Yara International ASA – 19.01.2015
Registration Document
Registration Document
Yara International ASA
19.01 2015
Prepared according to Commission Regulation (EC) No 809/2004 - Annex IV
Yara International ASA – 19.01.2015
Registration Document Important notice
The Registration Document is based on sources such as annual reports and publicly available information and forward looking information based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the Company's (including subsidiaries and affiliates) lines of business.
A prospective investor should consider carefully the factors set forth in chapter 1 Risk factors, and elsewhere in the Prospectus, and should consult his or her own expert advisers as to the suitability of an investment in the bonds.
The Joint Lead Managers and/or affiliated companies and/or officers, directors and employees may be a market maker or hold a position in any instrument or related instrument discussed in this Registration Document, and may perform or seek to perform financial advisory or banking services related to such instruments. The Joint Lead Managers’ corporate finance department may act as manager or co-manager for this Issuer in private and/or public placement and/or resale not publicly available or commonly known.
Copies of this Registration Document are not being mailed or otherwise distributed or sent in or into or made available in the United States other than on the Issuer’s web page. Persons receiving this document (including custodians, nominees and trustees) must not distribute or send such documents or any related documents in or into the United States.
Other than in compliance with applicable United States securities laws, no solicitations are being made or will be made, directly or indirectly, in the United States. Securities will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The distribution of the Registration Document may be limited by law also in other jurisdictions, for example in Canada, Japan and in the United Kingdom. The Prospectus has been reviewed and approved by the Norwegian FSA in accordance with sections 7-7 and 7-8, cf. section 7-3 of the Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information given in this Prospectus. The approval given by the Norwegian FSA only relates to the Issuer's descriptions pursuant to a pre-defined check list of requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or otherwise covered by this Prospectus.
The Registration Document together with a Securities Note constitutes the Prospectus.
The content of the Prospectus does not constitute legal, financial or tax advice and potential investors should seek legal, financial and/or tax advice.
Unless otherwise stated, the Prospectus is subject to Norwegian law. In the event of any dispute regarding the Prospectus, Norwegian law will apply.
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Registration Document Table of Contents:
1. Risk factors ...... 4 2. Persons responsible ...... 7 3. Definitions ...... 8 4. Selected Financial Information ...... 10 5. Statutory auditors ...... 12 6. Information about the Issuer ...... 13 7. Business overview ...... 16 8. Administrative, management and supervisory bodies ...... 28 9. Major shareholders ...... 34 10. Financial information concerning the Issuer's assets and liabilities, financial position and profits and losses ...... 35 11. Documents on display ...... 37 12. Third part information ...... 38 13. Cross reference list ...... 39
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Registration Document
1. Risk factors
Investing in bonds issued by Yara International ASA involves inherent risks.
As the Company is the parent company of the Group, (and primarily a holding company,) the risk factors for Yara are deemed to be equivalent for the purpose of this Registration Document.
Prospective investors should consider, among other things, the risk factors set out in the Prospectus, including those set out in both the Registration Document and the Securities Note(s), before making an investment decision. The risks and uncertainties described in the Prospectus are risks of which Yara is aware and that Yara considers to be material to its business. If any of these risks were to occur, Yara’s business, financial position, operating results or cash flows could be materially adversely affected, and Yara could be unable to pay interest, principal or other amounts on or in connection with the bonds. Prospective investors should also read the detailed information set out in the Registration Document dated 19.01.2015 and any accompanying Securities Note(s), and reach their own views prior to making any investment decision.
An investment in the bonds is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment.
Yara is exposed to a number of strategic, operational, financial, hazard and compliance risks that could have an adverse material effect on the Company’s business, reputation, operating results or financial condition. Several inherent business risks also represent business opportunities, underlining the need for systematic risk management of the operational and financial performance.
Strategic risks Yara’s business is closely interlinked with the major global challenges of resource scarcity, food insecurity and global warming. Execution of the Company’s strategy for sustainable, profitable growth depends on its ability to manage strategically important risk and opportunities relevant to Yara’s industry and arising from its business environment.
Fertilizer prices A large part of the Company’s business consists of sales of fertilizer products used in agriculture. While a growing world population, economic growth and changing dietary patterns are driving overall demand for food and fertilizer, swings in agricultural prices along with changes in global and regional fertilizer production capacity could significantly impact our profitability.
Raw materials Yara relies on third parties for a range of raw materials for fertilizer production, not least phosphate and potash. The Company is vulnerable to terminations, material change or failure of delivery in these arrangements. Potash operations are not vertically integrated, which represents a risk for the NPK business at times when potash prices are high.
Gas prices Due to natural gas being a key raw material in the production of nitrogen-based chemicals and fertilizer products, the pricing and availability of natural gas across regions is a strategic factor to Yara.
Climate change Climate change is affecting growers in most parts of the world, threatening farm productivity and profitability, and potentially leading to fluctuations in demand that could impact adversely on Yara.
Investments and integration Yara has an ambition to grow profitably, both organically and through step growth initiatives. The profitability of future growth initiatives relies on long-term price assumptions and future operational performance. Integration of new companies poses a risk of not being able to capture operational and financial synergies.
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Registration Document Operational risks Yara faces potential risk of loss from inadequate or failed internal processes, people and systems, or from external events. Also, production unreliability and irregularities may result in lost volumes and contribution. Increased plant reliability, however, is a key driver of organic growth in Yara’s production system.
Supply chain The Company faces internal and external risks, both upstream and downstream in the supply chain. Bottlenecks and inefficiencies in the planning, procurement, transport, handling or delivery of products may affect the Company’s ability to honor its commitments and could negatively impact its performance.
Price risk on inventory Yara operates in an industry with price cyclicality on finished products and raw materials. With increasing volumes this could impact negatively on the Company’s cost, particularly in times of high and volatile prices.
Human capital Yara’s ability to compete effectively and meet market demands depends heavily on the competence, experience and performance of its employees. Qualified, diverse and skilled staff is essential for Yara’s business to be successful.
Financial risks Due to its global operation Yara is exposed to various financial risks.
Financing risk Refinancing of maturing loans or establishment of new financing may be difficult or costly to arrange. Adverse financial market conditions could lead to higher funding costs and postponement of projects.
Credit risk Credit risk represents exposure to potential losses deriving from non-performance of counterparties.
Currency risk Prices of Yara’s most important products and raw materials are either directly denominated or determined in US dollars. In markets outside the USA, local prices will generally adjust to fluctuations in the US dollar exchange rate, with a certain time lag.
Interest rate risk Interest rates on different currencies vary dependent on the economy and political actions, which will influence Yara’s funding cost over time. However, the overall exposure of Yara’s business to interest rate fluctuations is considered low.
Hazard and compliance-related risks Yara is exposed to a range of risks driven by changing political and economic conditions in the countries, regions and markets where it operates. National or regional conflicts may impede operations. Terrorism has increasingly emerged as a potential threat also to industrial operations.
Political risk Yara’s investments and operations may be affected as a result of changes in political leadership, policies and regulations as well as political and social instability in a country or region. Such changes could represent threats for Yara.
Anti-corruption risk Yara has zero tolerance for corruption and unethical behavior of all employees, vendors, service providers, agents and other intermediaries; yet unacceptable incidents cannot be ruled out.
Ethics risk Failure, real or perceived, to abide by Yara’s ethical principles and comply with international standards e.g. on labor relations, human rights and environmental footprint, will have a damaging Page 5 of 39
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Registration Document effect on the Company’s brand and reputation. It can also negatively affect Yara’s relationship with current and future business partners, and both legal sanctions and financial loss can occur.
Legal compliance risk Operating a global business involves a risk of mistakes and failure to comply with all applicable local and international laws regulating our activities.
Personnel security risk The Company’s global activities may be exposed to national or regional conflicts and acts of terrorism, which could impede its operations and represent a threat to personnel security.
Natural disasters Yara’s production and logistics operations could be directly or indirectly affected by natural disasters.
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2. Persons responsible
PERSONS RESPONSIBLE FOR THE INFORMATION Persons responsible for the information given in the Registration Document are as follows:
Yara International ASA Drammensveien 131 0277 Oslo Norway
P.O. Box 343 Skøyen 0213 Oslo Norway
DECLARATION BY PERSONS RESPONSIBLE Yara International ASA confirms that, having taken all reasonable care to ensure that such is the case, the information contained in the Registration Document is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import.
19.01 2015
Yara International ASA
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Registration Document
3. Definitions
CCCs - Core Competency Communities
CROGI - Cash Return on Gross Investment (12 month rolling average)
CO2 - Carbon di oxide
Dry Ice - The solid form of carbon di oxide
EBIDTA - Earnings before Interest, Tax, Depreciation and Amortization
EU - The European Union
EVP - Excecutive Vice President
Galvani - Galvani Indústria, Comércio e Serviços S/A
GHG - Greenhouse Gas
Group/Yara - Yara International ASA with subsidiaries
IASB - International Accounting Standards Board
IFRS - International Financial Reporting Standards
Issuer / The Parent The Company/ Yara International - Yara International ASA reg.nr. 986 228 608 (Norway)
Joint Lead Managers - Danske Bank Markets, Bryggetorget 4, 0250 Oslo, Norway DNB Markets, Dronning Eufemias gate 30, 0021 Oslo, Norway Nordea markets, P.O.Box 1166 Sentrum, 0107 Oslo, Norway
JV - Joint Venture
MMBtu - Million Metric British thermal units
NGAAP - Norwegian General Accepted Accounting Practice
NOK - The official currency of Norway, the Norwegian Krone
Norsk Hydro - Norsk Hydro ASA, a Norwegian public limited company with reg.nr. 914 778 271 (Norway)
NOX - Nitrogen oxide
NPK - Fertilizer product that contains all of the three major plant nutrients, nitrogen, phosphorus and potassium.
