Zakłady Azotowe w Tarnowie-Mościcach S.A. ul. E. Kwiatkowskiego 8, 33-101 Tarnów, Polska, tel. +4814 633 07 81-85

PR /02/2011/1500

Annual Report 2010

www.azoty.tarnow.pl

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„Skonsolidowane sprawozdanie finansowe za okres 12 miesięcy, kończących się 31 grudnia 2010 roku”, sporządzone 8 marca 2011 roku zgodnie z wymogami Międzynarodowych Standardów Rachunkowości. Sprawozdanie rzetelnie i jasno przedstawia sytuację majątkową i finansową Spółki i Grupy Kapitałowej oraz wyniki finansowe. Pełny tekst raportu rocznego jest dostępny na stronie internetowej azoty.tarnow.pl oraz w siedzibie Spółki.

Ponadto do niniejszego Raportu Finansowego dołączamy płytę CD, na której w celu poszerzenia zamieszczonych w nim informacji prezentujemy: Roczne jednostkowe sprawozdanie finansowe za 2010 rok Sprawozdanie jednostkowe z działalności Spółki za 2010 rok Roczne skonsolidowane sprawozdanie finansowe za 2010 rok Sprawozdanie Zarządu z działalności Grupy Kapitałowej za 2010 rok Consolidated financial statement for 2010 Report on Activities of Azoty Tarnow Group for 2010

www.azoty.tarnow.pl

Annual Report 2010Zakłady Azotowe w Tarnowie-Mościcach S.A.

Dear Shareholders of Zakłady Azotowe w Tarnowie-Mościcach S.A.,

It is with pleasure that I present you with the Zakłady Azotowe w Tarnowie--Mościcach S.A. annual report for 2010, a year in which we took further steps towards achieving our principal business objective – strengthening core operations. These actions constantly plan out the path for developing the Azoty Tarnów Group as the key player in the Polish chemical industry.

At the beginning of last year we acquired a 100% interest in the German polyamide manufacturer Unylon Polymers GmbH, based in Guben. The effect of this acquisition is a significant advance for the Azoty Tarnów Group amongst integrated European polyamide producers. A subsequent event without precedence in the history of the Group was the purchase of a con-trolling stake in one of the largest chemical businesses in Poland – ZAK S.A.

The consolidation of Azoty Tarnów and ZAK S.A. is particularly visible in the agricultural products segment, including trade and logistics. The effects of the subsequent growth strategy in the fertiliser sector were becoming ap-parent at the end of 2009 after start-up of a modern fertiliser granulation facility in Tarnów and the introduction of new products to the market. After acquiring 52.6% of shares in ZAK S.A. we observed an even greater increase in quality and volume. Economies of scale, efficiency and the complementary nature of our product and service portfolio in the manu-facture and sale of mineral fertilisers within the Azoty Tarnów Group incre-ased to a level not previously observed.

Through continuing the investments declared in the issue prospectus of June 2008, Azoty Tarnów achieved a high growth dynamic in 2010. Last year we commenced implementation of another issue objective – constru-ction of a hydrogen facility in Tarnów with production capacity of 8000 Nm3/h, connected with modernisation of the caprolactam plant to a total capacity of 101.3 thousand tonnes per year. This investment enables an increase in the use of natural gas from local sources, and as a consequen-ce lowers production costs. The increase in production capacity of capro-lactam is also significant in the context of acquiring the factory in Guben, which for a year has generated ample synergies within the Azoty Tarnów Group.

The investment in ZAK S.A. also played a key role last year. In October the construction of a modern nitrogen fertiliser facility was completed. Aside from improving working conditions and saving on raw materials, this facility has become part of the Azoty Tarnów Group environmental policy by redu-cing harmful gas and liquid emissions into the atmosphere and lowering energy and material consumption by technological processes.

As the result of many months’ efforts, an industrial zone was established within the Azoty Tarnów site in 2010, aimed at enabling and facilitating busi-ness activity conducted in industrial and post-industrial areas. The zone is more than 231 hectares in area and means that businesses located there will have access to many significant benefits, including an attractive, fully equipped area with a convenient location.

Furthermore, processes of employment optimisation at Azoty Tarnów Group companies are on-going. In July 2010 a single business unit was established – the Plastics Centre – on the basis of the Plastics and Capro-lactam Departments. This was a subsequent phase of restructuring within the company aimed at business optimisation in the manufacture and sale of caprolactam and plastics into one natural chain. This year work will be continued on improving the organisational structure of the Group and its companies, together with the process of selling subsidiaries. These activi-ties will certainly result in significant cost rationalisation in future years.

Last year the Azoty Tarnów Group’s operations were recognised in many competitions and rankings. We are happy with the fact that we are a reliab-le and responsible business partner. Once again we were honoured by the Association of Polish Exporters and the Business Centre Club through be-ing granted the titles “Polish Export Leader 2010” and “Ambassador for the Polish Economy” in the “European Brand” category respectively. Recently we have been nominated under the “Company of the Year 2010” category in the annual “Parkiet” Awards.

Azoty Tarnów Group products also received a wide range of awards, amongst them fertilisers manufactured at the recently-opened mechani-cal granulation facility. Our new fertiliser – Saletrosan® 26 macro – was gi-ven particular recognition, receiving the European Medal for Products and Services.

Confirming the appropriate direction of our development as a manufactu-rer of fertilisers, we were also awarded the title “Innovation of the Year” 2010 by Forum Biznesu for the new nitrogen fertiliser manufacturing facility. ZAK S.A. products have also been awarded – last year its fertilisers were pre-sented with a Teraz Polska accolade and an award for Highest Quality.

Azoty Tarnów was for the second time included in the group of 16 listed companies comprising the RESPECT Index – companies managed in a responsible and sustainable manner. We have proved many times that our place in this elite group is confirmation of our bond with the local communi-ty. We continue to be involved in many areas which are significant for the local community and remain their patron. Azoty Tarnów’s mission for the town and region is confirmed by our distinction in the Pillars of the Polish Economy ranking 2010, promoting key companies in their regions. This distinction is awarded by the opinion-forming business magazine “Puls Bi-znesu” and the “TNS Pentor” Research Institute.

in the “10 for 10” programme of the Association of Private Investors, which is aimed at optimising activities in this field. Proof that our actions are effec-tive comes from an award presented by the business magazine “Puls Bi-znesu” for the company’s active participation in “Investor Action” – a plat-form for exchange of information between private investors and listed com-panies. We are convinced that with such a solid foundation for business we will witness further dynamic development of the Azoty Tarnów Group this year, with benefits for employees, current and future shareholders, our lo-cal community and the Polish economy.

On behalf of the Management Board I would like to sincerely thank our em-ployees for their hard work. Our successes and outstanding financial re-sults are the effect of engagement on the part of Group personnel and their intellectual potential. Once again I would like to thank shareholders for the trust they show in Azoty Tarnów and our business partners for cooperation over the last year.

Jerzy MarciniakPresident of the Management Board, Managing Director

Thanks to its operations and constant support for cultural and sporting ini-tiatives, ZAK S.A. has for many years been named the foremost patron of culture and sport in the Opole region. The company’s Code of Ethics defi-nes ethical standards and allows it to build partnerships with all of the company’s stakeholders. This constitutes a significant element in the company’s development and is aimed at creating a balance between eco-nomics and ethics. ZAK S.A. participated in and implemented many chari-ty, sponsorship, ecological, scientific and sporting projects, placing empha-sis on supporting chances for children and young people in the region.

As a socially responsible company we also care for the development of our employees. Last year we implemented a programme to raise staff qualifi-cations in foreign languages. A wide range of Azoty Tarnów Group em-ployees have begun or continue to study on post-graduate and specialist training courses. For many years we have worked with academic institutes and universities which are the basis for the development of industry. Last year we commenced cooperation with the Business College and our em-ployees are taking courses in chemical and process engineering. 24 Azoty Tarnów employees began studying under this venture. In June we signed an agreement with Krakow University of Technology concerning scientific and research cooperation together with common teaching ventures. In the spirit of the agreement, our cooperation will be continuously expanded de-pending on the requirements of the Azoty Tarnów Group.

One of the main priorities for Group operations is to care for the environ-ment, and all ventures are implemented with assurance of the responsible use of natural resources, decrease in the amount of waste and limitation of the emission of pollutants into the atmosphere. Care for the environment also brings notable economic benefits. Last year, as the first company in Poland to do so, Azoty Tarnów obtained funds from the sale of nitrous oxide emission units (ERUs) generated at the nitric acid facility under the first Po-lish-Japanese joint implementation project, executed by the Azoty Tarnów Group with Mitsubishi Corp. Reduction in nitric acid facility emissions of ni-trous oxide were also achieved at a similar level by ZAK S.A.

IT services are successfully being performed and expanded with Hewlett Packard Polska Sp. z o.o. within the Group. This covers maintenance and development of IT systems, with particular consideration to SAP. During the period, HP ran several significant standardisation projects. The first and key project was the start-up of the Help Desk – the first point of call for all IT users at Azoty Tarnów. The IT outsourcing project was recognised as the “most interesting of the best implementations in industry”. HP also main-tains and develops IT systems at ZAK S.A., simultaneously strengthening the company consolidation process within the Azoty Tarnów Group.

Amongst the many priorities we remember that Azoty Tarnów is a public company listed on the Warsaw Stock Exchange and its primary obligation is effective communication with the capital market. Hence our participation

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Management Board

of Zakłady Azotowe w Tarnowie-Mościcach S.A.

