27/2021 Preliminary estimated financial performance of Trakcja S.A. for the 6-month period ending on 30 June 2021

The Management Board of  Trakcja S.A. (the „Company”) informs that on 21 July 2021 marks the completion of the cyclical review process of long-term contracts and collection of financial data for the purposes of preparing the Company’s unit financial statements for the first half of the year ending on 30 June 2021. Accordingly, the Company is providing the general public with preliminary estimates of the Company’s financial performance for the period in question:
Revenue on sales: PLN 317,351,000.00
Gross result from sales: PLN -10,689,000.00
EBITDA: PLN -13,697,000.00
Net result: PLN -26,503,000.00

During the first half of 2021, the Company finalized negotiations with financial institutions within the framework of the II financing round, as a result of which long-term financing documents became effective (the Company provided the relevant information in Current Reports: no.  20/2021 dated 17 June 2021 and no. 22/2021 dated 24 June 2021).

The extended procedure regarding bank credit agreements and loans entailed limited options of financing the Company’s current capital during the first half of 2021, which caused:
– Great difficulties in the earlier purchase of materials necessary for performing contracts, which primarily consisted of products with significant price sensitivity, inter alia, steel and copper products, and goods manufactured from plastics goods. The increase of prices of steel and copper products, and goods manufactured from plastics goods during the first half of 2021 had an adverse impact on the expected profitability of certain contracts performed by the Company.
– reduction of the level of sales during the first half of 2021, which entailed a lower gross profit on sales during the period in question;
– extension of the envisaged deadlines of contract performance, in particular, railroad contracts, which caused an increase of overhead and indirect costs covered by contract budgets, and consequently, impairment of the profitability of contracts.

Furthermore, costs of the financial restructuring process – which amounted to a total of PLN 3,472,000.00 – made an impact on the presented EBIDTA and net result during the first half of 2021.

As a result of the completed cyclical review of long-term contracts, their budgets have been updated in terms of their nature, amounts, distribution in time and uncertainty as to revenues and cash flows which follow from their performance. During the course of budget updating, an opportunities and hazards analysis has been conducted, within the framework of which the following risks have been identified and taken into account: technical risks, implementation risks and liquidity risks, and risks associated with protracted contract completion.

During the II quarter of 2021, the impact of budget updating of contracts carries a negative result for the Company, amounting to PLN -24,740,000.00.

Furthermore, during the II quarter of 2021, the Company has recognized revenue as a result of a change of the provision for unused holiday leave in the amount of PLN 3,957,000.00 due to a decrease of days of outstanding holiday leave, which occurred as an effect of the implementation by the Company of one of the numerous initiatives within the framework of the II Recovery Plan.

The foregoing preliminary estimates of financial performance have not been reviewed yet by an auditor. Furthermore, these results do not take into account tests for impairment of the value of assets and revaluation of assets.

As this information is of a preliminary nature, the final calculations shall be provided in the Company’s report for the first half of the year ending on 30 June 2021, which, in accordance with the accepted report publishing calendar, shall be published on 15 September 2021.

Legal basis:
Article 17 (1) MAR