H1 218 RESULTS PRESENTATION August 29th 218 @Grupa_Azoty #GrupaAzoty H1 218
2 DEVELOPMENTS KEY DEVELOPMENTS IN H1 218 Sales consolidation 1 years on the Warsaw Stock Exchange FTSE4Good Corporate financing Dividend Diversification GRUPA AZOTY GROUP
3 DEVELOPMENTS FINANCIAL HIGHLIGHTS H1 218 PLN 4,977m Consolidated revenue PLN 529m Consolidated EBITDA PLN 536m Consolidated EBITDA excluding one-off items PLN 124m PLN 132m estimate (Current Report 39/218) Net profit/(loss) PLN 175m Net profit/(loss) excluding one-off items
4 DEVELOPMENTS DIVIDENDS PAID BY THE PARENT Dividend for 29 39.9 62 (PLNm) Dividend for 212 148.8 251 Dividend for 213 19.9 44 Dividend for 215 Dividend for 216 83.3 78.4 29 225 Dividend for 217 123.4 355 Dividend amount Net profit Dividends paid since IPO over PLN 493m
5 DEVELOPMENTS GRUPA AZOTY INTEGRATED REPORT 216/217 online: www.raport.grupaazoty.com In 216 and 217 we: Reduced energy consumption Reduced N 2 O emissions from production of nitric acid Spent over PLN 6m on projects designed to reduce our environmental impacts Had fatal accidents Contributed over PLN 15min donations and sponsorships to promote the development of our local communities IN THE REPORT: Challenges lying ahead and scenarios for the future Grupa Azoty Group New Sustainable Development Strategy for 218 222 consistent with the UN Sustainable Development Goals Innovative products and programmes for the non-fertilizer business
6 DEVELOPMENTS 1 YEARS ON Puławy (up to 95.98%) Siarkopol (99.33%) Puławy (1.4%) 9.8 9.9 1. 9. 9.6 Equity since IPO x 6.4 Police (66%) Kędzierzyn (94%) 7.1 Price low/high since IPO: 6./113. ATT Polymers GmbH (1%) Kędzierzyn (53%) 5.3 Capitalisation PLN 3.5bn Free float 26% 1.3 1.4 1.2 1.9 EV/EBITDA 3.1x 27 28 29 21 211 212 213 214 215 216 217 Consolidated revenue (PLNbn) Dividends paid: PLN 493m 6
CONSOLIDATED FINANCIAL INFORMATION GRUPA AZOTY
8 GRUPA AZOTY CONSOLIDATED FINANCIAL INFORMATION FINANCIAL HIGHLIGHTS PLNm Adverse impact of rising prices of energy commodities (coal and natural gas up over 3%) and carbon emission allowances Unfavourable weather conditions in the first quarter, leading to reduced fertilizer application and increased supply in the second quarter High inventory levels and increased supply as the key drivers behind fertilizer prices Revenue EBITDA Net profit 2,183 EBITDA margin EBITDA margin 9% % 12% 5% 15% 11% -152% -67% 2,38 4,87 4,877 277 262 133 126 739 715 536 529 134 122 397 378 175 124-64 -13 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 In 217 adjusted for impairment losses on the fat processing unit and Elektrownia Puławy Power Plant. In 218 adjusted for impairment losses on the fat processing unit and the effect of loss of control over AFRIG S.A.
