• Revenue increased to US $1,292 million, compared to US $1,261 million in H1 2012.
• Operating profit amounted to US $394 million, compared with US $410 million in H1 2012.
• Adjusted EBITDA comprised US $452 million, compared to US $462 million in H1 2012.
• Net profit amounted to US $253 million, compared with US $444 million in H1 2012*.

Moscow, Russia – 19 August 2013. URALCHEM HOLDING P.L.C. (hereinafter URALCHEM Holding or the Company), a Cypriot holding company of the URALCHEM Group (hereinafter the Group), one of the largest producers of nitrogen and phosphate fertilizers in Russia, announced its unaudited IFRS financial results for the first six months of 2013.

The Group’s Key Financial Figures for the first six months of 2013 and 2012 (US $ million)

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* The decline in net profit was due to the revaluation of the Company’s share in Perm Mineral Fertilizers carried out in 2012.

Dmitry Konyaev, CEO of URALCHEM, OJSC (the Russian holding company of the Group), commented on the Company’s results in the first half of 2013, “The overall global market situation has been less favourable for fertilizer producers in 2013 compared to last year. This trend is very likely to continue in the second half of this year. Along with the continuing rise in the cost of raw materials, this situation creates conditions for the further decline in the financial
performance of the leading manufacturers of mineral fertilizers. Thanks to its strategy, URALCHEM is continuing to hold a leading position in a number of financial and operational indicators. In the first half of 2013, URALCHEM maintained its sales volume at the level of the first half of 2012 and increased revenues by 2%. In addition, as a result of early repayment of loans to the amount of US $300 million we were able to reduce the Company's debt to a record low of US $787 million, as well as to withdraw from collateral all of the Group’s property. Net debt currently amounts to US $676 million”.

Financial Results

Revenue for the first six months of 2013 grew to US $1,292 million, compared to US $1,261 million last year. Operating profit amounted to US $394 million, or 31% of the revenue, compared with the operating profit of US $410 million, or 32% of the revenue, in the first half of 2012. Net profit amounted to US $253 million, compared to US $444 million in the first six months of 2012.

During the first half of 2013, adjusted EBITDA reached US $452 million, compared to US $462 million in the first half of the year before, a decrease by 2%. The adjusted EBITDA margin for the first six months of 2013 comprised 35% of revenue compared with 37% of revenue for the same period in 2012.

The main difference in the dynamics of the net profit compared to the other results is due to the fact that the results in 2012 included the revaluation of the Company’s share in Perm Mineral Fertilizers

Markets

During the first half of the year, the price of ammonia was declining. The main factor determining the price dynamics was the lack of demand in the agricultural and the industrial segments. Lower demand in the agricultural segment was due to the late start of the sowing season in the Northern Hemisphere. Lack of demand in the industrial segment was caused by reduced production of phosphate fertilizers in North Africa and India.

Urea prices showed significant growth in the beginning of the year due to active procurement in Europe and North America, which coincided with a limited supply of product from Egypt, forcing buyers to look for alternative sources. However, from mid-February to the end of June prices have been decreasing, mainly due to lack of demand. In Europe and the US slowdown in demand was attributed to the late start of the sowing season. Latin American importers were putting off purchases, monitoring the changes in the situation. Additional pressure on prices was created by the accumulation of large stocks of products at Chinese ports, in anticipation of the period of low export duties, which began on 1 July.

During January and February there was a steady growth of quotations for ammonium nitrate. In mid-March, due to the pressure from urea prices, the trend changed. By mid-May, prices for ammonium nitrate decreased by $100/t, compared with the maximum prices registered in the middle of the first quarter. At the end of May, prices stabilized with repair works carried out at that time at CIS plants being one of the factors that contributed to this stabilization. By the end of the second quarter, prices in the CIS were supported by the industrial segment.

Until the middle of the first quarter, global decline in prices for phosphate fertilizers continued due to the lack of current demand. The decrease of production by major suppliers together with increased demand in Latin America stabilized prices. At the same time, Latin America remained the single largest source of demand. Indian buyers refrained from transactions. Since the beginning of the second quarter the decline was caused by the reduction of subsidies in India, the delays of purchases in the US domestic market due to the weather conditions, devaluation of currencies of major importing countries, such as Brazil and India, and policy of procurements to the current needs adopted by importers in other regions lead to oversupply in market and decrease in prices.

Production and sales

Volume of production by the Group’s plants increased by 1%, sales of commercial products of the Group remained virtually unchanged.

Comparative production figures of the URALCHEM Group for the six months of 2013-2012 (tonnes):

Comparative sales figures of the URALCHEM Group for the six months of 2013-2012 (tonnes):

Financial Situation

Cash generated from operating activities in the first half of 2013 amounted to US $320 million, compared to US $342 million in the same period of 2012.

As at 30 June 2013, the Company’s net debt amounted to US $676 million. The weighted average interest rate of the loan portfolio in the first six months of 2013 equalled 4.7% annually compared to 5.2% annually during the same period in 2012.

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Annex to the press release about the unaudited financial results for the first half of 2013

EBITDA is a profit / loss from financial and economic activities during the reporting period, before deduction of income tax on profits, income and interest costs, depreciation and amortization. "Adjusted EBITDA" is EBITDA for the reporting period before goodwill, profit / loss from associates, profit / loss on foreign exchange differences arising on financial performance and profit / loss on operations with derivative financial instruments. Adjusted EBITDA is operating profit before depreciation and amortization and financial results of operations with derivative financial instruments. In accordance with International Financial Reporting Standards ("IFRS"), depreciation and amortization are included in cost structure, and in the selling, general and administrative expenses. IFRS does not require the disclosure and does not describe the calculation of EBITDA and adjusted EBITDA, among other financial indicators, so they can not substitute for net profit for the period when evaluating the results of operations or the measure of cash provided by operating activities when evaluating liquidity. Approach to the calculation of EBITDA and adjusted EBITDA, as described earlier, may not coincide with the approaches used by other companies, therefore, comparability may be limited. We believe that EBITDA and adjusted EBITDA provide useful information to investors because they are indicators of the stability and efficiency of our business and our ability to fund discretionary spending such as capital expenditures, the acquisition of subsidiaries and other investments, as well as indicators of our ability to incur and service debt. IFRS classifies depreciation and amortization to operating costs, while in fact they are distributed to the current period non-cash expenses for the acquisition or creation of fixed assets, incurred in previous periods, and are not affiliated with the movement of funds.

Calculation of EBITDA for the first six months of 2013 and for the first six months of 2012 (Thousands of US dollars)