PBG w upadlosci ukladowej : Half-year 2016 results of the PBG Group

Wysogotowo, September 14th 2016

PBG posted revenue of PLN 22.9m, down by more than PLN 34.5m year on year.

Gross loss totalled PLN 12.5m, compared with a PLN 22.3m loss in the previous year.

Operating profit stood at PLN 1.06bn, compared with a PLN 62.4m loss the year before. Net profit came in at PLN 963.9m, relative to a PLN 198.3m loss in the previous year.

The value of the order book as at July 1st 2016 was approximately PLN 135m.

The PBG Group reported revenue of PLN 788.7m, up by more than 2% year on year. Gross profit was PLN 46.2m, up 48.4% year on year.

Operating profit totalled PLN 828.7m, relative to a PLN 108m loss the year before.

Net profit attributable to owners of the parent was PLN 867.6m, compared with a loss of PLN 87.4m in H1 2015.

The value of the Group's order book as at July 1st 2016 was approximately PLN 4.4bn.

KEY EVENTS AT PBG IN H1 2016

• PBG published its performance figures for H1 2016. With revenue of PLN 22.9m, the Company posted operating profit of PLN 1.06bn, and net profit of PLN 963.9m.

• After the Bankruptcy Court's decision of October 8th 2015 approving the Company's voluntary arrangement became final on June 13th 2016, the Company disclosed the effect of debt reduction, as set out in the Arrangement and in agreements with arrangement Creditors pertaining to debt repayment deadlines. As a consequence, in its statement of profit or loss the Company disclosed a gain on conclusion of the Arrangement in the amount of over PLN 1.054bn.

• Following impairment testing of shares held (directly and indirectly) in RAFAKO S.A. as at June 30th 2016, the Company estimated the value of the investment in 50% + 1 share in RAFAKO at more than PLN 315m, and recognised an impairment loss of PLN 99m.

• Additionally, the Company made an estimate of the impact of an annex to the consortium agreement (the annex was signed on April 15th 2016 with other members of the consortium − Saipem S.p.A., Saipem S.A., Saipem Canada Inc. (previously Snamprogetti Canada Inc.), Techint − Compagnia Tecnica lnternazionale S.p.A. and EGBP Management Sp. z o.o. w upadłości układowej (in company voluntary arrangement) (previously PBG Export sp. z o.o.)) concerning loss of joint control by the Company on the contract implemented for Polski LNG S.A. The effect of the loss of joint control was a gain of PLN 22,955 thousand.

• On the date of the court's decision on approving the Company's arrangement becoming final, the provisions of the Arrangement concerning conversion of a portion of the claims into new Series H shares in the Company came into force. Following the conversion, the Arrangement Creditors will receive 756,410,820 new Series H ordinary registered shares in the Company with a par value of PLN 0.02 per share, at the issue price of PLN 0.02 per share. The issue of Series H shares will be successful upon registration of an increase in the share capital by the registry court.

  Half-year results

  PBG's financial results in H1 2016 vs. H1 2015

  PLN '000	H1 2016	H1 2015	y-o-y change
  Revenue	22,949	57,486	-60%
  Gross profit (loss)	-12,509	-22,272	-
  Operating profit (loss)	1,059,679	-62,439	-
  Net profit/(loss)	963,876	-198,28	-

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  KEY EVENTS AT THE PBG GROUP IN H1 2016

• The key event at the PBG Group in H1 2016 was the court's decision to sanction PBG's Arrangement with Creditors becoming final.

• In H1 2016, the PBG Group reported revenue of PLN 788.6m, up by more than 2% year on year, with gross profit at PLN 46.2m, up 48.4% year on year.

• As a result of the Arrangement with Creditors coming into force, PBG effectively acquired 75% of shares in PBG oil & gas Sp. z o.o., a subsidiary, from Jerzy Wiśniewski, thus becoming the sole shareholder in the company. Consummation of the transaction was contingent upon fulfilment of the condition precedent,

  i.e. effective execution of the Arrangement.

• After the Bankruptcy Court's decision of October 8th 2015 approving the Company's voluntary arrangement became final on June 13th 2016, the effect of reduction of the parent's debt towards its creditors from outside the PBG Group, as set out in the Arrangement and in agreements with arrangement Creditors pertaining to debt repayment deadlines, was disclosed in the accounting books. As a consequence, in its consolidated statement of profit or loss the Group disclosed a gain on conclusion of the Arrangement in the amount of PLN 921m.

• Given the identified indications of impairment of the recoverable amount of goodwill in connection with an impairment loss on Rafako S.A. shares recognised in the interim condensed financial statements of the parent, the Group decided to recognise an impairment loss on RAFAKO's goodwill of PLN 101m.

• A bid by RAFAKO (a PBG Group company) was selected by ENEA Wytwarzanie as the best bid in a tender for "Delivery and installation of a catalytic flue gas denitrification system for AP-1650 boilers No. 9 and 10 and for upgrade of the electrostatic precipitators at ENEA Wytwarzanie Sp. z o.o." The bid price is PLN 282.9m, VAT-exclusive.

• RAFAKO offered also the best bid for construction of a co-generation unit at a new CHP plant in Vilnius. The contract value is EUR 149.65m (approximately PLN 661m).

• On July 14th 2016, the subsidiary RAFAKO and POLIMEX Energetyka Sp. z o.o. signed a letter of intent to cooperate in a joint participation in a potential tender for expansion of power generation capacities at the Ostrołęka Power Plant and performance of works under a contract that will be concluded if the consortium of PE and RAFAKO wins the tender for the Project, on the terms and dates provided for in the contract. The Parties plan to participate in the Project as a consortium.

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Half-year results

PBG Group's financial results in H1 2016 vs. H1 2015

As at July 1st 2016, the value of the PBG Group's order book was approximatelyPLN 4.4bn, of which about PLN 1.15bn is attributable to orders to be executed in 2016, with the balance of PLN 3.25bn scheduled for execution in the coming years. Power construction projects account for the largest proportion of the order book value (94%), and the balance (6%) is represented by contracts in the oil, gas and fuels segment.

Table: Structure of the order book as at July 1st 2016

*The PBG Group provides specialist construction services in the area of gas and oil production and fuel facilities, as well as general contractor services in the power construction segment.

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