Body of the Report:
In reference to the information conveyed to date related to the impact exerted by COVID-19 on JSW’s business and having regard for the measures taken to date to mitigate the impact exerted by the coronavirus on JSW’s business, the Management Board of Jastrzębska Spółka Węglowa S.A. (“Company”, “JSW”) has assessed the impact exerted by the pandemic on its various business segments.
1. Impact exerted by COVID-19 on the level of coal production, coal sales and the amount of work to make resources accessible
As a consequence of this situation JSW did not achieve its production plan in the period from 23 March 2020 (namely, from when the Company phased in a three-shift work system in place of the four-shift system to limit contacts between employees working different shifts to the maximum extent possible) until 30 June 2020. The damage done thereby totaled 1.23 million tons, including 0.96 million tons of coking coal.
JSW has also experienced limitations connected with the restrictions associated with COVID-19 in the commercial area as a result of which total coal sales in Q2 2020 were approximately 2.96 million tons and were down by approximately 10.9% from Q1 2020 and approximately 7.5% from Q2 2019.
In addition, on account of challenging staffing issues related to the absence of employees, JSW did not manage to achieve the operational key performance indicators linked to work to gain access to resources. As a consequence of this situation JSW did not achieve its target of doing 6,291 running meters of corridor works in the period from 23 March 2020 to 30 June 2020.
2. Impact exerted by COVID-19 on the timely payment of public law liabilities
As a consequence of the current pandemic JSW took advantage of the possibility of deferring the payment deadline for public law liabilities in accordance with the Act of 31 March 2020 on amending the act on special solutions associated with preventing, counteracting and combating COVID-19, other infectious diseases and crisis situations they precipitate and certain other acts, which took effect as of 1 April 2020. The total outstanding amount to be remitted for ZUS social insurance contributions, income tax and real estate tax is PLN 281.18 million, where the new deadlines for the payment of these liabilities have been set for October-December 2020.
3. Impact exerted by COVID-19 on JSW’s labor costs
In the period from March to June 2020 JSW incurred incremental labor costs related to employees contracting COVID-19, their quarantine, the execution of preventive measures involving the need of phasing in “downtime” and costs related to handling and organizing the overall process to ensure that the panedemic’s repercussions are as least onerous as possible for JSW. The total labor costs in this period due to COVID-19 were PLN 61.7 million.
4. Other costs incurred by JSW in connection with COVID-19
Other costs (net of labor costs) incurred by the Company for the prevention of COVID-19 in the period up to 30 June 2020 totaled PLN 6.2 million.
The downturn brought on by the pandemic led to lower revenue, temporary production constraints, liquidity deterioration in the industry and in the entire supply chain, which directly contributed to extending the period of collecting trade receivables from clients, the level of trade receivables and the cash balance. Accordingly, the Company is taking efforts to mitigate the impact exerted by the past and future effects of COVID-19 on the Company’s liquidity, among others by taking advantage of the solutions available on the market to support working capital management and it is applying for the public financial aid available on the market. Having regard for the above, the Company submitted an application today to secure funding under the anti-crisis shield in the maximum amount of PLN 1,750.00 million.
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.