9.5.2. Capital risk management

The key objective of the Group’s capital risk management is to safeguard the Company’s ability to continue as a going concern and carry out the planned investment projects, while increasing the shareholder value of individual companies.

Capital risk management involves, among others, the monitoring of net financial debt/EBITDA and net financial debt/equity ratios calculated on the Group level, based on the regulations and definitions included in the Terms and Conditions of the Bond Issue, i.e. adjusted among others for the impact exerted by non-recurring events as defined in the Terms and Conditions of the Bond Issue. According to the Terms and Conditions of the Bond Issue, equity means the consolidated level of equity at the end of the given period stemming from the Group’s consolidated financial statements. In accordance with WEO requirements, the Group as a matter of priority strives to maintain its net financial debt/equity ratio at a level not higher than 0.6 and to suppress its net financial debt/EBITDA ratio to the love equal or lower than 2.5. According to the Terms and Conditions of the Bond Issue, JSW was required to present appropriate calculations of the ratios as at 30 June and 31 December and, in the case of the net financial debt/EBITDA ratio, also as at 31 March and 30 September of each year. As at 31 December 2017, the net financial debt/EBITDA ratio was -0.04 and the net financial debt/equity ratio was

-0.02. In each of the analyzed periods in 2018, both the net financial debt/equity ratio and the net financial debt/EBITDA ratio were negative, which resulted from a the fact that there was a surplus of cash over financial liabilities.

The Group is exposed to various risks in each area of its activity. In order to achieve its strategic objectives, the Group actively manages the risks arising in its operations, striving to mitigate or eliminate their potential negative effect on the financial result. In addition to the financial risks discussed in these consolidated financial statements, the Group is exposed to non-financial risks, which include risks arising from its social and economic and market settings, with its business activity, environmental risks and risks related to its legal environment. The non-financial risks are discussed in detail in Section 3.7. Management Board Report on the activity of Jastrzębska Spółka Węglowa S.A. and the Jastrzębska Spółka Węglowa S.A. Group for the financial year ended 31 December 2018.