Insolvency Helps Reduce Fortus S.A. Losses

Doru Mocanu,

IaŞi

Fortus S.A. - Iasi (RASDAQ:FRTI) reported a significant decrease in operating losses at the end of last year, compared to the figures for 2007, despite a nearly 5 million RON decrease in turnover. The company concluded 2008 with a turnover of 65,941,003 RON, down from 70,190,929 RON at the end of 2007. Of the total turnover for 2008, 39,058,969 RON was derived from foreign trade. Operating revenues decreased from 84,999,917 RON in 2007 to 76,137,931 RON at the end of 2008. Concurrently, operating costs decreased from 135,314,140 RON in 2007 to 109,192,456 RON in 2008, while operating losses decreased from 50,134,223 RON in 2007 to 33,054,525 RON at the end of 2008.

However, the improvement in operating figures was offset by an increase in financial losses from 2,099,579 RON in 2007 to 2,729,045 RON in 2008. Consequently, Fortus S.A. concluded last year with losses of 35,783,570 RON, calculated as the difference between overall revenues of 77,076,923 RON and overall expenses of 112,860,493 RON. The Iasi-based heavy machinery manufacturer reported losses of 52,413,802 RON at the end of 2007.

"Losses have been reduced primarily due to the Insolvency Law, which protected the company against creditors. Due to this law, the financial pressure on Fortus decreased, so the cash flow in and out the company"s accounts was resumed. Additionally, intensified commercial activities last year also contributed to the overall improvement," said Adrian Ababei, the Insolvency Administrator of Fortus S.A. However, "the turnover decreased because of the reluctance of some of the Fortus S.A. customers caused by the fact that the company is undergoing insolvency procedures," he added.

By the end of last year, Fotus S.A. had accumulated debts in the amount of 275,861,108 RON, of which 163,760,213 RON to the mandatory State social security and unemployment insurance funds. The company managed to pay some of the debts in the first two months of the year, especially to staff, suppliers and other creditors and reported an overall debt value of 259,354,059 RON at the end of February 2009.

At the end of 2008, Fortus reported receivables of 12,331,483 RON, including a litigious amount of 4,393,263 RON. Of the total sum of receivables, 31.86% or 3,093,870 RON is to be collected from the former majority shareholder Metalexportimport S.A. - Bucharest, which did not pay for a number of products delivered by Fortus.

The heavy machinery manufacturer, which made their first batch of steel in 1978, remains the only industrial platform with integrated technological flows and unitary management in Romania which produces heavy machinery for the mining industry, the energy industry, the cement industry, shipyards and other major industrial customers.

Fortus S.A. has an extensive customer portfolio including IHC (Holland), BEFON (Serbia), PSP Engineering (Czech Republic), Exim Trade (France), BH Wachtberg (Germany), Lafarge (France), Holcim (Switzerland) and UEI (Egypt). On the domestic market, Fortus works with ROMINEX - Timisoara, Arhipro - Bucharest, FEPA - Barlad, Fibec - Buzau, Donalm - Calarasi, Mechel - Targoviste, Ductil Steel - Buzau and the Constanta Naval Shipyard. The production value planned for 2008 is 83.6 million RON.