Consolidated interim report for the first half of 2016

Consolidated interim report for the first half of 2016

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 (all figures in PLN 000 unless indicated otherwise) Contents SECTION 1 FINANCIAL HIGHLIGHTS... 4 Consolidated financial information... 5 Separate financial information... 6 SECTION 2 INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX AND THREE MONTHS ENDED JUNE 30TH 2016, PREPARED IN ACCORDANCE WITH IAS 34 INTERIM FINANCIAL REPORTING AS ADOPTED BY THE EUROPEAN UNION... 7 Statement of the Management Board... 8 Condensed consolidated statement of profit or loss and other comprehensive income... 9 Condensed consolidated statement of financial position... 11 Condensed consolidated statement of changes in equity... 13 Condensed consolidated statement of cash flows... 16 1. Information about the Group... 18 1.1. Organisation of the Group... 18 1.2. Composition of the Group... 18 1.3. Changes in the entities structure... 19 2. Key events in the six months ended June 30th 2016 and until the authorisation date... 20 2.1. Composition of the management and supervisory bodies... 20 2.2. Profit distribution... 20 2.3. Impairment losses on the assets of the subsidiary African Investment Group S.A. and the related assets of the Parent... 20 3. Policies applied in the preparation of the interim condensed consolidated financial statements... 21 3.1. Statement of compliance and general policies... 21 3.2. Accounting policies and computation methods... 22 4. Selected supplementary and explanatory notes... 24 4.1. Explanatory notes... 24 4.2. Related parties... 47 4.3. Events after the end of the reporting period that could affect future financial performance... 48 4.4. Dividends... 48 4.5. Seasonality of operations... 48 SECTION 3 INTERIM CONDENSED SEPARATE FINANCIAL STATEMENTS FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30TH 2016, PREPARED IN ACCORDANCE WITH IAS 34 INTERIM FINANCIAL REPORTING AS ADOPTED BY THE EUROPEAN UNION... 49 Statement of the Management Board... 50 Condensed separate statement of profit or loss and other comprehensive income... 51 Condensed separate statement of financial position... 52 Condensed separate statement of changes in equity... 54 Condensed separate statement of cash flows... 55 Supplementary information to the interim condensed separate financial statements... 57 SECTION 4 MANAGEMENT S DISCUSSION AND ANALYSIS OF THE GRUPA AZOTY ZAKŁADY CHEMICZNE POLICE GROUP S PERFORMANCE IN H1 2016... 59 1. General information on the group... 60 2. Financial standing and assets... 61 2.1. Assessment of factors and non-typical events having a material impact on the Group s operations and financial performance... 61 2.2. Market overview... 62 2.3. Key financial and economic data... 67 2.3.1. Consolidated financial information... 67 2.3.2. Segments financial results... 69 Page 2 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 (all figures in PLN 000 unless indicated otherwise) 2.3.3. Sales by product group... 71 2.3.4. Operating expenses... 72 2.3.5. Structure of assets, equity and liabilities... 73 2.3.6. Financial ratios... 75 2.4. Financial liquidity and liabilities under loans and borrowings... 77 2.5. Type and amounts of one-off events affecting the assets, equity and liabilities, capital, net profit/loss or cash flows... 78 2.6. Execution of key investment projects... 78 2.7. Factors which will affect the Group s performance over at least the next reporting period... 80 3. Risks and threats... 81 3.1. Strategic management... 82 3.2. Technical and environmental safety... 83 3.3. Comprehensive customer support... 85 3.4. Availability of feedstocks and materials... 86 4. Other information... 86 4.1. Other significant events... 86 4.2. Significant agreements... 87 4.3. Sureties for borrowings, guarantees granted... 87 4.4. Shareholding structure... 89 4.5. Parent shares held by management and supervisory personnel... 89 4.6. Composition of the Management Board and the Supervisory Board... 90 4.7. Environmental performance... 94 5. Other Information... 95 Page 3 z 96

SECTION 1 FINANCIAL HIGHLIGHTS

Consolidated financial information Consolidated interim report for H1 2016 Financial highlights (all figures in PLN 000 unless indicated otherwise) Jan 1 Jun 30 2016 PLN 000 EUR 000 Jan 1 Jun 30 2015 restated* Jan 1 Jun 30 2016 Jan 1 Jun 30 2015 restated* Revenue 1,291,590 1,438,646 294,850 347,995 Operating profit 92,166 135,647 21,040 32,812 Profit before tax 92,247 130,303 21,059 31,519 Net profit 78,065 106,764 17,821 25,825 Total profit or loss and other comprehensive income 84,698 101,405 19,335 24,529 Number of shares 75,000,000 75,000,000 75,000,000 75,000,000 Earnings per ordinary share 1.13 1.42 0.26 0.34 Net cash from operating activities 63,968 134,691 14,603 32,580 Net cash from investing activities (118,064) (69,181) (26,952) (16,734) Net cash from financing activities 21,354 (55,801) 4,875 (13,498) Net increase/(decrease) in cash and cash equivalents (32,742) 9,709 (7,474) 2,349 Cash and cash equivalents at beginning of period 95,135 55,031 21,718 13,311 Cash and cash equivalents at end of period 63,223 65,089 14,433 15,744 as at Jun 30 2016 as at Dec 31 2015 as at Jun 30 2016 as at Dec 31 2015 Non-current assets 1,628,081 1,525,239 367,886 357,911 Current assets 593,947 658,465 134,210 154,515 Non-current liabilities 382,933 402,755 86,529 94,510 Current liabilities 526,390 552,942 118,945 129,753 Equity 1,312,705 1,228,007 296,623 288,163 Share capital 750,000 750,000 169,472 175,994 Non-controlling interests 89,907 93,308 20,316 21,896 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Page5 z 96

Separate financial information Jan 1 Jun 30 2016 Consolidated interim report for H1 2016 Financial highlights (all figures in PLN 000 unless indicated otherwise) PLN 000 EUR 000 Jan 1 2015 Jun 30 2015 restated* Jan 1 Jun 30 2016 Jan 1 2015 Jun 30 2015 restated* Revenue 1,283,015 1,430,837 292,891 346,106 Operating profit 69,804 138,551 15,935 33,514 Profit before tax 70,659 139,806 16,130 33,818 Net profit 56,747 114,943 12,954 27,804 Total profit or loss and other comprehensive income 56,034 114,411 12,792 27,675 Number of shares 75,000,000 75,000,000 75,000,000 75,000,000 Earnings per ordinary share 0.76 1.53 0.17 0.37 Net cash from operating activities 56,219 148,552 12,834 35,933 Net cash from investing activities (115,120) (60,682) (26,280) (14,678) Net cash from financing activities 21,835 (67,408) 4,985 (16,305) Net increase/(decrease) in cash and cash equivalents (37,066) 20,462 (8,462) 4,950 Cash and cash equivalents at beginning of period 57,210 32,085 13,060 7,761 Cash and cash equivalents at end of period 20,772 53,210 4,742 12,871 as at Jun 30 2016 as at Dec 31 2015 as at Jun 30 2016 as at Dec 31 2015 Non-current assets 1,467,880 1,387,715 331,687 325,640 Current assets 522,214 625,128 118,001 146,692 Non-current liabilities 314,703 328,502 71,111 77,086 Current liabilities 452,479 517,463 102,244 121,427 Equity 1,222,912 1,166,878 276,333 273,819 Share capital 750,000 750,000 169,472 175,994 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. The selected items of the statement of profit or loss and other comprehensive income, statement of financial position and statement of cash flows have been translated into the euro using the method specified below: individual items of assets and equity and liabilities in the statement of financial position have been translated using the exchange rate effective for the last day of the reporting period: the exchange rate as at December 31st 2015 was EUR 1 = PLN 4.2615 (table No. 254/A/NBP/2014), the exchange rate as at June 30th 2016 was EUR 1 = PLN 4.4255 (table No. 125/A/NBP/2016), items of the statement of profit or loss and other comprehensive income and statement of cash flows have been translated using the arithmetic averages of the EUR/PLN rates quoted by the National Bank of Poland as effective for the last day of each month in the reporting period: in January 1st June 30th 2015, the average exchange rate was EUR 1 = PLN 4.1341. in January 1st June 30th 2016, the average exchange rate was EUR 1 = PLN 4.3805. The translation was made using the exchange rates specified above by dividing amounts expressed in thousands of the złoty by the exchange rate. Page6 z 96

SECTION 2 INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX AND THREE MONTHS ENDED JUNE 30TH 2016, PREPARED IN ACCORDANCE WITH IAS 34 INTERIM FINANCIAL REPORTING AS ADOPTED BY THE EUROPEAN UNION

