MZK: Hello. What is the Management Board s position on paying a dividend from last year s profit?

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1 moderator: Welcome to our chat session with members of the Management Board of Grupa Azoty S.A. We meet to discuss the 2013 results and the Company s current position, plans and projects. It s also an opportunity to discuss in more detail the most interesting points brought up in a recent interview published on StockWatch.pl. You can ask your questions now, and our Guests will join us to answer them at 1:30 pm. moderator: I remind you of our chat rules: you send your questions to the moderator; the questions are selected by our Guests and published together with answers; you can see the lineup of your questions at the bottom of the screen; the moderator may delete a question if it doesn t comply with the rules. moderator: Information for journalists reporting on the chat session: using any information from today s chat session in your materials requires citing the source. If you have any questions or doubts, please contact: biuro@stockwatch.pl Grupa Azoty: Welcome to today s chat with representatives of the Management Board of Grupa Azoty. Mr Andrzej Skolmowski, Vice-President of the Management Board in charge of finances, and Mr Marek Kapłucha, Vice-President of the Management Board in charge of the supply chain management, will answer your questions. MZK: Hello. What is the Management Board s position on paying a dividend from last year s profit? Andrzej Skolmowski: The official Management Board s decision on the payment of a dividend will be made soon. In the Strategy for , the Management Board declared that 40-60% of the Company s profits would be distributed as dividends. łodzianin: What can you say about the equity involvement of the Russian company Akron in Grupa Azoty? The issue has long been forgotten. Have you received any signals or information regarding their plans to either increase or reduce their shareholding? Andrzej Skolmowski: A subsidiary of Akron still holds over 15% of shares in Grupa Azoty S.A. We have no knowledge of any recent declarations as to the future of the shareholder s equity stake in the Company, and the results reported by Akron give no grounds for predicting the future, either. Perhaps the current price discourages a potential sale. Gość unconfirmed: How is the acquisition of Organika Sarzyna going? Andrzej Skolmowski: The transaction depends on whether the tender offer for Ciech shares is completed successfully. We are waiting for the outcome. Gość unconfirmed: What are your predictions regarding raw material prices? Marek Kapłucha: At the Company we have a general rule not to comment on the future or forecasts. Having said that, Grupa Azoty operates on global markets and is subject to fluctuations in global market prices, which are not showing any clear signs of moving into an uptrend or a downtrend right now, as the economic environment remains uncertain, with strong price cycles,

2 many of which are hard to explain. In the fertilizers segment, which contributes some 60% of total revenue, we focus our attention on global urea and grain markets. Grain prices are expected to rise in the medium term, which is a good sign for the fertilizers market, as higher incomes will encourage farmers to spend more on fertilizers. SW-fan: Would you consider a share buy-back instead of a dividend payment? The Company is not significantly undervalued, but it s still something. Unlike dividends, buybacks are not taxed at a flat rate, but investors make their own tax calculations. This may be more tax effective. Andrzej Skolmowski: Our dividend policy was presented in the strategy adopted by the Management Board. As we have said on many occasions, we are finalising our long-term investment programme. Believe me, having own cash helps a lot. Gość unconfirmed: Hello. What steps is the Group planning to take in connection with the potential acquisition of Organika Sarzyna? The process has been going on for a long time now. Has the recent tender offer for Ciech shares changed Grupa Azoty s negotiating position? Does the tender offer mean that the transaction will be abandoned? Andrzej Skolmowski: We are waiting for the results of the tender offer for Ciech shares. Anna unconfirmed: Hello. What are your plans for the Tarnoform Division? Is it true that it will operate only until the end of the year? Andrzej Skolmowski: Recognition of an impairment loss does not mean the unit has to be closed. We have no plans of closing the Tarnoform Division. monika unconfirmed: How much money are you going to spend on investments in the near term, and how much debt are you going to incur in the process? Andrzej Skolmowski: Since we don t publish forecasts, we can t publish capex data, either. What we can say is that in line with our stated strategy we plan to build the Group s value through organic growth (supported by capital expenditure) and, possibly, through M&A transactions, provided that a given project fits with our core business. We plan to finance our investments from external sources (credit facilities, bonds in the future) and internal funds, in such proportions so as not to exceed the EBITDA to debt ratio of 2.5x. We are now finalising our long-term investment programme at the Group, based on the criteria set out in the strategy. Gość unconfirmed: Hello. Are you considering buying the residual stakes in your controlled subsidiaries Puławy and Police? Why are these companies still listed on the WSE? What is the rationale behind not acquiring 100% of the shares in the subsidiaries and withdrawing them from stock exchange listing? This could strengthen Grupa Azoty and the liquidity of its shares in the long run. Andrzej Skolmowski: We have no such plans. We have decided to give priority to the financing of our large-scale investment programme. InwestorGPW unconfirmed: Will Puławy be withdrawn from listing on the WSE?

