about ciech - investors presentation

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CIECH – a modern, diversified chemical group on a stable path of growth Presentation of the CIECH Group

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Page 1: About CIECH - investors presentation

CIECH – a modern, diversified chemical group on a stable path of growth

Presentation of the CIECH Group

Page 2: About CIECH - investors presentation

The CIECH Capital Group

Who are we and what do we do?

The CIECH Capital Group

Who are we and what do we do?

Page 3: About CIECH - investors presentation

3

We are one of the leaders of the Polish chemical market

70 yearsin world markets

8production plants

more than 3.7 thousand employees

in the Group

more than

10 yearsat the Warsaw Stock

Exchange (GPW)

and an important player in the European market.

The CIECH Group

Page 4: About CIECH - investors presentation

4

We are supported by a stable, strategic shareholder

KI Chemistry

Open Pension Fund (OFE) Nationale-Nederlanden

Others (including Investment Fund

Companies (TFI), Open Pension Funds(OFE), Asset Management companies, the Government of Norway, individual investors)

52,699,909shares

=52,699,909

votes

Since 9 June 2014, KI Chemistry (a company

from the Kulczyk Investments group)

has been the majority shareholder

of CIECH

9%51%

40%

As of 16 May 2016

The CIECH Group

KI confirms its long-term involvement in the

process of building the company’s market value. With

particular emphasis on its intention of transforming

CIECH into one of the leading chemical companies in the world.

Page 5: About CIECH - investors presentation

5

Our business model is diversified

Soda segment

PLN 2,241 million of revenues

PLN 656million of EBITDA (Adj.)

Silicates and glass segment

PLN 175 million of revenues

PLN 33 million of EBITDA (Adj.)

Organic segment

PLN 770 million of revenues

PLN 85million of EBITDA (Adj.)

Transport Segment

PLN 123 million of revenues

PLN 13 million of EBITDA (Adj.)

PLN 3,273 million of revenues

PLN 748million of EBITDA (Adj.)

Data for 2015

EBITDA (Adj.) – adjusted EBITDA; the Group also reports the Other segment which covers consolidation exclusions and corporate functions

The CIECH Group

Page 6: About CIECH - investors presentation

Segment

6Soda segment

Strong market position and diversification inside the segment

Soda ash Baking soda Salt

Used mainly to produce glass and granular detergents

Used mainly to produce animal feed and food

Used mainly in chemical and food industries and in water treatment

processes

Page 7: About CIECH - investors presentation

Segment

7

Dynamic development and market expansion

Plant protection products Polyurethane foamsResins

Used mainly by farmers (herbicides, fungicides, insecticides)

Used mainly in production of upholstery furniture

Used mainly to produce powder coating, varnishes, as well as in

construction and transport industries

Organic segment

Page 8: About CIECH - investors presentation

Segment

8

Stable position and continued growth

Glass products Silicates

Used in niche markets: ornamental lanterns for candles, jars with glass tops and twist-off jars for food products

Used for production of precipitated silica (applied mainly in the tyre industry), detergents, various types of seals,

coatings and waterproof layers

Silicates and glass segment

Page 9: About CIECH - investors presentation

Segment

9

Concentration on services inside the Group

Logistics inside the GroupRail transportTransshipment

Transport Segment

Page 10: About CIECH - investors presentation

10

Advantage connected with location of plants

CIECH Soda PolskaInowrocław, Janikowo

CIECH Vitrosilicon

Żary, Iłowa

CIECH RomaniaRamnicu Valcea

CIECH Soda DeutschlandStassfurt

CIECH SarzynaNowa Sarzyna

CIECH PiankiBydgoszcz

Soda segment

Organic segment

Silicates and glass segment

We have 8 production plants located in Poland, Germany and Romania.

Production activity

Page 11: About CIECH - investors presentation

Our activities are set by the Strategy

adopted in 2014

Page 12: About CIECH - investors presentation

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Maximization of the CIECH’s value through organic development

Strategy of the CIECH Group for 2014-2019**

1. Growth of revenues in the soda segment

2. Twofold increase of the share in the Polish market of plant protection products

3. Growth of adjusted EBITDA

4. Growth of the Company’s market value

approx. PLN 3.8 billion

average annual revenues from sale*

approx. PLN 660 million

average annual adjusted EBITDA*

approx. 17%

average annual adjusted EBITDA margin*

<1

Net debt to EBITDA ratio in 2019

* 2014 – 2019 **Strategy of the CIECH Chemical Group for 2014-2019” approved on 3 November 2014 by the Supervisory Board of CIECH