9 GRUPA AZOTY CONSOLIDATED FINANCIAL INFORMATION REVENUE ANALYSIS SEGMENT CONTRIBUTION IN H1 218 AGRO FERTILIZERS REVENUE (PLNm) 2,317 48% CHEMICALS 31% 1,514 PLASTICS 17% 831 NON-FERTILIZER BUSINESS ENERGY 3% 141 52% OTHER ACTIVITIES 1% 74 EV/EBITDA* 5.8 9.1 11.3 7.5 5.8 3.1 PHOSAGRO YARA CF INDUSTRIES MOSAIC CHEMICAL BASF GRUPA AZOTY LTM EBITDA as at March 31st 218
1 GRUPA AZOTY CONSOLIDATED FINANCIAL INFORMATION H1 218 EBITDA Business segments of the Grupa Azoty Group (PLNm) positive effect on EBITDA negative effect on EBITDA one-offs 24 48 29 5 1 266 7 714 529 * adjusted for one-offs Chemicals Higher prices of sulfur and titanium white contributing to margin improvement Higher sales volume in the OXO business Stabilisation of the Melamine business Energy Low Q1 217 base due to recognition of impairment loss on Elektrownia Puławy Power Plant capex Higher value of gas sales Plastics 16% yoy depreciation of the US dollar constricting sales margins, mainly in the Asian region Segment s performance impacted by rising energy costs Production structure modified towards increased volumes of caprolactam processed into PA6 in an attempt to mitigate the impact of adverse market factors Agro-Fertilizers High inventory levels and strong supply with an impact on the policy of redirecting Azoty volumes to the chemicals business Higher prices of gas and energy commodities, including carbon emission allowances
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 11 RAW MATERIALS 15 NATURAL GAS PLN/MWh PGNiG taryfa TGE DA import/pgnig 2/3/218; 257.44 2/3/218; 214.23 5 NATURAL GAS CONSUMPTION (MILLION MWH) H1 218 TOTAL 11.8 Grupa Azoty S.A. 1. Grupa Azoty POLICE 2.9 Grupa Azoty PUŁAWY 5.7 12% of natural gas consumption in Poland Grupa Azoty KĘDZIERZYN 2.2
12 RAW MATERIALS ENERGY RESOURCES ELECTRICITY PRICES CO2 PRICES PLN/MWh 24 EUR/t 17 19 12 7 14 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Q3 217 Q4 217 Q1 218 Q2 218 2 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Q3 217 Q4217 Q1 218 Q2 218 IRDN EEX HARD COAL PRICES CO2 EMISSIONS ( TONNES) USD/t H1 218 Grupa Azoty S.A. 544 8 Grupa Azoty POLICE 877 4 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Q3 217 Q4 217 Q1 218 Q2 218 ARA Grupa Azoty PUŁAWY 1,765 Grupa Azoty KĘDZIERZYN 662
13 RAW MATERIALS FALLING FERTILIZER PRICES AND SIGNIFICANTLY GROWING PRICES OF GAS EUR/MWh PPX, TTF DA, GPL DA PLN/t 15 27 22 1 17 5 12 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 215 216 217 218 THE POLISH POWER EXCHANGE Ammonium nitrate AN 33.5% France, delivered (bulk) (PLN/t) Ammonium nitrate (average retail price on the Polish market) TTF DA UREA prilled FOB Baltic (PLN/t) Urea average retail price on the Polish market
14 AGRO FERTILIZERS AGRO FERTILIZERS GLOBALLY Areas most affected by droughts -7.5 million tonnes Significant decrease in wheat production in EU caused by weather anomalies. Total production in EU: 137.5 million tonnes < = -5-5 to -499-1 to -49 1 to 5 51 to 5 > 5 Areas affected by drought, winter grains Year 218 period 3 (Apr 11 Jun 1) Long droughts EU 28 GRAIN PRODUCTION FORECAST 217/218* France -3.2% Germany -8.6% Poland -14.8% Italy 2.% United Kingdom -3.6% Spain 21.8% Hungary 9.4% Romania -18.3% Heavy rain * Largest producers (8% of EU production)/dg AGRI-G4 Source: USDA PSD
15 AGRO FERTILIZERS AGRO FERTILIZERS GLOBALLY CONSUMPTION OF FERTILIZERS (N, P 2 O 5, K 2 O), IN MILLION TONNES 25 2 15 1 5 5 4 3 2 1 World N+P+K (left axis) World N+P+K forecast (left axis) Europe N+P+K (right axis) Europe N+P+K forecast (right axis) 215 216 217 218 219 22 221 222 Poland N+P+K (right axis) Poland N+P+K forecast (right axis) CBOT GRAN PRICES/GLOBAL GRAIN STOCKS million tonnes USD/t 35 7 3 6 25 5 2 4 15 3 1 2 5 1 cze 12 cze 13 cze 14 cze 15 cze 16 cze 17 cze 18 Grain stock - million t Average wheat price CBOT (USD/t) Average corn price CBOT (USD/t) Source: Polish Central Statistical Office, IFA, USDA, GA data. 15
16 AGRO FERTILIZERS AGRO FERTILIZERS GLOBALLY Urea production capacity 21 22 AN production capacity 21 22 5 (tys. ton) 3 (tys. ton) 4 3 2 2 1 1 21 215 22 21 215 22 Bliski Wschód Europa Zach. i Centr. Rosja Ukraina Białoruś source: Integer 218 Central and Western Europe Russia Ukraine Lithuania Georgia Belarus source: IHS 9/216 AN Urea In the Middle East, between 215 and 22 production capacity grew in Iran; The growing trend will continue until 22; No other significant production capacity hikes are expected in the above countries/regions. Ammonium nitrate No significant increase in ammonium nitrate production capacity is expected by 22; The production capacity growth that was seen in Central and Western Europe between 215 and 22 was mainly attributable to Nitrogenmuvek (217) and YARA (ammonium nitrate, technical grade) (217). In Belarus, the ammonium nitrate production capacity rose after an obsolete production unit was replaced by a new one.
