INVESTOR PRESENTATION September 2019 2 GRUPA AZOTY AT A GLANCE - - PowerPoint PPT Presentation

INVESTOR PRESENTATION September 2019

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GRUPA AZOTY AT A GLANCE

GRUPA AZOTY GROUP

Grupa Azoty, Poland’s largest chemical group and a significant chemical industry player in the EU market, is one of the EU’s major chemical producers

• ffering

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

Grupa Azoty Group’s consolidated revenue EBITDA margin Net profit/(loss) Consolidated EBITDA

9,999 764

adjusted 777

8% 8

adjusted 65

CONSOLIDATED REVENUE FOR 2018 (PLNm)

Adjusted – net of one-off items

EU’s No. 2 in mineral fertilizers EU’s No. 3 in PA6

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

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GRUPA AZOTY AT A GLANCE

KEY DATA

FINACIAL RESULTS H1 2018 PLNm REVENUE 6,103 EBITDA* 970 EBITDA MARGIN 16% NET PROFIT* 420 PLN 3.7bn MARKET CAPITALISATION 99,195,484 shares SHARES min/max price 6 PLN -113 PLN NET DEBT 2,460 NET DEBT/EBITDA 2.09

(ratio)

WSE: WIG30, mWIG40, WIG- CHEMIA, WIG30, mWIG 40, WIG, WIG-Poland STOCK INFORMATION FOREIGN INDEXES: MSCI, FTSE ESG: RESPECT INDEX/WIG-ESG, FTSE4GOOD, MSCI ESG

* Data adjusted for one-off items

4 DIVISION OF RESPONSIBILITIES AMONG MANAGEMENT BOARD MEMBERS

Vice President of the Management Board Witold Szczypiński

Production integration

Member

• f the Management

Board Artur Kopeć

Production assets Plant safety Environment protection

President of the Management Board Wojciech Wardacki, PhD

Director General Grupa Azoty S.A. Agro Segment Plastics Segment Organic Synthesis Segment Management and HR policy Disclosure policy and communication CSR Audit and risk

President of the Management Board Grupa Azoty POLICE Vice President of the Management Board Paweł Łapiński

Finance Investor Relations

Vice President of the Management Board Grzegorz Kądzielawski, PhD

Innovation R&D programmes

Vice President of the Management Board Tomasz Hryniewicz

Controlling Investment projects Infrastructure Logistics

Vice President of the Management Board Mariusz Grab

Procurement strategy Raw material and product integration IT

GRUPA AZOTY AT A GLANCE

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49% 31% 16% 2% 2% Fertilizers 46% Compo Expert 14% 24% 13% 2% 1%

GRUPA AZOTY AT A GLANCE

BROAD PRODUCT PORTFOLIO

Revenue 2018

AGRO FERTILIZERS CHEMICALS PLASTICS ENERGY OTHER

Revenue H1 2019

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GRUPA AZOTY AT A GLANCE

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 10.0

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

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

CONSOLIDATED REVENUE (PLNbn)

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• Transaction completed on

November 26th 2018

OPERATIONS

8 48 12 7 85

GROUP’S BUSINESS BY GEOGRAPHY

Production units Commercial representatives Stabilisation units Logistics 2,053 100 578

126 77 9

Poland 48%

535 509 700 5 481

UE 37% North America 3%

3 35 15 108

South America 2% Africa 1%

8 4 64

Other Europe 5%

155 25 70 1 47

Asia 4%

THE WORLD EUR

Grupa Azoty Plastics Chemicals Energy Compo Expert Agro Fertilizers

H1 2019 REVENUE

PLNm

OPERATIONS

105 138

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OPERATIONS

FROM RAW MATERIAL TO PRODUCT GRUPA AZOTY GROUP

Natural gas Oxygen Nitrogen Methanol Phenol Benzene Sulfur Ammonia Nitric acid

Ammonium nitrate

(AN)

Calcium am monium nit rate (CAN) Ammonium sulfate nitra te (ASN) Ammonium sulfate (AS)

