extended consolidated quarterly report of the ciech … · 2015-07-31 · extended consolidated...

EXTENDED CONSOLIDATED

QUARTERLY REPORT

OF THE CIECH CHEMICAL GROUP

FOR THE THREE QUARTERS OF 2013

We are providing a courtesy English translation of our financial statements which were originally written in

Polish. We take no responsibility for the accuracy of our translation. For an accurate reading of our

financial statements, please refer to the Polish language version of our Extended Consolidated Quarterly

Report for the three quarters of 2013 attached hereto.

Extended consolidated quarterly report of the Ciech Group for the three quarters of 2013

2

CONTENTS

I. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF THE CIECH GROUP .................................................... 4 1. Condensed Consolidated Statement of Profit or Loss of the Ciech Group ...................................................... 4 2. Condensed Consolidated Statement of Other Comprehensive Income of the Ciech Group ........................... 6 3. Condensed Consolidated Statement of Financial Position of the Ciech Group ............................................... 8 4. Condendsed Consolidated Statement of Cash Flows of the Ciech Group ...................................................... 9 5. Condensed Consolidated Statement of Changes in Equity of the Ciech Group ............................................ 11

II. MANAGEMENT REPORT ........................................................................................................................................... 14 1. The most important events in the Ciech Group in the three quarters of 2013 ............................................... 14 2. A description of achievements of the Ciech Group in the period between 1 January and

30 September 2013 and description of factors and events that have a significant impact on th financial result ...................................................................................................................................... 16 2.1 Basic financial data ............................................................................................................................ 16 2.2 Sales revenues .................................................................................................................................. 17 2.3 Profit/(Loss) on sales nad Operating Profit/(Loss) .............................................................................. 18 2.4 Financing activities and net result ...................................................................................................... 19 2.5 Assets ................................................................................................................................................ 19 2.6 Liabilities ............................................................................................................................................ 19 2.7 Cash flows .......................................................................................................................................... 20 2.8 Information about the Ciech Group’s financial standing ..................................................................... 20

3. Seasonality and cyclicality of the operations of CIECH S.A. and the Ciech Group ....................................... 25 4. Fulfilment of profit forecasts previously published for a given year in light of the results

disclosed in the quarterly report against the forecast results ......................................................................... 25 5. Factors that influence the Ciech Group's results, with particular focus on the next quarter .......................... 26

5.1 External factors ................................................................................................................................... 26 5.2 Internal factors .................................................................................................................................... 27

6. Significant changes in risk factors ................................................................................................................. 27 7. Changes in the number of shares of CIECH S.A. held by the Members of the

Management Board and Supervisory Board ................................................................................................. 28 8. CIECH S.A.'s shareholders holding at least 5% of shares/votes at the General Meeting

of Shareholders ............................................................................................................................................. 28 9. Information on the issue, redemption and repayment of debt securities and equity securities

in the Ciech Group ........................................................................................................................................ 29 10. Information on dividends paid (or declared), in total and per share, broken down into

ordinary shares and preference shares ......................................................................................................... 29 11. Organisation description and identification of the effects of changes in the structure

of the Ciech Group’s business entities .......................................................................................................... 29 12. Procedures pending before courts, in arbitration proceedings or public administration bodies ..................... 29 13. Information on non-standard and non-routine transaction or transactions with related entities

concluded by CIECH S.A. or its subsidiaries ................................................................................................. 29 14. Information on loan and borrowing sureties or guarantees granted by CIECH S.A. or its subsidiaries ......... 29

III. INFORMATION ON THE PRESENTATION PRINCIPLES FOR THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF THE CIECH GROUP FOR THE THREE QUARTERS OF 2013..................................................................... 30 1. Basis for preparation of the Condensed Interim Consolidated Financial Statements

of the Ciech Group ........................................................................................................................................ 30 2. Adopted accounting principles ...................................................................................................................... 30 3. Functional and presentation currency and conversion principles .................................................................. 31

IV. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF THE CIECH GROUP ............................ 32 1. Consolidated entities ..................................................................................................................................... 32 2. Effects of changes to the organisational structure of the Ciech Group’s business units

in the three quarters of 2013, including legal mergers, acquisitions or disposals of the group's entities, long-term investments, demergers, restructuring and discontinued operations ............................... 37

3. Financial data by operating segments ........................................................................................................... 40 4. Balance-sheet exposure to currency risk ...................................................................................................... 47 5. Information about fair value of financial instruments ..................................................................................... 47 6. Information on non-standard and non-routine transaction or transactions with related entities

concluded by CIECH S.A. or its subsidiaries ................................................................................................. 47 7. Information on loan and borrowing sureties or guarantees granted by CIECH S.A. or its subsidiaries ......... 48 8. Provisions and impairmanet allowances on assets ....................................................................................... 49 9. Notes to the Condensed Consolidated Statement of Other Comprehensive Income of the Ciech Group ..... 51 10. Information on purchase and disposal of property, plant and equipment and commitments

for the acquisition of property, plant and equipment ...................................................................................... 52 11. Information on changes in contingent liabilities or contingent assets and other matters ............................... 53

11.1 Significant disputed liabilities of the Ciech Group, except for disputes described in point IV.11.3 ...... 53 11.2 Significant disputed receivables of the Ciech Group .......................................................................... 54 11.3 Other significant cases with the Group companies’ participation ........................................................ 54 11.4 Contingent assets and other contingent liabilities including guarantees and securities ...................... 56 11.5 Letters of support ................................................................................................................................ 57


3

11.6 Other issues with CIECH S.A.’s participation ..................................................................................... 57 12. Discontinued operations and non-current assets held for sale ...................................................................... 57 13. Information on loan agreements, including information about overdue debts or other

violations of debt – related agreements......................................................................................................... 60 14. Information on non – consolidated subsidiaries and associates .................................................................... 60 15. Reconciliation of data presented in the previously published report with the data presented

in the current report. ...................................................................................................................................... 61 16. Information on events after the balance sheet date ...................................................................................... 63

V. CONDENSED INTERIM SEPARATE FINANCIAL STATEMENTS OF CIECH S.A. ................................................................. 65 1. Condensed Separate Statement of Profit or Loss of CIECH S.A. ................................................................. 65 2. Condensed Separate Statement of Other Comprehensive Income of CIECH S.A. ....................................... 67 3. Condensed Separate Statement of Financial Position of CIECH S.A. .......................................................... 68 4. Condensed Separate Statement of Cash Flows of CIECH S.A. .................................................................... 69 5. Condensed Separate Statement of Changes in Equity of CIECH S.A. ......................................................... 70 6. Notes to the condensed interim separate financial statements of CIECH S.A. ............................................. 71

6.1. Basis for preparation and accounting principles (policy) ..................................................................... 71 6.2. Earnings per share ............................................................................................................................. 71 6.3. Seasonality and cyclicality of the operations ...................................................................................... 71 6.4. Changes in accounting estimates ....................................................................................................... 71 6.5. Information on the issue, redemption and repayment of debt securities and equity securities ........... 72 6.6. Information on dividends paid ............................................................................................................. 72 6.7. Financial data by operating segments ................................................................................................ 73 6.8. Information on material events that occurred after 30 September 2013 and have

not been reflected in the presented interim report .............................................................................. 77 6.9. Information on changes in shareholding structure .............................................................................. 77 6.10. Information on changes in contingent liabilities or contingent assets and other matters .................... 77

6.10.1 Significant disputed liabilities of CIECH S.A., except for disputes described in point 6.10.3. ...................................................................................................................... 77

6.10.2 Significant disputed receivables of CIECH S.A. ................................................................... 77 6.10.3 Other significant cases with CIECH S.A.’s participation ....................................................... 78 6.10.4 Contingent assets and other contingent liabilities including guarantees and sureties .......... 78 6.10.5 Letters of support ................................................................................................................. 79 6.10.6 Other issues with CIECH S.A.’s participation ....................................................................... 79

6.11. Provisions and impairment allowances on assets .............................................................................. 80 6.12. Notes to the Condensed Interim Separate Statament of Other Comprehensive

Income of CIECH S.A......................................................................................................................... 82 6.13. Information on purchase and disposal of property, plan and equipment

and commitments for the acquisition of property, plant and equipment ............................................. 83 6.14. CIECH S.A.’ shareholders holding at least 5.0% of shares/votes

at the General Meeting of Shareholders ............................................................................................ 83 6.15. Changes in the numer of shares of CIECH S.A. held by the Members

of the Management Board and Supervisory Board ............................................................................ 83 6.16. Corrections of prior period errors ........................................................................................................ 83 6.17. Discontinued operations and non- current assets held for sale .......................................................... 83 6.18. Information about overdue debts or other violations of debt-related agreements ............................... 85 6.19. Transactions with related parties ........................................................................................................ 85 6.20. Information on the impact of transferring to CIECH S.A. the separated parts of assets

of SODA MĄTWY S.A. and JANIKOSODA S.A on the CIECH S.A.’s standalone result .................... 85 6.21. Information on events after the balance sheet date ............................................................................ 86

VI. STATEMENT OF THE MANAGEMENT BOARD. ............................................................................................................... 87


4

I. Condensed Interim Consolidated Financial Statements of the Ciech Group

1. Condensed Consolidated Statement of Profit or Loss of the Ciech Group

01.01-30.09.2013 01.01-30.09.2012

PLN ‘000

Continuing operations

Discontinued operations

TOTAL Continuing operations

Discontinued operations*

TOTAL*

Sales revenues 2,453,324 252,576 2,705,900 2, 586,194 771,392 3,357,586

Cost of sales (2,013,993) (217,856) (2,231,849) (2,186,386) (704,153) (2,890,539)

Gross profit/(loss) on sales 439,331 34,720 474,051 399,808 67,239 467,047

Other operating income 40,328 253,421 293,749 42,054 22,177 64,231

Selling costs (147,676) (9,601) (157,277) (166,275) (40,281) (206,556)

General and administrative expenses (112,527) (22,772) (135,299) (109,373) (33,970) (143,343)

Other operating expenses (64,050) (235,387) (299,437) (115,311) (276,590) (391,901)

Operating profit/(loss) 155,406 20,381 175,787 50,903 (261,425) (210,522)

Financial income 21,419 698 22,117 6,765 2,413 9,178

Financial expenses (128,885) (8,942) (137,827) (148 931) (11,030) (159,961)

Net financial income/expenses (107,466) (8,244) (115,710) (142,166) (8,617) (150,783)

Share of profit of equity-accounted investees 253 - 253 684 ( 49) 635

Profit/(loss) before tax 48,193 12,137 60,330 (90,579) (270,091) (360,670)

Income tax 48,115 (47,357) 758 39 (9, 271) (9, 232)

Net profit/(loss) 96,308 (35,220) 61,088 (90,540) (279,362) (369,902)

including:

Net profit/(loss) attributable to shareholders of the parent company 102,810 (34,657) 68,153 (88,194) (272,509) (360,703)

Net profit/(loss) attributed to non-controlling interest (6,502) ( 563) (7, 065) (2,346) (6,853) (9,199)

Earnings per share (in PLN):

Basic 1.95 (0.66) 1.29 (1.67) (5.17) (6.84)

Diluted 1.95 (0.66) 1.29 (1.67) (5.17) (6.84)

* Restated

The condensed consolidated statement of profit or loss of the Ciech Group should be analysed together with the notes which constitute an integral part of the condensed interim consolidated financial statements.


5

Condensed Consolidated Statement of Profit or Loss of the Ciech Group

01.07-30.09.2013 01.07-30.09.2012

PLN ‘000




Discontinued operations*

TOTAL*

Sales revenues 786,305 37,068 823,373 825,011 240,025 1, 065,036

Cost of sales (642,142) (31,014) (673,156) (704,186) (227,922) (932,108)


Other operating income 15,792 5,888 21,680 9,632 4,306 13,938

Selling costs (49,208) (1,281) (50,489) (53,096) (9,989) (63,085)

General and administrative expenses (36,572) (5,278) (41,850) (31,788) (10,175) (41,963)

Other operating expenses (12,550) (11,936) (24,486) (13,361) (7,565) (20,926)

Operating profit/(loss) 61,625 (6,553) 55,072 32,212 (11,320) 20,892

Financial income (6,503) 70 (6,433) 2,712 791 3,503

Financial expenses (42,625) 1,822 (40,803) (41,568) (7,610) (49,178)

Net financial income/expenses (49,128) 1,892 (47,236) (38,856) (6,819) (45,675)

Share of profit of equity-accounted investees 68 - 68 278 (82) 196

Profit/(loss) before tax 12,565 (4,661) 7,904 (6,366) (18,221) (24,587)

Income tax (1,797) (1,181) (2,978) (8,909) 8,744 (165)

Net profit/(loss) 10,768 (5,842) 4,926 (15,275) (9,477) (24,752)

including:

Net profit/(loss) attributable to shareholders of the parent company 12,081 (5,797) 6,284 (14,222) (9,103) (23,325)

Net profit/(loss) attributed to non-controlling interest (1,313) (45) (1,358) (1,053) (374) (1,427)


Basic 0.23 (0.11) 0.12 (0.27) (0.17) (0.44)

Diluted 0.23 (0.11) 0.12 (0.27) (0.17) (0.44)

* Restated

The condensed consolidated statement of profit or loss of the Ciech Group should be analysed together with the notes which constitute an integral part of the condensed interim consolidated financial statements.


6

2. Condensed Consolidated Statement of Other Comprehensive Income of the Ciech Group

PLN ‘000

01.01.-30.09.2013 01.01.-30.09.2012





TOTAL

Net profit/(loss) for the period 96,308 (35,220) 61,088 (90,540) (279,362) (369,902)

Other comprehensive income before tax that may be reclassified to profit or loss

Currency translation differences (foreign companies) 2,423 - 2,423 (15,121) - (15,121)

Cash flow hedge (24,924) - (24,924) 4,851 - 4,851

Other 2 - 2 (5) - (5)

Other comprehensive income before tax that may not be reclassified to profit or loss - - - - - -

Income tax attributable to other comprehensive income 5,327 - 5,327 (922) - (922)

Income tax attributable to other comprehensive income that may be reclassified to profit

or loss 5,327 - 5,327 (922) - (922)

Income tax attributable to other comprehensive income that may not be reclassified to

profit or loss - - - - - -

Other comprehensive income net of tax (17,172) - (17,172) (11,197) - (11,197)

TOTAL COMPREHENSIVE INCOME 79,136 (35,220) 43,916 (101,737) (279,362) (381,099)

Comprehensive income including attributable to: 79,136 (35,220) 43,916 (101,737) (279,362) (381,099)

Shareholders of the parent company 85,777 (34,657) 51,120 (102,485) (272,509) (374,994)

Non-controlling interest (6,641) (563) (7,204) 748 (6,853) (6,105)

Detailed information on the components of other comprehensive income has been presented in point IV.9 of this Report. The condensed consolidated statement of other comprehensive income of the Ciech Group should be analysed together with the notes which constitute an integral part of the condensed interim consolidated financial statements.


7

Condensed Consolidated Statement of Other Comprehensive Income of the Ciech Group

PLN ‘000

01.07.-30.09.2013 01.07.-30.09.2012





TOTAL

Net profit/(loss) for the period 10,768 (5,842) 4,926 (15,275) (9,477) (24,752)

Other comprehensive income before tax that may be reclassified to profit or loss

Currency translation differences (foreign companies) (4,069) - (4,069) (8,050) - (8,050)

Cash flow hedge 24,370 - 24,370 6,990 - 6,990

Other (3) - (3) (1) - (1)

Other comprehensive income before tax that may not be reclassified to profit or loss - - - - - -

Income tax attributable to other comprehensive income (5,470) - (5,470) (1,328) - (1,328)

Income tax attributable to other comprehensive income that may be reclassified to profit

or loss (5,470) - (5,470) (1,328) - (1,328)

Income tax attributable to other comprehensive income that may not be reclassified to

profit or loss - - - - - -

Other comprehensive income net of tax 14,828 - 14,828 (2,389) - (2 389)


Comprehensive income including attributable to: 25,596 (5,842) 19,754 (17,664) (9,477) (27,141)

Shareholders of the parent company 26,204 (5,797) 20,407 (17,767) (9,103) (26,870)

Non-controlling interest (608) (45) (653) 103 (374) (271)

Detailed information on the components of other comprehensive income has been presented in point IV.9 of this Report. The condensed consolidated statement of other comprehensive income of the Ciech Group should be analysed together with the notes which constitute an integral part of the condensed interim consolidated financial statements.


8

3. Condensed Consolidated Statement of Financial Position of the Ciech Group

PLN ‘000 30.09.2013 31.12.2012 30.09.2012

ASSETS

Non-current assets Property, plant and equipment

1,921,587 2,099,395 2,049,116

Right of perpetual usufruct 56,617 57,134 58,067

Intangible assets, including: 132,613 129,167 150,546

- goodwill 61,876 60,455 60,739

Investment property 107,480 113,018 95,026

Non-current receivables 90,381 65,534 67,943

Investments in associates and jointly-controlled entities measured under the equity method

4,743 4,971 4,879

Other long-term investments 34,999 44,661 32,922

Deferred income tax assets 52,926 31,884 23,012

Total non-current assets 2,401,346 2,545,764 2,481,511

Current assets

Inventory 219,676 279,126 302,892

Short-term investments 1,129 946 954

Income tax receivables 7,458 4,086 3,896

Trade and other receivables 587,509 705,136 770,548

Cash and cash equivalents 334,837 81,177 160,555

Non-current assets held for sale 2,217 111,800 942

Total current assets 1,152,826 1,182,271 1,239,787

Total assets 3,554,172 3,728,035 3,721,298

EQUITY AND LIABILITIES

Share capital 287,614 287,614 287,614

Share premium 470,844 507,835 507,835

Cash flow hedge (17,448) 2,722 (4,182)

Other reserve capitals 78,521 78,521 78,521

Currency translation reserve (58,889) (62,022) (69,615)

Retained earnings 176,490 71,330 141,697

Equity attributable to shareholders of the parent 937,132 886,000 941,870

Non-controlling interest (12,137) (5,812) (8,179)

Total equity 924,995 880,188 933,691

Loans, borrowings and other debt instruments 1,318,194 1,291,660 140 892

Finance sale-and-lease-back liabilities 178,826 204,231 214,656

Finance lease liabilities 5,758 3,235 4,070

Other non-current liabilities 128,447 122,213 118,726

Employee benefits 19,428 20,560 59,670

Provisions (other long-term) 41,573 40,422 65,063

Deferred income tax liability 97,154 104,170 116,963

Total non-current liabilities 1,789,380 1,786,491 720,040

Overdraft facility - - 13,872

Loans, borrowings and other debt instruments 39,193 6,543 1,048,694

Finance sale-and-lease-back liabilities 52,908 48,740 48,197

Finance lease liabilities 3,409 7,855 10,543

Trade and other liabilities 594,922 768,404 873,176

Income tax liabilities 32,384 23,749 26,667

Provisions (short-term provisions for employee benefits and other provisions)

116,981 172,474 46,418

Liabilities related to non-current assets classified as held for sale - 33,591 -

Total current liabilities 839,797 1,061,356 2,067,567

Total liabilities 2,629,177 2,847,847 2,787 607

Total equity and liabilities 3,554,172 3,728,035 3,721,298

The condensed consolidated statement of financial position of the Ciech Group should be analysed together with the notes which constitute an integral part of the condensed interim consolidated financial statements.


9

4. Condendsed Consolidated Statement of Cash Flows of the Ciech Group

PLN ‘000 01.01-30.09.2013 01.01-30.09.2012

Cash flows from operating activities

Net profit/(loss) for the period 61,088 (369,902)

Adjustments

Amortisation/depreciation 158,549 179,402

Recognition / (reversal) of impairment allowances 159,846 276,087

Foreign exchange (gain) / loss (12,897) 9,581

Investment property revaluation (1,878) (1,320)

(Profit) / loss on investment activities (5,316) (5,627)

(Profit) / loss on disposal of property, plant and equipment (45,207) 6,310

Dividends and interest 123,657 100,257

Income tax (758) 9,231

(Profit) / loss on the settlement of construction contracts (voids) (2,707) (12,064)

Share of (profit) / loss on equity accounted investees (253) (635)

Other adjustments (2,771) (739)

Cash from operating activities before changes in working capital and provisions

431,353 190,581

Change in receivables 87,661 38,395

Change in inventory 71,455 57,480

Change in current liabilities (158,446) (88,617)

Change in provisions (56,218) 31,358

Net cash generated from operating activities 375,805 229,197

Interest paid (67,329) (75,591)

Inflows from construction contracts (voids) (2,019) 11,339

Change in liabilities from loan arrangement commission (4,890) 1,598

Income tax (paid) / received (15,753) 2,280

Change in cash and cash equivalents-merger 1,469 -

Net cash from operating activities 287,283 168,841

Cash flows from investment activities

Inflows 146,332 18,528

Disposal of a subsidiary 57,311 781

Disposal of intangible assets and property, plant and equipment 59,889 6,525

Disposal of financial assets 12,660 2,943

Disposal of investment property 5,399 -

Dividends received 683 921

Interest received 1,891 1,579

Repayment of borrowings - 500

Hedging deposits 8,499 -

Other inflows - 5,279

Outflows (168,661) (231,043)

Acquisition of a subsidiary (net of cash acquired) (38,749) (1,017)

Acquisition of intangible assets and property, plant and equipment (127,472) (227,128)

Research and development expenditures (1,398) (723)

Acquisition of investment property (375) -

Other outflows ( 667) (2,175)

Net cash from investment activities (22,329) (212,515)

Cash flows from financial activities

Inflows 64,297 159,935

Proceeds from loans and borrowings 40,037 79,994

"Silent partners" contribution - 50,338

Subsidies received 24,260 29,466

Other inflows - 137

Outflows (88,969) (118,837)

Repayment of loans and borrowings (40,678) (74,485)

Payments of finance lease liabilities (48,291) (44,243)

Dividends and other distributions to shareholders - (39)

Other outflows - (70)


10

PLN ‘000 01.01-30.09.2013 01.01-30.09.2012

Net cash from financial activities (24,672) 41,098

Total net cash flows 240,282 (2,576)

Cash and cash equivalents as at the beginning of the period 90,918 149,044

Impact of foreign exchange differences 3,637 215

Cash and cash equivalents as at the end of the period 334,837 146,683

The condensed consolidated statement of cash flows of the Ciech Group should be analysed together with the notes which constitute an integral part of the condensed interim consolidated financial statements.


11

5. Condensed Consolidated Statement of Changes in Equity of the Ciech Group

The condensed consolidated statement of changes in eguity of the Ciech Group should be analysed together with the notes which constitute an integral part of the condensed interim consolidated financial statements.

PLN ‘000 Share capital Share premium Cash flow

hedge Other reserve

capitals Currency translation

reserve Retained earnings

Equity attributable to

shareholders of the parent

Non-controlling interest

Total equity

Equity as at 01/01/2013

287,614 507,835 2,722 78,521 (62,022) 71,330 886,000 (5,812) 880,188

Change in the Group's structure

- - - - - 12 12 879 891

Share premium decrease - (36,991) - - - 36,991 - - -

Total comprehensive income for the period

- - (20,170) - 3,133 68,157 51,120 (7,204) 43,916

Net profit/(loss) - - - - - 68,153 68,153 (7,065) 61,088

Other comprehensive income - - (20,170) - 3,133 4 (17,033) (139) (17,172)


287,614 470,844 (17,448) 78,521 (58,889) 176,490 937,132 (12,137) 924,995


12

Condensed Consolidated Statement of Changes in Equity of the Ciech Group


PLN ‘000 Share capital

Share premium

Cash flow hedge Other reserve






Total equity


287,614 508,122 (8,111) 78,521 (51,400) 502,405 1,317,151 (2,020) 1,315,131

Share premium decrease - (287) - - - - (287) - (287)

Dividend - - - - - - - (54) (54)

Change in the Group's structure

- - - - - (491) (491) 491 -


- - 10,833 - (10,622) (430,584) (430,373) (4,229) (434,602)

Net profit/(loss) - - - - - (430,584) (430,584) (7,127) (437,711)

Other comprehensive income - - 10,833 - (10,622) - 211 2,898 3,109


287,614 507,835 2,722 78,521 (62,022) 71,330 886,000 (5,812) 880,188


13

Condensed Consolidated Statement of Changes in Equity of the Ciech Group


PLN ‘000 Share capital

Share premium

Cash flow hedge Other reserve






Total equity


287,614 508,122 (8,111) 78,521 (51,400) 502,405 1,317,151 (2,020) 1,315,131

Share premium decrease - (287) - - - - (287) - (287)

Dividend - - - - - - - (54) (54)


- - 3,929 - (18,215) (360,708) (374,994) (6,105) (381,099)

Net profit/(loss) - - - - - (360,703) (360,703) (9,199) (369,902)

Other comprehensive income - - 3,929 - (18,215) (5) (14,291) 3,094 (11,197)


287,614 507,835 (4,182) 78,521 (69,615) 141,697 941,870 (8,179) 933,691


14

II. Management Report

1. The most important events in the Ciech Group in the three quarters of 2013

Soda Segment:

On 21 January 2013, the District Court, XIII Commercial Department registered the reduction in the share capital of JANIKOSODA S.A. On 25 January 2013, the reduction in the share capital of SODA MĄTWY S.A. was registered and that was the date, on which the spin-off by separation of JANIKOSODA S.A. and SODA MĄTWY S.A. was registered in the National Court Register and, consequently, the date of the separation of soda divisions and their incorporation into CIECH S.A. The spin-off by separation was executed under Article 529 § 1 item 4) of the Commercial Companies Code by transferring part of assets of the divided companies, i.e. SODA MĄTWY S.A. and JANIKOSODA S.A. to CIECH S.A. as the acquiring company. At the same date, the court registered the increase in the share capital of CIECH S.A. by two registered shares granted to minority shareholders of JANIKOSODA S.A. and SODA MĄTWY S.A. for 1 share of JANIKOSODA S.A. and 1 share of SODA MĄTWY S.A. that were redeemed as a result of the registration of spin-off by separation.

On 22 May 2013, Soda Polska CIECH S.A. and Kompania Węglowa S.A. concluded an annex to a three-year agreement dated 17 January 2011 that regulates the supplies and prices of steam coal (current report no. 3/2011 of 18 January 2011). In the annex, the Parties extended the term of the agreement to 31 December 2015 and defined new rules for the establishment of prices in individual years. The net value of the annex in the years 2014-2015 is estimated at PLN 435 million net. The other provisions of the agreement remained unchanged.

Organic Segment:

On 7 January 2013, CIECH S.A. obtained information that Air Products LLC and Air Products Chemical Europe B.V. (jointly: “Air Products”) had initiated arbitration proceedings against Infrastruktura Kapuściska S.A. (formerly ZCh ZACHEM S.A.), a subsidiary of CIECH S.A., before the International Chamber of Commerce in Paris. The statement of claim seeks payment of USD 98 609 thousand and additional compensation in an amount not defined in the statement of claim. Air Products based their claim on Infrastruktura Kapuściska S.A.’s allegedly unjustified and unlawful termination of an amine supply contract. CIECH S.A. considers the claim to be unfounded. In CIECH S.A.’s opinion, Air Products is not entitled to pursue a claim for payment against Infrastruktura Kapuściska S.A., because Infrastruktura Kapuściska S.A. effectively served a notice of termination of the amine supply contract and the contract was terminated in accordance with the terms thereof. The reason for its termination was the cessation of supplies of amine from the factory in Pasadena, actual transfer of supply obligations to Bayer (that was, Infrastruktura Kapusciska S.A.’s major competitor on TDI market at that time) and Air Products’ failure to assure Infrastruktura Kapuściska S.A. about the possibility of subsequent performance of amine supplies in accordance with the contract.

On 25 January 2013, the petition of Air Products LLC in the case brought against CIECH S.A. before the Federal Regional Court for Eastern Region of Pennsylvania in the United States of America was delivered to CIECH S.A. via the Regional Court for Warsaw Śródmieście in Warsaw. The petition was amended by Air Products LLC in the course of the proceedings twice. Claims of the amended petition include, in particular:

the acknowledgement of CIECH S.A.’s responsibility to Air Products LLC by virtue of events formulated in the amended petition,

award, on behalf of Air Products LLC, of damages for the losses proven in the course of the proceedings in the amount exceeding USD 75 thousand,

award, on behalf of Air Products LLC, of punitive damages by virtue of the intentional and otherwise criminal conduct of CIECH S.A.