Development of the CIECH Group

Page 13: About CIECH - investors presentation

Previous years brought effective optimization activities and significant investments

Page 14: About CIECH - investors presentation

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We constantly generate higher profits and margins

4 378

3 5013 244 3 273

2012 2013 2014 2015

423 446514

748

2012 2013 2014 2015

9,7%12,7%

15,8%

22,9%

2012 2013 2014 2015

Revenues [mPLN] EBITDA (Adj.) [mPLN]

EBITDA (Adj.) – adjusted EBITDA (adjusted by non-typical one-off events); data reported in the statement for a given year, also covers discontinued activity

EBITDA Margin (Adj.) [mPLN]

282

526

684

838

2012 2013 2014 2015

Result on sale [mPLN]

Financial situation

Page 15: About CIECH - investors presentation

15

The most important implemented projectsDevelopment of the CIECH Group

Soda +200 Projectincrease of the soda production capacity by

additional 200 thousand tonnes per year

Extension of plastics production installation

increase of the production capacity of saturated polyester resins by 100%

MCPA installationstate-of-art installation for manufacture of an active

substance for production of plant protection products

Modernization of the salt production installation

intensification of dry salt production

New calcinatorat the plantin Romania

increase of the production capacity

Page 16: About CIECH - investors presentation

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Significant decrease in financial costs

* HY bond interest

Moody's rating:

Ba3 / positive perspectiveStandard & Poor’s rating:

BB- / stable perspective

Financial situation

Refinancing of the debt in 4Q2015

Was

9.5%*

double-currency credit in PLN and EUR (of up to PLN 1.34 million)

and revolving credit (of up to PLN 250 million)

High Yield bonds of EUR 245 millionrevolving credit of up to PLN 100 millionother credit facilities

Is

<2%Savings at the level of

PLN 70 milion per year

Page 17: About CIECH - investors presentation

In 1Q 2016, continuation of very good financial

results

Page 18: About CIECH - investors presentation

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Record EBITDA (Adj.)

[PLN million] 1Q16 1Q15 yoy1Q16

consensus1Q16

forecasted range

Revenue 826 817 1.1% 855 815 – 914

Gross sales profit 244 214 14.0% - -

Gross sales margin 29.5% 26.1% 3.4 p.p. - -

EBIT 150 117 28,4% 146 138 – 156

EBIT margin 18.2% 14.3% 3.9 p.p. 17.0% 15.6% - 18.8%

EBITDA 204 173 17,6% 204 195 – 212

EBITDA margin 24.6% 21.2% 3.4 p.p. 23.8% 21.9% - 25.5%

Adjusted EBITDA 206 193 7,0% 204 195 – 212

Adjusted EBITDA margin 25.0% 23.6% 1.4 p.p. 23.8% 21.9% - 25.5%

Net result 102 53 92,1% 105 84 – 118

Net margin 12.4% 6.5% 5.9 p.p. 12.3% 9.2% - 14.2%

Financial results for 1Q16

EBITDA (Adj.) – adjusted EBITDA (adjusted by unusual one-off events, in 1Q2016, mainly a change in the level of provisions PLN -2.7 million); PAP consensus of 10 May of the current year, based on forecasts from 11 brokerage houses

Page 19: About CIECH - investors presentation

59% 62% 61%71% 66% 66% 72% 71% 71%

27% 27%24%

19% 27% 25% 19% 22% 22%

13% 10%12% 9%

5% 6%6%

5% 5%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

19

Revenue

2014

845 814 799 786 817 841 801 814 826

2015 2016

Financial results for 1Q16

Organic segment Glass and silicates segment Transport segment OtherSoda segment

Page 20: About CIECH - investors presentation

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EBITDA (Adj.)

77%

82% 86%

101%

82% 84%

93%

92%

89%

22%

15%11%

17%9%

5%

15%

9%

7%7%

9%

4%

6%

5%

3%

3%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

EBITDA (Adj.) – adjusted EBITDA (adjusted by unusual one-off events, in 1Q2016, mainly a change in the level of provisions PLN -2.7 million)

2014 2015 2016

119 154 143 95 193 188 199 168 206

Financial results for 1Q16

Organic segment Glass and silicates segment Transport segment OtherSoda segment

Page 21: About CIECH - investors presentation

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Debt

1 2611 479

1 213 1 182

1 3611 447

3.9

3.5

2.72.3

1.8 1.9

2011 2012 2013 2014 2015 1Q2016

Net debt Net debt / EBITDA (Adj.)

