Grupa Azoty 2012 Annual Report

2012 | GRUPA AZOTY CONSOLIDATED ANNUAL REPORT

report

grupaazoty.com

Powering Creation

2012 | GRUPA AZOTY CONSOLIDATED ANNUAL REPORT

The birth of independent Poland’s chemical industry took place in Tarnów in 1927. Since then, history has come full circle.

Today marks the rebirth of Polish chemistry in Tarnów.

This time with a full awareness of its power. Grupa Azoty is the fusion of everything that we, the Poles, have been able to do best in this industry. Now we feel secure. Now we are ready to transcend borders.

2012 | GRUPA AZOTY CONSOLIDATED ANNUAL REPORT

report

grupaazoty.com

Powering Creation

2012 | GRUPA AZOTY CONSOLIDATED ANNUAL REPORT

The birth of independent Poland’s chemical industry took place in Tarnów in 1927. Since then, history has come full circle.

Today marks the rebirth of Polish chemistry in Tarnów.

This time with a full awareness of its power. Grupa Azoty is the fusion of everything that we, the Poles, have been able to do best in this industry. Now we feel secure. Now we are ready to transcend borders.

Grupa Azoty Consolidated Annual Report

2012

The difficulties facing the global economy over the past several years have given rise to a wide array of risks which require particular courage and resolve from those determined to pull through. Against this backdrop, the Supervisory Board of Zakłady Azotowe w Tarnowie-Mościcach S.A. has shown full support for the plan to consolidate Poland’s chemical industry.

Today, with the crowning achievement of the process – Grupa Azoty’s acquisition and integration of Zakłady Azotowe Puławy S.A., we can safely say that the first positive effects of consolidation will be visible much sooner than anticipated, and in almost all key areas of the Group’s operations. This reinforces our firm belief that Grupa Azoty is on the right track.

On behalf of the Supervisory Board I would like to thank all those who have helped in creating a modern chemical group. Grupa Azoty will elevate the status of the Polish chemical industry and increase its competitiveness in global markets.

With kind regards,

Monika Kacprzyk-Wojdyga Chairperson of the Supervisory Board Grupa Azoty S.A.

2 Report 2012

pow er i nG Cr e at i on

It is with pleasure that I present the Annual Report of Grupa Azoty for 2012, a ground-breaking year for many of our subsidiaries and the Group as a whole.

Looking to the future, we have further ambitious goals in mind, one of which is for Grupa Azoty to enter the main Warsaw Stock Exchange index, which will increase our long-term growth potential and investment capacity, allowing us to create shareholder value.

Through our unfaltering efforts to consolidate Poland’s leading chemical companies around Zakłady Azotowe w Tarnowie-Mościcach S.A., we have changed Poland’s and Europe’s chemicals landscape.

Our plans for the future, however, are firmly anchored in past achievements – we are well aware that what we have accomplished is owed to the hard work and experience of numerous generations. We will continue to draw inspiration from this rich tradition.

Creating Grupa Azoty was a long-term process and its crowning achievement was Zakłady Azotowe w Tarnowie-Mościcach S.A.’s acquisition of Zakłady Azotowe Puławy S.A. This landmark transaction will long be remembered in Poland’s economic history, but it would not have been possible without the trust of the shareholders who agreed to exchange Puławy shares for those of Zakłady Azotowe w Tarnowie-Mościcach S.A.

The present is equally important to us, because each company in our Group is a vital part of its community and region, from which it continually draws strength. For this reason we place emphasis on sustainable development. The more we benefit from the world and its people, the more we owe to them.

Grupa Azoty brings together strategically fit companies with various specialisations and traditions, now working together under a strong, distinctive brand that is well recognised in global markets. Modern capital markets demand strategic thinking, and in building Grupa Azoty we have proved that we understand the challenge. This is why we believe that, having achieved the leading position in Poland, we are now capable and ready to advance our standing in global markets.

We treat each success as a subsequent obligation – as a constant responsibility towards our shareholders, clients and employees. Responsibility for the environment, for quality of life, for global harmony. We take this obligation on without hesitation, because we know we have the power.

The power to create.

The first synergies are clearly visible.

We increased our assets and are ready to reduce raw material, logistics, transport and marketing costs.

We are already enjoying the effects of streamlined decision-making, which – as can be seen in further parts of the report – is best reflected in our financial results.

Jerzy Marciniak Chairman of the Management Board General Director Grupa Azoty S.A.

3 report 2012

KEY E VENTS IN 2012

For the Group Parent, Zakłady Azotowe w Tarnowie-Mościcach S.A., 2012 marked 85 years since its foundation – the ideal moment to confirm its status as the market leader and make good use of the experience and tradition built up over time. Already in its third year, consolidation of the chemical industry was advanced with the signing of a historic agreement with Zakłady Azotowe Puławy S.A. and the introduction of a single brand – Grupa Azoty.

24 January The Warsaw Stock Exchange announces the composition of the RESPECT index – Zakłady Azotowe w Tarnowie-Mościcach S.A. is included for the fourth time.

3 February The Group commences implementation of its “Information Security Policy for the Zakłady Azotowe w Tarnowie-Mościcach S.A. Group” in accordance with personal data protection legislation.

29 February A merger of two Z.Ch. Police S.A. subsidiaries is completed – Centrum Elektrotechnika Instalacje Serwis sp. z o.o. is taken over by AUTOMATIKA Usługi Kontrolno-Pomiarowe sp. z o.o.

9 March Polskie Konsorcjum Chemiczne sp. z o.o. sells 100% of shares in ZWRI sp. z o.o. to P.P.H.U. WIET-POL.

23 March

26 June

The management board of ZAK S.A. agrees to commence disposal of subsidiaries PTS Autozak sp. z o.o., Hotel Centralny sp. z o.o. and Hotel ORW “Azoty” sp. z o.o.

A modern installation for collection of ash at the on-site CHP plant is commissioned, significantly reducing the amount of waste generated and decreasing negative environmental impact.

16 May Through its holding company Norica Holding, Russian mineral fertiliser and chemical product group Acron announces a tender offer for shares in Zakłady Azotowe w TarnowieMościcach S.A. 1 June The management board of Zakłady Azotowe w Tarnowie-Mościcach S.A. responds to the tender offer announced by Norica Holding (Acron Group) on 16 May. The board strongly objects to the offer, saying that it does not reflect the company’s fair value and does not take into account its long-term strategy.

13 June

14 July The takeover of Zakłady Azotowe Puławy S.A. is commenced. Through a decisive majority, extraordinary general meeting of Zakłady Azotowe w Tarnowie-Mościcach S.A. adopts a resolution approving an increase of authorised share capital by 32 495 500 shares, to be exchanged for a 68% stake in Zakłady Azotowe Puławy S.A. The move was part of a defence strategy against the hostile takeover attempt by Norica Holding (Acron Group) and it put the company at the forefront of the domestic chemical industry, signalling commencement of the final stage in consolidating Poland’s leading chemical companies.

31 July

Zakłady Azotowe w TarnowieMościcach S.A. publishes the “Zakłady Azotowe w Tarnowie-Mościcach S.A. Group Strategy 2012-2020”, setting out the Group’s mission and vision and presenting directions for sustainable development.

20 June Two significant agreements relating to the formation of an employee pension scheme at Zakłady Azotowe w Tarnowie-Mościcach S.A. are signed: a company-wide pension agreement entered into between the employer and trade unions and an agreement between Zakłady Azotowe w Tarnowie-Mościcach S.A. and fund manager Towarzystwo Funduszy Inwestycyjnych PZU S.A., the company’s partner in the pension scheme.

4 Report 2012

For the fifth time, Zakłady Azotowe w Tarnowie-Mościcach S.A. is included in the RESPECT index.

31 July Consolidation of Polskie Konsorcjum Chemiczne sp. z o.o. (acquirer) and Biprozat sp. z o.o. (target) is completed, with the acquirer assuming the target’s liabilities and becoming the legal successor to the merged companies.

The outcome is a stable company focusing on investment and design processes.

3 August An agreement is entered into between ZAK S.A. and fund manager Towarzystwo Funduszy Inwestycyjnych PZU S.A. on the provision of additional pension benefits under the employee pension scheme.

KEY E VENTS IN 2012

5 December

21 August Through a tender offer to purchase 32% of shares in Zakłady Azotowe Puławy S.A., announced on 13 July, Zakłady Azotowe w TarnowieMościcach S.A. acquires a 10.3% stake in Puławy.

employees and public officials from the city of Tarnów. Accompanied

by Eugeniusz Kwiatkowski’s granddaughter, Julita MaciejewiczRyś, the President unveiled a statue of Kwiatkowski in front of the company’s headquarters.

19 December

31 August A merger of PROReM sp. z o.o., Zakład Remontowy REKOM sp. z o.o. and ZAK SERWIS sp. z o.o., companies providing services in the mechanics and machine industry, is completed. The combined entity trades as PROReM.

31 October A merger between automatics and control companies Automatyka sp. z o.o. and ASTERZAK sp. z o.o. is completed. The combined entity now trades as Automatyka sp. z o.o.

31 August

13 November

A merger between Jednostka Ratownictwa Chemicznego sp. z o.o. and CHEMZAK sp. z o.o. is finalised.

The merged entity, a provider of laboratory and small-scale chemical production services, trades as Jednostka Ratownictwa Chemicznego sp. z o.o.

Officials from Grupa Azoty, the mayor of Tarnów and the deputy marshal of the Małopolska province sign a letter of intent concerning cooperation on a new chemical technology research and development centre.

14 November

September Zakłady Azotowe w TarnowieMościcach S.A., ZAK S.A. and Zakłady Chemiczne Police S.A. sign a “framework agreement on cooperation with Polskie Konsorcjum Chemiczne sp. z o.o. (PKCh) ”. The agreement governs the principles on which Zakłady Azotowe w TarnowieMościcach S.A. Group subsidiaries commission investment management, coordination, implementation and supervision services to PKCh. 9 October Attended by Polish President Bronisław Komorowski, celebrations take place to mark 85 years since the founding of Zakłady Azotowe w Tarnowie-Mościcach S.A. The President met with Zakłady Azotowe w Tarnowie-Mościcach S.A.

The management board of Zakłady Azotowe w Tarnowie-Mościcach S.A. unveils the Grupa Azoty brand, which from this point will be adopted by all group companies.

The management boards of Zakłady Azotowe w Tarnowie-Mościcach S.A. and Zakłady Azotowe Puławy S.A. enter into a consolidation agreement outlining the rules for cooperation between the two companies.

This agreement governs the issues mentioned in the memorandum of 20 September 2012, which it supersedes.

23 November An agreement is entered into between Zakłady Azotowe w Tarnowie-Mościcach S.A. and Grupa LOTOS S.A., significantly expanding the Group’s R&D capabilities in the future. The agreement concerns feasibility studies, including technical and economic analyses, for a project to jointly develop new chemical and petrochemical installations.

5 Report 2012

An agreement is signed selling shares in PTS Autozak sp. z o.o. to Solaris sp. z o.o.

21 December The Polish Financial Supervision Authority approves Zakłady Azotowe w Tarnowie-Mościcach S.A.’s Prospectus for new series D shares to be issued to Zakłady Azotowe Puławy S.A. shareholders.

31 December The Joint Implementation Project performed by Zakłady Azotowe w Tarnowie-Mościcach S.A. and Mitsubishi Corporation since 2008 is completed. During the four-year project, CO2 emissions were reduced by 2 670 356 tonnes and the company generated over PLN 100 million in profit.

We are chemists – and therefore understand the mechanisms of change.We collaborate with nature.

We create a safe world.

Yet when talking about our mission, we don’t want to talk about ourselves. About our technique.

So instead of a chemical formula, we would rather show how stalks of wheat heavy with grain sway in the wind. We would rather show the smile of a child reaching for a toy. A cityscape which grows beautiful through our materials. A stream flowing with clean water. Instead of talking about ourselves, we would rather talk about how we envisage a better life. Because, in fact, this is what we mean.

6 Report 2012

7 Report 2012

People experience joy the same anywhere in the world, although they express it in different languages.

Only when you understand this, can you enter global markets.

8 Report 2012 REport

A G LOBAL B RAND

Grupa Azoty is a project focused on the future. This is the way it has always been. When President Ignacy Mościcki decided to build the National Nitrogen Compounds Factory in 1927, this was a vision of the future. A vision of great Polish chemistry.

This vision – as well as the history of all the companies which form part of the Group – is our commitment for decades to come. We’ve come a long way. We’ve changed. We’ve crossed many borders. Today we are competing with Europe’s largest chemical companies. But the power needed to achieve this – the power to create – is something which we draw upon from our tradition.

When choosing the name Grupa Azoty, we were guided by two considerations: respect for our own tradition and the principle of simplicity. We believe that even in our highly complex and rapidly changing contemporary age, simplicity remains a source of effectiveness and strength.

The strength of the group itself and the power and clarity of the message through which the group communicates its mission.

The Group – because we are all together, even if we have different experiences and operate in different areas. Because we complement one another. Azoty – because that’s the way it has always been. It was under this slogan that Poland’s modern chemicals industry was born. And it is our desire to enter global markets guided by this same slogan.

9 Report 2012

There are many strategy games and different puzzles. We choose business. This is where the gameplay is for true power.

For real security. For a better life.

For everyone.

10 Report 2012 REport

D e scr i p t i on of G r u pa A zot y CONSOLIDATION TIMELINE

Beginning in 2010, the process of consolidating Poland’s chemical industry has further progressed with the creation of a new brand – Grupa Azoty.

This was a ground-breaking moment for the entire industry.

For Grupa Azoty, its undisputed leader, it is a significant challenge and a new responsibility.

13 October 2011 Zakłady Azotowe w TarnowieMościcach S.A. increases its controlling interest in ZAK S.A. to 93.48%.

February – October 2012 Subsidiaries Biprozat sp. z o.o., PROReM sp. z o.o., Zakład Remontowy REKOM sp. z o.o., ZAK SERWIS sp. z o.o. and CHEMZAK sp. z o.o. are consolidated within Polskie Konsorcjum Chemiczne sp. z o.o.

14 July 2012

28 January 2010 Zakłady Azotowe w TarnowieMościcach S.A. acquires 100% of shares in Unylon Polymers GmbH, a German-based polyamide (PA6) manufacturer, and changes its name to ATT Polymers GmbH. 20 October 2010 Zakłady Azotowe w TarnowieMościcach S.A. acquires a 52.62% stake in ZAK S.A. 19 August 2011 Zakłady Azotowe w TarnowieMościcach S.A. acquires a 66% stake in Zakłady Chemiczne Police S.A.

Zakłady Azotowe w TarnowieMościcach S.A. begins the process of acquiring control over Zakłady Azotowe Puławy S.A. 21 August 2012 As a result of a tender offer, Zakłady Azotowe w Tarnowie-Mościcach S.A. acquires a 10.3% stake in Zakłady Azotowe Puławy S.A. 5 December 2012 The Grupa Azoty brand is launched.

24 January 2013 As a result of shareholders exchanging shares in Zakłady Azotowe Puławy S.A. for shares in Zakłady Azotowe w Tarnowie-Mościcach S.A., the latter raises its stake in the former’s share capital to 83.7%, thereby assuming control over it.

11 Report 2012

Through Grupa Azoty PKCh sp. z o.o. and its subsidiaries, the Group is taking steps to integrate and reorganise non-manufacturing companies active in design, investment delivery, repair and mechanics, automation, laboratory services and small-scale chemical production, together with other support services (with the exception of rail transport). This is aimed mainly at increasing the effectiveness and transparency of operations and separating core operations from other functions. The primary goal here is to reduce the Group’s overheads.

Where increasing the scale of operations is concerned, the Group’s strategy envisages further participation in the consolidation of Poland’s and Central Europe’s chemical industry. The consolidation aims to benefit from synergies, both in horizontal and vertical integration, and as a consequence to increase profit margins. The Group believes that potential acquisitions of other chemical companies, strategic alliances and joint ventures will expand its product portfolio, increase production capacity, develop sales markets and provide access to new distribution channels, but first and foremost will result in higher shareholder value.