Mixed acid Caprolactam PA 6 POM Trioxane Modified plastics C-non Oleum Dolomite

Syngas and hydrogen product ion

Formalin Sulfuric acid Ilmenite Titanium slag Titanium white Phosphate rock Potassium chloride Phosphoric acid Fertilizers NP Fertilizers NPK / PK Adipic acid Terephthalic acid Plasticizers OXO alcohols Urea (UREA) Propylene Aldehydes Melamine UAN (UAN)

Raw materials – procurement Plastics OXO ALCOHOLS Agro Fertilizers Own production Pigments

Pulaska

Liquid fertilizer

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FEEDSTOCK CONSUMPTION BY GRUPA AZOTY GROUP IN 2018

GRUPA AZOTY POLICE GRUPA AZOTY KĘDZIERZYN

FEEDSTOCK COST ANALYSIS

BUSINESS

GRUPA AZOTY PUŁAWY GRUPA AZOTY S.A.

60% 11% 10% 9% Natural gas Energy Benzene Coal 38% 35% 10% 5% 4% Propylene Natural gas Energy Terephthalic acid Fine coal

Gas 38% Other 18% Energy 9% Propylene 9% Potassium chloride 7% Phenol 6% Phosphate rock 4% Fine coal 6% Benzene 3%

31% 21% 11% 11% 6% Phenol Gas Ammonia Caprolactam Coal 30% 24% 15% 6% 4% 4% Natural gas Potassium chloride Phosphate rock Coal Electricity Sulfur

OPERATIONS

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ENERGY COMMODITIES

NATURAL GAS HARD COAL

PRICES [YOY]

PLN/MWh USD/t

140 190 240 290

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Electricity … 40 60 80 100

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Hard coal…

CO2 [YOY]

2 7 12 17 22

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

EEX

EUR/t

40 60 80 100 120 140

sty 17 kwi 17 lip 17 paź 17 sty 18 kwi 18 lip 18 paź 18 sty 19 kwi 19 PLN/MWh

GPL * Gas - PPX*

OPERATIONS

Q2 2019 on Q2 2018 change 12%

ELECTRICITY

GAS CONSUMPTION – 2018

Q2 2019 on Q2 2018 change

• 26%

Q2 2019 on Q2 2018 change 76% Q2 2019 on Q2 2018 change GPL* – 37% TGE* – 33%

PGNiG – 96.4%

• ther – 3.6%

*Excluding transmission

GAS SUPPLY SOURCES – H1 2019

TOTAL 2018 22,168 thousand MWh

4,373 thousand MWh 2,261 thousand MWh 10,917 thousand MWh

GRUPA AZOTY POLICE GRUPA AZOTY KĘDZIERZYN GRUPA AZOTY PUŁAWY GRUPA AZOTY S.A.

4,617 thousand MWh

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OPERATIONS

AGRO FERTILIZERS

PRODUCTION CAPACITIES

• No. 2

in EU

• No. 1

in Poland

TARGET MARKETS

Source: Fertilizers Europe 5 000 10 000 15 000

Azomures S.A. Groupe Roullier Nitrogenmuvek Rt. Achema JSC Fertiberia Eurochem Agrofert Borealis Grupa Azoty Yara

[tt] Poland 73% Other EU countries 21% Other Europe 3% Asia 0.3% Africa 0.3% North America 1% South America 2%

Revenue: PLN 4.9bn EBITDA: PLN 82m EBITDA MARGIN: 2% 2018 Revenue: PLN 3.7bn EBITDA: PLN 621m EBITDA MARGIN: 17% H1 2019 REVENUE

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OPERATIONS

COMPO EXPERT

REVENUE SHARE OF THE AGRO SEGMENT Q2 2019

23% of segment revenue 20% of segment EBITDA

SYNERGIES

• 70 performance improvement initiatives

identified, mainly in procurement, production, technology, and IT

• Knowledge, capabilities and experience of the

two companies in R&D combined

• Optimisation of the COMPO EXPERT Group
• rganisational structure
• Fourfold reduction in corporate financing costs