OFD - OFD Holding Inc
Prospectus - This Registration Document together with the Securities Note and any applicable summary, if any
R&D - Research and development
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Registration Document Registration Document - This document dated 19.01 2015
ROCE - Return on Capital Employed (12 month rolling average)
S&T - Supply and trade
Securities Note - Document to be prepared for each new issue of bonds under the Prospectus
SEK - The official currency of Sweden, the Swedish Krone
SOx - Sulphur oxides
Supplement to the Registration Document - Any supplements that are or will be made to this Registration Document
TAN - Technical ammonium nitrate
The Code - the Norwegian Code of Practice for Corporate Governance
UAN - Urea Ammonium Nitrate
USA/US - The United Stated of America
USD/US dollar - The official currency of the United States, the American Dollar
YTD - Year to date
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Registration Document
4. Selected Financial Information
Annual reports Q3 reports YTD Q3 Consolidated (NOK millions) 2013 20122 2014 2013 2014 2013 Financial preformance Revenue and other income 85 052 84 509 24 095 20 613 69 113 64 519 Operating income 7 791 11 159 2 501 2 022 7 618 7 490 EBITDA 13 266 16 970 3 964 3 318 11 782 11 541 EBITDA excl. special items 13 713 16 850 4 002 3 223 12 016 11 474 Net income after non-controlling interests 5 748 10 552 1 707 1 571 5 765 5 695 Investments (net) 7 729 10 415 -1 860 -1 117 -5 212 2 841 Earnings per share (NOK) 20.63 37.31 6.18 5.66 20.84 20.40 Average number of shares outstanding (millions) 278.6 282.8 276.2 277.6 276.6 279.1 CROGI1 12.6% 17.3% 11.8% 14.6% 11.8% 14.6% ROCE1 12.4% 19.3% 11.1% 15.9% 11.1% 15.9%
Assets and liabilities Non current assets 56 459 48 719 58 703 53 910 58 703 53 910 Current assets 32 521 32 530 33 767 33 038 33 767 33 038 Total assets 88 980 81 249 92 470 86 948 92 470 86 948 Non current liabilities 13 444 17 144 14 419 17 032 14 419 17 032 Current liabilities 19 118 14 115 19 036 14 945 19 036 14 945 Total liabilities 32 562 31 259 33 455 31 977 33 455 31 977 Total equity 56 419 49 991 59 015 54 971 59 015 54 971 Total equity and liabilities 88 980 81 249 92 470 86 948 92 470 86 948
Environmental preformance GHG emissions (mill tons CO2 eq) 9.8 11.4 Energy use (petajoules) 263 258
Production/sales/fertilizer (thousand tons) Total production 26 009 24 555 6 763 6 668 19 447 19 387 Total sales 30 797 28 020 8 982 7 933 26 138 23 827 Total fertilizers 23 668 20 748 6 848 5 884 19 732 17 523
112-month rolling average 2Restated numbers
Annual reports Parent (NOK millions) 2013 20123 Financial performance Revenue and other income 981 831 Operating income -607 -248 EBITDA 13 266 16 970 Net income after non-controlling interests 5 748 10 552
Assets and liabilities Non-current assets 32 569 22 564 Current assets 13 862 27 705 Total assets 46 431 50 269 Non-current liabilities 4 399 7 637 Current liabilities 38 295 34 823 Total liabilities 42 694 42 460
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Registration Document Shareholders’ equity 3 737 7 808 Total equity and liabilities 46 431 50 269
3 Restated numbers
The third quarter reports are based upon the Group’s consolidated financial statements; there are therefore no listed 3Q or YTD-numbers for the Parent.
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Registration Document
5. Statutory auditors
The Issuer’s auditor for the period covered by the historical financial information in this Registration Document has been Deloitte AS.
Deloitte AS contact information: Dronning Eufemias gate 14, 0191 Oslo, Norway. Post address: P.O. Box 221 Sentrum, 0103 Oslo, Norway. Phone: +47 23 27 90 00 Fax: +47 23 27 90 01
Deloitte AS is a member of the Norwegian Institute of Certified Public Accountants.
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6. Information about the Issuer
Yara International ASA is a Norwegian Limited Company incorporated on 10.11 2003 and regulated by the Norwegian Companies Act and supplementing Norwegian laws and regulations. The Company is registered in the Norwegian Companies Registry with registration number 986 228 608. The legal name of the Issuer is Yara International ASA, and the commercial name is Yara. The Issuer’s registered business address is Drammensveien 131, 0277 Oslo, Norway. Post address: P.O. Box 343 Skøyen, 0213 Oslo, Norway. Phone: +47 24 15 70 00. Fax: +47 24 15 70 01 Website: www.yara.com
Yara’s business involves agricultural development and industrial solutions. Yara is an international company, with production, sales and services, research and support operations in the Americas, Europe, Africa and Asia. Joint ventures have also taken the Company into new markets and its growth is ongoing. The parent company Yara International ASA is a holding company, with financial activities and non-material operations. For a full list of the Company’s subsidiaries please see the Company’s annual report 2013, note 33 (consolidated). Please see the cross reference list in chapter 13 of this Registration Document. Yara is dependent on its subsidiaries’ ability to create cash flows. As of November 2014 the Group had around 11 500 permanent employees.
According to §2 of the Company’s Articles of Association, the objectives of the Company are to engage in industry, commerce and transport, and to engage in other activities connected with these objectives. Activities may also proceed through participation in or in co-operation with other enterprises.
COMPANY STRUCTURE
HISTORY The Company’s development is rooted in that of Norwegian industrial firm Norsk Hydro, which dates back to 1905. That’s when industrialists Sam Eyde, Kristian Birkeland and Marcus Wallenberg tapped into Norway’s large hydro energy resources to produce the Company’s first important product: Mineral fertilizer, which attracted attention from all over the world since it enabled farmers to boost their yields. Page 13 of 39
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Decades later, after Norsk Hydro itself had expanded into a vast array of businesses from fertilizers to oil to metals, the division mostly devoted to agricultural products and co-products was spun off into its own stock listed entity. Yara International ASA debuted on the Oslo Stock Exchange in 2004.
In 2005 Yara celebrated its first century of accomplishments and set a clear ambition for the next to take the lead in shaping a more sustainable industry. Yara President and CEO at that time, Thorleif Enger, set a target of consolidating the company’s global leadership – and the goals of becoming the acknowledged driver of the fertilizer industry and a leading provider of industrial products for environmental protection and food care.
By 2005, Yara had more than just the hundred years of Norsk Hydro behind it. Key acquisitions like British Fisons, Swedish Supra and German Ruhr Stickstoff had contributed experience and heritage. Well-timed strategic investments and acquisitions had given Yara a global sales, production and logistics presence from the Americas to the Middle East, from Asia to Africa.
In October 2007, Yara completed its acquisition of Kemira GrowHow Oyj, one of the leading producers of fertilizers and feed phosphates in Europe, following overwhelming acceptance of its tender offer by Kemira GrowHow shareholders. Kemira GrowHow’s phosphate operations were recognized as complementing Yara’s nitrogen activities, serving as a solid platform in the global fertilizer industry. Further, Yara made a number of divestments in the first half of 2008, mainly to re-deploy funds to enhance its overall growth strategy. The divestments also complied with EU commitments regarding Yara’s acquisition of Kemira GrowHow Oyj.
In 2008 Yara entered into an agreement to acquire Canadian nitrogen producer Saskferco. Through this transaction, Yara acquired a world-class nitrogen manufacturing plant near Belle Plaine, Saskatchewan, in Canada and storage facilities in Saskatchewan and Manitoba. The acquisition provided a strong foundation for further growth through an efficient manufacturing facility located close to major gas production and with proximity to an important regional agricultural market for urea and UAN.
In 2010 Yara advanced its engagement in the African region, launching investment opportunities in the agricultural growth corridors at the World Economic Forum (WEF). Good soil, ample freshwater supplies, basic infrastructure availability and favorable climate conditions are among the key components to a potential growth corridor. Public-private partnerships, also including the international donor community, are instrumental to success. The public sector investments into basic infrastructure are the basis for a virtuous circle, creating an enabling environment for private- sector investments to increase productivity along the value chain. Apart from creating the concept, Yara plays a catalyst role, attracting partners and supplying its knowledge.
In October 2011, Yara signed an agreement with PetroKraft AB to acquire Petro Miljö, the Swedish world-leader in Selective Non Catalytic Reduction (SNCR), a technology for reducing nitrogen oxides (NOx) emissions from industrial plants. The acquisition allowed Yara to enhance the quality and delivery of its NOx abatement solutions under the NOxCare brand to a wider range of global customers.
