POLISH FINANCIAL SUPERVISION AUTHORITY
Consolidated annual report SRR 2023
(in accordance with § 60 sec. 2 of the Decree regarding current and periodic information)
for issuers of securities involved in production, construction, trade or services activities
for the financial year 2023 comprising the period from 1 January 2023 to 31 December 2023 containing the consolidated financial
statements according to International Financial Reporting Standards in PLN.
publication date: 24 April 2024
KGHM Polska Miedź Spółka Akcyjna
(name of the issuer)
KGHM Polska Miedź S.A.
(name of the issuer in brief)
59 – 301
(postal code)
M. Skłodowskiej – Curie
(street)
(+48) 76 7478 200
(telephone)
ir@kghm.com
(e-mail)
6920000013
(NIP)
G30CO71KTT9JDYJESN22
(LEI)
Mining
(issuer branch title per the Warsaw Stock Exchange)
LUBIN
(city)
48
(number)
(+48) 76 7478 500
(fax)
www.kghm.com
(www)
390021764
(REGON)
23302
(KRS)
PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt Sp.k.
(auditing company)
SELECTED FINANCIAL DATA
in PLN mn
in EUR mn
2023
2022
2023
2022
I.
Revenues from contracts with customers
33 467
33 847
7 390
7 219
II.
(Loss)/profit on sales
( 1 640)
4 344
( 362)
927
III.
(Loss)/profit before income tax
( 3 600)
6 489
( 795)
1 384
IV.
(Loss)/profit for the period
( 3 691)
4 774
( 815)
1 018
V.
(Loss)/profit for the period attributable to shareholders
of the Parent Entity
( 3 698)
4 772
( 817)
1 018
VI.
Profit for the period attributable to
non-controlling interest
7
2
2
-
VII.
Other comprehensive income
373
871
82
186
VIII.
Total comprehensive income
( 3 318)
5 645
( 733)
1 204
IX.
Total comprehensive income attributable to
shareholders of the Parent Entity
( 3 324)
5 643
( 734)
1 204
X.
Total comprehensive income attributable to
non-controlling interest
6
2
1
-
XI.
Number of shares issued
200 000 000
200 000 000
200 000 000
200 000 000
XII.
Net (loss)/earnings per ordinary share attributable to
shareholders of the Parent Entity
(18.49)
23.86
(4.09)
5.09
XIII.
Net cash generated from operating activities
6 051
2 464
1 336
526
XIV.
Net cash used in investing activities
( 4 798)
( 2 695)
( 1 060)
( 575)
XV.
Net cash used in financing activities
( 747)
( 446)
( 165)
( 95)
XVI.
Total net cash flow
506
( 677)
111
( 144)
XVII.
Non-current assets
37 981
40 379
8 736
8 610
XVIII.
Current assets
13 402
13 065
3 082
2 786
XIX.
Total assets
51 383
53 444
11 818
11 396
XX.
Non-current liabilities
11 136
12 113
2 561
2 584
XXI.
Current liabilities
11 617
9 185
2 672
1 958
XXII.
Equity
28 630
32 146
6 585
6 854
XXIII.
Equity attributable to shareholders of the Parent Entity
28 565
32 089
6 570
6 842
XXIV.
Equity attributable to non-controlling interest
65
57
15
12
Average EUR/PLN exchange rate announced by the National Bank of Poland
2023
2022
Average exchange rate for the period*
4.5284
4.6883
Exchange rate at the end of the period
4.3480
4.6899
*Exchange rates are the arithmetical average of the current average exchange rates announced by the National Bank of Poland on the last day of each month respectively of
2023 and 2022.
Polish Financial Supervision Authority
This report is a direct translation from the original Polish version.
In the event of differences resulting from the translation, reference should be made to the official Polish version
CONSOLIDATED
FINANCIAL STATEMENTS
FOR 2023
Lubin, April 2024
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
2
Table of contents
CONSOLIDATED STATEMENT OF PROFIT OR LOSS ................................................................................................................ 4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ............................................................................................... 5
CONSOLIDATED STATEMENT OF CASH FLOWS ...................................................................................................................... 6
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ....................................................................................................... 7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ......................................................................................................... 8
Part 1 – General information .................................................................................................................................................. 9
Note 1.1 Corporate information ................................................................................................................................................. 9
Note 1.2 Going concern............................................................................................................................................................... 9
Note 1.3 Declaration by the Management Board on the accuracy of the prepared financial statements ....................... 13
Note 1.4 Basis of preparation and presentation .................................................................................................................... 13
Note 1.5 Impact of new and amended standards and interpretations ............................................................................... 17
Note 1.6 Published standards and interpretations, which are not yet in force
and were not applied earlier by the Group. ............................................................................................................................ 18
Part 2 – Information on segments and revenues .............................................................................................................. 20
Note 2.1 Operating segments................................................................................................................................................... 20
Note 2.2 Financial results of reporting segments................................................................................................................... 23
Note 2.3 Revenues from contracts with customers of the Group – breakdown by products ........................................... 26
Note 2.4 Revenues from contracts with customers of the Group – breakdown by category ............................................ 31
Note 2.5 Revenues from contracts with customers of the Group – geographical breakdown
reflecting the location of end customers ................................................................................................................................ 33
Note 2.6 Main customers .......................................................................................................................................................... 34
Note 2.7 Non-current assets – geographical breakdown ...................................................................................................... 34
Part 3 – Impairment of assets .............................................................................................................................................. 35
Note 3.1 Impairment losses on assets as at 31 December 2023 .......................................................................................... 35
Note 3.2. Impairment of assets as at 31 December 2022 ..................................................................................................... 42
Part 4 - Explanatory notes to the statement of profit or loss .......................................................................................... 46
Note 4.1 Expenses by nature .................................................................................................................................................... 46
Note 4.2 Other operating income and (costs) ......................................................................................................................... 47
Note 4.3 Finance income and (costs) ....................................................................................................................................... 48
Note 4.4 Reversal and (recognition) of impairment losses recognised in the statement of profit or loss ....................... 48
Part 5 – Taxation .................................................................................................................................................................... 49
Note 5.1 Income tax in the consolidated statement of profit or loss ................................................................................... 49
Note 5.2 Other taxes and charges ........................................................................................................................................... 55
Note 5.3 Tax assets and liabilities ............................................................................................................................................ 56
Part 6 – Involvement in joint ventures ............................................................................................................................... 57
Note 6.1 Joint ventures accounted for using the equity method .......................................................................................... 57
Note 6.2 Loans granted to a joint venture (Sierra Gorda S.C.M.) .......................................................................................... 60
PART 7 – Financial instruments and financial risk management .................................................................................... 62
Note 7.1 Financial Instruments ................................................................................................................................................ 62
Note 7.2 Derivatives .................................................................................................................................................................. 68
Note 7.3 Other financial instruments measured at fair value .............................................................................................. 71
Note 7.4 Other financial instruments measured at amortised cost ..................................................................................... 73
Note 7.5 Financial risk management ....................................................................................................................................... 73
Part 8 – Borrowings and the management of liquidity and capital ................................................................................ 94
Note 8.1 Capital management policy ....................................................................................................................................... 94
Note 8.2 Equity ........................................................................................................................................................................... 95
Note 8.3 Liquidity management policy .................................................................................................................................... 97
Note 8.4 Borrowings .................................................................................................................................................................. 99
Note 8.5 Cash and cash equivalents ...................................................................................................................................... 102
Note 8.6 Liabilities due to guarantees granted..................................................................................................................... 103
Part 9 – Non-current assets and related liabilities .......................................................................................................... 105
Note 9.1 Mining and metallurgical property, plant and equipment and intangible assets ............................................. 105
Note 9.2 Other property, plant and equipment and intangible assets .............................................................................. 111
Note 9.3 Depreciation/amortisation ...................................................................................................................................... 114
Note 9.4 Provision for decommissioning costs of mines and other technological facilities ............................................ 114
Note 9.5 Capitalised borrowing costs .................................................................................................................................... 116
Note 9.6 Carrying amount of the assets of Group companies representing collateral of repayment of liabilities ....... 116
Note 9.7 Lease disclosures – the Group as a lessee ............................................................................................................. 117
Note 9.8 Greenhouse gas emissions allowances ................................................................................................................. 118
Note 9.9 Assets held for sale (disposal group) and liabilities associated with them ........................................................ 119
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
3
Part 10 – Working capital .................................................................................................................................................... 125
Note 10.1 Inventories .............................................................................................................................................................. 125
Note 10.2 Trade receivables ................................................................................................................................................... 128
Note 10.3 Trade and similar payables ................................................................................................................................... 129
Note 10.4 Changes in working capital ................................................................................................................................... 131
Part 11 – Employee benefits ............................................................................................................................................... 133
Note 11.1 Employee benefits liabilities.................................................................................................................................. 134
Note 11.2 Changes in liabilities related to future employee benefits programs .............................................................. 135
Part 12 – Other notes .......................................................................................................................................................... 138
Note 12.1 Related party transactions .................................................................................................................................... 138
Note 12.2 Dividends paid ........................................................................................................................................................ 139
Note 12.3 Other assets ............................................................................................................................................................ 140
Note 12.4 Other liabilities ....................................................................................................................................................... 141
Note 12.5 Assets and liabilities not recognised in the statement of financial position .................................................... 141
Note 12.6 Litigation and claims .............................................................................................................................................. 142
Note 12.7 Capital commitments related to property, plant and equipment and intangible assets ............................... 142
Note 12.8 Employment structure ........................................................................................................................................... 142
Note 12.9 Remuneration of key managers ........................................................................................................................... 143
Note 12.10 Remuneration of the entity entitled to audit the financial statements
and of entities related to it in PLN thousands ..................................................................................................................... 145
Note 12.11 Composition of the Group .................................................................................................................................. 146
Note 12.12 Subsequent events .............................................................................................................................................. 151
Part 13 – Quarterly financial information of the Group ................................................................................................. 153
CONSOLIDATED STATEMENT OF PROFIT OR LOSS............................................................................................................... 153
Note 13.1 Expenses by nature ................................................................................................................................................ 154
Note 13.2 Other operating income and (costs) .................................................................................................................... 155
Note 13.3 Finance income/(costs) .......................................................................................................................................... 156
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Note 2.3
Revenues from contracts with customers
33 467
33 847
Note 4.1
Cost of sales
(32 907)
(27 541)
Gross profit on sales
560
6 306
Note 4.1
Selling costs and administrative expenses
(2 200)
(1 962)
(Loss)/profit on sales
(1 640)
4 344
Note 6.2
Gain due to the reversal of allowances for
impairment of loans granted to a joint venture
101
873
Note 6.2
Interest income on loans granted to a joint venture
calculated using the effective interest rate method
597
582
Profit or loss on involvement in a joint venture
698
1 455
Note 4.2
Other operating income, including:
906
1 881
other interest calculated using the effective interest
rate method
56
54
reversal of impairment losses on financial
instruments
-
5
Note 4.2
Other operating costs, including:
(3 723)
( 919)
impairment losses on financial instruments
( 4)
( 5)
Note 4.3
Finance income
529
148
Note 4.3
Finance costs
( 370)
( 420)
(Loss)/profit before income tax
(3 600)
6 489
Note 5.1
Income tax expense
( 91)
(1 715)
(LOSS)/PROFIT FOR THE PERIOD
(3 691)
4 774
(Loss)/profit for the period attributable to:
Shareholders of the Parent Entity
(3 698)
4 772
Non-controlling interest
7
2
Weighted average number of ordinary shares
(million)
200
200
Basic/diluted (loss)/earnings per share (in PLN)
( 18.49)
23.86
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
5
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
(Loss)/profit for the period
(3 691)
4 774
Note 8.2.2
Measurement and settlement of hedging
instruments net of the tax effect
451
1 354
Exchange differences from translation of
statements of operations with a functional currency
other than PLN
( 79)
( 65)
Other comprehensive income, which will be
reclassified to profit or loss
372
1 289
Note 8.2.2
Measurement of equity financial instruments at fair
value through other comprehensive income, net of
the tax effect
253
( 76)
Actuarial losses net of the tax effect
( 252)
( 342)
Other comprehensive income which will not be
reclassified to profit or loss
1
( 418)
Total other comprehensive net income
373
871
TOTAL COMPREHENSIVE INCOME
(3 318)
5 645
Total comprehensive income attributable to:
Shareholders of the Parent Entity
(3 324)
5 643
Non-controlling interest
6
2
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
6
CONSOLIDATED STATEMENT OF CASH FLOWS
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Cash flow from operating activities
(Loss)/profit before income tax
(3 600)
6 489
Note 9.3
Depreciation/amortisation recognised in profit or loss
2 311
2 239
Note 6.2
Gain due to the reversal of allowances for impairment of loans
granted to a joint venture
( 101)
( 873)
Note 6.2
Interest on loans granted to a joint venture
( 597)
( 582)
Other interest
97
30
Part 3
Impairment losses on property, plant and equipment and intangible
assets
4 036
147
Other gains on reversal of impairment losses on property, plant and
equipment and intangible assets
( 56)
( 3)
Losses/(Gains) on disposal of property, plant and equipment and
intangible assets
21
( 108)
Note 9.9
Gain on disposal of subsidiaries
( 1)
( 180)
Exchange differences, of which:
958
( 661)
from investment activities and cash
1 314
( 838)
from financing activities
( 356)
177
Change in provisions for decommissioning of mines, liabilities
related to future employee benefits programs and other provisions
464
( 56)
Change in other receivables and liabilities other than working capital
( 222)
( 133)
Change in assets and liabilities due to derivatives
906
( 353)
Note 7.2
Reclassification of other comprehensive income to profit or loss due
to the realisation of hedging derivatives
( 285)
492
Other adjustments
31
29
Exclusions of income and costs, total
7 562
( 12)
Income tax paid
(1 646)
(1 696)
Note 10.4
Changes in working capital, including:
3 735
(2 317)
change in trade payables transferred to factoring
2 868
( 77)
Net cash generated from operating activities
6 051
2 464
Cash flow from investing activities
Note 9.1.3
Expenditures on mining and metallurgical assets, including:
(4 112)
(3 678)
Note 8.4.2
paid capitalised interest on borrowings
( 353)
( 214)
proceeds on settlement of an instrument hedging interest rate
of bonds
102
-
Expenditures on other property, plant and equipment and intangible
assets
( 664)
( 440)
Expenditures on financial assets designated for decommissioning
of mines
( 40)
-
Advances granted on property, plant and equipment and intangible
assets
( 156)
( 14)
Expenditures on acquisition of subsidiaries
( 7)
-
Proceeds from financial assets designated for decommissioning
of mines
2
26
Proceeds from repayment of loans granted to a joint venture (principal)
28
358
Proceeds from disposal of property, plant and equipment and intangible
assets
41
394
Proceeds from disposal of subsidiaries
1
243
Interest received on loans granted to a joint venture
135
431
Other
( 26)
( 15)
Net cash used in investing activities
(4 798)
(2 695)
Cash flow from financing activities
Note 8.4.2
Proceeds from borrowings
1 673
677
Proceeds from derivatives related to sources of external financing
70
130
Note 8.4.2
Repayment of received borrowings
(2 051)
( 425)
Note 8.4.2
Repayment of lease liabilities
( 83)
( 59)
Expenditures due to derivatives related to sources of external financing
( 81)
( 89)
Interest paid, including:
( 81)
( 92)
Note 8.4.2
due to borrowings
( 31)
( 89)
Dividends paid to shareholders of the Parent Entity
( 200)
( 600)
Other
6
12
Net cash used in financing activities
( 747)
( 446)
NET CASH FLOW
506
( 677)
Exchange gains/(losses)
23
( 27)
Cash and cash equivalents at beginning of the period
1 200
1 904
Cash and cash equivalents at end of the period, including:
1 729
1 200
restricted cash
27
21
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
7
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
31 December
2023
As at
31 December
2022
ASSETS
Mining and metallurgical property, plant and equipment
20 798
22 894
Mining and metallurgical intangible assets
2 697
2 772
Note 9.1
Mining and metallurgical property, plant and equipment and intangible
assets
23 495
25 666
Other property, plant and equipment
2 941
2 746
Other intangible assets
313
218
Note 9.2
Other property, plant and equipment and intangible assets
3 254
2 964
Note 6.2
Involvement in joint ventures – loans granted
9 096
9 603
Note 7.1
Derivatives
233
714
Note 7.3
Other financial instruments measured at fair value
905
606
Note 7.4
Other financial instruments measured at amortised cost
475
469
Financial instruments, total
1 613
1 789
Note 5.1.1
Deferred tax assets
137
137
Note 12.3
Other non-financial assets
386
220
Non-current assets
37 981
40 379
Note 10.1
Inventories
8 425
8 902
Note 10.2
Trade receivables, including:
932
1 177
trade receivables measured at fair value through profit or loss
414
751
Note 5.3
Tax assets
985
367
Note 7.1
Derivatives
760
796
Note 12.3
Other financial assets
296
337
Note 12.3
Other non-financial assets
275
286
Note 8.5
Cash and cash equivalents
1 729
1 200
Current assets
13 402
13 065
TOTAL ASSETS
51 383
53 444
EQUITY AND LIABILITIES
Note 8.2.1
Share capital
2 000
2 000
Note 8.2.2
Other reserves from measurement of financial instruments
277
( 427)
Note 8.2.2
Accumulated other comprehensive income, other than from
measurement of financial instruments
1 482
1 812
Note 8.2.2
Retained earnings
24 806
28 704
Equity attributable to shareholders of the Parent Entity
28 565
32 089
Equity attributable to non-controlling interest
65
57
Equity
28 630
32 146
Note 8.4.1
Borrowings, leases and debt securities
4 761
5 220
Note 7.1
Derivatives
202
719
Note 11.1
Employee benefits liabilities
3 117
2 621
Note 9.4
Provisions for decommissioning costs of mines and other
technological facilities
1 923
1 859
Note 5.1.1
Deferred tax liabilities
646
1 151
Note 12.4
Other liabilities
487
543
Non-current liabilities
11 136
12 113
Note 8.4.1
Borrowings, leases and debt securities
964
1 223
Note 7.1
Derivatives
499
434
Note 10.3
Trade and similar payables
6 188
3 094
Note 11.1
Employee benefits liabilities
1 709
1 699
Note 5.3
Tax liabilities
611
1 233
Provisions for liabilities and other charges
194
173
Note 12.4
Other liabilities
1 452
1 329
Current liabilities
11 617
9 185
Non-current and current liabilities
22 753
21 298
TOTAL EQUITY AND LIABILITIES
51 383
53 444
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to shareholders of the Parent Entity
Share capital
Other reserves
from
measurement of
financial
instruments
Accumulated
other
comprehensive
income
Retained
earnings
Total
Equity
attributable to
non-controlling
interest
Total equity
As at 31 December 2021
2 000
(1 705)
2 219
24 532
27 046
92
27 138
Note 12.2
Transactions with owners - Dividend
-
-
-
( 600)
( 600)
-
( 600)
Profit for the period
-
-
-
4 772
4 772
2
4 774
Note 8.2.2
Other comprehensive income
-
1 278
( 407)
-
871
-
871
Total comprehensive income
-
1 278
( 407)
4 772
5 643
2
5 645
Changes due to loss of control of subsidiaries
-
-
-
-
-
( 37)
( 37)
As at 31 December 2022
2 000
( 427)
1 812
28 704
32 089
57
32 146
Transactions with non-controlling interest
-
-
-
-
-
2
2
Note 12.2
Transactions with owners - Dividend
-
-
-
( 200)
( 200)
-
( 200)
Profit/(loss) for the period
-
-
-
(3 698)
(3 698)
7
(3 691)
Note 8.2.2
Other comprehensive income
-
704
( 330)
-
374
( 1)
373
Total comprehensive income
-
704
( 330)
(3 698)
(3 324)
6
(3 318)
As at 31 December 2023
2 000
277
1 482
24 806
28 565
65
28 630
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
9
Part 1 – General information
Note 1.1 Corporate information
KGHM Polska Miedź S.A. (“the Parent Entity”, “the Company”) with its registered office in Lubin at 48 M. Skłodowskiej-Curie
Street is a joint stock company registered at the Regional Court for Wrocław Fabryczna in Wrocław, Section IX (Economic)
of the National Court Register, entry no. KRS 23302, on the territory of the Republic of Poland.
KGHM Polska Miedź S.A. has a multi-divisional organisational structure, comprised of a Head Office and 10 divisions:
3 mines (Lubin Mine Division, Polkowice-Sieroszowice Mine Division, Rudna Mine Division), 3 metallurgical plants (Głogów
Smelter/Refinery, Legnica Smelter/Refinery, Cedynia Wire Rod Division), the Concentrator Division, the Tailings Division, the
Mine-Smelter Emergency Rescue Division and the Data Center Division.
The shares of KGHM Polska Miedź S.A. are listed on the Warsaw Stock Exchange.
The Parent Entity’s principal activities include:
− the mining of copper and non-ferrous metals ores; and
− the production of copper, precious and non-ferrous metals.
In addition, the KGHM Polska Miedź S.A. Group (“the Group”) conducts other activities, which are described in section 1.1.7
of the Management Board’s Report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group
in 2023.
The KGHM Polska Miedź S.A. Group carries out exploration and the mining of copper, nickel and precious metals based
on concessions given for the Polish deposits to KGHM Polska Miedź S.A., and also based on legal titles held by companies
of the KGHM INTERNATIONAL LTD. Group for the exploration for or mining of these resources in the USA, Canada and Chile.
Detailed information is presented in the Management Board’s report on the activities of KGHM Polska Miedź S.A and of the
KGHM Polska Miedź S.A. Group in 2023 (sections 1.1.4 and 1.1.7).
In 2023, the Parent Entity of the Group consolidated 63 subsidiaries and used the equity method to account for the shares
of two joint ventures (Sierra Gorda S.C.M. and NANO CARBON Sp. z o.o. in liquidation).
Note 1.2 Going concern
The consolidated financial statements were prepared under the assumption that the Group’s companies will continue
as a going concern during a period of at least 12 months from the end of the reporting period in a significantly unaltered
form and business scope, and there are no reasons to suspect any intentional or forced discontinuation or significant
limitation of its current activities. As at the date of signing of the consolidated financial statements the Management Board
of the Parent Entity is not aware of any facts or circumstances that may cast doubt about the going concern in the
foreseeable future.
Note 1.2.1 Monitored areas – macroeconomic conditions
The following macroeconomic factors have the most significant impact on the activities and financial results of the Group:
copper and silver prices, prices of fuel, electricity and energy carriers as well as market interest rates, USD/PLN exchange
rate, inflation manifested by fluctuations in prices of materials and services, which results in a salary pressure.
Stock prices of copper, silver and gold as well as the USD/PLN exchange rate shape the amount of revenues from sales and
constitute a part of a market risk which is managed by the Group by, among others, derivatives transactions hedging the
price as well as the exchange rate. Moreover, they have a significant impact on some of the Group’s costs, while the following
increases in prices have a direct impact on the level of costs: fuels, energy carriers and electricity, caused by a high inflation
and disruptions in global supply chains. Furthermore, the level of market interest rates was reflected in the level of discount
rates used by the Group in the balance sheet measurement of assets and liabilities recognised in the statement of financial
position.
All of the aforementioned risk factors have an impact on the measurement of recoverable amount of the Group’s assets,
where of significance is not only the current volatility of commodities and exchange rates shaping the amount of revenues
and a significant part of costs, but above all volatility of forecasts on shaping these factors in subsequent periods, since they
have an impact on production and investment plans. Moreover, due to the long-term nature of mining and metallurgical
assets, the applied discount rate, which remains under the influence of market interest rates, is of particular importance.
The description of impact of macroeconomic factors on individual areas of operations as well as assets and liabilities of the
Group was presented in the following notes:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
10
Impact observation areas
Note/Part
Operating segments and information on revenues – onerous contracts and variable overheads
2.3
Impairment of assets
Part 3
Receivables due to loans granted
6.2
Financial instruments – fair value
7.1
Market risk – price of commodities, exchange rate, interest rates, prices of energy and energy
carriers
7.5.1
Liquidity risk
8.1
Provision for decommissioning costs of mines and other technological facilities
9.4
Future employee benefits liabilities
Part 11
Note 1.2.2 Monitored areas – impact of COVID - 19
The Group did not record a negative impact due to factors related to the COVID – 19 pandemic during the reporting period,
and the uncertainty related to their potential future impact in the subsequent periods is judged to be low.
Note 1.2.3 Monitored areas – impact of war in Ukraine
The ongoing armed conflict in Ukraine and the observed economic slowdown, especially in the largest global economies as
well as the inflation and energy crisis, result in an uncertainty as to how the socio-economic situation will develop in Europe
and the world.
The Parent Entity has the most significant impact on the activities and results of the KGHM Polska Miedź S.A. Group and is
the most vulnerable to negative impact of the conflict in Ukraine.
Key risk categories
The most significant risk categories related to the war in Ukraine which impact the Group’s operations are:
• interruptions in the supply chain and the availability of materials and components, fuels and energy on
international markets,
• the possible recession of global economies as a result of the inflation and energy crisis, as well as the observed
economic slowdown,
• volatility in copper and silver prices on the metals markets,
• volatility in the USD/PLN exchange rate,
• volatility in electrolytic copper production costs, including in particular due to the minerals extraction tax, changes
in the value of consumed, purchased copper-bearing materials and volatility in prices of energy carriers and
electricity,
• the general uncertainty on financial markets,
• continued price rises of fuels and energy carriers.
Evaluation of the key categories of risk which are impacted by the war in Ukraine underwent detailed analysis by the on-
going monitoring of selected information in the areas of production, sales, supply chain, personnel management and
finance, in order to support the process of reviewing the current financial and operating situation of the KGHM Polska
Miedź S.A. Group. As a result, some of the aforementioned threats had a negative impact on the Group’s operations and
resulted in among others an increase in costs as compared to 2022. Details regarding the results of the operating segments
may be found in Part 2.
Impact on the metals market and shares price
From the point of view of the Group, the war in Ukraine has an impact on market risk connected with volatility in metals
prices and stock exchange indices during the reporting period. The level of the Parent Entity’s market capitalisation
continued to be lower than its net assets and it is one of the factors implying, among others, an occurrence of indications
to conduct impairment testing of its production assets. The Company’s share price at the end of 2023 rose by 10% compared
to prices at the end of the third quarter of 2023 and fell by 3% compared to the end of 2022, and at the close of trading on
29 December 2023 amounted to PLN 122.70. As a result of changes in share prices, the Company’s capitalisation decreased
from PLN 25 350 million at the end of 2022 to PLN 24 540 million at the end of 2023.
Uncertainty related to the volatility on the metals market, in particular copper, is the main factor influencing the level of
generated revenues and as a result it may have an impact on the financial result. The average price of copper during the
year 2023 amounted to 8 478 USD/t, which was more than assumed in the budget. However, as compared to the average
price of copper during 2022, it fell by 4%. Following the stable first quarter of 2023, the average price of copper in
subsequent quarters was in a downward trend, which was reflected in the decrease in copper price of 9% in the fourth
quarter as compared to the average price of copper in the first quarter of 2023. The average price of copper in the fourth
quarter of 2023 amounted to 8 158 USD/t, which was at the level assumed in the budget.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
11
Impact on the fuels and energy carriers market as well as the availability of raw and other materials
Currently, the Group still does not experience a significantly negative impact of volatility of supply chains on its business
activities. It cannot be ruled out that the continuation of this armed conflict as well as the system of economic sanctions
will have a substantial negative impact in subsequent periods on suppliers and customers of the Group and may lead to
unfavourable deviations in the continuity of materials and services supply chains in the KGHM Polska Miedź S.A. Group as
well as in the receipt of products, caused among others by logistical restrictions and the availability of materials (e.g. steel),
fuels and energy on international markets. Taking into consideration the continuity of supply of energy carriers (natural
gas, coal, coke), at the present time, the KGHM Polska Miedź S.A. Group is not experiencing a negative impact from the
suspension of Russian natural gas, coal and coke deliveries, and is fully capable of maintaining the continued operations of
the core production business and of all production processes.
Impact on the activities of the Parent Entity and other Group companies
The geopolitical situation related to the direct aggression of Russia against Ukraine and the implemented system of
sanctions at the present time is not restricting the operations of KGHM Polska Miedź S.A. and other Group companies, while
the risk of interruptions to the going concern of the Company and the KGHM Polska Miedź S.A. Group in this regard
continues to be estimated as low.
Despite the high level of inflation observed in the global economy, leading to a tightening of monetary policy, demand for
the Company’s key products in 2023 remained at a good level.
With respect to the availability of capital and the level of debt, the Group does not hold bank loans drawn from institutions
threatened with sanctions.
Preventive actions in the Group
There were no production stoppages either in KGHM Polska Miedź S.A. or in any of the international mines of the KGHM
Polska Miedź S.A. Group, including Sierra Gorda S.C.M., which could have been directly attributable to the war in Ukraine.
There have been no significant changes in the payment morality of customers, and therefore the receivables inflow to the
Parent Entity takes place without any major disturbances.
The strategy of diversification of suppliers applied by the entire KGHM Polska Miedź S.A. Group and the use of alternative
solutions effectively, at this point in time, mitigates the risk of interruptions in the supply chains of raw and other materials.
Due to the centralisation of the process of obtaining external financing for the entire Group’s needs, the realisation of intra-
group liquidity transfers is made using a debt instrument in the form of owner loans, which support the process of
investment activities, and to support current activities the Group uses local and international cash pooling.
The Group continues to advance its investment projects in accordance with established schedules and therefore does not
identify any increase in risk related to their continuation due to the war in Ukraine.
No significant, negative impact of the aforementioned factors has been recorded on the continued operations of the core
production business, sales or continuity of the supply chain for materials and services yet. The Parent Entity continuously
monitors the global economic situation in order to assess its potential negative impact on the KGHM Polska Miedź S.A.
Group and to take preventive actions to mitigate this impact.
