OTHER INFORMATION ABOUT THE RESULTS OF THE GRUPA AZOTY ZAKŁADY AZOTOWE PUŁAWY GROUP for the three and nine months ended September 30th 2019

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CONTENTS

1. Results of the Grupa Azoty PUŁAWY Group ...... 3 2. Macroeconomic overview ...... 8 3. Exchange rates ...... 9 4. Interest rates ...... 9 5. Production ...... 11 6. Capital expenditure ...... 12 7. Strategic feedstock markets ...... 15 8. Discussion and analysis of segments’ results ...... 20 8.1. Agro Segment ...... 21 8.2. Chemicals Segment ...... 31 8.3. Energy Segment ...... 39 8.4. Other Activities Segment ...... 41 9. Position of the Grupa Azoty Zakłady Azotowe Puławy S.A's Management Board on the feasibility of delivering performance forecasts ...... 42 10. Pending court, arbitration or administrative proceedings ...... 42 11. Sureties for bank borrowings and guarantees issued by the Group ...... 43 12. Other information which the Parent’s Management Board believes is essential for assessment of the Group's human resources, assets, financial condition and financial results, or changes in any of the foregoing, including information essential for assessmet of the Group's ability to fulfil its obligations...... 45 12.1. Financial position, investing of free cash ...... 45 12.2. Insurance policies ...... 46 12.3. Borrowing agreements ...... 48 12.4. Currency risk hedging transactions ...... 51 12.5. Letters of credit ...... 51 12.6. EU funds and other aid funds ...... 51 12.7. Significant agreements ...... 53 12.8. HR and remuneration policy ...... 53 12.9. Other information ...... 53 13. Factors and developments which will affect the Group’s performance at least in the next quarter ...... 55 14. Material events after the reporting period with a potentially significant effect on future financial performance ...... 55

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Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

1. Results of the Grupa Azoty PUŁAWY Group For the three months ended September 30th 2019, the Grupa Azoty Zakłady Azotowe Puławy Group posted: • Revenue of PLN 776.9m • EBITDA of PLN 107.1m • Net profit/(loss) of PLN 36.8m

Table 1: Statement of comprehensive income Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep Jan 1 – Sep Change Item Change 2018 2019 2019 2018* 30 2019 30 2018* 1 2 3 4 5=(3-4)/4 6 7 8 9=(7-8)/8 1,015,734 842,813 715,206 779,630 -8.3% Revenue from sale of products 2,573,753 2,421,779 6.3% Revenue from sale of 52,951 38,727 61,646 58,928 4.6% 153,324 176,226 -13.0% merchandise and materials 1,068,685 881,540 776,852 838,558 -7.4% Revenue 2,727,077 2,598,005 5.0% (697,360) (592,949) (567,295) (707,649) -19.8% Cost of products sold (1,857,604) (2,023,821) -8.2% Cost of merchandise and (52,639) (37,360) (54,315) (56,596) -4.0% (144,314) (166,268) -13.2% materials sold (749,999) (630,309) (621,610) (764,245) -18.7% Cost of sales (2,001,918) (2,190,089) -8.6% 318,686 251,231 155,242 74,313 108.9% Gross profit/(loss) 725,159 407,916 77.8% (63,196) (66,216) (58,296) (65,801) -11.4% Distribution costs (187,708) (198,452) -5.4% (49,008) (57,735) (49,257) (45,462) 8.3% Administrative expenses (156,000) (154,353) 1.1% 4,760 3,901 3,580 3,522 1.6% Other income 12,241 10,754 13.8% (3,672) (30,148) (5,123) (8,248) -37.9% Other expenses (38,943) (22,177) 75.6% 207,570 101,033 46,146 (41,676) - Operating profit/(loss) 354,749 43,688 712.0% (540) (372) 979 (804) - Net finance income/(costs) 67 18,062 -99.6% Share of profit/(loss) of equity - (391) 339 (48) (223) -78.5% (100) 1,732 - accounted entities Profit/(loss) from continuing 206,639 101,000 47,077 (42,703) - 354,716 63,482 458.8% operations before tax (38,697) (21,004) (10,284) 7,355 - Income tax (69,985) (13,165) 431.6% Net profit/(loss) from 167,942 79,996 36,793 (35,348) - 284,731 50,317 465.9% continuing operations 167,942 79,996 36,793 (35,348) - Group's net profit/(loss) 284,731 50,317 465.9% - (5,679) - - - Other comprehensive income (5,679) 821 - Income tax on other - 1,079 - - - 1,079 (157) - comprehensive income 167,942 75,396 36,793 (35,348) - Group's comprehensive income 280,131 50,981 449.5% *restated

3 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Table 2: Statement of financial position Opening balance Mar 31 2019 Jun 30 2019 Sep 30 2019 Change Item Sep 30 2018* Change Jan 1 2019 1 2 3 4 5=(4-1)/1 6 7 8=(4-7)/7 Assets 3,044,098 3,058,210 3,068,554 3,128,544 2.8% Non-current assets 2,698,395 15.9% 2,542,847 2,710,659 2,604,803 2,674,978 5.2% Property, plant and equipment 2,429,791 10.1% - - - - - Usufruct rights to land 72,536 -100.0% 323,522 162,370 286,328 278,306 -14.0% Right-of-use assets - - 18,488 18,363 17,848 18,648 0.9% Investment property 18,526 0.7% 49,900 48,866 50,555 49,389 -1.0% Intangible assets 51,441 -4.0% 933 933 933 933 0.0% Goodwill 933 0.0% 9,265 1,064 1,064 1,064 -88.5% Investments in equity instruments 12,235 -91.3% 15,836 29,547 29,236 29,188 84.3% Equity-accounted investments 15,917 83.4% 76,662 79,862 71,507 69,246 -9.7% Trade and other receivables 89,606 -22.7% 6,645 6,546 6,280 6,792 2.2% Deferred tax assets 7,410 -8.3% 1,615,630 1,825,278 1,721,773 1,664,207 3.0% Current assets 1,544,352 7.8% 398,229 377,670 401,771 370,496 -7.0% Inventories 346,561 6.9% 132,534 338,460 244,345 244,646 84.6% Property rights 125,564 94.8% 512 746 1,315 28 -94.5% Derivative financial instruments 615 -95.4% 2,997 59,099 90,289 318,354 10522.4% Other financial assets 3,003 10501.2% 35,336 31,281 26,249 1,061 -97.0% Current tax assets 32,693 -96.8% 476,444 541,862 487,073 427,966 -10.2% Trade and other receivables 457,417 -6.4% 142 307 412 7,880 5449.3% Amounts due from customers for contract work 124 6254.8% 569,409 475,853 470,319 293,776 -48.4% Cash and cash equivalents 578,375 -49.2% 27 - - - -100.0% Non-current assets held for sale - - 4,659,728 4,883,488 4,790,327 4,792,751 2.9% TOTAL ASSETS 4,242,747 13.0%

Opening balance Mar 31 2019 Jun 30 2019 Sep 30 2019 Change Item Sep 30 2018* Change Jan 1 2019 1 2 3 4 5=(4-1)/1 6 7 8=(4-7)/7 Equity and liabilities 3,208,704 3,376,646 3,418,295 3,455,075 7.7% Equity 3,205,097 7.8% 191,150 191,150 191,150 191,150 0.0% Share capital 191,150 0.0% 237,650 237,650 237,650 237,650 0.0% Share premium 237,650 0.0% 2,781,061 2,949,220 2,992,032 3,029,065 8.9% Retained earnings 2,776,621 9.1% 3,209,861 3,378,020 3,420,832 3,457,865 7.7% Equity attributable to owners of the Parent 3,205,421 7.9% (1,157) (1,374) (2,537) (2,790) 141.1% Non-controlling interests (324) 761.1% 462,922 460,166 532,028 527,610 14.0% Non-current liabilities 248,255 112.5% 222,043 215,312 204,243 201,734 -9.1% Other financial liabilities 2,425 8218.9% 146,391 146,083 161,641 161,373 10.2% Employee benefit obligations 146,849 9.9% 2,490 1,604 2,238 1,950 -21.7% Trade and other payables 2,850 -31.6% 7,188 6,860 12,360 12,324 71.5% Provisions 7,031 75.3% 53,630 52,435 97,270 95,578 78.2% Grants 53,988 77.0% 31,180 37,872 54,276 54,651 75.3% Deferred tax liability 35,112 55.6%

4 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

988,102 1,046,676 840,004 810,066 -18.0% Current liabilities 789,395 2.6% 52,554 68,141 80,653 82,726 57.4% Liabilities under borrowings 60,686 36.3% 188 352 - 1,398 643.6% Derivative financial instruments - - 53,404 28,884 27,325 27,668 -48.2% Other financial liabilities 3,134 782.8% 22,345 19,981 22,649 20,432 -8.6% Employee benefit obligations 18,792 8.7% 1,736 636 507 828 -52.3% Current tax liabilities 1,641 -49.5% 817,182 777,764 662,607 646,010 -20.9% Trade and other payables 674,858 -4.3% 24,074 21,770 9,594 11,909 -50.5% Contract liabilities 14,277 -16.6% 11,855 10,673 8,378 11,788 -0.6% Provisions 11,016 7.0% 4,764 118,475 28,291 7,307 53.4% Grants 4,991 46.4% 1,451,024 1,506,842 1,372,032 1,337,676 -7.8% Total liabilities 1,037,650 28.9% 4,659,728 4,883,488 4,790,327 4,792,751 2.9% TOTAL EQUITY AND LIABILITIES 4,242,747 13.0% *restated

Table 3: Statement of cash flows Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep Jan 1 – Sep Change Item Change 2018 2019 2019 2018* 30 2019 30 2018* 1 2 3 4 5=(3-4)/4 6 7 8 9=(7-8)/8 Cash flows from operating

activities 206,639 101,000 47,077 (42,703) - Profit/(loss) before tax 354,716 63,482 458.8% Adjustments for: Share of profit/(loss) of equity - 391 (339) 48 223 -78.5% 100 (1,732) - accounted entities 60,932 61,346 60,954 53,693 13.5% Depreciation and amortisation 183,232 157,881 16.1% Interest, dividends and foreign 2,105 1,846 3,952 3,118 26.7% 7,903 (4,238) - exchange gains or losses (Gain)/loss from investing 9,091 26,919 (2,167) 1,029 - 33,843 7,614 344.5% activities (Increase)/decrease in (68,404) 53,816 49,842 85,396 -41.6% 35,254 (27,939) - receivables (Increase)/decrease in 20,559 (24,101) 31,275 58,148 -46.2% 27,733 38,389 -27.8% inventories (Increase)/decrease in property (205,926) 94,115 (301) (1,333) -77.4% (112,112) (30,297) 270.0% rights (687) (182,020) 30,886 10,056 207.1% Increase/(decrease) in liabilities (151,821) (7,315) 1975.5% Increase/(decrease) in 112,516 (45,349) (22,676) (20,932) 8.3% 44,491 17,581 153.1% government grants Increase/(decrease) in (4,242) 15,752 889 1,279 -30.5% 12,399 6,865 80.6% provisions (24,947) 1,648 15,088 (473) - Income tax (paid)/refunded (8,211) (2,098) 291.4% (Gain)/loss on measurement of (70) (921) 2,685 (2,293) - 1,694 434 290.3% derivative instruments Other operating (292) 38 (229) 126 - (483) 143 - inflows/(outflows) Net cash from/(used in) 107,665 103,750 217,323 145,334 49.5% 428,738 218,770 96.0% operating activities Cash flows from investing

activities

5 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Proceeds from sale of property, 446 462 137 - - plant and equipment and 1,045 255 309.8% intangible assets Purchase of property, plant and (120,174) (81,261) (128,993) (123,152) 4.7% equipment and intangible (330,428) (331,384) -0.3% assets 3,000 56,000 42,000 2,000 2000.0% Sale of other financial assets 101,000 236,350 -57.3% (5,900) - - - - Acquisition of shares (5,900) - - Acquisition of other financial (59,000) (87,252) (269,000) (3,000) 8866.7% (415,252) (5,000) 8205.0% assets 92 358 943 152 520.4% Dividends and interest received 1,393 1,651 -15.6% Net cash from/(used in) (181,536) (111,693) (354,913) (124,000) 186.2% (648,142) (98,128) 560.5% investing activities Cash flows from financing

activities Payment of finance lease (7,598) (7,367) (5,847) (667) 776.6% (20,812) (1,972) 955.4% liabilities 15,587 12,512 2,072 - - Proceeds from borrowings 30,171 32,522 -7.2% - - - (11,459) -100.0% Repayment of borrowings - (18,334) -100.0% - - (33,744) - - Dividends paid (33,744) (85,253) -60.4% (1,812) (2,014) (1,908) (1,085) 75.9% Interest paid (5,734) (2,314) 147.8% (26,149) 5 - - - Other proceeds/(outflows) (26,144) - - Net cash from/(used in) (19,972) 3,136 (39,427) (13,211) 198.4% (56,263) (75,351) -25.3% financing activities Net change in cash and cash (93,843) (4,807) (177,017) 8,123 - (275,667) 45,291 - equivalents including net foreign exchange 29 (858) 826 (2,102) - (3) 6,178 - gains/(losses) Cash and cash equivalents at 569,062 475,219 470,412 571,007 -17.6% 569,062 533,839 6.6% beginning of the period Cash and cash equivalents at 475,219 470,412 293,395 579,130 -49.3% 293,395 579,130 -49.3% end of the period - 56,181 56,181 56,181 0.0% restricted cash 56,181 56,181 0.0% *restated

Structure of the Group’s financial result

Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep 30 Jan 1 − Sep 30 Change Item Change 2019 2019 2019 2018* 2019 2018* 1 3 4 5 6=4/5 7 8 9 10=8/9 Grupa Azoty Zakłady Azotowe 165,560 60,200 41,787 (30,155) - 267,547 65,367 409.3% Puławy S.A. (197) (222) (191) (4) 4775.0% PROZAP Sp. z o.o. (610) (481) 126.8% (970) 2,210 5,032 5,864 85.8% REMZAP Sp. z o.o. 6,272 7,172 87.5% (87) (261) (63) (272) 23.2% SCF Natural Sp. z o.o. (411) (349) 117.8% (2,147) (10,915) (1,684) (3,762) 44.8% Zakłady Azotowe Chorzów S.A. (14,746) (15,458) 95.4% 6,022 4,240 (518) 461 - GZNF Fosfory Sp. z o.o. 9,744 887 1098.5% 1,878 (1,644) (1,148) (524) 219.1% AGROCHEM PUŁAWY Sp. z o.o. (914) (10,651) 8.6% (162) - Elektrownia Puławy Sp. z o.o. (162) - 170,059 53,608 43,215 (28,554) - Group's net profit/(loss) 266,882 46,325 576.1%

6 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

(2,117) 26,388 (6,422) (2,399) 267.7% Consolidation adjustments 17,849 8,759 203.8% Group's net profit/(loss) 168,159 81,053 37,033 (30,888) - attributable to owners of the 286,245 55,858 512.5% Parent Net profit/(loss) attributable to (217) (1,057) (240) (65) 369.2% (1,514) (1,146) 132.1% non-controlling interests 167,942 79,996 36,793 (30,953) - Group's net profit/(loss) 284,731 54,712 520.4% *restated

Geographical structure of the Group’s sales Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Revenue Change Amount Structure Amount Structure 1 2 3 4 5 6=2/4 Domestic sales 530,201 67.9% 535,630 63.6% 99.0% Export sales 246,651 31.6% 302,928 36.0% 81.4% Revenue 776,852 99.5% 838,558 99.6% 92.6% Other income 3,580 0.5% 3,522 0.4% 101.6% Operating income 780,432 100.0% 842,080 100.0% 92.7% Year on year, between July 1st and September 30th 2019: • revenue from sales in Poland decreased by PLN 5.4m (1.0%) and its share in total revenue rose by 4.3pp; • revenue from export sales decreased by PLN 56.3m (18.6%) and its share in total revenue declined by 4.4pp.

