‘We continue to pursue our stated strategic objectives. We are focusing on the segments defined in our strategy, in particular fertilizers, where we are one of the European leaders and which delivers positive profitability. At the same time, we are cleaning up the situation at Grupa Azoty Polyolefins, which remains a significant burden for us,’ commented Andrzej Skolmowski, President of the Management Board of Grupa Azoty.

The current situation at Grupa Azoty Polyolefins stems, among other factors, from the failure to account for adverse market trends and the assumption of financial obligations exceeding the Group’s capacity at the time the investment was launched. Findings from the project review indicate numerous irregularities. As a result, Grupa Azoty has filed a notice with the prosecutor’s office regarding suspected criminal misconduct related to the execution of the project. In addition, Grupa Azoty Polyolefins has filed an arbitration claim with VIAC against Hyundai Engineering Co., Ltd., citing the contractor’s failure to fulfil contractual obligations, which resulted in the non-completion of the Polimery Police project.

We have been in constructive dialogue with Orlen for several months. The offer received, as well as our counteroffer – both valued at PLN 1.022 billion in a cash-free, debt-free structure – assume closing the share sale to Orlen by 30 June this year.

A key element of the offer is the restructuring proceedings of Grupa Azoty Polyolefins, which aim to reduce the debt burden of the project company and reach an agreement with creditors to allow the company to operate on a stable footing.

All these efforts are focused on working out the optimal scenario for the Polimery Police project. This, in turn, will allow Grupa Azoty to regain room for further development and build a long-term growth outlook,’ added President Skolmowski.

Impairment Charges

The charges reflect the current assessment of recoverability of loans and receivables in the context of the ongoing restructuring proceedings. As the 2025 financial audit and restructuring process continue, the final amounts may change.

Grupa Azoty has classified the loans granted to Grupa Azoty Polyolefins as impaired assets and has recognised a full impairment charge of PLN 586.0 million. This charge will be recorded in Grupa Azoty’s standalone financial statements under financial costs, reducing gross profit by PLN 586.0 million, without impact on EBITDA. Following the derecognition of a deferred tax asset and provision totalling PLN 3.8 million, the total impact on net profit amounts to PLN 589.8 million. The charge has no effect on Grupa Azoty’s consolidated financial statements.

Grupa Azoty Police has recognised a full impairment charge of PLN 661.0 million on loans granted to Grupa Azoty Polyolefins, based on the book value as at 31 December 2025. The charge will be reflected in both the standalone and consolidated financial statements of Grupa Azoty Police under financial costs, reducing gross profit by PLN 661.0 million, with no impact on EBITDA. After derecognising a deferred tax asset of PLN 3.0 million, the total impact on net profit will amount to PLN 663.0 million.

Additionally, Grupa Azoty Police has recognised a partial impairment charge of PLN 119.0 million on trade receivables, based on the cut-off date of 28 November 2025. This charge will be recognised in both the standalone and consolidated financial statements of Grupa Azoty Police and will affect EBITDA. If utilised, the charge will generate a deferred tax asset of PLN 21.0 million. The combined impact of the impairment and deferred tax adjustment on net profit will amount to PLN 98.0 million.

At the same time, Grupa Azoty is reviewing the asset valuations of Grupa Azoty Polyolefins for potential adjustments to its consolidated financial statements.

Summary Table of Impairment Charges