3 Andrzej Skolmowski: The Management Board currently has no plans to withdraw the listing of Grupa Azoty ZA Puławy SA shares from the stock exchange. SW-fan: Integration of business operations. This is the key theme for me today. It is common knowledge that 80% of M&A transactions don t work out, and you have just completed a series of mergers. Could you give us some more insight on that? I mean how do you solve problems arising from the fact that entire teams that used to compete with each other are now forced to cooperate, and they just do not know which side they are on, because the situation is the same at the top level. Marek Kapłucha: Indeed, it is one of the Group s top priorities. We are currently running the Operational Excellence programme, which is being implemented jointly with The Boston Consulting Group. There are many areas in which we have decided to continue our efforts towards greater integration. These include production, logistics and procurement. At the corporate level, there is still a lot of work to be done to achieve effective Group-wide integration. We have recently reported approximately PLN 90m in synergies generated by the end of 2013 from the Azoty/Puławy merger, and more synergies are expected from the Operational Excellence programme currently under way. KOVfan unconfirmed: What is your take on the tender offer for Ciech shares? Will the acquisition of Ciech impact your operations? Andrzej Skolmowski: We are watching the process very closely and waiting to see how the market reacts to it. The outcome of the tender offer will determine what happens to Sarzyna. There is no overlap between Ciech s operations and ours. Ciech s future growth is definitely important for the Polish chemical sector, so we are keeping our fingers crossed that it happens. MZK: Are economic problems in Ukraine affecting the country s fertilizers output? Andrzej Skolmowski: Of course they are. As you know, the key feedstock in fertilizer production is natural gas. If Ukraine has or will have in the future any gas problems, this will definitely affect fertilizers production. Russia rising the gas price was the first negative sign for Ukraine. The country s situation is not enviable. mk unconfirmed: What will be the tangible benefits of the planned construction of a new PA6 plant? Andrzej Skolmowski: We expect the investment in additional PA6 production capacities to bring us a number of benefits. In particular, it will enable us to utilise caprolactam made in Puławy, which, due to rising competitive pressures from China, will no longer be able to generate a positive margin for the Group as a separate product. We also expect tax benefits as the plant is to be built within a special economic zone (the project will be implemented provided that approval is obtained for extending the Kraków economic zone to cover the project site). SW-fan: We ve had a very mild winter this year, almost no winter at all, and the vegetation period has started earlier than usual. Do you expect any impact on the seasonal structure of

4 fertilizer sales? Do you expect them to be higher, lower, different than in a typical year in this part of the world? Marek Kapłucha: It s true that warm weather prompts earlier application of fertilizers, and we have noticed that fertilizer application has started early this year, which will also accelerate the crop production cycle, unless the weather changes significantly in coming weeks. The previous year was not the best year for compound fertilizers, especially considering low grain prices in the second half of the year. However, the trend has reversed (grain prices are rising), and we should see a positive change in the fertilizer application structure, with higher consumption of NPK fertilizers vs. nitrogen fertilizers. It s also important to note that the Group is promoting its liquid fertilizers, including RSM and the new RSMS product containing sulphur, both produced by Puławy. We expect farmers to continue to shift from solid to liquid fertilizers. Gość unconfirmed: Is the payment of an interim dividend from the 2014 profit possible, considering the low profit posted by the parent company of just PLN 44m, compared with PLN 250m last year? Andrzej Skolmowski: This is certainly a hot, topical issue. We have given it a lot of thought, but an interim dividend would not be in line with the Management Board s dividend policy. Having said that, the final decision lies with the General Meeting. sasky: Hello. What are your projections of fertilizer prices this year? Andrzej Skolmowski: Considering the slight oversupply, the Company