Annual Report • Apr 29, 2023
Annual Report
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Integrated report 2022 DRIVING SUSTAINABLE soil fertility 2 3 4 1 COMPANY PROFILE STRATEGIC REPORT PERFORMANCE REVIEW APPENDICES SHARE CAPITAL CORPORATE GOVERNANCE contents 4 ABOUT THIS REPORT 6 5 For the interactive version of the report, please visit our website at: phosagro.com Appendices (stand-alone document) 332 The consolidated financial statements 374 Management responsibility statement 375 Independent limited assurance report 381 GRI content index 395 SASB content index 397 TCFD Recommendations 398 Glossary 400 Contacts 8 Key highlights 10 Key events in 2022 12 Our mission and values 15 Business model 18 Geographical footprint 20 Investment case and credit ratings 27 Stakeholder engagement 30 Material topics 36 Chairman’s statement 40 CEO’s statement 43 Business environment 46 Market overview 51 Strategy 70 Strategic risks 84 Financial performance 92 Operational performance 100 Customers and product management 112 Research and education 130 Supply chain 142 People development 168 Industrial safety 190 Environmental review 234 Contributing to local communities 254 Chairman's statement 256 Corporate governance framework 260 Corporate governance structure 267 General Meeting of Shareholders 267 Board of Directors 290 Executive bodies 292 Remuneration report 296 Corporate controls 303 Ethical practices 320 Ownership structure 321 Share performance 322 Debt management 323 Analyst coverage 323 Dividend policy 326 Relationship with shareholders and investors 329 Information disclosure About this report GRI 2–1, 2–2, 2–3 It is our pleasure to welcome you to the 2022 Integrated Annual Report (the “Report”) of PJSC PhosAgro (PhosAgro). PhosAgro is a vertically integrated Russian company and one of the world’s leading producers of phosphate-based fertilizers. Boundaries and standards GRI 2–5 This Report complies with the following requirements and recommendations: • the Bank of Russia’s Regulation No. 714-P dated 27 March 2020 on Disclosure of Information by the Issuers of Issue-Grade Securities; • the Bank of Russia's Letter No. 06–52/2463 On Corporate Governance Code dated 10 October 2014; • the Bank of Russia's Letter On the Disclosure in the Annual Report of a Public Joint- Stock Company of a Report on Compliance with the Principles and Recommendations of the Code of Corporate Governance No. IN-06–28/102 dated 27 December 2021; • the UK Corporate Governance Code; • the Bank of Russia’s Information Letter on Recommendations on Disclosure by Joint-Stock Companies of Non-Financial Information Pertaining to Their Activities No. IN-06–28/49 dated 12 July 2021; • the Listing Rules of the Moscow Exchange and the London Stock Exchange; • the AA 1000 and ISO 26000 standards; • CDP – Carbon Disclosure Project standards; • The Value Reporting Foundation; • the Task Force on Climate-related Financial Disclosures, TCFD; • Reference Performance Indicators of the Russian Union of Industrialists and Entrepreneurs (RSPP), and the MOEX–RSPP Responsibility and Transparency, and Sustainability Vector indices. • UNCTAD’s Guidance on Core Indicators for Entity Reporting on Contribution Towards Implementation of the 2022 has already made history, but the challenges it set for PhosAgro Group and the entire mineral fertilizer industry are still vitally relevant. In response to them, we strive to increase production and ensure uninterrupted supplies of high- grade and safe fertilizers, which we make in the most efficient ways possible, both economically and environmentally, by consistently reducing the share of non-renewable resources along with our carbon footprint. The principles of environmental and social responsibility remain our key priority. It is impossible to succeed alone in preventing the global threat of hunger and ensuring global food security. That is why we are doing our utmost to maintain and develop partnerships with Russian and international organisations as part of the global sustainability agenda. Together we can achieve much more for sustainable soil fertility. In this Report, we did our best to share how we contribute to consistent and steady progress towards these goals across various areas of our activities. The Company maintains an annual reporting cycle, with the previous report released on 29 April 2022. The Report highlights how we integrate ESG principles into everything we do. The Company’s financial reporting follows the annual cycle too. Sustainable Development Goals, and the Business Reporting on the SDGs action platform; • The Social Charter of the Russian Business sponsored by the Russian Union of Industrialists and Entrepreneurs. The Company takes into account and implements global and national best practices in sustainable development. The Company has reported in accordance with the GRI and SASB. Appropriateness of the selected qualitative and quantitative information disclosures prepared under the related GRI Standards has been assured by Joint-Stock Company Technologies of Trust – Audit (Technologies of Trust – Audit JSC) in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information. The Auditor's Report and the GRI Content Index are both available in the appendices to this Report. Financial results in the Report have been disclosed based on the IFRS consolidated financial statements of the Group for 2022 audited by Technologies of Trust – Audit JSC in accordance with the International Standards on Auditing. This Report provides insight into the performance of parent company PhosAgro and its subsidiaries (hereinafter jointly referred to as “PhosAgro Group”, the “Group”, or the “Company”) across their operations, while also offering information on corporate governance and corporate responsibility. The key subsidiaries of the Group and PhosAgro’s stake in these subsidiaries are presented in the Group’s IFRS consolidated financial statements for 2022. Among other changes, economic environment developments led to changes in the Group structure, as described in note 29 to the consolidated financial statements, and affected a number of elements of the consolidated financial statements. For more information, see page 375 The boundaries of the Group companies covered in this Report differ from those in consolidated financial statements when it comes to specific non-financial disclosures. To ensure compliance with the materiality principle, we determined such boundaries in a way that this Report describes all material aspects of PhosAgro Group. The data disclosed in this Report includes information on: Boundary 1 – PhosAgro and companies that are part of the group to which PhosAgro belongs (the scope of disclosure in IFRS consolidated financial statements). Boundary 2 – Apatit, including its branches and standalone business units. For more information on specific disclosures and their boundaries used in this Report, see the GRI Indicator section on page 380 The report was approved by PhosAgro’s Board of Directors on 20 April 2023 (Minutes dated 20 April 2023). Strategic report Performance review Corporate governance Share capital Appendices 4 5 Company profile 1 As one of the world’s leading mineral fertilizer producers, PhosAgro has a special responsibility for ensuring food security. But we cannot achieve this goal alone. With this in mind and in full compliance with the UN Sustainable Development Goals, we place close and trusting collaboration with a wide range of partners at the heart of our business philosophy. In December 2021, the International Fertilizer Association confirmed PhosAgro’s status as an Industry Stewardship Champion for its responsible and sustainable approach to production. This award goes to companies committed to continuous improvement, transparency and best HSE practices. PhosAgro is the first Russian company chosen by the UN Food and Agriculture Organization (FAO) to run a global soil protection initiative. In 2022, PhosAgro and FAO launched the Russian Soil Laboratory Network (RUSOLAN). over 800 labs in the global network For more information, see page 21 For more information, see page 10 FOSTERING collaboration 6 7 COMPANY PROFILE 8 Key highlights 10 Key events in 2022 12 Our mission and values 14 Business model 18 Geographical footprint 20 Investment case and credit ratings 27 Stakeholder engagement 30 Material topics Key highlights Output by key product, kt Sales by key product, kt Pollutant emissions, kg per tonne of finished and semi-finished products Share of recycled and decontaminated hazard class 1–4 waste, % Employee satisfaction and loyalty, % Average annual training hours per employee, hour LTIFR (own staff) per 1 mln man-hours GHG emissions (Scope 1), kg of СO2-eq. per tonne of finished and semi-finished products Workplace fatalities (corporate staff) Waste water discharge into surface water bodies, m 3 per tonne of products and semi-finished products 569.5 420.5 253.9 2022 2021 2020 182.3 130.5 42.0 2022 2021 2020 142.1 72.3 38.9 2022 2021 2020 11,073 10,585 10,234 2022 2021 2020 11,097 10,434 10,138 2022 2021 2020 0.793 0.801 0.892 2022 2021 2020 38.8 39.1 37.6 2022 2021 2020 0.32 0.85 0.52 2022 2021 2020 133.1 135.5 143.6 2022 2021 2020 69 57 63 2022 2021 2020 1 0 0 2022 2021 2020 5.27 5.31 5.57 2022 2021 2020 99.8 95.1 79.5 2022 2021 2020 SUSTAINABLE DEVELOPMENT HIGHLIGHTS OPERATIONAL HIGHLIGHTS FINANCIAL HIGHLIGHTS Revenue, RUB bln Adjusted net profit, RUB bln Dividend payments, RUB bln COMPANY PROFILE 8 9 Strategic report Performance review Corporate governance Share capital Appendices Key events in 2022 • PhosAgro Group became first in Russia to achieve certification under the Vitality Leaf international environmental standard. • The Balakovo Branch completed the upgrade of phosphate fertilizer capacities. January February The first 400 t batch of ore from Kirovsky mine’s new +10 m level was delivered to the beneficiation plant. • Mikhail Rybnikov was appointed CEO of PhosAgro. • An Educational Centre opened at Saratov State Vavilov Agrarian University. March April • Cooperation agreements were signed with the governments of the Saratov and Leningrad regions. • An Educational Centre opened at Orel State Agrarian University. • PhosAgro and the Food and Agriculture Organisation of the United Nations (UN FAO) launched the Russian Soil Laboratory Network (RUSOLAN). • Permission was granted to retain the GDR programme. • PhosAgro Board of Directors elected the new Management Board. May June • Agreements on the development of education were made with the Ministry of Science and Higher Education and the Ministry of Agriculture of the Russian Federation. • PhosAgro signed partnership agreements with the governments of the Vologda and Murmansk regions. • A trilateral agreement on expanding cooperation with the Russian Academy of Sciences and the Mendeleev Russian Chemical Society was signed at the St Petersburg International Economic Forum. • PhosAgro and Aeromax signed an agreement to cooperate on regional digital transformation projects in the agricultural industry using remotely piloted aircraft systems. • An Educational Centre opened at Voronezh State Agricultural University. • Shareholders elected the new Board of Directors. • PhosAgro launched the second in-house mineral fertilizer distribution centre in Tatarstan which became the 29th logistics centre of PhosAgro-Region (PhosAgro Group), Russia's largest mineral fertilizer distribution network. July August Consumers were introduced to ApaSil, an adaptogen, growth enhancer, and natural immunity inducer based on bioavailable silicon, the flagship product in PhosAgro's summer 2022 product line. PhosAgro’s shares were included in theBlue Chip Index, indicator of the most liquid Russian shares on the Moscow Exchange. September October • PhosAgro-START personnel development and talent pool training programme was launched. • Independent director Victor Cherepov was elected Chairman of PhosAgro’s Board of Directors. • PhosAgro was awarded the highest ranking in the Russian Business Anti-Corruption Rating by the Russian Union of Industrialists and Entrepreneurs. • An Educational Centre opened at Kursk State Agricultural Academy. • PhosAgro received a letter of appreciation from the Minister for the Development of the Russian Far East and the Arctic for its active participation in the Clean Arctic environmental project. • Products of Apatit's Balakovo Branch were awarded the 21st Century Sign of Quality (platinum award). • PhosAgro Group companies won the 5 Stars. Leaders in the Chemical Industry nationwide industry competition held by the Russian Chemists Union. • The Russian Quality Agency (Roskachestvo) confirmed that PhosAgro’s products meet the requirements of the Green One label. • PhosAgro Group passed an inspection for product compliance with the Vitality Leaf international environmental standard. • PhosAgro Group offered a new agricultural service – integrated soil fertility monitoring – to farmers in southern Russia. November December • PhosAgro joined the UN Global Compact’s CEO Water Mandate, a global commitment platform for corporate water stewardship. • PhosAgro’s products earned an Environmental Quality Label from the Brazilian Association of Technical Standards. • Educational Centres opened at Ryazan State Agrotechnological University and Penza State Agrarian University. COMPANY PROFILE 10 11 Strategic report Performance review Corporate governance Share capital Appendices Our mission and values As one of the world’s leading mineral fertilizer producers, PhosAgro assumes a special responsibility for global food security. We offer high-quality, eco-efficient fertilizers, supply them and train farmers how to apply them in the most sustainable manner. Caring for Earth fertility for prosperous lives OUR mission Leadership Our goals are ambitious as we strive for professional excellence and continuous self-improvement Teamwork As strong team players, we look to ensure smooth cooperation of all our business units Expertise Everyone at PhosAgro is a qualified professional in what they do Reliability We always honour our obligations and are a reliable partner Improvement and innovation Development is ongoing at PhosAgro, with every procedure relentlessly improved and refined Safety We promote and share a safety culture within the Company to ensure safe working conditions Ethics We support human integrity, fostering moral standards and ethics, spiritual values, dedication at work, and respect for family values Global presence Organic growth and development Healthy lifestyles and occupational health and safety Eco-efficiency Social responsibility Innovation and digital transformation OUR values OUR vision COMPANY PROFILE 12 13 Strategic report Performance review Corporate governance Share capital Appendices For more information on SDGs, see the Commitment to UN Goals section of the Company’s website: https://www.phosagro.com/sustainability/#united-goals Navigator on UN SDGs 17 UN SDGs are the most important benchmark in our making both strategic and day- to-day management decisions. Committed to the Company’s mission and values, which are underpinned by our Strategy to 2025, we look to contribute to, and monitor the progress against, the targets of our eleven priority UN SDGs. Target 2.4 Our key programmes: • Product development programme to 2030; • Improvement of the product mix; • Programme to develop digital services for farmers. For more information, see pages 56, 100, 112 Targets 3.4 and 3.9 Our key programmes: • Safety culture improvement programme; • Social benefits and employee guarantees; • Minimising pollutant emissions per unit of output. For more information, see pages 56, 142, 168, 190, 234 The Company is among the most highly- engaged participants of the world’s largest corporate sustainability initiative. The UN first named PhosAgro a Global Compact LEAD company in 2019. Target 11.3 Our key programmes: • Our Favourite Cities programme; • Promoting entrepreneurship. For more information, see page 234 Target 15.1 Our key programmes: • Comprehensive programmes to assess and preserve biodiversity at the Cherepovets site and the Volkhov and Kirovsk branches of Apatit; • Partnership with UN FAO in advancing sustainable farming; • Carbon farm project in the Vologda Region run jointly with the Russian Academy of Sciences to arrange, among other things, for the regional monitoring of GHG emissions. For more information, see pages 57, 112, 190 Target 12.4 Our key programmes: • Programme to promote circular economy elements, including the use of phosphogypsum in farming and other industries; • Reduction of natural gas consumption in production processes; • As part of its Water Strategy, the Company is running initiatives to boost water use efficiency and reduce water consumption and waste water discharge; • Green procurement programme and ESG assessment of suppliers; • Construction of a heat and power plant at the Volkhov site. For more information, see pages 57, 63, 65, 112, 130, 190 Targets 17.16 and 17.17 Our key programmes: • Cooperation with universities and Russian and international R&D centres; • Collaboration with UN organisations (FAO, UNESCO, IUPAC); • Driving growth of sales markets; • Joining efforts with the governments and municipal authorities in the Russian regions in which the Company operates. For more information, see pages 100, 112, 234 Target 4.4 Our key programmes: • Developing PhosAgro School and DROZD projects; • Cooperation with universities and Russian and international R&D centres; • Promoting retraining and professional development. For more information, see pages 112, 142, 168, 234 Targets 6.1 and 6.3 Our key programmes: • Water Strategy; • Participation in international initiatives (the CEO Water Mandate and Water Resilience Coalition) ; • Water Use Optimisation Programme at the Cherepovets site of Apatit. For more information, see page 190 Targets 8.3, 8.5 and 8.8 Our key programmes: • Comprehensive production development programme; • Incentives and rewards system; • Green procurement programme and ESG assessment of suppliers; • Our Favourite Cities programme; • Safety culture improvement programme. For more information, see pages 65, 130, 142, 168, 234 Targets 13.1 and 13.2 Our key programmes: • Energy Efficiency Programme; • Ongoing carbon farm project in the Vologda region; • Use of green electricity to make agrochemical products; • Construction of a heat and power plant at the Volkhov site; • Green procurement programme and ESG assessment of suppliers; • Application improvement. For more information, see pages 56, 57, 112, 130, 190 Target 9.1 Our key programmes: • Logistics infrastructure development programme; • Our Favourite Cities programme; • Process Mining development. For more information, see pages 63, 130, 234 Making a positive impact Minimising the negative impact Business model For more information on the Company’s Strategy to 2025 see the Strategic Report section on page 51 PhosAgro Group’s business model is based on the simple idea that we must better than our competitors understand the ever-changing customer needs and respond to them quicker using a wide product range, large distribution network and robust logistics. This requires flexible high-tech production facilities, high self- sufficiency in quality raw materials, deep vertical integration and, most importantly, continuous feedback from end customers and analysis of our product performance. All this helps PhosAgro Group maintain a low cost position in the industry, while also ensuring top quality and unique eco- efficiency of its fertilizers. We leverage our competitive advantages and seek to meet the highest operational standards throughout our product lifecycle. 14 15 COMPANY PROFILE Strategic report Performance review Corporate governance Share capital Appendices LOGISTICS SALES APPLICATION Reliable delivery: a large Company's own fleet of railcars and port terminals on key export routes Service model for customers: our product is a combination of a fertilizer and our agronomic expertise, all available in a digital environment. Target 9.1 25.85 mt PhosAgro’s agronomic service: training, agronomic advice and support for customers: Digitalisation of sales and customer services: 42 dedicated exhibition events 47,000+ regular users of PhosAgro's digital ecosystem mobile app downloads 36,000 33 in Russian regions Largest sales network in Russia distribution centres 1.884 online fertilizer purchase orders via AgroResult online platform and mobile application up 29% year-on-year For more information, see page 18, 62 For more information, see page 18, 92 For more information, see page 57, 100 WE use Sustainable soil fertility Basis for making safe food products New research and technological innovations Well-paid jobs and social benefits Educational initiatives and upskilling opportunities Large-scale purchases of local products and services Consistent tax payments and local community development Contribution to international programmes addressing global challenges Sustainably high returns on investment WE secure Market and technology insights Management, production and sales competencies Energy and water Mineral resources and materials Partner, supplier and customer relationships Public and private infrastructure Finances PROCESS AND PRODUCT DEVELOPMENT We operate the industry’s largest research centre at Samoilov Scientific Research Institute for Fertilizers and Insectofungicides, Russia’s oldest of its kind. Target 2.4 Wide product range Ultra-modern product offering 57 fertilizer grades of all types share of grades developed in the last five years in total sales of our chemical products 8 % High vertical integration, % of self-sufficiency 2022 production, % growth vs 2021 MINERAL RESOURCES Apatite-nepheline ore of magmatic origin, which is unique in terms of quality and safety and does not have as much cadmium or other heavy metal content as would be dangerous for health, with a reserves-to- production ratio (RPR) of 60 years (including off-balance reserves) Target 12.4 For more information, see page 92, 100 For more information, see page 100, 112 For more information, see page 92, 190 §ǘȌȺȯǘƊɈƵ ȲȌƧDz Ammonia Sulphuric acid Ammonium sulphate 100 76 92 51 PRODUCTION Large-scale upgrade and construction programmes in Cherepovets, Volkhov and Balakovo Strong commitment to reducing emission intensity and waste water discharges, and improving energy efficiency Targets: 3.9 6.3 8.3 12.4 15.1 Phosphate fertilizers Nitrogen fertilizers 12.0 mt 8.2 mt 2.6 mt +2.0 % +4.2 % +5.6 % Apatite and nepheline concentrate Targets: Targets: 13.1 13.2 17.16 17.17 2.4 12.4 Growth in fertilizer volumes to a record 11 mt up 6.8% year-on-year Results of 48 published at www.phosagro.ru agronomic trials PhosAgro Group’s competitive advantages High railway throughput capacity at production sites: 16 17 COMPANY PROFILE Strategic report Performance review Corporate governance Share capital Appendices Moscow Murmansk Kirovsk Cherepovets Yekaterinburg Nizhny Novgorod Kazan Krasnodar Volgograd Stavropol Samara Bykov Otrog Ryazan Krasnoyarsk Novosibirsk Barnaul St Petersburg Ust-Luga Volkhov Rostov-on-Don Tambov Lipetsk Minsk (Belarus) Orel Ussuriysk Penza Saransk Astana (Kazakhstan) Kotka (Finland) Kursk Voronezh 1 4 5 2 3 Belgorod PhosAgro Group's eco-efficient mineral fertilizers and feed phosphates are sold all over the world via an extensive distribution network relying on the Groups’s robust logistics infrastructure. Geographical footprint Key subsidiaries • Apatit, JSC (including Balakovo, Volkhov, and Kirovsk branches) • Mekhanik, LLC • NIUIF, JSC • PhosAgro-Region, LLC • PhosAgro-Belgorod, LLC • PhosAgro-Don, LLC • PhosAgro-Kuban, LLC • PhosAgro-Kursk, LLC • PhosAgro-Lipetsk, LLC • PhosAgro-Oryol, LLC • PhosAgro-Stavropol, LLC • PhosAgro-Volga, LLC • PhosAgro-SeveroZapad, LLC • PhosAgro-Tambov, LLC • PhosAgro-Sibir, LLC BALAKOVO BRANCH VOLKHOV BRANCH APATIT KIROVSK BRANCH Bykov Otrog, Saratov region focuses on phosphate-based fertilizers (a leading producer in Europe) and feed phosphates (a leading producer in Russia, and the country’s only manufacturer of monocalcium phosphate feed grade). Volkhov, Leningrad region is Russia’s only producer of sodium tripolyphosphate and one of Russia’s leading producers of mineral fertilizers. R&D Cherepovets, Vologda region PhosAgro Group runs Samoilov Scientific Research Institute for Fertilizers and Insectofungicides, Russia’s only research centre specialising in this area and one of the largest in Europe. Founded in 1919, this institute paved the way for the country’s strong mineral fertilizer industry. Kirovsk, Murmansk region is the world’s leading producer of high-grade phosphate rock and Russia’s only producer of nepheline concentrate. It develops six Khibiny deposits: Kukisvumchorr, Yukspor, Apatitovy Cirque, Rasvumchorr Plateau, Koashva and Njorkpahk. Cherepovets, Vologda Region is Europe’s biggest producer of phosphate-based fertilizers, phosphoric and sulphuric acids, as well as one of Russia's leading manufacturers by NPK, ammonia and ammonium nitrate output. Our key production facilities (including mining and processing assets), port terminals and a research centre are located in Russia. A flexible business model, well-thought- out production and sales strategy, and deep knowledge of customer preferences help us maintain a strong position across the main fertilizer markets, primarily in Russia and other premium markets. Upstream and downstream Logistics With a ca. 8 mtpa port transhipment capacity across key export routes, the Company can ensure a reliable supply to foreign customers and guarantee timely delivery against its contractual obligations. R&D Distribution PhosAgro Group’s network of sales offices is the largest in Russia. The Group’s quality products are available to farmers across the globe. 5 2 1 3 4 For more information on our geographical footprint, visit the Company’s website: www.phosagro.com/about/#geo 71 regions of operation GRI 2–1, 2–6 COMPANY PROFILE 18 19 Strategic report Performance review Corporate governance Share capital Appendices 1 By total production capacity for DAP/MAP/NP/NPK/NPS. 2 Monoammonium phosphate / diammonium phosphate Investment case and credit ratings A global producer of high-quality phosphate-based fertilizers 1 PhosAgro is Europe’s largest producer of phosphate-based fertilizers 1 and a top 5 global producer of DAP/MAP 2 by capacity. Customer focus A netback-driven sales model with a global presence. Certification for compliance with international standards testifies to the highest quality of our products and management efficiency throughout their life cycle: • ISO 9001:2015 • ISO 14001:2015 • ISO 45001:2018 • GMP+ B2 • GMP+ B1 • GMP+ B4 Our products are compliant with Regulation (EC) No. 1907/2006 concerning the Registration, Evaluation and Authorisation of Chemicals (REACH). The Company is also taking all necessary steps to keep the registrations in line with new requirements. One of our achievements in 2022 is the certification of fertilizers in accordance with Regulation (EU) 2019/1009 of the European Parliament and of the Council, which sets out the rules for accessing the EU fertilizer market. Stewardship Champion PhosAgro has an Industry Stewardship Champion status assigned by the International Fertilizer Association (IFA). It is attached to companies that have been certified to meet the Protect & Sustain standard and actively participate in IFA research on safety, environment, energy efficiency and CO 2 emissions. Our production technologies meet the highest global standards. COMPANY PROFILE 20 21 Strategic report Performance review Corporate governance Share capital Appendices Unique resource base and sector-leading margins Unique mineral resource base The mine life, including off- balance reserves, is estimated at around 60 years. The only Russian and one of the leading European producers of monocalcium phosphate feed grade and the NP 11-37 liquid complex fertilizer Important food safety factor Thanks to its magmatic origin, phosphate rock mined on the Kola Peninsula boasts exceptional purity. Wide range of ready-to-use solutions for farmers Our in-house R&D function and cooperation with Russian and international R&D centres enables us to develop and launch new fertilizer grades in a prompt manner in order to deliver the crop nutrient solutions our customers need. 2 No. 1 World's producer of high- quality phosphate rock (P 2 O 5 content at 39% and above) globally No. 1 in terms of urea and mineral fertilizer capacity concentrated at one production facility (Apatit, Cherepovets) in Europe Self-sufficiency in major inputs: • 100% in phosphate rock, • 76% in ammonia, • 92% in sulphuric acid One of the highest margins in the phosphate segment In 2022 PhosAgro topped Expert RA’s ranking with its highest ESG transparency level among Russian chemical companies One of the global leaders in the production of major types of fertilizers by profitability 40,000 80,000 160,000 120,000 Share of PhosAgro Group’s supplies in the key sales markets (share of compound and complex fertilizers in the region’s total imports), 2022 estimates, % 10,000 20,000 30,000 PhosAgro Group's position on global DAP production cost curve, production, kt Source: CRU Industry Cost Curves 2022, PhosAgro PhosAgro Group's position on global urea production cost curve, production, kt Source: CRU Industry Cost Curves 2022, PhosAgro Russia (share of total supplies) Europe Latin America Africa 45 24 15 12 COMPANY PROFILE 22 23 Strategic report Performance review Corporate governance Share capital Appendices 1 Associação Brasileira de Normas Técnicas. 1 CAPEX excluding capitalised repairs. Eco-efficient fertilizers The Group’s product packaging also has a pictogram from the EU regulations, which is used to inform consumers of safe fertilizers in terms of heavy metals content with cadmium content not exceeding 20 mg/kg P 2 O 5 . Sound capital allocation in highly effective investment projects Investment projects may get a go-ahead subject to their high, compliance with the BAT and sustainability criteria along with the CAPEX/EBITDA target, and a comfortable net debt / EBITDA covenant headroom. Breakdown of CAPEX 2 , RUB bln 3 4 PhosAgro was the first Russian company to be certified to GOST R 58658–2019, a national standard for products with improved characteristics which introduced the world’s most rigorous limits on heavy metals and arsenic content. This allows PhosAgro to mark its products with a special Green One label. The Company also successfully completed voluntary Vitality Leaf certification. This ISO 14024-compliant framework was designed to assess a product’s environmental safety throughout its lifecycle, including mining and processing of raw materials, their delivery to the plant, storage, transportation and use of finished products, and packaging recycling. Additionally, PhosAgro made a Green Label environmental claim asserting that the product is free from dangerous cadmium concentrations harmful to human health and soils. 2 0 2 1 ( a c t u a l ) 2 0 2 2 ( a c t u a l ) 2 0 2 3 ( p l a n ) 53.2 41.9 57.1 27.0 24.1 2.2 29.0 4.0 24.2 10.8 30.0 1.1 Non-industrial construction Investment projects Maintenance In December 2022, the Group’s Cherepovets, Volkhov and Balakovo production sites and phosphate rock mining and beneficiation facility in Kirovsk successfully passed a certification audit by the Brazilian Association of Technical Standards (ABNT). COMPANY PROFILE 24 25 Strategic report Performance review Corporate governance Share capital Appendices Well-balanced corporate governance In March 2022, in the wake of sanctions against Russia, the international rating agencies Standard & Poor’s, Moody’s and Fitch withdrew both the sovereign credit ratings and the credit ratings of all Russian corporate issuers, including PhosAgro. This move was not related to a change in the creditworthiness of the companies and had no impact on PhosAgro’s ability to service its bank and public debt. At the time of the withdrawal, PhosAgro’s credit ratings were as follows: Standard & Poor’s – BBB-, Moody’s – Baa3, Fitch – BBB-. Throughout 2022, the Company continued to service its bank loans in a timely manner and took a number of steps to continue servicing Eurobonds in the new regulatory environment. Thus, the Company once again confirmed its high credit quality. Also, as a result of the sanctions against the country, international ESG rating agencies scaled down their engagement with Russian companies, including PhosAgro. Hence, PhosAgro’s international ESG ratings today cannot adequately reflect the Company’s ESG practices. PhosAgro is currently making efforts to obtain credit and ESG ratings from Russian rating agencies. 5 4 (40%) independent directors on the Board of Directors Stakeholder engagement Statement of the Chairman of the Strategy and Sustainable Development Committee lifecycle is instrumental in providing the most complete and well- structured information about the Company’s performance, while maintaining a balance between the interests of diverse stakeholder groups. I would also like to highlight the external recognition of our efforts. PhosAgro's Integrated Annual Report 2021 won the Grand Prix of the Moscow Exchange's 25th Annual Report Competition as the best report of companies with a capitalisation of over RUB 200 bln. This is our first reward of this kind, and we highly appreciate such a high recognition of our efforts by the investment community. We are doing our best to make sure our reporting complies with the highest standards going forward. Sustainable development remains the cornerstone of PhosAgro's strategy, and we intend not only to maintain, but also to reinforce our focus on ESG integration in our corporate governance and current operations. Aware that full and timely reporting is key to achieving this goal, we place a strong emphasis on preparing relevant reports. For the second year running, we are making disclosures in line with the TCFD recommendations. This methodology, also used in this Report, enables us to cover a wide range of steps we take across such areas as environmental protection, social responsibility and corporate governance. A disclosure approach focused on a product’s Alexander Sharabaika Chairman of the Audit and Sustainable Development Committee of the Board of Directors Our ability to listen and understand, be quick in our response, and effectively work with a wide range of stakeholders is key to the approach we use in doing business. It provides a solid foundation for delivering on strategic SDGs. External ESG assessment 2020 2021 2022 n/a А А Сorporate transparency rating n/a А А+↑ WWF Environmental Transparency Rating for Mining and Metal Companies 14 8↑ 7↑ Responsibility and Transparency index B A↑ А Sustainable Development Vector index B A↑ А Disclosure of UN SDG integration rating B A↑ А 3 meeting on a regular basis board committees COMPANY PROFILE 26 27 Strategic report Performance review Corporate governance Share capital Appendices Approach to stakeholder engagement; identifying and selecting stakeholders GRI 3–1, 2–29, SASB EM-MM-210a.3 For us, engagement with stakeholders begins when we realise our common goals and interests. A stakeholder is a person or organisation that has an interest in what we do. Stakeholders also include persons or organisations that may be affected by our activities or can influence our business decisions. Understanding stakeholder views facilitates many processes. It helps us develop new products for our customers, raise awareness among farmers about modern agricultural practices and techniques, work with researchers to present ambitious innovative projects connecting science and business and, most importantly, make informed practical choices to improve economic, social and environmental conditions where the Company can make a difference. In our engagement with our stakeholders, we strive to be constructive, open and principled. Thus, we work hard to build partner relationships in the towns where we operate and ensure that we strictly comply with all applicable regulatory requirements. PhosAgro’s framework for stakeholder engagement management covers all tiers of corporate governance. Suppliers and contractors For more information, see page 130 Research community For more information, see page 112 International organisations For more information, see page 128 Business and industry associations For more information, see page 126 Our key stakeholders: Generated and distributed direct economic value, RUB mln GRI 201–1 Item Stakeholder 2020 2021 2022 DIRECT ECONOMIC VALUE GENERATED 254,854 422,459 573,966 Revenue from sales Wide range of stakeholders 242,262 404,849 551,037 Revenue from other sales 11,617 15,639 18,490 Revenue from financial investments 975 1,971 4,439 Revenue from sale of assets 0 0 0 ECONOMIC VALUE DISTRIBUTED (247,254) (363,715) (520,253) Operating expenses, including: Suppliers and contractors Employees and trade unions (193,263) (250,101) (320,792) wages and other payments to employees (28,540) (32,781) (51,567) social expenses (2,570) (3,378) (9,314) PAYMENTS TO PROVIDERS OF CAPITAL payments to shareholders Investment and finance community (38,852) (72,260) (142,111) payments to creditors (4,132) (4,335) (4,558) Tax expenses and other payments to government: (11,007) (37,019) (52,792) including income tax expense Regional governments and local communities (8,045) (31,073) (41,465) ECONOMIC VALUE RETAINED 7,600 58,744 53,713 Feedback You can send your comments and proposals regarding corporate reporting to [email protected] or [email protected]. Feedback from shareholders and other stakeholders helps PhosAgro improve reporting transparency and quality. Employees and trade unions For more information, see page 142 Regional governments and local communities For more information, see page 234 Consumers For more information, see page 100 Investment and finance community, including investors, shareholders and ESG rating agencies For more information, see page 326 COMPANY PROFILE 28 29 Strategic report Performance review Corporate governance Share capital Appendices Material topics GRI 2–14, 2–29, 3–1, 3–2 Defining material topics: approach and steps In October 2022, PhosAgro approved the revised version of the Regulations on Collecting, Processing and Presenting Non-Financial Reporting Data in accordance with GRI standards, including the GRI Universal Standards updated in 2021. The Regulations include GRI-compliant data collection forms for the Report and establish the approach to defining material topics based on double materiality. This approach relies on the review of the impact that social, economic, regulatory and governance and/or environmental factors or aspects have on the Company and vice versa. The new way of materiality assessment resulted in several changes to the 2022 disclosures, in particular a more extensive list of material topics. With no GRI sector standard for the chemicals industry drafted so far, the list of topics was expanded to include additional aspects reflecting the specific nature of the Company's operations, including SASB recommended disclosures. The Company looked into topics for each GRI Topic Standard and rated them from 0 to 3 based on the opinion of the investment and finance community, including rating agencies, and feedback from the key stakeholders. In 2022, PhosAgro Group relied on the stakeholder survey from 2021, having first checked its relevance by reviewing communications received via the PhosAgro Hotline or [email protected] over the year. We included topics rated above 1 in the list of material topics proposed for disclosure. Following the analysis of topics deemed material in 2020, 2021 and 2022, we found out that their materiality had largely changed due to changes in assessment approaches. Our strategy and risk experts analysed the list of topics, compared them against our strategic priorities and risk profile and assessed their impact on PhosAgro's value chain. The impact of material aspects on our value chain from mine to plate (for more information, see the Business Model section on page 16 ) was rated as high, medium or low. When assessing the degree of impact on processes under our control such as product development and manufacturing, purchase and mining of mineral Assessment of each topic's materiality: • for the Company and its stakeholders (including investors); • from the perspective of industry standards and ratings Checking the selected topics for relevance to information users and against expert opinions Approving the final list of material topics by the Strategy and Sustainable Development Committee IDENTIFYING THE SOURCE OF DATA for selecting material topics and assessing respective impacts SHORT-LISTING material topics APPROVING THE FINAL LIST of material topics 2 3 Assessment Materiality assessment of negative and positive impacts and assessing materiality of each impact in the value chain Assessment of each topic's materiality on a scale from 0 to 3 OUR APPROACH TO SELECTING 2022 MATERIAL TOPICS Key changes in 2022 reporting that deserve a special mention 1. Material topics disclosed in the 2021 Annual Report are still relevant in 2022. 2. We performed a dynamic assessment (change in relevance year-on-year). 3. We carried out a double materiality assessment of the Company's impact on the aspect and vice versa. 4. Under the new GRI 3 standard, we identified five new material topics: • 206 Anti-competitive behaviour, • 402 Labour/management relations, • 405 Diversity and equal opportunity, • 410 Security practices, and • 414 Supplier social assessment. For more information, see the GRI Content Index section on page 380. 5. 44 GRI indicators (39 of which relate to the 22 material topics listed on page 32 below) underwent external independent audit by Technologies of Trust – Audit JSC, providing limited assurance. Review of material topics from the perspective of the corporate strategy, risks, opportunities and the Company's business model Surveys of internal stakeholders 1 Survey of investors' opinions on material topics Analysis of global and local ESG ratings, rankings and standards Review of material topics as per the SASB industry standard Analysis and prioritising of the UN SDGs Survey of external stakeholders, including review of complaints and queries received by the PhosAgro Hotline resources, logistics and sales, we took into account the scale of an actual and potential impact and the nature of the assessed topic with due regard to industry specifics. With the application of our products seen as an important stage in value creation, we paid attention both to the Company's impact on the end consumer and to customer needs, expectations and requirements with regard to our products and practices. To illustrate our approach to impact assessment, let us look at the GRI 404 Training and Education. For this topic, we rated the impact as high at every stage of the value chain due to an important role our highly qualified staff plays along the way from product development to sales. As regards the application stage, we assume that the customer gets a 2-in-1 product, including a fertilizer and our service expertise (training, agronomic advice and support). Hence, relevant competencies and skills acquired, in particular, as part of the provided training are highly relevant. Our work to define material topics resulted in a materiality list based on the entire range of stakeholder interests and opinions related to the Company’s disclosures. Following the analysis, we selected 22 material topics to be disclosed in this Report and ranked them according to their priority for the Company. COMPANY PROFILE 30 31 Strategic report Performance review Corporate governance Share capital Appendices Economic performance Emissions Waste Occupational health and safety Local communities Energy Water and waste water Employment Labour/management relations Market presence Diversity and equal opportunity 405 302 202 413 402 403 401 303 305 Strategic planning, production, project, sanctions, interest rate, credit, currency risks Climate, environmental, regulatory risks Environmental, regulatory risks HR, health and safety, infectious diseases risks Social risks Production, climate risks Environmental, regulatory risks Social, HR risks HR, business process risks Strategic planning, sanctions risks HR risks Related risks GRI UN SDGs Marketing and labelling Supplier social assessment Security practices Taxes Anti-competitive behaviour Anti-corruption Supplier environmental assessment Biodiversity Training and education Indirect economic impacts Procurement practices 204 205 203 206 404 207 304 410 308 414 417 Commodity risks Failure to deliver on SDGs and ESG Information and economic security risks Tax risks Reputational risks Corruption risks Failure to deliver on SDGs, and ESG environmental risks Environmental, regulatory risks HR risks Failure to deliver on SDGs and ESG, climate, sanctions risks Commodity, corruption, sanctions risks P r o d u c t d e v e l o p m e n t P r o d u c t d e v e l o p m e n t M i n e r a l r e s o u r c e s M i n e r a l r e s o u r c e s P r o d u c t i o n P r o d u c t i o n L o g i s t i c s L o g i s t i c s S a l e s S a l e s A p p l i c a t i o n A p p l i c a t i o n Impact on the value chain High Medium Low Impact degree 201 306 COMPANY PROFILE 32 33 Strategic report Performance review Corporate governance Share capital Appendices 2 MEETING the growing demand In November 2022, the world’s population exceeded eight billion people and may hit the ten billion mark by 2050. In this context, the use of fertilizers is one of the most promising ways to avert the global threat of hunger, and constructive cooperation between international organisations, governments, fertilizer producers and consumers is critical to maintaining resilient and reliable global fertilizer production and supply chains. Despite normal temporary fluctuations, the long-term growth in global demand for mineral fertilizers has been steady. In Russia and the CIS, consumption grew by 6% in 2022. Building on PhosAgro's contribution to meeting this growing demand, we further increased production in 2022. Boosting supplies to the rapidly grow- ing markets of Latin America is one of our key priorities. In 2022, PhosAgro Group products were certified in Brazil and earned the Environmental Quality Label from the Brazilian Association of Technical Standards. 4.6 % y-o-y growth in PhosAgro's mineral fertilizer production For more information, see page 65 For more information, see page 57 34 35 STRATEGIC REPORT 4 Chairman’s statement 6 CEO’s statement 9 Business environment 12 Market overview 17 Strategy 36 Strategic risks The past year has offered Russian businesses unprecedented challenges: the rules and mechanisms of international trade, including those for fertilizers and agricultural commodities, no longer work as they used to. PhosAgro Group, a supplier to farmers around the globe, was forced to adapt quickly to the new normal. And we did it. We have been working hard to make sure that farmers in the priority domestic market and globally have access to our high-quality and eco-efficient fertilizers, which is exactly what the Company was created for. In the year’s turbulent environment, not only have we not abandoned investment in development, but we have planned record investments in projects that will fuel our growth, support self-sufficiency in feedstock and, of course, create jobs and contribute to the development of the regions where we operate. RUB 63 bln earmarked for investment In 2022, PhosAgro’s corporate governance framework changed. I took on the role of the Chairman of the Board of Directors. This is an honour and a great challenge for me, and I want to express my gratitude to colleagues for their trust. It is my conviction that people are PhosAgro Group’s most valuable asset. I believe it is our team that helped keep the quality of PhosAgro’s corporate governance consistently high through all the headwinds of 2022. Year after year, the Company has been streamlining its production and governance structure: the local regulatory framework, monitoring and control systems, communications and accountability across the Group. This helped us withstand the challenges of the past year. Despite all the risks and external limitations pressing on the business environment, we strived to remain open and transparent to a wide range of stakeholders. In our view, it is a reliable indicator of strong corporate governance and sustainable development of the Company. Chairman’s statement Consistently strong corporate governance Sticking to strategic priorities In 2022, we continued with our Strategy to 2025, which focuses on increasing production and raising our status as a low-cost producer of eco- efficient fertilizers. In 2022, the Company invested over RUB 63 bln (including capitalised repairs) with another RUB 250 bln earmarked for investment over the next five years. Despite all the trade restrictions of 2022, the Company was able to route its supplies to other markets PhosAgro Group has stood strong boasting unprecedented flexibility: even under these circumstances, we were able to ramp up supplies, primarily to markets in friendly countries. Company profile STRATEGIC REPORT 36 37 Performance review Corporate governance Share capital Appendices Victor Cherepov, Chairman of the Board of Directors of PJSC PhosAgro in a short period of time. While maintaining our leading position in the priority domestic market, we have also cemented our business relationships with a number of friendly countries. Specifically, Russia and Brazil reached a new level in bilateral trade this year: our products earned an Environmental Quality Label from the Brazilian Association of Technical Standards. PhosAgro’s Cherepovets, Volkhov and Balakovo production sites and its phosphate rock mining and beneficiation facility in Kirovsk successfully passed a certification audit by ABNT. The joint project accomplished by PhosAgro Group, ABNT and the Ecological Union certification body to develop and harmonise common criteria for evaluating fertilizers is an important milestone towards mutual recognition of ecolabels for mineral fertilizers and setting uniform market requirements in the two countries based on the existing Vitality Leaf international system standard. Strengthening new business relationships Our absolute priority is to operate with the widest possible range of stakeholders in mind. We collaborate closely with farmers, local communities in the regions of operation, and domestic market players. PhosAgro continues to run joint humanitarian and educational projects in concert with international organisations. We also actively cooperate with academic organisations and institutions of higher and secondary vocational education offering training in relevant and related professions. This has brought to life highly successful The investments we have made over many years and the professionalism of our team are yielding tangible results. I am confident that we will continue to forge ahead to new heights and new records in 2023, all the more so because not only the Company needs this. We recognise our responsibility towards a wide range of stakeholders, including farmers all over the world. Our ultimate goal that we have been successfully pursuing for over 20 years is to ensure the reliable and seamless supply of eco-efficient fertilizers and therefore contribute to food security in Russia and in some 100 countries around the world. In 2022 and 2023, this challenge becomes particularly urgent as sanctions hit the global business arena, and unconscionable compliance from financial, logistics, and insurance companies may disrupt established processes. In 2023, we will continue to stand up for the free trade of PhosAgro Group’s eco-efficient fertilizers around the world for the benefit of people and global food security. Sustainability at the heart of PhosAgro’s business GRI 2-22 training programmes at these educational institutions for young talent the Company needs. Apart from our charitable initiatives in the area of social and environmental development, we are closely integrating the sustainability principles into our business model, which has become the key element of PhosAgro Group’s overall strategy and is successfully embedded into our corporate governance framework and our day- to-day operations. For example, at the UN Climate Change Conference (COP27), we joined the Business Declaration for Climate Resilient Water, Sanitation, and Hygiene (WASH). The Declaration was drafted by the Water Resilience Coalition, a UN Global Compact platform, together with the WASH4Work alliance to help achieve the Clean Water and Sanitation and Climate Action UN Sustainable Development Goals. As part of a joint project between PhosAgro and the UN Food and Agriculture Organisation, we launched the Russian Soil Laboratory Network (RUSOLAN), which was integrated into the Global Soil Laboratory Network (GLOSOLAN) that includes over 800 laboratories in more than 150 countries. To support the green agenda, Apatit mining and processing plant continues to increase the use of green electricity for its agrochemical products. Our in-house power generation facilities at our chemical plants are largely powered by sulphuric acid production steam. A similar generating facility was launched in Volkhov in 2022 as part of an investment project to build a new plant and cover 90% of its electricity needs. In a joint effort with the government of the Vologda region and the Russian Academy of Sciences, we have kicked off a project to create a carbon farm, an area designed to monitor and absorb greenhouse gases. In autumn 2022, the first part of the carbon farm was deployed as part of the project and around 110,000 coniferous and deciduous trees were planted on an area of around 100 ha. Forging ahead Company profile STRATEGIC REPORT 38 39 Performance review Corporate governance Share capital Appendices CEO’s statement The year of 2022 will certainly go down in the history of Russia’s business as one of the most challenging years even compared to the period of the COVID-19 pandemic. We were, too, affected by a number of sanctions, the disruption of international ties and supply chains that had developed over years of cooperation. It was in this year that I assumed the position of CEO, and I am grateful for the trust of our shareholders and team, and for the coordinated and professional work of each and every member of the management team. I am also grateful to my predecessor, Andrey A. Guryev, whose stewardship made PhosAgro one of the globally recognised leaders and the industry’s most efficient players. In 2022, this came in handy more than ever before. Throughout the year, we were dealing with the key challenge of maintaining access to PhosAgro Group’s eco- efficient fertilizers for farmers around the world for the sake of global food security. Artificial barriers impeded this in every way possible, but we continued to do our utmost to eliminate the restrictions on free trade in vital agricultural commodities from Russia. In the extremely challenging environment of 2022, our commercial and logistics divisions exemplified total dedication and impeccable professionalism. However, you need to understand that while much has been achieved, there is still a long way to go before obstacles to Russian fertilizers are lifted and a global humanitarian catastrophe is prevented. PhosAgro’s team manages to cope with the new challenges in a short space of time, not just keeping the business stable but reaching new highs. New records In 2022, in spite of all the external challenges, the Company’s team managed to set a new production record: the concerted efforts of our entire team increased PhosAgro Group’s agrochemical output by almost 5% year-on-year to a record 11.1 mt. Thus, we managed to meet growing demand in our priority domestic market reliably. One of PhosAgro Group’s primary objectives is to offer a wide range of high-quality fertilizers to farmers. With our in-house R&D function, we continue expanding our offering to meet the needs of farmers in line with the principles of sustainable development. And we are able to do this quickly. In 2022, our portfolio expanded to 57 agrochemical grades, including all types of fertilizers and feeds. Two of these grades were registered in 2022. A significant portion of our offering consists of newest fertilizer grades developed over the past five years, including two in the reporting year. Once again, the past year was a record year for us in terms of not only operating but also financial performance. Adjusted EBITDA was up by 39% compared to 2021, reaching a record of RUB 267 bln. EBITDA margin also improved, hitting 46.9% vs 45.7% in the previous year. Investments in the future n 2022, we continued to make steady progress towards the goals set out in our Strategy to 2025, including running existing investment projects and targeted programmes. Most of these goals seem relevant and realistic, even in the new external environment. In the reporting year, we allocated more than RUB 63 bln (including capitalised repairs) for the development and maintenance of production facilities, a third more than in 2021. We are building new production facilities, upgrading and expanding existing ones, bolstering their vertical integration and self-sufficiency in technology and feedstock. All this enables us not just to ramp up production, but to do so in the most flexible and cost-efficient way possible taking full advantage of existing market environment and delivering a sustainably high return on our investments. Projects we are proud of Putting the new +10 m level at the Kirovsky mine into operation is the most ambitious of our key investment projects. Early in 2022, we started to pilot the new level and in February the first batch of ore was already available for beneficiation. The new level will not only enable us to replace the levels being shuttered but even to increase the mine’s overall output in order to reach the targets in line with the Strategy to 2025. This project is the champion by the number of bleeding-edge technologies and solutions applied. Another key project for PhosAgro Group is to develop Balakovo branch, where we completed the third phase of our investment programme in 2022. One of the main initiatives in this project was the upgrade of the SK-20 sulphuric acid unit increasing its monohydrate capacity from the current 760 ktpa to 1.1 mtpa. It will make us more independent of external suppliers and more self-sufficient in the scarce raw material – high-quality sulphuric acid. This investment project boosted phosphate rock processing and helped us launch the production of complex NPK fertilizers in Balakovo. Over the next five years, we plan to invest around RUB 250 bln in developing and maintaining our production capacities, of which nearly RUB 67 bln (including capitalised repairs) will be invested in 2023 – a 6% increment over the record high investment made in 2022. Sustainable development and food security As we discuss PhosAgro Group’s performance in the past year, I cannot but mention our sustainability efforts and achievements. We have once again proved that we are able to combine strong operating and financial performance with social and environmental commitments. We more than doubled our support for social and charitable projects in the regions of operation, with some RUB 11 bln spent in this realm. PhosAgro implemented initiatives set to improve the quality of the urban environment, education, healthcare, youth policy, and sports. RUB 267 bln adjusted EBITDA The top priority for our team was to ensure seamless operations at all of our production sites, deliver fertilizers on time, and take care of our employees and their families. Company profile STRATEGIC REPORT 40 41 Performance review Corporate governance Share capital Appendices Mikhail Rybnikov, Chief Executive Officer of PJSC PhosAgro On top of that, we strongly support traditional cultural and spiritual values. By and large, the sustainability principles are firmly incorporated into our business model, as our primary goal is to supply our eco- efficient fertilizers to farmers around the globe and in the local priority market. We used the best available technologies to implement all the investment projects and programmes in 2022, and our sustainability efforts do not go unnoticed by the expert community. In November 2022, the Russian Quality Agency (Roskachestvo) confirmed that PhosAgro Group’s products meet the requirements of the Green One label. In 2021, the Company was the first business in Russia to take assessment for compliance with the standard enabling us to use this ecolabel. By a wide margin, PhosAgro’s fertilizers comply with the world’s most stringent limits on heavy metals and arsenic content in fertilizers, which are introduced by Russian national standard GOST R 58658-2019. We also passed an inspection for product compliance with the Ecological Union’s Vitality Leaf standard in November 2022. PhosAgro became the first company in the country’s fertilizer industry to be granted the right to use this international label a year earlier. We also ranked among the companies with the best social and charitable programmes in the Russian Leaders in Corporate Philanthropy 2022 competition organised by the Donors Forum, a coalition of major grantmakers in Russia. Outlook We have big plans for 2023. PhosAgro will continue to pursue the Strategy to 2025 by increasing capacity and upgrading production facilities. We plan to ramp up our state-of-the- art phosphate fertilizer production site in Volkhov to its design capacity, and it will become an innovative industry leader for years to come. This will help us increase not only the output of finished products, but also the processing of phosphate rock – the main raw material for fertilizers. We will continue with our ambitious programme to develop our raw material base in Kirovsk, where we intend to bring the second start-up facility at level 10 of the Kirovsky mine on stream by the end of the year. In Cherepovets, we plan to bolster phosphate rock processing; in Balakovo we intend to complete projects designed to boost feed phosphates and sulphuric acid output, and to kick off phase 3 of our production site creating a flexible MAP/DAP/NPS/NPK fertilizer production scheme. For more than 20 years of our history, we have remained true to our mission of supplying eco- efficient PhosAgro Group fertilizers to farmers around the world, including the priority Russian market, and making a meaningful contribution to global food security. PhosAgro Group’s strength lies in its employees, shareholders, and partners alike. Thank you for your confidence in the course the Company has chosen to follow. Business environment December 2021 – present On 1 December 2021, Russia’s export quotas for nitrogen- based and complex fertilizers came into effect As a way to prevent shortages in the domestic market and, consequently, to slow down the growth of food prices amid rising gas prices (with gas used extensively in the production of nitrogen-based fertilizers), Russia’s government resolved to restrict exports of nitrogen-based and complex fertilizers for six months starting from 1 December 2021. The quotas for nitrogen-based and complex fertilizers were approved at 5.9 mt and 5.35 mt respectively. Later on, the urea export quota was raised by 280 kt. When the initial effective period expired, the quotas were first extended until the end of August, and then until the end of 2022. The quotas for nitrogen-based and complex fertilizers were set at slightly above 8.3 mt and 5.9 mt respectively. In 2023, the Russian Ministry of Industry and Trade extended the quotas until 31 May 2023, with the quotas for nitrogen- based and complex fertilizers coming in at 7.3 mt and 5 mt respectively. Western suppliers of equipment and industrial solutions halted their operations in Russia. In February–March 2022, many Western suppliers of equipment and industrial solutions resolved to close shop in Russia. Among them were Caterpillar, Metso, Epiroc, Sandvik, Komatsu, Hitachi and others. The economic sanctions imposed by the USA and EU complicated exports of dump trucks from respective countries to Russia, while also contributing to the shortage of components (engines, gearboxes) and spare parts. The three largest container- shipping lines halted cargo bookings from Russia On 1 March 2022, the world’s three largest container shipping lines – Switzerland’s Mediterranean Shipping Company (MSC), Denmark’s Maersk and France’s CMA CGM – suspended cargo bookings from Russia. The USA introduced a sanction waiver for Russian fertilizers The Office of Foreign Assets Control (OFAC) of the US Treasury published a new general licence, which removed Russian mineral fertilizers from possible sanctions. The US authorities classified Russian fertilizers as strategic supplies required to prevent shortages of chemical products essential for the agricultural industry. February – March Ban on Russian vessels entering UK ports and other logistical restrictions On 1 March 2022, the UK passed a bill fully blocking access to the nation’s ports for all vessels related to Russia. On 4 March 2022, Denmark’s Maersk stopped accepting bookings for the shipment of essential goods from the ports of Novorossiysk, St Petersburg and Kaliningrad. The London Stock Exchange suspended trading in PhosAgro’s global depositary receipts The London Stock Exchange suspended trading in depositary receipts issued by Russian companies, including PhosAgro. According to the LSE, this move was designed to maintain orderly markets in light of the market conditions. SASB EM-MM-210b.2 Company profile STRATEGIC REPORT 42 43 Performance review Corporate governance Share capital Appendices The fifth sanctions package also imposes a ban on imports of potassium chloride from Belarus through Russia (“anti-circumvention measure against potash imports from Belarus”). As part of its fifth package of sanctions against Russia, the EU closed off its ports for Russian- flagged vessels starting from 16 April 2022. The ban also applies to the vessels that changed their Russian flag or their registration after 24 February 2022. Poland approved sanctions against 15 individuals and 35 legal entities from Russia The sanctions apply to a number of Russian companies, including PJSC Gazprom, PJSC NOVATEK, PJSC Acron, PJSC PhosAgro and others. July The USA issued a general licence to authorise transactions related to Russian fertilizers The OFAC authorised transactions with Russia related to the supplies of agricultural commodities, fertilizers, medicines and medical devices. The USA rejected duties on nitrogen-based fertilizers from Russia The US International Trade Commission (ITC) recognised that imports of urea ammonium nitrate (UAN) solutions from Russia and Trinidad and Tobago did not hurt American producers. The investigation was launched in summer 2021 after a petition from CF Industries Holdings, the nation’s largest producer of said fertilizers. June Russia became the largest supplier of phosphate fertilizers to India From April to June 2022, Russia shipped 350 kt of diammonium phosphate to India, thus becoming the largest supplier of phosphate fertilizers in the Indian market amid the sanctions imposed by Western countries. April The EU approved the fifth sanctions package As part of its new sanctions package, the EU restricted imports of fertilizers from Russia. The restrictions do not apply to the execution until 10 July 2022 of contracts concluded before 9 April 2022. Starting from 10 July, the EU also introduced the following one-year quotas for Russian fertilizer imports: 837.57 kt for potassium chloride, and 1,577.8 kt for complex and other potassium-containing fertilizers. Signing of the grain deal The grain deal was signed on 22 July 2022. Russia and Ukraine entered into the grain export agreement separately by executing individual documents with Turkey and the United Nations. Furthermore, Russia and representatives of the United Nations Secretariat met in Istanbul on 22 July 2022 to sign a Memorandum of Understanding on promoting Russian food products and fertilizers to the world markets. On 17 November 2022, the grain deal was extended for a period of 120 days. September The European Commission authorised Russian fertilizer supplies The European Commission issued an updated guidance to make it clear that EU companies are allowed to offer transportation and insurance support to Russian fertilizers transiting to third countries. November The US Department of Treasury and State Department encourage major US banks to continue transactions with certain Russian companies The US Departments of Treasury and State urged creditors to continue offering their key services (USD settlements, payment transfers, trade financing, etc.) to Russian companies exempted from certain aspects of sanctions, for example, such companies as PJSC Gazprom and PJSC PhosAgro. The UK authorises financial services for the supply of Russian fertilizers The UK Government issued a general licence that permits the provision of financial services for the supply of Russian fertilizers to third countries. The UK officials emphasised that the licence is only applicable to the shipments of fertilizers for agricultural needs. December As part of its ninth sanctions package, the EU authorised the unfreezing of assets belonging to Russian businessmen engaged in production of fertilizers and chemicals Under the ninth sanctions package, certain EU member states were allowed to unfreeze the assets of Russian businessmen engaged in production of fertilizers and chemicals, if this was needed strictly to bankroll shipments of food and fertilizers. Pan-African Parliament Bureau Resolution In January 2023, the Pan- African Parliament Bureau adopted a resolution on the impact of sanctions on food security in Africa. The resolution urges to create with an immediate effect a Fact-Finding Mission to assess the impact of current sanction- related fertilizer shortages and to address themselves to the relevant governments and institutions responsible for the shortages. January 2023 Russia introduced duties on fertilizer exports effective until the end of 2023 Starting from 1 January 2023, Russia imposed export duties on all types of mineral fertilizers to be charged at a rate of 23.5% of the price above USD 450 per tonne. New Common Agricultural Policy On 1 January 2023, the New Common Agricultural Policy of the European Union came into effect. This Policy will be key to securing the future of EU’s agriculture and forestry, as well as achieving the objectives of the European Green Deal. Company profile STRATEGIC REPORT 44 45 Performance review Corporate governance Share capital Appendices Market overview 1 Hereinafter based on data by CRU, Argusmedia, Profercy; expert estimates of industry analysts in Russian and international media. Global fertilizer consumption estimates, mt nutrient 192 205 201 192 192 2022 2021 2020 2019 2018 Nitrogen-based fertilizers Phosphate-based fertilizers Potash fertilizers In 2022, amid complications in the global geopolitical situation, the international fertilizer market faced a number of challenges that had a predominantly negative impact on the fertilizer industry and farmers as the end consumers. The key negative drivers include: was most pronounced in Europe (down by 2.7 mt nutrient, or 12%, y-o-y), North America (down by 2.7 mt nutrient, or 10%), and Latin America (down by 2.2 mt nutrient, or 7%). In Africa and Asia, consumption dropped by 12% and 3–4% respectively. In the CIS, there was price control on our priority market, an uptick by 0.4 mt, or 6%, against 2021 on the back of export restrictions imposed against Russian and Belarusian products and refocusing of export supplies towards the domestic market. Direct and indirect sanctions against mineral fertilizer producers in Russia and Belarus, which until then accounted for a total of 23% (49.4 mt) of global trade volumes (global exports). Disruptions in natural gas supplies and a marked rise in global prices for natural gas and other energy sources. Natural gas is the key raw material component in the production of nitrogen- based fertilizers, and a strong rise in natural gas costs, especially in Europe, caused production capacities to be scaled down and closed. Persisting restrictions on fertilizer exports from China, which have been in place since late 2021 as a way to make sure the domestic market remains well-supplied. As a result of all of the above, global prices for fertilizers surged, especially in 1H 2022, reaching levels above record highs for some of the fertilizer types. The spike in global prices made fertilizers less affordable (fertilizer/crop price ratio), dampening demand for them. Preliminary estimates by consulting agencies and industry analysts 1 suggest that in 2022, global consumption of mineral fertilizes stood at 192 mt nutrient, a reduction of 6%, or 13 mt nutrient, against 2021. Consumption of nitrogen- based fertilizers was down by 3 mt of N (–3%) to 111 mt; for phosphate fertilizers, it shrank by 3 mt of P 2 O 5 (–6%) to 47 mt, and for potash fertilizers, consumption fell by 6.0 mt of K 2 O (–15%) and reached 35 mt. In terms of geography, consumption of mineral fertilizers declined across all regions except for the CIS (not including Ukraine). The reduction Estimate of changes in consumption by region, mt nutrient (1.9) (0.7) (1.0) (0.2) (2.2) (2.7) (1.0) 0.4 (2.7) (4%) (4%) (3%) (4%) (7%) (10%) (12%) 6% (12%) East Asia Southeast Asia South Asia Middle East Latin America North America Africa CIS Europe Potash fertilizers, K₂O Phosphate-based fertilizers, P₂ O ₅ Nitrogen-based fertilizers, N Phosphate rock and phosphate-based fertilizer market Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 100 150 200 250 300 350 Phosphate rock prices, FOB Morocco (31–33% P 2 O 5 ), USD/t 202 mt global production of phosphate rock in 2022 (according to preliminary estimates) –7% vs 2021 The reduction was driven by weaker conditions in the markets for phosphoric acid, mineral fertilizes and industrial phosphates seen in 2022. The most significant decline in phosphate rock production came from China and Morocco, along with other African nations. Russia, Latin America and the Middle East saw no major changes in their phosphate rock production volumes. Pricing in the phosphate rock market has the traditional time lag associated with changes in price indices in phosphate-based fertilizer markets. In 1Q–3Q 2022, prices for the key types of phosphate rock were growing steadily before price correction kicked in, following the trend for phosphate- based fertilizers. Company profile STRATEGIC REPORT 46 47 Performance review Corporate governance Share capital Appendices 1 CFR (Cost and Freight) According to preliminary estimates, global production of complex phosphate-based fertilizers (DAP + MAP) in 2022 reached 55 mt, a 6 mt (10%) reduction y-o-y that reflects temporary weakening of demand for mineral fertilizers in general in 2022. The bulk of the production decline was seen in China, Morocco, and the USA. Global production of complex NPK fertilizers is also expected to go down by 5–7 mt to 92 mt in 2022. Global trade in DAP/MAP in 2022 was down by 5 mt, or 17%, to 25 mt y-o-y. The most significant drop in DAP/ MAP imports was seen in Europe and North and South America, with the trend only partially offset by higher DAP imports to India. Global imports of NPK fertilizers shrank by 2 mt to 16 mt, driven mainly by Europe and Africa’s weaker demand for import. In 1H 2022, phosphate-based fertilizer prices reached record highs of USD 1,200–1,300 per tonne (CFR) 1 in sales markets, which was due to concerns over a seasonal shortage of fertilizers after export restrictions were imposed by the key supplying nations (direct or indirect sanctions against products from Russia and Belarus; China’s limitations on exports to benefit the domestic market). In 2H 2022, global prices for phosphate fertilizers saw correction amid weaker demand in the key importing markets, including Brazil, USA, and Europe. Global DAP/MAP prices in 2022, FOB Baltic, USD/t Global NPK (15:15:15) prices in 2022, FOB Baltic, USD/t 400 600 800 1,000 1,200 1,400 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 400 500 600 700 800 900 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 25 mt global trade in DAP/MAP in 2022, according to preliminary estimates –17% vs 2021 Nitrogen-based fertilizer market In 2022, the global fertilizer market was under pressure from surging and persistently high natural gas prices in Europe, which caused a reduction in domestic production of nitrogen-based fertilizers in Europe and contributed to their substitution with imports. The launch of new facilities in West Africa and Southeast Asia, coupled with increased utilisation of existing capacities in countries with their own cheap raw materials (natural gas), managed to offset lower production volumes in Europe and other regions with high energy costs. According to preliminary estimates, global production of urea expanded by 4 mt (2%) to 175 mt in 2022. Lower output in Western and Eastern Europe (down by 3–4 mt) was offset by production ramp-up in Africa, North America and Asia (up by over 7 mt combined), including by new capacity launches in Nigeria, India, and Brunei. Global urea trade volumes in 2022 stayed virtually flat at some 53 mt. A 2.5 mt uptick in imports of urea to Europe was offset by weaker import demand seen in Latin America and Asia. In 2022, the global urea market remained highly volatile, with price fluctuations between all-year highs and lows reaching as much as 100% and above. Changes in the urea pricing environment reflect the natural gas market volatility, importer concerns over potential reductions in urea exports from Russia, and irregularities in seasonal demand from the key sales markets of South Asia and Latin America. Global urea prices in 2022, FOB Baltic, USD/t 175 mt global production of urea in 2022 (according to preliminary estimates) +2% vs 2021 200 400 600 800 1,000 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Company profile STRATEGIC REPORT 49 Performance review Corporate governance Share capital Appendices 48 Potash fertilizer market The key driver in the potash fertilizer market was the introduction of sanctions against exports of potassium chloride from Russia and Belarus. These two nations account for around 40% of global production and exports. Preliminary estimates show global production of potassium chloride to drop by 10 mt (14%) to 61 mt, with global trade in this fertilizer also going down by 10 mt (18%) on the back of lower shipments f rom Russia and Belarus. Potassium chloride prices in 2022, FOB Baltic, USD/t The downward trend in export supply drove up prices for potassium chloride in 1H 2022, causing them to reach as much as 1,000 USD/t and above. High potassium chloride prices made the fertilizer less affordable for farmers, driving a reduction in demand and global price correction in 2H 2022. 200 400 600 800 1,000 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 61 mt global production of potassium chloride (according to preliminary estimates) –14% vs 2021 Increasing sales in priority markets • Expansion of the foothold in premium markets • Higher share of premium fertilizer brands in the sales mix Boosting logistics efficiency • Alignment of production and sales • Reduction of per unit transportation costs • Developing port infrastructure Operational efficiency and production growth • Capacity expansion • Higher self-sufficiency in feedstock • Stronger operating efficiency ESG Sustainability principles are deeply integrated in all of the Strategy to 2025 aspects Contribution to the UN Sustainable Development Reduced emissions and water use, increased waste recycling Zero workplace incidents and injuries Strategy Strategy to 2025 In 2022, PhosAgro continued to make good progress towards the goals of its Strategy to 2025 approved by the Company’s Board of Directors in 2019. Despite the changing external environment, we consider most objectives of the Strategy to 2025 to be relevant and achievable and continue to implement respective projects and programmes. Our record-high production of 11.1 mt of mineral fertilizers and other chemical products in the reporting year is an important milestone along this journey. For more information, see page 56 For more information, see page 62 For more information, see page 65 Company profile STRATEGIC REPORT 50 51 Performance review Corporate governance Share capital Appendices 1 Excluding capitalised repairs. 2 Key investment projects excluding capitalised repairs. Capital investments A disciplined approach to CAPEX Breakdown of CAPEX 1 , RUB bln Expenditures 2020 (actual) 2021 (actual) 2022 (plan) 2022 (actual) 2023 (plan) Investment projects 23.8 30.0 23.6 24.1 24.2 Maintenance 10.4 10.8 27.6 27.0 29.0 Non-industrial construction 2.1 1.1 2.0 2.2 4.0 Total 36.3 41.9 53.2 53.2 57.1 Details of key investment projects in 2022, RUB bln Development of the Volkhov branch of Apatit (phase 3 – construction of a unit to produce water soluble MAP) Construction of +10 m level at the Kirovsky mine Development of the Vostochny mine, Koashvinsky open pit and Njorkpahk deposit (Kirovsk) Development of the Balakovo branch of Apatit (phase 2) Other key projects 6.3 21.2 5.3 2.5 1.9 5.2 CAPEX funding in 2020–2023 1 , RUB bln CAPEX2 Adjusted EBITDA CAPEX / adjusted EBITDA 36.3 84.3 192.1 41.9 53.2 266.9 43% 22% 20% 2020 (actual) 2021 (actual) 2022 (actual) The minimum project IRR of 15% Annual CAPEX budget of up to 50% of EBITDA More efficient working capital management New promising projects Despite the changes in the external environment, in 2022 we continued to develop an updated Strategy to 2030, however, this exercise will take us longer than expected due to dramatically increased uncertainty. We continue to greenlight those high-potential projects that offer significant economic and environmental benefits, meet the criteria adopted by the Board of Directors as part of the Strategy to 2025 for the key reviewed scenarios, and aim to promote further development in line with the Company’s strategic priorities – progressive production growth, innovative and ESG-compliant products and processes, and operating efficiency. Project Construction of crushing and delivery unit No. 4 (CDU- 4) at the Rasvumchorrsky mine (Kirovsk) Completion 2022 Targets IRR > 100 % Ore delivery from underground up to 3.5 mt of ore per year Investments RUB 0.8 bln Status Completed successfully. In August 2022, CDU-4 was commissioned at the Rasvumchorrsky mine for ore delivery from underground ESG agenda Addressing climate issues, environmental efficiency, energy and resource saving is integral to the Company’s Strategy to 2025. Every addition to our production capacities is designed to employ the best available techniques and operated in strict compliance with the applicable sustainability standards. PhosAgro's framework for assessing promising investment projects is based, among other criteria, on their potential environmental impact. In 2022, we created a methodology for incorporating the carbon price into the system for evaluating the climate impact as a factor in our final investment decisions. This methodology was approved in early 2023. In 2020, the Board of Directors completed the integration of PhosAgro’s climate and environmental agendas into its business strategy by approving Climate and Water strategies that set measurable, achievable targets for reducing the Company's environmental footprint through specific initiatives. Stable and successful home regions are a key driver of PhosAgro Group's sustainable development. We implement our social investment strategy through promoting efficient and successful cooperation with a broad range of partners. As a reliable long-term partner, we create stable and well-paid jobs for local people, provide good education and place regular orders with local businesses. Company profile STRATEGIC REPORT 52 53 Performance review Corporate governance Share capital Appendices Increasing sales in priority markets Sales volume mt: Russia and the CIS 3.7 mt / 2.6 mt American countries 3.5 mt / 2.7 mt Expansion of the foothold in premium markets Strategic goals Targets — 2025 / Status — 2022 Boosting logistics efficiency Reduction of transportation costs Increased reliance on own rolling stock. Use of innovative railcar fleet Alignment of production and sales Rail infrastructure throughput at key production sites: 28.3 mtpa / 25.9 mt Capacity expansion Number of distribution and logistics centres 35 / 33 Total storage capacity > 650 kt / 821 kt Liquid complex fertilizer storage capacity 62 kt / 74 kt Phosphate rock production 11.1 mt / 10.9 mt Phosphate rock processing 8.4 mt / 8.7 mt Mineral fertilizer and feed phosphate production 11.6 mt/ 10.8 mt Operating efficiency and production Target achieved or exceeded Maintaining high feedstock self-efficiency Stronger operating efficiency Implementation of organizational development projects in line with the BAT and sustainability criteria Ammonia 76 % / 76 % Progress Progress Sulphuric acid 91 % / 92 % Ammonium sulphate 75 % / 51 % Share of complex fertilizers (NPK/NPS/PKS) in total output 43.1 % (5 mt) / 33.5 % (3.7 mt) Higher share of premium fertilizer brands in the sales mix Progress Company profile STRATEGIC REPORT 54 55 Performance review Corporate governance Share capital Appendices In 2022, the Volkhov branch successfully completed a project to build a new sulphuric acid facility with a heat and power plant. The commissioning of a heat and power plant using process steam from the new sulphuric acid facility will help to reduce both the cost of purchasing electricity from third-party suppliers and greenhouse gas emissions. The new heat and power plant leverages the most efficient environmental protection technologies and solutions. In particular, it uses cooling towers with a prefabricated metal basin raised above the ground, allowing its integrity to be monitored and preventing hidden water leaks into the ground. The water treatment system relies on a state-of-the-art treatment technology based on reverse osmosis. As part of the HPP project, we also upgraded the site’s storm water collection and treatment system, which now includes an additional treatment unit used to bring the make-up water quality in line with the water circulation cycle requirements. This makes it possible to supply water to the HPP and sulphuric acid production facility while maintaining the closed water circulation cycle of the entire site, eliminating the discharge of waste water into water bodies. Project Construction of a heat and power plant in Volkhov Completion 2022 Targets Power to be generated in 2023: 249 mln kWh , including 205 mln kWh generated through the utilisation of sulphuric acid production steam GHG emissions to be reduced by 77 kt of CO 2 -eq. per year Investments RUB 3.0 bln. Status Completed successfully Increasing sales in priority markets Sales of mineral fertilizers and feed phosphates, kt Targets 2.4, 13.1, 13.2 Producing mineral fertilizers with micronutrients which enhance the quality of soils as natural sinks of СO 2 and help adapt to climate change Targets 2.4, 12.4, 15.1 Promoting and raising awareness about best farming practices and developing the service model Targets 2.4, 12.4 Expanding sales of eco- efficient mineral fertilizers and developing innovative plant nutrition systems STRATEGY TO 2025 2022 Russia and the CIS Europe American countries Other 3,700 3,100 3,500 1,255 11,555 kt PhosAgro Group is successfully increasing the profitability of its sales by active involvement in the most high-margin markets and through boosting sales of premium mineral fertilizer grades, primarily complex fertilizers. Russia and the CIS Europe American countries Other 2,571 2,239 2,651 3,493 Company profile STRATEGIC REPORT 56 57 Performance review Corporate governance Share capital Appendices Expansion of the foothold in premium markets The strategic flexibility of PhosAgro’s production and logistics capabilities achieved in previous years as a result of a robust investment programme, has enabled the Company to maintain premium margins despite largely diverting its exports to new markets amid restrictions on fertilizer supply from Russia imposed by several countries due to geopolitical reasons. We also remain strongly committed to our home market. From 2018 to 2022, a total of over RUB 3.2 bln was invested in the development of the Russian regional network. In 2022, the number of the network’s distribution centres increased to 33, while the total storage capacity exceeded 800 kt, including 74 kt for the transhipment of liquid mineral fertilizers (a new record for Russia). We also focused on making efficient use of our packaging capacities, with the packaging volume doubling in 2022. PhosAgro is successfully developing its service model. In 2022, PhosAgro- Region launched commercial service operation of its grain facilities at the distribution centre in Kalach (Voronezh region). At the end of the year, the service revenue from additional services totalled almost RUB 160 mln. 2020 (actual) 2021 (actual) 2022 (actual) Strategy to 2025 Distribution centres 29 31 33 35 Total storage capacity, kt 679 765 821 >650 Liquid complex fertilizer storage capacity, kt 52 66 74 62 In 2023, the Company plans to focus on further expanding the distribution network, developing existing and launching new logistics centres in key agricultural regions of Russia, enhancing the service offering, and creating a unified system of chemical soil analysis capabilities within its distribution network. To this end, we are building an in-house fleet of vehicles equipped with soil samplers at our distribution centres to enable GPS- based chemical soil analysis. Higher share of premium fertilizer brands As the Company forecasted in its 2021 integrated report, demand for dual fertilizer grades continued to prevail in 2022 due to the superior growth of the markets historically focused on these types of fertilizers. The flexibility of our production assets enables us to respond swiftly to changes in the market demand, while maintaining full capacity utilisation. Following significant changes in the geopolitical and business environment, PhosAgro will revise its strategic sales targets for the share of products sold in premium markets and the share of premium brands in total sales, as part of its updated Strategy to 2030. Progress towards our targets The ongoing expansion of storage and logistics capacities in Russia is in line with our strategy. Mineral fertilizer and feed phosphate sales mix, kt 2020 (actual) 2021 (actual) 2022 (actual) Strategy to 2025 Urea / AN / AS 2,286 2,495 2,551 2,620 MCP 379 405 349 472 APP 200 206 111 213 NPK/PK/PKS 3,887 3,586 3,670 4,980 MAP/DAP 3,203 3,565 4,272 3,270 Total 9,955 10,257 10,953 11,555 Share of complex fertilizers, % 39.0 35.0 33.5 43.1 Innovative products developed by PhosAgro Sales of fertilizers introduced over the last five years from 2018 to 2022 exceeded RUB 37.3 bln, or 8% of total sales of the Company’s chemical products. The Company’s ability to maintain a high share of new grades relies on the strong R&D capabilities of NIUIF and PhosAgro Innovation Centre and the flexibility of production capacities achieved through a fundamental overhaul in recent years. All of these give PhosAgro a competitive edge and help the Company meet the growing demand for specific grades that are best suited to certain crops, soils, and farming practices. Fertilizers with micronutrients Fertilizers with micronutrients can be accumulated by plants and are considered one of the most potent ways to combat malnutrition and reduce nutrient deficiencies. The Company has maintained a significant share of such fertilizers in its total product mix in recent years and expects it to grow further from 12% in 2022 to 13.6% in 2023. Fertilizers with micronutrients, kt 1 Including additional fertilizers Biological and biologised mineral fertilizers PhosAgro Innovation Centre also focuses on developing innovative biostimulants and biologised mineral fertilizers under the Green One label for eco-friendly agricultural products. With limited soil resources and significant population growth, biotechnology is one of the most effective solutions to ensuring global food security by boosting crop yields without damaging ecosystems. Coated fertilizers The Company is developing fertilizers coated with a monocalcium phosphate and dicalcium phosphate mixture and boasting improved environmental and biologicall performance. Research carried out jointly by PhosAgro and the Russian State Agrarian University – Moscow Timiryazev Agricultural Academy proved a significant increase in the uptake of nitrogen and other key nutrients from coated fertilizers, higher grain yields, improved crop quality, and better physical properties of the fertilizers. Unlike polymer coatings developed by other companies, the coatings used by PhosAgro do not lead to the release of microplastics and are therefore not harmful to the environment. Based on the results of our research, in 2022 we received a patent for the invention “A Method to Produce Slow and Controlled- Release Fertilizers”, prepared related publications and presented reports at several international scientific and technical conferences. Two grades of coated fertilizers are now pending registration and the preparatory process to launch their commercial production is underway. Actual Plan 1 533,3 1 329,6 1 691,1 1 554,1 2023 2022 2021 2020 1 Company profile STRATEGIC REPORT 58 59 Performance review Corporate governance Share capital Appendices PhosAgro’s digital ecosystem In 2022, the target audience had over 10 million interactions with PhosAgro’s digital ecosystem. As at the end of the year, the number of active users of PhosAgro’s digital services exceeded 47,000, including: 914 active personal accounts registered with the Russia/CIS online trading platform; more than 30,000 active users of the AgroResult mobile app (each user makes three settlements on average); more than 17,000 subscribers to the Pro Agro communications platform (YouTube, VK, Zen). In 2022, the Field Trials section on our website became an important element of communication with our customers in the domestic market. It features 48 trials performed in more than 20 regions of Russia and was visited by some 20,000 users, up tenfold compared to 2021. We made significant efforts to improve the efficiency of online communication with potential employees. In particular, from January to March 2022, we redesigned the Career section of our website and upgraded its content, adding separate pages for each of the vacancies and launching online promotion. As a result, the Career section's audience grew by 136 % and the Company hired 650 employees engaged via this online channel, a fifteenfold increase y-o-y The following results were achieved as part of the Russia/CIS online trading platform promotion: conversion from visit to order for the Russia/ CIS online trading platform in 2022 increased from 3% to 3.7%; a total of 1,884 online fertilizer purchase orders were registered (up 29% y-o-y). Over the past year, we released 11 playlists and arranged a number of blogger endorsements. User statistics > 17 thousand subscribers and nearly 14 mln views show that in 2.5 years we were able to create a popular agronomic chan- nel highlighting PhosAgro’s expertise in plant nutrition systems. To further improve our Agro Calculator, we introduced recommendations in 2022 for seasonal nutrition systems covering sunflower and spring barley, while also completing integration with Cropwise (Syngenta). In 2022, we launched the full version of the AgroResult mobile app featuring a fertilizer catalogue, a product card, a shopping cart, biometric authentication (face and fingerprint recognition), order history, etc. On top of that, the app was added to the Huawei and Xiaomi app stores. In 2022, we launched the Pro Agro communication platform, which includes an agronomic YouTube channel, a VK community and a Zen channel. Company profile STRATEGIC REPORT 60 61 Performance review Corporate governance Share capital Appendices Boosting logistics efficiency Amid the sanctions pressure and artificially imposed restrictions of non-market nature, the key focus of PhosAgro’s logistics operations shifts to ensuring uninterrupted supplies of the Company’s products to consumers in Russia and abroad. This means meeting the set delivery deadlines and preventing the risks of shipping delays and the products being seized or blocked. PhosAgro also seeks to achieve the maximum cost efficiency of its logistics operations in these conditions. Reduction of transportation costs Rail transport accounts for the most part of the Company’s domestic shipments (ca. 99%). In 2022, finished products transportation volumes totalled 23.2 mt, up 3% against 2021. Rail shipments are also subject to key measures aimed at improving the reliability of product deliveries and reducing transportation costs. Ensuring a secure supply is a top priority for us. In 2019–2021, we significantly increased reliance on our own rolling stock, buying mostly innovative railcars with a higher capacity and longer run life. Increased reliance on PhosAgro’s own rolling stock means: • enhanced safety of operation and more reliable supplies, as PhosAgro’s production and logistics processes are less dependent on third-party services; Other areas of focus to ensure transportation security and optimise transportation costs in 2022 included: signing contracts with key transhipment ports on new terms; developing mutually beneficial terms and concluding agreements with Russian Railways to co-finance the development of transport infrastructure at railway stations adjacent to Apatit’s production sites: Volkhov branch – final stage, Balakovo branch – planning stage; The share of long trains (more than 56 cars per train) on all transportation routes was 46% in 2022, up 4 p.p. compared to 2021. Further potential in this area is associated with the transition to 100-car trains, which will help boost economic efficiency and safety of the Company’s shipments, while also further reducing the environmental impact per tonne of cargo. securing tariff preferences for the shipment of liquid sulphur and sulphuric acid; verifying thepossibility of receiving subsidies for export transportation of industrial products by rail in the period from 2022 to 2024 according to the Decree of the Government of Russia No. 1347 On State Support of Russian Industrial Organisations in Order to Compensate Expenses for Transportation of Industrial Products dated 28 July 2022. • higher cost efficiency, as corporate railcars are cheaper in use than third-party rolling stock; • positive environmental effect, as the use of innovative rolling stock with higher cargo tonnage per railcar and train reduces the negative impact on the environment per tonne of cargo. As part of the fleet renewal programme in 2022, we signed contracts for the delivery, in 2023, of 400 mineral hoppers, 65 tank cars and 6,000 specialised containers intended for the use in seaports. Further acquisition of various types of rolling stock in 2023–2027 will be based on a robust analysis of the Company’s actual needs. Target 12.4 Managing chemicals and wastes wisely throughout their life cycle, including transportation Target 9.1 Developing rail infrastructure and contributing to the development of local communities through our value chain Enhancing port network, along with offering employment opportunities, developing infrastructure and implementing social investment programmes Cherepovets As the Kryolite station has come on stream, long trains (71 railcars and longer vs the standard 56) now run along the Apatity– Cherepovets–Ust-Luga–Apatity loop. With this loop, created under an ambitious joint project with Russian Railways, long trains accounted for ca. 73% of PhosAgro Group’s 2022 transportation volumes along this route. The decision to electrify the Kryolite railway station enabled PhosAgro to stop using diesel locomotives, thus securing positive economic and environmental effects. Progress towards our targets, mtpa 16.5 15.4 15.4 15.2 12.0 8.0 6.7 6.7 6.7 6.7 3.8 3.8 3.8 2.6 1.6 Cherepovets site Strategy to 2025 Balakovo branch Volkhov branch 2022 (actual) 2022 (plan) 2021 (actual) 2020 (actual) Volkhov In 2022, the rail infrastructure throughput capacity at the Volkhov site was ramped up to 3.8 mtpa from 2.64 mtpa as at the end of 2021. The project is on schedule, with the first stage already completed. We have reached an agreement with Russian Railways to co-finance the construction of public infrastructure as part of the second stage. Alignment of production and sales Rail infrastructure throughput capacity at the Company’s fertilizer hubs is critical to efficient transportation. Thanks to our investment programmes, we have been able to expand throughput capacity to or above target levels over the last three years. Balakovo In 2022, due to an upgrade in Balakovo we continued planning the development of infrastructure that would facilitate shipments of a new feedstock and allow for increased transportation of finished products. It is planned that the throughput capacity of the Balakovo site’s railway infrastructure will increase from the current 6.7 mtpa to 9 mtpa by 2025, which exceeds the target set in the Strategy to 2025. Company profile STRATEGIC REPORT 62 63 Performance review Corporate governance Share capital Appendices Developing port infrastructure In addition to developing logistics and sales infrastructure across Russia, our priority market, we are working to increase the reliability and efficiency of our exports by both reducing transportation costs and providing state-of-the-art transhipment capacities. Our strategic aim is to develop and maintain a balanced port sales infrastructure in terms of costs and reliability, capable of handling at least 8 mtpa of fertilizer exports. To achieve this target, in 2022 the Company revised a number of transhipment contracts covering the required export volumes and effective through 2025. As of today, we have basically secured the required transhipment capacities in line with the 8 mtpa target. The ports key to PhosAgro’s operations are located in the North- West of Russia. These include European Sulphur Terminal and Petrolesport in the Leningrad region and St Petersburg, and Murmansk Bulk Terminal in Murmansk. The Company also uses a terminal in Kotka, Finland. We rely on specialised terminals and their equipment designed to mitigate the environmental impact. 