It is a pleasure for me to greet you within the framework of this new edition of the Profertil Annual Report and Financial Statements. In this document, faithful to the transparency that characterizes our history of more than 22 years, we inform our Company’s financial results. This allows us to open the dialog and share the main milestones of the teams and areas that make up our company.

Undoubtedly, the feeling today is one of permanent change. In Profertil, we live this change as adaptation and evolution. We believe that this is the only way to stay current, to continue being relevant to the agro industrial chain with the goal to nourish the land in a sustainable way to produce more and better food.

The pandemics trained us intensively for change, which in 2022 continued forcing us to rethink our corporate practices and habits. Actually, Profertil has always been open to change and has always been attentive to identify the next steps to further enhance the reliability of the plants and its terminals.

Along this line, in 2022, our structure welcomed two new managements that underpin the path we have been following: the Supply Chain Management and the Strategy and Sustainable Development Management. The first aims to unify Profertil’s supply processes to increase coordination and efficiency. The second, on the other hand, seeks to manage the sustainability strategy in a crosscutting manner, looks for opportunities with a triple impact vision: environmental, social, and economic. Both managements will be key to Profertil’s immediate future.

The 22 years that Profertil has been producing granulated urea are reflected today in a work team that has learned a lot about this industry and whose results have an impact on a unique 2022, with historical records in production, dispatch, invoicing, and net profit. Urea and ammonia production records have been even beyond design. Thus, we reached 1,377,821 tons of granulated Urea and 840,759 tons of ammonia. I firmly believe that we have reached these milestones because we have a team that has been working for more than two decades with earnest and professionalism, learning from setbacks and making improvements for the future. This is why I congratulate all the great Profertil team.

It has also been a very good year in terms of environmental management: Profertil recertified the IFA, Protect & Sustain program. IFA is the International Fertilizer Association and the program we recertified is one of the most demanding in the world. It analyzes the environmental performance of fertilizer companies around the world, and Profertil passed with a score of 95% and no reportable environmental incidents since the first certification three years ago. This type of acknowledgment is relevant because it places us in an elite line of companies worldwide.

In 2022, in line with our objective to lead in innovative practices we have launched the Diversity and Inclusion Board, which is complemented by the Diversity and Inclusion Community, made up of representatives from each of the Company’s areas. These two teams will work on a joint agenda focused on improving, strengthening and expanding the scope of actions related to this topic.

Regarding the relationship with the community, Profertil continues to set trends and benchmark best practices for all companies. In 2022, I would especially highlight the 10th anniversary of the Creciendo in Comunidad (Growing in Community) program. This initiative is carried out in Bahía Blanca and Ingeniero White, working with community leaders to leave installed capacity in their organizations. During 10 years, this program has proven to have a great transforming power, fostering the growth of each of the participating institutions and an enormous synergic potential in the interaction of the different actors. It is also important to highlight what happened this year with our scholarship program, Educate to Transform: we have doubled the number of scholarship recipients, seeking that students of the Technical Education School N° 1 from Ingeniero White and the Technical Degree on Industrial Operations of the Universidad Nacional del Sur (UNS) are accompanied during their training and academic development.

Finally, as you all know, we continue to take steps in pursuit of the +UREA project. The objective is to double the production capacity of our plant to meet the demand for the most important nitrogen fertilizer available to agriculture for food production. There is still a long way to go, but we will continue to move forward at a steady pace, with our characteristic reliability.

We continue, from here, working to nourish the soil in a sustainable way. We know that this is the only way to do this, for the sake of current nutrition and to the benefit of the future generations and the entire planet. Our commitment is reaffirmed year after year, wherever a Profertil person works, from the production plant to the field.

Thank you,

The Supply Chain management was created in September 2022 to unify all supply processes and increase the coordination and efficiency of tasks previously distributed in different areas: the supply of strategic inputs such as gas, electricity and water, purchases of goods and services, and terminals logistics and operations.

This new setting seeks to rely on the skills, knowledge and experience of its members to combine them under a single vision that will allow us to enhance the current day-to-day management and, at the same time, prepare ourselves to face the challenges that the future development of our business will bring.

In this sense, and aligned with the production record, we dispatched 1,352,515 tons of Urea between transfers to the different distribution and sales centers during the fiscal year, exceeding in 6% the 2017 historic record.

Finally, in terms of electric power supply, and within the framework of our efforts to promote sustainability, thanks to the supply agreements with YPF Luz in effect since 2018, we replaced almost 70 % energy from conventional and mostly hydrocarbon-derived sources with energy from renewable sources.

El 2022 was excellent in terms of the results. The operative performance of the Bahía Blanca complex reached an alltime high, with daily, monthly, and annual production records, both of Ammonia and Urea. It also had a significant reduction in specific energy consumption.

As to ammonia production, January turned into the best month in our history, producing 73,190 tons. On the seventh of that month, the highest daily production in history was achieved with 2408 tons of ammonia, exceeding the rated capacity of 2360 tons. In this context, annual production was a record in the history of Profertil, reaching 840,759 tons.

Urea production reached its highest monthly historical value ever in March with 121,335 tons and a historic daily production record of 3971 tons on February 18, also exceeding the rated capacity of 3950 tons. In this case, the annual Urea production reached 1,377,821 tons, a quantity never before achieved, exceeding the rated design capacity of 1,320,000 tons.

As a determinant of the production volumes obtained, both plants operated with an excellent reliability factor (actual versus expected run time). In this sense, the ammonia plant had an ideal reliability factor of 100 % while in the Urea plant was 99.8 %. These values were reached for the first time in the history of the Bahía Blanca production complex, which represents a real milestone for Profertil.

As to the specific energy consumption, the ammonia plant, main consumer of this resource, had consumption below the budget value, both in natural gas and electric power, in accordance with the extraordinary performance of both production plants.

The specific natural gas consumption averaged 38.69 MMBTU/t and electric power specific consumption was 2.05 MMBTU/t, a value slightly above planned due to lower own generation and the intervention of the gas turbine.

Regarding human resources management in the production sector, during 2022 a total of 13,400 hours of operational training were provided, with specific training on brigades and other topics, for field and panel operators, contact engineers, and shift and daytime supervisors.

Among the activities carried out within this framework, the following stand out: a specific course on emergency brigades, based on NFPA 600 and NFPA 1600 Codes, held for two supervisors; a training in Denmark on ammonia plants for a contact engineer, the continuity of the evelopment plan for two young professionals who serve as contact engineers; the development of a training platform for the quick search of technical plant information; and the development of twelve operating procedures in audiovisual format, in accordance with modern training standards and within the framework of the knowledge management program.

On the other hand, field operators who joined the company in August 2019 completed their Career Plan in the different sectors of the Complex while those who joined in 2021 carried out different training activities such as boiler operation, forklift operation, among others. The rest of the operators were trained in technical issues such as fluid flow, pumps and compressors, heat exchangers, etc.

Within the framework of virtuality, we continued with the online course modality developed by IPA-UNS/PLAPIQUI. We also worked on panel operators training, with specific training on the process simulator, in accordance with the promotion and succession plan.

The Process Engineering sector developed a set of activities that contributed to maximize production and reduce energy consumption such as improvements in the ammonia recovery unit; optimization of operating conditions in the face of a significant change in the composition of natural gas coming from ships; optimization of the CO2 recovery unit (MDEA unit), optimization of the steam balance throughout the complex; improvements in the cooling water system; definitions of operating limits in the Urea plant.

In order to optimize the action time for correcting deviations, we also worked on improving the reporting of the mass and energy balances of the Complex, which allows us to analyze data on a daily basis and identify assets or units whose performance is not as expected.

Other significant issues were the review and minimization of frequent alarms of operating variables in the control panel and the development of two pre-feasibility studies related to the installation of a green ammonia production plant and the installation of a CO2 recovery unit as of the Primary Reformer’s stack exhausted gases.

One of the main activities in the Process Safety sector, due to its significance and impact, was the commissioning of the Real-Time Process Optimizer or RTO. The system had become outdated with the plant capacity expansion project, so we moved forward with its upgrade. It was put in service, in close loop on December 25, 2021 and was finished on February 2022.

Moreover, a pioneering application of its kind was developed with the support of Human Resources/Systems along the year. It is a Python program and a PowerBI database and dashboard that allow for more effective tracking of the tool’s performance, while providing the ability of obtaining high-value data from the rigorous simulations, such as turbine efficiency, heat exchanger fouling coefficients, reactor catalytic activities, etc., Information that is extremely useful for the “condition monitoring” of the assets. In the future, it is intended that this application will be made available to provide global material and energy balance data for applications such as functional failure detection agents and plant capacity studies, operating as a kind of digital twin of the ammonia plant.

Additionally, the update and the advance process control (APC) commissioning of the Urea plant were completed. This application has allowed us to standardize the operation of the most critical sections of the plant, which, when operating at high loads, often pose challenges that are difficult to overcome with basic control alone.

On the other hand, the Reliability and Mechanical Integrity sector worked hard on monitoring and improving asset care, contributing to the achievement of high availability and reliability during the year. For this purpose, we continued with the established plan, in which it is possible to highlight some relevant lines:

As to equipment maintenance management, the most important activity was undoubtedly the performance of the C inspection of the gas turbine, which included the gas generator and the power turbine, one of the main pieces of equipment of the ammonia plant. This implied the complete overhaul of the machine and other associate equipment and involved our own technicians as well as technical staff from Siemens Sweden, Hungary, and Germany, ten people, counting operators, engineers and the project manager in order to build up knowledge in this technology. This is the first time such an action is performed since the installation of the turbine seven years ago. As a conclusion of this process, no severe mechanical problems were found, except for those usual for this time in service. The intervention lasted a total of 60 days and once finished the equipment was started up again without any inconveniences.

Finally, performance indicators had very good results in accordance with the general operation of the complex, with values within the established objectives: compliance with the program: 80 % overtime in emergencies and urgencies: 7 %; backlog: 5 weeks; overtime 3.6 %

People training was also an axis of the area’s work. At least 64 activities were agreed upon, aligned to the needs of the different teams. As part of the year’s action plan and following the results of the 2021 wellbeing survey, a leadership competency strengthening program was developed for middle management with individual diagnostic interviews and two specific activities called “Building a Conscious Team: how to generate value through values” and “Conversational competencies for effective leadership”.

In addition, three direct reports participated in the training activity “Managing people” in the IAE.

Lastly, the maintenance work process was revised and optimized in accordance with the new structure in force. The purpose of this activity, that involved other sectors of Industrial Operations, was to identify and know the inputs and outputs of this process, which is already defined and in the stage of implementation testing and validation.

Estimates regarding the domestic fertilizer market for 2022 are approximately 4.5 million tons.

As to the fertilizers groups, it is estimated that nitrogen fertilizers will represent 56 % of the 2022 campaign with an increase of the granulated Urea share with respect to the rest of the products, reaching 78 % over the total of the nitrogen fertilizers.

As in previous years, phosphate products are the second most important, reaching 37 % of the estimated market total.

Financial Situation

EWithin the framework of the financial events that took place throughout 2022, the macro economy began with a gradual increase in interest rates seeking to generate a positive return in the face of the sustained increase in the general price index. Thus, the interest rates of the Central Bank’s Treasury Bills started at levels of 38 % NAR and ended the year at levels of 75 % NAR.

