Phosagro S Regulatory News (PHOR)

PhosAgro Board of Directors Approves a New Dividend Policy: Payments to Shareholders May Exceed 75% of Free Cash Flow

London - The Board of Directors of PhosAgro has approved a new dividend policy, under which future dividend payments will be based on the Company's free cash flow instead of net profit, with the amount varying depending on the Company's debt levels.

The new policy will allow the Company to direct more than 75% of free cash flow to dividends if the net debt/EBITDA ratio is less than 1.0x, 50-75% of free cash flow provided that the net debt/EBITDA ratio is between 1.0x and 1.5x, and less than 50% of free cash flow if the net debt/EBITDA ratio exceeds 1.5x. In addition, the policy sets a minimum threshold of 50% of adjusted net profit, which was the upper limit of the preceding dividend policy and may result in double-digit annualised dividend yields. Dividends are to be paid on a quarterly basis.

Xavier Rolet, Chairman of the Board of Directors of PhosAgro, said: "An essential aspect of improving corporate governance at PhosAgro is addressing the interests of all its key stakeholders. We have achieved this with the new Board of Directors, which has an absolute majority of independent directors, with new Board of Directors committees and with a number of other corporate transformations. PhosAgro's new dividend policy is fully in line with best practices, recognises the Company's need to reinvest into future growth, ongoing social and charitable obligations to the regions where the Company operates and to society. A flexible dividend policy will help to ensure PhosAgro's financial stability as it implements its new strategy, and at the same time will provide a more transparent mechanism for investors to analyse potential dividend income going forward."

PhosAgro CEO and Board of Directors member Andrey Guryev said: "Due to the successful implementation of the strategy to 2020, PhosAgro has been generating a consistently high cash flows for several quarters, paying dividends above the upper limit stipulated in the old dividend policy. By approving a new dividend policy, we have formalised PhosAgro's commitment to continue to pay decent dividends. This represents the next step aimed at further enhancing PhosAgro's investment story and, as a result, expanding our investor base and building sustainable, long-term value in terms of market capitalisation. As before, we intend to maintain a balance between payment of dividends and reinvestment of profit into further development, providing for the modernisation of existing and construction of new production facilities that use the best available techniques, as well as innovative and digital solutions, while implementing social and charitable projects."

Furthermore, at a meeting held on the eve of PhosAgro's Capital Markets Day in London, the Board of Directors updated its forward-looking agenda to 31 May 2020.

About the Company

PhosAgro is one of the world's leading vertically integrated phosphate-based fertilizer producers in terms of production volumes of phosphate-based fertilizers and high-grade phosphate rock with a P2O5 content of 39% and higher. PhosAgro's pure phosphate-based fertilizers stand out for their high efficiency and their environmental safety for the health of people and soils.

The Company is the largest phosphate-based fertilizer producer in Europe (by total combined capacity for DAP/MAP/NP/NPK/NPS), the largest producer of high-grade phosphate rock with a P2O5 content of 39%, a top-three producer of MAP/DAP globally, one of the leading producers of feed phosphates (MCP) in Europe, and the only producer in Russia, and Russia's only producer of nepheline concentrate (according to the RAFP).

PhosAgro's main products include phosphate rock, 39 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in 100 countries spanning all of the world's inhabited continents. The Company's priority markets outside of Russia and the CIS are Latin America, Europe and Asia.

PhosAgro's shares are traded on the Moscow Exchange, and Global Depositary Receipts (GDRs) for shares trade on the London Stock Exchange (under the ticker PHOR). Since 1 June 2016, the Company's GDRs have been included in the MSCI Russia and MSCI Emerging Markets indexes.

More information about PhosAgro can be found on the website: www.phosagro.ru.