1 Failure to meet the self-sufficiency target for ammonium sulphate is due to the fact that part of the sulphate output (165 kt in 2022) is sold as a commercial product rather than used for processing into compound mineral fertilizers as per the scenario adopted in the Strategy to 2025. Delivery our production targets, mt 2020 (actual) 2021 (actual) 2022 (plan) 2022 (actual) 2023 (plan) Strategy to 2025 Production of nitro- gen-based fertilizers 2.4 2.4 2.5 2.5 2.5 2.6 Production of phos- phate fertilizers and feed-grade MCP 7.6 7.9 8.3 8.2 8.4 8.9 Production of phos- phate rock 10.5 10.7 10.5 10.9 11.0 11.1 In-house processing of phosphate rock 7.3 8.0 8.4 8.7 8.9 8.4 Operational efficiency and production growth Progress towards our targets Despite short-term volatility concerns, mineral fertilizer demand is set to demonstrate solid growth in the long term. In order to respond to stronger demand, PhosAgro focuses on expanding capacities to produce its key products. Higher self-sufficiency in feedstock Strong vertical integration is PhosAgro’s major competitive advantage. With our phosphate rock reserves covering 100% of the Company’s needs for raw materials required for phosphate mineral fertilizers, we are ramping up the production of other key commodities, thus increasing our self-efficiency in feedstock. Feedstock self-efficiency 2020 (actual) 2021 (actual) 2022 (plan) 2022 (actual) 2023 (plan) Strategy to 2025 Ammonia, % 83 76 79 76 77 76 Production, mt 2.0 1.9 1.9 2.0 2.0 1.9 Consumption, mt 2.4 2.5 2.4 2.6 2.6 2.5 Sulphuric acid, % 93 95 91 92 93 91 Production, mt 6.8 7.4 7.7 7.9 8.1 7.8 Consumption, mt 7.3 7.8 8.5 8.6 8.7 8.6 Ammonium sulphate 1 , % 60 60 100 51 58 75 Production, mt 0.3 0.3 0.7 0.3 0.3 0.7 Consumption, mt 0.5 0.5 0.7 0.6 0.5 0.9 Capacity expansion Target 12.4 Making eco-efficient products in line with sustainability requirements and maximising the use of production waste in further processes Target 8.3 Maintaining and developing existing operations and creating innovative facilities Company profile STRATEGIC REPORT 64 65 Performance review Corporate governance Share capital Appendices Implementation of high-priority projects Project Development of the Volkhov branch of Apatit (phase 3 – construction of a unit to produce water soluble MAP) Completion 2023 Targets Water soluble MAP output of 43.5 ktpa Investments IRR 18 % Total RUB 33.7 bln incl. soluble MAP: RUB 2.9 bln Status Phase 3 (construction of a water soluble MAP facility) start-up operations commenced in December 2022, with the first product batch received in January 2023. Project Increase in output of feed- grade monocalcium phosphate (MCP) by 53 ktpa (Balakovo) Completion 2023 Targets Increase in feed phosphates output by 53 ktpa Investments IRR 17 % RUB 3.3 bln Status Upgrade of wet-process phosphoric acid unit No. 4 (WPA-4) was completed. Work to upgrade the mineral salts unit (MSU) is in progress. Project Capacity ramp-up of the Am-3 unit to 107% (Cherepovets) Completion 2022 Targets Increase in ammonia output by 53 ktpa Investments IRR 28 % RUB 0.9 bln Status In May 2022, the target capacity of 2,350 t/day was achieved. In 3Q 2022, the entire set of works was completed. Project Upgrade of the SK-20 sulphuric acid technological system with replacement of the contact process unit (Balakovo) Completion 2023 Targets Increase in sulphuric acid output by 350 ktpa Investments IRR n/a RUB 6.6 bln Status Contracts for the supply of main process equipment were signed; construction and installation work is underway and slated for completion in 4Q 2023. Company profile STRATEGIC REPORT 66 67 Performance review Corporate governance Share capital Appendices Kirovsk Cherepovets Balakovo Volkhov Economic effect in 2022 RUB 1,772.6 mln Operating efficiency improvements At PhosAgro, we are implementing a whole range of projects and initiatives to improve our technologies and organisational approaches and streamline production processes. In 2022, three projects were successfully implemented by the Company to improve the performance of Apatit’s business units. They covered all of the PhosAgro’s production sites and produced an overall economic effect of ca. RUB 1. 8 bln in the reporting year. Completion 2021–2022 Key project initiatives • Introducing production culture monitoring across all business units • Reducing scheduled preventive maintenance hours by an average of 20% • Implementing tools aimed at improving operational efficiency: punchlists, problem-solving boards, equipment checklists, etc. Completion 2021–2022 Key project initiatives • Increasing phosphoric acid output by reducing unscheduled shutdowns • Reducing end-to-end phosphate rock losses • Ensuring stringent compliance with preventive maintenance schedules at ANBP-2 and ANBP-3 Company profile STRATEGIC REPORT 68 69 Performance review Corporate governance Share capital Appendices Risk appetite In pursuing its goals, the Company is guided by risk appetite, or the level of risk it deems acceptable. Risk appetite is an integral part of strategic and operational decision-making. The Board of Directors defines the overall risk appetite when reviewing the Company’s risks and also as part of approving its strategy, budget and investment programme and considering other matters within the Board’s scope of authority. Risk appetite is then reflected in the Company's specific procedures and key performance indicators. Strategic risks Strategic risks The Company aims to identify and use opportunities that open up in the market as a result of changes in the external environment. The Company quickly responds to the changing operating landscape and targets priority markets that offer the best terms and conditions to sell its products. At the same time, the Company’s business model is designed in a way that strikes an optimal balance between sustainable development and operational efficiency. Production risks The Company aims to minimise unscheduled downtime in production while at the same time making sure that its processes and end product quality meet all applicable requirements. Creating a safe working environment is the Company’s absolute priority. The Company makes every effort to minimise the negative impact of its production processes on the environment and climate. Robust risk management is a sine qua non for PhosAgro to achieve its strategic goals and sustainable development. We continuously develop and improve our risk management framework, which enables us to identify external and internal risks in a timely manner and develop effective mitigants. Financial risks As a reliable borrower, the Company seeks to raise funding on the most attractive terms available in the market. The Company’s core operations are FX-linked, so we use natural hedging methods to manage our FX risk. We are not ready to take on credit risk related to our counterparties: in our relations with them, we either seek to secure terms and conditions we see as most beneficial to us or use risk transfer strategies. Operational risks The Company aims to prevent any disruptions to its business processes and IT infrastructure performance and to also secure maximum protection from cyber threats and fraud. When planning and implementing its investment projects, the Company works to deliver against strategic priorities and key performance indicators while factoring in potential deviations as a result of changing external factors. Regulatory risks The Company aims to remain 100% compliant with all applicable statutory regulations, including those related to taxation. As part of industry associations, the Company is involved in developing regulatory initiatives in order to minimise any non- compliance risk. In addition to laws and regulations, the Company operates in line with corporate values and ethical principles so as to minimise potential reputational damage. Company profile STRATEGIC REPORT 70 71 Performance review Corporate governance Share capital Appendices 4 2 10 15 17 1 18 9 19 8 3 13 7 11 12 22 14 16 6 21 5 20 KEY RISKS ASSOCIATED WITH PHOSAGRO’S ACTIVITIES Low Medium High Impact Low Medium High Probability Strategic planning risk Failure to deliver on SDGs Social risk HR risk Climate risk Infectious disease risk Sanctions risk 1 2 3 4 19 20 21 Production risk Health and safety risk Environmental risk 5 6 7 Credit risk Currency risk Commodity risk Interest rate risk 16 17 18 22 Project risk Business processes and systems risk Information security risk Economic security risk 8 9 11 12 Tax risk Regulatory risk Corruption risk Reputational risk 10 13 14 15 STRATEGIC RISK FINANCIAL RISK OPERATIONAL RISK REGULATORY RISK PRODUCTION RISK No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 1 Strategic planning GRI 201, 202 Risk associated with the adoption of an incorrect strate- gic decision and ensu- ing management decisions, resulting from an erroneous assessment of internal and external factors that have an impact on the Company’s prospects for devel- opment and its abil- ity to achieve strategic objectives The Company actively monitors both inter- nal and external factors that could impact the strategy. PhosAgro also takes a system- atic approach to assessing the potential costs and benefits of new strategic projects to facilitate and improve the decision-mak- ing process. PhosAgro started updating its strategy to 2030 to reflect the latest changes in the external and internal environments. Downside deviations of actual strategic perfor- mance from targets. Geopolitical developments cause greater uncertainty and as a result increase this risk.. 2 Failure to deliver on ESG and sus- tainable develop- ment goals GRI 203, 308, 414 Risk factors include failure to set ESG tar- gets and Sustainable Development Goals (SDGs) or update them in a timely man- ner, as well as the lack of resources and pro- cesses necessary to achieve these tar- gets and goals The Board of Directors’ Sustainable Development Committee helped set and prioritise SDGs and strategic ESG targets. To achieve the same, PhosAgro developed and is successfully implementing the low- carbon transition plan, the Climate Strategy, the Water Strategy, the Energy Efficiency Programme, and other initiatives. Significant work done in this area has enabled the Company to materially improve its ratings and become a leader in ESG. It should be noted that a result of certain geopolitical developments, a number of ESG rating agencies suspended their operations in Russia. For more information on the Company’s activities and indicators in this area, see the Navigator on UN SDGs section on page 14 Downside deviations of actual ESG and SDG per- formance from targets. No material risk events occurred. 3 Social GRI 413, 401 Risk of an adverse social environ- ment in the regions of operation With its commitment to the principles of partnership and cooperation between private business and the government, the Company runs a number of social programmes on a proactive basis. Social projects are designed, among other things, to support local authorities in promoting sports and culture, and enhancing the public utilities and opportunities for growth in the regions where the Company operates. Sustainable development in the regions of operation is one of the key goals the Company pursues in its community activities. For more information on the Company’s activities in this area, see the Contributing to Local Communities section on page 234 Downside deviations of actual ESG performance (social dimension) from targets. No material risk events occurred. high medium low up flat down Risk appetite Change in the risk Company profile STRATEGIC REPORT 72 73 Performance review Corporate governance Share capital Appendices No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 4 HR GRI 401, 402, 403, 404, 405 Developments and decisions related to the hiring, develop- ment and retention of employees PhosAgro runs independent and joint programmes seeking to train and attract young talents, including those from other regions, develop employee skills and enhance motivation as a way to improve retention and productiv- ity. Given the rising number of employ- ees working from home, the Company has introduced an online personnel appraisal system along with additional motivational arrangements. For more information on the Company’s activities in this area, see the People Development section on page 142 Personnel turnover and skill mismatch. No material risk events occurred. 5 Production GRI 201, 302 Technical/industrial disruptions of produc- tion processes result- ing in unscheduled equipment downtime PhosAgro seeks to ensure uninterrupted operation of machinery and reduce unscheduled equipment downtime. To that end, the Company invests in the construc- tion and upgrade of equipment and carries out preventative maintenance and major overhauls by relying on backup equipment and a reserve pool of components, accesso- ries and spare parts. The Company’s insurance programme cov- ers the risk of production disruptions. Unscheduled equipment downtime. No material risk events occurred. 6 Health and safety GRI 403 Risk associated with injuries, occupa- tional illnesses, acci- dents and incidents at production facilities, and non-compliance with statutory require- ments in the realm of health and safety PhosAgro enforces health and safety in workplaces in line with applicable laws and global best practices. To that end, the Company trains staff in health and safety and regularly checks their knowledge, promotes safety culture, and makes sure that all contractors adhere to the health and safety standards. In addition, safety audits and inspections ensure compliance with applicable regulations and OHSAS 18001 requirements. Tasks and measures to reduce the corresponding risks in various Company activities are defined in its health and safety documents. For more information on the Company’s indicators in this area, see the Health and Safety Review section on page 168 Workplace injuries and other incidents. 2022 saw some risks mate- rialise in terms of workplace injuries. The Company care- fully investigated each acci- dent, with remedial action plans developed to prevent their recurrence. No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 7 Environmental GRI 303, 304, 305, 306, 308 Risk of actual and potential environmen- tal damage resulting from the Company’s operations The Company has put in place the Environmental Policy, the Water Strategy, and the Code of Conduct for Counterparties setting out key environmental requirements for suppliers and contractors. PhosAgro conducts regular analysis and assessment of its impact on the environment. The environmental impact is mitigated through the upgrade of treatment and warehousing facilities and the implementation of energy efficiency programmes. The Company implements projects to address all the main areas of environmental impact (water use, greenhouse gas and other emissions, waste, biodiversity). The Company partners with the UNESCO and the International Union of Pure and Applied Chemistry (IUPAC) to provide research grants as part of the Green Chemistry for Life project seeking to protect the environment and human health through energy efficient processes and eco-efficient technologies based on innovative solutions. PhosAgro’s investment projects harness the best available techniques to reduce unit feedstock and energy costs while also cutting unit emissions of regulated substances. The Company discloses its environmental impact minimisation goals and performance in line with applicable laws and as part of global initiatives. Assessment of environmental factors, including potential scarcity of water and other natural resources, is integrated into PhosAgro's overall risk management system. For more information on the Company’s activities in this area, see the Environmental Review section on page 190 Exceeding maximum per- missible levels of negative environmental impact. No material risk events occurred. Company profile STRATEGIC REPORT 74 75 Performance review Corporate governance Share capital Appendices No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 8 Project GRI 201 Risk associ- ated with delays and budget over- runs in construction and upgrade projects, along with failure to deliver project effi- ciency targets PhosAgro strives to adhere to approved pro- ject budgets and schedules and to take a unified implementation approach lev- eraging a variety of project management tools. All projects go through a multi-step review and approval process. For large-scale and strategically important projects, dedi- cated project management offices are set up. The Company regularly monitors pro- gress against project budgets and deadlines. Downside deviations of actual project efficiency indicators from targets. No material risk events occurred. That said, geopo- litical developments of 2022 caused deviations related to shipments of imported equipment. The Company sets up its business pro- cesses in a way that makes sure such risk is mini- mised, including by rely- ing on import substitution efforts. 9 Business processes and systems GRI 402 Inefficiency or disrup- tion of the Company’s business processes, including risks related to counterparties and supply chain PhosAgro seeks to maximise efficiency of all its business processes and systems. Business process efficiency reviews are con- ducted on a regular basis to identify poten- tial bottlenecks and develop and implement efficiency improvement initiatives. The Company strives to minimise the risk of disruptions in supplies of key materials and feedstock. To that end, PhosAgro uses multi-stage ten- der procedures and enters into long-term contracts with its most reliable suppliers. In addition, it continuously works to optimise the logistics infrastructure and ensure suffi- cient rolling stock. The Company also moni- tors its IT infrastructure on an ongoing basis and carries out a number of initiatives to mit- igate risks associated with business process disruptions caused by technological factors or cyberattacks. Downside deviations of actual business process indicators (by focus area) from targets. No material risk events occurred. That said, geopolitical developments of 2022 caused deviations related to shipments of imported materials, use of software, and performance of logistics infrastructure outside of Russia. The Company sets up its business processes in a way that makes sure such risk is minimised, including by relying on import substitution efforts. No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 10 Tax GRI 207 Potential claims lodged by tax author- ities in response to the Company’s fail- ure to correctly file tax returns or pay taxes in due time PhosAgro complies with tax legisla- tion in the countries where it operates. The Company tracks all changes (includ- ing the planned ones) in tax laws, analyses the law enforcement practices, and seeks clarifications from the government on taxes. In addition, law and accountancy experts are engaged to advise on the administration of applicable tax laws. The Company also has a tax monitoring system in place to quickly identify and minimise tax risks in coordina- tion with the Federal Tax Service. Tax claims. No material risk events occurred. 11 Information security GRI 410 Losses incurred on the Company’s property and assets as a result of unau- thorised access to its information sys- tems or disclosure of confidential data PhosAgro implements a number of ini- tiatives to prevent unauthorised access to its information systems and disclosure of confidential data. A wide variety of tech- nical and software solutions, including those based on encryption, are used to control access to information resources and sys- tems. Access rights are granted to spe- cific user groups. There is a clear definition of what constitutes confidential information and how it should be handled. The Company undertakes regular audits to ensure strict compliance with its confidentiality policy. The Company’s Board of Directors adopted the Information Security Policy. Unauthorised disclosure of confidential data, unauthorised access to IT systems. No material risk events occurred. 12 Economic security GRI 410 Losses incurred on the Company’s property and assets as a result of eco- nomic crimes com- mitted by employees or third parties, including fraud and theft The Company takes steps to prevent poten- tial damage to its property and assets as a result of economic law infringements, including, in particular, by introducing access authorisations to the Company’s administra- tive and production facilities, clearly differ- entiating between responsibilities as part of contract or transaction execution, vetting counterparties before signing a contract, and putting in place a dedicated hotline. Moreover, additional checks are undertaken by a variety of the Company’s functions. Theft and fraud incidents. No material risk events occurred. Company profile STRATEGIC REPORT 76 77 Performance review Corporate governance Share capital Appendices No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 13 Regulatory GRI 303, 304, 305, 306 Untimely receipt/ extension of licences; legislative changes that might bring about higher cost of doing business, restrictive poli- cies by regulators, weaker equity story of the Company and/ or adverse transforma- tion of the competi- tive landscape PhosAgro is in full compliance with appli- cable laws. To make sure it gets timely updates on potential legislative changes, the Company closely tracks initiatives of leg- islators, the government and regulators, and takes part in discussing such initiatives and drafting relevant recommendations in partnership with professional associa- tions. The Company prepares and submits documents in due time to receive or extend licences required for its business. Deviations related to regulatory compliance. No material risk events occurred. 14 Corruption GRI 204, 205 Losses resulting from non-compliance or inadequate com- pliance with applica- ble anti-corruption laws by the Company or its employees (pen- alties levied against the Company by gov- ernment authorities and other damages) PhosAgro makes sure its facilities and part- ners fully comply with applicable anti-cor- ruption laws. To that end, it provides training in combating corruption and adminis- trating the anti-corruption law, and pro- motes zero tolerance towards corruption among the Company’s employees and part- ners. Among other things, the Company has approved the Anti-Fraud and Anti- Corruption Policy, the Code of Ethics, and the Regulations on Conflict of Interest. The Company’s counterparties are obliged to declare their compliance with anti-corrup- tion laws. The Company is a member of the Anti- Corruption Charter of Russian Business. Corrupt practices, conflicts of interest. No material risk events occurred. 15 Reputation GRI 206 Damage caused to the Company’s business reputation as a result of mis- leading or defam- atory information or allegations about the Company made publicly available, leakages of confi- dential information, and breaches of busi- ness ethics on the part of the Company's employees In its operations, PhosAgro demonstrates commitment to transparency by disclosing all relevant material facts and circumstances. The Company has adopted an informa- tion policy and a media engagement policy. Information about the Company is availa- ble on its website and in the mass media. PhosAgro provides comments in response to media enquiries and regularly monitors coverage in both Russian and international (social) media. To protect its business reputation, the Company has approved the Code of Ethics setting out unified rules for PhosAgro’s employees based on the principles of integ- rity, good judgement, fair play and partner- ship and designed to support the Company’s success. Stakeholder confidence. No material risk events occurred. No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 16 Credit GRI 201 Financial losses caused by the failure of buyers, commercial contractors and other financial counter- parties to fulfil their financial obligations to the Company in full and on time PhosAgro has approved policies on man- aging credit risks to institutionalise a num- ber of credit risk mitigation techniques, including deliveries against full or par- tial prepayments with full or partial insur- ance of credit risks, use of letters of credit, and factoring (securitisation) of accounts receivable. Providing advance payments to suppliers and contractors is only consid- ered after the counterparties have proved their reliability or after they have offered adequate bank guarantees for advance payments that exceed approved internal limits. The Company partners with banks, financial organisations and insurance com- panies that boast a high level of finan- cial stability and meet the criteria set out in the Company’s treasury policy. PhosAgro monitors all covenants under the existing loan agreements on an ongoing basis. For more information on the Company’s activities and indicators in this area, see the Financial Risk Management. Credit Risk section of the Notes to the consoli- dated financial statements on page 371 Overdue accounts receivable, provision for bad debt. No material risk events occurred. 17 Currency GRI 201 Financial losses arising from unfa- vourable changes in FX rates against the Company’s base currency In the context of oil price volatility and fluc- tuations of the rouble exchange rate against major international currencies, the Company seeks to align the currency breakdown of its debt financing with the FX structure of its sales. As of now, most of PhosAgro’s debt is denominated in US dollars as a nat- ural hedge against predominantly USD- denominated sales. The Company carefully tracks analyst forecasts and factors that may influence the rouble exchange rate against major currencies. If need be, PhosAgro can hedge its FX posi- tions either fully or partially. For more information on the Company’s activities and indicators in this area, see the Financial Risk Management. Currency Risk section of the Notes to the consoli- dated financial statements on page 369 Adverse changes in exchange rates. No material risk events occurred. Company profile STRATEGIC REPORT 78 79 Performance review Corporate governance Share capital Appendices No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 18 Commodity GRI 204, 417 Losses associated with unfavourable changes in the mar- ket prices for mineral fertilizers and other products or a hike in prices for key feed- stock and equip- ment sourced by the Company Given the volatility in prices for its main products, the Company constantly seeks to streamline its sales structure in terms of the fertilizer grade offering based on mar- ket priorities, as a way to maximise mar- gins. PhosAgro also continues to increase the share of sales to end consumers, improve production efficiency and offer its custom- ers add-on services such as packaging, blending and storage. To reduce its feed- stock and equipment expenses, PhosAgro invites multiple suppliers to take part in ten- ders, enters into long-term supply con- tracts and develops lasting relationships with its suppliers. Adverse changes in product and feedstock prices. No material risk events occurred. However, potential correction in mineral fertilizer prices following their strong growth in 2022 contributes to a moderate increase in this risk. 19 Climate GRI 203, 302, 305 Risks associated with changes in natu- ral processes or phe- nomena amid climate change (physical fac- tors) or with political, economic, financial or other decisions made by govern- ments, multilat- eral organisations, financial institu- tions, or producer or consumer asso- ciations or other NGOs to curb climate change by reduc- ing GHG emissions through carbon regu- lations or restrictions on the use of fossil fuels or non-renew- able energy (transi- tional factors) Processes to identify and assess climate change risks are being set up through- out the value chain and form an integral part of the Company’s risk management and internal control framework. The Board of Directors approved PhosAgro’s Climate Strategy, the key elements of which are analysis of climate risks and oppor- tunities, scenario analysis, science-based targets, and a low-carbon transition plan. In accordance with the climate strategy, priority actions are being taken to develop and implement the following measures: direct (Scope 1) emission reduction pro- grammes; an internal energy efficiency pro- gramme, and communication with energy suppliers to improve the climate profile of energy supplies (Scope 2); and a supplier and customer engagement plan and sup- plier ESG ratings (Scope 3). Thanks to these actions, the Company has improved its ratings for climate disclosure and sustainable development. Adverse deviations resulting from climate impacts (by focus area). In 2022, there were abnormal weather events. However, at this stage it is quite difficult to assess the extent to which these were caused by climate change. In any case, the Company did not incur any significant losses associated with these natural phenomena. At the same time, potential changes related to transition climate factors contribute to higher exposure to this risk. No Risk Description Risk mitigants Key indicators / risks materialised / changes in the risk 20 Infectious diseases GRI 403 Risks associated with the outbreak and spread of infec- tious diseases that pose a threat to busi- ness continuity 2022 saw further spread of a newly dis- covered coronavirus (COVID-19) around the world. At the same time, complications associated with this disease became consid- erably less severe. The Company took a set of measures to pre- vent mass infection and to support vac- cination among its employees and local communities in its regions of operation (jointly with government agencies). Thanks to these measures, the Company man- aged to minimise the negative impact of COVID-19 (in its active stage) on its opera- tions, ensure business continuity and deliver on its business targets. The Company’s suc- cessful experience of COVID-19 response and the procedures it has established help react to further developments associated with COVID-19, as well as to other infectious disease outbreaks. Confirmed cases, business process disruptions. The number of confirmed cases among the Company's employees in 2022 generally follows overall trends in the Company’s regions of operation. By quickly developing and putting in place anti-COVID-19 response measures, the Company ensured business continuity and delivered on its targets. 21 Sanctions GRI 201, 202, 203, 204 Foreign sanc- tions imposed on the Group’s companies The global nature of international economy creates a background for various sanctions to be imposed on the Russian economy and the Company’s operations by individ- ual countries or their groups. The Company’s flexible business model helps minimise any negative impact of such sanctions or restrictions. Losses associated with sanctions. In 2022, geopolitical developments caused this risk to materialise. By quickly developing and putting in place response measures, the Company ensured business continuity and delivered on its targets. 22 Interest rates GRI 201 The Company borrows money to finance its investment pro- gramme and working capital requirements, including via float- ing interest rate loans. Rising floating rates might lead to higher debt service costs and adversely impact the bottom line Should the Company accumulate significant floating interest rate borrowings, it would hedge this risk using interest rate derivatives. PhosAgro closely monitors and manages its fixed-to-floating debt ratio to mitigate interest rate risk. For more information on the Company’s activities and indicators in this area, see the Financial Risk Management. Interest Risk section of the Notes to the consoli- dated financial statements on page 370 Losses associated with changes in interest rates. No material risk events occurred. Company profile STRATEGIC REPORT 80 81 Performance review Corporate governance Share capital Appendices 3 PhosAgro is a major taxpayer and employer in its regions of operation. Fully aware of our responsibility for the sustainable social and economic development of local communities, we have more than tripled our support for social and charitable projects in the reporting year. Efficient use of resources, including water, is an integral part of our strategy. In 2022, PhosAgro joined the UN Global Compact’s CEO Water Mandate, a global commitment platform for corporate water stewardship. For more information, see page 234 For more information, see page 224 ACHIEVING shared goals 203 % y-o-y increase in social investments – 1 % reduction in water withdrawal per tonne of products PhosAgro is a successful and thriving business. But what's more, we are at the heart of an extensive network of diverse economic, environmental and social ties and partnerships. This is why we can celebrate our achievements together with our shareholders, contractors, employees, local communities and consumers of our products in Russia and all over the world. 84 Financial performance 92 Operational performance 100 Customers and product management 112 Research and education 130 Supply chain 142 People development 168 Industrial safety 190 Environmental review 234 Contributing to local communities 82 83 PERFORMANCE REVIEW Financial performance Adjusted free cash flow increased by 81% to more than RUB 141 bln as a result of both improved sales margins and strong working capital management. PhosAgro’s strong y-o-y performance contributes to ensuring its robust financial stability. As at 31 December 2022, our net debt / adjusted EBITDA ratio was 0.68x, way below the 2x threshold that we consider comfortable. Importantly, it continued to decline throughout 2022 (down from 0.8x at the end of 2021 and 1.8x in December 2020). With investors’ confidence in our production and financial strategy and the management team, PhosAgro successfully held a vote among its Eurobond holders to amend the relevant issuance documentation so as to continue honouring its public debt In the reporting year, we faced multiple challenges, many of which were by all means unprecedented. Despite these headwinds, our high production efficiency and a balanced financial policy along with the favourable pricing environment on global markets helped the Company deliver strong financial results. Increased fertilizer production and sales spurred a revenue rise in excess of 35% y-o-y. Revenue growth outpaced the increase in production costs, which were up by circa 23% y-o-y. With these drivers in place, the Company was able to increase adjusted EBITDA by 39% y-o-y, while adjusted net profit improved by 40%. Alexander Sharabaika Deputy CEO for Finance and International Projects commitments to the holders of bonds recorded both in Russia and abroad. 39 % growth in adjusted EBITDA Growth of supplies to Asian countries especially to India, due to stronger government support for agriculture (increase in subsidies) and favourable weather conditions Restrictions on exports of phosphate-based fertilizers from China to bolster domestic supply and introduction of fertilizer export quotas in Russia Growth of global crop prices underpinned in part by stronger demand for forage crops, which itself was partially caused by the recovery of hog production in China after the swine flu epidemic in 2018–2019 Fertilizer affordability issues caused on the global market by supply disruptions and an increase in raw materials prices Other drivers of PhosAgro's strong financial performance in 2022 along with an increase in sales and competitive cost levels include: Key external drivers of financial results 84 85 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report RUB 569.5 bln revenue for 2022 1 Adjusted EBITDA is calculated as operating profit adjusted for depreciation and amortisation less foreign exchange gain or loss from operating activities. 2 Adjusted net profit means net profit less net foreign exchange gain or loss from operating and financing activities. 3 Adjusted free cash flow is calculated as cash flows from operating activities less cash flows from investing activities, adjusted for the outflow of cash and cash equivalents as result of a loss of control over foreign subsidiaries. Financial and operational highlights Item 2020 2021 2022 Δ 2022/2021, % FINANCIAL HIGHLIGHTS, RUB MLN Revenue 253,879 420,488 569,527 35.4 Adj. EBITDA 1 84,280 192,117 266,947 39.0 Adj. EBITDA margin 33.2% 45.7% 46.9% 1.2 Net profit 16,921 129,674 184,714 42.4 Adj. net profit 2 41,991 130,512 182,297 39.7 Adj. free cash flow 3 42,519 77,857 141,024 81.1 31.12.2020 31.12.2021 31.12.2022 Net debt 156,875 153,718 180,338 17.3 12M net debt / adj. EBITDA 1.86 0.80 0.68 (15.6) SALES VOLUME, KT Phosphate-based fertilizers and feed phosphates 7,669 7,762 8,403 8.3 Nitrogen-based fertilizers 2,286 2,495 2,551 2.3 Total fertilizers 9,955 10,257 10,954 6.8 Other products 184 177 144 (18.8) Total fertilizers and other products 10,139 10,434 11,097 6.4 Revenue breakdown by key product, RUB bln Item 2020 2021 2022 Δ 2022/2021, % Phosphate and nitrogen-based products 242.3 404.9 551.0 36 Other 11.6 15.6 18.5 19 Total 253.9 420.5 569.5 35 Operating costs analysis Cost of sales, RUB mln Item 2020 2021 2022 Δ 2022/2021, % Depreciation and amortisation 23,743 24,812 26,979 8.7 Materials and services 40,937 47,084 54,178 15.1 Phosphate rock transportation 8,134 9,105 11,610 27.5 Repair 10,134 11,373 12,002 5.5 Drilling and blasting 3,168 3,486 3,217 (7.7) Other materials and services 19,501 23,120 27,349 18.3 Raw materials 35,514 63,534 108,323 70.5 Ammonia 4,802 14,277 19,550 36.9 Sulphur and sulphuric acid 4,360 17,707 40,798 130.4 Potassium 12,253 16,574 27,418 65.4 Natural gas 12,342 12,635 14,226 12.6 Ammonium sulphate 1,757 2,341 6,331 170.4 Salaries and social contributions 13,807 15,286 19,667 28.7 Electricity 6,311 6,740 6,754 0.2 Fuel 3,885 5,578 6,459 15.8 Products for resale 9,333 12,725 15,599 22.6 Customs duties 1,482 2,483 1,420 (42.8) Freight, port and stevedoring expenses 19,128 28,587 16,382 (42.7) Russian Railways and operators’ fees 11,452 10,728 12,647 17.9 Other 1,111 1,250 610 (51.2) Total 166,703 218,807 269,018 22.9 In 2022, cost of sales grew by 22.9% y-o-y to RUB 269 bln, mainly on the back of higher sales volumes and increased prices for key feedstocks. Raw materials costs added 70.5% y-o-y and amounted to RUB 108 bln as a result of a significant increase in the global prices for all key inputs, including sulphur and sulphuric acid, potassium, ammonium sulphate and natural gas. Despite the higher costs, PhosAgro remains one of the industry's most efficient players and leads the pack globally in terms of production costs. The main way we ensure effective cost control is by sourcing the key inputs and materials from domestic suppliers. Revenue analysis Revenue for 2022 grew by 35.4% y-o-y and amounted to RUB 569.5 bln. The growth was associated with increased sales volumes driven by higher mineral fertilizer output. A large-scale programme to upgrade existing production facilities and build new ones helped the Group achieve a significant improvement in equipment productivity. Higher average sales prices on global markets and a shift in the sales mix towards a greater share of higher-margin fertilizers, which are consistently popular among farmers, also contributed to the revenue increase. RUB 269 bln cost of sales for 2022 86 87 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report In 2022, lobbying spending stood at RUB 5,1 mln Adjusted EBITDA Adjusted EBITDA in 2022 vs actual 2021, RUB bln Adjusted free cash flow Capital investments (including capitalised repairs) for the year amounted to RUB 63 bln and were mainly focused around completing the construction of a large production facility in Volkhov, developing the ore and raw material base in Kirovsk, developing production capacities in Balakovo, and maintaining production facilities across all process stages, from mining and processing of raw materials to producing finished products. 1 Eurobond debt amount does not include the bank fee of RUB 220 mln. Debt Net debt as at 31 December 2022 increased y-o-y to RUB 180.3 bln. At the 2022 year-end, our net debt to adjusted EBITDA ratio went down to 0.68x from 0.8x as at 31 December 2021, primarily thanks to EBITDA growth. Our commitment to maintaining high credit quality and ensuring timely debt servicing continues to be a priority for the Company. Loans and borrowings breakdown by rate type as at 31 December 2022, % Loans and borrowings breakdown by currency as at 31 December 2022, % Debt maturity profile, RUB bln Item 2023 2024 2025 2026 2027 2028 Total Unsecured bank loans 44.6 23.2 3.7 10.7 2.1 – 84.3 Eurobonds 1 35.2 – 35.2 – – 35.2 105.6 Interest payable 1.1 – – – – – 1.1 Total debt 80.9 23.2 38.9 10.7 2.1 35.2 191.0 Tax policy GRI 3-3, 207–1, 207–2, 207–3 In 2022, PhosAgro’s Board of Directors approved the Company’s Tax Strategy. Our approach to taxation was developed in accordance with the Company’s Strategy to 2025 and combines social responsibility for developing and maintaining the well-being of regions across PhosAgro’s footprint, minimising tax litigation risks, and maximising the use of the Company’s leverage toolkit stipulated by law for actively investing companies, in particular Investment Protection and Promotion Agreements and Special Investment Contracts. Our approach to tax management, participation in shaping government tax policy, and organisational arrangements pertaining to the exercise of tax functions at PhosAgro is described in the Company’s Tax Strategy. 266.9 (20.3) (83.3) 158.9 19.5 192.1 2022 FX rates Costs Fertilizer prices Sales 2021 Adjusted EBITDA to adjusted FCF conversion in 2022, RUB bln 266.9 0.4 (16.9) (41.8) (5.3) 203.3 (62.3) 141.0 Adjusted EBITDA Adj. WC Tax paid Interest paid OCF ICF FCF Fixed rate Floating rate 96 4 USD-denominated RUB-denominated EUR-denominated 71 23 6 In 2022, the Company’s adjusted EBITDA grew to a record high of RUB 266.9 bln up by 39% y-o-y In 2022, the Company’s adjusted free cash flow reached RUB 141 bln The full text of the Tax Strategy is available on the Company's website Adjusted EBITDA margin for the reporting period grew to 46.9 % up by 81.1% y-o-y 88 89 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report 1 Reasons for the difference between corporate income tax accrued on profit/loss and the tax due if the statutory tax rate is applied to profit/loss before tax are as follows: intercompany transactions elimination, provisions accrued in accordance with IFRS (mostly allowance for expected credit losses), reduction in tax rate for certain Russian and foreign entities items which are not deductible or assessable for taxation purposes, and other differences. 2 For the Russian tax jurisdiction, an average statutory tax rate is used. Tax jurisdiction Unrelated party revenue Revenue from intra- group transactions with other tax jurisdictions Profit/(loss) before income tax Income tax paid (cash basis) Income tax accrued 1 Statutory tax rate 2 Average headcount, people Tangible assets other than cash and cash equivalents Total empoyee renumeration Intra-group oans received 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 Russia 131,527 440,639 250,534 106,420 11,877 157,360 28,471 41,393 29,875 39,932 20.00% 20.00% 18,198 19,846 274,386 320,961 34,039 55,318 67,069 103,233 Switzerland 221,961 96,268 63,188 27,436 112,008 57,850 137 331 742 764 12.05% 12.05% 32 36 4,725 0 1,723 528 0 0 Cyprus 0 0 8 4 (598) (4,243) 0 2 0 2 12.50% 12.50% 28 30 14 0 201 57 2,237 0 Poland 14,916 8,088 0 0 7,253 4,943 59 48 84 235 19.00% 19.00% 15 15 1,705 0 121 55 0 0 Germany 10,423 7,446 0 0 6,381 5,242 7 2 60 129 32.27% 32.27% 7 7 466 0 97 33 0 0 France 15,833 7,045 0 0 10,887 5,541 0 5 93 94 26.50% 25.00% 6 6 578 0 85 58 0 0 Serbia 4,752 2,020 230 58 2,060 1,063 (1) 1 89 65 15.00% 15.00% 12 14 1,443 0 54 28 337 0 Lithuania 9,838 1,598 0 0 5,075 1,038 28 26 31 0 15.00% 15.00% 4 4 7 0 67 20 0 0 Romania 4,681 4,050 0 0 1,213 1,916 5 0 6 63 16.00% 16.00% 5 7 1,019 0 25 14 0 0 South Africa 6,452 2,343 0 0 4,046 1,643 79 0 85 174 28.00% 28.00% 2 2 338 0 18 10 502 0 Finland 105 29 0 0 (7) (2) 12 3 12 3 20.00% 20.00% 1 1 677 0 8 2 0 0 Brazil 0 0 0 0 (86) (42) (5) 0 (5) 4 34.00% 34.00% 7 7 2 0 58 32 0 0 Singapore 0 0 0 0 (55) (13) 13 0 0 0 17.00% 17.00% 3 3 7 0 25 8 0 0 Total 420,488 569,527 313,961 133,918 160,055 232,297 28,806 41,811 31,073 41,465 285,368 320,961 36,522 56,163 70,146 103,233 Country-by-country reporting, RUB mln GRI 207–4 For the list of tax jurisdictions where the entities included in the Group’s consolidated financial statements are resident for tax purposes, and the details of taxes payable in each jurisdiction, please see page 394. In March 2022, the Group lost control over all of its foreign subsidiaries, therefore the 2022 figures for these companies in the table above are presented for the period before the loss of control. 20 % the Company’s income tax rate in 2022 and 2021 90 91 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report This production flexibility is the result of a number of successful investment projects, including MAP production at the Volkhov site reaching its full capacity. In 2022, nitrogen-based fertilizer output grew by 5.6% y-o-y, outpacing production of phosphate-based fertilizers. The granulated ammonium sulphate segment demonstrated the most impressive growth of more than two times thanks to expanded capacities to produce this very popular product. Production of urea, the nitrogen segment's core product, went up by 2.7% to 1.7 mt. In 2022, we allocated a record RUB 63 bln (including capitalised repairs) to upgrading and expanding 2022 was a new record year for PhosAgro in terms of output and sales. Compared to 2021, agrochemical output increased by 4.6% to 11.1 mt, while shipments to customers expanded by 6.8% to 11 mt. In our key segment of phosphate-based fertilizers, we demonstrated annual production growth of above 4% for the third year running. The market environment caused us to make serious changes to our product mix. In our key DAP/MAP grades and NPS, we improved the 2021 performance by 16.1% and 78.6% respectively, while NPK and APP output was down by 17.9% and 45.3% respectively. Alexander Gilgenberg, General Director of Apatit our production capacities. In 2023, these investments will hit RUB 67 bln. Safety at our production sites remains our absolute priority. We reduced LTIFR from 0.81 in 2021 to 0.38 in the reporting year, with the Cherepovets site team delivering the best LTIFR of 0.12, more than three times lower than the Company's overall result. Mineral fertilizers Nitrogen-phosphorus and complex fertilizers Nitrogen-phosphorus and complex fertilizers with micronutrients Nitrogen-based fertilizers Liquid complex fertilizers Feed additives Feed grade urea Feed grade monocalcium phosphate Concentrates • High-grade phosphate rock • Syenite alkali aluminium concentrate • Nepheline concentrate PhosAgro is the largest producer of liquid nitrogen-phosphorus fertilizers in Russia Industrial products МАССА НЕТТО: 1000 КГ ГОСТ 2081-2010 КАРБАМИД (МОЧЕВИНА ) МАРКА Б N,% не менее 46,2 СИСТЕМА МЕНЕДЖМЕНТА СЕРТИФИЦИРОВАНА ПО СТАНДАРТАМ ИСО 9001 , 14001 , 45001 OUR CUSTOMERS are at the heart of our business In 2022, our portfolio was expanded to 57 agrochemical grades, including all types of fertilizers and feeds. Two of these grades were registered in 2022. A significant portion of our offering consists of newest fertilizer grades developed over the past five years, including two in the reporting year. Product portfolio Industrial phosphates Sodium tripolyphosphate Operational performance Phosphogypsum • Phosphogypsum for road construction • Phosphogypsum for farming 92 93 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Upstream and downstream 39.51 mt total apatite-nepheline ore production in 2022 PhosAgro Group’s ore reserves as at 1 January 2023 Deposit Balance reserves, kt (A+B+C1+C2) Average P 2 O 5 content, % Kukisvumchorr 347,146 14.14 Yukspor 456,620 13.81 Apatitovy Cirque 86,565 13.69 Rasvumchorr Plateau 85,878 10.67 Koashva 254,963 17.24 Njorkpahk 55,979 14.11 Total 1,287,151 14.37 Upstream Kirovsk Branch of Apatit mines apatite-nepheline ore at six fields of the Khibiny deposits in Russia’s Murmansk region using both underground and open-pit mining methods. PhosAgro Group’s feedstock reserves are of igneous origin, which means that they do not have concentrations of toxic heavy metals. The Company’s phosphate rock is extremely rich in P 2 O 5 . The mineral resource base (including off-balance reserves) at one of the world’s richest deposits is expected to last for about 60 years. The slight y-o-y decrease in balance reserves corresponds to the volume of ore mined. Currently, the Company is shifting its resource base emphasis from reserves for open-pit mining to a higher share of underground mining reserves. In the reporting year, the share of open-pit mining came in at 78.3%. In 2022, total apatite-nepheline ore production rose by 3% to 39.51 mt (compared to 38.45 mt in 2021). This increase was due to the commissioning of new capacities at the Kirovsky mine (+10 m level of the Kukisvumchorr deposit) and the Rasvumchorrsky mine (CDU-4). In 2022, the Company also proceeded with its investment project to develop +10 m level at the Kirovsky mine. The project envisages the construction of two 1Q 2022 First start-up facility commissioned 4Q 2023 Second start-up facility expected to be launched 1.5 mt of ore production volume in 2022 RUB 36.1 bln the project’s budget crushing and delivery units for ore drawing, a haulage level and a water drainage, enhancement of the Kirovsky mine’s ventilation system, as well as further level development until 2035. SASB RT-CH-000.A 94 95 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report 12 mt production of phosphate rock and nepheline concentrate +2% y-o-y vs 2021 Chemical production Feedstock Production volume, kt Item 2020 2021 2022 Δ 2022/2021, % Ammonia 1,970.3 1,931.1 1,985.3 2.8 Phosphoric acid 2,716.8 2,952.0 3,199.4 8.4 Sulphuric acid 6,815.6 7,352.2 7,920.2 7.7 Ammonium sulphate 293.9 259.0 322.6 24.6 Total 11,796.6 12,494.3 13,427.6 7.5 In 2022, the production of phosphoric acid as the key feedstock used in phosphate fertilizers grew by 8.4% y-o-y and reached 3.2 mt on the back of earlier production unit upgrades and increased equipment utilisation efficiency. In 2022, sulphuric acid production was up by 7.7% year-on-year to 7.9 mt driven by the ramp-up to full capacity of the new unit in Cherepovets and the commissioning and reaching the design capacity of a new unit at the Volkhov site. Ammonia output also rose by 2.8% y-o-y to 1,985.3 driven by the completion of the capacity expansion project at ammonia production unit No. 3 of the Cherepovets site. This project helped increase daily output to 2,350 t. Furthermore, the Company proceeded with its Vostochny mine development project seeking to intensify open- pit mining. The investment project focuses on purchases of self-propelled machinery, including dump trucks, excavators and auxiliary machinery, with fleet renewal helping to increase the equipment’s technical availability and utilisation ratios. Additionally, the project involves relocation of infrastructure facilities and expansion of the beneficiation plant's production capacity. On top of that, we remain committed to the active implementation of our sustainable development strategy. For example, in 2022 the mining and processing plant of Apatit continued sourcing energy generated by the hydroelectric power plants of TGC-1. In the reporting year, green electricity supplies to the plant totalled 300 million kWh. Thus, about 17.8% of the plant’s output is covered by green electricity. 7 mtpa of ore ore output scheduled to be reached at the Koashvinsky open pit by 2030 4.5 mtpa of ore ore output achieved at the Njorkpahk open pit 8.5 mtpa of ore total ore production at the Vostochny mine RUB 33.4 bln project CAPEX Ore processing Production volume, kt Item 2020 2021 2022 Δ 2022/2021, % Phosphate rock 10,541.4 10,675.5 10,855.7 1.7 Nepheline concentrate (incl. syenite concentrate) 1,159.4 1,123.1 1,175.8 4.7 Total 11,700.8 11,798.6 12,031.5 2.0 kt 96 97 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Sales In 2022, PhosAgro increased total fertilizer sales by 6.8% y-o-y to hit an all-time high of 11 mt. Sales of phosphate fertilizers and feed phosphates in 2022 amounted to 8.4 mt, up 8.2% y-o-y. The increases came on the back of strong demand for these fertilizers in the Asian markets. We were able to meet the growth in demand by boosting the production of MAP in 2022 after launching a new facility at the Volkhov site. In the nitrogen segment, sales were up by 2.3% year-on-year, primarily due to a high seasonal demand and the availability of fertilizers for end users. Sales by key product, kt Item 2020 2021 2022 Δ 2022/2021, % Phosphate rock 3,151.8 2,677.6 2,041.2 (23.8) Nepheline concentrate 1,159.0 1,125.2 1,176.4 4.6 Total 4,310.8 3,802.8 3,217.6 (15.4) PHOSPHATE-BASED FERTILIZERS DAP/MAP 3,203.4 3,564.5 4,272.2 19.9 NPK 2,924.6 3,011.1 2,660.7 (11.6) NPS 912.2 566.8 1,008.8 78.0 APP 200.3 206.3 111.6 (45.9) MCP 378.6 405.2 349.1 (13.8) PKS 49.8 8.5 – – Total 7,668.9 7,762.4 8,402.4 8.2 NITROGEN-BASED FERTILIZERS Ammonium nitrate 618.6 798.0 661.6 (17.1) Urea 1,649.0 1,616.3 1,741.8 7.8 Ammonium sulphate 18.1 80.2 147.4 83.8 Total 2,285.7 2,494.5 2,550.8 2.3 Total fertilizers 9,954.6 10,256.9 10,953.2 6.8 OTHER PRODUCTS STPP 93.3 94.4 48.6 (48.5) Other 90.4 82.9 95.4 (15.1) Total other products 183.7 177.3 144.0 (18.8) Market outlook In 1Q 2023, the nitrogen-based fertilizer market faced an oversupply as a result of high carry-over stocks (in Europe, North and South America). This continues to pile downward pressure on prices. 8.4 mt sales of phosphate- based fertilizers and feed phosphates Phosphate-based fertilizer and feed phosphates production, kt Item 2020 2021 2022 Δ 2022/2021, % DAP/MAP 3,164.4 3,610.7 4,191.9 16.1 NPK 2,840.3 3,111.3 2,553.8 (17.9) NPS 928.9 561.6 1,003.1 78.6 APP 205.8 208.6 114.0 (45.3) MCP 392.1 390.6 361.6 (7.4) PKS 46.4 10.8 – – Total 7,577.9 7,893.6 8,224.4 4.2 Phosphate-based fertilizers In 2022, the production of phosphate fertilizers and feed phosphates grew by 4.2% y-o-y to 8.2 mt helped by increased output of phosphoric acid. The output of DAP/MAP fertilizers increased by 16.1% to 4.2 mt. The rapid growth rates of DAP/MAP fertilizers was due to the launching and ramp-up to full capacity of MAP production at the Volkhov site, and the higher demand for bicomponent fertilizers in 2022. NPS production in 2022 surged by 78.6% y-o-y to 1 mt, while the output of NPS and APP dropped by 17.9% and 45.3% respectively due to the interchangeability of phosphate fertilizer grades available in the product mix and considering the overall market requirements. Nitrogen-based fertilizers In 2022, production in the nitrogen segment went up by 5.6% y-o-y to 2.55 mt. As the Company completed its investment project to ramp up granulated ammonium sulphate capacities, the output of this unwaveringly popular fertilizer more than doubled y-o-y to reach 165.4 kt. The production of urea grew by 2.7% to 1,688.2 kt, while the output of ammonium nitrate in 2022 saw a slight planned decrease to 693 mt. Nitrogen-based fertilizers production, kt Item 2020 2021 2022 Δ 2022/2021, % Ammonium nitrate 691.5 694.8 693.0 (0.3) Urea 1,679.1 1,643.2 1,688.2 2.7 Ammonium sulphate 31.7 74.1 165.4 123.2 Total 2,402.3 2,412.1 2,546.6 5.6 2.55 mt production in the nitrogen segment 8.2 mt production of phosphate- based fertilizers and feed phosphates The prices of phosphate-based fertilizers have plateaued for now. Higher seasonal activity in South America (primarily in Brazil) in 1Q 2023 coupled with revival in the domestic US market after a significant import drop in 2022 are expected to provide support for the pricing environment. 98 99 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND RESULTS OF 2022 Providing expert support to agricultural producers and advancing a customised product offering Promoting the responsible and rational use of mineral fertilizers, i.e. green agriculture Optimising the mineral nutrition of crops with the use of PhosAgro Group's products and publishing trial data Establishing business partnerships built on mutual trust and respect Customers and product management ~ 10 mln interactions with PhosAgro’s digital ecosystem, up more than twofold y-o-y The trial results were featured in research publications and the book titled Trial Outcomes 2022, with the trial data also demonstrated at conferences and webinars Customers reported high satisfaction with the performance PhosAgro's staff promptness of request handling and quality of support and consultations: 98.6 % AgroResult app downloaded by > 36,000 users Results of 48 agronomic trials published on the Company's website (phosagro.ru) 4,395 calculations made using PhosAgro's agro calculator in 2022 Targets 17.16 and 17.17 Target 2.4 Ensuring a shared understanding of obligations and expectations from the partnership Driving sustainable growth of sales markets Stable development of sales markets Company pro le Corporate governance Share capital Appendices PERFORMANCE REVIEW 100 101 Strategic report Developing innovative products that meet customer requirements and enable farming with due consideration of environmental factors, soil and crop requirements, the climate agenda and the need to reduce greenhouse gas emissions in the value chain. Strategy We carry out PhosAgro’s strategic and globally important mission of supplying safe and eco-efficient fertilizers for the agricultural industry to ensure food security in Russia and across the world. We believe that tackling global problems is only possible through open dialogue, cooperation, and building synergies between all stakeholders. This approach is at the heart of our interaction with customers. We are committed to the responsible use of our products making sure they are safe for people and the environment. Product life cycle management at PhosAgro is in full compliance with applicable Russian and international standards and regulatory requirements. We seek to minimise any potential negative impact of our products on safety, health and the environment throughout the value chain, from product development to the end of its life cycle. To provide consumers with safe, eco-efficient, and quality innovative products and services, the Company's Strategy to 2025 has identified the following focus areas GRI 3-3 An open dialogue with customers helps us understand their expectations and requirements for our products, services and the management system, as well as their vision of future products. This valuable information creates a solid foundation for the Company’s further strategic growth and new product development. PhosAgro Group's responsible production management framework is based on the following principles: • compliance with Russian and international standards and regulations; • accurate traceability of materials, elements and substances from product development to the end of life cycle; • open and transparent information about the properties and quality of products for customers and other stakeholders; • open dialogue with stakeholders regarding their expectations and satisfaction with the Group’s products and services; • integration into the quality management and environmental management systems. PhosAgro Group’s vertically integrated business model is a key competitive advantage. PhosAgro’s upstream assets benefit from extensive and high-quality resource base boasting unmatched purity. Our downstream assets are located close to key mineral resources used in fertilizer production. At PhosAgro Group, we have a product management framework that relies on the assessment of product life cycle. It covers all production facilities and stages of product life. Management approach Product management framework • Regulations and other requirements • Expectations of stakeholders • PhosAgro’s strategic initiatives, and cooperation and joint research projects with research institutes • Elaboration of production requirements and opportunities • Product research and development • Ensuring production safety and product use in compliance with regulatory and other requirements • Drafting documents • Registration tests and receipt of permits • Marketing products meeting customer requirements • Taking into account customer feedback • Information support • Digital services for customers Advancing digital technology in agriculture to boost crop yields and quality in the near term, including by raising consumer awareness of innovations in agricultural production. Enhancing PhosAgro’s competitive strengths as one of the world's leading suppliers of eco-efficient phosphate fertilizers for farmers. Expanding PhosAgro Group’s involvement in programmes to protect human health and the environment, ensure food security and combat soil degradation. Developing circular economy and increasing rates of recycling, including the use of by-products from PhosAgro Group's facilities. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 102 103 Strategic report System for planning and defining criteria for product development Planning is an important element of PhosAgro Group’s management system. Planning involves complex and comprehensive research to determine a set of criteria for the development of a future product, including: stakeholder requirements and opinions about products and services; market expectations, requirements and trends; regulatory requirements applicable to activities and products; innovative methods and technologies of production, including those aimed at ensuring greater safety of the product and its manufacturing processes for humans and the environment; opportunities for implementing the circular economy principles and contributing to UN SDGs. PhosAgro Group’s quality management system defines processes that ensure traceability of the criteria of product safety, quality and conformance with stakeholder requirements and expectations throughout the product life cycle to comply with the stringent quality requirements for the end product, from ore and material selection to end product research. Interaction with customers and product safety are closely related issues regularly discussed by the Board of Directors’ committees and submitted to the Board of Directors for consideration. Each facility has designated staff members responsible for internal control and support of the quality and environmental management systems, which includes implementing targeted initiatives, performing internal audits, updating records, collecting and providing input data for review by top management to improve governance across the board. Every year, the quality and environmental management systems undergo an external audit by an independent firm to maintain their compliance with ISO 9001, ISO 14001 and other standards. The systems are supported by internal and external audits that help promptly reveal areas for improvement and introduce best practices into management systems. Development of products and manufacturing processes is implemented in partnership with Samoilov Scientific Research Institute for Fertilizers and Insectofungicides (NIUIF), Russia's only institute specialising in this area. 1 2 3 Risks and opportunities Regulatory environment and management of risks associated with chemicals PhosAgro Group facilities ensure timely receipt of all necessary licences for their activities to strengthen public confidence in the safety of their operations and products. All types of fertilizers are registered in Russia. PhosAgro Group is committed to minimising hazardous substances in its activities. We ensure full transparency with respect to the chemicals we use and the content and properties of our products. Risks associated with chemicals management and product safety Risks associated with customer satisfaction Risks associated with ensuring ethical research and production principles Risks specific to the Group's operations are listed below: The Company has a risk management system in place to identify and mitigate product related risks in cooperation with customers. The following strategic risks, in particular, affect our product and customer related objectives: 7 environmental risk; 9 risk related to business processes and systems; 13 regulatory risk. For more information, see the Strategic Risks section on page 70 The Company develops corrective measures as necessary and unlocks opportunities, including voluntary certification, to mitigate those risks. Below you can find more information about what we do on this front. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 104 105 Strategic report Regulations and certain requirements applied to mineral fertilizers in Russia We tap our extensive knowledge base and technologies to design products that are safe for the environment and people. In strict compliance with the regulations, all PhosAgro products undergo the necessary environmental and toxicological tests as part of their registration process before being marketed to our customers. Mineral fertilizers produced by PhosAgro Group are subject to mandatory state registration of agrochemicals by the Russian Ministry of Agriculture. All grades of PhosAgro Group’s mineral fertilizers registered in Russia passed a mandatory examination for compliance: • toxicological and hygienic – in Erisman Federal Research Centre of Hygiene; • biological – in Pryanishnikov Institute of Agrochemistry; • environmental – in Rosprirodnadzor and Lomonosov Moscow State University; • sanitary and epidemiological standards – in Rospotrebnadzor. We are committed to the ethical principles of animal welfare and seek to avoid using animals for research. This issue is addressed at the highest level by the Company’s Board of Directors. In 2021, we revised our Code of Ethics to state our position on this matter. In line with the Code of Ethics, PhosAgro Group does not conduct experiments on animals, except as required by law; when conducting an expert examination of fertilizers, the main method of evaluating information on the toxicity and hazard of a multi-component substance to animals is to analyse information from national and international databases, as well as information on previously registered fertilizers. Currently, there are very few alternatives to animal research that are recognised by the government. We are doing our best to expand the range of allowed research methods and reduce experiments on animals. Regulations and certain requirements applied to mineral fertilizers by the European Union, REACH, and SVHC PhosAgro Group's products exported to EU customers have been registered pursuant to Regulation (EC) No. 1907/2006 concerning the Registration, Evaluation and Authorisation of Chemicals (REACH). For companies, REACH conformity means greater responsibility for assessing the risks associated with the use of chemicals and providing users with relevant safety information. Companies producing or importing 10 tonnes or more of hazardous substances per year are required to submit not only technical data, but also a chemical safety assessment (CSA). All information on such substances is communicated by PhosAgro Group in full to the regulators. Pursuant to the above Regulation, Apatit’s products contain no substances which are subject to restrictions on their sales in the European Union. We produce ammonium nitrate (AN) CAS 6484-52-2 EC No. 229- 347-8, which is subject to para 58, Annex XVII of REACH. However, it does not apply if a fertilizer conforms to specifications defined in Annex I and Annex IV to Regulation (EU) 2019/1009 of the European Parliament and of the Council. To assess conformity, samples of ammonium nitrate are sent quarterly to the Inspectorate Estonia AS lab for detonation resistance and oil retention tests. The results are formalised by a protocol for compliance with the requirements of Annex I and Annex IV of Regulation (EU) 2019/1009. In addition, para 30 of Annex XVII to REACH lists substances specified in Part 3 of Annex VI to Regulation (EC) No. 1272/2008 and classified as toxic to reproduction, Category 1A/1B. These include sodium tetraborate, which is on the list of Substances of Very High Concern (SVHC) and is classified as a reproductive toxicant, Category 1В, but the restrictions only apply to individual concentrations in the mixture above 4.5%. We produce NPK fertilizers with boron that contain sodium tetraborate at a concentration of 2–3%. Therefore, the special concentration level as defined in Part 3 of Annex VI to Regulation (EC) No. 1272/2008 is not reached. Thus, PhosAgro Group faces no restrictions under Annex XVII of Regulation No. 1907/2006. The quality and safety of mineral fertilizers produced by the Company is confirmed by state registration certificates, declarations of conformity, and safety data sheets. According to expert reviews, new fertilizer grades of PhosAgro Group are effective and environmentally and toxicologically safe. The products are properly classified, labelled and packaged in accordance with Regulation (EC) No. 1272/2008 (Classification, Labelling and Packaging Regulation, CLP Regulation) and Regulation (ЕU) 2019/1009. All types of manufactured fertilizers have safety data sheets (SDS). PhosAgro Group's unique phosphate-based fertilizers have perfectly low cadmium average content (0.2 mg per kg), making them among the safest in the world. On 5 June 2019, the European Council and European Parliament approved the EU Regulation 2019/1009 (Fertilizing Products Regulation, FPR) on fertilizers, establishing new EU-wide rules for CE-marked fertilizers (also known as EU Fertilizing Products). The regulation provides for reducing cadmium content in EU fertilizers, by introducing a single cap at 60 mg per kg of P₂O₅ and banning inorganic fertilizers in the EU with a cadmium 0.2 mg per kg average cadmium content in PhosAgro Group's phosphate- based fertilizers content above that cap starting from 16 July 2022. Going forward, the regulation provides for gradual reduction of cadmium content to 20 mg per kg of P₂O₅. The plans of cutting the cap to 40 mg per kg of P₂O₅ have been already announced. At the same time, the French Agency for Food, Environmental and Occupational Health & Safety (ANSES) has already issued recommendations for a cadmium content in inorganic phosphate- based fertilizers of less than 20 mg per kg of P₂O₅. Thus, PhosAgro Group's phosphate-based fertilizers are well within EU requirements for cadmium content, which is reflected in our product slogan: pure minerals for healthy lives. In 2022, in line with Regulation (EU) 2019/1009, Apatit’s mineral fertilizers were successfully certified by an independent notified body in the area of fertilizer certification in the EU, making it possible for the fertilizers to be CE-marked. 60 mg per kg single level of maximum cadmium n fertilizers, according to EU regulation Company pro le Corporate governance Share capital Appendices PERFORMANCE REVIEW 106 107 Strategic report Also, the Company made a Green Label environmental claim, asserting that the Group’s products are free from dangerous cadmium concentrations capable of harming soils. In addition, our products are labelled with an EU pictogram developed under Regulation (EU) 2019/1009 and ensuing rules for voluntary labelling of safe fertilizers in terms of heavy metals content. All agrochemicals of PhosAgro Group have been certified under the GOST R 58658–2019 national standard, which has introduced the world’s most rigorous limits on heavy metal and arsenic content, allowing the Company to use the Green One eco-label. On top of that, the Company has a certificate under the Ecological Union’s Vitality Leaf standard and the right to use the internationally recognised eco-label on its products. Voluntary ESG certification of products GRI 2-28, 417-1 Both certificates were confirmed in 2022. Independent assessment results are a testament to the unique eco-efficiency of PhosAgro Group’s products. ISO 9001 14001 45001 In 2022, PhosAgro was the first Russian mineral fertilizer producer to win strong recognition in Brazil, one of the world’s major agricultural markets, where our products obtained the Environmental Quality Label. As part of mutual recognition of eco-labels, Brazilian experts reviewed the life cycle of the Company's products, Key initiatives in 2022 included production, environmental and social criteria, such as: energy efficiency and use of recycled materials and energy resources; use of best available technologies; customer service in terms of providing reliable information on the properties and optimal use of the mineral fertilizers. Throughout 2022, PhosAgro Group maintained a strong focus on activities that help make information about the Company's products and services more accessible. Customers enjoy our digital services, which are complementary to PhosAgro Group’s core products and allow us to expand consumer opportunities, including by offering faster access to the relevant information and competencies of PhosAgro Group experts. PhosAgro Innovation Centre provided extensive expert support to consumers during the year. with a special focus on conformity to Brazilian requirements for the production, storage and transportation of fertilizers. The Brazilian standard contains strict limits on levels of arsenic and heavy metals, which PhosAgro Group mineral fertilizers are fully compliant with. This comprehensive assessment Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 108 109 Strategic report Ensuring customer satisfaction is a major priority for PhosAgro Group. In order to obtain unbiased data on the performance of our quality management system, collect comments, and quickly act on them, we regularly monitor customer satisfaction levels. We also take on board feedback from existing and potential customers regarding our products and carefully review all the proposals and comments we receive in order to better meet our customer needs, expand our product range, acquire new customers and tap into new sales markets. The data obtained serves as the basis for the annual assessment of customer satisfaction. In late 2022 and early 2023, PhosAgro Group carried out yet another survey of consumer opinion. This time, the Company polled its Russian customers using a questionnaire in Microsoft Forms, which focused on customer satisfaction and loyalty aspects. The questionnaire relied on a qualitative evaluation using a scale from 1 (not satisfied at all) to 5 (completely satisfied). Whenever customer satisfaction is not rated at 5, respondents are asked to explain the reasons and provide comments to PhosAgro. During this survey customer satisfaction was assessed using the following indicators: quality of the products supplied; packaging (design, durability, moisture protection); product range; performance of PhosAgro’s staff in terms of promptness of request handling and quality of support and consultations. Satisfaction with product range, % score 5 score 4 score 3 score 1 63 18 15 4 Perfomance of PhosAgro's staff (promptness of request handling and quality of support and consultations), % score 5 score 4 93 7 Satisfaction with product quality, % score 5 score 4 score 3 89 7 4 Packaging (design, durability, moisture, protrction), % score 5 score 4 89 11 95 96 94 2022 2021 2020 Degree of consumer satisfaction, % Most of the customers praise: excellent product quality; timely supplies; Customers reported high satisfaction (score 5 or 4) with the performance of PhosAgro's staff (promptness of request handling and quality of support and consultations), rating it 98.6%, up from the 2021 level. Positive results also came for the quality and packaging of PhosAgro Group’s products (satisfaction levels rated at 97% and 98.6% respectively). Consumer survey The survey showed that customers gave a high appraisal of PhosAgro Group’s products using the above criteria. 98.6 % of consumers highly appreciated the performance of PhosAgro Group's staff strong skills of the staff responsible for support and consultations. Company pro le Corporate governance Share capital Appendices PERFORMANCE REVIEW 110 111 Strategic report AREAS, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 Target 12.4 Target 2.4 Targets 13.1, 13.2 Target 15.1 Target 4.4 Targets 17.16, 17.17 Research and education IMPROVEMENT OF PRODUCTION PROCESSES IMPROVEMENT OF THE PRODUCT MIX APPLICATION IMPROVEMENT COOPERATION WITH UNIVERSITIES AND RUSSIAN AND INTERNATIONAL R&D CENTRES High-quality and eco-efficiency of our products, including a process for the development of new products that respects safety and the environment throughout its life cycle Promotion of sustainable farming practices, development of new fertilizer grades for broader access to best practices in farming Soil safety, biodiversity conservation, fertility growth and lower GHG emissions in production and throughout the product’s life cycle: from mine to plate Implementation of a comprehensive phased programme to support sustainable agricultural practices and support young scholars in running sustainable development projects • Reduction of natural gas consumption in production processes • Improvement of the nepheline concentrate processing technology • Phosphogypsum processing technologies • Development of water-soluble fertilizers • Development of inorganic coatings to improve performance and reduce nitrogen loss • Development of biologised fertilizers • Manufacturing of the new product – ApaSil • Production of phosphates and purified phosphoric acid • Development of an in-house catalyst for sulphuric acid and liquid sulphur dioxide production • Research into an integrated approach to plant nutrition and N 2 O emissions in a grain-grass crop rotation • Phosphogypsum application research 91.6 kt of phosphogypsum sold • PhosAgro Group's carbon farm project in the Vologda region 2,751 t of CO2 estimated volume of carbon dioxide absorbed by plant biomass per 200 ha) • Cooperation across a range of areas related to the climate agenda and low-carbon transition plan • Continuation of the Green Chemistry project • Continuation of the Summer Schools on Green Chemistry international project involving 150 students and young scholars, 30 professors and lecturers from 45 countries • A project to run cooperation programmes with universities 112 113 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Strategy The Company's innovations in fertilizer production are a sustainable development driver in agriculture and make a meaningful contribution to strengthening cooperation for food security. PhosAgro Group seeks to ensure efficient and safe agricultural production and develops innovative fertilizers while also working hard to minimise the environmental impact of mineral fertilizer application and production. In doing so, the Company relies on Russian and international experience and leading research and production practices. Our Strategy to 2025 envisages efforts to increase the share of innovative products, develop technology and production, and ramp up potential for cooperation with stakeholders and partners in the area of innovation and research. Management approach Our innovation, product development and education management system is seamlessly integrated into our quality management system, which is aligned with ISO 9001:2015. PhosAgro Group runs the Samoilov Scientific Research Institute for Fertilizers and Insectofungicides (NIUIF), Russia's only institute specialising in this area. Furthermore, the Company has a competence centre focusing on the following areas: promotion of core assortment in other countries (including registration tests); on-demand expertise for related business units; writing/editing agrochemical materials; monthly reviews on cadmium and other pollutants; participation in educational programmes. An important focus for PhosAgro Group is close work with reputable international organisations to provide broad support to humanitarian and research-intensive projects. Research and education fall within the remit of the Technical Development Department and are discussed at the meetings of the Strategy and Sustainable The Group actively cooperates with the Ministry of Agriculture, the Russian Academy of Sciences, federal research centres, universities, innovation funds, and international R&D organisations (University of Belgrade and Brazil's Federal University of Lavras). PhosAgro Innovation Centre was established in 2018 to create cutting-edge products and technologies in partnership with research institutions in Russia and abroad. The NIUIF and PhosAgro Innovation Centre bring together world-class researchers, engineers, and experts from various areas. Development Committee of the Board of Directors. These matters are subject to an annual review by the Board of Directors. Another important focus under this strategy is to ensure efficient production and its compliance with high standards for environmental responsibility, safety, and circular economy principles. 