Current Report No.: 46/2019

Date of preparation: 14.11.2019 

Abbreviated name of the Issuer: CIECH S.A.

Legal basis: Art. 17.1 of the MAR – inside information

Subject: Creation of an additional write-down

Contents of the Report:

With reference to Current Report No. 37/2019 of 9 September 2019 and Current Report No. 40/2019 of 18 September 2019, CIECH S.A. (the “Company” or “Issuer”) informs that today the Management Board of the Company has decided to create an additional write-down in the amount of PLN 36.8 million (the “Additional Write-down”), in the consolidated financial statements of the CIECH Group for the third quarter of 2019, related to impairment of assets of CIECH Soda Romania S.A. based in Romania (the “Subsidiary”), which – together with the write-down created in the first half of the year (the “Write-Down”) – will total PLN 73.7 million. The Issuer informed on the creation of the Write-Down in its Current Report No. 37/2019 of 9 September 2019.

The decision to create the Additional Write-Down was made as a result of:

1. fulfilment of “Scenario 2” described in the aforementioned report, No. 37/2019, i.e. failure to reach agreement between the Subsidiary and the sole provider of Steam – S.C. CET Govora S.A. based in Romania in composition bankruptcy (“CET”), as to the level of the price of process steam (the “Steam”), as confirmed by CET in its letter with information on the inability to supply the Steam at the price agreed in the terminated contract,
2. analysis of possible Steam delivery options from a new source, the probability of which, as at the date of decision making, was assessed as insufficiently high. 

The creation of the Additional Write-Down will have no impact on the consolidated adj. EBITDA of the CIECH Group (calculated as EBITDA adjusted for extraordinary one-off events), consolidated financial flows and the separate financial statements of the Company. The value of the Additional Write-Down will affect the consolidated operating result, consolidated EBITDA and consolidated net result of the CIECH Group for the third quarter of 2019. The Additional Write-Down will be presented in the Extended Consolidated Quarterly Report of the CIECH Group for Q3 2019 to be published on 19 November 2019.

At the same time, the Issuer informs that analyses are continued with regard to the possibility of obtaining a new source of Steam at a reasonable cost and long-term cooperation in the supply of other raw materials necessary for production (guaranteeing cost predictability in subsequent years). The result of these analyses may affect the amount of write-downs to be recognised in the consolidated financial statements of the CIECH Group for subsequent reporting periods.

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).