expects fertilizer prices to be lower compared with last year. Gość unconfirmed: Hello. Are you going to distribute between 40% and 60% of your consolidated profit for the previous year, which was approximately PLN 700m? Andrzej Skolmowski: PLN 700m is our consolidated profit. In accordance with the Polish Commercial Companies Code, it s the parent company s profit that may be and will be distributed. Pi unconfirmed: When will a real consolidation of the Group begin? What I mean is product and marketing integration, elimination of double cost items, launch of a Group-wide purchasing centre, etc. What amount of savings in PLN do you think these measures could bring? Marek Kapłucha: The consolidation process at the Group has been under way for a year now. It started in March Let me remind you that we have recently informed the public of approximately PLN 90m in synergies generated by the end of 2013, which resulted from measures taken in the areas you have just mentioned. In past weeks, we have launched the Operational Excellence programme, which aims at augmenting the Group-wide consolidation processes and achieving cost efficiencies and/or revenue growth. In fertilizers, for one, those savings and upsides will be achieved by significantly expanding the product portfolio offered to clients by the Group-wide sales force. Grzegr unconfirmed: Do you plan to acquire new clients from non-eu countries?

5 Andrzej Skolmowski: We are doing it on a regular basis, in line with our operational strategy adopted for individual Business Segments. We have already established our foothold on other continents. Europe still remains our home market, accounting for 90% of our sales, and we are determined to maintain good relations with our European customers. However, new prospects have opened up before us on other continents, including Africa. Gość unconfirmed: Does Grupa Azoty plan to announce a tender offer for 100% of shares in Police? Last year, the Management Board mentioned that the option was under consideration. Andrzej Skolmowski: As we have said before that option is now off the table. We give priority to the financing of our large-scale investment programme. Gość unconfirmed: A question concerning your dividend policy. Will the planned dividend at 40-60% be distributed from the Group s consolidated profit (approximately PLN 700m) or Grupa Azoty s stand-alone profit (about PLN 100m)? Andrzej Skolmowski: Under the adopted strategy, the Management Board will recommend to the General Meeting dividend distributions of 40% to 60% of the Company s net profit for a given financial year. Any decisions on dividend payment will take account of a number of factors concerning the Company and the Grupa Azoty Group, including business outlook, future profits, cash needs, financial standing, growth plans, and legal requirements. FunkyKoval unconfirmed: Hello. How do you plan to maintain the 2013 performance in 2014? Andrzej Skolmowski: Given that our 2013 performance was largely impacted by non-recurrent events (mainly related to acquisitions), we believe that our financial results should be compared based on figures adjusted for the effects of one-off events. We are of the opinion that favourable weather conditions (with an impact on fertilizer sales), a good outlook for Poland s and EU s economic growth (which is important for the chemicals segment), and absence of unplanned events (accidents, downtimes, etc.) will allow us to achieve our production and commercial targets, while internal operational excellence projects and the gradual consumption of synergies will enable us to cut our costs and boost EBITDA in mk unconfirmed: Which firms are putting the greatest competitive pressure on Grupa Azoty in the plastics segment? Andrzej Skolmowski: There are a number of them all Champions League players: BASF, Lanxess, Domo, and DSM. Gość unconfirmed: Isn t the recent gas price hike for Ukraine beneficial to Grupa Azoty, given that higher gas prices will weaken the position of competitors east of the Polish border? Will it drive fertilizer prices in Europe and, consequently, Grupa Azoty s profits higher? Marek Kapłucha: Ukraine is a neighbouring market and therefore we are watching the situation east of our border very closely. However, changes in gas prices for Ukraine do not pose a direct threat or opportunity for our market, as we do not know the price at which gas is bought by