Group’s revenue by key product categories Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Product category Change Amount Structure Amount Structure

1 2 3 4 5 6=2/4 Fertilizers – main products 358,622 46.2% 400,723 47.8% 89.5% Chemicals – main products 314,384 40.5% 340,974 40.7% 92.2% Other sales 103,846 13.3% 96,861 11.5% 107.2% Total revenue 776,852 100.0% 838,558 100.0% 92.6%

Year on year, in the third quarter of 2019: • revenue from sales of main fertilizer products fell by PLN 42.1m (10.5%), mainly on lower sales volumes of most fertilizers; • revenue from sales of main chemical products decreased by PLN 26.6m (7.8%), mainly on lower prices and sales volumes of melamine and caprolactam; • revenue from other sales rose by PLN 7.0m (7.2%).

7 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

2. Macroeconomic overview Global economy The outlook for global economic growth (compared with the June 2019 projections) deteriorated over the entire projection horizon, reflecting weaker than expected recovery in certain emerging economies and (to a lesser extent) the effects of current trade tensions. According to the ECB staff macroeconomic projections for the euro area, September 2019: • In the second half of 2019, the global economic growth rate is expected to remain low; • A number of headwinds will continue to weigh on the global economy; • Global manufacturing activity will remain weak on the back of declining growth in global investment and consumption of durable goods, which form a large part of manufacturing output; • As uncertainty related to the future of international trading relations mounts, global investment growth is unlikely to regain traction. Faced with a slowing global economy, policymakers around the globe have adopted a number of measures to mitigate the negative impact of economic headwinds: • China cut the reserve requirement ratio for banks and lowered taxes to rekindle sluggish domestic demand; • In the United States, in addition to the recent agreement on new public spending caps, the Federal Reserve System decided to cut its benchmark interest rate with a view to supporting the ongoing economic expansion; • A number of other countries (e.g. Australia, Brazil, South Korea, Indonesia, India and Turkey) have also eased monetary policy, and markets expect that other countries may follow suit. It is expected that the global economic growth (excluding the euro area) is projected to decelerate to 3.1% in 2019, from 3.8% in 2018. Over the period 2020–21 growth in world economic activity is projected to stabilise at 3.5%. Developments in global growth will be shaped by three main forces: • Across advanced economies, the cyclical momentum is projected to slow as capacity constraints become increasingly binding amid positive output gaps and low unemployment rates across key economies, while, towards the end of the projection horizon (2021), policy support is expected to gradually diminish; • The progressive slowdown of the Chinese economy and its rebalancing from investment to consumption are projected to weigh negatively on global growth and on trade in particular; • EMEs (excluding China) will make a positive contribution to global growth as they are pulling out of recession and closing the negative output gap. Poland In the opinion of the Polish Monetary Policy Council: • A favourable business climate in Poland will continue in the coming quarters, including in 2020; • This uptrend will be driven by a steady increase in domestic demand and higher domestic consumption, supported by favourable labour market conditions and changes in Poland’s fiscal policy (personal income tax reduction by 1pp as of October 1st 2019) and strong consumer sentiment;

8 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

• Economic growth is likely to slow down, depending to a large extent on how long the current economic downturn in the environment of Poland’s economy, including in the eurozone, will persist, as well as on its impact on Polish economy. According to Adam Glapiński, the Governor of the National Bank of Poland and Chairman of the Polish Monetary Policy Council, in 2019 the economic growth and inflation rate in Poland will be 4.3% and 2.3%, respectively. Credit Agricole economists: • Made no changes to their projections of Poland’s economic growth in 2019, estimated at 4.4%; • Revised downward Poland’s GDP growth forecast for 2020, from 3.8% to 3.5%, on account of deteriorated outlook for global economic growth due to the escalation of trade wars; • Revised upward the forecast average annual inflation rate from 2.1% to 2.4% in 2019 and from 2.0% to 2.3% in 2020;

Acccorodng to Fitch economists: • The economic growth rate in the eurozone will decelerate in 2019–2020 to 1.1%, which will weaken external demand in Poland and affect forecasts for the Polish economy; • Poland’s economic growth will slow down from 4.2% to 4.1% in 2019, from 3.5% to 3.3% in 2020, and from 3.0% to 2.9% in 2021.

3. Exchange rates

Average monthly exchange rate according to the NBP data

Currency Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Apr 1 – Jun 30 2019 Change Change

1 2 3 4 5=(2-3)/3 6=(2-4)/4 PLN/USD 3.8854 3.7036 3.8116 4.91% 1.94% PLN/EUR 4.3194 4.3055 4.2833 0.32% 0.84%

Foreign exchange projections According to Oxford Economics’ forecasts, in the coming quarters of 2019 the Polish currency will strengthen against both the US dollar and the euro.

Projected monthly average exchange rates for the coming quarters

Currency Jul 1 – Sep 30 2019 Oct 1 – Dec 31 2019 Jan 1 – Mar 31 2020 Change Change

1 2 3 4 5=(3-2)/2 6=(4-2)/2 PLN/USD 3.8854 3.8355 3.7966 -1.28% -2.29% PLN/EUR 4.3194 4.2958 4.2655 -0.55% -1.25%

4. Interest rates

Poland At the meeting held on October 1st and October 2nd 2019, the Monetary Policy Council decided to keep the interest rates applied by the National Bank of Poland unchanged, which means that the main reference rate is maintained at 1.5%. 9 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

According to the Council, the current interest rates help the Polish economy continue on the path of sustainable growth and support the macroeconomic balance. Adam Glapiński, Chairman of the Council and Governor of the National Bank of Poland, upheld the opinion that the interest rates will remain unchanged until the end of the Council’s current term of office.

Interest rates in Poland in the third quarter of 2019 Reference rate Lombard rate Deposit rate Rediscount rate

1.50% 2.50% 0.50% 1.75% Source: NBP

European Union At its September meeting, the Governing Council of the European Central Bank (ECB) 1 lowered the deposit rate and decided to launch a quantitative easing (QE) programme 2. The deposit rate was reduced by 10 bps, to -0.50%. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility remained unchanged at 0.00% and 0.25%, respectively. The Governing Council of the ECB believes that the interest rates in the eurozone will be kept unchanged or lower in the coming years. The current rates are the lowest on record. Interest rates in the eurozone were last changed in March 2016. The eurozone monetary authorities have announced the launch of an asset purchase programme (QE). The project, referred to as the ‘financial bazooka’ 3, will begin on November 1st 2019 and will amount to EUR 20bn per month. The final date of the new QE programme has not been precisely defined. It has only been indicated that it will end “just before” the Governing Council decides to increase the interest rates. The first round of the quantitative easing programme lasted from March 2015 to the end of 2018. Under that programme, the ECB purchased bonds (and other assets) from eurozone countries. The scale of the programme was modified several times and its total value was EUR 2.5 trillion.

United States The Federal Reserve (the Fed): • Reduced the main interest rate by 25 basis points, to the range of 1.75%–2.00%; • Announced that there was still uncertainty around the economic growth prospects for the United States; the decision on interest rates was in line with market expectations. At the conference after the Federal Reserve’s meeting, Jerome Powell, Chair of the Federal Reserve, stated that if the economy weakens, further interest rate cuts may be necessary. In his opinion, there are risks to GDP growth, namely the global economic slowdown and the trade policy.

1 The Governing Council is the main decision-making body of the ECB. It consists of the six members of the Executive Board, plus the governors of the national central banks of the 19 euro area countries. 2 Quantitative easing is an unconventional monetary policy used to stimulate the economy and increase inflation. Its key objective is to cause higher inflation, encourage lending, as well as appease financial markets. Generally, quantitative easing is about increasing the money supply by purchasing securities from the market. 3 the commentators use the term ‘financial bazooka’ to denote a quantitative easing programme (powerful financial weapon ). 10 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

5. Production In the three months ended September 30th 2019, the output volumes from the main production units were set to match the trading policy of the Grupa Azoty PUŁAWY Group and the market conditions.

Main product output dynamics Jan 1–Jun 30 2019 vs Company Product Jul 1 – Sep 30 2018 • ammonia 94% • nitrogen fertilizers as pure N equivalent 83%

Grupa Azoty Zakłady Azotowe • caprolactam 95% Puławy S.A. • melamine 96% • hydrogen peroxide 97% • NOXy® (formerly AdBlue®) 128%

• CSP *) phosphate fertilizers as P 2O5 equivalent 54% • compound fertilizers as N equivalent 59%

• compound fertilizers as P 2O5 equivalent 72% GZNF Fosfory Sp. z o.o. • compound fertilizers as K 2O equivalent 72% • sulfuric acid as 100% concentration equivalent 79% • sodium bisulfite 107% • calcium nitrate solution 149% Zakłady Azotowe Chorzów S.A. • potassium nitrate 102% • liquid and flaked stearin 0% *) CSP – single-nutrient fertilizers, superphosphates

Due to excessively low prices of oleochemicals, the Supervisory Board of Zakłady Azotowe Chorzów S.A. agreed to extend the suspension period of liquid and flaked stearin production on the Organic Products Department’s production line until January 31st 2020.

Output of main products of Grupa Azoty Zakłady Azotowe Puławy S.A. 300

250

200

150

100 ‘000 tonnes

50

0 Ammonia PULAN® UAN - RSM ® Total urea Melamina™ CAPROLACTAM™ PULSAR® 2018 2019

11 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

6. Capital expenditure In the third quarter of 2019, the Grupa Azoty Zakłady Azotowe Puławy Group’s capital expenditure was approximately PLN 122.6m, including on development projects, improvements, major overhaul work, catalysts, and other (after adjustments and consolidation eliminations). Grupa Azoty Zakłady Azotowe Puławy S.A. In the third quarter of 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. incurred capital expenditure of approximately PLN 126.2m. The projects involved construction of new units, investments in existing units to improve their efficiency, and compliance with environmental laws. Projects were also carried out to replace and upgrade equipment critical for improving product quality, reliability of production units and work conditions. In the third quarter of 2019, capital expenditure was mainly incurred on the following projects: “Upgrade of the nitric acid unit and construction of new facilities for nitric acid production, neutralisation and production of new fertilizers based on nitric acid” and “Upgrade of steam generator OP-215 no. 2 to reduce NO x emissions”.

Key investment projects implemented in the third quarter of 2019 Planned Budget Total Expenditure completion Project expenditure in Q3 2019* Description date PLN '000 PLN '000 PLN '000

To bring the Company’s energy generation units in line with the latest environmental requirements, while increasing the share of the Construction of a coal-fired 1,200,000 3,720** 497 Company’s CHP plant in the electricity volumes 2022 power generation unit consumed by the Company’s production units, and to ensure uninterrupted supplies of energy (process steam and heating water).

To raise the efficiency of nitric acid production Upgrade of the nitric acid unit and to improve the economics of production of and construction of new nitric acid-based fertilizers; Any excess of nitric facilities for nitric acid 695,000 165,629 39,182 acid will be processed on the new line for the 2024 production, neutralisation and production of speciality fertilizers (magnesium production of new fertilizers nitrate, calcium nitrate and potassium nitrate), based on nitric acid with a capacity of 600 tonnes per day.

To improve the quality of fertilizers by applying modern mechanical granulation; The key Unit for manufacture of component of the plant are two lines for granulated fertilizers based on 385,000 342,604 4,725 manufacturing granulated fertilizers based on 2020 ammonium nitrate ammonium nitraCANte melt as the feedstock for granulated ammonium nitrate and calcium ammonium nitrate.

To adapt the steam generator, which will Upgrade of steam generator become one of the primary generating units OP-215 no. 2 to reduce NOx 93,000 21,758 8,875 along with generators Nos. 4 and 5, in order to 2020 emissions bring it into compliance with the new NOx emission standards.

To modernise CO 2 absorption To increase the efficiency of the unit for CO 2 in potassium carbonate absorption in potassium carbonate solutions to 24,656 4,064 2,286 2021 solutions – Lines II and III of 110%, and to reduce the consumption of heat the Gas Pre-Treatment System and electricity.

Purchase and assembly of To increase ammonia production capacity and synthesis gas compressor No. 24,400 14,791 1,585 2020 improve process safety. 7 - KS7

12 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

To improve the technical condition of the Upgrade of the circulation circulation water system, to ensure reliable water system in the Ammonia 24,100 16,379 1,579 supply of water to the cooling systems, and to 2020 Department secure supply of water to new units at the Ammonia Department.

*) Net of adjustments and consolidation eliminations.

**) The final decision to implement the project (the General Meeting’s resolution) was made on July 23rd 2019. Until then, expenses related to the preparation of the project for corporate decisions had been incurred.

Capex structure at Grupa Azoty Zakłady Azotowe Puławy S.A. in the third quarter of 2019:

Structure of capital expenditure Capital expenditure PLN '000

Business development 54,238 Business maintenance 4,795 Mandatory investments 9,468 Purchase of finished goods 892 Other (components, major overhaul work, improvements, catalysts, other) 56,762 Total capital expenditure 126,155

Construction of a coal-fired power generation unit in Puławy On July 23rd 2019, the Extraordinary General Meeting approved the acquisition by Grupa Azoty Zakłady Azotowe Puławy S.A. of non-current assets with a total value of up to PLN 1,200.0m (VAT exclusive) required to implement the project to construct a coal-fired power generation unit in Puławy. On September 25th 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. and the consortium comprising Polimex-Mostostal S.A. of Warsaw, Polimex Energetyka Sp. z o.o. of Warsaw and SBB ENERGY S.A. of Opole entered into a contract for turnkey construction of a coal-fired power generation unit. The contract provides for turnkey construction in Puławy of a new coal-fired power generation unit with a gross generation capacity of 90–100 MWe. The power generation unit will be a pass-out and condensing unit with a pulverized coal fired boiler. The contractor will construct a complete coal-fired generation unit, comprising all the plant and equipment necessary for combined heat and power generation. A lump-sum remuneration is due to the consortium under the contract. The basic period of the contractor’s warranty is 24 months from the date of execution by the Company of a commissioning report for the power generation unit. The commissioning of the power generation unit under the commissioning report signed by both parties should take place within thirty six months from the date specified by the Company in the Notice to Proceed.

Decisions of the governing bodies In the third quarter of 2019: • The Management Board of Grupa Azoty Zakłady Azotowe Puławy S.A. approved 11 investment projects with a total value of approximately PLN 11.9m; • The General Meeting of Grupa Azoty Zakłady Azotowe Puławy S.A. approved the acquisition of non- current assets for a project with a total value of up to PLN 1,200.0m. Grupa Azoty Zakłady Azotowe Puławy Group companies In the third quarter of 2019, the capital expenditure incurred by the Grupa Azoty Zakłady Azotowe Puławy Group companies totalled approximately PLN 4.7m (before adjustments and consolidation eliminations).

13 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

The expenditure was made mainly on upgrades of existing units and minor maintenance projects.

Key investment projects in progress in the third quarter of 2019 Planned Budget Total Expenditure completion Project expenditure in Q3 2019* Description date PLN '000 PLN '000 PLN '000

GZNF Fosfory Sp. z o.o.

To enable the provision of handling and storage Upgrade of the bulk product 7,000 7,025 516 services for such products as nitrates and Q4 2019 terminal ammonium sulfate.

To maintain production capacity and improve Upgrade of the fertilizer unit 5,500 3,239 2,358 2019 agrotechnical quality of compound fertilizers.

To construct a new caustic soda lye unloading facility in the immediate vicinity of the caustic soda lye storage tanks in order to shorten the Upgrade of the caustic soda 5,150 2,974 310 unloading station-storage tanks and unloading Q4 2019 lye handling unit station-ship railway routes for lye handling. The project will result in reduced railway traffic at the bulk product terminal.

Zakłady Azotowe Chorzów S.A. Reconstruction (upgrade) of To upgrade ceilings in the OPN building structural ceilings in the OPN 380 259 81 Q4 2019 (concerns the first, second and third floors). building (P5/2019)

To upgrade internal roads, develop the land in Project the vicinity of OPN, upkeep the area, minimise completed Road modernisation 235 235 235 dust emissions at OPN, improve internal on September transport quality. 16th 2019

PROZAP Sp. z o.o.

Purchase of finished goods Purchase of property, plant and equipment and 377 140 24 2019 and services intangible assets.

*Net of adjustments and consolidation eliminations.

