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

EXTENDED CONSOLIDATED

QUARTERLY REPORT

of the CIECH Group for three quarters 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 THREE QUARTERS OF 2021 (in PLN '000)

CIECH GROUP - SELECTED CONSOLIDATED FINANCIAL DATA

		in thousand PLN		in thousand EUR
SELECTED FINANCIAL DATA	9 months		9 months		9 months		9 months
		ended		ended		ended		ended
		30.09.2021		30.09.2020		30.09.2021		30.09.2020
Sales revenues on continued operations	2,467,850		2,171,568		541,373		488,872
Operating profit/(loss) on continued operations	295,341		179,673		64,789		40,449
Profit/(loss) before tax on continued operations	234,493		130,254		51,441		29,323
Net profit / (loss) for the period	233,622		76,189		51,249		17,152
Net profit/(loss) attributable to shareholders of the parent	234,035		77,277		51,340		17,397
company
Net profit/(loss) attributed to non-controlling interest	(413)		(1,088)		(91)		(245)
Other comprehensive income net of tax	103,454		(11,320)		22,695		(2,548)
Total comprehensive income	337,076		64,869		73,944		14,604
Cash flows from operating activities	591,056		519,459		129,660		116,943
Cash flows from investment activities	(521,650)		(553,329)		(114,435)		(124,568)
Cash flows from financial activities	(172,326)		172,290		(37,803)		38,787
Total net cash flows	(102,920)		138,420		(22,578)		31,162
Earnings (loss) per ordinary share (in PLN/EUR)	4.44		1.47		0.97		0.33
		as at		as at		as at		as at
		30.09.2021		31.12.2020		30.09.2021		31.12.2020
Total assets	6,098,268		5,730,323		1,316,296		1,241,728
Non-current liabilities	2,479,380		401,146		535,168		86,926
Current liabilities	1,322,403		3,210,639		285,437		695,727
Total equity	2,296,485		2,118,538		495,691		459,075
Equity attributable to shareholders of the parent	2,299,883		2,120,615		496,424		459,525
Non-controlling interest	(3,398)		(2,077)		(733)		(450)
Share capital	287,614		287,614		62,081		62,324

CIECH S.A. - SELECTED SEPARATE FINANCIAL DATA

		in thousand PLN	in thousand EUR
SELECTED FINANCIAL DATA	9 months	9 months	9 months	9 months
		ended	ended	ended	ended
		30.09.2021	30.09.2020	30.09.2021	30.09.2020
Sales revenues on continued operations	1,153,965	1,239,119	253,146	278,955
Operating profit/(loss) on continued operations	36,668	28,225	8,044	6,354
Profit/(loss) before tax on continued operations	141,533	23,156	31,048	5,213
Net profit for the period	180,680	20,164	39,636	4,539
Other comprehensive income net of tax	28,594	(27,726)	6,273	(6,242)
Total comprehensive income	209,274	(7,562)	45,909	(1,703)
Cash flows from operating activities	(54,211)	30,199	(11,892)	6,798
Cash flows from investment activities	(120,577)	(146,924)	(26,451)	(33,076)
Cash flows from financial activities	24,403	208,831	5,353	47,012
Total net cash flows	(150,385)	92,106	(32,990)	20,734
		as at	as at	as at	as at
		30.09.2021	31.12.2020	30.09.2021	31.12.2020
Total assets	4,616,121	4,357,634	996,378	944,274
Total non-current liabilities	2,054,215	40,973	443,397	8,879
Total current liabilities	916,963	2,722,893	197,924	590,035
Total equity	1,644,943	1,593,768	355,057	345,360
Share capital	287,614	287,614	62,081	62,324

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 30.09.2021		as at 31.12.2020		9 months		9 months
			ended 30.09.2021		ended 30.09.2020
	EUR 1 = PLN 4.6329		EUR 1 = PLN 4.6148		EUR 1 = PLN 4.5585		EUR 1 = PLN 4.4420

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

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE 9-MONTH PERIOD ENDED 30 SEPTEMBER 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 THREE QUARTERS 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
OTHER COMPONENTS OF OTHER COMPREHENSIVE INCOME.........................................................................................................................................................	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.	CIECH GROUP'S SEGMENT REPORTING ...............................................................................................................................................................................	14
2.6.	PROVISIONS AND IMPAIRMENT LOSSES ON ASSETS ............................................................................................................................................................	21
2.7.	INCOME TAX, DEFERRED TAX ASSETS AND LIABILITY ...........................................................................................................................................................	23
2.8.	INFORMATION ON FAIR VALUE OF FINANCIAL INSTRUMENTS ............................................................................................................................................	24
2.8.1.	FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE........................................................................................................................................................	25
2.8.2.	FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE ................................................................................................................................................	26

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

AND EQUIPMENT ................................................................................................................................................................................................................	26
2.10. INFORMATION ON LOAN AGREEMENTS, INCLUDING OVERDUE DEBTS OR OTHER VIOLATIONS OF DEBT-RELATED AGREEMENTS......................................	27
2.11. INFORMATION ON TRANSACTIONS WITH RELATED ENTITIES ..............................................................................................................................................	27
2.12. ISSUE, REDEMPTION AND REPAYMENT OF DEBT SECURITIES AND EQUITY SECURITIES IN THE CIECH GROUP .....................................................................	28
2.13. CONTINGENT ASSETS AND CONTINGENT LIABILITIES INCLUDING GUARANTEES AND SURETIES ..........................................................................................	28
2.14. INFORMATION ON DIVIDENDS PAID (OR DECLARED), IN TOTAL AND PER SHARE, BROKEN DOWN INTO ORDINARY SHARES AND PREFERENCE SHARES.....	36