17 AGRO FERTILIZERS IMPORTS OF NITRATE FERTILIZERS 217-218 VOLUMES OF AMMONIUM NITRATE IMPORTS CUMULATIVELY 1H218/1H217: 49% 217 218 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec VOLUMES OF UREA IMPORTS CUMULATIVELY 217 218 1H218/1H217: 1% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Analytical Centre, the Tax Administration Chamber in Warsaw.
18 AGRO FERTILIZERS FERTILIZERS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue PLN 1.15m Revenue PLN 2.317m EBITDA: PLN -7m EBITDA: PLN 98m NPK 31% EBITDA MARGIN: -6.3% EBITDA MARGIN: 4.2% Nitrogen fertilizers and ammonia 62% Other 7% VOLUMES ( TONNES) 4 3 2 1 Nitrate Phosphate and NPK fertilizers Urea Ammonium sulfate UAN Q2 217 Q2 218
USD/t EUR/t Q1 14 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 EUR/t Market spreads EUR/t 19 AGRO FERTILIZERS NITROGEN FERTILIZERS MARKET OVERVIEW 3 25 2 15 1 5 Market deltas expressed as CAN (27%N) equivalent 16 14 12 1 8 6 4 2 CAN/ammonia delta 129 136 average annualised 113 112 17 115 214 215 216 217 H1 217H1 218 Urea (27%N) Ammonia (27%N) CAN (27%N) 35 3 25 2 15 1 5 Pricing trends (cumulative) 2% 6% 125 128 149 158 286 257 215 225 AS UAN Ammonia Urea H1 217 H1 218-1% 5% 3 25 2 15 1 5-4% -1% 27 266 19 182 CAN AN H1 217 H1 218 OUTLOOK: In H2 218, prices of agricultural products are expected to increase due to the deterioration of their balance in Poland and the EU (droughts in H1 218). Demand for nitrogen fertilisers in Q3 218 (harvest period) is estimated to be low. A slight revival is expected in September (autumn application OUTLOOK: season). In H2 218, prices of nitrogen fertilisers are forecast to be steadily rising, the growth being an effect of the largest players pricing policies, the prospects of urea price growth on global markets, and the rising price of natural gas (used in production of nitrogen fertilizers). A negative supply-demand balance in urea on global markets in H2 218 will support urea prices. The demand for urea in Brazil and India and the limited availability of the fertilizer in China and Iran will also play a role.
USD/t Q1 14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Market spreads USD/t USD/t 2 AGRO FERTILIZERS COMPOUND FERTILIZERS MARKET OVERVIEW 4 35 3 25 2 15 1 5 Market deltas expressed as NPK 16-16-16 equivale nt 1 8 6 4 2 NPK 3x16/raw materials* delta average annualised 86 76 69 49 42 52 Potassium chloride Phosphate rock Urea Ammonium sulfate NPK 16-16-16 214 215 216 217 H1 217H1 218 * Potassium chloride, phosphate rock, urea, ammonium sulfate Pricing trends (cumulative) 5 4 3 2 1 +17% +8% -1% +1% +19% +3% 336 393 237 257 286 257 224 246 95 113 94 97 DAP 18-46 NPK 16-16-16 Ammonia Potassium chloride Sulfur Phosphate rock H1 217 H1 218 OUTLOOK: DAP: The shutdown of the Mosaic unit will be a balancing factor to the launch of additional capacities in the Middle East and North Africa and will OUTLOOK: stabilise the global supply/demand balance. NPK: the level of demand expected to be seen in Europe in Q4 and the cost pressure from energy prices will push up NPK prices in the region.
