Body of the Report:
The Management Board of Jastrzębska Spółka Węglowa S.A. (“JSW”) hereby reports that it has completed analyses of the key indications that the carrying amount of assets in the Coke segment may be impaired, in accordance with the provisions of IAS 36 Impairment of Assets.
In connection with changes in certain technical and economic parameters constituting indications for recognition of impairment losses in previous years in respect of the fixed assets of JSW KOKS S.A. in relation to the Radlin Coking Plant cash-generating unit (“CGU”), the probability that the value of recognized impairment losses will have to be updated has been identified.
Numerical estimates have been calculated in accordance with the provisions of IAS 36. The results of the test carried out in the Coke segment point to the termination of indications for the recognition of impairment losses in previous periods. On 28 February 2020, the Management Board of JSW KOKS S.A. made a decision to reverse in full the impairment loss recognized in 2015 for the Radlin Coking Plant CGU in the amount of PLN 189.8 million.
As regards technical parameters, the planned production structure of the Radlin Coking Plant has been changed as a result of, among other reasons, modernization measures taken, permitting the stabilization of parameters and production capacity.
Among the economic factors that warrant the anticipation of a stable and effective operation of this CGU are the following:
- market forecasts according to which the relation between the prices of blast furnace coke (the main product of the Radlin Coking Plant) and the prices of hard coking coal will remain in the optimal ranges,
- the CGU’s current and anticipated coke production to fulfill the requirements of the executed long-term commercial contract.
The reason for the decision to reverse the impairment loss is that, in the long term, the Radlin Coking Plant has the capacity to generate discounted cash flows that significantly exceed the recoverable value of its assets.
The reversal of the impairment loss will raise the operating result of JSW KOKS S.A. and the JSW Group; however, it will not impact their liquidity position.
The reversal of the impairment loss on the CGU’s assets will be taken into account in the standalone financial statements of JSW KOKS S.A. and in the consolidated financial statements of the JSW Group for 2019.
Legal basis: Article 17(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.