As for the official exchange rate, although it sought to follow the trends of the aforementioned variables, in the face of an annual devaluation of the peso of 72 %, it did not succeed in doing so. Beyond the context already detailed, the increase in the Company’s liquidity levels were the result of commodity price inertia that were later sustained by the Russia-Ukraine war. In spite of this, the interest in preserving the value of the currency prevailed at all times, resorting to investments that adjusted the value of capital according to the evolution of the official exchange rate. In this context, there were no shocks due to discretional devaluations of the currency. However, it could be observed how local currency hedging through futures contracts had a very pronounced cost rally: at the beginning of the year the implicit rate for a 30-day contract was below 50 % NAR while it ended the 2022 cycle in the order of 92 % NAR.

Later in the year, the financial market was shaken by the selloff on sovereign debt assets, which mainly affected CER (Reference Stabilizing Ratio)-adjusted securities. This situation was overcome without major inconveniences, given that by that time, the Company had low participation in these instruments and on the other hand, the value was recomposed in a few weeks.

Profertil started 2022 with a cash position of USD 223.5 MM and financial debt of USD 92.2 MM. These same items at the end of the 2022 financial year totaled USD 584.9 MM and USD 50.0 MM, respectively. The financial strategy aims to maintain active liquidity management in order to minimize the impact of a devaluation on the company’s net asset position.

As to the financial debt, Profertil was able to meet all of its obligations, including the reduction of its debt through the application of the export result. In this sense, the year had an average indebtedness rate of the order of 5.65 % NAR. It is worth mentioning that at present the Company has a negative net debt. Below is the evolution of the financial debt during 2022:

Financial debt evolution (USD MM)

Determining factors of fiscal year statement

The year 2022 was a disruptive for the Company from the economic-financial point of view. A net income of $ 59,844 million was obtained, the highest income in its more than 20 years of operation This was due to several factors, both internal and external, which had a positive impact: first, international prices of Urea averaged a substantial increase with respect to the previous year (USD/t 655 versus USD/t 518), accompanied by a product demand in the domestic market that exceeded 1,234,000 tons invoiced, generating a historic record in all Company’s sales income levels. Secondly, the excellent performance of the industrial plant that reached historic levels of productive efficiency.

The Company adopted the U.S. dollar as its functional currency; therefore, the amounts expressed in local currency pesos reported below include the devaluation effects of the local currency during the 2022 fiscal year.

Economic / Financial Indicators

The following are the main economic-financial indicators, compared to those of the previous fiscal year.

Loans and Collections

In 2022, credit exposure accompanied sales development again, in agreement with the commercial policy and in line with what the fertilizer market was offering regarding terms and rates.

This year, the customer web portal renewed in 2021 was improved. The platform provides this segment of the public with management autonomy and the possibility of consultation.

We continued developing alternative financing tools for the distribution segment, and we continued with operations through rural credit cards. At the same time, financing was again made available through forward grain contracts, for the administration of which a new sector was created within the Company, the “Grain Exchange”.

The average collection period was 32 days, keeping the levels of 2021 and uncollectibility was almost null.

During 2022, we continued with the implementation of control measures in face of the still-current COVID-19 circulation. Within said framework, a series of preventive barriers, such as the vaccination compliance system for the company’s own and contractor personnel, the evaluation of virus severity attenuation and compliance with protocols, among others.

The specific protocols that were modified along the year, and that remain in force to date according to activities and/or locations, are as follows:

In this context, contractors are evaluated for COVID-19 according to the specific protocol and the preventive actions during the performance of tasks.

In addition, annual work environment control analyses were performed, monitoring the following risk agents:

Together with the Production area, we prepared a procedure to maximize the prevention of safety and health risks for personnel who could be exposed to chlorine dioxide. At the same time, together with the Medical Service and Human Resources, we defined control and prevention measures for the staff, even in the case of pregnancies.

Regarding Resolution SRT 81/19, a procedure was prepared that obliges contractors to report whether or not they work with carcinogenic agents, according to the format of the “Carcinogenic Agents Surveillance and Control System” (SVCC).

Regarding the environmental aspect, in March we received the renewal of the Environmental Certificate of the Bahía Blanca industrial complex and in June the renewal of the San Nicolás Terminal’s Gaseous Emissions to the Atmosphere License from the Ministry of the Environment of the Province of Buenos Aires, with a four-year term in both cases. As every year, the scheme required by the environmental control program, established by the competent authorities, was completed. These included measurements in emission fixed points (stacks), air quality, liquid effluent discharge, underground water monitoring, and waste management and disposal. With these measurements, Profertil meets the requirements in the regulations in force and shows that its operation is environmentally responsible, both in Bahía Blanca complex and in the terminals.

The Det Norske Veritas audit was performed from June 28 to July 1, and the score obtained was 95.1 % exceeding the 91.7 % obtained in June 2019. The resulting recertification is valid until July 2025.

We worked in conjunction with the person responsible for Industrial Operations training in the Basic Training Program for Plant Brigades. Taking into account the protocols established for COVID-19 prevention, face-to-face meetings were held with Brigade personnel to provide the basic training modules planned for the year. Face-to-face training sessions for EH&S managers have resumed both in Bahía Blanca and in the North Terminals. Likewise, a face-to-face training workshop for the Emergencies Committee was carried out.

We participated in the APELL process as members of the emergency response and risk analysis commissions. Updates were made in the PRET (Technological Emergency Response Plan) and in the sources that might cause events that transcend the battery limits of each plant.

