Ciech S.A.

Audit Report / Information • Sep 10, 2019

Subject:Information on creating a write-down

Text of the report:

With reference to Current Report No. 32/2019 of 9August 2019, CIECH S.A. (the "Company" or "Issuer")herewith informs that after receiving today confirmation of the appliedapproach from the auditor of the Company - PricewaterhouseCoopers Polskaspółka z ograniczoną odpowiedzialnością Audyt sp.k., the ManagementBoard of the Company has decided to create a write-down in the amount ofPLN 36,655,000 (the "Write-down"), in the consolidatedfinancial statements of the CIECH Group for the first half of 2019,related to impairment of assets of CIECH Soda Romania S.A. based inRomania (the "Subsidiary"). The reason for creating theWrite-down is the risk of cessation of supply of process steam by itssole supplier - S.C. CET Govora S.A. based in Romania in compositionbankruptcy ("CET"). The decision to create the Write-downwas taken after the analysis of the premises pointing to impairment offixed assets in accordance with the provisions of IAS 36 Impairment ofAssets (the "Analysis").

The analysis was based on the following feasibleaction scenarios:

1.1."Scenario 1" - based on the assumptionof agreement that could be reached between the Subsidiary and CET withregard to the level of the price of steam - in the opinion of theManagement Board of the Company, the probability of implementation ofScenario 1 is equal to 50%.

2.2."Scenario 2" - based on the assumptionthat no agreement will be reached between the Subsidiary and CET withregard to the level of the price of steam, and as a result, on theassumption that the Subsidiary will suspend its production - in theopinion of the Management Board of the Company, the probability ofimplementation of Scenario 2 is equal to 50%.

The implementation of Scenario1 will result in the release of the Write-down. The implementation ofScenario 2 will result in a corresponding increase in the amount of theWrite-down by PLN 36,655,000, and if applicable, by the amountsfollowing the update of the assumptions and calculations adopted for theAnalysis.

The Write-down will have no impact on theconsolidated adj. EBITDA of the CIECH Group (calculated as EBITDAadjusted for extraordinary one-off events), consolidated financial flowsand the separate financial statements of the Company. The value of theWrite-down will affect the consolidated operating result, consolidatedEBITDA and consolidated net result of the CIECH Group for the first halfof 2019. The Write-down will be presented in the Extended ConsolidatedReport of the CIECH Group for 1H 2019 to be published on 10 September2019.