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RT We free imagination, we calculate and plan. | 2013 Creation is work that will never end. Fortunately. reportpowering Creation

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grupaazoty.com gRupa azoTy inTegRaTed RepoRT | 2013 Grupa Azoty integrated report | 2013

Report was prepared in accordance with GRI G4 (core) Report was verified by a third-party external verification agency. POWERING CREATION

2 integrated report | 2013 POWERING CREATION

Ladies and Gentlemen,

It is with great pleasure that I in large-volume chemical production, Even today we pioneer changes which present to you the first integrated as well as the many years of research may dramatically alter our current annual report of the Grupa Azoty and development work. We can build perception of . We set Group, covering the financial year on this to continue innovating and a course for smart solutions, and we G4-1 G4-2 2013. In line with an internationally- exploring for efficient solutions, which find them. We understand the threats, recognised approach, the report is essential in the context of global but we can also see the opportunities offers a systematic perspective social and environmental challenges. and capture them successfully. In the on our general economic, social and past, mineral fertilizers proved environmental performance, rather The Grupa Azoty Group leverages instrumental in increasing the food than just the financial results. its combined production capacities supply, thus dispelling the shadow This report is not only among and operates a uniform management of the Malthusian catastrophe, but ’s first integrated reports, framework relying on process today we can see with growing clarity but also one of the first on the market leaders, defined decision paths that fertilizers must also be safe to to implement the latest version and decision-making transparency. the environment. The world needs of the GRI Sustainability Reporting The consolidation, which was carried safe and effective fertilizers, and we Guidelines – the G4. I strongly believe out so as to preserve each company’s are here to offer them – it is our duty that this reporting framework individual character and place in the as the market’s leader. ensures an accurate and reliable local community, allows the entire presentation of a business enterprise. organisation to operate as if it were At the Grupa Azoty Group, I also think that this comprehensive a single company. Critical to successful we deliver solutions offering approach will be well received by the integration are respect, people and tangible social and environmental business environment, including common values. The respect for local value across all of our operating our shareholders. In my opinion, heritage and traditions, something areas. As shown by numerous presenting a full picture of our all our employees have in common, examples, business, including the performance, rather than just the is the source of our unique character chemical industry, opens the door financial results, will enable the and creative power. As the shared to global sustainable development. capital market to better understand vision and sense of unity binding our The Grupa Azoty Group, its creative the Group’s day-to-day operations team are the key source of synergy, workforce and stakeholders, and recognise its potential for long- we are working hard towards creating as integrated by the Group, term growth. A reporting approach a robust organisational culture across are all part of this new solution. that integrates social, environmental the Group. The awareness that we can have and economic perspectives with a real impact on the world fuels financial data has been developed For us, responsibility is a commitment our passion and creative power. to respond to the public’s to finding solutions to the problems We are thus building sustainable expectations towards business. of today’s world, including those value to the benefit of our immediate By catering to these expectations facing the Polish economy. environment, as well as, in the today, we set new standards. This commitment consists in limiting long-term perspective, for the our environmental impact, but also shareholders who have chosen Last year ushered in a host in discovering new opportunities, to invest in Grupa Azoty. of enormous challenges for innovations and unique expertise, As a team, we shall not betray the Group, spurring the creation as well as in creating prime quality the confidence which our of entirely new value in the Polish products, safe to the environment shareholders have placed in us. economy. We have succeeded and valuable to society. Rather than in consolidating 30 companies under make empty declarations about a single brand, including Poland’s sustainable growth, the chemical four largest chemical plants: industry should pursue concrete Have a good read, in Tarnów, Kędzierzyn-Koźle, solutions to make growth sustainable. Police and Puławy. We have The Grupa Azoty Group wants to play thus accumulated a wealth a part in developing such solutions. Paweł Jarczewski of complementary and unique capabilities in the chemical industry – the know-how and experience President of the Management Board Grupa Azoty S.A.

2 3 integrated report | 2013 integrated report | 2013 Grupa Azoty in key figures

After a time of growth comes a time of maturity – a time for harvest. A time for taking stock. Sometimes figures can bring as much joy as ripe fruit.

4 integrated report | 2013 Grupa Azoty in key figures

Revenue PLN 9 821m

EBIT PLN 703m

EBITDA PLN 1 253m

Capital expenditure PLN 670m

Net profit PLN 714m

Equity PLN 6 271m

Total assets PLN 9 962m

Headcount at end of year 13 879

Energy consumption 47 975 894 GJ

Water consumption 275 810 550 m3

4 5 integrated report | 2013 integrated report | 2013 6 integrated report | 2013 1 Introduction

6 7 integrated report | 2013 integrated report | 2013 Grupa Azoty Group’s profile

Architecture is a dialogue between matter and imagination. It's the art of harmony. Much like in business – a company's well-crafted architecture brings safety and lets various assets be used to achieve a common, daring goal.

8 integrated report | 2013 Grupa Azoty Group’s profile

The Grupa Azoty Group has Its products find practical applications As the industry leader, the Grupa consolidated several dozen in virtually all areas of the economy, Azoty Group strives to play an active with significant value added in social part in shaping the future and setting companies under a single terms. They open the field for new the highest industry standards. brand, including Poland’s technologies and improve the quality The Group pursues these objectives largest chemical plants in of everyday life. The Group’s products through membership in numerous are widely applied in agriculture, business and trade organisations, Tarnów, Kędzierzyn-Koźle, automotive industry, construction, which it sees as a platform for Police and Puławy, electrical engineering, pharmacy, dialogue with the market and accumulating a vast potential household products, food, textile and its environment. cosmetic industries, wood processing Through synergies, the combined of complementary capabilities. industry, paper manufacture, mining, knowledge and experience of printing, furniture, machine-building the Grupa Azoty Group’s R&D industry, sports equipment, and many laboratories and its significant The Group’s business is divided other areas. They are indispensable production capacities can foster into the following segments: for the manufacture of laminated unprecedented innovation and ■ Agro Fertilizers, decorative materials, wood-based ■ efficiency. The Grupa Azoty Group is boards, glues, paints and varnishes. ■■ Plastics, a network of equity-linked companies

G4-4 G4-12 Without mineral fertilizers, including which, operating as a single entity, ■■ Chemicals, those produced by the Grupa Azoty can now fully leverage their market Group, agricultural yield would not ■■ Energy, potential. be sufficient to feed the world, and ■■ Other Activities. it would not be possible to obtain many medicines and other specific The Grupa Azoty Group is currently products, such as de-icing blends the leader of the Polish chemical for aircraft runways, antiseptic industry and a significant player containers or fuel additives necessary in the EU market. for exhaust emissions treatment. Without such products, today’s food industry and medicine would certainly not be the same.

8 9 integrated report | 2013 integrated report | 2013 Grupa Azoty GROUP'S STRUCTURE Grupa Azoty GROUP'S STRUCTURE

Grupa Azoty S.A.

Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Grupa Azoty Kopalnie i Zakłady ATT Polymers GmbH „KOLTAR” Sp. z o.o. Zakłady Azotowe Zakłady Azotowe Zakłady Chemiczne Polskie Konsorcjum Chemiczne Siarki 100% 100% Kędzierzyn S.A. „Puławy” S.A. „POLICE” S.A. Chemiczne Sp. z o.o. „Siarkopol” S.A. 93,48% 95,98% 66% 63,27%* 85% 5

Hotel CENTRALNY Sp. z o.o. „Agrochem” Sp. z o.o. „Automatika” Usługi Grupa Azoty in liquidation 100% Kontrolno-Pomiarowe Sp. z o.o. Automatyka Sp. z o.o. 100% 100% 79,69% Grupa Azoty ZAKSA S.A. „Agrochem Puławy” Sp. z o.o. „KONCEPT” Sp. z o.o. Jednostka Ratownictwa 91,67% *** 100% 100% Chemicznego Sp. z o.o. 100% 4 REMECH Grupa Inwestycyjno- Regionalne Laboratorium CTL CHEMKOL Sp. z o.o. SCF Natural Sp. z o.o. Remontowa Sp. z o.o. Oceny Mleka Sp. z o.o. 49% 99,99% 100% 100%

Grupa Azoty „TRANSTECH” Konsorcjum D.W. „Jawor” Sp. z o.o. Polskie Konsorcjum Usługi Sprzetowo- EKO TECHNOLOGIES in liquidation 99,96% 1 Chemiczne Sp. z o.o. Transportowe Sp. z o.o. 60% 36,73% * 100% GZNF „Fosfory” Sp. z o.o. „Supra” Agrochemia Sp. z o.o. EKOTAR Sp. z o.o. 98,43% in liquidation 3 12%***

Przedsiębiorstwo Żywienia Zarzad Portu Morskiego Grupa Azoty Zbiorowego i Usług Police Sp. z o.o. PROREM Sp. z o.o. „STO-ZAP” Sp. z o.o. 99,97% 100% 96,15% 12 EKOTAR Sp. z o.o. REMZAP Sp. z o.o African Investment Group S.A. 12%*** 94,61% 55%

Zakład Opieki Zdrowotnej INFRAPARK Police S.A. „Medical” Sp. z o.o. in liquidation 91,41% 54,43%

„Budchem” Sp. z o.o. Zakłady Azotowe Chorzów S.A. in liquidation 85% 48,96%

PROZAP Sp. z o.o. „KEMIPOL” Sp. z o.o. 84,69% 33,99%

Bałtycka Baza Masowa Sp. z o.o. 50% „NAVITRANS” Sp. z o.o. „NAVITRANS” Sp. z o.o. 26,45%**** 26,45%****

Elektrownia Puławy Sp. z o.o. 50% Changes in Group structure in period 1st January-17th July 2014: 1) Dom Wczasowy Jawor Sp. z o.o. w likwidacji (in liquidation) − the company was deleted from the National Court Register on June 9th 2014. * Grupa Azoty PKCH Sp. z o.o. – shares held by Grupa Azoty S.A. CTL KOLZAP Sp. z o.o. and Grupa Azoty ZAK S.A. 49% 2) Przedsiębiorstwo Żywienia Zbiorowego i Usług STO-ZAP Sp. z o.o. – the company’s name was changed to STO - ZAP Sp. z o.o. as of February 27th 2014. ** ZAKSA S.A. – shares held by Grupa Azoty ZAK S.A. (91.67%) and CTL Chemkol Sp. z o.o. (0.783%) 3) Supra Agrochemia Sp. z o.o. w likwidacji (in liquidation) − on December 16th 2013, „NAVITRANS” Sp. z o.o. the Extraordinary General Meeting of Supra Agrochemia Sp. z o. o. w likwidacji EKOTAR sp. z o.o. – shares held by Grupa Azoty JRCH sp. z o.o. (in liquidation) resolved to revoke the resolution on the company’s liquidation *** and Grupa Azoty PROREM sp. z o.o. (12% each) 26,45%**** with effect from January 1st 2014; an entry changing the company name (to Supra „NAVITRANS” sp. z o.o. – shares held by Grupa Azoty S.A., Agrochemia Sp. z o. o. ) was made in the National Court Register on January 27th 2014. **** Grupa Azoty Zakłady Azotowe „Puławy” S.A. 4) Regionalne Laboratorium Oceny Mleka Sp. z o.o. – the company was deleted from TECHNOCHIMSERWIS S.A. and Bałtycka Baza Masowa sp. z o.o. the National Court Register on March 14th 2014 in connection with its merger with closed type Jednostka Ratownictwa Chemicznego Sp. z o.o., a Grupa Azoty Group company. 25% 5) Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. – the company’s name was changed to Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. as of February 11th 2014. 6) On May 19th 2014, Grupa Azoty S.A. incorporated two new subsidiaries: Grupa Azoty Compounding Sp. z o.o. (100%) and Grupa Azoty Folie Sp. z o.o. (100%). Grupa Azoty Compounding Sp. z o.o. was entered in the National Court Register on Correct as at 31 December 2013 r. June 18th 2014, while Grupa Azoty Folie Sp. z o.o. was registered on June 24th 2014. 7) On May 14th 2014, AFRIG Trade SARL, a wholly-owned subsidiary of African Investment Group S.A., was registered.

10 integrated report | 2013 Grupa Azoty GROUP'S STRUCTURE Grupa Azoty GROUP'S STRUCTURE

The Group comprises Grupa The above subsidiaries have a total Azoty S.A. of Tarnów and its eight of 23 their own subsidiaries. G4-17 subsidiaries (seven companies in The Grupa Azoty Group has which the Parent holds interests consolidated the Polish chemical above 50%, and one indirectly G4-6 industry by bringing together Poland’s controlled entity). In addition to largest chemical plants, including the Tarnów-based Parent Company those in Tarnów, Puławy, Police and

G4-5 of the Grupa Azoty Group, this Kędzierzyn-Koźle. This consistently integrated sustainability report also implemented consolidation strategy covers its three largest subsidiaries: allows the Group to be a competitive G4-3 G4-3 ■■ Grupa Azoty Zakłady Azotowe force not only in the Polish and EU „Puławy” S.A. z Puław markets, but also globally. (Grupa Azoty Puławy), Through its subsidiaries, the Grupa ■■ Grupa Azoty Zakłady Azotowe Azoty Group has access to seaports Kędzierzyn S.A. z Kędzierzyna-Koźla in Police, Gdańsk and Gdynia and the (Grupa Azoty ZAK S.A.), cargo handling port in Kędzierzyn- ■■ Grupa Azoty Zakłady Chemiczne Koźle, and operates its own rolling „Police” S.A. z Polic stock. The Group’s port facilities and (Grupa Azoty Police). rolling stock are adapted for transport of fertilizers and chemical products. The four companies covered by this report account for the majority of the Group’s revenue and operations. In addition, the Group’s consolidated financial statements also take into The constituent companies account the following five subsidiaries of Grupa Azoty: bring various specialisations

■■ Grupa Azoty ATT Polymers GmbH and capabilities into the Group, of Guben, Germany, which is where its strength ■■ Grupa Azoty Polskie Konsorcjum comes from. The wealth of their Chemiczne Sp. z o.o. (Tarnów), experience offers a potential ■■ Grupa Azoty „Koltar” Sp. z o.o. for synergies released through (Tarnów), the consolidation process. ■■ Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki „Siarkopol” S.A. (Grzybów),

■■ Navitrans Sp. z o.o. (Gdynia, an indirectly controlled subsidiary).

10 11 integrated report | 2013 integrated report | 2013 Size alone does not guarantee strength. Because strength without flexibility is an illusion. Which is why great organizations need to be built from diverse elements, in order to manage them wisely in every situation.

Grupa Azoty Companies Grupa Azoty Companies

Grupa Azoty S.A. Grupa Azoty ZAK S.A.

full name: Grupa Azoty Spółka Akcyjna full name: Grupa Azoty Zakłady Azotowe Kędzierzyn Spółka Akcyjna

Grupa Azoty S.A. has been present Specialist focus Management Board on the market for nearly 90 years. Grupa Azoty S.A.’s core business Paweł Jarczewski comprises manufacture and sale President of the Management Board Consolidation of mineral fertilizers, engineering plastics (including raw ingredients Witold Szczypiński Grupa Azoty S.A. is the Parent for their production), and other Vice-President of the Management Board, of its group (the Grupa Azoty chemicals, as well as provision Director General Group). Over the last five years, of related services. the Company has implemented Andrzej Skolmowski a strategy to consolidate the most Grupa Azoty S.A. is a major producer Vice-President of the Management Board valuable assets of the Polish chemical of fertilizers: Krzysztof Jałosiński industry. As a result, it has brought ■■ standard CAN 27 calcium Vice-President of the Management Board together under a single brand a host , of companies with different Marek Kapłucha ■■ AN 32 ammonium nitrate, and traditions and complementary particularly of Vice-President of the Management Board business profiles. ■■ fertilizers with a sulfur content: Marian Rybak Saletrosan®26, and Vice-President of the Management Board ■ AS 21 ammonium sulfate, Grupa Azoty S.A. ■ Artur Kopeć on the capital market Member of the Management Board of which it is the largest domestic Ticker symbol: ATT manufacturer. It is the only Polish Supervisory Board producer of polyacetal and a leading Grupa Azoty S.A. has been listed producer of modified engineering at the Warsaw Stock Exchange Monika Kacprzyk-Wojdyga plastics based on polyamide 6, since 2008. Since 2009, it has Chairperson of the Supervisory Board polyacetal and other compounds. been included in the Respect Index, The Company offers caprolactam Jacek Obłękowski and since 2013 – in the MSCI (both in liquid and crystalline forms), Vice-Chairperson of the Supervisory Board Emerging Markets index. as well as polyacetal and polyamide 6, Ewa Lis of which it is an integrated producer. Secretary of the Supervisory Board

Grupa Azoty S.A. also offers chemicals Robert Kapka (such as cyclohexanone and mixed Member of the Supervisory Board acids) and catalysts. It is a provider of modern laboratory services. Tomasz Klikowicz The Company has its own research Member of the Supervisory Board facilities, performing over a million analyses per year. It concentrates both Artur Kucharski on research into new products and Member of the Supervisory Board technologies, and on development Marek Mroczkowski of existing products. Member of the Supervisory Board

Zbigniew Paprocki Member of the Supervisory Board

Ryszard Trepczyński Member of the Supervisory Board

Correct as at 17 July 2014

14 integrated report | 2013 Grupa Azoty Companies Grupa Azoty Companies

Grupa Azoty S.A. Grupa Azoty ZAK S.A. full name: Grupa Azoty Spółka Akcyjna full name: Grupa Azoty Zakłady Azotowe Kędzierzyn Spółka Akcyjna

Grupa Azoty ZAK S.A. has been Specialist focus Management Board present on the market for over Grupa Azoty ZAK S.A.’s business Adam Leszkiewicz 60 years. profile consists in manufacture, President of the Management Board, provision of services and trading Director General Consolidation operations involving fertilizers and nitrogen compounds, OXO Mirosław Ptasiński Grupa Azoty ZAK S.A. joined alcohols and plasticizers, as well Vice-President of the Management Board, the consolidation process of as other organic and inorganic Head of the Finance Department the Grupa Azoty Group in 2010, chemicals. when Grupa Azoty S.A. acquired Dariusz Bednorz a 52.62% interest in the company. In terms of capacity, Vice-President of the Management Board Subsequently, in 2011, it acquired Grupa Azoty ZAK S.A. is currently Krzysztof Kamiński a further 40.86% of its shares the third largest domestic producer Vice-President of the Management Board (which brought its total shareholding of nitrogen-based fertilizers with in Grupa Azoty ZAK S.A. to 93.48%). excellent spreading properties. Grupa Azoty ZAK S.A. offers such Supervisory Board nitrogen fertilizers as: Andrzej Skolmowski Chairperson of the Supervisory Board ■■ Zaksan®, ■■ SALMAG® (a line of products), Jerzy Koziara ■■ calcium ammonium nitrate, Vice-Chairperson of the Supervisory Board ■ 46% granulated . ■ Paweł Polański

Secretary of the Supervisory Board It also markets a range of plasticizers under the Oxoplast® brand, and Marek Kapłucha a range of products from the OXO Member of the Supervisory Board alcohol category. The branded products offered Witold Szczypiński by the company also include NOXyTM Member of the Supervisory Board (AdBlue®). Marcin Stanisław Witkowski Grupa Azoty ZAK S.A. was the first Member of the Supervisory Board in Poland to develop the processes to obtain basic chemical products such as urea, phthalic anhydride, Correct as at 17 July 2014 maleic anhydride, and OXO alcohols, and to launch these products for commercial production. Specialists who had gained experience launching that production became the core group of professionals who have helped launch subsequent chemical plants in Poland.

14 15 integrated report | 2013 integrated report | 2013 Grupa Azoty Companies Grupa Azoty Companies

Grupa Azoty Police

full name: Grupa Azoty Zakłady Chemiczne „Police” Spółka Akcyjna

Grupa Azoty Police has been present Specialist focus Management Board on the market for over 40 years. Grupa Azoty Police’s business Krzysztof Jałosiński profile consists in manufacture, President of the Management Board, Consolidation provision of services and trading Director General operations involving compound Grupa Azoty Police joined fertilizers, , phosphoric Wojciech Naruć the consolidation process of and sulfuric acid, titanium white, Vice-President of the Management Board the Grupa Azoty Group in 2011, and other chemicals. when Grupa Azoty S.A. acquired Rafał Kuźmiczonek a 66% interest in the company. Grupa Azoty Police manufactures Vice-President of the Management Board the following compound mineral and nitrogen fertilizers: Supervisory Board Grupa Azoty Police ■ POLIDAP®, ■ Paweł Jarczewski on the capital market ® ■■ POLIFOSKA , Chairperson of the Supervisory Board Ticker symbol: PCE ■■ POLIMAG®, Anna Tarocińska ■■ mocznik.pl®. Grupa Azoty Police has been Secretary of the Supervisory Board listed at the Warsaw Stock Exchange since 2005. Production and sale of such Marcin Likierski products as Likam®, a water Member of the Supervisory Board solution of ammonia, and NOXy™ (also marketed as AdBlue®) Wiesław Markwas are other important elements Member of the Supervisory Board of the company’s operations. Andrzej Skolmowski Core areas of its business also Member of the Supervisory Board include production of titanium white and its by-products: iron (II) sulfate Correct as at 17 July 2014 and hydrolytic acid. Grupa Azoty Police operates the only titanium hite production facility in Poland. Titanium dioxide pigments are sold under the TYTANPOL® trademark. The company operates its own deep-sea port, located just next to the production facilities (Poland’s fourth largest seaport by weight of cargo handled).

16 integrated report | 2013 Grupa Azoty Companies Grupa Azoty Companies

Grupa Azoty Police Grupa Azoty Puławy full name: Grupa Azoty Zakłady Chemiczne „Police” Spółka Akcyjna full name: Grupa Azoty Zakłady Azotowe „Puławy” Spółka Akcyjna

Grupa Azoty Puławy has been present Specialist focus Management Board on the market for over 50 years. Grupa Azoty Puławy’s business Marian Rybak profile consists in manufacture, President of the Management Board Consolidation provision of services and trading operations involving mineral Wojciech Kozak Grupa Azoty Puławy joined fertilizers and chemical products. Vice-President of the Management Board the consolidation process of the Grupa Azoty Group in 2012, Zenon Pokojski The company’s flagship mineral Vice-President of the Management Board when Grupa Azoty S.A. acquired fertilizer products include: a 10.3% interest in the company. ■■ PULAN®, The consolidation gained a new Supervisory Board momentum in 2013, when ■■ PULREA®, Cezary Możeński following exchange of shares ■■ RSM® and RSM®S, by the shareholders of Zakłady Chairperson of the Supervisory Board ■■ PULASKA®, Azotowe Puławy S.A. for shares ■■ PULSAR®. Jerzy Koziara in Zakłady Azotowe w Tarnowie- Vice-Chairperson of the Supervisory Board Mościcach S.A., the Tarnów-based company increased its interest It also manufactures chemicals, Jacek Józef Wójtowicz in the former to 83.7%, and including the following key products: Secretary of the Supervisory Board subsequently, following the ■■ Melamina®, acquisition of an additional Andrzej Bartuzi ■■ Caprolactam®, block of shares, to 95.89%. Member of the Supervisory Board ■■ hydrogen peroxide, Marek Kapłucha ■■ PULREA®, Member of the Supervisory Board Grupa Azoty Puławy ■■ PULNOX®, on the capital market ■■ NOXy™ (previously AdBlue®). Andrzej Skolmowski Ticker symbol: ZAP Member of the Supervisory Board Being a parent of its own group, Grupa Azoty Puławy is able to offer Grupa Azoty Puławy has been Correct as at 17 July 2014 a vast range of fertilizer products: listed at the Warsaw Stock Exchange phosphate fertilizers and fertilizer since 2005. blends (Fosdar™ Enhanced Superphosphate, Amofoska®), fertilizer blends produced at GZNF Fosfory of Gdańsk, the Agrafoska and Amofosmag fertilizers produced at Agrochem Dobre Miasto, as well as nitrate fertilizer and calcium nitrate manufactured at Zakłady Azotowe Chorzów S.A. The plants of the Grupa Azoty Puławy Group also manufacture sulfuric acid, sodium bisulfite, as well as technical- and food-grade .

17 integrated report | 2013 Grupa Azoty Companies

GZNF FOSFORY

full name: Gdańskie Zakłady Nawozów Fosforowych "FOSFORY" Sp. z o.o.

A subsidiary of Grupa Azoty Puławy. Specialist focus Management Board Gdańskie Zakłady Nawozów The company began its operations in Mirosław Turzyński Fosforowych Fosfory Sp. z o.o. 1912 as a manufacturer of sulfuric acid President of the Management Board is a manufacturer and service and various inorganic salts. Andrzej Szymańczak provider. The present business profile Member of the Management Board of Gdańskie Zakłady Nawozów Fosforowych FOSFORY Sp. z o.o. consists in manufacture of agricultural Supervisory Board fertilizers and chemical products, as Zenon Pokojski well as provision of cargo handling Chairperson of the Supervisory Board and laboratory services. Weronika Gągała The company’s range of fertilizer Vice-Chairperson of the Supervisory Board products includes mineral fertilizers with extensive applications in Marek Zatorski agriculture, cultivation of fruits and Secretary of the Supervisory Board vegetables. Grażyna Pawlik Its product offering also includes Member of the Supervisory Board Amofoska fertilizers, such as:

■■ AMOFOSKA NPK 5-10-25+0,1B Correct as at 17 July 2014 ■■ AMOFOSKA NPK 4-16-18 ■■ AMOFOSKA NPK 4-12-20 ■■ AMOFOSKA NPK 4-12-12

and FOSDAR™ 40 Enhanced Superphosphate. Gdańskie Zakłady Nawozów Fosforowych Fosfory Sp. z o.o. also offers sulfuric acid and sodium bisulfite. Leveraging its convenient location within the Gdańsk port, the company has, since 1976, conducted extensive forwarding activities involving the services of handling bulk cargo transported by sea. The company also uses its advanced laboratory facilities to offer a broad range of laboratory services.

18 integrated report | 2013 Grupa Azoty Companies Grupa Azoty Companies

GZNF FOSFORY Zakłady Azotowe Chorzów full name: Gdańskie Zakłady Nawozów Fosforowych "FOSFORY" Sp. z o.o. full name: Zakłady Azotowe Chorzów S.A.

A subsidiary of Grupa Azoty Puławy. Specialist focus Management Board Zakłady Azotowe Chorzów S.A. Zakłady Azotowe Chorzów S.A. Krzysztof Burzański is a production company. focuses on manufacture and sale President of the Management Board of chemical products, fertilizers, and approved food additives. Krzysztof Mendecki Member of the Management Board Its range of fertilizer products includes: Supervisory Board ■■ potassium nitrate, Anna Gol ■■ fertilizer calcium nitrate, Chairperson of the Supervisory Board ■■ fertilizer blends - NPK, Wiesław Olszak ■■ monopotassium phosphate. Vice-Chairperson of the Supervisory Board

Zakłady Azotowe Chorzów S.A. Adam Leszkiewicz offers industrial chemicals, including Member of the Supervisory Board technical-grade potassium nitrate, Scalnit 50, and Borax pentahydrate. Kinga Śluzek It also manufactures food additives Member of the Supervisory Board (including food-grade potassium Ewa Sobczyk nitrate, ammonium carbonate E503, disodium diphosphate E450 and Secretary of the Supervisory Board other). Kamil Zwolański Member of the Supervisory Board In 2013, a state-of-the-art animal fats processing facility was placed in service at Zakłady Azotowe Correct as at 17 July 2014 Chorzów S.A., enabling it to produce stearin and glycerin. The facility, worth PLN 65m, is the first plant of this type in Poland. Its annual stearin production capacity is 13 thousand tonnes.

Zakłady Azotowe CHORZÓW was established in 1916. Next to Grupa Azoty S.A., the Chorzów-based company is the birthplace of the Polish chemical industry, which was created in the interwar period by the then President of Poland Ignacy Mościcki and Minister of State Treasury Eugeniusz Kwiatkowski.

19 integrated report | 2013 Grupa Azoty Companies Grupa Azoty Companies

Grupa Azoty ATT Polymers Grupa Azoty SIARKOPOL

full name: Grupa Azoty ATT Polymers GmbH full name: Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki „Siarkopol” S.A.

Grupa Azoty ATT Polymers GmbH Specialist focus Management Board was established over 50 years ago. Grupa Azoty ATT Polymers Krzysztof Pieńkowski is engaged in the production and Managing Director sale of polyamide 6, marketed Consolidation under the trade name of Alphalon™. Jacek Dychtoń Grupa Azoty ATT Polymers joined Managing Director the consolidation of the Grupa Azoty The business of Grupa Azoty ATT Group in 2010, when Grupa Azoty S.A. Polymers includes the processing acquired 100% of the shares in the of caprolactam into polyamide 6, Supervisory Board German company, which was then natural or modified, with relative Andrzej Skolmowski in bankruptcy. viscosities of 2.4–4.0. Chairperson of the Supervisory Board Małgorzata Malec The company’s aggregate production capacities are about 45 kt per year. Vice-Chairperson of the Supervisory Board The production facilities in Guben Jan Wais are characterised by considerable Member of the Supervisory Board flexibility, allowing the company, and consequently the Grupa Azoty Group, to easily respond to changing Correct as at 17 July 2014 customer needs.

20 integrated report | 2013 Grupa Azoty Companies

Grupa Azoty SIARKOPOL

full name: Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki „Siarkopol” S.A.

Grupa Azoty SIARKOPOL has Specialist focus Management Board operated for nearly 50 years. Grupa Azoty SIARKOPOL offers Marian Kosowicz the following sulfur-based products: President of the Management Board, Consolidation ■■ liquid sulfur, Director General Grupa Azoty SIARKOPOL joined ■■ granulated sulfur, Dariusz Bednorz the consolidation of the Grupa Azoty ■■ milled sulfur, Vice-President of the Management Board Group in 2013, when Grupa Azoty S.A. acquired an 85% interest ■■ flaked sulfur, Mirosław Osiecki in the company. ■■ carbon disulfide, Vice-President of the Management Board

■■ sulfur insoluble in CS2 – POLSINEX. Zbigniew Snopkiewicz Member of the Management Board

The company is one of few producers of sulfur insoluble in carbon disulfide, Supervisory Board which is an important raw material Marek Kapłucha for the tyre industry. Chairperson of the Supervisory Board

Barbara Haraburda The company’s Osiek sulfur mine Vice-Chairperson of the Supervisory Board is currently the world’s only native sulfur mine using the underground Andrzej Kapłan melting method to extract the Secretary of the Supervisory Board mineral. The mine’s production capacity ranges from 600 thousand Sławomir Krawczykowski to 960 thousand tonnes per year. Member of the Supervisory Board Exports account for 80% of Wojciech Naruć Grupa Azoty SIARKOPOL’s revenue. Member of the Supervisory Board

Witold Szczypiński Member of the Supervisory Board

Correct as at 17 July 2014

20 21 integrated report | 2013 integrated report | 2013 Grupa Azoty Companies Grupa Azoty Companies

Grupa Azoty KOLTAR Grupa Azoty PKCh

full name: Grupa Azoty „Koltar” spółka z ograniczoną odpowiedzialnością full name: Grupa Azoty Polskie Konsorcjum Chemiczne spółka z ograniczoną odpowiedzialnością.

KOLTAR was established nearly Specialist focus Management Board 15 years ago, following the Within the Grupa Azoty Group, the Piotr Golemo transformation of Zakład Transportu company is responsible for railway President of the Management Board, Kolejowego, a railway transport transport of goods, forwarding, Director General business unit which was then infrastructure maintenance and part of Zakłady Azotowe rolling stock management. It also Jarosław Wrona w Tarnowie-Mościcach S.A. successfully provides its services Vice-President of the Management Board, to customers outside the Group. Financial Director

Consolidation In 2013, the company set on tracks Correct as at 17 July 2014 Grupa Azoty KOLTAR is a direct more than 1,300 trains, which subsidiary of Grupa Azoty S.A. have covered over 160 thousand Initially, the company’s business train-kilometres running consisted only in maintenance on PKP PLK S.A. tracks. of the rolling stock and railway siding of Zakłady Azotowe Grupa Azoty KOLTAR has been w Tarnowie-Mościcach S.A., maintaining its position as a valued but as the company developed, service provider in Poland in the it started to provide services to area of rolling stock repairs and external customers, including licensed transportation services, the Group companies. seeking to expand the latter business. The company is one of the few business operators in Poland licensed to perform comprehensive repairs of rail car chassis and tanks suitable for transporting hazardous materials.

