OCI N.V.

OCI N.V. 549300NCMRGIBJYUOE57 2020-01-01 2020-12-31 549300NCMRGIBJYUOE57 2019-01-01 2019-12-31 549300NCMRGIBJYUOE57 2020-12-31 549300NCMRGIBJYUOE57 2019-12-31 549300NCMRGIBJYUOE57 2019-01-01 549300NCMRGIBJYUOE57 2018-12-31 549300NCMRGIBJYUOE57 2019-01-01 2019-12-31 ifrs-full:IssuedCapitalMember 549300NCMRGIBJYUOE57 2019-01-01 2019-12-31 ifrs-full:SharePremiumMember 549300NCMRGIBJYUOE57 2019-01-01 2019-12-31 ifrs-full:OtherReservesMember 549300NCMRGIBJYUOE57 2019-01-01 2019-12-31 ifrs-full:RetainedEarningsMember 549300NCMRGIBJYUOE57 2019-01-01 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300NCMRGIBJYUOE57 2019-01-01 2019-12-31 ifrs-full:NoncontrollingInterestsMember 549300NCMRGIBJYUOE57 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember 549300NCMRGIBJYUOE57 2020-01-01 2020-12-31 ifrs-full:SharePremiumMember 549300NCMRGIBJYUOE57 2020-01-01 2020-12-31 ifrs-full:OtherReservesMember 549300NCMRGIBJYUOE57 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember 549300NCMRGIBJYUOE57 2020-01-01 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300NCMRGIBJYUOE57 2020-01-01 2020-12-31 ifrs-full:NoncontrollingInterestsMember 549300NCMRGIBJYUOE57 2019-12-31 ifrs-full:IssuedCapitalMember 549300NCMRGIBJYUOE57 2019-12-31 ifrs-full:SharePremiumMember 549300NCMRGIBJYUOE57 2019-12-31 ifrs-full:OtherReservesMember 549300NCMRGIBJYUOE57 2019-12-31 ifrs-full:RetainedEarningsMember 549300NCMRGIBJYUOE57 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300NCMRGIBJYUOE57 2019-12-31 ifrs-full:NoncontrollingInterestsMember 549300NCMRGIBJYUOE57 2020-12-31 ifrs-full:IssuedCapitalMember 549300NCMRGIBJYUOE57 2020-12-31 ifrs-full:SharePremiumMember 549300NCMRGIBJYUOE57 2020-12-31 ifrs-full:OtherReservesMember 549300NCMRGIBJYUOE57 2020-12-31 ifrs-full:RetainedEarningsMember 549300NCMRGIBJYUOE57 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300NCMRGIBJYUOE57 2020-12-31 ifrs-full:NoncontrollingInterestsMember 549300NCMRGIBJYUOE57 2019-01-01 ifrs-full:IssuedCapitalMember 549300NCMRGIBJYUOE57 2019-01-01 ifrs-full:SharePremiumMember 549300NCMRGIBJYUOE57 2019-01-01 ifrs-full:OtherReservesMember 549300NCMRGIBJYUOE57 2019-01-01 ifrs-full:RetainedEarningsMember 549300NCMRGIBJYUOE57 2019-01-01 ifrs-full:EquityAttributableToOwnersOfParentMember 549300NCMRGIBJYUOE57 2019-01-01 ifrs-full:NoncontrollingInterestsMember iso4217:USD iso4217:USD xbrli:shares ANNU AL REPOR T 2020 24 07 CEO letter 10 Our strategic priorities 19 How we create value 90 Co-Chair's introduction 91 Board pr oﬁle 95 Board r eport 104 Remuneration report 117 Declarations 188 Independent auditor's report 197 Alternative performance measures (APMs) 199 GRI Index 204 TCFD Index 205 SASB Index 207 ESG performance summary 210 Glossary of abbreviations and key terms 212 Shareholder information 120 Consolidated ﬁnancial statements 126 Notes to the consolidated ﬁnancial statements 171 Parent Company ﬁnancial statements 175 Notes to the Parent Company ﬁnancial statements 186 Other information Strategy and value creation Business performance Corporate go vernance Financial statements 2 1 4 5 6 Other information 7 Risk management & compliance 30 ESG at a glance 31 Our approach to sustainability reporting 37 Our approach to climate change 39 Sustainability strategy 52 GHG emissions and energy use 53 W ater and waste 60 How we create value for our communities 66 Our employees 70 Health and Safety 76 Our approach to sustainability governance Sustainability 3 78 Enterprise risk management and internal control 81 Strategic risks 83 Operational risks 85 Financial risks 86 Regulatory risks 87 Compliance 21 Business performance 26 Management discussion and analysis P U R P O S E C u l t i v a t i n g a s u s t a i n a b l e w o r l d t h r o u g h c l e a n e r f u e l s o l u t i o n s , l o w e r c a r b o n f e e d s t o c k s , a n d f o o d s e c u r i t y COLLABORA TION Working acr oss our diverse cultures with mutual respect, inclusion, drive, and innovation AGILITY Working dynamically and swiftly to capitalize on opportunities and adapt to change EXCELLENCE Working with an emphasis on safety , ownership, and integrity W e promote a culture of CARE V ALUES RESOURCEFULNESS Working diligently and proactively to cr eate exceptional value for all our stakeholders OCI N.V . is a leading global pr oducer and distributor of nitr ogen and methanol pr oducts providing lower carbon fertilizers, fuels, and feedstocks to agricultural, transportation, and industrial customers ar ound the world. OCI’ s pr oduction capacity spans four continents and comprises appr oximately 16.2 million metric tons per year of nitr ogen fertilizers, methanol, diesel exhaust uid, melamine, and other nitr ogen products. OCI has mor e than 3,600 employees, is headquarter ed in the Netherlands, and listed on Eur onext in Amsterdam. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 3 2020 PERFORMANCE HIGHLIGHTS T otal equity 2019: $2,819M Earnings/(loss) per share 2019: $(1.598) Gross debt 2019: $4,662M Net debt 2019: $4,062M Free cash ﬂow 2019: $128M Adjusted EBITDA 2019: $748M Adjusted net income/(loss) 2019: $(208)M T otal assets 2019: $9,420M $2 , 672M     $4, 417M         Lost time injury rate 2019: 0.16 T otal r ecor dable injury rate 2019: 0.40 Women at OCI 2019: 10.34% Compliance training enrollment 2019: 95% Occupational illness rate 2019: 2.97% GHG intensity MT CO 2 e / ton produced 2019: 2.30 Energy intensity GJ / ton of ammonia produced 2019: 36.96 W ater Intensity M m3 consumed / ton produced 2019: 2.17 Employee turnover rate 2019: 1.99%                    Revenue 2019: $3,032M $3,4 7 4M DRIVING BUSINESS V AL UE FINANCIAL ESG * Please refer to page 39 for a description of how we calculate GHG intensity . OCI N.V . Annual Report 2020 4 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability S u s t a i n a b i l i t y p r o g r a m s s u p p o r t i n g g l o b a l f o o d s e c u r i t y a n d g r e e n e r f u e l s o l u t i o n s C u l t i v a t i n g a m o r e s u s t a i n a b l e w o r l d t h r o u g h p r o d u c t s a n d P e r f o r m a n c e B e s t i n c l a s s m a r g i n s d r i v e n b y o u r c o m p e t i t i v e s t r e n g t h s O p e r a t i o n s S t a t e - o f - t h e - a r t , w e l l m a i n t a i n e d a n d s t r a t e g i c a l l y l o c a t e d a s s e t s Sales by product Cleaner fuels and feedstocks   Methanol, bio-methanol, DEF , and green ammonia sold in 2020 • Other 78% • Cleaner fuels and feedstocks 22% Our customers • Fertilizer use 74% • Industrial use 26% Our employees   Employees in 2020 • MENA 70% • Europe 19% • North America 11% • Ammonia 13% • Urea 39% • CAN 9% • UAN 12% • AS 5% • Melamine 1% • DEF 6% • Methanol 15%   Sold in 2020 Our business Our production facilities ar e located in the United States, the Netherlands, the United Arab Emirates, Egypt, and Algeria. We ar e able to produce and distribute approximately 16.2 million metric tons per year of mer chant ammonia, granular urea, calcium ammonium nitrate (CAN), urea ammonium nitrate (UAN), ammonium sulphate (AS), methanol, diesel exhaust ﬂuid, melamine, and other nitrogen pr oducts, serving agricultural, transportation, and industrial customers around the world. Our position in the value chain Raw material input End- consumer Production Storage Wholesale distribution Our business model 2020 PERFORMANCE HIGHLIGHTS Production assets War ehousing ca pa cit y Distribution / JVs Revenue by segment $3,47 4M Revenue in 2020 • Nitrogen 80% • Methanol 20% Adjusted EBITDA by segment  Adjusted EBITDA in 2020 • Nitrogen 83% • Methanol 17% OCI N.V . Annual Report 2020 5 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability Str ateg y and v alue creation 07 CEO letter 10 Our strategic priorities 19 How we create value OCI N.V . Annual Report 2020 6 CEO LETTER Our purpose: Cultivating a mor e sustainable world thr ough cleaner fuel solutions, lower carbon feedstocks, and food security Dear stakeholders Resilience in 2020, and a favourable market outlook for 2021 underpinned by healthy fundamentals As we look back to what turned out to be a volatile year due to the global challenges because of COVID-19, our priority was to keep our employees, their families, and our surrounding communities safe. I assumed the role of CEO amidst the global turmoil, and I was immediately impressed with the support, teamwork and vigilance of our employees across our platform during these dif ﬁcult times. I would like to thank our whole team for their incredible r esilience. We ar e fortunate that the pandemic has not had a direct impact on our operations or on our global supply chain to date, as our products ar e essential for global food security and crucial for the continuity of the supply chains of many industries and consumer products. We ar e therefore particularly pleased that we delivered solid r esults in 2020 by achieving recor d volume growth and healthy cash generation. We achieved a r eduction in net debt of $332 million during 2020, despite selling prices for all our products nearing tr ough cycle levels during the year and on average at materially lower levels than in 2019. Looking ahead into 2021, we are starting to beneﬁt from a signiﬁcantly impr oved outlook for all our end markets. Particularly nitrogen markets ar e underpinned by healthy fundamentals as corn and other crop prices rise to levels last seen in 2012. This is highly supportive of farm economics and as a result, nitr ogen demand and prices. Against this backdrop, we look forwar d to delivering another year of robust volume gr owth and cash generation in 2021. Health and safety ﬁrst We ar e pleased that our safety performance continued to be best-in-class, despite the prevalence and challenges of COVID-19. We achieved r ecord occupational safety results in 2020, r esulting in industry leading performance. The lost time injury rate (L TIR) of 0.09 and total recor dable injury rate (TRIR) of 0.23 are well below our internal targets and reﬂect a 44% impr ovement over 2019 despite a more dif ﬁcult operating environment due to the strict COVID-19 safety precautions in place since March 2020. We ar e proud of every employee’ s diligence and attention to safety , which has brought our TRIR down by 72% since 2014. We will continue to promote a str ong safety culture and focus on targeting zero injuries acr oss our organization, both with our own employees and with contractors, with focused attention to this from the Boar d and in the HSE & Sustainability Committee. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 7 A Culture of OneOCI In addition to our environmental targets, we ar e also strengthening our gr oup culture. OCI has grown exponentially over the last decade, and the focus was on creating str ong local teams. During the year , we launched the OneOCI platform, which brings together the best of OCI under one uniﬁed culture, a shar ed set of values, and a platform to encourage dialogue across our locations. We ar e fortunate to be an employer of choice for a culturally diverse workforce that includes 25 nationalities in 10 countries. Through the roll-out of our OneOCI platform and our Diversity & Inclusion (D&I) program, we have set a target of achieving 25% female repr esentation in senior leadership positions by 2025. Though we operate in traditionally male dominated industries, we are working to improve our gender diversity in both technical and non-technical roles and at all levels of our organization and in all locations, including the MENA region. A differ entiated ESG strategy focused on capitalizing on the hydrogen opportunity I am pleased that we introduced our ESG strategy during our ﬁrst Capital Markets Day in March 2021, wher e we detailed how OCI can capitalize on the global hydrogen opportunity and announced signiﬁcant steps to decarbonize. As part of the accelerated global shift to clean energy , hydrogen will play a vital r ole in achieving the world’ s decarbonization ambitions and thus is expected to grow signiﬁcantly over the next decade. OCI is uniquely positioned to seize these opportunities presented by the global transition to a hydrogen economy . T wo of our main products – ammonia and methanol – have emerged as the most promising pr oducts to drive the hydrogen economy and enable the energy transition as the products curr ently repr esent more than 50% of global hydrogen use today and are excellent hydr ogen carriers. OCI beneﬁts from several strategic advantages as the only producer with facilities and extensive distribution and storage capabilities in the United States, Europe, and MENA, all of which are located near major inland demand centers or on major global shipping lanes next to key bunkering hubs. Nearly all of our facilities have access to ample and cost effective solar and wind energy . This facilitates a shift to renewable pr oduction processes and allows us to play a key r ole in supplying major hydrogen-deﬁcit markets such as Europe, as well as develop an ammonia fuel supply chain to support Asia’ s green transition. OCI’ s European assets, which include an ammonia import terminal in Rotterdam, ar e strategically positioned to play a major role in fulﬁlling Europe’ s hydrogen import needs as demand ramps up. These advantages are particularly ef fective in positioning OCI to decarbonize its product portfolio through a pipeline of opportunities in partnership with key private sector and government stakeholders in the hydrogen transition. This is exempliﬁed through OCI’ s recent announcements of several of ftake agreements in Eur ope for green hydrogen, as well as the announced partnerships with two of the world’ s leading ship owners, the Hartman Group and Eastern Paciﬁc Shipping, and the leading engine manufacturer , MAN Energy Solutions. OCI will drive decarbonization through a 20% emission reduction target At our Capital Markets Day , we announced a new group-wide target to r educe our scope 1 and 2 greenhouse gas intensity by 20% (on a 2019 baseline), to be achieved by 2030, and carbon neutrality by 2050. Our main end markets, agriculture, fuel and feedstocks, account for approximately 60% of global GHG emissions. Our purpose is clear: as a leader in our industries and through our unique geographic and product mix, we ar e committed to cultivating a sustainable world by developing and providing new opportunities for carbon-free food, fuel, and industrial feedstocks. We ar e committed to achieving these targets, and have aligned executive compensation to include speciﬁc ESG metrics and operational performance. In addition, OCI’ s Board of Directors has established a new committee, the HSE & Sustainability Committee, to effectively drive the group’ s environmental and social performance. It is important to note that we continue to focus on value creation and maintain a str ong capital discipline as we pursue decarbonization through new strategic initiatives with an unlevered IRR thr eshold of >12-14%. More than an estimated 45% of our target is achievable with limited incremental capital spend. CEO LETTER CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 8 INVESTMENT HIGHLIGHT S Global leader in nitrogen and methanol with excellent diversication Highly strategic locations allow for enhanced netback pricing through a coordinated global commer cial strategy Favourable position on the cost curve with state-of-the-art asset base • Net Ammonia 15% • Ur ea 34% • CAN 10% • UAN 16% • Methanol 18% • Melamine 1% • DEF 6% 18% >40yrs 30-40yrs 20-30yrs 0-10yrs 10-20yrs 8% 13% 9% 52% • North America 35% • Eur ope 24% • MENA 41% Y oungest asset base relative to global peers with 34% of production capacity under 5 years old 16.2 million metric tons per year of production capacity Asset base by vintage Capacity by region Looking ahead to 2021 and beyond Our priority remains to maximize fr ee cash ﬂow generation through operational and commer cial excellence, and we remain committed to our ﬁnancial policy to deleverage towards 2x through the cycle. Following a period of capital-intensive high growth rates, we ar e accelerating our Operational Excellence program as our focus shifts to extracting more value out of our young and state-of-the-art asset base. As a result, we anticipate a healthy increase in our sales volumes in 2021. We expect to be one of the main beneﬁciaries from impr oving market fundamentals in our respective sectors, nitr ogen and methanol. Based on the expected supportive pricing environment combined with our gr owth expectations for production volumes for 2021, we expect to deliver another year of robust sales volume growth and cash generation, and as a result a dr op in net leverage to below 3.0x by year -end 2021. Finally , we are pleased that we ar e making solid progr ess in our effort to grow our green portfolio and capitalize on new gr owth opportunities in the hydrogen economy . We made gr eat progress with gr owing our biofuel presence, as we str engthened our market-leading position in renewable methanol in the UK. We will continue to r oll out bio- methanol as a fuel, which helps reduce the carbon intensity of road transportation fuels in a highly efﬁcient way and we also see many opportunities in other industrial applications where this versatile pr oduct can be used. OCI is a global leader in the production of ammonia and methanol, which are the key products to accelerate the transition to a hydrogen economy , and is also one of the largest traders in these products globally . Combined with our strategic geographic footprint across four continents, OCI can simultaneously beneﬁt from gr owth in the hydrogen economy and signiﬁcantly contribute to the decarbonization of three of the largest contributors to global greenhouse gas emissions: food, fuel, and feedstock. For more details on our sustainability strategy , please refer to pages 29-76. Ahmed El-Hoshy Chief Executive Ofﬁcer CEO LETTER CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 9    Global population by 2050  Required gr owth in food production levels by 2050  Reduction in arable land per capita by 2050  Increase in meat production by 2050  Required r eduction in GHG emissions by 2030  Required incr ease in transport biofuel consumption by 2030 Global long-term fundamentals support expected sustained growth in our industries Sources: UN F AOSTA T , World Economic Forum, IEA, IPCC OUR S TRA TEGIC PRIORITIES We have announced our commitment to driving sustainable performance thr ough a differentiated strategy that will allow us to decarbonize through str ong industrial logic focused on capital discipline and value creation, coupled with a unique green portfolio that enables the hydr ogen economy . Our strategy is underpinned by strong governance with long-term incentives tied to ESG and operational excellence metrics and dedicated attention from our Boar d of Directors thr ough the HSE & Sustainability Committee. OPERA TIONAL EX CELLENCE BUSINESS OPTIMIZA TION GL OBAL COMMERCIAL STRA TEG Y SUST AINABILITY MAXIMIZING FREE CASH FL OW We ar e committed to excellence in every aspect of our organization. We continuously look for ways to maximize our production ef ﬁciencies, minimize our emissions and waste, and maintain our industry leading health and safety recor ds. We believe operational excellence does not stop at the gates of our plants and we hold all suppliers and business partners to the standards set out in our Business Partner Code of Conduct. We ar e committed to optimizing our global presence and enhance our position as a global leader in our industries. We will continue to explor e strategic opportunities that are in line with our strategic goals and ﬁnancial return expectations, including acquisitions, partnerships, joint ventures, business combination transactions, disposals, spin-offs or other transactions. We ar e committed to implementing a global approach to our commercial strategy . We work diligently to align our group-wide sales and marketing activities to optimize our production mix through our ﬂexible assets and to maximize the production of premium pr oducts, leverage logistical advantages through our global distribution network, and cultivate customer relationships to deliver strong netback prices. We ar e committed to being an environmental stewar d and will drive the hydrogen economy and signiﬁcantly contribute to the decarbonization of three of the largest contributors to global greenhouse gas emissions: food, fuel, and feedstock . We ar e committed to our ﬁnancial policy aimed at maximizing our free cash ﬂow generation and deleveraging. We believe our diversiﬁed pr oduct portfolio, advantageous geographic presence, and coor dinated global commercial strategy enables us to maximize netback prices, which coupled with our ramped-up production capacity and r educed capex requir ements, will allow us to achieve strong fr ee cash ﬂow conversion. W e are building a sustainable company for the futur e with a clear purpose of cultivating a sustainable world thr ough cleaner fuel solutions, lower carbon feedstocks, and food security . Our end-markets cover food, fuel, and feedstock, repr esenting an opportunity to decarbonize approximately 60% of today’ s global greenhouse gas emissions acr oss agriculture, industry , and transportation: • Our nitrogen fertilizers allow farmers to increase cr op yields and improve food quality . • Our fuel solutions provide clean alternatives to signiﬁcantly reduce greenhouse gas emissions by 60% versus conventional fuels. • Our industrial feedstocks are excellent hydrogen carriers and decarbonized input for downstream industrial pr ocesses. $75M Additional EBITDA from operational excellence expected in the next 3-5 years  GHG intensity reduction by 2030  Women in senior leadership by 2025  Net leverage through the cycle OUR STRA TEGIC PRIORITIES OUR T ARGETS Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 10 CAPIT ALIZING ON THE HYDROGEN OPPOR TUNIT Y OCI is building a sustainable company for the futur e that drives the global transition to a hydr ogen economy . Accelerated government responses to climate change are a signiﬁcant driver of this transition with the EU Climate Investment plan exceeding €1 trillion over the next ten years, and the United States re-joining the Paris Agreement and announcing a $2 trillion Climate Change investment bill. Government support and spending plans make one thing abundantly clear: hydrogen is the fuel and the feedstock of the future and will also play a vital r ole in achieving our global decarbonization ambitions. Green hydr ogen demand is expected to grow ten-fold over the next decade helping the transition from fossil fuels to hydrogen as the energy of the futur e, while costs of electrolysers and r enewable energy are expected to come down signiﬁcantly during this time. Growth in hydr ogen demand driven key OCI sectors 1 2020 2030 2040 2050 Existing feedstock uses Conventional Decarbonized New feedstock uses Industry energy Building heating and power T ransportation Power generation EU to invest >€1 tn by 2030 US announces a $2tn Climate Change Bill 10x green H 2 1 Subject to supportive regulatory environment, subsidies, technology advancements and national envir onmental targets. 2 Optimal green r efers to green ammonia produced using wind/solar energy in the Middle East. Production cost of hydr ogen expected to come down rapidly 0 6 4 2 2020 2030 2040 2050 -25% -25% -10% 1 Renewable energy electricity cost declines 2 Electrolyzer capital cost declines 3 Other: efﬁciency and O&M impr ovements Green Blue Optimal green 2 $/kg H 2 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 11 CAPIT ALIZING ON THE HYDROGEN OPPOR TUNITY CONTINUED T wo of our main products – ammonia and methanol – repr esent more than 50% of gr ey hydrogen use today and are key pr oducts to accelerate the transition to a hydrogen economy . Although most countries are working towar ds developing a hydrogen economy , it is not feasible to produce suf ﬁcient hydrogen to meet expected demand given limitations on renewable energy power in many regions, including Eur ope. This means that hydrogen will need to be transported over long distances, but as hydr ogen needs to be cooled down to -253 degrees Celsius, this r esults in a huge loss of scarce green energy and the cooled hydrogen has a very low energy density . However , ammonia and methanol are the ideal energy carriers for several reasons: • Their respective energy densities are higher than hydr ogen’ s, • They are widely used products, and • They are easier to store with extensive global distribution and storage infrastructur e in place. Our end-markets cover food, fuel, and feedstock, repr esenting an opportunity to decarbonize approximately 60% of today’ s global greenhouse gas emissions across agricultur e, industry and transportation. Our entrepr eneurial track record means we have the r elationships and global reach to drive change without having to choose between sustainability and value creation. OCI opportunities: ammonia and methanol are the only hydrogen carriers capable of decarbonizing our k ey sectors Ammonia and methanol form ~50% of gr ey hydrogen use and ar e key pr oducts in achieving a gr een hydrogen economy . F ood F eedstock Fuel Natural gas or renewable H 2 sources H 2 Global GHG emissions Blue / Green ammonia Bio / Green methanol Agriculture 20% Enabler for low carbon farming Fuel 10% No CO 2 , SO x , or particulate emissions upon combustion Needs less refrigeration (-33°C NH 3 vs -253°C H 2 ) Effective and easier to handle than H 2 Cleaner burning low carbon fuel in marine transport. Widely used in road transport Feedstock or energy carrier 30% Green feedstock for chemicals and low-cost solution to transport H 2 70% higher energy density than H 2 Efﬁcient and promising green feedstock for chemicals in many end-markets 84% higher energy density than H 2 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 12 OCI’ s unique advantages We ar e a global leader in the production of ammonia and methanol and are one of the largest traders in these pr oducts. We also beneﬁt fr om several strategic geographic advantages, including: • We are the only pr oducer with facilities and extensive distribution and storage capabilities in the United States, Europe and the MENA r egion. • Our coastal assets are all located on major global shipping lanes next to key bunkering hubs for the transportation of renewable fuels. • Almost all our assets have access to abundant and cost effective solar and wind energy , meaning we can shift to a renewable pr oduction process. As such, we can play a key role in supplying major hydr ogen-deﬁcit markets such as Europe and Asia. • Our European assets, which includes an ammonia import terminal in Rotterdam, ar e strategically positioned to play a major role in fulﬁlling hydr ogen import needs as demand ramps up. These advantages are particularly ef fective in positioning us to decarbonize our asset base through a pipeline of opportunities, in partnership with key private sector and government stakeholders in the hydrogen transition. OCI’S S TRA TEGIC FOO TPRINT WILL CAPTURE THE HYDROGEN PO TENTIAL W e are uniquely positioned to drive the hydr ogen economy thr ough our geographic pr esence and pr oduct mix Nitrogen and methanol assets with direct access to hydr ogen pipeline infrastructure coupled with strategic European import terminal at Rotterdam. Strategically located on the East and West of the Suez Canal allowing exports from MENA to Europe as gr een ammonia or as an energy carrier . Nitrogen and methanol assets located inland and on US Gulf with direct access to key infrastructure allowing us to capitalize on abundant wind and solar power . Optimal solar/wind resour ces Least Most OCI production assets Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 13 Shipping currently accounts for appr oximately 3% of global CO 2 emissions, but is one of the hardest sectors to decarbonize due to the curr ent economic cost effectiveness of heavy fuel oil (HFO). The International Maritime Organization (IMO) has set emissions targets that can only be achieved through the adoption of low-carbon fuels on new and existing vessels, and the EU is pushing to include shipping in the emissions trading system (EU ETS) with binding requir ements to reduce CO 2 by more than 40% by 2030. Of the various alternative low carbon fuels available, ammonia and methanol, OCI’ s cor e products, are the only practical alternatives for long-distance shipping. Both fuels, even without the implementation of decarbonization technologies, already have a lower envir onmental footprint compared to conventional fuels. Green ammonia is particularly pr omising as it can be produced fr om solar and wind resources without emitting any carbon. The ammonia engine on the vessels emits zero CO 2 , zero sulphur oxides (SOx) and the traces of NOx present in the ﬂue gas can be neutralized to water and dinitrogen by up to 99%. This makes a gr een ammonia fueled ship a zero-emission ship. Without carbon priced in, the grey and blue ammonia and methanol pathways are very close to cost parity compared to HFO. Using blue ammonia in a ship would start the decarbonization pathway with an improvement potential of mor e than 50% GHG reduction. Most importantly , with global infrastructure in place, these pr oducts can bridge the transition from 'gr ey' to 'green' until the industry has fully scaled up to pr oducts based solely on renewable energy sources. As such, we have made it a priority to make these established low carbon fuels for shipping via partnerships with various players in the shipping value chain, such as MAN Energy Solutions, Eastern Paciﬁc Shipping, Hartmann Group, and others. The maritime fuel market in HFO is expected to grow to appr oximately 430 million metric tons by 2050, translating in ammonia and methanol equivalents of 650 - 900 million metric tons while the current combined global gr oss ammonia and methanol production is ~290 million metric tons, indicating a large opportunity for OCI. A typical Panamax ship consumes 100 thousand metric tons of ammonia or 93 thousand metric tons of methanol per year , which equates to 13% of EBIC’ s ammonia capacity or 9% of OCI Beaumont’ s methanol capacity as fuel, saving approximately 140 thousand metric tons of CO 2 emissions per year . ~70 ~150 ~180 ~350 OCI’S PRODUC TS ARE KEY T O DECARBONIZING THE MARITIME SEC T OR Cost of container ship and bunkering location in the Middle East from 2030E (€ mn per annum) 2050 outlook for ammonia and methanol as a substitute for HFO (metric ton) vs negligible current consumption 24 28 27 29 34 36 48 Grey Methanol Grey Ammonia Blue Ammonia Green Ammonia Green Methanol Green Hydrogen Green Ammonia Fuel Cell CO 2 cost requir ed to break even with HFO, EUR/ton 2020 ammonia production 2050 HFO ammonia equivalent 2020 methanol production 2050 HFO methanol equivalent 4 – 5x production and >35x merchant ammonia traded volumes 182 750 - 900 103 650 - 720 6 - 7x 25 0.11 0.24 0.28 0.58 Heavy fuel oil ICE 1 Capex O&M Fuel Additional price per jeans, EUR Captive use Merchant trade 1 ICE refers to Internal Combustion Engine, fuel price average between IEA ($850/t and hydrogen council r eport at USD 630/t) Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 14 OCI’S GL OBAL DIS TRIBUTION NET W ORK IS S TRA TEGICALL Y L OCA TED A T KEY BUNKERING HUBS ON MAJOR SHIPPING L ANES OCI is located at or sufﬁciently near 3 out of the 4 global bunkering hubs (Rotterdam, Houston, Fujairah, Singapor e) The existing footprint creates strategic potential for bunkering stations stopovers, with limited investment for ammonia/ methanol fueled ship engines OCI will have a unique starting position across the estimated 40,000 container ship voyages a year OCI has pr oduction plants located along the busiest trading r outes in the world OCIN/OTE T erminal Rotterdam is next to the busiest bunker hub in the world Production assets Major bunkering hubs Container ship capacity deployed (width relative to size) Sorfert is ~1 day from Gibraltar EBIC is located next to the Suez Canal, where 12% of world seaborne trade goes through OCI Beaumont Houston is one of the global bunkering hubs Fertil is next to Fujairah, where one-thir d of the world’ s sea-traded oil passes through Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 15 WE HA VE DEVEL OPED A S TRONG V AL UE CREA TION L OGIC T O EV AL U A TE OUR SUST AINABILIT Y PROJEC TS Full f ocus on deleveraging tow ards 2.0x net lev erage through the cycle Prioritize pr ojects with positive NPV / short payback period • Focusing on decarbonization using existing facilities and infrastructure. • Focusing on net savings carbon abatement potential (mostly including operational efﬁciencies and selected cost-ef fective strategic options) to drive emission reduction at a net saving. Maintain str ong capital discipline and value cr eation focus • We will continue to evaluate opportunities to further optimize our capital structure, including assessing gr een ﬁnancing opportunities such as linking sustainability metrics to our RCF and / or future capital markets issuances. Fit with long term strategy of cr eating tactical optionality • Driving emission reduction while closely monitoring market developments and creating option value to addr ess future improvement potential (such as the ability to addr ess Scope 3 emissions). Net debt Net debt / adj. EBTDA 7.0x 2017 4.4x 2018 5.4x 2019 4.3x 2020 2.0x T arget <3.0x 2021 Guidance Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 16 CAPIT AL ALL OCA TION T ARGET S In a very thorough and ongoing pr ocess, OCI has identiﬁed various decarbonization initiatives across its platform based on emission potential and ﬁnancial feasibility . By means of such analysis OCI has targeted those initiatives that are NPV positive, thr ough being supported by positive business cases on a standalone basis or by a customer pull willing to pay a premium for a greener pr oduct, and by governments that are willing to support certain evolving green technologies with incentive schemes or subsidies. OCI also has identiﬁed partnerships that provide low capex and asset light solutions for the company through intensive and long-term collaboration with strategic partners. W e can achieve a large proportion of our targets and generate positive r eturns with limited incremental capital spend. We intend to achieve this by maintaining an IRR thr eshold of 12 - 14% on an unlevered basis with continued focus on deleveraging and cost optimization. Approximately 45% of our GHG r eduction commitment is zero to low capex, including accelerated operational excellence, switch to renewable energy and expansion of low carbon product portfolio. Accelerating our operational excellence pr ogram is expected to yield tangible shorter -term returns of more than $75 million EBITDA per annum with a payback of 3-5 years while also lowering our emissions by 5%. Over the medium to long term, additional options can become cost-effective depending on incentives such as regulatory frameworks, pr oduct premiums, and incr eased carbon prices. In these cases, the combined assets of OCI and its strategic partners often drive synergies which, supported with the right governmental incentives and subsidies, can drive an important ﬁrst decarbonization step-stone in a value chain. We don’ t expect signiﬁcant capital spending on developing opportunities in marine fuels and if any capital is deployed on sustainability projects, this will be likely fr om 2024 onwards, unless we see high r eturn opportunities earlier . W ith our carefully chosen strategy and project portfolio OCI is very well positioned to drive the energy transition together with our strategic partners. T otal Capacity (Mtpa) Prioritizing projects with a short payback period 1,2 Maintaining strong capital discipline 2015 2016 2017 2018 2019 2020 2021e Production capacity T otal Capex T otal Capex Spend (US $m) OCI projects with low/no CAPEX (e.g. operational excellence) OCI projects Joint venture pr ojects Emissions impact , % of total OCI baseline 0.1 100 10 1 Low Mid High Demand pull and customer willingness to pay Regulatory support / framework Expected initiatives needing subsidies Expected NPV positive initiatives T echnical/ﬁnancial feasibility 1 NPV calcula ted assuming a 12% ﬂoor , an upward sloping CO 2 price in EU, no subsidies and no pass-through of cost to customers 2 Parameters for sensitives included natural gas, power , carbon prices and potential subsidies Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 17 DELIVERING NEW CAP ACITY RAMP-UP V olume growth in 2020 and 2021 • W ith our growth pr ogram complete as evidenced by healthy volume growth in 2020, we enjoy a substantial reduction in execution risk and expect to deliver a full year contribution from our global platform in 2021 • We have a young asset base that, on average, can achieve better (1) gas- conversion (2) higher on-stream times, and (3) need lower maintenance capex versus older plants • Going forward, we will optimize our energy efﬁciency and utilization rates to impr ove energy intensity and operating rates for organic volume growth, as well as improve r eliability and reduce planned and unplanned downtime BENEFIT FROM COMPETITIVE COST POSITIONS Cash conversion metrics • We beneﬁt from a globally competitive position with access to cheap feedstock and a young asset base: - We ar e one of the lowest cost producers globally with sustainably low levels of capex - As the industry cost curve moves up, our cost advantage is increasing • As a result of the capital structure optimization plan that we implemented over the last two years, we expect to have a substantially lower cash interest in 2021 compared to 2020 WELL POSITIONED FOR MARKET UPSIDES Price recovery • The outlook for our end markets has improved considerably in r ecent months and we believe our industries will beneﬁt from attractive supply-demand fundamentals and steepening cost curve • An increase of $25/ton for all products adds more than $330 million to gr oup adjusted EBITDA on an annual basis, all else equal Strong commer cial position • Our integrated and centralized commercial platform will continue to capitalize on our strategic global reach, implement our disciplined commercial model, and gr ow our trading activities to deepen our market penetration and enhance our netback pricing globally CR YS T ALIZING OUR DECARBONIZA TION P A THWA Y Growing fr om grey to green • Focus on growing our green pr oduct portfolio, including decarbonized ammonia and methanol • Continue to pursue low/smart capex projects and opportunities to achieve our GHG reduction targets by 2030, in line with the world’ s commitments in the Paris Agreement, while balancing with our commitment to deleverage • For more information on our sustainability strategy , please refer to the sustainability section beginning page 29 DRIVING OUR S TRA TEG Y FORW ARD With our volume growth deliver ed in 2020, we ar e focused on delivering our nancial, operational, commercial, and decarbonization strategies Driver of improving FCF gener ation Driver of improving FCF gener ation Signicant upside from price recovery Driving decarbonization through the hydrog en economy We are well positioned f or future delever aging and improved credit metrics Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 18 HO W WE CREA TE V AL UE As a global producer and distributor of nitr ogen and methanol products, we aim to cr eate sustainable value for all stakeholders and are committed to delivering sustainable solutions to our customers. W e take a holistic approach to our business model to optimize all resour ces available to us, thereby maximizing our positive ﬁnancial, social and environmental impacts for a gr eener future. INPUT Financials People Operations IMP A CT OUTPUT SUST AINABLE BUSINESS MODEL $9 . 1BN Assets $2. 7BN Equity $3.47BN Revenue $870M Adj. EBITDA 9 production sites 16.2mt production capacity 1,418 rail tank cars 2 ammonia vessels 11 direct access to major waterways 2. 1mt storage capacity 63 countries reached For our communities: Educational and social programs speciﬁcally tailored to meet each community’ s needs (p 59-65) For our customers: Efﬁcient nitr ogen products optimizing agricultural productivity (p 51) Cleaner fuel solutions that signiﬁcantly reduce GHG emissions versus conventional fuels (p 46) For our employees: T op quartile compensation in all of our locations, with average annual compensation of $93 thousand per employee Improving diversity with 20.24% of senior leadership positions held by women in 2020 OCIs annual Safety Awar d went to OCI Nitrogen r ecognizing their outstanding safety performance For our investors: Competitive returns and a proven track r ecord of value creation For the world: Helping optimize crop yields to feed the world (p 57-58) Improving energy ef ﬁciency and reducing GHG intensity through our operational excellence program and a dif ferentiated decarbonization strategy that enables the hydrogen transition (p 11-17, p 39-48) 300T J Energy consumed 90 . 01M m 3 W ater consumed 2. 26t GHG Intensity 5.34mt CO 2 e Recycled 4 7 .35M m 3 W ater discharged 0 . 09 L TIR 0 .23 TRIR 3, 682 Employees 100% Compliance training enrollment 10.51% women at OCI 2.20% turnover rate Natural gas Cleaner fuel solutions and lower carbon feedstocks Production Storage Sustainable agriculture Providing cleaner fuel solutions and lower carbon feedstocks for our transportation and industrial customers Providing key nutrients for optimized yields to meet the world’ s food production needs Wholesale distribution Retail distribution Our position in the value chain Our suppliers: Natural gas is our primary raw material. Each facility is supplied with natural gas by pipeline purchased through a mix of long-term contracts with national oil and gas companies in MENA, and spot pur chases off national grids in the Netherlands and the USA. The total annual cost of our natural gas procur ement depends on the volume of gas procur ed and ﬂuctuations in market prices, and totalled $722.4 million in 2020. In addition to natural gas providers, our supply chain includes (but is not limited to) pr oviders of transportation and logistics services, utilities, other production materials, maintenance and engineering services, advisory and pr ofessional services, facilities management, contracting, information technology including hardwar e and software services, and other needs as the business requir es. The number of suppliers ﬂuctuates depending on the projects and business activities but exceed 3,200 suppliers each year . a b c a b c Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 19 21 Business performance 26 Management discussion and analysis Business per formanc e OCI N.V . Annual Report 2020 20 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page BUSINESS PERFORMANCE Industry leading safety performance 0.12 1.24 0.09 0.35 IF A (2019) OCI L TIR Employee TRIR OCI’ s capacity growth 2008 – 2020 (mtpa) 2008 2010 2012 2015 2020 16.2 Strategic priorities Delivering our strategy Our priorities Contribution to SDGs 1 OPERA TIONAL EXCELLENCE • Record HSE performance achieved despite COVID-19 r equiring stringent social distancing rules and reduced staf ﬁng per shift. T wo HSE audits conducted at OCI Nitrogen and Fertil. • Completed major turnarounds of 10 production lines at OCI Nitr ogen, Sorfert, OCI Beaumont, BioMCN, and Natgasoline following which we achieved high and steady utilization rates, particularly at OCI Beaumont and BioMCN. • Record pr oduction at IFCo achieved for all products and 10% over prior r ecords for ammonia and urea liquor , and strong production volumes achieved acr oss the group despite the slate of turnarounds. As a result, own-pr oduct sales increased by 23% year -on-year to a record 12.25 million metric tons. • Appointed Bart V oet as Global Vice President of Manufacturing to lead our global production platform. • Production efﬁciency: with the completion of our production platform’ s growth, our focus will be on improving our run-rate utilization rates to maximize volumes and optimize product mix, and on energy efﬁciency to impr ove on costs on emissions where possible. • HSE: we will continue to build on our HSE processes, focusing on pr ocess and occupational safety KPIs, as well as environmental emissions performance and enhanced KPIs. 8.4 7.6 4.0 1.3 Capex program complete Nitrogen Methanol Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 21 BUSINESS PERFORMANCE CONTINUED Strategic priorities Delivering our strategy Our priorities Contribution to SDGs 2 BUSINESS OPTIMIZA TION • Focused on developing our greener fuel solutions of ferings - Supplying ExxonMobil’ s UK subsidiary , Esso, with a biofuel alcohol mix consisting of bio- methanol and ethanol to be blended with all Esso’ s standard Synergy grade petrol sold in the UK. This enables OCI’ s customers to exceed mandated biofuel blending targets set by the UK and the EU without the introduction of a new fuel standar d such as E10. - Supplying Essar Oil (UK) Ltd with bio-methanol as part of a biofuel alcohol mix, to be blended with all Essar's petrol sold in the UK. - Entered into two partnerships with RWE and Nouryon to purchase gr een hydrogen pr oduced through electr olysers, which will be used to produce gr een methanol at BioMCN and help abate the plant’ s CO 2 emissions. - Secured a 7-year supply of r enewable gas in the United States at competitive economics as part of our strategy to grow our US bio-methanol business. • Integrated Fertiglobe to achieve signiﬁcant synergies. The platform has yielded strong quantitative and qualitative beneﬁts through: - a uniﬁed culture with dedicated leadership and corporate functions to str engthen gover nance and compliance; - excellent cooperation across sites to optimize operations , impr ove tur naround and capex planning, and share technical know-how; - centralized commercial decision-making r esulting in improved premium price achievement through deeper downstr eam reach in key export markets to captur e more in-land premiums, signiﬁcantly reduced r eliance on traders, and optimized trade ﬂows to capture freight savings and maximize netbacks. • Continue to grow our gr een fuels portfolio as part of our sustainability strategy , including continuing to roll out bio-methanol as a fuel, which helps r educe the carbon intensity of road transportation fuels in a highly efﬁcient way . We also see many opportunities in other industrial applications where this versatile pr oduct can be used. • Further crystalize Fertiglobe’ s value creation , particularly on the technical front to optimize pr oduction and energy efﬁciency . • Continue to evaluate strategic opportunities including select add-on optimization opportunities, and multiple value enhancing opportunities for the methanol group as the outlook has str engthened considerably . 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page T otal sales volumes grew 5% year -on-year 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 22 Strategic priorities Delivering our strategy Our priorities Contribution to SDGs 3 GL OBAL COMMERCIAL STRA TEGY • Focused on increasing our downstr eam market participation to enhance supply chain value capture thr ough: - More active trading of thir d-party product, particularly ammonia, to opportunistically capture price movements. - Increased logistics investments including adding a second ammonia vessel, enhancing our warehousing positioning globally , and capitalizing on our exclusive access to key terminals and port facilities. - Grew our r each through commercial partnerships and supply agr eements in key markets, and integrated the Dyno Nobel volumes into N-7’ s portfolio. - Grew Fertiglobe’ s ability to participate in larger tenders in key import markets such as India and Ethiopia. • Continued to optimize our methanol commercial platform by str engthening the US and European teams, and consolidating our bio-fuels business under OMM leadership to pr ovide further depth and agility to strategic commercial decision-making. • Continue to build our global capabilities through strategic partnerships, customer partnerships, and organically growing our team. W e will also invest in logistical positioning through storage terminals and logistics assets and push further downstream to the end customer , evaluating supply chain margins versus costs to determine our optimal commercial appr oach. Centralized commercial strategy has environmental advantag es BUSINESS PERFORMANCE CONTINUED Our centralized commercial strategy has contributed to the displacement of over 1 million tons of Chinese urea exports to Europe, the Americas, and Africa in 2020, effectively saving appr oximately 66 thousand tons of CO 2 e in vessel emissions, a 61% reduction as compar ed to 2017. Sorfert to USA: ~18 days at sea China to USA: ~35 days at sea OCI’ s urea trade ﬂows OCI’ s geographic end markets 49% reduction in CO 2 emissions per shipment delivered to the USA from Sorfert instead of China 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 11.71 2019 2020 14.68 +25%        T otal sales volumes Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 23 BUSINESS PERFORMANCE CONTINUED Strategic priorities Delivering our strategy Our priorities Contribution to SDGs 4 SUST AINABILIT Y • W e are driving our sustainability strategy and have announced 2030 and 2050 decarbonization targets • We believe we ar e uniquely positioned to reach our greenhouse gas (GHG) r eduction targets and help the world decarbonize in line with the Paris Agreement, with ammonia and methanol being the most promising pr oducts to enable a hydrogen economy . Our strategy follows a gradual path from gr ey to green: - Efﬁcient gr ey product production thr ough our Operational Excellence platform: we have a proven track r ecord in maximizing production ef ﬁciencies while minimizing emissions and waste - Blue and low carbon products: we have worked to expand our curr ent product offering to develop cleaner and greener pr oducts for downstream uses and fuel solutions, including methanol, bio-methanol, diesel exhaust ﬂuid (DEF) - Going green: we will work towar d moving to 100% use of green energy and gr een feedstocks through short and long-term opportunities, which we describe in the Sustainability section beginning page 29. • We ar e capitalizing on our strategic geographic positions in the United States, Europe and MENA to maximize our access to abundant and cost-effective r enewables, and leverage our infrastructure to develop our gr een ammonia and methanol products. • Focus on pursuing our announced decarbonization strategy through: - Monitoring the achievement of internal decarbonization KPIs for each asset - Continue evaluating pipeline of carbon reduction projects balancing between capex needs, investment returns, and decarbonization potential - Identify and pursue key new partnerships that would enable decarbonizing without major capex - Focus on growing our gr een products portfolio to accelerate our non-project based decarbonization - For more information please r efer to the Sustainability section beginning page 29. 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page • Cleaner fuels and feedstocks: 22% • Other products: 78% 3MT of methanol, bio-methanol, DEF , and green ammonia sold in 2020 1.7% reduction in GHG intensity year -on-year 2019 2020 2.30 2.26 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 24 Strategic priorities Delivering our strategy Our priorities Contribution to SDGs 5 MAXIMIZING FREE CASH FL OWS • Demonstrated commitment to ﬁnancial discipline and deleveraging: - Reﬁnancing: completed bond reﬁnancing in October to achieve $23 million in annual interest savings and 50bps reduction in weighted average cost of debt fr om 4.98% to 4.48% (down from 6% at the end of 2018); also completed Fertiglobe r eﬁnancing to achieve $9 million annual interest savings for a total inter est savings of more than $32 million. - $167 million cash consideration received fr om ADNOC in relation to the Fertiglobe business combination. - Natgasoline successfully completed a $120 million insurance settlement as compensation for properly damages and business interruption losses, of which $60 million was r eceived in 2020 and the balance in early 2021. - Partial IFCo bond redemption of $147 million in February 2021 to r educe interest cost and debt subordination further simplifying our capital structur e. - Covenants reset at zer o cost with signiﬁcant headroom . Leverage and interest cover covenants for our $850m Revolving Credit Facility amended to pr ovide additional ﬂexibility through 2021. • Achieved free cash ﬂows of $305 million in FY 2020 on impr oved EBITDA, working capital, and lower ﬁnancing costs. • As a result, deleveraged by $332 million to end the year with net debt of $3.73 billion compared to $4.06 billion at 31 December 2019. • Remain committed to our financial policy to prioritize our free cash flows towar ds deleveraging with a net leverage target of 2x through the cycle. • Continue to optimize and simplify our capital structure thr ough opportunistic financing at both the parent and subsidiary levels should it achieve further reduction of our weighted average cost of debt and the extension of our debt maturity profile. 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page 40 17 ICONS: COL OUR VERSION ICONS When an ico n is on a square, t hat square mus t be propor tional 1 x 1. The white ic on should be c ontained by i ts dene d colour, or blac k background. Do not alter th e colours of th e SDG icons. ICONS In Januar y 2018, the United N ations launc hed a revised d esign of Icon 10, as se en on this page BUSINESS PERFORMANCE CONTINUED 2019 2020 2021 2022 2023 2024 2025 2026-2037             Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 25 MANA GEMENT DISCUSSION AND ANAL Y SIS $ million 2019 2020 Revenue 3,031.7 3,474.1 Adjusted EBITDA 748.4 869.8 Adjusted EBITDA margin 24.7% 25.0% Adj. net income (loss) attributable to owners of the Company (208.4) (213.4) Net income (loss) attributable to owners of the Company (334.7) (177.7) Basic earnings per share (1.598) (0.847) Operating proﬁt as r eported 105.0 187.0 Depreciation and amortization (544.7) (592.2) EBITDA 649.7 779.2 EBITDA margin 21.4% 22.4% $ million 2020 performance drivers Revenue • Sales volumes: 25% increase in total sales volumes reaching a r ecord 14.7 million metric tons, primarily due to a 23% increase in own pr oduct sold as well as a 36% increase in traded volumes sold. This offset weaker prices in 2020 as compared to 2019. • Selling prices: General weakness in average pricing for our products reaching tr ough cycles levels during 2020, driven by weak industrial demand due to COVID-19 production limitations, and overall weakness in global nitr ogen fertilizer prices. Adjusted EBITDA 1 • Adjusted EBITDA increased by $121.4 million to $870 million, primarily driven by the r evenue growth. • EBITDA margin slightly improved resulting from higher utilization rates of our plants and favorable gas prices in the EU and US, partly offset by the lower average selling prices. Operating proﬁt Operating proﬁt incr eased by 78.1% or $82 million in 2020 as compared to 2019, primarily as a result of: • Gross proﬁt incr eased by $89.3 million due to a $442.4 million increase in revenue, partially of fset by a $353.1 million increase in cost of good sold • Selling, general and administrative expenses were ﬂat year -on-year as a result of a successful cost optimization program acr oss the group. Financing costs • Finance income increased by $151.7 million to $212.5 million, driven by a $153.2 million increase in for eign exchange gains. • Finance cost increased by $24.7 million to ($412.4) million. This was primarily due to a $29.1 million increase in foreign exchange loss, partially of fset by a $4.3 million decrease in interest expense on ﬁnancial liabilities. • The foreign exchange gains and losses mainly relate to external ﬁnancing and to the revaluation of inter company balances in foreign curr encies. Net proﬁt / (loss) • Net loss of $94.1 million in 2020, compared to a loss of $300.2 million in 2019. Primarily driven by a higher operating proﬁt and favourable impact of net ﬁnancing costs due to for eign exchange differences. • Adjusted Net proﬁt / (loss) attributable to the owners of the Company was a loss of $213.4 million in 2020, compared to a loss of $208.4 million in 2019. 1 OCI N.V . uses Alternative Performance Measures (APM) to provide a better understanding of the underlying developments of the performance of the business. The APMs are not deﬁned in IFRS and should be used as supplementary information in conjunction with the most dir ectly comparable IFRS measures. The deﬁnition of the APM and a detailed r econciliation between the APM and the most directly comparable IFRS measure can be found on pages 197-198 of this report. • Methanol US: 11% • Methanol Europe: 9% • Nitr ogen US: 16% • Nitr ogen Europe: 22% • Fertiglobe: 42% Revenue by segment: • Methanol US: 16% • Methanol Europe: 2% • Nitr ogen US: 21% • Nitr ogen Europe: 15% • Fertiglobe: 51% Adj. EBITDA by segment: Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 26 MANA GEMENT DISCUSSION AND ANAL YSIS C ONTINUED Condensed consolidated statement of cash ﬂows for the years ended 31 December $ million 2019 2020 Cash and cash equivalents at 1 January 460.7 600.5 Cash ﬂows from operating activities 337.5 617.8 Cash ﬂows from (used in) investing activities (252.6) (260.2) Cash ﬂows from (used in) ﬁnancing activities 55.2 (244.9) Net cash ﬂows 140.1 112.7 Currency translation adjustments (0.3) (26.9) Cash and cash equivalents at 31 December 600.5 686.3 Net debt as at 31 December $ million 2019 2020 Long-term interest-bearing debt 4,392.7 4,226.9 Short-term interest-bearing debt 269.6 189.7 Gross inter est-bearing debt 4,662.3 4,416.6 Cash and cash equivalents (600.5) (686.3) Net debt 4,061.8 3,730.3 Outlook We expect to continue to see healthy volume gr owth as we optimize utilization rates across the platform, and in particular beneﬁt fr om an increased contribution of the methanol segments. The outlook for nitrogen markets is positive for 2021, supported by healthy farm economics and expected strong demand gr owth in major nitrogen consuming regions. Methanol markets ar e similarly showing strong downstream demand gr owth as the global economy and industry activity recover . Our priority remains to maximize fr ee cash ﬂow generation and we remain committed to our ﬁnancial policy to deleverage towards 2x thr ough the cycle. Based on the current market outlook for selling prices and our gr owth expectations for production and sales volumes for 2021, we expect a dr op in net leverage to below 3.0x by year -end 2021. We will also continue to evaluate our capital structure to identify further cost ef fective reﬁnancing opportunities. $ million 2020 performance drivers Cash ﬂows from operating activities • Cash ﬂows from operations primarily reﬂect the change in net losses in 2020 and 2019, and changes in working capital. • Net loss was $94.1 million in 2020 compared to a net loss of $300.2 million in 2019, an improvement of $206.1 million. • Working capital inﬂows of $139.6 million compar ed to outﬂows of $1.1 million in 2019, a swing of $140.7 million. Cash ﬂows from investing activities • Cash ﬂows used in investing activities were $7.6 million higher than 2019, primarily due to the full year consolidation of Fertil • T otal cash capital expenditures wer e $262.6 million in 2020 compared to $300.0 million in 2019, of which maintenance capital expenditure was $239.4 million and $169.8 million r espectively . Cash ﬂows from ﬁnancing activities • Proceeds from borr owings in 2020 totaled $2,070.4 million, which consisted of the proceeds of new ﬁnancing arrangements and changes in the outstanding amounts of revolving cr edit facilities. • During 2020, we successfully completed the reﬁnancing at both the parent company and Fertiglobe level, which will generate cash interest savings of mor e than $32 million per year , as we lowered our weighted average cost of gross debt by c.60 bps to below 4.5%. As a r esult of the reﬁnancing activities $51.3 million of cost were incurr ed mainly due to the bond redemption fee of $33.3 million. • Repayments of borrowings were $2,396.0 million in 2020, mainly r elated to the above reﬁnancing and amortization of debt. • As part of the ﬁnal post-completion settlement between the Company and ADNOC, an amount of $166.8 million in cash was received. Free cash ﬂow 1 • Free cash ﬂow before gr owth capital expenditure amounted to $304.7 million in 2020 reﬂecting the r eported EBITDA for the year , working capital inﬂows, maintenance capital expenditure, and cash inter est paid of $279.1 million. Gross debt • Gross inter est-bearing debt decreased by $245.7 million due to repayments of $331.5 million, the afor ementioned reﬁnancing, and negative impact of exchange dif ferences on Euro denominated debt. Cash & cash equivalents • As a result of a positive fr ee cash ﬂow and cash received for Fertiglobe closing settlement, cash and cash equivalents increased to $686.3 million. Net debt • Net debt stood at $3,730.3 million as at 31 December 2020, from $4,061.8 million as at 31 December 2019. 1 O CI N.V . uses Alternative Performance Measures (APM) to provide a better understanding of the underlying developments of the performance of the business. The APMs are not deﬁned in IFRS and should be used as supplementary information in conjunction with the most dir ectly comparable IFRS measures. The deﬁnition of the APM and a detailed r econciliation between the APM and the most directly comparable IFRS measure can be found on pages 197-198 of this report. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 27 '000 metric tons 2019 2020 % Δ Own product  Ammonia 1,907.1 1,656.8 (13%) Urea 3,110.8 4,763.2 53% Calcium Ammonium Nitrate (CAN) 1,140.8 1,371.8 20% Urea Ammonium Nitrate (UAN) 1,489.6 1,749.9 17% T otal fertilizer 7,648.3 9,541.7 25% Melamine 135.8 144.6 6% DEF 508.7 636.2 25% T otal Nitrogen products 8,292.8 10,322.5 24% Methanol 1 1,628.7 1,926.5 18% T otal own product sold 9,921.5 12,249.0 23% T raded third party  Ammonia 160.6 284.3 77% Urea 329.5 910.5 176% UAN 24.1 41.3 71% Methanol 482.6 258.8 (46%) Ammonium Sulphate (AS) 713.6 712.8 (0%) DEF 73.3 227.0 nm T otal traded third party 1,783.7 2,434.7 36% T otal own product and traded third party 11,705.2 14,683.7 25% $ million 2020 market review Market outlook Nitrogen • Nitrogen prices were down signiﬁcantly in 2020 compared to 2019 r eaching trough levels in the second quarter . • Nitrogen markets faced signiﬁcant headwinds in 2020 on universally lower feedstock costs and COVID-19 uncertainty exposed nitrogen prices to weaker sentiment and signiﬁcant volatility . • Ammonia prices in 2020 were particularly weak, falling to levels last seen in 2003, due to a slowdown in GDP/industrial activity more than offsetting one of the best US ammonia fall application seasons in a decade. • Global nitrogen markets reset going into 2021 on tighter balances given robust demand for ecast in all our key markets on improved farm economics supported by rising corn prices and higher cor n imports from China and a recovery in industrial consumption. • Chinese urea exports are expected to be lower in 2021 compared to 2020 given higher fertilizer demand on str ong domestic crop prices, gr owing industrial demand and higher coal prices. • Ammonia prices are beneﬁtting from higher feedstock prices, a recovery in industrial markets, high-cost capacity shutdowns, and gas supply curtailments in T rinidad leading to a structural tighter market in 2021. • Our nitrates order book in Europe is healthy going into the second quarter of 2021. • Our US DEF sales reached recor d levels in Q4 2020 which combined with higher urea sales prices in the US supports an improving tr end in 2021. Methanol • Methanol prices weakened in 2020 to trough levels as a result of COVID-19 and its adverse impact on crude oil prices, weaker global industrial demand and coal prices, Methanol-to-Oleﬁns (MTO) affor dability in China and exports from sanctioned countries to Asian markets offer ed at discounted prices. • Rising utilization rates of MTO plants in China on the back of healthy MTO economics versus naphtha crackers have been a key driver of a rebound in methanol demand. • The outlook for downstream demand has improved, with fuel consumption picking up, and a return of global industrial and construction activity . • Long-term industry fundamentals remain positive, with expected new global supply additions of 6% expected to be needed to meet demand growth of 13% fr om 2021-24. Natural Gas • In 2020, natural gas prices in both the United States and Europe wer e signiﬁcantly below 2019 as COVID-19 hit energy demand during lockdowns and mild weather exacerbated over - supply in the LNG market. • In 2021, global gas prices particularly in Europe and Asia have increased on colder weather and tight LNG supply . • This has driven up marginal costs of production and supports selling prices for all our products. It also strengthens Fertiglobe’ s signiﬁcant competitive advantage as a result of its ﬁxed gas supply agr eements. • However , forward curves suggest natural gas prices will revert to low levels for the for eseeable future, and we expect to continue to be a beneﬁciary of a competitively priced blended natural gas cost. MANA GEMENT DISCUSSION AND ANAL YSIS C ONTINUED 1 Including OCI’ s 50% share of Natgasoline volumes Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 28 30 ESG at a glance 31 Our approach to sustainability reporting 37 Our approach to climate change 39 Sustainability strategy 52 GHG emissions and energy use 53 W ater and waste 60 How we create value for our communities 66 Our employees 70 Health and Safety 76 Our approach to sustainability governance Sustainabilit y str ateg y OCI N.V . Annual Report 2020 29 OCI 2020 ESG A T A GL ANCE W e are committed to envir onmental, social, and gover nance (ESG) principles, with envir onmental, social and gover nance matters fully integrated into our strategic objectives and executive compensation. Our Boar d of Directors ar e collectively r esponsible for ESG and have mandated our Executive Dir ectors with direct day-to-day oversight on ESG matters As a leader in our industries, we are cognizant of our r esponsibility to encourage sustainable practices in our policies, operations, supply chains, and communities. We ar e committed to our purpose of cultivating a sustainable world and believe our products ar e essential to achieving cleaner transportation, lower carbon industrial processes, and global food security . We have aligned our strategic priorities to cr eate sustainable value for all our stakeholders—our customers, our employees, our communities, and our shareholders—and develop a gr eener future for the world.  GHG savings when bio-methanol is used as fuel vs gasoline  • Committed to 20% GHG intensity reduction by 2030 and carbon neutrality by 2050 • Leading player in sustainable agricultural and fuel solutions • Uniquely positioned to enable the energy transition for transport, feedstock, and industrial applications • Delivering rapidly through operational excellence while leveraging strategic partnerships for long-term projects Driving sustainable performance ENVIRONMENT AL Lower N 2 O emissions than global average  Seawater intake in high water stress r egions  Lower NOx emissions than global average  Female Executive Directors  • Fostering an inclusive culture , wher e diversity is recognized and valued, and local talent is developed • Committed to 25% female senior leadership by 2025 • Launched a groupwide D&I pr ogram to improve r ecruitment processes, conduct de-biasing training, provide sponsorship and mentorship of minority employees, and develop employee networks increased female boar d representation to 23% in 2020 from 17% in 2019 Diversity & Inclusion (D&I) SOCIAL Female employees in US & EU segments  Female Board Members  Female repr esentation in senior leadership in 2020  Employees enrolled in our compliance framework training program  • Robust governance structure with ESG oversight at the Board level and focus in the HSE & Sustainability Committee • Executive Directors’ compensation tied to a basket of ESG metrics and operational excellence • All employees are trained on our compliance policies, Code of Conduct, and D&I Policy • All suppliers are r equired to adher e to our Business Partner Code of Conduct • Other ethics policies include Human Rights Policy , Anti-Bribery and Corruption Policy , Sanctions Policy , Insider T rading Code, Whistleblower Policy Robust go vernance and reporting framew ork encourag es best practices across our value chain GOVERNANCE Whistleblowing reports investigated  Employees covered by collective bargaining or unions   Executive Directors are r esponsible for compliance Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 30 Our sustainability reporting is designed to pr ovide transparency on our ESG practices, policies, and performance, along with an assessment of the material trends, topics, and interactions inﬂuencing our ESG strategy . How we r eport on ESG Our ESG reporting takes the following into account: Review of the key global and industry trends, challenges, and risks We conduct a compr ehensive review of the key risks, challenges, and megatrends impacting both the industries in which we operate and the world. These elements inform our strategic objectives, our risk management strategy , and allow us to identify opportunities to develop our business. Stakeholder engagement and identiﬁcation of material topics We engage with stakeholders on a r egular basis both directly and thr ough industry associations where we work with our peers to sustainably impr ove global standards in our industries and engage in dialogue on key global challenges related to our industries. Our stakeholder interactions provide us with insights into their key topics of inter est and areas of concern, which is incorporated into our identiﬁcation and monitoring of material topics. In addition to engaging with stakeholders, we determine material topics and boundaries by benchmarking against industry peers and considering disclosure r equirements and guidelines issues by various institutions and regulatory bodies. Implementation of reporting frameworks Our ESG reporting aims to comply with global best practices and r ecommendations from the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Boar d (SASB) and the T ask Force on Climate-Related Financial Disclosures (TCFD). W e also strive to report on how our businesses contribute to the United Nations Sustainable Development Goals (SDGs). Relevant disclosures ar e marked throughout this report, and the corr esponding index pages begin on page 199. Report boundaries This report covers the ﬁscal year ended 31 December 2020, focusing on the material topics for OCI and its subsidiaries as listed in note 34 of our ﬁnancial statements (unless otherwise noted). OUR APPRO A CH T O SUS T AINABILIT Y REPOR TING W e are committed to r eporting on our envir onmental, social, and gover nance (ESG) performance. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 31 We engage with stakeholders on a r egular basis through customer and investor meetings and calls, industry and investor conferences, customer service, employee meetings, surveys, portals and hotlines, community outreach pr ograms, and governmental or regulatory interactions. Our Executive Directors engage with key stakeholders on ESG and sustainability topics, r eﬂecting our commitment at all levels of the organization. In addition to our direct stakeholder interactions, we ar e an active member of several industry associations where we work with our peers to sustainably impr ove global standards in our industries and engage in dialogue on key global challenges related to our industries. During the year , key topics and questions raised by stakeholders included: S T AKEHOLDER ENGA GEMENT W e strive to maintain good r elations with our stakeholders and engage r egularly to cooperate on addr essing the key challenges, topics, and opportunities r elated to our industries. Stakeholders T opics Addressed thr ough Employees Compensation and beneﬁts, training and development, HSE and particularly COVID-19 safety T ownhalls, inter nal communication, employee surveys, training programs, COVID-19 HSE pr otocols Customers Relationship management, product information and distribution, supply chain, general feedback Customer letters, direct communication by commercial leadership team, proactive supply chain management, product information and safety sheets published on our website Investors Market trends, operational excellence, overall business performance, risks related to COVID-19, ESG Annual General Meeting, quarterly conference calls, investor meetings and conferences Communities Community safety and environmental impact, local socio-economic development programs, job opportunities Engagement with community leaders, non-proﬁts, dir ect donations, local recruitment RT -CH-210a.1 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 32 We deﬁne our material topics by assessing the topics raised by our various interactions with stakeholders, considering both ﬁnancial and sustainability materiality in line with “double materiality” considerations as recommended by the EU Non-Financial Reporting Dir ective and its supplements. We also consider the global megatr ends, challenges, and industry-speciﬁc risks that affect us, peer and industry r eports, and recommendations made by global r eporting frameworks. We annually evaluate the impact these material topics have on our global value chain, our local operations and our stakeholders to report a holistic view of how we strive to sustainably manage our business. Our assessment criteria also considered the GRI’ s materiality principles of sustainability context, materiality , completeness, and stakeholder inclusiveness, as well as SASB’ s criteria for materiality . After assessing a signiﬁcant number of topics of interest, we have identiﬁed the below topics as being most material to our stakeholders and OCI. Number Material T opic 1 Occupational health and safety 2 Envir onmental impact and climate 3 Energy ef ﬁciency 4 Local economic development 5 Food security 6 Human capital and D&I 7 Ethics and integrity 8 W ater stewardship and waste management OUR MA TERIAL T OPICS W e take a holistic double materiality appr oach to identifying and deﬁning our material topics Sustainable Materiality 10 9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 1 0 8 4 3 1 2 5 6 7 Financial Materiality High High • Stakeholder engagement with: • Investors • Customers • Employees • Communities • Global megatrends • Industry challenges • Internal risk management • Research r eports • Peer reports Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 33 OUR COMMITMENT T O A SUS T AINABLE WORLD What we do Quantifying our contribution Feeding the world and providing global employment opportunities • Our nitrogen fertilizers allow farmers to incr ease crop yields and improve food quality , resulting in impr oved food availability and improved diets. • Providing dir ect and indirect employment opportunities with commitment to maximize local employment and developing their skills. ~70% of our employees are employed in MENA, and we consistently rank in the top quartile of annual compensation across our locations. • Good workplace practices as described in our Code of Conduct and other policies promotes a safe and encouraging workplace, diversity , and equal opportunity . Producing gr een fuel solutions to drive the energy transition • Our fuel solutions provide clean alternatives to signicantly reduce GHG emissions by 60% versus conventional fuels. • Strong midstr eam and downstream contribution to decarbonization through promoting the use of gr een/blue ammonia and methanol as a hydrogen carrier , clean fuel, and decarbonized input for downstream industrial pr ocesses. Minimizing environmental impact through nutrient and product stewardship • Maintain safe, environmentally r esponsible production sites that aim to protect local environments and ensur e safe communities. • Commitment to educate farmers on nutrient stewardship allows them to maximize yields through optimal fertilizer application. This r educes soil nutrient loss, protects from defor estation, and minimizes runoff to gr oundwater . Continuously invest in best-in-class technologies and operational excellence • Maintaining state-of-the-art production facilities, coupled with the positive impact of our sustainable fuels portfolio, allows us to minimize our emissions and consequently reduce our impact on climate change. • Our water management processes implement best available technologies wher ever possible to reduce our water use and maximize r euse and recycling of water in our production pr ocesses to minimize our water discharge and our need for fr esh water .  