Current report number: 04/2020
Data: 20 March 2020
Art. 17 (1) of the 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 (‘MAR’).
Content of the report:
The Management Board of OEX S.A. (the ‘Company’ or the ‘Issuer’), with reference to the recommendations of the supervisory authorities, would hereby like to present information about a preliminary assessment of the impact of the Covid-19 outburst on the activities, financial performance and outlook of the Issuer’s Group (hereinafter referred to as the ‘Issuer’s Group’).
The Issuer’s Management Board estimates that the Covid-19 outburst and the effects of measures undertaken by Polish authorities to contain the propagation of the epidemic, in particular the introduction within the territory of the Republic of Poland (by virtue of Regulation of the Minister of Health of 13 March 2020) of a state of epidemic danger and, consequently, a state of epidemic, have a negative, albeit very diversified and ambiguous, impact on the operating activities of the Issuer’s Group in all business segments and may have a significantly adverse impact on its financial performance, although any estimates concerning the impact on the Issuer’s situation on a longer-term perspective are impossible at the moment foe to the dynamically changing external circumstances.
Among the main factors with an adverse impact on the business of the Issuer’s Group in all the areas there are limitations concerning the available personnel, which result from the imposed school closures and the related necessity for the employees to take care of their children, the reinforced security measures and lockdown in case of a cold or other diseases as well as the fear of infection.
One of the significant factors influencing the business of the Issuer’s Group in the Retail Services segment, in the part related to the management of retail sale outlets,, was the closure of shops in commercial centres and, to some extent, also in other locations. Such shops constitute currently approx. 35% of the sale network managed by the Issuer’s Group for the mobile phone operators. At the same time, the Issuer’s Management Board noted a significantly lower activity on the part of consumers also in that part of the stores that was not subject to restrictions and remained open. The Issuer plans to renegotiate the current commission-based settlement system with operators which, in case a solution satisfactory to both parties has been arrived at, should allow a partial neutralisation of the fall in revenues. It should be expected that the adverse impact of the above-mentioned events on the performance of the Issuer’ Group will be significant, at lease in a short-term perspective.
In the Sale Support segment, there was a significant reduction of the scale of operations, which resulted from, on the one hand, cancellations of fairs or events, the organisation of which Segment’s companies dealt with, and, on the other hand, restrictions imposed by a part of retail outlets (related to the recommendations of the Minister of Health and other competent authorities concerning precaution measures in commercial outlets), which translated in serious restrictions in the work of commercial representatives servicing such outlets and employed by the Segment companies. At the same time, 95% of clients currently declare that they should maintain their budgets planned for 2020. There are talks with key clients the objective of which is to work out solutions allowing the maintenance of the current number of jobs within field structures working for the clients despite the aforementioned events.
As regards the eCommerce Services area (comprising the business of the E-Business segment and Voice Contact Center), until the date of this report there have not been any decrease in the number of contracts which would have a significant influence on the level of business. There were, however, limitations as regard the availability of employees, which in some segments reached over 20% of the general headcount. The performance of services related to the support of processes of purchase of products manufactured in Asia and to international logistics also saw certain restrictions. These services constitute a supplementary source of revenue in the segment. Significant PLN/EUR exchange rate fluctuations may have a significant negative impact on the performance of this segment, despite the attempts to contractually limit the costs of euro in the business of the Issuer’s Group. Unless the EUR settlement principles are successfully changed (e.g. by a determination of an exchange rate that would be independent of the market) and if PLN continues to weaken, there is a risk of a significant rise in the operating costs in this segment (mainly costs of rental of warehouse space).
At present, the Issuer’s Management Board is able to assess the impact of the Covid-19 epidemic outburst on the current operating activities of the Issuer’s Group only approximately. The related and expected fall in revenues is, however, difficult to estimate, similarly as the impact of that fall on the performance of the Issuer’s Group in the whole of 2020.
It should be stressed that the Issuer’s Management Board notes a very good liquidity of the OEX Group and does not expect that it may deteriorate in the nearest future.
In relation with the dynamically changing situation, the Issuer’s Management Board constantly monitors the impact of the Covid-19 epidemic on the Issuer’s Group. All significant events influencing the financial results generated, the liquidity and the economic situation of the Issuer will be, should they arise, reported in subsequent ongoing reports together with assessments of their impact.
Signatures of Company’s representatives:
Tomasz Słowiński – Member of the Management Board
Artur Wojtaszek – Member of the Management Board