114 115 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Risks and opportunities Among other things, the following strategic risks affect our research and educational objectives: 1 strategic planning risk; 13 regulatory risk; 19 climate risk. Reduction of natural gas consumption in production processes NIUIF experts work to reduce natural gas consumption in technological processes and associated GHG emissions at existing MAP/DAP, NPS and NPK fertilizer production facilities. Measures related to a better use of the reaction’s heat in tubular reactors, for example for heating the coolant in a drum drier or a drum dryer granulator are a promising way to boost the energy efficiency of fertilizer production. In particular, a scheme to install a tubular reactor in a drum drier at the Cherepovets mineral fertilizer production unit was introduced in 2022. Performance 2,026.3 1,416.8 1,845.9 2022 2021 2020 For more information, see the Strategic Risks section on page 70 Risks specific to the Company's operations are listed below: The Group develops corrective measures as necessary and unlocks opportunities, including import substitution, to mitigate those risks. Below you can find more information about what we do on this front. Investments in R&D activities and development of new products, RUB mln Pilot tests are running in the production of various fertilizer grades: NPK 10-26-26, 15-15-15 and NPS 20-20(14). In the long term, the measures taken will ensure: savings in per unit consumption of natural gas: the actual savings range from 10% to 20%, and there is potential to increase this level up to 30% vs the baseline; reduction of GHG emissions by up to 20% (potentially up to 30% vs the baseline); higher productivity with an up to 10% reduction in natural gas consumption for some grades vs the baseline. And other environmental aspects associated with the adoption of the European Green Deal (primarily the From Farm to Fork Strategy) and potential similar restrictions in other markets. Non-compliance of products’ manufacturing process and their use with carbon footprint standards Inability to ensure full compliance of plant nutrition systems with specific farming practices Insufficient environmental friendliness of production processes Inability to accommodate customers’ expectations of advisory support regarding the use of our products 1 2 4 3 IMPROVEMENT OF PRODUCTION PROCESSES RUB 2,026.3 mln of investments in R&D and development of new products in 2022 116 117 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Improvement of the nepheline concentrate processing technology The NIUIF team is improving the technology for hydrogen sulphate treatment of Kola nepheline concentrate with production of aluminium hydroxide and by-products. Compared to the current sintering technology, this method boasts a lower metal intensity, higher energy efficiency, and lower carbon dioxide emissions. On top of that, the ability to process nepheline concentrate using the technology under development will reduce the country's dependence on imported bauxites. Phosphogypsum processing technologies In late 2022, we decided to build a facility at the Balakovo Branch to process by-products: fluosilicate acid (not used in production) obtained at the stage of absorption of fluorine-containing gases during concentration of extracted phosphoric acid in vacuum-evaporating installations, and dihydrate phosphogypsum to produce a solution of ammonium sulphate and technical calcium fluoride with a capacity of 20 ktpa in terms of 100% H 2 SiF 6 . Design and engineering documents for the construction of the facility are under development. The process is based on a patented resource and energy-saving technology developed by NIUIF to produce the most popular products: • ammonium sulphate solution to be used in the production of NS and NPS fertilizers on the site; • technical calcium fluoride to be used in the cement industry as a flux to reduce the calcination temperature of clinker mixture and improve cement quality. The method for producing ammonium sulphate solution by co-processing phosphogypsum and fluosilicate acid is classified as promising and is described in the Russian Reference Document ITS 2-2019 "Production of Ammonia, Mineral Fertilizers and Inorganic Acids". In 2022, NIUIF together with the Balakovo branch of Apatit filed an application to include the ammonium sulphate solution and technical calcium fluoride production technology in co-processing of phosphogypsum and fluosilicate acid in the list of advanced technologies for the purpose of Special Investment Contracts (SPIC 2.0); the application was approved by an expert organisation in December. NIUIF also continued its technical analysis of potentially setting up a production site processing phosphogypsum and carbon dioxide and manufacturing crystalline ammonium sulphate, technical calcium carbonate and its derivatives. CAPEX for the Cherepovets facility will be estimated in the first half of 2023. This technology will also reduce CO 2 emissions. PhosAgro Group's product mix expanded to 57 grades of agrochemicals of all types in 2022. By 2030, PhosAgro Group plans to complete work on and gear up for the introduction of 70 new products, which will include biological decomposers of organic matter, crop protection products; mineral fertilizers with controlled and prolonged release, liquid and solid fertilizers with microelements; feed additives with non-protein nitrogen sources and biological components; growth enhancers, adaptogens, amino acids. The overall focus of these developments is biologicalisation of agriculture and reduction of the environmental impact of chemicals in intensive farming, which will bolster crop yields and mitigate climatic and environmental impact. Development of new fertilizers Development of water-soluble fertilizers NIUIF continues research into the development of technologies for making completely water-soluble fertilizers in the form of crystalline products. In 2022, research involved products such as water- soluble monopotassium phosphate and water-soluble urea phosphate. This type of fertilizers provides for the most effective use of nutrients thanks to their application methods: fertigation and hydroponic systems. Application of water- soluble fertilizers also increases water use efficiency and reduces unproductive loss of nutrients, thus mitigating the negative impact on the environment. Due to the properties of monopotassium phosphate solutions, the risk of leaf burn and leaf curl during foliar feeding is much lower, making spraying at high solution concentrations possible. In addition, as a result of the special properties of the solutions, the use of monopotassium phosphate does not pose problems in saline or alkaline soils. The acidic reaction of urea phosphate solution prevents clogging of drip lines, and when it is absorbed by soil, it increases the availability of nutrients to plants and facilitates leaching of sodium ions from the root system. The use of an acidic component with urea can reduce ammonia losses, especially on alkaline soils. Development of inorganic coatings to improve performance and reduce nutrient loss In 2022, NIUIF team conducted research on making fertilizers with stronger agrochemical and environmental performance based on mineral fertilizer grades produced by PhosAgro Group (urea, NPK fertilizers, NPS fertilizers and ammonium nitrate). A method o f coating of inorganic compounds digestible by plants (mixtures of monocalcium phosphate and dicalcium phosphate with different proportions of these components) on granules was developed to slow down granule dissolution in the soil and help synchronise the release of nutrients from the fertilizer with the needs of plants. The novelty of the research consists in creating fertilizers with delayed and controlled release of nutrients without the use of expensive and environmentally unfriendly polymer coatings. IMPROVEMENT OF THE PRODUCT MIX Environmental R&D, including recycling and elements of circular economy 118 119 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report The strengths of PhosAgro Group's innovations are: use of inorganic compounds digestible by plants as a coating material, so that the final product contains additional amounts of plant-available nutrients; controlled rate of nutrient release; no negative environmental impact of the new fertilizer coatings; higher agrochemical performance. The increased agrochemical performance of the new fertilizers has been proven in vegetation and microplot trials. In vegetation trials, rate of nitrogen uptake from coated fertilizers rose by up to 29%, P 2 O 5 by up to 28%; K 2 O – by up to 20%; wheat grain yield increased by up to 26%; and yield quality improved. In field microplot trials, rate 1,329.6 1,691.1 621.3 2022 2021 2020 Rate of nutrient uptake from NPK fertilizer (vegetation trials), % Production of mineral fertilizers with micronutrients, kt 58 9.5 35 66.7 14.1 42 61.5 10.9 40 No coating 0.05 mm thick 0.1 mm thick +6.0% +14.9% +28% +11.9% +14.0% +20.8% N P O K O 24 57 58 30.5 64 66.7 30.9 0 61.5 No coating 0.05 mm thick 0.1 mm thick Urea +28.9% +27.2% +11.8% +6.0% +14.9% NP(S) 16:20(12) NPK 15:15:15 Development of biologised fertilizers In 2022, PhosAgro Group, together with the Russian State Agrarian University – Moscow Timiryazev Agricultural Academy, conducted the first tests of the impact of mineral fertilizers and their biologised counterparts on the climatic footprint of products. The climatic footprint of crop production includes nitrous oxide emissions from soil resulting from nitrogen conversion processes in mineral and organic fertilizers as well as carbon emissions from This innovation is fully in line with the principles of green chemistry and in line with the International Code of Conduct for the Sustainable Use and Management of Fertilizers (FAO) for the production and application of mineral fertilizers. In 2023, further efforts are planned in this area, including the registration of such fertilizers and market research to analyse market demand for these products. 1 For grades registered as fertilizers with micronutrients in 2020, production output since 2021 is presented. Currently, there is no commercially available technology for the production of such fertilizers in Russia. of nitrogen uptake from coated fertilizer increased by 20–22% and yield increased by up to 10%. Researchers noted enhanced physical and mechanical properties of the fertilizer (a 60–70% reduction in caking, an increase in the static strength of granules). By 2025, we plan to design and build a pilot plant with a capacity of 5–7 t/h. This will enable us to bring our coating capabilities as close as possible to our production capacities, with production at the Company's facilities potentially set up going forward. plant respiration, decomposition of crop residues and straw. Thus, higher yields with lower aggregate biomass of plants for comparable doses of fertilizers is the indicator that determines a smaller carbon footprint of mineral fertilizers. The tests also revealed a prominent role for micronutrients in increasing root biomass, which could potentially be used to "conserve" carbon in the soil. In 2023, we plan to scale up the tests to cover microplot trials and to study the carbon footprint of mineral fertilizers more extensively. No. Fertilizer Crop yield, g/chamber Increase vs the control Extra yield resulting from biologisation CO 2 footprint, g/chamber Decline resulting from biologisation average g/chamber % average % 1 Control (no fertilizer) 15.5 – – 54.7 – 2 NPK(S) 8:20:30(2) 21.7 6.2 – 82.4 – Bio-NPK(S) 8:20:30(2) 22.0 6.5 1.4 77.8 6.9 3 NPK(S) 15:15:15(10) 20.7 5.2 – 77.9 – Bio-NPK(S) 15:15:15(10) 21.0 5.5 1.5 74.6 5.6 4 DAP NP 18-46 21.7 6.2 – 71.7 – Bio-DAP bio-NP 18-46 22.5 7.0 3.7 71.5 3.8 5 MAP NP 12-52 22.3 6.8 – 76.3 – Bio-MAP bio-NP 12-52 23.7 8.2 6.3 74.5 8.1 6 Urea N 46.2 21.1 5.6 – 72.0 – Bio-urea bio-N 46.2 21.4 5.9 1.4 68.1 3.2 Rate of nitrogen uptake (vegetation trials), % 120 121 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Other innovative products Manufacturing of a new product – ApaSil In 2022, the Company continued to develop products with innovative features. In particular, we have marketed ApaSil, a product designed for seed pre-treatment and foliar application on a wide range of agricultural crops and ornamental plants on all types of soils. Field trials in different regions, on different soils and crops have shown that ApaSil helps plants cope with the stresses associated with drought, soil salinity and fungal diseases. Production of phosphates and purified phosphoric acid In 2022, NIUIF experts started comprehensive research of a technology for producing sodium and potassium phosphates used as food additives and comparable in quality to those from the leading global suppliers. The research seeks to obtain the most popular additives – disodium pyrophosphate (E450(i)), sodium pyrophosphate (E450(iii)), sodium tripolyphosphate (E451(i)), sodium hexametaphosphate (E452(i)) and dipotassium phosphate (E340(ii)) vital for the meat, fish, dairy, bakery and other food industries. The work will continue into 2023 and will serve as a basis for developing key technical solutions to produce food grade sodium and potassium phosphates from PhosAgro's own purified phosphoric acid. Given that these high-quality substances are not produced in Russia and are imported, the launch of local production will contribute to import substitution and food security. On top of that, the NIUIF is currently developing a solution for food grade phosphoric acid to be purified through solvent extraction using organic extractants. This product has not been produced in Russia this way and has been imported from Kazakhstan, China and other markets. We plan to use our own purified phosphoric acid to produce high-margin feed phosphates. Developing in-house catalyst for sulphuric acid and liquid sulphur dioxide production In 2022, the NIUIF, Russia's leading research centre specialising in sulphuric acid production technologies, focused on two very relevant areas in the new economic landscape – creating in-house production of high-performance vanadium sulphuric acid catalysts and launching a new production process for liquid sulphur dioxide. Before 2022, domestic consumers purchased these products mainly from foreign producers, whose exit from the Russian market brought about major challenges as well as new opportunities for local R&D. In the reporting year, as part of a project for vanadium sulphuric acid catalysts, our experts prepared the required inputs and estimated costs for the feasibility study of 900 ktpa in-house production of such catalysts for PhosAgro Group's needs. In 2023, we plan to use the input data to develop design documents for the production unit. The NIUIF also continued efforts to introduce a patented process for obtaining liquid sulphur dioxide by burning sulphur under oxygen deficiency condition. Widely used in the Russian petrochemical, pulp and paper, glass and wine industries, liquid sulphur dioxide is no longer supplied from abroad. In 2022, the NIUIF made research to obtain and assess the quality of samples. The outcomes show that the product is sufficiently pure and compliant with the applicable domestic standard. The NIUIF plans to continue rollout and development of technical solutions for a 20 ktpa pilot- scale production in 2023 with subsequent adjustment of parameters and equipment operation. This project will help fully meet Russia's demand for liquid sulphur dioxide. 122 123 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Agricultural Academy researched plant nutrition systems and N 2 O emissions in five- year grain-grass crop rotation at the farming station. According to the research, balanced mineral fertilization, soil liming as necessary and organic fertilizer application deliver excellent yields and reduce GHG emissions. Importantly, the effects are calculated for a five-year cycle. In particular, liming done in the first year will result in soil carbonate decomposition and higher CO 2 emissions, but based on a once in five years application, the research shows a definite increase in yields from limed fields coupled with decreasing average carbon footprint per product unit. We plan to complete the project to create the carbon farm in 2026, with the most effective CO 2 storage vegetation systems to be selected based on obtained data and further research to enable us to verify the results internationally and use them to scale up and fully implement the initiative by 2028. In total, the plantation accommodated 79.8 thousand deciduous and 28.8 thousand coniferous young seedlings Phosphogypsum application research Phosphogypsum is a valuable by-product of the production of mineral fertilizers. It includes, among other things, such elements as calcium, sulphur, phosphorus, zinc, silicon, magnesium, copper, which are important for the soil. The use of phosphogypsum enhances the soil structure, its water and air permeability, improves leaching highly soluble salts, and shapes favourable conditions for the development of soil biota. Phosphogypsum makes it possible to increase productivity of arable lands and reduce the cost of crop production. The International Fertilizer Association (IFA) recognised PhosAgro’s production of improved phosphogypsum and its use in agriculture as a best practice. In November 2021, we made a decision to merge all our phosphogypsum-related operations into one project. Project goals by 2026: Improving sales volumes; Reducing phosphogypsum accumulations at dump sites; Increasing phosphogypsum recycling rates. A data analysis and target market review has identified eight focus areas for selling phosphogypsum. Currently, we can cover three of them: • agriculture; • road construction; • cement production. After identifying new applications, the Company more than doubled phosphogypsum sales for the year and achieved a more than 20 times increase compared to 2021 and 2019 respectively. In 2022, we sold 91.6 kt of phosogypsum, including 43.3 kt for agriculture, 45.3 kt for road construction and 2.6 kt for cement production, while also expanding our customer base. For more information, see the Environmental Review section on page 190 Research as part of PhosAgro's carbon farm project in the Vologda region To combat climate change in the long run and study CO 2 compensation and absorption of our carbon emissions by various ecosystems, we started building a carbon farm. The project's main objective is to accumulate knowledge and expertise in cooperation with the research community and study CO 2 absorption by various crops (forage grasses, grain cereals and pulse crops), young coniferous and deciduous forests, and agricultural sites with varying organomineral nutrition regimes. In 2022, we planted 24 types of forest with various mixes of deciduous (willow, birch and aspen) and coniferous (fir and pine) trees at a 100 ha plantation near the Cherepovets site. In total, the plantation accommodated 79,800 deciduous and 28,800 coniferous young seedlings. Young deciduous trees cultivated specifically for the Vologda region through microclonal propagation grow fast and cannot propagate. The coniferous seedlings grew from seeds of native trees. In Cherepovets and Vologda regions, we set up 100 ha trial stations 100 km away from each other to study carbon sequestration abilities of perennial forage grasses cultivated using a variety of fertilization schemes. In Vologda region, forage grasses are the basic crop with the greatest GHG absorption potential. Together with scientists of the Russian Academy of Sciences, we are doing research at 48 agricultural sites of spontaneous vegetation to find the ways of returning abandoned lands to agricultural uses, study agricultural practices with reduced GHG emissions and carbon farming, and obtain precise measurements of the carbon footprint from crops grown for food. In the first year of trial, we estimated CO 2 absorption by plant biomass per 200 ha of land at 2,751 t. As part of the project, the Company and the Russian State Agrarian University – Moscow Timiryazev In 2022, we sold 91.6 kt of phosogypsum APPLICATION IMPROVEMENT 124 125 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report Cooperation in innovation Russian Academy of Sciences (RAS) Cooperation across a range of areas related to the climate agenda and low- carbon transition plan Partnership in promoting basic sciences and research in microbiology, biotechnologies, gene and cell engineering, photobiology, soil and environmental management, and physicochemical biology Partner Partnership goals Our strategy for innovating and helping students, teachers and farmers to develop profession competencies relies on partnerships with the leading agricultural universities and R&D centres. RAS Pushchino Biological Research Centre • We set up the carbon farm, planted young trees and purchased the required equipment as part of the relevant project. • PhosAgro was an official partner of the 25th Pushchino school- conference of young scientists called Biology – the Science of the 21st Century. The event saw the first PhosAgro awards distributed for the best research projects and practices in implementing Key results in 2022 • Further progress in implementing other projects involving leading Russian scientists to develop and promote innovative products: – biotechnologies and feed additives developed; – new biomineral fertilizers tested and registered; – a pipeline of new promising projects built. R&D in three categories – soil management, agroecology and plant biology. Over a thousand young scientists from all over Russia and beyond took part in the conference. Partnership in promoting basic sciences and research in chemistry and related fields to further sustainable development globally Institute of Chemistry and Sustainable Development at Mendeleyev University of Chemical Technology and the UNESCO Chair of Green Chemistry for Sustainable Development • An N.P. Laverov scholarship programme was established for young scientists from Mendeleyev University of Chemical Technology who do research in ecology, environmental management, new materials and substances. The scholarship is granted to the 20 best students and postgraduates. • A series of webinars was organised for Bachelor's and Master's students at the UNESCO Chair of Green Chemistry for Sustainable Development at Mendeleyev University of Chemical Technology. The focus areas were aligned with the UN’s 17 Sustainable Development Goals. Partner universities Creating PhosAgro’s nationwide educational network across 30 agricultural universities in Russia More than 200 online lectres were held for 30 agricultural universities; The lectures brought together 22,700 students and teachers from across Russia and the CIS. • The lectures covered multiple themes, including agrochemistry and agronomy, crop production, innovations and digitalisation in agriculture, economics, law and responsible farming. • Capabilities for conducting scientific experiments were set up at PhosAgro Educational Centre’s Phyto-Class of the Moscow Timiryazev Agricultural Academy. • Vocational profiling organised jointly with teachers of the Moscow Timiryazev Agricultural Academy was made available to school students. 126 127 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report International humanitarian projects GRI 2-28 In line with our strategic goals, we support young scholars and their projects addressing the challenges of biodiversity conservation, environmental well-being and the circular economy. Partner Project and goals Key results in 2022 UNESCO Green Chemistry for Life, a joint grant programme by PhosAgro, UNESCO and IUPAC Financial support and scientific guidance for young scholars doing research in emerging Green Chemistry technologies to address environmental challenges and ensure sustainable use of natural resources • Contracts in green chemistry research were awarded to the seventh round winners from Africa, Asia, Europe and Latin America. • Over the nine years of the programme's existence, its International Scientific Jury considered more than 800 applications from young scientists repre- senting 125 countries. More than 40 scholars from 29 countries received grants. International Competence Centre for Mining Engineering Education under the auspices of UNESCO The Centre is based at St Petersburg Mining University and plays an important role in implementing the UN Sustainable Development Goals, such as improving the quality of education, combating climate change, and protecting and restoring ecosystems • A member of the Centre's Steering Committee, PhosAgro actively participates in professional cer- tification of experts for compliance with interna- tional mining engineering requirements. • We took part in the International Forum for the 50th Anniversary of the Convention Concerning the Protection of the World Cultural and Natural Heritage (Conference on Nature Management and Preservation of the World Natural Heritage). • Our experts shared their experience in educational projects at the international forum dedicated to major subsoil use challenges which hosted over 900 young scientists from 57 universities of Europe, Asia, Africa and Latin America. IUPAC Summer Schools on Green Chemistry project run jointly by PhosAgro, IUPAC and Green Sciences for Sustainable Development Foundation IUPAC's educational initiative supported by PhosAgro to improve the qualifications of young scholars engaged in green and innovative chemistry research globally with a view to promoting technological innovations and breakthroughs • The fifth Summer School session called Chemistry Addressing UN-17 Sustainable Development Goals took place, with PhosAgro's personal awards estab- lished for young researchers for the best projects in green chemistry. More than 150 postgradu- ates and young scientists and about 30 profes- sors and teachers from 45 countries participated in the session. • Since the start of the project in 2018, a total of five training sessions have been held, bringing together over 600 young specialists and 60 teach- ers from 75 countries. UN Food and Agriculture Organisation (FAO) Development of Sustainable Agriculture through the Implementation of the Global Soil Doctors Programme and the Creation of the Global Soil Laboratory Network (GLOSOLAN) Promoting sustainable soil management among farmers and expanding the Regional Soil Laboratory Network (RESOLAN) in Africa, Latin America and the Middle East; achieving environmental and social well-being by raising awareness of soils to inform sustainable farming decisions • Since 2018, PhosAgro's total contribution to the pro- ject has reached USD 2.4 mln. Over this period, FAO has created the Global Soil Laboratory Network (GLOSOLAN) of more than 800 laboratories in 150 countries. • PhosAgro, FAO Liaison Office for the Russian Federation, Eurasian Soil Partnership, the Russian State Agrarian University – Moscow Timiryazev Agricultural Academy and the Diplomatic Academy of the Russian Ministry of Foreign Affairs coorgan- ised an international forum dedicated to the global challenges of the 21st century to food systems and environmental safety. • PhosAgro also financed the opening of the Russian Lounge at the FAO headquarters, which is set to become the key venue for receiving high-level delegations from the UN Member States. Partner Project and goals Key results in 2022 International Fertilizer Association (IFA) As a core member of the IFA, PhosAgro contributes to the association by providing expert advice on a wide range of topics • In the reporting year, PhosAgro's experts sat on IFA’s International Committees on Agriculture, Safety, Health and Environment, International Trade, and Communications and Public Affairs. • IFA recognised PhosAgro’s agricultural use of improved phosphogypsum certified in Russia as a best practice for this multi-component product. United Nations Global Compact As a Global Compact Lead company, PhosAgro contributes to the initiative by providing expert advice on a wide range of topics • The Global Compact Lead status makes it possible to engage in the discussion of the international agenda while actively liaising with other international organisations and contributing to the development of new business approaches, regulations and standards globally. • Contributing to the UN Sustainable Development Goals through projects implemented by the Company as a responsible producer of environmentally friendly and efficient mineral fertilizers committed to food security, environmental safety and human health protection • Enhancing global partnerships for sustainable development • Articulating an expert point of view on major issues on the global agenda • Participating in global initiatives aimed at addressing today’s global challenges • We retain our status of a Global Compact Lead company and are actively involved in the alliance's initiatives. • PhosAgro demonstrated its commitment to the UN Global Compact by vigorously support- ing Climate Ambition Accelerator and CEO Water Mandate initiatives to combat climate change and ensure the efficient use of water resources and their protection. • At the UN Climate Change Conference (COP27), we joined the Business Declaration for Climate Resilient Water, Sanitation, and Hygiene (WASH) supported by 26 leading global companies and 15 expert organisations committed to the care- ful use of water resources. European Sustainable Phosphorus Platform (ESPP) Partnership on the European political, scientific and technical agenda for the sustainable use of phosphate resources Fostering knowledge exchange, experience transfer and professional networking in phosphorus management; promoting dialogue between market participants, stakeholders and regulators; removing regulatory barriers; effecting communication through newsletters, website, conferences and publications • PhosAgro Group participated in the European Sustainable Phosphorus Conference that brought together several hundreds of representatives of business, stakeholders, regional and national authorities. At the event, we presented our best practices of phosphogypsum application in road construction. Safer Phosphates, an international alli- ance of environmen- tally friendly fertilizer producers Partnership in protecting human health and agricultural ecosystems from contamination with heavy metals • OPERA Research in partnership with Safer Phosphates and Euractiv pan-European media network organised a webinar on the soil health for sustainable agriculture. The event attracted more than 100 participants from among the scien- tific and business community, experts and NGOs. PhosAgro runs multiple humanitarian projects focused on building a modern education and science framework. 128 129 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW Strategic report AREA, STRATEGIC GOALS AND METRICS Supply chain KEY PROJECTS AND HIGHLIGHTS OF 2022 • Establishing into long-term relationships for the supply of inventory – long-term agreements – consignment warehouses – online shops Target — 30 % purchased range • Further development of category strategies • Lower reject rate Target 12.4 Targets 8,3, 12.4 and 13.2 Target 9.1 • Process Mining development • Introducing new robotic solutions • Process Mining, an innovative method of data analysis and business process optimisation to manage procurement. • SCOUT system to verify and monitor the integrity of suppliers. • Further development and implementation of an automated procurement workstation. The category strategies cover: 15 raw material categories 16 categories of materials and equipment 54 % of suppliers covered by ESG evaluation to 35 % rise in procurement from evaluated suppliers Setting up an ESG training system for suppliers 49 suppliers (60%) were recommended for cooperation based on the environmental and social assessment criteria included in the technical audit form 82 technical audits of potential suppliers of materials and equipment were carried out Training materials are available on the Company's official website in the Procurement section PROCUREMENT FUNCTION DEVELOPMENT DIGITAL TRANSFORMATION ESG EVALUATION OF SUPPLIERS 20 % procurement from SMEs 17 % procurement from local suppliers 2 categories of work and services • Audits • Updating the information provided by counterparties as part of the ESG survey, if more than a year has elapsed since the information was provided • Maintaining an ESG evaluation coverage of at least 50 % of counterparties that participated in the procurement at least 30 % of procurement volume from the evaluated counterparties Mutual improvement agreement for services, raw materials, and inventories About Company Corporate governance Share capital Appendices PERFORMANCE REVIEW 130 131 Strategic report RUB 214 bln. total procurement of goods and services Strategy PhosAgro’s procurement system seeks to ensure that the Group’s subsidiaries receive the required resources, materials, and services of adequate quality in full and at reasonable prices. However, there is much more to the principles and business processes underlying our procurement activities. We believe that running a supply chain in an efficient and responsible manner is the cornerstone Management approach For information about the hotline, see the registration page of PhosAgro’s electronic bidding platform. For the link to the registration form, main regulations, the EBP registration instructions and step-by-step guide, see the Procurement section of the Company's official website. Procurement activities The Company's procurement activities are governed by: • Procurement Policy; • Anti-Corruption Policy; • Code of Ethics; • Code of Conduct for Counterparties. The main objective of procurement is to ensure that the Company's needs for equipment, materials, and services are met in a timely manner, in full and at the best possible prices. The Group is committed to establishing and maintaining business relationships with companies that operate in line with high ethical standards and combat corruption. Therefore, any supplier that registers on the Company's electronic bidding platform (EBP) must read and understand the above regulations. Category management: the development and implementation of category strategies can significantly reduce costs, increase reliability of supply and improve economic efficiency. The Company's procurement process uses the following business solutions and tools to improve its efficiency. Interaction with suppliers relies on full transparency in decision- making, market and formula pricing, and long-term relationships. The Company operates a convenient open system for the procurement of goods and services. Procurement procedures are competitive, and information on the needs for materials, equipment or services is published on PhosAgro's EBP. To participate in the bidding, suppliers have to sign up and read the regulations. Evaluation and selection of a supplier are set out in the Company's procedures. The Company has an anti-fraud and anti-corruption system in place. PhosAgro seeks to minimise the risks of doing business with suppliers that might be involved in corruption. To this end, the Company has set up a corporate hotline for suppliers and other stakeholders to report on potential irregularities. 1 IT solutions: • Process Mining, an innovative method of data analysis and business process optimisation to manage procurement; • SCOUT system to verify and monitor the integrity of suppliers. The system helps to minimise the existing risks and losses by introducing a uniform auditing standard, monitor the condition of suppliers in real time and respond to changes in a timely manner. Robotisation of processes 3 of the Company’s sustainable development. In 2022, our procurements of goods and services reached almost RUB 214 bln. Thousands of our suppliers and contractors benefit directly from these investments, and so do their employees, who have to provide for their families. We contribute to the public budget at various levels. But what is more important is that the tools that we employ, including our environmental and social assessment of suppliers, as well as anti-corruption mechanisms, directly promote sustainable values across the Russian business community. These values are the bedrock of our business philosophy. We work to ensure that our procurement activities have a strong positive impact on all our stakeholders. 2 GRI 3-3 About Company Corporate governance Share capital Appendices PERFORMANCE REVIEW 132 133 Strategic report Challenges of 2022 Geopolitical factors had a significant impact on PhosAgro Group's supply chains in 2022. The US, EU, Japan, and a number of other countries ceased the supply of equipment. Many contracts had to be renegotiated with amendments to deadlines, prices and payment terms, logistics routes and, in many cases, substitution of goods in signed deals. In addition, banking operations with foreign suppliers became more complicated. To respond to these challenges, PhosAgro introduced structural changes in the Procurement Department, organised alternative procurement with a shift in geographic priorities and new supply chains in place, and took a number of steps to improve the Department's operational efficiency. The timely and successful action enabled us to adapt to the new conditions in a short space of time, restore the continuity of supply to our operations, and maintain an appropriate level of supply stability. Risks and opportunities Procurement management structure Level Organisational unit Key responsibilities BOARD OF DIRECTORS LEVEL Board of Directors Strategy and Sustainable Development Committee of the Board of Directors • Setting strategic priorities in procurement; • review of the executive management's procurement reporting. COMPANY MANAGEMENT LEVEL Procurement Department management Director (Supervisor, officer-in-charge) of the Department • Organising the overall operation, allocation of functions, business development strategies, definition of methodologies and procedures for the uninterrupted supply of tangible assets. Deputy Director • Meeting the Company’s needs for equipment and materials, controlled materials, and services in a timely manner, in full and at the best possible prices; • Apatit's warehouse inventory management; • day-to-day functioning of the Department; • supervising operations of the Department's structural units, allocation of functions; • developing a strategy for re-engineering of business processes in the Department, etc. Department Director Head of Division OPERATIONAL LEVEL Operational staff of the Procurement Department Heads of units and working groups • Managing operations of subordinate business units, selecting and deploying staff, determining the relevance of their work; • improving the skills of the subordinate staff, creating a favourable social and psychological climate in the team, fostering and maintaining corporate relations; • organising and directly supervising the compliance of the subordinate staff with regulations; • acting in accordance with the requirements of the management system, contributing to its improvement within their remit, etc. Specialists • Meeting the Company’s needs for equipment and materials, controlled materials, and services in a timely manner, in full and at the best possible prices; • professional development and upskilling. Efficient structure The past year saw significant changes to the structure of the Procurement Department aimed at both improving its overall efficiency and adapting to new economic realities. The Procurement Department is responsible for: • strategic sourcing of raw materials and services; • operational procurement; • project-based procurement; • local procurement; • alternative procurement (including strategic sourcing of materials and equipment procurement); • supply chain management; • planning and analysis. In order to assess performance, increase employee engagement and motivation, the Department has established KPIs in line with the Company's business objectives to evaluate the extent to which the Department's objectives have been achieved and processes streamlined. The performance of the Company's procurement function is subject to annual review by PhosAgro's Board of Directors. For more information, see the Strategic Risks section, p. 70 The following strategic risks affect our procurement objectives (for more information, see the Strategic Risks section): Procurement-specific risks are: The Group develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information about what we do on this front. 14 Corruption 18 Commodity risk 21 Sanctions risk 1 2 3 Suppliers’ failure to perform, changes in the product range or late delivery of raw materials, commodities, and equipment Quality of raw materials, commodities, and equipment, dissatisfaction of the internal customer Violations of ESG principles by suppliers, including breach of human rights, use of child and forced labour, non-compliance of products with environmental standards, etc. About Company Corporate governance Share capital Appendices PERFORMANCE REVIEW 134 135 Strategic report Key results in 2022 Cost budget in 2022 > 50 % of procurement costs are related to raw materials and fuel RUB 213.9 bln. the Company’s total procurement costs The Company’s procurement costs in 2022 totalled RUB 213.9 bln, of which raw materials and fuel accounted for 57%. One of PhosAgro’s top procurement priorities is to cooperate with small- and medium-sized enterprises (SMEs), primarily in the regions where the Company’s key assets are located. In the existing political and economic environment, we view active development of this cooperation benefiting all parties to be even more important. In 2022, as part of the Synergy of Growth agreement signed in 2020 between the government of the Vologda region, Apatit, Severstal and Urban Development Agency coordinating business development in Cherepovets, we published detailed information on the Company’s need for import- substituting products on Electronic Business Cooperation, an information platform, to identify opportunities for local producers to make and supply these products. PhosAgro also regularly participates in online and offline meetings held in the regional GRI 204-1 Share of local procurement, % Share of procurement from other suppliers, % Service procurement No. KPI Scale Actual Worst Critical Target 1 Average number of tender participants in the reporting period 3 5 7 4 2 Tender price reduction in the reporting period, % 5 7 12 10 3 Holding tenders on time, % 90 95 100 99 4 Bidders’ motivation assessment with respect to procurement quality 3.5 4.5 5 5 Commodity procurement No. KPI Scale Actual Critical Target Challenge 1 Timeliness of procurement, % 87 90 93 89 2 Reject rate at incoming control, % 5 3 2 6 3 Commodity price control index, % 1.05 1 0.95 0.93 Raw materials procurement No. KPI Scale Actual Critical Target Challenge 1 Raw materials procurement index 1.05 1 0.95 0.79 Procurement in 2022, RUB mln Number of suppliers in procurement in 2022 offices of the Russian Union of Industrialists and Entrepreneurs and the Urban Development Agency in Cherepovets, as well as at exhibitions and strategy sessions. Materials and equipment Raw materials and fuel Work and services 17% 57% 26% Breakdown of procurement costs Apatit Balakovo branch of Apatit Volkhov branch of Apatit Kirovsk branch of Apatit 20 23 27 13 13 21 14 23 35 18 14 11 2022 2021 2020 Apatit Balakovo branch of Apatit Volkhov branch of Apatit Kirovsk branch of Apatit 80 77 73 87 87 79 86 77 65 82 86 89 2022 2021 2020 2022 2021 2020 17 19 23 2022 2021 2020 83 81 77 42,143.2 29,918.4 20,203.7 5,914.8 4,389.3 2,878.5 213,910.7 150,006.7 104,069.3 2022 2021 2020 SMEs Imports Total 2,478 72 3,511 SMEs Imports Total About Company Corporate governance Share capital Appendices PERFORMANCE REVIEW 136 137 Strategic report Key ESG evaluation indicators The indicators for 2022 are based on the total number of suppliers taking part in procurement and the number of rated suppliers. This methodology will apply to future periods as well. No. Indicators 2022 1 Number of suppliers that participated in the evaluation on PhosAgro’s EBP 4,574 2 Number of suppliers taking part in procurement 3,511 Number of rated suppliers 1,888 Share of rated suppliers, % 54 3 Total procurement, RUB bln 213.9 Procurement from rated suppliers, RUB bln 74.8 ESG evaluation coverage by procurement volume, % 35 4 Average supplier rating (on a 100 point scale), points 62 Environmental assessment indicators show that 33% of suppliers have an innovative and forward-looking environmental policy and contribute to the protection of the environment. In 2020, based on the principles of sustainable development set forth in the Code of Conduct for Counterparties, PhosAgro developed a system to evaluate suppliers against ESG criteria relying on the Sustainable Procurement Indicators checklist. The checklist is part of an overall framework for assessing the Company’s and suppliers’ performance to ensure sustainability and reliability in order to benefit our consumers. It includes questions on compliance with the principles of environmental and social responsibility guiding PhosAgro’s operations. The completed checklist confirms that the Company’s supplier shares these principles. An individual supplier rating is based on the checklist. We believe that making suppliers aware of the Company’s system of values will contribute to a more responsible and sustainable business culture in the long run. To raise awareness of the existing evaluation system and of the need to complete the checklist, training materials on engaging with suppliers in sustainable development were published on the official PhosAgro website. 33 % of the evaluated suppliers in the key category have a certified environmental management system in place All categories of suppliers were assessed for environmental impact. Suppliers with an environmental management system certified to comply with ISO 14001 or a similar standard accounted for 33% of evaluated producers of raw materials, fuel, energy, and commodities. 4,574 3,031 2022 2021 1,888 1,046 2022 2021 35 24 2022 2021 62 54 2022 2021 Number of suppliers that participated in the evaluation on PhosAgro’s EBP Number of rated suppliers ESG evaluation coverage by procurement volume, % Average supplier rating (on a 100 point scale), points Supplier ESG evaluation Supplier environmental assessment in 2022 GRI 308-1, 308-2 No. Indicators 2022 1 Number of rated suppliers 1,888 2 Number of rated suppliers producing raw materials, fuel, energy, and commodities 847 3 Number of rated suppliers producing raw materials, fuel, energy, and commodities that have an environmental management system certified to comply with ISO 14001 or a similar standard 276 4 Share of rated suppliers producing raw materials, fuel, energy, and commodities among counterparties that have an environmental management system certified to comply with ISO 14001 or a similar standard, % 33 Technical audits have not identified any counterparties failing to comply with recognised standards with regard to environmental impact. About Company Corporate governance Share capital Appendices PERFORMANCE REVIEW 138 139 Strategic report The results show that more than half of suppliers share PhosAgro’s commitment to equal opportunity policies, do not tolerate harassment or other disrespectful behaviour towards employees and adopted a zero-tolerance stance on child labour. Some 39% of suppliers in the stated categories exhibit proactive and responsible behaviour towards occupational safety and ensure compliance with international standards set to control working conditions and mitigate occupational and industrial risks. Supplier social assessment in 2022 GRI 414-1, 414-2 No. Item Result Number of rated suppliers 1,888 1 Number of rated suppliers in the categories “Producers of raw materials, fuel, energy, and commodities”; “Logistics services”; “Construction and installation, repairs” 1,174 Number of rated suppliers in the above categories that have an occupational health and safety management system certified to comply with ISO 45001 (OHSAS 18001), or a similar system 452 Share of rated suppliers in the above categories that have an occupational health and safety management system certified to comply with ISO 45001 (OHSAS 18001), or a similar system, % 39 2 Number of rated suppliers taking part in procurement that adopted a zero-tolerance policy on child labour* 1,091 Share of rated suppliers in the above categories that have an occupational health and safety management system certified to comply with ISO 45001 (OHSAS 18001), or a similar system, % 58 3 Number of rated suppliers in the categories “Producers of raw materials, fuel, energy”, “Commodity producers and intermediaries”; “Logistics services”; “Construction and installation, repairs” 1,524 Number of rated suppliers in the above categories that adopted a zero-tolerance policy on discrimination 831 Share of rated suppliers in the above categories that adopteda zero-tolerance policy on discrimination, % 55 4 Number of rated suppliers in the categories “Producers of raw materials, fuel, energy”, “Commodity producers and intermediaries”; “Logistics services”; “Construction and installation, repairs” 1,524 Number of rated suppliers in the above categories that adopted a zero-tolerance policy on forced labour 856 Share of rated suppliers in the above categories that adopted a zero-tolerance policy on forced labour, % 56 39 % of suppliers exhibit proactive and responsible behaviour towards occupational safety Technical audits have not identified any counterparties failing to comply with recognised standards with regard to environmental impact About Company Corporate governance Share capital Appendices PERFORMANCE REVIEW 140 141 Strategic report AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 Target 3.4 Target 3.4 Target 8.3 Target 8.3 and 8.8 Target 8.5 and 8.8 Target 8.5 and 8.8 Target 8.3 Target 4.4 People development ANNUAL EMPLOYEE SURVEY TRAINING AND EVALUATION INCLUSIVE ENVIRONMENT GENDER EQUALITY INCENTIVES AND REWARDS • Maintaining employee satisfaction and loyalty at no less than 65 % • Increasing average annual training hours per employee • Motivating the staff to increase productivity and deliver strong operating results, retaining qualified talent 69 % employee satisfaction and loyalty 99.8 hours average annual training hours per employee RUB 272 mln invested in employee training over 400 people hired as part of career guidance and youth engagement initiatives by 2025 by 2025 • Building an inclusive environment for disabled people, adapting workplaces and municipal infrastructure to their needs, and employing more such people depending on business requirements • Providing all employees with opportunities for professional and career growth 21.5 % of women among managers of all levels We organised a job fair for disabled people 50 % more investments in social programmes for employees 89 % satisfaction with the social benefits offered Average salary increased by 18.7 % RUB 132,110 Company's average monthly salary We keep rolling out a virtual teaching package and a distance learning system Over 37 % of High-Potential Graduates employed by the Company were promoted and included in the talent pool 10 mentors selected from among current top managers 16 % of women in the Company’s Top 40 Talent Pool (6 out of 38) 34 % of women in the Company’s total headcount 87 % share of employees who praised the management’s performance 70 % employee engagement to 123 hours • Promoting retraining and professional development • Investing in future talent We streamlined cooperation with employment centres to facilitate the employment of disabled people • Training future top managers from among internal candidates SOCIAL BENEFITS AND EMPLOYEE GUARANTEES Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 142 143 Strategic report Strategy To deliver on our objectives, we: implement a remedial action plan called Growth Area based on the annual employee survey results; develop and implement e-learning modules on blue- collar jobs, occupational safety, and managerial skills; leverage an innovative approach to professional training (virtual reality simulators, 3D models, production training grounds for improving workplace safety skills, among other things); Management approach GRI 3-3 We rely on a robust performance management system that covers all levels – from individual employees to the Company as a whole – to ensure PhosAgro's sustainable growth in line with its goals. New-generation employees are aware of how important personal and professional growth is as it is a key to success and self-fulfilment in the constantly changing world. For many, high remuneration is no longer the main incentive, with self-fulfilment coming to the forefront if the Company invests heavily in developing the skills and competencies which will be in demand going forward. This is why we place a strategic emphasis on supporting our people's drive for self-improvement. We seek to create the right environment for them to fully unlock their potential. 2022 accolades • A top 100 Russian employer according to hh.ru • Gold status in the 2022 rating of Russia's best employers from Forbes • Winner among industrial companies according to Delovoy Peterburg • Grand Prix of the national competition of youth employment best practices in the category Best Practices in Preserving the Region's Youth Talent Potential • Two employees recognised as winners of the Engineer of the Year contest • Three employees named Russia's Professional Engineers • The Company's employees received 17 state awards, including one medal of honour for labour achievements from the Russian President Integrated HR management framework Organisational unit Key responsibilities THE BOARD OF DIRECTORS Remuneration and Human Resources Committee • Supervision over the introduction and implementation of the Company’s remuneration policies and various incentive programmes; • performance appraisal in respect of executive bodies and key executives, including the assessment of their performance against the targets set forth in the incentive programme; • succession planning for executive bodies and other key executives MANAGEMENT HR and Social Policy Department • Strategic development of HR processes; • development and implementation of process methodology; • optimisation, automation, and digitalisation of HR processes; • functional management of HR services in the regions OPERATIONS Local human resources and social policy departments • Implementation of the Personnel Management Policy; • recruitment for vacant and key positions; • organisation and implementation of initiatives for occupational training and competency building; • development and management of an incentive framework; • social support for the Company’s employees in accordance with the collective bargaining agreement Our key asset is talented, professional, and committed employees that share our corporate goals and values. The Company’s entire HR framework is geared towards recruiting, supporting and motivating employees to achieve the most ambitious goals. To this end, we provide a wealth of opportunities to enhance skills and knowledge, take consistent efforts to foster a culture of safety, equality and respect, and offer competitive salaries and social benefits. draft and put in place online training courses on personal competencies; develop a system of corporate libraries, guidelines, and knowledge management at large; introduce succession and training support tools such as mentoring, coaching and supervision; assess the application of skills acquired by the staff involved in real business operations and project activities. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 144 145 Strategic report HR management principles The reporting year saw a new version of the UK Modern Slavery Act Transparency Statement approved, which discloses contributions towards the UN SDGs and the Company's social projects to combat violations of human rights. Over the last three years, over 19,000 employees received additional training in human rights and corporate ethics. All relations between PhosAgro and its employees are regulated by the Labour Code of the Russian Federation and comply with the requirement to provide employees with a timely notice of material changes in employment terms, thus respecting human rights. GRI 2–30 We negotiate collective bargaining agreements with trade unions that address issues such as working conditions and compensation for employees at each of our production sites (usually for a three-year period, covering 100% of the employees of Apatit, its branches and standalone business units). Share of employees covered with collective bargaining agreements, % Non-discrimination policy and human rights PhosAgro is committed to respecting employees' rights as required by the International Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work, including zero discrimination, not using child or forced labour, respecting their right to exercise freedom of association and collective bargaining, and creating a safe and favourable working environment for both its own employees and the employees of its contractors, which are also expected to comply with such requirements and regulations. PhosAgro Group appreciates and encourages diversity among its employees. We provide equal opportunities for them to unlock their potential and do not tolerate any restriction of a person's or a group's natural rights and freedoms or any conduct violating privacy of our employees. Any decisions regarding promotion, hiring, remuneration, benefits or compensations are based solely on the employee’s qualifications, performance, skills and experience assessed impartially and fairly. We expect our employees to treat their colleagues and everybody else, including customers, suppliers and other stakeholders, with due professionalism, respect and fairness. We consider unacceptable any restriction of employee rights or freedoms, whether at workplace or in any other job-related environment. Since 2013, we have conducted annual employee surveys enabling each employee to give feedback on the performance of the Company and its management. Throughout the history of such surveys, we have not received any negative feedback or reports of violations of human rights. This clearly indicates that all obligations to PhosAgro’s staff are respected and met. The Code of Ethics In our operations, we seek to maintain an impeccable reputation and comply with ethical business practices. PhosAgro adopted a Code of Ethics in 2014 and updated it in 2021. It applies to all employees and is the Company’s primary document that clearly defines our corporate culture, rules and regulations for collective behaviour within the Company, business and social relationships, and interactions with other stakeholders. When agreeing and concluding contracts with external contractors, it is an imperative for us to cover arrangements and commitments related to mutual respect of human rights and compliance with the Company's Code of Ethics. The Code outlines our common values and underpins our success, helping us avoid unjustified risks, maintain long-term business growth, strengthen our position in the Russian and foreign markets, and increase the Company’s value for shareholders and other stakeholders. 100 % employees covered with collective bargaining agreements PhosAgro's Personnel Management Policy has the following key areas: • organisational change management system; • personnel attraction and recruitment system; • personnel training and development system; • incentives and rewards system; • social benefits system; • corporate communication system; • working hours and leisure; • respect for human rights and non-discrimination. 100 100 100 2022 2021 2020 Our goal is to keep our working environment free from discrimination based on nationality, gender, age, faith or other grounds as required by the applicable laws. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 146 147 Strategic report Compliance with human rights and ethical standards Provision of competitive incentives and social support to staff Workforce sufficiency, competence and development Inclusive environment In 2022, the Group employed 88 employees with disabilities (according to the average headcount). We believe we must exercise an individual approach when hiring people with special needs, and we are aware of our responsibility to create an inclusive environment for them. The Company honours all its obligations related to the employment of the disabled as required by applicable laws. In addition, we rely on job quotas in hiring the disabled, support and provide an expert opinion at Abilympics, a competition for the promotion of disabled people’s professional expertise, take an active part in job fairs for the disabled, and sign workplace lease agreements with other companies. Going forward we plan to expand our practices of building an inclusive space. Risks and opportunities The following strategic risks affect our HR management objectives: The Company develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information about what we do on this front. Open communication channels GRI 2–25, 2–26 Access to multiple communication and feedback channels within the Company allows our employees to resolve employment and other job-related issues. Some of the formats are Q&As in corporate newspapers, information sessions for the staff and management, a corporate portal, a hotline, and official social media accounts of our branches. Any employee or other stakeholder can use PhosAgro’s whistle-blower hotline to report human rights violations or discrimination of any nature, or to communicate any other issues or concerns related to employer-employee relationships. We keep introducing popular cutting-edge technologies in corporate communications. These include personal accounts for employees, a corporate mobile app with self-service options, and a chatbot, along with new capacities we added to our corporate portal, online training platforms, automated HR management system, and many more. In developing our production and creating new jobs, we seek to prioritise local residents when filling our vacancies. > 90 % of on-site employees are hired locally. 88 employees number of disabled people employed by PhosAgro in 2022 The Company’s key production sites are located in the Murmansk, Vologda, Leningrad, and Saratov regions. As a major contributor to the local economy and one of the largest employers in these regions, PhosAgro has a significant positive impact on social development and welfare across its geography. For more information, see the Strategic Risks section on page 70 Risk areas specific to HR management 3 Social 4 HR 20 Infectious diseases 1 2 3 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 148 149 Strategic report Recruitment As part of its comprehensive recruitment approach, PhosAgro continuously monitors the labour market in Russia to attract skilled staff and efficient managers with work experience at leading national and global companies, always determined to be one step ahead of the curve. Our recruitment efforts are underpinned by a consistent career guidance model, which prioritises engagement with school and university students. If two or more candidates qualify for a job, we are more likely to pick the one who is either: • a young talented professional (a programme for attracting, mentoring and upskilling high- potential university graduates); • an employee included in our talent pool (a programme for those looking to develop professional and managerial competencies for career growth). Gender equality To enhance women’s social security in accordance with the applicable laws, the Company: • does not use female labour for manual lifting or carrying weights exceeding maximum allowable limits; • releases pregnant women from their job duties and transfers them, subject to their medical reports, from production sites to lighter-duty positions; • provides women, at their request, with a parental leave until the child reaches the age of three; • prohibits business trips, overtime or night work, work on weekends and public holidays for pregnant women, except when there are a written consent and no contraindications; • safeguards employment of pregnant women, with their employment contracts terminated only in the event of liquidation of the facility, as well as that of women having children up to three years of age and single mothers having children up to 18 years of age. KEY AREAS PhosAgro Schools The PhosAgro Schools projects focuses on cooperation with schools across our footprint. By creating the right environment at schools, we help guide graduates in their career choices. In 2022, we engaged with six schools across our geography. Collaboration with secondary vocational institutions As part of our collaboration with secondary vocational institutions, we seek to create a pipeline of skilled employees with relevant competencies who are competitive in the labour market, acquainted with allied professions, and have what it takes to pursue career opportunities for their further employment with the Company. Cooperation with universities Cooperation with universities serves to fill the most relevant jobs by attracting and retaining talented graduates. Today, the Company actively collaborates with 24 universities that offer courses relevant to its core activities. 2 1 3 The Company works continuously to improve its recruitment processes. In 2022, we completed the first stage of recruitment automation to ensure faster communication with candidates and customers, while also reducing the time it takes to fill vacancies and minimising the labour inputs along the way. We also set up a recruitment centre to enhance the process across all our sites. Participation of women in internal thematic events • Superfinals of the Young Manager – 2022 competition – 9 men, 3 women. • Superfinals of the Mentor of the Year – 2022 corporate contest – 10 men, 3 women. Share of women taking part in corporate programmes, % 21.5 % of women among managers of all levels 16 % of women in the Company’s Top 40 Talent Pool 34 % of women in the Company’s total headcount 2022 2021 36 38 2022 2021 33 30 Corporate training initiatives High-Potential Graduates Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 150 151 Strategic report GRI 2–7, SASB EM-MM-000.B Region Permanent employees Temporary employees Number of employees (headcount) 2 Part-time employees Full-time employees 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 Men 5,585 5,623 6,238 478 485 529 6,063 6,108 6,767 4 1 5 6,059 6,107 6,762 Women 2,107 2,161 2,321 131 142 168 2,238 2,303 2,489 9 10 13 2,229 2,293 2,476 Murmansk region, total 7,692 7,784 8,559 609 627 697 8,301 8,411 9,256 13 11 18 8,288 8,400 9,238 Men 3,086 3,252 3,721 70 70 105 3,156 3,322 3,826 1 1 1 3,155 3,321 3,825 Women 2,404 2,516 2,755 216 221 234 2,620 2,737 2,989 4 3 12 2,616 2,734 2,977 Vologda region, total 5,490 5,768 6,476 286 291 339 5,776 6,059 6,815 5 4 13 5,771 6,055 6,802 Men 1,244 1,282 1,594 30 50 63 1,274 1,332 1,657 1 2 3 1,273 1,330 1,654 Women 619 649 740 50 61 85 669 710 825 8 7 11 661 703 814 Saratov region, total 1,863 1,931 2,334 80 111 148 1,943 2,042 2,482 9 9 14 1,934 2,033 2,468 Men 728 830 1, 100 43 93 117 772 923 1,217 1 0 2 771 923 1,215 Women 480 540 637 46 66 72 525 606 709 0 0 1 525 606 708 Leningrad region, total 1,208 1,370 1,737 89 159 189 1,297 1,529 1,926 1 0 3 1,296 1,529 1,923 Men 218 209 194 4 2 2 222 211 196 1 0 0 221 211 196 Women 177 164 147 7 2 3 184 166 150 0 1 0 184 165 150 Moscow, total 395 373 341 11 4 5 406 377 346 1 1 0 405 376 346 Men 570 571 557 8 10 7 578 581 564 3 3 3 575 578 561 Women 197 215 249 10 10 7 207 225 256 9 10 10 198 215 246 Other, total 767 786 806 18 20 14 785 806 820 12 13 13 773 793 807 Men 11,431 11,767 13,404 633 710 823 12,065 12,477 14,227 11 7 14 12,054 12,470 14,213 Women 5,984 6,245 6,849 460 502 569 6,443 6,747 7,418 30 31 47 6,413 6,716 7,371 Total 17,415 18,012 20,253 1,093 1,212 1,392 18,508 19,224 21,645 41 38 61 18,467 19,186 21,584 1 Due to expansion of the disclosure scope, the 2020 and 2021 data for the Vologda region, Leningrad region and other regions was recalculated to ensure the comparability of information. 2 Headcount as at the end of the reporting period. The headcount includes employees with an employment contract. 2022 metrics and highlights Breakdown of employees by gender, region, types of employment and employment contracts 1 , number of employees Average headcount 1 of PhosAgro Group, people Productivity 2 , t per person 19,846.1 18,320.9 17,891.0 2022 2021 2020 1,763 1,874 1,889 2022 2021 2020 1 Calculated using the period average methodology by adding up headcounts for each calendar day of any given period and dividing the sum of these headcounts by the number of calendar days in the period. 2 The ratio of mineral fertilizers, phosphate rock, nepheline concentrate and syenite alkali aluminium concentrate produced to the average headcount of Apatit, including its branches and standalone business units. 3 Due to expansion of the disclosure scope, the 2020 and 2021 data was recalculated to ensure the comparability of information. For the key personnel turnover indicators by age, gender and region, see page 396. Key personnel turnover indicators 3 , people GRI 401–1 8.3% 5,747 4,033 3,313 3,384 3,285 2,954 2022 2021 2020 Total joiners Total leavers 11.6% 9.8% The decrease in productivity due to the growth of the Company's headcount as a result of bringing equipment repair and maintenance functions back in-house, with a view to improving the quality and efficiency of the work. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 152 153 Strategic report Annual employee survey For ten years now, the Company has been conducting annual Growth Area employee surveys which serve as a basis for subsequent remedial action plans designed to address employee concerns. In 2022, the Company collected 13,773 completed survey questionnaires (with the headcount standing at approximately 19,800 employees). The employee satisfaction and loyalty index came in at 69% (up 12 p.p. y-o- y). This is a very good result for a chemical and mining company with a complex organisational structure. The engagement level came in at 70% (up 11 p.p. y-o-y due to the high assessment of the Company’s stability and social benefits offered), with 87% of employees appraising the management’s decisions. These results reflect positive changes in the Company and the effectiveness of corrective actions based on the outcomes of the annual Growth Area surveys. We plan to continue surveying our employees on an annual basis going forward, while also arranging pulse survey on dedicated subjects more frequently. The aggregate satisfaction and loyalty index demonstrated significant growth to reach its all time high (since 2013 when the Company’s first started measuring these metrics). Employee satisfaction and loyalty index, % Training and evaluation PhosAgro’s management seeks to attract highly skilled professionals and young talents, with heavy emphasis placed on providing professional development opportunities, promoting professional growth and encouraging production initiatives and in-house expertise. We offer a wide range of training formats for our people, including in-person training, on-the-job training, internships and online education. The COVID-19 pandemic came as a challenge from the perspective of ensuring employee training, development and assessment continuity, but also as a growth driver. The use of remote training capabilities became possible due to the implementation of new automated solutions and services which facilitate qualitative employee assessment, prompt identification of personnel management risks, Our corporate training framework relies on the following principles: alignment with the Company’s strategy; assessing and prioritising actual training needs of various staff categories to build appropriate processes; planning, coordination, quality and efficiency audit; introducing the most advanced and efficient training and development methods and tools from an economic and methodological perspective; developing new formats; using an individual approach to young talent; proactively identifying and developing new leaders to succeed current ones. GRI 405–1 Personnel breakdown, % Age Average headcount, % 2020 2021 2022 Men Women Men Women Men Women EMPLOYEES BY GENDER AND AGE Under 30 years 10.5 5.6 10.1 5.5 10.9 5.5 30–50 years 45.6 23.7 45.5 23.9 45.5 23.2 Above 50 years 9.1 5.6 9.3 5.7 9.3 5.6 EMPLOYEES BY CATEGORY Blue-collar employees 43.1 14.8 42.3 14.9 42.7 14.5 White-collar employees 11.6 17.1 12.0 17.2 12.6 16.9 Managers 10.5 3.0 10.6 3.0 10.5 2.9 EMPLOYEES BY EDUCATION Higher 25.0 20.0 25.3 20.3 25.4 19.7 Basic vocational 0.17 0.04 16.59 5.11 16.66 5.02 General 10.4 3.3 10.5 3.6 10.2 3.6 Secondary vocational 29.6 11.5 12.5 6.1 13.5 6.0 69 % aggregate employee satisfaction and loyalty index +12 p.p. to 2021 65 69 57 63 2025 target 2022 2021 2020 Training expenses, RUB ‘000 Training expenses per employee, RUB ‘000 In 2022, the number of employees who completed various types of training programmes reached 11.551 employees +16.4% to 2021 The average annual number of training hours per employee exceeded 99.8 hours +4.9% to 2021 271,872 235,216 199,684 2022 2021 2020 21.0 13.6 11.8 2022 2021 2020 and enactment of management initiatives for improving process efficiency. In 2022, we continued to enhance the expertise of professionals responsible for the assessment of candidates and employees as part of recruitment and development processes. We actively use psychometric assessment tools by leveraging the potential of new automated solutions and services introduced in 2021. These tools are applied in full compliance with the regulations on their use approved by the Company. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 154 155 Strategic report Additional information on employee training Item 2020 2021 2022 Change 2022 to 2021, % Number of employees trained 7,276 9,926 11,551 16.4 Average annual hours of mandatory training per employee n/a 81.6 85.1 4.34 Average annual hours of optional training per employee n/a 13.6 14.7 8.20 Total investments in training, RUB '000 199,684 235,216 271,872 15.6 Annual training investments per employee, RUB '000 11.8 13.6 21.0 53.8 Women 10.9 12.9 20.4 57.9 Men 12.3 14.0 21.3 52.1 In 2022, we continued to improve our corporate training programme by rolling out remote educational and development tools introduced during the pandemic, leveraging digital technologies and creating mixed training formats. The Company promotes a remote training system, creates online courses and upgrades technical capabilities by introducing computer simulators, and implementing VR technologies to support the learning process. The remote training system counts over 250 courses, while the VR library offers 12 programmes GRI 404–1 Average annual training, hours per employee Item 2020 2021 2022 Change 2022 to 2021, % Average annual training hours per employee 79.5 95.1 99.8 4.9 BREAKDOWN BY GENDER Women 56.2 75.0 86.5 15.4 Men 84.4 96.6 107.1 10.8 BREAKDOWN BY EMPLOYEE CATEGORY Managers 69.44 83.18 113.0 35.8 White-collar employees 39.59 61.71 85.4 38.3 Blue-collar employees 92.10 103.97 104.0 0.1 Our remote training system counts over 250 courses Our employees completed over 17 thousand Eduson сourses GRI 404–2 The Company seeks to promote the greatest possible number of internal candidates from the talent pool to PhosAgro’s executive roles. Our programmes aim to identify employees who have proved their efficiency in current positions and have what it takes to expand the scope of responsibilities and move up to executive roles. The Company offers a wide range of training and development opportunities to help such employees achieve these goals. The talent pool programmes include a variety of training options for talent pool members helping them to develop managerial and professional competencies, and to boost personal and business skills (analysis and decision-making, leadership, workflow management, motivation and delegation of powers, conflict settlement, project management, effective communications, etc.). In 2021, the Company started to use mentoring as a vehicle for promoting participants of the Top 40 Talent Pool programme. Senior managers (mentors) share their experience and knowledge with the participants in an attempt to build a next- level management culture, while talent pool members get a chance to learn the secrets of successful management from executives. The Top 40 Talent Pool programme offers opportunities to develop managerial competencies, pursue individual training at leading business schools, and benefit from mentoring support and personalised assistance. The main objective of training is to prepare the next generation of top-notch managers. We are creating an environment conducive to an active experience and knowledge sharing by promoting the culture of coaching and mentorship. In 2022, a number of Top 40 Talent Pool participants took on the role of mentors themselves to coach middle and line managers from the talent pool. Both talent pool development programmes and employee training initiatives seek to develop competencies required for progress against the Company’s goals and strategic projects and preventing personnel shortages. In 2023, we will continue our efforts to expand the talent pool. One of the Company's focus areas in training and development is to improve management culture. In 2022, PhosAgro set up the Rules of Effective Management project to train and support its managers. The purpose of the initiative is to strengthen management culture while also establishing and applying uniform rules for the supervisor-subordinate relationship to make staff interaction more effective. The Rules of Effective Management help the Company's employees in their managerial activities, laying down the fundamental principles of building effective communication between a supervisor and a subordinate, which in turn bolsters employee loyalty and engagement. TALENT POOL PROGRAMMES on occupational health and safety, and repairs of rotating equipment. We also provide our employees with opportunities for self- development by giving them access to our corporate electronic library and online training platform. In 2022, the Company partnered with Eduson, an educational platform, enabling its employees to complete over 17,000 courses and more than 2,600 tests. PhosAgro’s staff can also read and download business, professional and fiction books from Alpina’s online library. Status The project was successfully completed in the pilot units (Ammonia-1, Ammonia-2 and Ammonia-3) and will be rolled out across other units of Apatit. In 2022, four management practices were introduced in the pilot units: • Stand-Up/Shift Meeting, • Setting Targets, • Feedback, • Performance Discussion. Rules of effective management Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 156 157 Strategic report Virtual teaching package In 2022, we kept rolling out a virtual teaching package and a distance learning system to automate training and development processes. This was needed because of: • transition to remote work; • demand for a specific range of professions; • a large number of employees to be trained in various jobs; • employees’ aspirations for self-learning and keeping their knowledge up to date. The virtual teaching package includes: 1. A matrix of 24 corporate, job-agnostic and job- specific competencies; 2. Teaching packages for 15 corporate and job-agnostic competencies; 3. Ten distance learning courses for corporate and job-agnostic competencies. In addition to the earlier developed capabilities, in 2022 the Company unveiled: A tool to create online courses for nine job-specific competencies, including guidelines on developing the teaching package, a template of terms of reference for creating a programme, a template course presentation, didactic materials for teaching in-house developers, and recommendations on incentives for in-house developers; 100% of content required for distance learning theoretical courses on job-specific competencies covering four pilot professions. In 2022, 13 mentors took part in the Mentor of the Year super final communication support and methodological assistance to mentors. We have developed check lists and guidelines for mentors, and post information about mentors on stands, hold meetings with them in business units, and they are featured in the corporate media. On top of that, PhosAgro holds the annual Mentor of the Year corporate contest set to develop mentoring, make it more prestigious, raise employee awareness, and encourage and recognise mentors' personal contribution to the development of new hires. In 2022, 13 mentors from different assets of the Company took part in the Mentor of the Year super final. In the coming year, we will continue to improve the mentoring programme to raise the quality of personnel training, reduce the turnover rate among new employees, and boost employee loyalty and engagement. Mentoring The programme’s key objectives are to: Create a system to accumulate and transfer expertise and experience acquired in the Company to help new hires develop their skills Identify, evaluate and develop the initial potential of employees and leverage their professional experience in line with the Company’s requirements Improve labour productivity Reduce workplace injuries Improve professional skills of employees Reduce the number of errors, defects and other failures at work Target by 2026 is to achieve 100 % coverage of most in-demand professions by distance learning theoretical courses PhosAgro Group is committed to facilitating the successful onboarding of new employees. In 2022, the Company continued its Mentoring programme: new hires are overseen by mentors – seasoned employees who teach professional skills and provide feedback, support, and assistance in onboarding. To organise the mentoring process, we identified a pool of mentors (over 1,500 people so far). The selection criteria include qualifications and professional experience; perception by the team; organisational and training skills; and motivation to share experience and knowledge. In the course of the programme, we developed and approved the mentor’s competence model. Potential mentors have their competences assessed and take part in corporate development programmes to learn more about personnel development and training approaches. To promote the mentoring programme, the Company provides Furthermore, during 2022 a personal account developed for the distance learning system was available for pilot running at all sites. The personal account features: • mandatory multi-sectioned courses; • courses to develop additional competencies; • process flowcharts; • student atlases, etc. Lessons learned from the operation of the personal account will be used to automate HR management processes. Going forward, we plan to roll out the project and achieve 100% coverage of the 59 most popular professions by theoretical courses in the distance learning format by 2026. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 158 159 Strategic report Percentage of employees receiving regular performance and career development reviews, % GRI 404–3 Category 2020 2021 2022 Men Women Men Women Men Women Managers 1.02 0.18 1.49 0.20 1.63 0.19 White-collar workers 0.63 0.61 0.93 0.66 0.96 0.69 Blue-collar workers 0.37 0.05 2.06 1.00 5.11 0.76 Total by gender 2.03 0.84 4.48 1.87 7.70 1.63 Personnel evaluated in 2022, people PhosAgro Classes PhosAgro Schools We continue to implement the PhosAgro Schools career guidance project. Since 2013, the Company has invested over RUB 800 mln in it, including RUB 600 mln spent on renovations and equipment. In 2022, funding for the project increased 2.5 fold compared to 2021 (reaching more than RUB 260 mln), the funds were used, among other things, to further develop schools in Kirovsk and Apatity (Murmansk region). PhosAgro Schools not only develop educational and research auditoria and labs, but also implement career guidance projects to introduce the Company and its corporate culture to students, teachers, and parents. Since 2019, 83 participants of the PhosAgro Class programme who graduated from dedicated universities have been hired by PhosAgro units, including 30 in 2022, to take engineering positions. Some 34 graduates of PhosAgro Classes are expected to be employed by the Company in 2023, with over 100 more by 2025. More than 100 graduates of 2022 have been admitted to higher educational institutions, with St Petersburg Mining University enjoying the highest popularity among them (25 students). Since 2015, over 900 graduates of PhosAgro Classes have been enrolled in higher educational institutions, with technical careers gaining more traction among them every year. For more information on the educational programme, please see the Contributing to Local Communities section on page 234 In September 2022, 125 new students started their 10th grade programme at PhosAgro Classes, marking the tenth admission round since the project launch. INVESTING IN PHOSAGRO GROUP'S FUTURE TALENT PERSONNEL ASSESSMENT 154 Men Women Men Women Men Women Volkhov branch 663 262 212 24 124 89 663 99 132 Total White-collar workers Managers Blue-collar workers 37 4 20 3 51 17 36 12 28 46 31 1 119 5 65 34 421 19 20 3 11 6 160 62 Apatit (Cherepovets) Kirovsk branch Balakovo branch To assess HR management and make effective decisions in this area, we continuously monitor employee performance metrics and analyse the structure of staff costs, labour productivity, along with the performance of social, training, and other programmes. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 160 161 Strategic report Collaboration with technical colleges PhosAgro has been implementing a school–college/university–facility career guidance model to train highly skilled workers since 2013. The Company has been consistently partnering with technical colleges across its footprint, including: • Kirovsk branch of Murmansk Arctic State University (Murmansk region); • Cherepovets College of Chemistry and Technology. In 2022, around 200 students were trained for and received some of the key blue-collar jobs at the Company. Our collaboration with technical colleges covers: • setting up testing grounds and labs for students to acquire hands-on experience using real equipment; • running internship programmes at PhosAgro’s facilities with mentors; • supporting undergraduate and graduate thesis research; • organising and engaging students in sports, educational, and research initiatives, competitions, Olympiads. PhosAgro also supports a Training Centre at the Cherepovets College of Chemistry and Technology that offers express programmes in chemistry and associated fields to nurture talent for most in-demand jobs. In 2022, the college also took part in Professionalism, a federal project set to “reload” vocational education. PhosAgro is providing financial support for an internship-focused training programme for the professions: Inorganic Production Operator and Installation, Maintenance, and Operation of Industrial Equipment. In 2022, as part of cooperation with PhosAgro under a federal programme, the Cherepovets College of Chemistry and Technology was the only educational institution of the chemical industry cluster to make it the Top 10 clusters of the Professionalism project, demonstrating a high level of performance. Collaboration with universities As part of the school–college/ university–facility educational model, the Company has built a system of cooperation with universities to provide high- quality and affordable education and support research. As part of its collaboration with universities, PhosAgro: • sponsors advanced training for graduates of PhosAgro Classes in the fields relevant to PhosAgro (subject to their commitment to future employment at the Company); • offers scholarships to the most talented students (based on exam results); • invites university students to take a tour of one of the Company's facilities; • offers students a job in one of the Company’s popular specialisations after they graduate; • allocates money for repair and equipment of chemistry laboratories at dedicated universities. We have cooperation agreements and roadmaps with many universities. In 2022, 75 students were admitted to the Cherepovets College of Chemistry and Technology High-Potential Graduates For the recent 10 years, the Company has been running the High-Potential Graduates programme based on its cooperation with universities. The initiative fosters contact with graduates wishing to work at PhosAgro. The High-Potential Graduates corporate programme offers a competitive salary, as well as relocation and housing support. Each new hire is supervised by an experienced mentor. In 2022, 80 were recruited by the Group's entities. young professionals Number of people recruited to the High-Potential Graduates programme 80 80 71 2022 2021 2020 This brings the total number of graduates who have joined the Company since the launch of the university engagement programme to 554 people. ~ 400 of these employees are still with PhosAgro today, pursuing careers in such areas as mineralogy, geology, hydraulic engineering, chemistry, thermal energy and electricity generation, rail transport, open- pit and underground mining, and mine surveying. Of the programme participants still employed at PhosAgro as at December 2022, > 37% had received promotions and had been included in our talent pool, and many of them had successfully completed the projects assigned to them upon recruitment. In 2023, we plan to “reload” and transform the High- Potential Graduates programme into a corporate PhosAgro-START programme. The programme’s main objectives will be to build a talent pool for key positions within the Company and to identify career paths for young talented professionals to prepare future executives and set up a pool of internal experts. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 162 163 Strategic report GRI 405–2 Correlation of the standard entry-level wage and remuneration of women and men Region Difference in remuneration of men and women 2020 2021 2022 Vologda region 1.56 1.59 1.64 Saratov region 1.43 1.41 1.49 Leningrad region 1.58 1.69 1.70 Moscow 3.90 3.54 4.90 Murmansk region 1.52 1.52 1.54 Other 0.91 0.86 0.89 Total: 1.62 1.61 1.71 1 Significant regions of operation are those with the Company's main production facilities, maximum headcount, and governance structures. GRI 202–1 Ratios of standard entry-level wage by gender compared to local minimum wage 1 Region 2020 2021 2022 Men Women Men Women Men Women Vologda region 1.00 1.16 1.18 1.18 1.21 1.21 Leningrad region 1.28 1.35 1.33 1.17 1.20 1.24 Murmansk region 1.00 1.00 1.00 1.00 1.00 1.00 Saratov region 1.00 1.00 1.06 1.04 1.02 1.05 Moscow 3.32 1.53 2.30 1.32 1.98 1.30 Incentives and rewards Our robust system of rewards is aligned with the Company’s performance and motivates all employees to improve their performance in order to achieve our business goals. The purpose of the incentives and rewards system is to incentivise staff in order to increase productivity and deliver strong operating results, as well as to retain qualified talent. Due to the nature of our operations, there are generally more male employees than female ones. At PhosAgro, we believe that professionalism, sustainably strong performance and adherence to corporate values are prerequisites for and the only guarantee of career growth. Our regulations on labour relations, remuneration and social benefits cover all employees and underpin the principle of equitable remuneration and rewards. We comply with the principle by implementing a remuneration framework that offers equal pay to employees in equivalent positions, regardless of their gender. Our system ensures: Decent pay Implementation of incentive programmes using a transparent system of KPIs to calculate managerial rewards Implementation of incentive programmes to motivate blue-collar employees to deliver against their targets Availability of financial and non- financial rewards Employee coverage by social programmes Adherence to global best practices on benefit packages Availability of benefits for certain employee categories Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 164 165 Strategic report Social benefits and employee guarantees GRI 401–2 We provide comprehensive social support to our employees, and every year we increase funding for voluntary health insurance, financial assistance and corporate housing programmes. Collective Bargaining Agreements provide for a range of relevant benefits as part of the government programme to support families, mothers, and children. Recreational summer health resorts and specialised excursions are organised for employees' children on an annual basis. All children of employees between the ages of 0 and 14 receive New Year presents. PhosAgro provides employees with vouchers to local and southern health resorts and corporate health resorts. Employees and their family members, as well as veterans, have access to corporate health resorts at a reduced price. A range of social support measures and leisure activities are available to the Company’s veterans, and a corporate retirement plan is in place. Employees can also seek psychological, financial, and legal assistance and receive advice on an active lifestyle, including the use of telemedicine. Healthy eating programmes are being introduced and a nutritionist is available to employees. In 2022, we implemented major projects worth over RUB 300 mln to improve working conditions at our facilities. For example, repairs were carried out on lounge, shower and meeting rooms, staircases, and corridors in administrative and production facilities. Social investment, RUB mln Programme 2020 2021 2022 Change 2022 to 2021,% Financial aid to employees 48.26 64.7 66.3 2.5 Recreation, rehabilitation, health resort treatment, and VHI programme 225.93 359.52 506.21 40.8 Improvement of working conditions 85.599 302.12 390.128 29.1 Corporate housing programme 67.51 76.46 88.47 15.7 Other social benefits and guarantees 84.64 227.71 227.14 –0.3 Corporate and cultural events 72.34 134.22 186.44 38.9 Support to the trade union (special purpose funding and bonuses) 151.94 188.55 233.13 23.6 Total 736.22 1,353.28 1,697.82 25.5 Average monthly pay, RUB 132,110 111,288 92,442 83,770 2022 2021 2020 2019 In the reporting period, wages and salaries grew for all categories of staff as a result of the 3–4% wage indexation on 1 September 2021 and 12% wage indexation on 1 February 2022, along with targeted pay reviews and incentive programmes. In 2022, we implemented major projects worth over RUB 300 mln to improve working conditions at our facilities Wage indexation on 1 February 2022 12 % GRI 202–2 Proportion of senior management 1 hired from the local community 2 in significant regions of operations, % 1 Senior management include managers at level N, N-1, N-2 (CEO, heads of functions, director for production, chief engineer of a company (branch), director of a subsidiary and affiliate, adviser to the CEO). The governance levels of managerial positions are determined by an order. 