According to the copy of the amended petition, Air Products LLC brings three claims: First, Air Products LLC alleges that CIECH S.A. made fraudulent representations to persuade Air

Products LLC to make price reductions under the amine delivery contracts executed between Air Products LLC and Air Products Chemicals Europe B.V. with a subsidiary of CIECH S.A., i.e. Infrastruktura Kapuściska S.A.,

Second, Air Products LLC alleges illegitimate interference by CIECH S.A. in the contractual relations between Air Products LLC and Infrastruktura Kapuściska S.A.

Third, Air Products LLC alleges that CIECH S.A. was unjustly enriched by its alleged actions. Air Products LLC claims that, because of CIECH S.A.’s alleged actions, it has borne a loss of USD 16 million due to price reductions and a loss of at least USD 98 million due to lost profits.

CIECH S.A. believes that the claims of Air Products LLC are without merit. On 22 April 2013, CIECH S.A. submitted a motion to dismiss Air Products LLC’s amended petition. CIECH S.A. raised three reasons for dismissal:

First, the amended petition fails to state a legally valid claim upon which Air Products LLC could claim legal protection.

Second, the petition should be dismissed because public and private considerations warrant adjudication of the dispute in Poland rather than before the Federal Regional Court for Eastern Region of Pennsylvania.

Third, Air Products Chemicals Europe B.V., which is not a party to the lawsuit, is an indispensable party whose presence in the lawsuit is required, and that the case must be dismissed because its presence would destroy the federal court’s diversity jurisdiction.


15

On 28 February 2013, all conditions precedent of the Agreement for Sale and Transfer of TDI Assets were fulfilled. Therefore, on 11 March 2013, the parties conducted the activity of closing the transaction as agreed pursuant to the agreement by concluding a closure protocol – confirming an assignment of rights constituting an object of the agreement to BASF Polska Sp. z o.o. as of 11 March 2013. Furthermore, on 11 March 2013, price provided for pursuant to the agreement was paid to the benefit of CIECH S.A. and Infrastruktura Kapuściska S.A.

On 15 March 2013, Infrastruktura Kapuściska S.A. sent to the International Chamber of Commerce in Paris a reply to the lawsuit of Air Products along with a statement of counter-claim of Infrastruktura Kapuściska S.A. against Air Products. In reply to the lawsuit and in the statement of counter-claim Infrastruktura Kapuściska S.A. challenged the statements of Air Products concerning alleged breach of the amine supply contract by Infrastruktura Kapuściska S.A. and reported own claims towards Air Products.

On 3 July 2013, Infrastruktura Kapuściska S.A. supplemented the counter-claim by indicating the value of the compensation claims. Consequently, Infrastruktura Kapuściska S.A. claims a payment of at least PLN 161,647 thousand from Air Products as a compensation for damages incurred due to the breach of the agreement for amine supplies by Air Products. The final amount of Infrastruktura Kapuściska S.A.’s compensation claims is to be determined in the course of arbitration proceedings.

On 14 August 2013, the subsidiary of CIECH S.A., ZCh ZACHEM S.A., changed its company name to Infrastruktura Kapuściska S.A. On that day the change was registered in the National Court Register.

Agrochemical Segment

On 31 January 2013, CIECH S.A. and Alwernia Invest Sp. z o.o. entered into a preliminary agreement for the sale of 2,277,431 shares representing 99.62% of the share capital of CIECH S.A.’s subsidiary, Alwernia S.A. The preliminary share sale agreement was conditional and depended, among others, on consent of the Office of Competition and Consumer Protection and repayment of borrowings granted by CIECH S.A. to Alwernia S.A. accounting for approximately PLN 14.2 million. The conditional agreement for the sale of Alwernia S.A.’s shares was performed on 25 July 2013 and thereby 2,277,431 Alwernia S.A.’s shares were transferred to Alwernia Invest Sp. z o.o. The total purchase price amounts to USD 13,435 thousand and is to be paid in installments, i.e.: down payment of USD 300 thousand was paid within one month from the date of signing the Preliminary

Agreement, the first part of USD 6,717.5 thousand was paid at the Closing Date (i.e. on 25 July 2013) the remaining part of USD 6,717.5 thousand paid in 7 annual instalments, payable no later than on the last

business day of the calendar year, beginning on 31 December 2013, the payment will be made on the dates and in the amounts stipulated in the payment schedule laying down the rules for calculating each instalment and its amount.

Corporate Functions:

On 13 February 2013, in the District Court in Gdańsk, IX Commercial Department, CIECH S.A.’s claim against GZNF “FOSFORY” Sp. z o.o. was filed. CIECH S.A. claims payment of PLN 18,864 thousand as a compensation for making an alleged untrue declaration by GZNF “FOSFORY” Sp. z o.o. to CIECH S.A. The legal basis of the claim asserted by CIECH S.A. are the provisions of Article 416 of the Civil Code. The aforementioned representations made by GZNF “FOSFORY” Sp. z o.o. towards CIECH S.A. were the basis of warranties made by CIECH S.A. towards Zakłady Azotowe Puławy S.A.

On 26 February 2013, a subsidiary of CIECH S.A., Cheman S.A. changed its company name to Ciech Trading S.A.

On 22 May 2013, the the following members of the Management Board of CIECH S.A. were approved for the next term of office: Dariusz Krawczyk - President of the Management Board, Andrzej Kopeć - Member of the Management Board, Artur Osuchowski - Member of the Management Board.

On 4 June 2013, the Supervisory Board of CIECH S.A. selected KPMG Audyt Spółka z ograniczoną odpowiedzialnością sp. k. with its registered office in Warsaw as auditor to carry out the half-year review and to audit the annual separate financial statements of CIECH S.A. and the consolidated financial statements of the Ciech Group for 2013, 2014 and 2015.

On 9 August 2013, a new PLN 100,000 thousand super senior revolving credit facility agreement was concluded by and between CIECH S.A. as borrower, JANIKOSODA S.A., VITROSILICON S.A., SODA MĄTWY S.A., Soda Polska Ciech S.A., Transclean sp. z o.o., Z. Ch. “Organika-Sarzyna” S.A., CIECH Trading S.A., Ciech Pianki sp. z o.o., Soda Deutschland Ciech GmbH, Sodawerk Staßfurt Verwaltungs-GmbH, Sodawerk Holding Staßfurt GmbH, Sodawerk Staßfurt GmbH & Co. KG, Ciech Group Financing AB (publ) as the guarantors, and Bank Zachodni WBK S.A. (the Facility Agent), Bank Polska Kasa Opieki S.A. and Bank Powszechna Kasa Oszczędności Bank Polski S.A. At the same time CIECH S.A. gave cancellation notice for the existing PLN 100,000 thousand super senior revolving credit facility agreement of 6 November 2012 concluded by and between, among others, CIECH S.A. as the borrower, the Companies as the guarantors, and Bank Handlowy w Warszawie S.A. as the facility agent.


16

2. A description of achievements of the Ciech Group in the period between 1 January and 30 September 2013 and description of factors and events that have a significant impact on the financial result

2.1 Basic financial data

In the three quarters of 2013 the Ciech Group generated net profit of PLN 61,088 thousand, total assets amounted to PLN 3,554,172 thousand and cash and cash equivalents increased by PLN 240,282 thousand. The table below presents selected financial data and basic financial ratios for the three quarters of 2013 and 2012. Selected financial data

PLN ‘000 01.01.-

30.09.2013

Including discontinued operations

01.01.-30.09.2012

Including discontinued operations

Change 2013/2012

Sales revenues 2,705,900 252,576 3,357,586 771,392 (19.4%)

Cost of sales (2,231,849) (217,856) (2,890,539) (704,153) (22.8%)

Gross profit/(loss) on sales 474,051 34,720 467,047 67,239 1.5%

Selling costs (157,277) (9,601) (206,556) (40,281) (23.9%)

General and administrative expenses (135,299) (22,772) (143,343) (33,970) (5.6%)

Other operating income/expenses (5,688) 18,034 (327,670) (254,413) (98.3%)

Operating profit/(loss) 175,787 20,381 (210,522) (261,425) -

Financial income/expenses (115,710) (8,244) (150,783) (8,617) (23.3%)

Share of profit of equity-accounted investees 253 - 635 (49) (60.2%)

Income tax 758 (47,357) (9,232) (9,271) -

Net profit/(loss) 61,088 (35,220) (369,902) (279,362) -

Net profit/(loss) attributed to non-controlling interest

(7,065) (563) (9,199) (6,853) (23.2%)

Net profit/(loss) attributable to shareholders of the parent company

68,153 (34,657) (360,703) (272,509) -

EBITDA 334,336 26,314 (31,120) (238,825) -

EBITDA normalized* 366,460 x 327,956 x 11.7%

*Excluding one-off events, the more important of which are described in point II.2.3.

PLN ‘000 30.09.2013 31.12.2012 30.09.2012 Change

30.09.2013/ 31.12.2012

Total assets 3,554,172 3,728,035 3,721,298 (4.7%)

Total non-current assets 2,401,346 2,545,764 2,481,511 (5.7%)

Total current assets, including: 1,152,826 1,182,271 1,239,787 (2.5%)

- inventory 219,676 279,126 302,892 (21.3%)

- current receivables 594,967 709,222 774,444 (16.1%)

- cash and cash equivalents 334,837 81,177 160,555 312.5%

- short-term investments 1,129 946 954 19.3%

- non-current assets held for sale 2,217 111,800 942 (98.0%)

Total equity 924,995 880,188 933,691 5.1%

Equity attributable to shareholders of the parent 937,132 886,000 941,870 5.8%

Non-controlling interest (12,137) (5,812) (8,179) 108.8%

Total non-current liabilities 1,789,380 1,786,491 720,040 0.2%

Total current liabilities 839,797 1,061,356 2,067,567 (20.9%)

PLN ‘000 01.01.-30.09.2013 01.01.-30.09.2012 Change 2013/2012

Net cash flows from operating activities 287,283 168,841 70.2%

Net cash flows from investment activities (22,329) (212,515) (89.5%)

Net cash flows from financial activities (24,672) 41,098 -

Total net cash flows 240,282 (2,576) -

including, free cash flows 264,954 (43,674) -


17

01.01.-30.09.2013 01.01.-30.09.2012 Change 2013/2012

Earnings per share (in PLN): 1.29 (6.84) 8.13 p.p.

Net return on sales 2.3% (11.0%) 13.3 p.p.

EBIT % 6.5% (6.3%) 12.8 p.p.

EBITDA % 12.4% (0.9%) 13.3 p.p.

Normalized EBITDA %* 13.5% 9.8% 3.7 p.p

*Excluding one-off events, the more important of which are described in point II.2.3. Source: CIECH S.A. Calculation principles: earnings per share – net profit/weighted average number of ordinary shares outstanding in the given period (in accordance with definition of IAS 33 'Earnings per share') net return on sales – net profit for the given period/net revenues from the sale of products, services, goods and materials for the given period, EBIT% – operating profit for the given period/net revenues from the sale of products, services, goods and materials for the given period EBITDA% – (operating profit + amortisation/depreciation for the given period) net revenues from the sale of products, services, goods and materials for the given period Normalized EBITDA % - (EBITDA excluding one-off items the more important of which are described in point II.2.3)/ net revenues from sales of products, services, goods and materials in a given period

2.2 Sales revenues

Sales revenues of the Ciech Group for the three quarters of 2013 amounted to PLN 2,705,900 thousand. In comparison with the same period of the previous year, sales revenues decreased by PLN 651,686 thousand, i.e. by 19.4%. The decrease was mainly due to:

termination of production of TDI and ECH by Infrastruktura Kapuściska S.A. (TDI volume decreased by 41 thousand tons, ECH volume decreased by 8 thousand tons),

aggravated situation in the major sectors of unsaturated polyester resins recipients (volume decreased by 5.6 thousand tons), long winter – suspension of projects and works in the construction sector, large price competition in the market, increasing share of cheap resins from Asia in the market were the negative contributors to the sales of epoxy resins,

drop in sulphur prices and volume (by 66 thousand tons),

sale of Alwernia S.A. in July 2013. In comparison with 2012, in the agrochemical segment, increased sales of phosphorus compounds were recorded – the increased demand for phosphoric acid results, among others, from the declaration of bankruptcy of one of the Ciech Group’s competitors in this market. The activity of the Ciech Group concentrates on four main business segments: soda, organic, agrochemical a silindcates and glass. These segments generated in total 98% of the Group’s sales revenues. The structure of sales revenues, by business segment, has not changed in comparison with the same period of the previous year. The greatest share in the revenues for the three quarters of 2013 is attributed to the sales of soda segment products, i.e. 55.4%. Sales revenues – business segments

THREE QUARTERS

OF 2013

THREE QUARTERS

OF 2012 Change Change %

% of total revenues in

2013


2012

Soda segment, including: 1,498,539 1,471,605 26,934 1.8% 55.4% 43.8%

Dense soda ash 809,374 827,192 (17,818) (2.2%) 29.9% 24.6%

Light soda ash 243,570 252,462 (8,892) (3.5%) 9.0% 7.5%

Salt 119,967 116,286 3,681 3.2% 4.4% 3.5%

Baking soda 95,132 88,858 6,274 7.1% 3.5% 2.6%

Energy 82,904 99,136 (16,232) (16.4%) 3.1% 3.0%

Calcium chloride 16,880 11,529 5,351 46.4% 0.6% 0.3%

Gas* 40,420 - 40,420 100.0% 1.5% 0.0%

Other 45,621 41,157 4,463 10.8% 1.7% 1.2%

Revenues from inter-segment transactions 44,672 34,985 9,686 27.7% 1.7% 1.0%

Organic segment, including: 769,433 1,316,855 (547,422) (41.6%) 28.4% 39.2%

TDI 49,520 419,723 (370,203) (88.2%) 1.8% 12.5%

Resins 314,502 364,158 (49,656) (13.6%) 11.6% 10.8%

Polyurethane foams 151,935 152,806 (871) (0,6%) 5.6% 4.6%

Plant protection chemicals 153,650 165,460 (11,810) (7,1%) 5.7% 4.9%

Plastics 30,144 29,606 538 1.8% 1.1% 0.9%

ECH 1,727 51,317 (49,590) (96.6%) 0.1% 1.5%


18

THREE QUARTERS

OF 2013

THREE QUARTERS

OF 2012 Change Change %


2013


2012

Other 57,711 117,085 (59,374) (50.7%) 2.1% 3.5%

Revenues from inter-segment transactions 10,244 16,700 (6,456) (38.7%) 0.4% 0.5%

Agrochemical segment, including: 173,427 171,955 1,472 0.9% 6.4% 5.1%

Fertilisers 32,805 54,310 (21,505) (39.6%) 1.2% 1.6%

Phosphorus compounds 131,187 99,008 32,179 32.5% 4.8% 2.9%

Chromium compounds 5,038 9,774 (4,736) (48.5%) 0.2% 0.3%

Other 3,440 3,504 (64) (1.8%) 0.1% 0.1%

Revenues from inter-segment transactions 957 5,359 (4,402) (82.1%) 0.0% 0.2%

Silicates and Glass segment, including: 269,241 343,661 (74,420) (21.7%) 10.0% 10.2%

Sulphur 134,078 208,780 (74,702) (35.8%) 5.0% 6.2%

Glass blocks and packaging 68,877 73,848 (4,971) (6.7%) 2.5% 2.2%

Sodium silicate in lumps 40,862 39,057 1,805 4.6% 1.5% 1.2%

Sodium water glass 16,150 16,206 (56) (0.3%) 0.6% 0.5%

Other 9,272 5,764 3,508 60.9% 0.3% 0.2%

Revenues from inter-segment transactions 2 6 (4) (66.7%) 0.0% 0.0%

Other operations segment 62,338 110,434 (48,096) (43.6%) 2.3% 3.3%

Revenues from third parties 51,135 110,560 (59,425) (53.7%) 1.9% 3.3%

Revenues from inter-segment transactions 11,203 (126) 11,329 - 0.4% 0.0%

Consolidation adjustments (67,078) (56,924) (10,153) 17.8% (2.5%) (1.6%)

TOTAL 2,705,900 3,357,586 (651,686) (19.4%) 100.0% 100.0%

*Resale of excess gas Source: CIECH S.A.

2.3 Profit/(Loss) on sales nad Operating Profit/(Loss)

After three quarters of 2013, gross profit on sales amounted to PLN 474,051 thousand whereas in the same period of the previous year to PLN 467,047 thousand. Operating profit amounted to PLN 175,787 thousand (in the comparable period operating loss of PLN 210,522 thousand was incurred).

The positive contributors to the presented profit were as follows:

The drop in prices of energy raw materials.

Positive trend in sales of baking soda (total growth of 3.8 thousand tons) including: demand increase in the sector of gas purification (increase of 2.9 thousand tons) and the fodder sector (incease of 2.6 thousand tons).

The increase in sales of phosphorus compounds due to the bankruptcy of the major competitor of the Ciech Group in this market (increase of 11 thousand tons).

The reorganization of the Ciech Group activities. The decrease in fixed monetary costs by PLN 86,840 thousand with nearly half of the reduction relating to employee benefits.

The negative contributors to the presented profit were as follows:

A decrease in domestic sales of construction and assembly products: over 9 months of 2013 by 15.6% compared to a comparable period of the previous year (chemical industry generates many raw materials and intermediate products used for this production).

Weaker demand for epoxy resins on the European market connected with the general economic slowdown (including in the paints and varnishes industry – the main recipient of the Ciech Group’s resins).

Low prices of epoxy resins (decrease in quotations in Western Europe by a few percent in comparison with the

previous quarters as well as higher import from Far East).

A significant decrease in the market prices of sulphur on a global scale (by several dozen percent as compared to the previous year).

The negative impact of weather conditions on demand for plant protection chemicals (extension of the winter at the beginning of this year, resulting in a shortening of the spraying season).

Stagnation in the European market of soda ash as compared to prior year (lack of any clear signs of increasing

demand in Western Europe as compared to a few-percent negative dynamics recorded in 2012).

The presented results also take into account one-off items, including:

Impairment allowances of non-current assets and other assets as well as reversal of provisions in the Group companies,

Revenues form the realisation of the Agreement for Sale and Transfer of TDI Assets,


19

Sale of subsidiary Alwernia S.A.

The EBIT margin in the three quarters of 2013 was 6.5% (-6.3% in the prior year), while the EBITDA margin was 12.4% (-0.9% in the prior year). The EBIT margin excluding one-off items in the three quarters of 2013 was 7.7% (4.4% in the prior year), while the EBITDA margin excluding one-off items was 13.5% (9.8% in the prior year).

2.4 Financing activities and net result

Financial income for the three quarters of 2013 amounted to PLN 22,117 thousand and recorded a double increase as compared to the corresponding period of the previous year, when they amounted to PLN 9,178 thousand.

Financial expenses for the three quarters of 2013 amounted to PLN 137,827 thousand and recorded more than 13% decrease compared to the corresponding period of the previous year, when they amounted to PLN 159,961 thousand.

The positive contributors in the area of financing activities included the change in foreign exchange differences

result from negative in the three quarters of 2012 (minus PLN 14,502 thousand) to positive in the amount of PLN 8,912 thousand for the three quarters of 2013. Negative contributors in the area of financing activities were as follows:

conitnuous substantial costs of servicing external debt, including interest from bonds and finance lease, which is associated with high external debt,

provision for financial liabilities.

Consolidated net result for the three quarters of 2013 amounted to PLN 61,088 thousand, including the net result attributable to shareholder of the parent company in the amount of PLN 68,153 thousand. This profit was mainly influenced by profit on sales, partly leveled by the negative result on financing activities (the most negative influence resulted from the costs of servicing external debt, mainly interest on bonds).

Financial results achieved in different types of activities

PLN ‘000 01.01.-30.09.2013 01.01.-30.09.2012 Change

2013/2012

1. Operating profit/(loss) 175,787 (210,522) -

2. Net financial income/expenses (115,710) (150,783) (23.3%)

3. Share of profit of equity-accounted investees 253 635 (60.2%)

4. Income tax 758 (9,232) -

5. Net profit/(loss) (1+2+3+4) 61,088 (369,902) -

6. Net profit/(loss) attributed to non-controlling interest (7,065) (9,199) (23.2%)

7. Net profit/(loss) attributable to shareholders of the parent company (5-6)

68,153 (360,703) -

Source: CIECH S.A.

2.5 Assets

At the end of September 2013 the non-current assets of the Group amounted to PLN 2,401,346 thousand. As compared to the balance as at 31 December 2012, the value of non-current assets decreased by PLN 144,418 thousand, which is mainly related to impairment allowances of property, plant and equipment in the Infrastruktura Kapuściska Group. In year 2012 the value of impairment allowances of Infrastruktura Kapuściska Group’s property, plant and equipment was estimated based on the valuation report adjusted by the corresponding coefficients reflecting, among others, the possibility of its sales and other factors affecting the amount of the allowances including the contract with BASF. In the year 2013, due to the realization of the contract with BASF and recognition of this transaction in the statement of profit or loss, Infrastruktura Kapuściska Group recognized additional impairment allowances. The Group's current assets amounted to PLN 1,152,826 thousand as at 30 September 2013. The following items dominated among the current assets: trade and other receivables – 51.0% of current assets, cash and cash equivalents – 29.0% and inventory – 19.1%. In comparison to the end of December 2012 the value of current assets decreased by PLN 29,445 thousand. This decrease is related with disposal of Alwernia S.A. in the third quarter of 2013 presented in the previous quarters as assets held for sale.

2.6 Liabilities

As at 30 September 2013, the Ciech Group’s liabilities (non-current and current) amounted to PLN 2,629,177 thousand, which is a decrease in comparison with the end of December 2012 by PLN 218,670 thousand (i.e. 7.7%). The total debt ratio (current and non-current liabilities / total assets) was 74.0% as at 30 September 2013


20

(76.4% at the end of December 2012). The consolidated net debt of the Group calculated as the sum of non-current and current liabilities due to loans, borrowings and other debt instruments (bonds + finance lease + heat and power plant sale-and-lease-back liabilities + derivatives liabilities) decreased by cash and cash equivalents amounted to PLN 1,262,801 thousand as at 30 September 2013 and decreased in comparison with the balance as at the end of December 2012 by PLN 216,463 thousand. Information on liquidity ratios was included in point II.2.8 of this Report, “Information about the Ciech Group’s financial standing”.

2.7 Cash flows

Total net cash flows in the three quarters of 2013 were a positive amount equal to PLN 240,282 thousand. As compared to the same period of the previous year the Group generated cash flows higher by PLN 242,858 thousand. Cash flows from operating activities amounted to PLN 287,283 thousand and were higher than the ones generated in the comparable period of 2012 by PLN 118,442 thousand. The balance of cash flows from investment activities was negative, both after three quarters of 2013 and in the comparable period. The surplus of investment expenditure over inflows amounted to PLN -22,329 thousand and was lower by PLN 190,186 thousand in relation to the same period of 2012. The balance of cash flows from investment activities was mainly influenced by the disposal of property, plant and equipment in the Group companies. Net cash from financial activities was negative and amounted to PLN -24,672 thousand. In relation to the corresponding period of 2012, it was lower by PLN 65,770 thousand. In the year 2012, the Group received funds

under the agreement between “silent partners” of Soda Deutschland Ciech Group and financial proceeds from loans.

2.8 Information about the Ciech Group’s financial standing

Profitability in the three quarters of 2013

In the three quarters of 2013 sales profitability ratios for the Ciech Group were at a higher level than the ones achieved in the three quarters of 2012. The Ciech Group's return ratios

01.01.-30.09.2013 01.01.-30.09.2012

Gross return on sales 17.5% 13.9%

Return on sales 6.7% 3.5%

EBIT % 6.5% (6.3%)

EBITDA % 12.4% (0.9%)

Normalized EBIT %* 7.7% 4.4%

Normalized EBITDA %* 13.5% 9.8%

Net return on sales (ROS) 2.3% (11.0%)

Return on assets (ROA) 1.7% (9.9%)

Return on equity (ROE) 6.6% (39.6%)

*Excluding one-off items, the more important of which are described in point II.2.3. Calculation principles: gross return on sales – gross profit on sales for a given period/net revenues from sales of products, services, goods and materials, return on sales – profit on sales for a given period/net revenues from sales of products, services, goods and materials, EBIT % – operating profit for a given period/net revenues from sales of products, services, goods and materials, EBITDA% - ( operating profit + amortization/depreciation for a given period)/ net revenues from sales of products, services, goods and materials in a given period, Normalized EBIT % - (EBIT for a given period excluding one-off items the more important of which are described in point II.2.3)/ net revenues from sales of products, services, goods and materials in a given period Normalized EBITDA % - (EBITDA excluding one-off tems the more-important of which are described under II.2.3)/ net revenues from sales of products, services, goods and materials in a given period, net return on sales (ROS) – net profit for a given period/net revenues from sales of products, services, goods and materials, return on assets (ROA) – net profit for a given period/total assets at the end of a given period, return on equity (ROE) – net profit for a given period/total equity at the end of a given period.


21

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

III Q 2011 IV Q 2011 I Q 2012 II Q 2012 III Q 2012 IV Q 2012 I Q 2013 II Q 2013 III Q 2013

PL

N '000

The Ciech Group’s return levels

Gross profit on sales Normalized EBITDA

Gross return on sales Normalized EBITDA %

Normalized EBITDA – excluding one-off events described in particular quarters Source: CIECH S.A. Liquidity of the Group and working capital

Liquidity ratios as of the end of September 2013 improved in comparison with both, 30 September 2012 and the end of 2012. The current ratio, calculated as the ratio of total current assets to total current liabilities, amounted to 1.37 as at 30 September 2013, while the quick ratio amounted to 1.11. This was caused by the change in financing structure (repayment of short-term loan debt, incurring long-term debt from the issuance of bonds). The Ciech Group's liquidity ratios

30.09.2013 31.12.2012 30.09.2012

Current ratio 1.37 1.11 0.60

Quick ratio 1.11 0.85 0.45

Calculation principles: current ratio – the ratio of current assets to the current liabilities at the end of a given period; measures a company's ability to cover current liabilities using current assets. quick ratio – the ratio of current assets less inventory to current liabilities at the end of a given period; measures a company's ability to use its near cash assets to retire its current liabilities immediately.

Ability to generate cash flows

PLN ‘000 30.09.2013 31.12.2012 30.09.2012

Financial surplus (net profit + amortisation/depreciation) 219,637 (201,034) (190,500)

Other adjustments to net profit 66,976 363,193 352,083

Adjusted financial surplus 286,613 162,159 161,583

Change in working capital 670 (64,203) 7,258

Cash flows from operating activities 287,283 97,956 168,841

Cash flows from investment activities (22,329) (287,054) (212,515)

Free cash flows 264,954 (189,098) (43,674)

In the three quarters of 2013, the Ciech Group generated positive free cash flows, i.e. it was able to finance its investment expenditure with cash flows generated within its operating activities. The adjusted financial surplus reached the required level so as to allow for generating positive free cash flows. Working capital, defined as the difference between current assets and current liabilities adjusted by appropriate balance sheet items (cash and cash equivalents and short-term loans), as at the end of September 2013 amounted to PLN 72,112 thousand, which is a decrease of PLN 28,923 thousand as compared to the end of 2012.


22

The Ciech Group's working capital

PLN ‘000 30.09.2013 31.12.2012 30.09.2012

1. Current assets , including: 1,152,826 1,182,271 1,239,787

Inventory 219,676 279,126 302,892

Trade receivables 452,003 499,616 567,928

2. Cash and cash equivalents and Short-term investments 335,966 82,123 161,509

3. Adjusted current assets (1-2) 816,860 1,100,148 1,078,278

4. Current liabilities, including: 839,797 1,061,356 2,067,567

Trade liabilities 383,001 521,661 587,958

5. Short-term loans and other current financial liabilities* 95,049 62,243 1,130,462

6. Adjusted current liabilities (4-5) 744,748 999,113 937,105

7. Working capital including short-term loans (1-4) 313,029 120,915 (827,780)

8. Working capital (3-6) 72,112 101,035 141,173

* Other current financial liabilities include current finance lease liabilities + derivatives liabilities + heat and power plant finance sale-and-lease-back liabilities

Indebtedness

Acquisitions performed in 2006 and 2007, which led to increase in the Ciech Group’s assets were financed mainly by investment loan and bond issue. Additionally, investments carried out in 2008 were financed by short-term loan. As a result debt ratio increased in subsequent years. In the forth quarter of 2012 the Group issued domestic and foreign bonds described in details in point “Debt financing of the Group”. The debt rate slightly decreased as compared to December 2012 from 76.4% to 74.0%. At the same time, the relative net debt level (net financial liabilities divided by EBITDA) changed substantially as compared to the level achieved in September 2012 (in 2012, the Group recognized significant impairment allowances of property, plant and equipment in the companies comprising the Ciech Group which negatively affected EBITDA). The rate adjusted by one-off items remain on the lower level in comparision to previous year (net financial liabilities divided by normalized EBITDA). The Ciech Group's debt ratios

30.09.2013 31.12.2012 30.09.2012

Debt ratio 74.0% 76.4% 74.9%

Long term debt ratio 50.3% 47.9% 19.3%

Debt to equity ratio 284.2% 323.5% 298.6%

Equity to assets ratio 26.0% 23.6% 25.1%

Net debt / EBITDA (annualized) 3.1 36.7 31.3

Net debt/ normalized EBITDA (annualized) * 2.7 3.5 3.2

*Excluding one-off events, the more-important of which are described in item II.2.3. Calculation principles: debt ratio – the ratio of current and non-current liabilities to total assets; measures the share of external funds in financing a company’s activity. long-term debt ratio – the ratio of non-current liabilities to total assets; measures the share of non-current liabilities in financing a company’s activity. debt to equity ratio – the ratio of total liabilities to equity. equity to assets ratio – the ratio of equity to total assets; measures the share of equity in financing a company’s activity. net debt – liabilities on incurred loans and borrowings (plus overdraft) and other debt instruments (finance lease (excluding finance sale-and-lease-back liabilities + derivatives liabilities) less cash and cash equivalents.