21 CHEMICALS CHEMICALS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue PLN 745m Revenue PLN 1,514m Melamine 17% Titanium white 14% EBITDA: PLN 87m EBITDA MARGIN: 11.7% EBITDA: PLN 214m EBITDA MARGIN: 14.1% Urea (technical grade) 19% Other 22% Plasticizers 8% OXO alcohols 2% VOLUMES ( TONNES) 15 1 5 OXO alcohols Plasticizers Urea (technical grade) Melamine Titanium white Q2 217 Q2 218
EUR/t Q1 14 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 438 339 567 488 499 617 EUR/t Market spreads EUR/t 22 CHEMICALS CHEMICALS MARKET OVERVIEW Market deltas DEHT/propylene delta 1 8 1 6 1 4 1 2 1 8 6 4 2 7 6 5 4 3 2 1 average annualised 214 215 216 217 H1 217 H1 218 2-EH Propylene DEHT (DOTP) 3 Pricing trends (cumulative) +1% -5% +11% +28% +11% 2 1 2,94 2,32 1,92 1,12 1,361 1,297 1,467 1,635 862 958 2-EH DEHT Melamine Titanium white Propylene H1 217 H1 218 OUTLOOK: Demand for OXO products is forecast to keep rising. The projected upward trends in the prices of raw materials relative to to the first half of the year and on a year-on-year basis will increase the prices of OXO products. Demand for plasticizers has been rising steadily (especially in the case of non-phthalates), a trend forecast to continue into coming years. Titanium white supply and demand balanced out as a result of increased imports from China to Europe Increased product availability depressed prices in the second quarter As at the end of the first half-year, prices reached a record high Signs of a market slowdown seen after the end of the first half-year
23 PLASTICS PLASTICS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue PLN 42m Revenue PLN 831m EBITDA: PLN 59m EBITDA MARGIN: 14.% EBITDA: PLN 119m EBITDA MARGIN: 14.3% Polyamide 84% Caprolactam 1% Other 6% VOLUMES ( TONNES) 5 4 3 2 1 Polyamide Caprolactam Q2 217 Q2 218
EUR/t USD/t Q1 14 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 EUR/t 24 PLASTICS PLASTICS MARKET OVERVIEW 2 5 Market deltas 12 Sales of PA6 Grupa Azoty 2 1 5 1 5 1 8 6 4 +51% 2 Caprolactam Benzene Polyamide 6 211 212 213 214 215 216 217 H1 217 H1 218 2 5 2 1 5 1 5 Pricing trends (cumulative) +1% +2% -1% -5% 2,115 2,14 2,169 2,25 821 739 1,426 1,351 Benzene Phenol Liquid caprolactam Polyamide 6 H1 217 H1 218 2 5 2 1 5 1 5 +9% 1,923 2,98 Solid caprolactam H1 217 H1 218 OUTLOOK: Demand and supply trends, combined with crude oil prices, are the main factors shaping the market of PA6 and CPL. The European polyamide 6 market is expected to remain stable, with strong demand and balanced supply. OUTLOOK: The continued demand for PA6 in Europe will be mainly driven by the automotive and construction industries. Expected shift in the structure of demand for PA6: with the engineering plastics, film and flexible packaging sector gaining prominence.
25 GRUPA AZOTY Grupa Azoty Group financials as at June 3th 218* PKO and bank syndicate Revolving and umbrella credit facility EBRD PLN 3,55m Term Loan Agreement PLN 15m since July 25th 218: PLN 5m* EIB Term Loan Agreement PLN 1,18m AVAILABLE FUNDS/UNDRAWN FACILITIES* (mln PLN) corporate credit facilities overdrafts and multi-purpose credit facilities other financing sources 2 98 5* 499 Total corporate financing PLN 4,88m NET DEBT (PLNm) NET DEBT Q2 217 Q2 218 Net debt/ebitda - max. 3.x (22 223: max 3.5x) 586 Total debt ratio (%) 35.2 36.2 233 327 Net debt (PLNm) 439 576 Net debt/ebitda -.3x.58x.23x.28x Net debt/ebitda 12M EBITDA.5.58-41 215 216 217 H1 218 * Since July 25th, the amount of credit facilities granted under agreements and available credit lines has been PLN 5m higher as a result of a new agreement signed with the EBRD.
