INVESTOR PRESENTATION Q3 2018 2 GRUPA AZOTY AT A GLANCE GRUPA - - PowerPoint PPT Presentation

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INVESTOR PRESENTATION Q3 2018 2 GRUPA AZOTY AT A GLANCE GRUPA - - PowerPoint PPT Presentation

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INVESTOR PRESENTATION Q3 2018 2 GRUPA AZOTY AT A GLANCE GRUPA AZOTY Grupa Azoty, Poland's largest chemical company and a significant chemical industry player in the EU market, is one of the major chemical groups in the EU, offering

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INVESTOR PRESENTATION Q3 2018

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GRUPA AZOTY AT A GLANCE

GRUPA AZOTY

Grupa Azoty, Poland's largest chemical company and a significant chemical industry player in the EU market, is one of the major chemical groups in the EU,

  • ffering

a diversified product portfolio – from mineral fertilizers and engineering plastics through OXO products to melamine.

4 locations of main production plants 60 group companies Approximately 15,000 employees

  • No. 2 in the UE in

mineral fertilizer production

  • No. 3 in the EU in PA6 production
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GRUPA AZOTY AT A GLANCE

KEY DATA

FINACIAL RESULTS Jan–Sep 2018 PLNm REVENUE 7,202 EBITDA 573 EBITDA MARGIN 8% NET PROFIT* 59 PLN 3.4bn MARKET CAPITALISATION 99,195,484 shares SHARES min/max price PLN 6 - PLN 113 NET DEBT 766 NET DEBT/EBITDA 0.97 (ratio) 1M average trading volume PLN 3.204m WSE: WIG30, mWIG40, WIG- CHEMIA, WIG30, mWIG 40, WIG, WIG-Poland STOCK INFORMATION FOREIGN INDEXES: MSCI, FTSE ESG: RESPECT INDEX, FTSE4GOOD, MSCI ESG

* Data adjusted for one-off items

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GRUPA AZOTY AT A GLANCE

OWNERSHIP STRUCTURE

Skarb Państwa 33.00% ING OFE 9.96% TFI PZU S.A. 8.60% EBOiR 2.87% Pozostali 25.75% Opansa Enterprises Limited 9.51% Rainbee Holdings Limited 9,90% Norica Holding S.à. r.l. 0.41%

STATE TREASURY

  • Government of Poland
  • Represented by the Chancellery
  • f the Prime Minister

EBRD

  • European Bank of Research and

Development

  • Shareholder since 2013

TFI PZU S.A.

  • Financial investor

ING OFE (NN OFE)

  • Financial investor

NORICA HOLDING S.À. R.L.

  • Subsidiary of Acron and Mr. Viatcheslav

Kantor

  • Shareholder since 2012
  • Norica and its subsidiaries hold 19.82% of

shares

Norica indirectly 19.82%

Free float – 25.75 %

Based on official notifications received by the Company

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GRUPA AZOTY MANAGEMENT BOARD

DIVISION OF RESPONSIBILITIES AMONG MANAGEMENT BOARD MEMBERS

Vice President of the Management Board Grzegorz Kądzielawski, PhD

Member

  • f the Management

Board Artur Kopeć Production assets Plant safety and infrastructure Environmental protection

Social dialogue

President of the Management Board Wojciech Wardacki, PhD

Management and HR policy Audit and risk Communication CSR

President of the Management Board Grupa Azoty POLICE Vice President of the Management Board Witold Szczypiński

Director General Grupa Azoty S.A. Agro Segment Plastics Segment Organic Synthesis Segment Production integration

Vice President of the Management Board Paweł Łapiński

Finance Planning and controlling Growth strategy Investments

Vice President of the Management Board Mariusz Grab

Procurement strategy Raw material and product integration Infrastructure Research and development Logistics Investor relations M&A

GRUPA AZOTY S.A.

5

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GRUPA AZOTY AT A GLANCE

BROAD PRODUCT PORTFOLIO

Agro Fertilizers 48% Chemicals 31% Plastics 16% Energy 3% Other 2%

Jan–Sep 2018

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GRUPA AZOTY AT A GLANCE

CORE BIZNES

ZMPP Port Fosfory BBM Terminal Grupa Azoty Police ZMPP

  • Port

Navitrans

  • Logistics

Grupa Azoty S.A.