DESCRIPTION OF G RUPA AZOTY SHAREHOLDING STRUCTURE 31 DECEMBER 2011 – 15 MARCH 2013

Shareholder

Total

31 Dec 2011

27 Apr 2012

15 Jun 2012

23 Jul 2012

No. of votes

% of votes

No. of votes

% of votes

No. of votes

% of votes

No. of votes

% of votes

64 115 444

100.00%

64 115 444

100.00%

64 115 444

100.00%

64 115 444

100.00% 32.05%

20 549 000

32.05% 20 549 000

32.05% 20 549 000

32.05% 20 549 000

23 277 763

36.31% 22 662 448

35.35%

19 391 863

30.25%

9 433 677

14.71%

8 284 242

12.92%

8 284 242

12.92%

8 284 242

12.92%

9 250 000

14.43%

-

-

-

-

-

-

8 481 287

13.23%

Aviva Otwarty Fundusz Emerytalny Aviva BZ WBK

5 384 685

8.40%

6 000 000

9.36% 6 000 000

9.36%

6 397 643

9.98%

Generali OFE

3 245 554

5.06%

3 245 554

5.06%

3 245 554

5.06%

3 340 610

5.21%

-

-

-

-

3 270 585

5.10%

3 270 585

5.10%

3 374 200

5.26%

3 374 200

5.26%

3 374 200

5.26%

3 392 642

5.29%

State Treasury of Poland Other shareholders ING Otwarty Fundusz Emerytalny Norica Holding S.à.r.l., together with Cliffstone Holdings Limited

PZU OFE Złota Jesień PZU S.A. (including PZU Życie S.A.)

27 Jul 2012

Shareholder

Total State Treasury of Poland

29 Oct 2012

31 Dec 2012

6 Mar 2013

No. of votes

% of votes

No. of votes

% of votes

No. of votes

% of votes

No. of votes

% of votes

64 115 444

100.00%

64 115 444

100.00%

64 115 444

100.00%

99 195 484

100.00%

32.05% 20 549 000

32.05% 20 549 000

32.05%

44 764 617

45.13%

20 549 000

Other shareholders

12 826 319

20.00%

16 166 929

25.21%

16 166 929

25.21%

28 550 085

28.78%

ING Otwarty Fundusz Emerytalny

9 250 000

14.43%

9 250 000

14.43%

9 250 000

14.43%

9 883 323

9.96%

Norica Holding S.à.r.l., together with Cliffstone Holdings Limited

8 481 287

13.23%

8 481 287

13.23%

8 481 287

13.23%

9 599 816

9.68%

Aviva Otwarty Fundusz Emerytalny Aviva BZ WBK

6 397 643

9.98%

6 397 643

9.98%

6 397 643

9.98%

6 397 643

6.45%

Generali OFE

3 340 610

5.21%

-

-

-

-

-

-

PZU OFE Złota Jesień

3 270 585

5.10%

3 270 585

5.10%

3 270 583

5.10%

-

-

12 Report 2012

Report 2012

13

Grupa Azoty Polskie Konsorcjum Chemiczne sp. z o.o.

TECHNOCHIMSERWIS S.A.

NAVITRANS sp. z o.o.

CTL KOLZAP sp. z o.o.

Bałtycka Baza Masowa sp. z o.o.

Elektrownia Puławy sp. z o.o.

Przedsiębiorstwo Projektowania Modernizacji i Rozwoju ZA Puławy S.A. PROZAP sp. z o.o.

Azoty-Adipol S.A.

Zakład Opieki Zdrowotnej Medical sp. z o.o.

Przedsiębiorstwo Wykonawstwa Remontów i Inwestycji REMZAP sp. z o.o.

ZAKSA S.A.

CTL Chemkol sp. z o.o.

GZNF „Fosfory” sp. z o.o.

Przedsiębiorstwo Żywienia Zbiorowego i Usług „STO-ZAP” sp. z o.o.

Hotel Centralny sp. z o.o.

Zakłady Azotowe Puławy S.A.

D.W. „Jawor” sp. z o.o.

Grupa Azoty Zakłady Azotowe Kędzierzyn S.A.

Hotel ORW „Azoty” sp. z o.o.

Grupa Azoty Koltar sp. z o.o.

KEMIPOL sp. z o.o.

Budchem sp. z o.o. w upadłości likwidacyjnej

INFRAPARK Police S.A. w likwidacji

EKOTAR sp. z o.o.

Grupa Azoty PROReM sp. z o.o.

PIW UNISIL sp. z o.o.

EKOTAR sp. z o.o.

S+R Gazy sp. z o.o. w likwidacji

Konsorcjum EKO Technologies

Supra Agrochemia sp. z o.o. w likwidacji Zarząd Portu Morskiego Police sp. z o.o.

Regionalne Laboratorium Oceny Mleka Sp. z o.o.

TRANSTECH Usługi Sprzętowo-Transportowe sp. z o.o.

Grupa Azoty Jednostka Ratownictwa Chemicznego sp. z o.o.

REMECH Grupa Inwestycyjno-Remontowa sp. z o.o.

Navitrans sp. z o.o.

Automatyka sp. z o.o.

Grupa Azoty Polskie Konsorcjum Chemiczne sp. z o.o.

KONCEPT sp. z o.o.

Zakłady Chemiczne Police S.A.

Grupa Azoty brings together a number of strategically fit companies with distinct traditions and complementary specialisations working together on delivering a common strategy. In this manner the largest chemical company in Poland and one of the largest in Europe was formed.

ATT Polymers GmbH

Grupa Azoty S.A.

DESCRIPTION OF G RUPA AZOTY GROUP STRUCTURE

DESCRIPTION OF G RUPA AZOTY GRUPA AZOTY MANAGEMENT BOARD

In accordance with the 2012-2020 strategy, the management board of Grupa Azoty S.A. acts as management board of the entire group, with each board member responsible for a specific operating area.

Group management is compliant with the highest standards and current legislation.

The chairman of the management board/managing director oversees Grupa Azoty as a whole, while board members’ competences are split into three main areas – finance and trade, strategy and development, and production and safety.

MANAGEMENT BOARD Jerzy Marciniak Chairman of the Management Board, General Director

Andrzej Skolmowski Vice-Chairman of the Management Board responsible for Group finance and trade

Witold Szczypiński Vice-Chairman of the Management Board responsible for Group production and safety

Krzysztof Jałosiński Vice-Chairman of the Management Board responsible for Group strategy and development

Artur Kopeć Member of the Management Board elected by employees of the Parent

Responsibility for corporate management rests with the corporate departments at Grupa Azoty S.A. which oversee their respective areas throughout the entire Group.

14 Report 2012

DESCRIPTION OF G RUPA AZOTY BEST PRACTICES FOR A CREDIBLE CAPITAL MARKET PARTICIPANT

Acting in accordance with corporate governance best practices, as outlined in the Best Practices for Warsaw Stock Exchange-Listed Companies, the Parent (Grupa Azoty S.A.) provides all capital market participants, in particular its current and potential shareholders, with exhaustive and reliable information on events taking place at the Parent and within the Group.

These are presented in current and periodic reports, and online at www. grupaazoty.com. Information available online also includes the Parent’s recent share performance.

Going beyond what is required by law, the Group’s open information policy is aimed at meeting the expectations of capital market stakeholders, and in doing so creating and promoting the highest standards in communication between listed companies and investors.

As part of the open information policy, conferences are held after the publication of periodic reports presenting financial results. In 2012, representatives of the Parent also met with capital market stakeholders in a series of one-to-one meetings as well as during events. Starting with its IPO, the company has held annual meetings with retail investors during the Wall Street conference organised in Zakopane by the Association of Individual Investors. In June 2012, the management board and representatives of the Parent were again on hand to meet with shareholders during the conference and the associated Targi Akcjonariat event.

15 Report 2012

The Group’s corporate website is a key tool for communicating with capital market stakeholders, where current and periodic reports, significant information about AGMs and EGMs, analyst recommendations and financial results can be found. The new website, updated and revamped on 5 December 2012, was edited to efficiently provide precise capital market information. In addition, a dedicated module allows investors easy access to share price and other capital market-related information.

The content and presentation of significant investor information was recognised at the annual Złota Strona Emitenta awards for corporate web sites, organised by the Polish Association of Listed Companies. The jury decided to advance Grupa Azoty to the next stage of the competition.

Grupa Azoty’s investor relations efforts were also singled out by investors themselves in the popular Polish economic daily Puls Biznesu for the Parent’s active participation in the Akcja Inwestora campaign, due to which the Parent has had the privilege to be able to use the “Responds to Investors” mark since August 2010. The campaign aims to encourage capital market participants to communicate effectively with listed companies using a dedicated website.

Words are relative.

There are endless ears of grain in the field.

But there are even more stars in the sky.

This is why we use numbers. We measure hard facts.

16 Report 2012 REport

G RUPA AZOTY IN NU M B ERS

Revenue

PLN 7 099 million EBIT

PLN 372 million EBITDA

PLN 611 million Net profit

PLN 315 million Earnings per share

PLN 4.59 Total employment in Grupa Azoty as at the end of 2012

8 607 people

17 Report 2012

We operate within a Group.

We think together.

We talk.

We are open.

So we are not afraid of being tested by the market and our clients.

18 Report 2012 REport

STRATEGY 2012- 2020

Adopted in 2012, Grupa Azoty’s Strategy is the primary document outlining the vision to increase the Group’s value through strengthening its competitive position and ensuring its sustainable development in the global chemical market. The Group’s mission is to supply safe and useful chemical products and to make effective use of synergies and innovation to enhance Group value.

The strategy will be expanded in 2013 to include the growth potential resulting from the acquisition of Zakłady Azotowe Puławy S.A. Grupa Azoty is delivering an ambitious corporate strategy, which clearly outlines its key objectives and prospective growth areas.

The strategy provides a blueprint for identification and maximisation of potential value drivers, giving the Group the edge it needs to compete in global chemical markets. The strategy also focuses on Grupa Azoty entering the main Warsaw Stock Exchange index within a decade and places significant emphasis on generating industry-leading rates of return for shareholders. In fertiliser manufacturing, the Group aims to maintain its top-3 position in the European market.

The strategy addresses key aspects of Group operations, in particular: increasing the operational scale of the Group’s core activities (organic growth, alliances, M&As); maximising operating synergies within the Group; reducing sensitivity to energy costs (technical and energy solutions, a new CHP plant in Kędzierzyn-Koźle) and changes in economic cycles (product chain extensions); lowering production costs (modernising key production lines); building stable and effective customer relations (including introduction of advisory and technical marketing, opening a single centralised trade and marketing centre, entering markets with asymmetrical demand cycles); improving the effectiveness of key processes (modernisation, process optimisation); related diversification through synergies with existing product portfolio (expansion to include liquid and specialty fertilisers, mechanically granulated nitrate fertilisers, next generation plasticisers); constantly adapting product quality to client requirements, product perfection (innovative technologies and cooperation with research and development centres both in Poland and abroad, and opening the Group’s own R&D facility).

19 Report 2012

Grupa Azoty has significant potential for further growth in the fertiliser and chemical product markets, the capital needed to expand dynamically, patents and licences within the Polish chemical industry and independent research facilities. This guarantees dynamic product development, including those based on the latest technical solutions and those adapted to changing customer expectations.

Highly qualified personnel, innovative management systems, an open and transparent information policy, dialogue with local communities and care for the natural environment – these are the key factors which set Grupa Azoty apart from the competition.

The Group’s intention is to grow in line with sustainable development principles, limiting environmental impact in as far as economically practicable, while taking into consideration the needs of local communities.

The primary objective for the Group is to create economic value and redistribute earnings to shareholders.

To the extent covered by the strategy, the Group plans to increase the level of key operating and financial ratios: ROE > 12%; ROCE > 14%; EBIT/EBITDA > 8%/14%.

Where its dividend policy is concerned, Grupa Azoty S.A. plans to make pay-outs appropriate to the company’s earnings and financial standing. The dividend will be in the region of 40% to 60% of the company’s separate net profit in any given financial year.

20 Report 2012

GRUPA AZOTY COMPANIES

21 Report 2012

G RUPA AZOTY COM PANIES Grupa Azoty S.A. (formerly Zakłady Azotowe w Tarnowie-Mościcach S.A.)

SPECIALISATION On the back of an 85-year history, Grupa Azoty is reshaping Poland’s chemical industry. This trusted and well-known organisation was founded upon long-lasting commercial relationships based on partnership and mutual understanding.

The company is active in manufacturing, service and commercial operations relating to mineral fertilisers, engineering plastics and the raw materials needed for their production.

Grupa Azoty S.A. is also an experienced manufacturer and supplier of highly specialised catalysts used in the chemical industry.

In addition to working with leading domestic scientific and academic centres, the company conducts wideranging research and development at its own laboratories, carrying out over a million analyses each year.

Due to its robust R&D programme, Grupa Azoty S.A. is the source of new technologies and innovative products which enjoy recognition and trust in Poland and abroad.

Grupa Azoty S.A. is an active participant in the Responsible Care programme.

Grupa Azoty S.A.’s core operations centre on the manufacture of nitrogen fertilisers and compounds, engineering plastics, organic and inorganic chemicals and other chemical products. The company also generates revenue from selling electricity and laboratory, logistics and other services.

Of key significance within the nitrogen fertilisers manufactured by the company are nitrogen fertilisers with sulphur, a product group including Saletrosan®26 macro and ammonium sulphate AS21. Nitrate fertilisers are generally manufactured using macro mechanical granulation, and they are characterised by good spreading properties.

Due to the use of two granulation methods (smaller, varied granules produced by milling for standard fertilisers and uniform mechanical granulation for macro fertilisers), Grupa Azoty S.A. guarantees the highest quality products and an improvement in crop yields.

Engineering plastics are another significant manufacturing segment.

22 Report 2012

The engineering plastics manufactured by the company are both natural and modified (including Tarnamid®, the trade name of polyamide 6 – PA6). This segment also includes the manufacture of caprolactam, cyclohexanone and cyclohexanol. The company is Poland’s only manufacturer of polyoxymethylene (POM), marketed as Tarnoform® (a natural and modified acetal polymer).

The plastics produced in Tarnów are mainly used in the automotive industry, in white goods and packaging. The company also manufactures other organic and inorganic chemicals and catalysts used in certain chemical syntheses for the production of ammonia, hydrogen and synthetic gas.

G RUPA AZOTY COM PANIES Grupa Azoty S.A. (formerly Zakłady Azotowe w Tarnowie-Mościcach S.A.)

CAPITAL MARKET PARTICIPANT

MANAGEMENT BOARD

Grupa Azoty S.A. has been listed on the Warsaw Stock Exchange since 30 June 2008. Throughout this time the company has strived to ensure that communication with capital market stakeholders meets the highest standards of corporate governance. The company releases exhaustive and reliable information on corporate events. Long-term, partnership-based relations are built with investors on the basis of an open information policy which goes significantly beyond what is required by law. One of the key principles of Grupa Azoty S.A.’s operations is to ensure sustainable development.

Since 19 November 2009 the company has been listed in the RESPECT Index, Central and Eastern Europe’s first stock market index of companies observing guidelines for responsible business.

Jerzy Marciniak Chairman of the Management Board, General Director

Andrzej Skolmowski Vice-Chairman of the Management Board responsible for Group finance and trade

Witold Szczypiński Vice-Chairman of the Management Board responsible for Group production and safety

Krzysztof Jałosiński Vice-Chairman of the Management Board responsible for Group strategy and development

Artur Kopeć Member of the Management Board elected by employees of the Parent

SUPERVISORY BOARD Monika Kacprzyk-Wojdyga Chairperson of the Supervisory Board

Ewa Lis Deputy Chairperson of the Supervisory Board

Jan Wais Secretary of the Supervisory Board

Tomasz Klikowicz Member of the Supervisory Board

Artur Kucharski Member of the Supervisory Board

Marek Mroczkowski Member of the Supervisory Board

Jacek Obłękowski Member of the Supervisory Board

Zbigniew Paprocki Member of the Supervisory Board

Ryszard Trepczyński Member of the Supervisory Board

Correct as at 6 March 2013.

23 Report 2012

The future is a notion.

Life is a project.

We give people the freedom to design their own future.

24 Report 2012 REport

G RUPA AZOTY COM PANIES Zakłady Chemiczne Police S.A.