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Statement of the Management Board The Management Board of the Parent of the Grupa Azoty POLICE Group presents interim condensed consolidated financial statements for the six and three months ended June 30th 2016, comprising: Condensed consolidated statement of profit or loss and other comprehensive income for the periods January 1st June 30th 2016 and April 1st June 30th 2016, Condensed consolidated statement of financial position as at June 30th 2016, Condensed consolidated statement of changes in equity for the period January 1st June 30th 2016, Condensed consolidated statement of cash flows for the period January 1st June 30th 2016, Supplementary information to the interim condensed consolidated financial statements. These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as endorsed by the European Union, and give a fair and clear view of the financial position and performance of the Group. Signatures of the Members of the Parent s Management Board Wojciech Wardacki, Ph.D. President of the Management Board Rafał Kuźmiczonek Vice President of the Management Board Włodzimierz Zasadzki, Ph. D. Vice President of the Management Board Tomasz Panas Vice President of the Management Board Person in charge of maintaining accounting records Józefa Żurawska Chief Accountant Police, August 18th 2016 Page8 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Profit or loss Condensed consolidated statement of profit or loss and other comprehensive income Note Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 2015 Jun 30 2015 restated* Apr 1 2015 Jun 30 2015 restated* unaudited unaudited unaudited unaudited Revenue 1 1,291,590 605,060 1,438,646 693,098 Cost of sales 2 (1,027,965) (496,442) (1,169,516) (561,249) Gross profit 263,625 108,618 269,130 131,849 Selling and distribution expenses 2 (66,337) (42,431) (46,917) (21,679) Administrative expenses 2 (93,154) (46,069) (89,459) (45,776) Other income 3 2,597 1,256 4,775 1,324 Other expenses 4 (14,565) (13,705) (1,882) (797) Operating profit 92,166 7,669 135,647 64,921 Finance income 5 1,334 672 707 470 Finance costs 6 (7,149) (4,243) (11,543) (1,311) Net finance income/(costs) (5,815) (3,571) (10,836) (841) Share of profit of equityaccounted associates 5,896 3,250 5,492 2,841 Profit before tax 92,247 7,348 130,303 66,921 Income tax 7 (14,182) 2,545 (23,539) (11,241) Net profit 78,065 9,893 106,764 55,680 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page9 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Condensed consolidated statement of profit or loss and other comprehensive income (continued) Note Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 2015 Jun 30 2015 Apr 1 2015 Jun 30 2015 unaudited unaudited unaudited unaudited Other comprehensive income Items that will not be reclassified to profit or loss Remeasurement of defined benefit obligation (880) (880) (657) (657) Tax on items that will not be reclassified to profit or loss 7 167 167 125 125 (713) (713) (532) (532) Items that will be reclassified to profit or loss Exchange differences on translating foreign operations 7,346 8,372 (4,827) 3,200 7,346 8,372 (4,827) 3,200 Total other comprehensive income 6,633 7,659 (5,359) 2,668 Total profit or loss and other comprehensive income 84,698 17,552 101,405 58,348 Net profit attributable to: Owners of the parent 84,738 17,217 106,621 54,680 Non-controlling interests (6,673) (7,324) 143 1,000 Total profit or loss and other comprehensive income attributable to: Owners of the parent 88,099 21,362 103,376 55,854 Non-controlling interests (3,401) (3,810) (1,971) 2,494 Earnings per share: 8 Basic (PLN) 1.13 0.23 1.42 0.73 Diluted (PLN) 1.13 0.23 1.42 0.73 The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page10 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Condensed consolidated statement of financial position Assets Non-current assets Note as at Jun 30 2016 unaudited as at Dec 31 2015 restated* audited Property, plant and equipment 9 1,429,406 1,336,758 Perpetual usufruct of land 2,119 2,155 Investment property 5,374 5,064 Intangible assets 10 109,345 86,365 Investments in subordinated entities 22,102 27,014 Other financial assets 610 391 Other receivables 3,984 3,912 Deferred tax assets 7 55,141 63,580 Total non-current assets 1,628,081 1,525,239 Current assets Inventories 281,924 301,017 Property rights 36,605 36,965 Other financial assets 9,924 9,687 Trade and other receivables 202,271 215,661 Cash and cash equivalents 11 63,223 95,135 Total current assets 593,947 658,465 Total assets 2,222,028 2,183,704 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page11 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Condensed consolidated statement of financial position (continued) Equity and liabilities Equity Note as at Jun 30 2016 unaudited as at Dec 31 2015 restated* audited Share capital 750,000 750,000 Exchange differences on translating foreign operations 3,458 (616) Retained earnings, including: 469,340 385,315 Profit for the period 84,738 165,951 Equity attributable to owners of the parent 1,222,798 1,134,699 Non-controlling interests 89,907 93,308 Total equity 1,312,705 1,228,007 Liabilities Borrowings 12 190,094 208,313 Other financial liabilities 5,417 6,256 Employee benefit obligations 13 67,047 64,257 Trade and other payables 255 175 Provisions 14 49,202 46,972 Grants 18,805 19,295 Deferred tax liabilities 7 52,113 57,487 Total non-current liabilities 382,933 402,755 Borrowings 12 140,442 92,259 Other financial liabilities 2,436 2,278 Employee benefit obligations 13 7,326 7,086 Current tax expense 12,769 3,186 Trade and other payables 340,643 445,800 Provisions 14 10,658 831 Grants 12,116 1,502 Total current liabilities 526,390 552,942 Total liabilities 909,323 955,697 Total equity and liabilities 2,222,028 2,183,704 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page12 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Condensed consolidated statement of changes in equity for the period ended June 30th 2016 Share capital Translation reserve Retained earnings Equity attributable to owners of the parent Non-controlling interests Total equity Balance at Jan 1 2016 750,000 (616) 385,315 1,134,699 93,308 1,228,007 Profit or loss and other comprehensive income Net profit - - 84,738 84,738 (6,673) 78,065 Other comprehensive income - 4,074 (713) 3,361 3,272 6,633 Total profit or loss and other comprehensive income - 4,074 84,025 88,099 (3,401) 84,698 Transactions with owners, recognised directly in equity Dividends - - - - - - Total contributions by and distributions to owners - - - - - - Total transactions with owners of the Company - - - - - - Balance at Jun 30 2016 (unaudited) 750,000 3,458 469,340 1,222,798 89,907 1,312,705 The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page13 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Consolidated statement of changes in equity (continued) for the period ended June 30th 2015 Share capital Translation reserve Retained earnings Equity attributable to owners of the parent Non-controlling interests Total equity Balance at Jan 1 2015 750,000 86 262,340 1,012,426 94,907 1,107,333 Profit or loss and other comprehensive income Net profit - - 106,621 106,621 143 106,764 Other comprehensive income - (2,713) (532) (3,245) (2,114) (5,359) Total profit or loss and other comprehensive income - (2,713) 106,089 103,376 (1,971) 101,405 Transactions with owners, recognised directly in equity Dividends - - (42,000) (42,000) - (42,000) Total contributions by and distributions to owners - - (42,000) (42,000) - (42,000) Total transactions with owners - - (42,000) (42,000) - (42,000) Balance at Jun 30 2015 (unaudited) 750,000 (2,627) 326,429 1,073,802 92,936 1,166,738 The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page14 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Consolidated statement of changes in equity (continued) for the year ended December 31st 2015 Share capital Translation reserve Retained earnings Equity attributable to owners of the parent Non-controlling interests Total equity Balance as at Jan 1 2015 750,000 86 262,340 1,012,426 94,907 1,107,333 Profit or loss and other comprehensive income Net profit - - 165,951 165,951 (1,162) 164,789 Other comprehensive income - (702) (976) (1,678) (437) (2,115) Total profit or loss and other comprehensive income - (702) 164,975 164,273 (1,599) 162,674 Transactions with owners, recognised directly in equity Dividends - - (42,000) (42,000) - (42,000) Total contributions by and distributions to owners - - (42,000) (42,000) - (42,000) Total transactions with owners - - (42,000) (42,000) - (42,000) Balance at Dec 31 2015 (audited) 750,000 (616) 385,315 1,134,699 93,308 1,228,007 The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page15 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Condensed consolidated statement of cash flows Cash flows from operating activities Jan 1 Jun 30 2016 unaudited Jan 1 2015 Jun 30 2015 restated* unaudited Profit before tax 92,247 130,303 Adjustments for: 41,140 41,119 Depreciation and amortisation 44,193 41,963 Recognition of impairment losses on property, plant and equipment 4 90 (Profit)/loss from investing activities 8 (1,685) Share of profit of equity-accounted associates (5,896) (5,492) Interest, foreign exchange gains or losses 2,831 6,243 Cash from operating activities before changes in working capital 133,387 171,422 Changes in trade and other receivables 13,104 (30,993) Changes in inventories 19,910 78,845 Changes in trade and other payables (125,593) (98,410) Changes in provisions, accruals, deferrals and grants 23,480 14,189 Other adjustments - (6) Cash from operating activities 64,288 135,047 Income taxes paid (320) (356) Net cash from operating activities 63,968 134,691 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page16 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Condensed consolidated statement of cash flows (continued) Jan 1 Jun 30 2016 unaudited Jan 1 2015 Jun 30 2015 unaudited Cash flows from investing activities Proceeds from sale of property, plant and equipment, intangible assets and investment property 297 6,153 Acquisition of property, plant and equipment, intangible assets and investment property (110,924) (78,605) Exploration and evaluation expenditures (18,245) (8,219) Dividends received 10,808 11,035 Grants - 1,522 Loans - (1,000) Other disbursements - (67) Net cash from investing activities (118,064) (69,181) Cash flows from financing activities Dividends paid - (42,000) Proceeds from borrowings 46,655 49,740 Payment of borrowings (18,729) (57,311) Interest paid (4,652) (3,705) Payment of finance lease liabilities (2,220) (2,142) Other proceeds/(disbursements) 300 (383) Net cash from financing activities 21,354 (55,801) Net increase/(decrease) in cash and cash equivalents (32,742) 9,709 Cash and cash equivalents at beginning of period 95,135 55,031 Effect of exchange rate fluctuations on value of cash 830 349 Cash and cash equivalents at end of period 63,223 65,089 The supplementary information and notes are an integral part of these interim condensed consolidated financial statements. Page17 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Supplementary information to the interim condensed consolidated financial statements 1. Information about the Group 1.1. Organisation of the Group The Group s parent, Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna of Police (the Parent ), was established on December 14th 1995 on the basis of Notarial Deed A No. 20142. The Parent operates as a joint-stock company in the territory of Poland. The Parent is registered with the District Court for Szczecin-Centrum of Szczecin, 13th Commercial Division of the National Court Register, under No. KRS 0000015501. The Parent has been assigned REGON (industry identification) No. 810822270 and NIP (tax identification) No. 851-02-05-573. The duration of the Parent and the entities comprising the Grupa Azoty POLICE Group (the Group ) is unlimited. The Group s principal business activity includes in particular: manufacture and sale of chemical fertilizers, manufacture and sale of titanium white and other chemicals, generation, transmission and distribution of electricity. The Grupa Azoty POLICE Group is a part of the Grupa Azoty Group, whose parent is Grupa Azoty S.A. 1.2. Composition of the Group As at June 30th 2016, the Group comprised Grupa Azoty Zakłady Chemiczne Police S.A. (the Parent) and: nine subsidiaries (in which the Company held ownership interests above 50%), including one company in liquidation, one indirect subsidiary, two associates (in which the Company holds ownership interests below 50%), including one company in liquidation bankruptcy. Page18 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Structure of the Group as at June 30th 2016: Grupa Azoty Zakłady Chemiczne Police S.A. Consolidated subsidiaries Non-consolidated subsidiaries Equity-accounted associates 100% Grupa Azoty Police Serwis Spółka z o.o. 100% Supra Agrochemia Spółka z o.o. 48,96% Budchem Spółka z o.o. w upadłości likwidacyjnej (in liquidation 100% Koncept Spółka z o.o. 33,99% KEMIPOL Spółka z o.o. 100% PDH Polska S.A. 100% TRANSTECH Usługi Sprzętowe i Transportowe Spółka z o.o. 99,99% Grupa Azoty Africa S.A. S.A. Senegal 0,01% 99,98% Zarząd Morskiego Portu Police Spółka z o.o. 54,43% INFRAPARK Police S.A. w likwidacji (in liquidation) 54,90% African Investment Group S.A. Senegal 0,10% 100% AFRIG Trade SARL Senegal 1.3. Changes in the entities structure In the period from January to June 2016, there were no changes in the entities structure. Page19 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 2. Key events in the six months ended June 30th 2016 and until the authorisation date 2.1. Composition of the management and supervisory bodies As at the date of authorisation of the interim condensed consolidated financial statements for issue, the composition of the Parent s Management Board was as follows: Wojciech Piotr Wardacki, Ph.D. President of the Management Board of the seventh joint term of office, appointed by the Supervisory Board on April 7th 2016 (Resolution No. 206/VI/16), Tomasz Grzegorz Panas Vice President of the Management Board of the seventh joint term of office, appointed by the Supervisory Board on April 7th 2016 (Resolution No. 207/VI/16), Włodzimierz Zasadzki, Ph.D. Vice President of the Management Board of the seventh joint term of office, appointed by the Supervisory Board on July 15th 2016 (Resolution No. 7/VII/16), Rafał Kuźmiczonek Vice President of the Management Board of the seventh joint term of office, elected by Parent employees and appointed by the Supervisory Board on June 9th 2015 (Resolution No. 154/VI/15). As at the date of authorisation of the Group s interim condensed consolidated financial statements for issue, the composition of the Parent s Supervisory Board was as follows: Dariusz Hac Chair of the Supervisory Board of the seventh joint term of office, appointed by the Parent s Annual General Meeting on June 30th 2016 (Resolution No. 21), Joanna Habelman Deputy Chair of the Supervisory Board of the seventh joint term of office, appointed by the Parent s Annual General Meeting on June 30th 2016 (Resolution No. 22), Bożena Licht Secretary of the Supervisory Board Representative of the Ministry of State Treasury appointed to the Supervisory Board by virtue of a letter from the Minister of State Treasury of July 8th 2016, Agnieszka Ewa Dąbrowska Member of the Supervisory Board of the seventh joint term of office, appointed by the Parent s Annual General Meeting on June 30th 2016 (Resolution No. 23), Mirosław Kozłowski Member of the Supervisory Board of the seventh joint term of office, appointed by the Parent s Annual General Meeting on June 30th 2016 (Resolution No. 24), Andrzej Malicki Member of the Supervisory Board of the seventh joint term of office, appointed by the Parent s Annual General Meeting on June 30th 2016 (Resolution No. 25), Anna Tarocińska Member of the Supervisory Board of the seventh joint term of office, appointed by the Parent s Annual General Meeting on June 30th 2016 (Resolution No. 26), As at the date of authorisation of the Group s interim condensed consolidated financial statements for issue, the composition of the Audit Committee was as follows: Joanna Habelman Chair of the Audit Committee, appointed by the Supervisory Board on July 15th 2016 (Resolution No. 3/VII/16), Agnieszka Ewa Dąbrowska Secretary of the Audit Committee, appointed by the Supervisory Board on July 15th 2016 (Resolution No. 4/VII/16), Mirosław Kozłowski Member of the Audit Committee, appointed by the Supervisory Board on July 15th 2016 (Resolution No. 5/VII/16), For a full description of the changes, see Section 4.6 of the Management s discussion and analysis of the s performance in H1 2016 in this interim report for H1 2016. 2.2. Profit distribution On June 30th 2016, the Annual General Meeting of the Parent distributed the net profit for the financial year 2015 of PLN 168,788 thousand, transferring the entire amount to statutory reserve funds. 2.3. Impairment losses on the assets of the subsidiary African Investment Group S.A. and the related assets of the Parent As at June 30th 2016, the subsidiary African Investment Group S.A. recognised: an impairment loss on past due trade receivables of XOF 2,877,478 thousand (PLN 19,103 thousand as at June 30th 2016), a work in progress inventory write-down of XOF 817,340 thousand (PLN 5,426 thousand as at June 30th 2016). Page20 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 The impairment loss and write-down were charged to the consolidated statement of profit or loss and other comprehensive income as follows: the impairment loss on receivables was charged to selling and distribution expenses as other costs, the inventory write-down was charged to cost of sales as change in products. Receivables past due for more than 360 days resulted from the sale of fertilizers, previously acquired from the Parent, to a customer in Senegal in December 2014. As the payment has not been made, court proceedings are pending and the company seeks to satisfy its claim from the debtor s assets. The Management Board of the subsidiary believes that the recovery of the receivables in Senegal will be a lengthy process, and its outcome is highly uncertain. Given the existing and expected course of the process, a decision was made to recognise an impairment loss on the full amount of the receivables. The amount of the impairment loss may change in the future to reflect the outcome of the court and enforcement proceedings. Based on available information, the management board of the subsidiary estimated that bringing the inventory of work in progress (phosphate rock) to a condition in which it may be sold is a process that requires the subsidiary to incur significant additional costs. As a result, a 50% writedown of the inventory value was found to be the most appropriate solution. After examining the financial standing of the subsidiary AFRIG S.A. and classifying its past due receivables as doubtful, as at June 30th 2016 the Parent recognised an impairment loss of EUR 10,500 thousand (PLN 46,356 thousand as at June 30th 2016). The receivables are related to supplies of fertilizers to Senegal in 2013 2014, when the Parent endeavoured to enter a new fertilizer market. Due to identification of the impairment loss on the receivables, the Parent estimated future cash flows discounted using the asset s original effective interest rate, in accordance with paragraph 63 of IAS 39. The impairment loss was charged to the separate statement of profit or loss and other comprehensive income of the Parent, with no effect on the Group s consolidated financial statements, as other costs under selling and distribution expenses (principal amount of PLN 42,383 thousand) and as finance costs (interest and balance sheet valuation of receivables in foreign currencies of PLN 3,973 thousand). 3. Policies applied in the preparation of the interim condensed consolidated financial statements 3.1. Statement of compliance and general policies These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as endorsed by the European Union, and in accordance with the Minister of Finance s Regulation on current and periodic information to be published by issuers of securities and conditions for recognition as equivalent of information whose disclosure is required under the laws of a non-member state, dated February 19th 2009 (consolidated text: Dz.U. of 2014, item 133, as amended), and present the financial standing of the Grupa Azoty Police Group as at June 30th 2016, its operating performance for the six and three months ended June 30th 2016, and its cash flows for the six months ended June 30th 2016. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Grupa Azoty Police Group for the financial year ended December 31st 2015, prepared in accordance with the International Financial Reporting Standards endorsed by the European Union (the IFRS ) and other applicable laws. All figures in these interim condensed consolidated financial statements are presented in thousands of złoty. Page21 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 3.2. Accounting policies and computation methods a) Applied accounting policies The accounting policies applied in these interim condensed consolidated financial statements are the same as those applied in the full-year consolidated financial statements for 2015. b) Changes in presentation of financial statements In the reporting period, the presentation of financial statements was changed to improve the presentation of information on the effect of certain types of transactions on the Group s assets and financial position. The comparative data was appropriately restated. The following changes were made to the statement of financial position: Under assets Perpetual usufruct rights to land, Property rights and Other receivables are now presented as separate items. Under Other receivables and Trade and other receivables prepayments and accrued income are presented as separate items, previously disclosed under Other assets, Under equity and liabilities Provision for CO 2 emission rights and Deferred income are now presented under Trade and other payables. The effect of the presentation change on the data disclosed in the statement of financial position as at December 31st 2015 is presented in the table below. Assets Previously reported As at Dec 31 2015 Restated As at Dec 31 2015 Effect of change Non-current assets, including: 1,525,239 1,525,239 - Property, plant and equipment 1,338,913 1,336,758 (2,155) Perpetual usufruct of land - 2,155 2,155 Other receivables - 3,912 3,912 Other assets 3,912 - (3,912) Current assets, including: 658,465 658,465 - Inventories 337,982 301,017 (36,965) Property rights - 36,965 36,965 Trade and other receivables 207,984 215,661 7,677 Other assets 7,677 - (7,677) Total assets 2,183,704 2,183,704 - Equity and liabilities Equity, including: 1,228,007 1,228,007 - Equity attributable to owners of the parent 1,134,699 1,134,699 - Non-controlling interests 93,308 93,308 - Non-current liabilities 402,755 402,755 - Current liabilities 552,942 552,942 - Trade and other payables 392,169 445,800 53,631 Provisions 54,452 831 (53,621) Deferred income 10 - (10) Total equity and liabilities 2,183,704 2,183,704 - Page22 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 In the reporting period, changes were made in the presentation of the following items in the statement of profit or loss and other comprehensive income: income from and costs of investment property. Previously, rental income from investment property was presented under Revenue and the related cost under Cost of sales. Currently, they are presented under Other income and Other expenses, respectively; impairment losses on trade receivables, excluding interest on trade receivables, whose presentation under finance costs remained unchanged. Previously, impairment losses on receivables were presented under Other income and Other expenses. Currently, they are presented under Selling and distribution expenses classified as Other costs. The effect of the change on the data disclosed in the statement of profit or loss and other comprehensive income for the period January June 2015 is presented in the table below. Profit or loss Previously reported For period Jan 1 Jun 30 2015 Restated For period Jan 1 Jun 30 2015 Effect of change Revenue 1,439,825 1,438,646 (1,179) Cost of sales (1,170,212) (1,169,516) 696 Gross profit 269,613 269,130 (483) Selling and distribution expenses (47,132) (46,917) 215 Administrative expenses (89,459) (89,459) - Other income 3,825 4,775 950 Other expenses (1,200) (1,882) (682) Operating profit 135,647 135,647 - Net finance income/(costs) (10,836) (10,836) - Share of profit of equity-accounted associates 5,492 5,492 - Profit before tax 130,303 130,303 - Income tax (23,539) (23,539) - Net profit 106,764 106,764 - Total other comprehensive income, including: (5,359) (5,359) - Exchange differences on translating foreign operations (4,827) (4,827) - Total profit or loss and other comprehensive income 101,405 101,405 - Total profit or loss and other comprehensive income attributable to: Owners of the parent 103,376 103,376 - Non-controlling interests (1,971) (1,971) - c) Changes in International Financial Reporting Standards A number of new Standards, amendments to Standards and Interpretations were not yet effective for the interim periods ended June 30th 2016 and, consequently, they have not been applied in preparing these financial statements. The Group intends to apply them to the periods for which they will be effective for the first time. d) Judgements and estimates The preparation of interim condensed consolidated financial statements requires the Management Board to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and other factors reasonable in the Page23 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 circumstances and are the basis for determining the carrying amounts of assets and liabilities that do not result directly from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes to accounting estimates are recognised in the period in which the estimates are revised or in current and any future periods affected. The key judgements and estimates made by the Management Board in preparing these interim condensed consolidated financial statements were the same as those made in preparing the consolidated financial statements for the financial year ended December 31st 2015, excluding those described in Note 2.3 to these consolidated financial statements. 4. Selected supplementary and explanatory notes 4.1. Explanatory notes Segment reporting Operating segments The Group identifies operating segments based on internal reports. The operating results of each segment are reviewed on a regular basis by the Parent s chief operating decision maker, who decides about the allocation of resources to different segments and analyses their results. Separate information prepared for each segment is available. The Group identifies the following operating segments: the Fertilizers Segment (the Fertilizers and Nitro Business Unit), the Pigments Segment (the Pigments Business Unit), and other activities, which include power generation, port services, wastewater disposal, waste storage, laboratory services, property rental, and other activities which cannot be allocated to any of the segments specified above. Subsidiaries Grupa Azoty Africa S.A. and African Investment Group S.A. together with its subsidiary AFRIG Trade SARL are included in the Fertilizers Segment, and other subsidiaries in other activities. Under the operating segments data, the Group presents administrative, selling and distribution expenses and other income and expenses allocated to each segment. Performance of each of the segments is discussed in the Operating segments Note. Performance of each segment is measured based on its revenue, EBIT and EBITDA. Geographical areas The Group identifies the following geographical areas (countries or regions): Poland, Germany, Other European Union countries, South American countries, Other countries. If information is presented by geographical areas, revenue is determined based on the country of destination, i.e. the country where the product will be sold (irrespective of the location of the wholesaler whose operations frequently have a global reach). Assets allocated to a geographical area are identified on the basis of their geographical location. Page24 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Operating segments Revenue, expenses and financial result of operating segments for the six months ended June 30th 2016 Fertilizers Pigments Other Total External revenue 1,111,986 156,546 23,058 1,291,590 Inter-segment revenue 154,365 447 402,788 557,600 Total revenue 1,266,351 156,993 425,846 1,849,190 Operating expenses, including: (-) (1,166,620) (156,003) (422,433) (1,745,056) Selling and distribution expenses (-) (62,762) (3,575) - (66,337) Administrative expenses (-) (71,147) (11,257) (10,750) (93,154) Other income 522 381 1,694 2,597 Other expenses (-) (10,716) (172) (3,677) (14,565) Segment s EBIT* 89,537 1,199 1,430 92,166 Finance income x x x 1,334 Finance costs (-) x x x (7,149) Share of profit of equity-accounted associates x x x 5,896 Profit before tax x x x 92,247 Income tax x x x (14,182) Net profit x x x 78,065 EBIT* 89,537 1,199 1,430 92,166 Depreciation and amortisation 32,866 8,900 2,427 44,193 EBITDA** 122,403 10,099 3,857 136,359 * EBIT is calculated as operating profit (loss) as disclosed in the statement of profit or loss. ** EBITDA is calculated as operating profit (loss) before depreciation and amortisation. The PLN 19,103 thousand rise in selling and distribution expenses in the Fertilizers segment results from the recognition of an impairment loss on receivables of the subsidiary African Investment Group S.A. in Q2 2016, as described in Note 2.3 to these consolidated financial statements. In Q2 2016, a provision of PLN 9,411 thousand was made and charged to other expenses, for liabilities whose amount and settlement were doubtful, for technical consultancy services related to the supply of phosphate rock from Senegal. Page25 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Revenue, expenses and financial result of operating segments for the three months ended June 30th 2016 Fertilizers Pigments Other Total External revenue 506,530 85,441 13,089 605,060 Inter-segment revenue 67,923 196 205,848 273,967 Total revenue 574,453 85,637 218,937 879,027 Operating expenses, including: (-) (560,770) (82,350) (215,789) (858,909) Selling and distribution expenses (-) (40,407) (2,024) - (42,431) Administrative expenses (-) (34,326) (6,229) (5,514) (46,069) Other income 371 152 733 1,256 Other expenses (-) (10,614) (111) (2,980) (13,705) Segment s EBIT* 3,440 3,328 901 7,669 Finance income x x x 672 Finance costs (-) x x x (4,243) Share of profit of equity-accounted associates x x x 3,250 Profit before tax x x x 7,348 Income tax x x x 2,545 Net profit x x x 9,893 EBIT* 3,440 3,328 901 7,669 Depreciation and amortisation 16,388 4,379 1,305 22,072 EBITDA** 19,828 7,707 2,206 29,741 * EBIT is calculated as operating profit (loss) as disclosed in the statement of profit or loss. ** EBITDA is calculated as operating profit (loss) before depreciation and amortisation. Page26 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Revenue, expenses and financial result of operating segments for the six months ended June 30th 2015, restated* Fertilizers Pigments Other Total External revenue 1,261,154 155,678 21,814 1,438,646 Inter-segment revenue 168,760 335 387,478 556,573 Total revenue 1,429,914 156,013 409,292 1,995,219 Operating expenses, including: (-) (1,293,333) (159,636) (409,496) (1,862,465) Selling and distribution expenses (-) (43,562) (3,570) 215 (46,917) Administrative expenses (-) (69,258) (10,427) (9,774) (89,459) Other income 714 341 3,720 4,775 Other expenses (-) (69) (11) (1,802) (1,882) Segment s EBIT** 137,226 (3,293) 1,714 135,647 Finance income x x x 707 Finance costs (-) x x x (11,543) Share of profit of equity-accounted associates x x x 5,492 Profit before tax x x x 130,303 Income tax x x x (23,539) Net profit x x x 106,764 EBIT** 137,226 (3,293) 1,714 135,647 Depreciation and amortisation 31,129 8,304 2,530 41,963 EBITDA*** 168,355 5,011 4,244 177,610 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. ** EBIT is calculated as operating profit (loss), as disclosed in the statement of profit or loss. *** EBITDA is calculated as operating profit (loss) before depreciation and amortisation. Page27 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Revenue, expenses and financial result of operating segments for the three months ended June 30th 2015, restated* Fertilizers Pigments Other Total External revenue 602,218 79,578 11,302 693,098 Inter-segment revenue 84,849 187 201,764 286,800 Total revenue 687,067 79,765 213,066 979,898 Operating expenses, including: (-) (623,505) (80,269) (211,730) (915,504) Selling and distribution expenses (-) (20,169) (1,725) 215 (21,679) Administrative expenses (-) (35,443) (5,584) (4,749) (45,776) Other income 475 170 679 1,324 Other expenses (-) 207 13 (1,017) (797) Segment s EBIT** 64,244 (321) 998 64,921 Finance income x x x 470 Finance costs (-) x x x (1,311) Share of profit of equity-accounted associates x x x 2,841 Profit before tax x x x 66,921 Income tax x x x (11,241) Net profit x x x 55,680 EBIT** 64,244 (321) 998 64,921 Depreciation and amortisation 13,364 3,651 1,206 18,221 EBITDA*** 77,608 3,330 2,204 83,142 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. ** EBIT is calculated as operating profit (loss), as disclosed in the statement of profit or loss. *** EBITDA is calculated as operating profit (loss) before depreciation and amortisation. Page28 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Assets and liabilities by segment As at June 30th 2016 Fertilizers Pigments Other Total Reportable segment assets 1,614,908 303,662 203,598 2,122,168 Unallocated assets x x x 99,860 Total assets 1,614,908 303,662 203,598 2,222,028 Reportable segment liabilities 468,137 63,083 92,829 624,049 Unallocated liabilities x x x 285,274 Total liabilities 468,137 63,083 92,829 909,323 As at June 30th 2015 Fertilizers Pigments Other Total Reportable segment assets 1,446,663 337,065 109,367 1,893,095 Unallocated assets x x x 150,470 Total assets 1,446,663 337,065 109,367 2,043,565 Reportable segment liabilities 462,549 61,366 57,762 581,677 Unallocated liabilities x x x 295,150 Total liabilities 462,549 61,366 57,762 876,827 As at December 31st 2015 Fertilizers Pigments Other Total Reportable segment assets 1,538,397 327,003 163,847 2,002,233 Unallocated assets x x x 154,457 Total assets 1,538,397 327,003 163,847 2,183,704 Reportable segment liabilities 583,574 83,078 61,963 728,615 Unallocated liabilities x x x 227,082 Total liabilities 583,574 83,078 61,963 955,697 Geographical areas Revenue Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 restated* Apr 1 Jun 30 2015 restated* Poland 804,883 377,185 794,572 389,756 Germany 138,637 57,539 172,986 67,924 Other EU countries 260,520 98,541 299,016 123,338 South American countries 62,007 62,007 148,822 108,057 Other countries 25,543 9,788 23,250 4,023 Total 1,291,590 605,060 1,438,646 693,098 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Page 29 of 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 1 Revenue Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 restated* Apr 1 Jun 30 2015 restated* Revenue from sale of goods and services 1,284,210 600,061 1,436,801 692,376 Revenue from sale of merchandise and raw materials 6,785 4,404 1,845 722 Revenue from sale of property rights 595 595 - - Note 2. Operating expenses 1,291,590 605,060 1,438,646 693,098 Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 2015 Jun 30 2015 restated* Apr 1 2015 Jun 30 2015 restated* Depreciation and amortisation 44,193 22,072 41,963 18,221 Raw materials and consumables used 839,747 406,369 929,492 478,546 Services 82,890 40,101 87,398 46,944 Taxes and charges 45,040 22,517 49,529 25,920 Wages and salaries 126,335 64,985 115,900 57,633 Social security and other employee benefits 35,924 17,940 35,599 17,803 Other costs 50,391 33,886 26,503 12,960 Costs by type of expense 1,224,520 607,870 1,286,384 658,027 Changes in inventories of finished goods and work in progress (+/-) (40,582) (26,343) 19,164 (29,034) Work performed by the entity and capitalised (-) (542) (260) (434) (213) Selling and distribution expenses (-) (66,337) (42,431) (46,917) (21,679) Administrative expenses (-) (93,154) (46,069) (89,459) (45,776) Cost of merchandise and raw materials sold 4,060 3,675 778 (76) Cost of sales 1,027,965 496,442 1,169,516 561,249 including excise duty 3,326 1,594 4,658 2,302 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. The PLN 19,103 thousand rise in other costs and selling and distribution expenses results from the recognition of an impairment loss on receivables of the subsidiary African Investment Group S.A., as described in Note 2.3 to these consolidated financial statements. Under Wages and salaries the Group includes: wages and salaries paid and due, unused holiday accruals, annual and incentive bonus accruals, net of surcharges, costs of defined benefit plans (employee benefit obligations related to retirement and disability severance benefits), Page 30 of 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 costs of other long-term employee benefits (employee benefit obligations related to length-ofservice awards). Under Social security and other employee benefits the Group includes: social security contributions, surcharges related to annual and incentive bonus accruals, contributions to and provisions for Social Benefit Fund, training courses, other (workwear and protective clothing, employee meals, employee pension plan contributions). Note 3. Other income Gains on disposal of assets Gain on disposal of property, plant and equipment Reversed impairment losses on Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 restated* Apr 1 Jun 30 2015 restated* - - 1,697 191 - - 1,697 191 Other - (269) - (22) Other income - (269) - (22) Received compensations 68 61 356 20 Revenue from lease of investment property 1,206 607 1,179 589 Reversal of provisions 72 72 61 61 Grants 763 341 777 380 Other 488 444 705 105 2,597 1,525 3,078 1,155 2,597 1,256 4,775 1,324 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Page 31 of 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 4. Other expenses Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 restated* Apr 1 Jun 30 2015 restated* Loss on disposal of assets Loss on disposal of property, plant and equipment 4 (110) - - 4 (110) - - Recognised impairment losses on Property, plant and equipment 4 4 90 90 Other - (6) - (3) 4 (2) 90 87 Other expenses Fines and compensations 961 961 648 308 Plant outages 84 42 - - Current asset decommissioning costs 243 25 - - Failure recovery expenses 118 109 199 13 Provisions recognised 11,637 11,637 - - Investment property maintenance costs 810 428 696 277 Other 704 615 249 112 14,557 13,817 1,792 710 14,565 13,705 1,882 797 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. As at June 30h 2016, the Parent recognised a PLN 9,411 thousand provision for liabilities, whose amount and settlement were doubtful, for technical consultancy services related to supply of phosphate rock from Senegal, and a PLN 1,780 thousand provision for environmental protection. Note 5. Finance income Interest income on: Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Bank deposits 199 82 21 13 Cash pooling 149 123 89 29 Non-bank borrowings 237 119 94 48 Trade receivables 109 68 239 190 Other 14 (15) 20 15 708 377 463 295 Other finance income 626 295 244 175 1,334 672 707 470 Page 32 of 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 6. Finance costs Interest expense on: Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Credit facilities, including overdrafts 172 107 1,362 410 Non-bank borrowings 1,428 687 166 78 Cash pooling 171 167 336 161 Finance leases 376 188 205 112 Other 2,777 1,780 795 785 4,924 2,929 2,864 1,546 Losses on sale of financial investments - - 4 4 Other finance costs - - 4 4 Net foreign exchange losses 1,105 500 7,001 (1,881) Unwind of discount on provisions and borrowings 468 468 466 466 Unwind of discount on other liabilities - - 992 992 Other finance costs 652 346 216 184 2,225 1,314 8,675 (239) 7,149 4,243 11,543 1,311 Page 33 of 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 7. Income tax Note 7.1. Tax expense in the statement of profit or loss Current tax expense Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Current portion of tax expense 13,012 5,620 4,672 4,670 Deferred tax expense Temporary differences/reversal of temporary differences 1,170 (8,165) 18,867 6,571 Tax expense in the statement of profit or loss 14,182 (2,545) 23,539 11,241 Note 7.2. Effective tax rate Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Profit before tax 92,247 7,348 130,303 66,921 Tax at the Company s domestic tax rate 17,527 1,396 24,758 12,715 Effect of tax rates in foreign jurisdictions (2,409) (2,560) 11 295 Tax-exempt income (+/-) (449) (2,306) (311) (138) Non-deductible expenses (+/-) 917 702 750 534 Other (+/-) (1,404) 223 (1,669) (2,165) Tax expense in the statement of profit or loss 14,182 (2,545) 23,539 11,241 Effective tax rate 15.4% -4.3% 18.1% 16.8% The tax rate applicable to the Group s income in the reporting periods covered by these financial statements is 19%. The Group s foreign subsidiaries are subject to a 30% income tax rate. Page 34 of 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 7.3. Tax expense recognised in other comprehensive income Tax on items that will not be reclassified to profit or loss (+/-) Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Remeasurement of defined benefit obligation (167) (167) (125) (125) Tax expense recognised in other comprehensive income (167) (167) (125) (125) Note 7.4. Deferred tax assets and liabilities Deferred tax assets (-) Deferred tax liabilities (+) Jun 30 2016 Dec 31 2015 restated* Jun 30 2016 Dec 31 2015 Property, plant and equipment (21,782) (25,031) 73,877 67,365 Perpetual usufruct of land (26) (19) - - Investment property - - 2,751 2,692 Intangible assets (5,409) (5,223) 330 164 Financial assets (3,821) (2,930) 1,043 1,043 Inventories (2,818) (2,365) 6,138 6,451 Trade and other receivables (6,365) (584) 142 190 Trade and other payables (11,169) (17,911) - - Employee benefits (14,153) (13,672) 3 3 Provisions (11,216) (8,986) 414 - Other (10,967) (7,280) - - Deferred tax assets(-)/liabilities(+) (87,726) (84,001) 84,698 77,908 Offsetting 32,585 20,421 (32,585) (20,421) Deferred tax assets(-)/liabilities(+) recognised in the statement of financial position (55,141) (63,580) 52,113 57,487 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Page35 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 8. Earnings per share The calculation of basic earnings per share was based on the net profit attributable to ordinary shareholders of the Parent and the weighted average number of ordinary shares outstanding at the reporting date and was calculated as follows: Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Net profit 84,738 17,217 106,621 54,680 Ordinary shares outstanding at beginning of period 75,000,000 75,000,000 75,000,000 75,000,000 Ordinary shares outstanding at end of period 75,000,000 75,000,000 75,000,000 75,000,000 Weighted average number of ordinary shares in the period 75,000,000 75,000,000 75,000,000 75,000,000 Earnings per share: Basic (PLN) 1.13 0.23 1.42 0.73 Diluted (PLN) 1.13 0.23 1.42 0.73 Diluted earnings per share There are no potentially dilutive ordinary shares which would cause dilution of earnings per share. Note 9. Property, plant and equipment Carrying amounts as at Jun 30 2016 as at Dec 31 2015 restated* Land 6,347 6,347 Mineral deposits 283,372 273,259 Buildings and structures 305,603 316,874 Technical devices and machines 516,316 439,036 Vehicles 10,494 10,959 Grupa Other Azoty property, Zakłady Chemiczne plant and Police equipment Group 13,237 11,723 1,135,369 1,058,198 Property, plant and equipment under construction 294,037 278,560 1,429,406 1,336,758 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Page36 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Carrying amounts of property, plant and equipment As at Jun 30 2016 Land Mineral deposits Buildings and structures Technical devices and machines Vehicles Other property, plant and equipment Property, plant and equipment under construction Gross carrying amount 7,403 295,236 823,914 1,540,948 33,230 49,733 298,415 3,048,879 Accumulated depreciation (-) - (11,864) (422,740) (911,470) (22,045) (33,738) - (1,401,857) Impairment losses (-) (1,056) - (95,571) (113,162) (691) (2,758) (4,378) (217,616) Net carrying amount as at Jun 30 2016 6,347 283,372 305,603 516,316 10,494 13,237 294,037 1,429,406 As at Dec 31 2015 Gross carrying amount 7,403 284,699 826,792 1,435,956 32,884 48,233 282,938 2,918,905 Accumulated depreciation (-) - (11,440) (414,322) (883,681) (21,228) (33,752) - (1,364,423) Impairment losses (-) (1,056) - (95,596) (113,239) (697) (2,758) (4,378) (217,724) Net carrying amount as at Dec 31 2015 restated* 6,347 273,259 316,874 439,036 10,959 11,723 278,560 1,336,758 Total Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Page37 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 10. Intangible assets Carrying amounts as at Jun 30 2016 as at Dec 31 2015 Patents and licences 10,142 10,610 Software 1,942 2,106 Other intangible assets 1,227 1,314 13,311 14,030 Intangible assets under construction 21,052 17,752 Exploration and evaluation assets 74,982 54,583 109,345 86,365 Note 11. Cash as at Jun 30 2016 as at Dec 31 2015 Cash in hand 33 28 Bank balances in PLN 42,600 28,112 Bank balances in foreign currencies (translated to PLN) 