Grupa Azoty Integrated Report

TED 5 A AZO

GRA 201 GRUP INTE REPORT

OUR GROUP OUR BUSINESS OUR RESPONSIBILITY OUR FINANCES OUR REPORT

RAPORT ZINTEGROWANY GRUPY AZOTY ZA ROK 2015 om c . y t o grupaaz TABLE OF CONTENTS

OUR GROUP OUR BUSINESS OUR RESPONSIBILITY OUR FINANCES OUR REPORT

Letter of the Management Board . . . . . 2 1.0 OUR GROUP ...... 7 2.0 OUR BUSINESS ...... 41 3.0 OUR RESPONSIBILITY...... 73 4.0 OUR FINANCES ...... 117 5.0 OUR REPORT ...... 129 Grupa Azoty in key figures ...... 4 1.1. About the Grupa Azoty Group . . . . . 9 2.1. Our products ...... 43 3.1. Our employees ...... 75 4.1. Basis of preparation 5.1. About the report ...... 131 of the summary 1.1.1 The structure 2.2.1. Our main products ...... 43 3.1.1. Who forms 5.2.Index GRI ...... 133 financial statements ...... 119 of the Grupa Azoty Group ...... 9 2.2. Our production...... 52 the Grupa Azoty Group? ...... 75 5.3. Independent confirming 4.2.Consolidated statement report ...... 138 1.1.2. Our strategy ...... 12 2.2.1. Raw materials used 3.1.2. Developing the potential of profit or loss and other of our employees ...... 81 1.1.3. Our key investments ...... 13 for manufacturing comprehensive income...... 120 of our products ...... 52 3.1.3. Conducting dialogue 1.1.4. Results of the Azoty PRO 4.3.Consolidated statement with employees ...... 84 Program ...... 18 2.2.2. Supply chain management. . . . . 55 of financial position ...... 122 3.1.4. Preventing discrimination . . . . . 87 1.1.5. The place for responsible 2.2.3. Development of our products. . 57 4.4.Consolidated statement of cash flows...... 124 business in our operations . . . . 20 2.2.4. Ensuring safety 3.1.5. Services and benefits 1.2. Strategic management system . . . . 23 of our products ...... 61 available for our employees . . . 87 4.5.Financial results of the operating segments...... 126 1.2.1. Management structure 2.3. Our customers ...... 68 3.1.6. Safety management at the workplace ...... 89 4.6. Independent of the Grupa Azoty Group . . . . . 23 2.3.1. Conducting dialogue 3.2.Our impact on the local Auditors' Report ...... 128 1.2.2. Strategic management system with our customers ...... 68 community ...... 92 of the Grupa Azoty Group . . . . . 27 2.3.2. Our marketing activities ...... 70 3.2.1. Our impact 1.2.3. Monitoring of management on the development systems in the Grupa Azoty of the local community ...... 92 Group ...... 29 3.2.2. How do we support youth 1.2.4. Risk management...... 30 education? ...... 95 1.2.5. Ethical values followed within 3.2.3. What sports activity are the Grupa Azoty Group ...... 33 we engaged in? ...... 98 1.3. Capital market ...... 34 3.3. Our impact on the natural 1.3.1. Shareholders' structure environment ...... 100 of Grupa Azoty ...... 34 3.3.1. What is our impact 1.3.2. Information policy on the natural environment?. . 100 of Grupa Azoty ...... 35 1.3.3. Dividend policy of Grupa Azoty ...... 37 1.4. Communication with the environment ...... 38 1.4.1. Communication with our stakeholders...... 38 1.4.2. Initiatives we engage in ...... 39

1 OUR GROUP OUR GROUP 1 TABLE OF CONTENTS

OUR GROUP OUR BUSINESS OUR RESPONSIBILITY OUR FINANCES OUR REPORT

1 OUR GROUP OUR GROUP 1 Ladies and Gentlemen, We are a new group of companies, we aspire weather conditions that affected crops throughout Europe, and also the to develop our companies in a sustainable continuation of volatility on financial markets forced the world to reflect manner. In 2015, we have started a number of what global players could do to develop in a more sustainable manner. On behalf of the Management Board investments in four crucial companies included of Grupa Azoty, I am presenting in this report. Total investment expenditure At the beginning of 2015, Grupa Azoty made its debut on the World an Integrated Report of Grupa Azoty in the discussed period amounted in Grupa Economic Forum in Davos, discussing a global problem of food and energy Azoty to more than PLN 907 thousand. Right safety. In September, the General Assembly of the United Nations adopted for 2015. For me, it is an honour and now projects implemented in the companies are new, ambitious Sustainable Development Objectives, signed by more than responsibility to manage such strategic worth more than PLN 4 billion, and Grupa Azoty 100 heads of states and prime ministers, and also representatives of Polish company in the chemical industry. will allocate more than PLN 7 billion for 68 religious, business and civil society groups. This is an event which one Therefore, I undertake to continue investment projects by the end of 2020. These cannot ignore. Although these are governments that are directly will be the largest projects of this type in Poland. accountable for the implementation of these objectives, it is exactly the to build the tangible and intangible commitment of business and companies such as ours that will have the value of our Group. Through continuous Ensuring financing for the entire investment greatest importance in achieving real results. In this report, we are improvement, Grupa Azoty is changing program was the biggest challenge of 2015. presenting challenges of sustainable development in the chemical industry In April Grupa Azoty signed a rollover credit with which we identify ourselves. the face of Polish chemistry, contract with a consortium of commercial banks actions that we take make this one due to which it obtained financing for the At the end of 2015, nearly 200 countries of the United Nations Convention of the most innovative branches amount of PLN 1.5 billion. The next stage was on Climate adopted an agreement in Paris that is to stop global warming of industry in Europe. making contracts with the European Bank at the level “substantially below 2 degrees Celsius”. This is the first climate for Reconstruction and Development, contract in the history with such scope the provisions of which Grupa guaranteeing long-term financing for Azoty consistently implements, by investing in modern technologies that Above all, 2015 meant historically the amount of PLN 700 million. Contracts make it possible to reduce the emission of greenhouse gases, e.g. good financial results. Net profit was consolidating debt is an extremely important construction of exhaust gas desulfurization system or exhaust gas nearly PLN 692 million and was higher step in further integration of Grupa Azoty. denitrification system. More information about investments that curb the impact of our operations on the environment can be found in the chapter than the last year’s one by no less Growth in value and courageous investment Our Responsibility. than PLN 427 million. Sales revenue plans caused an increase in the importance exceeded the level of PLN 10 billion. of Grupa Azoty among international trade Conducting operations in a dynamically evolving environment as well as institutions. We joined 40 the most influential their wide scope mean that effective cooperation can proceed only based The improvement in financial indicators entities of the global chemical market ICIS TOP on dialogue. We listen carefully to our stakeholders, we have a dialogue is strengthening the Grupa Azoty market 40 Power Players 2015. According to Boston based on mutual learning needs and exchanging information. We believe position in the international arena. Consulting Group, Grupa Azoty is classified into that knowledge is a source of new ideas and innovations which, in turn, the group of the most attractive global chemical translates into better business effects. companies for investors. For eight (8) years, Grupa Azoty has been in an elite group We know that the responsibility of Grupa Azoty is not limited to the gates of issuers being members of the RESPECT Index, of our factories. We are aware of the impact which we make on the society, it confirms great commitment in fulfilling their environment and economy. Aspiring after excellence, we listen intently tasks in line with the principles of corporate to the voice of environment. Knowledge, cooperation and concentration social responsibility and sustainable on the future make it possible for us to be an innovative company that development. develops in a sustainable manner. For this reason, today, we are presenting the report - a story about our business, our employees, impact that we In Grupa Azoty, we have known that business make on our environment, drawn up already for the third time according changes the world, that not only profit to the world standards Global Reporting Initiative G4. maximisation matters in business, but also increasing goodwill for all stakeholders. Please familiarize yourself with the integrated report of Grupa Azoty for We are a Polish company of global importance, 2015. therefore we feel responsible also for the impact of our operations worldwide. In 2015, there were many acute global problems, i.e. the Mariusz Bober humanitarian crisis related to refugees, extreme President of the Management Board of Grupa Azoty

2 OUR GROUP OUR GROUP 3 Ladies and Gentlemen, We are a new group of companies, we aspire weather conditions that affected crops throughout Europe, and also the to develop our companies in a sustainable continuation of volatility on financial markets forced the world to reflect manner. In 2015, we have started a number of what global players could do to develop in a more sustainable manner. On behalf of the Management Board investments in four crucial companies included of Grupa Azoty, I am presenting in this report. Total investment expenditure At the beginning of 2015, Grupa Azoty made its debut on the World an Integrated Report of Grupa Azoty in the discussed period amounted in Grupa Economic Forum in Davos, discussing a global problem of food and energy Azoty to more than PLN 907 thousand. Right safety. In September, the General Assembly of the United Nations adopted for 2015. For me, it is an honour and now projects implemented in the companies are new, ambitious Sustainable Development Objectives, signed by more than responsibility to manage such strategic worth more than PLN 4 billion, and Grupa Azoty 100 heads of states and prime ministers, and also representatives of Polish company in the chemical industry. will allocate more than PLN 7 billion for 68 religious, business and civil society groups. This is an event which one Therefore, I undertake to continue investment projects by the end of 2020. These cannot ignore. Although these are governments that are directly will be the largest projects of this type in Poland. accountable for the implementation of these objectives, it is exactly the to build the tangible and intangible commitment of business and companies such as ours that will have the value of our Group. Through continuous Ensuring financing for the entire investment greatest importance in achieving real results. In this report, we are improvement, Grupa Azoty is changing program was the biggest challenge of 2015. presenting challenges of sustainable development in the chemical industry In April Grupa Azoty signed a rollover credit with which we identify ourselves. the face of Polish chemistry, contract with a consortium of commercial banks actions that we take make this one due to which it obtained financing for the At the end of 2015, nearly 200 countries of the United Nations Convention of the most innovative branches amount of PLN 1.5 billion. The next stage was on Climate adopted an agreement in Paris that is to stop global warming of industry in Europe. making contracts with the European Bank at the level “substantially below 2 degrees Celsius”. This is the first climate for Reconstruction and Development, contract in the history with such scope the provisions of which Grupa guaranteeing long-term financing for Azoty consistently implements, by investing in modern technologies that Above all, 2015 meant historically the amount of PLN 700 million. Contracts make it possible to reduce the emission of greenhouse gases, e.g. good financial results. Net profit was consolidating debt is an extremely important construction of exhaust gas desulfurization system or exhaust gas nearly PLN 692 million and was higher step in further integration of Grupa Azoty. denitrification system. More information about investments that curb the impact of our operations on the environment can be found in the chapter than the last year’s one by no less Growth in value and courageous investment Our Responsibility. than PLN 427 million. Sales revenue plans caused an increase in the importance exceeded the level of PLN 10 billion. of Grupa Azoty among international trade Conducting operations in a dynamically evolving environment as well as institutions. We joined 40 the most influential their wide scope mean that effective cooperation can proceed only based The improvement in financial indicators entities of the global chemical market ICIS TOP on dialogue. We listen carefully to our stakeholders, we have a dialogue is strengthening the Grupa Azoty market 40 Power Players 2015. According to Boston based on mutual learning needs and exchanging information. We believe position in the international arena. Consulting Group, Grupa Azoty is classified into that knowledge is a source of new ideas and innovations which, in turn, the group of the most attractive global chemical translates into better business effects. companies for investors. For eight (8) years, Grupa Azoty has been in an elite group We know that the responsibility of Grupa Azoty is not limited to the gates of issuers being members of the RESPECT Index, of our factories. We are aware of the impact which we make on the society, it confirms great commitment in fulfilling their environment and economy. Aspiring after excellence, we listen intently tasks in line with the principles of corporate to the voice of environment. Knowledge, cooperation and concentration social responsibility and sustainable on the future make it possible for us to be an innovative company that development. develops in a sustainable manner. For this reason, today, we are presenting the report - a story about our business, our employees, impact that we In Grupa Azoty, we have known that business make on our environment, drawn up already for the third time according changes the world, that not only profit to the world standards Global Reporting Initiative G4. maximisation matters in business, but also increasing goodwill for all stakeholders. Please familiarize yourself with the integrated report of Grupa Azoty for We are a Polish company of global importance, 2015. therefore we feel responsible also for the impact of our operations worldwide. In 2015, there were many acute global problems, i.e. the Mariusz Bober humanitarian crisis related to refugees, extreme President of the Management Board of Grupa Azoty

2 OUR GROUP OUR GROUP 3 SEGMENTS OF OPERATIONS OF GRUPA AZOTY SALES BY REGIONS IN 2015 The rest Grupa Azoty (percentage share in sales) (according to sales revenues) of Europe Poland 1,2% 55,6% Asia in key figures 60% North America 4,7% FERTILIZERS 0,2%

We are the leading manufacturer in the industry of fertilizers and chemicals in Poland and in Europe.

The Grupa Azoty Group is formed by four largest chemical plants in Poland: from Tarnów, Puławy, Police and Kędzierzyn-Koźle, as well as over ten subsidiaries, and production companies from Germany and Senegal. 2% POWER ENGINEERING We have our own logistic infrastructure, as well 2% CHEMISTRY as research, design and service facilities. OTHER

MATERIALS

Africa 2,1%

South America European Union 3,4% 32,7%

The most important areas of our business include production of mineral fertilizers, Leader in Poland Among the TOP in Europe caprolactam, construction plastics and The first Central European company other highly processed chemicals, such as on the list of 40 most influential OXO alcohols, plasticizers, titanium white, entities of the global chemical market NOXs™ (AdBlue®). TOP1 TOP1 TOP2 TOP3 TOP2 ICIS TOP 40 Power Players 2015. The group is also the largest supplier among the manufacturers among the manufacturers among among among of ammonia and phosphoric acid in Poland. of nitrogen, nitrogen of polyamided, OXO the manufacturers the manufacturers the manufacturers The Grupa Azoty Group has been and sulphur, nitrogen alcohols and plasticizers, of nitrogen of compound of melamine and phosphorous, titanium white and fertilizers fertilizers classified as one of the most and compound fertilizers 1 melamine attractive chemical companies for investors in the world according ¹ Compound fertilizers to Boston Consulting Group. in total (AP, NPK, PK)

4 Grupa Azoty in key figures Grupa Azoty in key figures 5 SEGMENTS OF OPERATIONS OF GRUPA AZOTY SALES BY REGIONS IN 2015 The rest Grupa Azoty (percentage share in sales) (according to sales revenues) of Europe Poland 1,2% 55,6% Asia in key figures 60% North America 4,7% FERTILIZERS 0,2%

We are the leading manufacturer in the industry of fertilizers and chemicals in Poland and in Europe.

MATERIALS

Africa 2,1%

South America European Union 3,4% 32,7%

4 Grupa Azoty in key figures Grupa Azoty in key figures 5 OUR PRODUCTS ARE USED IN: 1.0

agriculture automotive construction electrical pharmacy industry engineering

production food industry textile industry cosmetics paper industry of household appliances

mining furniture making machine production and many industry of sport other fields supplies

2015 IN KEY FIGURES OUR

Total sales revenues PLN 10 024 million ↑ 1.27%

EBIT PLN 830 million ↑ 174.63%

EBITDA PLN 1314 million ↑ 59.88%

Investment expenses* PLN 907 million ↑ 58% Net profit PLN 691 million ↑ 161.02% GROUP Equity PLN 7136 million ↑ 9.99% Structure Total assets PLN 10 777 million ↑ 8.33% Strategy Number of employees 13 968 ↑ 0.01% Responsible management Capital market

* Without components and improvements Communication with the environment

6 Grupa Azoty in key figures Azoty Group KĘDZIERZYN, plant for the production OUR GROUP 7 of nitric acid and administrative building OUR PRODUCTS ARE USED IN: 1.0 agriculture automotive construction electrical pharmacy industry engineering

production food industry textile industry cosmetics paper industry of household appliances

mining furniture making machine production and many industry of sport other fields supplies

2015 IN KEY FIGURES OUR

Total sales revenues PLN 10 024 million ↑ 1.27%

EBIT PLN 830 million ↑ 174.63%

EBITDA PLN 1314 million ↑ 59.88%

* Without components and improvements Communication with the environment

6 Grupa Azoty in key figures Azoty Group KĘDZIERZYN, plant for the production OUR GROUP 7 of nitric acid and administrative building 1.1. About the Grupa Azoty Group 1.1.1. From the point of view of the implementation of investments, 2015 was The structure very important for the entire Grupa Azoty. of the Grupa Azoty Group Investment activities are a crucial area on which the Group’s Strategy is based. Total investment expenditure of the Grupa In the past five years, we have been implementing Azoty group of companies in 2015 the strategy of consolidation of the largest chemical exceeded the level of PLN 900 million. plants in Poland to use their potential to pursue A number of crucial investments both from a common strategy. the point of view of particular companies, and from the point of view of the whole Group was implemented. At this point, it is worth mentioning, for example, the new Combined Heat and Power Plant and the System for production of liquid fertilizers in Kędzierzyn, the Factory of granular fertilizers based on ammonium nitrate and the development of nitric acid system in Puławy, Modernisation of the ammonia system in Police as well as the Factory of Polyamides II and the new System for Mechanical Granulation in Tarnów. Also preparatory works Azoty Group KĘDZIERZYN, Control Room of Aldehyde and Alcohol Production, in the foreground: on the System for propylene production Karol Malek - operator of alcohols production at the Department of Alcohol Production, Konrad Szwamel - operator of aldehydes production at the Department of Aldehydes Production, in Police were continued. Michal Glowacki - foreman at the Department of Aldehydes Production Despite that the main aim of the implemented investment program As a result, we have managed to gather under one brand of Grupa Azoty is improvement in the Grupa Azoty complementary companies with different traditions and specialisations, as well as create the largest chemical concern in Poland, and one of the competitive position, an important largest in Europe. element is a package of investments Since the completed consolidation, the four largest Polish chemical plants connected with the reduction in the – from Tarnów, Puławy, Police and Kędzierzyn-Koźle – have been operating impact on environment. Apart from along with other companies under one common brand of Grupa Azoty. The dominant entity in the Grupa Azoty Group is Grupa Azoty S.A. the new combined heat and power plant The main office of the Grupa Azoty Group is located in Tarnów. in Kędzierzyn, it is worth mentioning exhaust gas treatment systems in Police, Puławy and Tarnów. Józef Rojek Vice-President of the Management Board 8 OUR GROUP Azoty Group KĘDZIERZYN, Paweł Mrozowski – OUR GROUP 9 operator of fertilizers production 1.1. About the Grupa Azoty Group 1.1.1. From the point of view of the implementation of investments, 2015 was The structure very important for the entire Grupa Azoty. of the Grupa Azoty Group Investment activities are a crucial area on which the Group’s Strategy is based. Total investment expenditure of the Grupa In the past five years, we have been implementing Azoty group of companies in 2015 the strategy of consolidation of the largest chemical exceeded the level of PLN 900 million. plants in Poland to use their potential to pursue A number of crucial investments both from a common strategy. the point of view of particular companies, and from the point of view of the whole Group was implemented. At this point, it is worth mentioning, for example, the new Combined Heat and Power Plant and the System for production of liquid fertilizers in Kędzierzyn, the Factory of granular fertilizers based on ammonium nitrate and the development of nitric acid system in Puławy, Modernisation of the ammonia system in Police as well as the Factory of Polyamides II and the new System for Mechanical Granulation in Tarnów. Also preparatory works Azoty Group KĘDZIERZYN, Control Room of Aldehyde and Alcohol Production, in the foreground: on the System for propylene production Karol Malek - operator of alcohols production at the Department of Alcohol Production, Konrad Szwamel - operator of aldehydes production at the Department of Aldehydes Production, in Police were continued. Michal Glowacki - foreman at the Department of Aldehydes Production Despite that the main aim of the implemented investment program As a result, we have managed to gather under one brand of Grupa Azoty is improvement in the Grupa Azoty complementary companies with different traditions and specialisations, as well as create the largest chemical concern in Poland, and one of the competitive position, an important largest in Europe. element is a package of investments Since the completed consolidation, the four largest Polish chemical plants connected with the reduction in the – from Tarnów, Puławy, Police and Kędzierzyn-Koźle – have been operating impact on environment. Apart from along with other companies under one common brand of Grupa Azoty. The dominant entity in the Grupa Azoty Group is Grupa Azoty S.A. the new combined heat and power plant The main office of the Grupa Azoty Group is located in Tarnów. in Kędzierzyn, it is worth mentioning exhaust gas treatment systems in Police, Puławy and Tarnów. Józef Rojek Vice-President of the Management Board 8 OUR GROUP Azoty Group KĘDZIERZYN, Paweł Mrozowski – OUR GROUP 9 operator of fertilizers production Grupa Azoty S.A. Company name Seat Scope of activities Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Zakłady Azotowe Zakłady Azotowe Polskie Konsorcjum Kopalnie i Zakłady Grupa Azoty S.A. Tarnów Nitrogen and sulphur fertilizers, as well as nitrogen ATT Polymers GmbH "KOLTAR" sp. z o.o Zakłady Chemiczne Kędzierzyn S.A. "Puławy" S.A. Chemiczne sp. z o.o. Chemiczne Siarki fertilizers. Integrated manufacturer of polyamide 6, 100% 100%. "Police" S.A. 66% 1 93,48%. 95,98% 63,27% "Siarkopol" S.A. 88,20% which is produced by polymerisation of caprolactam manufactured in Tarnów. Grupa Azoty Grupa Azoty ZAKSA S.A. Agrochem AUTOMATYKA Grupa Azoty Zakłady Azotowe Puławy Nitrogen fertilizers and melamine (the company is one sp. z o.o. Police Serwis 91,67% (3) sp. z o.o. PUŁAWY S.A. of the largest manufacturers of melamine in the world). 100% sp. z o.o. 100% 77,86% Grupa Azoty Zakłady Azotowe Kędzierzyn-Koźle Nitrogen fertilizers and OXO products (OXO alcohols Grupa Azoty Kędzierzyn S.A. and plasticizers). CTL CHEMKOL "Agrochem Puławy" "KONCEPT" Jednostka Ratownictwa sp. z o.o. 49% sp. z o.o. 100% sp. z o.o. 100% Chemicznego sp. z o.o. Grupa Azoty Zakłady Chemiczne Police Key manufacturer of nitrogen and compound fertilizers 100% POLICE S.A. and titanium white

"TRANSTECH" Grupa Azoty ATT Polymers GmbH Guben (Niemcy) Manufacturer and compounder of polyamide 6 (PA6). Grupa Azoty Polskie SCF Natural Usługi Sprzętowo- Konsorcjum Konsorcjum Chemiczne sp. z o.o. Transportowe EKO TECHNOLOGIES Grupa Azoty Polskie Konsorcjum Tarnów Multi-trade design services related to full design services sp. z o.o. 36,73% 1 99,99% sp. z o.o. 100% 60% Chemiczne Sp. z o.o. for investment processes in the chemical industry – from studies and conceptual works, through process, EKOTAR sp. z o.o. building and executive designs, to services during GZNF "Fosfory" "Supra" Agrochemia w upadłości construction, start-up and operation. sp. z o.o. sp. z o.o. 100% likwidacyjnej 99,19% 12% 2 1. Grupa Azoty PKCH Sp. z o.o. – shares held by Grupa Azoty S.A. and Grupa Azoty ZAK S.A. Grupa Azoty KOLTAR Sp. z o.o. Tarnów Supplier of services within the railway industry across the whole country. As one of the few companies in Poland, it holds 2. EKOTAR Sp. z o.o. – shares held by Grupa Azoty JRCH STO-ZAP Grupa Azoty Grupa Azoty sp.z o.o. Africa SAU PROREM the required authorisations to perform comprehensive repairs Sp. z o.o. and Grupa Azoty PROREM Sp. z o.o. (12% each) 96,15% 99,99% sp. z o.o. 100% of rolling stock bogies and cistern tanks adapted for transport 3. ZAKSA S.A. – shares held by Grupa Azoty ZAK S.A. (91,67%) of hazardous materials, according to RID (International rail and CTL Chemikol Sp. z o.o. (0,783%) transport regulations for hazardous goods). EKOTAR sp. z o.o. REMZAP PDH Polska S.A. w upadłości 4. ”NAVITRANS” Sp. z o.o. w Likwidacji (in liquidation) – shares sp. z o.o. (100%) likwidacyjnej held by Grupa Azoty S.A., Grupa Azoty Zakłady Azotowe 94,61% Grupa Azoty Kopalnie i Zakłady Grzybów The largest producer of molten sulphur in Poland, the only 12% 2 ”Puławy” S.A. and Bałtycka Baza Masowa Sp. z o.o. Chemiczne Siarki SIARKOPOL S.A. sulphur mine in the world, manufacturer of insoluble sulphur.

5. Grupa Azoty Police Serwis Sp. z o.o. holds 0,1% in share Grupa Azoty FOLIE Sp. z o.o. Tarnów Conducts scientific research and development and research capital of African Investment Group S.A. Zakłady Azotowe Zarząd Morskiego Chorzów S.A. Portu Police works in the field of technical sciences. 6. African Investment Group S.A. holds 1 share of Grupy 92,33% sp. z o.o. 99,98% Azoty Africa SAU. Grupa Azoty „Compounding” Tarnów Engineering plastics (resulting from refining plastics), using Sp. z o.o. innovative technological solutions. African PROZAP Grupa Azoty Investment sp. z o.o. "Folie" Sp. z o.o. Group S.A. 84,69% 100% 54,9% 5

"NAVITRANS" AFRIG Grupa Azoty sp. z o.o. Bałtycka Baza Trade SARL "Compounding" w Likwidacji Masowa sp. z o.o. Most important changes in the structure introduced in 2015.: 4 50% 100% Sp. z o.o. 100% 26,45% • Merger of the companies REMECH Sp. z o.o. and AUTOMATIKA Sp. z o.o. - the entity formed as a result of the merger changed its name to Grupa INFRAPARK "NAVITRANS" Elektrownia Azoty Police Serwis Sp. z o.o. Police S.A. sp. z o.o. Puławy sp. z o.o. w likwidacji w Likwidacji • Completion of the process of liquidation of the Company Hotel 100% 54,43 26,45% 4 Centralny Sp. z o.o. • Beginning of lease of the company Ammono "Budchem" sp. z o.o. CTL KOLZAP by Grupa Azoty FOLIE Sp. z o.o. w upadłości sp. z o.o. likwidacyjnej 49% • Commencement of the process of liquidation of Navitrans Sp. z o.o. 48,96% • Merger of the companies "Agrochem Puławy" Sp. z o.o. and UNIBALTIC AGRO Sp. z o.o. *. On 30.06.2016 after the completion of the liquidation "NAVITRANS" "KEMIPOL" sp. z o.o. NAVITRANS was deleted from the National Court Register sp. z o.o. • Sale of shares in the company MEDICAL Sp. z o.o. w Likwidacji 33,99% * In 2016, the Parent increased its share in Grupa Azoty 26,45% 4 • Establishment of the Company PDH Polska S.A. SIARKOPOL (as a result of the share buy-back from authorised employees and their legal successors) – • Commencement of buy-back of employee shares of Grupa Azoty currently it is amounts to 97.69% TECHNOCHIMSERWIS Kopalnie i Zakłady Chemiczne Siarki SIARKOPOL S.A. S.A. typu zamkniętego 25% Azoty Group PUŁAWY, the warehouse of urea

10 OUR GROUP OUR GROUP 11 Grupa Azoty S.A. Company name Seat Scope of activities Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Zakłady Azotowe Zakłady Azotowe Polskie Konsorcjum Kopalnie i Zakłady Grupa Azoty S.A. Tarnów Nitrogen and sulphur fertilizers, as well as nitrogen ATT Polymers GmbH "KOLTAR" sp. z o.o Zakłady Chemiczne Kędzierzyn S.A. "Puławy" S.A. Chemiczne sp. z o.o. Chemiczne Siarki fertilizers. Integrated manufacturer of polyamide 6, 100% 100%. "Police" S.A. 66% 1 93,48%. 95,98% 63,27% "Siarkopol" S.A. 88,20% which is produced by polymerisation of caprolactam manufactured in Tarnów. Grupa Azoty Grupa Azoty ZAKSA S.A. Agrochem AUTOMATYKA Grupa Azoty Zakłady Azotowe Puławy Nitrogen fertilizers and melamine (the company is one sp. z o.o. Police Serwis 91,67% (3) sp. z o.o. PUŁAWY S.A. of the largest manufacturers of melamine in the world). 100% sp. z o.o. 100% 77,86% Grupa Azoty Zakłady Azotowe Kędzierzyn-Koźle Nitrogen fertilizers and OXO products (OXO alcohols Grupa Azoty Kędzierzyn S.A. and plasticizers). CTL CHEMKOL "Agrochem Puławy" "KONCEPT" Jednostka Ratownictwa sp. z o.o. 49% sp. z o.o. 100% sp. z o.o. 100% Chemicznego sp. z o.o. Grupa Azoty Zakłady Chemiczne Police Key manufacturer of nitrogen and compound fertilizers 100% POLICE S.A. and titanium white

10 OUR GROUP OUR GROUP 11 1.1.2. Our strategy OUR MAIN CORPORATE GOALS MISSION VISION IN 2020 ROCE ≥ 14%

The Grupa Azoty Group consistently strengthens WE ADD LIFE BEFORE its presence and competitiveness on the global IN 2020 EBITDA MARGIN > 14% market. The potential for our further development is still significant. In 2014, TO EARTH, AND ONE DECADE we translated our strategic goals into specific activities and figures. IN 202 EBIT MARGIN > 8% COLORS TO LIFE. We allocated these activities to three strategic areas of activity: organic development, mergers Thanks to the acquired experience and • we will be quoted in the main index of the Warsaw Stock Exchange, and acquisitions, and the Azoty PRO PLN 7bn to be spent on organic growth in 2014–2020 developed competences we ensure that • we will provide to shareholders of companies one of the highest Operational Excellence Programme. chemistry is safe and useful for people. in the industry returns on the entrusted capital, We pursue growth in the value of Grupa Azoty, Consolidating a top three position in fertilizer using effectively any synergies and innovations. • we will maintain established position of one of three largest manufacturers of fertilizers on the European market. MAIN AREAS OF THE "DEVELOPMENT STRATEGY manufacturing OF THE GROUP FOR THE YEARS 2013-2020" (indicated in the “Operationalization 2014-2020”)

Organic development 1.1.3. We have determined 68 investment projects, for which we will allocate nearly PLN 7 billion. These investments will develop new areas of activity of Grupa Azoty, will expand the portfolio Our key of products, increase production capacities, will improve effectiveness and strengthen the This results from the long-term strategy distribution network adopted by the Group, with one of its pillars investment investments? being new investments. The company projects already implements projects worth more For several years, the Grupa Azoty Group than PLN 4 billion, and until the end of 2020, has been changing the image of the Polish PLN 7 billion the Grupa Azoty Group will allocate more Mergers and acquisitions chemical industry. Its actions make 2014–2020 than PLN 7 billion on 68 investment projects. chemistry one of the most innovative These projects will be the largest We have selected entities whose potential and business profile could prove particularly valuable industry branches in Europe. undertakings of this type in Poland. under an exceptional configuration of the companies forming our Group Companies STRATEGIC INVESTMENTS Grupa Azoty Puławy IN PROGRESS Puławy power plant – PLN 1 125 million (2019) Expansion of nitric acid installation – PLN 695 million (2021) Operating excellence System for mechanical granulation of st The Operating Excellence Program of Azoty PRO assumes exchange of experiences between Grupa Azoty Police saltpetre – 2 lines – PLN 385 million (1 line companies, use of the best practices in order to improve technological and management Installation for propylene until 2018, 2nd line until 2020) processes and installation in the organization of the culture of self-improvement and production – PLN 1.7 billion (2019) continuous work for improvement in efficiency and effectiveness

Grupa Azoty Kędzierzyn Grupa Azoty S.A. Heat and power station Polyamide plant – PLN 600 million (2019) – PLN 320 million (2016) Installation for RSM production System for granulation of mineral For more information about the strategy of Grupa Azoty, see: – PLN 29.5 million (2015) fertilizers http://grupaazoty.com/en/grupa/strategia Installation for non-phtalate – PLN 140 million (2016) plasticizer Oxoviflex® Other projects – PLN 42 million (2015) – more than PLN 500 million

12 OUR GROUP OUR GROUP 13 1.1.2. Our strategy OUR MAIN CORPORATE GOALS MISSION VISION IN 2020 ROCE ≥ 14%

12 OUR GROUP OUR GROUP 13 STRUCTURE OF INVESTMENT OUTLAYS IN THE GRUPA AZOTY GROUP IN 2015

6,7% PURCHASES OF FINISHED GOODS GRUPA AZOTY KĘDZIERZYN

Name of Investmen Incurred Outlays Description Date of 9,7% 53,7% investment t budget outlays in 2015 of the investment project completion MANDATE INVESTMENTS RELATED TO The Grupa Azoty Group received INVESTMENTS DEVELOPMENT OF BUSINESS New Heat and 375 059 199 651 134 102 Restoring manufacturing capacities 2016 the title of the Investor of 2015 Power Station of thermal and electric energy in the heat in Grupa Azoty and power station, along with adjustment during the Investment Forum KĘDZIERZYN – to quantitative changes in the heat in Tarnów. This award means stage I and electric energy demand, as well as on the basis of solutions adjusted appreciation of the investment to the growing environmental demands program adopted by the company Start-up of 42 300 42 031 11 448 Construction and start-up of production The investment in 2015. Within the next 5 years, continuous installation of PVC non-phtalate plasticizer – were finished the Group intends to allocate production Oxoviflex®, with production capacity and for investment PLN 7 billion. of Oxoviflex® of 50 tons per year commissioned Logistic 20 800 15 301 15 247 Storage, maintaining qualitative parameters The investment facilities for of RSM-type liquid fertilizers and distribution was completed 29,9% RSM-type liquid of stored fertilizers INVESTMENTS RELATED TO MAINTENANCE fertilizers with OF BUSINESS modifier additives

The Grupa Azoty Group implements investment projects related both to development PLN and maintenance of business, as well as resulting from legal regulations (mandatory 906 790 000 investments). In 2015, cumulative investment GRUPA AZOTY PUŁAWY outlays in the Grupa Azoty Group amounted total value of investment to PLN 906 790 000 (excluding outlays outlays of the Name of Investment Incurred Outlays in Description of Phase Date of on repairs, expenses on components, paid Grupa Azoty Group in 2015 investment budget outlays 2015 the investment project of implementation completion advance payments and other expenses directly associated with investment projects). +58% Production of 137 500 134 495 36 102 Enabling production The investment was 2015 as compared to 2014 solid fertilizers and sale of new solid completed and based on urea fertilizers commissioned Azoty Group POLICE, night-time panorama and ammonium PULGRAN®/PULGRAN® SELECTED INVESTMENTS sulphate S in the volume OF THE GRUPA AZOTY GROUP of 160 000 tons per year and construction of a new logistics and GRUPA distribution complex

AZOTY S.A. Production plant 385 000 8906 8906 Improvement in the In 2015, design works 2020 of granulated quality of fertilizers and earthworks were Name Investment Incurred Outlays Description Date fertilizers based thanks to the completed, as well as of investment budget outlays in 2015 of the investment project of completion on ammonium application of modern key deliveries nitrate mechanical granulation of devices Polyamide plant 320 000 88 221 85 896 Improvement in management 2016 and industry services II 80 tt/year efficiency of caprolactam were contracted. produced within the Group In 2016, the design Mechanical Granulation 141 000 41 204 35 672 Introduction of new formulas 2016 works and Installation II for nitrogen and sulphur fertilizers contracting of devices and services Warehouse 43 000 42 967 32 347 Enabling seasoning and storage The warehouse will be continued, of fertilizers in bulk in adequate conditions started operation and works related to for Saletrosanu® 26 and calcium at the beginning construction of the ammonium nitrate 27 Standard of 2016 1st production line will be performed.

14 OUR GROUP OUR GROUP 15 STRUCTURE OF INVESTMENT OUTLAYS IN THE GRUPA AZOTY GROUP IN 2015

6,7% PURCHASES OF FINISHED GOODS GRUPA AZOTY KĘDZIERZYN

14 OUR GROUP OUR GROUP 15 GRUPA AZOTY PUŁAWY GRUPA AZOTY POLICE

Name of Investment PIncurred Outlays in Description of the Phase Date of Name of Investment Incurred Outlays in Description of the Phase Date of investment budget outlays 2015 investment project of implementation completion investment budget outlays 2015 investment project of implementation completion

Modernization 695 000 62 62 Increase in effectiveness A tendering campaign is 2021 Installation 1 675 000 32 606 32 606 Construction of the The supplier of propane 2019 of nitric acid of nitric acid production conducted for purchase of for propylene installation producing dehydrogenation technology installation and improvement in construction technology production by propylene by means was selected as the American and construction economics of the fertilizers for the new nitric acid means of propane of propane dehydrogenation company UOP LLC. Contracts of new acid produced on its basis and neutralization line. dehydrogenation (PDH). were signed with the company: installations, In 2016, it is planned to select (PDH) along with license contract, warranty neutralization and the technology supplier infrastructure The planned scale contract and contract for production of new and commence the design of production is at least provision of engineering fertilizers based works. 400 thousand tons services. Company prepared on nitric acid of propylene per year. technical documentation, A power unit will also the so-called Basic Engineering Replacement 99 000 321 64 Increase in generation In 2015, tendering and 2017 be constructed within (BE). At the same time, of TG-2 turbine set efficiency of electric and contracting campaign the project, and the seaport geological reports and were heat energy in combination was conducted for delivery in Police will be expanded prepared and works were by replacement of TG-2 of the turbine set. by a chemicals conducted, connected with extraction-condensing In 2016 – execution of the preparation of the area. The turbine set with output of contract for delivery of the Terms of Reference (ToR) were 30 MWe with a new unit with turbine set, continuation also prepared and invitations rated capacity of 37 MWe, of design works and to submit the bids for the FEED under modernization of the tendering campaigns, documentation were sent electric and power system beginning of the works trade. (Front-End Engineering Design).

Construction 1 125 000 4633 4633 The basic function of the In 2015, Elektrownia Puławy 2019 Flue gas treatment 163 700 134 635 25 026 Adjustment of the heat Revitalization of two boilers 2016 of the power plant power plant (gas-steam unit) Sp. z o. o. obtained a binding unit along with and power station operation was conducted within the Elektrownia will be generation of environmental decision modernization to the requirements investment; the devices were Puławy technological heat and Contracts were signed with of the heat and of Directive 2010/75/EU commissioned. heating energy, as well as companies responsible for power plant ECII A denitrification system was electric power in high- design preparation of the launched on both boilers, and efficiency cogeneration investment and temporary optimization of the devices' investment replacement. operation was completed. Works were commenced Warranty tests were conducted on the investment financing - NOX emission parameters model. In 2016, Elektrownia were met. Currently, works Puławy Sp. z o. o. obtained related to construction of flue a building permit. The gas desulphurization process of choosing the installation are conducted. General Investment Executor is in progress. Modernization 155 600 67 574 61 345 Reduction in power One carbon monoxide 2016 of the ammonia consumption conversion unit was optimized. installation of the production process One process air system was and improvement also modernized, and local in reliability of work air intakes were built for of its particular units process and instrument air compressors. One steam turbine driving the synthesis gas compressor was replaced. Recently undertaken works: start-up of a new turbine driving the synthesis gas compressor and commencement of the optimization process of the turbine set.