During 2022, the DIGITAL PPE (DRIXIT) prototype was enhanced, both for human safety applications and for emergency response. It was concluded that it is a highly useful element for daily tasks, as the system allows us to determine the location of personnel at the plant in the event of an emergency, as well as to provide assistance if the panic button is activated.

In compliance with Act 24449 regarding the transportation of hazardous goods by road, training was provided to all the fire departments located on the five routes where ammonia transports circulate within a 200 km radius of the plant.

We recorded a total of 1,783,712 hours worked among own and contractor personnel, obtaining the following global accident rates:

LTI (Number of incidents with lost time per each 200,000
hours worked): 0.11.

TRI (número de accidentes totales reportables por cada
200.000 horas trabajadas): 0,11.

In this sense, there was only one lost time incident recorded that was the splash and burn with sulfuric acid on face, neck and arms of a person in the Bahia Blanca complex. From the environmental point of view, no significant environmental incident was registered.

The annual program of “Training and accreditation of technical competencies related to Environment, Health and Safety” was complied with, according to the legal requirement established in Resolution SRT 905/15, which includes all members of the organization.

Major maintenance work and modifications were carried out on buildings and other facilities related to people’s health and safety in the Norte Terminals. The following works were performed at the Puerto General San Martín terminal:

• Installation of an access ladder to minimize the possibility of people falling into the water.
• Truck tarping platform.
• Second stage of suction systems upgrading: replacement of carbon steel pipes with stainless steel ones and bag filter improvements.
• Improvements in the dock fire network: replacement of the board due to obsolescence and measurement of pump start-up in the SCADA system.

These were the works performed in the San Nicolás Terminal:

• Beginning of sandblasting and painting of the conveyor. Approximately 60 % completed, including the transfer tower and other structures.
• Repair of internal roads.
• Installation of two new technology gates made of lightweight tarpaulin, removing the large metal gates.
• 50 % of the fire network installation.
• 70 % of the tarping platform.
• 70 % of the work for the complete replacement of filters in the main house and cell.

2022 was a period of changes and new challenges for the Profertil team, allowing us to continue the work started in past years to strengthen our institutional project that is to lead the transformation of the industry on the road towards sustainability.

Along this line, the need to expand the brand reach and our presence in the rest of the country was one of the priorities that marked the course of most of the actions developed by the area.

We worked towards this goal on the production of value contents specifically thought for publics of other provinces. Among other actions, we added the North Terminals to our communication strategy and extended our presence in other locations where we operate through some of our community outreach programs.

Undoubtedly, the continuous work to integrate the Company’s communications began to bear fruit in 2022 and opened us new opportunities to continue growing and innovating on the road to sustainability.

Sustainability Strategy

Aligned with the 2030 United Nations Organization (UN) Agenda, our Company has a Sustainability Strategy. Its objective is to adapt management to the global redefinition of the fertilizer industry, the new customer requirements, and the key role of the industry to achieve a sustainable food system.

A multidisciplinary team was formed to this end, made up by at least one representative from each Company area. This new work team, through regular meetings, monitored and validated the various stages of progress of the work plan, whose first stage defines clear objectives for 2025.

Specific trainings were carried out geared to each management’s teams to define and implement the action plan to achieve each goal under their leadership.

The Sustainability Strategy and its action plan are aligned mainly to six Sustainable Development Objectives (SDO) of the United Nations: zero hunger (2), gender equality (5), decent work and economic growth (8), responsible production and consumption (12), climate action (13) and partnerships to achieve the goals (17).

In order to give sustainability a greater importance as a crosscutting axis of our day-to-day activities, Profertil created the new Strategy and Sustainable Development Management to be in charge of the management and implementation of a sustainability strategy as of 2023.

Corporative Communication

During 2022, understanding that richness that comes from multidisciplinary work, we continued working with the integrated communications team on the implementation of strategic actions that contribute to disseminate the institutional mission and vision through the design of messages of value to all our audiences.

In this regard, weekly meetings were held to jointly define strategic initiatives that would enable us to strengthen and promote our corporate communication according to the stated objectives.

One of our priorities was the enhancement of the national reach of the brand. For this purpose, we developed audiovisual campaigns geared to national public opinion such as #ObjetivoNutrición (Nutrition Objective) which in its first and second seasons recalls and shares the history of the Río Negro Valley and Misiones producers, respectively.

#ObjetivoNutrición supplements the campaigns developed so far: #ModoCosecha and #EstamosSembrando, closing the circle of the three key moments in the field: sowing, harvesting, and fertilization.

The addition of the logistic terminals in all our communications was also key. In this sense, we wanted Puerto General San Martín, San Nicolás, and Necochea to be part of the strategy that was being implemented in the Bahía Blanca Complex and in the Buenos Aires offices, accompanying through communication the development of programs and activities implemented in the area and with the local communities.

Another basic axis in 2022 was the addition of Profertil programs into the communication strategy.

In this vein, thanks to the joint work developed throughout the year, the Company’s social networks grew monthly increasing the reach and interaction with all our target audiences: customers, suppliers, producers, collaborators, journalists, government and the community in general.

In this same context, and as part of the national positioning strategy, we intended to give a voice to our communications through Profertil leaders, focusing mainly on the CEO profile. After a benchmarking process, a plan was defined that included the development of the social media profile, with main focus on LinkedIn, and a training plan that included contents such as effective presentations, media training and spokesperson skills for the Steering Committee.