Capex structure in the third quarter of 2019

Structure of capital expenditure Capital expenditure of Group Companies PLN '000

Growth capex 57 Maintenance capex 4,120 Mandatory investments 0 Purchase of finished goods 504 Other (components, major overhaul work, improvements, catalysts, other) 0 Total capital expenditure 4,681

14 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

7. Strategic feedstock markets Natural gas The low prices of gas intensified competition in the energy market. Given the stable prices of emission allowances, natural gas for the power sector has again become very competitive (relative to coal). According to IHS Energy, the average price of natural gas in Europe in the third quarter of 2019: • Under long-term contracts – amounted to approximately EUR 4.52/MMBtu, having decreased by about 32.5% year on year and by about 13.7% on Q2 2019; • On spot markets – amounted to approximately EUR 3.19/MMBtu, having decreased by about 56.8% year on year and by about 24.4% on Q2 2019. In Q4 2019, the average price of natural gas is expected to grow: • under long-term contracts – to approximately EUR 5.11/MMBtu; • in spot transactions – to approximately EUR 4.17/MMBtu. The total gas trading volume on the Day-Ahead Market (DAM) of the Polish Power Exchange in Q3 2019 was 2,350,896 MWh, down by about 30.2% quarter on quarter. In Q3 2019, average prices of natural gas on the Polish Power Exchange: • Relative to the end of the previous quarter, went up slightly; in 2019, the weighted average price on the DAM market was PLN 52.98/MWh in July, PLN 50.12/MWh in August, and PLN 50.50/MWh in September; • Were on average higher by EUR 1.5/MWh than on the German market (i.e. EUR 10.1/MWh); the highest price quoted on the Polish Power Exchange was PLN 65.38/MWh (July 16th 2019) and the lowest one was PLN 38.73/MWh (September 7th 2019). As at September 30th 2019, the volumes of gas stored: • In the European Union represented approximately 97% of the full capacity (according to Gas Infrastructure Europe), up by 26 pp on June 30th 2019 and by 15 pp on September 30th 2018. The increase is due to the need to restock before the start of the heating season and to the high oversupply of natural gas; • Gas storage facilities in Poland were filled to capacity, up 33.04 pp on June 30th 2019. The European gas market continues to be significantly oversupplied, which is due to increased availability of LNG resulting from the constantly growing number of gas liquefaction plants in gas producing countries. The slight increases in natural gas prices, which occurred several times in Q3 2019, were attributable to: • Limited supplies from Norway and Russia during maintenance shutdowns of production and transmission infrastructure; • A geopolitical event – the attack on Saudi oil refineries. However, these factors resulted in gas price increases which lasted just a few days. In the coming heating season: • There is a threat of potential disruptions in gas transit to Europe through Ukraine; the current contract between Russia and Ukraine expires at the end of 2019; • Geopolitical conditions in the Middle East, the US and Asia may pose a threat to maintaining gas prices at current levels.

15 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Supplies of natural gas to Grupa Azoty Zakłady Azotowe Puławy S.A. The main supplier of natural gas to Grupa Azoty Zakłady Azotowe Puławy S.A. in the third quarter of 2019 was Polskie Górnictwo Naftowe i Gazownictwo S.A. (PGNiG S.A.). Gas was purchased from the main supplier under a framework agreement with PGNiG S.A. In Q3 2019, approximately 3% of gas supplied to Grupa Azoty Zakłady Azotowe Puławy S.A. was purchased from sources other than PGNiG S.A. In Q3 2019, charges for gas transmission were defined: • In Gaz-System S.A.’s Gas Fuel Transmission Tariff No. 12, effective from January 1st 2019 – for gas transmitted over the national grid; • In EuRoPol GAZ S.A.’s tariff for transmission of high-methane natural gas, effective from January 1st 2019 – for gas transmitted via the Yamal pipeline.

Coal In the third quarter of 2019, the average price of ARA coal (calorific value of 6,000 kcal), according to IHS Energy, was approximately USD 56.95/tonne and was: • 41.6% lower than in Q3 2018, when it was USD 97.49/tonne; • 2.2% lower than in Q2 2019, when it was USD 58.23/tonne. In Q4 2019, coal prices are forecast to grow slightly, to approximately USD 59.35/tonne. In the reporting period, coal prices in Poland remained relatively stable.

Lower domestic production of coal in China presents an opportunity for foreign suppliers, and imports to India are above expectations. A similar situation is observed in the case of some countries in South-East Asia, mainly Vietnam.

On the other hand, European countries, Japan, South Korea and Taiwan are pursuing a policy of reducing the share of coal in energy mix and are eager to import attractively priced liquefied natural gas.

Supplies of coal to Grupa Azoty Zakłady Azotowe Puławy S.A. In Q3 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. purchased hard coal under a long-term contract with Lubelski Węgiel Bogdanka S.A. Prices under the contract are determined based on market-linked formulae and are renegotiated annually. The Company also purchased coal from Silesian mines. Coal purchase prices (excluding transport costs) paid by Grupa Azoty Zakłady Azotowe Puławy S.A. in Q3 2019 were some 13% higher than a year earlier. The situation prevailing on global markets did not directly affect the prices of coal purchased by Grupa Azoty Zakłady Azotowe Puławy S.A., as it paid fixed prices it had negotiated in previous periods for the entire year in which the relevant agreements were in effect.

Electricity Movements in the spot prices of electricity are driven by such factors as the supply and demand levels, weather conditions, developments on the coal and CO2 emission allowances markets, and cross-border capacities. Spot prices of electricity are also markedly affected by the presence of renewable energy sources, mainly wind power generation.

In Q3 2019, the total volume of all trades executed on the electricity spot and futures markets was 65,013,171 MWh, up by more than 2% year on year, of which: • The trading volume on the futures market was 56,980,069 MWh, down by 0.45% year on year;

16 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

• On the Day-Ahead Market, the trading volume was 8,028,482 MWh, up by 29.4% year on year; • On the Intraday Market, the trading volume was 4,620 MWh, down 79.09% year on year. In the third quarter of 2019, the average monthly prices of electricity on the spot market were slightly higher year on year. In the reporting period, the average spot price of electricity was PLN 250.63/MWh, having decreased by 3.2% year on year (PLN 258.91/MWh).

The decline was mainly attributable to falling prices of CO 2 emission allowances and the pricing policy of main electricity producers. The monthly BASE price of electricity on the markets operated by Towarowa Giełda Energii S.A. (the Polish Power Exchange), calculated as the volume-weighted average from all DAM trades, was PLN 242.79/MWh in September 2019, i.e. PLN 23.43 (8.8%) less than in the previous month.

Supplies of electricity to Grupa Azoty Zakłady Azotowe Puławy S.A. In the third quarter of 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. purchased electricity under annual contracts with the main electricity suppliers, with additional purchases made on the spot market and in short-term transactions executed on the Polish Power Exchange, depending on the price and current production levels. The electricity transmission rates and prices paid by Grupa Azoty Zakłady Azotowe Puławy S.A. are based on PSE S.A.’s Electricity Tariff, approved annually by the President of the Energy Regulatory Office. In the third quarter of 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. purchased electricity in tenders for all Grupa Azoty Group companies and on the Polish Power Exchange to partially satisfy expected demand in 2020.

Benzene In the third quarter of 2019, the global benzene market was mainly affected by: • Lower supply and unstable prices of crude oil following a terrorist attack (on September 14th 2019) on a Saudi Arabia refinery;

• Weaker demand for petroleum derivatives as a consequence (particularly visible in the petrochemical sector) of the ongoing trade war between China and the US;

• Upgrade projects carried out by the benzene processing industry. Compared with the second quarter of 2019, A. in Q3 2019, benzene prices rose: • in Asia by USD 58/tonne (9.4%) (spot prices in the range USD 663-714/tonne); • in Europe – in transactions denominated in USD – by USD 58/tonne (8.2%) (contract prices in the range USD 725–841/tonne); for transactions in EUR – by EUR 51/tonne, i.e. 7.9% (contract prices in the range EUR 638−760/tonne); • in the United States by USD 84/tonne (12.2%) (contract prices in the range USD 761–800/tonne). B. Compared with the same period of 2018, benzene prices fell:

• in Asia by USD 171/tonne (20%); • in Europe – in transactions denominated in USD – by USD 108/tonne (12.2%), in transactions denominated in EUR – by EUR 65/tonne (8.6%);z • in the US – by USD 108/tonne (12.2%).

17 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Analysts expect benzene prices to rise in October 2019 in Asia and America, and in subsequent periods forecast a decline in the prices of benzene across the world as the year draws to an end.

Source: Wood Mackenzie Chemicals Supplies of benzene to Grupa Azoty Zakłady Azotowe Puławy S.A. In the third quarter of 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. purchased benzene under long-term framework contracts, also using its own rolling stock. By optimally diversifying supply sources and trade partnerships with the region’s major benzene producers, the Group has secured safe and efficient supplies.

Sulfur Analysts point out that the European market is currently like no other global market, and given the slightly different supply and demand forces inherent in it, it is difficult to determine the price trend for the next quarter – a price correction is possible, but the prices may also be rolled over to the next quarter. Negotiations are in progress to determine the terms of liquid sulfur purchase contracts in Western Europe for Q4 2019. According to Fertecon data (Sulphur Price Indicator Liquid), the average price of liquid sulfur (NWE Europe and Benelux) was USD 163/tonne, and was flat on Q2 2019 and higher by 9.6% compared with Q3 2018.

Sulfur and sulfuric acid price chart 200

160

120

USD/t 80

40

0

Sulphuric acid - FOB Bulk, NW Europe Spot / FOB Belgium WFM Sulphur NW Europe CPT Fertecon

Source: In-house data.

18 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Supplies of sulfur to the Grupa Azoty Zakłady Azotowe Puławy Group The demand of Grupa Azoty Zakłady Azotowe Puławy Group’s companies for liquid sulfur is satisfied with sulfur resources of the Grupa Azoty Group and with supplies from petrochemical companies.

Phosphate rock and phosphoric acid In the third quarter of 2019, according to reports by Fertecon and World Fertilizer Market: • the average transaction prices of phosphate rock were approximately USD 84/tonne, down 2.9% quarter on quarter and 18.2% year on year; • the average prices of phosphoric acid were approximately USD 787/tonne (CFR NW Europe spot and West Europe CFR), having decreased 6.7% on the previous quarter and 11.6% year on year.

Potassium chloride In the third quarter of 2019, the average price of potassium chloride (according to the most recent Fertecon Potash reports) fell by 2.2% relative to the previous quarter and went up 7.4% year on year. In the fourth quarter of 2019, potassium chloride prices are forecast to slightly decrease, by about 2%.

Animal fats In the third quarter of 2019, the Grupa Azoty Zakłady Azotowe Puławy Group did not purchase animal fats following the suspension of production of liquid and flaked stearin as prices on the oleochemicals market were still too low.

CO 2 emission allowances In the third quarter of 2019, the EU ETS market experienced high volatility of EUA prices, with the difference between the lowest and highest prices reaching around EUR 5. The average emission allowance price in the third quarter of 2019 was EUR 25.56, while the highest and lowest prices were EUR 29.77 and EUR 24.72, respectively. The prices were driven mainly by: • admission of financial institutions to the ETS market; • implementation of the Market Stability Reserve (MSR); • Brexit.

As of January 1st 2019, the European Commission temporarily suspended the allocation of CO 2 allowances to the UK (given uncertainty over the conditions of the UK’s exit from the EU). If the Brexit agreement is signed, the issuance and auctions of UK’s allowances will be resumed. Most probably, it will be impossible to sell some 75 million of UK’s EUA allowances in 2019 and they will be carried forward to 2020. In July 2019, after announcement of a more ambitious EU climate policy to be pursued until 2030 (including by increasing emission reduction target from the existing 40% to 55%), the price of CO 2 emission allowances soared to a record high of nearly EUR 30. However, in August 2019, when a no-deal Brexit appeared more and more likely, EUA prices started to fall. In addition, ever since Boris Johnson became the Prime Minister of the United Kingdom and a no-deal Brexit became more likely, the price of the allowances declined to approximately EUR 24–26. Some analysts warn that the prices may fall even more, to EUR 15.

19 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

As both the date and manner of UK’s exit from the EU in 2020 are uncertain, the final impact of Brexit on the prices of emission allowances is difficult to predict.

Property rights incorporated in certificates of electricity origin Year on year, in the third quarter of 2019 the average market prices of property rights were as follows: • PMOZE_A green certificates 4– the average price was PLN 131.28/MWh, having risen by 14.2%; • PMOZE-BIO blue certificates 5 – the average price was PLN 298.26/MWh, having fallen by 4.4%; • PMEF white certificates 6– the average price was PLN 1,553.20/toe, having risen by 144.9%. In Q3 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. purchased property rights under certificates of origin for electricity from renewable energy sources (PMOZE_A) on the Polish Power Exchange (PPX) in order to meet the obligation to redeem certificates of origin for 2019. Grupa Azoty Zakłady Azotowe Puławy S.A. regularly purchases and sells property rights in intraday trades on the Polish Power Exchange. Thus, the average purchase price of property rights paid by the Company results from market prices quoted in the period covered by the purchase and redemption obligation. Having submitted appropriate declarations to the Energy Regulatory Office (URE) by the prescribed deadline, in 2019 Grupa Azoty Zakłady Azotowe Puławy S.A. may purchase and redeem PMOZE_A and PMOZE-BIO certificates for 15% of electricity used for the Company’s own needs in relation to the statutory limit. Following the entry into force of the Act on the Promotion of Electricity from High-Efficiency Cogeneration of December 14th 2018, as of January 1st 2019 there is no obligation to purchase and redeem property rights for electricity produced in cogeneration units. This obligation has been replaced by a cogeneration charge set at PLN 1.58 per one MWh of the electricity purchased.

8. Discussion and analysis of segments’ results

Table 4: Statement of comprehensive income of the Group's operating segments Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep Jan 1 – Sep Change Item Change 2018 2019 2019 2018* 30 2019 30 2018* 1 2 3 4 5=(3-4)/4 6 7 8 9=(7-8)/8 2,199,338 1,811,709 1,464,175 1,833,687 -20.2% Segments’ revenue, including: 5,475,222 5,660,108 -3.3% 1,068,685 881,540 776,852 838,558 -7.4% External sales 2,727,077 2,598,005 5.0% 1,130,653 930,169 687,323 995,129 -30.9% Intersegment sales 2,748,145 3,062,103 -10.3% (1,956,539) (1,653,931) (1,384,369) (1,842,820) -24.9% Segments’ costs, including: (4,994,839) (5,500,053) -9.2% Cost of products, merchandise (749,411) (632,949) (622,771) (763,997) -18.5% and materials sold to external (2,005,131) (2,188,098) -8.4% customers (1,130,653) (930,169) (687,323) (995,129) -30.9% Intersegment sales (2,748,145) (3,062,103) -10.3% (63,196) (66,216) (58,296) (65,801) -11.4% Distribution costs (187,708) (198,452) -5.4% (15,205) (16,870) (16,095) (13,874) 16.0% Administrative expenses (48,170) (42,522) 13.3% 1,926 (7,727) 116 (4,019) - Net other income/(expenses) (5,685) (8,878) -36.0% 242,799 157,778 79,806 (9,133) - Segments’ profit/(loss) 480,383 160,055 200.1% - including: -

4PMOZE_A, known as green certificates – property rights to certificates of origin of electricity from a renewable source, with the period of generation specified in the certificate beginning not later than on February 28th 2009. 5 PMOZE-BIO, known as blue certificates – property rights under certificates of origin of electricity generated from agricultural biogas as of July 1st 2016. 6 PMEF, known as white certificates – property rights under energy efficiency certificates.

