Chairman Letter

03

Dear Shareholders,

Sven Ombudstvedt, Chairman of the Board of Directors, OJSC PhosAgroI am pleased to present PhosAgro’s first Annual Report, to have the opportunity to reflect on the progress made by our Company in 2011 and to share my thoughts as to future development.

2011 was without doubt a good year for PhosAgro, despite some difficult macroeconomic conditions in the second half of the year. I am delighted to report that we maintained strong growth, with consolidated revenues increasing by 31% over the previous year to RUB 100.5 billion, and EBITDA increasing by 73% year-on-year to RUB 35.4 billion.

It was a long-held ambition of the Company to be listed on an international stock exchange, and we are delighted that our IPO in London was successful. The listing was the culmination of much effort and enthusiasm from many people in the Company, and I am most grateful to them. I also wish to express my appreciation to those who invested into our Company, and who are now our shareholders. We are grateful for your belief in PhosAgro, and all of us in the Company are committed to providing the best possible investment returns for you. We are also determined that we will be diligent and open in our relations with you.

Our admission to the LSE also provided the stimulus to further strengthen corporate governance within the Company. We have three independent directors on our Board of Directors, including myself as Chairman. I believe that our Board now comprises a group of people with the necessary skills and experience, not only with regard to operational and technical matters, but also to ensure that the Company is managed in accordance with internationally recognised principles of good governance.

PhosAgro also made great strides in the development of new products and in modernising our production facilities in 2011, and maintained a proactive focus on health and safety for our employees — all of which contributed to a year where progress was not just measured in commercial success, but also in our Company becoming a better, safer and more socially responsible place to work.

It is indeed our employees on whom we most depend for PhosAgro’s success, and on behalf of the Board I wish to thank them for their hard work and loyalty. Many thousands of people work to extract the raw materials, process them into our products, and transport those products year-round to our customers.Others play vital roles in managing this complicated process or selling our products. We take very seriously our obligation to reward them fairly, recognise their achievements, provide training, and to make every possible effort to keep them healthy and safe.

Looking forward, PhosAgro is ambitious to grow further. At the same time we have a realistic, considered approach to developing our business, which is underpinned by the global requirement to increase crop yields from agricultural land. We are very strong in Russia, and our near term plan is to consolidate and develop our positions in the domestic market, where we are confident there is considerable further potential. We will continue to play to our strengths, particularly our vertical integration, which achieves economies of supply, processing and distribution. We are already present in the most important international markets, and we expect to increase our focus on this area in the medium to long term.

PhosAgro has reached a very exciting stage in its development. The Company has grown quickly on the basis of sound long-term fundamentals, including our unique resource base, comprehensive industry knowledge and thorough management of the process from resource extraction to product delivery. We are proud to be a public company with a firm commitment to good corporate governance and ethical and transparent business. I believe that we are well positioned for further growth and the delivery of good investment returns.





Sven Ombudstvedt

Chairman of the Board of Directors, 
OJSC PhosAgro