Zakłady Chemiczne Police S.A. has been manufacturing compound fertilisers for over 40 years. The company has its own specialist port infrastructure which is located in close proximity to its production facilities. The port in Police is the fourth largest in Poland by cargo handled. Thanks to Zakłady Chemiczne Police S.A., Grupa Azoty enjoys a strong and solid position in global markets as an exporter of fertilisers, pigments and chemical products. Zakłady Chemiczne Police S.A has Poland’s only titanium white facility and is the largestscale manufacturer of compound fertilisers, ammonia, and phosphoric and sulphuric acid.

SPECIALISATION The company manufactures compound mineral fertilisers (its standard fertilisers are marketed under the POLIFOSKA® brand) and urea – fulfilling stringent quality standards, this nitrogen fertiliser is the safest for plants and due to its high quality has a wide range of applications outside agriculture. The fertilisers manufactured at Police are: POLIWAP® POLIDAP® POLIFOSKA® POLIMAG® Mocznik.pl® Zakłady Chemiczne Police S.A. has also successfully launched a range of garden fertilisers. Particularly from an environmental protection viewpoint, a significant aspect of the company’s operations is the manufacture of AdBlue®, a urea solution used in the automotive industry to reduce nitrogen monoxide in diesel engines.

The company’s key operating areas also include the manufacture and marketing of titanium white and associate intermediates: iron (II) sulphate and post-hydrolytic acid. The company holds the leading position in the domestic titanium white market.

Titanium dioxide pigments are sold under the trade name TYTANPOL® and their principal customers are manufacturers of paints and varnishes. Other industrial consumers for this raw material include the plastics and paper sectors, ceramics industry and textiles. A source of essential support for the company’s operations is the Energy Centre, which generates technical steam, electricity and compressed air. The company also maintains an acid waste treatment centre and landfill site.

Zakłady Chemiczne Police S.A. has strategic significance for the West Pomeranian region as a whole, and it identifies closely with its regional community. Carrying on its tradition, it provides stable employment for over 2000 people.

MANAGEMENT BOARD

CAPITAL MARKET PARTICIPANT

Wiesław Markwas

On 14 July 2005 shares in Zakłady Chemiczne Police S.A. were floated on the Warsaw Stock Exchange (WSE symbol: PCE). The company is a constituent of the WIG-CHEMIA, sWIG80, InvestorMS, WIG and WIGPoland indices. On 19 August 2011 when Zakłady Azotowe w TarnowieMościcach S.A. acquired 49.5 million ordinary bearer shares in Zakłady Chemiczne Police S.A., assuming a 66% stake in its share capital, the company was absorbed into Grupa Azoty. In accordance with corporate governance guidelines, the company informs stakeholders of its current and planned activities based on the principles of transparency, accuracy and reliability.

Jerzy Góra

25 Report 2012

Krzysztof Jałosiński Chairman of the Management Board, Managing Director

Wojciech Naruć Vice-Chairman of the Management Board

Rafał Kuźmiczonek Vice-Chairman of the Management Board

SUPERVISORY BOARD Jerzy Marciniak Chairperson of the Supervisory Board

Marcin Likierski Deputy Chairperson of the Supervisory Board

Secretary of the Supervisory Board

Member of the Supervisory Board

Anna Tarocińska Member of the Supervisory Board

Andrzej Skolmowski Member of the Supervisory Board

Correct as at 15 March 2013.

We imagine the world as a garden.

As a living project, which requires vision and care.

As a place to live.

26 Report 2012 REport

G RUPA AZOTY COM PANIES Zakłady Azotowe PUŁAWY S.A.

For over half a century Zakłady Azotowe Puławy S.A. has skilfully combined business acumen with cutting-edge technology. Every day it manufactures products for millions of customers, both in Poland and in dozens of countries in Europe and as far afield as South America and Asia. As manufacturer of mainly nitrogen fertilisers and melamine, the company plays an important role in Grupa Azoty. As well as ensuring technological development, the company plays an active role in environmental protection, reflected through its participation in the international chemical industry programme Responsible Care. Its wide-ranging product portfolio and five decades of operations, experience and competences mean that Zakłady Azotowe Puławy S.A. is well-recognised by investors and trusted by customers.

Zakłady Azotowe Puławy S.A. became a part of Grupa Azoty as a result of the tender offer in July last year.

The consolidation agreement entered into on 14 November 2012 clearly outlines the principles for cooperation between the companies and specifies the merger conditions.

As of the beginning of January this year, Zakłady Azotowe Puławy S.A. shareholders were able to exchange their shares for those of Grupa Azoty S.A. Each share in Zakłady Azotowe Puławy S.A. entitled the holder to 2.5 D series shares in Grupa Azoty S.A. After the successful issue of D series shares, Grupa Azoty S.A. acquired an 83.7% stake in Zakłady Azotowe Puławy S.A. This transaction signalled a crowning achievement in the on-going consolidation of Poland’s chemical industry.

SPECIALISATION

MANAGEMENT BOARD

Zakłady Azotowe Puławy S.A.’s key products are mineral fertilisers, including: nitrogen fertilisers: PULAN®, PULREA®, RSM® and PULSAR®, manufactured in Puławy; phosphorous and mixed fertilisers – superfosfat, Amofoski®, Agrafoski®, Amofosmagi®, mixed fertilisers and ground phosphate rock, manufactured at GZNF Fosfory, Gdańsk; potassium nitrate and calcium nitrate, manufactured at Azoty-Adipol in Chorzów.

The second key operating area is the manufacture and sale of chemical products, including: melamine, caprolactam, hydrogen peroxide, PULREA®, PULNOX® and AdBlue®, manufactured in Puławy; sulphuric acid and sodium bisulphite, manufactured at GZNF Fosfory; and potassium nitrate manufactured at Azoty-Adipol for technical and food-related purposes.

Zakłady Azotowe Puławy S.A. also trades commercially in electricity, thermal energy and heat-transfer utilities.

Paweł Jarczewski Chairman of the Management Board

Marian Rybak Vice-Chairman of the Management Board

Wojciech Kozak Member of the Management Board

Marek Kapłucha Member of the Management Board

Zenon Pokojski Member of the Management Board

SUPERVISORY BOARD Cezary Możeński Chairperson of the Supervisory Board

Irena Ożóg Deputy Chairperson of the Supervisory Board

Jacek Józef Wójtowicz Member of the Supervisory Board

Jerzy Marciniak Member of the Supervisory Board

Marta Kulik-Zawadzka CAPITAL MARKET PARTICIPANT Zakłady Azotowe Puławy S.A. has been listed on the Warsaw Stock Exchange since 22 November 2005.

The company is included in the mWIG40, WIG-Chemia and WIG-div indices. Operating in compliance with the highest standards, the company is trusted by its shareholders and influencers within the investor community.

27 Report 2012

Member of the Supervisory Board

Andrzej Bartuzi Member of the Supervisory Board

Correct as at 6 March 2013.

G RUPA AZOTY COM PANIES Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. (formerly Zakłady Azotowe Kędzierzyn S.A.)

With a 65-year history, Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. is a company with well-recognised product brands and a continued drive towards growth – with the utmost respect for the natural environment and focus on the highest production safety standards. This has enabled the company to develop and maintain a stable position in the domestic and European chemical markets.

At present Grupa Azoty ZAK S.A. is Poland’s third largest manufacturer by production capacity of nitrogen fertilisers, products with exceptional seeding parameters. It is also the only domestic manufacturer of oxo alcohols and plasticisers.

The company’s products are used in numerous sectors of the economy: agriculture, construction, chemical processing, manufacturing and the automotive industry. The company also provides specialist laboratory and environmental analysis services.

With regard to corporate social responsibility, Grupa Azoty ZAK S.A. plays an active role in its local community and has become known as a responsible business partner, the largest employer in the region, a sponsor of sporting, cultural and artistic events, and a donor. The company invests in human capital, building relationships based on copromotion of corporate culture, loyalty to the company and full involvement in implementing the company’s strategy. For this reason the company is active in areas significant for the company’s employees and its local community, for example conservation of the natural environment and promotion of safe working conditions and corporate culture, support for employee development and care for their health and a comfortable retirement.

A key element of Grupa Azoty ZAK S.A.’s corporate social responsibility is environmental protection, and since 1994 the company has participated in the Responsible Care programme.

SPECIALISATION

MANAGEMENT BOARD Adam Leszkiewicz Chairman of the Management Board, Managing Director

Mirosław Ptasiński Vice-Chairman of the Management Board

Grupa Azoty ZAK S.A.’s core operations focus on manufacturing nitrogen fertilisers and compounds, organic and inorganic chemicals and other chemical products.

Sabina Nowosielska

The company manufactures plasticisers for plastics (chiefly PVC) and raw materials for their production, oxo alcohols and phthalic anhydride.

Plasticisers include: Oxoplast® IB (DIBP), Oxoplast® O (DOP), Oxoplast® PH (DPHP), Oxoplast® OT (DEHT).

Oxo alcohols include:  2-etyloheksanol, Izobutanol, N-butanol, Oktanol F. Grupa Azoty ZAK S.A. also manufactures phthalic anhydride, butanals, ammonia, nitric acid and other raw materials for the chemical industry.

The nitrogen fertilisers manufactured at Grupa Azoty ZAK S.A. include: Kędzierzyńska Saletra Amonowa® (a mixture of ammonium nitrate with calcium sulphate),

46% granulated urea, Saletrzak (CAN), Salmag®, Salmag® with boron, Salmag® with sulphur.

The basic raw materials for fertilisers – ammonia and nitric acid – are manufactured on-site from natural gas, air and water.

28 Report 2012

Vice-Chairman of the Management Board

Ireneusz Marciniak Vice-Chairman of the Management Board

SUPERVISORY BOARD Andrzej Skolmowski Chairperson of the Supervisory Board

Jerzy Koziara Deputy Chairperson of the Supervisory Board

Wojciech Lubiewa-Wieleżyński Member of the Supervisory Board

Witold Szczypiński Member of the Supervisory Board

Mirosław Sotel Member of the Supervisory Board

Correct as at 15 March 2013.

There are different seasons.

There are different lifestyles.

There are different people.

We create products which take this diversity into account.

29 Report 2012 REport

Adapt to the body?

Adapt to a wave?

Adapt to life?

This is what we’re about.

30 Report 2012 REport

G RUPA AZOTY COM PANIES ATT POLYMERS GmbH

One of the leading polyamide manufacturers in western Europe, ATT Polymers GmbH has been a part of Grupa Azoty since 2010.

The company processes caprolactam into granulated natural and modified polyamide 6. The company’s products are sold to consumers in a wide range of industry sectors including floor coverings, packaging, automotive, household appliances, electronics, construction and machinery.

The inclusion of ATT Polymers GmbH within Grupa Azoty constituted fulfilment of the strategic objectives outlined in the 2008 prospectus, and the transaction enabled the further consolidation and integration of subsidiaries.

The company was restructured in 2012, becoming an entity processing caprolactam and distributing polyamide on behalf of Grupa Azoty. It also successfully entered several demanding and technologically advanced Asian markets. ATT Polymers GmbH has highly flexible technical resources, meaning that the company and Grupa Azoty can easily fulfil market requirements for new, more technically sophisticated and higher quality products.

SPECIALISATION

MANAGEMENT BOARD

ATT Polymers GmbH manufactures and markets plastics (polymers), their intermediates and the by-products of the manufacturing process.

Krzysztof Pieńkowski Geschäftsführer

Jacek Dychtoń Geschäftsführer

The company’s operations cover processing of supplied caprolactam into granulated natural and modified polyamide 6 with viscosity of 2.44.0 through two-phase hydrolytic polymerisation of caprolactam, and packaging, warehousing, marketing and dispatching the manufactured product. Marketed as alphalon®, the polyamide 6 produced at ATT Polymers GmbH is used in the following plastics industry segments: manufacture of industrial and carpet fibres, for packaging, particularly in the food industry, manufacture of engineering plastics.

31 Report 2012

SUPERVISORY BOARD Andrzej Skolmowski Chairperson of the Supervisory Board

Stanisław Rygiel Deputy Chairperson of the Supervisory Board

Małgorzata Malec Member of the Supervisory Board

Correct as at 15 March 2013.

The process of creation begins with vision.

True art, however, means translating the vision to project language.

32 Report 2012 REport

G RUPA AZOTY COM PANIES Grupa azoty Polskie Konsorcjum Chemiczne sp. z o.o. (formerly Polskie Konsorcjum Chemiczne sp. z o.o.)

A subsidiary of Grupa Azoty, Grupa Azoty Polskie Konsorcjum Chemiczne Sp. z o.o.’s operations cover design services, investment coordination, management of subsidiaries and oversight for restructuring and consolidation activities.

Grupa Azoty Polskie Konsorcjum Chemiczne Sp. z o.o. comprises: Grupa Azoty Jednostka Ratownictwa Chemicznego Sp. z o.o., PROReM Sp. z o.o. and Automatyka Sp. z o.o.

– their collected experience and human capital enable comprehensive provision of services covering design, investment preparation and delivery, maintenance and support, together with maintaining the operability of Grupa Azoty production lines.

In 2012, Polskie Konsorcjum Chemiczne sp. z o.o. mainly dealt with implementing a previously developed corporate and financial plan for its subsidiaries’ operations, covering restructuring and consolidation of its group companies. Significant restructuring activities carried out in 2012 led to the streamlining of internal structures.

SPECIALISATION

MANAGEMENT BOARD

The company’s core operations cover chemical industry investment coordination – from studies, through process development, construction and implementation, services during construction and the commissioning of installations, to supply procurement and service contracting. Grupa Azoty PKCh sp. z o.o. also provides specialist rescue and industrial automation services. In 2012 the company provided engineering, procurement and construction management services (EP and EPCM) and lump-sum turnkey investment projects (EPC).

Jerzy Woliński

Within Grupa Azoty, the company is responsible for building a technological development platform and increasing Grupa Azoty value.

This allows effective management of investments within the Group.

CONSOLIDATION ACTIVITIES Reorganisation and consolidation activities were continued at Polskie Konsorcjum Chemiczne sp. z o.o. in 2012. One of the main tasks for last year was to take over Biprozat sp. z o.o. and to merge it into Polskie Konsorcjum Chemiczne sp. z o.o. This was completed on 31 July 2012 with the acquisition of Biprozat sp. z o.o. by Polskie Konsorcjum Chemiczne sp. z o.o., which became the legal successor merging the companies. As a result of this takeover, a strong entity was created bringing together expertise in investment and design, and Polskie Konsorcjum Chemiczne sp. z o.o.’s operations were expanded. A Project Delivery Department was created within the company’s organisational structure, encompassing the project management offices in Tarnów, Kędzierzyn-Koźle and Police.

33 Report 2012

Chairman of the Management Board

Beata Kurbiel Member of the Management Board

Henryk Chromik Member of the Management Board

SUPERVISORY BOARD Witold Szczypiński Chairperson of the Supervisory Board

Mirosław Ptasiński Deputy Chairperson of the Supervisory Board

Andrzej Skolmowski Member of the Supervisory Board

Adam Leszkiewicz Member of the Supervisory Board

Rafał Smoła Secretary of the Supervisory Board

Correct as at 15 March 2013.

G RUPA AZOTY COM PANIES grupa azoty Koltar sp. z o.o. (formerly Przedsiębiorstwo Transportu Kolejowego Koltar sp. z o.o.)

PTK “Koltar” sp. z o.o. was formed on 1 January 2000 through changing the legal form of Zakład Transportu Kolejowego, a part of Zakłady Azotowe w Tarnowie Mościcach S.A. Within Grupa Azoty, it plays a significant role in freight forwarding and rail transport.

Thanks to its highly-qualified personnel and the licences and concessions acquired during its operations, Grupa Azoty Koltar sp. z o.o. has rapidly become a valued service provider in the rail industry throughout the nation. The company is one of few in Poland to hold the required authorisations to perform comprehensive repair of rolling stock bogies and cistern tanks adapted for the transport of hazardous materials.

In 2012 the company reported significant growth in revenue from licensed transport operations, which increased by a factor of 3.4 in comparison with the figure recorded for the same period in 2011. A total of 1 123 rail trips took place in 2012, carrying a total of 287 000 tonnes of cargo.

The successful implementation of new rolling stock maintenance solutions led to a notable increase in operational efficiency and reduction in costs. Due to investment projects implemented last year at Grupa Azoty Koltar sp. z o.o., the company became practically selfsufficient in the maintenance of goods wagons.

