Phosagro S Regulatory News (PHOR)

For Immediate Release 17 April 2014 PhosAgro Reports 2013 IFRS Net Profit of RUB 8.6 bln Moscow - PhosAgro ("PhosAgro" or "the Company") (Moscow Exchange, LSE: PHOR),a leading global vertically integrated phosphate-based fertilizer producer,today announces its audited consolidated IFRS financial statements for 2013.PhosAgro earned a net profit for the year of RUB 8.6 billion (USD 269million), compared to RUB 24.5 billion (USD 788 million) in 2012. Basic anddiluted earnings per share came to RUB 60 (USD 1.88) for 2013 compared to RUB166 (USD 5.34) in 2012. 2013 Financial and Operational Highlights: Result 2013 2012 year-on-year change (RUB vs. RUB), % RUB USD RUB USD million million Revenue 104,566 3,283 105,303 3,387 (1%)EBITDA* 23,934 752 34,917 1,123 (31%)EBITDA margin 23% 23% 33% 33% (10 p.p.)Net Profit 8,576 269 24,510 788 (65%)Earnings per share 60 1.88 166 5.34 (64%) Sales volumes Kmt Kmt Phosphate-based 4,672.1 4,242.9 10%fertilizersNitrogen-based 1,262.2 1,094.9 15%fertilizersApatit mine and 3,912.0 4,583.1 (15%)beneficiation plantOther products 313.0 257.3 22%RUB/USD rates: average 2013: 31.8480; average 2012: 31.0930 As of 31 December 2013: 32.7292; as of 31 December 2012: 30.3727 *EBITDA is calculated as operating profit adjusted for depreciation andamortisation. Other 2013 Highlights Production, sales and logistics flexibility: - During 2013 PhosAgro's revenue and sales volumes benefited fromthe Company's strategy of enhancing production flexibility, with totalfertilizer production and sales volumes showing significant year-on-yeargrowth of 9% and 11%, respectively. Revenue for the same period decreased by1% year-on-year as result of: - a 17% decline in average DAP prices (FOB Tampa) and an 18%decline in average urea prices (FOB Baltic); - a 4% year-on-year increase in revenue following the consolidationof Metachem in December 2012, which brought sales of technical phosphates(STTP) and potassium sulphate (SOP) amounting to RUB 4,551 million (USD 143million) in 2013. - In June 2013 PhosAgro signed a contract with an internationalconsortium led by Mitsubishi Heavy Industries ltd for construction of a new,energy efficient ammonia plant with a capacity of 2,200 tonnes/day (760 thstons/year) at PhosAgro-Cherepovets. Consolidation of ownership in production facilities: - During 2013, PhosAgro successfully consolidated 100% ownership in Apatit byway of a compulsory share purchase offer and a subsequent squeeze out, whichwas completed in September; - In June 2013, PhosAgro acquired 25.24% of Metachem, bringing its ownershipin the subsidiary to 100%; - In August 2013, PhosAgro acquired 100% of PhosInt Trading Limited, whichowns 100% PhosAgro Asia Pte Ltd. PhosAgro Asia is PhosAgro's first tradingoperation in Asia, and is focused on international sales of mineralfertilizers in the region. PhosAgro reports its 2013 net profit of RUB 8.6 billion (USD 269 million), adecrease of 65% year-on-year from RUB 24.5 billion (USD 788 million) in 2012.Revenue for the period decreased by 1% year-on-year to RUB 104.6 billion (USD3,283 million), compared to RUB 105.3 billion (USD 3,387 million) for 2012. Operating profit for 2013 was RUB 16.1 billion (USD 507 million), a 43%decrease from RUB 28.4 billion (USD 913 million) in 2012. EBITDA margindecreased year-on-year to 23%, compared to 33% for 2012. Cash flows from operating activities amounted to RUB 17.9 billion (USD 563million) in 2013, compared to RUB 25.5 billion (USD 819 million) in 2012. TheCompany's capital expenditure (capex) in cash terms during 2013 was RUB 17.8billion (USD 559 million), compared to RUB 13.4 billion (USD 430 million) in2012. Net debt at 31 December 2013 stood at RUB 43.8 billion (USD 1,339 million), upfrom RUB 26.8 billion (USD 883 million) at 31 December 2012. Net debtincreased due to a significant cash outflow for the Apatit minorityshareholder buyout, which was funded through PhosAgro's successful long-termUSD 500 million debut Eurobond issue. Unfavourable market conditions alsocontributed to the growth in net debt. As a result, the Company's net debt toEBITDA ratio increased to 1.8 as of 31 December 2013. Excluding the effect ofthe Apatit buyout (under normal course of business), net debt/EBITDA stood at1.4 as of 