Composition of the Management Board as at 31 December 2010:

Jerzy Marciniak President of the Management Board,

Managing Director

Witold Szczypiński Vice-President of the Management Board

Andrzej Skolmowski Vice-President of the Management Board

Franciszek Bernat Member of the Management Board

The competences and duties of the Company’s Management Board and The competences and duties of the Company’s Management Board and The competences and duties of the Company’s Management Board and its members are specified in the provisions of the Polish Commercial Com-its members are specified in the provisions of the Polish Commercial Com-its members are specified in the provisions of the Polish Commercial Com-panies Code, the Act on Commercialisation and Privatisation of 30 August panies Code, the Act on Commercialisation and Privatisation of 30 August panies Code, the Act on Commercialisation and Privatisation of 30 August 1996 as amended, the Act of 29 July 2005 on Public Offerings and the 1996 as amended, the Act of 29 July 2005 on Public Offerings and the 1996 as amended, the Act of 29 July 2005 on Public Offerings and the Terms and Conditions of Admitting Financial Instruments to an Organised Terms and Conditions of Admitting Financial Instruments to an Organised Terms and Conditions of Admitting Financial Instruments to an Organised System of Trading and on Public Companies, the Act of 29 July 2005 on System of Trading and on Public Companies, the Act of 29 July 2005 on System of Trading and on Public Companies, the Act of 29 July 2005 on Trade in Financial Instruments, the provisions of secondary legislation is-Trade in Financial Instruments, the provisions of secondary legislation is-Trade in Financial Instruments, the provisions of secondary legislation is-sued pursuant to the above acts and the provisions of the Company’s Ar-sued pursuant to the above acts and the provisions of the Company’s Ar-sued pursuant to the above acts and the provisions of the Company’s Ar-ticles of Association (§19 - §210).ticles of Association (§19 - §210).

A detailed division of competences amongst members of the manage-A detailed division of competences amongst members of the manage-A detailed division of competences amongst members of the manage-ment board is governed by Resolution of the Company’s Management ment board is governed by Resolution of the Company’s Management ment board is governed by Resolution of the Company’s Management Board no. 190/VII/2009 of 8 April 2009.Board no. 190/VII/2009 of 8 April 2009.Board no. 190/VII/2009 of 8 April 2009.

Management Board declaration on application of corporate governanceManagement Board declaration on application of corporate governanceManagement Board declaration on application of corporate governance

In declaring operations compliant with the highest capital market commu-In declaring operations compliant with the highest capital market commu-In declaring operations compliant with the highest capital market commu-nications standards and the principles of corporate governance, Zakłady nications standards and the principles of corporate governance, Zakłady nications standards and the principles of corporate governance, Zakłady Azotowe w Tarnowie-Mościcach S.A. observes the principles of “Best Pra-Azotowe w Tarnowie-Mościcach S.A. observes the principles of “Best Pra-Azotowe w Tarnowie-Mościcach S.A. observes the principles of “Best Pra-ctices of WSE Listed Companies”, developed by the Warsaw Stock Ex-ctices of WSE Listed Companies”, developed by the Warsaw Stock Ex-ctices of WSE Listed Companies”, developed by the Warsaw Stock Ex-change. The document constitutes an appendix to Stock Market Council change. The document constitutes an appendix to Stock Market Council change. The document constitutes an appendix to Stock Market Council Resolution no. 17/1249/2010 of 19 May 2010.Resolution no. 17/1249/2010 of 19 May 2010.Resolution no. 17/1249/2010 of 19 May 2010.

It is the intention of Zakłady Azotowe w Tarnowie-Mościcach S.A. to abide It is the intention of Zakłady Azotowe w Tarnowie-Mościcach S.A. to abide It is the intention of Zakłady Azotowe w Tarnowie-Mościcach S.A. to abide by all of the corporate governance principles specified in the “Best Practi-by all of the corporate governance principles specified in the “Best Practi-by all of the corporate governance principles specified in the “Best Practi-ces for WSE Listed Companies” with the exception of principle 8, section III ces for WSE Listed Companies” with the exception of principle 8, section III ces for WSE Listed Companies” with the exception of principle 8, section III concerning the obligation to ensure a majority of independent superviso-concerning the obligation to ensure a majority of independent superviso-concerning the obligation to ensure a majority of independent superviso-ry board personnel on the audit committee in accordance with Annex I to ry board personnel on the audit committee in accordance with Annex I to ry board personnel on the audit committee in accordance with Annex I to the European Commission Recommendation of 15 February 2005 on the the European Commission Recommendation of 15 February 2005 on the the European Commission Recommendation of 15 February 2005 on the role of non-executive directors.role of non-executive directors.

Supervisory Board of Zakłady Azotowe w Tarnowie-Mościcach S.A.

Composition of the 7th term Supervisory Board as at 1 January 2010

Marzena Piszczek Chairperson

Małgorzata Rzążewska Vice-Chairperson

Jan Wais Secretary

Ewa Lis Member

Joanna Kiełkiewicz Member

Dariusz Maciejuk Member

Krzysztof Pieńkowski* Member

Armin Teske Member

Katarzyna Wałęga Member

*On 11 February 2010 Krzysztof Pieńkowski resigned from the Supervisory Board.

Composition of the 8th term Supervisory Board as at 4 January 2011

Marzena Piszczek Chairperson

Ewa Lis Vice-Chairperson**

Jan Wais*** Secretary****

Agnieszka Doroszkiewicz Member

Tomasz Klikowicz*** Member

Jacek Lewandowski Member

Jacek Obłękowski Member

Zbigniew Paprocki*** Member

Mirosław Potulski Member

**On 16 September 2010, pursuant to a resolution of the Supervisory Board, Ewa Lis was appointed as Vice-Chairperson of the Board.***On 19 November 2010 the Extraordinary General Meeting appointed persons elected by employees to the Supervisory Board.****On 4 January 2011, pursuant to a resolution of the Supervisory Board, Jan Wais was appointed as Secretary of the Board.

An Audit Committee operates within the Supervisory Board, appointed to streamline the work of the Board and improve control over the Company and Group. The Committee constitutes a consultancy body working jointly within the structure of the Supervisory Board. In January 2011 the Board delegated its representatives to the Committee, as follows:

Jacek Obłękowski,

Agnieszka Doroszkiewicz,

Tomasz Klikowicz.

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Shareholding structure of Zakłady Azotowe w Tarnowie-Mościcach S.A.

State Treasury of Poland 1 354 160  3.46%   1 354 160

Nafta Polska (in liquidation)  19 200 000  49.08%  19 200 000

Polskie Górnictwo Naftowe i Gazownictwo S.A.  4 000 001  10.23%  4 000 001

Ciech S.A.*  2 560 000  6.54%  2 560 000

Other  12 002 260  30.69%  12 002 260

Total  39 116 421  100.00%  39 116 421

State Treasury of Poland  1 349 000  3.45%  1 349 000

Nafta Polska (in liquidation)  19 200 000  49.08%  19 200 000

Fundusz Emerytalny AVIVA BZ WBK** 3 000 000  7.67%  3 000 000

Polskie Górnictwo Naftowe i Gazownictwo S.A.***  4 000 001 10.23%  4 000 001

Other  11 567 420  29.57% 11 567 420

Total  39 116 421  100.00%  39 116 421

State Treasury of Poland****  20 549 000  52.53% 20 549 000

Fundusz Emerytalny AVIVA BZ WBK  3 000 000 7.67%  3 000 000

Other  15 567 421  39.80%  15 567 421

Total:  39 116 421  100.00%  39 116 421

Shareholder

Shareholder

Shareholder

number of shares

number of shares

number of shares

shares %

shares %

shares %

*As a result of a transaction executed by Ciech S.A. in out-of-session block trading on 22 April 2010, 2 560 000 shares in the Issuer were disposed of, constituting 6.54% of the Issuer’s share capital.

**On 22 April 2010 Aviva Otwarty Fundusz Emerytalny Aviva BZ WBK (Aviva OFE) increased its shareholding in the Company above the 5% threshold.

***On 15 April 2010 PGNiG S.A. executed a transaction to dispose of shares in the Company.

Shareholding structure as at 31 December 2009

Shareholding structure as at 31 December 2010

Shareholding structure as at 20 May 2011

number of votes

number of votes

number of votes

****On 7 April 2011 the State Treasury of Poland acquired all 19 200 000 shares in the Company belonging to Nafta Polska S.A. (in liquidation).

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Calendar of events in 2010 at Zakłady Azotowe w Tarnowie-Mościcach S.A.

28 January 2010

Azoty Tarnów received an award for the fertiliser calcium ammonium nitrate 27 macro at the “Polish Fertilisers” Awards organised by the editorial team of “Zielony Sztandar”, with the Ministry for Rural Development and Agriculture as patron. In addition, Azoty Tarnów was singled out for its brand development efforts and received an award from the National Cooperative Council for exemplary collaboration with Agricultural Producers’ Groups.

21 February 2010

Azoty Tarnów was awarded with a “Golden Idea” statue, granted to persons and companies contributing to the development of Polish science and culture. The idea behind the award was developed by the Science and Health Foundation.

February

Acquisition of a 100% interest in Unylon Polymers GmbH in Guben. Acquisition of one of the leading non-integrated manufacturers of polyamides constituted realisation of one of Azoty Tarnów’s main issue objectives. The newly acquired entity changes its name to ATT Polymers GmbH.

March

During the 16th “AGROTECH” Agricultural Technology Fair in Kielce, Azoty Tarnów received the main prize – the “Golden Fair Medal” for the fertiliser Saletrosan®26 macro.

Zakłady Azotowe w Tarnowie-Mościcach S.A. was invited to participate in the programme “10 companies for 10 years of the Association of Private Investors – effective communication”, a project aimed at improving the investor relations of Polish exchange-listed companies organised by the Association of Private Investors.

The programme was initiated on 26 April.

Azoty Tarnów joined in implementing the programme “Green Office”, which is aimed at limiting the negative impact of offices and buildings on the environment through efficient use of paper, water and electricity, the minimisation of waste and the promotion of ecological and modern technological solutions.

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15 March 2010

The HP Helpdesk – a specialist help and information point – was initiated by the HP Azoty IT team and additional HP consultants.

31 March 2010

The District Court in Tarnów confirmed execution by the Company of an arrangement with creditors, while at the same time the Court acknowledged the proceedings for an arrangement as completed.

April

New nitrate fertilisers manufactured by Azoty Tarnów appeared on the market: ammonium nitrate 30 macro – a universal product which may be used both before sowing or planting crops and for principle crop fertilising.

6 April 2010

As the second of Poland’s key chemicals companies and the first company in the Tarnów region, Azoty Tarnów obtained an AEO certificate in Customs Procedures and Safety. This certificate, awarded at national level, is recognised throughout the EU.

17 May 2010

Azoty Tarnów was again awarded the title “Ambassador of the Polish Economy” in the “European Brand” category. The awards, organised by the Business Centre Club, took place under the patronage of the Minister ofForeign Affairs.

