Ciech S A : .pdf Extended consolidated quarterly report of the CIECH Group for the first quarter of 2021

EXTENDED CONSOLIDATED

QUARTERLY REPORT

of the CIECH Group for the first quarter of 2021

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 financial statements.

EXTENDED CONSOLIDATED QUARTERLY REPORT OF THE CIECH GROUP FOR THE FIRST QUARTER OF 2021 (in PLN '000)

CIECH GROUP - SELECTED CONSOLIDATED FINANCIAL DATA

		in thousand PLN		in thousand EUR
SELECTED FINANCIAL DATA	3 months		3 months		3 months		3 months
		ended		ended		ended		ended
		31.03.2021		31.03.2020		31.03.2021		31.03.2020
Sales revenues on continued operations	861,072		790,479		188,332		179,806
Operating profit/(loss) on continued operations	137,248		63,074		30,019		14,347
Profit/(loss) before tax on continued operations	138,274		68,116		30,243		15,494
Net profit / (loss) for the period	183,699		39,421		40,178		8,967
Net profit/(loss) attributable to shareholders of the parent	184,429		39,675		40,338		9,025
company
Net profit/(loss) attributed to non-controlling interest	(730)		(254)		(160)		(58)
Other comprehensive income net of tax	3,006		(13,680)		657		(3,112)
Total comprehensive income	186,705		25,741		40,835		5,855
Cash flows from operating activities	215,998		10,958		47,243		2,493
Cash flows from investment activities	(170,659)		(163,425)		(37,326)		(37,173)
Cash flows from financial activities	(12,102)		541,284		(2,647)		123,123
Total net cash flows	33,237		388,817		7,270		88,443
Earnings (loss) per ordinary share (in PLN/EUR)	3.50		0.75		0.77		0.17
		as at		as at		as at		as at
		31.03.2021		31.12.2020		31.03.2021		31.12.2020
Total assets	5,900,868		5,707,733		1,266,198		1,236,832
Non-current liabilities	2,161,244		401,146		463,756		86,926
Current liabilities	1,434,381		3,188,049		307,787		690,831
Total equity	2,305,243		2,118,538		494,655		459,075
Equity attributable to shareholders of the parent	2,307,898		2,120,615		495,225		459,525
Non-controlling interest	(2,655)		(2,077)		(570)		(450)
Share capital	287,614		287,614		61,716		62,324

CIECH S.A. - SELECTED SEPARATE FINANCIAL DATA

		in thousand PLN		in thousand EUR
SELECTED FINANCIAL DATA	3 months		3 months		3 months		3 months
ended		ended		ended		ended
		31.03.2021		31.03.2020		31.03.2021		31.03.2020
Sales revenues on continued operations	384,238		458,340		84,040		104,256
Operating profit/(loss) on continued operations	10,617		13,002		2,322		2,957
Profit/(loss) before tax on continued operations	48,699		(40,959)		10,651		(9,317)
Net profit for the period	98,877		(36,982)		21,626		(8,412)
Other comprehensive income net of tax	2,390		(20,752)		523		(4,720)
Total comprehensive income	101,267		(57,734)		22,149		(13,132)
Cash flows from operating activities	(59,242)		(201,365)		(12,957)		(45,803)
Cash flows from investment activities	38,509		(38,597)		8,423		(8,779)
Cash flows from financial activities	(5,323)		516,832		(1,164)		117,561
Total net cash flows	(26,056)		276,870		(5,698)		62,979
		as at		as at		as at		as at
		31.03.2021		31.12.2020		31.03.2021		31.12.2020
Total assets	4,425,226		4,357,634		949,558		935,054
Total non-current liabilities	1,796,169		40,973		385,419		8,792
Total current liabilities	934,022		2,722,893		200,421		584,274
Total equity	1,695,035		1,593,768		363,718		341,988
Share capital	287,614		287,614		61,716		61,716

The above selected financial data were converted into PLN in accordance with the following principles:

• items in the consolidated statement of financial position were converted using the average exchange rate determined by the National Bank of Poland on the last day of the reporting period;
• items in the consolidated statement of profit or loss, consolidated statement of other comprehensive income and consolidated statement of cash flows were converted using the exchange rate constituting the arithmetic mean of rates determined by the National Bank of Poland on the last day of each calendar month of the reporting period.

	as at 31.03.2021		as at 31.12.2020		3 months		3 months
			ended 31.03.2021		ended 31.03.2020
	EUR 1 = PLN 4.6603		EUR 1 = PLN 4.6148		EUR 1 = PLN 4.5721		EUR 1 = PLN 4.3963

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EXTENDED CONSOLIDATED QUARTERLY REPORT OF THE CIECH GROUP FOR THE FIRST QUARTER OF 2021 (in PLN '000)