Note 1.2.4 Monitored areas – risks and hazards associated with climate change
The KGHM Polska Miedź S.A. Group (KGHM Group) is a conscious and responsible participant in the energy transition, and
adaptation to climate changes and the management of climate risk are of key importance to it. The KGHM Group
continuously evaluates the risk associated with the climate and the impact on its operations under the process of Corporate
Risk Management of the KGHM Polska Miedź S.A. Group, which was described in more detail in the Management Board’s
report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group in 2023, section 4.2.
The negative impact of climate change on the activities of the KGHM Group is analysed using the classification presented
below:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
12
The KGHM Group is exposed to physical climate risk, arising from specified events, in particular related to violent and
chronic weather phenomena resulting from changes in the climate, such as rainless days (droughts), strong/violent winds,
increases in average daily temperature as well as permanent changes in weather patterns, which could impact the
operations of the KGHM Group by, among others, through disruptions in the supply chain, the continuity of the core
production business and an increase in operating costs directly related to the core business as well as through more difficult
working conditions.
The climate risk related to the transition, to which the KGHM Group is exposed, arises from the need to adapt the economy
to gradual climate change. This risk category comprises questions related to legal requirements, technological progress
towards a low-carbon economy and changes in demand and supply for certain products and services, whose production is
associated with the climate risk as well as the growing expectations of stakeholders regarding the KGHM Group as to the
reduction of its impact on the climate. A detailed description of identified, key climate risks associated with the negative
impact of climate changes on the activities of the KGHM Group, including indicators used in their assessment and actions
undertaken by the KGHM Group to mitigate their impact, is presented in the Management Board’s report on the activities
of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group in 2023, section 4.2 Climate impact management.
While assessing the impact of identified climate risks on the Group’s financial situation, results and activities, in particular
in the case of volatile costs of CO
2
emission allowances, the increase in costs of electricity purchase, costs associated with
research and additional expenditures on development of internal energy sources, the following areas were subjected to
detailed assessment:
• adopted periods of economic utility of fixed assets and their residual values,
• existence of indications of the possibility of impairment of property, plant and equipment and intangible assets
and assumptions adopted for impairment testing of these assets,
• assumptions adopted for the measurement of loans granted,
• revaluation of the provision for future decommissioning costs of mines and other technological facilities,
• revaluation of provisions for additional costs of sales, selling costs and administrative expenses,
• liabilities and liabilities due to guarantees associated with potential fines and environmental penalties.
As a result of the aforementioned work, as at 31 December 2023 no material impact of climate risk on the aforementioned
areas was identified.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
13
Note 1.3 Declaration by the Management Board on the accuracy of the prepared financial statements
The Management Board of KGHM Polska Miedź S.A. declares that, according to its best judgement, the annual consolidated
financial statements for 2023 and the comparative data have been prepared in accordance with accounting principles
currently in force, and give a true, fair and clear view of the financial position of the KGHM Polska Miedź S.A. Group and the
profit or loss for the period of the Group.
The Management Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group
in 2023 presents a true picture of the development and achievements, as well as the condition, of KGHM Polska Miedź S.A.
and the KGHM Polska Miedź S.A. Group, including a description of the basic exposures and risks.
The consolidated financial statements were authorised for publication and signed by the Management Board of the Parent
Entity on 23 April 2024.
Note 1.4 Basis of preparation and presentation
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union, on the basis of historical cost, except for financial instruments classified
as measured at fair value and investment properties measured at fair value.
Accounting Policies
The accounting policies of the Group which apply to the consolidated financial statements as a whole, as well
as significant estimates and their impact on amounts presented in the consolidated financial statements, are presented
in the following note.
Topic
Accounting policies
Significant estimates and judgments
Consolidation
principles
The consolidated financial statements include the financial
statements of the Parent Entity and its subsidiaries.
Subsidiaries are understood as being entities which are
either directly controlled by the Parent Entity or indirectly
through its subsidiaries.
Obtaining control of a subsidiary, which is a business, is
accounted for using the acquisition method.
Subsidiaries are fully consolidated from the date on which
control is obtained to the date on which control is lost.
Balances, incomes, expenses and unrealised gains
recognised in assets from intra-group transactions, are
eliminated.
Determining whether the Parent
Entity has control over a company
requires an assessment as to
whether it has rights to direct
relevant activities of the company.
Determining what constitutes
relevant activities of the company
and by which investor it is controlled
requires a judgment.
Among others, the following factors
are taken into consideration when
assessing the situation and
determining the nature of
relationships: voting rights, relative
voting power, dilution of voting
rights of other investors and their
ability to appoint members of key
management personnel or members
of the supervisory board.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
14
Fair value
measurement
Fair value is the price that would be received from selling an
asset or would be paid for a transfer of a liability in an orderly
transaction between market participants at the
measurement date. For financial reporting purposes, a fair
value hierarchy was established that categorises the inputs
into three levels:
Level 1 Value is based on inputs from active markets, as
they are seen as the most reliable source of data.
Level 2 Value is based on inputs other than from active
markets, which are nevertheless observable
(unbiased, measurable).
Level 3 Value is based on unobservable inputs, used when
appropriate observable input data is not available.
Unobservable input data reflect assumptions that
would be adopted by market participants in order
to calculate the price of an asset or a liability,
including risk assumptions.
Transfer between levels of the fair value hierarchy takes
place if there is a change of sources of input data used for
fair value measurement, such as:
• active market,
• lack of an active market, but there is observable data on
the market,
• subjective input data.
It is acknowledged that transfers between levels of the fair
value hierarchy take place at the end of the reporting
period.
Fair value presents current estimates
which may be subject to change in
subsequent reporting periods due to
market conditions or due to other
factors. There are many methods of
measuring fair value, which may
result in differences in fair values.
Moreover, assumptions constituting
the basis of fair value measurement
may require estimating the changes
in costs/prices over time, the
discount rate, inflation rate or other
significant variables.
Certain assumptions and estimates
are necessary to determine to which
level of fair value hierarchy a given
instrument should be classified.
Financial
statements of
operations
with a
functional
currency other
than PLN
For purposes of preparing the consolidated financial
statements in the presentation currency of the KGHM Polska
Miedź S.A. Group, i.e. in PLN, individual items of financial
statements of foreign operations whose functional
currencies are other than PLN are translated in the following
manner:
(i) assets and liabilities – at the closing rate, i.e. at the
average exchange rate for that currency announced by
the NBP at the end of the reporting period,
(ii) items of the statement of profit or loss, the statement of
comprehensive income and the statement of cash flows
- at the arithmetical average of average exchange rates
announced for a given currency by the NBP at the end of
each month of a given reporting period. If there is a
significant volatility of exchange rates in a given period,
revenues and costs in the statement of profit or loss and
the statement of comprehensive income are translated
using the exchange rates as at the transaction date.
Exchange differences from the translation of statements of
operations with a functional currency other than PLN are
recognised in other comprehensive income of a given period.
The consolidated financial
statements are presented in PLN,
which is also the functional currency
of the Parent Entity and the Group’s
subsidiaries, with the exception of:
the subsidiary Future 1 Sp. z o.o. and
entities of the subgroup KGHM
INTERNATIONAL LTD. in which
mainly the US dollar (USD) is the
functional currency.
The balance of exchange differences
from the translation of statements of
the aforementioned operations
amounted to:
in 2023 – PLN 2 476 million,
in 2022 – PLN 2 554 million
(see Note 8.2.2 Changes of other
equity items).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
15
Foreign
currency
transactions
and the
measurement
of items
denominated
in foreign
currencies
At the moment of initial recognition, foreign currency
transactions are translated into the functional currency:
• at the average exchange rate prevailing on the date of
conclusion of the transaction, where the exchange rate
prevailing on the date of conclusion of the transaction is
the average NBP exchange rate from the last working day
preceding the transaction date in the case of conversion of
currency sale and purchase transactions as well as of
payments of receivables and liabilities on bank accounts in
a currency of the transaction (including in the
measurement of transactions involving the receipt,
granting or repayment of borrowings) and for recognition
of other transactions (including sales and purchases),
• at the actual exchange rate applied, i.e. at the buy or sell
exchange rate applied by the bank in which the transaction
occurs, in the case of the sale or purchase of currencies
and the payment of receivables or liabilities on a bank
account in a currency other than the operation currency.
At the end of each reporting period, foreign currency
monetary items are translated at the closing rate prevailing
on that date.
Foreign exchange gains or losses on the settlement of foreign
currency transactions, and on the measurement of foreign
currency monetary assets and liabilities (other than
derivatives), are recognised in profit or loss.
Foreign exchange gains or losses on the measurement of
foreign currency derivatives are recognised in profit or loss as
a fair value measurement, provided they do not represent a
change in the fair value of the effective cash flow hedge.
In such a case, they are recognised in other comprehensive
income in accordance with hedge accounting policies.
Foreign exchange gains or losses on non-monetary items,
such as equity instruments classified as financial assets
measured at fair value through other comprehensive income,
are recognised in other comprehensive income and are
presented in measurement at fair value.
Foreign exchange gains or losses on monetary items
measured at fair value through profit or loss (e.g. loans
granted measured at fair value) are recognised as a part of
the fair value measurement.
-
As compared to the reporting period ended on 31 December 2022, there were no significant changes to the estimation
methods. Changes in estimates as at 31 December 2023 as compared to the aforementioned period arise from changes in
assumptions as a result of changes in business circumstances and/or other variables.
For a greater understanding of the data recognised in the consolidated financial statements, the accounting policy
(principles) and important estimates, assumptions and judgments are presented in individual, detailed notes as presented
in the table below.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
16
Note
Title
Amount recognised in
the financial statements
Accounting
policies
Important
estimates,
assumptions
and
judgements
2023
2022
2.3
Revenues from contracts with customers
33 467
33 847
X
X
3.1
Impairment of assets
(4 482)
(230)
X
5.1
Income tax in the statement of profit or
loss
(91)
(1 715)
X
X
5.1.1
Deferred income tax in the period
466
(533)
X
X
5.3
Tax assets
985
367
X
5.3
Tax liabilities
(611)
(1 233)
X
6.1
Joint ventures accounted for using the
equity method
-
-
X
X
6.2
Loans granted to a joint venture
9 096
9 603
X
X
7.2
Derivatives
292
357
X
X
7.3
Other financial instruments measured at
fair value
905
606
X
X
7.4
Other financial instruments measured at
amortised cost
475
469
X
X
8.2
Equity attributable to shareholders of the
Parent Entity
(28 565)
(32 089)
X
8.4
Borrowings
(5 725)
(6 443)
X
8.5
Cash and cash equivalents
1 729
1 200
X
8.6
Labilities due to guarantees granted
(1 389)
(1 326)
X
X
9.1
Mining and metallurgical property, plant
and equipment and intangible assets
23 495
25 666
X
X
9.2
Other property, plant and equipment and
intangible assets
3 254
2 964
X
9.4
Provisions for decommissioning costs of
mines and other facilities*
(1 974)
(1 893)
X
X
9.7
Lease disclosures – the Group as a lessee
704
771
X
X
9.8
Greenhouse gas emissions allowances
882
717
X
10.1
Inventories
8 425
8 902
X
X
10.1.1
Property rights arising from certificates of
origin of energy from renewable sources
and from energy efficiency
40
82
X
10.2
Trade receivables
932
1 178
X
X
10.3
Trade and similar payables
(6 385)
(3 280)
X
X
10.4
Changes in working capital
3 735
(2 317)
X
X
11.1
Employee benefits liabilities
(4 826)
(4 320)
X
X
12.3
Other assets
957
843
X
12.4
Other liabilities
(1 939)
(1 872)
X
* In the statement of financial position, current provisions for decommissioning costs of mines and other technological facilities are recognised
in the item Provisions for liabilities and other charges.
The accounting policies described in this note and in individual notes were applied by the Group in a continuous manner
to all presented periods.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
17
Note 1.5 Impact of new and amended standards and interpretations
Amendments to standards applied for the first time in the consolidated financial statements for 2023:
• IFRS 17 Insurance contracts and amendments to IFRS 17 published in 2020 and 2021,
• Amendments to IAS 1 and Practice Statement 2 on disclosures of accounting policies,
• Amendments to IAS 8 on the introduction of a definition of accounting estimates,
• Amendments to IAS 12 on deferred tax related to assets and liabilities arising from a single transaction,
• Amendments to IAS 12 on temporary exception to the requirements regarding recognition of deferred tax related
to the implementation of the reform of the international tax system (the so-called Pillar 2 of the BEPS 2.0 (Base Erosion
and Profit Shifting 2.0)).
Up to the date of publication of these consolidated financial statements, the aforementioned amendments to the standards
were adopted for use by the European Union.
In the Group’s opinion, the amendments to the standards:
• IFRS 17 – do not have an impact on the consolidated financial statements,
• IAS 1 and Practice Statement 2 and amendments to IAS 8 - have an insignificant impact on the consolidated financial
statements,
• IAS 12 on deferred tax related to assets and liabilities arising from a single transaction – do not have an impact on the
consolidated financial statements, because the Group applied an approach in line with current guidelines, among
others with respect to leases capitalised by lessees pursuant to IFRS 16 and environmental provisions recognised
pursuant to IFRIC 1,
• IAS 12 regarding recognition of the effects of the international tax system reform, will have an impact on the
consolidated financial statements, and the Group is assessing the scope of impact of the regulations on the global
minimum tax pursuant to the description provided below:
Pillar 2 of the BEPS 2.0 project introduces a general framework of the global minimum tax, adopted during the forum of
the Organisation for Economic Cooperation and Development (OECD, hereafter: OECD Framework). In the case of member
states of the European Union, the first stage of implementation of new rules will be the adoption of the Council Directive
(EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups
and large-scale domestic groups in the European Union (hereafter: “the Directive”). The Directive obliges the individual
member states to implement its rules to their domestic legal systems, in accordance with legislative rules in force in
individual states.
Pillar 2 of the BEPS 2.0 project introduces the GloBE rules (Global Anti-Base Erosion Model Rules):
1. The Income Inclusion Rule (IIR), pursuant to which a top-up tax is applied at the level of the ultimate parent entity
or an intermediate parent entity in the case of low-tax constituent entities.
2. The Undertaxed Profits Rule (UTPR). This is a complementary rule to the IIR rule and is applicable only if no IIR
was allocated. The top-up tax is allocated to countries with constituent entities on the basis of property, plant and
equipment/employees of these entities by limiting or denying deductions or requiring a corresponding
adjustment.
3. Qualified Domestic Minimum Top-up Tax (QDMTT). It is applicable prior to IIR and UTPR rules and consists of
calculating the top-up tax by the low-tax jurisdiction itself on the basis of a calculation pursuant to the calculation
for an IIR top-up tax.
The minimum effective tax rate (ETR) for all of the aforementioned rules is 15%.
The main mechanisms of Pillar 2 of the BEPS 2.0 reform will be applied by MNE (multinational enterprises /groups) in the
following manner:
1. In the first step, before the GloBE rules, the Subject to Tax Rule is applicable (STTR), which provides individual
countries with a right to impose a limited taxation at source on taxable payments between related entities, which
are taxable below the agreed-upon minimum nominal rate of 9%. It is applicable to interest, licence fees and
certain other receivables.
2. In the second step, QDMTT rule is applicable, under which the top-up tax may be calculated directly by the low-
tax jurisdiction in which a group’s (multinational enterprise’s) constituent entity operates. It is of significance that
the qualified domestic top-up tax should be calculated in a manner compliant with requirements stipulated for
the calculation of the IIR tax under the Pillar 2.
3. If the two rules mentioned above were not applied or if their application would not lead to full settlement of the
total top-up tax due from a given group, then the total amount of top-up tax, in the amount decreased by the part
of a top up tax charged in previous steps, will be charged at the level of the ultimate or intermediate parent entity,
pursuant to the IIR rule.
4. Finally, if the IIR top-up tax is likewise not imposed, the undertaxed profits rule is applicable (UTPR) by imposing
a top-up tax on constituent entities of the group whose jurisdictions adopted the GloBE rules, regardless whether
the constituent entities have paid the income tax above or below the ETR level of 15% or not.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
18
The application of the aforementioned rules depends on whether a given country has implemented GloBE rules or its own
national top-up tax.
In the case of Poland, appropriate domestic laws implementing the provisions of the Directive have not yet been adopted,
nor has draft legislation been released to the public. Apart from Poland, the KGHM Polska Miedź S.A. Group has constituent
entities in, among others, the following jurisdictions: Canada, USA, Chile, Luxembourg, the United Kingdom.
Currently in Canada, regulations on the implementation of QDMTT and IIR rules are being worked upon, and the first year
in which they are planned to be applicable is the financial year beginning on or after 31 December 2023. In the case of
UTPR, it is planned that it would be the financial year beginning on or after 31 December 2024.
The USA will not implement rules of Pillar 2 due to domestic regulations currently in force, whereas the USA plan to
implement regulations aimed at counteracting the UTPR rule under the Pillar 2 in other jurisdictions.
It is expected that Chile will implement Pillar 2 rules, but no implementation schedule has been announced yet.
In Luxembourg, on 20 December 2023 regulations were adopted which implemented IIR, QDMTT and UTPR rules. QDMTT
and IIR rules will be applicable to the financial year beginning on or after 31 December 2023, with UTPR rules to the financial
year beginning on or after 31 December 2024.
The United Kingdom is one of the leading nations in terms of progress in the implementation of IIR and QDMTT rules –
these regulations have already been implemented and will be in force from 2024, and a draft regulation on the
implementation of UTPR has been published, with implementation planned from 2025.
Due to the above, in the Group’s opinion, from 1 January 2024 the GloBE QDMTT and IIR rules will be implemented at least
in Canada and the United Kingdom.
The analysis of the OECD Framework and the Directive leads to the conclusion that the Company KGHM Polska Miedź S.A.,
as a so-called multinational enterprise, will be obliged to report a specific level of the tax rate of subsidiaries at the level of
individual jurisdictions. Nevertheless, implementation of appropriate regulations at the domestic level is necessary in this
regard.
While the rules of the Directive should encompass the year 2024, the OECD Framework includes a transitional period (a so-
called safe harbour), which enables the postponement of the date of obligatory application of these rules by 3 subsequent
years (no later than to 30 June 2028). Based on analysis of the assumptions stipulated in these transitional rules, in the
Group’s opinion, it will be able to use them in the majority of jurisdictions.
Due to the above, since there is no legal framework in force on Pillar 2 of the BEPS 2.0 reform, these consolidated financial
statements do not yet contain any amounts arising from the reform of the international tax system. The Group will take
actions to estimate the potential impact of the reform on future tax burden of the Group as soon as the regulations are
published.
The Group continuously monitors progress of the legislative work aimed at implementation of the rules of the reform in
question, in Poland as well as in other jurisdictions in which subsidiaries of the Group operate, and analyses their impact
on the Group as well as operational processes that will require an adjustment to new disclosure and reporting
requirements.
Note 1.6 Published standards and interpretations, which are not yet in force and were not applied earlier by the
Group.
Published standards and interpretations which are not yet in force, adopted for use by the European Union:
• Amendments to IFRS 16 on lease liabilities in a sale and leaseback, effective on or after 1 January 2024.
• Amendments to IAS 1 on classification of liabilities as current or non-current (including changes due to deferral of
effective date), effective on or after 1 January 2024. The standard introduces changes clarifying conditions necessary
to recognise financial liabilities as non-current. Such recognition will be possible only if the entity has the
unconditional right to defer settlement of a liability for over 12 months after the reporting date, and at the same time
the entity’s intent as to the early repayment will not have an impact on this recognition. If the amendments to IAS 1
were applied by the Group in these consolidated financial statements, the presentation of borrowings as at 31
December 2023 would not change.
• Amendments to IAS 1 on non-current liabilities with covenants, effective on or after 1 January 2024. The
amendments aim to clarify that covenants, whose conditions have to be met by an entity after the reporting date,
and which refer to the rights of an entity to defer settlement of a liability by at least twelve months from the end of
the reporting period, do not have an impact on the classification of liabilities as current or non-current at the end of
the reporting period. However, it will be necessary to disclose information on such covenants in notes to the financial
statements in order to allow users of financial statements to understand the risk that a particular liability may become
due in the period of 12 months from the end of the reporting period. In such a situation, the Standard requires the
disclosure of a description of a covenant, the amount of liabilities it is related to and facts and circumstances, if they
occur, indicating the occurrence of risk that an entity may not meet the conditions of the covenant within the deadline
indicated after the end of the reporting period.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
19
Published standards and interpretations which are not yet in force, awaiting the adoption for use by the European
Union:
• IFRS 14 Regulatory deferral accounts, effective on or after 1 January 2016, however the European Commission has
decided not to launch the endorsement process of this interim standard and to wait for the final standard.
• Amendments to IFRS 10 and IAS 28 on the sale or contribution of assets between an Investor and its Associate or
Joint Venture (date of entry into force was not specified).
• Amendments to IAS 7 and IFRS 7 on disclosure requirements regarding supplier finance arrangements, effective on
or after 1 January 2024.
• Amendments to IAS 21 on how to approach the issue of assessment as to whether a given currency is exchangeable
and how to determine a spot exchange rate if it is not exchangeable, effective on or after 1 January 2025.
• IFRS 18 Presentation and disclosure in financial statements, effective on or after 1 January 2027. IFRS 18 will
replace IAS 1 Presentation of financial statements. The aim of the new standard is to improve the usefulness of the
information presented in financial statements by providing investors with more transparent and comparable
information on companies' financial results.
The Group intends to apply all of the amendments at their effective dates. In the Group’s opinion, amendments to the
standards will be applicable to its activities in the scope of future economic operations, transactions or other events,
towards which the amendments to the standards are applicable. Amendments to IAS 7 and IFRS 7 on the disclosure
requirements regarding supplier finance arrangements will be applied by the Group in the scope of reverse factoring used
by the Group, as a supplement to information disclosed currently in these financial statements, but nevertheless, in the
Group’s opinion, this impact will be insignificant. If IFRS 18 is applied, changes in reporting will depend on the previously
used method of presenting information on financial results in the financial statements. The Group intends to conduct a
preliminary assessment of the scope of these changes for the Group's consolidated financial statements by the end of 2024.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
20
Part 2 – Information on segments and revenues
Note 2.1 Operating segments
The operating segments identified in the KGHM Polska Miedź S.A. Group reflect the structure of the Group, the manner
in which the Group and its individual entities are managed and the regular reporting to the Parent Entity’s Management
Board.
Based on the aggregation of operating segments and taking into account the criteria stipulated in IFRS 8, the following
reporting segments are currently identified within the KGHM Polska Miedź S.A. Group:
Reporting segment
Operating segments
aggregated in a given
reporting segment
Indications of similarity of economic characteristics of
segments, taken into account in aggregations
KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A.
Not applicable (it is a single operating and reporting
segment)
KGHM INTERNATIONAL
LTD.
Companies of the KGHM
INTERNATIONAL LTD. Group, in
which the following mines,
deposits or mining areas and
mining enterprises constitute
operating segments: Sudbury
Basin, Robinson, Carlota, DMC,
Victoria and Ajax projects.
Operating segments within the KGHM INTERNATIONAL
LTD. Group are located in North and South America.
The Management Board analyses the results of the
following operating segments: Sudbury Basin, Robinson,
Carlota, Victoria and Ajax projects and other. In addition,
the Management Board receives and analyses reports on
the whole KGHM INTERNATIONAL LTD. Group. Operating
segments are engaged in the exploration and mining of
copper, molybdenum, silver, gold, nickel, platinum and
palladium deposits.
The operating segments were aggregated based on the
similarity of long term margins achieved by individual
segments, and the similarity of products, processes and
production methods.
Sierra Gorda S.C.M.
Sierra Gorda S.C.M. (joint
venture)
Not applicable (it is a single operating and reporting
segment)
Other segments
This item includes other Group
companies (every individual
company is a separate
operating segment).
Aggregation was carried out as a result of not meeting the
criteria necessitating the identification of a separate
additional reporting segment.
The following companies were not included in any of the aforementioned segments:
• Future 1 Sp. z o.o., which acts as a holding company with respect to the KGHM INTERNATIONAL LTD. Group,
• Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o., which operate in the structure related to the establishment of
a Tax Group.
These companies do not conduct operating activities which could impact the results achieved by individual segments, and
as a result their inclusion could distort the data presented in this part of the consolidated financial statements
due to significant settlements with other Group companies.
Each of the segments KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD. and Sierra Gorda S.C.M. have their own
Management Board, which reports the results of their business activities to the Management Board of the Parent Entity.
The segment KGHM Polska Miedź S.A. is composed only of the Parent Entity, and the segment Sierra Gorda S.C.M.
is composed only of the joint venture Sierra Gorda S.C.M. Other companies of the KGHM Polska Miedź S.A. Group are
presented below by segment: KGHM INTERNATIONAL LTD. and Other segments.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
21
The SEGMENT KGHM INTERNATIONAL LTD.
Location
Company
The United States of America
Carlota Copper Company, Carlota Holdings Company, DMC Mining Services
Corporation, FNX Mining Company USA Inc., Robinson Holdings (USA) Ltd.,
Robinson Nevada Mining Company, Wendover Bulk Transhipment Company
Chile
Aguas de la Sierra Limitada, Minera Carrizalillo SpA, KGHM Chile SpA, Quadra
FNX Holdings Chile Limitada, DMC Mining Services Chile SpA
Canada
KGHM INTERNATIONAL LTD., 0899196 B.C. Ltd., Centenario Holdings Ltd.,
DMC Mining Services Ltd., FNX Mining Company Inc., FRANKE HOLDINGS LTD.,
KGHM AJAX MINING INC., KGHMI HOLDINGS LTD., Quadra FNX Holdings
Partnership, Sugarloaf Ranches Ltd.
Mexico
DMC Mining Services Mexico, S.A. de C.V.
Colombia
DMC Mining Services Colombia SAS
The United Kingdom
DMC Mining Services (UK) Ltd.
Luxembourg
Quadra FNX FFI S.à r.l.
OTHER SEGMENTS
Type of activity
Company
Support of the core business
BIPROMET S.A., CBJ sp. z o.o., “Energetyka” sp. z o.o., INOVA Spółka z o.o.,
KGHM CUPRUM sp. z o.o. – CBR, KGHM ZANAM S.A., KGHM Metraco S.A.,
PeBeKa S.A., POL-MIEDŹ TRANS Sp. z o.o., WPEC w Legnicy S.A.
Sanatorium-healing and hotel services
Uzdrowiska Kłodzkie S.A. - Grupa PGU, Uzdrowisko Cieplice Sp. z o.o. - Grupa
PGU, Uzdrowisko Połczyn Grupa PGU S.A., Uzdrowisko Świeradów - Czerniawa
Sp. z o.o. – Grupa PGU
Investment funds, financing activities
Fundusz Hotele 01 Sp. z o.o., Fundusz Hotele 01 Sp. z o.o. S.K.A., KGHM TFI
S.A.*, Polska Grupa Uzdrowisk sp. z o.o.**
Other activities
CENTROZŁOM WROCŁAW S.A., CUPRUM Development sp. z o.o., Polska Grupa
Uzdrowisk Sp. z o.o. (formerly CUPRUM Zdrowie sp. z o.o.)** , KGHM
(SHANGHAI) COPPER TRADING CO., LTD., KGHM Kupfer AG, MERCUS Logistyka
sp. z o.o., MIEDZIOWE CENTRUM ZDROWIA S.A., NITROERG S.A., NITROERG
SERWIS Sp. z o.o., PHU "Lubinpex" Sp. z o.o., PMT Linie Kolejowe Sp. z o.o.,
WMN "ŁABĘDY" S.A., Zagłębie Lubin S.A., OOO ZANAM VOSTOK, KGHM
Centrum Analityki Sp. z o.o., Invest PV 7 Sp. z o.o.***
* Entity sold on 3 August 2023 (Note 9.9).
** Entities merged on 1 August 2023 (Note 12.2).
*** Entity acquired on 10 October 2023 (Note 12.2).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
22
Location of mining assets of the KGHM Polska Miedź S.A. Group
The Parent Entity and the KGHM INTERNATIONAL LTD. Group (a subgroup) have a fundamental impact on the assets
and the generation of revenues in the KGHM Polska Miedź S.A. Group. The activities of KGHM Polska Miedź S.A.
are concentrated on the mining industry in Poland, while those of the KGHM INTERNATIONAL LTD. Group are concentrated
on the mining industry in the countries of North and South America. The profile of activities of the majority of the remaining
subsidiaries of the KGHM Polska Miedź S.A. Group differs from the main profile of the Parent Entity’s activities.
The Parent Entity’s Management Board monitors the operating results of individual segments in order to make decisions
on allocating the Group’s resources and to assess the financial results achieved.
Financial data prepared for management reporting purposes is based on the same accounting policies as those applied
when preparing the consolidated financial statements of the Group, while the financial data of individual reporting
segments constitutes the amounts presented in appropriate financial statements prior to consolidation adjustments
at the level of the KGHM Polska Miedź S.A. Group, i.e.:
• The segment KGHM Polska Miedź S.A. – comprises data from the separate financial statements of the Parent Entity
prepared in accordance with IFRSs. In the separate financial statements, investments in subsidiaries (including
indirect interest in KGHM INTERNATIONAL LTD.) are measured at cost, including impairment losses,
• The segment KGHM INTERNATIONAL LTD. – comprises consolidated data of the KGHM INTERNATIONAL LTD. Group
prepared in accordance with IFRSs. The involvement in Sierra Gorda S.C.M. is accounted for using the equity method,
• The segment Sierra Gorda S.C.M. – comprises the 55% share of assets, liabilities, revenues and costs of this venture
presented in the separate financial statements of Sierra Gorda S.C.M. prepared in accordance with IFRSs,
• Other segments – comprises aggregated data of individual subsidiaries after excluding transactions and balances
between them.
The Management Board of the Parent Entity assesses a segment’s performance based on adjusted EBITDA and the profit
or loss for the period.
The Group defines adjusted EBITDA as profit/loss for the period pursuant to IFRS, excluding taxes (current
and deferred income tax as well as the mining tax), finance income and costs, other operating income and costs, profit or
loss on involvement in joint ventures, depreciation/amortisation and recognition/reversal of impairment losses on
property, plant and equipment and intangible assets included in the cost of sales, selling costs and administrative expenses.