Within the Grow Africa (GA) framework, Yara in 2012 entered Letters of Intent with the governments of Burkina Faso, Ethiopia, Ghana and Tanzania, committing to invest in agricultural development. The GA interacted with the G8 on establishing the New Alliance for Food Security and Nutrition, where 49 companies – including Yara – committed more than USD 3 billion in investments in African agriculture.
Yara has been present in the Brazilian market since 1977, and we made our first investments in local production capacity in 2000. In 2013 we improved our position in this agricultural growth market by acquiring Bunge’s 22 blending units and two SSP (Single Super Phosphate) plants. The acquisition was closed in August 2013 following approval by Brazilian authorities.
Yara also continued its strategic expansion in Latin America by entering into an agreement in December 2013 to acquire OFD Holdings Inc. (OFD) from Omimex Resources Inc. Enterprise value was USD 377 million. The closing on this agreement took place in October 2014 Furthermore, in early December 2014 Yara announced the acquisition of 60% of the shares in Galvani Indústria, Comércio e Serviços S/A ("Galvani"). The enterprise value is USD 318 million for Page 14 of 39
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Registration Document 60% of Galvani. This comprises USD 132 million for the existing business and USD 186 million for the mining/production projects. Payment for the mining/production projects requires that certain project-related conditions are met. There will also be a post-closing adjustment of the working capital.
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7. Business overview
GENERAL Yara’s business Agriculture development Yara offers the most comprehensive range1 of fertilizers in the industry The portfolio ranges from single nutrient fertilizers to complex compounds and micronutrients for feeding plants Global leading producer of ammonia, nitrates, NPK, and specialty fertilizers2 Industrial solutions Yara’s portfolio contains products and integrated solutions for optimizing industrial processes, water treatment and preventing air pollution, including NOX abatement solutions for industrial plants, vehicles and vessels
Expertise in CO2, Dry Ice and solutions for the civil explosives and mining industries European leading position in nitrogen applications3
Yara delivers solutions for sustainable agriculture and the environment. Yara’s fertilizers and crop nutrition programs help produce the food required for the growing world population. Yara’s industrial products and solutions reduce emissions, improve air quality and support safe and efficient operations.
Yara converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers. The main application is fertilizers, while industrial uses and environmental solutions are also important growth segments.
Yara’s global activities range from phosphate mining and ammonia production, through commodity trade and energy arbitrage, to building local market knowledge and developing customer relationships. The backbone of the Group’s operations was large-scale ammonia and fertilizer production in Europe, but in recent years new capacity has been added in regions with low-cost gas supplies.
Yara ensures reliable supplies of mineral fertilizer and related industrial products to customers worldwide. The Group benefits from its scale advantages, as the world’s largest producer of ammonia, nitrate and complex fertilizer1, and with about 20% of global ammonia trade4.
Yara’s local sales and marketing units provide customer services and agronomical support, working with farmers worldwide to increase yields and improve crop quality and nutritional value.
Yara utilizes its strong production platform and global supply system to create local benefits, providing customers with the combination of quality products and expert knowledge that best matches their needs
1 Source: Yara, annual report 2013 page 48: http://yara.com/doc/133565_Yara_AR_Eng_2013.pdf 2 Source: Yara, investor presentation: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf 3 Fertilizer Europe; http://fertilizerseurope.com/index.php?eID=tx_nawsecuredl&u=0&g=0&t=1418807697&hash=dd10aa73145d24557a78eda484 0b02d27a52f261&file=fileadmin/user_upload/publications/communications/2013_AO_Fertilizers_Europe-VF.pdf 4 Source: ICIS, Yara, investor presentation: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf
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Registration Document Business model
VISION AND STRATEGY Yara’s vision Yara’s vision is to be an Industry Shaper, aiming to set industry standards and be a positive force, developing the industry through performance and growth. The Company’s mission is to strive for better yield, delivering good returns for farmers, industrial customers, our owners and society at large.
Yara is committed to fostering an inspiring and innovative performance culture, based on its vision and mission, code of conduct, ethics program, and four core values: ambition, teamwork, trust, accountability.
Yara’s strategy Yara’s corporate strategy is based on profitable and sustainable growth, building on an unrivaled market position and a unique, flexible business model united with global corporate citizenship. The strategy is Yara’s roadmap for industry shaper performance and long-term value creation.
With the current business platform, Yara’s goal is to increase its own-produced and JV sales volumes by 8 million tons from 2010 to 2016, which is about a 40% increase. Reaching this objective will require productivity gains in the existing business as well as organic and step growth initiatives, seeking new business opportunities.
Yara will focus on growing within nitrogen-based fertilizers; nitrogen for industrial applications; and sourcing of phosphate and potash to cover Yara’s needs in NPK production. Larger initiatives will focus on increasing production in regions with stable supplies of competitively priced natural gas for ammonia production; phosphate and potash resources; expanding presence in high-growth markets; and participating in consolidation in mature markets.
For all growth categories, scale, synergy and timing are important factors, along with strict financial discipline.
Creating Impact Yara has chosen Creating Impact as its strategic ambition and approach, aiming at improving its competitive edge through creating value both for shareholders, stakeholders and society at large. Yara is a global company and as the world’s largest producer5 of mineral fertilizer, the Company has the ambition, ability and determination to contribute sustainable solutions to some of the major global challenges of its time, particularly resource scarcity, food security, and global warming. With Yara’s knowledge and solutions it is well positioned to create impact within these
5 Source: Yara, investor presentation: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf
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Registration Document areas. Consequently, Yara has identified three focal areas as its main avenues to create profound impact: resources, food, and the environment.
Responding to these challenging global issues corresponds closely with Yara’s core business, its operations and offerings – and its business strategy. By leveraging Yara’s industrial expertise it has innovated technologies and upgraded its production processes, thereby greatly reducing greenhouse gas (GHG) and other emissions to air.
By employing the Company’s agronomic experience Yara has developed comprehensive crop nutrition solutions that improve agricultural productivity, thereby increasing production and improving food security while reducing pressure to convert forests and wetlands into farmland – a main source of GHG emissions.
At the same time Yara has developed solutions that improve resource use efficiency, in particular by reducing the amount of fertilizers and water needed to sustain productivity and profitability. Thus, Yara contribute to a more sustainable agriculture, while sustaining profitability for itself and its customers.
The Company has institutionalized Creating Impact as its fundamental way of thinking and a key strategic ambition. Creating Impact provides direction in pursuing strategic goals and delivering on the Company’s mission of better yield. Serving as the platform for aligning business operations with mounting global challenges, Creating Impact generates value for shareholders and customers – as well as for society at large.
By adopting a long-term perspective, Yara engages in global processes and drive innovation programs to identify solutions, develop competitive business models and seize emerging business opportunities arising from global challenges relevant to its operation. Yara is able to strengthen its competitive edge in a sustainable manner, supporting Climate-Smart Agriculture6 and green growth.
Leadership Agenda Yara’s Leadership Agenda supports its strategic ambitions. It concentrates on five areas the Company needs to focus on in order to realize its Industry Shaper vision:
• To continuously drive profitable growth • To be a leading enterprise in global agricultural development • To drive strong performance and positioning on environmental solutions • To perfect operations throughout the organization • To ensure a company-wide focus on best practice corporate governance
Underlying the agenda is the drive to consistently explore new business opportunities. Such opportunities arise from global developments as well as Yara’s knowledge base and market- oriented research and development activities.
PRINCIPAL ACTIVITY Yara operates through three operating segments Upstream, Downstream and Industrial. Each segment is managed as a separate and strategic unit, with Supply & Trade responsible for global optimization. Segment management is located in Oslo, Norway.
Upstream Upstream is the operational segment responsible for large-scale production of nitrogen-based products, as well as phosphoric acid and feed phosphates.
6 Climate-smart agriculture (CSA) is an integrative approach to address these interlinked challenges of food security and climate change, that explicitly aims for three objectives: (1) sustainably increasing agricultural productivity, to support equitable increases in farm incomes, food security and development; (2) adapting and building resilience of agricultural and food security systems to climate change at multiple levels; and (3) reducing greenhouse gas emissions from agriculture (including crops, livestock and fisheries). CSA invites to consider these three objectives together at different scales - from farm to landscape – at different levels - from local to global - and over short and long time horizons, taking into account national and local specifcities and priorities.
Defined by the Food and Agriculture Organization of the United Nations (FAO) http://www.fao.org/3/a-i4064e.pdf
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Registration Document Upstream is the backbone of Yara’s manufacturing base. It operates 15 ammonia plants and a number of production units for urea, nitric acid, nitrates, NPKs and phosphate, providing the foundation for Yara’s fertilizer and industrial solutions.
Upstream is the world’s largest producer of ammonia, nitrates and NPKs7. It combines cost-efficient raw material sourcing with strong operational efficiency, industrial expertise, clean production technologies and safety to provide competitiveness.
Downstream Downstream is the operational segment responsible for Yara’s global fertilizer distribution, marketing and sales organization, as well as innovation processes.