31 December 2013. Commenting on the 2013 results, PhosAgro Management Board Chairman and CEOAndrey A. Guryev said: "This has been a challenging year for the fertiliser industry. However, I ampleased that we have delivered a solid financial performance and havecompleted several strategic initiatives focused on developing sustainable, lowcost production by maximising the value inherent in our high quality phosphateresource. "In 2013 we managed to increase fertilizer production and sales by 9% and 11%,respectively. Our sales remained relatively stable when FOB Tampa DAP pricesdropped 23% from USD 488 per tonne at the beginning of the year to USD 378 atyear-end, and bottomed out at just USD 343 per tonne in the middle of Novemberafter declining following the breakup of BPC (the minimum price seen since the2009 financial crisis). This brought most of our industry to below break-evenlevels in 4Q 2013. I am pleased, therefore, that we have managed to generate a23% EBITDA margin in such challenging times, and to maintain almost 100%production capacity utilisation. "Despite challenging market conditions, we have achieved several strategicgoals with respect to consolidation of our production subsidiaries during theperiod: we completed the Apatit minority squeeze out and now own 100% of thisunique mining asset. We also made progress on further organic growth with thelaunch of construction of a new modern ammonia plant. This plant will help tosustain our low cost advantage in the future, and establish a base for thedevelopment of further downstream fertiliser capacity aimed at delivering anytype of phosphate-based fertilizer to farmers in either concentrated orcomplex triple (NPK) and even quadruple (NPKS) nutrient form." 2013 Market Conditions - In the first half of 2013, further subsidy cuts in India due to thecontinued economic downturn, accompanied by a cold spring in the US andEurope, prevented any seasonal price recovery; - Weak demand from India, the world's largest DAP market, combined withcontinued declines in the rupee vs. the US dollar, put downward pressure onDAP/MAP prices; - According to the IFA, India imported 3.7 mln tonnes of DAP in 2013, comparedto 5.9 mln tonnes in 2012, a decline of 37%; - Uralkali's new sales strategy, following its exit from BPC, had a negativeimpact on all three nutrients and caused stagnation on global fertilizermarkets, which resulted in significant decreases in prices for allfertilizers: between 30 July 2013 and the end of the year, DAP prices (FOBTampa) decreased from USD 455 to USD 375; - The average DAP price per tonne for 2013 fell 17% to USD 442 (FOB Tampa),compared to USD 535 (FOB Tampa) in 2012; - Weakness in the global phosphate-based fertilizer market has led producersto curtail production. According to Argus FMB and Fertecon in Q4 2013, OCPdecreased its capacity utilisation to 50%-60%, while in Chinese capacityutilisation was at 50%-70% according to CFMW; - China's total phosphate-based fertilizer exports for 2013 decreased by 6%(400 ths tonnes) year-on-year and amounted to 5.8 mln tonnes, compared to 6.2mln tonnes in 2012; - Despite the decline in feedstock prices, during 2013 DAP spot pricesremained below cash cost levels for marginal producers of concentratedphosphate fertilizers, and in 4Q spot prices were below the average cash costfor the industry. Phosphate-based products segment Result 2013 2012 year-on-year RUB mln RUB mln change, % Revenue 91,065 91,233 -Cost of goods sold (59,588) (54,824) 9%Gross profit 31,477 36,409 (14%) Phosphate-based products segment revenue remained at the same level andtotalled RUB 91,065 million (USD 2,859 million) in 2013. PhosAgro increasedproduction of phosphate-based fertilizers and MCP by 6.5% year-on-year in2013, while sales volumes were up 10.1% year-on-year. Production and salesvolumes for phosphate rock and nepheline concentrate decreased in 2013compared to 2012 by 2.9% and 14.6%, respectively. Despite the significant decrease in sales prices, revenue for thephosphate-based products segment was stable in 2013 due to the addition ofexport sales of STTP (sodium tripolyphosphate) and SOP (potassium sulphate) ofRUB 3,465 million (USD 109 million) and 884 (USD 28 million), respectively,following the consolidation of Metachem at the