The Company redefined adjusted EBITDA during the reporting period, by including depreciation/amortisation recognised
in expenses by nature in the calculation method (until now, the depreciation/amortisation recognised in profit or loss was
included). The applied approach is commonly used by numerous listed companies, including in the mining sector, and
ensures consistency and comparability with plans of individual operating segments of the KGHM Polska Miedź S.A. Group
and parameters applied in credit agreements. The comparable period was converted pursuant to the presentation in the
current reporting period, EBITDA changed as compared to the one presented in the published Consolidated financial
statements for 2022, an increase in the amount of PLN 159 million.
Since adjusted EBITDA is not a measure defined by IFRS, it is not a standardised measure and therefore its method of
calculation may vary between entities, and consequently the presentation and calculation of adjusted EBITDA applied by
the Group may not be comparable to that applied by other market entities.
Revenues from transactions with external entities and inter-segment transactions are carried out at arm’s length.
Eliminations of mutual settlements, revenues and costs between segments were presented in the item “Consolidation
adjustments”.
Unallocated assets and liabilities concern companies which have not been allocated to any segment. Assets which have not
been allocated to the segments comprise cash. Liabilities which have not been allocated to the segments comprise trade
liabilities and deferred tax liabilities.
Legend:
Mines of KGHM
Mine projects of KGHM
Metallurgical facilities
of KGHM
CANADA
(Ontario, Sudbury Basin)
McCreedy West (Cu, Ni, TPM)
Victoria (Cu, Ni, TPM)
Exploration in the region
CANADA
(British Columbia)
Ajax (Cu, Au)
USA
(Nevada & Arizona)
Robinson (Cu, Au, Mo)
Carlota (Cu)
Exploration in the region
CHILE
(Antofagasta & Atacama)
Sierra Gorda (Cu, Mo, Au, Ag)
Exploration in the region
POLAND
(Lower Silesia)
Polkowice-Sieroszowice (Cu, Ag)
Lubin (Cu, Ag)
Rudna (Cu, Ag)
Głogów Głęboki Przemysłowy (Cu, Ag)
Exploration in the region
Głogów I & Głogów II smelters/refineries
Legnica smelter/refinery
Cedynia (wire rod)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
23
Note 2.2 Financial results of reporting segments
from 1 January 2023 to 31 December 2023
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data of
the segment
Sierra Gorda S.C.M
Consolidation
adjustments****
Consolidated
financial
statements
Note 2.3
Revenues from contracts with customers, of which:
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
- inter-segment
732
-
-
9 921
-
(10 653)
-
- external
28 352
2 451
3 319
2 664
(3 319)
-
33 467
Segment result – profit/(loss) for the period
(1 153)
(1 120)
68
28
( 68)
(1 446)
(3 691)
Additional information on significant
revenues/costs items of the segment
Depreciation/amortisation recognised
in expenses by nature
(1 675)
( 706)
( 770)
( 295)
770
35
(2 641)
(Recognition)/reversal of impairment losses on non-
current assets, including:
(2 935)
( 150)
219
2
( 219)
( 796)
(3 879)
reversal of impairment losses on investment in
subsidiaries
827
-
-
-
-
( 827)
-
reversal of allowances for impairment of loans
granted
15
101
-
-
-
( 15)
101
As at 31 December 2023
Assets, including:
48 896
13 916
12 597
6 671
(12 597)
(18 100)
51 383
Segment assets
48 896
13 916
12 597
6 671
(12 597)
(18 100)
51 383
Assets unallocated to segments
-
-
-
-
-
-
-
Liabilities, including:
20 078
18 581
12 905
3 771
(12 905)
(19 677)
22 753
Segment liabilities
20 078
18 581
12 905
3 771
(12 905)
(19 790)
22 640
Liabilities unallocated to segments
-
-
-
-
-
113
113
Other information
from 1 January 2023 to 31 December 2023
Cash expenditures on property, plant and equipment
and intangible assets – cash flows
3 074
984
1 106
602
(1 106)
116
4 776
Production and cost data
from 1 January 2023 to 31 December 2023
Payable copper (kt)
592.4
39.9
78.7
Molybdenum (million pounds)
-
0.1
3.5
Silver (t)
1 403.3
2.7
22.3
TPM (koz t)
111.0
40.6
32.9
C1 cash cost of producing copper in concentrate
(USD/lb PLN/lb)**
2.98 12.52
4.15 17.44
1.68 7.06
Segment result - Adjusted EBITDA
3 563
( 142)
1 584
357
-
-
5 362
EBITDA margin***
12%
(6%)
48%
3%
-
-
15%
* 55% of the Group’s share in Sierra Gorda S.C.M.’s financial and production data.
** Unit cash cost of payable copper production, reflecting ore mining and processing costs, transport costs, the minerals extraction tax, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-product value. C1 cost is in regard
to payable copper in own concentrate in the case of the segment KGHM Polska Miedź S.A. and payable copper in end products of individual mines of the segment KGHM International Ltd. and the segment Sierra Gorda S.C.M. C1 cost in PLN/lb was calculated using the average
exchange rate by the NBP (arithmetical average of daily quotations per the NBP’s tables).
*** Adjusted EBITDA to revenues from contracts with customers. For the purposes of calculating the Group’s EBITDA margin (15%), the consolidated revenues from contracts with customers were increased by revenues from contracts with customers of the segment
Sierra Gorda S.C.M. [5 362 / (33 467 + 3 319) * 100]
**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
24
Financial results of reporting segments for the comparable period
from 1 January 2022 to 31 December 2022
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data of
the segment
Sierra Gorda S.C.M
Consolidation
adjustments****
Consolidated
financial
statements
Note 2.3
Revenues from contracts with customers, of which:
28 429
3 217
3 974
12 889
(3 974)
(10 688)
33 847
- inter-segment
565
-
-
10 123
-
(10 688)
-
- external
27 864
3 217
3 974
2 766
(3 974)
-
33 847
Segment result – profit/(loss) for the period
3 533
900
239
( 51)
( 239)
392
4 774
Additional information on significant
revenues/costs items of the segment
Depreciation/amortisation recognised in expenses by nature
(1 504)
( 656)
( 937)
( 274)
937
36
(2 398)
(Recognition)/reversal of impairment losses on non-current
assets, including:
207
781
-
-
-
( 259)
729
(recognition)/reversal of allowances for impairment of
loans granted
213
873
-
-
-
( 213)
873
As at 31 December 2022
Assets, including:
47 995
15 228
13 563
6 071
(13 563)
(15 850)
53 444
Segment assets
47 995
15 228
13 563
6 071
(13 563)
(15 854)
53 440
Assets unallocated to segments
-
-
-
-
-
4
4
Liabilities, including:
18 320
19 276
13 992
3 446
(13 992)
(19 744)
21 298
Segment liabilities
18 320
19 276
13 992
3 446
(13 992)
(19 804)
21 238
Liabilities unallocated to segments
-
-
-
-
-
60
60
Other information
from 1 January 2022 to 31 December 2022
Cash expenditures on property, plant and equipment and
intangible assets – cash flows
2 731
913
1 031
380
(1 031)
94
4 118
Production and cost data
from 1 January 2022 to 31 December 2022
Payable copper (kt)
586.0
56.2
90.8
Molybdenum (million pounds)
-
0.1
2.9
Silver (t)
1 298.4
2.0
26.7
TPM (koz t)
87.3
55.9
34.3
(C1) cash cost of producing payable copper (USD/lb
PLN/lb)**
2.38 10.62
2.14 9.57
1.50 6.69
Segment result - adjusted EBITDA
5 470
1 089
2 190
275
-
-
9 024
EBITDA margin***
19%
34%
55%
2%
-
-
24%
* 55% of the Group’s share in Sierra Gorda S.C.M.’s financial and production data.
** Unit cash cost of payable copper production, reflecting ore mining and processing costs, transport costs, the minerals extraction tax, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-product value. C1 cost is in regard to payable copper in own
concentrate in the case of the segment KGHM Polska Miedź S.A. and payable copper in end products of individual mines of the segment KGHM International Ltd. and the segment Sierra Gorda S.C.M. C1 cost in PLN/lb was calculated using the average exchange rate by the NBP (arithmetical average of daily
quotations per the NBP’s tables).
*** Adjusted EBITDA to revenues from contracts with customers. For the purposes of calculating the Group’s EBITDA margin (23%) the consolidated revenues from contracts with customers were increased by revenues from contracts with customers of the segment
Sierra Gorda S.C.M. [8 865 / (33 847 + 3 974) * 100]
**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
25
Reconciliation of adjusted EBITDA
from 1 January 2023 to 31 December 2023
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Other
segments
Consolidation
adjustments*
Consolidated
financial
statements
Sierra Gorda
S.C.M. **
Adjusted
EBITDA
(segments, total)
1
2
3
4
5
(1+2+3+4)
6
7
(5+6-4)
Profit/(Loss) for the period
(1 153)
(1 120)
28
(1 446)
(3 691)
68
[-] Profit or loss on involvement in joint ventures
-
698
-
-
698
-
[-] Current and deferred income tax, mining tax***
( 123)
250
( 48)
( 170)
( 91)
( 150)
[-] Depreciation/amortisation recognised
in expenses by nature
(1 675)
( 706)
( 295)
35
(2 641)
( 770)
[-] Finance income and (costs)
120
(1 028)
( 51)
1 118
159
( 778)
[-] Other operating income and (costs)
( 230)
( 185)
63
(2 465)
(2 817)
( 37)
[-] (Recognition)/reversal of impairment losses
on non-current assets recognised in cost of
sales, selling costs and administrative expenses
(2 808)
( 7)
2
88
(2 725)
219
Segment result - adjusted EBITDA
3 563
( 142)
357
( 52)
3 726
1 584
5 362
Reconciliation of adjusted EBITDA
from 1 January 2022 to 31 December 2022
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Other
segments
Consolidation
adjustments*
Consolidated
financial
statements
Sierra Gorda
S.C.M. **
Adjusted
EBITDA
(segments, total)
1
2
3
4
5
(1+2+3+4)
6
7
(5+6-4)
Profit/(Loss) for the period
3 533
900
( 51)
392
4 774
239
[-] Profit or loss on involvement in joint ventures
-
1 455
-
-
1 455
-
[-] Current and deferred income tax, mining tax***
(1 463)
( 122)
( 36)
( 94)
(1 715)
( 177)
[-] Depreciation/amortisation recognised
in expenses by nature
(1 504)
( 656)
( 274)
36
(2 398)
( 937)
[-] Finance income and (costs)
( 269)
(1 033)
( 45)
1 075
( 272)
( 823)
[-] Other operating income and (costs)
1 299
203
28
( 568)
962
( 14)
[-] (Recognition)/reversal of impairment losses
on non-current assets recognised in cost of
sales, selling costs and administrative
expenses
-
( 36)
1
( 45)
( 80)
-
Segment result - adjusted EBITDA
5 470
1 089
275
( 12)
6 822
2 190
9 024
* Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
**55% share of the Group in the financial data of Sierra Gorda S.C.M.
***Mining tax concerns only the segment Sierra Gorda S.C.M.
A detailed description of the results of individual segments is presented in the following sections of the Management Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska
Miedź S.A. Group in 2023:
− the segment KGHM Polska Miedź S.A. – in section 8,
− the segment KGHM INTERNATIONAL LTD. – in section 9,
− the segment Sierra Gorda S.C.M. – in section 10.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
26
Note 2.3 Revenues from contracts with customers of the Group – breakdown by products
Accounting policies
Revenues arising from ordinary operating activities of the Group, i.e. revenues from sales of products, merchandise and
materials, are recognised in the statement of profit or loss as revenues from contracts with customers.
The Group generates its revenues mainly from the sale of: copper, silver and gold. Other, smaller streams of revenues arise
from the sale of services (including distribution of electricity, other utilities and mine construction services) and other products
(including electricity), merchandise and materials (including steel, petroleum and its derivatives).
The Group recognises revenue from contracts with customers when the Group satisfies a performance obligation by
transferring a promised good or providing a service to a customer, which is when the customer obtains control of that asset,
i.e. the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset, as well as the ability to
prevent other entities from directing the use of, and obtaining the benefits from, the asset.
The Group recognises as a performance obligation every contractual promise to transfer to a customer a good or provide a
service that is distinct, or a series of distinct goods or services that are substantially the same and that have the same pattern
of transfer to the customer. For each performance obligation, the Group determines (based on contractual terms), whether
the obligation will be performed over time or at a specified moment. In particular, in contracts for the sale of copper, silver and
gold, every measurement unit of a transferred good (e.g. 1 tonne of copper or 1 kg of silver) is a separate performance
obligation. Therefore, for every sale or transfer of goods, constituting a multiplication of a measurement unit of a transferred
product, which is realised at the same time, the Group fulfils its performance obligation and at the same time recognises
revenues. The performance obligation is fulfilled by the Group in the same manner as in the case of other Group products,
such as: lead, salt, steel, petroleum, blasting materials, mining machinery, fuel additives and other products.
Since in the majority of sales transactions, following the shipment of the promised product or good and transferring control
over it, the Group has an unconditional right to consideration from the customer, and the only condition of receiving it is time
lapse, the Group recognises the consideration from contracts with customers as receivables and therefore the Group does not
recognise contractual assets.
In trade contracts in which the performance obligation is met at a specified time, the Group uses various payment conditions,
including prepayments of up to several days before delivery and deferred payments of up to 120 days, although the deferred
payments do not concern silver. Payment dates depend on the evaluation of the recipient’s credit risk and the possibility of
securing receivables. The consideration becomes due depending on contractual conditions, that is prior to the realisation of
the delivery (prepayment) by the Group or after the Group meets its performance obligation. If the Group receives payment
from the customer before it meets its performance obligation, it recognises it as contractual payables. However, in the case of
deferred payments terms, the Group recognises due consideration from the customer as a receivable only after the transfer
of promised products to the customer and the issuance of the invoice.
Moreover, revenues from the sale of services are recognised by the Group in profit or loss over time if one of the following
criteria is met:
− the customer simultaneously receives and consumes the benefits provided by the Group’s performance to the extent that
it performs its obligations, or
− the Group satisfies a performance obligation and creates or enhances an asset (for example, work in progress) that the
customer controls as the asset is created or enhanced, or
− the Group satisfies a performance obligation and creates an asset without an alternative use to the Group and the Group
has an enforceable right to payment for performance completed to date.
If the Group recognises revenues on the basis of assessment pursuant to the adopted method of measurement the degree of
advancement, prior to the issue of the invoice, it recognises due consideration as a contractual asset and transfers it to
receivables at the moment the right to consideration becomes unconditional.
The Group fulfils its performance obligation while performing the service and therefore it recognises revenues over time, under
contracts for mine construction and other geological work, sanatorium-spa services and sale of electricity, including distribution
of electricity.
Revenues from contracts with customers are recognised in the amount of the transaction price, consisting of the amount of
consideration to which – in accordance with the Group’s expectations – it will be given in return for the transfer of promised
goods or services to the customer, excluding consideration collected on behalf of third parties.
The transaction price also reflects the effects of the time value of money if a contract with a customer contains a significant
financing element, which is determined based on the contractual payment terms, regardless of whether the promise of
financing is explicitly stated in the contract. In determining whether a financing component is significant for a given agreement,
all of the facts and circumstances are taken into consideration, including the eventual difference between the promised
consideration and the cash selling price of the promised goods and services, as well as the total impact of the following two
factors: (i) the estimated period from the moment an entity transfers the promised goods or services to a customer to the
moment the customer pays for these goods or services, and (ii) prevailing interest rates on a given market. In the realised
contracts of sales to customers in 2023 and 2022, the Group identified a significant financing component in the contract with
Franco Nevada (contract described below in Important estimates, assumptions and judgments). The Group presents the results
of financing (interest costs) separately from revenues from contracts with customers in the statement of comprehensive
income. In the Franco Nevada contract, there is also an element of variable consideration. In such a situation, the Group
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
27
recognises revenues by estimating the amount of consideration, to which it will be entitled to in exchange for transferring the
good to the customer, and includes a part or all of the amount of variable consideration in the transaction price only to such
an extent to which it is highly probable that there will not be a reversal of a significant part of previously recognised accumulated
revenues at the moment when uncertainty as to the amount of consideration ceases to exist.
In the case of copper and silver products sales transactions, for which the price is set after the date of recognition of a given
sale, at the moment of initial recognition of a transaction an adjustment of revenues from sales is made, arising from the
difference between the forward price of a metal expressed in USD from the date of recognition of a sale in the period
corresponding to the period of settlement of the transaction, and the price from provisional invoice. This adjustment brings
the amount of the transaction to the expected amount as a transaction price at the moment of initial recognition. This only
concerns cases where the change in transaction price arises from a change in the metal’s price. For these types of variable
revenues, the limitation of IFRS 15 on recognising variable consideration only to the amount in respect of which it is highly
probable that a reversal will not be recognised, is not applicable. Changes to the booked amount after the moment of
recognition do not impact the revenues from sales but are fair value gains/losses on measurement of receivables pursuant to
the accounting policies presented in Note 10.2.
Sales revenue is adjusted for the gain or loss on the settlement of future cash flow hedging derivatives, in accordance with the
general principle that the portion of gain or loss on a derivative hedging instrument that is determined to be an effective hedge
is recognised in the same position of profit or loss in which the gain or loss on the hedged item is recognised at the moment
when the hedged item affects profit or loss.
Important estimates, assumptions and judgments
The Group recognises revenues from the sale of products, merchandise and materials in profit or loss once, when the
performance obligation is satisfied (in particular in accordance with the applied INCOTERMS principles. In the majority of
contracts, control is transferred to the customer after delivery of the goods, which is also understood as delivery of the goods
to the carrier or to a designated facility (DAP, FCA and EX WORKS bases). In other contracts, control is transferred to the
customer at the moment it is handed over to the carrier and loaded aboard a ship (CFR, CIF, CPT and CIP bases). In these
contracts, the Group is also obliged to organise the shipment. In these cases, the Group acts as a principal, as it has control
over the service before its completion and transfer to the customer. At the same time, the Group allocates a part of the
transaction price to the transport service and recognises these revenues over time.
The Group recognises revenues over time due to realised mine construction services and other geological work. The Group
meets liabilities in time, because the customer simultaneously receives and makes use of economic benefits arising from the
performed service as it is performed, or because components are made which do not have an alternative application for the
Group and simultaneously the Group has an enforceable right to payment. To measure the degree of advancement of
performance obligation, the Group applies a method based on expenses incurred while meeting the performance obligation
on the basis of incurred costs and for other contracts, a method based on results, where the unit cost set in advance is applied
to measure the unit of production (e.g. to measure meters of drilled tunnelling).
The contract with Franco Nevada
Performance obligation
The Group realises the streaming arrangement contract, which is a source of financing available on the market for entities
operating in the mining sector.
The contract concerns the sale of half of the production of gold, platinum and palladium contained in the ore extracted during
the lives of the following mines: Morrison, McCreedy West and Podolsky, which are within the CGU Sudbury. Pursuant to the
terms of the contract, Quadra FNX Mining Ltd. received a prepayment in the amount of CAD 400 million. Moreover, in
accordance with the contract, the selling price for one ounce of gold equivalent is the lower of these two amounts: (a) USD 400,
increased by 1% each year beginning from 2011, or (b) the market price of gold. The received prepayment covers the difference
between the market price of ore sold and its fixed selling price. The Group recognised a liability due to the contract in the
amount of prepayment due to the obligation put on the entity to meet the obligation to transfer or be ready to transfer goods
or services in the future. The Group ceases to recognise this contractual obligation and recognises revenues at the moment it
transfers these goods or services to the customer and therefore meets its performance obligation.
Variable consideration
In the contract with Franco Nevada the total transaction price is variable and depends on the amount of the raw material sold,
and this in turn depends on ore extraction in the future throughout the life of the mine (including for example on the size of
the deposit). Therefore, if in subsequent reporting periods the Group changes its judgment regarding the planned amount of
ore to be extracted, and consequently to the amount of raw material sold, the transaction price will also be updated.
The Group recognises amounts related to satisfied performance obligations as revenue or as a decrease of revenue in the
period in which the transaction price was changed.
Significant financing component
In the context of the contract with Franco Nevada, taking into consideration the expected period from the moment when
prepayment is received to the moment when the Group transfers the promised good (the life of the mine, or several decades)
and the nature of this contract, it was determined that the extension of payments over time provides benefits to the Group
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
28
due to the financing of deliveries of raw material by the buyer (Franco Nevada), and as a result the contract includes a significant
financing element.
The Group presents the effects of financing (interest costs) separately from revenue from contracts with customers in the
statement of profit or loss. Interest costs are recognised solely to the extent to which the liabilities related to the contract with
Franco Nevada were recognised.
Determination of the transaction price allocated to other performance obligations
If the Group has other performance obligations at the end of the reporting period, it is required to disclose the transaction
price allocated to these performance obligations (IFRS 15.120-122). The Group applies a practical expedient and does not
disclose performance obligations which are a part of a contract that has an original expected duration of one year or less.
Moreover, the Group has long-term contracts with prices based mainly on a variable consideration, which is not included by
the Group when estimating the transaction price.
Moreover, the Group (via the company DMC) advances long-term contracts for mine construction, in which it uses a method
based on expenditures to recognise revenues, which meets the criteria for recognising revenues in the amount, that the Group
has a right to invoice. As at 31 December 2023, the total transaction price allocated to performance obligations, which remained
unsatisfied at the end of the reporting period, amounted to PLN 940 million, of which the amount of PLN 489 million will be
realised in 2024, the amount of PLN 335 million will be realised in 2025 and the amount of PLN 116 million will be realised in
or after 2026 (in the comparable period the total transaction price allocated to performance obligations, which remained
unsatisfied at the end of the reporting period, amounted to PLN 899 million, of which the amount of PLN 559 million will be
realised in 2023, the amount of PLN 149 million will be realised in 2024 and the amount of PLN 191 million will be realised in
or after 2025). These contracts do not have an element of variable consideration.
Onerous contracts and variable consideration
Taking into account the greater volatility of the macroeconomic environment, which has a significant impact on the Parent Entity’s
financial results and requirements of IAS 37 with respect to the identification of onerous contracts, the Parent Entity periodically
analyses concluded contracts in terms of the potential occurrence of a situation under which the contractual sales price does not
exceed the estimated, unavoidable costs of realisation of such contracts.
For the sales contracts of main products (copper, silver, gold) the Parent Entity has limited options of transferring the potential
increase in production costs to the sales price of its final products, since the level of revenues from sales of these products mainly
depends on stock exchange quotations and currency exchange rates.
Stock quotations are the basis used to determine the sales price of copper products in physical contracts (“Cash Settlement” of
the London Metal Exchange are the most commonly used). In the case of silver products, applied prices are based on quotations
of the London Bullion Market Association. Things look similar for other significant products of the Parent Entity, that is gold and
lead products, the prices of which depend on stock quotations.
It is possible to negotiate additional premiums to prices arising from stock quotations, however they are limited due to the
influence of current market conditions as well as the negotiation position of the parties.
Some of the Parent Entity’s products (among others: sulphuric acid, sulphide copper and refined lead) are by-products of the
copper production process, which, after further processing, may be sold to external clients. While making a decision to process
and sell them, the Parent Entity is guided not only by potential, future economic gains arising from such contracts, but also pays
attention to other costs that were avoided by making such a choice, that otherwise would have to be incurred in order to dispose
of these by-products.
Despite the fact that the currently observed, and expected in the near future, prices of sulphuric acid, sulphide copper and refined
lead are not conducive to the achievement of positive profit margins, the results of this activity are more advantageous than the
available alternative solutions (e.g. disposal of these by-products).
Therefore, the Parent Entity does not recognise certain contracts as onerous contracts, because in a broader perspective, it
generates profit for the overall copper production process, in which utilisation of by-products is an integral part and fits in the
Parent Entity’s actions aimed at protecting the natural environment as well as minimising the negative impact on this environment
as a result of conducted economic activity.
On the basis of conducted analyses, the Parent Entity did not identify the occurrence of onerous contracts under IAS 37 as at 31
December 2023.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
29
Revenues from contracts with customers of the Group – breakdown by products
from 1 January 2023 to 31 December 2023
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda S.C.M.*
Other
segments
Elimination of data of
the segment Sierra
Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Products
Copper
22 290
1 409
2 677
10
(2 677)
( 44)
23 665
Silver
4 389
34
72
-
( 72)
-
4 423
Gold
932
211
277
-
( 277)
-
1 143
Services
199
681
-
2 711
-
(2 070)
1 521
Energy
123
-
-
519
-
( 388)
254
Salt
56
-
-
-
-
25**
81
Blasting materials
and explosives
-
-
-
313
-
( 152)
161
Mining machinery, transport vehicles
and other types of machinery and
equipment
-
-
-
383
-
( 331)
52
Fuel additives
-
-
-
103
-
-
103
Lead
264
-
-
-
-
-
264
Products from other
non-ferrous metals
-
-
-
141
-
( 9)
132
Other products
184
116
293
883
( 293)
( 572)
611
Merchandise and materials
Steel
-
-
-
440
-
( 73)
367
Petroleum and its derivatives
-
-
-
435
-
( 361)
74
Salt
-
-
-
81
-
(81)**
-
Other merchandise and materials
647
-
-
6 566
-
(6 597)
616
TOTAL
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
** Including: PLN 81 million – reclassification from revenues from the sale of merchandise and materials to revenues from the sale of products.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
30
from 1 January 2022 to 31 December 2022
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda S.C.M.*
Other
segments
Elimination of data of
the segment Sierra
Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Products
Copper
22 207
2 015
3 248
10
(3 248)
( 51)
24 181
Silver
4 341
30
82
-
( 82)
-
4 371
Gold
649
313
269
-
( 269)
-
962
Services
174
595
-
2 307
-
(1 745)
1 331
Energy
35
-
-
358
-
( 212)
181
Salt
36
-
-
-
-
23**
59
Blasting materials
and explosives
-
-
-
300
-
( 151)
149
Mining machinery, transport
vehicles and other types of
machinery and equipment
-
-
-
315
-
( 271)
44
Fuel additives
-
-
-
159
-
-
159
Lead
295
-
-
-
-
-
295
Products from other
non-ferrous metals
-
-
-
179
-
( 4)
175
Other products
325
264
375
797
( 375)
( 480)
906
Merchandise and materials
Steel
-
-
-
623
-
( 142)
481
Petroleum and its derivatives
-
-
-
528
-
( 431)
97
Salt
-
-
-
59
-
(59)**
-
Other merchandise and materials
367
-
-
7 254
-
(7 165)
456
TOTAL
28 429
3 217
3 974
12 889
(3 974)
(10 688)
33 847
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
** Including: PLN 59 million – reclassification from revenues from the sale of merchandise and materials to revenues from the sale of products.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
31
Note 2.4 Revenues from contracts with customers of the Group – breakdown by category
from 1 January 2023 to 31 December 2023
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL
LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data
of the segment
Sierra Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Total revenues from contracts with customers, of which:
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
Revenues from sales contracts, for which the sales price is
set after the date of recognition of the sales (M+ pricing
formula**), of which:
20 681
1 771
3 307
169
(3 307)
( 141)
22 480
settled
20 294
975
1 621
167
(1 621)
( 139)
21 297
unsettled
387
796
1 686
2
(1 686)
( 2)
1 183
Revenues from realisation of long-term contracts for mine
construction
-
642
-
166
-
( 128)
680
Revenues from other sales contracts
8 403
38
12
12 250
( 12)
(10 384)
10 307
Total revenues from contracts with customers, of which:
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
in factoring
8 852
-
-
246
-
( 246)
8 852
not in factoring
20 232
2 451
3 319
12 339
(3 319)
(10 407)
24 615
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
**the M+ pricing formula means that for individual transactions for the sale of copper and silver products, the final sales price is determined after the date of recognition of the sale, based on, for example, the average of the stock exchange quotations of a given metal in the month
of sale or in the month following the month of sale.
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Total revenues from contracts with customers, of which:
33 467
33 847
transferred at a certain moment
31 356
32 229
transferred over time
2 111
1 618
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
32
from 1 January 2022 to 31 December 2022
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL
LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data
of the segment
Sierra Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Total revenues from contracts with customers, of which:
28 429
3 217
3 974
12 889
(3 974)
(10 688)
33 847
Revenues from sales contracts, for which the sales price is
set after the date of recognition of the sales (M+ pricing
formula**), of which:
21 767
2 556
3 974
6 259
(3 974)
(6 038)
24 544
settled
21 045
1 459
2 068
6 259
(2 068)
(6 038)
22 725
unsettled
722
1 097
1 906
-
(1 906)
-
1 819
Revenues from realisation of long-term mine construction
contracts
-
555
-
165
-
( 146)
574
Revenues from other sales contracts
6 662
106
-
6 465
-
(4 504)
8 729
Total revenues from contracts with customers, of which:
28 429
3 217
3 974
12 889
(3 974)
(10 688)
33 847
in factoring
8 677
-
-
390
-
( 304)
8 763
not in factoring
19 752
3 217
3 974
12 499
(3 974)
(10 384)
25 084
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
**the M+ pricing formula means that for individual transactions for the sale of copper and silver products, the final sales price is determined after the date of recognition of the sale, based on, for example, the average of the stock exchange quotations of a given metal in the month
of sale or in the month following the month of sale.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
33
Note 2.5 Revenues from contracts with customers of the Group – geographical breakdown reflecting the location of end customers
from 1 January 2023 to 31 December 2023
from 1 January 2022 to 31 December 2022
Reconciliation items to consolidated data
KGHM Polska Miedź S.A. Group
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL
LTD.
Sierra Gorda S.C.M.*
Other
segments
Elimination of data of
the segment Sierra
Gorda S.C.M.