  • AN, CAN
  • ASN, AS
  • CPL, PA 6, POM
  • Compounding

Logistics Production

NPK Urea NPK TiO2

Grupa Azoty Puławy

Ammonia N fertilizers Urea

Grupa Azoty ATT Polymers

Melamine CPL

Grupa Azoty Siarkopol

PA6 S

Grupa Azoty S.A. Parent Z.A. Chorzów S.A.

CPL

Grupa Azoty Kędzierzyn

NPK PA6 Compounding Urea

Logistics

Plasticizers OXO

Production

Speciality fertilizers

Goat TopCo GmbH

N fertilizers N fertilizers

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ACQUISITIONS

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ACQUISITIONS

CREATING VALUE FOR GRUPA AZOTY THROUGH ACQUISITIONS

  • Puławy (up to 95.98%)
  • Siarkopol (99.33%)

1.3 1.4 1.2 1.9 5.3 7.1 9.8 9.9 10.0 9.0 9.6 7.2

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jan-Sep 2018

  • Puławy (10.4%)
  • Police (66%)
  • Kędzierzyn (94%)
  • ATT Polymers GmbH (100%)
  • Kędzierzyn (53%)

Consolidated revenue (PLNbn)

9

  • Transaction completed on

November 26th 2018

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ENHANCED FERTILIZER PRODUCT PORTFOLIO

ACQUISITIONS

Fertigation and foliar fertilizers SRF | CRF Stabilised NPK NPK (SOP-based) NPK (MOP-based) UAN | ASN | CAN AN | AS | DAP Ammonia | Urea Grupa Azoty product portfolio Commodity fertilizers

Standard fertilizers widely applied all around the world. Typically contain one or two nutrients. In the case of NPK fertilizers, they are based on potassium chloride. Priced lower that speciality fertilizers.

COMPO EXPERT product portfolio Speciality fertilizers

Technologically advanced agrochemical products with a higher added value than commodity fertilizers. Designed mainly for high-value crops (fruit, vegetables, ornamental plants). Speciality fertilizers are priced higher, but offer many benefits, including slow release of nutrients. Some speciality products can be used for covered or greenhouse cultivation, as well as for lawns and turf grass. They are available in solid form (granules) and as liquids (for soil and foliar application). The most advanced products positively influence certain characteristics of the plants, such as size, colour or – in the case of fruit and vegetables – taste.

Margin Volume Liquid fertilizers and biostimulants

Fertilizer value pyramid

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ACQUISITIONS

COMPO EXPERT SALES MARKETS

Americas Western and Central Europe Southern Europe and Africa Asia and Australia

(2017)

Key sales market Markets reached by COMPO EXPERT products

approximately

EUR 333m

Revenue

(FY 2017)

approximately

EUR 30m

Adjusted EBITDA

(FY 2017)

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COMPO EXPERT ACQUISITION

ACQUISITIONS

Raw material and product synergies

4.

Production know-how synergies

1.

Sales synergies

2.

R&D synergies

3.

Financing synergies

5.

INTEGRATION INITIATIVES Appointment of consolidation teams for:

  • Procurement
  • Agro Segment’s sales and marketing
  • Research and development
  • Manufacturing, technical and technology areas
  • Accounting and financial flows
  • Legal
  • Corporate supervision
  • IT
  • Consolidation of the Grupa

Azoty Group’s and the TopCo Goat Group’s financial statements

since Q4 2018

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OPERATIONS

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5 10 15 20 25 30 50 60 70 80 90 100 110 120 130 140

sty 16 kwi 16 lip 16 paź 16 sty 17 kwi 17 lip 17 paź 17 sty 18 kwi 18 lip 18 paź 18

EUR/MWh PLN/MWh

Average gas price paid by GA PGNiG tariff gas price Imported gas price PPE gas price TTF DA gas price (right axis)

OPERATIONS

ENERGY COMMODITIES

ELECTRICITY PRICES [YOY] CO2 PRICES [YOY] NATURAL GAS CONSUMPTION (MILLION MWH)

