Jastrzebska Spólka Weglowa S.A. (JSW) Earnings Call Transcript & Summary

[Audio Gap] The lower quality coal, the average price for Australian coking coal was down by 1.5% from Q2 to Q1. And so over the 6-month period of this year compared to last year, it was up by some 31%. As we can see in the presentation, in Q2, the strongest impulse for imports were for coke and so higher prices for coking coal, as I said previously, especially in internal market in China after the accident. And so that meant that the prices had to be pushed up. And so prices were up despite the major resistance amongst buyers. And so we can see that coke prices from other suppliers are growing also from Indonesian suppliers. So if you look at the Chinese FLB, such as 06707, and so it was up quarter-on-quarter by nearly 16%. And so compared of the 6-month period and this year to the 6-month period of the previous year, in the first half of the year, and so the price increase was some 12%. According to the McCloskey data, if we look at blast furnace coke, imported to Europe, here, we're talking about CSR parameters, so 67%. It's up by 14.3%. And if we compare the 2 semiannual periods -- interim periods, first 6 months of the year -- if you're looking at -- it's up by 8.5%, if we're talking about imported coal. What's important, we frequently mentioned this, it's worth reminding this of this, so we've also seen improvement in the ratio between coke prices and coking coal prices for PLD. And so 0.95 up to 1.15. And so in the second quarter, it was on average 0.94%, and so in the first quarter, across the period, it was below 1%. In some cases, it was down to the lowest level in histories, which was 0.82. And so it's worth mentioning that in Q2, we had the market waiting for information about the Indonesian authorities decisions in terms of antidumping prices for coke. And this was -- or customs duties that will be enforced until the end of 2030. They were approved at the beginning of July, and this is going to be -- it's going to be imported from Russia, Austria, Japan, and Polish Coke is not subject to these antidumping prices. And so I think it's worth mentioning that the customs duties depend on the country of origin, and they range from $43 to $129 per tonnes. That's the range of the customs duties. At previous conferences, I frequently talked about protectionism as well as commercial wars, which has an impact on the trade of raw materials. This is a major challenge. The regionalization of the market means that there are new indices, which take into consideration the quality of coal as well as the more deepening regionalization of the marketplace. On the subsequent slide, we present as a matter of tradition, the prices of JSW products to market prices in Australia, and we can see what's happening in individual quarters. And so in Q2, the benchmark price was on the way up over Q1. So this is an increase of more than 9%. We're talking about a very distinct period where we're comparing the prices from January to May as opposed to October 2025 to February 2026. So this is the distinct period that's being compared. And so if we look at PLV, so premium low volume and so is 93%. That was the case in Q1, and then, it was down to 89% in Q2, and this decline is due to a few factors. So we have volatility in coking coal prices, and you can see that on the graph below, and that had a varying impact on the quarterly prices -- the volatility of the U.S. dollar exchange rate as well as the production volatility. If we look at coal prices, we can say that when we're negotiating prices for Q2, we had observed in the marketplace diverse trends for what was going to happen with blast furnace coke compared to Chinese coke prices were falling. But at the same time, we saw increase in the ARA ports. And so that increase in the ARA ports was primarily due to freight cost moving up as a result of the war breaking out in the Strait of Hormuz. And so we're talking about all of the grades produced by JSW. And so this was a 98% ratio of coke prices to blast furnace coke and ER prints. And so if we look at the steam coal price, we can say that there was a slight decline in prices. But if we look at our sales increases, and this was a matter of having higher calorific value as opposed to the 2024 range, which is the basis for defining the PCMI 1 price index. On the next slide, we have a summary of sales of coal. And we first had the sales of coal to external customers, and so, we were up by 15.7% compared to the previous quarter. And we had a higher sales volume that was up by 8.7% and then thermal cost was up by more than 23% and coking coal than 4%, and we had higher coal prices, and so it's up by more than 31%, and coking coal was up by 6.2%. So despite the growth seen in Q2 across the full 6-month period of the first half of the year, so it was down by 6.7% compared to the previous year. So the half year to the half year, and so this was a result because we had the volume of sales down by 4.6%, and so coking coal was down by 9.4%, while the sales of thermal coal was up by 12.7%. And so the coking coal price increase is 4.3%, and it was up by nearly 1%. This average selling price. This was not able to, let's say, overcome the decline in volume. As we operate on a volatile market and having in mind what's happening with deep mining, the company has to manage sales actively, and that's 1 of the reasons why having in mind the limited ability to obtain financing, we have to have certain priorities. And so liquidity is the priority for us. And so having in mind the dynamic reactions to our -- the market situation with respect to liquidity as well, and so we have basically -- so the lower quality coking coal is reclassified to thermal coal. And so having in mind what Mr. Rozmus said previously, this does not that we have a change in our strategic goals. We will continue to maximize coking coal as a percentage of our output, but we have to react to the liquidity concerns as well as to what's happening in the marketplace in general. And so let me give you a short commentary on this slide in terms of sales of coke produced in the JSW, which were down by 12.6% over the earlier period in the year. And so the sales of coke -- and so the revenue and hydrogen were down in Q2 over Q1 by 1.7%. And so they're PLN 803 million in Q2, and this decline was a result of having a lower volume to sell, and so it was down by 10.7%, but the average coke sales price was up by 7.6%. In the first half of the year, the revenue was down by 8.5% in the first 6 months of this year compared to the first 6 months of last year, and it was -- so basically, we can say that it was down -- the average sales price was down by 8.5% and whereas the decline in the volume was down 1.6%. And then I'll give you a commentary about our inventories. So at the end of the year -- at the end of the half year, we are up by 17.5%, and so we're at 1,561,000 tonnes. And so the coal inventory, it was more or less similar. And so we had the bulk with coking coal, so PLN 1.4 million. A portion of the inventory is technological inventory, which is something that we always maintain to ensure that the coking batteries can operate without disruption as well as for financial transactions, having in mind our liquidity activities. The coke inventory is at the level that we need to send out coke overseas. At the end of the first half of the year, we had 132,000 tonnes. So it was down by 11% nearly compared to the previous quarter. So thank you very much. That would be it from my side. Then I'll ask Mr. Rozmus to tell us a little bit about the group's investments.