SPECIALISATION The company’s core operations include provision of services to Grupa Azoty, in particular freight forwarding, loading and unloading services, commercial operations and railway track maintenance for Grupa Azoty’s on-site railway station.

Grupa Azoty Koltar sp. z o.o.’s services include: licensed rail freight forwarding; rail freight forwarding support for Grupa Azoty and external companies; shunting services at Grupa Azoty sites and comprehensive rail marshalling support; lease of cargo locomotives and rolling stock; loading and unloading services.

Grupa Azoty Koltar sp. z o.o.’s maintenance and repair services include: systematic and emergency repair and periodic inspection of cargo rolling stock and locomotives; inspection and repair of tank wagons for the transport of RID class 3, 6.1 and 8 hazardous materials, confirmed through acceptance by the Transport Technical Supervision Inspector; blast cleaning of metal surfaces and painting of rolling stock; cleaning of rail tank wagons and road tankers after the transport of inorganic chemical products; maintenance and repair of railway tracks; major and ad hoc repairs on excavators and bulldozers; metalwork, welding and machining.

Grupa Azoty Koltar sp. z o.o.’s commercial operations include: sale of diesel;

sale of decommissioned goods wagons.

34 Report 2012

MANAGEMENT BOARD Piotr Golemo Chairman of the Management Board, Managing Director

Jarosław Wrona Vice-Chairman of the Management Board

SUPERVISORY BOARD Andrzej Skóra Chairperson of the Supervisory Board

Józef Grajdura Deputy Chairperson of the Supervisory Board

Tomasz Wałęga Secretary of the Supervisory Board

Correct as at 15 March 2013.

G RUPA AZOTY COM PANIES grupa azoty PROREM sp. z o.o. (formerly PROReM sp. z o.o.)

Subsidiary of Grupa Azoty PKCh sp. z o.o.

MANAGEMENT BOARD

PROReM sp. z o.o. was formed in 1998. Its core operations cover the provision of high quality maintenance and repair services for the chemical, energy and petrochemical industries.

PROReM sp. z o.o. also supervises, builds, starts up and commissions newly-constructed and operational buildings and structures.

Artur Sebesta

Chairman of the Management Board

Andrzej Paryło Vice-Chairman of the Management Board

Katarzyna Piekarska Member of the Management Board, Finance

The company’s biggest asset is its highly qualified personnel. The prestigious Quality of the Year award confirms that the implementation of long-term strategies and improvements goes hand-in-hand with the trust shown by business partners.

Correct as at 15 March 2013.

As part of the consolidation of Polskie Konsorcjum Chemiczne sp. z o.o., PROReM sp. z o.o. was singled out as a significant entity focusing on production maintenance and machine repairs.

In August 2012 PROReM sp. z o.o. took over Zakład Remontowy REKOM sp. z o.o. and ZAK SERWIS sp. z o.o.

35 Report 2012

G RUPA AZOTY COM PANIES grupa azoty Jednostka Ratownictwa chemicznego sp. z o.o. (formerly Jednostka Ratownictwa Chemicznego sp. z o.o.)

Subsidiary of Grupa Azoty PKCh sp. z o.o.

Grupa Azoty Jednostka Ratownictwa Chemicznego sp. z o.o. is a service and manufacturing company focusing on a wide range of operations, including specialist rescue services, particularly hazardous operations, recycling and salvage of municipal waste (including hazardous waste) and asbestos (the company owns and operates approx. 200 hectares of landfill), mechanical, biological and chemical purification of industrial waste and recycling of plastics, sale of chemicals and fertiliser packaging.

Grupa Azoty JRCh sp. z o.o. has its own PCA-accredited laboratory providing water, wastewater and waste analysis, testing of harmful factors in the working environment, the release of substances into the atmosphere, food testing, microbiological and other analysis. A separate area of its operations is the manufacture of polytetrafluoroethylene products and PA, PE and POM re-granulates.

Grupa Azoty JRCh sp. z o.o. also provides professional, specialist and follow-up training courses.

As part of the on-going consolidation process within Grupa Azoty, in 2012 Jednostka Ratownictwa Chemicznego sp. z o.o. acquired CHEMZAK sp. z o.o. in KędzierzynKoźle, which strengthened its position in laboratory analysis, small-scale chemical production and chemical rescue services.

MANAGEMENT BOARD Leszek Gniadek Chairman of the Management Board

Agata Gorzkowska-Rams Member of the Management Board

Correct as at 15 March 2013.

Out of concern for sustainable development, the company’s strategy is subordinate to the strict requirements of standards and implemented management systems relating to quality, the environment and occupational health and safety. Environmental protection is a priority for Grupa Azoty JRCh sp. z o.o., reflected in the company’s slogan – “protecting people and the environment”.

36 Report 2012

It’s impossible to enter a forest without leaving tracks.

We are humans.

We emerged from the forest ages ago.

We are humans.

Learning to walk all over again.

Learning not to leave tracks.

37 Report 2012 REport

What is a greater miracle – an ear of grain or human technology?

We are not miracle workers.

But we look for the best solutions wherever possible.

We listen to people.

We listen to nature.

38 Report 2012 REport

G RUPA AZOTY COM PANIES Automatyka sp. z o.o.

Subsidiary of Grupa Azoty PKCh sp. z o.o.

Automatyka sp. z o.o.’s operations cover industrial automation, control and measurement systems, electrical engineering, safety systems, telecommunications and IT. This wide range of services is possible due to the company’s highly qualified staff and extensive technical facilities.

MANAGEMENT BOARD Artur Maciejczyk Chairman of the Management Board

Robert Buczek Vice-Chairman of the Management Board

Janusz Semeniuk Since 1 November 2012, i.e. from the date on which Automatyka sp. z o.o. acquired AsterZAK sp. z o.o., a company based in Kędzierzyn-Koźle, it has employed approx. 380 staff in Tarnów and Kędzierzyn. Coupled with practical knowledge of technical processes in chemistry, energy and ecology, their extensive knowledge, qualifications and experience enable the efficient development of new dedicated solutions and subsequent integration with customers’ existing systems.

Vice-Chairman of the Management Board

Automatyka sp. z o.o. has modern diagnostic, repair and calibration facilities for measurement apparatus and elements of control systems, mechanical workshops, a 0.4 and 6 kV testing station and a calibration laboratory.

Correct as at 15 March 2013.

SUPERVISORY BOARD Jerzy Woliński Chairperson of the Supervisory Board

Wiesław Kozioł Member of the Supervisory Board

Maciej Włoch Member of the Supervisory Board, Secretary

The company’s key attributes – its partnership-based approach to cooperation with clients, its flexible approach to problem-solving and its high delivery capacity are its greatest advantages. This has been reflected in numerous awards, certificates, and more importantly client references.

39 Report 2012

Labour and its fruits. No other reward is necessary – unless backed by people’s appreciation.

40 Report 2012 REport

RAN KINGS , DISTIN C TIONS AND AWARDS 2012 was a year in which Grupa Azoty advanced in the rankings published by opinion-forming newspapers and industry magazines, and a year of prestigious awards and distinctions for particular companies and for Grupa Azoty as a whole.

RANKINGS (SELECTED LISTINGS) April – Zakłady Azotowe w Tarnowie-Mościcach S.A. ranked 37th on Newsweek’s 100 Most Valuable Companies list.

April – The Zakłady Azotowe w Tarnowie-Mościcach S.A. Group advanced 125 places to 43rd in Rzeczpospolita’s “500 Biggest Companies in Poland”. At the same time the Group ranked 29th in the “50 Companies which Invest the Most” (an advance of 14 places).

April – Zakłady Azotowe w TarnowieMościcach S.A. was placed a high 43rd (100 place advance) in Polityka’s ranking of the “50 Most Profitable Polish Companies” from the “500 Biggest Companies in Poland” list. The company recorded significant progress in the “50 Largest Polish Exporters”, where it advanced 102 places to 41st.

4 September – Zakłady Azotowe w Tarnowie-Mościcach S.A. is ranked 144th in the “500 Biggest Companies in CEE” published by Deloitte in cooperation with Rzeczpospolita (a 272 place improvement).

24 October – The Zakłady Azotowe w Tarnowie-Mościcach S.A. Group placed 44th on the “2000 Most Innovative Polish Companies 2011” list, published by Rzeczpospolita. Group companies also made the cut: Z.Ch. Police S.A. was ranked 124th, with ZAK S.A. at 163rd.

21 December – In Home & Market’s “50 Most Valuable Personalities of the Business” (by company market capitalisation), chairman of the management board of Zakłady Azotowe w Tarnowie-Mościcach S.A. Jerzy Marciniak ranked 22nd.

This publication also included a ranking of the “Most Dynamic Companies in Poland” (by revenue at the end of Q3 2012), where Zakłady Azotowe w Tarnowie-Mościcach S.A. took 1st place.

2012 – Automatyka sp. z o.o. was ranked 10th on Dziennik Gazeta Prawna’s “Business Wings 2012” list in the mid-sized company category.

SELECTED AWARDS RECEIVED BY GRUPA AZOTY AND GROUP COMPANIES 25 January – Weekly magazine Gazeta Finansowa named chairman of the management board of Zakłady Azotowe w Tarnowie-Mościcach S.A. Jerzy Marciniak “Finance Professional of the Year 2011” for his success in developing the group and consolidating the chemical industry.

10 February – Grupa PTWP S.A. awards Zakłady Azotowe w TarnowieMościcach S.A. with the “Cause for Change in Polish Industry” distinction for success in consolidating Poland’s chemical industry and creating stable foundations for a strong chemical group. The company was also named “Most Interesting of the Best” for its implementation of innovative IT solutions, which contributed significantly to improving business processes and increasing efficiency and competitiveness.

March – Z.Ch. Police S.A. was named “Pearl of Business 2011” for its 2011 financial results.

March – ZAK S.A. was named Opole Brand 2011 in the Opole region.

19 April – Zakłady Azotowe w Tarnowie-Mościcach S.A. and Z.Ch. Police S.A. were winners in the “Pillars of the Polish Economy” awards organised by magazine Puls Biznesu and the TNS Pentor research institute.

41 Report 2012

May – Zakłady Azotowe w TarnowieMościcach S.A. received a medal at the PLASTPOL International Plastics and Gum Expo in Kielce for Tarnoform® (POM) with reduced formaldehyde emissions (in the “Achievements of Polish Technology” category).

June – The Polish Ecological Foundation presented Z.Ch. Police S.A. with the “Eco-Trends 2011” award.

June – Z.Ch. Police S.A.’s titanium white is awarded the “Teraz Polska” logo.

July – Zakłady Azotowe w TarnowieMościcach S.A. is included in the RESPECT index for the fifth time.

22 October – ZAK S.A. received a Q quality certificate for Salmag®, Saletrzak (CAN) and Salmag z borem®.

8 November – The Lesser Poland Chamber of Commerce awarded the Lesser Poland Economic Award 2012 to Zakłady Azotowe w TarnowieMościcach S.A. 16 November – In the 10th “Best Functioning Companies” rankings published by economics magazine Polish Market in association with the Institute of Economic Sciences at the Polish Academy of Sciences, the Zakłady Azotowe w TarnowieMościcach S.A. Group, ZAK S.A. and Z.Ch. Police S.A. were named Pearls of the Polish Economy for “consistently implementing corporate policy and strategy and achieving a leading position among the most dynamic and effective companies in Poland”.

2012 – Automatyka sp. z o.o. received an “Astor Golden Partner 2011” certificate for control systems, SCADA visualisation systems using classic technology and industrial network systems.

2012 – PTK KOLTAR sp. z o.o. was named “Business Gazelle 2011” by Puls Biznesu, and also received the “Credible Company 2012” award from the Masovian Association of Commerce, Industry and Services.

42 Report 2012

Grupa Azoty Products and Services

43 Report 2012

Plants are like people.

We respect people and consider their needs.

We know what plants require – wherever they grow.

44 Report 2012 REport

G RUPA AZOTY PRODU C TS AND SERVI CES

Grupa Azoty’s core mission, as outlined in the 2012-2020 strategy, is to deliver chemicals which are safe for people.

As the leader in Poland’s chemical sector and a major player in Europe, Grupa Azoty operates in the following segments: fertilisers, plastics, oxo alcohols, pigments others.

FERTILISERS Fertilisers are a key manufacturing segment at Grupa Azoty. Well-known and trusted fertiliser producers (from Tarnów, Kędzierzyn-Koźle, Police, Puławy, Gdańsk and Chorzów) have joined forces in a newly-formed group with top capacity in Poland to manufacture compound and nitrogen fertilisers, including nitrogen fertilisers with sulphur and liquid fertilisers. Consolidation has also solidified the Group’s position in the European market, where it is the second-largest manufacturer of compound fertilisers and third-largest in mineral and liquid fertilisers.

The modern mineral fertilisers manufactured and sold by Grupa Azoty are enriched with scarce essential secondary nutrients: sulphur and magnesium, and some are additionally enriched with the commonly scarce boron.

Others 4% Pigments 6%

The most universal law in agricultural science – Liebig’s Law of the Minimum – states that growth is controlled not by the total amount of resources available in the soil, but by the scarcest resource. The wide range of fertilisers marketed by Grupa Azoty enables farmers to respect this principle. Use of the fertilisers manufactured by the Group contributes to development of root systems and the use of mineral resources and water by crops, bringing greater natural and economic effectiveness to fertiliser application.

The mineral fertilisers manufactured

by Grupa Azoty can be divided into the following sub-categories: compound fertilisers such as Polifoska®, PoliDAP®, PoliMAG®, PoliWAP®, Amofoska® and Superfosfat; Police’s NPK fertilisers stand out against the competition through their high assimilability and the significant concentration of pure ingredients; nitrogen fertilisers such as Salmag®, Kędzierzyńska Saletra Amonowa®, PULAN®, urea (including Mocznik.pl®, PULREA®) and saletrzak (CAN).

A significant role in the Group’s product portfolio is played by fertilisers with added sulphur: Saletrosan®, Salmag® with sulphur, Polifoska®21 and ammonium sulphate manufactured in Puławy under the trade name PULSAR®. Liquid RSM® (urea and ammonium nitrate solution) is also a key product within the nitrogen fertiliser product range.

The high quality of Grupa Azoty’s fertiliser products is owed to manufacturing processes not based on physical methods (crushing and mixing) but rather production based on emergent chemical processes.

Nitrogen-based chemicals are also manufactured in this segment, including ammonia, AdBlue® (a mixture of urea used for the selective reduction of nitrogen oxide in diesel engines) and mixed acids.

Other fertilisers 9%

Oxo alcohols 15%

Nitrogen fertilisers 50%

Plastics 16% Fertilisers 59% Compound fertilisers 41%

Sales structure by segment in 2012 Fertiliser sales structure in 2012 45 Report 2012

G RUPA AZOTY PRODU C TS AND SERVI CES

PLASTICS

OXO

Plastics is the second most important product segment at Grupa Azoty.

Manufacturing takes place within the group at two companies: Grupa Azoty in Tarnów, Poland and ATT Polymers in Guben, Germany. Plastics (Tarnamid®, alphalon® – trade name of polyamide 6) are manufactured both in natural and modified form and their high quality and composition, which are adapted to specific projects, result from the use of in-house R&D facilities and Grupa Azoty’s cooperation with leading Polish research institutes.

Granulates are also used to manufacture plastic goods: polyamide casings – used as packaging for sliced meats; polyamide 6, 11 and 12 and LDPE polythene pipes used as pneumatic and hydraulic tubing.

Intermediates for the manufacture of plastics are also sold in this segment, including melamine, caprolactam, cyclohexanone and cyclohexanol.

To ensure the highest customer service standards, Grupa Azoty provides all plastics customers with additional service and consultancy and develops product compositions for specific uses.

The plastics product range also includes natural and modified Tarnoform® (trade name of polyoxymethylene – POM), alongside other modified plastics based on polyamide 6.6 (Tarnamid A®), polypropylene (Tarnoprop®) and PBT (Tarnodur®). The plastics manufactured

by Grupa Azoty are used in a wide range of industries due to the myriad of beneficial physical properties, including in the automotive industry, construction, electrical engineering, household goods, and the food and textile industries.

Grupa Azoty is Europe’s second largest manufacturer of melamine and the fifth-largest integrated manufacturer of polyamide 6. In Poland it is the only manufacturer of melamine and POM and the leader in production of polyamide 6.

The oxo range comprises organic products and is a significant part of Grupa Azoty’s operations. The main products in this group are oxo alcohols, plasticisers and anhydrides.

A member of the group, Grupa Azoty ZAK S.A., is the only domestic manufacturer of oxo alcohols. It has one of the most technologically advanced oxo alcohol facilities in Europe. Oxo alcohols are used as an additive to oils and as thinners in the manufacture of paints and varnishes, as well as in other industry sectors. Within the group, oxo alcohols are used to manufacture plasticisers: Oxoplast®O (DEHP), Oxoplast®IB (DIBP), Oxoplast®PH (DPHP), Oxoplast®OT (DEHT), which are also available for sale. These are components of plastics, varnishes, dyes and polyester resins. They are widely used in the plastics and automotive industries.

Grupa Azoty is Poland’s only and Europe’s seventh-largest manufacturer of oxo alcohols and Poland’s largest and Europe’s fourthlargest manufacturer of plasticisers.

POM 5% Others 7% Others 4% Caprolactam 13%

Plasticisers 25%

Polyamide 75% Oxo alcohols 71%

Plastics segment in 2012

Oxo segment in 2012

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G RUPA AZOTY PRODU C TS AND SERVI CES

SERVICES

PIGMENTS The pigments manufactured at Police are Grupa Azoty’s latest product segment. As Poland’s only producer, the Group supplies domestic and international markets with titanium white, marketed as Tytanpol®.

The pigments product range covers nine rutile grades: universal titanium white (Tytanpol®R-001, Tytanpol®R-003, Tytanpol®R-210); specialist titanium white (Tytanpol®R-002, Tytanpol®R-211, Tytanpol®RD5, Tytanpol®R-310).

Others 2%

Titanium white is an important component in manufacturing across a wide range of industries. The key market for TiO2 pigments is the paints and varnishes sector. The high quality of the Group’s pigments means that the majority are certified for use in products in contact with food.

OTHER The “other” segment focuses on the sale of catalysts, energy and services.

The Group manufactures catalysts for selected chemical syntheses and for the production of ammonia, hydrogen and synthetic gas. The product range includes: iron-chromium catalyst; copper-zinc catalyst; iron catalyst.

Pigments 98%

Grupa Azoty provides a wide range of logistics, warehousing and port services. The Group owns three sea ports for its own and clients’ use (in Gdynia, Gdańsk and Police).

Railway rolling stock and locomotive services are provided within the Group by companies in Tarnów, Kędzierzyn, Puławy and Gdynia. The Group is also active in environmental protection and administration and is a supplier of diagnostic, inspection and research services. It also sells electricity and thermal energy and provides its customers with maintenance and repair services.

Grupa Azoty’s product sales are primarily determined by market conditions in the fertilisers, plastics and oxo segments. The largest percentage increase in revenue from sales was recorded in the pigments segment (170.5% growth), which was reflected in the net profit from sales and operating profit generated in this segment. The highest increase in revenue from sales was noted in the fertilisers segment, which has the highest share in total sales (60% growth on the figure for 2011).

This segment also generates the highest profit from sales and highest operating profit.

Pigments segment in 2012

GRUPA AZOTY EBIT BY SEGMENT /PLN THOUSAND/ AS AT 31 DECEMBER 2012

Revenue % share Net profit from sales % share EBIT % share

Fertilisers

Plastics

Oxo

Pigments

Other

4 157 393

1 128 561

1 093 888

400 590

318 303

58.6

15.9

15.4

5.6

4.5

338 481

45 628

43 661

36 377

(45 741)

80.9

10.9

10.4

8.7

(10.9)

332 770

50 647

43 278

35 620

(90 583)

89.5

13.6

11.6

9.6

(24.4)

47 Report 2012

We learn from our clients.

Our work is different but, like they, we sell what we produce.

The relationship is clear – if they succeed, so do we.

48 Report 2012 REport

SALES MAR KETS IN 2012

Between 2009 and 2012, Grupa Azoty sold its products to customers in over seventy countries worldwide. The largest group was the European Union, where mainly polyamide 6, oxo products and compound fertilisers were sold. Another significant region was Asia, where primarily oxo alcohols, polyamide 6, caprolactam and urea were marketed.

A subsequent region is South America, where the highest demand is for mineral fertilisers and oxo products.

SALES MARKETS

Poland 50.64% EU countries 37.68% South America 3.57% Asia 2.86% non-EU countries 2.76% Africa 2.09% North America 0.39% Others 0.01%

A diversified geographical structure is Grupa Azoty’s key competitive advantage, enabling it to apply a flexible sales policy. Sales market diversification is also aided by the seaport facilities in Police, Gdynia and Gdańsk and by diversified distribution channels. The Group sells its products both directly to consumers and through an extensive distribution network. Customer diversification makes it possible to eliminate the effects of seasonality through marketing products in diverse climate zones.

FERTILISERS The strategic market for mineral fertilisers is Poland, accounting for 70% of total sales. The remaining 30% is mainly exported to Germany, Scandinavia and the UK. The sales structure differs significantly by fertiliser groups. For NPK fertilisers, exports account for 41% of sales, while only 15% of nitrogen fertilisers are exported. NPK fertilisers are exported to the European Union (19% of NPK fertiliser sales – the principal countries being Germany, Denmark and Belgium) and South America (12% of total NPK fertiliser sales, mainly to Venezuela and Brazil).

Nitrogen fertilisers are primarily exported to the European Union (14% of nitrogen fertiliser sales), mainly to Germany, Scandinavia and Poland’s southern neighbours – the Czech Republic and Slovakia. A key nitrogen fertiliser product is ammonium sulphate, where the sales structure is diverse and varies from other fertilisers. Poland constitutes 34% of sulphate sales, with the European Union at 33% and South America at approx. 28%.

49 Report 2012

PLASTICS The primary market for engineering plastics is the European Union. Sales to this region constitute 82% of the total. Products are mainly marketed in Germany, Belgium and Italy.

A smaller share of products is sold in Asian markets (10% of total sales).

OXO PRODUCTS Oxo products are mainly sold in European Union markets (80% of sales), including Poland (27%), the Czech Republic, Italy and Germany.

Some oxo products are also sold in Asia, constituting 16% of sales.

PIGMENTS (TITANIUM WHITE) Titanium white is sold in the European Union, accounting for 95% of total sales, with Poland at 52%. Other notable markets include Italy, France, Germany and Scandinavia.

50 Report 2012

GRUPA AZOTY KEY OPERATING AREAS

51 Report 2012

We talk with people.

We talk with matter.

We talk with ourselves. But these are not negotiations. It’s getting to know oneself. It’s friendship.

52 Report 2012 REport

RESEARCH AND DE VELOPM ENT

One of the key factors impacting the development of any company is the way in which it faces up to future challenges.

In the chemical industry it is essential to continually seek new solutions. Thanks to its research facilities and experienced engineering staff, Grupa Azoty is in a prime position to do just this.

Working in partnership with leading research and development centres, Grupa Azoty is constantly seeking the latest and most effective technological solutions and is an active participant in innovative research programmes.

Through long-term cooperation with technical higher education institutions and academic and scientific centres, Grupa Azoty companies are recognised as trusted and solid partners. The experience and knowledge of experts working at Grupa Azoty also contribute to numerous international technology projects.

A key R&D project at Grupa Azoty is the establishment of the Chemical Technology Research and Development Centre. In accordance with the Group’s strategy, work has begun on building the Grupa Azoty Research and Development Centre. The main objective of the new venture will be to search for and implement the latest and most effective solutions at all Group companies. The primary objectives of the initiative were outlined in the letter of intent signed on 13 November 2012 concerning cooperation. This document was signed by representatives of Grupa Azoty, the Mayor of Tarnów and the deputy marshal of the Province of Lesser Poland. The overriding goal of the new centre is not just to increase innovation,

but also to actively build on the Group’s competitive advantages. The Chemical Technology Research and Development Centre will also serve to strengthen the links between the scientific and business communities. In this context, cooperation is planned with the International Centre for Chemical Safety and Security in Tarnów based on the cutting-edge solutions applied in the global chemical industry and promotion of associated cooperation.

The parties intend to support the development of innovations connected with the chemical industry through seed funds, loans and guarantees and entrepreneurship development.

In addition, an agreement entered into with Grupa LOTOS S.A. on 23 November 2012 will have a significant impact on the Group’s R&D capabilities.

The agreement concerns feasibility studies, including technical and economic analyses, for a project to jointly develop new chemical and petrochemical installations. The results of these studies will enable both groups to take a decision by the end of 2013 on whether to form an SPV to jointly implement the project. The main aim will be to process the raw materials generated at Grupa LOTOS into valuedadded petrochemical intermediates and their further processing at facilities belonging to Grupa Azoty into chemical products and plastics. The joint venture has a good chance of becoming part of the Inwestycje Polskie programme.

With its own research and development facilities, including the Technology Development Laboratory, Plastics Laboratory and Titanium White Applications Laboratory, Grupa Azoty focuses on continuous improvement of product quality and research on finding new, cutting-edge products and technologies. Thanks to these activities, new product launches and adaptation of the product range to changing customer requirements is a smooth and effective process.

53 Report 2012

Key R&D operations in 2012 include: perfection of the fertiliser manufacturing process, work on further enrichment of the nitrate fertiliser product range and research on the effectiveness and benefits of using fertilisers in agriculture; research on modernising the Tarnoform® polymerisation lines to increase effectiveness and lower the dependence on weaker links in the production chain; research on on-going optimisation of the cyclohexanol oxidation process, ammonium sulphate crystallisation process and intensification of the caprolactam manufacturing process; research on changing the technology used to manufacture phosphoric acid; work on the capability to process liquid waste at the titanium white facility; work on further product diversification and maximisation of synergies within Grupa Azoty.

R&D operations enable Grupa Azoty to increase the innovativeness and diversification of its product offering. The aim of work on increasing technological efficiency is to further decrease the level of energy used by technical facilities while taking simultaneous advantage of the synergies resulting from byproducts generated within the Group.

As per its 2012-2020 strategy, Grupa Azoty’s key R&D objective is to build knowledge-based competitive advantage, which as a consequence will enable it to increase the level of innovation in its product range, processes and technologies. Grupa Azoty is committed to investing up to 1% of revenue in research and development.

INVEST M ENTS

The Grupa Azoty 2012-2020 strategy emphasises investment in products for agriculture, technologically advanced materials, and organic and inorganic chemicals. The main objective of investment initiatives is to ensure that the Group continuously enhances its competitive position and ensures conditions for stable growth.

The investments implemented in 2012 are in line with the objectives and activities specified in the strategy.

The key investments delivered in 2012 include: Construction of a hydrogen facility adapted to the use of natural gas with higher nitrogen content from sources local to Zakłady Azotowe w Tarnowie-Mościcach S.A. Modernisation of the sulphuric acid and oleum plant at Zakłady Azotowe w Tarnowie-Mościcach S.A.

Modernisation of main electrical substations at Zakłady Azotowe w Tarnowie-Mościcach S.A. Modernisation of the internal logistics system, covering construction of a heavy goods vehicle parking area at Zakłady Azotowe w Tarnowie-Mościcach S.A. Construction of a dioctyl terephthalate research and production installation at Zakłady Azotowe w Tarnowie-Mościcach S.A. Modernisation of synthetic gas compression at Zakłady Chemiczne Police S.A. Construction of an iron II sulphate neutralisation system at Zakłady Chemiczne Police S.A. Modernisation of the fertiliser logistics system at Zakłady Chemiczne Police S.A. Modernisation of the stripper at Zakłady Chemiczne Police S.A.’s urea facility.

Modernisation of ammonia synthesis reactors at Zakłady Azotowe w Tarnowie-Mościcach S.A.

Adaptation of loading stations to new Transport Technical Supervision requirements at Zakłady Azotowe w Tarnowie-Mościcach S.A., Zakłady Chemiczne Police S.A. and Grupa Azoty ZAK S.A.

Economic use of ash from the CHP facility at Zakłady Azotowe w Tarnowie-Mościcach S.A.

IT projects strengthening integration and increasing management efficiency at Group companies.

Modernisation of the cooling system at Zakłady Azotowe w Tarnowie-Mościcach S.A.

54 Report 2012

As regards equity investments in 2012, Grupa Azoty acquired a 10.3% stake in the share capital of Zakłady Azotowe Puławy S.A. for PLN 216.5 million.

As per the strategy, in 2012 the key investment objectives were to lower manufacturing costs through modernising the main production lines and to decrease the Group’s sensitivity to the costs of energy and commodities. The Group also prepared new projects relating to the manufacture of plastics, fertilisers and further product diversification.

In the coming years, the Group intends to implement a range of energy projects at its three sites – in Tarnów, Kędzierzyn and Police – connected with the adaptation of this segment to new requirements resulting from implementation of the IED directive.

IT CONSOLIDATION

IT objectives for 2012 focused on supporting the consolidation of Grupa Azoty.

The beginning of the year saw the completion of a range of projects streamlining IT environments at ZAK S.A. and Zakłady Azotowe w Tarnowie-Mościcach S.A., while the end of the year saw the culmination of pre-start-up tests at Zakłady Chemiczne Police S.A. on a joint integrated system. In the meantime the core ERP system was used to launch key integrated-system elements for four service subsidiaries – Polskie Konsorcjum Chemiczne, Automatyka, Prorem and Koltar. This was in line with Grupa Azoty’s strategic IT objectives.

At Grupa Azoty, IT is the framework around which a cohesive Group is built. Databases for on-going operational synergies are created in specific areas, and IT environments are transformed and consolidated to increase standardisation and optimise business processes. On the back of the activities completed over the last 18 months, all significant business processes are recorded in a single IT environment and are inventoried using pre-defined,

uniform primary data. Standardisation has been effected across the Group using SAP/OpenText and Microsoft software. As a result of steps taken in 2012, almost 3 000 Group personnel are using common systems, e.g. e-mail, invoicing, business expense and annual leave reporting.

Consolidation is aimed at ensuring support for management processes within Grupa Azoty, including streamlining decision-making, optimising and standardising business processes, ensuring quick access to reliable and comparable data, report automation, and rapid presentation of results for Warsaw Stock Exchange reporting purposes.

Parallel projects were implemented to unify and standardise information sharing between teams which are frequently working at different locations. A SharePoint video conferencing platform was also implemented.

Web domains and the IT environment were adapted under the rebranding process, and e-mail addresses were unified across the group. From this moment the new group’s corporate website is at grupaazoty.com.

55 Report 2012

In partnership with HP, Grupa Azoty significantly expanded its IT environment last year to include solutions supporting operational security. A high-spec and reliable server environment was implemented for the requirements of consolidated central systems, and data processing, access networks, internet gateways and security systems were reorganised. The process of building systems to protect data processing against failures and natural disasters is on-going.

With regard to hardware, as a costsaving measure Grupa Azoty centralised and unified its solutions – networks, virtual servers and matrices, backup and computer hardware as per the latest IT developments.

All of the above activities will be continued in the future – actively supporting business processes, optimising costs and minimising information security risk.

RISK MANAG EM ENT

Grupa Azoty companies are exposed to numerous and wide-ranging risks capable of negatively impacting their operations, financial results and share performance.

In 2012, the management board adopted a list of key risks identified and assessed within the Group which should in particular be closely monitored and controlled.

Key risks to Grupa Azoty operations: Risk of a hostile takeover; Macroeconomic risk; Currency risk; Competition risk; Risk connected with technical downtime, production continuity and incident management; Risk connected with hazardous materials handling; Risk connected with access to and the continuity of supplies and supplier dependence; Risk connected with effective communication and decision-making processes within the Group during consolidation processes; Risk connected with strategy execution and strategic project delivery and effectiveness.

With regard to the specific nature of its operations and the industry in which Grupa Azoty operates, systematic tracking of risks appearing in its changing environment, including those created by changing legal regulations, is of the highest significance.

In line with its 2012-2020 strategy, Grupa Azoty will implement a corporate Risk Management System over this period, covering key risk identification, potential threat assessment and the introduction of tools to minimise their impact.

In 2012 a decision was taken to implement a Risk Management System within Grupa Azoty, which will be based on ISO 31 000 and COSO ERM Framework.

The process will be long-term, but the anticipated relatively short-term benefits will be the design of system foundations and thus organisational and procedural solutions to coordinate, monitor and report risk-related information.