22 integrated report | 2013 Grupa Azoty Companies Grupa Azoty Companies

Grupa Azoty KOLTAR Grupa Azoty PKCh full name: Grupa Azoty „Koltar” spółka z ograniczoną odpowiedzialnością full name: Grupa Azoty Polskie Konsorcjum Chemiczne spółka z ograniczoną odpowiedzialnością.

Grupa Azoty PKCh was established Specialist focus Management Board over 5 years ago. Grupa Azoty PKCh offers Jerzy Woliński high-quality, comprehensive President of the Management Board Consolidation services related to design, preparation and implementation Beata Kurbiel Grupa Azoty PKCh consolidated of investment projects, as well Member of the Management Board with the Grupa Azoty Group in 2009 as repairs, maintenance and (when Grupa Azoty S.A. and the keeping of the Grupa Azoty Group’s Henryk Chromik Grupa Azoty ZAK acquired interest production lines in operational Member of the Management Board in the company – 25% each). condition. Next Grupa Azoty S.A. (previously Marek Zatorski Member of the Management Board Zakłady Azotowe w Tarnowie- Additionally, the activities of Mościcach S.A.) acquired 50% Grupa Azoty PKCh also include interest in PKCh from the Ciech management of highly specialised Supervisory Board Group, and then together with Grupa subsidiaries. Azoty ZAK S.A. (previously ZAK S.A.) Witold Szczypiński Chairperson of the Supervisory Board acquired additional shares in PKCh The Grupa Azoty PKCh Group (Polskie Konsorcjum Chemiczne) comprises: Mirosław Ptasiński as a result of the share capital increase ■ Grupa Azoty Jednostka Ratownictwa Deputy Chairperson of the Supervisory Board by bringing shares of: Biuro Projektów ■ Chemicznego sp. z o.o., Zakładów Azotowych ‘BIPROZAT’ Krzysztof Kamiński – Tarnów Sp. z o.o., Jednostka ■■ Grupa Azoty Prorem sp. z o.o., Member of the Supervisory Board Ratownictwa Chemicznego Sp. z o.o., ■■ Grupa Azoty Automatyka sp. z o.o. PROReM Sp. z o.o., ZWRI Sp. z o.o., Andrzej Skolmowski AUTOMATYKA Sp. z o.o., ASTER ZAK Member of the Supervisory Board Sp.z o.o., ZAK SERWIS Sp.z o.o., REKOM Rafał Smoła Sp.z o.o., CHEMZAK Sp.z o.o. (those Secretary of the Supervisory Board companies have been mergered, except for ZWRI Sp. z o.o., which has been sold). As a result of those Correct as at 17 July 2014 changes the Grupa Azoty Group is holding 63.27% shares in Grupa Azoty PKCh and Grupa Azoty ZAK S.A. is holding 36.73% shares. Grupa Azoty PKCh plays a vital role in the Group’s consolidation through integrating and reorganizing companies’ production environment. The process has been ongoing since 2011.

22 23 integrated report | 2013 integrated report | 2013 Grupa Azoty Companies

Grupa Azoty prorem Grupa Azoty JRCh Grupa Azoty Automatyka full name: Grupa Azoty Prorem spółka full name: Grupa Azoty Jednostka full name: Grupa Azoty z ograniczoną odpowiedzialnością Ratownictwa Chemicznego spółka Automatyka spółka z ograniczoną z ograniczoną odpowiedzialnością odpowiedzialnością

A subsidiary of Grupa Azoty PKCh. A subsidiary of Grupa Azoty PKCh. A subsidiary of Grupa Azoty PKCh. Grupa Azoty PROREM is a services Grupa Azoty JRCh is a service Grupa Azoty AUTOMATYKA company. provider and manufacturing company. is a services company.

Specialist focus Specialist focus Specialist focus Grupa Azoty PROREM specialises in Grupa Azoty JRCh’s offering The core business of Grupa Azoty supervision, delivery, start-up and includes specialised rescue services, AUTOMATYKA comprises design, commissioning of newly developed performance of high-risk work and installation, start-up and servicing of and operated facilities. wastewater treatment. industrial control and instrumentation systems. Besides industrial automatics Its specialist services consist in: The company specialises in: and C&I systems, the company is also ■■ repairs and construction of ■■ collection, treatment and storage active in the following areas: chemical installations and steel of hazardous waste (including ■■ power engineering, structures; steam generators and asbestos) and other waste, ■ security systems, water boilers; fixed pressurised ■ ■■ production of chemicals and and non-pressure tanks and other ■ telecommunications, sale of feedstocks for chemical ■ specialist industrial facilities; production, ■■ IT. ■■ comprehensive handling of ■ specialised rescue services, The company is able to provide industrial projects: construction ■ performance of high-risk work, such a broad range of services thanks and repair of process installations to its vast technical resources. for the chemical, petrochemical ■■ industrial wastewater treatment, The high qualifications of its and power industries; employees and their experience ■■ packaging of liquid and loose in the fields of chemical production, ■ mounting or erection of industrial materials. ■ power generation and environmental facilities and installations; heat Grupa Azoty JRCh has PCA-accredited protection have allowed the company transfer stations, heat exchange laboratories which perform tests to efficiently develop new dedicated plants; gas installations, ventilation solutions and, if necessary, integrate systems; transmission pipelines; and analyses of wastewater, waste, water, hazardous agents present them with systems already operated steel structures, hoisting facilities. by its customers. The company in the workplace, emission of has modern diagnostic, repair and substances into the atmosphere, calibration workshops for measuring The company also offers testing nutrition and foodstuffs. instruments and control system services, including radiography The laboratories also offer elements, machine shops, a 0.4 and 6 kV (non-destructive testing), ultrasonic, a wide range of microbiological test bench and a calibration laboratory. magnetic particle and penetration and veterinary diagnostic tests. thickness gauging. It specialises in Moreover, Grupa Azoty JRCh provides machinery diagnostics and water Management Board professional and specialised training, jet cutting. as well as skill improvement courses. Artur Maciejczyk President of the Management Board Robert Buczek Management Board Management Board Vice-President of the Management Board, Artur Sebesta Leszek Gniadek Chief Financial Officer President of the Management Board President of the Management Board Janusz Semeniuk Vice-President of the Management Board, Andrzej Paryło Agata Gorzkowska-Rams Chief Operating Officer Vice-President of the Management Board Member of the Management Board Supervisory Board Katarzyna Piekarska Member of the Management Board, Finance Correct as at 17 July 2014 Jerzy Woliński Chairperson of the Supervisory Board Maciej Włoch Correct as at 17 July 2014 Member and Secretary of the Supervisory Board Wiesław Kozioł Member of the Supervisory Board

24 Correct as at 17 July 2014 integrated report | 2013 Grupa Azoty Companies

25 inteintegrated report | 2013 GROUP’S EXPANSION

Companies, like people, grow, learn, identify their surroundings. But only a select few get to set out into the wide world and explore distant countries and continents.

26 integrated report | 2013 GROUP’S EXPANSION

Over the last six years, Grupa The Group’s own phosphate SIARKOPOL in the Azoty S.A. has pursued rock reserves in Grupa Azoty Group

a strategy to consolidate the In August 2013, Grupa Azoty Police In Q4 2013, Grupa Azoty S.A. most valuable assets of the purchased a 55% interest in African acquired an 85% equity interest Polish chemical industry. Investment Group S.A. (Afrig S.A.). in Kopalnie i Zakłady Chemiczne Siarki Afrig S.A. holds licences for the Siarkopol S.A. of Grzybów, assuming As a result, it has brought development of phosphate and control over the company. together under a single ilmenite rock reserves in Senegal. The new company, currently Thanks to the transaction, Grupa Azoty brand a host of companies operating under the name of Grupa Police has become the first Polish Azoty Siarkopol, has strengthened the with different traditions and chemical company with its own Grupa Azoty Group by enhancing its complementary business mineral deposits. As it no longer access to strategic feedstocks. On the depends on external suppliers, profiles. In 2009−2012, other hand, Grupa Azoty Siarkopol the company should be able to has gained access the Grupa Azoty Group was save ca. PLN 30m in 2014 alone. joined by two companies to new foreign markets thanks Its presence in Senegal is also to the synergies with Grupa Azoty S.A., operating in the Polish sector expected to aid the company’s including the latter’s extensive trade of ’large-scale chemical plans of sales expansion in Africa, relationships. Grupa Azoty S.A. synthesis’ (heavy chemicals), as ships carrying the minerals to has committed to invest PLN 30m Police would carry back fertilizers in Siarkopol’s plant to stabilise based in Kędzierzyn-Koźle and for sale on African markets, which production and improve the level Police, as well as a German would optimise costs. In the target and quality of sulfur granulation. company based in Guben. logistics structure, currently under consideration, the phosphoric acid manufacture would be launched The most important event of 2013 locally, in Senegal. was the concluded acquisition

G4-13 Calendar of acquisitions 2007–2013 of Grupa Azoty Puławy shares. Other integration processes were also ongoing in that period, 9.8 as a result of which the Grupa Azoty Acquisition of a controlling interest in ZA Puławy S.A. Group has developed into a strong Acquisition of an 85% interest in KiZCHS „Siarkopol” S.A. conglomerate. The management model adopted by the Group supports its consolidation and effective management of the growing organisation (for more 7.1 information, see ’Management Acquisition of a 10.3% interest in ZA Puławy S.A. in the first tender offer model’). These developments have primarily delivered economic benefits, but, what is also important, 5.3 they may have an effect on the Grupa Acquisition of a 66% interest in Z.Ch. Police S.A. Azoty Group’s future impact on its Acquisition of a 41% interest in ZAK S.A. social and natural environment1.

Acquisition of Unylon Polymers GmbH Acquisition of a 53% interest in ZAK S.A.

1.9 1.3 1.4 1 The organisational structure of the Grupa Azoty 1.2 Group and the changes ongoing therein are described in detail in the Directors’ Report on the Operations of Grupa Azoty S.A. for the 12 months ended December 31st 2013, available 2007 2008 2009 2010 2011 2012 2013 at http://tarnow.grupaazoty.com/pl/relacje/ raportyr. Skonsolidowane przychody w mld zł

26 27 integrated report | 2013 integrated report | 2013 GROUP’S EXPANSION GROUP’S EXPANSION

Grupa Azoty’s membership in organisations

1. Polska Izba Przemysłu Chemicznego 27. Stowarzyszenie Zachodniopomorski 47. Forum Liderów Bezpiecznej Pracy (Polish Chamber of Chemical Industry Klaster Chemiczny (West Pomerania (Forum of Safe Work Leaders) G4-16 − PIPC) Chemical Cluster) 48. Krajowa Sieć Informatyczna 2. Fertilizers Europe 28. Towarzystwo Ziemi Kozielskiej Europejskiej Agencji Bezpieczeństwa 3. Plastics Europe (Koźle Region Association) i Zdrowia w Pracy (National IT Network of the European Agency for Safety and 4. ECPI (European Council for Plasticisers 29. Stowarzyszenie Elektryków Polskich Health at Work) and Intermediates) (Association of Polish Electrical Engineers), Management Board 49. Komitet Chemii Polskiej Akademii 5. INCOPA (Inorganic Coagulants of the Tarnów Division Nauk (Chemistry Committee of the Producers Association) 30. Izba Przemysłowo-Handlowa Polish Academy of Sciences) 6. TDMA (Titanium Dioxide w Tarnowie (Tarnów Chamber 50. Centrum Zaawansowanych Manufactures Association) of Commerce and Industry) Technologii przy Instytucie Chemii 7. IFA (International Fertilizer Industry 31. Puławska Izba Gospodarcza Przemysłowej (Advanced Technology Association) (Puławy Chamber of Commerce) Centre at the Industrial Chemistry 8. EMPA (European Melamine Producers Institute) 32. BCC (Business Centre Club) Association), a Sector Group of CEFIC 51. Polska Platforma Technologiczna 33. Opolska Izba Gospodarcza 9. Pracodawcy RP (Employers of Poland) Wodoru i Ogniw Paliwowych (Polish (Opole Chamber of Commerce) 10. Polski Związek Przetwórców Tworzyw Hydrogen And Fuel Cell Technology 34. Tarnowski Klub Techniki Sztucznych (Polish Association of Platform) i Racjonalizacji (Tarnów Club Plastics Processing Companies) 52. Polska Platforma Technologiczna of Technology and Technological Zrównoważonej Chemii 11. Jury of the Responsible Care Improvements) programme (Polish Technological Platform 35. Polska Izba Rzeczników Patentowych for Sustainable Chemistry) 12. Stowarzyszenie Emitentów Giełdowych (Polish Chamber of Patent Attorneys) (Polish Association of Listed Companies) 53. Polska Platforma Technologiczna − 36. Polskie Forum ISO 9000 Bezpieczeństwo Pracy w Przemyśle 13. CEFIC (European Chemical Industry (Polish ISO 9000 Forum) (Polish Technological Platform for Council) 37. Stowarzyszenie Inżynierów Safety at Industrial Work Places) 14. EPF (European Panel Federation) i Techników Przemysłu Chemicznego 54. Narodowa Fundacja Ochrony 15. EPCA (European Petrochemical (Polish Association of Chemical Środowiska (National Foundation Association) Engineers) for Environmental Protection) 16. European Sulphuric Acid Association 38. Klub Polskich Laboratoriów 55. Polska Grupa Bezpieczeństwa 17. Polskie Forum Akademicko- Badawczych POLLAB (POLLAB Club Chemicznego (Polish Chemical Gospodarcze (Polish Higher of Polish Research Laboratories) Safety Group) Education-Business Forum) 39. Stowarzyszenie Eksporterów Polskich 56. Towarowa Giełda Energii S.A. (Association of Polish Exporters) 18. Polish-Brazilian Chamber 57. Forum Dużych Konsumentów Gazu of Commerce 40. Stowarzyszenie Księgowych w Polsce (Large Gas Consumer Forum) (Accountants Association in Poland) 19. Grupa Promocyjna NPG-6 58. Naczelna Organizacja Techniczna NOT (NPG-6 Promotional Group) 41. Stowarzyszenie Konsumentów (Polish Federation of Engineering 20. Izba Przemysłowo-Handlowa i Importerów Soli Potasowej Associations NOT) (Association of Consumers and w Krakowie (Kraków Chamber 59. Izba Rzemieślnicza oraz Małej Importers of ) of Commerce and Industry) i Średniej Przedsiębiorczości 21. Izba Energetyki Przemysłowej 42. ISSA (International Security Systems w Tarnowie (Tarnów Chamber of Craft i Odbiorców Energii (Polish Chamber Association) and SMEs) of Industrial Power and Energy 43. Stowarzyszenie Księgowych w Polsce 60. Puławskie Centrum Przedsiębiorczości Consumers) (Kraków Branch of Accountants (Puławy Entrepreneurship Centre) Association in Poland) 22. Północna Izba Gospodarcza (North 61. Konsorcjum Info-Tech-Med Poland Chamber of Commerce) 44. PTBRiO – Polskie Towarzystwo (Info-Tech-Med Consortium) Badaczy Rynku i Opinii (Polish 23. Tarnowskie Towarzystwo Naukowe 62. Klub Sportowy Azoty-Puławy Association of Public Opinion (Tarnów Scientific Association) (Azoty-Puławy Sports Club) and Market Research Firms) 24. Regionalna Izba Gospodarcza 63. Fundacja Pomocy Szpitalowi 45. Forum ISO 14000 (Regional Chamber of Commerce) Puławskiemu (Puławy Hospital (Polish ISO 14000 Forum) 25. Brytyjsko-Polska Izba Gospodarcza Assistance Foundation) 46. System pomocy w transporcie (British Polish Chamber of Commerce) 64. Puławska Szkoła Wyższa materiałów niebezpiecznych SPOT 26. Business Club Szczecin (Szczecin (Higher School of Puławy) (SPOT System of Assistance in Business Club) Hazardous Material Transport) 65. Polski Komitet Normalizacyjny (Polish Committee for Standardization)

28 integrated report | 2013 GROUP’S EXPANSION GROUP’S EXPANSION

Grupa Azoty’s membership in organisations Important business awards and high ranking positions in 2013

january june During the 19th National Scientific 2012 Platinum Laurels of Skills Grupa Azoty in the high, 33rd place and Technical Conference entitled and Competence awarded to of the 1,000 Top Polish Companies ’Chemical Industry − Challenges and the President of the Grupa Azoty league table prepared by the editorial Barriers’, the jury of SITP Chem’s Management Board in the manager/ board of Gazeta Finansowa, where ’Restructuring Leader’ award community and business leader companies are rated by revenue. recognised the Tarnów-based category by the Opole Laurels company for ’creating a chemical of Skills and Competence Jury. group that is reshaping the industry’, september and awarded a distinction to Grupa Rzeczpospolita Ranking List. Azoty’s President for his commitment febuary Rzeczpospolita daily and Deloitte to the development of the Polish Grupa Azoty S.A. named ’Polish teamed up to compile a ranking chemical industry. The jury also Industry Transformer’ in recognition table of the largest companies expressed their appreciation for of its consolidation with Zakłady in 18 countries, published on Grupa Azoty Puławy’s restructuring Azotowe Puławy. The awards September 4th. The most impressive efforts. are organised by Grupa Polskie leap among Polish companies was Towarzystwo Wspierania made by Grupa Azoty, which climbed december Przedsiębiorczości, the publisher from the 144th to the 98th position. of Nowy Przemysł monthly During the Pearls of Polish Economy and wnp.pl website. Gala event, held at the Royal Castle november in Warsaw, awards and honours were Grupa Azoty Puławy was a given to Poland’s major companies. april second-time winner of the In the 2013 edition, Grupa Azoty S.A. Grupa Azoty won the first prize ’Well-Perceived Company’ survey was awarded a certificate and the in the 2012 edition of the Pillars run by the Business Centre Club’s Pearl of Polish Economy status in the of Polish Economy survey in Association of Employers. Large Pearls category by the editional recognition of its outstanding board of the Polish Market magazine

contribution to the Kraków region. and the Institute of Economics of The annual Polish Chemical Awards The survey is administered by the Polish Academy of Sciences. were presented during the national a leading research agency Grupa Azoty Puławy also received Polish Chemical Forum conference. in partnership with Puls Biznesu daily. a ’Pearl of Polish Economy’ certificate Grupa Azoty received the awards Grupa Azoty ZAK S.A. won a similar in the Large Pearls category for the in three out of the nine categories. distinction in the Opole region. consistent pursuit of its corporate Grupa Azoty President named policy and strategic goals and for TOP EXECUTIVE OF THE YEAR for Grupa Azoty ranked 30th in the its leading position among the most setting and delivering on bold Top 500 Polish Businesses league dynamic and efficient businesses visions of growth, implementing table compiled by Rzeczpospolita in Poland. Grupa future-oriented innovative projects, daily. and aptly leveraging synergies at the Azoty ZAK S.A was honoured with the time of a new beginning for the Polish Konfederatka award by the Employers Grupa Azoty Puławy named strategic chemical company. of Poland for initiating and supporting ’Reliable Employer’ in the 2012 Grupa Azoty S.A. received the important business initiatives and for edition of the award. Chemical Company of the Year CSR engagement. award for its consolidation of the may chemical industry and ambitious growth strategy, including its th Grupa Azoty in the high, 25 position landmark petrochemical project of the Top 500 Polish Companies pursued jointly with Grupa LOTOS. ranking list published by Polityka Grupa Azoty Puławy won the weekly (in terms of consolidated INVESTMENT PROJECT OF THE YEAR revenue). award for its wet ammonia FGD unit (Europe’s first and the world’s third facility of its kind), liquid sulfur fertilizer unit, and new logistics centre.

28 29 integrated report | 2013 integrated report | 2013 Scale of the organisation and ownership structure

The truth about a company cannot be learned solely from its income statement. The real proof of quality lies in its list of shareholders, people who believed in its vision and strategy.

30 integrated report | 2013 Scale of the organisation and ownership structure

The scale of the Grupa Azoty Group 2012 2013 is best illustrated by G4-9 Year-end headcount at the Group 8 607 13 879 its key employment, (including companies covered by this Report) (9 235*) (9 335) sales and asset figures. Revenue (PLN ’000) 7 098 735 9 821 023 Net profit (PLN ’000) 315 301 713 525

Equity (PLN ’000) 3 490 698 6 270 651

Total assets (PLN ’000) 5 357 041 9 961 530

* This includes Grupa Azoty Puławy. The company was not part of the Group in 2012 and its financial statements were not consolidated.

% of Shareholder Shares Ownership Voting rights interest (%) voting rights G4-7 State Treasury of Poland 32 734 509 33.00 32 734 509 33.00

Norica Holding S.à.r.l., including Cliffstone Holdings Limited 15 216 094 15.34 15 216 094 15.34

ING Pension Fund 9 883 323 9.96 9 883 323 9.96

TFI PZU S.A. 8 689 591 8.76 8 689 591 8.76

Aviva OFE / Aviva BZ WBK 7 800 000 7.86 7 800 000 7.86

EBRD 5 700 000 5.75 5 700 000 5.75

Other 19 171 967 19.33 19 171 967 19.33

Total 99 195 484 100.0 99 195 484 100.0

*Ownership structure as at December 31st 2013

Grupa Azoty shares are traded on GrupA Azoty S.A. Ownership structure the main market of the WSE. The stock is included in the WIG and mWIG40 indices, as well as the Other WIG-Chemia index of the chemical 19.33% sector, the blue-chip WIG 30 index, State Treasury of Poland and the RESPECT Index of socially 33% responsible companies (since its inception). In February 2013, Grupa EBRD 5.75% Azoty S.A. became part of the prestigious MSCI Emerging Markets index. Its two subsidiaries, Grupa Azoty Aviva OFE, Aviva BZ WBK Police and Grupa Azoty Puławy, are 7.86% also listed at the WSE.

Grupa Azoty S.A. ownership structure TFI PZU S.A. as at June 11th 2014 8.76% Norica Holding S.à.r.l., including Cliffstone Holdings Limite 15.34% State Treasury of Poland 33% ING Pension Fund 9.96% Norica Holding S.à.r.l., including Cliffstone Holdings Limited 20% ING Pension Fund 9,96% Ownership structure as at December 31st 2013 TFI PZU S.A. 8,76% EBRD 5,75% 30 31 Other 22,53% integrated report | 2013 integrated report | 2013 Business strategy and sustainable development Business strategy and sustainable development

The Grupa Azoty Group is pursuing The cornerstone of the Grupa Azoty a long-term growth strategy in line Group’s strategy is its mission, which G4-2 with the principles of sustainable G4-56 places a strong emphasis on its CSR development and corporate social goals. Striving to build value for responsibility. This comprehensive shareholders, the Group is also aware approach to business performance of the important role it plays in the helps maintain a balance between the community. financial, social and environmental aspects of the Group companies’ operations. Mission statement

Today, a business strategy cannot be G4-56 We add life to the soil, separated from a social responsibility and colour to life. With our strategy, just as growth cannot be accumulated experience separated from sustainable growth. and expanding capabilities, This Integrated Report is just one we make chemicals safe to example of the Group’s integrated people. We consistently approach to business. strive to increase the value of The key document defining the Group’s Grupa Azoty, taking advantage vision of development and value of all available synergies and creation, to be realised by consistently improving its competitive edge and innovations. sustainably expanding its presence To successfully meet market in the global chemical market, is the challenges, Grupa Azoty needs to Grupa Azoty Group’s revised strategy be innovative and exploit all available for 2013−20202. The strategy recognises sources of synergy. In 2013 alone, the new opportunities arising from the it achieved PLN 90m in synergy Company’s consolidation with Zakłady savings. Poland’s largest chemical Azotowe Puławy (renamed as Grupa companies integrated into a single Azoty Puławy). entity benefit from the economies of scale, shared distribution and procurement functions and the immense potential of complementary capabilities. However, to tackle future challenges, we must further the integration and consolidation processes within the Group.

In its strategy, Grupa Azoty has stated that by the end of this decade it aims:

■■ to be listed in the blue-chip index of the Warsaw Stock Exchange,

■■ to be generating top rates of return for its shareholders, and

■■ to remain one of the three leading players in the European fertilizer market.

2 The full text of the Grupa Azoty Group’s updated strategy for 2013−2020, including its declared approach to corporate social responsibility, is available at: http://grupaazoty.com/pl/grupa/ strategia.

32 integrated report | 2013 Business strategy and sustainable development Business strategy and sustainable development

2013−2020 strategy – Directions of growth

In its strategy, Grupa Azoty has The overriding corporate growth assumed it will grow by: strategy is supported by a number of functional strategies. At present, ■■ increasing the scale of operations in its core business areas through a CSR strategy is being developed organic growth, alliances and as part of the corporate management M&As, both in Poland and abroad, strategy. The first Group company to define a sustainable development ■■ further integration within the strategy was Grupa Azoty S.A. Group to maximise operating of Tarnów (Grupa Azoty Tarnów synergies, Sustainable Development Strategy ■■ reducing the Grupa Azoty Group’s for 2011−2016), which was the starting sensitivity to energy costs through point for work on a similar document the use of effective technologies covering the entire Group. and energy-efficient solutions, The document lists the following areas of responsibility: ■■ reducing the Group’s sensitivity to changing economic cycles ■■ sustainable production and to prices of natural gas and (reducing the environmental petrochemical feedstocks by impact of the Group companies, extending product chains, fostering partnerships with research institutions, raising ■■ reducing production costs by extending product chains, environmental awareness, developing sustainable products, ■■ building stable and effective and continued engagement customer relations, increasing in the Responsible Care® awareness of the Group’s leading programme, where chemical brands and optimising product companies voluntarily commit to logistics and distribution, improving their performance in the fields of environmental protection, ■■ improving the efficiency of key processes defined workplace and plant safety, and in the management model, ongoing dialogue with their external stakeholders), ■■ continuously adapting the quality and range of products to customer ■■ workplace (improving employee requirements, satisfaction, workplace safety and health protection, and providing ■■ horizontal diversification, staff development opportunities), leveraging synergies with the existing product portfolio, ■■ dialogue and relationship building (promoting the development ■■ continuously improving its of local communities, defining products based on innovative the forms of dialogue with technologies, each of the key stakeholder groups, maintaining effective ■■ growing the organisation’s intellectual capital and communication in the area of transforming that potential into an sustainable development, and asset with substantial market value. building a culture of ethics).

32 33 integrated report | 2013 integrated report | 2013 Management model and core values MANAGEMENT MODEL AND CORE VALUES

The Management Board of Grupa new Management model initiatives and strategic measures, and supports their day-to-day management. Azoty S.A. performs the function In July 2013, the Management Board G4-34 It consists of members of the Grupa Azoty of Grupa Azoty S.A. approved the of the Management Board of the Management Board, members of the assumptions for a new model of management boards of the Company’s Grupa Azoty Group. The remit of the the Group’s management, built on subsidiaries, and the Managing Director a process-based division of powers and President includes general oversight of Grupa Azoty S.A. of the Grupa Azoty Group, while responsibilities between the Company’s Management Board members. In keeping with the growth of the the Management Board members Grupa Azoty Group, which is intended In the same month, the document to operate as a single business entity, are responsible for key areas of the ’Ownership and governance policy’ the organisational structure of Grupa was revised, following the inclusion Group’s operations: finance, strategy Azoty S.A. was subject to a number of new companies in the Grupa Azoty and development, investments, of modifications to ensure it is able to Group. The overall purpose of the effectively manage the complex and ever- integration of production processes, corporate governance policy is to expanding organisation plastics and organic synthesis, have in place uniform Group-wide supply chain management, procedures for managing individual business processes (business areas), social dialogue, plant safety and and procedures for reporting environmental protection, as well information to the governing bodies and making disclosures to capital as the management of individual market participants; and to ensure Group companies. that the disclosure requirements and the criteria for assessment of 3 For more information on the adopted management compliance with those requirements The Grupa Azoty Group’s successful model, refer to the Directors’ Report on the are uniform and consistent. Operations of Grupa Azoty S.A. in the 12 months consolidation is a source of massive ended December 31st 2013, available at http://tarnow. business potential. With the adopted grupaazoty.com/pl/relacje/raportyr. All members management model, the Group is able of the Grupa Azoty Council are presented at http:// grupaazoty.com/pl/grupa/zarzadzanie/d. For details Grupa Azoty Council to generate and leverage synergies, on the current composition of the Management and to tap the economies of scale. In In December 2013, the Grupa Azoty Board and profiles of its members, see http://tarnow. 2013 alone, the effect of synergies was Council was set up as an advisory and grupaazoty.com/pl/relacje/lad/zarzad, and for details on the current composition of the Supervisory estimated at about PLN 90m.Despite the opinion-making body responsible for Board and profiles of its members, go to http:// centralisation of the Grupa Azoty Group’s initiating and backing Group-wide tarnow.grupaazoty.com/pl/relacje/lad/rada. main operations and management of core projects and communicating their 4 The modifications are described in more detail in economic processes at the Group level, progress to the managements of the Directors’ Report on the Operations of Grupa the subsidiaries’ identities, locations and individual Grupa Azoty Group companies. Azoty S.A. in the 12 months ended December 31st legal autonomy are preserved. 2013, which is available at: The Council presents its opinions on their http://tarnow.grupaazoty.com/pl/relacje/raportyr.

1 2 3 4 5 6 7

President of the Vice-President of the Vice-President of the Vice-President of the Vice-President of the Vice-President of the Member of the Management Board Management Board Management Board Management Board Management Board Management Board Management Board Paweł Jarczewski Andrzej Skolmowski Witold Szczypiński Krzysztof Jałosiński Marek Kapłucha Marian Rybak Artur Kopeć

Management and HR Finance Tarnów Police Supply chain Puławy Dialog społeczny

Plant safety Feedstock Supply Auditing, risks Planning Plastics Business Logistics support and environmental Integration and Investments and compliance and controlling Centre service protection Maritime Logistics Centre

Organic Synthesis Strategy Engineering Infrastructure Communications IT Business Centre and development support service service

Agro Business Production IR Centre integration

Energy service Business service

34 integrated report | 2013 Management model and core values MANAGEMENT MODEL AND CORE VALUES

Integrated Risk management6 Internal audit Management Systems The Grupa Azoty Group is managed The Grupa Azoty Group companies The Grupa Azoty Group has a robust based on integrated management identify risks associated with different internal audit system in place. G-34 G-34 G4-34 systems, in accordance with aspects of their operations. Aware The process is managed by the international standards.. that risk factors may pose a threat Group Internal Audit Office and

G-2 to sustainable development in the G-2 Internal Audit Departments The systems implemented bythe long term, the Grupa Azoty Group at individual companies. At the Grupa Azoty Group companies takes systematic steps to identify, Group level, the process is managed include5: assess and minimise their potential in accordance with the International ■■ Quality Management System negative impact on the operating Standards for the Professional compliant with the ISO 9001:2008 performance of the Group companies. Practice of Internal Auditing standard, developed by the Institute of Internal In keeping with the best global Auditors (IIA), and the related ■■ Environmental Management practice, the Grupa Azoty Group internal regulations. The role of the System compliant with the is implementing a comprehensive internal audit units is to streamline ISO 14001:2004 standard, risk management system in its key the Group’s operations and ensure companies. The system involves ■■ Occupational Health and Safety that its corporate governance Management System compliant the design and implementation system is appropriate and effective. with the PN-N-18001:2004 and of certain organisational and In addition, the Group Internal Audit BS OHSAS 18001:2007 standards, procedural measures to provide Office and individual Internal Audit a general framework for the ■■ Management System compliant Departments are to support the management of risks identified with the PN-EN ISO/IEC 17025:2005 Grupa Azoty Group companies in various areas of their operation. standard (general requirements in consistent and methodological The Grupa Azoty Group’s risk for the competence of testing and approach to the performance management is based on global calibration laboratories), evaluation and management process standards, in particular the enhancement. ■■ Food Safety Management System ISO 31000:2009 standard compliant with the ISO 22000:2005 (’Risk management – Principles and The Group Internal Audit Office and standard, guidelines’) and the ’Enterprise Risk Audit Departments perform their ■■ Automotive Industry Quality Management – Integrated Framework’ tasks on the basis of Annual Internal Management System implemented developed by COSO. As part of the Audit Plans. In view of the Group’s in accordance with the project, the Group developed growth, a single document entitled ISO/TS16949:2009 standard, a concept for the enterprise risk ’Internal Audit Standards for the management system and verified Grupa Azoty Group’ was developed ■■ Responsible Care Framework Management System compliant the risk map and register, including in 2013, providing a formal basis for with the guidelines of the European for key risks. carrying out internal audit procedures across the Grupa Azoty Group. Chemical Industry Council, Irrespective of the overall framework ■■ Energy Management System designed for the Grupa Azoty Group’s In addition, all companies of the compliant with the ISO 50001: 2011 comprehensive risk management Grupa Azoty Group listed at the WSE standard (applicable to the Grupa system, the Group companies have have set up Audit Committees, acting Azoty Police Group) for years been identifying, assessing, as collective advisory bodies within and actively managing their own their respective Supervisory Boards. In addition to maintaining and risks. Measures taken to minimise any Their responsibility is to monitor enhancing the above management identified threats to their business the effectiveness of internal control, G4-15 systems, the Grupa Azoty Group also processes are subject to regular internal audit and risk management embraces new standards, for instance reviews based on system tools. systems in place at the Group by designing and implementing the companies. enterprise risk management system and the Product Stewardship Programme compliant with the standards adopted by Fertilizers Europe.

