62/2022 Information on the Management Board’s decision to create write-downs

The Management Board of Trakcja S.A. (“Company”, “Issuer”) hereby informs that on September 5, 2022, based on the impairment tests performed as of the balance sheet date of June 30, 2022 ,it decided to write down the following assets:
1.    “Investments in subsidiaries” included in the separate report of Trakcja S.A. as of 30.06.2022:
a.    Investments in subsidiary BTW sp. z o.o. – a write-down in the amount of PLN 10,835 thousand;
b.    Investments in subsidiary PEUiM sp. z o.o. – a write-down in the amount of PLN 3,248 thousand;
c.    Investment in subsidiary AB Kauno Tiltai – a write-down in the amount of PLN 66,709 thousand.
2.    “Goodwill” recognized in the consolidated financial statements of the Trakcja Group as of 30.06.2022 allocated to the following cash generating units (hereinafter “CGU”):
a.    CGU consisting of the following companies: PEUiM sp. z o.o., Dalba sp. z o.o., PDM S.A. – a write-down in the amount of PLN 5,029 thousand;
b.    CGU consisting of companies belonging to the AB Kauno Tiltai Group – a write-down in the amount of PLN 34,330 thousand.

The write-down of “Investments in subsidiaries” will reduce the standalone financial result for the first half of 2022 and reduce the value of fixed assets presented in the Company’s standalone balance sheet as of 30.06.2022 by PLN 80,792 thousand. The process of investment impairment testing as of 30.06.2022 was carried out for all investments in Trakcja S.A.’s subsidiaries, except for the investment in Torprojekt sp. z o.o., whose carrying value as of 31.03.2022 was PLN 1,400 thousand. Work is underway for an impairment test of the investment in the subsidiary Torprojekt sp. z o.o. and the assets of Trakcja S.A. related to this company (taking into account the factors reported by the Company in current report No. 58/2022).

The creation of a write-down for “Goodwill” will reduce the consolidated financial result for the first half of 2022 and reduce the value of fixed assets presented in the consolidated balance sheet of the Trakcja Group as of June 30, 2022, by PLN 39,359 thousand.

The write-downs created are non-cash in nature and do not affect the liquidity position of the Company and the Group.

The factor that most affected the value of the write-downs, both of investments and goodwill, is the increase in the discount rate, i.e. the “weighted average cost of capital” (WACC) ratio. The increase is due to factors external to the Trakcja Group.

Preliminary estimates of the Company’s and the Group’s financial results for the first half of 2022 will be made public after the financial data collection process is completed.

The final financial results of the Company and the Group will be reported in the consolidated semiannual report for the six months ended June 30, 2022, which will be published on September 30, 2022, according to Current Report No. 61/2022.

Legal basis:
Article 17(1) MAR