20 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

172,002 118,959 70,741 (6,851) - AGRO SEGMENT 361,702 84,282 329.2% 76,406 55,820 18,748 (774) - CHEMICALS SEGMENT 150,974 89,815 68.1% (1,156) (4,825) (3,579) (4,999) -28.4% ENERGY SEGMENT (9,560) (5,825) 64.1% (4,453) (12,176) (6,104) 3,491 - OTHER ACTIVITIES (22,733) (8,217) 176.7% Unallocated (35,229) (56,745) (33,660) (32,543) 3.4% (125,634) (116,367) 8.0% revenue/expenses 207,570 101,033 46,146 (41,676) - Operating profit/(loss) [EBIT] 354,749 43,688 712.0% 60,932 61,346 60,954 53,693 13.5% Depreciation and amortisation 183,232 157,881 16.1% Operating profit/(loss) before 268,502 162,379 107,100 12,017 791.2% depreciation and amortisation 537,981 201,569 166.9% [EBITDA] (540) (372) 979 (804) - Net finance income/(costs) 67 18,062 -99.6% Share of profit/(loss) of equity - (391) 339 (48) (223) -78.5% (100) 1,732 - accounted entities (38,697) (21,004) (10,284) 7,355 - Income tax (69,985) (13,165) 431.6% 167,942 79,996 36,793 (35,348) - Net profit/(loss) for the period 284,731 50,317 465.9% 75,490 108,961 122,550 126,484 -3.1% CAPEX 307,001 313,853 -2.2% *restated

Group’s external revenue by segment Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Item Change Amount Structure Amount Structure

1 2 3 4 5 6=(2-4)/4 AGRO 424,966 54.7% 461,634 55.1% -7.9% CHEMICALS 315,679 40.6% 344,056 41.0% -8.2% ENERGY 23,185 3.0% 21,082 2.5% 10.0% OTHER ACTIVITIES 13,022 1.7% 11,786 1.4% 10.5% Group’s total revenue 776,852 100.0% 838,558 100.0% -7.4%

The Agro Segment had the largest share in external revenue (54.7%, compared with 55.1% in the third quarter of 2018), of PLN 425.0m, which represents a PLN 36.7m (7.9%) decrease year on year, chiefly due to lower sales volumes of the majority of fertilizers. The Chemical Segment’s external revenue represented 40.6% of the Group’s total revenue (compared with 41.0% in the same period of the previous year) and totalled PLN 315.7m, having fallen by PLN 28.4m (8.2%) year on year. The decline was driven mainly by lower sales prices and volumes of melamine and caprolactam. External revenue of the Energy Segment represented 3.0% of the Group’s total revenue (compared with 2.5% in the same period of the previous year) and totalled PLN 23.2m, having increased by PLN 2.1m (10.0%) year on year. The increase was mainly attributable to higher sales prices of electricity. The Other Activities segment’s external revenue represented 1.7% of the Group’s total revenue (1.4% in the same period of the previous year) and totalled PLN 13.0m, having decreased by PLN 1.2m (10.5%) year on year.

8.1. Agro Segment Situation in the agricultural sector In the third quarter of 2019: • Economic conditions in the agricultural sector slightly deteriorated – the average synthetic economic

21 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

index for agricultural production (SWKR) declined 7 0.2pp relative to the previous quarter and 0.4pp year on year; • In Europe, the prices of grains followed a downward trend; grain prices in Poland at the end of September were lower year on year, including the price indices for milling wheat, barley and maize, respectively, by 16.5%, 17.8% and 10.8%; • Demand for fertilizers was limited to current demand from the agricultural sector for winter season applications. Projections do not envisage any improvement of the economic conditions in Polish agriculture in the near term. Farm gate prices of most main plant products should continue at a low level, with potential slight increases driven by growing retail food prices reflecting consumers’ higher incomes. Disbursements (from mid-October 2019) of advances for direct payments to farmers may also stimulate demand for means of agricultural production, including fertilizers.

Farm gate prices of wheat, rye, maize and oilseed rape

1200 2 000 1 800 1 600 1000 1 400 1 200 800 1 000 PLN/tonne

800 PLN/tonne (oilseed rape) 600 600 400 200 400 0

wheat rye maize oilseed rape

Source: Ministry of Agriculture and Rural Development

Nitrogen fertilizers International markets In the third quarter of 2019, the average prices of most nitrogen fertilizers (except urea and UAN) on global markets were higher quarter on quarter. Based on Fertecon, Infofert, and World Fertilizer Market data, the average fertilizer prices were as follows: • Prilled ammonium nitrate (FOB Baltic/Black Sea bulk) – the average price was USD 201/tonne, up by approximately 3.1% quarter on quarter and down by approximately 2.4% year on year; In Q4 2019, the prices will most probably stay at the current level, with a slight growth trend possible; • Prilled bulk urea (FOB Baltic) – the average price was USD 249/tonne, down by about 0.8% quarter on quarter and by approximately 5.0% year on year. Urea prices should continue their upward trend in the coming months: • UAN 32% N (FOB Baltic) – the average price was USD 139/tonne, down by about 2.8% quarter on quarter and by approximately 24.5% year on year.

7 Synthetic economic index for agricultural production – a synthetic quantitative indicator illustrating changes in the market conditions for agricultural production. It is calculated as the arithmetic mean of the price differential index and the potential demand index. 22 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

UAN 32% prices should rise in the coming months; • Ammonium sulfate (FOB Black Sea steel grade) – the average price was approximately USD 114/tonne, up by about 6.5% quarter on quarter and by 0.8% year on year; The prices of ammonium sulfate are likely to stay flat in the coming months; • CAN (CFR dom Germany) – the average price was EUR 194/tonne, up by about 3.7% quarter on quarter on quarter and down by approximately 0.5% year on year. An uptrend in prices is expected in future periods.

Source: Fertecon, WFM

Source: Fertecon, WFM

23 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Source: Fertecon, WFM

Source: Fertecon, WFM

Source: Fertecon, Infofert.

In the third quarter of 2019, due to low sales margins, disrupted supplies of natural gas, technical problems, planned maintenance shutdowns and global political unrest, the following developments were also seen on the global fertilizer markets: • Suspension of production of: 24 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

− ammonia – in Trinidad and Tobago, Algeria, Saudi Arabia, and India; − urea – in Egypt, Russia, and India; − ammonium nitrate – in Egypt and Lithuania; − CAN – in Turkey; • Resumption of production of: − ammonia – in Russia, Saudi Arabia, Malaysia, and Slovakia; − urea – in Romania, Saudi Arabia, Malaysia, Slovakia, and Egypt; − ammonium nitrate – in Egypt, and Romania; − UAN – in Romania.

Polish market In the third quarter of 2019, demand for mineral fertilizers: • Was weak in the first half of the period due to the harvest season; • Slightly increased in the second half of the year as the autumn fertilizer application season commenced. Adverse weather conditions in some regions of the country in September 2019 caused delays in autumn fertilizer applications, leading to lower fertilizer demand compared with the same period last year. In the third quarter of 2019, the average retail prices of nitrogen fertilizers: • Significantly increased year on year: – ammonium nitrate and urea – by approximately 13%; – UAN – by over 16%; – ammonium sulfate – by approximately 9%; – calcium ammonium nitrate – by over 15%. • Remained flat quarter on quarter (except for UAN and ammonium sulfate prices, which fell by over 6%). In the fourth quarter of 2019, advance direct payments made to farmers and favourable weather conditions (a longer period of autumn fertilizer applications) may drive growth in demand and nitrogen fertilizer prices.

Source: Polish Institute of Agricultural and Food Economics; estimates for August and September 2019 based on market data.

25 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Source: Polish Institute of Agricultural and Food Economics; estimates for August and September 2019 based on market data.

Source: Data from points of sale and in-house calculations.

Source: Data from points of sale and in-house calculations.

26 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Source: Polish Institute of Agricultural and Food Economics; estimates for August and September 2019 based on market data.

Regulations in international trade in fertilizers On October 9th 2019, the Commission Implementing Regulation (EU) 2019/1688 of October 8th 2019 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of mixtures of urea and ammonium nitrate originating in Russia, Trinidad and Tobago and the United States of America was published in the Official Journal of the European Union. The anti-dumping duty was imposed for five years. Currently, prices per tonne of product by country are as follows: • Russia – Eurochem: EUR 27.77; Acron and other producers: EUR 42.47); • Trinidad and Tobago – Methanol Holdings and other producers: EUR 22.24; • USA – EUR 29.48 At the request from Fertilizers Europe submitted on June 21st 2019 on behalf of EU-based ammonium nitrate producers, the European Commission initiated a review of protective measures on imports of ammonium nitrate from Russia (expiring on August 23rd 2019). The duties in effect as at the date of opening the review will remain in force for the entire duration of the proceedings until a final decision is issued by the European Commission. The Ukrainian Inter-Departmental International Trade Commission (ICIT) initiated two safeguard investigations against imports of nitrogen and compound mineral fertilizers into Ukraine. Official notices of initiation of the proceedings were published on August 28th 2019.

Phosphate fertilizers In the third quarter of 2019, DAP prices 8 in international markets fell due to lower demand for phosphate fertilizers in Europe and China, with the average quarter-end price at USD 305/tonne. The average DAP price for the quarter was USD 317/tonne, down 25.2% (or USD 107/tonne) year on year and by 11.2% (or USD 40/tonne) quarter on quarter. Drops in phosphate fertilizer prices are expected in the fourth quarter due to the low season on the home market.

8 DAP – di-ammonium phosphate. 27 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Source: In-house data.

Source: In-house data.

Source: In-house data.

28 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

DAP/CSP prices in Poland [PLN/tonne] 2 200

2 000

1 800

1 600

1 400

1 200

DAP CSP

Source: In-house data.

Compound fertilizers In the third quarter of 2019, the prices of NPK fertilizers fell on international markets. The average price of NPK 15/15/15 fertilizers on the German market was PLN 1,133/tonne, a decrease of approximately 5% (PLN 60/tonne) year on year. A stable situation is expected on the domestic and international markets in the fourth quarter of the year considering: • low supply and pricing pressures from companies from the East; • lower imports of compound fertilizers from the East; • increased demand for Polish fertilizers in Ukraine (both high- and low-concentration NPK fertilizers).

NPK prices Poland vs NPK 15/15/15 prices Germany [PLN/tonne] 1 600 1 500 1 400 1 300 1 200 1 100 1 000 900

8/24/24 5/10/25

Source: In-house data.

Agro Segment’s financial results The Agro Segment’s EBIT (including inter-segment sales) for the period from July 1st to September 30th 2019 was PLN 70.7m, compared with a PLN 6.9m loss in the corresponding period of 2018.

29 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Table 5: Statement of comprehensive income Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep Jan 1 – Sep Change Item Change 2018 2019 2019 2018* 30 2019 30 2018* 1 2 3 4 5=(3-4)/4 6 7 8 9=(7-8)/8 1,039,384 809,183 645,976 806,928 -19.9% Segment’s revenue, including: 2,494,543 2,455,469 1.6% 690,617 513,009 424,966 461,634 -7.9% External sales 1,628,592 1,437,748 13.3% 348,767 296,174 221,010 345,294 -36.0% Intersegment sales 865,951 1,017,721 -14.9% (862,350) (684,101) (569,096) (808,137) -29.6% Segment’s costs, including: (2,115,547) (2,353,129) -10.1% Cost of products, merchandise (445,475) (331,079) (301,194) (425,132) -29.2% and materials sold to external (1,077,748) (1,190,477) -9.5% customers (366,673) (301,280) (225,756) (331,149) -31.8% Intersegment sales (893,709) (1,004,544) -11.0% (50,202) (51,742) (42,146) (51,856) -18.7% Distribution costs (144,090) (158,108) -8.9% 177,034 125,082 76,880 (1,209) - Segment’s gross profit/(loss) 378,996 102,340 270.3% (5,519) (6,217) (5,816) (5,210) 11.6% Administrative expenses (17,552) (17,486) 0.4% 487 94 (323) (432) -25.2% Net other income/(expenses) 258 (572) - Segment’s operating 172,002 118,959 70,741 (6,851) - 361,702 84,282 329.2% profit/(loss) [EBIT] 25,542 23,364 24,071 17,925 34.3% Depreciation and amortisation 72,977 51,628 41.4% Segment’s operating profit/(loss) before 197,544 142,323 94,812 11,074 756.2% 434,679 135,910 219.8% depreciation and amortisation [EBITDA] 45,443 72,231 75,188 67,189 11.9% CAPEX 192,862 166,134 16.1%

Agro Segment's external revenue by product group

Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Item Change Amount Structure Amount Structure 1 2 3 4 5 6=2/4 Main commercial products 358,622 84.4% 400,723 86.8% 89.5% Other commercial products 21,961 5.2% 16,022 3.5% 137.1% Segment’s other revenue 44,383 10.4% 44,889 9.7% 98.9% Total 424,966 100.0% 461,634 100.0% 92.1%

The Agro Segment in the third quarter of 2019: • external revenue was PLN 425.0m, having decreased by PLN 36.7m (7.9%) year on year, with cost of products, merchandise and materials sold to external customers down by PLN 123.9m (29.2%) and distribution costs down by PLN 9.7m (18.7%); • profit on external sales was PLN 81.6m, up by PLN 97.0m year on year; • profit margin on external sales was 19.2%, up by 22.5pp year on year. In the third quarter of 2019, a year-on-year decrease in the Agro Segment’s revenue was mainly attributable to lower sales volumes of most fertilizers.

30 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Share of exports in Agro Segment’s product groups Share of exports Item Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 1 2 3 Main commercial products 23.8% 30.0% Other commercial products 6.7% 11.1% Segment’s other revenue 1.4% 5.5% Segment’s total revenue 20.6% 26.9%

The share of exports in the Agro Segment’s revenue in the third quarter of 2019 decreased by 6.3pp, mainly on a 51.9% decrease in revenue from exports of ammonium nitrate.

Agro Segment’s capital expenditure In the third quarter of 2019, capital expenditure in the Agro Segment was PLN 75.2m, up by PLN 8.0m year on year. The largest items of capital expenditure were: • Construction of the production unit for granulated fertilizers based on ammonium nitrate; • Upgrade of the nitric acid unit and construction of new facilities for nitric acid production, neutralisation and production of new fertilizers based on nitric acid;

• Upgrade of the unit for CO 2 absorption in potassium carbonate solutions – Line II and III of the Gas Pre- Treatment System.

8.2. Chemicals Segment In the third quarter of 2019: • The chemical industry assessed the economic climate as positive; • The average PMI 9 index for the manufacturing sector in Poland was 48.0 points and remained relatively unchanged on the second quarter of 2019; • For the eurozone, the average PMI was 46.4; • The general business climate indicator of Statistics Poland (GUS) 10 for the ‘manufacture of chemicals and chemical products’ category in Poland was +15.1, a slight decrease quarter on quarter and year on year; • Stock market data show a deterioration in the chemical sector, with the market cap of WIG-CHEMIA index constituents down by 18.6%; • The Chemical Activity Barometer (CAB) (developed and published by the American Chemistry Council) points to a slight deterioration in business confidence in the US chemical sector; the CAB indicator fell 0.2% year on year in September 2019, while in the three consecutive months of the reporting period it showed a 0.4% gain, a 0.7% fall and a 0.6% gain, respectively (month on month).

9PMI (purchasing managers index) for manufacturing sector – an indicator of economic activity in individual countries, published by the Markit agency. It is based on surveys among managers. Questions concern new orders, production volumes, employment numbers, supply and stock volumes. The threshold value separating an increase from a decrease in activity is set at 50 points 10 The general business climate indicator of Statistics Poland (GUS) shows the sentiment prevailing among entrepreneurs operating in a given industry. The methodology for business climate surveying by Statistics Poland (with the use of a business climate test) consists in collecting entrepreneurs’ opinions on the current and future situation of their enterprises in the following areas: order book, production, financial condition, employment, prices, capex, and barriers. The highest and lowest values of the indicator are +100 and -100. The threshold value is set at 0. A positive value of the indicator means a positive climate and a negative one means a negative one. 31 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Melamine Developments on global markets of melamine in the third quarter of 2019: • Strong supply and varying demand depending on the end user, with the largest demand recorded in the wooden panels industry and, to a lesser extent, in the automotive industry. This trend should continue until November 2019; • A significant decline in activity in South East Asia due to the rainy season; • Increased supply of melamine in India, leading to lower imports; • Presence of melamine imported from Russia, the Middle East and, to a lesser extent, from China (due to anti-dumping duties in force) in the European market. In Southern Europe, imports from China were replaced with Japanese melamine. However, the offering from Eastern Europe proved the most competitive on the spot market; • European players entered into negotiations on melamine prices for the fourth quarter of 2019. Buyers are seeking price reductions, but producers believe prices should remain at current levels given a stable market situation; • Overhaul of a Dutch melamine producer’s unit in Geleen; • Four-week overhaul of a melamine unit by an Austrian manufacturer commenced at the end of August 2019; • Melamine production stoppage at plants owned by two Chinese producers.

In the third quarter of 2019, the average melamine prices in Europe (according to ICIS 11 ): • Fell by 2.5% (EUR 39/tonne) quarter on quarter and by 9.7% (EUR 160/tonnes) year on year in the case of contract prices;

• Fell by 3.8% (EUR 44/tonne) quarter on quarter and by 20.0% (EUR 262/tonne) year on year in the case of spot prices.

Source: ICIS Pricing.