2 In accordance with the generally accepted concept, which describes a person or a group of persons living in a certain territory regardless of ethnic and cultural composition, local community means employees whose region (area) of registration is the same as the region of the facility's location. 47 48 22 22 25 92 92 91 80 63 64 36 44 40 2022 2021 2020 Vologda region Leningrad region Moscow Murmansk region Saratov region 61 61 62 52 Average Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 166 167 Strategic report AREA, STRATEGIC GOALS AND METRICS Industrial safety KEY PROJECTS AND HIGHLIGHTS OF 2022 • fostering a safety culture and adhering to the highest occupational health and safety standards • reducing workplace injuries by 10 % annually • zero fatalities, and reducing the number of incidents by 10 % annually Target 4.4 Target 3.4 Target 3.4 • improving safety competencies • keeping employees motivated to stay safe and protect others WORK-RELATED INJURIES EMPLOYEE TRAINING TRANSPORT SAFETY OCCUPATIONAL DISEASES • reducing risks of traffic accidents • paying special attention to disease prevention and health improvement among the employees of all production sites; • providing employees with access to high-quality affordable healthcare 1 Apatit, including its branches and standalone business units. Target 3.4 Target 8.8 Target 8.8 Total injuries down 51 % – from 41 to 20 Severe injuries down 67 % – from 3 to 1 Minor injuries down 51 % – from 37 to 18 0 incidents 0 fires 0 accidents 0 traffic accidents with injuries or major damage 0 fatalities caused by occupational diseases 10.8 thousand Company employees passed health and safety training and knowledge checks, including an ad-hoc one around 80 % of the total headcount 1 Occupational disease record down 50 % from 30 to 15 Company pro le Corporate governance Share capital Appendices PERFORMANCE REVIEW 168 169 Strategic report Strategy All employees of PhosAgro Group and its contractors need to go back from work to their loved ones in perfect health. This is the underlying principle of all our efforts to ensure safe, healthy and comfortable workplace conditions. Our Strategy to 2025 focuses on fostering a safety culture and adhering to the highest occupational health and safety standards. In 2022, we continued to implement our Health and Safety Strategy, which defines key focus areas and target initiatives to reduce the risks associated with various operations. PhosAgro Group is consistently improving its safety culture, employee responsibility and awareness, hazard identification procedures and danger prevention measures by putting managers at all levels in charge and studying and applying best health and safety practices. We apply continuous efforts to identify and reduce health and safety threats to PhosAgro Group employees, contractors and visitors to the Company’s sites. The Company’s relevant goals and objectives, both strategic and day-to-day, are based on huge volumes of data derived from internal and external audits, inspections, incident investigations, employee recommendations and feedback. Management approach GRI 403-1, 3-3 We pay special attention to making our health and safety system compliant with applicable laws and the highest international standards. To this end, we have introduced a multi-tier health and safety management system involving managers of all levels. In 2008, the Company introduced an integrated health and safety management system in line with BS OHSAS 18001. In 2021, Apatit’s Cherepovets site was certified and in 2022 successfully audited for compliance with ISO 45001:2018. Health and safety management system Organisational unit Key responsibilities BOARD OF DIRECTORS Strategy and Sustainable Development Committee • Sets strategic priorities and develops relevant policy • Reviews executive management's health and safety reporting MANAGEMENT Executive bodies • Define and oversee the health and safety policy • Review all on-site incidents involving people and machinery on a weekly basis OHS Department • Supervises OHS management functions across the Group’s companies to implement OHS policies and strategies • Collects data and prepares OHS reports for the Strategy and Sustainable Development Committee • Cooperates with external consultants to implement the best practices of OHS management • Conducts audits and inspections at the Company’s sites OPERATIONS Heads of production sites • Oversee OHS policies and strategies at respective production sites • Develop and implement effective response measures following internal and external audits and accident investigations Local OHS Committees • Draft and improve, as part of the committees' activity, programmes to join efforts of the employer, employees and trade unions in ensuring health and safety OPERATIONAL OHS STAFF Local OHS management functions • Monitor the site’s compliance with OHS regulations and corporate standards • Develop targeted programmes, conduct training and stage initiatives • Interact with relevant regulatory authorities on behalf of the site and facilitate inspections • Conduct internal inspections and audits and present analytical reports to the local management Company pro le Corporate governance Share capital Appendices PERFORMANCE REVIEW 170 171 Strategic report Occupational health functions play a key role in ensuring safety at our facilities. Their main objectives are: • taking steps to ensure workers’ compliance with health and safety requirements; • monitoring workers’ compliance with OHS laws and regulations, the Collective Bargaining Agreement, OHS agreement and other internal regulations; • preventing workplace injuries, occupational diseases and work- related illnesses and improving workplace conditions; • advising workers on, and raising their awareness about, occupational health and safety; • studying and disseminating best OHS practices and promoting occupational health. Apart from applicable laws, these activities are regulated by: • health and safety SOPs at the facility (shop) level; • production SOPs; • worker health and safety instructions; • corporate standards; • process regulations; • accident management action plans, etc. GRI 403-4 For better OHS communication with employees, we have adopted the Regulations on the OHS Communication System. Pursuant to the Regulations, the OHS communication system is divided into internal and external communications, and provides for a feedback procedure: • regular OHS meetings at business units and enterprises; • OHS meetings at production sites, departments and facilities; • union and union committee meetings (for feedback from OHS officers); • corporate e-mail; • corporate periodicals; • local health and safety committees; • employee loyalty surveys; • OHS questionnaires. Internal OHS communication is achieved through: • local health and safety committees; • management meetings and conferences to discuss the health and safety performance of our enterprises; regular OHS meetings in departments, on production sites and at facilities; • health and safety bulletin boards, posters and other visuals; • corporate television (screens), intranet site, e-mail; • corporate periodicals; • education by OHS officers (including one-on-one meetings, training, mentoring, supervision, etc.). Local health and safety committees Since 2014, health and safety committees have been functioning at the Group’s companies. They are both an integral part of our OHS management system and a form of employee participation in it. In their work, these committees rely on the principles of social partnership. As part of their activities, health and safety committees draft and improve programmes to join efforts of the employer, employees and trade unions in ensuring health and safety. In 2022, we revised our regulations on health and safety committees, with meetings to be held on a monthly basis according to the new version. At meetings, information exchange and reporting are multilateral, as both health and safety functions and local unit heads report on health and safety progress. The latter can also address their questions and proposals directly to the management and the health and safety function. All resolutions are documented in minutes of the meetings. In 2022, health and safety committees held 35 meetings and adopted 560 resolutions. Workers are represented at committee meetings by heads or representatives of local unions. GRI 403-3 Meeting agendas comprise nine workstreams Accident/incident investigation Occupational health Industrial safety Road traffic safety Safety assessments and audits Developmentof health and safety management Safety projects (programmes, initiatives) Education and training Fire safety As part of these workstreams health and safety committees consider the following topics: • “Golden Rules” of OHS; • Safety Culture Transformation Project; • OHS leadership; • OHS motivation; • effective OHS communications; • contractors' safety; • PPE effectiveness; • trade union report. 560 resolutions adopted 35 held in 2022 health and safety committee meetings Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 172 173 Strategic report Improving contractor safety practices Measures to ensure safety of contractors’ employees temporarily working at our production and other facilities are an integral component of our OHS strategy. They include the selection of contractors based on a health and safety qualification assessment, briefings, and training to contractor employees, along with relevant compliance audits. ESG assessment is a major factor in contractor selection. For more information, see the Supply Chain section on page 130 Internal and external industrial safety audits In line with statutory requirements, PhosAgro Group is subject to scheduled external audits by Russian authorities, including the Federal Service for the Supervision of Environment, Technology and Nuclear Management (Rostekhnadzor), State Labour Inspectorate, Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor), the Ministry for Civil Defence, Emergencies and Elimination of Consequences of Natural Disasters (EMERCOM), etc. We may also engage consulting companies, or international associations of which the Group is a member to conduct additional external audits of compliance with international standards, or as part of a special assessment of workplace conditions. In 2022, state supervisory authorities carried out 189 audits at Apatit and its managed companies. The higher number of audits (up from 132 in 2021) was due to due to an increase in the number of audits conducted as part of the continuous state supervision of hazardous production facilities of hazard class 1, with Apatit having 17 such facilities. We also run internal audits conducted by our OHS departments and directorate, managers and employees exercising production H&S control. After external and internal audits, the Company issues orders and instructions outlining remedial action plans and establishing the deadlines and responsible persons. Identified breaches are remedied within the agreed time limits, and gaps that can be eliminated at no additional cost are addressed immediately. The Company has a procedure for drafting, submitting and reviewing reports on internal and external OHS audits. The results of all internal and external assessments and audits are recorded in the Safety and Instructions (Shift Assignments) management systems for further analysis, gap identification and elimination monitoring. We also submit all relevant reports to state supervisory bodies and statistical agencies in accordance with the Russian laws. Risks and opportunities GRI 403-2 The following strategic risks affect our OHS objectives: 4 HR risk; 6 health and safety risk; 20 infectious disease risk. 189 conducted by state supervisory authorities at Apatit in 2022 OHS-specific risks are: The Group develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information about what we do on this front. For more information, see the Strategic Risks section on page 70 1 Safety culture risks, including OHS communications and safety incentives Occupational risks of the Group’s business units, including occupational disease risks Risks of OHS-related regulatory changes 2 3 safety audits Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 174 175 Strategic report Emergency response procedures At our sites, we have introduced the following emergency response and prevention measures compliant with the Russian laws: accident management action plans for all hazardous industrial facilities as defined by the Russian laws developed; training sessions and drills held in 2022: • test alerts – 125 • fire training sessions – 666 • evacuation drills – 96 • oil spill drills – 48 • joint fire drills with EMERCOM – 2 Apatit’s programme for developing gas and mine rescue, fire-fighting and prevention activities for 2019–2022 completed; a targeted programme for upgrading Apatit’s fire safety systems in 2023–2025 developed. Case study Roll-out of the OHS remote monitoring system at the Cherepovets site of Apatit Starting from 2021, Apatit’s Cherepovets site (fluosilicate acid storage facility of the aluminium fluoride shop) participates in Rostechnadzor’s experiment to roll out an OHS remote monitoring system under Russian Government Decree No. 2415 On Experimental Roll-out of the Industrial Safety Remote Monitoring System dated 31 December 2020. The experiment provides for the development of stand- alone remote monitoring technology for hazardous production facilities, and a relevant legal framework. As assumed, the technology will improve the overall reliability and monitoring efficiency of safety systems, and help reduce the associated paperwork and bureaucracy. The pilot operation of the OHS remote monitoring system began in November 2022, with the process of data transmission to the Automated Information System of Rostekhnadzor currently being configured. in November 2022 OHS remote monitoring system was introduced SASB RT-CH-320a.2 We are constantly working to assess and mitigate risks. We perform risk assessment and identify material risks using our dedicated proprietary methodology. Following hazard identification and risk assessment, the unit’s OHS officer compiles a List of Occupational Risks, which is then used as a basis for the Company’s List of Material Occupational Risks. In accordance with an established procedure, information about incidents is provided by eyewitnesses to the supervisors in charge and by those supervisors to the dispatcher of the enterprise. Next, the dispatcher notifies the designated persons using text messages and phone calls. Industrial accidents and incidents are investigated in accordance with legislative requirements and internal procedures to determine the root causes. The Company encourages its staff to disclose information on potential sources of danger to worker health and life. For better OHS efficiency, and to automate and streamline the relevant processes, we have introduced and now use the Safety and Instructions (Shift Assignments) management systems. Both systems include a Risk Management module. The module enables internal check list-based OHS assessment at all units of Apatit. The module’s new underlying principles help enhance production H&S control, while its new functions facilitate operation, monitoring and analysis. The Company has a formal procedure for addressing workplace hazards. When a hazard is identified, employees are required to suspend work and report it to their supervisors directly or via the Public Scrutiny mobile app (on an anonymous basis if necessary). The supervisor uses the report to assess the risk and develop a remedial action plan. Risk assessment takes into account the following aspects: degree of personnel exposure; impact on personnel; frequency of occurrence; compliance with the applicable regulatory and other OHS requirements. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 176 177 Strategic report Key results in 2022 The significant increase in OHS expenses is attributable to the rise in prices for personal protective equipment on the Russian market, as well as the expansion of OHS training programmes for employees and changes in the approach to organising such training as a result of the growing number of training programmes due to the adoption of Russian Government Resolution No. 2464 On the Procedure for OHS Training and Checking the Knowledge of OHS Requirements dated 24 December 2021. Transport safety SASB RT-CH-540a.2 OHS expenses, RUB mln From 2020 to 2022, PhosAgro Group was able to reduce the total number of traffic accidents by 71 % from 45 accidents in 2020 to 13 accidents in 2022 Traffic accidents at Apatit and its branches and skills of PhosAgro employees responsible for operating all types of transport, and introducing various technical solutions to mitigate risks of traffic accidents. Examples of such solutions in 2022 include optical projections of pedestrian crossings implemented at the Volkhov branch and visualisation systems for dangerous zones installed on self- propelled machines at the Kirovsk branch. The initiatives implemented by the OHS Department and transport departments to mitigate traffic accident risks includes drafting internal regulations to ensure safe operation of motor vehicles, self-propelled machines and rail transport, performing targeted and full- scope inspections of vehicles used by our contractors, subsidiaries, enhancing the competencies In 2022, the Company continued to perfect its health and safety management system and made significant progress in improving workplace safety. The total number of work-related injuries, both minor and major, significantly reduced across the Company's facilities in 2022, with 20 injuries reported compared to 41 in 2021. Of these injuries, five occurred to contractor employees, eight to PhosAgro’s own staff and seven to employees of subsidiaries and affiliates (compared to 16, 17 and 8 in 2021, respectively). We were deeply saddened by the fatality involving our employee which occurred at the production site of Apatit’s Kirovsk branch in December 2022. The investigation has been completed. We have thoroughly analysed the circumstances of the fatality and communicated conclusions and recommendations on preventive measures, including a range of technical and organisational steps, to the management and employees of the facility. This tragedy clearly shows the importance of further improving safety practices. Most of the injuries reported in 2022 were related to chemical burns incurred while handling hazardous substances, as well as fractures resulting from falls and contact with moving and rotating objects and equipment. The main causes of work-related injuries in 2022 were poor work organisation, violations of labour and industrial discipline, and personal negligence of the injured parties. The Company plans to continue implementing its safety improvement strategy by leveraging new safety tools and modern comprehensive solutions and approaches that have already proven effective, including: • senior management’s leadership and commitment to health and safety; • allocating sufficient funding to ensure occupational, industrial and fire safety; • knowing and applying international and domestic best practices; • improving the internal incident investigation process to identify and eliminate root causes; • implementing project solutions and targeted programmes to improve workplace safety; • providing employees with modern and effective personal and collective protective equipment; • involving blue-collar workers (OHS officers) in directly managing health and safety in their business units; • reviewing the structure and functions of occupational health, industrial safety and fire safety services with a focus on enhancing control and preventive work; • selecting and appointing highly qualified leaders to key positions in occupational health, industrial safety and fire safety services; • developing and implementing a system of incentives motivating all categories of employees for safe working practices; • developing and updating e-courses to educate employees in corporate health and safety requirements; • integrating corporate health and safety requirements into the work of contractors; • digitalising data management processes to support high- quality analysis and effective management decision-making. Work-related injuries GRI 403-9, SASB RT-CH-320a.1, RT-CH-540a.1 3,841 3,029 4,977 1,545 1,397 884 2,002 1,770 1,593 983 471 402 447 203 150 2022 2021 2020 Total Apatit Kirovsk branch Balakovo branch Volkhov branch Total 37 45 13 10 19 29 3 18 16 2022 2021 2020 Road Rail Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 178 179 Strategic report 1 Lost time injury frequency rate, excluding fatalities. 2 Including fatalities. LTIFR 1 , per 1 mln of hours worked Item 2020 2021 2022 Employees, including 0.52 0.85 0.32 Apatit 0.42 0.40 0.12 Kirovsk branch of Apatit 0.47 1.18 0.22 Balakovo branch of Apatit 0.48 0.00 0.80 Volkhov branch of Apatit 1.37 2.28 0.88 Employees + staff of external contractors (including subsidiaries, affiliates and managed companies) 0.69 0.81 0.38 Fatalities as a result of work-related injury, per 1 mln of hours worked Item 2020 2021 2022 Employees 0 0 0.05 Staff of external contractors (including subsidiaries, affiliates and managed companies) 0.08 0.03 0 Severe injuries (excluding fatalities), per 1 mln of hours worked Item 2020 2021 2022 Employees 0.21 0.05 0 Staff of external contractors (including subsidiaries, affiliates and managed companies) 0.33 0.07 0.04 Work-related injuries 2 , per 1 mln of hours worked Item 2020 2021 2022 Employees 0.52 0.85 0.36 Staff of external contractors (including subsidiaries, affiliates and managed companies) 0.90 0.82 0.44 Number of hours worked by the Company’s employees and staff of external contractors Item 2020 2021 2022 Employees 19,091,953.05 19,893,115.33 22,196,069.58 Staff of external contractors (including subsidiaries, affiliates and managed companies) 24,359,432.13 29,207,298.96 27,194,133.46 Work-related injuries over the past three years Branches Minor injuries Severe injuries Fatal injuries Total 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 Apatit (Vologda region) 2 3 1 1 – – – – – 3 3 1 Balakovo branch – – 2 1 – – – – – 1 – 2 Volkhov branch 2 4 2 – – – – – – 2 4 2 Kirovsk branch 2 9 2 2 1 – – – 1 4 10 3 Subsidiaries and affiliates 7 7 6 6 1 1 – – – 13 8 7 External contractors 5 14 5 2 1 – 2 1 – 9 16 5 Worker training on occupational health and safety GRI 403-5 In 2022, 10,800 employees of the Company 1 (around 80% of the total headcount) passed health and safety training and knowledge checks, including an ad-hoc one (vs 7,800 employees in 2021). PhosAgro keeps working to improve OHS competencies and knowledge of its staff. Employees of the Company undergo online and in-person training arranged at our PhosAgro Education Centre. Our e-courses are easy to understand since they are made in the form of illustrated slides with key highlights on them. In particular, we offer an e-course on corporate OHS standards. It is followed by tests to check the knowledge and understanding of the standards and requirements. In 2022, we developed and rolled out four e-courses on the key occupational health and safety regulations: • procedure for occupational safety audits using check lists; • course in the Safety and Instructions (Shift Assignments) management systems for beginners; • procedure for operations in a confined space; • implementation of the railway transport safety management system at Apatit and its branches. Whenever required, the courses developed earlier are updated following changes in the law and the Company’s internal regulations. In 2022, we updated the following e-courses: • Occupational Health and Safety Golden Rules; • working at heights; • contractor safety requirements; • investigation and communication of occupational health and safety accidents/incidents; • management of contractors’ organisational and technical documents. 1 Apatit, including its branches and standalone business units. 10.8 thousand employees underwent health and safety training and knowledge check Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 180 181 Strategic report In 2022, check lists were developed for the following topics: • Rules for Working in Winter / Safe Driving and Walking in Winter; • Safe Use of Stairs / Flights of Stairs; • Golden Rules; • Correct Use of PPE; • OHS Motivation; • Learn the Occupational Safety Rules; • Disease Prevention; • Control of Briefings for Each Shift; • Safe Earthworks; • Occupational Safety at Low Temperatures, etc. In 2022, 7,200 employees of the Company (54% of the total headcount) completed 13 e-courses in occupational safety. Apart from that, PhosAgro Education Centre organises OHS training, including that in basic fire safety and electrical safety, industrial safety pre-certification sessions, and drills in the Vysota training centre. GRI 403-8, 403-1 In 2022, our health and safety management system covered 100% of the Company’s employees. All our employees (executives together with blue- and white- collar staff) take OHS training as required by the national laws, as well as additional training. The minimum required training is provided to each and everyone, including all visitors and contractors as part of the introductory briefing. Raising awareness about OHS To keep our employees well- informed about our safety measures, PhosAgro constantly develops and updates OHS check lists, presentations and other visual materials that emphasise the crucial information employees must rely on in various situations, including working on particular assignments, in order to stay safe. Raising awareness about occupational health and safety, each month the Company issues check lists on the month’s topic. In 2021, pilot business units of Apatit launched briefings for each shift. This initiative was rolled out at all business units in 2022. The key objectives of such briefings are: • revising industrial dangers/ hazards, OHS requirements (as set out in the Company’s internal regulations, OHS guidelines, technical and operational documents), and safe work practices; • fostering leadership skills among mid-level managers; • developing managers’ communication skills. In 2022, in order to draw attention of the Company's employees to incidents, an illustrated Incident Almanac was developed. This is a printed handbook describing all incidents in 2021 shown as animations. This format clearly illustrates the circumstances of incidents, draws attention to their causes and actions to prevent similar incidents in future. Changes to labour safety promotion programmes Senior executives (CEOs of the Company and its business units, as well as their direct subordinates) recognise the importance of OHS and are committed to safety and ready to take necessary managerial decisions. Since 2014, PhosAgro has had a system of KPIs that uses uniform standards linking the size of management remuneration to the efficiency of OHS measures, among other 7.2 thousand employees completed 13 e-courses in occupational safety All our employees, from managers to blue-collar staff, receive occupational health and safety briefing and training as required by the Russian laws. Furthermore, the employees of the Company and some contractors are offered a number of additional courses. To improve OHS training and remind employees about workplace safety, PhosAgro Education Centre creates animated videos. 100 % of employees covered by the health and safety management system in 2022 things. In particular, the Company established the following KPIs with regard to OHS: • LTIFR covering all staff categories, including contractors; • zero fatalities among all employee categories, including contractors; • timely implementation of action items from improvement notices issued by supervisory authorities; • industrial safety indicator; • zero industrial accidents. The Company has developed OHS promotion programmes to maintain each PhosAgro employee’s interest in ensuring their own safety and the safety of those around them, as well as to encourage the employees to take initiative and implement OHS improvements. In 2022, we revised the employee labour safety promotion regulations, including the addition of a new incentive programme, Best Public Scrutiny User, which provides for quarterly cash bonuses to employees who show initiative. 1 Apatit, including its branches and standalone business units. in 2022 an illustrated Incident Almanac was developed Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 182 183 Strategic report CEO's OHS Achievement Award Best OHS Business Unit Best OHS Employe 15,000 ₽ Best Public Scrutiny User GRI 403-10 Number of employees diagnosed with occupational diseases Branches 2020 2021 2022 Apatit 0 4 1 Kirovsk branch of Apatit 23 26 14 Volkhov branch of Apatit 0 0 0 Balakovo branch of Apatit 0 0 0 Total 23 30 15 In 2020–2022, there were no fatalities caused by occupational diseases. Promotion of worker health GRI 403-6, 403-7, GRI 403-10 PhosAgro places a strong emphasis on disease prevention, health improvement, and high- quality affordable healthcare and prevention for the employees of all its production sites. The Company takes part in the Health 360 programme run by the Russian Chemists Union to promote annual health self- assessments based on a dedicated questionnaire. In addition, PhosAgro is a frequent participant in contests aimed at promoting and shaping best practices for safe operations and healthy lifestyles. One of such contests is the Russian Organisation of High Social Efficiency. The participation of PhosAgro’s facilities starts at the regional stage with submissions made in the category For Promoting a Healthy Lifestyle at Industrial Organisations. In 2022, the Company continued introducing employee support programmes (mental health support, online advice for personal circumstances, etc.) and programmes to promote health and well-being (telemedicine, healthy diets, emotional unwinding, etc.). All employees who have signed an employment contract with the Company benefit from long- term voluntary health insurance (VHI) covering a broad range of risks. The benefits include: health resort (rehabilitation) treatment at corporate resort centres in our regions of operation and countrywide; services of outpatient clinics and health posts (including those available 24/7) at the Company’s production sites, operated by corporate medical centres and private and state-run healthcare facilities; treatment (expensive, dental, medical counselling) at healthcare facilities in our regions of operation and countrywide. Safety Ideas Employee labour safety promotion regulations Once a quarter Once a quarter Once a quarter Once a year Once a year RUB 100,000 RUB 30,000 RUB 5,000 for every idea implemented RUB 15,000 RUB 125,000 RUB 50,000 for teams participating in the super final A new programme since 2022 aimed at: • engaging employees in the Public Scrutiny system (InSight mobile app); • showing leadership and commitment to occupational safety among employees of Apatit and its branches by “submitting improvement ideas” or “reporting hazardous situations”. RUB 15,000 RUB 10,000 RUB 5,000 The employee incentive system receives more financing and is improved on an annual basis, RUB 2,339,090 2,063,218 445,000 2022 2021 2020 Apart from that, the existing promotion programme includes: individual incentive programmes : • Best OHS Employee • Safety Ideas • Best Public Scrutiny User collective incentive programmes : • CEO’s OHS Achievement Award • Best OHS Business Unit Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 184 185 Strategic report Every day, canteens at the Company's facilities serve up to 600 people 2,670 vouchers to health resorts purchased by the Company in 2022 for employees and veterans RUB 2.2 bln allocated towards the programme to improve social and working conditions Health insurance contracts are signed annually as part of long- term cooperation with the SOGAZ insurance company. On-site clinics can provide accident and emergency care and specialist advice from a therapist, endocrinologist, neurologist, ophthalmologist, dentist and other doctors. PhosAgro also has mobile medical teams and organises screening sessions for its employees. The Company's facilities take part in federal level prevention campaigns, such as a high-profile all-Russian campaign called Cancer Watch: as part of it, 16 doctors of the National Medical Research Radiological Centre examined over 300 employees of PhosAgro’s Cherepovets facility. PhosAgro’s production sites organise initial and regular check-ups and examinations of staff involved in potentially hazardous and/ or dangerous activities. Since 2010, the Company has been running a programme to improve social and working conditions by conducting annual scheduled repairs in all buildings housing social and sanitary facilities, canteens, and workplaces. In 2010–2022, PhosAgro invested over RUB 2.2 bln in the programme. In 2022, the Company made further progress on its Occupational Health and Preventive Healthcare Programme by focusing on making workplaces more comfortable and putting in place break rooms. As regards workplace comfort, standard terms of reference were developed for the purchase of chairs for structural units, and a list of best models was compiled following their tests at structural units and polls at Apatit and its branches. Psychological Relief Room, another project aimed at reducing employee’s emotional stress, kicked off in 2021 at the Balakovo branch. Going forward, the project will be extended to other facilities. Starting from 2022, employees of all PhosAgro facilities have access to Telemed, a telemedicine service offered by SOGAZ. Furthermore, Apatit's Balakovo branch continues piloting the Doctor Nearby project run by DOCTIS , and collaboration is ongoing between Apatit and its branches with the DobroService platform offering online counselling on critical issues. In 2022, the Company introduced changes to its menu of dietary and health meals provided to employees working in harmful conditions. Quality of the meals is subject to regular control in cooperation with the trade union. Every day, canteens at the Company's facilities serve up to 600 people. The Company has a nutritionist on site to provide information and advice to employees, and all meals are assessed each quarter based on employee surveys, review of complaints, and canteen attendance levels. Employees can comment on the quality of meals in a real-time mode by completing a survey available in corporate canteens via a QR code. On top of that, we have a dedicated working group that attends all of Apatit’s sites to assess food quality and canteen conditions. As part of healthcare initiatives, staff canteens provide nutrition according to Diet No. 10 targeting patients with cardiovascular diseases. In 2021, PhosAgro started a pilot project to use a traffic light labelling system for foods as a way to promote healthy dieting among employees. Also since 2021, we have been providing and broadcasting cooking workshops. As part of preventive care and health promotion efforts for PhosAgro's employees and veterans in 2022, the Company purchased 2,670 vouchers for them to go to health resort facilities. In 2022, employees and their families received 947 free vouchers under the Wellness programme, with partial coverage of travel expenses to and from the recreation facility. Employees of the Company and their family members as well as veterans have year-round access to corporate health resorts at a reduced price. PhosAgro’s facilities have corporate fitness centres, which include game halls, gyms and swimming pools and are available to employees on a daily basis. Pools offer classes in water aerobics and swimming lessons, both very popular among employees. At the Cherepovets facility, the fitness centre is attended by an average of 3,000 people per month; on days of mass classes, attendance has reached up to 250 visits per day since 2019 (excluding periods when COVID-19 cases were on the rise). An annual sports contest (Spartakiad) is held for employees in 18 types of sports. Teams in football, volleyball and other sports represent the Company in various levels of competitions, including Russian national. Since 2020, the Cherepovets facility provides free psychological support to employees, with in-house psychologists available to them for counselling and advice. As part of the Employee Mental Health Support programme, the Company offers meetings in persons, online interviews, and comprehensive events such as webinars and training sessions to reduce conflicts in teams, improve their psychological resilience, and increase performance levels. Starting from 2022, psychological support is provided by in-house psychologists to employees of Apatit, its branches and subsidiaries. To promote traditional spiritual values, improve social and psychological climate in the team, and enhance emotional well-being, the Company does a lot to help build and reconstruct Orthodox churches. Those employees whose children are involved in the DROZD project (Educated and Healthy Children of Russia) annually take part in several joint training sessions and sports contests held among families. At the DROZD sports facilities, our employees can work out and get ready for GTO (Ready for Labour and Defence) fitness tests. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 186 187 Strategic report Case study Transformation of safety culture and OHS management system Since 2021, we have been running a three-year project called "Transformation of Safety Culture and OHS Management System". Project goals: • transforming the safety culture and developing OHS leadership; • developing, adapting and ensuring the sustainability of best practices in the field of safety culture and OHS management improvements; • learning how to arrange and carry out works associated with high OHS risks; • ensuring the sustainability of our performance and the relevance of our management system over the next five years; • reaching stage 3.1 as per Bradley curve (in 2021, we were at stage 2.2). The project covers key business units of Apatit, entities under management, subsidiaries and affiliates, and third-party contractors engaged by our production sites. In 2022, the project delivered its first results, with the level of safety for higher-risk activities improving by 30 % and remaining unchanged throughout the year. To maintain and replicate this standard across all its units, the Company established the Transformation Centre, which implements tools to help achieve the project’s goals. These tools include leadership visits, standard operating procedures, audits of hot work, gas hazardous and underground construction work, etc. In 2022, following an audit of the corporate work permit systems in place at the Cherepovets facility and Volkhov branch, PhosAgro resolved that a target model system must be developed, along with an assessment methodology (both are expected to be completed in 2023). Target programme Apatit's target programme for developing gas and mine rescue, fire-fighting and prevention activities for 2019–2022. In 2022, Apatit's target programme for developing gas and mine rescue, fire-fighting and prevention activities for 2019– 2022 was completed at all of Apatit’s branches. Total funds allocated for the programme stood at approximately RUB 237 mln Programme results: • improved training facilities and equipment of gas/mine rescue and fire-fighting units; • enhanced quality of hands-on training for young hires; • achieved compliance with gas, mine, fire rescue, and personnel training regulations; • re-equipped gas/mine rescue and fire-fighting units, new equipment and machinery purchased. As part of the programme: • headcount of the respective business units increased by 92 people, to 456 people • purchased: – equipment – 447 units, – machinery – 17 units, – gear – 579 units; • a new fire brigade station was created at the Kirovsk branch of Apatit; • two buildings were renovated to accommodate a gas rescue squad. Participated in personnel training initiatives — 396 people Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 188 189 Strategic report AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 1 The indicator was calculated as the ratio of the Scope 1 gross emissions under GRI 305-1 to the total output of finished and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of class 1–4 waste recycled and decontaminated to the total volume of class 1–4 waste. 3 The Group specific disclosure was calculated as the ratio of total pollutant emissions discharged into the atmosphere to the total output of finished and semi-finished products. 4 The Group specific disclosure was calculated as the ratio of waste water discharged into surface water bodies, including mine and pit waters, to the total output of finished and semi-finished products. 5 The Group specific disclosure was calculated as the ratio of total water withdrawal to the total output of finished and semi-finished products. Environmental review CLIMATE ENERGY EFFICIENCY WASTE Minimisation of Scope 2 GHG emissions to 794.7 kt of СО2-eq. as part of the Energy Efficiency Programme Waste recycling 2025: 40 % of hazard class 1–4 waste recycled and decontaminated AIR Minimisation of air emissions 2025: pollutant emissions 0.80 kg/t WATER Responsible water use 2025: waste water discharge into surface waters 4.16 m 3 /t BIODIVERSITY Preservation of biodiversity in regions of PhosAgro Group’s operation at a level securing sustainability Self-sufficiency in electricity supplies 42.9 % 38.8 % of hazard class 1–4 waste recycled and decontaminated2 Pollutant emissions 0.79 kg/t 3 Waste water discharge into surface waters 5.27 m 3 /t 4 Water withdrawal 6.42 m 3 /t 5 • Development of comprehensive programmes to protect biodiversity (Cherepovets, Volkhov, Kirovsk) • Release of young fish and larvae into water bodies across the Company’s regions of operation Gross emissions: Scope 1 4,909 kt of СО2-eq. Scope 2 821.6 kt of СО2-eq. Scope 1 emissions of СО2-eq. 133.1 kg of СО2-eq./t • Climate Agenda project • Contracting TGC-1 as a supplier of green energy generated by HPPs • Assessing the impact of the carbon border adjustment mechanism on the Company’s operating expenses • Low-carbon transition plan • Сo-processing of phosphogypsum and carbon dioxide • Upgrade of the lighting system to LED Construction of a heat and power plant with a 34 MW exhaust gas turbine and a water treatment system (Volkhov) • Enhanced ore processing (Kirovsk) • Use of phosphogypsum • Implementation of phosphogypsum conversion at Balakovo branch • Dust suppression of dusty surfaces (Kirovsk) • Project of upgrading the process to return synthesis and purge gas to the fuel gas system without sending ammonia-containing gases to burners of the steam superheater • Second stage of water use optimisation programme (Cherepovets) • Collection and treatment of seepage water from ANBP-2 tailing dump • Installation and upgrade of gas recovery equipment in upgraded and new shops (Volkhov) 2025: water withdrawal 5.16 m 3 /t Climate action and minimisation of GHG emissions 2028: gross emissions Scope 1 – 4,175.5 kt of СО2-eq. Scope 2 – 794.7 kt of СО2-eq. Targets 12.4, 13.1, 13.2 Targets 12.4, 13.1 Target 12.4 Targets 3.9, 12.4, 13.1 Targets 3.9, 6.3, 12.4 Targets 3.9, 15.1 2028: Scope 1 emissions – 109.1 kg of СО2-eq./t 1 18 % of the mining and processing plant’s output covered by green electricity Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 190 191 Strategic report Strategy SASB EM-MM-160a.1, RT-CH-410b.2 At PhosAgro, we attach much importance to environmental protection and safety, as well as climate risk management, putting every effort into all of these areas to secure the Company’s sustainable development and well- being of the regions across its geography. Our Strategy to 2025 is designed to observe strict compliance with legislative environmental responsibility standards and practices aimed at minimising the impact of the Company’s operations throughout the whole life cycle of a fertilizer, from mine to food products. We strive to produce fertilizers in a safe and eco-friendly manner, thus contributing to the sustainable agricultural development worldwide. Committed to continuous improvement, the Company keeps working to lessen the environmental impact of its production operations and across the value chain. The key priorities set out in PhosAgro’s Environmental Policy are careful use of natural resources and reduction of the environmental footprint. We had a comprehensive assessment of our operations, determining key focus areas of such impact, both direct and indirect, and weighed it against the UN Sustainable Development Goals (UN SDGs). Based on the assessment results, we mapped out six strategic focus areas of environment protection, including: Climate Energy efficiency Waste Air Water Biodiversity and consumption waste from our operations, we are now implementing a range of projects aimed at minimising waste generation and increasing the share of recycled waste. In the scope of the strategic objectives to minimise air emissions , PhosAgro is running a programme to re-equip production facilities and cut pollutant emissions. In addition, in 2020, we adopted the Water Strategy to minimise our impact on water bodies by means of lean treatment of resources: less water withdrawal and waste water discharge. As part of the Strategy, we assessed water use risks and opportunities, including potential scarcity of water resources, set targets for water withdrawal and waste water discharge and designed a detailed action plan for each site to achieve the targets. PhosAgro sticks to its biodiversity management system comprising the assessment of potential impact, interaction with a wide range of stakeholders, as well as monitoring and reporting practices. We believe that our requirements should be uniform both for us and our partners engaged in PhosAgro’s projects. Everything we require of ourselves equally applies to our counterparties and is enshrined in the Code of Conduct for Counterparties. Management approach GRI 3-3 Effective environmental management is key to PhosAgro’s long-term sustainability and indicative of the Company’s commitment to run a socially responsible business, balancing its obligations to a wide range of stakeholders. We adopted a unified approach to environmental management that relies on Since 2020, we have been implementing the Climate Strategy based on PhosAgro’s vision and expertise in GHG emissions management. The document reviews climate risks and opportunities extensively, setting targets for GHG emissions and presenting the low- carbon transition plan. The Company acts on the Energy Efficiency Programme designed to ensure compliance with the Climate Strategy and the Energy Efficiency and Energy Saving Policy tightly integrated into the Company’s Strategy to 2025. Strategy to 2025 also seeks to minimise waste generation substantially. Having developed a system for accumulating and analysing data on production Company-wide control Putting Strategy to 2025 into action and compliance with the Company’s environmental policies are overseen by the Strategy and Sustainable Development Committee that regularly reports on the Company’s progress to the Board of Directors. The Environmental Protection Department exercises executive control over the Company’s environmental activities. For PhosAgro’s Environmental Policy, see the Company's website Traditionally, we put a special focus on environmental matters and stand in unconditional support of the vulnerable and rare habitats across our geography, leaving them intact and carefully treating natural systems and resources. Our operations undergo a stringent assessment for compliance with the Environmental Policy and the Company’s internal regulations. A unified management system The consistency of PhosAgro’s activities aimed at environmental protection and strengthening of the Company’s environmental performance results from continuous development of the environmental management system that was recertified according to ISO 14001 in 2022. Environmental compliance Our environmental management system relies on strict compliance with applicable laws and regulations. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 192 193 Strategic report Our environmental management system is integrated with the Company’s overall management framework and is a key element in our approach to managing environmental responsibility Our strategic environmental protection goals are set out in the Company’s Strategy to 2025, climate and environmental agendas and their achievement is included in the KPIs of managers and senior executives. Environmental management system Environmental management framework Unit Management approach BOARD OF DIRECTORS LEVEL Board of Directors Defines the Company’s environmental policy and sets strategic goals to ensure environmental protection and reduce the negative impact of its operations Strategy and Sustainable Development Committee • Maintains and regularly assesses PhosAgro’s internal sustainability regulations and monitors their development, relevance, quality and efficiency, as well as compliance with applicable laws and internal sustainability objectives • Engages with key stakeholders and fosters healthy and sustainable communities across all regions of operation • Prepares recommendations to the Board of Directors on determining the Company’s strategic sustainability objectives GROUP MANAGEMENT LEVEL Department of Ecology and Environmental Management of JSC Apatit Is responsible for general management, organisation and coordination of efforts to continuously enhance environmental management OPERATIONAL LEVEL Environmental Control and Management Service Fulfils commitments to the ongoing environmental improvement and reduction of the environmental footprint Officers in charge of environmental protection • Production units, which have the greatest environmental impact, have introduced a procedure for identifying and assessing risks and opportunities. Based on the results, we develop measures to bring risks pertaining to significant environmental aspects to an acceptable level. • Managers and experts responsible for making operational and other decisions that may adversely affect the environment take a specially designed training course in environmental safety. Only specially trained employees are cleared to handle hazard class 1–4 waste. Compliance Environmental compliance is key to running a responsible business. PhosAgro's environmental management practices ensure our compliance with the applicable environmental and nature Spending on environmental protection, RUB mln Item 2020 2021 2022 Operating costs of environmental protection (form 4-OS) 4,825.3 5,510.3 6,534.6 Investments in fixed assets aimed at environmental protection (form 18-KS) 3,120.4 4,168.8 2,396.7 Environmental impact payments 174.6 178.4 192.6 Environmental fines and damages 0.02 4.258 2.464 Total 8,120.3 9,860.7 9,126.4 The slight decline in expenses in 2022 was due to the fact that the bulk of CAPEX associated with the Company's key environmental investment project, the aluminium fluoride production upgrade in Cherepovets, was incurred in 2021. In 2022, a considerable part of investment projects with an environmental impact were at the design stage. The Company took steps to remedy the harm caused by an emergency in 2019 by committing RUB 2,274,000 to the reproduction of aquatic biological resources in 2022. In 2022, local bodies of the Federal Service for Supervision of Natural Resources carried out nine unscheduled audits of Apatit, including six audits of class 1 capital conservation regulations. To that end, the Company has developed an internal and external control framework, which includes internal audit and external compliance reviews, a reporting system designed in accordance with legislative requirements, and a staff training system. All our facilities that have an adverse environmental impact are included in dedicated state registers, with relevant categories assigned to them. PhosAgro has all necessary permits in place for each of these facilities. In 2022, the environmental management system was recertified across the Company's production sites and was found to be in full compliance with ISO 14001. The full text of the certificate is available on the Company's website PhosAgro’s environmental management system embraces all management levels and all stages of the product’s life-cycle, from R&D to manufacturing and product application by customers. This approach ensures uniform management requirements across all aspects of the Company’s operations. The facilities have also put in place a procedure to manage internal audits. Every year, they develop internal audit programmes taking into account the environmental significance of the reviewed processes, changes affecting the facility and previous audit outcomes. The audits provide input data for the management to analyse environmental management efficiency. None of PhosAgro’s enterprises uses ozone-depleting substances in the production process. A small amount (not more than 250 kg/year) of carbon tetrachloride (CCl 4 ) is used for some laboratory testing. We do not undertake cross-border hazardous waste transportation and our production sites are not situated in protected areas. Hence, there are no significant restrictions on our operations. construction projects, resulting in Apatit being held administratively liable under Articles 8.1 and 8.2 of the Code of Administrative Offences of the Russian Federation and required to pay a penalty of RUB 190,000. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 194 195 Strategic report Environmental impact payments, RUB mln 2020 2021 2022 ATMOSPHERE MPE 2.901 2.440 2.797 TPE 0 0 0 O-limit 0 0.018 2.355 AQUATIC ENVIRONMENT SPD 2.165 3.886 4.864 TPD O-limit 0 0 0 WASTE Limit 169.487 172.091 182.606 O-limit 0 0 0 Total 174.553 178.416 192.620 Over-limit 0 0.018 2.355 Share of over-limit in total payments, % 0 0.01 1.22 In 2022, over-limit payments accounted for 1.22% of total environmental impact payments. An over-limit payment was calculated and paid due to exceeding the permissible emission limit for nitrogen oxides by one of the emission sources at the Cherepovets facility. Nevertheless, the increase in the Company's environmental impact payments in 2022 was 8%, while the statutory indexation rate for environmental impact payments in 2022 was set at 10%, which points to the effectiveness of our efforts to reduce emissions. Assessment, analysis, and monitoring Continuous improvement is inherent in our environmental management. The Company identifies areas for improvement by reviewing its management system using an effective mechanism, which includes external and internal audits of the environmental management system (EMS), activities to monitor and assess the Company's performance, including by a wide range of stakeholders, and the analysis and assessment of the Company’s performance by the Company’s management. These efforts enable the Company to work out corrective action plans and proposals on how to develop and improve the EMS. Stakeholder engagement is essential for the Company’s planning. Public hearings are a legitimate and effective mechanism for establishing dialogue with stakeholders using a discussion platform to express their opinions and make suggestions on the initiatives under consideration. This mechanism has a positive impact on the decision-making process and improves its efficiency. Engaging the general public and a wide array of stakeholders in discussion plays an important role and helps ensure that all points of view are considered. When assessing the Company’s performance, much attention is paid to the analysis of ESG ratings and investor feedback The list of public hearings is available on the Company's website PhosAgro public hearings coverage Number of public hearings 12 15 13 2022 2021 2020 Risks and opportunities Environmental risk management is an integral part of the Company's risk governance framework. The following strategic risks affect our environmental protection objectives: 7 environmental risks; 13 regulatory risks; 19 climate risks. For more information, see the Strategic Risks section on page 70. The environmental protection risks include: Failure to achieve energy efficiency targets 1 2 The Company develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information about what we do on this front. Non-compliance with the existing environmental impact regulations Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 196 197 Strategic report Climate SASB RT-CH-110a.2 / EM-MM-110a.2 Our targets Reduce total GHG emissions (Scope 1, 2, 3) by 14 % by 2028 vs 2018 Reduce GHG emissions per tonne of finished and semi-finished products (Scope 1) by 31 % by 2028 vs 2018 2022 highlights Scope 1 emissions 4,909.0 kt of CO 2 -eq. Reduction of specific Scope 1 emissions 2.4 kt of CO 2 -eq. per tonne of finished and semi-finished products by 2021 18 % of phosphate rock and nepheline concentrate. We organised a “pilot site” of circa 650 ha of a carbon farm as part of a carbon footprint compensation project in the Vologda region. PhosAgro has LEAD status under the UN Global Compact and is a participant of the Climate Ambition, an initiative launched under the UN Global Compact. In 2021, the Company partnered with CGI Russia (Climate Governance Initiative), an organisation established by the World Economic Forum to raise awareness and boost efficiency of boards of directors with respect to climate change. The organisation assists in developing climate strategies and implementing them, as well as integrating the climate change agenda into day-to-day and long-term business decisions. Strategy and management approach GRI 3-3 The Company focuses on climate change in line with the double materiality principle. On the one hand, it identifies and assesses the impact of its operations on climate all along the value chain from extraction of raw materials to consumption of finished products. On the other hand, it projects how climate change affects PhosAgro's business, strategy, and financial planning. Climate matters feature prominently in PhosAgro Group’s strategic and investment decisions, as well as in its day-to-day business management. In 2022, we developed mechanisms to integrate the internal carbon price into the evaluation of investment projects and introduced them in early 2023. The Company has identified, assessed, and prioritised climate risks, establishing their short, medium and long term consequences for its production and business processes. We make our strategic plans and day-to- day management decisions with full awareness of the nature and extent of climate impact (both environmental and political) on the Company’s business, strategy, and financial planning. The Company develops and takes systemic measures to reduce its carbon footprint and closely interacts with partners across its value chain (suppliers and consumers) and other stakeholders in Russia and worldwide. PhosAgro's Climate Strategy was adopted in 2020. It is a comprehensive document setting out the Company's climate policy in the face of growing climate change and uncertainty. Starting from 2021, PhosAgro publishes an annual TCFD report fully addressing the climate aspects of its operations, strategy, risks, opportunities, governance, performance, and metrics. In June 2021, PhosAgro publicly declared support for the TCFD and its recommendations. The Company’s representatives are members of climate change and sustainable development task and expert groups instituted by government authorities and non- governmental organisations, and are actively engaged in discussions on current global challenges. • Setting up targets to minimise GHG emissions in line with the Science Based Targets initiative; using climate scenario analysis • Integrating climate risks into the comprehensive risk management framework for investment and day-to-day business activities • Focusing not only on technology-related measures, but also on proper organisation and management, as well as changes in the social and personnel policy Main principles of PhosAgro’s Climate Strategy • to improve energy efficiency and environmental performance of the key production processes; • to reduce energy and carbon intensity per unit of output; • to enter into new emerging markets for green products; • to retain and expand the existing market niches by ensuring PhosAgro’s competitive edge in terms of energy and carbon intensity. in the effort to reduce GHG emissions • Identifying not only risks, but also attractive climate-related investment opportunities and making long-term plans for them • Promoting awareness of the Company's climate initiatives and plans, as well as cooperation in specific areas. The Strategy has set the following goals: • to minimise GHG emissions while increasing output; Gross and specific GHG emissions (Scope 1 and 2) across the Group, СО2-eq. Indicator 2018 2020 2021 2022 2028 Gross GHG emissions (Scope 1), kt 4,624.6 4,856.5 4,775.8 4,909.0 4,175.5 Gross GHG emissions (Scope 2), kt 924.1 978.3 893.3 821.6 794.7 Specific GHG emissions (Scope 1), kg/t 150.5 143.6 135.5 133.1 109.1 The full text of our 2020 TCFD report is available on the Company's website Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 198 199 Strategic report PhosAgro is currently focused on creating particular metrics reflecting the impact of climate action in production and management processes on financial indicators. The Company has analysed the impact of the carbon border adjustment mechanism (CBAM) on PhosAgro’s operating expenses. The new mechanism will cover Russian industrial products, including, most likely, mineral fertilizers. Given the uncertainties as to the emission scopes the CBAM will apply to, the ability to account for PhosAgro’s individual emission levels, and the changing carbon dioxide prices, we have determined the estimated ceiling and floor of the mechanism’s impact on the Company’s financial performance in 2023–2030. Actions to deliver the Climate Strategy The Climate Agenda project was implemented to create the climate action management system and push forward the low- carbon transition plan. In 2022, we developed technical and technological initiatives to reduce direct GHG emissions with due regard to their economics. To this end, we engaged one of the global leaders among consulting firms. Risks and opportunities GRI 201-2 PhosAgro identifies its climate risks and opportunities taking account of climate change. The process is influenced by physical (changes in natural processes or phenomena) and transitional (changes in the policy and regulation with a view to fulfilling low-carbon transition) factors of various nature. Risks R1 – disruptions in production processes and logistics operations due to increasing acute climatic effects and other climate-related factors. R2 – flaws in supply chains, construction design, health and safety; negative environmental The Company's experts continued to explore options for absorbing greenhouse gases in order to select the most suitable ones. In 2022, we launched the Carbon Footprint Compensation project aimed at absorbing (compensating for) GHG emissions, with a carbon footprint compensation farm being set up in the Vologda region. Its pilot site was organised in 2022. Apart from that, the following has been developed as part of the project: rules for using the internal carbon price; guidelines and methodology for calculating the carbon footprint of products (validated by a reputable international certification body); a procedure for cooperation across the value chain involving suppliers, customers, and other stakeholders; a mechanism for the transition to low- carbon energy sources and acquisition of green energy. footprint and reduced flows of ecosystem services; lower resilience of infrastructure and communications due to increasing climatic effects. R3 – PhosAgro Group’s failure to comply with regulations reducing its negative environmental footprint (following the adoption of the carbon border adjustment mechanism). R4 – deterioration of the Company’s sustainability reputation. R5 – increased costs and losses (as a result of customers’ failure to meet their obligations, rising prices for feedstock, materials and services, higher borrowing rates) and shrinking revenues (as a result of a decline in sales, customers, countries and regions of operation). Opportunities O1 – boosting PhosAgro Group’s appeal as an environmentally and climatically responsible supplier of products with a positive climate profile. O2 – improved logistics driven by the new export opportunities amid shortened seasonal freeze-up of rivers and lakes due to climate change. O3 – new financial products that open up new sources of cheaper funding (such as green bonds) for companies that embraced environmental and climate sustainability. Low-carbon transition plan The low-carbon transition plan is based on the specialised research data and seeks to support economic development of PhosAgro that builds on the priority of keeping GHG emissions to a minimum. It is implemented to ensure that the GHG emission reduction targets are delivered across all scopes. Climate scenario analysis The Company views climate scenario analysis as a tool to make its climate strategy resilient to uncertainties and risks related to climate change. In line with that, we adopted climate scenarios and determined respective scenario parameters that are most probable and significant for the Company in the short, medium and long term. PhosAgro assessed the impact of climate-related risks and opportunities on its operations under two climate change scenarios: global warming of 2°С and 4°С. The key features of the scenarios are: • 2°С scenario is expected to result in stringent climate policy measures that will increase market volatility (goods, services, finances, etc.). This is projected to bring about low-carbon transition, putting in place mechanisms of a low-carbon economy that will slow down physical climate-related impacts going forward; • 4°С scenario is expected to result in less stringent climate policy measures as compared to the 2°С scenario, triggering faster physical climate-related changes. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 200 201 Strategic report Key initiatives in 2022 Focus areas Climate-related risk and opportunities Description and results Introduce HR actions to support the implementation of PhosAgro’s Climate Strategy, including additional training to improve staff competence and raise staff awareness in climate change R1, R2, O1 Our employees took part in webinars dedicated to sustainable development and corporate climate responsibility. Include climate metrics in incentive schemes of employees R2, O1 We have continued to develop climate KPIs; they are planned to be aligned with the parameters of investment projects aimed at minimising and offsetting GHG emissions. Establish a task group on reduction of GHG emissions and negative effect of climate change on the efficiency of management and production processes R1, R2 , R3 , O1 By implementing the Climate Agenda project we took forward thoroughly researched and technically feasible proposals to reduce the Company's climate footprint, minimise risks and maximise opportunities related to growing climate change impacts (technology, equipment, energy generation, operations, etc.). Develop a set of technological measures to mitigate the negative impact of production processes on climate R1, R2 Technical and technological initiatives to reduce direct GHG emissions were developed and accepted for implementation and are now pending approval at a meeting on investment feasibility at Apaptit. To, we engaged one of the global leaders among consulting firms. Approve a comprehensive plan of interaction with value chain participants R1, R2 , R3 , R4 , R5 , O1 , O2 , O3 A plan of interaction with value chain participants was developed and adopted for implementation (company-customer and supplier-customer interactions). Harmonise strategic documents (the Company's Development Strategy to 2025), financial planning and other policies and procedures with the low-carbon transition strategy and plan R1, R2 , R3 , R4 , R5 , O1 , O2 , O3 Climate impact matters and the risks and opportunities arising from climate change were integrated into trainings, matters disclosed in the reports, data book, and considered by the Board committee and Board of Directors, which helps to embed this topic into PhosAgro's culture. Arrange for identification, assessment, management and monitoring of climate-related risks R1, R2 , R3 , R4 , R5 , O1 , O2 , O3 Climate change risks were integrated into PhosAgro’s risk management framework. Factor in climate change impacts in industrial engineering projects to build new facilities and upgrade transport infrastructure R1, R2 At present, there is no need to proceed with this initiative. Reference documents used in engineering provide a sufficient margin of safety, with no factors driving accelerated climate changes observed. We identify, assess, and manage climate risks within our comprehensive risk management framework. Covered value chain stages – direct operations up and down the value chain. Climate risk management process is baked in the company-wide risk management processes. Process description The Company’s climate risk management forms an integral part of its comprehensive risk management system (RMS), with all its elements embedded in PhosAgro’s PhosAgro identified projected changes in climate risks and opportunities under the adopted climate scenarios based on risks, opportunities, scenario parameters, and time frames. In doing so, the Company focused on its operations, strategy, and financial planning. Processes to identify and assess climate change risks are being integrated throughout the value chain – from design, procurement and apatite-nepheline ore mining to finished product delivery existing structure. The RMS relies on the Company’s Risk Management and Internal Control Policy and other internal policies and procedures, as well as the applicable Russian and international standards. The assessment is done quarterly. Covered time horizon(s) – short-term, medium-term, long-term. Climate risk priority map Emerging Probability Low Low Medium High High Materiality Relevant Immaterial Manageable Immaterial Amenable Medium Manageable Manageable Immaterial R2 R4 R3 R1 R5 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 202 203 Strategic report Focus areas Climate-related risk and opportunities Description and results Support R&D developments related to the use of low-carbon energy and low-carbon production Explore options for GHG capture and select the most efficient ones to be employed by the Company R3, R4 , R5 , O1 In 2022, NIUIF developed, patented, tested and prepared for state registration in 2023 several grades of coated fertilizers with a low carbon footprint. In 2021, the Russian Academy of Sciences, PhosAgro, and the Vologda region signed a cooperation agreement to monitor climate change and minimise the environmental impact. The project envisages efforts in low-carbon transition, including regional monitoring of GHG emissions. Promising methods of farming focused on emissions prevention and carbon sequestration by soils will be developed and implemented in Russia. New forests and fields will be planted and created in the Vologda region to capture and store carbon. Their capacity is estimated at 0.7 mt of CO 2 per year. We organised a “pilot site” in a carbon farm in 2022. Introduce regular climate-related reporting in accordance with Russian and international standards R3, R4 , O1 Since 2020, the Company has been preparing climate reports in line with the TCFD standards. GHG emission reporting for 2021 was verified for the first time. Introduce an automated system to collect and process primary climate data R3, R4 , O1 Introducing a software solution for automated collection of input data and calculation of GHG emissions (total volumes by site and product). Guidelines for assessing products’ carbon footprint were developed and validated by a reputable international certification body. Collaborate with international organisations and join climate initiatives R4, O1 The Company participates in Climate Ambition, an initiative launched under the UN Global Compact; teams up with Climate Governance Initiative Russia; supports the TCFD; and takes part in task and expert groups of government authorities and non- governmental organisations. Plans for 2023 Focus areas Climate-related risk and opportunities Description, current status, and expected outcomes Implement a set of technological measures to mitigate the negative impact of production processes on climate R1, R2 In 2021–2022, technical and technological initiatives to reduce direct GHG emissions were developed as part of the PhosAgro Climate Agenda project. In 2023, management decisions are expected to be made on their implementation, including the development of relevant business plans. Prepare feasibility studies (business projects) for innovative climate- resilient products based on carbon dioxide utilisation. Develop production in high-potential areas R3, R4 , R5 , O1 Diversifying production to facilitate expansion into new markets and improve the climate-related performance on the back of new products better meeting consumer needs and having a positive climate profile. Reduce the negative impacts of climate change on operational processes such as disruptions in transportation of products and raw materials, increased water consumption for production needs, increased volume of waste water, product dusting, failures to use equipment in accordance with operating instructions and failures to create proper workplace conditions. R1, R2 , O2 Mitigating climate change risks for the Group's operating processes. Work is in progress to assess the risks and identify actions needed to manage them. A detailed description of climate risks and opportunities, in 2022 remained virtually unchanged and is presented in the TCFD report on the Company’s website Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 204 205 Strategic report 1 Greenhouse gas emissions were calculated in line with the Guidelines for Climate Impact Management of PJSC PhosAgro and other Group Entities (using the IPCC methodology). Energy indirect GHG emissions (Scope 2) are related to production of electricity and heat brought in from third parties to meet the Company’s needs. In 2022, we changed our approach to calculating Scope 2 GHG emissions related to electricity consumption. In 2020–2021, the methodology relied on emission factors defined by the International Energy Agency (IEA), while starting 2022, we use the energy indirect GHG emission factor for the First Synchronous Zone of the Russian Energy System defined by the Trading System Administrator of the Wholesale Electricity and Capacity Market 2 Including electricity from renewable energy sources. PhosAgro’s climate metrics are aligned with the goals of the Climate Strategy approved by its Board of Directors. The Company is working to expand and enhance the quality of climate-related measurements. Most metrics are locked on targets which are aligned with the goals of the Climate Strategy and other commitments of the Company. The metrics are monitored and reported annually to stakeholders. The Company’s primary focus is on GHG emissions (carbon dioxide CO2, methane CH4 and nitrous oxide N2O) in all three Scopes (1, 2, and 3). We calculate greenhouse gas emissions in accordance with the international guidelines: • 2006 IPCC Guidelines for National Greenhouse Gas Inventories; • The Greenhouse Gas Protocol: Scope 2 Guidance; • The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition); • ISO 14064-1 – Specification with Guidance at the Organisation Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals. Calculations are based on global warming projections of the IPCC report “Climate Change 2021: The Physical Science Basis”. The Company's efforts include end- to-end monitoring of raw data (Scopes 1, 2 and 3) and analysis of supply chain participants’ data (Scopes 2 and 3). The targets are set in line with minimum qualitative and quantitative criteria based on RCP 2.6, a representative concentration pathway for reduction of global anthropogenic emissions, in order to keep global temperature rise below 2°C by 2100. Direct (Scope 1) GHG emissions, СО2-eq. GRI 305-1, 305-4, SASB RT-CH-110a.1 / EM-MM-110a.1 Assets 2020 1 2021 1 2022 Gross emissions of the Kirovsk branch, kt 655.7 665.8 690.9 GHG emissions of the Kirovsk branch, kg per tonne of finished and semi-finished products 56.3 56.7 57.7 Gross emissions of the Balakovo branch, kt 225.3 238.0 236.6 GHG emissions of the Balakovo branch, kg per tonne of finished and semi-finished products 36.9 39.4 41.5 Gross emissions of the Volkhov branch, kt 155.6 155.2 191.5 GHG emissions of the Volkhov branch, kg per tonne of finished and semi-finished products 250.7 135.0 71.8 Apatit (Vologda region), gross emissions, kt 3,820.0 3,716.7 3 790.0 GHG emissions of Apatit (Vologda region), kg per tonne of finished and semi-finished products 247.0 227.7 229.1 Total gross emissions, kt 4,856.5 4,775.8 4,909.0 Total GHG emissions, kg per tonne of finished and semi-finished products 143.6 135.5 133.1 METRICS AND TARGETS Indirect (Scope 2) GHG emissions, СО2-eq. 1 GR I 305-2, 305-4 Assets 2020 2021 2022 Gross emissions of the Kirovsk branch, kt 723.9 622.5 2 588.2 2 GHG emissions of the Kirovsk branch, kg per tonne of finished and semi-finished products 62.2 53.0 49.1 Gross emissions of the Balakovo branch, kt 51.1 45.3 51.9 GHG emissions of the Balakovo branch, kg per tonne of finished and semi-finished products 8.4 7.5 9.1 Gross emissions of the Volkhov branch, kt 66.0 80.1 44.6 GHG emissions of the Volkhov branch, kg per tonne of finished and semi-finished products 106.2 69.7 16.7 Apatit (Vologda region), gross emissions, kt 137.3 145.4 136.9 GHG emissions of Apatit (Vologda region), kg per tonne of finished and semi- finished products 8.9 8.9 8.3 Total gross emissions, kt 978.3 893.3 821.6 Total GHG emissions, kg per tonne of finished and semi-finished products 28.9 25.3 22.3 1 Preparation of an inventory of greenhouse gas emissions as part of developing the Guidelines for Climate Impact Management of PJSC PhosAgro and other Group Entities identified new sources of emissions, resulting in a recalculation of data for 2020–2021 for consistency. Calculation of other indirect GHG emissions GRI 305-3 Category GHG emissions, t of СО2-eq. Share in total other indirect emissions, % 2020 2021 2022 2020 2021 2022 Purchased goods and services 3,118,660 1,963,324 2,425,375 23.47 16.21 18.28 Fuel- and energy-related activities not included in Scope 1 or Scope 2 328,501 407,740 350,275 2.48 3.37 2.64 Processing of sold products 764,119 704,402 720,223 5.75 5.82 5.43 Use of sold products 9,075,575 9,035,283 9,768,958 68.30 74.60 73.65 Total 13,286,855 12,110,749 13,264,831 100.00 100.00 100.00 Scope 3 greenhouse gas emissions were calculated for the above categories after an expert review identified them to be the most significant emission sources for the Company. Scope 3 GHG emissions, СО2-eq. GRI 305-3, 305-4 Category 2020 2021 2022 Total gross emissions of production assets, kt 13,286.9 12,110.7 13,264.8 Total GHG emissions of production assets, kg per tonne of finished and semi- finished products 392.7 343.6 359.8 GRI 305-2, GRI 305-4 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 206 207 Strategic report 1 The indicator was calculated as the ratio of the sum of Scope 1 and 2 gross emissions under GRI 305-1 and GRI 305-2 respectively to PhosAgro Group revenue according to consolidated financial statements converted into USD mln at monthly average USD/ RUB exchange rates. 2 Preparation of an inventory of greenhouse gas emissions as part of development of the Guidelines for Climate Impact Management of PJSC PhosAgro and other Group Entities identified new sources of emissions, resulting in a recalculation of data for 2020–2021 for consistency. 3 The indicator was calculated as the ratio of the sum of Scope 1 and 2 gross emissions under GRI 305-1 and GRI 305-2 respectively to the total number of full-time employees under GRI 2-7. GRI 305-5 We have chosen 2018 as the base year for calculations because it was the Company’s first GHG inventory year, and given the need to set GHG reduction targets for all three scopes based on the available emission data. In 2018, GHG emissions were as follows: direct GHG emissions (Scope 1) – 4,624.6 kt of CO2-eq., indirect GHG emissions (Scope 2) – 924.1 kt of CO2-eq., and other indirect GHG emissions (Scope 3) – 11,413.8 kt of CO2-eq. In 2022, Scope 1 GHG emissions declined by 17.3 kg/t, or 11.5%, vs 2018. In 2022, the reduction in total Scope 1 GHG emissions thanks to lower emissions per unit of finished and semi-finished products excluding the production volume growth totalled 638.9 kt vs the base year. The reduction in emissions was primarily driven by the Energy Efficiency Programme and above all the heat and power plant project at the Volkhov branch. For energy indirect (Scope 2) emissions, the reduction was 7.8 kg/t (or 25.9%) vs the 2018 level; the effect for total Scope 2 emissions excluding the production volume growth stood at 287 kt compared to the base year. The reduction was achieved thanks to the green electricity procured by the Kirovsk branch of Apatit, as well as energy efficiency initiatives. Total Scope 3 GHG emissions were up by 1,851 kt in 2022 vs 2018, or by 16.2%, reflecting increased product shipments and higher consumption of input resources and, consequently, their total carbon intensity. Excluding the production growth effect, Scope 3 GHG emissions decreased by 427.4 kt vs 2018 thanks to the reduction of emissions per unit of finished and semi-finished products (by 3%). The values of Scope 3 GHG emissions for 2020 and 2021 differ from the data previously provided by the Company in its CDP questionnaires for respective periods. The main reason for such changes are adjustments made to the calculation methodology following approval of the Guidelines for Climate Impact Management of PJSC PhosAgro and other Group Entities. Furthermore, the value for 2021 was adjusted due to a technical error identified in the Use of Sold Products category as part of a verification process. List and description of existing metrics introduced for the monitoring of performance under the climate strategy Metric 20202 20212 2022 Gross global emissions (Scopes 1 and 2) per currency unit of total revenue (GRI 305-4) 1 , t of CO2-eq. / USD mln 1,654.8 993.1 693.5 Gross global emissions (Scope 1 and 2) per FTE (GRI 305-4) 3 , t of CO2-eq. / FTE 326.1 309.4 288.8 Electricity purchased per unit of finished and semi-finished products, ‘000 kWh / t 0.068 0.066 0.062 Energy efficiency improvement costs, RUB mln 10,500.0 17.4 3,044.1 Share of feedstock suppliers providing necessary input data on GHG emissions (Scope 3), % 4.0 2.7 7.5 Energy efficiency 2022 highlights Consumption of all types of energy resources per tonne of finished and semi- finished products came in at 2.33 GJ/t In 2022, the consumption of all types of energy resources per tonne of finished and semi-finished products decreased by 1.27 % to 2.33 GJ/t. The reduction was underpinned by the implementation of the Company’s Strategy to 2025 and Energy Efficiency Programme. The decrease in per unit energy consumption vs the data disclosed in reports for Our target Reduce Scope 2 GHG emissions to 794.7 kt of СО₂-eq . by 2028 the previous years and recalculation of values for comparable periods were due to the application of a new energy resource accounting methodology. Scientifically justified changes in the accounting methodology that will be described in more detail in this section could be introduced thanks to the implementation of the first stage of the project to analyse and upgrade the energy management system. These changes enabled PhosAgro to enhance the transparency and completeness of information disclosed to stakeholders with respect to the consumption of energy resources (for example, natural gas) typical for the Company and mineral fertilizer industry. This unlocks new opportunities for developing a more nuanced understanding of all types of energy resources consumed by the Company. The Company will continue delivering on the project, as it will help PhosAgro achieve its energy efficiency and GHG emission minimisation goals. The reporting year saw PhosAgro’s self-sufficiency in electricity increase by 2.6% to 42.9 % The key driver in 2022 was the completion of construction and the ramp-up of the heat and power plant in Volkhov to its design capacity. Going forward, the Company will continue developing in-house power generation. We started testing a solar power generation technology at the Company’s facility in Balakovo to assess the viability of a further scale-up for the industrial solution leveraged since 2021. The tests will run until 3Q 2023. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 208 209 Strategic report The Company pays particular attention to energy efficiency risks. A sufficient and reliable energy supply is a material aspect and major concern for us. We thoroughly explore all opportunities to transition to renewable energy: among other things, in 2022, we purchased electricity generated by hydroelectric power plants on the Kola Peninsula. 1 Risk of Scope 2 GHG emissions to be included in carbon regulation in the EU and other jurisdictions. The Company’s energy efficiency directly affects Scope 2 GHG emissions, which poses a potential risk, for example after full- scale implementation of carbon border adjustment mechanisms. 2 Market availability of electricity from renewable energy sources. The Company continuously monitors the market to ensure a sufficient supply of electricity from renewable energy sources. 3 Key initiatives in 2022 PROJECT DESCRIPTION AND RESULTS EXPENDITURES, RUB MLN COMPLETION Balakovo Installation of frequency converters on chemically treated water pumps Reduced electricity consumption 1.8 4Q Balakovo Upgrade of the lighting system to LED at wet-process phosphoric acid sections 3 and 4 Reduced electricity consumption 2.0 4Q Volkhov Construction of a heat and power plant with a 34 MW high- efficiency electric turbine and a water treatment system at Apatit’s Volkhov branch Replacement of third-party electricity supply with in-house generation through utilisation of sulphuric acid production steam 3,018.0 2Q Kirovsk Upgrade of drum drier sections, with thermal insulation replaced, stage 1 (four drum driers out of seven) Reduced heat losses from drum drier surface and lower per unit consumption of fuel oil 7.0 3Q Cherepovets Upgrade of the lighting system to LED at the pyrite cinder storage facility Reduced electricity consumption 15.3 4Q Initiatives planned for 2023 PROJECT DESCRIPTION AND RESULTS EXPENDITURES, RUB MLN COMPLETION Kirovsk Upgrade of the Rasvumchorrsky mine’s compressor station Lower cost of compressed air production as a result of reductions in per unit electricity consumption 105.7 2Q Kirovsk Upgrade of the lighting system to LED at ANBP-2 of Apatit’s Kirovsk branch A 4.8 mln kWh reduction in annual electricity consumption, lower maintenance and repair costs 48.9 2Q Kirovsk Upgrade of drum drier sections, with thermal insulation replaced, stage 2 (three drum driers out of seven) Reduced heat losses and per unit consumption of fuel oil in concentrate drying 7.0 4Q Cherepovets Optimisation of the heat supply system at the production site Ca. 2.5 mln kWh of annual reduction in electricity consumption 8.0 4Q Cherepovets Use of circulating water to cool feed water pumps Reduced river water consumption with no discharges into the sewer system 10.6 4Q The initiatives set out in the Energy Efficiency Programme are aimed at improving energy efficiency, developing energy management at each production site, and achieving strategic objectives in the following focus areas: In 2022, PhosAgro continued to follow the Climate Strategy approved by the Board of Directors, the Energy Efficiency and Energy Saving Policy, and the Energy Efficiency Programme, which are tightly integrated into the Company’s Strategy to 2025. The Energy Efficiency and Energy Saving Policy sets out the following key goals: continuously improving energy efficiency; using energy resources in a sustainable and efficient manner; streamlining the energy management process for all types of operating activities. Strategy and management approach GRI 3-3, 302-4 In 2022, we implemented comprehensive energy efficiency projects at all of our sites. in-house power generation through utilisation of sulphuric acid production steam; ; increase in the share of renewable energy sources; introduction oftechnologies aimed at loss reduction and energy savings (e.g. LED lighting, frequency converters, less heat energy losses). Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 210 211 Strategic report The energy efficiency metrics are used to monitor the Company’s progress towards its energy efficiency improvement target and are set forth in PhosAgro’s Energy Efficiency Programme and Action Plan, which helps keep track of electricity generation and consumption, energy intensity, etc. The energy efficiency metrics are based on PhosAgro’s raw data and are calculated in accordance with the approved statistical methodologies. The Company prepares its energy efficiency reports in accordance with the GRI 302: Energy 2016 standard. In 2022, the Company’s production facilities were 42.9% self-sufficient in terms of electricity needs, which is 2.6% more than in 2021. In absolute terms, the electricity generated by PhosAgro went up by 150 mln kWh year-on-year, driven by the commissioning of new power generating facilities at the Volkhov branch. Total electricity consumption grew by 115 mln kWh year-on-year, which is attributable to the commissioning of new production facilities at the Volkhov branch. In 2023, the share of electricity generated in-house is likely to further increase due to the ramp-up to design capacity of the heat and power plant in Volkhov. In 2022, the volume of carbon- free electricity used in the production of phosphate rock at the Kirovsk branch grew to 300 mln kWh. As a result, green electricity from hydroelectric power plants supplied under an agreement with TGC-1 covers 17.8% of the plant’s output METRICS AND HIGHLIGHTS Item Unit Total for production facilities 2020 2021 2022 LNG Consumption t 2,273.4 2,951.57 2,380.30 FUEL OIL Consumption t 146,785.8 151,291.8 152,895.5 HEATING OIL Consumption t 725.50 779.4 766.4 DIESEL FUEL Consumption t 53,054.25 55,695.87 58,276.73 1 Calculations of total energy consumption include only gas consumed as fuel, whereas gas consumed as feedstock for ammonia production is provided for illustrative purposes and excluded from further calculations of total energy consumption (in GJ), as it is not used as an energy resource. 