8,647 23,848 Bank deposits - up to 3 months 11,943 43,147 63,223 95,135 Cash and cash equivalents in the statement of financial position 63,223 95,135 Cash and cash equivalents in the statement of cash flows 63,223 95,135 The fair value of cash and cash equivalents is equal to their carrying amount. The cash balance comprises unrestricted cash of PLN 63,223 thousand. Note 12. Borrowings as at Jun 30 2016 as at Dec 31 2015 Bank borrowings 97,059 54,926 Loans 233,477 245,646 Thereof: 330,536 300,572 Non-current 190,094 208,313 Current 140,442 92,259 330,536 300,572 Page38 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Maturities and currencies As at June 30th 2016 Currency Reference rate Value as at the reporting date in original currency in PLN Less than 1 year 1 2 year(s) 2-5 years >5 years PLN fixed - 1,841 1,473 368 - - PLN variable - 271,587 81,861 48,110 108,330 33,286 EUR variable 13,000 57,108 57,108 - - - As at December 31st 2015 Currency Reference rate 13,000 330,536 140,442 48,478 108,330 33,286 Value as at the reporting date in original currency in PLN Less than 1 year 1 2 year(s) 2-5 years >5 years PLN fixed - 2,798 1,841 957 - - PLN variable - 242,704 35,348 48,110 114,330 44,916 EUR variable 13,000 55,070 55,070 - - - 13,000 300,572 92,259 49,067 114,330 44,916 As at the reporting date, bank borrowings are measured at amortised cost. The basis of measurement is the amount drawn and the interest rate effective as at the reporting date. The Parent uses an overdraft facility under an agreement between Grupa Azoty S.A. and PKO BP S.A. with an additional cash pooling service. The credit limit available to the Parent is PLN 123,000 thousand. The overdraft facility agreement expires on September 30th 2016. As at June 30th 2016, debt outstanding under the agreement amounted to PLN 35,165 thousand, with a commission fee of PLN 38 thousand remaining to be settled. The Parent also uses a multi-purpose credit facility of PLN 82,000 thousand under an agreement with PKO BP S.A. As at June 30th 2016, there was no amount outstanding under the working capital facility. PLN 19,784 thousand was used for guarantees and a stand-by letter of credit. The remaining amount, of PLN 62,216 thousand, remains to be used for further guarantees, letters of credit and as working capital facility. As at June 30th 2016, a commission fee of PLN 5 thousand remained to be settled. The agreement expires on September 30th 2016. In November 2013, the Parent executed a PLN 80,000 thousand overdraft facility agreement with Bank Gospodarstwa Krajowego. As at June 30th 2016, debt outstanding under the overdraft facility amounted to PLN 4,863 thousand, with a commission fee of PLN 35 thousand remaining to be settled. The agreement expires on November 12th 2016. In February 2014, the Parent and its subsidiary, African Investment Group S.A., entered into a EUR 8,000 thousand multi-purpose credit facility agreement with BGŻ BNP Paribas Bank Polska S.A. on financing the subsidiary s day-to-day operations. The agreement provided for financing in the period from February 18th 2014 to February 17th 2016. After the first financing availability period ended, an annex to the agreement was signed, extending the availability period until February 17th 2017. On March 19th 2015, the facility limit was raised to EUR 13,000 thousand. As at June 30th 2016, the limit was fully used. As of September 26th 2014, the Parent, as a co-borrower, stands surety in respect of the repayment of a credit facility contracted by African Investment Group S.A. Loans advanced to the Group as at June 30th 2016: 10-year loan from the Regional Fund for Environmental Protection and Water Management in Szczecin, in the amount of PLN 90,000 thousand, to finance the Emissions treatment unit and upgrade of the EC II CHP plant at Zakłady Chemiczne Police S.A. project. The loan was Page39 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 disbursed in full. The loan is scheduled for repayment by December 31st 2022. As at June 30th 2016, the debt outstanding under the agreement was PLN 73,356 thousand. 4-year loan from the Regional Fund for Environmental Protection and Water Management in Warsaw, in the amount of PLN 2,945 thousand, to finance the Elimination of negative environmental impact of iron sulfate (II) landfill site - Stawostadion No. 1 project. The loan was disbursed in full. is scheduled for repayment by December 20th 2016. As at June 30th 2016, the debt outstanding under the agreement was PLN 1,841 thousand. 10-year loan from the Regional Fund for Environmental Protection and Water Management in Warsaw, in the amount of PLN 90,000 thousand, to finance the Upgrade of ammonia synthesis process at Zakłady Chemiczne Police S.A. project. The loan is disbursed in tranches. The loan agreement expires on December 20th 2023. As at June 30th 2016, the debt outstanding under the agreement was PLN 72,281 thousand. PLN 104,000 thousand loan to finance the Company s capital expenditure, advanced by Grupa Azoty S.A. on September 14th 2015 under the intragroup financing agreement of April 23rd 2015. As at June 30th 2016, the debt outstanding under the agreement was PLN 66,000 thousand. The last tranche of the loan, of PLN 26,000 thousand, remains available and may be drawn down until December 31st 2016. PLN 60,000 thousand loan to finance the share capital of the new subsidiary PDH Polska Spółka Akcyjna, advanced by Grupa Azoty S.A. on September 14th 2015 under the intragroup financing agreement of April 23rd 2015. The loan is disbursed in tranches. As at June 30th 2016, the debt outstanding under the agreement was PLN 20,000 thousand. The remaining amount of the loan may be drawn down by December 31st 2016. Note 13. Employee benefit obligations as at Jun 30 2016 as at Dec 31 2015 Pension benefit obligations 16,248 15,450 Jubilee benefit obligations 44,879 42,738 Pensioner Social Fund benefit obligations 5,480 5,704 Other liabilities 7,766 7,451 Thereof: 74,373 71,343 Non-current 67,047 64,257 Current 7,326 7,086 74,373 71,343 As at June 30th 2016, the Parent remeasured its obligations under employee benefits. As a result of the remeasurement: PLN 3,807 thousand was charged to operating expenses (wages and salaries); PLN 808 thousand was charged to finance costs (interest expense); PLN 880 thousand was credited to other comprehensive income (change in demographic and financial estimates); PLN 2,349 thousand of the provision was used. The key actuarial assumptions relating to the provisions for jubilee benefit obligations and pension benefit obligations, adopted for the purpose of estimates as at June 30th 2016 did not change relative to December 31st 2015 and were as follows: discount rate: 3.00% future average annual pay increase: 3.00% Page40 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 14. Provisions as at Jun 30 2016 as at Dec 31 2015 restated* Provision for legal claims 688 - Provision for environmental protection, including site restoration 48,444 46,238 Other provisions 10,728 1,565 Thereof: 59,860 47,803 Non-current 49,202 46,972 Current 10,658 831 59,860 47,803 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Provisions for environmental protection Structure of provisions as at June 30th 2016: provision for site restoration PLN 33,994 thousand, provision for cleaning installations of chemical substances PLN 3,420 thousand, provision for cleaning the treatment plant tanks and clarifiers PLN 11,030 thousand. The provisions were discounted using the same discount rate that was applied as at December 31st 2015, i.e. 2.00%. Changes in provisions resulted from the revised estimates as at June 30th 2016, including: creation of a provision of PLN 1,780 thousand (including PLN 1,297 thousand on site restoration), unwinding of a discount of PLN 468 thousand, reversal of a provision of PLN 42 thousand. Other provisions As at June 30h 2016, the Parent recognised a PLN 9,411 thousand provision for liabilities, whose amount and settlement were doubtful, for technical consultancy services related to supply of phosphate rock from Senegal. Note 15. Financial instruments Note 15.1. Capital risk management The Group is not subject to any external limitations relating to capital management, other than standard requirements concerning minimum share capital provided for in the Commercial Companies Code. The Group complies with regulations on minimum share capital. In line with the Commercial Companies Code, the Company is required to maintain statutory reserve funds amounting to up to one-third of the share capital solely to cover financial losses. The Parent has the obligation to transfer at least 8% of the current net profit to the statutory reserve fund until the fund reaches the required amount of one-third of the share capital. As at June 30th 2016, the Parent s statutory reserve fund was PLN 352,058 thousand, having reached the level required under the Commercial Companies Code. The purpose of capital risk management is to protect the Group s ability to continue its operations so as to ensure a return on investment for the shareholders and benefits for other stakeholders, and to maintain a cost-optimum capital structure. Page41 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 The Group monitors changes in the shareholding structure, return on capital and debt-to-equity ratios. To maintain equity or change it as required, the Management Board of the Parent may propose that the General Meeting adopt parameters determining dividend distribution to shareholders, return of invested capital, new share issue or asset disposal to reduce the Group s existing liabilities. In H1 2016, the Group executed credit facility agreements including certain covenants requiring the Group to maintain a specific level of the debt to EBITDA ratio. The minimum requirements for the ratio level were met. Note 15.2. Categories of financial instruments Classification of financial instruments Financial assets as at Jun 30 2016 as at Dec 31 2015 Loans and receivables 162,976 167,875 Cash and cash equivalents 63,223 95,135 Recognised in the statement of financial position as: 226,199 263,010 Trade and other receivables 152,442 157,797 Cash and cash equivalents 63,223 95,135 Other financial assets 10,534 10,078 Financial liabilities 226,199 263,010 as at Jun 30 2016 as at Dec 31 2015 At amortised cost 579,258 609,721 Recognised in the statement of financial position as: Non-current borrowings 190,094 208,313 Current borrowings 140,442 92,259 Trade and other payables 240,869 300,615 Other financial liabilities 7,853 8,534 Profit/(loss) on categories of financial instruments (+/-) Financial liabilities Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 579,258 609,721 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 At amortised cost - - (992) - Page42 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 15.3. Financial risk management The Group is exposed to credit, liquidity, and market risks (involving primarily currency risk and interest rate risk), which arise in the ordinary course of business. The Group manages its financial risk in order to minimise the effect of market factors on the Group s performance. Note 15.3.1. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises principally from trade receivables, short-term bank deposits and cash pooling. The following table presents the Group s maximum exposure to credit risk: as at Jun 30 2016 as at Dec 31 2015 Loans and receivables 162,976 167,875 Cash and cash equivalents 63,223 95,135 Trade receivables 226,199 263,010 The following table presents credit risk related to trade receivables by product groups: as at Jun 30 2016 as at Dec 31 2015 Fertilizers 91,786 133,709 Pigments 52,949 19,952 Other Activities 4,105 2,571 148,840 156,232 Trade receivables are the main source of the Group s credit risk exposure. Trade credit risk (lack of payment by an insolvent trading partner or a trading partner s excessive delay in meeting payment obligations) arises from sale of products with deferred payment. The Group s seeks to mitigate this risk to the possible minimum. Taking into account the procedures in place at the Group and its diversified customer base, the concentration of credit risk is not considered significant, as attested to by the data on receivables, including past due receivables. The correctness of the applied policy is also confirmed by the fact that delayed payments are infrequent given the continuous monitoring of financial standing of the Group s trade debtors and adjustments of trade credit amounts to trading partners needs and ability to repay. The Group performs ongoing credit assessment, including customer monitoring. To this end, the Group reviews business intelligence reports and debtor registers, and frequently requires collateral to be provided by trading partners. To mitigate the risk associated with deferred payment, the Group takes out insurance policies to cover its trade receivables. The policies limit credit risk to the deductible amount (5% of the value of insured receivables). The insurance covers sales in three currencies: PLN, EUR and USD (for the foreign currencies, the insurance also covers currency risk stemming from trade credit offered to foreign trading partners). As a rule, all deferred payments are insured. However, the Group s receivables for 2013-2014 related to the supply of fertilizers to AFRIG S.A. of Senegal were not insured as the risk was accounted for in the business strategy and was considered inherent in entering the local fertilizer market. Page43 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 The insurance policies provide the facility for current monitoring of customers current financial standing and debt recovery when required. Additionally, upon customer s real or legal insolvency, the Group receives compensation payments amounting to 95% of the insured receivables. The Group s trade receivables secured with letters of credit and bank guarantees are not insured. Where there is no positive trading history between a customer and the Group or where transactions are occasional and the credit limit cannot be insured, prepayments are required. Trade credit is typically granted subject to approval by the insurance company, requires a positive trading history and is based on assessment of the customer s credit worthiness, financial statements, payment history, collateral provided and business intelligence reports. Credit risk exposure is defined as the total amount of unpaid receivables, monitored on an ongoing basis by the Group s internal financial staff (individually for each trading partner) and, if a receivable is insured, also by the insurance company analysts. Domestic customers account for approximately 54% of the Group s total trade receivables, with the balance of 46% representing foreign trade receivables. Not impaired overdue trade receivables as at Jun 30 2016 as at Dec 31 2015 Past due up to 60 days 2,966 11,221 Past due 60 180 days 800 19,167 Past due 180 360 days 49 370 Past due more than 360 days 413 7 4,228 30,765 Note 15.4. Fair value of financial instruments Details of the fair value of financial instruments, where measurement is possible, are presented below: Cash and cash equivalents, short-term bank deposits and short-term bank borrowings. Carrying amounts of such instruments approximate their fair value because of the short maturities of such instruments. Trade and other receivables, trade payables. Carrying amounts of such instruments approximate their fair value because of the short maturities of such instruments. Long-term bank financing. Carrying amounts of such instruments approximate their fair value due to the variable interest rates. Note 15.5. Derivative instruments and hedge accounting In the six months ended June 30th 2016 and in 2015 the Group carried no derivative instruments and applied no hedge accounting. Page44 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 16. Contingent liabilities, contingent assets and guarantees As at June 30th 2016, the Group did not identify any disclosable contingent liabilities or contingent assets. As at June 30th 2016, the Group issued sureties for the following credit facility agreements: Type/ Issuer Surety for syndicated credit facility Surety for PKO BP credit facility (overdraft) Surety for PKO BP credit facility (MPCF) Surety for EIB credit facility Surety for EBRD credit facility Insurance guarantee Beneficiary Details Currency Issue date Grupa Azoty S.A. Grupa Azoty S.A. Grupa Azoty S.A. Grupa Azoty S.A. Grupa Azoty S.A. INTERRISK S.A. Revolving credit facility agreement Overdraft facility agreement Multi-purpose credit facility agreement Credit facility agreement Credit facility agreement Property insurance Amount (currency) Amount (PLN 000) PLN Apr 23 2015 NA 600,000 PLN Apr 23 2015 NA 120,800 PLN Apr 23 2015 NA 94,800 PLN May 28 2015 NA 220,000 PLN May 28 2015 NA 60,000 PLN Mar 21 2011 NA 1,881 1,097,481 Bank guarantees provided to the Group under available credit limits as at June 30th 2016: Type/ Issuer Beneficiary Details Currency Issue date Amount (currency) Amount (in PLN 000) PKO BP S.A. PKO BP S.A. PKO BP S.A. PGE S.A. Customs Chamber in Szczecin PSE S.A. PKO BP S.A. GAZ-SYSTEM S.A. PKO BP S.A. GAZ-SYSTEM S.A. PKO BP S.A. (stand-by letter of credit) MARSULEX (MET) Performance bond in open tender contract Customs debt payment guarantee Payment guarantee for electricity transmission contract Payment guarantee for gas fuel transmission contract Payment guarantee for gas fuel transmission contract Security for payment under a contract (exhaust gas treatment unit at the EC II CHP plant) PLN Mar 8 2016 NA 316 PLN Mar 18 2016 (annex) PLN Nov 9 2015 (annex) PLN PLN Dec 17 2015 Dec 17 2015 NA 4,000 NA 800 NA 144 NA 9,350 USD May 4 2016 1 300 5,174 19,784 As at June 30th 2016, Grupa Azoty Police Serwis Sp. z o.o., a subsidiary, was the only Group company to have provided performance bonds (two separate performance bonds for an aggregate amount of PLN 477 thousand). As at the reporting date, guarantees provided to the Parent totalled PLN 142,017 thousand. Page45 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 Note 17. Accounting estimates and assumptions Changes in provisions and employee benefit obligations (excluding deferred tax liability) Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Dec 31 2015 restated* Jan 1 Jun 30 2015 restated* Apr 1 Jun 30 2015 restated* Balance at the beginning of the period 119,146 119,146 117,316 117,316 116,582 Recognised 17,617 17,574 12,420 3,929 3,929 Reversed (-) (72) (72) (1,904) (60) (60) Used (-) (2,486) (2,446) (8,694) (3,008) (2,280) Effect of movements in exchange rates 28 31 8 (2) 4 Balance at the end of the period 134,233 134,233 119,146 118,175 118,175 Financial data restated due to the presentation changes described in Note 3.2 b) to these interim condensed consolidated financial statements. Changes in impairment loss on property, plant and equipment Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Dec 31 2015 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Balance at the beginning of the period 217,724 217,634 216,677 216,677 215,720 Recognised 4 4 4,880 87 87 Used (-) (112) (22) (3,833) (1,188) (231) Balance at the end of the period 217,616 217,616 217,724 215,576 215,576 Changes in inventory write-downs Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Dec 31 2015 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Balance at the beginning of the period 9,721 9,125 11,790 11,790 10,298 Recognised 6,334 6,116 4,902 2,730 2,507 Reversed (-) (593) (116) (6,220) (3,062) (1,423) Used (-) (728) (391) (751) (595) (519) Balance at the end of the period 14,734 14,734 9,721 10,863 10,863 Changes in impairment loss on receivables Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Dec 31 2015 Jan 1 Jun 30 2015 Apr 1 Jun 30 2015 Balance at the beginning of the period 19,997 19,992 24,922 24,922 24,878 Recognised 19,223 19,171 328 86 51 Reversed (-) (210) (154) (374) (304) (225) Used (-) (25) (24) (4,879) (3,844) (3,844) Effect of movements in exchange rates 167 167 - - - Balance at the end of the period 39,152 39,152 19,997 20,860 20,860 Page46 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 For a description of key events resulting in an increase in impairment losses on receivables and inventory write-downs, see Note 2.3 to these consolidated financial statements. For a description of key events resulting in an increase in provisions, see the note Provisions to these consolidated financial statements. Note 18. Capital commitments In the period ended June 30th 2016, the Group signed contracts concerning continuation of on-going projects. As at June 30th 2016, the Group was committed to make capital expenditure of PLN 199,151 thousand (December 31st 2015: PLN 120,326 thousand), which included the following key items: Construction of a polypropylene unit PLN 50,579 thousand, Upgrade of the ammonia unit PLN 44,420 thousand, Upgrade of the exhaust gas treatment unit at the EC II CHP plant PLN 40,331 thousand, Change of the DA-HF phosphoric acid production technology PLN 15,064 thousand, Logistics development - stage 2 PLN 11,404 thousand. 4.2. Related parties Significant related-party transactions: a) Significant related-party transactions executed by the Group on non-arm s length terms. In the six months ended June 30th 2016, the Group did not execute any related-party transactions on non-arm s length terms. b) Transactions with members of the Management Board and Supervisory Board of the Parent, their spouses, siblings, ascendants, descendants or other closely related persons In the six months ended June 30th 2016, the Group did not grant any advances, loans, guarantees or sureties to management or supervisory personnel or persons closely related to them, nor did it enter into any agreements with them to provide benefits to the Group. c) Significant related-party transactions executed by the Group. Transactions with the following entities are considered related party transactions of the Grupa Azoty Police Group: companies of the Grupa Azoty Group, companies of the Grupa Azoty ZAK Group, companies of the Grupa Azoty PUŁAWY Group, companies of the Grupa Azoty PKCh Group, and with the associated and non-consolidated companies of the Grupa Azoty Police Group. The most important transactions executed by the Grupa Azoty POLICE Group with its related parties in the period January June 2016 were the following: sale of liquid ammonia to Grupa Azoty S.A. for PLN 50,358 thousand, sale of urea and fertilizers to Agrochem Puławy Sp. z o.o. for PLN 16,113 thousand, sale of liquid ammonia and urea to Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. for PLN 5,819 thousand, purchase of liquid sulfur from Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. for PLN 13,652 thousand, purchase of ammonium sulfate from Grupa Azoty Zakłady Azotowe Puławy S.A. for PLN 12,931 thousand. Also, Grupa Azoty S.A. advanced loans to the Parent, as described in the note Borrowings. Page47 z 96

