The Management Board of Alumetal S.A. ("Company", "Issuer") informs that the Management Board of Alumetal Group Hungary Kft. ("Subsidiary") in consultation with the Management Board and the Audit Committee of Alumetal SA today decided to include the impairment of the deferred tax asset in its entirety. related to the activity of Alumetal Group Hungary Kft. due to the probable possibility of failing to meet the employment level parameter at a minimum annual average of 150 people, which is a necessary condition required by Hungarian law from every investor to obtain public aid in the form of corporate income tax exemption .
The change in the estimated likelihood of implementation of the aforementioned parameter in relation to the initial assumptions of the business plan of the project "Construction of the Plant in Hungary" of 2014 results from the following reasons:
a) permanent change in the structure of the supply of scrap materials in Hungary who is the Alumetal SA Capital Group. resulting in a significant reduction in the share of scrap materials requiring labor-intensive metal management processes, which affects the reduction of employment in the subsidiary, b) the implementation of several technological and organizational solutions in the subsidiary resulting in increased production efficiency and thus a permanent reduction in the level of demand on the work of production workers in relation to the original plans,
c) difficult situation on the Hungarian labor market characterized by low availability of new employees, high employee turnover and relatively high wage growth dynamics, which affected the above-described modification of the business model in the Company subsidiary.
In the light of the above, the subsidiary, having a significantly reduced demand for employees as a result of the above-mentioned changes, is likely not to meet the minimum level of employment requirement of 150 people a year in 2019, and consequently will not be able to benefit from tax relief income, about which the Issuer informed in the report No. 17/2014 of October 10, 2014. In this situation, the subsidiary decided today to include in full the impairment loss of the deferred tax asset relating tounused state aid in the form of corporate income tax exemption in the amount of 940 287 853 HUF (equivalent to approx. PLN 12.5 million), which will reduce in the fourth quarter of 2018 both the net result of Alumetal Group Hungary Kft. and reported consolidated net result of the Alumetal SA Capital Group The Issuer's Management Board points out that the inclusion of the tax asset in a written form will not affect the amount of the consolidated consolidated net profit of the Alumetal SA Capital Group, which is the basis for payment of the dividend by Alumetal S.A.
At the same time, the Issuer's Management Board would like to emphasize that the write-down of this asset is not associated with cash outflow from the subsidiary, and the savings resulting from the adoption of a new business model and, consequently, lower employment should compensate for the potential profits lost by the subsidiary with income tax relief.
The second part of the public aid in the form of a cash subsidy in the target amount of HUF 1 480 211 000 (equivalent to approx. PLN 20.7 million), which in more than 99% of the value is already paid, in the opinion of the Management Boards of the Subsidiary and the Issuer is not threatened with partial or total loss, as it results from the reduction of the requirement to employ up to a minimum of 113 people, based on the decision of the Hungarian Ministry of Foreign Affairs and Trade regarding the reduction of the aforementioned undertaking for the subsidiary, as reported by the Issuer in current reports no 39 / 2017 of October 11, 2017 and No. 51/2017 of November 29, 2017.
Source: company website, investor relations, current and periodic reports.