Press Actions

In connection with our goal to strengthen ties with agricultural journalists, we continued working on the “Strengthening linkages: training for agricultural journalists” program. We developed three initiatives: a lecture on pasture fertilization at Agroactiva, the annual comprehensive exhibition of agricultural products and services held in the province of Santa Fe; a hybrid training held at our production plant in Bahía Blanca, which consisted of a workshop talk on the “Importance of fertilization in times of drought”, given by specialists from INTA Balcarce, and a visit to the facilities of Profertil at the end of the day; Finally, a training course for journalists from the Buenos Aires Association of Agricultural Journalists (ABOPA) on digital communication and social networks was held at INTA Balcarce’s facilities.

Sustainability Report

Profertil presented its eleventh Sustainability Report, a document that allows us to account for the work done for environmental care and social contribution to the community.

New as of this issue was the use of the sustainability concept to report on actions related to the triple bottom line of social, economic, and environmental performance, in line with the main global trends and the UN proposal for 2023 expressed in the Sustainable Development Goals.

Aligned to our commitment with environmental care and the responsible use of resources, this edition was launched only in digital format through a microsite redesigned and optimized to present the information in an agile, practical and dynamic way for users.

Finally, apart from the GRI (Global Reporting Initiative) standards to which our reports usually respond, we included material indicators for the Resource Transformation Sector (Chemicals) from the Sustainability Accounting Standard Board (SASB) complying with the United Nations Global Compact requirements and identifying the main sustainability issues that have a direct impact on the industrial sector.

Community outreach programs

A priority of the Company’s institutional management model and the road map that defines and characterizes the actions we carry out annually within the framework of our community relations programs is to be good neighbors and to strengthen our relationship with local communities based on transparency, honesty, integrity, and sustainability.

Plant Visits

We reached more than 49,600 visitors through our plant visits program, demonstrating once again the open door policy that has characterized us since our beginnings.
Within this framework, we exceeded 3200 visits, with 2768 on-site tours and 455 in virtual format

Moreover, as part of this program, we opened participation to the North Terminals communities to contribute to the goal of increasing our reach at national level. Teachers, students, and neighbors of different provinces took part in the virtual visits.

Educar para transformar (Educate to transform)

During the third edition of Educar para transformar, we granted 48 scholarships to students of the Technical High School N° 1 of Ingeniero White and the Industrial Operations Technical Degree (TUOI) of the Universidad Nacional del Sur.

Increasing our commitment in more than 150 %, the scholarship students in the last year of the Technical High School N°1 of Ingeniero White were also given training workshops

on study methodologies, life projects, and communication and preparation for the world of work.

The program accompanies university students during the course of their studies, provided they meet the participation requirements.

Creciendo en Comunidad (Growing in Community) – Projects Board

2022 was a celebration year for the Creciendo en Comunidad program: We celebrated 10 years of teamwork with Bahia Blanca and Ingeniero White institutions.

To celebrate the path of joint growth, we carried out a compilation and recording of the lessons learned throughout these years, compiled in the form of testimonial videos and a book detailing the history, challenges and achievements of the company during this decade.

Twenty-one organizations participated, represented by 65 individuals. Along this cycle, each institution had an organizational workspace with the program coordinators in which their annual objectives were posed and where the internal challenges and the generation of dialogs and agreements within each organization were worked.

Concerning the Projects Board, during 2022 we prioritized projects with a social impact, which contributed value to the different generations and community neighbors.

Along this line, and after work related to cultural interventions within the framework of the community identity, we defined the execution of works such as the construction of a sign at the entrance to the town, community murals reflecting the history of Ingeniero White, a vertical green wall with Ingeniero White (IW) initials located in the area of the amphitheater, among other projects.

Huertas (Vegetable Garden) Program

Good practices associated with sustainable agriculture are drivers of change and collective learning, which will enable educational communities and new generations to become more aware of the need to care for resources, the environment and access to good nutrition.

Consequently, during 2022 we resumed the on-site edition of the vegetable garden workshop for teachers. This time, 24 teachers at the pre-school, primary, secondary and special education levels took part.

Relationship with the communities of the North Terminals: Puerto General San Martín and San Nicolás

To strengthen our commitment with the social organizations that conform the North Terminals communities, we initiated an institutional mapping and started a process of networking and dissemination of programs aimed at the community.

In this context, we held meetings in both cities and, after diagnosing the issues of interest, we worked on a version of the Vegetable Garden Program adapted to the characteristics of the target population.

Así son los suelos de mi País (This is what the soils of my country are like) program

For the first time we accompanied the development of Así son los suelos de mi País, a CREA initiative that seeks to promote awareness of sustainability and care of the soil as a critical natural resource for humanity through education.

We took part of the dissemination, valuation and assessment part developed by over 2400 pre-school, primary, secondary students of 111 schools of different provinces.

During 2022, we continued with the implementation of actions aimed at consolidating our ethics and compliance culture, strengthening all the tools of our Integrity Program, with the premise of guaranteeing total transparency in each of the organization’s activities. We also focused on the analysis of third parties Integrity Programs to which we relate, strengthening compliance in the value chain, with the challenge of exporting our compliance culture to society.

In November, we launched the “Construyendo Compliance” (Building Compliance) program. This initiative aims to determine the degree of implementation and maturity of the Integrity Programs carried out by third parties with which Profertil is related. We hope that this information will help us generate spaces for synergic collaboration that will allow us to improve standards in ethics and compliance.

Construyendo Compliance was implemented through the Contractor Control System that Profertil has been developing for some time now to unify the channels of communication with our stakeholders. Originally, the platform had been designed to control and request information and documentation from contractors who had access to our plant. In order to take advantage of it from a new dimension, the platform became a space in which Profertil is not limited to simply requiring certain demands, but can also interact and collaborate with the development of all parties (in this particular case, in terms of ethics and compliance). We have also broadened its scope: we have added a large number of suppliers as addressees and we plan to incorporate clients, intermediate institutions with which we have a relationship, and governmental entities with which we interact.