5 For more details, refer to the websites of individual Group companies.

6 For more information on risks and threats in the context of the Grupa Azoty Group’s growth prospects, refer to the Directors’ Report on the Operations of Grupa Azoty S.A. in the 12 months ended December 31st 2013, available at http://tarnow.grupaazoty.com/pl/relacje/raportyr 34 35 integrated report | 2013 integrated report | 2013 MANAGEMENT MODEL AND CORE VALUES MANAGEMENT MODEL AND CORE VALUES

Corporate governance Important capital market awards and high ranking The Grupa Azoty Group strives to positions in 2013 ensure the highest standards in its G4-15 relations with the capital market. The amended ’Code of Best Practice for WSE Listed Companies’ of November 2012 came into effect march at the beginning of 2013 (except The President of the Grupa Azoty for the requirement to publish the Management Board received the records of General Meetings, ’Bulls and Bears’ award, granted for in audio or video format, on the past 19 years by Parkiet daily corporate websites, and to provide – in recognition of the successful all shareholders with an opportunity consolidation of the chemical to participate in General Meetings industry. The ’CEO of the Year’ title is using electronic means of awarded to outstanding personalities communication, especially real-time among the CEOs of companies listed two-way communication)7. on the WSE.

march RESPECT Index Grupa Azoty S.A. ranked tenth in the

’Listed Company of the Year 2012’ Ever since 2009, Grupa Azoty S.A. has ranking, organised for the 14th time been included in the RESPECT Index by Puls Biznesu daily – in recognition – the first CSR-focused stock market of its achievements in the preceding index in Central and Eastern Europe. year. The Company received the The Company’s inclusion in the highest scores for ’Investor Relations’ RESPECT Index is a proof that (6th place) and ’Previous Year’s it operates in accordance with the Achievements’ (4th place). highest standards in corporate In the main ranking, Azoty Tarnów governance, corporate disclosure (currently Grupa Azoty S.A.) moved discipline, and investor relations, up 20 places compared with 2011, as well as environmental, social, and as many as 256 places vs. 2009. and labour-related matters. Zakłady Azotowe Puławy Having passed the three-step (currently Grupa Azoty Puławy) evaluation process by the WSE, and Zakłady Chemiczne Police the Polish Association of Listed (currently Grupa Azoty Police) also Companies and Deloitte, ranked high in the Puls Biznesu on December 17th 2013 the Company list, taking the 16th and 37th place, was included in the elite group respectively. of companies covered by the RESPECT Index for the seventh time. april Grupa Azoty ranked first in the ’Ranking of listed companies demonstrating the strongest growth’, organised by Forbes; the President of the Grupa Azoty Management Board received a distinction in the ’Best CEOs of 7 For more information on compliance with Listed Companies’ ranking by Forbes. the corporate governance standards, refer to the Directors’ Report on the Operations of Grupa Azoty S.A. in the 12 months ended December 31st 2013, which is available at september http://tarnow grupaazoty.com/pl/relacje/raportyr. Grupa Azoty S.A. received a statuette confirming its inclusion in the WIG30 index.

36 integrated report | 2013 MANAGEMENT MODEL AND CORE VALUES MANAGEMENT MODEL AND CORE VALUES

Ethical values and principles The provisions of the Code refer in the organisation’s to the risk of corruption and breach management G4-SO5 of business secrets, as well as the need to protect confidential information. The Code categorically condemns

6 In 2013, the Grupa Azoty Group The ’Code of Organisational Culture’ and prohibits any forms of mobbing was working on the organisational highlights not only the Group’s and discrimination on the grounds framework and management system corporate culture model and its source, of race, ethnicity, religion, sexual SO DMA for its ethical conduct programme. but also defines the management preference, age, or gender. It also 5 Following a period of intensive work, standards and model, which is flexible explicitly provides that the Group the Management Board adopted two and universal enough to allow for companies must remain apolitical 8

SO DMA key documents : future growth through mergers and and must not support any political

3 acquisitions. It also describes the parties, at the same time respecting ■■ ’Code of Organisational Culture – the Grupa Azoty Group’s brand and internal communication the worldviews of their employees organisational and management policies, as well as the management and prohibiting discrimination on HR DMA system’ of relations with key stakeholders. the grounds of ideology. In addition, 12 The Code combines corporate the Code prohibits anything that may ■■ ’The Grupa Azoty Group’s Code culture issues with an approach to harm the reputation of any person, of Ethical Conduct’.

LA DMA risk management, internal audit, and including the spreading of false compliance management processes information about other employees The common ethical values, at the Group level. and the Group (rumours). What G4-56 is important, the Code prescribes On the other hand, ’The Grupa Azoty shared by employees of all procedures to be followed Group’s Code of Ethical Conduct’ companies and their plants, by employees who suspect a breach specifies the standards for the conduct play a crucial role in corporate of the standards of ethics or who have of business, to be shared by all Grupa found themselves in a situation which culture building, as they will Azoty Group employees without constitutes or may lead to a conflict strengthen the Group’s cultural exceptions. A special focus is placed of interest (which must be reported on building proper and transparent integration, which will bring to immediate superiors or the relations with customers, suppliers, further benefits in the form Ethics Officer). of synergies. shareholders, the local community, and the natural environment. The Code is available in traditional The Code also discusses proper paper form at the Group companies Soft management, or management behaviour in the event of a conflict and in electronic version at www. through values shared by all of interest. The key part of the Code grupaazoty.com (in Polish, English employees, is a key to successful focuses on the fundamental ethical and German). The person responsible growth through mergers. Therefore, values by which the Grupa Azoty to the Management Board for the the Management Board and the Group is guided. effective implementation of the Code Supervisory Board have good reasons is the Ethics Officer. The Group’s to attach great importance to this management declares that all reported aspect. The process started with the breaches of ethical standards will be standardisation of all company names carefully investigated. and adoption of a new brand which − Given that the Code was formally while drawing on the remarkable and The core values of the adopted in 2014, it was not possible rich tradition of the Group companies Grupa Azoty Group are: to record any suspected breaches − is focused on the future, growth and of the Code reported in 2013. It should innovations. The two new Codes are ■■ efficiency, be noted, however, that in 2013 the currently being implemented. ■■ professionalism, Grupa Azoty Group identified no practices showing signs of corruption. ■■ cooperation, No action was brought to court against ■■ respect, the Grupa Azoty Group on the grounds of alleged corrupt practices, nor were 8 The documents were formally approved in 2014. ■ transparency. ■ there any instances of refusal to renew a business contract because of alleged corruption, or any cases of dismissal of a staff member on the grounds of such unethical behaviour.

36 37 integrated report | 2013 integrated report | 2013 38 integrated report | 2013 2 Responsible partner in business

38 39 integrated report | 2013 integrated report | 2013 Market overview

The market has long stopped being just a square downtown. Today the market is an open space, where vastly different elements and energies interact. Only the best are able to read its signals.

40 inteinteggratedrated report report | | 2013 2013W Market overview

2013 saw not only growing The flagging demand for melamine competitive pressures on the national in Europe, coupled with higher and international markets where supply of melamine produced with the Grupa Azoty Group’s products cheap gas, is also an unfavourable are sold, but also many changes in our trend. At the same time, increased business environment; as a result, processing capacities for urea used 2013 proved to be a challenging year in melamine production in the for most key market players around fertilizer industry have resulted the world. Low prices, combined with in intensified competition and high prices of selected feedstocks, a noticeable decline in melamine put a cap on profit margins, which prices around the world. ultimately turned out to be lower Trends observed on the caprolactam than in the preceding year. market are also far from being From our perspective, a significant favourable. The expansion development was the progressing of production capacities in Asia, consolidation of the fertilizer mainly in China, subsequent to 2012 distribution market in Poland. has depressed the product prices; Other noteworthy trends included the situation further deteriorated higher supply of fertilizers produced following a temporary decline with cheap gas originating from in demand for polyamides (produced countries neighbouring the EU, from caprolactam) on the back and the growing manufacturing of the general economic situation capacities in the sector, which have worldwide. Oversupply of ammonium led to intensified competition in the sulfate (a by-product of caprolactam fertilizer markets. production), caused by the larger output of caprolactam, may lead One of the factors with a bearing to price erosion also for this product. on the Company’s competitive position on the domestic and f oreign markets is also the increasing liberalisation of trade in the European Union. The Polish market is still protected by import duties; however, the lifting of customs duties on Ukrainian nitrate as of July 2012 could further intensify competition in this product segment. The European Commission has begun an analysis of the consequences of expiry of the anti- dumping duties on Russian nitrate. It means that the duties, which were to expire on July 13th 2013, will remain effective at least until the end of the proceedings, which may still continue for up to 15 months. After completion of the review, the Commission will propose that the duties be either maintained for another five years, or be lifted.

40 41 inteinteggratedrated report report | | 2013 2013W integrated report | 2013 Fertilizer market Chemicals

In 2013, the fertilizer market was pressure on nitrate fertilizer prices. affected by the low sentiment The price of ammonium nitrate, in agriculture, caused by sagging calcium ammonium nitrate, and crop prices. The price decreases were ammonium sulfate also declined attributable to high grain harvest noticeably. In particular, the decline forecasts both in the European Union in prices of ammonium sulfate was and globally. As a result, 2013 saw driven by higher sulfate production a significant drop in the profitability capacities, for instance in Germany of applying yield drivers, which (DOMO Leuna) and Spain (UBE), adversely affected their sales, despite accompanied by the increasing lower prices. Producers of fertilizers, popularity of coarse-grained sulfate including nitrogen fertilizers, manufactured by compacting remained under pressure in the first in Lithuania and Turkey. half of the year as farmers found Price reductions were also seen nitrate fertilizers too expensive. in the case of ammonia, even though The price level was additionally producers from Ukraine, Trinidad, affected by delayed payment Algeria, Egypt, Libya, and Qatar of subsidies and expected reduction reduced their ammonia production in gas prices in Poland. Towards the volumes. In Poland, the demand for end of the year, fertilizer producers, NPK fertilizers was also relatively including the Grupa Azoty Group, low. Moreover, throughout the year announced considerable price cuts. Polish manufacturers had to face A steep fall in the prices of urea, competition from attractively priced which emerged as a popular NPK fertilizers from Russia, Lithuania substitute for nitrate fertilizers, put and Belarus.

Plastics Power sector

Benzene and phenol are the key The caprolactam market depends feedstocks in the production heavily on demand for polyamide and of plastics. As far as benzene cost of raw materials linked to crude is concerned, the market in 2013 prices. In 2013, caprolactam prices was unstable, with periodic were driven by volatile benzene shifts in supply and demand and prices and the growing production speculative transactions. capacities in China, which led The market’s available benzene to oversupply and lower demand volumes were in constant decline. for the feedstock. The benzene market and price Although the polyamide 6 market was forecasts had a strong impact on stable in 2013, construction of new the phenol market, making production units in Asia puts it under it unstable. Europe continued to be significant stress, as it may lead affected by oversupply, and the to lower exports to the region, paired largest European manufacturers with higher imports of Asian-made were forced to temporarily reduce polyamide 6 to Europe. their phenol output.

42 integrated report | 2013 Fertilizer market Chemicals

The beginning of 2013 saw rising 2013 saw a slight increase in demand propylene prices, which was for hydrogen peroxide. a consequence of very high crude Global titanium white prices remained oil prices. The trend later reversed, at low but stable levels in 2013. and propylene prices declined In the US and Europe, which are the in parallel with a drop in crude prices. largest consumers of the product, August and September saw another demand was limited as a result of the increase in prices. persistent weakness of the paints, Given the adverse market conditions, varnishes, plastics, and automotive demand for key OXO alcohols industries. Lower demand was also (2-EH and n-Butanol) was satisfactory, recorded in China (30% of titanium and for the most part allowed product white’s global output), which was prices to be adjusted proportionately attributable to a decline in consumer to feedstock prices. goods exports. No significant negative shifts On the other hand, sulfur prices in demand or supply were seen declined by 26% on average in 2013 in 2013. Demand for melamine only vs. 2012. The decline was attributable decreased in summer and winter, chiefly to the situation on the which are typically periods of weaker phosphate fertilizers market and the market activity. increased supply of petrochemical sulfur.

Plastics Power sector

Electricity prices depend on prices

of coal and CO2 emission rights, as well as cross-border transmission capacities and electricity demand. Contrary to predictions, the prices decreased significantly in 2013. A considerable decline in coal prices should also be noted; this was mostly due to the significant oversupply which continued throughout the reporting period. Polish coal producers kept in line with the global trend by lowering coal prices.

42 43 integrated report | 2013 integrated report | 2013 Supply chain

In the area of feedstock supply, satisfying its own requirements, producer of liquid sulfur in Poland the Grupa Azoty Group’s supply the Group sells surplus ammonia and the CEE). Effective implementation G4-12 chain is rather complex, which to external customers (chiefly of the procurement process largely Grupa Azoty Police and Grupa depends on conditions prevailing is attributable to the broad Azoty ZAK). Effective implementation on the fertilizer market, particularly G4-6 range of raw materials needed of the procurement strategy largely in its most sulfur-intensive segment to produce chemicals. depends on conditions prevailing of compound fertilizers. The Group The ability to offer different on the fertilizers market. The Group is the largest consumer of liquid products depends directly is the largest consumer of ammonia sulfur on the domestic market and on the domestic market and in the in the region. on the sources of feedstock region. supplies. Feedstocks, including Methanol minerals, are not always Propylene available in Poland; they Since Poland is not a methanol In 2013, European Union countries producer, the entire domestic need to be imported, often were the main ortoxylene suppliers. demand is covered from imports. from far-away countries. Its prices are largely driven by the Offering competitive prices and The key feedstock categories situation on the oil market. convenient logistics, suppliers in Russia used in production, as well are the key sources of methanol for as their countries of origin, Ortoxylene the Group’s plant in Tarnów, with CEE manufacturers used as supplementary are listed below. In 2013, European Union countries sources. were the main ortoxylene suppliers. Natural gas Its prices are largely driven by the Benzene situation on the oil market. PGNiG continued to be the Grupa Benzene is sourced chiefly from Azoty Group’s key natural gas Potassium chloride domestic and CEE suppliers. supplier, supplying the Group with After the acquisition of Grupa high-methane gas under long-term Given the substantial natural Azoty Puławy, the Grupa Azoty Group contracts and nitrogen-rich gas from resources and competitive is by far the largest benzene consumer local sources. Supplies from other commercial terms, producers from in Poland and one of the largest in the trading partners were executed under Russia and Belarus are the primary region, which gives it considerable short-term agreements. In 2013, the suppliers of potassium chloride. competitive edge. The caprolactam Grupa Azoty Group purchased 84.1% If necessary, potassium chloride and polyamide markets are not of its methane-rich natural gas from is additionally supplied from the largest consumers of benzene PGNiG S.A. and the remaining 15.9% Western Europe. as feedstock, which makes the price from other sources. of the chemical sensitive to movements Phenol in other markets as well, including the Phosphate rock ethylbenzene market. The Group’s phenol procurement Phosphate rock was supplied mainly strategy is based on two primary by African producers, including sources – Western European and Electricity primarily from North Africa. domestic suppliers. Also, since 2013 The Group purchased electricity from The Group is diversifying its regular supplies from Scandinavian a few suppliers which trade with large procurement strategy, relying producers have been secured to customers: PGE S.A., TAURON Polska strongly on its own deposits supplement the existing sources. Energia S.A. and ENEA S.A. It was in Senegal, which give it a vital The phenol market in 2013 was largely possible to negotiate competitive competitive advantage. driven by benzene contract prices, contractual prices and terms thanks The situation in the phosphate which are the principal component to the procurement strategy adopted rock market is to a large extent of phenol pricing formulae. by the Group, and in particular the driven by the situation in the procurement scale. fertilizers sector. Sulfur Ammonia The Grupa Azoty Group’s sulfur The Group’s procurement strategy procurement strategy is based in this area is based on optimisation on optimisation of petrochemical of ammonia supplies. The Grupa sulfur supplies to the Group Azoty Group is Poland’s largest companies and on supplementary ammonia manufacturer, and operates deliveries from the recently acquired several ammonia units. Apart from Grupa Azoty SIARKOPOL (the leading

44 integrated report | 2013 Supply chain

A chemical concern, like a plant, needs minerals, water and air. A plant can simply draw them from the world. We forecast, calculate and plan our needs – so we can work calmly and effectively.

44 45 integrated report | 2013 inteintegrated report | 2013 MARKET PRESENCE

The Grupa Azoty Group’s Long-term contracts

G4-4 business is divided into the for the supply of fertilizers following five segments: to the US market G4-8 ■■ Agro Fertilizers, In early November 2013, Grupa Plastics Azoty Police signed commercial ■■ Plastics, 14.9% contracts with Nitron International ■■ Chemicals, Corporation, USA, for the supply of fertilizers. Thanks to its ■■ Energy, Agro Fertilizers commercial ties with Nitron, ■■ Other Activities. 56.7% the Grupa Azoty Group has already established a presence in the South American markets for Fertilizers are the key product sold ammonia fertilizers (notably in the domestic market. Exports Chemicals ammonium sulfate). With more to the EU are mainly plastics, 24.3% products on the supply list, the OXO alcohols and plasticizers. partners stand a good chance In Asia, key products include OXO Other Energy of strengthening their business alcohols and caprolactam, whereas Activities 2.7% alliance in the long term. fertilizers constitute the bulk 1.4% The largest contract for the sale of South American exports. of compound fertilizers runs The relatively unstable market from January 1st 2014 until environment in 2013 had a stifling December 31st 2016, and its full-term effect on margins. The instability value is estimated at around was driven by poor sentiment PLN 607.9m, VAT-exclusive. in the agri sector and high prices The Grupa Azoty−Nitron trade of crude oil, which − together with cooperation has continued for rising pressures from competitors two years now, and the value in China − had an adverse impact of transactions made between on the caprolactam market. the partners in the last 12 months This was compounded by low reached PLN 1.03bn, VAT-exclusive. demand for titanium white, In early December 2013, as part caused by a slowdown in the Poland of its contract negotiations for market for paints, varnishes 55.4% the coming years, Grupa Azoty and plastics. Other EU countries entered into a series of trade 22.3% agreements with Comexport of Germany São Paulo, worth a total of 9.5% PLN 360m. The commercial The challenging global market South America relationship with the Brazilian environment confirmed the 3.7% partner, which enjoys strong effectiveness of the management Asia reputation in the home market, model we have adopted − the 5.6% dates back 30 years. Group’s consistent consolidation Other Europe The contracts for the sale of efforts brought meaningful 1.6% synergies, translating into ammonium sulfate produced Africa increased efficiency. by the Tarnów and Puławy plants 1.3% as well as compound fertilizers Our successful initiatives also produced by the Police facility, are resulted in new long-term contract effective for three years, starting wins, including in South America. from January 1st 2014.

46 integrated report | 2013 MARKET PRESENCE

Partnerships in raw Grupa Azoty is: material sourcing # 1 in inorganic fertilizers On January 16th 2014, Grupa Azoty S.A. # 1 in multicomponent fertilizers and KGHM Polska Miedź S.A. signed # 1 in nitrogen-sulfur fertilizers a Letter of Intent on joint commercial # 1 in nitrogen fertilizers undertakings. among Polish fertilizer producers

The relationship may include # 1 in polyamides phosphogypsum processing, # 1 in OXO alcohols and plasticisers acquisition of potassium chloride # 1 in titanium white deposits abroad, securing access # 1 in melamine to natural gas reserves, construction among Polish producers of plastics, of a polygeneration power plant, and phosphate rock exploration and OXO alcohols, pigments, and melamine production. # 3 in inorganic fertilizers The signatories anticipate that the # 2 in multicomponent fertilizers collaboration may involve commercial among Europe’s fertilizer producers partnership (based on specific agreements or contracts), joint # 2 in melamine undertakings (e.g. formation of joint # 5 in plasticisers ventures), and equity investments. # 5 in polyamide-6 Given today’s challenging market, # 5 in OXO alcohols initiatives aimed at securing supplies among Europe’s producers of plastics, of strategic raw materials and OXO alcohols, and melamine feedstocks rank high on the Group’s agenda Bałtycka Baza Masowa Sp. z o.o. Logistics NAVITRANS sp. z o.o. GZNF Fosfory Logistics Multicomponent fertilizers Grupa Azoty Police Multicomponent fertilizers (NPK, NP) Nitrogen fertilizers (Mocznik) Gdynia Gdańsk Nitrogen-sulfur fertilizers (NS) Titanium white

Police

Grupa Azoty ATT Polymers Grupa Azoty Puławy Plastics (PA6) Nitrogen fertilizers (AN, RSM, UREA) Guben Melamine Caprolactam Puławy

Grzybów Kędzierzyn-Koźle Chorzów Tarnów Grupa Azoty Siarkopol Grupa Azoty ZAK S.A. Sulfur-based products Nitrogen fertilizers (AN, CAN, UREA) Nitrogen-sulfur fertilizers (CAN) OXO alcohols Plasticisers Grupa Azoty S.A. Zakłady Azotowe Chorzów S.A. Plastics (PA6, POM, modified products) NPK Caprolactam Stearin Nitrogen fertilizers (AN, CAN) Nitrogen-sulfur fertilizers (ASN, AS)

47 integrated report | 2013 MARKET PRESENCE

Agro Fertilizers

The Earth is a complex organism. It gives us various gift. We try to give it everything it needs to feed us. This is why we produce fertilizer in every shape and form.

48 inteintegrated report | 2013 MARKET PRESENCE

Agro Fertilizers

The segment represents the largest SEGMENT’S FUTURE share of the Grupa Azoty Group’s In the period covered by the strategy, product portfolio by value. In 2013, the mineral fertilizers segment, which its revenue totalled PLN 5,565,074 is of key importance to the Group’s thousand and accounted for 56.7% operations, will be an area of the of the Group’s total revenue. New most intense activity. The Group improved formulae are regularly is consistently expanding its product added to the segment’s product mix. range with new liquid and specialist Our principal goal is to promote fertilizer products and other products rational use of fertilizers to enable and services for the agricultural environmentally-friendly production sector. of food that is safe to people. The Company intends to increase One initiative taken to that end was its manufacturing capacity for the launch of a line of fertilizers with mechanically granulated nitrate a sulfur content. Such fertilizers are fertilizers. Also, ammonia lines will more effective in crop production be upgraded, mainly to reduce than traditional formulae, which energy-intensity of the manufacturing was made possible by several processes, but also to generate years of complex research and cost efficiencies and environmental development work (for more benefits. information, see ’Customers’).

The segment’s product mix comprises:

■■ Urea: PULREA®, mocznik.pl®,

■■ Calcium ammonium nitrate: Salmag®, Salmag z borem®, Salmag z siarką® Saletrzak 27 standard, Saletrzak 27 standard with boron,

■■ Ammonium nitrate: PULAN®, Zaksan™ (Kędzierzyńska Saletra Amonowa),

■■ Nitrogen-sulfur fertilizers: Saletrosan®26, POLIFOSKA®21, AS21 ammonium sulfate, PULSAR®,

■■ Compound fertilizers (NPK, NP, PK): POLIFOSKA®, POLIDAP®, POLIMAG®, AMOFOSKA® and (enhanced superphosphate fertilizer),

■■ liquid fertilizers: Pulaska®, urea- ammonium nitrate solution (RSM®), urea-ammonium nitrate solution with sulfur (RSM®S). Additionally, ammonia and nitric acid, which are key semi-products in the manufacture of nitrogen fertilizers, are classified within this segment.

48 49 inteintegrated report | 2013 integrated report | 2013 Plastics are something people have created and, at the same time, something that can be used to create much more – shapes, objects, surfaces. Thousands of things which surround us. Chemistry is not just the science of joining atoms – it is also the science of the freedom to create.

50 integrated report | 2013 MARKET PRESENCE

Plastics

In 2013, revenue in the Plastics segment was PLN 1,466,548 thousand and accounted for 14.9% of the Grupa Azoty Group’s total revenue. More than 90% of the segment’s revenue was derived from foreign markets. Our own caprolactam production capacities in Tarnów and Puławy provide a secure ource of feedstock supply for the segment’s polyamide production. Plastics production is located in Puławy, Tarnów and Guben, Germany. In modified plastics, the segment’s central location is the Tarnów plant, which houses all compounding lines and the plastics laboratory, providing R&D resources and services to the entire Plastics segment.

The segment’s product mix comprises:

■■ polyamides (PA 6 and modified engineering plastics): Tarnamid® and Alphalon®,

■■ polyoxymethylene (polyacetal) (POM and modified engineering plastics): Tarnoform®,

■■ plastics intermediates: caprolactam and cyclohexanone,

■■ modified plastics based on PA66, PBT, PP and other plastics: Tarnamid A, Tarnodur, Tarnoprop.

SEGMENT’S FUTURE In the period covered by the strategy, polyamides, polyoxymethylene and modified plastics will remain the key elements of the Group’s engineering plastics portfolio. Furthermore, the Group is planning to increase its engineering plastics production capacity and further diversify the product range in 2013−2020.

50 51 integrated report | 2013 integrated report | 2013 MARKET PRESENCE

Chemicals

Revenue in this segment reached SEGMENT’S FUTURE PLN 2,385,331 thousand, up 59.6%, In the period covered by the and represented 24.3% of the strategy, caprolactam, melamine, Group’s total revenue. OXO alcohols, plasticizers, The key commercial products of ammonia, concentrated nitric acid, the Chemicals segment include the titanium white and urea (used for Rednox lines: PULNOx®, NOXy™ non-fertilizer purposes) will be (AdBlue®), Likam®, as well as the core constituents of the Group’s melamine, hydrogen peroxide, chemical product portfolio. industrial gases, and OXO products The product portfolio will be (OXO alcohols, plasticizers): diversified, with a particular OXOPLAST®, sulfur and titanium focus on speciality chemicals. white. Caprolactam and polyamide 6 output will be balanced and next-generation Rednox: PULNOx®, NOXy™ plasticizers will be added to the (AdBlue®), Likam® segment’s product mix. Plant upgrade projects are also The Rednox line brings together in the pipeline, focused on improving products derived from special the energy efficiency and, as solutions based on urea and a consequence, reducing chemicals ammonia. It is worth noting that production costs and environmental today urea is becoming widely impact. applied outside agriculture. When used for flue gas and exhaust gas treatment applications, it helps reduce the noxious emissions of nitrous oxides generated in fuel combustion by process plants and motor vehicles. Thanks to urea-based additives, SCR-featuring diesel engines are able to meet the current emission standards.

52 integrated report | 2013 In a world of chemistry, chemicals are Chemicals a currency whose value is only clear to those in the know, as only they realize what goods it can purchase – what aims it can achieve. These aims can be as numerous as chemicals. This is why we want to produce them in ever growing varieties.

53 inteintegrated report | 2013 Energy independence works on every level and at every MARKET PRESENCE scale. We are chemists. We know how to create all sorts of things. This includes energy and heat – for ourselves and others.

54 integrated report | 2013 MARKET PRESENCE

Energy

The Grupa Azoty Group owns power generation assets, but it also buys energy under supply contracts with third parties. The Grupa Azoty Group resells electricity, heat, water and natural gas to customers connected to its distribution systems. In 2013, revenue in the Energy segment was PLN 265,516 thousand and accounted for 2.7% of the Group’s total revenue.

SEGMENT’S FUTURE In 2013−2020, the existing coal-powered co-generation facilities will continue as the main source of heat and electricity for the production plants in Tarnów and Police. They will be regularly upgraded to reduce their environmental footprint. In Kędzierzyn-Koźle, after 2015, heat and electricity will be generated by new units.

Other Activities

In 2013, the segment reported revenue of PLN 138,554 thousand. Other Activities include manufacturing of catalysts used in selected chemical synthesis processes, as well as in the production of ammonia, hydrogen and synthesis gas.

The segment’s product mix comprises:

■■ iron/chromium catalysts,

■■ copper/zinc catalysts, and

■■ iron catalysts. The segment also includes logistics and specialised overhaul and design services. It also has come to encompass resource extraction following inclusion of new companies in the Group.

54 55 integrated report | 2013 integrated report | 2013 There are industries in which one always needs to Innovation and development keep an eye on the horizon, beyond which lies the future. Chemistry is one of those. Therefore we invest in science and education. We don't know the future. Nobody knows it. Whatever it brings, we want our part in shaping it.

56 integrated report | 2013 Innovation and development

The consolidation Grupa Azoty Group has its own R&D facilities and also cooperates with

of chemical industry G4-26 external research institutes, as well leaders offering specialist as with Polish and foreign academic and complementary centres. The Group has been improving its technologies, thereby upgrading competencies represented G4-EN27 the quality of its products and services. by their laboratories gives In the course of R&D works, the Group the Grupa Azoty Group has developed effective solutions, G4-EN19 significant potential which are now patented and commercialised. for growth. The Group is also an initiator of and G4-EN6 valuable contributor to a number of innovative research programmes run 27-28 by leading Polish research institutions, as well as an active partner supporting

EN DMA the process of education, with many young scientists preparing their first scientific projects in cooperation with the Group.

Academic centres and research institutions with which the Grupa Azoty Group cooperated in 2013

Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy Grupa Azoty Police

Institute of Organic Chemistry, Silesian University Maria Curie Skłodowska West Pomeranian University Polish Academy of Sciences of Technology University of Lublin of Technology, Szczecin of Warsaw (including a branch in Puławy) Opole University Szczecin University Industrial Chemistry Research of Technology Warsaw University Maritime University Institute of Warsaw of Technology Opole University of Szczecin Institute of Electronic Lodz University of Technology Materials Technology University of Silesia West Pomeranian Business Poznan University School of Szczecin University of Wrocław Fertilizer Research Institute of Technology (currently New Chemical Warsaw University Institute of Heavy Organic Syntheses Institute) of Puławy Wrocław University of Technology Synthesis ’Blachownia’ of Technology Warsaw University Lodz University of Technology Industrial Chemistry Research of Technology Kazimierz Pulaski University Institute of I. Mościcki University of Warsaw of Technology and Humanities Wrocław University in Radom of Technology Institute of Industrial Organic Warsaw School of Economics Chemistry Cracow University Lublin University of Technology Wrocław University of Technology of Technology Lodz University of Technology AGH University of Science University of Agiculture and Technology in Krakow Institute for Chemical Cracow University Processing of Coal of Economics Wyższa Szkoła Biznesu – National-Louis University State Higher Vocational School in Tarnow AGH University of Science and Technology of Kraków

56 57 integrated report | 2013 integrated report | 2013 INNOVATION AND DEVELOPMENT INNOVATION AND DEVELOPMENT

THE TARNÓW CHEMICAL THE PUŁAWY TECHNOLOGY RESEARCH COMPETENCE CENTRE AND DEVELOPMENT CENTRE

Major joint In late 2012, the Grupa Azoty Group The Puławy Competence Centre research companies signed a Letter of Intent is a networking and information initiatives with the Municipality of Tarnów sharing platform for agribusiness, included the and the Province of Kraków agricultural consultants, research creation of regarding the creation of institutions, and business at the Tarnów a research and implementation large, bringing together partners Chemical unit, the Tarnów Chemical interested in modern and innovative Technology Technology Research and agribusiness. Therefore, the Research and Development Centre. Competence Centre is a meeting Development place for three different groups: The new research centre will Centre and the academic community, fertilizer function as a platform for the Puławy producers, and their customers. cooperation between a number Competence of entities representing both The overriding objectives of the Centre. industry and science. The goal Puławy Competence Centre are: of the project is to look for, organise, ■■ to develop and promote the develop, and implement most concept of a modern agricultural effective cutting-edge innovations entrepreneur, compliant with the principles of sustainable development, which ■■ to improve farmers’ competence will later be registered with patent in efficient management, authorities and used commercially. ■■ to promote soil fertilization The project will also involve research, cooperation with the International ■ to forge new links between the Centre for Chemical Safety and ■ worlds of business and science. Security (ICCSS) based on latest global chemical industry solutions, The PCC Scientific Council and will promote international is composed of nine distinguished cooperation in that area. professors specialising in soil fertilization and soil science, representing nine Polish universities and research institutes. In addition to scientific and research work, the Puławy Competence Centre and the Faculty of Agriculture at the Warsaw University of Life Sciences (SGGW) have developed a programme of post-graduate studies for agricultural technicians and producers, with a special profile: ’Management of fertilizers and crop protection products in a sustainable agriculture system’.

58 integrated report | 2013 INNOVATION AND DEVELOPMENT INNOVATION AND DEVELOPMENT

JOINT PROJECT OF GRUPA LOTOS AND GRUPA AZOTY

On December 3rd 2013, the Grupa 2013 saw a number of research and For more information on the research Azoty Group and the LOTOS Group development projects that were part work completed in 2013 by individual signed an agreement on the future of the adopted innovation strategy. Group companies, please refer to the formation of a special purpose annual Directors’ Report9. The Grupa Azoty Group has vehicle to conduct a comprehensive earmarked up to 1% of its revenue for Training provided by the Group or feasibility study on the construction research and development, and has in cooperation with leading Polish of a new petrochemical complex, defined its main research areas, which colleges and universities are a crucial to be located in the vicinity of both include: part of the Group’s customer support Grupa LOTOS’ and Grupa Azoty’s system. They combine hands-on and existing installations. ■■ state-of-the-art materials, theoretical training methods and are The two companies also signed ■■ high value-added specialist open also to prospective customers. a preliminary agreement with chemicals, Polskie Inwestycje Rozwojowe S.A., ■■ innovative products, including as a potential financial investor bioproducts, in the project. The investment will help reduce Poland’s chemical trade ■■ specialist mineral fertilizers, deficit. Under the agreement, Grupa ■■ processes reducing the energy LOTOS and Grupa Azoty will establish intensity of adopted technologies, a special purpose vehicle to run the ■■ technologies relying on the project, with project costs (related synergies with the Group’s by- to preparation of the feasibility study products. and financing of the SPV’s operations) shared equally between both parties. It should be noted that some of Pursuant to a separate agreement, them are fully compatible with Polskie Inwestycje Rozwojowe S.A. the Group’s strategy consistent with will provide expert assistance in the the sustainable development concept. financial and contractual structuring of the project.

9 The document ’Directors’ Report on Grupa Azoty Group’s operations in the 12-month period ended December 31st 2013’ is available at http://tarnow. grupaazoty.com/pl/relacje/raportyr.

58 59 integrated report | 2013 integrated report | 2013 INNOVATION AND DEVELOPMENT INNOVATION AND DEVELOPMENT

grupa Azoty s.a. Grupa Azoty ZAK S.A.

The research work carried out in ■■ engineering new varieties of 2013 followed from the Group’s modified plastics, with the use R&D strategy and focused both of various additives enabling on optimisation of the Company’s specialist application of the key production lines and on new plastics, e.g. in the automotive directions for development. industry; also improving quality of polyoxymethylene,

■■ research into reduction of The most important R&D initiatives caprolactam manufacturing costs in 2013 included: and improvement of the product ■■ optimisation and enhancement quality through optimisation. of the fertilizer manufacturing process through appropriate ® selection of inorganic additives and In 2013, Tarnamid HF (high flow) anti-caking agents improving the developed as part of the Company’s physical and chemical properties of R&D efforts received a distinction in the fertilizers, the Materials and Aids for Plastics Processing category at the 17th ■ assessment of effectiveness and ■ PLASTPOL International Plastics and benefits of using the Grupa Azoty Rubber Processing Fair in Kielce. Group’s fertilizers in agriculture,

Grupa Azoty Puławy Grupa Azoty Police

In 2013, in line with the development GZNF Fosfory Sp. z o.o., a subsidiary policy of Grupa Azoty Puławy, two of the Grupa Azoty Puławy Group, key projects were completed: conducted research activities on manufacture of new phosphate ■■ Construction and commissioning of a flue gas desulfurization unit and phosphate-potassium fertilizers at the CHP plant. The unit employs with sulfur and calcium (P CaS and an innovative method of washing out PK CaS). GZNF Fosfory Sp. z o.o. sulfur compounds with water solution also commenced work on alkaline of ammonia and produces ammonium (ammonia-based) absorption of sulfur sulfate, commonly used as nitrogen compounds from the sulfuric acid fertilizer with sulfur content (for more unit with a view to manufacturing information, see ’Air emissions’ and ammonium sulfate for use in compound ’Environmental protection projects’). fertilizers produced by the company.

■■ Construction and commissioning of a manufacturing unit for new liquid fertilizers based on urea, ammonium nitrate solution (RSM®), and ammonium sulfate. The project expanded the company’s fertilizer product range.

60 integrated report | 2013 INNOVATION AND DEVELOPMENT

grupa Azoty s.a. Grupa Azoty ZAK S.A.

In 2013, the company’s R&D activities In the area of fertilizer production, focused on search for new products the company is working on new to expand the product range, as well compound fertilizers and on launching as potential technical and technological the production of liquid fertilizers. upgrades to reduce energy consumption Various approaches to reducing in the manufacture of key intermediates. energy consumption in the In the OXOPLAST Business Unit, manufacturing of key intermediate R&D initiatives were focused on new products (primarily ammonia) are types of non-phthalate plasticizers also being analysed. The company and potential non-alcohol products seeks to improve technological of butyraldehyde (intermediate reliability of manufacturing processes product of OXO synthesis) for key intermediate products used processing. Regular manufacture in fertilizer production. of the OXOPLAST OT plasticizer was launched, while efforts to increase its output continued. The Grupa Azoty ZAK Group continued research activities geared towards expanding the offering of non-phthalate plasticizers, with a particular focus on bio-based plasticizers.

Grupa Azoty Puławy Grupa Azoty Police

In 2013, the company’s R&D activities The company also researched prospects focused primarily on developing for utilising neutralised decomposition new and upgrading the existing residue from the titanium white process lines. manufacturing processes. Other R&D efforts involved the use of iron sulfate Other projects were also carried out monohydrate to produce ammonium to bring individual production units sulfate and solid-state iron compounds in line with the requirements of the solution (for more information, see IED Directive on industrial emissions ’Environmental protection projects’). (integrated pollution prevention and control). Those efforts covered the In 2013, the energy audit of the fertilizer, phosphoric and sulfuric Ammonia Plant was completed. acid, titanium white, urea and The audit was to assess the plant’s ammonia production units, as well current energy efficiency and outline as the power unit. changes necessary to optimise the energy consumption. The most important R&D initiative was the work on replacing the Work also continued on analysing the dihydrate method of producing technical possibilities of manufacturing phosphoric acid with the the organic compounds referred semihydrate-dihydrate method. to above.

60 61 integrated report | 2013 integrated report | 2013 CUSTOMER RELATIONS

SUSTAINABLE DEVELOPMENT IN AGRICULTURE

Grupa Azoty has become a great company. Still, we want to stay close to our clients – like a rural store, where everyone knows your name, and the sales assistant knows what everyone needs. At such a scale of operations, this isn't easy. We are constantly seeking out new ways for greater mutual communication and understanding.

62 integrated report | 2013 CUSTOMER RELATIONS

SUSTAINABLE DEVELOPMENT IN AGRICULTURE

1 The development strategy adopted FREE, PROFESSIONAL In the context of fertilization, we by the Grupa Azoty Group is that ASSISTANCE FOR FARMERS must always remember that the key G4-26 of a leader which shapes the market, G4-PR1 to success is a seemingly obvious PR DMA sets trends, and defines standards The Grupa Azoty Group has launched fact – it is not about applying a lot of conduct. The position of a market an expert knowledge-sharing of fertilizers but rather about applying leader entails responsibility. This platform for farmers, available them in a rational manner. Nowadays, is especially true in the fertilizers at www.nawozy.eu, which is devoted the problem of inappropriate market, where the application entirely to fertilizer products and application of fertilizers is one of the of fertilizer products involves crop fertilization processes. key challenges to global sustainable certain opportunities for and threats Registration and unlimited access development. Irrational soil to sustainable development. To face to the content are free of charge. fertilization disturbs the biological these challenges, fertilizer producers The website offers: balance with a negative effect must stay in close contact with ■■ Expert articles, on biodiversity. farmers. ■■ Practical fertilization calculators Precision fertilization technologies, and schedules, which are custom-fitted to a given Therefore, the Group’s ambition field and crop, are therefore gaining ■ Fertilizer-related consultations, is to be not only a producer and ■ in importance. The optimum solutions including an opportunity to ask supplier of fertilizers, but also are selected depending on a number questions to experts, a trustworthy partner that cares of factors, including soil type, soil for farmers, knows their needs and ■■ Unlimited access to special weather acidity, time of year, and crop type. expectations, and even meets them forecasts for farmers to facilitate The Grupa Azoty Group, as the halfway by offering more effective and the fertilization process, market leader, bears responsibility environmentally-friendly products. ■■ Access to the database for maintaining a constructive of agricultural produce prices. dialogue. On the one hand, this involves higher R&D spending to To that end, we do not only sell our Users may also obtain telephone make sure that we offer safe products products but we also offer end-to-end numbers to agricultural experts of ever higher quality; on the other support in effective crop fertilization. in their region, and contact them hand, we need to educate farmers, Our mission is to provide assistance when they are in need of consultation. make them aware of new challenges and advice to farmers and to keep Furthermore, the website presents and enhance our consultancy services. a watchful eye on the entire process updates from the Grupa Azoty Group, The success of the Grupa Azoty Group, of fertilizing, from the conceptual combined with expert knowledge just as the success of individual stage in a laboratory up to fertilizer provided by the Institute of Soil farmers, will depend on the know-how application on the field. Science and Plant Cultivation (IUNG) and application of state-of-the-art of Puławy and the Fertilizer Research technologies; therefore, the alliance Institute (INS) of Puławy. The Group between business and science and the has also prepared a ’Fertilization development of a modern educational Manual’ for farmers (Polish: system is becoming increasingly ’Vademecum nawożenia’). important to the Group. To that The traditional paper-form magazine end, we need to involve the entire ’AGROlider’ is a valuable supplement agricultural community in our R&D to the website, as a reliable source efforts, and the Puławy Competence of knowledge on the fertilizer and Centre fits perfectly with this strategy. agricultural market.

62 63 integrated report | 2013 integrated report | 2013 CUSTOMER RELATIONS CUSTOMER RELATIONS

SUSTAINABLE DEVELOPMENT IN AGRICULTURE

’ENVIRONMENTAL SCIENCE – BUSINESS DEVELOPMENT TRENDS – AGRICULTURE IN THE CHEMICAL SECTOR’

In May 2013, the 17th ’Environmental On November 21st 2013, the third Development Trends in the Chemical edition of the ’Science – Business – Sector’ conference was organised Agriculture’ conference was held at the by the Grupa Azoty Group and Puławy Science and Technology Park. the Tarnów Branch of the Polish The conference is organised by the Association of Chemical Engineers. Puławy Competence Centre under The event brings together the the honorary patronage of the Polish entire Polish chemical sector and Ministry of Agriculture and Rural is addressed to representatives Development, and Fertilizers Europe of chemical companies, the scientific (European Fertilizer Manufacturers community, as well as central and Association, which brings together local government authorities. the European chemical industry The conference was attended leaders). by creative people with a strong Invitations to participate focus on the development of new in the conference were sent materials and technologies, also to representatives of the agricultural from recyclable waste, who also science community, government promote social and environmental agencies, agricultural producers responsibility in a time of raging and their trading partners, as well consumerism and who never forget as leaders of the agricultural the possible consequences in their chemicals research from all pursuit for innovative solutions. academic centres in Poland. Therefore, the focus was not only The conference addressed different on new environmentally-friendly aspects of the fertilization process, fertilization methods, but also including the system of fertilization on environmental trends in chemical recommendations vs. the agricultural materials and chemical production, practice, application of precision green nanotechnology, and the agriculture (or precision farming) application of biological processes methods, as well as trends to industrial waste water treatment. in fertilization technologies.

64 integrated report | 2013 CUSTOMER RELATIONS

Fostering good relations

The Group strives to build long- of fertilizers, customers assigned Free professional support the highest score to the quality to plastics processing companies

G4-26 lasting relations and strong ties of customer service and with its customers. information materials, and, At www.e-plastics.eu, the By maintaining close most importantly, to the technical Grupa Azoty Group has launched

G4-PR5 a website devoted entirely to plastics cooperation with customers quality of products. In plastics, the technical quality of products, and their processing, as well as the and keeping track of the latest timely delivery, and organisation latest achievements, trends, and G4-12 market trends and activities of customer service scored best. developments in the plastics business and new suggested applications 3-5 of its competitors, operating The customer satisfaction survey covered products supplied by of plastics. The website allows professional R&D facilities and Grupa Azoty S.A. and Grupa Azoty ZAK. access to detailed parameters PR DMA working with universities and of plastics, includes a search engine Grupa Azoty Puławy, which has which can be used to search for research institutes, the Group only recently joined the Grupa a product by its name, physical and is able to develop products that Azoty Group, runs its own customer chemical parameters, or processing satisfaction monitoring projects meet highest quality standards. characteristics, as well as an advanced on an annual basis. Customers functionality for comparing products. Our professional sale and technical give their feedback on a number Upon registration, users gain access support services are also a very of aspects, including fertilizer quality, to specialist materials, may consult important element in developing packaging quality and available their technical consultants and and maintaining successful customer packaging options, availability account managers, place orders, relations. The Grupa Azoty Group of products, timely delivery, monitor invoices and payments, is engaged in market research as well as work of the customer access product certificates and projects to monitor customer service personnel (in terms of the complete product documentation, satisfaction as accurately as possible. competent and professional and track orders to check the current In the past, most of those projects approach, politeness, speed location of dispatched products. were implemented separately of service, and post-sale support). by individual companies, using At Grupa Azoty Police, customer a wide range of different tools. dialogue is approached on an In 2013, the Grupa Azoty Group However, with the ongoing end-to-end basis and research did not report any cases of integration of our activities we are tools are adjusted to specific G4-PR7 non-compliance with applicable able to develop the most effective customer categories. For example,

7 regulations or voluntary codes approach based on existing good customer satisfaction surveys of conduct relating to marketing practices of individual companies. among end consumers are based communications, including

on the PAPI technique, telephone PR DMA The most recent customer satisfaction advertising, promotion, and interviews, and mailing. Polish trade survey was held in September 2013. sponsoring, which would result agents are usually interviewed Customers evaluated aspects related in the imposition of financial or other using the PAPI technique, while to products, packaging, customer penalties. This is due to our consistent foreign trade agents are typically service, organisation of deliveries, marketing communications policy, interviewed by telephone or based terms of business, complaint including the corporate image and on questionnaires. procedures, as well as promotional brand building strategy, which forms and advertising activities. In the case part of the Grupa Azoty Group Strategy for 2013−2020.

65 integrated report | 2013 Chemistry serves to make the world better Safety and safer. So it, too, must be safe for the world. We think about safety within each product's entire life cycle – from sourcing raw materials, to the production stage, through to use.

66 integrated report | 2013 Safety

The Group’s business requires compliance with the most exacting safety standards on multiple levels:

■■ workplace safety,

■■ process safety,

■■ safety of products throughout their life cycle, from research and development to final use. Relevant solutions applied across the Group ensure appropriate conditions for the manufacture, storage, transport and distribution of substances to meet the natural environment protection requirements. The Grupa Azoty Group companies operate in the chemical industry and are classified as facilities with a high risk of a major industrial accident. Being aware of the possible consequences of their operations, the Group companies strive to mitigate their negative environmental impact.

SAFETY PROGRAMME Ensuring the responsibility and safety of production processes is a fundamental principle of the Group. Advanced technological solutions enable the Group companies to actively engage in efforts aimed to mitigate adverse impact on the environment, which are often a source of economic benefits as well. The companies have devised and implemented relevant incident prevention programmes, and safety matters are subject to regular reporting. The Group is engaged in safety awareness initiatives and is an organiser of national industry conferences dedicated to safety. In 2013, the Company was involved in organising several such events, including the conferences on ’Environmental Development Trends in the Chemical Sector’, ’Repair and Plant Engineering in the Chemical Sector’, and ’Industrial Plant Safety’.

66 67 integrated report | 2013 integrated report | 2013 HEALTH & SAFETY HEALTH & SAFETY

At three Group companies, At the Puławy facilities, exposure

5-8 OHS is a vital aspect of corporate social responsibility Grupa Azoty S.A., Grupa Azoty Puławy to dust, noise and high temperatures

G4-LA8 and Grupa Azoty Police, the OHS was reported for 67, 868, and 118

LA DMA of any industrial facility, arrangements made between the employees, respectively. Occupational particularly in the chemical employer and employees are risk assessments were performed sector, whose operations reflected in the relevant collective at 60 workstations (320 workers). bargaining agreements, and in the involve specific risks. In Police, 621 employees were exposed case of Grupa Azoty ZAK S.A. they to risks and hazards in their work OHS management processes in are incorporated in the integrated environment, including to dust causing place at the Grupa Azoty Group management system. OHS matters pulmonary fibrosis (110 employees), are defined in the Integrated are also addressed in the dialogue other dusts (119 employees), a Management System and they between the management boards nd noise (392 employees). conform with the PN-N-18001:2004 and trade unions. and BS OHSAS 18001:2007 standards The exposure to risks was eliminated (see Integrated Management Systems). or reduced to acceptable levels for 38 employees. A total of 535 workstations (1,583 employees) Each of the four companies covered Given the nature of the Group’s were subject to occupational risk by this Report has set up a Health processes, our employees are exposed assessment, with risk exposures eliminated or reduced at 185 of them G4-LA5 and Safety Committee, representing G4-LA7 to risks related to factors that are all employees. The compositions and dangerous or harmful to human health. (603 staff). Technical measures remits of individual committees are We make every effort to eliminate or, to eliminate or reduce safety risks similar. They comprise representatives if eradication is impossible, to reduce were applied with respect to 101 of the employer (delegates from the risks, providing comprehensive workstations (389 employees), and HR and OHS units and occupational technical and organisational tools for 71 workstations (239 staff) were physicians providing preventive collective and personal protection equipped with additional personal care to employees) and of the of life and health. protection equipment. employees (trade union delegates According to statistics dated as and social labour inspectors). at the end of last year, 16 workers Their responsibilities include were exposed to excessive noise conducting workplace safety at our plants in Tarnów, and 190 cases inspections and periodic OHS of insufficient workplace lighting assessments, providing opinions were reported. Occupational risk on workplace accident and assessments were carried out for occupational disease prevention 14 workstations used by 43 staff. measures implemented by the management boards, formulating As at the end of the year, conclusions to improve workplace in Kędzierzyn-Koźle four employees safety, and working with the were exposed to noise that management boards in the pursuit exceeded permitted levels. of their OHS objectives. In 2013, occupational risk assessment forms for 123 workstations were reviewed and updated. Technical means of eliminating or reducing occupational risks were implemented in the case of 17 workstations, while organisational and personal protection measures were put in place for all the 123 workstations.

68 integrated report | 2013 HEALTH & SAFETY

New safety enhancement Card of Safe Work Leaders initiative by Polish chemical companies The declaration is an open access The Central Institute for Labour On October 17th 2013, companies initiative, providing a platform for the Protection has a system of awards of the Grupa Azoty Group met ongoing exchange of experience with to recognise businesses that operate with the representatives of other companies outside the Group, in the effective OHS management systems, Polish chemical companies in the realms of work safety, process safety, report consistently low accident city of Tarnów, where they signed and environmental protection. This and occupational disease rates, and a declaration of intent to improve complete and systematic approach have successful OHS prevention work safety, fire safety and to safety inspections is expected programmes in place. They are environmental protection standards to enhance the existing safety honoured with a Gold, Silver or Green throughout the chemical industry. management systems. Card of Safe Work Leaders. Grupa Azoty Group companies are among The purpose of the agreement ‘... the award recipients. is to develop a model for cooperation in developing process safety, with Gold Card recipients: a view to reducing the risks that can ■■ Grupa Azoty ZAK potentially lead to major industrial (until October 2015), accidents.’ The signatories all pledged to share their experiences in process ■■ Grupa Azoty Police (until November 2014). and work safety and to implement the Zero Accidents and Failures Silver Card recipients: prevention programme. ■■ Grupa Azoty S.A. Part of their joint work will be (until November 2014). to evaluate the feasibility of a new model for comprehensive operational With a strict approach to workplace safety inspections of production health and safety risks, the reported assets. The new inspection model, G4-LA6 injury incidence rate was relatively currently in the testing phase, low − a total of approximately is based on a series of checklists 100 accidents took place at the (comprising questions concerning four companies covered by this all inspected areas) prepared Report, with all of them classified jointly by the participating chemical as minor, save for one accident companies and the Chief Labour at the Tarnów facilities. Only one Inspector, Chief Environmental case of occupational disease Protection Inspector and the Main (at Grupa Azoty Police) was identified Headquarters of the National Fire Service. To check the feasibility of the Provincial Inspectorate of Environmental Protection, National Labour Inspectorate, and State Fire Service being able to conduct such comprehensive inspections simultaneously, the state agencies and chemical companies together prepared an ammonia storage facilities checklist, which has already been used to conduct inspections at Anwil Włocławek, Grupa Azoty S.A., and Grupa Azoty Zakłady Azotowe Puławy. Their experience of the pilot inspections are being discussed in working group meetings, and will be used to design the final inspection model.

68 69 integrated report | 2013 integrated report | 2013 HEALTH & SAFETY HEALTH & SAFETY

Workplace safety at Grupa Azoty Group companies

2012 2013 Grupa Azoty S.A. women men women men Total workplace accidents 2 15 8 12 Fatalities 0 0 0 0 Severe injuries 0 0 0 1 Minor injuries 2 15 8 11 Total days lost due to workplace accidents 119 668 538 957 Incidence rate 1.0 7. 3 3.8 5.7 (total number of accidents / headcount × 1,000) Severity rate (days lost/number of accidents) 59.5 44.5 67. 3 79.8 Reported cases of occupational disease 0 0 0 0

2012 2013 Grupa Azoty ZAK women men women men Total workplace accidents 1 9 5 6 Fatalities 0 0 0 0 Severe injuries 0 0 0 0 Minor injuries 1 9 5 6 Total days lost due to workplace accidents 5 594 330 219 Incidence rate 2.2 8.0 10.7 5.4 (total number of accidents / headcount × 1,000) Severity rate (days lost/number of accidents) 5.0 59.4 66.0 36.5 Reported cases of occupational disease 0 0 0 0

70 integrated report | 2013 HEALTH & SAFETY

Workplace safety at Grupa Azoty Group companies

2012 2013 Grupa Azoty Puławy* women men women men Total workplace accidents 8 47 10 50 Fatalities 0 0 0 0 Severe injuries 0 0 0 0 Minor injuries 8 47 10 50 Total days lost due to workplace accidents 657 1405 408 1287 Incidence rate 10.1 18.9 12.7 20.0 (total number of accidents / headcount × 1,000) Severity rate (days lost/number of accidents) 82.1 29.9 40.8 25.7 Reported cases of occupational disease 0 2 0 0

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

2012 2013 Grupa Azoty Police women men women men Total workplace accidents 2 16 2 10 Fatalities 0 0 0 0 Severe injuries 0 0 0 0 Minor injuries 2 16 2 10 Total days lost due to workplace accidents 101 916 76 603 Incidence rate 0.9 6.9 0.9 4.3 (total number of accidents / headcount × 1,000) Severity rate (days lost/number of accidents) 50.5 57. 3 38.0 60.3 Reported cases of occupational disease 0 0 0 1

71 integrated report | 2013 HEALTH & SAFETY Product safety

Workplace safety at Grupa Azoty Group companies

2012 2013 Total for the Group women men women men Total workplace accidents 13 87 25 78 Fatalities 0 0 0 0 Severe injuries 0 0 0 1 Minor injuries 13 87 25.0 77 Total days lost due to workplace accidents 882 3 583 1 313 3 066 Incidence rate 5.4 12.7 10.2 11.3 (total number of accidents / headcount × 1,000) Severity rate (days lost/number of accidents) 67.8 41.2 52.5 39.3 Reported cases of occupational disease 0 2 0 1

72 integrated report | 2013 Product safety

REACH PRECAUTIONARY APPROACH Grupa Azoty representation on The Grupa Azoty Group meets The Grupa Azoty Group strives the board of fertilizers europe the requirements set out in the to comply with the precautionary In mid-2013 two Vice-Presidents G4-14 GR-PR1 Regulation (EC) No. 1907/2006 principle for the chemical substances of Grupa Azoty were appointed

1-2 (REACH) concerning the registration, used in its production processes, to serve on the Board of Fertilizers evaluation, authorisation and including by not using substances Europe (FE). restriction of chemicals. whose properties have not been PR DMA The Group adheres to the regulations sufficiently investigated. If possible, Fertilizers Europe (the European that require thorough testing for the Group also relies on substitution Fertilizer Manufacturers Association) hazardous properties of all marketed by replacing extremely hazardous represents Europe’s largest fertilizer chemical substances, as well substances with those that manufacturers. Its main objectives as introduction of usage rules that present a lower risk. In the case are to educate, analyse and solve minimise related risks and, in justified of some substances (for instance problems related to the manufacture cases, usage restrictions and bans. cyclohexanone) the classification and use of fertilizers likely to have criteria applied by the Group are an impact on both the environment In discharge of its obligations more rigid than the formal criteria and the health of people living in the imposed under said regulations, the set out in the CLP Regulation. EU. Also, FE looks after the interests Group submitted relevant documents of the entire EU fertilizer market to the European Chemicals Agency, and is responsible for contacts containing test results and chemical PRODUCT CERTIFICATES with international companies safety assessments for each registered and institutions, being the only chemical. The safety assessments The Grupa Azoty Group holds organisation of such standing of the chemicals entailed a wide array a number of non-obligatory to represent the fertilizer industry of tests of their physical and chemical, certificates for its products, which before the European Commission. toxicological and ecotoxicological attest to their high quality and safety. Apart from Polish companies, its properties. For instance, the Puławy facilities are members include enterprises from proud to have product management All the Group’s substances have been Spain, France, Norway, Lithuania, standards in place which comply duly registered, with the relevant Germany, Austria, the Czech Republic, with the certification requirements documentation kept up to date. The Hungary, the Netherlands, Belgium, of Fertilizers Europe’s Product safety assessments served as the basis Romania and Greece. Stewardship Standard certification for the preparation of chemical safety programme. The certificate covers reports, each of them covering the product development, materials entire life cycle of a given substance. and additives sourcing, production, packaging, transport, storage, marketing and sales, and product DOCUMENTATION application, including support Product Data Sheets and Exposure provided to farmers. Also, select Scenarios are in place for hazardous products have been awarded products (such as fertilizers, the Q quality mark and hold chemicals and monomers), which ’EC Fertilizer’ certificates. provide downstream users with information on recommended risk management measures relevant to the identified uses of individual substances. If new data or test results are available for a given substance, the companies make relevant adjustments to its registration documents or classification filings.

72 73 integrated report | 2013 integrated report | 2013 TRANSPORT SAFETY CUSTOMER SAFETY

Chemical substances, especially Carriage of dangerous goods HIGH STANDARDS those classified as hazardous, may is governed by stringent regulations In 2013, there were no incidents pose a threat not only in production conforming with the ADR G4-EN30 of non-compliance with regulations or storage but also during transport. requirements, with day-to-day G4-PR2

30 and voluntary codes concerning the Thousands of trucks carrying various compliance ensured by dedicated health and safety impacts of products chemicals travel the roads every day. specialists. (understood as incidents leading

EN DMA In the event of a traffic accident and Transport safety is further enhanced to non-compliance with the law or related tanker spill, some of these by the Group choosing systems voluntary codes) resulting in warnings, chemicals may present a real danger of closed tank cars of various or significant fines or penalties. to people and the environment. RID classes over road tankers for The risk can be reduced by shipping chemicals. For safety compliance with very strict road reasons, special-purpose tank transportation rules, or by hauling cars designed to fit the equipment most cargo by rail, which is a safer in place at the loading and receiving mode of transport than trucks (see terminals are increasingly used. ’Transport’).

Spot System of Assistance AEO in Hazardous Material Transport The quality and the resulting safety The system aids in recovery from of transport services are confirmed incidents involving transport by the Authorised Economic of hazardous materials. It helps Operator Certificates held by all four 10 to improve the safety of transport companies covered by this Report . in Poland, and − in the case of any Holders of the certificate benefit incidents − facilitates effective removal from simplified security and safety of their consequences by joint effort customs clearance and simplified and measures of the national rescue, customs procedures. It attests fire services and SPOT members. to compliance with stringent Participation in the initiative requirements in production, is a voluntary declaration of intent logistics, and transport of goods by its members to provide assistance (including securing for shipment in case of emergency. and storage). The system was established in 2000 by the Polish Chamber of Chemical TRAFFIC ACCIDENTS Industry and a group of chemical producers, including Grupa Azoty No major traffic accidents that ZAK S.A. The other members of the could pose a significant risk Grupa Azoty Group later joined the of contamination were reported scheme as well. SPOT is a showcase in 2013. In total, two road incidents of industry collaboration and and one railway incident occurred, dialogue. all of which concerned Grupa Azoty Puławy.

10 The certificates belong to the category ’AEOF - Customs simplifications/Security and Safety’ and are published on the European Commission website athttp://ec.europa.eu/taxation_customs/ dds2/eos/aeo_consultation.jsp?Lang=en

74 integrated report | 2013 CUSTOMER SAFETY

The safety and prime quality personal protection measures HIGH STANDARDS (if applicable), information on of a product must be ensured In 2013, there were no incidents G4-PR3 toxicity and ecotoxicity, and throughout its entire life cycle of non-compliance with 9 disposal considerations. − not only at the production G4-PR9 regulations or voluntary codes stage but also when the product The packaging of feed additives concerning product and service PR DMA should also bear a label compliant information and labelling, is actually used. For end users,

with the requirements applicable G4-PR4 particularly those which would 3-5 such things as appropriate to feeds and feed additives result in significant fines, penalties and clear labelling are of key (Regulation (EC) No. 1831/2003), or warnings. No significant fines PR DMA importance. containing information on were imposed for non-compliance permitted doses and storage life. with laws and regulations concerning the provision and use The procedures and responsibilities of products and services. PRODUCT LABELLING regarding the proper labelling All packaging contains information of products are defined in the on the contents (name of the internal regulations. substance or the trade name of the product), manufacturer details (address) and weight. KOSHER PRODUCTS OF For instance, fertilizer packaging GRUPA AZOTY ZAK S.A. contains information required under In July 2013, the company obtained Regulation (EC) No. 2003/2003, an extended kosher certificate for including the class and type all its existing products and retained of fertilizer, the ’EC fertilizer’ a licence for the certified AdBlue® marking (if applicable), the product. content and its form, directions for On May 14th 2013, the Kędzierzyn plant use, and safety precautions (the was visited by Michael Schudrich, latter is optional under applicable Chief Rabbi of Poland, who extended regulations). If a fertilizer is marketed the kosher certificate for all products in bulk, an accompanying document made at Grupa Azoty ZAK S.A. is made, containing all the required To receive the certificate, label elements. the company first had to satisfy For chemical substances and mixtures the requirements set by the classified as hazardous and falling Chief Rabbinate of Poland as the within the scope of the CLP Regulation competent certification body. (EC) the disclosure requirements One of them was to prepare are broader, with the essential a set of relevant documents on information that must appear the technologies, products, on a label including: product identifier materials and catalysts used, (name of the substance and its which were then submitted identity number), hazard pictograms for assessment. and signal words, hazard statements, With the certificate, Grupa Azoty precautionary statements, and ZAK S.A. is able to place its branded information on storage and transport. products on any market, including those which require kosher SAFETY DATA SHEET attestation. To receive the certificate, the company had to meet certain Additional information to be found market requirements. in a safety data sheet includes first aid measures, fire-fighting measures, accidental release measures, measures relating to substances and mixtures, storage information,

74 75 integrated report | 2013 integrated report | 2013 ENVIRONMENTAL IMPACT

Grupa Azoty Group companies Drawing on the best practices Grupa Azoty Police Among have a clear formal and legal status of its individual companies, the Winners of The 8th Edition of as regards environmental protection Grupa Azoty Group has a unique the ’Green Laurel’ Contest and the requirements imposed by the opportunity to develop improved G4 EN-DMA Environmental Protection Law, which solutions, which it can then implement The ’Green Laurel’ contest sets out the environmental protection and promote across the Group. is an annual event organised rules as well as conditions for the use This is yet another synergy resulting by Polska Izba Gospodarcza of natural resources in line with the from the consolidation. Ekorozwój (Polish Economic principles of sustainable development Chamber for Eco-Development), relating to environmental protection. operating under the patronage The companies carry out their of the President of the National Fund industrial operations pursuant RESPONSIBLE CARE for Environmental Protection and to a number of decisions issued Water Management, and the Chief by provincial governors and marshals, Aiming to protect the environment, Environmental Protection Inspector such as integrated permits for the Grupa Azoty Group companies and Chairperson of the Convent operation of industrial facilities, participate in the Responsible Care of Presidents of Provincial Funds for permits to release gases and Programme (Odpowiedzialność Environmental Protection and Water ® dusts into the air, water permits i Troska ). By being involved in Management. Grupa Azoty Police to discharge sewage to water, permits the Programme, the companies received the award for its iron sulfate for waste generation, permits for demonstrate their deep and voluntary neutralisation plant. recovery of waste, permits for commitment to reducing their collective water intake and collective environmental impact, improving wastewater discharge, and permits working conditions and plant safety, to emit greenhouse gases. and to ensuring regular contact with their business and social The companies operate according environment11. to internal processes and procedures constituting their respective environmental management systems, which aim to limit negative environmental impacts in areas such as:

■■ Air emissions,

■■ Water emissions,

■■ Waste management,

■■ Soil contamination,

■■ Social impact,

■■ Use of raw materials and natural resources,

■■ Other local environmental concerns.