end of 2012. Productionflexibility also helped PhosAgro maintain stable revenue by increasing NPSexport sales volumes by 62% year-on-year. As a result, revenue from NPS exportsales increased by 33% year-on-year, from RUB 3,445 million (USD 111 million)in 2012 to RUB 4,587 million (USD 144 million) in 2013. Revenue from NPKexport sales decreased by 13% year-on-year, from RUB 15,617 million (USD 502million) in 2012 to RUB 13,657 million (USD 429 million) in 2013. This wasmainly the result of a 14% decline in revenue per tonne from export sales ofNPK. Revenue from DAP/MAP sales decreased by 9% year-on-year from RUB 34,182million (USD 1,009 million) in 2012 to 31,264 million (USD 982 million) in2013. This decrease was due to lower market prices (MAP/DAP price decreased by15% in average) outweighing a 5.5% increase in DAP/MAP sales volumes. Revenuefrom domestic sales of phosphate rock decreased by 28% year-on-year to RUB7,950 million (USD 250 million) in 2013 due to higher internal use followingthe consolidation of Metachem and higher phosphate-based fertilizer productionvolumes, as well as to lower sales to a significant Russian customer; thesevolumes were redirected to export markets, which led to an 6% year-on-yearincrease in export sales of the product to RUB 8,937 million (USD 280 million)for the period. The phosphate segment's gross profit for 2013 decreased by 14% year-on-year toRUB 31,477 million (USD 988 million), resulting in a gross profit margin of35%, compared to 40% in 2012. This was primarily the result of a decrease inprices for the Company's main phosphate-based products. PhosAgro is largely self-sufficient in key raw materials for phosphatefertilizer production, and fully self-sufficient in phosphate rock. However,higher production volumes and changes in the production mix in 2013 meant theCompany had to increase external purchases of other inputs, which led to anincrease in cost of sales (a more detailed discussion is provided in the CoGSanalysis below). Revenue per tonne for the principal phosphate-based fertilizers and feedphosphate Product 2013 2012 year-on-year RUB RUB change, %Domestic:MAP 15,383 18,704 (17.8%)DAP 14,246 17,676 (19.4%)NPK 13,979 14,569 (4.0%)MCP 19,988 19,273 3.7%NPS 11,336 12,259 (7.5%) Export:MAP 14,935 16,916 (11.7%)DAP 14,370 16,646 (13.7%)NPK 11,938 13,949 (14.4%)MCP 17,587 17,205 2.2%NPS 9,561 11,628 (17.8%) Nitrogen segment Result 2013 2012 year-on-year RUB RUB change, %Revenue 12,810 13,048 (2%)Inter-segment transfers 99 2,146 (95%)Cost of goods sold (10,036) (7,632) 31%Gross profit 2,873 7,562 (62%) Nitrogen segment revenue was RUB 12,810 million (USD 402 million) in 2013, adecrease of RUB 238 million year-on-year from RUB 13,048 million (USD 420million) in 2012. Production and sales volumes of nitrogen-based fertilizersincreased by 19% and 15% year-on-year, respectively, in 2013. Urea sales volumes increased by 22% year-on-year following the launch of thenew urea plant at PhosAgro-Cherepovets in the second half of 2012. Exportrevenue from urea increased by 8% year-on-year from RUB 8,323 million (USD 268million) in 2012 to RUB 8,988 million (USD 282 million) in 2013 as a result ofhigher export sales volumes (up 21%) and an 11% decrease in export revenue pertonne. Ammonium nitrate (AN) sales volumes decreased by 6%, which was themajor factor behind the 8% decrease in revenue from AN sales from RUB 2,837million (USD 91 million) in 2012 to RUB 2,620 million (USD 82 million) in2013, which was partially compensated by a 9% increase in domestic prices. Inter-segment revenues decreased by 95% year-on-year in 2013, to RUB 99million (USD 3 million). This was a result of the merger of Ammophos andCherepovetsky Azot, which represented the phosphate-based and nitrogen-basedsegments, respectively, prior to their merger into PhosAgro-Cherepovets. As a result of higher expenses for purchased ammonia (a more detaileddiscussion is provided in the CoGS analysis below), nitrogen segment grossprofit decreased by 62% year-on-year to RUB 2,873 million (USD 90 million) in2013, with a gross profit margin of 22%, compared to 58% in 2012. Revenue per tonne for the principal nitrogen-based fertilizers Product 2013 2012 year-on-year RUB mln RUB mln change, %Domestic:Ammonium nitrate 9,354 8,601 8.8%Urea 