Consolidation
adjustments
Consolidated
data
Poland
7 075
-
33
12 258
( 33)
(10 615)
8 718
8 986
Austria
401
-
-
22
-
-
423
570
Belgium
33
-
-
11
-
-
44
67
Bulgaria
251
-
-
16
-
-
267
47
Czechia
2 279
-
-
23
-
-
2 302
2 269
Denmark
9
-
-
-
-
-
9
28
Estonia
23
-
-
3
-
-
26
17
Finland
9
-
-
5
-
-
14
-
France
881
-
-
4
-
-
885
901
Greece
-
-
-
12
-
-
12
-
Spain
11
-
-
2
-
-
13
-
The Netherlands
7
-
78
-
( 78)
-
7
7
Lithuania
4
-
-
9
-
-
13
22
Germany
6 070
-
-
66
-
-
6 136
5 603
Romania
155
-
-
2
-
-
157
142
Slovakia
209
-
-
15
-
-
224
197
Slovenia
108
-
-
3
-
-
111
132
Sweden
146
-
-
29
-
-
175
31
Hungary
1 439
-
-
8
-
-
1 447
1 419
The United Kingdom
990
-
-
4
-
-
994
1 682
Italy
2 172
-
-
14
-
-
2 186
2 348
Australia
393
-
-
-
-
-
393
787
Bosnia and Herzegovina
12
-
-
2
-
-
14
25
Chile
2
274
1 046
1
(1 046)
( 1)
276
311
China
2 982
1 076
1 565
-
(1 565)
-
4 058
3 742
India
-
-
31
-
( 31)
-
-
-
Japan
-
-
469
-
( 469)
-
-
64
Canada
41
940
-
-
-
( 36)
945
865
South Korea
15
-
57
-
( 57)
-
15
68
The United States of America
1 163
162
-
17
-
( 1)
1 341
1 210
Switzerland
1 358
-
-
3
-
-
1 361
797
Türkiye
231
-
-
15
-
-
246
297
Saudi Arabia
102
-
-
1
-
-
103
-
Vietnam
2
-
-
-
-
-
2
231
Philippines
-
-
-
-
-
-
-
173
Malaysia
52
-
-
-
-
-
52
72
Algeria
79
-
-
-
-
-
79
-
Brazil
-
-
40
-
( 40)
-
-
-
Mexico
-
-
-
-
-
-
-
92
Taiwan
49
-
-
-
-
-
49
69
Thailand
327
-
-
-
-
-
327
442
Other countries
4
( 1)
-
40
-
-
43
134
TOTAL
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
33 847
*55% of the Group’s share in revenues of Sierra Gorda S.C.M.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
34
Note 2.6 Main customers
In the period from 1 January 2023 to 31 December 2023 and in the comparable period the revenues from no single customer
exceeded 10% of the sales revenue of the Group.
Note 2.7 Non-current assets – geographical breakdown
As at
31 December 2023
As at
31 December 2022
Poland
23 309
25 008
Canada
1 791
1 919
The United States of America
1 613
1 841
Chile
228
204
TOTAL*
26 941
28 972
*non-current assets, excluding: derivatives, other financial instruments, other non-financial assets and deferred tax assets (IFRS 8.33b) in the total amount
of PLN 11 041 million as at 31 December 2023 (PLN 11 448 million as at 31 December 2022).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
35
Part 3 – Impairment of assets
Note 3.1 Impairment losses on assets as at 31 December 2023
IMPAIRMENT TESTING OF THE POLISH PRODUCTION ASSETS (MINING AND METALLURGICAL ASSETS) OF KGHM
POLSKA MIEDŹ S.A. – the Segment KGHM Polska Miedź S.A.
Pursuant to the adopted accounting policy, KGHM Polska Miedź S.A. recognises a significant or prolonged decrease in
market capitalisation of an entity as compared to the carrying amount of its net assets as an indication to perform
impairment testing of the carrying amount of the Company’s assets. The Company’s market capitalisation was below the
carrying amount of net assets during the entire year 2023 and slightly decreased as compared to 31 December 2022,
and at the end of the reporting period it amounted to approx. 79% of this amount. Moreover, other indications of
impairment occurred, which may be found below.
As at 31 December 2023, due to the occurrence of indications of changes in the recoverable amount of the Company’s
assets, the Management Board of the Parent Entity performed impairment testing of the Polish production assets
(mining and metallurgical assets) of KGHM Polska Miedź S.A. In order to estimate the recoverable amount, these assets
constitute a single cash generating unit (CGU).
The main indications that the recoverable amount of the CGU may be lower than its carrying amount were the following:
● the forecasted increase in operating cost and planned increase in capital expenditures on replacement,
● the update of assumptions on medium-term production volumes,
● strengthening of the PLN exchange rate versus the USD.
Some of the analysed factors have a positive impact on the profitability of the CGU’s activities, and therefore on the value
of the Company’s assets, and these are as follows:
● an increase in the forecasted price paths of copper, silver and gold,
● a decrease in market interest rates,
● rich deposits in the concession areas (current long-term production plans of the Company are up to the horizon
of 2055 and this period does not arise from exhausting the deposit but from the current validity of mining
concessions held).
In order to estimate the recoverable amount of the CGU, in the conducted test the value in use of its non-current assets
was calculated using the DCF method, i.e. the method of discounted cash flows.
Basic macroeconomic assumptions adopted for impairment testing as at 31 December 2023 – metal prices and
the exchange rate
The Company adopted price paths on the basis of internal macroeconomic assumptions prepared based on long-term
forecasts available from financial and analytical institutions. A detailed forecast was prepared for the period 2024-2028,
while for the period 2029-2033 a technical adjustment of prices was applied between the last year of the detailed
forecast and 2034, for which a long-term metal price and exchange rate forecast was used at the following level:
- for copper– 8 250 USD/t;
- for silver – 22 USD/oz;
- for gold – 1 600 USD/oz,
- for the USD/PLN exchange rate – 4.10.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
36
Other assumptions adopted for impairment testing as at 31 December 2023
Assumption
Level adopted in the test
Detailed forecast period
A 5-year detailed forecast period was adopted for the years 2024-2028 on the basis
of assumptions of the Budget of KGHM Polska Miedź S.A. for 2024 and the
Company’s assumptions on production in the years 2024-2028 arising from the
Mine and Copper Concentrate Production Plan for the years 2024-2028.
Mine production level
The total mine production level adopted for testing in the detailed forecast period
(2024-2028) amounted to 1 913 thousand tonnes of copper in concentrate.
Margin level
The average level of EBIT margin adopted for testing in the detailed forecast period
and in the residual period does not differ significantly from the historically
observable level of the Company’s profitability in relatively stable macroeconomic
conditions.
Capital expenditures on
replacement
Total level of expenditures on replacement adopted for testing in the detailed
forecast period (2024-2028) amounted to PLN 12 338 million; in the residual period,
capital expenditures on replacement were adopted at a level which allows matching
the Company’s assets to the planned decrease in own mine production.
Rate of increase/decrease
following the forecast period
-1.43%, resulting from the planned decrease in production of copper in ore and in
own concentrates assumed in current long-term plans (up to 2055).
Discount rate*
7.00% - this is the level of the real discount rate after taxation (9.85% at the nominal
rate), since the cash flows adopted in the model were estimated on the basis of the
real rate.
Discount rate prior to taxation amounts to 12.69%.
*The presented data are the amounts after taxation as an approach practically used in the model of value in use. The discount rate before taxation
was calculated for disclosure purposes on the basis of the rate after taxation, which was applied in the test.
Results of the test performed as at 31 December 2023 may be found in the following table:
CGU
Segment
Carrying amount
as at
31 December 2023*
Recoverable amount
as at
31 December 2023
Impairment
loss
PLN mn
PLN mn
PLN mn
Polish production assets
(mining and metallurgical)
of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A.
20 166
16 577
3 589
* The carrying amount of non-current assets adjusted by key non-production assets, decreased by employee benefits liabilities. The CGU’s carrying
amount does not include provisions for the decommissioning costs of mines, just as the calculation of value in use does not include losses on the
decommissioning of mines.
As a result of the performed test, as at 31 December 2023 the value in use of mining and metallurgical assets of KGHM
Polska Miedź S.A. was lower than their carrying amount by PLN 3 589 million. The calculated impairment loss was
recognised in the following items: “Cost of sales” in the amount of PLN 2 587 million, “Selling costs and administrative
expenses” in the amount of PLN 131 million and “Other operating costs” in the amount of PLN 871 million. A deferred tax
on impairment losses was recognised in the amount of PLN 666 million, which decreased deferred tax liabilities in the
segment KGHM Polska Miedź S.A.
The impairment loss was allocated to the following types of assets: buildings and land (PLN 1 570 million), technical
equipment, machines, motor vehicles and other fixed assets (PLN 1 102 million), fixed assets under construction (PLN 874
million), intangible assets – other (PLN 43 million).
Sensitivity analysis of the recoverable amount of operating assets of KGHM Polska Miedź S.A. determined that the key
assumptions adopted for the impairment testing were the adopted price paths, the exchange rate and the discount rate.
The assumptions regarding the price paths, the exchange rate and the discount rate were adopted while taking into account
the professional judgment of the Management Board as to the performance of these amounts in the future, and was
reflected in the estimated recoverable amount.
Sensitivity analysis of the recoverable amount of the CGU (PLN million)
Recoverable amount
Discount rate 7.5%
15 263
Discount rate 7.0% (test)
16 577
Discount rate 6.5%
18 080
Sensitivity analysis of the recoverable amount of the CGU (PLN million)
Recoverable amount
Copper price -5%
12 700
Copper price (test)
16 577
Copper price +5%
20 118
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
37
Sensitivity analysis of the recoverable amount of the CGU (PLN million)
Recoverable amount
USD/PLN exchange rate -5%
11 002
USD/PLN exchange rate (test)
16 577
USD/PLN exchange rate +5%
21 779
TEST FOR THE IMPAIRMENT OF ASSETS OF THE KGHM INTERNATIONAL LTD. GROUP - the Segment KGHM
INTERNATIONAL LTD.
As at 31 December 2023, as a result of the identification of indications of a possible change in the recoverable amount
of some of the international mining assets of the KGHM INTERNATIONAL LTD. Group, the Parent Entity’s Management
Board performed impairment testing of these assets. The following cash generating units (CGUs) have been selected to
evaluate the recoverable amount of the assets of the KGHM INTERNATIONAL LTD. Group, in which indications of a
possible change in the recoverable amount were identified:
• The Robinson mine,
• The Carlota mine,
• The Sudbury Basin, comprising the Morrison mine, the Podolsky mine and the McCreedy mine,
• The pre-operational Victoria project.
The key indications to perform impairment testing of the individual CGUs:
The Robinson mine:
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices,
o a change in technical and economic parameters in terms of production volumes,
o a change in technical and economic parameters in terms of production volumes (including mining
from the Ruth West 6 pit), planned operating costs and capital expenditures;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o a change in discount rates.
The Carlota mine:
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices,
o a decrease in a discount rate compared to the discount rate from the date of the last test;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o a change in technical and economic parameters in terms of production volumes (including mining
from the Cactus pit – Phase III), planned operating costs, capital expenditures and a change of the
life of the mine.
The Sudbury Basin:
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o a change in discount rates;
o a change in technical and economic parameters in terms of production volumes, planned operating
costs, capital expenditures and a change of the life of the mine.
The pre-operational Victoria project;
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices,
o a change in discount rates,
o a change in technical assumptions in the model;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o an update of the mine construction schedule,
o an update of capital expenditures,
o a change in economic assumptions in the model.
In order to determine the recoverable amount of assets of individual CGUs, in the test conducted the fair value
(decreased by estimated costs to sell) was calculated using the DCF method, i.e. the method of discounted cash flows,
for the following CGUs: Sudbury, Victoria, Robinson and Carlota.
There was a change in the measurement model of recoverable amount of the CGU Robinson; in the last impairment
testing of this asset as at 30 June 2021 the model of value in use was applied.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
38
Basic macroeconomic assumptions adopted for impairment testing as at 31 December 2023 – metal prices
Price paths were adopted on the basis of long-term forecasts available from financial and analytical institutions. A detailed
forecast is being prepared for the period 2024-2028, while for the period 2029-2033 a technical adjustment of prices was
applied between the last year of the detailed forecast and 2034, from which a long-term metal price forecast is used at
the following levels:
- for copper – 8 250 USD/t (3.74 USD/lb);
- for gold – 1 600 USD/oz;
- for nickel – 8.5 USD/lb (18 739 USD/t).
CGU
Date of the last impairment
testing
Discount rate used in the
last impairment testing
Sudbury
31 December 2021
7.5%
Robinson
30 June 2021
7.5%
Carlota
31 December 2019
9.5%
Victoria
30 June 2021
10.5%
Key factors responsible for the modification of technical and economic assumptions adopted for impairment
testing as at 31 December 2023
Sudbury
The increase in the production volume of payable metal by the McCreedy West mine. The finance model
was updated on the basis of a change in operational assumptions.
Robinson
An update of the production plan which includes mining from the Ruth West 6 pit and changes in mining
sequence in the Liberty pit, which enabled the extension of LOM to 2036. The finance model was updated
on the basis of a change in operational assumptions.
Carlota
An update of the production plan which includes mining from the Cactus pit – Phase 3, which enabled
the extension of LOM to 2027. The finance model was updated on the basis of a change in operational
assumptions.
Victoria
Update of the mine construction schedule, update of capital expenditures and calculation of operating
costs.
Assumptions adopted for impairment testing as at
31 December 2023
Victoria
Sudbury
Robinson
Carlota
Mine life / forecast period
16
5
13
4
Level of copper production during mine life (kt)
266
16
569
11
Level of nickel production during mine life (kt)
229
5
-
-
Level of gold production during mine life (koz t)
205
12
478
-
Average operating margin during mine life
64%
9%
41%
3%
Capital expenditures to be incurred during mine life
[USD million]
1 686
8
1 236
31
Including capitalised stripping costs [USD million]
-
-
745
7
Applied discount rate after taxation for assets in the
operational phase
-
7.9%
7.9%
9.9%
Applied discount rate after taxation for assets in the
pre-operational phase
9.4%
-
-
-
Costs to sell
2%
Level of fair value hierarchy to which the measurement
at fair value was classified
Level 3
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
39
Results of the test performed as at 31 December 2023 are presented in the following table:
CGU
Segment
(Part 2)
Carrying amount*
Recoverable amount
Recognised impairment
loss
USD mn
PLN mn
USD mn
PLN mn
USD mn
PLN mn
Victoria
KGHM
INTERNATIONAL
LTD.
428***
1 683
320
1 259
108
424
Sudbury
(50)
(197)
(46)**
(164)
-
-
Robinson
358***
1 409
431
1 696
-
-
Carlota
(47)
(185)
(47)
(185)
-
-
* The carrying amount of non-current assets decreased by the provision for future decommissioning costs of mines and the balance of deferred tax.
** Includes liabilities due to the Franco Nevada contract.
*** Including the amount of activated borrowing costs for the Robinson of USD 7 million, for the Victoria Project of USD 44 million.
As a result of the conducted test, an impairment loss was recognised on the assets of the CGU Victoria in the amount of
PLN 424 million (USD 108 million), which was recognised in the item: “Other operating costs”. Due to the recognition of an
impairment loss, a deferred income tax was charged in the amount of PLN (75) million, which was recognised in the item
“Income tax”.
The results of tests performed as at 31 December 2023 for:
• the CGU Sudbury confirmed that the recoverable amount is higher than the CGU’s carrying amount, however the
difference between the recoverable and carrying amounts of the CGU is insignificant, and therefore the
impairment loss recognised in previous periods was not reversed.
• the CGU Robinson indicated that the recoverable amount of the CGU exceeded the carrying amount. Due to the
lack of impairment losses recognised in previous periods that could be reversed, the carrying amount of CGU
Robinson did not change.
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Discount rate 10.4%
235
Discount rate 9.4% (test)
320
Discount rate 8.4%
461
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Copper price -0.10 $/lb
327
Copper price (test)
320
Copper price +0.10 $/lb
351
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Nickel price -0.10 $/lb
329
Nickel price (test)
320
Nickel price +0.10 $/lb
350
Sensitivity analysis of the recoverable amount of CGU Robinson (USD mn)
Recoverable amount
Discount rate 8.9%
396
Discount rate 7.9% (test)
431
Discount rate 6.9%
469
Sensitivity analysis of the recoverable amount of CGU Robinson (USD mn)
Recoverable amount
Copper price -0.10 $/lb
355
Copper price (test)
431
Copper price +0.10 $/lb
507
The sensitivity analysis of the recoverable amount of the CGUs Sudbury and Carlota, due to the low carrying amount of
assets, was not presented.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
40
EVALUATION OF IMPAIRMENT OF WATER RIGHTS
In the Group, water rights in Chile are annually subjected to impairment testing by comparing their carrying amount
to the recoverable amount, which is set as fair value decreased by costs to sell. The fair value of water rights is classified
under level 2 of the fair value hierarchy, in which fair value measurements are based on significant observable input data,
other than market prices.
For the year ended on 31 December 2023, the Group assessed the factors impacting the recoverable amount of the asset.
The Group engaged an independent advisor that, by using a polynomial model taking into account technical, legal and
administrative aspects, performed a measurement of water rights held by the Group. As a result of the conducted
analysis, taking into account a change in water price and the estimated amount of water available for extraction as
compared to the level of these factors adopted for the measurement as at 31 December 2022, an impairment loss was
reversed on this asset in the amount of PLN 23 million (USD 6 million) which was recognised in the item “Other operating
income”. The carrying amount of water rights amounted to PLN 88 million as at 31 December 2023 (as at 31 December
2022: PLN 73 million).
IMPAIRMENT TESTING OF PROPERTY, PLANT AND EQUIPMENT OF THE COMPANY CENTROZŁOM WROCŁAW S.A. –
Segment – Other segments
As at 31 December 2023, as a result of the identification of indications of a possible change in the recoverable amount
of property, plant and equipment of the company Centrozłom Wrocław S.A., the company performed impairment testing
of these assets in 2023. The key indication to perform impairment testing was the achievement of a loss for 2023 by the
company in the amount of PLN 42 million. The test was conducted using the fair value less costs to sell method, on the
basis of available valuation reports and an expert’s opinion, in order to confirm the recoverable amount of non-current
assets.
The basis used to determine the recoverable amount during impairment testing:
1) land:
• valuation reports prepared by external entities at the company’s request,
• valuation reports prepared at the request of local municipal authorities,
2) buildings and structures:
• valuation reports prepared by external entities at the company’s request,
• an expert opinion by the technical services of the company on the basis of determined market value of similar
objects in individual locations
3) machinery and equipment:
• an expert opinion by the technical services of the company on the basis of auction websites and the level of
achieved prices
Properties for which valuation reports were prepared at the
company’s request*
Carrying amount
Recoverable
amount
in Chróścina
1
3
in Wrocław
9
76
in Poznań
11
16
in Konin
2
4
in Opole
1
2
in Łódź
9
14
Total
33
115
Properties for which valuation reports were prepared at the request of
local municipal authorities*
Carrying amount
Recoverable
amount
8
15
*cost to sell at the level of 3%
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
41
Sensitivity analysis of the recoverable amount of property to volatility of market prices for land and
accompanying buildings, for which valuation reports were prepared:
At the company’s request
Price lower
by 5%
Recoverable
amount
(test)
Price higher
by 5%
in Chróścina
2.9
3.1
3.2
in Wrocław
71.6
75.4
79.2
in Poznań
15.1
15.9
16.7
in Konin
4.0
4.2
4.4
in Opole
2.3
2.4
2.5
in Łódź
12.8
13.5
14.2
At the request of local municipal authorities
14.3
15.1
15.8
TOTAL
123.0
129.6
136.0
Sensitivity analysis of the fair value of
machinery and equipment to volatility of
market prices for machinery and equipment
Price lower
by 5%
Recoverable amount
(test)
Price higher
by 5%
31
32
34
As a result of the performed tests, the recoverable amount of property, plant and equipment was determined to be at the
level of PLN 176 million, which is significantly higher than the carrying amount of property, plant and equipment (PLN 87
million). Therefore, no impairment loss was recognised.
Other impairment losses on assets
Other impairment losses on assets concern:
• fixed assets and intangible assets, PLN 10 million,
• fixed assets under construction and other intangible assets not yet available for use, PLN 13 million,
• write-down of inventories, PLN 442 million (including PLN 370 million on the segment KGHM INTERNATIONAL
LTD. since the cost was higher than the net realisable value),
• allowances for impairment of receivables, PLN 4 million.
Information on the item in which impairment losses are recognised in the consolidated statement of profit or loss is
presented in Note 4.4.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
42
Note 3.2. Impairment of assets as at 31 December 2022
Pursuant to IAS 36, as at 31 December 2022 the Group assessed the occurrence of indications of impairment of its assets.
Key non-current assets of the Group were subjected to the analysis. As a result of the performed evaluation, no indications
of impairment of these assets were identified. Because of the Parent Entity’s market capitalisation remaining below the
level of its net assets for a significant part of 2022, this area was subjected to a further analysis.
Assessment of the risk of impairment of assets in the context of the market capitalisation
of KGHM Polska Miedź S.A.
In 2022, a general deterioration in sentiment was seen in stock markets due to the substantial uncertainty as to the
development of the global macroeconomic situation in reaction to the start of the armed conflict in Ukraine and the
tangible consequences of the COVID-19 (coronavirus) pandemic. As a result, stock market indices, amongst others,
suffered greatly. In 2022, the share price of KGHM Polska Miedź S.A. fell by 9% compared to the share price at the end
of 2021, and as at 31 December 2022 it amounted to PLN 126.75. During the same period the WIG and WIG 20 indices
fell respectively by 17% and 21%. As a result, the Parent Entity’s market capitalisation fell from PLN 27 880 million to PLN
25 350 million, which means that as at 31 December 2022 it remained 15% below the level of the Company’s net assets.
As at 15 March 2023, the Parent Entity’s share price amounted to PLN 113.30 and as a result, the market capitalisation
amounted to PLN 22 660 million and was 24% lower than the level of the Parent Entity’s net assets.
Due to the fact that, during a significant part of the reporting period, the Company’s market capitalisation remained
below the carrying amount of its net assets, in accordance with IAS 36 Impairment of assets, the Management Board of
KGHM Polska Miedź S.A. conducted an analysis to determine whether any area of KGHM Polska Miedź S.A.’s activities
could be impaired.
The analysis of the assets located in Poland indicated that not all of the factors which affect the market capitalisation of
KGHM Polska Miedź S.A. are factors which are related to the conducted economic activities.
The drop in share prices affected companies in the majority of sectors, in different economies, and reflected investor
uncertainty as to the future. In particular, the armed conflict in Ukraine caused a withdrawal of foreign investors from
areas bordering the war zone, which can be seen not only in the situation on the Warsaw stock exchange, but also on
exchanges in the region, such as in Czechia, Slovakia and Hungary, and also had a significant impact on the weakening
of the PLN versus the USD.
From the point of view of the Company’s operations, the key factor influencing the level of market capitalisation is the
copper price. In December 2021, the average price of copper amounted to 9 550 USD/t, and following the initial
continuation of the upward trend in the first months of 2022 it recorded a significant decline. The minimum was recorded
in July 2022, when the average copper price was at the level of 7 530 USD/t. But over time, as reassuring information as
to the demand for this metal kept coming, prices returned to the trend observed at the start of the year and in December
2022 the average price for copper amounted to 8 367 USD/t. The share prices of companies involved in the mining and
processing of copper are strongly correlated with the price of this metal.
It should be pointed out that in the case of the Polish assets, of significance are PLN-expressed metals prices, which are
also affected by the USD/PLN exchange rate. Fluctuations in the price of copper related to the turbulence on the financial
markets, whose origins may often be found not only in macroeconomics but also in broadly understood geopolitics, are
usually to a large extent offset by changes in the USD/PLN exchange rate, which additionally remains under the influence
of the armed conflict in Ukraine.
Despite the continued uncertainty in the economic environment, KGHM Polska Miedź S.A. maintains full operational
capacity and consistently advances planned production and sales targets. The financial results achieved by the Company
significantly exceed the budget targets, which is also a result of conducted optimisation initiatives and cost discipline
applied in response to macroeconomic conditions.
As a result of the assessment, it was judged that there was no relation between the fall in the share price of KGHM Polska
Miedź S.A. both in terms of the activities of KGHM Polska Miedź S.A. in Poland as well as abroad. The Company executes
production and sales targets in Poland as well as abroad. Consequently, there were no indications identified suggesting
the risk of impairment of the Polish and international production assets, therefore there were no tests for impairment
conducted for these assets as at 31 December 2022.
Due to the uncertainty and the significant volatility of basic economic parameters, including metals prices and currency
exchange rates, and dynamic development of the global pandemic situation, and its impact on the economic situation,
the Company is continuously monitoring the global situation.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
43
TEST FOR THE IMPAIRMENT OF NON-CURRENT ASSETS OF SPA COMPANIES – Segment – Other segments
As at 30 June 2022, new risks were identified to the realisation of forecasted financial results of the Group companies
providing spa services (CGU): Uzdrowiska Kłodzkie S.A. - Grupa PGU, Uzdrowisko Połczyn Grupa PGU S.A., Uzdrowisko
Cieplice Sp. z o.o. - Grupa PGU, Uzdrowisko Świeradów - Czerniawa Sp. z o.o. – Grupa PGU. Apart from the increase in
prices of electricity, energy carriers, food and other cost items due to inflation pressure, there is also a risk of inability to
effectively transfer these increases into prices for end customers and/or an impact of these costs on provided services.
For the purpose of estimating the recoverable amount, in the conducted test the value in use of the cash generating units,
comprised of property, plant and equipment and intangible assets of all of the aforementioned companies, was measured
using the DCF method, i.e. the method of discounted cash flows.
The recoverable amount of CGUs, estimated as described above, was confirmed by the fair value of a transaction price
of tested assets, which were sold between entities of the Group as part of the reorganisation project realised by the Group
(details on changes in the organisational structure of the Group may be found in Note 12.11 Composition of the Group).
Basic assumptions adopted for impairment testing
Assumption
Uzdrowiska
Kłodzkie S.A. -
Grupa PGU
Uzdrowisko Połczyn
Grupa PGU S.A.
Uzdrowisko
Cieplice
Sp. z o.o. -
Grupa PGU
Uzdrowisko
Świeradów -
Czerniawa
Sp. z o.o. – Grupa
PGU
Detailed forecast period*
2nd half of 2022 -
1st half of 2028
2nd half of 2022 -
1st half of 2028
2nd half of 2022 -
1st half of 2028
2nd half of 2022 -
1st half of 2028
Average EBITDA margin
during the detailed
forecast period
12%
13%
12%
13%
EBITDA margin during the
residual period
15%
14%
14%
16%
Capital expenditures
during the detailed
forecast period
PLN 58 million
PLN 12 million
PLN 12 million
PLN 9 million
Average notional discount
rate during the detailed
forecast period**
11.4%
11.3%
11.4%
11.5%
Discount rate during the
residual period**
11.4%
11.7%
11.5%
11.8%
Notional growth rate
following the detailed
forecast period
2.0%
2.0%
2.0%
2.0%
* A 6-year detailed forecast period was adopted instead of a 5-year one, pursuant to the approach applied by KGHM VII FIZAN for the measurement
of portfolio deposits, in order to maintain the comparability over time (the methodology applied in previous periods).
** Data is presented after taxation, despite the measurement model of value in use. The application of data before taxation does not have a significant
impact on the recoverable amount.
The results of the conducted tests are presented in the following table:
CGU
Carrying amount
Recoverable
amount
Impairment loss
Uzdrowiska Kłodzkie S.A. - Grupa PGU
114
102
12
Uzdrowisko Połczyn Grupa PGU S.A
81
55
26
Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU
34
28
6
Uzdrowisko Świeradów - Czerniawa
Sp. z o.o. – Grupa PGU
38
36
2
As a result of the tests conducted, an impairment loss on non-current assets was recognised in the total amount of
PLN 46 million – by comparing the carrying amount with the recoverable amount.
The impairment loss was recognised in the items: “Cost of sales” in the amount of PLN 45 million and in “Other operating
costs” in the amount of PLN 1 million.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
44
The recoverable amount of individual CGUs indicated a significant sensitivity to changes in the adopted discount rate,
the average EBITDA margin, and the growth rate following the forecast period. Moreover, it should be noted that sensitivity
to the change in the level of revenues is reflected in sensitivity to the changes in the EBITDA margin.
Recoverable amount
Average EBITDA margin during the forecast
period
decrease by 2 pp.
per test
increase by 2 pp.
Uzdrowiska Kłodzkie S.A. - Grupa PGU
60
102
144
Uzdrowisko Połczyn Grupa PGU S.A.
43
55
69
Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU
20
28
35
Uzdrowisko Świeradów - Czerniawa Sp. z o.o. –
Grupa PGU
27
36
45
Average discount rate during the forecast
period
decrease by 1 pp.
per test
increase by 1 pp.
Uzdrowiska Kłodzkie S.A. - Grupa PGU
119
102
88
Uzdrowisko Połczyn Grupa PGU S.A.
63
55
50
Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU
32
28
24
Uzdrowisko Świeradów - Czerniawa Sp. z o.o. –
Grupa PGU
41
36
32
Growth rate following the forecast period
decrease by 1 pp.
per test
increase by 1 pp.
Uzdrowiska Kłodzkie S.A. - Grupa PGU
92
102
113
Uzdrowisko Połczyn Grupa PGU S.A.
52
55
60
Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU
25
28
30
Uzdrowisko Świeradów - Czerniawa Sp. z o.o. –
Grupa PGU
33
36
39
In order to monitor the risk of further impairment of operating assets in subsequent reporting periods as well as to monitor
the possibility of reversing the impairment loss, it was determined that the recoverable amount would be equal to the
carrying amount of individual companies if the notional discount rate were as presented below:
Uzdrowiska Kłodzkie S.A. - Grupa PGU
10.54%
Uzdrowisko Połczyn Grupa PGU S.A.
8.50%
Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU
10.00%
Uzdrowisko Świeradów - Czerniawa Sp. z o.o. – Grupa PGU
10.75%
EVALUATION OF IMPAIRMENT OF WATER RIGHTS
In the Group, water rights in Chile are annually subjected to impairment testing by comparing their carrying amount
to the recoverable amount, which is set as fair value decreased by costs to sell. The fair value of water rights is classified
under level 2 of the fair value hierarchy, in which fair value measurements are based on significant observable input data,
other than market prices.
