Press releases

In the first half year, Ciech Chemical Group generated sales revenues of PLN 1.85 billion and achieved net result exceeding PLN 35 million. Despite bad economic situation, in the 2nd quarter the operating income (EBIT) rose by 11 percent in comparison to the previous quarter, which brought a total of PLN 137 million after six months.

In the first half of 2009, the global economy recovered from the abrupt slump at the end of 2008. The second quarter was characterized by a slower decrease in the production dynamics in Poland than the 1st quarter. Also, the general economic situation slightly improved. However, the global economy was still in a deep crisis. The economic slowdown was felt also in the national market, which managed the recession quite well. The effects of worse economic situation were most clearly observed in the industry and construction branch. High bank margins and limited access to funding have negatively influenced the costs of funding activities.  – Despite difficult conditions, in the 1st half year Ciech Group managed to improve its financial condition – said Ryszard Kunicki, President of the Group.

We strengthen business foundations

In the 2nd quarter, the results which are essential for the Group’s business activities improved. Operating income, the most important index from the viewpoint of the basic activities of the company, rose in the second quarter compared to the first quarter by 11 percent and accounted for PLN 72 million. Thus, it almost equalled the company’s operating income achieved in the corresponding period of the record 2008 – PLN 79 million. – Increase in the operating income from April to June compared to the first three months of the year, which are usually the best ones, proves the effectiveness of the programmes of cost reduction implemented by us and increase in synergy effects – said Robert Bednarski, member of the management board in charge of finance of Ciech Group. With PLN 123 million in the 2nd quarter, also EBIDTA (operating income + depreciation) was almost equal to that of the previous year – PLN 126 million. (EBITDA calculated without influence of options is by 10 percent higher than that in 2008.). Both in the second quarter and in the entire half year, on a year-on-year basis, operating financial flows significantly improved. In the first half year, the Group generated PLN 217 million of operating financial flows compared to minus PLN 72 million in the previous year. – Also, high revenues and decreasing influence of options on financial results support the reinforcement of the Group’s foundations – added Robert Bednarski.

Privatization accelerates

The privatization of three partners of the Polish Chemical Concern – Ciech, Azoty Tarnów and ZAK – which began in the first half year accelerates. Two information memoranda which present, among others, synergies and possible links of three companies have been already prepared. The first one has been prepared by the privatization adviser of Nafta Polska, which conducts the privatization process at the companies. The second one has been elaborated by management boards of the companies. The documents prepared by the adviser have already reached more than ten investors. Other several investors are to receive the documents soon. In accordance with the schedule, the interested entities may submit their offers by September 15th, 2009. In October and November, negotiations with investors who are included in the short list will take place. The investor will have been chosen by the end of the year. The investors included in the short list of two to five entities will get familiar with the other memorandum containing the development strategy of the three companies to 2016. The document suggests that three divisions, i.e. organic and plastics division, soda and silicates division and agrochemical division, i.e. fertilizers and plant protection substances, be created in the Group. The analyses show that the greatest revenues would be generated by agrochemical division, but distributed proportionally with more than 30 percent – Presenting the document we would like to emphasize the advisability of purchase of three companies, which is the preferred form of sale – explained Ryszard Kunicki. – Also other options are possible: purchase of two companies or each company separately.

Consistent organisation of finances

In the recent weeks, other significant steps aimed at restructuring the debt of Ciech Group were taken. On August 5th, 2009, an agreement revoking the violations of the terms and conditions of the loan agreement for purchase of shares at ZCh Organika-Sarzyna was concluded. On August 14th, an agreement on maintaining status quo was signed with banks funding Ciech Group. Banks undertook to maintain the signed contracts in force and financing at the same level. Also, derivatives have been restructured. On August 19th, a German company of the Group, Soda Deutschland Ciech, reached an agreement with Commerzbank on revoking violations of financial indices of the EUR 75 million loan agreement concluded on January 23rd, 2008. – The purpose of the activities is to maintain long-term financial involvement of banks and ensure a stable financing source for the company. The process is to be completed by the end of October 2009 – said the President of Ciech, Ryszard Kunicki. Ciech uses services of many banks; it concluded several dozens of loan agreements; it has many short-term liabilities. Such liabilities are more expensive and may adversely affect the company’s financial liquidity. Furthermore, standard contracts and level of securities are not coherent. In order to organize the issues, Ciech took a number of long-term activities aimed at reducing the number of banks and ensuring long-term funding for the Group. Debt refinancing will also enable a more flexible management of the Group’s liquidity and a better allocation of available funds.
The restructuring process began in the 4th quarter of 2008. Currently, loan terms and conditions are being negotiated with banks; the information memorandum is being completed. Negotiations are to finish and contracts are to be signed with banks in October 2009.