Azoty Group PUŁAWY, night-time panorama

16 OUR GROUP OUR GROUP 17 GRUPA AZOTY PUŁAWY GRUPA AZOTY POLICE

Azoty Group PUŁAWY, night-time panorama

16 OUR GROUP OUR GROUP 17 1.1.4. Results of the ENERGY EFFICIENCY

Azoty PRO Program 2016 improvement in energy efficiency

The purpose of the Azoty PRO Operational SUPPORT FUNCTIONS "After 18 months from its implementation, the Operational Excellence Programme is continuous Excellence Programme brings measurable results. In 2015, improvement in the company's efficiency both the aspirational goal assumed achievement of EBIDTA effects in terms of costs and incomes and, as a result, 2017 efficient administration starting from 2017, more than PLN 300 million at the level of PLN 65 million. In reality, the savings resulting of savings annually. 2016 sale of non-core assets from the implementation of the Azoty PRO Programme The programme has been inaugurated on 1 July reduction in taxes on out-of-operation in 2015 amounted to over five times more than assumed. 2014 and covers the whole Grupa Azoty Group, systems including both operating and business activities, as well as issues related to organizational 2015 principles that encourage maximisation Implementation of the Azoty PRO Programme strengthens culture, group integration, building commitment of the purchase of products within cooperation between companies within the Group and brings and innovative attitudes. the group millions of PLN in results. Operating excellence became efficient planning in the group a permanent element of the corporate culture of all companies within the Group. It effectively supports PRODUCTION uniform rules for the valuation of production costs in the group implementation of ambitious strategic goals and large 2016 uniform rules for monitoring based on investments.” 2017 optimization of the ammonia system efficiency and assessment in the group 2017 increase in employees’ commitment Robert Pikulski Product from the process in the group Manager of the Azoty PRO Program

2016 optimization of H2SO4 management 2016 flexible working hours in the group

2017 optimization of production costs 2015 innovation in the group of caprolactam in the group monitoring and benchmarking KPI 2016 improvement in the performance in the group of the process of quality testing in the group REPAIRS improvement in the efficiency of organisation of work in the group 2016 the best repair practices in the group 2015 optimization of production management in the group TPM** and Preventive Maintenance*** efficient management of repair AZOTY PRO AND SUSTAINABLE GROWTH PURCHASES AND LOGISTICS companies Beyond financial benefits, the implementation of the Azoty PRO Program brings significant environmental savings. It applies, first of all, to 2016 comprehensive use of tools for optimization of purchases consumption of materials and raw materials. Similar situation occurs with energy efficiency. 2015 efficient management of the level of coal in warehouses of the companies The Azoty PRO Program includes a sub-program of implementing in the group More than recommendations from power audits (White Power) to reduce power consumption of the production and supporting processes. Each success lower costs of gas consumption in this field will mean limited footprint which will be quite significant in the group Planned million on the scale of the whole Grupa Azoty. completion PLN 300 2017 an efficient purchase process of the projects of savings annually in the group Azoty Group Jsc, Marek Krawiec – operator at the Department of nitric acid efficient logistics in the group * Efficiency crucial indicators ** Efficient traffic maintenance *** Preventive traffic maintenance

18 OUR GROUP OUR GROUP 19 1.1.4. Results of the ENERGY EFFICIENCY

Azoty PRO Program 2016 improvement in energy efficiency

2016 optimization of H2SO4 management 2016 flexible working hours in the group

18 OUR GROUP OUR GROUP 19 1.1.5. The place for responsible business in our operations

We are aware of our impact on the environment Due to the fact that sustainable development concerns all business and we pay special attention to minimizing the areas of the Grupa Azoty Group, representatives of the company Sustainable development challenges in the chemical industry effects of the conducted industrial activities were also involved in the process: experts in their fields, from different on the environment, by undertaking a number departments and levels. of initiatives related to achieving harmony and balance with the surrounding world. We want our operations to have a measurable, positive impact on restricting adverse environmental investment in research seeking innovative technological We treat the issues of sustainable development sustainable development of the environment, where we operate. impact and development solutions as strategic ones. Supervision over the process Thus we fit within the new Sustainable Development Agenda, adopted of sustainable development management rests by the United Nations in September 2015 by 193 countries, including with the president of the management board – Poland. The Agenda contains 17 Sustainable Development Goals, Chief Executive Officer – and in the particular and 169 tasks, the implementation of which will contribute to building areas of competences - members of the a better future for us all in social, environmental and economic terms. management board. increase in the use building open Although the governments are the ones directly responsible for pursuing of renewable raw materials education dialogue these goals, the involvement of businesses and companies such as ours in production processes will have the largest impact on achieving the actual results.

SUSTAINABLE DEVELOPMENT GOALS OF THE GRUPA AZOTY GROUP

UN Sustainable Development Goals

Good health No poverty Quality Gender Zero hunger and equality well-being education

Sustainable production Workplace Dialogue and building relations

Decent work Industry, minimization of the environmental improvement in satisfaction of the supporting development of the local Clear water Affordable impact of companies comprising the employees community and innovation Reduced Sustainable and and clean economic cities and Grupa Azoty Group sanitation and inequalities improvement in the level of health adoption of a dialogue formula with energy growth infrastructure communities development of cooperation with and safety of the employees each key stakeholder group scientific units initiating activities with regard to building effective communication building ecological awareness employee development concerning the area of sustainable development creation of sustainable products building ethical culture of the Grupa Responsible involvement in the "Responsible Azoty Group consumption Peace, justice Partnerships Care" programme Climat action Life below Life on land and strong and water for the goals production institutions

20 OUR GROUP OUR GROUP 21 1.1.5. The place for responsible business in our operations

SUSTAINABLE DEVELOPMENT GOALS OF THE GRUPA AZOTY GROUP

UN Sustainable Development Goals

Good health No poverty Quality Gender Zero hunger and equality well-being education

Sustainable production Workplace Dialogue and building relations

20 OUR GROUP OUR GROUP 21 "RESPONSIBLE CARE”

The "Responsible Care" programme was initiated in the 1980s by the Canadian Chemical Industry Association. It is a voluntary obligation of companies within the chemical industry from more than 50 countries to comply with the principles of eco-ethics, improve work conditions, increase operation safety of the system, as well as have permanent contact with the environment.

All of the crucial companies of Grupa Azoty have since 1.2. the beginning of their existence in a comprehensive manner treating the development of new technologies, while time taking into account the needs of the closest environment. Strategic Their city-formation nature caused that issues connected with the development of a local community are a deep-rooted management system part of operations of our Group, and the understanding itself of responsibility towards the environment has evolved in companies, as has the idea of CSR itself in the world, reaching a strategic nature. Our approach to sustainable development management is an integrated approach to actions being taken 1.2.1. in respect of economic efficiency, responsibility towards Management structure the employee and the environment, and also facing the actual needs of environment. of the Grupa Azoty Group

Adam Żurek Director of the Corporate Department for Strategy and Development Management Board of Grupa Azoty S.A. serves as the management board of the Grupa Azoty Group. The president of the management board exercises comprehensive supervision over the capital group, and the management board members are responsible for the main areas of activity: finances, strategy and development, investments, production integration, plastics and organic syntheses, supply chain management, FOR 8 YEARS IN THE RESPECT INDEX social dialogue, technical safety and environmental protection, as well as management of particular companies. Grupa Azoty is in the elite group of companies quoted in the RESPECT Index at the Warsaw Stock Exchange.The RESPECT Index includes each time only listed companies operating in accordance with the best management standards with regard to corporate governance, information governance and relations with investors, as well as in the areas of environmental, social and employee factors. The companies comprising the index are subjected to annual assessment and verification of their practices. The Grupa Azoty Group has been quoted in the index constantly since 19 November 2009, namely since its establishment.

More on sustainable development of the Grupa Azoty Group at: http://grupaazoty.com/en/rozwoj

22 OUR GROUP Azoty Group KĘDZIERZYN, plant for the production of oxo alcohols OUR GROUP 23 "RESPONSIBLE CARE”

More on sustainable development of the Grupa Azoty Group at: http://grupaazoty.com/en/rozwoj

22 OUR GROUP Azoty Group KĘDZIERZYN, plant for the production of oxo alcohols OUR GROUP 23 Corporate management rests with the corporate departments, which - within the whole Grupa Azoty Group - perform a similar function as within the structures of Grupa Azoty S.A.

Effectiveness and clarity of management will remain one of the key aspects of the Group's operations, as management MEMBERS is the key to fully utilize the synergy effects obtained as a result of the previous consolidation. Its meaning will grow along OF THE MANAGEMENT BOARD with further expansion of the Grupa Azoty Group. OF THE GRUPA AZOTY GROUP:

Mariusz Bober Witold Szczypiński Tomasz Hinc Paweł Łapiński Józef Rojek Artur Kopeć President of the Management Board Vice President of the Management Board, Vice President of the Management Board Vice President of the Management Board Vice President of the Management Board Management Board Member CEO Responsible for comprehensive Responsible for the area Responsible for the Responsible for the area of Responsible for execution of Responsible for production supervision over and management of of production integration, implementation of the finances, audit and IT controlling. investment projects and assets, technical safety, the Group, for the strategy, corporate the Agro segment purchasing strategy research-development programs. environmental protection, management, including owner and the Plastics segment. coordination, resource infrastructure and social supervision, audit and internal control, integration, logistics and supply dialogue. compliance, human resources chain management in the group. management, communication and image (including public relations and CSR).

24 OUR GROUP OUR GROUP 25 Corporate management rests with the corporate departments, which - within the whole Grupa Azoty Group - perform a similar function as within the structures of Grupa Azoty S.A.

24 OUR GROUP OUR GROUP 25 GRUPA AZOTY COUNCIL 1.2.2. In order to utilize the synergy potential, opinions on the assumptions of individual and consolidated Strategic management system the Grupa Azoty Council was established annual budgets of the companies within the Grupa Azoty in 2013. It includes presidents and members Group and assumptions of long-term plans. of management boards of all companies of the Grupa Azoty Group of the Grupa Azoty Group and the CEO The Council is also a platform for improvement in the of the parent company. communication system and the terms of cooperation within the Grupa Azoty Group, for information exchange within The tasks of the Grupa Azoty Council includes common actions, as well as for works on the reporting advising, expressing opinions and initiating system for the Management Board of the Grupa Azoty management improvement activities, expressing Group and the management boards of its companies. A key goal of the management model is to increase the value of the Group by acting "as one company". The Group's management model assumes centralization of areas ensuring the highest synergistic effects and management of the main economic processes at the level of the Group, SUPERVISORY while maintaining the identity of the companies within the Grupa Azoty Group. The competences to manage the Group are allocated in the BOARD corporate departments, subordinate towards the Management Board of the Grupa Azoty Group.

The Supervisory Board supervises the Grupa The responsibilities of the Committee involve monitoring of: In the value management process, the Group implemented the integrated Azoty Group. Since 2013, under the Supervisory • the financial reporting process management system, including strategic and operational management, Board of the Grupa Azoty Group, the Audit which guarantees focusing goals and activities on growth in the economic Committee acts as an advisory body. • financial inspection value of the Group. • audit of individual and consolidated financial statements • independence of the statutory auditor and the entity authorized to audit the financial statements More about management systems in the Grupa Azoty Group at: http://grupaazoty.com/en/grupa/zarzadzanie/systemy • work and reports of the independent statutory auditor • operation of the internal audit cell • effectiveness of internal control system.

The primary management policy in the Grupa Azoty Group is "the Corporation Management Policy". Its provisions are correlated with GENERAL the directions set out in the "Development strategy of the Group for the years 2013–2020". Regardless of this policy, particular companies may – MEETING under the maintained and improved management systems – adopt their own management policies, focused on actions and role of each of them within the Group. The General Meeting is summoned and Its competences include examination and approval of reports prepared in accordance with the provisions of the management board and financial statements, issuing of the "Code of Commercial Companies" resolutions on division of profit or covering losses and on and the internal regulations of Grupa Azoty S.A. increase or decrease of share capital.

26 OUR GROUP Azoty Group PUŁAWY, pressure-free storage plant for ammonia, OUR GROUP 27 Piotr Deska – chemical processes control operator and Tomasz Rybak – operator of chemical processes GRUPA AZOTY COUNCIL 1.2.2. In order to utilize the synergy potential, opinions on the assumptions of individual and consolidated Strategic management system the Grupa Azoty Council was established annual budgets of the companies within the Grupa Azoty in 2013. It includes presidents and members Group and assumptions of long-term plans. of management boards of all companies of the Grupa Azoty Group of the Grupa Azoty Group and the CEO The Council is also a platform for improvement in the of the parent company. communication system and the terms of cooperation within the Grupa Azoty Group, for information exchange within The tasks of the Grupa Azoty Council includes common actions, as well as for works on the reporting advising, expressing opinions and initiating system for the Management Board of the Grupa Azoty management improvement activities, expressing Group and the management boards of its companies. A key goal of the management model is to increase the value of the Group by acting "as one company". The Group's management model assumes centralization of areas ensuring the highest synergistic effects and management of the main economic processes at the level of the Group, SUPERVISORY while maintaining the identity of the companies within the Grupa Azoty Group. The competences to manage the Group are allocated in the BOARD corporate departments, subordinate towards the Management Board of the Grupa Azoty Group.

26 OUR GROUP Azoty Group PUŁAWY, pressure-free storage plant for ammonia, OUR GROUP 27 Piotr Deska – chemical processes control operator and Tomasz Rybak – operator of chemical processes Management systems at the Grupa Azoty Group For the purpose of integration of management systems the Grupa Azoty Group, Management 1.2.3. Systems Integration Team within the Grupa The companies belonging to the Grupa Azoty Under the consolidation process of the "Group Management Model", Azoty Group was established, which operates Monitoring Group are governed by, among others: we implemented the following standards and policies in 2015: under the leadership of the Substantive Committee and implements initiatives from of management systems • Quality Management System compliant with • Internal audit standards in the Grupa Azoty Group and Internal Audit particular thematic areas of management ISO 9001:2008 standard Regulations in the Parent Company systems. For the purpose of execution of these in the Grupa Azoty Group activities, six working parties were appointed, • Environmental Management System • Financing and Liquidity Management Policy of the Grupa Azoty Group consisting of representatives of particular compliant with ISO 14001:2004 standard • Financial (Foreign Exchange and Interest Rate) Risk Management Policy Companies of the Grupa Azoty Group. • Occupational Health and Safety Management within Grupa Azoty Group, In order to improve integrated management systems in the Group System compliant with standards PN-N- In the Grupa Azoty Group, we conduct companies, audits are conducted by trained and experienced audit teams. 18001:2004 and BS OHSAS 18001:2007 • Standards for using business name within the Grupa Azoty Group evaluation of compliance of the activities with the implemented management systems and Audits of management systems are planned and carried out by individual • The strategy for technical maintenance and management of the life • Management System PN-EN ISO/IEC legal requirements. Compliance with qualitative, companies and have the form of: cycle of the Grupa Azoty Group's property 17025:2005 (competencies of testing environmental, occupational health and safety, and calibration laboratories) • internal audits conducted within particular companies • Common management model of CO2 emission allowances and food safety requirements is examined during audits of internal management systems. • Food Safety Management System compliant • Framework Procedure for sale of the right of perpetual usufruct, • audits of the other party, including: with ISO 22000:2005 standard the ownership title to real estate or the share in these rights − audits in subsidiaries • Quality Management System for the in the Grupa Azoty Group companies INTERNAL AUDIT − audits of suppliers automotive industry, implemented − customer audits. • Principles of conduct in the event of an inspection carried out by The Grupa Azoty Group has the system of internal as required by ISO/TS16949:2009 the Office for Protection of Competition and Consumers (UOKiK) audit in place, consistent with the International • Energy Management System, implemented in and the European Commission within the Grupa Azoty Group Standards for the Professional Practice of Internal Auditing (The Institute of Internal Auditors – IIA). some companies of the Grupa Azoty Group, • Principles of conduct preceding conclusion of contracts for provision Its purpose is to operationally streamline the as required by ISO 50001:2011 standard of services, delivery of raw materials and other materials in Grupa business activity and ensure proper and effective Azoty S.A. and common procedures within the Grupa Azoty Group • Responsible Care Framework Management functioning of corporate governance. System, consistent with the guidelines of the • Policy for preparing documentation of transactions with affiliates European Council of Chemical Industry within the Grupa Azoty Group, In addition, it is supposed to support companies of the Grupa Azoty Group in regular evaluation • Product Stewardship Management Standard • Coal purchase management principles in the Grupa Azoty Group of their activities and in improvement of CONTINUOUS IMPROVEMENT PROCESS • Enterprise risk management system. companies, effectiveness of management processes. OF MANAGEMENT SYSTEMS • Guidelines for reporting intended investments and preparation of investment projects in the Grupa Azoty Group companies The adopted management systems based on international standards ensure: • Integrated Investment Management System Instructions within the Grupa Azoty Group • transparency of business processes • Methodological assumptions of effectiveness analyses of investment • management integration of all value chain projects in the Grupa Azoty Group elements Policy Planning of Development Verification Improvement on the • Guidelines with regard to allocation of sub-limits of umbrella credits determination activities in order and conditions for of effects of basis of periodical • credibility, comparability and reliability between the Grupa Azoty Group companies. to implement the execution of the activities assessments of data policy planned activities of the achieved results • quick analyses, reliability and ease of creating reports On the organizational side, we established the following Committees: • dedicated availability of management • Financial Committee within the Grupa Azoty Group The consolidation processes conducted in the recent years within the information Grupa Azoty Group result in change in some organizational structures • Purchases Committee within the Grupa Azoty Group or defining of new areas, where close cooperation of the companies • growing automation of the processes • Development Committee within the Grupa Azoty Group is necessary. of processing and transmission of data • EU ETS Management Committee and for EU ETS Executive Team The ways of conduct in this respect are systematically regulated by the • high degree of reliability, stability, for the purposes of the common management model of CO2 emission issued internal corporate regulations in the form of procedures, internal quick responses actions and flexibility allowances orders, regulations, instructions. Successive expanding of the audit of the utilized IT infrastructure function and focus on corporate audits allow for assessing the degree • Substantive Committee and Task Team for development of a common of implementation of requirements, norms and corporate standards, • coherent information security system, HR strategy within the Grupa Azoty Group. building trust to the organization as well as the effectiveness of those actions. and its efficient functioning on the market. Azoty Group POLICE, night-time panorama

28 OUR GROUP OUR GROUP 29 Management systems at the Grupa Azoty Group For the purpose of integration of management systems the Grupa Azoty Group, Management 1.2.3. Systems Integration Team within the Grupa The companies belonging to the Grupa Azoty Under the consolidation process of the "Group Management Model", Azoty Group was established, which operates Monitoring Group are governed by, among others: we implemented the following standards and policies in 2015: under the leadership of the Substantive Committee and implements initiatives from of management systems • Quality Management System compliant with • Internal audit standards in the Grupa Azoty Group and Internal Audit particular thematic areas of management ISO 9001:2008 standard Regulations in the Parent Company systems. For the purpose of execution of these in the Grupa Azoty Group activities, six working parties were appointed, • Environmental Management System • Financing and Liquidity Management Policy of the Grupa Azoty Group consisting of representatives of particular compliant with ISO 14001:2004 standard • Financial (Foreign Exchange and Interest Rate) Risk Management Policy Companies of the Grupa Azoty Group. • Occupational Health and Safety Management within Grupa Azoty Group, In order to improve integrated management systems in the Group System compliant with standards PN-N- In the Grupa Azoty Group, we conduct companies, audits are conducted by trained and experienced audit teams. 18001:2004 and BS OHSAS 18001:2007 • Standards for using business name within the Grupa Azoty Group evaluation of compliance of the activities with the implemented management systems and Audits of management systems are planned and carried out by individual • The strategy for technical maintenance and management of the life • Management System PN-EN ISO/IEC legal requirements. Compliance with qualitative, companies and have the form of: cycle of the Grupa Azoty Group's property 17025:2005 (competencies of testing environmental, occupational health and safety, and calibration laboratories) • internal audits conducted within particular companies • Common management model of CO2 emission allowances and food safety requirements is examined during audits of internal management systems. • Food Safety Management System compliant • Framework Procedure for sale of the right of perpetual usufruct, • audits of the other party, including: with ISO 22000:2005 standard the ownership title to real estate or the share in these rights − audits in subsidiaries • Quality Management System for the in the Grupa Azoty Group companies INTERNAL AUDIT − audits of suppliers automotive industry, implemented − customer audits. • Principles of conduct in the event of an inspection carried out by The Grupa Azoty Group has the system of internal as required by ISO/TS16949:2009 the Office for Protection of Competition and Consumers (UOKiK) audit in place, consistent with the International • Energy Management System, implemented in and the European Commission within the Grupa Azoty Group Standards for the Professional Practice of Internal Auditing (The Institute of Internal Auditors – IIA). some companies of the Grupa Azoty Group, • Principles of conduct preceding conclusion of contracts for provision Its purpose is to operationally streamline the as required by ISO 50001:2011 standard of services, delivery of raw materials and other materials in Grupa business activity and ensure proper and effective Azoty S.A. and common procedures within the Grupa Azoty Group • Responsible Care Framework Management functioning of corporate governance. System, consistent with the guidelines of the • Policy for preparing documentation of transactions with affiliates European Council of Chemical Industry within the Grupa Azoty Group, In addition, it is supposed to support companies of the Grupa Azoty Group in regular evaluation • Product Stewardship Management Standard • Coal purchase management principles in the Grupa Azoty Group of their activities and in improvement of CONTINUOUS IMPROVEMENT PROCESS • Enterprise risk management system. companies, effectiveness of management processes. OF MANAGEMENT SYSTEMS • Guidelines for reporting intended investments and preparation of investment projects in the Grupa Azoty Group companies The adopted management systems based on international standards ensure: • Integrated Investment Management System Instructions within the Grupa Azoty Group • transparency of business processes • Methodological assumptions of effectiveness analyses of investment • management integration of all value chain projects in the Grupa Azoty Group elements Policy Planning of Development Verification Improvement on the • Guidelines with regard to allocation of sub-limits of umbrella credits determination activities in order and conditions for of effects of basis of periodical • credibility, comparability and reliability between the Grupa Azoty Group companies. to implement the execution of the activities assessments of data policy planned activities of the achieved results • quick analyses, reliability and ease of creating reports On the organizational side, we established the following Committees: • dedicated availability of management • Financial Committee within the Grupa Azoty Group The consolidation processes conducted in the recent years within the information Grupa Azoty Group result in change in some organizational structures • Purchases Committee within the Grupa Azoty Group or defining of new areas, where close cooperation of the companies • growing automation of the processes • Development Committee within the Grupa Azoty Group is necessary. of processing and transmission of data • EU ETS Management Committee and for EU ETS Executive Team The ways of conduct in this respect are systematically regulated by the • high degree of reliability, stability, for the purposes of the common management model of CO2 emission issued internal corporate regulations in the form of procedures, internal quick responses actions and flexibility allowances orders, regulations, instructions. Successive expanding of the audit of the utilized IT infrastructure function and focus on corporate audits allow for assessing the degree • Substantive Committee and Task Team for development of a common of implementation of requirements, norms and corporate standards, • coherent information security system, HR strategy within the Grupa Azoty Group. building trust to the organization as well as the effectiveness of those actions. and its efficient functioning on the market. Azoty Group POLICE, night-time panorama

28 OUR GROUP OUR GROUP 29 FINANCIAL RISKS

Our Group is governed by the Financial (Foreign Exchange and Interest Rate) Risk Management Policy, which is one of the tools used for implementation of a centralized Financing Model. 1.2.4. Risk management Foreign exchange risk Interest rate risk The purpose of the foreign exchange risk management The purpose of interest rate risk management is is to limit variability of the Group's currency flows to optimize interest rates levels in terms of: in EUR and USD, included in the plan, and to protect • minimizing costs of debt capital interest, them against unfavorable changes in exchange rates • providing the highest available profitability The Grupa Azoty Group, following the best We implemented the enterprise risk management system on the basis using instruments limiting foreign exchange exposure of financial assets, while maintaining safety corporate models, has implemented integrated of the PN-ISO 31000:2012 standard "Risk management principles and and its impact on the financial result of the Group. of their allocation. approach to enterprise risk management. Risk guidelines" and the COSO standard "Enterprise risk management – management is a part of the management process integrated framework". The Grupa Azoty Group established the of our Group and constitutes an element of "Enterprise Risk Management Policy" and procedural solutions describing Pricing risk sustainable protection and building of its value. the stages of the risk management process, detailed mode of proceedings and the responsibilities of its participants. MAIN STAGES The objective of the Group is to reduce the risk of price Credit risk OF THE RISK MANAGEMENT PROCESS variability by natural hedging, consisting in linking the greatest possible part of purchasing and sales turnover Identification (above all, for production line: phenol, benzene, The purpose of the adopted procedures with regard and assessment of risks caprolactam, polyamide) in the concluded framework to credit risk management is minimization of the risk RISK MANAGER contracts with changes in prices of ICIS quotations for of loss of financial assets, such as loans, receivables, the raw material. cash and other cash assets. Determinationand implementation of response The Group established an administrator of the risk management process – to the risk and incident the Risk Manager. His role is to manage enterprise risk at the level of the NON-FINANCIAL RISKS response plans Group. Non-financial risks are related to the need to plan new investment projects and adjust production processes to new legal STEERING COMMITTEE requirements, including environmental requirements. Monitoring incidents and reporting Risk concerning price and availability of natural gas the risk level In order to support process management, the Steering Committee was established. Actions taken by the Committee consist in exchanging information, conducting analyses and formulating opinions allowing for Looking for alternative and competitive sources of gas demand of the companies. Currently, the prices of gas development of substantive solutions with regard to the process being supply, we diversify both the directions of deliveries, bought by Grupa Azoty are based on quotations, which executed. Members of the Steering Committee of the Risk Management as well as the suppliers. We conduct common means that we buy gas at prices similar to these, for which Consideting information Process are representatives of the companies within the Grupa Azoty negotiations with suppliers with regard to buying it is purchased by our competition in the European Union. about decision- Group, where the risk management system was implemented. gas, using the strengthened negotiation position The Grupa Azoty Group companies reduce consumption making processes within the Grupa Azoty Group. costs of gas also through investment activities focused on reduction in consumption rates of this raw material. RISK OWNERS Our gas purchase structure is a result of combining the long-term contract with the strategic supplier, namely The expansion of gas interconnectors, gas warehouses, Monitoring PGNiG, with annual and shorter-term contracts with as well as start-up of the gas terminal in Świnoujście, and evaluation of the risk The responsibility for management of particular risks rests with their different suppliers, as well as transactions on exchanges implemented in Poland, minimized the availability management system Owners, who undertake current actions with regard to monitoring and on the OTC market, taking account of the current risk of gas. the factors of a given risk and assume risk management strategies.

The Owners perform periodical evaluation of risks, taking account of the evaluation scale of effect and probability adopted for a given year. Then, they are prioritized and the key risks for the company in a given period Reporting Risk related to the implementation of the Industrial Emission Directive (IED) and communication are indicated. As a result of this process, the companies and the Grupa Azoty Group adopt the key risks list, the Risk Map and the Risk Register. In connection with implementation of the Industrial within the Grupa Azoty Group to the new legal requirements. Information about risks is used as a support element during planning Emission Directive (IED) in January 2014, it will be The Group companies will be forced to carry out certain and making management decisions, as well as during creation of internal required to adjust production systems of the companies adaptation works and bear the execution costs of these works. audit plans.

More about the main financial risks within the Grupa Azoty Group can be found in the report on operations of the Management Board of Grupa Azoty Group for 2015.

30 OUR GROUP OUR GROUP 31 FINANCIAL RISKS

More about the main financial risks within the Grupa Azoty Group can be found in the report on operations of the Management Board of Grupa Azoty Group for 2015.

30 OUR GROUP OUR GROUP 31 1.2.5. Risk concerning the process of Risk related planning and implementation to BAT conclusions Ethical values of strategic projects followed within As a result of the planned review of regulations Implementation of investment projects takes with regard to the Best Available Techniques account of the change management process, the Grupa Azoty Group (BAT) of manufacturing large volume inorganic in which special attention is paid to changes in products (ammonia, acids, fertilizers), there is foreign exchange rates, prices of raw materials, In 2014, we adopted the "Code of Ethical a risk of increase and extension of requirements as well as the changing requirements for newly Conduct of Grupa Azoty Group", which contains relating to emission of pollutants to the built installations. As a result, it is possible to the desired attitudes and ways of conduct. environment. Similarly, there is a risk related to update the adopted implementation schedules determination of new BATs for systems, which and the planned expenses on the on-going This document determines the direction so far had no specific Best Available Techniques. basis. Implementation of investment projects of actions of the Group, aimed at shaping is monitored by controlling services for the the employees' attitudes, as well as effecting purpose of identification of potential hazards. the way of building relations with the The binding regulations also take account environment, where the organization operates. of requirements resulting from the obligations We address the Code of Ethical Conduct of Grupa Azoty Group resting with the beneficiaries, who obtain the to our employees, customers, business partners, Actions performed by us in the aforementioned EU aid for implementation of tasks co-financed shareholders and other stakeholders acting in the environment area include: from the aid funds. of Grupa Azoty. VALUES Azoty Group KĘDZIERZYN mechanical granulation plant, OF GRUPA AZOTY from the right Dariusz Chramęga – operator – coordinator, Piotr Kalita – junior operator

• analysis of the level of market efficiency Economy means for us based on the economic account principles and of the applied technologies as compared Risk related to emission responsible disposal of material and intangible assets of Grupa Azoty to the development trends in the competitive of greenhouse gas Economy in a manner ensuring maximization of benefits for shareholders and other environment stakeholders. Emission of greenhouse gas is subject to legal regulations related to the functioning of the EU We care to ensure that standards of organization management, its operation and control system are effective and provide implementation emission trading system in greenhouse gas Professionalism of our strategy.Professionalism is the requirement of utmost diligence (EU ETS). This system is based on allocation of and optimum use of knowledge, skills and business competences. • planning and implementation of projects free allowances to greenhouse gas emissions aimed at achievement of the level of from installations, and in the case of receiving BAT/BREEF in production units inadequate allowances as compared to the We believe that good cooperation consists in shaping mutual emissions – on purchase on the primary (stocks) relations that maximizes benefits for Grupa Azoty, taking account or secondary market (e.g. on the stock Cooperation of and respecting interests of the other party. It requires communication exchange). The number of the allocated focused on reaching agreement and trust while pursuing common goals. free allowances is decreased each year, in accordance with the European Union policy. • searching for new solution proposals applied Due to higher CO2 emission as compared to in other processes, in particular aimed at the allocation of free allowances, the Grupa Respect is, briefly speaking, full recognition of the dignity of another person, regardless of his or her nationality, race, sex, age, degree increasing effectiveness and reducing power Azoty Group - in the case of significant increase Respect of disability, denomination, political opinions and sexual orientation. consumption with regard to the binding in the price for the allowance - may be forced regulations and the technology level to sustain additional costs related to investment activities in order to reduce emission of nitrous oxide and carbon dioxide. It means for us open communication of own decisions and factors of the undertaken activities and our expectations and requirements. Transparency We practice it in all areas of activities, except for those areas that, To decrease the impact of this risk, the for business or legal reasons, must remain non-public. companies undertake actions designed to • preparing and introducing to the product reduce power consumption of processes, catalogue new fertilizers, based on and thus reduce greenhouse gas emissions, Code of Ethical Conduct of Grupa Azoty Group The Code of Ethical Conduct regulates the issues related to cases components manufactured in the operating and in the case of Grupa Azoty KĘDZIERZYN, is addressed to all employees within the Grupa of corruption. In 2015, no such cases were recorded. There were no cases installations. for the nitric acid installation, reduction Azoty Group, as well as to customers, business of disciplinary dismissals or punishments in connection with corruptive in emission of nitrous oxide. partners, shareholders and other stakeholders behaviors. There were also no cases of non-renewal of contracts with operating in the environment of the Grupa contractors due to the breach of the corruption principles. No court cases Azoty Group. were pending concerning corruption practices, initiated against the Grupa Azoty Group or its employees in the reporting period.

32 OUR GROUP OUR GROUP 33 1.2.5. Risk concerning the process of Risk related planning and implementation to BAT conclusions Ethical values of strategic projects followed within As a result of the planned review of regulations Implementation of investment projects takes with regard to the Best Available Techniques account of the change management process, the Grupa Azoty Group (BAT) of manufacturing large volume inorganic in which special attention is paid to changes in products (ammonia, acids, fertilizers), there is foreign exchange rates, prices of raw materials, In 2014, we adopted the "Code of Ethical a risk of increase and extension of requirements as well as the changing requirements for newly Conduct of Grupa Azoty Group", which contains relating to emission of pollutants to the built installations. As a result, it is possible to the desired attitudes and ways of conduct. environment. Similarly, there is a risk related to update the adopted implementation schedules determination of new BATs for systems, which and the planned expenses on the on-going This document determines the direction so far had no specific Best Available Techniques. basis. Implementation of investment projects of actions of the Group, aimed at shaping is monitored by controlling services for the the employees' attitudes, as well as effecting purpose of identification of potential hazards. the way of building relations with the The binding regulations also take account environment, where the organization operates. of requirements resulting from the obligations We address the Code of Ethical Conduct of Grupa Azoty Group resting with the beneficiaries, who obtain the to our employees, customers, business partners, Actions performed by us in the aforementioned EU aid for implementation of tasks co-financed shareholders and other stakeholders acting in the environment area include: from the aid funds. of Grupa Azoty. VALUES Azoty Group KĘDZIERZYN mechanical granulation plant, OF GRUPA AZOTY from the right Dariusz Chramęga – operator – coordinator, Piotr Kalita – junior operator

32 OUR GROUP OUR GROUP 33 For Grupa Azoty, it is a priority to conduct operations in a responsible and trustworthy manner. Our Company’s ambition is 1.3.2. to be an entity that in an open and precise manner communicates Information policy adopted values and principles for conduct. In Grupa Azoty, we are working on the “Code of Ethical Procedure of Grupa Azoty” as an of Grupa Azoty element of the Ethical Program. The document will determine the direction of activities used to shape workers’ attitudes, and also impact on the method of building relations. We address the Code of Ethical Procedure also to our customers, business partners, The priority of information and communication shareholders and other stakeholders acting in the environment actions of Grupa Azoty S.A. is to protect and of Grupa Azoty. By pointing out in the Code the principles that respect the interests of all shareholders of the we follow, we express a belief that external entities cooperating company. with us will fully respect the content and the spirit of the Code We operate according to the highest of Ethics of Grupa Azoty. communication standards of the capital market and the principles of corporate governance. We provide all capital market participants, in particular the present and future shareholders, with exhaustive and reliable information, by:

Maurycy Graszewicz, PhD • result conferences after publication of Director of the Marketing and Communication Department periodical reports, co-organized by all companies-issuers of the Grupa Azoty Group. They are transmitted in real time via the 33% Internet, in Polish and in the English language STATE TREASURY; version. The conference recordings, along More on the Code of Ethical Procedure with presentations, are published each time of Grupa Azoty Group on the website: on the company's website and in the social http://grupaazoty.com/en/grupa/zarzadzanie/kodeks 9,9% media RAINBEE HOLDINGS COMMUNICATION PRINCIPLES WITH THE SHAREHOLDERS LIMITED • one-2-one meetings • national and foreign trade conferences, XX 1.3. presenting quoted companies from the 9,96% region of Eastern and Central Europe ING OFE (e.g. the WallStreet conference, organized Equal Capital by the Individual Investors Association). Reliability access In 2015, the representatives of the Grupa information to information Azoty Group for the first time participated market in the Capital Market Games, a sports event 9,5% addressed to minority investors, organized Opansa Enterprises Limited by the Individual Investors Association

1.3.1. • open Internet chats, during which Information OTHER stockholders can ask questions directly to the Coordination policy 8,6% representatives of the Grupa Azoty Group of information Transparency Shareholders' structure TFI PZU S.A. activities of Grupa 5,75% 0,072% Azoty of Grupa Azoty European Bank Nordica Hodilng S.a.r.l. • social networking websites, such for Reconstruction as Facebook, Twitter, YouTube and Development • website (http://grupaazoty.com/en/relacje), The largest shareholder of the Grupa Azoty The Grupa Azoty Group is a part of the WIG, WIG30, mWIG40, WIG-Poland where we publish current and periodic Group is the State Treasury. Other shareholders, indexes and the trade index WIG-Chemia. Since February 2013, it is also reports, as well as the latest information High namely investment funds and other financial included in the MSCI Emerging Markets index, calculated by the American about general meetings or recommendations quality Reliability institutions, control together nearly 45% investment bank Morgan Stanley. of analysts and presentations of periodical of information of the share capital of the Group. 22% results. of shares are free-floating shares, which In March 2015, the Grupa Azoty Group was qualified to the prestigious guarantees stability of the exchange rate and index FTSE Emerging Markets, which is a part of the FTSE Global Equity a chance for a considerable growth dynamics. Index Series (GEIS).

34 OUR GROUP OUR GROUP 35 For Grupa Azoty, it is a priority to conduct operations in a responsible and trustworthy manner. Our Company’s ambition is 1.3.2. to be an entity that in an open and precise manner communicates Information policy adopted values and principles for conduct. In Grupa Azoty, we are working on the “Code of Ethical Procedure of Grupa Azoty” as an of Grupa Azoty element of the Ethical Program. The document will determine the direction of activities used to shape workers’ attitudes, and also impact on the method of building relations. We address the Code of Ethical Procedure also to our customers, business partners, The priority of information and communication shareholders and other stakeholders acting in the environment actions of Grupa Azoty S.A. is to protect and of Grupa Azoty. By pointing out in the Code the principles that respect the interests of all shareholders of the we follow, we express a belief that external entities cooperating company. with us will fully respect the content and the spirit of the Code We operate according to the highest of Ethics of Grupa Azoty. communication standards of the capital market and the principles of corporate governance. We provide all capital market participants, in particular the present and future shareholders, with exhaustive and reliable information, by:

34 OUR GROUP OUR GROUP 35 AWARDS AND DISTINCTIONS

Issuer Golden Website 1.3.3. Method of presentation of data essential for the investors and online communication were once again appreciated in the competition Issuer 1.4.1.Dividend policy Golden Website, organized by the Association of Listed Companies. The jury of the competition awarded the Grupa Azoty Group with of Grupa Azoty the title of the Winner of the 8th edition in the category of Polish Quoted Companies included in WIG20 and mWIG 40 indexes. The website was assessed, among others, in terms of the information content, innovation and transparency of communication. The jury of the The Grupa Azoty Group follows a flexible dividend policy. We are guided competition emphasized that particularly impressive is the harmonious by the interests of the shareholders and the need to ensure proper level and transparent graphic layout, the rich information content and the fact of financial indicators and capital for further development. Our shares are that the website is very high-tech. particularly attractive for long-term investors, who base their decisions on responsibility criteria in business. We pursue a strategic goal, namely high rate of return on equity, with responsible management, social and environmental impact. Special Award of the Minister of the State Treasury

A honourable mention for the best communication with individual investors through the website. PAYMENT OF DIVIDENDS FOR 2015 PLN 83 324 206.56 "Responds to Inventors" honourable mention the amount allocated on payment of dividend

Activities of the Grupa Azoty Group concerning investor's relations were appreciated also by the investors in the opinion-forming economic daily newspaper "Puls Biznesu", for active participation of the Grupa Azoty PLN 0.84 Group in the "Investor Action" – as a result of which, from August 2010, dividend value per 1 share the company has the honour of being able to use the "Responds to Inventors" logo. 99 195 484 pcs. number of shares entitled to the dividend "10 for 10 Programme”

The essence of the programme organized by the Individual Investors Association is delivery of the best practices with regard to communication with individual investors, based on expectations reported by this group and on the patterns binding on foreign markets. The Grupa Azoty Group More on the capital market of the Grupa Azoty Group at: undertook to follow an active communication policy with individual http://grupaazoty.com/en/relacje investors and act with respect for the rights of this group.

36 OUR GROUP Azoty Group PUŁAWY, Melamine II and III plants OUR GROUP 37 AWARDS AND DISTINCTIONS

36 OUR GROUP Azoty Group PUŁAWY, Melamine II and III plants OUR GROUP 37 1.4. Customers website and social media (Facebook, Twitter, The specificity of the chemical industry consists in Youtube) a tremendous variation of areas of activities. In our current Communication image research of the Grupa Azoty Group work it translates into passing on hundreds of messages integrated annual report. connected with environmental, financial, raw material, with the Scientific institutions product, legislative issues or issues related to the involvement of particular companies in cooperation with local integrated annual report communities. Naturally, communication of all of these issues environment direct meetings under jointly conducted projects conferences, congresses, symposiums, should be adapted to specific stakeholders because each conventions (international, national, industry, of the groups has different expectations as to the scope 1.4.1. local). and form of cooperation. For this reason, it is important to apart from the willingness to share the knowledge Communication Media concerning our operations thoroughly learn our partners’ with our stakeholders press conferences expectations. We understand responsible communication one-2-one meetings as a dialogue adapted to our mutual needs and expectations. We conduct our operations in the dynamically changing articles (including interviews with environment. Learning about the stakeholders' expectations representatives of the company) and advertising and conducting a dialogue based on common exploration of in national, industry, local press needs and exchange of information is the source of new ideas website and social media (Facebook, Twitter, Grzegorz Kulik and innovations, which, in turn, brings better business results. Youtube). Press Spokesman of Grupa Azoty The form and frequency of the dialogue with stakeholders Television (Grupa Azoty POLICE has its own depend on the specific nature of a given group and on the program on the local television "News of Grupa Azoty Zakłady Chemiczne "Police" SA, aired twice current expectations and problems important for both parties. a month) Conducting a dialogue is the responsibility of managers for 1.4.2. particular functional areas of the companies, who have the Suppliers best knowledge of the expectations of stakeholder groups. Initiatives Engagement in activities At the stage of defining the scope of the report, it was direct communication with people assigned to co- of many organizations of a global, important to be involved in the process of data acquisition operation with companies from the Group companies we engage in of a few dozen persons, who know their areas of responsibility website the national and local range and expectations of their key stakeholders. industry meetings, fairs Forum ISO 14000 integrated report annual. The representatives of the Grupa Azoty Group belong to OUR STAKEHOLDERS the most important international decision-making groups. Forum of Work Safety Leaders Local communities We take part in, for instance, the World Economic Forum Foundation for Assistance to the Hospital in Puławy in Davos, regional thematic forums, and we are also the first Davos World Economic Foundation* Investors, shareholders meetings with representatives of the local entity from Central Europe to take the floor in the most community (artistic, teacher, sports, business important think-tank in Europe, the Royal Institute NPG-6 Promotional Group output conferences after publishing environment, etc.) of International Affairs Chatham House in London. periodical reports direct meetings, participation in local events IFA (International Fertilizer Industry Association) We feel co-responsible for the future of our industry, as well as conferences, congresses, symposiums, integrated report annual IFIEC (Europe International Federation of Industrial for the quality and living conditions of the communities we conventions (international, national, industry, Energy Consumers) local) participation of Grupa Azoty employees in live in. We create new products, shape new trends, influence activities for the benefit of local communities INCOPA (Inorganic Coagulants Producers Association) Internet chats with shareholders the market and its environment. under the employee voluntary service program. Institute of Internal Auditors IIA Poland one-2-one meetings. For this reason, we engage in activities of many organizations of a global, the national and local range: ISSA (Information Systems Security Association) State institutions British-Polish Economic Chamber Industrial Energy Sector and Energy Recipients Chamber Employees Business Club Szczecin Land Transport Chamber of Commerce integrated report annual surveying employee satisfaction CEEP (Central European Energy Partners) Chamber of Industry and Commerce in Kraków direct meetings crew meetings and trainings CEFIC (European Chemical Industry Council) Chamber of Industry and Commerce in Tarnów conferences, congresses, symposiums, cooperation with trade unions conventions (international, national, industry, CEMS (The Global Alliance in Management Education) Chamber of Crafts and Small and Medium-Sized Intranet local). Centre for Advanced Technologies at the Industrial Enterpreneurship in Tarnów newsletters and bulletins, news-sheet for Chemistry Institute "Chem-Ster" Speciality Chemicals Cluster employees Financial institutions EPCA The European Petrochemical Association Polish Testing Laboratories Club POLLAB program of employee voluntary service integrated report annual EPF (European Panel Federation) Azoty Sports Club – Puławy boxes for comments and requests, notice current and periodical reports boards Executive Club Audit Heads Club direct meetings integrated annual report Fertilizers Europe Committee of Chemistry of the Polish Academy of Sciences conferences, congresses, symposiums, chats with the President. conventions (international, national, industry, Large Gas Consumers Forum Info-Tech-Med Consortium local).

