Body of the report:
The Management Board of Jastrzębska Spółka Węglowa S.A. (“Company”, “JSW”) hereby reports that it has completed JSW’s asset impairment tests in accordance with the provisions of IAS 36 Impairment of Assets.
The results of the tests carried out by JSW point to impairment of the carrying amount of non-current assets in the coal segment, i.e. assets of the “Knurów-Szczygłowice” and of the Zofiówka Section of the “Borynia-Zofiówka-Jastrzębie” coal mines, totaling PLN 1 214.0 million. The main reasons for reducing the recoverable value of the assets were as follows:
- the limited access to mining and drilling services characterized by an increase in the prices for these services,
- the observed steel price growth translating into higher costs of material consumption,
- the need to raise capital expenditures to maintain production capacity in the long run,
- the need to increase headcount compared to the previously assumed numbers and the growth in payroll expenses,
- the need to withdraw in the long run from operating parcel H in the Zofiówka Section as a result of the occurrence of the high energy shock wave in 2018.
Recognition of the impairment loss will reduce the operating result of JSW and the Group but will not impact their liquidity position. The final value of the impairment loss will be presented in the standalone and consolidated financial statements of JSW and the JSW Group, respectively, for 2018.
At the same time, the Company hereby reports that it has partially reversed the impairment loss taken in previous years for the Budryk coal mine totaling PLN 719.1 million. The Company made the decision to reverse this impairment loss after analyzing the samples of coal obtained from work to open up new deposits. The planned output mix in the Budryk coal mine has changed in terms of the coal quality, which drives up the revenues that may be generated from selling it.
The reversal of the impairment loss will raise the operating result of JSW and the Group; however, it will not impact their liquidity position. The remainder of the impairment loss after its reversal will be presented in the standalone and consolidated financial statements of JSW and the JSW Group, respectively, for 2018.
At the same time, the Company reports that the above figures are estimates and are subject to change.
Legal basis: Article 17 Section 1 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on Market Abuse and Repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC