Current Report No. 27/2015 - Gas fuel contracted for the gas year 2015/2016, with a total value corresponding to the value of a significant agreement

Legal basis: Art. 56.1.2 of the Public Offering Act - current and periodic information

Text of the report: The Management Board of Grupa Azoty Zakłady Azotowe Puławy S.A. (the "Company") announces that on August 17th the Company received an Annex of August 13th 2015 to the high-methane gas sale and purchase agreement (the "Agreement") concluded with Polskie Górnictwo Naftowe i Gazownictwo S.A. ("PGNiG S.A.") on January 14th 1999 for an indefinite term. The agreement provides for the sale and supply of agreed volumes of natural gas by PGNiG S.A.

Under the Annex the definition of Contract Year was changed to mean the period from 6:00 am on October 1st of a given year to 6:00 am on October 1st of the following year (gas year). Previously, the Contract Year corresponded to the calendar year.

Together with the Annex, an Appendix to the Agreement ('Gas fuel volumes contracted in individual months of the Contract Year and contracted capacity') was signed, specifying the contracted capacity and quantity of gas fuel for the 2015/2016 gas year. The volumes and contracted capacity are agreed by the parties separately for each gas year.

The value of the agreement in the new Contract Year, reflecting the current market conditions, is estimated at PLN 541m (VAT exclusive), which is more than 10% of the Company's equity, qualifying it as a significant agreement. The Appendix also replaces the previous arrangements concerning contracted volumes and capacity in the period October 1st−December 31st 2015 specified in the appendix to the Agreement concluded on December 17th 2014 and announced by the Company in its Current Report No. 28/2014 dated December 17th 2014. Contractual penalties are as provided for in the annex of March 3rd 2011 (see Current Report No. 6/2011).

The value of the agreement with PGNiG S.A. in the 12 months from October 1st 2015 to September 30th 2016 is lower compared with the 12-month period reported by the Company in Current Report No. 28/2014 of December 17th 2014, because the Company joined the PGNiG S.A. Discount Scheme, as a result of which the price paid for gas fuel was reduced relative to the tariff price and the gas volume contracted by the Company was changed.

The estimated aggregate value of the agreements (including the Appendix concerning the contract year 2015/2016) executed between the Company and its subsidiaries with PGNiG S.A. and its subsidiaries in the period from December 17th 2014 to August 17th 2015 is approximately PLN 542m.

Legal basis: Par. 5.1.3 of the Minister of Finance's Regulation on current and periodic information to be published by issuers of securities and conditions for recognition as equivalent of information whose disclosure is required under the laws of a non-member state, dated February 19th 2009 (consolidated text: Dz.U. of 2014, item 133).

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