Ciech S.A.

Regulatory Filings • Feb 28, 2020

Text of the Report:TheManagement Board of CIECH S.A. (hereinafter referred to as the: “Issuer”or “CIECH”) informs that on 28 February 2020, a letter ofintent was signed between CIECH Soda Polska S.A. with its registeredoffice in Inowrocław (hereinafter referred to as the “Subsidiary”)and REMONDIS Energy & Services Sp. z o.o. with its registered office inWarsaw (hereinafter referred to as “REMONDIS”, and togetherwith CIECH as the “Parties”), on their cooperation in theimplementation of the investment, consisting in the construction byREMONDIS of an incineration plant for municipal waste or waste ofmunicipal origin (hereinafter referred to as: “Letter of Intent”,“Investment” and “Incineration Plant”respectively). The electricity and heat generated in the process ofthermal waste transformation will be supplied by REMONDIS to theSubsidiary. The cooperation is aimed at reducing the heat price andincreasing the availability of the heat source at the Subsidiary'splant. The Issuer assumes that the collection of heat and electricityfrom the Incineration Plant will have a positive impact on theconsolidated financial results of the CIECH Group by reducing the priceof steam, i.e. a key raw material/ingredient in the production of sodaash. In addition, as a result of the cooperation between the Parties,the Subsidiary’s production plant would be able to reduce CO2 emissions.

The investment will be implemented and fully financedby REMONDIS. However, the Subsidiary will provide the necessaryorganisational, technical and formal assistance in implementing theInvestment.

The commencement of the Investment and cooperationbetween the Parties, depends on the fulfilment of certain conditions,including:

1. 1.entry of the Incineration Plant on thelist to be published by the Minister competent for the environment inthe form of a regulation (hereinafter referred to as the “List”);

2. 2.conclusion by the Parties of anagreement for the reception of electricity and heat, under which theParties will define the financial and any other conditions related tosupplies (hereinafter referred to as the “Agreement”).

Upon the execution of the Letter of Intent, theParties intend to negotiate the Agreement. In the event that theIncineration Plant is not entered on the said List by 31 December 2020,the Letter of Intent shall expire on that date.

The objective of the Parties is to commence thesupply of heat and electricity to the Subsidiary by 2026 at the latest.The parties assume that the Subsidiary will collect heat within a periodof approximately 25 years. As estimated by the Subsidiary, the minimumvalue of the Agreement over a 25-year period will be approximately PLN350,000,000.

The Issuer expects the cooperation consisting in theheat supply from the Incineration Plant to be analogous to solutionsalready functioning in the CIECH Group, where similar cooperation existsbetween CIECH Soda Deutschland and a heat supplier from the REMONDISGroup.

The cooperation between the Parties fits in well intothe CIECH Group Strategy adopted by the Issuer of 5 December 2018(Current Report No. 34/2018 of 5 December 2018) and operations of theGroup aimed at:

1. 1.reduction of the so-called CarbonFootprint (including, in particular, CO2 emissions);

2. 2.adaptation of the energy mix tochanging market conditions and trends in environmental protection, andthe assumed CO2 neutrality in Europe by 2050; and

3. 3.lowering the heat price and increasingthe availability of the heat source at the Subsidiary's plant inInowrocław.