Ciech S.A.

Legal Proceedings Report • Jan 24, 2019

Text of the report:

Withreference to Current Report No. 38/2018 of 27 December 2018, theManagement Board of CIECH S.A. (the "Company" or "Issuer") informs thattoday, based on its own assessment of the case, the advisor's opinionand the auditor's approach, it has completed the internal assessment ofrisks related to the decision of the Head of the Małopolskie ProvinceCustoms and Tax Office in Cracow (the "Office" or "Authority") dated 13December 2018, issued following tax proceedings conducted against theCompany with regard to the audit of corporate income tax for 2012.

As aresult of such assessment, following the precautionary principle, theManagement Board of the Issuer decided to create in the separatefinancial statements of CIECH S.A. a provision for income tax in theamount of PLN 43.7 million, and a provision for late payment interest,which as at the balance sheet date, i.e. 31 December 2018, amounted toPLN 23.5 million. The aforementioned provisions will also be recognisedin the consolidated financial statements of the CIECH Group for 2018.Thecreated provisions will have an impact on the financial results of theIssuer and its Group.

At thesame time, the Management Board would like to emphasise that the Companyand its advisors do not agree with the approach expressed in thedecision of the Authority. Accordingly, the Company has already takenprocedural steps in order to defend the tax consequences of itsoperations in 2012, and on 10 January 2019, filed an appeal against thedecision of the Authority.