Downstream plays a crucial role in providing Yara its global presence, with sales offices in about 50 countries and sales to over 150. It offers the industry’s most comprehensive product portfolio8, and has a strong position in specialty fertilizers.
Downstream creates competitive edge for Yara, chiefly by its unrivaled presence and strong position. With Yara’s unique agronomic expertise, Downstream tailors nutrition concepts to specific crops, achieving competitiveness – and a knowledge margin.
The product offering covers both commodity and high-value crop segments, where Downstream offers differentiated fertilizer products and services. The segment offers the fertilizer industry’s most comprehensive8 product portfolio, ranging from standard nitrogen products to complete crop nutrition solutions.
7 Source: Yara, investor presentation: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf Upstream is the division of Yara responsible for production, hence Upstream is the largest producer. 8 Source: Yara, annual report 2013 page 48: http://yara.com/doc/133565_Yara_AR_Eng_2013.pdf
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Registration Document Industrial Industrial offers a range of products and solutions related to emissions abatement, waste water treatment, process chemicals and CO2.
Industrial creates value over and above commodity nitrogen-based chemicals by developing solutions and applications for non-agricultural industries. It has a leading position in nitrogen applications, based on a Total Service Provider approach.
Industrial leverages Yara’s global distribution network to offer reliable deliveries of safe and cost- efficient solutions worldwide. The growing portfolio of environmental solutions caters to customer needs to meet tougher environmental legislation.
The Industrial product portfolio includes nitrogen-based chemicals, both for end-user application and as raw materials for numerous industrial applications. Industrial has a growing portfolio of environmental applications for emissions abatement in transport, power generation, water utility and other sectors.
Supply & Trade Supply & Trade is a global function responsible for the sourcing of key raw materials and traded products, realizing Yara’s scale advantages, reinforcing its flexibility. This includes global planning and optimization of finished products, global supply chain procurement, supply chain governance & processes, supply chain regions and mining.
Supply & Trade plays a key role in serving the operating segments with vital input factors, in particular energy and raw materials. S&T trades in ammonia, and is in charge of Yara’s mining operation.
Supply & Trade creates global competitive edge for Yara chiefly by securing cost-competitive raw materials and balanced third party sourcing.
Supply & Trade has a global network of suppliers, logistics expertise, deep sea terminals and large maritime ammonia storage capacity. Supply & Trade responds quickly to changing market conditions and helps to balance third party and own production. This adds to the capability to deliver competitive products worldwide.
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Registration Document
COMPETITIVE EDGE Yara has identified a sustainable competitive edge that constitutes the center-point of its strategy. The Company continuously works to strengthen its competitive edge through pursuing its strategic imperatives.
Operational Excellence Yara applies operational excellence throughout the Company, perfecting operations and tuning its business model as the platform for profitable growth. The Company aims for the highest level of reliability and productivity in its production assets, maximizing resource and raw material efficiency, and optimizing the supply chain, from sourcing to distribution. Safety is a top priority, and the Company works systematically to minimize environmental impacts from its operations. Yara’s operational excellence creates value by reducing loss and ensuring reliable deliveries of high quality products.
Knowledge Margin Yara’s accumulated knowledge margin within agronomy and industrial products is a key differentiator. Through innovation, agronomic knowledge and Yara’s product portfolio the Company offers the farmer optimal crop nutrition to increase yield and ensure sustainable application to the soil. The Company’s industrial portfolio includes technology and service concepts within environmental solutions that are continuously being developed – in response to global challenges, e.g., within NOx abatement applications.
Global Optimization and Scale Yara constantly pursues scale advantages as the world’s largest producer of nitrogen fertilizers, nitrate-based NPKs9, and through its significant position within industrial nitrogen applications. The Company also exploits opportunities for optimization arising from its presence in global markets; its extensive value chain involvement, intimate market knowledge and business intelligence. Taking advantage of its scale, the Company also profit from a sizeable global ammonia trade. Through its extensive logistics and distribution systems as well as the built-in flexibility of the business model, Yara creates value by increasing efficiency and reducing costs throughout the value chain. Yara continue to implement an improved supply chain process in order to further strengthen its competitive edge.
9 Source: Yara, investor presentation: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf
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Yara International ASA – 19.01.2015
Registration Document Competitive Raw Material Cost Yara is continually securing access to reliable and competitively priced supplies of raw materials, and it is able to benefit from scale advantages in its sourcing. Yara capitalize on favorable hub- based pricing in the spot market after switching a significant share of its European gas sourcing from oil-linked to hub-based contracts in recent years. As a major buyer of potash and phosphate, the Company also builds on its competitive edge in sourcing other key raw materials. Securing access to low cost raw materials remains an imperative in the Company’s growth strategy.
The combined competitive edge, executed through Yara’s strategic imperatives, is the key to creating value.
WHERE YARA OPERATES Yara is an international company, with production, sales and services, research and support operations in the Americas, Europe, Africa and Asia. Joint ventures have also taken the Company into new markets and its growth is ongoing.
As a global player, Yara has production on six continents, operations in 51 countries – and sales to about 150 countries.
RESEARCH AND DEVELOPMENT Yara has grown through a combination of scientific research and commercial daring that revolutionized modern agriculture. Yara’s current goal of becoming the "Industry Shaper" means the company needs to be at the forefront of developing new products and technology.
Yara employs its tradition of innovation to nurture a culture that encourages the search for improved methods and the development of new solutions – to explore and seize future growth opportunities, and to drive business development. In keeping with this, Yara develops and utilizes its comprehensive, combined industrial and agronomic knowledge base, which is considered a major asset, contributing to the company’s competitive edge.
To uphold Yara’s long-term growth perspective, R&D activities focus on sustainable agriculture and commercializing new environmental solutions. Yara runs three R&D centers, one located in Porsgrunn, Norway that includes the two Core Competency Communities (CCCs): Process R&D and Manufacturing support CCC and Catalyst Systems CCC. In addition to the site in Porsgrunn, R&D activities are carried out at Yara’s R&D centers at the plants located in Sluiskil, the Netherlands, and at Yara’s Research Center Hanninghof, Germany.
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Yara International ASA – 19.01.2015
Registration Document Identifying business opportunities arising from global challenges and employing Yara’s core competencies to develop and offer solutions lie at the core of the corporate strategy – making innovation a main business driver. Innovation is particularly geared towards creating opportunities within the three focal areas of Yara’s strategic approach of creating impact: resources, food and the environment.
Innovation platforms In 2011 Yara established three innovation platforms as the framework for driving business development and launching solutions and services. Within these Yara coordinates prioritized projects closely connected to its core business, enabling a holistic approach to exploit value with maximum efficiency.
Within the Emissions to Air innovation platform Yara explores opportunities arising from air pollution, for example, from cleaner technologies. Yara is focusing on abating hazardous NOx emissions, and targets innovation that develops applications and solutions for a growing global market.
Within the Water Scarcity innovation platform Yara explores opportunities related to water shortages challenging agriculture. Yara is focusing on fertigation solutions reducing water use, and innovation targets increasing agriculture’s water use efficiency.
Within the Resource Efficiency innovation platform Yara explores ways to improve the use of scarce resources other than water, notably land and phosphate. Yara delivers knowledge solutions with the crop nutrition concept furthering nutrient use efficiency, and explores opportunities to increase the efficiency of phosphate use and to improve processing technologies. With the new coffee & cocoa innovation platform Yara combines crop specific nutrition knowledge with recent experiences from public private partnerships and value chain approaches, such as participating in the Coffee Task Force in Vietnam whose goal is to increase coffee bean productivity and quality in Vietnam.
Research & Development Yara has organized its R&D organization to work more effectively and meet its strategic ambitions. The new structure is made up of three core competency communities: Product and Application Development; Process Research; and Catalyst Systems.
In addition to a reinforcement of internal capabilities, Yara established a systematic approach to open innovation through partnerships. A series of collaborations with universities, institutes or companies supplements internal capacity in support of specific projects. In 2013 the cooperation with Empresa Brasileira de Pesquisa Agropecuária (Embrapa), Brazil’s chief research organization, established joint trials to investigate the economic and environmental benefits of Yara fertilizers in tropical sites.
Innovation is also carried out through global engagements and partnerships, such as the Sahara Forest Project in Qatar, confirming the concept of successful year-round greenhouse production of cucumbers in the desert, based entirely on renewable energy.
INVESTMENTS Investments during 2014 Yara’s growth ambitions imply significant investments, through expansion of existing operations, new builds and acquisitions. The Board of Directors underlines that the focus on growth opportunities is combined with strict valuation and capital discipline, seeking opportunities where Yara has the best relative synergies, at the right time of the cycle. The investment level required to maintain current Yara production capacity and productivity is estimated to be approximately NOK 4 billion per year.
Principal investments The Yara Pilbara technical ammonium nitrate plant is scheduled for completion in 2015 with a total investment of USD 800 million, of which Yara’s 45% share in 2014 is approximately NOK 800 million
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Yara International ASA – 19.01.2015
Registration Document January 28th 2014: Yara International ASA has entered into shipbuilding contracts with Hyundai Mipo Dockyard (HMD) for the construction and delivery of three 20 600 CBM semi-refrigerated LPG carriers with an expected cost per vessel of USD 51 million.