H1 2018 TOTAL 11.8 Grupa Azoty S.A. 1.0 Grupa Azoty POLICE 2.9 Grupa Azoty PUŁAWY 5.7 Grupa Azoty KĘDZIERZYN 2.2

NATURAL GAS PRICES

PLN/MWh USD/t

140 190 240 290

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

IRDN 40 60 80 100 120

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

ARA 2 7 12 17 22

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

EEX

EUR/t

48% 0% 180%

HARD COAL PRICES [YOY]

33%

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OPERATIONS

AGRO FERTILIZERS

2017

Nitrogen fertilizers and ammonia 64% Compound fertilizers 36% 3 0% 4 0% 5 0% 6 0%

PRODUCTION CAPACITIES Revenue: PLN 5.3bn

5 000 10 000 15 000

Petrokemija Azomures Timac Agro Achema JSC Eurochem Fertiberia Borealis Agrofert Grupa Azoty YARA

[tt]

  • No. 2

in EU

EBITDA: PLN 484m EBITDA MARGIN: 9.6%

  • No. 1

in Poland

Poland 6.8% EU (excl. Poland) 2.8% Europe -

  • ther

0.2% North America 0.0% South America 0.2% Africa 0.1% Asia 0.0%

TARGET MARKETS

Source: Fertilizers Europe

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OPERATIONS

CHEMICALS

2017 Revenue: PLN 2.8bn

OXO alcohols 20% Plasticizers 8% Urea (technical grade) 21% Melamine 17% Titanium white 13% Other 21%

EBITDA: PLN 348m EBITDA MARGIN: 12.5% PRODUCT GROUPS

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17 100 200 300 400 500

Oltchim SA Grupa Azoty Perstrop OXO AB Ineos Oxea Group Basf

OPERATIONS

CHEMICALS

[tt]

OXO * * PRODUCTION CAPACITIES

*Production capacities for phthalate plasticizers and terephthalate plasticizers. ** Production capacities for 2-EH, N-butanol, isobutanol. Source: Plasticizers Alkohols 2013 and Plasticizers (UE) 2013

PLASTICIZERS*

100 200 300 400 500

Perstorp OXO AB DEZA OXEA GROUP Grupa Azoty Polynt Evonik Basf ExxonMobil

[tt]

Aldehydes Plasticizers

Oxoviflex

OXO alcohols

  • No. 1

in Poland

  • No. 5

in EU

  • No. 1

in Poland

  • No. 5

in EU

Construction industry Automotive Paints and varnishes Footwear Electric cables and wiring

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OPERATIONS

CHEMICALS

  • Wood processing

(laminates, resins, adhesives)

  • Automotive industry (varnishes)
  • Paper industry
  • Electrotechnical industry
  • Anti-inflammatory agents
  • Plastics
  • Rubber

, leather and ceramic industries

  • Textile and cosmetics industries

PRODUCTION CAPACITIES MELAMINE

20 40 60 80 100 120 140 160

Azomures S.A. BASF SE Grupa Azoty Grupa Borealis OCI Melamine

  • No. 3

in EU

  • No. 1 in

Poland

[tt]

TITANIUM WHITE

  • No. 1

in Poland

OPERATIONS Paints Paper Laminates Varnishes

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OPERATIONS

PLASTICS

2017

Polyamide 68% Caprolactam 26% Other 6%

PRODUCTION CAPACITIES Revenue: PLN 1.4m

POLYAMIDE 6

EBITDA: PLN 221m

50 100 150 200 250 Nurel Ube* Nyobe Rhodia Domo* Radici DSM* Aquafil* GRUPA AZOTY* Lanxess* BASF*

EBITDA MARGIN: 15.6%

  • No. 3

in EU

  • ther

3% Poland 23% UE 64% Asia 10%

TARGET MARKETS

  • No. 1

in Poland

Source: PCI Nylon, YellowBook 2015 Integrated

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INVESTMENTS

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STRATEGY

STRATEGIC GROWTH DIRECTIONS

Our mission Complete the Group consolidation process

1.

Reinforce leadership in agricultural solutions in Europe

2.

Create value for the Company and the national economy by delivering safe, useful and innovation-driven chemical products Our vision Strengthen the second

  • perating pillar by

expanding the non- fertilizer business

3.

Develop and implement innovations to drive growth of the chemical industry

4.

Deploy state-of-the-art and comprehensive chemical industry solutions that meet stakeholder expectations

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2014 2015 2016 2017 I-IX 2018

INVESTMENTS

INVESTMENTS

(PLNm)

CAPITAL EXPENDITURE

CAPEX PROJECTS including: CAPEX in Jan–Sep 2018 GROWTH CAPEX 422 MAINTENANCE CAPEX 126 MANDATORY CAPEX 31 PURCHASE OF FINISHED GOODS 29 OTHER (COMPONENTS, MAJOR OVERHAULS) 100 TOTAL 708

RESEARCH AND DEVELOPMENT CENTRE IN TARNÓW 1.3 0.9

Plan 2018 Prognoza 2018

CAPEX

CAPEX organiczny Remonty komponentów Ulepszenia

1.6bn 1.1bn

(PLNbn) CONSOLIDATED CAPEX – CASH FLOW 771

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INVESTMENTS INVESTMENTS

COMPLETED INVESTMENT PROJECTSORGANIC GROWTH

23

Pulgran/PulgranS in Puławy Upgrade of the ammonia unit in Police New CHP plant in Kędzierzyn – phase 1 Flue Gas Treatment Unit in Tarnów (project co-financed under the Norwegian Financial Mechanism) Polyamide Unit in Tarnów New Research and Development Centre in Tarnów

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POLICE POLYMERS

MANUFACTURING COMPLEX PROJECT SCOPE: Propylene and polypropylene units, a polypropylene logistics base, and a propane and ethylene handling and storage terminal

  • Annual production capacity – approximately 400,000

tonnes

  • Start of construction – end of 2019
  • Commercial commissioning – 2022
  • Financing under a project finance model:

a) equity – 50% b) debt capital – 50%

  • Location: within the Pomeranian Special Economic Zone

(state aid of up to PLN 428m)

  • Budgeted cost of the project: EUR 1.27bn

PROPYLENE UNIT POLYPROPYLENE UNIT SEA TERMINAL WITH FEEDSTOCK TANK FARM AUXILIARY AND LOGISTICS INFRASTRUCTURE PROJECT’S KEY BENEFITS: diversification of revenue streams, additional profits for the Grupa Azoty Group, expansion of the product portfolio, flattening of business cycles

INVESTMENTS

24

MAIN PROJECTS IN PROGRESS

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NITRATE GRANULATION PLANT

PRODUCTS PROJECT SCOPE: Plant for production of ammonium nitrate-based granulated fertilizers 385,000

  • The plant’s daily production capacity:

1,400 tonnes of CAN

  • r

1,200 tonnes of mechanically granulated nitrate

  • Project completion timeframe: 2015 - 2020
  • Location: Puławy
  • Capital expenditure: PLN 385m

PROJECT’S KEY BENEFITS: Improvement of fertilizer quality as a result of applying modern mechanical granulation

INVESTMENTS

25

MAIN PROJECTS IN PROGRESS

Calcium ammonium nitrate (CAN) Granulated ammonium nitrate

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NITRIC ACID AND NEUTRALISATION UNITS

MAIN PROJECTS IN PROGRESS

PROJECT SCOPE: new nitric acid unit 1,000 t/d, neutralisation unit 1,300 t/d, fertilizer production line 600 t/d, upgrade of existing nitric acid lines

  • Project completion timeframe: 2017 – 2024
  • Project carried out jointly with Thyssenkrupp Industrial

Solutions AG

  • Location: Puławy
  • Capital expenditure: PLN 695m

PROJECT’S KEY BENEFITS: higher production capacity, addition of new solid and liquid fertilizers (Ca, K, Mg) to product range, avoiding downtime (production losses), elimination of bottlenecks in absorption and cooling, improvement in production efficiency and consumption rates (ammonia, steam yield, electricity)

