Sale of EUA CO2 allowances

Current Report No.: 38/2021

Date of preparation:  29.12.2021

Abbreviated name of the Issuer: CIECH S.A.

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

Subject:  Sale of EUA CO₂ allowances.

Text of the report:

The Management Board of CIECH S.A. (the “Company” or “Issuer”) herewith informs that on 29 December 2021, CIECH Soda Deutschland GmbH & Co. KG and CIECH Energy Deutschland GmbH (the “Subsidiaries”) sold 655.390 units of CO₂ emission allowances (EUA), originating from free allocation and units previously purchased from the market (“Sale of Allowances” and “EUA Units” respectively). The market value of EUA Units sold amounts to EUR 52 million (equivalent of PLN 238 million) as per current value of a CO₂ emission allowance unit, i.e. EUR 78,93/EUA (equivalent of PLN 363,30)

At the same time, the Subsidiaries concluded agreements securing the purchase of 655.390 units of CO₂ emission allowances on the forward market, with a settlement date in April 2022 and April 2023 (“Hedging”). The Hedging settlement dates fall before the deadline for the required redeeming of the units in the amounts corresponding to the CO₂ emissions for the years 2021 and 2022 respectively.

The Sale of Allowances and Hedging (jointly as the “Transaction”):

1. have an impact on the adequate increase in the level of cash in the Subsidiaries;
2. an impact on the reduction of the consolidated net debt of the CIECH Group by approx. PLN 238 million, calculated as at 31 December 2021;
3. have an insignificant impact on EBITDA, limited to the difference between the selling price of EUA Units and the repurchase price of the units of CO₂ emission allowances (EUA), which should not exceed approx. PLN 2 million; and
4. do not affect the change in the net exposure of the CIECH Group to market risk related to fluctuations in the price of CO₂ emission allowances.

The main purpose of the Transaction was to obtain funds that would improve liquidity in the short term and reduce the costs of financing in the CIECH Group. The funds obtained from the Transaction will be allocated, among others, to reduce the utilisation of short-term financing sources (overdraft facilities, factoring) with a higher cost of financing. 

The Company assumes that obtaining funds through the sale of the units of CO₂ emission allowances may be repeated in subsequent years – within the time limits, in quantities and values depending, among others, on the dates of allocation of such units as well as their quantity and market value.

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 Company’s representatives:

Dawid Jakubowicz – President of the Management Board

Jarosław Romanowski – Member of the Management Board

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