The transaction will be financed according to the overall funding plan for the group, see below.
July 17th 2014: the Board of Yara International ASA approved an investment of approximately EUR 50 million to expand annual NPK production capacity by 250 kilotons in Uusikaupunki, Finland. The project shall be completed by the end of 2015.
The transaction will be financed according to the overall funding plan for the group, see below.
October 1st 2014: Yara International ASA has obtained relevant regulatory approvals and closed the acquisition of OFD Holding Inc. (OFD) allowing the integration process to start. Regulatory approvals have been obtained in almost all jurisdictions, including commitments which are not expected to materially impact the profitability of the acquisition. The final enterprise value is USD 377 million.
The transaction was financed from the existing cash balance of Yara International ASA.
October 21st 2014: On 21 October 2014, the Board of Yara International ASA approved an investment of approximately NOK 2 250 million to expand annual NPK and Calcium Nitrate capacity by 50 000 tons and 200 000 tons respectively in Porsgrunn, Norway. The project is expected to be completed during first quarter 2017.
The transaction will be financed according to the overall funding plan for the group, see below.
December 1st 2014: Yara International ASA has obtained relevant regulatory approvals to acquire a 60% stake in Galvani Indústria, Comércio e Serviços S/A ("Galvani") allowing the integration process to start. The enterprise value is USD 318 million for 60% of Galvani. This comprises USD 132 million for the existing business and USD 186 million for the mining/production projects. Payment for the mining/production projects requires that certain project-related conditions are met. There will also be a post-closing adjustment of the working capital.
The projects under development also include new upgrading capacity for phosphate fertilizer. Start- up for the various projects is expected between 3 and 5 years from closing date.
The acquisition was financed from the existing cash balance of Yara International ASA. The projects in Galvani under development will be funded partly through local loans and partly through equity from the shareholders.
December 5th 2014: The Board of Yara International ASA has approved an investment of SEK 1 747 million (USD 220 million) to sustain and increase technical ammonium nitrate (TAN) capacity in the Köping site in Sweden. The investment includes the construction of a new nitric acid plant replacing an existing plant which is approaching the end of its operating life. The total TAN capacity after the upgrade will reach about 450 kt per annum. The new plant will be based on state-of-the-art technology, improving energy efficiency and further reducing greenhouse gas emissions in the Köping plant. Construction will start in 2015, with completion expected in second half 2017.
The transaction will be financed according to the overall funding plan for the group, see below.
October 22nd 2014: BASF and Yara have made good progress with their plan to jointly build a world-scale ammonia plant on the U.S. Gulf Coast. The proposed plant would be located at the existing BASF site in Freeport, Texas, have an annual capacity of 750 000 metric tons, and be based on a hydrogen-synthesis process. Further details of the planned joint venture are currently under discussion between the parties. The project is subject to final approval from the respective boards of directors of BASF and Yara.
The large investments described above will be funded based on the overall financing strategy for Yara. Yara has, through its BBB rating, access to different funding sources and aim to diversify both the use of different capital markets and spread the downpayment obligations to reduce the refinancing risk. Yara is active in the different bond markets and has also a strong relationship
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Registration Document bank group. Through committed revolving credit facilities Yara has more than USD 2 000 million in liquidity reserves.
Total investments in the period January-September 2014 (NOK million) Maintenance 2 732 Growth 2 353 Total 5 085
Total acquisitions in the period January-September 2014 (NOK million)
Acquired company Consideration Non-controlling interest Fair value Goodwill H+H 131 - 43 88 ZIM 30 - 21 9 Kynoch South 188 - 124 64 GreenTech Marine 62 30 25 67 LeHavre 33 - 47 -14 Strabag 17 - 2 15 Total 459 30 262 227
Future committed investments in 2015 and onwards (NOK million)
Porsgrunn expansion 2 250 Köping expansion 1 712 Uusikaupunki expansion 461 TAN Pilbara 416 Ammonia vessels 1 548 Rondonopolis (warehouse) 216 Total 6 602
Long-term contracts and future obligations Take-or-pay and long-term contracts Yara has entered into take-or-pay and long-term contracts providing for future payments to transportation capacity, raw materials and energy. Yara has marketing and off-take agreements with some of its equity-accounted investees, for more information see note 12 in the Company’s annual report for 2013. Please see the cross-reference list in chapter 13 of this Registration Document.
Non-cancelable future obligations: The non-cancelable future obligations are mainly related to gas and raw material contracts. The amounts are calculated based on minimum contracted quantities and market prices at 31 December 2013.
NOK millions Total 2014 -36 949 2015 -1 559 2016 -1 067 2017 -1 507 2018 -1 082 Thereafter -2 751 Total -11 916
Sales commitments (mainly related to industrial products)
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Registration Document NOK millions Total 2014 1 341 2015 738 2016 296 2017 10 2018 - Total 2 385
THE INDUSTRY AND THE MARKET Industry The mineral fertilizer industry is global, connected to the availability of key resources, notably minerals and hydrocarbons. The market is segmented into three main crop nutrients: nitrogen (N), phosphorus (P) and potassium (K). Of these, nitrogen is the most important crop nutrient and the largest industry segment, accounting for more than 60% of global crop nutrition consumption.
The fertilizer industry has historically been divided into nutrient-specific sub-sectors. A number of companies serve national markets or sub-regional markets. Only a handful operates on a global scale. The N fertilizer industry is less consolidated than the P and K industries, a fragmentation that offers growth opportunities for Yara. The industry has historically been subject to extensive government involvement and ownership.
Industry developments The commodity nitrogen fertilizer supply in 2013 was significantly influenced by increased Chinese urea production and export capacity, in addition to a reduced urea export tax. Going forward, the price and availability of urea exports from China will be influenced by the price development for anthracite coal and other domestic cost elements such as labor and freight. In addition, port loading capacity can represent a bottleneck during peak export months.
There is limited greenfield nitrogen capacity additions scheduled for completion in the next two years outside China, apart from Algeria, where start-ups are planned but with unclear export volume implications amid natural gas, administrative and logistical bottlenecks.
Market The mineral fertilizer market is global, due to the transportability of finished products and globalization easing international investments and trade. Traditionally, Yara’s main market for mineral fertilizers has been Western Europe; in recent years Latin America has become a major market, with Brazil being the single largest market. Driven by environmental consciousness and regulation, the demand for industrial solutions has grown in several markets, particularly in Europe and North America, as well as in Brazil and some countries in Asia.
Market developments The long-term fundamentals of fertilizer demand are strong, as a growing and increasingly prosperous world population continues to drive demand, and land available for agriculture becomes scarcer. More efficient and balanced fertilizer use globally is a crucial element of achieving sustainable improvement in agricultural productivity.
However, there is significant potential for high price volatility in the markets for agricultural commodities, where supply is limited and customers have a low sensitivity to price changes. Weather-related setbacks in agricultural production could further increase fertilizer demand, while a significant drop in agricultural prices, e.g. in the event of improved harvest prospects, could lead to a temporary slow-down in fertilizer deliveries. However, substantial harvest increases are required merely to avoid a future decline in inventories.
More efficient and balanced fertilizer use globally will require a change of fertilizer product and application practices in many markets, implying a further increase in differentiation and tailoring of fertilizers and related technologies. However, the extent to which individual markets will embrace and achieve such efficiency improvements is likely to vary strongly, linked to the degree of deregulation and competition in their agricultural sectors.
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Registration Document
Global trends Yara is fundamentally influenced by a set of global megatrends that impact business environments and market conditions. Some drive demand for mineral fertilizer and industrial products, others affect the way business is conducted.
Global growth increases the demand for food, fiber and fuel. Economic growth stimulates dietary change, which alongside population growth increases demand for agricultural produce. Growth also drives overall consumption and demand for transportation and energy, leading to large emissions of air pollutants. Consequently, global growth increases demand for Yara’s crop nutrition solutions and knowledge, as well as for its environmental solutions.
Resource scarcity influences the way business is done. With increased pressure on limited resources, there is a growing need for improved solutions, resource efficiency and innovation.
Climate change impacts the world economy in general, and agriculture in particular. Global warming is anticipated to affect crop yields negatively, increasing the need for productivity gains. Climate change can also be mitigated by agriculture, increasing demand for Yara’s crop nutrition solutions.
Urbanization affects Yara by impacting its customers and markets for crop nutrition solutions, and by increasing demand for its industrial products and environmental solutions. Urbanization transforms people’s lives – where they live and how they live, including production in rural areas and consumption in urban areas.
Globalization affects Yara as a global company engaged in production and partnerships, trade and sales in international markets. Globalization has harmonized regulations and standards, not least affecting agricultural commodities, and eased access to markets.
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Registration Document
8. Administrative, management and supervisory bodies
BOARD OF DIRECTORS Chairman of the Board – Leif Teksum Chairman of the Board since 2014
Chairman of the Compensation Committee. Leif Teksum (born 1952) has since 1991 had various roles in the DNB group management. In the period 2003-2013, he was group EVP with responsibility for large corporate clients in Norway and all international banking activities in DNB/DnB NOR. Since 2013 he has, as Senior Relationship Manager, been responsible for a portfolio of customers in Norway and Sweden.