26 GRUPA AZOTY INVESTMENTS EXECUTED IN H1 218 (PLNm) BY COMPANY INVESTMENT PROJECTS including: H1 218 EXPENDITURE Puławy 44% GROWTH CAPEX 291 MAINTENANCE CAPEX 69 MANDATORY CAPEX 23 Tarnów 2% PURCHASE OF FINISHED GOODS 15 OTHER (COMPONENTS, MAJOR OVERHAULS) TOTAL 445 47 Other 9% Kędzierzyn 1% Police 17% CAPEX in 218: approximately PLN 1.6bn
GRUPA AZOTY PUŁAWY GROUP
28 GRUPA AZOTY PUŁAWY GROUP FINANCIAL HIGHLIGHTS Natural gas prices at record highs Unfavourable weather conditions Price decline Revenue EBITDA Net profit 7.7% -1.8% EBITDA EBITDA -16.3% -44.7% margin 3.6% margin 1.8% 788 849 1 7 91 1 7 59 93 78 38 31 35 282 196 19 41 26 5-2 187 164 96 91 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Currency exchange rates
29 GRUPA AZOTY PUŁAWY GROUP H1 218 EBITDA BUSINESS SEGMENTS OF THE GRUPA AZOTY PUŁAWY GROUP (PLNm) -92.1-4.6 14.4-1.5-8.6 281.9 189.6 positive effect on EBITDA negative effect on EBITDA Lower fertilizer prices and sales volumes Higher sales volumes and prices of melamine Higher sales volumes and lower sales prices of caprolactam Natural gas prices up 19%
3 GRUPA AZOTY PUŁAWY GROUP Q2 218 EBITDA BUSINESS SEGMENTS OF THE GRUPA AZOTY PUŁAWY GROUP (PLNm) -55.2 78.3 18.5-5.2-2.1 3.6 3.7 positive effect on EBITDA negative effect on EBITDA Higher sales volumes and lower sales prices of fertilizers Higher sales volumes and lower sales prices of caprolactam Higher sales volumes and prices of melamine Natural gas prices up 3%
31 GRUPA AZOTY PUŁAWY GROUP FERTILIZERS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue PLN 47m Revenue PLN 976m EBITDA: PLN 17m EBITDA: PLN 126m Phosphate and compound fertilizers 9% EBITDA MARGIN: 3.6% EBITDA MARGIN: 12.9% Other 11% Nitrogen fertilizers 8% VOLUMES ( TONNES) 3 +36% +9% 2 1-2% -2% +52% Nitrate Phosphate and NPK fertilizers Urea Ammonium sulfate UAN Q2 217 Q2 218
32 GRUPA AZOTY PUŁAWY GROUP CHEMICALS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue PLN 346m Revenue PLN 699m Melamine 37% EBITDA: PLN 59m EBITDA: PLN 127m Urea 18% EBITDA MARGIN: 17.1% EBITDA MARGIN: 18.2% Other 11% VOLUMES ( TONNES) Caprolactam 34% 1-6% 5 +6% +47% Melamine Caprolactam Urea Q2 217 Q2 218
33 GRUPA AZOTY PUŁAWY GROUP ONGOING CAPEX PROJECTS (PLNm) TYPE 218 PLANNED H1 218 CAPEX Mandatory 48.9 1.2 Maintenance capex 38. 9.7 Growth capex 294.5 135.4 Purchase of finished goods 6.6 3.1 Contingency 1. 9.3 Total 398, 158,8 H1 218 CAPITAL EXPENDITURE BY PROJECT STRUCTURE Purchase of finished Growth goods capex 2% 85% Contingency 6% Mandatory 1% Maintenance capex 6% *Excluding the cost of improvements, major overhauls and catalysts. MAJOR PROJECTS IN 218 CAPEX PROJECT TOTAL BUDGET 218 PLANNED EXPECTED COMPLETION DATE TOTAL ACTUAL COST TO DATE 218 CAPEX PROJECT TYPE Upgrade of existing nitric acid production units and construction of new nitric acid production and neutralisation units, and construction of units for production of new fertilizers based on nitric acid Facility for production of granulated fertilizers based on ammonium nitrate Replacement of the TG-2 turbine generator set Upgrade of steam generator OP-215 to reduce NOx emissions 695. 55.4 224 84.7 17.1 Growth 385. 131.3 22 226.3 79.6 Growth 99. 5. 218 69.5 9.4 Growth 93. 44. 22.6.1 Mandatory
GRUPA AZOTY POLICE GROUP
Key issues related to AFRIG S.A.