T op quartile compensation at all locations   Employees in 2020  Nitrogen fertilizers sold in 2020   L TIR performance is 74% better than peers per IF A #1 Global bio-methanol producer  Cleaner fuel solutions sold in 2020 (methanol, bio-methanol, DEF , green ammonia) 112K Our digital resour ces reached over 112,000 users in 2020  Lower CAN CO 2 footprint than the European average   GHG intensity in 2020  W ater consumption intensity in 2020 Driving decarbonization with a focus on sustainable value cr eation and contributing to the UN Sustainable Development Goals (SDGs) Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 34 Sustainabilit y R epor t | Environment OCI N.V . Annual Report 2020 35 GL OBAL INDUS TR Y MEGA TRENDS Key megatrends Key risks and challenges Key opportunities Food security • Risk of current agricultural systems not pr oducing enough food by 2050, while minimizing potential of deforestation and protecting ecosystems. • Finite availability of arable land coupled with soil degradation increases risk of defor estation and biodiversity loss. • Global shifts in dietary prefer ences may result in changes to cr op production and agricultural patterns. • As a leading nitrogen fertilizer pr oducer present acr oss the globe, we are well positioned to pr omote the efficient use of nitrogen fertilizers and best practices. • This ensures soil health, high yields, r e-forestation, and pr oper irrigation to minimize water stress, maximize Nutrient Use Efficiency , and minimize nutrient losses to the environment (air , groundwater , surface water). Climate change • Impact of changing weather patterns, and extreme weather events on supply chain and farming seasons. • Global push to decarbonize to mitigate climate change. • W ater stress both as a r esult of climate change and demand growth fr om human and industrial consumption. • W e are focused on developing our renewable ener gy use to reduce our dependence on carbon-emitting fossil fuels in our production pr ocesses. • W e are growing our r enewable and clean energy pr oduct solutions for our non-agricultural products, with a particular focus on the ener gy transition. • W e are developing more ef ficient nitrogen fertilizers (e.g.: low- carbon variants) and promoting nutrient stewar dship. Circular economy and changing farming practices • Changing farmer economics and farmer proles, such as: aging farmers, changing technology pushing for digitization in agriculture, and a gr owing focus on resour ce scarcity . • Sustainability drive to recycle/r educe nutrient loss and reuse existing nutrients reduces demand for conventional fertilizers, and improves food value chain integration. • Adapting farm economics to be more sustainable by developing low-carbon fertilizers, digital solutions, and micro- financing opportunities. W e are participating in projects that support farmer education, and provide several digital tools. • W e are integrating circular economy concepts in our manufacturing processes. W e monitor the global megatrends af fecting our industries and our stakeholders These megatrends and their associated risks, challenges and opportunities inform our strategy , better serve our customers, and develop the tools, products, and services that pr omote sustainable farm and fuel practices to holistically improve our global envir onmental and social impact. Key Global Decarbonization Challenges... • Food • Fuel • Feedstock … Have Common Solutions…. Ammonia and methanol as hydrogen carriers, green fuels, and gr een decarbonization feedstock … That are Gr owth Opportunities for OCI Uniquely positioned to enable the energy transition through our geographic pr esence and product mix Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 36 OUR APPRO A CH T O CLIMA TE CHANGE - RISK S AND OPPOR TUNITIES Climate change pr esents physical and transitional risks for our businesses, industries, supply chains, customers, and communities. Our Enterprise Risk Management (ERM) framework equips us with the policies and procedur es to facilitate the evaluation and management of risks across our organization. W e assess and monitor the physical and transitional risks presented by climate change as one of our primary risks, and believe we have adequate mitigation and sustainability strategies to maximize the opportunities to develop our business and help combat climate change. We also consider SASB Chemicals Sustainability Accounting Standards along with TCFD r ecommendations when assessing our climate-related risks. Please refer to pages 77-88 for a detailed explanation of our ERM framework, executive and boar d responsibilities, and descriptions of our other primary risks and mitigation strategies. TCFD Strategy (a) (b) TCFD Risk Management (a) (b) RT -CH-530a.1 Physical risks caused by rising global temperatures include extr eme weather events (hurricanes, oods), changing weather patterns, increased water stress, and rising sea levels. These events and changes can impact our supply chain, disrupt planting cycles and growing conditions, and impede farmers’ ability to apply cr op nutrients. T ransitional risks associated with transitioning to a lower -carbon economy are primarily related to (i) changes in carbon-linked r egulations and policies, such as the ETS system, the proposed Eur opean carbon border adjustment mechanism, and other potential carbon taxation mechanisms, (ii) costs associated with transitioning to lower emissions technology and resour ce efciency , and (iii) dietary shifts to more plant-based nutrition. Potential impact • Rising insurance costs and lower pay-outs • Unplanned downtime • Interruption to supply chain, such as power outages caused by hurricanes • Changing weather patterns impacting availability of water and reducing predictability of planting seasons • Commodity price volatility Potential impact • Higher capital expenditures to transition to lower emissions technologies • Higher or new taxation measures on carbon-r elated products • Changes to crop demand to accommodate dietary shifts to mor e plant-based nutrition PHYSICAL RISKS • Decarbonization pathway: we are pursuing a decarbonization strategy with long-term tar gets, as described on pages 39-40. • Green pr oducts: we are growing our sustainable fuel and feedstock solutions portfolio to accelerate our path to decarbonization, as described on pages 46-51. • Water efﬁciency: we are focused on continuously improving our water ef ciency , particularly in water stressed r egions where we primarily use seawater , as described on pages 53-56. • Low carbon nutrients: our low-carbon nitrates and de-carbonizing efforts for our nitr ogen fertilizers help reduce farming emissions, and our nitr ogen fertilizer product of fering is key maximize soil health and feeding the crops that ar e the favoured by global dietary shifts, described on pages 51 and 57. • Digital solutions: our digital applications help farmers monitor weather patterns to optimize their activity planning and calculate optimal nutrition application, as described on page 58. W ater stress Changing weather patterns Rising global temperatures Rising sea levels Extreme weather events Regulatory changes Cost to transition to lower emissions technology Dietary shifts TRANSITIONAL RISKS OCI’ s resilience: mitigants and opportunities Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 37 OUR APPRO A CH T O CLIMA TE CHANGE As a producer of nitr ogen-based products, we generate gr eenhouse gases along our value chain. However , our products ar e essential to meet the global challenges of food security , decarbonized industrial processes, and cleaner fuel solutions by playing a key r ole to achieving climate neutral food, fuel, and feedstock for production pr ocesses. Our nitrogen fertilizers ar e essential to achieving the crop yields necessary to meet global food demand. We believe that ammonia and methanol ar e the most promising pr oducts to enable the energy transition, with their application as shipping fuels being particularly promising as these products can help this sector decarbonize in a cost-ef fective way . Other products in our portfolio such as methanol, bio-methanol, and DEF are important contributors to the development of cleaner fuels. Accordingly , through their respective cycles, our end pr oducts all contribute positively to the ﬁght against climate change by aiding the sequestration of carbon in farming, land reclamation, and the elimination of transport emissions. With production facilities in ﬁve countries around the world, our operations ar e subject to different environmental r egulations, but we are unequivocal in our goal to r educe our environmental impact wherever possible. This has been our policy since we ﬁrst enter ed the nitrogen space in 2008. We have invested heavily in achieving this by both minimizing our envir onmental footprint through continuous investment in state-of-the-art technologies to maintain one of the world’ s youngest and most efﬁcient asset ﬂeets, and maximizing our development of gr eener products, including our cleaner fuel solutions portfolio. We have announced envir onmental targets to reduce our scope 1 and 2 greenhouse gas emissions intensity by 20% by 2030, which highlights our commitment to reduce our climate impact throughout our value chain such as further impr oving our production pr ocesses and feedstock sources, farmer education, supply chain ef ﬁciencies, and product innovations. We aim to achieve our targets thr ough a comprehensive climate strategy that includes investing in cleaner technologies and projects, r ecycling and reusing r esources, and cooperating with all our stakeholders, industry peers, governments, and other institutions in the ﬁght against climate change. W e are committed to being an envir onmental steward and have aligned our strategy to the world’ s goal of combating climate change, as established thr ough the 2015 Paris Climate Agr eement. TCFD Strategy (a) (b) TCFD Metrics & T argets (a) (c) -30% Industry -10% T ransport -20% Agriculture -20% Power -10% W aste 1.5 o C pathway 2 o C pathway Continued growth ‘business-as-usual’ Global CO 2 emissions, Gt CO 2 / year 2010 2020 2030 2040 2050 20 40 60 80 OCI focus markets OCI’ s focus markets account for ~60% of emission reduction potential OCI indirect markets OCI also indirectly inﬂuences ~30% of further emission reduction potential Governments have set targets for the 1.5-2°C pathway • EU Green Deal to cut emissions by 55% in 2030 and reach net zer o by 2050 • US recommitted to Paris agreement targeting net zero by 2050 and shaping gr een deal T o limit global warming, the world needs to rapidly r educe annual emissions. OCI’ s focus markets need to contribute to these emission r eductions Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 38 SUS T AINABILIT Y STRA TEG Y Quantifying our GHG emissions baseline During the year , we engaged an external climate change and sustainability consultant to quantify the group’ s Scope 3 greenhouse gas emissions and abatement initiatives for Scope 1, 2 and 3. Our 2019 total emissions were quantiﬁed as follows in accor dance with the Greenhouse Gas Pr otocol: We have set a gr oupwide target to reduce our Scope 1 and 2 gr eenhouse gas (GHG) emissions by 20% by 2030 and aim to achieve carbon neutrality by 2050 . We have set our envir onmental targets as a signiﬁcant step towards aligning to the 2°C pathway . We are exploring joining the Science Based T arget Initiative (SBT i) in the next few years and anticipate moving to a science- based target in the future. 2019 was chosen as the base year in line with the Science Based T arget Initiative’ s (SBT i) recommendations, and as it was the ﬁrst year following completion of our expansion pr ogram. It was restated to include a full year of emissions fr om Fertil and 50% of Natgasoline. Base year GHG emissions will be recalculated with any signiﬁcant change in business operations (for example, acquisitions or divestments, or a change in product portfolio), corr ections to historical data based on availability of more accurate information, or changes to r eporting methodology . How we calculate GHG intensity: • Emissions boundaries: Gross Scope 1 and 2 gr eenhouse gas emissions, stated in carbon dioxide equivalent terms, calculated using the EU ETS methodology . This means that the CO 2 used in the production of ur ea and other downstream pr ocesses, which is deﬁned as Scope 3 as per the GHG Protocol and part of scope 3 in the table above, is included. By including the CO 2 that goes into downstream pr ocesses, we eliminate the ﬂuctuations that may occur when we make any changes or experience downtime in our downstream pr oduct mix and present a transparent view of the CO 2 produced when making ammonia. This also better aligns us to the SBTi’ s methodology . • Production boundaries: Gr oss ammonia production on a nutrient-ton basis, and our total methanol production on a pr oduct ton basis. We believe this most accurate reﬂects the nitr ogen content of our production portfolio, eliminates the possibility of double counting downstr eam products and normalizes for annual ﬂuctuations in our pr oduct mix. TCFD Metrics & T argets (a) (c) Scope Category CO 2 e (Mn metric tons) % 1 Production 9.2 24 2 Purchased electricity 0.6 2 3 Purchased fuel, raw materials, other 4.2 11 T ransport (upstream and downstr eam) 0.5 1 Product use 23.3 62 T otal 37.8 100 • Pr oduct use • Production • Purchased electricity • Pur chased fuel, raw materials, other • T ransport (upstream and downstream) Setting long-term envir onmental targets Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 39 SUST AINABILITY STRA TEG Y CONTINUED We have spent considerable time developing a r oadmap to achieve these targets, consisting of both short-to-medium term and long-term value-enhancing initiatives offering sustained envir onmental and operational beneﬁts. Our operational excellence program is expected to deliver appr oximately 5-7.5% of our target through a str ong focus on energy efﬁciency and asset r eliability , which will be achieved through short-to-medium term quick wins at no or low capital expenditure r equirements while simultaneously generating mor e than $75 million of annual incremental EBITDA. This is further described on pages 43-44. We believe we can deliver appr oximately 12.5-15% of our target through new strategic, lower carbon initiatives that follow the transition pathway of grey to blue to gr een, capitalizing on both new and established technologies such as waste gasiﬁcation, CCS, purchased blue and gr een hydrogen, and switching our facilities to r enewable energy sources (RES), which will contribute approximately 4% of our target at no or low economic cost. TCFD Strategy (a) (b) TCFD Risk Management (a) (b) TCFD Metrics & T argets (a) (c) RT -CH-110a.2 Driving decarbonization thr ough value enhancing operational and envir onmental initiatives • CCS/U • Purchased blue hydrogen T ransition pathway • Biofuels • Green hydrogen, ammonia, and methanol from RES 2 • W aste gasiﬁcation • Bio-methanol • RES to substitute current power (Scope 2) Blue Green Other solutions 2019 GHG intensity baseline Operational excellence Lower carbon initiatives 2030 GHG intensity target 2050 carbon neutrality 1 Consolidated scope 1+2 calculated on EU ETS methodology on total ammonia and methanol production on a nutrient ton basis. Ability to achieve these targets is subject to supportive regulatory environment, subsidies, technology advancements, and national envir onmental targets. Base year GHG emissions will be recalculated with any signiﬁcant change in business operations (for example, acquisitions or divestments, or a change in product portfolio), corr ections to historical data based on availability of more accurate information, or changes to reporting methodology . 2.30 1.84 -20% 5-7.5% emission reduction through operational excellence • ~5% expected at no/low costs in the short- to-medium term, ~$75 million p.a. EBITDA to be delivered over 3 - 5 years • ~0-2.5% with capital in the medium-to-long term with focus on economic payback 1 Accelerated focus on reliability , capital performance and energy efﬁciency 12.5-15% emission reduction thr ough new strategic, lower carbon initiatives Ongoing activities in lower carbon products and switch to RES at low/no economic cost account for ~4% emission reduction Partnerships and lower carbon technologies ensure optimal value creation Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 40 GHG EMISSIONS – OUR APPRO A CH T O A CHIEVING OUR T ARGETS While there is no single or straightforwar d solution to reducing GHG emissions in our value chain, we have identiﬁed several short, medium, and long-term opportunities to transition from fossil fuels to a low-to-no carbon mix, which will help meet the ambitious targets set by the Paris Agreement. We believe we ar e uniquely positioned both in terms of our product mix and global geographic presence to enable the energy transition and the decarbonization of food, fuel, and feedstock , with ammonia and methanol emerging as the most promising pr oducts to achieve this. While we are fully committed to pursuing our r eduction strategy , we cannot do this alone, and are dependent on the timing, scale and ar ea of focus of regulatory and ﬁscal support, such as US environmental policies, the EU carbon bor der tax mechanism, and governmental support and subsidies for green initiatives. TCFD Strategy (a) (b) TCFD Risk Management (a) (b) RT -CH-110a.2 Our strategy to achieve our long-term GHG r eduction targets is multi-disciplinary and multi-pr onged, ensuring that all aspects of our business ar e fully aligned to achieve these targets. Ammonia and methanol have a pivotal r ole in these sustainability transitions F ood Agriculture, including crop production, accounts for ~20% of global GHG emissions Fuel Continuously growing transport sector emits ~10% of global GHG emissions F eedstock Industry emits ~30% of global GHG emissions, of which 90% are CO 2 emissions Sustainability transitions ar e requir ed to decarbonize the global economy Fuel F eedstock or energy carrier Blue/ Green ammonia Of the future potential fuels, blue or green ammonia is one of the few fuels to address all emissions. Blue or green ammonia is a lower cost alternative to transport hydrogen. Bio/ Green methanol Bio or green methanol is the only low carbon fuel that can be used effectively in road transport with an 84% higher density than hydrogen. Bio or green methanol is considered an ef ﬁcient and promising gr een hydrogen carrier with a 70% higher density than hydrogen. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 41 GHG EMISSIONS – OUR APPROA CH TO A CHIEVING OUR T ARGETS CONTINUED TCFD Strategy (a) (b) SCOPE 1 SCOPE 2 SCOPE 3 Decarbonizing production pr ocesses through: • Blue Hydrogen (CCUS) • Circular Hydrogen (Waste-to-Syngas) • Green Hydrogen (Renewable Electr olysis) • Biobased Feedstock (2nd & 3rd generation) And maximizing our energy efﬁciency to reduce our emissions Decarbonizing our utilities through: • Renewable Energy Power Purchasing Agreements Minimizing our upstream emissions through: • Working with our supply chain partners to decarbonize the transport of raw materials to our assets Decarbonizing Our V alue Chain OCI’ s upstream and onsite decarbonization Sustainable farming Green chemicals Green fuels Decarbonized production processes leads to: • Low carbon nitrogen fertilizers • Organic nitrogen fertilizers when using green, cir cular and biobased Hydrogen, Nitrogen and CO 2 as feedstock Decarbonized production processes leads to: • Low carbon and zero carbon industrial chemicals allowing customers to decarbonize a wide range of products in the chemical value chain • Green/Bio-methanol and ammonia for industrial use Decarbonized production processes leads to: • Low and no carbon green fuels which help our downstream value chain minimize emissions Minimizing downstream emissions through: • Supporting farmer education programs (e.g.: 4Rs) • More effective fertilizers (OCI’ s Nutramon, green ammonia, Exacote) • Inhibitors and slow release fertilizers Minimizing downstream emissions through: • Recycling ﬁnished products at end-of-life in a waste-to- syngas process to be used as a perpetual feedstock in OCI’ s plants and contributes to the circular economy Minimizing downstream emissions through: • Green Ammonia as the fuel of the future • DEF to abate NOx emissions from diesel • Green/Bio-Methanol for various transportation modes -20% GHG intensity reduction by 2030 Downstream decarbonization Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 42 GHG EMISSIONS – OUR APPROA CH TO A CHIEVING OUR T ARGETS CONTINUED The program is founded on thr ee key pillars that are tightly interlinked: Pr ocess Safety , Reliability and Energy Efﬁciency . The program is expected to yield signiﬁcant reductions in GHG intensity and contribute approximately $75 million per year in incr emental EBITDA over the next three to ﬁve years. Maximising pr oduction ef ﬁciencies while minimizing emissions and waste The Global Operational Excellence Pr ogram is alr eady set in motion and is being rolled out acr oss all our sites. Process safety enables r eliability , which in tur n enables energy efﬁciency to achieve lower GHG emissions Process safety Reliability • Leading process safety design elements featur ed by OCI’ s young asset base • Site led improvement pr ograms reﬂecting the site- speciﬁc process safety priorities • Groupwide leading performance KPI’ s and best practices for Process Safety Fundamentals • Site-led improvement programs r eﬂecting site- speciﬁc priorities and the “Focus & Follow Through” approach • Global reliability pr ogram focused on the identiﬁcation and elimination of repeat issues • Structured r eadiness reviews for major turnarounds to improve completion times, competitiveness and predictability Energy efﬁciency • Energy-efﬁcient designs featured by OCI’ s young asset base • Immediate focus on operational excellence , supported by industry leading monitoring tools • Reviewing our energy and feedstock purchases with the aim to increase our use of gr een or renewable sources, including incr easing our purchase of renewable power (such as solar and wind energy) and increasing our consumption of bio-fuels and alternative green feedstocks • Identify and pursue further efﬁciency through select value accretive investments >40 years 30-40 years 20-30 years 10-20 years 0-10 years 52% 9% 13% 8% 18% Y oungest asset base relative to global peers with appr oximately 34% of OCI production capacity under 5 years old Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 43 GHG EMISSIONS – OUR APPROA CH TO A CHIEVING OUR T ARGETS CONTINUED We ar e committed to excellence in every aspect of our organization. We continuously look for ways to maximize our production ef ﬁciencies, minimize our emissions and waste, and maintain our industry leading health and safety recor ds. Operational excellence is integral to optimizing energy efﬁciency , which in tur n is necessary to minimizing our scope 1 GHG emissions as the bulk of our scope 1 GHG emissions are emitted when we consume natural gas to pr oduce ammonia and methanol. Our assets hold global certiﬁcations recognizing the quality of our envir onmental management processes, such as ISO 14001 Envir onmental Management System, ISO 50001 Energy Management System, and RC 14001 Responsible Care Management System, on which employees are also trained. Other certiﬁcations include REACH, International Sustainability and Carbon Certiﬁcation (ISCC), and Fertilizers Europe Pr oduct Stewardship. W e are compliant with the applicable environmental r egulations at each of our locations. N 2 O and NOx abatement Nitrous oxide (N 2 O) is 298 times more potent than carbon dioxide (CO 2 ) as a greenhouse gas and is primarily produced by our nitric acid plants. W e have invested heavily in our nitric acid plants to bring our nitrogen oxide (NOx) and N 2 O emissions down to nearly zero by installing best available abatement technology such as de-NOx or selective catalytic reduction units and catalyst replacements thr ough our responsible catalyst management pr ocesses. As a result of these investments, our global N 2 O emissions are 90% lower than the global average for nitric acids plants, and our overall NOx emissions are 51% lower than the global average for nitric acid plants. We continue to evaluate ways to achieve further r eductions of our NOx and N 2 O emissions. Continuous reliability and pr ocess improvements We continuously assess and make impr ovements to our plant processes, turnarounds and maintenance stops. This both helps maximize asset reliability and r educe planned and unplanned downtime, which can result in higher GHG emissions than normal during plant start-ups. Best Available Contr ol T echnology All of our facilities in the United States implement Best Available Contr ol T echnology (BACT), a pollution control standar d mandated by the United States Clean Air Act, to minimize our environmental impact. W aste heat capture and recovery The waste heat and steam systems in all our plants are highly integrated and we endeavor to use all heat within our processes to make use of energy in the most ef ﬁcient way possible. Renewable energy The primary feedstock at all our production facilities is natural gas, which r epresents approximately 95% of our total energy use, and is predominantly used to pr oduce ammonia and methanol. We are r eviewing our energy and feedstock purchases with the aim to increase our use of gr een or renewable sour ces, including increasing our pur chase of renewable power (such as solar and wind energy) and increasing our consumption of bio-fuels and alternative green feedstocks. W e believe we are well positioned to capitalize on global low and no-carbon hydr ogen opportunities given our unique geographic positioning, which we believe will allow us to signiﬁcantly decarbonize our production pr ocesses in the future. CO 2 capture, r ecycling, and sale Our production facilities emit gr eenhouse gases directly fr om the conversion of natural gas into our products, and indir ectly through the generation of pur chased electricity and steam. We diligently work to minimize our CO 2 emissions by investing in reduction technologies, r ecycling CO 2 within our downstream pr ocesses, and selling CO 2 to third parties. W e are also exploring carbon capture and storage (CCS) opportunities as described on page 45. In 2020 we: Operational excellence Sold 0.34 million tons of CO 2 to other industrial users Captured 4.8 million tons of CO 2 by using it in our production pr ocesses Purchased 0.18 million tons of CO 2 to produce methanol Maximising pr oduction ef ﬁciencies while minimizing emissions and waste Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 44 GHG EMISSIONS – OUR APPROA CH TO A CHIEVING OUR T ARGETS CONTINUED Decarbonizing thr ough low-carbon pr oduct innovation Strategic partnerships with industry leaders on announced pr ojects in Europe, and lower carbon pr ojects being developed across our global asset base We have numer ous initiatives underway to capture the transitional potential by partnership with industry leaders. We have partner ed with Nouryon and RWE on three projects 1 that allow us to offtake gr een hydrogen at competitive prices with minimal pr oject development costs to OCI: • We have agreed to of f-take green hydr ogen produced through a 20MW electr olyser from Nouryon, abating BioMCN’ s CO 2 emissions by up to 27ktpa. The project can be scaled up to 60MW in the future. • We have agreed to of f-take green hydr ogen produced through a 50MW electr olyser with direct connection to RWE's W estereems wind farm, abating BioMCN’ s CO 2 emissions by up to 18ktpa. • We have agreed to be the main-of ftake partner for RWE’ s FUREC project, a large-scale waste- to-hydrogen pr oject that will use proven and commer cially available technology to convert waste streams to cir cular green hydrogen . OCI Nitr ogen will use this green hydr ogen to replace some of its natural gas needs to pr oduce ammonia. Accordingly , the project both reduces the carbon dioxide that would have been emitted fr om waste incineration as well as through our natural gas-based ammonia pr oduction. Once operational, FUREC will save more than 200 million cubic meters of natural gas every year , with is equivalent to about 20% of OCI Nitrogen’ s total natural gas consumption and would abate a total of approximately 380 thousand tons of CO 2 in its boarder value chain, of which appr oximately 160 thousand tons would be at OCI Nitrogen. In addition to these projects, we ar e evaluating carbon capture and storage opportunities for our assets in the Netherlands, the US and MENA. The blue hydrogen pathway is a cost-ef fective decarbonization opportunity , pending carbon prices and subsidies. In the Netherlands, CO 2 emissions from the ammonia pr oduction process to be captur ed and stored under the North Sea and repr esents approximately 485 thousand tons of CO 2 abatement potential at OCI Nitrogen. As CCS technology and projects develop, we expect it to become a cost-ef fective blue hydrogen pathway to decarbonize our ammonia and methanol production. While we are fully committed to pursuing decarbonization opportunities, we cannot do this alone, and are dependent on the timing, scale and ar ea of focus of regulatory and ﬁscal support, such as US environmental policies, the EU carbon bor der tax mechanism, and governmental support and subsidies for green initiatives. 1 Subject to supportive subsidies and deﬁnitive documentation Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 45 We ar e committed to developing products and initiatives to provide cleaner and mor e sustainable solutions to our customers. We aim to gr ow the share of low carbon products in our portfolio, which include bio-methanol, green ammonia, and diesel exhaust ﬂuid. Bio-methanol We ar e a leading bio-methanol producer , using biogas rather than natural gas at our Dutch and US methanol plants. Bio-methanol is an advanced second-generation biofuel that is produced using bio-waste, meaning it not only r educes our own consumption of natural gas, but also provides an outlet for waste that would otherwise emit methane, which repr esents 16% of global GHG emissions and traps ~36 times more heat in the atmosphere than CO 2 over 100 years. When used as a fuel, bio-methanol provides a 60% r eduction in greenhouse g as em i ss i on s v e rs u s petr ol or diesel, which means it is an excellent clean alternative fuel to meet renewable fuel standards. Bio-methanol is a fast-growing pr oduct with our sales volumes increasing at a 75% CAGR since 2018. However , we believe this remains an underpenetrated market that will gr ow rapidly over the medium term, particularly if regulations such as the EU Renewable Energy Directive, the UK Renewable T ransport Fuel Obligation, and the US Renewable Fuel Standards continue to requir e vehicles to shift away from conventional fossil fuels. W e estimate that EU regulations will r equire a 17% annual incr ease in advanced bio-fuels by 2030. As an industry leader in biogas procur ement, we are very well positioned to meet this demand as the market grows and are able to continue making an incr emental margin over the production and sale of gr ey methanol. We also see many opportunities in new applications where this versatile pr oduct can be used as an environmentally friendly building block for pr oducts such as cosmetics, building materials, paints and many other downstream applications. We have enter ed into several recent bioproduct supply agreements with Essar Oil, ExxonMobil, str engthening our market-leading position in renewable methanol, and we will continue to roll out bio-methanol as a fuel and industrial feedstock. Diesel Exhaust Fluid (DEF) We ar e seeing similar regulatory-driven growth for another of our premium-priced pr oducts – DEF , often our highest margin product out of IFCo. DEF is a ur ea-based solution that is added to Selective Catalytic Reduction (SCR) engines to eliminate NOx and particulate emissions created in diesel exhaust, with the added advantage of improving vehicle fuel economy by approximately 5% and using diesel fuel mor e efﬁciently . We ar e one of the largest producers and distributors of DEF in the US, with IFCo capable of producing a million tons, and our US distribution arm, N-7, also marketing DEF produced by Dakota Gasiﬁcation and Dyno Nobel. Regulations in the US, EU and China are driving demand gr owth by requiring the r eplacement of older vehicles, particularly heavy- duty trucks, coupled with higher dosing rates in newer generation diesel engines. We see this as being the only viable option for emissions abatement for truck and rail in the foreseeable futur e as the switch to electric vehicles has proven to be unsuccessful to date for heavy duty trucks or farm vehicles due to poor power -to-weight ratios. We have grown this business by 34% over the past year despite the transport sector hit by COVID to reach r ecord volumes and are well positioned to leverage further demand growth. Green ammonia If global ammonia production switches to gr een feedstocks, green ammonia could r educe global GHG emissions by more than 1%, and would provide signiﬁcant further decarbonization opportunities for multiple industries. Green ammonia has multiple carbon-free uses, including as fertilizer , fuel, chemical feedstock or source of energy storage. In 2019, our Dutch fertilizer complex, OCI Nitrogen, became the ﬁrst ammonia producer in Eur ope to add ISCC+ certiﬁed green ammonia pr oduced from bio-methane to its portfolio. The GHG footprint is at least 50% lower compared to gr ey ammonia and can be decarbonized further depending on customer requir ements. There is a str ong potential to ramp up decarbonization volumes as customers are expected to cr eate a demand pull for such low carbon premium pr oducts. We supply AnQore, a longstanding strategic customer and one of our neighbours on the Dutch Chemelot site, with green ammonia thr ough with AnQore produces acrylonitrile. W e are growing our gr een ammonia presence as we develop r elationships with additional industrial customers seeking to decarbonize their production pr ocesses. GHG EMISSIONS – OUR APPROA CH TO A CHIEVING OUR T ARGETS CONTINUED Decarbonizing thr ough low-carbon pr oduct innovation Pr oduct innovation Our fuel products • Bio-Methanol • Bio-MTBE (tolling) arrangements • Bio-Methanol / Ethanol Mix Our fuel products have 4 key advantages 1 Advanced second generation bio-fuels 2 Lower consumption of fossil fuels 3 Provide an outlet for biowaste to reduce methane emissions fr om waste sources 4 Provide up to a 60% r eduction in GHG emissions Cars T ankers Biodiesel Key transport markets Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 46 OCI FULFILLS CUS T OMER DEMANDS T O REDUCE EMISSIONS IN THE V AL UE CHAIN Example industries and end markets Fertilizers T extiles Animal Nutrition Automotive Cosmetics Electronics OCI gr owth opportunities Sustainability push is a major catalyst for demand for OCI’ s decarbonized products • Zero carbon ammonia and methanol as industrial feedstocks • Zero carbon ammonia and methanol as shipping fuel • Biofuels • Low-carbon ammonia for use in consumer products • Zero carbon ammonia feedstocks for fertilizer • Controlled-release and stabilized fertilizers (inhibitors) • V ariable rate fertilizers We incr easingly see that markets realize the importance of Scope 3 emissions. In many cases, to signiﬁcantly reduce embedded emissions in an end pr oduct, it is key that decarbonization starts at the beginning of a value chain, and then is carried onward thr oughout the chain. OCI crucially sits at the beginning of a variety of value chains, and we are seeing a str ong push from the broader market and our customers to decarbonize, which gives us the opportunity to intensify collaborations across the value chain. By smartly sourcing non-fossil raw materials, or by introducing r enewable sources in our production processes for ammonia and methanol, we can make a material impact on the carbon footprint of our customers. For instance, one of our longstanding customers, W acker in Germany , uses our bio- methanol to produce fossil fr ee silicones, which further decarbonize a variety of products. In addition, with speciﬁc additives or bio-based coatings, we can also reduce the envir onmental impact during the use of fertilizers on farmland by our end customers. T o that end, we can both decarbonize our own assets and products, and help our customers abate their emissions while using our products. This will potentially reap signiﬁcant multiple value chain emission reductions in the futur e. As such we are excited to increasingly expand and gr ow our green product of fering to the market. W acker procures bio methanol fr om BioMCN to produce a fossil fr ee silicone, BELSIL®eco & ELASTOSIL®eco, which further decarbonizes a variety of products Fertilizer Green fertilizer Melamine Green Melamine Ammonia, ACN, Caprolactam, etc Green Ammonia, ACN, Capr olactam, etc Methanol, Formaldehyde, Acetic Acid Green Methanol, Formaldehyde, Acetic Acid Silicone, other Green Silicone, other End customer Downstream pr oduction at OCI and end customers Natural gas Green gas, biogas, H 2 by electriﬁcation or other Durable Consumer Goods Healthcare Plastics & Resins Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 47 Acrylonitrile is a product that is widely used in a broad range of applications. With OCI’ s low carbon ammonia, combined with low carbon propylene sour ced separately , AnQore decarbonizes acrylonitrile by 60%. In turn, AnQore is helping its wide range of customers to decarbonize important consumer goods and equipment suppliers to the wind power generation industry . The relative cost price incr ease of decarbonizing a product thr oughout a value chain is often quite high for OCI. However , as the cost increase of a decarbonized component in an end-product is often minimal, it is promising that customers ar e increasingly awar e of their environmental footprint and increasingly willing to spar e a small premium for a mor e environmentally friendly product. This helps the participants in a value chain cover their costs and investments involved in decarbonizing their products. Decarbonizing AnQor e’ s acrylonitrile value chain has begun with gr een ammonia pr oduction at OCI Nitr ogen CA SE S TUD Y Contribution to SDGs Scope 1 reduction of 50% over grey ammonia Lower carbon end products • Windmill blades • Mobile phones • Surgical gloves • Mattresses and furniture • Rubber products • Automotive parts • Carbon Fiber sports gear (e.g.: golf clubs) • Small kitchen appliances • Electrical connectors • Protective headgear • Medical equipment -35% Scope 3 reduction of 60% over grey Acrylonitrile 1 Signiﬁcant scope 3 reduction for OCI and AnQore -12% < 0.5-2% 2 OCI produces ISCC+ certiﬁed low carbon ammonia made from biogas. Strong potential to ramp up green ammonia volumes thr ough expected customer demand pull. AnQore pr oduces Econitrile , theworld’ s ﬁrst ever sustainableand circularacrylonitrilepr oduced from non-fossil ammonia and propylene feedstock in an existing acrylonitrile plant 1 AnQore sour ces a mix of renewable feedstock 2 Cost price increase in end-consumer product (e.g. car , mobile phone) % Relative price increase of low carbon ammonia in pr oduct Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 48 Delivering decarbonization with gr een ammonia Decarbonizing our ammonia production We ar e evaluating green ammonia initiatives acr oss our ammonia production portfolio. First in Europe Our Dutch fertilizer complex successfully produced and sold green ammonia in 2019, the ﬁrst ammonia producer in Eur ope to add ISCC+ certiﬁed green ammonia produced fr om bio-methane to its portfolio. By using water electrolysis and renewable electricity , ammonia production can be made completely carbon-free. Green ammonia has multiple carbon-fr ee uses, including as a fertilizer , fuel, or source of energy storage. Fertilizer T ransportation Fuel cell vehicle Ammonia power plant T extiles and pharmaceuticals Energy storage Refrigeration Solar power Biogas Wind power W ater electrolysis How green ammonia is made What green ammonia can be used for Developing our gr een ammonia capabilities Contribution to SDGs W ater or biogas for hydrogen Clean Energy Merchant ammonia capacity 2.4MT Gross ammonia capacity 6.9MT N H H H NH 3 If produced globally , green ammonia could reduce global GHG emissions by mor e than 1 % CA SE S TUD Y Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 49 Melamine contributes to carbon captur e and the cir culate economy Melamine and its end pr oducts are excellent sour ces of carbon capture, as well as key contributors to the cir cular economy . • CO 2 is used to produce melamine, with each ton of melamine pr oduced capturing a ton of CO 2. • Melamine is used in the production of various end products, so that carbon is stor ed for at least several decades throughout the entir e life cycle until recycling. • Since over 75% of all melamine is used in wood-based products, with wood itself already being a major carbon sink, today all melamine-based wood pr oducts are actively storing signiﬁcant volumes of CO 2. Carbon capture W aste r eduction and the circular economy Slow growing har dwood 80 years to mature 40% of the trees used in production ONE OAK 40 years to mature 80% of the trees used in production Fast growing species WOOD EQUIV ALENT OF ONE OAK 2,000 m 2 parquet ﬂoor for 20 homes 12,000 m 2 laminate ﬂoor for 120 homes Solid wood applications Melamine based applications • Melamine allows for more efﬁcient use of wood by upgrading lower quality wood from faster gr owing trees, providing an alternative to solid wood and combatting deforestation • Melamine’ s durability and its use to extend the lifetime of wood-based products contributes to waste reduction globally • It also is used to make high value products from waste wood, contributing to the circular economy • As a laminate on wood-based productsand other surfaces, melamine extends the lifetime of these products and of fers design optionality • As a material to produce household items, melamine issafe anddurable Contribution to SDGs Ammonia Manufacturing of melamine CO 2 1 metric ton of melamine is estimated to store 1 metric ton of CO 2 CO 2 bound for the lifetime of the melamine products * Estimated lifetime 20 - 50 years CA SE S TUD Y Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 50 In addition to our work on farmer education on nutrient application best practices, we have invested in developing innovative products that impr ove crop yields while having a lower environmental impact. Our conventional nitrogen fertilizer pr oducts provide optimal cr op nutrition due to their quality , resulting in lower nitr ogen loss and increased crop yields. ISO 14040/14044 Life Cycle Assessment As part of our ongoing assessment of the potential impact of our products on the envir onment, during the year we conducted a life cycle analysis (LCA) with external veriﬁcation of our CAN and UAN in accordance with ISO 14040/14044 Life Cycle Assessment Standar ds. Based on these externally veriﬁed assessments conducted by SGS, our CAN’ s CO 2 footprint is amongst the lowest in the world. Compared to Eur opean peers as benchmarked by Fertilizers Europe, our CAN CO 2 footprint is approximately 33% lower than peers implementing best available emissions technology . Our UAN CO 2 footprint is similarly best-in-class as it is produced in the same downstream pr ocess of nitric acid as CAN. ISCC+ Certiﬁed Green Ammonia We ar e also the ﬁrst ammonia producer in Europe to use bio-methane to pr oduce and sell green ammonia. The sustainable product and mass balance system is ISCC+ certiﬁed and can be used to produce gr een downstream products. Inhibitors and Controlled Release Fertilizers Farming activities account for over 50% of GHG emissions in the nitrogen fertilizer value chain. In addition to the farmer education programs in place to impr ove fertilizer use efﬁciency , we are evaluating the introduction of ur ease and nitriﬁcation inhibitors as well as other controlled release coatings to our nitrogen fertilizers, which have the potential to r educe scope 3 N 2 O emissions by at least 24%. GHG EMISSIONS – OUR APPRO A CH T O A CHIEVING OUR T ARGETS Decarbonizing thr ough low-carbon pr oduct innovation Developing mor e effective fertilizers Contribution to SDGs According to Fertilizers Eur ope Care for Growth benchmark. * Best available technology designed for production of CAN in EU OCI CAN CAN (best tech.) CAN (EU av .) CAN (Russian) 350% 180% 150% 100% OCI CAN CO 2 production footprint is lowest in Eur ope Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 51 GHG EMISSIONS AND ENERG Y USE Unit 2019 2020 Energy (Ammonia) Energy consumption TJ 213,399 212,297 Energy intensity GJ / metric ton gross pr oduction 36.96 37.47 Energy (Consolidated) Energy consumption TJ 290,955 300,142 Energy intensity GJ / ton product 18.60   18.68 Emissions to Air GHG emissions (Scope 1 – Direct) million tons of CO 2 e 9.23 9.12 GHG emissions (Scope 2) million tons of CO 2 e 0.60 0.64 GHG emissions (Scope 3 - CO 2 to Downstream) million tons of CO 2 e  4.79  5.11 T otal GHG emissions million tons of CO 2 e 14.62 14.87 GHG intensity ton CO 2 e / N-ton 2.30 2.26 Scope 1 emissions covered under emissions limiting regulations % (Scope 1 – Direct) 18.4% 16.4% NOx metric tons 3,037 3,485 N 2 O metric tons 131 150 SO 2 metric tons 135 163 VOCs metric tons 55 46 Greenhouse gas intensity 2.30 2019 2.26 2020 Metric ton CO 2 e / nutrient ton product NOx intensity 0.48 2019 0.53 2020 Metric ton NOx / thousand nutrient ton product SO 2 intensity 0.02 2019 0.02 2020 Metric ton SO 2 / thousand nutrient ton product * GHG emissions have been restated to EU ETS methodology , which includes CO 2 captured in downstream pr oduction processes as Scope 1 emissions, versus Scope 3 as per the GHG Protocol. 2019 emissions restated to include a full year of Fertil and 50% of Natgasoline. GHG Intensity has been restated on total ammonia and methanol pr oduction on a nutrient ton basis, with a correction to Scope 3 emissions resulting in a lower 2019 baseline intensity versus the r eported intensity in the ESG Investor Day presentation. ** IF A 2019 global emissions benchmark 2020 energy and air emissions scor ecard 9% Improvement in gr oup ener gy intensity since 2016 31% Reduction in SO 2 emissions since 2017 90% N 2 O emissions are 90% lower than global average for nitric acid plants 47 % Ammonia capacity under 10 years old versus 70% of industry over 20 years old 2% Y ear -on-year improvement in Scope 1 GHG emissions intensity 46% Reduction in NOx emissions since 2017 51% NOx emissions are 51% lower than global average for nitric acid plants 52% T otal capacity under 10 years old; youngest asset base compared to peers Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 52 W A TER AND W AS TE – OUR APPROA CH W ater Management approach As water is an essential but ﬁnite resour ce, we work diligently to maximize our water efﬁciency and are focused on r educing our water use wherever possible at all our sites. We primarily use water in our pr oduction processes for cooling, steam generation, or in our downstream aqueous pr oducts. Our water management processes implement best available technologies wher ever possible to reduce our water use and maximize r euse and recycling of water in our production pr ocesses to minimize our water discharge and our need for fresh water . Most of our water consumption is recycled several times in closed loop systems to r educe our intake of freshwater wher ever possible and use non-potable water sources such as tr eated water from industrial sour ces and seawater to reduce our impact. W e have made signiﬁcant investments to reduce our use of freshwater wher ever possible, and particularly at our sites in water stressed regions such as the Middle East and North Africa where we have installed desalination units to use seawater instead of freshwater . Withdrawal and discharge We closely monitor our water withdrawals and discharges at every facility and ensur e any discharged water is treated to meet applicable envir onmental requir ements and safely discharged. At several facilities, including those in Egypt and Iowa, we have invested in on-site pools to safely evaporate discharged water , or treat the collected water for irrigation. Some of our facilities beneﬁt from inter connections with neighboring plants, allowing them to safely recycle water for use in other facilities’ production pr ocesses. We meet or exceed all water quality r egulations and permits through our water management and treatment pr ocesses to ensure we do not impact local water sources. W ater management - including water quality - is a key element of our overall HSE and resour ce use management systems and is monitored by the Boar d of Directors’ HSE & Sustainability Committee. We continuously r eview our water management processes, our water use, and evaluate ways in which we can improve our water stewar dship at every facility . W aste, efﬂuents, and spills Our production pr ocesses for nitrogen and methanol pr oducts produce limited by-products and are not waste intensive. Our distribution pr ocesses are primarily bulk shipments with minimal packaging requir ed. Almost all the waste we produce is non-hazar dous and primarily result from maintenance activities. Each facility monitors and minimizes its hazardous and non-hazar dous waste through active waste management pr ograms. The primary source of hazar dous waste is spent catalyst, which is disposed of safely as per local regulations. W e minimize potential waste leakage, efﬂuents, or spills thr ough primary and secondary containment systems that are regularly inspected. All processes undergo r egular reviews by our HSE teams to identify and implement waste reduction opportunities wher e possible. In 2020, our facilities reported 37 envir onmental incidents (EI), repr esenting an environmental incident rate (EIR) of 0.66. None of these incidents were classiﬁed as major and mor e than half related to a stringent waste-water ir on content permit at IFCo, for which we successfully commissioned pipeline in 2021 to permanently resolve the issue. Excluding this r epetitive permit exceedance, our EI's totaled 16 with an EIR of 0.29. Contribution to SDGs RT -CH-140a.3 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 53 W A TER AND W ASTE – OUR APPRO A CH CONTINUED Each plant works to maximize water efﬁciency W ater is sourced from seawater , municipal sources, wells, and surface water . W ater is used in the production process in several ways, such as cooling water , as steam, or as a raw material for our downstream pr oducts. Water is circulated and r e-used many times throughout our pr oduction cycles Following several cycles through our plants, water is recycled by neighbouring plants wher e interconnections exist or is safely r eleased as unpolluted water vapour . W ater is treated at water treatment facilities to ensure it is safe and clean. W ater is safely discharged as per local regulations, or further r ecycled as irrigation water . 1 5 1 4 2 3 RT -CH-140a.3 Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 54 W A TER AND W AS TE – 2020 PERFORMANCE Contribution to SDGs Unit 2019 2020 Efﬂuents and waste Hazardous waste r eused, recycled or recover ed Thousand metric tons 1.98 1.69 Hazardous waste tr eated or disposed of Thousand metric tons 1.33 1.61 Non-hazardous waste r eused, recycled or recover ed Thousand metric tons  2.17 2.22 Non-hazardous waste tr eated or disposed of Thousand metric tons 30.57 44.33 W ater T otal intake by source Million cubic meters 88.64 90.01 Groundwater Million cubic meters 14.84 15.43 Seawater Million cubic meters 49.43 48.00 Surface water Million cubic meters 20.72 20.69 Third party water Million cubic meters 3.65 5.89 T otal water discharge by destination Million cubic meters 52.13 47.35 Groundwater Million cubic meters 2.28 2.17 Seawater Million cubic meters 41.17 37.88 Surface water Million cubic meters 5.01 1.43 Third party water Million cubic meters 3.67 5.87 W ater Stress  W ater withdrawn in regions with High or Extremely High Baseline W ater Stress % 72% 70% W ater consumed in regions with High or Extremely High Baseline W ater Stress % 59% 55% Environmental incidents Environmental incidents # 36 37 Environmental Incident Rate (EIR) Per 200,000 hours worked 0.59 0.66 2020 water and waste scor ecard 47 % W ater consumed, reused, or recycled 2.2 7 Million cubic meters of total water re-used or r ecycled 30% Reduction in water consumption per ton year -on-year 72% W ater intake from seawater in high stressed r egions • Surface water 23% • Groundwater 17% • Seawater 53% • Thir d party 7% 2020 water intake by source T otal water intake 90.01 million cubic meters • Surface water 3% • Groundwater 5% • Seawater 80% • Thir d party 12% 2020 water discharge by source T otal water intake 90.01 million cubic meters * Excludes seawater used for cooling at FERTIL in a ‘once-through’ system, where seawater intake volumes ﬂow through heat exchangers and are safely discharged uncontaminated back to the sea. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 55 W A TER AND W AS TE – C ASE S TUD Y RT -CH-140a.3 Contribution to SDGs Minimizing fr eshwater consumption in water str essed r egions Our Middle East and North African (MENA) operations work diligently to minimize their use of freshwater given the high str ess on water resour ces in the region. We have invested in r everse osmosis and seawater desalination units on-site at all our MENA locations. Our assets in Egypt source appr oximately 51% their water intake by using reverse osmosis units to desalinate non-potable water and our production facilities in Algeria and the UAE sour ce 100% of their water intake from the sea. Our goal is to become fully self-reliant on sustainable water sour ces and reduce our r eliance on fresh water sour ces at all our MENA assets. Actions being taken to address water sustainability in Egypt include: • Increasing our access to sustainable groundwater wells thr ough local investments • Investing in increasing capacity and efﬁciency of our on-site r everse osmosis units, treating and upgrading groundwater • Investing in wastewater plants to re-use/re-cycle mor e water from the pr oduction process • Continuing to make use of any water discharge to grow our land reclamation pr oject Zero ef ﬂuent discharge Both Fertil and EFC have implemented a novelsolution to the large quantity of water produced as a by-product of the ur ea manufacturing process. The facilities invested in the construction of irrigation and evaporation ponds to avoid discharging efﬂuents into the envir onment. EFC is the only plant in Egypt to do this, with three ponds capable of holding a total of 15,000 cubic meters of water . Fertil has two ponds capable of holding a total of 24,800 cubic meters of water . W ater recycling and reuse During the year , EBIC implemented a wastewater treatment and r e-use closed loop system for cooling water that reduces the plant’ s water intake by approximately 5%. Land reclamation in the Egyptian desert The water collected at EFC’ s irrigation ponds is used to irrigate 50 acres of forestry that was planted by EFC in the nearby desert, contributing to essential land reclamation in the Egyptian desert and creating an additional sour ce of carbon sequestration. The 50 acres of for estry sequester an estimated 39 metric tons of carbon dioxide a year . 1. 62 Million cubic meters of water re-used for irrigation in the Egyptian desert 50 Acres of land r eclaimed in the Egyptian desert through our water recycling ef forts Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 56 FEED THE W ORLD The world continues to face a signiﬁcant challenge in ensuring a sustainable supply of food for our burgeoning global population, which is expected to reach nearly 10 billion people by 2050. This is expected to requir e a doubling of food production levels, all while arable land per capita is projected to decline by 55% by 2050. With growing populations and declining r esources, crop yield optimization is imperative to meet our global food needs, while also minimizing the environmental impact of agricultur e and fertilizer use. Fertilizer use is essential to maximize yields, minimize soil degradation, and sequester carbon dioxide Nitrogen fertilizers ar e the key nutrient for crop gr owth and development. High quality soil maximizes farm yields and ensures healthy crops, which in turn naturally sequester carbon dioxide to help ﬁght climate change. Efﬁcient farming thr ough correct fertilizer application helps farmers maximize the use of existing farmland and reduces land sequestration. OCI’ s fertilizer products help achieve sustainable agriculture by providing an ef fective and environmentally sound sour ce of nitrogen. By using nitrogen fertilizers ef fectively , farmers can: • grow more food on their land, • reduce soil nutrient loss and improve soil quality , and • reduce the need for new farmland to be sequestered, which therefor e reduces GHG emissions by limiting defor estation. Without annual application of nitrogen fertilizers to replenish soil nutrients, soil health is eroded r esulting in lower yields and biodiversity loss amongst many issues. Promoting nutrient stewar dship Incorrect or inef ﬁcient fertilizer application can result in nitr ogen release into the atmosphere as well as leaching or run-of f into groundwater or surface water , which can negatively impact water quality and aquatic biodiversity . We work with industry associations to educate farmers on fertilizer application , storage, provide digital r esources , and to encourage sustainable farming . In the US, we support the 4R Nutrient Stewardship pr ogram through our membership in The Fertilizer Institute (TFI). Other environmental impacts Biodiversity None of our production facilities ar e located near protected ar eas or areas of high biodiversity , and we are not requir ed to maintain a biodiversity management plan for any of our sites. We comply with all relevant r egulatory requirements and envir onmental policies when assessing new projects, which would include envir onmental and biodiversity impact assessments wherever r elevant. Nitrogen fertilizer use helps impr ove agricultural efﬁciency , which protects biodiversity by maximizing yields of existing farmland ther eby reducing the need to sequester new land for farming. Other emissions to air We have installed the necessary equipment - such as de-NOx units, methanol removal units, and Selective Catalytic Reduction (SCR) units – at our facilities in line with our policy to implement Best Available Control T echnology (BACT) to minimize our environmental impact. Accordingly , we emit minimal amounts of nitrous oxide (N2O), nitrogen oxides (NOx), sulfur oxides (SOx), particulates, and volatile organic compounds (VOCs), as reported on page 52. W e are committed to working towar ds global food security . Thr ough various programs, we work with our customers ar ound the world to maximize yields, str engthen crops, pr event soil degradation, pr omote sustainable agricultural practices, and accelerate gr owth to meet the world’ s rising food demands. W e also work to ensure our pr oducts are used in a way which safeguar ds health, occupational and public safety and security , biodiversity , and the envir onment. Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 57 Contribution to SDGs FEED THE W ORLD – CA SE S TUD Y Digital Farming While nitr ogen fertilizers of fer a sustainable means of maximizing yields, farmer education is essential to ensur e nitr ogen fertilizer application is optimized for both pr oduction and envir onmental protection. W e work with farmers around the world thr ough various initiatives to achieve this goal. Our digital offerings include the Nutrinorm agr onomy website, and two applications developed speciﬁcally for farmers: • OCI Agro W eather app to optimize farmers' activity planning. • OCI Nutri-N app for an optimal nutrition application. Using these resour ces, our customers can ensure fertilizer quality is maintained through corr ect storage, blend products corr ectly , ensure spreading settings ar e correct to maximize even fertilization, calculate optimal fertilizer release, accurately track the weather , and receive 24/7 access to the support they need. >112 , 000 USERS Our digital resour ces reached over 112,000 users in 2020 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 58 Sustainabilit y R epor t | Social OCI N.V . Annual Report 2020 59 HO W WE CREA TE V AL UE FOR OUR COMMUNITIES RT -CH-210a.1 Our operations directly and indir ectly create signiﬁcant economic opportunities for our communities in both developed and developing countries through payments for goods and services, job creation, impr oved farmer productivity , taxes, research and development, and donations to develop the communities in which we operate. We have invested mor e than $5 billion in growth and impr ovement projects in under a decade, which has created thousands of ancillary businesses and job opportunities. In 2020, we created $3.47 billion in value, of which 82.9% was redistributed. The balance was reinvested in OCI, primarily as capex. $3.47BN $2.88BN ECONOMIC V ALUE GENERA TED IN 2020 ECONOMIC V ALUE DISTRIBUTED IN 2020 Payments to suppliers 63.2% 9.2% Employee wages and benets 10.5% Payments to providers of capital, governments, and donations to communities V alue retained in OCI through capex and other investments 17.1% Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 60 We endow time and r esources into the entire education value chain, from donating school supplies to children in need and r ewarding high achievers by funding university scholarships and providing on-site training opportunities. Our local operations have worked hard to encourage students of all ages to pursue an education in ﬁelds of science, technology , engineering and mathematics (STEM) through various initiatives. W e also participate in programs speciﬁcally designed to encourage girls to pursue STEM, such as Girlsday . In 2020, despite the lack of in-person programs due to COVID-19 restrictions, 412 students and young professionals beneﬁted fr om the training or education opportunities availed through the pr ograms we participated in or sponsored in Eur ope, the United States, and North Africa. Our plants pay close attention to the social causes that matter to each community to effectively participate in local development. Such causes include sponsoring or donating time to local sports teams, music and arts festivals, food banks, toy runs, youth programs, and animal rights causes. In addition, we have strong ties to local healthcar e initiatives that provide necessary physical, mental, and emotional support to our communities. Our plants work with trusted partners focusing on the issues that signiﬁcantly impact their communities, including elderly care centers, cancer tr eatment and support, essential supplies for the underprivileged, and programs that encourage healthy living. HOW WE CREA TE V ALUE FOR OUR COMMUNITIES CONTINUED A tailored appr oach to each community As a local employer in each of our communities, we are pr oud to have strong stakeholder engagement programs in place that allow us to identify and participate in the social development causes that matter most locally . Accordingly , we have cultivated local social development programs tailored to the speciﬁc needs of each of our communities to maximize the impact of our donations. In addition to our sponsorships and ﬁnancial contributions to various causes, our employees personally invest their time in our local communities by participating in fundraisers and volunteering at events. EDUCA TION SOCIAL CAUSES >330 , 000 Meals provided in South East T exas since 2015 >12 , 100 Students reached since 2015 >$45 , 000 V alue of food and essential products donated to vulnerable community residents in 2020 >8, 000 V ulnerable residents pr ovided Christmas meals and gift hampers in London in 2020 Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 61 HOW WE CREA TE V ALUE FOR OUR COMMUNITIES CONTINUED Our 2020 Outreach In 2020, we continued to focus on investing on the social causes that matter to each of our communities. Our tailored appr oach allows us to create a meaningful and sustained impact through longstanding partnerships with charities and non-proﬁts serving our communities, such as Southeastern Iowa Community College’ s Building the Dream pr ogram, the Girlsday science and technology program in Geleen, and the Southeast T exas Food Bank. Please refer to Our Stories for mor e examples of how we create value for our communities. RT -CH-210a.1 • Throughout the ﬁrst wave’ s PPE shortage, our facilities in the United States and the Netherlands regularly donated face masks, gloves, safety glasses, other PPE equipment, gift cards, and men’ s dress shift to be used as makeshift hospital gowns to local front line hospital staff. • In October , IFCo ran a food drive encouraging employees to donate food and supplies to Lee County food pantries.As a result of IFCo employees' generosity , IFCo was able to donate $10,000 worth of food and supplies to help support the community . • In December , OCI and its employees donated $22,000 to a collective of UK frontline charities working to provide Christmas hampers consisting of a full meal and gifts for vulnerable residents in the London bor ough of Kensington and Chelsea. 8,365 people were served thr ough the campaign with 4,031 hampers delivered. Serving our communities during the COVID-19 pandemic #Orangetheworld In an act of solidarity , OCI Nitr ogen turned its cooling tower orange on 25 November . OCI Nitrogen's cooling tower was one of many landmarks tinted orange around the world in support of the Orange the World initiative, a United Nations campaign ﬁghting violence against women. Orange symbolizes a brighter future, fr ee of violence. Other participating landmarks included Times Square, Niagara Falls, and the Brandenburg Gate. Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 62 HO W WE CREA TE V AL UE FOR OUR COMMUNITIES – C ASE S TUD Y Partnering with the Sawiris Foundation for Social Development In 2020, we enter ed into a partnership with the Sawiris Foundation for Social Development (SFSD) to support vulnerable farmers and boost the agricultural sector in Egypt. Empowering Egyptian farmers We will work to ensur e beneﬁciaries become self-sufﬁcient and ar e able to earn a sustainable income through an education program focused on sustainable farming practices, with the aim of enhancing environmental protection, gr owing production, and increasing farmer pr oﬁtability . The partnership’ s outreach program will complement an SFSD pr ogram that was launched speciﬁcally for agricultural development in Egypt. About the Sawiris Foundation for Social Development Established in 2001, the Sawiris Foundation for Social Development is one of the ﬁrst national donor foundations in Egypt. SFSD focuses on funding and delivering sustainable development solutions to alleviate poverty and social and economic exclusion, as well as provide equitable educational opportunities for the most marginalized groups in Egypt, all in cooperation with civil society , and the private and governmental sectors. SFSD’ s four focus areas are: RT -CH-210a.1 HIGH-QUALITY EDUCA TION • Providing scholarships for distinguished Egyptian students • Establishing specialized higher education institutions capable of meeting the urgent needs of society • Supporting and ﬁnancing education programs at all levels: from kindergarten through to higher education SOCIAL EMPOWERMENT • Improving access to health care services (e.g. ﬁghting Hepatitis C, liver transplants, improved maternal and child health) • Providing marginalized children pr otection and support • Improving infrastructure of underprivileged villages and areas ECONOMIC EMPOWERMENT • Financing training programs that lead to employment • Encouraging small and microenterprise development through providing capital ﬁnancing in the form of grants and loans, along with technical and administrative support • Supporting and ﬁnancing agricultural development programs ENCOURAGING ARTISTIC AND CUL TURAL CREA TIVITY • The Annual “Sawiris Cultural Awar d” • Sawiris Scholarship for Arts and Culture Partnering with OCI Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 63 HOW WE CREA TE V ALUE FOR OUR COMMUNITIES – CASE STUD Y CONTINUED SFSD in numbers | 2001-2020 RT -CH-210a.1 ECONOMIC EMPOWERMENT SECTOR +117 , 000 Beneciaries +34 4 EGP million in funding T raining for Employment Program +54, 000 Beneﬁciaries trained and employed, with a total budget exceeding EGP 206 m Micro-Cr edit & Agricultural Development Program +63, 000 Beneﬁciaries have received micr o and small loans with a total budget exceeding EGP 138 m SOCIAL EMPOWERMENT SECTOR +37 7 , 000 Beneciaries +569 EGP million in funding Infrastructure Development & Children without Shelter Pr ogram +48, 000 Beneﬁciaries received a range of integrated services including rehabilitation, education, shelter and healthcare with a total budget exceeding EGP 255 m Health-Care Program +137 , 000 Beneﬁciaries received healthcar e services including Hepatitis testing and treatment operations with a total budget EGP 212 m Covid-19 Response +192 , 000 Beneﬁciaries served and supported in dealing with the ramiﬁcations of Covid-19 with a total budget EGP 102 m Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 64 HOW WE CREA TE V ALUE FOR OUR COMMUNITIES – CASE STUD Y CONTINUED SFSD in numbers | 2001-2020 Continued RT -CH-210a.1 EDUCA TION AND SCHOLARSHIPS SECTOR +60 , 000 Beneciaries + 777 EGP million in funding P ARTNERSHIP SECTOR Scholarships Program 1, 113 International and local scholarships were awar ded to outstanding Egyptian students with an estimated budget of EGP 272 m Basic, V ocational & T echnical Education Programs 59 , 000 Beneﬁciaries of these programs with an estimated budget of EGP 505 m SFSD has 49 par tners executing development programs and initiatives with a total budget of EGP 530 m SAWIRIS CUL TURAL AW ARD 203 Egyptian writers and authors won awards with a total budget exceeding EGP 22 m GEOGRAPHICAL SCOPE 86% of the support is directed at villages in Upper Egypt Egypt 24 Governorates with focus on the most impoverished villages Outstanding Egyptian students were awarded scholarships to study at some of the top universities in Switzerland, UK, USA and Germany International Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 65 OUR EMPL O YEES Our approach Our people are fundamental to our success. W e strive to create a safe and encouraging workplace where ther e is mutual trust and respect towar ds and amongst employees. We promote excellence in every aspect of our operations by investing in our people to foster their development and encourage their passion to excel. A local employer , globally We ar e proud to have cultivated a strong community focused identity as a local employer with 3,682 employees around the world. We have a commitment to maximize the use of local resour ces whenever possible by drawing local people into our company and developing their skills, and by choosing local partners where possible to supply materials and other services. Living wage We ar e mindful of the importance of ensuring that all employees are compensated and have crafted our local compensation frameworks using each country’ s living wage as the baseline. We believe that when an employee can af ford their family’ s needs including discretionary income, they ar e more motivated to succeed. We consistently rank amongst the top quartile of employers by annual compensation in each of our communities. In addition to top quartile compensation, we offer all employees, including part-time employees, a range of beneﬁts, including but not limited to health insurance, retir ement plans, parental leave, and other non-ﬁnancial beneﬁts in line with local employment laws. Diversity and inclusion Our employment strategy has resulted in a diverse global workforce encompassing 32 nationalities located in ten countries, with multiple ethnicities, religious beliefs, cultur es, ages, and other traits working together respectfully and with a shared sense of purpose. Our Code of Conduct requir es all employees to act with honesty and integrity to foster a business environment that protects the rights and inter ests of all stakeholders. Our Code of Conduct also highlights our zero-tolerance policy for any form of harassment or bullying. Employees are r equired to treat all individuals with r espect, tolerance, dignity , and without prejudice to cr eate a mutually respectful, collaborative, and positive working environment. W e do our utmost to provide employees with a safe environment to addr ess any issue directly with management, and through our Whistleblowing Policy we also provide a conﬁdential pr ocedure to raise any concerns, instances of discrimination, and other breaches to our Code of Conduct. We ar e committed to fostering an inclusive culture and have launched a group wide D&I pr ogram, which aims to ensure fairness, equality , and diversity in recruiting, compensating, motivating, retaining, and pr omoting employees. Though we operate in traditionally male dominated industries, we are working to improve our gender diversity in both technical and non-technical roles and at all levels of our organization. W e have set internal benchmarks and targets to improve our recruitment processes, conduct de-biasing training, pr ovide sponsorship and mentorship of minority employees, and develop employee networks that help them succeed. During the year , the majority of our workforce completed the de-biasing training, with the balance expected to complete the training in 2021. Despite limitations on hiring during the COVID-19 pandemic, we improved the ratio of female-to-male hir es by 16% in 2020 versus 2019. With an eye on the future of our industry , we also support Science, T echnology , Engineering, and Mathematics (STEM) education programs in many of our local communities, with a focus on girls and minority students. At the Board level, we implemented a Board D&I policy in 2019 and have r ecently appointed a third woman to our Boar d who also has substantial ESG expertise, taking the percentage of female boar d members to 23% from 17%. W omen as a percentage of total employees increased marginally to 10.51% in 2020 fr om 10.34% in 2019. Approximately 20% of leadership positions acr oss the organization were held by women. W e will continue to work towards incr easing gender diversity while continuing to hire or promote based on merit. Employee Engagement We strive to encourage open dialogue acr oss all levels of the organization, including with senior management. We launched the OneOCI platform in 2020 to provide employees with regular updates on a variety of corporate, operational, and industry matters, enhance communication across the group, cr eate opportunities for employees to connect across countries and functions, and provide an additional means to reach senior management. W e also conduct surveys at the group and local levels to gather feedback on various topics. W e value the feedback from these engagement channels and ar e continuously making improvements to enhance all employees’ experiences at OCI. T alent development and retention We ar e committed to fostering an environment that encourages individuals to seek opportunities for professional gr owth and enrichment. We r ecognize the importance of training and development of new employees, improving the performance of experienced employees, and building future leaders. W e invest in our employees through training and development pr ograms focused on professional gr owth and enrichment. Opportunities are tailor ed to the needs of each employee, and can include on-the-job practical training programs, sponsoring higher education, mentorships and leadership programs for succession planning, and online courses. W e promote a cultur e of CARE – collaboration, agility , r esourcefulness, and excellence. Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 66 OUR EMPL O YEES CONTINUED Succession planning We have a succession planning pr ocess in place for critical roles across the organization, both at the corporate and the operating company levels. This is key to talent retention and development, and to mitigating potential human capital risks. Unions and W orks Councils Our employees can join a union, works council, employee association, trade union, or similar labour organizations in line with local regulations. As such, approximately 46% of our total workfor ce is covered by Collective bargaining or unions. We strive to maintain pr oductive relationships with the labour organizations r epresenting our employees and engage with them regularly . Human rights and working conditions We ar e committed to respecting and promoting human rights and safe working conditions. We conduct all business activities r esponsibly , efﬁciently , transparently , and with integrity and respect towar ds all stakeholders. This expectation extends to our suppliers and business partners, who are requir ed to conduct their business according to the principles included in our Business Partner Code of Conduct. These principles are based on global human rights standar ds, including the International Bill of Human Rights, the Inter national Labour Organization’ s declaration on Fundamental Principles and Rights at Work, and the United Nations International Children’ s Emergency Fund (UNICEF). Accordingly , our suppliers cannot use forced or child labor , or engage in slavery or human trafﬁcking. These principles also form part of our Human Rights Policy , which falls within our Compliance Framework and aims to ensure that salient human rights issues potentially arising through our supply chain ar e tackled effectively . We perform customary due diligence to ensure our suppliers and business partners are compliant and have an anonymous reporting hotline wher e employees can report suspected violations throughout our supply chain. Gender Location Age proﬁle New hires Y ears of service Contract type • Female 11% • Male 89% • Eur ope 19% • USA 11% • MENA 70% • under 25 2% • 25-34 18% • 35-44 42% • 45-54 25% • 55-64 12% • 65+ 1% • Female 21% • Male 79% • 0-5 years 22% • 6-10 years 25% • 11-20 years 43% • 21+ years 10% • Full-time 98% • Part-time 2% Our employee engagement priorities • Diversity: increase gender diversity and inclusion across the group • Development: increase training and development opportunities for all employees • Dedication: maintain our low voluntary turnover rates at under 3% • Drive: provide employees with the resources they need to feel engaged, empowered, and driven to deliver Our human rights policy principles • No forced or child labor • No harassment or discrimination • Safe and healthy workplace • Fair compensation and living wage • Equal employment • Freedom of association and collective bargaining Links to policies Code of Conduct Diversity & Inclusion (D&I) Board D&I Whistleblower Policy Human Rights Policy Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 67 OUR EMPL O YEES CONTINUED 3, 682 Direct employees in 2020 16% Improvement in female-to-male hiring ratio in 2020 2.2 % V oluntary tur nover rates 32 Nationalities in our global workforce 34% Increase in female employees in technical roles 46% Employees covered by collective bar gaining or unions $93K Average employee annual compensation 20% Percentage of women in leadership positions W orking at OCI Unit 2019 2020 Employees T otal employees # 3,715 3,682 Full-time # 3,622 3,602 Part-time # 93 80 Engagement and development V oluntary turnover rate % 1.99% 2.20% Employee absenteeism % 2.97% 1.89% Employees covered by Collective Bargaining orUnions % 47.32% 46.14% Average spending on training and development $ / employee 1,442 218 Compliance & Governance Incident notiﬁcations # 12 9 Incidents investigated # 12 9 Substantial cases # 0 0 Anonymous notiﬁcations via hotline # 3 1 Cybersecurity training (various topics) # employees reached  1,938 1,921 Compliance training (various topics, incl. CoC, ABC, Debiasing, Data privacy , and others) # employees reached  973  2,002 Gender Women % 10.34% 10.51% Women in technical r oles % 1.10% 1.49% Women non-technical r oles % 9.23% 9.02% Women on the Boar d of Directors % 16.67% 23.08% Women in leadership positions % 18.18% 20.24% Age proﬁle under 25 % 1.68% 1.90% 25-34 % 21.34% 18.12% 35-44 % 41.82% 42.07% 45-54 % 22.29% 25.07% 55-64 % 12.12% 11.92% 65+ % 0.76% 0.92% Y ears of service 0-5 years % 27.26% 21.67% 6-10 years % 25.29% 25.12% 11-20 years % 36.85% 42.78% 21+ years % 10.60% 10.43% Contribution to SDGs Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 68 CA SE S TUD Y Pr omoting a cultur e of CARE thr ough OneOCI P U R P O S E C u l t i v a t i n g a s u s t a i n a b l e w o r l d t h r o u g h c l e a n e r f u e l s o l u t i o n s , l o w e r c a r b o n f e e d s t o c k s , a n d f o o d s e c u r i t y COLLABORA TION Working across our diverse cultures with mutual respect, inclusion, drive, and innovation AGILITY Working dynamically and swiftly to capitalize on opportunities and adapt to change EXCELLENCE Working with an emphasis on safety , ownership, and integrity W e promote a culture of CARE V ALUES RESOURCEFULNESS Working diligently and proactively to create exceptional value for all our stakeholders Collaboration We work acr oss our diverse cultures with mutual respect , inclusion , drive , and innovation • W e foster an inclusive culture in which diversity is recognized and valued • W e strive to be an employer of choice, where each person is proud to contribute their knowledge, skills, experience and perspectives • W e treat all individuals with r espect, tolerance, dignity , and without prejudice to maintain a positive and encouraging workplace Agility We work dynamically and swiftly to capitalize on opportunities and adapt to change • W e maintain our competitive edge by quickly recognizing, accepting, and adapting to change • W e empower our people with the tools, resour ces, and autonomy to be innovative and creative • W e find smarter ways of working to increase productivity and impr ove profitability Exc ellence We work with an emphasis on safety , ownership, and integrity • W e are focused on safety in every aspect of our or ganization with a goal of zero incidents • W e commit to being good stewards of the environment, as well as being a good neighbor • W e deliver quality products and exceptional services that our customers can rely on Resourcefulness We work diligently and pr oactively to create exceptional value for all our stakeholders • W e drive success by taking pride in everything we do to perform reliably , efficiently , and with unwavering integrity • W e are transpar ent in our business practices, and lead by example • W e are focused on delivering str ong and sustainable financial growth Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 69 HEAL TH AND SAFETY Our approach focuses on the following HSE priorities: 1. Commitment to zero injuries 2. Focus on operational excellence 3. Continuous improvement of our pr ocesses 4. Health and wellness of all employees 5. Product stewar dship & chemical safety We believe that the health and safety of our employees is essential to the successful conduct and future gr owth of our business and are in the best inter ests of our stakeholders. HSE policies and standards Our HSE Policy is approved by the Boar d HSE & Sustainability Committee, which is also responsible for supervising the gr oup’ s overall HSE performance. The HSE Policy provides our sites and employees with a clear set of standards and pr ocedures based on industry standards and global best practices. Each facility additionally implements tailored initiatives and supplemental procedur es to enhance their HSE standards depending on their speciﬁc needs and technologies, which are reviewed and appr oved by the Corporate HSE team. Examples of locally tailored pr ograms include: IFCo’ s SafeStart program, a safety program that addr esses unintentional human error and critical safety habits; ther eby reducing risk and the pr obability of injury . OCI Nitrogen’ s Project ViS, a coordinated cluster of activities aimed to deliver a safer facility through person, pr ocess, and environmental safety . HSE performance monitoring The Corporate HSE team reviews and monitors all facilities’ site-speciﬁc programs and performance metrics, which ar e implemented, maintained, and reported by each facility’ s management team in compliance with the HSE Policy . The Corporate HSE team also assists the sites in implementing the OCI HSE policy when requir ed and reports each site’ s performance to the HSE Committee on a quarterly basis. The HSE Committee sets groupwide and site-speciﬁc HSE targets annually . The Executive Directors r eview each site’ s monthly HSE performance and trends with local site leadership during the monthly business review . In addition, HSE audits at each site periodically assess the implementation of OCI’ s HSE policy . 1. Commitment to zero injuries Safety is a core focus in every aspect of our operations. Our goal is to achieve leadership in safety and occupational health standards acr oss our operations by fostering a culture of zer o injuries at all our production facilities, and continuously impr oving health, safety and environmental monitoring, pr evention and reporting acr oss our plants. We have integrated this goal into our corporate values, and into the programs and policies of each of our pr oduction facilities. Safety is considered an integral part of plant operation, quality control, cost r eduction and efﬁciency , and we are committed to providing r esources to enable this. Occupational safety We achieved r ecord occupational safety results in 2020, with a lost time injury rate of 0.09 and a total recor dable injury rate (TRIR) of 0.23. These results ar e well below our internal targets and reﬂect a 44% impr ovement over 2019 despite a more difﬁcult operating envir onment due to the strict COVID-19 safety precautions in place since Mar ch 2020. Most of the incidents were contractor -related, with six of our sites achieving zero own employee TRIs during the year . We ar e proud of every employee’ s diligence and attention to safety , which has brought our TRIR down by 72% since 2014. We view the impr oved rates in 2020 to be indicative of the effectiveness of our safety incident learning and awareness program, and the r egular refresher sessions we conduct for all employees as part of our training program. We will continue to pr omote a strong safety culture and focus on targeting zero injuries acr oss our organization, both with our own employees and with contractors. Emergency prepar edness Every facility has emergency prepar edness plans in place with emergency response teams on-site. The emergency prepar edness plans and response teams are tested and trained regularly . All sites also align closely with local police, ﬁre, and other emergency response pr oviders to ensure the best possible response pr otocols are implemented. Facilities located on shared industrial sites also coor dinate closely with the industrial site facilities management teams. During the year , more than 200 Emergency Response training sessions were conducted, and each site conducted Emergency Response drills and tabletop exercises as r equired by their local regulatory agencies. W e are committed to pr oviding a safe and healthy workplace for all employees. W e implement the highest inter national safety standar ds to avoid any potential risks to people, communities, assets, or the envir onment. RT -CH-320a.2 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 70 2. Focus on operational excellence We pr omote excellence in every aspect of our operations to ensure a safe and healthy work envir onment, protect our communities, and optimize operational costs. We continuously train all employees to implement the best sustainable practices and maintain our focus on operational excellence. Process safety We implement a pr ocess safety management (PSM) framework across our sites, which was developed based on international industry best practices and standards including the U.S. OSHA Process Safety Management r egulations and AIChE T echnology Alliance – Center for Chemical Process Safety (CCPS) information. Our PSM is further enhanced by case studies on industry incidents and lessons learned. We track pr ocess safety incidents (PSI’ s) in three categories of severity and take all incidents very seriously . We achieved a PSI rate (PSIR) of 0.38 in 2020, well below our internal target of 0.8 but above our 2019 PSIR of 0.32. Most incidents were related to minor leaks or r eleases of substances as a result of an equipment failure or operator err or , all of which were immediately contained with no further impact. No personal injuries were sustained in any of the PSIs and all PSI’ s are reviewed with a root-cause-analysis with lessons learned shared acr oss all sites. We continue to work diligently to r educe the number of PSI’ s at all our sites every year . Global management and quality assurance standards Our assets hold global certiﬁcations recognizing the quality of our products and management pr ocesses, including ISO 9001 Quality Management Systems, ISO 14001 Environmental Management Systems, and OHSAS 18001 Occupational Health and Safety Management Systems. Other certiﬁcations include REACH, International Sustainability and Carbon Certiﬁcation (ISCC), Fertilizers Europe Pr oduct Stewardship, and OCI Beaumont is an OSHA VPP Star Site. 3. Continuous improvement of our pr ocesses We r egularly assess our HSE management systems to ensure our processes enable operational excellence. W e do so through internal and external HSE audits, insurance reviews, performance reviews, incident analysis, and gr oupwide knowledge sharing. We r eward HSE excellence, encourage best practice sharing across our sites, and pr ovide additional support wherever needed to ensur e all sites meet or exceed our standards. Groupwide knowledge sharing We have set up several avenues to enhance and facilitate communication and knowledge sharing across our global HSE community . Examples include: • Weekly publication of a one-page HSE awar eness article called the Gazette addressing various HSE subjects on a general level. • Monthly groupwide safety calls to shar e learnings of occupational and process safety incidents and to initiative companywide improvement initiatives. • Quarterly groupwide envir onmental calls aligning on environmental impr ovements and regulatory affairs. • Publication of a quarterly multi-page HSE Newsletter addressing speciﬁc HSE subjects in detail targeting HSE engineers. • All sites generate one-page ﬂyers of incidents and near misses that are shar ed, and lessons learned with fellow colleagues during the monthly Process Safety Sharing Incident T eleconferences • Annual internal global OCI Process Safety conference, wher e various safety and risk assessment topics are discussed by our process safety experts fr om across our sites. The main topics in 2020 were new pr ocess safety KPIs, leak prevention rules, best practices sharing from the sites’ Pr ocess Safety Management program, learning form sites’ key safety incidents, and plant insurance inspections. In addition, we rewar d excellent HSE performance through an annual awards cer emony called the OCI HSE Award, which is presented by the VP of Manufacturing. HEAL TH AND SAFETY CONTINUED Plant certiﬁcations Plant ISO 9001 ISO 14001 ISO 45001 / OHSAS 18001 REACH Others OCI Nitrogen ✔ ✔ • Fertilizers Europe - Product Stewar dship certiﬁcate • ISCC (Inter national Sustainability and Carbon Certiﬁcation) Green Ammonia BioMCN ✔ ✔ ✔ • ISCC OCI Beaumont ✔ ✔ • OSHA VPP ST AR • ISCC EFC ✔ ✔ ✔ ✔ • DEF added to ISO 9001 EBIC ✔ ✔ ✔ ✔ Fertil ✔ ✔ ✔ • ISO 50001 – Energy Management System • RC 14001 – Responsible Care Management System Sorfert ✔ IFCo Natgasoline RT -CH-320a.2 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 71 HEAL TH AND SAFETY CONTINUED 4. Health and wellness of all employees Occupational health and general well-being is part of our overall HSE management, and we implement wellness programs across the organization to ensur e that everyone working at OCI remains healthy . A Fitness for Duty Process is set up to ensur e that each employee can safely perform the essential physical and mental requir ements of the job. A Health Risk Assessment Process is in place to estimate the nature and pr obability of adverse health effects to people by identifying the adverse health ef fects that can be caused by any exposure to any hazar dous agent or the work environment. 5. Product stewar dship & chemical safety Product stewar dship ensures that our pr oducts and their raw materials, additives and intermediate products ar e processed and manufactured, handled, stor ed, distributed, and used in a way which safeguards health, occupational and public safety , the environment, and which ensur es security . Approach Product stewar dship and chemical safety is supervised by the Board HSE Committee and subject experts fr om each facility contribute to risks assessments and internal audits of the HSE impact of our product portfolio. We use the best available technologies to minimize our carbon footprint and implement the Product Stewar dship guidelines developed by Fertilizers Europe and International Fertilizer Association (IF A) throughout our production processes to monitor and minimize our environmental, health and safety impact from feedstock to farmer . We comply with international standards as members of IF A, Fertilizers Europe, The Fertilizer Institute (TFI), the International Methanol Producers & Consumers Association (IMPCA), the European Melamine Pr oducers Association (EMP A), the Ammonia Energy Association, and the Melamine REACH consortium, among others. We ar e committed to our obligations regarding any environmental and health r egulatory aspects of the chemicals we handle, and we closely monitor regulatory and safety developments for all our chemicals. Our products do not include ozone depleting substances, persistent organic pollutants (POPs), polyaromatic hydr ocarbons (P AHs), or polychlorinated biphenyls (PCBs) and do not contain any chemical classiﬁed by REACH, or equivalent regulation, as substances of very high concern (SVHC). We strive to substitute any identiﬁed SVHC as raw material or intermediate where possible and if a product cannot be substituted, we compr ehensively assess the risk potential of the substance by weighing the degree of HSE risk and regulatory r estrictions or classiﬁcation, technical and ﬁnancial feasibility of developing a substitute, and stakeholder concerns, amongst other considerations. We fulﬁl our obligations by enforcing strict pr ocess and occupational safety and product handling measur es to minimize risks of exposure to health and to the environment. W e have identiﬁed ﬁve chemical substances of concern, which we monitor and manage carefully in line with r egulatory processes and our HSE, pr oduct stewardship, and chemical compliance policies and pr ocedures. We ar e also assessing alternative substances and regulatory actions for these chemicals. In line with our commitment to leadership in product and HSE stewardship, during 2020 the Boar d formally ratiﬁed our policy to not produce, sell or trade solid ammonium nitrate (AN) given the product’ s public safety concer ns. This also allows us to ensure that our business trajectory is in line with global insurance and directors’ liability advice, which is incr easingly stringent around AN. With ever -increasing concerns surrounding AN, the product could be substituted by much safer ur ea or other nitrates going forward. Safe product handling We publish Safety Data Sheets (SDS) on our website for all our products and substances. W e monitor and evaluate the environmental, health and safety data continuously and update the information published in the SDS section of our website regularly . SDSs provide safe handling, storage, disposal, and personal protection equipment (PPE) information and disclosur e on potential health and safety effects due to exposur e or mishandling. All SDSs and product labels comply with applicable laws and regulations, including but not limited to REACH, US EP A, CEP A, and CLP . The safety data sheets are translated into several languages to make them more accessible for our global customers. Stem cell technology , nanotechnology , genetic engineering, and other emerging technologies We do not make use of stem cell technology , nanotechnology , genetic engineering, or any other emerging technologies. Genetically Modiﬁed Organisms (GMOs) and neonicotinoids We do not pr oduce GMOs or neonicotinoids (pesticides), nor do we make use of the technology . Through our participation in farmer education programs, we pr omote the safe use of such products in our supply chain. Animal testing We do not conduct animal testing. RT -CH-320a.2 RT -CH-410b.2 RT -CH-530a.1 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 72 HEAL TH AND SAFETY CONTINUED Unit 2019 2020 Safety Lost Time Injury Rate - total Per 200,000 hours worked 0.16 0.09 Lost Time Injury Rate - employees Per 200,000 hours worked 0.07 0.06 Lost Time Injury Rate - contractors Per 200,000 hours worked 0.30 0.14 T otal Recordable Injury Rate - total Per 200,000 hours worked 0.40 0.23 T otal Recordable Injury Rate - employees Per 200,000 hours worked 0.34 0.12 T otal Recordable Injury Rate - contractors Per 200,000 hours worked 0.49 0.42 Fatalities # 0 0 Process Safety Incidents # 17 21 Process Safety T otal Incident Rate Per 200,000 hours worked 0.32 0.38 Signiﬁcant Process Safety Incidents count 17 21 Major Process Safety Incidents count 0 0 Signiﬁcant Process Safety T otal Incident Rate cases per 200,000 hours worked 0.28 0.38 Major Process Safety T otal Incident Rate cases per 200,000 hours worked 0.00 0.00 2020 SAFETY SCORECARD 11. 14 Million man hours worked 5 Sites achieved zero L TI’ s 72% Reduction in TRIR since 2014 4 4% Reduction in L TIR since 2014 6 Sites achieved zero employee TRIs 2 Smoking free sites ZERO OCI Beaumont achieved 0 TRIRs for the fth consecutive year 1.89% Occupational illness rate Lost Time Injury Rate 0.16 0.07 0.31 2019 0.09 0.06 0.14 2020 T otal Recordable Injury Rate 0.40 0.34 0.49 2019 0.23 0.12 0.42 2020 T otal Employees Contractors Industry leading safety performance 0.09 0.35 L TIR 0.12 1.24 Employee TRIR OCI IF A (2019) OCI Nitrogen r eceives the 2020 OCI NV Safety Awar d 2M 2 million man-hours worked without a lost-time injury zero L TI’ s Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 73 HEAL TH AND SAFETY – CASE STUD Y RT -CH-210a.1 Our r esponse to the COVID-19 pandemic In March 2020, we implemented our emergency r esponse protocol and established a dedicated COVID-19 T askforce to ensure the safety of our employees and business continuity . The taskforce is dedicated to closely monitoring developments and coordinating ef forts across gr oup to align plans and policies to appropriate r esponse measures, ensur e contingency plans are in place, conduct ongoing risk assessment and planning, provide corporate support, and keep employees updated with facts and company actions. Since the onset of the pandemic, our business operations have continued without interruption, as our industries and our products have been designated as critical infrastructur e by the respective governments of each of our markets to ensure the uninterrupted supply of goods and other essential products. W e have applied strict protective measur es, including sanitation, personal protection equipment, social distancing and thermal testing prior to accessing any gr oup locations. As our plants are heavily automated, essential on-site operating and logistics personnel can be limited and administrative and operational support personnel have worked remotely in order to maintain social distancing following governmental guidelines. Although the long-term effects of COVID-19 ar e still unclear , our current outlook is that our ﬁnancial and operating performance remains solid. W e have operated our business in a remote working environment and could continue to do so for an extended period of time, if necessary . Developments in each jurisdiction are being closely monitor ed and protocols ar e ﬂexible to allow for rapid adjustments as needed. The impressive r esilience of our staff thr oughout the period gives all local management teams conﬁdence to revert to a work-fr om-home policy again if needed, without interruptions to our operations and supply chain. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 74 Sustainabilit y R epor t | Gov ernance OCI N.V . Annual Report 2020 75 OUR APPRO A CH T O SUS T AINABILIT Y GO VERNANCE TCFD Governance (a) (b) TCFD Risk Management (a) (c) Our corporate governance structure is designed in compliance with the requir ements of the Dutch Civil Code, the Dutch Corporate Governance Code (Code), applicable securities laws, our articles of association, by-laws, and the rules and regulations of the Eur onext in Amsterdam. All governance policies and procedures ar e published on our website , and a full description of our corporate governance framework, Board composition, oversight and responsibilities, shareholders’ rights, executive compensation and other governance topics can be found on in the Corporate Governance section beginning on page 89. Our ERM framework is described on pages 78-86 and our approach to climate risk is described on page 37. Our Compliance framework, including our ethics and anti-corruption processes, is described on page 87. ESG and Sustainability Governance ESG and sustainability are imbedded into all aspects of our organization, including our strategic objectives, risk management, capital allocation and ﬁnancial planning, operational and commercial activities, and other medium and long-term decision-making. Dedicated Board oversight The Board of Dir ectors has overall responsibility for OCI’ s strategy , business objectives, and risk management, including ESG and sustainability . The Board Health, Safety and Envir onment (HSE) Committee evolved in 2021 to formally include sustainability and was renamed the HSE & Sustainability Committee. The Committee’ s responsibilities include overseeing our approach to managing the risks and opportunities related to sustainability , climate change, and our environmental impact. The Committee met four times in 2020 and its activities and ar eas of focus during the year are described on page 97. In addition to its oversight over health and safety topics, the Committee’ s speciﬁc sustainability and environment related activities during the year included: • Oversight and supervision of the development of our long-term sustainability strategy , ESG targets, and decarbonization pathway; • Oversight and review of our environmental and sustainability risk identiﬁcation and management; • Review of environmental performance, audits, and emergency prepar edness plans; • Review of the sustainability section of the annual report. During 2020, Ms. Heike van de Kerkhof joined the Board as an independent non-executive director and is a member of the HSE Committee. Ms. van de Kerkhof brings a wealth of ESG and sustainability expertise to our Board. Management of ESG The Board has tasked the Executive Dir ectors with the management of ESG and sustainability , including the development and implementation of our ESG targets and strategy , supported by the Group Corporate Af fairs Director . Executive compensation is tied to ESG performance. Each production facility’ s leadership team is responsible for identifying and evaluating sustainability projects and opportunities, and r eport on their progr ess to the Executive Directors during the site’ s monthly business review . The Capex Committee reviews and approves sustainability-r elated capex with a view to balance our sustainability goals with our other commitments and investment returns thresholds. We appointed a Sustainability Dir ector for Europe in 2020 to support our European assets with their decarbonization projects. During the year , we engaged an external consultant to assess our scope 1, 2, and 3 GHG emissions to develop our decarbonization targets and strategy using 2019 as the base year as described on page 39-40. We also engaged an external consultant to support the development of our decarbonization strategy . The Group Corporate Af fairs Director and Investor Relations Dir ector are responsible for internal and external communications, including reporting of our ESG and sustainability performance, strategy , and targets. This is closely aligned with ﬁnancial and non-ﬁnancial functions including our internal audit and risk functions, legal and public affairs, business planning, and operations. Risk Management of Sustainability We perform a compr ehensive assessment of our climate change, environmental and sustainability risks and opportunities both at the operating company level and at the corporate level, assessing relevance at each level accor ding to extent and likelihood of impact. We incorporate sustainability considerations into our assessment and management of all other risks relevant to the topic, such as operations, ﬁnance, and regulatory risks. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 76 Risk Manag ement and Compliance 78 Enterprise risk management and internal control 81 Strategic risks 83 Operational risks 85 Financial risks 86 Regulatory risks 87 Compliance OCI N.V . Annual Report 2020 77 ENTERPRISE RISK MANA GEMENT AND INTERNAL CONTROL TCFD Risk Management (b) (c) Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 78 Our approach Our businesses inherently involve risks. Our management is cognizant of these risks and takes a measured mitigation appr oach. Our Board and management foster a transparent company- wide approach to risk management and internal controls, driven by our conviction that risk management is most effective when it is aligned with our strategy , is integrated at all management levels, and is as dynamic as the industry and environments wher e we operate, allowing us to quickly act on value creation opportunities. Enterprise risk management (ERM) framework Risk management is a company-wide activity with roles and r esponsibilities allocated across all levels of the group to secur e our in-control position. Equipped with updated insights from the market, industry , and geopolitics, we follow a bottom-up approach to ensur e that all relevant business risks are identiﬁed, managed, and r eported in a timely and comprehensive manner . The Internal Audit & Risk team is tasked with providing reasonable assurance to the Boar d of Directors and to the Audit Committee that this risk management approach is adequate. The Board has the overall r esponsibility of maintaining a sound and effective risk management and internal control program. The Audit Committee supports the Boar d in monitoring our risk exposure, including the design and ef fectiveness of our internal control program. While every OCI employee is responsible for managing risk within his or her own ar ea of activity , the Executive Directors – and particularly the CFO - own the Gr oup-wide risk landscape and leads the effort in mitigating all types of risks. The internal Audit & Risk team assists the Audit Committee, Executive management, and local management by facilitating the identiﬁcation of risks and the promotion of risk awar eness and ownership across our organization. The team is centrally managed at the gr oup level and operates across the operating companies. This ensur es our Internal Control Framework (ICF) is properly institutionalized and applied, that we have ef fective and up-to-date internal control and internal audit systems in place, and that we are aligned with our external auditors. Each quarter , executive management monitors and assesses the consolidated group risk pr oﬁle comprising of strategic, operational, ﬁnancial and compliance risks with the involvement of key stakeholders. Our ICF is aligned with the Enterprise Risk Management Integrated Framework of the Committee of Sponsoring Organizations of the T readway Commission (COSO) and the Dutch Corporate Governance Code. It is designed to provide reasonable assurance that the risks we face ar e properly evaluated and mitigated, and that management is pr ovided with all information necessary to make informed decisions. Our Internal Audit function is certiﬁed by the Institute of Inter nal Auditors (IIA). OCI actively assesses the impact of climate-related, sustainability , and environmental risks as described on pages 36-38. We also consider SASB Chemicals Sustainability Accounting Standards along with TCFD r ecommendations when assessing our climate-related risks, as described on pages 31 and 37. ENTERPRISE RISK MANA GEMENT AND INTERNAL CONTROL CONTINUED Our ERM and ICF systems are designed to pr oactively identify , monitor , mitigate, and manage risks: TCFD Risk Management (c) Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 79 OPERA TING COMP ANIES • First line of defense responsibility for the establishment of an effective contr ol environment based on corporate directives and policies • Operational management reporting, risk assessment and mitigation • Internal controls implementation and self- assessment • Weekly business updates to Corporate ofﬁce functions • Detailed monthly review of performance, ﬁnancials, operating issues, and key risks • Semi-annual risk self-assessments and quarterly updates of their business risk proﬁles and r eport to relevant Corporate functions and executive directors • Local Internal Control Ofﬁcer is responsible for supporting local management on the effective implementation of internal controls and the compliance framework • Detailed annual budgeting with monthly updates allowing management to make real-time assessments • Local management signs the Non- Financial Letter of Representation to annually certify the in-control position in relation to the Code of Conduct, Corporate policies, and other non- ﬁnancial requir ements • Operational, health, safety , environmental, quality , security and emergency prepar edness systems are in place at each subsidiary CORPORA TE MANAGEMENT • Risk reporting, assessment, and mitigation • Compliance Framework • Identiﬁcation of and capitalization on key opportunities • Assessment of key market, ﬁnancial, regulatory , and technological developments against strategy execution • Consolidated budget and forecasts ar e used by management to evaluate KPIs, investment strategy , and operations • Each quarter , Corporate management monitors and assesses the consolidated group risk pr oﬁle comprising of strategic, operational, ﬁnancial, sustainability , and compliance risks with the involvement of key executives and corporate function heads • Internal Audit & Risk facilitates and supervises the risk management process, compliance with OCI’ s policies and controls, and pr oactively advises on further optimization of the internal control system • Additional control leadership fr om other corporate functions including Corporate T echnical and HSE, Compliance, Inter nal Control, Legal, T ax, Strategic Planning, and Group Contr oller INTERNAL AUDIT & RISK • Independent and objective assurance about the effectiveness of governance, risk management, compliance, and internal controls • Quarterly reporting by the Internal Audit & Risk department to the Audit Committee of the results fr om internal audits, status of internal controls implementations, OpCo risk assessments and Group consolidated risk dashboard, highlighting effectiveness of actions taken to mitigate the risks, risk trends and the status of risks and issues • Internal Audit & Risk performs periodic independent internal audits of operating and holding companies. Management is consulted on performance developments and gaps and remediation plans • Internal Audit & Risk maintains a central repository for the monitoring of mitigating actions and trends in r elation to each risk, and aides the Board in maintaining objectivity in its risk assessments • The progr ess of audit action plans is monitored by the Internal Audit & Risk department, local internal control ofﬁcers and by local as well as Corporate senior management BOARD OVERSIGHT • Deﬁnes risk appetite and oversees risk management • Delegates responsibility to the Executive Directors and pr ovides resources to achieve the objectives of the organization • Oversees an independent IA function • Board of Dir ectors is given a full ﬁnancial and operational update by the Executive Directors at each Boar d meeting • Audit Committee (on behalf of the Board) monitors and reviews the internal control and risk management system and provides guidance or investigates speciﬁc topics as needed • The Board oversees the performance of both the Internal Audit & Risk team and the external auditor , and receives regular updates and reports fr om both functions Entity Key responsibilities Review and reporting pr ocesses RISK MANA GEMENT Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 80 STRA TEGIC Description Risks that may impede our ability to achieve strategic objectives that we believe are critical to our performance and growth. These ar e risks that are consider ed strategic matters for the Board and Executive Dir ectors, and may impact the company as a whole. Risk appetite As a leading player in our markets, we are able to take certain calculated strategic risks that create opportunities to maximize our ability to deliver outstanding value to our stakeholders. We take a measur ed approach to strategic risk management with clear thresholds set by our Board for r equired investment returns, market risk appetite, growth capital expenditur es, and corporate actions. OPERA TIONAL Description Risks that may impede our ability to achieve operational objectives and performance. These risks can be internal or exter nal, and are typically dir ectly managed and monitored by the local management teams of each operating company and supervised by our Executive Directors. Risk appetite We aim to minimize operational risks while maximizing our ability to capitalize on our leadership positions in our markets. We strive to maximize operational excellence at all facilities while fostering a ‘safety ﬁrst’ culture across the organization with a zer o-tolerance approach to HSE risks. FINANCIAL Description Risks related to ﬁnancial, accounting, and reporting contr ols and processes that may impede our ability to meet ﬁnancial commitments, obligations, and daily operating needs. Risk appetite We implement a ﬁnancial strategy to maintain an efﬁcient balance sheet whilst securing good access to ﬁnancing with a view to deleverage to 2x net debt through the cycle while balancing our capital expenditure needs. Our risk appetite and key policies are described throughout the annual r eport. REGULA TOR Y Description Risks related to non-compliance with or changes in laws and regulations, including HSE, tax, and ﬁnancial reporting, and other legislation that may requir e changes in the way we do business. Risk appetite We comply with applicable laws and regulations everywher e we do business. All employees are bound by our Compliance Framework, which we are continuously embedding throughout our organization. It is in our core values to act with honesty , integrity and fairness to foster a business climate that maintains such standards. Our key business risks with management’ s assessment of each risk’ s potential development Our risk appetite is ﬂexible to account for our diversiﬁed market presence and pr oduct portfolio and is tailored to four main categories. These categories tie into our strategic priorities and aim to support our ability to mitigate against risks and protect OCI's ability to cr eate long-term value. Risk Risk Rating Description Risk management approach POLITICAL RISK, RISK OF UNILA TERAL SOVEREIGN A CTIONS, AND MA CROECONOMIC CHANGES OCI does business in both developed and emerging markets, which means that we are exposed to some countries where ther e is a risk of political or socioeconomic instability , including the risk of adverse sovereign actions. Accordingly , developments in any of the countries in which we operate can create an uncertain envir onment for investment and business activity and may adversely impact our business. This includes certain partnerships and joint ventures that involve various economic, operational, and legal risks that are dif ferent from the risks involved in owning facilities and operations independently . We mitigate the impact of potential risks in any single market by diversifying our presence, both in terms of sales destinations and the geographic locations of our production facilities, which ar e in emerging and developed markets. Our run-rate production capacity of 16.2 million metric tons is evenly split geographically , with 35% in the USA, 24% in Europe, and 41% in the Middle East and North Africa. In addition, we sell our products ar ound the world, reaching 63 countries in 2020. We actively monitor economic, political, and r egulatory developments and maintain positive relationships with various governmental bodies in the countries where we operate as part of our effort to be a ‘local’ player in each of our markets and have strategically partnered with sover eign-backed entities. Our legal team also works diligently to monitor and review our practices and any changes in laws or r egulations in the countries where we operate to pr ovide reasonable assurances that we remain in line with all relevant laws. Management has also drafted contingency plans for various unforeseen events and adverse scenarios. RISK MANA GEMENT Strategic Risks ASSOCIA TED STRA TEGIC PRIORITIES Commercial Strategy Business Optimization Risk Rating Risk decreasing Risk stable Risk increasing Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 81 Risk Risk Rating Description Risk management approach CLIMA TE , ADVERSE WEA THER CONDITIONS, AND NA TUR AL DISASTERS Climate change and adverse weather conditions can negatively impact field work and fertilizer application seasons, which may affect the demand for our pr oducts. Climate change also poses a global transition risk which may result in changes to market dynamics, legislation, and technology . Please refer to page 37 for a description of the risks and opportunities presented by climate change. Adverse weather conditions and natural disasters such as hurricanes, health epidemics or pandemics (including the current COVID-19 outbr eak), and other extraordinary events could result in pr operty damage, loss of life, production interruptions, and supply chain disruptions. We have a balanced pr oduct split with no single product r epresenting more than approximately 34% of our capacity . Our products have inherently dif ferent industrial dynamics, including differ ent supply/demand drivers, seasonal cycles, customers, competitors, and other factors that may affect prices and demand patterns. This mitigates the risk of the impact of an individual product’ s fluctuations and results in a more stable r evenue stream. We ar e also geographically diversified, reducing the risk of local or regional weather events. Please r efer to pages 39-40 for a description of how we intend to reduce our envir onmental impact and contribute to achieving the decarbonization goals set by the Paris Agreement. In terms of natural disasters and pandemics, we have comprehensive emergency prepar edness systems in place that allow us to quickly react to extraor dinary events, and our assets have business interruption insurance policies in place that cover natural disasters. For a description of how we are managing COVID-19, please r efer to page 74. RISK MANA GEMENT Strategic Risks c ontinued ASSOCIA TED STRA TEGIC PRIORITIES Sustainability Operational Excellence Risk Rating Risk decreasing Risk stable Risk increasing Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 82 Risk Risk Rating Description Risk management approach CHANGES TO CONDITIONS AFFECTING OUR MARKETS AND COMMODITIES Our products ar e global commodities with little or no product dif ferentiation, and supply-demand dynamics can be affected by global tr ends such as dietary patterns and population growth af fecting demand for food, swings in crop and agricultural prices, global pr oduction capacity for our products, and the availability and pricing of the raw materials requir ed to produce our products – particularly natural gas. Our diversified product mix is exposed to a variety of cyclical and seasonal patterns which mitigates the impact of an individual product’ s fluctuations and results in a more stable r evenue stream. We continuously evaluate our price exposur e and have hedged our feedstock positions where appr opriate based on our risk appetite and our understanding of market factors. We also occupy a leading market position in many of our products. We have policies in place to r espond to competitive factors and maintain mutually beneficial relationships with our key customers to ef fectively compete and achieve our business plans. We have global sales, marketing, distribution, and logistics teams that work diligently to expand our sales channels, develop new and repeat customer relationships, negotiate favorable contracts, and cr eate market contacts by attending various industry and trade conferences. In 2020, we further str engthened our competitive position with the integration of Fertiglobe, which contributes 2.1 million tons to our product portfolio, and pr ovides enhanced logistical agility to better serve our customers. Our production and manufacturing teams also work diligently to ensur e our plants operate efficiently to pr oduce high quality products that meet or exceed international standards. Our pr oducts and processes ar e certified by global quality control institutions. In terms of the availability and cost of our key feedstock – natural gas – we have hedged our global exposure to natural gas price fluctuations thr ough a mix of long-term contracts in the United Arab Emirates, Egypt and Algeria, and spot prices in the United States and the Netherlands, where we also take calculated hedge positions. We continuously identify , implement, and sustain cost improvement plans, including our outsourcing pr ojects and those related to general overhead and workforce rationalization. RISK MANA GEMENT Operational Risks ASSOCIA TED STRA TEGIC PRIORITIES Commercial Strategy Operational Excellence Risk Rating Risk decreasing Risk stable Risk increasing Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 83 Risk Risk Rating Description Risk management approach BUSINESS INTERRUPTION AND PRODUCTION Our production facilities may experience unplanned shutdowns or utilization rate reductions, which may r esult in lost volumes and unplanned costs. We have consistently invested in best-in-class technologies at all our facilities, which maximizes reliability and ef ficiency . Our facilities are on average the youngest in the industry with approximately 56% of our pr oduction capacity under ten years old, which supports above average utilization rates and low maintenance costs. We have also invested heavily in our older facilities to refurbish, debottleneck, and impr ove efficiency and reliability . We have a well-developed pr eventative maintenance system, including scheduled maintenance turnarounds, frequent follow ups on action items fr om previous shutdowns, and regular knowledge- sharing amongst all sites including compr ehensive training programs for our plant employees. W e maintain adequate spare parts positions and winterization procedur es (where appropriate) as well as r eliability initiatives where requir ed. Our plants have Business Continuity plans to respond to adverse events, and for large and extended shutdowns, our plants have business interruption insurance. HUMAN CAPIT AL We may face risks to our ability to employ , develop, and retain talented employees is essential to maintain our high- quality operations and management. We have been able to attract, motivate and r etain knowledgeable and experienced employees thanks to our reputation and market position, our in-house training and talent development programs, our Employee Incentive Plans (as described in note 21 of the financial statements), as well as our strategic partnerships with industry leaders, which offer employees exposur e to high profile projects and advanced technologies. We have instituted employee succession pr ogram for key positions across the group to ensure ef fective knowledge transfer in support of the continuity of our business operations. RISK MANA GEMENT Operational Risks c ontinued ASSOCIA TED STRA TEGIC PRIORITIES Maximizing free cash ﬂow Operational Excellence Risk Rating Risk decreasing Risk stable Risk increasing Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 84 Risk Risk Rating Description Risk management approach CAPIT AL STRUCTURE, ALL OCA TION, AND CURRENCY FLUC TUA TIONS Our ability to deploy and raise capital effectively can impact our ability to achieve our strategic priorities or capitalize on business opportunities. Although we strive to ensure that adequate levels of working capital and liquidity are maintained, unfavorable financial market conditions may adversely affect our financing costs, hinder our ability to achieve additional financing, and/or hinder our ability to refinance existing debt. This could ther efore have an adverse impact on our business prospects, earnings and/ or our financial position. In addition, a substantial portion of our consolidated revenue, operating expenses and long-term debt is denominated in foreign curr encies. Significant changes in the exchange rates of certain operational currencies, such as the US Dollar , the Euro, and the Algerian Dinar , can have a material effect on our financial performance. We have a r obust capital allocation strategy that aligns to our strategic priorities, with the governance and decision-making measures in place to balance opportunities and risks. We strive to maintain a str ong financial position and creditworthiness with our cr editors. We closely monitor our cash position and cr edit lines to ensure our financial flexibility . We have also diversified our funding sour ces to avoid dependence on a single market, staggered our debt maturity pr ofile to reduce repayment bur dens and have implemented other working capital improvement pr ograms. OCI has robust in-house financing expertise and a proven track r ecord in both refinancing debt and accessing new funding. We hedge our for eign exchange cash flow risk on a consolidated basis by matching our foreign curr ency- denominated liabilities with continuing sources of for eign currencies. CYBERSECURITY Despite our IT security measures, our information technology and infrastructure may be vulnerable to cyber - attacks or breaches. Any such br each could result in business disruption or compromise our systems and r esult in downtime or leak of personal and/or business sensitive data adversely affecting our r eputation. We continuously implement up-to-date security pr ocedures and measur es to strengthen our security posture and minimize our vulnerabilities to cyber -attacks. We believe these measures and pr ocedures are appr opriate. Our IT team is focused on the monitoring and enhancement of our IT security capabilities across the gr oup for both our IT infrastructures and plant pr ocess control systems. In addition, we invest in internal resources and engage with external security experts to support the implementation of various action plans that are part of our compr ehensive cyber security management system. Throughout the year , we run several inter nal and external security assessments across the group to ensur e that our risk levels are appr opriate. We also maintain a group wide cyber insurance program as last line of defense in case of adverse incidents. Additionally , we regularly run IT audits and security assessments to ensur e the continuous effectiveness of our security measur es. RISK MANA GEMENT Financial Risks ASSOCIA TED STRA TEGIC PRIORITIES Maximizing free cash ﬂow Business Optimization Risk Rating Risk decreasing Risk stable Risk increasing Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 85 ASSOCIA TED STRA TEGIC PRIORITIES Sustainability Operational Excellence Risk Risk Rating Description Risk management approach CHANGES IN REGULA TOR Y CONDITIONS IN THE MARKETS IN WHICH WE OPERA TE Changes in laws, regulations and the r elated interpretations may alter the environment in which we do business. This includes changes in health and safety , competition and product-r elated laws and regulations, as well as changes in accounting standards and taxation r equirements. This also includes the impact of proposed climate change related r egulations at both the international and national levels, such as the EU’ s proposed carbon dioxide reduction targets, and more intensified or bur densome tax regulation and tax controversy challenges to curb budget shortfalls resulting fr om the negative economic impact of the COVID-19 pandemic. Failure to comply with these laws may r esult in substantial fines, penalties, or other sanctions such as the obligation to invest in newer equipment, permit revocations or facility shutdowns. Consequently , we may experience delays in obtaining or be unable to obtain requir ed permits, which may delay or interrupt our operations. In addition, global geopolitics have created uncertainty ar ound tariff implementation in key markets (particularly in the US, EU, and China), which may affect pr oduct or feedstock pricing. Our ability to manage regulatory , tax and legal matters and to resolve pending matters within curr ent estimates may impact our results. We actively monitor r egulatory developments to ensure we comply with the laws and regulations of the countries wher e we operate, including climate and HSE legislation to maintain our licenses to operate. Additionally , we actively provide comments and feedback regar ding proposed or draft rules when given the opportunity , specifically when draft rules are open for public comments. As a result of the Paris Climate Agr eement and the European Union’ s announced carbon dioxide emissions reductions targets, our Dutch operations ar e part of a group of companies engaged in the ongoing dialogue with Dutch government regarding pr oposed new carbon dioxide emissions regulations and additional taxes. W e are also engaged in ongoing lobbying on the national and European Union levels to enhance cooperation and transparency between r egulators and our industries. We have also committed to r educing our greenhouse gas emissions to reduce our environmental impact and contribute to achieving the decarbonization goals set by the Paris Agreement. Please r efer to pages 39-40 for more information. We continue to monitor closely and maintain flexibility to change trade flows and accommodate tariffs and continue to monitor r egulatory developments and develop targeted action plans as part of our Group Compliance Framework. ABILITY TO MAINT AIN OUR HEAL TH, SAFETY AND ENVIRONMENT (HSE) ST ANDARDS HSE is a vital aspect across the gr oup. We have a deep commitment to maintaining our strong HSE track r ecord. Despite the nature of our businesses, we aim to pr event every accident through stringent HSE rules, standar ds, and training programs. We implement strict HSE training and operating discipline at every plant to minimize HSE risks, and we closely monitor our plants through r egular management site visits and HSE audits, in addition to comprehensive knowledge sharing acr oss the group. Our safety and emissions recor ds meet or exceed international standards, underscoring our commitment to providing our employees with a safe, secur e, and environmentally conscious workplace. In addition, the HSE Committee supervises our HSE activities, as described in the HSE Committee report. Risk Rating Risk decreasing Risk stable Risk increasing RISK MANA GEMENT Regulatory Risks Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 86 COMPLIANCE OCI strives to conduct all business activities responsibly , transparently , and with integrity and respect towar ds all stakeholders. These values underpin everything we do and form the framework which deﬁnes the day-to-day attitudes and behaviour of our employees. Our approach T o make those values clear and provide clear ground rules for how we do business, our Compliance Framework consists of policies that describe in speciﬁc terms what we stand for as a company and the conduct requir ed in the workplace, in how we deal with business partners, serve our customers, and the broader r esponsibilities we have to the communities in which we work and live. The Compliance Framework also sets out rules on important topics such as the prohibition of bribery , dealing with conﬁdential information and conﬂicts of interest, competition law , third-party due diligence, the importance of accurate record keeping and r eporting, and explains the possibility of disciplinary measures when in br each of the framework. All employees are trained on the key principles and applications of the Compliance Framework through a gr oup-wide e-learning platform and can raise any concer ns and breaches through a safe and conﬁdential whistleblowing and incident reporting pr ocedure. An anonymous r eporting procedur e is also available, through which employees can r eport to a whistleblower hotline hosted by a third-party hotline pr ovider . All reports ar e handled with the utmost care and conﬁdentiality , regar dless of if reported internally or via the anonymous reporting hotline. The majority of employees eligible or included in the various programs successfully completed their training. Moving forward, we will continue to raise awar eness of compliance and train employees in relevant policies and pr ocedures. Our compliance program The Chief Legal and Human Capital Ofﬁcer (CLHCO) is the Executive Dir ector responsible for ethics and compliance. The Group Compliance Of ﬁcer , in close collaboration with the CLHCO and the rest of the Boar d of Directors, implements our gr oup Compliance Program and ensures that our Compliance Framework remains in line with applicable r egulations and is properly applied. The Integrity Committee, comprising of the CFO, the CLHCO, and the Group Compliance Of ﬁcer , handles incidents of a severe natur e. The Integrity Committee did not meet in 2020, as no incident of a (potential) severe natur e was reported. Management of Operating Companies and staff departments ar e responsible and accountable for raising compliance awareness within their r espective businesses and departments and are supported by a Local Compliance Ofﬁcer who r eports on alleged breaches and compliance incidents to both operating company management and to corporate leadership. Additionally , the Audit Committee receives a Quarterly Compliance Report. At the start of every year the Group Compliance Of ﬁcer , in collaboration with operating company management, sets the annual compliance agenda. The agenda consists of continuous and new compliance activities and requir ements, to ensure gr owth in maturity of the Compliance Program. These activities and requir ements are concrete and measurable, and ar e reported internally on a quarterly basis, and can be tested on their effectiveness. Thr ough this annual agenda, compliance controls ar e continuously developed and enhanced for effectiveness. In 2020, amongst others, the following compliance requir ements and activities were achieved: • T raining and awareness sessions on various compliance topics, among which competition law , gifts & entertainment, conﬂict of interest, and diversity and inclusion • Development and implementation of a process for compliance risk mapping and setting the standard for the gr oup’ s risk appetite • Successful implementation of the third-party due diligence software and enhancement of the related scr eening procedure • Implementation of a new whistleblowing hotline, including an incident management system • Development and implementation of a tailor -made compliance framework for Fertiglobe and its operational companies At the end of the year , the CEO and CFO of each operating company sign the Non-Financial Letter of Representation (NF LoR) to conﬁrm compliance with the Code of Conduct and other corporate non-ﬁnancial requir ements. The outcome is reviewed by the CFO, CLHCO, the Gr oup Compliance Ofﬁcer and the Dir ector Internal Audit & Risk and the results are r eported to the Audit Committee and the Board of Dir ectors. Reported outstanding actions are followed up on by the Internal Audit department and monitored in quarterly reviews. The outcome of the NF LoR process, in combination with the internal control self- assessments, the HSE r eports, the Compliance reports, the risk assessments and the performed internal audits, establishes the basis for the In Control Statement of the Boar d of Directors in this Report. During 2020, we received 9 incident notiﬁcations. All incidents wer e investigated, with no substantial cases found. There wer e no violations of applicable laws in 2020. Privacy and data policy Code of Conduct Whistle-blower policy Insider T rading & Market Abuse policy Sanctions Policy Human Rights Policy Applicable laws and regulations Anti-bribery and Corruption policy Competition policy Business Partner Code of Conduct COMPLIANCE FRAMEWORK Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 87 W e promote sustainable agricultur e and nutrient stewardship through our supply chain, which begins with sourcing natural gas and ends at our agricultural and industrial customers. W e work diligently to ensure every aspect of our business operates optimally and promote best practices thr ough our Business Partner Code of Conduct . Our governance and compliance policies and expectations of ethical business practices extend beyond our operations throughout our supply chain thr ough our Business Partner Code of Conduct. We seek to awar d business to suppliers and business partners with whom OCI has a supplier relationship (collectively , Business Partners) who are committed to act fairly and with integrity towards their stakeholders, who have adopted and pr omote the implementation of strong business principles, and who observe the applicable laws of the country in which they operate. We hold every Business Partner to the same level of accountability , transparency , and respectability as we do ourselves to ensur e our entire value chain secur es the salient rights of every individual. Business Partner Code of Conduct Our Business Partner Code of Conduct summarizes the values and expectations we requir e all Business Partners to adhere to and aligns to international laws and standards on ethics, labor , and human rights such as those set out by the International Labor Organization (ILO) and the United Nations International Children's Emergency Fund (UNICEF), the United Nations Guiding Principles on Business and Human Rights, and others. Screening and due diligence Based on the company’ s Sanctions Policy , a screening of all Business Partners performed when considering Business Partners. Via a compliance software tool, we conduct customary due diligence including a screening of the Business Partner against sanction lists and compliance databases, on environmental performance, labour practices, and human rights performance. W e also check if any adverse media coverage in relation to the Business Partner exists, including if the future Business Partner has been involved in other unethical or illegal conduct. In addition, all existing Business Partners are continuously monitor ed via this software tool. It is the Business Partner's responsibility to maintain and enfor ce compliance within its supply chain. Key Business Partners undergo more in-depth scr eening as part of our due diligence process. The effectiveness of our Business Partner scr eening processes is evaluated by the compliance team and the internal audit team as part of their regular compliance and audit cycles, which also includes Business Partner audits as part of contractual arrangements. Reporting Business Partner misconduct We pr ovide a clear reporting mechanism for suspected Business Partner misconduct through our whistleblowing platform, which includes an anonymous reporting pr ocedure via a hotline hosted by a third-party hotline pr ovider . More information is available in the Business Partner Code of Conduct and on our website. COMPLIANCE Our Code of Conduct e xtends acr oss our supply chain Business Partners across our business partner chain Business Partner audits conducted as part of contractual arrangements of Business Partners are r equired to adhere to Business Partner Code of Conduct   REGUL AR  Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 88 90 Co-Chair's intr oduction 91 Board pr oﬁle 95 Board r eport 104 Remuneration r eport 117 Declarations Corpor ate g o vernanc e OCI N.V . Annual Report 2020 89 OCI N.V . Annual Report 2020 89 The exceptional events of 2020 emphasized the importance of robust governance for the effective management of our business. I am impressed by the way OCI N.V . (OCI or Company) navigated the year’ s challenges and congratulate every employee for their perseverance and resour cefulness to deliver strong performance for OCI and its gr oup companies (Group), despite the year’ s unusual working conditions and personal stress. During the year , the Board of Dir ectors (Board) oversaw several initiatives that we believe have allowed OCI to achieve strong cohesion and develop a clear purpose. Strategically , we mandated the executive directors (Executive Directors) to further develop OCI’ s commitment to decarbonization through the development and implementation of our recently announced envir onmental and social targets and sustainability strategy . We also r eafﬁrmed this commitment by establishing the HSE & Sustainability Committee to provide dedicated guidance on the subject and aligned the Executive Directors’ long-term compensation to a basket of envir onmental, social, and governance (ESG) metrics. Culturally , we oversaw the launch of the OneOCI platform, which we are pleased to see was instrumental in helping develop a uniﬁed community throughout the Gr oup despite the physical separation caused by COVID-19. We also oversaw the launch of a Groupwide diversity and inclusion pr ogram, which includes a target to increase the r epresentation of women in senior leadership to 25% by 2025. We also guided the Gr oup through changes to OCI’ s leadership. During the year , Mr . Nassef Sawiris was appointed Executive Chair , allowing him to focus on directing OCI’ s strategy and long-term value creation. Mr . Ahmed El-Hoshy succeeded Mr . Nassef Sawiris as Chief Executive Ofﬁcer and was appointed to the Board. Having worked with the OCI leadership team for many years in my capacity as Co-Chair , I believe OCI is led by a formidable team that is best suited to drive the business forward. In addition, we welcomed Ms. Heike van de Kerkhof as a non-executive director (Non-Executive Dir ector). Ms. Heike van de Kerkhof brings a wealth of expertise in sustainability to the Board, which is particularly timely given the Gr oup’ s commitment to decarbonization. For the year ended 31 December 2020, the Board r eports the following: • The Board has reviewed and discussed the audited ﬁnancial statements for the year 2020. • The Board discussed with the external auditor the outcome of their performed audits in accordance with International Standards on Auditing. • The Board has received written conﬁrmation of the external auditor’ s independence. • Based on the review and discussions referr ed to above, the Board has appr oved that the audited consolidated and parent company ﬁnancial statements be included in the 2020 Annual Report (Annual Report). The Board r ecommends that the General Meeting of Shareholders (GM) adopts the 2020 ﬁnancial statements included in this Annual Report and looks forward to overseeing continued excellence in every aspect in 2021. MICHAEL BENNETT CO-CHAIR I congratulate every employee for their perseverance and r esourcefulness to deliver str ong performance for OCI and its gr oup companies CO - CHAIR'S INTRODUC TION Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 90 Michael Bennett Nassef Sawiris Ahmed El-Hoshy Hassan Badrawi Maud de V ries Co-Chair and Senior Independent Non-Executive Director Executive Chair Chief Executive Of ﬁcer (CEO) Chief Financial Ofﬁcer (CFO) Chief Legal and Human Capital Ofﬁcer (CLHCO) Y ear of birth 1953 1961 1984 1976 1972 Gender Male Male Male Male Female Nationality American Egyptian/Belgian Egyptian/American Egyptian/British Dutch Initial appointment date January 2013 January 2013 June 2020 May 2018 June 2019 Date of last re-appointment June 2020 June 2020 - June 2020 June 2020 End of current term 2023 2024 2024 2024 2024 Ordinary shar es owned 23,500 69,374,747 60,928 129,601 10,647 Committee membership 1 N&R - - - - Attendance at Board and Committee meetings 2 BoD (6/6) N&R (8/8) BoD (6/6) BoD (3/3) BoD (6/6) BoD (6/6) Current external appointments • Director Morningside College • Please see the summary of skills and experience on page 94 • Supervisory Director Adidas AG • Chairman and CEO of Avanti Acquisition Corp. • Executive chairman of Aston Villa FC Member of the: • J.P . Morgan Inter national Council • Cleveland Clinic’ s Inter national Leadership Board Executive Committee • University of Chicago’ s Board of T rustee • Exor N.V . Partners Council • Council on Foreign Relations Global Board of Advisors • Please see the summary of skills and experience on page 94 Please see the summary of skills and experience on page 94 Risk management and for further experience please see the summary of skills and experience on page 94 • EVP HR NNS Luxembourg S.à r .l. • Please see the summary of skills and experience on page 94 BO ARD PROFILE 1 Board and Committees: BoD: Board of Dir ectors, AC: Audit Committee, HSE: Health, Safety and Environment & Sustainability Committee and N&R: Nomination and Remuneration Committee 2 The attendance at board and committee meetings is pr o-rated to the term of the individuals Board and Committee membership during the year Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 91 Sipko Schat Jérôme Guiraud Robert Jan van de Kraats Gr egory Heckman Vice-Chair and Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Y ear of birth 1960 1961 1960 1962 Gender Male Male Male Male Nationality Dutch French Dutch American Initial appointment date December 2013 June 2014 June 2014 June 2015 Date of last re-appointment June 2020 June 2020 June 2020 June 2020 End of current term 2024 2024 2024 2024 Ordinary shar es owned 5,000 180,190 3,725 40,000 Committee membership 1 AC, N&R (chair) AC, N&R AC (chair), N&R HSE Attendance at Board and Committee meetings 2 BoD (6/6) AC (5/5) N&R (8/8) BoD (6/6) AC (5/5) N&R (8/8) BoD (6/6) AC (5/5) N&R (8/8) BoD (6/6) HSE (4/4) Current external appointments • Member Supervisory Board: • Rothschild & Co. • Rothschild Bank A.G. • T raﬁgura Group Pte Ltd • Drienim B.V . • Director Randstad Beheer B.V . • Please see the summary of skills and experience on page 94 • CEO NNS Luxembourg S.à r .l. • Co-CEO NNS Advisers Ltd • Non-Executive Director and Chairman Orascom Construction Plc • Non-Executive Director BESIX Gr oup • Director various NNS Group entities and OS Luxembourg S.à r .l. • Please see the summary of skills and experience on page 94 • Non-Executive Director VEON Ltd. (Chairman of the Audit and Risk Committee) • Non-Executive Chairman TMF Group • Supervisory Board Member Royal Schiphol Group N.V . • Director Randstad Beheer B.V . • Member advisory board SUITSUPPL Y • Advisor to the Supervisory Board HEMA B.V . 3 • Risk management and for further experience please see the summary of skills and experience on page 94 • Member of the board and CEO Bunge Ltd • Member Rabobank North America Agribusiness Advisory Board • Member NYSE Board Advisory Council • Member Board of Governors for the AKSARBEN Foundation • Member of University of Illinois Division of Intercollegiate Athletics Campaign Steering Committee • Please see the summary of skills and experience on page 94 BOARD PROFILE CONTINUED 1 Board and Committees: BoD: Board of Dir ectors, AC: Audit Committee, HSE: Health, Safety and Environment & Sustainability Committee and N&R: Nomination and Remuneration Committee 2 The attendance at board and committee meetings is pr o-rated to the term of the individuals Board and Committee membership during the year Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 92 Anja Montijn-Groenewoud David Welch Dod Fraser Heike van de Kerkhof Independent Non-Executive Director Independent Non-Executive Dir ector Independent Non-Executive Director Independent Non-Executive Dir ecto r Y ear of birth 1962 1953 1950 1962 Gender Female Male Male Female Nationality Dutch American American German Initial appointment date June 2016 May 2019 May 2019 October 2020 Date of (last) re-appointment June 2020 June 2020 June 2020 - End of current term 2024 2024 2024 2024 Ordinary shar es owned - - 4,000 - Committee membership 1 HSE (chair), N&RC HSE AC HSE Attendance at Board and Committee meetings 2 BoD (5/6) HSE (4/4) N&R (7/8) BoD (6/6) HSE (4/4) BoD (5/6) AC (5/5) BoD (1/1) HSE (1/1) Current external appointments • Member of the Supervisory Board of Fugro N.V . • Member of the Board VEUO (a repr esentative organization of listed companies which looks after the interest of companies listed at Euronext Amster dam) • Please see the summary of skills and experience on page 94 • Member of the Council on Foreign Relations and the American Academy of Diplomacy • Please see the summary of skills and experience on page 94 • Independent Dir ector Subsea 7 S.A. • Non-Executive Chairman Rayonier Inc. • Member of the Board of Fleet T opco Limited, the private holding company of Argus Media Ltd. • Please see the summary of skills and experience on page 94 • Chief Executive Ofﬁcer and Member of the Board of Dir ectors at Archroma • Non-Executive Director at V enator Materials PLC • Please see the summary of skills and experience on page 94 BOARD PROFILE CONTINUED 1 Board and Committees: BoD: Board of Dir ectors, AC: Audit Committee, HSE: Health, Safety and Environment & Sustainability Committee and N&R: Nomination and Remuneration Committee 2 The attendance at board and committee meetings is pr o-rated to the term of the individuals Board and Committee membership during the year Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 93 M. Bennett N. Sawiris A. El-Hoshy H. Badrawi M. de V ries S. Schat J. Guiraud R.J. van de Kraats G. Heckman A. Montijn D. W elch D. Fraser H. van de Kerkhof Independent • • • • • • • • International business experience • • • • • • • • • • • • • Commercial/Marketing • • • • • • • HSE • • • • • • • Strategic management • • • • • • • • • • • • • Financial expertise: banking • • • • • • • Financial expertise: accounting • • • • • Nitrogen/Methanol experience • • • • • • Emerging Markets experience • • • • • • • • • • • • T ax/Legal/Compliance • • • • • • HR & executive compensation • • • • • • • • Risk management / Internal Control & Audit • • • • • • • • • Government/Regulatory knowledge • • • • • • • • Sustainability • • • • • • • • • • Change management / Business consolidation • • • • • • • • • • • • • T echnology / IT • • • • • BOARD SUMMAR Y OF SKILLS AND EXPERIENCE Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 94 OCI is a public limited liability company ( naamloze vennootschap ) established under the laws of the Netherlands, with its ofﬁcial seat in Amster dam, the Netherlands. Governance framework Introduction OCI is committed to the principles of good corporate governance. The Board believes that good corporate governance practices align the interests of all stakeholders by having structures in place that ensure the business is managed with integrity and ef ﬁciency , thereby maximizing the proﬁtability and long-term value cr eation of the Company . OCI's strategic priorities as described on pages 6-19 aim to deliver long-term value creation for the Company and its stakeholders. These priorities are supported by the Boar d and are underpinned by OCI’ s commitment to invest in products that help achieve OCI's purpose of cultivating a sustainable world through cleaner fuel solutions, lower carbon feedstocks, and global food security . Please refer to the Strategy and value cr eation section of this Annual Report for the Board’ s view on OCI's strategy and its implementation. Organizational and corporate structure OCI is organized by its two primary functional segments, nitrogen and methanol. The Board sets the strategic mandate with operational, ﬁnancial, and sustainability goals r elayed to management. The Executive Directors manage the achievement of these goals and the day-to-day operations. In executing the goals, the Executive Directors ar e supported by several corporate functions. In addition, each principal subsidiary is led by a general manager and a ﬁnance director who r eport to the Executive Directors. Governance structure OCI has designed its corporate governance structure in compliance with its articles of association, by-laws, the requir ements of the Dutch civil code, the Dutch corporate governance code (Code), the applicable securities laws, rules and regulations of the Amster dam stock exchange and international best practices. All gover nance and compliance policies and procedur es are available on our website under Corporate Governance . Shareholders Articles of Association – By-laws Board (one-tier) Articles of Association – By-laws – Board pr oﬁle – Board Rotation Schedule – Board D&I Policy – Reserved Matters – Code of Conduct – Related Party T ransactions Policy – Insider T rading Code Audit Committee HSE & Sustainability Committee Nomination and Remuneration Committee T erms of refer ence T erms of reference T erms of refer ence Executive Directors Operating company management Local laws and regulations Code of Conduct Insider T rading Code Business Partner Code of Conduct Diversity and Inclusion Policy Anti Bribery and Corruption Policy Human Rights Policy Whistleblower Policy Sanctions Policy BO ARD REPOR T Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 95 BOARD REPORT CONTINUED The Board of Dir ectors OCI is managed by a one-tier Board comprised of Executive Dir ectors and Non-Executive Directors. The Boar d maintains three committees as part of its supervisory role: the Audit Committee, the Nomination and Remuneration Committee and the HSE & Sustainability Committee (Committees). The Board is collectively r esponsible for OCI’ s management and strategy . The Board promotes a culture of openness and accountability within the Boar d and throughout the entir e organization. The tasks, responsibilities and pr ocedures of the Boar d are set out in OCI’ s by-laws, which are available on OCI’ s website. The Board has delegated the operational management of the business to the Executive Dir ectors, apart from certain r eserved matters as set out in such Board r esolution, OCI’ s articles of association and by-laws. The Board is authorized to r epresent OCI. In addition, the Co-Chair of the Board and each Executive Director ar e authorized to solely represent OCI. Executive Directors The Executive Directors ar e charged with the day-to-day management of OCI. They are responsible for the continuity of OCI, the optimization of its business, and cr eating a culture that contributes to long-term sustainable value creation for stakeholders. Each Executive Dir ector has an individual responsibility for certain business segments, functional ar eas, projects and tasks. Our strategic priorities include operational excellence, global commercial strategy , sustainable solutions, decarbonization, and maximizing free cash ﬂow . During 2020, the Board was composed of the following thr ee Executive Directors: Mr . Nassef Sawiris (CEO), Mr . Hassan Badrawi (CFO) and Ms. Maud de V ries (CLHCO). Mr . Ahmed El-Hoshy was appointed to the Board at the 2020 AGM as Executive Dir ector , thereby bringing the total number of Executive Directors to four . Mr . Ahmed El-Hoshy assumed the role of CEO fr om Mr . Nassef Sawiris per 1 August 2020. Mr . Nassef Sawiris became the Executive Chair of the Board as per that same date. The Executive Chair is, amongst others, responsible for determining the strategy of the Group and pr oviding guidance to the other Executive Directors. Non-Executive Directors The role of the Non-Executive Dir ectors is essentially supervisory in nature. The Non-Executive Directors supervise, amongst others, the inter ests of the stakeholders, fostering a culture aimed at long-term value creation, the operational, ﬁnancial and sustainability goals, the establishment and maintenance of internal procedures to ensur e that all relevant information is known to the Boar d in a timely fashion, and shareholder engagement. During 2020, the Board was composed of nine Non-Executive Dir ectors: Mr . Michael Bennett, Mr . Jan T er Wisch, Mr . Sipko Schat, Mr . Jérôme Guiraud, Mr . Robert Jan van de Kraats, Mr . Gregory Heckman, Ms. Anja Montijn-Gr oenewoud, Mr . David Welch and Mr . Dod Fraser . The appointment of Mr . Jan T er Wisch as Independent Non-Executive Director and Vice-Chair of the Board ended at the AGM. Ms. Heike van de Kerkhof was appointed to the Boar d as Independent Non- Executive Director at the Extraor dinary General Meeting of Shareholders (EGM) on 20 October 2020, bringing the total number of Non-Executive Directors back to nine, and bringing knowledge and experience in sustainability to the Board. As of 1 August 2020, Mr . Michael Bennett became Co-Chair and Senior Independent Non-Executive Director and Mr . Sipko Schat became Vice-Chair and Independent Non-Executive Director . The Co-Chair is primarily responsible for the functioning of the Boar d and its Committees. T ogether with the Company Secretary , the Co-Chair sets the agenda for Board meetings and leads an induction program for new Dir ectors tailored to their r espective needs. The Vice-Chair acts as the contact for shareholders and other stakeholders of the Company with r espect to concerns which have not been resolved through the normal channels of the Co-Chair , the Executive Chair or the other Executive Directors. Appointment of Directors The GM can appoint, suspend or dismiss an Executive Director or a Non-Executive Dir ector by an absolute majority of the votes cast upon a proposal of the Boar d. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 96 BOARD REPORT CONTINUED 2020 Board and Committee meetings The table below summarizes how the duties of the Board and the Committees wer e carried out during 2020, including the focus topics that were r eviewed, discussed and advised on. Board Audit Committee Nomination and Remuneration Committee HSE & Sustainability Committee General The Board focused on matters contributing to medium and long-term value creation and continues to be involved in shaping the strategy through r egular discussions and focus on supervising medium to long term strategic targets aligned with OCI’ s vision. The Board maintains three committees as part of its supervisory r ole, these committees are Non-Executive committees. The Chair met with the internal and external auditor in advance of every Audit Committee meeting to secure that all relevant issues wer e sufﬁciently addressed. The external auditor attended all Audit Committee meetings in 2020 and was able to meet with the Audit Committee without the presence of management in each meeting. More information on the r emuneration policy and the 2020 remuneration r eview can be found in the Remuneration Report beginning on page 104. More information on HSE and sustainability can be found in the sustainability section beginning page 29. T asks, responsibilities and procedures Set out in the by-laws Set out in the T erms of Reference of the Audit Committee Set out in the T erms of Reference of the Nomination and Remuneration Committee Set out in the T erms of Reference of the HSE & Sustainability Committee Number of Members 13 Directors Four Non-Executive Dir ectors. Mr . Robert Jan van de Kraats is the Chair given his competence in accounting and auditing as per section 2(3) of the Audit Committee Decree 2016 Five Non-Executive Directors. Mr . Sipko Schat is the Chair Four Non-Executive Directors. Ms. Anja Montijn-Groenewoud is the Chair Number of Meetings held Six Five Eight Four Focus topics • Medium and long term strategy • COVID-19 • HSE • ESG and sustainability and regulatory environment (Climate Agreement in the Netherlands, Dutch Carbon T ax and impact on the Dutch businesses viability) • Virtual Board and Committee meetings, AGM and EGM • Net debt reduction • Reﬁnancing strategy • Debt capital structure optimization • Sales and inventories strategy / market developments • Operational performance and cost control • Succession planning • Organizational design and management development • Composition of the Board and Committees and Board structure • Internal controls • Natural gas risk management • Hedging policy and risk framework • Cybersecurity • Related party transactions • Evaluation Risk Management and Internal Controls including the key risks facing the Group • Evaluation of ESMA guidance and focus, priorities and risk management in relation to COVID-19 • Implementation of a Group Delegation of Authority • IT and IT (cyber) security • In-control statement and underlying in-contr ol situation • Evaluation Related Party T ransactions and implementation of Related Party T ransactions Policy • T ax review and policy • Reﬁnancing • Governance and stand-alone functioning of Fertiglobe • Evaluation Group’ s Compliance Framework and effectiveness • Evaluation year -end closing process • Litigation • Assessment of the functioning of the external auditor , its appointment, including scope, risk assessment and materiality • Strategy and ERP • Internal Audit Plan • Remuneration cycle and policy review • HR roadmap: succession planning and talent management and development • Strengthening key positions in the internal organization • Evaluation Board proﬁle and composition including diversity and inclusion • Overseeing the governance changes (reappointment of 11 Board members, appointment of two new Boar d members in functions and titles) • Fertiglobe governance and stand-alone functioning • Ensuring compliance of Remuneration Policy with EU Shareholders Rights Dir ective II • Evaluation of the 2019 targets for the Executive Directors • Setting 2020 targets for the Executives • Reviewed and advised on the executive compensation • Reviewed and advised on the beneﬁt plans and short-term and long-term incentive programs of the Executive Directors • 2020 HSE strategy and performance • 2021 HSE plan and 2021 target setting • HSE audit schedule and quality and outcome of the HSE audits • Climate Agreement in the Netherlands • Energy and environmental developments • Safety Awar d • Fertil (Abu Dhabi) site visit • Oversight of the Company’ s strategy , policies and initiatives relating to sustainability matters (linked to OCI’ s overall strategy) • Monitor and periodically discuss the Company’ s sustainability goals, targets, risk management and objectives and the progr ess made in these areas • Review of the Company’ s sustainability disclosures in the annual report, as well as any periodic disclosur es on sustainability Strategic targets The Board’ s strategic targets are focused on guiding and supervising the company’ s journey to achieving its commitment to sustainable value creation by focusing on its strategic priorities of operational excellence, business optimization, a global commercial strategy , sustainability , and maximizing free cash ﬂow to achieve 2.0x net leverage through the cycle. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 97 Board r otation schedule During the AGM, OCI has implemented the standard appointment terms under the Code (four years for Executive Directors and two times four years with possible extensions of two times two years for Non-Executive Directors) to facilitate that the Dir ectors can focus on long-term value creation in the performance of their work. It furthermor e enables the Executive Directors to ensur e continuity in the Company's management and strategy and enables the Non-Executive Directors to further ensure continuity in their supervision of the Company's strategy . The reappointment of Mr . Michael Bennett, Mr . Jérôme Guiraud, Mr . Gregory Heckman, Mr . Robert Jan van de Kraats and Mr . Sipko Schat resulted in an aggr egate term of appointment of more than eight years. The Boar d has duly considered this and concluded that their invaluable experience and knowledge of the Company’ s operations as well as the industries justiﬁed such reappointments. OCI’ s rotation schedule as included in the table below aims to avoid, as far as possible, a situation in which Directors r etire at the same time. Name Date of ﬁrst appointment End of current term Final retir ement (max. 8 (12) years) Nassef Sawiris 16 Jan 2013 2024 None Ahmed El-Hoshy 17 June 2020 2024 None Hassan Badrawi 24 May 2018 2024 None Maud de V ries 1 Jun 2019 2024 None Michael Bennett 25 Jan 2013 2023 2021(25) Sipko Schat 9 Dec 2013 2024 2022(26) Jérôme Guiraud 26 Jun 2014 2024 2022(26) Robert Jan van de Kraats 26 Jun 2014 2024 2022(26) Gregory Heckman 10 Jun 2015 2024 2023(27) Anja Montijn-Groenewoud 28 Jun 2016 2024 2024(28) David Welch 29 May 2019 2024 2027(31) Dod Fraser 29 May 2019 2024 2027(31) Heike van de Kerkhof 20 October 2020 2024 2028(32) Board composition and independence The composition of the Board strives to arm OCI with leadership that is diverse in skills, experience, gender and background, ther eby maximizing the Board’ s ability to independently and critically act without emphasis on particular interests. The Boar d maintains independence by ensuring the majority of the Non-Executive Directors including the Co-Chair ar e independent. Mr . Jérôme Guiraud is not consider ed independent within the meaning of the Code. The Board’ s composition, independence, competencies, and qualiﬁcations are detailed in the Board Pr oﬁle and the D&I Policy . The Board Proﬁle is assessed annually , taking into account the requir ed competencies and expertise requir ed for OCI’ s mission and strategic priorities, opportunities and threats, and its aim of long-term value cr eation. Appointments of new Board members are made based on objective selection criteria highlighting the speciﬁc skills and experience needed to ensure a balanced Boar d composition and to match the overall Board proﬁle. The Board undertakes necessary measur es to ensure diversity in education, pr ofessional experience, nationality , age and gender in the selection of new candidates for the Board. In addition, the Board tries to maintain a balance between experience and af ﬁnity with the nature and culture of the Gr oup. In this regard, the Boar d will follow the development of female talent in the organization closely . New appointments are based on objective selection criteria highlighting the speciﬁc skills and experience needed to ensure a r ounded Board. With regard to vacancies, the Board pr epares a proﬁle based on the r equired education and pr ofessional experience. In 2020 two new Directors wer e appointed to the Board, contributing to diversity in age, nationality , knowledge, gender and experience: • Ahmed El-Hoshy (CEO) was appointed as Executive Director . Mr . Ahmed El-Hoshy has a wide range of knowledge and experience in the businesses conducted by OCI and corporate ﬁnance. Prior to joining OCI in 2009, Mr . Ahmed El-Hoshy began his career in Goldman Sachs’ Leveraged Finance group in New Y ork and Dubai. Before appointed CEO of OCI, Mr . Ahmed El-Hoshy was COO of OCI and CEO of OCI Americas. • Heike van de Kerkhof was appointed as Non-Executive Director and has a wide range of knowledge and experience in the chemicals industry , in both operational and strategic roles, thought leadership in ESG strategy and strong focus on innovation and sustainability . Ms. Heike van de Kerkhof is CEO of a global specialty chemicals company and holds several non- executive positions. BOARD REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 98 BOARD REPORT CONTINUED Diversity & Inclusion The Board acknowledges the importance of diversity within its Boar d and is considering its overall size and composition to look for opportunities to increase the female r epresentation in the Boar d. OCI’ s target is to improve gender diversity and to maintain diversity within the Board while taking into account nationality , age, gender and background of education and pr ofessional experience of the Directors. In October 2020, Ms. Heike van de Kerkhof was appointed as Non-Executive Director , increasing the total female repr esentatives in OCI’ s Board to three out of thirteen members, or 23% of the Board. Despite the male-dominated natur e of the industries OCI is active in, in case of a vacancy in the Board, OCI will continue to use all ef forts in the coming years to ﬁnd a suitable female candidate. Following the launch of the Board Diversity pr ogram in 2019, we further reinforced our commitment to fostering an inclusive culture by launching a gr oup-wide Diversity and Inclusion program in 2020. The pr ogram aims to ensure fairness, equality and diversity in recruiting, compensating, motivating, retaining, and pr omoting employees. We ar e fortunate to have a diverse global workforce encompassing 32 nationalities located in ten countries, but we lag in gender diversity . Though we operate in traditionally male dominated industries, we are working to improve our gender diversity in both technical and non-technical r oles and at all levels of our organization. We have set internal benchmarks and targets to improve our r ecruitment processes, conduct de-biasing training, provide sponsorship and mentorship of minority employees, and develop employee networks that help them succeed. The de-biasing training conducted in 2020 was positively received, and participants’ feedback pr ovided relevant insights, amongst others that there is support acr oss the Group for increasing awar eness on diversity and inclusion. In addition, all HR teams completed a full de-biasing review of r ecruitment processes and will extend this review to compensation, r etention and promotion pr ocesses in 2021. On a group level, we announced a target to incr ease female repr esentation in senior leadership to 25% by 2025. We also set an internal target of ﬁlling at least 20% of all vacancies with female candidates. During the year , 100% of our HR community completed the de-biasing training, which helped improve the diversity of our hiring in 2020 despite limitations on hiring during the COVID-19 pandemic. We hir ed 18.5% more women in 2020 compared to 2019 by ﬁlling 20.6% of vacancies with female candidates during the year . Female repr esentation within the Group r emained stable in 2020 compared to 2019 at 10.5%. Going forwar d, we will continue to focus on female turnover analysis and initiatives to retain female talent as part of our diversity pr ogram. A new performance measure r elating to diversity and inclusion was added to the long-term incentive plan of the Executive Directors that will apply fr om 2021, thereby aligning r emuneration more closely to performance of our strategic priorities and long-term inter ests. Board involvement Members of the Board r egularly visit one or more of OCI’ s plants, headquarters and corporate ofﬁces to gain gr eater familiarity with the workforce and senior management and to develop deeper knowledge of local operations, local customs, operational opportunities and challenges, and the business in general. In January 2020, prior to COVID-19 restricting international travel, the Board visited Abu Dhabi to meet Fertiglobe management and visit one of Fertiglobe’ s plants in Abu Dhabi. The visit deepened the Board's understanding of the history , legacy set-up, vision, values, ﬁnancial performance and cost optimization initiatives, and operational safety performance. The Board was impr essed by the focus on and culture of health, safety and envir onment. The products and pr oduction processes were further explained during a tour of the site and a visit to the contr ol rooms. The Board interacts with senior management thr oughout the entire organization on various occasions and in various settings. The Board is r egularly informed about relevant topics by OCI’ s senior leaders and experts during Committee and Board meetings, annual site visits, and also as part of their ongoing professional education. In 2020, the Board was trained on sustainability and sustainability initiatives that r educe OCI’ s environmental impact, gr ow OCI’ s green portfolio and innovate more ef fective ways of reaching the world's carbon neutral goals. As part of the Company's drive to create a cohesive gr oup culture, the Boar d approved the launch of the OneOCI platform encouraging a dialogue across all locations. The Executive Dir ectors host bi-annual townhall meetings including Q&A session for all employees as part of the OneOCI platform. The Board also closely monitor ed the developments and Company response to COVID-19, including receiving r egular updates from the COVID-19 taskfor ce. ESG ESG and sustainability are imbedded into all aspects of our organization, including our strategic objectives, risk management, capital allocation and ﬁnancial planning, operational and commercial activities, and other medium and long-term decision-making. The Board has overall r esponsibility for OCI’ s strategy , business objectives, and risk management, including ESG and sustainability . The Health, Safety and Environment Committee evolved in 2021 to formally include sustainability . The Committee’ s responsibilities include overseeing our approach to managing the risks and opportunities r elated to sustainability , climate change, and our environmental impact. Ms. Heike van de Kerkhof was appointed as Non-Executive Dir ector during the EGM on 20 October 2020 having a strong focus on ESG, innovation and sustainability , and joined the HSE & Sustainability Committee in 2020. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 99 The Board has mandated the Company to communicate its sustainability strategy and has approved OCI’ s long-term environmental targets. In addition to dedicated focus by the HSE & Sustainability Committee, Board sessions will continue to spend time on ESG topics. The Boar d has tasked the Executive Directors with the management of ESG and sustainability objectives, including the development and implementation of our ESG targets and strategy , supported by the Group Corporate Af fairs Director . A new performance measure relating to ESG was added to the long-term incentive plan of the Executive Directors that will apply fr om 2021, thereby aligning remuneration mor e closely to performance of our strategic priorities and long-term interests. Each production facility’ s leadership team is responsible for identifying and evaluating sustainability projects and opportunities, and r eport on their progr ess to the Executive Directors during the site’ s monthly business review . The Capex Committee reviews and approves sustainability-r elated capex with a view to balance our sustainability goals with our other commitments and investment returns thresholds. W e also appointed a Sustainability Director for Eur ope in 2020 to support our European assets with assessing potential decarbonization pr ojects. Culture OCI has grown signiﬁcantly over the last 12 years at a compound annual gr owth rate (CAGR) of 23% since 2008, and because of that ramp up the focus was on creating str ong local teams resulting in a diverse workfor ce with 25 nationalities located in ten countries. W ith our rapid growth phase complete, we are str engthening our group cultur e to become a cohesive and united global organization. During the year , we launched the OneOCI platform to bring together the best of OCI under one uniﬁed culture, a shar ed set of values, and a platform to encourage dialogue across our locations. OneOCI provides a central hub for employee dialogue acr oss all locations and functions, facilitates information sharing and collaboration, recognizes employee development by highlighting personal and professional achievements, and cr eates opportunities for greater transpar ency and alignment on the Group’ s strategy through regular newsletters and townhalls led by the Executive Dir ectors. The Group’ s refreshed purpose of cultivating a sustainable world thr ough cleaner fuel solutions, lower carbon feedstocks, and global food security . provides a clear ambition, with goals and strategic objectives that strive to achieving that vision. Our values promote our cultur e of CARE – Collaboration, Agility , Resourcefulness, Excellence – through which we strive to contribute positively to our world, our communities, our customers, and each other at OCI. Employees are encouraged to uphold these values both at work and in their day-to-day lives. OCI’ s culture is underpinned by its Code of Conduct, which requir es all employees to act with honesty and integrity to foster a business environment that pr otects the rights and interests of all stakeholders. Our Code of Conduct also highlights our zero- tolerance policy for any form of harassment or bullying. Employees are r equired to tr eat all individuals with respect, tolerance, dignity , and without prejudice to cr eate a mutually respectful, collaborative, and positive working environment. W e do our utmost to provide employees with a safe environment to addr ess any issue directly with management, and thr ough our Whistleblower Policy we also provide a conﬁdential procedur e to raise any concerns, instances of discrimination, and other breaches to our Code of Conduct. Compliance We strive to conduct all business activities r esponsibly , transparently , and with integrity and respect towar ds all stakeholders. These values underpin everything we do and form the framework which deﬁnes the day-to-day attitudes and behaviours of our employees. T o make those values clear and provide clear ground rules for how we do business, our Compliance Framework consists of policies that describe in speciﬁc terms what we stand for as a company and the conduct requir ed in the workplace, in how we deal with business partners, serve our customers, and the broader r esponsibilities we have to the communities in which we work and live. The Compliance Framework also sets out rules on important topics such as the prohibition of bribery , dealing with conﬁdential information and conﬂicts of interest, competition law , third-party due diligence, the importance of accurate record keeping and r eporting, and explains the possibility of disciplinary measures when in br each of the framework. All employees are trained on the key principles and applications of the Compliance Framework through a gr oup-wide e-learning platform and can raise any concer ns and breaches through a safe and conﬁdential whistleblowing and incident reporting pr ocedure. An anonymous r eporting procedur e is also available, through which employees can r eport to a whistleblower hotline hosted by a third-party hotline pr ovider . All reports ar e handled with the utmost care and conﬁdentiality , regar dless of if reported internally or via the anonymous reporting hotline. The Chief Legal and Human Capital Ofﬁcer (CLHCO) is the Executive Dir ector responsible for ethics and compliance. The Director Compliance, in close collaboration with the CLHCO and the rest of the Executive Dir ectors, implements our group Compliance Pr ogram and ensures that our Compliance Framework remains in line with applicable r egulations and is properly applied. The Integrity Committee, comprising of the CLHCO, the CFO and the Director Compliance, handles incidents of a severe natur e. We r efer to the Compliance section on page 87 for further details on OCI’ s Compliance Framework, including compliance with the Code of Conduct and the Business Partner Code of Conduct. OCI places great value on its Compliance Framework, which is fundamental to its reputation and continued success. BOARD REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 100 Assessment and evaluation of the Board An evaluation of the Board is performed every year by an external advisor . OCI engaged the services of Lintstock to assist with the 2020 review of the Boar d’ s performance. Lintstock is a corporate governance advisory ﬁrm that specializes in facilitating Board reviews and has no connection with OCI. The ﬁrst stage of the review involved Lintstock engaging with the Co-Chair and Company Secretary to set the context for the evaluation and to tailor the survey content to the speciﬁc circumstances of OCI. All Boar d members were then invited to complete an online survey addressing the performance of the Boar d and its Committees. The anonymity of the respondents was ensured thr oughout the process in order to pr omote an open exchange of views. The exercise was weighted to ensur e that core areas of Boar d and Committee performance were addressed, with a particular focus on the following topics: • COVID-19 and the focus, priorities and risk management in response to the COVID-19 pandemic; • The gover nance changes that took place during 2020 in relation to the changes made to the roles and r esponsibilities; • The overall Board composition and composition of the Committees; • The oversight of various aspects of risk, and the effectiveness of OCI’ s approach to HSE and monitoring compliance with relevant r egulations and legislation; • The culture and behaviour throughout OCI; • The development, clarity and achievability of OCI’ s strategic plan and the integration of sustainability into OCI’ s business strategy and operations; • The effectiveness of Board meetings held r emotely using video-conferencing technology; • The effectiveness of monitoring developments in the market environment, including the digital developments relevant to OCI, and any likely impacts on the business; • The organizational structure of OCI at senior levels, and the Board’ s oversight of the succession plans for the Board and the layer of management below the Boar d to manage and develop talent; • The understanding amongst Board members of investors, customers and employees, and the development of the mechanisms by which the Board engages with key stakeholder gr oups; • The atmosphere at Board meetings, and the extent to which the experience of Non-Executive Directors is drawn on for the beneﬁt of the business; • The quality of information and support available to the Board, including speciﬁc areas in which Directors would beneﬁt fr om greater training or support in futur e; • The individual performance and personal development of each of the Board members. The overall feedback from the evaluation in 2020 was that the Boar d members feel the Board generally functions well. The above topics have the constant attention of the Board thr oughout the year , with a particular focus on strategy , operational excellence, sustainability , culture and behaviour , Board composition and succession planning. BOARD REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 101 Shareholders’ rights and meetings OCI’ s shareholders exercise their rights thr ough the GM. An AGM is held no later than six months after the end of OCI’ s ﬁnancial year (which equals a calendar year). The 2020 AGM was held on 17 June 2020. The GM has the authority to discuss and decide on inter alia the following main items: • The adoption of the annual accounts; • The release of the Directors fr om liability for their respective duties, insofar as the exer cise of such duties is reﬂected in the annual accounts and/or otherwise disclosed to the GM prior to the adoption of the annual accounts; • The appointment of the exter nal auditor; • The (re)appointment, dismissal and suspension of the Directors; • Amendments to the remuneration policy applicable to the Board; • An advisory vote regarding the r emuneration report applicable to the Boar d; • The issue of shares and the restriction or exclusion of pr e-emptive rights of shareholders (both insofar not delegated to the Board); • The reduction of share capital; and • The approval of those decisions of the Board that entail a signiﬁcant change in the identity or character of OCI or its business. The agenda for each GM is published on OCI’ s website in advance of the GM. After a GM the minutes are made available on OCI’ s website as well. Shareholders r epresenting more than 3% of the issued shar e capital may submit proposals for the agenda, if substantiated and submitted in writing at least 60 calendar days in advance of the GM. Additional EGMs may be convened at any time by the Board or by one or mor e shareholders repr esenting more than 10% of the issued shar e capital. During 2020, an EGM was held on 20 October 2020. V otes representing shares can usually be cast at the GM either personally or by pr oxy . No restrictions ar e imposed on these proxies, which can be granted electronically or in writing to OCI or independent third parties. OCI’ s shareholders may cast one vote for each share. All r esolutions adopted by the GM are passed by an absolute majority of the votes cast, unless Dutch law or OCI’ s articles of association prescribe a larger majority . In 2020, the AGM and EGM were held virtually per the T emporary Dutch COVID-19 Justice and Security Act (Tijdelijke wet COVID-19 Justitie en V eiligheid). Shareholders were invited to follow the AGM remotely thr ough a live webcast and the EGM remotely via conference call. Prior to the GM, shareholders wer e invited to vote via a proxy and submit written questions about the items on the agenda which were answer ed during the GM. The following proposals wer e voted on during the 2020 GM’ s: • The adoption of the Annual Accounts 2019 and allocation of proﬁts; • The discharge of the Executive Directors and Non-Executive Directors fr om liability; • The reappointment of the Executive Directors and Non-Executive Dir ectors and the appointment a new Executive Director and a new Non-Executive Dir ector; • The approval of the new Remuneration Policy; • T o advise on the 2019 Remuneration Report; • The extension of the designation of the Board as the authorised body to issue shares in the share capital of OCI, to r estrict or exclude pre-emptive rights upon the issuance of shares and to repur chase shares in the share capital of OCI; and • The appointment of KPMG Accountants N.V . as auditor charged with the auditing of the annual accounts for the ﬁnancial year 2020. External Auditor OCI’ s exter nal auditor is appointed by the AGM. The Audit Committee evaluates the functioning of the external auditor and recommends to the Board the external auditor to be proposed for (re)appointment by the AGM. At the 2020 AGM, KPMG Accountants N.V . was appointed as external auditor for OCI for that same year . The external auditor attends all Audit Committee meetings. During these meetings, the exter nal auditor discusses the outcomes of the audit procedur es. Key audit topics are discussed. The external auditor receives the ﬁnancial information per quarter and can comment on and respond to such information, which is also included in OCI’ s quarterly condensed ﬁnancial statements. The external auditor is also present at the AGM and may be questioned on its statement of the fairness of the ﬁnancial statements. OCI’ s lead audit partner needed to rotate off after signing the 2019 ﬁnancial statements early 2020. Since then, the new lead audit partner took over , after already having attended all Audit Committee meetings during the 2019 ﬁnancial statements audit and having been involved in the analysis and conclusions of all major accounting and reporting matters during 2019. Furthermor e, after closing of the Fertiglobe transaction end 2019, the new lead audit partner has been responsible to oversee the onboar ding of Fertil in OCI’ s group audit. BOARD REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 102 Independence of the auditor is a continued area of focus. In accor dance with OCI’ s exter nal audit independence policy , the Audit Committee reviews the independence of the auditor annually . Internal auditor The internal Audit & Risk team assists the Audit Committee, Executive Directors, and local management by facilitating the identiﬁcation of risks and the promotion or risk awar eness and ownership across our organization. The internal Audit & Risk department reports the r esults from internal audits, risk assessments from operating companies and gr oup consolidated risk dashboards to the Audit Committee quarterly and performs periodic independent internal audits to review any speciﬁc issues at the subsidiary and holding company levels. Decree Article 10 EU T akeover Directive OCI conﬁrms that it has no anti-takeover instruments, i.e.: of measures that ar e primarily intended to block future hostile public of fers for its shares. Although the members of the Sawiris family have not entered into any formal shar eholders agreement, they have historically coordinated their voting on the OCI shares and should ther efore be regar ded as parties acting in concert ( personen die in onderling overleg handelen ) as deﬁned in section 1:1 of the Dutch Financial Supervision Act ( Wet op het ﬁnancieel toezicht ). Their collective voting rights of 55.97% as at 31 December 2020 act as an implicit anti-takeover element. Compliance with the Code OCI is compliant with the Code. Potential conﬂicts of interest Potential or actual conﬂicts of interest ar e governed by OCI’ s articles of association and by-laws which regulations ar e in line with the relevant principles of the Code and Dutch law . A Director shall immediately report any conﬂict of inter est or potential conﬂict of interest that is of material signiﬁcance to the other Directors and may not take part in any discussion or decision-making that involves a subject or transaction in relation to which he/she has a potential conﬂict of inter est with OCI. During 2020, no transactions occurred in r espect of which a Director had a conﬂict of inter est. Related party transactions OCI has a Related Party T ransactions Policy in place, providing adequate pr otection for the interests of OCI and its stakeholders which has been pr epared with due observance of the requir ements of Dutch law , the Code, OCI’ s articles of association and by-laws. The overview of related party transactions in 2020 is disclosed in the Financial Statements in note 30. BOARD REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 103 REMUNERA TION REPOR T Introduction by the Chair of the Nomination and Remuneration Committee On behalf of the Board, I am pleased to pr esent our 2020 Remuneration Report, in which we comment on OCI’ s performance and how 2020 events have impacted the remuneration paid to our Executive and Non-Executive Directors. During the year , OCI was able to deliver on its strategy despite the unprecedented global circumstances we all faced due to the COVID-19 pandemic. The Executive Dir ectors effectively navigated the company to deliver strong r esults during the year in addition to implementing several operational, commercial, and cultural changes such as operational and commer cial team restructuring, the launch of the OneOCI platform with a focus on diversity and inclusion, and a cost savings program, all while ensuring each OCI location r emained as safe and healthy as possible for our employees, contractors and suppliers during the pandemic and without applying for government assistance programs or requiring r edundancies or furloughs. The Committee is satisﬁed by the swift actions and decisions made in the past year and is impressed with the collaboration amongst the team which has been thr ough several recent changes. At the 2020 AGM Mr . Ahmed El-Hoshy was appointed as statutory director of the company , following his appointment as Chief Operating Ofﬁcer (COO) on 25 November 2019. When Mr . Nassef Sawiris assumed the position of Executive Chair of OCI’ s Board per 1 August 2020, Mr . El-Hoshy succeeded Mr . Sawiris as Chief Executive Ofﬁcer (CEO). Following the change in position for Mr . Sawiris, Mr . Michael Bennett assumed the role of Non-Executive Co-Chair and Senior Independent Director and Mr . Sipko Schat assumed the role of Vice Chair of the Board of Directors. This Remuneration Report explains the application of the 2020 Remuneration Policy which was approved by OCI’ s shareholders at the 2020 AGM with 99.43% votes in favour . In line with the 2020 Remuneration Policy , the Remuneration Report is prepar ed in the spirit of the draft, non- binding guidelines of the European Commission for disclosur e. Mindful of the advisory vote on our 2019 Remuneration Policy , which was approved by an unequivocal majority (99.38% votes in favour), this Remuneration Report is prepar ed in a similar format, whereby some minor changes were made to enhance r eadability , take out duplicates and step-up in the level of disclosure. As a global producer and distributor of nitr ogen and methanol products, our purpose is to cultivate a sustainable world through global food security and gr eener fuel solutions. Our strategy integrates our ﬁnancial, operational, commercial, and sustainability objectives to cr eate long- term, sustainable value for all our stakeholders as described throughout the 2020 annual r eport. This focus on sustainable value creation is r einforced by our r emuneration policy , wherein both our short-term and long-term incentives include not just ﬁnancial targets, but environmental, social, and operational goals as well. These targets are designed to be inter dependent to ensure equitable focus on each of our strategic priorities, which include operational excellence, a commitment to health and safety , business optimization, global commercial strategy , sustainable solutions, decarbonization, and maximizing cash ﬂow . Accordingly , we believe the 2020 Remuneration Policy provides good alignment between the remuneration of the Executive Dir ectors and shareholders’ long-term inter ests. The Executive Directors ar e incentivized through both short-term and long-term compensation schemes that align to the group’ s long-term value creation as well as short- and medium-term company targets, individual objectives and focus areas, and strategic non-ﬁnancial metrics that ar e fundamental to the group’ s long-term success. The Remuneration Report will be subject to an advisory vote at our 2021 AGM. Looking ahead This year’ s Remuneration Report contains an additional section outlining some changes to the operation of the Long T erm Incentive Plan (L TIP) of the Executive Directors that will apply from 2021. With support from external advisors, the Nomination and Remuneration Committee reviewed the L TIP with particular focus on the selection of performance measures. The new performance measures selected align our r emuneration practice more closely to performance of our strategic priorities. These changes are within the parameters set out in the Remuneration Policy . Based on on-going conversations with our shareholders and the positive feedback fr om other stakeholders I am conﬁdent the amendment strengthens the execution of the Remuneration Policy to meet its purpose to attract, motivate and retain the qualiﬁed individuals needed to achieve OCI’ s strategic and operational objectives, also on the long-term. On behalf of the Nomination and Remuneration Committee, Sipko Schat Chair Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 104 This section of the Remuneration Report details how the 2020 Remuneration Policy was applied in 2020 for the Non-Executive Directors. Non-Executive Directors The remuneration of the Non-Executive Dir ectors consists of ﬁxed fees for their Board Membership and for services on the Committees. T o ensure their independence the Non- Executive Directors ar e not entitled to any variable remuneration linked to the performance of the Company . The remuneration is set at the level r equired to attract qualiﬁed Non-Executive Dir ectors with the personal skills, competencies and international experience required to oversee the company’ s strategy and contribute to its performance and the long-term value creation. The Non-Executive Directors do not r eceive any beneﬁts. They are r eimbursed for OCI-related expenses for travel, accommodation, and repr esentation. The table below summarizes the details of the individual remuneration of the Non-Executive Directors. Non-Executive Director Y ear Annual Bboard fee Audit committee membership Nomination and remuneration committee Health safety , environment committee Extraordinary Items T otal Remuneration Proportion of Fixed Remuneration M. Bennett 2020 300,000 - 7,500 - - 307,500 100% 2019 290,000 - 7,500 3,750 - 301,250 100% S. Schat 2020 150,000 20,000 20,000 - - 190,000 100% 2019 145,000 20,000 17,500 - - 182,500 100% A. Montijn- Groenewoud 2020 150,000 - 7,500 10,000 - 167,500 100% 2019 145,000 - - 8,750 - 153,750 100% R.J. van de Kraats 2020 150,000 25,000 7,500 - - 182,500 100% 2019 145,000 25,000 7,500 - - 177,500 100% G. Heckman 2020 150,000 - - 7,500 - 157,500 100% 2019 145,000 - - 8,750 - 153,750 100% J. Guiraud 2020 150,000 20,000 7,500 - - 177,500 100% 2019 145,000 20,000 7,500 - - 172,500 100% D. W elch 1 2020 150,000 - - 7,500 90,000 2 247,500 100% 2019 88,710 - - 3,750 - 92,460 100% D. Fraser 3 2020 150,000 20,000 - - - 170,000 100% 2019 88,710 10,000 - - - 98,710 100% H. van de Kerkhof 4 2020 29,348 - - 1,467 - 30,815 100% 2019 n/a n/a n/a n/a n/a n/a n/a J. T er Wisch 5 2020 69,643 9,286 3,482 - - 82,411 100% 2019 145,000 20,000 7,500 - - 172,500 100% 1 Appointed 29 May 2019. 2 The amount reported as extraordinary item for Mr . Welch in 2020 is the fee for services on the Boar d of Fertiglobe Holding Ltd 3 Appointed 29 May 2019 4 Appointed 20 October 2020 5 Appointment ended 17 June 2020 REMUNERA TION REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 105 This section of the Remuneration Report explains how the 2020 Remuneration Policy was applied in 2020 for the Executive Directors. Executive Directors The Executive Directors r eferred to in this Remuneration Report ar e the Executive Chair (former CEO), CEO (former COO), Chief Financial Ofﬁcer (CFO), and Chief Legal and Human Capital Ofﬁcer (CLHCO). For this Remuneration Report, the r emuneration of the CEO (former COO) is reported as if he was an Executive Dir ector for the full year 2020. The details of their appointment terms are as follows: Name Title Date of appointment Current time commitment N. Sawiris CEO/Executive Chair 16 January 2013 Full time A. El-Hoshy COO/CEO 17 June 2020 Full time H. Badrawi CFO 1 October 2017 Full time M. de V ries CLHCO 1 June 2019 80% contract Summary of pay in the year The details of the individual remuneration of the Executive Dir ectors and its costs to the Company are as follows: Fixed remuneration Variable remuneration Proportion of ﬁxed and variable remuneration Executive Director Y ear Annual Base Salary incl. 25% beneﬁts allowance 1 Annual bonus Long-term Incentives cost-to- company 2 Medical insurance T otal Remuneration Fixed V ariable N. Sawiris Executive Chair (former CEO) 2020 1,583,334 n/a 3 2,393,191 n/a 3,976,525 40% 60% 2019 2,000,000 1,200,000 2,641,951 n/a 5,841,951 34% 66% A. El-Hoshy CEO (former COO) 2020 1,091,667 921,032 1,420,277 n/a 3,432,976 32% 68% 2019 n/a n/a n/a n/a - n/a n/a H. Badrawi CFO 2020 1,150,000 878,715 1,193,956 n/a 3,222,671 36% 64% 2019 1,150,000 552,000 863,471 6,815 2,572,286 45% 55% M. de V ries CLHCO 2020 526,667 4 402,426 356,049 n/a 1,285,142 41% 59% 2019 280,000 4,5 134,400 108,060 n/a 522,460 54% 46% 1 These ﬁgures exclude employer’ s social security payments ($0.6 million). 2 The amounts mentioned in this column are based on accounting standar ds (IFRS). 3 Mr . Sawiris requested the Committee to waive his bonus entitlement for the ﬁrst 7 months of 2020; As Executive Chair he is no longer entitled to an annual bonus. 4 Based on 80% contract. 5 Pro-rated to 7 months, r eﬂecting the appointment to the Board per 1 June 2019. Annual base salary (including 25% beneﬁts allowance) Salary is ﬁxed cash compensation which enables the recruitment and r etention of individuals of the caliber requir ed to drive business performance and execute OCI group’ s strategy . Salaries are set in line with individual performance and contribution to company goals with refer ence to external market data. Following the change to the positions held by Mr . Sawiris from CEO to Executive Chair per 1 August 2020, his annual base salary was reduced by 50% fr om $2,000,000 to $1,000,000. At the same time, the annual base salary of Mr . El-Hoshy who assumed the position of CEO was increased by 9.5% fr om $1,050,000 to $1,150,000. REMUNERA TION REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 106 The Committee has evaluated the CLHCO’ s performance since joining the Board. She has strongly established herself within the r ole. As such, the annual base salary of the CLHCO was increased by 16.7% fr om $480,000 to $560,000 per 1 June 2020 (based on 80% contract). The Executive Directors’ base salaries include a ﬁxed cash allowance of 25% of the total which is designed to compensate for the personal provision of key beneﬁts such as pension, car , life and disability insurance and other key beneﬁts. OCI does not provide for a pension fund nor contribute to a pension plan for its Executive Directors. The Executive Directors do not r eceive housing allowances or other expatriate-style beneﬁts. They are r eimbursed for OCI-related business expenses. In 2020 no extra-ordinary items or one-of f payments were paid. The base salaries of the Executive Directors include any compensation for their positions on the Board. The Executive Dir ectors do not receive remuneration fr om other OCI Group companies. Annual Bonus The annual bonus plan supports our strategic priorities in both the short and long term, with challenging ﬁnancial and non-ﬁnancial targets. The Executive Chair is not entitled to an annual bonus. Mr . Nassef Sawiris requested the Boar d to waive his bonus for the ﬁrst 7 months of 2020. For the CEO the on-target annual bonus opportunity is 75% of annual base salary . For the other Executive Directors the on-target opportunity is 60% of annual base salary . The maximum opportunity is 200% of target (i.e. 150% of annual base salary for the CEO and 120% of annual base salary for the other Executive Directors). The structure can be summarized as follows: For 2020, the performance measures for the annual bonus can be summarized as follows: Executive Director Performance Measure and weighting T arget achievement % Bonus pay- out as % of base salary Base salary in USD 2020 Bonus outcome in USD A. El-Hoshy Cash ﬂow (40%) 92% 24.45% 1 Sales volume (20%) 96% 12.72% 1 1st Strategic and non-ﬁnancial (12.5%) 175% 14.49% 1 2nd Strategic and non-ﬁnancial (12.5%) 155% 12.84% 1 HSE (15%) 200% 19.88% 1 T otal 84.37% 1 1,091,667 921,032 H. Badrawi Cash ﬂow (40%) 92% 22.14% Sales volume (20%) 96% 11.52% 1st Strategic and non-ﬁnancial (12.5%) 155% 11.63% 2nd Strategic and non-ﬁnancial (12.5%) 175% 13.13% HSE (15%) 200% 18.00% T otal 76.41% 1,150,000 878,715 M. de V ries Cash ﬂow (40%) 92% 22.14% Sales volume (20%) 96% 11.52% 1st Strategic and non-ﬁnancial (12.5%) 175% 13.13% 2nd Strategic and non-ﬁnancial (12.5%) 155% 11.63% HSE (15%) 200% 18.00% T otal 76.41% 526,667 402,426 1 Bonus opportunity calculated on the basis of 7 months as COO with a bonus opportunity of 60% of annual base salary and 5 months as CEO with a bonus opportunity of 75% of annual base salary . REMUNERA TION REPORT CONTINUED + 60% corporate ﬁnancial performance measures Cash Flow Sales V olumes 25% strategic and non-ﬁnancial performance measures 15% health, safety and environmental performance measures Annual Bonus + = Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 107 REMUNERA TION REPORT CONTINUED The following table summarizes performance against the 2020 strategic and non-ﬁnancial performance measures for each Executive Dir ector . The combined weight of these performance measures is 25% of the total annual bonus. The strategic and non-ﬁnancial performance measures link dir ectly to the strategic priorities of operational excellence, business optimization, global commercial strategy and sustainable solutions, thus contributing to maximizing cash ﬂow . Based on the assessment of all targets by the Committee as approved by the Boar d, the target achievement is determined as per the table below . Executive Director Strategic and personal performance measures and weighting 2020 Performance outcome Positioning against target A. El-Hoshy CEO (former COO) • Sustainability and ESG (12.5%) • Made signiﬁcant progr ess on the development and implementation of a sustainability strategy , including setting and announcing greenhouse gas intensity reduction targets. • Clearly improved the ESG positioning of OCI whilst considering the economic implications and feasibility of the sustainability initiatives as well as the communication around that to key stakeholders internally and externally . 175% • OneOCI/ Leadership (12.5%) • Successfully brought the various OCI entities under one common identity , creating mor e transparency and sense of belonging across the gr oup, whilst carefully managing participations and recent COVID-19 developments. • Clear focus on organizational development, including stafﬁng of key positions, ther eby developing a platform to beneﬁt from a centralized oversight structur e, cooperation and disciplined reporting. 155% H. Badrawi CFO • T rade and Overall Risk Management (12.5%) • Further improved the ﬁnancial trading governance and control framework which has been r olled out at our trade entities and is adapted to cover our existing trading operations as well as capture futur e trades. 155% • Cost Control, Cash Management and Optimization (12.5%) • Successfully managed the reﬁnancing of the 2023 bonds, thus achieving a cash payback in under two years, with a signiﬁcant ﬁnance cost beneﬁt. • Realized above target saving on SG&A spend and increased the cash/accounts managed within automated sweeping and pooling structures. 175% M. de V ries CLHCO • ESG: Social and Governance (12.5%) • Deﬁned a comprehensive organizational r esponse to employee experience and human-centered interaction with the workforce thr oughout a challenging year directing organizational performance. • Launched several initiatives to ensure sustained performance and health focusing on organizational effectiveness. • Further fostered a diverse and inclusive cultur e speciﬁcally focusing on increasing female r epresentation with the workforce. 175% • Business contracts (12.5%) • Successfully navigated and supported the business from a legal perspective thr oughout the changed market circumstances which r esulted in no business disruptions in supply chain thereby ensuring business operations globally . • Further improved the legal support framework and business contracts, resulting in signiﬁcant cost savings as well as improved service levels to the business. 155% Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 108 The following table summarizes performance against the 2020 HSE performance measures. The combined weight of the HSE performance measures is 15% of the total STI. The 2020 HSE- performance as assessed by the HSE Committee and approved by Boar d was outstanding, resulting in an achievement of 200% of target. Please r efer to pages 70-73 for more information on OCI’ s HSE performance. HSE Performance Measure 2020 target 2020 Performance outcome Positioning against target Lost Time Injury Rate (L TIR) 0.11 0.09 T otal Recordable Incidents Rate (TRIR) 0.40 0.23 Process Safety Incidents Rate (PSIR) 0.80 0.38 Environmental Stewar dship / EIR 0.40 0.29 Safety Culture and A wareness qualitative target focussing on a wide range of initiatives to promote a str ong safety culture Full year corporate HSE score 200% Long term variable remuneration Options (legacy arrangement) All options held by the Executive Directors expir ed per 31 December 2020. No options were exercised in 2020. Bonus / Share Matching rights (legacy arrangement) The Bonus / Share Matching plan was discontinued ef fective 1 January 2019; as such no new matching rights were awar ded in 2019 or 2020. As at 31 December 2020, the Executive Directors had 38.196 shar e matching rights to bonus shares outstanding. Executive Director Awar d cycle Outstanding year -end 2020 V alue at grant date in USD V esting date End of lock-up period N. Sawiris 2 2017 17,190 381,810 23-04-2021 23-04-2023 A. El-Hoshy 2017 1 14,633 325,016 09-04-2021 09-04-2023 H. Badrawi 2017 1,398 31,067 23-04-2021 23-04-2023 M. de V ries 2017 1 4,975 110,495 09-04-2021 09-04-2023 1 These repr esent awards granted before the appointment to the Board. 2 The 2016 Award could not vest on the plan date of 14 April 2020 as OCI was in a Closed T rading period and share-based transactions were not allowed under the Insider T rading / Market Abuse regulations. The A wards vested on 11 May 2020, the ﬁrst T rading Day after the Closed Period. V esting of the share matching rights is contingent on the continued employment with OCI. Restricted stock unit plan (legacy arrangement) As at 31 December 2020, the current CEO and CLHCO had been granted Restricted Stock Units from pr evious years, as follows: Executive Director Awar d cycle Outstanding year -end 2020 V alue at grant date in USD V esting date End of lock-up period A. El-Hoshy 2019 1 19,472 354,900 1/3 rd : 07-02-2022 07-02-2023 2/3 rd : 07-02-2023 07-02-2024 2018 1 27,346 585,000 1/3 rd : 17-04-2021 17-04-2023 2/3 rd : 17-04-2022 17-04-2024 M. de V ries 2018 1 14,263 296,163 1/3 rd : 17-04-2021 17-04-2023 2/3 rd : 17-04-2022 17-04-2024 1 These repr esent awards granted before the appointment to the Board. V esting of the Restricted Stock Units is contingent on continued employment with OCI. REMUNERA TION REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 109 Performance share units As at 31 December 2020, the Executive Directors had been granted 713,851 conditional performance share units at target. Executive Director Awar d cycle Outstanding year -end 2019 Granted conditional in 2020 Outstanding year -end 2020 V alue at grant date in USD 1 V esting date End of lock-up period N. Sawiris 2018 84,873 - 84,873 2,181,674 25-02-2021 07-02-2023 2019 116,002 - 116,002 2,500,000 07-02-2022 07-02-2024 2020 - 135,354 135,354 2,500,000 07-02-2023 07-02-2025 A. El-Hoshy 2018 2 41,376 - 41,376 1,063,577 25-02-2021 07-02-2023 2019 2 47,855 - 47,855 1,031,340 07-02-2022 07-02-2024 2020 2 - 71,061 71,061 1,312,500 07-02-2023 07-02-2025 H. Badrawi 2018 40,315 - 40,315 1,036,304 25-02-2021 07-02-2023 2019 66,701 - 66,701 1,437,500 07-02-2022 07-02-2024 2020 - 77,829 77,829 1,437,500 07-02-2023 07-02-2025 M. de V ries 2020 - 32,485 32,485 600,000 07-02-2023 07-02-2025 1 The grant value is a percentage of the annual base salary . For the Executive Directors this percentage is curr ently ﬁxed at 125% as laid down in the Remuneration Policy . 2 Granted before appointment as Executive Dir ector . V esting of 2017 performance shares awar d Based on the PSP awards of 7 February 2017, conditional shar es were granted to the Executive Chair . The vesting of these shares was conditional on OCI’ s TSR performance in the three-year performance period ending 7 February 2020 and continued employment. The vesting of this Awar d could not take place on the original vesting date, 7 February 2020 as OCI was in a closed trading period. Hence, the Awar d vested at the ﬁrst trading day after the Closed T rading Period, being 25 February 2020. Over the 3-year performance period OCI’ s TSR performance ranked 6th in the TSR peer group at the 58th per centile. As a result, the awar d vested at 77% of target. The Committee reviewed this achievement in light of the br oader ﬁnancial as well as non-ﬁnancial performance of the Group in the r espective performance period (7 February 2017 – 7 February 2020) and decided to make no adjustments to the pay-out. Share ownership guidelines Subject to the Share Ownership Guidelines for the Executive Dir ectors of the Board all Executive Directors ar e required to own a per centage of OCI shares of their salary . These percentages are a holding of 300% for the CEO and Executive Chair and 150% for the other Executive Directors. The table below summarizes the number of shares curr ently held by Executive Directors (which have no further performance conditions attached). Their holding as a percentage of salary is based on a share price of € 15.72 ($ 19.22) (the closing shar e price on 31 December 2020). Executive Directors ar e expected to build up share ownership over a period of ﬁve years of the date of appointment. Until this requir ement has been met, Executive Directors must retain at least 50% of any vested shares fr om the PSU Plan. The Executive Chair and CFO already meet the share ownership guidelines. Executive Director Shares held Shareholding 1 (% of salary) N. Sawiris 69,374,747 Majority shareholder in OCI N.V . A. El-Hoshy 60,928 102% H. Badrawi 129,601 217% M. de V ries 10,647 36% 1 Based on a share price of € 15.72 on 31 December 2020. Internal pay ratio In line with market practice, the calculation of the internal pay ratio per 31 December 2020 is changed to include the value of the long term incentive (PSP/PSU). The global internal pay ratio is calculated on the basis of the following parameters: • Average total direct compensation of a r eference gr oup consisting of all our employees globally (on an FTE basis) • T otal remuneration of our CEO, including the value of the long-term incentive based on accounting standards (IFRS). The global internal pay ratio as measured per 31 December 2020 is 39.2 for the CEO and on average 32.8 for the Executive Board Dir ectors. In 2019 these global internal pay ratios, calculated on the basis of the total direct compensation, excluding the value of the long-term incentive, wer e 33.2 for the CEO and 20.2 for the Executive Directors. REMUNERA TION REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 110 REMUNERA TION REPORT CONTINUED This section of the Remuneration Report explains how the remuneration of the Dir ectors develops over time and for the relevant periods it includes remuneration details for curr ent and former Directors. Development of directors’ r emuneration, company performance and employee remuneration. The table below sets out the change in remuneration for each individual dir ector , the change in OCI’ s company performance and the average change in remuneration for the employees at OCI (excluding directors) over the past 5 years. For the Non-Executive Directors, ther e is no link to the company performance to ensure their independence. We have disclosed TSR performance at OCI as the main metric for company performance sustained over the long-term. This is in line with our Performance Shar e Unit Plan which has historically only been measured on r elative TSR performance. For the average employee remuneration, we used the same data as for the calculation of the internal pay ratio. As the internal pay ratio is disclosed by OCI since 2017, only the data from the last four years is available. 2020 2019 2018 2017 2016 T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) Executive Director’ s Remuneration in USD N. Sawiris, Executive Chair/former CEO 3,976,525 -31.9% 5,841,951 -7.1% 6,290,697 +29.9% 4,842,242 -7.7% 5,243,873 A. El-Hoshy , CEO/former COO 3,432,976 1 n/a n/a n/a n/a n/a n/a n/a n/a H. Badrawi, CFO 3,222,671 +25.6% 2,565,471 +7.0% 2,397,640 n/a 351,500 2 n/a n/a M. de V ries, CLHCO 1,285,142 n/a 522,460 3 n/a n/a n/a n/a n/a n/a S. Butt, former CFO n/a n/a n/a n/a n/a n/a 5,600,665 +81.8% 3,080,962 Non-Executive Director’ s Remuneration in USD M. Bennett, USA, Co-Chair 307,500 +2.1% 301,250 -15.5% 356,575 -16.8% 428,750 -34.4% 653,486 S. Schat, NED, Vice-Chair 190,000 +4.1% 182,500 +14.1% 160,000 - 160,000 - 160,000 A. Montijn-Groenewoud, NED 167,500 +8.9% 153,750 +11.8% 137,500 -2.7% 141,250 n/a 72,500 4 R.J. van de Kraats, NED 182,500 +2.8% 177,500 +9.2% 162,500 - 162,500 - 162,500 G. Heckman, USA 157,500 +2.4% 153,750 +9.8% 140,000 - 140,000 +1.4% 138,125 J. Guiraud, FR 177,500 +2.9% 172,500 +9.5% 157,500 - 157,500 - 157,500 D. W elch, USA 247,500 n/a 92,460 5 n/a n/a n/a n/a n/a n/a D. Fraser , USA 170,000 n/a 98,710 6 n/a n/a n/a n/a n/a n/a H. van de Kerkhof, GER 30,815 7 n/a n/a n/a n/a n/a n/a n/a n/a J. T er Wisch, NED 82,411 8 n/a 172,500 9.5% 157,500 -3.1% 162,500 -3.0% 167,500 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 111 2020 2019 2018 2017 2016 T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) % change T otal Remuneration (cost-to-company) Performance at OCI TSR performance 65.82 -16.2% 78.50 +5.3% 74.57 -15.3% 88.05 +26.8% 69.42 Average Employee Remuneration and Internal pay ratio’ s Average employee r emuneration – global employee refer ence group (FTE, T otal Remuneration Costs) 93,170 -2.2% 95,287 9,10 n/a n/a n/a n/a n/a n/a Internal pay ratio – global employee reference group 39.2 11 n/a 12 33.2 9,10 n/a n/a n/a n/a n/a n/a Average employee r emuneration – EU+USA employee refer ence group (FTE, T otal Remuneration Costs) n/a n/a n/a n/a 122,040 -0.7% 112,843 n/a n/a Internal pay ratio – EU+USA employee refer ence group n/a n/a n/a n/a 29.6 +19.4% 24.8 n/a n/a 1 A. El-Hoshy was appointed COO on 25 November 2019 and appointed member of the Board at the 2020 AGM on 17 June 2020; the amount r epresents his remuneration for the full year 2020. 2 H. Badrawi was appointed CFO on 1 October 2017 and appointed member of the Board at the 2018 AGM; the amount r epresents his remuneration for the part of 2017 ﬁnancial year he was a Director . 3 M. de V ries was appointed as Executive Director and member of the Board per 1 June 2019; the amount is based on her 80% contract and repr esents her remuneration for the part of 2019 ﬁnancial year she was a Director . 4 A. Montijn-Groenewoud was appointed as Non-Executive Dir ector per June 2016. 5 D. Welch was appointed as Non-Executive Dir ector per May 2019. 6 D. Fraser was appointed as Non-Executive Director per May 2019. 7 H. van de Kerkhof was appointed as Non-Executive Director per October 2020. 8 The appointment of J.A. T er Wisch ended in June 2020. 9 Per 2019 we changed the employee refer ence group for calculating our internal pay ratio from regional to global. 10 The 2019 numbers are r estated compared to our 2019 Remuneration Report as the numbers reported in 2019 were err oneously based on the consolidated, Q4 compensation for the employees of Fertil instead of the full year . 11 In line with market practice, the calculation of the internal pay ratio is changed per 2020 to include the value of the long-term incentives (PSP/PSU). 12 Due to the change in calculation methodology per 2020, the % of change between 2019 and 2020 would not correctly r eﬂect the actual change in the inter nal pay ratio. REMUNERA TION REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 112 Implementation of our Remuneration Policy in 2021 2021 Remuneration at a glance The table below provides an overview of the 2021 Remuneration of the Executive Dir ectors in a glance. Role Executive Chair CEO CFO CLHCO Remuneration in 2021 Annual base salary (with effect fr om 1 January 2021) $1,000,000 $1,250,000 $1,150,000 $560,000 1 2021 T arget Bonus opportunity (as a % of annual base salary) n/a 75% 60% 60% 2021 T arget PSU award (as a % of annual base salary) 125% 125% 125% 125% Share ownership guidelines (as a % of annual base salary) 300% 300% 150% 150% 1 Based on current 80% contract; the full-time equivalent is $700,000. Salary Per 1 January 2021 the annual base salary of the CEO will be increased to $1,250,000 (8.7% increase). This reﬂects his str ong contribution since promotion and the fact that his salary is closer to market. There will be no increases for the other Executive Directors. Annual Bonus The bonus will be based on corporate ﬁnancial performance measures (60%), strategic, personal (25%) and HSE (15%) performance measures as detailed in the table below . These will be measured over the ﬁnancial year ending 31 December 2021. The bonus opportunities remain unchanged with an at target opportunity of 75% of annual base salary for the CEO and 60% for the other Executive Directors. The maximum opportunity remains at 200% of target for all Executive Directors. The Executive Chair is not eligible for an annual bonus. Performance Share Unit Plan The 2021 PSU Awar ds will be dependent on relative TSR (60%) and additional performance measures (40%), selected from two sets of strategic incentives. (operational excellence and ESG). Further details of measures and weighting are given below and the targets for operational excellence and ESG will be disclosed in the 2021 Annual Report. Opportunities are unchanged from 2020. On-target opportunities are 125% of salary for all Executive Directors. The 2021 awards ar e granted on 8 February 2021 in line with our consistent course of action. In line with the Dutch Corporate Governance Code, awards will be subject to a two-year holding period in addition to the current three-year performance period, resulting in a total ﬁve-year period from the date of grant. Shareholding Guidelines The Guidelines introduced in 2019 will remain unchanged; the CEO has a requir ement of 300% of salary; the other Executive Directors have a requir ement of 150% of salary . REMUNERA TION REPORT CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 113 2021 Annual bonus performance measures Performance measure and weighting Financial Metrics (applicable to all Executive Directors) Cash Flow (40%) T argets will be disclosed in the 2021 Annual Report Sales V olumes (20%) T argets will be disclosed in the 2021 Annual Report HSE (15)% Lost Time Injury Rate (L TIR) 0.10 T otal Recordable Incidents Rate (TRIR) 0.36 Process Safety Incidents Rate (PSIR) 0.70 Environmental Stewar dship / EIR 0.40 Strategic and non- ﬁnancial A. El-Hoshy , CEO Strategic target (12.5%): Focusing on successful execution of the potential strategic opportunities Developing Corporate Excellence and Improvement Plans via Changes to Organizational Design (12.5%) H. Badrawi, CFO Strategic target (12.5%): Focusing on successful execution of the potential strategic opportunities IT and Cybersecurity (6.25%): Ensure a coher ent and centrally managed IT organization at the Group level that is able to ef fectively support the business requir ements T rade and Overall Risk Management (6.25%) M. de V ries, CLHCO Organizational design, Performance management and Leadership development (12.5%): Enabling the development of OCI’ s Operating model by changing organizational design in combination with direction clarity facilitating a high performing culture. Legal and Compliance (12.5%); Optimization of legal dispute management and enhance ethics and compliance awareness to maintain the highest standards acr oss the complete workforce. Amendment of Long T erm Incentive Plan With support from external advisors, the Nomination and Remuneration Committee (N&RC) reviewed the L TIP with particular focus on the performance measures. For the in-ﬂight L TIP Awar ds, vesting of the performance shares is dependent on OCI’ s TSR performance, relative to the TSR performance of the companies in our TSR peer group and no changes ar e proposed. The N&RC believes that TSR remains an important performance measur e to align executives’ remuneration to long-term shar eholder value, demonstrating the Group’ s absolute commitment to delivering returns. However , the Board has determined that it would pr efer to align part of the long-term incentive to the strategic business priorities. Therefor e, for future A wards, starting in 2021, relative TSR will continue to apply for 60% and for the r emaining 40% the N&RC will select additional performance measures out of a set of strategic initiatives including both Operational Excellence measures and ESG priorities. Operational excellence is a key driver for success and a translation of the strategic direction. The ESG priorities are linked to our unique position to enable the energy transition and move towards carbon neutrality as well as our value enhancing operational and envir onmental initiatives. For each Awar d, the Committee will select one Operational Excellence measure with a weight of 15% and two ESG-priorities with a combined weight of 25%. REMUNERA TION REPORT CONTINUED 100% L TIP Performance measure for inﬂight awards Relative TSR L TIP Performance measure for future awar ds 60% Relative TSR Operational excellence ESG - measures 25% 15% Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 114 REMUNERA TION REPORT CONTINUED Strategic Initiatives Measure Description Operational Excellence: Plant reliability Impr ovement of Asset Utilization = Onstream Efﬁciency x Capacity Ef ﬁciency Operational Excellence: Net Backs TBC] Improvement of the costs associated with bringing the OCI pr oducts to the market place, controlling sales and r evenues ESG: Decarbonization roadmap Development, implementation and execution of decarbonization plan ESG: Decarbonization – quantitative reduction target Reduction of our GHG emission on scope 1+2 and possibly 3 ESG : Sustainable W ater Management – roadmap Development, implementation and execution of a water management plan ESG : Sustainable W ater Management – quantitative reduction target Do not exceed the average [T -1+T -2+T -3] water intensity per ton produced on average per year ESG: ISO Certiﬁcation Attain certiﬁcation for energy / environmental management system (ISO14001, ISO50001, etc.) ESG-Index Rating (MSCI and Sustainalytics) Attain improvement on MSCI ESG Index and Sustainalytics index ESG: Diversity & Inclusion Increase per centage of women’ s repr esentation in senior positions and initiatives to increase r epresentation of minorities ESG: Sustainable Supplier Management Compliance with OCI’ s Business Partner Code of Conduct to ensure responsible sour cing The amendment of the performance measures for futur e Awar ds falls within the parameters set out in OCI’ s remuneration policy as published on our website. As such, there will be no further vote on the Remuneration Policy; shareholders will continue to have an advisory vote on the Remuneration Report. The L TIP opportunity is unchanged and after vesting, the performance shares awar ded will be subject to a further 2-year holding period in line with the Dutch Corporate Governance Code demonstrating a further commitment to the long-term sustainability of the Group. The discretion to select the performance measur es from the above set of strategic initiatives for each performance period ensures the Committee can select performance measur es that are best aligned to the company’ s strategic priorities and long-term interests. The Committee will ensure the selected long-term performance measures do not overlap the performance measur es for the annual bonus. The performance measures selected for the 2021 A wards, as granted on 8 February 2021 are fully aligned to our strategic priorities, which include operational excellence, business optimization, sustainable solutions and decarbonization. Please ﬁnd further details on these performance measures in the table below: Performance measures 2021 PSU A wards Measure W eight T arget deﬁnition Relative TSR 60% Operational Excellence: Plant reliability 15% Improvement of Asset Utilization = Onstream Ef ﬁciency x Capacity Efﬁciency ESG: Decarbonization 15% Development, implementation and execution of decarbonization plan ESG: Diversity & Inclusion 10% Increase per centage of women’ s repr esentation in senior positions and initiatives to increase r epresentation of minorities The target level for OCI’ s relative TSR performance are set out in the Policy . The target levels for plant reliability , decarbonization and diversity & inclusion will be disclosed in the 2021 Remuneration Report. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 115 REMUNERA TION REPORT CONTINUED 2021 Remuneration Scenarios The Remuneration Committee conducts pay scenario modelling on an annual basis which investigates pay-out quantum for Executive Directors under dif ferent performance scenarios. This modelling is undertaken to ensure that the Remuneration Policy links dir ectly with the performance of OCI and therefor e, is in the interests of shar eholders. In the event that speciﬁc short-term and long-term threshold performance targets ar e not achieved, there will be no variable pay vesting or payout for Executive Dir ectors for the relevant period. The charts below illustrates how much the current Executive Dir ectors could receive under differ ent scenarios in 2021, assuming a constant share price (i.e. no appr eciation) and no dividend payments. Element of Remuneration Details of assumptions Fixed remuneration This comprises base salary with effect from 1 January 2021. The base salary is inclusive of the 25% beneﬁts allowance. The Executive Chair’ s salary amounts to $1,000,000, the CEO’ s salary amounts to $1,250,000, the CFO’ s salary $1,150,000 and the salary of the CLHCO $560,000 pro-rated on an 80% contract. Annual Bonus Assumes maximum opportunity of 150% of salary for the CEO and 120% of salary for the CFO and CLHCO. For target, the scenario assumes 75% of annual base salary for the CEO and 60% of annual base salary for the CFO and CLHCO. For threshold, the scenario assumes 30% of salary for the CEO and 24% of salary for the CFO and CLHCO. For minimum, the scenario assumes no pay-out of the bonus. Performance Share Unit Plan Assumptions apply to all Executive Directors. Ther e is a maximum opportunity of 150% of target (187.5% of annual base salary) in conditional shares. For target, the scenario assumes 125% of annual base salary for all Executive Directors. For threshold, the scenario assumes 25% of target for all Executive Dir ectors. For minimum, the scenario assumes 0% of target for all Executive Directors. 