Construyendo Compliance will annually assess the state of third parties Integrity Programs that will enable to establish joint improvement objectives through collaborative work. Thus, Profertil will be able to accompany the development of the audiences with whom it interacts, making available tools, training, instructions, tutorials and models to enable the gradual implementation and strengthening of its own policies and tools in this area.

In order to encourage and promote a process of continuous improvement, there will be a follow-up of the evolution and improvements in ethics, transparency, and compliance, which will not only benefit synergically all involved, but will also allow specific awards to be granted to the most consolidated Integrity Programs and to those that achieve the most outstanding results.

Our challenge is to lead a change in paradigm, establishing a new form of business development, always geared towards ethics, transparency, and social commitment. In this sense, Profertil is a leading and innovative company, so we understand that it is our responsibility to make good use of these strengths to transmit our culture to customers, suppliers, contractors and other public and private institutions with whom we interact.

We highlight that within the framework of the development of this program, Profertil was summoned by the Anti-Corruption Office of the National Ministry of Justice to participate in the design of a new tool that seeks to promote the development of integrity and transparency actions for different entities and companies. This platform, called RITE (Integrity and Transparency Register for Companies and Entities), will allow companies and organizations to carry out a self-diagnosis based on the staggered, dynamic and updated provision of information, so that each company will be able to identify its areas for improvement. The training platform will provide tools and mechanisms for continuous improvement in the areas of transparency, human rights and sustainable development, assessing not only results but also efforts and progress.

As to the Continuous Training Program, an element highlighted by Act 27401 on Criminal Liability of Legal Entities and a fundamental pillar of our Integrity Program, we renewed the training on the Code of Conduct and Ethics. This is a mandatory annual training space for all the Company’s collaborators. The new training has a modern and dynamic format, with interactive activities and challenging contents that help us to reflect on central aspects of our integrity policies. Its configuration allows for agile modification of its contents in order to keep them up to date.

We also carried out personal data protection trainings where emphasis was placed on the rights and obligations in relation to this type of information and on the dedicated Whistle Blowing Line, a basic tool of our Integrity Program. Both trainings were given with the collaboration of specialists in the field and had wide participation and interest by part of Profertil collaborators.

We tried to make practical issues visible, highlighting the relevance of Compliance in the different processes and areas, with different actions such as the meeting of Compliance Ambassadors, which brought together people from different sectors of the Company, with various degrees of responsibility in the organization, unionized and non-unionized personnel, and contractors’ employees. The purpose of the activity was to analyze the different Compliance challenges in the company and the contribution that each one of us can make to achieve the goals that we define. The activity is part of the general objective of continuing generating collaborative synergies with all sectors of the organization.

We continued with Compliance Risk Tracking with the assistance of 19 “risk owners” collaborators from different sectors of the organization. Together with them, we conducted training activities and worked on updating the Compliance risk map, reviewing its definitions, determinants, application of mitigating factors and impact assessment.

This map is a basic tool on which our Integrity Program is designed and sustained. Cultural changes and business dynamics make it necessary to actively monitor the mapped risks, review their determinants and mitigating factors, and detect possible new risks.

In line with the corporate objective related to preparing the organization for the dissemination of our reports under ESG criteria, we carried out various activities aimed at communicating and raising awareness in all areas about the opportunities under this new global reporting trend, and the role of Compliance in the Sustainability agenda. These activities were performed on different dates and in different Company locations with the objective of disseminating the tasks of the area and getting closer to collaborators, generating bonds of trust that allow us to guarantee better integrity results.

Another significant fact was the implementation of the new Ethics Committee Operation Manual, duly approved by the Board. The integration of the Committee is already regulated as well as the faculties and the responsibilities of the Compliance officer and the Committee itself. Within this framework, agendas were planned and coordinated to guarantee the monthly frequency of the Ethics Committee meetings, without prejudice to the extraordinary meetings that may be held. There is record of each of them in the agenda together with the minutes with the contents of the decisions adopted.

The new Complaints Management Manual has been implemented. These complaints are received through the dedicated Whistle Blowing Line achieving thus a more efficient management of this tool and a better classification of the severity level of the reports.

Details up to this point show a clear improvement in the processes, which are not only more efficient, but also more permeable and clearer in the face of controls or audits, with a complete record and archive of the actions.

In order to further improve the level of knowledge available in the tool and to raise the level of trust as to confidentiality and anonymity of the channel, the proposed changes were accompanied by activities and trainings in the organization, both face to face and on line to be able to explain the modifications in the management of the Resguarda Ethics Complaints line.

In addition to the improvements and enhancements detailed so far, we also continued consolidating our internal legal support of the different processes and areas of the Company. We worked together with the different sectors, supplying legal insight in the different stages of our businesses to be considered in the decision making process, from a preventive rather than a reactive vision to the emergence of potential conflicts.

In Profertil, we work within the framework of a good organization climate based on our values. That is why we strive to promote a safe, inclusive, and pleasant environment, where respect, acceptance, and non-discrimination prevail.

Profertil Human Resources management is part of the Integrated People Management System, whose objective is to achieve the best fit between the organization and its employees through the fulfillment of objectives.

Management practices are aimed at adding value to our human capital: they ensure that each member of the team is committed to the achievement of professional objectives to make work a key factor in everybody’s well-being and self-realization. Likewise, Profertil culture promotes open and honest dialog to achieve a transparent and sustainable link among all its members.

Thus, practices related to people management are grouped into three strategic areas: diversity and inclusion, integral wellbeing, and transformation.