[PLN million] At the end of 1Q16 At the end of 2015 change

Debt ratio 64.1% 65.7% -1.6 p.p.

Long-term debt ratio 45.7% 46.1% -0.4 p.p.

Debt to equity ratio 178.8% 191.5% -12.7 p.p.

Gross financial liabilities (PLN million) 1,579 1,564 +1.0%

Net financial liabilities (PLN million) 1,447 1,361 +6.3%

The Group systematically reduces its debt. At the end of 1Q16, the net debt / EBITDA (Adj.) ratio amounted to 1.9. According to the adopted strategy, the Group endeavours to reduce the ratio to the level below 1 in 2019.

Thanks to refinancing of the debt in 1Q 2016, the Group’s costs of debt servicing were much lower

Financial results for 1Q16

Methodology for calculating the metrics is consistent with the financial statement

Page 22: About CIECH - investors presentation

Effective implementation of the strategy and strategic support of the owner translated into the growth of CIECH’s market value in recent years

Page 23: About CIECH - investors presentation

23Growth of goodwill

CIECH share price – long-term growth trend

Information chart

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

2Q2014Acquisition of the majority package

of CIECH shares by KI Chemistry

4Q2014Adoption of

strategy for 2014-2019

2Q2014Early redemption

of bonds

1Q2016End of the Soda +200 Project

1Q2016Marketing of the ZIEMOVIT brand

3Q2015Change in the

position of the President of

the Management

Board

4Q2015Earlier redemption of HY bonds

and refinancing of indebtedness

4Q2015New member of the Management Board

1Q2015End of investment of dry

salt intensification

4Q2014Signature of a significant contract with Solvay for

delivery of sodium silicate1Q2015The end of the 1st stage of the Soda +200 Project

Share price [PLN]

Page 24: About CIECH - investors presentation

CIECH also has good prospects for the future

Page 25: About CIECH - investors presentation

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Further development of the soda segmentOutlook for future

Sales of additional soda volumesfrom expanded installations

Higher quality of products and a focus on highly processed products

Higher share of dry salt in revenue, lower exposure to weather conditions

Entry to new markets

Page 26: About CIECH - investors presentation

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Dynamic development of the organic segmentOutlook for future

Developing the plant protection chemicals portfolio, including the ZIEMOVIT product line

Higher efficiency of AGRO sector

in CIECH Sarzyna

Developing foams portfolio Focusing on high margin products

Expanding abroadfocusing on most promising

directions

Page 27: About CIECH - investors presentation

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Other investments and projectsOutlook for future

Increased innovationthrough new R&D projects

Modernisationand expansion of

the sodium silicate furnace

Transport servicesfor external clients

Continued construction of a fume treatment installation to remove

nitrogen and sulphur oxides

Page 28: About CIECH - investors presentation

Why CIECH?

Page 29: About CIECH - investors presentation

Modern and diversified chemical group on a stable progress path

Innovative approach to business

Diversification, also within segments

Stable increase in profits and margins since 2013 and potential for furthereffective growth in all segments

Financial backing from a strong dominant shareholder

Dynamic development of the organic segmentand increasing its share in the Group’s revenue

Extending the portfolio based on recent consumer trends

Modernised plants

Page 30: About CIECH - investors presentation

30Załączniki

This document has been prepared solely for informational purposes. It includes only summary information, is not exhaustive, and may not be usedas a sole basis for any assessment or analysis. CIECH S.A. makes no guarantees (explicit or implicit) regarding information presented herein andsuch information, including forecasts, estimates and opinions, should not be unduly relied upon. CIECH S.A. does not accept any responsibility forpossible mistakes, omissions or irregularities found herein. The document is based on sources of information which CIECH S.A. deems to be reliableand accurate, however, it does not guarantee them to be exhaustive nor to fully reflect the actual situation. This document does not constitute anadvertisement or a public offer of securities. It may include forward-looking statements that involve investment risks or uncertainties and maysignificantly differ from actual results. CIECH S.A does not accept any responsibility for consequences of decisions made based on this document.The responsibility lies exclusively with the party using the document. This document is protected by the Copyright and Related Rights Act. Copying,publishing or distributing it requires prior written consent of CIECH S.A.

CONTACT FOR INVESTORS:

Joanna SiedlaczekInvestor Relations Expert

+48 669 600 [email protected]