2021 Pay scenario analysis Further to the pay scenario modelling conducted, the Committee concluded that the relationship between the ﬁnancial and strategic priorities of the company and the performance measures set for the annual bonus as well as the PSP/PSU plan are adequate. The Committee also concluded that the objectives of the Remuneration Policy and the underlying objectives of the company are well served by the ratio between ﬁxed and variable pay , which is for the CEO 62:38 in the threshold scenario and 23:77 in the maximum scenario. CFO CLHCO (80%) Minimum Thr eshold Maximum T arget 560 869 1,596 2,282 Minimum Thr eshold Maximum T arget 1,150 1,185 3,278 4,686 CEO Minimum Thr eshold Maximum T arget 1,250 2,016 5,469 3,750 Salary Benets allowance PSU All gures $'000 Executive Chair Minimum Thr eshold Maximum T arget 1,000 1,313 2,875 2,250 STI Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 116 Introduction This 2020 Annual Report comprises regulated information within the meaning of sections 1:1 and 5:25c of the Dutch Financial Supervision Act ( Wet op het ﬁnancieel toezicht ). For the consolidated and OCI 2020 ﬁnancial statements ( jaarrekening ) within the meaning of section 2:361 of the Dutch Civil Code, refer ence is made to the ﬁnancial statements. OCI’ s Directors have signed the 2020 ﬁnancial statements in line with section 2:101 paragraph 2 of the Dutch Civil Code. Corporate governance statement As referr ed to in article 2a of the Decree laying down additional r equirements for annual reports ( Besluit inhoud bestuursverslag ) effective 1 January 2018 (the AR Decr ee ), OCI is required to make a statement on corporate governance. Information requir ed to be included in the corporate governance statement as described in articles 3, 3a and 3b of the AR Decree can be found in the following sections of this Annual Report: • information concer ning compliance with the Code, as requir ed by article 3 of the AR Decree, can be found in the section Compliance with the Code on page 103; • information concer ning OCI’ s risk management and control frameworks relating to the ﬁnancial reporting pr ocess, as required by article 3a(a) of the AR Decr ee, can be found in the section Risk Management beginning on page 77; • information regarding the functioning of the GM, and the authority and rights of OCI’ s shareholders, as r equired by article 3a(b) of the AR Decr ee, can be found in the section Shareholders’ rights and meetings on page 102; • information regarding the composition and functioning of OCI's Boar d and its Committees, as requir ed by article 3a(c) of the AR Decree, can be found beginning on page 91; • information regarding the diversity policy concerning the composition of the Board, as r equired by article 3a(d) of the AR Decree, can be found in the sections Boar d composition and independence and Diversity & Inclusion on pages 98 and 99; and • information concer ning the inclusion of the information requir ed by the Decree Article 10 T akeover Directive ( Besluit artikel 10 overnamerichtlijn ), as requir ed by article 3b of the AR Decree, can be found in the section Decr ee Article 10 T akeover Directive on page 103. The Code was last amended with effect fr om 1 January 2017 and is available at the website of the Corporate Governance Monitoring Committee (http://www .mccg.nl). In control statement The Board is r esponsible for the design, implementation and operation of OCI’ s inter nal risk management and control systems. In discharging this r esponsibility , the Board has made an assessment of the effectiveness of OCI’ s inter nal control and risk management systems. Based on this assessment and to the best of its knowledge and belief, the Board states that: • there are no material failur es in the effectiveness of OCI’ s internal risk management and control systems; • OCI’ s inter nal risk management and control systems provide r easonable assurance that the Annual Report does not contain any errors of material importance; • based on the current state of affairs, it is justiﬁed that the ﬁnancial r eporting is prepar ed on a going concern basis; and • there are no material risks or uncertainties that could r easonably be expected to have a material adverse effect on the continuity of OCI’ s enterprise in the coming twelve months. The above statements do not imply that our systems and procedur es provide absolute assurance as to the realization of our operational and strategic business objectives, or that they can pr event all misstatements, inaccuracies, errors, fraud and non-compliances with legislation, rules and regulations. Directors’ statement pursuant to article 5:25c of the Dutch Financial Supervision Act In accordance with Article 5:25c of the Dutch Financial Supervision Act ( W et op het ﬁnancieel toezicht ), the Directors declar e that to the best of their knowledge: • the 2020 ﬁnancial statements ( jaarrekening ) provide a true and fair view of the assets, liabilities, ﬁnancial position and results of OCI and its subsidiaries included in the consolidated statements; and • the Board Report ( bestuursverslag ) provides a true and fair view of the situation as at 31 December 2020, and of OCI’ s and its group companies’ state of affairs for the ﬁnancial year 2020, as well as the principal risks and uncertainties that OCI faces. DECL ARA TIONS Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 117 Non-Financial Statement pursuant to Directive 2014/95/EU Directive 2014/95/EU r equires large companies to disclose non-ﬁnancial information. This Directive has been implemented into Dutch law through the Decr ee disclosure of non-ﬁnancial information ( Besluit bekendmaking niet-ﬁnanciële informatie ) (the NF Disclosure Decr ee ). Pursuant to article 2 of the NF Disclosure Decr ee, OCI has included the information included in article 3 of the NF Disclosure Decr ee in the following sections of this Annual Report: • a description of OCI’ s business model is included on page 19; • a description, including applied procedures and the r esults of its policy in relation to: • environmental, social and employee matters is included on pages 29-76, and • respect for human rights is described on page 67 and in our Human Rights Policy; and • anti-corruption and bribery matters are described in the section Risk Management & Compliance on page 87; • the principal risks related to the policy and how the risks are managed as described thr oughout the sustainability and ERM sections of this Annual Report; and • the non-ﬁnancial performance indicators which are relevant for OCI’ s business activities are described on pages 29-76. Amsterdam, the Netherlands, 22 Mar ch 2021 The Board Michael Bennett Nassef Sawiris Ahmed El-Hoshy Hassan Badrawi Maud de V ries Sipko Schat Jérôme Guiraud Gregory Heckman Robert Jan van de Kraats Anja Montijn-Groenewoud David Welch Dod Fraser Heike van de Kerkhof DECL ARA TIONS CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 118 OCI N.V . Annual Report 2020 119 Financial statements OCI N.V . Annual Report 2020 119 120 Consolidated Statement of Financial Position 122 Consolidated Statement of Proﬁt or Loss and Other Comprehensive Income 123 Consolidated Statement of Changes in Equity 124 Consolidated Statement of Cash Flows 126 Notes to the Consolidated Financial Statements Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 120 CONSOLIDA TED ST A TEMENT OF FINANCIAL POSITION AS A T $ millions Note 31 December 2020 31 December 2019 Assets Non-current assets Property , plant and equipment (7) 6,244.3 6,570.6 Right-of-use assets (7) 279.4 277.5 Goodwill and other intangible assets (8) 486.5 599.8 T rade and other receivables (9) 3.5 4.1 Equity-accounted investees (10) 468.7 506.9 Financial assets at fair value through other compr ehensive income (11) 30.0 33.4 Deferred tax assets (12) 0.8 6.5 T otal non-current assets 7,513.2 7,998.8 Current assets Inventories (13) 293.8 308.7 T rade and other receivables (9) 600.9 508.4 Income tax receivables (12) 2.8 3.2 Cash and cash equivalents (14) 686.3 600.5 T otal current assets 1,583.8 1,420.8 T otal assets 9,097.0 9,419.6 Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 121 CONSOLIDA TED ST A TEMENT OF FINANCIAL POSITION CONTINUED AS A T $ millions Note 31 December 2020 31 December 2019 Equity Share capital (15) 5.6 5.6 Share pr emium (15) 6,316.3 6,316.3 Reserves (16) (338.4) (237.8) Retained earnings (4,851.8) (4,726.6) Equity attributable to owners of the Company 1,131.7 1,357.5 Non-controlling inter ests (17) 1,540.1 1,461.2 T otal equity 2,671.8 2,818.7 Liabilities Non-current liabilities Loans and borrowings (18) 4,226.9 4,392.7 Lease obligations (19) 248.6 244.3 T rade and other payables (20) 25.7 30.7 Provisions (21) 3.0 2.8 Deferred tax liabilities (12) 515.5 490.2 T otal non-current liabilities 5,019.7 5,160.7 Current liabilities Loans and borrowings (18) 189.7 269.6 Lease obligations (19) 43.6 41.0 T rade and other payables (20) 1,003.6 991.3 Provisions (21) 158.3 129.5 Income tax payables (12) 10.3 8.8 T otal current liabilities 1,405.5 1,440.2 T otal liabilities 6,425.2 6,600.9 T otal equity and liabilities 9,097.0 9,419.6 The notes on pages 126 to 169 are an integral part of these consolidated ﬁnancial statements. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 122 CONSOLIDA TED ST A TEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 DECEMBER $ millions Note 2020 2019 Revenue (27) 3,474.1 3,031.7 Cost of sales (22) (3,062.0) (2,708.9) Gross pr oﬁt 412.1 322.8 Other income (23) 17.6 5.8 Selling, general and administrative expenses (22) (219.3) (219.1) Other expenses (24) (23.4) (4.5) Operating proﬁt 187.0 105.0 Finance income (25) 212.5 60.8 Finance cost (25) (412.4) (387.7) Net ﬁnance cost (25) (199.9) (326.9) Income from equity-accounted investees (net of tax) (10) (36.7) (56.6) Proﬁt / (loss) befor e income tax (49.6) (278.5) Income tax (12) (44.5) (21.7) Net proﬁt / (loss) (94.1) (300.2) Other comprehensive income: Items that are or may be r eclassiﬁed subsequently to proﬁt or loss Movement in hedge reserve (16) 5.9 0.2 Currency translation dif ferences (16) (146.9) 4.6 Currency translation dif ferences from equity-accounted investees (10) 1.6 (0.2) Items that will not be reclassiﬁed to pr oﬁt or loss Changes in the fair value of ﬁnancial assets at fair value through other compr ehensive income (16) (3.7) (3.4) Other comprehensive income, net of tax (143.1) 1.2 T otal comprehensive income (237.2) (299.0) Proﬁt / (loss) attributable to: Owners of the Company (177.7) (334.7) Non-controlling inter ests (17) 83.6 34.5 Net proﬁt / (loss) (94.1) (300.2) T otal comprehensive income attributable to: Owners of the Company (282.1) (329.9) Non-controlling inter ests (17) 44.9 30.9 T otal comprehensive income (237.2) (299.0) (Loss) / earnings per share (in USD) Basic (loss) / earnings per share (26) (0.847) (1.598) Diluted (loss) / earnings per share (26) (0.847) (1.598) The notes on pages 126 to 169 are an integral part of these consolidated ﬁnancial statements. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 123 CONSOLIDA TED ST A TEMENT OF CHANGES IN EQUITY $ millions Note Share capital (15) Share pr emium (15) Reserves (16) Retained earnings (15) Equity attributable to owners of the Company Non-controlling interests (17) T otal equity Balance at 1 January 2019 5.6 6,316.3 (249.0) (5,065.6) 1,007.3 469.8 1,477.1 Net proﬁt / (loss) - - - (334.7) (334.7) 34.5 (300.2) Other comprehensive income - - 4.8 - 4.8 (3.6) 1.2 T otal comprehensive income - - 4.8 (334.7) (329.9) 30.9 (299.0) Impact differ ence in proﬁt sharing non-controlling inter ests (17) - - - - - 10.5 10.5 Dividend to non-controlling inter ests (17) - - - - - (143.3) (143.3) T reasury shar es sold / delivered (16) - - 7.7 (7.7) - - - T reasury shar es acquired (16) - - (1.3) - (1.3) - (1.3) Business combination Fertiglobe (15) - - - 674.8 674.8 1,093.3 1,768.1 Share-based payments (15) - - - 6.6 6.6 - 6.6 Balance at 31 December 2019 5.6 6,316.3 (237.8) (4,726.6) 1,357.5 1,461.2 2,818.7 Net proﬁt / (loss) - - - (177.7) (177.7) 83.6 (94.1) Other comprehensive income - - (104.4) - (104.4) (38.7) (143.1) T otal comprehensive income - - (104.4) (177.7) (282.1) 44.9 (237.2) Impact differ ence in proﬁt sharing non-controlling inter ests (17) - - - - - 17.4 17.4 Dividend to non-controlling inter ests (17) - - - - - (49.2) (49.2) Reversal of dividend to non-controlling inter ests (17) - - - - - 125.4 125.4 T reasury shar es sold / delivered (16) - - 3.8 (3.8) - - - Business combination Fertiglobe (15) - - - 48.3 48.3 (59.6) (11.3) Share-based payments (15) - - - 8.0 8.0 - 8.0 Balance at 31 December 2020 5.6 6,316.3 (338.4) (4,851.8) 1,131.7 1,540.1 2,671.8 The notes on pages126 to 169 are an integral part of these consolidated ﬁnancial statements. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 124 CONSOLIDA TED ST A TEMENT OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER $ millions Note 2020 2019 Net proﬁt / (loss) (94.1) (300.2) Adjustments for: Depreciation and amortization (7), (8) 592.2 544.7 Interest income (25) (4.4) (5.9) Interest expense (25) 307.5 311.8 Net foreign exchange loss and others (25) (103.2) 21.0 Fertiglobe business combination (13.3) - Share in income of equity-accounted investees (10) 36.7 56.6 Equity-settled share-based payment transactions (15) 8.0 6.6 Impact differ ence in proﬁt-sharing non-controlling inter ests (15) 17.4 10.5 Income tax expense (12) 44.5 21.7 Changes in: Inventories (13) 18.2 (50.0) T rade and other receivables (9) (120.4) 90.7 T rade and other payables (20) 214.2 (42.4) Provisions (21) 27.6 0.6 Cash ﬂows: Interest paid (283.5) (274.1) Lease interest paid (19) (8.6) - Interest r eceived 4.4 5.8 Income taxes paid (12) (25.4) (59.9) Cash ﬂow from / (used in) operating activities 617.8 337.5 Investments in property , plant and equipment (7) (262.6) (300.0) Investments in intangibles (0.6) - Cash acquired in business combination (2.2.1) - 45.8 Dividends from equity-accounted investees (10) 3.0 1.6 Cash ﬂow from / (used in) investing activities (260.2) (252.6) Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 125 CONSOLIDA TED ST A TEMENT OF CASH FLOWS CONTINUED FOR THE YEARS ENDED 31 DECEMBER $ millions Note 2020 2019 Purchase of tr easury shares (16) - (0.7) Proceeds fr om borrowings (18) 2,070.4 1,765.5 Repayment of borrowings (18) (2,396.0) (1,654.4) Newly incurred transaction costs / call pr emium (18) (51.2) (19.0) Payment of lease obligations (19) (37.3) (30.1) Dividends paid to non-controlling inter ests (15), (17) (43.2) (6.1) Settlement FX derivatives 45.6 - Net debt settlement business combination Fertiglobe (2.2.1) 166.8 - Cash ﬂows from / (used in) ﬁnancing activities (244.9) 55.2 Net cash ﬂow 112.7 140.1 Net increase / (decr ease) in cash and cash equivalents 112.7 140.1 Cash and cash equivalents at 1 January 600.5 460.7 Effect of exchange rate ﬂuctuations on cash held (26.9) (0.3) Cash and cash equivalents at 31 December 686.3 600.5 For non-cash movements in loans and borrowings and lease obligations, r eference is made to notes 18 and 19, respectively . The notes on pages 126 to 169 are an integral part of these consolidated ﬁnancial statements. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 126 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER 1. General OCI N.V . (‘OCI’ or ‘Company’) was established on 2 January 2013 as a public limited liability company incorporated under Dutch law , with its head ofﬁce located at Honthorststraat 19, Amster dam, the Netherlands. OCI is register ed in the Dutch commercial register under no. 56821166 dated 2 January 2013. The consolidated ﬁnancial statements comprise the ﬁnancial statements of the Company , its subsidiaries (together referr ed to as the ‘Group’) and the Group’ s interests in associates and joint ventures. The Group is primarily involved in the pr oduction of natural gas-based products. 2. Basis of preparation 2.1 General The consolidated ﬁnancial statements have been prepar ed in accordance with International Financial Reporting Standards as endorsed by the Eur opean Union (IFRS-EU). The consolidated ﬁnancial statements have been prepar ed on the historical cost convention, except when otherwise indicated. The ﬁnancial year of the Group commences on 1 January and ends on 31 December . The Company’ s functional currency is the Euro (‘EUR’). The group p resen tation curr ency is the US doll ar , as the Group’ s major foreign operations have the US dollar as their functional curr ency . All v alues are rounded to the near est tenth of a million (in millions of USD), except when stated otherwise. These ﬁnancial statements have been authorized for issue by the Company’ s Board of Directors on 22 March 2021. These consolidated ﬁnancial statements ar e subject to adoption by the Annual General Meeting of Shareholders. 2.2 Business combinations 2.2.1 Fertiglobe business combination On 30 September 2019, the Group and Abu Dhabi National Oil Company (“ADNOC”) completed a transaction to combine ADNOC’ s fertilizer business into OCI’ s Middle East and North Africa (“OCI MENA”) nitrogen fertilizer platform. As part of the transaction, Fertiglobe, a subsidiary of the Group obtained OCI MENA under common control and 100% of the voting powers and economic r eturns from Ruwais Fertilizer Industries Ltd. (“Fertil”), a previously wholly owned subsidiary of ADNOC. Fertil has been consolidated by the Gr oup from 30 September 2019. Fertil is based out of the Emirate of Abu Dhabi, United Arab Emirates and is engaged in processing feedstock gas to pr oduce nitrogen fertilizers. In exchange, the Group transferr ed 42% of the total share capital of Fertiglobe to ADNOC. With the acquisition of Fertil, Fertiglobe will become the largest producer of nitr ogen fertilizers in the MENA region. The accounting for this business combination has been disclosed in our 2019 consolidated ﬁnancial statements. As previously disclosed the accounting for this business combination at the end of 2019 was still provisional in r espect of the accounting for the net debt settlement (‘post-closing adjustment’). On 31 March 2020 the Company signed a ﬁnal settlement with ADNOC for the post-closing adjustment which is considered to be an adjustment to the consideration transferr ed in this transaction. In our 2019 consolidated ﬁnancial statements a settlement receivable was included of USD 49.7 million (which repr esented the uncontested amount at the time). In the ﬁnal settlement a compensation of USD 178.0 million has been agreed with ADNOC as post-closing adjustment (of which USD 166.8 million was received in cash). The measurement period adjustments r ecognized, compared to the 2019 consolidated ﬁnancial statements, resulted in a decr ease of goodwill (USD 115.1 million), trade and other receivables (USD 49.7 million) and non-controlling inter ests (USD 11.3 million) and an increase of cash (USD 166.8 million), which resulted in the identiﬁcation of a gain on this transaction of USD 13.3 million. Goodwill arising from the business combination has been r ecognized as follows: $ millions Consideration transferred 1,057.5 NCI, based on their proportionate inter est in the recognized amounts of the assets and liabilities 710.6 Fair value of identiﬁable net assets (1,603.4) Additional consideration received (178.0) Gain on transaction (13.3) * Due to the ﬁnal post-completion settlement between the Company and ADNOC, the total consideration transferred (USD1,590.1 million) is less than the fair value of the identiﬁable net assets (USD1,603.4 million), resulting in a gain on pur chase of USD 13.3 million which is recorded in the pr oﬁt or loss. As per 30 September 2020, the Company ﬁnalized the Purchase Price Allocation (‘PP A ’). The ﬁnalization of the PP A did not result in any changes to the previously r eported numbers for this business combination. As part of the transaction, ADNOC and OCI agreed on several adjustments in the consideration for indemnities related to potential tax and legal exposur es for both parties. Such indemnities could lead to a future settlement between both parties if such items materialize. The fair value of these contingent consideration arrangements as per acquisition date was assessed based on the estimated impact and likelihood (which are mostly supported by thir d party opinions). During the remeasurement period, the aggregate fair value of the contingent consideration assets and liabilities was assessed to be zer o. Reference is made to note 21. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 127 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 2.2.2 Completed Demerger of the Engineering & Construction Business in 2015 OCI demerged the Company’ s Engineering & Construction business in March 2015 (‘the Demerger’). The ultimate parent company holding the demerged Engineering & Construction activities and that became listed on the Cairo and Dubai stock exchanges dir ectly after the demerger is Orascom Construction PLC (’OC’). The Demerger was completed on 7 March 2015. Ongoing relationship between OCI N.V . and Orascom Construction PLC After the Demerger , OCI and OC each operate as separately listed companies. Construction contracts Subsidiaries of OC and OCI are still party to continuing commer cial arrangements. Conditional sale agreement Orascom Construction Industries S.A.E (‘OCI S.A.E.’) was the former parent company of the OCI Group, which was r eplaced by OCI N.V . in 2013 and was delisted from the Egyptian Stock Exchange in 2016. OCI S.A.E. acts as the sub holding of several operating fertilizer companies of OCI NV . At the time of the demerger , OCI S.A.E. also held certain construction activities that could not be legally transferred to Orascom Construction PLC as part of the Demerger due to legal, regulatory , or other considerations. In order to have the Engineering & Construction businesses der ecognized from the OCI N.V . consolidated ﬁnancial statements, a conditional sale agreement was enter ed into between the OCI Group and the OC Gr oup. The agreement stipulates that the management of construction activities, as well as the economic effect of all r elated risks and rewards (including the right to any dividends), would be passed from OCI SAE to OC ef fective 30 September 2014 until OCI SAE’ s construction activities ar e terminated, or until OCI SAE’ s construction activities are demerged into a separate construction entity called ‘Construction Egypt’ that is then transferred to OC. In addition to management, OC also received the right to vote on the boar d of directors of OCI S.A.E. in matters related to the construction business. This transfer of economic beneﬁts, liabilities and rights will remain in for ce until the transfer of the ‘Construction Egypt’ shares have been legally formalized. Any new awarded pr ojects will be sought through a wholly-owned subsidiary of OC. T ax indemnity agreement On 6 February 2015, OC and OCI S.A.E. entered into a tax indemnity agr eement. The agreement sets out each party’ s obligations in respect of the tax claim lodged by the tax authorities in Egypt relating to the sale of the OCI S.A.E.’ s cement business to Lafarge SA in 2007 (further reference is made to note 28). The parties have agreed to equally split any liability incurr ed by OCI S.A.E. in relation to the T ax Claim (including the costs of dealing with the T ax Claim). In addition, to the extent that any recoveries are made in r elation to the tax claim, including interest received on the funds, these will be shar ed between the parties on a 50%/50% basis (excluding the amount of EGP 1.9 billion (refund r eceived in March 2015) for which it was announced that the rights will be transferr ed to T ahya Misr social fund in Egypt). 2.3 COVID-19 impact The outbreak of COVID-19 continues to impact the global economy and markets. However , our business operations including our global supply chain and distribution channels have continued without interruption throughout the pandemic to-date, as our industries and our pr oducts have been designated as essential by the respective governments of each of our markets to ensure the uninterrupted supply of goods and other essential products. W e noted decreasing selling prices for all our products over the course of the second quarter of 2020 and recovery of selling prices over the course of the thir d and fourth quarter of 2020, on the back of increased global energy prices, driving lower global operating rates and resulting in lower supply . Based on the recent strong r ecovery of the market, we expect this will not impact the long term outlook of our business and the valuation of our assets. Global urea and ammonia prices have increased by 30% in the ﬁrst two months of 2021 while the outlook for Methanol continues to improve, Methanol prices have almost tripled since mid-2020 due to tight balance in the market as a result of shutdown of high-cost Methanol capacity and healthy industrial demand. At the outset of the COVID-19 outbreak, we established an internal COVID-19 taskforce to ensur e safety of our employees and business continuity . OCI applied strict protective measur es, including sanitation, personal protection equipment, social distancing and thermal testing prior to accessing any group locations. The status of r eturning to workplace differs per jurisdiction. Currently the majority of the locations are now at 50%-70% employee occupancy rates. As our plants ar e heavily automated, essential on-site operating and logistics personnel can be limited and administrative and operational support personnel have worked remotely in or der to maintain social distancing following governmental guidelines. Although the long-term effects of COVID-19 ar e still unclear , our current outlook is that our ﬁnancial and operating performance remains solid. W e have operated our business in a remote working environment and could continue to do so for an extended period of time, if necessary . Developments in each jurisdiction are being closely monitor ed and protocols are ﬂexible to allow for rapid adjustments as needed. The impressive r esilience of our staff throughout the period gives all local management teams conﬁdence to revert to a work-fr om-home policy again if needed, without interruptions to our operations and supply chain. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 128 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies The Group has applied the accounting policies set out in note 3 consistently over both periods presented in these consolidated ﬁnancial statements. 3.1 Consolidation The consolidated ﬁnancial statements include the ﬁnancial statements of OCI, its subsidiaries and the Group’ s interests in associates and joint ventur es. Subsidiaries Subsidiaries are all companies to which OCI is exposed or has rights to variable r eturns from its involvement with the investee and has the ability to affect those r eturns through its control over the investee, generally accompanying a shareholding of mor e than half of the shares issued and related voting power . Subsidiaries are fully consolidated fr om the date that control commences until the date that control ceases. When the Gr oup ceases to have control over a subsidiary , it derecognizes the assets and liabilities of the subsidiary , and any related non-contr olling interests and other components of equity . Any investment retained in the former subsidiary is r ecognized at fair value. The fair value shall be regar ded as the fair value on initial recognition of a ﬁnancial asset or , when appropriate, the cost on initial recognition of an investment in an associate or joint ventur e. Any resulting gain or loss is recognized in proﬁt or loss including r elated cumulative translation adjustments accumulated in other comprehensive income. If it becomes an associate or joint venture, the inter est retained is subsequently measured in accordance with the equity method. The principal subsidiaries ar e listed in note 34. T ransactions eliminated in the consolidated ﬁnancial statements Intra-group balances and transactions, and any unr ealized income and expenses arising from intra- group transactions, ar e eliminated in preparing the consolidated ﬁnancial statements. Unrealized gains arising from transactions with equity-accounted investees ar e eliminated against the investment to the extent of the Group’ s interest in the investees. Unr ealized losses are eliminated in the same way as unrealized gains, but only to the extent that ther e is no evidence of impairment. Non-controlling inter ests Non-controlling inter ests is presented as a separate component in equity . ‘Proﬁt or loss’ and ‘T otal comprehensive income’ attributable to the non-contr olling interests are pr esented as a separate line item in the consolidated statement of proﬁt or loss and other compr ehensive income. Non-controlling interests is measur ed at its proportionate share of the acquir ee’ s identiﬁable net assets at the balance sheet date. Changes in Group’ s ownership interest in a subsidiary that do not r esult in a loss of control are accounted for as equity transactions. 3.2 Equity-accounted investees Associates Associates are those companies in which the Gr oup exercises signiﬁcant inﬂuence, but does not have control over the ﬁnancial and operating policies, and ar e presumed to exist when the Group holds 20% to 50% of the shareholding and r elated voting rights of the other entity . Associates are accounted for under the equity method. The Group’ s share of pr oﬁt or loss of an associate is recognized in proﬁt or loss from the date when signiﬁcant inﬂuence begins up to the date when that inﬂuence ceases. Investments in associates with negative shareholder’ s equity are impair ed and a provision for its losses is recognized only if the Gr oup has a legal or constructive obligation to cover the losses. Equity changes in investees accounted for under the equity method that do not result fr om proﬁt or loss are r ecognized in other comprehensive income. Unr ealized gains on transactions between the Group and its associates are eliminated to the extent of the Gr oup’ s inter est in associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferr ed. Unrealized gains on transactions between two associates are not eliminated. Joint ventures Investments in joint arrangements are classiﬁed as either joint ventur es or joint operations depending on the contractual rights and obligations of each investor . Those joint arrangements that are assessed as joint ventures ar e accounted for using the equity method. Joint operations are accounted for using line by line accounting. Joint ventures ar e accounted for under the equity method. Under the equity method of accounting, interests in joint ventur es are initially recognized at cost and adjusted subsequently for the Gr oup’ s share in the post-acquisition proﬁt or losses and movements in compr ehensive income. When the Group’ s share of losses in a joint ventur e equals or exceeds its interest in the joint venture (which includes any long-term interest that, in substance, forms part of the Gr oup’ s net investment in joint ventur es), the Group does not r ecognize further losses, unless it has incurred obligations or made payments on behalf of the joint venture. 3.3 Business combinations Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggr egate of the consideration transferred, measured at acquisition date, fair value of the assets and liabilities assumed and the amount of any non-controlling inter ests in the acquiree. For each business combination, the Group elects whether to measur e the non-controlling interests in the acquiree at fair value or at the pr oportionate share of the acquiree’ s identiﬁable net assets. Acquisition- related costs ar e expensed as incurred and included in administrative expenses. When the Group acquir es a business, it assesses the classiﬁcation of particular ﬁnancial assets and ﬁnancial liabilities assumed as, at fair value through pr oﬁt or loss, or at amortized cost or as a ﬁnancial asset measured at fair value thr ough other comprehensive income. The Group makes an assessment of whether embedded derivatives of the acquiree should be separated fr om their host contracts. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 129 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies (continued) If the business combination is achieved in stages, the previously held equity inter est is remeasured at its acquisition date fair value and any resulting gain or loss is r ecognized in proﬁt or loss or other comprehensive income, as appr opriate. The consideration transferred in exchange for the acquir ee includes any asset or liability resulting from a contingent consideration arrangement. The Gr oup recognizes the acquisition-date fair value of contingent consideration as part of the consideration transferred in exchange for the acquir ee. Changes in the fair value of consideration that are not measur ement period adjustments shall be adjusted as follows: • Contingent consideration classiﬁed as equity shall not be remeasur ed. • Other contingent consideration shall be measured at fair value with changes r ecognized in proﬁt or loss. 3.4 Foreign curr ency Foreign curr ency transactions The ﬁnancial statements of subsidiaries and joint operations are pr epared in the currencies which are determined based on the primary economic envir onment in which they operate (‘the functional currency’). T ransactions in currencies other than the functional currency ar e recorded at the rates of exchange prevailing on the transaction dates. At each balance sheet date, monetary items denominated in foreign curr encies are revalued into the entity’ s functional currency at the then prevailing closing-rates. Exchange differ ences arising on the settlement and translation of monetary items are included in proﬁt or loss for the period except when deferred to other compr ehensive income for ﬁnancial assets at fair value through other compr ehensive income and the effective part of qualifying cash ﬂow hedges. Foreign curr ency translation Upon consolidation, the assets and liabilities of subsidiaries with a functional currency other than the US dollars are translated into US dollars using the exchange rates pr evailing at the balance sheet date. Income and expense items are translated using exchange rates pr evailing at the date of the transactions. Investments in joint ventures and associates with a functional curr ency other than the US dollars are translated into US dollars using exchange rates pr evailing on the balance sheet date. Exchange rate differ ences arising during consolidation and on the translation of investments in subsidiaries, joint arrangements and associates are included in other compr ehensive income, as ‘Currency translation dif ferences’. When a foreign operation is (partly) disposed of or sold, (the proportionate shar e of) the related currency translation dif ferences that wer e recorded in other comprehensive income ar e recycled to proﬁt or loss as part of the gain or loss on disposal or sale. Goodwill and fair value adjustments arising on the acquisition of a foreign subsidiary ar e considered as assets and liabilities denominated in the functional currency of the for eign subsidiary . 3.5 Financial instruments Financial assets IFRS 9 contains three principal classiﬁcation categories for ﬁnancial assets: measur ed at amortized cost, at fair value through pr oﬁt or loss (‘FVTPL ’) and at fair value through other compr ehensive income (‘FVOCI’). The classiﬁcation of ﬁnancial assets under IFRS 9 is generally based on the business model in which a ﬁnancial asset is managed and its contractual cash ﬂow characteristics. Amortized cost T rade and other receivables ar e held to collect contractual cash ﬂows and are expected to give rise to cash ﬂows repr esenting solely payments of principal and interest. The Group analyzed the contractual cash ﬂow characteristics of those instruments and concluded that they meet the ‘hold-to- collect’ business model criteria for amortized cost measurement. Inter est income from these assets is included in ﬁnance income using the effective inter est rate method. Any gain or loss on derecognition is recognized dir ectly in proﬁt or loss. The Group sells certain trade r eceivables under a securitization agreement to a third party . For these selected debtors the Group will use the ‘hold-to-collect-and-sell business model’ as deﬁned under IFRS 9 and will measure these r eceivables going forward at FVOCI. Fair value through pr oﬁt or loss (‘FVTPL ’) Derivative ﬁnancial instruments held by the Group ar e classiﬁed in the category FVTPL, unless the instrument is designated in a hedge relationship and the hedge meets the r equirements for hedge accounting. Under IFRS 9, derivatives embedded in contracts where the host is a ﬁnancial asset in the scope of the standard ar e never separated. Instead, the hybrid ﬁnancial instrument as a whole is assessed for classiﬁcation. Fair value through other compr ehensive income (‘FVOCI’) Equity investments, previously r ecognized as available-for -sale assets, are measur ed at FVOCI, based on the irrevocable election made by the Gr oup. The Group elected this approach as these investments are not held for trading. Movements in the carrying amount ar e recognized in other comprehensive income, except for the recognition of impairment gains and losses, inter est income and foreign exchange gains and losses which are r ecognized in the proﬁt or loss. On derecognition the cumulative gain or loss recognized in other compr ehensive income is not reclassiﬁed from equity to pr oﬁt or loss. Dividend income is recognized in pr oﬁt or loss when the Group’ s right to receive payment is established. Gas purchase contracts The Group has pur chase contracts in place to procure natural gas for its pr oduction activities. These contracts are not accounted for as ﬁnancial instruments as they ar e excluded for the scope of IFRS 9 through the “own use exemption”. The own use exemption applies to contracts that ar e entered into and continue to be held for the receipt of a non-ﬁnancial item in accor dance with the Group’ s expected purchase, sale or usage r equirements. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 130 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies (continued) Financial liabilities Financial liabilities, like loans and borrowings and trade and other payables, ar e measured at amortized cost, unless the ﬁnancial liability: • is a derivative at FVTPL; • arose from the transfer of a ﬁnancial assets that does not qualify for der ecognition or if the continuing involvement approach applies; • is a ﬁnancial guarantee contract; • is a commitment to provide a loan at a below-market inter est rate; and • is a contingent consideration resulting from a business combination to which IFRS 3 applies, measured at FVTPL. Impairment The new impairment model requir es the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurr ed credit losses as is the case under IAS 39. Based on the assessment undertaken on historical data, there’ s limited impact from the expected cr edit loss model. The Group will evaluate any possible impact going forwar d. For the assessment of loss allowance for expected credit losses, a simpliﬁed model for trade r eceivables is applied. The loss allowance is measured at initial r ecognition and throughout the life of the receivable at an amount equal to lifetime ECL. They are estimated based on the pr esent value of all cash shortfalls over the remaining expected life of the ﬁnancial asset, i.e., the differ ence between: • the contractual cash ﬂows that are due to an entity under the contract; and • the cash ﬂows that the holder expects to receive. In order to assess the lifetime ECLs for trade r eceivables, both historic credit losses experience and forward-looking information is assessed. For other receivables (and other ﬁnancial assets) the Gr oup measures the loss allowance at an amount equal to the lifetime ECLs if the credit risk on that ﬁnancial instrument has incr eased signiﬁcantly since initial recognition. If at the reporting date, the cr edit risk of other receivables has not increased signiﬁcantly since initial recognition, the Gr oup measures the loss allowance for that ﬁnancial instrument at an amount equal to 12-month ECL. 3.6 Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less fr om the acquisition date (original maturity) that are subject to an insigniﬁcant risk of changes in their fair value and are used by the Gr oup in the management of its short-term commitments. Restricted cash comprises cash balances where speciﬁc r estrictions exist on the Company’ s ability to use this cash. Restricted cash includes cash deposited as collateral for letters of credit issued by the Company . Restricted funds include bank balances reserved by the lending institution for installments of loan payments to be made in the near future. 3.7 Share capital Ordinary shar es are classiﬁed as equity . Share pr emium is the excess amount received over the par value of the shares. Incr emental costs directly attributable to the issue of new shares ar e recognized in equity as a deduction, net of tax, from the pr oceeds. When ordinary shares ar e repur chased, the amount of the consideration paid, which includes directly attributable costs, net of tax ef fects, is recognized as a deduction fr om ‘Reserves’. Repurchased shares ar e classiﬁed as treasury shar es and are pr esented in ‘Reserves’. When treasury shares ar e sold or reissued subsequently , the amount received is r ecognized as an increase in ‘Reserves’, and the resulting surplus or deﬁcit on the transaction is presented in shar e premium. 3.8 Property , plant and equipment Items of property , plant and equipment are measured at cost less accumulated depr eciation and any impairment. Cost includes expenditure that is dir ectly attributable to the acquisition of the asset. The cost of self-constructed assets includes cost of material, direct labour , other directly attributable cost incurred to bring the asset r eady to its intended use, cost of asset retirement obligations and any capitalized borrowing cost. Purchased softwar e that is integral to the functionality of the related equipment is capitalized as part of that equipment. When parts of property , plant and equipment have different useful lives, they ar e accounted for as separate items (major components) of property , plant and equipment. Any gain or loss on disposal of an item of property , plant and equipment (calculated as the difference between the net proceeds fr om disposal and the carrying amount of the item) is recognized in proﬁt or loss. Subsequent expenditures ar e capitalized only when it is probable that the future economic beneﬁts associated with the expenditure will ﬂow to the Gr oup. Ongoing repairs and maintenance costs are expensed as incurr ed. Spare parts of property , plant and equipment are recognized under property , plant and equipment if the average tur n-over exceeds 12 months or more, otherwise they are recognized within inventories. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 131 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies (continued) Property , plant and equipment under construction Expenditures incurr ed for purchasing and constructing property , plant and equipment are initially recor ded as ‘under construction’ until the asset is completed and becomes ready for use. Upon the completion of the assets, the recognized costs ar e reclassiﬁed from ‘under construction’ to its ﬁnal category of property , plant and equipment. Assets under construction are not depreciated and measured at cost less any impairment losses. Depreciation Items of property , plant and equipment are depreciated on a straight-line basis thr ough proﬁt or loss over the estimated useful lives of each component, taking into account any residual values. Land is not depreciated. Items of property , plant and equipment are depreciated fr om the date that they are installed and are ready for use, or in r espect of internally constructed assets, from the date that the asset is completed and ready for use. The estimated useful lives for items of property , plant and equipment are as follows: Y ears Buildings 10 - 50 Plant and equipment 5 - 25 Fixtures and ﬁttings 3 - 10 Depreciation methods, useful lives and r esidual values are reviewed at each r eporting date and adjusted if necessary by the Group. Borrowing costs Borrowing costs attributable to the acquisition, construction or pr oduction of assets that necessarily take a substantial period of time to get ready for their intended use or sale, ar e recognized as part of the cost of those assets. All other borrowing costs ar e recognized as ‘Finance cost’ in the period in which they are incurr ed. 3.9 Goodwill and other intangible assets Goodwill Goodwill repr esents the excess of purchase price and related costs over the value assigned to the Groups’ shar e of identiﬁable assets acquired and liabilities assumed of businesses acquired that wer e directly attributable to the legal entities comprising the Gr oup. If the fair value of the net assets acquired is in excess of the aggregate consideration transferr ed, the gain is recognized in proﬁt or loss. Goodwill on acquisition of entities that qualify as subsidiaries is presented under ‘Goodwill and intangible assets’. Goodwill on acquisitions of entities that qualify as associates or joint ventures is included in ‘Equity-accounted investees’. Goodwill on acquisition of subsidiaries is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or group of units that ar e expected to beneﬁt from the business combination through which the goodwill arose, based on past experience. Goodwill is initially measured at cost. After initial r ecognition, goodwill is measured at cost less any impairment losses. Goodwill is tested annually for impairment; an impairment loss is recognized for the amount by which the cash-generating unit’ s carrying amount exceeds its recoverable amount. The recoverable amount of the cash-generating unit is determined by the higher of its fair value less cost to sell and its value in use. Impairment losses on goodwill are not r eversed. Gains or losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold. All other expenditur es on internally generated goodwill and other intangible assets is recognized in proﬁt or loss as incurr ed. Other intangible assets Other intangible assets with a ﬁnite useful life (licenses, customer relations, brand names and other rights that are acquir ed separately or through business combinations) are amortized on a straight- line basis in proﬁt or loss over their estimated useful lives taking into account any r esidual value and impairment losses, from the date that they ar e available for use. The estimated useful lives of intangible assets are as follows: Y ears Licenses and trade names 3 - 10 Purchased rights and other 4 - 10 Amortization methods, useful lives and residual values ar e reviewed at each reporting date and adjusted if necessary . 3.10 Inventories Inventories are measur ed at the lower of cost and net realizable value. The cost of inventories of raw materials, spare parts and supplies ar e based on the weighted average principle or the ﬁrst-in-ﬁrst- out method, and includes expenditure incurr ed in acquiring the inventories and bringing them to their existing location and condition. In case of manufactured inventories and work in pr ogress, cost includes an appropriate shar e of production overheads based on normal operating capacity . Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 132 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies (continued) 3.11 Impairment of assets Non-derivative ﬁnancial assets The Group assesses at each balance sheet date whether ther e is objective evidence that a non- derivative ﬁnancial asset or a group of non-derivative ﬁnancial assets is impair ed. A non-derivative ﬁnancial asset is considered to be impair ed if the counterparty does not meet the agreed payment terms or when evidence exists that the counterpart will not be able to do so. The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually signiﬁcant assets are individually assessed for impairment. Those found not to be impair ed are then collectively assessed for any impairment that has been incurred but not yet individually identiﬁed. Assets that ar e not individually signiﬁcant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics. In assessing collective impairment, the Group uses historical information on the timing of r ecoveries and the amount of loss incurred, and makes an adjustment if current economic and cr edit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical tr ends. An impairment loss is recognized for the amount by which the carrying amount of a non-derivative ﬁnancial asset exceeds its estimated discounted future cash ﬂows using the original inter est rate. Impaired non-derivative ﬁnancial assets are tested periodically to determine whether the estimated futur e cash ﬂows have increased and the impairment has to be reversed. Reversal of impairments is only permitted if in a subsequent period after an impairment loss has been recognized, the amount of the impairment loss decr eases and the decrease can be r elated objectively to an event after the impairment loss was recognized. In the case of a ﬁnancial asset classiﬁed as ﬁnancial asset at fair value through other compr ehensive income, a signiﬁcant or prolonged decline in the fair value of the ﬁnancial asset at fair value thr ough other comprehensive income below its acquisition cost is consider ed as an indicator that the ﬁnancial asset at fair value through other compr ehensive income is impaired. If any such evidence exists for a ﬁnancial asset at fair value through other compr ehensive income, the cumulative loss – measured as the differ ence between the acquisition cost and the current fair value, less any impairment loss on that ﬁnancial asset previously r ecognized in proﬁt or loss – is removed fr om other comprehensive income and recognized in pr oﬁt or loss. Impairment losses recognized in proﬁt or loss on equity instruments classiﬁed as ﬁnancial asset at fair value through other compr ehensive income are not reversed thr ough proﬁt or loss. Derivative ﬁnancial assets Derivative ﬁnancial assets are measur ed at fair value and the Group investigates whether the counterparty’ s creditworthiness gives rise to an impairment. When determining the fair value, credit value and debit value adjustments are taken into account. Non-ﬁnancial assets Non-ﬁnancial assets that have an indeﬁnite useful life, for example goodwill, are not subject to amortization but are tested annually for impairment or mor e frequently when indicators arise. Assets with a ﬁnite useful life are subject to depr eciation or amortization and are reviewed at each r eporting date to determine whether there is an indication of impairment. If any such indication exists, then the assets’ recoverable amount is estimated. An impairment loss is r ecognized for the amount by which the assets’ carrying amount exceeds its recoverable amount. The r ecoverable amount is the higher of an asset’ s fair value less costs of disposal and its value in use. The value in use is the present value of the future cash ﬂows expected to be derived fr om an asset or cash-generating unit by continued use. For the purposes of assessing impairment, assets are gr ouped based on the lowest level for which there are separately identiﬁable cash ﬂows (cash-generating units). Impairment losses are r ecognized in proﬁt or loss. They are allocated ﬁrst to r educe the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pr o-rata basis. Non-ﬁnancial assets, which are impair ed, are tested periodically to determine whether the recoverable amount has increased and the impairment be (partially) r eversed. Impairment losses on goodwill are not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’ s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Reversal of impairments is only permitted if in a subsequent period after an impairment loss has been recognized, the amount of the impairment loss decr eases and the decrease can be r elated objectively to an event after the impairment loss was recognized. 3.12 Provisions Provisions ar e recognized when a present legal or constructive obligation based on past events exists, and it is probable that an outﬂow of economic beneﬁts is r equired to settle the obligation. If the outﬂow is probable, but cannot be determined r eliably , the obligation is disclosed. The non-current part of provisions is determined by discounting the expected futur e cash ﬂows at a pre-tax rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the liability . The unwinding of the discount is recognized as ﬁnance cost. Asset retir ement obligations The Group r ecognizes a provision if the Group has an obligation to r estore a leased asset in its original condition at the end of its lease term and in case of legal requir ements with respect to clean- up of contamination of land, and the estimate can be made reliable. Based on the land lease of their production facilities, some entities have the obligation to r estore their site upon decommissioning. The Group has not r ecorded a liability for this conditional asset retir ement obligation, as it does not believe there is curr ently a reasonable basis for estimating a date or range of dates of cessation of the operations, which is necessary to estimate the fair value of this liability . Considering that maintenance, turnarounds and any other upgrades will be conducted on a regular basis as was done in the past, this can extend the physical life of the production facility indeﬁnitely (also taken into account the possible changes in technology and availability of raw materials). Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 133 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies (continued) Claims and contingencies The Group is subject to legal and r egulatory proceedings in various jurisdictions. Such proceedings may result in criminal or civil sanctions, penalties or disgorgements against the Company . If it is probable that an obligation to the Group exists, which will r esult in an outﬂow of resources and the amount of the outﬂow can be reliably estimated, a pr ovision is recognized. Donation provision The donation provision is r ecognized as a constructive obligation, the amount is undiscounted as the Group does not know the exact settlement date. 3.13 Revenue from contracts with customers Revenues are r ecognized to depict the transfer of goods or services to customers in the ordinary course of the Group’ s activities, in the amounts that reﬂect the considerations to which the Gr oup expects to be entitled in exchange for those goods or services. Revenue is recognized when the Gr oup satisﬁes the performance obligations by transferring promised goods or services to customers. The main performance obligation of the Group is the transfer of the Gr oup’ s fertilizer and chemical pr oducts to customers. Revenue from the sale of fertilizer and chemical pr oducts are the two main revenue str eams of the Group. Goods are transferr ed when the customer obtains control of the asset. The timing of when control transfers depends on the sales and shipping terms agreed. Depending on its natur e and the agreed sales terms, a performance obligation is either satisﬁed at certain point in time or over a certain period of time. Revenue is recognized net of expected discounts and r ebates to customers. Accumulated experience and management judgement is used to estimate and provide for the discounts and r ebates and revenue is only recognized to the extent that it is highly pr obably that a signiﬁcant reversal will not occur . The Group does not have any contracts wher e the period of time between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year . Consequently , no adjustment is made to transaction prices for the time value of money . 3.14 Gover nment grants An unconditional government grant related to an asset is recognized in pr oﬁt or loss as ‘Other income’ when the grant becomes receivable. When the grant r elates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. Grants that compensate the Gr oup for expenses incurred ar e recognized in proﬁt or loss as ‘Other income’ on a systematic basis in the periods in which the expenses are r ecognized. Other government grants are recognized initially as deferred income at fair value when there is r easonable assurance that they will be received and the Group will comply with the conditions associated with the grant, and are then r ecognized in proﬁt or loss as ‘Other income’ on a systematic basis over the useful life of the asset. European Emission Allowances The Group r eceives European Emission Allowances (“EUAs”) as a result of its industrial activities in the Netherlands. The grant of these allowances is within the scope of IAS 20 Government Grants. Upon initial recognition, the EUA ’ s are r ecognized at cost. Concurrently , a liability is recognized for the obligation to refund the allowances for CO2 emissions during the compliance period. In the event that a deﬁcit in EUAs is identiﬁed, the Group has to pur chase additional EUAs on the commodity markets. Any deﬁcit in EUAs is therefor e measured at fair value through pr oﬁt or loss. 3.15 Lease accounting Whether an arrangement is, or contains a lease is assessed at the commencement date of the lease. In general, an arrangement is considered to be or to contain a lease when all of the following apply: • there is an identiﬁed asset; • OCI obtains substantially all economic beneﬁts from the use of the asset; and • OCI can direct the use of the identiﬁed asset. Lease obligations are r ecognized based on the present value of the future minimum lease payments. Right-of-use assets are valued equal to the lease liabilities. As leases do not easily pr ovide for an implicit rate, OCI uses the incremental borr owing rate. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exer cise that option. For leases, each lease payment is allocated between the liability and ﬁnance cost. The ﬁnance cost is charged to the consolidated statement of proﬁt or loss over the term of the lease so as to pr oduce a constant periodic rate of interest on the r emaining balance of the liability for each period. The right-of- use asset is depreciated over the shorter of the asset’ s useful life and the lease term on a straight-line basis. OCI has lease agreements with lease and non-lease components, which ar e generally accounted for as a single lease component. For assets in the class leases of ofﬁces and buildings, we account for the lease and non-lease components separately . For these types of leases the allocation of the consideration between lease and non-lease components is based on the relative stand-alone prices of lease components included in the lease arrangements. Leases are pr esented as ‘Right-of-use assets’ and ‘Lease obligations’. Short term leases (less than 12 months) or low value leases (less than USD 5,000) are expensed through the statement of pr oﬁt or loss as incurred. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 134 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies (continued) 3.16 Finance income and cost Finance income comprises: • interest income on funds invested (including on ﬁnancial assets at fair value through other comprehensive income); • gains on the disposal of ﬁnancial assets at fair value through other compr ehensive income; • dividend income; • fair value gains on ﬁnancial assets at fair value through pr oﬁt or loss; • gains on hedging instruments related to for eign currency and interest rate derivatives that ar e recognized in pr oﬁt or loss and reclassiﬁcations of amounts previously r ecognized in other comprehensive income; and • interest income is recognized as it accrues in proﬁt or loss, using the ef fective interest method. Dividend income is recognized in pr oﬁt or loss on the date that the Group’ s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date. Finance cost comprise: • interest expense on borr owings; • unwinding of the discount on provisions and contingent consideration; • interest expense r elated to lease obligations; • losses on disposal of ﬁnancial assets at fair value through other compr ehensive income; • fair value losses on ﬁnancial assets at fair value through pr oﬁt or loss; • loss on hedging instruments related to for eign currency and interest rate derivatives that ar e recognized in pr oﬁt or loss and reclassiﬁcations of amounts previously r ecognized in other comprehensive income; and • impairment losses recognized on ﬁnancial assets (other than trade r eceivables). Borrowing costs that ar e not directly attributable to the acquisition, construction or production of a qualifying asset are r ecognized in proﬁt or loss and expensed as incurred. For eign currency gains and losses are r ecognized on a net basis as either ﬁnance income or ﬁnance cost depending on whether foreign curr ency movements are in a net gain or net loss position. 3.17 Employee beneﬁts Deﬁned contribution plan Certain Group subsidiaries pr ovide pension plans, end of service remuneration plans and long-term service beneﬁts. These pension plans qualify as deﬁned contribution plans. Obligations for contributions to deﬁned contribution plans are expensed as the r elated service is provided. Prepaid contributions ar e recognized as an asset to the extent that a cash r efund or a reduction in future payments is available. Short-term employee beneﬁts Short-term employee beneﬁts are expensed as the r elated service is provided. A liability is recognized for the amount expected to be paid if the Group has a pr esent legal or constructive obligation to pay this amount as a result of past service pr ovided by the employee and the obligation can be estimated reliably . Long-term employee beneﬁts The Group long-term employee beneﬁts ar e recognized if the Group has a pr esent legal or constructive obligation to pay this amount as a result of past service pr ovided by the employee and the obligation can be estimated reliably to determine its pr esent value. The discount rate is the yield at the balance sheet date on triple-A (‘AAA ’) credit rated bonds that have maturity dates appr oximating to the terms of the Group’ s obligations. Re-measurements ar e recognized in proﬁt or loss in the period in which they arise. T ermination beneﬁts Employee termination beneﬁts are payable when employment is terminated befor e the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these beneﬁts. OCI recognizes termination beneﬁts when OCI is demonstrably committed to either terminating the employment of current employees accor ding to a detailed formal plan without possibility of withdrawal, or when OCI is providing termination beneﬁts as a r esult of an offer made to encourage voluntary redundancy . Beneﬁts falling due more than 12 months after balance sheet date are discounted to present value. Share-based payments Employees (including senior executives) of the Group r eceive remuneration in the form of share-based payments, whereby employees r ender services as consideration for equity instruments. The grant date fair value of equity-settled share-based payment awar ds granted to employees is recognized as an employee expense, with a corr esponding increase in equity , over the period (the vesting period) that the employees render service and becomes unconditionally entitled to the awar ds. The amount recognized as an expense is adjusted to r eﬂect the number of awards for which the related service and non-market performance conditions ar e expected to be met, such that the amount ultimately recognized as an expense is based on the number of awar ds that meet the related service and non-market performance conditions at the vesting date. For cash-settled share-based compensation plans and shar e-based compensation plans with cash alternatives the liability is remeasured at each balance sheet date during the vesting period and for shar e option plans also during the exercise period. 3.18 Income tax Current tax is the expected tax payable or r eceivable on the taxable income or loss for the year , using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in r espect of previous years. The amount of current tax payable or r eceivable is the best estimate of the tax amount expected to be paid or received that r eﬂects uncertainty related to income taxes, if any . Current tax also includes any tax arising fr om the declaration of dividends. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 135 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 3. Summary of signiﬁcant accounting policies (continued) Current income tax r eceivable and payable are offset when ther e is a legally enforceable right to of fset and when the current income tax r elates to the same ﬁscal authority . Deferred tax liabilities ar e recognized for all taxable temporary differ ences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated ﬁnancial statements (‘balance sheet’ method). Deferred tax assets ar e recognized for all deductible temporary differ ences, unused carry forward losses and unused carry forwar d tax credits, to the extent that it is probable that futur e taxable proﬁt will be available against which the deferr ed income tax assets can be utilized. Deferred tax assets are r eviewed at each reporting date and are r educed to the extent that it is no longer probable that the related tax beneﬁt will be r ealised; such reductions are r eversed when the probability of futur e taxable proﬁts impr oves. Deferred income tax is not r ecognized if it arises from initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting nor taxable proﬁt or loss. Also, no deferr ed income tax is recognized regar ding the initial recognition of goodwill and r egarding investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to contr ol the timing of the reversal of the temporary differ ences and it is probable that they will not r everse in the foreseeable future. Deferred income tax is measur ed at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date, and reﬂects uncertainty r elated to income taxes, if any . Deferred income tax assets and liabilities ar e offset when there is a legally enfor ceable right to offset current tax assets against curr ent tax liabilities and when the deferred income tax relates to the same ﬁscal authority . In cases where it is concluded it is not pr obable that tax authorities will accept a tax treatment, the effect of the uncertainty is r eﬂected in the recognition and measurement of tax assets and liabilities or , alternatively , a provision is made for the amount that is expected to be settled, where this can be reasonably estimated. This assessment r elies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the company to change its judgment regar ding the adequacy of existing tax assets and liabilities. Such changes to tax assets and liabilities will impact the income tax expense in the period during which such a determination is made. 3.19 Segment reporting An operating segment is a component of an entity that engages in business activities for which it may earn revenues and incur expenses (including revenues and expenses r elating to transactions with other components of the same entity), whose operating results ar e regularly reviewed by the entity’ s Chief Operating Decision Maker (‘CODM’) to make decisions about resour ce allocation to the segment and to assess its performance and for which discrete ﬁnancial information is available. The Gr oup determines and presents operating segments on the basis of information that internally is provided to the CODM during the period. Operating segments are gr ouped into reporting segments based on similar economic environments and similar pr oducts. 3.20 Consolidated statement of cash ﬂows The consolidated statement of cash ﬂows has been prepar ed using the ‘indirect’ method. Cash ﬂows in foreign curr encies have been translated applying average exchange rates. Currency translation differ ences on cash are shown separately in the consolidated statement of cash ﬂows. Cash ﬂows from investing activities consist mostly of investments and divestments in property , plant and equipment, intangible assets, and acquisitions insofar as these are paid for in cash. Acquisitions or disposals of subsidiaries are pr esented as acquisition of subsidiary , net of cash. Cash ﬂows relating to capitalized borrowing cost ar e presented as cash ﬂows from operating activities. Cash ﬂows fr om discontinued operations / assets held for demerger are pr esented separately from the cash ﬂows from continuing operations. 3.21 Ear nings per share Earnings per ordinary share ar e calculated by dividing the proﬁt or loss (net) attributable to holders of ordinary shar es by the weighted average number of ordinary shares outstanding during the year . In making this calculation the (ordinary) tr easury shares are deducted fr om the number of ordinary shar es outstanding. The calculation of the diluted earnings per share is based on the weighted average number of ordinary shar es outstanding plus the potential increase as a result of the conversion of convertible bonds and the settlement of share-based compensation plans (shar e option plans). Anti-dilutive effects are not included in the calculation. An adjustment is made to pr oﬁt or loss (net) to eliminate interest charges, whilst allowing for effect of taxation. Regar ding equity-settled share option plans it is assumed that all outstanding plans will vest. The potential increase arising fr om share option plans is based on a calculation of the value of the options outstanding. This is the number of options multiplied by the exercise price, divided by the average shar e price during the ﬁnancial year . This potential increase is only applied if the option has intrinsic value. 4. New accounting standards and policies On a regular basis, the IASB issues new accounting standar ds, amendments and revisions to existing standards and interpr etations. These new accounting standards, amendments and revisions to existing standards and interpr etations are subject to endorsement by the European Union. 4.1 Standards, amendments, revisions and interpr etations that became effective to OCI during 2020 Currently ther e are no standards and interpr etations that became effective to OCI during 2020. 4.2 Standards, amendments, r evisions and interpretations not yet effective to OCI IFRS standards and interpr etations thereof not yet in force which may apply to the futur e Group’ s consolidated ﬁnancial statements are being assessed for their potential impact. Curr ently there are no standards and interpr etations not yet effective that would have a signiﬁcant impact on the Group. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 136 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED 5. Critical accounting judgment, estimates and assumptions The preparation of the ﬁnancial statements in compliance with IFRS r equires management to make judgments, estimates and assumptions that affect amounts r eported in the consolidated ﬁnancial statements. The estimates and assumptions are based on experience and various other factors that are believed to be r easonable under the circumstances and are used to judge the carrying amounts of assets and liabilities that are not r eadily apparent from other sour ces. The estimates and underlying assumptions are r eviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised or in the r evision period and future periods, if the changed estimates affect both curr ent and future periods. As a result of the outbr eak of COVID-19 in 2020, all our critical accounting judgments, estimates and assumptions have been reviewed and updated when necessary following this situation. The most critical accounting policies, involving a higher degree of judgment and complexity in applying principles of valuation and for which changes in the assumptions and estimates could result in signiﬁcantly differ ent results than those recor ded in the ﬁnancial statements, are the following: Goodwill and other intangible assets Intangible assets with ﬁnite useful lives are carried at cost less cumulative amortization and any impairment. Amortization is calculated using the ‘straight-line’ method based on the estimated useful lives. Management makes estimates regar ding the useful lives and residual values and assumes that amortization takes place on a ‘straight-line’ basis. The assets’ useful lives are r eviewed, and adjusted if appropriate, at each balance sheet date. For intangible assets with ﬁnite useful lives, OCI assesses annually or more fr equently whether indicators exist that suggest the intangible asset might be impaired by comparing the recoverable amounts with their carrying amounts. In determining the r ecoverable amounts of intangible assets, OCI makes estimates and assumptions about future cash ﬂows based on the value in use. In doing so, OCI also makes assumptions and estimates regar ding the discount rates in order to calculate the net present value of the futur e cash ﬂows. OCI tests at least annually whether goodwill is impaired by comparing the r ecoverable amounts of cash-generating units with their carrying amounts. The recoverable amount is the higher of the fair value less cost of disposal and the value in use. In determining the recoverable amount, OCI makes estimates and assumptions concerning future revenues, futur e costs, future working capital, future investments, W eighted Average Cost of Capital (‘WACC’) and futur e inﬂation rates. Property , plant and equipment Depreciation is calculated using the ‘straight-line’ method based on the estimated useful lives, taking into account any residual values. Management makes estimates r egarding the useful lives and residual values and assumes that depreciation takes place on a ‘straight-line’ basis. The assets’ r esidual values and useful lives are r eviewed, and adjusted if appropriate, at each balance sheet date. OCI assesses annually , or more fr equently , whether indicators exist that suggest that an item of property , plant and equipment might be impaired by comparing the r ecoverable amounts with their carrying amounts. In determining the recoverable amounts of pr operty , plant and equipment, OCI makes estimates and assumptions about future cash ﬂows based on the value in use. The discount rate to be used in or der to calculate the net present value of the futur e cash ﬂows in the impairment analysis is based on the WACC. Financial instruments The fair value of ﬁnancial instruments traded in active markets (ﬁnancial instruments in the fair value hierarchy level 1) is based on quoted market prices at the balance sheet date. The fair value of ﬁnancial instruments not traded in an active market with observable market prices (ﬁnancial instruments in the fair value hierarchy level 2) is determined using generally accepted valuation techniques. These valuation techniques include estimates and assumptions about forward rates, discount rates based on a single interest rate, or on a yield-curve based on market conditions existing at the balance sheet date. The fair value of borrowings and inter est rate swaps is calculated based on the present value of the estimated future cash ﬂows based on the yield-curve applicable at the balance sheet date. If the ﬁnancial instrument contains a ﬂoating interest rate, the futur e expected interest rates are determined based on forward rates. The fair value of forwar d foreign exchange contracts is determined using quoted forward exchange rates at the balance sheet date. Gas price option and gas swap contracts are valued using applicable market yield curves. All inputs for the fair value calculations repr esent observable market data that are obtained from external sources that ar e deemed to be independent and reliable. The net carrying amount of trade receivables and trade payables is assumed to approximate the fair value due to the short-term natur e. The fair value of ﬁnancial instruments with no observable market prices (ﬁnancial instruments in the fair value hierarchy level 3) is based on assumptions that market participants would use when pricing these assets or liability , including assumptions about risk. Assumptions about risk include the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and the risk inher ent in the inputs to the valuation technique, including a risk adjustment when there is signiﬁcant measur ement uncertainty . The fair value of non-current ﬁnancial liabilities is estimated by discounting the futur e cash ﬂows using original effective yield-curves. Unlisted equity securities in the ﬁnancial assets at fair value thr ough other comprehensive income category (ﬁnancial instruments in the fair value hierar chy level 3) are measured at cost less impairments. A signiﬁcant and prolonged decline in the fair value of a ﬁnancial asset at fair value through other compr ehensive income below its acquisition cost is considered as an indicator that the ﬁnancial asset at fair value through other compr ehensive income is impaired. If any such evidence exists for a ﬁnancial asset at fair value through other compr ehensive income, the cumulative losses previously r ecognized in other comprehensive income is recognized in the pr oﬁt or loss – measured as the differ ence between the acquisition cost and the current fair value, less any impairment loss on that ﬁnancial asset previously r ecognized in proﬁt or loss – is removed fr om other comprehensive income and recognized in pr oﬁt or loss. Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 137 5. Critical accounting judgment, estimates and assumptions (continued) Impairment ﬁnancial instruments (including trade receivables) Objective evidence may exist in circumstances in which a counterparty has been placed in bankruptcy , or has failed on the repayments of principal and inter est. In other circumstances OCI uses judgment to determine whether ﬁnancial assets may be impaired. OCI uses judgment to determine whether an impairment can be reversed, an assumption in doing so might be an impr ovement in the debtor’ s cr edit rating or receipt of payments due. For listed equity securities in the ﬁnancial assets at fair value thr ough other comprehensive income category , the Group uses the assumption that if the market value declined by more than 25 per cent and more than 6 months, the asset is assumed to be impaired. For unlisted equity securities in the ﬁnancial assets at fair value through other compr ehensive income category , an impairment test is performed if objective evidence becomes available to the Group that the asset might be impaired. For debt-securities, an impairment trigger exists when the counterpart fails to meet its contractual payment obligations or there is evidence that the counterpart has encounter ed ﬁnancial difﬁculties. The impairment is determined based on the carrying amount and the r ecoverable amount. The recoverable amount is determined as the pr esent value of estimated future cash ﬂows using the original effective inter est rate. Inventories In determining the net realizable value of inventories, OCI estimates the selling prices in the or dinary course of business, cost of completion and cost to sell. In doing so, OCI makes estimates and assumptions based on current market prices, historical usage of various pr oduct categories versus current inventory levels and speciﬁc identiﬁed obsolescence risks (e.g. end of life of speciﬁc goods and spare parts and the impact of new envir onmental legislation). Provisions Recognition of provisions include signiﬁcant estimates, assumptions and judgments. IFRS r equires only those provisions to be r ecognized if there is an expected outﬂow of resour ces and if the cost of these outﬂows can be estimated reliably . Accordingly , management exercises considerable judgment in determining whether it is more likely than not that ther e is a present obligation as a result of a past event at the end of the reporting period, whether it is pr obable that such a proceeding will result in an outﬂow of resour ces and whether the amount of the obligation can be reliably estimated. These judgments are subject to change as new information becomes av aila ble. The r equ ire d am ount of a pro visi on ma y change in the future due to new developments in the matter . Revisions to estimates may signiﬁcantly impact future pr oﬁt or loss. Upon resolution, the Group may incur charges in excess of the r ecorded provisions for such matters. Provisions for asset r etirement obligations, repr esent estimated costs of decommissioning. Due to the long time period over which future cash outﬂows ar e expected to occur , including the respective interest accretion, assumptions ar e required to be made. Amongst others, the estimated cash outﬂows could alter signiﬁcantly if, and when, political developments affect futur e laws and regulation with respect to asset retir ements. The Group has not recognized any asset r etirement obligations because a r eliable estimate of the amount of the obligations cannot be made. With respect to legal cases, the Group has to estimate the outcome. Regulatory and legal pr oceedings as well as government investigations often involve complex legal issues and are subject to substantial uncertainties. The Company periodically reviews the status of these pr oceedings with both the internal and external legal counsels. Income taxes OCI is subject to income taxes in several jurisdictions. Estimates are r equired in determining the group- wide provision for income taxes. Ther e are some transactions and calculations for which the ultimate tax position is uncertain during the ordinary course of business. The Gr oup recognizes provisions for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the ﬁnal tax outcome of these matters is differ ent from amounts that were initially r ecorded, such dif ferences will impact the current income tax and deferr ed tax provisions in the period in which such determination is made. OCI recognizes deferr ed tax assets to the extent that it is probable that future taxable pr oﬁts will be available for the deferred tax asset to be r ecovered. This is based on estimates of taxable fut ure income by jurisdiction in which OCI operates and the period over which deferred tax assets ar e e xpec ted to be recoverable. In the event that actual r esults or new estimates differ from pr evious estimates and depending on the possible tax strategies that may be implemented, changes to the recognition of deferred tax assets could be r equired, which could impact the ﬁnancial position and proﬁt or loss. Leases The assessment of whether a contract is or contains a lease requir es judgment with respect to whether the lessor has substantive substitution rights, who obtains economic beneﬁts from use of the asset and who takes the ‘how and for what purpose’ decisions during the period of use. Judgment is also applied in order to assess whether the entity will exer cise any extension or cancelation options of a lease. The group applies judgments in or der to determine the incremental borrowing rate in or der to calculate the lease liabilities. Control over investees In determining whether OCI shall consolidate certain investments in joint arrangements, OCI makes assumptions about whether certain decision rights are substantive or pr otective in nature. In doing so, OCI applies judgment regar ding shareholder agreements it has with those other investees. If OCI determines it holds the majority of the substantive decision rights, it assumes that it holds power over the investee. OCI also makes assumptions whether it is exposed to variable returns and whether these are linked to the power OCI holds. The linkage is tested by making assumptions whether OCI might be acting as a principal rather than an agent. If OCI meets all three criteria, OCI assumes it contr ols the investee. Liquidity risk As part of the preparation of the ﬁnancial statements, the Company has assessed its liquidity risk and going concern. Liquidity risk is the risk that the Group may encounter difﬁculty in meeting the obligations associated with its ﬁnancial liabilities that are settled by delivering cash or another ﬁnancial asset. The Company has made a number of assumptions in assessing its ability to meet its covenant requir ements and satisfy obligations as they become due. Determining these assumptions requir es signiﬁcant judgment about future r esults and cash ﬂows. Key assumptions include product pricing, gas pricing, utilization rates and the ability to arrange ﬁnancing and obtain waivers for potential covenant breaches. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 138 6. Financial risk and capital management Overview The Group has exposur e to credit, liquidity and market risks from ﬁnancial instruments. These risks arise from exposur es that occur in the normal course of business and are managed on a consolidated company basis. This note presents information about the Gr oup’ s exposur e to each of the above risks, the Group’ s objectives, policies and processes for measuring and managing these risks, additionally it also includes the Group’ s management of capital. Risk management framework The Board has oversight r esponsibility on the establishment and monitoring of the Group’ s risk management framework. Senior (local) management is responsible for the ef fective operation of the internal risk management and control systems. The Audit and Risk department is responsible for the facilitation and supervision of the Risk Management function, compliance with OCI Internal Control Framework and supports the Board in the exer cise of their aforementioned risk management duties. The Group’ s risk management policies and practices are established to identify and analyze the risks faced by the Group, to set appr opriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are r eviewed regularly to reﬂect changes in market conditions and the Group’ s business activities. The Group, thr ough its training and management standards and procedur es, aims to develop a disciplined and constructive control envir onment in which all employees understand their roles and r esponsibilities. The Audit Committee oversees how management monitors compliance with the Group’ s risk management policies and procedur es, and reviews the adequacy of the risk management framework in relation to the risks faced by the Gr oup. The Audit Committee is assisted in its oversight role by the Audit and Risk Department. The Audit and Risk Department undertakes both regular and ad hoc reviews of risk management contr ols and procedures, the r esults of which are r eported to the Audit Committee. 6.1 Credit risk Credit risk is the risk of ﬁnancial loss to the Gr oup if a customer or counterparty to a ﬁnancial instrument fails to meet its contractual obligations, and arises principally from the Gr oup’ s r eceivables from customers and investments in debt securities. The Company mitigates the exposure to cr edit risk on outstanding cash balances by placing funds at multiple ﬁnancial institutions with a sufﬁcient cr edit rating. The Group’ s exposure to customer cr edit risk is monitored and mitigated by performing credit checks before selling any goods. No collateral is r eceived. The Group establishes an allowance, if needed, for impairment that repr esents its estimate of expected losses in respect of trade and other receivables. The main components of this allowance are a speciﬁc loss component that r elates to individually signiﬁcant exposures, and a collective loss component established for gr oups of similar assets in respect of losses that ar e expected based on historical performance. IFRS 9 establishes a three-stage impairment model, based on whether there has been a signiﬁcant incr ease in the credit risk of a ﬁnancial asset since its initial recognition. As at 31 December 2020, management assessed any signiﬁcant increase in cr edit risk based on internal and exter nal factors related to the ﬁnancial instruments and concluded no such signiﬁcant credit risk was pr esent. Hence, no allowance related to credit risk has been recognized. As of September 2018, the Group enter ed into a securitization agreement to sell certain trade receivables to an external ﬁnancial institution. The agreement permits securitization of trade r eceivables up to EUR 180.0 million (USD 218.4 million). As per 31 December 2020 an amount of EUR 122.6 million (USD 148.7 million) of trade receivables wer e transferred. With respect to transactions with ﬁnancial institutions, the Group sets a minimum cr edit rating for the counterparties. The maximum exposure to cr edit risk is the carrying amount of ﬁnancial instruments, for an overview refer ence is made to the tables ﬁnancial instruments by category . There is no signiﬁcant concentration by counterparty of credit risk in trade and other r eceivables, ﬁnancial assets at fair value through other compr ehensive income or cash and cash equivalents. Concentrations of receivables by region can be seen in the table below . The maximum exposure to cr edit risk at the reporting date is as follows: $ millions Note 2020 2019 T rade and other receivables (9) 604.4 512.5 Financial assets at fair value through other compr ehensive income (11) 30.0 33.4 Cash and cash equivalents (14) 686.3 600.5 T otal 1,320.7 1,146.4 The maximum exposure to cr edit risk for trade and other receivables by geographic region is as follows: $ millions 2020 2019 Middle East and Africa 192.0 122.7 Asia and Oceania 18.5 53.7 Europe 269.0 214.7 Americas 124.9 121.4 T otal 604.4 512.5 The maximum exposure to cr edit risk for cash and cash equivalents by geographic region is as follows: $ millions 2020 2019 Middle East and Africa 535.0 425.0 Europe 17.6 96.6 Americas 133.7 78.9 T otal 686.3 600.5 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 139 6. Financial risk and capital management (continued) 6.2 Liquidity risk 6.2.1 General Liquidity risk is the risk that the Group will encounter dif ﬁculty in meeting the obligations associated with its ﬁnancial liabilities that are settled by delivering cash or another ﬁnancial asset. The following are the contractual maturities of ﬁnancial liabilities, including estimated inter est payments and exclude the impact of netting agreements: At 31 December 2020 $ millions Note Carrying amount Contractual cash ﬂow Less than 1 year Between 1 and 5 years More than 5 years Financial liabilities Cash outﬂows: Loans and borrowings (18) 4,416.6 5,557.0 479.9 4,258.6 818.5 Lease obligations (19) 292.2 539.1 48.5 125.6 365.0 T rade and other payables (20) 1,020.6 1,020.6 999.1 17.5 4.0 Letters of guarantee (28) - - - - - Derivatives (20) 8.7 8.7 4.5 4.2 - T otal 5,738.1 7,125.4 1,532.0 4,405.9 1,187.5 At 31 December 2019 $ millions Note Carrying amount Contractual cash ﬂow Less than 1 year Between 1 and 5 years More than 5 years Financial liabilities Cash outﬂows: Loans and borrowings (18) 4,662.3 6,081.4 469.1 4,303.0 1,309.3 Lease obligations (19) 285.3 545.4 41.5 116.7 387.2 T rade and other payables (20) 1,004.4 1,004.4 984.3 19.7 0.4 Letters of guarantee (28) - - - - - Derivatives (20) 17.6 17.6 7.0 10.6 - T otal 5,969.6 7,648.8 1,501.9 4,450.0 1,696.9 The interest on ﬂoating rate loans and borr owings is based on forward interest rates at period-end. This interest rate may change as the market inter est rate changes. Callable loan amounts are classiﬁed as ‘Less than one year’. The future obligations will be managed by the futur e incoming cash from operations, currently available non-r estricted cash and cash equivalents of USD 632.2 million and unused amounts on credit facility agr eements in the amount of USD 705.1 million, reference is made to note 18. The Group’ s approach to managing liquidity risk is to ensur e that it will always have sufﬁcient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’ s reputation. This is also safeguar ded by using multiple ﬁnancial institutions in order to mitigate any concentration of liquidity risk. The Group’ s ﬁnancing strategy is to secure external ﬁnancing primarily at OCI N.V . with debt at an operating company level only if there is a compelling economic rationale. OCI N.V . acts as the ﬁnancing company thus limiting the number of cross r elationships within the Company and maximizing ﬂexibility to divest operating companies. The liquidity risk is monitored internally at Group level. On an ongoing basis the Gr oup prepares liquidity forecasts to verify whether the Gr oup is able to meet its future debt obligations. The Company has also carefully evaluated the funding of its Business Plan for at least the next 12 months fr om the date of issuance of the ﬁnancial statements, taking into account the measures mentioned below and has applied sensitivities to the forecast level of liquidity headr oom available. Key assumptions include product pricing, natural gas pricing and utilization rates. Management has applied these assumptions to the forecasts, which would leave suf ﬁcient liquidity headroom. 6.2.2 Reﬁnancing activity The following reﬁnancing activity was completed during 2020 to optimize the Gr oup’ s ﬁnance cost, extend its debt maturity proﬁle, and enhance its cashﬂow up-str eaming to OCI N.V . • In October 2020 OCI N.V . completed a dual-tranche bond offering consisting of USD 400.0 million senior secured ﬁxed rate notes due 2025 and EUR 400.0 million senior secur ed ﬁxed rate notes due 2025. The Dollar Notes bear interest at a rate of 4.625% per annum and the Eur o Notes bear interest at a rate of 3.625% per annum. The Notes were issued at par , are senior secured obligations of the Company and are guaranteed by certain of the Company’ s subsidiaries. Interest will be payable semi- annually . The proceeds fr om the offering, along with a drawing of approximately $290 million (equivalent) under the Company’ s revolving credit facility , were used to redeem the Company’ s approximately $1,155 million (equivalent) euro and US dollar -denominated senior secured notes due 2023 and to pay fees and expenses incurred in connection with the of fering. • In October 2020, Fertiglobe completed a USD 385.0 million reﬁnancing (USD 310.0 million term loan and USD 75.0 million RCF) maturing in 2025 at an interest rate of LIBOR + 2.00%. This facility replaced the existing cr edit facilities at EFC that would mature in 2025 and 2026 with an interest rate of LIBOR + 3.75% on USD borrowings and Central Bank of Egypt (‘CBE’) mid corridor + 0.25% on EGP borrowings. 6.3 Market risk Market risk is the risk of changes in market prices, such as foreign exchange rates, inter est rates, commodity prices and equity prices that will affect the Gr oup’ s income or the value of its holdings of ﬁnancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the r eturn. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 140 6. Financial risk and capital management (continued) The Group is exposed to for eign currency risk arising in separate ways: Foreign exchange translation risk Due to the Group’ s international presence, the Group is exposed to the translation of for eign currency denominated transactions and monetary assets that are dif ferent from the US dollar (which is the Group’ s presentation curr ency). The currencies concerned are mainly the Euro and the Algerian dinar . These exposures ar e managed by the group treasury function, which hedges a portion of the for eign currency exposur es estimated to arise in the foreseeable future, for the unhedged portion the Gr oup seeks to mitigate translation risk by broadly matching the r emaining currency of debt with cashﬂows. The nominal amount of the foreign curr ency derivatives outstanding used to hedge translation risk as per 31 December 2020 was USD 1,005.7 million (2019: USD 220.2 million) and relates to the exposur e of Euro denominated assets and liabilities. Foreign exchange transaction risk The Group entities pr edominantly execute their activities in their respective functional currencies. The Group is however exposed to for eign exchange transaction risk to the extent that there is a mismatch between the currencies in which sales, pur chases, investments and borrowings are denominated and the respective functional curr encies of the Group entities. The Group monitors the exposur e to foreign currency risk arising fr om operating activities and enters selectively into foreign exchange contracts to hedge foreign curr ency exposures. The nominal amount of the foreign curr ency derivatives outstanding used to hedge transaction risk as per 31 December 2020 was USD 65.9 million (2019: USD 84.7 million) and relates to the USD exposur e of the Group (on Euro curr encies). The functional currencies of the Group entities ar e primarily the US dollar , the Algerian dinar and the Euro. EFC and EBIC have exposure to ﬂuctuations in the USD / EGP exchange rates. The summary of balances of the Group’ s exposure to for eign exchange transaction, where the main exposure curr encies are differ ent from the functional curr encies, including intercompany balances, is as follows: At 31 December 2020 $ millions USD EUR EGP T rade and other receivables 18.3 4.8 87.6 T rade and other receivables inter company 2,098.3 0.8 0.8 T rade and other payables (17.7) (4.1) (7.6) T rade and other payables intercompany (11.7) (6.4) - Loans and borrowings (1,350.0) - - Loans and borrowings inter company (1,133.2) 5.4 - Provisions - - (120.7) Cash and cash equivalents 238.9 8.8 26.5 At 31 December 2019 $ millions USD EUR EGP T rade and other receivables 19.2 6.4 77.8 T rade and other receivables inter company 2,046.4 3.5 0.1 T rade and other payables (61.9) (0.9) (16.3) T rade and other payables intercompany (65.3) (1.4) (0.2) Loans and borrowings (1,435.0) - (51.4) Loans and borrowings inter company (1,190.6) - - Provisions - - (118.7) Cash and cash equivalents 237.2 19.2 23.4 The Algerian dinar is not included in the above table of foreign exchange transaction exposur e, since there ar e no entities in the Group which have monetary items denominated in Algerian dinar , except for Sorfert, which has the Algerian dinar as its functional currency . Signiﬁcant rates The following signiﬁcant exchange rates applied during the year against the US dollar: Average 2020 Average 2019 Closing 2020 Closing 2019 Euro 1.1418 1.1193 1.2225 1.1213 Egyptian pound 0.0632 0.0596 0.0635 0.0623 Algerian dinar 0.0079 0.0084 0.0076 0.0084 The following tables demonstrate the sensitivity to a reasonably possible change in USD exchange rate to increase or (decr ease) against the EUR, EGP and DZD, with all other variables held constant. The Group’ s exposure to for eign currency changes for all other currencies is not material. 31 December 2020 $ millions Change in FX rate Effect on pr oﬁt before tax Effect on equity EUR - USD 8 percent (32.0) - (8) percent 32.0 - EGP - USD 3 per cent (0.4) - (3) percent 0.4 - DZD - USD 3 percent 7.2 - (3) percent (7.2) - NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 141 6. Financial risk and capital management (continued) 31 December 2019 $ millions Change in FX rate Effect on pr oﬁt before tax Effect on equity EUR - USD 5 percent (33.1) - (5) percent 33.1 - EGP - USD 3 per cent (2.6) - (3) percent 2.6 - DZD - USD 3 percent 6.7 - (3) percent (6.7) - The ﬁgures in the above overview ar e determined based on the currency volatility of the respective years. A signiﬁcant part of the Group’ s exposure to for eign currency transaction risk relates to intercompany balances. Interest rate risk The Group’ s cash ﬂow interest rate risks arise fr om the exposure to variability in future cash ﬂows of ﬂoating rate ﬁnancial instruments and reﬁnancing ﬁxed rate borr owings. The Group regularly r eviews its exposure to the global inter est rate environment. The Group has not enter ed into any interest rate derivatives. The Group analyses its inter est rate exposure on a dynamic basis. The Group calculates the impact on proﬁt or loss of a deﬁned inter est rate shift. The same interest rate shift is used for all currencies. The following table demonstrates the sensitivity to a reasonably possible change in inter est rates on that portion of borrowings af fected. W ith all other variables held constant, the Group’ s proﬁt befor e tax is affected thr ough the impact on ﬂoating rate borrowings plus reﬁnancing of ﬁxed rate borr owings, as follows: $ millions In basis points 2020 2019 Effect on pr oﬁt before tax for the coming year +100 bps (6.6) (7.2) - 100 bps 6.6 7.2 The assumed movement in basis points for the interest rate sensitivity analysis is based on the curr ently observable market data, showing a lower volatility compared to prior years. The inter est rate sensitivity calculation is based on the interest-bearing liabilities excluding the r estricted funds of IFCo, reference is made to note 14. Commodity price risk Natural gas is one of the primary raw materials used in the Group’ s production pr ocesses. The Group is exposed to natural gas price commodity risk for those entities that buy natural gas at spot prices. Management monitors the development of gas prices and products’ selling prices on a daily basis using external historical and forecast market data provided by several data vendors. Management analyzes the potential proﬁt margin per pr oduct based on these data in order to make operational and hedging decisions. The Group enters into gas hedges in or der to hedge future gas price levels over a certain period of time (refer ence is made to note 20). The Group uses derivatives (Basis swaps, Index swaps and options) in order to do so and does not apply hedge accounting on these instruments, ther efore all fair value changes related to these ﬁnancial instruments ar e recognized in proﬁt or loss. Fixed price gas contracts and month-ahead swaps are accounted for under the ‘own use’ exemption. The ﬁscal year 2020 gas price risk is reduced by the Gr oup to an extent of 21% (including both physical pricings and ﬁnancial hedges). The outstanding gas derivatives in MMBtu as per 31 December 2020 for the years 2021-2023 are: • Flat priced contracts 18.4 million; • Options (delta equivalent) 19.9 million; • Basis Swaps 11.0 million For the entities that are impacted by changes in natural gas prices during FY 2021, a change in the average natural gas prices by USD 1 per MMBtu would impact the total annual cost of sales by USD 136.9 million, excluding the positive impact of our differ ent hedges. European Emission Allowance The Group r eceives European Emission Allowances (“EUAs”) as a result of its industrial activities in the Netherlands. The EUAs are granted annually in advance by the Dutch Emission Authority . The amount of EUAs granted is based on an estimate of CO2 emissions in the Netherlands and the effective Eur opean emission legislation. In arrears, the Gr oup has to refund allowances to the Dutch Emission Authority based on actual CO2 emissions during the year . In the event that a deﬁcit in EUAs is identiﬁed, the Group has to pur chase additional EUAs on the commodity markets to settle its liability to the Dutch Emission Authority . During the year , the Group has generated additional liquidity by selling its EUAs to the market. This generated a total net proceeds of USD 82.8 million r esulting for the sale and repurchase of EUAs. Upon the sale of EUA ’ s a liability to the Dutch Emission Authority is recorded, which is subsequently measur ed at fair value. The total liability recor ded as per 31 December 2020 amounts to USD 99.0 million. T o manage the price exposure, the Gr oup entered into ﬁnancial hedges to purchase EUAs in or der to meet its commitment to the Dutch Emission Authority . As per 31 December 2020, the fair value of these forward contracts amounts to USD 3.1 million. The gr oup does not apply hedge accounting to these contracts. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 142 6. Financial risk and capital management (continued) Categories of ﬁnancial instruments: 31 December 2020 $ millions Note Loans and receivables / payables at amortized cost Assets / liabilities at fair value Financial assets through other comprehensive income at fair value Assets T rade and other receivables (9) 585.1 19.3 - Financial assets at fair value through other comprehensive income (11) - - 30.0 Cash and cash equivalents (14) 686.3 - - T otal 1,271.4 19.3 30.0 Liabilities Loans and borrowings (18) 4,416.6 - - T rade and other payables (20) 921.6 107.7 - T otal 5,338.2 107.7 - 31 December 2019 $ millions Note Loans and receivables / payables at amortized cost Derivatives at fair value Financial assets through other comprehensive income at fair value Assets T rade and other receivables (9) 507.5 5.0 - Financial assets at fair value through other comprehensive income (11) - - 33.4 Cash and cash equivalents (14) 600.5 - - T otal 1,108.0 5.0 33.4 Liabilities Loans and borrowings (18) 4,662.3 - - T rade and other payables (20) 1,004.4 17.6 - T otal 5,666.7 17.6 - The Group has limited ﬁnancial instruments carried at fair value. For derivative ﬁnancial instruments, the fair value is calculated within hierarchy category level 2. Financial assets at fair value thr ough other comprehensive income r ecognized as level 1 is USD 2.9 million (2019: USD 3.4 million), the investment in the Infrastructure and Gr owth Capital Fund of USD 6.3 million (2019: USD 6.8 million) was recognized as level 2 as the valuation is partially derived from listed shar es. The investment in Notore Chemical of USD 20.8 million (2019: USD 23.2 million) is recognized as level 3, refer ence is made to note 11. Notore is listed on the Nigerian Stock Exchange since 2018, however due to the lack in trading volumes the investment is still valued within the hierarchy category level 3 based on audited ﬁnancial statements. In 2020 and 2019, there wer e no transfers between the fair value hierarchy categories. The fair value of loans and borrowings and r eceivables are disclosed in notes 18 and 9, respectively . 6.4 Capital management The Board’ s policy is to maintain a strong capital base so as to maintain investor , creditor and market conﬁdence and to sustain future development of the business. Capital consists of or dinary shares, retained earnings and non-controlling inter ests of the Group. The Board of Dir ectors monitors the return on capital as well as the level of dividends to ordinary shar eholders. The Group is requir ed by external ﬁnancial institutions to maintain certain capital requir ements compared to its debt. Reference is made to note 18 for a description of ﬁnancial covenants. The Group’ s net debt to equity ratio at the reporting date was as follows: $ millions Note 2020 2019 Loans and borrowings (18) 4,416.6 4,662.3 Less: cash and cash equivalents (14) 686.3 600.5 Net debt 3,730.3 4,061.8 T otal equity 2,671.8 2,818.7 Net debt to equity ratio at 31 December 1.40 1.44 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 143 7. Property , plant and equipment and right-of-use assets Property , plant and equipment: $ millions Land and buildings Plant and equipment Fixtures and ﬁttings Under construction T otal Cost 594.1 6,533.6 32.3 223.4 7,383.4 Accumulated depreciation (83.8) (2,305.8) (18.1) - (2,407.7) At 1 January 2019 510.3 4,227.8 14.2 223.4 4,975.7 Movements in the carrying amount: Additions 0.1 31.2 3.6 253.3 288.2 Business combination Fertiglobe 103.8 1,714.5 2.0 23.1 1,843.4 Disposals - (1.3) (0.2) (2.1) (3.6) Depreciation (26.0) (482.9) (2.8) - (511.7) T ransfers 2.4 334.7 1.3 (338.4) - Effect of movement in exchange rates (0.9) (16.9) 0.2 (3.8) (21.4) At 31 December 2019 589.7 5,807.1 18.3 155.5 6,570.6 Cost 749.9 9,209.3 58.8 155.5 10,173.5 Accumulated depreciation (160.2) (3,402.2) (40.5) - (3,602.9) At 31 December 2019 589.7 5,807.1 18.3 155.5 6,570.6 Movements in the carrying amount: Additions 5.1 24.0 2.5 221.2 252.8 Disposals - - (0.3) - (0.3) Depreciation (27.5) (519.0) (3.5) - (550.0) T ransfers 4.3 228.4 0.8 (233.5) - Effect of movement in exchange rates (5.4) (26.1) (0.3) 3.0 (28.8) At 31 December 2020 566.2 5,514.4 17.5 146.2 6,244.3 Cost 751.9 9,328.1 60.3 146.2 10,286.6 Accumulated depreciation (185.7) (3,813.7) (42.8) - (4,042.3) At 31 December 2020 566.2 5,514.4 17.5 146.2 6,244.3 As at 31 December 2020, the Group has land with a carrying amount of USD 35.3 million (2019: USD 35.3 million). The transfers of USD 233.5 million are assets under construction that wer e put into use during the year . T ransfers mainly relate to BioMCN for USD 42.5 million, OCI Nitr ogen for 102.1 million and OCI Beaumont for USD 74.2 million. The additions of USD 252.8 million mainly relate to OCI Nitr ogen of USD 92.0 million and OCI Beaumont of USD 44.7 million. The effect of movement in exchange rates in 2020 mainly relates to Sorfert, BioMCN and OCI Nitr ogen, which have different functional curr encies (Algerian dinar and Euro r espectively) compared to the Group’ s presentation currency . The Algerian dinar decreased by 9.5% and the Eur o increased by 9.0% against the US dollar in 2020. The capitalized borrowing costs during the year ended 31 December 2020 amounts to USD 0.6 million (2019: USD 3.5 million) and relates fully to OCI Beaumont. The capitalization rate used is 4.0%. The capitalized borrowing costs for both periods wer e substantially paid. The differ ence between the additions in the above schedule and the investments in property , plant and equipment mentioned in the consolidated statement of cash ﬂows is mainly caused by changes in capital expenditure cr editors not yet paid and capitalized borrowing costs, which are pr esented as part of interest expenses under cash ﬂows fr om operating activities in the consolidated statement of cash ﬂows. For capital commitments refer ence is made to note 29. Property , plant and equipment of USD 1,920.6 million (2019: USD 2,041.2 million) have been pledged as security for external loans and borrowings of IFCo. Reference is made to note 18. Right-of-use assets: $ millions Note Land and buildings Plant and equipment Fixture and ﬁttings T otal At 1 January 2020 133.6 88.3 55.6 277.5 Movement in the carrying amount: Additions 11.8 14.8 3.8 30.4 Modiﬁcations 3.7 1.3 - 5.0 Disposals (0.6) (1.1) - (1.7) Depreciation (22) (7.4) (24.4) (9.5) (41.3) Effect of movement in exchange rates 6.7 2.9 (0.1) 9.5 At 31 December 2020 147.8 81.8 49.8 279.4 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 144 8. Goodwill and other intangible assets $ millions Goodwill Licenses and trademarks Other intangible assets T otal Cost 1,807.2 75.4 4.8 1,887.4 Accumulated amortization and impairment (1,322.9) (73.8) (3.4) (1,400.1) At 1 January 2019 484.3 1.6 1.4 487.3 Movements in the carrying amount: Business combination Fertiglobe 115.1 - - 115.1 Amortization - (1.3) (0.9) (2.2) Effect of movement in exchange rates (0.4) - - (0.4) At 31 December 2019 599.0 0.3 0.5 599.8 Cost 1,921.9 74.0 4.8 2,000.7 Accumulated amortization and impairment (1,322.9) (73.7) (4.3) (1,400.9) At 31 December 2019 599.0 0.3 0.5 599.8 Movements in the carrying amount: Investments - - 0.6 0.6 Amortization - (0.3) (0.5) (0.8) Post completion settlement Fertiglobe (115.1) - - (115.1) Effect of movement in exchange rates 2.0 - - 2.0 At 31 December 2020 485.9 - 0.6 486.5 Cost 1,808.8 74.0 5.4 1,888.2 Accumulated amortization and impairment (1,322.9) (74.0) (4.8) (1,401.7) At 31 December 2020 485.9 - 0.6 486.5 Goodwill Goodwill has been allocated to the cash generating units as follows: Cash generating units $ millions Reporting segment 2020 2019 Egyptian Fertilizers Company (‘EFC’) Fertiglobe 440.0 440.0 Fertil Fertiglobe - 115.1 OCI Beaumont Methanol US 23.0 23.0 OCI Nitrogen Nitrogen Eur ope 22.9 20.9 T otal 485.9 599.0 Licenses and trademarks The licenses and trademarks mainly relate to the customer r elationships, trademarks and technology assets of OCI Nitrogen. These intangible assets wer e identiﬁed during the acquisition of OCI Nitrogen in 2010. The useful life of the customer relationships, trademarks and technology assets ar e respectively 5 to 10 years, 3 years and 5 years. Goodwill impairment testing The determination of the recoverable amounts for the cash generating units r equires signiﬁcant judgments and estimates, including projections of futur e cash ﬂows from the businesses. The recoverable amounts have been estimated based on value in use. The tests were carried out by discounting futur e cash ﬂows to be generated from the continuing use of the cash-generating units to which the goodwill applies and on the assumption of an indeﬁnite life. Key assumptions used in the calculation of recoverable amounts ar e the discount rate, the terminal value growth rate, selling price outlook per pr oduct, natural gas prices and the number of expected operating days per plant. Selling price and natural gas price assumptions are based on a published independent price outlook prepar ed by global experts. The other assumptions used are based on past experiences and external sources, but that are unpr edictable and inherently uncertain. The impairment tests are based on speciﬁc estimates for cash ﬂow pr ojections for the years 2021 to 2025 (this period captures the cyclical natur e of the industry). For the subsequent years, the residual values were calculated based on the average EBITDA margin of the last two years of the pr ojection period and whereby a perpetual gr owth rate of 1.45% was used. The estimated cash ﬂows are discounted using a present value technique. The following rates were applied in performing the impairment test: Percentage 2020 2019 EFC OCI Beaumont OCI Nitrogen EFC OCI Beaumont OCI Nitrogen Pre-tax discount rate 11.54% 8.30% 8.74% 12.5% 9.8% 9.9% Perpetual growth rate 1.45% 1.45% 1.45% 2.0% 2.0% 2.0% NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 145 8. Goodwill and other intangible assets (continued) Result of the impairment test For all cash generating units the recoverable values signiﬁcantly exceed their carrying amounts. No reasonably possible change in a key assumption would cause the cash generating unit’ s carrying amount to exceed the recoverable amount. 9. T rade and other receivables $ millions 2020 2019 T rade receivables (net) 271.3 220.9 Loans and trade receivables due fr om related parties (note 30) 58.5 55.7 Prepayments 66.2 30.3 Other tax receivables 112.2 90.7 Supplier advanced payments 30.9 24.7 Commodity derivatives 16.0 3.3 Foreign curr ency derivatives 3.3 1.7 Other receivables 46.0 85.2 T otal 604.4 512.5 Non-current 3.5 4.1 Current 600.9 508.4 T otal 604.4 512.5 In 2018, the Group enter ed into a securitization agreement to sell certain trade receivables to an external ﬁnancial institution. By doing so, the Group is able to receive cash ﬂows fr om selected debtors sooner than would normally be the case. Upon transfer of the balances, OCI derecognizes the trade receivables, since substantially all risks and r ewards of ownership are transferr ed. The agreement permits securitization of trade receivables up to EUR 180.0 million (USD 218.4 million) (2019: EUR 180.0 million). As per 31 December 2020 an amount of EUR 122.6 million (USD 148.7 million) (2019: EUR 116.3 million) of trade receivables wer e transferred. The transferred trade r eceivables are pledged as security under the securitization program. The other tax receivable contains an amount of EGP 900 million (USD 57.2 million) r elating to a payment made to the Egyptian T ax Authorities as part of the tax claim which will be refunded upon settlement of the tax claim. Reference is made to note 28 ‘OCI S.A.E. tax dispute’. The carrying amount of ‘T rade and other receivables’ as at 31 December 2020 appr oximates its fair value. The aging of current trade r eceivables at the reporting date were as follows: $ millions 2020 2019 Neither past due nor impaired 223.2 212.5 Past due 1 - 30 days 42.4 7.0 Past due 31 - 90 days 3.4 0.8 Past due 91 - 360 days 1.5 0.6 More than 360 days 0.8 - T otal 271.3 220.9 Management believes that the unimpaired amounts that ar e past due by more than 30 days are collectible in full, based on historic payment behavior and extensive analysis of customer credit risk, including underlying customers’ credit ratings if they ar e available. The Group has not recognized any allowance for trade receivables. 10. Equity-accounted investees (i) The following table shows the movements in the carrying amount of the Group’ s associates and joint ventures: $ millions 2020 2019 At 1 January 506.9 566.6 Share in income (36.7) (56.6) Intercompany pr oﬁt elimination on upstream transactions (0.1) (1.3) Dividend (3.0) (1.6) Effect of movement in exchange rates 1.6 (0.2) At 31 December 468.7 506.9 Joint ventures 1.1 2.7 Associates 467.6 504.2 T otal 468.7 506.9 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 146 10. Equity-accounted investees (continued) (ii) The Group has inter ests in the following associates and joint ventures: Name T ype Participation via Country Participation % Firewater LLC (Natgasoline) Associate Firewater B.V . United States 50.0 Sitech Manufacturing Services C.V . Associate OCI Nitrogen B.V . The Netherlands 35.0 Sitech Utility Holding Beheer B.V . Associate OCI Nitrogen B.V . The Netherlands 40.0 Sitech Utility Holding C.V . Associate OCI Nitr ogen B.V . The Netherlands 40.0 Sitech Services B.V . Associate OCI Nitrogen B.V . The Netherlands 23.0 White Rock Insurance PCC Ltd. Associate OCI N.V . Holding The Netherlands 5.0 Nitrogen Iberian Company SL. Joint venture OCI Nitrogen B.V . Spain 50.0 Shanxi Fenghe Melamine Company Ltd. Joint ventur e OCI Nitrogen B.V . China 49.0 Fitco OCI Agro S.A. Joint ventur e Fertiglobe Holding Ltd. Uruguay 50.0 (iii) The following table summarizes the ﬁnancial information of OCI’ s associates and joint ventures (on a 100% basis): $ millions 2020 2019 Associates Joint ventures T otal Associates Joint ventures T otal Non-current assets 2,106.9 1.2 2,108.1 2,254.7 1.9 2,256.6 Current assets 312.5 2.8 315.3 277.3 5.7 283.0 Non-current liabilities (1,154.8) - (1,154.8) (1,186.7) - (1,186.7) Current liabilities (291.4) (1.9) (293.3) (305.0) (2.2) (307.2) Net assets 973.2 2.1 975.3 1,040.3 5.4 1,045.7 Income 804.9 34.9 839.8 797.4 45.2 842.6 Expenses (869.8) (36.6) (906.4) (902.7) (47.4) (950.1) Net (loss) / proﬁt (64.9) (1.7) (66.6) (105.3) (2.2) (107.5) Associates The following chart summarizes the ﬁnancial information of signiﬁcant associates (on a 100% basis): Firewater LLC (Natgasoline) Sitech Services B.V . $ millions 2020 2019 2020 2019 Non-current assets 1,977.2 2,131.2 128.9 117.3 Current assets (excluding cash and cash equivalents) 122.6 81.4 31.1 34.0 Cash and cash equivalents 3.2 24.9 35.1 29.8 Non-current liabilities (1,078.1) (1,115.0) (76.7) (71.7) Current liabilities (119.1) (138.9) (55.9) (56.1) Net assets 905.7 983.6 62.5 53.3 Group’ s share of net assets 452.8 491.8 14.4 12.3 Revenues 256.2 285.1 204.3 202.2 Depreciation (173.3) (145.0) (13.3) (13.1) Interest income 0.1 0.4 - - Interest expense (62.9) (72.9) (1.4) (1.5) (Loss) / proﬁt befor e taxes (78.2) (121.0) 19.4 19.2 T ax expense - - (6.1) (3.5) (Loss) / proﬁt after taxes (78.2) (121.0) 13.3 15.7 Other comprehensive income - - - - T otal comprehensive income (78.2) (121.0) 13.3 15.7 Group’ s share in total comprehensive income (39.0) (60.5) 3.1 3.6 Dividends - - 9.1 6.1 Included in the associates is Firewater LLC, the holding company of Natgasoline LLC, which is a methanol plant in T exas USA, and Sitech, which operates at the Chemelot site in Geleen, the Netherlands, where the factory of OCI Nitr ogen is. The Chemelot site is also used by other companies. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 147 11. Financial assets at fair value through other compr ehensive income $ millions 2020 2019 Infrastructure and Gr owth Capital Fund LP (UAE) 6.3 6.8 Notore Chemical Industries (Mauritius) 20.8 23.2 Orascom Construction PLC (UAE) 2.9 3.4 T otal 30.0 33.4 Non-current 30.0 33.4 Current - - T otal 30.0 33.4 The Group holds an investment in the Infrastructur e and Growth Capital Fund LP , which is managed by the Abraaj Group. Abraaj Holdings and Abraaj Investment Management ar e in provisional liquidation in the Cayman Islands and their court-appointed joint provisional liquidators, Deloitte and PwC, ar e overseeing the restructuring of Abraaj’ s debt. The investment in Notore Chemical Industries r epresents a 13.18 percent shar eholding. Further , OCI N.V . holds shares in Orascom Construction PLC. 12. Income taxes 12.1 Income tax in the statement of proﬁt or loss $ millions 2020 2019 Current tax (18.3) 1.9 Deferred tax (26.2) (23.6) T otal income tax reported in proﬁt or loss (44.5) (21.7) Current tax expense $ millions 2020 2019 Current year (27.1) 4.6 Dividend withholding tax 7.8 (7.8) Changes in estimates relating to prior years 1.0 5.1 Income tax beneﬁt / (expense) reported in pr oﬁt or loss (18.3) 1.9 Deferred tax expense $ millions 2020 2019 Origination and reversal of temporary dif ferences 74.3 84.0 Movement in uncertain tax positions (30.4) (27.2) Changes in tax rates (4.2) (1.7) Recognition of previously unr ecognized tax assets 2.9 - Unrecognized tax assets (56.6) (76.1) Dividend withholding tax (12.2) (2.6) Income tax beneﬁt / (expense) reported in pr oﬁt or loss (26.2) (23.6) 12.2 Other comprehensive income $ millions 2020 2019 Cash ﬂow hedges, effective portion of changes in fair value (1.9) - Income tax beneﬁt / (expense) reported in OCI (1.9) - NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 148 12.3 Reconciliation of effective tax rate OCI’ s operations are subject to income taxes in various foreign jurisdictions. The statutory income tax rates vary from 0.0% to 30.5%, which r esults in a difference between the ef fective income tax rate and the Netherlands’ statutory income tax rate of 25.0%. Reconciliation of the statutory income tax rate in the Netherlands with the effective income tax rate can be summarized as follows: $ millions 2020 % 2019 % Proﬁt / (loss) befor e income tax (49.6) (278.5) Enacted income tax rate in the Netherlands 25% 25% T ax calculated at the enacted Dutch tax rate 12.4 25.0 69.6 25.0 Effect of tax rates in for eign jurisdictions 9.8 19.8 11.5 4.1 Expenses non-deductible (28.8) (58.1) (51.3) (18.4) Income not subject to tax 19.0 38.3 20.7 7.4 Adjustments prior years 1.0 2.0 5.1 1.8 Change in tax rates (4.2) (8.4) (1.7) (0.6) Recognition of previously unr ecognized tax assets 2.9 5.8 - - Unrecognized tax assets (56.6) (114.1) (76.1) (27.3) Dividend withholding tax 7.8 15.7 (2.6) (0.9) Uncertain tax positions (7.5) (15.1) 3.1 1.1 Other (0.3) (0.6) - - T otal income tax in proﬁt or loss (44.5) (89.7) (21.7) (7.8) The effective income tax rate is (89.7%) (2019: 7.8%), mainly due to (i) unr ecognized tax assets for an amount of USD (56.6) million mainly relating to BioMCN, IFCo, Natgasoline and OCI NV not meeting the recognition criteria, (ii) expenses non-deductible for an amount of USD (28.8) million and (iii) income not subject to tax for an amount of USD 19.0 million. The non-deductible expenses mainly relate to inter est expense that is limited under local interest deduction limitation rules and non-deductable shar eholder costs. The income not subject to tax mainly relates to tax exemption on export sales as well as the application of free trade zones for several entities within the Gr oup. The Group believes that its accruals for tax liabilities ar e adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. 12.4 Deferred income tax assets and liabilities Changes in deferred tax asset and liabilities (net): $ millions 2020 2019 At 1 January (483.7) (173.3) Proﬁt or loss (26.2) (23.6) Equity - - Business combination Fertiglobe - (287.4) Effect of movement in exchange rates (4.8) 0.6 At 31 December (514.7) (483.7) Recognized deferred tax assets and liabilities: Assets Liabilities Net $ millions 2020 2019 2020 2019 2020 2019 Intangible assets 81.6 114.0 (62.7) (62.7) 18.9 51.3 Property , plant and equipment - 0.1 (610.7) (612.2) (610.7) (612.1) Inventory 1.9 2.8 (3.3) (2.5) (1.4) 0.3 Investment in partnership - - (89.6) (74.1) (89.6) (74.1) T rade and other receivables - - (0.4) (0.2) (0.4) (0.2) Loans and borrowings 52.0 60.6 (1.1) - 50.9 60.6 T rade and other payables 12.4 14.9 - (1.3) 12.4 13.6 Provisions - - (6.3) (8.7) (6.3) (8.7) Uncertain tax positions - - (57.6) (27.2) (57.6) (27.2) Undistributed earnings - - (15.6) (3.4) (15.6) (3.4) Operating losses carry forward and tax credits 184.7 116.2 - - 184.7 116.2 T otal 332.6 308.6 (847.3) (792.3) (514.7) (483.7) Netting of ﬁscal positions (331.8) (302.1) 331.8 302.1 - - Amounts recognized in the Statement of Financial Position 0.8 6.5 (515.5) (490.2) (514.7) (483.7) NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 149 12.4 Deferred income tax assets and liabilities (continued) Deferred tax liabilities r elating to intangible assets mainly relates to goodwill of EFC for USD 62.7 million. This deferred tax liability will be r eversed in case the asset is impaired. Deferred tax liabilities recognized in r elation to property , plant and equipment will be r ealized over the depreciation period of the related asset, and mainly r elate to Fertil (USD 265.9 million), IFCo (USD 235.0 million), EFC (USD 69.7 million) and OCI Nitrogen (USD 25.9 million). The uncertain tax position of USD 57.6 million is related to a dif ference in interpretation of local r egulation with local tax authorities, this is currently under discussion although no agreement is expected on the tr eatment within a short timeframe. Furthermore, the deferred tax liability ‘investment in partnership’ (USD 89.6 million) r elates to a temporary difference related to OCI USA Inc’ s investment in OCI Beaumont. The deferred tax liability ‘undistributed earnings’ relates to income tax consequences of undistributed earnings of subsidiaries that will reverse in the foreseeable futur e. The Company does not anticipate any other income tax consequences resulting from the undistributed earnings of subsidiaries. Deferred tax assets r elate to temporary differences, tax cr edits and tax losses carry forward. The Company has net tax losses carry forward and tax cr edits totalling USD 611.2 million, for which an amount of USD 426.5 million has not been recognized. The losses carry forwar d mainly relate to the US operations (USD 364.7 million), Dutch operations (USD 40.2 million) and Egyptian operations (USD 47.9 million). T ax credits are available amounting to USD 94.7 million mainly r elating to the US operations. Uncertain tax positions The group is subject to the application of complex tax laws in multiple jurisdictions. Application of these complex tax laws may lead to uncertainties in determining tax positions. We aim to r esolve these uncertainties in discussions with the tax authorities. The ﬁnancial effect of the existing uncertainties per balance sheet date are determined in accor dance with IAS 12 and IFRIC 23, which requires us to estimate the potential outcome of any tax position. Our estimate for the potential outcome of any uncertain tax position is judgmental. As of 31 December 2020, the Group r ecorded uncertain tax positions to an amount of USD 57.6 million which is classiﬁed as a deferred tax liability . Expected interest and penalties related to uncertain income tax liabilities have been accrued for and are included in the uncertain tax positions and in the income tax expense. In addition to the uncertain tax liability , the Group also has a contingent tax asset that curr ently does not meet the recognition criteria of IFRIC 23. For mor e information we refer to note 28. Expiration scheme of gross unr ecognized carry forward tax losses, tax credits and deferr ed temporary tax assets: 2020 $ millions Less than 1 year Between 1 and 5 years Between 5 and 10 years Between 10 and 15 years Between 15 and 20 years Unlimited T otal T emporary differences - - - - - - - T ax losses and tax credit carry forwar ds 67.2 309.7 128.9 - 359.2 532.1 1,397.1 T ax assets – unrecognized 67.2 309.7 128.9 - 359.2 532.1 1,397.1 2019 1 $ millions Less than 1 year Between 1 and 5 years Between 5 and 10 years Between 10 and 15 years Between 15 and 20 years Unlimited T otal T emporary differences - - - - - - - T ax losses and tax credit carry forwar ds 19.7 145.5 262.1 9.4 399.9 313.8 1,150.4 T ax assets – unrecognized 19.7 145.5 262.1 9.4 399.9 313.8 1,150.4 1 In the Annual Report 2019 amounts were pr esented net. The above unrecognized temporary dif ferences, tax losses and tax credit carryforwar ds relate to tax jurisdictions in which OCI has suffer ed a tax loss in the current or a preceding period. Signiﬁcant judgment is requir ed in determining whether deferred tax assets can be utilized. OCI determines this based on expected taxable proﬁts arising fr om the reversal of recognized deferr ed tax liabilities and based on budget, cash ﬂow forecasts and impairment models and the r ecent history of taxable results. Where utilization is not consider ed probable, deferred tax assets ar e not recognized. Changes in income tax receivables and payables: $ millions 2020 2019 At 1 January (5.6) (67.7) Proﬁt or loss (27.1) 1.9 Changes in estimates relating to prior years 1.0 - Other comprehensive income (1.9) - Payments 25.4 59.9 Effect of movement in exchange rates 0.7 0.3 At 31 December (7.5) (5.6) Income tax receivable 2.8 3.2 Income tax payables (10.3) (8.8) T otal (7.5) (5.6) NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 150 13. Inventories $ millions 2020 2019 Finished goods 149.0 189.3 Raw materials and consumables 30.4 29.8 Spare parts, fuels and others 114.4 89.6 T otal 293.8 308.7 During 2020, the total write-downs amount to USD 1.4 million (2019: USD 5.2 million) of which USD 1.0 million (2019: USD 2.6 million) relates to spar e parts. During 2020 there were USD 5.2 million of reversals of write downs (2019: USD 4.4 million). Inventory amounting to USD 31.2 million (2019: USD 43.3 million) has been pledged as security for external loans of IFCo. Reference is made to note 18. 14. Cash and cash equivalents $ millions 2020 2019 Cash on hand 0.2 0.2 Bank balances 632.0 560.3 Restricted cash 54.1 40.0 T otal 686.3 600.5 Restricted cash Restricted cash of USD 47.4 million (2019: USD 23.1 million) is held as part of IFCo’ s debt service requir ements for the outstanding bonds, of which USD 39.4 million (2019: USD 15.0 million) is held as a requir ed deposit in a major maintenance reserve account and is to be used to fund capital expenditure. The remaining r estricted balances are held as collateral against letters of credit and letters of guarantees issued. 15. Equity attributable to owners of the Company The movements in the number of shares can be summarized as follows: 2020 2019 Number of shares at 1 January 210,306,101 210,306,101 Number of issued shares - - On issue at 31 December – fully paid 210,306,101 210,306,101 Par value per share (in EUR) 0.02 0.02 At 31 December (in millions of USD) 5.6 5.6 The authorized capital of the Company amounts to EUR 12.0 million. The authorized capital is divided into 600 million shares, with a nominal value of EUR 0.02 each. Movements in equity attributable to owners of the Company in 2020: • The post-completion adjustment with ADNOC resulted in an increase in r etained earnings of USD 48.3 million and a decrease in non-contr olling interests of USD 59.6 million. Reference is made to note 2.2.1. and note 17. • • An amount of USD 8.0 million related to share-based compensation expense was r ecognized in retained earnings. Movements in equity attributable to owners of the Company in 2019: • The business combination Fertiglobe with ADNOC resulted in an increase in r etained earnings of USD 674.8 million and an increase in non-contr olling interests of USD 1,093.3 million. Reference is made to note 2.2.1. and note 17. • An amount of USD 6.6 million related to share-based compensation expense was r ecognized in retained earnings. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 151 16. Reserves $ millions Hedge reserve Financial assets at fair value through other comprehensive income 1 Currency translation T reasury shares T otal At 1 January 2019 (0.4) 0.1 (223.8) (24.9) (249.0) Increase in hedge r eserve 0.2 - - - 0.2 Currency translation dif ferences - - 8.0 - 8.0 Financial assets at fair value through other comprehensive income - (3.4) - - (3.4) Other comprehensive income 0.2 (3.4) 8.0 - 4.8 T reasury shar es sold / delivered - - - 7.7 7.7 T reasury shar es acquired - - - (1.3) (1.3) At 31 December 2019 (0.2) (3.3) (215.8) (18.5) (237.8) Increase in hedge r eserve 5.9 - - - 5.9 Currency translation dif ferences - - (106.6) - (106.6) Financial assets at fair value through other comprehensive income - (3.7) - - (3.7) Other comprehensive income 5.9 (3.7) (106.6) - (104.4) T reasury shar es sold / delivered - - - 3.8 3.8 T reasury shar es acquired - - - - - At 31 December 2020 5.7 (7.0) (322.4) (14.7) (338.4) 1 Cannot be subsequently reclassiﬁed to pr oﬁt or loss. OCI is a company incorporated under Dutch law . In accordance with the Dutch Civil Code, legal reserves have to be established in certain cir cumstances. The hedging reserve, the ﬁnancial assets at fair value through other compr ehensive income reserve, the currency translation r eserve and other legal reserves ar e legal reserves that limit distributions to shareholders to the extent that these r eserves individually have a credit balance. T reasury shar es During the ﬁnancial year ended 31 December 2020 the company acquired zer o shares and sold and delivered out of shar e-based payment plans 160,327 shares. 2020 2019 Number of shares 561,926 722,253 Average carrying value per shar e (USD) 25.13 23.05 T otal (In millions USD) 14.1 16.6 Foreign exchange ef fect 0.6 1.9 T otal carrying value of treasury shares (In millions of USD) 14.7 18.5 17. Non-controlling inter ests 2020 $ millions Fertil EFC Egyptian Basic Industries Corporation Sorfert Algeria Spa Other T otal Non-controlling interests 42.00% 42.06% 65.20% 70.43% - - Non-current assets 753.3 678.7 193.9 551.7 23.0 2,200.6 Current assets 81.6 50.8 47.5 301.8 1,263.5 1,745.2 Non-current liabilities (144.1) (125.3) (4.7) (233.8) (405.3) (913.2) Current liabilities (41.0) (119.5) (60.5) (61.2) (1,210.3) (1,492.5) Net assets 649.8 484.7 176.2 558.5 (329.1) 1,540.1 Revenues 200.2 151.3 77.7 241.5 812.6 1,483.3 Proﬁt 1.2 21.8 (11.3) 77.6 (5.7) 83.6 Other comprehensive income - - - (40.2) 1.5 (38.7) T otal comprehensive income 1.2 21.8 (11.3) 37.4 (4.2) 44.9 Dividend cash ﬂows - - - - (43.2) (43.2) NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 152 17. Non-controlling inter ests (continued) 2019 $ millions Fertil EFC Egyptian Basic Industries Corporation Sorfert Algeria Spa Other T otal Non-controlling inter ests 42.00% 42.06% 65.20% 70.43% - - Non-current assets 846.7 680.3 197.8 650.6 26.3 2,401.7 Current assets 57.2 31.4 42.4 290.3 1,169.9 1,591.2 Non-current liabilities (154.9) (183.9) (4.7) (314.5) (342.5) (1,000.5) Current liabilities (28.9) (64.1) (38.1) (283.6) (1,116.5) (1,531.2) Net assets 720.1 463.7 197.4 342.8 (262.8) 1,461.2 Revenues 55.1 37.8 70.5 186.5 352.8 702.7 Proﬁt (6.9) 2.6 (1.0) 41.8 (2.0) 34.5 Other comprehensive income - - - (3.6) - (3.6) T otal comprehensive income (6.9) 2.6 (1.0) 38.2 (2.0) 30.9 Dividend cash ﬂows - - - - (6.1) (6.1) * NCI in EFC, EBIC and Sorfert increased in 2019 due to the Fertiglobe business transaction and the transfer of 42% in OCI MENA, refer ence is made to note 2.2.1. Fertiglobe 2019 business combination with ADNOC (NCI) OCI N.V . owns 58% shares in one of its subsidiaries, Fertiglobe, which contr ols 100% of the voting powers and economic returns from Fertil (and holds the Gr oup’ s shar e in OCI MENA). For purchase accounting purposes, the company has determined the fair value of the shares in Fertil as described above. As OCI N.V . retains contr ol over shares that were alr eady owned by Fertiglobe in OCI MENA, these assets and liabilities are not r evalued as part of the purchase accounting. As a result, the NCI in Fertiglobe is the sum of 42% of the fair value of Fertil and 42% of the OCI MENA net assets as at 30 September 2019. OCI N.V .’ s disposal of 42% ownership in Fertiglobe, whilst retaining control in the subsidiary was treated as an equity transaction. NCI of USD 382.7 million is r ecognized as part of the disposal of 42% ownership in its former OCI MENA net assets, while the differ ence between 42% of the fair value of OCI MENA and the book value resulted in an equity incr ease of USD 674.8 million. The NCI recognized as part of the non-contr olling interests held by ADNOC in Fertil amounted to USD 710.6 million as per September 2019. The fair value of Fertil has been measured by applying a discounted cashﬂow method, cash ﬂows beyond the forecasted period of ﬁve years have been extrapolated using a 2% growth rate. The pr e-tax WACC used to determine the expected discounted future cash ﬂows is 9.0%. Refer ence is made to note 2.2.1. Movements in equity attributable to non-controlling inter ests in 2020: • • The reduction of declared dividends to non-contr olling interests in the amount of USD 125.4 million relates to the dividends declar ed by Sorfert relating to the ﬁnancial year 2018, that were cancelled by a resolution of the general meeting of shar eholders of Sorfert in December 2020. • T otal dividends declared to non-controlling interests amounted to USD 49.2 million. • • Impact difference in pr oﬁt sharing non-controlling interests: In the partnership agr eement of Sorfert between OCI and the partner , a proﬁt-sharing arrangement is agr eed, where the other investor will receive a r elatively higher portion of dividends in compensation for lower natural gas prices arranged for by the partner . As a result of this agr eement the non-controlling interests incr eased by USD 17.4 million during 2020. Movements in equity attributable to non-controlling inter ests in 2019: • T otal dividends declared to non-controlling interests amounted to USD 143.3 million, of which USD 137.2 million related to Sorfert. • Impact difference in pr oﬁt sharing non-controlling interests: In the partnership agr eement of Sorfert between OCI and the partner , a proﬁt-sharing arrangement is agr eed, where the other investor will receive a r elatively higher portion of dividends in compensation for lower natural gas prices arranged for by the partner . As a result of this agr eement the non-controlling interests incr eased by USD 10.5 million during 2019. 18. Loans and borrowings $ millions 2020 2019 At 1 January 4,662.3 4,580.3 Proceeds fr om loans 2,070.4 1,765.5 Redemptions of loans (2,396.0) (1,654.4) Newly incurred transaction costs (14.6) (24.1) Amortization of transaction costs / (bond) premiums 34.1 25.6 Effect of movement in exchange rates 60.4 (24.4) Debt modiﬁcation gain - (6.2) At 31 December 4,416.6 4,662.3 Non-current 4,226.9 4,392.7 Current 189.7 269.6 T otal 4,416.6 4,662.3 The effect of movement in exchange rate mainly r elates to EUR and DZD denominated loans, which are dif ferent from the Gr oup’ s presentation currency . Information about the Group’ s exposure to interest rate, for eign currency and liquidity risk is disclosed in the ﬁnancial risk and capital management paragraph in note 6. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 153 18. Loans and borrowings (continued) Borrowing company T ype of loan Principal amount ($ millions) Interest rate Date of maturity Carrying amount 1 ($ millions) Long-term portion ($ millions) Short-term portion ($ millions) Fair value ($ millions) Collateral / Guarantee given (if applicable) Sorfert Algeria SP A (‘Sorfert’) Secured USD 961.3 (DZD 114,440.0) Algerian bank interest rate plus rate of 1.95% June 2026 398.3 325.8 72.5 n/a Debt service reserve account, ban for any disposal or decrease of the Company shar e and assets Iowa Fertilizer Company (‘IFCo’) Secured USD 120.0 USD 429.0 USD 147.2 USD 425.4 Fixed: 3.125% Fixed: 5.25% Fixed 5.875% Fixed 5.25% December 2022 December 2025 December 2027 December 2037 80.0 426.1 139.8 412.1 43.4 426.1 139.8 412.1 36.6 - - - 80.7 465.4 147.7 424.3 Certain bank accounts, property of IFCo, inventories, all funds, including equity contributions of USD 762.0 million by OCI Egyptian Fertilizers Company (‘EFC’) Secured USD 150.0 LIBOR + 2.00% October 2025 134.2 108.4 25.8 136.7 The loan is guaranteed, jointly and severally , by Fertiglobe Holding Ltd, Egyptian Fertilizers Company S.A.E., Ruwais Fertilizer Industries LLC, OCI Fertilizer T rading Ltd, Fertiglobe Distribution Limited and OCI Fertilizer T rade & Supply B.V . Fertiglobe Holding Ltd. Secured USD 160.0 LIBOR + 2.00% October 2025 138.1 110.6 27.5 140.7 The loan is guaranteed, jointly and severally , by Fertiglobe Holding Ltd, Egyptian Fertilizers Company S.A.E., Ruwais Fertilizer Industries LLC, OCI Fertilizer T rading Ltd, Fertiglobe Distribution Limited and OCI Fertilizer T rade & Supply B.V . Fertiglobe Holding Ltd. Secured USD 75.0 LIBOR + 2.00% October 2025 - - - - N/a OCI N.V . (‘OCI’) Senior Secured Notes USD 400.0 USD 489.0 (EUR 400.0) Fixed at 4.625% Fixed at 3.625% for EUR denominated notes October 2025 October 2025 395.6 483.8 395.6 483.8 - - 416.0 506.8 The Notes are guaranteed, jointly and severally , by OCI Chemicals B.V ., OCI Fertilizers B.V ., OCI Fertilizer Inter national B.V ., OCI Intermediate B.V ., BioMethanol Chemie Nederland B.V . and BioMethanol Chemie Holding II B.V ., OCI Nitrogen B.V ., OCI Chem 4 B.V ., OCI Partners LP , OCI Beaumont LLC OCI N.V . (‘OCI’) Senior Secured Notes USD 855.8 (EUR 700.0) USD 600.0 Fixed: 3.125% Fixed: 5.250% November 2024 November 2024 845.1 591.6 845.1 591.6 - - 878.9 623.3 The Notes are guaranteed, jointly and severally , by OCI Chemicals B.V ., OCI Fertilizers B.V ., OCI Fertilizer Inter national B.V ., OCI Intermediate B.V ., BioMethanol Chemie Nederland B.V . and BioMethanol Chemie Holding II B.V ., OCI Nitrogen B.V ., OCI Chem 4 B.V ., OCI Partners LP , OCI Beaumont LLC OCI N.V . (‘OCI’) Secured USD 850.0 LIBOR + 3.50% April 2023 344.6 344.6 - 350.0 Guaranteed, jointly and severally , by OCI Chemicals B.V ., OCI Fertilizers B.V ., OCI Fertilizer International B.V ., OCI Intermediate B.V ., BioMethanol Chemie Nederland B.V . and BioMethanol Chemie Holding II B.V ., OCI Nitrogen B.V ., OCI Chem 4 B.V ., OCI Partners LP , OCI Beaumont LLC OCI Fertilizer T rading Ltd. (‘OFT’) Revolver USD 75.0 LIBOR + 2.50% Renewed annually - - - - n/a OCI Nitrogen Inventory ﬁnancing USD 70.2 (EUR 57.4) 1.25% No deﬁned maturity , facility is uncommitted with monthly roll overs 27.3 - 27.3 27.3 Stand by letter of credit of EUR 9.0 million (USD 10.1 million) and OCI N.V . guarantee of EUR 90 million (USD 100.9 million) T otal 31 December 2020 4,416.6 4,226.9 189.7 n/a NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 154 18. Loans and borrowings (continued) Borrowing company T ype of loan Principal amount ($ millions) Interest rate Date of maturity Carrying amount 1 ($ millions) Long-term portion ($ millions) Short-term portion ($ millions) Fair value ($ millions) Collateral / Guarantee given (if applicable) Sorfert Algeria SP A (‘Sorfert’) Secured USD 961.3 (DZD 114,440.0) Algerian bank interest rate plus rate of 1.95% per annum June 2026 539.9 439.8 100.1 n/a Debt service reserve account, ban for any disposal or decrease of the Company shar e and assets Iowa Fertilizer Company (‘IFCo’) Secured USD 120.0 USD 429.0 USD 147.2 USD 425.4 Fixed: 3.125% Fixed: 5.25% Fixed 5.875% Fixed 5.25% December 2022 December 2025 December 2027 December 2037 118.6 424.9 138.6 411.2 82.3 424.9 138.6 411.2 36.3 - - - 122.0 466.7 155.1 465.7 Certain bank accounts, property of IFCo, inventories, all funds, including equity contributions of USD 762.0 million by OCI Egyptian Fertilizers Company (‘EFC’) Secured USD 60.0 USD 100.0 USD 69.8 (EGP 1,120.0) USD 220.0 LIBOR + 3.75% LIBOR + 3.75% CBE Mid Corridor + 0.75% margin for EGP denominated borrowings LIBOR + 3.75% June 2025 June 2026 June 2025 June 2025 49.9 82.6 50.6 126.6 44.3 72.5 44.6 112.1 5.6 10.1 6.0 14.5 51.0 84.3 51.4 127.5 Pledge EFC shares 99.9% owned by ‘Orascom Fertilizer Plant Maintenance’. Power of Attorney for perfection of commercial and real estate mortgages. OCI will pay for shortfalls OCI N.V . (‘OCI’) Senior Secured Notes USD 650.0 USD 448.5 (EUR 400.0) Fixed at 6.625% Fixed at 5.0% for EUR denominated notes April 2023 April 2023 639.8 441.0 639.8 441.0 - - 677.6 466.7 The Notes are guaranteed, jointly and severally , by OCI Chemicals B.V ., OCI Fertilizers B.V ., OCI Fertilizer Inter national B.V ., OCI Intermediate B.V ., BioMethanol Chemie Nederland B.V . and BioMethanol Chemie Holding II B.V ., OCI Nitrogen B.V ., OCI Chem 4 B.V ., OCI Partners LP , OCI Beaumont LLC OCI N.V . (‘OCI’) Senior Secured Notes USD 784.9 (EUR 700.0) USD 600.0 Fixed: 3.125% Fixed: 5.250% November 2024 November 2024 772.8 590.6 772.8 590.6 - - 818.9 625.5 The Notes are guaranteed, jointly and severally , by OCI Chemicals B.V ., OCI Fertilizers B.V ., OCI Fertilizer Inter national B.V ., OCI Intermediate B.V ., BioMethanol Chemie Nederland B.V . and BioMethanol Chemie Holding II B.V ., OCI Nitrogen B.V ., OCI Chem 4 B.V ., OCI Partners LP , OCI Beaumont LLC OCI N.V . (‘OCI’) Secured USD 185.0 LIBOR + 4.00% April 2023 178.2 178.2 - 178.2 Guaranteed, jointly and severally , by OCI Chemicals B.V ., OCI Fertilizers B.V ., OCI Fertilizer International B.V ., OCI Intermediate B.V ., BioMethanol Chemie Nederland B.V . and BioMethanol Chemie Holding II B.V ., OCI Nitrogen B.V ., OCI Chem 4 B.V ., OCI Partners LP , OCI Beaumont LLC OCI Fertilizer T rading Ltd. (‘OFT’) Revolver USD 75.0 LIBOR + 2.50% Renewed annually 32.7 - 32.7 32.7 n/a OCI Nitrogen Inventory ﬁnancing USD 64.3 (EUR 57.4) 1.25% No deﬁned maturity , facility is uncommitted with monthly roll overs 64.3 - 64.3 64.3 Stand by letter of credit of EUR 9.0 million (USD 10.1 million) and OCI N.V . guarantee of EUR 90 million (USD 100.9 million) T otal 31 December 2019 4,662.3 4,392.7 269.6 n/a 1 As at 31 December 2020 the carrying amount of loans and borrowings excluded inter est of USD 24.4 million (2019: USD 79.1 million) NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 155 18. Loans and borrowings (continued) Covenants Certain loan agreements include ﬁnancial covenants. The deﬁnitions for calculating the ﬁnancial covenants applicable to the facilities within the Group can be summarized as follows: • Debt Service Coverage Ratio: Income Available (revenue earned less operating expenses) to Debt Service (net ﬁnance charges including the capital element of ﬁnance leases) or gross pr oﬁt less change in working capital to interest and principal payments. • Debt to Equity Ratio: Gross Debt (current and long-term debt obligations) to total Equity (the sole capital of the borrower). • Net Leverage Ratio: the Group’ s Net Debt (meaning the aggregate amount of all obligations of the Group, excluding intergr oup loans and cash and cash equivalents, but including ﬁnance leases) to adjusted EBITDA. • Interest Coverage Ratio: EBITDA, EBIT or Distribution Receipts (cash received by the borr ower by way of dividends or repayments of loans) to Finance Charges (meaning ﬁnance payments in r espect of borrowings including the inter est element of ﬁnance leases). As per 31 December 2020 all ﬁnancial covenants were met. In the event the respective borr owing company’ s would not comply with the covenant r equirements, in total an amount of USD 1,026.0 million of the loans would become immediately due. Refer to note 6.2 for additional discussion of the Company’ s liquidity risk. The exter nal borrowings include change in control clauses that enable the lenders to call the ﬁnancing pr ovided. Fair value measurement loans and borr owings Except for the IFCo bonds, the senior secured notes of OCI N.V . and the loan of Sorfert, the fair value of all other loans and facilities is calculated within hierarchy category level 2. The bonds of IFCo and OCI N.V . are measur ed following hierarchy category 1. The fair value of the loan of Sorfert cannot be determined as no observable market data is available. New and amended ﬁnancing arrangements in 2020 OCI N.V . In October 2020 OCI N.V . completed a dual-tranche bond offering consisting of USD 400.0 million senior secured ﬁxed rate notes due 2025 and EUR 400.0 million senior secur ed ﬁxed rate notes due 2025. The Dollar Notes bear interest at a rate of 4.625% per annum and the Eur o Notes bear interest at a rate of 3.625% per annum. The Notes were issued at par , are senior secured obligations of the Company and are guaranteed by certain of the Company’ s subsidiaries. Interest will be payable semi- annually . The proceeds fr om the offering, along with a drawing of approximately USD 290 million (equivalent) under the Company’ s revolving credit facility , were used to redeem the Company’ s approximately USD 1,155 million (equivalent) euro and US dollar -denominated senior secured notes due 2023 and to pay fees and expenses incurred in connection with the of fering. Fertiglobe In October 2020, Fertiglobe completed a USD 385 million reﬁnancing (USD 310 million term loan and USD 75 million RCF) maturing in 2025 at an interest rate of LIBOR + 2.00%. This facility will r eplace the existing credit facilities at EFC that would matur e in 2025 and 2026 with an interest rate of LIBOR + 3.75% on USD borrowings and CBE mid corridor + 0.75% on EGP borr owings. Proceeds fr om borrowings Proceeds fr om borrowings in 2020 totaled an amount of USD 2,070.4 million, which consisted of the net proceeds of the new ﬁnancing arrangements of OCI N.V , EFC, Fertiglobe Holding, new proceeds of the revolving cr edit facility at OCI N.V . and changes in the outstanding amounts at OCI Nitrogen and IFCo. Redemptions Redemptions of borrowings in 2020 totaled an amount of USD 2,396.0 million, which consisted of a partly repayment of bonds at OCI N.V ., repayment of borrowings at EFC, partly r epayment of the revolving cr edit facility at OCI N.V . and regular installments for borrowings and changes in the outstanding amounts of the revolving cr edit facilities at OCI Nitrogen, IFCo, Sorfert, EFC, Fertiglobe Holding and OFT . Undrawn bank facilities As of 31 December 2020, the Group had not drawn external bank facilities in the amount of USD 700.0 million. This relates to a trade ﬁnance facility of OFT and OFTS of USD 75.0 million, a working capital facility of IFCo of USD 50.0 million and external bank facilities of Fertiglobe Holding Ltd of USD 75.0 million and OCI N.V . of USD 500.0 million. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 156 19. Lease obligations The Group leases a number of of ﬁce spaces, warehouses, land, employee accommodation, computers, machinery and vehicles. Lease terms vary from 1 year to indeﬁnite r enewal options. Calculations of the lease obligation for leases with indeﬁnite renewal options ar e done using a lease term based on the expected renewal periods and can be mor e than 100 years. Lease obligations: $ millions Non-current lease obligations Current lease obligations T otal At 1 January 2019 189.7 26.5 216.2 Movement in the carrying amount: Payments - (30.1) (30.1) Accretion of inter est 3.9 1.9 5.8 Additions 18.8 7.9 26.7 Disposals (1.5) (0.3) (1.8) T ransfers (28.0) 28.0 - Modiﬁcations (15.3) (2.9) (18.2) Business combination Fertiglobe 76.4 10.0 86.4 Effect of movement in exchange rates 0.3 - 0.3 At 31 December 2019 244.3 41.0 285.3 Movement in the carrying amount: Payments - (45.9) (45.9) Accretion of inter est 8.2 0.4 8.6 Additions 24.7 6.1 30.8 Disposals (0.6) (0.7) (1.3) T ransfers (40.1) 40.1 - Modiﬁcations 3.6 1.4 5.0 Effect of movement in exchange rates 8.5 1.2 9.7 At 31 December 2020 248.6 43.6 292.2 20. T rade and other payables $ millions Note 2020 2019 T rade payables 298.6 281.7 T rade payables due to related parties (30) 81.4 85.0 Amounts payable under the securitization agreement 113.6 76.7 Accrued interest to non-contr olling interests 12.2 141.2 Other payables 228.7 114.7 Employee beneﬁt liabilities 12.9 14.6 Accrued expenses 235.8 202.1 Accrued interest 24.4 79.1 Deferred r evenue - 3.2 Other tax payable 13.0 6.3 Commodity derivative ﬁnancial instruments 8.7 17.4 T otal 1,029.3 1,022.0 Non-current 25.7 30.7 Current 1,003.6 991.3 T otal 1,029.3 1,022.0 Information about the Group’ s exposure to curr ency and liquidity risk is included in note 6. The carrying amount of ‘T rade and other payables’ approximates its fair value. Derivative ﬁnancial instruments Derivative ﬁnancial instruments consist of commodity gas hedges contracts in order to hedge futur e gas price levels. The fair value of these contracts amounts to USD 8.7 million as per 31 December 2020 (2019: USD 17.4 million). All derivatives included in trade and other payables are classiﬁed in the fair value hierarchy level 2. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 157 21. Provisions $ millions Claims and other provisions Donation provision T otal At 1 January 2020 13.6 118.7 132.3 Recorded during the year 27.8 - 27.8 Used during the year (0.2) - (0.2) Reversed - - - Effect of movement in exchange rates (0.8) 2.2 1.4 At 31 December 2020 40.4 120.9 161.3 Non-current 3.0 - 3.0 Current 37.4 120.9 158.3 T otal 40.4 120.9 161.3 Claims and other provisions The Group is involved in various litigations and arbitrations. In cases wher e it is probable that the outcome of the proceedings will be unfavorable, and the ﬁnancial outcome can be measur ed reliably , a provision has been r ecognized. Reference is made to note 28 for detailed information with respect to major ongoing litigations and claims for which no provision has been r ecognized. Donation provision On 13 November 2014, the Company announced that it had decided to transfer the rights to the amounts receivable fr om the ﬁrst installment already paid to the Egyptian T ax Authority in 2013 of EGP 2,500 million (approximately USD 360.0 million) to the T ahya Misr (‘Long Live Egypt’) Fund (refer ence is made to note 28 for the claim in relation to the OCI S.A.E. tax dispute). No formal agr eement has been drafted with the T ahya Misr Fund yet and no payments have been made to the fund. The transfer of rights has been approved by OCI’ s Board of Dir ectors on 12 November 2014. Following the guidance under IAS 37 (constructive obligations) the Company has presented the transfer of rights to the T ahya Misr Fund as a donation provision. In March 2015, the Company r eceived a cheque for EGP 1,904 million (approximately USD 266.2 million) fr om the Egyptian Authorities. At year end 2020 the carrying amount in US dollars had reduced to USD 120.9 million, due to the devaluation of the EGP since March 2015. Provision for indemniﬁcations As part of historical transactions, the Group has agr eed with the transaction parties on certain indemnities related to potential tax and legal exposur es for both parties. Potential outﬂows of economic resour ces related to these indemnities contain inherent uncertainties for which the Gr oup engaged renowned local and international law ﬁrms to examine OCI’ s legal position. No information is provided on the speciﬁc assumptions included in the estimate of outﬂows as it would prejudice the Gr oup’ s position in these disputes. Sorfert reinvestment case The Large Multinationals Directorate of the Algerian T ax Authorities (DGE) issued to Sorfert a letter in which its initial claim of DZD 7,296 million (USD 55.4 million) related to the alleged non-compliance of the requir ements for the tax exemption granted by the Agency Nationale de Developpement de l’Investissement (ANDI) was maintained. The DGE is of the opinion that Sorfert did not timely carry out the reinvestment obligations as r equired under ANDI exemption. As a result, the DGE r equires Sorfert to repay the full assumed tax beneﬁt it enjoyed in r elation herewith. Sorfert is of the opinion that it has complied with its reinvestment obligations as well as that the basis of any claim should in any case be limited to the source of income that is taxable (local sales only as export sales are exempted under domestic Algerian tax law) and as such Sorfert r ecorded a provision of USD 1.7 million. This position was examined by various reputable tax advisors who concurr ed with the opinion of Sorfert. 