- An impairment loss of PLN 36.8M was recorded in Q3 2019 due to halted steam supplies.
- Total impairment losses on CSR assets in 2019 amount to PLN 73.7M.
- Production at CIECH Soda Romania stopped on September 18, 2019.
- Future decisions regarding the plant will be made by year-end.
Impairment Loss
The Management Board of CIECH S.A. decided to record an impairment loss of PLN 36.8 million in the consolidated financial statements for Q3 2019. This loss is related to the cessation of process steam supplies to CIECH Soda Romania (CSR) by CET Govora, the sole steam supplier. The write-down does not impact the adjusted EBITDA result, cash flows, or the unconsolidated result of CIECH S.A. However, it will be recognized in the EBITDA result and the Group's net result.
Previous Write-Downs
In 2019, CIECH made two impairment losses on CSR assets, totaling PLN 73.7 million. The first write-down was recorded in the consolidated financial statements for the first half of 2019. The decision to create a revaluation write-down was based on an analysis of two scenarios: reaching an agreement on steam prices with CET Govora or discontinuing production, which would necessitate an additional write-down.
Production Halt
As a result of failing to reach an agreement, an additional write-down of PLN 36.8 million was created. Consequently, CIECH Soda Romania halted production on September 18, 2019, and entered stand-by mode. This decision followed CET Govora's termination of the steam supply contract and a proposed price increase that made profitable operations impossible.
Future Plans
CIECH Soda Romania is currently exploring the possibility of securing a new steam source at a reasonable cost. However, the probability of implementing these scenarios was assessed as insufficiently high at the time of the write-down decision. Further decisions regarding the plant's future will be made by the end of the year.