11 ICIS – Independent Chemical Information Service. 32 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Caprolactam In the third quarter of 2019, caprolactam prices were in a downtrend on global markets (except for July prices of flaked caprolactam intended for export in the US and Europe, August prices of flaked caprolactam intended for export in the US, and contract prices in China and Taiwan), mainly due to: • oversupply; • low purchasing activity; • lower consumption in the automotive industry; • volatile crude oil prices; • trade war between US and China; • tensions in the Middle East; • uncertainties related to Brexit (including uncertainties surrounding sales of products to end-use markets in the UK). The end of the third quarter of 2019 saw a series of price declines due to lower demand.

Caprolactam prices in the third quarter of 2019 A. Year on year: • In Asia – the prices of imported caprolactam in China fell by ca. 30.6% (USD 662/tonne), and in Taiwan – by 31.5% (USD 674/tonne); • In Europe: – prices of liquid caprolactam in EUR-denominated transactions (average for domestic large and medium customers according to the Wood Mackenzie Chemicals classification) decreased by approximately 10.6% (EUR 220/tonne), and in USD-denominated transactions – by approximately 14.4% (USD 349/tonne); – Export contract prices of flaked caprolactam (average for Flake Export according to Wood Mackenzie Chemical classification) fell in EUR-denominated transactions by 31.1% (EUR 542/tonne), and in USD-denominated transactions – by 34.1% (USD 692/tonne); • In the US – export contract prices of flaked caprolactam fell by 34.6% (USD 692/tonne); B. Quarter on quarter: • In Asia – the prices of imported caprolactam in China fell by ca. 11.8% (USD 200/tonne), and in Taiwan – by 12.0% (USD 201/tonne); • In Europe: – prices of liquid caprolactam in EUR-denominated transactions (average for domestic large and medium customers according to the Wood Mackenzie Chemicals classification) decreased by approximately 2.0% (EUR 68/tonne), and in USD-denominated transactions – by approximately 4.5% (USD 97/tonne); – export contract prices of flaked caprolactam (average for Flake Export according to Wood Mackenzie Chemical classification) – fell in EUR-denominated transactions by 10.4% (EUR 140/tonne), and in USD-denominated transactions – by 11.3% (USD 171/tonne); • In the US – export contract prices of flaked caprolactam fell by 11.5% (USD 170/tonne).

33 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Source: Wood Mackenzie Chemicals

Source: Wood Mackenzie Chemicals

Source: Wood Mackenzie Chemicals

In the third quarter of 2019: • In China three production lines were shut down for planned maintenance, production was resumed on eight lines and production was cut on four lines due to negative profit margins and low demand; • In Taiwan one production line was shut down due to low demand; • In Japan one unit was shut down for maintenance;

34 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

• A Chinese company announced the acquisition of six Hongye Group companies. The acquired assets include a caprolactam unit (200,000 tonnes per year) and a PA 6 unit (80,000 tonnes per year). The acquisition process should be completed by the end of 2019; • The acquisition of Solvay’s PA 66 division by Domo was announced. At the same time BASF entered the game. It wants to acquire a 50% interest in a JV established by Solvay and Invista Butachima to obtain access to adiponitrile production. BASF also holds a 51% interest in a JV with Domo. The acquisition of Solvay will thus strengthen both Domo and BASF, complementing the companies’ portfolios; • A Chinese producer announced plans to construct a caprolactam unit with a capacity of 300,000 tonnes per year. Commercial operation is planned to commence in June 2021; • A Chinese producer and the Qingzhou City government signed documents for a project to build an industrial complex including a caprolactam unit and a PA6 unit, with a capacity of 1,200 tonnes a year each; • On August 8th 2019, a Chinese caprolactam producer signed an agreement with the authorities of China’s Ningxia Hui Autonomous Region to construct a complex consisting of a plant for the production of caprolactam, PA 6 polymer and PA 6 fibres; • On September 1st 2019, a government-supported Chinese company signed an agreement with the Shandong pilot free trade zone to invest USD 500m in PA6 production. The Shaaxi Province Environmental Protection Office approved the project to build a new cyclohexanone unit. The two- phase project commenced on September 10th 2019. The first phase provides for the construction of a cyclohexanone unit (300,000 tonnes per year), whereas the second phase envisages the construction of two lines with a capacity of 100,000 tonnes per year and a caprolactam unit (200,000 tonnes per year). Whether both phases will be executed has not been confirmed to date. In the fourth quarter of 2019, the caprolactam market will be driven by: • Developments in the trade war between China and the US; • Geopolitical situation in the Middle East; • Conditions in the automotive industry; • Completion of Brexit. Gradual additions to caprolactam production capacity in China since 2012 are having a material impact on the global balance of caprolactam demand and supply. According to CCF Group (China Chemical Fiber Group), at the end of 2018 the total caprolactam production capacity in China was 3,550 thousand tonnes per year, with plans announced to launch new production lines with a total capacity of 880,000 in 2019. Regulations in international trade in caprolactam China is probably still assessing the situation to decide whether to extend the effective period of (or lift) the anti-dumping duty on caprolactam imports from the European Union and the US. The group of affected exporters includes Grupa Azoty Zakłady Azotowe Puławy S.A., for which the rate has been set at 4.4%. In the reporting period, the Chinese government proposed to introduce further duty rates (5%–10%) on imports from the US, including products in the polyamide chain. The duties would be introduced in two stages by December 2019. Negotiations between Chinese and US governments may result in the postponement or cancellation of the duty rates.

Hydrogen peroxide market In the third quarter of 2019, the contract price of hydrogen peroxide in Europe remained unchanged from the previous quarter, and rose by approximately 14.2% (by EUR 80 per tonne on average) year on year.

35 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Negotiations of contract prices for 2020 in Europe should enter the decisive phase at the end of this year. The key issue will be the expectations of price rises underpinned by rising commodity prices and the need to increase margins to finance investment in new production capacities that would meet the growing demand. In the third quarter of 2019, demand for hydrogen peroxide in Europe was strong and stable. The only exception was September, which is a month when demand tends to dip and wood pulp producers carry out maintenance work that typically lasts until mid-November. An overview of the global hydrogen peroxide market in the third quarter of 2019: • A Russian producer is making preparations to increase its hydrogen peroxide capacity by adding a new unit of 50,000 tonnes per year (100% H 2O2). The unit is expected to come on stream in 2022 and will make Russia self-sufficient in meeting demand for the product; • A leading US-based producer of organic peroxides announced the acquisition of all shares in a producer of hydrogen peroxide (H 2O2) with various properties and concentrations in Turkey. Slated for 2019, the transaction will increase the company’s share in the global hydrogen peroxide market; • A German producer is set to complete a project to increase its hydrogen peroxide production capacity from 115,000 tonnes per year (100% H 2O2) to 175 thousand tonnes per year in 2020; • On July 9th 2019, a Belgian producer announced a plan to increase its hydrogen peroxide production capacities in Belgium, Germany, and Finland. The plan provides for the project to be completed by the end of 2019, with the additional volumes intended for export; • A new hydrogen peroxide unit was brought on stream by an Egyptian producer in Giza in July 2019. The new unit has a capacity of 13,000 tonnes per year (100% H 2O2). Despite its small size, the unit may contribute to increasing Egypt’s self-sufficiency and lead to a reduction in imports from Europe, North Africa, and the Middle East; • Paper pulp manufacturers in Spain, Sweden, Germany and the Czech Republic are increasing or planning to increase their capacities by the end of 2019. Once implemented, these projects will increase demand for hydrogen peroxide in Europe as of 2020.

Reductants market 12 (including AdBlue ®) According to estimates by Integer Research analysts, in the third quarter of 2019 AdBlue consumption in Europe was at 1.052bn litres, up by 18.6% year on year. Projected AdBlue consumption in 2019: • In Europe – 4bn litres, an increase of 18% year on year; • In Europe – 176m litres, an increase of 17% year on year.

The situation in the RedNO x market was stable in the third quarter of 2019, although demand weakened, mainly due to: • Lower demand for reducing agents from the energy sector; higher demand is expected only in Q4 2019;

12 RedNOx® reductants, including: NOXy®, a complementary line offering AdBlue® (registered trademark of Verband der Automobilindustrie e. V. (VDA)), PULNOx® (40% and 45% urea solutions), LIKAM® (25% ammonia water) .

36 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

• Especially in the first part of the quarter, increasing prices of urea used in AdBlue production, remaining above EUR 300/tonne, which led to higher AdBlue prices on foreign markets, thus decreasing import volumes. In the third quarter of 2019, prices of RedNOx products on foreign markets, due to gas prices and low demand for the reducing agent, remained within the range of EUR 80–90/tonne for LIKAM and at EUR 120/tonne for Pulnox.

At Grupa Azoty Zakłady Azotowe Puławy S.A., prices of RedNO x products are maintained at a stable level, securing the Company’s interests and enabling supplies to customers to be made despite supply constraints caused by maintenance shutdowns of the Grupa Azoty Group’s urea units. Prices are expected to remain at a similar level in next quarter.

ONECON/carbon dioxide market Grupa Azoty Zakłady Azotowe Puławy S.A. is expanding its offering of carbon dioxide sold under the ONECON brand. Food-grade carbon dioxide is obtained from surpluses from of natural gas processing. Following the completion of an investment project in the first half of 2019, the production of industrial carbon dioxide was increased by 150 tonnes per day, to 370 tonnes per day. In the third quarter of 2019, on the ONECON market: • High demand was observed due to the seasonal nature of the product (drink carbonation, greenhouses, etc.); • There were no significant supply limitations (unlike in 2018); • Prices remained close to those recorded in the previous quarters of 2019. In the next quarter, consumption of carbon dioxide will be decreasing as the off-season approaches.

Sulfuric acid market The third quarter of 2019 saw another drop in prices of sulfuric acid. At the end of the period, the average price was USD 34/tonne, down USD 35/tonne year on year and USD 30/tonne quarter to quarter, reflecting the continuing high supply of the acid on global markets. In Q4 2019, the stable economic conditions on the domestic market are expected to continue, and, consequently, margins on sulfuric acid sales are expected to be stable as well. On global markets, prices of sulfuric acid are likely to continue to fall further.

Sulfur and sulfuric acid prices [USD/tonne] 200

160

120

80

40

0

Sulphuric acid - FOB Bulk, NW Europe Spot / FOB Belgium WFM Sulphur NW Europe CPT Fertecon

Source: In-house data.

37 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Chemicals Segment’s financial results In the third quarter of 2019, the Chemicals Segment’s EBIT (including inter-segment sales) was PLN 18.7m, compared with a loss of PLN (-)0.8m in the corresponding period of 2018.

Table 6: Statement of comprehensive income Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep Jan 1 – Sep Change Item Change 2018 2019 2019 2018* 30 2019 30 2018* 1 2 3 4 5=(3-4)/4 6 7 8 9=(7-8)/8 651,731 576,382 479,401 578,071 -17.1% Segment’s revenue, including: 1,707,514 1,781,070 -4.1% 346,362 341,172 315,679 344,056 -8.2% External sales 1,003,213 1,042,989 -3.8% 305,369 235,210 163,722 234,015 -30.0% Intersegment sales 704,301 738,081 -4.6% (572,919) (514,977) (459,458) (577,374) -20.4% Segment’s costs, including: (1,547,354) (1,680,236) -7.9% Cost of products, merchandise (272,743) (270,735) (284,575) (315,318) -9.7% and materials sold to external (828,053) (889,272) -6.9% customers (287,463) (230,104) (158,976) (248,160) -35.9% Intersegment sales (676,543) (751,258) -9.9% (12,713) (14,138) (15,907) (13,896) 14.5% Distribution costs (42,758) (39,706) 7.7% 78,812 61,405 19,943 697 2761.3% Segment’s gross profit/(loss) 160,160 100,834 58.8% (2,361) (2,415) (2,993) (1,538) 94.6% Administrative expenses (7,769) (4,897) 58.6% (45) (3,170) 1,798 67 2583.6% Net other income/(expenses) (1,417) (6,122) -76.9% Segment’s operating 76,406 55,820 18,748 (774) - 150,974 89,815 68.1% profit/(loss) [EBIT] 18,608 18,765 18,310 18,487 -1.0% Depreciation and amortisation 55,683 55,532 0.3% Segment’ s operating profit/(loss) before 95,014 74,585 37,058 17,713 109.2% 206,657 145,347 42.2% depreciation and amortisation [EBITDA] 5,904 15,804 19,658 14,942 31.6% CAPEX 41,366 29,495 40.2%

Chemicals Segment's external revenue by product group Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Item Change Amount Structure Amount Structure 1 2 3 4 5 6=2/4 Main commercial products 314,384 99.6% 340,974 99.1% 92.2% Other commercial products 617 0.2% 2,081 0.6% 29.6% Segment’s other revenue 678 0.2% 1,001 0.3% 67.7% Total 315,679 100.0% 344,056 100.0% 91.8%

The Chemicals Segment in the third quarter of 2019: • External revenue was PLN 315.7m, having decreased by PLN 28.4m (8.2%) year on year, with cost of products, merchandise and materials sold to external customers lower by PLN 30.7m (9.7%) and distribution costs up by PLN 2.0m (14.5%); • Profit on external sales was PLN 15.2m, up by PLN 0.4m (2.4%) year on year; • Profit margin on external sales was 4.8%, up by 0.5pp year on year. In the third quarter of 2019, a year-on-year decrease in revenue was mainly attributable to lower prices and volumes of melamine and caprolactam.

38 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Share of exports in Chemicals Segment’s product groups Share of exports Item Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 1 2 3 Main commercial products 50.5% 52.2% Other commercial products 0.0% 0.0% Segment’s other revenue 38.5% 36.2% Segment’s total revenue 50.4% 51.9%

The share of exports in the Chemicals Segment’s revenue in the third quarter of 2019 fell by 1.5pp, mainly on a 17.6% decrease in revenue from exports of melamine and a 7.2% decrease in revenue from exports of caprolactam.

Chemicals Segment’s capital expenditure In the third quarter of 2019, capital expenditure in the Chemicals Segment was PLN 19.7m, up by PLN 4.8m year on year. The largest amounts were spent on improvements.

8.3. Energy Segment

Energy Segment’s financial results In the third quarter of 2019, the Energy Segment’s EBIT (including inter-segment sales) was PLN (-)3.6m, compared with PLN (-)5.0m in the corresponding period of 2018.

Table 7: Statement of comprehensive income Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep Jan 1 – Sep Change Item Change 2018 2019 2019 2018* 30 2019 30 2018* 1 2 3 4 5=(3-4)/4 6 7 8 9=(7-8)/8 478,546 398,331 311,060 422,743 -26.4% Segment’s revenue, including: 1,187,937 1,340,315 -11.4% 20,893 17,409 23,185 21,082 10.0% External sales 61,487 80,818 -23.9% 457,653 380,922 287,875 401,661 -28.3% Intersegment sales 1,126,450 1,259,497 -10.6% (480,144) (400,352) (311,897) (423,411) -26.3% Segment’s costs, including: (1,192,393) (1,339,288) -11.0% Cost of products, merchandise (22,472) (19,411) (24,024) (21,723) 10.6% and materials sold to external (65,907) (79,655) -17.3% customers (457,653) (380,922) (287,875) (401,661) -28.3% Intersegment sales (1,126,450) (1,259,497) -10.6% (19) (19) 2 (27) - Distribution costs (36) (136) -73.5% (1,598) (2,021) (837) (668) 25.3% Segment’s gross profit/(loss) (4,456) 1,027 - (1,074) (1,219) (992) (1,337) -25.8% Administrative expenses (3,285) (4,458) -26.3% 1,516 (1,585) (1,750) (2,994) -41.5% Net other income/(expenses) (1,819) (2,394) -24.0% Segment’s operating (1,156) (4,825) (3,579) (4,999) -28.4% (9,560) (5,825) 64.1% profit/(loss) [EBIT] 10,802 10,796 10,610 10,731 -1.1% Depreciation and amortisation 32,208 31,421 2.5% Segment’ s operating profit/(loss) before 9,646 5,971 7,031 5,732 22.7% 22,648 25,596 -11.5% depreciation and amortisation [EBITDA] 14,399 11,711 19,369 24,449 -20.8% CAPEX 45,479 50,476 -9.9%

39 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Energy Segment's external revenue by product group Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Item Change Amount Structure Amount Structure 1 2 3 4 5 6=2/4 Main commercial products 4,281 18.5% 4,272 20.3% 100.2% Other commercial products 353 1.5% 298 1.4% 118.5% Segment’s other revenue 18,551 80.0% 16,512 78.3% 112.3% Total 23,185 100.0% 21,082 100.0% 110.0%

The Energy Segment in the third quarter of 2019: • External revenue was PLN 23.2m, having increased by PLN 2.1m (10.0%) year on year, with cost of products, merchandise and materials sold to external customers higher by PLN 2.3m (10.6%); • Profit/loss on external sales was PLN (-)0.8m, up by PLN 0.2m year on year; • Profit margin on external sales was (-)3.6%, down by 0.4 pp year on year. In Q3 2019, the year-on-year revenue increase was mainly attributable to higher selling prices of electricity.