22. Development of cost of sales and selling, general and administrative expenses a. Expenses by natur e $ millions Note 2020 2019 Raw materials and consumables and ﬁnished goods 2,105.7 1,884.2 Maintenance and repair 128.4 104.5 Employee beneﬁt expenses (22b) 364.5 279.4 Depreciation and amortization (7) 592.2 544.7 Consultancy expenses 33.1 28.6 Other 57.4 86.6 T otal 3,281.3 2,928.0 Cost of sales 3,062.0 2,708.9 Selling, general and administrative expenses 219.3 219.1 T otal 3,281.3 2,928.0 b. Employee beneﬁt expenses $ millions Note 2020 2019 W ages and salaries 244.7 188.9 Social securities 7.8 8.1 Employee incentive plans 34.1 31.7 Pension cost 22.1 14.9 Share-based compensation expenses (22c) 7.9 6.6 Other employee expenses 47.9 29.2 T otal 364.5 279.4 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 158 22. Development of cost of sales and selling, general and administrative expenses (continued) The increase in employee beneﬁt expenses in 2020 compar ed to 2019 is mainly related to the full year consolidation of Fertil. During the ﬁnancial year ended 31 December 2020, the number of key executives was 4 (2019: 3 key executives), which repr esents the Executive Board members; Nassef Sawiris (Chief Executive Ofﬁcer from January 1st till August 1st; Executive Chair per August 1st), Hassan Badrawi (‘Chief Financial Ofﬁcer’) Maud de V ries (Chief Legal and Human Capital Ofﬁcer) and Ahmed El-Hoshy (Chief Executive Ofﬁcer per August 1st). Ahmed El-Hoshy is consider ed as key management personnel for the full year 2020. During the ﬁnancial year ended 31 December 2020, the number of staff employed in the Gr oup amounted to 3,682 employees (2019: 3,147 employees). c. Shar e-based compensation arrangements OCI has currently awar d agreements outstanding under four differ ent share-based compensation plans. In 2020 share based compensation A wards were granted under the existing Performance Shar e Unit Plan and Restricted Stock Unit Plan. Share option plans In 2020 no share options wer e exercised and all outstanding share options expir ed per 31 December 2020. Performance share plan In 2014, a new performance share plan was intr oduced for the Executive Board. The share plan comprises the conditional granting of shares in OCI. Each year a plan with a 3-year vesting period starts in which the Company’ s performance is measured based on total shareholder r etur n (‘TSR’) against a peer group of companies. The fair value of these awar ds has been calculated using Monte-Carlo simulations. The number of conditional shares corr esponds to a percentage (maximum of 150%) of the ﬁxed refer ence salary divided by the price of the share on the stock market on the ﬁrst day of the vesting period. The relative ranking that OCI achieves in the peer gr oup determines the deﬁnitive number of shares that ar e granted at the end of the vesting period. The remaining shares vested must be r etained by the members of the Executive Board for a period of 2 years. In 2017, in total 190,600 conditional shares have been granted with a fair value of EUR 3.4 million (fair value at grant date EUR 17.710 per share, using a volatility of 39.3%, a risk-fr ee rate of (0.7) percent and a dividend yield of 0.0%). At 30 September 2017, a total of 87,013 conditional shares wer e vested at a TSR of 55.4% resulting in a total number of shar es of 48,239 delivered. In 2020, a total of 103,587 conditional shares have been vested at a TSR of 77.0%, r esulting in a total number of shares of 79,762 delivered. In 2018, in total 166,564 conditional shares have been granted with a fair value of EUR 3.4 million (fair value at grant date EUR 20.770 per share, using a volatility of 37.5%, a risk-fr ee rate of (0.589) percent and a dividend yield of 0.0%). Bonus matching plan In 2014, a new bonus matching plan was introduced for the members of the Executive Boar d and Senior Management. In this plan members of the Executive Board and Senior Management ar e entitled to buy shares fr om their annual bonus. The shares will be withheld for a period of three years. After the 3-year period, the participants will receive a bonus shar e for each share of the plan. For the members of the Executive Board, the shar es vested must be retained for a period of 2 years. In 2017, 95,060 bonus matching rights were granted in the bonus matching plan with a fair value of EUR 1.6 million (with a fair value of EUR 16.59 at grant date equal of the share price at grant date calculated with a dividend yield of 0.0%). In September 2017, 14,496 shares wer e vested giving a total outstanding at 31 December 2017 of 80,564 bonus matching rights. In 2020, 80,564 shares wer e vested, resulting in no r emaining shares outstanding. In 2018, 93,451 bonus matching rights were granted in the bonus matching plan with a fair value of EUR 1.7 million (with a fair value of EUR 18.085 at grant date equal of the share price at grant date calculated with a dividend yield of 0.0%). At 31 December 2020, all shares wer e outstanding to be vested at their vesting date. In 2019 it was decided to discontinue the Bonus Matching Plan for all eligible employees. Current matching rights will continue to vest at their normal vesting date, but no new awards will be made after those made in 2018. Performance share units plan In 2019, a new performance share unit plan was intr oduced for the Executive Board as replacement for the performance share plan. The performance shar e unit plan comprises the conditional granting of shares in OCI. Each year a plan with a 3-year vesting period starts in which the Company’ s performance is measured based on total shar eholder return (‘TSR’) against a peer group of companies operating in a similar or the same market. Between 0% and 150% of this award will vest at the end of 3-year performance period based on the actual performance. The fair value of these awards has been calculated using a Monte-Carlo simulations model. The number of performance stock units comprising Shares has been calculated based on the average OCI N.V . closing sales price of the Shares as quoted in Euronext Amster dam on the date of the grant. The relative ranking that OCI achieves in the peer gr oup determines the deﬁnitive number of shares that are granted at the end of the vesting period. The r emaining shares vested must be retained by the members of the Executive Board for a period of 2 years. In 2019, in total 230,558 conditional shares have been granted with a fair value of EUR 3.6 million (fair value at grant date EUR 19.46 per share, using a volatility of 34.7%, risk-fr ee rate of (-0.659) percent and expected dividend yield of 0.0%). In 2020, in total 316,729 conditional shares have been granted with a fair market value of EUR 4.3 million (fair value at grant date EUR 13.69 per share), using a volatility of 34.5%, risk-fr ee rate of (-0.66) percent and expected dividend yield of 0.0%). NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 159 22. Development of cost of sales and selling, general and administrative expenses (continued) Restricted stock units plan For the level below the Board, a r estricted stock unit plan was implemented to replace the Bonus Matching Plan. First awards granted under this plan was made in 2019. Executive Dir ectors are not eligible for RSU grants. The restricted stock unit plan comprises the conditional granting of shar es in OCI. The total gross entitlement of an eligible employee under the applicable short-term incentive plan will be paid out partly in cash in accordance with the short-term incentive plan and partly in awar ds in accordance with this RSU plan. Shar es will vest for 1/3 of the restricted stock units comprising the award at the second anniversary of the date of grant and for 2/3 of the r estricted stock units comprising the award on the thir d anniversary of the date of grant subject to still being employed by OCI. The RSU entitles the participants to dividend equivalents. The restricted stock unit plan comprises the conditional granting of shares in OCI. In 2019, in total 206,253 conditional shares have been granted with a fair value of EUR 5.5 million (fair value at grant date of EUR 26,45 per share equals the shar e price at grant date calculated with a dividend yield of 0.0%). In 2020, in total 89,900 conditional shares have been granted with a fair value of EUR 0.95 million (fair value at grant date of EUR 10.52 per share equals the shar e price at grant date calculated with a dividend yield of 0.0%). The fair value of the RSUs awarded is based on OCI’ s share price at the grant date. Furthermor e, when measuring the fair value of RSU share awar ds, there may be an adjustment for any expected dividends. In this case, there will be no adjustment for dividends since the participants ar e entitled to dividend equivalents during the vesting period. 23. Other income $ millions 2020 2019 Insurance proceeds 3.7 3.3 Fertiglobe business combination 13.3 - Other 0.6 2.5 T otal 17.6 5.8 Insurance proceeds in 2020 of USD 3.7 million r elate to BioMCN. For the Fertiglobe business combination refer ence is made to note 2.2.1. 24. Other expenses $ millions Note 2020 2019 Loss on sale of scrapped assets - 0.9 Other 21 23.4 3.6 T otal 23.4 4.5 For the other expense related to the pr ovision for indemniﬁcations, reference is made to note 21. 25. Net ﬁnance cost $ millions 2020 2019 Interest income on loans and r eceivables 4.4 5.9 Foreign exchange gain 208.1 54.9 Finance income 212.5 60.8 Interest expense and other ﬁnancing costs on ﬁnancial liabilities measur ed at amortized cost (307.5) (311.8) Foreign exchange loss (104.9) (75.9) Finance cost (412.4) (387.7) Net ﬁnance cost recognized in pr oﬁt or loss (199.9) (326.9) The foreign exchange gains and losses mainly r elate to external ﬁnancing, FX derivatives and to the revaluation of inter company balances in foreign currencies (for which the statement of pr oﬁt or loss impact is not eliminated in the consolidated ﬁnancial statements). In 2020, the Company recor ded a gain of USD 45.6 million resulting fr om a settlement of its FX derivatives. Included in the interest expense and other ﬁnancing costs on ﬁnancial liabilities measured at amortized cost is a call pr emium of USD 33.3 million (2019: USD 6.3 million) related to early r edemption of bonds. For the interest expense r elated to lease obligations reference is made to note 19. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 160 26. Earnings per share 2020 2019 i. Basic Net (loss) attributable to shareholders (177.7) (334.7) Weighted average number of or dinary share (Basic) 209,709,296 209,461,639 Basic earnings per ordinary share (0.847) (1.598) ii. Diluted Net (Loss) attributable to holders of ordinary shar eholders (177.7) (334.7) Weighted average number of or dinary shares (Basic) 209,709,296 209,461,639 Adjustment for assumed equity-settled share-based compensation anti-dilutive anti-dilutive Diluted earnings per ordinary share (0.847) (1.598) Weighted average number of or dinary shares calculation shares 2020 2019 Issued ordinary shar es at 1 January 210,306,101 210,306,101 Effect of tr easury shares held (596,805) (844,462) W eighted average number of ordinary shares outstanding as per 31 December 209,709,296 209,461,639 27. Segment reporting OCI’ s reportable segments are consistent with how the Chief Operating Decision Maker (‘CODM‘) manages the business operations and views the markets it serves. The reportable segments ar e: Methanol US, Methanol Europe, Nitr ogen US, Nitrogen Europe and Fertiglobe. The organizational structure of the segments is based on a number of factors that the CODM uses to evaluate, view , and direct business operations. Segment policy The Company derives the results of the business segments dir ectly from its internal management reporting system. All segments ar e managed separately because they require dif ferent operating strategies and use their own assets and employees. The entities grouped together in each segment have similar regulatory envir onments, macroeconomic conditions, banking, insurance and public utilities. The Group has two r evenue streams from contracts with customers that r elate to the sale of goods, namely , Nitrogen and Methanol. Segment revenues includes r evenues from sales to external customers and intersegment revenues. EBITDA, Adjusted EBITDA and Proﬁt / (loss) ar e the primary performance measure used by our CODM to evaluate operating results and allocate capital r esources among segments. These are also the proﬁtability measur es used to set management and executive incentive compensation goals. ‘Other’ consists of share-based compensation and certain corporate general and administrative expenses that are not allocated to the segments. Segment r esults, assets and liabilities include items directly attributable to a segment as well as those that can be reasonably and consistently r e-allocated. A summary description of each reportable segment is as follows: Methanol US This segment consists of OCI Beaumont (OCIB), Natgasoline LLC and the trading entities: OCI Methanol and Marketing LLC (OMM US). OCI Beaumont is an integrated methanol and ammonia production facility that is strategically located on the T exas Gulf Coast near Beaumont. Natgasoline LLC is a world scale methanol production complex in Beaumont, T exas. OCI and its partner , Consolidated Energy Limited (CEL)/G2X, each own 50% stakes. Natgasoline LLC is an equity-accounted investee of the Group, r eference is made to note 10. Natgasoline commenced production in 2018 and due to the similarities in r egulatory environment, products and customer base, this equity accounted investee has been included in the ‘Methanol US’ segment as of 2018 on a proportionally consolidated basis. The elimination column is used to eliminate the proportionally consolidated ﬁgur es of Natgasoline that are included in the US Methanol segment and to include the investment in, and results fr om Natgasoline (associate) and thereby reconcile to the Group’ s reported ﬁgur es. OCIB and Natgasoline sell mainly domestically; primarily to industrial customers in and around the U.S. Gulf Coast through pipeline connections to adjacent customers, port access with dedicated methanol and ammonia import / export jetties, and truck loading facilities for both methanol and ammonia. OMM US is a trading entity that sells products pr oduced by OCIB and Natgasoline. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 161 27. Segment reporting (continued) Methanol Europe This segment consists of BioMCN, located at Delfzijl in the Netherlands, OCI Fuels Ltd, OCI Fuels B.V . and OCI Methanol Marketing B.V . (OMM EU). BioMCN is one of Europe’ s largest methanol producers. BioMCN produces two types of methanol: bio-methanol and r egular (also known as grey) methanol. OCI Fuels is a trading entity that supplies biogas, which is processed into bio-methanol and bio-fuel, and sells the bio-methanol products pr oduced by BioMCN. OMM EU is a trading entity that sells grey methanol products pr oduced by BioMCN. Nitrogen US This segment consists of Iowa Fertilizer Company (IFCo), a wholly owned nitrogen fertilizer complex in Iowa and the trading entity , N-7. IFCo products ar e sold via the trading entity . Nitrogen Eur ope This segment consists of OCI Nitrogen. OCI Nitr ogen is Europe’ s second largest integrated nitrates fertilizer producer and the world’ s largest melamine producer with pr oduction site in Geleen, the Netherlands. Fertiglobe (previously Nitr ogen MENA) During 2019 OCI and ADNOC completed a transaction to combine ADNOC’ s fertilizer business into OCI’ s Middle East and North Africa (MENA) nitrogen fertilizer platform, creating Fertiglobe. The Fertiglobe segment consists of the following entities: Egyptian Fertilizer Company (EFC), Egypt Basic Industries Corporation (EBIC), Sorfert, Fertil, Fertiglobe Distribution (FD), OCI Fertilizer T rading (OFT), OCI Fertilizer T rade and Supply (OFTS) and OCI S.A.E. EFC is a granular urea pr oducer in Egypt. EBIC is an ammonia plant in Egypt. Sorfert is a partnership with Algeria’ s state-owned oil and gas authority and is one of the largest nitrogen fertilizer pr oducers in North Africa. Fertil is a producer of urea fertilizer in Abu Dhabi. FD, OFT and OFTS are trading entities based in Abu Dhabi, Dubai and the Netherlands. Other This segment consists of all remaining entities of the Gr oup. 2020 $ millions Methanol US 1 Methanol Europe Nitrogen US Nitrogen Europe Fertiglobe Other Eliminations T otal T otal revenues 465.7 339.1 547.9 752.9 1,550.8 1.3 (183.6) 3,474.1 EBITDA 2 148.2 23.0 181.0 125.1 437.5 (54.2) (81.4) 779.2 Adjusted EBITDA 2 135.6 21.6 181.0 132.3 441.0 (39.4) (2.3) 869.8 Income from equity- accounted investees - - - 2.3 - - (39.0) (36.7) Depreciation and amortization (153.1) (28.5) (142.7) (82.9) (268.0) (3.8) 86.8 (592.2) Finance income 0.6 0.1 0.3 7.2 33.6 280.3 (109.6) 212.5 Finance expense (34.0) (4.4) (128.6) (9.9) (87.0) (289.5) 141.0 (412.4) Income tax (expense) / income 1.4 0.8 (0.1) (13.4) (40.9) 7.7 - (44.5) Net proﬁt / (loss) (36.9) (9.0) (90.1) 28.4 75.2 (59.6) (2.1) (94.1) Equity-accounted investees - - - 15.6 - 0.2 452.9 468.7 Capital expenditures PP&E 56.5 38.1 9.8 92.0 66.4 0.7 (10.7) 252.8 T otal assets 1,605.7 436.6 2,192.4 743.9 4,616.3 102.0 (599.9) 9,097.0 1 Including ammonia at OCIB 2 OCI N.V . uses Alternative Performance Measures (‘APM’) to provide a better understanding of the underlying developments of the performance of the business. The APMs are not deﬁned in IFRS and should be used as supplementary information in conjunction with the most directly comparable IFRS measures. The deﬁnition of the APM and a detailed r econciliation between the APM and the most directly comparable IFRS measur e can be found on pages 197-198 of this report. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 162 27. Segment reporting (continued) 2019 $ millions Methanol US 1 Methanol Europe Nitrogen US Nitrogen Europe Fertiglobe Other Eliminations T otal T otal revenues 512.1 280.1 541.0 812.1 1,055.5 - (169.1) 3,031.7 EBITDA 2 72.2 (6.3) 219.5 150.5 369.8 (107.7) (48.3) 649.7 Adjusted EBITDA 2 91.8 (4.9) 219.5 152.4 374.3 (84.7) - 748.4 Income from equity- accounted investees 1.4 - - 2.6 - (0.1) (60.5) (56.6) Depreciation and amortization (151.6) (14.6) (152.7) (71.3) (222.6) (4.4) 72.5 (544.7) Finance income 0.9 - 1.1 4.1 15.1 157.2 (117.6) 60.8 Finance expense (69.3) (1.2) (117.5) (7.2) (151.2) (195.2) 153.9 (387.7) Income tax (expense) / income (0.1) (24.4) (0.5) (16.6) (15.1) 34.8 - (21.7) Net proﬁt / (loss) (146.3) (46.5) (50.1) 62.1 (4.0) (115.4) - (300.2) Equity-accounted investees - - - 14.4 - 0.7 491.8 506.9 Capital expenditures PP&E 57.6 66.6 36.7 80.9 50.6 0.8 (5.0) 288.2 T otal assets 1,627.2 369.2 2,269.0 675.1 4,859.5 248.0 (628.4) 9,419.6 1 Including ammonia at OCIB 2 OCI N.V . uses Alternative Performance Measures (‘APM’) to provide a better understanding of the underlying developments of the performance of the business. The APMs are not deﬁned in IFRS and should be used as supplementary information in conjunction with the most directly comparable IFRS measures. The deﬁnition of the APM and a detailed r econciliation between the APM and the most directly comparable IFRS measur e can be found on pages 197-198 of this report. Until 2019 OCI Fuels Ltd. was included in segment Methanol US. Effective 1 January 2020, OCI Fuels Ltd. will be combined with OCI Fuels B.V . in the segment Methanol Europe. The comparative numbers of 2019 are r estated to reﬂect that change. Geographical information of continuing operations The geographic information below analyses the Group’ s revenue (by destination of the goods) and non- current assets (by the Company wher e the activities are being operated). OCI has no single customer that repr esents 10 percent or more of r evenues and therefor e information about major customers is not provided. Revenue Non-current assets $ millions 2020 2019 2020 2019 Europe 1,218.8 1,235.8 878.3 775.2 Americas 1,281.2 1,330.3 2,916.1 3,123.4 Africa & Middle East 302.0 184.7 3,697.2 4,098.6 Asia & Oceania 672.1 280.9 21.6 1.6 T otal 3,474.1 3,031.7 7,513.2 7,998.8 The key performance obligation of the OCI group is always the supply of pr oducts as speciﬁed in the contracts with customers, possible additional performance obligations included are transportation and related cost of insurance, depending on the incoterms. The Gr oup has two revenue streams from contracts with customers that r elate to the supply of products i.e. Nitrogen and Methanol. No impairment losses on receivables have been r ecognized (reference is made to note 6.1 and note 9). Based on the IFRS 15 accounting policies adopted, the following modiﬁcations to the contracts are allowed: discounts and rebates. They ar e all taken into account when presenting the segment revenues. Time value of money is not considered to be relevant for the amendment of the r evenue amount, as the payment terms are short. Also, ther e are no non-cash considerations that would need to be disclosed separately . No information is provided about r emaining performance obligations at current and comparative year end date that have an original expected duration of one year or less, as allowed by IFRS 15. 28. Contingencies Contingent liabilities Letters of guarantee / letters of credit OCI has a guarantee facility with Rabobank for a maximum guarantee amount of USD 140.6 million (EUR 115.0 million). Under this guarantee facility , USD 83.3 million (EUR 68.2 million) has been utilized. The facility is used to issue guarantees on behalf of the subsidiaries, mainly for operational purposes. OCI has an uncommitted surety facility with T okio Marine Europe SA and Zürich Insurance PLC for a maximum guarantee amount of USD 30.6 million (EUR 25.0 million). This facility is fully utilized. The facility is used to issue a performance guarantee on behalf of OCI Nitrogen BV . OCI also has an uncommitted facility for the issuance of payment undertakings with BNP Paribas for an amount of USD 93.7 million, fully utilized. Outstanding letters of credit as at 31 December 2020 (uncover ed portion) amounted to nil. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 163 28. Contingencies (continued) Litigations and claims In the normal course of business, the Group entities and joint ventur es are involved in some arbitration or court cases as defendants or claimants. These litigations are car efully monitored by the entities’ management and legal counsels, and are r egularly assessed with due consideration for possible insurance coverage and recourse rights on thir d parties. OCI does not expect these proceedings to result in liabilities that have a material ef fect on the Company’ s ﬁnancial position. In cases where it is pr obable that the outcome of the proceedings will be unfavorable, and the ﬁnancial outcome can be measured r eliably , a provision has been recognized in the ﬁnancial statements which is disclosed in note 21 ‘Provisions’. It should be understood that, in light of possible futur e developments, such as (a) potential additional lawsuits, (b) possible future settlements, and (c) rulings or judgments in pending lawsuits, certain cases may result in additional liabilities and r elated costs. At this point in time, OCI cannot estimate any additional amount of loss or range of loss in excess of the recor ded amounts with sufﬁcient certainty to allow such amount or range of amounts to be meaningful. Mor eover , if and to the extent that the contingent liabilities materialize, they are typically paid over a number of years and the timing of such payments cannot be predicted with conﬁdence. While the outcome of said cases, claims and disputes cannot be predicted with certainty , we believe, based upon legal advice and information received, that the ﬁnal outcome will not materially af fect our consolidated ﬁnancial position but could be material to our results of operations or cash ﬂows in any one accounting period. Sorfert legal case On 5 March 2018, the lower criminal court of Oran (T ribunal du pôle pénal spécialisé d’Oran) issued a judgment against Sorfert regar ding an alleged violation of exchange control regulations as well as the regulation of public markets and public service delegations. The lower court or dered Sorfert to pay a ﬁne in the amount of 5.5 billion Algerian dinars (about USD 42.1 million) and an ofﬁcer of the company received a ﬁne of DZD 2.8 billion (about USD 21.1 million). On 7 Mar ch 2018, Sorfert lodged an appeal with the Court of Appeal of Oran, Algeria who upheld the verdict against Sorfert in its judgment render ed on 28 November 2018. In January 2019, Sorfert lodged an appeal against this judgment with the Supreme Court. Sorfert disputes the validity of the judgment and continues to vigor ously defend its case. T o date, no Supreme Court hearing has been scheduled and during the appeal period the enforcement of the judgment is suspended. V arious renowned local and international law ﬁrms have examined OCI’ s legal position. No provision has been recor ded by the Group related to this matter . EBIC free zone status On 20 April 2013, the Administrative Court ruled in favor of EBIC for the reinstatement of EBIC to its previous status as a fr ee zone entity in Egypt. The General Authority for Investment and Free Zones (‘GAFI’) ﬁled an appeal before the Administrative Court. The Court has not yet r endered a decision. OCI concluded to release the (deferr ed) tax liabilities totaling USD 138.2 million at 31 December 2015 and no tax ﬁlings have been done by EBIC since the ﬁling for the year 2011. On 4 January 2018, GAFI issued an executive decision that allows for the enforcement of the Administrative Court’ s judgment in favor of EBIC and EBIC received the Fr ee Zone Status tax card. EBIC’ s free zone status will remain subject to the outcome of the Appeal before the Administrative Court. OCI S.A.E. tax dispute In October 2012, the Egyptian T ax Authority (‘ET A ’) raised a tax evasion claim against our Egyptian subsidiary , Orascom Construction Industries S.A.E. (‘OCI S.A.E.’). The tax dispute related to the sale of OCI S.A.E.’ s cement business to Lafarge SA in 2007. This was ﬁled against OCI S.A.E. despite there being no ofﬁcial investigation. Although OCI S.A.E. and its legal and tax advisors believed that the aforementioned transaction was exempted of tax, management enter ed into a settlement agreement whereby EGP 7.1 billion would be paid over a 5-year period. The agreement was followed by payment of a ﬁrst installment of EGP 2.5 billion in 2013. Following the change in government, the company was exonerated from the tax claim by the Egyptian Public Prosecutor on 18 February 2014 and subsequently by the ET A ’ s Independent Appeals Committee on 4 November 2014. The ET A appealed this decision without including new facts or documents. The appeal is ongoing. OCI S.A.E. and its local counsel believe the likelihood of a judgment in favor of the ET A is not probable. On 13 November 2014 OCI S.A.E. announced that it would transfer its rights to EGP 1.9 billion undue paid tax amounts to the T ahya Misr Fund and recorded a pr ovision for this amount, refer ence is made to note 21 Provisions. Despite the ET A Independent Appeals Committee ruling in favor of OCI S.A.E., OCI S.A.E. was still held to pay EGP 900 million. OCI S.A.E. has lodged a reimbursement claim for this amount. As this dispute occurred prior to the demerger of the Engineering and Construction Gr oup that formed Orascom Construction PLC (‘OC’) in 2015, any liabilities and any recoveries ar e shared on a 50:50 basis between OCI N.V . and OC. Should the ET A win their appeal, OCI N.V .’ s maximum share of the tax claim would be EGP 2.3 billion, which equates to approximately USD 146.0 million. Asset retir ement obligations Sorfert has a contractual asset retir ement obligation in connection with the lease of its land. This asset retir ement obligation is being disclosed as a contingent liability because it is not possible to determine a reliable estimate in both timing and value of this obligation. OCI Nitrogen enter ed into agreements with DSM and associated company Sitech for respectively the lease of the sites (land) on which it operates its plant and site services/usage. These agreements have an indeﬁnite term and include an asset dismantling obligation and the obligation to clean up environmental pollution occurr ed after zero measurement. These obligations have not been accounted for , since the company has no plans to end its business activities in the foreseeable futur e as such the ﬁnancial impact is assessed as not material by the company’ s management. Fertil entered into an agr eement with ADNOC for the lease of the land on which it operates its plant. The agreement has an indeﬁnite term and includes an asset dismantling obligation and the obligation to clean up environmental pollution occurr ed after decommissioning. This obligation has not been accounted for , since the company has no plans to end its business activities in the foreseeable futur e as such the ﬁnancial impact is assessed as not material by the company’ s management. Contingent assets A sequence of historical transactions resulted in (gr oss) deductible temporary tax differences of USD 1.4 billion. However , due to a differ ence in interpretation of local tax regulations, the deductible temporary differ ences do currently not yet meet the recognition criteria of IAS 12/ IFRIC 23. The gr oup company concerned is currently under examination of the tax authorities in the respective jurisdiction. A deﬁnitive conclusion on the treatment is not expected within a short timeframe. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 164 29. Commitments 29.1 Biogas purchase agr eements OCI enters into biogas purchase agr eements around the USA for the production of bio-methanol in the methanol plant in Beaumont (T exas, USA) and for sale to the USA transportation market. Through these long-term agreements OCI pur chases biogas for a ﬁxed price. Per 31 December 2020, an expected 13.0 million mmbtu biogas will be purchased over the coming years (2021 - 2026). The total expected purchase commitment per 31 December 2020 amounts to USD 158.2 million. T otal contract value is 21.6 million mmbtu and the total contract value is USD 260.1 million. 29.2 Capital commitments Capital commitments relate to pur chase commitments of property , plant and equipment. $ millions 2020 2019 OCI Beaumont - 15.3 Sorfert 19.9 32.7 Fertil 8.5 8.9 BioMCN 7.6 13.7 OCI Nitrogen 7.9 21.9 EFC 1.3 3.5 IFCo 4.6 1.8 T otal 49.8 97.8 30. Related party transactions T ransactions with related parties – normal course of business T ransactions with related parties occur when a r elationship exists between the Company and their directors and key management personnel. The Company engages in two types of r elated party transactions: • Those with NNS Luxembourg Sarl for occasional consultancy services and the Executive Chair’ s travel as per his right to expense the use of a private aircraft for OCI-r elated business travel; and • The Company’ s former construction arm which was divested on 7 March 2015 and incorporated as a separate legal entity in the United Arab Emirates. The Sawiris Family , the majority shareholders of OCI, also owns the majority of the outstanding shares of OC, which qualiﬁes OC and its subsidiaries to be classiﬁed as related parties. OCI has ongoing construction contracts with OC Group. The transactions with the following entities of the OC Group ar e presented in the ﬁnancial statements as related party transactions: • Orascom Construction PLC (‘OC’) • OCI Construction Holding Cyprus • Orascom E&C (‘OEC’) • Contrack International Inc. (‘Contrack’) • Orascom Construction Egypt NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 165 30. Related party transactions (continued) The following is a list of signiﬁcant related party transactions and outstanding amounts as at 31 December 2020: Related party Relation Revenue transactions during the year AR outstanding at year end Purchase transactions during the year AP outstanding at year end Loans receivable Interest income Orascom Construction Egypt OC group company - - - 0.9 - - OCI Construction Holding Cyprus OC group company - - - 0.8 - - Orascom Construction PLC OC gr oup company - - - 0.2 - - NNS Luxembourg Sarl Related via shareholder 0.2 0.2 Nassef Sawiris Executive Chair - - 0.7 0.2 - - T otal - - 0.9 2.3 - - The following is a list of signiﬁcant related party transactions and outstanding amounts as at 31 December 2019: Related party Relation Revenue transactions during the year AR outstanding at year end Purchase transactions during the year AP outstanding at year end Loans receivable Interest income Orascom Construction Egypt OC group company - - - 0.3 - - Contrack International OC group company - - 0.1 0.5 - - OCI Construction Holding Cyprus OC group company - - - 0.8 - - Orascom Construction PLC OC gr oup company - 0.2 - - - - NNS Luxembourg Sarl Related via shareholder - - 0.2 7.1 - - Nassef Sawiris CEO - - 1.0 0.2 - - T otal - 0.2 1.3 8.9 - - T ransactions with associates and joint ventures OCI conducts transactions with its associates and joint ventures (as deﬁned in note 3.2, together “Equity-accounted investees”) in the ordinary course of business by buying and selling goods and services from and to various Equity-accounted investees within the gr oup. These associates and joint ventures ar e: • Firewater LLC • Natgasoline LLC • Fitco OCI Agro S.A. • Shanxi Fenghe Melamine Company Ltd. • Nitrogen Iberian Company SL • Sitech Manufacturing Services C.V . • Sitech Utility Holding Beheer B.V • Sitech Utility Holding C.V . • Sitech Services B.V . • Utility Support Group B.V . The following is a list of signiﬁcant related party transactions and outstanding amounts as at 31 December 2020: Related party Relation Revenue transactions during the year AR outstanding at year end Purchase transactions during the year AP outstanding at year end Loans receivable Interest income Natgasoline LLC Related via an associate 6.4 - 130.8 20.8 - - Sitech Manufacturing Services C.V . Associate - 0.3 138.4 52.0 - - Utility Support Group B.V . Related via an associate 13.3 1.2 53.3 4.5 56.8 1.8 Sitech Services B.V . Associate - - 17.4 2.2 - - OCI Nitrogen Iberian Company Joint venture 17.8 - - - - - Shanxi Fenghe Melamine Co Ltd. Joint venture 0.5 0.1 15.1 - - - T otal 38.0 1.6 355.0 79.5 56.8 1.8 NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 166 30. Related party transactions (continued) The following is a list of signiﬁcant related party transactions and outstanding amounts as at 31 December 2019: Related party Relation Revenue transactions during the year AR outstanding at year end Purchase transactions during the year AP outstanding at year end Loans receivable Interest income Natgasoline LLC Related via an associate 6.7 0.2 143.7 34.9 - - Sitech Manufacturing Services C.V . Associate - - 123.9 29.3 - - Utility Support Group B.V . Related via an associate 17.0 3.1 64.1 8.2 52.1 1.8 Sitech Services B.V . Associate - - 16.6 2.6 - - OCI Nitrogen Iberian Company Joint venture 13.4 - - 1.1 - - Shanxi Fenghe Melamine Co Ltd. Joint venture - 0.1 20.6 - - - T otal 37.1 3.4 368.9 76.1 52.1 1.8 T ransactions and balances with equity-accounted investees and related parties As these are transactions with Equity-accounted investees and r elated parties, the terms and conditions may not necessarily be the same as transactions negotiated between third parties. Management believes that the terms and conditions of all transactions with our Equity-accounted investees and related parties ar e generally no less favorable to either party than those that could have been negotiated with unafﬁliated parties with r espect to similar services. The loan receivable balance fr om Utility Support Group consists of 2 loans: • A Credit Facility of EUR 44.0 million that bears interest at a rate of 6 month Euribor + 3% (ﬂoor of 3.5% all in rate) and is repayable on 30 September 2021. • A Loan of EUR 2.4 million that bears interest at a rate of 12 month Euribor + 1.7% (no ﬂoor) and is repayable on 30 September 2021. 31. Remuneration of the Board of Dir ectors (key management personnel) We consider ed the members of the Board of Directors (Executive and Non-executive) to be the key management personnel as deﬁned in IAS 24 ‘Related parties’. For transactions with key management personnel refer ence is made to note 30. No other beneﬁts or remuneration were pr ovided to or have been entered into with above mentioned key management personnel except as disclosed below . Remuneration of the Directors During the ﬁnancial year ended 31 December 2020, the total remuneration costs r elating to the Executive Directors amounted to USD 11.9 million (2019: USD 8.9 million) consisting of the elements listed in the table below: 2020 Age Base salary 1 Annual bonus Share-based compensation T otal remuneration 1 N. Sawiris 59 1,583,334 - 2,393,191 3,976,525 H. Badrawi 44 1,150,000 878,715 1,193,956 3,222,671 M. de V ries 48 526,667 402,426 356,049 1,285,142 A. El-Hoshy 36 1,091,667 921,032 1,420,277 3,432,976 T otal 4,351,668 2,202,173 5,363,473 11,917,314 1 These ﬁgures exclude employer’ s social security payments (USD 0.6 million). 2019 Age Base salary 1 Annual bonus Share-based compensation T otal remuneration 1 N. Sawiris 58 2,000,000 1,200,000 2,641,951 5,841,951 H. Badrawi 43 1,150,000 552,000 863,471 2,565,471 M. de V ries 47 280,000 2 134,400 108,060 552,460 T otal 3,430,000 1,886,400 3,613,482 8,929,882 1 These ﬁgures exclude employer’ s social security payments (USD 0.6 million) and medical insurance, if applicable. 2 With effect from 1 June 2019. As at 31 December 2020, the Executive Directors held no stock options (2019: 35,000). The 35,000 stock options outstanding expired during 2020. Mr . Badrawi participated in this plan before he was appointed as a boar d member for OCI N.V . Outstanding year end 2019 Granted Exercised Expired Outstanding year end 2020 Exercise price Expiration H. Badrawi 35,000 - - 35,000 - - 31-12-2020 T otal 35,000 - - 35,000 - - - NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 167 31. Remuneration of the Board of Dir ectors (key management personnel) (continued) At 31 December 2020, the Executive Directors held 713,851 conditional performance shares (2019: 411,478 excluding the conditional performance shares granted to A. El-Hoshy prior to his appointment to the Board). Outstanding year end 2019 Granted conditional Vested Less / more due to TSR Outstanding year end 2020 V esting date N. Sawiris 103,587 - (79,762) (23,825) - 25-02-2020 84,873 - - - 84,873 25-02-2021 116,002 - - - 116,002 07-02-2022 - 135,354 - - 135,354 07-02-2023 N. Sawiris total 304,462 135,354 (79,762) (23,825) 336,229 H. Badrawi 40,315 - - - 40,315 25-02-2021 66,701 - - - 66,701 07-02-2022 - 77,829 - - 77,829 07-02-2023 H. Badrawi total 107,016 77,829 - - 184,845 M. de V ries - 32,485 - - 32,485 07-02-2023 M. de V ries total - 32,485 - - 32,485 A. El-Hoshy 41,376 1 - - - 41,376 25-02-2021 47,855 1 - - - 47,855 07-02-2022 - 71,061 - - 71,061 07-02-2023 A. El-Hoshy total 89,231 1 71,061 - - 160,292 T otal 500,709 316,729 (79,762) (23,825) 713,851 1 These conditional performance shares wer e granted before appointment to the Board. As at 31 December 2020, the Executive Directors held 38,196 bonus matching shar es (2019: 53,834, excluding the bonus matching shares granted to A. El-Hoshy prior to his appointment to the Boar d). Outstanding year end 2019 Granted Vested Outstanding year end 2020 V esting date N. Sawiris 21,571 - (21,571) - 11-05-2020 1 17,190 - - 17,190 09-04-2021 N Sawiris total 38,761 - (21,571) 17,190 H. Badrawi 7,500 2 - (7,500) - 14-04-2020 1,398 - - 1,398 09-04-2021 H. Badrawi total 8,898 - (7,500) 1,398 M. de V ries 1,200 2 - (1,200) - 14-04-2020 4,975 2 - - 4,975 09-04-2021 M. de V ries total 6,175 2 - (1,200) 4,975 A. El-Hoshy 12,719 2 - (12,719) - 14-04-2020 14,633 2 - - 14,633 09-04-2021 A. El-Hoshy total 27,352 2 - (12,719) 14,633 T otal 81,186 - (42,990) 38,196 1 The Matching rights granted to N. Sawiris could not vest on 14 April 2020, as OCI was in a Closed T rading Period (share based transactions r elated to the 2017 Bonus Matching Plan were not allowed during this period under the Insider T rading / Market Abuse Regulations). Accordingly , the 2017 Matching Awar d vested on 11 May 2020 (the ﬁrst trading day after the Closed T rading Period). 2 These bonus matching shares outstanding wer e granted before appointment to the Board. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 168 31. Remuneration of the Board of Dir ectors (key management personnel) (continued) As at 31 December 2020, the Executive Directors held 61,081 RSU shar es (2019: 14,263 excluding RSU shares granted to A. El-Hoshy prior to his appointment to the Boar d). Outstanding year end 2019 Granted Vested Outstanding year end 2020 V esting date M. de V ries 4,754 - - 4,754 17-04-2021 9,509 - - 9,509 17-04-2022 M. de V ries total 14,263 - - 14,263 A. El-Hoshy 9,115 - - 9,115 17-04-2021 18,231 - - 18,231 17-04-2022 - 6,491 - 6,491 07-02-2022 - 12,981 - 12,981 07-02-2023 A. El-Hoshy total 27,346 19,472 - 46,818 T otal 41,609 19,472 - 61,081 In 2020, the total remuneration costs r elating to the Non-Executive Directors amounted to USD 1.7 million (2019: USD 1.5 million) consisting of the elements in the table below: 2020 Annual ﬁxed fee Audit committee membership Additional fee Nomination governance and remuneration committee Health safety environment committee T otal M. Bennett 300,000 - - 7,500 - 307,500 J. T er W isch 1 69,643 9,286 - 3,482 - 82,411 S. Schat 150,000 20,000 - 20,000 - 190,000 A. Montijn- Groenewoud 150,000 - - 7,500 10,000 167,500 R.J. van de Kraats 150,000 25,000 - 7,500 - 182,500 G. Heckman 150,000 - - - 7,500 157,500 J. Guiraud 150,000 20,000 - 7,500 - 177,500 D. Welch 150,000 - 90,000 - 7,500 247,500 D. Fraser 150,000 20,000 - - - 170,000 H. van de Kerkhof 2 29,348 - - - 1,467 30,815 T otal 1,448,991 94,286 90,000 53,482 26,467 1,713,226 1 Appointment ended on 17 June 2020. 2 Appointed on 20 October 2020. 2019 Annual ﬁxed fee Audit committee membership Additional fee Nomination governance and remuneration committee Health safety environment committee T otal M. Bennett 290,000 - - 7,500 3,750 301,250 J. T er W isch 145,000 20,000 - 7,500 - 172,500 S. Schat 145,000 20,000 - 17,500 - 182,500 A. Montijn- Groenewoud 145,000 - - - 8,750 153,750 R.J. van de Kraats 145,000 25,000 - 7,500 - 177,500 G. Heckman 145,000 - - - 8,750 153,750 J. Guiraud 145,000 20,000 - 7,500 - 172,500 D. Welch 1 88,710 - - - 3,750 92,460 D. Fraser 1 88,710 10,000 - - - 98,710 T otal 1,337,420 95,000 - 47,500 25,000 1,504,920 1 Appointed on 29 May 2019. 32. Subsequent events Iowa Fertilizer Company redemption of bonds On February 2, 2021 Iowa Fertilizer Company redeemed the outstanding principal amount of the 5.875% of USD 147.2 million. This transaction resulted in additional r ecurring cash interest savings and marks the continuation of the company’ s ﬁnancial policy to optimize its capital structure. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Consolidated Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 169 33. External auditors’ fee The service fees recognized in the ﬁnancial statements 2020 for the service of KPMG amounted to USD 4.7 million (2019: USD 5.3 million). Other assurance services provided to the Gr oup include services related to bond of ferings, voluntary audit of other ﬁnancial statements, agreed upon procedur es related to covenant reporting and other statutory r equirements. The amounts per service category are shown in the following table: T otal service fee of which KPMG Accountants N.V . (The Netherlands) $ millions 2020 2019 2020 2019 Audit of group ﬁnancial statements 3.8 4.3 2.2 2.4 Other assurance services 0.8 0.9 0.7 0.5 T otal assurance services 4.6 5.2 2.9 2.9 T ax services 0.1 0.1 - - Sundry services - - - - T otal 4.7 5.3 2.9 2.9 34. List of principal subsidiaries as per 31 December 2020 Companies Country Percentage of interest Consolidation method Fertiglobe Holding UAE 58.00 Full OCI Fuels B.V . The Netherlands 100.00 Full OCI Methanol Marketing B.V . The Netherlands 100.00 Full OCI Nitrogen B.V . The Netherlands 100.00 Full BioMCN B.V . The Netherlands 100.00 Full Iowa Fertilizer Company LLC United States 100.00 Full OCI USA Inc. United States 100.00 Full OCI Partners LP / OCI Beaumont United States 100.00 Full N-7 LLC United States 50.00 Full OCI Methanol Marketing LLC United States 100.00 Full Key subsidiaries held via Fertiglobe holding Ruwais Fertilizers Industries Ltd (Fertil) UAE 100.00 Full Egypt Basic Industries Corporation Egypt 60.00 Full Egyptian Fertilizers Company Egypt 99.96 Full Sorfert Algérie Spa Algeria 50.99 Full Orascom Construction Industries S.A.E. Egypt 99.96 Full Fertiglobe Distribution Limited UAE 100.00 Full OCI Fertilizer T rade and Supply UAE 100.00 Full OCI Fertilizer T rading Limited UAE 100.00 Full A full list of afﬁliated companies will be available for public inspection at the Commer cial Registry in conformity with the provisions of Article 2:379 and 2:414 of the Dutch Civil Code. NOTES TO THE CONSOLIDA TED FINANCIAL ST A TEMENTS FOR THE YEARS ENDED 31 DECEMBER CONTINUED Financial statements 171 Parent Company Statement of Financial Position 172 Parent Company Statement of Proﬁt or Loss and other Comprehensive Income 173 Parent Company Statement of Changes in Equity 174 Parent Company Statement of Cash Flows 175 Notes to the Parent Company Financial Statements 186 Other information P ar ent Company OCI N.V . Annual Report 2020 170 OCI N.V . Annual Report 2020 171 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability P ARENT COMP ANY ST A TEMENT OF FINANCIAL POSITION AS A T $ millions Note 31 December 2020 31 December 2019 Assets Non-current assets Investment in subsidiaries (41) 7,207.0 7,600.7 Property , plant and equipment 0.8 0.4 Right-of-use assets 0.8 1.2 Financial assets at fair value through other compr ehensive income (43) 2.9 3.4 Other receivables (42) 881.8 881.8 Deferred tax assets 0.0 4.8 T otal non-current assets 8,093.3 8,492.3 Current assets Other receivables (42) 128.6 51.2 Cash and cash equivalents (44) 14.2 92.3 T otal current assets 142.8 143.5 T otal assets 8,236.1 8,635.8 Equity Share capital (45),(15) 5.6 5.6 Share pr emium (15) 6,316.3 6,316.3 Currency translation r eserve (1,242.2) (1,692.0) Financial assets at fair value through other compr ehensive income (1.5) (0.7) Other reserves (117.0) (120.8) Retained earnings 269.6 1,195.5 Equity attributable to owners of the Company 5,230.8 5,703.9 Liabilities Non-current liabilities Loans and borrowings (46) 2,660.7 2,622.4 Lease obligations 0.2 0.6 T rade and other payables (47) - - Deferred tax liabilities (53) 1.2 - T otal non-current liabilities 2,662.1 2,623.0 Current liabilities Loans and borrowings (46) 277.2 112.1 Lease obligations 0.6 0.6 T rade and other payables (47) 65.4 196.2 Income tax payables - - T otal current liabilities 343.2 308.9 T otal liabilities 3,005.3 2,931.9 T otal equity and liabilities 8,236.1 8,635.8 The notes on pages 175 to 185 are an integral part of these par ent company ﬁnancial statements. OCI N.V . Annual Report 2020 172 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability P ARENT COMP ANY ST A TEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER $ millions Note 2020 2019 Revenue from dividend income (48) 176.9 52.5 Other income (50) 0.1 0.2 General and administrative expenses (49) (30.7) (55.1) Other expenses 1 (51) (1,030.1) (543.7) Operating proﬁt / (loss) (883.8) (546.1) Finance income (52) 235.1 80.3 Finance cost (52) (284.7) (192.2) Net ﬁnance (cost) (52) (49.6) (111.9) Proﬁt / (loss) befor e income tax (933.4) (658.0) Income tax (53) 3.3 30.0 Net proﬁt / (loss) (930.1) (628.0) Other comprehensive income: Items that are or may be r eclassiﬁed subsequently to proﬁt or loss Currency translation dif ferences 449.8 (122.4) Items that will not be reclassiﬁed to pr oﬁt or loss Changes in fair value of other ﬁnancial assets (0.8) (0.2) Other comprehensive income, net of tax 449.0 (122.6) T otal comprehensive income (481.1) (750.6) 1 Other expenses in 2020 include an impairment of investment in subsidiaries of USD 1,008.6 million (2019: USD 504.8 million), refer ence is made to note 51. The notes on pages 175 to 185 are an integral part of these par ent company ﬁnancial statements. OCI N.V . Annual Report 2020 173 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability P ARENT COMP ANY ST A TEMENT OF CHANGES IN EQUITY $ millions Note Share capital (15) Share premium (15) Financial assets at fair value through other comprehensive income 1 Currency translation 2 Other reserves Retained earnings Equity attributable to owners of the Company Balance at 1 January 2019 5.6 6,316.3 (0.5) (1,569.6) (127.2) 1,824.6 6,449.2 Net proﬁt / (loss) (45.2) - - - - - (628.0) (628.0) Other comprehensive income - - (0.2) (122.4) - - (122.6) T otal comprehensive income - - (0.2) (122.4) - (628.0) (750.6) T reasury shar es sold / delivered (16) - - - - 7.7 (7.7) - T reasury shar es acquired (16) - - - - (1.3) - (1.3) Share-based payments (15) - - - - - 6.6 6.6 Balance at 31 December 2019 5.6 6,316.3 (0.7) (1,692.0) (120.8) 1,195.5 5,703.9 Net proﬁt / (loss) (45.2) - - - - - (930.1) (930.1) Other comprehensive income - - (0.8) 449.8 - - 449.0 T otal comprehensive income - - (0.8) 449.8 - (930.1) (481.1) T reasury shar es sold / delivered (16) - - - - 3.8 (3.8) - T reasury shar es acquired (16) - - - - - - - Share-based payments (15) - - - - - 8.0 8.0 Balance at 31 December 2020 5.6 6,316.3 (1.5) (1,242.2) (117.0) 269.6 5,230.8 1 Cannot be reclassiﬁed to pr oﬁt or loss 2 Legal reserve under Dutch Law . The notes on pages 175 to 185 are an integral part of these par ent company ﬁnancial statements. OCI N.V . Annual Report 2020 174 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability P ARENT COMP ANY ST A TEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER $ millions Note 2020 2019 Net proﬁt / (loss) (930.1) (628.0) Adjustments for: Depreciation (49) 0.8 0.7 Interest income (52) (65.8) (41.3) Interest expense (52) 198.4 141.8 Net foreign exchange loss (52) (83.0) 11.5 Dividend income from subsidiaries (48) (176.9) (52.5) Impairment of subsidiaries (41) 1,008.6 504.8 Share-based compensation (15) 7.9 6.6 Income tax expense (53) (3.3) (30.0) Changes in: Other receivables (42) (68.5) (650.0) T rade and other payables (47) (131.5) 116.5 Cash ﬂows: Interest paid (184.6) (124.5) Interest paid Nile Holding loan (7.1) - Interest r eceived 77.0 61.0 Income taxes paid - (1.9) Income taxes received 1.1 - Dividends received 176.9 28.6 Cash ﬂow (used in) / from operating activities (180.1) (656.7) Capital contributions to subsidiaries (41) - - Cash ﬂow (used in) investing activities - - Purchase of tr easury shares (16) - (0.7) Proceeds fr om borrowings (18), (46) 1,675.0 1,631.3 Proceeds fr om borrowings from subsidiaries (46) 145.9 68.0 Repayment of borrowings (46) (1,756.1) (936.6) Repayment of borrowings fr om subsidiaries (46) - (6.2) Newly incurred transaction costs (46) (10.4) (17.2) Settlement of FX derivatives 45.6 - Payment of lease obligations (0.6) (0.6) Cash ﬂow from ﬁnancing activities 99.4 738.0 Net (decrease) in cash and cash equivalents (80.7) 81.3 Cash and cash equivalents at 1 January 92.3 11.1 Effect of exchange rate ﬂuctuations on cash held 2.6 (0.1) Cash and cash equivalents at 31 December 14.2 92.3 The notes on pages 175 to 185 are an integral part of these par ent company ﬁnancial statements. OCI N.V . Annual Report 2020 175 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER 35. General OCI N.V . (‘The Company’ or ‘OCI’) was established on 2 January 2013 as a public limited liability company incorporated under Dutch law , with its head ofﬁce located at Honthorststraat 19, Amster dam, the Netherlands. OCI is register ed in the Dutch commercial register under no. 56821166 dated 2 January 2013. OCI is a holding company and is tax resident in the Netherlands. 36. Basis of preparation The parent company ﬁnancial statements have been pr epared in accordance with International Financial Reporting Standards as endorsed by the Eur opean Union (IFRS-EU). The parent company ﬁnancial statements have been pr epared on the historical cost basis, except when otherwise indicated. The ﬁnancial year of OCI commences on 1 January and ends on 31 December . The Company’ s functional currency is the Euro (‘EUR’). Because the Company’ s major foreign operations have the US dollar as their functional currency , the presentation currency of the Company is the US dollar (‘USD’). All values are r ounded to the nearest tenth million (in millions of USD), except when stated otherwise. The parent company ﬁnancial statements have been authorized for issue by the Company’ s Board of Directors on 22 March 2021. The ﬁnancial statements are subject to adoption of the Annual General Meeting of Shareholders. 37. Accounting principles applied In the parent company ﬁnancial statements, the same accounting policies have been applied as set out in the notes to the consolidated ﬁnancial statements, except for the measurement of the subsidiaries as presented under ‘Investments in subsidiaries’ in the par ent company ﬁnancial statements. These policies have been consistently applied to all years presented. For the amendments that became applicable and the new standards not yet applicable to OCI, refer ence is made to note 4.2 of the consolidated ﬁnancial statements. 38. Summary of signiﬁcant accounting policies Investments in subsidiaries These policies have been consistently applied to all years presented. In the parent company ﬁnancial statements, investments in subsidiaries ar e recorded at cost less impairment. In the parent company statement of pr oﬁt or loss and other comprehensive income, dividend received fr om investments in subsidiaries is recorded as dividend income. Due to this application, the parent company equity and net r esult are not equal to the consolidated equity and net result. A r econciliation for total equity attributable to owners of the company and total comprehensive income is pr esented in note 45 to the parent company ﬁnancial statements. Dividend distribution Dividend distribution to the Company’ s shareholders is recognized as a liability in the par ent company ﬁnancial statements, in the period in which the dividend is approved by the Company’ s shareholders. Dividend Income Dividend income from the Company’ s subsidiaries is recognized when the right to r eceive payment is established. 39. Use of estimates and judgments The preparation of the par ent company ﬁnancial statements requires management to exer cise judgment and make estimates and assumptions that affect the application of the Company’ s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual r esults could differ from these estimates. Estimates and underlying assumptions are r eviewed on an ongoing basis. Revisions to accounting estimates are r ecognized in the period in which the estimates are revised and in any futur e periods affected. The areas involving a higher degr ee of judgment or complexity , or areas where assumptions and estimates are signiﬁcant to the par ent company ﬁnancial statements are the impairment of the investments in subsidiaries. V aluation of investments in subsidiaries At each balance sheet date, the Company reviews whether ther e is an indication that its investments in subsidiaries might be impaired. An indication for impairment of the investments in subsidiaries may include, respectively , management’ s downward adjustment of the strategic plan. Further indications for impairments of its investments may include other areas wher e observable data indicates that there is a measurable decrease in the estimated future cash ﬂows. These determinations r equire signiﬁcant judgment. In making this judgment, management evaluates, among other factors, the ﬁnancial performance of and business outlook for its investments, including factors such as industry and sector performance, changes in technology and operational and ﬁnancing cash ﬂow . OCI N.V . Annual Report 2020 176 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED 39. Use of estimates and judgments (continued) If any indication for impairment exists, the recoverable amount of the investments is estimated in or der to determine the extent, if any , of the impairment loss. An investment is impaired if the r ecoverable amount is lower than the carrying amount. The recoverable amount is deﬁned as the higher of an investment’ s fair value less costs to sell and its value in use. The investments’ fair value less costs to sell repr esents the best estimate of the amount OCI would receive if it sold its investments. The determination of the investment’ s value in use is based on calculations using pre-tax cash ﬂow projections based on ﬁnancial budgets appr oved by management covering a 5-year period and the terminal value period. If the recoverable amount of an investment is estimated to be less than its carrying amount, the carrying amount of the investment is reduced to its r ecoverable amount. Any impairment loss is recognized immediately in the statement of proﬁt or loss. Impairment losses recognized in prior periods shall be r eversed only if there has been a change in the estimates or external market information used to determine the investment’ s recoverable amount since the last impairment loss was recognized. The r ecoverable amount shall not exceed the carrying amount that would have been determined had no impairment loss been recognized in prior years. 40. Financial risk and capital management Reference is made to note 6 ‘Financial risk and capital management‘ in the notes to the consolidated ﬁnancial statements. 40.1 Credit risk The maximum exposure to cr edit risk at the reporting date was as follows: $ millions Note 2020 2019 Other receivables (42) 1,010.4 933.0 Financial assets at fair value through other compr ehensive income (43) 2.9 3.4 Cash and cash equivalents (44) 14.2 92.3 T otal 1,027.5 1,028.7 The maximum exposure to cr edit risk for other receivables by geographic region was as follows: $ millions 2020 2019 Middle East and Africa - 0.8 Europe 43.3 31.6 Americas 967.1 900.6 T otal 1,010.4 933.0 40.2 Liquidity risk The following are the contractual maturities of ﬁnancial liabilities, including estimated inter est payments and excluding the impact of netting agreements: At 31 December 2020 $ millions Note Carrying amount Contractual cash ﬂow Less than 1 year Between 1 and 5 years More than 5 years Financial liabilities Loans and borrowings (46) 2,660.7 3,140.1 106.6 3,033.5 - Loans and borrowings fr om subsidiaries 1 (46) 277.2 277.2 277.2 - - T rade and other payables (47) 65.4 65.4 65.4 - - Letters of guarantee (27) - - - - - T otal 3,003.3 3,482.7 449.2 3,033.5 - 1 The contractual cash ﬂows do not include interest cash ﬂow for the loan received fr om OCI Overseas Holding since this loan is repayable on demand. At 31 December 2019 $ millions Note Carrying amount Contractual cash ﬂow Less than 1 year Between 1 and 5 years More than 5 years Financial liabilities Loans and borrowings (46) 2,622.4 3,219.9 138.9 3,081.0 - Loans and borrowings fr om subsidiaries 1 (46) 112.1 112.1 112.1 - - T rade and other payables (47) 196.2 196.2 196.2 - - Letters of guarantee (27) - - - - - T otal 2,930.7 3,528.2 447.2 3,081.0 - 1 The contractual cash ﬂows do not include interest cash ﬂows for the loans received fr om OCI Overseas Holding and OCI Nitrogen since these loans ar e repayable on demand. OCI N.V . leases ofﬁce space and vehicles. The of ﬁce space lease is for an initial period of 7 years, with an option to renew the lease ther eafter . Lease payments are indexed annually . Future minimum lease payments $ millions 2020 Less than one year 0.6 Between one and ﬁve years 0.2 More than ﬁve years - T otal 0.8 OCI N.V . Annual Report 2020 177 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 40. Financial risk and capital management (continued) As part of the preparation of the ﬁnancial statements, the Company has assessed its liquidity risk. Liquidity risk is the risk that the Company may encounter difﬁculty in meeting the obligations associated with its ﬁnancial liabilities that are settled by delivering cash or another ﬁnancial asset. The Company has made a number of assumptions in assessing its ability to meet its covenant requir ements and satisfy obligations as they become due. Determining these assumptions requir es signiﬁcant judgment about future r esults and cash ﬂows. Key assumptions include product pricing, gas pricing, utilization rates, and the ability to arrange ﬁnancing and obtain waivers for anticipated covenant breaches. Refer to note 6.2 and note 18 of the notes to the consolidated ﬁnancial statements for the Company’ s analyses of liquidity risk and debt covenants, respectively . Furthermore, the Company’ s ﬁnancial liabilities include loans and borrowings fr om subsidiaries. Although these loans and borrowings from subsidiaries ar e sometimes classiﬁed as short-term due the contractual terms, the repayment date of these loans and borr owings can be controlled and determined by OCI and may be extended beyond one year . 40.3 Market risk Foreign exchange risk As of 31 December 2020, if the US dollar had weakened / strengthened by 8 per cent against the Euro with all other variables held constant, the translation of foreign curr ency receivables, payables, cash and cash equivalents and loans and borrowings would have r esulted in an increase / decrease of USD 33.1 million of the proﬁt of the year . The summary of quantitative data about the Company’ s exposure to foreign exchange transaction exposure based on risk management policy for the main curr encies was as follows: At 31 December $ millions 2020 USD 2019 USD Other receivables 961.8 903.1 T rade and other payables (15.3) (90.2) Loans and borrowings (1,364.2) (1,437.7) Cash and cash equivalents 3.9 11.1 The following tables demonstrate the sensitivity to a reasonably possible change in EUR-USD exchange rates, with all other variables held constant. The impact on the Company’ s general and administrative expenses is due to changes in the fair value of monetary assets and liabilities, including inter -company positions. The Company’ s exposure to foreign curr ency changes for all other currencies is not material. 2020 $ millions Change in FX rate Effect on pr oﬁt before tax Effect on equity EUR - USD 8 percent (33.1) - (8) percent 33.1 - 2019 $ millions Change in FX rate Effect on pr oﬁt before tax Effect on equity EUR - USD 5 percent (30.7) - (5) percent 30.7 - Interest rate risk The following table demonstrates the sensitivity to a reasonably possible change in inter est rates on that portion of borrowings af fected. W ith all other variables held constant, the Company’ s proﬁt before tax is affected thr ough the impact on ﬂoating rate borrowings plus reﬁnancing of ﬁxed rate borr owings, as follows: $ millions In basis points 2020 2019 Effect on pr oﬁt before tax for the coming year +100 bps (3.5) (1.6) - 100 bps 3.5 1.6 Commodity price risk Natural gas is one of the primary raw materials used in the OCI’ s production processes. The Company is exposed to natural gas price commodity risk for those entities that buy natural gas at spot prices. Management monitors the development of gas prices and products’ selling prices on a daily basis using external historical and forecast market data provided by several data vendors. Management analyzes the potential proﬁt margin per pr oduct based on these data in order to make operational and hedging decisions. The Company enters into gas hedges on behalf of subsidiaries, in order to hedge futur e gas price levels over a certain period of time. The Company uses derivatives (Basis swaps, Index swaps and options) in order to do so and does not apply hedge accounting on these instruments, ther efore all fair value changes related to these ﬁnancial instruments ar e recognized in proﬁt or loss. OCI N.V . is a participating entity in several hedge strategies of the Group. For the hedge strategies refer ence is made to note 6.3. European Emission Allowance Several subsidiaries of OCI N.V . receive Eur opean Emission Allowances (“EUAs”) as a result of their industrial activities in the Netherlands. The EUAs are granted annually in advance by the Dutch Emission Authority . The amount of EUAs granted is based on an estimate of CO2 emissions in the Netherlands and the effective Eur opean emission legislation. In arrears, the subsidiaries have to refund allowances to the Dutch Emission Authority based on actual CO2 emissions during the year . In the event that a deﬁcit in EUAs is identiﬁed, the subsidiaries have to purchase additional EUAs on the commodity markets to settle its liability to the Dutch Emission Authority . During the year , OCI N.V . has generated additional liquidity by selling its EUAs to the market. T o manage the price exposure on the liability towar ds the Dutch Emission Authority , OCI N.V . entered into ﬁnancial hedges to purchase EUAs. For further information r eference is made to note 6.3. For the fair value of the commodity derivatives refer ence is made to note 42. NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 178 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 40. Financial risk and capital management (continued) Categories of ﬁnancial instruments 2020 $ millions Note Loans and receivables / payables at amortized cost Assets / liabilities at fair value Financial asset at fair value through other comprehensive income Assets Other receivables (42) 1,000.2 10.2 - Financial asset at fair value through other comprehensive income (43) - - 2.9 Cash and cash equivalents (44) 14.2 - - T otal 1,014.4 10.2 2.9 Liabilities Loans and borrowings fr om third parties (46) 2,660.7 - - Loans and borrowings fr om subsidiaries (46) 277.2 - - T rade and other payables (47) 54.5 10.9 - T otal 2,992.4 10.9 - 2019 $ millions Note Loans and receivables / payables at amortized cost Assets / liabilities at fair value Financial asset at fair value through other comprehensive income Assets Other receivables (42) 933.0 - - Financial asset at fair value through other comprehensive income (43) - - 3.4 Cash and cash equivalents (44) 92.3 - - T otal 1,025.3 - 3.4 Liabilities Loans and borrowings fr om third parties (46) 2,622.4 - - Loans and borrowings fr om subsidiaries (46) 112.1 - - T rade and other payables (47) 195.5 0.7 - T otal 2,930.0 0.7 - The only ﬁnancial instrument carried at fair value by the Company is the ﬁnancial asset at fair value through other compr ehensive income which is measured with hierarchy level 1 of the fair value hierar chy category . 41. Investment in subsidiaries $ millions 2020 2019 Balance at 1 January 7,600.7 7,646.3 Impairment (1,008.6) (504.8) Capital contribution - 602.9 Exchange rate differ ences 614.9 (143.7) Balance at 31 December 7,207.0 7,600.7 Capital contributions In 2019, capital contributions of USD 602.9 million were made to OCI Intermediate B.V . in kind by settling loans and receivable balances. Impairment testing 2020 An impairment trigger was identiﬁed in OCI N.V .’ s investment in subsidiaries due to a decrease in share price as per 31 December 2020 compared to 2019. As a r esult, the Group has prepar ed an impairment test on the investment in subsidiaries in accordance with IAS 36. An impairment loss is r ecognized if the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount has been estimated based on fair value less cost of disposal. Key elements for the determination of fair value were the shar e price of OCI N.V . as per 31 December 2020 of USD 19.22 (which is measured with hierar chy level 1 of the fair value hierarchy category), the number of outstanding shares of OCI NV (210,306,101 shar es) and a control premium of 30% which is the median bid premium for the acquisitions of Dutch listed companies in the period 2000 – 2019 based on the price paid over and above the trading share price to obtain contr ol and determined to be a reasonable control pr emium for listed companies. The costs of disposal are assumed to be limited and included in the control pr emium assumption. This results in a recoverable amount of USD 5,254.1 million. The carrying amount of OCI Intermediate B.V . (which is the total of the investment in subsidiaries, receivables fr om subsidiaries and the loans and borrowings) exceeded the recoverable value. As a result, an impairment loss of USD 1,008.6 million is r ecognized in the Parent company statement of Proﬁt or Loss and Other Compr ehensive Income. List of subsidiaries as per 31 December 2020: Name Country of incorporation Ownership % OCI Intermediate B.V . The Netherlands 100.0 OCI UK Ltd. United Kingdom 100.0 OCI Intermediate B.V . is a holding company which has all operating companies as subsidiaries. NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 179 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 42. Other receivables $ millions 2020 2019 Receivables from subsidiaries 995.5 925.6 Receivables from r elated parties - 0.2 Commodity derivatives 9.4 - Foreign curr ency derivatives 0.8 - Other receivables 4.7 7.2 T otal 1,010.4 933.0 Non-current 881.8 881.8 Current 128.6 51.2 At 31 December 1,010.4 933.0 The carrying amount of receivables appr oximates their fair value. The assessment of the expected credit losses did not r esult in an impairment of receivables. This will be monitored on a continuous basis going forwar d and periodically reassessed. Speciﬁcation of receivables fr om subsidiaries non-current: $ millions T ype Interest rate 2020 Long-term 2020 Short-term 2019 Long-term 2019 Short-term OCI USA Inc. Unsecured 8% ﬁxed 392.1 - 392.1 - OCI USA Inc. Unsecured 6.418% ﬁxed 489.7 - 489.7 Other receivables subsidiaries - - - 113.7 - 43.8 T otal 881.8 113.7 881.8 43.8 43. Financial assets at fair value through other compr ehensive income $ millions 2020 2019 Orascom Construction Limited (Dubai) 2.9 3.4 T otal 2.9 3.4 Orascom Construction Limited is a related party . 44. Cash and cash equivalents $ millions 2020 2019 Bank balances 14.2 92.3 T otal 14.2 92.3 The bank balances are fr eely available for usage and are not restricted. NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 180 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 45. Equity attributable to owners of the Parent Company 45.1 Reconciliation of consolidated income and equity attributable to shar eholders to Parent Company income and equity attributable to owners $ millions 2020 Equity 2020 Proﬁt / (loss) 2019 Equity 2019 Proﬁt / (loss) Consolidated equity attributable to owners of the company 1,131.7 (282.1) 1,357.5 (329.9) Revaluation of subsidiaries 7,592.0 - 7,592.0 - Differ ence gain on demerger 2015 (387.8) - (387.8) - Differ ence in proﬁt or loss 2,264.6 256.2 2,008.4 211.5 Other comprehensive income (1,129.5) 553.4 (1,682.9) (127.4) Business combination Fertiglobe (723.1) - (674.8) - Other direct equity movements (including impact IFRS 9 adoption) 162.9 - 162.9 - Impairment subsidiaries (3,680.0) (1,008.6) (2,671.4) (504.8) Parent Company equity attributable to owners 5,230.8 (481.1) 5,703.9 (750.6) The differ ences between total shareholders’ equity and total comprehensive income accor ding to the consolidated ﬁnancial statements and the parent company ﬁnancial statements in general r elate to the accounting of investments at cost (fair value as deemed cost upon adoption of IFRS) in the parent company ﬁnancial statements and subsequent impairments. The reconciling items for equity and income ar e further detailed below . Revaluation of subsidiaries The revaluation of subsidiaries of USD 7,592.0 million r elates to the step up in fair value at the date of transition to IFRS, 1 January 2014. The revaluation r eserve related to the deemed cost value step-up of the subsidiaries was subsequently converted into share capital and partly distributed as part of the demerger transaction of OCI’ s E&C Business. Gain on demerger In the 2015 parent company ﬁnancial statements, the demerger gain of USD 243.0 million is lower compared to the demerger gain as r eported in the consolidated ﬁnancial statements of USD 630.8 million as the investment is stated at cost in the parent company ﬁnancial statements versus the equity value in the 2015 consolidated ﬁnancial statements. Differ ence in proﬁt or loss The 2020 net result is USD 256.2 million lower in the par ent company ﬁnancial statements as the net loss for 2020 is USD 930.1 million (mainly driven by the impairment in subsidiaries of USD 1,008.6 million), whereas the net loss attributable to owners of the company in the consolidated ﬁnancial statements was USD 177.7 million. The 2019 net result is USD 211.5 million lower in the par ent company ﬁnancial statements as the net loss for 2019 is USD 628.0 million (mainly driven by the impairment in subsidiaries of USD 504.8 million), whereas the net loss attributable to owners of the company in the consolidated ﬁnancial statements was USD 334.7 million. Other comprehensive income The reconciliation item ‘Other compr ehensive income’ represents hedge and curr ency translation differ ences which are recognized in the consolidated ﬁnancial statements but not in the par ent company ﬁnancial statements as the investments are stated at cost. The 2020 differ ence in income of USD 553.4 million comprises USD 556.2 million of currency translation losses and USD 5.7 million of gains on cash ﬂow hedges and USD 2.9 million losses ﬁnancial asset at fair value through other compr ehensive income, which do not occur in the parent company ﬁnancial statements. The 2019 differ ence in income of USD 127.4 million comprises USD 130.4 million of currency translation gains and USD 0.2 million of gains on cash ﬂow hedges and USD 3.2 million losses ﬁnancial asset at fair value through other compr ehensive income, which do not occur in the parent company ﬁnancial statements. Business combination Fertiglobe The Fertiglobe business combination resulted in an incr ease of USD 723.1 million in equity attributable to the owners of the company in the consolidated ﬁnancial statements, but had no impact on the parent company . Reference is made to note 2.2.1. and note 17. Other direct equity movements The other direct equity movements mainly r elate to the effect of OCI Beaumont buy-back of minority shares net of taxes. Impairment subsidiaries The Company recor ded an impairment on subsidiaries of USD 1,008.6 million in 2020 (2019: USD 504.8 million). 45.2 Appropriation of net pr oﬁt / (loss) $ millions 2020 2019 Added to / (deducted from) r etained ear nings (930.1) (628.0) Net proﬁt / (loss) attributable to shar eholders (930.1) (628.0) Upon adoption of this proposed net pr oﬁt / (loss) appropriation, the dividend for the 2020 ﬁnancial year will be nil. This proposed net pr oﬁt / (loss) appropriation is in conformity with article 26 of the Company’ s Articles of Association. NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 181 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 46. Loans and borrowings $ millions 2020 2019 Senior notes 2,316.1 2,444.3 T erm loan and revolving credit facility 344.6 178.1 Sub-total third-party 2,660.7 2,622.4 OCI Chem 5 B.V . 0.4 - OCI Overseas Holding Ltd. 0.8 1.1 OCI Nitrogen 267.5 111.0 OCI Methanol Marketing B.V . 4.0 - OCI Fuels B.V . 3.4 - OCI Chemicals B.V . 