(PLNm) Q2 2018* Q2 2019 Q/Q change H1 2018 1H 2019 H/H CHANGE Segment revenue, including: 385 369

• 4%

851 868 2% Granular NPK fertilizers 129 111

• 14%

316 311

• 2%

SRF & CRF 86 82

• 5%

190 194 2% Fertigation and foliar fertilizers 115 128 11% 234 251 7% Liquid fertilizers and biostimulants 45 45 0% 98 96

• 2%

EBITDA 30 41 37% 71 86 21% EBITDA margin 8% 11% +3pp 8% 10% +2pp

* Proforma data

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OPERATIONS

PLASTICIZERS

100 200 300 400 500

Valtris Perstorp OXO AB Deza Grupa Azoty Polynt Evonik BASF ExxonMobil

200 400 600

Oltchim SA Perstorp OXO Grupa Azoty Ineos Oxea Group BASF

OXO ALCOHOLS MELAMINE

50 100 150 200

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

PRODUCTION CAPACITIES

• No. 3

in EU

• No. 5

in EU

• No. 4

in EU OXO alcohols 20% Plasticizers 8% Urea (technica l grade) 21% Melamine 17% Titanium white 13% Other 21%

PRODUCT CATEGORIES

CHEMICALS

Revenue: PLN 3.1bn EBITDA: PLN 282m EBITDA MARGIN: 9% 2018 Revenue: PLN 1.4bn EBITDA: PLN 167m EBITDA MARGIN: 12% H1 2019 REVENUE

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OPERATIONS

PLASTICS

Poland 12% Other EU countries 68% Other Europe 2% Asia 14% Africa 1% North America 2% South America 1%

PRODUCTION CAPACITIES

POLYAMIDE 6

50 100 150 200 250 Nurel Beaulieu Ube Rhodia Domo Radici DSM Aquafil Grupa Azoty Lanxess BASF

No.1

in Poland

No.

3 in EU

Source: PCI Nylon, YellowBook 2015 Integrated

Revenue: PLN 1.6bn EBITDA: PLN 192m EBITDA MARGIN: 12% 2018 Revenue: PLN 791m EBITDA: PLN 81m EBITDA MARGIN: 10% H1 2019 REVENUE

INVESTMENTS

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STRATEGY

STRATEGIC 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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GRUPA AZOTY – INVESTMENTS

INVESTMENTS

CAPEX PROJECTS IN H1 2019 including: CAPEX in

(PLNm)

GROWTH CAPEX 202 MAINTENANCE CAPEX 60 MANDATORY CAPEX 22 PURCHASE OF FINISHED GOODS 30 OTHER (COMPONENTS, MAJOR OVERHAULS) 73 TOTAL 387 CONSOLIDATED CAPEX – CASH FLOW 439

2019 CAPEX* ≈ PLN 1.3BN

*Excluding equity investments PLNm

CAPITAL EXPENDITURE IN H1 2019

50 100 150 200

Tarnów

50 100 150 200

GK Police

50 100 150 200

GK Kędzierzyn

50 100 150 200

GK Puławy

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GRUPA AZOTY – INVESTMENTS

MAJOR CAPEX PROJECTS IN 2019

Plan 2019

Components Other Purchase of finished goods Mandatory capex Maintenance capex Growth capex Project name Company Project budget in 2019 Complet ion date Upgrade of steam generator to reduce NOx emissions Puławy PLN 42.5m 2020 Upgrade of synthesis gas compression unit supplying Ammonia Plant Kędzierzyn PLN 38m 2020 Raw gas compressor (GHH) Kędzierzyn PLN 12.8m 2019 Construction of new draft cooling tower for Lactam Department Tarnów PLN 10.1m 2020 Replacement of fertilizer drying unit 311Y PN-2 Police PLN 9.5m 2020 Upgrade of existing nitric acid production units and construction of new nitric acid production and neutralisation units and units for production of new fertilizers based on nitric acid Puławy PLN 147.8 2024 Modified Plastics Plant