27 May 2010

The Council of the Town of Tarnów presented Azoty Tarnów with the prestigious award “Tarnów Patron of Culture”. The nomination for this award was submitted by the Tarnów Cultural Centre, Mościce Cultural Centre and the Society of the Friends of Mościce. The award was presented on 26 June.

May

Azoty Tarnów was a finalist in the “Best of Plastics” awards, announced by the website www.plastech.pl for the best plastics industry website.

June

The Association of Polish Exporters again awarded a medal and the title “Leader in Polish Export” to Azoty Tarnów.

15 June 2010

Azoty Tarnów and Krakow University of Technology executed a long-term agreement on R&D cooperation and joint teaching ventures, including the organisation of student internships and postgraduate studies.

1 July 2010

The operating structure of Azoty Tarnów was reorganised. This alteration concerned the Caprolactam Department and Plastics Department. Pursuant to a Management Board resolution, these two previously separate Business Centres were merged into a single unit – the Materials Centre. This was a subsequent phase in the process of restructuring the company.

July

The fertiliser Saletrosan® 26 received a special award at the 23rd International Agro-Tech Agricultural and Industrial Fair in Minikowo in the category “European Standard Product”.

23 August 2010

Azoty Tarnów began cooperation with the Business College (WSB NLU). This joint venture resulted in the start-up of a new field of studies at the Business College campus in Tarnów – “Chemical and Process Engineering”.

September

Acquisition of an additional 50% stake in Polskie Konsorcjum Chemiczne (75% in total)

In recognition of the results achieved in improving working conditions, safety and personal protection in the working environment, the Central Institute for Working Conditions – National Research Institute – awarded the “Silver Award for Leaders in Occupational Safety” to Azoty Tarnów.

October

The Board of the Association of Polish Electricians awarded an “Honorary Gold Association Badge” for publicising the developing the association’s operations and for achievements in the development of electronics.

The awards committee of the “Innovation of the Year 2010” awards and its host, Forum Biznesu, awarded the title Winner of the “Innovation of the Year 2010” Awards to Azoty Tarnów for the innovative 1200 tonne/day granulation facility. The awards’ patrons were the Minister for Regional Development and the FIRE Innovation Centre.

20 October 2010

Pursuant to an agreement concerning acquisition of new shares in ZAK S.A., Azoty Tarnów purchased 30 million series B shares of a nominal value of PLN 5 each. The transaction was valued at PLN 150 million.

November

Acquisition of a 30 million-share controlling stake in ZAK S.A.

A Catalyser Production Facility was created at Azoty Tarnów, separated out from the Fertilisers Centre. This change was a subsequent step in restructuring the company, aimed at operational optimisation in the field of manufacture and sales of catalysers.

17 November

At the 21st edition of the European Medal for Products and Services, Azoty Tarnów received a “European Medal” for the fertiliser Saletrosan® 26 macro.

December

An industrial zone was established within the Azoty Tarnów site, aimed at facilitating business activity conducted in industrial and post-industrial areas.

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Azoty Tarnów

Over the almost 85-year history of Azoty Tarnów, our philosophy has been

to find an ideal balance between respect for tradition and the advance-

ment of innovative technology. The company’s history has its roots in the

interwar period – a time of great change and the creation of a country after

decades of partitions and occupation. The dynamic development, eupho-

ria and enthusiasm of this period became part of the company’s founda-

tion. As Eugeniusz Kwiatkowski wrote, a great national achievement arose

– a factory which changed the Tarnów area and the country and whose

products revolutionised European and world chemicals markets.

Today, Azoty Tarnów is one of the largest chemicals companies in Poland,

selling a wide range of products including modern construction plastics:

Tarnamid® (PA6), Tarnoform® (POM) and semi-finished products for their

manufacture (caprolactam), together with mineral and chemical fertilisers.

These products are well-recognised in many markets, thereby allowing

Azoty Tarnów to continuously strengthen its position of industry leader,

selling its products to more than 40 countries around the world. This is

a result of many years’ experience, commitment and creativity in increas-

ing its market share internationally. The drive towards achievement of

strategic goals itself constitutes success. Azoty Tarnów stands firmly for

innovation, inspiring constant change and internal excellence. All of this is

achieved in order to make us an effective business partner in domestic

and international markets.

Zakłady Azotowe w Tarnowie-Mościcach S.A. (trading as Azoty Tarnów) was entered into the register of companies of the National Court Register, entry number KRS 0000075450, on 28 December 2001 pursuant to the ruling of the District Court for Krakow-Śródmieście in Krakow, 12th Commercial Division of the National Court Register of 28 December 2001.The company’s share capital amounts to PLN 195 582 105 (one hundred and ninety-five million, five hundred and eighty-two thousand, one hundred and five Polish zloty) and is divided into 39 116 421 (thirty-nine thousand, one hundred and sixteen thousand, four hundred and twenty-one) bearer shares, ISIN code PLZATRM00012, of a nominal value of PLN 5 (five Polish zloty) each, including 24 000 000 series AA shares of a nominal value of PLN 5 and 15 116 421 series B shares of a nominal value of PLN 5 each.

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We are a company which constantly sets itself new ambitious goals to be achieved. Our updated Management Policy reflects the principles set out in the “Azoty Tarnów Development Strategy”. We establish clearly de-fined goals and detailed growth directions. In nurturing the development of Azoty Tarnów we have devised strategic goals which are imperative for the company’s operations, and over the space of several years cover vari-ous operational sectors; beginning with core business, where increasing economies of scale are expected, through the development and achieve-ment of a situation in which the company will be less sensitive to changes in general economic cycles with consideration to natural gas and petro-chemical commodities price volatility, to a lowering of the costs of manu-facture, streamlining of organisational methods and unlocking intellectual capital. A particularly important goal and direction for the development of Azoty Tarnów is systematic adaptation of product and service quality to customer expectations, as well as creation of long-lasting, reliable and effective relations with partners.

The integrated management system in force at the Company, which is compliant with international standards, provides workplace security. The key operational priorities of Azoty Tarnów, such as ensuring technical and environmental safety, are constantly supervised by the audit department together with independent certification institutions. This type of monitor-ing means that Azoty Tarnów enjoys the reputation of a solid and modern company where all safety guidelines and standards are observed. This is proved not only by numerous certificates but also by the innovative man-agement system in force within the company, including:Quality Management System,Environmental Management System,Food Safety Management System,Occupational Health & Safety Management System.

Amongst others, the company fulfils the strict requirements of the Responsible Care Management System Certificate, ISO 14001:2004, ISO 9001:2008, a Management System Certificate of conformity with the ISO 22000:2005 standard (concerning the “manufacture and distribution of potable water”), a certificate under the pro-gramme “Responsibility and Care”, a PN-N-18001:2004 Management System

Certificate and OH SAS 18001:2007 Management System Certificate.

Mission and strategic objectivesof Zakłady Azotowe w Tarnowie-Mościcach S.A.

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Our experience and competences prove that chemistry

is safe and useful for people. We strive to increase

shareholder value through maximising synergies.

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Development directions

In implementing innovative technologies, improving service standards and increasing product quality we capture an ever greater market share. Azoty Tarnów constantly determines new directions for development un-der the adopted “Company Development Strategy 2007-2015” and objec-tives outlined in the issue prospectus, concentrating on:– the advanced materials sector, in particular construction plastics,– the organic chemicals sector, in particular caprolactam,– the agricultural products sector, in particular mineral fertilisers.

Our objective is the most dynamic operational development, creating specific value in the form of profits from each sector. Improving service quality is also a particularly important field. We aim to strengthen our lead-ing position as a manufacturer of caprolactam and construction plastics in European markets as well as to intensify operations in the agricultural products sector. This objective is also achieved through organic growth and as a result of strategic alliances and acquisitions.

The company intends to play an active role in the consolidation of the chemicals sector. The principal goal of external growth is to create a large, integrated structure solidifying the company’s competitive position. In its operations, Azoty Tarnów strives to capitalise on the opportunities present

in the market environment. Furthermore we will strengthen our compe-tences and reliability, with significant impact on our competitive position, in particular on:

– increasing the scale of operations conducted in strategic areas,– reducing exposure to changes in the general economic climate and to

natural gas and petrochemical commodity prices through extending product chains,

– lowering the costs of manufacture through modernising key production lines,

– creating stable and effective links with commercial partners and optimising distribution channels,

– optimising organisational solutions,– improving the effectiveness of key processes and knowledge

management,– achieving synergy in raw materials, logistics, organisation, etc.,– adapting product quality to customer expectations,– moderating concentric diversification through maximising the effects

of synergy with current product portfolio elements.

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As at the end of 2010 the Azoty Tarnów Group comprised Zakłady Azotowe

w Tarnowie-Mościcach S.A. (the Parent), together with 10 subsidiaries in

which Azoty Tarnów holds 100% of shares or a majority interest and 1 as-

sociate (26.45% interest). The Group’s aim is to become the undisputed

leader in the European chemicals market and achieve outstanding finan-

cial results and economic benefits.

The Azoty Tarnów Group

Significant changes within the Group in 2010

Acquisition of a 100% stake in Unylon Polymers GmbH

On 28 January 2010 the Management Board of Azoty Tarnów received confirmation, dated 27 January 2010, from a Notary’s Office in Berlin on fulfilment of all terms and conditions concerning acquisition of 100% of shares in Unylon Polymers GmbH, headquartered in Guben, in accord-ance with the provisions of the conditional agreement executed on 18 November 2009. Under the above agreement, executed between Azoty Tarnów and Unylon AG, headquartered in Hamburg, the latter disposed of and transferred the shares to Azoty Tarnów.

Taking place on 12 February 2010 in Berlin, the General Meeting of Shareholders in the German company changed the company’s name to ATT Polymers GmbH pursuant to a resolution of the Owner, appointed a new supervisory board and introduced a representative of Azoty Tarnów to its management board.Consent for the acquisition by the Parent of 100% of shares in Unylon Polymers GmbH was adopted by the Extraordinary General Meeting on 15 December 2009 and constitutes fulfilment of the obligations contained in the Azoty Tarnów issue prospectus concerning an increase in polyam-ide 6 (PA6) production capacity.

The acquisition of this company and its entry into the Azoty Tarnów Group is aimed at integrating the manufacture of polyamide 6. In this way both companies can maximise potential synergies in order to enhance their position in the European polyamide market.