Ladies and gentlemen, so the unwavering execution of the remedial program as well as deliberately reducing our CapEx. You can see that on the slide. And so as a matter of my commentary to this. I would mention the trend, which is highly visible in the first half of this year compared to the first half of last year, and so if we look at CapEx in the group in this period is down by PLN 440 million, which is an increase -- sorry, a decrease of 24%, and this is primarily for investments in JSW itself. And this decrease took place in investment construction as well as the purchase of goods, property, plant and equipment and the expenditures related to expandable mining pits. And so we were deliberately reducing the CapEx because we want to utilize and optimize the production assets we have, and we want to utilize the equipment we have to the maximum extent possible. If we look at the capital expenditure across in terms of coke, this is important. So we have higher CapEx of PLN 41 million because we're modernizing a battery in the coking plant, what's important here in Q2. So at the end of the first half of the year, this is when Coke Battery #4 was launched. So the investment period that's been going on for many years has been brought to an end. And so we've launched coking battery. Number four, it's utilized at 80%, now having in mind the targets that have been embraced. One other thing that's worth mentioning was the launch in Q2 of power block in Radlin. So we're synchronizing this system with the national energy system. So the -- these are some things that we should mention, and this is a deliberate execution of our plans. And the final thing, our investment outflows under the group. And this is a matter of what's going to happen with CapEx and how we're going to execute the optimization plan in the -- as a matter of our operations. So thank you very much, and I'll give the floor back to the CEO, Boguslaw Oleksy.

So thank you very much. So we have financial highlights that I would like to present at this time. And so this is relatively simple because you've received information previously in terms of the market environment and the production environment, they have a direct impact on the group's financial results. And so what I can say in terms of our sales revenue, if we measure it quarter-on-quarter, we have an increase of revenue in excess of 7%. If you look at H1 to H1, in 2026, in 2025, the revenue on sales has fallen by more than 5 percentage points -- if we look or 5%. If we look at EBITDA, we should note that the group level EBITDA in Q2 is in the black. So it's slightly above 0, but since it's in the black, it's a value in excess of 0. And that's why I wanted to mention that level of EBITDA. And so this is something we note with the measure of satisfaction. And so when I showed you the EBITDA level of JSW, it's more than PLN 51 million, as I said. If we look year-on-year, there is a major change, of course because we had a negative EBITDA of PLN 1.6 billion. Now, we're at PLN 236 million. Unfortunately, it's still got a minus in front of it, but we are consistently implementing our intentions. If we look at net working capital, it is still -- and we still present that with the closed-end investment fund. We still have some money in that closed-end an investment fund. But the level of working capital shows how it's changed. If we have in mind basically the contributions made by the fund, so in Q2 of last year, we had PLN 200 million negative. Now, at the end of June of this year, this net working capital is negative in excess of PLN 5 billion. So the net result for Q2, well, we have a loss of PLN 427 million. This is a result that's better than in Q1, which also shows that our efforts, our activities, the measures we're taking are delivering results, producing results. And so if we compare that H1 to H1, we can see that there's a fundamental difference because last year, at the end of H1 2025, we had a total of minus PLN 2 billion. Now, at the end of H1 -- in the H1 period, we have a net loss of PLN 1 billion. Well, there is a major change in terms of absolute values, but this is not yet the level that would satisfy us, and I think that's quite obvious to say. And so if we look at the change in sales revenues, what are the contributing factors? We can see the bridge here. Most of the line items are green, so they have a positive impact as they contribute to sales growth. The major factor that actually detracted from -- or reduced the level of sales revenues is the volume of coke sales and madam Gruszka mentioned that the decline in the coke sales volume. Now, if you look at costs, this is, in fact, 1 of our 1 of the things that we've been dealing with primarily for many months now. If we look at the costs, in Q1 versus Q2, we can see that we've reduced the costs by nearly 11% year-on-year, so H1 to H1, where what we can see that the decrease in costs is some 18%. And this is what we promised nearly a year ago. And so what we promised a year ago has been delivered. We'll look at the major contributing factors on the next slide. And so this is a reduction of employee benefits, amortization materials. And so if I look at those individual cost change drivers, so you can see the depreciation, amortization. So we've reduced that cost. And so that's a positive improvement of PLN 74 million. If we look at the consumption of materials, we've been able to save PLN 100 million in excess of PLN 100 million. We have savings on the consumption of energy of some PLN 44 million. External services are down by nearly PLN 68 million, employee benefits, PLN 71 million. When I said this is 1 of our top priorities is to reduce costs. It's not so much the reduction of costs per se, but to generate a profitable return on our operations. Well, we can see that the efforts we've taken are producing results. And so maybe in the initial period, they're easier to achieve, later it will be more difficult. But the first meters, seconds are possible to improve more easily, but we have to be consistent, unwavering in our execution in terms of the implementation of our remedial program. So the structure of our costs has an impact, and we can show you that in the form of our mining cash cost. And so with respect to the overall volume. So what is the mining cash cost. So quarter-on-quarter, we've been able to reduce the MCC by 7% on a year-on-year basis. So H1 to H1, the increase -- decrease is in excess of 20%. This shows you the outcome and the determination we've shown to reduce mining costs coast. And so then if we look at unit mining cash cost, we can see this has also improved. In Q2 we have the unit mining cash cost at 587 watts per tonne. And we're showing that on this slide, our goal for 2026 is to have MCC of 588. This was achieved, but we have to achieve it, of course, in the latter half of the year as well. If we look at the cash conversion cost for coke, here, we can say, unfortunately, we've not achieved the success we had anticipated. So quarter-on-quarter, we have an increase of nearly 20% for the cash conversion cost. But if we look year-on-year, H1 to H1, we can see that we've been able to reduce the cost by more than -- or almost 19%, but if we look at the unit cash conversion costs in Q1, we