36 GRUPA AZOTY POLICE GROUP AGREEMENT WITH DGG ECO SP. Z O.O. AND DECONSOLIDATION OF AFRIG S.A. On December 2th 217, Grupa Azoty Police and DGG ECO Sp. z o.o. entered into a conditional agreement (sanctioned by a court settlement) providing for reimbursement (in view of AFRIG S.A. s failure to produce phosphate rock from its deposits in quantities provided for in the contract) of all undue amounts paid for the shares in AFRIG S.A. against re-transfer of the shares, confirming the validity of the Company s claims. Signing of settlement with DGG December 2th 217 Signing of annex to the agreement with DGG May 22nd 23rd 218 Exclusion of AFRIG S.A. from consolidated financial statements No settlement finalised on the initially planned date Re-transfer of AFRIG S.A. shares to DGG and loss of control of the company May 3th 218 USD 3m reimbursed by DGG as partial repayment of the amount due for AFRIG S.A. shares August 14th 218 AFRIG S.A. was excluded from the consolidated financial statements as of May 3th 218 Negative effect on the consolidated H1 218 net profit or loss: PLN -44m The deconsolidation had a negative impact on consolidated profit or loss because the Company (as a joint borrower) is liable for repayment of a bank loan used by AFRIG S.A. to finance its operations Positive effect on the separate H1 218 net profit or loss: PLN +14m At the parent level, the risk was accounted for in the separate financial statements in the form of provisions recognised for the loan guarantee from the moment the risk was identified. 36
GRUPA AZOTY POLICE GROUP RESULTS
38 GRUPA AZOTY POLICE GROUP CONSOLIDATED FINANCIAL RESULTS FINANCIAL HIGHLIGHTS (PLNm) Significant increase in natural gas prices Unfavourable downward trend in ammonia prices Unfavourable weather conditions Significant increase in prices of carbon emission allowances Loss of control over AFRIG S.A. impact on net profit or loss: PLN -43,994 thousand Revenue EBITDA Net profit -3% -8% EBITDA margin 4.% EBITDA margin 7.6% -189% -115% 65 63 135 1245 93 88 177 172 94 94 54 5-4 1 96 29 25 25-48 -15 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Net of one-off items related to subsidiary AFRIG S.A. Constructive market environment in Pigments Optimisation of administrative expenses Several major capex projects finalised
39 GRUPA AZOTY POLICE GROUP SEPARATE AND CONSOLIDATED NET PROFIT (PLNm) 16 Separate net profit Consolidated net profit 14 12 1 Separate net profit margin 8% 6% 8% Effect of AFRIG S.A. deconsolidation on consolidated net profit for H1 218: PLN -44m 8 6 4 2 5% 4% 59 56 6 48 115 17 75 77 113 1 4% 53-15 H1 213 H1 214 H1 215 H1 216 H1 217 H1 218
4 GRUPA AZOTY POLICE GROUP H1 218 EBITDA BUSINESS SEGMENTS OF THE GRUPA AZOTY POLICE GROUP (PLNm) 23 7 111 177 2 94 positive effect on EBITDA negative effect on EBITDA Pigments: sales prices of titanium white rising (up 28%) on stable demand Fertilizers: unfavourable market conditions in nitrogen fertilizers, with key feedstock (natural gas) prices rising almost 2%, with average market prices of ammonia down year on year Prices of fine coal and potassium chloride up 32% and 7%, respectively, with prices of carbon emission allowances surging ca. 14% year on year Decline in sales volumes of compound fertilizers and ammonia