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 3-MONTH PERIOD ENDED 31 MARCH 2021

PREPARED IN ACCORDANCE WITH

INTERNATIONAL FINANCIAL REPORTING STANDARDS

AS ENDORSED BY THE EUROPEAN UNION

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EXTENDED CONSOLIDATED QUARTERLY REPORT OF THE CIECH GROUP FOR THE FIRST QUARTER OF 2021 (in PLN '000)

TABLE OF CONTENTS

1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE CIECH GROUP PREPARED IN ACCORDANCE WITH INTERNATIONAL

	FINANCIAL REPORTING STANDARDS AS ENDORSED BY THE EUROPEAN UNION ....................................................................................................................	6
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS OF THE CIECH GROUP .....................................................................................................................	6
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME OF THE CIECH GROUP .........................................................................................	7
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE CIECH GROUP..............................................................................................................	8
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS OF THE CIECH GROUP ..........................................................................................................................	9
CONDENSED STATEMENT OF CHANGES IN CONSOLIDATED EQUITY OF THE CIECH GROUP ............................................................................................................	10
2.	EXPLANATORY NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE CIECH GROUP......................................................	11
2.1.	BASIS FOR PREPARATION OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE CIECH GROUP.................................................	11
2.2.	ADOPTED ACCOUNTING PRINCIPLES ...................................................................................................................................................................................	11
2.2.1.	ADJUSTMENT OF PRIOR PERIOD ERRORS AND CHANGES IN ACCOUNTING POLICY .............................................................................................................	12
2.3.	FUNCTIONAL AND REPORTING CURRENCY..........................................................................................................................................................................	13
2.4.	SEASONALITY AND CYCLICALITY OF ACTIVITY OF THE CIECH GROUP ...................................................................................................................................	14
2.5.	SEGMENT REPORTING ........................................................................................................................................................................................................	14
2.6.	PROVISIONS AND IMPAIRMENT LOSSES ON ASSETS ............................................................................................................................................................	21
2.7.	INCOME TAX, DEFERRED TAX ASSETS AND LIABILITY ...........................................................................................................................................................	22
2.8.	INFORMATION ON FAIR VALUE OF FINANCIAL INSTRUMENTS ............................................................................................................................................	23
2.8.1.	FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE........................................................................................................................................................	24
2.8.2.	FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE ................................................................................................................................................	25

2.9. INFORMATION ON PURCHASE AND DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT AND COMMITMENTS FOR THE ACQUISITION

	OF PROPERTY, PLANT AND EQUIPMENT..............................................................................................................................................................................	25
2.10. INFORMATION ON LOAN AGREEMENTS, INCLUDING OVERDUE DEBTS OR OTHER VIOLATIONS OF DEBT-RELATED AGREEMENTS......................................	25
2.11. INFORMATION ON TRANSACTIONS WITH RELATED ENTITIES ..............................................................................................................................................	26
2.12. ISSUE, REDEMPTION AND REPAYMENT OF DEBT SECURITIES AND EQUITY SECURITIES IN THE CIECH GROUP .....................................................................	27
2.13. CONTINGENT ASSETS AND CONTINGENT LIABILITIES INCLUDING GUARANTEES AND SURETIES ..........................................................................................	27
2.14. INFORMATION ON DIVIDENDS PAID (OR DECLARED), IN TOTAL AND PER SHARE, BROKEN DOWN INTO ORDINARY SHARES AND PREFERENCE SHARES.....	28
2.15. INFORMATION ON DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD FOR SALE IN THE FIRST QUARTER OF 2021........................................	28
2.16.	INFORMATION ON IMPORTANT EVENTS IN THE CIECH GROUP DURING THE FIRST QUARTER OF 2021 ..............................................................................	30
2.17.	INFORMATION ON POST-BALANCE-SHEET EVENTS .............................................................................................................................................................	30