were at PLN 274 per tonne, whereas in Q2, we came in at PLN 328. And here, the major factors is the cost impact, but this is also affected by -- or driven by what happened with the volume. And so now, if we break that down into the various drivers for the unit mining cash cost, so consumption materials and energy has a savings of nearly PLN 25. And then, we have external services more or less flat. And if we look at employee benefits, we have reduced them by nearly PLN 20. Taxes and charges more or less flat. Other costs by nature are more or less a 1%. So we can say, and we're showing you that the unit cash cost -- unit mining cash cost. While the reduction is taking place in these areas and those are the areas that are the subject of our -- to the object of our consideration. We'll talk about that in just a moment when we get to the remedy program. Sorry, there is a minor book there as I switch slides. And now we can look at the unit cash conversion cost. Here, the major elements that have linked to -- that have led to an increase in Q2 over Q1, well, these are external services in excess of PLN 9. They may have taxes and charges are up by PLN 12. And then the impact of volume, which is the biggest impact, Madam President, Gruszka already mentioned that. These are the 3 elements that drove this situation. That's why the unit cash conversion costs grew. Primarily, this was due to volume impact, and that's the access of our efforts. And so it's a matter of extracting the right type of coal, and that will lead to an increase in the coke production in our coking plants. Now, if you look at the JSW Group's EBITDA drivers, as we mentioned previously, EBITDA is now in the green or in the black as we would say. And we consider the major drivers are volume and sales figures. And then, we can say the cost savings make a major contribution here. Some of the other items have an impact on the cost of depreciation and amortization. So Mr. Rozmus already talked about the reduction there. And so those figures are lower. And we can also see the impact of the results of other activities. This has made a positive impact as well. So we're getting better results on other operating. And then we have impact of impairment of nonfinancial, noncurrent assets, which is around PLN 64 million. So we can say a relatively small impact or a small share of what was happening here. So what we can say here and emphasize once again is that our EBITDA is currently in the black. We have achieved a positive value. Now, we can look at the contribution made by the various segments to the EBITDA change. So Mrs. Gruszka already referred to that, and so the major positive impact was delivered by what happened in the coal segment. We continue to have some -- or grapple with the negative impact of the coke segment. So at present, that's 1 of the important objectives we have. What we're endeavoring to do here is to basically take control of that situation. And so some of the market factors referred to Mrs. Gruszka aren't helping us, but we want to make sure that the impact of this segment will be -- well, we want to change entirely the negative impact of that segment. I'm sorry, I've gone a little too far -- it's good to have a quick hand if you're a 6 shooter in a shootout, but it's not something that's the best to have when you're delivering a presentation. So net working capital is something that I've already mentioned, talked about as I give you a composite view. So you can see it being broken down into the individual components or drivers of our net working capital. So of course, our trade and other liabilities are the biggest burden here. And then we have loans and borrowings and then employee benefit liabilities. And so these red bars illustrate the major drivers of our working capital. What's important here? And Mrs. Gruszka referred to that, that's when we look at our inventory, the utilization of other working capital elements, and we're utilizing those inventories to deal with our liquidity position. And so we're proactively working on our net working capital. We want to utilize those assets, current assets to the best possible way in order to achieve the maximum impact. And so as we wrap up, we can look at the group's cash flows. So at the beginning -- so at the end of last quarter, we had PLN 234 million. Then if we look at what's happened with our liabilities in inventories, depreciation, amortization, investment flows, at the end of the day, we have cash at the end of the period. As of 30 June 2026, we have basically PLN 117 million in cash. And this shows what it's not right now, but it shows what we've been dealing with for several months now. So we're trying to maintain liquidity, improve the liquidity of the company. And this is 1 of the goals, which form the foundation of our remedial program. At this point in time, we would generally break for questions and answers. But as I said at the beginning, what we'd like to do today before we go on to the Q&A section. What we'd like to do is present a document that we prepared recently. And this document is very important to us, and its preparation entailed a lot of work. We've been working on that for nearly a year. We've been working on a variety of program-related documents that would enable us to stabilize the situation, the position of the company through a variety of actions. The fact that we've embraced this program, approved this program is very important. What's even more important is its execution. And we treat this as the first step, the embracing of this program -- the approval of this program is the first step. What's going to be critical, however, and crucial is its execution. And so you'll see in just a moment that our determination in terms of executing this program is enormous. Nearly 1 year ago, when we commenced our work with my colleagues from the management team, there were a number of things, factors, in fact, that made the situation critical. We had problems with extraction. We had a decline in prices on the marketplace. We saw some dramatic price declines in the market of both coal and coke. This is something we need to reference. The parameters were much more demanding in terms of the FX rates. And as you know, our business is denominated in U.S. dollars and euros. So to that end, the situation was changing for the worst. Then we also had cost related elements, which we were affected by. Inflation was quite high in our economy. So the internal problems. So previous high CapEx, high employee benefits or salaries, employee guarantees, all of these things meant that the starting point was very difficult. The fact that we still had funds in the closed-end investment fund, we had money there, it seemed to everybody that, that would be a period a time in which we could easily complete that period. Unfortunately, that didn't happen. The cash was burned. And so the termination is linked to the fact that we have to prepare ourselves to regain profitability, stability and credibility in the marketplace. That was 1 of the things that we held in mind from the very get-go. And that's why this document has been penned, has been drafted. I think it's worth mentioning here that the social partner had a major contribution to the drafting of this document. We were able to strike a comp price with them in terms of employment guarantees as well as the costs of employee benefits. And what's very important here, and this is something that should be highlighted, the remedial program has been created by the company, by the employees of this company. This is not something that's been prepared for us by advisers. We were the ones who prepared this program. And this is something that's very, very important because nobody knows the company better than we do. So the employees of this company. Of course, there is participation of our colleagues from the Supervisory Board. So many hours of work, analysis, deliberations, and the program leader, we've named a person who has experience, has already lived through 1 minor episode in the history of the company when it was very, very tough. So this is President, Thomas. He's the leader of this undertaking what happens with leaders. You have splendor and you have accountability, but we are all aware that -- as we sit here, we're all abundantly aware that this is not an easy undertaking. It will require many difficult tasks. It will require a sacrifice, but the company here is the most important for us, and we were assisted by other stakeholders because it's not just the employees, not just the corporate bodies of the company, but also the Ministry of State Assets, the Ministry of Energy, the social security institution, we can't forget about them, and the banks, our business partners. This is also very important. All of them who took part in this process, and I bow very low to them. Without these stakeholders, it would have been difficult for the company to prepare for this. And so what I've said is quite lengthy, but the value I see in that is emotional. This has taken a long time. The expectations were there, but the document does exist. The remedy document, the remedy program is here in front of us. And now I'd like to ask our leader to present what we want to do, how we want to do it. And then, we -- with full determination, we will deliver, we will execute because we have to. So thank you very much. Tom, please take over the floor.

Thank you very much, Mr. President. I'd like to welcome, ladies and gentlemen. It is my pleasure to present the fundamental or the core assumptions on behalf of JSW for the period from 2026 to 2035 having in mind the entire group. When we talk about the remedial program, already mentioned as part of his introductory remarks, how difficult the situation is we find ourselves in. And when we talk about the remedial program, we have to have in mind the various factors that led the company to the position where it found itself. And there are several factors, there are external factors and internal factors. If we think about the external factors, we should mention that there was a major decline in prices in the period from 2022 to 2025. We're talking about a decrease of prices in excess of 50% for premium coking coal prices. And we also saw decreases in coke. Here, the decrease is nearly 60%, and we also had in this period, 2022, 2025, we had other important factors. Mrs. Gruszka already mentioned the decline in production in the EU, then the war breakout, then the temporary increase in prices to a level that had never been seen in the history of the company. Those are the most important things in terms of the factors in the external environment. If we look at the internal factors, here, we should have in mind some of the extraordinary factors that affected the level of production or output. And so we saw a major decline in 2024. We should also mention that we had a very high level of capital expenditures that was done primarily in 2023, 2024. And unfortunately, this did not contribute to improving the efficiency of production, call production efficiency. Another very important element, which had an impact, this is what I mentioned, this is the mining cash cost. You see that the mining cash cost grew substantially, even though we also had the CapEx that was increased, and then, we had the one-offs, and so the cash benefits in excess of PLN 6 million, then the famous windfall tax, which was incurred in 2023, which is PLN 1.6 billion. These factors taken together led to a very difficult precarious situation of the company, as the CEO said, my predecessor spoken. And so that's why we had to embark on a remedial program. And so what's important here that we work on this program has been underway for nearly a year. But in the meantime, the management team supported by the majority shareholder, which is represented by the Ministry of State, assets and other stakeholders who got involved in this process, including the social partners. So activities were undertaken to maintain the liquidity of JSW as a company and as a group. And we have the agreement signed with the social partners in November of 2025, and then, in February 2026. And so on 1 hand, this meant that there was a limitation on the employee guarantees. And so this applied primarily to admin employees. And then we had other aspects linked to salaries, then the law was amended, which gave the opportunity to the company to -- for the employees of the company to utilize certain instruments under that law, that new law. Here, we're talking about cash severance benefits for severance, and some of the stakeholders that have been supporting the company in terms of maintaining the liquidity that was the ARP. So industry restructuring agency. And so then, we were able to sell a couple of companies to ARP. And another important event that took place was the amending of the law in terms of development, and that means certain loans could be made, and those opportunities did not exist previously. And as a result in August of this year, there was a loan of PLN 824 million. And then an application for another loan of in excess of PLN 1 billion. And so -- and this was to replace or sub-in for the sale of JZRNPBZ. And so this was something that the amendment of the law allowed for. And then we get to September of this year. So after all of this initial leg work was done and the work done by the employees as the CEO mentioned. So the remedy program has been adopted with the participation of the employees of the company, and this program has been approved by the Supervisory Board of the company. So as part of that remedy program, we have defined priorities or objectives. And so basically, we want to build a company capable of effectively competing on the global markets while maintaining stability. We're operating on a global market, not just in the EU. And so we have certain fundamental objectives that we want to achieve. So we want to rebuild the cash position as the foundation for the group's financial security, and in particular, we want to rebuild or regain the credibility and stakeholder trust. And so we want to raise external financing to carry out the restructuring process. We want to restructure -- we want to gain balance and have an ability to generate a sustainable cash surplus. And the next general objective is to stabilize our production, the quality and operational efficiency as pillars of the potential of the JSW Group, and in particular, we're talking about stabilizing production levels, the quality of coking coal and coke. We