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Group companies

Zakłady Azotowe w Tarnowie-Mościcach S.A. (Azoty Tarnów) Group Parent

ZAK S.A. (formerly Zakłady Azotowe w Kędzierzynie) together with its group, comprising eight subsidiaries, is the largest subsidiary of the Azoty Tarnów Group. The company is one of the largest and most developed entities amongst Poland’s key chemicals companies. Its operations are mainly based on the manufacture and sale of chemical products used in agriculture, together with industrial plastics, paints and varnish-es. ZAK S.A. has modern technologies at its disposal which enable ef-ficient use of production facilities and effective operations, thus ensur-ing high product quality. Its most recognisable brand is the Salmagi® fertiliser family, Kędzierzyńska Saletra Amonowa® and urea. It is worth emphasising that the company is the only manufacturer of OXO alco-hols in Poland and is a significant manufacturer of plasticisers in the European market. ZAK.S.A. boasts one of the most up-to-date, eco-logical nitric acid facilities (opened in 2010) and a water treatment plant. Both of these key facilities are an result of modernisation and intensifi-cation of the company’s development.Azoty Tarnów holds 52.62% of the company’s share capital.

ATT Polymers GmbH This company concentrates on the manufacture and trade in construc-tion plastics, including by-products and derivatives. It has 5 polymeri-sation lines with total production capacity of 47 000 tonnes of PA6 per year. The company can flexibly manufacture 4 types of polyamide si-multaneously, ranging in viscosity from 2.4 to 4.0.Azoty Tarnów holds 100% of share capital.

BIPROZAT – Tarnów sp. z o.o.This company deals with the design, document preparation and sup-ply logistics for equipment and apparatus and conducts commercial, consulting and IT activities (Polish Classification of Business Activity (PKD) 7112Z).Azoty Tarnów holds 100% of share capital.

ELZAT sp. z o.o.This firm conducts activity consisting of the creation of electrical in-stallations, manufacture of mechanical tools and equipment, metal processing, technical research and analysis and finishing works (PKD 4321Z).Azoty Tarnów holds 100% of share capital.

JEDNOSTKA RATOWNICTWA CHEMICZNEGO sp. z o.o.This company provides services covering decontamination, recycling, reclamation and storage of waste, sewage treatment, removal of the effects of accidents, water, air and waste analysis, training, transport of

Acquisition of an additional 50% interest in Polskie Konsorcjum Chemiczne Sp. z o.o.

Pursuant to a resolution of the Management Board of 28 May 2010, the Parent conducted activities aimed at acquiring a majority interest in the share capital of Polskie Konsorcjum Chemiczne Sp. z o.o. through purchase of all shares belonging to Ciech S.A.As a result of the above, on 19 July 2010 Azoty Tarnów executed a “condi-tional agreement on sale of shares in a limited liability company” with Ciech S.A., pursuant to which the Parent acquired 1 000 shares from Ciech S.A., of a value of PLN 50 000, constituting 50% of the share capital of Polskie Konsorcjum Chemiczne Sp. z o.o.Ownership of the above shares was transferred on 1 September 2010. As a result of this transaction Azoty Tarnów currently holds 1 500 shares in PKCh Sp. z o.o. of a total nominal value of PLN 75 000, constituting 75% of PKCh Sp. z o.o.’s share capital.As of the date of transferring share ownership and transformation from an associate into a subsidiary, the equity method of accounting was replaced with full consolidation.

PKCh Sp. z o.o. is to be a company used for conducting further restructuring processes with the Azoty Tarnów Group.

Acquisition of shares in ZAK S.A.

On 20 October 2010 an agreement on purchase of a controlling stake in ZAK S.A. was executed between Azoty Tarnów and ZAK S.A., having its registered office in Kędzierzyn-Koźle.

After the increase in ZAK S.A. share capital, the number of shares held by Azoty Tarnów, amounting to 30 million, constitutes 52.62% of ZAK S.A.’s share capital, carrying 30 million votes at the General Meeting and consti-tuting 52.62% of total votes at the General Meeting. The acquisition of 30 million new series B shares in ZAK S.A. constitutes the Parent’s long-term investment.On 31 January 2010 the Supervisory Board of ZAK S.A. appointed Mr Jerzy Marciniak as President of the Management Board of ZAK S.A., ef-fective as of 1 February 2011. Mr Jerzy Marciniak simultaneously holds the position of President of the Parent’s Management Board.

The acquisition by Azoty Tarnów of 30 million shares in ZAK S.A. was aimed at creating a competitive fertiliser product portfolio with an increase in production effectiveness, sales margins and distribution efficiency. The highly developed technical infrastructure at ZAK S.A.’s commodities divi-sion also allows for optimisation of ammonia and nitric acid production capacity throughout the Azoty Tarnów Group.

Significant changes within the Group in 2010

hazardous materials, food testing, manufacture and trade in chemical products (PKS 9001Z), together with the manufacture of plastics (PKD 3700Z).Azoty Tarnów holds 100% of share capital.

KOLTAR sp. z o.o.This company deals with loading, unloading and freight forwarding sup-port for rail freight, the cleaning of tanks and wagons and their inspection, and maintenance of railway track connected with support for the on-site railway station (PKD 4920Z).Azoty Tarnów holds 100% of share capital.

PROREM sp. z o.o.This company provides services and manufactures products relating to construction, installation, sanitary fittings, industrial, electrical, surveying and ICT services, repair and modernisation of specialist buildings and structures (PKD 3312Z).Azoty Tarnów holds 100% of share capital.

ZWRI sp. z o.o.A company specialising in the manufacture and provision of services con-cerning construction, installation, sanitary fittings, industrial, electrical, sur-veying and ICT services (PKD 4120Z).Azoty Tarnów holds 100% of share capital.

AUTOMATYKA Sp. z o.o.This company conducts business activity connected with mechanical en-gineering and consultancy relating to computer hardware and also manu-factures equipment for controlling industrial processes, together with de-signing and implementing installations (PKD 3312Z).Azoty Tarnów holds 72.17% of share capital.

POLSKIE KONSORCJUM CHEMICZNE sp. z o.o.This company provides financial holding services (PKD 6420Z) and activi-ties of head offices and holding companies, with the exception of financial holdings (PKD 7010Z).Azoty Tarnów holds 75%* of share capital.

NAVITRANS sp. z o.o.A company specialising in marine and road transport, broker support for freight forwarding and transport and freight forwarding consultancy ser-vices (PKD 6340C).Azoty Tarnów holds 26.45% of share capital.

*On 1 September 2010 Azoty Tarnów acquired 1 000 shares in PKCh Sp. z o.o. pursuant to an agree-ment executed with CIECH S.A., constituting 50% of the share capital of PKCh. In connection with this, the Parent’s share in the capital of Polskie Konsorcjum Chemiczne Sp. z o.o. increased to 75%. The acquisition was valued at PLN 50 000.

Development, innovation and creativity

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18

The Azoty Tarnów Group is one of the key chemical sector holding

companies, conducting manufacturing, service and commercial activ-

ity in construction plastics (polyamide 6, polyoxymethylene, modified

plastics), raw materials for their synthesis (caprolactam), mineral fertilis-

ers (calcium ammonium nitrates, ammonium nitrates, ammonium sul-

phates), together with OXO alcohols and plasticisers.

Operational areas of the Azoty Tarnów Group

Azoty Tarnów Group product positioning in chemical markets:

Poliamide 6 (PA6)

Tarnamid®, alphalon®

Nitrate fertilisersSalmag®, Calcium

ammonium nitrate,

Saletrosan®

OXO alcohols2-Etyloheksanol,

N-butanol

PlasticisersOxoplast® O (DEHP)

Poland 1 1 1 1

Europe 5* 3 5 2

Azoty Tarnów is the only integrated manufacturer of polyamide 6 (sold un-der the brand name Tarnamid®) in Poland and one of several in Europe. This product is manufactured through the polymerisation of caprolactam produced in Tarnów. The Company is also the only domestic manufactur-er of polyoxymethylene (POM), sold under the brand name Tarnoform®. It provides technical research and consultancy services, enabling optimum selection and use of plastics.

The Parent is also one of the largest manufacturers of nitrate fertilisers in Poland. Thanks to investments recently implemented in this field, it supplies fertilisers with two granulation types (milling and mechanical granulation), and specific types of fertilisers are adapted to the needs of end customers – “standard” (milling – smaller, varied granules) and “macro” (mechanical granulation – uniform).

A significant area of Azoty Tarnów’s operations is the manufacture of chemicals. The most important products in this group are concentrated nitric acid and nitrates. These products are used mainly as raw materials for the chemical and pharmaceutical industries.Specialised organisational units within the Parent provide laboratory ser-vices, including environmental analysis (physical and chemical analysis of water, sewage, waste and soil), physical and chemical analysis of organic and inorganic products and testing of plastics.

c

*Integrated PA 6

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Item Volume Volume % change in tonnes 2010 2009 2010 / 2009

Plastics Centre        

Total caprolactam* 51 482.8 49 835.3 103.3Tarnoform 9 165.5 7 500.1 122.2Natural Tarnamid 38 739.1 35 970.1 107.7Modifi ed plastics 6 004.3 4 147.1 144.8Formalin 350.9 294.6 119.1

Fertilisers centre

     

Calcium ammonium nitrate 27.+27B standard 249 218.2 229 508.5 108.6

Calcium ammonium nitrate 27.+27B makro 43 542.0 67 512.4 64.5

Ammonium nitrate AN 32 macro 13 000.4 64 398.0 20.2Saletrosan 177 730.4 3 568.9 4 980.0Ammonium sulphate AS 21 309 860.3 415 827.5 74.5Total nitrates 50 392.8 48 108.2 104.7Carbon dioxide 33 401.9 32 930.0 101.4

*Alongside sales. caprolactam is processed into natural Tarnamid.

Principal Azoty Tarnów products by quantity

The process of strengthening the Azoty Tarnów Group in 2010 occurred in areas including the ac-quisition of 100% of shares in a German polyamide manufacturer (currently ATT Polymers GmbH). The company is a leading manufacturer of PA6 in Western Europe. Thanks to flexible manufacturing processes, it is capable of manufacturing 5 types of polyamides with various levels of viscosity.