6 companies owned by Mr Firtash (which account for 70% of Ukraine s fertilizer assets). We have not identified any particular threats arising from those developments, other than potentially lower crop yields in Ukraine due to social unrest. This might negatively affect grain supply and drive up grain prices, as Ukraine is one of world s leading grain exporters. Higher grain prices could drive up revenues of Polish and European farmers, and more money would be spent on fertilizers. mk unconfirmed: What does the future hold for the POM plant? How exactly are you going to improve its efficiency? Andrzej Skolmowski: At present we have no plans to close the POM plant. Efficiency of that installation will be improved mainly through reduced consumption of feedstocks and energy. Market considerations are also important, and we are working on this aspect. dm unconfirmed: Is your petrochemical project a real deal or just a PR stunt? Why hasn t the primary product been specified yet? Who is the leader of the petrochemical project in Gdańsk? It seems that no one wants to assume responsibility for the project and both parties (Azoty and Lotos) are reluctant to invest any money in it (which probably means they have no money). Andrzej Skolmowski: We are considering constructing a steam cracker unit to handle the production of light olefins, such as ethylene, propylene and butadiene, which are the key feedstocks in plastics production, as well as new chemical installations at Grupa Azoty plants to handle their further processing. However, a final decision will be made only after a feasibility study has been completed. At this stage, it is too early to discuss financing sources. Considering our balance sheet and corporate strategy it seems rather clear that we will not finance the project on our own. As regards the performance of project-related tasks under our leadership, as agreed with Lotos, I can assure you that the project is progressing as scheduled, with only minor delays, and we have no problems with the division of responsibilities. mk unconfirmed: What caused the downward correction in Grupa Azoty share price in Q4 2013? Andrzej Skolmowski: The price of shares in public companies is regulated by the capital market, and is determined by a number of factors beyond the issuer s control. The end of the year had a strong negative impact on the market, including the chemical sector, and the turmoil related to open-ended pension funds (OFE) additionally undermined market sentiment. FunkyKoval unconfirmed: To what extent was the Company impacted by the falling chemical index? Andrzej Skolmowski: You can see the effect clearly on the price chart. Once again, it turns out that we are better off in the Group! :) Gość unconfirmed: Can you give us more insight on the project with Lotos. What NPV is expected for this project? Is the investment attractive for shareholders? Andrzej Skolmowski: You people are very inquisitive...

7 It is much too early to publish such information, as we are still working on the feasibility study. As far as the financing of the project is concerned, there exist financing sources other than the Group s balance sheet. mk unconfirmed: Why was Grupa Azoty s offer for the acquisition of Petrokemija Kutina turned down? Do you plan any other foreign acquisitions this year? Andrzej Skolmowski: According to the seller, our price was too low. However, the price was in line with our valuation of that company, and the information published recently by Kutina only proves us right. Gość unconfirmed: Is the Management Board or are you personally considering purchasing Grupa Azoty shares? At Synthos, you can definitely feel the Management Board s firm confidence in the company lately, but there have been no such signals from Grupa Azoty so far, which is curious from a shareholder s perspective... Andrzej Skolmowski: We do have a firm belief in the Company. However, we cannot inform you of any decisions or plans other than by official channels, as this would fall under market manipulation. Gość unconfirmed: Do you think that Grupa Azoty s current share price accurately reflects the Company s value, or is the Company undervalued? Andrzej Skolmowski: In our opinion, which is substantiated by recent Bloomberg forecasts, the shares are underpriced. SW-fan: The fertilizer business is to a large extent based on gas processing. What is the potential or actual impact of the gas tensions between Russia and Ukraine on your performance and business risks? Marek Kapłucha: A lot will depend on whether the amounts owed to Russia for gas already sold to Ukraine are settled or not. If those payments are not made (and that scenario seems very possible), Russia may cut its gas supplies to Ukraine. This, in turn, may affect the Polish fertilizer