want to reorganize the operation of mines to ensure that we optimize resource utilization and have integrated organization. We want to limit those assets in areas that fail to meet efficiency criteria. Another general objective is to achieve cost flexibility as a prerequisite for sustainable competitiveness. So we want to actively manage our unit cash costs, so MCC and CCC. So both for coking coal and Coke. And we want to utilize synergy to the fullest extent with our subsidiaries as well that can support us in the restructuring process. We're talking about our renovation plan as well as the shaft driving company. And then, we also have JSW, JSW Logistics, CLPP and PGVER. And then, we want to maintain investment discipline and effectively allocate capital. As we mentioned previously in previous years, there was a very expansive policy of investments, which did unfortunately not contribute to any improvement in efficiencies in the company. And that's why we're talking about investment model, where we would pull assets to ensure that -- and then allocate capital and then to make sure that we can maintain conformance with regulations. And so this is something that we want to improve our costs. And so then profitability is the next objective is the foundation for rebuilding the value of the group. And this is a matter of our capacity to operate as a group in a cyclical market environment. And in the -- then we have the sustainable development. So we want to maintain our environmental targets, while at the same time, abiding by the highest standards of employees, safety for employees and mine operations, and this is very important in terms of what we're doing in mine operations. And so Mr. Alexa mentioned, it's one thing to define goals. But now we have to break them down into individual areas. And so in terms of the remedy program, we have an implementation program that's been prepared. And so those goals or objectives have been decomposed into various areas across our company, and we have a separate project here. And as you can see on the slide, we have mining and costs, investment in procurement, HR coke, trading subsidiaries and finance. And in those areas, we have leaders appointed and working teams, and the leaders are key employees of our company. And the goal of these leaders and their teams is to define initiatives and projects that will enable us to achieve the intended objectives that were defined in the overall remedy program. And so the work has been done. And so we've defined those efforts. In JSW, we have more than 58 initiatives. In terms of the group, we have more than 140 initiatives. And since these projects are being done, not only in JSW, but in all of the companies belonging to the group, so we're saying that all hands are on deck. And this is a good slope, and it's working that we're extraordinarily determined to achieve our objectives. The initiatives have been, as I said, defined in the various areas. And we've put parameters on them in terms of finance as well as the deadlines for their achievement. And then, we're monitoring the execution of initiatives to make sure that we can react proactively to any type of divergence that could appear in the execution of initiatives. And so if we look at the stability of production as a pillar of our group, so we assume that our production, our run rate will grow from PLN 13 million in 2025 to PLN 14 million by 2029 and all the way through 2035, we want to maintain that run rate of 14.1 million tonnes per year. What's also important here is we will have a stable increase and the share of production to be held by coking coal, high-quality coking coal from 85% to 94% in 2029. And then, we want to maintain that level in subsequent years, as Mr. Rozmus said, and so we will limit or curtail production of steam coal, thermal coal. So we want to concentrate fully on the most economically viable portion of our deposits and generate money through that CapEx to extract that type of coal, and we want to utilize those instruments. So we have the mining lease as well as the cash severance payments. And so this should generate positive impact, and we want to make sure this is done while having in mind a high level of employee safety. And we have a similar plan for coke production in how we utilize production in our JSW Coke subsidiary. And we want to have a stable production all the way through 2029, which we -- around 3.4 million tonnes per year, of which 2.7 million tonnes will be blast furnace coke. And so we want to move up the production utilization ratio from 86% to 96% in 2029. The next major element that requires our activities, that's the cost flexibility. Here, we assume that the unit mining cash cost will decline quite substantially from PLN 738 million to PLN 560 million in 2029. And of course, this will be done through reorganization to optimize resources, HR resources. And we want to be more efficient and have greater flexibility. And at the same time, we want to utilize to the maximum extent possible, the competences of our renovation plan as well as our shaft and driving company, which are subsidiaries. And we've made a similar assumption in terms of unit coke cash conversion costs falling. And so we want to drop from PLN 347 per tonne to PLN 227 million in 2029. Of course, discipline is an issue. As I said previously, the capital expenditure policy was quite extensive, a lot was spent. It did not improve efficiencies. So we want to reduce the level of CapEx, as Mr. Rozmus said. So compared to 2025, when it was in excess of PLN 3 billion, we will see our CapEx fall to slightly below PLN 1.8 billion in 2029. Of course, we're talking at the group level. And so from a little bit below PLN 3 billion. And so we have PLN 2.5 billion at the group level. At JSW, this will be around PLN 2 billion. Naturally, in terms of CapEx, we should mention that our assumptions in production uplift, run rate uplift that means we have to do certain corridor works and have a certain intensity ratio there. And so we want to stabilize that ratio. Well, we want to be around 65 kilometers of works and that should be stabilized and the ratio as a result. So then we have the matter of utilization of the expenditures made in previous years, and we want to utilize those assets effectively. So we want to focus on those investments to open up new resources, and so we want to extend mines, both vertically as well as horizontally to gain access to new deposits and set up new fields where we can extract that and that would extend the life of mine in, and then, we want to complete some key investment projects at the Budryk mine as well as the Pinova mine. And then gradually, we want to open up new development projects, but that would be done after 2030. And so Mr. Rozmus also mentioned that we've wrapped up the investment process of coke oven battery #4 as well as the coke oven gas-fired power unit at the Radlin coking plant, which is a subsidiary, JSW Cox. So ladies and gentlemen, we cannot forget about sustainable development, and so we want to achieve our environmental objectives. And this is part of the overriding objective, which has been laid out in the remedy program. So we want to support those initiatives and under the environmental policy is -- and