Ciech S A : .PDF 6. Report on the activites of the Supervisory Board of CIECH S.A.

Appendix to Resolution No. 138/X/2021 of the Supervisory Board of CIECH S.A. of April 22, 2021

REPORT

ON THE ACTIVITIES OF THE SUPERVISORY BOARD OF

CIECH S.A.

for financial year 2020

Warsaw, April 2021

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The Supervisory Board of CIECH S.A. herewith submits its report on its activities in financial year 2020 containing, among others, report on the results of the evaluation referred to in article 382 § 3 of the Code of Commercial Companies, i.e. on the evaluation of: Separate Financial Statements of CIECH S.A. for 2020, Consolidated Financial Statements of CIECH Group for 2020, the Report of the Management Board on the activities of CIECH Group and CIECH S.A. for 2020, together with the Non-Financial Report for 2020, and the Management Board's proposal regarding distribution of net profit for 2020.

The scope of this report includes:

1. Information on changes in the composition of the Supervisory Board of CIECH S.A. in 2020.
2. Discussion of the activities of the Supervisory Board of CIECH S.A. in the period from 1 January 2020 to 31 December 2020, including information on the issues discussed at the Supervisory Board's meetings.
3. Information on the activities of the Audit Committee of the Supervisory Board of CIECH S.A. in 2020.
4. Information on the activities of the Remuneration Committee of the Supervisory Board of CIECH S.A. in 2020.
5. Assessment of the Separate Financial Statements of CIECH S.A. for the financial year 2020 and the Consolidated Financial Statements of CIECH Group for the financial year 2020 in terms of compliance with the accounting books and documents, as well as the actual state of affairs.
6. Evaluation of the Report of the Management Board on the activities of CIECH Group and CIECH S.A. in 2020 in terms of compliance with the accounting books and documents, as well as the actual state of affairs, and the proposal of the Management Board of CIECH S.A. regarding the distribution of the net profit of CIECH S.A. for the financial year 2020.
7. Assessment of the situation of CIECH S.A. in 2020, including the assessment of the internal control system and the system to manage any risk which is significant for the company.
8. Recommendations to the Annual General Meeting of CIECH S.A.

1. INFORMATION ON CHANGES IN THE COMPOSITION OF THE SUPERVISORY BOARD OF CIECH S.A. IN 2020

As at 1 January 2020, the composition of the Supervisory Board of CIECH S.A. was as follows:

1. Sebastian Kulczyk

- Chairperson of the Supervisory Board,

1. Tomasz Mikołajczak - Deputy Chairperson of the Supervisory,
2. Piotr Augustyniak,
3. Marek Kośnik,
4. Mariusz Nowak,
5. Artur Olech.

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Due to the resignation of Mr. Mariusz Nowak as of 22 January 2020 from his membership in the Supervisory Board of CIECH S.A., on 23 January 2020 the Extraordinary General Meeting of CIECH S.A. appointed Mr Łukasz Rędziniak as a member of the Supervisory Board of CIECH S.A.

On 20 May 2020, Mr Tomasz Mikołajczak, previously Deputy Chairperson of the Supervisory Board, tendered his resignation, and on 21 May 2020, the Annual General Meeting of CIECH S.A. appointed Mr Martin Laudenbach as a member of the Supervisory Board of CIECH S.A.

On 16 July 2020, the Supervisory Board elected Mr Marek Kośnik as the Deputy Chairperson of the Supervisory Board.

As at 31 December 2020, the Supervisory Board exercised its functions in the following composition:

1.	Sebastian Kulczyk	- Chairperson of the Supervisory Board,
2.	Marek Kośnik	- Deputy Chairperson of the Supervisory,

1. Łukasz Rędziniak,
2. Martin Laudenbach,
3. Piotr Augustyniak,
4. Artur Olech.

In 2020, two committees operated as part of the Supervisory Board of CIECH S.A., i.e.:

1. the Audit Committee of the Supervisory Board of CIECH S.A., and
2. the Remuneration Committee of the Supervisory Board of CIECH S.A.

Information on the activities of the aforementioned committees is presented in the subsequent parts of this Report.

2. DISCUSSION OF THE ACTIVITIES OF THE SUPERVISORY BOARD OF CIECH S.A. IN 2020

Acting on the basis of § 21 section 1 of the Articles of Association of CIECH S.A. and § 3 section 1 of the Regulations of the Supervisory Board, the Supervisory Board of CIECH S.A. exercised continuous supervision over the activities of the Company. In 2020, the Supervisory Board held 5 meeting, of all of which minutes were duly taken, and resolutions were adopted both at the meetings and using distant direct communication methods - without holding a meeting.

The following are some of the major issues dealt with by the Supervisory Board in financial year 2020.

FINANCIAL PLAN FOR 2021

The Financial Plan of the CIECH Group for 2021(hereinafter referred to as the "2021 Plan") was approved at a meeting of the Supervisory Board on 14 December 2020. The Management Board of CIECH S.A. presented and then discussed in detail the 2021 Financial Plan with the Supervisory Board. The analysis included, among others, issues such as: impact of external factors (incl. the Covid-19 pandemic), developments in the prices of salt and soda, key development projects (Grain and Golden Eye), incl. the planned production launch by the new evaporated salt plant in Staßfurt, sources of

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investment financing, CAPEX, key company and operational indicators, as well as the level of net debt to EBITDA, raw material strategy, inventory optimisation, fixed and variable expenses, emissions of production installation and CO2 certificate policy.