For the year ended on 31 December 2022, the Group assessed the factors impacting the recoverable amount of the asset
and concluded that there are no grounds for recognising an impairment loss, as the water price and the estimated
amount of water available for extraction did not change compared to the level of these factors adopted for measurement
as at 31 December 2021. The carrying amount of water rights amounted to PLN 73 million as at 31 December 2022
(as at 31 December 2021: PLN 67 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
45
Other impairment losses on assets
Other impairment losses on assets concern:
• fixed assets and intangible assets, PLN 38 million (including PLN 36 million on the segment KGHM
INTERNATIONAL LTD.),
• fixed assets under construction and other intangible assets not yet available for use, PLN 63 million (including
PLN 55 million on the segment KGHM INTERNATIONAL LTD., and exploratory work capitalised pursuant to IFRS
6, which were fully impaired since the lack of confirmation of economic feasibility of explored deposits),
• write-down of inventories, PLN 74 million,
• allowances for impairment of receivables, PLN 9 million.
Information on the item in which impairment losses are recognised in the consolidated statement of profit or loss is
presented in Note 4.4.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
46
Part 4 - Explanatory notes to the statement of profit or loss
Note 4.1 Expenses by nature
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Note 9.3
Depreciation of property, plant and equipment and
amortisation of intangible assets
2 641
2 398
Note 11.1
Employee benefits expenses
8 296
7 333
Materials and energy, including:
14 872
15 876
purchased metal-bearing materials
7 712
8 859
External services
2 960
2 604
Note 5.2
Minerals extraction tax
3 496
3 046
Other taxes and charges
874
786
Note 4.4
Reversal of impairment losses on property, plant and
equipment and intangible assets
( 3)
( 3)
Note 4.4
Reversal of write-down of inventories
( 19)
( 55)
Advertising costs and representation expenses
96
89
Property and personal insurance
87
80
Part 3
Note 4.4
Impairment losses on property, plant and equipment
and intangible assets
2 728
83
Note 4.4
Write-down of inventories
429
74
Other costs
83
77
Total expenses by nature
36 540
32 388
Cost of merchandise and materials sold (+)
679
792
Change in inventories of finished goods and work in
progress (+/-)
( 275)
(2 008)
Cost of products for internal use of the Group (-) *
(1 837)
(1 669)
Total costs of sales, selling costs and
administrative expenses, of which:
35 107
29 503
Cost of sales
32 907
27 541
Selling costs
481
560
Administrative expenses
1 719
1 402
*The amount is mainly comprised of cost of manufacturing fixed assets by the Group
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
47
Note 4.2 Other operating income and (costs)
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Note 7.1
Gains on derivatives, of which:
367
270
measurement
202
109
realisation
165
161
Interest income calculated using the effective
interest rate method
56
54
Note 7.1
Exchange differences on financial assets and
liabilities other than borrowings
-
949
Reversal of impairment losses on fixed assets under
construction and intangible assets not yet available
for use
53
-
Note 4.4
Reversal of impairment losses on financial
instruments
-
5
Release of provisions
54
62
Gain on disposal of intangible assets
7
134
Note 9.9
Gain on disposal of subsidiaries
1
180
Government grants received
17
19
Income from servicing of letters of credit and
guarantees
21
28
Compensation, fines and penalties received
47
66
Assistance under the government program “Aid for
energy-intensive sectors related to sudden
increases in natural gas and electricity prices in 2022
and 2023”
178
-
Other
105
114
Total other operating income
906
1 881
Note 7.1
Losses on derivatives, of which:
( 634)
( 490)
measurement
( 188)
( 116)
realisation
( 446)
( 374)
Note 4.4
Impairment losses on financial instruments
( 4)
( 5)
Fair value losses on financial assets
( 104)
( 58)
Part 3
Note 4.4
Impairment losses on fixed assets under
construction and intangible assets not yet available
for use
(1 308)
( 64)
Note 7.1
Exchange differences on financial assets and
liabilities other than borrowings
(1 414)
-
Provisions recognised
( 36)
( 27)
Financial support granted to municipalities
( 7)
( 100)
Losses on disposal of property, plant and
equipment
( 28)
( 26)
Donations granted
( 66)
( 55)
Other
( 122)
( 94)
Total other operating costs
(3 723)
( 919)
Other operating income and (costs)
(2 817)
962
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
48
Note 4.3 Finance income and (costs)
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Note 7.1
Exchange differences on measurement and
realisation of borrowings
356
-
Note 7.1
Gains on derivatives - realisation
173
130
Result of the settlement of a transaction hedging
against interest rate risk due to the issue of bonds
with a variable interest rate
-
18
Total finance income
529
148
Note 7.1
Interest on borrowings including:
( 76)
( 18)
leases
( 1)
( 9)
Unwinding of the discount effect on provisions
( 60)
( 21)
Bank fees and charges on drawn borrowings
( 26)
( 29)
Note 7.1
Losses on derivatives - realisation
( 183)
( 149)
Note 7.1
Exchange differences on measurement and
realisation of borrowings
-
( 179)
Other
( 25)
( 24)
Total finance costs
( 370)
( 420)
Finance income and (costs)
159
( 272)
Note 4.4 Reversal and (recognition) of impairment losses recognised in the statement of profit or loss
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Reversal of impairment losses on assets
recognised in:
cost of sales, of which:
24
58
Note 4.1
reversal of impairment loss on property, plant and
equipment and intangible assets
3
3
Note 10.1
reversal of write-down of inventories
21
55
Note 6.2
gains due to reversal of allowances for
impairment of loans granted to a joint venture
101
873
other operating income, of which:
53
5
reversal of impairment losses on fixed assets
under construction and intangible assets not yet
available for use
53
-
Note 4.2
reversal of an allowance for impairment of trade
receivables
-
2
Note 4.2
reversal of an allowance for impairment of other
financial receivables
-
3
Reversal of impairment losses, total
178
936
Impairment losses on assets, recognised in:
cost of sales and selling costs, of which:
(3 170)
( 162)
Note 4.1
impairment loss on property, plant and
equipment and intangible assets
(2 728)
( 83)
Note 10.1
write-down of inventories
( 442)
( 79)
other operating costs, of which:
(1 312)
( 73)
Note 4.2
impairment losses on fixed assets under
construction and intangible assets not yet
available for use
(1 308)
( 64)
allowance for impairment of non-financial
receivables
-
( 4)
Note 4.2
allowance for impairment of trade receivables
( 4)
( 4)
Note 4.2
allowance for impairment of other financial
receivables
-
( 1)
Impairment losses, total
(4 482)
( 235)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
49
Part 5 – Taxation
Note 5.1 Income tax in the consolidated statement of profit or loss
Accounting policies
Income tax recognised in profit or loss comprises current income tax and deferred income tax.
Current income tax is calculated in accordance with current tax laws.
Taking into account the tax optimisation within the KGHM Polska Miedź S.A. Group, the “PGK KGHM I” Tax Group was
founded, which operated in the years 2016-2018. Real benefits were noted in the period of operation of PGK KGHM,
including the possibility of current utilisation of losses generated by some of the companies within PGK to settle them with
the profits of other companies, and the positive result of an analysis of companies of the Group with respect to meeting
the criteria indicated in the act on corporate income tax were a basis to found a new tax group – PGK KGHM II. It operated
in the years 2019-2021, and in October 2021 an agreement was signed to extend its operations by a subsequent 3 tax
years, that is from 2022 to 2024.
PGK KGHM II is comprised of:
1) KGHM Polska Miedź S.A.
2) Energetyka sp. z o.o.
3) Zagłębie Lubin S.A.
4) Miedziowe Centrum Zdrowia S.A.
5) KGHM CUPRUM sp. z o.o. – Centrum Badawczo-Rozwojowe
6) INOVA Centrum Innowacji Technicznych sp. z o.o.
7) PeBeKa S.A.
8) KGHM ZANAM S.A.
9) POL-MIEDŹ TRANS Sp. z o.o.
10) Mercus Logistyka sp. z o.o.
11) KGHM Metraco S.A.
12) Special purpose companies: Future 1 Sp. z o.o., Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o.,
13) KGHM Centrum Analityki Sp. z o.o.
14) Centrum Badań Jakości Sp. z o.o.
15) BIPROMET S.A.
Income tax
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Current income tax
682
1 369
Note 5.1.1
Deferred income tax
( 569)
315
Current tax adjustments for prior periods
( 37)
31
Income tax on controlled foreign companies
15
-
Income tax
91
1 715
In 2023, Group entities paid income tax in the amount of PLN 1 646 million (in 2022: PLN 1 696 million) to the appropriate
tax offices.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
50
The table below presents differences between income tax from profit before income tax for the Group and the income tax
which could be achieved if the Parent Entity’s tax rate was applied:
Reconciliation of effective tax rate
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
(Loss)/profit before income tax
(3 600)
6 489
Tax calculated using the Parent Entity’s rate
(2023: 19%, 2022: 19%)
( 684)
1 233
Effect of applying other tax rates abroad
( 88)
( 26)
Tax effect of non-taxable income
( 9)
( 6)
Tax effect of expenses not deductible for tax purposes,
including:
723
713
minerals extraction tax
664
600
Unrecognised deferred tax assets on deductible temporary
differences
76
2
Utilisation in the period of previously-unrecognised tax losses
( 45)
( 287)
Adjustments of current tax for prior periods
( 37)
31
Tax losses and tax credits in the period from which there was
no recognition of deferred tax assets
53
160
Deferred tax on eliminated interest on intra-Group loans
( 72)
( 81)
Income tax on controlled foreign companies
15
-
Other
159
( 24)
Income tax in profit or loss
91
1 715
In Poland, tax bodies are empowered to audit tax declarations for a period of five years, although during this period
companies may offset tax assets with tax liabilities being the income of the State Treasury (including due to current income
tax). In Canada, tax declarations may be audited for a period of three years without the right to offset assets with liabilities
due to current income tax.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
51
Note 5.1.1 Deferred income tax
Accounting policies
Significant estimates, assumptions and judgments
Deferred income tax is determined using tax rates and tax laws
that are expected to be applicable when the asset is realised
or the liability is settled based on tax rates and tax laws that
have been enacted or substantively enacted at the end of the
reporting period.
Deferred tax liabilities and deferred tax assets are recognised
for temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements, with the exception of temporary differences
arising from initial recognition of assets or liabilities in
transactions other than business combinations, which do not
have an impact either on profit/(loss) before tax or on the
taxable profit/(tax loss) at the moment they are concluded, and
at the date of the transaction does not result in the occurrence
of equal amounts of taxable and deductible temporary
differences.
Deferred tax assets are recognised if it is probable that taxable
profit will be available against which the deductible temporary
differences and unused tax losses can be utilised.
Deferred tax assets and deferred tax liabilities are offset
if the company has a legally enforceable right to set off current
tax assets and current tax liabilities, and if the deferred tax
assets and deferred tax liabilities relate to income taxes levied
on a given entity by the same tax authority.
The assessment of probability of realising deferred tax
assets with future tax income is based on the budgets
of the companies of the Group. Companies of the
Group recognised deferred tax assets in their
accounting books to the extent that it is probable that
taxable profit will be available against which the
deductible temporary differences can be utilised.
Companies of the Group which historically have
generated losses, and whose financial projections
do not foresee the achievement of taxable profit
enabling the deduction of deductible temporary
differences, do not recognise deferred tax assets
in their accounting books.
from 1 January
2023 to 31
December 2023
from 1 January
2022 to 31
December 2022
Deferred net income tax at the beginning of the period, of
which:
(1 014)
( 458)
Deferred tax assets
137
185
Deferred tax liabilities
(1 151)
( 643)
Deferred income tax during the period:
466
( 533)
Recognised in profit or loss
569
( 315)
Recognised in other comprehensive income
( 103)
( 218)
Exchange differences from translation of balances of deferred
income tax of statements of operations with a functional
currency other than PLN
39
( 23)
Deferred net income tax at the end of the period, of which:
( 509)
(1 014)
Deferred tax assets
137
137
Deferred tax liabilities
( 646)
(1 151)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
52
Maturities of deferred tax assets and deferred tax liabilities were as follows:
Deferred tax assets
Deferred tax liabilities
As at
31 December
2023
As at
31 December
2022
As at
31 December
2023
As at
31 December 2022
Maturity over the 12 months
from the end of the reporting
period
42
31
( 615)
(1 238)
Maturity of up to 12 months from
the end of the reporting period
95
106
( 31)
87
Total
137
137
( 646)
(1 151)
Expiry dates of unused tax losses and tax credits, for which deferred tax assets were not recognised in individual countries,
are presented in the following table:
As at
31 December 2023
As at
31 December 2022
Unused tax
losses
Expiry
date
Unused tax
credits
Expiry date
Unused tax
losses
Expiry date
Unused
tax credits
Expiry date
Luxembourg
-
-
-
-
158
indefinite
-
-
325
2037
-
-
520
2036-2037
-
-
Chile
97
Indefinite
-
-
91
indefinite
-
-
Canada
1 663
2043
53
2039
1 602
2026-2042
60
2030-2039
Other
5
2024-2028
-
-
16
2025
-
-
Total
2 090
53
2 387
60
As at 31 December 2023, the Group did not recognise a deferred tax asset on deductible temporary differences in the
amount of PLN 556 million (as at 31 December 2022: PLN 660 million) because there is low possibility that they will be
reversed in the foreseeable future and that taxable income, on which it could be recognised, will be achieved.
As at 31 December 2023, at the level of the consolidated financial statements, there was no recognition of deferred tax
liabilities on taxable temporary differences in the amount of PLN 1 273 million (as at 31 December 2022: PLN 1 076 million)
related to investments in subsidiaries and shares in joint ventures, as the conditions stipulated in IAS 12.39 were met., i.e.
the Parent Entity is able to control the dates of reversal of these differences and it is probable that they will not reverse in
the foreseeable future.
The following tables present deferred income tax assets and liabilities before their compensation at the level of individual
companies of the Group.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
53
Deferred tax assets (deferred tax assets prior to offsetting with deferred tax liabilities at the level of individual companies of the Group)
As at
31 December
2021
Credited/(Charged)
As at
31 December
2022
Credited/(Charged)
profit or loss
other
comprehensive
income
exchange
differences from
translation of
statements of
operations with a
functional
currency other
than PLN
changes due
to loss of
control of
subsidiaries
profit or loss
other
comprehensive
income
exchange
differences from
translation of
statements of
operations with a
functional
currency other
than PLN
As at
31 December
2023
Provision for decommissioning of mines and other
technological facilities
191
1
-
2
-
194
17
-
( 2)
209
Measurement of forward transactions other than hedging
instruments
71
( 27)
-
-
-
44
1
-
-
45
Difference between the depreciation rates of property, plant
and equipment for accounting and tax purposes
88
7
-
-
-
95
141
-
-
236
Future employee benefits
465
-
80
-
-
545
33
59
-
637
Equity instruments measured at fair value
104
-
19
-
-
123
1
( 56)
-
68
Lease liabilities
75
19
-
-
-
94
6
-
100
Accrued and unpaid interest on borrowings
235
45
-
17
-
297
44
-
( 32)
309
Recognition/reversal of impairment losses on assets
58
( 17)
-
-
( 1)
40
167
-
-
207
Short-term accruals for remuneration
113
12
-
-
-
125
( 30)
-
-
95
Re-measurement of hedging instruments
305
-
( 292)
-
-
13
-
( 3)
-
10
Liabilities related to fixed fee due to setting mining usufruct
35
-
-
-
-
35
3
-
-
38
Employee benefits (holidays)
13
-
-
-
-
13
5
-
-
18
Unpaid remuneration with surcharges
24
3
-
-
-
27
( 25)
-
-
2
Other
214
( 11)
-
-
( 4)
199
9
-
( 3)
205
Total
1 991
32
( 193)
19
( 5)
1 844
372
-
( 37)
2 179
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
54
Deferred tax liabilities (deferred tax liabilities prior to offsetting with deferred tax assets at the level of individual companies of the Group)
As at
31
December
2021
(Credited)/Charged
As at
31 December
2022
(Credited)/Charged
profit or loss
other
comprehensive
income
exchange
differences
from
translation of
statements of
operations with
a functional
currency other
than PLN
changes due
to loss of
control of
subsidiaries
profit or loss
other
comprehensive
income
exchange
differences
from
translation of
statements of
operations with
a functional
currency other
than PLN
As at
31 December
2023
Measurement of forward transactions other than
hedging instruments
50
( 9)
-
-
-
41
6
-
-
47
Difference between the depreciation rates for
accounting and tax purposes, including:
1 659
159
-
26
( 4)
1 840
( 418)
-
( 36)
1 386
related to depreciation of right-to-use assets
71
18
-
-
-
89
( 13)
-
-
76
Accrued and unpaid interest on loans
504
119
-
20
-
643
158
-
( 42)
759
Re-measurement of hedging instruments
-
-
25
-
-
25
-
103
-
128
Equity instruments measured at fair value
91
( 7)
-
-
-
84
29
-
-
113
Other
145
85
-
( 4)
( 1)
225
28
-
2
255
Total
2 449
347
25
42
( 5)
2 858
( 197)
103
( 76)
2 688
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
55
Note 5.2 Other taxes and charges
from
1 January 2023
to
31 December
2023
from
1 January 2022
to
31 December
2022
Basis for
calculating tax
Tax rate
from
1 January 2023
to
31 December
2023
from
1 January 2022
to
31 December
2022
Minerals
extraction
tax, of
which:
3 496
3 046
tax rate calculated
for every reporting
period*
3 405
2 951
tax
recognised
in cost of
sold
products
- copper
2 946
2 650
Amount of
copper in
produced
concentrate,
expressed in
tonnes
- silver
550
396
Amount of
silver in
produced
concentrate,
expressed in
kilograms
91
95
tax
recognised
in
inventories
* In accordance with conditions specified by the Act dated 2 March 2012 on the minerals extraction tax, the amount of tax depends on the amount
of copper and silver in concentrate as well as the tax rates. Tax rates are set separately for copper (Cu) and silver (Ag) on the basis of formulas
specified in the Act and depend on average prices of these metals (stock quotations from LME/LBMA) as well as the USD exchange rate. The increase
in tax rate in 2023 was mainly caused by the return to the calculation method used to determine the tax rate prior to the decrease in tax rates
introduced by the Act, which temporarily in the period from January to November 2022, decreased the tax rates by approx. 30%. Currently, the
indicator which is used to multiply the tax rate for copper and silver once again amounts to 0.85 (and in the period from January to November 2022
it amounted to 0.6).
The minerals extraction tax paid by the Parent Entity is calculated from the amount of copper and silver in produced
concentrate and depends on the stock prices of these metals as well as on the USD/PLN exchange rate. The tax is accounted
for under manufacturing costs of basic products and is not deductible for corporate income tax purposes.
Other taxes and charges, with a breakdown by geographical location, were as follows:
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Poland
803
693
Real estate tax
293
268
Royalties
127
122
Excise tax
7
6
Environmental fees
96
16
Costs of redemption of CO
2
emission allowances
190
199
Contributions to the State Fund for the Rehabilitation of
the Disabled People (PFRON)
34
29
Other taxes and charges
56
53
Other countries
78
113
Total
881
806
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
56
Note 5.3 Tax assets and liabilities
Accounting policies
Tax assets comprise current income tax assets and the settlement related to VAT.
Assets not representing financial assets are initially recognised at nominal value and are measured at the end
of the reporting period at the amount due.
Tax liabilities comprise the Group’s liabilities towards the tax office arising from the corporate income tax, including due
to the withholding tax, personal income tax and liabilities due to the minerals extraction tax and the excise tax.
Liabilities not representing financial liabilities are measured at the amount due.
As at
31 December 2023
As at
31 December 2022
Current corporate income tax assets
558
39
Assets due to other taxes
427
328
Tax assets
985
367
As at
31 December 2023
As at
31 December 2022
Current corporate income tax liabilities
-
612
Liabilities due to other taxes
611
621
Tax liabilities
611
1 233
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
57
Part 6 – Involvement in joint ventures
Accounting policies
The item “involvement in joint ventures” comprises investments in joint ventures accounted for using the equity method
and loans granted to joint ventures.
The Group classifies as investments accounted for using the equity method interests in joint ventures which are joint
contractual arrangements, in which the parties sharing control have the right to the net assets of a given entity. Joint
control occurs when decisions on the relevant activities of joint ventures require the unanimous consent of the parties
sharing control.
Investments are initially recognised at cost. The Group’s share in the profit or loss of entities accounted for using the
equity method (assessed while taking into account the impact of measurements to fair value at the investment’s
acquisition date) from the acquisition date is recognised in profit or loss, while its share in changes of accumulated other
comprehensive income from the acquisition date is recognised in the relevant item of accumulated comprehensive
income.
Unrealised gains and losses on transactions between the investor and the joint venture are eliminated in an amount
proportional to the investor’s share in these profits/(losses), and correspond with the carrying amount of the Group’s
share in this unit. If, at the end of the reporting period, the Group’s share in the unrealised gains on transactions between
the Group and the joint venture exceeds the carrying amount of the investment in this unit, the Group’s share in these
gains is eliminated to the level of the carrying amount of the Group’s interest in this unit. Elimination of unrealised gains,
proportionally to the Group’s share, unsettled in the period in which the transaction occurred, is performed in
subsequent reporting period at the moment the carrying amount of the Group’s interest in this unit exceeds zero.
If there are any indications of a possibility of impairment, an investment is tested for impairment by calculating the
recoverable amount.
Significant estimates, assumptions and judgments
Joint control
The Group classifies Sierra Gorda S.C.M. with its head office in Chile as a joint venture under IFRS 11, in which KGHM
INTERNATIONAL LTD.’s share equals 55%. Classification of Sierra Gorda S.C.M. as a joint venture, despite the 55% share
of the Group, was made based on analysis of the terms of the agreements between the parties and contractual
stipulations which indicated joint control. Pursuant to the terms of the agreements, all relevant activities of Sierra Gorda
S.C.M. require the unanimous consent of both owners. The Group and other owners have three members each in the
appointed Owners Council.
The Owners Council makes strategic decisions and is responsible for overseeing their execution. Moreover, it approves
the appointment of senior management. In the reporting period, there were no changes to provisions that were
the basis of classifying the investment as a joint venture.
Pursuant to the Group’s judgment, loans granted to the joint venture Sierra Gorda S.C.M. do not meet the criteria
of recognition as net investments in a joint venture, because the loans’ settlement is planned and probable
in the foreseeable future.
Note 6.1 Joint ventures accounted for using the equity method
During the comparable period, a change in partnership with the KGHM Polska Miedź S.A. Group in the joint venture Sierra
Gorda S.C.M. was made. On 22 February 2022, the sale of a 45% share in Sierra Gorda S.C.M. by Sumitomo Metal Mining
Co. Ltd. and Sumitomo Corporation to South32 Limited, an Australian mining group with its head office in Perth, was
concluded. The transaction was carried out on the basis of sales agreements entered into on 14 October 2021.
The new partner of the Group is a globally diversified mining and metallurgical company with production plants in Australia,
South Africa and South America. The company produces among others aluminium, metallurgical coal, manganese, nickel,
silver, lead and zinc.
As at 31 December 2023, none of the agreements regulating the cooperation between the JV partners in the venture Sierra
Gorda S.C.M. have been modified. Sierra Gorda S.C.M. had an off-take agreement signed with the companies Sumitomo
Metal Mining Co., Ltd. and Sumitomo Corporation, pursuant to which they had the right to off-take 50% of the copper
concentrate. The change in the partner in the joint venture did not have an impact on the conditions of the off-take
agreement.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
58
Value of the investment in the consolidated statement of
financial position
2023
2022
As at 1 January
-
-
Share of profit for the reporting period
68
239
Settlement of the Group’s share of unsettled losses from prior years
(accumulated comprehensive losses)
( 120)
( 183)
Exchange differences from the translation of statements of operations
with a functional currency other than PLN
52
( 56)
As at 31 December
-
-
from
1 January 2023
to
31 December 2023
from
1 January 2022
to
31 December 2022
The Group’s share (55%) of profit for the reporting period of Sierra
Gorda S.C.M., recognised in the valuation of the joint venture
68
239
Unrecognised share of the Group of the losses of Sierra Gorda
S.C.M.
2023
2022
As at 1 January
(1 174)
(1 283)
Settlement of the Group’s share of unsettled losses from prior years
(accumulated comprehensive losses)
120
183
Unrecognised adjustment due to unrealised gains on a transaction
between the Group and the joint venture (sale of the Oxide project)
-
( 74)
As at 31 December
(1 054)
(1 174)
As at 31 December 2023, the KGHM Polska Miedź S.A. Group’s share of the unsettled accumulated losses of Sierra Gorda
S.C.M. amounted to PLN 1 054 million (USD 342 million), as at 31 December 2022: PLN 1 174 million (USD 362 million).
The Group stopped recognising its share of losses of Sierra Gorda S.C.M. at the moment the value of this share exceeded
the carrying amount of the interest in the investment in Sierra Gorda S.C.M. Recognition of the Group’s share of losses of
Sierra Gorda S.C.M. caused the carrying amount of shares in Sierra Gorda S.C.M. to be equal to PLN 0. After reducing the
share to zero, the Group performed an analysis as to whether there is a legal or customary obligation to pay on Sierra
Gorda S.C.M.’s behalf, which would result in an obligation of the Group to recognise a liability for this reason. On the basis
of conducted analyses, the Group does not identify the existence of a legal or customary obligation to pay
on Sierra Gorda S.C.M.’s behalf, which is described in IAS 28.39.
Moreover, the Group analysed the terms of the guarantee granted to Sierra Gorda S.C.M. to secure repayment of an
instalment of the credit facility, which meets the definition of a financial guarantee pursuant to IFRS 9. Details on the
guarantees granted to Sierra Gorda S.C.M. are described in Note 8.6.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
59
Condensed financial data of Sierra Gorda S.C.M. is presented in the table below
As at
31 December 2023
As at
31 December 2022
Non-current assets
20 752
22 052
Current assets, including:
2 151
2 608
Cash and cash equivalents
609
377
Non-current liabilities, including:
669
23 751
Borrowings and leases
525
2 242
Liabilities due to loans granted by jointly-controlling entities
-
20 891
Current liabilities, including:
22 795
1 689
Borrowings and leases
1 667
63
Liabilities due to loans granted by jointly-controlling entities
19 504
63
Carrying amount of net assets (incorporating the fair value
measurement from the date of obtaining joint control)
( 561)
( 780)
The Group’s share in net assets (55%)
( 309)
( 429)
Total unrecognised accumulated share of losses of Sierra Gorda
S.C.M. (accumulated comprehensive losses)
1 054
1 174
Balance of impairment loss on interest in Sierra Gorda S.C.M.
( 671)
( 671)
Unrecognised adjustment due to unrealised gains on a
transaction between the Group and the joint venture (sale of the
Oxide project)
( 74)
( 74)
Value of the investment in the consolidated statement of
financial position
-
-
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Revenues from contracts with customers
6 035
7 225
Depreciation/amortisation
(1 400)
(1 704)
Reversal of an impairment loss on property, plant and
equipment
399
-
Interest costs
(1 391)
(1 440)
Other incomes/(costs)
(3 247)
(3 325)
Profit before income tax
396
756
Income tax
( 273)
( 321)
Profit for the period
123
435
Exchange differences from the translation of Sierra Gorda S.C.M.’s
net assets to the PLN presentation currency
96
( 103)
Total comprehensive income
219
332
Other information on the Group’s involvement in the joint venture Sierra Gorda S.C.M.
As at
31 December
2023
As at
31 December
2022
Group’s share in commitments (investment and operating)
7 758
7 153
Group’s share in the total amount of future lease gross
payments due to lease agreements for mining equipment
480
459
Note 8.6
Guarantees granted by the Group
866
969
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
60
Note 6.2 Loans granted to a joint venture (Sierra Gorda S.C.M.)
Accounting policies
Significant estimates, assumptions and judgments
Loans granted to Sierra Gorda S.C.M. were
classified as credit-impaired financial assets
due to the high credit risk at the moment of initial
recognition (POCI). POCI loans are measured
at amortised cost using the effective interest rate,
adjusted by the credit risk using the scenario
analysis and available free cash of Sierra Gorda
S.C.M.
The terms of repayment of loans granted to finance operations
abroad, including planned repayment dates, were set in individual
agreements. Pursuant to the terms of the agreement, the principal
amount and interest are paid on demand, but not later than 15
December 2024. Since the expected repayment of the loan was not
made in the period of 12 months from the end of the reporting
period, and taking into account that every repayment requires
consent from both partners in the joint venture and there no such
consent was expressed at the balance sheet date and at the date
these consolidated financial statements were signed, the Group
presents the balance of the loan as a long-term receivable. Due to the
implementation of IFRS 9 as at 1 January 2018, the expected,
undiscounted credit loss at the moment of initial recognition was
estimated to amount to PLN 6 105 million (USD 1 754 million per the
3.4813 USD/PLN exchange rate of NBP dated 29 December 2017). As
at 31 December 2022, the above-mentioned amount has been
reversed in total. As at 31 December 2023, there are no expected
credit losses at the moment of the initial recognition.
The repayments of loans by Sierra Gorda S.C.M. depend on that
company’s financial standing. In 2022, there were repayments in the
total amount of USD 193 million (PLN 789 million). Further payments
were made in 2023 in the total amount of USD 39 million
(PLN 163 million). Due to the fact that settling the loan is planned and
probable in the foreseeable future, the loan is not a net investment
under IAS 21.15.
Pursuant to the requirements of IFRS 9.5.5.17, the Group performed
impairment testing of the loan. To estimate the expected credit
losses, scenario analysis (IFRS 9.5.5.18) was used, comprising the
Group’s assumptions on the repayment of the loan granted. The
scenario analysis was based on cash flows of Sierra Gorda S.C.M.,
estimated on the basis of current market paths of commodities price
forecasts, which were subsequently discounted using the effective
interest rate adjusted by the credit risk, determined at the initial
recognition of the loan pursuant to IFRS 9.B5.5.45 at the level of
6.42%.