Teksum has led the bank's Investment Banking area, the Asset Management functions as well as the IT and Purchasing activity. In the period 1987 - 1989 he was head of the Bergen Bank London branch. Teksum has a Master’s degree in Business and Economics from The Norwegian School of Economics and Business Administration.
Vice chair, board member – Hilde Merete Aasheim Vice chair, member of the Board since 2010
Chairperson of the Audit Committee. Mrs. Aasheim (born 1958) is Executive Vice President (EVP), Primary Metal in Hydro. Prior to that she served as EVP for the Aluminum Metal business area in the same company. Aasheim joined Hydro in October 2005 as EVP for Leadership and Culture (human resources, health, environment, safety and corporate social responsibility). When Hydro’s oil and gas activities were merged with Statoil in 2007, Aasheim headed the integration process. Between 1986 and 2005, she held several senior positions in Elkem.
Aasheim holds a Master’s degree in Business Economics from the Norwegian School of Economics and Business Administration (NHH) in Bergen and is also an accredited public accountant. Aasheim has also work experience with Arthur Andersen & Co.
Board member – Geir Petter Isaksen Member of the Board since 2013
Member of the Compensation Committee. Mr. Isaksen (born 1954) is a Norwegian citizen and CEO of NSB (Norwegian State Railways). From 1996 to 2011 Geir Isaksen was CEO of Cermaq ASA (before 2002 Statkorn Holding ASA). During this period he led a comprehensive restructuring and IPO of the business and contributed to significant growth in Norway and abroad. From 1995 to 1996 Geir Isaksen was CEO of Statkorn AS, and prior to this he has held director positions in the Norwegian agriculture organizations’ Brussels office and Gartnerhallen, a food wholesale and distribution company.
Geir Isaksen holds a doctoral degree in Agricultural Economics from the Norwegian University of Life Sciences.
Board member – Hilde Bakken Member of the Board since 2014
Member of the Compensation Committee. Hilde Bakken (born 1966) has held various leadership roles in Statkraft within market and power production areas since 2000. Since 2010, Bakken has been part of Statkraft Executive management, from 2010 to 2013 as Chief of Staff and since 2013 she has been responsible for Statkraft’s power generation activities in seven countries. She is also responsible for further development of Statkraft's hydropower concessions in North-West Europe.
Before joining Statkraft, she was employed in Norsk Hydro and Conoco where she has held various management and engineering positions in operations and field development on the Norwegian continental shelf. Bakken has a Master’s degree from the Norwegian University of Science and Technology and Delft University of Technology, The Netherlands
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Yara International ASA – 19.01.2015
Registration Document Board member – John Gabriel Thuestad Member of the Board since 2014
Member of the Audit Committee. John Thuestad (born 1960) has since 2013 led Sapa Extrusions Europe, with 50 locations, 11 000 employees and 20 000 customers. From 2012 to 2013 he led Sapa Profiles with production plants in Europe, North America and China. From 2009 to 2012 he led Alcoa Global Primary Products with 40 locations in Australia, Latin America, Europe and North America. Thuestad has previously been CEO of Elkem AS and Elkem Aluminium AS. Prior to that, Thuestad was Managing Director of Norzink AS and Fundo AS.
Thuestad has a Master’s degree from the Norwegian University of Science and Technology and an MBA from Carnegie Mellon University, Pittsburgh, USA. Thuestad is Chairman of the European Aluminium Association, Extrusion Division and an Overseas Trustee of the American Scandinavian Foundation.
Board member – Geir Olav Sundbø Member of the Board since 2010
Mr. Sundbø (born 1963) has been a Yara (Hydro) employee since 1987. He has been actively engaged in union matters in the Porsgrunn plant since 1989. He is Deputy Chairman of the local union chapter in Herøya Industripark Porsgrunn and union chairman of Yara Porsgrunn. He is also a member of the executive committee of the IndustriClusteret Grenland (ICG). Sundbø has been a certified TQM supervisor since 1990. Since 2009, he has been secretary of the European Works Council (EWC) of Yara. He is also secretary of the control committee in National Trade Union of Industrial Energy since 2010.
Board member – Guro Mauset Member of the Board since 2012
Mrs. Mauset (born 1968) has been a Yara employee since 2009. She currently holds the position of Group Coordinator of the Process Technology and Support group in the Process Modelling and Control department at Yara Technology Center in Porsgrunn, Norway. She holds a Masters degree in Chemical Engineering from NTH (Norwegian Institute of Technology) . Mauset has been a board member of the Norwegian Society of Chartered Scientific and Academic Professionals (Tekna) in Yara since 2011.
Board member – Rune Asle Bratteberg Member of the Board since 2012
Member of the Audit Committee. Mr. Bratteberg (born 1960) has been a Yara (Hydro) employee since 1986, currently in the position of Head of Chemical Compliance. He has held different IT and HESQ leadership positions within Hydro and Yara, from 2001 to 2009 as CIO. Bratteberg has been a member of the Chemical Industry Advisory Board to SAP AG 2004-2009, and Chairman of the Board at the Scandinavian School of Brussels 2009-2011. Bratteberg holds a degree in Information Technology from the University of Bergen.
Board’s share holdings in the Company as of 7th January 2015 Position, name Number of shares Chairman of the Board – Leif Teksum 1 000 Vice chair, board member – Hilde Merete 0 Aasheim Board member – Geir Petter Isaksen 84 Board member – Hilde Bakken 0 Board member – John Gabriel Thuestad 0 Board member – Geir Olav Sundbø 96 Board member – Guro Mauset 148 Board member – Rune Asle Bratteberg 124
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Registration Document MANAGEMENT President and CEO (acting) – Torgeir Kvidal Mr. Kvidal (born 1965) has served as acting President and Chief Executive Officer since October 2014.
His previous positions in the company include: Chief Financial Officer 2012-14, Senior VP Head of Supply & Trade 2011-12, Head of Investor Relations 2006–11, CFO Industrial 2005–06, Head of Business Unit CO2/Industrial Central Europe 2000–05 and VP Finance Hydrogas 1997–99, Corporate Controller Hydro Agri 1993–97. He was employed by Hydro in 1991 as a trainee. Mr. Kvidal holds a Master’s degree from the Norwegian School of Economics and Business Administration (NHH).
Head of Downstream – Egil Hogna Mr. Hogna (born 1971) has served as Senior VP Head of Downstream since August 2009.
His previous positions in the company are: Chief Financial Officer 2008–09, Business Unit Manager South Europe/Mediterranean, 2007–08; SVP Business Intelligence 2006–07; VP Investor Relations, 2004–06; VP of Hydro Aluminum Metal Products (responsible for Supply Chain & Performance Management), 2001–03; Corporate Controller Hydro Agri 1999–2001. Before joining Norsk Hydro, Mr. Hogna was a consultant with McKinsey, 1994–99. He holds an M.Sc in Industrial Management from the Norwegian Institute of Technology (NTH) and an MBA from INSEAD.
Head of Upstream – Gerd Löbbert Dr. Löbbert (born 1957) has served as Senior VP Head of Upstream since December 2012.
Before joining Yara, Dr. Löbbert served as EVP for Polyolefins in the Vienna-based Borealis Group. He also held several managerial positions in the BASF Group, including Group Vice President from 2002-2009. Dr. Löbbert holds a PhD in Chemistry from the University Bochum, in Germany.
Head of Industrial – Yves Bonte Mr. Bonte (born 1961) has served as Senior VP Head of Industrial since January 2010.
Before joining Yara, he worked for 17 years for the chemical company LyondellBasell and its predecessors, serving as Senior VP Polypropylene Business based in Germany and the Netherlands, 2007– 09; Senior VP Sales & Marketing for Asia, Middle East/Africa and Latin America based in Hong Kong, 2002–06; Head of Strategic Marketing, 2000–01; several marketing, supply chain and manufacturing positions, 1992–99. Prior to this he worked five years for Exxon Chemical in Brussels.
Mr. Bonte holds a post-graduate degree in Business Management and a Master’s degree in Civil Engineering from the University of Leuven in Belgium
Chief Communications and Branding Officer – Bente G. H. Slaatten Mrs. Slaatten (born 1958) has served as Senior VP Chief Communications and Branding Officer since October 2009. From January 2008 until then she was VP Corporate Communications. Before joining Yara, she was President of the Norwegian Nurses Organization, 1998–2007, and its Chief Negotiator and Director of the Department of Negotiation, 1995–98. Between 1984–95 she held various positions within the Norwegian Association of Local and Regional Authorities. Mrs. Slaatten holds a Master’s degree in Business Administration from the Norwegian School of Economics and Business Administration (NHH), a Bachelor’s degree in Nursing, a degree in Business Administration from the Norwegian School of Management and has studied organization and project management at the University of Oslo. Mrs. Slaatten has held numerous board positions and honorary posts.
CFO (acting) – Thor Giæver Mr. Giæver (born 1972) has served as Acting Chief Financial Officer since October 2014.