11 For more information on the initiatives undertaken by individual companies under the Responsible Care Programme, see local supplements to this Report.

76 integrated report | 2013 76 77 integrated report | 2013 inteintegrated report | 2013 FEEDSTOCKS

KEY RAW MATERIALS USED

It's good to have trusted partners. Each of our companies spent years building a circle of trustworthy suppliers. We continue to work with them. However, as Grupa Azoty, we have achieved a scale of operations which makes it possible to obtain raw materials on our own – in Poland and around the world.

78 integrated report | 2013 FEEDSTOCKS

KEY RAW MATERIALS USED

The Grupa Azoty Group’s supply chain Securing access to deposits aims chiefly to secure the availability of polyhalite, a sulfate of potassium, G4-12 of appropriate feedstocks. magnesium and calcium, would

1 be particularly valuable in this The Group’s ability to offer different respect, as the mineral could be products depends directly on stable used as a source of potassium for the EN DMA supplies of quality feedstocks. production of compound fertilizers. Feedstocks, including minerals, are The Grupa Azoty Group sources its not always available in Poland; they key feedstocks from various countries. need to be imported, often from Despite its ongoing diversification far-away countries rich in mineral efforts, the Group still relies deposits. The consolidation efforts chiefly on Russia for its natural gas undertaken over the last year were supplies, while sourcing phosphate geared towards vertical integration rock primarily from North African to secure access to certain feedstock countries, propylene and ortoxylene sources (phosphate rock deposits from Western Europe, potassium in Senegal and sulfur deposits chloride from Russia, Belarus and in Grzybów). Western Europe, phenol from Poland, In August 2013, Grupa Azoty12 signed Western Europe and Scandinavian a Letter of Intent to collaborate countries, methanol from Russia and with KGHM Polska Miedź S.A. Central and Eastern Europe, and on joint exploration for mineral benzene from Poland and other CEE deposits in Poland and abroad, countries13. and on management of recyclable materials.

12 Gdańskie Zakłady Nawozów Fosforowych 13 For more information on the supply of strategic Fosfory, a subsidiary not included in this feedstocks, see ’Directors’ Report on the Report, was the formal signatory of the Operations of the Grupa Azoty Group for the Letter of Intent. 12 months ended December 31st 2013’ (pp. 34–35), which can be found at http://tarnow.grupaazoty. com/pl/relacje/raportyr.

78 79 integrated report | 2013 integrated report | 2013 FEEDSTOCKS FEEDSTOCKS

Raw materials used by Raw materials used by Grupa Azoty S.A. Grupa Azoty police G4-EN1 31,0% 31,0% 21,8% 21,6% 17,6% 17,6% 11,1% 11,0% 9,6% 9,5% 4,8% 4,2% 3,3% 3,1% 2012 r. 1,7% 1,5% 2013 r.

Natural Fine Sulfur Liquid Methanol Benzene Phenol Caprolactam gas coal ammonia

Raw materials used by Grupa azoty zak S.A. G4-EN1 45,4% 45,4% 40,3% 37,7% 5,4% 4,8% 4,5% 3,0%

2,8% 2012 r. 2,7% 2,6% 2,6% 1,3% 0,9% 0,3% 0,2% 2013 r.

Coal Naturalgas Oxygen Nitrogen Propylene Ortoxylene Terephthalicacid 2-Propylheptylalcohol

80 integrated report | 2013 FEEDSTOCKS FEEDSTOCKS

Raw materials used by Raw materials used by Grupa Azoty S.A. Grupa Azoty police G4-EN1 43,0% 30,2% 26,7% 22,8% 21,6% 18,4% 5,8% 5,7% 5,4% 3,8% 3,8% 3,4% 3,4%

2,9% 2012 r. 1,9% 1,3% 2013 r.

Natural Potassium Phosphate Molten Sulfuric Titanium Ilmenite Fine coal gas chloride rock sulfur acid slag

Raw materials used by Raw materials used by Grupa azoty zak S.A. Grupa Azoty Puławy* 73,0% 72,3% G4-EN1 15,0% 14,5% 12,5% 11,3% 2012 r. 0,7% 0,6% 2013 r.

Natural Coal Benzene Sulfur gas

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

80 81 integrated report | 2013 integrated report | 2013 ENERGY ENERGY

For their continued operation, the remained broadly flat on previous- Group’s production plants rely on year levels (down 1.9%), while its

G4-EN5 stable and reliable electricity and energy intensity, defined as the heat supplies. Individual production ratio of energy costs to production facilities have their own CHP plants. value, was seen to improve in three

G4-EN3 plants (Tarnów, Kędzierzyn-Koźle and The Grupa Azoty Group takes measures

3-6 Puławy). However, the ratio rose in to improve their energy efficiency the Police plant (up 5.3%) on the back and limit the environmental impact of of a reduction in production output EN DMA power generation, particularly in view which nullified the economies-of- of the fact that coal is set to remain scale effect. This offset the improved the prevalent fuel. For several years, results seen in other companies, the Group has pursued investments bringing the total intensity ratio close to upgrade its available production to previous-year levels, with energy capacities. costs accounting for 7.7% and 7.8% The energy efficiency improvements of production value in 2012 and 2013, achieved by the Group are attributable respectively, which represented a to different factors, including regular change of 1.3%. upgrade projects and efforts to reduce the share of energy from the most expensive sources. Total energy consumption within the Group

ENERGY CONSUMPTION WITHIN THE ORGANISATION [GJ]

2012 2013 change Grupa Azoty S.A. 9 341 094 GJ 9 196 615 GJ -1,5% G4-EN3 Grupa Azoty ZAK** 7 033 099 GJ 7 559 975 GJ 7,5% Grupa Azoty Puławy* 19 391 723 GJ 19 912 500 GJ 2,7% Grupa Azoty Police 13 141 894 GJ 11 306 804 GJ -14,0% Total for Grupa Azoty Group 48 907 810 GJ 47 975 894 GJ -1,9%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012). ** Figures for Grupa Azoty ZAK do not take into account cooling generation.

ENERGY INTENSITY, I.E. ENERGY COSTS TO PRODUCTION VALUE (%)

2012 2013 change Grupa Azoty S.A. 8,2% 8,0% -2,3% G4-EN5 Grupa Azoty ZAK* 12,1% 11,5% -4,9% Grupa Azoty Puławy** 9,4% 9,0% -4,2% Grupa Azoty Police 4,4% 4,6% 5,3% Total for Grupa Azoty Group 7,7% 7,8% 1,3%

* Figures for Grupa Azoty ZAK do not take into account cooling generation. ** Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

82 integrated report | 2013 A number ENERGY of initiatives contributed to improved KEY INITIATIVES TO energy efficiency IMPROVE ENERGY EFFICIENCY IN 2013 in 2013.

■■ Installation of power inverters at the Central Wastewater Treatment Plant, Biological Wastewater Treatment Plant and Power Business Unit, ■■ installation of an ammonia compressor at the 6th cooling unit, Grupa Azoty S.A. ■■ upgrade of the K-32 unit to enable recovery of unreacted phenol and Beckmann rearrangement with reaction heat, ■■ replacement of steam ejectors with a vacuum pump, ■■ upgrade of the cooling ammonia network, ■■ erection of a new hydrogen production plant;

■■ upgrade of the river pumping station (Unit No. 140) , ■■ upgrade of the industrial water pumping station (Unit. No. 202) providing water for general use at the plant and for fire-fighting purposes, Grupa Azoty ZAK ■■ replacement of heating water circulation pump No. 4 at the heating unit (Unit No. 211/1), (apart from the replacement of key equipment, upgrade work also involved energy-efficient operation of frequency converters);

■■ replacement of two pumping sets (pump + motor) with new, energy-efficient units, Grupa Azoty Puławy ■■ replacement of 31.5 MVA transformers with 40 MVA units;

■■ replacement of motors and lighting systems with more energy-efficient units ■■ change in regulation of the circulating pumps at CHP plant No. 2 Grupa Azoty Police ■■ switch-over to two OP 230 boilers at CHP plant No. 2 to limit the use the less energy-efficient OR 32 boilers at CHP plant No. 1 ■■ implementation of an energy management system based on ISO 50001.

The investment projects implemented are estimated to reach 228.73 GJ replacement of motors and lighting ENERGY INTENSITY, I.E. ENERGY COSTS TO PRODUCTION VALUE (%) at the Tarnów plant alone translated annually, while investments at systems. Additionally, limiting the into considerable energy savings last Grupa Azoty Puławy have reduced its use of less energy-efficient boilers year, estimated at PLN 9.5m. Thanks energy consumption by 10,840 GJ is documented to have reduced the to the upgrade of the pumping a year. Grupa Azoty Police saved plant’s costs by PLN 1.4m in the three station, Grupa Azoty ZAK’s savings some PLN 313 thousand following the winter months only.

82 83 integrated report | 2013 integrated report | 2013 ENERGY ENERGY

SUPPLEMENTARY NON-FINANCIAL INFORMATION SUPPLEMENTARY NON-FINANCIAL INFORMATION

ENERGY FROM PRIMARY SOURCES (BY ENERGY CARRIERS) TOTAL ENERGY CONSUMPTION IN [GJ]

Total consumption Grupa Azoty S.A. j.m. 2012 2013 G4-EN3 Thermal coal GJ 7 185 000 8 500 000 Natural gas GJ 5 500 4 300 Fuel-grade MEK GJ 209 400 171 700 Process gas GJ 100 200 53 000 Mazut GJ 32 900 33 800

Total consumption Grupa Azoty ZAK j.m. 2012 2013 Fine coal GJ 4 332 426 4 736 730 Fuel oil GJ 5 005 4 517

Total consumption Grupa Azoty Puławy* j.m. 2012 2013 Hard coal GJ 14 384 037 15 158 825 Petroleum-based fuels GJ 462 306 463 689 Natural gas GJ 14 044 17 798

Total consumption Grupa Azoty Police j.m. 2012 2013 Hard coal GJ 7 240 214 7 053 725

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

84 integrated report | 2013 ENERGY

SUPPLEMENTARY NON-FINANCIAL INFORMATION SUPPLEMENTARY NON-FINANCIAL INFORMATION

TOTAL ENERGY CONSUMPTION IN [GJ]

Grupa Azoty S.A. Grupa Azoty ZAK** Grupa Azoty Puławy* Grupa Azoty Police G4-EN3 2012 2013 2012 2013 2012 2013 2012 2013

Electricity, heat, cooling and steam 635 400 211 400 1 321 385 1 247 863 3 686 275 3 829 040 1 565 404 1 507 092 purchased for consumption

Electricity, heat, cooling and steam 9 071 694 9 328 215 6 255 063 6 869 426 17 263 119 17 642 379 12 077 573 10 310 256 generated by the organisation

Electricity, heat, cooling and steam sold 366 000 343 000 543 349 557 314 1 557 671 1 558 919 501 084 510 543 by the organisation

Total energy consumption within 9 341 094 9 196 615 7 033 099 7 559 975 19 391 723 19 912 500 13 141 894 11 306 804 the organisation

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012). ** Figures for Grupa Azoty ZAK do not take into account cooling generation.

84 85 integrated report | 2013 integrated report | 2013 WATER MANAGEMENT WATER MANAGEMENT

WATER INTAKES AT THE GRUPA AZOTY GROUP PERCENTAGE AND VOLUME OF REUSED WATER

At the Grupa Azoty Group, Grupa Azoty S.A. water is used chiefly for industrial ■■ surface intake on the right bank of the Dunajec river, G4-EN8 purposes, as a cooling agent, for ■■ underground intake from Quaternary water-bearing, drinking and as sanitary water, to

8-10 formations (first aquifer); produce process waters, and for fire-fighting applications. Water

EN DMA consumption management is Grupa Azoty ZAK governed by applicable procedures ■■ surface intake from the Oder river, to ensure rational water management, ■■ surface intake from the Łącza stream, prevent water loss, minimise amount ■■ tertiary and Quaternary groundwater intakes (deep wells), ■ of effluent, and prevent industrial ■ purchase of water drained from the Kotlarnia Sand Mine; failures. Grupa Azoty Puławy ■■ surface intake from the Wisła river (through four pipelines: R1–R4), ■■ surface intake from the Kurówka river, ■■ underground intake from Quaternary water-bearing formations (deep wells);

Grupa Azoty Police ■■ surface intake from the Oder river, Total water abstraction increased at ■■ surface intake from the Gunica river. two plants in the past year – Tarnów

G4-EN8 (up 6.0%) and Puławy (up 9.9%) – while decreasing at Kędzierzyn-Koźle (down 3.9%) and Police (down 8.8%). As a result, the total water abstraction remained virtually unchanged, having decreased only slightly (down 1.5%).

TOTAL WATER ABSTRACTION [M3]

2012 2013 change Grupa Azoty S.A. 12 516 000 13 267 000 6.0% G4-EN8 Grupa Azoty ZAK 7 336 000 7 052 240 -3.9% Grupa Azoty Puławy* 97 599 890 107 244 776 9.9% Grupa Azoty Police 162 595 854 148 246 534 -8.8% Grupa Azoty (total) 280 047 744 275 810 550 -1.5%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

The Grupa Azoty Group strives to optimise its water consumption

G4-EN10 through efficient water management, including water reuse. The method and scope of water reuse depends on production process characteristics at individual plants.

86 integrated report | 2013 WATER MANAGEMENT

PERCENTAGE AND VOLUME OF REUSED WATER

luwy unit (reuse in three cooling circulation systems 2 041 003 m3 to compensate losses) Grupa Azoty S.A. 22.4% 86 984 m3 reverse osmosis unit 850 101 m3 condensate treatment plant recirculation system for treated industrial wastewater, ash Grupa Azoty ZAK 40.6% 2 861 160 m3 and slag hydraulic transport water, spent cooling water, and storm water (the mixture is used to produce industrial water) Grupa Azoty Puławy 3.7% 3 805 283 m3 waters assumed pure* 9 451 800 m3 spent cooling water powering decarbonation stations 2 868 000 m3 water recirculated to intakes Grupa Azoty Police 9.8% 1 021 030 m3 turbine condensate 209 580 m3 dirty condensate 1 014 850 m3 process condensate

*16% last year – the substantial decrease was due to upgrade work in 2013.

Consumption optimisation measures sanitary sewage undergo mechanical Grupa Azoty Police operates an on- other than recycling, such as closed and chemical treatment at the Central site wastewater treatment plant cooling circuits, are also used. Wastewater Treatment Plant. The comprising stationary equipment A good example of such optimisation treated water is then discharged into for mechanical and chemical is the Police plant, which operates the Biała Tarnowska river. Industrial treatment of raw sewage. In addition three systems circulating substantial wastewater containing biodegradable to industrial wastewater, sanitary amounts of water: the CCW cycle substances is directed to drains and sewage, leachate from landfill sites (16,500 m3/h), the TCW-1 cycle trestle-supported sewer lines, and and municipal wastewater from the (14,400–21,000 m3/h), and the subsequently treated biologically town and municipality of Police are TCW-2 cycle (3,000 m3/h). at the Biological Wastewater also treated at the plant (following The improvement in efficiency Treatment Plant. The wastewater preliminary treatment in Police, is best illustrated by contrasting is then additionally streamed to the the wastewater is directed to the the amount of water circulating in Wastewater Treatment Facility on-site plant through the sewer closed cooling cycles throughout the operated by the Tarnów Water and system). The treatment technology year (321,880,560 m3/year) with the Sewage Utility (Zakład Oczyszczalni in use at the plant is listed among amount of water abstracted from Ścieków Tarnowskich Wodociągów the Best Available Techniques intakes (147,905,778 m3). Sp. z o.o.). Stormwater and spent (BAT) for the industry (’Central final cooling water from the plant’s treatment of inorganic waste water premises are drained separately, in a chemical-mechanical WWTP’). collected in a retention pond and then The treatment procedure involves WASTEWATER MANAGEMENT directed through a Sutro weir into the lime milk-based wastewater Production processes generate various Dunajec river. If a failure occurs at one neutralisation, aeration, coagulation, types of wastewater (such as industrial of the installations and the wastewater sedimentation, centrifugation, contaminates the EF drain, the drain and final treatment in retention

G4-EN22 wastewater, sanitary sewage, stormwater, and spent cooling water). may be cut off completely and all and equalisation ponds where the 22-23 Depending on its type, wastewater of the wastewater may be pumped separated effluent is treated naturally. generated at the Tarnów plant to the Central Wastewater Treatment As the treatment process is highly

EN DMA is transported using the industrial Plant, where specific water quality efficient, the discharged wastewater’s water system to be treated at the parameters can be achieved. It is also parameters are well below prescribed Central Wastewater Treatment Plant or possible to flow the entire volume values, and their impact on the quality the Biological Wastewater Treatment of wastewater to the Wastewater of water is negligible. Spent cooling Plant. Industrial wastewater and Treatment Facility operated by the water and stormwater from the Police Tarnów Water and Sewage Utility plant, which are discharged directly (Zakład Oczyszczalni Ścieków into the surface waters of the Oder Tarnowskich Wodociągów Sp. z o.o.). river, undergo regular and automatic pH monitoring to control their acidity.

86 87 integrated report | 2013 integrated report | 2013 WATER MANAGEMENT WATER MANAGEMENT

PERCENTAGE AND VOLUME OF REUSED WATER IN 2013

Grupa Azoty Puławy’s treated recorded in 2013 were significantly Wastewater Treatment Plant. The wastewater is discharged into the below the limits specified in the wastewater is also directed to the Wisła river. Individual wastewater integrated permit. Piskorzowiec Wastewater Treatment types are treated at the Central Plant. The on-site mechanical and The quality of wastewater discharged Industrial Wastewater Treatment Plant biological wastewater treatment by Grupa Azoty ZAK to the Oder (mechanical and chemical treatment), plant underwent upgrade work river was equally good. The plant Biological Industrial Wastewater in the past years, which included the has a wastewater treatment system Treatment Plant (biological erection of a sediment dewatering comprising local pretreatment treatment), Blackwater Treatment station. Upgrade work at the Central facilities, the Central Mechanical Plant (biological treatment), and Mechanical Wastewater Treatment Wastewater Treatment Plant, and the local pretreatment facilities. The Plant was completed in 2014. Central Mechanical and Biological discharged water’s parameters

SUPPLEMENTARY NON-FINANCIAL INFORMATION

TOTAL WATER ABSTRACTION BY SOURCE [m3] WASTEWATER DISCHARGE BY DESTINATION

Grupa Azoty S.A. Grupa Azoty ZAK 2012 2013 2012 2013 G4-EN8 Surface water 11 961 000 12 673 000 3 811 000 3 839 540 Groundwater 555 000 594 000 1 849 900 1 345 200 Municipal water supply 0 0 0 0 Other 0 0 1 675 100 1 867 500 Total 12 516 000 13 267 000 7 336 000 7 052 240

Grupa Azoty Puławy* Grupa Azoty Police 2012 2013 2012 2013 Surface water 94 063 885 103 431 596 162 245 909 147 905 778 Groundwater 3 536 005 3 813 180 0 0 Municipal water supply 0 0 349 945 340 756 Other 0 0 0 0 Total 97 599 890 107 244 776 162 595 854 148 246 534

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

88 integrated report | 2013 WATER MANAGEMENT

PERCENTAGE AND VOLUME OF REUSED WATER IN 2013 SUPPLEMENTARY NON-FINANCIAL INFORMATION

VOLUME OF WASTEWATER

Volume Unit 2012 2013 G4-EN22 Grupa Azoty S.A. Central wastewater treatment plant – mechanical and chemical treatment m3 3 622 000 4 042 000 Biological wastewater treatment plant – biological treatment m3 1 427 000 1 415 000 Grupa Azoty ZAK Wastewater treatment system m3 1 996 898 2 231 333 Piskorzowiec Wastewater Treatment Plant m3 4 749 094 6 098 670 Grupa Azoty Puławy* Central wastewater treatment plant – mechanical and chemical treatment m3 2 684 969 2 580 467 Biological industrial wastewater treatment plant – biological treatment m3 1 295 760 1 332 850 Blackwater treatment plant – biological treatment m3 101 650 126 760 Dawidagi – mechanical treatment m3 254 736 254 040 Biological treatment – tertiary treatment m3 85 885 399 98 155 513 Grupa Azoty Police On-site Mechanical and Chemical Wastewater Treatment Plant m3 42 062 549 36 419 081

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

SUPPLEMENTARY NON-FINANCIAL INFORMATION

TOTAL WATER ABSTRACTION BY SOURCE [m3] WASTEWATER DISCHARGE BY DESTINATION

Volume Unit 2012 2013 G4-EN22 Grupa Azoty S.A. Biała Tarnowska river m3 3 622 000 4 042 000 The Wastewater Treatment Facility operated by the Tarnów Water and Sewage Utility (Zakład Oczyszczalni Ścieków Tarnowskich Wodociągów m3 1 427 000 1 415 000 Sp. z o.o.); then discharged to the Biała river Dunajec river m3 712 000 824 000 Grupa Azoty ZAK Oder river m3 4 749 094 6 098 670 Grupa Azoty Puławy* Wisła river m3 85 885 399 98 155 513 Grupa Azoty Police Internal seawaters – Oder river m3 42 062 549 36 419 081

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

88 89 integrated report | 2013 integrated report | 2013 Biodiversity AIR EMISSIONS

The Group is fully aware of operating At some distance from the premises 8,182.3 ha), ’Płaskowyż Nałęczowski’ within a specific environment, and of of Grupa Azoty Police there are also (Nałęczów Plateau) (code: PLH060015,

G4-EN11 coexistence in its immediate vicinity several areas designated as nature area: 1,080.7 ha), ’Dolina Środkowej of areas of high natural and ecological reserves, including ’Białokrzew Wisły’ (Middle Wisła River Valley) 11-12 values. Its priority is to respect this Kopicki’, ’Olszanka’, ’Uroczysko (code: PLB140004, area: 30,777.9 diversity unconditionally. Święta’, ’Świdwie’, and ’Ostoja ha), ’Małopolski Przełom Wisły’

EN DMA Wkrzańska’ (formerly ’Puszcza (Lesser Poland Wisła River Gorge) Wkrzańska’) (code: PLB320014, (code: PLB140006, area: 6,972.8 ha), ENVIRONMENT OF area: 14,575.7 ha). ’Przełom Wisły w Małopolsce’ (Wisła GRUPA AZOTY S.A. River Gorge in Lesser Poland) (code: PLH060045, area: 15,116.4 ha). Grupa Azoty S.A. leases and ENVIRONMENT OF manages 72.2 ha of land located GRUPA AZOTY PUŁAWY within a protected area of the ENVIRONMENT OF Dunajec river catchment basin. Also in the vicinity of Grupa Azoty GRUPA AZOTY ZAK The operations carried out within Puławy there are protected areas this area, which contains surface of high ecological value, including There are no protected areas of and underground water intake three nature reserves. The first high natural value in the immediate facilities, as well as reservoirs feeding of them is ’Jezioro Piskory’ (Lake proximity of Grupa Azoty ZAK’s water to an underground municipal Piskory), a body of water created premises. However, there are some water intake point, pose no threat by damming the Duży Pioter Natura 2000 sites located between to biodiversity. Abstraction of water watercourse. The lake, which is one 10 km to 20 km away, including Park is subject to relevant permits which of the Lublin region’s finest refuges Krajobrazowy Góra św. Anny (Saint set the maximum quantities of for waterfowl and marshland birds, Ann Mountain Landscape Park) water that may be drawn, ensuring is located some 4.5 km north of the (PLH160002, area: 5,084.3 ha), and they are not excessive. In the case company’s premises. Another reserve Obszar Chronionego Krajobrazu Łęg of Grupa Azoty S.A. the protected is called ’Łęg na Kępie’ in Puławy. Zdzieszowicki (Zdzieszowice Floodplain areas include ’Dolny Dunajec’ (Lower Established to protect a natural Forest Protected Landscape Area) Dunajec River) (code: PLH120085; floodplain forest of elms in the Wisła (PLH160011, area: 619.9 ha). area: 1,293.9 ha) and ’Biała Tarnowska’ river valley, it also contains forests Detailed and up-to-date information (Biała Tarnowska River) (code: of willow and poplar trees as well as on all the listed areas, including

PLH120090, area: 957.5 ha). elm and ash trees, remnants of vast G4-EN14 information on their protected riparian forests that used to cover species and habitats, can be found the Wisła river terrace. That second in two publicly available databases ENVIRONMENT OF reserve is located some 4.5 km south

G4-EN12 – Catalogue of Natura 2000 sites GRUPA AZOTY POLICE of the company’s premises. The third compiled by the Institute for protected area is ’Czapliniec’ near the As for Grupa Azoty Police, it owns or Sustainable Development (INE), village of Gołąb, an animal preserve holds perpetual usufruct right to land and the Central Register of Nature established to protect a breeding 14 adjacent to areas protected for their Protection Forms (CRFOP) . colony of grey herons. high biodiversity value. These include the following Natura 2000 sites: Another unique site located at some According to the calculations of air distance from the company’s plant pollution dispersion, there were no ■■ ’Police – Kanały’ (Police Canals) is the Kazimierz Landscape Park, instances of exceeding the allowable (code: PLH320015; area: 100.2 ha), G4-EN12 dissected by a system of gullies concentrations of any pollutants ■■ ’Zalew Szczeciński’ (Szczecin formed in the easily eroding loess outside the areas to which the Group Lagoon) (code: PLB320009, area: soil. There are also six areas of high holds legal title. The conclusion is that 47,194.6 ha), natural interest included in the Natura the Group’s pollutant emissions have ■■ ’Ujście Odry i Zalew Szczeciński’ 2000 network at distances varying no negative impact on the biology of (Oder Estuary and Szczecin Lagoon) between 1.8 km to 16.2 km from the any neighbouring areas. (code: PLH320018, area: 52,612.0 ha). plant: ’Puławy’ (code: PLH060055, area: 1,157 ha), ’Dolny Wieprz’ (Lower Wieprz River) (code: PLH060051, area:

14 Catalogue of Natura 2000 sites: http://www.obszary.natura2000.org.pl/index. php?s=lista&o=wyszukiwarka. Central Register of Nature Protection Forms (CRFOP): http://crfop.gdos.gov.pl/CRFOP/search.jsf

90 integrated report | 2013 AIR EMISSIONS

In line with the environmental 15-21 management system in place, the Grupa Azoty Group strives to mitigate

EN DMA its atmospheric emissions, both in terms of volumes and parameters of emitted gases.

As regards greenhouse gases, the Grupa Azoty Group emits mainly

G4-EN15 carbon dioxide (CO2), a typical pollutant generated by many branches of the industry, as well

as nitrous oxide (N2O), generated in the production of nitric acid. Key sources of carbon dioxide emissions are the Group’s CHP plants and production facilities, primarily ammonia and hydrogen, caprolactam, nitric acid, melamine and urea units. Significant impacts are also associated with the production of synthesis gas, aldehydes and alcohols.

Efforts made by Grupa Azoty to mitigate its GHG emissions not

G4-EC2 only benefit the environment, but are also an important driver of its long-term financial performance. This is connected with the European Union’s emissions trading scheme (EU ETS).

90 91 integrated report | 2013 integrated report | 2013 AIR EMISSIONS OTHER AIR EMISSIONS

REDUCTION IN GHG EMISSIONS ACHIEVED IN RECENT YEARS REDUCTIONS IN NITROUS OXIDE EMISSIONS

In recent years, including the closed At Puławy, the replacement of the period of Joint Implementation nitrous oxide reduction catalyst and projects, the Group has taken the changed method of its installation a number of specific measures that in the nitric acid unit’s reactors have have notably contributed to reducing contributed to reducing emissions. its GHG emissions. Total emission reductions achieved as part of the Joint Implementation In 2013, it replaced the catalyst for project in 2008−2012 amounted high-temperature decomposition to 7,211,720 tonnes of CO . The of nitrous oxide in the ammonia 2 project involved the application oxidation reactors of the dual of a high-temperature catalyst for pressure nitric acid facility in Tarnów. decomposition of nitrous oxide in Thanks to the sustained, intensive the ammonia oxidation reactors of N O EMISSIONS INTENSITY RATIO catalytic activity enabling a reduction 2 the nitric acid facility. As a result, the (ABSOLUTE N2O EMISSIONS [KG] RELATIVE TO THE OUTPUT OF NITRIC ACID [MG]) of the N O content in outlet gases 2 volume of N O emissions has been by as much as 95%, emissions of 2 reduced. this greenhouse gas have been substantially lowered. As a result, Grupa Azoty Police did not participate 174 tonnes of nitrous oxide have not in Joint Implementation projects been released into the air. Emission (JI) in the second trading period reductions achieved as part of the (2008−2012), and in 2013 there were no Joint Implementation projects have direct activities on any of the EU ETS- already amounted to 2,674,356 Mg of covered installations. As part of its

CO2e. Cumulative emission reductions own activities, in 2008 the company in 2008−2012 at Grupa Azoty ZAK completed an upgrade of its fertilizer

amounted to 1,224,538 Mg of CO2e. unit. The result of the project, As part of a Joint Implementation spanning the years 2005−2008, is

project, a secondary catalyst was a reduction in CO2 emissions by about

installed at the TKIV nitric acid 10,000 Mg CO2 per year. Its scale production unit, which decomposes is best demonstrated by a sharp

N2O inside the reactor, exactly reduction in the emissions intensity

where it is generated. Under high ratio: from 0.045 Mg CO2/1 Mg of

temperature and in the presence of fertilizer to 0.0038 Mg CO2/1 Mg of

the catalyst, N2O is decomposed into fertilizer.

nitrogen (N2) and oxygen (O2).

CO2 EMISSIONS INTENSITY RATIO (%)

(ABSOLUTE CO2 EMISSIONS IN TONNES RELATIVE TO THE OUTPUT OF AMMONIA IN TONNES)

2012 2013 Change Grupa Azoty S.A. 1.758 1.874 +6.6% Grupa Azoty ZAK ND 1.727 – Grupa Azoty Puławy* 1.700 1.676 -1.4% Grupa Azoty Police 1.941 1.925 -0.8% Grupa Azoty (total) 1.771 1.759 -0.6%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

92 integrated report | 2013 OTHER AIR EMISSIONS

REDUCTIONS IN NITROUS OXIDE EMISSIONS

Last year saw great progress in the

mitigation of N2O emissions, as the emissions intensity ratios recorded G4-EN19 by all the three Group companies producing nitric acid came very close to the level prescribed by BAT. G4-EN18

N2O EMISSIONS INTENSITY RATIO (ABSOLUTE N2O EMISSIONS [KG] RELATIVE TO THE OUTPUT OF NITRIC ACID [MG])

2012 2013 Change Grupa Azoty S.A. 1.99 1.36 -31.7% G4-EN18 Grupa Azoty ZAK b.d. 1.03 – Grupa Azoty Puławy* 2.03 1.16 -42.9% Grupa Azoty Police n/d n/d n/d Grupa Azoty (total) 2.02 1.16 -42.7%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

At Grupa Azoty S.A. the benchmark The ratio achieved in 2013 was level is expected to be achieved slightly higher than the benchmark already in 2014, thanks chiefly to used to calculate a share of emission the catalyst replacement. Also at allowances to be allocated for free

Grupa Azoty Puławy, where the N2O under the EU ETS (ca. 1 kg of N2O/

emissions intensity ratio in nitric tHNO3), but lower from the level acid production was brought down prescribed by the Best Available from 2.03 in 2012 to 1.16 in 2013, the Techniques (BAT) for existing improvement resulted from the medium-pressure installations (1.85 CO EMISSIONS INTENSITY RATIO (%) 2 replacement of the N2O reduction kg of N O/tHNO ). The nitric acid (ABSOLUTE CO EMISSIONS IN TONNES RELATIVE TO THE OUTPUT OF AMMONIA IN TONNES) 2 3 2 catalyst and changed method of its production units operated by Grupa installation in reactors. Azoty ZAK S.A. are modern facilities

which meet the benchmarks for N2O emissions and are compliant with the BAT standards. Altogether, the Grupa Azoty Group improved its performance by 43% year on year.