Debt financing of the Group

Debt financing of the Group in the form of bonds and loan is obtained mainly through:

bonds issued by Ciech Group Financing AB (publ) – as at 30 September 2013 the nominal debt amounted to EUR 245 million (i.e. PLN 1,032,994 thousand),

bonds issued by CIECH S.A. – as at 30 September 2013 the nominal debt amounted to PLN 320 million,

loan provided to CIECH S.A. under the revolving loan agreement of 9 August 2013 in the amount of PLN 100 million – as at 30 September 2013, the debt amounted to PLN 0.

As at 30 September 2013, the fair value of the above bonds was PLN 1 457,759 thousand. Issue of foreign bonds by Ciech Group Financing AB (publ) – a subsidiary of CIECH S.A. on 28 November 2012

On 28 November 2012, Ciech Group Financing AB (publ) issued secured bonds of nominal value of EUR 245,000 thousand. Bonds were offered and sold in accordance with Rule 144 A and Regulation S of the US Securities Act. Below is the information about the issue:

nominal value: EUR 245,000,000


23

nominal value of one bond: EUR 100,000

form of bonds: global note

yield: fixed of 950 basis points a year

interest payment: every six months (half year periods)

maturity period: 7 years (30 November 2019). Funds from the issue were used to repay the loans granted to CIECH S.A. in accordance with the Loan Agreement of 10 February 2011 and repayment of loans granted to Sodawerk Stassfurt GmbH & Co. KG and Sodawerk Holding Stassfurt GmbH. The foreign bonds are secured with guarantees granted by CIECH S.A. and selected CIECH S.A.’s subsidiaries in Poland, Germany and Romania under the Indenture Agreement of 28 November 2012. Under the Indenture Agreement, each guarantor fully, unconditionally and irrevocably guarantees, as the main debtor, to each bondholder of foreign bonds on the rule of precedence total and immediate execution of all obligations of the issuer of bonds, including payment of the principal, premium, if any, as well as interest on account of bonds, as well as other obligations of the issuer with respect to the bondholders of foreign bonds and the trustee. The foreign bonds were also indirectly secured with parallel debt (created under the Intercreditor Agreement, in accordance with the description below) in form of tangible collateral established by CIECH S.A. as well as selected CIECH S.A.’s subsidiaries in Poland, Germany, Romania and Sweden. The bonds were admitted to trading on the Luxembourg Stock Exchange. Issue of series 01 and 02 bonds governed by the law of Poland in the amount of PLN 320,000,000 on 5 December 2012

On 5 December 2012, CIECH S.A. issued secured bearer bonds governed by the Polish law, denominated in PLN:

Series 01 of the total nominal value of PLN 160,000 thousand with an option of an early buy-out by CIECH S.A. prior to the maturity date thereof, i.e. after 18 or 42 months after the issue date, with maturity date at 5 December 2017;

Series 02 of the total nominal value of PLN 160,000 thousand without the option of early buy-out by CIECH S.A., with maturity date at 5 December 2017.

Funds from the issue of series 01 and 02 bonds were used mainly for an early buyout of series A bonds issued by CIECH S.A. on 14 December 2007 (of PLN 285,000 thousand) on 5 December 2012 and timely redemption, i.e. on 14 December 2012, of the remaining series A bonds of PLN 15,000 thousand. Series 01 bonds were issued on the following terms and conditions:

nominal value: PLN 160,000,000,

nominal value of one bond: PLN 10,000,

type of bonds: secured bearer bonds in dematerialized form registered in the National Depository for Securities S.A.,

interest rate (annual): WIBOR 6M plus a margin of 500 basis points,

interest payment: every six months,

the maturity date for Polish Bonds series 01 has been set on 60 months from the issue date of Polish Bonds, i.e. 5 December 2017, however, Polish Bonds series 01 have an option of an early buyout by CIECH S.A. prior to the maturity date thereof, after 18 or 42 months after the issue date. They will be redeemed at nominal value.

Series 02 bonds were issued on the following terms and conditions:

issue value: PLN 160,000,000,

nominal value of one bond: PLN 10,000,

type of bonds: secured bearer bonds without the form of a document registered in the National Depository for Securities S.A.,

interest rate (annual): WIBOR 6M plus a margin of 490 basis points,

interest payment: every six months,

the maturity date for Polish Bonds series 02 has been set on 60 months from the issue date of Polish Bonds, i.e. 5 December 2017. They will be redeemed at nominal value.

The bonds series 01 and 02 are secured by guarantees granted by selected subsidiaries of CIECH S.A. from Poland, Germany, Romania and Sweden. The maximum amount of the surety (with certain exceptions concerning Z. Ch. „Organika-Sarzyna” S.A., Alwernia S.A.; on 25 July 2013, the guarantee granted by Alwernia S.A. expired due to the sale of its shares by the Ciech Group) was set at the level of 155% of the total nominal value of all Polish bonds. Sureties are unconditional and irrevocable and they cover obligations of original guarantors as well as future guarantors to make any payments related to Polish bonds to each and every bondholder of Polish bonds, including in particular an obligation to pay the nominal value of Polish bonds, yields, premiums payable, interest for delays in payments as well as an obligation to pay other costs incurred by the bondholders in connection with pursuing their rights in relation to Polish bonds (including enforcement costs). Additionally, Polish Bonds series 02 were indirectly secured by parallel debt created on the basis of the Intercreditor Agreement of 28 November 2012 (as described below), however, the bondholders of Polish Bonds series 01 and 02


24

are able to use such security via the Security Agent (Powszechna Kasa Oszczednosci Bank Polski S.A.) on the rules determined in the Intercreditor Agreement provided that they enter into the agreement. The bonds were introduced to the Catalyst Alternative Trading System. Super Senior Revolving Credit Facility for the amount of PLN 100 000,000 of 9 August 2013

On 9 August 2013, a PLN 100,000 thousand Super Senior Revolving Loan Agreement was signed by CIECH S.A. as the borrower, Janikowskie Zakłady Sodowe Janikosoda S.A., Vitrosilicon S.A., Inowrocławskie Zakłady Chemiczne Soda Mątwy S.A., Soda Polska Ciech S.A., Transclean Sp. z o.o., Z. Ch. „Organika-Sarzyna” S.A., Ciech Trading S.A., Ciech Pianki sp. z o.o., Soda Deutschland Ciech GmbH, Sodawerk Staßfurt Verwaltungs-GmbH, Sodawerk Holding Staßfurt GmbH, Sodawerk Staßfurt GmbH & Co. KG, Ciech Group Financing AB (publ) ("Entities") as the guarantors and Bank Zachodni WBK S.A. ("the Facility Agent"), Bank Polska Kasa Opieki S.A. and Bank Powszechna Kasa Oszczędności Bank Polski S.A. ("Lenders").

The funds made available under the Loan Agreement may be used, among others, to: (i) finance CIECH S.A.’s short-term liquidity; (ii) issue guarantees in connection with the operations of CIECH S.A.’s capital group as well as (iii) fund CIECH S.A.’s intra-group borrowings. Provided loans

Under the Loan Agreement the banks have committed to provide a revolving loan to CIECH S.A. of PLN 100,000 thousand (the “Loan"). The Loan Agreement provides also for guarantee facility which can decrease the limit of the revolving loan. The Loan Agreement also provides for the possibility for the Borrowers to issue the so-called ancillary Facilities in the form of, among others, overdraft or bank guarantee. The Loan interest rate is variable, determined based on WIBOR plus fixed margin stipulated in the Loan Agreement. Effective Date

The Loan Agreement entered into force on 13 September 2013, i.e. once the loan agreement of 6 November 2012 was terminated and cancellation of the unused loan provided under that agreement was confirmed. The conditions precedent to the Loan Agreement

The cash under the Loan Agreement may be made available, provided that the Facility Agent will inform CIECH S.A. and the Lenders that he received all documents and proofs listed in annex to the Loan Agreement (or that he waived them), further provided that all statements of CIECH S.A. and the Ciech Group which are stipulated in the Loan Agreement are true at that time and no breach of the Agreement’s terms and conditions stipulated therein has occurred or persists. A condition precedent to the disbursement of funds under the Loan is, among others, (i) obtaining by CIECH S.A. and the Entities all necessary corporate approvals and (ii) placing the statement on volountary submission to enforcement procedure by CIECH S.A. and the Entities pursuant to art. 97 of the Banking Law. The fulfillment of the conditions precedent have been confirmed by the Facility Agent on 29 October 2013. The conditions of the repayment of Loan

The general Loan repayment conditions include without limitation: 1. The final repayment date in respect of all liabilities assumed under the Loan Agreement falls as at the end of the

36th month counting from the Effective Date of the Loan Agreement. 2. The mandatory early Loan repayment occurs in the following cases:

change of control over CIECH S.A. (as defined in the conditions of the bond issue under Polish law in the amount of PLN 320,000 thousand and in the agreement of 28 November 2012 establishing the conditions of the bond issue and indenture; and

inconsistency with law on the part of the Lenders and/or the Facility Agent. Collateral for the Loan repayment

The collateral to secure the repayment of Loan issued under the Loan Agreement is the guarantees provided by the Entities and existing collaterals established to secure the parallel debt, which was created under the Intercreditor Agreement of 28 November 2012. Other important terms of the Loan Agreement

Under the Loan Agreement, CIECH S.A. and the Entities undertook, among others, to: 1. keep the financial leverage net ratio (ratio of consolidated debt for net loans and borrowings as at last day of the

accounting period to consolidated EBITDA) on a defined level, as measured for the Ciech capital group, tested semiannually.

Measurement period ended 30.06.2013 31.12.2013 30.06.2014 31.12.2014 30.06.2015 31.12.2015 30.06.2016

The maximum level of ratio 4.5 4.3 3.6 3.6 3.0 3.0 3.0

2. not to establish new collaterals, 3. not to dispose of the property apart from the cases permitted in the Loan Agreement


25

4. not to assume any financial liabilities and issue loans, credits, borrowings, guarantees apart from the cases permitted in the Loan Agreement.

The executed loan agreement was intended to substitute a revolving loan agreement of 6 November 2012 and improve commercial conditions of the disbursed funding. Security of claims on account of the Intercreditor Agreement

Pursuant to the Intercreditor Agreement of 28 November 2012, the following parallel debt was created:

parallel debt of CIECH S.A.,

parallel debt of the issuer of foreign bonds – Ciech Group Financing AB (publ),

parallel debts of selected CIECH S.A.’s subsidiaries in Poland, Germany and Romania that granted sureties and guarantees.

Each parallel debt is an independent and separate claim of the Security Agent with respect to the relevant debtor. On the basis of each parallel debt, each of the entities referred to above is obliged to pay to Powszechna Kasa Oszczędności Bank Polski S.A. (“the Security Agent”) an amount being the sum of all liabilities of this entity under basic legal relationships covered by the Intercreditor Agreement: 1. in the case of CIECH S.A.:

secured bearer bonds up to PLN 320,000 thousand issued on 5 December 2012;

guarantees of foreign bonds; and

the revolving loan agreement, under which the revolving loan of PLN 100,000 thousand was granted. 2. in the case of Ciech Group Financing AB (publ) – sureties for Polish bonds and sureties for the revolving loan

agreement; 3. in the case of guarantors – sureties for Polish bonds, sureties for foreign bonds and sureties for the Revolving

Loan Agreement. Maturity of any basic claim of the relevant debtor automatically results in maturity of the parallel debt in the same amount. A payment made by a relevant entity to the Security Agent on account of the parallel debt automatically reduces the amount of basic liabilities of such entity equivalent to the parallel debt by the amount of such payment. A repayment of basic liabilities by a relevant entity automatically reduces the amount of the parallel debt of such entity by the amount of such payment. Liabilities of each debtor under the parallel debt (including CIECH S.A.) were secured by establishing a package of securities comprising: 1. Mortgages established on real estate properties of certain subsidiaries and CIECH S.A., 2. Registered and financial pledges over shares in certain subsidiaries including Ciech Group Financing AB (publ), 3. Registered pledges over real estate properties and other assets of certain subsidiaries and CIECH S.A., 4. Financial pledges over bank accounts of the subsidiaries including Ciech Group Financing AB (publ); 5. Registered pledges over intragroup bonds issued by CIECH S.A., 6. Assignments of rights under insurance policies issued in relation to the assets that are subject of the security and

conditional assignments of rights under intragroup borrowings and significant commercial agreements of certain subsidiaries and CIECH S.A.,

7. Statements on the submission to execution by certain subsidiaries and CIECH S.A., 8. Powers of attorney to access bank accounts of certain subsidiaries and CIECH S.A.

3. Seasonality and cyclicality of the operations of CIECH S.A. and the Ciech Group

Seasonality resulting from periodic demand and supply fluctuations has little impact on the general sales trends in Ciech Group. Products clearly influenced by seasonality include plant protection chemicals. Most plant protection chemicals are used in the first half of the year, i.e. the period of intensive plant growth, when approx. 90% of the total sale of these products is realised. Similarly, fertilisers are sold mainly at the turn of Q1 and Q2 and in Q3 of a year. This is due to intensive field fertilisation in spring and autumn. Furthermore, in the soda segment, a seasonal relationship between the volume of some products sold and the progress of winter can be observed. A mild winter is reflected in a decrease in the sale of calcium chloride and other products (anti-ice, salt and chloride mix, waste salt), while the influence on the sale of salt is indirect. In the case of other products, Group's revenues and results are not influenced by any significant seasonal fluctuations during the business year. As a result, seasonality plays a relatively small role in the Group’s overall sales.

4. Fulfilment of profit forecasts previously published for a given year in light of the results disclosed in the quarterly report against the forecast results

The Ciech Group did not publish any forecasts for 2013.


26

5. Factors that influence the Ciech Group's results, with particular focus on the next quarter

5.1 External factors

Situation in industries being the Ciech Group’s products recipients in Poland

Poland is the biggest selling market for the Ciech Group. The largest domestic recipients of the Group’s products include: the glass industry, the chemical industry, plastics industry, furniture industry, agriculture, and food industry. Development in these economic sectors depends on the economic situation in Poland. Sold industrial production in fixed price over 9 months of 2013 increased by 1.4% compared to the corresponding period of the previous year (accordingly it increased by 2.5% in 2012). At the same time, the dynamics of the chemical industry indicated: a decrease of 2.9% in the production of chemicals and chemical products (excluding pharmacy) and an increase of 5.5% in the production of rubber products and plastics. After an acceleration of Polish economic growth in 2010-2011 (with an annual GDP growth of 4%), a clear slowdown of GDP growth to the level of 1.9% was recorded in 2012. In 2013, the level of GDP growth is expected to drop to 1.3%. Insignificant upturn is expected in 2014 (GDP growth minimum of 2.5%). A similar tendency should be expected in the chemical industry which usually develops in line with the whole economy. Economic situation in Europe and around the world

The Ciech Group’s business is largely based on the sales of chemical products on foreign markets. The volume and profitability of sales depend on the global economic situation in Europe and around the world. A global economic slump usually affects the demand for raw materials on international markets, thus reducing the export revenue of the Group. In 2013, the largest countries in Asia (China and India) as well as the countries of the ASEAN have been developing relatively fast. According to the estimates of the International Monetary Fund, the global GDP will grow this year only by 2.9% (which is the lowest rate noted since the crisis in 2009). Still it is only the eurozone, which negatively stood out over the global economy, where (after a drop in GDP of 0.6% in 2012) in 2013, the negative dynamic of growth (-0.4%) is expected to maintain. The forecasts for the whole 2014 indicate a clear improvement in the economic situation in comparison with the previous year. The International Monetary Fund expects global GDP dynamic growth (up to 3.6%) and in the case of the European Union insignificant upturns (increase in the GDP growth rate by 1.3%, compared to 0.0% in 2013). For the chemical production the American Chamber of Chemical (ACC) estimates that after a slight increase in the global production of chemicals by 1.2% noted in 2012, next years will bring a significant increase in this sector: by 4.3% in 2013 and by 4.7 % in 2014. On the other hand, the European Chemical Industry Council (CEFIC) assumes that in the EU, after two years of decline in chemical output (by 1.5% in 2012 and by 0.5% in 2013) the next year will bring a growth in the output by 1.5% in this sector. Financial situation of agriculture

A portion of the Ciech Group’s revenues covering plant protection chemicals (products manufactured by the Group and merchandise) is generated by sales to the agricultural sector. In the Group's opinion, in the long-term, the volume of demand for chemical products for agriculture in Poland and Central and Eastern Europe should continue to grow. The material factors favouring an increase in the consumption of agrochemicals in Poland and thus the demand for the Group’s products and merchandise are processes improving the financial situation and profitability of agricultural production, including: production quoting and direct subsidies. The above should result in a growth of Group’s revenue. On the other hand, the lack of significant improvement in the purchasing capacity of the agricultural sector may be the reason for a stagnation in the demand for plant protection chemicals and as a result of a decrease in the Group’s revenues related to agrochemical products. According to data supplied by Poland's Institute of Agricultural and Food Economics (IERiGZ), the market conditions affecting domestic agriculture in the period from January to September 2013 were slightly more favorable than a year ago (lower growth of prices of agricultural inputs as compared to the growth of prices of agricultural outputs). In 2013, the synthetic index of the economic situation in agriculture (SWKR) fluctuated slightly (it reached a level of 100.9 in September 2013 as compared to 100.6 in September 2012). In the near term market conditions for agriculture may deteriorate due to the seasonal reduction of purchase prices of agricultural products. REACH implementation

In accordance with REACH regulation, the Group companies selling substances in quantities exceeding 1 ton p.a. have completed or will complete full registration of these substances by defined deadlines which will let them continue their operations in the current scope. In the 2nd stage of the registration,that finished on 31 May 2013, one substance in the tonnage range of 100-1000 Mg/y has been registered by the Ciech Group. In the 3rd stage, i.e. up to 31 May 2018, the plan is to register 38 substances being introduced to the market in a volume of 1 - 100 Mg/y. Emission trading system

Within the European Union Emission Trading Scheme phase III (EU ETS III) covering the period 2013-2020, in order to improve and extend the EU greenhouse gas emission rights trading system, significant changes were implemented starting from 2013. In addition to already participating companies such as: Soda Polska Ciech S.A., Sodawerk Stassfurt and Vitrosilicon S.A., the system was extended to cover also S.C. Uzinele Sodice Govora S.A.; the range of CO2 emissions has been significantly expanded to include process emissions associated, among others, with the production of soda; the companies producing electricity used by all the Ciech Group companies has been obliged, totally or in part, to purchase the rights, also the degree of usage of CERs (Certified Emission Reduction units) and ERUs (Emission Reduction Units) has changed.


27

The internal analyses carried out by the Ciech Group companies show that the quantity of free allowances for CO2 emissions in the EU ETS III will not be sufficient to cover the actual need for this type of units of account. The resulting deficit of allowances to emit carbon dioxide will be possible to balance by using one or more of the following actions:

the use of emission allowances received free of charge and unamortized during the second period of the EU ETS (2008 -2012);

purchase of missing allowances in the auction, on the stock exchange or OTC transactions;

capital investments aimed at reducing the emission of generated heat and/or emissivity of the processes;

using raw materials and fuels that result in lower emission. In addition to the direct costs associated with the purchase of rights to emit carbon dioxide, all Ciech Group Companies will incur higher costs of purchasing power due to the fact that the costs of purchase of emission rights will be transferred on them by the manufacturers. PLN/EUR exchange rates

The Ciech Group's export sale is settled mostly in EUR. A strong EUR increase profitability of exports, both for the Group and for other manufacturers from the chemical industry in Poland. Furthermore, it increases volumes of turnover carried out by the Group for other manufacturers. As a result, the PLN/EUR exchange rate influences profitability of sales revenues in the Group. If the Polish zloty becomes stronger against the EUR, the profitability of exports declines, and the Group's export volumes decrease.

5.2 Internal factors

Obligations related to the purchase of Z.Ch. “Organika-Sarzyna” S.A.

In accordance with the Social Guarantee Package being in force in Z.Ch. "Organika-Sarzyna" S.A until the end of 2013, the last obligation was to repurchase shares issued free of charge to eligible persons in accordance with Art. 36 of the Act of 30 August 1996 on commercialization and privatization of state enterprises. On 14 June 2013, the last repurchase of shares of Z.Ch. "Organika-Sarzyna" S.A. from employees of Z. Ch. “Organika-Sarzyna” S.A. was conducted. CIECH S.A. purchased in total 67,228 ordinary registered shares for the total price of PLN 2,353 thousand, which increased the share of CIECH S.A. in the Company’s share capital from 98.85% to 99.64%. Obligations related to the purchase of the Soda Deutschland Ciech Group companies

Soda Deutschland Ciech Group has shown in its balance sheet the liability to repurchase heat and power plant of PLN 230,573 thousand. The plant was sold on 1 September 1999 by KWG GmbH (a subsidiary of Sodawerk Stassfurt GmbH&Co. KG) to VASA Kraftwerke – Pool for EUR 115.8 million. Following the signing of a new lease agreement of the heat and power plant with VASA Kraftwerke – Pool, the strict obligation to repurchase the heat and power plant on 31 December 2014 was prolonged by at least one year (depending on VASA’s intention to execute the option), while retaining the right to repurchase the heat and power plant on 31 December 2014 at previously agreed price.

6. Significant changes in risk factors

The most significant risk factors, to which the Ciech Group is exposed, have been presented in details in the Consolidated Annual Report of the Ciech Group for the year 2012 in point I.4, published on 19 April 2013.

During the three quarters of 2013, no new risks occurred, and the previously identified factors did not change, except for (a) the reduction of risk resulting from dependence of the costs of financing of part of the Group’s indebtedness denominated in PLN on the level of market interest rates and (b) identification of increased risk related to the continued downturn in the sectors of our main clients.

Interest on New Domestic Bonds (with face value of PLN 320 million) and a loan available under the Revolving Credit Facility (with the maximum value of PLN 100 million), is based on the variable WIBOR rate. During the three quarters of 2013, part of the debt resulting from New Domestic Bonds, amounting to PLN 80 million, was hedged using an interest rate swap contract, concluded at the beginning of 2013.

It should, however, be noted that the interest rate swap hedge only part of the interest rate risk and, consequently, the Group is exposed to the interest rate risk in relation to the part of the debt that is not hedged. The increased level of market interest rates would increase the cost of indebtedness and unfavourably influence the Group’s business and financial condition.

Additionally, during the analysis of risk factors related with the Group’s business, it was noticed that the continued downturn in the sectors of our main clients (construction, automotive industry) may cause a significant risk that the quantity of soda ash sales plans may be unrealized. Consequantly, this situation may have a negative impact on our business, financial situation and results.


28

7. Changes in the number of shares of CIECH S.A. held by the Members of the Management Board and Supervisory Board

According to the declarations submitted by the management and supervisory persons, it appears that as at 30 September 2013 and as at the date of approving the foregoing report:

Mr Dariusz Krawczyk – President of the Management Board, held 40,000 shares in CIECH S.A.

Mr Artur Osuchowski – Member of the Management Board, held 3,825 shares in CIECH S.A.

Other persons holding managerial and supervisory positions did not hold any shares in CIECH S.A. or shares or holdings in related entities as at 30 September 2013. From 30 August 2013, i.e. from the day of submitting the extended consolidated report of the Ciech Group for the I half of 2013, there were no changes in the possession of shares by the Management or Supervisory Board Members of CIECH S.A.

8. CIECH S.A.'s shareholders holding at least 5% of shares/votes at the General Meeting of Shareholders

CIECH S.A.’s shares are listed on the Warsaw Stock Exchange. The registration of a change (decrease) of share capital and the redemption of 2 ordinary registered series F shares took place on 21 June 2013. Therefore, the share capital of the Company is PLN 263,500,965 and is divided into 52,699,909 shares with a face value of PLN 5 each, including: 20,816 series A ordinary bearer shares, 19,775,200 series B ordinary bearer shares, 8,203,984 series C ordinary bearer shares, 23,000,000 series D ordinary bearer shares, 1,699,909 series E ordinary bearer shares.

Shareholders List of shareholders holding at least 5% of votes at the General Meeting of Shareholders of CIECH S.A. as at the date of submission of the foregoing report

The information presented below on the shareholding structure of CIECH S.A. is based on data submitted by significant shareholders of the Company under art. 69 of the Public Offering Act or made available in other manner stipulated by the law. In accordance with the above, the significant shareholders who possess at least 5% of the total votes at the General Shareholders’ Meeting as at 14 November 2013 are:

Shareholder Type of

shares

Number of

shares

Share in the

share capital

(%)

Number of

votes at GSM

Share in the total

number of votes at

GSM

State Treasury* Ordinary bearer shares

20,407,437 38.72% 20,407,437 38.72%

Open Pension Fund PZU "Złota Jesień" S.A.**

Ordinary bearer shares

4,850,000 9.20% 4,850,000 9.20%

ING Open Pension Fund** Ordinary bearer shares

4,500,000 8.54% 4,500,000 8.54%

* According to information submitted by the shareholder on 23 August 2011 under art. 69 of the Public Offering Act (cr 59/2011 – adjustment)

** based on the list of shareholders holding at least 5% of votes at the Ordinary General Meeting of Shareholders of CIECH S.A. on 22 May 2013 (Aricle 70 item 3 of the Public Offering Act (…) (cr 20/2013)

As at 30 August 2013, i.e. as at the day of submitting the extended consolidated report of the Ciech Group for I half of 2013, significant shareholders holding at least 5% of votes at the General Meeting of Shareholders were:

Shareholder Type of

shares

Number of

shares

Share in the

share capital

(%)

Number of

votes at GSM

Share in the total

number of votes at

GSM

State Treasury* Ordinary bearer shares

20,407,437 38.72% 20,407,437 38.72%

Open Pension Fund PZU "Złota Jesień" S.A.**

Ordinary bearer shares

4,850,000 9.20% 4,850,000 9.20%


29

ING Open Pension Fund** Ordinary bearer shares

4,500,000 8.54% 4,500,000 8.54%

* According to information submitted by the shareholder on 23 August 2011 under art. 69 of the Public Offering Act (cr 59/2011 – adjustment)

** based on the list of shareholders holding at least 5% of votes at the Ordinary General Meeting of Shareholders of CIECH S.A. on 22 May 2013 (Aricle 70 item 3 of the Public Offering Act (…) (cr 20/2013)

9. Information on the issue, redemption and repayment of debt securities and equity securities in the Ciech Group

On 25 January 2013, as a result of the spin-off of soda divisions from the companies SODA MATWY S.A. and JANIKOSODA S.A. and their incorporation into CIECH S.A., two ordinary registered series F shares were issued, which were given to the minority shareholders of JANIKOSODA S.A. and SODA MATWY S.A. in exchange for one

share in JANIKOSODA S.A. and one share in SODA MATWY S.A. redeemed as a result of the spin-off by separation. On 22 May 2013, the Ordinary General Meeting of Shareholders of CIECH S.A. agreed to purchase two ordinary registered series F shares and their redemption. On that day, the shares were purchased by CIECH S.A. On 21 June 2013 the change (decrease) in the share capital and the redemption of the shares were registered.

In 2013, the Ciech Group did not issue, repurchase or repay debt securities.

10. Information on dividends paid (or declared), in total and per share, broken down into ordinary shares and preference shares

By virtue of a resolution of 22 May 2013, the Ordinary General Meeting of Shareholders of CIECH S.A. decided to cover the loss of CIECH S.A. for 2012 amounting to PLN 484,776 thousand from the supplementary capital of the Company. Due to net loss incurred in 2012, CIECH S.A. will not pay dividend in the year 2013.

By virtue of a resolution of 25 June 2012, the Ordinary General Meeting of Shareholders of CIECH S.A. decided to allocate the net profit of CIECH S.A. for 2011 amounting to PLN 351,176 thousand to the supplementary capital of the Company, and not to pay dividend.

11. Organisation description and identification of the effects of changes in the structure of the Ciech Group’s business entities

The description of the Ciech Group’s organisation as well as information on the effects of changes in the organisational structure have been presented in points IV.1, IV.2 and IV.14 of this Report.

12. Procedures pending before courts, in arbitration proceedings or public administration bodies

The information has been presented in point IV.11 of this Report.

13. Information on non-standard and non-routine transaction or transactions with related entities concluded by CIECH S.A. or its subsidiaries


14. Information on loan and borrowing sureties or guarantees granted by CIECH S.A. or its subsidiaries



30

III. Information on the presentation principles for the Condensed Interim Consolidated Financial Statements of the Ciech Group for the three quarters of 2013

1. Basis for preparation of the Condensed Interim Consolidated Financial Statements of the Ciech Group

The presented condensed interim consolidated financial statements for the period from 1 January to 30 September 2013, was approved by the Management Board of CIECH S.A. on 14 November 2013 to be published on 14 November 2013.

The presented consolidated financial statements has been prepared on a going concern basis.

These consolidated financial statements cover the financial statements of CIECH S.A., the parent company, and its subsidiaries (jointly referred to as the “Ciech Group”; the “Group”), as well as the Group's interests in associates.

The presented interim consolidated financial statements were drawn up in compliance with IAS 34 “Interim Financial Reporting” as approved by the European Union and the Regulation of the Minister of Finance dated 19 February 2009, with amendments, on current and periodic information published by issuers of securities and the conditions of recognising as equivalent the information required by the law provisions of a country which is not a member state (Journal of Laws No. 33, item 259). Preparation of financial statements in compliance with International Financial Reporting Standards requires the Management Board to exercise professional judgement, estimates and assumptions that impact the adopted accounting principles and the value of assets, liabilities, income and expenses presented. All estimates and related assumptions are based on historical experience and various other factors considered reasonable under the given circumstances, and the results of such estimates are the basis for professional judgement of the carrying value of assets and liabilities, which cannot be calculated using other sources. Actual results may differ from these estimates.

The estimates and related assumptions are subject to regular verification. Revisions to accounting estimates are recognised in the period in which the estimates are revised, if such revisions apply solely to that period, or in the current period and future periods, if such revisions apply both to the current and future periods. The Management Board's professional judgements, which have a significant impact on the consolidated financial statements, and the estimates bearing a risk of significant changes in future periods, have been presented in points IV.8 and IV.11 of this Report. During the current interim period there were no significant revisions to the estimated values presented in previous reporting periods. The Management Board of the parent company used its best judgement in selecting and interpreting the applicable standards, as well as in the selection of measurement methods and principles for particular items of the Ciech Group's consolidated financial statements as at 30 September 2013. Due diligence was exercised in preparing the tables and notes below. The financial statements for the period ended 30 September 2013 present truly and fairly the financial position and the financial performance of the Ciech Group. The management report contains a true depiction of the development, achievements and situation of the Ciech Group, including a description of primary threats and risks.

2. Adopted accounting principles

The Ciech Group's accounting principles are described in the Consolidated Report of the Ciech Group for the year 2012, published on 19 April 2013. The report in question includes detailed information regarding the principles and methods of valuation of assets and liabilities and measurement of the financial result, as well as the method of preparing the financial statements and comparative information. These principles have been applied on a continuous basis with relation to currently published data, the last annual financial statements and comparative data except for the following changes:

The Group has changed the way of presentation of the result on disposal of discontinued operations. Until now, the result on disposal of discontinued operations was presented in the consolidated statement of profit or loss as “discontinued operations”, separately from the net income generated on the discontinued operations. Following the change, the result on disposal of discontinued operations is presented as “discontinued operations” under appropriate position of gain or loss, in accordance with the rules for presentation of identical events in continuing operations. In the case of the sale of net assets of subsidiaries, these are other operating incomes or expenses, respectively. The separate presentation of the profit on sale of discontinued operations and the result generated on discontinued operations as required by IFRS 5.33 was presented in Note IV.12. The effect of the above mentioned change in the presentation on the previously published statement of profit or loss for the period from 1 January to 30 September 2012 was presented in Note IV.15.


31

In 2013 there was a change in the presentation of equity items. “Net currency translation differences (investments in foreign companies)” item was shown together with the item: “Currency translation differences (foreign companies)” for all periods presented in the Report.

In addition, the Ciech Group applied the changes in the titles of the particular statements in accordance with the new requirements of IAS 1 — “Presentation of Financial Statements”. Other amendments to IFRSs that came into force from 1 January 2013, has had no significant impact on the consolidated financial statements of the Ciech Group. The Ciech Group intends to adopt amendments to IFRSs that are published but not effective as at the date of publication of these consolidated financial statements of the Ciech Group in accordance with their effective date. The estimated impact of amendments to IFRSs on the Group’s future consolidated financial statements was presented in the note 2 of the consolidated financial statements for the year 2012 published on 19 April 2013. In the assessment of the Group amendments to IFRSs that came into force between the date of publication of the consolidated financial statements for the year 2012 and the date of publication of this report will not have significant impact on the financial statements.

3. Functional and presentation currency and conversion principles

The Polish zloty (PLN) shall be the reporting currency of these consolidated financial statements. Unless indicated otherwise, the information in the consolidated financial statements has been presented in thousands of PLN (PLN '000). The functional currency of the parent company CIECH S.A. is the Polish zloty. The functional currencies for significant foreign subsidiaries are:

Soda Deutschland Ciech Group and Ciech Group Financing AB – functional currency - EUR; presentation currency in the Ciech Group consolidated financial statements – PLN

EUR exchange rate as at the balance sheet date: 30 September 2013 – 4.2163 PLN (30 September 2012 – 4.1138 PLN)

EUR average exchange rate (calculated as the arithmetic average of the average EUR exchange rates determined by the National Bank of Poland as at the last day of every month, i.e. from January to September): for the period from 1 January to 30 September 2013 – 4.2231 PLN (comparable period – 4.1948 PLN).

S.C Uzinele Sodice Govora – Ciech Chemical Group S.A – functional currency - RON; presentation currency in the Ciech Group consolidated financial statements – PLN

RON exchange rate as at the balace sheet date: 30 September 2013 – 0.9452 PLN (30 September 2012 – 0.9076 PLN)

RON average exchange rate (calculated as the arithmetic average of the average RON exchange rates determined by the National Bank of Poland as at the last day of every month, i.e. from January to September): for the period from 1 January 2013 to 30 September 2013 – 0.9596 PLN (comparable period – 0.9458 PLN).


32

IV. Notes to the Condensed Interim Consolidated Financial Statements of the Ciech Group

1. Consolidated entities

Description of organisation of the Ciech Group

The parent of the Ciech Capital Group is CIECH Spółka Akcyjna, with its registered office in Warsaw, ul. Puławska 182, registered under number 0000011687 at the Regional Court for the capital city of Warsaw, XIII Commercial Department of the National Court Register. The Ciech Group is a group of domestic and foreign manufacturing, distribution and trade companies operating in the chemical industry. As at 30 September 2013, it was composed of 36 business entities, including:

the parent company CIECH S.A.,

29 subsidiaries, including: - 19 domestic subsidiaries, - 10 foreign subsidiaries,

4 domestic associates,

1 foreign associate,

1 foreign jointly-controlled entity. The parent company has a branch in Ramnicu Valcea, Romania. The Ciech Group is composed of direct subsidiaries and affiliates, for which CIECH S.A. is the parent entity, as well as indirect subsidiaries and associates, whose parent entities are direct subsidiaries of CIECH S.A. The Ciech Group conducts manufacturing activity with the sale of own products as well as commercial activity connected with the trade in goods. Commercial activities are primarily conducted by CIECH S.A. and domestic and foreign commercial companies, being CIECH S.A. subsidiaries. Manufacturing activities are carried out by CIECH S.A.'s manufacturing subsidiaries. In preparing the consolidated financial statements for the three quarters of 2013, the following companies were consolidated:


33

List of consolidated companies and companies measured under the equity method in the three quarters of 2013 and in the comparable period

Company/Group

Consolidation method as at 30.09.2013 and CIECH S.A.'s control


Share in the capital as at 30.09.2013

Share in the capital as at

30.09.2012

Business

1) CIECH S.A. Parent company Parent company - -

According to the Statute, the core business of the parent entity includes: commercial activity including trade activity, investment activity, manufacturing activity, service activity and financial operations with particular focus on foreign and domestic trade in chemicals and activity connected therewith. The Company is also licensed to act as an agent for Polish and foreign companies.

CIECH FINANCE Group

2) CIECH FINANCE Spółka z ograniczoną odpowiedzialnością

Subsidiary of CIECH S.A. - fully

consolidated

Subsidiary of CIECH S.A. – fully consolidated

100% 100%

implementing divestment projects concerning unnecessary property, plant and equipment (real estates) and financial assets (shares in companies),

2.1.) Ciech Trading S.A.

(until 26 February 2013 Cheman S.A.)

Indirect subsidiary of CIECH S.A. – full

consolidation at the level of the Ciech Group.

Indirect subsidiary of CIECH S.A. – full

consolidation at the level of the Ciech Group.

100% 100%

wholesale and distribution of solid inorganic and organic chemicals,

wholesale and distribution of raw materials for household chemicals,

wholesale and distribution of raw materials for cosmetic and pharmaceutical products,

wholesale and distribution of builders, pigments, raw materials for paints and varnishes,

wholesale and distribution of food and feed additives,

wholesale and distribution of acids, bases and other liquid chemicals

2.1.1.) JANIKOSODA S.A.

Indirect subsidiary of CIECH S.A. – fully

consolidated at the level of the Ciech Group. The sale was concluded on

28 March 2013.


consolidated

100% 100%

- three quarters of 2013 – real estate agencies, real estate management, public relations and communication activities, combined office administrative service activities, other education n.e.c. - three quarters of 2012 – manufacture of salt, manufacture of industrial gases, manufacture of other inorganic basic chemicals, manufacture of other chemical products n.e.c.

2.1.1.1) S.C. Uzinele Sodice Govora – Ciech Chemical Group S.A.

Indirect subsidiary of Ciech SA - fully

consolidated at level of Ciech Group. The sale was concluded on 22

May 2013.

Subsidiary of CIECH S.A. – fully consolidated

92.91% 92.91%

manufacture of other inorganic basic chemicals,

wholesale of chemical products


34

Company/Group





30.09.2012

Business

3) SODA MĄTWY S.A. Subsidiary of

CIECH S.A. - fully consolidated

Lower-tier parent in SODA MĄTWY Group

100% 100%

- three quarters of 2013 – real estate agencies, real estate management, public relations and communication activities, combined office administrative service activities, other education n.e.c.

- three quarters of 2012 – manufacture of other inorganic basic chemicals, wholesale of chemical products, production and distribution of electricity, goods shipment.

Soda Polska Ciech Group

Fully consolidated lower-tier Group


100% 100%


wholesale of chemical products,

production and distribution of electricity,

goods shipment

4.) Soda Polska Ciech S.A. Lower-tier parent Indirect subsidiary of

CIECH S.A. - full consolidation at lower tier

100% 100%

4.1. TRANSODA Sp. z o.o.

Indirect subsidiary of CIECH S.A. - full

consolidation at lower tier


consolidation at lower tier 100% 100%

5) „Alwernia” S.A. Company was sold on

25 July 2013

Subsidiary of CIECH S.A. fully consolidated

- 99.62%


manufacture of dyes and pigments,

manufacture of other organic basic chemicals,

manufacture of chemical fertilisers and nitrogen compounds,

manufacture of gypsum,

production of heat (steam and hot water)

6) CIECH-POLSIN

PRIVATE LIMITED


consolidated


98.00% 98.00%

wholesale and retail sale of a variety of goods in the Far East markets

7) VITROSILICON

Spółka Akcyjna


consolidated


100% 100%


manufacture of household and technical glassware,

manufacture of plastic packing goods,

manufacture of other plastic products

8) Przedsiębiorstwo Transportowo-Usługowe TRANSCLEAN Sp. z o.o.


consolidated


100% 100%

international transport of liquid chemicals,

tank truck and rail tank car wash

9) Zakłady Chemiczne „Organika-Sarzyna” S.A.


consolidated


99.64% 98.85%

manufacture of plastics,

manufacture of pesticides and other chemical products

Infrastruktura Kapuściska S.A. Group



99.00% 97.44% Company's previous business:

manufacture of other organic and non-organic chemicals,


35

Company/Group





30.09.2012

Business

10) Infrastruktura Kapuściska S.A.

(until 14 August 2013 ZACHEM S.A.)

Lower-tier parent Lower-tier parent 99.00% 97.44%

manufacture and sales of plastics,

manufacture of plastic plates, sheets, tubes and profiles,

manufacture of dyes and pigments,

services of installation, repairs and maintenance of general-purpose machinery n.e.c.

In connection with the cessation of TDI and ECH production in the Company, the core business of the Company was changed which was registered on 18 March 2013. The Company’s business activities pursuant to the resolution of EGM of Infrastruktura Kapuściska S.A. of 7 December 2012:

distribution and sale of electricity and heat;

steam and air conditioning supply;

buying and selling of own real estate;

lease and management of property;

performing the duties of a Trade and Technical Operator with relation to joint procurement of electricity for the Ciech Group companies;

general construction works related to linear transmission structures: pipelines, power lines, traction lines and telecommunications lines; water collection, treatment and supply; sewerage.

10.1) BORUTA - ZACHEM Kolor Spółka z ograniczoną odpowiedzialnością

Company sold on 8 March 2013.


consolidation at lower tier - 97.43%

10.2) ZACHEM UCR Spółka z ograniczoną odpowiedzialnością

Indirect affiliate of CIECH S.A. -

measurement under the equity method at lower

tier.

Indirect affiliate of CIECH S.A. - measurement

under the equity method at lower tier.

24.78% 24.39%

10.3) ZACHEM Epichlorohydryna Sp. z o.o. in liquidation





99.00% 97.44%

10.4) ZACHEM Energetyka Sp. z o.o.





99.00% 97.44%

10.5) ZACHEM Park Sp. z o.o. in liquidation





99.00% 97.44%

Soda Deutschland Ciech Group



100% 100% manufacture of other non-organic basic chemicals,

wholesale of chemical products,

production and distribution of electricity, 11.) Soda Deutschland Ciech GmbH

Lower-tier parent Lower-tier parent 100% 100%

11.1.) Sodawerk Holding Stassfurt GmbH





11.1.1.) Sodawerk Stassfurt Verwaltungs GmbH





11.1.2) Sodawerk Stassfurt GmbH&Co.KG






36

Company/Group





30.09.2012

Business

11.1.3) KWG GmbH





11.1.4) Kaverngesellschaft Stassfurt GbmH

Indirect affiliate of CIECH S.A.

measurement under the equity method at lower

tier.

Indirect affiliate of CIECH S.A. measurement under

the equity method at lower tier.

50% 50%

12) Ciech Pianki Sp. z o.o. Subsidiary of

CIECH S.A. - fully consolidated.


consolidated.

100% 100%

manufacture of other organic and non-organic chemicals,

13) Ciech Group Financing AB


consolidated. - 100% -

conducting financial activities, particularly in the lending of funds by issuing bonds and other financial instruments with institutional and private investors as well as the direct lending of such funds to the companies of the Group and carrying out any other activities in support of such activities and the provision of related services.


37

2. Effects of changes to the organisational structure of the Ciech Group’s business units in the three quarters of 2013, including legal mergers, acquisitions or disposals of the group's entities, long-term investments, demergers, restructuring and discontinued operations

In the three quarters of 2013 the following changes occurred in relation to companies in which CIECH S.A. owns a direct share, leading to changes in the structure of the Ciech Group: SODA MĄTWY S.A., JANIKOSODA S.A. and Soda Polska CIECH S.A.

As a result of implementation of the SODA MĄTWY S.A. and JANIKOSODA S.A. Division Plan of 27 August 2012, the Extraordinary General Shareholders’ Meetings of: SODA MĄTWY S.A., JANIKOSODA S.A. and CIECH S.A. approved, on 19 November 2012, the spin-off of SODA MĄTWY S.A. and JANIKOSODA S.A. and the transfer of part of the assets of both companies to CIECH S.A. in the form of an organised part of the enterprise, including 100% of shares in Soda Polska CIECH S.A. and the decrease of the share capital of SODA MĄTWY S.A. and JANIKOSODA S.A., i.e.: the share capital of SODA MĄTWY S.A. was decreased, pursuant to the EGM resolution of 19 November 2012,

from PLN 74,161 thousand to PLN 148 thousand by cancelling 1 series A share held by the Minority shareholder and decreasing the face value of the remaining shares of SODA MĄTWY S.A. The decrease of SODA MĄTWY S.A.’s share capital was registered on 25 January 2013. The decreased share capital of SODA MĄTWY S.A. amounts to PLN 148 thousand and is divided into 7,416,074 shares with a face value of PLN 0.02 each;

the share capital of JANIKOSODA S.A. was decreased, pursuant to the EGM resolution of 19 November 2012, from PLN 44,676 thousand to PLN 134, thousand by cancelling 1 series A share held by the Minority shareholder and decreasing the face value of the remaining shares of JANIKOSODA S.A. The decrease of JANIKOSODA S.A.’s share capital was registered on 21 January 2013. The decreased share capital of JANIKOSODA S.A. amounts to PLN 134 thousand and is divided into 4,467,607 shares with a face value of PLN 0.03 each.

on the date of the registration of the spin-off of SODA MĄTWY S.A. and JANIKOSODA S.A. and the decrease of their share capital on 25 January 2013, the ownership of 100% shares in Soda Polska CIECH S.A. was transferred to CIECH S.A.

JANIKOSODA S.A.

On 28 March 2013, CIECH S.A. sold to Ciech Trading S.A. 4,467,607 ordinary registered shares in JANIKOSODA S.A., with a face value of PLN 0.03 each, as a result of which, CIECH S.A. transferred the share ownership right to Ciech Trading S.A. Ciech Trading S.A. became the owner of 100% of shares in JANIKOSODA S.A. on the date of payment of the JANIKOSODA S.A.’s share price, i.e. on 28 March 2013. S.C. Uzinele Sodice Govora – Ciech Chemical Group S.A.

On 22 May 2013 JANIKOSODA S.A. became the owner of 92.91% of the share capital of U.S. Govora - Ciech Chemical Group S.A., as a result of the acquisition of shares on the Bucharest Stock Exchange. The shares, were offered for sale by CIECH S.A. on 17 May 2013. CIECH S.A. ceased to be a shareholder of the Company on 17 May 2013 (the Company is currently under the indirect control of CIECH S.A.) Ciech America Latina Ltd. in liqudation (seated in Brazylii)

The company terminated its activities on 13 June 2012. The liquidation process lasted until 17 June 2013 and since then the Company has been deregistered from the Register of Entrepreneurs. Alwernia S.A.

On 25 July 2013, the ownership of 2,277,431 Alwernia S.A.’s shares was passed to Alwernia Invest Sp. z o.o. and, therefore, the Conditional Agreement for the sale of Alwernia S.A.’s shares, entered into on 31 January 2013 (with further amendments) between CIECH S.A. (as the Seller) and Alwernia Invest Sp. z o.o. (as the Buyer) was performed. The total purchase price amounts to USD 13,435 thousands and is to be paid in instalments, i.e.:

down payment of USD 300 thousands was paid within one month from the date of signing the Preliminary Agreement,

the first part of USD 6,717.5 thousand was paid at the Closing Date (i.e. on 25 July 2013),

the remaining part of USD 6,717.5 thousand paid in 7 annual instalments, payable no later than on the last business day of the calendar year, beginning on 31 December 2013, the payment will be made on the dates and in the amounts stipulated in the payment schedule laying down the rules for calculating each instalment and its amount. Consequently, CIECH S.A. is no longer the shareholder of Alwernia S.A. and the company ceased to be the member of the Ciech Group.

Ciech-Polsin Private Ltd.

Due to the gradual decrease of the chemical products import to Asia, on 7 June 2013, the Board of Directors of Ciech-Polsin Pte. Ltd. decided to terminate the Company’s operating activities and to start preparations for its liquidation and to its deregistry from the Register of Entrepreneurs in Singapore.


38

In the three quarters of 2013, the following changes occurred in the structure of the Ciech Group in relation to companies in which CIECH S.A. indirectly owns shares:

Infrastruktura Kapuściska Group Boruta-Zachem Kolor Sp. z o.o. - on 1 February 2013, the agreement for the sale of 19,303 shares in Boruta-Zachem Kolor Sp. z o.o. was signed by and between Infrastruktura Kapuściska S.A. (as the Seller) and Coal Oil Sp. z o.o. (as the Buyer), for the total share sale price of PLN 5,200 thousand. On 29 March 2013, an Annex to the Sales Agreement was signed, under which the date of payment of the sale price was extended until 5 April 2013. The payment of the sale price was executed on 4 April 2013, and thus the Buyer became the owner of the shares on 4 April 2013. Metalko Sp. z o.o. – on 5 April 2013, Metalko Sp. z o.o. entered into an agreement with Infrastruktura Kapuściska

S.A. under which Infrastruktura Kapuściska S.A. sold to Metalko Sp. z o.o. 6,100 shares for a total price of PLN 915 thousand for redemption purposes. According to the agreement the price of the shares was reduced by Infrastruktura Kapuściska S.A.’s liability towards Metalko Sp. z o.o. in the amount of PLN 563 thousand. On 8 April 2013, the difference between the sale price of the shares and the amount of Infrastruktura Kapuściska S.A.’s liability of PLN 352 thousand was transferred to the account of Infrastruktura Kapuściska S.A. Upon payment of the above amount, the ownership of 6,100 shares of Infrastruktura Kapuściska S.A. was transferred to Metalko Sp. z o.o. Zachem Park Sp. z o.o. – On 6 March 2013, the Extraordinary General Meeting of Shareholders adopted a resolution to dissolve the Company and started its liquidation process. Zachem Epichlorohydryna Sp. z o.o. – On 6 March 2013, the Extraordinary General Meeting of Shareholders adopted a resolution to dissolve the Company and started its liquidation process. Soda Polska CIECH S.A. – on 25 January 2013, i.e. on the date of the registration of the spin-off of SODA MĄTWY S.A. and JANIKOSODA S.A. and the decrease of their share capital, the ownership of 100% shares in Soda Polska CIECH S.A. was transferred to CIECH S.A., as a result of which: 71,605,000 shares with a face value of PLN 5 each, with a total nominal value of PLN 358,025 thousand, that is

53.51% of the share capital of the Company – previously held by SODA MĄTWY S.A. – was acquired by CIECH S.A.,

62,205,000 shares with a face value of PLN 5 each, with a total nominal value of PLN 311,025 thousand, that is 46.49% of the share capital of the Company – previously held by JANIKOSODA S.A. – was acquired by CIECH S.A.

On 25 January 2013, i.e. on the date of transfer of ownership of Soda Polska CIECH S.A.’s shares to CIECH S.A., the SODA MĄTWY Group ceased to exist. Vitrosilicon S.A. Huta Szkła Wymiarki S.A. – according to the information obtained, on 13 May 2013, Huta Szkła Wymiarki S.A. was

declared bankrupt with the option to enter into composition. The Regional Court in Zielona Góra established a temporary administrative receiver (Ms Iwona Borzym) for the purpose of securing the debtor’ assets. Subsequently, on 3 September 2013, a change in the conduct of bankruptcy proceedings was registered by the Regional Court by transforming the same to bankruptcy involving liquidation of the debtor's assets. Ciech-Polsin Private Ltd. POLSIN OVERSEAS SHIPPING LTD. Sp. z o.o. registered office in Sopot – on 1 October 2013, the ownership of

36 shares of the Company was passed to CIECH S.A., in accordance with the Conditional Sales Agreement concluded on 6 August 2013 between CIECH S.A., with its registered office in Warsaw (as the Buyer) and CIECH-POLSIN Private Limited, with its registered office in Singapore (as the Seller). The Agreement concerns sales of 36 shares of POLSIN OVERSEAS SHIPPING LTD. Sp. z o.o., for a total price of PLN 811 thousand. Sold shares stand for 30% of the Company’s share capital. In the Group structure, the company Polsin Overseas Shipping Ltd. Sp. z o.o. will become a direct affiliate company, while previously it was an indirect affiliate company. Moreover, there were changes in the Ciech Group that did not lead to changes in the Group’s structure, i.e.: CHEMAN S.A. / Ciech Trading S.A.

On 11 February 2013, the Extraordinary General Meeting of Shareholders of Cheman S.A. adopted a resolution on changes in the Company’s Articles of Association concerning the change in the company’s name from Przedsiębiorstwo Chemiczne Cheman S.A. to Ciech Trading S.A. The change of the Company’s name was registered by the Court on 26 February 2013.

On 26 March 2013, the Extraordinary General Meeting of Shareholders of Ciech Trading S.A. adopted a resolution on the increase of the Company’s share capital by PLN 536 thousand, i.e. from PLN 17,018 thousand to PLN 17,554 thousand by way of issue of 59,570 series K ordinary registered shares, with a face value of PLN 9 each. The issue price of the series K shares is equal to their face value and amounts to PLN 9 per share. All series K shares were offered to an indicated addressee, i.e. CIECH S.A., in exchange for cash. Pursuant to an Agreement for the Acquisition of Shares of 27 March 2013, CIECH S.A. obtained the title to series K shares on 28 March 2013, i.e. on the date of crediting Ciech Trading S.A.’s bank account with the share issue price. The increase in share capital was registered by the Court on 4 April 2013.


39

Ciech Group Financing AB (publ)

On 1 February 2013, CIECH S.A., as a sole shareholder of Ciech Group Financing AB (publ), adopted a decisionto increase the share capital of the Company by EUR 600 thousand, by way of an “Unconditional shareholder’s contribution”, payable on demand.

US Govora S.A.

By virtue of a letter of 13 February 2013, the Authority for State Assets Administration – AAAS (former AVAS), informed that: 1. CIECH S.A. fulfilled its investment obligations included on the Agreement for the sale of shares in UZINELE

SODICE GOVORA S.A., with its registered office in Ramnicu Valcea, Romania, of a total value of USD 2,500 thousand;

2. AAAS gave its consent to release the pledge on 4,289,299 shares in the Company held by CIECH S.A., against which a registered pledge was established for the benefit of AAAS, under a Registered Pledge Agreement, in connection with the complete fulfilment of investment obligations provided for in the agreement;

3. AAAS gave its consent to terminate the Registered Pledge Agreement, under which a registered pledge was established for the benefit of AAAS, recorded in the Electronic Archive of Registered Pledges, in connection with the complete fulfilment of investment obligations provided for in the agreement;

4. AAAS confirmed compliance with contractual obligations contained in the Agreement for the sale of shares; 5. AAAS terminated the post-privatisation monitoring of the Agreement for the sale of shares in UZINELE SODICE

GOVORA S.A. ZACHEM S.A. / Infrastruktura Kapuściska S.A.

The change of the company name from Zakłady Chemiczne ZACHEM S.A. to Infrastruktura Kapuściska S.A. was registered under a court decision of 14 August 2013. The change of the company name was effected by virtue of the Extraordinary General Meeting resolution of 27 June 2013 on changing the Company’s Statute.


40

3. Financial data by operating segments

The tables below present data concerning revenues and costs as well as assets and liabilities of particular operating segments of the Ciech Group in the periods covered by the financial statements:

Ciech Group OPERATING SEGMENTS 01.01-30.09.2013 PLN ‘000

Soda Segment

Organic Segment

including: discontinued operations

Silicates and Glass Segment



Other operations Segment

Corporate functions -

reconciliation item

Eliminations (consolidation adjustments)

TOTAL

Revenues from third parties 1,453,867 759,189 97,304 269,239 172,470 155,272 51,135 - 2,705,900

Revenues from inter-segment transactions 44,672 10,244 - 2 957 - 11,203 - (67,078) -

Total revenues 1,498,539 769,433 97,304 269,241 173,427 155,272 62,338 - (67,078) 2,705,900

Cost of sales (1,220,540) (666,806) (92,264) (213,059) (143,448) (125,592) (44,208) - 56,212 (2,231,849)

Gross profit/(loss) on sales 277,999 102,627 5,040 56,182 29,979 29,680 18,130 - (10,866) 474,051

Selling costs (84,204) (28,375) (3,308) (39,434) (6,410) (6,293) (7,614) - 8,760 (157,277)

General and administrative expenses (47,312) (35,044) (18,171) (4,985) (4,601) (4,601) (2,902) (42,036) 1,581 (135,299)

Result on management of receivables (1,414) 475 19 (144) (1,658) (1,714) (98) - - (2,839)

Result on other operating activities (18,153) 22,807 29,983 2,877 (10,215) (10,254) 89 - (254) (2,849)

Operating profit/(loss) 126,916 62,490 13,563 14,496 7,095 6,818 7,605 (42,036) (779) 175,787

Exchange differences and interest on trade settlements

(6,705) (20,437) (5,927) (9,584) (13,409) (9,083) (942) 600 - (50,477)

Group borrowing costs - - - - - - - (112,308) - (112,308)

Result on financial activity (non-attributable to segments)

- - - - - - - 47,075 - 47,075

Share in profit of equity-accounted investees

253 - - - - - - - - 253

Profit/(loss) before tax 120,464 42,053 7,636 4,912 (6,314) (2,265) 6,663 (106,669) (779) 60,330

Income tax 758

Net profit/(loss) 61,088

Amortisation/depreciation 120,242 26,803 5,826 8,651 107 107 16 2,730 - 158,549

EBITDA 247,158 89,293 19,389 23,147 7,202 6925 7,621 (39,306) (779) 334,336

Normalized EBITDA* 286,525 71,965 X 23,254 17,506 X 7,295 (39,306) (779) 366,460

*Normalized EBITDA for the period ended 30 September 2013 is calculated as EBITDA adjusted by one-off items: impairment of assets: PLN -157.7 million, execution of the Agreement for Sale and Transfer of TDI Assets: PLN 176.7 million, result on sale of non-financial non-current assets: PLN 11.6 million, unused production capacity: PLN -48.7 million, reversal of provision for compensation; PLN 34.2 million, restructuring costs: PLN -17.4 million, recognition of provision for liabilities: PLN -12.4 million, liquidation of materials and property, plant and equipment: PLN -6.4 million, allowances for inventories: PLN -6.5 million, valuation of investment property to fair value: PLN 1.8 million, result on disposal of discontinued operations: PLN -6.1 million, other: PLN -1.2 million.


41

Ciech Group OPERATING SEGMENTS 01.01.-30.09.2012 PLN ‘000

Soda Segment

Organic Segment








reconciliation item


TOTAL

Revenues from third parties 1,436,620 1,300,155 601,382 343,655 166,596 127,250 110,560 42,760 - - 3,357,586

Revenues from inter-segment transactions 34,985 16,700 - 6 5,359 - 335 - - (57,385) -

Total revenues 1,471,605 1,316,855 601,382 343,661 171,955 127,250 110,895 42,760 - (57,385) 3,357,586

Cost of sales (1,232,19

8) (1,171,959) (555,862) (289,156) (154,171) (112,840) (95,538) (35,451) - 52,483 (2,890,539)

Gross profit/(loss) on sales 239,407 144,896 45,520 54,505 17,784 14,410 15,357 7,309 - (4,902) 467,047

Selling costs (93,472) (64,639) (36,374) (39,969) (5,565) (2,592) (7,037) (1,315) - 4,126 (206,556)

General and administrative expenses (49,614) (44,719) (23,323) (5,897) (5,436) (4,874) (7,904) (5,773) (29,935) 162 (143,343)

Result on management of receivables (1,492) (2,006) (1,844) (120) (155) (155) 1,764 (60) - - (2,009)

Result on other operating activities 6,907 (252,457) (206,539) (8,741) (43,922) (43,927) (26,008) (1,888) (1,373) (67) (325,661)

Operating profit/(loss) 101,736 (218,925) (222,560) (222) (37,294) (37,138) (23,828) (1,727) (31,308) (681) (210,522)


(15,087) (28,973) (4,765) (12,025) (4,928) (3,652) (7,102) (526) - - (68,115)

Group borrowing costs - - - - - - - - (75,765) - (75,765)


- - - - - - - - (6,903) - (6,903)

Share in profit of equity-accounted investees 684 (49) - - - - - - - - 635

Profit/(loss) before tax 87,333 (247,947) (227,325) (12,247) (42,222) (40,790) (30,930) (2,253) (113,976) (681) (360,670)

Income tax (9,232)

Net profit/(loss) (369,902)

Amortisation/depreciation 120,624 41,740 20,843 12,814 1,919 1,757 112 - 2,193 - 179,402

EBITDA 222,360 (177,185) (201,717) 12,592 (35,375) (35,381) (23,716) (1,727) (29,115) (681) (31,120)

Normalized EBITDA* 249,846 75,771 X 22,453 7,037 X 1,272 X (27,742) (681) 327,956

*Normalized EBITDA for the period ended 30 September 2012 is calculated as EBITDA adjusted by one-off items: impairment of assets: PLN -284.6 million, profit on sale of rights to the greenhouse gas emissions: PLN 2.1 million, valuation of energy certificates: PLN -14.4 million, valuation of investment property to fair value: PLN 10.6 million, abandonment costs PLN -13.9 million, recognition of provisions for the environmental protection: PLN -15.2 million, recognition of provisions for liabilities and expected losses: PLN – 25.2 million, unused production capacity: PLN -13.2 million, result on disposal of discontinued operations: PLN -1.9 million, other: PLN -3.4 million.


42

Ciech Group ASSETS AND LIABILITIES BY OPERATING SEGMENTS

30.09.2013 PLN ‘000

Soda Segment

Organic Segment




Corporate functions - reconciliation item


TOTAL

Property, plant and equipment 1,477,321 377,032 66,008 - 177 1,049 - 1,921,587

Intangible assets 91,673 34,557 1,725 - 552 4,106 - 132,613

- goodwill 46,767 15,070 39 - - - - 61,876

Investments in associates and jointly controlled entities measured under the equity method

4,743 - - - - - - 4,743

Inventory 114,752 74,224 30,625 - 1,426 - (1,351) 219,676

Trade receivables 289,769 149,978 23,868 1,017 11,926 - (24,555) 452,003

Non-current assets classified as held for sale included in previous periods under segment assets.

- - 368 - - - - 368

Other assets held for sale - - - - - 1,849 - 1,849

Other assets - - - - - 821,333 - 821,333

Total assets 1,978,258 635,791 122,594 1,017 14,081 828,337 (25,906) 3,554,172

Trade liabilities 264,171 94,435 29,071 10,402 6,941 - (22,019) 383,001

Liabilities related to assets classified as held for sale included in previous periods under segment liabilities

- - - - - - - -

Other liabilities held for sale - - - - - - - -

Other liabilities - - - - - 2,246,176 - 2,246,176

Total liabilities 264,171 94,435 29,071 10,402 6,941 2,246,176 (22,019) 2,629,177


43

Ciech Group ASSETS AND LIABILITIES BY OPERATING SEGMENTS

30.09.2012 PLN ‘000

Soda Segment

Organic Segment




Corporate functions - reconciliation item


TOTAL

Property, plant and equipment 1,495,534 460,294 74,450 16,709 511 1,618 - 2,049,116

Intangible assets 105,215 37,362 2,378 2,206 558 2,827 - 150,546

- goodwill 45,630 15,070 39 - - - - 60,739

Investments in associates and jointly controlled entities measured under the equity method

4,879 - - - - - - 4,879

Inventory 109,804 124,256 32,830 33,488 3,487 - (973) 302,892

Trade receivables 244,078 237,608 56,706 34,019 18,234 - (22,717) 567,928

Non-current assets classified as held for sale included in previous periods under segment assets

- - 500 - 442 - - 942

Other assets held for sale - - - - - - - -

Other assets - - - - - 644,995 - 644,995

Total assets 1,959,510 859,520 166,864 86,422 23,232 649,440 (23.690) 3,721,298

Trade liabilities 266,683 218,197 88,163 35,160 2,941 - (23,186) 587,958

Liabilities related to assets classified as held for sale included in previous periods under segment liabilities

- - - - - - - -

Other liabilities held for sale - - - -

- - -

Other liabilities - - - -

2,199,649

2,199,649

Total liabilities 266,683 218,197 88,163 35,160 2,941 2,199,649 (23,186) 2,787,607


44

Ciech Group

01.01.-30.09.2013 PLN ‘000

Soda Segment

Organic Segment


Silicates and Glass

Segment





reconciliation item


TOTAL

Recognised impairment losses 14,479 174,830 173,910 2,197 5,909 5,909 142 - - 197,557

Reversed impairment losses 1,917 29,753 24,414 477 565 470 105 - - 32,817

Recognised impairment losses (non- attributable to segments), including:

- - - - - - - 29,207 - 29,207

- discontinued operations - - - - - - - 28,091 - 28,091

Reversed impairment losses (non-attributable to segments), including:

- - - - - - - 672 - 672

- discontinued operations - - - - - - - 98 - 98

Interest income attributable to segments

1,155 916 214 - 40 38 - - (410) 1,701

Interest income recognised under Corporate Functions

- - - - - - - 2,876 - 2,876

Interest expense attributable to segments

1,792 541 647 37 - - 72 - (410) 2,032

Interest expense recognised under Corporate Functions

- - - - - - - 109,427 - 109,427


45

Ciech Group

01.01.-30.09.2012 PLN ‘000

Soda Segment

Organic Segment








reconciliation item


TOTAL

Recognised impairment losses 25,300 230,224 193,609 806 40,366 40,022 2,860 143 - - 299,556

Reversed impairment losses 2,777 4,586 1,510 233 678 444 405 4 - - 8,679

Recognised impairment losses (non- attributable to segments), including:

- - - - - - - - 55,181 - 55,181

- discontinued operations - - - - - - - - 51,611 - 51,611

Reversed impairment losses (non- attributable to segments), including:

- - - - - - - - 3,429 - 3,429

- discontinued operations - - - - - - - - 2,691 - 2,691

Interest income attributable to segments

419 1,205 235 3 51 44 48 25 - (317) 1,409

Interest income recognised under Corporate Functions

- - - - - - - - 2,438 - 2,438

Interest expense attributable to segments

3,535 3,762 3,587 33 18 13 399 173 - (317) 7,430

Interest expense recognised under Corporate Functions

- - - - - - - - 74,845 - 74,845


46

Ciech Group INFORMATION ON GEOGRAPHICAL AREAS

01.01.-30.09.2013 PLN ‘000

Poland European

Union Other European

countries Africa Asia Other regions TOTAL

Sales revenue 1,013,404 1,238,078 202,228 160,860 69,149 22,181 2,705,900

01.01.-30.09.2012 PLN ‘000

Poland European



Sales revenue 1,163,835 1,423,263 254,216 237,278 167,695 111,299 3,357,586

30.09.2013 PLN ‘000

Poland European



Non-current assets other than financial instruments 1,373,406 764,417 - - 16 - 2,137,839

Deferred income tax assets 45,089 7,837 - - - - 52,926

Other assets 825,521 468,427 50,756 10,080 7,200 1,423 1,363,407

Total assets 2,244,016 1,240,681 50,756 10,080 7,216 1,423 3,554,172

30.09.2012 PLN ‘000

Poland European



Non-current assets other than financial instruments 1,573,077 798,710 - - 254 - 2,372,041

Deferred income tax assets 13,875 8,673 - - 464 - 23,012

Other assets 928,265 284,790 45,143 25,048 22,958 20,041 1,326,245

Total assets 2,515,217 1,092,173 45,143 25,048 23,676 20,041 3,721,298


47

4. Balance-sheet exposure to currency risk

The table below presents the estimated balance sheet currency exposure of the Ciech Group in euro as at 30 September 2013 due to financial instruments (excluding figures of the Soda Deutschland Ciech Group):

Exposure to currency risk in EURO ('000 EUR) Impact on the

statement of profit or loss

Impact on statement of other

comprehensive income

Assets

Loans granted to SDC Group (treated as net investment in a foreign entity)

70,000 X

Loans granted to SDC Group (not treated as net investment in a foreign entity)

17,800 X

Trade and other receivables 23,522 X

Bank deposits 5,360 X

Liabilities

Trade and other liabilities (9,953) X

Loans, borrowings and bonds (hedge accounting) (245,000) X

Total exposure (138,271)

The table contains an analysis of the sensitivity of individual items of statement of financial position to foreign exchange rate changes as at 30 September 2013:

Analysis of sensitivity to foreign exchange rate changes

(PLN ‘000)* Impact on the statement of profit or loss

Impact on statement of

other comprehensive

income

Currency items of statement of financial position (1,383) 367 (1,750)

* for exchange rate increase of EUR/PLN rate by 1 grosz (1/100 PLN)

5. Information about fair value of financial instruments

a) financial instruments measured at fair value

As of 30 Sepmteber 2013 Ciech Group does not possess significant financial instruments measured at fair value, except for interest rate swap. Fair value of interest rate swap is measured as the difference between discounted interest cash flows (cash flows based on variable interest rate, so-called floating leg, and cash flows based on fixed interest rate, so-called fixed leg). The input data for this method is the market data on the interest rate from Reuters. The fair value of the interest rate swap as of 30 September 2013 amounted to PLN 617 thousand net and was presented separately as a short-term investments and other current liabilities. According to the fair value hierarchy, it is Level 2. In the three quarters of 2013, there were no transfers within the fair value hierarchy of instruments measured at fair value.

b) financial instruments not measured at fair value

The Ciech Group is in possession of foreign and domestic issued bonds, whose carring amount as of 30 September 2013 amounts to PLN 1,356,967 thousand and their fair value amounts to PLN 1,457,759 thousand. For the remaining financial instruments held by the Ciech Group (classified mainly as cash, loans and receivables, financial liabilities measured at amortized cost and financial liabilities exempt from the scope of IAS 39) their fair value is close to their carring amount.

6. Information on non-standard and non-routine transaction or transactions with related entities concluded by CIECH S.A. or its subsidiaries

In the three quarters of 2013, no transactions with related entities were concluded in the Ciech Group on other than market terms. In February 2013, CIECH S.A. redeemed all outstanding loans granted to Infrastruktura Kapuściska S.A. in the amount of PLN 85,109 thousand and interest in the amount of PLN 1,218 thousand.


48

7. Information on loan and borrowing sureties or guarantees granted by CIECH S.A. or its subsidiaries

Sureties and guarantees granted as at 30 September 2013

Beneficiary’s name

Amount of loans covered by surety in whole or in specific

part Surety period

Financial terms, including surety fee due to the company

Principal

Nature of relations between

CIECH S.A.

and the borrower

PLN ‘000

Infrastruktura Kapuściska S.A.*

Bank PEKAO S.A. 18,160 until 31.12.2014 None Spółka Wodna Kapuściska None

Nordea Bank 18,160 until 31.12.2014 None Spółka Wodna Kapuściska None

Total amount of

sureties granted 36,320

*On 31 August 1999, Spółka Wodna Kapuściska and Infrastruktura Kapuściska S.A. concluded an agreement on collection and treatment of sewage provided by Infrastruktura Kapuściska S.A. to the sewage treatment plant "Kapuściska". § 3 of this agreement provides that remuneration paid to Spółka Wodna Kapuściska for services performed will correspond to the so-called minimum amount (independent of the amount of waste supplied to clear), which is calculated to ensure repayment of Spółka Wodna Kapuściska’s liabilities on loans and borrowings. As of 30 September 2013, the debt of Spółka Wodna Kapuściska due to the loan granted by the NFOŚiGW amounted to PLN 7,936 thousand. Guarantees issued to Spółka Wodna Kapuściska as a collateral of the loan are limited by share of Infrastruktura Kapuściska S.A. in Spółka Wodna Kapuściska (45.4%). In addition, given the fact that the other guarantors are the City of Bydgoszcz, City of Solec Kujawski and Nitro-Chem S.A., the maximum potential claim against Infrastruktura Kapuściska S.A. should not exceed the amount of PLN 3,603 thousand.The claim is covered by the provision.


Total amount of liabilities covered by guarantee in whole or in specific part Guarantee

period

Financial terms, including guarantee

fee due to the company

Principal


CIECH S.A. and the

beneficiary currency ‘000 PLN ‘000

CIECH S.A.

ING Lease Romania IFN S.A.

EUR 12 51

31.10.2013

(the guarantee expired on due

date)

Collateral of lease payments

S.C. Uzinele Sodice Govora – Ciech Chemical

Group S.A. - Romania

Subsidiary

Deutsche Trustee Company Limited; bondholders

EUR 245,000 1,032,994

until total redemption of

bonds (max term

30.11.2019)

Collateral of liabilities due to bonds issued

Ciech Group Financing AB

(publ.) Subsidiary

Gdańska Fundacja Kształcenia Menedżerów

- 79 31.12.2013 Collateral of liabilities for advisory services

Infrastruktura Kapuściska S.A. Subsidiary

Total amount of

guarantees granted 1,033,124


49

8. Provisions and impairmanet allowances on assets

The Ciech Group's consolidated financial statements for the three quarters of 2013 disclosed the following changes (recognition, use and reversal) of provisions and impairment allowances on assets.*

Provision increase (PLN’000) 01.01.-30.09.2013 01.01.-30.09.2012

Deferred income tax liability 23,419 60,589

Provision for retirement gratuities, annual holiday, bonuses, compensation payments, etc.

2,143 7,747

Provision for environmental protection 380 16,207

Provision for liabilities (costs) 21,254 8,407

Provision for expected losses 246 19,100

Total 47,442 112,050

Provision decrease (use and reversal) (PLN’000) 01.01.-30.09.2013 01.01.-30.09.2012



39,487 11,443

Provision for environmental protection 1,769 5,754

Provision for liabilities (costs) - 227

Provision for restructuring 240 335

Provision for expected losses 39,376 2,068

Total 111,218 94,593

Impairment of assets (increase) (PLN’000) 01.01.-30.09.2013 01.01.-30.09.2012

Impairment of intangible assets - 3,667

Impairment of property, plant and equipment 178,729 279,218

Impairment of current receivables 4,803 10,930

Impairment of inventory 10,689 20,406

Impairment of non-current financial assets - 2,528

Total 194,221 316,749

Impairment of assets decrease (use and reversal) (PLN’000) 01.01.-30.09.2013 01.01.-30.09.2012

Impairment of intangible assets - 99



Impairment of inventory 10,348 4,967

Total 70,628 20,843

Change in deferred income tax assets (PLN’000) 01.01.-30.09.2013 01.01.-30.09.2012

Increase 91,434 62,690

Decrease 43,862 25,849

*The information does not include provisions and impairment allowances on assets presented as assets held for sale

In 2013, the Ciech Group made an assessment of indicators of impairment of assets coming from both internal and external sources of information. As a result of this analysis, S.C. Uzinele Sodice Govora – Ciech Chemical Group S.A. estimated recoverable amount according to IAS 36 “Impairment of assets”. The Company carried out an impairment test based on which an impairment allowance of of PLN 5,259 thousand was recognized.

In 2012, an impairment of property, plant and equipment of Infrastruktura Kapuściska S.A. was estimated based on valuation report adjusted by corresponding coefficients reflecting, among others, the posibility of its sales and other factors affecting the amount of allowances including the contract with BASF. In the reporting period, due to realization of the contract with BASF and recognition of this transaction in the statement of profit or loss, Infrastruktura Kapuściska S.A. recognized additional impairment allowances on assets of PLN 173,946 thousand.


50

In the three quarters of 2013, the Ciech Group reversed impairment allowances on property, plant and equipment and intangible assets in the total amount of PLN 24,759 thousand (mainly in Infrastruktura Kapuściska Group of PLN 23,970 thousand). The Ciech Group's consolidated financial statement for the third quarter of 2013 disclosed the following changes (recognition, use and reversal) of provisions and impairment allowances on assets.*

Provision increase (PLN’000) 01.07.-30.09.2013 01.07.-30.09.2012



1,040 2,164

Provision for environmental protection 127 442

Provision for liabilities (costs) 55 -

Provision for expected losses 228 3,322

Total 3,834 35,177

Provision decrease (use and reversal) (PLN’000) 01.07.-30.09.2013 01.07.-30.09.2012



2,256 8,431

Provision for environmental protection 593 1,022

Provision for restructuring 49 51

Provision for expected losses 2,329 130

Total 8,540 39,096

Impairment of assets (increase) (PLN’000) 01.07.-30.09.2013 01.07.-30.09.2012


Impairment of property, plant and equipment - 2,254

Impairment of current receivables 974 5,804

Impairment of inventory 7,442 -

Total 8,416 8,059

Impairment of assets decrease (use and reversal) (PLN’000) 01.07.-30.09.2013 01.07.-30.09.2012




Impairment of inventory 475 903

Total 21,043 6,345

Change in deferred income tax assets (PLN’000) 01.07.-30.09.2013 01.07.-30.09.2012

Increase 8,012 38,132

Decrease 7,053 3,637

* The information does not include provisions and impairment allowances on assets presented as assets held for sale


51

9. Notes to the Condensed Consolidated Statement of Other Comprehensive Income of the Ciech Group

Tax effect of each component of Other Comprehensive Income of the Ciech Group

01.01.-30.09.2013 01.01.-30.09.2012

PLN ‘000 Before tax Tax After tax Before tax Tax After tax

Currency translation differences (foreign companies) 2,423 573 2,996 (15,121) - (15,121)

Cash flow hedge (24,924) 4,754 (20,170) 4,851 (922) 3,929

Other 2 - 2 (5) - (5)

Other comprehensive income net of tax (22,499) 5,327 (17,172) (10,275) (922) (11,197)

Income tax and reclassification adjustments in Other Comprehensive Income

Other comprehensive income before tax PLN ‘000

change in the period 01.01.-30.09.2013 change in the

period 01.01.-30.09.2012

Currency translation differences - 2,423 - (15,121)

- remeasurement for the current period 2,423 - (15,121) -

Cash flow hedge - (24,924) - 4,851

- fair value remeasurement in the period (27,299) - 2,014 -

- reclassification to profit or loss 2,375 - 2,837 -

Other 2 2 5 5

Income tax attributable to other components of other comprehensive income - 5,327 - (922)

- accrued for the current period 5,665 - (383) -

- reclassification to profit or loss (338) - (539) -

Other comprehensive income net of tax - (17,172) - (11,197)


52

10. Information on purchase and disposal of property, plant and equipment and commitments for the acquisition of property, plant and equipment

Between 1 January and 30 September 2013, the Ciech Group carried out the following transactions increasing and decreasing the gross value of property, plant and equipment:

01.01-30.09.2013

Land

Buildings, offices

and land and

water engineering

facilities

Machinery and equipment

Means of transport

Other

property, plant and

equipment

Property, plant and

equipment under

construction

Property, plant and

equipment PLN ‘000

Gross value of property, plant and equipment at the beginning of the period

78,241 922,271 2,115,794 111,342 45,174 265,298 3,538,120

Purchase - - 9,631 94 1,312 - 11,036

Transfers from property, plant and equipment under construction 34 65,894 89,388 778 602 (156,696) -

Modernisation - 3,478 10,605 1,410 225 - 15,718

Components - 3,263 2,007 - - - 5,270

Capitalisation of borrowing costs - - - - - 3,998 3,998

Investment expenditure on property, plant and equipment under construction

- - - - - 95,392 95,392

Sales - (27,046) (18,544) (18,721) (510) - (64,821)

Disposal - (2,290) (21,462) (678) (1,362) - (25,791)

Reclassification to another group - 6,470 (7,420) 548 (950) (23,153) (24,505)

Decrease of the capital group - (2,284) (3,791) (299) (12) - (6,386)

Currency translation differences (foreign entities) 2,368 5,778 22,537 313 273 116 31,384

Other (34) 172 2,489 - (55) (39) 2,533

Gross value of property, plant and equipment assets at the end of the period

80,609 975,706 2,201,234 94,787 44,697 184,915 3,581,947

The liabilities accumed for acquisition of property, plant and equipment amounted to PLN 50,994 thousand. Other purchases were made with own financial resources or are a subject of a financial lease.


53

11. Information on changes in contingent liabilities or contingent assets and other matters

11.1 Significant disputed liabilities of the Ciech Group, except for disputes described in point IV.11.3

As at 30 September 2013, the total value of significant disputed liabilities of CIECH S.A. and subsidiaries of CIECH S.A., pursued in all types of proceedings before court, body appropriate for arbitration proceedings or public administration bodies amounted to PLN 125,642 thousand, of which PLN 66,908 thousand is covered by provisions. The amount of claims asserted against each of the following companies is as follows:

CIECH S.A. – PLN 22,169 thousand;

Soda Polska Ciech S.A. – PLN 1,039 thousand;

Infrastruktura Kapuściska S.A. – PLN 3,367 thousand;

S.C. Uzinele Sodice Govora - Ciech Chemical Group S.A. – PLN 93,632 thousand (RON 99,060 thousand);

Soda Dutschland Ciech Group – PLN 5,435 thousand (EUR 1,289 thousand). Description of significant disputed liabilities:

CIECH S.A.

On 16 December 2010, CIECH S.A. with its registered seat in Warsaw and Zakłady Azotowe “Puławy" S.A. with its registered seat in Puławy (“ZAP”) entered into a “Conditional Agreement on the Sale of Shares”. Under the Agreement, CIECH S.A. undertook to sell to ZAP shares in Gdańskie Zakłady Nawozów Fosforowych „FOSFORY" Sp. z o.o. The Agreement was in principle executed by both parties, as a result of which ZAP acquired 100% shares in GZNF „FOSFORY” Sp. z o.o., held by CIECH S.A. On 12 November 2012, the District Court in Warsaw, XVI Commercial Department, received a claim of ZAP against CIECH S.A. for the payment of PLN 18,864 thousand on account of CIECH S.A.'s alleged non-performance of the Agreement. The basis of the claim was the breach of warranties made in the said Agreement by CIECH S.A. In this respect, ZAP demanded the amount of PLN 18,607 thousand and a reimbursement of expenses incurred by ZAP for breach of warranties, in the amount of PLN 257 thousand. The legal basis for the claims asserted by ZAP are the provisions of Article 9 of the aforementioned Agreement. ZAP’s action against CIECH S.A. is derived from a number of actions of Agrochem Sp. z o.o. with its registered seat in Człuchów alleged by ZAP. On 5 January 2013, CIECH S.A. issued a response to the claim in which it questioned both its basis and its value.The claim is covered by the provision. US GOVORA S.A.

On 10 January 2013, the Trade Unions "Sodistul” filed a claim against US Govora S.A. concerning the following:

Payment of remuneration for the years 2010–2012 calculated based on a Social Agreement concluded in 2006 between CIECH S.A. and the Trade Union “Sodistul” in which CIECH S.A. declared assigning 16% of operating revenues for the payment of remuneration. This provision was subsequently transferred to the Collective Labour Agreement.

Budgeting the remuneration fund in the subsequent years at the level of at least 16% of the company’s revenues.

Increasing the number of employees to the level specified pursuant to Resolution no. 1/09.10.2009. The law suit started on 29 January 2013. The company applied for the defender. Four proceedings took place – the last one on 23 April 2013. Non of them was adjudicative. On 29 April 2013 the Union withdrew the claim which was confirmed by the appropriate sentence dated 21 May 2013. Due to withdrawal of the claim, the amount of the claim has not been included in the summary of claims asserted against the Ciech group companies that was presented above. The claim is covered by the provision. On 8 July 2013, US Govora S.A. received a claim filed against the Company by S.C. CET GOVORA S.A. (“CET”) to pay PLN 25,291 thousand concerning liabilities of US Govora S.A. due to CET resulting from the heat energy suppy and condensate collection agreement, softened water suppy agreement as well as the lease agreement of drinking water plant. The proceedings were held before the Voivodeship Court in Valcea.

On 8 July 2013, US Govora S.A. received a claim filed against the Company by CET to pay PLN 46,437 thousand concerning liabilities of US Govora S.A. due to CET resulting from the heat energy supplies agreement and agreement that spread payments for 2010 due based on the heat energy supply and condensate collection agreement into instalments . The Proceedings were held before the Voivodeship Court in Valcea.

On 24 July 2013, US Govora S.A. received a claim,filed against the Company by CET to pay PLN 3,362 thousand concerning liabilities of US Govora S.A. due to CET resulting from the price differences during the period from 1 July 2010 till 31 December 2010, defined on the basis of the heat energy supply agreement, as well as PLN 4,659 thousand arising from delays in payments, due based on the above-mentioned agreement during the period from 5 February 2010 till 31 December 2010. The proceedings were held before the Voivodeship Court in Valcea. The claim is covered by the provision of PLN 7,891 thousand.