Interim condensed consolidated financial statements for the six and three months ended June 30th 2016 4.3. Events after the end of the reporting period that could affect future financial performance There were no reportable events subsequent to the end of the reporting period that could potentially affect the Group s future financial performance. 4.4. Dividends The Annual General Meeting of Kemipol Sp. z o.o., held on April 26th 2016, passed a resolution to pay dividend to its shareholders. As a result, Grupa Azoty Zakłady Chemiczne Police S.A. received dividend of PLN 10,808 thousand. The dividend was paid on June 30th 2016. 4.5. Seasonality of operations Seasonality of the Parent s operations is seen mainly on the markets for mineral fertilizers and pigments. Mineral fertilizers market The end of the first quarter and beginning of the second quarter of each year (March and April) as well as the third quarter of each year (August and September) are periods of increased activity in the agricultural sector, when demand for mineral fertilizers is high. In addition, on the Parent s key markets (Poland and Europe), the periods when fertilizers are purchased are the same. The seasonality of the fertilizers market is mitigated by various distribution and commercial efforts (including exports outside Europe), which ensure stable and continuous sale of fertilizers. Titanium white market In the Parent s key markets, which are Poland and Europe, the highest demand for titanium white is observed in spring and summer (second and third quarter), driven by increased demand for paints and varnishes in the construction industry. Sales of titanium white usually decline during the winter season in the fourth and first quarter of each year. Titanium white remains a seasonal product, but given its widespread application, demand for this product chiefly depends on general market conditions. Chemicals For other chemicals manufactured by the Parent (urea, AdBlue, Fespol), seasonality virtually does not occur or may occur to a limited extent and its effect on the Parent s performance is insignificant. Page48 z 96