utilize that in the remedy program. And so the CEO mentioned during the preparation of the remedy program, we were working heavily on maintaining our liquidity, and there's a wide body of stakeholders participating in this process. And so we'd like to present certain stakeholders who supported us and we can begin with the employees. So those agreements that we made with the employees will lead to substantial savings of around PLN 1.2 billion in 2026 and 2027. And then we have the Industrial Development Agency, which is PLN 1.22 billion, and that also includes a PLN 400 million advance towards a potential transaction because I've said recently, we want to change that transaction and converted into alone. And then our contractors, Mrs. Gruszka and her team did a lot with our contractors that delivered value of PLN 1.3 billion. Then we have the social insurance institution, deferrals and installment payments, and that gave us an impact in excess of PLN 1 billion. So if we look at production in the first half of this year during the preparation of the remedy program, we've defined certain things, and you can see some positive impacts on the production side prior to the approval of this remedy program. So the level of production is at 6.5 million tonnes as opposed to 6.2 million tonnes. The mining cash cost is PLN 609 per tonne as opposed to PLN 778 in 2025, then the CapEx is at PLN 1.38 billion as opposed to PLN 1.82 billion in H1, 2025. The same is true in the second key area, which is coke production. So it's flat at 1.4 million tonnes, then the cash conversion cost will fall to PLN 300 per tonne from PLN 368. And then, if we look at the number of active longwalls, it's 21.3% versus 19.9%. If I could add, because we've shown the major stakeholders and those entities that have provided support, but we cannot forget about our suppliers and service contractors because we received support from them as well to assist in our liquidity. It's not shown on the slide here, the spot they gave, but we owe them that. Because of our good cooperation with them, we've been able to maintain our liquidity. Thanks to the participation. Yes, that's exactly right. And so the level of internal participation, so employees, the management team and the employees, but we can also say that all of our stakeholders and our surrounding environment have shown a lot of understanding, appreciation given support in terms of the difficult position that JSW is in. So ladies and gentlemen, so our shareholders, our stakeholders. So now, ladies and gentlemen, in terms of the remedy program, we can say how important the JSW Group is as the European leader for the delivery of coking coal and coke. We have a strong position. We're the sole producer in the EU after production was wound up in January of this year in Czech Republic. So the largest merchant coker in the EU and the entire time coking coal, which is a critical raw material, and it's on the CRM list without interruption since 2014. And so in terms of the stable support from customers, stable demand from key clients. So Mrs. Gruszka and her team means that we have very stable cooperation with our customers. So 95% of the coal segment's external revenues come from EU customers. In terms of Coke segment, they account for some 59% of our revenue. We're an employee supplier of coking coal and coke to the largest steel concerns in Europe that don't have their own captive coking plants. And we have a 30- to 50-year outlook. For the life of mine, we have recoverable coal reserves of 1.2 billion tonnes. And then, we have coke oven batteries, number four, where we've completed the investment there just recently. So as a result of the events that took place in our environment, and how important the coke -- the JSW Group is, so we're able to secure the safety of the European Union in recent months have shown it is how important it is to have your own raw materials have that raw material security and to be independent and to mitigate any risks in terms of disruptions in the value chain. Of course, JSW, as a coking coal and coke producer, is the fundamental supplier for steel mills. So 70% of production of steel is in the current production such as blast oven, furnace coke. Nothing is changing here. If we look at hydrocarbons, there are components of synthetic graphite and batteries, energy storage, advanced materials. And generally, for this steel industry. So as I sum up. And so let's bring this all together. If we think about the fundamental or core assumptions, we have the coal segment, and so we want to grow production from 13 million tonnes to 14.1 million tonnes. That's our long-term target. The second thing in coke -- sorry, in coal segment, we want to increase the share of high-quality coking coal to 95% of total production. And then corridor works in the meantime will be roughly flat or stable at 64 kilometers per year. And the coke segment, basically, we want to increase coke production to 3.3 million tonnes in the long term with 7.2 million tonnes of that being blast furnace coke. And we want to utilize the capacity at 94%, so we want to increase that from 86 -- in 2025, we want to utilize the production assets to improve operational efficiency and cost competitiveness. And then, we'll analyze potential divestments in the coking segment, and then, we mentioned, we've completed certain investments in coke battery #4 and the Redland CHP plant. In terms of CapEx, we've made major efforts to ensure that our CapEx can be reduced to secure our liquidity. And so it's going to be below PLN 2 billion per year in the period up to 2030. In subsequent years, the increase in CapEx will be within limits that supports stable growth and that will be backed by optimization initiatives in terms of employment and productivity. So we want to reduce headcount across the group and in GSW, and so we want to utilize instruments from the act or the law in the function of the mining industry, and that should improve our productivity significantly. And so our efficiency should be improved on top of that by the execution of initiatives in our key areas of activity. If we look at the mining cash cost and the cash conversion cost, so as a result of our business restructuring, we want to drop that from PLN 738 per tonne in 2025 to PLN 588 in 2026 and our long-term target is to drop it to PLN 559 per tonne. In terms of the cost conversion cost, in 2026, our plan is to achieve PLN 286 per tonne compared to PLN 347 in 2025. And the long-term target is roughly PLN 317. And so we want to rebuild our cash position and competitiveness. So ladies and gentlemen, this is a matter, a key matter in terms of executing the remaining program. And so in the near future, we want to rebuild our liquidity. In the midterm and the long term, we want to be profitable and competitive. And this should enable us to operate in a stable fashion in a cyclical market environment. But at the same time, we want to be a stable employer and ensure that we have jobs for our employees. But it's not just a matter of giving them jobs, but also making it possible for these employees to grow. That would be more or less it from my side. So thank you very much for your attention. I'll give the floor back to the CEO. Thank you very much.