38 OUR GROUP OUR GROUP 39 1.4. Customers website and social media (Facebook, Twitter, The specificity of the chemical industry consists in Youtube) a tremendous variation of areas of activities. In our current Communication image research of the Grupa Azoty Group work it translates into passing on hundreds of messages integrated annual report. connected with environmental, financial, raw material, with the Scientific institutions product, legislative issues or issues related to the involvement of particular companies in cooperation with local integrated annual report communities. Naturally, communication of all of these issues environment direct meetings under jointly conducted projects conferences, congresses, symposiums, should be adapted to specific stakeholders because each conventions (international, national, industry, of the groups has different expectations as to the scope 1.4.1. local). and form of cooperation. For this reason, it is important to apart from the willingness to share the knowledge Communication Media concerning our operations thoroughly learn our partners’ with our stakeholders press conferences expectations. We understand responsible communication one-2-one meetings as a dialogue adapted to our mutual needs and expectations. We conduct our operations in the dynamically changing articles (including interviews with environment. Learning about the stakeholders' expectations representatives of the company) and advertising and conducting a dialogue based on common exploration of in national, industry, local press needs and exchange of information is the source of new ideas website and social media (Facebook, Twitter, Grzegorz Kulik and innovations, which, in turn, brings better business results. Youtube). Press Spokesman of Grupa Azoty The form and frequency of the dialogue with stakeholders Television (Grupa Azoty POLICE has its own depend on the specific nature of a given group and on the program on the local television "News of Grupa Azoty Zakłady Chemiczne "Police" SA, aired twice current expectations and problems important for both parties. a month) Conducting a dialogue is the responsibility of managers for 1.4.2. particular functional areas of the companies, who have the Suppliers best knowledge of the expectations of stakeholder groups. Initiatives Engagement in activities At the stage of defining the scope of the report, it was direct communication with people assigned to co- of many organizations of a global, important to be involved in the process of data acquisition operation with companies from the Group companies we engage in of a few dozen persons, who know their areas of responsibility website the national and local range and expectations of their key stakeholders. industry meetings, fairs Forum ISO 14000 integrated report annual. The representatives of the Grupa Azoty Group belong to OUR STAKEHOLDERS the most important international decision-making groups. Forum of Work Safety Leaders Local communities We take part in, for instance, the World Economic Forum Foundation for Assistance to the Hospital in Puławy in Davos, regional thematic forums, and we are also the first Davos World Economic Foundation* Investors, shareholders meetings with representatives of the local entity from Central Europe to take the floor in the most community (artistic, teacher, sports, business important think-tank in Europe, the Royal Institute NPG-6 Promotional Group output conferences after publishing environment, etc.) of International Affairs Chatham House in London. periodical reports direct meetings, participation in local events IFA (International Fertilizer Industry Association) We feel co-responsible for the future of our industry, as well as conferences, congresses, symposiums, integrated report annual IFIEC (Europe International Federation of Industrial for the quality and living conditions of the communities we conventions (international, national, industry, Energy Consumers) local) participation of Grupa Azoty employees in live in. We create new products, shape new trends, influence activities for the benefit of local communities INCOPA (Inorganic Coagulants Producers Association) Internet chats with shareholders the market and its environment. under the employee voluntary service program. Institute of Internal Auditors IIA Poland one-2-one meetings. For this reason, we engage in activities of many organizations of a global, the national and local range: ISSA (Information Systems Security Association) State institutions British-Polish Economic Chamber Industrial Energy Sector and Energy Recipients Chamber Employees Business Club Szczecin Land Transport Chamber of Commerce integrated report annual surveying employee satisfaction CEEP (Central European Energy Partners) Chamber of Industry and Commerce in Kraków direct meetings crew meetings and trainings CEFIC (European Chemical Industry Council) Chamber of Industry and Commerce in Tarnów conferences, congresses, symposiums, cooperation with trade unions conventions (international, national, industry, CEMS (The Global Alliance in Management Education) Chamber of Crafts and Small and Medium-Sized Intranet local). Centre for Advanced Technologies at the Industrial Enterpreneurship in Tarnów newsletters and bulletins, news-sheet for Chemistry Institute "Chem-Ster" Speciality Chemicals Cluster employees Financial institutions EPCA The European Petrochemical Association Polish Testing Laboratories Club POLLAB program of employee voluntary service integrated report annual EPF (European Panel Federation) Azoty Sports Club – Puławy boxes for comments and requests, notice current and periodical reports boards Executive Club Audit Heads Club direct meetings integrated annual report Fertilizers Europe Committee of Chemistry of the Polish Academy of Sciences conferences, congresses, symposiums, chats with the President. conventions (international, national, industry, Large Gas Consumers Forum Info-Tech-Med Consortium local).

38 OUR GROUP OUR GROUP 39 • The National IT Network of the European Agency "Responsible Care" Programme* for Safety and Health at Work Association of Advisers for Transport of Hazardous Polish Federation of Engineering Associations Products by Rail National Environmental Protection Foundation Polish Exporter Association Chamber of Economy in Opole Polish Electrical Engineers Association - Management ADR Research Center "Law and Economy" Board of the Tarnów Branch Plastics Europe Association of Listed Companies Polish Chemical Security Group Association of the Polish Chemical Engineers and Technicians Polish Chamber of Commerce "Eco-Development" Polish Accountants Association, branch in Lublin, branch Polish Chamber of Chemical Industry in Kielce, branch in Cracow 2.0 Polish Chamber of Patent Agents Association of Polish Consumers and Importers Polish Technology Platform – Work Safety in the Industry of Potassium Salt Polish Technology Platform for Hydrogen and Fuel Cells "Lubelskie Drewno" Association Polish Technology Platform for Sustainable Chemistry Association of Polish Corporate Treasurers Polish Standardization Committee Association West Pomeranian Chemical Cluster "Green Chemistry" Polish Plastics Converters Association* SPOT assistance system for transport of dangerous Polish Forum ISO 9000 materials Polish-Brasilian Chamber of Commerce Technology and Rationalization Club in Tarnów Northern Chamber of Commerce TDMA (Titanium Dioxide Manufacturers Association) Employers of the Republic of Poland The European Sulphuric Acid Association Chamber of Commerce in Puławy Towarowa Giełda Energii S.A. Entrepreneurship Center in Puławy Regional Economic Chamber

* Associations members constitute 3 reporting companies without Grupa Azoty S.A.

Royal Institute of International Responsible Care Fertilizers Europe Affairs Chatham House

The "Responsible Care" programme is Fertilizers Europe is an organization Royal Institute of International an expression of voluntary commitment associating the biggest European Affairs Chatham House, having of the global chemical industry in actions entities producing fertilizers. Its its registered office in London, for the benefit of eco-ethics, improvement imperative objectives include gathers more than 300 companies in work conditions, safety of manufacturing education and analysis, as well representing the following sectors: systems, and in constant dialog with the as solving problems related to financial, industrial, health, power, OUR environment. production and use of fertilizers, telecommunication and commercial, which may affect health of the as well as the most important inhabitants of the European Union embassies, inter-governmental The programme was established in 1984 and the natural environment. organizations and universities. in Canada, at the initiative of the Canadian Furthermore, FE supervises the Grupa Azoty is the first partner Chemical Industry Association. interests of the whole EU fertilizer from Central and Eastern Europe. Participation in the programme creates market and is responsible for an obligation to conduct business contact with other entities and In 2015, the Grupa Azoty, as the first operations in accordance with the main international institutions, and is company from Central and Eastern principles of sustainable development: also the only organization of this Europe, joined Chatham House, • economic efficiency, strength, representing the fertilizer which is considered to be one of industry before the European the most important think-tanks in • care for environment (protection BUSINESS Commission. Its members, apart the world. of natural resources, systematic from companies from Poland, Products minimization of environmental impacts, The membership will allow the include companies from Spain, effective use of raw materials), company to shape global policy, Production France, Norway, Lithuania, Germany, above all concerning food and power • social balance (improvement in the Austria, the Czech Republic, security. Customers quality of life of the local community, Hungary, the Netherlands, Belgium, involvement in propagation of Romania, Greece. ecological education).

40 OUR GROUP Azoty Group KĘDZIERZYN, plant for the production of nitric acid, OUR BUSINESS 41 Jacek Farasiewicz – operator of inorganic acid, Control-foreman at the Department of nitric acid • The National IT Network of the European Agency "Responsible Care" Programme* for Safety and Health at Work Association of Advisers for Transport of Hazardous Polish Federation of Engineering Associations Products by Rail National Environmental Protection Foundation Polish Exporter Association Chamber of Economy in Opole Polish Electrical Engineers Association - Management ADR Research Center "Law and Economy" Board of the Tarnów Branch Plastics Europe Association of Listed Companies Polish Chemical Security Group Association of the Polish Chemical Engineers and Technicians Polish Chamber of Commerce "Eco-Development" Polish Accountants Association, branch in Lublin, branch Polish Chamber of Chemical Industry in Kielce, branch in Cracow 2.0 Polish Chamber of Patent Agents Association of Polish Consumers and Importers Polish Technology Platform – Work Safety in the Industry of Potassium Salt Polish Technology Platform for Hydrogen and Fuel Cells "Lubelskie Drewno" Association Polish Technology Platform for Sustainable Chemistry Association of Polish Corporate Treasurers Polish Standardization Committee Association West Pomeranian Chemical Cluster "Green Chemistry" Polish Plastics Converters Association* SPOT assistance system for transport of dangerous Polish Forum ISO 9000 materials Polish-Brasilian Chamber of Commerce Technology and Rationalization Club in Tarnów Northern Chamber of Commerce TDMA (Titanium Dioxide Manufacturers Association) Employers of the Republic of Poland The European Sulphuric Acid Association Chamber of Commerce in Puławy Towarowa Giełda Energii S.A. Entrepreneurship Center in Puławy Regional Economic Chamber

* Associations members constitute 3 reporting companies without Grupa Azoty S.A.

Royal Institute of International Responsible Care Fertilizers Europe Affairs Chatham House

2.2.1. Our main products

Nowadays Grupa Azoty is significant Our offer includes mineral fertilizers, plastics, strength on the European fertilizer chemicals, OXO alcohols, titanium white. Our market – the second largest company production focuses on five segments, with the in the European Union – and a powerful dominant share in sales held by the segment player on the chemical market. Our we are the most usually associated with, namely plants are ones of the most advanced Agro fertilizers. in Europe, being characterised by exceptionally high production efficiency and lower consumption of natural raw materials than in the competition. Our REVENUES FROM SALES BY OPERATIONAL fertilizers reach thousands of farmers SEGMENTS (in PLN thousands) in Poland and abroad. In the model of cooperation adopted by us, we want to be on the same side 7 000 000 of the value chain, by advising 6 000 000 and working together with farmers and scientists on optimal use of fertilizers: 5 000 000

both traditional and new-generation 4 000 000 ones. We want to create unique fertilizers - custom-made. Our aim is 3 000 000 to use the entire synergies on which Grupa Azoty was built. 2 000 000 1 000 000 Witold Szczypiński Vice-President of the Management 0 Agro-Fertilizers Plastics Chemicals Energy Segment Other Activities Board of Grupa Azoty Segment Segment Segment Segment +8.6% -14.5% -8.1% +7.5% +31.3%

2015 2014 % - 2015/2014

42 OUR PRODUCTS OUR PRODUCTS 43 2.1. Our products

2.2.1. Our main products

2015 2014 % - 2015/2014

42 OUR PRODUCTS OUR PRODUCTS 43 AGRO FERTILIZERS

No. 1 on the Polish market No. 2 in the European Union in production of mineral fertilizers 69% of sale of products from the Agro fertilizers segment was sale on the domestic market OUR STRATEGY 2020

The sector of mineral fertilizers will keep on being our largest area of activities, with crucial importance for the Group's operations. We will keep on expanding the assortment of offered fertilizers to liquid and specialized fertilizers, other products and services for agriculture.

It is planned to increase production capacities of mechanically granulated nitrate-based fertilizers. In addition, production lines are modernized, targeted mainly at reduced power consumption and costs of production processes.

Nitrogen fertilizers are one of the most popular In order to reinforce and consolidate the leader's position in the segment agents in the world aiding yield and growth of production and sale of fertilizers, we undertake actions aiming of green mass of plants. Fertilizers are used, at optimization of production costs and expansion of the catalogue OUR INVESTMENTS first of all, in agriculture for cultivation of products and services offered to the customers, including, among of cereals, cultivated plants (rape, potato, others, by: corn) and vegetables. Mechanical fertilizer New fertilizer complex • implementation of the assumptions of the Group's updated strategy granulation unit in Tarnów in Puławy The Grupa Azoty Group offers nitrogen, in the field of distribution nitrogen-sulphur, nitrogen-phosphorus and • implementation of investment projects, which will contribute to an In 2015, the founding document was signed Grupa Azoty PUŁAWY officially launched the production unit compound fertilizers. Additionally, this group increase in production effectiveness and built-in for construction of the second of PULGRAN® and PULGRAN® S fertilizers. It is the final investment project includes ammonia and other semi-finished mechanical granulation unit, the largest project of the new fertilizer complex, the total value of which amounted to more products manufactured on the basis of nitrogen. • seeking alternative sources of natural gas supply in terms of price currently implemented in the field of fertilizers than PLN 450 million. The new fertilizer complex is the biggest investment Fertilizers are produced by companies in • strengthening of the Group's market position by canvassing and in Tarnów. Project implementation will enable of Grupa Azoty PUŁAWY in the recent years, and hence a complex of some Tarnów, Puławy, Kędzierzyn, Police, Gdańsk launching new products on the market extension of the catalogue of the offered of the most advanced liquid and solid fertilizers production installations and Chorzów. Additionally, the Azoty Group • active participation in consolidation process of chemical plants products. The new unit will also allow in Europe. analyzes the eventual possibility of mining for doubling the production capacities phosphates in Senegal - the main ingredient for • undertaking anti-dumping actions of ammonium sulphonitrate (Saletrosan®26 As a result, the company will extend the product chain in the segment the production of compound fertilizers. • active participation in the works of Fertilizers Europe and Saletrosan®30) and other mechanically of fertilizers and will consolidate its position of the market leader granulated fertilizers. in urea fertilizers. The budget of the last part of the project amounts • cooperation with universities and scientific institutes to PLN 137.5 million. Under this part, a tabletting unit was created • execution of actions aiming at supporting agricultural producers in for manufacturing PULGRAN® and PULGRAN® S. accessing the latest solutions in the field of production and fertilizing.

44 OUR PRODUCTS OUR PRODUCTS 45 AGRO FERTILIZERS

No. 1 on the Polish market No. 2 in the European Union in production of mineral fertilizers 69% of sale of products from the Agro fertilizers segment was sale on the domestic market OUR STRATEGY 2020

44 OUR PRODUCTS OUR PRODUCTS 45 PLASTICS No. 1 in production of polyamide 6 in Poland No. 6 in the European Union among integrated manufacturers More than 91.7% of revenue from sales of products from the segment of plastics was generated from sale in foreign markets OUR STRATEGY 2020

Polyamides and modified plastics will remain key components of the plastics portfolio. The Group will increase the production scale of polyamides and balance fully production capacities of caprolactam and polyamides. We are planning also increase the scale of operations in the field of polyamide composites.

The segment of plastics has the second largest Production of plastics takes place in Tarnów and Guben (Germany). They • adjustment to the recipients' expectations OUR INVESTMENTS share in sales of the Grupa Azoty Group and are produced both in the natural and modified form. As a result of using by offering the so-called "dedicated" enjoys particular popularity among foreign our own R&D base and cooperation with the leading Polish scientific and products - matching specific needs recipients. Plastics are used in many industries research institutions, we create recipes dedicated for individual projects. of specific customers Innovative polyamide 6 unit due to a number of very favorable physical Within this segment, we also sell semi-finished products for manufacture of properties; for instance, in automotive plastics, such as melamine, caprolactam, cyclohexanone and cyclohexanol. • conducting actions aimed at optimizing the In 2015, the founding document was signed for construction of a new industry, construction, electrical engineering, portfolio of suppliers of raw materials, with polyamide 6 unit (PA6). The investment project is worth PLN 320 million household appliances, as well as food and In order to strengthen the competitive position in the segment of plastics, particular focus on direct cooperation with and will allow the Grupa Azoty Group to increase production capacities textile industry. we undertake the following actions: producers under long-term strategic of PA6 to 170 000 tons annually. contracts, as well as developing an optimum The offers of plastics includes: Tarnamid®, • construction of a new PA6 polyamide unit in Tarnów, which will ensure logistic model of suppliers of raw materials Alphalon® (trade names of polyamide 6), full balance of caprolactam within the Grupa Azoty Group Tarnoform® (trade name of polyacetal (POM)), • active operation of the Grupa Azoty Group and other modified plastics, based on • finalization of the construction project of a new Modified Plastics on the international forum as a member of polyamide 6.6 (Tarnamid A®), polypropylene Factory in Tarnów, within the Cracow SEZ (Special Economic Zone), the European trade organizations, such as (Tarnoprop®) or PBT (Tarnodur®). The which will result in further extension of the product chain CEFIC (European Chemical Industry Council) granulates are also used to manufacture plastic or Plastics Europe products, such as polyamide covers used • continuation of the sales diversification policy of caprolactam as packaging of cured meats, or tubes made • monitoring all hazards quick enough to allow of polyamide 6, 11, 12 and polyethylene LDPE, • preparation of a long-term program for limiting the manufacturing costs for undertaking preventive actions or actions used as pneumatic and hydraulic wires. of caprolactam minimizing losses.

• use of synergy effects of the installations in Tarnów and Puławy, resulting from combining production and trade potentials

46 OUR PRODUCTS OUR PRODUCTS 47 PLASTICS No. 1 in production of polyamide 6 in Poland No. 6 in the European Union among integrated manufacturers More than 91.7% of revenue from sales of products from the segment of plastics was generated from sale in foreign markets OUR STRATEGY 2020

• use of synergy effects of the installations in Tarnów and Puławy, resulting from combining production and trade potentials

46 OUR PRODUCTS OUR PRODUCTS 47 CHEMICALS

No. 3 No. 1 No. 1 manufacturer of in Poland in Poland melamine in the world No. 2 No. 5 No. 5 in the European Union in Europe* in terms in Europe* of production of OXO as the manufacturer alcohols of plasticizers*

* Per the sum of 2-EH * Per the sum of DEHT, and butanols DINP, DEHP, DPHP. 61% of sale of products from OUR STRATEGY 2020 the "Chemicals" segment In the area of OXO products our main actions will be associated constitutes sale on foreign markets with further expansion of the product portfolio. Works related to the extension of the offered assortment to new generation non-phthalate plasticizers will be continued.

In the "Melamine" segment we assume continuation of the adopted product-market strategy, further optimization of logistic processes and possible expansion of distribution channels.

The segment of chemicals gathers comprises OXO products (OXO alcohols, plasticizers), urea for technical purposes, melamine, sulfur and other substances. We produce them in our companies in Kędzierzyn, Puławy, Police and Grzybowo.

OXO alcohols Plasticizers Sulphur Melamine Titanium white In order to strengthen the competitive position OUR INVESTMENTS We produce the We produce three In the Grupa Azoty It is a non-toxic and non- Universal titanium in the segment of chemicals, we undertake the following OXO alcohols: plasticizers: DEHT, DEHP, Group, this raw material flammable product in white and specialist 2-ethylohexanol (2-EH), DPHP is used as natural the form of white titanium white marketed following actions: butanols (n-butanol, iso- sulphur powder as Tytanpol® The largest propylene unit in Europe butanol). The key alcohol • adjustment of the offer to the market needs is 2-EH and requirements, such as introduction Until 2019, Police will have the most modern and the largest propylene of non-phthalate plasticizer to the offer, high unit in Europe, utilizing the method of propane dehydrogenation (PDH). 2-ethylohexanol (2-EH) Plasticizers are used in the The main application Used in many applications: The key market for TiO2 is used for production of chemical industry as a of sulphur is for production for production of synthetic pigments is the paints and purity of OXO alcohols, as well as seeking Is the biggest investment of Grupa Azoty. The project, with the value plasticizers. Furthermore, softening agent for plastics, of sulphuric acid, which resins, thermosetting varnishes sector. The high market niches, among others, by improving of PLN 1.7 billion, assumes construction of a propylene production unit, 2-EH and its derivatives mainly PVC, as an additive is widely used in chemistry, plastics, adhesives, paints, quality of the Group's DEHP plasticizer for medical purposes, a power unit, and expansion of the port in Police by a liquid chemicals are utilized in the textile to paints and varnishes. among others, in production varnishes (including stoving pigments means that the and refining industries. The key plasticizer for of two-component fertilizer organization of deliveries strictly according terminal. The terminal is supposed to handle the largest LPG vessels varnish), auxiliary agents majority are certified for It is also used as a solvent the Group is DEHT. DAP. to the needs of the final recipient (flexitanks in Poland, increasing its operational capacity two times. for the textile industry, use in products in contact for vegetable oils, animal DEHT is now produced for deep-sea freights of small amounts fats, resins, waxes and fire-retardant additives with food. under the brand name of products) Strategic investment project will strengthen the position of the Grupa petrochemical products. and other. Oxoviflex®. It is used Azoty Group as a manufacturer of OXO alcohols and plasticizers, securing in processing of plastics the needs for the basic raw material for the plants in Kędzierzyn, while as a "non-phthalate" • projects aiming at minimizing manufacturing plasticizer and in costs of particular goods the remaining part of propylene will be allocated for sale, which will make the industry of paints and the Grupa Azoty Group the key manufacturer of propylene in Europe. varnishes. It also has a broad • active participation in public affairs market The construction of the unit will employ ca. 1000 people. After starting-up range of applications, from production of fitted carpets activities and works of trade associations. the production unit, ca. 200 people will be employed permanently. and wall linings to children toys.

48 OUR PRODUCTS OUR PRODUCTS 49 CHEMICALS

In the "Melamine" segment we assume continuation of the adopted product-market strategy, further optimization of logistic processes and possible expansion of distribution channels.

48 OUR PRODUCTS OUR PRODUCTS 49 ENERGY OTHER PRODUCTS Approximately 99.1% AND SERVICES of sale of products from the segment of energy constituted sale on the domestic market.

Azoty Group Jsc, warehouse of fertilizers no.3, portal charger, Bartosz Rega- operator

Group PUŁAWY, laboratory of ammonium nitrate, Katarzyna Grzelak- technician OUR STRATEGY 2020

Until 2020, the existing coal-fired combined heat and power plants will remain the main source of heat and power for the production complexes in Tarnów and Police. The functioning combined heat EXEMPLARY SERVICES OF GRUPA AZOTY S.A.: and power plants will be systematically modernized, and the scale • laboratory services, including analyses of food products, analyses and scope of their modernization will be adjusted to changing legal of fertilizers, plastics tests, identification and quality analyses requirements, in particular concerning environmental impact. • electric power and water, including water fit for consumption, Azoty Group PUŁAWY, night-time panorama In Kędzierzyn-Koźle it is assumed to restore production capacities of heat industrial water, demineralized water, softened water and power of the combined heat and power plant along with adjustment The main plants of the Grupa Azoty Group to changes in demand for volume of heat and power as well as on the basis A significant service area for operations • lease of land and buildings. have their own power and heat generating units. of solutions adjusted to growing environmental demands. The completed of the Grupa Azoty Group was gathered The Grupa Azoty Group companies also have implementation of the 1st stage of a new CHP plant in Grupa Azoty in the segment of other activities. It includes their own power media and energy distribution KĘDZIERZYN is expected in 2016. such services as maintenance services EXEMPLARY SERVICES OF GRUPA AZOTY POLICE: network. (automation, designing, repairs, etc.), • Center for Laboratory Analyses Works related to the design of construction of a new power plant are logistics, infrastructure management, continued in Puławy. Surplus of the produced electricity will be sold. environment protection and research. • Laboratory of Technical Control A program of necessary modernization of the existing internal power industry is carried out independently. Like in the segment of energy, the majority • Laboratory of Application JB Pigments of activities within this area is implemented • waste neutralization services for the internal purposes of Grupa Azoty. Nonetheless, some services are also offered • port services. to the external customers.

50 OUR PRODUCTS OUR PRODUCTS 51 ENERGY OTHER PRODUCTS Approximately 99.1% AND SERVICES of sale of products from the segment of energy constituted sale on the domestic market.

Azoty Group Jsc, warehouse of fertilizers no.3, portal charger, Bartosz Rega- operator

Group PUŁAWY, laboratory of ammonium nitrate, Katarzyna Grzelak- technician OUR STRATEGY 2020

50 OUR PRODUCTS OUR PRODUCTS 51 2.2.

Our ELECTRIC POWER NATURAL GAS Procurement of electric power for the We obtained a few percent reductions in electric power prices as production companies within the Grupa Azoty Group is compared to the prices from 2014. We are the largest consumer of natural gas in Poland. Total demand based on the major domestic power sellers – for this raw material is ca. 2.2 billion m3 annually, therefore its purchase PGE S.A., TAURON Sprzedaż Sp. z o.o., ENEA S.A. The procurement strategy with regard to electric power allowed is of strategic importance for us. – handling large customers. for obtaining competitive prices and contract terms, among others, 2.2.1. by utilizing the buying economies of scale. Due to the variability of this To ensure continuity and security of natural gas supplies, half of our As a result of tenders for 2015, the Grupa Azoty market and the variability of legal regulations related thereto, the Raw materials used demand is covered with a long-term contract with the strategic supplier, Group companies signed dedicated transaction procurement policy of electric power was pursued on the basis and the remaining needs are supplemented with short-term contracts, agreements under the existing framework of short-term contracts. for manufacturing purchases on the stock exchange and over-the-counter (OTC). We use agreements. the economies of scale thanks to joint tenders and negotiations conducted of our products by the team consisting of representatives of particular companies. We also diversify contract prices under acceptance flexibility. COAL We buy coal on the domestic market. Deliveries Amsterdam, Rotterdam and Antwerp, and Polish mining is too small We are one of the largest consumers of raw from far away with large quantities and the to affect global prices. materials in Central and Eastern Europe. required quality become unprofitable. The largest expenses are related to the energy The strategy of most companies from the Grupa Azoty Group in this field raw materials (mainly natural gas) and strategic Grupa Azoty S.A. additionally uses nitrogen-rich natural gas from local The prices of fine coals in Poland depend on assumes execution of purchases on the basis of short-term contracts, with resources. The group of strategic raw materials deposits, securing about 40 % of the demand of the ammonia factory the international prices binding in harbors in a guarantee of invariability of prices. includes resources of petrochemical origin in Tarnów, which contributes to reduction in the raw materials costs, (propylene, benzene, phenol, methanol) as a result of favorable pricing conditions, and makes the company and minerals (phosphorites, potassium salt, independent in the case of gas constraints in the transmission system. molten sulphur). PROPYLENE Deliveries of propylene for the Group are The prices of propylene are largely dependent on the level of oil prices. implemented mainly on the basis of annual The Group pursues a diversified procurement strategy, based mainly on contracts, and supplementary deliveries – by deliveries from the EU and Eastern Europe countries. Diversification of We spend spot purchases, which substantially reduces deliveries to a significant degree reduces costs of purchase of this raw PLN 6 billion costs of purchase of this raw material. material. per year on raw materials PHOSPHORITES Deliveries of phosphorites are executed on the The Grupa Azoty Group pursues a diversified delivery strategy. basis of periodical contracts or spot contracts, The situation on the phosphorite market is highly dependent on the 30% mostly from African manufacturers, including situation in the fertilizer sector. The Grupa Azoty Group executes joint of the value of the purchased mainly from the region of Northern Africa, purchases of this raw material for Grupa Azoty POLICE and GZNF "Fosfory" raw materials is natural among others, owing to their relatively high Sp. z o.o., which to a significant degree reduced costs of purchase of this gas used for production of nitrogen fertilizers availability and rich infrastructure with regard raw material (buying economies of scale). and ammonia Azoty Group Jsc, warehouse of fertilizers no.3 to maritime logistics.

We cooperate with many trusted national POTASSIUM SALT and foreign suppliers. We have approximately The basic suppliers of potassium salt, due to The procurement strategy of Grupa Azoty in this field is based mostly 25 key suppliers. At the same time, we invest the rich raw material sources and competitive on framework agreements, supplemented by periodical deliveries from in our own deposits of raw materials. We already commercial terms, are manufacturers from Western Europe. The Grupa Azoty Group pursues a common purchase have our own supply sources of sulfur in Poland. the area of the former USSR. strategy of this raw material for all its companies, utilizing the buying economies of scale.

52 OUR PRODUCTS OUR PRODUCTS 53 2.2.

52 OUR PRODUCTS OUR PRODUCTS 53 One of the main assumptions in the course of formation of Grupa To purchase Azoty were raw materials synergies and their full use within the Group. The most important of these synergies are raw material 2.2 bn m³ cooperation in respect of ammonia, phosphorites, liquid sulphur, of natural gas nitric acid and PE packages, and also intra-group supplies of and over caprolactam and ammonium sulphate. One of the priorities of the purchase strategy is diversification, 5 mln t which is important both from the point of view of the safety of raw of other raw material materials, and from the point of view of reduction in purchase costs. We operate on the market that is characterised by a considerable we spent approximately degree of concentration, but we make efforts to make the level of diversification be as high as possible and optimal from the point annually of view of raw material needs of Grupa Azoty where it is reasoned 6 bn in economic terms. As is known, competition, which in this case is

Azoty Group KĘDZIERZYN, tanks of Oxoplast Medica® at the esters department diversification of supplies, is the best market regulator, and the lack 40% of it impedes development. We use all available national sources, PETROLEUM-DERIVED RAW MATERIALS MATERIAL AND ENERGY CONSUMPTION being the biggest consumer in Poland in most raw material areas, and we cooperate with main suppliers from the external market, PLN BN directly with producers in a substantial majority, including in many 3 2.7 cases with European and world leaders in particular segments.

2 2.3 Andrzej Skóra STRATEGIC Director of the Purchase Corporate Department RAW MATERIALS 1 2.2.2. 0.8 Supply GOALS OF THE EXCELLENCE PROGRAM AZOTY PRO FROM THE AREA OF PURCHASES AND LOGISTICS: chain • systematic application of a full spectrum of purchasing optimization 0 STRATEGIC GAS OTHER ENERGY levers, OTHER RAW MATERIALS management • implementation of uniform principles of managing reserve coal in warehouses of the companies of Grupa Azoty In our Group, securing supplies of raw materials • reduction in costs of gas consumption in Grupa Azoty MINERALS and products distribution in Poland and abroad is handled by the Corporate Logistics • optimized purchasing organization Department, which also supervises processes • optimized logistic function in Grupa Azoty. related to warehouse management, preparation of products and coordination of transport. Its tasks also include setting the strategic goals Implementation of initiatives from the area of purchase and logistics in the field of logistics and risk management will make it possible to obtain better efficiency of purchase and logistics in the related processes. processes at the output with simultaneous reduction in costs of these functions.

Management of the supply chain of raw materials and products to and from companies located throughout Poland is a tremendous logistics challenge. Every year, we transport millions of tons of fertilizers, chemicals and raw materials for their manufacturing. Advanced logistics allows us to optimize transport, which is reflected in financial and environmental savings. Rail transport is the most suitable, which we also pursue with the use of our own company – Grupa Azoty KOLTAR. Sea transport is particularly profitable in Grupa Azoty POLICE, due to the location of plants in the vicinity of Szczecin.

Azoty Group PUŁAWY, warehouse of urea Azoty Group PUŁAWY melamine plant

54 OUR PRODUCTS OUR PRODUCTS 55 One of the main assumptions in the course of formation of Grupa To purchase Azoty were raw materials synergies and their full use within the Group. The most important of these synergies are raw material 2.2 bn m³ cooperation in respect of ammonia, phosphorites, liquid sulphur, of natural gas nitric acid and PE packages, and also intra-group supplies of and over caprolactam and ammonium sulphate. One of the priorities of the purchase strategy is diversification, 5 mln t which is important both from the point of view of the safety of raw of other raw material materials, and from the point of view of reduction in purchase costs. We operate on the market that is characterised by a considerable we spent approximately degree of concentration, but we make efforts to make the level of diversification be as high as possible and optimal from the point annually of view of raw material needs of Grupa Azoty where it is reasoned 6 bn in economic terms. As is known, competition, which in this case is

Azoty Group PUŁAWY, warehouse of urea Azoty Group PUŁAWY melamine plant

54 OUR PRODUCTS OUR PRODUCTS 55 TRANSPORT

We have introduced in our companies rigorous guidelines concerning road transport and we require their observance from the carriers cooperating with us.

Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty S.A. KĘDZIERZYN PUŁAWY POLICE

2014 2015 2014 2015 2014 2015 2014 2015 Road transport 27.41% 32.4% 51.44% 61.00% 35.10% 60.00% 35.91% 39.11% Sea transport 2.18%* 0.6% 11.91% 7.00% 12.14% 19.00% 45.32% 43.97% Rail transport 70.41% 67.0% 37.66% 32.00% 52.75% 21.00% 18.78% 16.92% River transport 2.33%

STORAGE MODERNIZATION OF GRANULATED FERTILIZER WAREHOUSE

We have a warehouse base across Poland, and In 2015, we modernized the granulated fertilizer warehouse in Kędzierzyn- additionally we have signed contracts with over Koźle, with the total area of 11 700.00 m2 and storage capacity 80 distributors, who have their warehouses of 35 thousand tons of nitrate fertilizers. The overhaul involved sealing across the whole country. We comply with all the warehouse roofing with a thermal insulation layer, which will protect SAFETY DATA SHEETS OF HAZARDOUS storage standards for our products, maintaining the fertilizers against overheating during the summer periods and will SUBSTANCES AND MIXTURES, MSDS the safety standards specified in product data prevent their decomposition. Additionally, creation of a window opening (MATERIAL SAFETY DATA SHEET) sheets. system will allow for regulating the air flow in the warehouse, which will prevent exceeding of ammonia and dust concentration and will allow for Material safety data sheets are mandatory to employ the necessary means related to protection of health and safety maintaining the expected temperature. Modernization of the warehouse for substances and mixtures classified as of people at the work place, as well as environmental protection. ensured yet higher quality of nitrate fertilizer storage and subsequent hazardous. They are prepared in the official 50 years of the warehouse operation without high expenditures. The cost languages of member states, on the territory Material safety data sheets, depending on the product, are published of modernizations amounted to PLN 22.080 million. of which the substance or mixture is marketed. on our websites (nawozy.eu, e-plastics.eu, grupaazoty.com). The sheet is the basic element of communication between the manufacturer For product, which do not require a material safety data sheet, we prepare and further user, with regard to notification information cards containing all information on the product required by An important process along the way of creating supply chain of hazards and management of risk associated the law. with the use of chemicals, and allows users management within the Grupa Azoty (Azoty Group), is deepening the integration between the entities within the Group and the optimal synergy implementation in the area of logistics. We strive to configure all resources i.e. people, warehouses, materials and tools, so as to achieve the best possible financial effect within the operational scope of the company. A separate issue is the attempt to integrate processes within the companies of the Grupa Azoty. 2.2.3. Every Company has assigned thereto a leading role in one of the competences, and is remains an active participant within other Development processes. Individual tasks assigned to leaders being specialists in the scope of railway, road, maritime transportation, or in the of our products area of warehouses and goods packing centres. In 2015, we have started an optimization process of our own rolling stock. We have our own research and development Thanks to this cooperation, we improve our technologies while at the Simultaneously, we are improving qualifications and capabilities base (Chemical Center of Technology and same time improving the quality of the offered products and services. of railway workshops. These actions are intended to streamline Development in Tarnów, Competence Center We use modern solutions and develop our own patents, which contribute the management of the railcar fleet, accelerating the inspection in Puławy) and we cooperate with external to increasing the safety level and creating competitive advantage. One of research units, academic centers in Poland the significant goals of the conducted works is also to increase the degree process, and improving the train rotation. and abroad. of product's diversification, in particular specialist chemicals. Adam Mrozicki Director of Corporate and Logistics Department

56 OUR PRODUCTS OUR PRODUCTS 57 TRANSPORT

We have introduced in our companies rigorous guidelines concerning road transport and we require their observance from the carriers cooperating with us.

Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty S.A. KĘDZIERZYN PUŁAWY POLICE

STORAGE MODERNIZATION OF GRANULATED FERTILIZER WAREHOUSE

56 OUR PRODUCTS OUR PRODUCTS 57 First in Poland agricultural think-tank, being a platform of the cooperation between agricultural entrepreneurs, agricultural advisers, research institutions and business.

Detailed information on the PUŁAWY Competence Centre are available at: COMPETENCE CENTER PUŁAWY http://ckpulawy.com/competence-center/

The Competence Center PUŁAWY is a platform The Competence Centre Consortium in Puławy includes: Projects completed in the Competence Center of plants and trends of agricultural markets, of cooperation and exchange of information PUŁAWY in 2015: and, as a consequence, lift economic for agricultural entrepreneurs, agricultural • •Grupa Azoty S.A., including Azoty Zakłady Azotowe Puławy S.A. - efficiency and increase competitiveness of advisors, scientific institutions, as well as consortium coordinator • Phosphorus – a research project aimed to agricultural companies, transfer knowledge broadly understood business. The institution • Institute of New Chemical Syntheses in Puławy assess agricultural suitability of a new two- and technology to agricultural producers was established in 2011, and its activities component fertilizing product containing involved in cultivation. are based on: • Institute of Cultivation, Fertilization and Soil Science – State Research nitrogen and phosphorus. Institute in Puławy • The conference "Science-Business- • shaping and promoting a model of modern • Azomais – a development project aimed Agriculture”, which delivers knowledge and PUŁAWY Competence agricultural entrepreneur • National High School of Rural Farming in Warsaw at preparation of a complex package intended additional values to the agricultural market Center was distinguished • raising competences of farmers with regard to • Maria Curie-Skłodowska University in Lublin for corn cultivation, consisting of an participants. The 5th jubilee edition was in the Responsible management efficiency innovative technique of sowing and fertilizing, dedicated to agricultural production in the Business in Poland Report • National Chemical-Agricultural Station in Warsaw • popularization of research on fertilizing preparation of a formula of specialist fertilizer context of opportunities for development 2015 - Best practices, • National Association of Producers of Rapeseed and Protein Plants intended for corn cultivation and a device for resulting from environment and a new as the long-standing best • building of new relations between business simultaneous sowing of seeds and fertilizing. approach to the Nitrate Directive. CSR practice. and science. • National Federation of Producers of Cereals The above goals are pursued by CK PUŁAWY, • Association of Lime Industry • Postgraduate studies: ”Trade in fertilizers • The report "Poland as an Attractive Producer among others, by recommending research and and plant pesticides in the system and Supplier of Food" – project that was rd development research, exchanging experience • National Association of Sugar Beet Planters of sustainable agriculture” – the 3 edition supposed to start discussion on the of the educational project, whose aim was cooperation between agriculture and the with industry partners and scientific institutes • INTERMAG Sp. z o.o. and organizing trainings, agricultural consulting to prepare specialists in most recent food industry as a strategic sector of the and deepening professional knowledge for • Przedsiębiorstwo Produkcyjno-Consultingowe ADOB. technologies of the integrated production economy stimulating the development customers. of Poland in the future.

58 OUR PRODUCTS OUR PRODUCTS 59 First in Poland agricultural think-tank, being a platform of the cooperation between agricultural entrepreneurs, agricultural advisers, research institutions and business.

Detailed information on the PUŁAWY Competence Centre are available at: COMPETENCE CENTER PUŁAWY http://ckpulawy.com/competence-center/

58 OUR PRODUCTS OUR PRODUCTS 59 In 2015, our research-development team focused on:

improvement in the quality search for new products, creation of new and testing in the laboratory • Institute of Fertilization and Soil Science – State Research Institute – Year 2015 was the first year of implementation of manufactured products expanding the commercial development of the and quarterly-technical project coordinator offer of the company existing technologies scale of the project "Support for low-emission agriculture – capable of adapting to climate optimization • Institute of Agrophysics of the Polish Academy of Sciences of selected production introducing technical and improvement of execution of feasibility changes now and until 2030 and 2050 (LCAgri)", lines technological manufactured products studies, expert's reports subsidized by the National R&D Center, the goal • Institute of Environmental Protection – State Research Institute. improvements, decreasing and analyses of the of which is to improve efficiency of the use of preparation of the power consumption in production process resources by implementing innovative low- Calculation methods of the carbon footprint were developed for fertilizer technology of manufacturing of the key carbon agricultural practices and promotion products of Grupa Azoty PUŁAWY, and initial results of emission manufacturing of semi-finished products of the sustainable use of mineral fertilizers by assessment of these products for the years 2013 and 2014 were presented innovative products agricultural farms in Poland during the fertilizer on the first conference organized under the LCAgri project (17 November products life cycle, based on the LCA method. in the Institute of Environmental Protection in Warsaw). In addition, the institutes taking part in the project began field measurements of greenhouse gases, using unique measurement equipment purchased under the project.

Chosen research-development projects in 2015:

Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty S.A. KĘDZIERZYN PUŁAWY POLICE

improvement of production start-up of RSM-type liquid research and identification research on the possibility 2.2.4. process of fertilizers, among fertilizer production of the possibility to of recovery of phosphorus others, by means of installations in Europe, implement reduction from leachate waters from Ensuring selecting inorganic additives with production capacity of technology in emissions of the phosphogypsum landfill and anti-caking agents 100 000 tons per year. nitrogen oxides (NOx) using improving warehousing urea solution research on improvement in the safety of fertilizers research works quality of phosphoric acid concerning new fertilizer development of our products comprehensive assessment formulas, also with and implementation of analysis of ecological assessment of effectiveness and benefits higher magnesium a method to process of the life cycle of fertilizers from the application of content deposits from the biological a new variety of the sewage treatment plant tests and assessment produced fertilizer with conducted modernization to satisfythe future legal of the possibility to launch reduced sulfur content of the ammonia synthesis requirements in this respect a new liquid fertilizer We pay special attention to ensuring safety Owing to the nature of the conducted operations, the Grupa Azoty Group ® Saletrosan 30 unit, consisting in building manufactured on the basis and high quality throughout the whole life cycle is subject to the following provisions of: on selected crops a new interior for the development of a synthesis of urea and ammonium sulfate of our products. The highest world standards, convertor, thanks to which technology of from post-crystallization restrictive regulations implemented within the • The Environmental Protection Law commencement of we managed to reduce the biodegradable plastics acid Grupa Azoty Group, as well as the system implementation of a project synthesis pressure.We are based on semi-finished solutions allow us to minimize the risk • The Water Law covering preparation of also preparing products and products tests and experiment with connected with the nature of our operations, decomposition technology intensification of the TKV manufactured by Grupa regard to utilization of sewage of waste solutions of sodium nitric acid generating Azoty PUŁAWY and the sediment from the sewage as well as its impact on the environment • The Act on Waste sulphate to sulphuric acid installation.Modernization subsidiaries treatment plant for reclamation and the local communities. The solutions and soda lye. The project of production methods of landfills applied in our Group ensure proper conditions • other legal regulations within environmental protection, OHS and fire is implemented with of the basic semi-finished of manufacturing, storage, transport and protection. subsidizing from the funds products, used for distribution of substances for the purpose of the National Research and production of fertilizers, of maintaining the highest safety requirements. The above regulations impose on the Grupa Azoty Group companies Development Center, along by modernizing obligations in the scope of its production operations, investments, with the New Chemical technological processes, All our companies developed and implemented reclamation of contaminated grounds and ensuring appropriate Syntheses Institute, Inorganic also focuses on increasing programs for prevention of failures and conditions of manufacturing, storage, transport and distribution Chemistry Branch "IChN" in the level of their reliability regularly report any safety issues. Furthermore, of products. Gliwice rescuing plans and safety management systems are binding within the plants of the Grupa Azoty Group.

60 OUR PRODUCTS OUR PRODUCTS 61 In 2015, our research-development team focused on:

Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty S.A. KĘDZIERZYN PUŁAWY POLICE COOPERATION The project is being implemented under the consortium, which, apart WITH SCIENTIFIC INSTITUTIONS from Grupa Azoty PUŁAWY, includes: improvement in the quality search for new products, creation of new and testing in the laboratory • Institute of Fertilization and Soil Science – State Research Institute – Year 2015 was the first year of implementation of manufactured products expanding the commercial development of the and quarterly-technical project coordinator offer of the company existing technologies scale of the project "Support for low-emission agriculture – capable of adapting to climate optimization • Institute of Agrophysics of the Polish Academy of Sciences of selected production introducing technical and improvement of execution of feasibility changes now and until 2030 and 2050 (LCAgri)", lines technological manufactured products studies, expert's reports subsidized by the National R&D Center, the goal • Institute of Environmental Protection – State Research Institute. improvements, decreasing and analyses of the of which is to improve efficiency of the use of preparation of the power consumption in production process resources by implementing innovative low- Calculation methods of the carbon footprint were developed for fertilizer technology of manufacturing of the key carbon agricultural practices and promotion products of Grupa Azoty PUŁAWY, and initial results of emission manufacturing of semi-finished products of the sustainable use of mineral fertilizers by assessment of these products for the years 2013 and 2014 were presented innovative products agricultural farms in Poland during the fertilizer on the first conference organized under the LCAgri project (17 November products life cycle, based on the LCA method. in the Institute of Environmental Protection in Warsaw). In addition, the institutes taking part in the project began field measurements of greenhouse gases, using unique measurement equipment purchased under the project.

Chosen research-development projects in 2015:

Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty S.A. KĘDZIERZYN PUŁAWY POLICE improvement of production start-up of RSM-type liquid research and identification research on the possibility 2.2.4. process of fertilizers, among fertilizer production of the possibility to of recovery of phosphorus others, by means of installations in Europe, implement reduction from leachate waters from Ensuring selecting inorganic additives with production capacity of technology in emissions of the phosphogypsum landfill and anti-caking agents 100 000 tons per year. nitrogen oxides (NOx) using improving warehousing urea solution research on improvement in the safety of fertilizers research works quality of phosphoric acid concerning new fertilizer development of our products comprehensive assessment formulas, also with and implementation of analysis of ecological assessment of effectiveness and benefits higher magnesium a method to process of the life cycle of fertilizers from the application of content deposits from the biological a new variety of the sewage treatment plant tests and assessment produced fertilizer with conducted modernization to satisfythe future legal of the possibility to launch reduced sulfur content of the ammonia synthesis requirements in this respect a new liquid fertilizer We pay special attention to ensuring safety Owing to the nature of the conducted operations, the Grupa Azoty Group ® Saletrosan 30 unit, consisting in building manufactured on the basis and high quality throughout the whole life cycle is subject to the following provisions of: on selected crops a new interior for the development of a synthesis of urea and ammonium sulfate of our products. The highest world standards, convertor, thanks to which technology of from post-crystallization restrictive regulations implemented within the • The Environmental Protection Law commencement of we managed to reduce the biodegradable plastics acid Grupa Azoty Group, as well as the system implementation of a project synthesis pressure.We are based on semi-finished solutions allow us to minimize the risk • The Water Law covering preparation of also preparing products and products tests and experiment with connected with the nature of our operations, decomposition technology intensification of the TKV manufactured by Grupa regard to utilization of sewage of waste solutions of sodium nitric acid generating Azoty PUŁAWY and the sediment from the sewage as well as its impact on the environment • The Act on Waste sulphate to sulphuric acid installation.Modernization subsidiaries treatment plant for reclamation and the local communities. The solutions and soda lye. The project of production methods of landfills applied in our Group ensure proper conditions • other legal regulations within environmental protection, OHS and fire is implemented with of the basic semi-finished of manufacturing, storage, transport and protection. subsidizing from the funds products, used for distribution of substances for the purpose of the National Research and production of fertilizers, of maintaining the highest safety requirements. The above regulations impose on the Grupa Azoty Group companies Development Center, along by modernizing obligations in the scope of its production operations, investments, with the New Chemical technological processes, All our companies developed and implemented reclamation of contaminated grounds and ensuring appropriate Syntheses Institute, Inorganic also focuses on increasing programs for prevention of failures and conditions of manufacturing, storage, transport and distribution Chemistry Branch "IChN" in the level of their reliability regularly report any safety issues. Furthermore, of products. Gliwice rescuing plans and safety management systems are binding within the plants of the Grupa Azoty Group.

60 OUR PRODUCTS OUR PRODUCTS 61 PRODUCT STEWARDSHIP CERTIFICATE

Responsibility for all actions involving Granting of the Product Stewardship Certificate was preceded by an audit production of our products in the whole conducted in the Group companies by independent DNV auditors delivery chain – it is one of the fundamental (Det Norske Veritas). Few companies in the industry undergo the rigorous principles of activity of the Grupa Azoty Group. and multi-faceted assessment preceding the granting of the certificate. Therefore, as part of membership in Fertilizers The audit confirmed that the Grupa Azoty Group meets the highest global Europe, we implement the "Product standards. Stewardship" programme. Its principles are based on international regulations and The audit conducted in 2014 covered Grupa Azoty S.A., Grupa Azoty qualitative standards. POLICE, Grupa Azoty PUŁAWY and Grupa Azoty KĘDZIERZYN.

Execution of the "Product Stewardship" Product Stewardship is a continuous process, which begins with programme obligates the whole Grupa Azoty commitment of the senior management. The first stage involves review Group to guarantee that the manufactured of the risks concerning properties, production, storage, distribution fertilizers, as well as the raw materials and semi- and use of fertilizers, as well as preparation of product management finished products acquired for their production, systems for its whole life cycle, compliant with the standards of the are processed, transported, stored, distributed Fertilizers Europe. The next stage is establishment of realistic goals for and applied in a responsible way, harmless to improvement in the results and monitoring of the actual implementation health and safety of humans and the natural of these goals. The next step is ensuring that the product standards are environment. maintained and remain consistent with the adopted principles. Corrective and preventive actions are taken when necessary.

Product development

Management Searching for sources and administration PRODUCT STEWARDSHIP PRODUCTION SAFETY of raw materials, additives and PROGRAM ELEMENTS: products of third parties • setting goals and tasks for product All our companies have monitoring systems, securities and procedures, Monitoring management aimed at preventing failures and limiting their effects.Our Group has Production and inspection a Fire Protection Team, which includes fire protection units from our • defining the programme (tasks, scopes of four key companies, as well as the Company Emergency Service of Grupa responsibility, time limits) Azoty SIARKOPOL and the Siarkopol Mine's Mining Rescue Station.

• appointing the programme management Thanks to the commitment of this team, during the recent two years, team we developed the "Strategy for Selection of the Amount and Quality of Fire-fighting Foams for Grupa Azoty Units", adopted the uniform "Dress PROGRAM • informing the customers of the product Code for Uniformed Services", and established the Grupa Azoty Rescue PRODUCT management policies Education Center. STEWARDSHIP • informing the employees of the principles of the programme

• training the programme managers and the employees covered by the programme

Use of the product • documenting the undertaken actions Packaging and services for farmers • maintaining and reviewing the documents required by the programme

Transport Marketing • controlling the responsibilities up and down and sales the distribution chain, namely, on the one hand, controlling the suppliers, while on the other hand – distributors and carriers. Storage (beyond the manufacturing place)

62 OUR PRODUCTS OUR PRODUCTS 63 PRODUCT STEWARDSHIP CERTIFICATE

Product development

• training the programme managers and the employees covered by the programme

Use of the product • documenting the undertaken actions Packaging and services for farmers • maintaining and reviewing the documents required by the programme

62 OUR PRODUCTS OUR PRODUCTS 63 an average of

POWOŁANIE CENTRUM In 2015, Grupa Azoty KĘDZIERZYN EDUKACJI RATOWNICZEJ registered Strong phenol smell near the shopping centre in Tarnów – trace quantities On 12 March in 2015, the Rescue Education of phenol could have been emitted during the standard unloading Center of Grupa Azoty Group (CERGA) began 23 substances of tankers with phenol. The dispatcher, who verified the report, did not operation. It is a modern unit responsible under the REACH obligation observe a noticeable phenol smell. for periodical and specialized training of firefighters and chemical rescuers working within the Grupa Azoty Group. Its activities On average, Grupa Azoty PUŁAWY cover Grupa Azoty S.A., Grupa Azoty PUŁAWY, is subject to SAFETY IN GRUPA AZOTY S.A. Grupa Azoty POLICE, Grupa Azoty KĘDZIERZYN, Grupa Azoty SIARKOPOL, and other entities In 2014, Grupa Azoty S.A. updated the following documents (adapting 50 inspections them to the current legal requirements): interested in benefiting from the training offer. of various public bodies and institutions per year (including • Report on Safety - general part along with studies of risks process 5-6 conducted by the National for installations creating high risk of a major chemical breakdown Labor Inspectorate) • Internal Operational and Rescue Plan In 2015, we observed 3 complaints concerning Azoty Group PUŁAWY, fire brigade • Failure Prevention and High Risk Plant Reporting Programme. adverse impact of the companies within the Grupa Azoty Group on the local community Establishment of the CERGA unit is supposed to help The abovementioned documents were approved in 2015 by or on the environment: in development of common standards under fire protection the Voivodeship Chief of the State Fire Department. In connection and rescue, exchange of experiences and use of the synergy with implementation of the SEVESO III Directive and amendment Pipeline leak in Biała (reported in March and among companies of the Grupa Azoty Group. of the Environmental Protection Law, we also updated the "Safety Guide October 2015) – the event was reported to the for Grupa Azoty S.A.". shift manager in order to switch the pipeline. As a result of flooding of private plots with ash, slag and water, the injured parties were paid compensation.

COMPLIANCE TRANSPORT SAFETY PARTNERSHIP FOR SAFE TRANSPORT WITH THE REACH REGULATION OF HAZARDOUS MATERIALS

In accordance with the law, the Grupa Azoty market, and we make on the current basis all necessary updates to these With transport of particularly hazardous cargo, Caring about safety of people and their property and environment, the Group's products are treated as chemical documents. The registration required risk assessment, which - in the case we follow the ADR regulations (L'Accord plants of Grupa Azoty offer their assistance during breakdowns related to substances or mixtures and are subject to of substances classified as hazardous - was based on a broad spectrum of européen relatif au transport international transportation of hazardous materials. In 2000, Grupa Azoty KĘDZIERZYN the provisions of the Regulation (EC) 1907/2006 chemical analyses and toxicological and ecotoxicological data. On the des marchandises Dangereuses par Route, along with other producers of chemicals and the Polish Chamber of REACH (Registration, Evaluation and basis of these data, we developed the Substance Safety Report. The report International convention on road transport Chemical Industry created the Association System of Assistance in Authorisation of Chemicals). These provisions covers the whole "life cycle" of the substance. It applies to the hazards at of hazardous goods and substances). Transportation of Hazardous Materials (SPOT). A year later, the association obligate manufacturers to apply proper safety the stage of its production, use in industry, use by consumers and methods was joined by Grupa Azoty S.A., and in 2002, Grupa Azoty POLICE. assessment of use of the produced substances. of neutralization. The report applies to hazards for people and the We try to transport chemical raw materials in It is not possible to introduce substances to environment. the system of closed rail tank cars of various RID The purpose of the system is to provide assistance in removing the effects the market without their prior registration classes (International rail transport regulations of breakdowns related to transportation of hazardous materials. The in accordance with REACH. Within Grupa Azoty we determined also procedures concerning marking for hazardous goods) and we limit the use of system serves the improvement in transportation safety on the territory of products, means of transport and packaging. In this respect the tanker cars. of our country, and in the case of hazard it enables effective removal of its All our companies fulfilled the obligation regulations of the REACH regulation and of the Regulation 1272/2008 effects using joined forces and means of the National System of Rescue- of registering the produced substances. For on classification, labelling and packing of substances and mixtures (CLP) Due to safety reasons, we more and more often Fire Extinguishing Activities and entities being part of the SPOT system. this purpose, we development and submitted were implemented. use tankers adapted to the fittings of the loader documents to the European Chemicals Agency, and the unloader. Thanks to active prevention of possible hazards and material losses consistent with the requirements of the REACH In 2015, we continued the process of consolidation and closer cooperation and granting assistance to emergency services transport of hazardous Regulation, for all products placed on the of REACH actions in the companies of Grupa Azoty. materials can be executed in reliable and safe manner.

64 OUR PRODUCTS OUR PRODUCTS 65 an average of

COMPLIANCE TRANSPORT SAFETY PARTNERSHIP FOR SAFE TRANSPORT WITH THE REACH REGULATION OF HAZARDOUS MATERIALS

64 OUR PRODUCTS OUR PRODUCTS 65 FOOD SAFETY STORAGE SAFETY Poland is already Polish food is Many of our products are used by food Our companies gradually implement best practices and international perceived as a country present in the EU manufacturers, in particular by farmers. standards regarding warehousing safety. Due to concern with the quality producing healthy and on 73 other We provide them with fertilizers, which are to of our products, in addition to complying with binding law, we implement be effective and, above all, safe for the health international standards concerning storage. Packing, warehousing and and safe food. markets, among of people, who will be the consumers of food transportation, are integrated elements of the life cycle of our products, others, in Africa and products manufactured from plants grown which we constantly monitor, adjust and improve. As part of our activities, Asia – in China, Hong by our customers. we use a number of hazardous substances, which require special warehousing conditions.For this reason, the care for the highest safety Kong, Malaysia, Therefore, one of the most important areas for standards is the very foundation for preventive activities throughout the Japan, Singapore, us are processes having impact on food safety. entire Grupa Azoty. and South Korea. In these areas, we implemented the Food Safety Management Policy of the Grupa Azoty Group.

OUR APPROACH TO HEALTH PROTECTION The Food Safety Management Policy of the Grupa Azoty Group is OF AGRICULTURAL PRODUCT CONSUMERS: pursued by: • monitoring of parameters having impact on the quality and safety Food manufacturers, who are the recipients of products of our fertilizers, just like us, put emphasis on the guidelines of the system based on • compliance with hygienic regimes at the stage of production, storage analysis of hazards and critical points of the and distribution Poland manufactures all mineral fertilizers so called HACCP control (hazard analysis and • constant modernization and improvement of infrastructure resources critical control points) throughout the whole and manufacturing technology necessary for rural food chain. th production. We • raising awareness of the staff with regard to health safety We hold the 4 place Therefore, in, among others, installations in terms produce ca. 1.7 million producing goods for the food industry, we • internal and external communication, aimed at exchanging tons of nitrogen implement and maintain a system consistent information on hazards for the safety of products in the food chain. of the size of surface with the requirements of the Codex of arable lands fertilizers, which gives Alimentarius, the ISO 22000 standard in the EU, after France, us the second place in and the legal regulations. Spain and Germany. this aspect in the European Union. However, we understand the role of the Grupa For us, food security means a systemic an innovative approach to Azoty Group in ensuring food safety to be development of the potential of the Polish economy as an important link significantly broader than just caring for the of a broader system, providing Poland and Europe with enough high safety of our products used in the agricultural quality food. sector. PRODUCT LABELLING

Our goals in ensuring food security: We comply with uniform principles concerning If the fertilizer is sold without packaging, we prepare an accompanying labelling and full description of manufactured document, containing all the required label elements. Packages of feed 100 % of our products and services are subject to evaluation of their impact on health and safety. In 2015, the Grupa Azoty products in all segments of our business additives are additionally equipped with a label, compliant with the Group reported no inconsistencies with the regulations and the voluntary codes with regard to impact of products and activities. All our packages contain information requirements for feed and feed additives (Regulation (EC) no. 1831/2003), services on health and safety at every stage of their life cycle, which would result in fines, penalties or a warning. about the product (product trade name), the containing information on dietary intakes and storage period. manufacturer (address data) and the weight 1. Delivery of artificial fertilizers, supporting One of the signs of our efforts in strengthening of the position of the Polish of the product. In the case of fertilizers, we give In the case of chemical substances and mixtures classified as hazardous, effective and ecological cultivation so that agriculture and food industry is preparation of a comprehensive report, information required by the provisions of the to which the CLP Regulation (Classification, Labelling and Packaging) (EC) agricultural economy is profitable and entitled "Raport 2015 – Polska atrakcyjnym producentem i dostawcą Regulation (EC) no. 2003/2003, namely the kind 1272/2008 applies, the scope of obligatory information is broader. The supplies affordable food. żywności" ("Report 2015 – Poland as an attractive manufacturer and and type of the fertilizer, the label "EC Fertilizer" label must include the product's identifier, pictograms specifying the type supplier of food"), and subjecting it to a broad discussion among expert (if applicable), the nutrient content and their of hazard and a warning sign, as well as phrases indicating the type of 2. Contribution to safety of supply of food, and sectoral environments. and thereby – reduction in poverty forms, as well as instructions for use and the hazard and precautions, and information regarding storage and transport. and and human development. This document was created with our support, under academic editorial basic precautions (optional information from supervision of prof. dr. hab. Janusz Igras, prof. dr. hab. Andrzej Kowalski, the point of view of the regulations). In 2015, the Grupa Azoty Group recorded no cases of inconsistencies 3. Prevention of degradation of soils and dr. Zenon Pokojski and Wojciech Nalazek. restoration of their natural condition with the regulations and the voluntary codes, related to labelling to achieve ecological purposes such The report constitutes a substantive basis for discussion on the directions and information on the products and services, which would as combating desertification. of development of Polish agriculture. The course of this discussion, as well result in fines, penalties or a warning. as the full content of the report, can be followed on the websites of the 4. Elimination, where possible, or minimization PUŁAWY Competence Center, coordinated by Grupa Azoty PUŁAWY. of adverse environmental impact of artificial fertilizers and agricultural production.

66 OUR PRODUCTS OUR PRODUCTS 67 FOOD SAFETY STORAGE SAFETY Poland is already Polish food is Many of our products are used by food Our companies gradually implement best practices and international perceived as a country present in the EU manufacturers, in particular by farmers. standards regarding warehousing safety. Due to concern with the quality producing healthy and on 73 other We provide them with fertilizers, which are to of our products, in addition to complying with binding law, we implement be effective and, above all, safe for the health international standards concerning storage. Packing, warehousing and and safe food. markets, among of people, who will be the consumers of food transportation, are integrated elements of the life cycle of our products, others, in Africa and products manufactured from plants grown which we constantly monitor, adjust and improve. As part of our activities, Asia – in China, Hong by our customers. we use a number of hazardous substances, which require special warehousing conditions.For this reason, the care for the highest safety Kong, Malaysia, Therefore, one of the most important areas for standards is the very foundation for preventive activities throughout the Japan, Singapore, us are processes having impact on food safety. entire Grupa Azoty. and South Korea. In these areas, we implemented the Food Safety Management Policy of the Grupa Azoty Group.

66 OUR PRODUCTS OUR PRODUCTS 67 2.3. „GRUNT TO WIEDZA” (”KNOWLEDGE IS A BASE")

Our customers Under this slogan in October 2015, in The first edition was launched after the harvest and before the autumn cooperation with PKO Bank Polski, we started fertilizing. As a result, the owners of reported farms were able to get to all-Polish program of free tests of soils in terms know real demand for nutrients of their soils and plan a proper fertilizing of abundance in nutrients. During a three-year strategy. 2.3.1. campaign we set a goal of reaching nearly 2 000 agricultural farms nationwide and The program involved participation of 330 farms from 163 counties from Conducting dialogue collecting 28 000 samples in as much as all over Poland. In laboratories of the District Chemical-Agricultural with our customers 17 District Chemical-Agricultural Stations. Stations we tested 4950 samples.

The Grupa Azoty Group monitors the level RESULTS OF CUSTOMER SATISFACTION STUDIES 2016 of customer satisfaction on the current basis. THE STATISTICS OF Due to diversification of products and the The purpose of the studies conducted in March 2016 was to collect information necessary to formulate recommendations with regard THE FIRST EDITION diversity of recipient groups, the methodology OF THE "GRUNT 4950 to improving relations with trade partners and improve the degree of these studies is diverse.Usually, we ask our TO WIEDZA" 163 of satisfaction of the customers of the Grupa Azoty Group. 330 clients about things such as product quality, PROGRAMME samples farms poviats price and terms of payment, punctuality of deliveries, service quality and competences The Grupa Azoty Group Customer Satisfaction Study was conducted of employees, method of examination of on the basis of sixteen pre-defined product features (criteria). complaints, and quality of promotional The respondents graded each of these features on a scale of 1 to 5 materials and packaging. In these studies, (equivalent of school grading scale). The research technique applied we utilize the best solutions applied in in the study was a random survey – the participants filled the surveys particular companies and apply them to anonymously, at the same place and time. The research sample covered the whole Grupa Azoty Group. At the Grupa trade partners of companies belonging to the Grupa Azoty Group (Grupa Azoty Group, we developed a consistent Azoty S.A., Grupa Azoty KĘDZIERZYN, Grupa Azoty PUŁAWY, Grupa Azoty manner of studying the customers' satisfaction. POLICE and Grupa Azoty Gdańskie Zakłady Nawozów Fosforowych). TRAININGS FOR FARMERS

The trainings for farmers we organize are intended to communicate the most important information concerning the use of the Grupa STRENGTHS AREAS FOR ATTENTION Azoty Group's fertilizers. During the presentations, Local Representatives discuss the • Customer service level • Pricing policy most important characteristics of fertilizers and • Packaging quality • Quickness and punctuality of deliveries the dates of their application (quantity of doses • Access to product information • Initiative in solving customer problems for particular plants, time and conditions for • Fertilizer quality • Fertilizer availability application of fertilizers). • Promotional and advertising campaigns The trainings are one of the most important elements in the communication process. Thanks Pricing policy is an area, where it is most difficult for the customers to maintain objectivity. Therefore, though we do not to these meetings, we gain feedback about the underestimate the low grades in this area, we focus mainly on improving the actions in other areas of relations with our prevailing trends and needs of farmers. customers, which can potentially decrease the importance of the price criterion (which is already not indicated by the customers as the most important). STUDY TRIPS TO THE USA

The Grupa Azoty Group, along with the Polish Association of Cerial Producers and the Texas A&M University, organize study trips to the USA Dialogue with our customers is not limited to AGRO FESTA – ANNUAL MEETINGS OF THE AGRICULTURAL In 2015, the trainings organized monitoring their satisfaction with the already AND AGRI-FOOD INDUSTRY LEADERS for Polish farmers. The project is intended to provide experiences, by the Grupa Azoty Group which may be transposed on the Polish agriculture. Within the study visit, offered products. We cooperate all the time were attended by with our customers, analyze their needs, thanks We regard direct meetings with farmers as our highest priority. a few dozen meetings and visits are planned, focused on exchange of to which we are able to develop new products In September 2015, we organized for the second time the conference experiences related to production of beef, potatoes, selection of seeds, together with them, which are better in meeting for representatives of the largest Polish agricultural farms. The main irrigation systems on large plantations, fodder, production of ethanol, the expectations of the users. We also help them task of Agro Festa is to create a platform for exchange of knowledge crop storage systems, by-product management, equipment used during and experiences between the top agricultural farms in Poland, the world 10 000 harvest, application of agricultural statistics and drawing conclusions from to optimally use our products. of science and companies, such as Grupa Azoty, namely companies, farmers from all around Poland. databases, agricultural education system, kinds of legislation and structure whose activities directly affect the agricultural market. of agrarian budgets.

68 OUR PRODUCTS OUR PRODUCTS 69 2.3. „GRUNT TO WIEDZA” (”KNOWLEDGE IS A BASE")

68 OUR PRODUCTS OUR PRODUCTS 69 AGROlider – MODERN FARMER'S MAGAZINE

AGROlider is a journal published by the Grupa The values and philosophy of Grupa Azoty come down to Azoty Group, discussing the subject matter of continuous efforts to, with the use of state-of-art technologies, agriculture and agricultural business, fertilizers deliver to customers solutions, tools and knowledge for running and fertilizing, as well as innovations in agriculture. The magazine, in the circulation of an agricultural holding in as most effective manner as possible. The most important stakeholder and receiver of products, and 15 000 also of activities of Grupa Azoty are Polish farmers. For these copies, is distributed free of charge, both in receivers, the Group is implementing a number of supporting a printed version and in the electronic form. activities that are evidence of actual interest in this group of receivers and in its needs. Modern agriculture requires a professional approach to fertilization. Going in this direction, Grupa Azoty offers farmers a three-year program of testing soil pH as well as soil abundance in nutrients.

The strength of the image, but also a clear, lucid, positive image of Grupa Azoty – built and promoted in a consistent manner by means of different marketing tools, requires also the involvement of a link that is in regular and direct contact with a farmer, namely the potential of field structure of REP. Success is guaranteed by coherence and narrative consistency in both of these fields. 2.3.2. Our marketing Magdalena Niski activities Head of the Office for Marketing, Grupa Azoty PUŁAWY

We treat marketing and the process of handling The Grupa Azoty Group implements consistent marketing communication, sales as an opportunity to deepen and enrich focusing on the product and customer. The direction of our communication communication with the distributors and target activities is determined by the multibrand policy, the essence of which is customers – farmers. We have customers not the use of the values of particular product brands to build a strong position only in Poland, but also all throughout the of the Grupa Azoty Group on the national and international scale. European Union, South America, Africa, and SALES Asia. Therefore, already at the strategic level of For each of the product segments, we build communication, distribution thinking about the relations with our customers, and marketing models matching their specific nature. The e-commerce system has been functioning within the entire Grupa we take into consideration the nature of these Azoty Group. Its purpose is to automate sales, from the moment an order markets and the expectations of the recipient is placed by a customer, through selection of means of transport and groups within those markets. tracking of the order, to delivery and guarantee service. The website provides the customer with reports, information on the stage of execution of the order, electronic access to invoices, as well as professional information.

DISTRIBUTION CONSULTING 81 Trade Partners We conclude volume contracts with the Contact with the customer does not end with sale of the product. distributors of our fertilizers, determining More The users of our products can count on professional consulting with the volume of annual deliveries for the nearest than authorized their application. 5 years. 300 trade outlets

70 OUR PRODUCTS OUR PRODUCTS 71 AGROlider – MODERN FARMER'S MAGAZINE

70 OUR PRODUCTS OUR PRODUCTS 71 NAWOZY.GRUPAAZOTY.COM WEBSITE An important function of the website are filters, allowing for a precise selection of the product, owing to additional criteria, such as form of At the beginning of 2015, on the Grupa Azoty nitrogen, manufacturer and application for crops.We also offer the users Group' website, we launched of our fertilizers another online source of information about the products, namely the professional agricultural service devoted to fertilizers and fertilizing the Customer Zone nawozy.grupaazoty.com. www.nawozy.eu.

The customers may find there advisory 3.0 materials, agricultural news and information about fertilizer products of the Grupa Azoty Group, including detailed information on their intended use, application and dosing.

Furthermore, the Customer Zone offers access to folders, booklets and pictures of products, as well as contact with the market manager.

Access to its content is free. The website offers articles, calculators and fertilization schedules, an opportunity to ask questions to experts and agricultural advisors in the region, specialist agricultural weather forecasts, access to an archive of crop prices quotations. More than 4.5 million views since the launch of the website (June 2013) OUR In 2015, the Grupa Azoty Group recorded no cases of inconsistencies with the regulations or the voluntary codes governing the issues of marketing communication, including advertising, promotion and sponsorship, which would result in fines, penalties or a warning. No penalties were also reported for inconsistencies with the law and regulations concerning deliveries and the use products and services. RESPONS-

FARMSTER MOBILE APPLICATION The application was downloaded by almost

For the farmers, who want to manage their work in a modern and quick way, we prepared 2000 people a mobile application called Farmster. Farmster replaces the traditional method of managing work that needs to be done on a farm. Thanks to WEBSITE E-PLASTICS.EU IBILITY geographical location, you can record in detail the completed field works in real time (online), The website devoted to plastics and their applications. It enables learning Employees make current analyses, as well as archive data about parameters of plastics, searching according to name or physical- Local community about the already completed works. The chemical properties or processing properties and accurate comparing. Agrolicznik (Agri-measure) conntained in the A registered customer may contact technical advisor, commercial Environment application allows for precisely calculating the representative, submit orders, monitor invoices and payments. He or she demand for particular fertilizers and controlling has also access to certificates and documentation of the ordered goods the efficiency of fertilizer consumption. and the possibility of tracking the order status.

72 OUR PRODUCTS Azoty Group KĘDZIERZYN, OUR RESPONSIBILITY 73 Paweł Mrozowski- operator of fertilizers production NAWOZY.GRUPAAZOTY.COM WEBSITE An important function of the website are filters, allowing for a precise selection of the product, owing to additional criteria, such as form of At the beginning of 2015, on the Grupa Azoty nitrogen, manufacturer and application for crops.We also offer the users Group' website, we launched of our fertilizers another online source of information about the products, namely the professional agricultural service devoted to fertilizers and fertilizing the Customer Zone nawozy.grupaazoty.com. www.nawozy.eu.

Furthermore, the Customer Zone offers access to folders, booklets and pictures of products, as well as contact with the market manager.

FARMSTER MOBILE APPLICATION The application was downloaded by almost

72 OUR PRODUCTS Azoty Group KĘDZIERZYN, OUR RESPONSIBILITY 73 Paweł Mrozowski- operator of fertilizers production 3.1. Our employees

3.1.1. Who forms the Grupa Azoty Group?

Noticing the quick pace of changes taking place around us, we strongly The Grupa Azoty Group is formed by more than 9200 believe that our employees are employees, both experienced specialists from many the most valuable resource of the fields, as well as people at the beginning of their organization, decisive for the professional career. business successes. It is reflected in our strategy, with one of its pillars being to improve the working conditions and satisfaction of the employees, increase their level of 9266 health and safety, and support their the total number development. Employing more than of employees in 1500 employees, we are also our companies responsible for their families and covered by 2407 6859 the environment, in which they live. the report including women men We offer the employees not only remuneration, but also many additional benefits. For the future of the company, we invest in our These companies employ almost 7 thousand men and more than 2 thousand women, 9 % of us are below 30 years of age, while successors – children and teenagers, 36 % are more than 50 years old. Such a numerous and diverse team by organizing contests, scholarship of employees is an exceptionally valuable social and intellectual capital and internships programmes, from the point of view of the future of our company. and supporting sport initiatives.

Monika Ptaszyńska HR Policy Office Director

74 OUR RESPONSIBILITY Azoty Group KĘDZIERZYN, Piotr Niemiec OUR RESPONSIBILITY 75 senior foreman in the esters department 3.1. Our employees

3.1.1. Who forms the Grupa Azoty Group?

Monika Ptaszyńska HR Policy Office Director

74 OUR RESPONSIBILITY Azoty Group KĘDZIERZYN, Piotr Niemiec OUR RESPONSIBILITY 75 senior foreman in the esters department TOTAL NUMBER OF EMPLOYEES BY TYPE OF CONTRACTS IN 2015

2014 2015 Grupa Azoty S.A. Women Men Women Men Full-time 642 1445 642 1434 OUR STRATEGY FOR 2020 The sustainable development strategy determines two priority areas related to the place of work: Part-time 0 1 0 1 Total 642 1446 642 1435 One of the fundamental priorities of the Grupa the level of satisfaction of employees Azoty Group pursued in the area of "workplace" Grupa Azoty KĘDZIERZYN Women Men Women Men is to provide employees with safe and suitable and the level of their safety and health. Full-time 475 1090 477 1086 workplace. Part-time 3 1 2 2 Total 478 1091 479 1088 Grupa Azoty PUŁAWY Women Men Women Men Full-time 792 2513 779 2505 Part-time 1 1 1 5 We are a stable employer. The fluctuation index Guarantee of equal and fair treatment of employees - it is one of the key Total 793 2514 780 2510 did not exceed the level of 4.1 % in the principles of the "Code of Ethics of the Grupa Azoty Group". At each stage Grupa Azoty POLICE Women Men Women Men reporting companies for any age group of of cooperation with the employees, we apply standards set by the "Code employees. The lowest fluctuation index was of Ethical Conduct of the Grupa Azoty Group". It defines the principles, Full-time 541 1839 509 1832 observed for employees aged between 30 and which should be applied by all employees and management personnel Part-time 0 0 1 1 50. years in Grupa Azoty S.A. (1.3 %), the highest at the workplace. This applies both to the principles of everyday Total 541 1839 510 1833 for employees over 50 years of age in Grupa cooperation in the course of performing professional tasks, as well as Azoty POLICE (4.03 %). to the recruitment processes conducted by the companies of the Grupa Azoty Group.

TOTAL NUMBER OF EMPLOYEES TOTAL NUMBER OF EMPLOYEES BY GENDER IN 2015 BY TYPE OF CONTRACTS IN 2015

2014 2015 2014 2015 Grupa Azoty S.A. Grupa Azoty S.A. Kobiety Men Kobiety Men Women 642 642 Employed for indefinite period 615 1342 609 1331 Men 1446 1435 Employed for definite period 27 104 33 104 Total 2088 2077 Total 642 1446 642 1435 Grupa Azoty KĘDZIERZYN Grupa Azoty KĘDZIERZYN Kobiety Men Kobiety Men Women 478 479 Employed for indefinite period 445 1058 440 1019 Men 1091 1088 Employed for definite period 33 33 39 69 Total 1569 1567 Total 478 1091 479 1088 Grupa Azoty PUŁAWY Grupa Azoty PUŁAWY Kobiety Men Kobiety Men Women 793 780 Employed for indefinite period 746 2331 737 2342 Men 2514 2510 Employed for definite period 47 183 43 168 Total 3307 3290 Total 793 2514 780 2510 Grupa Azoty POLICE Grupa Azoty POLICE Kobiety Men Kobiety Men Women 535 510 Employed for indefinite period 500 1729 481 1729 Men 1831 1833 Employed for definite period 35 102 29 104 Total 2366 2343 Total 535 1831 510 1833

76 OUR RESPONSIBILITY OUR RESPONSIBILITY 77 TOTAL NUMBER OF EMPLOYEES BY TYPE OF CONTRACTS IN 2015

TOTAL NUMBER OF EMPLOYEES TOTAL NUMBER OF EMPLOYEES BY GENDER IN 2015 BY TYPE OF CONTRACTS IN 2015

76 OUR RESPONSIBILITY OUR RESPONSIBILITY 77 TOTAL NUMBER OF EMPLOYEES BY EMPLOYMENT STRUCTURE RECRUITMENT Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE We are a significant and valued employer Employee category 2014 2015 2014 2015 2014 2015 2014 2015 in each of the regions the Grupa Azoty Group Management Board 7 7 3 3 3 3 4 4 companies operate in. In 2015, our company was joined by 316 people – 250 men and Upper management personnel 29 29 23 24 58 59 30 31 66 women. We try to ensure high standards Managers 127 128 105 105 168 167 107 105 of relations with the candidates Specialists 257 260 242 254 578 579 408 422 Independent 241 252 116 120 154 165 10 8 The transparent and efficient recruitment Foremen 124 123 99 91 249 247 144 141 process is supported by a dedicated website https://rekrutacja.grupaazoty.com Apparatus 724 710 710 703 1007 1018 1003 1027 Laboratory operators 200 201 134 127 188 177 200 179 Other blue collars 379 367 137 140 902 875 474 426 On there, we inform all persons interested in working in the Grupa Azoty Group companies about the current job offers and facilitate contact with the recruiters. COMPOSITION OF THE SUPERVISORY BOARD BY GENDER

2014 2015 Grupa Azoty S.A. Women Men Women Men 2 7 2 7 We also cooperate with many EXAMPLES OF OUR ACTIONS 22% 78% 22% 78% schools and academic centers, Grupa Azoty KĘDZIERZYN Women Men Women Men offering numerous internships and Grupa Azoty KĘDZIERZYN 0 6 0 6 job trainings. In 2015, the reporting 0% 100% 0% 100% companies took in more than Grupa Azoty KĘDZIERZYN is the largest employer in the region. The company Grupa Azoty PUŁAWY Women Men Women Men pursues the internship programme "Building the value of the Polish economy. Work for us". 0 6 0 6 412 trainees 0% 100% 0% 100% and 112 interns. In the region, the company has taken the patronage over the chemistry class Grupa Azoty POLICE Women Men Women Men in the Schools Complex No. 3 in Kędzierzyn-Koźle. The patronage covers a scholarship programme, substantive support for the school in the form 1 5 2 5 of classes with qualified staff, teaching the school subject Technological 17% 83% 29% 71% Studio and professional internships in the company, participation in seminars and thematic conferences, sponsorship support in chemistry knowledge competitions for students from the Kędzierzyn-Koźle poviat, and support in equipping the school laboratory. The essence of cooperation clearly lies COMPOSITION OF THE SUPERVISORY BOARD not only in obtaining new chemists, but also a number of other professions, BY AGE GROUP which are necessary for safe operation of a production plant.

2014 2015 Grupa Azoty PUŁAWY <30 30-50 >50 <30 30-50 >50 on 30 June 2015, the Management Board of Grupa Azoty PUŁAWY signed Grupa Azoty S.A. 0 6 3 0 6 3 a cooperation agreement with the Lublin University of Technology and the Military Technical University. As part of this cooperation, students 0% 67% 33% 0% 67% 33% benefit from paid internships in the company, and the three best interns Grupa Azoty KĘDZIERZYN 0 3 3 0 3 3 receive permanent work proposal in the new power plant, belonging 0% 50% 50% 0% 50% 50% to Grupa Azoty PUŁAWY. Grupa Azoty PUŁAWY 0 3 3 0 2 4 Grupa Azoty POLICE 0% 50% 50% 0% 33% 67% Azoty Group PUŁAWY, pressure-free ammonia storage plant, Grupa Azoty POLICE 0 4 2 0 4 3 Piotr Deska– chemical processes control operator "Zielona Kuźnia" - The aim of the project is to offer internship or training and Tomasz Rybak – chemical processes operator 0% 67% 33% 0% 57% 43% to the best students or graduates, with the highest competences, development potential and high motivation. Development for young people More examples of our cooperation with schools of an opportunity of development and achievement of the first professional and universities are presented in the chapter experience. Candidates apply by filling in the notification form and sending “Support for education of the youth". it to the address [email protected].

78 OUR RESPONSIBILITY OUR RESPONSIBILITY 79 TOTAL NUMBER OF EMPLOYEES BY EMPLOYMENT STRUCTURE RECRUITMENT Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE We are a significant and valued employer Employee category 2014 2015 2014 2015 2014 2015 2014 2015 in each of the regions the Grupa Azoty Group Management Board 7 7 3 3 3 3 4 4 companies operate in. In 2015, our company was joined by 316 people – 250 men and Upper management personnel 29 29 23 24 58 59 30 31 66 women. We try to ensure high standards Managers 127 128 105 105 168 167 107 105 of relations with the candidates Specialists 257 260 242 254 578 579 408 422 Independent 241 252 116 120 154 165 10 8 The transparent and efficient recruitment Foremen 124 123 99 91 249 247 144 141 process is supported by a dedicated website https://rekrutacja.grupaazoty.com Apparatus 724 710 710 703 1007 1018 1003 1027 Laboratory operators 200 201 134 127 188 177 200 179 Other blue collars 379 367 137 140 902 875 474 426 On there, we inform all persons interested in working in the Grupa Azoty Group companies about the current job offers and facilitate contact with the recruiters. COMPOSITION OF THE SUPERVISORY BOARD BY GENDER

78 OUR RESPONSIBILITY OUR RESPONSIBILITY 79 TOTAL NUMBER AND PERCENTAGE OF NEWLY EMPLOYED PEOPLE BY GENDER 3.1.2. 2014 2015 Developing the potential Women Men Women Men Grupa Azoty S.A. 25 29% 61 71% 14 27% 37 73% of our employees Grupa Azoty KĘDZIERZYN 17 32% 36 68% 21 29% 52 71% Grupa Azoty PUŁAWY 22 22% 80 78% 26 25% 80 75% Knowledge, experience, motivation and ability In 2015, each of the reporting companies increased the average number of Grupa Azoty POLICE 15 16% 76 84% 8 9% 81 91% to cooperate at the workplace affect our results, training hours per employee. The highest growth in the number of training translate into successes appreciated by the hours, as compared to 2014, was observed in Grupa Azoty POLICE. market and by the investors. Therefore, within the Grupa Azoty Group, we try to ensure TOTAL NUMBER development of our staff through a training OF NEWLY EMPLOYED PEOPLE system and support for individual additional BY AGE GROUP education at universities. 275 350 the total number 2014 2015 of training hours in 2015 <30 30-50 >50 <30 30-50 >50 AVERAGE NUMBER Grupa Azoty S.A. 55 63.95% 27 31.40% 4 4.65% 22 43.14% 21 41.18% 8 15.69% OF TRAINING HOURS Grupa Azoty KĘDZIERZYN 20 37.74% 24 45.28% 9 16.98% 32 43.84% 39 53.42% 2 2.74% BY GENDER Grupa Azoty PUŁAWY 59 58% 14 14% 2 2% 66 62% 35 33% 3 3% Grupa Azoty POLICE 49 53.85% 39 42.86% 3 3.29% 50 56% 37 42% 2 2% 2014 2015 Grupa Azoty S.A. Women Men Women Men Grupa Azoty S.A. 8.89 14.44 9.00 16.81 Grupa Azoty KĘDZIERZYN 8.09 9.37 11.49 8.26 TOTAL NUMBER AND PERCENTAGE OF EMPLOYEES LEAVING THE COMPANY Grupa Azoty PUŁAWY 9.82 11.76 19.56 12.53 BY GENDER Grupa Azoty POLICE 33.01 21.46 20.88 26.97

2014 2015 Women Men Women Men Grupa Azoty S.A. 11 16.92% 54 83.08% 14 22.22% 49 77.78% TOTAL NUMBER OF TRAINING HOURS Grupa Azoty KĘDZIERZYN 10 21.74% 36 78.26% 20 26.67% 55 73.33% BY EMPLOYMENT STRUCTURE Grupa Azoty PUŁAWY 24 28% 61 72% 33 31% 75 69% Grupa Azoty POLICE 21 19.81% 85 80.19% 39 30.95% 87 69.05% Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE

Employment structure 2014 2015 2014 2015 2014 2015 2014 2015 Management Board 21 0 168 56 8 147 328 522 TOTAL NUMBER AND PERCENTAGE OF EMPLOYEES LEAVING THE COMPANY Upper management personnel 280 360 616 392 2243 3394 7683 12 499 BY AGE GROUP Managers 7854 9339 2000 2722 4766 5207 4449 9778 2014 2015 Specialists 6486 7286 2164 3930 10 150 18 541 15 821 39 683 <30 30-50 >50 <30 30-50 >50 Independent 856 864 632 400 737 1133 3007 4287 Grupa Azoty S.A. 0 0.00% 8 12.31% 57 87.69% 6 9.52% 6 9.52% 51 80.95% Foremen 3012 3120 1732 3595 5027 4792 4634 20 368 Grupa Azoty KĘDZIERZYN 6 13.04% 13 28.26% 27 58.70% 2 2.67% 14 18.67% 59 78.67% Apparatus 7781 8158 4040 1344 6897 7808 11 499 74 781 Grupa Azoty PUŁAWY 11 13% 13 15% 61 72% 5 5% 19 18% 84 78% Laboratory operators 154 186 888 1216 400 1429 1093 1190 Grupa Azoty POLICE 11 10.38% 14 13.21% 81 76.42% 9 7.14% 25 19.84% 92 73.02% Other blue collars 144 584 1848 831 7118 4235 8802 21 173

80 OUR RESPONSIBILITY OUR RESPONSIBILITY 81 TOTAL NUMBER AND PERCENTAGE OF NEWLY EMPLOYED PEOPLE BY GENDER 3.1.2. 2014 2015 Developing the potential Women Men Women Men Grupa Azoty S.A. 25 29% 61 71% 14 27% 37 73% of our employees Grupa Azoty KĘDZIERZYN 17 32% 36 68% 21 29% 52 71% Grupa Azoty PUŁAWY 22 22% 80 78% 26 25% 80 75% Knowledge, experience, motivation and ability In 2015, each of the reporting companies increased the average number of Grupa Azoty POLICE 15 16% 76 84% 8 9% 81 91% to cooperate at the workplace affect our results, training hours per employee. The highest growth in the number of training translate into successes appreciated by the hours, as compared to 2014, was observed in Grupa Azoty POLICE. market and by the investors. Therefore, within the Grupa Azoty Group, we try to ensure TOTAL NUMBER development of our staff through a training OF NEWLY EMPLOYED PEOPLE system and support for individual additional BY AGE GROUP education at universities. 275 350 the total number 2014 2015 of training hours in 2015 <30 30-50 >50 <30 30-50 >50 AVERAGE NUMBER Grupa Azoty S.A. 55 63.95% 27 31.40% 4 4.65% 22 43.14% 21 41.18% 8 15.69% OF TRAINING HOURS Grupa Azoty KĘDZIERZYN 20 37.74% 24 45.28% 9 16.98% 32 43.84% 39 53.42% 2 2.74% BY GENDER Grupa Azoty PUŁAWY 59 58% 14 14% 2 2% 66 62% 35 33% 3 3% Grupa Azoty POLICE 49 53.85% 39 42.86% 3 3.29% 50 56% 37 42% 2 2% 2014 2015 Grupa Azoty S.A. Women Men Women Men Grupa Azoty S.A. 8.89 14.44 9.00 16.81 Grupa Azoty KĘDZIERZYN 8.09 9.37 11.49 8.26 TOTAL NUMBER AND PERCENTAGE OF EMPLOYEES LEAVING THE COMPANY Grupa Azoty PUŁAWY 9.82 11.76 19.56 12.53 BY GENDER Grupa Azoty POLICE 33.01 21.46 20.88 26.97

80 OUR RESPONSIBILITY OUR RESPONSIBILITY 81 AVERAGE NUMBER OF TRAINING HOURS PERIODIC EMPLOYEE APPRAISAL BY EMPLOYEE BY EMPLOYMENT STRUCTURE Grupa Azoty S.A. Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE Grupa Azoty S.A. carries out an annual employee In 2014, employee appraisal covered 1967 employees, while in 2015, appraisal, the results of which are used, among employee appraisal covered 1980 employees which is 95% of total Employment structure 2014 2015 2014 2015 2014 2015 2014 2015 others, for determining the training needs and for numer of employees. Management Board 3 0 56 18.67 2.7 49.00 82 130.50 the system for rewarding solid work performance. Upper management personnel 9.66 12.41 26.78 16.33 38.7 57.53 256.12 403.19 Managers 61.84 72.96 19.05 25.92 28.4 31.18 41.58 93.12 Grupa Azoty KĘDZIERZYN Specialists 25.24 28.02 8.94 15.47 17.6 32.02 38.78 94.04 The quarterly appraisal covers all the employees of the term of office in the board of the company's trade union organization Independent 3.55 3.43 5.45 3.33 4.8 6.87 300.7 535.88 Grupa Azoty KĘDZIERZYN (except for: members of and as the Company's Social Labor Inspector), whose job seniority in Foremen 24.29 25.37 17.49 39.51 20.2 19.40 32.18 144.45 the Management Board, management staff, Grupa Azoty ZAK S.A. amounts to at least 1 year. In total, the process Apparatus 10.75 11.49 5.69 1.91 6.8 7.67 11.46 72.81 employees covered by individual bonus goals cards of annual appraisal in 2015 covered 92 % of the company's employees. and exempted from providing work for the period of Laboratory operators 0.77 0.93 6.63 9.57 2.1 8.07 5.47 6.65 Other blue collars 0.38 1.59 13.49 5.941 7.9 4.84 8.57 49.70 Grupa Azoty PUŁAWY The company does not have a formal appraisal bonuses. The Bonus Awarding Regulations determine the criteria that won in the grant competition addressed to employees, CORPORATE VOLUNTEERING system. However, employee appraisal is performed should be followed by managers. The superiors are obliged to inform and received financial support in the amount of every quarter during allocation of discretionary the employees of the amount of the granted bonus and substantiate Corporate volunteering within the Grupa Azoty Group 10 for the decision. consists in the Company supporting pro-social and projects implementation pro-environmental activities of employees, who – PLN of each idea. Grupa Azoty POLICE devoting their free time and using their skills – pursue 5 000 volunteering projects prepared by them. Grupa Azoty POLICE has a quarterly periodic of employees. Members of the Management Board, the chief accountant employee appraisal under the system of bonus and persons employed on the basis of managerial contracts are subject At the end of 2015, Grupa Azoty PUŁAWY launched awarding. In 2015, periodic appraisal covered 95% to assessment according to a separate system and separate principles. the first pilot edition of the Corporate Volunteering. Volunteering projects could have been submitted by teams, consisting of at least 3 employees, but DEVELOPMENT PROGRAMMES the most important selection criterion of the victorious projects was contribution of own work. An example of a project developing competences and teams management. The project participants also benefitted Project implementations commenced in 2016. of employees is the educational project of Grupa from language courses and postgraduate studies. In 2015, Grupa Azoty Azoty PUŁAWY, entitled "Masters in management", KĘDZIERZYN also launched a training cycle "Manager's Academy". Volunteers from the Azoty Group PUŁAWY addressed to the production staff, from the level of The purpose of the trainings is to increase knowledge concerning a foreman to the department manager. 2015 marked management competences, in particular decision-making and the end of its second stage. Under this programme, delegating tasks, as well as solving conflicts in the team and effectively more than 300 employees took advantage of motivating the employees. Employees of the Grupa Azoty Group have proved their social a training concerning the skill of human resources sensitivity many times before. Collecting gifts for those in need, collecting caps for the hospice, preparing Christmas gifts – those Foreman’s Academy – programme implemented in are only a few of the examples of actions performed by the Grupa Azoty Kędzierzyn group since 2014 Grupa Azoty Group. Such high potential could not be left While executing tasks from the area of support CHAMPIONS LEAGUE IN GRUPA AZOTY POLICE unused. for improvement in competences of the employees of Grupa Azoty Kędzierzyn group, in "Champions League" is an innovative project addressed to Foremen 2014 the company launched an educational project of Grupa Azoty Zakłady Chemiczne POLICE. Its first edition covered The Corporate Volunteering programme gives the possibility directed to the foremen's group the "Foreman's foremen of business units of the company. of pursuing own ideas for helping. At work, we are a team, Academy". The participation in workshops was The project covers three thematic modules: and after work - a part of the local community. The projects are suggested to all foremen employed in the • Champion in organization implemented in the closest neighborhood of our Volunteers. company. Apart from the possibility to improve • Communication professional competences "Foreman's Academy" • Motivation The pilot edition in Puławy enjoyed great interest and ended is an excellent opportunity for inter-department with a success. For the next edition of the competition, we will talks, initiating new contacts and exchange of A cycle of trainings, practical workshops and improvement trainings, experiences. The "Foreman's Academy" was a two- which are carried out under the project, is intended to ensure further, already invite all the employees of the Grupa Azoty Group. stage program enriching the previous project broad development of management competences, so that the foremen “Mistrzówka", which included workshops in the could become leaders in building high level of employee involvement theoretical and practical issues with regard to, of Grupa Azoty Zakłady Chemiczne POLICE. Monika Płońska among others, teambuilding, establishing goals, delegating tasks, effective communication The Champions League ended with selecting a business unit with "Corporate Volunteering" Programme Coordinator and effective cooperation. the best foremen team and awarding the Champions League Cup.

82 OUR RESPONSIBILITY OUR RESPONSIBILITY 83 AVERAGE NUMBER OF TRAINING HOURS PERIODIC EMPLOYEE APPRAISAL BY EMPLOYEE BY EMPLOYMENT STRUCTURE Grupa Azoty S.A. Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE Grupa Azoty S.A. carries out an annual employee In 2014, employee appraisal covered 1967 employees, while in 2015, appraisal, the results of which are used, among employee appraisal covered 1980 employees which is 95% of total Employment structure 2014 2015 2014 2015 2014 2015 2014 2015 others, for determining the training needs and for numer of employees. Management Board 3 0 56 18.67 2.7 49.00 82 130.50 the system for rewarding solid work performance. Upper management personnel 9.66 12.41 26.78 16.33 38.7 57.53 256.12 403.19 Managers 61.84 72.96 19.05 25.92 28.4 31.18 41.58 93.12 Grupa Azoty KĘDZIERZYN Specialists 25.24 28.02 8.94 15.47 17.6 32.02 38.78 94.04 The quarterly appraisal covers all the employees of the term of office in the board of the company's trade union organization Independent 3.55 3.43 5.45 3.33 4.8 6.87 300.7 535.88 Grupa Azoty KĘDZIERZYN (except for: members of and as the Company's Social Labor Inspector), whose job seniority in Foremen 24.29 25.37 17.49 39.51 20.2 19.40 32.18 144.45 the Management Board, management staff, Grupa Azoty ZAK S.A. amounts to at least 1 year. In total, the process Apparatus 10.75 11.49 5.69 1.91 6.8 7.67 11.46 72.81 employees covered by individual bonus goals cards of annual appraisal in 2015 covered 92 % of the company's employees. and exempted from providing work for the period of Laboratory operators 0.77 0.93 6.63 9.57 2.1 8.07 5.47 6.65 Other blue collars 0.38 1.59 13.49 5.941 7.9 4.84 8.57 49.70 Grupa Azoty PUŁAWY The company does not have a formal appraisal bonuses. The Bonus Awarding Regulations determine the criteria that won in the grant competition addressed to employees, CORPORATE VOLUNTEERING system. However, employee appraisal is performed should be followed by managers. The superiors are obliged to inform and received financial support in the amount of every quarter during allocation of discretionary the employees of the amount of the granted bonus and substantiate Corporate volunteering within the Grupa Azoty Group 10 for the decision. consists in the Company supporting pro-social and projects implementation pro-environmental activities of employees, who – PLN of each idea. Grupa Azoty POLICE devoting their free time and using their skills – pursue 5 000 volunteering projects prepared by them. Grupa Azoty POLICE has a quarterly periodic of employees. Members of the Management Board, the chief accountant employee appraisal under the system of bonus and persons employed on the basis of managerial contracts are subject At the end of 2015, Grupa Azoty PUŁAWY launched awarding. In 2015, periodic appraisal covered 95% to assessment according to a separate system and separate principles. the first pilot edition of the Corporate Volunteering. Volunteering projects could have been submitted by teams, consisting of at least 3 employees, but DEVELOPMENT PROGRAMMES the most important selection criterion of the victorious projects was contribution of own work. An example of a project developing competences and teams management. The project participants also benefitted Project implementations commenced in 2016. of employees is the educational project of Grupa from language courses and postgraduate studies. In 2015, Grupa Azoty Azoty PUŁAWY, entitled "Masters in management", KĘDZIERZYN also launched a training cycle "Manager's Academy". Volunteers from the Azoty Group PUŁAWY addressed to the production staff, from the level of The purpose of the trainings is to increase knowledge concerning a foreman to the department manager. 2015 marked management competences, in particular decision-making and the end of its second stage. Under this programme, delegating tasks, as well as solving conflicts in the team and effectively more than 300 employees took advantage of motivating the employees. Employees of the Grupa Azoty Group have proved their social a training concerning the skill of human resources sensitivity many times before. Collecting gifts for those in need, collecting caps for the hospice, preparing Christmas gifts – those Foreman’s Academy – programme implemented in are only a few of the examples of actions performed by the Grupa Azoty Kędzierzyn group since 2014 Grupa Azoty Group. Such high potential could not be left While executing tasks from the area of support CHAMPIONS LEAGUE IN GRUPA AZOTY POLICE unused. for improvement in competences of the employees of Grupa Azoty Kędzierzyn group, in "Champions League" is an innovative project addressed to Foremen 2014 the company launched an educational project of Grupa Azoty Zakłady Chemiczne POLICE. Its first edition covered The Corporate Volunteering programme gives the possibility directed to the foremen's group the "Foreman's foremen of business units of the company. of pursuing own ideas for helping. At work, we are a team, Academy". The participation in workshops was The project covers three thematic modules: and after work - a part of the local community. The projects are suggested to all foremen employed in the • Champion in organization implemented in the closest neighborhood of our Volunteers. company. Apart from the possibility to improve • Communication professional competences "Foreman's Academy" • Motivation The pilot edition in Puławy enjoyed great interest and ended is an excellent opportunity for inter-department with a success. For the next edition of the competition, we will talks, initiating new contacts and exchange of A cycle of trainings, practical workshops and improvement trainings, experiences. The "Foreman's Academy" was a two- which are carried out under the project, is intended to ensure further, already invite all the employees of the Grupa Azoty Group. stage program enriching the previous project broad development of management competences, so that the foremen “Mistrzówka", which included workshops in the could become leaders in building high level of employee involvement theoretical and practical issues with regard to, of Grupa Azoty Zakłady Chemiczne POLICE. Monika Płońska among others, teambuilding, establishing goals, delegating tasks, effective communication The Champions League ended with selecting a business unit with "Corporate Volunteering" Programme Coordinator and effective cooperation. the best foremen team and awarding the Champions League Cup.

82 OUR RESPONSIBILITY OUR RESPONSIBILITY 83 In the recent years, we have been developing very dynamically, and our 3.1.3. structure has recently underwent fundamental transformations. In such a rapidly changing and developing group, employees face the challenge of Communication channel Communication tool Description and purpose of the tool Conducting finding their place in the new situation and taking up new challenges and Social media Facebook, Youtube, External tool used to support internal communication by means dialogue responsibilities. Twitter of posts related to the broadly understood company business We pursue actions that help create a positive atmosphere and support the Company media Company newspaper A bulletin talking about the issues important for the employees, supporting with employees employees at the workplace. communication, building corporate culture Leaflets, posters Additional information materials, describing in an accessible and interesting manner the issues important for the employees or informing the employees OUR COMMUNICATION CHANNELS WITH EMPLOYEES about the events organized for them Radio broadcasts The company's radio broadcasting station informing the employees about Communication channel Communication tool Description and purpose of the tool events within the company, communicating company messages and messages Meetings The management staff meetings with the Meetings concerning current topics in the company of organizations cooperating with the company, employee announcements, formal president of the Management Board (CEO) and the group enriched with local information

Staff meetings, cascade communication Communicating up-to-date information Other publications Texts published by the company, concerning its functioning in the local (annual reports, and business environment, presenting its structure and the adopted booklets) management model, showing its products or popularizing other important issues Meetings of the Management Board with Meetings devoted to current topics and important social trade union organizations and employee issues, pay and staff issues Media and channels Intranet Communication platform for office employees supporting internal communication Announcement boards Boards placed in the company, offering the possibility of popularization Individual meetings of employees with Possibility of direct contact with the CEO in special of events taking place within the company (announcements, posters) the president of the Management Board cases (CEO) Comments and Boxes placed in the company, offering the possibility of reporting comments motions boxes and motions, also anonymous, concerning the internal company's functioning Organized meetings and events for Regular meetings of employees, aimed at strengthening the employees employee's identification with the company and the brand Letter of the President Letter of the President of the Management Board addressed to company of the Management employees, used for communicating significant events concerning the company's Meetings Integration meetings of departments and Employee meetings focused on improvement in Board functioning; launching important processes within the company and the group informal units communication, motivation, atmosphere at work SMS and MULTIINFO An external tool used for transferring a given text message at the same time Work Safety Days Thematic meetings of broadly understood management platform to the whole group of users of company phones staff involving a representative of the Management Board

Sport tournaments, local events Regular employee meetings in order to improve the level Mailing Information passed on to the company's employees by e-mail; they may concern, supported by the company of communication, motivation, atmosphere at work e.g., significant events, surveys, published texts or contests the company takes part in

Newsletter Electronic form of the newsletter – sent by e-mail to subscribers Meetings with retired employees Regular meetings with a group of retired employees, (previous subscription necessary); addressed both to people within sustaining relations and up-to-date communication the Grupa Azoty Group, as well as to external recipients

Official Procedures, instructions, Internal regulations describing modes of conduct essential Trainings Preliminary Mandatory training familiarizing the employee with documentation the functioning of the company in the given area regulations, official for effective operation of the company's management system of the company orders, circular letters Periodical Mandatory training systematizing the employee's knowledge within a given area Questionnaire Survey of satisfaction Surveys allowing for checking the level of work satisfaction among employees, Thematic Regular trainings dedicated to employees in order studies and opinions of team atmosphere, internal communication; the obtained analysis is the basis and specialist to expand their knowledge and skills within employees or (and) for undertaking improvement activities for the indicated areas a specific focus area employee involvement

84 OUR RESPONSIBILITY OUR RESPONSIBILITY 85 In the recent years, we have been developing very dynamically, and our 3.1.3. structure has recently underwent fundamental transformations. In such a rapidly changing and developing group, employees face the challenge of Communication channel Communication tool Description and purpose of the tool Conducting finding their place in the new situation and taking up new challenges and Social media Facebook, Youtube, External tool used to support internal communication by means dialogue responsibilities. Twitter of posts related to the broadly understood company business We pursue actions that help create a positive atmosphere and support the Company media Company newspaper A bulletin talking about the issues important for the employees, supporting with employees employees at the workplace. communication, building corporate culture Leaflets, posters Additional information materials, describing in an accessible and interesting manner the issues important for the employees or informing the employees OUR COMMUNICATION CHANNELS WITH EMPLOYEES about the events organized for them Radio broadcasts The company's radio broadcasting station informing the employees about Communication channel Communication tool Description and purpose of the tool events within the company, communicating company messages and messages Meetings The management staff meetings with the Meetings concerning current topics in the company of organizations cooperating with the company, employee announcements, formal president of the Management Board (CEO) and the group enriched with local information

84 OUR RESPONSIBILITY OUR RESPONSIBILITY 85 3.1.4. EXAMPLES OF OUR ACTIONS Preventing Grupa Azoty KĘDZIERZYN On 11 – 24 February 2015, Grupa Azoty KĘDZIERZYN conducted a referendum about modifications of the shift system. From discrimination among 898 employees entitled to vote, 740 people took part in the referendum, which is attendance at the level of 82.41%.

The Grupa Azoty Group pays great attention Since 01.07.2014, we are also governed by the Code of Ethical Conduct to ensuring suitable working conditions and of the Grupa Azoty Group, which reinforces communication of the does not accept any signs of discrimination principles of counteracting discrimination and mobbing, as well as by at the workplace. The principles of the management system of these matters within the Grupa Azoty Group. counteracting discrimination phenomena in EMPLOYEE INVOLVEMENT SURVEY Grupa Azoty S.A. are governed by Regulation In 2013, we developed a procedure for submission of complaints no. 9/2014 of 03.03.2014. Monitoring concerning the workplace by the employees. In order to build and In 2015, each employee could take part in of the mobbing phenomena is conducted maintain good relations between the employee and his superior, we the employee involvement survey of the Grupa 44,92% by the HR Management Corporate Office on the introduced the procedure of solving problems at the workplace. Each Azoty Group. The project was the first stage NEUTRAL basis of regular up-to-date information and HR employee has the right to present reasonable doubts concerning his own of the initiative "Shaping Involvement", analyses, as well as on the basis of analyses and workplace. The doubts may concern the following situations: occupational implemented under the Azoty PRO Operational studies conducted in the form safety hazard, signs of discrimination and mobbing at work. So far, the Excellence Programme. The involvement survey of surveys. company has not reported any complaint submitted under this procedure. allowed for learning the internal perspective – the way the employees perceive what is happening in the life of the company. The survey was attended by the four key Grupa Azoty Group companies in Tarnów, Kędzierzyn, Police and Puławy. The invitation to participate 5,75% in the project covered 9 299 employees – BLACK SHEEP the surveys were filled by 6 773 persons, which constitutes 72.8 % of the respondents. 3.1.5. The involvement measurement methodology applied in the survey allowed for distinguishing Services and One of our responsibilities is to provide suitable working conditions. four groups of employees, depending on the 14,42% In 2015, the minimum wage in the companies covered by the report level of involvement (from high level to total lack AVANT-GARDE benefits was higher than the minimum wage in Poland. of involvement): The Avant-garde, the Potential, the Indifferent and the Black Sheep. available for The greatest difference between the minimum wage in Poland and the minimum wage in the company was observed in Grupa Azoty PUŁAWY, 34,90% our employees where this difference amounted to PLN 996.05. POTENTIAL

MINIMUM REMUNERATION IN GRUPA AZOTY GROUP The "Avant-garde" group, namely people declaring high level AS COMPARED TO MINIMUM WAGE of involvement, includes 14.42 % of the employees taking part in the study. IN POLAND The category of "Potential" persons, namely close to full involvement, Grupa Grupa Azoty Grupa Azoty Grupa Azoty includes 34.90 % of the respondents. On the other hand, detached Azoty S.A. KĘDZIERZYN PUŁAWY POLICE persons and persons declaring moderate involvement were classified into the category of the "Neutral", which includes 44.92 % of respondents. 2014 2015 2014 2015 2014 2015 2014 2015 5.75% of people were classified to the category of the "Black Sheep", Minimum wage in the company 2500 2700 2 545.16 2636.20 2904.92 2746.05 1680 1850 namely people actively uninvolved. Minimum wage in Poland 1680 1750 1680 1750 1680 1750 1680 1750 Undoubtedly, employee involvement is one of the key elements ensuring The ratio of the minimum the company's success. Without involved employees, the Grupa Azoty wage in the company to Group cannot develop, implement innovative solutions, pursue better the minimum wage in Poland 1.49 1.54 1.51 1.51 1.73 1.57 1 1.06 effectiveness and achieve strategic goals. Azoty Group PUŁAWY, Saltpeter storage facility, Zbigniew Gogacz – operator of dosing, molding and packaging equipment

86 OUR RESPONSIBILITY OUR RESPONSIBILITY 87 3.1.4. EXAMPLES OF OUR ACTIONS Preventing Grupa Azoty KĘDZIERZYN On 11 – 24 February 2015, Grupa Azoty KĘDZIERZYN conducted a referendum about modifications of the shift system. From discrimination among 898 employees entitled to vote, 740 people took part in the referendum, which is attendance at the level of 82.41%.

86 OUR RESPONSIBILITY OUR RESPONSIBILITY 87 An important element of supporting the Benefits are granted to all employees, except for employees employed This applies in particular to management systems and internal policies employees is wide range of benefits offered under contract of mandate, as well as except for prophylactic meals, which 3.1.6. of companies, related to OHS. by the companies of the Grupa Azoty Group are granted to employees holding positions specified in the CEO's order. under the employee social package. Safety management OHS committees actively operate within the Grupa Azoty Group. All four 98.60 % of employees of the Grupa Azoty Group are covered by collective companies covered by the report have OHS Committees representing all Examples of benefits for the employees: contracts. The Company's Collective Labor Agreement determines, among at the workplace their employees. Makeup of the committees and their tasks are very • medical care others, the principles and benefits resulting from retirement. These similar. Their members include both the employer's representatives (HR • protective clothing and workwear include, e.g., the right to earlier payment of the long-service bonus and departments, OHS departments and doctors providing preventive health • prophylactic meals a one-time severance pay in cash in the amount of multiple remunerations, care services for employees), as well as representatives of the employees • corrective glasses which depends upon the length of service. (representatives of trade unions, social labor inspectors). • life insurance • retirement benefits We offer our employees to participate in the Occupational Pension All processes taking place in the company depend In Grupa Azoty S.A., health and safety issues are regulated in the "Work • social fund Scheme, which helps them gather additional funds within the 3rd pillar. on people and the weight they assign to these Regulations". They are consulted on the current basis with the company's • long-service bonus The scheme includes all employees covered by the Company's Collective processes. This applies particularly to the issue social labor inspector, and periodically, every quarter discussed during the • annual bonus Labor Agreement (CAO) and the management staff. Entering the of health protection and safety at the workplace. meeting of the OHS Committee. In turn, in Grupa Azoty KĘDZIERZYN, • trainings and courses Occupational Pension Scheme is conditioned upon undergoing a 6-month For this reason, we pay special attention to OHS the relevant provisions were reflected in the Integrated Management • maternity leaves, parental leaves, paternity internship in the company. trainings, as well as activities improving the work System. Consultations of the Management Board with trade unions take leaves principles in terms of prevention of accidents place periodically, once a month. Furthermore, particular Members and health impairments at the workplace. of the Management Board consult specific issues with trade union organizations. In Grupa Azoty PUŁAWY, health and safety issues are In order to ensure the highest OHS standards, discussed during meetings of the OHS Commission and during monthly employees of the Grupa Azoty Group undergo meetings of trade unions with the Management Board. In Grupa Azoty mandatory trainings and regularly pass POLICE, the general principles concerning OHS are included in the examinations, which verify their knowledge with "Company's Collective Labor Agreement", and more detailed provisions regard to OHS. Furthermore, the companies apply are set out in internal normative acts. Consultations take place on the EXAMPLES OF OUR ACTIONS various solutions designed to ensure top-level forum of the OHS Committee no less frequently than once every quarter. safety. Under the expanded social benefits package, employees of the Grupa Azoty Group can benefit from, among others: • Occupational Pension Scheme* • Additional Medical Care Scheme One of the most important management elements at Grupa • health and life insurance • health promotion schemes and rehabilitative treatments Azoty POLICE, determining the success of our Company, is for employees safety and health protection of the employees. This element • expert support projects in the field of law and psychology determines not only the business image, its successful • WORK LIFE BALANCE project - individual psychological consultations for employees, helping them in difficult professional and life situations development, but also ensures the best candidates for work. • financial support for studies That is why it is so important to ensure work safety and • subsidies to vacations. undertake prophylactic actions, such as the executed programme "No accidents", improving the level of safety. * excluding Grupa Azoty PUŁAWY Ensuring suitable working conditions significantly affects the development of the Company by improving the efficiency and quality of the performed work, as well as by limiting losses resulting from failures, standstills or accidents at work.

Krzysztof Klein Technical Safety Director "PYTAJNIK" project

In October 2015, Grupa Azoty KĘDZIERZYN launched the "PYTAJNIK" project. It allows the employees to benefit from free legal In November 2015, the company Grupa Azoty KĘDZIERZYN started the EXAMPLES OF OUR ACTIONS • periodical Work Safety Days consultations, as well as assistance in specific project WORK LIFE BALANCE. It offers free psychological consultations • "STOP accidents" programme difficult life situations. A consultation point in building balance between professional and personal life. It is also aimed The Grupa Azoty Group companies organize • STOP™ Safety Monitoring Programme was established, where specialists give the to support people in difficult life situations. campaigns for health and safety at the workplace, • "Protect your eyes" campaign employees professional legal consultations, such as: • program "5 minutes for safety" among others, with regard to social insurance, • contest "Safe Work Department". tax law and administrative law.

88 OUR RESPONSIBILITY OUR RESPONSIBILITY 89 An important element of supporting the Benefits are granted to all employees, except for employees employed This applies in particular to management systems and internal policies employees is wide range of benefits offered under contract of mandate, as well as except for prophylactic meals, which 3.1.6. of companies, related to OHS. by the companies of the Grupa Azoty Group are granted to employees holding positions specified in the CEO's order. under the employee social package. Safety management OHS committees actively operate within the Grupa Azoty Group. All four 98.60 % of employees of the Grupa Azoty Group are covered by collective companies covered by the report have OHS Committees representing all Examples of benefits for the employees: contracts. The Company's Collective Labor Agreement determines, among at the workplace their employees. Makeup of the committees and their tasks are very • medical care others, the principles and benefits resulting from retirement. These similar. Their members include both the employer's representatives (HR • protective clothing and workwear include, e.g., the right to earlier payment of the long-service bonus and departments, OHS departments and doctors providing preventive health • prophylactic meals a one-time severance pay in cash in the amount of multiple remunerations, care services for employees), as well as representatives of the employees • corrective glasses which depends upon the length of service. (representatives of trade unions, social labor inspectors). • life insurance • retirement benefits We offer our employees to participate in the Occupational Pension All processes taking place in the company depend In Grupa Azoty S.A., health and safety issues are regulated in the "Work • social fund Scheme, which helps them gather additional funds within the 3rd pillar. on people and the weight they assign to these Regulations". They are consulted on the current basis with the company's • long-service bonus The scheme includes all employees covered by the Company's Collective processes. This applies particularly to the issue social labor inspector, and periodically, every quarter discussed during the • annual bonus Labor Agreement (CAO) and the management staff. Entering the of health protection and safety at the workplace. meeting of the OHS Committee. In turn, in Grupa Azoty KĘDZIERZYN, • trainings and courses Occupational Pension Scheme is conditioned upon undergoing a 6-month For this reason, we pay special attention to OHS the relevant provisions were reflected in the Integrated Management • maternity leaves, parental leaves, paternity internship in the company. trainings, as well as activities improving the work System. Consultations of the Management Board with trade unions take leaves principles in terms of prevention of accidents place periodically, once a month. Furthermore, particular Members and health impairments at the workplace. of the Management Board consult specific issues with trade union organizations. In Grupa Azoty PUŁAWY, health and safety issues are In order to ensure the highest OHS standards, discussed during meetings of the OHS Commission and during monthly employees of the Grupa Azoty Group undergo meetings of trade unions with the Management Board. In Grupa Azoty mandatory trainings and regularly pass POLICE, the general principles concerning OHS are included in the examinations, which verify their knowledge with "Company's Collective Labor Agreement", and more detailed provisions regard to OHS. Furthermore, the companies apply are set out in internal normative acts. Consultations take place on the EXAMPLES OF OUR ACTIONS various solutions designed to ensure top-level forum of the OHS Committee no less frequently than once every quarter. safety. Under the expanded social benefits package, employees of the Grupa Azoty Group can benefit from, among others: • Occupational Pension Scheme* • Additional Medical Care Scheme One of the most important management elements at Grupa • health and life insurance • health promotion schemes and rehabilitative treatments Azoty POLICE, determining the success of our Company, is for employees safety and health protection of the employees. This element • expert support projects in the field of law and psychology determines not only the business image, its successful • WORK LIFE BALANCE project - individual psychological consultations for employees, helping them in difficult professional and life situations development, but also ensures the best candidates for work. • financial support for studies That is why it is so important to ensure work safety and • subsidies to vacations. undertake prophylactic actions, such as the executed programme "No accidents", improving the level of safety. * excluding Grupa Azoty PUŁAWY Ensuring suitable working conditions significantly affects the development of the Company by improving the efficiency and quality of the performed work, as well as by limiting losses resulting from failures, standstills or accidents at work.

Krzysztof Klein Technical Safety Director "PYTAJNIK" project

88 OUR RESPONSIBILITY OUR RESPONSIBILITY 89 STOP™ SAFETY RATES OF INJURY, OCCUPATIONAL DISEASES, MONITORING PROGRAMME LOST DAYS AND ABSENCES AT WORK, AS WELL AS THE NUMBER OF WORK-RELATED For many years, Grupa Azoty S.A. has been In 2015, the company made another important step in this direction – it FATALITIES BY REGION AND BY GENDER systematically introducing solutions reducing implemented the STOP™ Safety Monitoring Programme. This programme the number of accidents and potentially teaches the employees how to effectively recognize hazardous working 2014 2015 accidental events. conditions and behaviors. Grupa Azoty S.A. Women Men Women Men Total number of accidents at work 3 6 3 15 Number of minor accidents 3 6 3 15 Total number of days lost due to accidents I am convinced that all hazards related to the performed work at work 89 459 219 737 can be suitably secured, but in order to do this, we need to Accidence ratio (calculated create safety culture within ourselves. Therefore, we invest as the total number of accidents/headcount x 1000) 4.68 4.14 4.7 10.4 in innovative programmes and solutions. The STOP™ Severity rate (calculated as Programme is supposed to create this kind of culture in us, the number of days lost due to not only in the workplace, but also beyond. On the other an accident/number of accidents) 29.66 76.5 73 49.13 hand, CERGA is the new quality of safety, chemical rescue Grupa Azoty KĘDZIERZYN Women Men Women Men and fire rescue in Poland. Total number of accidents at work 8* 9* 2 6 Number of minor accidents 8 9 2 6 Total number of days lost due to accidents at work 281 506 231 481 Accidence ratio (calculated as the total number of accidents/headcount x 1000) 16.74 8.25 4.09 5.51 Severity rate (calculated as the number of days lost due to an accident/number of accidents) 35.13 56.22 115.5 80.16 Artur Kopeć Grupa Azoty PUŁAWY Women Men Women Men Member of the Management Board of the Grupa Azoty Group Total number of accidents at work 1 30 7 22 responsible for safety Number of minor accidents 1 30 7 22 Total number of days lost due to accidents at work 5 667 203 1008 Accidence ratio (calculated GRUPA AZOTY as the total number of CERGA is supposed to help in developing common safety standards, accidents/headcount x 1000) 1.26 11.91 9.02 8.75 RESCUE EDUCATION CENTER CERGA as well as in exchanging experiences and utilizing the synergy among the companies of the Grupa Azoty Group. Its operations will cover Grupa Severity rate (calculated as the number of days lost due to The Grupa Azoty Rescue Education Center Azoty S.A., Grupa Azoty PUŁAWY, Grupa Azoty POLICE, Grupa Azoty an accident/number of accidents) 5 22.23 29 45.81 CERGA is a modern entity responsible for KĘDZIERZYN, Grupa Azoty SIARKOPOL, and other entities interested Grupa Azoty POLICE Women Men Women Men training of firefighters and chemical rescuers in benefiting from the training offer. working within the Grupa Azoty Group. Total number of accidents at work 3 15 2 15 The Center was created on the basis of the Number of minor accidents 3 15 2 15 Corporate Fire Brigade of Grupa Azoty PUŁAWY, Total number of days lost due to accidents and started its operations on 12 March 2015 with at work 227 530 178 717 an inaugural training for chemical rescue teams. Accidence ratio (calculated The Center's tasks include organization and EXAMPLES OF OUR ACTIONS as the total number of accidents/headcount x 1000) 1.2 6.3 0.85 6.38 conduct of trainings for the whole Grupa Azoty Group. It improves qualifications and skills The Grupa Azoty Group has a Fire Protection Team, which includes fire Severity rate (calculated as of employees responsible for safety, rescuing protection units of its four key companies, as well as Corporate Rescue the number of days lost due to and fire protection. Service of Grupa Azoty SIARKOPOL and the Mining Rescue Station an accident/number of accidents) 75.6 35.33 89 47.8 SIARKOPOL. Thanks to commitment of this team, in the recent two years, we have developed the "Strategy for Selection of the Amount and Quality of Firefighting Foams for Grupa Azoty Units", adopted the unified "Dress Code for Uniformed Services", and established the Grupa Azoty Rescue In the recent two years, we reported no accidents resulting in fatalities and severe injuries. 2 cases of occupational diseases were observed (1 in Grupa Azoty PUŁAWY, 1 in Grupa Azoty Education Center. POLICE).