The scale of operations at Grupa Azoty means that the occurrence of new risks could constitute a hazard.

Effective risk management must therefore combine three aspects: accurate forecasting of risk factors, design of possible emergency scenarios and effective reduction of their effects. Common, unified operating guidelines are particularly vital to the Group during the dynamic processes and changes it is undergoing.

56 Report 2012

MANAG EM ENT SYSTEMS

Grupa Azoty companies work towards their strategic objectives based on management systems compliant with the highest international standards. These systems outline frameworks to establish and review strategic goals relating to quality, the environment, occupational health and safety and food safety.

Systems in place at Grupa Azoty companies include: ISO 9001:2008-compliant Quality Management System; ISO 14001:2004-compliant Environmental Management System; PN-N-18001:2004 and BS OHSAS 18001:2007-compliant Workplace Health and Safety Management System; PN-EN ISO/IEC 17025:2005 Management System (research and calibration laboratory competences); ISO 22000:2005-compliant Food Safety Management System; Quality Management System for the automotive industry, implemented as per ISO/TS 16949:2009; Responsible Care Framework Management System compliant with European Chemical Industry guidelines.

57 Report 2012

In 2012 a decision was taken to implement a subsequent system – the Grupa Azoty Risk Management System – based on the guidelines of ISO 31 000 and COSO ERM Framework.

These systems enable Grupa Azoty companies to cite the highest management standards. Their operational rollout and compliance with international standards are inspected by certification bodies.

STRATEG I C RAW MATERIALS AND ENERGY

For its manufacturing operations, Grupa Azoty needs two things – raw materials and energy.

The Group’s strategy envisages raw material procurement on the basis of a common procurement policy.

Security of supply is ensured through long-term agreements taking into consideration commercial price formulas and quantitative guarantees.

The most important task in procuring raw materials is to reduce the Group’s sensitivity to changing economic cycles and to natural gas and petrochemical commodity prices.

PHENOL

PROPENE

In this field, Grupa Azoty’s procurement strategy is based on two primary sources – western Europe and supplies from domestic sources.

Regular deliveries from Scandinavian manufacturers commenced from 2013, constituting supplementary supplies.

Phenol consumption was reduced at the end of 2012 with regard to unfavourable market conditions and a drop in cyclohexanol shipments to external customers.

The Group mainly purchases propene based on annual contracts, with spot purchases constituting a supplementary source of supply.

Propene prices are heavily dependent on oil prices. In 2012 Germany remained the main propene supplier, accounting for over 47% of this commodity.

Phosphate rock AMMONIA In 2012 Zakłady Azotowe w TarnowieMościcach S.A. sourced ammonia exclusively through intragroup deliveries, chiefly from the facilities at Zakłady Chemiczne Police S.A. Grupa Azoty has the largest ammonia surplus in Poland and completely satisfies its own requirements.

BENZENE Zakłady Azotowe w TarnowieMościcach S.A.’s benzene procurement strategy is based on supplies from Poland and other CEE countries.

Supply of this commodity in 2012 was completely secured. The main problem for caprolactam manufacturers in 2012 were the prevailing high contract prices of benzene, exceeding EUR 1 000/tonne. In the unanimous opinion of market participants, benzene price levels in 2012 were inadequate for the market situation.

To a large extent the market was dominated by speculative transactions.

ELECTRICITY Electricity for all Grupa Azoty facilities was sourced primarily from a large domestic supplier. The electricity procurement strategy enabled the Group to enjoy competitive prices and contract conditions. The Group’s facilities also periodically purchased on the spot market. The CHP facilities at Grupa Azoty S.A., Grupa Azoty ZAK S.A. and Z.Ch. Police S.A. also contributed to electricity supply security.

Phosphorite was mostly purchased on the basis of periodic agreements or spot contracts, mainly from African manufacturers. Grupa Azoty is diversifying its procurement strategy. The situation in the phosphorite market is to a large extent connected with the situation in the fertilisers sector.

NATURAL GAS The sole domestic supplier of natural gas supplied this commodity from the transmission network and from local sources pursuant to long-term agreements. Grupa Azoty purchased 84.5% of its methane-rich natural gas from the PGNiG S.A. transmission network and the remaining 15.5% from other sources.

METHANOL In 2012 Grupa Azoty secured its own manufacturing requirements through annual contracts, mainly from Russian sources. No major price changes were noted in the spot market, and short-term price fluctuations were mainly caused by technical failures or maintenance stoppages at the largest producers. A high level of supply from Russian sources was maintained in the Polish market, which was competitive from a pricing viewpoint.

58 Report 2012

SULPHUR Grupa Azoty’s long-term strategy assumes supplies of sulphur on the basis of long-term contracts, which enable it to ensure continuous access to this commodity. This is possible due chiefly to Grupa Azoty’s common procurement policy, together with diverse sulphur supplies from petrochemical sources and optimised commercial terms for sulphuric acid purchases.

POTASSIUM SALT Due to competitive commercial terms, the primary suppliers of potassium salt are producers from Russia and Belarus. Supplies are ensured on the basis of quarterly contracts.

Supplementary deliveries are periodically sourced from Germany and the UK. STEAM COAL Supplies of steam coal for Grupa Azoty’s CHP facilities were mainly sourced from two large domestic firms, with supplies split 74.9% to 19.1%. Some purchases were also made through spot contracts. The high price of steam coal noted at the beginning of 2012 fell significantly over the course of the year. For the Group, this meant low double-digit percentage rebates. Coal products are used at Grupa Azoty pursuant to the amended provisions of the excise duty act. From 2 January 2012 these were exempt from excise duty.

MAR KET ENVIRON M ENT The European Union constitutes Grupa Azoty’s key strategic market.

In connection with seasonality and the quest to find new alternatives, overseas markets are also becoming increasingly important. Hence, we track macroeconomic and industry trends concerning our key operating areas with particular attention.

Current fertiliser use in the domestic market stands at 1.14 million tonnes for nitrogen fertilisers, 400 000 tonnes for phosphorous fertilisers and 500 000 tonnes for potassium fertilisers. A growth trend will also be maintained in Poland.

AGRICULTURAL MARKET

Prospects for 2013 are uncertain for manufacturers throughout the entire caprolactam production chain, who fear low demand for polyamide 6, mainly in the automotive sector.

Market analysts at Jato Dynamic believe that car sales in Europe will remain weak next year. A particular hazard is the prospect of economic weakening in the German market.

North Africa may however emerge as a prospective market for automotive development. Industry website Automotive News Europe states that new car sales in this region are due to increase by almost 40% over the next 4 years. The growth in polyamide 6 production in Asian countries will likely limit the possibilities for sales in this region.

According to Strategie Grains estimates, EU crop production in the 2013/2014 season is forecast at 290.2 million tonnes, approx. 7% up on harvests in 2012/2013. Forecasts for soft wheat harvests in European Union countries stand at as much as 134.2 million tonnes (+9%). The highest increase is expected for corn, production of which is forecast at 63 million tonnes. Barley harvests are expected to reach close to 54.1 million tonnes, while a 13% (7.5 million tonne) drop in harvests is forecast for rye.

The forecast changes should not result in a drop in prices for agricultural produce.

FERTILISERS MARKET It is forecast that China, India and Brazil will remain the primary importers of potassium and phosphorus, although African countries will also gain in significance.

The current level of fertiliser consumption in the EU is as follows: 10.5 million tonnes of nitrogen fertilisers, 2.4 million tonnes of phosphorous fertilisers and 2.7 million tonnes of potassium fertilisers. It is estimated that by 2022, EU countries will increase levels of fertiliser use to 10.8 million tonnes, 2.6 million tonnes and 3.2 million tonnes respectively. The countries with the highest forecast decreases in nitrogen fertiliser consumption are the Netherlands, Denmark and Greece, while slightly smaller reductions are expected in France and the UK. In the case of phosphorous and potassium fertilisers, growth in their use is anticipated in Austria, Portugal, Spain and Sweden.

PLASTICS MARKET

Demand for European polyacetal is weak, which is mainly due to on-going weak macroeconomic conditions. With regard to the fact that the automotive sector is one of the dominant consumers for polyacetal, as is the case in the polyamide 6, market demand trends do not look promising. Another sector using polyacetal is the household and electronic goods sector. Research firm PMR forecasts that, despite an anticipated drop in economic growth in 2013, the market will see several positive factors leading to growth for household and electronic goods.

Despite weakening demand for plastics (chiefly in the automotive segment), an improvement in the situation for the plastics industry is anticipated before the end of 2013.

59 Report 2012

OXO MARKET Asia (including Japan), Europe and North America are the largest markets for oxo chemicals. In 2012 these regions generated 95% of global demand, and consumption between 2008 and 2012 increased at an annual rate of over 4%. Consumption in these markets is forecast to continue to rise until 2018. Particularly good consumption is estimated up to 2018 for Germany. German demand is estimated to increase at an annual average of 13%, which to a large extent results from increased demand for acrylates, where n-butanol and 2-ethylohexanol are used.

PLASTICISER MARKET The market for plasticisers is seeing a systematic decrease in the share of phthalate plasticisers based on C4 and C8 alcohols in western European processing, and their gradual replacement by phthalate plasticisers based on C9 and C10 alcohols and non-phthalate plasticisers, including bio-plasticisers.

The global non-phthalate plasticiser market is growing at a rate of approx.

7% per year, and its current value is estimated at EUR 1.3 billion. The industry’s rapid expansion comes on the back of legislative amendments in numerous North American and western European countries. There is however demand for phthalate plasticisers from Asian markets.

TITANIUM WHITE MARKET The titanium white market is closely linked to GDP. The financial crisis, weak global economic situation and drop in consumption translate directly into a drop in titanium white prices.

Current forecasts for the economic situation and GDP for 2013 are not optimistic. Under deteriorating market conditions, a further fall in titanium white consumption and price should therefore be expected.

A slight seasonal demand uptick may be anticipated in June and July 2013.

Mathematicians say that beauty and simplicity are the criteria for truth.

Business is similar.

But knowing the business world better than mathematicians do, we would like to add one more – harmony.

60 Report 2012

SUSTAINABLE DEVELOPMENT

61 Report 2012

The profile of a wing, the delicacy of a leaf, the freshness of air.

Everything needs to be where it belongs. Power demands delicacy.

62 Report 2012 REport

SUSTAINAB LE DE VELOPM ENT

One of the most important elements in the Group’s strategy is responsibility for its surroundings. Believing that technological development can always go hand-in-hand with care for the natural environment and positive economic results, the Group is working on a range of initiatives aimed at achieving harmony and balance with the world around it.

Grupa Azoty treats issues of sustainable development as a matter of strategy. Further to the “Zakłady Azotowe w Tarnowie-Mościcach S.A. Group Strategy 2012-2020”, the Group is developing and will execute a sustainable development and corporate social responsibility strategy based on the “Zakłady Azotowe w Tarnowie-Mościcach S.A. Sustainable Development Strategy 2012-2016”. The adopted strategy completely reflects an integrated approach to all tasks implemented with regard to economic effectiveness, responsibility towards the workforce and relations with the Group’s surroundings.

This strategic approach shows the way in which Grupa Azoty will create stakeholder value while simultaneously achieving economic goals. Management of sustainable development is effected at strategic level, which translates into improvements in processes within key Grupa Azoty operational areas.

Implementation of corporate social responsibility guidelines is based on three pillars.

Grupa Azoty’s goals under sustainable manufacturing are: reducing the environmental impact of Grupa Azoty companies; developing cooperation with scientific and academic institutions; building ecological awareness; creating sustainable products; continuing involvement in the Responsible Care programme, a voluntary undertaking by chemical industry companies to take an active role in ensuring observance of eco-etiquette, improve working conditions, increase the safety of facility operations and maintain constant contact with the environment.

Grupa Azoty’s goals under dialogue and relation building are: supporting the development of the local community; adopting forms of dialogue with key stakeholder groups; building an ethical culture for Grupa Azoty.

Grupa Azoty’s goals under sustainable employment are: improving employee satisfaction; improving employee health and safety; initiating employee development initiatives.

Grupa Azoty operates on a large scale and its reach covers numerous countries, which is why the actions taken are reported in a systematic, transparent and reliable manner in annual and environmental reports.

63 Report 2012

RESPECT Index Proof of its responsibility and sustainable development is the fact that since 19 November 2009 Grupa Azoty S.A. (formerly Zakłady Azotowe w Tarnowie-Mościcach S.A.) has continually been listed in the RESPECT index. The companies are selected to join this index in accordance with a three-phase procedure. Financial issues, strategy and corporate management, environmental factors, employment policy and employee relations, together with market impact and customer relations, are analysed.

This means that Grupa Azoty S.A. is part of an elite group of stable and credible organisations and constitutes additional confirmation that Grupa Azoty S.A. is well-balanced, secure and managed in accordance with the highest sustainable developmentbased standards.

RESPONSIBLE CARE PROGRAMME One of the most important programmes in which the Grupa participates is Responsible Care.

The initiative was launched in 1984 in Canada and for almost three decades has assisted in creating operational systems for chemical companies aimed at reducing environmental impact, increasing the safety of manufacturing process safety and ensuring preventative health system management.

Grupa Azoty S.A., Z.Ch. Police S.A., Grupa Azoty ZAK S.A. and Z.A. Puławy S.A. are actively involved in programme activities. This proves the companies’ deep-rooted involvement in voluntary activities driving sustainable development. The companies submit annual declarations concerning activities planned under the Responsible Care programme, supervised by the Polish Chamber of Chemical Industry.

There can be no tree without the sun.

And no shade without a tree.

We need both – the sun and shade.

We need balance.

64 Report 2012 REport

SUSTAINAB LE DE VELOPM ENT

ENVIRONMENT Environmental performance within Grupa Azoty is run in accordance with the highest standards. Operational issues are addressed on an on-going basis: manufacturing, investment, reclamation of contaminated land, and the appropriate conditions for the manufacturing, storage, transport and distribution of substances are ensured in order to observe environmental protection requirements. With regard to their operating areas, Group companies are classified as entities with a high risk of industrial incidents.

Due to the skilful implementation of the latest technological solutions, Grupa Azoty companies drive environmental performance, financially benefitting in this field on more than one occasion.

Group companies have developed and implemented appropriate programmes to prevent industrial incidents and regularly report safetyrelated issues. There are appropriate evacuation and rescue plans and safety management systems in force at Grupa Azoty sites.

Due to the nature of its operations, Grupa Azoty is subject to legal regulations under the Environmental Protection Law, Water Law, Waste Management Act and other environmental protection legislation.

These regulations impose obligations on Group companies with regard to manufacturing, investment, reclamation of contaminated land and the guarantee of appropriate conditions for the manufacturing, storage, transport and distribution of substances in order to observe environmental protection requirements.

REACH SYSTEM The end of 2012 saw completion of the Joint Implementation Project, executed in cooperation with Japan’s Mitsubishi Corporation from the second half of 2008. The project was an effect of the Kyoto Protocol and concerned limitation of greenhouse gases, including nitrogen oxide, which is released from the Nitric Acid Plant. Throughout the entire project from 2008 to 2012, the actual level of ERUs generated was 2 670 356, which translated into profit exceeding PLN 100 million.

It is worth emphasising that this success was achieved despite an incident which took place at the KDC installation at the beginning of 2011 and resulted in a stoppage of several months, during which it was impossible to generated ERUs. With regard to the significance of the project, its entire duration required constant monitoring and supervision, both from management and from personnel working at the plant. The ERUs generated were verified on multiple occasions by an external firm and only the final report, confirming application of the right standards and methods, enabled the ERUs to be sold.

Grupa Azoty companies act in full compliance with regulations aimed at thoroughly analysing the harmful properties of all marketed chemical substances, introducing guidelines for their use and, in justified instances, limitations and prohibitions.

Beginning 1 June 2007, the REACH regulation imposes a registration obligation on all European manufacturers and importers of chemical substances. In the case of some substances belonging to the “substance of very high concern” category, it is necessary to obtain authorisation for their use. In order to register substances, it is necessary to submit the appropriate documentation to the European Chemicals Agency containing test results and assessment of the chemical’s safety.

In 2012 the on-going process of consolidation and close cooperation between the REACH departments at three Grupa Azoty companies (Grupa Azoty S.A., Grupa Azoty ZAK S.A. and Z.Ch. Police S.A.) was continued. In accordance with the European Chemicals Agency’s decision, required updates and registration of chemicals and chemical substances were undertaken in 2012.