54

On 31 July 2013, US Govora S.A. received a claim filed against the Company by CET to pay PLN 9,374 thousand concerning liabilities of US Govora S.A. due to CET resulting from the price differences during the period from 1 January 2012 till 30 April 2013, defined on the basis of the the heat energy suppy and condensate collection agreement, the amount of PLN 566 thousand arising from delays in payments, due based on the above-mentioned agreement during the period from 1 January 2011 till 31 December 2012, as well as PLN 2,027 thousand arising from delays in payments, due based on the above-mentioned agreement for the period from 1 January 2012 till 31 December 2012. The proceedings were held before the Voivodeship Court in Valcea. The claim is covered by the provision of PLN 11,967 thousand.

Under the agreement signed between both parties on 28 October 2013, CET agreed to withdraw all claims against the US Govora S.A. Requests for withdrawal of all claims have been filed until 8 November 2013.

11.2 Significant disputed receivables of the Ciech Group

As at 30 September 2013, the total value of significant disputed receivables of CIECH S.A. and subsidiaries of CIECH S.A., pursued in all types of proceedings before court, body appropriate for arbitration proceedings or public administration bodies amounted to PLN 13,922 thousand, of which PLN 7,061 thousand is covered by impairment allowances.

The amount of disputed receivables of each the following companies is as follows:

CIECH S.A. – PLN 135 thousand;

Soda Polska Ciech S.A. – PLN 206 thousand;

Ciech Trading S.A. (previously Cheman S.A.) – PLN 518 thousand;

Infrastruktura Kapuściska S.A. (previously Zachem S.A.) – PLN 5,362 thousand;

TRANSCLEAN Sp. z o.o. – PLN 56 thousand;

S.C. Uzinele Sodice Govora - Ciech Chemical Group S.A. – PLN 7,601 thousand (RON 8,042 thousand);

VITROSILICON – PLN 44 thousand.

11.3 Other significant cases with the Group companies’ participation

JANIKOSODA S.A and SODA MĄTWY S.A.

On 14 December 2011, a law firm Beiten Burkhardt, representing Gothear Finanzholding AG (Buyer), which in 2010 acquired shares in Polskie Towarzystwo Ubezpieczeniowe S.A. (PTU) belonging to SODA MĄTWY S.A. and JANIKOSODA S.A. (Sellers), delivered a notification of the violation of the Share Purchase Agreement. The main accusation towards the Sellers is not providing full information to the Buyer, which would allow him for a proper evaluation of operations and financial, actuarial and legal position of PTU. In the sent notification, the Buyer did not submit any claims for payment, but merely pointed out that, as a result of underestimation of the technical and insurance provisions, it might have suffered damage for which the Sellers (JANIKOSODA S.A. and SODA MĄTWY S.A.) are liable to the total amount of PLN 24,981 thousand. The Buyer declared the will to settle the case amicably. According to Gothaer, the basis for the responsibility is item 5.1.1 of the Share Purchase Agreement – compensation for damage resulting from untrue assurances and guarantees. Under item 5.2 of the Share Purchase Agreement, Gothaer is entitled to demand compensation of its damage amounting to PLN 55 million in a part equal to 45.42%, i.e. of PLN 24,981 thousand. In response, the law firm handling the case (legal advisor of the Sellers in the sale of shares in PTU) acting on behalf of the Sellers, on 31 January 2012 provided the Buyer with a letter containing detailed argumentation and completely rejecting the charges brought against the Sellers. On 23 January 2013, JANIKOSODA S.A. and SODA MĄTWY S.A. received a notice from the Regional Court for the Capital City of Warsaw, IX Commercial Department, informing about the date of hearing on the motion for a conciliation hearing filed by Gothear Finanzholding AG in which the Buyer indicated the value of the subject of the action to be PLN 24,981 thousand. The hearing was scheduled for 4 April 2013. No settlement was reached during that hearing. In the opinion of legal advisers appointed in this case, there is low probability of winning the case by the Buyer. The financial statements of JANIKOSODA S.A. and SODA MĄTWY S.A. do not contain any adjustments for that reason in the form of additional provisions. Infrastruktura Kapuściska S.A.

On 7 January 2013, CIECH S.A. obtained information that Air Products LLC and Air Products Chemical Europe B.V. (jointly: “Air Products”) had initiated arbitration proceedings against Infrastruktura Kapuściska S.A. (formerly ZACHEM S.A.), a subsidiary of CIECH S.A., before the International Chamber of Commerce in Paris. The statement of claim seeks payment of USD 98,609 thousand and additional compensation in an amount not defined in the statement of claim. Air Products based their claim on Infrastruktura Kapuściska S.A.’s allegedly unjustified and unlawful termination of an amine supply contract. CIECH S.A. considers the claim to be unfounded. In CIECH S.A.’s opinion, Air Products is not entitled to pursue a claim for payment against Infrastruktura Kapuściska S.A., because Infrastruktura Kapuściska S.A. effectively served a notice of termination of the amine supply contract and the contract was terminated in accordance with the terms thereof. The reason for its termination was the cessation of supplies of amine by Air Products from the factory in Pasadena, actual transfer of supply obligations to Bayer (that was, Infrastruktura Kapusciska S.A.’s major competitor on TDI market at that time) and Air Products’ failure to assure Infrastrukura Kapuściska S.A. about the possibility of subsequent performance of amine supplies in accordance with the contract.


55

On 15 March 2013, Infrastruktura Kapuściska S.A. sent to the International Chamber of Commerce in Paris a reply to the lawsuit of Air Products along with a statement of counter-claim of Infrastruktura Kapuściska S.A. against Air Products. In reply to the lawsuit and in the statement of counter-claim Infrastruktura Kapuściska S.A. challenged the statements of Air Products concerning alleged breach of the amine supply contract by Infrastruktura Kapuściska S.A. and reported own claims towards Air Products. Infrastruktura Kapuściska S.A. calls in particular:

statement that Air Products breached the agreement for amine supplies,

statement that Air Product acted grossly negligently, wilfully or in bad faith,

obliging Air Product to pay compensation, the amount of which will be settled in further stages of proceedings and to which Infrastruktura Kapuściska S.A is entitled for violations of the agreement for amine supplies by Air Products,

statement that Infrastruktura Kapuściska S.A. did not breach the agreement for amine supplies,

statement that Air Products is not entitled to any claims for damages against Infrastruktura Kapuściska S.A.,

obliging Air Products to reimburse all cost of arbitration proceedings and any other proceedings connected with arbitration proceedings.

On 3 July 2013, Infrastruktura Kapuściska S.A. supplemented the counterclaim by indicating the value of the compensation claims. Consequently, Infrastruktura Kapuściska S.A. claims a payment of at least PLN 161,647 thousand from Air Products as a compensation for damages incurred due to the breach of the agreement for amine (TDA) supplies by Air Products. The final amount of Infrastruktura Kapuściska S.A.’s compensation claims is to be determined in the course of arbitration proceedings.

CIECH S.A. believes that the request made by Infrastruktura Kapuściska S.A. merit consideration. As Infrastruktura Kapuściska S.A. effectively terminated its amine supply agreement because of its obvious infringement by Air Products, Infrastruktura Kapuściska S.A. is entitled to claim for damages, and the position taken by Air Products is not supported by the facts and law. Provision for the above-mentioned Air Products claim was not recognized.

CIECH S.A.


the acknowledgement of CIECH S.A.’s responsibility to Air Products LLC by virtue of events formulated in the amended petition,



According to the copy of the amended petition, Air Products LLC brings three claims. First, Air Products LLC alleges that CIECH S.A. made fraudulent representations to persuade Air Products LLC to make price reductions under the amine (TDA) delivery contracts executed between Air Products LLC and Air Products Chemicals Europe B.V. with a subsidiary of CIECH S.A., i.e. Infrastruktura Kapuściska S.A. Second, Air Products LLC alleges illegitimate interference by CIECH S.A. in the contractual relations between Air Products LLC and Infrastruktura Kapuściska S.A. Third, Air Products LLC alleges that CIECH S.A. was unjustly enriched by its alleged actions. Air Products LLC claims that, because of CIECH S.A.’s alleged actions, it has borne a loss of USD 16 million due to price reductions and a loss of at least USD 98 million due to lost profits. CIECH S.A. believes that the claims of Air Products LLC are without merit. On 22 April 2013, CIECH S.A. submitted a motion to dismiss Air Products LLC’s amended petition. CIECH S.A. raised three reasons for dismissal of the amended petition. First, the amended petition fails to state a legally valid claim upon which Air Products LCC could claim legal protection. Second, the petition should be dismissed because public and private considerations warrant adjudication of the dispute in Poland rather than before the Federal Regional Court for Eastern Region of Pennsylvania. Third, Air Products Chemicals Europe B.V., which is not a party to the lawsuit, is an indispensable party whose presence in the lawsuit is required, and that the case must be dismissed because its presence would destroy the federal court’s diversity jurisdiction. Currently both parties of the dispute are handling further pleadings. Provision for the abovementioned Air Products’ claim was not recognized.


56

11.4 Contingent assets and other contingent liabilities including guarantees and securities

OTHER CONTINGENT ITEMS PLN ‘000

30.09.2013 31.12.2012

1. Contingent assets 18,864 18,864

- other contingent receivables* 18,864 18,864

2. Other contingent liabilities 254,855 245,721

- guarantees and sureties granted 36,320 36,320

- other** 218,535 209,401

*On 13 February 2013, CIECH S.A. brought an action to the District Court in Gdańsk, IX Commercial Department, against Gdańskie Zakłady Nawozów Fosforowych Sp. z o.o. („GZNF”) to pay PLN 18,864 thousand as a compensation for making an alleged untrue declaration by GZNF to CIECH S.A. about the condition of Agrochem Człuchów sp. z o.o. with its registered office in Człuchów. The response to the above claim was issued on 16 May 2013, in which GZNF applied for a dismissal of a claim in whole and for award of reimbursement of litigation costs. ** Including: contingent liabilities related to sodium waste management in S.C. Uzinele Sodice Govora – Ciech Chemical Group S.A. According to Directive 1999/31/EC on the landfill of waste introduced into the Romanian legislation by Government Decree 349/2005 implementing resolution of the Treaty of Accession to the EU, USG should have ceased its activities related to the disposal of liquid industrial waste in landfills by 31 December 2012. Integrated Permit No. 68/2012, valid for 10 years provided that USG will solve the problem of soda waste after 2012. Mistake (in other EU countries, sodium waste are stored in exactly the same manner, in accordance with the requirements of BAT) related to qualification of ponds belonging to USG as a liquid landfill, was indicated to the environmental authorities repeatedly. The effects of this error affect the performance of not only USG, but also heat and power plants in which waste is made of ashes, delivered to landfill with hydraulic transport. Environmental authorities, however, ruled out reopening of the Accession Treaty. The solution to this situation was to be starting the process of closing the waste pools as at 1 January 2013. For this reason, the Company ordered a technical project „Sludge ponds closing and post-closure monitoring of USG-CIECH” The project involved the following steps:

1) Raise the pond (the technology used today) in order to raise all parts of the site to a level of +231 m. According to the cost estimate of the project, realization of this stage should cost EUR 733 thousand (PLN 3,091 thousand). 2) Reclamation of reservoir B4 - an estimated cost of EUR 736 thousand (PLN 3,103 thousand). 3) Fill the cavities between the sludge ponds - sections I and II – and the construction of the substructure to the level of +234 m.An etimated cost of this stage is EUR 5,040 thousand (PLN 21,250 thousand).

Described steps 1,2 and 3 was to be conducted within capital investments. Completion of step 1 would enable the Company to operate, assuming current production capacity at the level of 1,200 t per day, for a period of three years. However, the implementation of phase 3, would enable to operate even in the next 14 years. Therefore 17 years of further operations of the Company should be carried out without the necessity to incur expenses significantly influencing the financial situation of USG. The Company was going to undertake activities aimed at changing negative, erroneous record. Success would mean extending the life of joints for about 30 years, and the ability to reduce expenses related to the restoration of the entire surface of the landfill, which were estimated at EUR 38,093 thousand (PLN 160,612 thousand) as at the end of third quarter of 2013. The Company submitted the project with the necessary opinions to the local Office for the Environment Protection. The Management believes that there was no reason why the project would be rejected. First, the whole situation is the result of an erroneous decision. Second, the Company stored waste in the same way as other EU soda producers. Third, a refusal would mean the closure of heat and power plants, including those that heat the houses. In the mid 2013, a new possibility of solving the landfill problem was identified based on a change of qualification of sodium sludge ponds and certain activities were undertaken in order to sanction this concept, which were, however, abandoned later on, because of the fact that in Decision 677 of 28 October 2013 S.C. Uzinele Sodice Govora – Ciech Chemical Group S.A. obtained a new environmental permission which sanctioned the status of ponds as flow reservoirs. It means that the Company does not have to implement any more a pound closing project, which requires vast expenditures. Instead, it will exploit ponds like the other Ciech Group soda companies.

Other contingent liabilities as at 30 September 2013 amounted to PLN 254,855 thousand, which signifies an increase by PLN 9,134 thousand compared to 31 December 2012. Change in value of other contingent liabilities in comparison with their value as at 31 December 2012 results mainly from:

a change in EUR exchange rate applied by Soda Deutschland Ciech Group to translate, among others, a potential liability due to the reclamation of ponds, which will be recognized if the waste management regulations become applicable,

a change in RON exchange rate applied by S.C. Uzinele Sodice Govora – Ciech Chemical Group S.A. to translate contingent liability connected with sodium waste management,

reclassification of contingent liability to CET Govora to provisions in S.C. Uzinele Sodice Govora – Ciech Group S.A.,

a decrease of contingent liability due to a claim notified by CIECH S.A.’s former employee in relation to compensation for employment termination – decrease by PLN 1,441 thousand to PLN 778 thousand.


57

an introduction of contingent liability in Soda Polska Ciech S.A., resulting from the grant received under the “Infrastructure and Environment” program, the amount of grant received in the form of refund of outlays made is PLN 15,904 thousand.

11.5 Letters of support

As at 30 September 2013, CIECH S.A. was an obliged party in the following letters of support:

letter of support (Patronatserklärung) regarding Sodawerk Staßfurt GmbH&Co. KG seated in Staßfurt ("SWS") and KWG-Kraftwerksgesellschaft Staßfurt mbH seated in Staßfurt (“KWG”) granted to Vasa Kraftwerke-Pool GmbH&Co. KG seated in Staßfurt ("VASA") relating to financial liabilities of SWS and KWG resulting from the agreement dated 16 December 2011 on lease of heat and power plant concluded by SWS, KWG and VASA which include lease payments to VASA of EUR 13 million net annually. In the support letter CIECH S.A. has committed, among others, to ensure that SWS and KWG will be able to fulfil their financial commitments resulting from the above-mentioned agreement,

letter of support (Patronatserklärung) regarding KWG-Kraftwerksgesellschaft Staßfurt mbH seated in Staßfurt (“KWG”) granted to Erdgas Mittelsachsen GmbH (“EMS”) and Stadtwerke Staßfurt GmbH ("STW") relating to liabilities of KWG resulting from the silent partners’ agreement dated 2 December 2011 concluded by KWG, EMS and STW based on which, among others, EMS and STW has provided equity contributions in the total amount of EUR 12 million. In the support letter CIECH S.A. has committed to ensure, among others, that KWG will be able to fulfil its financial commitments resulting from the above-mentioned agreement,

letter of support (Patronatserklärung) regarding Sodawerk Staßfurt GmbH&Co. KG seated in Staßfurt ("SWS") granted to RWE Gasspeicher GmbH (“RWE”) relating to liabilities of SWS resulting from the agreement dated 5 May 2009 on salt caverns construction for the purpose of natural gas storage on the mining field Stassfurt according to which SWS has received payments of EUR 34.4 million from RWE until 30 September 2013. In the support letter CIECH S.A. has committed, among others, to ensure that SWS will have sufficient financial funds in order to be able to fulfil its financial commitments resulting from the above-mentioned agreement,

letter of support (Patronatserklärung) regarding KWG-Kraftwerksgesellschaft Staßfurt mbH seated in Staßfurt (“KWG”) granted to Erdgas Mittelsachsen GmbH (“EMS”) relating to liabilities of KWG to EMS resulting from the gas supplies agreement. In the support letter CIECH S.A. has committed, among others, to ensure that KWG will be equipped with the essential financial means to be able to fulfill their financial commitments against EMS resulting from the above-mentioned agreement. The responsibility of CIECH S.A. as regards the letter is limited to EUR 6 million untill 31 December 2013.

11.6 Other issues with CIECH S.A.’s participation

On 24 May 2013, CIECH S.A. filled a claim to the District Court in Warsaw, XX Commercial Department, against Bank Handlowy S.A. in Warsaw, requesting a payment of a principal of PLN 63,583 thousand due to liabilities resulting from option transactions concluded between CIECH S.A. and the Bank. Handling of pleadings is ongoing.

On 24 May 2013, CIECH S.A. filed a motion to the Regional Court Katowice-Wschód in Katowice for a summons to a conciliation hearing against ING Bank Śląski S.A. concerning liabilities resulting from option transactions concluded between CIECH S.A. and ING Bank Śląski S.A. The claim of CIECH S.A. against the Bank amounts to PLN 67,415 thousand, which constitutes a principal. At the hearing of 30 Ocober 2013 no settlement was reached as the bank challenges the validity and amount of the claim

12. Discontinued operations and non-current assets held for sale


The accounting principles applied in preparing the statement of profit or loss for discontinued operations are in line with the Group’s accounting policy. The results of discontinued operations include:

For the period between 1 January and 30 September 2013:

results of the Infrastruktura Kapuściska Group in relation with the discontinuation of TDI and ECH production in Infrastruktura Kapuściska S.A. – operations presented in the organic segment,

results of Alwernia S.A. – the period of participation in the Group, as well as the consolidated result on the disposal of this entity,

eliminations of results of transactions between consolidated entities in the Ciech Group and entities reported as discontinued operations,

results of the Ciech Group companies (including CIECH S.A.) on transactions with entities reported as

discontinued operations.


58

01.01.-30.09.2013 PLN ‘000

Result on discontiuned operations

Result on disposal of discontinued operations

Total discontinued operations

Sales revenues 252,576 - 252,576

Cost of sales (217,856) - (217,856)

Gross profit/(loss) on sales 34,720 - 34,720

Other operating income 253,421 - 253,421

Selling costs (9,601) - (9,601)

General and administrative expenses (22,772) - (22,772)

Other operating expenses (229,270) (6,117) (235,387)

Net financial income/expenses (8,244) - (8,244)

Profit/(loss) before tax 18,254 (6,117) 12,137

Income tax (47,357) - (47,357)

Net profit/(loss) (29,103) (6,117) (35,220)

Earnings per share (in PLN) (0.54) (0.12) (0.66)

The following table presents the details of the result on disposal of discontinued operations:

PLN ‘000 Alwernia S.A. Boruta Kolor Zachem

Sales revenues 42,723 5,200

Consolidated cost (48,853) (5,187)

Gross profit (6,130) 13

Income tax - -

Consolidated net result on disposal (6,130) 13

Payment received:


Received cash and cash equivalents 20,941 5,200

Deferred proceeds from the sale 21,782 -

Analysis of assets and liabilities disposed off:

PLN ‘000 Alwernia S.A.* Boruta Kolor Zachem

Total assets 109,293 8,722

Non-current assets 22,808 809

Property, plant and equipment 13,329 809

Intangible assets 9 -

Deferred income tax assets 9,470 -

Current assets 86,485 7,913

Inventory 25,903 1,839

Trade and other receivables 55,402 2,812

Cash and cash equivalents 5,180 3,262

Total liabilities 60,253 3,535

Non-current liabilities 17,593 -

Finance lease liabilities 65 -

Employee benefits 434 -

Other provisions 13,340 -

Deferred income tax liability (gross) 3,754 -

Current liabilities 42,660 3,535

Loans, borrowings and other debt instruments 8,138 -

Income tax liabilities 1,217 -

Employee benefits 1,790 845

Other provisions 418 -

Trade and other liabilities 31,017 2,690

Finance lease liabilities 80 -

Disposed net assets 49,040 5,187

% share in net assets 99.62% 100%


59

PLN ‘000 Alwernia S.A.* Boruta Kolor Zachem

Consolidated cost of net assets disposed off 48,853 5,187

* The assets and liabilities of the company before the date of the disposal were presented as assets held for sale.

Cash flows attrubutable to discontinued operations:


Net cash flows from operating activities 12,363 413

Net cash flows from investment activities (2,185) 14

Net cash flows from financial activities (14,960) 427

For the period between 1 January and 30 September 2012:

result of POLFA Sp. z o.o., for the period of participation in the Group, as well as the consolidated result on disposal of this entity,

results of the Infrastruktura Kapuściska Group,

results of Alwernia S.A.,

eliminations of results of transactions between consolidated entities in the Ciech Group and entities reported as discontinued operations,

results of the Ciech Group companies (including CIECH S.A.) on transactions with entities reported as discontinued operations.

01.01.-30.09.2012 PLN ‘000

Result on discontinued operations




Cost of sales (704,153) - (704,153)



Selling costs (40,,281) - (40,281)

General and administrative expenses (33,970) - (33,970)

Other operating expenses (274,712) (1,878) (276,590)

Net financial income/expenses (8,617) - (8,617)

Share of profit of equity-accounted investees (49) - (49)

Profit/(loss) before tax (268,213) (1,878) (270,091)

Income tax (8,486) (785) (9 ,271)

Net profit/(loss) (276,699) (2,663) (279,362)

Earnings per share (in PLN) (5.12) (0.05) (5.17)


PLN ‘000 POLFA Sp. z o.o.

Sales revenues 6,500

Consolidated cost (8,378)

Gross profit (1,878)

Income tax (785)

Consolidated net result on disposal (2,663)

Payment received:

PLN ‘000 POLFA Sp. z o.o.

Received cash and cash equivalents 6,500

Analysis of assets and liabilities disposed off: PLN ‘000 POLFA Sp. z o.o.*

Total assets 25,111

Non-current assets 3,012

Property, plant and equipment 1,552

Intangible assets 688

Other long-term investments 205

Right of perpetual usufruct 61

Deferred income tax assets 506

Current assets 22,099


60

PLN ‘000 POLFA Sp. z o.o.*

Inventory 4,110

Trade and other receivables 12,270

Cash and cash equivalents 5,719

Total liabilities 16,733

Non-current liabilities 117

Employee benefits 117

Current liabilities 16,616

Employee benefits 27

Trade and other liabilities 16,589

Disposed net assets 8,378

% share in net assets 100.00%

Consolidated cost of net assets disposed off 8,378

* The assets and liabilities of the company before the date of the disposal were presented as assets held for sale.

Cash flows attrubutable to discontinued operations: PLN ‘000 POLFA Sp. z o.o.

Net cash flows from operating activities 2,356

Net cash flows from investment activities 532

Net cash flows from financial activities (5,729)

Due to cessation of production of chemicals in the organic segment in December 2012 (based on resolution of the Extraordinary Shareholders’ Meeting of Infrastruktura Kapuściska S.A. from 2012), completion of the agreement with BASF, and disposal of Alwernia S.A., Ciech Group reclassified this part of its activity to discontinued operations (comparative data were restated accordingly). Assets and liabilities classified as held for sale As at 30 September 2013 the following assets were classified by the Ciech Group as “Non-current assets held

for sale”:

VITROSILICON S.A. disclosed property, plant and equipment of PLN 368 thousand (the land located in Iłowa), which is redundant for the Company’s business and for which the potential buyer is being sought. These assets are categorized in the silicates and glass segment,

Infrastruktura Kapuściska S.A. disclosed the following companies’ shares (assets assigned to the organic segment):

ZACHEM UCR – PLN 915 thousand,

BPP - Bydgoski Park Przemysłowy – PLN 934 thousand.

As at 30 September 2012 the following assets were recognised by the Ciech Group as “Non-current assets

classified as held for sale”:

VITROSILICON S.A. disclosed property, plant and eqquipment of PLN 500 thousand, including:

land – PLN 368 thousand,

buildings and structures – PLN 132 thousand. These assets are categorised in the silicates and glass segment.

CIECH - POLSIN Pte. Ltd. disclosed land with a building situated on it amounting to PLN 442 thousand. The company is in negotiations with a potential buyer. These assets are assigned to the other operations segment.

13. Information on loan agreements, including information about overdue debts or other violations of debt – related agreements

No loan agreement was called to maturity and there were no violations of payment terms for repayment of capital or interest due in relation to financial liabilities recognized in the statement of financial position in the period covered by these financial statements.

14. Information on non – consolidated subsidiaries and associates

When selecting entities for consolidation, the Management Board of the parent company applied the materiality principle in respect of their financial data (in line with the IFRS conceptual framework) in order to comply with the requirement of true and fair view of the economic and financial standing and financial result of the Group.


61

The total share of data of subsidiaries not covered by consolidation under the full method due to their irrelevance in relation to the total values of the Ciech Group for the period from 1 January to 30 September 2013 does not exceed 1% of total consolidated assets of the Group and the consolidated net revenues from sales of goods and products and financial operations.

Aggregated data of associates which were not measured under the equity method for the period from 1 January 2013 to 30 September 2013 does not exceed 1% of the total consolidated equity of the Group.

15. Reconciliation of data presented in the previously published report with the data presented in the current report.

The Group has changed the way of presentation of the result on disposal of discontinued operations. Until now, the result on disposal of discontinued operations was presented in the consolidated statement of profit or loss as “discontinued operations”, separately from the net income generated on the discontinued operations. Following the change, the result on disposal of discontinued operations is presented as “discontinued operations” under appropriate position of gain or loss, in accordance with the rules for presentation of identical events in continuing operations. In the case of the sale of net assets of subsidiaries, these are other operating incomes or expenses, respectively.


62

Condensed Consolidated Statement of Profit or Loss of the Ciech Group

PLN ‘000

01.01-30.09.2012 01.01-30.09.2012 01.01-30.09.2012

Previously published Changes Currently published







TOTAL

Sales revenues 2,586,194 771,392 3,357,586 - - - 2,586,194 771,392 3,357,586

Cost of sales (2,186,386) (704,153) (2,890,539) - - - (2,186,386) (704,153) (2,890,539)

Gross profit/(loss) on sales 399,808 67,239 467,047 - - - 399,808 67,239 467,047

Other operating income 42,054 22,177 64,231 - - - 42,054 22,177 64,231

Selling costs (166,275) (40,281) (206,556) - - - (166,275) (40,281) (206,556)

General and administrative expenses (109,373) (33,970) (143,343) - - - (109,373) (33,970) (143,343)

Other operating expenses (115,311) (274,712) (390,023) - (1,878) (1,878) (115,311) (276,590) (391,901)

Operating profit/(loss) 50,903 (259,547) (208,644) - (1,878) (1,878) 50,903 (261,425) (210,522)

Financial income 6,765 2,413 9,178 - - - 6,765 2,413 9,178

Financial expenses (148,931) (11,030) (159,961) - - - (148,931) (11,030) (159,961)

Net financial income/expenses (142,166) (8,617) (150,783) - - - (142,166) (8,617) (150,783)

Share of profit of equity-accounted investees 684 (49) 635 - - - 684 (49) 635

Profit/(loss) before tax (90,579) (268,213) (358,792) - (1,878) (1,878) (90,579) (270,091) (360,670)

Income tax 39 (8,486) (8,447) - (785) (785) 39 (9,271) (9,232)

Net profit/(loss) (90,540) (276,699) (367,239) - (2,663) (2,663) (90,540) (279,362) (369,902)

Profit/(loss) on disposal of discontinued operations - (2,663) (2,663) - 2,663 2,663 - - -

Net profit/(loss) for the year (90,540) (279,362) (369,902) - - - (90,540) (279,362) (369,902)

including:

Net profit/(loss) attributable to shareholders of the parent company

(88,194) (272,509) (360,703) - - - (88,194) (272,509) (360,703)

Net profit/(loss) attributed to non-controlling interest (2,346) (6,853) (9,199) - - - (2,346) (6,853) (9,199)


Basic (1.67) (5.17) (6.84) - - - (1.67) (5.17) (6.84)

Diluted (1.67) (5.17) (6.84) - - - (1.67) (5.17) (6.84)


63

16. Information on events after the balance sheet date

On 3 October 2013, in accordance with the Verbis ETA Sp. z o.o. share sales agreement concluded between tax advisory company Ożóg i Wspólnicy Sp. z o.o. with its registered office in Warsaw (as the Seller) and CIECH S.A. with its registered office in Warsaw (as the Buyer) CIECH S.A. became a 100% owner of Verbis ETA Sp. z o.o. The Agreement concerned 100 shares with a face value of PLN 50 each. The total sales price amounted to PLN 5 thousand. The ownership of Shares was passed to CIECH S.A. on the day on which the sales price was credited against the Seller’s bank account, i.e. on 3 October 2013.

