Ciech S.A.

Regulatory Filings • Mar 26, 2020

With reference to Current Report No. 40/2019 of 18September 2019, the Management Board of CIECH S.A. with its registeredoffice in Warsaw (the "Issuer") herewith informs thattoday, a subsidiary of the Issuer - CIECH Soda Romania S.A. based inRomania ("CSR") and the Romanian Branch of the Issuer (the "Branch")decided to implement, as of 1 April 2020, the Voluntary RedundancyProgramme (the "VRP") with regard to employees of CSR andthe Branch, and to launch, as of 27 March 2020, the group layoffprocedure with regard to employees of CSR.Inresponse to the proposal to join the VRP, 72% of the total CSR andBranch staff volunteered. A group layoff procedure will be implementedwith regard to 13% of CSR employees. The remaining staff of CSR and theBranch will continue with their employment, mainly in the production ofsilicates and maintenance of the soda production installations. Thetotal cost of the VRP and group layoffs, with regard to the employees ofCSR and the Branch, will amount to approximately RON 12.5 million and isincluded in the VRP provision created in the consolidated financialstatements of the CIECH Group for 2019. The publication of the financialstatements is scheduled for 31 March 2020. The implementation of the VRPand commencement of the group layoff procedure ends the period oftechnical unemployment (downtime) that has continued at CSR since thebeginning of 2020.The decision to implement the VRP and launch the grouplayoffs was made in connection with the ineffective negotiations on theprice of process steam (the "Steam"), conducted for manymonths with its sole supplier, i.e. CET Govora S.A. based in Romania inarrangement bankruptcy ("CET"). CET's previous Steam priceproposals have prevented CSR from conducting economically profitablebusiness operations. In the Issuer's opinion, there are no prospects forquick resumption of soda production. Accordingly, CSR and the RomanianBranch can no longer bear the cost of maintaining the entire staff ofthe plant in the soda production suspension mode, and were forced todecide to implement the VRP and launch the group layoffs.At the sametime, the CIECH Group is still analysing the possibility of developingan effective Steam source at a reasonable cost in the next few years toenable CSR to resume its soda production in the long term. However,possible scenarios of such action exclude any investment expensesaffecting the balance sheet of the CIECH Group. As part of this project,CIECH's intention is to establish cooperation with an external partnerresponsible for the construction and maintenance of a new steam source,as well as authorities, in order to obtain government assistance andlaunch support mechanisms provided by the European Union.

Legal basis: Article 17.1 of the Regulation of theEuropean Parliament and of the Council (EU) No. 596/2014 of 16 April2014 on Market Abuse (the Market Abuse Regulation) and repealingDirective 2003/6/EC of the European Parliament and of the Council andCommission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OfficialJournal of the European Union L No. 173, p. 1).