2 Starting 2022, the Company excludes natural gas used as feedstock for ammonia production from the calculation of per unit energy consumption. Based on the principle of comparability, the data for 2020–2021 was recalculated using the new methodology.. 3 To convert energy consumption values into joules, the coefficients on the Berkeley Institute (USA) website were used (https://w.astro. berkeley.edu/~wright/fuel_energy.html). 4 Starting 2022, the Company calculates consumption of heating oil (in J) using a ratio of 46.2, whereas previously it used a ratio of 44. Based on the principle of comparability, the data for 2020–2021 was recalculated using the new methodology. 5 Starting 2022, the Company calculates total and per unit energy consumption excluding natural gas used as feedstock for ammonia production, as well as heat and electricity produced by the Company for its own consumption. Based on the principle of comparability, the data for 2020–2021 was recalculated using the new methodology. PhosAgro’s energy consumption GRI 302-1, 302-3, SASB RT-CH-130a.1 / EM-MM-130a.1 Item Unit Total for production facilities 2020 2021 2022 ELECTRICITY Purchased electricity, including mln kWh 2,300.77 2,326.63 2,303.26 Purchased from renewable sources mln kWh - 299.00 300.00 Purchased per unit of finished and semi- finished products ‘000 kWh / t 0.068 0.066 0.062 HEAT ENERGY Purchased (in hot water) '000 Gcal 374.54 438.22 352.07 Supplied (in hot water) '000 Gcal 200.78 161.23 187.49 Exhaust steam '000 Gcal 8,091.16 8,538.81 8,923.70 NATURAL GAS As feedstock for ammonia production mln m 3 1,953.86 1,926.10 1,968.06 As fuel, etc. mln m 3 746.02 730.12 771.72 Total mln m 3 2,699.88 2,656.22 2,739.78 1 Consumption per unit of finished and semi- finished products 2 '000 m 3 / t 0.022 0.021 0.021 PhosAgro Group's energy consumption, GJ 3 GRI 302-1, 302-3 Item 2020 2021 2022 Internal use of electricity 8,282,776 8,375,878 8,291,723 Internal use of heat energy 34,603,584 36,910,017 38,050,823 Internal consumption of natural gas (excluding gas consumed as feedstock during production processes) 29,094,927 28,474,611 30,097,257 Internal consumption of LNG 123,673 160,565 129,488 Internal consumption of fuel oil 6,473,253 6,671,968 6,742,692 Internal consumption of heating oil 4 33,518 36,008 35,407 Internal consumption of diesel fuel 2,419,273 2,539,731 2,657,419 Total internal consumption 81,031,004 83,168,778 86,004,809 Total energy consumption per unit of finished and semi-finished products, GJ/t 5 2.40 2.36 2.33 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 212 213 Strategic report In 2022, the Company initiated a project to define a set of metrics in energy consumption and energy efficiency to benchmark its performance against leading peers in the mining, chemical, and fertilizer production industries. The next step, which is also underway in 2022–2023, is detailed analysis of the Company’s energy management system and review of gaps in terms of compliance with ISO 50001:2018. Based on the work completed to date, the Company has introduced certain amendments to its disclosure, including in terms of natural gas consumption. The project showed that in its reporting, the Company is guided by international standards, which require aggregation of data based on total consumption of energy (electricity, heat, natural gas, fuel oil, petrol, LNG, and heating oil). The Company uses natural gas both as fuel and as feedstock in ammonia production. In ammonia synthesis processes, part of the natural gas is sent to the reactor to be used as chemical feedstock to produce hydrogen; however, natural gas is also used for energy needs as fuel (see the chart below). Use of natural gas in ammonia synthesis As a result, for its 2022 reporting, the Company decided to split the total amount of natural gas previously used in calculations of total and per unit energy consumption, so that GRI 302 reporting does not include natural gas that acts as chemical feedstock in ammonia synthesis. The change in the methodology caused us to recalculate our energy consumptions values for the previous periods on a retrospective basis. Still, given the link between data of GRI standards and the use of energy consumption data in GHG emission calculations, we carried out a review to make sure the changes in natural gas presentation approach does not compromise our calculations of GHG emissions in ammonia production. Waste Target Increase in the share of recycled and decontaminated hazard class 1–4 waste to 40 % by 2025 2022 highlights 38.8 % of hazard class 1–4 waste recycled and decontaminated Strategy and management approach GRI 3-3, 306-1 PhosAgro’s Development Strategy to 2025 stipulates an increase in the share of recycled hazard class 1–4 waste to 40%. Having developed a system for accumulating and analysing data on production and consumption waste from our operations, we are now implementing a range of projects aimed at reducing waste generation and increasing the share of recycled waste. The management system covers: • an inventory of resources that are used to manufacture products and become waste afterwards; • data on the amount of waste generated from our own operations, including future waste in the form of products or their part provided to customers; • waste characteristics; • properties that limit or prevent the recycling (recovery) of the material or product or limit its useful life; • continuous monitoring of known and potential negative characteristics of certain materials to prevent them from losing their consumer properties and going to waste; • identification of activities and processes that generate significant amounts of waste. PhosAgro’s waste management is monitored on a regular basis and discussed by the Strategy and Sustainable Development Committee before being communicated to the Board of Directors. process needs energy needs Air Reactor Synthesis converter Boiler furnace Boiler furnace Ammonia Natural gas Flue gases Heat Gas mixture Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 214 215 Strategic report Enhanced ore processing mechanisms PhosAgro and the Kola Science Centre of the Russian Academy of Sciences have signed a long-term cooperation agreement to implement a project for improving the processing of hard-to- process apatite-nepheline ores. The agreement prioritises joint projects focused on novel production technologies. One of the outcomes of the cooperation with the Kola Science Centre is the resolution to set up a joint research centre to study key industrial ores, identify optimal mineral liberation and selective flotation modes, conduct technological and mineralogical 3D mapping of ore reserves, as well as select and develop efficient and eco-friendly flotation reagents. In April 2022, PhosAgro launched project to sell phosphogypsum as a commercial product in seven areas of application: • ameliorant for farming; • ground for road surface dressing and soil reinforcement; • litter in poultry and livestock farming; • reduction in soil salinity and contamination in urban areas; • recultivation of unauthorised landfills and lands contaminated with oil products; • raw material for the cement industry; • raw material for construction materials (gypsum blocks, construction blocks, and construction mixtures).. For this project, PhosAgro Group created a sales unit focused on phosphogypsum and tasked with R&D in each of the areas of its application, obtaining regulatory and technical documents, and promotion and sales of phosphogypsum accordingly. Our project to promote phosphogypsum as a chemical ameliorant agent in agriculture first saw light in February 2021. These benefits include: reduction in litter moisture content to 13 % Reduction in levels of ammonia released into the air of poultry houses (day 28–35) by 6–8 % The use of phosphogypsum helps alter quality indicators of poultry litter: • an 8–11% increase in the level of nitrogen in litter; • a 2–3x rise in the level of calcium in litter For more information about the project, see the Research and Education section on page 125. Key initiatives in 2022 GRI 306-2 In 2022, a decision was made to go ahead with an investment project for the Balakovo branch of Apatit. The unit is designed to process by-products of wet-process phosphoric acid – concentrated fluosilicate acid and dihydrate phosphogypsum – to produce a solution of ammonium sulphate and technical calcium fluoride. The key process stages are as follows: fluosilicate acid is neutralised by ammonia liquor with dihydrate phosphogypsum. With an excess In 2021, we rolled out a Company-wide project to reduce the accumulation of phosphogypsum at dump sites by promoting it in various areas of phosphogypsum, the reaction results in calcium fluoride, silica gel, and a solution of ammonium sulphate. The resulting pulp is then filtered, technical-grade calcium fluoride is washed with water to remove ammonia sulphate and then sent to open air storage, and ammonia sulphate solution is neutralised with sulphuric acid to pH=4.5–5 and sent to the phosphate fertilizers unit to make granulated ammonium sulphate. Promotion of phosphogypsum Its aim is to reduce the accumulation of phosphogypsum at dump sites across our production sites by promoting its agricultural use on saline soils as an ameliorant and source of sulphur, phosphorus and micronutrients. In 2021–2022, over 50 trials were conducted to apply phosphogypsum in agriculture as an ameliorant for acidic, neutral, alkali and sodic soils. Based on the trials, extra yield averaged between 15% and 35% depending on the crop. Aside from better yields, all commercial products also demonstrated a reliable increase in quality indicators. As part of the project, PhosAgro established a preparation and loading hub for bulk phosphogypsum and remodelled a railway to ensure its supply to farmers in other regions. In 2022, we were able to ship phosphogypsum in gondola cars and make deliveries to the Moscow, Tambov, Smolensk, Astrakhan and Volgograd regions and the Republic of Tatarstan. Experiments were conducted to use phosphogypsum as poultry litter in floor housing of broilers. The results showed benefits of using phosphogypsum in the amount of 10–30% of the litter volume. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 216 217 Strategic report The reporting year saw a decline in the share of recycled and decontaminated hazard class 1–4 waste following a slight change in the ratio of recycled waste to waste disposed of, generated by an increased volume of repairs and cleaning of process equipment. SASB RT-CH-150a.1 Share of recycled and decontaminated hazard class 1–4 waste 1 , % 40.0 38.8 39.1 37.6 Target 2025 2022 2021 2010 METRICS AND HIGHLIGHTS Waste generation by hazard class, t GRI 306-3, RT-CH-410b.1 Waste hazard class 2020 2021 2022 (actual) 1 6.48 5.63 4.22 2 7.61 3.86 0.39 3 1,070.64 1,698.52 1,436.71 4 180,439.54 192,698.46 195,057.45 5 132,492,537.10 132,227,604.70 120,229,530.98 Total 132,674,061.36 132,422,011.17 120,426,029.77 1 Hazardous means hazard class 1–4 waste; non-hazardous means hazard class 5 waste. Waste by type and disposal method, t 1 GRI 306-4, GRI 306-5 Disposal method 2020 2021 2022 PhosAgro Group's waste reused internally 21,877,032.2 19,203,406.7 27,753,191.6 Hazardous waste 51,632.9 74,266.9 74,456.8 Non-hazardous waste 21,825,399.3 19,129,139.8 27,678,734.8 Total waste landfilled 110,776,483.1 112,392,381.5 93,400,262.0 Hazardous waste 113,597.1 119,050.2 120,688.6 Non-hazardous waste 110,662,885.9 112,273,331.3 93,279,573.4 Including landfilled at the Company’s waste disposal facilities 110,771,883.1 112,386,304.7 93,390,463.8 Hazardous waste 109,096.9 113,463.9 110,976.1 Non-hazardous waste 110,662,786.2 112,272,840.8 93,279,487.7 Third-party recycled 52,377.7 72,278.0 63,040.9 Hazardous waste 16,402.3 1,432.2 1,449.9 Non-hazardous waste 35,975.4 70,845.8 61,591.0 Third-party decontaminated 262.4 332.5 299.8 Hazardous waste 262.4 332.5 263.1 Non-hazardous waste 0 0 36.7 Third-party processed 1,590.9 2,756.7 2,880.6 Hazardous waste 6.4 2.2 45.1 Non-hazardous waste 1,584.5 2,754.5 2,835.5 The reduction in class 5 waste generation was due to increased use of overburden as a backfilling material at the Kirovsk branch. Disposal of beneficiation waste and overburden at Apatit’s Kirovsk branch, t SASB EM-MM-150a.1, EM-MM-150a.2 Reused Landfilled at waste disposal facilities 2020 2021 2022 2020 2021 2022 Apatite-nepheline ore processing waste (tailings) 12,015,508.0 12,535,665.7 13,065,273.3 12,947,652.0 13,483,863.3 12,865,355.7 Rocks and overburden mix 6,625,514.0 3,360,586.0 11,276,148.0 89,454,699.0 90,494,219.0 72,281,414.0 Waste generation, t per tonne of finished and semi-finished products Production site 2020 2021 2022 Kirovsk branch 10.4 10.3 9.1 Balakovo branch 0.9 0.9 0.9 Volkhov branch 0.031 0.003 0.001 Apatit (Vologda region) 0.4 0.4 0.4 Total 3.9 3.8 3.3 Waste generation (hazard class 1–4), kg per tonne of finished and semi-finished products Production site 2020 2021 2022 Kirovsk branch 0.3 0.5 0.8 Balakovo branch 16.7 21.3 21.1 Volkhov branch 27.0 0.6 0.5 Apatit (Vologda region) 3.8 3.6 4.0 Total 5.4 5.5 5.3 1 The Group specific disclosure was calculated as ratio of class 1–4 waste recycled and decontaminated to the total volume of class 1–4 waste. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 218 219 Strategic report Air Our targets 23.7 % reduction in emission intensity by 2025 vs 2018 to 0.8 kg per tonne of products and semi- finished products 2022 highlights The 2025 target to reduce GHG emissions was achieved. Pollutant emissions, kg per tonne of products and semi-finished products 0.793 Strategy and management approach GRI 3-3 PhosAgro has developed and now maintains an emissions management process that includes assessment of planned activities, discussion of relevant matters with a wide range of stakeholders, as well as monitoring and disclosing pollutant emissions. To effectively reduce its environmental impact, PhosAgro is running a programme to re-equip production facilities and cut pollutant emissions. PhosAgro takes part in the government’s Clean Air initiative, which aims to drastically reduce air pollution in major industrial cities across Russia. As part of the initiative, the Company implemented a number of projects that helped reduce emissions by 20% in 2022 vs 2017, despite an annual rise in production output and launch of new capacities. Air quality in sanitary protection areas near the Company’s production sites complies with applicable hygienic requirements. RUB 3,916 mln invested throughout the duration of the Clean Air Initiative, including RUB 315 mln in 2022 Activities Status Environmental efficiency, t Year Actual expenditures, RUB mln Upgrade of the SK-600/3 sulphuric acid plant completed 892 2018–2019 2,733.225 Deployment of new tailing gas pre- heating equipment for the UKL-7 plant completed 105 2019 10.975 Upgrade of technological system No. 3, block 2.70 at the mineral fertilizer production site completed 62.3 2020 776.62 Technical upgrade of the low- capacity absorption unit, blocks 7.00 and 7.01 at the mineral fertilizer production site completed 402.6 2021–2022 321.84 Catalyst replacement at contact process units of the SK-600/1 and SK-600/2 technological systems in progress 665 t reduction achieved in sulphur dioxide emissions (partial catalyst replacement at SK-600/2 and SK-600/1) 2021–2024 125.58 PROJECTS IN ADDITION TO THE COMPREHENSIVE PLAN’S ACTIVITIES Unit to recover ammonia from residual and synthesis gases of the first and second ammonia production lines Design and expert reviews (implementation scheduled until end of 2024) 268 2022–2025 1.747 Upgrade of the process to return synthesis and purge gas to the fuel gas system without sending ammonia-containing gases to burners of the steam superheater at the first ammonia production line implemented effect to be determined in 2023 2022 5.594 Key initiatives in 2022 Apatit’s Cherepovets site implemented four out of five planned activities as part of the Clean Air initiative. down ~1% vs 2021 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 220 221 Strategic report METRICS AND HIGHLIGHTS Pollutant emissions, kg per tonne of finished and semi- finished products 1 0.800 0.793 0.801 0.892 Target 2025 2022 2021 2020 At the Volkhov branch, the key activities of 2021–2022 to reduce the negative impact on the environment, including air, were implemented as part of an investment project to develop the Volkhov site: technical solutions to reduce per unit emissions and concentrations of pollutants at the sanitary protection zone boundaries near residential areas were provided for back at the stages of new construction and upgrades. The considerable reduction in per unit emissions confirms that we have chosen the right approach. In 2022, the Balakovo branch completed the second stage of technical upgrade at technological systems 5 and 6 of the phosphate fertilizers unit, along with a revamp of gas recovery equipment. The impact will be assessed in 2023. On an annual basis, Apatit’s Kirovsk branch runs activities to minimise dust emissions from tailing dumps of beneficiation facilities. In 2022, the following work was completed: • chemical stabilisation using binding agents (PSKh-18 and DUSTBIND) for dusty surfaces in the beach area of tailing dumps: • – at ANBP-2 across 631.1 ha, • – at ANBP-3 across 410 ha; • chemical stabilisation using binding agents (bitumen emulsion) for dusty surfaces in the beach area of tailing dumps: • – at ANBP-2 across 2.6 ha; • chemical stabilisation for dusty surfaces on service roads of tailing dumps: • – at ANBP-2 across 141 ha, • – at ANBP-3 across 50.7 ha; • biological stabilisation using hydroseeding for dusty surfaces of dam slopes and beach area of tailing dumps: • – at ANBP-2 across 3.19 ha, • – at ANBP-3 across 33.597 ha; • search for an optimal anti-dusting agent, with pilot tests held for nine new samples. GRI 305-7, SASB RT-CH-120a.1 / EM-MM-120a.1 NO x , SO x and other significant air emissions, t Pollutants 2020 2021 2022 TOTAL Kirovsk branch 10,003.4 10,120.3 10,141.3 Balakovo branch 7,286.2 6,876.0 7,323.8 Volkhov branch 1,068.9 1,165.8 1,575.0 Apatit (Vologda region) 11,830.7 10,065.3 10,193.5 Total 30,189.0 28,227.4 29,233.6 SOLIDS Kirovsk branch 5,148.6 4,939.8 5,011.1 Balakovo branch 429.5 425.8 497.1 Volkhov branch 461.7 528.6 234.9 Apatit (Vologda region) 917.3 1.055.1 771.7 Total 6,957.1 6,949.3 6,514.8 SULPHUR DIOXIDE Kirovsk branch 3,104.0 3,308.2 3,373.4 Balakovo branch 4,432.1 3,975.4 4,227.2 Volkhov branch 180.8 206.7 320.5 Apatit (Vologda region) 3,367.2 3,029.2 3,770.9 Total 11,084.0 10,519.5 11,692.0 CARBON MONOXIDE Kirovsk branch 711.1 777.0 798.1 Balakovo branch 870.0 933.1 949.4 Volkhov branch 92.4 115.3 106.3 Apatit (Vologda region) 1,573.5 1,274.8 1,324.2 Total 3,247.0 3,100.2 3,178.0 NITROGEN OXIDES (NO X AS NO 2 ) Kirovsk branch 1,012.2 1,067.8 931.2 Balakovo branch 746.9 760.7 765.1 Volkhov branch 283.1 207.6 330.7 Apatit (Vologda region) 2,540.0 2,401.8 2,491.9 Total 4,582.1 4,437.9 4,518.9 HYDROCARBONS (W/O VOCS) Kirovsk branch 8.0 8.0 8.0 Balakovo branch 2.6 2.6 2.6 Volkhov branch 0.0 0 0 Apatit (Vologda region) 38.1 38.1 38.1 Total 48.7 48.7 48.7 VOLATILE ORGANIC COMPOUNDS (VOCS) Kirovsk branch 19.0 19.0 19.0 Balakovo branch 340.1 340.7 340.0 Volkhov branch 4.6 5.0 6.2 Apatit (Vologda region) 2.2 2.0 2.8 Total 365.8 366.7 368.0 OTHER GASEOUS AND LIQUID POLLUTANTS Kirovsk branch 0.5 0.5 0.5 Balakovo branch 465.1 437.7 542.4 Volkhov branch 46.2 102.6 576.4 Apatit (Vologda region) 3,392.6 2,264.3 1,793.9 Total 3,904.3 2,805.1 2,913.2 1 The Group specific disclosure was calculated as the ratio of pollutant emission to the output of products andsemi-finished products. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 222 223 Strategic report Water RT-CH-140a.2 / EM-MM-140a.2 Our targets Reduce water withdrawal by 29.3 % by 2025 vs 2018 to 5.16 m3 per tonne of products and semi-finished products 2022 highlights Water withdrawal1 6.42 m³/t Water is an essential resource for the Company. There is no shortage of water sources in the regions where our facilities are based. According to the Water Risk Atlas and Water Risk Filter, Risks and opportunities SASB RT-CH-140a.3 The main risks related to water consumption are water quality deterioration in water bodies across PhosAgro’s footprint and the Company’s non- compliance with statutory requirements for limiting negative impact on water bodies. Going forward, we plan to improve waste water management by focusing on maximum reuse of water through closed-loop water recycling systems and better treatment of effluents discharged into water bodies in addition to ongoing monitoring of water bodies in the regions of operation. The regulatory risks include tightened waste water quality requirements, as well as restrictions on the amount of water consumed and discharged into both water bodies and centralised waste water systems. There were no incidents of non-compliance associated with water quality permits, standards, and regulations. Waste water discharge into surface waters2 5.27 m³/t PhosAgro has implemented closed- loop water recycling systems at its sites in Volkhov and Balakovo to reuse water in production processes. To mitigate these risks, in 2020 we adopted and started implementing a Water Strategy that seeks to reduce water consumption and discharge and improve waste water quality. The strategy is implemented at all PhosAgro sites, and we regularly analyse these measures to determine whether they are sufficient and effective enough to achieve our targets. To identify the impact of the Company's operations on water bodies, we monitor these bodies in accordance with adopted programmes by engaging our own certified laboratory and external certified laboratories. all PhosAgro production sites are located in areas with low or moderate fresh water scarcity. However, access to clean water is a major issue facing the world. Strategy and management approach GRI 3-3, 303-1 1 The Group specific disclosure was calculated as the ratio of total water withdrawn to the total output of products and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of the volume of waste water discharged into surface water bodies, including mine and pit waters, to the total output of products and semi-finished products. Reduce the discharge of waste water into surface water bodies by 31.1 % by 2025 vs 2018 to 4.16 m3 per tonne of products and semi-finished products down 0.93% vs 2021 down 0.75% vs 2021 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 224 225 Strategic report Phosphate facility 1. Engineering documentation developed for the project named The Technical Upgrade of a Water Treatment Station in a Utility and Drinking Water Supply System with Arrangements Made to Dehydrate Sludge Water at the Phosphate Facility of Apatit. 2. Pilot tests completed and core technical solutions developed for the technical upgrade of an acidic waste water treatment station, with the drafting Key initiatives in 2022 Nitrogen facility: 1. Work started to design a saline waste water treatment unit. The designer of the saline waste water facilities is NIUIF. of engineering documentation underway. 3. A base case design developed for the project named A Waste Water Treatment Unit with a Source Water Capacity of at Least 400 m3 /h at the Phosphate Facility of Apatit. The general designer responsible for the facility’s design (construction, networks, auxiliary systems) is NIUIF. 4. The development of engineering documentation is underway for the project named A Saline Waste Water Sewerage At the Cherepovets site, we completed the first stage of the water use optimisation programme as part of our production upgrade initiative for 2022–2025 2. As part of the Electricity Generation Based on the System of Chemical Water Treatment (Heat and Power Plant) initiative, the Volkhov branch successfully piloted the reuse of effluents resulting from boiler blowdown at the Phosphate Facility of Apatit. The documentation is expected to be completed in 1Q 2023. 5. Implementation of the Water Use Optimisation Programme at the Cherepovets site of Apatit as part of the production upgrade initiative for 2022–2025. 1 The Group specific disclosure was calculated as the ratio of total water withdrawn, including mining and pit waters, to the total output of products and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of the total volume of waste water discharged into surface waters to the total output of finished and semi-finished products. 3 The Group specific disclosure was calculated as the ratio of total water withdrawn, excluding mining and pit waters, to the total output of products and semi-finished products. Total water withdrawal by source, ‘000 m3 GRI 303-3, SASB RT-CH-140a.1 / EM-MM-140a.1 Indicators 2020 2021 2022 SURFACE WATER Total water withdrawal from surface sources, including: 170,862 175,943 182,276 process water 59,081 60,747 62,164 drinking water (internal use) 995 1,193 1,187 drinking water (for supplies to third parties) 399 557 632 mining and pit waters 104,475 107,633 111,751 drainage water 3,312 3,170 2,401 rainwater 2,600 2,642 4,142 GROUND WATER Water withdrawal from ground-water sources 2,832 2,912 3,357 Total water received from third-party suppliers, including: 52,898 49,600 51,240 process water received from suppliers 28,443 28,373 28,644 water from municipal supply (internal use) 8,138 9,126 8,400 water from municipal supply (for supplies to third parties) 17 47 32 waste water from other waste water discharge systems 16,300 12,054 14,164 Total 226,592 228,456 236,873 Measurement of total and specific water withdrawal including and excluding mining and pit waters Indicators 2020 2021 2022 Total water withdrawal, including mining and pit waters, ‘000 m3 226,592 228,456 236,873 Specific water withdrawal, including mining and pit waters, 2 m3 per tonne 6.70 6.48 6.42 Total water withdrawal, excluding mining and pit waters, ‘000 m3 122,117 120,823 125,122 Specific water withdrawal from surface sources, excluding mining and pit waters, 3 m3 per tonne 3.61 3.43 3.39 METRICS AND HIGHLIGHTS 5.16 6.42 6.48 6.70 Target 2025 2022 2021 2020 4.16 5.27 5.31 5.57 Target 2025 2022 2021 2020 Discharge of waste water into surface water bodies, m3 per tonne of products and semi-finished products 2 Water withdrawal, m3 per tonne of products and semi- finished products1 at a heat and power plant and chemical water treatment concentrate. This led to the reduction of waste water discharged into sanitary protection zones by 135 tonnes per hour. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 226 227 Strategic report 1 The Group specific disclosure was calculated as the ratio of waste water discharged into surface water bodies, including mining and pit waters, to the total output of products and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of waste water discharged into surface water bodies, excluding mining and pit waters, to the total output of products and semi-finished products. Total water discharge by source, ‘000 m3 GRI 303-4 Indicators Total 2020 2021 2022 WATER DISCHARGE INTO SURFACE WATER BODIES Total water discharge into surface water bodies, including: 188,455 187,012 194,447 mining and pit waters 104,475 107,633 111,751 drainage water 3,312 3,171 2,401 waste water from other waste water discharge systems 15,901 11,673 13,782 SUPPLIES TO THIRD PARTIES Total water supplies to third parties including: 4,147 4,222 4,406 waste water to the public water discharge system (after use) 3,314 3,238 3,219 waste water to the public water discharge system (unused) 399 381 523 water supplies to third parties from surface sources 417 557 632 water supplies to third parties from municipal sources 17 47 32 Total 192,602 191,234 198,853 Measurement of total and specific waste water discharge including and excluding mining and pit waters Indicators 2020 2021 2022 Total water discharge into surface water bodies, including mining and pit waters, ‘000 m3 188,455 187,012 194,447 Specific water discharge into surface water bodies, including mining and pit waters, 1 m3 per tonne 5.57 5.31 5.27 Total water discharge into surface water bodies, excluding mining and pit waters, ‘000 m3 83,980 79,379 82,696 Specific water discharge into surface water bodies, excluding mining and pit waters, 2 m3 per tonne 2.48 2.25 2.24 Water consumption includes both mining and pit waters. The volume of mining and pit waters depends on the intensity of precipitation and the size of the catchment area. It tends to increase with the development of new horizons. Water consumption, ‘000 m3 GRI 303-5 Indicator Total 2020 2021 2022 Total water withdrawal (all sources) 226,592 228,456 236,873 Total water discharge (all sources) 192,602 191,234 198,853 Water consumption 33,990 37,222 38,020 Water discharge in 2022, mln m3 GRI 303-4 Indicator 2020 2021 2022 WASTE WATER DISCHARGE INTO SURFACE WATER BODIES Kirovsk branch 173.7 173.9 180.0 Balakovo branch 0 0 0 Volkhov branch 0 0 0 Apatit (Vologda region) 14.8 13.1 14.4 Total 188.5 187.0 194.4 DISCHARGED WITHOUT TREATMENT (% OF TOTAL WATER DISCHARGE) Kirovsk branch 0 0 0 Balakovo branch 0 0 0 Volkhov branch 0 0 0 Apatit (Vologda region) 0 0 0 Total 0 0 0 Waste water discharge at Apatit Receiving water body KIROVSK BRANCH Discharge 1 Discharge from ANBP-3 Zhemchuzhnaya River Discharge 2 Discharge from ANBP-2 Belaya River Discharge 3 Rainwater at ANBP-2 Belaya River Discharge 4 Mining waters of the combined Kirovsky, Central and Rasvumchorrsky mines Lake Bolshoi Vudyavr Discharge 5 Mining waters of the Koashva and Njorkpahk open pits Lake Kitchepahk Discharges 6, 9 Waters of water-lowering wells of the Vostochny mine Vuonnemyok River APATIT (VOLOGDA REGION) Effluents from the phosphate facility Rybinsk Reservoir Effluents from the nitrogen facility Rybinsk Reservoir Treated effluents (reused in the production cycle) Asset 2020 2021 2022 Total, mln m3 240.4 244.7 241.7 Share of reused water, % 88 87 86 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 228 229 Strategic report Biodiversity Target Preservation of biodiversity in regions of PhosAgro Group’s operation at a level securing sustainability 2022 highlights Over 1.2 million juvenile fish of various species and pike larvae were released into water bodies across PhosAgro’s geographies in 2019–2022 Strategy and management approach GRI 3-3 The Company’s Environmental Policy sets forth PhosAgro’s obligations to preserve biodiversity, natural landscapes and habitats across its footprint and prevent its projects from causing any harm to the same. Before building any new production facilities or renovating existing ones, PhosAgro conducts an environmental impact assessment (EIA) based on the results of engineering and environmental surveys. Assessment of the local flora, fauna and landscapes, as well as research, analysis and consideration of public attitudes towards biodiversity protection are integral to our EIA procedures. For a number of years, the Company has been working to preserve biodiversity and replenish biological resources. In 2020, the Company started developing comprehensive biodiversity protection programmes in partnership with research institutions. The effort is aimed at assessing and restoring environmental conditions across the Company’s footprint and establishing its priorities in protecting biodiversity based on indicator species monitoring. Kirovsk Cherepovets Volkhov Balakovo Lake Ladoga, Leningrad region Whitefish 1,584 Rybinsk Reservoir, Vologda region Pike 42,340 Zander 28,064 Key initiatives in 2022 GRI 304-3, SASB EM-MM-160a.3 Comprehensive biodiversity protection programmes were implemented at the Volkhov branch, one of the Kirovsk branch’s facilities and Apatit’s Cherepovets production site. Kovdozero Reservoir, Murmansk region Whitefish 11,502 In 2022, the Cherepovets facility completed research of flora and fauna within the footprint of pyrite cinder storage facility No. 1–3 (System for Hydraulic and Dry Stacking of Pyrite Cinder). Sukhona River, Vologda region Sterlet 11,743 187,222 juvenile fish of various species and pike larvae were released into water bodies across the Company’s geographies in 2022 Sheksna Reservoir, Vologda region Sterlet 3,000 Volgograd Reservoir, Saratov region Sterlet 5,601 Saratov Reservoir, Saratov region Carp 28,151 Silver carp 30,237 Carp 25,000 The research revealed that the area’s wildlife includes endemic European and Siberian species and is typical of the Vologda region. The field and desktop studies proved that none of the plants or animals found in the reviewed area are included in the Vologda region’s Red Data Book or in the Red Data Book of the Russian Federation. GRI 304-2, SASB EM-MM-160a.3 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 230 231 Strategic report METRICS AND HIGHLIGHTS Investment in biodiversity protection programmes, RUB mln 13.7 11.4 4.1 5.3 2022 2021 2020 2019 GRI 304-3 Juvenile fish released into water bodies across PhosAgro’s geographies Water body 2020 2021 2022 SARATOV REGION Volgograd Reservoir 45,911 55,838 60,838 Saratov Reservoir 26,393 28,151 28,151 LENINGRAD REGION Lake Ladoga 2,116 – 1,584 Nakhimovskoye Lake – 28,715 – MURMANSK REGION Umba River 4,000 5,000 – Kovdozero Reservoir – – 11,502 VOLOGDA REGION Sukhona River – 22,933 11,743 Sheksna Reservoir – 3,500 3,000 VOLOGDA AND YAROSLAVL REGIONS Rybinsk Reservoir 654,400 – 70,404 YAROSLAVL REGION Gorky Reservoir 6,500 – – Total 739,320 144,137 187,222 As part of the efforts to develop biodiversity protection programmes, the Company joined forces with Kolsky Research Centre of the Russian Academy of Sciences to conduct a comprehensive environmental study of the area within the footprint of Apatit’s Kirovsky mine. The researchers walked over 150 km of trails and completed 62 geobotanical descriptions. The total distance walked to take stock of the endemic birds and mammals exceeded 121 km. The study of hydrobionts was carried out at three stations and lasted from July until September. The research revealed that the biome of terrestrial ecosystems within the footprint of the Kirovsky mine includes over 900 species of fungi, lichens, mosses and vascular plants, as well as 135 species of birds and 11 species of mammals. The realm of lichens and plants within the footprint of the Kirovsky mine is amazingly diverse and idiosyncratic, which is a reason enough to develop designated initiatives for protecting the unique flora of the Khibiny Mountains. The diversity of bird and mammal species was strongly affected and disturbed by human activities in the area. Their incidence in natural habitats corresponds to standard incidence in slightly disturbed areas and predictably enough shows signs of structural transformation in populations inhabiting areas impacted by humans. Water ecosystems within the footprint of the Kirovsky mine exhibit relatively high taxonomic diversity due to a wide range of conducive factors. The efforts to take stock of fish fauna within the footprint of the Kirovsky mine led to the identification of four fish species. Lake Bolshoi Vudyavr currently fits the habitat requirements for these species, as it offers ample food supplies for both salmonids (brown trout, Arctic char) and European smelt. As part of the programme for environmental monitoring of biome (flora and fauna), the Volkhov branch researched an area within the sanitary protection zone. The study of the area within the footprint of Apatit’s Volkhov branch revealed that structure of animal species across the reviewed biotopes is typical for the region in question. A total of 52 bird species were found to live within the facility’s footprint and in adjacent areas. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 232 233 Strategic report KEY PROJECTS AND HIGHLIGHTS OF 2022 Target 9.1 Target 3.4 Target 8.3 Target 11.3 Target 4.4 Target 17.17 Contributing to local communities OUR FAVOURITE CITIES EDUCATION PROMOTION OF SPORTS CONNECTING GENERATIONS • Improving the quality of urban environment and promoting sustainable development of the cities where we operate: Kirovsk, Cherepovets, Balakovo, and Volkhov. 78 mprovement projects completed • Supporting Russian sports at the international, national and regional levels, and promoting sports in regions where the Group operates. 83 graduates of PhosAgro Classes started their career with the Company after completing higher education Number of DROZD students increased by 11.3 % Specific activities: support for entrepreneurs in the form of interest-free loans or grants; implementation of the Arctic Entrepreneurship Library project Total financial support came close to RUB 466 mln Target 3.4 Target 3.4 Target 3.4 Target 4.4 Задача 11.3 SPIRITUAL REVIVAL • Preservation and promotion of orthodox values, spiritual ideas, benevolence and respect for our legacy and motherland. PROGRAMMES, STRATEGIC GOALS AND METRICS Completion of a project to restore mosaic icons of the Holy Trinity Cathedral in Balakovo 175 initiatives • Attracting educated, motivated and skilled young talent to innovative Russian facilities, including those of PhosAgro. • Effective combination of high-quality education and physical training to facilitate moral and ethical development and promote health of the younger generation. Number of DROZD students who are children of the Company’s employees increased by 49.9 % Total number of events rose by 3.5 % Total number of offsite activities was up by 20.2 % • Preserving the history of the nation, industry, or facility for all generations; supporting continuity of generations, inclusive traditions, respect for the older generation, veterans, and vulnerable population groups. Implementation of a project to restore the wooden church of Dormition of the Most Holy Mother of God (17th century) in Nelazskoye (Cherepovets District) Repair and provision of equipment for the spiritual and educational centre of the Cathedral of the Life-Giving Trinity (Volsk, Saratov region) Support for a project to develop the Russian Orthodox Centre in Singapore created to provide targeted support and assistance to veterans, senior citizens, and vulnerable population groups 5,794 events held by career guidance and exhibition centre Laboratory of Safety, an interactive multimedia exhibition, created Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 234 235 Strategic report Management of social investment programmes Organisational unit Key responsibilities CORPORATE LEVEL OF PHOSAGRO GROUP Management Board Chief Executive Officer Deputy CEO Office for External Communications • Annual budget consideration and approval • Decisions on participation in social and charitable initiatives • General coordination of activities related to charity, sponsorship and community investment • Collection and analysis of feedback and other relevant information on ongoing projects • Organisation of public hearings and sociological surveys • Information support OPERATIONS Government Relations Department Information Policy Department HR and Social Policy Department Social Development Departments Commission for Social Issues and Charity • Regular communication with business partners • Project and programme management • Preparation of proposals on the basis of feedback • Initial consideration of new applications Strategy Our strategy is focused on long-term social and economic development programmes in the regions, cities, towns and rural communities in which our key production units operate. We place a high priority on historical continuity: as a successful enduring partner of local communities in which we operate, we are committed to promoting their sustainable development. While hinging upon long-established Management approach Our social investment programmes are based on public benefit priorities and mostly rely on opportunities to partner with regional and local government authorities, local communities, non-governmental organisations, including non- profit organisations established by the Company to this end, educational institutions and other stakeholders. We implement our social investment strategy through promoting efficient and successful cooperation with a broad range of partners in line with the highest international sustainable development standards. The key principle underlying our interaction with local communities is a meaningful dialogue through a variety of communication channels, from public hearings and the involvement of Company representatives in the work of local legislative and representative bodies and government authorities to setting up community liaison offices and other venues for meetings with people. Key policies and regulations All of the Group’s social investment projects and initiatives are implemented in accordance with the requirements of the Federal Law on Charitable Activities and Charitable Organisations, and other applicable laws and regulations. To ensure transparent and effective corporate governance, the Group has developed a framework of internal regulations governing charity and sponsorship, including: • Code of Ethics; • Charity Policy; • Government Relations Policy; • Policy for Managing Community Social Programmes; • Regulations on Managing Community Social Programmes; • Assessment Criteria for Community Social Programmes. The Company’s Charity Policy identifies the following key areas of social investments: • education; • sports and a healthy lifestyle; • social and spiritual aspects; • medicine and healthcare. For more information on community social programmes, please visit the Company’s website GRI 3–3 respecting the interests of, and open communication with, all stakeholders; investments in social and infrastructure development initiatives; We implement regional development projects with a special focus on: charitable support of local population and communities; improving educational potential of the regions and promoting sports and a healthy lifestyle. External recognition In 2022, PhosAgro Group once again ranked among businesses with the best social and charitable programmes in the Russian Leaders in Corporate Philanthropy competition. These long- standing awards for socially responsible businesses are organised by the Donors Forum, a coalition of major grantmakers in Russia. In 2022, a total of 60 companies enrolled in the competition, with 39 making it into the final ranking and PhosAgro included in the A+ Leaders category along with eight other companies with the highest score. Showcased by the Cherepovets facility, the Laboratory of Safety exhibition won a social programme award as the Best Programme Contributing to the Achievement of UN Sustainable Development Goals to Ensure Health, Healthy Lives, and Well-Being to Promote Sustainability. social responsibility practices implemented by our production facilities, this partnership is perfectly tailored to meet today’s challenges and relevant stakeholder expectations. All our programmes and initiatives involving social investments are aligned with the goals and objectives set in the Group’s Strategy to 2025 and contribute to its successful implementation. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 236 237 Strategic report Performance assessment and feedback GRI 413–1 We focus heavily on evaluating the results of our social investment programmes. Assessment criteria include both objective data and stakeholder views, thus ensuring comprehensive performance assessment and monitoring We also collect a considerable amount of data used for analysing the effectiveness of our social investment programmes from the ongoing stakeholder feedback, including corporate newspapers, TV broadcasts, and social networking. Local residents in communities where we operate voice their grievances and comments using the Company’s website; social networks; liaison offices of deputies who are also the Company’s employees; public the evolution of public priorities related to social and economic development. In 2021, we partnered with the Donors Forum to run an exhaustive stakeholder survey and evaluate charity programmes and projects implemented in the regions of our footprint and supported by PhosAgro hearings on various aspects; and public meetings organised at public sites. As an example, in Volkhov, the Company with support from its government relations team started holding regular meetings with local residents to discuss various matters at a local community centre. The first meeting was held in 2022, with the Company’s social projects presented and showcased to local residents. Group. Building on that, in 2022 we reviewed our internal documents to develop and approve criteria and procedures for the assessment of community social programmes. The sets of criteria for each of them are available on the Company’s website. Our 2022 performance for some of the key criteria is shown below for each specific programme. Also, the Company’s employees have been elected to various regional and local legislative bodies. Our work in these bodies provides us with information on the most urgent issues faced by local authorities. We include them in the agenda of joint working groups which discuss the methods and mechanisms for addressing the issues. For information on other feedback mechanisms, see the description of specific projects. Risks and opportunities SASB RT-CH-210a.1, EM-MM-210b.1 Our social investment objectives are affected among other things by the following strategic risks: social risk; HR risk; reputational risk. The Company develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information about what we do on this front. Insufficient regulation of social investment management processes Performance evaluation of social investment programmes Evolution of public priorities of social And economic development 3 4 15 Social investment specific risks are listed below: 1 2 For more information, see the Strategic Risks section on page 70 The Company uses the following channels to liaise with stakeholders: involvement in the work of regional and municipal legislative and representative authorities; participation in meetings of regional and local government authorities; interaction withcommunity groups (veterans, pensioners, NGOs, and volunteers); interaction with religious and faith leaders; organising and running city-wide public events (the Company’s corporate holidays, city celebrations, sports competitions, tree planting, release of young fish, etc.); public hearings and festivals of charity projects; partnership ties in implementing projects such as DROZD, PhosAgro Schools, projects run with colleges, universities, hospitals, sports clubs/teams, and charity foundations (including in the form of surveys, polls, and social listening on social networks and in the mass media); interaction through social networks and mass media (publications on social projects and handling questions asked by stakeholders); establishment of subsidiaries to promote non-core activities that have economic influence on the sustainable development of local communities; interaction with recipients of targeted support. 3 Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 238 239 Strategic report Key social investment programmes GRI 203–2 Our Favourite Cities initiative is implemented under social and economic partnership agreements signed with the authorities and is financed in line with the Company's social policy for a particular municipality based on the results of comprehensive social surveys and identification of major social problems and development potential of the territories. Partnership and ongoing meaningful dialogue with stakeholders allow us to fine-tune our social programmes to better align them with focuses of regional development and invest more efficiently. Charitable giving and community and infrastructure investment 1 , RUB ‘000 GRI 203–1 Allocations 1 2020 2021 2022 Contributions to charities, NGOs and research institutions (not related to the organisation’s commercial research and development) 616,149 742,048 3,083,504 Funds allocated to support community infrastructure (recreational facilities, etc.) 1,895,758 1,992,825 3,749,281 Direct spending on social programmes, including arts and educational activities 637,419 832,965 3,986,468 Total 3,149,326 3,567,838 10,819,253 1 In 2022, the Company revised the methodology for calculating the indicator and excluded expenses incurred under sponsorship agreements. Based on the principle of comparability, the data for 2021 and 2020 was recalculated accordingly. 2022 metrics and highlights PhosAgro Group makes an extensive and diverse contribution to the social and economic development of local communities in the regions of our presence: we pay taxes to local budgets, create stable and well- paid jobs for local people, and place regular orders with local businesses. As a responsible long-term partner, we also allocate significant funds to support local communities, contribute to charitable causes and develop infrastructure. Stable and successful home regions are a key driver of PhosAgro Group's sustainable development. Social spending by area in 2022, % Educational projects (net of renovation of educational institutions) Infrastructure facilities, including renovation of educational institutions Churches Sports Nationwide projects Organisations of veterans and disabled people Membership fees 51.62 36.13 5.36 4.30 2.15 0.42 0.02 Social spending by area in 2021 1 , % Infrastructure facilities, including renovation of educational institutions Sports Churches Educational projects (net of renovation of educational institutions) Nationwide projects Organisations of veterans and disabled people Membership fees 59.76 13.97 11.91 9.67 3.36 1.27 0.06 Promoting entrepreneurship The Company traditionally supports a range of initiatives aimed at promoting entrepreneurship. In 2022, a competitive corporate-city project Making Our City Better Together! was established in Cherepovets, which included training for potential participants representing small private businesses to help them learn the rules of applying for the project. The initiative is implemented in cooperation with regional and local government authorities, non- governmental organisations and civil society. In Kirovsk, Murmansk region, the project of the Kirovsk Tourism and Entrepreneurship Development Agency (formerly Khibiny Business Development Centre), a project supported by the Company, is underway. Its main activities include providing new and existing entrepreneurs with training and grant support awarded on a competitive basis. The Kirovsk Tourism and Entrepreneurship Development Agency assists in obtaining regional and federal grants through the Regional Small Business Support Fund and other grant providers. In addition, 2022 saw the implementation of the Arctic Entrepreneurship Library project. Results of supporting entrepreneurship in the Murmansk region in 2021–2022: 279 new jobs created; 17 new LLC and sole traders as well as 14 self- employed persons registered; 12 project initiatives launched, including seven completed; government support totalling RUB 10 mln received by eight entrepreneurs; status of Russian Arctic Zone residents granted to seven entrepreneurs; three entrepreneurs in the process of registering as Russian Arctic Zone residents; 849 hotline consultations for businesses conducted. Improving the quality of urban environment and promoting sustainable development of the cities where we operate: Kirovsk, Cherepovets, Balakovo, and Volkhov. OUR FAVOURITE CITIES Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 240 241 Strategic report Our Favourite Cities programme Key criteria and metrics 2022 Total improvement projects completed (including repairs and reconstruction of social and healthcare facilities, educational institutions and roads) 78 Residents' initiatives (applications submitted) 3 including those implemented with the Company's support 3 Share of external co-financing, % 48 Number of partners involved (including local residents for reconstruction/construction of infrastructure facilities, including leisure and sports facilities) 139 Number of city-wide events organised by the Company 101 Vologda region In November 2022, the first stage of the Northern Ring Road was inaugurated in Cherepovets. The project was completed with funding from regional and municipal budgets and financial support from PhosAgro Group and Severstal. A quadripartite co-financing agreement was concluded, making it the first major public-private partnership project in the Vologda region. The Company invested RUB 171.6 mln in the road construction. According to a sociological survey conducted in the reporting year and feedback collected in social networks, residents of the Vologda region are generally satisfied with urban improvements currently taking place in the region. Comments of city residents regarding the need to maintain improved areas in due state are taken into account when creating PhosAgro Group's municipal programmes and charitable initiatives. Saratov region In 2022, Apatit provided financial support to build a sports ground and install professional sports equipment in a Balakovo public garden garden near the Olympic sports school in Balakovo. Initiated by a group of locals, the project became a successful example of involving the public and businesses of Balakovo in social development. The project’s total cost stood at RUB 10.6 mln. The sports ground is the only one in the island part of Balakovo with this level of equipment. According to a sociological survey conducted in the reporting year and feedback collected in social networks, residents of the Balakovo municipal district are generally satisfied with the urban improvements currently taking place in the region. Leningrad region In 2022, a concept for the development of the Kirov public garden in Volkhov was drawn up, featuring new locations for active and passive recreation activities, an alley with information and history boards, an amphitheatre, outdoor chess tables, a stage and even an urban vegetable garden. The initiative to create a vegetable garden/greenhouse with corporate design where PhosAgro Group’s fertilizers will be used to grow agricultural products won the second place at the Young Manager – 2022 corporate competition. According to a sociological survey conducted in the reporting year and feedback collected in social networks, residents of the Leningrad region are generally satisfied with urban improvements currently taking place in the region. Murmansk region The key project in 2022 was PhosAgro's co-financing of the overhaul of the street and road network in Kirovsk. The main objective of the project is to improve traffic safety in the town by enhancing road infrastructure, among other things in order to further boost Kirovsk's appeal for tourists. In addition, the access to the Kirovsky mine was improved, reducing travel time and increasing the safety of our employees and all residents of the Kukisvumchorr neighbourhood (about 5.000 people). We participate in a public- private partnership to develop the Khibiny tourist cluster, including the Bolshoi Vudyavr Ski Resort. In particular, the construction of the second stage of an artificial snowmaking system on the resort's northern slope continued in 2022. In November 2022, Bolshoi Vudyavr was named the best ski resort in the Northwestern Federal District by the Russian Mountains national award. All of the resort’s sports facilities are certified by the International Ski Federation (FIS). Results of a 2022 sociological survey: • about 77% of the respondents positively evaluated changes in the appearance of Kirovsk; • about 57% of those surveyed positively rated the safety and quality of roads; PhosAgro Schools As part of our unique multi-stage education support programme along the school–college/ university–enterprise pathway, we implement career guidance projects for schoolchildren. In the field of personnel training, we cooperate with educational institutions in the cities and towns where we operate, as well as in Moscow, St Petersburg, Ivanovo, Kazan and more. Covering all levels of education, this programme supports promising future professionals at each stage of the school–college/university– enterprise track. In addition to financial support and assistance in building renovations provided to the schools, the project offers advanced programmes in natural sciences, economics, and management. According to an annual survey of PhosAgro Schools students: • almost half of the students – 49% – say that PhosAgro Schools give them more chances and opportunities to enter a specialised university than other schools. 32% of students consider PhosAgro Schools prestigious and enjoy the educational process. 23% say that PhosAgro Schools increase their chances to join the Company. 8% say that PhosAgro Schools offer more sporting opportunities than other schools; • degree of parents’ and students’ satisfaction with the level of teaching at PhosAgro Schools is quite high: 90% of students say they are satisfied with the teaching of almost all subjects. • 81% of respondents are happy with the condition of sports infrastructure; • about 63% consider the town to be a tourist attraction; • level of healthcare, housing, and utilities are areas for improvement. School College University Career with PhosAgro Healthy, educated and professionally trained population is a critical driver of any region's social and investment attractiveness. Since its establishment, PhosAgro Group has been deeply involved in the development of human potential in the regions of its operation, in particular, by helping to address the outflow of young people from small towns. EDUCATION Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 242 243 Strategic report 988 868 517 181 Total graduates Graduates admitted to universities Technical cources Employer-sponsored technical education 9 8 5 9 9 9 10 5 2 2 4 2 2022 2021 2020 Apatit Kirovsk branch of Apatit Volkhov branch of Apatit Balakovo branch of Apatit 206 128 107 108 74 53 2025 plan 2024 plan 2023 plan 2022 2021 2020 Satisfaction with various aspects of PhosAgro Schools (296 people surveyed), % Availability of state-of-the-art specialised laboratories Events organised by PhosAgro for children Equipment and materials for the teaching process Comfort in classrooms and other areas Relationships with classmates Relationships with teachers Course schedule 85 90 94 96 96 97 94 For more information on PhosAgro Schools, see the People Development section on page 161 Graduates enrolment outcomes from 2015 to 2022, people Graduates of PhosAgro Сlasses hired by PhosAgro Group companies, people Vocational schools and universities We provide the country's leading technical universities with funds for equipment and supplies and participate in adapting educational programmes to the needs of modern production facilities. Students of PhosAgro Group's partner vocational schools and universities are offered internships at the Company, and the most promising students get employment opportunities at the Group's facilities. Since 2013, PhosAgro has been implementing a comprehensive programme of cooperation with the Cherepovets College of Chemistry and Technology (CCCT), where the Group supports activities of a specialised department of the Ivanovo State University of Chemistry and Technology providing training for students and employees of PhosAgro's facilities. In February 2022, following an offsite meeting held by the Russian Federation Council Committee on Science, Education and Culture in Kirovsk, the committee recommended that the Russian Government take into account the Company's experience in training skilled engineers and workers using the school–college–university– enterprise educational pathway when creating the Professionalism federal project and education and production clusters in key industries such as chemical, light industry, metallurgy, etc. Employment of CCCT graduates by the Company's facilities, people Programme of cooperation with Russian agricultural universities At PhosAgro, we believe that the development of education in the agribusiness sector is a crucial factor in supporting and enhancing the robust growth that Russian agriculture has been delivering in recent years. We are focused on fostering the right conditions for that by developing professional competencies of students and teachers at agricultural universities, as well as of agricultural producers and agro-industrial technology service providers. The main mechanism for this is the consolidation of resources within PhosAgro Group's Education Centres at Russia's leading agricultural universities. In 2022, the programme reached a new level with the opening of nine new centres in the country’s key agricultural regions. Today, PhosAgro Group's educational centres operate at Russian State Agrarian University: • Moscow Timiryazev Agricultural Academy, • Saratov State Agrarian University, • Kursk State Agricultural Academy, • Belgorod State Agricultural University, • Kuban State Agrarian University, • Orel State Agricultural University, • Voronezh State Agricultural University, • Penza State Agrarian University • Ryazan State Agrotechnological University. In 2021–2022, PhosAgro's Education Centres held over 200 online lectures for 30 agrarian universities in Russia and the CIS. A total of 22,700 students and teachers attended the lectures, which covered topics such as agrochemistry and agronomy, crop production, innovation and digitalisation of agriculture, economics, law, and responsible farming. Capabilities for conducting scientific experiments were set up at PhosAgro Educational Centre’s Phyto-Class of Moscow Timiryazev Agricultural Academy, including those for students’ thesis projects. In addition, the Company together with Timiryazev Academy work to provide career guidance to schoolchildren, organise lectures and conferences, additional professional education courses, open days with major employers and meetings for young scientists Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 244 245 Strategic report 7,263 6,524 2,797 1,866 2022 2021 Total number of students Children of PhosAgro Group employees +11.3 % +49.9 % Funding from Apatit Funds raised 2022 2021 147.2 44.6 121.7 39.2 Balakovo Volkhov Khibiny Cherepovets 6,372 9,573 17,545 6,350 39,840 people In addition, DROZD established ten non-sports clubs as well as hobby groups for popular science, patriotic and preliminary military training, fitness, Media School, robotics, etc. In 2022, DROZD was presented at the Best Practices in Promoting Physical Culture and Sports session of Russia – Country of Sports, the X International Sports Forum. In 2022, the DROZD Village project (running since 2016) was awarded in the Sports for Everyone, Best Organiser of Physical Culture and Sports in Rural Areas categories, according to the National Sports Award. The project covers twelve villages DROZD Village project DROZD project results, people Sports achievements of students in 2022, people Finance, RUB mln Number of participants in public events, corporate festivals, and celebrations staged by independent non- profit organisations in 2022, people 3,716 Number of children monitored In 2022, raised funds accounted for 23% of the project's total funding, which demonstrates the popularity of DROZD and confirms keen interest in the project from local residents and regional authorities. Surveys show a growing number of positive reviews, in particular from parents regarding the organisation of recreational and sports activities (e.g. summer camps in the Vita health resort in Anapa and the annual awards ceremony of the Best DROZD students). An important fact is that more than 50% of DROZD students who took part in the survey appreciated the quality and level of equipment in the gyms. According to a parent survey, almost 50% of parents expect DROZD sports clubs to improve their children's health. There was a considerable increase in the number of parents interested in their children's sporting achievements. 16.9 Average health index of all children monitored, at the beginning of the reporting period 17.1 Average health index of all children monitored, at the end of the reporting period Winners and runners-up of international competitions Candidate masters of sports Winners and runners-up of regional competitions Winners and runners-up of municipal competitions Masters of sports Winners and runners-up of national competitions 10 71 1,158 3,406 13 2 in the Saratov region and offers more than 500 rural students an opportunity to do sports. Necessary infrastructure is created in rural locations, sports clubs are opened and mass sports events are held. More than 30 sports clubs are available to DROZD Village students for sports activities free of charge. An important feature of the project is continuous health monitoring based on the Health Navigator methodology. It helps teachers and parents to adapt educational activities as closely as possible to specific requirements of a child’s body. DROZD (Educated and Healthy Children of Russia) DROZD, a unique corporate project, addresses the social issues associated with keeping children busy outside school hours in the cities and towns where PhosAgro operates. The Company has taken on a significant share of responsibility for their upbringing, education, and sporting development, so that parents can work comfortably knowing that their children have everything they need for their intellectual and physical development. The project is a comprehensive system of multi-faceted long-term interactions with children aged 4 to 18 that harmoniously combines sports, spiritual, and patriotic education. To facilitate the DROZD programme, operators (independent non-profit organisations) have been established in four cities where PhosAgro operates: DROZD- Balakovo (Saratov region), DROZD- Cherepovets (Vologda region), DROZD-Khibiny (Kirovsk, Murmansk region) and DROZD-Volkhov (Leningrad region). In 2022, the project covered more than 7,000 children (including 170 physically disabled and handicapped ones) who practised more than 20 athletic disciplines in 70 sports classes. Over 50% of the students passed various levels of the GTO fitness tests, with 29% of the children with disabilities at the DROZD- Cherepovets site passing the tests under the GTO Without Borders project. More than 40% of the students are winners and runners-up in sporting events at the municipal, regional, and federal levels. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 246 247 Strategic report Career Guidance and Exhibition Centres project Career guidance and exhibition centres are located in all of the four key cities across our footprint and represent a combination of a modern multimedia corporate museum and an innovative and interactive popular science centre offering advanced programmes in chemistry, biology, and related professional training. The centres are equipped with virtual and physical science laboratories designed to prepare a variety of chemical compounds, multimedia microscopes with 50.000x power, and an interactive garden where students can watch educational videos on cell life and structure and do lab experiments. There are panoramic cinemas offering career guidance and educational films, sensor tables with geographic data on minerals and countries around the world, and sensor booths to test professional aptitude. The centres are very popular with schoolchildren for being the place to learn about different professions and a major attraction for teenagers combining cultural entertainment and intellectual pastime. Total number of attendees Number of events 85,544 66,540 24,189 241,034 578,651 400,090 2022 2021 2020 Offline Online 5,794 5,313 363 2022 2021 2020 The main goal of the programme is to preserve memory of the history of the nation, industry, or facility for all generations; traditions of respect for the older generation, veterans, and vulnerable population groups. Participants: • Museum and exhibition centre for interactive education of Apatit in Kirovsk; • Fifteenth Element, a museum and exhibition centre in Volkhov; • Green Planet, a centre for interactive education in Cherepovets; • Academy of Fertility, a museum and exhibition centre in Balakovo. CONNECTING GENERATIONS The restoration of the unique mosaic icons of the Holy Trinity Cathedral in Balakovo, which began in 2018, was completed in 2022. In June, the Sign mosaic on the north side of the building was consecrated. Also, in 2022, work began on the Calvary mosaic panel, which will be placed on the west side of the church. Such was the intention of Fyodor Schechtel, a prominent architect of the early 20th century, and now his ideas are to be brought to life by the outstanding Russian mosaic artist Igor Lavrenenko. In addition, in 2022 PhosAgro financed the restoration of the cathedral's fence. The programme has been underway since 2001 and is implemented in cooperation with the Russian Orthodox Church, regional and local government authorities, non- governmental organisations and civil society. The Company organises biannual pilgrimage tours to the relics of St Nicolas the Wonderworker for Russian believers. PhosAgro Group supports the project to develop the Russian Orthodox Centre in Singapore. The Group provides assistance to the exarchate of the Russian Orthodox Church in Southeast Asia. The main objective of the programme is to preserve and promote orthodox values, spiritual ideas, and respect for our legacy and motherland. With the Company's organisational support, the restoration of a church of Dormition of the Most Holy Mother of God (built in 1694) in the Nelazskoye village, a unique monument of wooden architecture, is underway. PhosAgro also helped renovate and equip the spiritual and educational centre of the Cathedral of the Life-Giving Trinity (Volsk, Saratov region). SPIRITUAL REVIVAL Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 248 249 Strategic report Support for Russian sports at the international, national and regional levels, and promoting sports in regions where the Group operates. We believe that supporting the first steps of young athletes in the cities of our presence is just as important as contributing to the success of record holders. Apart from DROZD, the Company provides assistance to 21 sports organisations at the federal, regional, and municipal levels. The Company also continued to support local organisations: youth sports schools, sports associations and clubs. The Company's support at the regional level went to: • Proton Volleyball Club; • Avtodor Basketball Club (Saratov region); • Turbina speedway team (Saratov region); • Severyanka Volleyball Club (Vologda region). PhosAgro's support at the federal level went to: • Russian Olympians Foundation: • Russian Rhythmic Gymnastics Federation; • Russian Cross-Country Skiing Federation; • Russian Chess Federation; • Russian Rugby Federation; • Moscow Rhythmic Gymnastics Federation; Academy of Fertility, a museum and exhibition centre in Balakovo. Other areas of work with veterans include: • financial aid; • health resort treatment; • mass cultural events, excursions, entertainment. In 2022, total support for sports projects amounted to nearly RUB 466 mln Targeted Assistance project A combination of targeted assistance to public organisations and support for volunteer initiatives in the regions of operation. The programme supports 24 non- governmental organisations of labour and war veterans, as well as a number of charities. In particular, PhosAgro supports ten non-governmental organisations in Cherepovets, including In the Name of Good charity, the Cultural and Recreational Centre in the Northern Microdistrict, and veteran organisations. In Kirovsk and Apatity, we provide support to six non-governmental organisations, including a volunteer centre for the Group's pensioners. We also support four local non- governmental organisations in Balakovo and Volkhov, respectively. The Company’s volunteers organised 175 events to provide assistance to veterans, the elderly, and vulnerable social groups in 2022. Apart from that, the volunteers' activities include interaction with orphanages (in particular, making friends with children, helping them to socialise PROMOTION OF SPORTS Security Agents In 2022, PhosAgro continued a unique project for schoolchildren which was initiated by the Cherepovets facility and enlisted the support of Apatit's Economic Security Department and the Ministry of Internal Affairs’ Office in Cherepovets. The project achieved the following results: • Laboratory of Safety, an interactive multimedia exhibition, created; • security and safety training courses developed for different categories (including children); • the first issue of Security Agents, a magazine for teenagers (12+), published, and three more issues are slated for 2023; • Security Agents, a media school, set up, seeking to provide an in-depth insight into security and safety issues and promote safe behaviour; • five episodes of The Kislov Family, a cartoon for children (6+), filmed to reveal the problems of modern society and show how to avoid them; • a travelling safety exhibition developed; in 2023, the exhibition will travel across Cherepovets and the Vologda region, Volkhov and Balakovo; • project experience was rolled out at PhosAgro's Balakovo and Volkhov sites of Apatit. For more information on the Security Agents project, see the Ethical Practices section on page 310 The Agents of Safety project received prizes at two federal competitions: • winner in the Best Museum Event category for the project in the Corporate Museum competition; • winner as the Best Programme Contributing to the Achievement of UN Sustainable Development Goals to Ensure Health, Healthy Lives, and Well-Being to Promote Sustainability in the Russian Leaders in Corporate Philanthropy competition. and prepare them for independent life outside the institution), as well as environmental initiatives. Members of the youth organisation also help an animal shelter. Another important area of volunteer activity is assistance to the Company’s veterans, primarily those who are single. Company profile Corporate governance Share capital Appendices PERFORMANCE REVIEW 250 251 Strategic report 4 For details, see page 267 For details, see page 312 MAINTAINING best practices We believe it is important to continue to be guided by best practices in this essential area and to make sure all our internal standards and procedures are aligned with both Russian statutory requirements and the most reputable national and global guidelines. Last year, PhosAgro saw major reshuffles in its Board of Directors composition. Maintaining a meaningful share of independent directors on the Board remains a key priority for us. We engage in ongoing and consistent efforts in the area of anti-corruption. We have the Anti-Corruption Policy and Code of Ethics in place, run anti-corruption control of our procurement activities, and work to prevent conflict of interest and train our employees as needed. 4 ndependent directors currently on PhosAgro's Board of Directors А1 PhosAgro was awarded the highest ranking in the Russian Business Anti- Corruption Rating by the Russian Union of Industrialists and Entrepreneurs 252 253 CORPORATE GOVERNANCE 254 Chairman's statement 256 Corporate governance framework 260 Corporate governance structure 266 General Meeting of Shareholders 266 Board of Directors 290 Executive bodies 292 Remuneration report 296 Corporate controls 302 Ethical practices 1 Bank of Russia’s Information Letter No. IN-06–28/96 dated 16 December 2021 On Recommendations for Boards of Directors of Public Joint-Stock Companies to Consider ESG Factors and Sustainable Development Issues. Chairman's statement 2022 saw unprecedented challenges in the production and economic activities, which could not but have an immediate effect on the Company’s corporate governance practices. In early March, Andrey A. Guryev resolved to step down as the CEO of PhosAgro and to resign from the Company’s Board of Directors. Furthermore, the Board of Directors lost Xavier Rolet, its Chairman and independent director, Andrey G. Guryev, Deputy Chairman, and Irina Bokova, Chair of the Sustainable Development Committee under the Board of Directors. 70% of directors elected to the Board in June 2022 were newcomers. In spring 2022, the London Stock Exchange suspended trading in global depositary receipts issued by Russian companies, including PhosAgro. The introduced restrictions affected the shareholders’ rights to manage PhosAgro, receive dividends, and dispose of securities issued by PJSC PhosAgro. As a result of disruptions in the settlement infrastructure, PhosAgro also could not pay interest on the previously issued Eurobonds. In this challenging environment, we demonstrated utmost commitment to our obligations. For example, in May 2022 the Company obtained a permit to proceed with its GDR programme. In 4Q 2022, PhosAgro held a vote among its Eurobond holders to amend the issuance documentation in such a way as to continue honouring its public debt commitments to the holders of bonds recorded both in Russia and abroad. The newly elected Board of Directors continues to work actively. We have streamlined the structure of committees by reducing their number from six to three and reviewing the scope of their responsibilities. We have also shifted the focus of the Board of Directors and its committees by placing a particular emphasis on anti-crisis management efforts. The Board of Directors continues to be actively engaged in embedding best practices into all aspects of PhosAgro's operations, including its corporate governance. In 2022, the Board of Directors took note that the practices applied by PhosAgro are strongly aligned Victor Cherepov, Chairman of the Board of Directors of PJSC PhosAgro with the Corporate Governance Code recommended by the Bank of Russia. The directors also assessed progress made in the reporting year against previously approved corporate governance improvement initiatives and reviewed a similar action plan for 2023. We paid particular attention to the recommendations published by the Bank of Russia in December 2021 to encourage boards of directors of public joint- stock companies to consider ESG factors and sustainable development in their activities 1 . Among other things, in the reporting year the Strategy and Sustainable Development Committee of the Board of Directors reviewed results of the self-assessment conducted by the Board of Directors for 2021 in line with the regulator’s recommendations and examined the action plan developed based on the self-assessment findings. The 2023 external assessment of the Board’s performance in 2022 confirmed that activities of the Board of Directors and its committees comply with the Corporate Governance Code recommended by the Bank of Russia and the Listing Rules of the Moscow Exchange. The Board of Directors reaffirms the Company’s commitment to the highest standards of corporate governance and will continue to focus closely on health and safety, sustainable development, climate change and the global challenges facing the agricultural industry. PhosAgro’s directors commend the performance of the management team and its contribution to the strong results delivered by the Company in 2022, while also continuing to support the management in implementing the Strategy to 2025. 70 % of directors elected to the Board in June 2022 were newcomers. Company profile Share capital Appendices CORPORATE GOVERNANCE 254 255 Strategic report Performance review Corporate governance framework GRI 2–12, 2–13 Our governance framework for sustainable development (SD) relies on a number of internal and external drivers. Sustainable development governance The six main components of the sustainable development governance system are listed in the Sustainable Development section on the official website Internal drivers The Company’s mission and values supported by our Corporate Strategy External drivers Stakeholder expectations and the global community’s requirements for the maturity of the Company’s SD governance framework PhosAgro sees its commitment to the highest corporate governance standards as key to building a transparent, responsible and trustworthy governance framework to ensure further growth and sustainable financial strength. PhosAgro's corporate governance principles, structure, practices and procedures are set forth in its Charter and Corporate Governance Code. Provisions of PhosAgro's Corporate Governance Code do not contradict the Corporate Governance Code recommended by the Bank of Russia’s Letter dated 10 April 2014 (the “CGC”) and the UK Corporate Governance Code. Corporate governance principles For the full text of PhosAgro's Corporate Governance Code, please visit our website For the full text of PhosAgro's Charter, please visit our website Basic principles of the Company's Corporate Governance Code Accountability Equality Transparency Responsibility Company profile Share capital Appendices CORPORATE GOVERNANCE 256 257 Strategic report Performance review Documentation support Approval of: • the Inside Information Regulations as amended • the Regulations on the Information Policy as amended • the transparency statement under the UK Modern Slavery Act as amended • the Terms of use of the PhosAgro hotline as amended • the Regulations on the Board of Directors as amended • the Regulations on the Strategy and Sustainable Development Committee of the Board of Directors • the Tax Strategy IT • Update of the reporting year’s environmental and social achievements on the Sustainability page of the Company’s official website • Maintenance of the Public Scrutiny application designed to report occupational health violations Competencies and people • Mandatory training in various areas (for example, cybersecurity, climate change, human rights, etc.) included in the sustainability training framework • Participation in major international and Russian initiatives (RSPP, CGI, ESG Alliance, UN Global Compact, IFA) maintained Performance review and reporting • Procedure for preparing integrated annual reports drafted and approved. CEO appointed as chair of the working group in charge of the integrated annual report • Analysis of global and local ESG ratings and rankings • Taking into account stakeholders’ opinions (inside and outside the Company) • Procedure for the Strategy and Sustainable Development Committee to monitor the Company’s sustainability projects developed • TCFD, GRI, CDP, The Value Reporting Foundation recommendations for reporting implemented Business processes and organisation • Establishing the Strategy and Sustainable Development Committee of the Board of Directors to vest it with the majority of functions previously pertaining to three dissolved committees of the Board of Directors: the Strategy Committee, the Environmental, Health and Safety Committee, and the Sustainable Development Committee • Strengthening the sustainability management function at the corporate headquarters and the enterprises • Comprehensive regulations on interaction in preparing non-financial reporting drafted and implemented • Extending certificates of compliance with requirements of ISO 9001, ISO 14001, ISO 45001, and GMP+ FSA • Surveying the opinions of the Company and its stakeholders with respect to the material topics under GRI 2021 Project management • List and coverage of sustainability key performance indicators (KPIs) expanded • Expansion of analytics under the automated system evaluating suppliers against ESG criteria • List of initiatives pursuing individual UN SDGs-related targets updated 2022 initiatives GRI 2–14 Company profile Share capital Appendices CORPORATE GOVERNANCE 258 259 Strategic report Performance review Corporate governance structure Structure of corporate governance and sustainability management GRI 2–9 Corporate governance assessment When assessing the quality of the Company's corporate governance, the recommendations of the Corporate Governance Code (the "CGC") and the UK Corporate Governance Code (UK CGC, FRC, 2018) are adopted as best practices. The actual compliance with the CGC is measured on an annual basis and disclosed in a dedicated report (report on compliance with the principles and recommendations of the Corporate Governance Code, hereinafter the “CGC Report”), which is subject to review by the Audit Committee of the Board of Directors and approval by the Board of Directors, and forms a part of the Company’s annual report. In February 2023, the Audit Committee of the Board of Directors reviewed the results of the improvement plan implementation in 2022, analysed the developments of the degree of compliance with the CGC principles, as well as the assessment of the disclosure quality to explain non-compliance or partial compliance. Following a review of the corporate governance quality assessment, the Board of Directors approved the CGC compliance report for 2022 and issued a positive assessment of compliance with the CGC recommendations. Furthermore, the Board of Directors praised progress against the 2022 Corporate Governance Practice Improvement Plan, and approved the improvement plan for 2023. Over the past three years, PhosAgro has demonstrated a high level of compliance with the CGC recommendations. CGC section Total number of matters Full compliance Partial compliance Non-compliance 2020 2021 2022 2020 2021 2022 2020 2021 2022 1. Shareholders' rights 13 11 11 11 2 1 1 1 1 2. Board of Directors 36 33 32 30 3 4 5 1 3. The Company's Corporate Secretary 2 2 2 2 4. Remuneration 10 5 8 8 4 2 2 1 5. Risk governance and internal control 6 6 6 6 6. Information disclosure 7 7 5 7 2 7. Material corporate actions 5 3 5 5 2 Total 79 67 69 69 11 9 8 1 1 2 Percentage of compliance with CGC principles 85 87 87 14 11 10 1 1 3 Compliance with CGC principles at PhosAgro and other Russian companies, % Board of Directors committees: • Audit Committee • Remuneration and Human Resources Committee • Strategy and Sustainable Development Committee Collective executive body (Management Board) Review Committee GENERAL MEETING OF SHAREHOLDERS Functional departments in sustainable development Sustainable Development Department Internal Audit Department Chief Executive Officer Corporate Secretary Legal and Corporate Governance Department Administrative reporting Functional reporting Functional relationship Board of Directors • Ecology and Environmental Management • Human Resources and Social Policy • Technical Development, Capital Construction and Repairs, Samoilov Scientific Research Institute for Fertilizers and Insectofungicides (NIUIF) • Marketing and Development, Innovations, NIUIF • Procurement • Project Management • Economic departments • Risk Management and Internal Control 87 87 85 84 2022 2021 2020 2019 78 77 78 PJSC PhosAgro Russian public joint-stock companies 1 Full compliance 10 11 14 15 2022 2021 2020 2019 17 17 16 Partial compliance PJSC PhosAgro Russian public joint-stock companies 3 1 1 1 2022 2021 2020 2019 5 6 6 Non-compliance PJSC PhosAgro Russian public joint-stock companies 1 Based on the Bank of Russia's annual reviews of corporate governance practices in Russian public companies Company profile Share capital Appendices CORPORATE GOVERNANCE 260 261 Strategic report Performance review For every case of partial compliance or non-compliance, PhosAgro specifies the measures taken to mitigate the associated risks in the CGC Report. In 2021, the quality of PhosAgro's disclosure to explain the non-compliance (partial non-compliance) with the recommendations of the Code, according to the Bank of Russia, improved from 69 to 76%, while the average level in the Russian Federation declined from 63% to 59%. Degree of disclosure to explain non-compliance (partial non-compliance) with CGC principles at PhosAgro and other Russian companies, % Results of implementing the CG improvement plan developed and approved by the Board of Directors in the analysis of the 2021 CGC Report Review and approval of the tax strategy The document was approved by the Board of Directors on 3 November 2022 Amendments to the information policy detailing the process for providing data on shareholder requests The document was approved by the Board of Directors on 3 November 2022 Amendments to the Regulations on the Remuneration and Human Resources Committee reflecting the conditions (events) for reviewing the compensation policies Amendments not approved. The Company proceeded from the fact that the responsibility to regularly revise the policy, which is specified in the Regulations on the Remuneration and Human Resources Committee of the Board of Directors, implies ensuring that it is updated and meets the current needs of the Company Return to the practice of individual assessment of the Board members when assessing the Board performance in general It was resolved to refrain from individual assessments for the purposes of the Board’s 2022 performance assessment ADDITIONAL MEASURES IMPLEMENTED Expanding the scope of the annual reports to include the Board of Directors’ viability statement, the going concern assumptions, consideration given to key stakeholders’ voice in the Board's discussions and decision-making, information about significant external appointments of the Board members Underway since April 2021 Expanding disclosure on the remuneration system as a whole, the KPI system and their alignment with the strategy Underway since April 2021 Updating PhosAgro Hotline Regulations The document was approved by the Board of Directors on 18 August 2022 Updating the Regulations on the Board of Directors and Regulations on committees of the Board of Directors The document was approved by the Board of Directors on 18 August 2022 Updating PhosAgro’s Inside Information Regulations The document was approved by the Board of Directors on 3 November 2022 Updating the Board's Modern Slavery Act Transparency statement The document was approved by the Board of Directors on 20 December 2022 Key actions approved by the Board of Directors upon review of the 2022 CGC Report which are aimed at improving the governance quality in 2023: upon the re-election of the Remuneration and Human Resources Committee in 2023, the Board of Directors will seek to staff the Remuneration and Human Resources Committee with independent directors only; as part of the next amendments made to the Regulations on the Remuneration and Human Resources Committee (presumably in 2023), a clause on conditions (events) for reviewing the compensation policies will be introduced; in 2023, the Company will resume the practice of assessing each Board member individually, as part of the evaluation of the quality of the work of the Board of Directors. 1 The most recent year assessed by the Bank of Russia. 76 69 77 59 63 63 2021 1 2020 2019 PJSC PhosAgro Russian public joint-stock companies Company profile Share capital Appendices CORPORATE GOVERNANCE 262 263 Strategic report Performance review Changes in self-assessment as regards compliance with corporate governance principles No. Number and brief description of the principle Old status New status Comments 1 1.1.2. Publishing of a general meeting notice on the company’s website at least 30 days prior to the date of the general meeting of shareholders Criterion 1 is partially complied with. A notice on one of the three General Meetings of Shareholders held in 2022 was published 27 days (not 30 days) before the Meeting date. This was due to the necessity to align the General Meeting’s agenda with Article 42 of Federal Law No. 208-FZ On Joint-Stock Companies dated 26 December 1995 based on the Bank of Russia’s improvement notice, which was received after the Board of Directors approved the agenda. Hence, a new Board meeting had to be convened to amend the net profit distribution item of the General Meeting’s agenda by specifying the applicable net profit distribution period. That said, PhosAgro did not breach the shareholder notification timeframe in accordance with Article 52 of the same Federal Law. Going forward, PhosAgro will seek to respect applicable timeframes for serving (publishing) General Meeting notices as required by laws and the Corporate Governance Code. 2 1.1.5. Ability for shareholders to freely exercise their rights to vote Formally speaking, the criterion is not complied with, as PhosAgro’s Charter does not provide for online ballot completion on the website. However, the vast majority of the Company’s shareholders hold their shares through nominee shareholders (with the exception of only 24 out of 231,000 shareholders, or less than 0.01%) and can take advantage of remote voting by instructing their nominees accordingly (proxy voting) and thus freely exercise their voting rights in a simple and convenient way. Going forward (for example, if the number of shareholders who do not use nominee shareholding services increases drastically), PhosAgro may once again consider an option of electronic voting. 