business, as the lion s share of gas flowing to Europe from the eastern direction passes through Ukraine. However, there is still hope that the European and American loans for Ukraine will allow that country to settle at least some of its payables towards Russia. Meanwhile Grupa Azoty is working to diversify its gas sources. Currently we buy approximately 30% of gas from companies other than our key/strategic supplier, PGNIG. We will continue those efforts to achieve the ultimate goal and cut our reliance on a single source of gas supplies. Obviously, a lot will depend not so much on our ability to purchase gas from alternative suppliers but on the availability of transmission capacities, that is gas interconnectors on Poland s borders and the LNG terminal. We hope that these projects will progress as planned. Diversification of gas suppliers is our response to the rising tensions in Ukraine and the risk of closing off taps on the gas pipeline running through Ukraine. Gość unconfirmed: Has your negotiating position in Grupa Azoty/PGNiG gas price negotiations changed after the acquisition of Puławy? Do recent gas contracts provide for any price discounts given that with all its facilities the Group has definitely become a major customer for natural gas?

8 Andrzej Skolmowski: We have just been told there are about a thousand of us in the chat room today... Luckily, the US President is not holding a press conference today. He would have some hard competition. Coming back to your question. We have always emphasised that the Group s gas strategy may not stand in opposition to our national gas distributor. Of course, there is no denying that the growing scale of our business has strengthened our bargaining position, and we are leveraging that effect in negotiations. We are consistently implementing our strategy, with the highest priority assigned to diversification of gas sources. We can already see effects of our efforts. Gość unconfirmed: Will there be any pay rise for Grupa Azoty employees this year? Andrzej Skolmowski: Under an agreement signed with Company trade unions, pay will be raised for Grupa Azoty SA employees in Gość unconfirmed: Are you considering commercial cooperation with Acron in purchasing feedstocks for fertilizer production? There were reports in the press last year saying that the Russians would be willing to cooperate in this area. Andrzej Skolmowski: We said on many occasions that we have long-standing business relationships with Russian partners. We haven t worked with Acron, though. We have yet to complete a project launched by that company in May Only then can commercial negotiations begin. Doing business under pressure is anything but comfortable. Gość unconfirmed: The investment programme you have mentioned earlier is capital-intensive. Is a significant improvement in operating performance going forward one of its objectives? Are you implementing the most profitable projects only? Andrzej Skolmowski: Our plan is to implement projects offering the highest rates of return. Projects will be short-listed based on their potential to achieve the financial indicators specified in the strategy including ROCE of 14%. T.P. unconfirmed: Is Azoty still a partner in a project to establish the International Centre for Chemical Safety and Security? If so, when will the Centre open? Andrzej Skolmowski: We have a strong commitment to chemical safety and security, and we remain involved in the project as one of the partners. In our CSR strategy, the Company has firmly stated its dedication to environmental protection. Gość unconfirmed: How did you arrive at PLN 90m? Does this mean that the combined result of Puławy and Grupa Azoty would have been lower by as much as PLN 90m if it weren t for the acquisition? Marek Kapłucha: The PLN 90m-worth of synergies from the Puławy/Grupa Azoty merger are reflected both in our revenue (broader portfolio of products sold to a larger number of clients or on new markets, such as NPK fertilizers sold to customers in the US and South America) and costs