41 GRUPA AZOTY POLICE GROUP H1 218 EBITDA GRUPA AZOTY POLICE GROUP (PLNm) 36 3 1 96 including: - natural gas prices up PLN 46m - prices of carbon emission allowances up PLN 11m - coal prices up PLN 12m - potassium chloride prices up PLN 1m 177 24 3 94 positive effect on EBITDA negative effect on EBITDA Average prices of titanium white up 28% year on year Significant increase in natural gas prices, up 2% relative to H1 217 Marked increase in prices of CO 2 emission allowances (by ca. 14%) Decline in sales volumes of compound fertilizers, ammonia and titanium white Higher prices of fine coal, potassium chloride, and raw materials for the production of titanium white
42 GRUPA AZOTY POLICE GROUP FERTILIZERS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue PLN 51m Revenue PLN 1,3m EBITDA: PLN -9M EBITDA: PLN 28m Urea 18% EBITDA MARGIN: -2% EBITDA MARGIN: 3% Compound fertilizers, 65% Ammonia 1% other 7% VOLUMES ( TONNES) 4 % 2 +23% -6% Compound fertilizers Urea Ammonia 2Q217 Q2 218
43 GRUPA AZOTY POLICE GROUP PIGMENTS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue PLN 19m Revenue PLN 219m EBITDA: PLN 32m EBITDA MARGIN: 3% EBITDA: PLN 66m EBITDA MARGIN: 3% Titanium white 96% Other Activities 4% VOLUMES ( TONNES) 12-1% 1 8 6 4 2 Titanium white Q2217 Q2 218
44 GRUPA AZOTY POLICE GROUP ONGOING CAPEX PROJECTS PARENT S H1 218 CAPITAL EXPENDITURE BY PROJECT STRUCTURE (PLNm) TYPE H1 218 CAPEX* Growth capex 17. Mandatory 16.6 Purchase of finished goods 4% Growth capex 39% Maintenance capex 8.8 Purchase of finished goods 1.9 Total 44,3 Maintenance capex 2% Mandatory 37% *Excluding the cost of improvements, major overhauls and catalysts. GRUPA AZOTY POLICE GROUP S LARGEST PROJECTS IN 218 CAPEX PROJECT TOTAL BUDGET EXPECTED COMPLETION DATE TOTAL ACTUAL COST TO DATE EXPENDITURE INCURRED 1H 218 PROJECT TYPE Police Polymers (implemented jointly with Grupa Azoty S.A.) Change of phosphoric acid production method (DA-HF technology) Fabrication and replacement of heat exchangers in ammonia unit Replacement of absorption tower on sulfuric acid line 7 Computerisation of phosphoric acid PF-4 line 5,276.8 222 139,5 28,6 Growth 73.7 218 53.8 13.4 Growth 15.5 219 5. 2.3 Mandatory 14. 219.1.1 Maintenance 1.8 218 4.5 3.5 Maintenance Major capex projects completed in H1 218: 1. Exhaust gas treatment unit and upgrade of the EC II CHP plant; project budget: PLN 29.9m 2. Upgrade of TUP-12 turbine generator set and auxiliary equipment; project budget: PLN 16.m 3. Replacement of the fertilizer drying plant; project budget: PLN 12.m
GRUPA AZOTY KĘDZIERZYN GROUP
46 GRUPA AZOTY KĘDZIERZYN GROUP FINANCIAL HIGHLIGHTS Natural gas prices at record highs Unfavourable weather conditions Price declines in Fertilizers Revenue EBITDA Net profit 9.8% 5.6% EBITDA EBITDA - 51.9% -28.9% margin 3.8% margin 9.9% 395 434 88 929 2 16 11 92 44 32-3 -5 Q2 217 Q2 218 1H 217 1H 218 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Foreign exchange rates Price increases in Oxoplasts
47 GRUPA AZOTY KĘDZIERZYN GROUP Q2 EBITDA BUSINESS SEGMENTS OF GRUPA AZOTY KĘDZIERZYN (PLNm) 9.8 13..4 2. 16.3 positive effect on EBITDA negative effect on EBITDA Revenue delivered by the Oxoplast business up PLN 38m (increased sales volumes of products, mainly Oxo Alcohols, with prices also rising) Cost of raw materials in Oxoplasts up PLN 29.7m (propylene up PLN 25.8m) Revenue delivered by the Fertilizers business up PLN 12.7m (increased sales volumes of nitrogen fertilizers and Rednox products) Cost of raw materials in Fertilizers up PLN 34.8m (natural gas up PLN 34.2m) Cost of services in Fertilizers down PLN 8.6m (overhauls down PLN 7.5m)
