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CIECH S. A. additional write-down for impairment of CIECH Soda Romania assets without impact on the adjusted EBITDA result

The Management Board of CIECH SA decided to create in the consolidated financial statements for the third quarter of 2019 an impairment loss of PLN 36. 8 million related to the cessation of supplies of process steam to CIECH Soda Romania ("CSR";) by the only steam supplier - CET Govora. The write-down does not affect the adjusted EBITDA result - the basic indicator showing the CIECH Group's business activity, cleaned from unusual one-off events, as well as cash flows or the CIECH SA unconsolidated result. The write-down will be recognized in the EBITDA result and the Group's net result (consolidated statement). In 2019, CIECH made two impairment losses on CSR assets in the total amount of PLN 73. 7 million. The first write-down on this account was made in the consolidated financial statements for the first half of 2019.

 

In September, the Company informed about the analysis assuming two scenarios with the same degree of probability, which resulted in the decision to create a revaluation write-down. The scenarios were as follows:

  • assuming an agreement between CIECH Soda Romania and CET Govora on the level of steam price;
  • assuming no agreement and discontinuation of production, the implementation of which would result in an additional write-down.

 

As a result of the implementation of the scenario of no agreement, an additional write-down in the amount of PLN 36. 8 million was created. In total, CIECH wrote off PLN 73. 7 million due to the impairment of CSR assets.

 

The Romanian company CIECH stopped production on September 18th, 2019 and went into stand-by mode. This decision was a consequence of the CET Govora heat and power plant's termination of the contract for the supply of technological steam by the only available supplier of this raw material to CIECH Soda Romania and the proposal of price increase preventing the Company from running a profitable business.

 

CIECH Soda Romania is currently analyzing the possibility of acquiring a new steam source at a reasonable cost. The probability that these scenarios will be implemented as at the date of the decision on the write-down was assessed as insufficiently high.

 

Further directional decisions regarding the future of the plant will be made by the end of the year.

 

 

Contact:

Mirosław Kuk, Press Spokesperson of the CIECH Group

miroslaw.kuk@ciechgroup.com, tel. +48 723 66 86 86.

 

 

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