90 OUR RESPONSIBILITY OUR RESPONSIBILITY 91 STOP™ SAFETY RATES OF INJURY, OCCUPATIONAL DISEASES, MONITORING PROGRAMME LOST DAYS AND ABSENCES AT WORK, AS WELL AS THE NUMBER OF WORK-RELATED For many years, Grupa Azoty S.A. has been In 2015, the company made another important step in this direction – it FATALITIES BY REGION AND BY GENDER systematically introducing solutions reducing implemented the STOP™ Safety Monitoring Programme. This programme the number of accidents and potentially teaches the employees how to effectively recognize hazardous working 2014 2015 accidental events. conditions and behaviors. Grupa Azoty S.A. Women Men Women Men Total number of accidents at work 3 6 3 15 Number of minor accidents 3 6 3 15 Total number of days lost due to accidents I am convinced that all hazards related to the performed work at work 89 459 219 737 can be suitably secured, but in order to do this, we need to Accidence ratio (calculated create safety culture within ourselves. Therefore, we invest as the total number of accidents/headcount x 1000) 4.68 4.14 4.7 10.4 in innovative programmes and solutions. The STOP™ Severity rate (calculated as Programme is supposed to create this kind of culture in us, the number of days lost due to not only in the workplace, but also beyond. On the other an accident/number of accidents) 29.66 76.5 73 49.13 hand, CERGA is the new quality of safety, chemical rescue Grupa Azoty KĘDZIERZYN Women Men Women Men and fire rescue in Poland. Total number of accidents at work 8* 9* 2 6 Number of minor accidents 8 9 2 6 Total number of days lost due to accidents at work 281 506 231 481 Accidence ratio (calculated as the total number of accidents/headcount x 1000) 16.74 8.25 4.09 5.51 Severity rate (calculated as the number of days lost due to an accident/number of accidents) 35.13 56.22 115.5 80.16 Artur Kopeć Grupa Azoty PUŁAWY Women Men Women Men Member of the Management Board of the Grupa Azoty Group Total number of accidents at work 1 30 7 22 responsible for safety Number of minor accidents 1 30 7 22 Total number of days lost due to accidents at work 5 667 203 1008 Accidence ratio (calculated GRUPA AZOTY as the total number of CERGA is supposed to help in developing common safety standards, accidents/headcount x 1000) 1.26 11.91 9.02 8.75 RESCUE EDUCATION CENTER CERGA as well as in exchanging experiences and utilizing the synergy among the companies of the Grupa Azoty Group. Its operations will cover Grupa Severity rate (calculated as the number of days lost due to The Grupa Azoty Rescue Education Center Azoty S.A., Grupa Azoty PUŁAWY, Grupa Azoty POLICE, Grupa Azoty an accident/number of accidents) 5 22.23 29 45.81 CERGA is a modern entity responsible for KĘDZIERZYN, Grupa Azoty SIARKOPOL, and other entities interested Grupa Azoty POLICE Women Men Women Men training of firefighters and chemical rescuers in benefiting from the training offer. working within the Grupa Azoty Group. Total number of accidents at work 3 15 2 15 The Center was created on the basis of the Number of minor accidents 3 15 2 15 Corporate Fire Brigade of Grupa Azoty PUŁAWY, Total number of days lost due to accidents and started its operations on 12 March 2015 with at work 227 530 178 717 an inaugural training for chemical rescue teams. Accidence ratio (calculated The Center's tasks include organization and EXAMPLES OF OUR ACTIONS as the total number of accidents/headcount x 1000) 1.2 6.3 0.85 6.38 conduct of trainings for the whole Grupa Azoty Group. It improves qualifications and skills The Grupa Azoty Group has a Fire Protection Team, which includes fire Severity rate (calculated as of employees responsible for safety, rescuing protection units of its four key companies, as well as Corporate Rescue the number of days lost due to and fire protection. Service of Grupa Azoty SIARKOPOL and the Mining Rescue Station an accident/number of accidents) 75.6 35.33 89 47.8 SIARKOPOL. Thanks to commitment of this team, in the recent two years, we have developed the "Strategy for Selection of the Amount and Quality of Firefighting Foams for Grupa Azoty Units", adopted the unified "Dress Code for Uniformed Services", and established the Grupa Azoty Rescue In the recent two years, we reported no accidents resulting in fatalities and severe injuries. 2 cases of occupational diseases were observed (1 in Grupa Azoty PUŁAWY, 1 in Grupa Azoty Education Center. POLICE).

90 OUR RESPONSIBILITY OUR RESPONSIBILITY 91 Our principle 3.2. Companies belonging to Grupa Azoty are entities with particular economic importance for the region, being at the same time stakeholders who use to the greatest extent resources of natural environment in a given voivodeship. Therefore, the companies support first of all projects that relate to the region Our impact where they operate. on the local community Our principle The companies make decisions on the conclusion of the socio-sponsorship agreement, taking into account first of all projects and initiatives from the region in which they operate, and whose level and impact go 3.2.1. beyond a given region.

Our impact Our principle on the development Decisions concerning involvement in different initiatives are made by the management board of a given of the local community company, on the basis of approved by the Supervisory Board "Plan of Social and Sponsorship Activities".

The Grupa Azoty Group companies are a significant PRINCIPLES OF COOPERATION WITH THE LOCAL COMMUNITY and recognizable part of the local communities. The activity of the Grupa Azoty Group in many ROLE IN REGIONAL ECONOMY We contribute to development of the regions, Social commitment campaigns of national and international range, areas of social and economic life – from artistic where we are located. It is very important for us to including socio-sponsoring projects, are coordinated on behalf and cultural projects, through sport, to educational We are one of the driving forces of economic development in the regions. ensure good quality of life wherever we are present of the whole Grupa Azoty Group by Grupa Azoty S.A. At the same time, and economic projects - emphasizes our desire We consolidate the image of cities and economic zones, where our as the employer, neighbor, business and social each of the four reporting companies within the Grupa Azoty Group to strengthen relations with the inhabitants of the companies are located, as locations fostering business operations. partner. In connection with each of these roles, implements social projects and actions of local nature and range. regions, where the companies of the Group are Our presence and strategic approach to long-term activities, such as we want to positively affect individuals and entire located.It is very important for us to provide all development of innovations and education, affect the social and communities. stakeholders interested in cooperating with us with intellectual capital, which may be also used by other companies. fast and easy access to information about the terms and directions of social activities undertaken by us. We develop local markets, using services and products of local suppliers. With the taxes we pay, we make an important contribution to the budgets The directions of social activities of the Grupa This type of information can be found, of the local authorities. We also invest in infrastructure and public utility Azoty Group and the principles we follow among others, on our website: buildings, which serve the inhabitants of the regions we are connected in cooperation with social partners, clearly http://grupaazoty.com/en/rozwoj with. regulate specific guidelines, included in such documents as: STATEMENT OF LOCAL TAXES • "Strategy of Grupa Azoty for 2013-2020" OF THE KEY COMPANIES WITHIN THE GRUPA AZOTY • "Sustainable Development Strategy GROUP FOR 2015 Grupa Grupa Azoty Grupa Azoty Grupa Azoty of Azoty Tarnów for 2013-2020" Azoty S.A. KĘDZIERZYN PUŁAWY POLICE

• "Grupa Azoty Group's Donation Policy" Tax name Property tax PLN 17,847,367.03 PLN 21,948,669.00 PLN 35,618,524.00 PLN 30,357,658.00 • "Grupa Azoty Group's Scholarship Policy" Forest tax PLN 6.00 PLN 1,259.00 PLN 472.00 Vehicle tax PLN 890.00 PLN 6,443.00 PLN 26,210.00 PLN 2,123.00 We support activities of non-governmental organizations and social institutions, which Agricultural tax PLN 1,253.16 n/a n/a PLN 3 505,00 OUR STRATEGY 2020 conducting activities within the area of Total PLN 17,849,510.19 PLN 21,955,118.00 PLN 35,645,993.00 PLN 30,363,758.00 important social needs and issues. According to the principles of Grupa Azoty, we do not In the area of "dialogue and building relations", our goals include: grant financial donations to political parties, • supporting development of the local community SIGNIFICANT FINANCIAL politicians and political institutions. This is • adopting a dialogue formula with each key stakeholder group SUPPORT OBTAINED compliant with the provisions of the "Grupa FROM THE STATE IN 2015 Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty Group's Donation Policy", adopted in the • building effective communication concerning the area (IN PLN) Azoty S.A. KĘDZIERZYN PUŁAWY POLICE entire group. of sustainable development • building ethical culture of Grupa Azoty. Subsidies PLN 18,551.00 PLN 657,707.60 PLN 982,659.35 PLN 0 Exemptions related to activity in the special economic zone PLN 0 PLN 0 PLN 11,336,000.00 PLN 0 Other PLN 1,170.00 PLN 0 PLN 0 PLN 0

92 OUR RESPONSIBILITY OUR RESPONSIBILITY 93 Our principle 3.2. Companies belonging to Grupa Azoty are entities with particular economic importance for the region, being at the same time stakeholders who use to the greatest extent resources of natural environment in a given voivodeship. Therefore, the companies support first of all projects that relate to the region Our impact where they operate. on the local community Our principle The companies make decisions on the conclusion of the socio-sponsorship agreement, taking into account first of all projects and initiatives from the region in which they operate, and whose level and impact go 3.2.1. beyond a given region.

92 OUR RESPONSIBILITY OUR RESPONSIBILITY 93 ENVIRONMENTAL 14 993 438.53 * INITIATIVES 3.2.2. value of funds made in the form "Tree for a Bottle" Campaign How do we support of donations, sponsorship or investment in the local infrastructure (PLN) The idea of this project is to organize a contest for collecting the greatest youth education? number of empty PET bottles, which will be then recycled. In 2015, the campaign was dedicated to educational establishments from the Puławy * excluding the sponsorship in sports Poviat. In exchange for bottles, the institutions receive seedlings of trees We are distinguished by the scale of involvement in improving the quality DIALOGUE FORUM and shrubs, and the winners - prizes, diplomas and gifts. Subsequent this of education and the character of cooperation undertaken in this respect WITH THE LOCAL COMMUNITY editions of campaign enjoy increasingly greater prestige, media coverage with the best teaching institutions – schools and universities in the regions and popularity. It is proved not only by the records in collecting bottles of our business activities. and the number of planted trees, but, above all, by the increasing activity In November in 2015, we launched a new of children and teenagers in involvement in tangible actions aimed Our companies offer numerous internships and trainings to pupils and initiative in Grupa Azoty PUŁAWY – the Dialogue at protection of the natural environment. Forum with the local community. The aim students. We support financially and substantively activities of many technical and vocational schools. We cooperate, under appreciated by us of the project is to develop dialogue and social All the companies of Grupa Azoty participated in contests organized on cooperation in the region. Under this partnerships, with universities, in particular with faculties training future the initiative of of the Responsible Care Program: The contest specialists and experts in our industry. programme, in November in 2015, we organized "Złap zająca" ("Catch a Hare") - photo contest for employees, Contests in the seat of the company the first meeting related to the Car-Free Day, the World Day for Safety and Health with 50 representatives of the educational at Work, the Baltic Sea Days-organized by the internal mass media environment of Puławy and the Puławy Poviat. (bulletins, Intranet, radio stations) as knowledge contests for employees. The project has been implemented in Grupa Azoty PUŁAWY since 2005, Headmasters, teachers and representatives under the auspices of the Secretary's Office "Odpowiedzialność and EXAMPLES OF ACTIONS OF THE COMPANIES of local student councils, representatives of Troska" ("Responsibility and Concern) in cooperation with the Poviat OF GRUPA AZOTY FOR CHILDREN AND YOUTH EDUCATION associations, foundations and the Puławy Park Office of Puławy (previously with the Municipal Office of Puławy) of Science and Technology, familiarized during and the Municipal Services Department in Puławy. the meeting with the "Social and Sponsoring Policy" and the "Policy for cooperation with schools and universities for the development of intellectual capital" of Grupa Azoty PUŁAWY. TRAININGS VOCATIONAL We discussed how to support education of the AND INTERNSHIPS EDUCATION youth to ensure that it meets the labor market demand, as well as the future of the campaigns "Tree for a Bottle" and "Academy of Ecological More than 336 trainees and interns Cooperation with schools important Skills", organized by us in the previous years. in the reporting companies for the region like e.g. of Grupa Azoty in 2015. Technical Vocational School Complex in Puławy, SOCIO-SPONSORING PROGRAMMES SUPPORTING CULTURE School Complex no. 3 in Kędzierzyn – Koźle,

THE COMPANIES IV High School in Tarnów Mościce We believe that culture is a priceless social OF GRUPA AZOTY phenomenon, an integral system of the SUPPORT EFFECTIVE education process, determining and modelling EDUCATION FOR imagination, developing interests allowing THE FUTURE OF REGIONS for combining work with hobbies. It strengthens COOPERATION NON-FORMAL EDUCATION sensitivity and creativity of the next generations. WITH UNIVERSITIES AND Therefore, Grupa Azoty supports numerous DEVELOPMENT OF TALENTS events and cultural institutions. Establishment of a branch faculty of UMCS Educational campaigns related to safety principles such as In 2015, Grupa Azoty S.A. supported, among (Maria Curie-Skłodowska University) in Puławy. "We Care for Safety Together" carried out with the Police in Puławy. others, such events as: Grupa Azoty Launching of the major "technical chemistry" in Puławy, under International Jazz Contest, the Tarnów Film our auspices (80 students in the first edition of this study major). Cooperation with entities for children and youth education Prize. We also supported cultural institutions, Finals of the action "A tree for a bottle” like the Association SIEMACHA, the Catholic Youth Cooperation with other universities, especially universities such as the Krzysztof Penderecki European Education Center KANA, the Culture and Art Foundation of technology - trainings, internships, running classes Center for Music in Lusławice, the Mościce Art KROPKA. Center, the Girls Cathedral Choir Association (e.g. chemistry, chemical technology), making available data Puellae Orantes, the City Art Gallery in Tarnów. for diploma theses.

94 OUR RESPONSIBILITY OUR RESPONSIBILITY 95 ENVIRONMENTAL 14 993 438.53 * INITIATIVES 3.2.2. value of funds made in the form "Tree for a Bottle" Campaign How do we support of donations, sponsorship or investment in the local infrastructure (PLN) The idea of this project is to organize a contest for collecting the greatest youth education? number of empty PET bottles, which will be then recycled. In 2015, the campaign was dedicated to educational establishments from the Puławy * excluding the sponsorship in sports Poviat. In exchange for bottles, the institutions receive seedlings of trees We are distinguished by the scale of involvement in improving the quality DIALOGUE FORUM and shrubs, and the winners - prizes, diplomas and gifts. Subsequent this of education and the character of cooperation undertaken in this respect WITH THE LOCAL COMMUNITY editions of campaign enjoy increasingly greater prestige, media coverage with the best teaching institutions – schools and universities in the regions and popularity. It is proved not only by the records in collecting bottles of our business activities. and the number of planted trees, but, above all, by the increasing activity In November in 2015, we launched a new of children and teenagers in involvement in tangible actions aimed Our companies offer numerous internships and trainings to pupils and initiative in Grupa Azoty PUŁAWY – the Dialogue at protection of the natural environment. Forum with the local community. The aim students. We support financially and substantively activities of many technical and vocational schools. We cooperate, under appreciated by us of the project is to develop dialogue and social All the companies of Grupa Azoty participated in contests organized on cooperation in the region. Under this partnerships, with universities, in particular with faculties training future the initiative of of the Responsible Care Program: The contest specialists and experts in our industry. programme, in November in 2015, we organized "Złap zająca" ("Catch a Hare") - photo contest for employees, Contests in the seat of the company the first meeting related to the Car-Free Day, the World Day for Safety and Health with 50 representatives of the educational at Work, the Baltic Sea Days-organized by the internal mass media environment of Puławy and the Puławy Poviat. (bulletins, Intranet, radio stations) as knowledge contests for employees. The project has been implemented in Grupa Azoty PUŁAWY since 2005, Headmasters, teachers and representatives under the auspices of the Secretary's Office "Odpowiedzialność and EXAMPLES OF ACTIONS OF THE COMPANIES of local student councils, representatives of Troska" ("Responsibility and Concern) in cooperation with the Poviat OF GRUPA AZOTY FOR CHILDREN AND YOUTH EDUCATION associations, foundations and the Puławy Park Office of Puławy (previously with the Municipal Office of Puławy) of Science and Technology, familiarized during and the Municipal Services Department in Puławy. the meeting with the "Social and Sponsoring Policy" and the "Policy for cooperation with schools and universities for the development of intellectual capital" of Grupa Azoty PUŁAWY. TRAININGS VOCATIONAL We discussed how to support education of the AND INTERNSHIPS EDUCATION youth to ensure that it meets the labor market demand, as well as the future of the campaigns "Tree for a Bottle" and "Academy of Ecological More than 336 trainees and interns Cooperation with schools important Skills", organized by us in the previous years. in the reporting companies for the region like e.g. of Grupa Azoty in 2015. Technical Vocational School Complex in Puławy, SOCIO-SPONSORING PROGRAMMES SUPPORTING CULTURE School Complex no. 3 in Kędzierzyn – Koźle,

94 OUR RESPONSIBILITY OUR RESPONSIBILITY 95 TOGETHER WE ENSURE SAFETY Each of the participants receives educational brochures and gadgets. Grupa Azoty KĘDZIERZYN Students commuting on bicycles have been issued reflective vests. During the meetings, we promote safe behaviour on roads and in contact with fire. Grupa Azoty KĘDZIERZYN provided sponsorship • annual purchase of new equipment to the school laboratory Within the Grupa Azoty PUŁAWY, since 2012, for the chemical class in the vocational secondary we conduct a recurring "Together We Ensure • lessons of chemistry of the chemical class in the area of the company. The Poviat Headquarters of the State Fire Service in Puławy holds fire school of School Complex no. 3 in Kędzierzyn- Safety" initiative. As part thereof, we organize The project "A Young All-Chemist" for junior high school pupils fighting knowledge contests for children from primary schools. On 1 June Koźle. Under cooperation, we offer: educational meetings in educational institutions in Kędzierzyn-Koźle. The tasks of the pupils is to present and prepare 2015 at the Science and Technology Park in Puławy as part of the Children's • one-semester scholarship program for pupils in the entire poviat (primary schools, lower an interesting chemical experiment, which stimulates young people Day celebrations a meeting was held with fire fighters and policemen. attending the chemical class secondary schools and kindergartens) with to searching for interesting chemical solutions, increases their interest An exposition was held, of fire fighting equipment, crime fighting regards to safety. • substantive support in the form of open classes, in this field of knowledge and facilitates its absorption. techniques, WOPR (Volunteer Water Rescue Services) equipment substantive help of the company employees, chemistry lessons, vocational trainings Chemical contests and experiments are a great way of making youth interested in chemistry and inspire them to study this major. • support for the chemical contest (the contest COOPERATION "Chemical Head") for junior high school classes WITH VOCATIONAL SCHOOLS AND UNIVERSITIES Grupa Azoty S.A. Technical School Complex in Tarnów and Ignacy Mościcki Foundation Grupa Azoty PUŁAWY

Our obligations: Support for two vocational programs: We initiated establishment of a Branch Faculty The agreement on our cooperation covered, among others, organization of the Lublin Maria Curie-Skłodowska University and running engineering studies in the major "technical chemistry" in • Employment of up to 10 graduates every year analyst technician (4 classes together in Puławy. It was established in 2014, on the Puławy, implementing postgraduate studies for employees of our plants, approximately 90 students) and techniques • Scholarships for pupils with the best academic merits initiative of the Management Board of Grupa enabling student trainings and internships for MCSU students, as well as of chemical technology (2 classes together more • Prizes for winners of contests, competitions and professions Azoty PUŁAWY and the rector of MCSU (Maria diploma and doctoral theses related to the scope of activities of our than 50 students). • Organization of vocational trainings Curie-Skłodowska University) in Lublin. company. In the period of recent five years: • Organization of specialized classes conducted by specialists Plans of establishing the branch were supported • we have organized approximately 60 trainings We planned also research cooperation and commercialization of research from Grupa Azoty S.A. by local government authorities of the city, for pupils, results and functioning of the elite competence center (Nitrogen Elite • Organization of scientific and teaching trips poviat, the Social Patronage Council of the Center Puławy) with regard to dissemination of application of products • we have received approximately 50 graduates. Puławy Higher School; it was supported also • Organization of teachers' development regarding modern of Zakłady Azotowe PUŁAWY, and promotion of common projects. technologies by directors of other economic and industrial institutions from Puławy. • Support for purchases of teaching aids

Grupa Azoty POLICE Cracow University of Technology Grupa Azoty POLICE concluded an agreement On the contrary, pupils of the Ignacy Łukasiewicz School Complex in Police Our obligations: nd We conduct the program of scholarships for the 2 on establishing new educational majors with are educated to become technicians of chemical technology. • Organization of student trainings degree students of the Faculty of Chemical the West Pomeranian University of Technology • Organization of diploma trainings (theses written on the basis Engineering and Technology. Under the program, (WPUT) in Szczecin and the Ignacy Łukasiewicz We conduct dialogue with the local community, among others, by offering of and in consultation with our company) we found two scholarships of PLN 1000 monthly Vocational Secondary School Complex in Police. trainings for pupils and students. In 2015, the following projects were each.An additional advantage of the program is The opening of a new specialization at WPUT is executed: • Organization of scientific and teaching visits of students the obligation to employ graduates in our company. to our company related directly to the execution of the largest In the period of recent five years: investment in the history of the Polish heavy • Innovative Engineer – Chemistry for Economy and Environment • Organization of lectures for students by specialist staff • we have organized approximately 160 trainings chemistry – construction in Police of a system of the West Pomeranian Region of our company for students, for production of propylene by using the PDH • we have received approximately 40 graduates. method. • Internships "Szczecin University – Leader of the Future"

The outcome of the agreements between • Internships "Practical training of ICT competences at the Faculty scientific units with Grupa Azoty POLICE, of Economic Sciences and Management of the Szczecin University" State Higher Vocational School in Tarnów the largest employer in Zachodniopomorskie Our obligations: In the period of recent five years: Voivodeship, is the opening of two majors. • Internships "Engineer's Career" • Organization of student trainings The engineering of olefins production processes • we have organized approximately 140 trainings is a new specialization available for students • Government project of competence development "Project Management • Organization of diploma trainings (theses written in consultation with for students, of the University of Technology in Szczecin in Training" our company) • we have received approximately 50 graduates. the major chemical and process engineering, • Organization of workshops and laboratories in units of our company in connection with professional preparation • We are building the value of the Polish Economy (laboratories) of the investment PDH also in terms of • Organization of scientific and teaching visits of students to our preparation of the future staff. company • Organization of lectures for students by specialist staff of our company

96 OUR RESPONSIBILITY OUR RESPONSIBILITY 97 TOGETHER WE ENSURE SAFETY Each of the participants receives educational brochures and gadgets. Grupa Azoty KĘDZIERZYN Students commuting on bicycles have been issued reflective vests. During the meetings, we promote safe behaviour on roads and in contact with fire. Grupa Azoty KĘDZIERZYN provided sponsorship • annual purchase of new equipment to the school laboratory Within the Grupa Azoty PUŁAWY, since 2012, for the chemical class in the vocational secondary we conduct a recurring "Together We Ensure • lessons of chemistry of the chemical class in the area of the company. The Poviat Headquarters of the State Fire Service in Puławy holds fire school of School Complex no. 3 in Kędzierzyn- Safety" initiative. As part thereof, we organize The project "A Young All-Chemist" for junior high school pupils fighting knowledge contests for children from primary schools. On 1 June Koźle. Under cooperation, we offer: educational meetings in educational institutions in Kędzierzyn-Koźle. The tasks of the pupils is to present and prepare 2015 at the Science and Technology Park in Puławy as part of the Children's • one-semester scholarship program for pupils in the entire poviat (primary schools, lower an interesting chemical experiment, which stimulates young people Day celebrations a meeting was held with fire fighters and policemen. attending the chemical class secondary schools and kindergartens) with to searching for interesting chemical solutions, increases their interest An exposition was held, of fire fighting equipment, crime fighting regards to safety. • substantive support in the form of open classes, in this field of knowledge and facilitates its absorption. techniques, WOPR (Volunteer Water Rescue Services) equipment substantive help of the company employees, chemistry lessons, vocational trainings Chemical contests and experiments are a great way of making youth interested in chemistry and inspire them to study this major. • support for the chemical contest (the contest COOPERATION "Chemical Head") for junior high school classes WITH VOCATIONAL SCHOOLS AND UNIVERSITIES Grupa Azoty S.A. Technical School Complex in Tarnów and Ignacy Mościcki Foundation Grupa Azoty PUŁAWY

96 OUR RESPONSIBILITY OUR RESPONSIBILITY 97 Nowadays listening to young people’s expectations is a great challenge, we are better and better linking it to the labour market, but it is taking place also due to the commitment of Grupa Azoty ZAK S.A. Opportunity to implement vocational EXAMPLES OF OUR ACTIONS subjects in chemical plants, a scholarship program dedicated to chemical-oriented classes motivate young people to work Grupa Azoty KĘDZIERZYN Grupa Azoty POLICE Our company in Kędzierzyn supports student Grupa Azoty POLICE is the main partner of Pogoń Szczecin and the female on themselves even harder. Using their example, others can clubs and municipal sports events. The company volleyball players of Chemik Police.For another year in a row Grupa Azoty see that it is worth learning in poviat upper-secondary schools is a long-term Main Sponsor of the major league POLICE supported the local clubs and associations promoting active because we have not only an excellent teaching staff, but also volleyball team ZAKSA Kędzierzyn-Koźle, it lifestyle, among others, the Sports Club of the Disabled "Start" Szczecin, supports activities of the Folk Equestrian Club KP Chemik POLICE with the Youth Football Academy and the Student many innovative subjects. Benefits can be observed on both "Lewada", and it sponsors the para badminton Sports Club of the Disabled "Champion" POLICE, associating table tennis sides, chemical plants need new workers, and the aim of the player Bartłomiej Mróz, MKS Kluczbork and players. For young sport amateurs in Police, the company supports the school and the Kędzierzyn-Koźle Poviat is to prepare young Sports Association "Chemik ". Integration Student Swimming Club "Wodnik". We supported also the Match of the Stars organized by the Association "Siatkarze dla Hospicjum" people well to a profession. By the way, we show others that ("Volleyball Players for the Hospice"). by choosing our schools, students choose education at the highest level under the prestigious patronage of Grupa Azoty ZAK S.A.” The Sports Club " Azoty" Puławy would not exist, if more than 10 years ago the management board of Zakłady Azotowe "Puławy" had not looked generously at us and had not signed Aurelia Stępień the sponsorship contract with us. This year's contract is the Director of the Poviat Education Team in Kędzierzyn – Koźle. continuation of those activities. It ensures stability in the club, its development and the possibility of building a strong team, to the amusement of not only the sponsor, but also the community from Puławy. The companies of Grupa Azoty continue long-term tradition of supporting It is necessary to remember that as a result of support 3.2.3. What sports sports and physical activity: we invest in strengthening this field both at the local level and through national activities. We believe that sports of Grupa Azoty Puławy, not only can we play in the top flight activity are activity reinforces the best attitudes and valuable values which affect in Poland, but we can also represent the sponsor and our we engaged in? favorably social capital and condition of subsequent generations of Poles. country on European floors Jerzy Witaszek the President of KS "Azoty" Puławy

EXAMPLES OF OUR ACTIONS Grupa Azoty S.A. began cooperation with the Polish Ski Federation in 2012. Responsible, going beyond local Grupa AZOTY S.A. the football section KS ZKS Unia Tarnów, playing in the third league, engagement in the cooperation with PZN (Polish Ski Federation) based on support for sport training and sport Since 2012, we have cooperated with the Polish and MUKS 1811 Unia Tarnów (male basketball section) and SPR Tarnów (first- Ski Federation and ski jumpers: Jakub Wolny, league handball players). events, national and international, results in a non-measurable Piotr Żyła and Aleksander Zniszczoł and we have Grupa Azoty S.A. continues the tradition of supporting the speedway promotion of the Polish sport abroad. Thanks to cooperation supported the organization of such events as the section ŻSSA Unia Tarnów - a club performing in the speedway major with Azoty Group, I am looking confidently to the future Ski Jumping World Cup in Zakopane and Wisła. league. The company supports speedway youth from the schools of Janusz Among representatives of winter disciplines, Kołodziej, UKS Jaskółki and juniors from the section of the club in Tarnów, of Polish winter sports. we have been sponsoring the ski runner Sylwia and three-times individual national champion in speedway - Janusz Jaśkowiec. Kołodziej. In 2015, we supported also the manager of the Polish speedway Apoloniusz Tajner We have executed a program Grupa Azoty representation - Marek Cieślak. the President of the Polish Ski Federation START targeted at youth from both summer and winter disciplines. Under the program support Grupa Azoty PUŁAWY is provided for ski runners, handball players Under the long-term contracts, Grupa Azoty PUŁAWY supports local MKS Pałac Młodzieży Tarnów and the climbing sports clubs, among others, the handball players of "Azoty-Puławy" section of Edyta Ropek. We support financially and the athletes of "Wisła" Puławy.

98 OUR RESPONSIBILITY OUR RESPONSIBILITY 99 Nowadays listening to young people’s expectations is a great challenge, we are better and better linking it to the labour market, but it is taking place also due to the commitment of Grupa Azoty ZAK S.A. Opportunity to implement vocational EXAMPLES OF OUR ACTIONS subjects in chemical plants, a scholarship program dedicated to chemical-oriented classes motivate young people to work Grupa Azoty KĘDZIERZYN Grupa Azoty POLICE Our company in Kędzierzyn supports student Grupa Azoty POLICE is the main partner of Pogoń Szczecin and the female on themselves even harder. Using their example, others can clubs and municipal sports events. The company volleyball players of Chemik Police.For another year in a row Grupa Azoty see that it is worth learning in poviat upper-secondary schools is a long-term Main Sponsor of the major league POLICE supported the local clubs and associations promoting active because we have not only an excellent teaching staff, but also volleyball team ZAKSA Kędzierzyn-Koźle, it lifestyle, among others, the Sports Club of the Disabled "Start" Szczecin, supports activities of the Folk Equestrian Club KP Chemik POLICE with the Youth Football Academy and the Student many innovative subjects. Benefits can be observed on both "Lewada", and it sponsors the para badminton Sports Club of the Disabled "Champion" POLICE, associating table tennis sides, chemical plants need new workers, and the aim of the player Bartłomiej Mróz, MKS Kluczbork and players. For young sport amateurs in Police, the company supports the school and the Kędzierzyn-Koźle Poviat is to prepare young Sports Association "Chemik ". Integration Student Swimming Club "Wodnik". We supported also the Match of the Stars organized by the Association "Siatkarze dla Hospicjum" people well to a profession. By the way, we show others that ("Volleyball Players for the Hospice"). by choosing our schools, students choose education at the highest level under the prestigious patronage of Grupa Azoty ZAK S.A.” The Sports Club " Azoty" Puławy would not exist, if more than 10 years ago the management board of Zakłady Azotowe "Puławy" had not looked generously at us and had not signed Aurelia Stępień the sponsorship contract with us. This year's contract is the Director of the Poviat Education Team in Kędzierzyn – Koźle. continuation of those activities. It ensures stability in the club, its development and the possibility of building a strong team, to the amusement of not only the sponsor, but also the community from Puławy. The companies of Grupa Azoty continue long-term tradition of supporting It is necessary to remember that as a result of support 3.2.3. What sports sports and physical activity: we invest in strengthening this field both at the local level and through national activities. We believe that sports of Grupa Azoty Puławy, not only can we play in the top flight activity are activity reinforces the best attitudes and valuable values which affect in Poland, but we can also represent the sponsor and our we engaged in? favorably social capital and condition of subsequent generations of Poles. country on European floors Jerzy Witaszek the President of KS "Azoty" Puławy

98 OUR RESPONSIBILITY OUR RESPONSIBILITY 99 OUR ENVIRONMENTALLY-FRIENDLY 3.3. INVESTMENTS IN 2015 Our impact on Grupa Azoty S.A. Construction of the flue gas desulfurization system and the flue gas denitrification system

the natural environment The implementation of both projects is related to require- EC-2 and its adjustment to new NOx emission standards. ments to adjust industrial combustion plants to the emission The implementation of the projects will result in reduced standards as specified in the regulation of the Minister volume of pollutants introduced to the environment and will of Environment of 4 November 2014 on the standards for improve quality of air by reducing the volume of emission emissions for certain systems, sources of fuel combustion of pollutants from the fuel combustion system. Both projects 3.3.1 and devices of waste combustion or co-combustion. of flue gas desulfurization and denitrification obtained What is our impact The projects include modernization of the existing subsidies by the NFM 2009-2014. Completion of both on the natural environment? infrastructure of the combined heat and power plant investment projects is planned for 2016.

Grupa Azoty KĘDZIERZYN Our activities are strictly regulated within the or for water consumption, permit for waste generation, permits scope of environmental protection and depend for waste collection and treatment, permits for waste recovery, permits New combined heat and power plant – stage I Modernization of the urea system upon a number of requirements (among others, for collective water supply, collective discharge of waste water as well as the Environmental Protection Law, the Act permits for emission of greenhouse gases. The project a new combined heat and power plant – stage I is The purpose of the project of modernization of the urea on Waste, Water Law, as well as other intended to restore production capacities of heat and power system is to limit the environmental impact of the system along environmental protection regulations) All our companies have in place the Environmental Management System of the combined heat and power plant along with adjustment with obtaining additional production capacity and improved and permits issued by governors and marshals consistent with the standard ISO 14001:2004 that supports actions to quantitative changes in demand for heat and power as well process efficiency.The completion of both investments is of voivodeships where our plants are located. associated with environmental protection and prevention of as on the basis of solutions adjusted to growing environmental planned in 2016. These are, among others, integrated permits contamination. It obligates us also to assess compliance of our actions requirements. for operation of system, permits for discharge with legal regulations and other standards and to improve continuously of gases and dust into the air, aquatic legal the effects of environmental activity. permits for discharging waste water to water In 2015, none company of Grupa Azoty was fined for non-compliance with legal regulations and regulations concerning environmental protection. Grupa Azoty POLICE Flue gas treatment unit along with modernization Modernization of the dyke around the landfill of the combined heat and power plant ECII of phosphogypsum

The issues of environmental protection in Grupa Azoty ZAK The purpose of the project of flue gas treatment unit along The purpose of modernization of the dyke around the landfill of phosphogypsum is an increase in its tightness and better S.A. are governed by the Environmental Management System with modernization of the combined heat and power plant ECII is to adjust operation of the combined heat and power plant's protection of the landfill of phosphogypsum against external ISO 14001, program Care over the Product and the program systems to the requirements of Directive 2010/75/EU waters. The implementation of the investment will contribute Responsibility and Concern. Environmental issues are concerning NOx, SOx and dust emissions. to improvement in safety of the area, as well as consistency and integrity of the surrounding area.The completion of both managed by the environmental protection service staff projects is planned in 2016 that controls production activities, care for operation of the Company in accordance with applicable regulations, monitor condition of the natural environment and stimulate Grupa Azoty PUŁAWY actions aiming at its improvement. Other investments implemented are aimed at reduction in the environmental System for reduction of nitrogen oxides on two boilers Replacement of cooling water pumps with new ones of the plant's combined heat and power plant with an inverter along with the introduction to DCS impact and technological progress, such as construction of a new combined heat and power plant, modernization The result of the project implementation is limited emissions The obtained effect is improved energy efficiency, limited of the urea system, modernization of the Central Mechanical of nitrogen oxides from boilers K4 and K5 to the level specified consumption of power supply. The implementation of projects in Directive 2010/75/EU. was completed in 2015. and Biological Waste Water Treatment Plant. Modernization of the reversed osmosis system Grażyna Waloszyńska The modernization of the reversed osmosis system allowed Senior Environmental Protection Specialist limitation of discharge of waste water containing ammonia in Grupa Azoty Kedzierzyn nitrate and ammonia to the industrial sewer system.

100 OUR RESPONSIBILITY OUR RESPONSIBILITY 101 OUR ENVIRONMENTALLY-FRIENDLY 3.3. INVESTMENTS IN 2015 Our impact on Grupa Azoty S.A. Construction of the flue gas desulfurization system and the flue gas denitrification system the natural environment The implementation of both projects is related to require- EC-2 and its adjustment to new NOx emission standards. ments to adjust industrial combustion plants to the emission The implementation of the projects will result in reduced standards as specified in the regulation of the Minister volume of pollutants introduced to the environment and will of Environment of 4 November 2014 on the standards for improve quality of air by reducing the volume of emission emissions for certain systems, sources of fuel combustion of pollutants from the fuel combustion system. Both projects 3.3.1 and devices of waste combustion or co-combustion. of flue gas desulfurization and denitrification obtained What is our impact The projects include modernization of the existing subsidies by the NFM 2009-2014. Completion of both on the natural environment? infrastructure of the combined heat and power plant investment projects is planned for 2016.

100 OUR RESPONSIBILITY OUR RESPONSIBILITY 101 POWER REDUCTION OF ENERGY The main source of energy for our plants are We introduce modern, energy-saving devices and technologies CONSUMPTION coal fuels, therefore we care for increase in to our plants. energy efficiency. Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE

ENERGY FROM PRIMARY SOURCES Total energy savings (according to energy resources) in GJ obtained as a result of limited consumption of energy and increased Fuels used to generate electricity energy efficiency PLN 500 000 PLN 3 678 000 PLN 151 500 PLN 2 014 000 inside the organization 2014 2015 Grupa Azoty S.A. Power coal 8 268 936 7 640 144 total energy savings obtained as a result of limited consumption Natural gas 31 128 5026 PLN 6 343 500 of energy and increased energy efficiency MEK – fuel 167 306 171 931 Technological gas 63 260 63 850 Actions that contributed to limiting consumption of energy, include, among others Mazout 27 109 27 354 Grupa Azoty KĘDZIERZYN Fine coal 484 726 445 832 Grupa Azoty S.A. Grupa Azoty PUŁAWY Fuel oil 377 429 • Modernization of the Mechanical Draft Cooling Tower of • Replacement of transformers 31.5MVA with 40MVA, along with Grupa Azoty PUŁAWY "Pumping Station Z” modernization of transformer bays and replacement of bus bars - the task consisted in replacement of four transformers with Hard steam coal 4 117 121 4 060 302 new ones, energy-saving in the electrical power grid, the effect Methane-rich natural gas 5682 4800 of which is savings of 2361.98 GJ/year of final energy MEAK 127 324 120 800 Grupa Azoty POLICE Fine coal 7 336 878 7 967 807 Grupa Azoty KĘDZIERZYN Grupa Azoty POLICE Fuel oil 15 544 13 579 Heat in steam* 1 740 767 2 393 353 • Minimization of losses through improved configuration • Modernization of the condensate management system of the steam network 0.6 MPa, improved insulation • Application of power inverter in production and metering of recipients, the effect of which is savings • Thermal modernization of facilities and pipelines of heat in steam (132000 GJ/year) • Replacement of motors and lighting with more efficient • Replacement of the motor of pump P-207, the effect in terms of energy TOTAL CONSUMPTION of which is electricity saving • Improved combustion process in boilers OP-230 OF ENERGY (in GJ) • Replacement of transformer MV 30/6 B.212 Tr3 and, as a result, reduction of losses Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE ELECTRICITY CONSUMPTION 2014 2015 2014 2015 2014 2015 2014 2015 INTENSITY INDICATOR (%) Electricity, heating, cooling and steam purchased 2014 2015 for consumer purposes 205 600 296 330 1 226 440 1 131 844 3 542 141 3 729 725 1 764 724 1 428 865 Electricity, heating, cooling and steam generated by Grupa Azoty S.A. 58.00 63.00 the organization 4 285 350 3 976 770 6 612 240 6 644 073 17 400 172 17 231 537 11 127 555 10 320 173 Grupa Azoty KĘDZIERZYN 36.84 33.26 Electricity, heating, cooling Grupa Azoty PUŁAWY 43.75 42.29 and steam sold by Grupa Azoty POLICE 33.87 29.89 the organization 328 600 256 630 458 706 494 970 1 208 121 1 232 855 445 307 501 512 Total consumption of energy inside the organization 4 162 350 4 016 470 7 379 974 7 280 948 19 734 192 19 728 407 12 446 972 11 247 527 The electricity consumption intensity indicator for 2015 was calculated pursuant to the Act on RSE of 20 February 2015

102 OUR RESPONSIBILITY OUR RESPONSIBILITY 103 POWER REDUCTION OF ENERGY The main source of energy for our plants are We introduce modern, energy-saving devices and technologies CONSUMPTION coal fuels, therefore we care for increase in to our plants. energy efficiency. Grupa Grupa Azoty Grupa Azoty Grupa Azoty Azoty S.A. KĘDZIERZYN PUŁAWY POLICE

102 OUR RESPONSIBILITY OUR RESPONSIBILITY 103 WATER WASTE WATER MANAGEMENT

In our Group water is used for technological, for fire protection purposes. All our plants are obliged to rational water As a result of conducted by us production processes waste waters are generated. They can be divided into: technological, cooling, social-living purposes and as a raw management, prevent its losses, minimize waste water quantities, and take household, after-cooling and rainfall waste waters. material for production of special waters and actions aimed to counteract breakdowns.