Energy Segment’s capital expenditure In the third quarter of 2019, capital expenditure in the Energy Segment was PLN 19.4m, down by PLN 5.0m year on year. The largest capital projects were the construction of a power generation unit and upgrade of steam generator OP-215 no. 2.

Important information In connection with the project to construct a new coal-fired power generation unit, the President of URE issued to Grupa Azoty Zakłady Azotowe Puławy S.A. a letter of promise to grant an amended licence: • On July 16th 2019 – for heat generation, taking into account the construction of another cogenerating unit with installed thermal capacity of 277.407 MW. The letter of promise to amend the licence is valid until July 16th 2024; • On July 22nd 2019 – for electricity generation, taking into account the construction of another cogenerating unit with installed generating capacity (TPU) of 100 MW. The letter of promise to amend the licence is valid until December 31st 2023. On August 13th 2019, the President of URE approved the Heat Tariff for Grupa Azoty Zakłady Azotowe Puławy S.A. The Tariff is valid until August 31st 2020.

New legal regulations applicable to trade in the Energy Segment’s products The Act Amending the Excise Tax Act and Certain Other Acts (referred to as the Electricity Act) of December 28th 2018, as amended on February 21st 2019, June 13th, July 19th and July 31st 2019, imposes an obligation to reduce electricity prices for end users in 2019 to the 2018 level. The price reductions and compensation related to purchased/sold electricity, as specified in the Electricity Act, are determined for different customer groups for H1 and H2 2019. On July 19th 2019, an Implementing Regulation to the Electricity Act was announced. As part of the Announcement of the President of URE and the Minister of Energy’s Public Notice, the data necessary to calculate the price difference was published. In October 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. applied to Zarządca Rozliczeń S.A. for compensation for the difference in the price of electricity sold to end users, in an amount of PLN 7.5m, for the electricity sold in H1 2019. 40 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Grupa Azoty Zakłady Azotowe Puławy S.A. will apply to Zarządca Rozliczeń S.A. for financial compensation for the electricity sold in the second half of 2019 on a gradual basis given the lack of publicly available data necessary for all calculations. The deadline for submitting the application for the second half of 2019 is January 30th 2020. In the third quarter of 2019, with respect to both sale and purchase of electricity Grupa Azoty Zakłady Azotowe Puławy S.A. applied the provisions of the Electricity Act relating to end users. On July 19th 2019, the Act on the compensation scheme for energy-intensive sectors and subsectors took effect. Grupa Azoty Zakłady Azotowe Puławy S.A., being an energy-intensive entity under the Act, is entitled to seek compensation for passing the cost of purchase of emission allowances onto the price of electricity used for production purposes in energy-intensive sectors or subsectors. The Company will seek financial compensation under the Act.

8.4. Other Activities Segment Other Activities Segment’s financial results In the third quarter of 2019, the Other Activities Segment’s EBIT (including inter-segment sales) was PLN (-)6.1m, compared with PLN (+)3.5m in the corresponding period of 2018.

Table 8: Statement of comprehensive income Jan 1 – Mar 31 Apr 1 – Jun 30 Jul 1 – Sep 30 Jul 1 – Sep 30 Jan 1 – Sep Jan 1 – Sep Change Item Change 2018 2019 2019 2018* 30 2019 30 2018* 1 2 3 4 5=(3-4)/4 6 7 8 9=(7-8)/8 29,677 27,813 27,738 25,945 6.9% Segment’s revenue, including: 85,228 83,254 2.4% 10,813 9,950 13,022 11,786 10.5% External sales 33,785 36,450 -7.3% 18,864 17,863 14,716 14,159 3.9% Intersegment sales 51,443 46,804 9.9% (27,847) (29,904) (27,939) (16,005) 74.6% Segment’s costs, including: (85,690) (76,000) 12.8% Cost of products, merchandise (8,721) (11,724) (12,978) (1,824) 611.5% and materials sold to external (33,423) (28,694) 16.5% customers (18,864) (17,863) (14,716) (14,159) 3.9% Intersegment sales (51,443) (46,804) 9.9% (262) (317) (245) (22) 1013.6% Distribution costs (824) (502) 64.1% 1,830 (2,091) (201) 9,940 - Segment’s gross profit/(loss) (462) 7,254 - (6,251) (7,019) (6,294) (5,789) 8.7% Administrative expenses (19,564) (15,681) 24.8% (32) (3,066) 391 (660) - Net other income/(expenses) (2,707) 210 - Segment’s operating (4,453) (12,176) (6,104) 3,491 - (22,733) (8,217) 176.7% profit/(loss) [EBIT] 3,620 6,032 5,262 4,154 26.7% Depreciation and amortisation 14,914 12,060 23.7% Segment’s operating profit/(loss) before (833) (6,144) (842) 7,645 - (7,819) 3,843 - depreciation and amortisation [EBITDA] 7,147 5,890 6,952 15,064 -53.9% CAPEX 19,989 58,660 -65.9%

External revenue, by product: Jul 1 – Sep 30 2019 Jul 1 – Sep 30 2018 Item Change Amount Structure Amount Structure 1 2 3 4 5 6=2/4 Main commercial products 929 7.1% 1,949 16.5% 47.7% Segment’s other revenue 12,093 92.9% 9,837 83.5% 122.9% Total 13,022 100.0% 11,786 100.0% 110.5%

41 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

The Other Activities Segment in the third quarter of 2019: • External revenue was PLN 13.0m, having increased by PLN 1.2m (10.5%) year on year, with cost of products, merchandise and materials sold to external customers higher by PLN 11.2m (611.5%); • Profit/loss on external sales was PLN (-)0.2m, down by PLN 10.1m year on year; • Profit margin on external sales was -1.5%, down by 85.9 pp year on year.

Other Activities Segment’s capital expenditure In the third quarter of 2019, capital expenditure in the Other Activities Segment was PLN 7.0m, down by PLN 8.1m relative to the third quarter of 2018. The largest expenditure was incurred on the inter-segment project to construct a unit for manufacture of granulated fertilizers based on ammonium nitrate (the Agro Segment is the primary sponsor of the project).

9. Position of the Grupa Azoty Zakłady Azotowe Puławy S.A's Management Board on the feasibility of delivering performance forecasts

On October 29th 2019, the Management Board of Grupa Azoty Zakłady Azotowe Puławy S.A. published a forecast of the Grupa Azoty Zakłady Azotowe Puławy Group’s financial performance in the reporting period. The performance recorded and presented in this report for the three and nine months ended September 30th 2019 does not differ materially from the estimates published earlier.

10. Pending court, arbitration or administrative proceedings The total value of claims brought by or against any of the Grupa Azoty Zakłady Azotowe PUŁAWY Group companies in court proceedings pending as at September 30th 2019:

Value of cases:

brought by the Company brought against the company Company [PLN ‘000] [EUR ‘000] [PLN ‘000] [EUR ‘000] Grupa Azoty Zakłady Azotowe Puławy S.A. 20,349*) 0 2,880 0 GZNF Fosfory Sp. z o.o. 1,535 0 18,864**) 0 Zakłady Azotowe Chorzów S.A. 144 0 42 0 AGROCHEM PUŁAWY Sp. z o.o. 5,945 0 73 0 PROZAP Sp. z o.o. 0 0 0 0 REMZAP Sp. z o.o. 0 0 28 0 SCF Natural Sp. z o.o. 0 0 0 0 Total 27,973 0 21,887 0

*) Including: Claim against Ciech S.A. filed by Grupa Azoty Zakłady Azotowe Puławy S.A., seeking compensation of PLN 18,864 thousand from Ciech S.A. for breach of warranties given in the agreement for sale of shares in GZNF Fosfory Sp. z o.o. The case is pending. **) Claim brought by Ciech S.A. against GZNF Fosfory Sp. z o.o. for redress of damage – the proceedings are suspended until the dispute between Grupa Azoty Zakłady Azotowe Puławy S.A. and Ciech S.A. is resolved.

42 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

11. Sureties for bank borrowings and guarantees issued by the Group

Grupa Azoty Zakłady Azotowe Puławy S.A. As at September 30th 2019, the amount of all sureties and guarantees provided by Grupa Azoty Zakłady Azotowe Puławy S.A. and its subsidiaries to support bank borrowings and other debt instruments exceeded 10% of Grupa Azoty Zakłady Azotowe Puławy S.A.’s equity. In the three months ended September 30th 2019, no guarantees were provided by or at the request of Grupa Azoty Zakłady Azotowe Puławy S.A.

Guarantees and sureties effective at Grupa Azoty Zakłady Azotowe Puławy S.A. as at September 30th 2019 Total Relationship surety/guarantee Secured debtor Beneficiary Issue date Expiry date Financial terms between the Purpose amount as at the parties reporting date PKO BP S.A. (acting as the Surety provided Credit Facility Grupa Azoty S.A is for a fee Agent the parent of calculated as a Security for credit Grupa Azoty S.A. representing also PLN 1.2bn Jun 29 2018 Jun 29 2028 Grupa Azoty percentage of the facility the other lenders, Zakłady Azotowe surety amount i.e. BGK S.A., BZ Puławy effectively granted WBK S.A., ING BŚ S.A.)

Surety provided Grupa Azoty S.A is for a fee the parent of calculated as a Security for Grupa Azoty S.A. PKO BP S.A. PLN 124.0m Jun 29 2018 Sep 30 2025 Grupa Azoty percentage of the overdraft facility Zakłady Azotowe surety amount Puławy effectively granted

Surety provided Grupa Azoty S.A is for a fee the parent of Security for multi- calculated as a Grupa Azoty S.A. PKO BP S.A. PLN 96.0m Jun 29 2018 Sep 30 2028 Grupa Azoty purpose credit percentage of the Zakłady Azotowe facility surety amount Puławy effectively granted

Guarantee Grupa Azoty S.A is provided for a fee the parent of Security for credit Grupa Azoty S.A. EIB PLN 220.0m May 28 2015 May 28 2029 calculated as a Grupa Azoty facility percentage of the Zakłady Azotowe guarantee amount Puławy

The guarantee expires upon the expiry of the Grupa Azoty S.A is security term, Guarantee the parent of which ends upon provided for a fee Grupa Azoty Security for credit Grupa Azoty S.A. EBRD PLN 60.0m May 28 2015 repayment of the calculated as a Zakłady Azotowe facility debt under the percentage of the Puławy, EBRD is a credit facility guarantee amount shareholder of agreement, Grupa Azoty S.A. concluded for a period of 10 years.

Guarantee Grupa Azoty S.A is provided for a fee the parent of Security for credit Grupa Azoty S.A. EIB EUR 58.0m Jan 25 2018 May 5 2031 calculated as a Grupa Azoty facility percentage of the Zakłady Azotowe guarantee amount Puławy

The guarantee expires upon the expiry of the Grupa Azoty S.A is security term, Guarantee the parent of which ends upon provided for a fee Grupa Azoty Security for credit Grupa Azoty S.A. EBRD PLN 200.0m Jul 26 2018 repayment of the calculated as a Zakłady Azotowe facility debt under the percentage of the Puławy, EBRD is a credit facility guarantee amount shareholder of agreement, Grupa Azoty S.A. concluded for a period of 10 years. 43 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Sureties and guarantees provided on behalf of Grupa Azoty Zakłady Azotowe Puławy S.A. and effective as at September 30th 2019

Total Relationship surety/guarantee Extended by Beneficiary Issue date Expiry date Financial terms between the Purpose amount as at the parties reporting date

Guarantee security for Head of Fiscal provided for a fee PLN 363.5 payment of GA Puławy Administration Dec 5 2018 Mar 29 2020 calculated as a none thousand audiotext lottery Chamber percentage of the prizes guarantee amount

Guarantees and sureties received under sale and purchase agreements in the period from July 1st to September 30th 2019 and effective as at September 30th 2019 Sureties and guarantees received in the third quarter of 2019 13 : • Under sale agreements, at the Grupa Azoty Zakłady Azotowe Puławy Group, amounted to PLN 3,485 thousand (including above PLN 500 thousand: PLN 2,000 thousand), including PLN 3,485 thousand at Grupa Azoty Zakłady Azotowe Puławy S.A.; (including above PLN 500 thousand: PLN 2,000 thousand); • Under purchase agreements, at the Grupa Azoty Zakłady Azotowe Puławy Group, amounted to PLN 12,546.50 thousand (including above PLN 500 thousand: PLN 6,776.98 thousand), including PLN 12,541.17 thousand at Grupa Azoty Zakłady Azotowe Puławy S.A. (including above PLN 500 thousand: PLN 6,776.98 thousand).

Guarantees and sureties Grupa Azoty Zakłady Azotowe Puławy Group Grupa Azoty Zakłady Azotowe Puławy S.A. received in Q3 2019 PLN '000 Total Over PLN 500,000 Total Over PLN 500,000

under sale agreements 3,485.00 2,000.00 3,485.00 2,000.00

under purchase agreements 12,546.50 6,776.98 12,541.17 6,776.98

Grupa Azoty Zakłady Azotowe Puławy Group companies Sureties and guarantees effective at Grupa Azoty Puławy Group Companies as at September 30th 2019

Total Relationship surety/guarantee Secured obligor Beneficiary Issue date Expiry date Financial terms between the Purpose amount as at the parties reporting date

AGROCHEM PUŁAWY Sp. z o.o. Currently, there is no relationship sureties for bank Bank Spółdzielczy Individual PLN 536.0 thousand Jun 1 2015 May 15 2035 none between the loans of a then- w Więcborku obligor and the employee company REMZAP Sp. z o.o.

Grupa Azoty contractual blank promissory related REMZAP Sp. z o.o. Zakłady Azotowe PLN 2,048.0 thousand Aug 21 2018 Jul 14 2025 guarantee note undertaking Puławy S.A.

13 Includes sureties and guarantees received in Q3 2019 and expired before September 30th 2019, as well as sureties and guarantees effective as at September 30th 2019 (excluding those issued before January 1st 2019 and effective in 2019). 44 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

blank promissory note and power State-owned REMZAP Sp. z o.o. PKN Orlen S.A. PLN 359.6 thousand Dec 8 2015 Nov 14 2019 of attorney to company bank account PROZAP Sp. z o.o. payment of the Grupa Azoty entire amount to Grupa Azoty PROZAP Sp. z o.o. Zakłady Azotowe PLN 375.0 thousand Apr 10 2017 Oct 20 2020 account at PKO Group company Police S.A. BP transfer of 20% of Air Liquide Global not a Grupa bond value under PROZAP Sp. z o.o. E&C Solutions PLN 79.9 thousand Jul 20 2018 Jan 31 2021 Azoty Group performance framework Poland S.A. company bond guarantee agreement provided by bank

Vitkovice Power PROZAP Sp. z o.o. Grupa Azoty PLN 190.1 thousand May 22 2015 Apr 25 2020 - Engineering a.s. Group company

PROZAP Sp. z o.o. Grupa Azoty Vitkovice ENVI PLN 579.0 thousand Sep 18 2018 Jan 22 2021 - Group company

Sureties and guarantees issued at the request of Companies of the Grupa Azoty Puławy Group and effective as at September 30th 2019

Total Relationship surety/guarantee Secured obligor Beneficiary Issue date Expiry date Financial terms between the Purpose amount as at the parties reporting date

PROZAP Sp. z o.o.

payment of the Grupa Azoty entire amount to Grupa Azoty PROZAP Sp. z o.o. Zakłady Azotowe PLN 375.0 thousand Apr 10 2017 Oct 20 2020 account at PKO Group company Police S.A. BP performance bond guarantee transfer of 20% of provided by bank Air Liquide Global not a Grupa bond value under PROZAP Sp. z o.o. E&C Solutions PLN 79.9 thousand Jul 20 2018 Jan 31 2021 Azoty Group framework Poland S.A. company agreement

REMZAP Sp. z o.o.

not a Grupa KB Pomorze Sp. z blank promissory contractual REMZAP Sp. z o.o. PLN 245.0 thousand May 22 2019 Apr 30 2021 Azoty Group o.o. note guarantee company

12. Other information which the Parent’s Management Board believes is essential for assessment of the Group's human resources, assets, financial condition and financial results, or changes in any of the foregoing, including information essential for assessment of the Group's ability to fulfil its obligations

12.1. Financial position, investing of free cash Grupa Azoty Zakłady Azotowe Puławy S.A. Grupa Azoty Zakłady Azotowe Puławy S.A. is exposed to liquidity risk understood as the risk of failure to meet its liabilities as they fall due. This risk is connected with a potentially limited access to financial markets, which may result in the Group’s inability to raise financing. Grupa Azoty Zakłady Azotowe Puławy S.A. manages liquidity by maintaining cash and open credit facilities appropriate to the scale of its operations. The Company is party to an intra-group financing agreement with the main companies of the Grupa Azoty Group, and a deferred payment service agreement with a bank. The Company has also entered into a loan agreement with the National Fund for Environmental Protection and Water Management, and uses lease contracts. Free cash deposited in bank accounts is invested by Grupa Azoty Zakłady Azotowe Puławy S.A. in term and overnight deposits (negotiated and automatic) and in the cash pooling scheme of the Grupa Azoty Group

45 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000 companies. The term deposits bear interest at fixed rates. Cash at banks bears interest at variable rates, which depend on the interest rate for overnight bank deposits on the interbank market. Short-term deposits were placed for various periods, ranging from one day to three months, depending on the current and forecast cash requirements. In the third quarter of 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. was fully solvent, with good credit standing. The Company is able to pay its liabilities as they fall due and to maintain and generate free operating cash flows.

