7/2020 - Information on the spreading of SARS CoV-2 and its effects on the financial situation of the Issuer and his group of companies

In connection with the recommendations of the Polish Financial Supervision Authority of 12 March 2020 and own analysis, the Management Board of Trakcja PRKiI S.A. (”Company”) hereby informs that the rapid spread of the SARS CoV-2 virus in Poland and on other markets where the Company and its subsidiaries (”Group”) conducts business may affect the Company’s and the Group’s financial results in 2020.

As at the date of this report, the Management Board foresees that the current threat related with the SARS CoV-2 epidemic, which results, amongst others, in potential restrictions of transport and interruptions in the continuity of supplies of components and raw materials may lead to delays in the the execution by the Group of purchase orders under the contracts, to which Group companies are parties as contractors or subcontractors; in consequence, this may lead to a risk of claims addressed by contracting parties for payment by Group companies of contractual penalties due to untimely contract performance.

In addition, although as at the date of this report, both contractors and financial institutions are continuing operations, the further spread of SARS CoV-2 may result in a change in the business of the Group’s contractors, courts, and the institutions financing the Group; this may lead to delays in obtaining funds essential to perform the Group’s financial obligations, the possibility to obtain new contracts due to a lack of required financial collateral in the form of guarantees of funds essential to pay a deposit, as well as a failure to meet the Company’s liabilities related with long-term financing (as notified by the Company in the Current Report No. 51/2019 of 27 September 2019) within the scope of the process of the Group’s financial restructuring. It should be noted that as at the date of this report, the Company is applying measures leading to the finalization of the process of obtaining additional funds, amongst others from the instruments foreseen in the long-term financing documentation, such as bonds convertible to shares, a prepayment reimbursement guarantee for a railway contract, as well as release of guaranteed deposits (with the total value of approximately PLN 50 million).  As a consequence of the negative influence of the SARS CoV-2 epidemic on the aforementioned operations, the Group’s liquidity and financial situation of Group companies may be adversely affected. Simultaneously, the potential restrictions or extensions of deadlines of investments of contracting authorities, resulting from the epidemic, may affect the Group’s financial perspectives in the next quarters of 2020.

In account of the health and safety of employees and to ensure continuity of the Company’s operations, the Management Board prepared a procedure of operation with regard to the risks related with SARS CoV-2.

As at the date of this report, the exact and final effect of the SARS CoV-2 epidemic on the Group’s situation has not been identified yet, therefore the Company’s Management Board continues to monitor how the situation develops, and analyses the potential influence of the epidemic on the Company’s and the Group’s business, results and perspectives, including any need to change contract evaluations and the Group’s liquidity indicator.

Legal basis:

Article 17.1 of the Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation)