Management Board Report on the activity of the JSW S.A. Capital Group for 2012

3.9. Differences between the financial results captured in the annual report and the previously published forecasts of results for the reporting year

In the Management Board report on the activity of the Jastrzębska Spółka Węglowa S.A. Capital Group for the financial year ended 31 December 2011, Item 3.2 “Information about the Group’s current and expected financial standing" presents the main assumptions of the Group’s Plan for 2012. The basic assumptions of the Plan for 2012 and their implementation are presented in the following table.

	2012 actuals	2012 plan	Growth rate
Production of coal (in thousands of tons)	13,462.4	13,303.0	101.2%
Coking coal (in thousands of tons)	9,469.2	9,675.1	97.9%
Share of coking coal	70.3%	72.7%	- 2.4 p.p.
Steam coal (in thousands of tons)	3,993.2	3,627.9	110.1%
Production of coke (in thousands of tons)	3,849.4	3,540.0	108.7%
Expenditures on non-current assets (in PLN millions)	1,816.7	1,671.1	108.7%
Headcount – as at 31 December	29.718	30.053	98.9%

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In 2012, JSW S.A.’s mines produced 13,462.4 thousand tons of coal, including 9,469.2 thousand tons of coking coal, representing 70.3% of total production. In terms of net production of coal, 101.2% of the volume assumed in the Plan was achieved, with a surplus of 159.4 thousand tons. The structure of coal production was adjusted to demand and customer expectations.

The Group produced 3,849.4 thousand tons of coke, up by 309.4 thousand tons in relation to the Plan for 2012. The difference was mainly due to the 2012 Plan’s failure to take into account WZK Victoria’s production of coke.

In 2012, the Group incurred capital expenditures the amount of PLN 1,816.7 million, i.e. PLN 145.6 million (8.7%) more than had been planned. This large amount of capital expenditures in relation to the Plan for 2012 was the result of inclusion of capital expenditures incurred by WZK Victoria and PEC. Because both these companies were merged into the Group only in Q4 2011, these items were not included in the Plan for 2012. Furthermore, the Parent Company incurred capital expenditures greater than assumed in the Plan – their value amounted to PLN 1,467.6 million.

The scope of capital expenditures in 2012 demonstrated a strong commitment to the execution of the Group’s capital expenditures program whose main objectives are:

• opening new resources through the implementation of horizontal and vertical expansion of the mines,
• maintaining the current production capacity of the mines,
• reducing labor intensity and downtime ratios through purchases of modern machinery and equipment,
• improving occupational health and safety conditions,
• improving the quality of coal and adjusting production levels to customer needs through the modernization of key process units in the mines’ processing plants,
• modernization of coking batteries,
• execution of environmental protection projects.

As at 31 December 2012, the Group’s headcount stood at 29,718 persons, i.e. 335 persons fewer than planned. The assumptions made in the employment policy provided for replenishment of the headcount in numbers sufficient to fill in vacancies resulting from employee attrition due to retirement or disability. The fill-ins included the hiring of graduates of mining schools.