Grupa Azoty Zakłady Azotowe Puławy Group companies As at September 30th 2019, the Grupa Azoty Zakłady Azotowe Puławy Group companies had adequate current financial liquidity and none of their bank accounts was subject to judicial or administrative attachment. Their trade payables and public charges were paid when due. Their liquidity ratios remained at safe levels. In Q3 2019, only Zakłady Azotowe Chorzów S.A. paid its trade payables with a slight delay. The Company also reduced its capital expenditure and costs of repairs. In the third quarter of 2019, the other Grupa Azoty Zakłady Azotowe Puławy Group companies invested free cash in bank deposits on the terms and the physical cash pooling.

12.2. Insurance policies Grupa Azoty Zakłady Azotowe Puławy S.A. In July 2019: • Annex No. 3 was issued to Certificate No. 9 issued under the Construction and Assembly All-Risk Insurance Master Agreement concluded with TuiR WARTA S.A., PZU S.A. and STU Ergo Hestia S.A. Under the Annex, for an additional premium, the period of insurance cover for Project No. 1044 ‘Construction of a vacuum concentration unit for ammonium nitrate solution process line 3 of the ammonium nitrate unit’ was extended from July 31st 2019 until December 31st 2019; the sum insured is PLN 9.88m; • Annex 4 was issued to the Construction and Assembly All-Risk Insurance Agreement concluded in connection with the ‘Production unit for ammonium nitrate-based granulated fertilizers’ project. Under the Annex, for an additional premium, the period of insurance cover for the first stage of the project was extended from July 31st 2019 until December 31st 2019 and for the second stage – from March 31st 2020 until December 31st 2020; the sum insured is PLN 365.0m; • Grupa Azoty S.A. extended its receivables insurance agreement with KUKE S.A. until July 31st 2021. Under that agreement, GA Puławy may add selected trading parties for insurance with KUKE S.A. The agreement does not specify the sum insured for GA Puławy. In August 2019: • Colonnade Insurance S.A. Oddział w Polsce (AIG’s legal successor) issued an environmental insurance policy for the period from August 1st 2019 to July 31st 2020. The aggregate sum insured for the four main Grupa Azoty Group companies is PLN 20.0m, with Grupa Azoty Zakłady Azotowe Puławy S.A.’s sublimit amounting to PLN 5m. In September 2019: • Insurance cover was extended, on existing terms, for the period from September 17th 2019 to March 16th 2020 under the D&O third party liability insurance agreement concluded by Grupa Azoty S.A. with PZU S.A. The agreement covers the Grupa Azoty Group companies, including companies of the Grupa Azoty Puławy Group (except for STO-ZAP Sp. z o.o.). The guaranteed sum under this insurance is PLN 200.0m for all entities covered by the insurance.

46 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

GZNF Fosfory Sp. z o.o. In the third quarter of 2019, GZNF Fosfory Sp. z o.o. entered into the following insurance agreements: • Property in national and international transport (cargo) insurance agreement with Towarzystwo Ubezpieczeń Wzajemnych Polski Zakład Ubezpieczeń Wzajemnych for the period from July 1st 2019 to June 30th 2020; the sum insured per vehicle is PLN 11.0m in international transport and PLN 200.0 thousand in national transport; • Third party liability insurance agreement (covering each type of business and other activity performed by the Insured) with Towarzystwo Ubezpieczeń Wzajemnych Polski Zakład Ubezpieczeń Wzajemnych for the period from July 1st 2019 to June 30th 2020; the sum insured is PLN 50.0m; • Motor insurance agreements no. DKD00550041-DKD00550046 (third party liability vehicle insurance, and vehicle insurance including third party liability, comprehensive motor insurance, personal accident insurance, Assistance and windscreen insurance) concluded with Towarzystwo Ubezpieczeń Wzajemnych Polski Zakład Ubezpieczeń Wzajemnych for the period from August 31st to December 31st 2019; the sum insured is PLN 105 thousand; • Annex to the Directors and Officers liability insurance policy; under the annex the insurance period is from September 17th 2019 to March 16th 2020; the insurer is PZU S.A. and the sum insured for all of the insured is PLN 200.0m. Zakłady Azotowe Chorzów S.A. In Q3 2019, Zakłady Azotowe Chorzów S.A. entered into the following insurance agreements: • Business and property third-party liability insurance agreement for 2019–2020 for the Grupa Azoty Group’s subsidiaries, effective for the period from July 1st 2019 to June 30th 2020; the insurer is AVIVA and the aggregate sum insured is PLN 10.0m per event insured and PLN 20.0m for all events per year; • CASCO rolling stock insurance policy taken out with Uniqa, effective for the period from July 1st 2019 to June 30th 2020; the sum insured is PLN 5.0m per event insured; • Comprehensive all-risk business insurance policy concluded with Ergo Hestia, effective for the period from July 1st 2019 to June 30th 2020; the sum insured is PLN 117.5m; • All-world foreign trip insurance contract (type of insurance/events insured) for the period from July 27th 2019 to July 26th 2020; the sum insured is PLN 2.5m, 100 man-days; • D&O civil liability insurance under policy no. 1023345541 for the period from September 17th 2019, extended for additional six months, on the same terms and conditions. The limit of the sum insured is PLN 200.0m. Insurer: PZU S.A.

AGROCHEM PUŁAWY Sp. z o.o. In Q3 2019, AGROCHEM PUŁAWY Sp. z o.o. entered into the following insurance agreements: • Business and property third-party liability insurance agreement for 2019–2020 for the Grupa Azoty Group’s subsidiaries, effective for the period from July 1st 2019 to June 30th 2020; the insurer is AVIVA and the sum insured is PLN 140.0m ; • General third party liability insurance agreement effective for the period from July 1st 2019 to June 30th 2020; the insurer is STU ERGO HESTIA S.A. and the sum insured is PLN 50.0m; • Property insurance agreement effective for the period from September 1st 2019 to August 31st 2020 (type of insurance/events covered); the insurer is STU ERGO HESTIA S.A. and the sum insured is PLN 81.1m; • Road carrier third-party liability insurance agreement effective for the period from September 1st 2019 to August 31st 2020; the insurer is STU ERGO HESTIA S.A. and the sum insured is USD 150.0 47 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

thousand.

PROZAP Sp. z o.o. In Q3 2019, PROZAP Sp. z o.o. entered into the following insurance agreements: • Property insurance; insurer: STU ERGO HESTIA S.A., period of cover: from July 1st 2019 to June 30th 2020, including: − electronic equipment insurance – sum insured: PLN 1.1m; − property insurance against all risks – sum insured: PLN 1.8m; • 2019–2020 business and property third-party liability insurance contract for the Grupa Azoty Group’s subsidiaries; period of cover: from July 1st 2019 to June 30th 2020; sum insured: PLN 15.0m ; • Annex to the Directors and Officers liability insurance contract; insurer: PZU S.A.; period of cover: from September 17th 2018 to March 16th 2020; sum insured: PLN 200.0m.

REMZAP Sp. z o.o. In Q3 2019, REMZAP Sp. z o.o. entered into the following insurance contracts: • Business and property third-party liability insurance contract for the Grupa Azoty Group’s subsidiaries with AVIVA TUO S.A.; period of cover: from July 1st 2019 to June 30th 2020; (the limit of the insurer’s liability to REMZAP Sp. z o.o. is PLN 15.0m per event insured and PLN 30.0m for all events in the settlement period); • Cargo insurance in domestic transport with AVIVA TUO S.A.; insurance period: from July 1st 2019 to June 30th 2020 (maximum limit of sum insured: PLN 200.0 thousand per vehicle); • Comprehensive all-risks business insurance (against fire, water damage, destruction, theft, etc.) with STU Ergo Hestia S.A.; period of cover: from July 1st 2019 to June 30th 2020 (sum insured: PLN 29.7m); • Annex to directors and officers liability insurance contract for management and supervisory personnel of the Grupa Azoty Group with PZU S.A.; period of cover: from September 17th 2018 to March 16th 2020 (limit of sum insured: PLN 200.0m).

SCF Natural Sp. z o.o. In Q3 2019, SCF Natural Sp. z o.o. entered into the following insurance contracts: • 2019/2020 business and property third-party liability insurance contract for the Grupa Azoty Group’s subsidiaries; insurer: Aviva Towarzystwo Ubezpieczeń Ogólnych S.A; period of cover: from July 1st 2019 to June 30th 2020; sum insured: PLN 10.0m; • Directors and Officers liability insurance contract; insurer: PZU ŻYCIE S.A.; period of cover: from September 17th 2019 to March 16th 2020; sum insured: PLN 200.0m. • Comprehensive all-risks business insurance; insurer: Sopockie Towarzystwo Ubezpieczeń ERGO Hestia S.A.; period of cover: from September 1st 2019 to August 31st 2020; sum insured: PLN 18.3m.

12.3. Borrowing agreements Intra-group financing In Q3 2019, the Intra-Group Financing Agreement executed on April 23rd 2015 by Grupa Azoty S.A., Grupa Azoty Zakłady Azotowe Puławy S.A., Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. and Grupa Azoty Zakłady Chemiczne Police S.A. continued in force. The financing limit, that is the maximum amount of Grupa Azoty S.A.’s financing for Grupa Azoty Zakłady Azotowe Puławy S.A., is PLN 1,000m. In Q3 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. did not use any financing under the Intra-Group Financing Agreement. 48 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Loans advanced by Grupa Azoty Zakłady Azotowe Puławy S.A.

Borrower Amount Agreement date Repayment period As at Sep 30 2019

Apr 2 2014 Zakłady Azotowe Chorzów S.A. PLN 47.0m Annex 1 of December 31st 2014, Dec 31 2023 PLN 23.6m – Loan Agreement Annex 2 of December 20th 2017

SCF Natural Sp. z o.o. Jan 16 2017 PLN 1.0m Oct 31 2022 PLN 1.0m – Loan Agreement Annex 1 of Sep 12 2017

SCF Natural Sp. z o.o. May 7 2014 PLN 0.6m Jun 30 2022 PLN 0.6m – Loan Agreement Annex 1 of Dec 27 2016

External financing Grupa Azoty Zakłady Azotowe Puławy S.A. As at September 30th 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. had access to credit facilities totalling PLN 72m, available for the financing of its day-to-day operations. No amounts were drawn under the facilities as at September 30th 2019. September 23rd 2019 saw the execution of an agreement for the financing by the bank of invoices received from suppliers, which amended and superseded the payments processing agreement of December 14th 2018 with Banco Santander S.A. The agreement was made for an indefinite period. The financing amounts to EUR 122.0m. The Company did not use this form of financing in Q3 2019. In Q3 2019, the agreement of September 12th 2018 with the National Fund for Environmental Protection and Water Management on co-financing the project to upgrade steam generator OP-215 no. 2 in order to reduce NO x emissions was also continued. The loan amount is PLN 52.5m. The Company did not use this form of financing in Q3 2019. Overdraft limits in bank accounts as at September 30th 2019

Borrowing costNon- Repayment As at Sep 30 Lender Borrowing amount Agreement/annex date bank borrowings period 2019

April 23 2015 Annex 1 of Dec 23 2015, Annex 2 PKO BP S.A., multi-purpose PLN 70.0m 1M WIBOR + margin of Sep 20 2016, Sep 30 2022 PLN 0.0m credit facility agreement Annex 3 of Nov 23 2017, Annex 4 of Jun 29 2018 National Fund for Environmental Protection and Water Management of Warsaw – agreement for co- financing, in the form of a PLN 52.5m 3M WIBOR + margin Sep 12 2018 Mar 31 2028 PLN 0.0m loan, for the project to upgrade steam generator OP-215 no. 2 to reduce NOx emissions May 14 2010 Annex 1 of Oct 22 2010, Annex 2 of Sep 30 2011, Annex 3 of Dec 1 2011, No cost. The Annex 4 of Nov 29 2012, PEKAO S.A., intraday overdraft must be PLN 2.0m Annex 5 of Nov 29 2013, Nov 30 2019 PLN 0.0m overdraft facility repaid on the same Annex 6 of Nov 28 2014, day. Annex 7 of Nov 30 2015, Annex 8 of Nov 29 2016, Annex 9 of Nov 24 2017, Annex 10 of Nov 29 2018

49 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Aug 19 2013 Annex 8 of Aug 19 2013, Annex 9 of Oct 23 2013, Annex 10 of Apr 16 2014, PKO BP S.A., overdraft PLN 0.0m 1M WIBOR + margin Annex 11 of Apr 23 2015, Sep 30 2022 PLN 0.0m facility agreement Annex 12 of Oct 16 2015, Annex 13 of Sep 20 2016, Annex 14 of May 9 2018,Annex 15 of Jun 29 2018

Grupa Azoty Zakłady Azotowe Puławy Group companies Borrowing costNon- Repayment Lender Borrowing amount Agreement/annex date As at Sep 30 2019 bank borrowings period

GZNF Fosfory Sp. z o.o.

PKO BP S.A.(overdraft PLN 20.0m 1M WIBOR + margin Jun 29 2018 Sep 30 2022 PLN 0.0m facility sublimit)

Zakłady Azotowe Chorzów S.A. Oct 1 2010 PKO BP S.A. (overdraft Annex 11 of Apr 23 2015, facility sublimit, cash Annex 12 of Oct 16 2015, pooling) PLN 2.0m 1M WIBOR + margin Sep 30 2022 PLN 0.0m Annex 13 of Sep 20 2016,

Annex 14 of May 9 2018,

Annex 15 of Jun 29 2018 AGROCHEM PUŁAWY Sp. z o.o.

PKO BP S.A. Oct 1 2010Annex 15 of Jun 29 (overdraft facility PLN 30.0m 1M WIBOR + margin Sep 30 2022 PLN 30.0m 2018 sublimit)

PKO BP S.A. Oct 1 2010 (physical PLN 69.0m 1M WIBOR + margin Sep 30 2022 PLN 49.6m Annex 5 of Mar 5 2019 cash pooling)

REMZAP Sp. z o.o. PKO BP S.A. (overdraft facility sublimit, cash Oct 1 2010 pooling) PLN 3.0m 1M WIBOR + margin Sep 30 2022 PLN 0.0m Annex 15 of Jun 29 2018

SCF Natural Sp. z o.o. PKO BP S.A. (physical cash pooling) PLN 4.0m 1M WIBOR + margin Feb 1 2019 Sep 30 2022 PLN 3.1m

Lease contracts In the third quarter of 2019: • Grupa Azoty Zakłady Azotowe Puławy S.A. had four ongoing lease contracts with mLeasing Sp. z o.o. and one lease assignment agreement with Prime Car Management S.A., all involving transport vehicles;

• GZNF Fosfory Sp. z o.o. had three ongoing lease contracts for three transport vehicles. Following expiry of some of the lease contracts, five forklifts previously leased under the contracts were bought out in the reporting period.