Diversity and Inclusion

With the code of ethical conduct and the diversity and inclusion policy, every person working at Profertil becomes a fundamental part of sustaining a work environment free of any type of violence or discrimination, be it among colleagues, superiors or clients, promoting people’s comprehensive well-being. In 2022, we strengthened this axis with the systematization of the Diversity and Inclusion (DI) governance: we created the DI Community and the DI Board two interdisciplinary teams actively working on this topic, channeling consultations and executing actions throughout the Company.

We conducted trainings in operational teams to reinforce respectful treatment, to be aware of our own biases and to discuss micro-violence.

We also organized workshops open to the entire Profertil team. “Making violence visible”, a talk organized as part of International Women’s Day and “Respectful parenting free of stereotypes”, a workshop that seeks to help employees acquire concepts and tools that will help them in their daily lives.

In 2022, we increased our active participation in associations and peer groups, such as the IFREI club (Family and Business Reconciliation Center of the Argentine Business Institute), the Di Tella University’s Business Network for Diversity, and the Diversity and Inclusion Network of the Argentine Chamber of Chemical and Petrochemical Industries in order to learn from best practices and promote a more equitable society.

Comprehensive well-being

The Comprehensive wellbeing axis is based on understanding people as multidimensional beings where work is another sphere of life in which we can achieve fulfillment, beyond economic retribution. During this year, we worked on the following initiatives:

Transformation

This axis starts from the importance of transformation and innovation of both the organization and our practices, understanding that what we did well in the past will not necessarily lead us to success in the future.

In this sense, the transformation initiated in 2020 in the wake of the COVID-19 pandemic continued in 2021 and deepened in 2022, allowing us to gain greater experience in hybrid work and build a job matrix to draw up the best scheme for each position.

Internal communication and work climate management were aimed at maintaining a sense of belonging in a context of change, encouraging diversity, and fostering healthy bonds and well-being. It was necessary to keep the communication channels active with content that would give meaning and security to people. Together with the Medical Service and the Steering Committee, videos and notes were made in order to disseminate recommendations, care, and new procedures.

We also changed the intranet platform to make it faster and mobile, allowing access from anywhere and promoting interaction with the news. In addition, we implemented a portal to access and digitally sign salary receipts and other important documentation.

We continued with the Strategy and Organizational Culture Transformation started in 2021. Culture diagnosis was performed through quantitative (surveys) and qualitative (focus group and individual interviews) tools.

Recent changes in the way we work are driving us to create a collaborative digital culture. The entire organization will require higher levels of digital skills given the increased use of technology, change mindset and self-management of digital processes. Due to this, we created the “Digital Skills” program that boosts the adoption of digital tools through the performance of pilot tests in different areas and the building of new practices and policies.

IT

The IT area continued working on different projects to keep the information technology platform robust, secure, reliable and efficient, and to keep it continuously updated.

In this context, work was carried out within the area to evaluate the roles within the team and the efficiency of the processes, proposing an internal reorganization to be carried out in stages.

At the infrastructure level, a new cloud architecture was implemented. Improvements were made in the Company’s data centers and a reorganization of physical servers was carried out, virtualizing several solutions. As to the networks, the optic fiber ring of the Bahía Blanca plant corporative network was completed and several initiatives were implemented to improve the connectivity services supplied, such as the decentralization of some services aimed at having distributed Internet access. We also started the process of equipping Bahía Blanca’s plant with industrial Wi Fi.

Improvement in plant camera systems was executed, unifying platforms to have a centralized control. A new system was also installed in the Necochea terminal.

In order to reinforce information security, several initiatives were undertaken: work was carried out to raise user awareness and new tools were incorporated for monitoring incidents and managing the blocking of USB ports on personnel computers. In addition, an industrial cybersecurity diagnosis was performed, which later materialized in the definition of a policy.

Work was done with Industrial Operations in the update of the plant documentation and drawings system (Smart Plant for Owner Operators; SPO) that allows to be used in the cloud. This system added a module enabling the management of transmittals for the exchange of documentation with contractors during the execution of plant projects.

In the 2021-2022 period, Profertil undertook a strategy review project in which it redefined the scope of its mission and purpose, as well as the objectives, goals and strategic initiatives at corporate level. As a result of this project, the need for the creation of this new management team was identified, which is responsible for managing the Company’s strategy in a cross-cutting manner, developing business opportunities with a triple impact vision: environmental, social, and economic.

During this year, the area priority was to continue exploring the conditions for the possible execution of the +Urea project in a volatile world, so that negotiations continued with the bidder selected in 2021 after the completion of the international bidding process for the plant expansion project with a new ammonia and Urea train. These negotiations were carried out within the framework of the agreement signed with the Saipem/Techint Consortium in December 2021 to optimize its bid and outweigh the higher prices of the international commodities market because of COVID-19.

The optimization process developed in 2022 was based on three work lines:

As members of the H2Ar Consortium, we actively participated in the year’s activities, focusing on the initial steps necessary to advance in the development of the low-emission hydrogen in the country and the national strategy and the hydrogen promotion law. Collaboration with the development of reports supplied by the Consortium to the Secretariat of Strategic Affairs of the Nation in the three thematic axes defined (1. Regulation and Standards, 2. Hydrogenated gas, and 3 Blue H2 and carbon capture and storage (CCS).

Driven by the future needs of low carbon ammonia in the country and in the world, we participated in several seminars and meetings with companies that are focused on this new market. We held a meeting with representatives of the H2Ar Consortium, the Bahía Blanca Port Management Consortium (CGPBB) and the Port of Rotterdam envoys at the Embassy of the Netherlands to obtain information on the needs of green H2 and green NH3 in Europe and the probabilities of Argentina as supplier. We participated in the project being carried out by the CGPBB together with Plapiqui-CONICET to know the needs and uses of H2 in the Petrochemical Pole of Bahía Blanca. We took part in the Hydrogen Forum, organized by AHK Argentina – Argentine-German Chamber of Industry and Commerce, where there was a presentation of the H2Ar Consortium, among other presentations of the sector.