His previous positions in the company include: Head of Investor Relations and Company Secretary and Head of Controlling & Risk Management. Thor Giæver joined Yara in 2004. He holds a BSc (Hons) degree from the School of Management, University of Bath, UK.
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Registration Document Head of Supply & Trade – Alvin Rosvoll Mr. Rosvoll (born 1957) has served as Senior VP Head of Supply & Trade since June 2012.
His previous positions in the company include Business Unit Manager North and East Europe, Commercial Director in the Downstream Segment and Deputy President Yara Industrial Gases. Before that, he has held a number of commercial and management positions since joining the company in 1981.
Mr. Rosvoll holds a Masters degree in chemistry from the Norwegian Institute of Technology (NTH).
Chief HR Officer – Kaija Korolainen Ms. Korolainen (born 1964) has served as Senior VP Chief Human Resource Officer since June 2014.
Before joining Yara, she held operational and strategic HR leadership positions with global agricultural equipment producer AGCO (2012-2014) at their European HQ in Switzerland, and leading supply chain and logistics provider DB Schenker (2003-2011). Ms. Korolainen holds a M.Sc (Law & Economics) Degree from Åbo Akademi University Finland, and has conducted research as a Fulbright Scholar at the University of Louisville, KY USA.
Chief Legal Officer – Trygve Faksvaag Mr. Faksvaag (born 1966) has served as Senior VP Chief Legal Officer since May 2008.
His previous positions in the company include: Managing Director of Yara Switzerland Ltd., 2006– 08; VP and general counsel of Yara North America, Inc., 2004–06; legal counsel and VP of Norsk Hydro Americas, Inc., 2001–03. Mr. Faksvaag joined Hydro/Yara in 1996 from the Norwegian law firm Wikborg, Rein & Co.
Management’s share holdings in the Company as of 7th January 2015
Position, name Number of shares President and CEO (acting) – Torgeir Kvidal 6 168 Head of Downstream – Egil Hogna 14 318 Head of Upstream – Gerd Löbbert 4 992 Head of Industrial – Yves Bonte 8 441 Chief Communications and Branding Officer – 4 433 Bente G. H. Slaatten CFO (acting) – Thor Giæver 2 478 Head of Supply & Trade – Alvin Rosvoll 4 946 Chief HR Officer – Kaija Korolainen 946 Chief Legal Officer – Trygve Faksvaag 7 258
AUDIT COMMITTEE The Audit Committee consists of at least three board members who supervise corporate accounts, Yara’s financial reporting and internal audit, financial risk management and the work of the external auditor. The members are Hilde Merete Aasheim (chair), John Thulestad and Rune Bratteberg. The members of the committee serve for two years. The Board appoints the Audit Committee Chair, who cannot also be the Chairperson of the Board. The majority of people on the committee should be independent of Yara, and at least one independent member should also have auditing or accounting experience.
The responsibilities of the Audit Committee include the following: Supervise the integrity of the Company’s accounts, the process for financial reporting and the internal control related to financial reporting. Supervise the relation to the external auditor Handle complaints, irregularities and concerns related to financial reporting and audit issues Fraud and corruption: The Audit Committee shall be informed of and assess all cases of fraud and corruption involving employees of the Company. Performance evaluation: The Audit Committee shall assess its own performance annually.
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Registration Document The Audit Committee will base its work on the assumption that the external auditor, the Head of Yara Internal Risk and Audit and Management represented by the Chief Compliance Officer have informed the Audit Committee of any issues considered important for the Audit Committee in performance of its tasks as defined in this Mandate.
All the members of the Issuer’s board, management and the audit committee can be reached at Drammensveien 131, 0277, Oslo Norway
RELATED PARTY TRANSACTIONS Related parties The Norwegian State: At 31 December 2013 the Norwegian State owned 100 849 268 shares, representing 36.2% of the total number of shares issued. On the same date, the Norwegian National Insurance Scheme Fund, Norway owned 16 491 554 shares, representing 5.9% of the total number of shares issued.
Yara Pension Fund: One of Yara International ASA’s pension plans is arranged through Yara Pension Fund. This plan has been closed for new members since July 2006. Yara has during 2013 contributed to the pension fund.
Board of Directors: Members of the Board of Directors are elected for two year terms. Their rights and obligations as board members are solely and specifically provided for the Company’s articles of association and Norwegian law. The company has no significant contracts in which a board member has a material interest.
Related party transactions Transactions with related parties are mainly associated with the group treasury function and rendering of group services by the employees of Yara International ASA.
Remuneration to the Board of Directors and Yara management are disclosed in notes 6 and 32 to the consolidated financial statements. Yara International ASA has transactions with Yara Pensjonskasse (pension fund), see note 2 for more information. Please see the Cross Reference List in section 13 of this Registration Document.
In 2014 there were no significant transactions between the company and closely related parties, except for ordinary commercial transactions with subsidiaries and non-consolidated investees.
Other than the above mentioned, there are no conflicts of interests between any duties to the issuing entity of the persons referred to above and their private interests or other duties.
CORPORATE GOVERNANCE Yara’s Board of Directors promotes and supports open and clear communication of the Company’s key governance and decision processes. Yara has chosen to comply with the Norwegian Code of Practice for Corporate Governance, last updated 30 October 2014. The Code contains stricter requirements than mandated by Norwegian law.
On details of Yara’s compliance with the Code please see the 2013 annual report for the Company at page 22-27. Please see the Cross reference list in chapter 13 of this Registration document.
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Corporate governance structure:
RISK MANAGEMENT AND INTERNAL CONTROL PROCEDURES Yara’s risk management and internal control activities are integrated with the corporate strategy and business planning processes, based on the principle that risk evaluation is an integral part of all business activities. While risk management is a centrally governed process, the responsibility for day-to-day risk management activities is placed with the business segments and expert organizations.
The Board carries out separate annual reviews of the Company’s most important risk exposures and internal control systems.
The Audit Committee performs ongoing evaluations of risk and control related to financial reporting. Yara Internal Risk and Audit supports Yara Management and the Board of Directors in terms of evaluating the effectiveness and efficiency of internal controls and gives an independent view on risk management.
Yara Internal Risk and Audit performs independent audits both at subsidiary and group level, as well as audits and reviews of specialist functions involved in business operations, financial reporting and risk management. The Chief Internal Risk and Audit Executive reports functionally to the Board of Directors and administratively to the Chief Financial Officer. Yara Internal Risk and Audit has no direct operational responsibility or authority over any of the activities it reviews. The unit has unrestricted access to all functions, records, physical properties, and personnel relevant to the performance of its tasks. It also has full and free access to Yara Executive Management, the Board of Directors and the Audit Committee.
Yara has adopted the Committee of Sponsoring Organizations of the Treadway Commission (COSO) integrated framework for internal control. The five framework components are: control environment, risk assessment, control activities, information and communication, and monitoring. The content of the different elements are described below.
Yara’s corporate social responsibility policy and Code of Conduct are integrated in its risk management and internal control systems, through global employee training programs, and an Integrity Due Diligence process which covers both existing business partners and forward-looking business development activities.
Yara’s Steering System is one of the pillars of Yara’s internal control system. It aims to ensure that all Yara employees act in a consistent manner and in line with quality standards and business needs. All Yara employees are encouraged to raise questions or issues about such matters with line management and through alternative channels, including a whistle-blowing system. The Steering System provides all employees with an overview of the prevailing corporate policies and procedures.
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9. Major shareholders
SHARE CAPITAL The Issuer’s share capital consists of 276 227 775 shares with nominal value of NOK 1.70 per share. Total share capital is NOK 469 587 217.5. There are one class of shares, and all Yara shareholders have equal rights.
MAJOR SHAREHOLDERS as of December 8th 2014:
Shareholders (Main Share holder) Details Country Number of shares Share of total Ministry of Trade, Industry and Fisheries NOR 100 026 133 36.2% Norwegian National Insurance Scheme Fund NOR 13 335 014 4.8% Clearstream Banking (Lux) Nominee LUX 8 641 249 3.1% State Street Bank Nominee USA 7 136 775 2.6% FLPS - PRINC ALL SEC USA 4 383 600 1.6% State Street Bank Nominee USA 4 117 538 1.5% Bank of New York Nominee USA 3 363 479 1.2% State Street Bank Nominee USA 3 331 905 1.2% JPMorgan Chase Bank ADR-division USA 3 112 479 1.1% State Street Bank Nominee USA 2 800 649 1.0% State Street Bank Nominee USA 2 668 383 1.0% RBC Investor Services Trust Nominee GBR 2 606 866 0.9% State Street Bank Nominee USA 2 583 019 0.9% Bank of New York Nominee USA 2 118 568 0.8% Bank of New York Nominee NLD 2 033 782 0.7% Skandinaviska Enskilda Banken Nominee SWE 2 017 159 0.7% Danske Capital NOR 1 665 652 0.6% KLP Aksje Norge NOR 1 642 105 0.6% JPMorgan Chase Bank Nominee GBR 1 578 113 0.6% Invesco Funds LUX 1 572 236 0.6%
SHARE BUY BACK In May 2013, the Annual General Meeting authorized the Board of Directors to acquire up to 5% (13 925 045 shares) with a nominal value up to NOK 23 672 577 in the equity market and from the Norwegian State. Within this frame, the Company has acquired 1 450 000 shares with a total nominal value of NOK 2 465 000. In May 2014, the Annual General Meeting approved the cancellation of 1 450 000 of the Company’s own shares and the redemption of 823 135 shares owned by the Norwegian State for a consideration of NOK 214 million. Payment to the Norwegian State will take place in third quarter 2014. The number of shares in the company is consequently reduced to 276 227 775.