Grupa Azoty S.A.

TOTAL WATER CONSUMPTION Waste waters are discharged through underground industrial tank and the "Sutro" overflow tank into surface waters BY SOURCE (IN M3) sewer system and pipelines placed on the trestle bridges to of the Dunajec River. the waste water treatment plant. Depending on their specific Grupa Grupa Azoty Grupa Azoty Grupa Azoty nature, they are discharged for treatment to the Central Waste Grupa Azoty S.A. is prepared appropriately in case Azoty S.A. KĘDZIERZYN PUŁAWY POLICE Water Treatment Plant (COŚ) and the Biological Waste Water of breakdown. In order to prevent penetration of pollutants, 2014 2015 2014 2015 2014 2015 2014 2015 Treatment Plant (BOŚ). The Central Waste Water Treatment there is a possibility of total closing by an outflow damper Plant receives industrial waste waters along with household from the rainfall water collector, and pumping the whole Surface waters* 12 549 000 12 336 000 3 859 600 4 059 300 94 239 843 94 582 199 168 025 287 163 319 721 waste waters which are treated using mechanical and chemical volume of waste water into the Central Waste Water Treatment Ground waters* 688 000 507 000 989 400 1 870 900 3 600 425 4 133 143 – 2175 processes. On the other hand, the Biological Waste Water Plant. There is also a possibility of transferring the whole Supplies of municipal water – 0 – 0 – – 291 977 273 723 Treatment Plant receives industrial waste water containing volume of waste waters generated by Grupa Azoty to the biologically degradable substances. This type of waste water Waste Water Treatment Plant of Tarnowskie Wodociągi. Other – 0 1 921 700 1 671 600 – – – - is additionally discharged for treatment in the waste water Total 13 237 000 12 843 000 6 770 700 7 601 800** 97 840 268 98 715 342 168 317 264 163 595 619 treatment plant of Tarnowskie Wodociągi. Rainfall waters Parameters of waste waters are monitored continuously at and after-cooling waters from the area of Grupa Azoty S.A. are particular points of the sewer system by means of automatic discharged through a separate collector through a detention analyzers. Laboratory analyses of pollutants in waste waters are * Volume of water consumption from intakes depends on aquatic-legal permits for consumption of surface and ground waters (integrated permits). conducted on an on-going basis with specified frequency. ** Higher volume of surface water consumption was concerned with an external entity for which water is consumed from the intake of Grupa Azoty KĘDZIERZYN. Growth in consumption of underground waters in relation to 2014 was a result of draught in the summer period 2015. Lower supply of waters from a surface source caused higher consumption of underground waters. Grupa Azoty KĘDZIERZYN WATER INTAKES Grupa Azoty KĘDZIERZYN has in place a system of waste water to produce industrial water. These waters, generally together treatment, which covers local initial treatment, the Central with part of treated waste waters, are discharged to the Grupa Azoty S.A. Grupa Azoty PUŁAWY Mechanical Waste Water Treatment Plant, the Central industrial water treatment station. An advantage of the waste Mechanical and Biological Waste Water Treatment Plant, and water management is a multistage, systematically modernized • •surface intake on the right bank of the Dunajec River • surface intake from the Vistula River (through four pipelines R1–R4) the Treatment Plant "Piskorzowiec". Treated waste waters are waste water treatment and discharge system, thanks to which • underground intake from Quaternary formations • surface intake from the Kurówka River discharged to the Odra River. For the purpose of limiting the company is self-sufficient with regard to waste water (from the first water-bearing level) • underground intake from Quaternary formations (from abyssal consumption of waters, the company has in place a system treatment.We conduct also constant monitoring of discharged wells) of returning waters from the stormwater drainage system waste waters, both in terms of their quantity and quality.

Grupa Azoty KĘDZIERZYN Grupa Azoty POLICE Grupa Azoty PUŁAWY

• surface intake from the Odra River • ·surface intake from the Odra River In Grupa Azoty PUŁAWY, waste waters, depending on the type, treatment) and local initial treatment plants. All streams of • surface intake from the Łącza stream • ·surface intake from the Gunica River are treated in the Central Industrial Waste Water Treatment waste waters generated by the company reach then the last • Tertiary and Quaternary underground waters Plant (mechanical and chemical treatment), the Biological element of the waste water treatment system, i.e. pond of 3rd (from abyssal wells) Industrial Waste Water Treatment Plant (biological treatment), degree biological treatment. Treated waste waters are • purchase of waters from water drainage of Sand Mine the Fecal Sanitary Waste Water Treatment (biological discharged to the receiver – the Vistula River. Kotlarnia S.A.

Reduced water consumption is determined largely by its re-use in the production process after treatment.

Grupa Azoty POLICE Percentage Volume of re-used water of re-used water (m3) Waste water treatment plant operates in Police. Apart from treatment technology used in the company in Police is listed industrial waste water, also household waste waters, leachate in the industry BAT document as one of the best available Grupa Azoty S.A. 23.70% 2 457 166 waters from landfills and municipal waste water from the City techniques. It consists in neutralization with limestone, and Commune of Police are treated there (subjected to initial aeration, coagulation, sedimentation,centrifugation and Grupa Azoty KĘDZIERZYN 38.70% 2 944 500 treatment in the initial treatment station and directed to the additional treatment in natural conditions of separated waste Grupa Azoty PUŁAWY 14.42% 14 230 868 plant's waste water treatment plant). The waste water water in storage and equalization tanks. Grupa Azoty POLICE 11.24% 18 392 515

104 OUR RESPONSIBILITY OUR RESPONSIBILITY 105 WATER WASTE WATER MANAGEMENT

Grupa Azoty S.A.

Grupa Azoty KĘDZIERZYN Grupa Azoty POLICE Grupa Azoty PUŁAWY

Reduced water consumption is determined largely by its re-use in the production process after treatment.

104 OUR RESPONSIBILITY OUR RESPONSIBILITY 105 TOTAL VOLUME OF WASTE WATER BY TREATMENT METHOD (IN M3) Grupa Azoty S.A.

Method of waste water treatment Volume of treated waste waters (in m3) In 2013, within the Double Pressure Nitric Acid Installation, The achieved level of emission restrictions of nitrous oxide we have exchanged the catalyser for high-temperature in relation to 2014, was 77 Mg. Grupa Azoty S.A. 2014 2015 degradation of nitrous oxide in the ammonia oxidation Central Waste Water Treatment Plant – mechanical and chemical treatment 3 544 000 3 438 000 reactors. Due to high and stable activity ensuring a degree of The level of prevented/reduced emissions within projects Biological Waste Water Treatment Plant – biological treatment 1 339 000 1 286 000 reduction of N2O in exhaust gases from the installation to 95%, of Joint Implementations was 1 815 050 t CO2 eq. Grupa Azoty KĘDZIERZYN 2014 2015 emissions of this greenhouse gas have been greatly reduced. Waste water treatment system 2 147 870 2 115 830 Waste Water Treatment Plant "Piskorzowiec" 6 782 409 8 254 221 Grupa Azoty PUŁAWY 2014 2015 Grupa Azoty KĘDZIERZYN

Central industrial waste water treatment plant – mechanical and chemical treatment 1 939 531 2 176 471 The decrease of N2O emissions in 2015 is a result of actions nitric gases outside the catalytic deposit). Emissive power from Biological industrial waste water treatment plant - biological treatment 1 438 220 1 240 214 undertaken at the production installation of nitric acid TK IV in this installation has been maintained at a low level for an entire Fecal sanitary waste water treatment plant – biological treatment 154 870 131 230 August 2014, i.e. replacing the boiler-oxidizer with a new one year. (structural replacement of the catalytic basket grate, improving Dawidagi – mechanical treatment 254 040 254 040 the basket sealing, which eliminated any possible fracturing of The level of achieved emissions reduction: 17 830 t CO2 eq. Biological treatment – 3rd degree treatment 90 899 718 91 079 649 Grupa Azoty POLICE 2014 2015 Mechanical and chemical treatment 37 045 743 38 965 266 Grupa Azoty POLICE

In 2015 indirect activities have been conducted, limiting CO2 reducing the ratio of emissions in relation to 2014, by emissions, due to the started modernization of the ammonia 0.0239 Mg of CO2/Mg of NH3 production. TOTAL VOLUME OF WASTE WATER BY THE TARGET DESTINATION production installation intended to reduce the power consumption of the production process by 2.66 GJ/1Mg of Maintaining the continuity of the ammonia production Place of discharge of waste waters ammonia, as well as reducing the consumption of thermal and installation and commenced therein modernization works, (into ground waters, surface waters, sewer system, etc.) Volume (in m3) electrical energy at the fertilizer production installation. Works reduced (for production level in 2015) annual CO2 emissions carried out previously with simultaneously retaining by 12.4 thousand Mg. The result of the increased power Grupa Azoty S.A. 2014 2015 production continuity at the level from 2014, resulted in effectiveness is the reduction of CO2 emissions by 85 Mg. Central Sewage Treatment Plant 3 544 000 3 438 000 Biological Waste Water Treatment Plant 1 339 000 1 286 000 Ditch EF+A0 808 000 546 000 SIZE OF CO2 EQUIVALENT (in tons) Grupa Azoty KĘDZIERZYN 2014 2015 Grupa Grupa Azoty Grupa Azoty Grupa Azoty Oder River 6 782 409 8 254 221 Azoty S.A. KĘDZIERZYN PUŁAWY POLICE Grupa Azoty PUŁAWY 2014 2015 Name of greenhouse gas 2014 2015 2014 2015 2014 2015 2014 2015 Vistula river 90 899 718 91 079 649 Carbon dioxide 1 214 236 1 140 005 1 099 672 1 067 486 3 414 213 3 417 841 1 699 227 1 773 065 Grupa Azoty POLICE 2014 2015 Nitrogen suboxide 88 248 95 529 123 591 107 327 232 747 294 307 nd nd Oder River – internal maritime waters 37 045 743 38 965 266

EMISSIONS EFFECTIVENESS RELATED TO EMISSION OF GREENHOUSE GASES IN (%)

In 2015, we completed works on the of planned shortages of allowances on the forward market for subsequent Grupa Grupa Azoty Grupa Azoty Grupa Azoty introduction of a common CO2 Emission 3 years and purchase of shortages for the current year in current and Azoty S.A. KĘDZIERZYN PUŁAWY POLICE Allowances management model. Since then, forward transactions. all our companies have been obliged to 2014 2015 2014 2015 2014 2015 2014 2015 implement the policy and procedures In connection with the implementation in January 2014 of the Industrial Efficiency ratio connected systematizing the issue of managing CO2 Emissions Directive (IED), it is required to adjust production systems to with CO2 emission (t CO2/t NH3) 1.67** 1.69 1.58 1.62 1.68 1.67 1.87 1.85 Emission Allowances. The above mentioned new requirements. The companies of Grupa Azoty adjust their combined Efficiency ratio connected documents stipulate creation of three-year heat and power plants to strict emission standards for NOX, SO2 and dust. with N2O emission purchasing plans and conducting on their basis (kg N2O /t HNO3)*** 1.03 1.06 0.85 0.73 0.88 1.09 n/a n/a purchases of missing CO2 emission allowances. Change in legal requirements concerning greenhouse gas emissions forces adaptation and sustaining related costs. Since the volume of emissions * Efficiency ratio connected with CO2 emissions is the relation of CO2 emission levels (in tons) to the value of ammonia production (in tons). The main assumption of the adopted depends on the power consumption of production, in all our companies ** The manner of calculating efficiency connected with CO2 emission in Grupa Azoty S.A. for 2014 was changed, so that the manner of calculating is the same for all purchasing strategy is percentage purchase we aim at its reduction. companies, and the results are comparable. *** Efficiency ratio connected with N2O emissions is the relation of the N2O emissions volume (in kg) to nitric acid production levels (in tons).

106 OUR RESPONSIBILITY OUR RESPONSIBILITY 107 TOTAL VOLUME OF WASTE WATER BY TREATMENT METHOD (IN M3) Grupa Azoty S.A.

EMISSIONS EFFECTIVENESS RELATED TO EMISSION OF GREENHOUSE GASES IN (%)

106 OUR RESPONSIBILITY OUR RESPONSIBILITY 107 Comparison of the N2O emissions volume to the ETS benchmark (ca. 1 kg N2O/tHNO3) and BAT recommendations, respectively for the type of installation:

Grupa Azoty S.A. Grupa Azoty KĘDZIERZYN Grupa Azoty PUŁAWY Grupa Azoty PUŁAWY 2014 2015 Change Ammonia (NH3) 1117 1154 3% 2 In 2014, emission size was The nitric acid production The N O emissions ratio in nitric acid production in Sulfur dioxide (SO2) 4202 1656 -61% 296 134 kg, and the efficiency installations used in the 2015 was 1.09 kg N2O/t HNO3, and in 2014 – 0.88 kg ratio, 1.03 at the benchmark Grupa Azoty KĘDZIERZYN, of N2O/t HNO3. The deterioration of the ratio is Melamine dust 15 14 -7% of 1. The level of emissions are modern facilities with a result of a slightly worse operation of the catalytic Urea dust 30 32 7% in 2015 was 320 567 and N2O emissions below the deposit in ammonia oxidation reactors in the nitric the efficiency ratio, 1.06 benchmark, meeting BAT acid installation. The ratios achieved in 2014 and 2015 Ammonium nitrate dust 407 396 -3% at the benchmark of 1. requirements. however, are significantly lower than the Ammonium sulfate dust* 6.2 311 4916% recommendations of the Best Available Technologies Dust from fuel combustion 157 108 -31% (BAT) for the existing medium-pressure installations (1.85 kg N2O/tHNO3) and in the vicinity of the Nitrogen oxides (NO) 3213 2837 -12% benchmark used for calculations of free-of-charge emission rights allocations under the ETS system * Growth in emission of ammonium sulfate dust is related to the establishment of a new emission source – flue gas desulfurization system. (ca. 1 kg N2O/tHNO3).

EMISSION OF NOx, SOx COMPOUNDS AND OTHER SIGNIFICANT COMPOUNDS EMITTED TO THE AIR BY TYPE OF COMPOUND AND WEIGHT Grupa Azoty POLICE 2014 2015 Change Ammonia (NH3) 1077.11 940.41 -13% Name of compound emitted to the air Volume of emission (in Mg) Benzo-alpha-pyrene (C2OH12) 0 0 0% Sulfur dioxide (SO2) 2906.81 3491.64 20% Grupa Azoty S.A. 2014 2015 Change Sulfuric acid (H2SO4) 45,60 23.63 -48% Ammonia (NH3) 202.50 112.40 -44% NO2 1204.15 1187.38 -1% Sulfur dioxide (SO2) 4240.60 3727.10 -12% Total dust 725.73 533.51 -26% Carbon dioxide (CO2) 1 248 761.40 1 174 177.70 -6% Carbon monoxide (CO) 304.87 113.85 -63% Sulfuric acid (H2SO4) 82.40 46.70 -43% Aliphatic hydrocarbons 0.03 0.02 -28% Methane (CH4) 8.10 16.60 105% Fluorine compounds 3.,96 5.91 49% Dusts total 387.10 333.60 -14% Carbon monoxide (CO) 239.10 179 -25% Nitrogen oxides (NOx) 7555.40 6822.90 -10% MANAGEMENT OF EMISSIONS Name of compound emitted to the air Volume of emission (in Mg) Grupa Azoty S.A. Grupa Azoty KĘDZIERZYN 2014 2015 Change Ammonia (NH3) 477 547 15% In Grupa Azoty S.A. we have implemented many solutions Measurements of emissions as well as measurements which have a positive impact on the environmental protection of concentrations of pollutants discharged into the air Sulfur dioxide (SO2) 1800 1666 -7% in the area of emission of pollutants to the atmosphere. Thanks are conducted on emitters discharging significant loads Organic acids 5 0 -100% to the applied air protection devices, it is possible to reduce of pollutants. Emission measurements are conducted on Volatile organic compounds (VOC) 9 6 -33% gas and dust discharged into the air: an on-going basis (combined heat and power plant, two- Methane (CH4) 6 3 -50% pressure nitric acid system) and periodically on selected • reduction in dust emission is possible as a result of the emitters of technological systems. Measurements of emissions Nitrogen suboxide (N2O) 415 360 -13% application of water washers, cyclones, multicyclones and concentrations of substances for particular emitters are Dusts total 317 252 -21% and electrofilters performed according to legal and administrative requirements. Suspended dust 230 173 -25% Carbon monoxide (CO) 1595 262 -84% • reduction in pollutant emissions in gases is possible Taking care of clean air, we monitor systematically air in five as a result of absorbers and thermal reducers. measurement points within Tarnów. Location of particular Nitrogen oxides (NOx) 1079 1019 -6% measurement points is intended to control a wide area that may Persistent organic be under the impact of dusts and gases emitted from the area pollutants (POP) 0 0 0% of the plant.

108 OUR RESPONSIBILITY OUR RESPONSIBILITY 109 Comparison of the N2O emissions volume to the ETS benchmark (ca. 1 kg N2O/tHNO3) and BAT recommendations, respectively for the type of installation:

108 OUR RESPONSIBILITY OUR RESPONSIBILITY 109 Grupa Azoty KĘDZIERZYN

Discharge of gases and dusts into the atmosphere by the Monitoring of loads of pollutants discharged into the air takes production systems of Grupa Azoty KĘDZIERZYN is place through continuous measurements of emissions NOISE implemented in accordance with the law on the basis of held (combined heat and power plant, nitric acid production decisions and integrated permits for production systems, fuel system), periodical measurements of emissions (important combustion system (combined heat and power plant), emitters of production systems) and balances of loads. industrial waste water treatment system and notifications for In our Group, devices with proper acoustic parameters are chosen already systems for which they were required (Water Treatment Operation of the systems is conducted together with at the stage of design. Selection of devices with proper parameters of Station, laboratories on the basis of previous regulations). operation of protective devices that provide maximum noise emission or methods of its restriction refers both to noise at the efficiency of removal of produced pollutants. working post and noise emitted to the environment. The sources of emissions in the company are: production systems, fuel combustion system (combined heat and power In connection with participation in the allowances trading The basic noise sources in our Group include, among others, sources plant), fume hoods in laboratories, post-repair waste landfill scheme of combined heat and power plants and chemical related to operation of the system (compressors, and superchargers, and industrial waste water treatment system. systems, annual reports of volumes of greenhouse gas stirrers of reactors and distillers, drives of granulators), sources related to emissions for 2014 were verified positively. operation of auxiliary units (such as transmission pipelines, pumping systems, fans, cooling towers, snail and belt transporters), sources related to operation of machines and equipment during processes of start-up and Grupa Azoty PUŁAWY stop of the system.

Grupa Azoty PUŁAWY continuously monitors emitted Grupa Azoty PUŁAWY performs a number of environmentally Our companies use the following manners of restricting acoustic pollutants discharged into the air (combined heat and power friendly projects aimed at reduction in emissions to the inconveniences: plant, nitric acid system) and periodically (other systems). environment. In 2015, the implementation of the 2nd stage Measurements of emissions of substances for particular of construction of NOX emission reduction systems on the 4th • sound absorbing cabins, emitters are performed according to legal requirements. and 5. boiler in the plant's combined heat and power plant was • placement of devices in buildings or covers, completed. The obtained effect is limited NOx emission from • noise suppressors on exhausts to the atmosphere. The company monitors also air pollution condition. It takes K4 and K5 to the level of 200 mg/m3. place at 8 measurement points situated around the plant In 2015, the conducted measurements of noise emission around the includes measurement of sulfur dioxide, nitric oxides, In 2015, an analysis of data from continuous monitoring of companies from Grupa Azoty did not show any exceeded acceptable and ammonia. Additionally, at 11 points measurements are emissions of pollutants from the plant's combined heat and standards. Measurement of noise in Grupa Azoty PUŁAWY are performed conducted in rainfall waters with regard to ammonia nitrogen, power plant in Puławy indicated incidentally exceeded values in accordance with the provisions of the integrated permit once every two nitrate, nitrite and sulfates and dust. of emission standards for sulfur dioxide. Exceeded values were years. The measurements made in 2014 and in 2016 did not show any a result of operations of switching the basic emitter to the exceeded values of the acceptable standards. reserve emitter in the flue gas desulfurization system.

Grupa Azoty POLICE

Grupa Azoty POLICE continuously monitors pollutants • modernization of decomposition gas treatment systems discharged into the air (combined heat and power plant EC II in the system of titanium white and titanium white production system) and periodically (other WASTE systems). Measurements of emissions and concentrations of • expansion of the desulfurization system of post-calcination substances for particular emitters are performed according gases in the system of titanium white. to legal and administrative requirements. The company monitors also concentrations of air quality. It In our Group the production processes are planned to minimize the The company implements many solutions which have takes place at three measurement points around the plant. quantity of waste. For this purpose, we modernize old systems and we a positive impact on the environmental protection in this Measurements are performed for three substances (SO2, introduce low-waste technologies compliant with the BAT assumptions. area. These are, among others, investments adjusting F compounds, NH3) in the continuous system as 24-hour production systems to the requirements of the Industrial concentrations. Not only do these technologies minimize the quantity of waste, they also Emissions Directive (IED) (integrated prevention of pollutants have a substantial impact on the limitation of used resources. In this way and control): The conducted monitoring enables obtaining information we are trying to improve waste collection on an on-going basis and we about the current condition of air pollution, which is the basis plan their further use in the recovery and recycling processes. • construction of the flue gas desulfurization for actions aimed to restrict emissions of dusts and gases into and denitrification system in the Combined Heat the air. and Power Plant EC II,

110 OUR RESPONSIBILITY Azoty Group Jsc mechanical granulation plant, OUR RESPONSIBILITY 111 Dariusz Chramęga – operator-coordinator Grupa Azoty KĘDZIERZYN

Grupa Azoty POLICE

110 OUR RESPONSIBILITY Azoty Group Jsc mechanical granulation plant, OUR RESPONSIBILITY 111 Dariusz Chramęga – operator-coordinator CTOTAL WEIGHT OF WASTE BY TYPE OF WASTE WASTE PACKAGING RECOVERY AND WASTE HANDLING METHOD AND RECYCLING INDICATOR IN 2015

Grupa Grupa Azoty Grupa Azoty Grupa Azoty 2014 2015 Azoty S.A. KĘDZIERZYN PUŁAWY POLICE Grupa Azoty S.A. Quantity of waste (in Mg) 2014 2015 2014 2015 2014 2015 2014 2015 Plastic packaging 23.50% 23.50% Type of waste Steel and steel sheet packaging 51% 51% Hazardous waste 78,309 61,476 7415 7934 517 436,906 9687,40 11 966,9 Paper and cardboard packaging 61% 61% Waste other than Wood packaging 16% 16% hazardous 94 721,72 82 436,12 121 214 102 210 209 925 99 933,97 3 249 921,79 3 671 142 Recycling for total packaging 56% 56% Total 94 800,03 82 497,6 128 629 110 144 210 442 100 370,9 3 259 609,19 3 683 109 Recovery for total packaging 61% 61% Multi-material packaging – recovery 14% 16% Recycling for many-material packaging 10% 20% WASTE HANDLING METHOD (E.G. RECYCLING, STORAGE, TRANSFER Packaging of hazardous agents – recovery TO EXTERNAL COMPANIES, ETC.) (in MG) (recycling is not required) 0.05% 10% Grupa Azoty KĘDZIERZYN Plastic packaging 23.50% 23.50% Quantity of waste (in Mg) 2014 2015 Steel packaging 51% 51% Grupa Azoty S.A. Wood packaging 16% 16% Storage 2754.46 2231.86 Recycling for total packaging 56% 56% Recovery on one's own 89.70 98.90 Recovery for total packaging 61% 61% Transfer to external companies 92 045.89 80 166.84 Grupa Azoty PUŁAWY Total 94 890.05 82 497.60 Plastic packaging 24% (including 0,5% recycling using own system) 23.50% Grupa Azoty KĘDZIERZYN Wood packaging 16% 16% Transfer to external waste recipients 168 593.00 55 686.00 Paper and cardboard packaging 61% 61% Storage 48 871.00 0.00 Recycling of total packaging 56,25% (including 0.25% recycling using own system) 56% Total 217 464.00 55 686.00 Recovery for total packaging 61,22% (including 0.22% recycling using own system) 61% Grupa Azoty PUŁAWY Packaging of hazardous agents – recovery 5% 10% Recovery on one's own 898.00 463.80 Grupa Azoty POLICE Storage on one's own 27 003.00 19 178.94 Plastic packaging 23.70% 23.50% Transfer to external companies 182 370.00 79 979.56 Paper and cardboard packaging 77% 61% Waste stored at the end of the year compared to waste generated this year - hazardous 79.00 49.43 Steel sheet packaging 51% 51% Waste stored at the end of the year compared to waste Wood packaging 49% 16% generated this year - non-hazardous 92.00 699.18 Total 210 442.00 100 370.91 Grupa Azoty POLICE Recovery on one's own 371 573.80 343 087.00 Recovery by external company 76 113.17 68 762.40 Neutralization in a different way than storage on one's own 1 129 115.64 1 350 740.00 WASTE MANAGEMENT Neutralization in a different way than storage In all the contracts concluded with external In order to fulfil the obligation of obtaining adequate levels of packaging by external company 195.50 6.00 companies with regard to receipt of waste and recovery and recycling, including many-material and hazardous packaging, Neutralization by storage on own waste performance of services related to waste we also cooperate with recovery organizations and National Chambers landfills 1 683 744.49 1 928 085.90 generation, we contain a clause reading that of Commerce. Neutralization by storage on external waste is to be managed in accordance with waste landfills 0.00 0.00 the requirements of the environmental Storage 0.00 121.00 protection law and the act on waste. Total 3 260 863.93 3 690 802.30

112 OUR RESPONSIBILITY OUR RESPONSIBILITY 113 CTOTAL WEIGHT OF WASTE BY TYPE OF WASTE WASTE PACKAGING RECOVERY AND WASTE HANDLING METHOD AND RECYCLING INDICATOR IN 2015

112 OUR RESPONSIBILITY OUR RESPONSIBILITY 113 Grupa Azoty S.A. Grupa Azoty POLICE

The main waste generated in the company is ash and slag. Waste plastics are subjected to the process of recovery in In the company's factory in Police the main technological waste Generated in the course of operation of the system solutions Wet ash is used for economic purposes, and fly-ash is the production systems Compounding PA6 and Compounding covers phosphogypsums, iron(II) sulphate, sediment from the and sludge are fully neutralized in the plant's waste water transferred for the purpose of using in construction. POM. plant's waste water treatment plant and solutions and sludge treatment plant. Sediments generated in the waste water from regeneration of ion exchangers. treatment plant are managed during the recovery process. In 2015, oils and lubricants accounted for approximately In addition, 78% of hazardous waste and they were fully transferred to of plastics were subjected Waste phosphogypsum and sulfate(II) iron is neutralized by MIS-Polska and then to the refinery, where they are used 99 tons to recovery in 2015 storage on internal waste landfills. Owing to the possibility in Grupa Azoty POLICE (depending on the selected handling for production of new oil. of economic use of waste sulfate(II) iron, both in the systems method) the following are considered as by-product: ash of the company and by external recipients, on the waste and slag, post-hydrolytic acid and iron(II) sulfate. In Grupa Azoty S.A. we conduct also selective collection landfill sulfate(II) iron negative balance is recorded on of waste are oils and lubricants that of recyclables (among others, waste paper, plastics, wood, the sulfate iron landfill. 78% are re-used in the production of new oil glass, spent batteries, electronic and electrical equipment).

BIODIVERSITY

Grupa Azoty KĘDZIERZYN We operate in many regions of Poland with valuable natural values, as well as close to protected areas, therefore we conduct our activities in full accordance with the surrounding nature. Grupa Azoty KĘDZIERZYN generates waste produced both in Main waste generated in 2015 in Grupa Azoty Kędzierzyn in the the course of production and as a result of conducting social greatest quantity: All our companies have registered their products in accordance with the REACH regulation. Our products have instructions of use and living activity and some repair works. Any waste generated and material safety data sheets informing about possible impact on living organisms. Periodical controls and other actions do not in the plant is subjected to selective collection and stored • •ash-slag mixes (87% of total quantity of generated waste), indicate irregularities. The acceptable values of concentrations of pollutants emitted beyond the areas belonging to the companies at places marked and agreed on by way of relevant decisions. • steel scrap (4.9%), were not exceeded. The company has five plant's waste landfills, including four • post-distillation residues (3.4%), landfills were closed (three were reclaimed, and on the next • sludge from biological waste water treatment (2.3%), Grupa Azoty S.A. reclamation works are underway) and one landfill in the • sludge from non-biological waste water treatment (1.2%). operation phase where ash-slag mixes from the plant's combined heat and power plant are stored. The company Run for several years cooperation with a recovery entity Grupa Azoty S.A. leases an area of 72.2 ha located in the The protected areas are: Lower Dunajec River conducts an intensive process of extraction of the provides to the company the packaging recycling and recovery Dunajec River basin within Natura 2000 area. (code PlH120085; area: 1293.9 ha) and Biala Tarnowska River aforementioned waste, and at the same time it does not incur level as required by legal regulations. (code PlH120090; area: 957.5 ha). any fees for its storage. The generated waste is transferred to authorized external recipients. Grupa Azoty KĘDZIERZYN continued the process of transferring generated waste to external waste recipients, first Grupa Azoty KĘDZIERZYN In line with the principle adopted by the company, contracts of all, for recovery. for the provision of repair services and works related to the execution of investments contain provisions reading that the Our company in Kędzierzyn does not have, lease and does not manage lands located in protected areas or adjacent to such service provider is the waste generator and binding this entity areas. to handle waste in accordance with legal requirements.

Grupa Azoty PUŁAWY Grupa Azoty PUŁAWY Grupa Azoty PUŁAWY is located inside a forest complex on the • Area of Protected Landscape "Kozi Bór" at a distance Grupa Azoty PUŁAWY performs its obligations related Some waste, in accordance with the provisions of the integrated right bank of the Vistula River. The area is neither covered nor of approx. 8.6 km to recovery and recycling of packaging waste and public permit, is recovered or neutralized in the company's system. is it adjacent to protected areas. However, in our vicinity there • Natural and landscape complex covering the bottom of the educational campaigns under contracts signed with a packaging are areas that are covered by various forms of protection: Bystra River valley located at a distance of approx. 11.9 km recovery organization as well as packaging of hazardous The company has its own landfill of non-hazardous and inert • "Piskory" reserve at a distance of approx. 6 km substances with a business self-government organization that waste with an instruction of operation of a landfill approved • Area of special protection Natura 2000 at a distance of has an agreement with the Voivodeship Marshal. by way of the decision of Marshal of Lubelskie Voivodeship. • "Łęg na Kępie w Puławach" reserve at a distance approx. 1.3 km of approx. 5.6 km • Area of special protection Natura 2000 "Lower Wieprz River" Additionally, we run the process of recycling of plastic Reduction in the quantity of generated non-hazardous waste • "Czapliniec" reserve near Gołąb at a distance of approx. 8.6 km at a distance of approx. 5.2 km packaging in devices of the packaging production system. by more than 50% involves recognition in October 2014 by Waste is melted, granulated and transferred again for the Marshal of the Voivodeship of the waste: fly-ashes from • Kazimierz Landscape Park at a distance of approx. 7.1 km. • The special protection area Natura 2000 "Plateau of Nałęczów" at a distance of approx. 8.3 km production of packaging. coal generated in the system of Grupa Azoty PUŁAWY for • Area of Protected Landscape "Wieprz River Proglacial Valley" by-product. at a distance of approx. 5 km • The bird conservation area Natura 2000 "Middle Vistula Waste generated in the company is collected selectively. River Valley" at a distance of approx. 5 km It enables hazard minimization and proper waste management. Waste is transferred only to entities having the permit of the • The special protection area of Natura 2000 "Lesser Polish competent authority for waste management. Gorge of the Vistula River", at a distance of approx. 6.1 km

114 OUR RESPONSIBILITY OUR RESPONSIBILITY 115 Grupa Azoty S.A. Grupa Azoty POLICE

BIODIVERSITY

114 OUR RESPONSIBILITY OUR RESPONSIBILITY 115 Grupa Azoty POLICE

Grupa Azoty POLICE is the owner and perpetual user of land in Additionally, in the vicinity of Police Facility, there are also: the vicinity of areas protected under the Natura 2000 network. • "Białokrzew Kopicki" reserve, located 13 km from the facility These are: Police – Canals (code PlH320015; area 100.2 ha), • "Uroczysko Święta" reserve, located 4.2 km from the facility Szczecin Lake (code PlB320009; area 47 194.6 ha), Mouth of the • "Olszanka" reserve, located 4.5 km from the facility Odra River and the Szczecin Lake (code PlH320018; area • "Świdwie" reserve, located 9.3 km from the facility 52 612.0 ha). • Ostoja Wkrzańska, located 1.8 km from the facility 4.0

"BALTIC" PROGRAM

The Competence Center PUŁAWY is the partner The involvement of CK PUŁAWY in the implementation of the "Baltic" of the "Baltic" Program for the years 2015 – 2020, program 2015 – 2020 aims at promotion and dissemination of responsible executed on the Initiative of the General and sustainable agricultural practices. Secretary of UN Global Compact in Poland and is the co-author of the report entitled "Baltic for The Report "Baltic for all", in which an article of the representative of the all" which was inaugurated on 2 October 2015 on Scientific Council of the Centre, Prof. hab. Janusz Igras, PhD, was published, the European Forum of New Ideas in Sopot. CK entitled "Analysis of reasons and consequences of eutrophication of the PUŁAWY performs initiatives of the UN system Baltic Sea and directions of actions aimed at decreasing outflow of for effective management of ecosystem and biogenic substances to the Baltic waters", is available on the website: resources of the sea basin, analyses of causes of eutrophication, as well as restoration of good ecological condition of the Baltic Sea. http://ckpulawy.com/wp-content/uploads/ /2015/11/baltyk_124_rozkladowki.pdf

PEREGRINE FALCON IN POLICE AND PUŁAWY

Grupa Azoty has been well taking care of pairs of peregrine falcons in Police and Puławy. These are ones of a few pairs of this species across the country. Although as early as in the 1940s the peregrine falcon was a common bird, the use in the next two decades of biocides, including mainly DDT, resulted in a decrease in the number of national population almost to zero. Currently, there are attempts made to increase the number of falcon, but still it is one of the rarest breeding birds of Poland. “Chimneys are ideal nesting places for falcons, therefore, on one of them, OUR at the height of 80 metres, we installed a special nesting box. Four (4) falcons have been born this year. As many as ten (10) falcons have already flown off the nest on the chimney of the “Police power distribution plant” - Jerzy Matyjasik, a retired power engineer of Grupa Azoty Police, takes care of peregrine falcons that live on one of the chimneys of ZCH Police.

