“The Acquisition of Multi-System Locomotives Is a Milestone for PKP CARGO, Especially in the Context of the Recently Announced Acquisition of the Czech Carrier AWT

Warsaw, 12 January 2015

PRESS RELEASE

PKP CARGO to buy 20 locomotives for PLN 400 million to serve foreign markets

PKP CARGO has opened a tender to buy 20 multi-system locomotives to serve cross-border rail connections. Five of them are optional. The value of the contract will be approximately PLN 400 million. Poland’s biggest rail carrier will deploy the first new locomotives in H2 2016. They will pull trains to Germany, the Czech Republic, Slovakia, Austria, Hungary and the Netherlands. After the acquisition of the Czech carrier AWT for close to PLN 400 million, this is yet another step which consolidates the international position of the second largest freight carrier in the European Union.

Originally PKP CARGO considered the acquisition of ten multi-system locomotives with an option of buying another five; however, in view of the electrification of the border crossing with Germany at Węgliniec, it has decided to acquire 15 locomotives with an option of buying another five.

“The acquisition of multi-system locomotives is a milestone for PKP CARGO, especially in the context of the recently announced acquisition of the Czech carrier AWT. As we are expanding our international business, we are investing in new rolling stock. While we initially considered buying ten locomotives, we are now opening a tender for 15 multi-system locomotives with an option of buying another five. This will strengthen PKP CARGO’s capacity of operating international rail connections,” says Wojciech Derda, Board Member in charge of Operations at PKP CARGO.

The first two new locomotives approved for Poland, the Czech Republic, Slovakia, Hungary, Germany and Austria will join PKP CARGO’s rolling stock in August 2016 and the last one, in March 2017. The tender covers full maintenance of the locomotives up to and including the first revision repair (level P4). A revision repair takes place after eight years of operation or a mileage of 1.2 mn km. A potential decision to acquire further locomotives may be made following an analysis of demand for such rolling stock.

PKP CARGO will require the vendor to have experience in the production of electric locomotives as well as type approval in at least one of the countries where the new locomotives will operate. This will ensure the highest quality of contract performance. The contract will have in place mechanisms which protect PKP CARGO against potential downtime of the locomotives, such as technical readiness and reliability indicators. Non- performance of the indicators will entail the payment of damages to PKP CARGO in order to cover the cost of substitution rolling stock.

The company previously owned only one multi-system locomotive and operated the others under operating lease. The solution allowed PKP CARGO to respond promptly and flexibly to changing conditions of transports and to obtain foreign safety certificates. Thanks to the certificates, PKP CARGO can operate transports single-handedly in nine European Union member states. At this time, PKP CARGO’s utilisation of multi-level locomotives has stabilised. Acquisition is the best option under these circumstances.

PKP CARGO S.A., ul. Grójecka 17, 02-021 Warszawa KRS 0000027702, Sąd Rejonowy, dla m. st. W-wy w Warszawie, XII Wydział Gospodarczy, REGON 277586360, NIP 954-23-81-960, Kapitał zakładowy Spółki: 2.239.345.850,00 zł, w całości wpłacony. www.pkp-cargo.eu

PKP CARGO’s existing multi-system locomotives

The first multi-system locomotives used by PKP CARGO from 2008 were EU43 (Traxx) machines produced by Bombardier. The carrier owned six such locomotives which operated transports between Poland and Germany. In 2012, the Bombardier locomotives were replaced with EU45 (EuroSprinter) machines produced by Siemens. Currently PKP CARGO uses ten such locomotives. They pull trains with containers, cars, steel, coal, coke, iron ore, chips, and car parts, among others. They run in the three main corridors: Poland-Czech Republic-Austria, Poland-Germany-Netherlands, and Germany-Poland-Czech Republic- Slovakia-Hungary.

PKP CARGO in 13 European countries

PKP CARGO will have access to 13 European markets after closing the acquisition of Advanced World Transport (AWT). Slovenia, Croatia, Bulgaria, and Romania will join the group of serviced countries: Germany, the Czech Republic, Slovakia, Austria, the Netherlands, Hungary, and Lithuania. Apart from multi-system locomotives, PKP CARGO uses other types of locomotives for international transports. Diesel locomotives are used in Germany, the Czech Republic, Slovakia and Lithuania. PKP CARGO deploys single-system electric locomotives in the Czech Republic and Slovakia.

A carrier may enter a foreign market subject to obtaining a safety certificate issued by the local regulator. The procedure is similar in all European Union member states but it is conducted on a case-by-case basis. One of the requirements for a certificate to be issued is to operate locomotives approved in the given country. PKP CARGO has had its ET22 and ET41 electric locomotives and ST44 and SM42 diesel locomotives approved in the Czech Republic and Slovakia, among others.

PKP CARGO trains are driven by Polish train drivers in three countries: the Czech Republic, Slovakia, and Germany. To drive a train abroad, train drivers are required to pass a language examination and get local train driver certification. PKP CARGO uses the services of third- party drivers in the other countries.

About multi-system locomotives

Multi-system electric locomotives are designed to move between different power systems without stopping the train. This ensures smooth operation of cross-border transports in countries using different voltages in the rail network. As a result, a train may use a single locomotive to go, for instance, from Germany through Poland, the Czech Republic and Slovakia to Hungary. Multi-system locomotives are several percent more expensive than single-system locomotives.

Contact: Mirosław Kuk Spokesman for PKP CARGO S.A. (+48) 783 91 51 34 [email protected]

European countries where PKP CARGO may operate

*** PKP CARGO Group is the leader in rail freight in Poland and the second largest operator in the European Union. It was established in 2001. In the area of logistics services, it runs land transport operations (rail and road) and maritime operations (ferries). It owns the largest fleet of freight rolling stock in Poland. The carrier runs a thousand of trains on average every day, providing services to 10,000 customers. It operates its own freight cargo services in Slovakia, the Czech Republic, Germany, Austria, Belgium, the Netherlands, Hungary and Lithuania. PKP CARGO Group includes such subsidiaries as Cargosped (responsible for intermodal operations), PS Trade Trans (national and international rail freight forwarding services) and PKP CARGOTABOR (one of the world’s largest freight companies). In 2013, PKP CARGO Group generated a revenue of PLN 4.8 million and a net profit of PLN 65 million, having moved 114 million tonnes of cargo. On 30 October 2013, PKP CARGO was floated on the Warsaw Stock Exchange, becoming the first stock-listed rail freight operator in the EU. The public offering, during which PKP S.A. sold almost 50 percent of shares of PKP CARGO, totalled PLN 1.42 billion. The Company is now part of the mWIG40 index. PKP S.A. remains its major shareholder. PKP CARGO Group is active in the area of CSR. It follows the standards of responsible employment policy and carries out a range of environmental activities. Additionally, it is a patron for railway artefacts such as those collected in Parowozownia Wolsztyn, the only museum of its kind in Europe.