The extent of registration to date corresponds to the current extent of Group companies’ operations.

At future dates specified in the REACH regulation (2013 and 2018), it is anticipated that subsequent substances will need to be registered.

These are substances manufactured at a lower scale of operations (below 1 000 tonnes per year) and have less significance for Group revenues.

65 Report 2012

66 Report 2012 REport

SUSTAINAB LE DE VELOPM ENT

EMPLOYMENT

LOCAL COMMUNITY

SPORTS SPONSORSHIP

The greatest capital that any company possesses is people. Their experience, skills and knowledge are the greatest value for the business they build together. As the largest industrial complexes in their regions, Group companies count among the leading employers in the provinces of West Pomerania, Lesser Poland, Opole and Lublin.

Keeping in mind our responsibility towards local communities, Grupa Azoty conducts voluntary activities such as investment for local communities, solutions to social problems and charity work.

Sponsorship makes it possible to achieve several goals simultaneously. Skilfully implemented, it enables brand identity and a company’s products to be enhanced, and reflects positive factors associated with sport such as passion, emotion and fair play on the company’s identity. It enables the company’s name to be associated with a specific sporting discipline, streamlines client acquisition and leads to a visible increase in the sale of products and services. For this reason, Grupa Azoty companies successfully marketed their operations in 2012 through various sports, acknowledging this form of promotion as positively received and effective.

The Group is timely and reliable in fulfilling its obligations towards its employees, feeling responsibility not just for them but also for their families and their daily environment. Being fully aware of the difficulties which employees may be faced with during the consolidation period, the Group is making every effort to make sure that they are well prepared to meet new challenges and are kept fully up-to-date of developments. HR policy is based on strategic documents including the HR Policy itself. The Group constantly ensures investment in employee development, including through a training system, programs co-funded by the EU and support for individual studies at higher education institutions.

In operations where safety is so highly dependent on the human factor, support for employee development must be constantly perfected.

Employees are subject to obligatory training and regularly sit exams verifying their awareness of occupational health and safety issues. In addition, specific companies also apply solutions aimed at ensuring the highest level of safety, in particular management systems and internal policies.

Group companies also offer a wide range of additional programmes such as life insurance, pension schemes, additional health insurance, and support for sporting activities, cultural interests and leisure pursuits.

Adopted in 2011, the “Zakłady Azotowe w Tarnowie-Mościcach S.A. Strategy for Local Communities 2011-2013” is aimed at organisations and institutions working within their regions for the benefit of local communities. Grupa Azoty companies are key players in developing the regions in which they are based. Involvement in the development of local communities is manifested in support for scientific and academic projects, economic initiatives, sports and culture.

Seeing the need to support people unable to independently develop and function in society, Grupa Azoty acts for the benefit of its stakeholders. The Group’s “Donation Award Guidelines” clearly and precisely specify the principles for providing this type of assistance.

Support for the development of local communities is proof of the Group’s involvement in the problems faced by local communities. This involvement is the effect of best practices applied within the Group and of its strategic approach.

Grupa Azoty’s activity in various areas, from artistic and cultural initiatives to sports and economic projects underscores its involvement and willingness to build on relationships with residents of the regions where its plants, companies and facilities are located.

67 Report 2012

In 2012 the management board of Grupa Azoty specified the principal fields for sponsoring and marketing of the Group’s brand when supporting professional sport. This was aimed at ensuring a coherent corporate identity policy and coherent principles for managing funds designated for Grupa Azoty brand marketing.

It was decided that Group marketing and advertising would be implemented through supporting winter sports, speedway, and men’s and women’s volleyball. Aside from the above sporting disciplines, Grupa Azoty also implements brand marketing activities through supporting sports such as football, basketball and climbing. The value of steps taken in this field is confirmed by the fact that year on year corporate and product advertising implemented through sports is not just increasingly popular, but it is also increasingly effective.

68 Report 2012

Business is an adventure.

Vision. Responsibility.

Yes, we know that.

But in the end it all has to be counted.

This is what our shareholders expect.

This is what our customers expect. So this is something we don’t forget.

SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR 2012

69 Report 2012

SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME GRUPA AZOTY FOR THE PERIOD ENDED 31 DECEMBER 2012 (PLN THOUSAND)

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

7 098 735

5 338 029

Cost of sales

(6 107 680)

(4 151 389)

Gross profit

991 055

1 186 640

Selling and distribution expenses

(181 916)

(151 617)

(390 733)

(312 087)

Revenue

Administrative expenses Other income Other expenses Results from operating activities Finance income

49 024

34 000

(95 698)

(175 609)

371 732

581 327

42 741

19 129

(38 672)

(39 750)

Net finance income (costs)

4 069

(20 621)

Share of profit of equity-accounted investees

8 549

2 850

Profit before tax

384 350

563 556

Tax expense

(69 049)

(64 615)

315 301

498 941

423

(1 124)

Finance costs

Net profit Other comprehensive income Effective portion of changes in fair value of cash flow hedges Net change in fair value of cash flow hedges reclassified to profit or loss Net change in fair value of available-for-sale financial assets Deferred tax on other comprehensive income

1 594

874

45 952

-

(9 114)

47

Foreign currency translation differences – foreign operations

(6 750)

7 037

Other comprehensive income

32 105

6 834

347 406

505 775

294 376

461 527

20 925

37 414

Equity holders of the Parent Company

326 481

468 361

Non-controlling interests

20 925

37 414

Basic earnings per share (PLN)

4.59

9.45

Diluted earnings per share (PLN)

4.59

9.45

Total comprehensive income Net profit attributable to: Equity holders of the Parent Company Non-controlling interests Total comprehensive income attributable to:

Earnings per share:

70 Report 2012

SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION GRUPA AZOTY AS AT 31 DECEMBER 2012 (PLN THOUSAND)

Assets

31 Dec 2012

Non-current assets

31 Dec 2011

Property, plant and equipment

2 845 691

2 747 478

Investment property

28 903

49 275

Intangible assets

281 343

283 000

9 124

9 124

Goodwill Investments in subordinated entities Available-for-sale financial assets Other financial assets Non-current receivables Deferred tax assets Other assets Total non-current assets

80 132

80 106

283 202

12 604

565

565

4 890

1 201

113 366

124 266

3 932

610

3 651 148

3 308 229

Current assets

Inventories

723 682

653 171

19 079

253

4 141

-

Trade and other receivables

677 927

722 958

Cash and cash equivalents

243 440

244 791

19 894

16 702

347

125

Other financial assets Current tax assets

Other current assets Assets held for sale Total current assets

1 688 510

1 638 000

Total assets

5 339 658

4 946 229

71 Report 2012

SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION GRUPA AZOTY AS AT 31 DECEMBER 2012 (PLN THOUSAND)

Equity and liabilities

31 Dec 2012

31 Dec 2011

Equity Share capital Share premium Fair value reserve Hedging reserve Translation reserve Retained earnings, including: Net profit for the year Equity attributable to owners of the Parent Non-controlling interests Total equity

320 577

320 577

680 688

680 688

37 221

-

-

(1 634)

(1 279)

5 471

2 039 413

1 745 368

294 376

461 527

3 076 620

2 750 470

414 078

402 197

3 490 698

3 152 667

Liabilities Loans Employee benefits Other non-current payables Provisions Government grants Deferred income Deferred tax liabilities Other financial liabilities Total non-current liabilities

289 979

226 072

139 756

124 932

928

790

118 622

118 951

19 996

17 917

12

-

131 800

126 378

17 632

23 977

718 725

639 017

Loans Employee benefits

200 017

168 754

14 155

28 247

19 227

2 179

Trade and other payables

697 317

754 181

Provisions

133 275

133 142

Government grants

768

600

Deferred income

687

644

64 789

66 798

1 130 235

1 154 545

Current tax liabilities

Other financial liabilities Total current liabilities Total liabilities

1 848 960

1 793 562

Total equity and liabilities

5 339 658

4 946 229

72 Report 2012

SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY GRUPA AZOTY FOR THE PERIOD ENDED 31 DECEMBER 2012 (PLN THOUSAND)

Share capital

As at 1 January 2011

Share premium

195 582

Revaluation reserve

209 990

Hedging reserve

Translation reserve

Retained earnings

Total equity attributable to owners of the parent

Non-controlling interests

Total equity

-

(1 431)

(1 566)

1 099 601

1 502 176

447 926

1 950 102

Total comprehensive income for the year Net profit for the year

-

-

-

-

-

461 527

461 527

37 414

498 941

Total other comprehensive income

-

-

-

(203)

7 037

-

6 834

–

6 834

Total comprehensive income

-

-

-

(203)

7 037

461 527

468 361

37 414

505 775

Transactions with owners of the company, recognised directly in equity Contributions by and distributions to owners of the company Issue of ordinary shares Dividends Total contributions by and distributions to owners of the company

124 995

470 698

-

-

-

-

595 693

-

595 693

-

-

-

-

-

-

-

(265)

(265)

124 995

470 698

-

-

-

-

595 693

(265)

595 428

Change in ownership interests in subsidiaries Acquisition of non-controlling interests without a change in control

-

-

-

-

-

184 474

184 474

(384 564)

(200 090)

Acquisition of subsidiary with non-controlling interests

-

-

-

-

-

-

-

301 849

301 849

Total transactions with owners of the company

124 995

470 698

-

-

-

184 474

780 167

(384 829)

395 338

Other Other

-

-

-

-

-

(234)

(234)

(163)

(397)

As at 31 December 2011

320 577

680 688

-

(1 634)

5 471

1 745 368

2 750 470

402 197

3 152 667

As at 1 January 2012

320 577

680 688

-

(1 634)

5 471

1 745 368

2 750 470

402 197

3 152 667

Total comprehensive income for the year Net profit for the year

-

-

-

-

-

294 376

294 376

20 925

315 301

Total other comprehensive income

-

-

37 221

1 634

(6 750)

-

32 105

-

32 105

Total comprehensive income

-

-

37 221

1 634

(6 750)

294 376

326 481

20 925

347 406

Transactions with owners of the company, recognised directly in equity Dividends

-

-

-

-

-

-

-

(8 884)

(8 884)

Total transactions with owners of the Company

-

-

-

-

-

-

-

(8 884)

(8 884)

-

-

-

-

-

(331)

(331)

(160)

(491)

320 577

680 688

37 221

-

(1 279)

2 039 413

3 076 620

414 078

3 490 698

Other Other As at 31 December 2012

73 Report 2012

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS GRUPA AZOTY FOR THE PERIOD ENDED 31 DECEMBER 2012 (PLN THOUSAND)

1 Jan 2012 to 31 Dec 2012 Cash flows from operating activities

1 Jan 2011 to 31 Dec 2011

Profit for the year

384 350

563 556

Adjustments for:

284 073

323 824

Depreciation

239 592

188 864

(Reversal of) impairment losses of assets

35 562

52 683

Gain (loss) from investing activities

26 058

40 479

Gain (loss) on disposal of financial assets

(5 501)

(2 281)

Share of profit of equity-accounted investees

(8 549)

(2 850)

11 423

31 189

(18 352)

(142)

Interest, foreign exchange gains or losses Dividends Change in fair value of financial assets at fair value through profit or loss Cash generated from operating activities before changes in working capital Changes in trade and other receivables Changes in inventories Changes in trade and other payables Changes in provisions, prepayments and grants Other adjustments Cash generated from operating activities Income taxes paid Net cash from operating activities

3 840

35 578

668 423

907 076

87 136

(75 414)

(73 056)

(80 016)

(129 684)

(148 843)

40 504

55 299

(437)

(19 998)

592 886 za okres (49 106) od 01.01.2012 do 31.12.2012 543 780

638 104 za okres (106 633) od 01.01.2011 do 31.12.2011 531 471

13 329

8 687

(397 294)

(344 034)

Cash flows from investing activities Proceeds from sale of property, plant and equipment, intangible assets and investment property Acquisition of property, plant and equipment, intangible assets and investment property Dividends received

8 000

142

(224 688)

(701 115)

12 269

4 006

Interest received

1 999

3 014

Grants received

2 907

599

(10 680)

(7 965)

(1 190)

(450)

(596 148)

(1 037 116)

-

594 278

(8 884)

(265)

Acquisition of financial assets Proceeds from sale of financial assets

Other proceeds/disbursements Loans Net cash from investing activities Cash flows from financing activities Proceeds from issue of share capital Dividends paid Proceeds from loans and borrowings

565 777

877 807

(460 099)

(1 025 851)

Interest paid

(28 717)

(35 971)

Payment of finance lease liabilities

(12 563)

(9 226)

(9 544)

61 417

Payment of loans and borrowings

Other proceeds/disbursements Net cash from financing activities

45 970

462 189

Net decrease in cash and cash equivalents

(6 398)

(43 456)

244 791

279 450

5 047

8 797

243 440

244 791

Cash and cash equivalents at the beginning of the period Effect of exchange rate fluctuations on cash held Cash and cash equivalents at the end of the period

74 Report 2012

Basis of preparation of the summary consolidated financial statements

These summary consolidated financial statements are only a summary of information included in the consolidated financial statements of Grupa Azoty S.A. Group, approved by the Management Board of Grupa Azoty S.A. on 6 March 2013. These are not the complete financial statements and do not include the information sufficient to gain a full understanding of the Group’s financial position and performance. The summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements prepared in accordance with International Financial Reporting Standards adopted by the European Union (IFRS EU) and other applicable regulations.

The summary consolidated financial statements were prepared using the accounting policies presented in point 2 of the notes to the Group’s consolidated financial statements.

The Group’s consolidated financial statements for 2012 are available online at grupaazoty.com. Copies of the financial statements may be obtained in the registered office of Grupa Azoty S.A., ul. Kwiatkowskiego 8, Tarnów, Poland.

75 Report 2012

REVENUE, expenses AND FINANCIAL RESULT BY OPERATING SEGMENTs FOR THE 12 MONTHS ENDED 31 DECEMBER 2012

External revenues Inter-segment revenue Total revenue Operating expenses, including: (-)

Fertilisers

Plastics

Oxo

Pigments

Other

Total

4 157 393

1 128 561

1 093 888

400 590

318 303

7 098 735

624 654

282 879

6 894

759

1 438 017

2 353 203

4 782 047

1 411 440

1 100 782

401 349

1 756 320

9 451 938

(4 443 566)

(1 365 812)

(1 057 121)

(364 972)

(1 802 061)

(9 033 532)

Selling and distribution expenses (-)

(112 189)

(37 017)

(40 884)

(4 293)

12 467

(181 916)

Administrative expenses (-)

(195 415)

(84 667)

(44 587)

(16 720)

(49 344)

(390 733)

8 922

9 604

174

1 269

29 055

49 024

Other income Other expenses (-)

(14 633)

(4 585)

(557)

(2 026)

(73 897)

(95 698)

Segment result from operating activities EBIT*

332 770

50 647

43 278

35 620

(90 583)

371 732

Finance income

-

-

-

-

-

42 741

Finance costs

-

-

-

-

-

(38 672)

Share of profit of equity-accounted investees

-

-

-

-

-

8 549

Profit before tax

-

-

-

-

-

384 350

Income tax

-

-

-

-

-

(69 049)

Net profit

-

-

-

-

-

315 301

332 770

50 647

43 278

35 620

(90 583)

371 732

85 171

29 387

24 716

6 956

84 508

230 738

-

-

-

-

-

8 854

417 941

80 034

67 994

42 576

(6 075)

611 324

EBIT Depreciation and amortisation Unallocated depreciation and amortisation EBITDA**

* EBIT is calculated as results from operating activities presented in the statement of comprehensive income. ** EBITDA is calculated as results from operating activities increased by depreciation and amortisation.

