44/2023 – Settlement Agreement with PKP PLK

In reference to the information provided in the consolidated periodic reports for the first half of 2023 and the third quarter of 2023 regarding the ongoing negotiations with PKP Polskie Linie Kolejowe S.A. [“PKP PLK”] concerning mediation agreements related to claims arising from the execution of certain contracts, the Management Board of Trakcja S.A. [“Company”] informs that today, with the participation of a mediator from the Court of Arbitration at the General Prosecutor’s Office of the Republic of Poland, a settlement agreement has been reached concerning contract No. 90/107/0217/18/Z/I dated July 24, 2018, for the design and execution of works under the project “Construction of the Szczecin Metropolitan Railway using existing sections of railway lines No. 406, 273, 351 Task A” titled “Modernization of Railway Line No. 406 on the Szczecin Główny-Police Section” [“Contract SKM A”], which constitutes formal confirmation of the additional remuneration amount related to the Company’s full execution of this contract.

Previously, the Company had included estimated variable remuneration amounts in the budgets of this contract concerning: additional work not covered by Contract SKM A, contractual claims arising from the scope of costs due to the extended time for completion, and indexation.

The parties have now agreed to conclude the mediation by signing a settlement agreement in the Court of Arbitration at the General Prosecutor’s Office of the Republic of Poland.

Under the settlement, in order to amicably resolve the dispute, mutual concessions were agreed upon and the final settlement of mutual claims under Contract SKM A was made. The settlement resolves the uncertainty regarding mutual rights and obligations related to the aforementioned Contract, particularly concerning the costs incurred due to the extended time for completion, indexation, and additional works. In accordance with the settlement, PKP PLK will pay the Company PLN 27,776,012.33 net for costs incurred due to the extended time for completion and remuneration indexation. The amount of PLN 199,384,470.34 net awarded for additional works will be paid to Trakcja S.A. based on the progress of the work, in accordance with the Interim Payment Certificates, within the timeframe specified in the contract conditions. The Company has agreed that the amount of PLN 5,256,811.52, accrued as contractual penalties and cost reimbursements, will be deducted in equal amounts from the remuneration due to the Company for the execution of Contract SKM A over the next 10 months, starting from March 2024.

The signing of the mediation settlement with PKP PLK will be reflected in the cyclical review of long-term contracts and will have a positive impact on the updated budgets of the Company’s contracts for the fourth quarter of 2023.

The Company will report on the conclusion of other proceedings related to the remaining contracts involved in the ongoing mediation discussions, as indicated in the consolidated periodic reports for the first half of 2023 and the third quarter of 2023, in subsequent reports.

Legal Basis: Article 17 MAR