On 3 October 2013, in accordance with the Verbis ETA Sp. z o.o. S.K.A. share sales agreement concluded between tax advisory company Ożóg i Wspólnicy Sp. z o.o. with its registered office in Warsaw (as the Seller) and CIECH S.A. with its registered office in Warsaw (as the Buyer) CIECH S.A. became the sole shareholder of Verbis ETA Sp. z o.o. Spółka Komandytowo-Akcyjna, with its registered office in Warsaw. The Agreement concerned 5,000 shares with a face value of PLN 10 each. The total sales price amounted to PLN 50 thousand. The ownership of Shares was passed to CIECH S.A. on the day on which the sales price was credited against the Seller’s bank account, i.e. on 3 October 2013.

CIECH S.A., acting as the sole shareholder of Soda Deutschland Ciech GmbH, by virtue of the resolution of the Extraordinary General Shareholders’ Meeting of Soda Deutschland Ciech GmbH of 8 October 2013, undertook to contribute additional payments to Soda Deutschland Ciech GmbH’ share capital in the amount of EUR 99,730 thousand. Simultaneously, on 8 October 2013, CIECH S.A. was informed by Soda Deutschland Ciech GmbH’s Management Board that the funds obtained from the additional payments were used in the first place to repay the loan granted to the Company on 19 December 2007 by CIECH S.A. in the amount of EUR 95,100 thousand plus accrued interest. The whole amount of the loan including interest (in aggregate EUR 99,730 thousand) was repaid until 31 October 2013.

On 21 October 2013, Share Sale Agreement concerning 100% shares of Turia Sp. z o.o. with its registered office in Warsaw, with a face value of each share of PLN 50 and the total sales price of PLN 11.3 thousand was concluded between Ciech Finance Sp. z o.o. (as the Buyer) and TFM Poland Sp. z o.o. (as the Seller). Consequently, Ciech Finance Sp. z o.o. became a 100% owner of Turia Sp. z o.o.

On 4 November 2013, the Extraordinary General Shareholders’ Meeting of Verbis ETA Sp. z o.o. S.K.A., a subsidiary of CIECH S.A., adopted a resolution on increasing Verbis ETA Sp. z o.o. S.K.A’s share capital from PLN 50 thousand to PLN 1,050 thousand, i.e. by PLN 1,000 thousand through issuing 100,000 series B ordinary registered shares numbered from 000001 to 100000, with a face value of PLN 10 each and the total nominal value of PLN 1,000 thousand. In accordance with the aforementioned resolution, the Shares will be subscribed for in private placement addressed to CIECH S.A. CIECH S.A. is the sole shareholder of Verbis ETA Sp. z o.o. S.K.A. and the sole shareholder of Verbis ETA Sp. z o.o., which is the sole general partner of Verbis ETA Sp. z o.o. S.K.A. The issue price of one Share was determined to amount to PLN 1,658.10. The total issue price of the Shares amounted to PLN 165,810 thousand. The Shares will be subscribed for by CIECH S.A. in exchange for a contribution in kind, which involves assets and property rights, evaluated to the total amount of PLN 165,810 thousand. In order to effect the above, on 4 November 2013, CIECH S.A. executed with Verbis ETA Sp. z o.o. S.K.A. the following agreements: 1) Agreement to subscribe for the shares, concerning the subscription by CIECH S.A. for the Shares at the issue price to be settled by CIECH S.A. through bringing by CIECH S.A. to Verbis ETA Sp. z o.o. S.K.A. a contribution in kind. 2) Agreement to transfer the assets, concerning the contribution in-kind by CIECH S.A. to Verbis ETA Sp. z o.o. S.K.A. to cover up the Share Issue Price, in relation to the execution of the Agreement to subscribe for the shares. As a result of the acquisition of Shares, the CIECH S.A.’S stake in Verbis ETA Sp. z o.o. S.K.A.’s share capital will remain the same (100%). For further details concerning the above-mentioned agreements see Current Report no. 32/2013.

On 4 November 2013, Verbis ETA Sp. z o.o. S.K.A. and Turia Sp. z o.o, CIECH S.A.’s subsidiaries, executed an assets sales agreement, under which Verbis ETA Sp. z o.o. S.K.A. sells to Turia Sp. z o.o. assets and property rights. The compensation for the assets sold was determined to amount to PLN 144,973 thousand net. In accordance with the agreement, the sales price will be paid untill 8 November 2013 to Verbis ETA Sp. z o.o. S.K.A.’s bank account; the parties may agree on other form of the sales price payment in a separate agreement. The execution of the above-mentioned agreement will affect the recognition of deferred income tax assets in the Ciech Group consolidated financial statements, which will be calculated based on the difference between the value of assets estimated for the purpose of sale and their tax value arising from the tax register of Verbis ETA Sp. z o.o. S.K.A. For further details concerning the above-mentioned agreement see Current Report no. 33/2013.

On 6 November 2013, the Loan Agreement was signed by and between Verbis ETA Sp. z o.o. S.K.A. and Turia Sp. z o.o. (subsidiaries of CIECH S.A.). Under the Agreement Verbis ETA Sp. z o.o. S.K.A. undertook


64

to provide a loan to Turia Sp. z o.o. in the amount of PLN 178,317 thousand. According to the Agreement, the loan is granted for 5 years from the date of the Loan Agreement, with a possibility of early repayment of the whole or a part of the principal amount of the Loan. The interest rate on the loan is fixed at WIBOR6M + margin of 5.85% p.a., payable semi-annually, where the first interest period will run from the date of transfer of the amount of the loan (i.e. no later than 30 days from the date of the Loan Agreement) to 30 June 2014. The Agreement was not concluded subject to any condition or term and does not include contractual penalty clauses or terms different from those commonly used in this type of contracts. Detailed information about this

agreement has been included in the current report no 34/2013.

On 8 November 2013, Verbis ETA Sp. z o.o. S.K.A. and Turia Sp. z o.o. (subsidiaries of CIECH S.A.) - concluded an agreement for set-off of mutual settlements due under the agreements they concluded, i.e.: liablilty of Verbis ETA Sp. z o.o. S.K.A. to Turia Sp. z o.o. due under the Assets Sale Agreement of PLN

178,317 thousand liability of Turia Sp. z o.o. to Verbis ETA Sp. z o.o. S.K.A. due under the Loan Agreement of PLN

178,317 thousand. The agreement was not concluded subject to any condition or term and does not include contractual penalty clauses or terms different from those commonly used in this type of contracts. Detailed information about this agreement has been included in the current report no. 35/2013.


65

V. Condensed Interim Separate Financial Statements of CIECH S.A.

1. Condensed Separate Statement of Profit or Loss of CIECH S.A.

01.01.-30.09.2013 01.01.-30.09.2012

PLN ‘000 Continued operations


TOTAL Continued

Operations* Discontinued Operations*

TOTAL

Sales revenues 1,233,554 142,069 1,375,623 1,337,964 578,601 1,916,565

Cost of sales (1,049,504) (137,123) (1,186,627) (1,140,469) (550,228) (1,690,697)


Other operating income 7,640 135,197 142,837 5,563 4 5,567

Selling costs (94,425) (1,753) (96,178) (105,847) (14,697) (120,544)

General and administrative expenses (46,232) (16) (46,248) (31,181) - (31,181)

Other operating expenses (23,236) (2,488) (25,724) (50,407) - (50,407)

Operating profit/(loss) 27,797 135,886 163,683 15,623 13,680 29,303

Financial income 596,858 33,135 629,993 27,312 38,055 65,367

Financial expenses (565,005) (178,026) (743,031) (132,285) (229,687) (361,972)

Net financial income/expenses 31,853 (144,891) (113,038) (104,973) (191,632) (296,605)

Profit/(loss) before tax 59,650 (9,005) 50,645 (89,350) (177,952) (267,302)

Income tax 74,006 (25,299) 48,707 5,314 (785) 4,529

Net profit/(loss) 133,656 (34,304) 99,352 (84,036) (178,737) (262,773)

Earnings per share (in PLN)

Basic 2.54 (0.65) 1.89 (1.59) (3.40) (4.99)

Diluted 2.54 (0.65) 1.89 (1.59) (3.40) (4.99)

* Restated – description in the note V.6.17.

The condensed separate statement of profit or loss of CIECH S.A. should be analysed together with the notes which constitute an integral part of the condensed interim separate

financial statements.


66

Condensed Separate Statement of Profit or Loss of CIECH S.A.

01.07.-30.09.2013 01.07.-30.09.2012



TOTAL Continued


TOTAL

Sales revenues 390,221 8,986 399,207 450,618 204,504 655,122

Cost of sales (331,668) (8,506) (340,174) (388,489) (195,241) (583,730)

Gross profit/(loss) on sales 58,553 480 59,033 62,129 9,263 71,392

Other operating income 2,636 - 2,636 905 4 909

Selling costs (30,561) (34) (30,595) (32,877) (4,695) (37,572)

General and administrative expenses (16,982) (8) (16,990) (9,458) - (9,458)

Other operating expenses (12,005) (936) (12,941) (15,984) - (15,984)

Operating profit/(loss) 1,641 (498) 1,143 4,715 4,572 9,287

Financial income 292,003 29,438 321,441 9,024 10,613 19,637

Financial expenses (309,977) (32,037) (342,014) (44,682) (9,413) (54,095)

Net financial income/expenses (17,974) (2,599) (20,573) (35,658) 1,200 (34,458)

Profit/(loss) before tax (16,333) (3,097) (19,430) (30,943) 5,772 (25,171)

Income tax 1,793 (259) 1,534 (3,482) 6,158 2,676

Net profit/(loss) (14,540) (3,356) (17,896) (34,425) 11,930 (22,495)

Earnings per share (in PLN)

Basic (0.28) (0.06) (0.34) (0.65) 0.22 (0.43)

Diluted (0.28) (0.06) (0.34) (0.65) 0.22 (0.43)


The condensed separate statement of profit or loss of CIECH S.A. should be analysed together with the notes which constitute an integral part of the condensed interim separate

financial statements.


67

2. Condensed Separate Statement of Other Comprehensive Income of CIECH S.A.

01.01-30.09.2013 01.01-30.09.2012



TOTAL Continued


TOTAL

Net profit/(loss) for the period 133,656 (34,304) 99,352 (84,036) (178,737) (262 773)

Other comprehensive income before tax that may be

reclassified to profit or loss 617 - 617 - - -

Cash flow hedge 617 - 617 - - -

Other comprehensive income before tax that may not be

reclassified to profit or loss - - - - - -

Income tax attributable to other comprehensive income (117) - (117) - - -

Income tax attributable to other comprehensive income that may

be reclassified to profit or loss (117) - (117) - - -


not be reclassified to profit or loss - - - - - -

Other comprehensive income net of tax 500 - 500 - - -



01.07-30.09.2013 01.07-30.09.2012



TOTAL Continued


TOTAL

Net profit/(loss) for the period (14,540) (3,356) (17,896) (34,425) 11,930 (22,495)

Other comprehensive income before tax that may be

reclassified to profit or loss 611 - 611 - - -

Cash flow hedge 611 - 611 - - -

Other comprehensive income before tax that may not be

reclassified to profit or loss - - - - - -

Income tax attributable to other comprehensive income (116) - (116) - - -


be reclassified to profit or loss (116) - (116) - - -


not be reclassified to profit or loss - - - - - -

Other comprehensive income net of tax 495 - 495 - - -

TOTAL COMPREHENSIVE INCOME (14,045) (3,356) (17,401) (34,425) 11,930 (22,495)


Detailed information on the components of other comprehensive income has been presented in point V.6.12 of this Report. The condensed separate statement of other comprehensive income of CIECH S.A. should be analysed together with the notes which constitutes an integral part of the

condensed interim separate financial statements.


68

3. Condensed Separate Statement of Financial Position of CIECH S.A.

PLN ‘000 30.09.2013 31.12.2012 30.09.2012

ASSETS

Non-current assets

Property, plant and equipment 3,475 5,104 5,646

Right of perpetual usufruct 843 843 843

Intangible assets 6,185 5,664 6,043

Investment property 6,073 6,073 6,073

Non-current receivables 30,767 19,908 19,742

Long-term borrowings granted 595,096 713,596 1,068,193

Shares in related entities 1,272,045 1,136,093 917,829

Other long-term investments 22,597 30,561 16,455

Deferred income tax assets 42,394 - -

Total non-current assets 1,979,475 1,917,842 2,040,824

Current assets

Inventory 19,114 19,263 19,405

Short-term investments - borrowings granted 80,189 90,787 3,868

Income tax receivables 3,759 262 -

Trade and other receivables 348,267 539,582 462,060

Cash and cash equivalents 249,008 31,322 101,629

Non-current assets held for sale - 66,930 -

Total current assets 700,337 748,146 586,962

T o t a l a s s e t s 2,679,812 2,665,988 2,627,786

EQUITY AND LIABILITIES

Equity

Share capital 287,614 287,614 287,614

Share premium 470,846 507,835 507,835

Other reserve capitals 76,199 76,199 76,199

Cash flow hedge 500 - -

Retained earnings 99,352 (36,989) 185,014

Total equity 934,511 834,659 1,056,662

Loans, borrowings and other debt instruments 1,321,045 1,286,264 -

Finance lease liabilities 581 1,206 1,404

Finance sale-and-lease-back liabilities 190 929 1,162

Employee benefits 767 717 2,055

Other non-current liabilities 12,842 20,211 20,086

Deferred Income tax liability - 6,193 12,062

Total non-current liabilities 1,335,425 1,315,520 36,769

Loans, borrowings and other debt instruments 53,276 33,303 1,009,746

Finance lease liabilities 823 755 734

Finance sale-and-lease-back liabilities 972 896 872

Trade and other liabilities 332,492 455,250 495,853

Income tax liabilities 265 321 -

Provisions (short-term provisions for employee benefits and other provisions)

22,048 25,133 27,150

Liabilities related to non-current assets classified as held for sale - 151 -

Total current liabilities 409,876 515,809 1,534,355

Total liabilities 1,745,301 1,831,329 1,571,124

T o t a l e q u i t y a n d l i a b i l i t i e s 2,679,812 2,665,988 2,627,786

The condensed separate statement of financial position of CIECH S.A. should be analysed together with the notes which constitute an integral part of the condensed interim separate financial statements.


69

4. Condensed Separate Statement of Cash Flows of CIECH S.A.

PLN ‘000 01.01-30.09.2013 01.01-30.09.2012

Net profit/(loss) for the period 99,352 (262,773)

Amortisation/depreciation 3,876 4,335

Recognition / (reversal) of impairment allowances 481,636 235,914

Foreign exchange (gain)/ loss 3,876 46,813

Investment property revaluation - (1,320)

(Profit) / loss on investment activities 67,398 (4,588)

(Profit) / loss on disposal of property, plant and equipment (1) (49)

Dividends and interest (529,082) (10,446)

Income tax (48,707) (4,529)

Other adjustments - merger 2,571 -

Other adjustments - write-off of a loan principal and accured intrest 86,327 -

Cash from operating activities before changes in working capital and provisions

167,246 3,357

Change in receivables 243,745 18,554

Change in inventory 149 9,100

Change in current liabilities (138,612) 68,527

Change in provisions (3,035) 20,807

Net cash generated from operating activities 269,493 120,345

Interest paid (62,419) (55,744)

Income tax (paid)/received (3,551) 2,395

Change in liabilities from loan arrangement commission 3,319 1,598

Valuation of derivatives (617) -

Net cash from operating activities 206,225 68,594

Cash flows from investment activities Inflows Disposal of intangible assets and property, plant and equipment 41 147

Disposal of a subsidiary 57,802 6,500

Hedging deposits 8,499 -

Dividends received 5,050 81

Interest received 2,648 2,011

Repayment of borrowings 82,545 21,141

Outflows Acquisition of intangible assets and property, plant and equipment (3,304) (1,523)

Acquisition of a subsidiary (net of cash acquired) (3,164) (20,983)

Expenditures connected with increase of capital and capital contributions (536) -

Borrowings granted (146,727) (38,380)

Net cash from investment activities 2,854 (31,006)

Cash flows from financial activities Inflows Proceeds from loans and borrowings 46,439 83,315

Outflows Repayment of loans and borrowings (40,000) (33,882)

Payment of finance lease liabilities (1,222) (966)

Net cash from financial activities 5,217 48,467

Total net cash flows 214,296 86,055

Cash and cash equivalents at the beginning of the period 31,322 15,099

Impact of foreign exchange differences 3,390 475

Cash and cash equivalents at the end of the period 249,008 101,629

The condensed separate statement of cash flows of CIECH S.A should be analysed together with the notes which constitute an integral part of the condensed interim separate financial statements.


70

5. Condensed Separate Statement of Changes in Equity of CIECH S.A.

PLN ‘000 Share capital Share premium Cash flow hedge Other reserve

capitals Retained earnings Total equity

Equity as at 01/01/2013 287,614 507,835 - 76,199 (36,989) 834,659

Coverage of losses for the year 2012 - (36,989) - - 36,989 -

Total comprehensive income for the period - - 500 - 99,352 99,852

Net profit/(loss) - - - - 99,352 99,352

Other comprehensive income - - 500 - - 500

Equity as at 30/09/2013 287,614 470,846 500 76,199 99,352 934,511



Equity as at 01/01/2012 287,614 508,122 - 76,199 447,787 1,319,722

Share premium decrease - (287) - - - (287)

Total comprehensive income for the period - - - - (484,776) (484,776)

Net profit/(loss) - - - - (484,776) (484,776)

Other comprehensive income - - - - - -

Equity as at 31/12/2012 287,614 507,835 - 76,199 (36,989) 834,659



Equity as at 01/01/2012 287,614 508,122 - 76,199 447,787 1,319,722

Share premium decrease - (287) - - - (287)

Total comprehensive income for the period - - - - (262,773) (262,773)

Net profit/(loss) - - - - (262,773) (262,773)

Other comprehensive income - - - - - -

Equity as at 30/09/2012 287,614 507,835 - 76,199 185,014 1,056,662

The condensed separate statement of changes in equity of CIECH S.A should be analysed together with the notes which constitute an integral part of the condensed interim separate financial statements.


71

6. Notes to the condensed interim separate financial statements of CIECH S.A.

6.1. Basis for preparation and accounting principles (policy)

The Extraordinary General Meeting of Shareholders of CIECH S.A. adopted a resolution no. 4 on 31 January 2007, concerning preparation of separate financial statements in accordance with the International Financial Reporting Standards as approved by the European Union.

The presented interim separate financial statements were drawn up in compliance with IAS 34 „Interim Financial Reporting” as approved by the European Union and the Regulation of the Minister of Finance dated 19 February 2009, with amendments, on current and periodic information published by issuers of securities and the conditions of recognising as equivalent the information required by the law provisions of a country which is not a member state (Journal of Laws No. 33, item. 259). Detailed information concerning principles and methodes of valuation of assets and liabilities and measurement of the financial result as well as the method of preparing the financial statements and comparative information is included in the report of CIECH S.A. for the year 2012, published on 19 April 2013. In these financial statements CIECH S.A. applied the changes in the titles of the particular statements in accordance with the new requirements of IAS 1 — “Presentation of Financial Statements”. Other amendments to IFRSs that came into force from 1 January 2013, has had no significant impact on the separate financial statements of the Company. CIECH S.A. intends to adopt amendments to IFRSs that are published but not effectiveas at the date of publication of these separate financial statements in accordance with their effective date. The estimated impact of amendments to IFRSs on the Company’s future separate financial statements was presented in the note 2 of the separate financial statements of CIECH S.A. for the year 2012, published on 19 April 2013. During the three quarters of 2013 there was a transaction in which separated parts of assets of SODA MĄTWY S.A and JANIKOSODA S.A were transferred to CIECH S.A., after the spin-off processes had been completed. In accordance with the accounting policy assumed by the Company, the acquired assets were recognized at book value and the surplus of the acquired net assets over the remuneration received was presented as dividend revenue. Since the transaction was treated as a dividend, there was no restatement of comparative data.

6.2. Earnings per share

Data concerning profit and shares, which is the basis for calculating basic and diluted earnings per share, has been presented below:

PLN ‘000 01.01.-30.09.2013 01.01.-30.09.2012

Net profit /(loss) on continued operations attributable to the shareholders of the parent company

133,656 (84,036)

Net profit /(loss) on discontinued operations attributable to the shareholders of the parent company

(34,304) (178,737)

Net profit /(loss) attributable to the shareholders of the parent company, applied to calculate basic earnings per share

99,352 (262,773)

Net profit /(loss) attributable to the shareholders of the parent company, applied to calculate diluted earnings per share

99,352 (262,773)

pcs. 01.01-30.09.2013 01.01-30.09.2012

Weighted average number of issued ordinary shares, applied to calculate basic earnings per share

52,699,910 52,699,909

Weighted average number of issued ordinary shares, applied to calculate diluted earnings per share

52,699,910 52,699,909

6.3. Seasonality and cyclicality of the operations

Information on seasonality and cyclicality has been presented in point II.3 of this Report.

6.4. Changes in accounting estimates

There were no material changes in the accounting estimates disclosed in the previous financial years.


72

6.5. Information on the issue, redemption and repayment of debt securities and equity securities

Information on the issue, redemption and repayment of debt securities and equity securities has been presented in point II.9 of this Report.

As at 30 September 2013, CIECH S.A. held debt securities in the form of issued domestic and intragroup bonds. Their carrying value amounted to PLN 1,359,854 thousand and the fair value was PLN 1,469,693 thousand. As at the balance sheet date, the accrued interest amounted to PLN 43,703 thousand.

6.6. Information on dividends paid

Information on dividends paid has been presented in point II.10 of this Report.


73

6.7. Financial data by operating segments

CIECH S.A. 01.01.-30.09.2013 PLN ‘000

Soda Segment

Organic Segment

including discontinued operations



Silicates and

Glass Segment




reconciliation item

TOTAL

Revenues from third parties 728,413 297,711 49,520 15,312 3,527 156,685 52 - - 1,198,173

Revenues from inter-segment transactions

62,915 24,876 11,025 77,997 77,997 1,125 10,537 - - 177,450

Total revenue 791,328 322,587 60,545 93,309 81,524 157,810 10,589 - - 1,375,623

Cost of sales (665,739) (300,016) (57,438) (90,561) (79,685) (129,758) (553) - - (1,186,627)

Gross profit/(loss) on sales 125,589 22,571 3,107 2,748 1,839 28,052 10,036 - - 188,996

Selling costs (57,394) (12,813) (1,685) (794) (68) (23,756) (1,421) - - (96,178)

General and administrative expenses

(3,739) (449) (16) - - (24) - (8) (42,036) (46,248)

Result on management of receivables

(7,896) (4,291) (2,488) - - - (5,372) - - (17,559)

Result on other operating activities

182 135,073 135,197 (2) - 1 (582) - - 134,672

Operating profit/(loss) 56,742 140,091 134,115 1,952 1,771 4,273 2,661 (8) (42,036) 163,683


(4,013) (19,259) (5,280) (6,650) (2,231) (9,635) (688) - - (40,245)

Borrowing costs - - - - - - - - (20,108) (20,108)


- - - - - - - - (52,685) (52,685)

Profit/(loss) before tax 52,729 120,832 128,835 (4,698) (460) (5,362) 1,973 (8) (114,829) 50,645

Income tax

48,707

Net profit/(loss)

99,352

Amortisation/depreciation 877 249 X - X 71 - X 2,679 3,876

EBITDA 57,619 140,340 X 1,952 X 4,344 2,661 X (39,357) 167,559

Normalized EBITDA* 57,610 5,145 X 1,952 X 4,346 2,913 X (39,357) 32,609

*Normalized EBITDA for the period ended 30 September 2013 is calculated as EBITDA adjusted by one-off items including mainly: execution of the Agreement for Sale and Transfer of TDI Assets: PLN 135,197 thousand, other PLN -247 thousand.


74

CIECH S.A. 01.01.-30.09.2012 PLN ‘000

Soda Segment

Organic Segment




Silicates and

Glass Segment


including discontinue

d operations


reconciliation item

TOTAL

Revenues from third parties 722,990 685,579 426,159 37,599 4,378 259,866 673 23 - 1, 706,707

Revenues from inter-segment transactions

51,614 80,456 71,072 76,969 76,969 819 - - - 209,858

Total revenue 774,604 766,035 497,231 114,568 81,347 260,685 673 23 - 1, 916,565

Cost of sales (631, 452) (719, 886) (470, 456) (111, 366) (79, 772) (227, 759) ( 234)

- (1,690, 697)

Gross profit/(loss) on sales 143,152 46,149 26,775 3,202 1,575 32,926 439 23 - 225,868

Selling costs (63, 688) (29, 337) (14, 607) (1, 020) ( 89) (26, 499) - - - (120, 544)

General and administrative expenses

( 644) ( 904) - ( 562) - ( 1) - - (29, 070) (31, 181)

Result on management of receivables

(18, 338) ( 118) - - - - (2, 107) - - (20, 563)

Result on other operating activities 1,379 ( 132) - ( 35) - 82 (25, 518) 4 ( 53) (24, 277)

Operating profit/(loss) 61,861 15,658 12,168 1,585 1,486 6,508 (27, 186) 27 (29, 123) 29,303


(10, 752) (22, 996) (2, 301) (3, 389) (2, 157) (11, 748) (6, 718) ( 173)

(55, 603)

Borrowing costs - - - - - - - - (22, 131) (22, 131)


- - - - - - - - (218, 871) (218, 871)

Profit/(loss) before tax 51,109 (7, 338) 9,867 (1, 804) ( 671) (5, 240) (33, 904) ( 146) (270, 125) (267, 302)

Income tax

4,529

Net profit/(loss) (262, 773)

Amortisation/depreciation 834 930 X 162 X 215 - X 2,194 4,335

EBITDA 62,695 16,588 X 1,747 X 6,723 (27, 186) X (26, 929) 33,638

Normalized EBITDA* 61,395 16,764 X 1,775 X 7,023 (2, 632) X (26, 876) 57,449

*Normalized EBITDA for the period ended 30 September 2013 is calculated as EBITDA adjusted by one-off items including mainly: valuation of investment property to fair value: PLN 1,320 thousand, recognition of provisions: PLN -22,440 thousand, recognition of impairment allowances: PLN -4,266 thousand, reversal of provisions: PLN 1,372 thousand, other: PLN -17 thousand.


75

CIECH S.A. ASSETS AND LIABILITIES BY OPERATING SEGMENTS

30.09.2013 PLN ‘000

Soda Segment

Organic Segment



Other operations

Segment


reconciliation item

TOTAL

Property, plant and equipment 856 244 - 69 - 2,306 3,475

Intangible assets 1,524 433 - 124 - 4,104 6,185

Inventory 12,037 7,077 - - - - 19,114

Trade receivables 220,176 33,919 1,017 11,408 3,074 - 269,594

Other assets - - - - - 2, 381,444 2, 381,444

Total assets 234,593 41,673 1,017 11,601 3,074 2, 387,854 2, 679,812

30.09.2013 PLN ‘000

Soda Segment

Organic Segment



Other operations

Segment


reconciliation item

TOTAL

Trade liabilities 217,596 43,827 10,402 17,330 - - 289,155

Other liabilities - - - - - 1, 456,146 1, 456,146

Total liabilities 217,596 43,827 10,402 17,330 - 1, 456,146 1, 745,301

30.09.2012 PLN ‘000

Soda Segment

Organic Segment



Other operations

Segment


reconciliation item

TOTAL

Property, plant and equipment 1,170 1,305 228 302 - 2,641 5,646

Intangible assets 1,252 1,397 244 323 - 2,827 6,043

Inventory 9,722 9,308 375 - - - 19,405

Trade receivables 185,652 113,228 14,060 15,863 10,346 - 339,149

Other assets - - - -

2, 257,543 2, 257,543

Total assets 197,796 125,238 14,907 16,488 10,346 2, 263,011 2, 627,786

30.09.2012 PLN ‘000

Soda Segment

Organic Segment



Other operations

Segment


reconciliation item

TOTAL

Trade liabilities 247,324 97,170 31,026 75,951 - - 451,471

Other liabilities - - - - - 1, 119,653 1, 119,653

Total liabilities 247,324 97,170 31,026 75,951 - 1, 119,653 1, 571,124


76

CIECH S.A.