Other important assumptions used in the measurement of the loan
concern the following:
• the probability of realisation of individual measurement
scenarios,
• the level of production,
• the level of costs,
• the level of capital expenditures,
• the external financing of Sierra Gorda S.C.M.,
• the form and level of financing of Sierra Gorda S.C.M. by the
owners,
• taxation at the level of Sierra Gorda S.C.M.,
• the distribution of cash.
Future realisation, or not, of assumptions will depend on many
macroeconomic, operational and financial factors, as well as on the
agreements made between the JV partners (sensitivity analysis of the
carrying amount of the loan is presented in Note 7.5.2.4).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
61
2023
2022
As at 1 January
9 603
8 314
Repayment of loans (principal and interest)
( 163)
( 789)
Accrued interest
597
582
Note 4.4
Gain due to the reversal of allowances for impairment
on loans granted to a joint venture
101
873
Exchange differences
(1 042)
623
As at 31 December
9 096
9 603
The loan granted to Sierra Gorda S.C.M. has a fixed interest rate of 8%.
As at 31 December 2023, the Group estimated the expected cash flows on repayment of receivables due to loans granted
to Sierra Gorda S.C.M., as a result of which, pursuant to IFRS 9.5.5.14, a gain on reversal of an allowance for impairment
was recognised in the amount of PLN 101 million (USD 26 million). In the comparable period, an allowance for impairment
was reversed in the amount of PLN 873 million.
Assumptions adopted for the estimation of cash flows of Sierra Gorda S.C.M. (commodity prices and other key assumptions)
are presented below:
Basic macroeconomic assumptions adopted for cash flow estimation – price of metals
Price paths were adopted on the basis of a decision made by the Market Risk Committee of KGHM Polska Miedź S.A.,
which took into account current market forecasts:
Period
2024
2025
2026
2027
LT
Copper price [USD/t]
8 500
8 700
9 000
9 200
8 250
Gold price [USD/oz]
1 900
1 800
1 650
1 600
1 600
Other key assumptions used for estimation of cash flows
Mine life / forecast period
24
Level of copper production during mine life (kt)
3 732
Level of molybdenum production during mine life (mn lbs)
233
Level of gold production during mine life (koz)
1 043
Average operating margin during mine life
43.1%
Applied discount rate after taxation
(used to calculate the fair value for disclosure purposes in Part 7)
9.13%
Capital expenditures to be incurred during mine life (USD million)
1 708
Capitalised stripping costs during mine life (USD million)
4 102
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
62
PART 7 – Financial instruments and financial risk management
Note 7.1 Financial Instruments
As at 31 December 2023
As at 31 December 2022
Financial assets
At fair value
through other
comprehensive
income
At fair
value
through
profit or
loss
At
amortised
cost
Hedging
instruments
Total
At fair value
through other
comprehensive
income
At fair
value
through
profit or
loss
At
amortised
cost
Hedging
instruments
Total
Non-current
829
114
9 571
195
10 709
521
90
10 072
709
11 392
Loans granted to a joint venture
-
-
9 096
-
9 096
-
-
9 603
-
9 603
Derivatives
-
38
-
195
233
-
5
-
709
714
Other financial instruments measured at
fair value
829
76
-
-
905
521
85
-
-
606
Other financial instruments measured at
amortised cost
-
-
475
-
475
-
-
469
-
469
Current
-
919
2 475
323
3 717
-
829
1 926
755
3 510
Trade receivables
-
414
518
-
932
-
751
426
-
1 177
Derivatives
-
437
-
323
760
-
41
-
755
796
Cash and cash equivalents
-
-
1 729
-
1 729
-
-
1 200
-
1 200
Other financial assets
-
68
228
-
296
-
37
300
-
337
Total
829
1 033
12 046
518
14 426
521
919
11 998
1 464
14 902
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
63
As at 31 December 2023
As at 31 December 2022
Financial liabilities
At fair value
through profit
or loss
At amortised
cost
Hedging
instruments
Total
At fair value
through profit
or loss
At amortised
cost
Hedging
instruments
Total
Non-current
38
4 991
164
5 193
19
5 460
700
6 179
Borrowings, leases and debt securities
-
4 761
-
4 761
-
5 220
-
5 220
Derivatives
38
-
164
202
19
-
700
719
Other financial liabilities
-
230
-
230
-
240
-
240
Current
480
7 433
26
7 939
188
4 440
280
4 908
Borrowings, leases and debt securities
-
964
-
964
-
1 223
-
1 223
Derivatives
473
-
26
499
154
-
280
434
Trade payables
3 167
-
3 167
-
3 076
-
3 076
Similar payables – reverse factoring
-
3 021
-
3 021
-
18
-
18
Other financial liabilities
7
281
-
288
34
123
-
157
Total
518
12 424
190
13 132
207
9 900
980
11 087
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
64
Gains/(losses) on financial instruments recognised in profit/(loss) for the period
from 1 January 2023
to 31 December 2023
Financial assets/liabilities
measured at fair value through
profit or loss
Financial assets
measured at
amortised cost
Financial liabilities
measured at
amortised cost
Hedging
instruments
Total
Note 4.2
Note 6.2
Interest income
-
653
-
-
653
Note 6.2
Gain due to the reversal of allowances for impairment of loans
granted to a joint venture
-
101
-
-
101
Note 4.3
Interest income/(costs)
-
-
( 76)
( 76)
Note 4.2
Foreign exchange gains/(losses) on instruments other than
borrowings
( 384)
(1 071)
41
-
(1 414)
Note 4.3
Foreign exchange gains on borrowings
-
-
356
-
356
Note 4.4
Impairment losses
-
( 4)
-
-
( 4)
Note 7.2
Revenues from contracts with customers
-
-
-
635
635
Note 4.2
Note 4.3
Gains on measurement and realisation of derivatives
540
-
-
-
540
Note 4.2
Note 4.3
Losses on measurement and realisation of derivatives
( 467)
-
-
( 350)
( 817)
Note 4.3
Fees and charges on bank loans drawn
-
-
( 26)
-
( 26)
Note 4.2
Fair value losses on financial receivables
( 104)
-
-
-
( 104)
Other gains
-
6
-
-
6
Total net gain/(loss)
( 415)
( 315)
295
285
( 150)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
65
from 1 January 2022
to 31 December 2022
Financial assets/liabilities
measured at fair value through
profit or loss
Financial assets
measured at
amortised cost
Financial liabilities
measured at
amortised cost
Hedging
instruments
Total
Note 4.2
Note 6.2
Interest income
-
636
-
-
636
Note 6.2
Gain due to the reversal of allowances for impairment of loans
granted to a joint venture
-
873
-
-
873
Note 4.3
Interest income/(costs)
-
-
( 60)
60
-
Note 4.2
Foreign exchange gains/(losses) on instruments other than
borrowings
233
767
( 51)
-
949
Note 4.3
Foreign exchange losses on borrowings
-
-
( 179)
-
( 179)
Note 4.4
Reversal of impairment losses
-
5
-
-
5
Note 4.4
Impairment losses
-
( 5)
-
-
( 5)
Note 7.2
Revenues from contracts with customers
-
-
-
( 182)
( 182)
Note 4.2
Note 4.3
Gains on measurement and realisation of derivatives
400
-
-
-
400
Note 4.2
Note 4.3
Losses on measurement and realisation of derivatives
( 329)
-
-
( 310)
( 639)
Note 4.3
Fees and charges on bank loans drawn
-
-
( 29)
-
( 29)
Note 4.2
Fair value losses on financial receivables
( 58)
-
-
-
( 58)
Other gains/(losses)
-
2
( 2)
-
-
Total net gain/(loss)
246
2 278
( 321)
( 432)
1 771
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
66
The fair value hierarchy of financial instruments
As at 31 December 2023
As at 31 December 2022
fair value
carrying
amount
fair value
carrying
amount
Classes of financial instruments
level 1
level 2
level 3
level 1
level 2
level 3
Loans granted
-
22
7 778
9 118
-
20
7 787
9 623
Listed shares
703
-
-
703
422
-
-
422
Unquoted shares
-
126
-
126
-
99
-
99
Trade receivables
-
414
-
414
-
751
-
751
Derivatives, of which:
-
292
-
292
-
357
-
357
Assets
-
993
-
993
-
1 510
-
1 510
Liabilities
-
( 701)
-
( 701)
-
(1 153)
-
(1 153)
Received long-term bank and other loans
-
(2 486)
-
(2 486)
-
(2 560)
-
(2 560)
Long-term debt securities
(1 627)
-
-
(1 600)
(1 952)
-
-
(2 000)
Other financial assets
-
48
74
122
-
37
65
102
Other financial liabilities
-
( 7)
-
( 7)
-
( 34)
-
( 34)
The Group does not disclose the fair value of financial instruments measured at amortised cost (except for loans granted, long-term bank and other loans received and long-term debt securities) in
the statement of financial position, because it makes use of the exemption arising from IFRS 7.29. (Disclosure of information on fair value is not required when the carrying amount is approximate to
the fair value).
There was no transfer in the Group of financial instruments between individual levels of the fair value hierarchy in the current reporting period.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
67
Methods and measurement techniques used by the Group in determining fair values of each class of financial
assets or financial liabilities.
Level 1
Listed shares
Shares are measured based on quotations from the Warsaw Stock Exchange and the TSX Venture Exchange in Toronto.
Long-term debt securities
Long-term debt securities are measured based on quotations from the Catalyst Market of the Warsaw Stock Exchange.
Level 2
Unquoted shares
Unquoted shares are measured using the adjusted net assets. Observable input data other than the ones from the active
market were used in the measurement (e.g. transaction prices of real estate similar to the one subjected
to measurement, market interest rates of State Treasury bonds and term deposits in financial institutions, and the risk-free
discount rate published by the European Insurance and Occupational Pensions Authority).
Trade receivables
Receivables arising from the realisation of sales under contracts which are finally settled using future prices were measured
using forward prices, depending on the period/month of contractual quoting. Forward prices are from the Reuters system.
For trade receivables transferred to non-recourse factoring, a fair value is assumed at the level of the amount of the trade
receivables transferred to the factor (nominal value from the invoice) less interest, which are the factor’s compensation.
Due to the short term between the transfer of receivables to the factor and their payment, fair value is not adjusted by the
credit risk of the factor and the impact of time lapse.
Loans granted
This item comprises loans measured at fair value, the fair value of which was estimated on the basis of contractual cash
flows (per the contract) using the model of discounted cash flows, including the borrower’s credit risk.
Other financial assets/liabilities
Receivables/payables due to the settlement of derivatives, whose date of payment falls two working days after the end
of the reporting period, were recognised in this item. These instruments were measured at fair value set per
the reference price applied in the settlement of these transactions.
Currency and currency-interest derivatives
In the case of derivatives on the currency market and currency-interest transactions (CIRS), the forward prices from the
maturity dates of individual transactions were used to determine their fair value. The forward price for currency exchange
rates was calculated on the basis of fixing and appropriate interest rates. Interest rates for currencies and the volatility
ratios for exchange rates are taken from the Reuters system. The standard Garman-Kohlhagen model is used to measure
European options on currency markets.
Metals derivatives
In the case of derivatives on the commodity market, forward prices from the maturity dates of individual transactions were
used to determine their fair value. In the case of copper, official closing prices from the London Metal Exchange were used,
and with respect to silver and gold - the fixing price set by the London Bullion Market Association. Volatility ratios and
forward prices for measurement of derivatives at the end of the reporting period were obtained from
the Reuters system. Levy’s approximation to the Black-Scholes model was used for Asian options pricing on metals markets.
Long-term bank and other loans received
The fair value of bank and other loans is estimated by discounting the cash flows associated with these liabilities in
timeframes and under conditions arising from agreements, and by applying current rates.
Level 3
Loans granted
Loans granted measured at amortised cost in the statement of financial position are included in this category, because of
the use of unobservable assumptions in the fair value measurement. With respect to estimating the fair value of these
loans, a significant element of the estimation are the forecasted cash flows of Sierra Gorda S.C.M., which are unobservable
input data, and pursuant to IFRS 13 the fair value of these assets is classified to level 3 of the hierarchy. The discount rate
adopted to calculate the fair value of loans measured at amortised cost is 9.13% (as at 31 December 2022: 9.75%).
Detailed disclosures on the assumptions adopted for the measurement of loans were presented in Note 6.2, while the
sensitivity of the fair value classified to level 3 for loans granted – in Note 7.5.2.4. As at 31 December 2023, assumptions
adopted for forecasted cash flows which were applied to measurement of fair value are consistent with assumptions
adopted for the calculation of the carrying amount, while the difference between the carrying amount and the fair value
arises from the adoption of different discount rates.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
68
Other financial assets
This item includes receivables due to conditional payments associated with the agreement on the sale of a subsidiary S.C.M.
Franke, which were estimated based on a probabilistic model stipulated in the binding offer and including the discount of
payments for subsequent years.
Note 7.2 Derivatives
Accounting policies
Derivatives are classified as financial assets/liabilities measured at fair value through profit or loss, unless they have not
been designated as hedging instruments.
Purchases or sales of derivatives are recognised at the transaction date.
Derivatives not designated as hedges, defined as trade derivatives, are initially recognised at fair value and at the end
of the reporting period are measured at fair value, with recognition of the gains/losses on measurement in profit
or loss.
In the KGHM Polska Miedź S.A. Group, the Parent Entity applies hedge accounting for cash flows. Hedge accounting aims
at reducing volatility in the Parent Entity’s net result, arising from periodic changes in the measurement of transactions
hedging individual types of market risk to which the Parent Entity is exposed. Hedging instruments may be derivatives as
well as bank and other loans in foreign currencies.
The designated hedges relate to the future sales transactions forecasted as assumed in the Sales Plan for a given year.
These plans are prepared based on the production capacities for a given period. The Parent Entity estimates that
the probability that transactions included in the production plan will occur is very high, as from the historical point
of view sales were always realised at the levels assumed in Sales Plans. Future cash flows arising from interest on bonds
issued in PLN also represent a hedged position.
The Parent Entity may use natural currency risk hedging through the use of hedge accounting for bank and other loans
denominated in USD, and designates them as positions hedging foreign currency risk, which relates to future revenues
of the Parent Entity from sales of copper, silver and other metals, denominated in USD.
Gains and losses arising from changes in the fair value of the cash flow hedging instrument are recognised in other
comprehensive income, to the extent by which the change in fair value represents an effective hedge of the associated
hedged item. The Group recognises in other reserves from measurement of financial instruments a part of the change of
the hedging instrument arising from changes in the time value of the option, the forward element and currency margin.
The portion which is ineffective is recognised in profit or loss as other operating income or costs. Gains
or losses arising from the cash flow hedging instrument are recognised in profit or loss as a reclassification adjustment,
in the same period or periods in which the hedged item affects profit or loss.
Derivatives are no longer accounted for as hedging instruments when they expire, are sold, terminated or settled,
or when the goal of risk management for a given relation has changed.
The Parent Entity may designate a new hedging relationship for a given derivative, change the intended use of the
derivative, or designate it to hedge another type of risk. In such a case, for cash flow hedges, gains or losses which arose
in the periods in which the hedge was effective are retained in accumulated other comprehensive income until the hedged
item affects profit or loss.
If the hedge of a forecasted transaction ceases to function because it is probable that the forecasted transaction will not
occur, then the net gain or loss recognised in other comprehensive income is immediately transferred to profit or loss as
a reclassification adjustment.
If a hybrid contract has an underlying instrument which is not a financial asset, the derivative is separated from an
underlying instrument and is measured pursuant to the rules for derivatives only if (i) the economic characteristic and
risk of the embedded instrument are not strictly related to the character of the host contract and its risks, (ii) a separate
instrument, whose characteristics reflect the traits of the embedded derivative, would fulfil the conditions of the
derivatives, and (iii) the combined instrument is not classified to financial assets measured at fair value, whose results of
revaluation are recognised in other income or other operating costs in the reporting period. If an embedded derivative is
separated, the underlying instrument is measured pursuant to appropriate accounting principles. The Parent Entity
separates embedded derivatives in commodities transactions with settlement periods in the future, after the date of
recognising a purchase invoice in the books up to the date of final settlement of the transaction.
If a hybrid contract has an underlying instrument, which is a financial asset, the criteria for classification of financial assets
are applied to the whole contract.
Important estimates, assumptions and judgments
Assumptions and estimates adopted for the measurement of fair value of derivatives were presented in note 7.1, in the
item „Methods and measurement techniques used by the Group in determining fair values of each class of financial
assets or financial liabilities” and in tables in Note 7.2. below.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
69
Hedging derivatives – open items as at the end of the reporting period
As at 31 December 2023
As at 31 December 2022
Type of derivative
Financial assets
Financial liabilities
Total
Financial assets
Financial liabilities
Total
Non-current
Current
Non-current
Current
Non-current
Current
Non-current
Current
Hedging instruments (CFH), of which:
195
323
(164)
(26)
328
709
755
(700)
(280)
484
Derivatives – Metals (price of copper, silver)
Options – seagull* (copper)
-
-
-
-
-
60
440
(36)
(232)
232
Options – seagull* (silver)
-
-
-
-
-
5
50
(1)
(3)
51
Derivatives – Currency (USDPLN exchange rate)
Options – collar
-
-
-
-
-
328
262
(88)
(11)
491
Options – seagull*
-
-
-
-
-
1
3
(6)
(34)
(36)
Options – put spread
28
315
(2)
(7)
334
Derivatives – Currency-interest rate
Cross Currency Interest Rate Swap CIRS
167
8
(162)
(19)
(6)
315
-
(569)
-
(254)
Trade instruments, of which:
-
1
(38)
(473)
(510)
5
41
(14)
(118)
(86)
Derivatives – Metals (price of copper, silver, gold)
Sold put option (copper)
-
-
-
-
-
-
-
(13)
(49)
(62)
Purchased put option (copper)
-
-
-
-
-
-
1
-
-
1
Purchased call option (copper)
-
-
-
-
-
4
32
-
-
36
QP adjustment swap transactions (copper)
-
-
-
(5)
(5)
-
-
-
(10)
(10)
Sold put option (silver)
-
-
(1)
(1)
(2)
QP adjustment swap transactions (gold)
-
1
-
(6)
(5)
-
4
-
(14)
(10)
Derivatives – Currency
Sold put option (USDPLN)
-
-
(38)
(436)
(474)
-
-
-
(1)
(1)
Purchased call option (USDPLN)
-
-
-
-
-
1
4
-
-
5
Collars and forwards/swaps (EURPLN)
-
-
-
-
-
-
-
-
-
-
Embedded derivatives (price of copper, silver, gold)
Purchase contracts for metal-bearing materials
-
-
-
(26)
(26)
-
-
-
(43)
(43)
Instruments initially designated as hedging instruments excluded
from hedge accounting, of which:
38
436
-
-
474
-
-
(5)
(36)
(41)
Derivatives – Currency (USDPLN exchange rate)
Options – seagull
-
-
-
-
-
-
-
(1)
(4)
(5)
Options - collar
38
436
-
-
474
Derivatives – Metals (price of copper, silver)
Options – seagull (copper)
-
-
-
-
-
-
-
(4)
(32)
(36)
TOTAL OPEN DERIVATIVES
233
760
(202)
(499)
292
714
796
(719)
(434)
357
* Collar structures, i.e. purchased put options and sold call options were designated as hedging under seagull options structures (CFH – Cash Flow Hedging).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
70
The table below presents detailed data on derivative transactions designated as hedging, held by the Parent Entity as at 31
December 2023.
Open hedging derivatives
Notional
Average weighted
price /exchange
rate/interest rate
Maturity
- settlement
period
Period of profit/loss
impact**
currency [USD mn]
CIRS [PLN mn]
[USD/PLN]
[USD/PLN, fixed interest
rate for USD]
Type of derivative
from
to
from
to
Currency – put spread
660.00
3.60 - 4.48
Jan’24
- Dec’24
Jan’24
- Jan’25
Currency – interest rate – CIRS*
400
3.78 and 3.23%
June’24
June’24
Currency - interest rate – CIRS*
1 600
3.81 and 3.94%
June’29
June ‘29
- July ‘29
* Settlements of interest payments are made periodically, on a half-year basis, until the moment of the realisation of the transaction.
** Reclassification of profits or losses on a cash flow hedging instrument from other comprehensive income to the statement of profit or loss takes place in the reporting
period in which the hedged position impacts profit or loss (as an adjustment of a hedged position and to other operating income/costs for the settled hedging cost).
However, the recognition of the result on the settlement of the transaction takes place on the date of its settlement.
The table below presents detailed data on derivative transactions designated as hedging, held by the Parent Entity as at 31
December 2022.
Open hedging derivatives
Notional
Average weighted
price /exchange
rate/interest rate
Maturity
- settlement
period
Period of profit/loss
impact***
copper [t]
silver [mn ounces]
currency [USD mn]
CIRS [PLN mn]
[USD/t]
[USD/ounce]
[USD/PLN]
[USD/PLN, fixed interest
rate for USD]
Type of derivative
from
to
from
to
Copper – seagulls*
189 000
8 075 - 9 759
Jan‘23
- Dec‘23
Jan‘23
- Jan‘24
Silver – seagulls*
4.20
26.00 - 42.00
Jan‘23
- Dec‘23
Jan’23
- Jan‘24
Currency – collars
2 640
4.58 - 5.78
Jan‘23
- Dec’24
Jan’23
- Jan’25
Currency – seagulls*
315
3.94 - 4.54
Jan‘23
- Dec‘23
Jan‘23
- Jan‘24
Currency – interest rate – CIRS**
400
3.78 and 3.23%
June‘24
June ‘24
Currency - interest rate – CIRS**
1 600
3.81 and 3.94%
June‘29
June‘29
-July ‘29
* Collar structures, i.e. purchased put options and sold call options were designated as hedging under seagull options structures (CFH – Cash Flow
Hedging).
** Settlements of interest payments are made periodically, on a half-year basis, until the moment of the realisation of the transaction.
*** Reclassification of profits or losses on a cash flow hedging instrument from other comprehensive income to the statement of profit or loss takes
place in the reporting period in which the hedged position impacts profit or loss (as an adjustment of a hedged position and to other operating
income/costs for the settled hedging cost). However, the recognition of the result on the settlement of the transaction takes place on the date of its
settlement.
The impact of derivatives and hedging transactions on the items of the statement of profit or loss and on the statement of
other comprehensive income is presented below.
Statement of profit or loss
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Revenues from contracts with customers (reclassification adjustment)
635
(182)
Other operating income / (costs) (including the reclassification
adjustment):
(267)
(220)
realisation of derivatives
(281)
(213)
measurement of derivatives
14
(7)
Finance income / (costs) (reclassification adjustment):
(11)
41
realisation of derivatives
(11)
(19)
interest on borrowings
-
60
Impact of derivatives and hedging instruments
on profit or loss for the period (excluding the tax effect)
357
(361)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
71
Statement of other comprehensive income
Measurement of hedging transactions (effective portion)
944
1 239
Reclassification to revenues from contracts with customers due to
realisation of a hedged item
(635)
182
Reclassification to finance costs due to realisation of a hedged
item
-
(60)
Reclassification to non-current assets due to realisation of a
hedged item*
(102)
-
Reclassification to other operating costs due to realisation of a
hedged item (settlement of the hedging cost)
350
310
Impact of hedging transactions (excluding the tax effect)**
557
1 671
TOTAL COMPREHENSIVE INCOME
914
1 310
*Reclassification to non-current assets due to capitalisation of borrowing costs under the hedge accounting in the cost of non-current assets.
**Amounts of income tax corresponding to individual items of other comprehensive income are presented in Note 8.2.2.
Statement of financial position – non-current assets
As at
31 December 2023
As at
31 December 2022
Gain on settlement of an instrument hedging interest rate of bonds*
(102)
-
*Reclassification to non-current assets due to capitalisation of borrowing costs under the hedge accounting in the cost of non-current assets.
Note 7.3 Other financial instruments measured at fair value
Accounting policies
The item “Other financial instruments measured at fair value” mainly includes: shares (listed and unquoted) which were
not acquired for trading purposes, for which the option of measurement at fair value through other comprehensive
income was selected in order to limit the volatility of the result, and loans granted measured at fair value through profit
or loss, as they did not pass the contractual cash flow test (SPPI), because in the financing structure at the last stage of the
target recipient of funds, debt is changed into a share, and that is why they were obligatorily classified to this measurement
category.
Shares are initially recognised at fair value increased by transaction costs, and at the end of the reporting period they are
measured at fair value with recognition of gains/losses from measurement in other comprehensive income. The amounts
recognised in accumulated other comprehensive income are not transferred later to profit or loss, while accumulated
gains/losses on a given equity instrument are transferred within equity to retained earnings at the moment an equity
instrument ceases to be recognised. Dividends from such investments are recognised in profit or loss.
The translation of items expressed in a foreign currency is performed according to the accounting policies described
in Note 1.5.
Important estimates, assumptions and judgments
The fair value of unquoted shares is calculated using the adjusted net assets method. The application of this method
is due to the specific nature of the assets of companies whose shares are subject to measurement. Observable Input data
other than the ones from the active market were used in the measurement (e.g. transaction prices of real estate similar to
one subjected to measurement, market interest rates of State Treasury bonds and fixed-term deposits in financial
institutions, and the risk-free discount rate published by the European Insurance and Occupational Pensions Authority).
The fair value of listed shares is calculated based on the closing price as at the end of the reporting period.
The loan’s fair value is set at the present value of future cash flows, including any change in market risk and credit risk
factors during the loans’ life.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
72
As at
31 December 2023
As at
31 December 2022
Other financial instruments measured at fair value through other
comprehensive income
829
521
Shares of listed companies (Warsaw Stock Exchange
and TSX Venture Exchange), of which:
703
422
TAURON POLSKA ENERGIA S.A.
680
386
GRUPA AZOTY S.A.
19
32
Other listed shares
4
4
Unquoted shares
126
99
Other financial instruments measured at fair value through profit
or loss
76
85
Loans granted
22
20
Receivables due to conditional payments associated with the
agreement on the sale of a subsidiary S.C.M. Franke
54
65
Total other financial instruments measured at fair value
905
606
The measurement of listed shares is classified to level 1 of the fair value hierarchy (i.e. measurement is based on the prices
of these shares listed on an active market at the measurement date), while the measurement of unquoted shares is
classified to level 2 (i.e. measurement based on observable data, not deriving from an active market).
The measurement of loans granted is classified to level 2 of the fair value hierarchy.
In 2023 as well as in 2022, there were no dividends from companies in which the Group had shares classified as other
financial instruments measured at fair value.
In 2023 as well as in 2022, there were no transfers of accumulated gain or loss within equity in respect of companies in
which the Group holds shares classified as other financial instruments measured at fair value.
Due to investments in listed companies, the Group is exposed to price risk. Changes in the listed share prices of these
companies resulting from the current macroeconomic situation may have a significant impact on the level of other
comprehensive income and on the accumulated amount recognised in equity.
The following table presents the sensitivity analysis of listed companies’ shares to price changes.
As at
31 December
2023
Percentage change of share price
As at
31 December
2022
Percentage change of share price
13%
-13%
14%
-14%
Carrying
amount
Other
comprehensive
income
Other
comprehensive
income
Carrying
amount
Other
comprehensive
income
Other
comprehensive
income
Listed shares
703
91
(91)
422
60
(60)
Sensitivity analysis for significant types of market risk to which the Group is exposed presents the estimated impact
of potential changes in individual risk factors (at the end of reporting period) on profit or loss and other comprehensive
income.
Potential changes in share prices at the end of the reporting period were determined at the level of standard deviations
from the WIG20 and mWIG40 indices respectively for a period of 3 calendar years ended at the end of the reporting period.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
73
Note 7.4 Other financial instruments measured at amortised cost
Accounting policies
Important estimates, assumptions and judgements
The item other financial instruments measured at
amortised cost includes financial assets designated
to cover the costs of decommissioning mines (accounting
policies with respect to the obligation to decommission
mines are presented in Note 9.4) and other financial assets
not classified to other items.
Assets included, in accordance with IFRS 9, in the category
“measured at amortised cost”, are initially recognised
at fair value adjusted by transaction costs, which
can be directly attributed to the purchase of these assets
and measured at amortised cost at the end of the reporting
period using the effective interest rate method, reflecting
impairment.
Sensitivity analysis of the risk of changes in interest rates
of cash accumulated on a bank account of the Mine Closure
Fund and of investments in debt securities is presented in
Note 7.5.1.4.
As at
31 December 2023
As at
31 December 2022
Cash held in the Mine Closure Fund
439
406
Other non-current financial receivables
36
63
Note 7.1
Total
475
469
Financial assets designated for decommissioning mines and restoring tailings storage facilities are exposed to the credit
risk described in Note 7.5.2.5.
Details regarding revaluation of the provision for the decommissioning costs of mines and other technological facilities are
described in Note 9.4.
Note 7.5 Financial risk management
In the course of its business activities the Group is exposed to the following main financial risks:
• market risks:
o commodity risk,
o risk of changes in foreign exchange rates,
o risk of changes in interest rates,
o risk of changes in other merchandise, including energy and energy carriers,
o price risk related to investments in shares of listed companies (Note 7.3),
• credit risk, and
• liquidity risk (the process of financial liquidity management is described in Note 8).
The Group identifies and measures financial risk on an ongoing basis, and also takes actions aimed at minimising its impact
on the financial position.
The Parent Entity manages identified financial risk factors in a conscious and responsible manner, using the adopted
Market Risk Management Policy, the Purchase policy of electricity, property rights, guarantees of origin and gaseous fuels,
the Financial Liquidity Management Policy and the Credit Risk Management Policy. The process of financial risk
management in the Parent Entity is supported by the work of the Market Risk Committee, the Standing Committee, the
Financial Liquidity Committee and the Credit Risk Committee.
Note 7.5.1 Market risk
The market risk to which the Group is exposed to is understood as the possible occurrence of negative impact
on the Group's results arising from changes in the market prices of commodities, exchange rates, interest rates, and debt
securities, as well as the share prices of listed companies.
Note 7.5.1.1 Principles and techniques of market risk management
In market risk management (especially commodity and currency risk) the scale and profile of activities of the Parent Entity
and of mining companies of KGHM INTERNATIONAL LTD. is of the greatest significance and impact the results
of the KGHM Polska Miedź S.A. Group.