• AGROCHEM PUŁAWY Sp. z o.o. has six ongoing lease contracts, of which five are for transport vehicles and one is for computer hardware;

• REMZAP Sp. z o.o. has two ongoing machinery leases; 50 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

• SCF Natural Sp. z o.o. has two ongoing car leases.

12.4. Currency risk hedging transactions In the three months ended September 30th 2019, 24 hedging transactions were closed with a net aggregate result of PLN (+) 757,113.80, which included: • result on EUR transactions: (+) EUR 813,020.11; • result on USD transactions: (+) USD 55,906.31. The effect of hedging transactions on net profit for the third quarter of 2019 was negative at PLN (-)1,927,224.59, including: • PLN (+)757,113.80 on closed transactions; • PLN (-) 2,684,338.39 from remeasurement of open positions as at September 30th 2019 relative to the previous quarter. 12.5. Letters of credit One import letter of credit was opened between July 1st 2019 and September 30th 2019. On July 5th 2019, at the request of Grupa Azoty Zakłady Azotowe Puławy S.A., PKO BP S.A. extended the validity of the EUR 2,040,000 import letter of credit issued for the vendor of a CO 2 purification and liquefaction plant by another three months, until October 5th 2019. The letter of credit was issued under the multi-purpose credit facility agreement with PKO BP S.A. On July 31st 2019, EUR 170,000 was paid under the letter of credit. As at September 30th 2019, the credit balance under the letter of credit was EUR 0. On July 22nd 2019, at the request of Grupa Azoty Zakłady Azotowe Puławy S.A., PKO BP S.A. opened a EUR 299,600 import letter of credit, expiring on December 31st 2019. The beneficiary is a supplier of a dolomite powder pneumatic conveying system. The letter of credit was opened under the multi-purpose credit facility agreement with PKO BP S.A. The credit balance under the letter of credit as at September 30th 2019 was EUR 299,600. On July 30th 2019, EUR 2,535,000 was paid under the EUR 19,012,500 letter of credit issued by PKO BP S.A. at the request of Grupa Azoty Zakłady Azotowe Puławy S.A. The letter of credit was opened in favour of a supplier of neutralisation equipment for the nitric acid unit. On August 29th 2019, at the request of Grupa Azoty Zakłady Azotowe Puławy S.A., PKO BP S.A. extended the validity of the letter of credit from August 30th 2019 to October 31st 2019. The letter of credit was opened under the multi-purpose credit facility agreement with PKO BP S.A. The credit balance under the letter of credit as at September 30th 2019 was EUR 2,535,000.

12.6. EU funds and other aid funds In Q3 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. was party to the following agreements: A. co-financing in the form of a loan: • Agreement of September 12th 2018 with the National Fund for Environmental Protection and Water

Management on co-financing of the project to upgrade steam generator OP-215 No. 2 to reduce NO x emissions. The project cost is PLN 84.1m. The loan amount is PLN 52.5m. The loan was granted for the period from January 2nd 2019 to June 30th 2028. The grace period ends on June 29th 2021. The loan is secured with a blank promissory note. As at September 30th 2019, the outstanding balance was PLN 0.

B. co-financing in the form of a grant: • with the National Fund for Environmental Protection and Water Management (NFOŚiGW):

51 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

− Agreement of May 4th 2011 on co-financing of the project to construct deNOx units on boilers OP- 215 No. 4 and No. 5 at Grupa Azoty Zakłady Azotowe Puławy S.A. – PLN 3.5m was granted and disbursed by September 30th 2019.

• with the National Centre for Research and Development:

− Agreement of December 2nd 2013 on implementation and financing of the ‘Optimisation of Drilling Waste Management Methods’ project carried out by a Consortium (five members) under the ‘Blue Gas − Polish Shale Gas’ programme. The total amount of co-financing granted to the Consortium was PLN 11,074 thousand, including PLN 5.0m for Grupa Azoty Zakłady Azotowe Puławy S.A. The amount disbursed as at September 30th 2019 was PLN 3.7m, as specified in the request for final payment;

− Agreement of June 2nd 2015 on implementation and financing of the ‘Support for low-emission agriculture capable of adapting to climate change now and within the 2030 and 2050 timeframes’ project, implemented under the BIOSTRATEG Natural Environment, Agriculture and Forestry Programme. The total amount of co-financing granted to the Consortium is PLN 10.58m, including PLN 0.12m granted to Grupa Azoty Zakłady Azotowe Puławy S.A. and paid by September 30th 2019;

− Agreement with the National Centre for Research and Development on December 6th 2016 on co- financing of the ‘Development of a new synthesis route for production of ε-caprolactone from cyclohexanone and hydrogen peroxide with the use of chemo-enzymatic catalysis’ project under the Smart Growth Operational Programme. The amount of co-financing granted was PLN 2.0m, of which PLN 0.84m was disbursed as at September 30th 2019.

− Agreement on co-financing of the ‘Development and implementation of advanced process controls (APC) for the ammonia unit’ project under the Smart Growth Operational Programme, executed on February 2nd 2017. The total amount of co-financing granted was PLN 1.1m, of which PLN 0.67m was disbursed as at September 30th 2019.

− Agreement of November 29th 2017 on co-financing of the ‘Development of a technology for the production of potassium thiosulfate using exhaust gases from the sulfuric acid plant and production of potassium thiosulfate-based compound liquid fertilizers’ project. The total amount of co- financing for the consortium is PLN 2.0m, including PLN 1.4m for Grupa Azoty Zakłady Azotowe Puławy S.A. (the consortium leader), of which PLN 0.26m was disbursed as at September 30th 2019.

− Agreement for co-financing of the ‘Development of innovative technologies for microbial mineral fertilizers’ project, signed on December 18th 2017 and implemented under the BIOSTRATEG Natural Environment, Agriculture and Forestry Programme. The agreement was concluded by the Skierniewice Consortium. The value of co-financing for the consortium is PLN 16.4m, including PLN 0.28m for Grupa Azoty Zakłady Azotowe Puławy S.A., of which PLN 0.004m was disbursed as at September 30th 2019.

− Agreement of August 3rd 2018 on co-financing of the ‘Green technology for production of succinic acid from renewable and waste materials’ project under the Smart Growth Operational Programme. The agreement was concluded by the Wrocław Consortium. The total amount of co- financing for the consortium is PLN 6.5m, including PLN 2.1m for Grupa Azoty Zakłady Azotowe Puławy S.A., of which PLN 0.11m was disbursed as at September 30th 2019.

− Agreement of March 12th 2019 on co-financing of the ‘Development of new type of liquid fertilizers based on phosphate materials of sedimentary origin’ project carried out by a consortium with Grupa Azoty Zakłady Chemiczne Police S.A. The total amount of co-financing for the consortium is 52 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

PLN 7.4m, including PLN 0.8m for Grupa Azoty Zakłady Azotowe Puławy S.A., of which PLN 0m was disbursed as at September 30th 2019;

• with the Polish Agency for Enterprise Development:

– Agreement of November 14th 2018 on co-financing of the ‘Eastern Business Accelerator’ project carried out by the Puławski Park Technologiczny Consortium. The total amount of co-financing for the consortium is PLN 17.3m, including PLN 0.8m for Grupa Azoty Zakłady Azotowe Puławy S.A., of which PLN 0 was disbursed as at September 30th 2019.

• with the Lublin Agency for the Support of Entrepreneurship:

− Agreement of November 20th 2018 on co-financing of the ‘Development of the Grupa Azoty Zakłady Azotowe Puławy Research Laboratory’ project under the Lublin Province Regional Operational Programme. The total amount of co-financing for Grupa Azoty Zakłady Azotowe PuławyS.A. was PLN 3.0m, of which PLN 0 was disbursed as at September 30th 2019.

• with the Minister of Investments and Development:

− Agreement of January 31st 2019 on co-financing of the ‘Strengthening the potential of Grupa Azoty Zakłady Azotowe Puławy S.A. in the R&D&I area’ project under the Smart Growth Operational Programme. The total amount of co-financing for Grupa Azoty Zakłady Azotowe PuławyS.A. was PLN 20.6m, of which PLN 0 was disbursed as at September 30th 2019.

12.7. Significant agreements Execution of contract for sale of PULREA On August 23rd 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. executed a contract for sale of PULREA urea with Kronospan Mielec Sp. z o.o., Kronospan KO Sp. z o.o., Diakol Strazske S.R.O. of Slovakia, and Dukol Ostrava S.R.O. of the Czech Republic, effective from July 1st 2019 to June 30th 2023. The contract specifies the minimum amount of the product to be delivered to the Buyers thereunder. Prices will be negotiated on a monthly basis. The estimated VAT-exclusive value of the contract is PLN 300m. The other terms and conditions of the contract do not differ from standard terms and conditions commonly used in contracts of this type.

12.8. HR and remuneration policy Grupa Azoty Zakłady Azotowe Puławy S.A. In July 2019, Arrangement No. 1/2019/17 of July 25th 2019 to the Collective Bargaining Agreement of March 22nd 2006 concerning pay rises for the Company’s employees in 2019 was signed. Termination, suspension, signing of a local or collective bargaining agreement, significant changes to a collective bargaining agreement Since August 21st 2019, Additional Protocol No. 34 of July 25th 2019 concerning the introduction of new rules for pay matrix implementation, job grading, regarding and promotions to the Collective Bargaining Agreement of March 22nd 2006 for employees of Zakłady Azotowe Puławy S.A. has been in force.

12.9. Other information Grupa Azoty Zakłady Azotowe Puławy S.A. Amendments to the Articles of Association On July 11th 2019, the District Court for Lublin-Wschód in Lublin, with its seat in Świdnik, 6th Commercial Division of the National Court Register, registered an amendment to the Articles of Association of Grupa 53 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

Azoty Zakłady Azotowe Puławy S.A. approved by Resolution No. 29 of the Annual General Meeting of June 24th 2019. The amendment to the Articles of Association of Grupa Azoty Zakłady Azotowe Puławy S.A. of Puławy consisted in inserting new letter c) in Art. 30.2.2) of the Articles of Association, reading as follows: “c) contracts for the purchase of electricity and related property rights, contracts for the purchase of CO 2 emission allowances”. The new consolidated text of the Company's Articles of Association incorporating the above amendment was adopted by the Company's Supervisory Board on August 1st 2019.

External inspections In Q3 2019, 10 external inspections were carried out at Grupa Azoty Zakłady Azotowe Puławy S.A. The inspecting bodies were: • IDIPSUM National Centre for Research and Development in Warsaw – 3 inspections; • Provincial Inspector for Environmental Protection in Lublin – 2 inspections; • County Sanitary Inspector in Puławy – 5 inspections. Following the inspections, Grupa Azoty Zakłady Azotowe Puławy S.A. of Puławy received 7 payment demand notices (no decisions, rulings, orders or statements were issued). Following the inspections carried out by IDIPSUM National Centre for Research and Development in Warsaw, PLN 57.8 thousand in fines was imposed on Grupa Azoty Zakłady Azotowe Puławy S.A. All the fines were paid. In Q3 2019, administrative proceedings instigated following an inspection carried out by the State Fire Service between October 17th and November 24th 2017, as a result of which the Lublin Province Commander-in-Chief of the State Fire Service issued a decision not to approve the safety report for an upper tier establishment, were concluded with a decision upholding the Commander’s refusal. Currently, work is under way to prepare a new safety report for an upper tier establishment for Grupa Azoty Zakłady Azotowe Puławy S.A. Approval of the report by the Lublin Province Commander-in-Chief of the State Fire Service is a precondition for launching the ammonium nitrate-based granulated fertilizers unit. Grupa Azoty Zakłady Azotowe Puławy S.A. has been implementing investment projects which will validate a request to the Provincial Environmental Protection Inspectorate for deferral and subsequent waiver of any potential sanctions for exceeding the emission limits by its CHP plant (in the period from July 1st 2019 to September 30th 2019). Major environmental sustainability projects and environmental protection and technical safety events In Q3 2019, Grupa Azoty Zakłady Azotowe Puławy S.A. continued the following environmental sustainability projects: • Upgrade of steam generator no. 2; • Upgrade of the nitric acid unit and construction of a new nitric acid unit. Grupa Azoty Zakłady Azotowe Puławy Group companies did not execute any major environmental sustainability projects in Q3 2019. Letters of intent signed by Grupa Azoty Zakłady Azotowe Puławy S.A. Grupa Azoty Zakłady Azotowe Puławy S.A. signed a letter of intent launching a new edition of the Safety is Our Common Goal programme. Owing to the Company’s commitment, 28 Volunteer Fire Brigades from the Puławy County will be equipped with an integrated public warning and protection system. The new edition of the programme will be carried out together with Volunteer Fire Brigades located in the Puławy county, and its goal will be the execute tasks in the area of protection of life, health and property 54 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000 against fire, natural disasters and other hazards, and to improve the competences of volunteer firefighters. The State Fire Brigade is an expert partner of the programme. The cooperation is expected to last three years. The Company’s Management Board signed a letter of intent with the Mayor of Puławy, in which Grupa Azoty PUŁAWY declared its intention to be the title sponsor for a new sports and entertainment arena being built in Puławy. The document, signed in the presence of Grupa Azoty S.A. CEO Wojciech Wardacki and Deputy Minister of Investments and Development Artur Soboń, envisages the execution of a sponsorship agreement in early 2020. As the main and long-term sponsor of sports in Puławy, Grupa Azoty PUŁAWY is aware of how the opening of a new multi-purpose facility will help promote its brand. Aside from sports, the arena will also be used to hold business, cultural and entertainment events. Grupa Azoty PUŁAWY has signed three-year sponsorship agreements this year with the KS Azoty-Puławy handball club and Wisła Puławy Sports Club. The new Puławy arena will host handball matches and weightlifting competitions (also of international level) as well as other events.

13. Factors and developments which will affect the Group’s performance at least in the next quarter Events which will have an impact on the financial results of the Grupa Azoty Zakłady Azotowe Puławy Group in the next quarter of 2019: • Prices of key feedstocks: natural gas, coal, electricity, benzene and sulfur; • Consolidation of the Grupa Azoty Group, including execution of strategic projects; • Foreign exchange rates (USD, EUR); • Situation in the agricultural sector and end-user industries for the Group’s products; • Market conditions in industries which consume chemical products (textile manufacturers, carmakers, construction companies, plastics producers).

14. Material events after the reporting period with a potentially significant effect on future financial performance

On October 29th 2019, ambassadors of 27 EU member states agreed that EU27 would approve the United Kingdom’s request for postponement of Brexit until January 31st 2020 (originally October 31st 2019). If a no-deal Brexit materialises, the United Kingdom will become a third country and the World Trade Organisation (WTO) rules will apply, resulting in customs duties imposed on various product groups, for instance 6.5% on nitrogen fertilizers. In addition, new procedures and controls will start to apply on the UK border. For instance, businesses will be required to have a UK EORI number. As a result, two parallel EORI (Economic Operators’ Registration and Identification System) numbers – European and UK – will be applied. From the perspective of REACH, all permits, registrations and certificates obtained by UK companies will become invalid. At the same time, the United Kingdom will have the right to introduce its own requirements for imported chemicals. However, the introduction of other regulations is unlikely even in the event of a no-deal Brexit. And if a no-deal Brexit scenario materialises, the expectations are that in the first months following Brexit no CEMT permits will be required from carriers transporting goods to the UK.

55 Interim consolidated report of the Grupa Azoty PUŁAWY Group Other information on the results of Grupa Azoty Zakłady Azotowe Puławy Spółka Akcyjna for the three and nine months ended September 30th 2019 All amounts in PLN ‘000

The EU Communication envisages the extension of the regulation ensuring basic road freight and road passenger connectivity from December 31st 2019 until July 31st 2020, and of the regulation ensuring basic air connectivity – until October 24th 2020.

Krzysztof Bednarz President of the Management Board

Krzysztof Homenda Vice President of the Management Board

Izabela Świderek Vice P resident of the Management Board

Anna Zarzycka-Rzepecka Vice President of the Management Board

Andrzej Skwarek Member of the Management Board

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