92 93 integrated report | 2013 integrated report | 2013 In addition to GHG

G4-EN21 emissions, activities Other air emissions REDUCTIONS IN NITROUS OXIDE EMISSIONS carried out by the Grupa Azoty Group were also a source of other air emissions.

SOx, NOx AND OTHER SIGNIFICANT AIR EMISSIONS

Emissions Greenhouse gas Unit Change (%) 2012 2013 G4-EN21 Grupa Azoty S.A.

Nitrogen oxides (NOx) Mg 6 252.7 6 501.1 4.0%

Sulfur dioxide (SO2) Mg 3 704.1 4 454.6 20.3% Total dust Mg 332 378.5 14.0%

Ammonia (NH3) Mg 191 185 -3.1%

Methane (CH4) Mg 25.6 74.6 191.4% Carbon monoxide (CO) Mg 188 214 13.8%

Sulfuric acid (H2SO4) Mg 80.1 87.2 8.9% Grupa Azoty ZAK

Nitrogen oxides (NOx) Mg 1 130 1 184 4.8%

Sulfur dioxide (SO2) Mg 1 910 2 154 12.8% Volatile organic compounds (VOC) Mg 10 8 -20.0% Carbon monoxide (CO) Mg 2 674 1 922 -28.1%

Ammonia (NH3) Mg 446 459 2.9% Organic acids Mg 13 5 -61.5%

Benzene (C6H6) Mg 0.35 0 -100.0%

Methane (CH4) Mg 10 5 -50.0% Total dust Mg 279 324 16.1% Particulate matter Mg 45 209 364.4% SUPPLEMENTARY NON-FINANCIAL INFORMATION Aliphatic alcohols Mg 9 7 -22.2% Grupa Azoty Puławy* Sulfur dioxide (SO ) Mg 7 394 4 111 -44.4% 2 GREENHOUSE GAS EMISSIONS

Nitrogen oxides (NOx) Mg 4 183 2 951 -29.5%

Ammonia (NH3) Mg 811 902 11.2% Ammonium nitrate dust Mg 379 385 1.6% Urea dust Mg 28 28 0.0% Ammonium sulfate dust Mg 3.6 6 66.7% Melamine dust Mg 13 15 15.4% Dust from fuel combustion Mg 194 113 -41.8% Grupa Azoty Police

Sulfur dioxide (SO2) Mg 4 079 3 011 -26.2%

Nitrogen dioxide (NO2) Mg 1 703 1 477 -13.3% Carbon monoxide (CO) Mg 171 195 14.0% Fluorine compounds Mg 7 5 -28.6%

Ammonia (NH3) Mg 1 012 1 075 6.2%

Sulfuric acid (H2SO4) Mg 54 37 -31.5% Total dust Mg 646 604 -6.5% Aliphatic hydrocarbons Mg 0.04 0.04 0.0%

Benzo(alpha)pyrene (C2OH12) Mg 0.13 0.00 -100.0%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

94 integrated report | 2013 REDUCTIONS IN NITROUS OXIDE EMISSIONS

SO , NO AND OTHER SIGNIFICANT AIR EMISSIONS x x The increase in Grupa Azoty’s Significant changes in emission levels Innovative Desulfurization Unit emissions of dust, sulfur dioxide were seen at Grupa Azoty Puławy: the At Grupa Azoty Puławy and carbon monoxide from fuel 2013 increase in ammonia emissions combustion recorded in 2013 resulted followed the launch of a new flue gas On July 8th 2013, Europe’s first and the from higher output of steam from its desulfurization unit (new source of world’s third ammonia-based wet flue CHP plant. On the other hand, the emissions). On the other hand, the gas desulfurization unit was officially reduced emissions of ammonia in new unit has helped to significantly placed in service in Puławy. Tarnów can be linked to lower output lower sulfur dioxide emissions (by The project will reduce air emissions of ammonium nitrite. An increase in about 44%). The marked reduction from the CHP plant by more than hydrogen output by Grupa Azoty S.A. in NOx emissions in 2013 resulted 80%, with ammonium sulfate resulted in higher methane emissions. from the completion of phase 1 obtained as a process by-product At Grupa Azoty ZAK, we should note of the project to construct NOx to be used in the manufacture of the increase in dust and sulfur dioxide reduction units at boilers No. 4 and sulfur fertilizers by the New Fertilizer emissions (higher heat output), and No. 5 (emissions have been lowered Production Facility. the reduction in carbon monoxide to 350mg/m3; the final completion emissions due to lower anhydride of work in 2014 will reduce them output. further to less than 200mg/m3). Another factor behind the reduced NOx emissions was the launch, in the fourth quarter of 2012, of a selective catalytic reduction (SCR) unit on line 4 of the nitric acid production facility.

SUPPLEMENTARY NON-FINANCIAL INFORMATION

GREENHOUSE GAS EMISSIONS

Emissions [Mg of CO equivalent] Greenhouse gas Unit 2 2012 2013 G4-EN15 Grupa Azoty S.A.

Carbon dioxide (CO2) Mg 1 104 908 1 210 550

Nitrous oxide (N2O) Mg 177 122 118 419 Grupa Azoty ZAK*

Carbon dioxide (CO2) Mg 394 859 1 103 923

Nitrous oxide (N2O) Mg - 147 887 Grupa Azoty Puławy**

Carbon dioxide (CO2) Mg 3 363 384 3 382 499

Nitrous oxide (N2O) Mg 533 357 303 614 Grupa Azoty Police

Carbon dioxide (CO2) Mg 1 658 309 1 676 201

* Emissions from the EU ETS-covered installations. ** Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

94 95 integrated report | 2013 integrated report | 2013 Waste management Waste management

Efforts to mitigate waste-related Grupa Azoty Police is the only Polish threats start from waste prevention plant to operate a titanium white

G4-EN23 at all levels, from planning, production facility. The process by- to designing, to manufacture products include hydrolytic sulfuric of products, as well as during acid and iron (II) sulfate, which can be and after their consumption. converted into commercial products This objective has long been a key and so are stored (hydrolytic sulfuric element of the Grupa Azoty Group’s acid) or extracted from the landfill operational strategy. Upgrades site (iron (II) sulfate) for reprocessing. of old installations and launch After drying, the iron (II) sulfate of new, low-emission and low-waste waste is sold to customers, while the BAT-compliant technologies help leachate which has passed through minimise the amount of waste while the iron (II) sulfate landfill site is boosting output, minimise resource used as a coagulant in the company’s consumption, and improve waste wastewater treatment facility. The sorting for recovery and recycling. hydrolytic acid, on the other hand, is recovered in the fertilizer facility. The main types of waste produced Together with used-up catalysts, it by the Grupa Azoty Group include is recycled in the phosphoric acid residue of coal combustion at the production unit. Due to the landfilling CHP plants and sludge from effluent process, the annual waste balances treatment. Given its specific include significant volumes of stored production profile, the main type waste, carried over to the next of waste produced by Grupa Azoty accounting year. In the case of iron Police is phosphogypsum, which − (II) sulfate, the volume processed mixed with power generation waste into commercial products exceeds − is landfilled separately on site. the volume generated during the Sustainable waste management year, which is connected with takes more than just modern the extraction of waste landfilled technologies. It also requires staff in previous years. From the awareness and clearly defined rules environmental point of view, this laid down in a company’s internal is a highly positive development. regulations. The development and In order to expand the capacity of implementation of procedures Grupa Azoty Puławy’s landfill site forming a comprehensive waste and for waste other than hazardous and packaging management framework inert waste, phase 1 of the project to have helped significantly reduce the raise the dykes of the K1, K2, K4 and K6 volume of waste generated by the cells by 3 meters, up to 132.50 metres Group. It should be noted that above sea level, was executed in the Group’s waste is increasingly 2009−2012. reused, mainly through resource recovery. It is also sorted and stored at designated and properly marked locations. Individual Group companies have their own recovery and disposal processes for some waste, while other waste is transferred to licensed waste management contractors. Some is used as a source of raw materials by Grupa Azoty S.A. For instance, plastic waste is recycled in the Compounding PA6 and Compounding POM units.

96 integrated report | 2013 Waste management

Ash Collection Facility Phosphogypsum Landfill Site at in Tarnów Grupa Azoty Police Back in 2012, Grupa Azoty S.A. The storage technology used at the Waste generated by Grupa Azoty finished the construction of an phosphogypsum landfill site has is classified and disposed of advanced facility designed to collect won the company a certificate of the as required by law. A notable ash from the on-site CHP plant. American World Environment Center success of last year is that the It has noticeably reduced the volume foundation. Since 1994, Grupa Azoty volume of hazardous and non- of landfilled waste, enabling its Police has made efforts to introduce hazardous waste was reduced commercial utilisation. Currently, high growing vegetation at the landfill by nearly 10% and over 19%, the collected ash is sold to third-party site. There is already a profusion of sod- respectively, resulting in an customers (including concrete, forming vascular plants. The condition overall waste volume reduction brick and cement manufacturers). of the grass sod, the extent to which it of almost 19%. covers the site, the visual appearance of the plants and their ability to go through all development phases, Individual companies of the including growth of fertile shoots, Grupa Azoty Group comply with the legal requirement defining

demonstrate the ability of many plant G4-EN28 species to develop normally in this a percentage of packaging materials environment. that must be reclaimed through a professional provider of recycling For a number of years, the landfill services. In 2013, all the companies site has been a habitat for many plant met the legally prescribed levels species and an assemblage of animals, of packaging reclaimed and recycled. including some 100 species of birds. The ornithologists from the Szczecin University who conducted research over an area adjacent to the landfill site (storage reservoirs for the wastewater treatment plant) have found that the area can be compared to the Świdwie reserve in terms of the populations and diversity of bird species.

96 97 integrated report | 2013 integrated report | 2013 Waste management Waste management

SUPPLEMENTARY NON-FINANCIAL INFORMATION SUPPLEMENTARY NON-FINANCIAL INFORMATION

PERCENTAGE OF PACKAGING MATERIALS WASTE BY DISPOSAL METHOD THAT ARE RECLAIMED RELATIVE TO VOLUMES MARKETED (%)

G4-EN28 Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy Grupa Azoty Police

15% 21.5% 21.5% 15% 21.5% 16.5% 23.7%

46%

58% 46% 15% 58% 46% 63.8% 50.6%

Wooden packaging Plastic packaging Steel packaging Paper and cardboard packaging

Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy Grupa Azoty Police

Total packaging 50% 50% 50% 55.0%

Recovery rate for 58.5% 58.5% 58.5% 64.4% total packaging

WASTE BY TYPE

Waste weight Unit 2012 2013 G4-EN23 Grupa Azoty S.A. Hazardous waste Mg 127 108 Non-hazardous waste Mg 98 228 96 835 Total Mg 98 355 96 943 Grupa Azoty ZAK Hazardous waste Mg 3 162 4 816 Non-hazardous waste Mg 88 418 110 466 Total Mg 91 580 115 282 Grupa Azoty Puławy* Hazardous waste Mg 416 605 Non-hazardous waste Mg 198 776 212 135 Total Mg 199 192 212 740 Grupa Azoty Police** Hazardous waste Mg 76 335 68 245 Non-hazardous waste Mg 3 616 034 2 817 867 Total Mg 3 692 370 2 886 112

* Grupa Azoty PUŁAWY’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012). ** Large amounts of waste are processed at facilities operated by the company. The hydrolytic sulfuric acid stored by the company is re-used in the production of phosphoric acid and ammonium sulfate. Consequently, the annual waste balances include the volumes stored and carried over to the next accounting year (hydrolytic acid). The negative balance of the iron (II) sulfate landfill site is due to the 100% commercial utilisation of the waste volume generated in a given calendar year and extraction of the waste landfilled in previous years.

98 integrated report | 2013 Waste management Waste management

SUPPLEMENTARY NON-FINANCIAL INFORMATION SUPPLEMENTARY NON-FINANCIAL INFORMATION

PERCENTAGE OF PACKAGING MATERIALS WASTE BY DISPOSAL METHOD THAT ARE RECLAIMED RELATIVE TO VOLUMES MARKETED (%)

Waste weight Unit 2012 2013 G4-EN23 Grupa Azoty S.A. On-site recovery Mg 90 0 Transfer to third-party contractors Mg 98 265 96 943 Total Mg 98 355 96 943 Grupa Azoty ZAK* On-site landfilling Mg 2 706 0 Transfer to third-party contractors Mg 106 241 125 121 Total Mg 108 947 125 121 Grupa Azoty Puławy** On-site recovery Mg 569 780 On-site landfilling Mg 28 231 26 238 Transfer to third-party contractors Mg 152 746 185 140 Waste stored at year end compared with waste Mg 9 49 generated during the year − hazardous waste Waste stored at year end compared with waste Mg 17 637 534 generated during the year − non-hazardous waste WASTE BY TYPE Total Mg 199 192 212 740 Grupa Azoty Police*** On-site recovery Mg 475 253 403 284 On-site disposal Mg 1 069 059 883 914 On-site landfilling Mg 2 064 718 1 533 477 Transfer to third-party contractors Mg 85 762 84 276 Total Mg 3 694 792 2 904 951

* The larger volume of waste disposed of than the volume generated by Grupa Azoty ZAK resulted from the transfer in 2013 of waste produced in previous years to third-party waste disposal contractors. ** Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012). *** In the case of the Police plant, the substantial amount of waste is connected with the extraction from the landfill site and treatment of the iron (II) sulfate waste (landfilled in previous years), in the process described above.

98 99 integrated report | 2013 integrated report | 2013 TRANSPORT G4-EN30 30 EN DMA

The main type of transport vehicles The Company does not have its own used by Grupa Azoty S.A. to carry fleet of transport vehicles to carry fertilizers is semi-trailers with raw materials and products. However, tarpaulin covers, provided by third it operates a fleet of passenger cars parties. While the Company does not and delivery vehicles, all of which require the carriers to comply with are modern vehicles equipped with specific EURO standards, it obligates fuel-efficient engines with low exhaust them to use the shortest possible emissions. With respect to its fleet, the routes and vehicles complying with Company has put in place standard the EURO 5 and EURO 6 emission environmentally-friendly procedures standards. concerning the recycling of waste, such as used batteries and tyres.

TRANSPORT STRUCTURE

Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy Grupa Azoty Police Rail transport 84.6% 66.0% 41% 30.2% Road transport 14.0% 29.7% 40%* 29.1%

Sea transport (including, for instance, com- 1.4% 4.3% 19% 40.7%** bined rail and sea transport)

* 38% road transport and 2% combined road and rail transport; ** including 2.1% inland waterway transport.

Two factors come into prominence With advanced logistics solutions, when considering environmental we are able to optimise shipments, impacts of our transport activities: which translates into financial and the direct environmental impact environmental savings. Generally, arising from the use of electricity and the use of rail transport is most fuels as well as exhaust gas and noise optimal. However, for the Police emissions, and the need to ensure plant, given its location, it is sea environmental safety when carrying transport that is most beneficial. hazardous substances (for more

information, see ’Transport safety’).

100 integrated report | 2013 TRANSPORT STRUCTURE

Taking part in global markets means working across great distances. Our raw materials arrive from far away, while the products travel even further. It's not just a question of cost, but also of safety – responsibility for places where are products arrive, and for every kilometer of roadway which gets them there.

100 101 integrated report | 2013 inteintegrated report | 2013 ENVIRONMENTAL PROTECTION PROJECTS COMPLIANCE

KEY PRO-ENVIRONMENTAL INVESTMENT PROJECTS

The Grupa Azoty Group’s Grupa Azoty ZAK strategy provides for the use of ■■ In 2014, the company completed ■■ In 2015, the company also plans to complete

G4-EN27 energy-efficient technologies an upgrade of the Mechanical Waste- construction of an industrial wastewater water Treatment Plant, with the current neutralisation unit at the titanium white 27 and mitigation of the Group maximum work load of 500 m3/h. plant, which will help reduce sulfate ion companies’ environmental The project will result in increased emissions to water.

EN DMA footprint. These objectives efficiency of wastewater pretreatment ■■ Construction of a decomposition sludge and, as a result, improved parameters translate into very specific neutralisation unit is expected to be of treated wastewater from the mecha- completed in 2015. This project is designed obligations and investments nical section of the plant. to reduce sulfate ion emissions to water from in assets at the individual ■■ A new facility is planned to be put the titanium white production plant. companies of the Grupa Azoty into service, which will replace the ■■ In 2014, the company will complete technologically obsolete and worn-out expansion of the post-calcination gas Group. The investments are installations of the existing on-site CHP desulfurization system through the addition plant. The completion of the project expected to significantly reduce of two new reactors (SO2 emissions from the operating costs, including will help increase the efficiency of heat titanium white plant). and electricity generation and reduce ■ Phase 1 of a project to upgrade the the cost of fees and charges air emissions (the project is planned for ■ decomposition gas treatment system 2014−2016, with the new plant expected paid for economic use of the is scheduled to be completed in 2014. to be put into service in 2017). environment. It is designed to reduce SO2 emissions from the titanium white plant (the purpose of the Grupa Azoty Puławy project is to reduce SO2 emissions and limit Grupa Azoty S.A. ■■ The construction of a flue gas emissions of sulfuric acid mists from the feedstock decomposition unit at the titanium ■■ In 2013, the Company completed desulfurization unit was completed an upgrade of the sulfuric acid plant. in 2013. The purpose of the project was white plant). The project involved installation to reduce sulfur dioxide emissions into ■■ The start-up of a continuous monitoring 3 of a new contactor system with heat air from 3,000 mg/m to below 200 mg/ system for SO2 and dust emissions from the exchangers and economisers, as well m3. The FGD unit uses the wet ammonia titanium white plant is also planned for 2014. as construction of a sulfur furnace with method to reduce sulfur emissions. ■■ The plans for 2014 also include a project a waste heat boiler. Its completion ■■ For 2014, the company plans involving the purchase and installation resulted in improved environmental completion of the construction of of a second roller mill system, whose performance and increased steam NOx reduction units on OP-215 boilers objective is to eliminate the Raymond mill output. No. 4 and No. 5. line and thereby reduce the nuisance caused ■ ■ In 2013, the Company completed the ■■ The construction of the Biological by plant operation, as well as noise levels, distillation of palladium-catalysed Wastewater Treatment Plant’s electricity consumption and costs of repair/ cyclohexanone rectification residue precipitate dehydration unit maintenance of the calcite milling unit. project. It helped reduce the is expected to be completed in 2014. consumption of phenol and energy It will allow Grupa Azoty Puławy (power, 0.9 MPa steam, 1.7 MPa steam, Over pln 160m invested to outsource management of this waste frigories, natural gas, and circuit water) in a pro-environmental used in cyclohexanol production. to third parties, and thus eliminate the need to deposit it within the landfill site. project by Grupa Azoty Police ■■ In 2014, the Company plans to complete upgrade of the interior Grupa Azoty Police is implementing of ammonia synthesis reactors. Grupa Azoty Police a new pro-environmental project to The project is expected to result ■■ In 2013, the company completed construct a flue gas treatment unit. in reduced consumption of electricity a project involving construction With its cost exceeding PLN 163m, needed to compress synthesis gas of the iron (II) sulfate neutralisation it is the second project of that scale and cooling ammonia, better use plant ’MONOHYDRAT’. Its purpose implemented in the area of the Province of reaction heat to produce steam, and is to facilitate the management of waste reduced consumption of the coolant. of Szczecin, after the Świnoujście produced by the titanium white LNG terminal. The project is part of ■■ Plans for 2014−2016 include upgrade plant. Neutralised iron (II) sulphate of the existing infrastructure of on-site monohydrate may be used for the the upgrade of CHP plant No. 2. Once CHP No. 2, and bringing the existing purpose of chrome (VI) reduction in the the work is completed in 2015, Grupa system to full compliance with the new cement industry. Azoty Police will significantly reduce emission standards. ■■ In 2015, a flue gas treatment unit certain air emissions and meet the more is expected to be put into service and restrictive standards imposed on the upgrade of CHP plant No. 2 is scheduled Polish energy sector by the European to be completed. Union. It is an element of changes within the Polish energy sector, which is currently undergoing a process of transformation. 102 integrated report | 2013 COMPLIANCE

Internal regulations and procedures In the case of Grupa Azoty Puławy, in place at the Grupa Azoty the analysis of the data from the Group ensure compliance with continuous emissions monitoring G4-EN29 environmental protection regulations. system at the on-site CHP plant 29 However, despite the utmost showed isolated instances care exercised and attention paid of exceeding the sulfur dioxide

EN DMA to the environmental issues by the emission standards. They were caused management boards of the individual by boiler change-overs from the old companies and the employees emission source to the new emission of the individual business units, last source following the installation year administrative proceedings of a flue gas desulfurization unit, were pending against Grupa Azoty an investment project aimed Group companies on the grounds at improving the quality of flue gases. of alleged violations of the applicable As at the date of this Report, no environmental standards. decision on a penalty has been made. The Company estimates that it may There were administrative reach approximately PLN 20 thousand. proceedings pending against Grupa Other than the above, no exceedance Azoty S.A., concerning excessive noise of other parameters was identified, emissions from the VRM Unit. As at the no administrative proceedings date of this Report, no decision concerning environmental protection on a penalty has been made. The were pending and no penalties were Company estimates that the amount imposed on the company. In 2013, no of the penalty should not exceed PLN environmental fines were imposed 12 thousand. on and no complaints were filed In the case of Grupa Azoty ZAK, against Grupa Azoty Police. a penalty of PLN 157,410 was imposed on the company in 2013 for discharging industrial wastewater into the Oder river in 2010 and 2011 in violation of the terms and conditions of the relevant water permit. Grupa Azoty ZAK has planned certain measures to solve the problem of periodic exceedance of permitted parameters of discharged wastewater. It has obtained a decision to postpone the penalty payment deadline until the remedial actions have been taken.

103 integrated report | 2013 104 integrated report | 2013 3 Responsible employer and community member

104 105 integrated report | 2013 integrated report | 2013 The easiest way to earn respect EMPLOYEES is by showing it to others. EMPLOYMENT AND ADDITIONAL BENEFITS This rule works – we've been practicing it for years in our employee relations. Today we are able to say, that we can always count on the people who work for us – as they can count on us.

106 integrated report | 2013 EMPLOYEES

EMPLOYMENT AND ADDITIONAL BENEFITS

The Grupa Azoty Group is a significant Having a workforce in the thousands They are also entitled to additional employer whose headcount at the entails a huge responsibility, not only medical check-ups under annual G4-LA2 G4-EC8 end of 2013 was almost 14,000, for them but also for their families. health promotion programmes.

including 10,000 people working 1-2 This is why the Grupa Azoty Group’s Access to group insurance schemes in the subsidiaries covered by this governing body wants to make sure and additional medical care is also G4-EC7

Report. The Group’s main companies LA DMA the employees receive not only provided to employees from Police. are also key employers for local decent remuneration and training A noteworthy thing is the respect communities in the towns where they to foster their development, but which the Group has for its employees are situated, i.e. Tarnów, Kędzierzyn- also additional benefits. The fact with the longest periods of service. Koźle, Puławy, and Police. of vital importance at the present At present, people aged 50 and time of hardships and insecurity The companies being part of the more represent over 33% of the total for households is that virtually all Grupa Azoty Group have been, and workforce, and over 40% in Police. employees work under permanent, continue to be, a major factor in the Although in the job market they are full-time employment contracts. development of these towns. commonly referred to as individuals Employees working in Tarnów, at risk of exclusion, the Grupa Azoty It is in their proximity that people Kędzierzyn-Koźle, and Police are Group considers them priceless. have gathered and built housing covered by the Employee Pension The employment of people aged estates. Plan. Employees of the Group’s 50 or more and high innovation individual companies can also benefit potential tend to go hand in hand from additional medical care and rather than be mutually exclusive. group insurance schemes. Employee satisfaction survey It must be stressed that a company’s In September 2013, a standardised Around one and a half thousand competences often rely on these employee satisfaction survey was employees of Grupa Azoty S.A. people, as their expertise and carried out in the Grupa Azoty benefit from additional medical experience constitute an asset giving Group’s companies in Tarnów, care services. They have access the Group a competitive advantage. to GPs and specialist physicians, Kędzierzyn-Koźle, and Puławy. An ability to share this as well as a selection of specialist The survey aimed at identifying the experience with younger medical tests and diagnostics, for sources of satisfaction and motivation colleagues is a crucial condition a token price of one złoty. In addition among the Group’s employees. for the long-term development to occupational medicine services The respondents declared their of companies. The knowledge, which and specialist consultations, loyalty and satisfaction with the work, has been passed on to successive employees covered by the medical which they find motivating. They can generations of chemical engineers care plan receive support to partly appreciate the fact that, especially since the interwar period, is a unique pay for preventive vaccination and in comparison with other companies value of the Grupa Azoty Group. outpatient rehabilitation. Almost 90% operating in the respective of Grupa Azoty Puławy’s employees It is a power of creation derived regions, the Grupa Azoty Group are covered by additional group from tradition, a business reality is an attractive employer. Compared insurance schemes. Under the group rather than merely a brand identity with 2011, the employee loyalty and insurance, some of them have access statement. motivation have increased. to a wide range of medical services. As for employees from Kędzierzyn- Koźle, they can join an additional group insurance scheme, which currently covers 1,244 employees and 326 members of their families. The insurance covers accidents, death, serious illnesses, and hospital stay. Under the insurance policy, both the insured and the joint insured can benefit from medical care services.

106 107 integrated report | 2013 integrated report | 2013 EMPLOYEES EMPLOYEES

MEDIA USED IN INTERNAL COMMUNICATIONS EMPLOYMENT BY EMPLOYMENT CONTRACT AND FORM

The Grupa Azoty Group’s employees have wide access to information on the Group and its companies. Each company has its local media to communicate key information on current organisational, social, and cultural matters.

Media Grupa Azoty S.A. Grupa Azoty ZAK S.A. Grupa Azoty Police Grupa Azoty Puławy Corporate Tarnowskie Azoty Twój ZAK bi-monthly Magazyn Police PULS monthly bulletin monthly 3,000 copies 1,000 copies monthly 2,500 copies 2,000 copies Programme Programme Broadcasting broadcasting three Irregular programme broadcasting three None system times a day (6:40 am; broadcasting times a day (9:30 am; 10 am; 2:45 pm) 2:30 pm; 10:30 pm)

Intranet Available Available Available Available

Employment at the four

G4-LA12 companies in the period covered by G4-11 this Report was as follows:

G4-10 EMPLOYMENT BY SEX AND AGE GROUP

By sex By age 2013 Total Women Men <30 30–50 >50 Grupa Azoty S.A. 626 1 446 79 1 268 725 2 072 Grupa Azoty ZAK 473 1 100 114 911 548 1573 Grupa Azoty Puławy 789 2 506 586 1 865 844 3 295 Grupa Azoty Police 554 1841 231 1142 1 022 2 395 Grupa Azoty Group (total) 2 442 6 893 1 010 5 186 3 138 9 335

69.8% 69.9% 76.1% 76.9% 73.8% 35% 34.8% 25.6% 42.7% 33.6% 100% 100%

56.6% 61.2% 57.9% 55.6% > 50 47.7% Men 30–50 Women < 30 30.2% 30.1% 24% 25.2% 23.1% 17.8% 10.8% 7.2% 9.6% 3.8%

Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Azoty S.A. Azoty ZAK Azoty Azoty Azoty Azoty S.A. Azoty ZAK Azoty Azoty Azoty Puławy Police Group Puławy Police Group (total) (total)

108 integrated report | 2013 EMPLOYEES

MEDIA USED IN INTERNAL COMMUNICATIONS EMPLOYMENT BY EMPLOYMENT CONTRACT AND FORM

By employment contract By employment form 2013 Full-time Part-time Open ended Fixed term Grupa Azoty S.A. 2 070 2 1 964 108 Grupa Azoty ZAK 1 567 6 1 520 53 Grupa Azoty Puławy 3 292 3 3 077 218 Grupa Azoty Police 2 395 0 2 228 167 Grupa Azoty Group (total) 9 324 11 8 789 546

0.1% 0.4% 0.1% 0% 0.1% 5.2% 3.4% 6.6% 7% 5.8% 100% 100% 99.9% 99.6% 99.9% 100% 99.9% 96.6% 94.8% 93.4% 93% 94.2%

Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Azoty S.A. Azoty ZAK Azoty Azoty Azoty Azoty S.A. Azoty ZAK Azoty Azoty Azoty EMPLOYMENT BY SEX AND AGE GROUP Puławy Police Group Puławy Police Group (total) (total) full-time employed for a definite term part-time employed for a indefinite term

Percentage of workforce covered by Analysis of employee turnover data As regards job departures, 1-2 collective bargaining agreements: reveals trends related to typical particularly of elderly people,

replacement of retiring staff with G4-LA10 it is necessary to mention special

■■ Grupa Azoty S.A. – 98.8% LA DMA younger employees. The largest bonuses for retirees. Under their ■■ Grupa Azoty ZAK – 98.2% group of employees leaving work collective bargaining agreements, were the oldest persons, while individual companies provide for 69.8% 69.9% 76.1% 76.9% 73.8% 35% 34.8% 25.6% 42.7% 33.6% ■■ Grupa Azoty Puławy – 99.7% 100% 100% young people prevailed among severance pay for retirees which is ■■ Grupa Azoty Police – 99.0% the new hires. higher than that guaranteed by the 56.6% Polish Labour Code. In order to stay in 61.2% 57.9% 55.6% > 50 47.7% contact with their retired employees, Men 30–50 the companies often host meetings Women < 30 for them. 30.2% 30.1% 24% 25.2% 23.1% 17.8% 10.8% 7.2% 9.6% 3.8%

Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Grupa Azoty S.A. Azoty ZAK Azoty Azoty Azoty Azoty S.A. Azoty ZAK Azoty Azoty Azoty Puławy Police Group Puławy Police Group (total) (total)

108 109 integrated report | 2013 integrated report | 2013 EMPLOYEES EMPLOYEES

NEW HIRES BY SEX AND AGE GROUP STAFF DEVELOPMENT AND TRAINING

New hires

2013 By sex By age Total

Women Men <30 30–50 >50 Grupa Azoty S.A. 42 28 25 35 10 70 Grupa Azoty ZAK 20 17 14 17 6 37 Grupa Azoty Puławy 29 75 54 47 3 104 Grupa Azoty Police 36 151 120 61 6 187 Grupa Azoty Group (total) 127 271 213 160 25 398

EMPLOYEE DEPARTURES BY SEX AND AGE GROUP

Employee departures

2013 By sex By age Total

Women Men <30 30–50 >50 Grupa Azoty S.A. 24 38 1 10 51 62 Grupa Azoty ZAK 10 44 2 21 31 54 Grupa Azoty Puławy 25 62 6 11 70 87 Grupa Azoty Police 10 77 8 18 61 87 Grupa Azoty Group (total) 69 221 17 60 213 290

398 400

290

Employee hires 187 Departures

104 87 87 70 62 54 37

Grupa Grupa Grupa Grupa Grupa Azoty S.A. Azoty ZAK Azoty Azoty Azoty Puławy Police (total)

110 integrated report | 2013 EMPLOYEES

STAFF DEVELOPMENT AND TRAINING

As stated above, the Grupa Azoty depend, like in the Kędzierzyn-Koźle- Group attaches great importance based company, on whether it is the

G4-LA9 to the development of its employees. employer who sends an employee

9-11 The number of training hours per to pursue studies (full financing), employee is not the only proof or whether it is the employee’s of that policy. Besides various own initiative (partial financing). LA DMA training courses and seminars When taking up studies at a higher meant to upgrade their skills, education institution, an employee employees can receive financing or may also be entitled to additional co-financing of language courses leave. There are no programmes or higher education studies. The dedicated to persons terminating terms of such financing vary from their employment (retiring company to company, and may employees)

TOTAL AND AVERAGE NUMBER OF EMPLOYEE TRAINING HOURS

Total number of training hours Average number of training hours 2013 By sex By sex Total Total Women Men Women Men Grupa Azoty S.A. 13 758 29 883 43 641 21,98 20,67 21,06 Grupa Azoty ZAK 4 824 8 384 13 208 10,20 7,62 8,40 Grupa Azoty Puławy 16 904 41 388 58 292 21,42 16,52 17,69 Grupa Azoty Police 15 967 34 396 50 363 28,82 18,68 21,03 Grupa Azoty Group (total) 51 453 11 4051 165 504 21,07 16,55 17,73

110 111 integrated report | 2013 integrated report | 2013 EMPLOYEES EMPLOYEES

EMPLOYEE REVIEWS NON-DISCRIMINATION

A common annual performance review system has been implemented

G4-LA11 at the companies based in Tarnów and

9-11 Kędzierzyn-Koźle. The other Group companies have in place their own employee review systems. LA DMA At Grupa Azoty S.A., employee reviews are carried out based on the system referred to at the beginning. The system relies on a 5-grade assessment framework and individual scorecards for all job groups, with the number of criteria ranging from 16 to 25. The scorecards include information on the effectiveness of training received by an employee, proposed areas for professional development, and potential assignment to reserve staff. Last year, 1,908 of Grupa Azoty’s employees received performance reviews, excluding those who had worked for the Company for less than one year. MINIMUM SALARIES AT THE GRUPA AZOTY GROUP Grupa Azoty Police carries out quarterly performance reviews. Among those reviewed are all employees except Management Board members, the chief accountant and persons employed under manager contracts (those excluded from quarterly reviews are evaluated separately). Last year, approximately 95% of all employees were subject to the review. The Puławy-based company, which has joined the Grupa Azoty Group recently, does not operate a standard employee performance review system. Its review system is limited to the management staff of the three highest tiers (from the Management Board to the N-3 level) and covers close to 150 persons. However, this is a typical MBO review, and does not evaluate the quality of work as such.