SECTION 3 INTERIM CONDENSED SEPARATE FINANCIAL STATEMENTS FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30TH 2016, PREPARED IN ACCORDANCE WITH IAS 34 INTERIM FINANCIAL REPORTING AS ADOPTED BY THE EUROPEAN UNION

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Statement of the Management Board The Management Board of Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna presents interim condensed separate financial statements for the six and three months ended June 30th 2016, comprising: Condensed separate statement of profit or loss and other comprehensive income for the period January 1st June 30th 2016 and April 1st June 30th 2016, Condensed separate statement of financial position as at June 30th 2016, Condensed separate statement of changes in equity for the period January 1st June 30th 2016, Condensed separate statement of cash flows for the period January 1st June 30th 2016, Supplementary information to the interim condensed separate financial statements. These interim condensed separate financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, as endorsed by the European Union, and give a fair and clear view of the financial position and performance of the Company. Signatures of the Members of the Management Board Wojciech Wardacki, Ph.D. President of the Management Board Rafał Kuźmiczonek Vice President of the Management Board Włodzimierz Zasadzki, Ph.D. Vice President of the Management Board Tomasz Panas Vice President of the Management Board Person in charge of maintaining accounting records Józefa Żurawska Chief Accountant Police, August 18th 2016 Grupa Azoty Zakłady Chemiczne Police S.A. Page50 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Profit or loss Condensed separate statement of profit or loss and other comprehensive income Jan 1 Jun 30 2016 Apr 1 Jun 30 2016 Jan 1 Jun 30 2015 restated* Apr 1 Jun 30 2015 restated* unaudited unaudited unaudited unaudited Revenue 1,283,015 598,817 1,430,837 688,064 Cost of sales (1,031,700) (494,527) (1,170,450) (561,939) Gross profit 251,315 104,290 260,387 126,125 Selling and distribution expenses (89,617) (65,711) (46,917) (22,085) Administrative expenses (79,107) (39,048) (75,837) (39,216) Other income 2,269 1,243 3,302 515 Other expenses (15,056) (13,836) (2,384) (1,218) Operating profit / (loss) 69,804 (13,062) 138,551 64,121 Finance income 11,856 11,302 11,803 11,671 Finance costs (11,001) (7,994) (10,548) (1,573) Net finance income 855 3,308 1,255 10,098 Profit / (loss) before tax 70,659 (9,754) 139,806 74,219 Income tax (13,912) 2,190 (24,863) (12,866) Net profit/(loss) 56,747 (7,564) 114,943 61,353 Other comprehensive income Items that will not be reclassified to profit or loss Remeasurement of defined benefit obligation (880) (880) (657) (657) Tax on items that will not be reclassified to profit or loss 167 167 125 125 Total other comprehensive income (713) (713) (532) (532) Total profit or loss and other comprehensive income 56,034 (8,277) 114,411 60,821 Earnings per share: Basic (PLN) 0.76 (0.10) 1.53 0.82 Diluted (PLN) 0.76 (0.10) 1.53 0.82 Financial data restated due to the presentation changes described in the supplementary information to these interim condensed separate financial statements. The supplementary and explanatory notes are an integral part of these interim condensed separate financial statements. Grupa Azoty Zakłady Chemiczne Police S.A. Page51 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Condensed separate statement of financial position Assets Non-current assets as at Jun 30 2016 unaudited as at Dec 31 2015 restated* audited Property, plant and equipment 1,129,117 1,050,705 Perpetual usufruct of land 5,122 5,157 Investment property 25,008 24,713 Intangible assets 33,762 31,303 Investments in subordinated entities 219,595 219,595 Other receivables 3,880 3,807 Deferred tax assets 51,396 52,435 Total non-current assets 1,467,880 1,387,715 Current assets Inventories 267,769 290,081 Property rights 36,605 36,965 Other financial assets 9,924 9,687 Trade and other receivables 187,144 231,185 Cash and cash equivalents 20,772 57,210 Total current assets 522,214 625,128 Total assets 1,990,094 2,012,843 Financial data restated due to the presentation changes described in the supplementary information to these interim condensed separate financial statements. The supplementary and explanatory notes are an integral part of these interim condensed separate financial statements. Grupa Azoty Zakłady Chemiczne Police S.A. Page52 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Condensed separate statement of financial position (continued) Equity and liabilities Equity as at Jun 30 2016 unaudited as at Dec 31 2015 restated* audited Share capital 750,000 750,000 Retained earnings, including: 472,912 416,878 Profit for the period 56,747 168,788 Total equity 1,222,912 1,166,878 Liabilities Borrowings 190,094 208,313 Other financial liabilities 4,253 5,061 Employee benefit obligations 56,672 53,903 Trade and other payables 918 175 Provisions 48,444 46,238 Grants 14,322 14,812 Total non-current liabilities 314,703 328,502 Borrowings 83,334 37,189 Other financial liabilities 2,436 2,278 Employee benefit obligations 5,841 5,464 Current tax expense 12,628 2,434 Trade and other payables 326,713 468,686 Provisions 9,500 89 Grants 12,027 1,323 Total current liabilities 452,479 517,463 Total liabilities 767,182 845,965 Total equity and liabilities 1,990,094 2,012,843 Financial data restated due to the presentation changes described in the supplementary information to these interim condensed separate financial statements. The supplementary and explanatory notes are an integral part of these interim condensed separate financial statements. Grupa Azoty Zakłady Chemiczne Police S.A. Page53 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Condensed separate statement of changes in equity for the period ended June 30th 2016 Share capital Retained earnings Total equity Balance at Jan 1 2016 750,000 416,878 1,166,878 Profit or loss and other comprehensive income Net profit - 56,747 56,747 Other comprehensive income - (713) (713) Total profit or loss and other comprehensive income - 56,034 56,034 Transactions with owners of the Company, recognised directly in equity Dividends - - - Total transactions with owners of the Company - - - Balance at Jun 30 2016 (unaudited) 750,000 472,912 1,222,912 for the period ended June 30th 2015 Share capital Retained earnings Total equity Balance at Jan 1 2015 750,000 290,784 1,040,784 Profit or loss and other comprehensive income Net profit - 114,943 114,943 Other comprehensive income - (532) (532) Total profit or loss and other comprehensive income - 114,411 114,411 Transactions with owners of the Company, recognised directly in equity Dividends - (42,000) (42,000) Total transactions with owners - (42,000) (42,000) Balance at Jun 30 2015 (unaudited) 750,000 363,195 1,113,195 for the year ended December 31st 2015 Share capital Retained earnings Total equity Balance as at Jan 1 2015 750,000 290,784 1,040,784 Profit or loss and other comprehensive income Net profit - 168,788 168,788 Other comprehensive income - (694) (694) Total profit or loss and other comprehensive income - 168,094 168,094 Transactions with owners, recognised directly in equity Dividends - (42,000) (42,000) Total transactions with owners - (42,000) (42,000) Balance at Dec 31 2015 (audited) 750,000 416,878 1,166,878 The supplementary and explanatory notes are an integral part of these interim condensed separate financial statements. Grupa Azoty Zakłady Chemiczne Police S.A. Page54 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Condensed separate statement of cash flows Cash flows from operating activities Jan 1 Jun 30 2016 unaudited Jan 1 Jun 30 2015 restated* unaudited Profit before tax 70,659 139,806 Adjustments for: 36,080 34,298 Depreciation and amortisation 43,503 40,735 Recognition of impairment losses on property, plant and equipment 4 90 (Profit)/loss from investing activities 829 (1,089) Interest, foreign exchange gains or losses 2,552 5,774 Dividends (10,808) (11,035) Reversal of impairment losses on investments in subordinated entities - (177) Operating profit before changes in working capital 106,739 174,104 Changes in trade and other receivables 41,594 (35,291) Changes in inventories 22,672 87,240 Changes in trade and other payables (138,883) (91,704) Changes in provisions, accruals, deferrals and grants 24,097 14,390 Cash from operating activities 56,219 148,739 Income taxes paid - (187) Net cash from operating activities 56,219 148,552 Financial data restated due to the presentation changes described in the supplementary information to these interim condensed separate financial statements. The supplementary and explanatory notes are an integral part of these interim condensed separate financial statements. Grupa Azoty Zakłady Chemiczne Police S.A. Page55 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Condensed separate statement of cash flows (continued) Jan 1 Jun 30 2016 unaudited Jan 1 Jun 30 2015 unaudited Cash flows from investing activities Proceeds from sale of property, plant and equipment, intangible assets and investment property 276 6,052 Acquisition of property, plant and equipment, intangible assets and investment property (105,371) (77,691) Dividends received 10,808 11,035 Acquisition of subsidiaries (20,000) - Grants - 1,522 Loans - (1,000) Other disbursements (833) (600) Net cash from investing activities (115,120) (60,682) Cash flows from financing activities Dividends paid - (42,000) Proceeds from borrowings 46,655 37,335 Payment of borrowings (18,729) (57,311) Interest paid (4,471) (3,549) Payment of finance lease liabilities (2,180) (2,068) Other proceeds 560 185 Net cash from financing activities 21,835 (67,408) Net increase/(decrease) in cash and cash equivalents (37,066) 20,462 Cash and cash equivalents at beginning of period 57,210 32,085 Effect of exchange rate fluctuations 628 663 Cash and cash equivalents at end of period 20,772 53,210 The supplementary and explanatory notes are an integral part of these interim condensed separate financial statements. Grupa Azoty Zakłady Chemiczne Police S.A. Page56 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Supplementary information to the interim condensed separate financial statements These interim condensed separate financial statements of Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna should be read in conjunction with the interim condensed consolidated financial statements of the Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna Group for the six and three months ended June 30th 2016, and the audited separate financial statements of Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna for the financial year ended December 31st 2015. The accounting policies applied in these interim condensed separate financial statements are the same as those applied in the full-year separate financial statements for 2015. In the reporting period, presentation changes were made in the statement of financial position, including: Under assets Perpetual usufruct rights to land, Property rights and Other receivables are now presented as separate items. Under Other receivables and Trade and other receivables prepayments and accrued income are presented as separate items, previously disclosed under Other assets, Under equity and liabilities Provision for CO 2 emission rights and Deferred income are now presented under Trade and other payables. In the reporting period, changes were made in the presentation of the following items in the statement of profit or loss and other comprehensive income: Income from and costs of investment property. Previously, rental income from investment property was presented under Revenue and the related cost under Cost of sales. Currently, they are presented under Other income and Other expenses, respectively; Impairment losses on trade receivables, excluding interest on trade receivables whose presentation under finance costs remains unchanged. Previously, impairment losses on receivables were presented under Other income and Other expenses. Currently, they are presented under Selling and distribution expenses classified as Other costs. In the opinion of the Management Board of Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna, notes to the interim condensed consolidated financial statements of the Grupa Azoty Zakłady Chemiczne Police Spółka Akcyjna Group contain all relevant information required to properly assess the Company s assets and financial position in the presented period. The effect of the presentation change on the data disclosed in the statement of financial position as at December 31st 2015 and on the data disclosed in the statement of profit or loss and other comprehensive income for January June 2015 is presented in the table below. Grupa Azoty Zakłady Chemiczne Police S.A. Page57 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Interim condensed separate financial statements for the six and three months ended June 30th 2016 Assets Previously reported As at Dec 31 2015 Restated As at Dec 31 2015 Effect of change Non-current assets, including: 1,387,715 1,387,715 - Property, plant and equipment 1,055,862 1,050,705 (5,157) Perpetual usufruct of land - 5,157 5,157 Other receivables - 3,807 3,807 Other assets 3,807 - (3,807) Current assets, including: 625,128 625,128 - Inventories 327,046 290,081 (36,965) Property rights - 36,965 36,965 Trade and other receivables 225,430 231,185 5,755 Other assets 5,755 - (5,755) Total assets 2,012,843 2,012,843 - Equity and liabilities Equity 1,166,878 1,166,878 - Non-current liabilities 328,502 328,502 - Current liabilities 517,463 517,463 - Trade and other payables 415,055 468,686 53,631 Provisions 53,710 89 (53,621) Deferred income 10 - (10) Total equity and liabilities 2,012,843 2,012,843 - Profit or loss Previously reported For period Jan 1 Jun 30 2015 Restated For period Jan 1 Jun 30 2015 Effect of change Revenue 1,432,016 1,430,837 (1,179) Cost of sales (1,171,146) (1,170,450) 696 Gross profit 260,870 260,387 (483) Selling and distribution expenses (47,132) (46,917) 215 Administrative expenses (75,837) (75,837) - Other income 2,352 3,302 950 Other expenses (1,702) (2,384) (682) Operating profit 138,551 138,551 - Net finance income 1,255 1,255 - Profit before tax 139,806 139,806 - Income tax (24,863) (24,863) - Net profit 114,943 114,943 - Total other comprehensive income (532) (532) - Total profit or loss and other comprehensive income 114,411 114,411 - Grupa Azoty Zakłady Chemiczne Police S.A. Page58 z 96

