TOGLIATTIAZOT ANNOUNCES 2016 FINANCIAL RESULTS

OJSC Togliattiazot announces its financial results for 2016 under RAS.

The company's revenues for the year amounted to 44.3 billion rubles, decreasing by 18.9 billion rubles year-on-year (down 30%). Revenue decrease is consequent to the global falling of market prices in 2016 for ammonia and urea - the company’s key products - resulting in reduction of the average sale price. Year revenues declined while total sales volume did not vary significantly y-o-y, amounting to 3.2 mln tons in 2016.

Costs rose by 1 billion rubles (up 3%) y-o-y to 37 billion rubles driven by a 20% surge in selling expenses due to the increased costs of products shipment. Cost of goods sold and administrative expenses declined by 4% and 1% respectively y-o-y.

Net income amounted to 1.3 billion rubles in 2016, down by 20.4 billion rubles as compared with 2015.

Key figures:

Key events of 2016

The most important events of 2016 are connected with the ongoing implementation of the strategic investment program designed for modernization and development of JSC Togliattiazot's production capacity. The volume of investment in the accounting period amounted to 6.2 billion rubles. Over 25 billion rubles has been invested within the modernization program since 2012.

Key investment projects completed in 2016:

• major repairs of the water disposal system (Phase I);

• general overhaul of ammonia plant No.4;

• major repairs of ammonia plant No.3;

• modernization of the company's own railway infrastructure (Phase I);

• general overhaul of urea plant No.2;

• general overhaul of ammonia plant No.2 (completed in 2017);

• start of works on major overhaul of ammonia plant No.5 (completion expected in 2017).

Work on major investment projects continued in 2016:

• construction of the third urea plant (public hearings conducted, work on project documents in progress);

• upgrade of waste treatment facilities;

• construction of ammonia and urea transshipment complex in the Taman Seaport, Krasnodar Region, resumed; adjustment of project documents in progress;

Another important event for OJSC Togliattiazot was the Ukraine's Higher Administrative Court decision in November 2016, which cancelled the surcharge of more than $8 to the tariff for transit of 1 ton of ammonia via the territory of Ukraine, which had been in force in respect of the company's products for more than a year. ToAZ expects this decision to have a positive effect on the company’s financial performance in the long term.

Tax and social contributions

Despite the financial difficulties, in 2016 Togliattiazot continued committed to all its tax and social liabilities.

During the accounting period the company paid 4.2 billion rubles in taxes into budgets of all levels. The corporation retained its status as one of the Samara region’s largest taxpayers and the key enterprise contributing to the Togliatti Urban Okrug budget. Significant growth was registered in the taxes to the local budget (745 million rubles, by 58% more than in 2015) and non-budget funds (929 million rubles, up by 9% vs. 2015).

ToAZ remained committed to its policy of providing solid social guarantees for the company's employees. In 2016 the average wage in the company was more than 41.7 thousand rubles or 30% higher of an average wage in Togliatti. In the accounting period the Togliattiazot's management adopted a decision to pay 100% of the cost of voluntary health insurance certificates for all ToAZ employees at the company's expense, thus providing another welcome addition to the social package. Togliattiazot will continue the systematic work aimed at maintaining and improving the working environment at the plant.

Commenting on the results of the year, CEO of CJSC Corporation Togliattiazot Vyacheslav Suslov pointed out: "Last year the employees of Togliattiazot had to face serious challenges which required active work to increase efficiency. I think we have successfully met those challenges: despite the significant decrease in the key financials, ToAZ moved forward with modernization program with confidence that these steps will enable us to overcome the decline in the market and prepare for the growth phase.

Changes in legislation also required us to take measures of reorganizing certain ToAZ units. Nevertheless we remain committed to the social agenda and will continue to ensure benefits to all our employees.

We are entering the period of implementation of significant investment projects, which will reinforce our position among Russian and world leaders of the chemical market."