The Parent Entity actively manages market risk by taking actions and making decisions in this regard within the context
of the KGHM Polska Miedź S.A. Group’s global exposure as a whole.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
74
In accordance with the adopted policy, the goals of the market risk management process in the Group are as follows:
• limit volatility in the financial result;
• increase the probability of meeting budget targets;
• decrease the probability of losing financial liquidity;
• maintain good financial condition; and
• support the process of strategic decision making related to investing activities, including financing sources.
The objectives of market risk management should be considered as a whole, and their realisation is determined mainly by
the Group’s internal situation and market conditions.
The goals of market risk management at the Group level are achieved through their realisation in individual mining
companies of the Group, with the coordination of these activities at the Parent Entity’s level, in which key tasks related
to the process of market risk management in the Group were centralised (such as coordination of the identification
of sources of exposure to market risk, proposing hedging strategies, contacting financial institutions in order to sign,
confirm and settle derivative transactions, and calculating measurements to fair value).
One of the market risk management techniques in the Parent Entity are hedging strategies using derivatives. The natural
hedging is also used. The Parent Entity uses hedging transactions under the hedge accounting.
Taking into account the potential scope of their impact on the Group’s results, market risk factors were divided into the
following groups:
Group
Market risk
Approach to risk management
Note 7.2
Group I – factors
with the greatest
impact on
the Group’s total
exposure to market
risk
Copper price
A strategic approach is applied to this group, aimed at
systematically building up a hedging position comprising
production, costs and revenues from sales for subsequent
periods while taking into account the long-term cyclical nature of
various markets. A hedging position may be restructured before
it expires.
Note 7.2
Silver price
Note 7.2
USD/PLN exchange rate
Prices of energy and
energy carriers
Note 7.2
Group II – other
exposure to market
risk
Prices of other metals
and merchandise
From the Group’s point of view, this group is comprised of less
significant risks, although sometimes these risks are significant
from an individual entity’s point of view. Therefore, it is tactically
managed - on an ad-hoc basis, depending on the market
conditions.
Note 7.2
Other exchange rates
Note 7.2
Interest rates
In market risk management various approaches are applied for particular, identified exposure groups. The Parent Entity
considers the following factors when selecting hedging strategies or restructuring hedging positions: current and
forecasted market conditions, the internal situation of the Entity, the effective level and cost of hedging,
and the impact of the minerals extraction tax.
The Parent Entity applies an integrated approach to managing the market risk to which it is exposed. This means
a comprehensive approach to market risk, and not to each element individually. An example is the hedging transactions
on the currency market, which are closely related to contracts entered into on the metals market. The hedging of metals
sales prices determines the probability of achieving specified revenues from sales in USD, which represent a hedged
position for the strategy on the currency market.
The Parent Entity only executes those derivatives which it has the ability to evaluate internally, using standard pricing
models appropriate for a particular type of derivative, and which can be traded without significant loss of value with
a counterparty other than the one with whom the transaction was initially entered into. In the market valuation of a given
instrument, the Parent Entity uses information obtained from leading information services, banks, and brokers.
The Market Risk Management Policy in the Group permits the use of the following types of derivatives:
• swaps,
• forwards and futures,
• options, and
• structures combining the above instruments.
The instruments applied may be, therefore, either of standardised parameters (publicly traded instruments) or non-
standardised parameters (over-the-counter instruments). The primary instruments applied are cash flow hedging
instruments meeting the requirements for effectiveness as understood by hedge accounting. The effectiveness
of the financial hedging instruments applied by the Parent Entity in the reporting period is continually monitored and
assessed (details in Note 7.2 Derivatives - accounting policies).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
75
The economic relationship between a hedging instrument and a hedged position is based on the sensitivity of the value of
the position to the same market factors (metals prices, exchange rates or interest rates) and on matching appropriate key
parameters of the hedging instrument and the hedged position (volume/notional amount, maturity date).
The hedge ratio of the established hedging relationship is set at the amount ensuring the effectiveness of the relationship
and is consistent with the actual volume of the hedged position and the hedging instrument. Sources of potential
ineffectiveness of the relationship arise from a mismatch of the parameters of the hedging instrument and the hedged
position (e.g. the notional amount, maturity, base instrument, impact of credit risk). When structuring a hedging
transaction, the Parent Entity aims to ensure a maximal match between these parameters to minimise the sources
of ineffectiveness.
The Parent Entity quantifies its market risk exposure using a consistent and comprehensive measure. Market risk
management in the Group is supported by simulations (such as scenario analysis, stress-tests, backtests) and calculated
risk measures. The risk measures being used are mainly based on mathematical and statistical modelling, which uses
historical and current market data concerning risk factors and takes into consideration the current exposure to market
risk.
One of the measures used as an auxiliary tool in making decisions in the market risk management process in the Parent
Entity is EaR - Earnings at Risk. This measure indicates the lowest possible level of profit for the period for a selected level
of confidence (for example, with 95% confidence the profit for a given year will be not lower than…). The EaR methodology
enables the calculation of profit for the period incorporating the impact of changes in market prices of copper, silver and
foreign exchange rates in the context of budget plans. EBITDA-at-Risk ratio is calculated for both the KGHM INTERNATIONAL
LTD. Group and the JV Sierra Gorda S.C.M.
Due to the risk of production cutbacks (for example because of force majeure) or failure to achieve planned foreign
currency revenues, as well as purchases of metals contained in purchased materials, limits with respect to commitment in
derivatives have been set.
For the Parent Entity limits on metals and currency markets were set at:
• up to 85% of planned, monthly sales volumes of copper, silver and gold from own concentrates, while:
for copper and silver - up to 50% with respect to instruments which are obligations of the Parent Entity
(for financing the hedging strategy), and up to 85% with respect to instruments representing the rights of the
Parent Entity,
• up to 85% of planned, monthly revenues from the sale of products from own concentrates in USD
or of the monthly, contracted net currency cash flows in the case of other currencies. For purposes of setting the
limit, expenses for servicing the debt denominated in USD decrease the nominal amount of exposure
to be hedged.
With respect to the risk of changes in interest rates, the Parent Entity has set a limit of commitment in derivatives
of up to 100% of the debt’s nominal value in every interest period, as stipulated in the signed agreements.
For selected mining companies in the Group, limits were set for commitment in derivatives on the copper and currency
markets at the same levels as those functioning in the Parent Entity, while with respect to transactions on the nickel, silver
and gold markets the limits were set as up to 60% of planned, monthly sales volume from own concentrates.
These limits are in respect both of hedging transactions as well as of the instruments financing these transactions.
The maximum time horizon within which the Group decides to limit market risk is set in accordance with the technical and
economic planning process and amounts to 5 years, whereas in terms of interest rate risk, the time horizon reaches up to
the maturity date of the long-term financial liabilities of the Group.
Note 7.5.1.2 Commodity risk
The Parent Entity is exposed to the risk of changes in the prices of the metals it sells: copper, silver, gold and lead.
Furthermore, the KGHM INTERNATIONAL LTD. Group is exposed to the risk of changes in the prices of copper, gold, nickel,
molybdenum, platinum and palladium.
In the Parent Entity and the KGHM INTERNATIONAL LTD. Group, the price formulas used in physical delivery contracts are
mainly based on average monthly quotations from the London Metal Exchange for copper and other common metals and
from the London Bullion Market for precious metals. Within the commercial policy, the Parent Entity and KGHM
INTERNATIONAL LTD. set the price base for physical delivery contracts as the average price of the appropriate future
month.
The permanent and direct link between sales proceeds and metals prices, without similar relationships on the expenditures
side, results in a strategic exposure. In turn, operating exposure is a result of possible mismatches in the pricing of physical
contracts with respect to the Group’s benchmark profile, in particular in terms of the reference prices and the quotation
periods.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
76
On the metals market, the Group has a so-called long position, which means it has higher sales than purchases. The analysis
of the Group’s strategic exposure to market risk should be performed by deducting from the volume of metals sold the
amount of metal in purchased materials.
The Group’s strategic exposure to the risk of changes in the price of copper and silver in the years 2022-2023 is presented
in the table below.
from 1 January 2023 to 31 December 2023
from 1 January 2022 to 31 December 2022
Net
Sales
Purchase
Net
Sales
Purchase
Copper [t]
416 122
628 130
212 008
391 180
619 944
228 764
Silver [t]
1 343
1 361
18
1 322
1 347
25
The notional amount of copper price hedging strategies settled in 2023 represented approx. 32% (25% in 2022) of the total
sales of this metal realised by the Parent Entity (it represented approx. 50% of net sales
1
in 2023 and 42% in 2022).
The notional amount of silver price hedging strategies settled in 2023 represented approx. 10% of the total sales of this
metal realised by the Parent Entity (24% in 2022).
In 2023, pursuant to the Market Risk Management Policy, the Parent Entity monitored and analysed on an ongoing basis
the macroeconomic environment and the situation on financial markets, and also identified and measured market risk
related to changes in metals prices (testing the impact of market risk factors on the financial result, balance sheet and the
statement of cash flows). In 2023, no hedging transactions were entered into on the copper and silver markets. All derivative
transactions entered into in the previous periods as part of the strategic management of the Company against risk of
changes in metals prices were settled.
In 2023 QP adjustment swap transactions were entered into on the copper and gold markets with maturities of up to June
2024, as part of the management of a net trading position
2
.
As a result, as at 31 December 2023 the Parent Entity held open derivatives positions on metals market entered into solely
under strategic management of a net trading position (for 9.2 thousand tonnes of copper and 18.3 thousand ounces of
gold) with settlement period falling up to June 2024.
As at 31 December 2022, the Parent Entity held open derivatives positions on the copper market for 193.5 thousand tonnes
(including: 189 thousand tonnes under strategic management of market risk, while 4.3 thousand tonnes was entered into
under management of a net trading position) and for 4.2 million troy ounces of silver.
In 2022 and in 2023, neither KGHM INTERNATIONAL LTD. nor any of the mining companies implemented any forward
transactions on the commodity market.
As at 31 December 2023, the risk of changes in metals prices was also related to derivatives embedded in the purchase
contracts for metal-bearing materials entered into by the Parent Entity.
1
Copper sales less copper in purchased metal-bearing materials.
2
Applied in order to react to changes in contractual arrangements with customers, non-standard pricing terms as regards metals sales and the
purchase of copper-bearing materials.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
77
An analysis of the Group’s sensitivity to the risk of changes in copper, silver and gold prices in the years 2022-2023
Financial assets and liabilities
as at 31 December 2023
Value at
risk
Carrying
amount
31
December
2023
Change in COPPER prices [USD/t]
Change in GOLD prices [USD/ ounce]
10 102 (+21%)
6 579 (-21%)
2 391 (+16%)
1 738 (-16%)
profit or
loss
other
comprehen
sive
income
profit or
loss
other
comprehe
nsive
income
profit or loss
profit or loss
Derivatives (copper)
(5)
(5)
(28)
-
47
-
-
-
Derivatives (gold)
(5)
(5)
-
-
-
-
(19)
28
Embedded derivatives (copper, gold)
(26)
(26)
(78)
-
99
-
(24)
26
Impact on profit or loss
(106)
-
146
-
(43)
54
Impact on other comprehensive income
-
-
-
-
-
-
Financial assets and liabilities
as at 31 December 2022
Value at
risk
Carrying
amount
31
December
2022
Change in COPPER prices [USD/t]
Change in GOLD prices [USD/ounce]
Change in SILVER prices [USD/ounce]
10 293 (+23%)
6 463 (-23%)
2 107 (+15%)
1 524 (-16%)
31.69 (+32%)
17.06 (-29%)
profit or
loss
other
comprehen
sive
income
profit or
loss
other
comprehe
nsive
income
profit or loss
profit or loss
profit or
loss
other
comprehe
nsive
income
profit or
loss
other
comprehensi
ve income
Derivatives (copper)
161
161
(49)
(1 026)
17
935
-
-
-
-
-
-
Derivatives (silver)
50
50
-
-
-
-
-
-
2
(67)
(17)
106
Derivatives (gold)
(10)
(10)
-
-
-
-
(22)
29
-
-
-
-
Embedded derivatives (copper, silver, gold)
(43)
(43)
(164)
-
161
-
(24)
27
-
-
-
-
Impact on profit or loss
(213)
-
178
-
(46)
56
2
-
(17)
-
Impact on other comprehensive income
-
(1 026)
-
935
-
-
-
(67)
-
106
In order to determine the potential changes in metals prices for purposes of sensitivity analysis of commodity risk factors (copper, silver, gold), the mean reverting Schwarz model (the geometrical
Ornstein-Uhlenbeck process) was used.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
78
Note 7.5.1.3 Risk of changes in foreign exchange rates
Regarding the risk of changes in foreign exchange rates within the KGHM Polska Miedź S.A. Group, the following types
of exposures were identified:
• transaction exposure related to the volatility of cash flows in the base (functional) currency,
• exposure related to the volatility of selected items of the statement of financial position in the base (functional)
currency.
The transaction exposure to currency risk derives from cash flow-generating contracts, whose values expressed
in the base (functional) currency depend on future levels of exchange rates of the foreign currencies with respect to the
base (functional) currency. Cash flows exposed to currency risk may possess the following characteristics:
• denomination in the foreign currency – cash flows are settled in foreign currencies other than the functional
currency, and
• indexation in the foreign currency – cash flows may be settled in the base currency, but the price (i.e. of a metal)
is set in a different foreign currency.
The key source of exposure to currency risk in the Parent Entity’s business operations are the proceeds from sales
of products (with respect to metals prices, processing and producer margins).
The exposure to currency risk also derives from items in the consolidated statement of financial position denominated
in foreign currencies, which under the existing accounting regulations must be translated, upon settlement or periodic
valuation, including the translation of foreign operations statements, by applying the current exchange rate of the foreign
currencies versus the base (functional) currency. Changes in the carrying amounts of such items between valuation dates
result in the volatility of profit or loss for the period or of other comprehensive income.
Items in the consolidated statement of financial position which are exposed to currency risk include in particular:
• trade receivables and trade payables related to purchases and sales denominated in foreign currencies;
• financial receivables due to loans granted in foreign currencies;
• financial liabilities due to borrowings in foreign currencies;
• cash and cash equivalents in foreign currencies; and
• derivatives on metals market.
As for the currency market, the notional amount of settled transactions hedging revenues from metals sales amounted to
approx. 26% (in 2022: 20%) of the total revenues from sales of copper and silver realised by the Parent Entity in 2023.
In 2023, as part of the active management of an open hedging position, the Parent Entity restructured a position on the
currency market. Part of the collar options structures hedging revenues from sales in the period from July 2023 to
December 2024, in the total notional amount of USD 990 million (USD 55 million on a monthly basis), was closed, which led
to cash inflow due to option premiums of approx. PLN 533 million in the first half of 2023. The positive hedge result
accumulated in equity was partly recognised in the operating result for the second half of 2023 (total amount of PLN 171
million) and will be systematically recognised in the operating result for the subsequent months of 2024 (total amount of
PLN 345 million). Moreover, collar options structures hedging revenues from sales in 2024 in the notional amount of USD
660 million (USD 55 million on a monthly basis) were restructured by transforming them into put spread
3
structures, which
enabled full participation in potential increases in the USD/PLN exchange rate.
As a result, as at 31 December 2023 the Parent Entity held an open position on the currency market for the notional amount
of USD 660 million (USD 2 955 million as at 31 December 2022), and Cross Currency Interest Rate Swap (CIRS) transactions
for the notional amount of PLN 2 billion, hedging revenues from sales in the currency as well as the variable interest of
issued bonds.
The condensed table of open transactions in derivatives of the Parent Entity on the currency market as at 31 December
2023 is presented below (the hedged notional in the presented periods is allocated evenly on a monthly basis).
3
Put spread option structures were designated as hedging sales revenues.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
79
Hedging against USD/PLN currency risk – open derivatives as at 31 December 2023
The condensed table of open transactions in derivatives on the currency market as at 31 December 2022 is presented
below (the hedged notional in the presented periods is allocated evenly on a monthly basis).
Hedging against USD/PLN currency risk – open derivatives as at 31 December 2022
Hedging against currency-interest rate risk connected with the issue of bonds with a variable interest rate in PLN
– open derivatives as at 31 December 2023 and as at 31 December 2022
Instrument
Notional
Average interest rate
Average exchange rate
[PLN mn]
[fixed interest rate for USD]
[USD/PLN]
VI
2024
CIRS
400
3.23%
3.78
VI
2029
CIRS
1 600
3.94%
3.81
TOTAL
2 000
The table of open derivative transactions entered into by Polish companies on the currency market is not presented, due
to its immateriality for the Group.
As for managing currency risk, the Parent Entity applies natural hedging by borrowing in the currency in which it has
revenues. As at 31 December 2023, following their translation to PLN, the bank loans and the investment loans which were
drawn in USD amounted to PLN 2 737 million (as at 31 December 2022: PLN 3 435 million).
The currency structure of financial instruments exposed to currency risk (change in the USD/PLN, EUR/PLN and CAD/PLN
exchange rates) of the KGHM Polska Miedź S.A. Group and sensitivity analysis to the risk of changes in the exchange rates
are presented in the tables below. In order to determine the potential changes in the USD/PLN, EUR/PLN and CAD/PLN
exchange rates for sensitivity analysis purposes, the Black-Scholes model (the geometrical Brownian motion) was used.
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
Instrument/
option
sold put option
purchased put
option
sold call
option
hedge
limited to
exchange rate
hedging
participation
limited to
[USD mn]
[USD/PLN]
[USD/PLN]
[USD/PLN]
[PLN per USD 1]
[USD/PLN]
1st
half of
2024
put spread
330.00
3.60
4.48
-
(0.01)
4.47
2nd
half of
2024
put spread
330.00
3.60
4.48
-
0.01
4.49
TOTAL 2024
660.00
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
Instrument/
option
sold put option
purchased put
option
sold call option
hedge
limited to
exchange rate
hedging
participation
limited to
[ USD mn]
[USD/PLN]
[USD/PLN]
[USD/PLN]
[PLN per USD 1]
[USD/PLN]
2023
seagull
135.00
3.30
4.00
4.60
(0.00)
4.00
seagull
180.00
3.30
3.90
4.50
0.03
3.93
collar
660.00
-
4.48
5.48
(0.03)
4.45
collar
660.00
-
4.69
6.09
(0.05)
4.64
TOTAL 2023
1 635.00
2024
collar
660.00
-
4.48
5.48
(0.00)
4.48
collar
660.00
-
4.69
6.09
(0.01)
4.68
TOTAL 2024
1 320.00
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
80
Financial instruments
Value at risk as at 31 December 2023
total PLN million
USD million
EUR million
CAD million
Shares
4
-
-
1
Trade receivables
524
89
34
8
Cash and cash equivalents
1 306
280
31
24
Long-term loans granted to a joint venture
9 096
2 311
-
-
Other financial assets
174
30
1
17
Derivatives*
292
9
-
-
Trade and similar payables
(2 238)
(229)
(298)
(14)
Borrowings
(2 828)
(695)
(10)
(16)
Other financial liabilities
(18)
(1)
(3)
-
*Transactions on the commodities market which are denominated in USD and translated to PLN at the exchange rate as at the end of the reporting
period are presented in the item “derivatives”, in the column “USD million”, while the column “total PLN million” also includes the fair value of
derivatives which are denominated solely in PLN and their value depends on exchange rates.
Financial instruments
Value at risk as at 31 December 2022
total PLN million
USD million
EUR million
CAD million
Shares
4
-
-
1
Trade receivables
776
140
30
5
Cash and cash equivalents
868
163
20
17
Long-term loans granted to a joint venture
9 603
2 182
-
-
Other financial assets
234
44
-
12
Derivatives*
357
36
-
-
Trade and similar payables
(1 063)
(153)
(75)
(11)
Borrowings
(3 578)
(793)
(10)
(13)
Other financial liabilities
(49)
(9)
(2)
-
*Transactions on the commodities market which are denominated in USD and translated to PLN at the exchange rate as at the end of the reporting
period are presented in the item “derivatives”, in the column “USD million”, while the column “total PLN million” also includes the fair value of
derivatives which are denominated solely in PLN and their value depends on exchange rates.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
81
An analysis of the Group’s sensitivity to the currency risk in 2023 and 2022
Value at
risk
Carrying
amount
31 December
2023
Change in the USD/PLN exchange rate
Change in the EUR/PLN
exchange rate
Change in the CAD/PLN
exchange rate
4.46 (+13%)
3.50 (-11%)
4.79 (+10%)
4.13 (-5%)
3.27 (+10%)
2.77(-7%)
Financial assets and liabilities
as at 31 December 2023
profit or
loss
other
comprehensive
income
profit or
loss
other
comprehensive
income
profit or loss
profit or loss
profit or loss
profit or loss
Shares
4
829
-
-
-
-
-
-
-
-
Trade receivables
524
932
47
-
(38)
-
15
(7)
2
(2)
Cash and cash equivalents
1 306
1 729
148
-
(121)
-
14
(7)
7
(5)
Long-term loans granted to a joint
venture
9 096
9 096
1 223
-
(997)
-
-
-
-
-
Other financial assets
174
847
16
-
(13)
-
-
-
5
(3)
Derivatives
292
292
(4)
(500)
4
413
-
-
-
-
Trade and similar payables
(2 238)
(6 385)
(121)
-
99
-
(131)
-
64
-
Borrowings
(2 828)
(5 725)
(368)
-
300
-
(4)
2
(5)
3
Other financial liabilities
(18)
(321)
(1)
-
1
-
(1)
1
-
-
Impact on profit or loss
940
(765)
(107)
(11)
73
(7)
Impact on other comprehensive income
(500)
413
Value at
risk
Carrying
amount
31 December
2022
Change in the USD/PLN exchange rate
Change in the EUR/PLN
exchange rate
Change in the CAD/PLN
exchange rate
5.03 (+14%)
3.91 (-11%)
5.18 (+10%)
4.48 (-5%)
3.68 (+13%)
2.88 (-11%)
Financial assets and liabilities
as at 31 December 2022
profit or
loss
other
comprehensive
income
profit or
loss
other
comprehensive
income
profit or loss
profit or loss
profit or loss
profit or loss
Shares
4
521
-
-
-
-
-
-
-
-
Trade receivables
776
1 178
88
-
(68)
-
15
(6)
2
(2)
Cash and cash equivalents
868
1 200
102
-
(79)
-
10
(4)
7
(6)
Long-term loans granted to a joint
venture
9 603
9 603
1 372
-
(1 065)
-
-
-
-
-
Other financial assets
234
890
28
-
(21)
-
-
-
5
(4)
Derivatives
357
357
(3)
(1 197)
(6)
1 193
(2)
1
-
-
Trade and similar payables
(1 063)
(3 280)
(96)
-
75
-
(37)
16
(5)
4
Borrowings
(3 578)
(6 443)
(499)
-
387
-
(5)
2
(5)
5
Other financial liabilities
(49)
(211)
(6)
-
4
-
(1)
-
-
-
Impact on profit or loss
986
-
(773)
-
(20)
9
4
(3)
Impact on other comprehensive income
(1 197)
1 193
-
-
-
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
82
Note 7.5.1.4 Interest rate risk
In 2023 the Group was exposed to the risk of changes in interest rates due to loans granted to a joint venture, investing
cash, the reverse factoring program and using borrowings.
Positions with variable interest rates expose the Group to the risk of changes in cash flow from a given position
as a result of changes in interest rates (i.e. it has an impact on the interest costs or income recognised in profit or loss).
Positions with fixed interest rates expose the Group to the risk of fair value changes of a given position, excluding positions
measured at amortised cost, for which the change in fair value does not affect their measurement and profit
or loss.
The main items which are exposed to interest rate risk are presented below:
As at
31 December 2023
As at
31 December 2022
Cash flow
risk
Fair value
risk
Total
Cash flow risk
Fair value
risk
Total
Cash and cash
equivalents
1 729
-
1 729
1 200
-
1 200
Loans granted
-
22
22
-
20
20
Note 7.1
Borrowings
(2 714)
(3 011)
(5 725)
(2 656)
(3 787)
(6 443)
Similar payables*
(3 021)
-
(3 021)
(18)
-
(18)
* In order to effectively manage the working capital and realise mutual payables arising from binding agreements with suppliers on time, the Group
performed reverse factoring agreements. Consequently, for a part of the portfolio of trade payables, an exten sion of payment dates was agreed
upon in exchange for additional consideration in the form of interest. Interest is calculated with a variable rate, based on a fixed margin increased
by a specified reference rate determined for individual currencies. Details on reverse factoring may be found in Note 8.4.1, Note 10.3 and Note
10.4.
As at 31 December 2023 the Parent Entity had CIRS transactions (Cross Currency Interest Rate Swap) with maturities falling
in June 2024 and June 2029, in the notional amount of PLN 2 billion, hedging both the sales revenues in the currency, as
well as the variable interest rate of issued bonds. The open hedging position as at 31 December 2023 and as at 31 December
2022 is presented in the table in Note 7.5.1.3.
An analysis of the Group’s sensitivity to interest rate risk, assuming changes in interest rates for the balance sheet items in
PLN, USD and EUR (presented in basis points, bps) is presented in the following table. An expert method including
recommendations of the ARMA model was used to determine the potential volatility of interest rates.
31 December 2023
change in interest rate
31 December 2022
change in interest rate
+50 bps
(PLN, USD, EUR)
-150 bps
(PLN, USD, EUR)
+150 bps
(PLN, USD, EUR)
-100 bps
(PLN, USD, EUR)
profit or
loss
other
comprehensive
income
profit or
loss
other
comprehensive
income
profit
or loss
other
comprehensive
income
profit or
loss
other
comprehensive
income
Cash and cash equivalents
9
-
(26)
-
18
-
(12)
-
Borrowings
(14)
-
41
-
(40)
-
27
-
Financial derivatives –
interest rate
-
31
-
(107)
-
134
-
(97)
Similar payables
(15)
-
45
-
-
-
-
-
Impact on profit or loss
(20)
-
60
-
(22)
-
15
-
Impact on other
comprehensive income
-
31
-
(107)
-
134
-
(97)
Impact of the reference rates reform
In 2023 the LIBOR reference rates in borrowing agreements entered into by the Group were replaced by SOFR or CME
TERM SOFR reference rates. These rates are also applicable to newly-signed agreements with financial institutions
denominated in USD.
In October 2023, the Steering Committee of the National Working Group on the reform of reference rates, which was
appointed in connection with the reform of reference rates in Poland, revised the schedule of the process of replacing the
WIBOR and WIBID reference rates with the new RFR (risk-free-rate) reference rate. During work on this reform, a variety of
challenges specific to the Polish financial sector resulting from the scale and structure of agreements and instruments
based on WIBOR were identified, thereby generating risk to the safe conduct of the conversion. This resulted in the
designation of a new schedule for the introduction of these changes in order to limit risk and the costs of reforming the
reference rates. The Committee set the final date of the conversion as at the end of 2027.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
83
Until 2027, the IBOR reform will not have an impact on the interest rate applied in the Group’s derivatives, because the
CIRS transactions entered into (open cross currency interest rate swaps) and bonds issued by the Parent Entity are based
on the WIBOR reference rate. In the case of this benchmark, until 2027 we are in the transitional period, during which
adjustments to transactions entered into before the reform will not be required. After 2027, the IBOR reform may have an
impact on cash flow hedging of variable interest of issued bonds (Tranche B) in the amount of PLN 1.6 billion, based on
WIBOR 6M, that is CIRS transactions (cross currency swap) with maturity falling in 2029. The Group applied temporary
exemptions from application of specific requirements of hedge accounting under IFRS 9 due to the IBOR reform and
adopted an assumption that it may continue the hedge relationships. The notional amounts of hedging instruments to
which these exemptions apply are disclosed in the following table.
As at 31 December 2023, the Group estimated that the impact of IBOR reform on the financial statements will be
immaterial.
As at 31 December 2023, the Group held financial instruments based on variable interest rates, which were not yet replaced
by alternative rates. The amount of financial instruments that are based on a rate subject to planned reform are presented
in the following table:
Type of financial instrument
Carrying amount
as at
31 December 2023
Carrying amount
as at
31 December 2022
Bank loans
USD LIBOR 1M
-
(528)
WIBOR 1M
(39)
(63)
Debt securities
WIBOR 6M
(2 002)
(2 002)
Reverse factoring
WIBOR 1M
(1 757)
(18)
Derivatives (CIRS for 2029, PLN 1 600 million)
WIBOR 6M
5
(198)
Total
(3 793)
(2 809)
Note 7.5.1.5 Risk of changes in prices of energy and energy carriers
In market risk management resulting from changes in metals prices and currency, the scale and profile of activities of the
Parent Entity is of the greatest significance and impact on the results of the KGHM Polska Miedź S.A. Group. The risk of
changes in prices of electricity and energy commodities is a commodity risk for the Parent Entity, the measurement of
which is based on its impact on cash flow.
The Parent Entity’s exposure to the risk of volatility in electricity prices, energy commodities and related merchandise
involves the following markets:
• electricity and natural gas, which are required to engage in mining and processing operations, including natural
gas used to generate electricity to meet the Parent Entity’s needs in its own generating sources,
• CO
2
emission allowances, which need to be redeemed due to the level of greenhouse gas emissions by
installations operated by the Parent Entity being higher than the level of greenhouse gas emissions for which the
Parent Entity received freely-granted rights to emit CO
2
,
• property rights to energy resulting from certificates of origin of energy from renewable sources (RES)
and energy efficiency certificates (hereafter: property rights), subject to redemption (required for purposes of
redemption due to the sale of electricity by the Parent Entity to end users as well as the consumption of purchased
electricity for own needs).
The management of commodity price risk with respect to planned purchases of electricity and natural gas is based on the
management of exposure to the risk of changes in the prices of electricity and natural gas in a time horizon of up to 36
subsequent months, resulting from electricity and gas purchase plans, less previously-signed purchase contracts with
delivery in future periods.