SECTION 4 MANAGEMENT S DISCUSSION AND ANALYSIS OF THE GRUPA AZOTY ZAKŁADY CHEMICZNE POLICE GROUP S PERFORMANCE IN H1 2016

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 1. General information on the Group As at June 30th 2016, the (the Group ) comprised Grupa Azoty Zakłady Chemiczne Police S.A. (the Parent, the Company ), and: nine subsidiaries (in which Grupa Azoty Zakłady Chemiczne Police S.A. held ownership interests above 50%), including one company in liquidation, one indirect subsidiary, two associates (in which the Parent held ownership interests below 50%), including one company in liquidation bankruptcy. For a description of the organisation of the Parent and presentation of the Group subsidiaries, see pp. 4 8 of the Director s Report on the operations of the Grupa Azoty Zakłady Chemiczne Police Group in the twelve months ended December 31st 2015. The Company has for decades been one of the leading European manufacturers of fertilizers and is one of the largest Polish chemical manufacturers. High sales to external markets make it also one of the largest Polish exporters. The Company s advantages include a titanium white production unit of a type unique in Poland, the size of production of ammonia, phosphoric acid and sulfuric acid, as well as its strong position in the compound mineral fertilizers market. On an international forum, the Company is appreciated not only for its production and sales of large volumes of fertilizers, but also for contributing to the development of the chemical industry and global agriculture. The Company takes CSR issues very seriously, engaging in projects supporting local communities and regional development. In cooperation with local authorities, Grupa Azoty Zakłady Chemiczne Police S.A. supports vocational education, with particular focus on professions useful to the Company. Grupa Azoty Zakłady Chemiczne Police S.A. also cooperates with higher education institutions. The Company shares its expertise with students writing their theses in chemistry, environmental protection, management and marketing. Some of those students are subsequently employed at the Police plant. Grupa Azoty Zakłady Chemiczne Police S.A. Page60 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Table 1. Parent s interests in subsidiaries as at June 30th 2016 Name Grupa Azoty Police Serwis Sp. z o.o. Koncept Sp. z o.o. PDH Polska S.A. Supra Agrochemia Sp. z o.o. Transtech Usługi Sprzętowe i Transportowe Sp. z o.o. Grupa Azoty Africa S.A. ZMPP Sp. z o.o. African Investment Group S.A. (AFRIG S.A.) Infrapark Police S.A. w likwidacji (in liquidation) Budchem Sp. z o.o. w upadłości likwidacyjnej (in liquidation bankruptcy) Kemipol Sp. z o.o. AFRIG Trade SARL Registered office/address ul. Kuźnicka 1, 72-010 Police, Poland ul. Kuźnicka 1, 72-010 Police, Poland ul. Kuźnicka 1, 72-010 Police, Poland ul. Monopolowa 6 51-501 Wrocław, Poland ul. Kuźnicka 1, 72-010 Police, Poland Route de Ngor Villa No. 12, Dakar, Senegal ul. Kuźnicka 1, 72-010 Police, Poland Route de Ngor Villa No. 12, Dakar, Senegal ul. Kuźnicka 1, 72-010 Police, Poland ul. Moczyńskiego 8/10, 70-101 Szczecin, Poland ul. Kuźnicka 6, 72-010 Police, Poland Route de Ngor Villa No. 12, Dakar, Senegal Share capital % of shares attributable to the Parent Directly Indirectly 9,618 100.00 0.00 512 100.00 0.00 60,000 100.00 0.00 19,721 100.00 0.00 XOF 132,000 thousand 9,783 100.00 0.00 99.99 0.01 32,617 99.98 0.00 XOF 340,000 thousand 54.90 0.10 9,559 54.43 0.00 1,201 48.96 0.00 3,445 33.99 0.00 XOF 33,000 thousand 0.00 55.00 2. Financial standing and assets 2.1. Assessment of factors and non-typical events having a material impact on the Group s operations and financial performance One-off events, i.e. impairment losses on assets of a subsidiary African Investment Group S.A. and related assets of the Parent The Management Board of Grupa Azoty Zakłady Chemiczne Police S.A. passed a resolution to recognise an impairment loss on receivables from the subsidiary African Investment Group S.A. of Dakar, Senegal (AFRIG S.A.), in an amount of EUR 10.5m (PLN 46.4m as at June 30th 2016). The receivables are trade receivables for the supplies of fertilizers to Senegal in 2013 2014, when the Company endeavoured to enter a new, Senegalese, fertilizers market. The resolution was adopted after an examination of AFRIG S.A. s financial standing and taking into consideration information on AFRIG S.A. s recognition of the following impairment losses: Impairment losses on receivables past due for more than one year, covering 100% of the receivables amount totalling XOF 2,877.5m (approximately PLN 19m as at June 30th 2016); Write-downs on inventories of phosphate rock, which the Company presents under work in Grupa Azoty Zakłady Chemiczne Police S.A. Page61 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 progress, deemed slow moving for over two years, covering 50% of their value, totalling XOF 817m (approximately PLN 5.4m as at June 30th 2016). The recognition of the EUR 10.5m impairment loss reduced the Company s separate profit and total assets disclosed in the Company s separate financial statements for H1 2016. The recognition of the impairment losses and inventory write-downs by the Company s subsidiary reduced both the consolidated profit and total assets in the Company s consolidated financial statements for H1 2016. 1 The other matters referred to in Current Report No. 27/2016 of May 30th 2016, which can change the carrying amount of the assets relating to the subsidiary AFRIG S.A. and are not disclosed in these financial statements, are still under analysis and examination. As at June 30h 2016, the Parent also recognised a PLN 9,411 thousand provision for liabilities, whose amount and settlement were doubtful, for technical consultancy services related to supply of phosphate rock. These amounts affected both separate and consolidated results. 2.2. Market overview FERTILIZERS Poland In H1 2016, grains prices in Poland were under pressure. Grains were sold primarily by farmers seeking to regain their financial liquidity. Many farmers continued to store large quantities of grains in their own warehouses while the warehouses of grain purchasers were overstocked. According to a report prepared by the Institute of Soil Science and Plant Cultivation State Research Institute (Instytut Uprawy, Nawożenia i Gleboznawstwa PIB) of Puławy, winter losses on winter grains exceeded 10% nationwide. In the case of rapeseed, the losses exceeded 25%, and in the case of barley 50%. Most of these rapeseed and barley acres were re-planted and farmers incurred additional costs of crop growing. Farmers benefited from growing contract prices of new rapeseed and growing prices of pork. Over the last three months, prices of pork have gone up by almost PLN 2/kg, reaching their highest value in the last two years. After the EU lifted milk quotas, the situation of milk producers has steadily been deteriorating due to oversupply and persistent low prices. In many cases, payments for supplied milk were delayed by up to two months. A growing number of farmers plan to get rid of their milk herds after the expiry of the three-month notice periods for their milk supply contracts. The prolonged period of low prices of grains, pigs, meat cattle and milk put numerous farmers in a difficult economic situation. Compared with the previous year, over the entire first half of 2016 payments of direct subsidies to farmers were delayed. By June 29th 2016, the Agency for Restructuring and Modernisation of Agriculture disbursed over PLN 14.16bn in direct subsidies for 2015 (to 99.4% of farmers). Europe and the world The principal drivers that pushed down grain prices in Q1 2016 included high levels of stocks and expected high yields in the 2016/2017 season, both globally and in the EU. Stocks are expected to stay high. A series of drops in the wheat price on the Paris commodity exchange was recorded, primarily attributable to the high supply on global markets. Prices of American wheat remained low, despite the expected reduction of the acreage planted for wheat. The weakness of wheat prices reflected exceptionally fierce competition on the global export market. Russia s and Ukraine s shares in and importance for the supply and demand balance on global grain markets have been increasingly higher. Unfavourable weather conditions prevailed in Ukraine last autumn. For this reason, this year s grain yields in that country are forecast to be 8% (53m tonnes) below the last year s figure. Also the rapeseed yield in Ukraine, which remains the largest rapeseed supplier to the EU, is forecast to decrease. On the other hand, Russia expects high grain yields and plans to harvest 105.4m tonnes of grains (the highest figure since 2008), compared with 104.8m tonnes a year earlier. Combined with the high global yields and large last-year harvest stocks, this will contribute to price drops across global markets. 1 The Company announced this in Current Report No. 42/2016 Impairment losses on assets related to a subsidiary, AFRIG S.A., dated July 22nd 2016. Grupa Azoty Zakłady Chemiczne Police S.A. Page62 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Prices of maize remained low on continued oversupply on the global market and are still in the downward trend that started in November 2015. In June 2016, the US Department of Agriculture (USDA) published a new forecast of global wheat yield, estimating it at 730.8m tonnes in the 2016/2017 season. If realised, the figure would be the second largest in history, lower by just 0.5% than the record yield in the 2015/2016 season. The European Union remains the largest global producer and exporter of wheat. The USDA forecasts the wheat yield in the EU in 2016 at 157.5m tonnes or approximately 22% of the global production. Ammonia Poor sales of ammonia and production constraints kept the demand for fertilizer and technical grade ammonia low in Q1 2016. The continued production constraints and plant failures suffered by many producers kept the ammonia price at a stable level which changed only slightly in Q1 2016. The strong demand for agricultural ammonia recorded in the US in the second half of April and in May, as well as production constraints experienced by numerous ammonia exporters (Persian Gulf countries) and producers (e.g. BASF) pushed the price up 5% in May. However, after the production constraints were removed and the season for agricultural ammonia application in the US ended, the increase was halted. Figure 1. Ammonia and urea prices [USD/t] 670 570 470 370 270 170 Ammonia Urea Source: Company data. After the Turkish government banned the production of ammonium nitrate, from a major importer of ammonia the country became an exporter of the product. In June, the price of ammonia re-entered a downward trend, and at the end of the month went down to ca. USD 250/t, the value last recorded in 2009/2010. Urea In H1 2016, the global urea market saw significant shifts, with downward price pressures prevailing. In February, in anticipation of the approaching spring season, American importers placed large orders on the market. Accompanied by production constraints (plant failures suffered by several large exporters), the increased demand pushed global urea prices up. In March, the demand dropped again and urea prices resumed the downward trend due to global overproduction of urea. Urea prices went dramatically down to the level last recorded at the end of 2004 and beginning of 2005. In April, India purchased large quantities of urea, and the demand for the product rebounded in the US and China, driving prices up. However, as the season of spring application of urea was coming to an end on a number of markets (the US, China, Europe), price drops were observed in the last days of April. The downward trend in urea prices that started at the end of April continued until the end of June despite India s purchase of over 1.3m tonnes of urea in late May and a 30% production drop in China. Given China s excessive production capacity and growing capacities on other markets (new annual production capacities of over 5m tonnes are expected to be launched by the year end), global urea overproduction will continue. Grupa Azoty Zakłady Chemiczne Police S.A. Page63 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 NPK fertilizers In H1 2016, retail sales of NPK fertilizers were subdued on the domestic market, primarily due to liquidity constraints experienced by numerous farmers. Delays in direct payments of EU funds and falling prices of grains and other agricultural produce induced farmers to reduce their purchases of fertilizers and other means of agricultural production. Compared with the previous years, there was a strong increase in the number of fertilizer sale transactions executed on a deferred payment basis, e.g. with payments deferred until the end of the 2016 harvest or even until the end of the year. The distribution network will have to collect these payments. In the spring peak season (March and April), volumes of trade in NPK fertilizers varied from good to no trade at all, depending on the retailer and region, the main reason being farmers worries about the condition of winter crops, highly diversified from region to region. In the second half of April, retailers mostly made supplementary purchases of fertilizers to satisfy specific customers requirements. Companies holding large stocks of fertilizers sold them frequently at a loss just to dispose of the merchandise. On a positive note, at the end of the spring season most retailers had very low stocks of NPK fertilizers or no stocks at all. Figure 2. 550 Prices of NPK, DAP [USD/t] 500 450 400 350 300 250 NPK 16-16-16 DAP Source: Company data. May saw low volumes of NPK fertilizer purchases as farmers and distributors awaited a new price opening (late season discounts). In late May, most Polish fertilizer producers announced new price lists, with significantly lower prices of NPK fertilizers. The size of the price reductions was principally dictated by low prices of imported NPK fertilizers and high activity of distributors offering the imported product. Despite such significant price reductions, distributors were reluctant to make new purchases given the low availability of financial resources on the market. In H1 2016, the sales of imported NPK fertilizers on the Polish market were 17% lower year on year, while imports of NP (including DAP and MAP) fertilizers were markedly higher. Total imports of NPK and NP fertilizers were 2% higher than in the first five months of 2015. Other markets The first half of 2016 proved difficult for European producers of NPK fertilizers. Sales volumes for NPK fertilizers fell significantly year on year, and both producers and distributors recorded high levels of stocks. Due to excessive stocks, the leading producers reduced their output. In March, producer prices of the standard NPK 15-15-15 fertilizer fell by 6% to 15%, depending on the market. This did not, however, encourage European farmers to increase NPK fertilizer purchases. It was only on the UK and Irish markets that demand for NPK fertilizers remained at a sound level, but there, too, like on the other European markets, the season of NPK fertilizer application and demand for the products ended in May. Also on non-european markets demand for NPK fertilizers was rather low and was limited to the markets of India and a few countries of South-East Asia. Russian producers reduced prices of basic types of NPK fertilizers by 10% to 15%, in the hope of placing overproduction elsewhere, e.g. in India. On their domestic market, Russian producers entered into negotiations with large farms concerning NPK fertilizer supplies between June and August. For May and June, 60,000 to 80,000 tonnes of the fertilizers were planned to be supplied per month to the domestic market. Grupa Azoty Zakłady Chemiczne Police S.A. Page64 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Also in Ukraine, in June large farms entered into negotiations with Russian, Belarusian and Ukrainian producers concerning autumn supplies of NPK fertilizers. First purchases of NPK fertilizers for autumn application were made already in May and June. DAP fertilizers In H1 2016, weak demand continued on the main DAP markets in the US, Europe, Brazil, China and India. A number of major producers, e.g. in the US and China, significantly reduced their output. In China, production capacities were utilised at 60 70% due to weak domestic and foreign demand. The poor demand for DAP in China forced Chinese producers to increase exports, which pushed the global prices down. To place the product on the market, the largest global producers were gradually reducing DAP prices, and the price reductions enabled them to sell their current output. On the European market, sales of DAP stagnated due to overstocking with fertilizers and grains and farmers reluctance to purchase the product. The only import market where demand rose was India which, taking advantage of low DAP prices, started to accumulate the product before the autumn fertilizer application season. However, on this market, too, purchases declined after sufficient quantities of the product had been stocked up. Despite production constraints, DAP prices were going down steadily on most markets in the first half of 2016. The average DAP price fell from USD366/t at the beginning of the year to USD 320/t in June 2016. In June 2015, the price of DAP was USD 460/t. RAW MATERIALS FOR THE PRODUCTION OF FERTILIZERS Phosphorites The downward trend in phosphate fertilizer prices pushed down the prices of raw materials, including phosphorites. In January 2016, the prices of phosphorites fell by 5% to 17% in US dollar terms. After the January drop, the prices of phosphorites remained stable in Q1 2016. Another price drop was recorded in late April. Its scale depended significantly on the manufacturer and the quality of phosphorites. Prices went down by 3% to 5% on average. In late June, there was an indication of further price decreases in phosphorite exports from Egypt to India. The prices quoted in contracts for Q3 2016 were lower by USD 3 4/t (ca. 5 6%). Potassium chloride In H1 2016, on all global markets, poor demand for potassium chloride persisted and the downward trend in the product s price that began in July 2015 continued. Potassium chloride manufacturers were pessimistic. To curb the price drop, the largest global producers of potassium chloride reduced their output. One producer permanently shut down a new mine. An analysis of quarterly reports shows that in Q1 2016 the production and financial results of potassium chloride producers were 10% to 30% lower year on year, in terms of both volume and value. Importers from numerous countries, including Brazil, China, India, Malaysia and the Philippines, put a strong downward pressure on potassium chloride prices. Low prices of agricultural produce and financial crises in certain geographies markedly limited farmers incomes and thus their purchasing power. The largest importers of potassium chloride, China and India, had already accumulated large stocks of the product during H1 2016 and did not plan further purchases. As the stocks of imported potassium chloride in Chinese ports reached a high last seen many years ago (ca. 2m tonnes), Chinese importers have not yet signed new contracts for supplies in 2016. Towards the end of Q1, a seasonal increase in purchases of potassium chloride was seen in the US and Brazil, which put to a halt the downward trend in prices for the product on these markets, observed for several months. In late June, India signed a contract with a Belarusian supplier for the supply of 700,000 tonnes of potassium chloride until April 2017, for the price of USD 227/t, that is USD 105/t below the price quoted in the previous contract. Such a significant contract can contribute to stabilising potassium chloride prices on global markets in H2 2016. Grupa Azoty Zakłady Chemiczne Police S.A. Page65 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Sulfur On European markets, sulfur prices went down by USD 3 5/t quarter on quarter in Q1 2016. Sulfur price declines across global markets led European purchasers of the product to believe that prices would also decrease significantly in Q2 2016. In Q2 2016, the average sulfur price was in the range USD 110 120/t. No new sulfur prices for Q3 2016 were announced by the end of June, and the prices are expected to remain at their Q2 levels on the European markets. On global markets, the prices of sulfur, as well as of numerous other key raw materials, were under a downward pressure throughout H1 2016. Significant drops (of up to 35%) in sulfur prices were recorded in H1 2016 at major suppliers in the US, Canada and Persian Gulf countries. The main drivers of the decline were high stocks of sulfur at petrochemical plants and limited purchases by phosphate fertilizers producers. Drops in phosphate fertilizer prices prompted the largest global producers of these fertilizers to pressure sulfur suppliers into reducing their prices. The principal causes of price drops in Persian Gulf countries were high stocks of sulfur and limited production of phosphate fertilizers in China. In late June, sulfur producers in Persian Gulf countries announced product prices for July lower by 7% to 11%. PIGMENTS Titanium white In Q1 2016, demand for titanium white remained low, which is typical of that period of the year. While several leading producers announced plans to increase prices as of January 1st 2016, Q1 2016 contract prices fell on average by approximately EUR 50/t (3%) on the European markets. Last year, several manufacturers reduced their titanium white output or permanently shut down a few production facilities. The oversupply of the product has been reduced but not eliminated completely. A leading manufacturer has announced the launch, in H2 2016, of a new titanium white production facility with an annual capacity of 200,000 tonnes. The price increase expected by the producers in Europe and the US in Q1 2016 failed to materialise following an increase in imports from China. Due to the economic deceleration in China, the Chinese producers have significant excessive titanium white production capacities, which has prompted them to expand into other markets, including Europe. In Q2 2016, European markets saw a rise in demand for titanium white. In anticipation of the seasonal increase in demand in Q2 2016, the largest global manufacturers of titanium white (Chemours, Kronos and Huntsman) increased their prices in April. The scale of the increase varied a lot and depended on the titanium white grade (sulfate or chloride) and customer requirements. Accepted price increases for chloride-process titanium white were in the range EUR 80 100/t, while for sulfate-process titanium white in the range EUR 20 60/t. Apart from the increased demand, prices were also pushed up by production constraints at the largest titanium white manufacturers. The constraints postponed the delivery dates for some titanium white grades, especially of the chloride-process titanium white. Demand was also driven by the higher number of orders placed in response to price increase announcements. Grupa Azoty Zakłady Chemiczne Police S.A. Page66 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Figure 3. Market prices of titanium white [EUR/t] 2 500 2 400 2 300 2 200 2 100 2 000 1 900 Source: Company data. Titanium white In May and June 2016, the average price of titanium white was by over 10% lower than in the same period of 2015. RAW MATERIALS FOR THE PRODUCTION OF PIGMENTS Ilmenite and titanium slag On the representative Chinese market, in January 2016 the average price of ilmenite fell to the lowest level since the 2009 crisis. Given the significant ilmenite production constraints in China, the product price grew by almost 40% in Q1 2016, while the price of titanium slag in China went up by USD 20/t, or 5%. 2.3. Key financial and economic data 2.3.1. Consolidated financial information The Group s key achievements in H1 2016 included: higher gross margin compared with the corresponding period of the previous year, positive EBIT and higher revenue of the Pigments segment compared with the corresponding period of the previous year, securing a lower price of the key feedstock natural gas, continued performance of the key project construction of the PDH propylene unit with infrastructure. The negative change in the Group s performance was mainly a result of a one-off event, i.e. impairment loss on receivables and inventory write-down at the subsidiary AFRIG S.A. and uncertain liabilities of the Parent. In H1 2016, the Group generated a net profit of PLN 78,065 thousand, with EBIT at PLN 92,166 thousand and EBITDA at PLN 136,359 thousand. Compared with H1 2015, EBIT decreased by PLN 43,481 thousand (32%), and EBITDA by PLN 41,251 thousand (23%). Operating expenses generated by the Group were lower compared with the corresponding period of 2015. In the reporting period, the financial performance of the Group was strongly correlated with the situation in the Parent s market environment. Grupa Azoty Zakłady Chemiczne Police S.A. Page67 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Table 2 Consolidated financial data Item H1 2016 H1 2015 change % change Revenue 1,291,590 1,438,646-147,056-10 Cost of sales 1,027,965 1,169,516-141,551-12 Gross profit 263,625 269,130-5,505-2 Selling and distribution expenses 66,337 46,917 19,420 41 Administrative expenses 93,154 89,459 3,695 4 Profit on sales 104,134 132,754-28,620-22 Net other income/(expenses) -11,968 2,893-14,861-514 Operating profit 92,166 135,647-43,481-32 Net finance income/(costs) -5,815-10,836 5,021-46 Share of profit of equity-accounted associates 5,896 5,492 404 7 Profit before tax 92,247 130,303-38,056-29 Income tax 14,182 23,539-9,357-40 Net profit 78,065 106,764-28,699-27 EBIT 92,166 135,647-43,481-32 Depreciation and amortisation 44,193 41,963 2,230 5 EBITDA 136,359 177,610-41,251-23 It is worth noting that the Company s gross profit for H1 2016 was only 2% lower year on year. EBIT amounted to PLN 92,166 thousand, down by PLN 41,481 thousand on H1 2015. The negative change resulted mainly from a one-off event, i.e. recognition of an impairment loss on receivables, inventory write-down, and provision for liabilities. Figure 4 EBITDA main drivers 2 865 93 009 97 733 19 420 14 861 10 864 3 695 177 610 136 359 136 359 EBITDA H1 2015 lower cost of sales increase in lower product higher selling other revenue prices and distribution expenses lower net other income lower sales volume higher administrative expenses EBITDA H1 2016 Source: Company data. In H1 2016, sales of ammonia and fertilizers (NPK and urea) were lower and the prices of these products fell. In addition, EBIT was affected by the recognition of an impairment loss on past due receivables (PLN 19,103 thousand) and an inventory write-down (PLN 5,426 thousand) in a subsidiary and recognition of a provision for liabilities whose amount and materialisation are uncertain (PLN 9,411 thousand). Favourable movements in the prices of natural gas, fine coal, sulfur and ilmenite and higher volumes of titanium white sales did not offset the effect of the above factors on the Company s EBIT. Grupa Azoty Zakłady Chemiczne Police S.A. Page68 z 96