112 integrated report | 2013 EMPLOYEES

NON-DISCRIMINATION

The Grupa Azoty Group is looking to establish a formal framework

G4-HR3 for preventing discrimination in all

3 forms. Following the date of this Report, Grupa Azoty S.A. adopted

HR DMA appropriate rules to counteract discrimination. This approach is 12 inextricably linked with the building of the Group-wide organisational LA DMA culture. As there were no instances of 5 discrimination reported at the Group in 2013, no remedial measures were

EC DMA EC taken on that basis. There were no cases of unfair (i.e. drastically low) remuneration HR DMA reported at any of the Group companies. At each of the Group companies, the lowest salary was G4-EC5 11%–89% higher than the national minimum pay

MINIMUM SALARIES AT THE GRUPA AZOTY GROUP

Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy* Grupa Azoty Police

2012 2013 2012 2013 2012 2013 2012 2013

1500 1600 1500 1600 1500 1600 1500 1600

2900 2800 2406 2414 2885 3029 2049 1770

Minimum salaries at the grupa azoty group company Minimum salaries in Poland

Grupa Azoty S. A. Grupa Azoty ZAK Grupa Azoty Puławy* Grupa Azoty Police 2012 2013 2012 2013 2012 2013 2012 2013

Ratio of the lowest salary at the company 193,3% 175,0% 160,4% 150,9% 192,3% 188,8% 136,6% 110,6% to national minimum pay

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

112 113 integrated report | 2013 integrated report | 2013 EMPLOYEES EMPLOYEES

OTHER NON-FINANCIAL DATA OTHER NON-FINANCIAL DATA

EMPLOYMENT BY SEX TOTAL NUMBER OF EMPLOYEES BY WORKFORCE STRUCTURE

2012 2013 Women Men Women Men Grupa Azoty S.A. Total number of employees by sex 609 1 457 626 1 446 Percentage of employees by sex 29% 71% 30% 70% Grupa Azoty ZAK Total number of employees by sex 463 1 127 473 1 100 Percentage of employees by sex 29% 71% 30% 70% Grupa Azoty Puławy* Total number of employees by sex 788 2 496 789 2 506 Percentage of employees by sex 24% 76% 24% 76% Grupa Azoty Police Total number of employees by sex 528 1 767 554 1 841 Percentage of employees by sex 23% 77% 23% 77% Total for the Group Total number of employees by sex 2 388* 6 847* 2 442 6 893 Percentage of employees by sex 26% 74% 26% 74% Total 9 235* 9 335

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

EMPLOYMENT BY AGE GROUP

2012 2013 <30 30–50 >50 <30 30–50 >50 Grupa Azoty S.A. Total number of employees by age group 57 1 245 764 79 1 268 725 Percentage of employees by age group 3% 60% 37,0% 4% 61% 35% Grupa Azoty ZAK Total number of employees by age group 129 940 521 114 911 548 Percentage of employees by age group 8% 59% 33% 7% 58% 35% Grupa Azoty Puławy* Total number of employees by age group 534 1 842 908 586 1 865 843 Percentage of employees by age group 16% 56% 28% 18% 57% 26% Grupa Azoty Police Total number of employees by age group 167 1 156 972 231 1 142 1 022 Percentage of employees by age group 7% 50% 42% 10% 48% 43% Total for the Group Total number of employees by age group 887 5 183 3 165 1 010 5 186 3 138 Percentage of employees by age group 10% 56% 34% 11% 56% 34%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

114 integrated report | 2013 EMPLOYEES

OTHER NON-FINANCIAL DATA

TOTAL NUMBER OF EMPLOYEES BY WORKFORCE STRUCTURE

Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Police Grupa Azoty Puławy* G4-LA12 2012 2013 2012 2013 2012 2013 2012 2013

Management Management 5 7 4 4 3 3 4 2 Board Board

Senior Top-level 23 23 45 42 26 27 99 101 executives management

Managing Middle-level 135 135 80 82 102 106 137 139 officers management

Low-level Specialists 208 218 235 242 400 415 268 269 management

Senior staff 255 251 114 116 12 10 Specialists 560 575

Production Supervisors 126 126 98 92 139 142 2032 2027 staff

Administration Operators 726 719 720 707 925 1006 185 182 staff

Laboratory 178 196 127 132 191 208 staff

Other blue- 410 397 167 156 497 478 collar jobs

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

114 115 integrated report | 2013 integrated report | 2013 EMPLOYEES Pracownicy

OTHER NON-FINANCIAL DATA OTHER NON-FINANCIAL DATA

TOTAL NUMBER OF EMPLOYEES BY EMPLOYMENT CONTRACT, EMPLOYMENT FORM AND SEX EMPLOYEE TURNOVER BY AGE GROUP

2012 2013 Women Men Women Men G4-LA1 Grupa Azoty S.A. Full-time 608 1 457 625 1445 Part-time 1 0 1 1 Open ended 587 1 390 602 1362 Fixed term 22 67 24 84 Total 609 1 457 626 1 446 Grupa Azoty ZAK Full-time 459 1 123 469 1 098 Part-time 4 4 4 2 Open ended 451 1 094 448 1 072 Fixed term 12 33 25 28 Total 463 1 127 473 1 100 Grupa Azoty Puławy* Full-time 787 2 493 788 2 504 Part-time 1 3 1 2 Open ended 750 2 273 747 2 330 Fixed term 38 223 42 176 Total 788 2 496 789 2 506 Grupa Azoty Police Full-time 528 1767 554 1841 Part-time 0 0 0 0 Open ended 525 1 749 522 1 706 Fixed term 3 18 32 135 Total 528 1 767 554 1 841 Total for the Group Full-time 2 382 6 840 2 436 6 888 Part-time 6 7 6 5 Open ended 2 313 6 506 2 319 6 470 Fixed term 75 341 123 423 Total 2 388 6 847 2 442 6 893

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

116 integrated report | 2013 Pracownicy

OTHER NON-FINANCIAL DATA

TOTAL NUMBER OF EMPLOYEES BY EMPLOYMENT CONTRACT, EMPLOYMENT FORM AND SEX EMPLOYEE TURNOVER BY AGE GROUP

2012 2013 <30 30–50 >50 <30 30–50 >50 G4-LA1 Grupa Azoty S.A. New hires by age group 22 15 4 25 35 10 Percentage of new hires by age group 53.66% 36.6% 9.8% 35.7% 50.0% 14.3% Total number of terminations by age group 1 8 27 1 10 51 Percentage of terminations by age group 2.8% 22.2% 75.0% 1.6% 16.1% 82.3% Turnover by age group 1.1% 1.1% 1.5% 1.3% 2.2% 2.9% Grupa Azoty ZAK New hires by age group 21 14 12 14 17 6 Percentage of new hires by age group 44.7% 29.8% 25.5% 37.8% 45.9% 16.2% Total number of terminations by age group 5 15 22 2 21 31 Percentage of terminations by age group 11.9% 35.7% 52.4% 3.7% 38.9% 57.4% Turnover by age group 1.6% 1.8% 2.1% 1.0% 2.4% 2.4% Grupa Azoty Puławy* New hires by age group 70 38 1 54 47 3 Percentage of new hires by age group 64.2% 34.9% 0.9% 51.9% 45.2% 2.9% Total number of terminations by age group 20 11 68 6 11 70 Percentage of terminations by age group 20.2% 11.1% 68.7% 6.9% 12.6% 80.5% Turnover by age group 2.7% 1.5% 2.1% 1.8% 1.8% 2.2% Grupa Azoty Police New hires by age group 3 1 0 120 61 6 Percentage of new hires by age group 75.00% 25.00% 0.00% 64.17% 32.62% 3.21% Total number of terminations by age group 26 83 93 8 18 61 Percentage of terminations by age group 12.9% 41.1% 46.0% 9.2% 20.7% 70.1% Turnover by age group 1.3% 3.7% 4.1% 5.3% 3.3% 2.8%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

116 117 integrated report | 2013 integrated report | 2013 EMPLOYEES EMPLOYEES

OTHER NON-FINANCIAL DATA OTHER NON-FINANCIAL DATA

TOTAL AND AVERAGE NUMBER OF TRAINING HOURS BY SEX

2012 2013 Women Men Women Men G4-LA9 Grupa Azoty S.A. Total number of training hours by sex 17 383 25 127 13 758 29 883 Average number of training hours by sex 28.54 17.25 21.98 20.67 Grupa Azoty ZAK Total number of training hours by sex 5 032 6 528 4 824 8 384 Average number of training hours by sex 10.87 5.79 10.20 7.62 Grupa Azoty Puławy* Total number of training hours by sex 16 476 44 614 16 904 41 388 Average number of training hours by sex 20.91 17.87 21.42 16.52 Grupa Azoty Police Total number of training hours by sex 7 738 37 424 15 967 34 396 Average number of training hours by sex 14.66 21.18 28.82 18.68 Total for the Group Total number of training hours by sex 30 153.00 69 079.00 34 549.00 72 663.00 Average number of training hours by sex 12.63 10.09 14.15 10.54

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

TOTAL NUMBER OF TRAINING HOURS BY WORKFORCE STRUCTURE AVERAGE NUMBER OF TRAINING HOURS BY WORKFORCE STRUCTURE

Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Police Grupa Azoty Puławy*

G4-LA9 2012 2013 2012 2013 2012 2013 2012 2013 Management Management 32 0 104 128 0 48 688 320 Board Board Senior Top-level 372 408 608 1 440 4 352 4 745 11 114 10 223 executives management Managing Middle-level 8 394 12 019 1 808 2 736 5 624 5 342 7 178 6 008 officers management Low-level Specialists 13 120 14 789 2 584 2 248 5 342 18 931 8 487 6 355 management Senior staff 9468 5720 1440 1024 256 630 Specialists 19 428 19 870 Production Supervisors 6 324 5 048 696 1 872 2 744 4 733 14 543 13 713 staff Administration Operators 3 896 4 377 3 216 2 480 25 268 14 863 1 492 1 803 staff Laboratory 0 48 736 560 1576 1039 staff Other blue- 904 1 232 368 720 0 0 collar jobs

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

118 integrated report | 2013 EMPLOYEES

OTHER NON-FINANCIAL DATA

COMPOSITION OF SUPERVISORY BODIES BY SEX

2012 2013

G4-LA9 Women Men Women Men Grupa Azoty S.A.

Composition of the Supervisory Board by sex 2 7 2 7

Structure of the Supervisory Board by sex (%) 22% 78% 22% 78% Grupa Azoty ZAK

Composition of the Supervisory Board by sex 0 5 0 5

Structure of the Supervisory Board by sex (%) 0% 100% 0% 100% Grupa Azoty Puławy*

Composition of the Supervisory Board by sex 2 4 0 6

Structure of the Supervisory Board by sex (%) 33% 67% 0% 100% Grupa Azoty Police

Composition of the Supervisory Board by sex 1 5 1 5

Structure of the Supervisory Board by sex (%) 17% 83% 17% 83%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

AVERAGE NUMBER OF TRAINING HOURS BY WORKFORCE STRUCTURE

Grupa Azoty Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy* Police

G4-LA9 2012 2013 2012 2013 2012 2013 2012 2013 Management Management 6,4 0,0 26,0 32,0 0,0 16,0 172,0 160,0 Board Board Senior Top-level 16,2 17,7 13,5 34,3 1 450,7 1 581,7 112,3 101,2 executives management Managing Middle-level 62,2 89,0 22,6 33,4 1 874,7 1 780,7 52,4 43,2 officers management Low-level Specialists 63,1 67,8 11,0 9,3 1 780,7 6 310,3 31,7 23,6 management Senior staff 37,1 22,8 12,6 8,8 85,3 210,0 Specialists 34,7 34,6 Production Supervisors 50,2 40,1 7,1 20,4 914,7 1 577,7 7,2 6,8 staff Administration Operators 5,4 6,1 4,5 3,5 8 422,7 4 954,3 8,1 9,9 staff Laboratory 0,0 0,2 5,8 4,2 525,3 346,3 staff Other blue- 2,2 3,1 2,2 4,6 0,0 0,0 collar jobs

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

118 119 integrated report | 2013 integrated report | 2013 EMPLOYEES

OTHER NON-FINANCIAL DATA

COMPOSITION OF SUPERVISORY BODIES BY AGE GROUP

2012 2013 By age group <30 30–50 >50 <30 30–50 >50 G4-LA12 Grupa Azoty S.A. Composition of the Supervisory Board by age group 0 6 3 0 6 3 Structure of the Supervisory Board by age group (%) 0% 67% 33% 0% 67% 33% Grupa Azoty ZAK Composition of the Supervisory Board by age group 0 2 3 0 3 2 Structure of the Supervisory Board by age group (%) 0% 40% 60% 0% 60% 40% Grupa Azoty Puławy* Composition of the Supervisory Board by age group 0 2 4 0 3 3 Structure of the Supervisory Board by age group (%) 0% 33% 67% 0% 50% 50% Grupa Azoty Police Composition of the Supervisory Board by age group 0 3 3 0 4 2 Structure of the Supervisory Board by age group (%) 0% 50% 50% 0% 67% 33%

* Grupa Azoty Puławy’s data for 2012 are provided for comparison only (in 2012 the company was not part of the Group and was not included in its consolidated financial statements for the 12 months ended December 31st 2012).

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LOCAL COMMUNITIES

122 integrated report | 2013 COMMUNITIES AND SOCIETY

LOCAL COMMUNITIES

The Grupa Azoty Group aims Until the end of 2013, Grupa Azoty respective regions. Also, they often to establish strong ties with all S.A. had in place ’The Azoty Tarnów provide direct support to schools G4-26 its stakeholders, particularly Group’s Strategy of Support for Local in their communities. They run Community in 2011–2013’. In 2013, as the scholarship programmes for talented local communities. The keystone Grupa Azoty Group had been joined young people, hoping they will join

G4-EC8 of mutual trust is open dialogue, by new companies, new corporate the Grupa Azoty Group and apply which allows the Group documents were drawn up: their knowledge towards growing the Group’s business.

G4-EC7 companies to identify the best ■■ ’Grupa Azoty Group’s policy on ways to support their local social and sponsorship activities Higher education institutions, communities and immediate and its operation at the Group’, particularly those technology-

G4-SO1 focused, can also count on our environment. ■■ ’Grupa Azoty Group’s 1-2 donation policy’, support, as can research institutions The Grupa Azoty Group whose work contributes to the engages in local initiatives to ■■ ’Grupa Azoty Group’s chemical industry’s development. SO DMA foster its communities and help scholarship policy’. Our partnership with universities 7-8 solve problems faced by local Although integration is the source involves joint research projects, residents. of its strength, the Group is also work placements, internships and

EC DMA EC strongly convinced of the need to workshops (e.g. in chemistry and preserve the individual character materials science). of each of its companies and their It is a well thought-out, local communities. comprehensive approach, promoting The communities, which have initiatives in various areas and on supplied the Group with successive various levels of the chemical sector. generations of employees, are its Firstly, we support our small and In 2013, the Group received cornerstone. This is a management medium-sized business partners; philosophy which perceives the secondly, we look to fill staffing gaps the following main awards future through tradition, and looks to by helping educate future technical in recognition of its support expand into global markets from firm and engineering staff, and thirdly, for local communities: local roots. The Grupa Azoty Group we collaborate with researchers does not intend or is able to cut off who shape the future of the Polish its roots. The local character and chemical industry. marzec corporate citizenship of the Group This comprehensive approach companies are invaluable assets, is also manifest in special economic Grupa Azoty S.A. was named forming an integral part of the Grupa zones and industrial parks, which ’Ambassador of Tarnów’, a title Azoty brand. are established thanks to constructive awarded annually to the city’s best dialogue and partnership with local representative on the international Its openness to dialogue makes for a governments. The Grupa Azoty Group arena (an individual or institution). unique organisational culture. Since 2013, more and more activities have sees this partnership as a commitment An Honorary Diploma of the Józef been carried out at the corporate to pursue joint initiatives Dietl Award granted to Grupa level, many of them by individual (e.g. construction and modernisation Azoty S.A. by the Józef Dietl companies, which are closest to of local infrastructure), mutual Self-Government Corporation their local communities and best business promotion, support of in recognition of the Company’s understand their needs. culture, local sports events, higher achievements, work for the local education, and academic sports communities and contribution to This approach is reflected in social associations, as well as efforts regional development. involvement, principally at the local to improve the safety and living level, which includes agreements standards of local residents. with locally-based organisations active in the fields of culture, sports or education. Companies of the Group support various events in their

122 123 integrated report | 2013 integrated report | 2013 COMMUNITIES AND SOCIETY COMMUNITIES AND SOCIETY

Local communities Safe neighbourhood

Activities in this area involve specific The Group companies often supply investments, benefiting the local heat generated by their CHP community, businesses and the plants to nearby housing estates, Group itself. The purpose of special while in turn receiving municipal economic zones and industrial parks wastewater for treatment. Grupa is to make it easier for entrepreneurs Azoty Police and Grupa Azoty and businesses to operate Puławy (whose on-site CHP plant in industrial and post-industrial areas. supplies heat for the entire town) are good examples of this symbiotic Industrial parks contain facilities relationship. What should also be with dedicated sections for use noted is that our companies have by individual entrepreneurs, often been instrumental in the which significantly facilitates their construction of local hospitals, operations. Start-up businesses gain cultural centres or sports facilities. access to well-situated land with all necessary utilities and good transport Also important in the context of our logistics, while those already positive community impact are established on the market have more local residents we employ and their leeway, not having to contain their families, as well as those employed impact strictly within their own plots by contractors working for the Group of land. The Grupa Azoty Group companies. These are thousands is a partner to economic zones and of people whose welfare directly industrial parks in Tarnów (Special depends on the success of the Grupa Industrial Park), Puławy (Starachowice Azoty Group, not only as a source Special Economic Zone – Puławy of remuneration, but also extensive Subzone and Puławy Industrial packages of fringe benefits offered Park) and Kędzierzyn-Koźle (Special to the Group’s employees and often Demographic Zone). Yet another also to their families. Such packages of the Group’s many initiatives may include funding of children’s is the Chemical Technology and trips and summer camps, co-financing Development Centre in Tarnów. of holidays and education, and employee loans. Social benefits All large industrial plants, such are also available to our retired as those of the Grupa Azoty Group’s employees (for more information, companies, are inextricably linked see ’Employment and additional with their local communities, so benefits’). much so that they often share some infrastructural facilities.

124 integrated report | 2013 COMMUNITIES AND SOCIETY

Safe neighbourhood

The impact of large industrial Materials Transport (SPOT), and are Always interested in how facilities may also be onerous or even ready to provide assistance in the it is perceived by society, and

G4-SO2 dangerous to the local environment event of accidents involving transport particularly by local communities,

1-2 and residents. of hazardous materials, irrespective in 2013 the Grupa Azoty Group of whether such materials are commissioned a corporate image The Grupa Azoty Group is continually transported to the Group or to other survey from an independent SO DMA seeking to mitigate its negative parties (for more information, see opinion polling institute. The survey environmental impact by investing ’Customer safety’). consisted of in-depth interviews in the latest technologies to reduce with Grupa Azoty’s key stakeholders, noxious emissions into the The Grupa Azoty Group a nationwide omnibus survey, CAPI atmosphere, improve the quality maintains regular contact with G4-26 interviews with opinion leaders, of wastewater and reduce noise local communities, keeping them and a survey of opinions in the four pollution (to find out more, see informed of its day-to-day operations provinces in which Grupa Azoty plants ’Environmental impact’). and safety matters. This is achieved G4-SO1 are located (CAPI interviews with 100 by means of various channels, such respondents from each province). The monitoring carried out in 2013 as bulletins, dedicated programmes revealed no significant breaches and interviews in local radio stations, of any requirements laid down in articles published in local press, and the relevant integrated permits (for electronic media. more information, see ’Compliance’). In a systemic effort to mitigate the consequences of potential industrial The Mościce 2020 Forum accidents, the Group companies of Organisations – a unique develop and implement programmes platform for community to prevent major accidents and dialogue engage in safety reporting. The individual companies have A good example of our dialogue with in-house rescue plans setting out local communities is the Mościce procedures to be followed should 2020 Forum of Organisations, held an industrial accident occur. regularly as part of an outreach The Group companies have in place programme for the community of appropriate organisational and Mościce, a district of Tarnów dating technical safety measures, such back to 1927, when the factory now as CCTV systems, safeguards, and belonging to Grupa Azoty S.A. was procedures for prevention and erected. mitigation of industrial accidents. The Forum has been initiated, They maintain well-trained fire organised and coordinated by services capable of leading effective Grupa Azoty S.A. and Stowarzyszenie rescue operations, with additional KANON with the purpose of support from chemical rescue integrating the Mościce community, teams and other services. establishing a platform for exchanging Local institutions are provided with opinions and ideas on the future of special procedures to be followed Mościce and its residents, as well as in the event of an industrial accident. encouraging people and institutions The Grupa Azoty Group’s in-house to contribute to the district’s rescue teams participate in the development. System of Assistance in Hazardous

124 125 integrated report | 2013 integrated report | 2013 COMMUNITIES AND SOCIETY

SPORTS SPONSORSHIP AND PATRONAGE

The Grupa Azoty Group has strong ■■ ŻSSA Unia Tarnów World Cup in Wisła and Zakopane, ties with the communities where its (speedway), the finals of the Individual Speedway

G4-SO1 plants are located. At the same time, Polish Championship and Individual ■■ AZS Koszalin

1-2, it is a global player with ambitions (basketball), Speedway Junior Polish Championship, to establish its presence across all the Visegrád Bicycle Rally, and the ICE continents. It also sponsors athletes ■■ KS Wisła Puławy Speedway in Sanok. SO DMA in Poland and abroad, because (multi-disclipline club), According to experts, the new – breaking down barriers itself – it wants ■■ KS Azoty Puławy (handball). Grupa Azoty brand created through to help others do the same. SIn 2013, the Grupa Azoty Group consolidation has become one of the The Grupa Azoty Group knows that sponsored the following sportsmen most visible brands in Polish sports, sustained, long-term promotion and and sportswomen (whom it continues particularly in such disciplines as ski advertising through sports can bring to support): Robert Kubica (rally racing), jumping, volleyball and motorcycle positive and lasting effects, both Piotr Żyła (ski jumping), Edyta Ropek speedway. Consolidation and synergies financially and in terms of corporate (sport climbing), Klaudia Buczek (sport have more than just a business image. Advertising effectiveness climbing), and Bartłomiej Mróz dimension, as demonstrated by the fact studies have shown that companies (para-badminton). Until December that Grupa Azoty is widely recognisable which engage extensively in sports 2013, the Group also sponsored two as a sports sponsor. marketing obtain a solid advertising motorcycle speedway riders from the It is interesting to note that, value equivalent. As part of its sports Unia Tarnów club – Janusz Kołodziej according to the same experts, the marketing activities, the Grupa Azoty and Maciej Janowski. The Grupa Azoty sports sponsored by the Group are Group supports athletes in their Group also supports Marek Cieślak, among Polish favourites, surpassed training and helps them achieve new manager of the Unia Tarnów club and only by football, which − in business successes, while at the same time of Poland’s national speedway team. terms – means that the Group’s brand benefiting from this modern and enjoys significant media publicity. effective form of brand advertising The Group also participates in various Ski jumping, volleyball and speedway and promotion. Thanks to the efforts professional and amateur sports are, respectively, the 2nd, 3rd and 5th of the Group companies, many initiatives at the local level. It actively most popular sports in terms of media local sports clubs have won national supports many sports clubs and coverage. acclaim. It is often in such clubs that institutions of great importance to athletes later representing Poland the regions where the Group’s core Sports marketing surveys in international competition start their companies are located. These include: commissioned by the Grupa Azoty careers. ■■ Stowarzyszenie Piłki Ręcznej Tarnów Group from specialist research centres (handball), have shown that the Group provides In 2013, we supported the following ■■ ZKS KS Unia Tarnów support, either directly or indirectly, sports clubs and associations: (football), to some of Poland’s most popular ■■ Polish Ski Federation ■■ UKS Jedynka Tarnów sports personalities, including Robert (winter sports), (women’s volleyball), Kubica, Piotr Żyła, Kamil Stoch and ■■ Ludowy Klub Jeździecki Lewada Justyna Kowalczyk. ■■ ZAKSA Kędzierzyn-Koźle (horse riding sports). (men’s volleyball), The Grupa Azoty Group has also ■■ PSPS Chemik Police supported numerous nation-wide (women’s volleyball), and local sporting events. Last year, ■■ MKS Pogoń Szczecin the Group sponsored the Ski Jumping (football),

Funding (PLN) Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy Grupa Azoty Police G4-EC7 CSR activities for local 1 736 843 PLN 769 032 PLN 1 194 902 PLN 800 900 PLN communities and donations G4-EC1

126 integrated report | 2013 126 127 integrated report | 2013 inteintegrated report | 2013 Success evokes emotion. Sport evokes emotion. This is why we want the image of Grupa Azoty to be associated with the faces of Polish athletes – with their strength, ambition and youth. We understand winners, since we ourselves have achieved so much. And we understand those just arriving in line to win.

128 integrated report | 2013 128 129 integrated report | 2013 integrated report | 2013 COMMUNITIES AND SOCIETY

COMPLIANCE

8 As the industry leader and a well- The Grupa Azoty Group companies known brand both in Poland and take care to ensure compliance

Europe, the Grupa Azoty Group is G4-SO6 with legal requirements and other SO DMA aware of the importance of people’s standards, including standards of respect. It also realises that even ethics. Key importance is attached not

a relatively minor incident can easily G4-SO8 only to remedial measures, but also to

erode public trust. 8 prevention. No significant fines or non- monetary sanctions were imposed on The Group’s activities are thus any of the four Group companies due systematically reviewed for SO DMA to their non-compliance with law, or conformity with the relevant due to anti-competitive or corruptive standards in quality, environmental practices, and none of them provided protection, occupational health financial support to any political and safety, and food safety. The parties. results of those compliance checks are presented during management system reviews in the presence of senior executive staff, and analysed to design appropriate remedial measures and fine-tune the management systems.

130 integrated report | 2013 130 131 integrated report | 2013 inteintegrated report | 2013 132 integrated report | 2013 4 Financial information

132 133 integrated report | 2013 integrated report | 2013 Today we compare summary consolidated financial statements for 2013 ourselves and compete with the world's largest market players. Operating globally means following global norms – this is why we use the highest international standards in our reporting. We take numbers seriously.

134 integrated report | 2013 summary consolidated financial statements for 2013

BASIS OF PREPARATION OF THE summary CONSOLIDATED FINANCIAL STATEMENTS

The financial results presented in this The summary consolidated financial Report are consistent, and should statements presented in this Report

G4-EC1 be read in conjunction, with the are only a summary of the information

1-4 results presented in the publicly presented in the consolidated available financial statements for 2013, financial statements of the Grupa

EC DMA EC including in particular the explanatory Azoty Group, as approved by notes which are an integral part of the Grupa Azoty Management the annual consolidated financial Board on March 12th 201415 . It is not statements. The Group’s financial a complete version of the Group’s results presented here (unlike its financial statements and does not performance in other areas, including include information sufficient to the social or environmental aspects) fully understand its assets, financial reflect not only the performance of standing and financial performance. the four key companies, but of all The summary consolidated entities included in the consolidated financial statements should be read financial statements of the Grupa in conjunction with the audited Azoty Group. The figures for 2012 consolidated financial statements do not include Grupa Azoty Puławy’s prepared in accordance with the data. International Financial Reporting Standards as adopted by the European Union (’IFRS EU’) and other applicable laws.

The summary consolidated financial statements were prepared in accordance with the accounting policies described in Note 2 to the consolidated financial statements of the Group.

15 The consolidated financial statements for the 12 months ended December 31st 2013 prepared in accordance with International Financial Reporting Standards as endorsed by the European Union are available at http://tarnow.grupaazoty.com/pl/ relacje/raportyr.

134 135 integrated report | 2013 integrated report | 2013 summary CONSOLIDATED FINANCIAL STATEMENTS summary consolidated financial statements for 2013

CONSOLIDATED STATEMENT OF PROFIT AND LOSS CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME AND OTHER COMPREHENSIVE INCOME

For the period For the period Jan 1 – Dec 31 2012 Jan 1 – Dec 31 2013 G4-EC1 Continuing operations Revenue 7 098 735 9 821 023 Cost of sales (6 107 680) (8 436 709) Gross profit 991 055 1 384 314 Selling and distribution expenses (181 916) (447 750) Administrative expenses (390 733) (706 391) Other income, including: 49 024 601 010 Gain on a bargain purchase - 515 438 Other expenses (95 698) (128 558) Results from operating activities 371 732 702 625 Finance income 42 741 73 761 Finance costs (38 672) (56 225) Net finance income 4 069 17 536 Share of profit of equity-accounted investees 8 549 12 361 Profit before tax 384 350 732 522 Tax expense (69 049) (18 443) Net profit from continuing operations 315 301 714 079

136 integrated report | 2013 summary consolidated financial statements for 2013

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

For the period For the period Jan 1 – Dec 31 2012 Jan 1 – Dec 31 2013 G4-EC1 Discontinued operations Net loss from discontinued operations - (554) Profit for the year 315 301 713 525 Other comprehensive income Items that will never be reclassified to profit or loss Remeasurements of defined benefit liability - (4 032) Tax on items that will never be reclassified to profit or loss - 678 - (3 354) Items that are or may be reclassified to profit or loss Effective portion of changes in fair value of cash flow hedges 423 - Net change in fair value of cash flow hedges reclassified to profit or loss 1 594 - Net change in fair value of available-for-sale financial assets 45 952 (15 751) Net change in fair value of available-for-sale financial assets - (27 256) reclassified to profit or loss Foreign currency translation differences − foreign operations (6 750) (8 344) Tax on items that are or may be reclassified to profit or loss (9 114) 8 239 32 105 (43 112) Other comprehensive income 32 105 (46 466) Total profit or loss and other comprehensive income 347 406 667 059 Profit attributable to: Equity holders of the Parent Company 294 376 679 593 Non-controlling interests 20 925 33 932 Total comprehensive income attributable to: Equity holders of the Parent Company 326 481 635 743 Non-controlling interests 20 925 31 316 Earnings per share: Basic (PLN) 4,59 6,95 Diluted (PLN) 4,59 6,95

136 137 integrated report | 2013 integrated report | 2013 summary CONSOLIDATED FINANCIAL STATEMENTS summary CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of financial position Consolidated statement of financial position

As at Dec 31 2012* As at Dec 31 2013 restated G4-EC1 Assets Non-current assets Property, plant and equipment 2 845 691 5 791 013 Investment property 28 903 53 374 Intangible assets 182 847 516 099 Goodwill 9 124 11 617 Investments in subordinated entities 80 132 128 944 Available-for-sale financial assets 283 202 23 989 Other financial assets 565 53 Non-current receivables 4 890 3 408 Deferred tax assets 113 366 102 621 Other non-current assets 3 932 4 462 Total non-current assets 3 552 652 6 635 580

Current assets Inventories 839 561 1 170 626 Other financial assets 19 079 106 822 Current tax assets 4 141 40 558 Trade and other receivables 677 927 1 273 112 Cash and cash equivalents 243 440 713 024 Other current assets 19 894 21 016 Assets held for sale 347 792 Total current assets 1 804 389 3 325 950 Total assets 5 357 041 9 961 530

138 integrated report | 2013 summary CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of financial position

As at Dec 31 2012* As at Dec 31 2013 restated G4-EC1 Equity Share capital 320 577 495 977 Share premium 680 688 2 418 270 Fair value reserve 37 221 2 346 Translation reserve (1 279) (9 623) Retained earnings, including: 2 039 413 2 654 487 Profit for the year 294 376 679 593 Equity attributable to owners of the Parent Company 3 076 620 5 561 457 Non-controlling interests 414 078 709 194 Total equity 3 490 698 6 270 651 Liabilities Loans 289 979 634 693 Employee benefits 139 756 254 613 Other non-current payables 928 61 821 Provisions 118 622 119 343 Government grants 19 996 24 906 Deferred income 12 - Deferred tax liabilities 131 800 294 728 Other financial liabilities 17 632 22 513 Total non-current liabilities 718 725 1 412 617 Loans 200 017 604 140 Employee benefits 14 155 34 008 Current tax liabilities 19 227 4 903 Trade and other payables 697 317 1 313 547 Provisions 134 437 213 839 Government grants 16 989 2 936 Deferred income 687 25 921 Other financial liabilities 64 789 78 968 Total current liabilities 1 147 618 2 278 262 Total liabilities 1 866 343 3 690 879 Total equity and liabilities 5 357 041 9 961 530

* Financial information restated with respect to CO2 emission rights, as described in point 2.3 of the notes to the consolidated financial statements for the 12 months ended December 31st 2013, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, pp. 26−28 (http://tarnow.grupaazoty.com/pl/relacje/raportyr).