The increase in the scale of operations and the Group’s effectiveness in 2010 in the manufacture, sale and distribution of mineral fertilisers was possi-ble due to the acquisition of a controlling interest in ZAK S.A. This company’s operations are conduct-ed mainly in the field of manufacturing and selling organic and inorganic chemicals intended primar-ily for agriculture and the plastics industry, together with paints and varnishes. ZAK S.A. has a strong position in the domestic and international markets. This is due to a recognisable brand identity and an exceptional approach to customer service.

c

*Integrated PA 6

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The Group’s objective is to ensure the highest quality of products and services offered by specific companies. One example of this is Koltar – a company responsible for maintaining the rail infrastructure and rolling stock at Azoty Tarnów. As one of only a handful of companies in Poland to do so, it holds the authorisations needed to perform comprehensive maintenance of the wagons and tank cars used to transport hazardous materials under RID. Many years’ experience in this field and the high qual-ity of services on offer mean that Koltar is also able to successfully offer freight forwarding and maintenance services to external companies. The Group also includes a chemical emergency management unit (Jednostka Ratownictwa Chemicznego), which provides specialist emergency man-agement services in particularly hazardous areas. Its operations also in-clude the recycling and storage of hazardous waste and specialist servic-es connected with the recycling of oxidant rocket fuels. Furthermore, the company is active in the market for accredited food testing and veterinary diagnostics. What makes Jednostka Ratownictwa Checmicznego unique is its experienced and highly qualified personnel, who are able to conduct training sessions for NATO military specialists and fire services.

A particularly important element of the Azoty Tarnów Group’s operations are the projects conducted by a qualified group of specialists from the company Automatyka. They successfully complete tasks in the field of designing surveying systems and the installation and commissioning of industrial systems, which are used as far afield as Iran, Romania, Slovakia, China, Turkmenistan, Hungary and Ukraine.Within the processes of development, modernisation and intensification of manufacturing at Poland’s key chemical companies, projects devel-oped by Biprozat are used around the world.The experience and know-how of other specialist companies, including in the implementation of complete medium- and high-voltage electrical installations and the operational maintenance of electricity systems for industrial facilities (Elzat), the maintenance and construction of new build-ings and production lines (Prorem), and the manufacture of chemical in-dustry equipment and pipelines (ZWRI) are evidence of the qualifications of Azoty Tarnów in the field of comprehensive investment and modernisa-tion project execution within the Group and for external clients.

Selected operational areas of specific Group companies

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2010 SALES REVENUE STRUCTURE

Revenue from sales of Group products at Azoty Tarnów by product group in 2010

Revenue from sales of Azoty Tarnów Group products -by product group in the first quarter of 2011

Constructionplastics

25%

OXO alcoholsand plasticisers

26%

Nitrate fertilisers

33%

Semi-finished productsfor the manufacture of plastics

5%

Other products

5%

Basechemicals

6%

Constructionplastics

36%

OXO alcoholsand plasticisers

7%Nitrate fertilisers

33%

Semi-finished productsfor the manufacture of plastics

11%

Other products

6%

Basechemicals

7%

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SALES OF KEY PRODUCTS IN 2010

Total revenues from sale of products, goods and materials within the Azoty Tarnów Group for 2010 amounted to PLN 1 901 784 000 and was PLN 687 146 000 higher in current prices than 2009 revenues, i.e. an increase of 56.57%. The highest level of sales was noted in the plastics segment at PLN 929 486 000.

SALES MARKETS

Azoty Tarnów Group products are mainly sold to countries of the European Union, in particular to Germany, Belgium, Italy and the Czech Republic. Export to the EU and Asia mainly covers plastics, OXO alcohols and plasticisers, while to Latin America the principal export is mineral fertilisers.

Plastics

34%

Fertilisers

45%

Oxo alcoholsand plasticisers

7%*

Otheroperations

14%

Azoty Tarnów Group sales markets in 2010 by regionRevenue from sales of the Azoty Tarnów Group in 2010 by operating segment

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Other European cauntries

2%

South America

2%

North America

0.4%

European Union

49%

Asia

8%

Australia

0.03%

Africa

1%

Poland

38%

Azoty Tarnów

Calcium ammonium nitrateAmmonium nitrateSaletrosan®

Ammonium sulphate

ZAK S.A.

SalmagKędzierzyńskaSaletra AmonowaUrea

ChemicalsNitratesAmmoniaNitric acid(concentrated and technical)other

Azoty Tarnów

CaprolactamTarnamid® (PA6)Tarnamid®

modifiedTarnoform® (POM)Tarnoform®

modified

ATT Polymers

alphalon®

ChemicalsC-nonC-nolother

ZAK S.A.

OXO alcohols2-Etyloheksanoln-butanolizobutanol

PlasticisersOxoplast® O(DEHP)Oxoplast® IB(DIPB)Oxoplast® PH(DPHP)

Chemicalsn-butanalIsobutyl aldehydeMaleic anhydrideother

Energy

Services:designmaintenanceconstructiontransportelectricalrepairenvironmental protectionlaboratory and othersprovided by the companies

* from 19 November 2010.

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Azoty Tarnów Group sales markets in 2010 by region

Investments and achievement of issue objectives

Investments implemented are an indicator of company development. The Azoty Tarnów Group is dynamic and constantly strives to improve the quality of its services and increase the scale of operations. Significantly, total expenditures on investments incurred by Azoty Tarnów alone in 2010 amounted to PLN 65 991 500, of which PLN 370 000 was invested in in-ventory.In order to strengthen the company’s competitive position, implementa-tion of the largest on-going investment commenced in 2010 – constru-ction of the Hydrogen Facility. This is also an element of one of the issue objectives – “Modernisation of the Caprolactam Plant together with con-struction of a new Hydrogen Facility”.The aim of this project is to:– increase the scale of operations,– achieve stable caprolactam production capacity at a level of approx. 100 000 tonnes/year,– decrease the unit costs of caprolactam manufacture.Construction of the new Hydrogen Facility with production capacity of 8 000 Nm3/h, which is closely connected with modernisation of the Caprolactam Plant, will increase the security of power supplies for the Plant, enable production costs to be lowered and increase the use of natu-ral gas with higher nitrogen content from local sources.

Significant Azoty Tarnów investments completed in 2010

– protection of the cyclohexane oxidation installation in the event of a loss of circulating water,

– use of vacuum pumps in the caprolactam crystallisation node,– modernisation of the copper and iron-chromium catalyst drying system,– construction of a heat exchange station in order to increase sales of heat

in heating water for MPEC up to 30 MW,– intensification of the c-non purification system,– big-bag and palette warehouse.

Most significant on-going projects and investments

– modernisation of the Benfield potassium wash station within the V RM installation,

– modernisation of the A1 cooling system,– modernisation of the dolomite milling plant,– modernisation of the fertiliser packaging and dispatch station,– modernisation of the air compression system,– intensification of the Modified Plastics Plant – phases I+II,– construction of heat and energy measurement equipment,– modernisation of the selective phenol hydrogenation installation in the

Palladium catalyst,– modernisation and Intensification of the Caprolactam Plant to 101 300 t/

year – Technical Project,– implementation of an integrated ERP-class management system within

the Parent.

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Research and development

Thanks to its own research facilities, Azoty Tarnów is able to develop its technology and increase the quality of its products. Observing the need to continually seek out the latest technological solutions, the company has become a valued and sought-after initiator of and active participant in in-novative R&D programmes run by national scientific institutes, including in the field of polymer nanotechnology and mercury biodegradation. Under improvement of existing products and the creation of new solutions, the Company cooperates with the Industrial Chemistry Research Institute, the Fertiliser Research Institute, Wroclaw University of Technology, Warsaw University of Technology, Krakow University of Technology, Lodz University of Technology, the Business College and the Polish Academy of Sciences – Branch in Lodz. Consistency and persistence in these activities means that Azoty Tarnów is perceived as a trusted and experienced partner in technological projects implemented worldwide, and a proven European supplier of patents and licences which – thanks to highly qualified techni-cal personnel – sets new industry standards. In 2010 the Group generated PLN 14.9 million in licence sales. In 2010 Azoty Tarnów initiated many R&D projects aimed at achieving the adopted strategic objectives. The largest amount of funds was allocated to issues connected with the manufacture of construction plastics, caprolactam and nitrate fertilisers. Work was also carried out on further product diversification and new products. Work in the field of construction plastics focussed on the development of techno-logy for the production of polytrioxane and on newly modified construction plastic variants. R&D work on caprolactam concentrated on improving economic ratios and enabling further intensification of the Caprolactam Plant. In turn, work on fertilisers was connected with expanding and deve-loping the Azoty Tarnów product portfolio in the fertiliser segment.

Many projects implemented at Azoty Tarnów have been recognised and valued. Calcium ammonium nitrate 27 macro was presented with an award at the 7th Polish Fertiliser Awards, and Saletrosan® 26 macro recei-ved the “Golden Medal” at the “AGROTECH” Agricultural Technology Fair in Kielce as well as being recognised as a “European Standard Product” at the “Agro-Tech” Agricultural and Industrial Fair in Minikowo.

New fertiliser products were introduced to the market as a result of the 2009 commissioning of the largest investment in recent years – the 1200 t/d Mechanical Fertiliser Granulation Installation. The new installation al-lows for the manufacture of mineral fertilisers with stable, homogeneo-us granulation, which is currently one of the key parameters required on the global mineral fertiliser market. Azoty Tarnów was also awarded “Innovation of the Year 2010” by Forum Biznesu for the innovative mecha-nical granulation installation.

An industrial zone was established within the Azoty Tarnów site in 2010, ai-med at enabling and facilitating business conducted in industrial and post--industrial areas. The zone is more than 231 hectares in area and contains 276 plots of land. It covers the main area where production facilities are located. Thanks to this zone, businesses located there will have access to many significant benefits, including an attractive, fully equipped area with a convenient location. It is a significant chance for investors, since the Azoty Tarnów site is convenient area for the performance of various types of business activity.