12,618 12,455 1.3% Export:Ammonium nitrate 9,591 10,437 (8.1%)Urea 10,410 11,691 (11.0%)NP 9,121 8,818 3.4% Cost of sales PhosAgro's cost of sales increased by 14% year-on-year in 2013 to RUB 68,139million (USD 2,140 million), in line with the growth in fertilizer salesvolumes of 11% and price inflation. This increase in cost of sales wasprimarily due to the following changes from 2012 to 2013: - A RUB 3,244 million (USD 102 million), or 18%, increase in thecost of materials and services. The consolidation of Metachem into PhosAgroled to an increase in materials and services expenses of 7%, or RUB 1,348million (USD 42 million). The growth in fertilizer sales volumes by 11% led tohigher consumption of related materials and services. During the reportingyear there was also a significant increase in expenses for third partiesservices, which was the result of personnel optimisations and outsourcing ofcertain functions previously performed by PhosAgro, such as transportation andmaintenance. - Higher production of NPS/NPK, which have a high nitrogen content,led to an increase in purchases of ammonium sulphate of RUB 493 million (USD15 million). - A RUB 1,767 million (USD 55 million), or 61%, increase in ammoniaexpenses, mainly due to higher production volumes of nitrogen-basedfertilizers and changes in the product mix, which led to a 56% increase inPhosAgro's third party ammonia purchases. This was also due to a slightincrease of 5% in the purchased ammonia price, to RUB 13,486 per tonne in 2013from RUB 12,835 in 2012. - An increase in expenditure on natural gas of RUB 567 million (USD18 million), or 10%, to RUB 6,300 million (USD 198 million) in 2013. Naturalgas is required primarily for the production of ammonia. The price per cubicmetre of natural gas rose by 8%, while natural gas consumption increased by 2%year-on-year. The price increase was due to a 15% tariff increase in thesecond half of 2013. The smaller rise in volume of gas purchased, by just 2%,was due to the start of the new 32 Mwt gas turbine electricity plant atCherepovets. . - An increase in expenditure on electricity of RUB 223 million (USD7 million), or 7%, from RUB 3,255 million (USD 105 million) in 2012 to RUB3,478 million (USD 109 million) in 2013. This was primarily driven by a 10%tariff hike in July 2013, and partially compensated for by decreasedconsumption following the start of the new 32 Mwt gas turbine electricityplant. - Personnel costs increased 4% year-on-year, primarily due to theconsolidation of Metachem. Increases due to the indexation of salaries werecompensated by reduced payroll costs resulting from PhosAgro's restructuringand staff optimisation programme. - The increase in cost of sales was partially offset by ayear-on-year decrease in expenditure on potash of 11%, or RUB 484 million (USD15 million), to RUB 4,114 million (USD 129 million) in 2013. This was mainlydue to an 8% decrease in potash purchase volumes and a 3% decrease in potashpurchase prices. Potash consumption declined due to the higher share of NPKgrades with low potash content in the overall production mix. - A decrease in expenditure on fuel of RUB 418 million (USD 13million), or 9%, from RUB 4,579 million (USD 147 million) in 2012 to RUB 4,161million (USD 131 million) in 2013. This was mainly due to a 6% decrease inconsumption of fuel following the decrease in phosphate rock and nephelineconcentrate production, as well as lower volumes of phosphate ore extracted inopen-pits where diesel is primarily consumed, and to a 3% decrease in fuelpurchase prices. - A decrease in expenditure on sulphur and sulphuric acid of RUB169 million (USD 5 million), or 5%, from RUB 3,597 million (USD 116 million)in 2012 to RUB 3,428 million (USD 108 million) in 2013. This was driven by adecrease in purchase prices by 11% as result of cheaper sulphuric acid supplyfrom domestic metallurgical producers. The decrease in purchase prices waspartly offest by a 6% increase in purchase volumes following the consolidationof Metachem, and due to higher production volumes of phosphate-basedfertilizers. Item 2013 2012 Change y-on-y RUB USD % of RUB USD % of RUB % mln mln cost mln mln cost mln of of sales sales Materials and 21,663 680 32% 18,419 593 31% 3,244 18%servicesSalaries and 12,022 378 18% 