138 139 integrated report | 2013 integrated report | 2013 summary CONSOLIDATED FINANCIAL STATEMENTS summary CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF CASH FLOWS

For the period For the period Jan 1 – Dec 31 2012* Jan 1 – Dec 31 2013 G4-EC1 restated Cash flows from operating activities Profit before tax 384 350 732 522 Adjustments for: 284 073 69 419 Depreciation and amortisation 239 592 550 166 Impairment losses 35 562 49 568 (Profit)/loss from investing activities 26 058 (545 568) Profit on disposal of financial assets (5 501) (12) Share of profit of equity-accounted investees (8 549) (12 361) Interest, foreign exchange gains or losses 11 423 38 443 Dividends (18 352) (1 251) Change in fair value of financial assets at fair value through profit or loss 3 840 (9 566) Cash generated from operating activities before changes in working capital 668 423 801 941 Change in trade and other receivables 87 136 (42 953) Change in inventories (90 439) 187 893 Change in trade and other payables (129 684) 95 942 Change in provisions, prepayments and grants 57 887 78 815 Other adjustments (437) (8 176) Cash generated from operating activities 592 886 1 113 462 Income taxes paid (49 106) (122 965) Net cash from operating activities 543 780 990 497 Cash flows from investing activities Proceeds from sale of property, plant and equipment, intangible assets and 13 329 15 627 investment property Acquisition of property, plant and equipment, intangible assets and investment (397 294) (680 878) property Dividends received 8 000 28 067 Acquisition of financial assets (224 688) (128 499) Acquisition of subsidiaries, net of cash acquired - (230 956) Proceeds from sale of financial assets 12 269 43 787 Cash acquired, net of consideration transferred in acquisition of subsidiaries - 273 797 Interest received 1 999 816 Grants received 2 907 497 Loans (1 190) (525) Other proceeds/disbursements (11 480) (10 271) Net cash used in investing activities (596 148) (688 538)

140 integrated report | 2013 summary CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from financing activities Disbursements from issue of share capital - (11 159) G4-EC1 Dividends paid (8 884) (170 813) Proceeds from loans and borrowings 565 777 1 020 372 Acquisition of non-controlling interests - (311 316) Payment of loans and borrowings (460 099) (324 710) Interest paid (28 717) (40 470) Payment of finance lease liabilities (12 563) (12 623) Other proceeds/disbursements (9 544) 20 170 Net cash from financing activities 45 970 169 451 Net increase/(decrease) in cash and cash equivalents (6 398) 471 412 Cash and cash equivalents at beginning of the period 244 791 243 440 Effect of exchange rate fluctuations on cash held 5 047 (1 828) Cash and cash equivalents at end of the period 243 440 713 024

* Financial information restated with respect to CO2 emission rights, as described in point 2.3 of the notes to the consolidated financial statements for the 12 months ended December 31st 2013, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, pp. 26−28 (http://tarnow.grupaazoty.com/ pl/relacje/raportyr).

In order to gain a full picture of the relations of the four key companies with society, in addition to data derived directly from the financial statements it is important to highlight the substantial financial support they received from the state in various forms over the last year.

[PLNm] Grupa Azoty S.A. Grupa Azoty ZAK Grupa Azoty Puławy Grupa Azoty Police Government grants 1,179 1,782 4,338 0,886 G4-EC4 Tax incentives related to operation within a special - - 24,393 0 economic zone Borrowings on preferential - - - 99,173 terms

140 141 integrated report | 2013 integrated report | 2013 summary CONSOLIDATED FINANCIAL STATEMENTS summary CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT RESULTS SEGMENT RESULTS

Sales of the Grupa Azoty Group’s The smallest increase in revenue products in 2013 were driven (29.9%) was recorded in the Plastics primarily by the market situation segment. Shares of the individual in the Agro Fertilizers, Plastics and segments in overall revenue remained Chemicals segments. The largest relatively unchanged compared with year-on-year increase in revenue 2012. was recorded in the Energy (66.3%), Chemicals (59.6%) and Agro Fertilizers (33.9%) segments.

REVENUE BY SEGMENTs

PRZYCHODY ZE SPRZEDAŻY WEDŁUG SEGMENTÓW OPERACYJNYCH

6 000 000

5 000 000

4 000 000 2012 3 000 000

2 000 000 2013

1 000 000

Agro Fertilizers Plastics Chemicals Energy Other Activities

Źródło: Sprawozdanie Zarządu z działalności Grupy Azoty za okres 12 miesięcy kończących się 31 grudnia 2013 r.”, str. 67 (http://tarnow.grupaazoty.com/pl/relacje/raportyr).

142 integrated report | 2013 summary CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT RESULTS

These results translated directly into each segment’s profitability. The Agro Fertilizers segment’s profit on sales was a source of financing for the other segments’ growth.

Other Agro Fertilizers Plastics Chemicals Energy Activities External revenue 5 565 074 1 466 548 2 385 331 265 516 138 554 Share [%] 56,7 14,9 24,3 2,7 1,4 Net profit on sales 391 785 (110 530) (14 372) (4 608) (32 102) Share [%] 170,2 (48,0) (6,3) (2,0) (13,9) EBIT 424 980 (156 115) (7 432) (3 366) (70 880) Share [%] 227,0 (83,3) (4,0) (1,8) (37,9)

* EBIT: operating profit/(loss) presented in the statement of profit and loss and other comprehensive income, adjusted for gain on bargain purchase.

142 143 integrated report | 2013 integrated report | 2013 INDEPENDENT AUDITORS’ REPORT ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTs

144 integrated report | 2013 INDEPENDENT AUDITORS’ REPORT ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTs

This document is a free translation Management’s of the Polish original. Terminology Responsibility for the current in Anglo-Saxon countries has Summary Consolidated been used where practicable for the Financial Statements purposes of this translation in order to aid understanding. The binding Management of the Parent Entity Polish original should be referred to is responsible for the preparation of in matters of interpretation. the summary consolidated financial statements on the basis described in Note “Basis of preparation of the To the General Meeting summary consolidated financial of Grupa Azoty S.A. statements”.

The accompanying summary Auditor’s Responsibility consolidated financial statements, which comprise the summary Our responsibility is to express an consolidated statement of financial opinion on the summary consolidated position as at 31 December financial statements based on our 2013, the summary consolidated procedures, which were conducted statement of profit or loss and other in accordance with national standards comprehensive income and the on auditing issued by the Polish summary consolidated statement of National Council of Certified Auditors cash flows for the year then ended, and International Standards on Auditing and related notes, are derived from (ISA) 810, Engagements to Report on the audited consolidated financial Summary Financial Statements. statements of the Group, whose

parent entity is Grupa Azoty S.A. with its registered office in Tarnów, Opinion ul. Kwiatkowskiego 8 (“the Group”) for the year ended 31 December In our opinion, the summary 2013. We expressed an unmodified consolidated financial statements audit opinion on those consolidated derived from the audited consolidated financial statements in our report financial statements of the Group for dated 12 March 2014. Those the year ended 31 December 2013 are consolidated financial statements, and consistent, in all material respects, with the summary consolidated financial those consolidated financial statements, statements, do not reflect the effects on the basis described in Note “Basis of events that occurred subsequent to of preparation of the summary that date. consolidated financial statements”. The summary consolidated financial statements do not contain all the disclosures required by International Financial Reporting Standards, as adopted by the European Union and other applicable regulations. Reading the summary consolidated On behalf of KPMG Audyt Sp. z o.o. financial statements, therefore, is not a substitute for reading the audited Registration No. 458 consolidated financial statements of ul. Chłodna 51 the Group. 00-867 Warsaw

Marcin Domagała Key Certified Auditor Registration No. 90046 July 11th 2014 Director

144 145 integrated report | 2013 integrated report | 2013 About the report

146 integrated report | 2013 About the report

146 147 integrated report | 2013 integrated report | 2013 ABOUT THE REPORT

148 integrated report | 2013 ABOUT THE REPORT

This Report is the first Out of the total number of several the specific sector requirements dozen companies comprising the was determined also based

integrated report of the G4-17 G4-29 17 on an analysis of the requirements Grupa Azoty Group, covering Grupa Azoty Group , this Report covers the four key companies, i.e.: of the ’Odpowiedzialność i Troska’® the four largest Group (Responsible Care) programme. G4-6 ■■ Grupa Azoty S.A. of Tarnów companies and presenting both In addition, to ensure that the results (Parent), their financial performance of the Expert Committee’s work are ■■ Grupa Azoty Zakłady Azotowe and their economic, social G4-5 credible, the analysis also took account Puławy S.A. of Puławy 16 of the local market conditions in which and environmental impacts . (Grupa Azoty Puławy), the Group operates. To this end, apart

The release of this integrated G4-3 ■■ Grupa Azoty Zakłady Azotowe from the meetings of the working Report is accompanied by Kędzierzyn S.A. Committee, individual meetings were the publication of regional of Kędzierzyn-Koźle, also held at the plants in Tarnów, Puławy, Police and Kędzierzyn-Koźle. supplements, discussing ■ Grupa Azoty Zakłady Chemiczne ■ By identifying the existing challenges Police of Police the activities of the four and the expectations towards the (Grupa Azoty Police).. largest companies of the individual Group plants in their Grupa Azoty Group. These are the largest Group companies operating environment, we were in terms of revenue and headcount able to propose a scope of the report Report profile (they generate more than 98% of the which not only ensures compliance Grupa Azoty Group’s revenue). Given with the principles of materiality and This Report has been drawn up in the scale and nature of their business, completeness, but also reflects the accordance with the ’core’ option the companies also have the greatest stakeholders’ expectations and the

G4-28 of the latest GRI G4 Guidelines, in impact on the social and natural context of sustainable development. line with the GRI recommendation environment18. Based on those analyses, aspects for organisations reporting for the

G4-30 of low, medium and high relevance first time in accordance with the were identified. The aspects of low Guidelines. This Report is an annual In order to define the scope of CSR relevance, which provide no report for the financial year 2013, reporting, an Expert Committee for G4-18 G4-33 measurable added value for the which corresponds with the calendar CSR was appointed, which included organisation and the addressees of year. In order to exercise utmost employees responsible for different this Report, were disregarded. care, we have engaged a third-party areas of the Group’s business. The The other indicators were discussed expert to assist in the preparation efforts of the working groups were during a series of meetings held at the of this Report, and this Report has additionally supported by external four key Group companies. Once been verified by an independent experts. To determine aspects the indicator definitions have been auditor (Deloitte Advisory Sp. z o.o.). which are relevant to the corporate discussed with the persons responsible Financial data sourced from financial social responsibility of the Group, for the individual business areas statements has been additionally an analysis of the CSR reporting of the at the Group companies, a process audited by independent auditors leading global chemical groups was of collecting data and verifying its (KPMG Audyt Sp. z o.o.). undertaken. The materiality of the reporting aspects with respect to relevance to the Group was developed. Considering the need to ensure the highest quality of information, i.e. compliance with the requirements of the GRI Guidelines as to information

16 The financial information includes the figures of a 17 The full list of companies making up the Grupa balance, comparability, accuracy, greater number of entities, presented in the same Azoty Group and included in the consolidated timeliness, clarity and reliability, manner as in the consolidated financial statements. financial statements can be found at http://tarnow. a software application dedicated grupaazoty.com/pl/relacje/raportyr. to GRI reporting was created. 18 Apart from the abovementioned companies, the consolidated financial statements also include the Approximately 70 persons from the financial data of five other companies (subsidiaries various functional areas of the four key of Grupa Azoty): Grupa Azoty ATT Polymers GmbH (Guben, Germany), Grupa Azoty Polskie Group companies were involved in the Konsorcjum Chemiczne Sp. z o.o. (Tarnów), Grupa process of collecting data. Azoty KOLTAR Sp. z o.o. (Tarnów), Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. (Grzybów), and Navitrans Sp. z o.o. (Gdynia, an indirectly controlled subsidiary). Moreover, the above subsidiaries have a total of 23 their own subsidiaries.

148 149 integrated report | 2013 integrated report | 2013 ABOUT THE REPORT ABOUT THE REPORT

Ultimately, this Report includes the CSR aspects listed below. G4-21 Given the horizontal strategic integration of the Group, the impact areas of the Group’s four G4-20 key entities are practically the same. G4-19

RELEVANCE OF INDIVIDUAL CSR ASPECTS TO THE GRUPA AZOTY GROUP

High relevance:

■■ Occupational Health and Safety ■■ Biodiversity Environmental protection ■■ Emissions ■■ Energy ■■ Materials ■■ Product and Service Labelling ■■ Products and Services ■■ Non-discrimination ■■ Anti-corruption ■■ Local Communities ■■ Effluents and Waste ■■ Transport ■■ Water ■■ Economic Performance ■■ Employment ■■ Customer Health and Safety ■■ Compliance

Medium relevance:

■■ Training and Education ■■ Marketing Communications ■■ Market Presence ■■ Indirect Economic Impacts ■■ Diversity and Equal Opportunity ■■ Freedom of Association and Collective Bargaining ■■ Public Policy ■■ Compliance (compliance with laws and regulations concerning the provision and use of products and services)

150 integrated report | 2013 ABOUT THE REPORT

We cannot discuss material aspects The form and frequency of dialogue and corporate social responsibility depends on the characteristics of a as such without identifying the G4-27 given group and the expectations specific groups of stakeholders. and problems material to both parties. At the present moment,

The Grupa Azoty Group has in place G4-26 such solutions as stakeholder panels a formal register of stakeholders, are not yet an effective tool in which additionally defines the

G-24 Poland, one of the reasons being the method of assessing the materiality business environment’s limited trust and the ability of the individual in dialogue as such. Therefore, the stakeholders to affect the Group’s

G4-25 dialogue relied for the most part on operations. more traditional tools (e.g. qualitative Stakeholders can be divided into and quantitative market research, the following groups: meetings, workshops). The persons responsible for maintaining dialogue ■■ Employees with the environment are the heads ■■ Customers of the individual functional areas ■■ Local communities at the Group companies, who also have up-to-date knowledge of the ■■ Research and development expectations of each stakeholder institutions group. ■■ Suppliers Therefore, at the stage of defining ■■ Shareholders the scope of this Report, it was important to hold meetings directly ■■ Public institutions at the companies and to engage ■■ Trade unions in the process of collecting data ■■ Local government authorities several dozen people who have the knowledge of their individual ■■ State Treasury areas of responsibility, including of ■■ Banks and financial institutions. the expectations and any potential concerns of the environment. Thanks to this, the CSR aspects identified as material are those which are addressed most often in stakeholders’ inquiries.

150 151 integrated report | 2013 integrated report | 2013 GRI Content Index GRI Content Index

Indicator Name Note Audit p. 157 Page

G4-32 General Standard Disclosures

Strategy and Analysis

Statement from the most senior decision-maker of the organization (such as CEO, G4-1 chair, or equivalent senior position) about the relevance of sustainability to the  3 organisation and the organisation’s strategy for addressing sustainability

G4-2 Description of key impacts, risks, and opportunities.  3, 32

Organizational Profile

G4-3 Name of the organization  11, 149, 160

G4-4 Primary brands, products, and services  9, 46

G4-5 Location of the organisation’s headquarters  11, 149, 160

Number of countries where the organisation operates, and names of countries G4-6 where either the organisation has significant operations or that are specifically  11, 44, 149 relevant to the sustainability topics covered in the report

G4-7 Nature of ownership and legal form  31

Markets served (including geographic breakdown, sectors served, and types of G4-8  46 customers and beneficiaries)

G4-9 Scale of the organisation  31

G4-10 Total number of employees by employment contract and gender  108

G4-11 Percentage of total employees covered by collective bargaining agreements  108

G4-12 Organisation’s supply chain  9, 44, 65, 79

Significant changes during the reporting period regarding the organisation’s size, G4-13  27 structure, ownership, or its supply chain

G4-14 Whether and how the precautionary approach or principle is addressed by the organisation  73

Externally developed economic, environmental and social charters, principles, or G4-15  35, 36 other initiatives to which the organisation subscribes or which it endorses

Memberships of associations (such as industry associations) and national or G4-16  28 international advocacy organisations

Identified Material Aspects and Boundaries

G4-17 Entities included in the organisation’s consolidated financial statements  11, 149

G4-18 Process for defining the report content  149

G4-19 Identified Material Aspects regarding environmental and social impacts  150

G4-20 Materiality of identified environmental and social impacts for individual entities  150

Report limitations regarding impacts of material environmental and social No material G4-21  150 aspects, including at entities outside of the organisation limitations

Effect of any restatements of information provided in previous reports, and the Organization’s G4-22 reasons for such restatements (e.g. mergers or acquisitions, change of base years  – first report or periods, nature of business, measurement methods)

Significant changes from previous reporting periods in the scope and Organization’s G4-23  – measurement methods first report

Stakeholder Engagement

G4-24 List of stakeholder groups engaged by the organisation  151

G4-25 Basis for identification and selection of stakeholders with whom to engage  151

Organisation’s approach to stakeholder engagement, including frequency of 57, 63, 65, G4-26  engagement by type and by stakeholder group 123, 125, 151

Key topics and concerns that have been raised through stakeholder engagement, G4-27 and how the organisation has responded to those key topics and concerns,  151 including through its reporting

152 153 integrated report | 2013 integrated report | 2013 GRI Content Index

Report Profile

G4-28 Reporting period (such as fiscal or calendar year) 01.01.2013-31.12.2013  149

G4-29 Date of most recent previous report (if any)  149

G4-30 Reporting cycle (such as annual, biennial) annual  149

G4-31 Contact point  160

G4-32 CSR index  153

Organisation’s policy and current practice with regard to seeking external assurance for the report. If not included in the assurance report accompanying the sustainability G4-33  149 report, reporting on the scope and basis of any external assurance provided, as well as the relationship between the organisation and the assurance providers.

Governance

Governance structure of the organisation, including committees under G4-34 the highest governance body responsible for specific tasks, such as setting  34, 35 strategy or organisational oversight

Ethics and Integrity

Organisation’s values, principles, standards and norms of behavior G4-56  32, 37 such as codes of conduct and codes of ethics

Specific Standard Disclosures

CATEGORY: ECONOMIC

Aspect: Economic Performance

DMA Management approach  135

Direct economic value generated and distributed, including revenues, operating 126, 135, 136, G4-EC1 costs, employee compensation, donations and other community investments,  137, 138, 139, retained earnings, and payments to capital providers and governments 140, 141

Financial implications and other risks and opportunities for the organisation’s G4-EC2  91 activities due to climate change

G4-EC4 Significant financial assistance received from government  141

Aspect: Market Presence

DMA Management approach  113

Ratios of standard entry level wage by gender compared to local minimum G4-EC5  113 wage at significant locations of operation

Aspect: Indirect Economic Impacts

DMA Management approach  123

Development and impact of infrastructure investments and services provided G4-EC7  107, 123, 126, primarily for public benefit through commercial, inkind, or pro bono engagement

Identification and description of significant indirect economic impacts, including G4-EC8  107, 123 the extent of impacts

CATEGORY: ENVIRONMENTAL

Aspect: Materials

DMA Management approach.  79

G4-EN1 Materials used by weight or volume Partially reported  80,81

Aspect: Energy

DMA Management approach.  82

G4-EN3 Direct and indirect energy consumption within the organisation  82, 84, 85

G4-EN5 Energy intensity  82

G4-EN6 Reduction of energy consumption Partially reported  57

153 integrated report | 2013 GRI Content Index

Aspect: Water

DMA Management approach.  86

G4-EN8 Total water abstraction by source  86, 88

G4-EN10 Percentage and total volume of water recycled and reused  86

Aspect: Biodiversity

DMA Management approach.  90

Location and size of land owned, leased, managed in, or adjacent to, protected G4-EN11  90 areas and areas of high biodiversity value outside protected areas

Description of significant impacts of activities, products, and services on G4-EN12 biodiversity in protected areas and areas of high biodiversity value outside  90 protected areas

Aspect: Emissions

DMA Management approach.  91

G4-EN15 Total direct greenhouse gas emissions by weight  91, 95

G4-EN18 Greenhouse gas (GHG) emissions intensity  93

G4-EN19 Reduction of greenhouse gas (GHG) emissions  57, 93

G4-EN21 NOX, SOX, and other significant air emissions by type and weight  94

Aspect: Effluents and Waste

DMA Management approach.  87

G4-EN22 Total water discharge by quality and destination  87, 89

G4-EN23 Total weight of waste by type and disposal method  96, 99

Aspekt: Produkty i usługi

DMA Management approach.  57, 102

G4-EN27 Extent of impact mitigation of environmental impacts of products and services Partially reported  57, 102

Percentage of products sold and their packaging materials that are reclaimed by G4-EN28  98 category

Aspect: Compliance

DMA Management approach.  103

Monetary value of significant fines and total number of non-monetary G4-EN29  103 sanctions for non-compliance with environmental laws and regulations

Aspect: Transport

DMA Management approach.  74, 100

Significant environmental impacts of transporting products and other goods G4-EN30 and materials for the organisation’s operations, and transporting members  74, 100 of the workforce

CATEGORY: SOCIAL

Labor practices and decent work

Aspect: Employment

DMA Management approach.  107

Total number and rates of new employee hires and employee turnover by age G4-LA1  116, 117 group, gender and region

Benefits provided to full-time employees that are not provided to temporary or G4-LA2  107 part-time employees, by significant locations of operation

154 integrated report | 2013 GRI Content Index

Aspect: Occupational Health and Safety

DMA Management approach.  68

Percentage of total workforce represented in formal joint management–worker G4-LA5 health and safety committees that help monitor and advise on occupational  68 health and safety programs

Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, G4-LA6  69 and total number of work-related fatalities, by region and by gender

G4-LA7 Workers with high incidence or high risk of diseases related to their occupation  68

G4-LA8 Health and safety topics covered in formal agreements with trade unions  68

Aspect: Training and Education

DMA Management approach.  111, 112

Average hours of training per year per employee by gender, G4-LA9  111, 118, 119 and by employee category

Programs for skills management and lifelong learning that support the continued G4-LA10  109 employability of employees and assist them in managing career endings

Percentage of employees receiving regular performance and career development G4-LA11  112 reviews, by gender and by employee category

Aspect: Diversity and Equal Opportunity

DMA Management approach.  107

Composition of governance bodies and breakdown of employees per employee G4-LA12 category according to gender, age group, minority group membership, and other  108, 115, 120 indicators of diversity

Human Rights

Aspect: Non-discrimination

DMA Management approach.  113

G4-HR3 Total number of incidents of discrimination and corrective actions taken  113

Society

Aspect: Local Communities

DMA Management approach.  123-126

Percentage of operations with implemented local community engagement, G4-SO1  123-126 impact assessments, and development programs

Operations with significant actual and potential negative impacts on local G4-SO2  125 communities

Aspect: Anti-corruption

DMA Management approach.  37

G4-SO5 Confirmed incidents of corruption and actions taken  37

Aspect: Public Policy

DMA Podjeście zarządcze.  130

Total value of financial and in-kind political contributions to parties, G4-SO6  130 politicians and similar institutions by country

Aspect: Compliance

DMA Management approach.  130

Monetary value of significant fines and total number of non-monetary sanctions G4-SO8  130 for non-compliance with laws and regulations

155 integrated report | 2013 GRI Content Index Independent assurance report pertaining to the non-financial part of the Grupa Azoty Integrated Report 2013

Product responsibility

Aspect: Customer Health and Safety

DMA Management approach.  63, 73

Percentage of significant product and service categories for which health and G4-PR1  63, 73 safety impacts are assessed for improvement

Total number of incidents of non-compliance with regulations and voluntary codes G4-PR2 concerning the health and safety impacts of products and services during their life  74 cycle, by type of outcomes

Aspect: Product and Service Labelling

DMA Management approach.  65, 75

Type of product and service information required by the organisation’s procedures for product and service information and labelling, and percentage G4-PR3  75 of significant product and service categories subject to such information requirements

Total number of incidents of non-compliance with regulations and voluntary codes G4-PR4  75 concerning product and service information and labelling, by type of outcomes

G4-PR5 Results of surveys measuring customer satisfaction  65

Aspect: Marketing Communications

DMA Management approach.  65

Total number of incidents of non-compliance with regulations and voluntary codes G4-PR7 concerning marketing communications, including advertising, promotion, and  65 sponsorship, by type of outcomes

Aspect: Compliance

DMA Management approach.  75

Monetary value of significant fines for non-compliance with laws and regulations G4-PR9  75 concerning the provision and use of products and services

156 integrated report | 2013 GRI Content Index Independent assurance report pertaining to the non-financial part of the Grupa Azoty Integrated Report 2013

We have reviewed the non-financial Planning and performing our works ■■ Verifying the information included part of the Grupa Azoty Integrated had the nature of a limited assurance in the Integrated Annual Report Report 2013 (“Integrated Annual engagement performed in line with for compliance with the internal Report”) developed by Grupa Azoty ISAE 3000 (Assurance Engagements documentation of the Company. S.A. with the registered address Other than Audits or Reviews of ■■ Assessing the level of compliance in Tarnów, at ul. Kwiatkowskiego 8 Historical Financial Information), with Sustainable Development (“Company”), with respect to material which requires us to plan and perform Reporting Guidelines and GRI aspects identified by the Company the engagement in a manner which Reporting Framework. and indicators reported on the allows for limited assurance that the basis of G4 Sustainability Reporting non-financial part of the Integrated Based on the review we obtained Guidelines for “Core” level, issued by Annual Report does not include limited assurance that the information Global Reporting Initiative (GRI). The significant misstatements. The scope concerning identified material aspects assurance works covered the period and methodology of a review of the and indicators reported by the from 1 January 2013 to 31 December Integrated Annual Report significantly Company included in the Integrated 2013 with relation to quantity and differ from those applied during an Annual Report developed by the quality of available evidence. audit, which is aimed at expressing Grupa Azoty S.A. is free from material reasonable assurance. The purpose of misstatements and it is compliant The Management Board of the the review is not to issue an opinion with G4 Sustainability Reporting Company is responsible for reliable, on correct, true and fair nature of Guidelines for ‘Core’ level issued correct and fair information and the Integrated Annual Report, and by Global Reporting Initiative. for correct preparation of the therefore no such opinion has been documentation. Our task was to issue issued. The procedures followed an independent assurance report during the review of the non-financial based on the Integrated Annual part of the Integrated Annual Report Report. comprised:

Our procedures did not include ■■ Identifying issues and results assessment of the fairness, significant for the content of the correctness and completeness Integrated Annual Report from the of documents provided by the viewpoint of the corporate social Company, nor did they constitute an responsibility strategy followed audit of the internal control system by the Company and stakeholders' implemented therein. Therefore, we expectations. do not express an opinion regarding ■■ Comparing data included in the correctness of the system. Our non-financial part of the Integrated procedures did not constitute an audit Annual Report to those presented of financial statements as defined in in the Financial Statements of Grupa the Accounting Act. Therefore, we do Azoty for 2013. not express an opinion concerning the auditor’s Report nor do we make ■■ Interviewing individuals in charge of statements regarding the financial the implementation of the corporate social responsibility strategy in the statements of the Company as Company and of the preparation of determined in regulations applicable the Integrated Annual Report. to certified auditors.

Deloitte Advisory Sp. z o.o. Warsaw, July 10th 2014

156 157 integrated report | 2013 integrated report | 2013 table of contents table of contents

3 Letter from the President of the Management Board

7 Introduction 9 Group’s profile 10 Group structure 27 Group’s expansion 31 Scale of the organisation and ownership structure 32 Business strategy and sustainable development 34 Management model and core values 35 Integrated Management Systems 35 Risk management 35 Internal audit 36 Corporate governance 37 Ethical values and principles in the organisation’s management

39 Responsible partner in business 41 Market overview 42 Fertilizer market 42 Plastics 43 Chemicals 43 Power sector 44 Supply chain 46 Market presence 49 Agro Fertilizers 51 Plastics 52 Chemicals 55 Energy 55 Other Activities 57 Innovation and development 60 Grupa Azoty S.A. 60 Grupa Azoty Puławy 61 Grupa Azoty ZAK S.A. 61 Grupa Azoty Police 63 Customer relations 63 Sustainable development in agriculture 65 Fostering good relations 67 Safety 68 Health & safety

158 integrated report | 2013 table of contents

73 Product safety 74 Transport safety 75 Customer safety 76 Environmental impact 79 Feedstocks 82 Energy 86 Water management 90 Biodiversity 91 Air emissions 93 OTHER AIR EMISSIONS 96 Waste management 100 Transport 102 Environmental protection projects 103 Compliance

105 Responsible employer and community member 107 Employees 107 Employment and additional benefits 111 Staff development and training 112 Employee reviews 113 Non-discrimination 123 Communities and society 123 Local communities 125 Safe neighbourhood 126 Sports sponsorship and patronage 130 Compliance

133 financial statements 135 Condensed consolidated financial statements for 2013 142 Segment results 145 OINDEPENDENT AUDITOR’S OPINION ON THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

149 About the report 152 GRI Content Index 157 Independent assurance report pertaining to the non-financial part of the Grupa Azoty Integrated Report 2013

158 159 integrated report | 2013 integrated report | 2013 Grupa Azoty S.A. ul. Kwiatkowskiego 8 33-101 Tarnów, Poland

NIP: 873-000-68-29 Ticker GPW: ATT KRS: 0000075450 ISIN: PLZATRM00012

tel. +48 14 637 35 31 [email protected]

Grupa Azoty Police ul. Kuźnicka 1, 72-010 Police, Poland

NIP: 851-02-05-573 Ticker GPW: PCE KRS: 0000015501 ISIN: PLZCPLC00036

tel. +48 91 317 17 17 [email protected]

Grupa Azoty Puławy Al. Tysiąclecia Państwa Polskiego 13 24-110 Puławy, Poland

NIP: 716-000-18-22 Ticker GPW: ZAP KRS: 0000011737 ISIN: PLZAPUL00057

tel. +48 81 565 37 15

Grupa Azoty ZAK S.A. ul. Mostowa 30 A, skr. poczt. 163 47-220 Kędzierzyn-Koźle, Poland

NIP: 749-00-05-094 KRS: 0000008993

tel. +48 77 481 26 35 [email protected]

integrated report | 2013

Report written and compiled by the Corporate Public Relations Office Please send comments and queries to: [email protected] To obtain additional information on the report or our CSR activities, please contact:

G4-31 Magdalena Ciepiela | [email protected] Grupa Azoty S.A. | ul. Kwiatkowskiego 8 | 33-101 Tarnów, Poland

designed and published by © grupa tomami | www.tomami.pl

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