Grupa Azoty is restructuring its financial position in the area of the Polimery Police project in connection with the implementation of its strategy to focus on the fertilizer segment and preparations for a potential divestment of Grupa Azoty Polyolefins. The parent company and Grupa Azoty Police have established impairment write-downs, mainly on previously granted loans, reflecting the current assessment of their recoverability under the restructuring proceedings conducted in the project company. These measures form part of a broader process of streamlining the Group's financial and balance sheet structure, covering both intra-group settlements and the preparation of financial statements for 2025. At the same time, the Group is continuing talks on the potential sale of shares in GA Polyolefins to Orlen and is pursuing legal and arbitration actions related to the implementation of the investment in Police.
Strategic direction and burden of the Polimery Police project
In line with its adopted strategy, Grupa Azoty is focusing on defined business segments, in particular the fertilizer business, which remains a key source of positive profitability and an area in which the Group is one of the leaders on the European market. The Polimery Police project implemented by Grupa Azoty Polyolefins has been identified as a significant burden for the Group, both in financial terms and in terms of operational risks.
President of the Management Board of Grupa Azoty, Andrzej Skolmowski, emphasizes that the current actions are part of efforts to tidy up the situation around the project company and limit its negative impact on the Group. "We are consistently implementing our strategic objectives. We are focusing on the segments defined in the strategy, in particular the fertilizer segment, in which we are one of the European leaders and which generates positive profitability. At the same time, we are tidying up the situation in Grupa Azoty Polyolefins, which remains a significant burden for us," comments President Skolmowski.
Causes of difficulties and legal actions
The current financial situation at Grupa Azoty Polyolefins stems, among other factors, from the failure to take into account adverse market trends when making investment decisions and from assuming financial liabilities exceeding the Group's capabilities at the stage of launching the project. Findings concerning the implementation of the Polimery Police investment indicate numerous irregularities, which prompted Grupa Azoty to take legal action.
The company has filed a notice with the public prosecutor's office regarding a suspected criminal offense in the implementation of the project. In parallel, Grupa Azoty Polyolefins has submitted a statement of claim to VIAC against Hyundai Engineering Co., Ltd. in connection with the contractor's failure to fulfill its contractual obligations, which led to the non-completion of the Polimery Police project.
Talks with Orlen and restructuring of the project company
For several months, Grupa Azoty has been in talks with Orlen regarding a potential transaction involving shares in Grupa Azoty Polyolefins. According to the Management Board, the offer received and Grupa Azoty's counter-offer at the level of PLN 1.022 billion on a cash free, debt free basis, that is without debt, envisage the completion of the share sale to Orlen by 30 June of the current year.
A key element of the offer is the restructuring proceedings in Grupa Azoty Polyolefins. Their objective is to reduce the debt of the project company and to work out an agreement with creditors so that the company can operate in a stable manner in the future, irrespective of the final ownership structure. All these measures are intended to develop an optimal scenario for the Polimery Police project.
President Andrzej Skolmowski stresses that this process is crucial for the Group's future financial position. "All these activities are aimed at developing an optimal course of action related to the Polimery Police project. As a result, this will allow Grupa Azoty to regain space for further development and build a growth perspective for the coming years," explains President Skolmowski.
Impairment write-downs at Grupa Azoty
In connection with the restructuring proceedings and the assessment of the recoverability of the financial exposure to Grupa Azoty Polyolefins, Grupa Azoty classified the loans granted to this company as assets with impairment. This resulted in the establishment of an impairment write-down in the full amount of PLN 586.0 million.
The write-down will be recognized in Grupa Azoty's separate financial statements under financial costs, reducing the gross profit by PLN 586.0 million, without affecting EBITDA. After the reversal of the deferred tax asset and provision in the amount of PLN 3.8 million, the total impact on net profit will be PLN 589.8 million. The write-down will have no impact on Grupa Azoty's consolidated financial statements, which means that at the group level the accounting effect has already been reflected earlier or does not affect the consolidated result.
Write-downs at Grupa Azoty Police
In parallel, significant adjustments to asset values related to the Polimery Police project have been recognized in the books of Grupa Azoty Police. The company has established an impairment write-down on loans to Grupa Azoty Polyolefins in the full carrying amount as at 31 December 2025, that is PLN 661.0 million. This write-down will be recognized in the separate and consolidated financial statements of Grupa Azoty Police under financial costs, reducing gross profit by PLN 661.0 million, without affecting EBITDA.
After taking into account the reversal of the deferred tax asset in the amount of PLN 3.0 million, the total impact on the net result of Grupa Azoty Police will be PLN 663.0 million. This represents a significant burden on net profit, with no impact at the EBITDA level.
In addition, Grupa Azoty Police has established a partial write-down on trade receivables in the amount of PLN 119.0 million. The amount of the write-down was determined as at the arrangement date, that is 28 November 2025, with respect to receivables covered by the restructuring proceedings in Grupa Azoty Polyolefins.
The write-down on trade receivables will be recognized in the separate and consolidated financial statements of Grupa Azoty Police and will affect EBITDA. If it is utilized, income tax deductible amounts of PLN 21.0 million will arise, and the total impact of the write-down on receivables and deferred tax assets will be PLN 98.0 million.
Further analysis of asset values
In parallel with the establishment of write-downs on loans and receivables, Grupa Azoty is analyzing the value of assets in Grupa Azoty Polyolefins with a view to a possible adjustment in the consolidated financial statements. This includes, in particular, the assessment of the value of fixed assets and other balance sheet items related to the Polimery Police project in the context of the ongoing restructuring proceedings and the potential divestment.
The impairment write-downs reflect the current assessment of the recoverability of loans and receivables in light of the present status of talks with creditors and the restructuring processes. Due to the ongoing audit of the 2025 financial statements and the ongoing restructuring proceedings, the final amount of the write-downs may still change depending on the further course of negotiations and decisions regarding the future of the Polimery Police project.
