Current Report No.: 36/2019

Date of preparation: 29.08.2019

Abbreviated name of the Issuer: CIECH S.A.

Legal basis: Art. 70 point 3 of the Act on Offering – the Shareholders' Meeting, a list of more than 5 %

Subject: List of shareholders holding at least 5% of votes at the Ordinary (Annual) Shareholders’ Meeting of CIECH S.A. on 22 August 2019

Contents of the Report:

The Management Board of CIECH S.A. (the “Issuer” or “CIECH”), herewith informs that today Verbis Eta sp. z o.o. S.K.A. (the Subsidiary) has received the decision issued by the Head of the Third Tax Office for Warszawa-Śródmieście (hereinafter referred to: the “Decision” and “Authority 1” respectively) to credit the claim of the Subsidiary against the State Treasury for a VAT refund of PLN 30,775,122.00 (the “Overpaid Tax”) towards the disputed liability arising from the decision of the Head of the Małopolskie Province Customs and Tax Office in Krakow  (hereinafter referred to: the “Decision” and “Authority 2” respectively), as advised by the Issuer in its Current Report 26/2019 of 17 July 2019. The amount of the disputed liability arising from the Decision is PLN 30,775,122.00. (the “Liability”). 

The Issuer informed about tax proceedings pending before Authority 2 and the amount of potential tax liability, in the consolidated statements of the CIECH Group. In the annual consolidated financial statements of the CIECH Group for 2018, the proceedings are described in Note 9.2 in the section '"Audits of tax settlements in the CIECH Group"' in the paragraph “VAT audit for the fourth quarter of 2013 at VERBIS ETA Sp. z o.o. S.K.A”.

In its Decision, Authority 1, according to article 55 § 2 of the Tax Ordinance, credited the Overpaid Tax as follows:

1. the amount of PLN 22,301,698.60 towards the Liability, and 

2. the amount of PLN 8,473,423.40 towards late payment interest. 

In connection with the fact that Authority 1 made the Decision immediately enforceable, in order to avoid the enforcement of the remaining part of the Liability and outstanding interest, the Subsidiary has paid the amount of PLN 8,473,423.40 for the remaining part of the Liability and the amount of PLN 3,891,739.00 towards the outstanding interest.

The Issuer informed about the Decision made immediately enforceable by Authority 1 in its Current Report No. 31/2019 of 6 August 2019.

Notwithstanding the above, the Subsidiary intends to continue its dispute with Authority 2 in connection with the Decision issued by the authority.

Legal basis: article 17.1 of the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of 16 April 2014 on Market Abuse (the Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of the European Union L No. 173, p. 1).

Signatures of the persons representing the Company: