UPDATE: LPP fashion's write-offs related to Russian company to impact Q3 results by around PLN 788 mln

The write-off will concern the value of trading liabilities of around PLN 547 mln (EUR 124 mln) and liabilities due to the sale of Re Trading in the amount of approximately PLN 241 mln (EUR 56.9 mln).

The company also reported that the write-off was a non-cash event and as such it would not impair its financial situation, growth plans or dividend policy (including the future recommendation of the management board concerning the dividend for the 2025 financial year).

In May 2022, the company signed an agreement to sell 100 percent of its shares in RE Trading OOO, which was confirmed and legitimised by a Russian court decision, as LPP earlier said.

It now added that since the disinvestment of part of its Russian business in 2022, the company had reclaimed close on PLN 2.6 bln (EUR 613 mln) from this direction, including proceeds from the sale of products and shares in the Russian unit.

LPP also said that it had received information from current shareholders of Re Trading - General Consulting Services - FZCO and Far East Services - FZCO – concerning their inability to execute their obligation to pay the third and fourth instalment of the price for Re Trading (totalling USD 94.8 mln), which were due on December 25, 2025, and December 25, 2026, respectively. They also announced their inability to regulate payments owned to their suppliers.

The reasons they listed were: Re Trading's dire financial situation, failure of restructuring efforts and lack of possibility of acquiring financing from Russian banks.

The investors also announced that they did not plan to execute their put option for the sale of shares in Re Trading in the period of four weeks preceding December 25, 2025. Subsequent windows for executing the put option would formally be the period of four weeks preceding December 25, 2026.

The company assesses the possibility of the investors' execution of the put option as unlikely due to geopolitical settings as well as legal requirements making it impossible to transfer shares in Re Trading to the company without a consent from the respective Russian authorities.

At the same time, LPP upheld its stance that even if the put option was executed successfully, the company would not carry out any operations in Russia (in such a scenario, the company would assume closing down the Russian company and full write-off of its value).

pel/ tom/