Press releases

Income of PLN 1.12 billion, being the highest sum in its history, was achieved by the Ciech Group in the first quarter of 2011. The operating profit accounted for PLN 42 million with the net profit being PLN 4 million. During the first three months of the year Ciech carried out a successful issue of shares as a result of which it gained PLN 441.6 for development, and signed a long-term loan agreement. It enabled the company to establish a new financing structure of the Group for the coming years.

– The beginning of the year abounded in very important events for our Group. We managed to succeed in two essential processes: issue of shares and arrangement of a new, much more favourable loan agreement. At the same time, we have been consistently carrying out the reorganisation of the Group and maintaining the financial discipline to achieve good financial results  – said Ryszard Kunicki, President of Ciech.

Between January and March, the Ciech Group’s sales revenues were the highest in its history and accounted for PLN 1 122 million. This is by 9.36 percent more than in the record Q4 2010 and by 16.63 percent more than a year ago. EBITDA (operating profit plus depreciation and amortisation), which is essential for the Group’s operations, accounted for PLN 97 million. In Q1 2011, the operating profit (EBIT) equalled to that of the previous year although no one-off events have taken place. In net figures, the Ciech Group has earned PLN 4 million, while after the first three months of 2010 it recognised a loss of PLN 3 million.
 
The greatest share in the Group’s profit in the previous quarter was that of soda segment, whose EBITDA accounted for PLN 66 million, while one year ago it was by 15.15 percent lower. It results from a considerable improvement in the profitability of US Govora, higher sales volumes of soda ash in the entire Soda Division, and an increase in prices. In the organic segment, high sales results were achieved by plant protection chemicals and polyester and epoxy resins. The prices of epoxy resins rose by 45 percent year on year, with an increase in the sales volume by 37 percent year on year. The sales volume of plant protection chemicals increased by 14 percent. Due to the good situation in the market for phosphorous acid and fertilisers, the agrochemical segment achieved, during the first quarter,  EBITDA of PLN 15 million, being by 36% more than one year ago. In the Silicates and Glass segment, the income rose by 4 percent, up to PLN 81 million.

Successful public offering

The Company acquired PLN 441.6 million from the public sale of D series shares with rights issue. As many as 21.83 million shares out of 23 million offered shares were acquired within initial subscriptions. During additional subscriptions the demand exceeded the number of shares issued by 17 times, and the reduction rate was 94.22 percent.

– Due to the successful implementation of the Reorganisation Plan and divestments, we have managed to regain the trust in Ciech as a result of which the public offering met a positive feedback. The success suggests that we should continue to consistently implement the development strategy adopted by us – emphasised Mr Kunicki.

The issue of D series shares followed the resolution of the Extraordinary General Meeting dated October 28th, 2010 on an increase in the share capital. The offer involved a sale of 23 million shares with pre-emptive rights at the issue price of PLN 19.20. The income from the issue will be allocated to the essential investments in Soda and Organic Divisions. Some of the funds gained from the offering were utilised to reduce the Group’s debt. The shares were assigned on February 25th. The increase in the Ciech’s share capital from PLN 140 001 420 to PLN 255 001 420 was registered by the District Court on March 14th, 2011. As a result of assimilation, since March 30th, 2011 D series shares have been quoted together with A, B and C series shares, which have been present on the Warsaw Stock Exchange since 2005.

Organised financing

In February, Ciech entered into a 5-yar loan agreement with the main commercial banks financing the Group (Bank DnB Nord Polska, Bank Handlowy, Bank Millennium, Bank Pekao, Bank PKO BP, BRE Bank, ING Bank Śląski). Thereafter, the new loan agreement was joined by the European Bank for Reconstruction and Development. The total amount of new loans allocated to the refinancing of the consortium debt and financing of the on-going operations will account for a total of approximately PLN 840 million. Due to the new agreement, the Group reduces the financing costs, provides funds for buyout of bonds in December 2012, and acquires the financing of investment outlays to be made during the term of the agreement, as well as reduces the currency exposure in euro. Furthermore, the new agreement adjusts debt maturity dates to Ciech’s financial possibilities, and secures funds for the refinancing of the existing bridging consortium loan.

On March 18th, two days prior to the deadline, Ciech repaid its debt of PLN 400 million, which was the essential obligation arising from the agreement with banks financing the Group entered into on April 26th, 2010. In order to make the repayment, Ciech utilised some of the funds from the issue of D series shares. The debt reduction significantly contributed to a reduction in the costs of financing the Group. Due to the early repayment of a part of the debt, Ciech saved in March one million zloty.

Implementation of the Reorganisation Plan

On April 27th Ciech concluded the greatest divestment process implemented within the Reorganisation Plan, i.e. the sale of Gdańskie Zakłady Nawozów Fosforowych Fosfory. For 89.46 percent of shares, the Company received from Zakłady Azotowe Puławy PLN 107.24 million. In addition, the purchaser repaid the loans given by Ciech to the companies of Fosfory Group accounting for PLN 121.36 million. By the end of 2010, in consequence of organisation of assets and focus on the core business, Ciech gained effects accounting for PLN 281.1 million. The list of assets to be sold includes several dozen items, including Alwernia and Polfa. The expected income and savings from the initiatives commenced in 2010 by 2011 will account for at least PLN 510 million. The aggregate effect of the Reorganisation Plan by the end of 2014 may exceed PLN 650 million.