New technology was also introduced and R&D work was actively pursued at ZAK S.A. Here work was continued from previous periods and a wide range of research and development studies were drawn up. The company collaborates with numerous research institutes and engineering compa-nies, counting the following as its most important achievements in 2010:

In the field of chemical and energy process and technology assessment essential in determining further development at ZAK S.A.:

− an inspection of technology used from the point of view of its development potential and technical level with regard to Best Available Technology (BAT) requirements through drawing up initial feasibility studies for the following complexes: acrylic, maleic, methanolic and LPC,

− an energy audit of the facilities’ electricity systems,− use of coke-oven gas as a chemical raw material at ZAK S.A.,− use of propene-propylene fraction as a raw material for the OXO

alcohol installation.

In the field of implementing new products:− feasibility study for coal gasification for the production of heating

energy and electricity and syngas for the production of methanol, with detection, transport and storage of CO2,

− application research on a new plasticiser, i.e. DIOCH – hydrogenated dioctyl phthalate and technical concepts for manufacture of DIOCH,

− a feasibility study for manufacture of terephthalate dioctyl at ZAK S.A.

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The strategic commodities used by Azoty Tarnów for large-scale manu-facture are natural gas, phenol, benzene and ammonia. We are the only company in the industry with diversified natural gas supply sources. Supplies are sourced from the national transmission network and from independent local sources of natural gas with high nitrate content located in the Tarnów region. The gas from local sources currently meets approx. 40% of the company’s requirements, which is significant in strengthening Azoty Tarnów’s security in the supply of raw materials. In the short-term Azoty Tarnów is also seeking new local sources of gas, which will cover up to 60% of the company’s requirements for this raw material.

To a large extent the Azoty Tarnów Group is supplied with commodities for manufacture, together with goods and services, from within Poland. Remaining requirements are met from EU countries (benzene, phenol, propene) and from Eastern markets (ammonia, methanol, propene). The stability and security of strategic raw materials is guaranteed through contracts based on commercial price formulae together with quantitative guarantees, both in the Group’s operations and in optimising the purchase and logistics process. This strategy allows us to minimise negative market phenomena and adapt the quantity of supplies to current production re-quirements.

In order to further advance energy security, the existing on-site 65 MW CHP plant at Azoty Tarnów is undergoing modernisation. At the present time ap-prox. 80% of Azoty Tarnów’s energy needs are met by the on-site, coal-fired CHP plant. In 2010 two large domestic companies supplied coal for power, deliveries of which were balanced 80-20. The largest supplier for the Azoty Tarnów Group is Polskie Górnictwo Naftowe i Gazownictwo S.A.

Environmental protection

Thanks to implementation of the latest technological solutions, Azoty Tarnów takes active environmental protection measures which bring si-multaneous balance sheet benefits. As one of the first Polish companies to do so, Azoty Tarnów is implementing the recommendations of the United Nations Framework Convention on Climate Change (the Kyoto Protocol) through a Polish-Japanese Joint Implementation Project to reduce green-house gas emissions (Emission Reduction Units, ERUs). Commissioned in 2009, the recycling catalyser at the nitric acid installation has led to a 93% reduction in nitrogen oxide emissions, the largest reduction of this gas in the world. Revenues to be achieved on this account over the period 2008-2012 are estimated at approx. PLN 135 million. The level of these revenues in 2010 amounted to PLN 27.9 million.

Development of IT infrastructure

IT activities constitute significant support for implementation of the devel-opment strategy and an increase in the company’s value. The “IT Strategy 2010-2015” was adopted, in line with the “Company Development Strategy”, together with the IT mission: “effective use of information and knowledge as a strategic resource”. For its implementation, an innovative IT outsourcing project has been in progress since 2010 in cooperation with Hewlett-Packard Polska.

Covering supervision of the Azoty Tarnów IT system, HP simultane-ously employed personnel from the former IT department, creating a Competence Centre for the Group. The aim of the project is to use IT de-velopment to streamline business processes and improve the quality of IT support. The project was presented with the “Most Interesting of the Best” award by the editorial team of PTWP Group – publishers of the business monthly Nowy Przemysł and the website wnp.pl. This award is presented to companies for implementation of the most interesting IT solutions in business – implementation of innovative solutions which significantly im-prove business and increase effectiveness and competition.

Since commencing provision of IT services, HP has conducted sever-al significant standardisation projects. The first and key project was the ITSM/ITIL-compliant start-up of the Help Desk – the first point of call for all IT users at Azoty Tarnów. Subsequent projects concerned issues includ-ing virtualisation of the equipment platform and applications used, supply and implementation of a Microsoft platform for e-mail and group work and data archiving.

5 key business projects were implemented, including creation of a Business Intelligence environment (including planning, budgeting and management information optimisation), introduction of electronic docu-ment and invoice circulation, management of investments and repair works and a cycle of advanced training sessions for SAP users.

The aim of strategic cooperation in all fields of technology and ICT services expressed in the contract is systematically fulfilled through HP’s participa-tion in analysis of the company’s subsequent strategic initiatives. Bilateral transfer of knowledge and joint development of IT solutions bringing the best business effects continuously add value to the outsourcing contract.

Commodity and energy security

27

ATT a reliable capital markets partner

Azoty Tarnów debuted on the Warsaw Stock Exchange on 30 June 2008. Shares in the company, with ticker symbol ATT, are listed on the WSE pri-mary market under a continuous trading system and are included in the WIG, mWIG80, WIG-Chemia and RESPECT indices.

Acting in accordance with the highest standards for capital market com-munications and corporate governance principles, Zakłady Azotowe w Tarnowie-Mościcach S.A. provides all capital market participants, par-ticularly its current and future shareholders, with in-depth and reliable in-formation concerning events within the company and its group, present-ed in current and periodic reports. These reports are also available on the company’s website azoty.tarnow.pl. The Investor Relations section is updated with Azoty Tarnów share price information, and also contains the latest recommendations for Azoty Tarnów share target price, taken from capital market analysts’ recommendations, together with publica-tion of results drawn up after each publication of a periodic report and presented during meetings with investors and market analysts, road-shows or investor conferences.

Azoty Tarnów does more than merely abide by obligatory legal require-ments in communications with investors. Wishing to live up to the high expectations of capital market participants, the company applies an open information policy. In April 2010 Azoty Tarnów joined the “10 for 10” programme of the Association of Private Investors, aimed at creating and optimising the highest standards in communication between listed companies and investors.

Azoty Tarnów’s investor relations activities were distinguished by in-vestors in the business weekly “Puls Biznesu” for the company’s ac-tive participation in “Investor Action”, thanks to which from August 2010 the Company has the honour of being able to use the “Responds to Investors” logo.

Azoty Tarnów began 2010 with a share price of PLN 14.55, after which the price ranged, first rising to a level of PLN 18 and then falling to PLN 13.9 on 2 July 2010 (the minimum during 2010). From that point on, a long-term uptrend developed, closing the year at PLN 32.68. This growth gained pace in the fourth quarter of 2010, with the highest daily price in 2010 taking place on 27 December 2010 at a level of PLN 33.4 per share. The growth tendency continued into the first quarter of 2011 when the share price again reached a record high, hitting PLN 40.41 on 8 March 2011.

The rate of return on investment in Azoty Tarnów shares in 2010 reached 119.48%, significantly outperforming the average ROI rate for the WIG-Chemia index, which over the same period was approx. 60%. However, investors who acquired ATT shares at the issue price of PLN 19.50 in 2008 could expect a 67.59% rate of return through selling shares on 31 December 2010.

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Since its founding, Azoty Tarnów has contributed to the region’s social and economic development and is a trusted partner for the local community.

It operates in a responsible manner and strives to integrate social, envi-ronmental and economic aspects. To date the company has taken a wide range of measures to raise internal standards to the highest international requirements. Such tasks include the implementation of integrated man-agement systems. Azoty Tarnów completely fulfils the requirements of ISO standards regarding quality management, environmental manage-ment, food safety management and occupational health and safety. Furthermore, the company takes active part in programmes and initia-tives such as “Responsibility and Care”, REACH and SPOT.

The company is deeply involved in the development of local communities and cares for its employees, ensuring a safe working environment and countless opportunities for development. Employee benefits include the possibility to take advantage of various forms of subsidies in the event of continuing education or to take part in training courses, conferences and industry events. Numerous training courses are co-financed by the European Social Fund under the Human Capital Operational Programme. To date, training has been organised on topics including use of comput-er software, IT systems, the Internet and website design, together with English courses. Furthermore, employees have the opportunity to take advantage of the company’s support under a package of social benefits.

The company is a recognised and valued organiser and partner of pro-jects aimed at environmental protection, integration and the development of the local community. Azoty Tarnów supports both large investments and small ventures. The list of institutions supported by the company includes educational facilities for disabled children, cultural centres and sports clubs. Azoty Tarnów is strategically and transparently involved in this type of activity and acts in accordance with the “Azoty Tarnów Strategy for Development of the Local Community”, which in 2010 was expanded to include the entire Group. The organisations and projects supported by Azoty Tarnów in 2010 include:

The “Tarnów Film Award” organised by the Tarnów Cultural Centre – the largest film event in the region, supported by the Company for several years,Centrum Paderewskiego Kąśna Dolna – a significant organisation active in Tarnów’s cultural life and organiser of countless renowned classical music festivals and concerts,Mościce Cultural Centre – a cultural institution organising concerts, exhibitions, film showing, plays etc.,The Educational Centre in Zbylitowska Góra, which conducts classes for sick and disabled children, including hippotherapy, therapy with dogs and light therapy,Schools from the Mościce municipality which are located in the company’s surroundings,The Tarnów Investment Forum – an event held during the annual Economic Forum in Krynica, a gathering of selected investors from Poland and Central and Eastern Europe as well as representatives of governments and parliaments,Edyta Ropek and Tomasz Oleksy – two of the best European and global mountaineers,Żużlowa Sportowa Spółka Akcyjna Unia Tarnów (sports),Kryterium Kolarskie im. Eugeniusza Kwiatkowskiego (cycling),Polskie Towarzystwo Gimnastyczne “Sokół-Świat Pracy” (gymnastics),The Voluntary Lifeguard Service.

In order to maintain the transparency of its activities, Azoty Tarnów is-sues financial and environmental reports which provide up-to-date infor-mation on activities (available on the company website), as well as being subject to external audit. Azoty Tarnów’s involvement is also recognised by other organisations. An example of the value attached to the compa-ny’s contribution to Polish science and culture is the award of a “Golden Idea” statue (the idea behind the award was developed by the Science and Health Foundation in Krakow). Azoty Tarnów was also presented with the prestigious “Tarnów Patron of Culture” award, granted by Council of the Town of Tarnów.

