Ciech S.A.

Legal Proceedings Report • Jun 7, 2019

The Management Board of CIECH S.A. (the "Company"or "Issuer") informs that on 6 June 2019, the legalrepresentative of subsidiaries of the Issuer - CIECH Soda Polska S.A.,CIECH Cargo sp. z o.o., CIECH Pianki sp. z o.o. (hereinafter jointly the"Subsidiaries") - received the decisions of the Head of theKujawsko-Pomorskie Tax Office in Bydgoszcz (the "Office" or "Authority")of 23 May 2019, issued following tax proceedings conducted against theSubsidiaries in the scope of an audit of the corporate income tax for2015.

In the issued decisions, the Office questioned theright of each Subsidiary to settle a tax loss from participation in apartnership, which is an indirect subsidiary of the Issuer (the"Partnership").When taking action contested by the Office, theSubsidiaries used the services of professional advisers.

The Subsidiaries and their advisors disagree withthis approach, and therefore, each Subsidiary intends to take proceduralsteps to defend the tax consequences of its activities in 2015.

The decisions are neither final nor enforceable. Ifsuch disadvantageous decisions for the Subsidiaries are maintained inthe next stage of administrative proceedings, the Subsidiaries will beforced to pay income tax in the total amount of PLN 8.19 million andadditional late payment interest, which as at the date of publication ofthis report amount to PLN 2.09 million.

At the same time, the Issuer announces that potentialtax liabilities due to income tax resulting from the aforementioneddecisions and pending tax proceedings in other subsidiaries of theIssuer, with respect to the right to settle losses from participation ofthe Subsidiaries in the Partnership, amount to a total of approx. PLN19.6 million, and interest, if any, amounts to approx. PLN 4.7 million.The potential tax liabilities of Issuer's subsidiaries may increase ifnew tax audits are instituted, as part of which the right to settle atax loss by subsidiaries of the Issuer from participation in thePartnership in subsequent tax years would be disputed by the competentTax Office.

The Issuer informed about the pending tax audits andproceedings at the Issuer's subsidiaries in the scope of the audit ofcorporate income tax in the consolidated statements of the CIECH Group.

The Subsidiaries are analysing the received decisionsin terms of the appropriateness of creating a provision for income taxand interest.