INVESTOR PRESENTATION JUNE 2019
DISCLAIMER THIS PRESENTATION IS FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND SHOULD NOT BE TREATED AS GIVING INVESTMENT ADVICE AND MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THIS PRESENTATION IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN. This Presentation has been prepared by JSC Acron (“Company”) . Information contained in this document is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities of the Company in Russia, and does not constitute an advertisement of the securities and must not be passed on to third parties or otherwise be made publicly available. This information is being provided to you solely for your information on the basis that you will keep confidential any information contained herein or otherwise made available. This information may not be reproduced, retransmitted, further distributed to any other person (excluding an investment professional’s advisers) or published, in whole or in part, for any purpose. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its shareholders, directors, officers, employees, agents or advisers or any other person as to, nor may any reliance be placed upon, the accuracy, completeness or fairness of the information or opinions contained in this presentation. By accepting this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company’s business. This publication constitutes neither an offer to sell nor an invitation to buy securities, nor does it constitute an inducement to engage in investment activity. To the extent this presentation contains forward-looking statements, including, without limitation, statements containing the words “projected”, “planned”, “expected” and similar expressions (including the negative of such expressions, these statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, no undue reliance should be placed on such forward-looking statements should be placed. Neither the Company nor any of its shareholders, directors, officers, employees, agents or advisers nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. These forward-looking statements speak only as of the date of this document and the Company and its shareholders, directors, officers, employees, agents or advisers disclaim any obligation to update any such forward-looking statements in this document to reflect future events or developments. The distribution of this document in the Russian Federation and in overseas jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of any such jurisdiction. In particular, this document should not be distributed, published or reproduced in whole or in part in or into the United States (in particular to any US Person (as defined in regulation S promulgated under the US Securities Act), Canada, Japan or Australia or to any residents, corporations, citizens or nationals of any such jurisdictions or in any other country where such distribution may lead to a breach of any law or regulatory requirement. Distribution of this document in the United States in the absence of such an applicable exemption may constitute a violation of United States securities law. The information contained in this document is not an offer of securities for sale or a solicitation of an offer to purchase securities in the United States. The Company’s shares will have not been nor will they be registered under the US Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered within the United States or to US persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. 2
RECENT DEVELOPMENTS • In March and May 2019, Acron Group launched two new nitric acid units, 135 ktpa each. • On 11 March 2019, Acron’s EGM approved distribution of dividends in the amount of RUB 130 per share. The record date for persons entitled to dividends is 22 March 2019. • On 30 May 2019, Acron’s AGM approved distribution of dividends in the amount of RUB 135 per share. The record date for persons entitled to dividends is 11 June 2019. • In May 2019, Acron Group extended for two years the 5-year syndicated structured pre-export finance facility of up to USD 750 mn, which was originally signed with a group of banks in May 2017. The grace period was prolonged from two to four years. • Acron Group released its 1Q 2019 IFRS results. EBITDA was up 13% YoY to USD 158 mn, while EBITDA margin was 35%. Net debt/ EBITDA was 1.7 as of the quarter-end. • Acron Group executed a special investment contract for the Talitsky potash mine and signed with a number of banks a preliminary term sheet for the project financing. 3
SPECIAL SITUATION How does a weaker rouble impact the company’s financials? Total cash costs structure, Revenue structure, EBITDA gain in 2019 2018 2018 if exchange rate depreciates for RUB 1 25 USD mn per RUB 1 of rate Russia FX 20 18% 29% 15 10 5 Export Rouble 82% 71% 0 50 55 60 65 70 75 80 USD/RUB Note: company estimates 4
CONTENTS Acron at a glance • 5 Market overview • 8 Company overview • 12 Development programme • 20 Financial standing • 26 Appendices • 30 5
COMPANY PROFILE OUR KEY PRODUCT USD mn 14/06/19 MCap 2,862 Free-float 11% ACRON GROUP P Net debt* 1,044 N Stake in ATT 213 • Leading low-cost producer of NPK and nitrogen Assets* 3,050 K fertilisers * As of 31 March 2019 • In Top 3 NPK producers in Europe and in Top 10 globally NPK complex • Vertical integration in nitrogen and phosphates fertiliser COMMERCIAL OUTPUT Potash project underway mn t 8 • Developed logistics and distribution FINANCIAL RESULTS 7 Sales to >60 countries 6 USD mn 2016 2017 2018 5 • Listed on MOEX and LSE 4 Revenue 1,333 1,617 1,723 3 • 11,000 employees 2 EBITDA 445 511 591 1 margin 33% 32% 34% 0 Net profit 381 244 212 LFCF 89 91 221 Other Complex Nitrogen 6
INVESTMENT CASE GROWING BUSINESS • Sustainable increase in demand for mineral fertilisers (page 9) • Efficient management with a proven track record of successful projects (page 21) • 5-year average EBITDA margin of 35% (page 27) • Cost control based on nitrogen and phosphate vertical integration and capped gas prices in Russia (page 18) • Output growth at a 5-year CAGR of 7.4% (page 21) • Further output growth due to smart investment programme (page 22) DIVIDENDS • 5-year average dividend yield of 8.7% (page 29) • ~ $200 mn paid yearly as dividends in 2016 - 2018 (page 29) 7
CONTENTS Acron at a glance • 5 Market overview • 8 Company overview • 12 Development programme • 20 Financial standing • 26 Appendices • 30 8
MINERAL FERTILISER MARKET DRIVERS Living standards in developing countries The world population keeps growing. The bio-fuel industry keeps growing. keep improving, leading to increase in meat consumption. 200 10 bn l bn Biodiesel Ethanol 36 kg per 8 160 Now: 7.6 bn capita 35 6 34 120 4 33 CAGR (2015-25): 1.0% CAGR (2017-27): 0.30% CAGR (2017-27): 0.8% 80 2 32 40 31 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 30 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 Source: OECD-FAO, July 2018 Source: United Nations Population Division, 2017 Source: OECD-FAO, July 2018 As a consequence, demand for As a result, demand for crops as a As a result, demand for feed crops is agricultural products increases. feedstock strengthens. going up. Agricultural production expands while the area of farming lands Mineral fertiliser consumption expands every year. stays relatively stable. mn t* N (CAGR 2017-2022: 1.1%) 3200 2000 mn t mn ha 200 P (CAGR 2017-2022: 1.3%) K (CAGR 2017-2022: 1.9%) 2400 1500 150 CAGR (2017-27) 1600 cereals: 1.1% 1000 100 agricultural land: 0.18% 800 500 50 CAGR (2017-22): 1.3% 0 0 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2022 Wheat Coarse grains Rice Agricultural land* (rhs) * arable land and land under permanent crops * in terms of nutrient Source: OECD-FAO, July 2018 Source: IFA, June 2018 9 Farmers have to take additional measures to get higher yields.
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