1.1 - Sub-total subsidiaries 277.2 112.1 T otal 2,937.9 2,734.5 Non-current 2,660.7 2,622.4 Current 277.2 112.1 At 31 December 2,937.9 2,734.5 Reference is made to note 18 ‘Loans and borr owings’ of the consolidated ﬁnancial statements for detailed information on third-party loans and the undrawn bank facility . The carrying amounts of loans and borrowings fr om subsidiaries approximates their fair values. $ millions 2020 2019 Balance at 1 January 2,734.5 2,035.6 Proceeds fr om borrowings 1,675.0 1,631.3 Proceeds fr om borrowings subsidiaries 145.9 68.0 Proceeds fr om borrowings subsidiaries in kind 113.7 44.4 Redemptions of borrowings (1,756.1) (936.6) Redemptions of borrowings subsidiaries - (6.2) Redemptions of borrowings subsidiaries in kind (114.1) (66.8) Newly incurred transaction costs (9.3) (22.2) Amortization of transaction costs / (bond) premiums 24.4 11.4 Effect of movement in exchange rates 123.8 (25.3) Accrued interest 0.1 0.9 At 31 December 2,937.9 2,734.5 Net proceeds fr om borrowings third-party Proceeds fr om borrowings in 2020 for the Company totaled an amount of USD 1,675.0 million (2019: USD 1,631.3 million). Reference is made to note 18 of the consolidated ﬁnancial statements. Net proceeds fr om borrowings from subsidiaries in kind Proceeds fr om borrowings from subsidiaries in kind of USD 113.7 million consists of USD 113.1 million cashpool settlements and USD 0.6 million settlements with OCI Overseas Holding. Redemptions of borrowings fr om subsidiaries in kind Redemptions of borrowings fr om subsidiaries in kind of USD 114.1 million consist of USD 113.1 million to OCI Nitrogen and USD 1.0 million to OCI Overseas Holding. The maturity dates of loans and borrowings fr om third-party and related party ar e as follows: $ millions 2020 2019 2021 - - 2022 - - 2023 350.0 1,283.5 2024 1,455.7 1,384.9 2025 889.0 - Sub-total 2,694.7 2,668.4 Deducted transaction costs (34.0) (46.0) T otal 2,660.7 2,622.4 Speciﬁcation of loans and borrowings fr om subsidiaries: $ millions T ype Interest % 2020 Long-term 2020 Short-term 2019 Long-term 2019 Short-term OCI Overseas Holding Ltd. Unsecured LIBOR + 3.25 - 0.8 - 1.1 OCI Nitrogen Unsecured 0.05% - - - 111.0 OCI Nitrogen Unsecured Deposit rate 0% - 267.5 - - OCI Chemicals B.V . Unsecured Deposit rate 0% - 1.1 - - OCI Methanol Marketing B.V . Unsecured Deposit rate 0% - 4.0 - - OCI Fuels B.V . Unsecured Deposit rate 0% - 3.4 - - OCI Chem 5 B.V . Unsecured Deposit rate 0% - 0.4 - - T otal - 277.2 - 112.1 NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 182 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 47. Other payables $ millions 2020 2019 Payables due to subsidiaries 22.9 128.3 Payables due to related parties - 7.8 Share-based compensation - 0.1 Accrued interest 18.8 29.6 Commodity derivative ﬁnancial instruments 10.9 0.7 Other current liabilities 12.8 29.7 T otal 65.4 196.2 Non-current - - Current 65.4 196.2 T otal 65.4 196.2 The carrying amount of ‘Other payables’ approximates its fair value. 48. Revenue from dividend income Revenue from dividend income in 2020 consists of USD 176.9 million fr om OCI Intermediate of which USD 176.9 million was in cash. 49. Development of general and administrative expenses a. Expenses by natur e $ millions Note 2020 2019 Employee beneﬁt expenses (b) 15.8 15.6 Depreciation 0.8 0.7 Consultancy expenses 12.5 33.1 Other 1.6 5.7 T otal 30.7 55.1 The expenses by nature comprise ‘general and administrative expenses’. b. Employee beneﬁt expenses $ millions 2020 2019 W ages and salaries 5.5 4.7 Social securities 0.3 0.3 Employee proﬁt sharing 1.5 3.6 Pension cost 0.6 0.5 Share-based compensation expense 7.9 6.5 T otal 15.8 15.6 For speciﬁcations on share-based payments, r eference is made to note 22c of the notes to the consolidated ﬁnancial statements. 50. Other income $ millions 2020 2019 Other 0.1 0.2 T otal 0.1 0.2 51. Other expenses $ millions 2020 2019 Impairment of subsidiaries 1,008.6 504.8 Other 21.5 38.9 T otal 1,030.1 543.7 Reference is made to note 41 for the impairment of subsidiaries. The decr ease in other is mainly due to losses on derivatives in 2019. NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 183 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 52. Net ﬁnance cost $ millions 2020 2019 Interest income on loans and r eceivables third-party 0.1 0.2 Interest income on loans and r eceivables related parties - - Interest income on loans and r eceivables subsidiaries 65.7 41.1 Foreign exchange gain 169.3 39.0 Finance income 235.1 80.3 Interest expense and other ﬁnancing costs on ﬁnancial liabilities measur ed at amortized cost third-party (198.2) (140.7) Interest expense and other ﬁnancing costs on ﬁnancial liabilities measur ed at amortized cost related party - - Interest expense and other ﬁnancing costs on ﬁnancial liabilities measur ed at amortized cost subsidiaries (0.2) (1.0) Foreign exchange loss (86.3) (50.5) Finance cost (284.7) (192.2) Net ﬁnance (cost) recognized in pr oﬁt or loss (49.6) (111.9) 53. Income taxes 53.1 Income tax in the statement of proﬁt or loss $ millions 2020 2019 Current tax 12.7 29.9 Deferred tax (9.4) 0.1 T otal income tax in proﬁt or loss 3.3 30.0 Current tax $ millions 2020 2019 Current year 12.5 20.5 Changes in estimates relating to prior years 0.2 9.4 Income tax beneﬁt / (expense) in proﬁt or loss 12.7 29.9 Deferred tax $ millions 2020 2019 Origination and reversal of temporary dif ferences 0.3 0.1 V aluation allowance (9.7) - Income tax beneﬁt / (expense) in proﬁt or loss (9.4) 0.1 53.2 Reconciliation of effective tax rate Reconciliation of the statutory income tax rate in the Netherlands with the effective tax rate can be summarized as follows: $ millions 2020 % 2019 % Proﬁt / (loss) befor e income tax (933.4) (658.0) Enacted income tax rate in the Netherlands 25% 25% T ax calculated at statutory tax rate 233.4 25.0 164.5 25.0 Impairment of subsidiaries (252.2) (27.0) (126.2) (19.2) Expenses non-deductible 1 (12.6) (1.3) (31.6) (4.8) Income not subject to tax 2 44.2 4.7 13.4 2.1 Unrecognized tax assets (9.7) (1.0) - - Changes in estimates relating to prior years 0.2 - 9.9 1.5 T otal income tax in proﬁt or loss 3.3 0.4 30.0 4.6 1 The non-deductible expenses mainly relate to non-deductible inter est expense as a result of the 30% EBITDA limitation and non-deductible shareholder costs. 2 Income not subject to tax related to dividend income in 2020 of USD 176.9 million gr oss. 53.3 Deferred income tax assets and liabilities Changes in deferred tax assets and liabilities: $ millions 2020 2019 At 1 January 4.8 (1.6) Proﬁt or loss (9.4) 0.1 Effect of movement in exchange rates - - Other 3.4 6.3 At 31 December (1.2) 4.8 NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 184 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 53. Income taxes (continued) Other relates to change of position fr om net operating losses being capitalized on the balance sheet in 2019 to creating a valuation allowance for a deferr ed tax asset in relation to the operating losses. Recognized deferred tax assets and liabilities: Assets Liabilities Net $ millions 2020 2019 2020 2019 2020 2019 T rade and other receivables - - (0.4) (0.2) (0.4) (0.2) Loans and borrowings - - (1.1) - (1.1) - T rade and other payables 0.3 - - (1.3) 0.3 (1.3) Operating losses carry forward and tax cr edits - 6.3 - - - 6.3 T otal 0.3 6.3 (1.5) (1.5) (1.2) 4.8 Netting of ﬁscal positions (0.3) (1.5) 0.3 1.5 - - Amounts recognized in the Statement of Financial Position - 4.8 (1.2) - (1.2) 4.8 Of the deferred tax liabilities at 31 December 2020, an amount of USD 0.6 million is to be settled within 12 months. Expiration scheme of gross unr ecognized carry forward tax losses: 2020 $ millions Less than 1 year Between 1 and 5 years Between 5 and 10 years Between 10 and 15 years Between 15 and 20 years Unlimited T otal Gross federal tax losses - 41.6 - - - - 41.6 Unrecognized operating losses carry forward - 41.6 - - - - 41.6 54. Related party transactions For an overview of the related parties, r eference is made to note 30 of the consolidated ﬁnancial statements. The Company has the following current account r elated party balances as at 31 December 2020: Related party Relation Revenue transactions during the year AR outstanding at year end Purchase transactions during the year AP outstanding at year end Loans receivables Loans payables Interest income Interest expense Orascom Construction PLC (‘OC’) OC group company - - - - - - - - Contrack International OC group company - - - - - - - - Nassef Sawiris CEO - - 0.7 0.2 - - - - NNS Luxembourg Sarl Related via shareholder - - 0.2 0.2 - - - - T otal - - 0.9 0.4 - - - - The Company has the following current account r elated party balances as at 31 December 2019: Related party Relation Revenue transactions during the year AR outstanding at year end Purchase transactions during the year AP outstanding at year end Loans receivables Loans payables Interest income Interest expense Orascom Construction PLC (‘OC’) OC group company - 0.2 - - - - - - Contrack International OC group company - - 0.1 0.5 - - - - Nassef Sawiris CEO - - 1.0 0.2 - - - - NNS Luxembourg Sarl Related via shareholder - - 0.2 7.1 - - - - T otal - 0.2 1.3 7.8 - - - - The current accounts consist of management fees, transferr ed cost and other . All outstanding related party balances ar e unsecured. NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 185 Parent Company Financial Statements Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability 55. Contingencies Guarantees OCI has provided ﬁnancial guarantees to certain subsidiaries including OCI Nitr ogen related to its inventory ﬁnancing. For OFT , OFTS and OCI S.A.E. a comfort letter was provided by OCI. The Company has a guarantee facility with Rabobank for a maximum guarantee amount of USD 140.6 million (EUR 115.0 million). Under this guarantee facility , USD 83.3 million (EUR 68.2 million) has been drawn. The facility is used to issue guarantees on behalf of the subsidiaries, mainly for operational purposes. OCI has an uncommitted surety facility with T okio Marine Europe SA and Zürich Insurance PLC for a maximum guarantee amount of USD 30.6 million (EUR 25.0 million). This facility is fully utilized. The facility is used to issue a performance guarantee on behalf of OCI Nitrogen BV . The Company also has a guarantee facility with BNP for an amount of USD 93.7 million, that is fully drawn. 56. Employees The total number of employees in 2020 was 29 (2019: 32 employees). 57. Fiscal unity OCI N.V . forms a ﬁscal unity with several Dutch entities for corporation tax purposes. In accordance with the standard conditions, a company and its subsidiaries that form the ﬁscal unity ar e jointly and severally liable for taxation payable by the ﬁscal unity . The following entities are included in the ﬁscal unity headed by OCI N.V .: · OCI N.V . · OCI Intermediate B.V . · OCI Nitrogen B.V . · OCI Personnel B.V . · OCI T erminal Europoort B.V . · OCI Fertilizers B.V . · OCI China Holding B.V . Amsterdam, the Netherlands, 22 Mar ch 2021 The OCI N.V . Board of Dir ectors Michael Bennett Nassef Sawiris Ahmed El-Hoshy Hassan Badrawi Sipko Schat Jérôme Guiraud Robert Jan van de Kraats Gregory Heckman Anja Montijn-Groenewoud Maud de V ries David Welch Dod Fraser Heike van de Kerkhof NOTES TO THE P ARENT COMP ANY FINANCIAL ST A TEMENTS FOR THE YEAR ENDED 31 DECEMBER CONTINUED OCI N.V . Annual Report 2020 186 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OTHER INFORMA TION Extract from the Articles of Association r elating to Net Proﬁt /(Loss) appropriation Article 26. ‘Proﬁts and Distributions’. 26.1 The Board may decide that the pr oﬁts realized during a ﬁnancial year will fully or partially be appropriated to incr ease and/or from reserves. 26.2 The proﬁts r emaining after application of Article 26.1 shall be put at the disposal of the General Meeting. The Board shall make a pr oposal for that purpose. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting of Shareholders. 26.3 Distributions from the Company’ s distributable reserves ar e made pursuant to a resolution of the General Meeting at the proposal of the Boar d. 26.4 Provided it appears fr om an interim statement of assets signed by the Board that the requir ement mentioned in Article 26.8 concerning the position of the Company’ s assets has been fulﬁlled, the Board may make one or more interim distributions to the holders of Shar es. 26.5 The Board may decide that a distribution on Shar es shall not take place as a cash payment but as a payment in Shares, or decide that holders of Shar es shall have the option to receive a distribution as a cash payment and / or as a payment in Shares, out of the pr oﬁt and / or at the expense of reserves, provided that the Boar d is designated by the General Meeting pursuant to Articles 6.2. The Board shall determine the conditions applicable to the aforementioned choices. 26.6 The Company’ s policy on reserves and dividends shall be determined and can be amended by the Board. The adoption and ther eafter each amendment of the policy on reserves and dividends shall be discussed and accounted for at the General Meeting of Shareholders under a separate agenda item. 26.7 The Company may further have a policy with respect to pr oﬁt participation for employees which policy will be established by the Board. 26.8 Distributions may be made only insofar as the Company’ s equity exceeds the amount of the paid in and called up part of the issued capital, increased by the r eserves which must be kept by virtue of the law or these Articles of Association. Other inf ormation 188 Independent auditor's report 197 Alter native performance measures (APMs) 199 GRI Index 204 TCFD Index 205 SASB Index 207 ESG performance summary 210 Glossary of abbreviations and key terms 212 Shareholder information OCI N.V . Annual Report 2020 187 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 188 INDEPENDENT A UDIT OR’ S REPOR T T o: the General Meeting of Shareholders of OCI N.V . Report on the audit of the 2020 nancial statements included in the annual report Our opinion In our opinion the accompanying nancial statements give a true and fair view of the nancial position of OCI N.V . as at 31 December 2020 and of its result and its cash ows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code. What we have audited We have audited the 2020 nancial statements of OCI N.V . (the Company) based in Amsterdam, the Netherlands. The nancial statements comprise: 1 the Consolidated and Parent Company Statement of Financial Position as at 31 December 2020; 2 the following Consolidated and Parent Company Statements for 2020: the Statement of Prot or Loss and Other Comprehensive Income, Changes in Equity and Cash Flows; and 3 the notes comprising a summary of the signicant accounting policies and other explanatory information. Basis for our opinion We conducted our audit in accordance with Dutch law , including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the nancial statements’ section of our report. We are independent of OCI N.V . in accordance with the ‘V erordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘V erordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics). We believe the audit evidence we have obtained is sufcient and appropriate to provide a basis for our opinion. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 189 INDEPENDENT A UDIT OR’ S REPOR T CONTINUED Audit approach Summary Materiality – Materiality of USD 30 million for the consolidated financial statements, which is 0.9% of consolidated total revenue; – Materiality of USD 60 million for the parent company financial statements, which is 0.7% of the parent company total assets. Group audit – 98% of total consolidated assets; – 98% of consolidated revenue. Key audit matter 1. Recoverable amount in impairment tests; 2. Claims and litigation. Opinion Unqualified opinion Materiality Based on our professional judgement, we determined the materiality for the consolidated nancial statements as a whole at USD 30 million (2019: USD 25 million). The materiality is determined with reference to the consolidated revenues, of which it represents 0.9% (2019: 0.8%). We deem prot before tax from continuing operations as not representative because the benchmark has historically been highly volatile. As such, we consider revenues as the most appropriate benchmark as the Company is result oriented. We determined a separate materiality for our audit of the parent company nancial statements. Based on our professional judgement, we determined the materiality for the parent company nancial statements at USD 60 million (2019: USD 60 million) using parent company total assets as a benchmark, of which it represents 0.7% (2019: 0.7%). Given the nature of the parent company’s activities – the holding and nancing of investments within the Company – we consider the use of the total asset benchmark as most appropriate in respect of the parent company nancial statements. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the consolidated and parent company nancial statements for qualitative reasons. We agreed with the Board of Directors that misstatements in excess of USD 1.25 million and USD 3 million which have been identied during the audit of the consolidated and parent company nancial statements respectively , would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 190 INDEPENDENT A UDIT OR’ S REPOR T CONTINUED Scope of the group audit OCI N.V . is at the head of a group of components. The nancial information of this group is included in the consolidated nancial statements of OCI N.V . Our group audit mainly focused on signicant components, including the signicant equity accounted investment. T o ensure sufcient coverage over the group’s nancial information, we have requested 14 component auditors (2019: 14 component auditors) to perform a full scope audit of the nancial information of the related component (audit of complete reporting package). Furthermore, we requested 4 component auditors (2019: 2 component auditors) to perform specied audit procedures. The relative size of the component and the likelihood for the component to include a signicant risk were both evaluated in determining the scope of our component audits. For the remaining components we have performed audit procedures ourselves or performed analytical procedures in order to corroborate our assessment that the risk of material misstatement in the residual population is less than reasonable possible. We provided detailed instructions to all component auditors as part of the group audit, covering the signicant audit areas, including the relevant risks of material misstatement identied by us, and set out the information required to be reported back to us. In view of restrictions, caused by the COVID-19 pandemic, on the movement of people across borders, and also within signicantly affected countries, we have considered making changes to the planned audit approach to evaluate the component auditors’ communications and the adequacy of their work. According to our original audit plan, we intended to visit the components in countries Abu Dhabi, Algeria, Egypt and United States of America to review selected component auditor documentation. Due to the aforementioned restrictions, this was not feasible in the current environment. As a result, we have requested those component auditors to provide us with remote access to audit workpapers to perform these evaluations, subject to local law and regulations. In addition, due to the inability to arrange in-person meetings with such component auditors, we have increased the use of alternative methods of communication with them, including through written instructions, exchange of emails and virtual meetings. We have assessed these expanded communications, with additional robust discussions as needed, to ensure that they are sufcient for us to evaluate and conclude on the appropriateness and adequacy of the component auditor ’s work. Video conferences were held with all the component auditors that were part of the group audit. During these conferences, the planning, audit approach, ndings and observations were reviewed and discussed. Any further work deemed necessary was subsequently performed by the component auditors and reviewed by us. For the residual population not in scope we performed analytical procedures in order to corroborate that our scoping remained appropriate throughout the audit. By performing the procedures mentioned above at group components, together with additional procedures at group level, we have been able to obtain sufcient and appropriate audit evidence about the group’s nancial information to provide an opinion about the nancial statements. This resulted in a coverage of 98% of consolidated total assets and of 98% of consolidated total revenue. The audit coverage as stated in the section summary can be further specied as follows: 91% Audit of the complete reporting package T otal assets Revenue 5% Audit of specic items 2% Specied audit procedures 79 % Audit of the complete reporting package 0% Audit of specic items in revenue is not applicable 19 % Specied audit procedures Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 191 Our focus on the risk of fraud and non-compliance with laws and regulations Our objectives The objectives of our audit with respect to fraud and non-compliance with laws and regulations are: With respect to fraud: - to identify and assess the risks of material misstatement of the nancial statements due to fraud; - to obtain sufcient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate audit responses; and - to respond appropriately to fraud or suspected fraud identied during the audit. With respect to non-compliance with laws and regulations: - to identify and assess the risk of material misstatement of the nancial statements due to non-compliance with laws and regulations; and - to obtain a high (but not absolute) level of assurance that the nancial statements, taken as a whole, are free from material misstatement, whether due to fraud or error when considering the applicable legal and regulatory framework. The primary responsibility for the prevention and detection of fraud and non-compliance with laws and regulations lies with the Management Board. We refer to chapter ‘Risk Management’ of the Annual Report where the Management Board included its risk assessment. Our risk assessment As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to nancial reporting fraud, misappropriation of assets and bribery and corruption. We, together with our forensics specialists, evaluated the fraud risk factors to consider whether those factors indicated a risk of material misstatement due to fraud. In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks that are applicable to the Company and we inquired Management Board as to whether the entity is in compliance with such laws and regulations and inspected correspondence, if any , with relevant regulatory authorities. The potential effect of the identied laws and regulations on the nancial statements varies considerably . Firstly , the Company is subject to laws and regulations that directly affect the nancial statements, including taxation and nancial reporting. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related nancial statement items and therefore no additional audit response is necessary . Secondly , the Company is subject to many other laws and regulations where the consequences of non-compliance could have an indirect material effect on amounts recognised or disclosures provided in the nancial statements, or both, for instance through the imposition of nes or litigation. We identied the following areas as those most likely to have such an indirect ef fect: - Employment legislation; - Health and safety regulation; - Environmental regulation; - Anti-bribery and corruption laws and regulations; - Anti-money laundering laws and regulations; - Trade sanctions and export controls laws and regulations. In accordance with the auditing standard we evaluated the following fraud and non-compliance risks that are relevant to our audit: - revenue recognition, in relation to overstatement of revenue due to manual override of sales cut-off and non-routine sales transactions (a presumed risk); and - management override of controls (a presumed risk). We communicated the identied risks of fraud and non-compliance with laws and regulations throughout our team and remained alert to any indications of fraud and non-compliance throughout the audit. This included communication from the group to component audit teams, and vice versa, of relevant risks of fraud identied at their respective levels. In all of our audits, we addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by management that may represent a risk of material misstatement due to fraud. We communicated our risk assessment and audit response to management as well as the Audit Committee. Our audit procedures differ from a specic forensic fraud investigation, which investigation often has a more in-depth character . INDEPENDENT A UDIT OR’ S REPOR T CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 192 Our response We performed the following audit procedures (not limited) to respond to the assessed risks: - We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness of internal controls that mitigate fraud risks. In case of internal control deciencies, where we considered there would be opportunity for fraud, we performed supplemental detailed risk-based testing. - We performed data analysis of high-risk journal entries. Also we evaluated key estimates and judgements for bias by the Company , including retrospective reviews of prior year ’s estimates. Where we identied instances of unexpected journal entries or other risks through our data analytics, we performed additional audit procedures to address each identied risk. These procedures also included testing of transactions back to source information. - Assessment of matters reported via the Company’s whistleblower and complaints hotline and results of management’s investigation of such matters. - With respect to the risk of fraud in revenue recognition we have evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness of internal controls. We performed substantive audit procedures over the manual and non- routine sales transactions and sales reversal transactions surrounding cut-off to address the signicant risk with regards to fraudulent revenue recognition. - With respect to the risk of bribery and corruption across various countries, we evaluated the Company’s controls and procedures such as due diligence procedures on third parties. We considered the possibility of fraudulent or corrupt payments made through third parties including agents and conducted detailed testing on third-party vendors in high-risk jurisdictions. - We incorporated elements of unpredictability in our audit. - We considered the outcome of our other audit procedures and evaluated whether any ndings or misstatements were indicative of fraud or non-compliance. If so, we re-evaluated our assessment of relevant risks and its resulting impact on our audit procedures. - We obtained audit evidence regarding compliance with the provisions of those laws and regulations generally recognised to have a direct effect on the determination of material amounts and disclosures in the nancial statements. We considered the ef fect of actual, suspected or identied risk of non-compliance as part of our procedures on the related nancial statement items. We do note that our audit is based on the procedures described in line with applicable auditing standards. In addition to the requirements of the auditing standards we have performed, amongst others, the following incremental procedures: - Incorporated specic procedures on fraud within our selection of high risk journal entries; - Investigation into publicly held information in relation to negative publicity; - Interviews with both corporate and local compliance ofcers and external legal counsel with regards to the Litigation and claims as described in the respective key audit matter . Our procedures to address identied risks of fraud did not result in a key audit matter . W e do note that our audit is not primarily designed to detect fraud and non-compliance with laws and regulations and that management is responsible for such internal control as management determines is necessary to enable the preparation of the nancial statements that are free from material misstatement, whether due to errors or fraud, including compliance with laws and regulations. The more distant non-compliance with indirect laws and regulations (irregularities) is from the events and transactions reected in the nancial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery , intentional omissions, misrepresentations, or the override of internal controls. Our key audit matters Key audit matters are those matters that, in our professional judgement, were of most signicance in our audit of the nancial statements. We have communicated the key audit matters to the Board of Directors. The key audit matters are not a comprehensive reection of all matters discussed. These matters were addressed in the context of our audit of the nancial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Compared to last year the key audit matter with respect to the accounting of the purchase price allocation in respect to the acquisition of Ruwais Fertilizer Industries Ltd. (“Fertil”) is not included, as this was a 2019 transaction. Furthermore, compared to last year the key audit matter with respect to litigations and claims has been added. INDEPENDENT A UDIT OR’ S REPOR T CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 193 INDEPENDENT A UDIT OR’ S REPOR T CONTINUED #1 Recoverable amount in impairment tests Description As described in Note 8 to the consolidated financial statements, management performs a yearly goodwill impairment test. In addition, management performs a triggering event analysis with respect to the valuation of (fixed) assets as described in Note 5. Impairment tests under IFRS require to assess whether the entities’ assets are not carried at more than their recoverable amount (i.e. the higher of fair value less costs of disposal and the value in use). As such, the Company determined the value in use based on the individual cash generating units’ value in use. This requires significant estimates in respect of key assumptions used in the value in use models such as: • production volumes; • sales prices; • gas prices; • terminal growth rate; and • weighted average cost of capital (“W ACC”). Furthermore, as described in Note 41 to the parent company financial statements, management identified a triggering event in respect of the impairment indicators of the valuation of subsidiaries. With regards to valuation of subsidiaries management has determined the recoverable amount based on the fair value less cost of disposal. The valuation was conducted based on the market capitalisation of the group considering the net-debt position and application of a control premium. The valuation of goodwill is considered to be significant to our audit due to management judgement involved in the assumptions used and contains a significant risk of error due to the complexity of the calculations . Our response We evaluated the design and implementation of relevant controls related to the client impairment trigger assessment and annual goodwill impairment testing. We reviewed the impairment trigger assessment and valuation models as prepared by management, this includes an evaluation of management assessment of cash generating units, the retrospective review and a sensitivity assessment of significant assumptions used in the model. #1 Recoverable amount in impairment tests (continued) In our audit we evaluated the appropriateness of the cash flow projections of the identified cash generating units. In respect of the key assumptions, we obtained managements business plans and amongst others: • compared the production volumes with the historical average’s and external forecasts; • compared the sales prices with historical and external forward prices; • compared the gas price with historical and external forward gas prices; and • involved KPMG valuation specialist to recalculated the W ACC and assess the reasonableness of the terminal growth rate. We furthermore specifically focused on the sensitivity in the available headroom, evaluating whether a reasonably possible change in assumptions could cause the carrying amount to exceed its recoverable amount and assessed the historical accuracy of management’s estimates. We involved KPMG valuation specialists to support the audit team in making these assessments. Furthermore, we assessed the adequacy of the disclosure (Note 8) to the consolidated financial statements. In our audit we evaluated the management’s procedures with regards to valuation of subsidiaries based on their fair value less cost of disposal, this assessment includes an evaluation of the design and implementation of relevant controls with regards to management’s trigger assessment and the valuation model. An impairment of USD 1,008 million has been recorded. The impairment has been determined based on the cost value of the subsidiaries and the market capitalisation of the group, corrected for net debt and a 30% control premium. We involved KPMG valuation specialists to support the audit team in determining the appropriateness of these assumptions. Furthermore, we assessed the adequacy of the disclosure (Note 41) to the parent company financial statements. Our observation Based on our procedures performed, we consider management’s key assumptions and methodology used in the impairment tests to be within a reasonable range. Furthermore, we determined that the related disclosure for the valuation of the subsidiaries in the parent company financial statements (Note 41) and the disclosures in respect of the goodwill impairment test (Note 8) are adequate. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 194 #2 Litigation and claims Description As disclosed in Provisions (Note 21) and Contingencies (Note 28) the Company has several litigations and claims (both legal and tax related) pending, for which the outcome is uncertain. Based on the likelihood of occurrence and the exposure, the Company determines if, and for what amount, a provision should be recognised. This assessment is considered to be significant to our audit due to management judgement involved. As the Company is diversified globally , the pending claims and litigations differ in terms of risk profile. Our response During our audit, we performed the following procedures: • Instructed our component auditors to perform procedures over litigations and claims on a local level; • Evaluated the legal expenses and requested external legal letters for lawyers involved in litigations and claims; • Obtained and inspected the quarterly updated Litigation report from Group Legal department; • Performed quarterly update meetings with Group Legal and T ax departments; • Obtained internal position papers from management on the cases including the accounting implications; • Requested external expert opinions for specific cases with a significant exposure; • Assessed the adequacy of the disclosure to the financial statements. Our observation Based on our procedures performed, we verified the reasonableness of the provision recorded for litigations and claims. We consider management’ s assessment of the exposure and the recording of related provisions to be appropriate. Furthermore, we determined that the related disclosure with regards to Provisions (Note 21) and Contingencies (Note 28) are adequate. Report on the other information included in the annual report In addition to the nancial statements and our auditor ’s report thereon, the annual report contains other information. Based on the following procedures performed, we conclude that the other information: - is consistent with the nancial statements and does not contain material misstatements; and - contains the information as required by Part 9 of Book 2 of the Dutch Civil Code. We have read the other information. Based on our knowledge and understanding obtained through our audit of the nancial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of the nancial statements. The Board of Directors is responsible for the preparation of the other information, including the information as required by Part 9 of Book 2 of the Dutch Civil Code. Report on other legal and regulatory requirements and ESEF Engagement We were engaged by the General Meeting of Shareholders as auditor of OCI N.V . on 17 June 2020 for the year 2020. Our rst appointment as statutory auditor of the Company was in 2013 to audit the 2013 nancial statements. No prohibited non-audit services We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specic requirements regarding statutory audits of public-interest entities. INDEPENDENT A UDIT OR’ S REPOR T CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 195 European Single Electronic Format (ESEF) OCI N.V . has prepared its annual report in ESEF . The requirements for this format are set out in the Commission Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specication of a single electronic reporting format (these requirements are hereinafter referred to as: the RTS on ESEF). In our opinion, the annual report prepared in the XHTML format, including the partially tagged consolidated nancial statements as included in the reporting package by OCI N.V . has been prepared in all material respects in accordance with the RTS on ESEF . Management is responsible for preparing the annual report including the nancial statements in accordance with the RTS on ESEF , whereby management combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package, is in accordance with the RTS on ESEF . Our procedures taking into consideration Alert 43 of NBA (the Netherlands Institute of Chartered Accountants), included amongst others: - obtaining an understanding of the entity’s nancial reporting process, including the preparation of the reporting package; - obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy les have been prepared in accordance with the technical specications as included in the RTS on ESEF; - examining the information related to the consolidated nancial statements in the reporting package to determine whether all required taggings have been applied and whether these are in accordance with the RTS on ESEF . Description of responsibilities regarding the nancial statements Responsibilities of the Board of Directors for the nancial statements The Board of Directors is responsible for the preparation and fair presentation of the nancial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Board of Directors is responsible for such internal control as management determines is necessary to enable the preparation of the nancial statements that are free from material misstatement, whether due to fraud or error . As part of the preparation of the nancial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern. Based on the nancial reporting frameworks mentioned, the Board of Directors should prepare the nancial statements using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors should disclose events and circumstances that may cast signicant doubt on the Company’s ability to continue as a going concern in the nancial statements. The Board of Directors is responsible for overseeing the Company’ s nancial reporting process. Our responsibilities for the audit of the nancial statements Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufcient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the basis of these nancial statements. The materiality af fects the nature, timing and extent of our audit procedures and the evaluation of the effect of identied misstatements on our opinion. A further description of our responsibilities for the audit of the nancial statements is included in the appendix of this auditor ’s report. This description forms part of our auditor’s report. Amstelveen, 22 March 2021 KPMG Accountants N.V . C.A. Bakker RA INDEPENDENT A UDIT OR’ S REPOR T CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 196 INDEPENDENT A UDIT OR’ S REPOR T CONTINUED Appendix Description of our responsibilities for the audit of the nancial statements We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others: - identifying and assessing the risks of material misstatement of the nancial statements, whether due to fraud or error , designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufcient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the risk resulting from error , as fraud may involve collusion, forgery , intentional omissions, misrepresentations, or the override of internal control; - obtaining 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 Company’ s internal control; - evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors; - concluding on the appropriateness of the Board of Directors’ 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 signicant doubt on Company’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 nancial 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 a company to cease to continue as a going concern; - evaluating the overall presentation, structure and content of the nancial statements, including the disclosures; and - evaluating whether the nancial statements represent the underlying transactions and events in a manner that achieves fair presentation. We are solely responsible for the opinion and therefore responsible to obtain sufcient appropriate audit evidence regarding the nancial information of the entities or business activities within the group to express an opinion on the nancial statements. In this respect we are also responsible for directing, supervising and performing the group audit. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and signicant audit ndings, including any signicant ndings in internal control that we identify during our audit. In this respect we also submit an additional report to the audit committee in accordance with Article 1 1 of the EU Regulation on specic requirements regarding statutory audits of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor ’ s report. We provide the Board of Directors 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, related safeguards. From the matters communicated with the Board of Directors, we determine the key audit matters: those matters that were of most signicance in the audit of the nancial statements. 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, not communicating the matter is in the public interest. AL TERNA TIVE PERFORMANCE MEASURES (APM s) In this Annual Report, OCI presents certain ﬁnancial measur es when discussing OCI’ s performance, that are not measur es of ﬁnancial performance under IFRS. These non-IFRS measures of ﬁnancial performance (also known as non-GAAP or alternative performance measures) ar e presented because management considers them important supplemental measures of OCI’ s performance and believes that similar measures are widely used in the industry in which OCI operates. OCI believes that an understanding of its ﬁnancial performance is enhanced by reporting the following APMs: • EBITDA • Adjusted EBITDA • Adjusted net income • Free cash ﬂow EBITDA, adjusted EBITDA, adjusted net income and free cash ﬂow ar e supplemental measures of ﬁnancial performance that are not r equired by , or presented in accordance with, IFRS. Therefor e, EBITDA, adjusted EBITDA, adjusted net income and free cash ﬂow should be viewed as supplemental but not as a substitute for measures pr esented in the Consolidated Statement of Proﬁt or Loss and Other Compr ehensive Income, which are determined in accor dance with IFRS. External stakeholders should not consider EBITDA, adjusted EBITDA, adjusted net income and free cash ﬂow (a) as an alternative to operating proﬁt or pr oﬁt/(loss) before taxation (as determined in accordance with IFRS) as a measur e of our operating performance, and (b) as an alternative to any other measure of performance under IFRS. Because not all companies deﬁne adjusted EBITDA, EBITDA, adjusted net income and free cash ﬂow in the same way , these measures may not be comparable to similarly titled measures used by other companies. Deﬁnitions and explanations of the use of the APMs are described below . Reconciliations of the APMs to the most directly r econcilable line item are pr esented on the following pages. EBITDA EBITDA is deﬁned as the total net proﬁt befor e interest, income tax expenses, depr eciation and amortization, foreign exchange gains and losses and income fr om equity accounted investees. Adjusted EBITDA Adjusted EBITDA is deﬁned as EBITDA, adjusted for additional items and costs that management considers not reﬂective of our cor e operations. Adjusted net income Adjusted net income is the total net proﬁt, adjusted for additional items and costs that management considers not reﬂective of our cor e operations. Free cash ﬂow Free cash ﬂow (FCF) r eﬂects an additional way of viewing our liquidity that we believe is useful to our investors and is deﬁned as cash ﬂow reﬂecting the EBITDA for the year , change in working capital, maintenance capital expenditure, taxes paid, cash inter est paid, lease payments, dividends from equity accounted investees, dividends paid to non-contr olling interests and adjustment for other non-cash items. Reconciliation of operating proﬁt to adjusted EBITDA $ million 2020 2019 Operating proﬁt 187.0 105.0 Depreciation & Amortization 592.2 544.7 EBITDA 779.2 649.7 APM adjustments 90.7 98.7 Adjusted EBITDA 869.9 748.4 APM adjustments at EBITDA level $ million 2020 2019 Natgasoline 65.9 59.8 Unrealized r esult natural gas hedging (8.6) 4.8 Gain on purchase r elated to Fertiglobe (13.3) - Expenses related to expansion pr ojects - 1.4 Hurricane Laura 10.0 - Mandatory inspection at OCI Nitrogen 7.2 - Other including provisions 29.5 32.7 T otal APM adjustments at EBITDA level 90.7 98.7 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 197 The main APM adjustments at EBITDA level in 2020 and 2019 relate to: • Natgasoline is not consolidated and an adjustment of USD 65.9 million was made for OCI’ s 50% share in the plant’ s EBITDA in 2020. Natgasoline’ s contribution to adjusted EBITDA in 2019 was USD 59.8 million. • The unrealized r esults on natural gas hedge derivatives of USD (8.6) million in 2020 and USD 4.8 million in 2019 relate to hedging activities at OCI Beaumont and in the Netherlands. • Due to the ﬁnal post-completion settlement related to Fertiglobe, a gain on pur chase of USD 13.3 million was recor ded in the income statement. • OCI Beaumont and Natgasoline were pr e-emptively shut down ahead of the arrival of hurricane Laura in 2020. As a result of the hurricane both entities faced certain additional costs (mainly related to start-up costs, e.g. incr emental gas costs), loss on third party pur chases due to committed sales volumes and estimated lost margins. The resulting total impact of lost methanol revenues and margin is estimated to be USD 10 million. • The impact of the mandatory inspection stop due to COVID-19 rescheduling at OCI Nitr ogen resulted in an estimated negative impact on cost absorption based on r egular utilization rates and certain directly allocated costs totaling to USD 7.2 million. • Other adjustments of USD 29.5 million in 2020 mainly relates to movements in pr ovisions related to ongoing litigation and claims (USD 32.7 million in 2019 related to Fertiglobe transaction costs, provisions and the fair value adjustment on inventories as part of the Fertiglobe transaction). $ million 2020 2019 Reported net proﬁt/(loss) attributable to owners of the Company (177.7) (334.7) Adjustments at EBITDA level 90.7 98.7 Add back: Natgasoline EBITDA adjustment (65.9) (59.8) Result from associate (change in unr ealized gas hedging Natgas) (13.5) 12.0 Accelerated depreciation 2.2 53.6 Derecognition of deferr ed tax assets - 26.1 Expenses related to r eﬁnancing 51.3 9.1 Forex (gain)/loss on USD exposur e (108.5) 9.6 Non-controlling inter est adjustment / release interest accrual 8.7 (12.9) T ax effect of adjustments (0.7) (10.1) T otal APM adjustments at net proﬁt/(loss) level (35.7) 126.3 Adjusted net proﬁt/(loss) attributable to owners of the Company (213.4) (208.4) The main APM adjustments at net proﬁt/(loss) level in 2020 and 2019 r elate to: • Result from associate of USD (13.5) million mainly r elates to the unrealized r esults on natural gas hedge derivatives at Natgas (2019: USD 12.0 million). • The impact of accelerated depreciation amounts to 2.2 million in 2020 compar ed to USD 53.6 million in 2019. • USD 51.3 million expenses related to r eﬁnancing activities during 2020 including early redemption costs, r eﬁnancing activities in 2019 amounted to USD 9.1 million. • USD (108.5) million FX-impact (2019: USD 9.6 million) relates to the for eign exchange gains or losses on loans and borrowings and r elated instruments on USD exposure carried at entities which do not have USD as functional currency . • Non-controlling inter est adjustment is related to the calculated pr oﬁt attributable to non- controlling inter est on all APM adjustments and the release of the inter est accrual totaling to USD 8.7 million (2019: USD (12.9) million). • T ax effect of adjustments (USD 0.7 million in 2020) is related to the calculated tax ef fect of all APM adjustments. Free cash ﬂow $ million 2020 2019 Cash ﬂow from operating activities 617.8 337.5 Maintenance capital expenditure (239.4) (169.8) Lease payments (37.3) (30.0) Dividends from equity accounted investees 3.0 1.6 Dividends paid to non-controlling inter ests (43.2) (6.1) Other non-current items 3.8 (5.7) Free cash ﬂow 304.7 127.5 AL TERNA TIVE PERFORMANCE MEASURES (APM s ) CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 198 General disclosur es GRI indicator Response 102-1 Name of the organization OCI N.V . 102-2 Activities, brands, products, and services 'Our business', page 5 102-3 Location of headquarters Amsterdam, the Netherlands 102-4 Location of operations 'Our business', page 5 102-5 Ownership and legal form Public limited liability company 102-6 Markets served 'Our business', page 5 102-7 Scale of the organization ‘2020 Performance highlights', page 4 102-8 Information on employees and other workers ‘Our employees’, pages 66-74 102-9 Supply chain ‘Our value chain’, page 19 102-10 Signiﬁcant changes to the organization and its supply chain ‘CEO letter’, page 7-9 102-11 Precautionary principle or approach We support the precautionary principle by working to r educe our environmental impact as described throughout this annual r eport 102-12 Exter nal initiatives ‘Our approach to Sustainability r eporting’, page 39 102-13 Membership of associations In addition to local memberships at the plant level, OCI’ s memberships include: 102-14 Statement from senior decision-maker 'CEO Letter', page 7-9 102-15 Key impacts, risks, and opportunities 'Strategy and value creation', page 6-19, ‘Industry megatr ends’, page 36, ‘Our approach to climate change’, pages 37-38, 'Risk Management', pages 80-86 102-16 Values, principles, standar ds, and norms of behavior 'CEO Letter', page 7-9 102-17 Mechanisms for advice and concer ns about ethics Code of Conduct , and ‘Compliance’, pages 87-88 GL OBAL REPOR TING INITIA TIVE (GRI) INDEX Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 199 GRI indicator Response 102-18 Gover nance structure See Corporate gover nance and pages 89-118 102-19 Delegating authority 'Organizational and corporate structur e', page 95 and 'The Board of Directors', page 96 102-20 Executive-level responsibility for economic, environmental, and social topics 'The Board of Dir ectors', page 96 102-21 Consulting stakeholders on economic, environmental, and social topics See 102-40 to 44 102-22 Composition of the highest gover nance body and its committees ‘Board pr oﬁle’, page 91-94 102-23 Chair of the highest gover nance body 'The Board of Dir ectors', page 96 102-24 Nominating and selecting the highest governance body See Corporate governance and pages 96 102-25 Conﬂicts of interest Potential or actual conﬂicts of interest are governed by OCI’ s Articles of Association and By-Laws, and corporate gover nance policies and procedures. A Director shall immediately r eport any conﬂict of interest or potential conﬂict of interest that is of material signiﬁcance and may not take part in any discussion or decision-making that involves a subject or transaction in relation to which he has a potential conﬂict of inter est with the Company . Personal loans are prohibited in our Code of Conduct . OCI complies with provisions 2.7.3 2.7.4, 2.7.5 and 2.7.6 of the Dutch Corporate Governance Code. 102-26 Role of highest gover nance body in setting purpose, values, and strategy ‘Board r eport’, page 95-103 102-27 Collective knowledge of highest gover nance body ‘Board r eport’, page 95-103 102-28 Evaluating the highest gover nance body’ s performance ‘Board r eport’, page 95-103 102-29 Identifying and managing economic, environmental, and social impacts ‘Board r eport’, page 95-103 102-30 Effectiveness of risk management processes ‘Risk management and compliance’, page 77-88 102-31 Review of economic, environmental, and social topics ‘Board r eport’, page 95-103 102-32 Highest gover nance body’ s role in sustainability reporting The Board discusses sustainability r eporting in Board meetings and HSE & Sustainability Committee meetings. The Board pr ovides input on the annual report and approves sustainability disclosur es ahead of publication. 102-33 Communicating critical concer ns ‘Boar d report’, page 95-103 102-34 Nature and total number of critical concerns OCI deems this to be conﬁdential 102-35 Remuneration policies ‘Remuneration report’, page 104-116 102-36 Process for determining remuneration ‘Remuneration report’, page 104-116 GL OBAL REPOR TING INITIA TIVE (GRI) INDEX General disclosur es continued Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 200 GRI indicator Response 102-37 Stakeholders’ involvement in remuneration Our current Remuneration Policy was approved by shar eholders at our 2020 AGM and governs remuneration for both Executive and Non-ExecutiveDirectors. Our Remuneration Policy is formulated in accordance with the Dutch Civil Code; we have pr oposed certain amendments to the policy to comply with theShareholder Rights Directive II, wher eby we have developed a Recruitment Policy to guide the remuneration package of newly appointed Executive Directors. 102-38 Annual total compensation ratio ‘Remuneration report’, page 104-116 102-39 Percentage increase in annual total compensation ratio ‘Remuneration report’, page 104-116 102-40 List of stakeholder groups ‘Stakeholder Engagement’, page 32 102-41 Collective bargaining agreements 'Our employees', pages 66-68 102-42 Identifying and selecting stakeholders ‘Stakeholder Engagement’, page 32 102-43 Approach to stakeholder engagement ‘Stakeholder Engagement’, page 32 102-44 Key topics and concer ns raised ‘Stakeholder Engagement’, page 32 102-45 Entities included in the consolidated ﬁnancial statements Note 34 of the ﬁnancial statements 102-46 Deﬁning report content and topic Boundaries ‘Material T opics’, page 33 102-47 List of material topics ‘Material T opics’, page 33 102-48 Restatements of information Any exceptions, restatements, or changes to data reported ar e noted where applicable 102-49 Changes in reporting Any exceptions, restatements, or changes ar e noted where applicable. Environmental data for 2019 has been r estated to include a full year of Fertil and 50% of Natgasoline. Scope 1 greenhouse gas emissions have been r estated to conﬁrm to EU ETS deﬁnitions. 102-50 Reporting period Y ear ended 31 December 2020 102-51 Date of most recent report 2019 102-52 Reporting cycle Annual 102-53 Contact point for questions regarding the report [email protected] 102-54 Claims of reporting in accordance with the GRI Standards This report has been pr epared in accordance with the GRI Standar ds: Core Option. 102-55 GRI content index Global Reporting Initiative (GRI) Index, pages 199-202 102-56 Exter nal assurance OCI engaged an externalclimate change and sustainability consultant to quantify the group’ s Scope 3 greenhouse gas emissions and abatement initiatives for Scope 1, 2 and 3. While our non-ﬁnancial information is not externally assured, it is reviewed and veriﬁed by senior leads of r elevant functions, including the internal audit and corporate HSE teams, senior management, and corporate function heads. GL OBAL REPOR TING INITIA TIVE (GRI) INDEX General disclosur es continued Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 201 T opic-speciﬁc disclosur es GRI indicator Response Economic 201-1 Direct economic value generated and distributed ‘How we created value for our communities’, page 60-65 201-2 Financial implications and other risks and opportunities due to climate change ‘Our approach to climate change’, pages 37-58, 'strategy and value cr eation', page 6-19 Energy 302-1 Energy consumption within the organization ‘Our environment’, page 52 302-3 Energy intensity ‘Our environment’, page 52 W ater 303-1 W ater withdrawal by source ‘Water and waste’, page 55 303-3 W ater recycled and reused ‘Water and waste’, page 55 Emissions 305-1 Direct (Scope 1) GHG emissions ‘Our environment’, page 52 305-2 Energy indirect (Scope 2) GHG emissions ‘Our environment’, page 52 305-4 GHG emissions intensity ‘Our envir onment’, page 52 305-5 Reduction of GHG emissions 'sustainability strategy' and 'our approach to achieving our targets', pages 39-51 Efﬂuents and waste 306-2 W aste by type and disposal method ‘Water and waste’, page 55 Environmental compliance 307-1 Non-compliance with environmental laws and regulations OCI has complied with applicable environmental laws and r egulations GL OBAL REPOR TING INITIA TIVE (GRI) INDEX Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 202 T opic-speciﬁc disclosur es continued GRI indicator Response Employment 401-1 New employee hires and employee turnover ‘Our employees’, pages 66 401-2 Beneﬁts provided to full-time employees that are not pr ovided to temporary or part-time employees ‘Our employees’, pages 66-67, note 22 of the ﬁnancial statements Occupational health and safety 403-2 T ypes of injury and rates of injury , occupational diseases, lost days, and absenteeism, and number of work-related fatalities ‘Health and safety', pages 73 T raining and education 404-1 Average hours of training per year per employee ‘Our employees’, pages 68 404-2 Programs for upgrading employee skills and transition Comprehensive Development Pr ograms Diversity and equal opportunity 405-1 Diversity of governance bodies and employees ‘Our employees’, pages 66, and ‘Board of Dir ectors proﬁle’, pages 91-94, and 99 GL OBAL REPOR TING INITIA TIVE (GRI) INDEX Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 203 Category Disclosure Page Governance (a) Describe the board’ s oversight of climate-related risks and opportunities 76 Governance (b) Describe management’ s role in assessing and managing climate-related risks and opportunities 76 Strategy (a) Describe the climate-related risks and opportunities the organization has identiﬁed over the short, medium, and long term 37-38, 41-42 Strategy (b) Describe the impact of climate-related risks and opportunities on the organization’ s businesses, strategy , and ﬁnancial planning 37-38, 41-42 Strategy (c) Describe the resilience of the organization’ s strategy , taking into consideration different climate-r elated scenarios, including a 2°C or lower scenario -- Risk Management (a) Describe the organization’ s processes for identifying and assessing climate-r elated risks 37, 40-41, 76 Risk Management (b) Describe the organization’ s processes for managing climate-r elated risks 37, 40-41, 78 Risk Management (c) Describe how pr ocesses for identifying, assessing, and managing climate-related risks ar e integrated into the organization’ s overall risk management 76, 78-79 Metrics and T argets (a) Disclose the metrics used by the organization to assessclimate-related risks and opportunities in line with its strategy and risk management pr ocess 38 Metrics and T argets (b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 gr eenhouse gas (GHG) emissions, and the related risks 39, 207 Metrics and T argets (c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets 39-40 T ASK FORCE ON CLIMA TE -REL A TED FINANCIAL DISCL OSURES ( T CFD) INDEX Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 204 SUS T AINABILIT Y A CCOUNTING S T AND ARDS BO ARD (SASB) INDEX Sasb Reference Metric Category Unit of measure Page Environment GHG gas emissions RT -CH-110a.1 Gross global Scope 1 emissions, per centage covered under emissions-limiting regulations Quantitative Metric tons (t) CO 2 e, Percentage (%) 207 RT -CH-110a.2 Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets Discussion and analysis n/a 40-41 Air quality RT -CH-120a.1 Air emissions of the following pollutants: (1) NOx (excluding N2O), (2) SOx, (3) volatile organic compounds (VOCs), and (4) hazardous air pollutants (HAPs) Quantitative Metric tons (t) 207 Energy management RT -CH-130a.1 (1) T otal energy consumed, (2) percentage grid electricity , (3) percentage renewable,(4) total self-generated energy Quantitative Gigajoules (GJ), Percentage (%) 207 W ater management RT -CH-140a.1 1) T otal water withdrawn, (2) total water consumed, percentage of each in regions with High or Extremely High Baseline W ater Stress Quantitative Thousand cubic meters (m³), Percentage (%) 207 RT -CH-140a.2 Number of incidents of non-compliance associated with water quality permits, standards, and regulations Quantitative Number 207 RT -CH-140a.3 Description of water management risks and discussion of strategies and practices to mitigate those risks Discussion and analysis n/a 53-56 Hazardous waste management RT -CH-150a.1 Amount of hazardous waste generated, per centage recycled Quantitative Metric tons (t), Percentage (%) 207 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 205 SA SB INDEX SASB Reference Metric Category Unit of measure Page Social Community relations RT -CH-210a.1 Discussion of engagement processes to manage risks and opportunities associated with community inter ests Discussion and analysis n/a 32, 60-65, 74 W orkforce health & safety RT -CH-320a.1 (1) T otal recordable incident rate (TRIR) and (2) fatality rate for (a) direct employees and (b) contract employees Quantitative Rate 208 RT -CH-320a.2 Description of efforts to assess, monitor , and reduce exposure of employees and contract workers to long- term (chronic) health risks Discussion and analysis n/a 70-72 Product design for use-phase ef ﬁciency RT -CH-410a.1 Revenue from pr oducts designed for use-phase resource ef ﬁciency Quantitative Reporting currency 208 Safety & environmental stewar dship of chemicals RT -CH-410b.1 (1) Percentage of pr oducts by revenue that contain Globally Harmonized System of Classiﬁcation and Labeling of Chemicals (GHS) Category 1 and 2 Health and Environmental Hazar dous Substances, (2) percentage of such products by r evenue that have undergone a hazard assessment Quantitative Percentage (%) by revenue, Percentage (%) 208 RT -CH-410b.2 Discussion of strategy to (1) manage chemicals of concern and (2) develop alternatives with reduced human and/or environmental impact Discussion and analysis n/a 72 Genetically modiﬁed organisms RT -CH-410c.1 Percentage of pr oducts by revenue that contain genetically modiﬁed organisms (GMOs) Quantitative Percentage (%) by revenue 208 Operational safety , emergency prepar edness & response RT -CH-540a.1 Process Safety Incidents Count (PSIC), Pr ocess Safety T otal Incident Rate (PSTIR), and Process Safety Incident Severity Rate (PSISR) Quantitative Number , Rate 208 RT -CH-540a.2 Number of transport incidents Quantitative Number 208 Governance Management of the legal & regulatory envir onment RT -CH-530a.1 Discussion of corporate positions related to government regulations and/or policy pr oposals that address environmental and social factors af fecting the industry Discussion and analysis n/a 37, 72 Other Activity metric RT -CH-000.A Production by r eportable segment Quantitative Metric tons (t) 207 Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 206 Environmental performance Unit 2019 2020 SASB reference Energy (Ammonia) Energy consumption TJ 213,399 212,297 Energy intensity GJ / ton gr oss production 36.49 37.47 Energy (consolidated) Energy consumption TJ 290,955 300,142 R T -CH-130a.1 Energy intensity GJ / ton gross pr oduction  18.60  18.68  Grid Electricity % NPR 1.7% RT -CH-130a.1 Renewable % NPR 1.5% RT -CH-130a.1 Self-generated energy % NPR - RT -CH-130a.1 Emissions to air GHG emissions (Scope 1 - Direct) Million tons of CO 2 e  9.23  9.12 RT -CH-110a.1 GHG emissions (Scope 2) Million tons of CO 2 e 0.60 0.64 RT -CH-110a.1 GHG emissions (Scope 3 - CO 2 to Downstream) Million tons of CO 2 e  4.79  5.11  T otal GHG emissions Million tons of CO 2 e 14.62 14.87  GHG intensity T on CO 2 e / N-ton 2.30 2.26  Scope 1 emissions covered under emissions limiting r egulations % (Scope 1 – Direct) 18.4% 16.4% RT -CH-110a.1 NOx Metric tons 3,037 3,485 R T -CH-120a.1 N 2 O Metric tons 131 150 R T -CH-120a.1 SO 2 Metric tons 135 163 RT -CH-120a.1 VOCs Metric tons 55 46 RT -CH-120a.1 Efﬂuents and waste Hazardous waste r eused, recycled or recover ed Metric tons  1.98  1.69 RT -CH-150a.1 Hazardous waste tr eated or disposed of Metric tons  1.33 1.61 RT -CH-150a.1 Non-hazardous waste r eused, recycled or recover ed Metric tons  2.17  2.22  Non-hazardous waste tr eated or disposed of Metric tons  30.57  44.33  W ater T otal intake by source Million cubic meters 88.64 90.01 RT -CH-140a.1 Groundwater Million cubic meters 14.84 15.43  Seawater Million cubic meters 49.43 48.00  Surface water Million cubic meters 20.72 20.69  Third party water  3.65 5.89  T otal water discharge by destination Million cubic meters 52.13 47.35 RT -CH-140a.1 Groundwater Million cubic meters 2.28 2.17  Seawater Million cubic meters 41.17 37.88  Surface water Million cubic meters 5.01 1.43  Third party water Million cubic meters 3.67 5.87  W ater Stress     W ater withdrawn in regions with High or Extremely High Baseline W ater Stress % 72% 70% RT -CH-140a.1 W ater consumed in regions with High or Extremely High Baseline W ater Stress % 59% 55% R T -CH-140a.1 Production T otal Million tons of ammonia (nutrient tons) and methanol (product tons)  6.36  6.58 RT -CH-000.A ESG PERFORMANCE SUMMAR Y TCFD Metrics & T argets (b) * Excludes seawater used for cooling at FERTIL in a ‘once-through’ system, where seawater intake volumes ﬂow through heat exchangers and ar e safely discharged uncontaminated back to the sea. Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 207 ESG PERFORMANCE SUMMAR Y HSE Unit 2019 2020 SASB refer ence Safety Lost Time Injury Rate - total Per 200,000 hours worked 0.16 0.09  Lost Time Injury Rate - employees Per 200,000 hours worked 0.07 0.06  Lost Time Injury Rate - contractors Per 200,000 hours worked 0.30 0.14  T otal Recordable Injury Rate - total Per 200,000 hours worked 0.40 0.23 R T -CH-320a.1 T otal Recordable Injury Rate - employees Per 200,000 hours worked 0.34 0.12 RT -CH-320a.1 T otal Recordable Injury Rate - contractors Per 200,000 hours worked 0.49 0.42 RT -CH-320a.1 Fatalities # 0 0 RT -CH-320a.1 Process Safety Incidents # 17 21 R T -CH-540a.1 Process Safety T otal Incident Rate Per 200,000 hours worked 0.32 0.38 RT -CH-540a.1 Signiﬁcant Process Safety Incidents count 17 21 RT -CH-540a.1 Major Process Safety Incidents count 0 0 RT -CH-540a.1 T ransport incidents # 0 0 R T -CH-540a.2 Environmental incidents Environmental incidents # 36 37  Environmental Incident Rate (EIR) Per 200,000 hours worked 0.68 0.66  W ater -related permit exceedances # 12 16 RT -CH-140a.2 Product design for use-phase ef ﬁciency Revenue from pr oducts designed for use-phase resource ef ﬁciency Reporting Currency NPR $314 million RT -CH-410a.1 Chemical stewardship Percentage of pr oducts by revenue that contain Globally Harmonized System of Classiﬁcation and Labeling of Chemicals (GHS) Category 1 and 2 Health and Environmental Hazar dous Substances % NPR 36.6% RT -CH-410b.1 Percentage of such pr oducts by revenue that have undergone a hazard assessment % NPR 100% RT -CH-410b.1 Genetically Modiﬁed Organisms (GMOs) Percentage of pr oducts by revenue that contain GMOs % 0% 0% RT -CH-410c.1 * IFCo permit for iron discharge is tightest in industry , a new pipeline was commissioned in 2021 to permanently resolve exceedances Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 208 W orking at OCI Unit 2019 2020 Employees T otal employees # 3,715 3,682 Full-time # 3,622 3,602 Part-time # 93 80 Engagement and development V oluntary turnover rate % 1.99% 2.20% Employee absenteeism % 2.97% 1.89% Employees covered by Collective Bargaining orUnions % 47.32% 46.14% Average spending on training and development $ / employee 1,442 218 Compliance & Governance Incident notiﬁcations # 12 9 Incidents investigated # 12 9 Substantial cases # 0 0 Anonymous notiﬁcations via hotline # 3 1 Cybersecurity training (various topics) # employees reached  1,938  1,921 Compliance training (various topics, incl. CoC, ABC, Debiasing, Data privacy , and others) # employees reached  973  2,002 Gender W omen % 10.34% 10.51% Women in technical r oles % 1.10% 1.49% Women non-technical r oles % 9.23% 9.02% Women on the Boar d of Directors % 16.67% 23.08% Women in leadership positions % 18.18% 20.24% Age proﬁle under 25 % 1.68% 1.90% 25-34 % 21.34% 18.12% 35-44 % 41.82% 42.07% 45-54 % 22.29% 25.07% 55-64 % 12.12% 11.92% 65+ % 0.76% 0.92% Y ears of service 0-5 years % 27.26% 21.67% 6-10 years % 25.29% 25.12% 11-20 years % 36.85% 42.78% 21+ years % 10.60% 10.43%  * excl. Natgasoline; 2019 ﬁgures r estated to include a full year of FERTIL * excl. Fertiglobe and Natgasoline ESG PERFORMANCE SUMMAR Y Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 209 ADNOC Abu Dhabi National Oil Company AGM or GM Annual General Meeting of Shareholders APM Alternative Performance Measures AS Ammonium sulphate BACT Best Available Contr ol T echnology BN Billion CAN Calcium ammonium nitrate Capex Capital expenditure CO 2 Carbon dioxide CO 2 e Carbon dioxide equivalent COSO Committee of Sponsoring Organizations of the T readway Commission DEF Diesel exhaust ﬂuid EBIC Egypt Basic Industries Corporation EBITDA Earnings Before Interest, T axes, Depreciation and Amortization EFC Egyptian Fertilizers Company EIR Environmental incident rate EPS Earnings per share ESG Environmental, Social, Governance FCF Free cash ﬂow GHG Greenhouse gas GJ Gigajoule GRI Global Reporting Initiative HSE Health, Safety and Envir onment ICF Inter nal Control Framework IEA International Energy Agency I FA International Fertilizer Association IFRS International Financial Reporting Standards IPCC Intergover nmental Panel on Climate Change ISCC Inter national Sustainability & Carbon Certiﬁcation LCA Life-cycle analysis LT I Lost time injury L TIR Lost time injury rate M Million M m 3 Million cubic meters MENA Middle East and North Africa MMBTU Million British thermal unit MT Million metric tons N 2 O Nitrous oxide NF LoR Non-ﬁnancial Letter of Representation NOx Nitr ogen oxide OHSAS Occupational Health and Safety Assessment Series OSHA Occupational Safety and Health Administration PSI Process safety incident REACH Registration, Evaluation, Authorization and Restriction of Chemicals SASB Sustainability Accounting Standards Boar d SDG Sustainable Development Goal SO ² Sulphur dioxide STEM Science, T echnology , Engineering, and Maths TCF T ask Force on Climate-r elated Financial Disclosures TFI The Fertilizer Institute TJ T erajoule TRIR T otal recordable injury rate TSR T otal shareholder return UAN Urea ammonium nitrate UN F AOST A T United Nations Food and Agriculture Organization Statistics VPP V oluntary Protection Pr ogram Yo Y Y ear -on-year Abbreviations GL OSSAR Y OF ABBREVIA TIONS AND KEY TERMS Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 210 Biofuel A fuel made from renewable r esources CO 2 equivalents Units to measure greenhouse gas emissions Environmental Incidents A measure of the number of environmental incidents such as unauthorized pr oduct discharge, leaks, spills, or other potential environmental damage Greener fuel solutions Products in our portfolio that can be used as greener alternatives to conventional fuels, including methanol, bio-methanol, diesel exhaust ﬂuid, ammonia, and green ammonia Greenﬁeld Newly built asset on an undeveloped site GHG intensity Greenhouse gas emissions gas emissions divided by total production Greenhouse Gas Pr otocol (GHG Protocol) A standardized framework fr om the World Resources Institute for measuring and managing greenhouse gas emissions Living wage The minimum income necessary for a worker to meet their basic needs, including discretionary spending Lost time injury rate T otal lost-time injuries for every 200,000 hours worked Netback price The price achieved after deducting any applicable transportation costs incurred Production Capacity Each production unit's maximum pr oven capacity (MPC), which is calculated as annualizing the proven pr oduction of a production unit's best achieved month. For new plants, the MPC is the design (also known as nameplate) capacity . For facilities with more than one inter connected production unit, namely IFCo and OCI Nitrogen, the Production Capacity of each downstr eam product cannot all be achieved at the same time Scope 1 Direct GHG emissions fr om our production processes as per the Gr eenhouse Gas Protocol Scope 2 Indirect GHG emissions fr om steam and electricity import/export as per the Greenhouse Gas Pr otocol Scope 3 Indirect GHG emissions occurring upstr eam or downstream of our production processes as per the Gr eenhouse Gas Protocol T otal recordable injury rate T otal recordable injuries for every 200,000 hours worked Deﬁnitions GL OSSAR Y OF ABBREVIA TIONS AND KEY TERMS CONTINUED Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 211 Share listing OCI N.V .’ s shares have been listed on the Eur onext in Amsterdam as of 25 January 2013. Share capital The authorized capital of the Company amounts to EUR 12 million. The authorized capital is divided into 600 million shares, with a nominal value of EUR 0.02 each. OCI’ s issued share capital consists of 210,306,101 ordinary shar es. The shares are r egistered shar es. No share certiﬁcates are issued. As at 31 December 2020, 44.03% of the total shares outstanding wer e free-ﬂoat. Shareholder engagement We place gr eat importance on maintaining active dialogue with existing and potential shareholders, banks, and analysts. W e are committed to pr oviding relevant, high-quality and timely information to all stakeholders, and to giving current and potential shar eholders, analysts and ﬁnancial press br oader insight into the Company and the industries in which we operate. We ensure that r elevant information is provided equally and simultaneously to all interested parties as governed by our shareholder communications policy . As per our by-laws, we observe a ‘black-out’ period during which analysts’ meetings and presentations to and/or dir ect discussions with current or potential shar eholders do not take place shortly before the publication of the r egular ﬁnancial information. We r egularly schedule conference calls and meetings with potential and current equity and debt investors through r oadshow days, conferences and inhouse meetings. In addition to the Investor Relations director , meetings were conducted by our Executive Chair , CEO and CFO. We hold r esults conference calls hosted by our CEO and CFO on the day results ar e published, during which investors and analysts are invited to ask questions. A r eplay option is made available on our website. In order to ensur e our Board of Directors is fully apprised of shar eholders’ areas of focus, concerns, and feedback, an investor relations update is provided at each Boar d meeting. Dividend policy OCI has a ﬂexible dividend policy designed to balance the availability of funds for dividend distribution with pursuing growth opportunities, while maintaining, as a priority , its target of 2x net leverage through the cycle and achieving an investment grade pr oﬁle. Accordingly , the Board of Directors has not announced a dividend for FY 2020. Information in 2020 Number of outstanding ordinary shar es as at 31 December 2020 210,306,101 Highest share price (EUR/shar e) 19.50 Average shar e price (EUR/share) 12.45 Lowest share price (EUR/shar e) 8.40 Share price at 31 December 2020 (EUR/shar e) 15.72 Market capitalization at 31 December 2020 (EUR billion) 3.31 Shareholders According to the Dutch Financial Supervision Act, shar eholders of 3% or more must disclose their holdings to the Dutch Authority for the Financial Markets (AFM). These disclosures ar e made available on the AFM’ s public register , which can be found at www .afm.nl According to the AFM’ s register , the following shareholders possessed an inter est of 3% or more as at 31 December 2020: Contact us This annual report is available online at www .oci.nl OCI N.V . Honthorststraat 19 1071 DC Amsterdam The Netherlands OCI N.V . stock symbols: OCI / OCI.NA / OCI.AS Investor relations contact Hans Zayed Investor Relations Director E-mail: [email protected] T el: (+31) 20 723 45 00 investor [email protected] Corporate & ESG contact Erika W akid Group Corporate Af fairs Director E-mail: [email protected] T el: (+44) 020 7297 8820 [email protected] • Nassef Sawiris 32.99% • Onsi Sawiris 17.36% • Samih Sawiris 5.62% • W .H. Gates III 6.05% • Pictet 3.01% • Pelham 3.00% • Remaining shar es 31.97% SHAREHOLDER INFORMA TION Business performance Strategy and value creation Risk management and compliance Corporate governance Financial statements Other information Sustainability OCI N.V . Annual Report 2020 212

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