Pigments Other Activities Fertilizers Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 2.3.2. Segments financial results Profit on sales of the Grupa Azoty Group s products in H1 2016 was determined primarily by the market situation in the Fertilizers segment, i.e. lower sales volumes and falling prices. The segment s performance was additionally impacted by the one-off events described in Section IV.2. of this report. Revenue of the Fertilizers segment was down 12% year on year. The revenue increases recorded by the Other Activities (6%) and Pigments (1%) segments were driven by higher sales of titanium white. Table 3 EBIT by segment in H1 2016 Item Fertilizers Pigments Other Activities Revenue from external sales 1,111,986 156,546 23,058 Share [%] 86% 12% 2% EBIT 89,537 1,199 1,430 Table 4 EBIT by segment in H1 2015 Item Fertilizers Pigments Other Activities Revenue from external sales 1,261,154 155,678 21,814 Share [%] 88% 11% 1% EBIT 137,226-3,293 1,714 Figure 5 1 400 000 Revenue by segment 1 200 000 1 000 000 800 000 600 000 1H 2015 1H 2016 400 000 200 000 0 Source: Company data. Grupa Azoty Zakłady Chemiczne Police S.A. Page69 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Figure 6 Revenue by segment [%] H1 2016 1,8% 12,1% Fertilizers Pigments Other Activities 86,1% H1 2015 1,5% 10,8% Fertilizers Pigments Other Activities 87,7% Source: Company data. The shares of individual segments in total revenue changed slightly compared with H1 2015, with increased shares of the Pigments (1.3pp) and Other Activities (0.3pp) segments and a lower contribution from the Fertilizers (1.6pp) segment. Fertilizers In H1 2016, revenue of the Fertilizers segment was PLN 1,111,986 thousand and accounted for approximately 86% of the Group s revenue. The segment recorded positive EBIT. Domestic market accounted for approximately 64% of the Fertilizers segment sales. Figure 7 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 2Q 3Q 2014 2014 Source: Company data. Revenue of the Fertilizers Segment 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 Grupa Azoty Zakłady Chemiczne Police S.A. Page70 z 96

Other Urea Compound fertilizers Titanium white Chemicals Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 Pigments In H1 2016, at PLN 156,546 thousand, the revenue of the Pigments segment was up 0.6% year on year and accounted for 12% of the Group s revenue. Approximately 52% of the segment s revenue from sales of products was generated on foreign markets. EBIT reported by the segment was positive, after a period of negative results continuing from October 2014. Figure 8. 120 000 100 000 80 000 60 000 40 000 20 000 Source: Company data. Other 0 Revenue of the Pigments Segment 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 In H1 2016, revenue of the Other Activities segment amounted to PLN 23,058 thousand and accounted for 2% of the Group s total revenue. It was higher by 6% relative to H1 2015. The segment s EBIT in H1 2016 remained relatively flat year on year. 2.3.3. Sales by product group Accounting for more than 60% of the total, compound fertilizers have the largest share in the Group s revenue by product group. Compared with H1 2015, the share of compound fertilizers and titanium white in total revenue rose by 3pp, while the share of chemical products fell. In H1 2016, revenue from sales of compound fertilizers was PLN 792,130 thousand, having fallen 5% year on year. The contributing factors were a 1% increase in NPK fertilizer sales and lower sales of NP and NS fertilizers (down 22% and 13%, respectively). The main cause of the year-on-year revenue drop was a 5% decrease in compound fertilizers sale price, accompanied by a 1% decline in their sales volume. Figure 9 Revenue by product group 900 000 800 000 700 000 600 000 500 000 1H 2015 400 000 1H 2016 300 000 200 000 100 000 0 Source: Company data. Grupa Azoty Zakłady Chemiczne Police S.A. Page71 z 96

Grupa Azoty Zakłady Chemiczne Police S.A. Management s discussion and analysis: H1 2016 In H1 2016, revenue from sales of urea was PLN 173,199 thousand, having declined 17.5% year on year. The change is attributable to a 10% drop in sales volume and a more than 8% price decrease. In H1 2016, revenue from sales of titanium white was PLN 149,688 thousand, remaining flat year on year. A 2% increase in sales volumes was offset by lower prices. Figure 10. Revenue by product group H1 2016 Titanium white; 12% Chemicals; 12% Other; 2% Urea; 13% Compound fertilizers; 61% H1 2015 Titanium white; 10% Chemicals; 15% Other; 2% Urea; 15% Compound fertilizers; 58% Source: Company data. Revenue in the chemicals product category, where urea is the largest contributor to the value of sales, was 32% lower year on year, mainly owing to more than 40% decline in revenue from sales of ammonia. Revenue of the Other Activities segment accounts for around 2% of the Parent s total revenue and is derived mainly from occasional sales of merchandise and services. 2.3.4. Operating expenses In H1 2016, the Group s operating expenses were PLN 1,224,520 thousand, down by PLN 61,864 thousand year on year. The decrease was attributable to lower costs of raw materials and consumables used, taxes and charges and costs of services. The most important item of operating expenses was raw materials and consumables used, most of which were generated by the Parent. The main cause of the year-on-year decrease in operating expenses was the lower price of natural gas. The decrease in taxes and charges is mainly attributable to lower cost of CO 2 emission allowances. Wages and salaries rose following the execution of wage agreements. Increase in other costs resulted mainly from the recognition of a one-off impairment loss on past-due receivables and write-down of impaired inventories. Grupa Azoty Zakłady Chemiczne Police S.A. Page72 z 96