In May 2014, the Annual General Meeting approved that the existing buy-back program is replaced by a new program, authorizing the Board to acquire up to 5% (13 811 388 shares) of Yara’s shares before the next Annual General Meeting. Shares may be purchased within a price range of NOK 10 to NOK 1 000. The shares may either be used for cancellation or as payment in business transactions. Yara has renewed its agreement with the Norwegian State according to which the State’s shares will be redeemed on a pro-rata basis to ensure the State’s ownership is unchanged in the event of a cancellation of the shares bought back.
During third quarter 2014, Yara purchased 120 000 own shares under the 2014 buy-back program for a total consideration of NOK 37 million. As of the date of this Registration Document, Yara has purchased 730 000 shares during 2014.
There are no arrangements, known to the Issuer, the operation of which may at a subsequent date result in a change in control of the Issuer.
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10. Financial information concerning the Issuer's assets and liabilities, financial position and profits and losses
The consolidated financial statements of Yara International ASA, the Group, are prepared with International Financial Reporting Standards, IFRS, and interpretations adopted by the International Accounting Standards Board (IASB) and approved by the European Union (EU). The financial statements for Yara International ASA, parent, have been prepared in accordance with the rules of the Norwegian Accounting Act and generally accepted accounting practice in Norway, NGAAP.
The financial information is incorporated by reference to Yara International Financial Reports as follows. Please see the cross reference list in section 13 in this Registration Document:
Annual reports Third quarter reports Consolidated, Group 2013 2012 2014 2013 Income statement Page 69-70 Page 67-68 Page 13-14 Page 13-14 Balance Sheet Page 72-73 Page 70-71 Page 16-17 Page 16-17 Cash flow statement Page 74 Page 72 Page 18 Page 18 Notes Page 81-130 Page 79-125 Page 19-31 Page 19-27 Accounting principles Page 75-80 Page 73-78 Page 19 Page 19 Auditor's report Page 154-155 Page 148-149 Unaudited Unaudited
Parent Income statement Page 133 Page 127 Balance Sheet Page 134-135 Page 128-129 Cash flow statement Page 136 Page 130 Notes Page 137-152 Page 131-146 Accounting principles Page 137-138 Page 131-132 Auditor's report Page 154-155 Page 148-149
Annual report 2013 for Yara International ASA: http://yara.com/doc/133565_Yara_AR_Eng_2013.pdf Annual report 2012 for Yara International ASA: http://yara.com/doc/64851_Yara%20FR%20komplett.pdf Q3 report 2014 Yara International ASA: http://yara.com/doc/160620_2014_3Q14_Web_report.pdf Q3 report 2013 Yara International ASA: http://yara.com/doc/99819_2013-10-18%203Q%20Web%20report.pdf
The historical annual financial information for 2013 and 2012 for the Issuer has been audited. The historical financial information for the Q3 reports has not been audited.
There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware), during a period covering at least the previous 12 months which may have, or have had in the recent past, significant effects on the Issuer and/or Group's financial position or profitability.
Other than the information given under “Investments” in chapter 7 of this Registration Document, there are no significant change in the financial or trading position of the Group which has occurred since the end of the last financial period for which either audited financial information or interim financial information have been published. And there has been no material adverse change in the prospects of the Issuer since the date of its last published audited financial statements.
There are no recent events particular to the Issuer which is to a material extent relevant to the evaluation of the issuer’s solvency.
Other than the information given under “Investments” in chapter 7 of this Registration Document, there are no material adverse change in the prospects of the Issuer since the date of its last published audited financial statements.
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Registration Document There are no known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Issuer's prospects for at least the current financial year.
There are no material contracts that are not entered into in the ordinary course of the Issuer's business, which could result in any group member being under an obligation or entitlement that is material to the Issuer’s ability to meet its obligation to security holders in respect of the securities being issued.
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11. Documents on display For the life of the Registration Document the following documents (or copies thereof), where applicable, may be inspected:
a) the memorandum and articles of association of the issuer;
b) all reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the issuer's request any part of which is included or referred to in the registration document;
c) the historical financial information of the issuer or, in the case of a group, the historical financial information of the issuer and its subsidiary undertakings for each of the two financial years preceding the publication of the registration document.
The documents may be inspected at the Issuer’s head office; Drammensveien 131, 0277 Oslo, Norway.
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12. Third part information
Yara International ASA is the source of information in this Registration Document. Part of the information given in this Registration Document has been sourced from a third party. It is hereby confirmed that the information has been accurately reproduced and that as far as Yara International ASA is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The sources in this Registration Document are as follows:
Information regarding Yara offering the “most comprehensive range of fertilizers in the industry” is sourced from Yara’s annual report 2013 at page 48: http://yara.com/doc/133565_Yara_AR_Eng_2013.pdf
Information regarding Yara being the leader in ammonia and value-added nitrogen fertilizers is sourced from Yara’s investor presentation, published December 8th 2014: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf The presentation refers to the external sources Fertecon and Fertilizer Europe. The information from Fertecon is only available through subscription, while the information from Fertilizer Europe is publicly available.
Europe's major manufacturers of nitrogen, phosphate and potash fertilizers is defined by Fertilizer Europe, and the information is downloaded from; http://fertilizerseurope.com/index.php?eID=tx_nawsecuredl&u=0&g=0&t=1418807697&ha sh=dd10aa73145d24557a78eda4840b02d27a52f261&file=fileadmin/user_upload/publicatio ns/communications/2013_AO_Fertilizers_Europe-VF.pdf
Information regarding Yara having scale advantages with about 20 % of global ammonia trade is sourced from Yara’s investor presentation, published December 8th 2014: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf The presentation refers to the external source ICIS.
The source of the statement that Yara is the world’s largest producer of mineral fertilizers comes from the Yara’s investor presentation, published December 8th 2014: http://yara.com/doc/170962_2014-12-08%20Bond%20roadshow.pdf
Climate-smart agriculture (CSA) is defined by the Food and Agriculture Organization of the United Nations (FAO), and the information is downloaded from; http://www.fao.org/3/a- i4064e.pdf
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13. Cross reference list
In section 6 of this Registration Document, information regarding the Company’s subsidiaries was incorporated by reference to the Company’s annual report 2013, note 33 (consolidated).
In section 7 of this registration Document, further information regarding Yara’s marketing and Off- take agreements was incorporated by reference to the Company’s 2013 annual report.
In section 8 of this Registration Document, remuneration to the Board of Directors and Yara management were incorporated by reference to notes 6 and 32 to the consolidated financial statements in the Company’s 2013 annual report. Further, information regarding Yara International ASA transactions with Yara Pensjonskasse (pension fund), was incorporated by reference to note 2 to the consolidated financial statements in the Company’s 2013 annual report.
In section 8 of this Registration Document, details on how Yara complies with the Norwegian Code of Practice for Corporate Governance was incorporated by reference to the Company’s 2013 annual report, page 22-27.
In section 10 of this Registration Document, the financial information is incorporated by reference to the following:
Annual reports Third quarter reports Consolidated, Group 2013 2012 2014 2013 Income statement Page 69-70 Page 67-68 Page 13-14 Page 13-14 Balance Sheet Page 72-73 Page 70-71 Page 16-17 Page 16-17 Cash flow statement Page 74 Page 72 Page 18 Page 18 Notes Page 81-130 Page 79-125 Page 19-31 Page 19-27 Accounting principles Page 75-80 Page 73-78 Page 19 Page 19 Auditor's report Page 154-155 Page 148-149 Unaudited Unaudited
Parent Income statement Page 133 Page 127 Balance Sheet Page 134-135 Page 128-129 Cash flow statement Page 136 Page 130 Notes Page 137-152 Page 131-146 Accounting principles Page 137-138 Page 131-132 Auditor's report Page 154-155 Page 148-149
Information concerning the Issuer’s 2013 figures is incorporated by reference from the Issuer’s Annual Report 2013. Information concerning the Issuer’s 2012 figures is incorporated by reference from the Issuer’s Annual Report 2012. Information concerning the Issuer’s 2014 Q3 figures is incorporated by reference from the Issuer’s 2014 Q3 report. Information concerning the Issuer’s 2013 Q3 figures is incorporated by reference from the Issuer’s 2013 Q3 report
The financial reports are available at: Annual report 2013 for Yara International ASA: http://yara.com/doc/133565_Yara_AR_Eng_2013.pdf Annual report 2012 for Yara International ASA: http://yara.com/doc/64851_Yara%20FR%20komplett.pdf Q3 report 2014 Yara International ASA: http://yara.com/doc/160620_2014_3Q14_Web_report.pdf Q3 report 2013 Yara International ASA: http://yara.com/doc/99819_2013-10-18%203Q%20Web%20report.pdf
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