2.18. INFORMATION ON THE CURRENT SITUATION IN CONNECTION WITH THE IMPACT OF THE COVID-19 CORONAVIRUS PANDEMIC

	ON THE CIECH GROUP'S ACTIVITIES ....................................................................................................................................................................................	30
3.	OTHER NOTES TO THE CONSOLIDATED QUARTERLY REPORT ..............................................................................................................................................	33
3.1.	DESCRIPTION OF THE CIECH GROUP'S ORGANISATION .......................................................................................................................................................	33
3.2.	INFORMATION ON NON-CONSOLIDATED SUBSIDIARIES AND ASSOCIATES ..........................................................................................................................	36
3.3.	SIGNIFICANT EFFECTS OF CHANGES TO THE ORGANISATIONAL STRUCTURE OF THE CIECH GROUP IN THE FIRST QUARTER OF 2021 .................................	36
3.4.	THE MOST IMPORTANT EVENTS IN THE CIECH GROUP IN THE FIRST QUARTER OF 2021.....................................................................................................	38
3.5.	REVIEW OF KEY ECONOMIC AND FINANCIAL FIGURES CONCERNING THE CIECH GROUP ....................................................................................................	39
3.5.1.	BASIC FINANCIAL DATA .......................................................................................................................................................................................................	39
3.5.2.	SALES REVENUES.................................................................................................................................................................................................................	39
3.5.3.	PROFIT/(LOSS) ON SALES AND OPERATING PROFIT/(LOSS)..................................................................................................................................................	41
3.5.4.	FINANCING ACTIVITIES AND NET PROFIT/LOSS....................................................................................................................................................................	41
3.5.5.	ASSET POSITION OF THE CIECH GROUP...............................................................................................................................................................................	42
3.5.6.	CASH POSITION OF THE CIECH GROUP ................................................................................................................................................................................	43
3.5.7.	WORKING CAPITAL AND SELECTED FINANCIAL RATIOS OF THE CIECH GROUP ....................................................................................................................	43
3.6.	SIGNIFICANT RISK FACTORS.................................................................................................................................................................................................	47

3.7. FULFILMENT OF PROFIT FORECASTS PREVIOUSLY PUBLISHED FOR A GIVEN YEAR IN THE LIGHT OF THE RESULTS DISCLOSED IN THE REPORT

	AGAINST THE FORECAST RESULTS.......................................................................................................................................................................................	49
3.8.	FACTORS AFFECTING THE CIECH GROUP'S RESULTS WITH PARTICULAR FOCUS ON THE NEXT QUARTER ............................................................................	49
3.9.	CIECH S.A.'S SHAREHOLDERS HOLDING AT LEAST 5% OF SHARES/VOTES AT THE GENERAL SHAREHOLDERS' MEETING ......................................................	51
3.10.	CHANGES IN THE NUMBER OF SHARES IN CIECH S.A. HELD BY THE MEMBERS OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD OF CIECH S.A...	52
3.11.	LITIGATION PENDING BEFORE A COURT, COMPETENT ARBITRATION AUTHORITY OR PUBLIC ADMINISTRATION AUTHORITY .............................................	53
3.11.1.	SIGNIFICANT DISPUTED LIABILITIES OF THE CIECH GROUP ..................................................................................................................................................	53
3.11.2.	SIGNIFICANT DISPUTED RECEIVABLES OF THE CIECH GROUP ..............................................................................................................................................	53
3.12.	LOAN OR BORROWING SURETIES OR GUARANTEES GRANTED BY CIECH S.A. OR ITS SUBSIDIARY AND OTHER CONTINGENT LIABILITIES ............................	53
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EXTENDED CONSOLIDATED QUARTERLY REPORT OF THE CIECH GROUP FOR THE FIRST QUARTER OF 2021 (in PLN '000)

3.13.	INFORMATION ON TRANSACTIONS BETWEEN THE KEY MANAGEMENT PERSONNEL OF CIECH S.A. AND RELATED PARTIES................................................	60
4.	QUARTERLY FINANCIAL INFORMATION OF THE PARENT COMPANY, CIECH S.A. .................................................................................................................	62
CONDENSED SEPARATE STATEMENT OF PROFIT OR LOSS OF CIECH S.A..........................................................................................................................................	62
CONDENSED SEPARATE STATEMENT OF OTHER COMPREHENSIVE INCOME OF CIECH S.A..............................................................................................................	62
CONDENSED SEPARATE STATEMENT OF FINANCIAL POSITION OF CIECH S.A. .................................................................................................................................	63
CONDENSED SEPARATE STATEMENT OF CASH FLOWS OF CIECH S.A...............................................................................................................................................	64
CONDENSED SEPARATE STATEMENT OF CHANGES IN EQUITY OF CIECH S.A. ..................................................................................................................................	65
5.	EXPLANATORY NOTES TO THE INTERIM CONDENSED SEPARATE FINANCIAL STATEMENTS OF CIECH S.A. ...........................................................................	66
5.1.	BASIS OF PREPARATION ......................................................................................................................................................................................................	66
5.2.	ADOPTED ACCOUNTING PRINCIPLES ...................................................................................................................................................................................	66
5.3.	CHANGES IN ESTIMATES .....................................................................................................................................................................................................	66
RATIO CALCULATION METHODOLOGY ............................................................................................................................................................................................	67
REPRESENTATION BY THE MANAGEMENT BOARD ..........................................................................................................................................................................	68

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