11,602 373 19% 420 4%socialcontributionsAmmonia 4,671 147 7% 2,904 93 5% 1,767 61%Potash 4,114 129 6% 4,598 148 8% (484) (11%)Ammonium 1,157 36 2% 664 21 1% 493 74%sulphateNatural gas 6,300 198 9% 5,733 184 9% 567 10%Depreciation 7,147 224 10% 5,933 191 10% 1,214 20%Fuel 4,161 131 6% 4,579 147 8% (418) (9%)Sulphur and 3,428 108 5% 3,597 116 6% (169) (5%)sulphuric acidElectricity 3,478 109 5% 3,255 105 5% 223 7%Other items 53 2 - 87 3 - (34) (39%)Change in stock (55) (2) - (1,405) (45) (2%) 1,350 96%of WIP andfinished goodsTotal 68,139 2,140 100% 59,966 1,929 100% 8,173 14% Administrative expenses rose by 21% year-on-year to RUB 8,380 million (USD 263million) in 2013 primarily as a result of inflation, the consolidation ofMetachem and increased medical insurance coverage. In 2013, following theimplementation of a new KPI-based motivation programme, all senior- andmid-level management bonuses for 2013 were accrued in the 2013 financialperiod. Selling expenses rose by 13% year-on-year, from RUB 7,437 million (USD 239million) in 2012 to RUB 8,378 million (USD 263 million) in 2013. This wasprimarily due to higher sales volumes, as well as a 7% year-on-year increasein Russian Railways infrastructure tariff in 2013. Restructuring costs relate to PhosAgro's restructuring and staff optimizationprogramme, which commenced in 2012 and comprises mainly redundancy paymentsand related social contributions. In 2013 these payments amounted to RUB 1,513million. The programme is on track to be finalised in June 2014, and aprovision of RUB 472 million relating to the completion of the programme hasbeen recognised as an accrual in the 2013 financial statements. Cash spent on capex in 2013 amounted to RUB 17,795 million (USD 559 million),compared to RUB 13,370 million (USD 430 million) in 2012. PhosAgro's capitalexpenditure, which consists of additions to property, plant and equipment,amounted to RUB 17,662 million (USD 555 million) for 2013, compared to RUB14,881 million (USD 479 million) in 2012. Capital expenditure focused onconstruction of the main ore shaft № 2 at the Kirovsky underground mine(expected to enable the mine to increase production to 14 mtpa in 2-3 years),as well as the construction of new storage facilities for liquid ammonia atBalakovo Mineral Fertilizers. Total debt at 31 December 2013 amounted to RUB 52,756 million (USD 1,612million), compared to RUB 36,469 million (USD 1,201 million) at 31 December2012. Net debt at 31 December 2013 amounted to RUB 43,818 million (USD 1,339million), compared to RUB 26,805 million (USD 883 million) at 31 December2012. Outlook Market: - Agricultural commodities market trends in 2014 are positive: prices forsoybeans and wheat have increased by 15-17% year-to-date; corn is up more than20%; - Indian elections are upcoming and a subsidy decision was announced at theend of March, instead of late April like last year: with a continuing marketdownturn, the country left the P2O5 subsidy at the same level as last year; - Very low Indian stocks, combined with conservative expectations of exportsto the country increasing by around 2 million tonnes to at least 5-5.5 milliontonnes in 2014, will bring global fertilizer demand growth back in line withthe normal annual rate of around 2%; - India's currency has strengthen by 13% from the minimum levels in August2013; - Feedstock prices are increasing globally, driving cash costs of mostsignificant players up: sulphur prices are up from 80% to more than 150% insome regions from minimum 4Q 2013 levels of USD 70-80 to USD 130-170 now;ammonia has increased 30% from USD 425-450 to USD 555-580 in 2Q 2014; - The stabilisation of potash prices is reviving NPK market activity. Company: - Following the sharp recovery in concentrated phosphate fertilizerdemand from late December, PhosAgro has focused on MAP/DAP production in 1Q2014; - With global demand for complex fertilizers and NPS now alsorecovering, the Company intends to invest further into both increasingcapacity and expanding the number of NPK grades it produces, commencing PKSproduction in 2Q 2014; - All major development projects are on track, including the newammonia plant designed to increase cost efficiency and support furtherexpansion of complex fertilizer capacity; - In February 2014 PhosAgro signed a USD 440.6 million loanfacility with the Japan Bank of International cooperation (JBIC) and a groupof Japanese banks to fund construction of the new ammonia plant at highlyattractive rates with a tenure of over 10 years; - Following the full consolidation of Apatit shares, PhosAgro is focusing onconsolidating its ownership of PhosAgro-Cherepovets in 2014. In February 2014,PhosAgro launched a voluntary tender offer to acquire ordinary shares of OJSCPhosAgro-Cherepovets. The offer price, which was determined in accordance withRussian law, is RUB 44.0 per ordinary share with a nominal value of RUB 1.10.For the purposes of the voluntary buyout, PhosAgro obtained a bank guaranteein the amount of RUB 10,800 million. The offer period expires on 6 May 2014; - In February 2014 PhosAgro launched a new subsidiary, LLC Smart BulkTerminal, which will manage the construction and subsequent operation of a newbulk terminal at the Baltic port of Ust-Luga that will handle fertilizersproduced and sold by PhosAgro; - Management focus on cost optimisation will help to reduce theCompany's material and personnel costs; - The Management Board is carefully monitoring the capitalexpenditure programme to comply with PhosAgro's financial policy with respectto capital spending and leverage. Conference call and webcast On 17 April 2014, PhosAgro will hold a conference call and webcast at 14.00London time (17:00 Moscow; 09:00 New York). Following a presentation of the results, PhosAgro CEO Andrey Guryev willanswer questions from conference call participants. The call will be held in English, with simultaneous translation into Russianon a separate line. Webcast links: English: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=2240 Russian: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=2241 Participants Dial-in numbers: Russia:+7-495-662-57-93 UK:+44-20-7190-1595 (Local access)0800-358-5256 (Toll free) USA:+1-480-629-9771 (Local access)1-877-941-1469 (Toll free) Conference ID numbers:English call: 4679739Russian call: 4679742 For further information please contact: OJSC PhosAgroIrina Evstigneeva, Head of Corporate Finance and Investor Relationsir@phosagro.ru+7 495 231 3115 Timur Belov, Press Officer+7 495 232 9689 EMSam VanDerlipvanderlip@em-comms.com+44 7554 993 032+7 916 306 6112 Notes to Editors PhosAgro is one of the leading global vertically integrated phosphate-basedfertilizer producers. The Company focuses on the production of phosphate-basedfertilizers, feed phosphate and high-grade phosphate rock (P2O5 content of notless than 39%), as well as ammonia and nitrogen-based fertilizers. The Companyis the largest phosphate-based fertilizer producer in Europe, the largestproducer of high-grade phosphate rock worldwide and the second largest MAP/DAPproducer in the world (excluding China), according to Fertecon. PhosAgro has 2.1 billion tonnes of resources (according to JORC as of 1 June2011) of high quality apatite-nepheline ore, representing over 75 years ofproduction (at current production levels). The Company also controlssubstantial Al2O3 resources, and has more than 41% of Russia's rare earthoxides resources. The Company's mines and phosphate rock production facilities are located inthe mountainous areas of the Kola Peninsula in the Murmansk region ofnorthwest Russia, whereas its fertilizer and feed phosphate production assetsare located near the city of Cherepovets in the Vologda region and near thecity of Balakovo in the Saratov region of southwest part of European Russia.PhosAgro's 2013 IFRS revenue was over USD 3.3 bln and EBITDA was USD 752 mln.The Сompany's net debt/EBITDA ratio was 1.8 at 31 December 2013. For further information on PhosAgro please visit:www.PhosAgro.comwww.phosagro.com Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2013 2013 2012* RUB Million RUB MillionContinuing operationsRevenues 104,566 105,303Cost of sales (68,139) (59,966)Gross profit 36,427 45,337 Administrative expenses (8,380) (6,904)Selling expenses (8,378) (7,437)Taxes, other than income tax (2,149) (1,634)Other expenses, net (1,378) (966)Operating profit 16,142 28,396 Negative goodwill on consolidation of LLC "Metachem" - 678Finance income 1,138 2,070Finance costs (2,272) (1,450)Foreign exchange (loss)/gain (2,999) 1,576Share of profit