Trakcja PRKiI S A : 3/2021 - Initial estimated 2020 financial results

The Management Board of Trakcja S.A. ('Company') hereby informs that on 22 January 2021 the Company completed the process of cyclical reviews of long-term contracts and collection of financial data for the purpose of preparation of the Company's individual financial statements for the 12 months ended on 31 December 2020. Therefore, the Company announces the initial estimate 2020 results:

Sales revenues: PLN 652,753 thousand

Gross result on sales: PLN -18,614 thousand

EBITDA: PLN -32,089 thousand

Net profit/loss: PLN -64,928 thousand

The greatest impact on the Company's gross result on sales in the period of 12 months of 2020 was exerted by the valuation of the railway contract implemented in the 'design and build' formula, where, after a significant part of the design works and geotechnical studies had been performed, deviations from the conditions presented by the Contracting Party in the tender specification were discovered, which resulted in the necessity to perform previously unforeseen works related to: soil reinforcement, railway traffic control, modernisation of engineering structures.

Moreover, the level of gross result on sales in the reporting period was significantly influenced by the increase in fixed costs as a result of the extension of contract completion dates in connection with a number of factors, such as:

1. the prolonged process of negotiations with financial institutions under the 2nd round of financing resulting in insufficient level of working capital financing, which contributed to the reduced level of sales;

2. ongoing restrictions related to the COVID pandemic, including:

1. extended period for obtaining administrative decisions;
2. disruptions in the pace of acceptance of work with the Contracting Party due to partly remote work;
3. lower availability of subcontractors employing foreigners;

3. implementation of other, concurrent infrastructure projects affecting:

1. changes in project schedules through the overlapping of projects implemented in other sectors outside the scope of the Company's work (e.g. railway traffic control);
2. deterioration in the availability of materials as a result of the accumulation of work in the infrastructure sector.

In addition, the EBITDA and net result presented above were affected by costs related to the financial restructuring process.

As a result of the cyclical review of contracts, their budgets have been updated in terms of the nature, amounts, time distribution and uncertainty of revenues as well as cash flows resulting from their execution. During the budget update, an opportunity and risk analysis was carried out, in which technical, implementation and liquidity risks were identified and taken into account, as well as risks related to the extension of contracts execution period.

In Q4 2020, the impact of updating contract budgets on the Company's gross result was negative and amounted to PLN -23,347 thousand.

The above preliminary estimates of financial results have not yet been examined by the auditor. Moreover, these results do not take into account asset impairment tests and asset revaluation.

Due to the initial nature of data, final calculations shall be presented in the Company's annual report for the 12 months ended on 31 December 2020, which shall be published on 15 April 2021 according to the adopted calendar of periodic reports publication.

Legal basis:

Article 17.1 of the Market Abuse Regulation (MAR)