1Q 2020 Consolidated Financial Notification of the company has submitted to the Financial Supervision Commission.
Through the explanatory notes:
Statement on the impact of COVID-19
This statement is made on recommendation of ESMA of 11.03.2020 to the financial market participants with respect to the impact of COVID-19.
We have taken measures to ensure the health and work fitness of employees, the continuous operation of our business and the activities related to regulatory obligations. In the period after 13.03.2020, the enterprises of Stara Planina Hold Plc group continued to operate with minimum deviations from the established operational mode while following the protective measures for limiting the contagion and spread of COVID-19.
The effect of the measures imposed by governments with respect to COVID-19 has had a major negative impact on the economic sentiments and global business environment. The information we have been getting from our customers over the last two months is very uncertain and frequently changing.
The group enterprise most affected is Elhim - Iskra AD, where the production process had to be stopped multiple times due to order cancellations coming mainly from Italy, France and Russia. The percentage drop in sales over the last two months is now two-digit. The company estimates that the significant downtrend in the sales will continue in June as well with the net income from sales for the first half slumping by more than 30% compared to the first half of 2019 which will exacerbate the loss for the period.
Machine-building enterprises have also registered a negative impact of the Covid-19 measures. Considering the sharp decline in the orders from our major customers and with relatively unchanged ongoing costs, we project to see the financial result fall by double digits.
This will affect parent company's cash flow and we expect for the current year dividends to be down by 21%.
We welcome the gradual easing of the lockdown measures imposed by the governments due to the pandemic. The negative results are yet to be analyzed and assessed, but it is certain that the European Union will slip into the deepest recession in its history. We support the warning announced earlier that if the measures are to be re-introduced on the same scale or extended, then the governments must ensure the necessary balance between the restrictions affecting the business and improvement of conditions for the industrial manufacturing. Otherwise this could result in a devastating effect on the EU economy, including economic and financial collapses as an aftermath.