So now I'd like to say a few words myself. I'd like to add a few words, if I may, because this presentation was exhaustive and comprehensive in terms of the objectives we incorporated. First thing. I've already mentioned this. This is our own proprietary program. And this program was written by those people who will execute this program. And they will be subjected to this program. Second, this is an ambitious program, but it's 1 that's achievable. It's feasible. In many areas, it is difficult because we're grappling with the market with nature and Mr. Rozmus most mentioned that as well, but it's something that can be done, can be delivered. And so we believe it's a feasible program. At the same time, it's a tool that's consistent. All of the initiatives, all of the areas mentioned by Mr. Gawlik, this is something that's cohesive. It's coherent. And so it's internally consistent, and this is something that we drew attention to. It's hard to talk about production without costs. You can't talk about production without employees. This is something I'd like to emphasize and highlight. The next thing, our program is flexible and open. We will incorporate and absorb new ideas. We will react to what's happening on the marketplace. This is not a document to be put on the shelf. It's something that will live with us. And at the end, what's also important, it is evolutionary, but at the same time, it's transformational. Mr. Galik said that in many areas, things that will be changed in this company in many areas. And these changes have to transpire. And at the end, this is something that will interest you. I'm sure this program is highly transparent. We will communicate this program.

As the CEO mentioned, we assume that we will be monitoring this on an ongoing basis. We will be held to account on an ongoing basis, and we will communicate with you about how the execution is moving forward, how the implementation is looking, what our progress is. So we -- as we sit here on this side of the table, we are convinced that we are capable of implementing this program, and we are confident that we can say that we can do this. Since I said that we've broken the convention, but that's because of the significance of this remedy document -- remedy program document. Now I'd like to open things up with the Q&A session. This can apply both to the remedy program as well as to the results of H1 2026. So I'd now ask for those questions to be posed.

So ladies and gentlemen, let me read the questions that have been submitted to the company. First question, the decrease in head count of 4,248 persons. Will it be completed by the end of this year? If so, the headcount in JSW will be slightly below 16,000 employees. So 20,000 at the end of March '26, minus the 4,248 people who are leaving the company. Have I understood this correctly? Yes, this is a correct understanding. We, as I said, when we were mentioning or showing you the document in the internal aspects, we've been analyzing individual items. But logically speaking, that's correct. Thank you very much. What is the breakdown in declines of head count by quarter. In Q2 2026, you mentioned that in May, you would have 120 people leaving. Can you assume then that in -- you have 526 in Q2, 1,122 in Q3? And for Q4, you'll have another 2,600 employees leaving the company. Well, the response is a little bit different from those numbers. We, in this process, have to follow the interest of the company. So we need to obtain the continuity of our business activity. And so it's not simpler mathematics that we can divide the 4,000-plus people into -- divide that number by 4 or 3 quarters because we had 3 quarters so much to do this. Basically, we assume that in Q3, the decline will be roughly 2,200 people, whereas in Q4, it should be around 1,400 people. Thank you very much. Next question. The data above suggests that the major decline in head count will not have a big impact on the level of production. So basically, you want to have an increase of efficiency to 200 tonnes per employee per quarter, so 800 tonnes per annum. JSW number has never delivered that result, highest ratio was 710,000, 730,000 tonnes per person per year. And that was in 2016, 2018. So these levels in the future would suggest that in previous years, the company was highly inefficient. So having 16,000 employees at JSW and an efficiency of 800 tonnes per year per person, that means you would be able to have 12.5 million tonnes as opposed to 13.3 million tonnes in 2026. And let me follow the same question. So we have an increase in efficiency in the company that's never been seen before. And so it should be nearly 900 tonnes per year, whereas the highest in the past was in 2026, which was a little bit above 7. How can you make such a major improvement? So ladies and gentlemen, the assumptions for the remedy program are not based on a single factor like reducing head count and improving the yield per tonne of yields in tonnes per employee per year. So basically, this requires a number of activities to optimize our work. So we'll make organizational changes, and so, CapEx will change. We have to improve the utilization of time of work. And so both of people and equipment. We have a lot of equipment underground. We want to focus extraction. And this is something that we're looking at quite heavily. And then, we want to change the model of how individual mines work. So at Budryk, and this mine was shown as a 4 longwall, now it's going to be a 3 longwall mine. That means we'll limit the amount of equipment and also limit the number of people to do the mining efforts. But at the same time, we have to change some organization. We have to accelerate the process of laying out the equipment and utilizing that equipment better. A similar argument can be used in terms of the mine. So we'll have a 3 longwall mine as opposed to 2 longwall mine. Another important factor is that employees are leaving us, not only on longwalls or production, but also in administration, and these are things that are not directly linked to production itself. So to sum up, well, we would say that we're only going to touch 1 element, then why would you need a remedial program? So it'd be enough to change the headcount while maintaining the same run rate that would suggest that we're a land of milk and honey. Now, we have to focus on a large number of initiatives to need to change our approach in many areas, and we have to adapt to what the market requires of us. So we have to make several major changes in how we approach things. Thank you very much for this exhaustive response. And the next question. So the employee safety measures like mining leave and these one-off severance pace. Will they be continued in the subsequent years? Well, this question seems to be quite simple, but the response is not so simple to give. So we assume that we have an instrument which we can use, but we have to observe closely the organization itself and technical and engineering factors. We will mine as long as we can do that safely and reasonably. So safety, my colleagues have mentioned safety, perhaps they mentioned that briefly, but because of the time limits of today's meeting, safety is a top priority for us. And that's why other groups that could utilize the benefits of the mining law. Well first, we have to do a profound analysis on that before we respond to that question. The most important thing is that the instrument exists, but we have to -- if we want to utilize that instrument, we have to do the initial legwork. Basically, we assume that, yes, this is a possibility that we could do that, but we have to factor in safety and continuity -- business continuity as I referenced earlier. Thank you very much. Recently, we've seen a spike increase in coking coal prices. In the opinion of the management Board, have they peaked? Ladies