A meeting was held with Topsoe to learn more about the pre-feasibility study for the production of green ammonia and green hydrogen in the current plant and other options for new plants.

Based on the so called “CO2 Atlas” prepared by the H2Ar Consortium, a meeting was held with Y-Tec and the CGPBB to discuss the real probabilities of CO2 storage in the Claromecó basin to reduce CO2 emissions from the Bahía Blanca Petrochemical Pole.

As part of the digitalization initiatives, within the company’s technical documentation system, a tool was implemented that allows the filing, distribution, and control of communications and documentation exchanged with contractors and/or suppliers through the transmission of delivery or shipping notes (Trasmittals).

We also took part in two Academy-Company workshops for a Sustainable Petrochemical Industry promoted by Plapiqui, with the participation of the main companies of the Petrochemical Pole of Bahía Blanca and the Argentine Petrochemical Institute (IPA). Profertil representatives were defined in the Steering Committee and in the four work committees: Decarbonization/Energy Efficiency, Circular Economy, Efficient Water Management and Education for Sustainable Development.

As part of innovation development, we participated in the Innovation Experience program, which included a one-week immersion trip to Israel, which allowed us to meet and visit companies, universities, startups, venture capitals and R&D centers of the most successful companies in the world. Additionally, we visited a lab where a project is being developed to separate and use H2 from the effluent and the ICI fertilizer plant in Israel, which has an electrochemical treatment of effluents to reduce N-NH3. By virtue of such visits, the development of the high content of N-NH3 effluent treatment at the plant was finalized, which will be implemented during 2023 and 2024.

Profertil had an extraordinary operative and financial 2022 due to the excellent plant performance and high international prices. Internationally and locally, the context was uncertain due to the war between Russia and Ukraine and macroeconomic imbalances in the local economy. The risks derived from the evolution of macroeconomic variables are key factors in the Argentine economic situation and financial markets, and may particularly affect our strategy, financial condition, results of operations, among others.

For 2023, we will continue focused on our purpose of nurturing the soil in a sustainable manner, producing and marketing products and services to enhance crop yields, increasing food production, insisting on continuous improvement of our processes and operations, preserving financial caution as the guiding principle of our decisions and protecting the health of our people. The context will probably continue to be highly challenging in a setting of high volatility of local macroeconomic variables and commodity prices (including granulated Urea) and with difficulties to have access to foreign currency to import fertilizers and other plant inputs and equipment. Therefore, will shall work to mitigate cost pressures due to the context of high inflation, while monitoring the price of our products in order to optimize our results for the benefit of our shareholders. The commercial perspectives for 2023 will depend mainly on two variables: the weather, in principle it is forecast to be a wetter year, and the economic context, mainly related to the possibility of access to foreign currency, which will ensure the supply of inputs for the agricultural sector and allow planting of the different crops with the necessary technology, ensuring the maximization of their yield potential. In the operative field, and provided there is normal natural gas supply, production conditions are expected to continue to be stable. At the same time, still committing to continuous improvement, we expect to carry out several investment projects, which will not only improve the operability of the current plant, but will also facilitate a future expansion of the plant. Likewise, we will continue exploring the +Urea project for a possible construction of a new plant to increase fertilizer production in the country in the medium term.

Profertil has not adopted a formal policy in relation to dividends. In each fiscal year, the Board carefully assesses the possibility of making a recommendation of paying dividends to the shareholders. Historically, dividends were approved and distributed according to net and realized income approved for each fiscal year, respecting the legal regulations in force, and considering, among other factors, funding requirements related to investment/maintenance plans, debt servicing, working capital needs and the general conditions of the economic and financial context.

For the 2022 fiscal year, according to the financial statements, the unallocated retained earnings of the Company as of the end of the fiscal year under review amounted to $ 85,132 million of which accrued earnings for $ 64,383 million and accrued conversion differences for $ 20,749 million. Additionally, the special reserve of the company at the closing of the fiscal year was $ 3,803 million, made up of $ 5,839 million corresponding to other comprehensive income at the date of transition of capital stock, $ 625 million corresponding to other comprehensive income of the legal reserve and a negative balance of unallocated retained earnings for $ 2,661 million. In this sense, based on the change of the accounting policy adopted by the Company’s Board dated on March 7, in accordance with General Resolution N° 941/2022 of the National Securities Commission, the accrued conversion differences were appropriated to the Other Comprehensive Income account for each of the components of shareholders’ equity that gave rise to them, as stated in Note 2.b1) to the Financial Statements being considered.

Along this path, the Board decided to propose to the Shareholders Meeting assigning the above-mentioned retained earnings as per the following detail:

We also inform that Article 70 of the General Corporations Act N° 19550 establishes that not less than 5 % of realized and net income for the year must be allocated to the legal reserve until it reaches an amount equal to 20 % of capital stock, something that has been complied with during the fiscal year finished on December 31, 2013. Under the terms of CNV General Resolution N° 941/2022, it is ratified that, by virtue of the appropriation of the accrued conversion differences to capital stock, it was necessary to appropriate $ 62.25 million corresponding to the conversion differences accrued in the Other Comprehensive Income account to the increase of said reserve.

Profertil thanks all the staff for their collaboration during the management of this fiscal year, the shareholders for the assistance received, and the bank institutions and vendors in general for their support.

Buenos Aires, March 7, 2023.

The Board.