Press releases

The Ciech Group generated revenues of PLN 2.14 billion in the 1st half of 2011. The operating profit accounted for PLN 69 million, and the net profit nearly PLN 5 million. During the first six months of the year, Ciech conducted two share issues in order to acquire capital and organise its assets, and constructed a new Group financing structure.

– The first half of this year was very busy – we finalised the essential projects of the Reorganisation Plan, we conducted two share issues, one with pre-emptive rights and the other one with contributions in kind, we constructed a new, much more favourable financing structure. We have been maintaining the financial discipline all the time and we have achieved stable financial results – said Ryszard Kunicki, the President of Ciech.

During the period from January to June the sales revenues of the Ciech Group accounted for PLN 2 137 million, i.e. by 9.6% more than a year ago. The main reason for the increase included higher sales revenues of resins and soda ash. Also the agrochemical segment generated higher revenues than in the 1st half of 2010 despite the sale of GZNF Fosfory and inclusion of the company in the result solely for 4 months of 2011.The greatest share in revenues for the 1st half 2010 was constituted by sales of organic segment products – the sales volumes of 2010 were maintained. In comparison to the 1st half of 2010, the share of individual segments in the consolidated revenues of the Ciech Group has not significantly changed.

In the first half of the year, EBITDA (operating profit plus depreciation and amortisation) exceeded PLN 178 million. The operating profit (EBIT) accounted for PLN 69.3 million. The net profit of the Ciech Group was PLN 4.97 million, while after the first six months of 2010 it incurred a loss of PLN 37.8 million. The high prices of epoxy resins and epichlorohydrin and an increase in the demand for and prices of soda ash in the European markets have positively affected the results of the Group. The increase in production costs of soda ash arising from growing prices of coke, anthracite and energy in comparison to the previous year was a negative factor. The reduction in market prices of TDI in the 1st half of 2011 and high crude oil prices resulting in suppliers’ pressure in an increase in prices of raw materials for the organic industry also negatively affected the Group’s results.

Implementation of the reorganisation programme

During the 1st half of the year the largest divestment project under the Reorganisation Plan of the Ciech Group, i.e. the sale of shares in GZNF Fosfory was implemented. The final sale price was PLN 107 million. Furthermore, on the effective date of the contract, the purchaser repaid to Ciech the loans taken out by GZNF Fosfory accounting for PLN 121 million. The results of GZNF Fosfory were consolidated up to the effective date of the sales contract, i.e. April 27th, 2011. Furthermore, also minor reorganisation projects, including takeover by Ciech of a portion of the polyurethane foam production business from Zachem and its transformation into Ciech Pianki, sale of Zachem’s Plastics Centre, which manufactures PCW-based plastics, and Polfa were finalised by the end of August. In total, by the end of July Ciech acquired, due to the reorganisation, PLN 545.9 million from proceeds and savings, which represents nearly 83% of the amount to be acquired by the end of 2014. It is possible that 90% of the plan will have been implemented by the end of 2011.

Issue with contributions in kind to be finished soon

On August 25th the Board of Directors of the National Depository for Securities registered 1,699,909 series E ordinary bearer shares of Ciech with a nominal value of PLN 5 each. Earlier the District Court in Warsaw registered the related increase in the share capital unto PLN 263 500 965 from PLN 255 001 420. After this operation, the Ciech’s share capital is divided into 52 699 909 shares, of which the State Treasury is a holder of 38.72% of shares. Together with its subsidiaries, Agencja Rozwoju Przemysłu and OFE PZU, the State Treasury holds 23,268,472 shares, which represent 44.15% of the Company’s share capital. After the introduction of new E series shares into trading, which should take place in September 2011, the process of increasing the capital by issue with a contribution in kind will be finished. In consequence thereof, Ciech has acquired minority blocks of shares in the Group’s companies: 5.15 % in ZCh Zachem, 5.06% in ZCh Organika-Sarzyna and 25.1% in ZCh Alwernia. The transaction is another undertaking organising the assets and liabilities within the reorganisation of the Group. Due to the transaction, we have carried out one of the Ciech’s liabilities which is now estimated at PLN 26 million, provided for in the contracts of purchase of ZCh Zachem and ZCh Organika-Sarzyna entered into with the State Treasury in 2006, without spending any cash.

The acquisition from the Ministry of State Treasury of a block of 25.01% of shares of ZCh Alwernia is a step towards streamlining the process of divestment of the said company, which has been one of the assets intended for sale. To date the investor who would decide to take over a package in excess of 32% was bound by the provisions of Alwernia’s articles of association to submit an acquisition offer to Ciech and the State Treasury. The holding by Ciech of all shares will accelerate the process.