2.15. INFORMATION ON DISCONTINUED OPERATIONS, NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE AND LIABILITIES RELATED THERETO

	DURING THREE QUARTERS OF 2021....................................................................................................................................................................................	36
2.16.	INFORMATION ON IMPORTANT EVENTS IN THE CIECH GROUP DURING THREE QUARTERS OF 2021...................................................................................	38
2.17.	INFORMATION ON POST-BALANCE-SHEET EVENTS .............................................................................................................................................................	38

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

	ACTIVITIES...........................................................................................................................................................................................................................	38
3.	OTHER NOTES TO THE CONSOLIDATED QUARTERLY REPORT ..............................................................................................................................................	41
3.1.	DESCRIPTION OF THE CIECH GROUP'S ORGANISATION .......................................................................................................................................................	41
3.2.	INFORMATION ON NON-CONSOLIDATED SUBSIDIARIES AND ASSOCIATES ..........................................................................................................................	44
3.3.	SIGNIFICANT EFFECTS OF CHANGES TO THE ORGANISATIONAL STRUCTURE OF THE CIECH GROUP DURING THREE QUARTERS OF 2021 ..........................	44
3.4.	THE MOST IMPORTANT EVENTS IN THE CIECH GROUP DURING THREE QUARTERS OF 2021 ...............................................................................................	47
3.5.	REVIEW OF KEY ECONOMIC AND FINANCIAL FIGURES CONCERNING THE CIECH GROUP ....................................................................................................	48
3.5.1.	BASIC FINANCIAL DATA .......................................................................................................................................................................................................	48
3.5.2.	SALES REVENUES.................................................................................................................................................................................................................	49
3.5.3.	PROFIT/(LOSS) ON SALES AND OPERATING PROFIT/(LOSS)..................................................................................................................................................	50
3.5.4.	FINANCING ACTIVITIES AND NET PROFIT/LOSS....................................................................................................................................................................	52
3.5.5.	ASSET POSITION OF THE CIECH GROUP...............................................................................................................................................................................	52
3.5.6.	CASH POSITION OF THE CIECH GROUP ................................................................................................................................................................................	53
3.5.7.	WORKING CAPITAL AND SELECTED FINANCIAL RATIOS OF THE CIECH GROUP ....................................................................................................................	54
3.6.	SIGNIFICANT RISK FACTORS.................................................................................................................................................................................................	57

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.............................................................................................................................................................................................................	60
3.8.	FACTORS AFFECTING THE CIECH GROUP'S RESULTS WITH PARTICULAR FOCUS ON THE NEXT QUARTER ............................................................................	60
3.9.	CIECH S.A.'S SHAREHOLDERS HOLDING AT LEAST 5% OF SHARES/VOTES AT THE GENERAL SHAREHOLDERS' MEETING ......................................................	62
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...	63
3.11.	LITIGATION PENDING BEFORE A COURT, COMPETENT ARBITRATION AUTHORITY OR PUBLIC ADMINISTRATION AUTHORITY .............................................	64
3.11.1. SIGNIFICANT DISPUTED LIABILITIES OF THE CIECH GROUP ..................................................................................................................................................	64
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EXTENDED CONSOLIDATED QUARTERLY REPORT OF THE CIECH GROUP FOR THE THREE QUARTERS OF 2021 (in PLN '000)

3.11.2.	SIGNIFICANT DISPUTED RECEIVABLES OF THE CIECH GROUP ..............................................................................................................................................	64
3.12.	LOAN OR BORROWING SURETIES OR GUARANTEES GRANTED BY CIECH S.A. OR ITS SUBSIDIARY AND OTHER CONTINGENT LIABILITIES ............................	64
3.13.	INFORMATION ON TRANSACTIONS BETWEEN THE KEY MANAGEMENT PERSONNEL OF CIECH S.A. AND RELATED PARTIES ...............................................	64
4.	QUARTERLY FINANCIAL INFORMATION OF THE PARENT COMPANY CIECH S.A. ..................................................................................................................	66
CONDENSED SEPARATE STATEMENT OF PROFIT OR LOSS OF CIECH S.A..........................................................................................................................................	66
CONDENSED SEPARATE STATEMENT OF OTHER COMPREHENSIVE INCOME OF CIECH S.A..............................................................................................................	66
CONDENSED SEPARATE STATEMENT OF FINANCIAL POSITION OF CIECH S.A. .................................................................................................................................	67
CONDENSED SEPARATE STATEMENT OF CASH FLOWS OF CIECH S.A...............................................................................................................................................	68
CONDENSED SEPARATE STATEMENT OF CHANGES IN EQUITY OF CIECH S.A. ..................................................................................................................................	69
5.	EXPLANATORY NOTES TO THE INTERIM CONDENSED SEPARATE FINANCIAL STATEMENTS OF CIECH S.A. ...........................................................................	70
5.1.	BASIS OF PREPARATION ......................................................................................................................................................................................................	70
5.2.	ADOPTED ACCOUNTING PRINCIPLES ...................................................................................................................................................................................	70
5.3.	CHANGES IN ESTIMATES .....................................................................................................................................................................................................	70
RATIO CALCULATION METHODOLOGY ............................................................................................................................................................................................	71
REPRESENTATION BY THE MANAGEMENT BOARD ..........................................................................................................................................................................	72

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