Compounding

PLN 83.4m 2019 Power generation unit Puławy PLN 81m 2022 Facility for production of granulated fertilizers based on ammonium nitrate Puławy PLN 69m 2020 Construction of turbo generator set using steam from Sulfuric Acid Unit and Dual-Pressure Nitric Acid Unit, and 4 MPa steam pipeline from Sulfuric Acid Unit to Dual- Pressure Nitric Acid Unit Tarnów PLN 15m 2020 Chemical Technology and Development Centre Tarnów PLN 14m 2019 Adaptation of continuous FDO unit for periodic production of Oxoviflex Kędzierzyn PLN 10m 2019 Installation of second polyamide 6 surface modification line Tarnów PLN 10m 2020

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POLIMERY POLICE

PROJECT SCOPE:

• PDH-PP plant
• polypropylene logistics base
• propane and ethylene handling & storage terminal
• Production capacity

– propylene 429,000 tonnes/year

• polypropylene 437,000 tonnes/year
• Project commencement – Q1 2020
• Commercial launch – 2022
• Project finance
• Location: within the Pomeranian Special Economic Zone

(state aid of up to PLN 428m)

• Budgeted cost of the project: EUR 1.52bn

CAPEX EUR 1.18bn

• Hyunday Engineering Co. Ltd as the General Contractor

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

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MAIN PROJECTS IN PROGRESS

• Full Notice to

Proceed (FNTP)

Q4 2019

• Start of construction

by the General Contractor

Q1 2020

• Test run of the PDH-

PP plant

Q2 2022

• Start of commercial
• peration

Q4 2022

PROJECT SCHEDULE

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INVESTMENTS

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MODIFIED PLASTICS PLANT – COMPOUNDING

PORTFOLIO

Caprolactam intermediate in polyamide 6 (PA6) production Natural engineering plastics: PA6, POM Modified plastics: PA 6, PA66, POM, PPC, PPH , PBT

MAIN PROJECTS IN PROGRESS

PROJECT SCOPE: Construction of plastics modification unit

• Project implemented within a Special

Economic Zone

• Target production capacity 46tt

PROJECT’S KEY BENEFITS: The project will allow the Group to shift its product mix towards higher-margin segments and further enhance the value of its PA6 product

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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: Improved quality of fertilizers by applying modern mechanical granulation

INVESTMENTS

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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, improved production efficiency, consumption rates: ammonia, steam yield, electricity

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POWER GENERATION UNIT

MAIN PROJECTS IN PROGRESS

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

• Launch of the unit: 2021
• A 100 MWe coal-fired unit
• Integrated with the on-site CHP plant
• Location: Puławy
• Project budget: PLN 1.2bn

FINANCING

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GRUPA AZOTY – FINANCING

GRUPA AZOTY GROUP FINANCES AS AT JUNE 30TH 2019

• Revolving and umbrella credit facility
• PLN 3,869m

PKO and bank syndicate

• Term Loan Agreement
• PLN 650m

EBRD

• Term Loan Agreement
• PLN 1,119m

EIB

• PLN 5,638m

Total corporate financing

AVAILABLE FUNDING

Corporate credit facilities 2,353 Overdraft and multi-purpose facilities 846 Other financing sources 52

PLNm

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GRUPA AZOTY – FINANCING

GRUPA AZOTY GROUP FINANCES AS AT JUNE 30TH 2019

Total debt ratio (%) 47.3

NET DEBT BRIDGE

576 2,460 1,520 1,080 1,176 131 405 76

Net debt H1 2018 Purchase + refinancing of Compo’s debt Capital expenditure EBITDA Dividend balance Recognition of

• perating leases

Other Net debt H1 2019

NET DEBT

H1 2018 1H 2019 Net debt (PLNm) 576 2,460 Net debt/EBITDA for 12 months (ratio) 0.58* 2.09*

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