01.01.-30.09.2013

PLN ‘000

Soda Segment

Organic Segment



Other operations

Segment


reconciliation item

TOTAL

Recognised impairment losses 11,819 5,227 38 - 5,372 - 22,456

Reversed impairment losses 4,259 933 92 - - - 5,284

Recognised impairment losses (non-attributable to segments)

- - - - - 590,618 590,618

Reversed impairment losses (non-attributable to segments)

- - - - - 110,972 110,972

16,078 6,160 130 - 5,372 701,590 729,330

CIECH S.A.

01.01.-30.09.2012

PLN ‘000

Soda Segment

Organic Segment



Other operations

Segment


reconciliation item

TOTAL

Recognised impairment losses 18,690 281 344 - 6,624 - 25,939

Reversed impairment losses 14 140 234 - 251 - 639

Recognised impairment losses (non-attributable to segments)

- - - - - 232,416 232,416

Reversed impairment losses (non-attributable to segments)

- - - - - 55 55

18,704 421 578 - 6,875 232,471 259,049


77

CIECH S.A. INFORMATION ON GEOGRAPHICAL AREAS

Assets by geographical areas

PLN ‘000 30.09.2013 30.09.2012

Poland 1,747,307 1,791,262

European Union 881,665 751,602

Other European countries 33,683 42,781

Africa 8,679 20,641

Asia 7,356 12,525

Other regions 1,122 8,975

Total 2,679,812 2,627,786

Sales revenues by geographical areas

PLN ‘000 01.01.-30.09.2013 01.01.-30.09.2012

Poland 608,518 721,767

European Union 488,450 670,277

Other European countries 133,406 188,556

Africa 117,996 179,674

Asia 11,876 69,252

Other regions 15,377 87,039

Total 1,375,623 1,916,565

6.8. Information on material events that occurred after 30 September 2013 and have not been reflected in the presented interim report

There were no material events that occurred after 30 September 2013 and have not been reflected in the financial statements for the period from 1 January to 30 September 2013.

6.9. Information on changes in shareholding structure

In the three quarters of 2013, there were changes in the portfolio of shares that are described in point IV.2 of this Report.

6.10. Information on changes in contingent liabilities or contingent assets and other matters

6.10.1 Significant disputed liabilities of CIECH S.A., except for disputes described in point 6.10.3.

As at 30 September 2013, the total value of significant disputed liabilities of CIECH S.A. pursued in all types of proceedings before court, body appropriate for arbitration proceedings or public administration body amounts to PLN 22,169 thousand, of which PLN 21,940 thousand is covered by provisions.

Description of significant disputed liabilities:

On 16 December 2010, CIECH S.A. with its registered seat in Warsaw and Zakłady Azotowe “Puławy" S.A. with its registered seat in Puławy (“ZAP”) entered into a “Conditional Agreement on the Sale of Shares”. Under the Agreement, CIECH S.A. undertook to sell to ZAP shares in Gdańskie Zakłady Nawozów Fosforowych „FOSFORY" Sp. z o.o. The Agreement was in principle executed by both parties, as a result of which ZAP acquired 100% shares in GZNF „FOSFORY” Sp. z o.o., held by CIECH S.A. On 12 November 2012, the District Court in Warsaw, XVI Commercial Department, received a claim of ZAP against CIECH S.A. for the payment of PLN 18,864 thousand on account of CIECH S.A.'s alleged non-performance of the Agreement. The basis of the claim was the breach of warranties made in the said Agreement by CIECH S.A. In this respect, ZAP demanded the amount of PLN 18,607 thousand and a reimbursement of expenses incurred by ZAP for breach of warranties, in the amount of PLN 257 thousand. The legal basis for the claims asserted by ZAP are the provisions of Article 9 of the aforementioned Agreement. ZAP’s action against CIECH S.A. is derived from a number of actions of Agrochem Sp. z o.o. with its registered seat in Człuchów alleged by ZAP. On 5 January 2013, CIECH S.A. issued a response to the claim in which it questioned both its basis and its value. The claim is covered by the provision.

6.10.2 Significant disputed receivables of CIECH S.A.

As at 30 September 2013, the total value of significant disputed receivables of CIECH S.A. pursued in all types of proceedings before court, body appropriate for arbitration proceedings or public administration bodies amounts to PLN 135 thousand, of which PLN 113 thousand is covered by impairment allowances.


78

6.10.3 Other significant cases with CIECH S.A.’s participation


The acknowledgement of CIECH S.A.’s responsibility to Air Products LLC by virtue of events formulated in the amended petition,



According to the copy of the amended petition, Air Products LLC brings three claims. First, Air Products LLC alleges that CIECH S.A. made fraudulent representations to persuade Air Products LLC to make price reductions under the amine delivery contracts executed between Air Products LLC and Air Products Chemicals Europe B.V. and subsidiary of CIECH S.A., i.e. Infrastruktura Kapuściska S.A. Second, Air Products LLC alleges illegitimate interference by CIECH S.A. in the contractual relations between Air Products LLC and Infrastruktura Kapuściska S.A. Third, Air Products LLC alleges that CIECH S.A. was unjustly enriched by its alleged actions. Air Products LLC claims that, because of CIECH S.A.’s alleged actions, it has borne a loss of USD 16 million due to price reductions and a loss of at least USD 98 million due to lost profits. CIECH S.A. believes that the claims of Air Products LLC are without merit. On 22 April 2013, CIECH S.A. submitted a motion to dismiss Air Products LLC’s amended petition. CIECH S.A. raised three reasons for dismissal of the amended petition. First, the amended petition fails to state a legally valid claim upon which Air Products LLC could claim legal protection. Second, the petition should be dismissed because public and private considerations warrant adjudication of the dispute in Poland rather than before the Federal Regional Court for Eastern Region of Pennsylvania in the United States of America. Third, Air Products Chemicals B.V., which is not a party to the lawsuit, is an indispensable party whose presence in the lawsuit is required, and that the case must be dismissed because its presence would destroy the federal court’s diversity jurisdiction. Currently both parties of the dispute are handling further pleadings. Provision for the above-mentioned Air Products’ claim was not recognized.

6.10.4 Contingent assets and other contingent liabilities including guarantees and sureties

PLN ‘000

OTHER CONTINGENT ITEMS 30.09.2013 31.12.2012

1. Contingent receivables 18,864 18,864

- other contingent receivables 18,864 18,864

2. Other contingent liabilities 1,033,902 1,076,894

-guarantees and sureties granted 1,033,124 1,074,675

-other 778 2,219

Contingent receivables of CIECH S.A. as at 30 September 2013 amounted to PLN 18,864 thousand, and did not change as compared to 31 December 2012. They result from a claim for the payment of compensation for making an alleged untrue declarations by GZNF to CIECH S.A. that were the basis of warranties made by CIECH S.A. towards ZAP. Other contingent liabilities as at 30 September 2013 amounted to PLN 1,033,902 thousand, which signifies a decrease of PLN 42,992 thousand as compared to December 2012. The main cause of this difference is a reduction in the value of guarantees and sureties on liabilities of a subsidiary GOVORA by EUR 620 thousand and on liabilities of a subsidiary Infrastruktura Kapuściska S.A. by PLN 57,250 thousand and EUR 3,200 thousand and an increase of guarantees on liabilities of Infrastruktura Kapuściska S.A. by PLN 79 thousand. The remaining difference results from the changes in exchange rates applied to translate liabilities. The line “Other” of PLN 778 thousand results from a claim filed by a former employee of the Company in relation to compensation for termination of employment. It decreased in comparison with 31 December 2012 by PLN 1,441 thousand.


79

Sureties and guarantees granted or effective as at 30 September 2013


Total amount of liabilities covered by guarantee in whole or in specific part Guarantee

period

Financial terms, including guarantee

fee due to the company

Principal


CIECH S.A. and the

beneficiary currency ‘000 PLN ‘000

CIECH S.A.

ING Lease Romania IFN S.A.

EUR 12

51

31.10.2013

(the guarantee expired on due

date)

Collateral of lease payments

S.C. Uzinele Sodice Govora – Ciech Chemical

Group S.A. - Romania

Subsidiary

Deutsche Trustee Company Limited; bondholders

EUR 245,000 1,032,994

until total redemption of

bonds (max term

30.11.2019)

Collateral of liabilities due to bonds issued

Ciech Group Financing AB

(publ.) Subsidiary

Gdańska Fundacja Kształcenia Menedżerów

- 79 31.12.2013 Collateral of liabilities for advisory services

Infrastruktura Kapuściska S.A.

Subsidiary

Total amount of guarantees granted

1,033,124

6.10.5 Letters of support

As at 30 September 2013, CIECH S.A. was an obliged party in the following letters of support:

letter of support (Patronatserklärung) regarding Sodawerk Staßfurt GmbH&Co. KG seated in Staßfurt ("SWS") and KWG-Kraftwerksgesellschaft Staßfurt mbH seated in Staßfurt (“KWG”) granted to Vasa Kraftwerke-Pool GmbH&Co. KG seated in Staßfurt ("VASA") relating to financial liabilities of SWS and KWG resulting from the agreement dated 16 December 2011 on lease of heat and power plant concluded by SWS, KWG and VASA which include lease payments to VASA of EUR 13 million net annually. In the support letter CIECH S.A. has committed, among others, to ensure that SWS and KWG will be able to fulfil their financial commitments resulting from the above-mentioned agreement,

letter of support (Patronatserklärung) regarding KWG-Kraftwerksgesellschaft Staßfurt mbH seated in Staßfurt (“KWG”) granted to Erdgas Mittelsachsen GmbH (“EMS”) and Stadtwerke Staßfurt GmbH ("STW") relating to liabilities of KWG resulting from the silent partners’ agreement dated 2 December 2011 concluded by KWG, EMS and STW based on which, among others, EMS and STW has provided equity contributions in the total amount of EUR 12 million. In the support letter CIECH S.A.has committed to ensure, among others, that KWG will be able to fulfil its financial commitments resulting from the above-mentioned agreement

letter of support (Patronatserklärung) regarding Sodawerk Staßfurt GmbH&Co. KG seated in Staßfurt ("SWS") granted to RWE Gasspeicher GmbH (“RWE”) relating to liabilities of SWS resulting from the agreement dated 5 May 2009 on salt caverns construction for the purpose of natural gas storage on the mining field Stassfurt according to which SWS has received payments of EUR 34.4 million from RWE until 30 September 2013. In the support letter CIECH S.A. has committed, among others, to ensure that SWS will have sufficient financial funds in order to be able to fulfil its financial commitments resulting from the above-mentioned agreement.

letter of support (Patronatserklärung) regarding KWG-Kraftwerksgesellschaft Staßfurt mbH seated in Staßfurt (“KWG”) granted to Erdgas Mittelsachsen GmbH (“EMS”) relating to liabilities of KWG to EMS resulting from the gas supplies agreement. In the support letter CIECH S.A. has committed, among others, to ensure that KWG will be equipped with the essential financial means to be able to fulfill their financial commitments against EMS resulting from the above-mentioned agreement. The responsibility of CIECH S.A. as regards the letter is limited to EUR 6 million untill 31 December 2013.

6.10.6 Other issues with CIECH S.A.’s participation

On 24 May 2013, CIECH S.A. filed a claim to the District Court in Warsaw, XX Commercial Department, against Bank Handlowy S.A. in Warsaw, requesting a payment of a principal of PLN 63,583 thousand due to liabilities resulting from option transactions concluded between CIECH S.A. and the Bank. Handling of pleadings is ongoing. On 24 May 2013, CIECH S.A. filed a motion to the Regional Court Katowice-Wschód in Katowice for a summons to a conciliation hearing against ING Bank Śląski S.A.concerning liabilities resulting from option transactions concluded between CIECH S.A. and ING Bank Śląski S.A. The claim of CIECH S.A. against the Bank amounts to PLN 67,415 thousand which constitutes a principal. At the hearing of 30 Ocober 2013 no settlement was reached as the bank challenges the validity and amount of the claim.


80

6.11. Provisions and impairment allowances on assets

CIECH S.A.’s financial statements for the three quarters of 2013 disclosed the following changes (recognition, use and reversal) of provisions and impairment allowances on assets.

01.01.-30.09.2013

PLN ‘000 Opening balance Increase Decrease Closing balance

Property, plan and equipment 3,610 - - 3,610

Investment property 701 - - 701

Long-term investments 576,945 521,165 250,684 847,426

Inventory 530 100 487 143

Receivables 61,587 22,661 5,786 78,462

Short-term investments 31,355 58,984 (2,520) 92,859

01.01.-30.09.2013


Deferred income tax liability 14,671 4,519 - 19,190


8,051 3,374 5,725 5,700

Provision for expected losses 23,689 251 2,000 21,940

Provision for liabilities (costs) 1,669 6,094 4,654 3,109

01.01.-30.09.2013


Deferred income tax assets 8,478 53,106 - 61,584

In the comparable period, provisions and impairment allowances remained on following level:

01.01.-30.09.2012


Property, plan and equipment - 3,525 - 3,525

Investment property - 700 - 700

Long-term investments 169,779 219,929 - 389,708

Inventory 245 716 245 716

Receivables 48,216 21,725 7,692 62,249

Short-term investments 18,774 10,627 352 29,049

01.01.-30.09.2012


Deferred income tax liability 28,592 - 6,317 22,275


4,445 5,050 3,312 6,183

Provision for expected losses 5,968 19,123 1,395 23,696

Provision for liabilities (costs) 794 2,064 625 2,233

01.01.-30.09.2012


Deferred income tax assets 11,947 - 1,734 10,213

CIECH S.A.’s financial statements for the third quarter of 2013 disclosed the following changes (recognition, use and reversal) of provisions and impairment allowances on assets. 01.07.-30.09.2013





81

01.07.-30.09.2013


Long-term investments 854,173 - 6,747 847,426

Inventory 172 - 29 143

Receivables 67,812 11,856 1,206 78,462

Short-term investments 92,859 17,121 1,493 108,487

01.07.-30.09.2013


Deferred income tax liability 14,896 4,294 - 19,190


3,603 2,097 - 5,700

Provision for expected losses 23,756 184 2,000 21,940

Provision for liabilities (costs) 6,852 - 3,743 3,109

01.07.-30.09.2013


Deferred income tax assets 55,873 5,711 61,584

In the comparable period, provisions and impairment allowances remained on following level: 01.07.-30.09.2012




Long-term investments 389,708 - - 389,708

Inventory 684 32 - 716

Receivables 48,232 15,139 1,122 62,249

Short-term investments 26,203 3,198 352 29,049

01.07.-30.09.2012


Deferred income tax liability 25,358 - 3,083 22,275 Provision for retirement gratuities, annual holiday, bonuses, compensation payments, etc. 7,939 - 1,756 6,183

Provision for expected losses 23,765 - 69 23,696

Provision for liabilities (costs) 1,608 653 28 2,233

01.07.-30.09.2012


Deferred income tax assets 10,620 - 407 10,213

Deferred income tax liabilitiy and deferred income tax assets are netted off in the statement of financial position.


82

6.12. Notes to the Condensed Interim Separate Statament of Other Comprehensive Income of CIECH S.A.

Tax effect of each component of Other Comprehensive Income of CIECH S.A.

PLN ‘000 01.01.-30.09.2013 01.01.-30.09.2012

Before tax Tax After tax Before tax Tax After tax

Cash flow hedge 617 (117) 500 - - -

Other comprehensive income net of tax 617 (117) 500 - - -

Income tax and reclassification adjustments in Other Comprehensive Income

Other comprehensive income before tax (PLN ‘000) Change in the

period 01.01-30.09.2013

Change in the period

01.01-30.09.2012

Cash flow hedge - 617

-

- fair value remeasurement in the period 1,020

- reclassification to profit or loss (403)

Income tax attributable to other components of other comprehensive income: - (117) - -

- accured for the current period (194)

-

- reclassification to profit or loss 77

-

Other comprehensive income net of tax 500 -


83

6.13. Information on purchase and disposal of property, plan and equipment and commitments for the acquisition of property, plant and equipment

01.01.-30.09.2013

PLN ‘000 land, buildings,

offices and land and water engineering facilities

machinery and

equipment

means of transport

other property, plant and

equipment

property, plant and

equipment under

construction

Total

Purchase - 151 3 4 750 908

Disposal 1,406 345 - 125 - 1,876

01.01.-30.09.2012

PLN ‘000 land, buildings,

offices and land and water engineering facilities

machinery and

equipment

means of transport

other property, plant and

equipment

property, plant and

equipment under

construction

Total

Purchase - 122 - 7 242 371

Disposal - 85 602 27 - 714

Purchases were made with own financial resources of the Company. The liabilities assumed for the acquisition of property plant and equipment amounted to PLN 837 thousand.

6.14. CIECH S.A.’ shareholders holding at least 5.0% of shares/votes at the General Meeting of Shareholders

Information on the shareholders of CIECH S.A. holding at least 5% of shares/votes at the General Meeting of Shareholders has been presented in item II.8 of this Report.

6.15. Changes in the numer of shares of CIECH S.A. held by the Members of the Management Board and Supervisory Board

Information on the changes in the number of shares of CIECH S.A. held by the Members of the Management Board and Supervisory Board has been presented in point II.7 of this Report.

6.16. Corrections of prior period errors

There were no corrections of prior period errors.

6.17. Discontinued operations and non- current assets held for sale


From 1 January to 30 September 2013 the results of transactions with the following companies were presented as discontinued operations:

Infrastruktura Kapuściska S.A. – in relation with discontinuation of TDI and ECH production in Infrastruktura Kapuściska S.A. – operations presented in the organic segment,

ALWERNIA S.A. – in connection with disposal of the company’s shares to Alwernia Invest Sp. z o.o. – operations presented in the agrochemical segment.

Sales revenues and cost of sales of CIECH S.A. resulting from the sales of goods acquired from the aforementioned entities to external entities were also presented as discontinued operations.

01.01.-30.09.2013 PLN ‘000


Result on disposal of discontinued

operations



Cost of sales (137,123) - (137,123)



Selling costs (1,753) - (1,753)

General and administrative expenses (16) - (16)

Other operating expenses (2,488) - (2,488)

Operating profit/(loss) 135,886 - 135,886


84

01.01.-30.09.2013 PLN ‘000


Result on disposal of discontinued

operations


Financial income 32,055 1,080 33,135

Financial expenses (178,026) - (178,026)

Net financial income/expenses (145,971) 1,080 (144,891)

Profit/(loss) before tax (10,085) 1,080 (9,005)

Income tax (25,299) - (25,299)

Net profit/(loss) (35,384) 1,080 (34,304)

Earnings per share (in PLN) (0.67) 0.02 (0.65)


PLN ‘000 Alwernia S.A.


Cost of sales (41,643)

Gross profit 1,080

Income tax -

Net result on disposal 1,080

Payment received:

PLN ‘000 Alwernia S.A.


Deferred proceeds from the sale 21,782

From 1 January to 30 September 2012 the results of transactions with the following companies were presented as discontinued operations:

Infrastruktura Kapuściska S.A. – in relation with discontinuation of TDI and ECH production in Infrastruktura Kapuściska S.A. – operations presented in the organic segment,

ALWERNIA S.A. – in connection with share sale agreement signed with Alwernia Invest Sp. z o.o. – operations presented in the agrochemical segment,

Polfa Sp. z o.o.- in connection with the disposal of the company’s shares – operations presented in the other operations segment.

01.01.-30.09.2012 PLN ‘000





Cost of sales (550,228) - (550,228)


Other operating income 4 - 4

Selling costs (14,697) - (14,697)

General and administrative expenses - - -

Other operating expenses - - -

Operating profit/(loss) 13,680 - 13,680

Financial income 33,466 4 589 38,055

Financial expenses (229,687) - (229,687)

Net financial income/expenses (196,221) 4 589 (191,632)

Profit/(loss) before tax (182,541) 4 589 (177,952)

Income tax - (785) (785)

Net profit/(loss) (182,541) 3,804 (178, 737)

Earnings per share (in PLN) (3.47) 0.07 (3.40)


PLN ‘000 Polfa Sp. z o.o.


Cost of sales (1,911)

Gross profit 4,589

Income tax (785)


85


Net result on disposal 3,804

Payment received:



Due to cessation of production of chemicals in the organic segment in December 2012 (based on resolution of the Extraordinary Shareholders’ Meeting of Infrastruktura Kapuściska S.A. from 2012), completion of the agreement with BASF and disposal of Alwernia S.A., CIECH S.A. reclassified this part of its activity to discontinued operations (comparative data were restated accordingly). Assets and liabilities classified as held for sale

No non-current assets held for sale were recognized, both in these financial statements as well as in comparable period.

6.18. Information about overdue debts or other violations of debt-related agreements

No loan agreement was called to maturity and no deadlines for repaying the capital or interest due to financial liabilities recognized in the balance sheet were violated in the period covered by these financial statements

6.19. Transactions with related parties

Transactions with related parties are concluded on the arm’s length basis.

PLN ‘000 Sales revenues

01.01.-30.09.2013

Purchase of goods and services 01.01.-

30.09.2013

Financial income 01.01.-30.09.2013

Receivables as at

30.09.2013

Liabilities as at 30.09.2013

Consolidated entities 177,450 918,486 459,797 127,790 257,664

Non-consolidated entities

51,065 1,304 50 9,969 399

PLN ‘000 Sales revenues

01.01.-30.09.2012

Purchase of goods and services 01.01.-

30.09.2012

Financial income 01.01.-30.09.2012

Receivables as at

30.09.2012

Liabilities as at 30.09.2012

Consolidated entities 209,858 1,355,975 70,886 123,795 331,331

Non-consolidated entities

46,513 5,186 627 5,613 1,166

In February 2013, CIECH S.A. redeemed all outstanding loans granted to Infrastruktura Kapuściska S.A. in the amount of PLN 85,109 thousand and interest in the amount of PLN 1,218 thousand.

6.20. Information on the impact of transferring to CIECH S.A. the separated parts of assets of SODA MĄTWY S.A. and JANIKOSODA S.A on the CIECH S.A.’s standalone result

In January 2013, the process of dividing SODA MĄTWY S.A. and JANIKOSODA S.A. (divided companies) and transferring separated parts of their assets to CIECH S.A. that was initiated last year, came to an end. Following these actions, the share capital of the divided companies decreased. In case of JANIKOSODA S.A. the decrease in share capital was registered by the Regional Court, XIII Commercial Department, on 21 January 2013. On 25 January 2013, the decrease in the share capital of SODA MĄTWY S.A. was registered, and that was the date when the spin-off by separation of JANIKOSODA S.A. and SODA MĄTWY S.A. was registered in the National Court Register (KRS), consequently, the date of separation of the soda divisions and their incorporation into CIECH S.A. The spin-off by separation was executed under Article 529 &1 item 4 of the Commercial Companies Code by transferring part of assets of the divided companies i.e. SODA MĄTWY S.A. and JANIKOSODA S.A. to CIECH S.A. as the acquiring company. The recognition of the merger in the accounting books of CIECH S.A. resulted in a positive impact on the financial result of CIECH S.A. in the amount of PLN 209 million (including impairment allowance on shares held in JANIKOSODA S.A. and SODA MĄTWY S.A.). As a result of the analysis of tax budgets, a high probability of future tax profits was identified against which the temporary difference can be utilized in the foreseeable future. Based on that, as of the day of the merger, deferred income tax asset of PLN 63 million was recognized in the accounting records of CIECH S.A. As a result of the sale of the shares of JZS Janikosoda S.A., a deferred income tax asset of PLN 31.5 million was utilised. The remainder of the deferred income tax asset as of the balance sheet date amounts to PLN 31.5 million.


86

6.21. Information on events after the balance sheet date

On 3 October 2013, in accordance with the Verbis ETA Sp. z o.o. share sales agreement concluded between tax advisory company Ożóg i Wspólnicy Sp. z o.o. with its registered office in Warsaw (as the Seller) and CIECH S.A. with its registered office in Warsaw (as the Buyer) CIECH S.A. became a 100% owner of Verbis ETA Sp. z o.o. The Agreement concerned 100 shares with a face value of PLN 50 each. The total sales price amounted to PLN 5 thousand. The ownership of Shares was passed to CIECH S.A. on the day on which the sales price was credited against the Seller’s bank account, i.e. on 3 October 2013.

On 3 October 2013, in accordance with the Verbis ETA Sp. z o.o. Spółka Komandytowo-Akcyjna share sales agreement concluded between tax advisory company Ożóg i Wspólnicy Sp. z o.o. with its registered office in Warsaw (as the Seller) and CIECH S.A. with its registered office in Warsaw (as the Buyer) CIECH S.A. became the sole shareholder of Verbis ETA Sp. z o.o. Spółka Komandytowo-Akcyjna, with its registered office in Warsaw. The Agreement concerned 5,000 shares with a face value of PLN 10 each. The total sales price amounted to PLN 50 thousand. The ownership of Shares was passed to CIECH S.A. on the day on which the sales price was credited against the Seller’s bank account, i.e. on 3 October 2013.

CIECH S.A., acting as the sole shareholder of Soda Deutschland Ciech GmbH, by virtue of the resolution of the Extraordinary General Shareholders’ Meeting of Soda Deutschland Ciech GmbH of 8 October 2013, undertook to contribute additional payments to Soda Deutschland Ciech GmbH’ share capital in the amount of EUR 99,730 thousand Simultaneously, on 8 October 2013, CIECH S.A. was informed by Soda Deutschland Ciech GmbH’s Management Board that the funds obtained from the additional payments were used in the first place to repay the loan granted to the Company on 19 December 2007 by CIECH S.A. in the amount of EUR 95,100 thousand plus accrued interest. The whole amount of the loan including interest (in aggregate EUR 99,730 thousand) was repaid until 31 October 2013.

On 4 November 2013, the Extraordinary General Shareholders’ Meeting of Verbis ETA Sp. z o.o. S.K.A., a subsidiary of CIECH S.A., adopted a resolution on increasing Verbis ETA Sp. z o.o. S.K.A’s share capital from PLN 50 thousand to PLN 1,050 thousand, i.e. by PLN 1,000 thousand through issuing 100,000 series B ordinary registered shares numbered from 000001 to 100000, with a face value of PLN 10 each and the total nominal value of PLN 1 000 thousand. In accordance with the aforementioned resolution, the Shares will be subscribed for in private placement addressed to CIECH S.A. CIECH S.A. is the sole shareholder of Verbis ETA Sp. z o.o. S.K.A. and the sole shareholder of Verbis ETA Sp. z o.o., which is the sole general partner of Verbis ETA Sp.z o.o. S.K.A. The issue price of one Share was determined to amount to PLN 1,658.10. The total issue price of the Shares amounts to PLN 165,810 thousand. The Shares will be subscribed for by CIECH S.A. in exchange for a contribution in kind, which involves assets and property rights, evaluated to a total amount of PLN 165,810 thousand. In order to effect the above, on 4 November 2013, CIECH S.A. executed with Verbis ETA Sp. z o.o. S.K.A. the following agreements:

1) Agreement to subscribe for the shares, concerning the subscription by CIECH S.A. for the Shares at the issue price to be settled by CIECH S.A. through bringing by CIECH S.A. to Verbis ETA Sp. z o.o. S.K.A. a contribution in kind; 2) Agreement to transfer the assets, concerning the contribution in-kind by CIECH S.A. to Verbis ETA Sp. z o.o. S.K.A. to cover up the Share Issue Price, in relation to the execution of the Agreement to subscribe for the shares.

As a result of the acquisition of Shares, the CIECH S.A.’s stake in Verbis ETA Sp. z o.o. S.K.A.’s share capital will remain the same (100%). For further details concerning the above-mentioned agreements see Current Report no. 32/2013.

Statement of the Management Board

VI. Statement of the Management Board.

This extended consolidated quarterly report of the Ciech Group for the three quarters of 2013 was approved by the Management Board of CIECH S.A. in its registered office on 14 November 2013. Warsaw, 14 November 2013.

………………………………………………………………….. Dariusz Krawczyk - President of the Management Board of CIECH Spółka Akcyjna

………………………………………………………………….. Andrzej Kopeć – Member of the Management Board of CIECH Spółka Akcyjna

………………………………………… ………………………… Artur Osuchowski – Member of the Management Board of CIECH Spółka Akcyjna

………………………………………… ………………………… Katarzyna Rybacka – Chief Accountant of CIECH Spółka Akcyjna

extended consolidated quarterly report of the ciech … · 2015-07-31 · extended consolidated...

Documents