Corporate social responsibility

31

In pursuit of sustainable growth

Being aware of the impact on its surroundings, in 2010 the Company be-gan preparations for the development of a comprehensive, long-term strategy for sustainable development and social responsibility.

The objective of the strategy is to integrate activities undertaken in the fields of economic efficiency, responsibility towards employees and the environment and relations with the company’s surroundings. The docu-ment will demonstrate the means by which Azoty Tarnów wishes to create value for stakeholders, including employees, shareholders, business part-ners and local communities.

The strategy will comprehensively address the actual needs of the com-munity and will enable sustainable development for the company. The strategy is created on strong foundations and over seventy years of histo-ry, during which Azoty Tarnów has been involved in countless scientific, economic, sporting and cultural events.

Azoty Tarnów listed in the RESPECT Index

Azoty Tarnów has been listed in the RESPECT Index without interruption since 19 November 2009, i.e. since the index’s formation. This index is or-ganised by the Warsaw Stock Exchange and is the first index of socially responsible companies in Central and Eastern Europe. The objective of the RESPECT Index is to select companies managed in a responsible and sustainable manner and accent their investment attractiveness. To date Azoty Tarnów has successfully passed the external audits conducted by Deloitte, which has twice confirmed that the Company, as one of 16 in Poland, fulfils the rigorous index criteria.

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33

34

in PLN thousands in EUR thousands

For the periodfrom 1.1.2010 to 31.12.2010

For the periodfrom 1.1.2009 to 31.12.2009

For the periodfrom 1.1.2010 to 31.12.2010

For the periodfrom 1.1.2009 to 31.12.2009

Revenue from sales 1 901 784 1 214 638 474 924 279 832

Profi t on operating activities 422 206 (14 353) 105 436 (3 307)

Profi t before tax 417 007 (7 129) 104 137 (1 642)

Net profi t 400 758 (3 740) 100 080 (862)

Total comprehensive income  400 849 1 042 100 102 240

Number of shares 39 116 421 39 116 421 39 116 421 39 116 421

Net profi t per ordinary share 9.99 (0.11) 2.50 (0.03)

Net cash fl ows from operating activities

115 161 (43 288) 28 759 (9 973)

Net cash fl ows from investing activi ties

(63 996) 222 648 (15 981) 51 294

Net cash fl ows from fi nancing activities

(16 393) 21 792 (4 094) 5 021

Total net cash fl ows 34 772 201 152 8 683 46 342

Cash at the beginning of period 246 485 45 333 61 554 10 444

Cash at the end of period 279 450 246 485 69 786 56 786

As at31-12-2010

As at31-12-2009

As at31-12-2010

As at31-12-2009

Non-current assets 2 339 060 989 463 590 627 240 851

Current assets 974 347 591 855 246 029 144 067

Non-current liabilities 433 695 199 778 109 511 48 629

Current liabilities 929 610 268 245 234 732 65 295

Equity 1 950 102 1 113 295 492 413 270 993

Share capital 195 582 195 582 49 386 47 608

Non-controlling interests 447 926 2 163 113 104 527

SELECTED CONSOLIDATED FINANCIAL DATA

34

35

in PLN thousands in EUR thousands

For the periodFor the periodfrom 1.1.2010 from 1.1.2010 to 31.12.2010to 31.12.2010

For the periodfrom 1.1.2009 to 31.12.2009

For the periodfrom 1.1.2010 to 31.12.2010

For the periodfrom 1.1.2009 to 31.12.2009

Revenue from sales 1 549 753 1 137 699 387 013 262 106

Profi t on operating activities 75 896 (26 860) 18 953 (6 188)

Profi t before tax 77 138 (15 839) 19 263 (3 649)

Net profi t 60 656 (10 997) 15 147 (2 533)

Total comprehensive income  62 313 (6 215) 15 561 (1 432)

Number of shares 39 116 421 39 116 421 39 116 421 39 116 421

Net profi t per ordinary share 1.55 (0.28) 0.39 (0.06)

Net cash fl ows from operating activities 152 591 (43 052) 38 106 (9 918)

Net cash fl ows from investing activities (224 423) 229 417 (56 044) 52 854

Net cash fl ows from fi nancing activities 8 373 25 392 2 091 5 850

Total net cash fl ows (63 459) 211 757 (15 847) 48 785

Cash at the beginning of period 235 650 23 893 58 848 5 505

Cash at the end of period 172 191 235 650 43 000 54 290

As at31.12.201031.12.2010

As at31.12.2009

As at31.12.2010

As at31.12.2009

Non-current assets 1 092 527 915 980 275 870 222 964

Current assets 502 500 562 611 126 884 136 948

Non-current liabilities 161 200 156 612 40 704 38 122

Current liabilities 311 604 262 069 78 682 63 792

Equity 1 122 223 1 059 910 283 368 257 999

Share capital 195 582 195 582 49 386 47 608

AZOTY TARNÓW – SELECTED SEPARATE FINANCIAL DATA

36

SALES OF AZOTY TARNÓW GROUP PRODUCTS BY PRODUCT GROUP/in PLN millions/

2009 2010 Change

Poliamide 6 227 580 256%

Tarnoform 54 66 122%

Caprolactam 232 201 87%

Nitrate fertilisers, inc.: 459 587 128%

Calcium ammonium nitrates 268 406 151%

Ammonium sulphate 191 160 84%

Urea - 22 -

OXO alcohols* - 91 -

Plasticisers* - 39 -

Cyclohexanone 0,1 56 56000%

Cyclohexanol 6 12 200%

Nitrates 30 34 113%

Maleic anhydride* - 3 -

* from 19 November 2010.

36 36

37

Share capital Share premiumProvision for hedge

accounting

Exchange diff erences

from conversion ofsubsidiaries

Retained earnings

Total equity attributable to

owners of parent

Non-controling interests Total equity

As at 1 January 2009 195 582 209 990 (7 870) - 757 931 1 155 633 1 698 1 157 331

Error correction - - - - (1 768) (1 768) 81 (1 687)

As at 1 January 2009 after corrections 195 582 209 990 (7 870) - 756 163 1 153 865 1 779 1 155 644

Total comprehensive income for the 12 months ended 31 December 2009

- - 4 782 - (4 249) 533 509 1 042

Dividend - - - - (39 899) (39 899) (125) (40 024)

Other - - - - (3 367) (3 367) - (3 367)

As at 31 December 2009 195 582 209 990 (3 088) - 708 648 1 111 132 2 163 1 113 295

As at 1 January 2010 195 582 209 990 (3 088) - 708 648 1 111 132 2 163 1 113 295

Error correction - - - - - - - -

As at 1 January 2010 after corrections 195 582 209 990 (3 088) 708 648 1 111 132 2 163 1 113 295

Total comprehensive income for the 12 months ended 31 December 2010

- - 1 657 (1 566) 390 953 391 044 9 805 400 849

Dividend - - - - - - (454) (454)

Non-controlling interests resulting from acquisition of ZAK SA Group

- - - - - - 436 412 436 412

As at 31 December 2010 195 582 209 990 (1 431) (1 566) 1 099 601 1 502 176 447 929 1 950 102

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 31 December 2010/in PLN thousands/

38

NoteFor the periodfrom 1.1.2010 to 31.12.2010

For the periodfrom 1.1.2009 to 31.12.2009

Continuing operations

Revenues 2 1 901 784 1 214 638

Cost of sales 3 (1 572 293) (1 051 564)

Gross profit on sales 329 491 163 074Distribution costs 3 (82 123) (64 713)

Administrative expenses 3 (123 834) (99 720)

Other operating revenues 4 391 040 15 791

Other operating costs 5 (92 368) (28 785)

Profit (loss) on operating activities  422 206 (14 353)Finance income 6 11 919 51 301

Finance costs 7 (17 282) (44 110)

Net finance income (costs) (5 363) 7 191Profit (loss) on shares in associates measured under the equity method

164 33

Profit (loss) before tax 417 007 (7 129)Income tax 8 (16 249) 3 389

Net profit (loss) on continuing operations 400 758 (3 740)

Discontinued operations

Net profit (loss) on discontinued operations 9 – –Net profit (loss) 400 758 (3 740)Components of other comprehensive incomeValuation of hedging instruments 836 (1 988)

Settlement of hedging instruments 1 209 7 892

Deferred tax on other comprehensive income 8 (388) (1 122)

Exchange differences from conversion of subsidiaries (1 566)

Total other comprehensive income 91 4 782Total comprehensive income 400 849 1 042Net profit attributable to:

Owners of the parent 390 953 (4 249)

Non-controlling interests 9 805 509

Total comprehensive income attributable to:

Owners of the parent 391 044 533

Non-controlling interests 9 805 509

Profit (loss) per share: 10

From continuing and discontinued operations:

Basic (PLN) 9,99 (0,11)

Diluted (PLN) 9,99 (0,11)

From continuing operations:

Basic (PLN) 9,99 (0,11)

Diluted (PLN) 9,99 (0,11)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the period ended 31 December 2010 /in PLN thousands/

40

Assets As at31.12.2010

As at31.12.2009

Non-current assets

Property, plant and equipment 2 038 415 902 639

Investment property 26 338 12 135

Intangible assets 182 954 22 219

Investments in subsidiaries 7 651 596

Available-for-sale investments 12 633 12 653

Other fi nancial assets 737 2

Non-current receivables 3 501 1 355

Deferred income tax assets 66 706 37 829

Other assets 125 35

Total non-current assets 2 339 060 989 463

Current assets

Inventory 269 787 180 874

Other fi nancial assets 1 908 340

Deferred tax receivables - 5 394

Trade and other receivables 417 326 148 788

Cash and cash equivalents 279 450 246 485

Other assets 5 751 9 361

Non-current assets available for sale 125 613

Total current assets 974 347 591 855

Total assets 3 313 407 1 581 318

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

for the period ended 31 December 2010/in PLN thousands/

40

Equity and liabilities As at31.12.2010

As at31.12.2009

Equity

Share capital 195 582 195 582

Share premium 209 990 209 990

Provision for hedge valuations (1 431) (3 088)