The 2021 Plan was also discussed in the context of its compliance with the approved CIECH Group Strategy for 2019 - 2021.

The Audit Committee analysed the assumptions for the 2021 Plan in detail on 7 December 2020, and together with the Management Board of CIECH S.A. discussed forecasts of the results of CIECH S.A. and its individual Business Units in terms of assumptions for production, expected increase in EBITDA, gross margin, fixed expenses, planned CAPEX level, ongoing development projects, including the construction of a new evaporated salt plant in Staßfurt coming to its end, soda and salt market environments, personnel costs and sales volumes for each type of activity. The situation of CIECH Soda Romania was also discussed and the impact of the cost of maintaining the company in a "suspended" condition on the planned 2021 results.

STRATEGY OF THE CIECH GROUP for 2019 - 2021

The Strategy of the CIECH Group for 2019 - 2021 was approved at a meeting of the Supervisory Board on 5 December 2018 (the "2019 - 2021 Strategy").

During 2020, the Supervisory Board discussed in detail the progress in the implementation of the 2019- 2021 Strategy, including progress in the implementation of development projects in the soda and salt segments, with particular focus on the investment in the construction of the evaporated salt plant in Staßfurt, the completion and commissioning of which was scheduled for the end of the first quarter of 2021. Discussions included the development projects aimed at developing specialist businesses in other segments, including the agro segment, and building a working environment, as well as strengthening the position of the CIECH Group as a reliable partner for local communities, caring for the natural environment.

PREPARATIONS FOR THE ANNUAL GENERAL MEETING OF CIECH S.A. FOR FINANCIAL YEAR 2019

At its meeting on 31 March 2020, the Supervisory Board assessed the reports and statements presented by the Company for approval at the Annual General Meeting, i.e.:

1. Separate Financial Statements of CIECH S.A. for financial year 2019, which was assessed by the Supervisory Board as prepared in accordance with the accounting books and records as well as the actual status, and meeting the requirements of the Accounting Act of 29 September 1994 (the "Accounting Act" - Journal of Laws of 2019, item 351, as amended).
2. Consolidated Financial Statements of CIECH Group for financial year 2019, which was assessed by the Supervisory Board as prepared in accordance with the accounting books and records as well as the actual status, and meeting the requirements of the Accounting Act of 29 September 1994 (the "Accounting Act" - Journal of Laws of 2019, item 351, as amended).
3. Report of the Management Board on the activities of CIECH Group and CIECH S.A. for 2019, together with the Non-Financial Report of CIECH Group for 2019, which was assessed by the Supervisory Board as exhaustively presenting the functioning of the Group and the Company in

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2019 and as consistent with the financial data included in the Separate Financial Statements of CIECH S.A. for 2019 and the Consolidated Financial Statements of CIECH Group for 2019, and meeting the requirements provided for in article 49 of the Accounting Act of 29 September 1994.

After the aforementioned assessments and evaluations, the Supervisory Board recommended to the Annual General Meeting of CIECH S.A. that the reports and statements indicated under points 1 to 3 above be approved.

In addition, the Supervisory Board also considered further issues to be discussed at the Annual General Meeting of CIECH S.A., including:

1. it considered the motion of the Management Board of CIECH S.A. concerning the proposed distribution of the net profit of CIECH S.A. generated by the Company in 2019, and then, after analysing and discussing the Company's financial situation, decided to recommend to the Annual General Meeting of CIECH S.A. that the net profit for 2019 in the amount of PLN 60,436,467.46 be allocated to the supplementary capital in its entirety;
2. it assessed positively its cooperation with the Management Board of the Company in the financial year 2019 and, taking into account the Company's results for the financial year 2019, decided to recommend to the Annual General Meeting of CIECH S.A. that the following individuals holding office of Members of the Management Board of the Company in financial year 2019, be discharged from their duties, i.e.:
3. • Mr Dawid Jakubowicz with regard to performance of his duties as the President of the Management Board of CIECH S.A. in the period from 1 January 2019 to 31 December 2019.
   • Mr Mirosław Skowron with regard to performance of his duties as a Member of the
     Management Board in the period from 1 January 2019 to 31 December 2019.
   • Mr Artur Osuchowski with regard to performance of his duties as a Member of the Management Board in the period from 1 January 2019 to 25 October 2019.
4. it adopted the Report of the Supervisory Board on the activities of the Supervisory Board in 2019 containing reports on the results of the assessment Report on the activities of the CIECH Group and CIECH S.A. for 2019, together with the non-financial report of the CIECH Group for 2019, financial statements of CIECH S.A. and the CIECH Group for the financial year 2019, taking into account the assessment of the internal control system and the significant risk management system, as well as the results of the assessment of the Management Board's motion on the distribution of the net profit of CIECH S.A. for 2019.

ONGOING SUPERVISION OVER FINANCIAL SITUATION AND OPERATING ACTIVITIES

As part of supervision over the current operations of the Company, the financial situation and results of operating activities were the subject of regular analysis of the Supervisory Board.

The basis of analyses carried out by the Supervisory Board was the Financial Plan of CIECH Group for 2020 and the Strategy of the CIECH Group for 2019-2021.

Apart from those described in any other sections hereof, in 2020, the Supervisory Board also dealt with issues such as:

1. Acquisition by the Company of additional long-term financing in the form of revolving loans under the adopted 2019-2021 Strategy, enabling flexible use of funds from loans and the adjustment of

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