3 1.2.1. A transparent and clear mechanism for determining the amount of dividends and payment thereof In the reporting year, explanations on the proposed net profit distribution procedure (including the amounts paid as dividends and profits allocated for the Company’s own needs) and its conformity with PhosAgro’s dividend policy were included in the materials for the General Meeting of Shareholders. No. Number and brief description of the principle Old status New status Comments 4 2.3.2. Availability of information on nominees to the company’s board of directors to shareholders The criterion is partially complied with, as the shareholders were not provided with the findings of an assessment completed by the Board of Directors or its Remuneration and Human Resources Committee to determine whether the professional qualifications, experience and skills of nominees to the Board of Directors meet the current and potential needs of PhosAgro. This was due to the short period of time left between the repeated final date for submitting agenda proposals in the run-up to the Annual General Meeting of Shareholders and proposals on nominees to the Company’s Board of Directors, on the one hand, and the date of the Board meeting convened to review these proposals, on the other hand. In 2023, the shareholders will be provided with the findings of an assessment completed by the Board of Directors or its Remuneration and Human Resources Committee to determine whether the professional qualifications, experience and skills of nominees meet the current and potential needs of PhosAgro. Going forward, the Company will also seek to make this information available to the shareholders in the run-up to the General Meetings of Shareholders focusing on the election of Board members. 5 2.8.2. Performance of the remuneration committee Criterion 1 was not complied with, as one of the members of the Remuneration and Human Resources Committee does not meet the independence requirements. The Committee was drawn from the members of the newly elected Board of Directors. The directors were selected based on their experience, professional background, skills and knowledge so that they could best meet the Committee’s goals and objectives. Once the General Meeting of Shareholders elects new members of PhosAgro’s Board of Directors in 2023, the Board will seek to staff the Remuneration and Human Resources Committee with independent directors only. Criterion 2 was not complied with to the extent that the Remuneration and Human Resources Committee is chaired by a director who does not meet the independence requirements. However, the director’s competencies, professional experience and dedicated skills enable him to run the Committee in the most efficient manner. Upon the re-election of the Remuneration and Human Resources Committee in 2023, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee. Criterion 3 was not met with respect to the failure to define in the Company’s internal documents the conditions (events) upon the occurrence of which the Remuneration and Human Resources Committee of the Board of Directors considers the revision of PhosAgro’s policy on remuneration of the Board members, members of executive bodies, and other key executives. The Company proceeded from the fact that the responsibility to regularly revise the policy, which is specified in the Regulations on the Remuneration and Human Resources Committee of the Board of Directors, implies ensuring that it is updated from time to time and meets the current needs of PhosAgro. As part of the next amendments made to the Regulations on the Remuneration and Human Resources Committee or upon approval of a new version of the Regulations (presumably in 2023), a clause on conditions (events) for reviewing the compensation policies will be introduced. Full compliance Partial compliance Non-compliance Company profile Share capital Appendices CORPORATE GOVERNANCE 264 265 Strategic report Performance review No. Number and brief description of the principle Old status New status Comments 6 2.8.5. Composition of committees of the Board of Directors Criterion 1 was not complied with to the extent that the Remuneration and Human Resources Committee is chaired by a director who does not meet the independence requirements. However, the director’s competencies, professional experience and dedicated skills enable him to run the Committee in the most efficient manner. Upon the re-election of the Remuneration and Human Resources Committee in 2023, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee. 7 2.9.1. Evaluation of the quality of the work of the Board of Directors Criteria 1 and 3 were fully complied with. Criterion 2 was not met with respect to the failure to conduct individual assessment of each member of the Board of Directors in 2021 (for 2020) and 2022 (for 2021). Individual assessment of each Board member was deemed irrelevant by the Remuneration and Human Resources Committee, as 70% of directors working at the Board starting July 2022 were newcomers. In this context, the Board of Directors did not see any risks in failing to complete individual assessments for each member of the Board. In 2023, the Company will resume the practice of assessing each Board member individually, as part of the evaluation of the quality of the work of the Board of Directors. 8 6.3.1. Providing shareholders with access to information at their requests Relevant amendments were added to PhosAgro’s internal documents (the Regulations on the Information Policy). 9 6.3.2. Providing shareholders with access to information at their requests Relevant amendments were added to PhosAgro’s internal documents (the Regulations on the Information Policy). General Meeting of Shareholders The activities of PhosAgro's supreme governing body – the General Shareholders' Meeting – are governed by the Regulations on the General Meeting of Shareholders.In June 2022, the Annual General Meeting of Shareholders was held in absentia to elect new members of the Board of Directors and Review Committee, determine the Board of Directors’ remuneration, and resolve on other matters within the Meeting’s remit. Full compliance Partial compliance Non-compliance Full text of PhosAgro’s Regulations on the General Meeting of Shareholders is available on the official website of the Company Full text of PhosAgro’s Regulations on the Board of Directors is available on the official website of the Company Report on compliance with the principles and recommendations of the Corporate Governance Code (stand-alone document) Board of Directors direction and make key decisions. Throughout the year, the Board focused on maintaining the continuous operation of the Company's production assets, supporting established supply chains and building new ones. The Board of Directors of PJSC PhosAgro underwent notable changes both in terms of its composition and agenda and structure of committees. The Board's responsibility to the government, shareholders, employees, communities in the regions of PhosAgro’s footprint and other stakeholders for the Company's operational, financial, environmental and social performance remained unchanged. The reporting year also saw two extraordinary General Shareholders’ Meetings convened to vote on declaration (payout) of interim dividends. The Board of Directors plays a key role in PhosAgro's corporate governance system. Its activities are governed by the Regulations on the Board of Directors. In 2022, amid significant changes in the operating environment, the Board of Directors continued to set the Company's strategic Company profile Share capital Appendices CORPORATE GOVERNANCE 266 267 Strategic report Performance review Strategy and global challenges In 2022, we continued to develop our updated Strategy to 2030 despite the changing external environment, but given the serious rise in the level of uncertainty, this will take longer than expected. The Board traditionally paid great attention to monitoring progress in the implementation of the Strategy to 2025, including a detailed review of progress towards strategic goals in functional areas such as sales, logistics, production, environmental protection and climate change, occupational health and safety, and personnel development. In addition, the focus of the Board during the year was on approved projects that, though not part of the Strategy to 2025, meet the criteria adopted by the Board when approving the Strategy in the context of the main scenarios considered. These criteria include sustainable production growth, introduction of innovative and sustainable products and processes, and stronger operating efficiency. The Board also reviewed a number of investment initiatives that form the basis for the Strategy to 2030 and can be integrated into it in line with developments in the markets. Sustainable development and corporate governance GRI 2–14 In July 2022, the new Board of Directors resolved to establish a Strategy and Sustainable Development Committee, which confirms its understanding of the key role of sustainability principles in defining the Company's strategy, as well as their importance in managing such aspects of the Company's operations as environmental protection, occupational health and safety and energy efficiency. Regulations on the Board of Directors and its committees were updated to set out the new functionality and structure of the committees. During 2022, as part of the action plan to implement the ESG agenda in the Company's practices, the Board of Directors adopted a tax strategy and updated a number of internal documents on anti- corruption activities, shareholder relations, and handling of insider information. Information technologies and information security In the reporting year, the Board dealt with three groups of IT-related issues. In addition to the traditional assessment of information security threat prevention, the Board heard a report on the development of cloud and other advanced technical solutions in line with PhosAgro's IT strategy, as well as analysed the Company's preparedness to replace software products that are no longer supported in the Russian Federation due to the imposition of sanctions. Board members, along with Company employees, received information security training on Kaspersky ASAP, Apatit's corporate platform. Ongoing tasks Key activities undertaken by the Board of Directors in 2022 included: • assessment and quarterly monitoring of the risk management process; • assessment and quarterly monitoring of subsidiary activities with a focus on workplace health and safety, industrial safety and environmental protection; • assessment of compliance with the Inside Information Regulations; • assessment of the quality of investment and organisational project management at PhosAgro Group subsidiaries; • appointment and evaluation of the performance of PJSC PhosAgro's CEO and Management Board; • oversight over management relations with shareholders, investors and other stakeholders; • monitoring the implementation of priority areas of PhosAgro’s activities in 2022 and determining priority areas of its activities for 2023; • reviewing PJSC PhosAgro’s budget for 2023, as well as quarterly follow-up on the 2022 budget utilisation; • determining whether Phosagro’s corporate culture is aligned with its mission, values and strategy, as well as assessing and monitoring the corporate culture; • performance, work plans, and budget of the Internal Audit Department; • quarterly review and approval of financial statements; • convening General Meetings of Shareholders of PJSC PhosAgro. Participation in the Board meetings In 2022, the Board of Directors held twelve meetings (two of them by absentee voting) and considered a total of 77 agenda items. The number of items considered by the Board of Directors in 2022 grew compared to 2020 (70) and decreased compared to 2021 (91). Meetings of the Board of Directors 10 7 8 2 1 3 2022 2021 2020 In-person meetings Absentee meetings 12 meetings of the Board of Directors in 2022 77 considered a total in 2022 agenda items Company profile Share capital Appendices CORPORATE GOVERNANCE 268 269 Strategic report Performance review Participation in the Board meetings before the election of new members of the Board of Directors (before 30 June 2022) Irina Bokova Andrey A. Guryev Andrey G. Guryev Sven Ombudstvedt Natalia Pashkevich James Rogers Marcus Rhodes Mikhail Rybnikov Xavier R. Rolet Andrey Sharonov Board of Directors 3/6 4/6 4/6 6/6 6/6 6/6 6/6 6/6 3/6 6/6 Audit Committee 2/2 2/2 2/2 2/2 Strategy Committee 0/0 0/0 0/0 0/0 Remuneration and Human Resources Committee 1/1 1/1 1/1 Risk Management Committee 1/1 1/1 1/1 Environmental, Health and Safety Committee 1/1 1/1 1/1 Sustainable Development Committee 0/0 0/0 0/0 S172 statement According to Section 172 “Duty to promote the success of the company” of the UK Companies Act 2006, PhosAgro’s Board of Directors acts in good faith for the benefit of the Company to promote its success, taking into account possible long-term consequences of its decisions for the society and the environment, as well as the interests of the Company’s employees and other stakeholders. For the members of PhosAgro’s Board of Directors, these standards mean that the Group’s stakeholders should be interacted with responsibly and that their interests should be respected to the maximum extent possible. At least once a year, the Strategy and Sustainable Development Committee (until 2022, the Sustainable Development Committee) of the Board of Directors reviews feedback from stakeholders on aspects of the Company’s operations that are material to them. Such feedback is used both to identify topics and indicators to be disclosed in PhosAgro Group's non-financial reporting and to determine mechanisms for engagement with the Company's stakeholders, including at the Board level. Prospects The Company's development scenarios are reviewed by the Board of Directors when approving its Strategy. The strategic planning cycle adopted by the Company is five years. Since 2019, the Board of Directors has been considering a contingency plan to prepare for critical changes in the external operating environment such as possible restrictions on our supplies to key markets. For the Group, 2021 was marked by the countervailing duties imposed on Russian and Moroccan producers in the US market, the agreement among Russian producers of mineral fertilizers to put a cap on prices in the domestic market, as well as the introduction of quotas and export licences in Russia. In 2022, countervailing duties and the supply quota system remained in force in Russia. At the same time, the restrictions caused by international sanctions and supply chain disruptions made it difficult for the Company to deliver its products to its traditional markets. The Company is adversely affected by the termination of operations in Russia by some Western suppliers of equipment, services and technology, as well as by difficulties in making payments. When approving the Strategy to 2025, the Board of Directors also weighed the associated strategic risks and regularly reviews them as part of the strategy implementation monitoring. Risk management maps were drawn for each risk, containing a detailed description along with mitigants and probability, materiality and risk appetite estimates. For more information on our strategic risks, see the Strategic Report section on page 70. In the face of unprecedented levels of realisation of these risks, the Company ensures uninterrupted operation of all its production sites, timely supply of fertilizers and care for its employees and their families. PhosAgro Group's team manages to cope with the new challenges in a short space of time, not just keeping the business stable, but reaching new highs. Based on the foregoing, the Board of Directors finds it reasonable to believe that the Company will, without any reservations, be able to continue its operations and meet all its obligations as they fall due while the Strategy to 2025 is in force. Participation in the Board meetings after 30 June 2022 Victor Ivanov Yuri Krugovykh Siroj Loikov Ivan Rodionov Natalia Pashkevich Alexander Seleznev Victor Cherepov Mikhail Rybnikov Alexander Sharabaika Andrey Sharonov Board of Directors 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 5/5 Audit Committee 2/2 2/2 2/2 Remuneration and Human Resources Committee 2/2 2/2 2/2 Strategy and Sustainable Development Committee 2/2 2/2 2/2 Company profile Share capital Appendices CORPORATE GOVERNANCE 270 271 Strategic report Performance review Board of Directors: age % Above 60 years 50–60 years 40–50 years Under 40 years 40 40 10 10 50 20 20 10 After 30 June 2022 Before the election of new Board members (before 30 June 2022) Composition of the Board of Directors GRI 2–9, 405-1 1 Including competencies in environment, health and safety. Key competencies of Board members GRI 2–17 Board members since 5 July 2022 Status Key competencies (based on professional experience) Equity interest, % Strategy and innovation Finance and audit Risk management Law and corporate governance Chemistry and mining engineering Personnel management Corporate governance and sustainable development (ESG) 1 International cooperation Victor Cherepov Chairman, independent none Victor Ivanov Independent 0.0013 Natalia Pashkevich Independent none Andrey Sharonov Independent none Ivan Rodionov Non-executive 0.0064 Yuri Krugovykh Executive none Alexander Sharabaika Executive none Alexander Seleznev Executive none Siroj Loikov Executive none Mikhail Rybnikov Executive 0.0258 The General Meeting of Shareholders annually elects ten members of the Board of Directors by cumulative voting: the nominees with the highest number of votes are elected. The composition of the Board of Directors should be balanced in terms of the qualifications, expertise and business skills of its members. Board members should have a recognised, including among investors and shareholders, good business reputation and no conflicts of interest with the Company. Board of Directors: place of residence, % Russian Federation Europe Southeast Asia 50 40 10 100 0 0 After 30 June 2022 Before the election of new Board members (before 30 June 2022) Board of Directors: length of continuous service, % <3 years 4–7 years >7 years 0 50 50 70 20 10 After 30 June 2022 Before the election of new Board members (before 30 June 2022) Board of Directors: gender split, % Men Women 80 20 90 10 After 30 June 2022 Before the election of new Board members (before 30 June 2022) Board of Directors: independence, % 10 40 50 Non-executive directors Independent directors Executive directors 10 70 20 After 30 June 2022 Before the election of new Board members (before 30 June 2022) Company profile Share capital Appendices CORPORATE GOVERNANCE 272 273 Strategic report Performance review 1 Directors & Officers Liability D&O 1 liability insurance The company has been taking out D&O liability insurance every year since 2012. Under the current insurance contract (insurance period from 1 June 2022 to 31 May 2023), liability for third-party losses incurred in the exercise of duties by directors and officers of PhosAgro is covered up to USD 50 mln in rouble equivalent, with a liability extension for all independent non-executive directors by USD 2 mln. Apart from directors' liability, the above contract includes the liability of the Company's officers. Assessment of the Board of Directors GRI 2–18 In accordance with the CGC recommendations, PhosAgro assesses the performance of its Board of Directors on an annual basis, with external experts engaged for this purpose once in three years. In January 2023, IDA – Association of Professional Directors conducted an external assessment of the Company's Board of Directors. Approach to the Board of Directors’ assessment The Board assessment methodology is based on international best practices, CGC recommendations and the Listing Rules of the Moscow Exchange, and has been agreed with the Chairman of the Remuneration and Human Resources Committee and the Corporate Secretary. Detailed questionnaires were circulated among directors to assess the performance of the Board and its committees. The findings were supplemented by comments and feedback from Board members and management during individual interviews. As part of the assessment, the number of the Board’s focus areas under review was increased to eleven. Each of them received a fairly high score. The external assessment confirmed that the Board and its committees were functioning in accordance with the recommendations of the CGC and the Listing Rules of the Moscow Exchange. Corporate governance practices in such areas as the organisation of activities and operation of the Board of Directors, interaction with committees, the role of the Board Chairman, the performance of the Corporate Secretary, and the Company's ESG and sustainability activities were noted as highly effective. In line with the CGC recommendations and international best practice, PhosAgro will continue organising annual self-assessment of the Board of Directors and an external independent assessment every three years to ensure the continued development and improvement of PhosAgro's corporate governance practices. The Board of Directors’ assessment Role of the Board of Directors Composition and structure of the Board of Directors Organisation of activities of, and changes in, the Board of Directors Effectiveness of the Board of Directors External stakeholder engagement Senior management engagement Liaising with committees Chairman of the Board of Directors Corporate Secretary assessment ESG and sustainable development Strategy and risks 1,0 0,0 2,0 3,0 4,0 3.5 3.5 3.6 3.6 3.2 3.5 3.5 3.3 3.4 3.1 3.3 Role of independent directors Independent directors make a valuable contribution to the Board’s decision-making as their opinions rely solely on professional skills and expertise, as well as a comprehensive study of the matter. Their position is unbiased, independent and free from the influence of other members of the Board and PJSC PhosAgro's management, and they are primarily focused on improving PhosAgro's performance. Since 1 July 2022, four out of ten Board members are independent. Until 30 June 2022, independent directors chaired five out of the Board's six committees; after the election of new directors, one of the three committees is chaired by an independent director. The independence of Board members and nominees is assessed biannually by the Remuneration and Human Resources Committee. The assessment is based on the criteria set out in PhosAgro's Regulations on the Board of Directors, Clause 2.4 of the CGC, Clause 2 of Appendix 2 (2.18) and Appendix 4 of the Listing Rules of the Moscow Exchange and Clause 10 of the UK Corporate Governance Code (FRC, 2018). In 2022, four of the Board members (Victor Ivanov, Natalia Pashkevich, Victor Cherepov and Andrey Sharonov) were recognised as independent. Company profile Share capital Appendices CORPORATE GOVERNANCE 274 275 Strategic report Performance review Members of the Board of Directors as at 31 December 2022 Information on the members of the Board of Directors GRI 2–11 Alexander Sharabaika Deputy Chairman of the Board of Directors at PhosAgro since 5 July 2022, Deputy CEO for Finance and International Projects at PhosAgro Year of election: 2022 Date of birth: 25 February 1977 For information on Xavier R. Rolet, Irina Bokova, Andrey G. Guryev, Andrey A. Guryev, Sven Ombudstvedt and Marcus Rhodes who all left the Board of Directors in March and July 2022 please see the 2021 integrated Annual Report of PJSC PhosAgro on the Company’s website 2018 – Pr. – AB Energo, Member of the Board of Directors 2018 – Pr. – NPF BLAGOSOSTOYANIE, Member of the Board of Directors 2016 – Pr. – Krasnoyarskii Kotelnyi Zavod, Member of the Board of Directors 2016–2020 – Public Council under the Ministry of Health of the Russian Federation, Member of the Board of Directors 2015 – Pr. – Pharmaceutical and Medical Industry Investors Club, President 2010–2022 – Machine-Building Factory of Podolsk, Member of the Board of Directors 2010 – Pr. – National Medical Chamber, Member of the Council for Professional Qualifications in Healthcare 2008 – Pr. – Federal Compulsory Health Insurance Fund, Member of the Management Board 2005–2021 – Russian Union of Industrialists and Entrepreneurs, Executive Vice President, Managing Director of the Department of Relations with Regional and Industrial Associations 2002 – Pr. – State University of Management, Head of the Department of Healthcare and Sport Industry Management Education Karaganda State Medical Institute, Degree in General Medicine School of Medicine, Boston University School of Public Health, USA MD, Professor, Member of the Russian Academy of Medical and Technical Sciences, Member of the International Academy of Energy Information Sciences Professional experience 2022 – Pr. – PhosAgro, Deputy Chairman of the Board of Directors 2019 – Pr. – PhosAgro, Deputy CEO for Finance and International Projects 2018–2022 – PhosAgro, Member of the Management Board 2017 – Pr. – Apatit, Advisor to the CEO (part-time) 2017–2019 – Apatit, Member of the Management Board 2017–2018 – PhosAgro, Member of the Board of Directors 2015 – Pr. – PhosAgro-Region, Member of the Management Board 2014–2019 – PhosAgro, Director for Economic Affairs and Finance Education Belarus State Economic University, Degree in Finance and Credit University of Nottingham (UK), Bachelor's degree in Finance Moscow School of Management SKOLKOVO, Executive Coaching for the Development of Leaders, Project Management Victor Cherepov Chairman of the Board of Directors at PhosAgro since 3 October 2022, independent director Year of election: 2022 Date of birth: 15 January 1951 Professional experience 2022 – Pr. – PhosAgro, Chairman of the Board of Directors, Chairman of the Audit Committee 2022 – Pr. – Kashira Steel Structures and Boiler Building Plant, Member of the Board of Directors 2022 – Pr. – Kompaniya Ust-Luga, Member of the Board of Directors 2021 – Pr. – RC Novotrans, Advisor 2021 – Pr. – Russian Union of Industrialists and Entrepreneurs, Vice President for Social Policy and Labour Relations 2020 – Pr. – Public Council under the Ministry of Health of the Russian Federation, Deputy Chairman of the Board of Directors 2019 – Pr. – NPF BLAGOSOSTOYANIE, Chairman of the Human Resources and Remuneration Committee, Member of the Strategic Planning Committee Victor Ivanov Member of the Board of Directors at PhosAgro since 5 July 2022, independent director Year of election: 2022 Date of birth: 17 January 1943 Professional experience 2022 – 2023 – PhosAgro, Member of the Board of Directors, Member of the Remuneration and Human Resources Committee 2017 – Pr. – Reatex, Member of the Board of Directors 2017 – Pr. – AgroChimInvest, Chairman of the Board of Directors 2013 – Pr. – Pigment, Member of the Board of Directors 2012 – Pr. – Russian Chemists Union, President Education Tomsk Polytechnic Institute, Degree in Chemical Process Engineering Academy of National Economy under the USSR Council of Ministers Company profile Share capital Appendices CORPORATE GOVERNANCE 276 277 Strategic report Performance review Natalia Pashkevich 2016–2022 – SKOLKOVO Endowment Fund, Director 2016–2022 – Association for the Development of Moscow School of Management SKOLKOVO, Managing Director 2016–2021 – Moscow School of Management SKOLKOVO, President 2015 – Pr. – Sovcomflot, Chairman of the Audit Committee, Member of the Compensation Committee 2015–2018 – VTB Bank, Member of the Supervisory Council 2014–2022 – International Business Leaders Forum, Chairman of the Board of Trustees Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors 2021 – Pr. – Priority 2030 Strategic Academic Leadership Programme, Head of the programme 1999 – Pr. – St Petersburg Mining University, First Vice Rector Education Leningrad Mining Institute, Degree in Mining Engineering and Economics, PhD in Economics, professor Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors, Chairman of the Remuneration and Human Resources Committee, Member of the Audit Committee 2017–2020 – IBS IT Services, Member of the Board of Directors 2014–2022 – AgroGard-Finance, Member of the Board of Directors 2012 – Pr. – Interdepartmental Analytical Centre, Member of the Board of Directors 2009–2021 – IC RUSS-INVEST, Member of the Board of Directors Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors, Member of the Audit Committee, Member of the Remuneration and Human Resources Committee, Member of the Strategy and Sustainable Development Committee 2022–2022 – PhosAgro, Chairman of the Board of Directors 2022 – Pr. – ESG Alliance, CEO 2021 – Pr. – Profilum, Chairman of the Board of Directors 2021–2022 – Sberbank, Vice President 2020 – Pr. – Foundation for Development of the Centre for Elaboration and Commercialisation of New Technologies (Skolkovo Foundation), Member of the Board of Directors, Chairman of the Human Resources and Compensation Committee 2019 – Pr. – En+ Group, independent non-executive director, Member of the Audit Committee, Chairman of the Corporate Governance and Nominations Committee 2019–2022 – Rosseti, Member of the Board of Directors (independent director), Member of the Personnel and Remuneration Committee 2018 – Pr. – Medicina, Chairman of the Board of Directors 2017–2022 – PhosAgro, Member of the Board of Directors, Member of the Audit Committee, Member of the Remuneration and Human Resources Committee, Member of the Sustainable Development Committee 2014 – Pr. – MC NefteTransService, Chairman of the Board of Directors 2014 – Pr. – Sovcomflot, Member of the Board of Directors (independent director), Member of the Innovative Development and Technical Policy Committee 2014–2019 – NOVATEK, independent director, Chairman of the Audit Committee, Member of the Remuneration and Nomination Committee 2009–2020 – National Research University Higher School of Economics, Professor (part-time) at the School of Finance of the Faculty of Economic Sciences Member of the Board of Directors at PhosAgro, independent director Year of election: 2017 Date of birth: 5 November 1939 2017–2022 – PhosAgro, Member of the Board of Directors, Member of the Environmental, Health and Safety Committee 2009 – Pr. – National Research University, Head of the development programme Andrey Sharonov Member of the Board of Directors at PhosAgro, independent director Year of election: 2017 Date of birth: 11 February 1964 Education Ufa Aviation Institute, Degree in Aviation Instrument Making Institute of Socio-Political Research under the Russian Academy of Sciences, PhD in Sociology Russian Academy of Public Administration under the President of the Russian Federation, Degree in Law Moscow School of Management SKOLKOVO, Executive Coaching for the Development of Executives, Top Management Teams and Organisations Ivan Rodionov Member of the Board of Directors at PhosAgro from 5 July 2022 to 27 March 2023, non-executive director Year of election: 2022 Date of birth: 30 November 1953 2003–2021 – National Research University Higher School of Economics, Professor (part-time) Education Higher education in Economics, Lomonosov Moscow State University, PhD in Economics, professor Company profile Share capital Appendices CORPORATE GOVERNANCE 278 279 Strategic report Performance review Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors 2020 – Pr. – PhosAgro, First Deputy CEO 2020 – Pr. – Apatit, Advisor to the CEO (part-time) 2018–2020 – PhosAgro, Deputy CEO 2018–2020 – Apatit, Deputy CEO (part-time) 2018–2019 – PhosAgro-Region, Deputy CEO for Human Resources (part-time) 2017–2018 – Tirvas, Member of the Board of Directors 2017–2018 – Apatit, Human Resources and Social Policy Director 2017–2018 – Apatit, Member of the Management Board 2015–2018 – PhosAgro, Human Resources and Social Policy Director 2015–2018 – Korporativnoe pitanie (Corporate Nutrition), Member of the Board of Directors 2015–2017 – PhosAgro-Cherepovets, Human Resources and Social Policy Director, Member of the Management Board 2013–2022 – PhosAgro, Member of the Management Board 2013–2017 – Izumrud, Member of the Board of Directors Education Tashkent State University of Economics, International Economic Relations University of Nottingham (UK), Bachelor's degree in Business Management Moscow School of Management SKOLKOVO, Executive Coaching for the Development of Leaders, Project Management Siroj Loikov Member of the Board of Directors, First Deputy CEO of PhosAgro Year of election: 2022 Date of birth: 9 September 1972 Yuriy Krugovykh Member of the Board of Directors at PhosAgro since 5 July 2022, First Deputy CEO Year of election: 2022 Date of birth: 29 May 1955 Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors 2022 – Pr. – PhosAgro, Member of the Management Board 2015 – Pr. – Apatit, Deputy CEO for Information Policy (part-time) 2013 – Pr. – PhosAgro-Region, Member of the Management Board Education Moscow University for the Humanities, Degree in History Professional experience 2022 – Pr. – PhosAgro, CEO 2022 – Pr. – PhosAgro, Member of the Board of Directors, Member of the Management Board, Member of the Strategy Committee, Member of the Sustainable Development Committee 2021–2022 – PhosAgro, Deputy CEO 2020–2021 – PhosAgro, Managing Director 2018 – Pr. – NIUIF, Member of the Board of Directors 2018 – Pr. – Apatit, Advisor to the CEO (part-time) Mikhail Rybnikov Member of the Management Board, Member of the Board of Directors and CEO at PhosAgro since 11 March 2022 Year of election: 2022 Date of birth: 30 November 1975 2018–2020 – PhosAgro, First Deputy CEO 2018–2019 – Apatit, Member of the Management Board 2017–2018 – Apatit, CEO, Chairman of the Management Board 2016–2022 – PhosAgro, Member of the Board of Directors, Chairman of the Environmental, Health and Safety Committee, Member of the Strategy Committee, Member of the Sustainable Development Committee 2016 – Pr. – PhosAgro-Region, Member of the Management Board 2015–2017 – PhosAgro-Cherepovets, CEO, Chairman of the Management Board 2013–2022 – PhosAgro, Member of the Management Board 2013–2018 – PhosAgro, Managing Director (part-time) Education Lomonosov Moscow State University, Master’s degree in Economics Moscow School of Management SKOLKOVO, Executive Coaching for the Development of Executives, Leadership In Action Alexander Seleznev Member of the Board of Directors at PhosAgro since 5 July 2022, Chief of Staff for the CEO Year of election: 2022 Date of birth: 6 July 1984 Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors 2019 – Pr. – PhosAgro, Chief of Staff for the CEO 2019–2022 – PhosAgro, Member of the Management Board 2015–2019 – PhosAgro, Head of Investor Relations Education Bauman Moscow State Technical University, Degree in Comprehensive Information Security of Automated Systems Company profile Share capital Appendices CORPORATE GOVERNANCE 280 281 Strategic report Performance review For more information, please visit the Company’s website Committees of the Board of Directors Corporate Secretary The Corporate Secretary is responsible for day-to-day interactions with the shareholders, coordination of the Company’s efforts to protect shareholder rights and interests, and support provided to the Board of Directors to ensure its efficient performance. The Corporate Secretary is appointed by the Board of Directors. The operating procedures of the Corporate Secretary are governed by the Regulation on the Corporate Secretary approved by the Company’s Board of Directors. Sergey Samosyuk Year of appointment: 2016 Date of birth: 1 October 1976 Professional experience 2022 – Pr. – PhosAgro, Advisor to the Deputy CEO for Sales, Marketing and Logistics (part-time) 2021 – Pr. – AgroGard-Finance, Member of the Board of Directors 2021 – Pr. – Giproruda, Member of the Board of Directors 2017 – Pr. – Apatit, Advisor to the CEO (part-time) 2016 – Pr. – PhosAgro, Corporate Secretary Education St Petersburg State University of Economics, Degree in Engineering and Economics St. Petersburg University, Degree in Law National Research University Higher School of Economics, Executive MBA Achievements 2020 Director of the Year National Award for the best corporate governance directors / corporate secretaries. The committees of the Board of Directors are advisory and consultative bodies made up of the current Board members with relevant experience and expertise in specific focus areas. The committees can also engage external experts and consultants in their work. The primary role of the committees is the preliminary consideration of key issues submitted for review by the Company’s Board of Directors. The new Board of Directors at its meeting on 5 July 2022 (Minutes w/o No. dated 6 June 2022) set up three committees: Audit Remuneration and Human Resources Strategy and Sustainable Development Company profile Share capital Appendices CORPORATE GOVERNANCE 282 283 Strategic report Performance review Key highlights in 2022 In the reporting year, the Committee focused on the quality, reliability and timeliness of financial and non- financial corporate reporting. The prevailing uncertainty had an impact on preparations of financial statements, with changes to the Group's structure bringing about the readjustments of the accounting system, processes and reporting. Based on the 2022 results, the Committee is happy to report an invariably high quality of financial reporting and observance of previously established release deadlines, despite a significant transformation of the Company's operations. Non-financial reporting is becoming increasingly important on its agenda, with ESG disclosures discussed at several meetings during the year. In particular, the Committee made a detailed analysis of non-financial disclosure trends and reviewed the quality and completeness of ESG reporting in 2021 as compared to previous Victor Cherepov, Chairman of the Audit Committee periods. That said, the reporting year saw Committee members consider such initiatives to improve reporting perception and increase its reliability and accuracy as drafting an audit and assurance policy, ISAE 3000-based external assurance (full instead of limited assurance) and an independent assurance of metrics in compliance with TCFD recommendations. The high quality of our 2021 non-financial reporting as assessed by the Board of Directors was confirmed by expert opinion and numerous awards received at national competitions. The Committee initiated drafting the Company's Tax Strategy which seeks to articulate PhosAgro's stance on operational principles and strategic goals in taxation, and inform key stakeholders thereof. The Committee discussed the draft tax strategy twice during the year, and the Board of Directors approved it in August 2022 based on the Committee's recommendations. Tax matters were a special focus area and featured twice on the meeting agenda. Information on committees’ performance Audit Committee The Committee’s activities are governed by the Regulations on the Audit Committee. For more information, please visit the Company’s website Committee members as at 31 December 2022 First and last name Position Victor Cherepov Committee Chairman, independent director Ivan Rodionov Committee member, non- executive director Andrey Sharonov Committee member, independent director The Committee’s statistics 5 6 5 including in person / via video 2022 30 35 27 Matters 2021 2020 In 2022, the Committee expanded its scope to include the review of the key investment projects as regards reporting capital expenditures in financial statements, and procurement reporting in 2022 on the back of import substitution. Ongoing tasks in 2022 During the reporting period, the Audit Committee held five in-person meetings, where 30 matters were considered, mainly in the following areas: • analysis, review and discussion of the Company's annual financial and operating performance based on the IFRS consolidated financial statements, including reasons for changes as compared to the previous periods and obtaining a clear understanding of the disclosures; • review of quarterly IFRS condensed consolidated financial statements, along with ensuring the adequacy of disclosures; • review and discussion of the results of the annual audit and quarterly reviews by the external auditor in accordance with RAS and IFRS; • review of the external auditor plan for the assurance of 2022 financial statements; • approval of the plan and budget, and assessment of the Internal Audit Department's performance; • analysis of the Company's compliance with Russian and European legislation on the protection and use of insider information; • review of compliance with the CGC; • discussion with legal and tax department heads about ongoing issues that may have an impact on financial statements. External auditor The Committee's approach to the assessment of the independence and effectiveness of the external audit process, as well as to the appointment or reappointment of the external auditor is comprehensively described in the External Auditor Selection and Cooperation Policy of PJSC PhosAgro approved by the Board of Directors in April 2021. All additional services related and unrelated to audit were duly approved by the audit partner, as well as by the Chairman of the Audit Committee, with due regard to appropriate independence considerations. For more information, please visit the Company’s website Company profile Share capital Appendices CORPORATE GOVERNANCE 284 285 Strategic report Performance review Key highlights in 2022 The Committee focused on the following: • assessment of professional skills, independence, engagement and important external nominations or appointments to the Board of Directors; • performance assessment of the Company’s executive bodies, other key employees, and the Corporate Secretary; • assessment of the incentive system for the members of executive bodies and other key employees; • assessment of social and employee training programmes, including the progress towards a sustainability target approved in the Strategy to 2025 – the number of employee training hours; • review of the outcomes following the annual staff loyalty and satisfaction survey, including progress towards a sustainability target approved in the Strategy to 2025 – integrated employee loyalty index; • analysing the alignment of the Company's goals, values and strategy with its corporate culture; • review of workforce composition in companies belonging to PhosAgro Group as regards diversity, gender equality and inclusion; • best practice guidance and analysis following the appraisal of the Board of Directors’ performance. Both when initially assessing nominations to the biannual Board of Directors and subsequently when finalising its composition, the Committee decides which reasons should disqualify members from serving on it. While preparing the shareholder information for the Annual General Meeting, the Committee, among other factors, analysed the effect of important external nominations of independent directors on their ability to duly discharge their responsibilities as tPhosAgro's Board members. Independent directors’ external nominations as at 31 December 2022: • Victor Cherepov: Russian Union of Industrialists and Entrepreneurs, State University of Management, Pharmaceutical and Medical Industry Investors Club, Novotrans, Krasnoyarskii Kotelnyi Zavod, AB Energo, Kompaniya Ust-Luga, Kashira Steel Structures and Boiler Building Plant, and others. • Victor Ivanov: Russian Chemists Union, AgroChimInvest, Reatex, Pigment. • Andrey Sharonov: ESG Alliance, Sovcomflot, MC NefteTransService, Profilum, En+ Group, Medicina, and others. • Natalia Pashkevich: St. Petersburg Mining University The Committee found that the above external appointments did not prevent the Board members from duly discharging their responsibilities, while also maximising their contribution to the Company’s growth. Ivan Rodionov, Chairman of the Remuneration and Human Resources Committee from 5 July 2022 to 27 March 2023 Remuneration and Human Resources Committee The Committee’s activities are governed by the Regulations on the Remuneration and Human Resources Committee Committee members as at 31 December 2022 Committee member Position Ivan Rodionov Committee Chairman, non- executive director Victor Ivanov Committee member, independent director Andrey Sharonov Committee member, independent director For more information, please visit the Company’s website The Committee’s statistics 3 4 5 Including in person 2022 12 16 14 Matters 2021 2020 Company profile Share capital Appendices CORPORATE GOVERNANCE 286 287 Strategic report Performance review 2 14 Including in person Matters Key highlights and performance in 2022 In 2022, the sustainability management framework underwent the most significant changes ever. In July, the new Board of Directors decided to establish the Strategy and Sustainable Development Committee and vested it with the majority of functions previously pertaining to the three previously existing committees: the Strategy Committee, the Environmental, Health and Safety Committee, and the Sustainable Development Committee. The decision was underpinned by the awareness of the key role sustainability plays in defining the Company's strategy, as well as its paramount importance in managing such aspects of the Company's operations as environmental protection, occupational health and safety and energy efficiency. As a successor to the Strategy Committee, the new Committee focused on monitoring the progress against the Strategy to 2025 approved in 2019. Following the Board of Directors' recommendations issued upon approval, the Committee regularly checks such actual metrics as production volumes, sales in priority markets, expansion of sales and transport infrastructure and ESG metrics, including those set in the Climate and Water strategies approved in 2020, against the Strategy. Based on the 2022 results, we are happy to announce that we are firmly on track towards the Strategy to 2025 goals in production and sales as well as in social and environmental domains. The key achievements include a more than 50% reduction in total injuries with LTIFR (Lost Time Injury Frequency Rate) per 1 million hours at 0.32 for in-house staff and 0.38 for in-house and contractor staff. There was also a 67% reduction in injury severity among in-house staff. As regards other positive results in 2022, the Company successfully implemented long-term programmes, and its management and the Board of Directors maintained a strong focus on health and safety, including prevention of emergencies, incidents, fires and traffic accidents. We completed the first stage of the three-year Safety Culture Transformation Project to 2024 seeking to achieve the safety culture level of 3.1 as per the Bradley curve, and the initiative to improve the safety of high-risk operations. In terms of environmental protection, the reporting period saw an ongoing decline in environmental impact per product unit. We take consistent efforts to reduce such impact and achieve the desired environmental effect. The Company also designed biodiversity protection programmes for its Cherepovets, Volkhov and Kirovsk sites. We made strong progress in improving energy efficiency. In 2022, similarly to the last few years, consumption rates for major energy resources showed a steady decline. The Committee continued to monitor and regularly update the Energy Efficiency Programme. Approved in 2020, it covers all our projects and initiatives designed to reduce energy consumption. As the Board of Directors approved the Climate Strategy in December 2020 and the low-carbon transition plan was put into action, monitoring of activities specified in these documents remained an important item on the Committee's agenda. That said, the Committee placed a special emphasis on monitoring and overseeing the climate project initiated by Apatit's Project Execution and Management Department to centralise all areas of the Company's climate agenda. The reporting year saw the completion of the project and a number of important results delivered. The new Committee continued the dissolved Sustainable Development Comittee's work to monitor and regularly update the action plan to improve ESG ratings. We consider this practice to be effective in terms of developing and prioritising organisational and technical sustainability measures, and intend to maintain this approach going forward. The Committee paid due attention to the Bank of Russia's recommendations on integrating ESG and sustainability practices into the Company's operations (letter dated 16 December 2021). Its members separately considered the results of the Board of Directors' self-appraisal as regards the evaluation of ESG practices in accordance with the Bank of Russia's recommendations, and approved an action plan to further strengthen them. Sustainability reporting and disclosure supervision were among key agenda items as well. The Committee reviewed matters related to stakeholder engagement, identification of material topics to be disclosed in the 2021 integrated Annual Report, and the Report’s overall concept and standards we relied on when preparing it. Also, after analysing the quality of disclosure and feedback regarding the 2021 integrated Annual Report, the Committee gave a positive appraisal of the Company’s non- financial disclosure practices. Following proposals received from the Board of Directors as part of the self-assessment, the Committee invited other Board members to discuss such items as agricultural challenges and trends and PhosAgroGroup's sustainability innovations. We also remained focused on regulatory compliance, reviewing, among others, draft laws, which are yet to be considered and approved.. Alexander Sharabaika, Chairman of the Strategy and Sustainable Development Committee Strategy and Sustainable Development Committee GRI 2–16 The Committee’s activities are governed by the Regulations on the Strategy and Sustainable Development Committee For more information, please visit the Company’s website Committee members as at 31 December 2022 Committee member Position Alexander Sharabaika Committee chairman, executive director Mikhail Rybnikov Committee member, executive director Andrey Sharonov Committee member, independent director The Committee’s statistics Company profile Share capital Appendices CORPORATE GOVERNANCE 288 289 Strategic report Performance review Executive bodies In charge of PhosAgro’s day-to- day operations are two executive bodies accountable to the Board of Directors: • the collegial body (Management Board) and • the sole executive body (CEO). In 2022, the Management Board held four meetings and reviewed eight items most of which were related to the budget discipline. Changes in the Management Board composition The following changes to the Management Board took place in 2022. On 11 March 2022, the following members of the Company's collective executive body (Management Board) Information on members of the Management Board Number of Management Board meetings 8 10 12 2022 2021 2020 Breakdown and number of matters considered 4 6 8 4 4 4 2022 2021 2020 Revision and approval of PhosAgro’s quarterly and annual budgets Review of operating and financial reports At least twice a year (after the end of the previous calendar year and on election of a new Management Board), the CEO submits a report on the performance of PhosAgro's executive bodies to the Board of Directors for review and approval. We ensure that the executive management focuses on PhosAgro Group's strategy and long-term sustainable business development for the benefit of our shareholders and other stakeholders by linking executive remuneration to the Company's goals and values, as well as ESG KPIs. Professional experience 2017 – Pr. – Apatit, Legal Affairs Director 2017–2019 – Apatit, Member of the Management Board 2015–2017 – PhosAgro-Cherepovets, Legal Affairs Director, Member of the Management Board Mikhail Rybnikov Member of the Management Board, Member of the Board of Directors and CEO at PhosAgro since 11 March 2022 Year of election: 2022 Date of birth: 30 November 1975 For more information on Mikhail Rybnikov, please see page 86. Alexei Sirotenko Member of the Management Board, Deputy CEO of PhosAgro for Corporate and Legal Affairs, Legal Affairs Director at Apatit Year of election: 2013 Equity interest / Stake of ordinary shares: None Date of birth: 3 January 1969 Dmitry Morozov Member of the Management Board, Advisor to the CEO of PhosAgro Year of election: 2022 Equity interest / Stake of ordinary shares: None Date of birth: 5 June 1964 For more information, see page 292 were elected: Mikhail Rybnikov, Yuriy Krugovykh, Siroj Loikov, Alexander Seleznev, Alexei Sirotenko, and Alexander Sharabaika. In May 2022, the number of Management Board members was approved at three. Since that date and as at 31 December 2022, members of the Management Board are Mikhail Rybnikov, Alexei Sirotenko and Dmitry Morozov. Professional experience 2022 – Pr. – PhosAgro, Member of the Management Board 2022 – Pr. – Apatit, Director for Economic Affairs 2022 – Pr. – PhosAgro, Advisor to the CEO (part-time) For information on Andrey A. Guryev and Sergey Pronin, who all left the Board of Directors in March 2022, please see the 2021 integrated Annual Report of PJSC PhosAgro on the Company’s website 2013 – Pr. – PhosAgro, Member of the Management Board 2010 – Pr. – PhosAgro, Deputy CEO for Corporate and Legal Affairs (part-time) Education Lomonosov Moscow State University, Degree in Jurisprudence, Lawyer. Key competencies • Law and corporate governance 2019–2022 – PhosAgro, Director for Economic Affairs 2015–2019 – PhosAgro, Director for Economic Affairs and Finance Education Moscow State Institute of International Relations (Russia), Degree in International Economic Relations as an Economist for International Economic Relations Key competencies • Strategy and innovation • Finance and audit Company profile Share capital Appendices CORPORATE GOVERNANCE 290 291 Strategic report Performance review Remuneration report GRI 2–19, 2–20 Board of Directors remuneration When deciding on the Board composition, the General Meeting of Shareholders approves the amount and the rules for determining and paying remuneration and compensation to the Board members. The Board remuneration shall be in line with current market conditions and shall be sufficient to enable the Company to attract, motivate and retain highly skilled professionals to help drive the future growth and performance. At the same time, the Company avoids higher-than-necessary remuneration. The existing amounts and rules for determining and paying remuneration and compensation to the Board members were approved by the General Meeting of Shareholders on 30 June 2022. Board of Directors remuneration, RUB Full name of the member of the Board of Directors: 2020 2021 2022 Sven Ombudstvedt 27,111,960.00 26,561,520.00 12,171,879.00 James Rogers 22,593,300.00 22,134,600.00 10,143,232.50 Marcus Rhodes 22,593,300.00 22,134,600.00 10,143,232.50 Andrey Sharonov 13,555,980.00 13,280,760.00 14,418,297.00 Xavier Rolet 27,111,960.00 26,561,520.00 5,717,786.80 Irina Bokova 22,593,300.00 22,134,600.00 5,115,232.97 Ivan Rodionov – – 9,581,287.50 Victor Cherepov – – 12,746,475.00 Victor Ivanov – – 5,748,772.50 Total 135,559,800.00 132,807,600.00 85,786,195.77 Remuneration of the management The report on the voting results of PhosAgro’s General Meeting of Shareholders dated 30 June 2022 is available on the Company's official website Remuneration principles The Company's remuneration policy for executive bodies and other key employees is determined by the Board of Directors based on the recommendations of the Remuneration and Human Resources Committee. The Remuneration and Human Resources Committee conducts a detailed bi-annual review of the incentive system, evaluating its effectiveness and, if necessary, making recommendations for its improvement. The remuneration due to the Company’s senior executives consists of a monthly base salary plus additional compensation payable twice a year. Additional remuneration is linked to achieving the Company’s KPIs and completeness and quality of accomplishment of additional tasks, as determined by the Board of Directors and the CEO for the reporting period, as well as the Company's achievement of the EBITDA target. All KPIs are aligned with the Company’s strategic goals defined in its Strategy to 2025 and oriented towards their achievement. 1 2 Change in spread between average EV/ EBITDA of public phosphate fertilizer manufacturers and PhosAgro's EV/EBITDA. EV/ EBITDA reflects investors' estimate of the Company's fair market value and its investment case. The goal is to increase the spread. Excess of PhosAgro's ROIC – WACC spread over the average ROIC – WACC spread of public peers. The indicator reflects how much higher the Company's return on investment is than the cost of capital (equity and debt), and how efficient the Company's investments are compared to other companies in the industry. The goal is to increase the indicator. In addition, KPIs of N-1 level managers include indicators that help benchmark the Company’s performance against industry peers. Values of the CEO KPIs in the range of base case / target / challenge, as well as their actual values at the end of the reporting period are approved by the Chairman of the Board of Directors. Taken together, these indicators contribute to the achievement of the Company's strategic goals and serve the interests of shareholders both in terms of the Company's development and in terms of minimising the risks arising from incentivising excessively risky management decisions. KPIs of the CEO and N-1 level managers, including sustainable development indicators, are cascaded down and decomposed into KPI scorecards of lower-level management. The indicators themselves and their weights are modified depending on the nature of a particular manager's focus area with due regard to their strategic fit. Specific KPI wordings and their weights are established by PhosAgro's KPI Committee, taking into account the opinion of the KPI holder and their immediate supervisor. In 2022, 307 officers of PhosAgro Group were benchmarked against 1,717 KPIs. The amount of additional remuneration ranges from 30% to 150% of the annual base salary and depends on the level of the position held and the functional area of the manager. The Remuneration and Human Resources Committee of the Board of Directors, during its annual evaluation of the incentive system, ensures an effective proportion of fixed and variable components of remuneration. KPIs for each senior manager are set annually and take into account metrics related to operational efficiency and individual contribution to the corporate growth and strategic performance. To assess the performance of the Company’s CEO, a number of indicators are used, which aim to improve the efficiency of investments and sales, control costs, and reduce employee injury rates for the Company and its contractors. Company profile Share capital Appendices CORPORATE GOVERNANCE 292 293 Strategic report Performance review Number of officers holding KPIs by year: Top 3 KPI driven areas Commitment to sustainability 38 % of KPIs Expansion of production capacities through improved operational efficiency 33 % of KPIs Development in high- potential areas 24 % of KPIs As can be seen from the above statistics, PhosAgro Group is focused on sustainable development, and the KPI framework includes the following indicators: • reduction of unit pollutant emissions to the atmosphere; • share of waste recycling, neutralisation and processing; • implementation of key social projects; • % of completion of the programme to improve social and working conditions; • zero accidents; • zero occupational injuries among the Company and contractor employees. When determining the amount of additional annual remuneration for the top management, we look at the achievement of the EBITDA target as an integral indicator of the Company's performance. The managers' performance is adjusted by the percentage of delivering on the EBITDA target. The Company does not provide for any compensation payable to managers in case of their dismissal or voluntary resignation or the Company’s takeover or the change of its owner (golden parachutes). Neither does it use options, pre-determined unconditional bonuses or a clawback mechanism. Remuneration paid to the CEO and six other Management Board members who represent the senior management team, RUB '000 Pay type 2020 2021 2022 Total, including 1,098,922.60 1,422,622.4 1,020,231.4 salary 421,033.0 399,548.2 214,350.2 bonus 677,807.1 1,023,035.3 805,881.2 other types of remuneration 82.5 78.9 0 fee 0 0 0 External auditor’s remuneration PhosAgro engaged JSC Technologies of Trust – Audit to audit its 2022 IFRS consolidated financial statements. The actual remuneration paid to the auditor for this service stood at RUB 36.0 mln, net of VAT and overhead costs; for 2021, the amount paid was also RUB 36.0 mln. In 2022, Technologies of Trust – Audit rendered audit-related services to the Company for a total of RUB 3 mln, net of VAT. Also, during 2022, other contracts were concluded for the provision of non-audit services to PhosAgro in the amount of RUB 2.3 mln, net of VAT. All additional services, related and unrelated to audit, were duly approved by the audit partner, as well as by the Chairman of the Audit Committee of PhosAgro's Board of Directors, with due regard to appropriate independence considerations. The actual remuneration of Unicon to audit PhosAgro’s RAS accounting statements for 2022 was RUB 683,700, net of VAT, up 10% year-over-year. Remuneration of members of executive bodies The amount of remuneration and additional compensation due to PhosAgro’s CEO is regulated by a contract between them and the PhosAgro, which is signed by the Chairman of the Board of Directors. The total remuneration reflects the CEO’s qualifications and their personal contribution to PhosAgro's financial results. No loans were extended to members of the Board of Directors or the Management Board as at 31 December 2022. 307 280 277 106 2022 2021 2020 2019 Company profile Share capital Appendices CORPORATE GOVERNANCE 294 295 Strategic report Performance review Corporate controls GRI 2–12 Risk management and internal control Organisational structure of the risk management and internal control framework The risk management and internal control framework is a set of organisational measures, methods, practices and standards of corporate culture. It also embraces actions taken by the Company to strike the right balance between value growth, profitability and risks, support sustainable development, and ensure efficient operations, protection of its assets, compliance with applicable laws and internal documents, along with timely and accurate reporting. The Board of Directors defines the key principles of, and approaches to, risk management and internal controls, oversees the Company's executive bodies, and performs other key functions, including setting the overall risk appetite and reviewing material risks and ways to manage them. The Board's Audit Committee focuses on assessing and making proposals to improve the risk management and internal controls. On top of that, its members supervise the preparation of accounting (financial) statements and the measures taken to prevent fraudulent behaviour of the Company's employees or third parties. The Review Committee elected by the General Meeting of Shareholders exercises control over the financial and business operations of the Company. The Annual General Meeting of Shareholders held in June 2022 elected the following members to the Review Committee: • Lusine Agabekyan, Deputy Head of Group Financial Control and Management Reporting at PhosAgro; • Ekaterina Viktorova, Deputy Head of Treasury at PhosAgro; • Olga Lizunova, head of unit (functional in other areas), budgeting office, Economics Department at Apatit. The Review Committee’s goals, objectives and powers are outlined in the Regulations on Review Committee of PhosAgro as approved by the General Meeting of Shareholders on 12 May 2011. The Committee endorsed PhosAgro’s financial statements for 2022, with its report dated 28 February 2023 included in the materials for the shareholders to prepare for the Annual General Meeting of Shareholders. The executive bodies establish and maintain an efficient risk management and internal control framework. To this effect, they have set up a Risk Commission that monitors For the full text of PhosAgro's Regulations on Review Committee, please visit our website Board of Directors Executive bodies (Management Board and CEO) Risk Management and Internal Control Department Internal Audit Department Other structural departments Review Committee Audit Committee Administrative reporting Functional reporting the status and effectiveness of risk management initiatives. The monitoring results serve as a basis for the relevant proposals issued by the Commission to executive bodies and the Board of Directors. Following the audits, the Internal Audit Department provides the Board of Directors and executive bodies with recommendations and reports, including, among other things, the assessment of the current status, reliability and effectiveness of the corporate governance, risk management and internal control framework. The Risk Management and Internal Control Department is charged with the general supervision of risk management, including related activities, and consolidated reporting to the Board of Directors and executive bodies. As part of their duties, heads of other organisational units are responsible for building, documenting, implementing, monitoring and developing the risk management and internal control framework in their respective functional areas. The framework requires the Company's employees to identify and assess relevant risks and efficiently implement the controls and risk management initiatives. Company profile Share capital Appendices CORPORATE GOVERNANCE 296 297 Strategic report Performance review 5 4 6 15 16 16 2022 2021 2020 Scheduled Revision and approval of PhosAgro’s quarterly and annual budgets Review of operating and financial reports Unscheduled Risk management In 2022, PhosAgro’s risk management and internal control framework continued performing strongly thanks to timely identification and assessment of risks, as well as development and implementation of risk management measures. On a quarterly basis, the Board of Directors reviewed reports on the management of PhosAgro's key risks. PhosAgro’s executives paid special attention to managing these key risks. The Risk Commission continuously monitored the status of risk management activities and, when necessary, initiated changes to improve those related to key risks. Development of the risk management and internal control framework in 2022 The Company is making a consistent effort to develop its risk management and internal control framework. The Board of Directors reviewed the results of the framework’s independent external assessment, which showed that it was on par with those adopted by the industry’s leading companies, including: • compliance with applicable regulatory requirements; • adoption of most of the leading risk management practices such as alignment with the Company’s development strategy, risk appetite, key risk indicators, automation and robotisation in risk management, as well as integration into the Company’s incentive system and governance framework. The reporting year saw both the production sites and PhosAgro Group as a whole complete a full- year cycle of risk management and internal control, including: • ongoing risk monitoring; • analysis of key risk indicators; • development of corrective actions; • follow-up control and review. In addition, in 2022, the Company rearranged a number of risks in different focus areas, including the continuity of procurement, logistics, and software and IT infrastructure operation, on the back of geopolitical developments. Plans for 2023 PhosAgro Group looks to maintain and further develop the existing elements of its risk management framework based on the best practices, while also taking into account the changing external and internal factors. For information on key risks and risk management, see the Strategic Report section on 70 Internal audit PhosAgro’s Internal Audit Department assists the Company’s executive bodies and the Board of Directors in improving the management of business processes and enhancing the internal control and risk management framework. In doing this, it uses a risk-oriented approach and works closely with the Risk Management, Internal Control and Economic Security Departments, and the Company management. Internal audit goals, objectives and powers are outlined in the Internal Audit Policy as approved by the Board of Directors on 18 May 2021. The Company’s internal audit procedure is set out in the Internal Audit Guidelines. Audit of business processes The audit plan along with the budget of the Internal Audit Department for the calendar year is subject to review, discussion and approval by the Audit Committee and the Board of Directors. Audits are performed at the Company level, as well as at specific subsidiaries and their standalone business units. In addition, the Internal Audit Department monitors the effectiveness and efficiency of corrective actions taken by the management following the audit, and reports to the Audit Committee on a quarterly basis and to the Board of Directors annually. In 2022, the Internal Audit Department fully met the annual action plan. The audits covered PhosAgro Group’s business processes related to the procurement of goods, works and services, inventory management and corporate governance. The Internal Audit Department also conducted an IT audit of the automated process control system. The audits were followed by proposals to improve efficiency of procurement processes, streamline the approach to inventory management and improve cooperation between business units. The management developed and approved corrective action plans, with the progress monitored by the Internal Audit Department. The 2023 audit plan includes audits of personnel management, cash and CAPEX management. It also covers an IT audit of sales units, review of the IT strategy alignment and audit of ESG targets. Team development In order to achieve the strategic goals in internal audit, we continue working to develop and diversify the competencies of our team by holding regular trainings, which focus on sourcing data from information systems and further processing and visualising it. We will continue these efforts in 2023. Self-assessment and external assessment The internal audit quality is assured through regular external independent assessments and self-assessment. An external independent assessment takes place once every three years. The latest one was conducted in late 2021 by PwC. In late 2022, the Internal Audit Department held a self- assessment of its compliance with the International Standards for the Professional Practice of Internal Auditing and the Institute of Internal Auditors’ Code of Ethics. The self- assessment showed the Department’s full compliance with all applicable standards and requirements. Awards In April 2023, the Expert Council of the 10th Internal Auditor of the Year national competition named PhosAgro's Internal Audit Department a winner in the Internal Audit Service of the Year category. For the full text of PhosAgro's Internal Audit Policy, please visit our website Audits Company profile Share capital Appendices CORPORATE GOVERNANCE 298 299 Strategic report Performance review External audit A key element of the Audit Committee’s operations is ongoing interaction with external auditors and development of recommendations for the Board of Directors regarding the choice and approval of auditors. When selecting an auditor, we evaluate the following factors in addition to the cost of their services: • composition of the audit team (in terms of experience and qualifications), which should ensure that the statements are audited within acceptable deadlines and with adequate quality; • the auditor’s independence evaluated based on a variety of factors, including assessment of the scope of non-audit services provided to us by the candidate company during the relevant periods. Each offer from the current auditor for non-audit services requires confirmation by the audit partner to make sure there is no risk to independence and is submitted to PhosAgro's Audit Committee for consideration and approval. The Committee consents to the contract only if the scope of the non-audit services does not call into question the ability to perform the audit service independently and impartially. The Committee’s assessment of the auditor’s independence is also significantly influenced by the auditor’s internal procedures for controlling the impartiality and professional ethics of the auditor's staff, including requirements for periodic rotation of the audit partner, training arranged in this area and the use of specialised software to perform the respective audits; • balance between the benefits of long-term cooperation with the auditor and the need for a fresh look at PhosAgro's financial statements and preparation procedures; • the auditor’s performance over the previous period. The Committee may form its opinion on the quality of the external auditor’s work during in-person Committee meetings, where the external auditor’s mandatory participants are a manager and the partner, as well as during meetings between the audit team and the Chairman of the Audit Committee held prior to the Committee meetings. PhosAgro’s auditor performs the audit of its financial and business operations in compliance with Russian laws and regulations and the agreement signed with the Company. The auditor is approved by the Company’s General Meeting of Shareholders. The Company engaged JSC Technologies of Trust – Audit (10 Butyrsky Val, Moscow, Russia) to audit its 2022 IFRS financial statements. The Company’s 2021 RAS accounting statements were audited by JSC Unicon (8 Preobrazhenskaya Ploshchad, Preo 8 Business Centre, Moscow, Russia). The approach to assessing external audit’s independence and efficiency, as well as appointment and re-appointment of the external auditor is set out in the External Auditor Selection and Cooperation Policy of PhosAgro as approved by the Board of Directors on 14 April 2021. Inside information PhosAgro has adopted the Inside Information Regulations compliant with the Russian laws and the EU Market Abuse Regulation (MAR). In accordance with its provisions, the Corporate Secretary Office keeps a list of insiders, persons discharging managerial responsibilities (PDMR) and persons closely associated with them (PCA). The Regulations define the scope of responsibilities for each insider group, which the Corporate Secretary Office from time to time communicates to respective persons. First and foremost, these include the limitations on the use of inside information and trading in the Company’s securities. Depending on the group, an insider may be prohibited from such transactions or obliged to notify PhosAgro or obtain its consent for such transactions. Every quarter, the Corporate Secretary Office checks the list of shareholders to identify transactions that may have been executed in breach of such limitations. The checks showed that in 2021 and 2022 no changes were made to the shareholding structure as a result of transactions unreported by insiders. The audit conducted by the Internal Audit Department in 2021 identified no material violations of the applicable laws and the Inside Information Regulations. In January 2022, following the 2021 audit an action plan was adopted to improve engagement with insiders and inside information management. The plan was fully implemented in the reporting year. In 2022, the Board of Directors approved a revised version of the Inside Information Regulations. For the full text of the External Auditor Selection and Cooperation Policy of PhosAgro, please visit our website) For the full text of the Inside Information Regulations, please visit our website For more information on the auditors, their selection procedure and independence evaluation, please see the Company’s semi-annual reports, as well as the respective section of this Report that discusses the Audit Committee’s activities on page 284 and in the Remuneration Report and the Remuneration Report. Information security GRI 3-3 The Information Security Policy is the Company’s fundamental document defining the general provisions and principles for ensuring information security. Its adoption ensues from the risks and hazards faced by the Group companies in their operations and the respective need to respond to the hazards and minimise the risks. For more details, please see PhosAgro's Information Security Policy Company profile Share capital Appendices CORPORATE GOVERNANCE 300 301 Strategic report Performance review The Policy states high priority of information security activities and sets up its key principles. They cover the target setting and planning of information security activities, as well as their implementation, quality management and process improvement. The above principles define the contents of the lower-level documents such as the Information Security Framework and other internal documents covering respective issues. This set of documents reflects modern solutions and best practices in information security. Ensuring information security is the responsibility of each employee. To this end, the Group regularly holds events to raise employees' awareness of information security issues and develop practical skills to deal with modern threats. This, together with the use of modern information security tools and well-coordinated work Security personnel who completed human rights training, % GRI 410–1 Ethical practices GRI 2–23, 2–24 Values, principles, standards and norms of behaviour PhosAgro Group has a well-deserved reputation of a reliable business partner, attractive employer, responsible taxpayer, and partner to the Russian government and regions where the Company operates. The trust that our investors, employees, customers, contractors and authorities place in the Company is underpinned by the high ethical standards that we have adhered to since PhosAgro’s inception. We take an integrated approach to business ethics; in other words, we believe that ethical considerations are intrinsic to all aspects of our operations, from procurement and teamwork to safety and trade. We systematically analyse risks in this area and develop and implement measures to manage them. To achieve the above, we need to ensure that our ethical principles and standards are clearly defined and communicated to employees and counterparties. We also need to have relevant legal, organisational and informational mechanisms in place to support and, more importantly, monitor compliance with these principles and standards, which should also be overseen at the highest corporate governance level. By consistently implementing this approach for years, PhosAgro was able to become a company operating to the highest global standards in human rights, industrial safety, environmental protection, anti-corruption, etc. We recognise that it is hardly possible to fully eliminate ethical risks in a large and diverse organisation that has an almost global presence. We believe that by adhering to our ethical principles and standards we minimise unnecessary risks, maintain our business reputation and keep ourselves on track to achieve our ambitious production and financial targets for the benefit of PhosAgro’s shareholders and other stakeholders. Management approach PhosAgro Group does its best to eliminate corrupt practices, while also enhancing and protecting its business reputation as an honest, open and bona fide company among shareholders, potential investors, partners, employees, and counterparties. Elimination of any possible occurrences bearing the signs of corruption or potential conflict of interest, and strengthening the commitment of PhosAgro Group’s employees to the highest ethical standards are at the forefront of the Group's activities. To ensure PhosAgro Group's observance of ethical practices and generally recognised business standards, the Company put in place an anti-fraud and anti- corruption system covering all areas of operation. On top of that, Group companies adopted a set of corporate, legal, information and educational measures to build a shared corporate culture underpinned by high ethical standards and maintain an atmosphere of trust, mutual respect and integrity among employees. PhosAgro and all of its subsidiaries approved anti-corruption standards with the obligation to comply with anti-corruption rules included in the Collective Bargaining Agreement for 2020– 2023 and employment contracts with employees. All initiatives are running as part of the effective anti-corruption plan. 100 100 100 2022 2021 2020 All employees of the Economic Security Department receive training in terrorism prevention and the main goals and principles of PhosAgro Group Code of Ethics. In 2022, the Group received the national Silver Dagger Award having won in the Digital Transformation and Information Security category. The Company outperformed the competition with its unique solution offering a comprehensive approach to cybersecurity based on Kaspersky Unified Monitoring and Analysis Platform (KUMA). of the department, helped avoid information security incidents in 2022 and in previous periods that could have caused tangible material or reputational damage. Based on the results of the 2021 assessment, a description of the target state and a respective roadmap were also prepared by one of the world's leading expert companies. The proposed measures were included in the 2022–2023 action plans; information security issues are submitted for consideration by the Board of Directors every six months. In 2022, the Company did the following to implement the roadmap: • raised awareness: over 11,000 employees completed information security courses on the corporate Kaspersky Automated Security Awareness Platform (ASAP); the training continues to cover 100% of users who have accounts in the Company’s information systems); • ensured compliance with statutory requirements by adopting 55 internal regulations; • enhanced SCADA information security; • improved access control processes; • improved information security monitoring processes; • improved vulnerability management processes. Company pro le Share capital Appendices CORPORATE GOVERNANCE 302 303 Strategic report Performance review Code of Ethics The Code outlines the key principles and rules of ethical business conduct underlying the corporate culture of PhosAgro Ethical standards and norms of behaviour The principles and standards of ethical behaviour when working at and with PhosAgro are set out in relevant policies and other internal documents listed below. These are regulatory documents all the Group's managers, officers and employees must comply with. Employees who have violated them are subject to the respective sanctions, including social condemnation, public censure through publication in the media, full or partial withholding of bonuses, and – if the employee’s action (omission) bears signs of a disciplinary offence – disciplinary measures also apply to such employee pursuant to the applicable labour and employment laws. PhosAgro Hotline Regulations The Regulations set out the goals and objectives with regard to the receipt of employee reports on the matters pertaining to combating fraud, corruption and theft and identifying conflicts of interest Regulations on Internal Checks Regulations on Inspections The regulations govern a set of actions taken to elicit the facts and identify the circumstances, motives and conditions of misconduct, incidents, and other violations of requirements set out in the Company’s internal regulations Charity Policy The Policy sets out the key principles and areas for providing charitable support on behalf of and through the funds of the Company Government Relations Policy The Policy establishes the principles, areas, purpose and objectives of PhosAgro interaction with public authorities and officials Regulations to Ensure Compliance with Anti-Corruption Laws as Part of Legal Support Process The Regulations outline goals and objectives for legal support of the Company’s business processes and transactions involving a high risk of corruption Regulations on Business Presents and Representation Expenses The Regulations set out the procedure for receiving presents by the Company’s employees, as well as making them on behalf of the Company. The Regulations substantiate and detail the formation, structure, and documentation of representation expenses Personnel Management Policy The Policy sets forth the Company’s and its management’s adherence to high ethical standards of transparent and fair business aimed at building the image of an employer attractive for the best professionals The following internal policies and procedures governing the compliance of the Company with the key principles and standards of ethical conduct are currently in effect: SASB RT-CH-530a.1 Anti-Corruption Policy The Policy defines the goals and objectives and sets forth the Company’s key principles and employee responsibilities in the sphere of anti-fraud and anti-corruption Code of Conduct for Counterparties The Company may refuse to cooperate with suppliers or business partners discriminating their own or subcontractors’ employees or using forced labour Regulations on Conflict of Interest The Regulations establish the procedure for identifying and resolving conflicts of interest arising with employees in the course of their employment UK Modern Slavery Act Transparency Statement The Act outlines the Company’s actions to prevent all forms of modern slavery and human trafficking within PhosAgro and its supply chain Corporate Governance Code The Code defines the main principles of and approaches to corporate governance Apatit's Procurement Policy The Policy defines the goals, key principles, roles and employee responsibilities in procurement Regulations on the Commission for Combating Fraud and Corruption and Regulating Conflicts of Interest The Regulations address and govern the issues pertaining to employee anti-corruption compliance Company profile Share capital Appendices CORPORATE GOVERNANCE 304 305 Strategic report Performance review Operations assessed for risks related to corruption When building an effective anti- corruption policy, it is of utmost importance to understand what corruption offences employees may be inclined to commit depending on their positions, what business processes are most likely to involve the commission of such offences, what ways or schemes are available for committing them and what consequences they may lead to. For this purpose, the Group has defined lists of corruption- prone functions and positions. The activities of the officials occupying the positions included in the list are under special control of the Economic Security Department and heads of the relevant business units in terms of their compliance with high ethical standards and requirements of internal documents on anti-corruption, including compliance with related prohibitions and restrictions and measures to prevent and resolve conflicts of interest. These standards are set out in internal regulations. PhosAgro Group seeks to identify and assess corruption risks on a regular basis using a three- step procedure to update the list of functions and positions exposed to such risks. Over the last three years (2020–2022) the Company identified no corruption risks that are highly likely to materialise. PhosAgro's Board of Directors receives regular reports on the progress of anti-corruption initiatives and the performance of the anti-fraud and anti-corruption system in accordance with PhosAgro’s Risk Management and Internal Control Policy. In addition, the process of identifying risks and preventing wrongdoings is monitored by line managers on the basis of, among other things, the Risk Management Regulations. Organisational and informational mechanisms PhosAgro Group has a well-designed set of tools in place to ensure that the Group's employees and counterparties are kept abreast of and trained in ethical business practices and that cases Informing, advising, and training employees GRI 205–2 Corruption risk identification Identification of corruption offences that may be committed by Group employees and detection of business processes (critical points) where such misconduct is possible Corruption risk analysis Identification of ways that can be potentially used to commit a corruption offence, depending on the specifics of the Group’s business processes (corruption schemes), persons who may be involved in corruption, and business processes’ vulnerabilities Assessment of materiality of corruption risks Assessment of the probability of a corruption offence at a specific stage of a business process and the potential damage to PhosAgro Group in case an employee (employees) commits (commit) a corruption offence of potentially unethical and corrupt behaviour are effectively reported to relevant officers and units. Goals and objectives Provide employees with updated information on laws and regulations on detecting and combating corruption in business entities. Help students develop an anti-corruption attitude, learn about methods of combating corruption and conflicts of interests and master relevant skills. Help students acquire knowledge of the causes and preconditions for corruption and practices of identifying and counteracting such cases Training results Upon completion of the anti-corruption training, an employee shall have an understanding of the theory of counteracting corruption in the Group; factors, causes, essence and consequences of corruption; Russian anti-corruption laws and regulations, as well as internal regulations of the Company; responsibility for failure to comply with anti- corruption practices Benefits of online training Educational materials (presentations, tests) accurately reflect the potential issues of corruption at PhosAgro Group companies. The training process does not disrupt core business activities Target audience Managers and white-collar workers of all levels, including employees of branches and standalone business units PhosAgro Group offers ongoing training programmes to educate employees on anti-corruption in order to minimise the risk of their involvement in corrupt practices. To this end, the Group has put in place a robust training system to prevent any and all corrupt practices, mitigate possible harm, and eliminate the consequences thereof. Training methodology To train and inform employees, PhosAgro Group annually develops anti-corruption courses with final tests, which are posted on the corporate intranet portal. The themes of the courses depend on the responsibilities of business units (employees) and the established system of anti- corruption standards. Company pro le Share capital Appendices CORPORATE GOVERNANCE 306 307 Strategic report Performance review Training period Completed programmes 2020 Preventing and Resolving Conflict of Interest Main Goals and Principles of the PhosAgro Group Code of Ethics 2021 Principles of the PhosAgro Hotline PhosAgro Group Anti-Corruption Policy Employees are tested on training outcomes; the regulations provide for mandatory additional training for employees who have demonstrated poor performance 2022 Main Goals and Principles of the PhosAgro Group Code of Ethics To implement anti-corruption measures, PhosAgro’s Economic Security Department drafts an annual training plan, according to which employees are informed from time to time about existing internal regulations on anti- corruption, anti-corruption standards, responsibility for failure to comply with them, as well as amendments and additions to them. The Company’s management serves as the key communication channel to emphasise the importance of compliance with the established anti-corruption measures. PhosAgro Group’s employees and counterparties have free and easy access to information about the Company’s anti- corruption practices. PhosAgro’s official website features a special section on anti-corruption, which contains CEO’s message about the need to strictly comply with established anti-corruption standards, as well as copies of internal documents aimed at preventing corruption (the Anti- Corruption Policy, Code of Ethics, Regulations on Conflict of Interest and on PhosAgro Hotline). Internal documents are supplemented by methodological materials (handouts, presentations), which explain in easy terms the anti- corruption policy, standards of conduct, responsibility, and provide examples of corruption- prone situations that employees may encounter in the course of their employment. Every new employee receives training on the basic requirements of the Anti-Fraud and Anti- Corruption Policy, the Code of Ethics, Regulations on Conflict of Interest and on PhosAgro Hotline by watching a respective video and putting their signature in briefing log to confirm the above. Employees’ job descriptions stipulate their obligation to comply with anti-corruption standards and PhosAgro Group’s internal regulations, as well as to receive respective training. When employees perform functions involving a high risk of corruption, those responsible for the implementation of the Anti- Corruption Policy additionally explain to them the Russian laws and the Group’s internal policies on anti-corruption. Completed training programmes Total number and share of members of the governance body, employees and business partners familiarised with the Company's Anti-Corruption policy and procedures, by region Total number of members of the governance body Share of members of the governance body, % Total number of employees Share of employees, % Total number of business partners Share of business partners, % '20 '21 '22 '20 '21 '22 '20 '21 '22 '20 '21 '22 '20 '21 '22 '20 '21 '22 Saratov region 177 177 283 28 28 33 609 609 852 59 59 67 130 89 104 100 100 100 Murmansk region 335 427 888 31 31 34 2,564 2,564 2,621 61 61 66 121 95 71 100 100 100 Moscow region 74 74 87 32 32 39 86 82 225 45 45 61 1,087 903 898 100 100 100 Leningrad region 110 172 266 28 31 35 502 502 770 58 58 65 707 504 487 100 100 100 Vologda region 447 478 943 29 32 28 3,028 2,767 33,346 80 81 72 186 181 167 100 100 100 Other 132 32 1,902 408 68 1,292 1,208 1,401 100 100 100 Total 1,143 1,328 2,599 29 30 32 8,691 6,524 8,222 60 62 68 3,523 2,980 3,128 100 100 100 Total number and share of members of the governance body and employees trained in anti-corruption measures, by region Total number of members of the governance body Share of members of the governance body, % Total number of employees Share of employees, % '20 '21 '22 '20 '21 '22 '20 '21 '22 '20 '21 '22 Saratov region 177 177 234 80 80 83 609 609 747 80 87 88 Murmansk region 335 335 718 80 80 81 2,564 2,564 2,275 81 82 87 Moscow region 74 74 68 80 80 78 86 82 181 78 80 80 Leningrad region 110 110 209 80 80 79 502 502 636 80 81 83 Vologda region 447 447 910 89 89 97 3,028 2,767 3,206 89 90 96 Other 102 77 1,902 335 82 Total 1,143 1,328 2,241 81 87 86 8,691 6,524 7,380 86 89 90 Company profile Share capital Appendices CORPORATE GOVERNANCE 308 309 Strategic report Performance review Tools to notify the relevant PhosAgro Group's executives of any instances of misconduct and corrupt practices GRI 2–25, 2–26 Tool Description Obligation Any Company employee, as well as any member of the Board of Directors, who has become aware of any actual or potential violation of law or PhosAgro’s internal regulations is obliged to give a prompt notice of the same in writing. This also applies to any inducement to corruption or violations showing signs of corruption committed with respect to other employees, counterparties or other parties interacting with the Group. Communication The procedures for reporting and consideration of violation reports are defined in the Anti-Corruption Policy, the Code of Ethics, the Regulations on Conflict of Interest, and the Anti-Corruption Agreement, as well as other internal regulations of the Group companies Confidentiality and protection A person who has submitted a notice/report is guaranteed confidentiality of the information received, as well as such person’s personal data. PhosAgro takes steps to protect the employee who has notified the employer’s representative (employer) of any actual or potential violation of law and the Company’s internal regulations that may pose a threat to the Group’s interests. Advice PhosAgro’s Code of Ethics formalises the right of each employee, if they have any questions relating to anti-corruption compliance or any concerns as to the rightness of their actions the actions of other employees, counterparties, or other parties interacting with the Company, to seek advice or assistance from their immediate supervisors or, if need be, the relevant business units of the Company. PhosAgro Hotline The Hotline operates to improve the efficiency of measures taken to prevent fraud, corruption, theft, and conflict of interest, as well as to mitigate the compliance and reputational risks resulting from violation of professional and ethical standards by the PhosAgro Group’s employees. There are three ways to report to the Hotline: by phone at +8 8202 59 32 32, e-mail at [email protected] and regular mail at the following address: Economic Security Department, 75 Severnoye Highway, Cherepovets, Vologda region, 162622, Russia. To ensure free access to the Company’s Hotline, all existing communication chanels are posted on PhosAgro’s website. PhosAgro Hotline To improve the timeliness and effectiveness of measures aimed at preventing ethical violations, including corruption, discrimination, human rights violations, etc., the Company created the PhosAgro Hotline portal. Security Agents December 2022 saw the second festival held as part of Security Agents, Russia's unique initiative run by PhosAgro and the Vologda Regional Office of the Russian Ministry of Internal Affairs. The project seeks to train children in security and observance of ethical standards. The participants learn about security operations, cybersecurity, rules of conduct in public places, and healthy lifestyle. The festival was attended by the Company management together with the representatives of the Vologda Regional Office and Kaspersky Lab. From June 2021, the project organisers have given over 470 classes to more than 5,000 children, including those of the Company's employees, school students, children without parental care placed in dedicated centres, and teenagers assigned to the Juvenile Liaison Office. In 2022, its geography expanded to include Volkhov (Leningrad region) and Balakovo (Saratov region). Any employee or other stakeholder can use PhosAgro Hotline to report any potential violations detrimental to the Company’s interests, while the Company may not disclose the identity of the whistle-blower to other employees and third parties. 110 119 134 6 3 2 2022 2021 2020 Total reports received by PhosAgro Hotline Reports related to corruption Reports received by PhosAgro Hotline by category Other (non-compliance with sanitary and epidemiological rules or internal regulations) Violations of law and tender procedures HSE External fraud Reputational risk Internal fraud Conflicts of interest Non-compliance with the Code of Ethics Violations of human rights 41 32 30 20 5 2 2 2 0 2020 Other (non-compliance with sanitary and epidemiological rules or internal regulations) External fraud Violations of law and tender procedures HSE Reputational risk Internal fraud Non-compliance with the Code of Ethics Violations of human rights 53 25 16 16 3 3 3 0 2021 Other (non-compliance with sanitary and epidemiological rules or internal regulations) Violations of law and tender procedures Fraud in foreign and domestic markets HSE Non-compliance with the Code of Ethics Workplace conditions Theft Confidential information Violations of human rights 37 27 20 9 6 5 4 2 0 2022 PhosAgro’s Internal Audit Department reports on a quarterly basis to the Audit Committee on all reports received by the PhosAgro Hotline, actions taken, the results of audits and measures to address violations of the Group’s ethical standards. The Chairman of the Audit Committee provides this information to members of PhosAgro's Board of Directors. Company profile Share capital Appendices CORPORATE GOVERNANCE 310 311 Strategic report Performance review Anti-corruption GRI 3-3 We consider it unacceptable for PhosAgro Group's executives and employees at all levels to take advantage of their official position in a way that is in conflict with corporate or national interests. To prevent fraud and corruption, PhosAgro has put in place its Anti-Corruption Policy together with a system covering the entire range of its activities, and set up a commission on fraud, corruption, and conflicts of interest. The Company seeks to identify and assess corruption risks on a regular basis to keep track of functions and positions exposed to such risks. PhosAgro’s management regularly reviews reports on the progress of anti-corruption initiatives and the performance of the anti- fraud and anti-corruption system. In addition, we make an ongoing effort to build a culture of zero tolerance to corruption underpinned by high ethical standards, as well as maintain an atmosphere of trust, mutual respect and integrity among employees. PhosAgro Group’s participation in collective efforts to combat corruption The Company’s Anti-Corruption Policy is implemented in accordance with applicable anti-corruption laws and international conventions (including the UN Convention against Corruption and Russian anti-corruption laws). To prevent and combat corruption, PhosAgro Group cooperates with business communities and participates in public associations, which is seen as a guarantee of compliance with Article 13.3 of Federal Law No. 273-FZ On Combating Corruption dated 25 December 2008: 1. The Anti-Corruption Charter of the Russian Business adopted by the RSPP. As part of self-assessment of special anti-corruption programmes and practices implemented by the Company and covering not only internal activities, but also relations with business partners and the state, procurement through public auctions, financial control, staff training and development, cooperation with law enforcement agencies, PhosAgro regularly completes surveys using the portal of the Chamber of Commerce and Industry of Russia. 2. The Social Charter of the Russian Business adopted by the RSPP. Having joined the Social Charter of the Russian Business, PhosAgro formalised the responsible approach it takes to ESG and its commitment to best practices in corporate social responsibility. 3. The Anti-Fraud Working Group of the Russian Association of Fertilizer Producers (RAFP), which has developed initiatives to combat wrongdoings committed by unidentified persons using brands of major mineral fertilizer producers. 4. The Chamber of Commerce and Industry of Russia (CCI). The CCI membership implies engaging in a dialogue between the business community and the government to forge the social, economic, and industrial policy, remove administrative hurdles, improve the business and investment climate, and promote entrepreneurship. In December 2022, PhosAgro participated in the nationwide interactive campaign held in furtherance of the National Anti-Corruption Plan for 2021–2024. 5. The Russian Union of Industrialists and Entrepreneurs. As a member of the RSPP, PhosAgro participates in the annual Anti- Corruption Rating assessing compliance with best business conduct practices both in Russia and globally. As part of the 2022 rating, PhosAgro was awarded the A1 score and designated as a “Company with Extremely Strong Anti-Corruption Credentials and Extremely Low Corruption Risks”. To counteract corruption, we cooperate successfully with state and local government authorities and non-governmental organisations based on the principles of partnership, mutual respect, trust and professionalism. We have entered into a number of long-term agreements on preventing and detecting crime, as well as helping to build security infrastructure through the creation of police stations at PhosAgro Group’s production sites. Joint activities are widely covered in the corporate media. Acquainting business partners with PhosAgro Group’s anti-corruption standards and procedures SASB EM-MM-510a.1 PhosAgro recognises that corruption risks can arise not only within, but also outside the Company, primarily when interacting with counterparties, including business partners, suppliers, contractors, etc. PhosAgro Group has approved a procedure for incorporating an anti-corruption clause and a clause of good faith in every contract signed by the parties; these clauses contain clear and detailed rules and procedures aimed at preventing corruption, including special management procedures, requirements for counterparties, rules of special anti-corruption control and audit, measures to prevent conflicts of interest and commercial bribery, and compensation for material damage. The Group is committed to establishing and maintaining business relationships with companies that operate in line with high ethical standards and combat corruption. We have improved the registration process at the electronic bidding platform (PhosAgro's official website – Procurement – Tenders – Supplier Registration Form). Every potential supplier of goods or services interested in establishing a business relationship with PhosAgro Group is required to read the relevant internal regulations (the Company’s Anti-Corruption Policy, Code of Ethics, Anti-Fraud and Anti- Corruption Policy of Apatit, Code of Conduct for Counterparties, etc.), and familiarise themselves with information on PhosAgro’s Hotline. Only after becoming aware of these standards may they proceed with the registration at the electronic bidding platform. This helps to ensure that all potential counterparties seeking to do business with PhosAgro Group are familiar with the applicable standards. As a result, 100% of counterparties wishing to engage in business with the Company are introduced to the applicable internal regulations of the Company during the registration at the electronic bidding platform. 3,128 2,980 3,523 2022 2021 2020 Общее количество деловых партнеров, прошедших регистрацию на ЭТП и ознакомившихся с антикоррупционными стандартами 100 100 100 2022 2021 2020 Доля деловых партнеров данной категории, % Total number of business partners registered at the electronic bidding platform and acquainted with the anti-corruption standards Share of business partners in this category, % Company profile Share capital Appendices CORPORATE GOVERNANCE 312 313 Strategic report Performance review 1 The Company updated the 2021 data: in 2021, the Company disqualified one business partner who wanted to participate in bidding procedures worth over RUB 400 mln on the grounds that it was not considered trustworthy because of its failure to comply with anti-corruption standards. 2 All corruption-related cases are included in the official statistics of law enforcement agencies. Confirmed incidents of corruption and actions taken GRI 205–3 2020 2021 2022 Total number of confirmed corruption cases 2 2 4 Total number of confirmed incidents resulting in the dismissal of employees or initiation of a disciplinary action against them on corruption charges 2 2 3 Total number of confirmed incidents resulting in the termination of contracts with business partners or a failure to renew them due to corruption-related offences 1 1 1 2 Total number of public court actions 2 taken against an organisation or its employees on corruption charges 1 1 2 GRI 205–3 In 2022, four criminal cases were initiated, including two cases against employees of Apatit (there are three employees listed in the case records whose employment contracts were terminated): • on 25 April 2022, a criminal case was opened in accordance with Article 204, Part 7 (“Commercial Bribery”) of the Russian Criminal Code against the head of the MFPU section at Apatit who received RUB 201,000 in exchange for engaging in wrongdoing for the benefit of a contractor; • on 12 July 2022, a criminal case was opened in accordance with Article 204, Part 7 (“Commercial Bribery”) of the Russian Criminal Code against the head and chief expert of the environmental control unit at Apatit’s Volkhov branch who illegally received RUB 250,000 from the Company’s contractors. Further investigation revealed two more offences committed by the criminal case subjects with a view to receiving illegally RUB 170,000 and RUB 184,000. This brought the total amount of illegally received funds to RUB 604,000. Incidents of corruption identified and actions taken Internal investigations into reported corrupt behavior 35 52 52 2022 2021 2020 Number of internal investigations into various failures to comply with the internal regulations 4 3 2 2022 2021 2020 Including corruption-related GRI 205–1 In 2022, 35 internal investigations were launched to identify failures in complying with the internal regulations. Four of the completed investigations were related to corruption and fraud and had to do with: • illegal receipt of RUB 800,000 by the contractor’s manager in exchange for facilitating the signing of the as-built report on cabling at the Kriolit railway station. As a result of this offence, Apatit incurred losses of RUB 10,999,700; • illegal receipt of RUB 201,000 by the head of the MFPU section at Apatit in exchange for exercising their official powers for the benefit of a contractor; • a contractor’s failure to fulfil its obligations under a contract to apply anti-corrosion coating to structures and buildings at Apatit’s phosphate and nitrogen facilities. As a result of this failure, Apatit incurred losses of RUB 1,000,000; • illegal transfer by the Company’s counterparties of RUB 604,000 to the head and chief expert of the environmental control unit at Apatit’s Volkhov branch in exchange for deliberate wrongdoing on their part. As a result of this offence, Apatit incurred losses of RUB 87,707,800. The internal investigations led to the initiation of a disciplinary action against one employee, and termination of contract with three other employees. PhosAgro Group’s commitment to the anti- corruption standards is evidenced by the fact that it cooperates with law enforcement authorities: PhosAgro made a public commitment to report to the relevant law enforcement authorities any cases of corruption (signs of corruption) the Group (its employees) may become aware of. PhosAgro will not impose any sanctions on employees who reported to law enforcement authorities any actual or potential corruption incidents that they became aware of in the course of their employment. 1 2 Company profile Share capital Appendices CORPORATE GOVERNANCE 314 315 Strategic report Performance review Identification, prevention and settlement of conflicts of interest in the actions of PhosAgro Group’s employees 2020 2021 2022 Total number of conflicts of interest pertaining to joint ownership with suppliers and other stakeholders 0 1 0 Total number of conflicts of interest pertaining to controlling shareholders 0 0 0 Total number of conflicts of interest pertaining to related parties and their relations, transactions and outstanding balances. 0 0 0 Total number of conflicts of interest pertaining to membership in the Board of Directors 0 0 0 Total number of potential conflicts of interest 12 10 15 Number of conflicts of interest considered at the meeting of the Commission on Fraud, Corruption and Conflicts of Interest 5 5 9 Antitrust measures GRI 3-3, 206–1 The Company has approved trade policies for the sale of phosphate rock (Apatit’s Marketing Policy for Domestic Sales of Phosphate Rock) and for the sale of certain fertilizer grades to agricultural Non-discrimination policy and human rights GRI 2–23 We do our best to keep the working environment at the Group’s facilities free from restrictions based on nationality, gender, age, faith or other grounds as required by the applicable laws. At PhosAgro Group, any decisions regarding promotion, hiring, remuneration or benefits are based solely on the employee’s qualifications, performance, skills and experience. In 2022, the Board of Directors and the Remuneration and Human Resources Committee paid special attention to human rights focusing on staff diversity and equality of genders. The discussions held by these bodies led to the key conclusion that every employee who works dutifully and has professional skills and competencies may apply for any position within the Group, producers. The respective documents are designed to ensure compliance with antitrust laws, while also mitigating risks associated with anti-competitive behaviour. There are no pending lawsuits filed The respective documents are available in the Buyers section of the Company’s official website including in an executive role. In 2020–2022, there were no employee reports or complaints about violations of labour practices, human rights, or discrimination. Conflicts of interest GRI 2–15 PhosAgro’s Code of Ethics and Regulations on Conflict of Interest require employees to report any potential or actual conflicts of interest to their line manager or an anti-corruption officer. As part of the work to develop a framework for preventing, identifying and resolving conflicts of interest, three designated collegial advisory bodies were established: 1. the Commission on Conflict of Interest between Employees of PhosAgro chaired by the CEO; 2. the Commission on Fraud, Corruption and Conflicts of Interest at Apatit (to streamline anti-corruption efforts across the Company’s production units); 3. the Commission on Fraud, Corruption and Conflicts of Interest at PhosAgro-Region (to act for PhosAgro–Region and its subsidiaries. PhosAgro places a strong emphasis on timely prevention, identification and resolution of potential conflicts of interest. The Company puts in place verification procedures to be carried out when personnel decisions are made and responsibilities are distributed and requires all candidates to report personal interest, if any, at the time they are offered employment with the Company and regularly from then onwards. The Company did not identify any conflicts of interest related to membership in the Board of Directors; joint ownership with suppliers and other stakeholders; controlling shareholders; related parties and their relations, transactions and outstanding balances. In 2022, the Company reviewed 15 cases of potential conflict of interest, including nine of them at a meeting of Apatit’s Commission on Fraud, Corruption and Conflicts of Interest. As a result of this review, recommendations were drafted on amending job descriptions, revisiting the organisational and staff structure and transferring employees to other business units. In order to prevent potential conflicts of interest, five notices were served on respective managers. In one of the reviewed cases, the conflict of interest (at PhosAgro-Region) proved to be unsubstantiated. on charges of anti-competitive behaviour or breach of applicable antitrust and trust laws, or any similar lawsuits settled in 2020– 2022 to which the Company could be identified as a party. Company profile Share capital Appendices CORPORATE GOVERNANCE 316 317 Strategic report Performance review For details, see page 324 For details, see page 321 PhosAgro’s shares are among the most liquid Russian securities and in September 2022 were included in the Blue Chip Index of the Moscow Exchange. An indicator of the market for Russia’s most liquid and well performing shares, the index is based on prices of transactions for shares of the 15 leading issuers. In 2022, PhosAgro paid dividends of RUB. 1,563 per ordinary registered uncertified share STRENGTHENING our partnerships We appreciate the partnership that we have with our securities holders and are committed to open, full and timely communication with them while also taking into account any feedback they may have. 5 268 Ownership structure 269 Share performance 270 Debt management 271 Analyst coverage 271 Dividend policy 273 Relationship with shareholders and investors 202 Information disclosure 318 319 SHARE CAPITAL Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2,000 4,000 6,000 8,000 10,000 Share capital Ownership structure Share performance PhosAgro’s shares are traded on the A1 quotation list of the Moscow Exchange under the ticker symbol PHOR (ISIN: RU000A0JRKT8). Global depositary receipts (GDR; three GDRs represent one share) are admitted to listing on the London Stock Exchange under the ticker symbol PHOR. On 3 March 2022, trading in the Company’s GDRs was suspended. Shares of PhosAgro are included in the following indices of the Moscow Exchange: • MOEX Russia; • RTS. Citigroup Global Markets Deutschland AG acts as the depositary for the Company’s GDR programme. Share performance on MOEX in 2022 Tickers Stock exchange Bloomberg Reuters ISIN Moscow Exchange PHOR RU PHOR.MM RU000A0JRKT8 London Stock Exchange PHOR LI PHORq.L US71922G3083 US71922G4073 Codes for Global Depositary Receipts Under Regulation S Under Regulation S Under Rule 144A CUSIP 71922G308 71922G407 71922G100 ISIN US71922G3083 US71922G4073 US71922G1004 Common code 065008939 065008939 065008939 SEDOL 0B62QPJ1 0B62QPJ1 0B5N6Z48 RIC PHOSq.L PHOSq.L GBB5N6Z48.L Shareholding structure (list of shareholders that hold 5% and more of PhosAgro’s authorised capital) As at 31 December 2020 Shareholder Number of shares % of issued and outstanding shares Adorabella Limited 30,234,162 23.35 Chlodwig Enterprises 26,302,400 20.31 Vladimir Litvinenko 27,174,815 20.98 Other shareholders 45,788,623 35.36 Total 129,500,000 100.00 As at 31 December 2021 Shareholder Number of shares % of issued and outstanding shares Adorabella AG 30,234,162 23.35 Chlodwig Enterprises AG 26,302,400 20.31 Vladimir Litvinenko 27,174,815 20.98 Other shareholders 45,788,623 35.36 Total 129,500,000 100.00 As at 31 December 2022 Shareholder Number of shares % of issued and outstanding shares MKOOO Adorabella 30,234,162 23.35 MKOOO Chlodwig Enterprises 26,302,400 20.31 Tatyana Litvinenko 26,674,815 20.60 Other shareholders 46,288,623 35.74 Total 129,500,000 100.00 For more information on Reestr, please visit the Company's website The authorised capital of PhosAgro as at 31 December 2022 amounted to RUB 323,750,000 consisting of 129,500,000 ordinary shares with a par value of RUB 2.5 per share. As at 31 December 2022, there were no shareholders in PhosAgro with a stake of more than 5%, beyond those already disclosed by PhosAgro in this Report. The register of holders of PhosAgro’s securities is maintained by Joint-Stock Company Reestr. SHARE CAPITAL Appendices 320 321 Strategic report Performance review Corporate governance Company profile 1 Trading in PhosAgro’s GDRs on the London Stock Exchange was suspended starting 3 March 2022. Strong demand for phosphate and nitrogen-based fertilizers over the year Logistical challenges associated with shipments from Russia Expensive primary feedstock, including gas and potassium Strong operational and financial performance of the Company High prices for major crops in global markets Low fertilizer stocks in the Company’s key sales markets Debt management The Company uses a conservative approach to leverage and believes that a comfortable net debt/EBITDA ratio should be below 2х or even within the range of 1–1.5х in the long run. As at 31 December 2022, the Company’s leverage was much lower than that, at 0.68x. When determining its borrowing requirements, the Company assesses the cost of borrowing from banks and public debt markets, the amount and maturity available while striving to ensure that this fits into the Group’s long-term debt reduction strategy. The choice of the currency of borrowings is based on the structure of the Company’s revenue, 76% of which was in foreign currency in 2022. In line with the investment policy designed to meet PhosAgro's investor obligations and strengthen its investment case, the investment budget shall not exceed 50% of planned EBITDA. The record high capital investments and charitable expenses in 2022 did not affect the Company’s leverage, which remained comfortably below the net debt/EBITDA target. Borrower PJSC PhosAgro PJSC PhosAgro PJSC PhosAgro Issuer PhosAgro Bond Funding Limited PhosAgro Bond Funding Limited PhosAgro Bond Funding Limited Settlement date 24 January 2018 23 January 2020 16 September 2021 Principal outstanding, USD mln 500 500 500 Guarantor(s) JSC Apatit JSC Apatit JSC Apatit Share performance Item As at 30 December 2020 As at 30 December 2021 As at 30 December 2022 Weighted average trading price of a share on the Moscow Exchange, RUB 3,156.00 5,857.00 6,390.00 GDR price on the London Stock Exchange 1 , USD 13.64 21.58 – Market capitalisation, RUB mln 408,831.50 758,611.00 827,505.00 Bonds Analyst coverage PhosAgro is covered by analysts from leading Russian and international brokers. Company Analyst Tel. ATON Andrey Lobazov +7 (495) 213-03-37 Alfa Bank Boris Krasnojenov +7 (495) 795-36-12 BCS Global Markets Kirill Chuyko +7 (495) 213-15-26 Renaissance Capital Boris Sinitsyn +7 (499) 956-45-40 (ext. 4540) Sberbank CIB Georgiy Ivanin +7 (495) 665-56-00 Sinara Financial Corporation Dmitriy Smolin +7 (916) 555-79-97 Arowana Capital Elena Sakhnova +7 (495) 287-68-77 Veles Capital Elsa Gazizova +7 (495) 258-19-88 (ext. 599) Dividend policy PhosAgro is committed to striking an effective and reasonable balance between the payment of dividends and reinvestment of profit in further development. Higher transparency and predictability of dividend payments are a priority for the Company as it seeks to ramp up its growth and strengthen its investment case. All resolutions on the payment of dividends and the timing and amount of such payment are subject to approval of the General Meeting of Shareholders, based on recommendations provided by PhosAgro’s Board of Directors. When preparing recommendations for the General Meeting of Shareholders on any dividend payout (declaration), in addition to the current financial standing assessment, the Board of Directors takes into account the relevant provisions of PhosAgro's dividend policy whereby the amount of distributed dividends may range from 50 to over 75% (subject to PhosAgro's leverage ratio) of PhosAgro's consolidated free cash flow for the respective year under IFRS. At the same time, the amount of declared dividends should not be lower than 50% of adjusted net profit for the year under IFRS. On 2 March 2023, PhosAgro’s Board of Directors recommended that the Annual General Meeting of Shareholders (AGM) approve the distribution of profits and losses of PhosAgro for 2022 and use part of the Company’s net profit for 2022 to pay out dividends in the amount of RUB 465 per each ordinary registered uncertified share. Official market capitalisation data is published on the Moscow Exchange’s website For more information on our historical share performance, please visit the Company’s website The key factors affecting PhosAgro's share performance in 2022 Approval of multiple sanction packages against Russia No access to trading on the London Stock Exchange since 3 March 2022 and suspension of trading on the Moscow Exchange from 28 February to 23 March 2022 The full text of the Company’s Dividend Policy is available on the Company’s website For the debt repayment schedule, see the Financial Performance section on page 89 SHARE CAPITAL Appendices 322 323 Strategic report Performance review Corporate governance Company profile Report on dividends declared and paid Dividend per share, RUB Dividend per GDR, RUB Governance body deciding on the payment of dividends Date of the General Meeting of Shareholders where the relevant resolution on the payment of dividends was adopted and No. of the minutes Dividend payment timeframes 1 2020 Retained earnings as at 31 March 2020: 78 26 19 June 2020 No later than 7 July 2020/10 August 2020 ...as at 30 June 2020 33 11 30 September 2020 No later than 16 October 2020/20 November 2020 ...as at 30 September 2020 123 41 14 December 2020 No later than 28 December 2020/18 January 2021 ...as at 31 December 2020 (based on 2020 results) 63 21 25 May 2021 No later than 8 June 2021/13 July 2021 2021 Retained earnings as at 31 December 2020 (based on 2020 results): 105 35 22 June 2021 No later than 6 July 2021/9 August 2021 ...as at 30 June 2021 156 52 13 September 2021 No later than 8 October 2021/29 October 2021 ...as at 30 September 2021 234 78 8 December 2021 No later than 21 December 2021/1 February 2022 ...as at 31 December 2021 (based on 2021 results) 2 390 (no resolution passed) 130 (no resolution passed) 30 June 2022 No later than 25 July 2022/15 August 2022 2022 Retained earnings as at 30 June 2022 780 260 21 September 2022 No later than 17 October 2022/8 November 2022 9M 2022 318 106 8 December 2022 No later than 9 January 2023/30 January 2023 FY 2022 465 155 24 March 2023 No later than 9 January 2023/30 January 2023 3 1 For nominee holders and trustees who are securities market professionals and are on PhosAgro’s register of shareholders / other persons on PhosAgro’s register of shareholders. 2 The General Meeting of Shareholders did not approve profit distribution for FY 2021, including payment of dividends. 3 Provided that on 24 March 2023, the Annual General Meeting of Shareholders approves the FY 2022 payments recommended by the Board of Directors. Results of the vote held by the Annual General Meeting of Shareholders on the distribution of profits (including payout (declaration) of dividends) and losses of the Company Annual General Meeting of Shareholders of 25 May 2021 109,197,672 6,704 0 FOR AGAINST ABSTAINED Annual General Meeting of Shareholders of 30 June 2022 38,088,321 56,540,778 0 FOR AGAINST ABSTAINED Annual General Meeting of Shareholders of 24 March 2023 94,790,985 0 0 FOR AGAINST ABSTAINED For more information on the Company’s dividend payment history, please visit the Company’s website Extraordinary General Meeting of Shareholders Annual General Meeting of Shareholders SHARE CAPITAL Appendices 324 325 Strategic report Performance review Corporate governance Company profile To raise investor awareness of the Company’s potential value and long-term sustainability To update investors on PhosAgro’s strategic priorities and progress we have made To attract a wider pool of investors to improve liquidity, share price and borrowing costs Relationship with shareholders and investors Why we interact Provide investment community with reliable and relevant information on the key aspects of the Company’s operations, its development plans and long-term goals. Identify risks and opportunities for the Company as seen from the perspective of members of the investment community after they have analysed the provided information. At PhosAgro, we are committed to transparency and consistency, and maintain an ongoing dialogue with the investor community through a variety of communication channels and with involvement of the Company’s senior management and independent directors. We keep the market abreast of the Company’s performance by publishing quarterly operational and financial results that are made available to investors via press A well-developed Eurobond programme helps reinforce PhosAgro's position in the public debt market, while also ensuring the lowest cost of funding. In 2022, the Company continued to stay in touch with retail investors by holding conference calls with the assistance of major Russian brokers. To increase our access to a variety of capital market instruments To provide transparency on how our corporate governance systems work To clarify the Company’s contribution to the UN Sustainable Development Goals To generate new ideas through a dialogue with investors Strong engagement programme releases, presentations, conference calls and webcasts. On top of that, we take every opportunity to answer investors’ questions and gather feedback from market players by participating in conference calls. In 2022, the Company did not conduct its ESG investor survey due to the macroeconomic challenges, but it plans to reinstate this practice in 2023. The survey is expected to be conducted every two years. The first survey took place in 2020. Communicate investor feedback to the management to form the internal position and tweak/ work out a development strategy that would mitigate major risks and unlock the Company’s potential. Monitor the progress against the Company’s development strategy and present its results to the public. 1 3 4 2 Four main purposes for which PhosAgro interacts with the investment community Each building on each other Facilitating an ongoing exchange of information Ensuring greater business transparency SHARE CAPITAL Appendices 326 327 Strategic report Performance review Corporate governance Company profile > 50 press releases were distributed via the UK regulatory news service Information disclosure In its declarations and disclosures, PhosAgro strictly follows the requirements imposed by Russian securities regulations, as well as rules for the companies traded on the LSE. The Company publicly discloses all required Key topics and outcomes in 2022 In 2022, closer contacts of the Company with shareholders, debt investors and analysts (primarily in the form of online meetings) were of critical importance due to the impact of external challenges. PhosAgro's proactive approach to communication with debt market players guaranteed the success of a vote held among Eurobond holders to amend the issuance documentation with a view to ensuring continuous debt repayment in the changing regulatory environment. 85 publications were made in line with Russian disclosure regulations via the Interfax Corporate Disclosure Centre For more information on our initiatives and their accompanying presentations, please visit the Calendar section of the Company's official website The Company's page on the official LSE website PhosAgro’s official disclosure page on the Interfax portal Disclosure on the Company's official website The Company interacts with the investment community in a variety of ways. Roadshows Virtual non-deal roadshows covering general topics for broader investor audiences and deal roadshows relating to Eurobond offerings and ESG disclosures, etc. One-on-one calls One-on-one calls with investors. Online conferences Online investor conferences. Surveys Surveys of the Company’s perception by different investor categories, including ESG-oriented groups. Communication with members Selective communication with members of the analyst community to raise their awareness of the Company’s operations. Interaction with agencies Interaction with credit and ESG rating agencies. Press releases Regulatory press releases. How we interact Meetings of Shareholders Annual General Meetings of Shareholders and formal reporting. Corporate website Corporate website of the Company. Investor relations team A dedicated in-house investor relations team. 3 March 2023 19 May 2023 (TBC) 11 August 2023 (TBC) 10 November 2023 (TBC) Financial calendar for 2023 Financial results disclosure 4Q and FY 2022 1Q 2023 2Q and 6M 2023 3Q and 9M 2023 information to shareholders and investors in a timely manner through authorised newswires, the corporate website, PhosAgro’s official disclosure page on the Interfax portal, and on the LSE webpage. SHARE CAPITAL Appendices 328 329 Strategic report Performance review Corporate governance Company profile 6 ADDITIONAL information 330 331 104 The consolidated financial statements 114 Independent limited assurance report 122 GRI content index 138 SASB content index 156 TCFD recommen- dations 190 Glossary 193 Contacts ADDITIONAL INFORMATION The consolidated financial statements Independent Auditor’s Report Joint-Stock Company “Technologies of Trust – Audit” (“Technologies of Trust – Audit” JSC) White Square Office Center, 10 Butyrsky Val, Moscow, Russian Federation, 125047 T: +7 (495) 967 6000, F: +7 (495) 967 6001 www.tedo.ru Independent Auditor’s Report To the Shareholders and Board of Directors of Public Joint Stock Company “PhosAgro” : Qualified opinion In our opinion, except for the effects of the matter described in the Basis for qualified opinion section of our report, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Public Joint Stock Company “PhosAgro” (the “Company”) and its subsidiaries (together – the “Group”) as at 31 December 2022, and the Group’s consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS). What we have audited The Group’s consolidated financial statements comprise: • the consolidated statement of profit or loss and other comprehensive income for 2022; • the consolidated statement of financial position as at 31 December 2022; • the consolidated statement of cash flows for 2022; • the consolidated statement of changes in equity for 2022; and • the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information. Basis for qualified opinion The Group has not disclosed segment information as required by IFRS 8, Operating Segments for the year ended 31 December 2022 and for the comparative period. Considering the significant volume of undisclosed segment information required by IFRS 8, Operating Segments , presenting this undisclosed information in our audit opinion is not practicable. We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Independence We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Auditor’s Professional Ethics Code and Auditor’s Independence Rules that are relevant to our audit of the consolidated financial statements in the Russian Federation. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for qualified opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. www.tedo.ru 2 Key audit matter How our audit addressed the key audit matter Effect of changes in current economic situation on the consolidated financial statements of the Group Refer to Notes 1 (b) and 29 to the consolidated financial statements of the Group In 2022, there were significant changes in the economic environment in which the Group operates, commodity and financial markets demonstrated increased volatility. The imposition of the restrictive measures against a number of Russian entities led to the restricted access to European and USA financial markets and a risk that USD- denominated coupon payments on the Group’s Eurobonds will not reach the final debt securities holders through foreign paying agents. Among other changes, economic environment developments led to changes in the Group structure, as described in note 29 to the consolidated financial statements, and affected a number of elements of the consolidated financial statements. We focus on this matter due to significance of potential impact of changes in the economic environment in which the Group operates on its consolidated financial statements and significant management’s judgement required in respect of certain transactions and balances. We performed the following audit procedures in respect of this key audit matter: • We performed inquiries of management in respect of how the changes in current economic environment have affected the Group and its financial performance measures. • We tested compliance with debt covenants under the Group’s loan obligations, received documents in respect of changes made in 2022 in debt securities repayment mechanism and terms of service of Eurobonds. We confirmed that loan obligations of the Group denominated in foreign currency were fulfilled timely and in full amount. • We have analysed terms of sales contracts to identify new non- standard sales terms, performed detailed testing of the supporting documents and received on a sample basis a third party confirmation to ensure sales revenue is recognised properly and in correct period in the consolidated financial statements. • We performed analytical procedures of revenues by main products, including comparison with market prices to ensure that changes in the Group revenue are in line with market trends. • We tested changes in the Group structure, in particular we: - analysed the agreement and key terms of the transaction for disposal of foreign subsidiaries of the Group; - assessed and challenged management conclusions relating to loss of control by the Group; - assessed reasonableness of management assumptions applied for estimation of fair value of the Group’s 5% investment in Phosint Limited; - examined accounting transactions for disposal of these companies in the consolidated financial statements of the Group; - analysed management’s calculation of allowance for expected credit losses in respect of receivable accrued as a result of disposal. • We assessed reasonableness of the following key assumptions used by management for calculation of allowance for expected credit losses in respect of trade and other receivables: credit rating of the debtor, probability of default and loss given default. • We analysed events after the reporting date for existence of circumstances which could have significant adverse effect on the consolidated financial position and consolidated financial performance of the Group. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 332 333 www.tedo.ru 3 Other matter – Materiality and Group audit scope Overview Materiality Overall Group materiality: Russian Roubles (“RUB”) 11,615 million, which represents 5% of profit before tax. Group scoping • We conducted audit work at all significant reporting units in the Russian Federation and abroad. • Our audit scope addressed 94% of the Group’s revenues and 94% of the Group’s absolute value of underlying profit before tax. Materiality As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls including, among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the consolidated financial statements as a whole. Overall Group materiality RUB 11,615 million (2021: RUB 8,003 million) How we determined it 5% of profit before tax Rationale for the materiality benchmark applied We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is consistent with quantitative materiality thresholds used for profit- oriented companies in this sector How we tailored our Group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. Our group audit was focused on the significant components in the Russian Federation and abroad. For components which are individually financially significant we performed an audit of their complete set of financial information. The audit work for the significant components in the Russian Federation and abroad was performed by the group auditor. We also included information systems and tax specialists in our group audit team. By performing the above procedures at the components, combined with additional procedures at the Group level, we have obtained sufficient and appropriate audit evidence regarding the consolidated financial statements of the Group as a whole. www.tedo.ru 4 Other information Management is responsible for the other information. The other information comprises the Integrated annual report for 2022 and the Company’s Securities issuer’s report for the 12 months ended 31 December 202 2 (but does not include the consolidated financial statements and our auditor’s report thereon), which are expected to be made available to us after the date of this auditor’s report. Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. When we read the Integrated annual report for 2022 and the Company’s Securities issuer’s report for the 12 months ended 31 December 2022, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 334 335 www.tedo.ru 5 • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The certified auditor responsible for the audit resulting in this independent auditor’s report is A.Y. Fegetsyn. 2 March 2023 Moscow, Russian Federation A.Y. Fegetsyn is authorised to sign on behalf of the general director of Joint-Stock Company “Technologies of Trust – Audit” (Principal Registration Number of the Record in the Register of Auditors and Audit Organizations (PRNR) – 12006020338), certified auditor (PRNR – 21906101957) Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2022 RUB million Note 2022 2021 Revenues 6 569,527 420,488 Cost of Group products sold 7 (253,419) (206,082) Cost of products for resale (15,599) (12,725) Gross profit 300,509 201,681 Administrative and selling overhead expenses 8 (42,403) (27,845) Taxes, other than income tax, net 9 (11,327) (5,946) Other expenses, net 10 (9,371) (3,449) Foreign exchange loss from operating activities, net (9,068) (307) Operating profit 228,340 164,134 Gain from revaluation of financial assets measured at fair value 17 - 1,193 Finance income 11 4,439 778 Finance costs 11 (11,967) (5,044) Foreign exchange gain/(loss) from financing activities, net 28(b) 11,485 (531) COVID19 related expenses - (475) Profit before tax 232,297 160,055 Income tax expense 12 (47,583) (30,381) Profit /(loss) for the year 184,714 129,674 Attributable to: Non-controlling interests 1 52 (23) Shareholders of the Company 184,662 129,697 Basic and diluted earnings per share (in RUB) 23 1,426 1,002 Other comprehensive loss Items that will never be reclassified to profit or loss Actuarial losses 26 (276) (36) Items that may be reclassified subsequently to profit or loss Foreign currency translation difference (2,929) (350) Foreign currency translation difference reclassified to profit or loss upon loss of control over foreign subsidiaries 29 (6,302) - Actuarial losses reclassified to profit or loss upon loss of control over foreign subsidiaries 61 - Other comprehensive loss for the year (9,446) (386) Total comprehensive income/(loss) for the year 175,268 129,288 Attributable to: Non-controlling interests 1 52 (23) Shareholders of the Company 175,216 129,311 1 Non-controlling interests are the minority shareholders of the subsidiaries of PJSC “PhosAgro” The consolidated financial statements were approved on 2 March 2023: M.K. Rybnikov Chief executive officer A.F. Sharabaiko Deputy CEO for Finance and International Projects The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 5 to 37. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 336 337 Consolidated Statement of Financial Position as at 31 December 2022 RUB million Note 31 December 2022 31 December 2021 ASSETS Property, plant and equipment 13 274,522 237,444 Advances issued for property, plant and equipment 9,270 13,237 Other non-current assets 17 8,546 2,058 Deferred tax assets 16 7,903 9,499 Non-current spare parts 5,125 4,698 Right-of-use assets 14 4,277 6,955 Intangible assets 2,099 1,756 Catalysts 1,965 2,049 Investments in associates 15 592 569 Non-current assets 314,299 278,265 Trade and other receivables 20 75,741 48,526 Inventories 19 39,349 41,177 Cash and cash equivalents 21 13,356 21,710 VAT and other taxes receivable 12,565 15,013 Other financial assets 18 210 216 Income tax receivable 93 540 Current assets 141,314 127,182 Total assets 455,613 405,447 EQUITY 22 Share capital 372 372 Share premium 7,494 7,494 Retained earnings 190,664 148,193 Actuarial losses (968) (753) Foreign currency translation reserve - 9,231 Equity attributable to shareholders of the Company 197,562 164,537 Equity attributable to non-controlling interests 158 106 Total equity 197,720 164,643 LIABILITIES Loans and borrowings 24 109,784 157,081 Deferred tax liabilities 16 17,820 12,937 Lease liabilities 25 1,660 3,459 Defined benefit obligations 26 1,050 952 Non-current liabilities 130,314 174,429 Loans and borrowings 24 80,974 12,710 Trade and other payables 27 39,412 41,754 VAT and other taxes payable 5,632 6,397 Lease liabilities 25 1,276 2,178 Income tax payable 203 3,334 Dividends payable 82 2 Current liabilities 127,579 66,375 Total equity and liabilities 455,613 405,447 The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 5 to 37. Consolidated Statement of Cash Flows for 2022 RUB million Note 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Operating profit 228,340 164,134 Adjustments for: Depreciation and amortisation 7, 8 29,539 27,676 Loss on disposal of property, plant and equipment and intangible assets 10 429 198 Operating profit before changes in working capital and provisions 258,308 192,008 Increase in inventories, catalysts and non-current spare parts (12,308) (10,855) Decrease/(increase) in trade and other receivables 1 7,498 (38,667) (Decrease)/increase in trade and other payables1 (3,131) 17,490 Cash flows from operations before income taxes and interest paid 250,367 159,976 Income tax paid (41,811) (28,806) Finance costs paid (5,275) (4,945) Cash flows from operating activities 203,281 126,225 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment and intangible assets (63,021) (47,951) Cash and cash equivalents disposed as a result of loss of control over foreign subsidiaries 29 (36,729) - Loans issued 18 (3,130) - Borrowing cost capitalised paid 13 (976) (1,141) Advances issued for right-of-use assets (850) - Finance income received 3,783 583 Proceeds from disposal of financial assets measured at fair value through profit or loss 17 1,778 - Other 159 141 Cash flows used in investing activities (98,986) (48,368) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings, net of transaction costs 24 57,171 61,622 Repayment of borrowings 24 (23,926) (50,081) Dividends paid to shareholders of the Company 22 (142,111) (72,260) Lease payments 25 (1,429) (1,950) Cash flows used in financing activities (110,295) (62,669) Net (decrease)/increase in cash and cash equivalents (6,000) 15,188 Cash and cash equivalents at 1 January 21,710 8,460 Effect of exchange rates fluctuations (2,354) (1,938) Cash and cash equivalents at 31 December 21 13,356 21,710 1 Changes in trade and other receivables and changes in trade and other payables include effect of foreign exchange differences from operating activities The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 5 to 37. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 338 339 Consolidated Statement of Changes in Equity for 2022 Attributable to shareholders of the Company RUB million Share capital Share premium Retained earnings Actuarial losses Foreign currency translation reserve Total Attributable to non- controlling interests Total equity Balance at 1 January 2021 372 7,494 90,757 (717) 9,581 107,487 129 107,616 TOTAL COMPREHENSIVE INCOME/ (LOSS) Profit/(loss) for the year - - 129,697 - - 129,697 (23) 129,674 Actuarial losses, note 26 - - - (36) - (36) - (36) Foreign currency translation difference - - - - (350) (350) - (350) TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY Dividends to shareholders - - (72,261) - - (72,261) - (72,261) Balance at 31 December 2021 372 7,494 148,193 (753) 9,231 164,537 106 164,643 Balance at 1 January 2022 372 7,494 148,193 (753) 9,231 164,537 106 164,643 TOTAL COMPREHENSIVE INCOME/ (LOSS) Profit for the year - - 184,662 - - 184,662 52 184,714 Actuarial losses, note 26 - - - (276) - (276) - (276) Foreign currency translation difference - - - - (2,929) (2,929) - (2,929) Foreign currency translation difference reclassified to profit or loss upon loss of control over foreign subsidiaries, note 29 - - - - (6,302) (6,302) - (6,302) Actuarial losses reclassified to profit or loss upon loss of control over foreign subsidiaries - - - 61 - 61 - 61 TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY Dividends to shareholders, note 22 - - (142,191) - - (142,191) - (142,191) Balance at 31 December 2022 372 7,494 190,664 (968) - 197,562 158 197,720 The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 5 to 37. Notes to the Consolidated Financial Statements for 2022 1. Background (a) Organisation and operations PJSC “PhosAgro” (the “Parent” or the “Company”) is a public joint stock company registered in accordance with Russian legislation. PJSC “PhosAgro” and its subsidiaries (together referred to as the “Group”) comprise Russian legal entities. The Company was registered in October 2001. The Parents’s location is Leninsky prospekt 55/1 building 1, Moscow, Russian Federation, 119333. The Group’s principal activity is production of apatite concentrate and mineral fertilisers at plants located in the cities of Kirovsk (Murmansk region), Cherepovets (Vologda region), Balakovo (Saratov region) and Volkhov (Leningrad region), and their distribution across the Russian Federation and abroad. As at 31 December 2022, the Parent’s key shareholders are two entities registered in Russia – ILLC Chlodwig Enterprises holding approximately 20.3% of the Parent’s ordinary shares, ILLC Adorabella holding approximately 23.3% of the Parent’s ordinary shares and T.P. Litvinenko holding approximately 21% of the Parent’s ordinary shares. As at 31 December 2021, the Parent’s key shareholders were entities registered in Switzerland – Chlodwig Enterprises AG that held approximately 20.3%, Adorabella AG that held approximately 23.3% and V.S. Litvinenko who held approximately 21% of the Parent’s ordinary shares. As at 31 December 2022 and 31 December 2021, the Parent does not have the ultimate controlling party in accordance with the definitions of control described in IFRS 10 Consolidated Financial Statements. (b) Russian business environment The Group’s operations are primarily located in the Russian Federation. Consequently, the Group is exposed to the economic and financial conditions of the Russian Federation, which display certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue development, and are subject to varying interpretations and frequent changes (note 31). The Russian economy continues to be negatively impacted by ongoing political tension in the region and international sanctions against certain Russian companies and individuals. In 2022 ongoing political tensions intensified as a result of situation with Ukraine, which negatively affected commodity and financial markets and increased volatility, especially in exchange rates. On 24 February 2022 Brent oil prices increased to over USD 100 per barrel, foreign currency exchange rates reached RUB 90.88 per 1 EUR and RUB 80.42 per 1 USD. On 11 March 2022, RUB depreciation reached its maximum level and foreign currency exchange rates were RUB 132.96 per 1 EUR and RUB 120.38 per 1 USD. Subsequently, these exchange rates strengthened, although they remained volatile during the reporting period. It is not possible to determine how long this increased volatility will last or when the above indicators will revert to previous levels. A number of sanctions have been introduced to restrict Russian entities from having access to European and USA financial markets. Sanctions included access termination to SWIFT international system for several Russian banks which could potentially impact the Group’s ability to transfer or receive funds. As a result of restrictions, there is a risk that USD-denominated coupon payments will not reach the final debt securities holders through foreign paying agents. In October 2022 the Group received approval from Eurobond holders to change debt securities repayment mechanism. These changes are mainly aimed at reducing repayment risks and in providing that payments can be made both through the main paying agent and directly to noteholders. In March 2022, Andrey A. Guryev was included in the European Union sanctions list, followed by his resignation from the Company’s CEO role and his post on the Board of Directors. The future effects of current economic situation and the above measures are difficult to predict. Management’s current expectations and estimates could differ from actual results. Management of the Group has considered events and conditions that could give rise to material uncertainties and concluded that the range of possible outcomes does not cast significant doubt over the Group’s ability to continue as a going concern. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 340 341 2. Basis of preparation (a) Statement of compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The Group additionally prepares IFRS consolidated financial statements in the Russian language in accordance with the Federal Law No. 208FZ On consolidated financial reporting. (b) Basis of measurement The consolidated financial statements are prepared on the historical cost basis except for the financial assets measured at fair value. (c) Functional currency The national currency of the Russian Federation is the Russian Rouble (“RUB”), which is the functional currency of the Parent and its subsidiaries. In March 2022, the Group lost control over its 100% foreign subsidiary Phosint Limited (currently PUREFERT LIMITED) owning all the foreign companies of the Group (note 29). Until the disposal, the Group included subsidaries with the functional currency USD, EUR and other currencies. (d) Presentation currency These consolidated financial statements are presented in RUB. All financial information presented in RUB has been rounded to the nearest million, except per share amounts. The translation from USD and EUR into RUB, where applicable, was performed as follows: Assets and liabilities in USD and EUR as at 31 December 2022 and 31 December 2021 were translated at the following closing exchange rates: Closing exchange rate RUB to USD 1 RUB to EUR 1 31 December 2022 70.3375 75.6553 31 December 2021 74.2926 84.0695 Profit and loss items of foreign subsidiaries previously controlled by the Group for 2022 (until the Group lost control over Phosint Limited) and 2021 were converted at the average exchange rate for the appropriate month: Average exchange rate for the month 2022 2021 RUB to USD 1 RUB to EUR 1 RUB to USD 1 RUB to EUR 1 January 75.8837 85.9393 74.2291 90.5062 February 77.4048 87.7638 74.3842 89.9403 March 104.0810 114.7127 74.4151 88.6904 April - - 76.0977 90.8178 May - - 74.0438 89.8856 June - - 72.5106 87.4537 July - - 73.9194 87.3794 August - - 73.5942 86.6334 September - - 72.8914 85.9412 October - - 71.4981 82.9586 November - - 72.6024 82.9339 December - - 73.7172 83.3260 Equity items arising during the year are recognised at the exchange rate ruling at the date of transaction. The resulting foreign exchange difference is recognised in other comprehensive income. (e) Use of estimates and judgments The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical assumptions and estimation uncertainties that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes: • Note 3 (c) (iii) – estimated useful lives of property, plant and equipment; • Note 29 – loss of control over foreign subsidiaries previously controlled by the Group and recognition of accounts receivable as a result of their disposal. (f) Adoption of new and revised standards and interpretations • COVID19Related Rent Concessions – Amendments to IFRS 16 (issued on March 31, 2021 and effective for annual periods beginning on or after April 1, 2021). The amendment extended the date of the practical expedient provided by Amendments to IFRS 16 issued on 28 May 2020 from 30 June 2021 to 30 June 2022. The application of the amendment did not have an impact on the right-of-use asset. The following amended standards became effective from 1 January 2022, but did not have a material impact on the Group: • Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods beginning on or after 1 January 2022). (g) New standards and interpretations not yet adopted A number of new standards and interpretations have been issued that are mandatory for the annual periods beginning on or after 1 January 2023 or later, and which the Group has not early adopted, but is in process of assessing the impact on the Group’s consolidated financial statements. • Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and IAS 28 (issued on 11 September 2014 and effective for annual periods beginning on or after a date to be determined by the IASB). • IFRS 17 “Insurance Contracts” (issued on 18 May 2017 and effective for annual periods beginning on or after 1 January 2023). • Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for annual periods beginning on or after 1 January 2023). • Classification of liabilities as current or non-current – Amendments to IAS 1 (issued on 23 January 2020 and effective for annual periods beginning on or after 1 January 2022). • Classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023). • Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). • Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). • Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023). • Transition option to insurers applying IFRS 17 – Amendments to IFRS 17 (issued on 9 December 2021 and effective for annual periods beginning on or after 1 January 2023). • Lease Liability in a Sale and Leaseback Amendments to IFRS 16 – Amendments to IFRS 16 (issued on 22 September 2022 and effective for annual periods beginning on or after 1 January 2024). • Non-current Liabilities with Covenants – Amendments to IAS 1 (issued on 31 October 2022 and effective for annual periods beginning on or after 1 January 2024). Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 342 343 3. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. (ii) Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as measured at FVOCI financial asset depending on the level of influence retained. (iii) Acquisitions and disposals of non-controlling interests Any difference between the consideration paid to acquire a non-controlling interest, and the carrying amount of that non-controlling interest, is recognised in equity. Any difference between the consideration received from disposal of a portion of a Group’s interest in the subsidiary and the carrying amount of that portion, including attributable goodwill, is recognised in equity. (iv) Associates Associates are those enterprises in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence effectively commences until the date that significant influence effectively ceases. Dividends received from associates reduce the carrying value of the investment in associates. When the Group’s share of losses exceeds the Group’s interest in the associate, that interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate. (v) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and jointly controlled enterprises are eliminated to the extent of the Group’s interest in the enterprise. Unrealised gains resulting from transactions with associates are eliminated against the investment in the associate. Unrealised losses are eliminated in the same way as unrealised gains except that they are only eliminated to the extent that there is no evidence of impairment. (b) Foreign currencies Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate ruling at that date. Non-monetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated to the functional currency at the exchange rate ruling at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at the exchange rate ruling at the dates the fair values were determined. Foreign exchange differences arising on translation are recognised in the profit or loss. (c) Property, plant and equipment (i) Owned assets Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. The cost of property, plant and equipment at the date of transition to IFRS was determined by reference to its fair value at that date (“deemed cost”) as determined by an independent appraiser. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for their intended use and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. (ii) Subsequent expenditure Expenses in connection with ordinary maintenance and repairs are recognised in the consolidated statement of profit or loss and other comprehensive income as they are incurred. Expenses in connection with periodic maintenance on property, plant and equipment are recognised as assets and depreciated on a straight-line basis over the period until the next periodic maintenance, provided the criteria for capitalizing such items have been met. Expenses incurred in connection with major replacements and renewals of property, plant and equipment are capitalised and depreciated on a systematic basis. (iii) Depreciation Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful lives of the individual assets. Depreciation commences on the month of acquisition or, in respect of internally constructed assets, from the month when an asset is completed and ready for use. Land is not depreciated. The estimated useful lives as determined when adopting IFRS (1 January 2005) for the assets reflected on the statement of financial position at that date are as follows: Buildings 12 to 17 years; Plant and equipment 4 to 15 years; Fixtures and fittings 3 to 6 years. Tangible fixed assets acquired after the date of adoption of IFRS, are depreciated over the following useful lives: Buildings 10 to 60 years; Plant and equipment 5 to 35 years; Fixtures and fittings 2 to 25 years. Management assesses the remaining useful lives in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group. (iv) Capitalisation of borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised as part of the costs of those assets. Capitalization of borrowing costs continues up to the date when the assets are substantially ready for their use or sale. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 344 345 The Group capitalizes borrowing costs that could have been avoided if it had not made capital expenditure on qualifying assets. Borrowing costs capitalised are calculated at the Group’s average funding cost (the weighted average interest cost is applied), except to the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset. Where this occurs, actual borrowing costs are capitalised. Borrowing costs capitalised are presented as part of cash flows from investing activities in the consolidated statement of cash flows. (v) Advances issued for property, plant and equipment A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. (d) Intangible assets (i) Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the profit or loss as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the profit or loss as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. (ii) Other intangible assets Other intangible assets acquired by the Group are represented by Oracle software, which has finite useful life and is stated at cost less accumulated amortisation and impairment losses. (iii) Amortisation Intangible assets, other than goodwill, are amortised on a straight-line basis over their estimated useful lives from the date the asset is available for use. The estimated useful lives are 3 – 10 years. (e) Financial instruments Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. The Group financial assets are classified in the following measurement categories based on the Group’s business model for managing the financial assets and the contractual terms of the cash flows: financial assets at amortised cost; financial assets at fair value (either through other comprehensive income or profit or loss). Financial assets at amortised cost. Financial asset is measured at amortised cost if it meets both of the following conditions: • the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Any gains or losses arising from derecognition are recognised directly in profit or loss. Financial assets at fair value through other comprehensive income (“FVOCI”). Financial assets are classified and measured at fair value through other comprehensive income if they meet both of the following conditions: • they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and • their contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. These financial assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Financial assets at fair value through profit or loss (“FVPL”). Financial asset that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. (f) Securitisation arrangements The Group enters into non-recourse securitization arrangements under which insured trade receivables can be sold to a bank for cash proceeds. Trade receivables are derecognised from the statement of financial position as the Group does not retain substantially all risks and rewards of ownership, except for the amount of security deposit which represents insurance deductible amount for the receivables transferred to a bank. A deposit is recognised in trade receivables in the consolidated statement of financial position of the Group. The Group continues to collect and service the receivables and then transfers to the bank the collected amounts of the trade receivables sold. The portfolio of trade receivables that can be sold to a bank meets the criteria for “held to collect and sell” business model and such trade receivables are classified and measured at fair value through other comprehensive income. Cash collected from the customers and not yet transferred to the bank at the reporting date is presented within other payables in the consolidated statement of financial position of the Group. Securitization fees are recognised as finance costs. (g) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less. Bank deposits held for longer than three months that are repayable on demand within several working days without penalties or that can be redeemed/withdrawn, subject to the interest income forfeited, are classified as cash equivalents if the deposits are held to meet short-term cash needs and there is no significant risk of a change in value as a result of an early withdrawal. (h) Inventories Inventories are stated at the lower of cost and net realisable value. The cost of inventory (finished goods and goods for resale) for distribution companies is determined on the first-in, first-out (FIFO) basis. The cost of inventories for production companies is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Spare parts to be used for construction and in repairs capitalised are classified as non-current spare parts. Catalysts to be used in production during the period of more than 1 year are classified as part of non-current assets and written-off to the production cost based on the volume of goods produced. Catalysts to be used in production within 1 year are classified as part of inventories Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le 346 347 (i) Impairment Financial assets The Group recognises loss allowances for expected credit loss (ECLs) on financial assets measured at amortised cost and financial assets measured at fair value through other comprehensive income (“FVOCI”). The loss allowances are measured on either of the following bases: 12month ECLs that result from default events that are possible within the 12 months after the reporting date; and lifetime ECLs that result from all possible default events over the expected life of a financial instrument. For trade receivables the Group estimated the expected credit losses for the entire period, applying a simplified approach to measuring expected credit losses, which uses lifetime expected loss allowance. In the terms of calculating the expected credit loss, the Group considers the credit rating for each counterparty, adjusted with forward-looking factors specific to the debtors, historical credit loss experience and economic environment in which they operate. If, in a subsequent period, the fair value of an impaired financial assets increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. Non-financial assets The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss. Impairment losses recognised in respect of cash- generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, if any, and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. ( j) Leases As a lessee Applying IFRS 16 for all leases (except as noted below), the Group: • recognises right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of future lease payments; • recognises depreciation of right-of-use assets and interest on lease liabilities in the consolidated statement of profit or loss and other comprehensive income; and • separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the consolidated statement of cash flows. The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and making certain adjustments to reflect the terms of the lease and type of the asset leased. Lease payments included in the measurement of the lease liability comprise the following: • fixed payments; • variable lease payments that depend on the rate; • amounts expected to be payable under a residual value guarantee. Lease liability is measured at amortised cost using the effective interest method. It is revalued when there is a change in future lease payments arising from adjusted interest rate, extension or termination option and other events. Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. For short-term leases (lease term of 12 months or less) and leases of low-value assets the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented within cost of sales, administrative expenses and selling expenses in the consolidated statement of profit or loss and other comprehensive income. (k) Share capital (i) Repurchase of share capital When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is deducted from equity. (ii) Dividends Dividends are recognised as a liability in the period in which they are declared. (l) Financial liabilities The Group’s financial liabilities comprise trade and other payables, borrowings and bonds which are measured at amortised cost. The Group derecognises a financial liability when its obligation specified in the contract is discharged or cancelled or expires. (m) Employee benefits (i) Pension plans The Group’s net obligation in respect of defined benefit post-employment plans, including pension plans, is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value, and the fair value of any plan assets, if any, is deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed using the projected unit credit method. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised immediately as an expense in the profit or loss. To the extent the benefits vest immediately, the expense is recognised immediately in the profit or loss. All actuarial gains and losses are recognised in full as they arise in other comprehensive income. (ii) Long-term service benefits other than pensions The Group’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefits that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group’s obligations. All actuarial gains and losses are recognised in full as they arise in other comprehensive income. (iii) State pension fund The Group makes contributions for the benefit of employees to Russia’s State pension fund. The contributions are expensed as incurred. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 348 349 (n) Provisions A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (o) Income tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive income, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (p) Revenues Revenue from contracts with customers is recognised when control of the goods or services is transferred to a customer. The amount of revenue recognised reflects the consideration the Group expects to be entitled in exchange for goods or services, taking into account any trade, volume and other discounts. Advances received before the control passes to a customer are recognised as the contract liabilities. The amount of consideration does not contain a significant financial component as payment terms for the majority of contracts are less than one year. No information is provided about remaining performance obligations as at the reporting date that have an original expected duration of one year or less, as allowed by IFRS 15. Contracts with customers for the supply of goods use a variety of delivery terms. The Group determined that under the terms of the certain contracts for the supply of mineral fertilizers the Group undertakes to provide delivery and the related delivery services after the transfer of control over the goods to the buyer at the loading port. Under IFRS 15, these services are a separate performance obligation, which revenue must be recognised during the period of delivery as revenue from logistics activities. The Group recognises revenue from these logistics services at the time of delivery, due to the fact that the potential difference is calculated and recognised as insignificant. In the revenue disclosure the sales of certain product groups include the proceeds from transportation services. Costs related to rendering of transportation services are mainly represented by logistics costs and included in cost of Group products sold. (q) Finance income and finance costs Finance income comprises interest income, dividend income, unwinding of discount on financial assets and share of profit of associates and foreign exchange gains on financing activities. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the Group’s right to receive payment is established. Finance costs comprise interest expense on borrowings, interest expense on lease liabilities, bank fees, interest expense on defined benefit obligations, securitisation fees, increase in provision for bad debts for financial investments, share of loss of associates and foreign exchange losses on financing activities. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Foreign currency gains and losses, gains and losses arising from operations with foreign currency, securitisation fees and share of profit and losses of associates are reported on a net basis. (r) Overburden removal expenditure In open pit apatite rock mining operations, it is necessary to remove the overburden and other waste in order to access the economically recoverable resources. Stripping costs incurred during the pre-production phase of the open pit mine are capitalised as the cost of the development of the mining property and amortised over the life of the mine. According to the Group’s approach to stripping, the ore, which becomes accessible after the overburden removal, is extracted within no more than four months. Therefore, the stripping ratio (volume of overburden removed over the volume of resources extracted) is expected to stay relatively constant over the future periods and stripping costs incurred during the production phase of the open pit mine are recognised in the profit or loss as incurred. (s) Earnings per share The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. If the number of ordinary shares outstanding increases/ decreases as a result of a share split/ reverse share split, the calculation of the EPS for all periods presented is adjusted retrospectively. 4. Determination of fair values When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Fair values have been determined for measurement and / or disclosure purposes based on the methods described below. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (a) Financial assets and liabilities measured at amortised cost The fair values of financial assets and liabilities presented by loans issued, trade and other receivables, cash and cash equivalents, trade and other payables approximate their carrying amounts as at the reporting date. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 350 351 The fair values of Eurobonds are determined for disclosure purposes based on quoted market prices and included in level 1 of the fair value hierarchy. The fair values of loans and borrowings are categorised as Level 3 of the fair value hierarchy. The fair values are calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. (b) Financial instruments measured at fair value The fair value of financial assets measured at fair value through profit or loss is determined using valuation techniques and categorised as Level 3 of the fair value hierarchy. 5. Seasonality The Group is subject to certain seasonal fluctuations in fertiliser demand due to the timing of fertiliser application and, as a result, fertiliser purchases by farmers. This normally results in increase of advances received from local customers at the year-end. However, the effect of seasonality on the Group’s revenue is partially offset by the fact that the Group sells its fertilisers globally and fertiliser application and purchases vary by region. The Group’s costs are generally stable throughout the year, however several maintenance activities undertaken at the Group’s production facilities may not be evenly spreaded. 6. Revenues RUB million 2022 2021 Phosphate-based and nitrogen-based products 551,037 404,850 Other 18,490 15,638 Revenues 569,527 420,488 7. Cost of Group products sold RUB million 2022 2021 Production expense for Group goods sold (222,360) (163,034) Sulphur and sulphuric acid (40,798) (17,707) Potash (27,418) (16,574) Materials and services (27,349) (23,120) Depreciation (26,979) (24,812) Salaries and social contributions (19,667) (15,286) Ammonia (19,550) (14,277) Natural gas (14,226) (12,635) Repair and maintenance expenses (12,002) (11,373) Transportation of phosphate rock (11,610) (9,105) Electricity (6,754) (6,740) Fuel (6,459) (5,578) Ammonium sulphate (6,331) (2,341) Drilling and blasting operations expenses (3,217) (3,486) Logistics expenses for Group goods sold (31,059) (43,048) Freight, port and stevedoring expenses (16,382) (28,587) Russian Railways infrastructure tariff and operators’ fees (12,647) (10,728) Customs duties (1,420) (2,483) Other services and materials (610) (1,250) Cost of Group products sold (253,419) (206,082) 8. Administrative and selling overhead expenses RUB million 2022 2021 Administrative overhead expenses: (37,328) (21,083) Salaries and social contributions (29,015) (13,493) Professional services (2,386) (1,971) Depreciation and amortisation (1,387) (1,384) Security and fire safety services (1,222) (1,053) Other (3,318) (3,182) Selling overhead expenses: (5,075) (6,762) Salaries and social contributions (2,885) (4,002) Depreciation and amortization (1,173) (1,480) Materials and services (1,017) (1,280) Administrative and selling overhead expenses (42,403) (27,845) 9. Taxes, other than income tax, net RUB million 2022 2021 Mineral extraction tax (8,707) (3,605) Property tax (1,890) (1,694) Land tax (226) (222) Environment pollution payment (207) (211) VAT included in expenses (162) (113) Using water objects payment (58) (53) Other taxes (77) (48) Taxes, other than income tax, net (11,327) (5,946) 10. Other expenses, net RUB million 2022 2021 Social expenditures (9,314) (3,378) Increase in provision for bad debt and expected credit losses allowance (539) (125) Loss on disposal of property, plant and equipment and intangible assets (429) (198) (Accrual)/reversal of contingent liabilities (32) 2 Gain on disposal of inventories 276 387 Decrease/(increase) in provision for inventory obsolescence 120 (370) Other income, net 547 233 Other expenses, net (9,371) (3,449) Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 352 353 11. Finance income and finance costs RUB million 2022 2021 Interest income 3,818 643 Unwinding of discount on financial assets 519 64 Other finance income 102 71 Finance income 4,439 778 Provision for impairment of loans issued (note 18) (4,124) - Discount on extension of payment terms (note 17, 29) (2,777) - Interest expense on borrowings (note 24) (4,223) (3,910) Interest expense on lease liabilities (note 25) (244) (395) Bank fees (258) (221) Interest expense on defined benefit obligations (56) (48) Loss from revaluation of financial instruments (55) - Securitization fees (47) (146) Increase in provision for bad debts for financial investments (14) (81) Other finance costs (169) (243) Finance costs (11,967) (5,044) 12. Income tax expense The Company’s applicable corporate income tax rate is 20% (2021: 20%). RUB million 2022 2021 Current tax expense (41,465) (31,073) Deferred income tax – origination and reversal of temporary differences, including change in unrecognised assets (6,118) 692 Income tax expense (47,583) (30,381) Reconciliation of income tax: RUB mln 2022 2021 Profit before tax 232,297 160,055 Income tax at applicable tax rate (46,459) (32,011) Tax effect of items which are not deductible or assessable for taxation purposes (2,072) (1,017) Tax effect on receivables recognised from disposal of Phosint Group (note 17) (1,647) - Tax effect on provision for loans issued (517) - Tax effect on foreign exchange differences on receivables recognised from disposal of Phosint Group (note 17) (295) - Effect of reduction in tax rate 3,289 2,163 Effect of tax rates in foreign jurisdictions 118 431 Prior years tax adjustments - 78 Change in tax incentive - (25) Income tax expense (47,583) (30,381 ) 13. Property, plant and equipment RUB Million Land and buildings Plant and equipment Fixtures and fittings Construction in progress Total Gross book value at 1 January 2021 104,605 187,961 17,900 38,600 349,066 Additions 1,529 4,406 3,031 34,866 43,832 Transfers to right-of-use assets (note 14) - (15) - - (15) Transfers 11,760 18,110 - (29,870) - Disposals (1,450) (6,655) (192) (102) (8,399) Other transfers (44) (7) (2) - (53) Gross book value at 31 December 2021 116,400 203,800 20,737 43,494 384,431 Additions 3,312 14,193 3,125 47,160 67,790 Transfers 20,246 26,198 - (46,444) - Disposals (1,071) (6,602) (358) (209) (8,240) Disposal of foreign subsidiaries (note 29) (1,129) (2,891) (101) - (4,121) Other transfers 62 138 11 - 211 Gross book value at 31 December 2022 137,820 234,836 23,414 44,001 440,071 Accumulated depreciation at 1 January 2021 (25,455) (92,284) (11,296) - (129,035) Transfers to right-of-use assets (note 14) - 7 - - 7 Depreciation (6,425) (17,703) (1,852) - (25,980) Disposals 1,263 6,560 179 - 8,002 Other transfers 8 10 1 - 19 Accumulated depreciation at 31 January 2021 (30,609) (103,410) (12,968) - (146,987) Depreciation (7,416) (18,528) (1,886) - (27,830) Disposals 973 6,270 305 - 7,548 Disposal of foreign subsidiaries (note 29) 357 1,241 85 - 1,683 Other transfers (13) 59 (9) - 37 Accumulated depreciation at 31 January 2022 (36,708) (114,368) (14,473) - (165,549) Net book value at 1 January 2021 79,150 95,677 6,604 38,600 220,031 Net book value at 31 December 2021 85,791 100,390 7,769 43,494 237,444 Net book value at 31 December 2022 101,112 120,468 8,941 44,001 274,522 During the year ended 31 December 2022, the Group capitalised borrowing costs in the amount of RUB 976 million (2021: RUB 1,141 million) in the value of property, plant and equipment using the weighted average interest rate of 2.55% per year (2021: 2.86% per year). As at 31 December 2022, the most significant balances of the construction in progress related to the following investment projects: • Kirovsk branch of Apatit, JSC: Kirovsk mine extension and modernization. As at 31 December 2022, the Group has capitalised expenses of RUB 13,458 million (as at 31 December 2021: RUB 14,045 million); • Kirovsk branch of Apatit, JSC: Rasvumchorrskiy mine extension and modernization. As at 31 December 2022, the Group capitalised expenses of RUB 4,821 million (as at 31 December 2021: RUB 2,667 million); • Kirovsk branch of Apatit, JSC: apatit-nepheline beneficiation plants extension and modernization. As at 31 December 2022, the Group capitalised expenses of RUB 4,575 million (as at 31 December 2021: RUB 2,414 million); • Volkhov branch of Apatit, JSC: MAP facilities construction. As at 31 December 2022, the Group has capitalised expenses of RUB 3,385 million (as at 31 December 2021: RUB 13,362 million); • Balakovo branch of Apatit, JSC: granulated ammonium sulphate facilities construction. As at 31 December 2022, the Group has capitalised expenses of RUB 2,616 million (as at 31 December 2021: RUB 1,862 million); • Apatit, JSC, Cherepovets: ammonia production facilities support and modernization. As at 31 December 2022, the Group has capitalised expenses of RUB 1,724 million (as at 31 December 2021: RUB 1,077 million). Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 354 355 14. Right-of-use assets The Group has the following types of right-of-use assets: railway wagons, production equipment, offices. The leases typically run for a period of 5 years, with an option to renew the lease after that date. RUB million Buildings Plant and equipment Total Net book value at 1 January 2021 185 7,150 7,335 New lease contracts and modification on existing lease contracts 395 1,087 1,482 Transfers from property, plant and equipment (note 13) - 8 8 Depreciation (100) (1,673) (1,773) Disposals (20) (68) (88) Effect of foreign currency translation reserve (8) (1) (9) Net book value at 31 December 2021 452 6,503 6,955 Disposal of foreign subsidiaries (note 29) (246) (18) (264) New lease contracts and modification on existing lease contracts 60 (1,118) (1,058) Depreciation (78) (1,108) (1,186) Disposals (67) (132) (199) Effect of foreign currency translation reserve 27 2 29 Net book value at 31 December 2022 148 4,129 4,277 Amounts recognised in the consolidated statement of profit or loss and other comprehensive income: RUB million 2022 2021 Depreciation expense on right-of-use assets 1,186 1,773 Interest expense on lease liabilities 244 395 Expenses relating to short-term leases 349 481 Expenses relating to leases with variable payments 498 524 Amounts recognised in the consolidated statement of cash flows: RUB million 2022 2021 Principal lease payments (note 25) (1,429) (1,949) Interest lease payments (note 25) (244) (395) Expenses relating to short-term leases (349) (481) Expenses relating to leases with variable payments (498) (524) Total payments (2,520) (3,349) 15. Investments in associates Carrying values of the Group’s investments in associates are as follows: RUB million 31 December 2022 31 December 2021 Carrying value Share of ownership Carrying value Share of ownership JSC Khibinskaya Teplovaya Kompaniya (Russia) 504 50% 484 50% JSC Giproruda (Russia) 62 25% 59 25% JSC Soligalichskiy izvestkovyi kombinat (Russia) 26 26% 26 26% Total 592 569 16. Deferred tax assets and liabilities (a) Deferred tax assets and liabilities by type of temporary difference Deferred tax assets and liabilities are attributable to the following items: RUB Million Assets Liabilities Net Assets Liabilities Net 31 December 2022 31 December 2021 Property, plant and equipment and intangible assets 104 (15,986) (15,882) 375 (13,714) (13,339) Other non-current assets 41 (1,199) (1,158) 71 (256) (185) Current assets 765 (1,945) (1,180) 2,449 (809) 1,640 Liabilities 1,345 (1,565) (220) 1,825 (205) 1,620 Tax loss carry-forwards 8,578 - 8,578 6,881 - 6,881 Unrecognised deferred tax assets (55) - (55) (55) - (55) Deferred tax assets/(liabilities) 10,778 (20,695) (9,917) 11,546 (14,984) (3,438) Offset (2,875) 2,875 - (2,047) 2,047 - Net deferred tax assets/(liabilities) 7,903 (17,820) (9,917) 9,499 (12,937) (3,438) The deferred tax assets on tax loss carry-forwards relate to the Russian entities of the Group. Due to the Russian tax legislation, starting from 1 January 2017, tax losses accumulated as at 31 December 2022 can be carried forward without limitation on utilisation period. Management has developed a tax strategy to utilise the tax losses above. In assessing the recoverability of the tax losses, management considers a forecast of future taxable profits of the Group and the Group’s tax position. The forecast is reviewed at each reporting date to ensure that the related tax benefit will be realised. As at 31 December 2022, no deferred tax asset for deductible temporary differences of RUB 18,710 million associated with investments in subsidiaries has been recognised (31 December 2021 no deferred tax liability has been recognised: RUB 714 million), either because the Parent can control the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future, or because the income applicable tax rate is expected to be 0%. (b) Movement in temporary differences during the year RUB million 31 December 2022 Recognised in profit or loss Recognised in other comprehensive income Disposal of foreign subsidiaries 1 January 2022 Property, plant and equipment, right-of-use assets and intangible assets (15,882) (2,288) 25 (280) (13,339) Other non-current assets (1,158) (904) 10 (79) (185) Current assets (1,180) (2,788) 37 (69) 1,640 Liabilities (220) (1,835) 3 (8) 1,620 Tax loss carry-forwards 8,578 1,697 - - 6,881 Unrecognised deferred tax assets (55) - - - (55) Net deferred tax (liabilities)/ assets (9,917) (6,118) 75 (436) (3,438) Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 356 357 RUB million 31 December 2021 Recognised in profit or loss Recognised in other comprehensive income Reclassification 1 January 2021 Property, plant and equipment, right-of-use assets and intangible assets (13,339) (1,331) 1 (2) (12,007) Other non-current assets (185) (243) (6) - 64 Current assets 1,640 1,337 (7) - 310 Liabilities 1,620 10 (2) 2 1,610 Tax loss carry-forwards 6,881 919 - - 5,962 Unrecognised deferred tax assets (55) - - - (55) Net deferred tax (liabilities)/ assets (3,438) 692 (14) - (4,116) 17. Other non-current assets RUB million 31 December 2022 31 December 2021 Receivable accrued as a result of Phosint Group disposal 8,454 - Provision for receivable accrued as a result of Phosint Group disposal (85) - Receivable accrued as a result of Phosint Group disposal, net 8,369 - Long-term accounts receivable 58 677 Provision for long-term accounts receivable - (589) Long-term accounts receivable, net 58 88 Loans issued to third parties, at amortised cost 38 637 Provision for loans issued to third parties - (561) Loans issued to third parties, at amortised cost, net 38 76 Loans issued to employees, at amortised cost 69 104 Financial assets, at fair value through profit or loss 12 1,790 Total other non-current assets 8,546 2,058 The movements in provision for impairment of loans issued and long-term accounts receivable are as follows: RUB million 2022 2021 PROVISION FOR LOANS ISSUED TO THIRD PARTIES Balance at 1 January (561) (605) Disposal of foreign subsidiaries (note 29) 625 - Provision for loans issued to third parties accrued (1) (1) Use of provision 1 - Effect of foreign currency translation reserve (64) 45 Balance at 31 December - (561) PROVISION FOR LONG-TERM ACCOUNTS RECEIVABLE Balance at 1 January (589) (635) Disposal of foreign subsidiaries (note 29) 657 - Provision for long-term accounts receivable accrued - (1) Effect of foreign currency translation reserve (68) 47 Balance at 31 December - (589) As at 31 December 2021, financial assets measured at fair value through profit or loss include 9.27% share in a related party JSC “AgroGuard-Finance”. In March 2022, JSC “AgroGuard-Finance” redeemed its shares held by the Group for RUB 1,778 million. During the year ended 31 December 2022, the Group recognised a gain of RUB 1 million on disposal of investment in JSC “AgroGuard-Finance” as part of other expenses, net. The following information shows the movements of the Group’s receivables recognised as a result of Phosint Group disposal during the reporting period: RUB million 2022 2021 Balance at 1 January - - Receivable accrued (note 29) 12,189 - Discount on extension of payment terms (note 29, 11) (2,777) - Unwinding of discount (note 11) 519 Foreign currency translation difference (1,477) - Balance at 31 December 8,454 - During the reporting period the Group recognised deferred tax liabilities of RUB 1,647 million on receivables accrued as a result of Phosint Group disposal. Tax effect on foreign exchange loss from receivables revaluation was RUB 295 million. 18. Other financial assets RUB million 31 December 2022 31 December 2021 Loans issued to employees, at amortised cost 101 104 Interest receivable 76 140 Loans issued to third parties, at amortised cost 51 60 Loans issued to related parties, at amortised cost - 25 Provision for doubtful accounts (18) (113) Total other financial assets 210 216 In February 2022, the Group provided cash of RUB 3,130 million (USD 40 million) to the investment broker at 0.25% and received securities as a collateral for the funds deposited (reverse repo transaction). As a result of negative economical situation, significant market disruptions to broker cross-border operations led to his liquidity problems and inability to repurchase securities back from the Group. As a result, the Group loan issued under this transaction was fully impaired and loss of RUB 4,124 million was recognised as a part of finance costs. The movements in provision for doubtful accounts and expected credit losses allowance are as follows: RUB million 2022 2021 Balance at 1 January (113) (37) Increase in provision for doubtful accounts and expected credit losses allowance (4,135) (79) Disposal of foreign subsidiaries 4,235 - Effect of foreign currency translation reserve (11) 3 Use of allowance 6 - Balance at 31 December (18) (113) Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 358 359 19. Inventories RUB million 31 December 2022 31 December 2021 Raw materials and spare parts 15,109 11,652 FINISHED GOODS: Chemical fertilisers 10,388 22,110 Apatite concentrate 801 607 Other products 1,379 291 WORK-IN-PROGRESS: Chemical fertilisers and other products 5,685 5,258 Chemical fertilisers and other products for resale, purchased from third parties 5,941 1,662 Other goods 148 197 Provision for obsolescence (102) (600) Total inventories 39,349 41,177 20. Trade and other receivables RUB million 31 December 2022 31 December 2021 FINANCIAL ASSETS Trade accounts receivable 61,997 33,013 Other receivables 1,479 822 Provision for doubtful accounts and expected credit losses allowance (482) (339) NON-FINANCIAL ASSETS Advances issued 8,634 14,621 Advances issued on custom duties 3,901 198 Deferred expenses 202 199 Receivables from employees 20 28 Provision for doubtful accounts and expected credit losses allowance (10) (16) Total trade and other receivables 75,741 48,526 As at 31 December 2022, the Group has no trade receivables measured at fair value through other comprehensive income (31 December 2021: RUB 3,166 million). As at 31 December 2022, amount of trade accounts receivable measured at fair value through profit or loss is RUB 542 million (31 December 2021: RUB 4,885 million). The fair values of these receivables approximate their carrying amounts. The movements in bad debt and expected credit losses allowance are as follows: RUB million 2022 2021 Balance at 1 January (355) (369) Use of allowance 223 140 Disposal of foreign subsidiaries 125 - Reversal of allowance 7 10 Effect of foreign currency translation reserve (20) (3) Increase in provision for doubtful accounts and expected credit losses allowance (472) (133) Balance at 31 December (492) (355) See note 28 (c) for the analysis of overdue trade and other accounts receivable. 21. Cash and cash equivalents RUB million 31 December 2022 31 December 2021 Cash in bank 7,438 13,298 Call deposits 5,911 8,405 Petty cash 7 7 Total cash and cash equivalents 13,356 21,710 As at 31 December 2022 the most significant cash and cash equivalents balances were held in large Russian banks with high credit ratings, according to independent Russian rating agencies. 22. Equity (a) Share capital As at 31 December 2022 and 31 December 2021, the Company’s share capital consists of 129,500,000 ordinary shares with par value of RUB 2.5 per share. All issued ordinary shares are fully paid. Each ordinary share carries one vote. As at 31 December 2022 and 31 December 2021, the number of ordinary shares authorised for additional issue is 994,977,080, with a par value of RUB 2.5 per share. (b) Dividend policy The Group’s dividend policy is based on the following principles: • striking an effective and reasonable balance between the payment of dividends and reinvestment of profit in further development; • ensuring transparency and predictability of dividend payments as a way to boost the Company’s investment case. Amount of such payment is subject to approval of the General Shareholders’ Meeting, based on recommendations provided by the PhosAgro Board of Directors. The Board of Directors’ recommendations depend on such factors as the Company’s earnings for the reporting period and its financial position. To calculate the amount of dividend payments, the Board of Directors considers the Company’s consolidated free cash flow for the reporting period (quarter, six months, first nine months or year) under IFRS. Free cash flow is defined as cash flows from operating activities less cash flows from investing activities based on the consolidated statement of cash flows. A decision on the payment of an interim dividend is made at the General Shareholders’ Meeting within three months of the end of the relevant reporting period. The payment period for dividends payable to a nominal holder or a trustee, which is a professional participant of the securities market, who are registered in the share register, shall be not more than 10 business days. The payment period for dividends payable to other parties registered in the shareholders register shall not exceed 25 business days after the date on which the parties entitled to receive dividends are determined. Holders of PhosAgro GDRs are also entitled to receive dividends in respect of the underlying shares, subject to the terms of their Depositary Agreements. In accordance with the dividend policy, the Board of Directors shall seek to make sure that the amount of distributed dividends ranges from 50% to over 75% (subject to the Company’s leverage ratio) of the Company’s consolidated free cash flow for the respective period under IFRS. At the same time, the amount of declared dividends shall not be lower than 50% of net profit for the relevant period under IFRS adjusted by the amount of unrealised exchange rate difference. (c) Dividends In accordance with Russian legislation the Company’s distributable reserves are limited to the balance of accumulated retained earnings as recorded in the Company’s financial statements prepared in accordance with Russian Accounting Standards. As at 31 December 2022, the Company had cumulative retained earnings of RUB 65,040 million (31 December 2021: RUB 59,337 million). Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 360 361 Proposed by the Board of Directors in Approved by shareholders in Amount per share RUB Amount of dividends RUB million TOTAL DIVIDENDS APPROVED DURING THE REPORTING PERIOD August 2022 September 2022 780 101,010.0 November 2022 December 2022 318 41,181.0 Total dividends 142,191.0 23. Earnings per share Basic earnings per share are calculated based on the weighted average number of ordinary shares outstanding during the year. Basic and diluted earnings per share are the same, as there is no effect of dilution. 2022 2021 Weighted average number of ordinary shares in issue 129,500,000 129,500,000 Profit for the year attributable to shareholders of the Company, RUB million 184,662 129,697 Basic and diluted earnings per share, RUB 1,426 1,002 24. Loans and borrowings This note provides information about the contractual terms of the Group’s loans and borrowings. For more information about the leases, see note 25. For more information about the Group’s exposure to foreign currency risk, interest rate risk and liquidity risk, see note 28. RUB million 31 December 2022 31 December 2021 CURRENT LOANS AND BORROWINGS Unsecured bank loans 44,648 11,492 Eurobonds 35,169 - Interest payable 1,157 1,220 Bank commission (short-term) - (2) Total current loans and borrowings 80,974 12,710 NON-CURRENT LOANS AND BORROWINGS Eurobonds 70,337 111,439 Unsecured bank loans 39,667 45,957 Bank commission (long-term) (220) (315) Total non-current loans and borrowings 109,784 157,081 Total loans and borrowings 190,758 169,791 In January 2018 the Company’s SPV issued a USD 500 million 5,25-year Eurobond with a coupon rate of 3.949%, which is listed on the Irish Stock Exchange, with the fair value at the reporting date of RUB 27,256 million (31 December 2021: RUB 37,940 million). In January 2020 the Company’s SPV issued a USD 500 million 5-year Eurobond with a coupon rate of 3.05%, which is listed on the Irish Stock Exchange, with the fair value at the reporting date of RUB 18,552 million (31 December 2021: RUB 37,726 million). In September 2021, the Company’s SPV issued a USD 500 million 7-year Eurobond with a coupon rate of 2.6%, which is listed on the Irish Stock Exchange, with the fair value at the reporting date of RUB 24,407 million (31 December 2021: RUB 36,140 million). The breakdown of the loans and borrowings denominated in different currencies is as follows: RUB million 31 December 2022 31 December 2021 USD-denominated 135,825 154,288 RUB-denominated 42,805 3,096 EUR-denominated 12,128 12,407 Total 190,758 169,791 The maturity of the loans and borrowings is as follows: RUB million 31 December 2022 31 December 2021 Less than 1 year 80,974 12,712 1-2 years 23,218 48,760 2-3 years 38,824 16,879 3-4 years 10,688 41,037 4-5 years 2,105 11,320 More than 5 years 35,169 39,400 Bank commission (220) (317) Total 190,758 169,791 Reconciliation of loans and borrowings balances: RUB million 2022 2021 Balance as at 1 January 169,791 159,140 Cash inflows 57,171 61,622 Cash outflows (23,926) (50,081) Foreign exchange (11,950) (812) Interest accrued 4,223 3,910 Interest paid (4,628) (3,861) Amortisation of bank commission 78 83 Other turnovers (1) (210) Balance as at 31 December 190,758 169,791 25. Leases RUB million Lease liability without subsequent asset buyout Lease liability with subsequent asset buyout Total Balance as at 1 January 2021 3,622 2,573 6,195 New lease contracts and modification of existing lease contracts 882 521 1,403 Interest expense on lease liabilities 223 172 395 Principal lease payments (1,345) (604) (1,949) Interest lease payments (223) (172) (395) Effect of foreign currency translation reserve (11) (1) (12) Balance as at 31 December 2021 3,148 2,489 5,637 New lease contracts and modification of existing lease contracts (1,431) 460 (971) Disposal of foreign subsidiaries (note 29) (290) - (290) Interest expense on lease liabilities 106 138 244 Principal lease payments (730) (699) (1,429) Interest lease payments (106) (138) (244) Effect of foreign currency translation reserve 34 (45) (11) Balance as at 31 December 2022 731 2,205 2,936 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 362 363 26. Defined benefit obligations RUB million 31 December 2022 31 December 2021 Pension obligations, long-term 442 307 Post-retirement obligations other than pensions 608 645 Total defined benefit obligations 1,050 952 The Group has defined benefit plans at JSC “Apatit”, including all the branches, which stipulate payment of a lump sum allowance to employees who have a specified period of service in this company upon their retirement. All the defined benefit plans are unfunded. The movement in the present value of the defined benefit obligations is as follows: RUB million 2022 2021 Defined benefit obligations at 1 January 952 945 Disposal of foreign subsidiaries (194) - Benefits paid (101) (132) Current service costs and interest 103 123 Past service costs (1) (15) Actuarial loss in other comprehensive income 276 36 Effect of foreign currency translation reserve and foreign exchange differences 15 (5) Defined benefit obligations at 31 December 1,050 952 The key actuarial assumptions used in measurement of the defined benefit obligations are as follows: 31 December 2022 31 December 2021 Discount rate 10.1% 7.5% Future pension increases 6.0% 4.1% 27. Trade and other payables RUB million 31 December 2022 31 December 2021 Trade accounts payable 15,700 16,643 including accounts payable for property, plant and equipment and intangible assets 4,294 5,676 Advances received (contract liabilities) 17,258 16,379 Payables to employees 4,620 5,094 Accruals and provisions 241 209 Other payables 1,593 3,429 Total trade and other payables 39,412 41,754 Contract liabilities balance at the beginning of the year was fully recognised in revenue during the reporting period. 28. Financial risk management (a) Overview In the normal course of its operations, the Group has exposure to market, credit and liquidity risks. This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. (b) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Foreign currency risk The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily USD and EUR. In respect of monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. The Group implemented a natural hedge approach (policy) aiming at reducing its exposure to foreign currency risk by means of borrowing in the same currencies in which sales agreements are denominated. The Group has the following net monetary position on financial assets and liabilities denominated in foreign currencies: RUB million 31 December 2022 31 December 2021 USD denominated EUR denominated USD denominated EUR denominated GROUP COMPANIES IN RUSSIA: Current assets 72,727 1,242 1,643 70 Non-current liabilities (92,131) (9,293) (143,073) (11,786) Сurrent liabilities (46,001) (3,333) (13,563) (1,712) Net position of the Group companies in Russia (65,405) (11,384) (154,993) (13,428) FOREIGN GROUP COMPANIES: Current assets - - 2,831 2,977 Non-current liabilities - - - (2) Сurrent liabilities - - (137) (199) Net position of foreign Group companies - - 2,694 2,776 TOTAL: Current assets 72,727 1,242 4,474 3,047 Non-current liabilities (92,131) (9,293) (143,073) (11,788) Сurrent liabilities (46,001) (3,333) (13,700) (1,911) Total net position (65,405) (11,384) (152,299) (10,652) Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 364 365 Management estimates that a 10% strengthening/(weakening) of RUB against USD and EUR, based on the Group’s total net position in USD and EUR as at the reporting date would have increased/(decreased) the Group’s profit for the year by RUB 7,679 million, before any tax effect (2021: would have increased/(decreased) the Group’s profit for the year by RUB 16,295 million). This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2021. The foreign exchange gain recognised in profit or loss of RUB 2,417 million (foreign exchange loss of RUB 838 million for the comparative period) resulted from Russian rouble appreciation against major currencies during the reporting period (Russian rouble depreciation against major currencies during the comparative period). Interest rate risk Interest rate risk is the risk that changes in interest rates will adversely impact the financial results of the Group. Management does not have a formal policy of determining how much of the Group’s exposure should be to fixed or variable rates. However, at the time of raising new loans or borrowings management uses its judgment to decide whether it believes that a fixed or variable rate would be more favourable to the Group over the expected period until maturity. The interest rate profile of the Group’s interest-bearing financial instruments at their carrying values is as follows: RUB million 31 December 2022 31 December 2021 FIXED RATE INSTRUMENTS Call deposits and other financial assets 6,063 8,594 Other non-current assets 107 181 Long-term borrowings (107,781) (154,309) Short-term borrowings (74,749) (6,523) Lease liabilities (2,936) (5,637) Total fixed rate instruments (179,296) (157,694) VARIABLE RATE INSTRUMENTS Long-term borrowings (2,223) (3,087) Short-term borrowings (6,225) (6,189) Total variable rate instruments (8,448) (9,276) Sensitivity analysis for financial instruments with variable interest rates At 31 December 2022, a 1 percentage point increase/(decrease) in interest rate, with all other variables held constant, would have decreased/(increased) the Group’s profit for the year and equity by RUB 85 million (31 December 2021: RUB 93 million). (с) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises from the Group’s receivables from customers, loans issued to related parties, current and non-current financial assets and cash and cash equivalents. As at 31 December 2022, the Group’s maximum exposure to credit risk is represented by the carrying amount of its financial assets and amounted to RUB 85,116 million (31 December 2021: RUB 57,489 million). As at 31 December 2022, 98 % of the Group’s trade receivables balance are represented by one counterparty. As at 31 December 2021, there are no counterparties with a significant share of trade receivables in the Group’s trade receivables structure. As at 31 December 2022, the Group’s financial assets measured at amortised cost amounted to RUB 84,563 million (31 December 2021: RUB 47,648 million). As at 31 December 2022, the Group’s financial assets measured at fair value through profit or loss amounted to RUB 553 million (31 December 2021: RUB 6,675 million). As at 31 December 2022, the Group has no financial assets measured at fair value through other comprehensive income (31 December 2021: RUB 3,166 million). Trade and other receivables The Group’s exposure to credit risk is influenced mainly by the individual specific characteristics of each customer. The general characteristics of the Group’s customer base, including the default risk of the industry and country, in which customers operate, has less of an influence on credit risk. Management has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, which represent the maximum amount of outstanding receivables; these limits are reviewed quarterly. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis. The majority of the Group’s customers have been transacting with the Group for several years, and losses have occurred infrequently. In monitoring customer credit risk, customers are grouped according to their credit characteristics. Trade and other receivables relate mainly to the Group’s wholesale customers. The Group does not require collateral in respect of trade and other receivables, except for new customers who are required to work on a prepayment basis or present an acceptable bank guarantee or set up letter of credit with an acceptable bank. The Group establishes an allowance for impairment that represents its estimate of the expected credit losses in respect of trade and other receivables and other financial assets. The Group estimated the expected credit losses, applying a simplified approach to measuring expected credit losses, which uses lifetime expected loss allowance. In the terms of calculating the expected credit loss, the Group considers the credit rating of counterparties, adjusted with forward-looking factors specific to the debtors and economic environment in which they operate, and historical credit loss experience. Exposures within each credit risk grade are segmented by geographic region classification and an ECL rate is calculated for each segment based on delinquency status and actual credit loss experience over the past years. The credit loss allowance for trade receivables is determined according to provision matrix presented in the table below: RUB Million 31 December 2022 31 December 2021 Loss Rate Gross carrying amount Lifetime ECL Net carrying value Gross carrying amount Lifetime ECL Net carrying value 0.1-0.5% 46,487 (81) 46,406 31,979 - 31,979 1.3% 844 (11) 833 - - - 2.0% 15,650 (312) 15,338 - - - 3.0% - - - 460 (14) 446 5.0% 383 (19) 364 - - - 10.0% - - - 67 (7) 60 13.8% 29 (4) 25 - - - 18.0% - - - 746 (135) 611 21.3% 34 (6) 28 - - - 30.0% - - - 21 (6) 15 60.0% - - - 268 (162) 106 100.0% 49 (49) - 294 (15) 279 Total 63,476 (482) 62,994 33,835 (339) 33,496 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 366 367 Trade and other receivables include accounts receivable with the following past due periods at the reporing date: RUB Million 31 December 2022 31 December 2021 Gross carrying amount Lifetime ECL Net carrying value Gross carrying amount Lifetime ECL Net carrying value Not past due 61,684 (406) 61,278 30,652 (3) 30,649 Past due 0-90 days 1,681 (18) 1,663 2,265 (46) 2,219 Past due 91-180 days 29 (4) 25 32 (6) 26 Past due 181-365 days 34 (6) 28 68 (51) 17 More than one year 48 (48) – 818 (233) 585 63,476 (482) 62,994 33,835 (339) 33,496 The following information shows the movements in the Group’s assets and liabilities under the securitisation arrangement for the reporting period: RUB million 2022 2021 Trade receivables transferred to the bank 9,717 23,992 Net-off with other payables 9,471 15,308 Associated cash inflow 246 8,684 Associated cash outflow (3,180) (3,566) Other non-cash operations (137) 253 Payables to the bank as at 31 December 2021 amounted to RUB 3,229 million are presented within other payables. Receivables from the bank as at 31 December 2021 amounted to RUB 854 million are presented within trade receivables. As a result of loss of control over its foreign subsidaries (note 29) previously controlled by the Group, the Group has no securitization agreements and related payables and receivables balances as at 31 December 2022. Current and non-current financial assets The Group lends money to related parties and to third parties, who have good credit standing. Based on the prior experience, management believes that there is no significant credit risk in respect of related party and third party loans. Cash and cash equivalents are primarily held with large banks with high credit rating, which provides high-level credit risk limits. All bank account balances and term deposits are not overdue or impaired. Guarantees For financial guarantees issued the maximum exposure to credit risk is the amount of the commitment (note 32). The Group’s policy is to provide financial guarantees only to the subsidiaries or related parties. (d) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 30 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition, the Group maintains several lines of credit in various Russian and international banks. The table below illustrates the contractual maturities of financial liabilities, including interest payments, which are converted at the closing exchange rates, where applicable. The amounts disclosed in the maturity table are the contractual undiscounted cash flows: RUB Million 31 December 2022 Carrying value Contractual cash flows 0-1 year 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Over 5 yrs Loans and borrowings 190,978 202,313 84,567 26,025 40,747 11,829 3,060 36,085 Lease liabilities 2,936 3,487 1,488 1,026 515 312 113 33 Trade and other payables 17,616 17,616 17,616 - - - - - Total 211,530 223,416 103,671 27,051 41,262 12,141 3,173 36,118 31 December 2021 RUB Million Carrying value Contractual cash flows 0-1 year 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Over 5 yrs Loans and borrowings 170,108 185,811 16,492 52,628 19,720 43,070 12,526 41,375 Lease liabilities 5,637 6,246 2,487 1,856 1,261 318 202 122 Trade and other payables 20,283 20,283 20,283 - - - - - Financial guarantees issued for associates and related parties 75 75 75 - - - - - Total 196,103 212,415 39,337 54,484 20,981 43,388 12,728 41,497 (e) Capital management The Group’s policy is to safeguard the Group’s ability to continue as a going concern, to maintain a strong capital base in order to provide investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital invested and the level of dividends paid to shareholders. There were no changes in the Board’s approach to capital management during the year. The Company and its subsidiaries are subject to externally imposed capital requirements including the statutory requirements of the country of their domicile and the bank covenants. 29. Loss of control over foreign subsidiaries In March 2022, the Group’s wholly owned foreign subsidiary Phosint Limited owning all the foreign companies of the Group, increased its share capital which was subscribed by a third party company Negrinio Limited, resulting in dilution of the Group’s stake in Phosint Limited to 5%. The Group performed the analysis of the key attributes and documents of the transaction, and made a conclusion that it lost a control over Phosint Limited as described in IFRS 10, Consolidated Financial Statements. Upon the loss of control, the Group recognised a receivable of RUB 12,189 million with a payment period of three years, derecognised the assets and liabilities of the foreign subsidiaries and reclassified to profit or loss the cumulative amount of the exchange differences relating to the foreign subsidiaries of RUB 6,302 million, previously recognised in other comprehensive income and accumulated in the separate component of equity. The Group recognised the receivable at present value using a discount rate of 9% per annum and accrued finance costs of RUB 2,777 million. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le 368 369 Summarised amounts of the assets and liabilities in the foreign subsidiaries over which control is lost are presented below: RUB million As at the date of loss of control ASSETS Property, plant and equipment 2,438 Right-of-use assets 264 Other non-current assets 722 Trade and other receivables 42,238 Cash and cash equivalents 36,729 Inventories 17,147 Income tax receivable 10 LIABILITIES Other non-current liabilities (1,043) Lease liabilities (290) Trade and other payables (77,938) Income tax payable (1,749) Other current liabilities (37) Total net assets 18,491 As the Group retained no significant influence over Phosint Limited upon loss of control, it classified the remaining 5% share in the company as a financial asset measured at fair value through other comprehensive income with a non- significant fair value at the date of initial recognition and at the reporting date. The Group didn’t recognize any gain or loss as a result of Phosint Group disposal: RUB million As at the date of loss of control Carrying amount of net assets disposed 18,491 Foreign currency translation difference reclassified to profit or loss upon loss of control over foreign subsidiaries (6,302) Receivable accrued as a result of disposal of foreign subsidiaries 12,189 Result from loss of control over foreign subsidiaries - 30. Commitments As at 31 December 2022, the Group had contractual commitments for the purchase of property, plant and equipment for RUB 35,181 million (31 December 2021: RUB 29,458 million), including VAT where applicable. 31. Contingencies (a) Litigation The Group has a number of small claims and litigations relating to regular business activities and small fiscal claims. Management believes that none of these claims, individually or in aggregate, will have a material adverse impact on the Group. (b) Taxation contingencies Russian tax legislation which was enacted or substantively enacted at the end of the reporting period, is subject to varying interpretations when being applied to the transactions and activities of the Group. Consequently, tax positions taken by management and the formal documentation supporting the tax positions may be challenged tax authorities. Russian tax administration is gradually strengthening, including the fact that there is a higher risk of review of tax transactions without a clear business purpose or with tax incompliant counterparties. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year when decisions about the review was made. Under certain circumstances reviews may cover longer periods. Russian transfer pricing (TP) legislation is generally aligned with the international TP principles developed by the Organisation for Economic Cooperation and Development (OECD), although it has specific features. The TP legislation provides for the possibility of additional tax assessment for controlled transactions (transactions between related parties and certain transactions between unrelated parties) if such transactions are not on an arm’s-length basis. The management has implemented internal controls to comply with current TP legislation. Tax liabilities arising from controlled transactions are determined based on their actual transaction prices. It is possible, with the evolution of the interpretation of TP rules, that such prices could be challenged. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the Group’s operations. As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of such uncertain areas that reduce the overall tax rate of the Group. While management currently estimates that the tax positions and interpretations that it has taken can probably be sustained, there is a possible risk that an outflow of resources will be required should such tax positions and interpretations be challenged by the tax authorities. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the overall operations of the Group. (c) Environmental contingencies The enforcement of environmental regulation in the Russian Federation is evolving and the enforcement posture of government authorities is continually being reconsidered. The Group is involved in chemical production, which is inherently exposed to significant environmental risks. The Group companies record environmental obligations as they become probable and reliably measurable. The Group companies are parties to different litigations with the Russian environmental authorities. The management believes that based on its interpretations of applicable Russian legislation, official pronouncements and court decisions no provision is required for environmental obligations. However, the interpretations of the relevant authorities could differ from management’s position and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant. (d) Compliance with covenants The Group is subject to certain covenants related primarily to its loans and borrowings. Non-compliance with such covenants may result in negative consequences for the Group including growth in the cost of borrowings and declaration of default. The Group was in compliance with covenants during the years ended 31 December 2022 and 31 December 2021. The payment obligations of the Group in respect of coupon payments for Eurobonds are fulfilled when the funds are transferred to the account of the paying agent. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le 370 371 32. Related party transactions Parties are generally considered to be related if the parties are under common control or if one party has the ability to control the other party or can exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Other related parties include entities controlled by the Company’s key shareholders. The balances and transactions with related parties are usually unsecured and denominated in RUB. (a) Transactions with related parties RUB million Nature of relationship 2022 2021 Sales of goods and services Associates 30 26 Purchases of goods and services Associates (734) (585) Sales of goods and services Other related parties 1,089 968 Other expenses, net Other related parties (85) (60) Purchases of goods and services Other related parties (246) (224) In 2022, the Company declared dividends in total amount of RUB 91,366 million (2021: RUB 46,824 million) to its shareholders which have significant influence over the Group. (b) Balances with related parties RUB million Nature of relationship 31 December 2022 31 December 2021 Trade and other receivables Associates 42 20 Trade and other payables Associates (39) (17) Trade and other receivables Other related parties 8 8 Trade and other payables Other related parties (451) (349) Short-term loans issued, at amortised cost Other related parties - 25 (c) Financial guarantees As at 31 December 2022 the Group does not have any financial guarantees issued to the bank to secure associates’ bank loans (31 December 2021: RUB 75 million). (d) Remuneration of key management personnel and Board of Directors members Remuneration of key management personnel consists of monthly compensation, annual performance bonus contingent on operating results, termination benefits and contributions to the Russian state pension and social funds. The remuneration of the Board of Directors and key management personnel recognised as part of administrative and selling overhead expenses amounted to RUB 16,897 million (2021: RUB 4,147 million). 33. Significant subsidiaries 1 In March 2022, the Group lost control over its wholly owned foreign subsidiary Phosint Limited owning all the foreign companies of the Group, see note 29 Subsidiary Country of incorporation Effective ownership (rounded) 31 December 2022 31 December 2021 Apatit, JSC (including Balakovo, Volkhov and Kirovsk branches) Russia 100% 100% Mekhanik, LLC Russia 100% 100% NIUIF, JSC Russia 94% 94% PhosAgro-Region, LLC Russia 100% 100% PhosAgro-Belgorod, LLC Russia 100% 100% PhosAgro-Don, LLC Russia 100% 100% PhosAgro-Kuban, LLC Russia 100% 100% PhosAgro-Kursk, LLC Russia 100% 100% PhosAgro-Lipetsk, LLC Russia 100% 100% PhosAgro-Oryol, LLC Russia 100% 100% PhosAgro-Stavropol, LLC Russia 100% 100% PhosAgro-Volga, LLC Russia 100% 100% PhosAgro-SeveroZapad, LLC Russia 100% 100% PhosAgro-Tambov, LLC Russia 100% 100% PhosAgro-Sibir, LLC Russia 100% 100% PureFert Trading AG (PhosAgro Trading SA till 05.09.2022) 1 Switzerland 5% 100% PUREFERT LIMITED (Phosint Limited till 30.08.2022) 1 Cyprus 5% 100% PureFert Logistics AG (PhosAgro Logistics SA till 05.09.2022) 1 Switzerland 5% 100% PhosAgro Polska Sp.z o.o. 1 Poland 5% 100% PureFert Deutschland GmbH (PhosAgro Deutschland GmbH till 21.11.2022) 1 Germany 5% 100% PUREFERT FRANCE SAS (PhosAgro France SAS till 10.11.2022) 1 France 5% 100% PUREFERT Balkans d.o.o. (PhosAgro Balkans DOO till 07.09.2022) 1 Serbia 5% 100% UAB PhosAgro Baltic 1 Lithuania 5% 100% Purefert Balkans S.R.L. (PhosAgro Balkans SRL till 06.10.2022) 1 Romania 5% 100% Purefert South Africa Proprietary Limited (PhosAgro South Africa Proprietary Limited till 07.10.2022) 1 South Africa 5% 100% Logifert Oy 1 Finland 5% 100% Bulk Terminal Kotka Oy 1 Finland 5% 100% 34. Subsequent events On 1 January 2023 Russian government decree entered into force, introducing the customs duties on export volumes of mineral fertilizers during the period from 1 January to 31 December 2023. In March 2023, the Board of Directors proposed paying a dividend of RUB 465 per ordinary share. Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile 372 373 Joint-Stock Company “Technologies of Trust – Audit” (“Technologies of Trust – Audit” JSC) White Square Office Center, 10 Butyrsky Val, Moscow, Russian Federation, 125047 T: +7 (495) 967 6000, F: +7 (495) 967 6001 www.tedo.ru Independent Auditor’s Limited Assurance Report To the Management of Public Joint Stock Company “PhosAgro” : Introduction We have been engaged by the Management of Public Joint Stock Company “PhosAgro” (hereinafter – the “Company”) to provide limited assurance on the selected information described below and included in the Integrated Annual Report of the Company for the year ended 31 December 2022 (hereinafter – the “ Integrated Annual Report” ). The Integrated Annual Report represents information related to the Company and its subsidiaries (hereinafter together – the “Group”), unless otherwise stated in the Integrated Annual Report. Selected information We assessed the quantitative and qualitative information specified in Appendix 1 that is disclosed in the Integrated Annual Report and referred to or included in the GRI Content Index of the Integrated Annual Report (hereinafter – the “Selected Information”). The scope of our limited assurance procedures was limited to the Selected Information for the year ended 31 December 2022 only. We have not performed any procedures with respect to earlier periods or any other items included in the Integrated Annual Report and, therefore, do not express any conclusion thereon. Reporting criteria We assessed the Selected Information using relevant criteria, including reporting requirements in the GRI Sustainability Reporting Standards 2, 3, 202, 203, 205, 207, 302, 303, 304, 305, 306, 401, 403, 404 and 413 (hereinafter – the “GRI Standards”) published by Stichting Global Reporting Initiative and in the Group’s management methodology as set forth in the criteria defined in the notes to the Group’s specific disclosures in the Environmental review section of the Integrated annual report (hereinafter – the “PhosAgro Methodology”, and together with the GRI Standards – the “Reporting Criteria”) . We believe that the Reporting Criteria are appropriate given the purpose of our limited assurance engagement. Responsibilities of the Group’s management Management of the Group is responsible for: • designing, implementing and maintaining internal control relevant to the preparation of the Selected Information that is free from material misstatement, whether due to fraud or error; • establishing internal methodology and guidelines (including the PhosAgro Methodology) for preparing and reporting the Selected Information in accordance with the Reporting Criteria; • preparing, measuring and reporting of the Selected Information in accordance with the Reporting Criteria; and • the accuracy, completeness and presentation of the Selected Information. Our responsibilities We are responsible for: • planning and performing the engagement to obtain limited assurance about whether the Selected Information is free from material misstatement, whether due to fraud or error; • forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained; and • reporting our conclusion to the Management of the Group. Joint-Stock Company “Technologies of Trust – Audit” (“Technologies of Trust – Audit” JSC) White Square Office Center, 10 Butyrsky Val, Moscow, Russian Federation, 125047 T: +7 (495) 967 6000, F: +7 (495) 967 6001 www.tedo.ru Independent Auditor’s Limited Assurance Report To the Management of Public Joint Stock Company “PhosAgro”: Introduction We have been engaged by the Management of Public Joint Stock Company “PhosAgro” (hereinafter – the “Company”) to provide limited assurance on the selected information described below and included in the Integrated Annual Report of the Company for the year ended 31 December 2022 (hereinafter – the “Integrated Annual Report”). The Integrated Annual Report represents information related to the Company and its subsidiaries (hereinafter together – the “Group”), unless otherwise stated in the Integrated Annual Report. Selected information We assessed the quantitative and qualitative information specified in Appendix 1 that is disclosed in the Integrated Annual Report and referred to or included in the GRI Content Index of the Integrated Annual Report (hereinafter – the “Selected Information”). The scope of our limited assurance procedures was limited to the Selected Information for the year ended 31 December 2022 only. We have not performed any procedures with respect to earlier periods or any other items included in the Integrated Annual Report and, therefore, do not express any conclusion thereon. Reporting criteria We assessed the Selected Information using relevant criteria, including reporting requirements in the GRI Sustainability Reporting Standards 2, 3, 202, 203, 205, 207, 302, 303, 304, 305, 306, 401, 403, 404 and 413 (hereinafter – the “GRI Standards”) published by Stichting Global Reporting Initiative and in the Group’s management methodology as set forth in the criteria defined in the notes to the Group’s specific disclosures in the Environmental review section of the Integrated annual report (hereinafter – the “PhosAgro Methodology”, and together with the GRI Standards – the “Reporting Criteria”). We believe that the Reporting Criteria are appropriate given the purpose of our limited assurance engagement. Responsibilities of the Group’s management Management of the Group is responsible for: • designing, implementing and maintaining internal control relevant to the preparation of the Selected Information that is free from material misstatement, whether due to fraud or error; • establishing internal methodology and guidelines (including the PhosAgro Methodology) for preparing and reporting the Selected Information in accordance with the Reporting Criteria; • preparing, measuring and reporting of the Selected Information in accordance with the Reporting Criteria; and • the accuracy, completeness and presentation of the Selected Information. Our responsibilities We are responsible for: • planning and performing the engagement to obtain limited assurance about whether the Selected Information is free from material misstatement, whether due to fraud or error; • forming an independent conclusion, based on the procedures we have performed and the evidence we have obtained; and • reporting our conclusion to the Management of the Group. Management responsibility statement The PhosAgro management hereby confirms that, to the best of its knowledge, the financial statements prepared in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole. The management report includes a fair review of the development and performance of the business and the position of the PhosAgro and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. This Integrated Annual Report was reviewed and approved at PhosAgro’s Board of Directors meeting on 20 April 2023. The consolidated financial statements for the year ended 31 December 2022 were approved by the Board of Directors on 03 March 2023. Mikhail Rybnikov Chief Executive Officer and Chairman of the Management Board of PhosAgro Independent limited assurance report GRI 2-5 374 375 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile www.tedo.ru 2 This report, including our conclusion, has been prepared solely for the management of the Group in accordance with the agreement between us, to assist management in reporting on the Group’s sustainability performance and activities. We permit this report to be disclosed in the Integrated Annual Report, which will be published on the Company’s website 1 , to assist management in responding to its governance responsibilities by obtaining an independent auditor’s limited assurance report in connection with the Selected Information. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the management of the Group for our work or this report except where the respective terms are expressly agreed between us in writing and our prior consent in writing is obtained. Professional standards applied and level of assurance We performed our limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) “ Assurance Engagements other than Audits or Reviews of Historical Financial Information” , issued by the International Auditing and Assurance Standards Board. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks. Our independence and quality management We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, and the ethical requirements of the Auditor’s Professional Ethics Code and Auditor’s Independence Rules that are relevant to our limited assurance engagement in respect of the Selected Information in the Russian Federation. Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Work done We are required to plan and perform our work in order to consider the risk of material misstatement of the Selected Information. In doing so, we: • made enquiries of the Group’s management, including the Group Sustainability Reporting (SR) team and those with responsibility for SR management and Group SR reporting; • conducted interviews of Group’s personnel responsible for the preparation of the Integrated Annual Report and collection and analysis of underlying data; • performed analysis of the relevant internal methodology and guidelines (including the PhosAgro Methodology), gaining an understanding of the design of the key structures, systems, processes and controls for managing, recording, preparing and reporting the Selected Information; • performed limited substantive testing on a selective basis of the Selected Information to check that data had been appropriately measured, recorded, collated and reported; and • reviewed the Selected Information for compliance of the disclosures with the relevant requirements of the Reporting Criteria. The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. 1 The maintenance and integrity of the Company’s website is the responsibility of management; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the reported Selected Information or Reporting Criteria when presented on the Company’s website. www.tedo.ru 3 Reporting and measurement techniques Under the GRI Standards there is a range of different, but acceptable, reporting and measurement techniques. The techniques, together with the PhosAgro Methodology, can result in materially different reporting outcomes that may affect comparability with other organisations. The Selected Information should therefore be read in conjunction with the methodology used by management in preparing the Integrated Annual Report, described therein, and for which the Group is solely responsible. Limited assurance conclusion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Selected Information for the year ended 31 December 2022 has not been prepared, in all material respects, in accordance with the Reporting Criteria. 28 April 2023 Moscow, Russian Federation A. Y. Fegetsyn is authorised to sign on behalf of the general director of Joint-Stock Company “Technologies of Trust – Audit” (Principal Registration Number of the Record in the Register of Auditors and Audit Organizations (PRNR) – 12006020338), certified auditor (PRNR – 21906101957) 376 377 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le www.tedo.ru 4 Appendix 1 to the Independent Auditor’s Limited Assurance Report dated 28 April 2023 The Selected Information subject to limited assurance procedures and prepared in accordance with the GRI Disclosures and the PhosAgro Methodology, as applicable, is set out below: GRI Disclosure Narrative 2-7 Employees 2-27 Compliance with laws and regulations 3-1 Process to determine material topics 3-2 List of material topics 3-3 Management of material topics 202-1 Ratios of standard entry level wage by gender compared to local minimum wage 202-2 Proportion of senior management hired from the local community 203-1 Infrastructure investments and services supported 205-3 Confirmed incidents of corruption and actions taken 207-1 Approach to tax 207-2 Tax governance, control, and risk management 207-3 Stakeholder engagement and management of concerns related to tax 207-4 Country-by-country reporting 302-1 Energy consumption within the organization 302-3 Energy intensity 303-3 Water withdrawal 303-4 Water discharge 303-5 Water consumption 304-3 Habitats protected or restored 305-1 Direct (Scope 1) GHG emissions 305-2 Energy indirect (Scope 2) GHG emissions 305-3 Other indirect (Scope 3) GHG emissions 305-4 GHG emissions intensity 305-5 Reduction of GHG emissions 305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions 306-3 Waste generated 306-4 Waste diverted from disposal 306-5 Waste directed to disposal 401-1 New employee hires and employee turnover 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees 403-1 Occupational health and safety management system 403-2 Hazard identification, risk assessment, and incident investigation 403-3 Occupational health services 403-4 Worker participation, consultation, and communication on occupational health and safety 403-5 Worker training on occupational health and safety 403-6 Promotion of worker health 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 403-8 Workers covered by an occupational health and safety management system 403-9 Work-related injuries 403-10 Work-related ill health 404-1 Average hours of training per year per employee 404-2 Programs for upgrading employee skills and transition assistance programs 404-3 Percentage of employees receiving regular performance and career development reviews 413-1 Operations with local community engagement, impact assessments, and development programs www.tedo.ru 5 PhosAgro Methodology (the Group’s specific disclosure) Related description Pollutant emissions Pollutant emissions, kg per tonne of finished and semi-finished products Waste water discharge Waste water discharge into surface waters, m 3 per tonne of finished and semi-finished products Specific water withdrawal Specific water withdrawal, including mining and pit waters, m 3 per tonne of finished and semi- finished products Specific water withdrawal Specific water withdrawal from surface sources, excluding mining and pit waters, m 3 per tonne of finished and semi-finished products Recycled and decontaminated waste Share of recycled and decontaminated hazard class 1 – 4 waste, % 378 379 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le GRI content index The data disclosed in this Report includes information on: Boundary 1: PhosAgro and companies that are part of the group to which PhosAgro belongs (corresponds to the scope of disclosure in IFRS consolidated financial statements). Boundary 2: Apatit, including its branches and standalone business units. Code GRI Indicator Page number (or link)/Comments Boundary 2 GENERAL DISCLOSURES (2021) 2–1 Organisational profile 4, 18-19 2–2 Entities included in the organisation's sustainability reporting 5 2–3 Reporting period, frequency, and point of contact 4, 400 2–4 Restatements of information In the 2022 Report, the boundary and methodology were revised • The following historical data were revised in the 2022 Report: • calculation methodology for Scope 1 GHG emissions after the inventory had identified new unaccounted sources of emissions (for more information, see GRI 305-1 and GRI 305-4); • the Company revised the methodology for calculating the GRI 203-1 indicator and excluded expenses incurred under sponsorship agreements; • calculation methodology for energy consumption (for more information, see GRI 302-1 and GRI 302-3); • due to the expansion of the disclosure boundary, the personnel data disclosed in GRI 2-7 and GRI 401-1 indicators were recalculated; • for the purposes of 2022 disclosures, the Company changed GRI 401-1 presentation by age group. 2–5 External assurance 5, 375 2–6 Activities, value chain and other business relationships In 2022, we set up new materials and equipment supply chains from China, India and the CIS. We started procuring electrical equipment online from our partner and a large supplier Elektrotekhmontazh, which significantly reduced delivery time. As regards procurement of key raw materials, such as flotation reagents and conditioning mixtures, we refocused from Europe to Asia and substituted a number of imported items with domestic alternatives. Prices for key feedstock are now less dependent on foreign benchmarks and exchange rates. 1 2–7 Employees 152-153 1 Code GRI Indicator Page number (or link)/Comments Boundary 2–8 Workers who are not employees Not disclosed owing to the confidential nature of this information 2–9 Governance structure and composition 260, 272-273 1 2–10 Appointment and selection of the supreme governance body 1 2–11 Chair of the supreme governance body 276 1 2–12 Role of the supreme governance body in overseeing the impacts 257, 296-297 1 2–13 Delegation of responsibility for impact management 257 1 2–14 Role of the supreme governance body in sustainability reporting 30-31, 258-259, 268 1 2–15 Conflicts of interest 316 1 2–16 Communication of critical concerns 288-289 1 2–17 Collective knowledge of the supreme governance body 273 1 2–18 Supreme governance body performance assessment 274-275 1 2–19 Remuneration policies 292-295 1 2–20 Process to determine remuneration 292-295 1 2–21 Annual total compensation ratio Not disclosed owing to the confidential nature of this information 2–22 Statement on sustainable development strategy 38-39 1 2–23 Policy commitments 303-305, 316-317 1 2–24 Embedding policy commitments 303-305 1 2–25 Processes to remediate negative impacts 148, 310-311 1 380 381 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile Code GRI Indicator Page number (or link)/Comments Boundary 2–26 Mechanisms for seeking advice and raising concerns 148, 310-311 1 2–27 Compliance with laws and regulations For the purposes of this disclosure, the Group uses the following materiality criteria: • with regard to fines, the Group determined the amount exceeding RUB 1 mln as a materiality criterion which it deems to be meaningful given the scale of its operations; • with regard to other penalties, the Group assesses their influence on its reputation and ability to continue as a going concern, taking into account the amount of expenses likely to be incurred as a result of such penalties. 2022 saw no violations by the Group of laws and regulations resulting in material fines or penalties. The Group was taking steps to remedy the harm caused by an emergency in 2019 by committing RUB 2,274 thousand to the reproduction of aquatic biological resources in 2022. For information on cases of non-compliance with environmental laws and regulations, see page 195 1 2–28 Membership associations 28-29 1 2–29 Approach to stakeholder engagement 1 2–30 Collective bargaining agreements We negotiate collective bargaining agreements with trade unions that address issues such as working conditions and compensation for employees at each of our production sites (usually for a three-year period, covering 100% of the employees of Apatit, its branches and standalone business units). For more information, see page 146 2 3 MATERIAL TOPICS (2021) 3–1 Processes to determine material topics 30-31 1 3–2 List of material topics 30-33 1 3–3 Management of material topics 89, 103, 133,145,171,193,199,210,215,220, 224,230,237,301,312,317 1 Code GRI Indicator Page number (or link)/Comments Boundary 201 ECONOMIC PERFORMANCE (2016) 201–1 Direct economic value generated and distributed 28 1 201–2 Financial implications and other risks and opportunities due to climate change 201 1 201–3 Defined benefit plan obligations and other retirement plans 389 1 201–4 Financial assistance received from government Not disclosed owing to the confidential nature of this information 202 MARKET PRESENCE (2016) 202–1 Ratios of standard entry level wage by gender compared to local minimum wage 164 1 202–2 Proportion of senior management hired from the local community 166 1 203 INDIRECT ECONOMIC IMPACTS (2016) 203–1 Infrastructure investments and services supported 240 A special scope is applied: PhosAgro and Apatit, including its branches and standalone business units 203–2 Significant indirect economic impacts 241-251 A special scope is applied: PhosAgro and Apatit, including its branches and standalone business units. 204 PROCUREMENT PRACTICES (2016) 204–1 Proportion of spending on local suppliers at significant locations of operation 136 2 382 383 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le Code GRI Indicator Page number (or link)/Comments Boundary 205 ANTI-CORRUPTION (2016) 205–1 Operations assessed for risks related to corruption 314 1 205–2 Communication of and training in anti- corruption policies and procedures 307-309 1 205–3 Confirmed incidents of corruption and actions taken 314-315 1 206 ANTI-COMPETITIVE BEHAVIOR (2016) 206–1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices 317 1 207 TAX (2019) 207–1 Approach to tax 89 1 207–2 Tax governance, control, and risk management 89 1 207–3 Stakeholder engagement and management of tax-related concerns 89 1 207–4 Country-by-country reporting 90-91, 390-391 1 302 ENERGY (2016) 302–1 Energy consumption within the organisation 212-213 2 302–2 Energy consumption outside of the organization not applicable 302–3 Energy intensity 212-213 2 302–4 Reduction in electricity consumption 210-211 2 302–5 Reductions in energy requirements of products and services not applicable 2 303 WATER AND EFFLUENTS (2018) 303–1 Responsible water consumption 224-225 2 303–2 Management of water discharge and related impacts on water resources Effluents are treated until standard permissible discharge and temporarily permitted discharge rates are reached as required by permits to discharge pollutants into the environment (water bodies) issued by a relevant authority for each discharge. 2 303–3 Water withdrawal 227 2 303–4 Water discharge 228-229 2 303–5 Water consumption 229 2 Code GRI Indicator Page number (or link)/Comments Boundary 304 BIODIVERSITY (2016) 304–1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas The Group’s operations are not located in protected areas or areas of high biodiversity value outside protected areas. 304–2 Significant impacts of activities, products, and services on biodiversity 231-232 1 304–3 Habitats protected or restored 231, 233 1 304–4 IUCN Red List species and national conservation list species with habitats in areas affected by operations The Group’s operations are not located in protected areas or areas of high biodiversity value. The Group’s operations do not pose a threat to endangered animal and plant species listed in the International Union for Conservation of Nature (IUCN) Red List and the Russian Red Data Book 305 EMISSIONS (2016) 305–1 Direct (Scope 1) GHG emissions 206 2 305–2 Energy indirect (Scope 2) GHG emissions 207 2 305–3 Other indirect (Scope 3) GHG emissions 207 2 305–4 GHG emissions intensity 206 2 305–5 Reduction of GHG emissions 208 2 305–6 Emissions of ozone-depleting substances The Сompany does not use ozone-depleting substances on an industrial scale 305–7 Nitrogen oxides (NOX), Sulphur oxides (SOX), and other significant air emissions 223 2 306 WASTE (2020) 306–1 Waste generation and significant waste- related impacts 215 2 306–2 Management of significant waste-related impacts 216-217 2 306–3 Waste generated 218 2 306–4 Waste diverted from disposal 219 2 306–5 Waste directed to disposal 219 2 308 SUPPLIER ENVIRONMENTAL ASSESSMENT (2016) 308–1 New suppliers that were screened using environmental criteria 139 2 308–2 Negative environmental impacts in the supply chain and actions taken 139 2 384 385 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le Code GRI Indicator Page number (or link)/Comments Boundary 401 EMPLOYMENT (2016) 401–1 New employee hires and employee turnover 153, 392-393 1 401–2 Benefits provided to full-time employees that are not provided to temporary or part- time employees Benefits established by collective bargaining agreements apply to all employees of Company, its branches, standalone business units and subsidiaries anddo not depend on conditions of employment. 1 401–3 Parental leave 394 1 402 LABOR/MANAGEMENT RELATIONS (2016) 402–1 Minimum notice periods regarding operational changes In case of significant changes in labour conditions of employees or their representatives the Company is guided by the applicable Russian laws. For example, organisational or technological changes are communicated to employees no later than two months before they take effect. In case of staff optimisation, the employer shall also send respective notice to employees at least two months in advance or three months in advance if optimisation measures may lead to large- scale dismissals. In these cases and in other circumstances related to material operational changes, the Company shall act in compliance with the Labour Code of the Russian Federation, collective bargaining agreements and internal regulations of PhosAgro Group companies. Collective bargaining agreements negotiated with trade unions also stipulate notification timeframes for changes. In addition to statutory requirements, the Company has drafted and is ready to implement anti-crisis measures, including an employee communication plan (e.g. information sessions for the staff and management), professional and career guidance, psychological aid and all kinds of other support to employees during transition periods. 1 403 OCCUPATIONAL HEALTH AND SAFETY (2018) 403–1 Occupational health and safety management system 183 2 403–2 Hazard identification, risk assessment, and incident investigation 175 2 403–3 Occupational health services 172 2 Code GRI Indicator Page number (or link)/Comments Boundary 403–4 Worker participation, consultation, and communication on occupational health and safety 172 2 403–5 Worker training on occupational health and safety 181-183 2 403–6 Promotion of worker health 185-189 2 403–7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 185-189 2 403–8 Workers covered by an occupational health and safety management system In 2022, our health and safety management system covered 100% of the Company’s employees. All our employees (executives together with blue and white-collar staff) take OHS training as required by the national laws, as well as additional training (for more information, see page 181). The minimum required training is provided to each and everyone, including all visitors and contractors as part of the introductory briefing. 2 403–9 Work-related injuries 179-181 2 403–10 Occupational diseases In 2020–2022, employees of Apatit, its branches and standalone business units were diagnosed with the following occupational diseases: • vibration syndrome, stages 1–2, due to lasting workplace exposure to general vibration; • chronic bilateral hearing loss due to lasting workplace exposure to noise; • cervical and lumbar radiculopathy due to lasting hard workload; • muscular tonic syndrome in the lower back due to lasting hard workload (awkward (fixed) working postures); • acute irritant poisoning: one-off exposure to ammonia in concentrations exceeding the maximum permissible level as a result of its leakage into the air of the industrial site's process area. For more information, see page 185 2 386 387 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le Code GRI Indicator Page number (or link)/Comments Boundary 404 TRAINING AND EDUCATION (2016) 404–1 Average hours of training per year per employee 156 2 404–2 Programmes for upgrading employee skills and transition assistance programmes 157-159 2 404–3 Percentage of employees receiving regular performance and career development reviews 160 2 405 DIVERSITY AND EQUAL OPPORTUNITY (2016) 405–1 Diversity of governance bodies and employees 154, 272 1 405–2 Ratio of basic salary and remuneration of women to men 164 1 410 SECURITY PRACTICES (2016) 410–1 Security personnel trained in human rights policies or procedures 302 1 413 LOCAL COMMUNITIES (2016) 413–1 Operations with local community engagement, impact assessments, and development programs Programmes for engagement with local communities, assessment of our operations' impact on local communities, and local community development programmes were implemented across all branches of Apatit, including its branches and standalone business units. 2 413–2 Operations with significant actual and potential negative impacts on local communities The Apatit, including its branches and standalone business units has no operations with significant actual and potential negative impacts on local communities. Significant impacts of the Apatit, including its branches and standalone business units on local communities has been assessed as part of evaluation of UN Sustainable Development Goals impacts. 2 414 SUPPLIER SOCIAL ASSESSMENT (2016) 414–1 New suppliers that were screened using social criteria 141 2 414–2 Negative social impacts in the supply chain and actions taken 141 2 417 MARKETING AND LABELLING (2016) 417–1 Requirements for product and service information and labelling 108 1 417–2 Incidents of non-compliance concerning product and service information and labelling No such cases registered, not applicable. 417–3 Incidents of non-compliance concerning marketing communications No such cases registered, not applicable. GRI Content Index: additional information GRI 201–3 Defined benefit plan obligations and other retirement plans, RUB mln Region Retirement-related obligations (other than employee benefit obligations) Actual pension payments 2020 2021 2022 Saratov region Payment of retirement benefits 1,552 1,620 2,771 Merit benefit plans 0,000 0,000 0,000 Financial aid to retired former employees 2,387 7,637 16,719 Total 3,939 9,257 19,490 Murmansk region Payment of retirement benefits 32,704 43,859 39,206 Merit benefit plans 0,000 0,000 0,000 Financial aid to retired former employees 18,575 88,877 148,831 Total 51,279 132,736 188,038 Leningrad region Payment of retirement benefits 1,475 0,714 2,676 Merit benefit plans 0,000 0,000 0,000 Financial aid to retired former employees 5,164 19,746 31,647 Total 6,640 20,460 34,323 Vologda region Payment of retirement benefits 17,758 11,006 13,052 Merit benefit plans 17,982 19,148 21,383 Financial aid to retired former employees 16,769 73,191 119,930 Total 52,509 103,344 154,365 Total Payment of retirement benefits 53,489 57,199 57,705 Merit benefit plans 17,982 19,148 21,383 Financial aid to retired former employees 42,895 189,451 317,128 Total 114,366 265,797 396,215 For the benefit of its former employees, the Company has established and operates a voluntary non-profit union of pensioners (veterans). As at 1 October 2022, the union had 10,953 members. It operates in accordance with collective bargaining agreements and an annual plan including leisure activities for unemployed pensioners (clubs and sports competitions for veterans of various age groups), celebrations of professional and public holidays, jubilees and wedding anniversaries. Support to union members includes: • one-off termination allowance; • annual financial aid linked to anniversaries (50th birthday and every five years afterwards), Day of the Older Persons, Chemist's Day, Victory Day, 8th of March; • a one-off payment in case of a pensioner's decease; • financial aid associated with expensive treatment or decease of relatives (family members); • annual paid tours to corporate health resorts, including for treatment purposes. 388 389 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le GRI 207–4 Tax payments, RUB mln Group Russia Poland Switzerland France Germany Serbia Lithuania Romania Africa Brazil Singapore Cyprus Finland 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 VAT 11,813 20,425 12,520 21,650 (524) (108) (178) (707) (197) (447) 149 148 35 30 (0) 0 (96) (43) 103 (99) 0 0 0 0 0 0 (0) 2 Personal income tax (4,298) (7,324) (3,985) (7,199) (20) (13) (187) (53) (11) (11) (27) (15) 0 0 (13) (5) (1) 0 (5) (5) (16) (5) 0 0 (31) (16) (2) (1) Social contributions (7,332) (9,902) (6,896) (9,595) (28) (14) (285) (238) (37) (21) (18) (4) (5) (1) (10) (5) (8) (7) 0 0 (10) (4) 0 0 (33) (12) (1) 0 MET (3,391) (8,028) (3,391) (8,028) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Property tax (1,025) (1,737) (1,023) (1,737) 0 0 0 0 (0) 0 0 0 (1) 0 0 0 0 0 0 0 (0) 0 0 0 0 0 (1) 0 Pollution fees (207) (187) (200) (187) 0 0 0 0 0 0 0 0 (7) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Land tax (229) (226) (229) (226) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Water use charges (50) (56) (50) (56) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Transport tax (15) (17) (15) (17) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (0) 0 0 0 0 0 0 0 Water tax (3) (4) (3) (4) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Regular subsoil use fees (0) 0 (0) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Other taxes (46) (19) (33) (15) (0) 0 0 0 (3) (1) 0 0 (1) 0 0 0 0 0 0 0 (8) (3) 0 0 (0) 0 0 0 Tax fines and penalties (4) (8) (4) (8) 0 0 0 0 (0) 0 0 0 0 0 0 0 0 0 (0) 0 0 0 0 0 0 0 0 0 Dividend income tax (1,591) (1) (1,591) (1) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Tax jurisdiction Name of the resident entities Primary activity of the organization Russian Federation PhosAgro, PJSC Parent company Apatit, JSC Core production Tirvas, LLC Social services Gornyy tsekh, LLC Capital mining operations Teleset, LLC Social services Tsentr stroitelnyh materialov, LLC Repair services Aeroport, JSC Social services Korporativnoe pitanie, LLC Social services PromTransPort, LLC Transportation services Mekhanik, LLC Repair services PhosAgro-Region, LLC, PhosAgro-Oryol, LLC, PhosAgro- Belgorod, LLC, PhosAgro-Volga, LLC, PhosAgro-Lipetsk, LLC, PhosAgro-Kursk, LLC, PhosAgro-Don, LLC, PhosAgro- Kuban, LLC, PhosAgro-Stavropol, LLC, PhosAgro-Tambov, LLC, PhosAgro-SeveroZapad, LLC Domestic trader Smart Balk Terminal, LLC Stevedoring services NIUIF, JSC R&D Trading House PhosAgro, LLC Trading RBTS PhosAgro, LLC Service company ITS PhosAgro, LLC Service company PhosAgro-Service, LLC Service company PhosAgro-Sibir, LLC (from 01.09.2021) Domestic trader Tirvas OP, LLC (from 16.12.2021) Social services Aeroport Khibiny, LLC (from 29.04.2022) Social services 1 In March 2022, the Group lost control over all the foreign companies of the Group Tax jurisdiction Name of the resident entities Primary activity of the organization Brazil PhosAgro Americas (until 31.03.2022) 1 Service company Germany PhosAgro Deutschland GmbH(until 31.03.2022) 1 Foreign trader Cyprus Phosint Trading Limited Ltd (until 31.03.2022) 1 Foreign trader Phosint Ltd (until 31.03.2022) 1 Holding company Okmus Oy(until 31.03.2022) 1 Holding company Lithuania UAB PhosAgro Baltic(until 31.03.2022) 1 Foreign trader Poland PHOSAGRO POLSKA Sp.z o.o.(until 31.03.2022) 1 Foreign trader Romania PhosAgro Balkans SRL Romania(from 01.09.2020 until 31.03.2022) 1 Foreign trader Serbia Phosagro Balkans d.o.o. Beograd(until 31.03.2022) 1 Foreign trader Singapore Phosagro Asia Pte Ltd(until 31.03.2022) 1 Foreign trader Finland Bulk Terminal Kotka Oy(until 31.03.2022) 1 Service company Logifert Oy(until 31.03.2022) 1 Service company France Phosagro France SAS(until 31.03.2022) 1 Foreign trader Switzerland PhosAgro Trading SA(until 31.03.2022) 1 Foreign trader PhosAgro Logistics AG(until 31.03.2022) 1 Logistics and distribution PhosAsset GmbH(until 31.03.2022) 1 Holding company South Africa PhosAgro South Africa Proprietary Limited(from 01.11.2020 until 31.03.2022) 1 Foreign trader 390 391 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile GRI 401–1 New hires, people 1 2 Region Gender 2020 2021 2022 under 30 years 30–50 years above 50 years Share, % Total under 30 years 30–50 years above 50 years Share, % Total under 30 years 30–50 years above 50 years Share, % Total Vologda region M 185 288 19 14.9 492 284 332 26 15.9 642 405 526 107 18.1 1,038 F 131 206 28 11.0 365 190 319 47 13.8 556 197 354 50 10.5 601 Total 316 494 47 25.9 857 474 651 73 29.7 1,198 602 880 157 28.5 1,639 Saratov region M 47 79 21 4.4 147 68 130 5 5.0 203 143 310 33 8.5 486 F 21 38 10 2.1 69 40 88 12 3.5 140 65 156 26 4.3 247 Total 68 117 31 6.5 216 108 218 17 8.5 343 208 466 59 12.8 733 Leningrad region M 88 129 17 7.1 234 117 227 21 9.1 365 201 374 35 10.6 610 F 36 69 11 3.5 116 44 94 24 4.0 162 68 118 18 3.5 204 Total 124 198 28 10.6 350 161 321 45 13.1 527 269 492 53 14.2 814 Moscow M 5 29 10 1.3 44 4 23 7 0.8 34 3 20 8 0.5 31 F 2 11 2 0.5 15 5 32 3 1.0 40 3 17 2 0.4 22 Total 7 40 12 1.8 59 9 55 10 1.8 74 6 37 10 0.9 53 Murmansk region M 387 886 51 40.0 1,324 364 872 65 32.3 1,301 449 1,237 123 31.5 1,809 F 113 192 26 10.0 331 145 190 31 9.1 366 161 287 47 8.6 495 Total 500 1,078 77 50.0 1,655 509 1,062 96 41.3 1,667 610 1,524 170 40.1 2,304 Other M 18 78 33 3.9 129 16 104 45 4.1 165 19 98 39 2.7 156 F 12 24 11 1.4 47 12 41 6 1.5 59 13 26 9 0.8 48 Total 30 102 44 5.3 176 28 145 51 5.6 224 32 124 48 3.5 204 Men, total 730 1,489 151 71.5 2,370 853 1,688 169 67.2 2,710 1,220 2,565 345 71.9 4,130 Women, total 315 540 88 28.5 943 436 764 123 32.8 1,323 507 958 152 28.1 1,617 Total 1,045 2,029 239 100.0 3,313 1,289 2,452 292 100.0 4,033 1,727 3,523 497 100.0 5,747 1 For the purposes of 2022 disclosures, the Company changed presentation by age group. Based on the principle of comparability, the data for 2021 and 2020 was recalculated. 2 Turnover takes into account voluntary resignations – part 1.3, article 77 of the Labour Code of the Russian Federation; part 1.7, article 77 of the Labour Code of the Russian Federation and for breach of labour discipline – part 1.5, article 81 of the Labour Code of the Russian Federation; part 1.6a, article 81 of the Labour Code of the Russian Federation; part 1.6b, article 81 of the Labour Code of the Russian Federation, part 1.7, article 81 of the Labour Code of the Russian Federation. Turnover 1 2 , % Region Gender 2020 2021 2022 under 30 years 30–50 years above 50 years Total under 30 years 30–50 years above 50 years Total under 30 years 30–50 years above 50 years Total Vologda region M 0.37 0.79 0.13 1.29 0.57 1.35 0.11 2.03 0.47 0.81 0.12 1.40 F 0.27 0.56 0.12 0.94 0.43 1.07 0.16 1.66 0.31 0.72 0.09 1.12 Total 0.64 1.35 0.25 2.23 1.00 2.42 0.27 3.69 0.79 1.53 0.21 2.52 Saratov region M 0.02 0.18 0.04 0.24 0.15 0.36 0.04 0.54 0.18 0.45 0.04 0.67 F 0.04 0.10 0.06 0.20 0.07 0.26 0.08 0.41 0.07 0.21 0.06 0.33 Total 0.06 0.28 0.10 0.44 0.22 0.62 0.12 0.95 0.25 0.66 0.10 1.00 Leningrad region M 0.12 0.24 0.03 0.39 0.30 0.57 0.04 0.91 0.38 0.72 0.10 1.20 F 0.03 0.21 0.01 0.24 0.07 0.20 0.04 0.31 0.10 0.19 0.05 0.34 Total 0.15 0.45 0.03 0.64 0.37 0.76 0.08 1.21 0.48 0.91 0.15 1.54 Moscow M 0.03 0.06 0.0 0.09 0.02 0.07 0.01 0.09 0.01 0.06 0.03 0.09 F 0.01 0.03 0.02 0.06 0.01 0.04 0.01 0.05 0.01 0.05 0.01 0.07 Total 0.04 0.09 0.02 0.15 0.02 0.10 0.01 0.14 0.01 0.11 0.04 0.15 Murmansk region M 0.74 2.56 0.21 3.52 0.95 2.57 0.21 3.73 0.69 2.18 0.22 3.09 F 0.19 0.46 0.07 0.71 0.24 0.66 0.11 1.01 0.24 0.57 0.09 0.91 Total 0.93 3.02 0.29 4.24 1.19 3.24 0.32 4.74 0.93 2.75 0.31 4.00 Other M 0.06 0.22 0.18 0.47 0.06 0.38 0.28 0.72 0.06 0.33 0.14 0.52 F 0.02 0.06 0.04 0.12 0.01 0.09 0.03 0.13 0.01 0.07 0.02 0.10 Total 0.08 0.28 0.22 0.59 0.07 0.47 0.31 0.85 0.07 0.40 0.16 0.62 Men, total 1.34 4.07 0.60 6.00 2.04 5.29 0.69 8.02 1.79 4.55 0.63 6.97 Women, total 0.56 1.41 0.31 2.28 0.82 2.32 0.42 3.57 0.74 1.81 0.32 2.87 Total 1.90 5.48 0.91 8.29 2.87 7.61 1.11 11.59 2.52 6.36 0.95 9.84 392 393 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile GRI 401–3 Parental leave in the reporting year Item 2020 2021 2022 M F Total M F Total M F Total Employees on parental leave 11 794 805 14 818 832 15 827 842 Employees who returned to work after parental leave 0 179 179 3 176 179 2 198 200 Employees who returned to work after parental leave and stayed at work 12 months after return 2 165 167 0 159 159 3 165 168 Return to work ratio 0.00 22.54 22.24 21.4 21.5 21.5 13.3 23.9 23.8 Retention ratio 100.00 93.75 93.82 0.0 88.8 88.8 100.0 93.8 93.9 List of PhosAgro Group companies 1 PhosAgro, PJSC 16 PhosAgro-Kursk, LLC 2 Tirvas, LLC 17 PhosAgro-Don, LLC 3 Gorny tsekh, LLC 18 PhosAgro-Kuban, LLC 4 Teleset, LLC 19 PhosAgro-Stavropol, LLC 5 Tsentr stroitelnyh materialov, LLC 20 PhosAgro-Tambov, LLC 6 Aeroport, JSC 21 PhosAgro-SeveroZapad, LLC 7 Korporativnoe pitanie, LLC 22 Smart Bulk Terminal, LLC 8 PromTransPort, LLC 23 NIUIF, JSC 9 Mekhanik, LLC 24 Trading House PhosAgro, LLC 10 Apatit (including Balakovo, Volkhov and Kirovsk Branches), JSC 25 RBTS PhosAgro, LLC 11 PhosAgro-Region, LLC 26 ITS PhosAgro, LLC 12 PhosAgro-Oryol, LLC 27 PhosAgro-Service, LLC 13 PhosAgro-Belgorod, LLC 28 PhosAgro-Sibir, LLC 14 PhosAgro-Volga, LLC 29 Tirvas OP, LLC 15 PhosAgro-Lipetsk, LLC 30 Khibiny Airport, LLC SASB content index Code Activity metric Page number/ Comment RT-CH-000.A Production broken down by reporting segments 94-98 EM-MM-000.B Total number of employees, percentage contractors 152-153 ENVIRONMENTAL RT-CH-110a.1 Gross global Scope 1 emissions, percentage covered under emissions- limiting regulations 206 EM-MM-110a.1 RT-CH-110a.2 Discussion of a long-term or short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets 198 EM-MM-110a.2 RT-CH-120a.1 Air emissions of the following pollutants: (1) CO, (2) NOx (excluding N2O), (3) SOx, (4) particulate matter (PM10), (5) mercury (Hg), (6) lead (Pb), (7) volatile organic compounds (VOCs), and (8) hazardous air pollutants (HAPs) 223 EM-MM-120a.1 RT-CH-130a.1 (1) Total energy consumed, (2) percentage grid electricity, (3) percentage renewable, (4) total self-generated energy 212-213 EM-MM-130a.1 RT-CH-140a.1 (1) Total water withdrawn, (2) total water consumed, percentage of each in regions with High or Extremely High Baseline Water Stress 227 EM-MM-140a.1 RT-CH-140a.2 Number of incidents of non-compliance associated with water quality permits, standards, and regulations 224 EM-MM-140a.2 RT-CH-140a.3 Description of water management risks and discussion of strategies and practices to mitigate them 225 RT-CH-150a.1 Amount of hazardous waste generated, percentage recycled 218 EM-MM-150a.1 Total weight of tailings waste, percentage recycled 219 EM-MM-150a.2 Total weight of mineral processing waste, percentage recycled 219 EM-MM-160a.1 Description of environmental management policies and practices for active sites 192-193 EM-MM-160a.3 Percentage of (1) proved and (2) probable reserves in or near sites with protected conservation status or endangered species habitat 231 RT-CH-410b.1 (1) Percentage of products that contain Globally Harmonized System of Classification and Labeling of Chemicals (GHS) Category 1 and 2 Health and Environmental Hazardous Substances, (2) percentage of such products that have undergone a hazard assessment 218 RT-CH-410b.2 Discussion of strategy to (1) manage chemicals of concern and (2) develop alternatives with reduced human and/or environmental impact 192 394 395 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile Code Activity metric Page number/ Comment SOCIAL EM-MM-210a.3 Discussion of engagement processes and due diligence practices with respect to human rights, indigenous rights, and operation in areas of conflict 28-29 RT-CH-210a.1 Discussion of engagement processes to manage risks and opportunities associated with community interests 239 EM-MM-210b.1 Discussion of process to manage risks and opportunities associated with community rights and interest 239 EM-MM-210b.2 Number and duration of non-technical delays 43-45 EM-MM-310a.2 Number and duration of strikes and lockouts No cases RT-CH-320a.1 (1) Total recordable incident rate (TRIR) and (2) fatality rate for (a) direct employees and (b) contract employees 179-181 RT-CH-320a.2 Description of efforts to assess, monitor, and reduce exposure of employees and contract workers to long-term (chronic) health risks 176 RT-CH-540a.1 Process Safety Incidents Count (PSIC), Process Safety Total Incident Rate (PSTIR), and Process Safety Incident Severity Rate (PSISR) 179-181 RT-CH-540a.2 Number of transport incidents 178 GOVERNANCE EM-MM-510a.1 Description of the management system for prevention of corruption and bribery throughout the value chain 313 EM-MM-510a.2 Production in countries that have the 20 lowest rankings in Transparency International’s Corruption Perception Index The Company does not carry out production in countries that have the 20 lowest rankings in Transparency International’s Corruption Perception Index RT-CH-530a.1 Discussion of corporate positions related to government regulations and/ or policy proposals that address environmental and social factors affecting the industry 305 TCFD Recommendations Indicator Reported CORPORATE GOVERNANCE The Board of Director’s role in monitoring climate-related risks and opportunities 260 The management’s role in assessing and managing climate-related risks and opportunities 201 STRATEGY Description of the climate-related risks and opportunities the organisation has identified over the short, medium, and long term 201 Description of the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning. 199-201 Assessment of the resilience of the organisation’s strategy, taking into consideration different climate- related scenarios, including a 4°C and 2°C scenario 201 CLIMATE RISK MANAGEMENT Description of the organisation’s processes for identifying and assessing climate-related risks 201 Description of the organisation’s processes for managing climate-related risks. 201 Description of integration of processes for identifying, assessing and managing climate-related risks into the general risk management framework 80 METRICS AND TARGET Description of the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management processes 198 Disclosure of Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks. 198 Description of the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. 198 TCFD-report For more information on GHG emissions and climate risks, see the TCFD report 2020 https://ar2020.phosagro.com/pdf/ar/en/tcfd-pointer.pdf 396 397 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company pro le Glossary AN – ammonium nitrate ANBP – apatite-nepheline beneficiation plant ANSES – French Agency for Food, Environmental and Occupational Health & Safety BAT – best available technique bln – billion Capex – capital expenditure CBAM – carbon border adjustment mechanism CCl 4 – carbon tetrachloride CDP – Carbon Disclosure Project CIS – Commonwealth of Independent States CJSC – closed joint-stock company CO 2 – carbon dioxide CO 2 -equivalent – a conventional unit of measurement used to measure greenhouse gas emissions (including carbon footprint calculations). COVID-19 – сoronavirus disease 2019, the pandemic caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) DAP – diammonium phosphate DROZD – Educated and Healthy Children of Russia programme EBITDA – earnings before interest, taxes, depreciation and amortisation EMERCOM – Ministry for Civil Defence, Emergencies and Elimination of Consequences of Natural Disasters ESG – environmental, social, and governance ESPP – European Sustainable Phosphorus Platform EU – European Union FAO – Food and Agriculture Organisation GDP – gross domestic product GDR – global depositary receipt GLOSOLAN — Global Soil Laboratories Networks; supporting the GLOSOLAN by developing research capacities and strengthening the Regional Soil Laboratories Networks (RESOLAN) GRI – Global Reporting Initiative HR – human resources HSE – health, safety and environment IFA – International Fertilizer Association IFRS – International Financial Reporting Standards IMF – International Monetary Fund IPCC – Intergovernmental Panel on Climate Change IRR – internal rate of return IT – information technology IUPAC – International Union of Pure and Applied Chemistry JSC – joint-stock company kg – kilogram KPI – key performance indicator kWh – kilowatt-hour LSE – London Stock Exchange LTIFR – lost time injury frequency rate MAP – monoammonium phosphate MCP – feed monocalcium phosphate mg – milligram mln – million MOP – muriate of potash MW – megawatt NIUIF – Samoilov Scientific Research Institute for Fertilizers and Insectofungicides NO 2 – nitrogen dioxide NPK – nitrogen-phosphorus- potassium fertilizer OHS – occupational health and safety OPEC – Organisation of the Petroleum Exporting Countries P 2 O 5 – phosphoric pentoxide PJSC – public joint-stock company PwC – PricewaterhouseCoopers R&D – research and development RAFP – Russian Association of Fertilizer Producers RAS – Russian Accounting Standards REACH – Registration, Evaluation, Authorisation and Restriction of Chemicals Rospotrebnadzor – Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing Rostekhnadzor – Federal Service for the Supervision of Environment, Technology and Nuclear Management RSPP – Russian Union of Industrialists and Entrepreneurs RUB – Russian rouble SASB – Sustainability Accounting Standards Board SDG – UN Sustainable Development Goal SME – small and medium enterprise SMEs – small and medium-sized enterprises SO 2 – sulphur dioxide STPP – sodium tripolyphosphate Strategy to 202 5 – PhosAgro Group's Development Strategy to 2025 t – metric tonne Total output of finished and semi- finished products – total output of the Company’s finished and semi- finished products for the reporting period, including mineral fertilizers, animal feed, industrial phosphates and industrial products, phosphate rock and nepheline concentrate. ths – thousand UN – United Nations UNESCO – United Nations Educational, Scientific and Cultural Organisation USA – United States of America USD – United States dollar VAT – value-added tax VHI – voluntary health insurance VOC – volatile organic compound 398 399 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile Contacts Investor Relations Andrey Serov Head of Investor Relations Tel.: +7 (495) 231 31 15 Email: [email protected] Corporate Secretary Sergey Samosyuk Tel.: +7 (495) 232 96 89, ext. 2712 Email: [email protected] 55/1 Leninsky Prospekt, bldg. 1, Moscow 119333, Russia Tel.: +7 (495) 232 96 89 Fax: +7 (495) 956 19 02 Auditor JSC Technologies of Trust – Audit 10 Butyrsky Val, White Square Business Centre, Moscow 125047, Russia Tel.: +7 (495) 967 60 00 Fax: +7 (495) 967 60 01 Website: www.tedo.ru JSC Unicon 8 Preobrazhenskaya Ploshchad, Preo 8 Business Centre, Moscow, Russia Tel.: +7 (495) 797 56 65 Fax: +7 (495) 797 56 60 Website: www.unicon.ru Registrar JSC Reestr 20 B. Balkansky Lane, bldg. 1, Moscow 129090, Russia Tel.: +7 (495) 617 01 01 Fax: +7 (495) 680 80 01 Email: [email protected] Website: www.aoreestr.ru Contacts for employees and potential employees Dmitry Borodich HR and Social Policy Director Tel.: +7 (495) 231 31 15 Email: [email protected] Contacts for media Andrey Podkopalov Director of Information Policy Tel.: +7 (495) 232 96 89, ext. 26 51 Timur Belov Head of Information Policy Division, Press Secretary Tel.: +7 (495) 232 96 89, ext. 26 52 Email: [email protected] Sustainability contacts Sergey Kudryashov Head of Sustainable Development Department Tel.: +7 (495) 231 27 47 Email: [email protected] GRI 2-1 400 401 Strategic report Performance review Corporate governance Share capital ADDITIONAL INFORMATION Company profile
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