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COAL GASIFICATION PROJECT

RAW MATERIALS PROJECT SCOPE: Construction of hard coal gasification unit

  • Products: methanol or ammonia
  • Estimated construction period: 36 months
  • Location: Kędzierzyn
  • Project carried out jointly with Tauron Polska Energia S.A.
  • Estimated capital expenditure: EUR 400m–600m

KEY OBJECTIVES: Improved security of gas supplies thanks to in-house production of syngas, development of low-emission, clean coal-based technologies, development of new production capacities in the chemical and energy sectors

INVESTMENTS

27

coal

  • xygen

nitrogen

MAIN PROJECTS IN PROGRESS

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POWER GENERATION UNIT

MAIN PROJECTS IN PROGRESS

PROJECT’S KEY BENEFITS: The new unit and the upgraded captive CHP plant will provide Grupy Azoty Puławy with an energy system appropriate for its electricity and process heat requirement. PROJECT SCOPE: Construction of a new coal-fired unit

  • Launch of the unit: 2021
  • A 100 MWe coal-fired unit
  • Integrated with the captive CHP plant
  • Location: Puławy
  • Project budget: PLN 890m
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SELECTED R&D PROJECTS

R&D

3D PRINTING

 PA6 filaments for FDM  PA6 powders for SLS  Enhancement of the Grupa Azoty Group’s product portfolio  Entering new markets

OUTCOME: SCOPE: ORGANIC SYNTHESIS TECHNOLOGY

 Developing new organic synthesis products  Extension of the product chain  Enhancement of the Grupa Azoty Group’s product portfolio  Entering new markets  Low-tonnage, high-margin products

HUMIC ACIDS

 Construction of a humic acid unit  Addition of plant growth stimulants and

  • rganic fertilizers to the Grupa Azoty

Group’s fertilizer portfolio  Expansion of the Grupa Azoty Group’s product portfolio  Entering new markets

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FINANCING

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GRUPA AZOTY GROUP

Grupa Azoty Group financials as at September 30th 2018

490 3,395 320*

1 2 3

AVAILABLE FUNDING

(PLNm)

* Since November 2nd, the amount of credit facilities granted under agreements and available credit limits has been approximately PLN 320m higher following the execution of a new overdraft facility agreement with PKO BP (EUR 75m), connected with physical cash pooling in the euro.

  • Revolving and umbrella credit facility
  • PLN 3,550m
  • PLN 3,770m since Nov 2 2018*

PKO and bank syndicate

  • Term Loan Agreement
  • PLN 650m

EBRD

  • Term Loan Agreement
  • PLN 1,170m

EIB

  • PLN 5,370m

Total corporate financing

  • 41

233 327 766

NET DEBT

(PLNm) Net debt/EBITDA

0.23x 0.97x 0.28x 2015 2016 2017 Sep 2018

  • 0.03x

Net debt/EBITDA - max 3.0x (2020–2023: max 3.5x)

NET DEBT

Q3 2017 Q3 2018 Total debt ratio (%) 34.0 37.5 Net debt (PLNm) 608 766 Net debt/EBITDA for 12 months (ratio) 0.53 0.97

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STOCK PRICE

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2018 EVENTS AND GRUPA AZOTY S.A SHARE PRICE

Share price

[SERIES NAME] Initial offer to purchase COMPO EXPERT shares submitted Change of 2017 annual report issue date 2017 estimated performance 2017 annual report Q1 2018 results Agreement amending credit facility agreements with PKO BP executed Dividend record date Financing agreements with EBRD signed Dividend paymentdate H1 2018 estimated H1 2018 results Agreement to purchase Goat TopCo GmbH shares executed Q3 2018 estimated performa Credit facility agreement with Q3 2018 results Goat TopCo GmbH acquisition closed Management Board recommendation concerning dividend MSCI indices review Reclassificatio n to MSCI GLOBAL SMALL CAP 10 20 30 40 50 60 70 80 sty 18 lut 18 mar 18 kwi 18 maj 18 cze 18 lip 18 sie 18 wrz 18 paź 18 lis 18 gru 18

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Thank you for your attention For more information, visit www.grupaazoty.com Contact: ir.tarnow@grupaazoty.com