48 GRUPA AZOTY KĘDZIERZYN FERTILIZERS Q2 218 H1 218 REVENUE IN H1 218, BY PRODUCT GROUP Revenue: PLN 186.2m Revenue: PLN 49.7m EBITDA: PLN -2.6m EBITDA: PLN 37.7m 29% EBITDA MARGIN: -1.4% EBITDA MARGIN: 9.2% 71% VOLUMES ( TONNES) Nawozy azotowe Pozostałe produkty 24 19 14 14 +23.1% 172 +16.6% 99 115 9 4-1 Nitrogen fertilizers Other products Q2 217 Q2 218
49 GRUPA AZOTY KĘDZIERZYN OXO Q2 218 H1 218 VOLUMES ( TONNES) Revenue: PLN 222.7m EBITDA: PLN 9.2m EBITDA MARGIN: 4.1% Revenue: PLN 463.3m EBITDA: PLN 29.8m EBITDA MARGIN: 6.4% +16.3% 43 5 Oxoplast Segment's products Q2 217 Q2 218
5 GRUPA AZOTY KĘDZIERZYN ONGOING CAPEX PROJECTS (PLNM) TYPE H1 218 CAPEX Mandatory.1 Growth capex 22.3 Maintenance capex 21.2 Purchase of finished goods 2.1 Contingency.6 Total 46.3 H1 218 CAPITAL EXPENDITURE BY PROJECT STRUCTURE Growth capex 46% Purchase of finished goods 5% Contingency 1% Mandatory % Maintenance capex 48% MAJOR PROJECTS IN 218 CAPEX PROJECT TOTAL BUDGET EXPECTED COMPLETION DATE TOTAL ACTUAL COST TO DATE H1 218 CAPEX PROJECT TYPE - Special Esters I 54.6 March 219 33.3 17.2 Growth - Upgrade of synthesis gas compression unit supplying ammonia plant 18. March 22 15.4 15.1 Maintenance - Gas compressor (GHH) 31.6 June 219 14.9 3.4 Maintenance
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52 APPENDIX 1
53 GRUPA AZOTY S.A. SEPARATE FINANCIAL DATA FINANCIAL HIGHLIGHTS (PLNm) Energy commodity prices at record highs Reduced fertilizer application in Q1 Accelerated cycle of maintenance and modernization shutdowns High stock levels reflected in fertilizer prices Revenue EBITDA Net profit 14% 6% EBITDA margin 16% 5% EBITDA margin 17% 12% 282-72% -62% 377 43 856 97 59 22 145 18 5 8-1 328 96 125 36 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Q2 217 Q2 218 H1 217 H1 218 Increase in sales volumes after the launch of Polyamide Plant II * Net profit adjusted for dividends received
54 GRUPA AZOTY CONSOLIDATED FINANCIAL INFORMATION CONSOLIDATED RESULTS OF THE GRUPA AZOTY GROUP, BY QUARTER REVENUE AND NET PROFIT (PLNm) Income Net profit 2 5 2 1 5 1 5-5 EBITDA AND NET DEBT 5 4 3 2 1-1 7 6 5 4 3 2 1-1 -2 EBITDA NET DEBT FINANCIAL DATA
55 GRUPA AZOTY PUŁAWY GROUP CONSOLIDATED RESULTS OF THE GRUPA AZOTY PUŁAWY GROUP, BY QUARTER REVENUE AND NET PROFIT (PLNm) 1 25, Revenue Net profit 25, 1, 2, 75, 15, 5, 1, 25, 5,,, -25, 5, 25,, -25, -5, -75, -1, EBITDA AND NET DEBT -5, EBITDA NET DEBT FINANCIAL DATA
56 GRUPA AZOTY POLICE GROUP CONSOLIDATED RESULTS OF THE GRUPA AZOTY POLICE GROUP, BY QUARTER (PLNm) 1 REVENUE AND NET PROFIT 9 8 7 6 5 4 3 2 1 Revenue Net profit Effect of AFRIG S.A. deconsolidation on net profit for Q2 218: PLN -44m 25 15 5-5 -15-25 -35 EBITDA AND EBITDA MARGIN 3 EBITDA EBITDA MARGIN 5,% 1,% -1-5,% -3-1,% FINANCIAL DATA The 213 215 net profit and EBITDA figures are shown based on a 216 adjustment related to AFRIG S.A., with an estimated effect on each performance metric (with the effect on the bottom line totalling approximately PLN 223m). Figures for the years from 216 to H1 218 are based on the reported data.
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