76 Report 2012

REVENUE, expenses AND FINANCIAL RESULT BY OPERATING SEGMENTs FOR THE 12 MONTHS ENDED 31 DECEMBER 2011

External revenues Inter-segment revenue

Fertilisers

Plastics

Oxo

Pigments

Other operations

Total

2 586 223

1 240 844

1 063 644

148 082

299 236

5 338 029

280 705

233 198

9 392

1 733

718 305

1 243 333

2 866 928

1 474 042

1 073 036

149 815

1 017 541

6 581 362

(2 509 279)

(1 257 187)

(948 936)

(119 676)

(1 023 348)

(5 858 426)

(88 198)

(36 855)

(36 729)

(2 084)

12 249

(151 617)

(143 247)

(72 419)

(57 604)

(4 557)

(34 260)

(312 087)

3 851

878

6 308

(483)

23 446

34 000

Other expenses (-)

(51 302)

(3 914)

(9 904)

(7 288)

(103 201)

(175 609)

Segment result from operating activities EBIT*

310 198

213 819

120 504

22 368

(85 562)

581 327

Finance income

-

-

-

-

-

19 129

Finance costs

-

-

-

-

-

(39 750)

Share of profit of equity-accounted investees

-

-

-

-

-

2 850

Profit before tax

-

-

-

-

-

563 556

Income tax

-

-

-

-

-

(64 615)

Net profit

-

-

-

-

-

498 941

EBIT

310 198

213 819

120 504

22 368

(85 562)

581 327

Depreciation and amortisation

73 400

23 530

24 647

3 940

53 535

179 052

-

-

-

-

-

9 812

383 598

237 349

145 151

26 308

(32 027)

770 191

Total revenue Operating expenses, including: (-) Selling and distribution expenses (-) Administrative expenses (-) Other income

Unallocated depreciation and amortisation EBITDA**

* EBIT is calculated as results from operating activities presented in the statement of comprehensive income. ** EBITDA is calculated as results from operating activities increased by depreciation and amortisation.

77 Report 2012

Whatever we do, we play by the rules.

78 Report 2012 REport

INDEPENDENT AUDITORS’ REPORT ON T H E SU M M ARY CONSOLIDATED FINAN CIAL STATEM ENTS

To the General Meeting of Grupa Azoty S.A.

Management’s Responsibility for the Summary Consolidated Financial Statements

The accompanying summary consolidated financial statements, which comprise the summary consolidated statement of financial position as at 31 December 2012, the summary consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and related notes, are derived from the consolidated financial statements of the Group, whose parent entity is Grupa Azoty S.A. (previously Zakłady Azotowe w Tarnowie-Mościcach S.A.) with its registered office in Tarnów, ul.

Kwiatkowskiego 8 (“the Group”) for the year ended 31 December 2012. We expressed an unmodified audit opinion on those consolidated financial statements in our report dated 6 March 2013. Those consolidated financial statements, and the summary consolidated financial statements, do not reflect the effects of events that occurred subsequent to that date.

Management is responsible for the preparation of the summary consolidated financial statements on the basis described in Note “Basis of preparation of the summary consolidated financial statements”.

Auditors’ Responsibility Our responsibility is to express an opinion on the summary consolidated financial statements based on our procedures, which were conducted in accordance with National Standards on Auditing issued by the National Council of Certified Auditors in Poland and International Standard on Auditing (ISA) 810, Engagements to Report on Summary Financial Statements.

Opinion In our opinion, the summary consolidated financial statements derived from the audited consolidated financial statements of the Group for the year ended 31 December 2012 are consistent, in all material respects, with those consolidated financial statements, on the basis described in Note “Basis of preparation of the summary consolidated financial statements”.

The summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards as adopted by the European Union and other applicable regulations.

Reading the summary consolidated financial statements, therefore, is not a substitute for reading the audited consolidated financial statements of the Group.

On behalf of KPMG Audyt Sp. z o.o.

Registration No. 458 ul. Chłodna 51, 00-867 Warsaw Marcin Domagała Key Certified Auditor Registration No. 90046 Director

15 March 2013

79 Report 2012

Perspective makes lines converge as if they were to meet at one point – somewhere at infinity.

But if you manage things right, it can happen here and now. In real life.

80 Report 2012 REport

SELECTED FINANCIAL information FOR 2012

CONSOLIDATED SELECTED FINANCIAL information GRUPA AZOTY

PLN thousand

Revenue Results from operating activities Profit before tax Net profit Total comprehensive income Number of shares Earnings per share

EUR thousand

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

7 098 735

5 338 029

1 700 866

1 289 348

371 732

581 327

89 067

140 414

384 350

563 556

92 091

136 121

315 301

498 941

75 547

120 514

347 406

505 775

83 239

122 165

64 115 444

64 115 444

64 115 444

64 115 444

9.45

1.10

4.59

Net cash flows from operating activities

2.28

543 780

531 471

130 290

128 372

Net cash flows from investing activities

(596 148)

(1 037 116)

(142 838)

(250 505)

Net cash flows from financing activities

45 970

462 189

11 015

111 637

Total net cash flows

(6 398)

(43 456)

(1 533)

(10 496)

Cash and cash equivalents at the beginning of the period

244 791

279 450

58 652

67 498

Cash and cash equivalents at the end of the period

243 440

244 791

58 329

59 127

31 Dec 2012

31 Dec 2011

31 Dec 2012

31 Dec 2011

Non-current assets

3 651 148

3 308 229

893 094

749 010

Current assets

1 688 510

1 638 000

413 020

370 857

718 725

639 017

175 805

144 679

1 130 235

1 154 545

276 463

261 399

Non-current liabilities Current liabilities Equity

3 490 698

3 152 667

853 847

713 790

Share capital

320 577

320 577

78 415

72 581

Non-controlling interests

414 078

402 197

101 286

91 061

The selected balances in the statement of financial position, statement of comprehensive income and statement of cash flows are translated into EUR in accordance with the following method: – assets and liabilities in the statement of financial position are translated at the exchange rate prevailing at the end of the reporting period: rate as at 31 December 2011 EUR 1 = PLN 4.4168 (Table 252/A/NBP/2011) rate as at 31 December 2012 EUR 1 = PLN 4.0882 (Table 252/A/NBP/2012), – items in the statement of comprehensive income and the statement of cash flows are translated at the exchange rates being the arithmetical average of exchange rates published by the National Bank of Poland for EUR, for the last day of each month in the reporting period: average exchange rate in the period 1 January – 31 December 2011 EUR 1 = PLN 4.1401 average exchange rate in the period 1 January – 31 December 2012 EUR 1 = PLN 4.1736.

The recalculation was performed based on the above mentioned exchange rates by dividing the amounts in PLN thousand by the exchange rate.

82 Report 2012

SEPARATE SELECTED FINANCIAL information Grupy Azoty S.A. (formerly Zakłady Azotowe w Tarnowie-Mościcach S.A.)

PLN thousand

Revenue Results from operating activities Profit before tax

EUR thousand

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

1 996 173

1 916 717

478 286

462 964

133 517

258 245

31 991

62 377

276 143

259 621

66 164

62 709

Net profit

250 692

207 875

60 066

50 210

Total comprehensive income

289 547

207 672

69 376

50 161

64 115 444

48 842 068

64 115 444

48 842 068

3.91

4.26

0.94

1.03

183 327

249 063

43 925

60 159

(272 919)

(943 721)

(65 392)

(227 946)

Number of shares Earnings per share

Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities

70 295

608 756

16 843

147 039

Total net cash flows

(19 297)

(85 902)

(4 624)

(20 749)

Cash and cash equivalents at the beginning of the period

86 289

172 191

20 675

41 591

Cash and cash equivalents at the end of the period

66 992

86 289

16 051

20 842

31 Dec 2012

31 Dec 2011

31 Dec 2012

31 Dec 2011

2 344 204

1 973 543

573 407

446 826

Current assets

543 440

502 872

132 929

113 854

Non-current liabilities

299 874

149 906

73 351

33 940

Current liabilities

372 635

400 920

91 149

90 772

2 215 135

1 925 589

541 836

435 969

320 577

320 577

78 415

72 581

Non-current assets

Equity Share capital

The selected balances in the statement of financial position, statement of comprehensive income and statement of cash flows are translated into EUR in accordance with the following method: – assets and liabilities in the statement of financial position are translated at the exchange rate prevailing at the end of the reporting period: rate as at 31 December 2011 EUR 1 = PLN 4.4168 (Table 252/A/NBP/2011) rate as at 31 December 2012 EUR 1 = PLN 4.0882 (Table 252/A/NBP/2012), – items in the statement of comprehensive income and the statement of cash flows are translated at the exchange rates being the arithmetical average of exchange rates published by the National Bank of Poland for EUR, for the last day of each month in the reporting period: average exchange rate in the period 1 January – 31 December 2011 EUR 1 = PLN 4.1401 average exchange rate in the period 1 January – 31 December 2012 EUR 1 = PLN 4.1736.

The recalculation was performed based on the above mentioned exchange rates by dividing the amounts in PLN thousand by the exchange rate.

83 Report 2012

SEPARATE SELECTED FINANCIAL information Zakłady Chemiczne „Police” S.A.

PLN thousand

EUR thousand

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

2 956 836

2 753 660

708 462

665 119

Results from operating activities

134 846

270 517

32 309

65 097

Profit before tax

137 085

252 425

32 846

60 971

Net profit

115 970

321 255

27 787

77 596

Total comprehensive income

115 970

321 255

27 787

77 596

75 000 000

75 000 000

75 000 000

75 000 000

1.55

4.28

0.37

1.03

Net cash flows from operating activities

129 286

125 984

30 977

30 430

Net cash flows from investing activities

(113 580)

(56 671)

(27 214)

(13 688)

Net cash flows from financing activities

(26 204)

(60 486)

(6 279)

(14 610)

Total net cash flows

(10 498)

8 827

(2 515)

2 132

31 967

19 858

7 659

4 797

28 904

31 967

6 925

7 721

31 Dec 2012

31 Dec 2011

31 Dec 2012

31 Dec 2011

917 779

847 868

224 495

191 964

600 438

646 922

146 871

146 468

192 583

211 500

47 107

47 885

Current liabilities

334 511

408 137

81 824

92 405

Equity

991 123

875 153

242 435

198 142

750 000

750 000

183 455

169 806

Revenue

Number of shares Earnings per share

Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

Non-current assets Current assets Non-current liabilities

Share capital

The selected balances in the statement of financial position, statement of comprehensive income and statement of cash flows are translated into EUR in accordance with the following method: – assets and liabilities in the statement of financial position are translated at the exchange rate prevailing at the end of the reporting period: rate as at 31 December 2011 EUR 1 = PLN 4.4168 (Table 252/A/NBP/2011) rate as at 31 December 2012 EUR 1 = PLN 4.0882 (Table 252/A/NBP/2012), – items in the statement of comprehensive income and the statement of cash flows are translated at the exchange rates being the arithmetical average of exchange rates published by the National Bank of Poland for EUR, for the last day of each month in the reporting period: average exchange rate in the period 1 January – 31 December 2011 EUR 1 = PLN 4.1401 average exchange rate in the period 1 January – 31 December 2012 EUR 1 = PLN 4.1736.

The recalculation was performed based on the above mentioned exchange rates by dividing the amounts in PLN thousand by the exchange rate.

84 Report 2012

SEPARATE SELECTED FINANCIAL information GrupA Azoty Zakłady Azotowe Kędzierzyn S.A.

PLN thousand

EUR thousand

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

1 Jan 2012 to 31 Dec 2012

1 Jan 2011 to 31 Dec 2011

2 165 037

2 193 317

518 746

529 774

Results from operating activities

140 350

253 178

33 628

61 153

Profit before tax

145 970

236 491

34 975

57 122

Net profit

115 804

191 539

27 747

46 264

Total comprehensive income

115 804

191 539

27 747

46 264

57 012 860

57 012 860

57 012 860

57 012 860

2.03

3.36

0.49

0.81

Revenue

Number of shares Earnings per share

Net cash flows from operating activities

163 280

215 176

39 122

51 974

Net cash flows from investing activities

25 200

(169 708)

6 038

(40 991)

Net cash flows from financing activities

(174 021)

(60 099)

(41 696)

(14 516)

14 459

(14 631)

3 464

(3 534)

Cash and cash equivalents at the beginning of the period

44 682

59 392

10 706

14 346

Cash and cash equivalents at the end of the period

58 686

44 682

14 061

10 792

31 Dec 2012

31 Dec 2011

31 Dec 2012

31 Dec 2011

1 034 775

1 069 773

253 113

242 205

444 450

451 910

108 715

102 316

167 167

211 497

40 890

47 885

307 595

301 800

75 240

68 330

1 004 463

1 008 386

245 698

228 307

285 064

285 064

69 728

64 541

Total net cash flows

Non-current assets Current assets Non-current liabilities Current liabilities Equity Share capital

The selected balances in the statement of financial position, statement of comprehensive income and statement of cash flows are translated into EUR in accordance with the following method: – assets and liabilities in the statement of financial position are translated at the exchange rate prevailing at the end of the reporting period: rate as at 31 December 2011 EUR 1 = PLN 4.4168 (Table 252/A/NBP/2011) rate as at 31 December 2012 EUR 1 = PLN 4.0882 (Table 252/A/NBP/2012), – items in the statement of comprehensive income and the statement of cash flows are translated at the exchange rates being the arithmetical average of exchange rates published by the National Bank of Poland for EUR, for the last day of each month in the reporting period: average exchange rate in the period 1 January – 31 December 2011 EUR 1 = PLN 4.1401 average exchange rate in the period 1 January – 31 December 2012 EUR 1 = PLN 4.1736.

The recalculation was performed based on the above mentioned exchange rates by dividing the amounts in PLN thousand by the exchange rate.

85 Report 2012

Grupa Azoty S.A. ul. Eugeniusza Kwiatkowskiego 8 33-101 Tarnów Poland NIP: 873-000-68-29 WSE symbol: ATT KRS: 0000075450 ISIN: PLZATRM00012 tel. +4814 637 35 31 ir.tarnow@grupaazoty.com

Zakłady Chemiczne „Police” S.A. ul. Kuźnicka 1, 72-010 Police Poland NIP: 851-02-05-573 WSE symbol: PCE KRS: 0000015501 ISIN: PLZCPLC00036 tel. +4891 317 24 36 ir.zchpolice@grupaazoty.com

Zakłady Azotowe Puławy S.A. Al. Tysiąclecia Państwa Polskiego 13 24-110 Puławy Poland NIP: 716-000-18-22 WSE symbol: ZAP KRS: 0000011737 ISIN: PLZAPUL00057 tel. +48 81 565 37 15

Grupa Azoty ZAK S.A. ul. Mostowa 30 A, skr. poczt. 163 47-220 Kędzierzyn-Koźle Poland NIP: 749-00-05-094 KRS: 0000008993 tel. +48 77 481 26 35 zak@grupaazoty.com

grupaazoty.com

86 Report 2012

You have to do something good to be able to smile at the end of the day.

To smile at the end of the year, you have to do something more.

87 Report 2012 REport

Grupa Azoty S.A. ul. Eugeniusza Kwiatkowskiego 8, 33-101 Tarnów, Poland

grupaazoty.com 2012 ANNUAL REPORT

Report written and compiled by the Corporate Public Relations Office Please send comments and queries to: redakcja@grupaazoty.com

Published by | Designed by © grupa tomami | www.tomami.pl

SKONSOLIDOWANY RAPORT ROCZNY GRUPY AZOTY | 2012

raport

grupaazoty.com

Siła Tworzenia

SKONSOLIDOWANY RAPORT ROCZNY GRUPY AZOTY | 2012

Przemysł chemiczny niepodległej Polski narodził się w Tarnowie w roku 1927. Od tej pory historia zatoczyła pełny krąg. Dziś polska chemia rodzi się w Tarnowie po raz drugi.

Tym razem świadoma własnej siły. Grupa Azoty to połączenie wszystkiego, co w tej branży nam, Polakom, udało się zrobić najlepiej. Teraz czujemy się bezpieczni. Teraz jesteśmy gotowi do przekraczania granic.

SKONSOLIDOWANY RAPORT ROCZNY GRUPY AZOTY | 2012

raport

grupaazoty.com

Siła Tworzenia

SKONSOLIDOWANY RAPORT ROCZNY GRUPY AZOTY | 2012

Przemysł chemiczny niepodległej Polski narodził się w Tarnowie w roku 1927. Od tej pory historia zatoczyła pełny krąg. Dziś polska chemia rodzi się w Tarnowie po raz drugi.

Tym razem świadoma własnej siły. Grupa Azoty to połączenie wszystkiego, co w tej branży nam, Polakom, udało się zrobić najlepiej. Teraz czujemy się bezpieczni. Teraz jesteśmy gotowi do przekraczania granic.