Exchange diff erences from conversion of subsidiaries (1 566) -

Retained earnings, including: 1 099 601 708 648

Current-period net profi t (loss) 390 953 (4 249)

Equity attributable to owners of the parent 1 502 176 1 111 132

Non-controlling interests 447 926 2 163

Total equity 1 950 102 1 113 295

Liabilities

Liabilities due to borrowings 33 587 29 446

Provisions for employee benefi ts 71 235 45 087

Other non-current liabilities 251 189

Other provisions 129 288 20 835

Government grants 307 33

Deferred income 2 4

Provisions for deferred income tax 192 082 102 511

Financial liabilities 6 943 1 673

Total non-current liabilities 433 695 199 778

Liabilities due to borrowings 281 699 110 201

Provisions for employee benefi ts 8 176 5 389

Liabilities due to deferred income tax 2 763 -

Trade and other payables 591 233 143 372

Other provisions 39 803 7 937

Government grants 48 136

Deferred income 747 128

Financial liabilities 5 141 1 082

Total current liabilities 929 610 268 245

Total liabilities 1 363 305 468 023

Total equity and liabilities 3 313 407 1 581 318

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

for the period ended 31 December 2010/in PLN thousands/

41

Cash fl ows from operating activitiesFor the periodfrom 1.1.2010 to 31.12.2010

For the periodfrom 1.1.2009 to 31.12.2009

Gross profi t (loss) 417 007 (7 129)

Corrections 129 634 57 233

Depreciation / amortisation 92 328 80 844

Creation (reversal) of revaluations 34 098 (4 186)

Profi t (loss) on investing activities 806 (7 329)

Profi t (loss) on disposal of fi nancial assets (1 025) (4 115)

Profi t (loss) on shares in associates under the equity method (164) (33)

Interest, exchange diff erences 4 616 (10 278)

Dividend received (544) (180)

Profi t (loss) on change in fair value of fi nancial assets measured at fair value

(481) 2 510

Profi t (loss) on operating activities before changes in working capital 546 641 50 104

Change in trade and other receivables 43 417 30 379

Change in inventories 18 121 (47 454)

Change in trade and other payables (924) (56 924)

Change in inventory, accruals and grants 15 187 (15 117)

Other adjustments (491 681) 80

Cash generated from operating activities 130 761 (38 932)

Interest paid 404 –

Tax paid (16 004) (4 356)

Net cash from operating activities 115 161 (43 288)

CONSOLIDATED STATEMENT OF CASH FLOWS

for the period ended 31 December 2010/in PLN thousands/

42

For the periodfrom 1.1.2010 to 31.12.2010

For the periodfrom 1.1.2009 to 31.12.2009

Cash fl ows from investing activities

Sale of intangible assets, PP&E and investment properties 34 647 31 222

Purchase of intangible assets, PP&E and investment properties (94 979) (75 813)

Dividend received 546 2 646

Expenditures on acquisition of fi nancial assets (73) (12 355)

Proceeds from sale of fi nancial assets 1 825 271 880

Interest received 3 694 14 257

Other investment proceeds / expenditures (9 606) -

Repayment of borrowings (50) (9 189)

Net cash from investing activities (63 996) 222 648

Cash fl ows from fi nancing activities

Dividend paid 488 (42 459)

Proceeds from loans and borrowings taken 155 457 128 295

Expenditures on repayment of loans and borrowings (161 792) (58 711)

Interest paid (7 605) (4 540)

Payment of liabilities under fi nance lease contracts (1 965) (793)

Net cash from fi nancing activities (16 393) 21 792

Total net cash fl ows 34 772 201 152

Cash at the beginning of period 246 485 45 333

Eff ects of exchange diff erences (1 807) –

Cash at the end of period 279 450 246 485

43

Opinion of Independent Statutory Auditor DELOITTE AUDYT* To the Shareholders and Supervisory Board of Zakłady Azotowe w Tarnowie-Mościcach S.A.

We audited the accompanying consolidated financial statements of the Zakłady Azotowe w Tarnowie-Mościcach S.A. Group, for which the Pa-rent is Zakłady Azotowe w Tarnowie-Mościcach S.A., with its registered office in Tarnów at ul. E. Kwiatkowskiego 8, consisting of:– consolidated statement of financial position as at 31 December 2010, – consolidated statement of comprehensive income, – consolidated statement of changes in equity, – consolidated statement of cash flows for the financial year 1 January

2010 to 31 December 2010 and notes to the financial statements, con-taining information on the adopted accounting policies and other ex-planatory information.

The Management Board of the Parent is responsible for drawing up the financial statements and report on Group operations in accordance with the binding provisions of law.

The Management Board of the Parent and members of its Supervisory Board are required to ensure that the consolidated financial statements and report on Group operations fulfil the requirements of the Accounting Act of 29 September 1994 (Polish Journal of Laws of 2009, no. 152, item 1223 as amended), hereinafter the “Polish Accounting Act”.

Our task was to audit and provide an opinion on the compliance of the consolidated financial statements with the accounting principles (poli-cies) adopted by the Group and on whether they clearly and reliably pre-sent the Group’s financial situation, asset position and financial result in all significant aspects.

We planned and carried out the audit of the financial statements in accor-dance with the following regulations:

– section 7 of the Polish Accounting Act,– the national financial audit standards issued by the National Chamber

of Statutory Auditors.

We planned and carried out the audit of the consolidated financial stat-ements in such manner as to gain the rational certainty necessary for us to express an opinion on the statements. In particular, the audit covered verification of the accounting principles (policies) applied by the Parent and subsidiaries and examination, mainly on a test basis, of evidence su-pporting the amounts and disclosures in the consolidated financial sta-

tements, together with an overview of the statements. We consider that the audit provided us with sufficient basis to provide an opinion.

In our opinion, the audited consolidated financial statements, in all signi-ficant aspects:– give a true and fair view of information significant for assessing the

financial situation and asset position of the Group as at 31 December 2010, as well as its financial result for the financial year 1 January 2010 to 31 December 2010,

– were drawn up in accordance with International Accounting Standards, International Financial Reporting Standards and associated interpreta-tions published in the form of European Commission regulations, and where not governed by such standards then appropriate to the requi-rements of the Polish Accounting Act and secondary legislation issued on its basis,

– are compliant with the provisions of law binding on the Group which impact the content of financial statements.

The report on the Group’s operations for 2010 is complete in the me-aning of art. 49, sec. 2 of the Polish Accounting Act and the Ordinance of the Minister of Finance of 19 February 2009 concerning current and periodic information provided by issuers of securities and the conditions for regarding information required by the law of a non-member state as equivalent, and the information contained therein, as sourced from the audited consolidated financial statements, is compliant with such stat-ements.

Marek Turczyński Lead Statutory Auditor

conducting the audit reg. no. 90144

Warsaw, 8 March 2011

*DELOITTE Audyt Sp. z o.o., having its registered offi ce in Warsaw, Al. Jana Pawła II 19, 00-854 Warsaw – an entity authorised to audit fi nancial statements, entered onto the list of authorised entities, reg. no. 73, held by the National Chamber of Statutory Auditors.

45

46

Contents

Introduction from the President of the Management Board of Azoty Tarnów

Management Board of Zakłady Azotowe w Tarnowie-Mościcach S.A.

Supervisory Board of Zakłady Azotowe w Tarnowie-Mościcach S.A.

Shareholding structure of Zakłady Azotowe w Tarnowie-Mościcach S.A.

Calendar of events in 2010 at Zakłady Azotowe w Tarnowie-Mościcach S.A.

Azoty Tarnów

Mission and strategic objectives of Zakłady Azotowe w Tarnowie-Mościcach S.A.

Development vectors

The Azoty Tarnów Group

Fields of operations of the Azoty Tarnów Group

Azoty Tarnów Group sales revenue structure

Sales of key products in 2010 and sales markets

Investments and achievement of issue objectives

R&D

Commodity and energy security

ATT – a reliable capital markets partner

Corporate social responsibility

Selected consolidated Azoty Tarnów Group financial data

Azoty Tarnów – selected separate financial data

Sale of Azoty Tarnów Group products by product group

Azoty Tarnów Group consolidated statement of changes in equity

Azoty Tarnów Group consolidated statement of comprehensive income

Azoty Tarnów Group consolidated statement of financial position

Azoty Tarnów Group consolidated statement of financial position

Azoty Tarnów Group consolidated statement of cash flows

Opinion issued by independent statutory auditor Deloitte Audyt

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Zakłady Azotowe w Tarnowie-Mościcach S.A.

ul. Eugeniusza Kwiatkowskiego 8, 33-101 Tarnów PL

www.azoty.tarnow.pl

VAT number: PL8730006829

GPW ticker: ATT

KRS: 0000075450

ISIN: PLZATRM00012

Investor Relations

tel. +4814 637 35 31

fax +4814 637 47 25

ir@azoty.tarnow.pl

Zakłady Azotowe w Tarnowie-Mościcach S.A. ul. E. Kwiatkowskiego 8, 33-101 Tarnów, Polska, tel. +4814 633 07 81-85

PR /02/2011/1500

Annual Report 2010

www.azoty.tarnow.pl

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„Skonsolidowane sprawozdanie finansowe za okres 12 miesięcy, kończących się 31 grudnia 2010 roku”, sporządzone 8 marca 2011 roku zgodnie z wymogami Międzynarodowych Standardów Rachunkowości. Sprawozdanie rzetelnie i jasno przedstawia sytuację majątkową i finansową Spółki i Grupy Kapitałowej oraz wyniki finansowe. Pełny tekst raportu rocznego jest dostępny na stronie internetowej azoty.tarnow.pl oraz w siedzibie Spółki.

Ponadto do niniejszego Raportu Finansowego dołączamy płytę CD, na której w celu poszerzenia zamieszczonych w nim informacji prezentujemy: Roczne jednostkowe sprawozdanie finansowe za 2010 rok Sprawozdanie jednostkowe z działalności Spółki za 2010 rok Roczne skonsolidowane sprawozdanie finansowe za 2010 rok Sprawozdanie Zarządu z działalności Grupy Kapitałowej za 2010 rok Consolidated financial statement for 2010 Report on Activities of Azoty Tarnow Group for 2010

www.azoty.tarnow.pl