and gentlemen, we see the Australian coking coal grades prices increasing in August of this year was not a result of market conditions. As I mentioned during the presentation, we've observed this increase because of decisions made by the Chinese authorities linked to major catastrophes in Chinese mines. And that means that safety controls were -- guardrails were increased, and that led to decrease in production. So this means there were less deliveries from Mongolia to China. And that means that there is many more purchases done by Chinese buyers, and that in parallel, then prices spiked. So these high prices, if you look at the margins of steel mills, I will emphasize, once again, those prices were difficult to stomach by other buyers, including buyers from India, who could not transpose those higher costs on to steel. And so basically, the start buying less Australian grade coal. So in September, mid-September, the Chinese authorities, once again, added to a summary to open up those mines and that's led to a change in the prices for Australian coal. There's a change in trend. It's a decline, not a major decline, but there is a decline. As I said in the presentation, there is protectionism. There are price wars, regionalization of the marketplace. This is a challenge for the company. And here, we should remember that American coal grades saw a much smaller price increase. The situation in China had an indirect impact on American coal prices compared to 2025. And so there were customs duties on Chinese products and the Chinese added a 25% customs do any tariff on American coal grades. So we can say basically that Chinese stopped buying American coal grades. In recent days, information was published about an agreement being reached at the government level between the United States and China about a mutual trade agreement to reduce customs duties, and Chinese authorities under the declarations will start -- will restart imports of coal from the U.S., and they're talking about 10 million tonnes per annum as of 2027. So this means that competition for American ships will grow and could have an impact on the global situation and could have an impact on the prices, price quotations. So we've seen Australian coal prices gradually ebbing. This is more of a waiting period. So buyers are waiting to make their purchases. They're observing and tracking the market to see what the impact is going to be on prices. Thank you very much. Next question. On 17, August 2026, the Management Board adopted a resolution to give consent to submit a motion to the Industrial Development Agency for a loan of PLN 1.066 billion. Has a decision been made about granting that loan to JSW? What are the next stages of this process? So ladies and gentlemen, to be brief, that decision has not yet been made. Work is underway to determine the term sheet for such a loan. The major issue or issues or topics are pertinent to collateral because a loan that can be given by ARP, these are new instruments because the amendment to the law for development institutions. Well, they had this opportunity, as they have this opportunity in place as of April. Since this instrument didn't exist in the past, we decided to sell or divest some subsidiaries. But since this instrument, this loan instrument has appeared as an opportunity, we made the decision that we would submit an application for a loan. Collateral is related to the bank financing we hold. And since that bank financing is secured or is collateralized, so we have to talk about the split of collateral, and that's something that's being negotiated. After agreeing those elements, we'll follow our corporate path. So we'll submit applications to obtain consent from the corporate authorities according to the Articles of Association. And then, we'll also have to obtain the consent of the financing institutions consortium, which has been financing us up until now. So this process is underway. It's not easy, but it's being executed or implemented step by step. The next question, does this program -- remedy program incorporate the sales of 2 companies to ARP, so the industrial development agency that's been the major draft tunneling company, sinking company and the renovation company? Well, the program itself incorporates those issues linked to optimizing the structure of the group. We must, for a variety of reasons, optimize the operations of the group. So optimization is taking place at a number of different levels. One of the major elements of that optimization is the ability to deinvest, so divest. So whether or not as Mr. Gabe said, we sell these entities, and we convert that into a loan, that does not mean that we want to sell them later if we don't do that, if we stop that. So this is an open question, an open issue. As you know, we issued current reports on that process. So the closing of the sale has not taken place yet. Work is underway that would address both outcomes. This does not mean, however, if we make the decision to take out a loan that we will not want to divest -- so the areas presented by Mr. Gabe, well, these companies have a role to play in this remedy program. They have a certain value attached to them. But we'll talk about that once we complete the process of obtaining a loan. Thank you very much. Next question. Why is employee costs, why are employee costs going to -- employee benefits going to grow again in 2028? Well, if you look at the collective tables and you look at the overall cost of employee benefits, well, we can see that there is a bit of a distortion here with respect to a disruption in the previous trend. But if we think about certain employee benefits being suspended, this is for a temporary period of time. And the temporary period is for 2 years. That is the outcome of the negotiations. And so the labor code makes it possible to do something like that, the suspension can last for a maximum of 3 years. But after those 2 years, we'll have to reintroduce the original agreements. But the level of employee benefits should be seen with respect to previous questions concerning the overall process of utilizing the guardrails for the safety net for the mining industry. These employees will no longer be a cost to our business. So if we look at that line item, which is employee benefits, we have to incorporate a number of other factors that contribute to that value. I think Mr. Rozmus mentioned that, so it's not just this law that's at play. We also have natural attrition, so retirement. So this is a process of employee benefits, and the timing of it is very dynamic, and Tom mentioned this as well. This is a change in the organization transformation of the organization, how it operates, and this will affect the level of employee benefits, the amount of employee benefits. So that return to a higher level of employee benefits as a result of the agreement that we have in place for a 2-year period. Thank you very much. And now having in mind the limited time, I think we'll wrap up the Q&A session here. And the Investor Relations team will respond to your questions later. So we would ask you to put forward your questions, and the management Board and our Investor Relations team will happily field your questions and respond to them. So in that fashion, we have arrived at the end of our presentation. So I would like to thank you cordially. We want to thank all of our stakeholders. So that's why I have the last slide displayed on the screen right now. So it's thanks to you. Our work is sensible. The support, the credibility we want to build and regain. These are fundamental values, and we'd like to thank you, give you a major express our gratitude. So if you allow us, we'd like to wrap up today's presentation about the H1 2026 results and the Remedy program. So once again, we thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]