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#Current report 94/2018

Current report 94/2018 (23.11.2018)

Title:

Information on the initial financial results of URSUS S.A. in restructuring for III quarters of 2018.

Legal basis:

Article 17 section 1 MAR - confidential information.

Content:

Upon the completion of the aggregation process of financial data pursued to create the condensed consolidated financial statement of URSUS S.A. in restructuring for three quarters of 2018 i.e. from 01.01.2018 to 30.09.2018, the Management of URSUS S.A. in restructuring reports to the public opinion the initial financial results for the above-mentioned period:

- sales revenue: 79,3 millionn PLN;

- nett profit (loss): -29,5 million PLN;

The nett loss of URSUS S.A. in three quarters of 2018 is 29,5 million PLN over 6,4 million PLN of nett profit from the same period of the previous year which resulted in the decrease of the domestic and foreign sales revenue as well as lower profitability of goods due to the requirement to bear fixed costs despite reducing the sales volume. Sales revenue of URSUS S.A. in three quarters of 2018 dropped by 64% i.e. by the value of 140,8 million PLN over the same period of the previous year and they are 79,3 million PLN which stem from the decrease of foreign sales by 69% as compared to the same quarters of 2017 and the decrease of domestic sales by 56% year-on-year. The reduction in the revenue from the contract with the Tanzanian National Development Corporation (NDC) (Current reports no. 38/2015, 5/2016, 29/2016, 39/2016, 47/2016, 1/2018 and 59/2018) had a significant impact on the decrease of foreign sales revenue. In three quarters of 2017 the Company noted revenue from the realization of the above-mentioned contract in the amount of 60 513 thousand PLN. However, in three quarters of 2018 the contract sales is 3 762 thousand PLN. The reasons behind the delay in the realization of this contract were procedural problems connected with the acceptance of the payment. Domestic sales revenue lower by 56% year-on-year was caused by the delays in the realization of applications for subsidies within the EU programme RDP for years 2014-2020 which is the basic financial instrument for Polish agriculture. The drop of the domestic sales revenue is caused mainly by the non-implementation of EU subsidies which have a significant influence on decisions concerning investment purchases in agriculture and by the deteriorating condition on the agricultural market in Poland. The liquidity problems of the company were the consequences of the difficulties in the acceptance of the payment from the contract with Tanzanian NDC and decreased flow from the domestic sales revenue. As a result the production level was reduced and the quantity of finished products lowered, therefore, further decline appeared in the following periods.

The negative factors contributed to the decision of the Company to enter into Court with a request to open the accelerated conciliation procedure, about which the Company informed in the current reports no. 91/2018 and 92/2018. The accelerated conciliation procedure was opened by the Court on 7th November 2018 (current report 90/2018) and it is in progress.

The Issuing Party informs that the presented values are treated as estimates and they may change. The condensed consolidated financial statement of URSUS Capital Group and the condensed separate financial statement of URSUS S.A. in restructuring for III quarters of 2018 will be published on 29th November 2018.

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