of associates 19 166Restructuring costs (1,985) (222)Profit before income tax 10,043 31,214 Income tax expense (1,740) (6,704)Profit from continuing operations 8,303 24,510 Discontinued operationsProfit from discontinued operations, net of tax 273 -Profit for the year 8,576 24,510 Attributable to:Non-controlling interests^ 916 3,856Shareholders of the Parent 7,660 20,654 Other comprehensive income/(loss)Revaluation of available-for-sale securities - 282Actuarial gains and losses, net of tax (111) (276)Foreign currency translation difference 247 (396)Other comprehensive income/(loss) for the year 136 (390)Total comprehensive income for the year 8,712 24,120 Attributable to:Non-controlling interests^ 901 3,794Shareholders of the Parent 7,811 20,326Basic and diluted earnings per share (in RUB) 60 166 Consolidated Statement of Financial Position as at 31 December 2013 31 December 2013 31 December 2012 RUB Million RUB MillionAssetsProperty, plant and equipment 75,928 66,393Intangible assets 623 688Investments in associates 8,485 9,620Deferred tax assets 1,806 -Other non-current assets 4,383 3,071Non-current assets 91,225 79,772 Other current investments 1,585 833Derivative financial assets 79 45Inventories 12,293 12,324Current income tax receivable 668 769Trade and other receivables 11,464 11,874Cash and cash equivalents 8,938 9,664Assets held for sale, net - 346Current assets 35,027 35,855Total assets 126,252 115,627 EquityShare capital 372 360Share premium 7,494 1,099Retained earnings 48,556 48,294Other reserves (116) (267)Equity attributable to shareholders of the Parent 56,306 49,486Equity attributable to non-controlling interests 3,020 12,389Total equity 59,326 61,875 LiabilitiesLoans and borrowings 39,550 14,452Defined benefit obligations 971 1,257Deferred tax liabilities 3,304 2,973Non-current liabilities 43,825 18,682 Trade and other payables 9,377 12,377Current income tax payable 518 676Loans and borrowings 13,206 22,017Current liabilities 23,101 35,070Total equity and liabilities 126,252 115,627 Consolidated Statement of Cash Flows for 2013 2013 2012 RUB Million RUB MillionCash flows from operating activitiesProfit before taxation 10,043 31,214Adjustments for:Depreciation and amortisation 7,792 6,521Negative goodwill on consolidation of LLC "Metachem" - (678)Loss on disposal of fixed assets 91 193Finance costs 2,272 1,450Finance income (1,138) (2,070)Share of profit of associates (19) (166)Foreign exchange loss/(gain), net 3,252 (1,203)Operating profit before changes in working capital and provisions 22,293 35,261Decrease/(increase) in inventories 122 (1,843)Decrease/(increase) in trade and other receivables 1,515 (324)(Decrease)/increase in trade and other payables (823) 915Cash flows from operations before income taxes and interest paid 23,107 34,009Income tax paid (3,276) (7,117)Finance costs paid (1,906) (1,429)Cash flows from operating activities 17,925 25,463 Cash flows from investing activitiesLoans repaid/(issued) 785 (153)Acquisition of intangible assets (198) (110)Acquisition of property, plant and equipment (17,795) (13,370)Proceeds from disposal of property, plant and equipment 613 251Cash of PhosInt Trading Ltd and PhosAgro Asia Pte Ltd acquired 1,143 -Cash paid for CJSC "Nordic Rus Holding" (1,680) -Proceeds from disposal of CJSC "Pikalevskaya soda" and part of manufacturingfacilities within LLC "Metachem" 633 -Cash from disposal of investments 107 648Acquisition of investments in associates - (987)Consolidation of LLC "Metachem" - 84Additional equity contribution in associates - (511)Finance income received 911 1,579Cash flows used in investing activities (15,481) (12,569) Cash flows from financing activitiesProceeds from issuance of additional shares 6,407 -Proceeds from borrowings 47,559 21,375Repayment of borrowings (36,979) (15,941)Acquisition of non-controlling interests (11,674) (12,047)Dividends paid to non-controlling interests (2) (364)Dividends paid to shareholders of the Parent (7,511) (11,890)Finance leases paid (1,465) (1,169)Cash flows used in financing activities (3,665) (20,036)Net decrease in cash and cash equivalents (1,221) (7,142)Cash and cash equivalents at 1 January 9,664 16,946Effect of changes in exchange rates 495 (140)Cash and cash equivalents at 31 December 8,938 9,664