“In our Plants, the first nesting box for falcons was hung in 2006 on the chimney of the Combined Heat and Power Plant. Birds did not nest it for many years. A pair of falcons had nested here not until 2013 successfully raising two chicks. During the next two years, these birds had triplets and quadruplets. At the beginning of 2016, because of the disassembly of the FINANCES chimney, a new nesting box was installed on the chimney of the Exhaust Gas Desulphurization System, the birds began hatching very late this year, Financial results despite that they successfully raised three chicks” - Grzegorz Sierocki, works in the Corporate Communication Department of Grupa Azoty Puławy, he is fascinated by photographing nature, ornithologist by avocation. He takes care of the pair of peregrine falcons from Puławy.

fot. Grzegorz Sierocki

116 OUR RESPONSIBILITY Azoty Group Jsc, Marek Krawiec – OUR FINANCES 117 operator at the Department of nitric acid Grupa Azoty POLICE

"BALTIC" PROGRAM

PEREGRINE FALCON IN POLICE AND PUŁAWY

116 OUR RESPONSIBILITY Azoty Group Jsc, Marek Krawiec – OUR FINANCES 117 operator at the Department of nitric acid 4.1. Basis of preparation of the summary financial statements

In 2015, Grupa Azoty presented The financial results presented in this Report historically good financial are consistent, and should be read in conjunction, with the results presented in the publicly available results. The profit for the year financial statements for 2015, including in particular amounted to almost PLN 692 the explanatory the notes, which form an integral million and was higher compared part of the consolidated annual financial statements. to the prior year by PLN 427 million. Revenue exceeded PLN The Group's financial results presented below comprise not only the performance (social or environmental) of the four key companies 10 billion. The Grupa Azoty's presented in this Report but of all entities included in the consolidated financial statements of the Grupa Azoty Group. The summary consolidated shares approached PLN 100 per financial statements presented in this Report are only an extract of the share. Hence, the company has information included in the consolidated financial statements of the Grupa Azoty, approved by the Grupa Azoty Management Board on March strengthened its position 8th 2016. It is not a complete version of the Group's financial statements amongst investors and, above all, and does not include information sufficient to fully understand its assets, confirmed its position of one of financial position and financial performance. the largest European chemical The summary consolidated financial statements should be read in conjunction with the audited consolidated financial statements prepared groups. The excellent financial in accordance with the International Financial Reporting Standards as results were supported by the adopted by the European Union (IFRS EU) and other applicable laws. The summary consolidated financial statements were prepared in accordance decrease in strategic raw with the accounting policies described in Note 2 to the consolidated material prices such as natural financial statements of the Group. gas and coal. The consolidated financial statements for the 12 months ended December 31st 2015 prepared in accordance with International Financial Reporting Standards as adopted by the European Union are available at

http://tarnow.grupaazoty.com/en/relacje Paweł Łapiński Vice-President of the Management Board Azoty Group KĘDZIERZYN, control room of aldehydes and alcohol, in the foreground: Karol Malek – operator of alcohol production at the Department of alcohol, Konrad Szwamel – operator of aldehydes production at the Department of aldehydes, 118 OUR FINANCES Michal Glowacki – senior foreman at the Department of aldehydes OUR FINANCES 119 4.1. Basis of preparation of the summary financial statements

http://tarnow.grupaazoty.com/en/relacje Paweł Łapiński Vice-President of the Management Board Azoty Group KĘDZIERZYN, control room of aldehydes and alcohol, in the foreground: Karol Malek – operator of alcohol production at the Department of alcohol, Konrad Szwamel – operator of aldehydes production at the Department of aldehydes, 118 OUR FINANCES Michal Glowacki – senior foreman at the Department of aldehydes OUR FINANCES 119 4.2. Consolidated statement of profit or loss and other comprehensive income

For the period For the period For the period For the period 01.01.2015 01.01.2014 01.01.2015 01.01.2014 All amounts in PLN thousand – 31.12.2015 – 31.12.2014 All amounts in PLN thousand – 31.12.2015 – 31.12.2014 Continuing operations Items that are or may be reclassified Revenue 10 024 405 9 898 476 to profit or loss Cost of sales (7 760 211) (8 231 565) Measurement of hedging instruments 65 - Gross profit 2 264 194 1 666 911 Net change in fair value of available-for-sale financial assets - (24) Selling and distribution expenses (633 314) (581 145) Net change in fair value Administrative expenses (736 546) (739 977) of available-for-sale financial assets reclassified Other income 47 664 58 421 to profit or loss - (2912) Other expenses (111 987) (101 980) Foreign currency translation differences – foreign operations (526) 7807 Results from operating activities 830 011 302 230 Tax on items that are or may be reclassified Finance income 42 910 45 767 to profit or loss - 559 Finance costs (47 576) (58 398) (461) 5430 Net finance costs (4666) (12 631) Share of profit of equity-accounted investees 13 737 13 940 Other comprehensive income for the year (6139) (13 692) Profit before tax 839 082 303 539 Total comprehensive income for the year 685 709 251 363 Tax expense (147 234) (37 731) Profit attributable to: Profit from continuing operations 691 848 265 808 Equity holders of the Parent Company 609 499 231 350 Non-controlling interests 82 349 33 705 Total comprehensive income Discontinued operations attributable to: Net loss from discontinued operations - (753) Equity holders of the Parent Company 604 443 216 144 Profit for the year 691 848 265 055 Non-controlling interests 81 266 35 219 Earnings per share: Basic earnings per share (PLN) 6.14 2.33 Other comprehensive income Diluted earnings per share (PLN) 6.14 2.33 Items that will never be reclassified to profit or loss Remeasurements of defined benefit liability (6987) (23 542) Tax on items that will never be reclassified to profit or loss 1309 4420 (5678) (19 122)

120 OUR FINANCES OUR FINANCES 121 4.2. Consolidated statement of profit or loss and other comprehensive income

120 OUR FINANCES OUR FINANCES 121 4.3. As at As at As at All amounts in PLN thousand 31.12.2015 31.12.2014 01.01.2014 Consolidated statement Equity and liabilities Equity Share capital 495 977 495 977 495 977 of financial position Share premium 2 418 270 2 418 270 2 418 270 Hedging reserve 65 - - Fair value reserve - - 2346 Translation reserve 752 1403 (3681) Retained earnings, including: 3 452 224 2 843 389 2 649 822 Profit for the year 609 499 231 350 676 948 Equity attributable to owners As at As at As at All amounts in PLN thousand 31.12.2015 31.12.2014* 01.01.2014* of the Parent Company 6 367 288 5 759 039 5 562 734 Non-controlling interests 768 933 729 097 707 820 Assets Total equity 7 136 221 6 488 136 6 270 554 Non-current assets Property, plant and equipment 6 429 767 5 905 106 5 736 378 Liabilities Investment property 52 204 54 968 53 374 Loans 1 047 450 476 932 634 693 Intangible assets 532 798 509 964 519 280 Employee benefits 326 968 312 419 254 613 Goodwill 12 550 12 600 11 617 Other non-current payables 972 1498 61 821 Investments in subordinated Provisions 100 740 113 106 119 343 entities 111 095 110 842 128 944 Government grants 47 036 39 993 24 906 Available-for-sale financial assets 12 370 12 371 23 989 Deferred tax liabilities 245 868 231 692 284 068 Other financial assets 4 347 19 054 53 Other financial liabilities 16 112 20 205 22 513 Non-current receivables 1797 2932 3408 Total non-current liabilities 1 785 146 1 195 845 1 401 957 Deferred tax assets 62 769 86 941 103 540 Other non-current assets 5226 4675 4462 Loans 118 880 509 259 604 140 Total non-current assets 7 224 923 6 719 453 6 585 045 Employee benefits 33 167 30 494 34 008 Current tax liabilities 18 986 2934 4903 Current assets Trade and other payables 1 347 227 1 425 553 1 313 547 Inventories 1 180 599 1 343 513 1 147 585 Provisions 273 447 211 432 213 839 Other financial assets 502 885 68 484 106 822 Government grants 5091 2982 2936 Current tax assets 2156 6720 40 558 Deferred income 1346 2322 25 921 Trade and other receivables 1 078 292 1 227 334 1 335 931 Other financial liabilities 57 658 79 375 78 968 Cash and cash equivalents 753 144 558 603 713 024 Total current liabilities 1 855 802 2 264 351 2 278 262 Other current assets 32 047 24 118 21 016 Total liabilities 3 640 948 3 460 196 3 680 219 Assets held for sale 3123 107 792 Total current assets 3 552 246 3 228 879 3 365 728 Total equity and liabilities 10 777 169 9 948 332 9 950 773

Total assets 10 777 169 9 948 332 9 950 773

* Financial information restated as presented in point 2.3.1 of the notes to the consolidated financial statements

122 OUR FINANCES OUR FINANCES 123 4.3. As at As at As at All amounts in PLN thousand 31.12.2015 31.12.2014 01.01.2014 Consolidated statement Equity and liabilities Equity Share capital 495 977 495 977 495 977 of financial position Share premium 2 418 270 2 418 270 2 418 270 Hedging reserve 65 - - Fair value reserve - - 2346 Translation reserve 752 1403 (3681) Retained earnings, including: 3 452 224 2 843 389 2 649 822 Profit for the year 609 499 231 350 676 948 Equity attributable to owners As at As at As at All amounts in PLN thousand 31.12.2015 31.12.2014* 01.01.2014* of the Parent Company 6 367 288 5 759 039 5 562 734 Non-controlling interests 768 933 729 097 707 820 Assets Total equity 7 136 221 6 488 136 6 270 554 Non-current assets Property, plant and equipment 6 429 767 5 905 106 5 736 378 Liabilities Investment property 52 204 54 968 53 374 Loans 1 047 450 476 932 634 693 Intangible assets 532 798 509 964 519 280 Employee benefits 326 968 312 419 254 613 Goodwill 12 550 12 600 11 617 Other non-current payables 972 1498 61 821 Investments in subordinated Provisions 100 740 113 106 119 343 entities 111 095 110 842 128 944 Government grants 47 036 39 993 24 906 Available-for-sale financial assets 12 370 12 371 23 989 Deferred tax liabilities 245 868 231 692 284 068 Other financial assets 4 347 19 054 53 Other financial liabilities 16 112 20 205 22 513 Non-current receivables 1797 2932 3408 Total non-current liabilities 1 785 146 1 195 845 1 401 957 Deferred tax assets 62 769 86 941 103 540 Other non-current assets 5226 4675 4462 Loans 118 880 509 259 604 140 Total non-current assets 7 224 923 6 719 453 6 585 045 Employee benefits 33 167 30 494 34 008 Current tax liabilities 18 986 2934 4903 Current assets Trade and other payables 1 347 227 1 425 553 1 313 547 Inventories 1 180 599 1 343 513 1 147 585 Provisions 273 447 211 432 213 839 Other financial assets 502 885 68 484 106 822 Government grants 5091 2982 2936 Current tax assets 2156 6720 40 558 Deferred income 1346 2322 25 921 Trade and other receivables 1 078 292 1 227 334 1 335 931 Other financial liabilities 57 658 79 375 78 968 Cash and cash equivalents 753 144 558 603 713 024 Total current liabilities 1 855 802 2 264 351 2 278 262 Other current assets 32 047 24 118 21 016 Total liabilities 3 640 948 3 460 196 3 680 219 Assets held for sale 3123 107 792 Total current assets 3 552 246 3 228 879 3 365 728 Total equity and liabilities 10 777 169 9 948 332 9 950 773

Total assets 10 777 169 9 948 332 9 950 773

* Financial information restated as presented in point 2.3.1 of the notes to the consolidated financial statements

122 OUR FINANCES OUR FINANCES 123 4.4. Consolidated statement of cash flows

For the period For the period For the period 01.01.2014 For the period 01.01.2014 01.01.2015 – 31.12.2014* 01.01.2015 – 31.12.2014* All amounts in PLN thousand – 31.12.2015 restated All amounts in PLN thousand – 31.12.2015 restated Cash flows from operating activities Cash flows from investing activities Profit before tax 839 082 303 539 Proceeds from sale of property, plant and equipment, Adjustments for: 566 576 589 459 intangible assets and investment property 13 029 8786 Depreciation and amortisation 484 810 520 175 Acquisition of property, plant and equipment, intangible assets and investment property (1 061 762) (676 398) Impairment losses 61 469 40 300 Dividends received 12 668 11 971 Loss from investing activities 8177 1628 Acquisition of financial assets (855 926) (179 583) Profit on disposal of financial assets (4691) (2912) Acquisition of subsidiaries, net of cash acquired - (23 443) Share of profit of equity-accounted investees (13 737) (13 940) Proceeds from sale of financial assets 389 769 215 686 Interest, foreign exchange gains or losses 31 213 48 740 Interest received 3840 3480 Dividends (187) (807) Government grants received 10 928 - Change in fair value of financial assets at fair value through profit or loss (478) (3725) Loans (9974) (645) Other disbursements (5945) (7920) Cash generated from operating activities Net cash used in investing activities (1 503 373) (648 066) before changes in working capital 1 405 658 892 998 Changes in trade and other receivables 165 599 122 141 Cash flows from financing activities Changes in inventories 142 870 (195 134) Dividends paid (25 544) (41 768) Changes in trade and other payables (39 758) (20 733) Proceeds from loans and borrowings 1 105 758 288 300 Changes in provisions, prepayments and grants 30 803 57 824 Acquisition of non-controlling interests (12 048) - Other adjustments (925) 761 Payment of loans and borrowings (927 651) (541 358) Interest paid (36 955) (43 766) Cash generated Payment of finance lease liabilities (12 504) (13 191) from operating activities 1 704 247 857 857 Other proceeds / (disbursements) (22 538) 23 742 Income taxes paid (74 021) (38 076) Net cash from financing activities 68 518 (328 041) Net increase / (decrease) in cash and cash equivalents 195 371 (156 326) Net cash from operating activities 1 630 226 819 781

Cash and cash equivalents at the beginning of the period 558 603 713 024 Effect of exchange rate fluctuations on cash held (830) 1905

Cash and cash equivalents at the end of the period 753 144 558 603

* Financial information restated as presented in point 2.3.1 of the notes to the consolidated financial statements

124 OUR FINANCES OUR FINANCES 125 4.4. Consolidated statement of cash flows

Cash and cash equivalents at the beginning of the period 558 603 713 024 Effect of exchange rate fluctuations on cash held (830) 1905

Cash and cash equivalents at the end of the period 753 144 558 603

* Financial information restated as presented in point 2.3.1 of the notes to the consolidated financial statements

124 OUR FINANCES OUR FINANCES 125 4.5. Financial results of the operating segments

Revenue, expenses and financial result of operating segments for the 12 month period Revenue, expenses and financial result of operating segments ended 31 December 2015 for the 12 month period ended 31 December 2014

All amounts in PLN thousand All amounts in PLN thousand

Fertilizers-Agro Plastics Chemicals Energy Other Activities Total Continued operations Fertilizers-Agro Plastics Chemicals Energy Other Activities Total External revenues 6 057 906 1 247 971 2 302 233 209 236 207 059 10 024 405 External revenues 5 580 374 1 460 155 2 505 638 194 621 157 688 9 898 476 Inter-segment revenue 2 190 855 308 990 992 745 2 712 905 903 264 7 108 759 Inter-segment revenue 2 323 040 348 170 1 050 591 2 933 148 802 963 7 457 912 Total revenue 8 248 761 1 556 961 3 294 978 2 922 141 1 110 323 17 133 164 Total revenue 7 903 414 1 808 325 3 556 229 3 127 769 960 651 17 356 388 Operating expenses, Operating expenses, including:(-) (7 407 674) (1 603 980) (3 224 385) (2 924 792) (1 077 999) (16 238 830) including:(-) (7 468 963) (1 899 986) (3 568 630) (3 123 579) (949 441) (17 010 599) Selling and distribution Selling and distribution expenses (-) (433 228) (52 742) (145 660) (121) (1563) (633 314) expenses (-) (395 845) (53 566) (130 041) (82) (1611) (581 145) Administrative Administrative expenses (-) (385 839) (114 235) (172 699) (14 137) (49 636) (736 546) expenses (-) (367 528) (123 773) (184 559) (12 565) (51 552) (739 977) Other income 21 041 4677 5902 9234 6810 47 664 Other income 14 929 12 923 4778 10 336 15 455 58 421 Other expenses(-) (13 343) (16 475) (37 313) (2996) (41 860) (111 987) Other expenses(-) (13 960) (2678) (47 709) (8582) (29 051) (101 980)

Segment results from Segment results from operating activities EBIT 848 785 (58 817) 39 182 3587 (2726) 830 011 operating activities EBIT 435 420 (81 416) (55 332) 5944 (2386) 302 230 Finance income - - - - - 42 910 Finance income - - - - - 45 767 Finance costs (-) - - - - - (47 576) Finance costs (-) - - - - - (58 398) Share of profit Share of profit of equity-accounted investees - - - - - 13 737 of equity-accounted investees - - - - - 13 940 Profit before tax - - - - - 839 082 Profit before tax - - - - - 303 539 Tax expense - - - - - 147 234 Result on discontinued operations - - - - - (753) Tax expense - - - - - (37 731) Profit for the year - - - - - 691 848 EBIT* 848 785 (58 817) 39 182 3587 (2726) 830 011 Profit for the year - - - - - 265 055 Depreciation and amortisation 149 275 48 417 95 540 74 307 80 839 448 378 EBIT* 435 420 (81 416) (55 332) 5944 (2386) 302 230 Unallocated depreciation Depreciation and amortisation 158 972 47 870 100 947 74 050 80 285 462 124 and amortisation - - - - - 36 432 Unallocated depreciation and amortisation - - - - - 58 051 EBITDA** 998 060 (10 400) 134 722 77 894 78 113 1 314 821 EBITDA** 594 392 (33 546) 45 615 79 994 77 899 822 405

* EBIT is calculated as results from operating activities presented in the statement of profit or loss, adjusted for the gain on bargain purchase.

** EBITDA is calculated as results from operating activities increased by depreciation and amortisation, adjusted for the gain on bargain purchase. * EBIT is calculated as results from operating activities presented in the statement of profit or loss, adjusted for the gain on bargain purchase. ** EBITDA is calculated as results from operating activities increased by depreciation and amortisation, adjusted for the gain on bargain purchase.

126 OUR FINANCES OUR FINANCES 127 4.5. Financial results of the operating segments

All amounts in PLN thousand All amounts in PLN thousand

* EBIT is calculated as results from operating activities presented in the statement of profit or loss, adjusted for the gain on bargain purchase.

126 OUR FINANCES OUR FINANCES 127 This document is a free translation of the Polish original. Terminology current in Anglo-Saxon countries 4.6. has been used where practicable for the purposes of this translation in order to aid understanding. The binding Polish original should be referred to in matters Independent of interpretation. Auditors' Report 5.0 INDEPENDENT AUDITORS' REPORT ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

To the General Meeting of Grupa Azoty S.A.

The accompanying summary consolidated financial statements, which comprise the summary consolidated statement of financial position as at 31 December 2015, the summary consolidated statement of profit or loss and other comprehensive income and the summary consolidated statement of cash flows for the year then ended, and related notes, are derived from the audited consolidated financial statements of Grupa Azoty S.A. Group, with its parent company's registered office in Tarnów, ul. Kwiatkowskiego 8 (“the Group”) for the year ended 31 December 2015. We expressed an unmodified audit opinion on those consolidated financial statements dated 8 March 2016. Those consolidated financial statements, and the summary consolidated financial statements, do not reflect the effects of events that occurred subsequent to that date.

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.

Management's Responsibility for the Summary Consolidated Financial Statements

Management of the parent company 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”.

Auditor's Responsibility

Our responsibility is to express an opinion on the summary consolidated financial statements based on our procedures, which were conducted in accordance with the International Standard on Auditing 810 Engagements to Report on Summary Financial Statements as adopted by the National Council of Certified Auditors as the National Standard on Assurance 810.

Opinion OUR In our opinion, the summary consolidated financial statements derived from the audited consolidated financial statements of the Group for the year ended 31 December 2015 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”.

On behalf of KPMG Audyt Sp. z o.o. Marcin Domagała Registration No. 458 Member of the Management Board ul. Inflancka 4A Key Certified Auditor 00-189 Warsaw Registration No. 90046 REPORT 8 November 2016

Made in the Control room 128 OUR FINANCES of ammonium nitrate production - Azoty Group Jsc PUŁAWY OUR REPORT 129 4.6. Independent Auditors' Report 5.0

OUR REPORT

Made in the Control room 128 OUR FINANCES of ammonium nitrate production - Azoty Group Jsc PUŁAWY OUR REPORT 129 5.1. About the report

In business, the numbers We hand over to you the Integrated Report presenting financial and non-financial results of Grupa Azoty for are important, but do not tell 2015. When preparing the report for the third time we the whole story. Therefore, used international guidelines of the reporting standard in this year's report Global Reporting GRI G4 at the level of CORE. The of the Grupa Azoty Group report is issued annually. we present, beyond the numbers, the story of what we do. The story about us, The report describes results of four largest companies of the group: our products, our partners, • Grupa Azoty S.A. our customers. In brief: seated in Tarnów about what is important for (the Parent Company) us. Why, for what and how • Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. we operate. And because seated in Kędzierzyn-Koźle we work among the people – (Grupa Azoty KĘDZIERZYN) we are also telling the story • Grupa Azoty Zakłady Azotowe „Puławy” S.A. about our responsibilities seated in Puławy to them. (Grupa Azoty PUŁAWY) • Grupa Azoty Zakłady Chemiczne „Police” S.A. seated in Police (Grupa Azoty POLICE)

Maurycy Graszewicz PhD, Director of the Marketing

130 OUR REPORT Azoty Group POLICE, night-time panorama and Communication Department OUR REPORT 131 5.1. About the report

Maurycy Graszewicz PhD, Director of the Marketing

130 OUR REPORT Azoty Group POLICE, night-time panorama and Communication Department OUR REPORT 131 5.2. Apart from the above companies, the In this year's report the following non-financial aspects were consolidated financial statement covers taken into account: seven other entities (subsidiaries of Index GRI Grupa Azoty): Grupa Azoty ATT Polymers GmbH (Guben, Germany), Grupa Azoty Reporting aspects of high importance Polskie Konsorcjum Chemiczne Sp. z o.o. • OHS Indicator Name Note Audit Page (Tarnów), Grupa Azoty "Koltar" Sp. z o.o. • biodiversity concerning environmental protection (Tarnów), Grupa Azoty Kopalnie i Zakłady General Standard Disclosures Chemiczne Siarki "Siarkopol" S.A. • emissions Strategy and Analysis (Grzybów), Grupa Azoty "Folie" Sp. z o.o., • power G4-1 Statement from the most senior decision-maker of the organization (such as "Navitrans" Sp. z o.o. (Gdynia, currently • materials CEO, chair, or equivalent senior position) about the relevance of sustainability 2,3 the company does not exist, indirectly to the organisation and the organisation's strategy for addressing sustainability controlled, the consolidated result was • marking of products and services G4-2 Description of key impacts, risks, and opportunities 20, 30-32 only until 31.03.2016). The above • products and services Organizational profile subsidiaries have additionally • counteracting discrimination subsidiaries and affiliates – more G4-3 Name of the organization 4 information on this topic can be found in • counteracting corruption G4-4 Primary brands, products, and services 4, 43-51 the "Statement of the Management Board • the local community G4-5 Location of the organisation's headquarters 9 of operations of Grupa Azoty for the • waste water and waste period of 12 months ending 31 December G4-6 Number of countries where the organisation operates, and names of 5 2015". • transport countries where either the organisation has significant operations or that are specifically relevant to the sustainability topics covered in the report In order to exercise the utmost diligence, • water the preparation of the content of the • business performance G4-7 Nature of ownership and legal form 10-11 report was supported by the educational • employment G4-8 Markets served (including geographic breakdown, sectors served, and types 5, 43-51 and advisory company (CSRinfo), and the of customers and beneficiaries) • customer health and safety report alone was subjected to G4-9 Scale of the organisation 4-6 • compliance with regulations independent verification by an auditor G4-10 Total number of employees by employment contract and gender 75-77 (Deloitte Advisory Sp. z o.o.). The financial data that were taken from financial G4-11 Percentage of total employees covered by collective bargaining agreements Reporting aspects of average importance G4-11 88 statements were audited by independent G4-12 Organisation's supply chain chartered auditors (KPMG Audyt • education and training G4-13G4-12 Significant changes during the reporting period regarding the organisation's 55-56, 62-65 Sp. z o.o.). The data collection process • marketing communication G4-13 size, structure, ownership, or its supply chain 132, 11 involved participation of approximately • presence on the market G4-14 Whether and how the precautionary approach or principle is addressed 70 people from four major companies. G4-14 by the organisation 62-65 • indirect economic impact The scope and range of the report, like G4-15 Externally developed economic, environmental and social charters, principles, 39-40 the applied measurement methods, • diversity and equality of opportunities or other initiatives to which the organisation subscribes or which it endorses did not change significantly. • freedom of association and the right to collective disputes G4-16 Memberships of associations (such as industry associations) and national 39-40 or international advocacy organisations The areas of impact and indicators • participation in public life indicated by the Substantive Committee • compliance with regulations concerning deliveries and use Identified Material Aspects and Boundaries for CSR when preparing the report of products and services G4-17 Entities included in the organisation's consolidated financial statements 131-132 for 2013 are still valid. At that time the G4-18 Process for defining the report content 132 aspects of low, medium and high G4-18 132 G4-19 Identified Material Aspects regarding environmental and social impacts 132 importance were distinguished. The G4-19 132 former, as the ones that do not create G4-20 Materiality of identified environmental and social impacts 132 a measurable value added for the for individual entities G4-20 132 organization and recipients of the report, G4-21 Report limitations regarding impacts of material environmental and social 132 were ignored in it. G4-21 aspects, including entities outside of the organisation 132 G4-22 Effect of any restatements of information provided in previous reports, 122132 and the reasons for such restatements (e.g. mergers or acquisitions, change of base years or periods, nature of business, measurement methods)

The previous report for 2014 was published in 2015 and is available at the website: G4-23 Significant changes from previous reporting periods in the scope 107, 132 http://grupaazoty.com/doc/1e487f6c/raport_zintegrowany_grupa_azoty_za_2014.pdf G4-23 and measurement methods 107, 132 With regard to the previous report it is not necessary to introduce significant adjustments.

132 OUR REPORT OUR REPORT 133 5.2. Apart from the above companies, the In this year's report the following non-financial aspects were consolidated financial statement covers taken into account: seven other entities (subsidiaries of Index GRI Grupa Azoty): Grupa Azoty ATT Polymers GmbH (Guben, Germany), Grupa Azoty Reporting aspects of high importance Polskie Konsorcjum Chemiczne Sp. z o.o. • OHS Indicator Name Note Audit Page (Tarnów), Grupa Azoty "Koltar" Sp. z o.o. • biodiversity concerning environmental protection (Tarnów), Grupa Azoty Kopalnie i Zakłady General Standard Disclosures Chemiczne Siarki "Siarkopol" S.A. • emissions Strategy and Analysis (Grzybów), Grupa Azoty "Folie" Sp. z o.o., • power G4-1 Statement from the most senior decision-maker of the organization (such as "Navitrans" Sp. z o.o. (Gdynia, currently • materials CEO, chair, or equivalent senior position) about the relevance of sustainability 2,3 the company does not exist, indirectly to the organisation and the organisation's strategy for addressing sustainability controlled, the consolidated result was • marking of products and services G4-2 Description of key impacts, risks, and opportunities 20, 30-32 only until 31.03.2016). The above • products and services Organizational profile subsidiaries have additionally • counteracting discrimination subsidiaries and affiliates – more G4-3 Name of the organization 4 information on this topic can be found in • counteracting corruption G4-4 Primary brands, products, and services 4, 43-51 the "Statement of the Management Board • the local community G4-5 Location of the organisation's headquarters 9 of operations of Grupa Azoty for the • waste water and waste period of 12 months ending 31 December G4-6 Number of countries where the organisation operates, and names of 5 2015". • transport countries where either the organisation has significant operations or that are specifically relevant to the sustainability topics covered in the report In order to exercise the utmost diligence, • water the preparation of the content of the • business performance G4-7 Nature of ownership and legal form 10-11 report was supported by the educational • employment G4-8 Markets served (including geographic breakdown, sectors served, and types 5, 43-51 and advisory company (CSRinfo), and the of customers and beneficiaries) • customer health and safety report alone was subjected to G4-9 Scale of the organisation 4-6 • compliance with regulations independent verification by an auditor G4-10 Total number of employees by employment contract and gender 75-77 (Deloitte Advisory Sp. z o.o.). The financial data that were taken from financial G4-11 Percentage of total employees covered by collective bargaining agreements Reporting aspects of average importance G4-11 88 statements were audited by independent G4-12 Organisation's supply chain chartered auditors (KPMG Audyt • education and training G4-13G4-12 Significant changes during the reporting period regarding the organisation's 55-56, 62-65 Sp. z o.o.). The data collection process • marketing communication G4-13 size, structure, ownership, or its supply chain 132, 11 involved participation of approximately • presence on the market G4-14 Whether and how the precautionary approach or principle is addressed 70 people from four major companies. G4-14 by the organisation 62-65 • indirect economic impact The scope and range of the report, like G4-15 Externally developed economic, environmental and social charters, principles, 39-40 the applied measurement methods, • diversity and equality of opportunities or other initiatives to which the organisation subscribes or which it endorses did not change significantly. • freedom of association and the right to collective disputes G4-16 Memberships of associations (such as industry associations) and national 39-40 or international advocacy organisations The areas of impact and indicators • participation in public life indicated by the Substantive Committee • compliance with regulations concerning deliveries and use Identified Material Aspects and Boundaries for CSR when preparing the report of products and services G4-17 Entities included in the organisation's consolidated financial statements 131-132 for 2013 are still valid. At that time the G4-18 Process for defining the report content 132 aspects of low, medium and high G4-18 132 G4-19 Identified Material Aspects regarding environmental and social impacts 132 importance were distinguished. The G4-19 132 former, as the ones that do not create G4-20 Materiality of identified environmental and social impacts 132 a measurable value added for the for individual entities G4-20 132 organization and recipients of the report, G4-21 Report limitations regarding impacts of material environmental and social 132 were ignored in it. G4-21 aspects, including entities outside of the organisation 132 G4-22 Effect of any restatements of information provided in previous reports, 122132 and the reasons for such restatements (e.g. mergers or acquisitions, change of base years or periods, nature of business, measurement methods)

132 OUR REPORT OUR REPORT 133 Stakeholder engagement CATEGORY: ENVIROMENTAL G4-24 List of stakeholder groups engaged by the organisation 38 Aspect: Materials G4-25 Basis for identification and selection of stakeholders with whom to engage 38 DMA Management approach 4-6 G4-26 Organisation's approach to stakeholder engagement, including frequency G4-EN1 Materials used by weight or volume Partially 54 of engagement by type and by stakeholder group 38 reported G4-27 Key topics and concerns that have been raised through stakeholder Aspect: Energy engagement, and how the organisation has responded to those key topics 38 and concerns, including through its reporting DMA Management approach 102 Report profile G4-EN3 Direct and indirect energy consumption within the organisation 102 103 G4-28 Reporting period (such as fiscal or calendar year) 131 G4-EN5 Energy intensity G4-29 Date of most recent previous report (if any) 132 G4-EN6 Reduction of energy consumption Partially 103 reported G4-30 Reporting cycle (such as annual, biennial) Annual 131 G4-31 Contact point 139 Aspect: Water G4-32 GRI Index 133-137 DMA Management approach 104 G4-33 Organisation's policy and current practice with regard to seeking external 132 G4-EN8 Total water abstraction by source 104 assurance for the report. If not included in the assurance report accompanying the sustainability report, reporting on the scope and basis G4-EN10 Percentage and total volume of water recycled and reused 104 of any external assurance provided, as well as the relationship between Aspect: Biodiversity the organisation and the assurance providers DMA Management approach 115 Goverance G4-EN11 Location and size of land owned, leased, managed in, or adjacent to, 115-116 G4-34 Governance structure of the organisation, including committees under 23-29 protected areas and areas of high biodiversity value outside protected areas the highest governance body responsible for specific tasks, such G4-EN12 Description of significant impacts of activities, products, and services 115-116 as setting strategy or organisational oversight on biodiversity in protected areas and areas of high biodiversity value Ethics and integrity outside protected areas G4-56 Organisation's values, principles, standards and norms of behavior such 33 Aspect: Emissions as codes of conduct and codes of ethics DMA Management approach 109-110 Specific Standard Disclosures G4-EN15 Total direct greenhouse gas emissions by weight 107 CATEGORY: ECONOMIC G4-EN18 Greenhouse gas (GHG) emissions intensity 107 Aspect: economic performance G4-EN19 Reduction of greenhouse gas (GHG) emissions 107 DMA Management approach G4-EN21 NOX, SOX, and other significant air emissions by type and weight 108-109 G4-EC1 Direct economic value generated and distributed, including revenues, 6 Aspect: Effluents and Waste operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers DMA Management approach 105, 113-115 and governments G4-EN22 Total water discharge by quality and destination 106 G4-EC2 Financial implications and other risks and opportunities for 57-61 G4-EN23 Total weight of waste by type and disposal method 112-113 the organisation's activities due to climate change Aspect: products and services G4-EC4 Significant financial assistance received from government 93 DMA Management approach 62-63 Aspect:: Market presence G4-EN27 Extent of impact mitigation of environmental impacts of products 101 DMA Management approach 44-51 and services G4-EC5 Ratios of standard entry level wage by gender compared to local 87 G4-EN28 Percentage of products sold and their packaging materials that are 112-113 minimum wage at significant locations of operation reclaimed by category Aspect: indirect economic impacts Aspect: Compliance DMA Management approach 92 DMA Management approach 100 G4-EC7 Development and impact of infrastructure investments and services 92-95 G4-EN29 Monetary value of significant fines and total number of non-monetary 100 provided primarily for public benefit through commercial, inkind, sanctions for non-compliance with environmental laws and regulations or pro bono engagement G4-EC8 Identification and description of significant indirect economic impacts, 92-95 including the extent of impacts

134 OUR REPORT OUR REPORT 135 Stakeholder engagement CATEGORY: ENVIROMENTAL G4-24 List of stakeholder groups engaged by the organisation 38 Aspect: Materials G4-25 Basis for identification and selection of stakeholders with whom to engage 38 DMA Management approach 4-6 G4-26 Organisation's approach to stakeholder engagement, including frequency G4-EN1 Materials used by weight or volume Partially 54 of engagement by type and by stakeholder group 38 reported G4-27 Key topics and concerns that have been raised through stakeholder Aspect: Energy engagement, and how the organisation has responded to those key topics 38 and concerns, including through its reporting DMA Management approach 102 Report profile G4-EN3 Direct and indirect energy consumption within the organisation 102 103 G4-28 Reporting period (such as fiscal or calendar year) 131 G4-EN5 Energy intensity G4-29 Date of most recent previous report (if any) 132 G4-EN6 Reduction of energy consumption Partially 103 reported G4-30 Reporting cycle (such as annual, biennial) Annual 131 G4-31 Contact point 139 Aspect: Water G4-32 GRI Index 133-137 DMA Management approach 104 G4-33 Organisation's policy and current practice with regard to seeking external 132 G4-EN8 Total water abstraction by source 104 assurance for the report. If not included in the assurance report accompanying the sustainability report, reporting on the scope and basis G4-EN10 Percentage and total volume of water recycled and reused 104 of any external assurance provided, as well as the relationship between Aspect: Biodiversity the organisation and the assurance providers DMA Management approach 115 Goverance G4-EN11 Location and size of land owned, leased, managed in, or adjacent to, 115-116 G4-34 Governance structure of the organisation, including committees under 23-29 protected areas and areas of high biodiversity value outside protected areas the highest governance body responsible for specific tasks, such G4-EN12 Description of significant impacts of activities, products, and services 115-116 as setting strategy or organisational oversight on biodiversity in protected areas and areas of high biodiversity value Ethics and integrity outside protected areas G4-56 Organisation's values, principles, standards and norms of behavior such 33 Aspect: Emissions as codes of conduct and codes of ethics DMA Management approach 109-110 Specific Standard Disclosures G4-EN15 Total direct greenhouse gas emissions by weight 107 CATEGORY: ECONOMIC G4-EN18 Greenhouse gas (GHG) emissions intensity 107 Aspect: economic performance G4-EN19 Reduction of greenhouse gas (GHG) emissions 107 DMA Management approach G4-EN21 NOX, SOX, and other significant air emissions by type and weight 108-109 G4-EC1 Direct economic value generated and distributed, including revenues, 6 Aspect: Effluents and Waste operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers DMA Management approach 105, 113-115 and governments G4-EN22 Total water discharge by quality and destination 106 G4-EC2 Financial implications and other risks and opportunities for 57-61 G4-EN23 Total weight of waste by type and disposal method 112-113 the organisation's activities due to climate change Aspect: products and services G4-EC4 Significant financial assistance received from government 93 DMA Management approach 62-63 Aspect:: Market presence G4-EN27 Extent of impact mitigation of environmental impacts of products 101 DMA Management approach 44-51 and services G4-EC5 Ratios of standard entry level wage by gender compared to local 87 G4-EN28 Percentage of products sold and their packaging materials that are 112-113 minimum wage at significant locations of operation reclaimed by category Aspect: indirect economic impacts Aspect: Compliance DMA Management approach 92 DMA Management approach 100 G4-EC7 Development and impact of infrastructure investments and services 92-95 G4-EN29 Monetary value of significant fines and total number of non-monetary 100 provided primarily for public benefit through commercial, inkind, sanctions for non-compliance with environmental laws and regulations or pro bono engagement G4-EC8 Identification and description of significant indirect economic impacts, 92-95 including the extent of impacts

134 OUR REPORT OUR REPORT 135 Aspect: Transport Society DMA Management approach 56 Aspect: Local communities G4-EN30 Significant environmental impacts of transporting products and other 56,65 DMA Management approach 92 goods and materials for the organisation's operations, and transporting G4-SO1 92 members of the workforce Percentage of operations with implemented local community engagement, impact assessments, and development programs CATEGORY: SOCIAL G4-SO2 Operations with significant actual and potential negative impacts 66 Labor practices and decent work on local communities Aspect: Employment Aspect: Anti-corruption DMA Management approach 76 DMA Management approach 33 G4-LA1 Total number and rates of new employee hires and employee turnover 80 G4-SO5 Confirmed incidents of corruption and actions taken 33 by age group, gender and region Aspect: public policy 88 G4-LA2 Benefits provided to full-time employees that are not provided to DMA Management approach 92 temporary or part-time employees, by significant locations of operation G4-SO6 Total value of financial and in-kind political contributions to parties, 92 Aspect: Health and Safety politicians and similar institutions by country. DMA Management approach 89 Aspekt: Compliance G4-LA5 Percentage of total workforce represented in formal joint 89 DMA Management approach 29 management–worker health and safety committees that help monitor and advise on occupational health and safety programs G4-SO8 Monetary value of significant fines and total number of non-monetary 33 sanctions for non-compliance with laws and regulations G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, Product Responsibility and absenteeism, and total number of work-related fatalities, 91 by region and by gender Aspect: customer Health and Safety G4-LA7 Workers with high incidence or high risk of diseases related 91 DMA Management approach 61-63 to their occupation G4-PR1 Percentage of significant product and service categories for which health 66 G4-LA8 Health and safety topics covered in formal agreements with trade unions 89 and safety impacts are assessed for improvement Aspect: Training and education G4-PR2 Total number of incidents of non-compliance with regulations and voluntary 66 codes concerning the health and safety impacts of products and services DMA 81 Management approach during their life cycle, by type of outcomes G4-LA9 Average hours of training per year per employee by gender 81-82 and by employee category Aspect: Product and Service labelling G4-LA10 Programs for skills management and lifelong learning that support 83 DMA Management approach 67 the continued employability of employees and assist them in managing G4-PR3 Type of product and service information required by the organisation's 67 career endings procedures for product and service information and labelling, G4-LA11 Percentage of employees receiving regular performance and career 83 and percentage of significant product and service categories subject development reviews, by gender and by employee category to such information requirements Aspect: Diversity and equal opportunity G4-PR4 Total number of incidents of non-compliance with regulations 67 DMA Management approach 76 and voluntary codes concerning product and service information and labelling, by type of outcomes G4-LA12 Composition of governance bodies and breakdown of employees 78 per employee category according to gender, age group, minority G4-PR5 Results of surveys measuring customer satisfaction 68 group membership, and other indicators of diversity Aspect: Marketing communications Human rights DMA Management approach 70 Aspect: Non-discrimination G4-PR7 Total number of incidents of non-compliance with regulations and voluntary 72 DMA Management approach 87 codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes G4-HR3 Total number of incidents of discrimination and corrective actions taken 87 Aspect: Compliance DMA Management approach 70-71 G4-PR8 Monetary value of significant fines for non-compliance with laws 72 and regulations concerning the provision and use of products and services

136 OUR REPORT OUR REPORT 137 Aspect: Transport Society DMA Management approach 56 Aspect: Local communities G4-EN30 Significant environmental impacts of transporting products and other 56,65 DMA Management approach 92 goods and materials for the organisation's operations, and transporting G4-SO1 92 members of the workforce Percentage of operations with implemented local community engagement, impact assessments, and development programs CATEGORY: SOCIAL G4-SO2 Operations with significant actual and potential negative impacts 66 Labor practices and decent work on local communities Aspect: Employment Aspect: Anti-corruption DMA Management approach 76 DMA Management approach 33 G4-LA1 Total number and rates of new employee hires and employee turnover 80 G4-SO5 Confirmed incidents of corruption and actions taken 33 by age group, gender and region Aspect: public policy 88 G4-LA2 Benefits provided to full-time employees that are not provided to DMA Management approach 92 temporary or part-time employees, by significant locations of operation G4-SO6 Total value of financial and in-kind political contributions to parties, 92 Aspect: Health and Safety politicians and similar institutions by country. DMA Management approach 89 Aspekt: Compliance G4-LA5 Percentage of total workforce represented in formal joint 89 DMA Management approach 29 management–worker health and safety committees that help monitor and advise on occupational health and safety programs G4-SO8 Monetary value of significant fines and total number of non-monetary 33 sanctions for non-compliance with laws and regulations G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, Product Responsibility and absenteeism, and total number of work-related fatalities, 91 by region and by gender Aspect: customer Health and Safety G4-LA7 Workers with high incidence or high risk of diseases related 91 DMA Management approach 61-63 to their occupation G4-PR1 Percentage of significant product and service categories for which health 66 G4-LA8 Health and safety topics covered in formal agreements with trade unions 89 and safety impacts are assessed for improvement Aspect: Training and education G4-PR2 Total number of incidents of non-compliance with regulations and voluntary 66 codes concerning the health and safety impacts of products and services DMA 81 Management approach during their life cycle, by type of outcomes G4-LA9 Average hours of training per year per employee by gender 81-82 and by employee category Aspect: Product and Service labelling G4-LA10 Programs for skills management and lifelong learning that support 83 DMA Management approach 67 the continued employability of employees and assist them in managing G4-PR3 Type of product and service information required by the organisation's 67 career endings procedures for product and service information and labelling, G4-LA11 Percentage of employees receiving regular performance and career 83 and percentage of significant product and service categories subject development reviews, by gender and by employee category to such information requirements Aspect: Diversity and equal opportunity G4-PR4 Total number of incidents of non-compliance with regulations 67 DMA Management approach 76 and voluntary codes concerning product and service information and labelling, by type of outcomes G4-LA12 Composition of governance bodies and breakdown of employees 78 per employee category according to gender, age group, minority G4-PR5 Results of surveys measuring customer satisfaction 68 group membership, and other indicators of diversity Aspect: Marketing communications Human rights DMA Management approach 70 Aspect: Non-discrimination G4-PR7 Total number of incidents of non-compliance with regulations and voluntary 72 DMA Management approach 87 codes concerning marketing communications, including advertising, promotion, and sponsorship, by type of outcomes G4-HR3 Total number of incidents of discrimination and corrective actions taken 87 Aspect: Compliance DMA Management approach 70-71 G4-PR8 Monetary value of significant fines for non-compliance with laws 72 and regulations concerning the provision and use of products and services

136 OUR REPORT OUR REPORT 137 In order to obtain additional information about the 5.3. report or approach of Grupa Azoty to CSR please contact: Independent confirming report Monika Płońska, [email protected] We are interested in your opinion about our report and the scope of information you would like to find in its another edition. In this case, as well as in the case of order of a copy of the report, please write to the following address [email protected]

Contact for the media: Spokesperson of Grupa Azoty [email protected]

Contact for investors: Investor Relations Team [email protected]

Publisher Grupa Azoty S.A. Ul. Kwiatkowskiego 8 33-101 Tarnów Poland

138 OUR REPORT OUR REPORT 139 In order to obtain additional information about the 5.3. report or approach of Grupa Azoty to CSR please contact: Independent confirming report Monika Płońska, [email protected] We are interested in your opinion about our report and the scope of information you would like to find in its another edition. In this case, as well as in the case of order of a copy of the report, please write to the following address [email protected]

Contact for the media: Spokesperson of Grupa Azoty [email protected]

Contact for investors: Investor Relations Team [email protected]

Publisher Grupa Azoty S.A. Ul. Kwiatkowskiego 8 33-101 Tarnów Poland

138 OUR REPORT OUR REPORT 139