9 (lower prices of energy and other key feedstocks purchased by the Group as a whole, not as individual companies). Sławek unconfirmed: I understand from what you said that the dividend payout will be 40%-60% of PLN Or maybe I got something wrong? I think many small investors are interested to know the answer. Andrzej Skolmowski: As you know very well, the final decision lies with the General Meeting. The Management Board s recommendation will be issued in due time. Gość unconfirmed: What are the parameters of the polyamide 6 project in Tarnów (caprolactam processing). Does the Management Board have the specific parameters for this investment, including NPV and IRR? It s a major project that s why I m asking about its profitability. Andrzej Skolmowski: We are confident that an in-depth analysis of the project based on a feasibility study and its planned outcomes are fully in line with the Group s efficiency (profitability) targets adopted in the strategy. Gość unconfirmed: What is the forecast dividend yield for 2014 and 2015? Is a DY of 7-8% realistic in the case of Puławy? Andrzej Skolmowski: The Company does not publish any forecasts. Gość unconfirmed: Petrokemija is not running at a profit. Would a potential closure of that plant open up an opportunity for you enter a new market in the south? Or is the closure unlikely? Marek Kapłucha: We don t want to go as far as to comment on possible scenarios for Petrokemija. We have recently expressed our interest in the acquisition of that company, but our offer was turned down at an initial stage. One of the reasons behind our interest in the Croatian company was the potential access to new markets. But the value of these markets depends on whether you have your production located there or you have to sell your products from a country far away. Logistics costs would probably have a negative impact on sales. Agronom unconfirmed: Is Grupa Azoty ready to face the pressure from increased supply of imported NPK and nitrogen fertilizers? Is the current structure of distribution companies, with many of them selling high volumes of imported fertilizers, efficient enough to weather more challenging times? Can loyal distributors who sell only fertilizers manufactured at home (with Grupa Azoty accounting for a high 80% of total sales) count on priority treatment in terms of quantities in contracts? Andrzej Skolmowski: Well, it s a difficult question. I m sorry, but I cannot discuss the Company s sales policy and commercial relations with clients in an online chat. Gość unconfirmed: Do you expect a year-on-year improvement in Q vs. Q1 2013?

10 Andrzej Skolmowski: As I said, we do not publish forecasts, but we certainly hope so. The weather has accelerated the natural farm work cycle, for sure. As for the effects, you will have to wait until May 15th Gość unconfirmed: Have you resumed production at ATT Polymers in Germany? Andrzej Skolmowski: ATT still produces PA6. Only a small part of the production plant was shut down, but sales volumes have not changed as the processing of caprolactam into PA6 was outsourced. We had to do it to maintain our market share. Gość unconfirmed: What are your plans regarding purchases of natural gas as the Group s key feedstock and key cost driver? Given the current high efficiency of your installations, you will probably not be able to further drive down costs to improve your operating performance, so what will you do to secure lower gas prices? Marek Kapłucha: Indeed, we have significantly increased the efficiency of our fertilizer production plants, and we now need approximately cubic metres of gas to make one tonne of ammonia. It s around 35% less than Russian or Ukrainian production plants. Therefore, the only way to reduce the cost of gas is to participate in the liberalisation of the Polish/European gas market and to diversify gas suppliers. At present, around 30% of our gas purchases are sourced from suppliers other than PGNiG, and we plan to increase that share, especially in the context of the Ukraine crisis. Gość unconfirmed: Does Grupa Azoty plan to start making graphene? Andrzej Skolmowski: We are working closely with R&D centres. Graphene definitely has a future! dm unconfirmed: Why is the Company investing in polyamide in Tarnów, where most of its caprolactam is processed, rather than in Puławy where the plant is not integrated at all? Will this involve additional transport costs? Andrzej Skolmowski: Several key factors influenced our decision to go ahead with the project in Tarnów: - production know how based in Tarnów - location of the project in a Special Economic Zone - operational synergies with the Tarnów plant in the area of lab services, storage, production, and power generation. Andrzej Skolmowski and Marek Kapłucha: Thank you for participating in the chat. It s been a pleasure! Unfortunately, we did not have enough time to answer all your questions. You are most welcome to participate in the next chat. Until then, good-bye! moderator: Thank you for such a great turnout. We have broken the record today with more than 1,100 investors in the chat room! I would also like to thank Grupa Azoty. See you next time!