Ciech S.A.

Legal Proceedings Report • May 23, 2019

Subject:Report as part of pending tax proceedings

The Management Board of CIECH S.A. (hereinafterreferred to as "CIECH" or the "Issuer")herewith informs that on 22 May 2019, the authorised representative ofVerbis ETA sp. z o.o. S.K.A. (hereinafter referred to as the "Subsidiary"),received a bookkeeping audit report in connection with the tax auditproceedings conducted against the Subsidiary by the Małopolskie ProvinceCustoms and Tax Office in Krakow (hereinafter referred to as the "Authority")in respect of its VAT settlements for the fourth quarter of 2013 (the "Proceedings").The Authority challenged the right to deduct VAT from a part of thenon-cash contribution (the "Non-Cash Contribution") made byCIECH to the reserve capital of the Subsidiary. In the opinion of theAuthority, the taxable amount of the Non-Cash Contribution is the amountequal to the nominal value of the Subsidiary's Shares acquired by CIECH,contrary to the tax interpretation issued to CIECH by the Director ofthe National Tax Information.

The Subsidiary and its advisers disagree with theposition of the Authority. If this position, unfavourable to theSubsidiary, is upheld in the course of Proceedings, and in the court andadministrative proceedings, if any, the consolidated result of the CIECHGroup will be affected by the following amounts: PLN 30,775,121.95(thirty million seven hundred and seventy-five thousand one hundred andtwenty-one 95/100 zlotys) due to VAT and interest which - as of today -amount to PLN 13,520,818.00 (thirteen million five hundred and twentythousand eight hundred and eighteen 00/100 zlotys). Due to the fact thatthe entire VAT amount was paid to the competent tax office, given thecurrent circumstances and facts - the consolidated cash flows of theCIECH Group could be affected by the payment of the aforementionedinterest.

CIECH provided information on the Proceedings in theconsolidated statements of the CIECH Group.