In the case of changes in electricity prices, the source of exposure are sales prices in bilateral contracts and energy sales
prices on the Polish Power Exchange, where the Parent Entity purchases electricity in forward products (RTEE) as well as
on the intra-day and next-day market. Moreover, the Parent Entity entered into a contract for the supply of electricity from
renewable energy sources under a PPA (Power Purchase Agreement), which was entered into to meet the own needs of
the Parent Entity and, in accordance with the exemption provided for under IFRS 9 para. 2.4, is not subject to measurement
and recognition as a financial instrument.
In the case of the risk of changes in gas prices, the source of exposure is a contract entered into with ORLEN S.A.,
according to which the price of the purchased gas depends to a large degree on the prices quoted on the Polish Power
Exchange for E-type gas (as regards both forward and SPOT contracts).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
84
Commodity risk related to CO
2
emission allowances is connected with the exposure to changes in the prices of emission
allowances quoted in EUR on an exchange (e.g. European Energy Exchange) and in the EUR/PLN exchange rate, as well as
differences in the utilization of CO
2
emission allowances by the Parent Entity from planned amounts. In terms of changes
in the prices of CO
2
emission allowances, the Parent Entity has a net short position, resulting from the obligation to redeem
rights due to CO
2
systemic emissions which occur as a result of the combustion of coal within coal-bearing materials in
installations functioning in the copper smelters, and also as a result of the combustion of gas in the CCGT (Combined Cycle
Gas Turbine) blocks generating electricity to meet the Parent Entity’s needs. In 2023, the Parent Entity purchased CO
2
emission allowances in forward transactions to secure its own needs. Such derivatives, which are acquired and maintained
to secure own needs, are excluded under IFRS 9 Financial Instruments and are not subject to measurement as at the end
of the reporting period.
In terms of the risk of changes in property rights, the Parent Entity has a net short position resulting from the obligation
to redeem property rights due to the sale of electricity to an end user as well as to the consumption of purchased electricity
for own needs, while the source of exposure are mainly the prices of property rights on the wholesale market, (i.e. on the
Polish Power Exchange). KGHM Polska Miedź S.A. sells electricity mostly to customers which provide services to the Parent
Entity on properties belonging to KGHM Polska Miedź S.A..
Exposure of the Parent Entity to a given risk – demand volume of individual merchandise for own needs (purchase)
Merchandise
Unit
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
CO
2
emission allowances
EUA
282 901
151 900
Property rights, so-called green certificates
GWh
251
406
Property rights, so-called blue certificates
GWh
10
11
Property rights, so-called white certificates
TOE
2 403
2 371
Gas
GWh
2 282
1 751
Electricity
GWh
2 614
2 742
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
85
Note 7.5.1.6 Impact of hedge accounting on the financial statements
The following table contains information on changes in the fair value of hedging instruments, as well as corresponding changes in the fair value of hedged positions during the reporting period, being
the basis for recognising the effective and ineffective portions of changes in the fair value of hedging instruments in the years 2023-2022 (excluding the tax effect).
In hedging relations, only the intrinsic value of the option is designated as a hedging instrument. The time value approximates zero in the horizon of a hedging relation. The hedge’s inefficiency
recognised in the statements of profit or loss in the reporting periods 2022-2023 was immaterial.
As at 31 December 2023
from 1 January 2023
to 31 December 2023
from 1 January 2023
to 31 December 2023
As at 31 December 2022
from 1 January 2022
to 31 December 2022
from 1 January 2022
to 31 December 2022
Balance of other comprehensive income
due to cash flow hedging for relations
Change in the value of
hedged item
Balance of other comprehensive income
due to cash flow hedging for relations
relation type
risk type
instrument type – hedged item
remaining in hedge
accounting
for which hedge
accounting was
ceased
Change in the value of
hedging instrument
remaining in
hedge accounting
for which hedge
accounting was ceased
Change in the value
of hedged item
Change in the
value of hedging
instrument
Cash flow hedging
Commodity risk (copper)
Options – Sales revenue
-
-
-
-
(21)
(11)
(327)
255
intrinsic value
-
-
-
-
152
-
-
325
time value
-
-
-
-
(173)
(11)
-
(70)
Commodity risk (silver)
Options – Sales revenue
-
-
-
-
19
-
16
(21)
intrinsic value
-
-
-
-
30
-
-
(16)
time value
-
-
-
-
(11)
-
-
(5)
Currency risk (USD)
Options – Sales revenue
77
604
(623)
469
402
-
(183)
403
intrinsic value
107
545
-
619
193
-
-
182
time value
(30)
59
-
(150)
209
-
-
221
Loans – Sales revenue
-
(48)
-
-
-
(64)
-
-
intrinsic value
-
(48)
-
-
-
(64)
-
-
Currency-interest rate risk
CIRS – Sales revenue
(180)
(439)
388
(569)
-
154
(137)
intrinsic value
(180)
-
388
(569)
-
-
(137)
CIRS – Finance income/costs
175
172
(140)
315
-
(181)
152
intrinsic value
175
-
(140)
315
-
-
152
Total, including:
72
556
(890)
717
146
(75)
(521)
652
Total intrinsic value
102
497
-
867
121
-
-
506
Total time value
(30)
59
-
(150)
25
(75)
-
146
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
86
The table below presents information on the impact of hedge accounting on the statement of profit or loss and other comprehensive income (excluding the tax effect).
from 1 January 2023 to 31 December 2023
from 1 January 2022 to 31 December 2022
relation type
risk type
instrument type
Profits or (losses) due to
hedging recognised in other
comprehensive income
Amount reclassified from other
comprehensive income as a
reclassification adjustment, due to
realisation of a hedged item in the period
Profit or (loss) due to
hedging recognised
in other
comprehensive
income
Amount reclassified from other
comprehensive income to the
statement of profit or loss as a
reclassification adjustment, due to
realisation of a hedged item in the
period
to statement of
profit or loss
to non-current assets
Cash flow hedging
Commodity risk (copper)
Options*
(128)
(160)
800
(525)
Commodity risk (silver)
Options*
(6)
13
26
114
Currency risk (USD)
Options*
738
459
357
(46)
Loans**
-
(16)
-
(16)
Currency-interest rate risk
CIRS***
340
(11)
102
56
41
Total
944
285
102
1 239
(432)
Item of the statement of profit or loss which includes a reclassification adjustment:
* revenues from contracts with customers, other operating income and (costs),
** revenues from contracts with customers,
*** revenues from contracts with customers, other finance income and (costs) and non-current assets
The following table contains information on changes in other comprehensive income (excluding the tax effect) in the period in connection with the application of hedge accounting in 2022 and 2023.
2023
2022
Other comprehensive income due to cash flow hedging
Effective value *
Cost of hedging **
Total
Effective value *
Cost of hedging **
Total
Other comprehensive income – transactions hedging against
commodity and currency risk – as at 1 January
68
3
71
(1 178)
(422)
(1 600)
Impact of measurement of hedging transactions (effective part)
1 272
(328)
944
1 124
115
1 239
Reclassification to the statement of profit or loss due to
realisation of hedged item
(737)
350
(387)
122
310
432
Other comprehensive income – transactions hedging against
commodity and currency risk – as at 31 December
603
25
628
68
3
71
* Effective portions of changes in the fair value of hedging instruments due to hedged risk - intrinsic value of option.
** Time value of option + CCBS (Cross Currency Basis Swap).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
87
Note 7.5.2 Credit risk
Credit risk is defined as the risk that the Group’s counterparties will not be able to meet their contractual liabilities
and involves three main areas:
• the creditworthiness of the customers with whom physical sales transactions are undertaken,
• the creditworthiness of the financial institutions (banks/brokers) with whom, or through whom, hedging
transactions are undertaken, as well as those in which free cash and cash equivalents are deposited, and
• the financial standing of subsidiaries - borrowers.
In particular, the sources of exposure to credit risk are:
• cash and cash equivalents and deposits,
• derivatives,
• trade receivables,
• loans granted (Note 6.2),
• guarantees granted (Note 8.6), and
• other financial assets.
Accounting policies
The Group recognises impairment loss on expected credit losses on financial assets measured at amortised cost.
Expected credit losses are credit losses weighed by the default probability. The Group applies the following models
for designating impairment losses:
- the simplified model – for trade receivables,
- the general (basic) model – for other financial assets.
Under the general model the Group monitors changes in the level of credit risk related to a given financial asset
and classifies financial assets to one of three stages of determining impairment losses – based on observations of changes
in the level of credit risk compared to an instrument’s initial recognition. In particular, the following are monitored: the
credit rating and the financial condition of the customer and the payment delay period. Depending on which degree it is
classified to, an impairment loss is estimated for a 12-month period (degree 1) or in the horizon of lifetime (degree 2 and
degree 3). The absolute indicator of default is an overdue period of more than 90 days.
Under the simplified model the Group does not monitor changes in the level of credit risk during an instrument’s life and
estimates the expected credit loss over the time horizon of maturity of the instrument based on historical data respecting
the repayments of receivables.
Note 7.5.2.1 Credit risk related to cash, cash equivalents and bank deposits
The Group allocates periodically free cash in accordance with the requirements to maintain financial liquidity and limit risk
and in order to protect capital and maximise interest income.
As at 31 December 2023, the total amount of free and restricted cash and cash equivalents of PLN 1 724 million was held
in bank accounts and in short-term deposits (in total as at 31 December 2022: PLN 1 195 million).
All entities with which deposit transactions are entered into by the Group operate in the financial sector. Analysis of
exposure to this type of risk indicated that these are solely banks with the highest, medium-high and medium ratings, and
which have an appropriate level of equity and a strong, stable market position. The credit risk in this regard is monitored
through the on-going review of the financial standing and by maintaining an appropriately low concentration levels in
individual financial institutions.
The following table presents the level of concentration of cash and deposits, with the assessed creditworthiness of the
financial institutions*.
Rating level
As at
31 December 2023
As at
31 December 2022
Highest
from AAA to AA- according to S&P and Fitch, and from Aaa
to Aa3 according to Moody’s
8%
10%
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
84%
73%
Medium
from BBB+ to BBB- according to S&P and Fitch, and from
Baa1 to Baa3 according to Moody’s
8%
17%
*Weighed by amount of cash deposited in current accounts and deposits.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
88
The risk level of a financial institution arising from depositing cash on bank accounts or deposits in the said institution, and
taking into consideration the risk of these instruments, is almost the same, and therefore they are presented jointly.
As at 31 December 2023 the maximum single entity share of the amount exposed to credit risk arising from cash and bank
deposits amounted to 35%, or PLN 608 million (as at 31 December 2022: 30%, or PLN 354 million).
As at
31 December 2023
As at
31 December 2022
Counterparty 1
608
354
Counterparty 2
317
335
Counterparty 3
315
105
Counterparty 4
102
76
Counterparty 5
80
73
Other
302
252
Total
1 724
1 195
Impairment losses on cash and cash equivalents were determined individually for each balance of a given financial
institution. External bank ratings were used to measure credit risk. The analysis determined that these assets have a low
credit risk at the reporting date. The Group used a simplification permitted by the standard and the impairment loss was
determined on the basis of 12-month credit losses. The calculation of impairment determined that the amount of
impairment loss is insignificant. These assets are classified to Degree 1 of the impairment model.
Nota 7.5.2.2 Credit risk related to derivative transactions
All entities with which derivative transactions (excluding embedded derivatives) are entered into by the Group operate
in the financial sector.
The Group’s credit exposure related to derivatives by main counterparties is presented in the table below
4
.
As at 31 December 2023
As at 31 December 2022
Exposure to
credit risk
Exposure
to credit
risk
Financial
receivables
Financial
liabilities
Fair value
Financial
receivables
Financial
liabilities
Fair value
Counterparty 1
246
(138)
108
260
(250)
10
Counterparty 2
241
(172)
69
226
(172)
54
Counterparty 3
155
(93)
62
154
(33)
121
Counterparty 4
130
(180)
(50)
120
(53)
67
Other
269
(99)
170
787
(636)
151
Total
1 041
(682)
359
1 547
(1 144)
403
Open derivatives*
993
(675)
318
1 510
(1 110)
400
Settled derivatives, net
48
(7)
41
37
(34)
3
*excluding embedded derivatives
Taking into consideration the receivables due to open derivatives transactions entered into by the Group (excluding
embedded derivatives) as at 31 December 2023 and net receivables
5
due to settled derivatives, the maximum single entity
share of the amount exposed to credit risk arising from these transactions amounted to 24%, or PLN 246 million (as at 31
December 2022: 17%, or PLN 260 million).
In order to reduce cash flows and at the same time to limit credit risk, the Parent Entity carries out net settlements (based
on standard framework agreements entered into with its customers, regulating the trade of financial instruments, meaning
ISDA or based on a formula of the Polish Bank Association). Moreover, the resulting credit risk is continuously monitored
by reviewing the credit ratings and is limited by striving to diversify the portfolio while implementing hedging strategies.
4
Excludes embedded derivatives.
5
The Parent Entity offsets receivables and liabilities due to settled derivatives, for which the future flows are known at the end of the reporting period,
pursuant to the principles of net settlements of cash flows adopted in framework agreements with individual customers.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
89
Despite the concentration of credit risk associated with derivatives’ transactions, the Parent Entity has determined that,
due to its cooperation solely with renowned financial institutions, as well as continuous monitoring of their ratings, it is not
materially exposed to credit risk as a result of transactions concluded with them.
The following table presents the structure of ratings of the financial institutions with whom the Group had derivatives
transactions, representing exposure to credit risk.
Rating level
As at
31 December 2023
As at
31 December 2022
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
71%
84%
Medium
from BBB+ to BBB- according to S&P and Fitch, and from Baa1
to Baa3 according to Moody’s
29%
16%
Note 7.5.2.3 Credit risk related to trade receivables
The following Group companies had significant trade receivables as at 31 December 2023: KGHM Polska Miedź S.A.
PLN 322 million, the KGHM INTERNATIONAL LTD. Group PLN 283 million, WPEC w Legnicy S.A. PLN 70 million, CENTROZŁOM
WROCŁAW S.A. PLN 70 million, KGHM Metraco S.A. PLN 35 million, „MCZ” S.A. PLN 33 million, NITROERG S.A. PLN 30 million,
WMN “Łabędy” S.A. PLN 18 million, , Pol-Miedź Trans Sp. z o.o. PLN 11 million, Energetyka Sp. z o.o. PLN 10 million
(as at 31 December 2022: KGHM Polska Miedź S.A. PLN 517 million, the KGHM INTERNATIONAL LTD Group PLN 364 million,
CENTROZŁOM WROCŁAW S.A. PLN 67 million, WPEC w Legnicy S.A. PLN 49 million, NITROERG S.A. PLN 39 million,
KGHM Metraco S.A. PLN 28 million, „MCZ” S.A. PLN 24 million, WMN "Łabędy" S.A. PLN 19 million, Energetyka Sp. z o.o. PLN
11 million).
The total net amount of trade receivables of the Group as at 31 December 2023, excluding the fair value of accepted
collateral, up to the amount of which the Group may be exposed to credit risk, amounts to PLN 932 million (as at 31
December 2022: PLN 1 178 million).
The Parent Entity limits its exposure to credit risk related to trade receivables by evaluating and monitoring the financial
condition of its customers, setting credit limits, requiring collateral, and non-recourse factoring. The terms of factoring
agreements entered into meet the criteria of removing receivables from the books at the moment of their purchase
by the factor. As at 31 December 2023, the amount of receivables transferred to factoring, for which payment from factors
was not received, amounted to PLN 10 million (as at 31 December 2022: PLN 4 million). Information on the amount of
revenues from sales subjected to factoring in the financial period is presented in Note 2.4.
An inseparable element of the credit risk management process performed by the Parent Entity is the continuous
monitoring of receivables and the internal reporting system.
Buyer’s credit is only provided to proven customers. In the case of new customers, an effort is made to ensure that sales
are based on prepayments or trade financing instruments which transfer the credit risk to financial institutions.
The Parent Entity makes use of the following forms of collateral:
• registered pledges, bank guarantees, promissory notes, notarial enforcement declarations, corporate
guarantees, cessation of receivables, mortgages and documentary collection;
• ownership rights to goods to be transferred to the buyer only after payment is received;
• a receivables insurance contract, which covers receivables from entities with buyer’s credit which have not
provided strong collateral or have provided collateral which does not cover the total amount of the receivables.
Taking into account the above forms of collateral and the credit limits received from the insurance company, as at
31 December 2023 the Parent Entity had secured 56% of its trade receivables (as at 31 December 2022, 76%).
Although KGHM INTERNATIONAL LTD. does not use collateral, credit risk connected with trade receivables is subject
to monitoring, and the majority of sales are to proven, long-term customers conducting international activities.
Assessment of concentration of credit risk in the Group:
Sector
concentration
While KGHM Polska Miedź S.A. and KGHM INTERNATIONAL LTD. operate in the same sector, these two
companies are different both in terms of their portfolios of products as well as in terms
of the geographic location and nature of their customers, and consequently this sector concentration
of credit risk is considered to be acceptable.
Other companies of the Group operate in various economic sectors, such as transport, construction,
commerce, industrial production and energy. As a consequence, in the case of most Group companies,
in terms of sectors, there is no concentration of credit risk.
Customers
concentration
As at 31 December 2023 the balance of receivables from the 7 largest customers represented 25%
of trade receivables (2022: 58%). Despite the concentration of this type of risk, it is believed that due to
the availability of historical data and the many years of experience cooperating with its customers, as
well as to the securing used, the level of credit risk is low.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
90
Geographical
concentration
Companies of the Group have been cooperating for many years with a large number of customers,
which affects the geographical diversification of trade receivables. Geographical concentration
of credit risk for trade receivables is presented in the table below.
Trade receivables (net)
As at
31 December 2023
As at
31 December 2022
Poland
43%
40%
Canada
14%
19%
European Union (excluding Poland)
8%
10%
Asia
23%
26%
Other countries
12%
5%
Accounting policies
The Group applies the simplified model of calculating the allowance for impairment of trade receivables (regardless
of their maturity). The expected credit loss on trade receivables is calculated at the closest ending date of the reporting
period after the moment of recognition of a receivable in the statement of financial position and is updated at every
subsequent reporting period ending date. In order to estimate the expected credit loss on trade receivables, the Group’s
entities apply provision matrices, made on the basis of historical levels of payment of trade receivables, which are
periodically recalibrated in order to update them.
The Group adopted an assumption that the receivable risk is characterised by the number of days of delay and this
parameter determines the estimated PD, i.e. the probability of a delay in payment of trade receivables by at least 90 days.
For the purpose of estimating PD, 5 risk groups have been selected based on the criteria of number of days in payment,
according to ranges presented below as “Important estimates and assumptions”.
Default is defined as being a failure by a customer to meet its liabilities after a period of 90 days from the due date.
In order to estimate the loss allowance for expected credit losses, collateral is also taken into account by allocating
expected recovery rates to the particular types of collateral.
Moreover, forward-looking information is taken into account in the applied parameters of the model for estimating
expected losses, by adjusting the base coefficients of default probability. This means that if as a result of analysis
of macroeconomic data, such as for example: current GDP dynamics, inflation, unemployment rate, or WIG index, the
Group recognises any deterioration in them in comparison to the previous period, in the ECL calculation the forward
looking factor, which corrects risk connected with any decrease in receivables recovery, is taken into account. Despite the
worsening of the GDP dynamics, and taking into consideration the inflation slowdown, favourable performance of the
unemployment rate, and also forecasted significant economy rebound in 2024, the Parent Entity did not note any
deterioration of macroeconomic factors to the degree justifying the accounting for forward looking factor as at the end of
the reporting period, that is on 31 December 2023.
Important estimates and assumptions
31 December 2023
31 December 2022
Time frame
in days
Percent of
allowance for
impairment*
Gross
amount of
receivables
Allowance for
impairment in
individual time
frames**
Percent of
allowance for
impairment*
Gross
amount of
receivables
Allowance for
impairment in
individual time
frames**
Not overdue
0.1-4.4
483
(2)
0.1-2.7
401
(2)
<1,30)
0.3-9.0
29
(1)
0.2-8.1
23
(1)
<30,60)
5.4-41.4
9
(4)
5.5-41.4
5
(1)
<60,90)
34.1-70.7
-
-
34.1-72.3
1
-
Default
100
36
(32)
100
36
(35)
Total
557
(39)
466
(39)
*Probability of default is represented in thresholds, calculated individually by Group companies on the basis of real historical data as respects the
number of days of delay, pursuant to the model for calculating expected credit losses adopted by the Group for trade receivables.
**The amount of allowance for impairment includes the recovery due to collateral.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
91
The following table presents the change in trade receivables measured at amortised cost.
2023
2022
Gross amount as at 1 January
466
435
Change in the balance of receivables
95
31
Utilisation of a loss allowance in the period
(4)
-
Note 10.2
Gross amount as at 31 December
557
466
The following table presents the change in the estimation of expected credit losses on trade receivables measured
at amortised cost.
2023
2022
Loss allowance for expected credit losses as at 1 January
39
36
Change in allowance in the period recognised in profit or loss
4
3
Utilisation of a loss allowance in the period
(4)
-
Note 10.2
Loss allowance for expected credit losses as at 31 December
39
39
As at 31 December 2023, disputed receivables amounted to PLN 30 million (as at 31 December 2022, PLN 36 million).
The Group is taking actions aimed at recovering these receivables or explaining the validity of pursuing claims.
Note 7.5.2.4 Credit risk related to loans granted to the joint venture Sierra Gorda S.C.M. (POCI)
Credit risk related to loans granted depends on risk related to the realisation of the joint mining venture in Chile (Sierra
Gorda S.C.M.). These loans, as a result of the impairment recognised at the moment of initial recognition due to credit risk,
were classified as POCI, and are measured at the end of the subsequent reporting periods at amortised cost using the
effective interest rate method and the effective discount rate adjusted by credit risk.
The basis for accruing interest on POCI loans is their gross value less any allowance for impairment at the moment
of initial recognition.
The loan granted does not have collateral limiting the exposure to credit risk, therefore the maximum amount exposed to
potential loss due to credit risk is the gross amount of the loan, less expected credit losses recognised pursuant to IFRS 9.
Changes in the value of POCI loans in the reporting and comparable periods are presented in Note 6.2.
Neither in the reporting period nor in the comparable period was there any expected impairment of POCI loans.
Sensitivity analysis of the fair value of loans due to the change in forecasted cash flows of Sierra Gorda S.C.M.
As at 31 December 2023, the Group classified the measurement to fair value of loans granted to level 3 of the fair value
hierarchy because of the utilisation in the measurement of a significant unmeasurable parameter, being the forecasted
cash flows of Sierra Gorda S.C.M. These cash flows are the most sensitive to changes in copper prices, which implies other
assumptions such as forecasted production and operating margin. Therefore, pursuant to IFRS 13 p.93.f, the Group
performed a sensitivity analysis of the fair value (level 3) of loans to changes in copper prices.
Copper prices [USD/t]
Scenarios – 31 December 2023
2024
2025
2026
2027
LT
Base
8 500
8 700
9 000
9 200
8 250
Base minus 0.1 USD/lb during mine life
(220 USD/tonne)
8 280
8 480
8 780
8 980
8 030
Base plus 0.1 USD/lb during mine life
(220 USD/tonne)
8 720
8 920
9 220
9 420
8 470
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
92
Copper prices [USD/t]
Scenarios – 31 December 2022
2023
2024
2025
2026
LT
Base
8 200
8 500
8 500
8 500
7 700
Base minus 0.1 USD/lb during mine life
(220 USD/tonne)
7 980
8 280
8 280
8 280
7 480
Base plus 0.1 USD/lb during mine life
(220 USD/tonne)
8 420
8 720
8 720
8 720
7 920
Sensitivity analysis of the fair value to
changes in copper price
Classes of financial instruments
Fair value
as at
31 December 2023
Base plus 0.1 USD/lb
during mine life
Base minus 0.1 USD/lb
during mine life
Loans granted measured at amortised cost
7 778
7 969
7 567
Loans granted measured at amortised cost
(USD million)
1 977
2 025
1 923
Carrying amount
as at
31 December 2023
Sensitivity analysis of the carrying amount
to changes in copper price
Classes of financial instruments
Base plus 0.1 USD/lb
during mine life
Base minus 0.1 USD/lb
during mine life
Loans granted measured at amortised cost
9 096
9 223
8 956
Loans granted measured at amortised cost
(USD million)
2 311
2 344
2 276
Sensitivity analysis of the fair value to
changes in copper price
Classes of financial instruments
Fair value
as at
31 December 2022
Base plus 0.1 USD/lb
during mine life
Base minus 0.1 USD/lb
during mine life
Loans granted measured at amortised cost
7 787
8 064
7 465
Loans granted measured at amortised cost
(USD million)
1 769
1 832
1 696
Carrying amount
as at
31 December 2022
Sensitivity analysis of the carrying amount
to changes in copper price
Classes of financial instruments
Base plus 0.1 USD/lb
during mine life
Base minus 0.1 USD/lb
during mine life
Loans granted measured at amortised cost
9 603
9 766
9 380
Loans granted measured at amortised cost
(USD million)
2 182
2 219
2 131
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
93
Note 7.5.2.5 Credit risk related to other financial assets
As at 31 December 2023, the most significant item in other financial assets was cash accumulated on the bank accounts of
the Mine Closure Fund in the amount of PLN 442 million (as at 31 December 2022: PLN 407 million).
All special purpose deposits of the Group, which are dedicated to collection of cash for future decommissioning costs of
mines, are carried out by banks with the highest or medium-high ratings confirming the security of the deposited cash.
The following tables present the level of cash concentration within special purpose funds dedicated to the collection of
cash by the Group for future decommissioning costs of mines, according to the credit ratings of financial institutions in
which cash is held on special purpose accounts.
Rating level
As at
31 December 2023
As at 31
December 2022
Highest
AAA to AA- according to S&P and Fitch,
and from Aaa to Aa3 according to Moody’s
10%
12%
Medium-high
from A+ to A- according to S&P and Fitch,
and from A1 to A3 according to Moody’s
90%
88%
As at
31 December 2023
As at 31
December 2022
Counterparty 1
398
358
Counterparty 2
44
49
Total
442
407
Impairment losses on cash accumulated on the bank accounts of special purpose funds: the Mine Closure Fund, were
determined individually for each balance of a given financial institution. External bank ratings were used to measure credit
risk. The analysis determined that these assets have a low credit risk at the reporting date. The Group used a simplification
permitted by the standard and the impairment loss was determined on the basis of 12-month credit losses. The calculation
of impairment determined that the amount of impairment loss is insignificant. These assets are classified to Degree 1 of the
impairment model.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
94
Part 8 – Borrowings and the management of liquidity and capital
Note 8.1 Capital management policy
Capital management in the Group is aimed at securing funds for business development and maintaining the appropriate
level of liquidity.
In accordance with market practice, the Group monitors the level of financial security, among others on the basis of the
Net Debt/Adjusted EBITDA ratio presented in the table below:
Ratios
Calculations
31 December 2023
31 December 2022
Net Debt/Adjusted EBITDA
Relation of net debt to adjusted EBITDA
1.06
0.77
Net Debt
Borrowings, debt securities and lease
liabilities less free cash and its
equivalents.
4 023
5 264
Adjusted EBITDA*
Profit/(loss) for the period pursuant to
IFRS, excluding taxes (current and
deferred income tax and mining tax),
finance income and costs, other
operating income and costs, profit or
loss on involvement in joint ventures,
depreciation/amortisation recognised
in expenses by nature,
recognition/reversal of impairment
losses on property, plant and
equipment and intangible assets
recognised in the cost of sales, selling
costs and administrative expenses.
3 778
6 834
*Adjusted EBITDA for the period of 12 months ending on the last day of the reporting period excluding adjusted EBITDA of the joint
venture Sierra Gorda S.C.M.
The level of the Net Debt/Adjusted EBITDA ratio achieved in 2023 is consistent with the assumptions adopted by the Group
in the reporting period and confirms its stable financial condition.
The economic situation is one of the most important factors affecting the Group’s financial liquidity.
The Group forecasts the coverage ratio of financial needs by available sources of financing, in order to identify, at a
sufficiently early stage, the possible occurrence of a liquidity gap.
The overriding principle in this process is to ensure the Group’s financial security and stability, while the main tool used to
limit risk is the diversification of financing sources and ensuring they are of long-term maturities.
When making decisions about the use of financial instruments, the Group analyses factors of significance for managing
liquidity, amongst which the basic parameter is the level of interest rates and forecasts regarding their future direction.
The level of interest rates primarily has an impact on the Group’s borrowing potential, understood as the possibility of
obtaining and servicing debt, and consequently its subsequent refinancing. To limit the unfavourable impact of increases
in market interest rates, some of the Group’s borrowings are based on fixed interest rates.
Details regarding the impact of changes in interest rates on the occurrence of liquidity risks are presented in Note 7.5.1.4
of the Financial statements.
In the management of liquidity and capital, the Group also pays attention to adjusted operating profit, which is the basis
for calculating the financial covenant and which is comprised of the following items:
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
(Loss)/profit on sales
(1 640)
4 344
Interest income on loans granted to a joint venture
597
582
Other operating income and (costs)
(2 817)
962
Adjusted operating (loss)/profit*
(3 860)
5 888
* Presented amount does not include the profit due to reversal of allowances for impairment of loans granted to a joint venture.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
95
Financial covenant Net debt/EBITDA is calculated based on consolidated data, pursuant to definitions stipulated in
borrowing agreements.
As at the end of the reporting period, in the financial year and after the end of the reporting period, up to the date of
publication of these Consolidated financial statements, the value of the financial covenant subject to the obligation to
report as at 30 June 2023 and 31 December 2023, met the conditions stipulated in the credit agreements.
Note 8.2 Equity
Accounting policies
Other reserves from the measurement of financial instruments arise from the measurement of cash flow hedging
instruments (Note 7.2, Accounting policies) and the measurement of financial assets at fair value through other
comprehensive income (Note 7.3, Accounting policies) less any deferred tax effect.
Accumulated other comprehensive income consists of exchange differences from the translation of statements of
operations with a functional currency other than PLN (Note 1.4, Accounting policies) and actuarial gains/losses on post-
employment benefits programs less any deferred tax effect (Part 11, Accounting policies).
Note 8.2.1 Share capital
As at 31 December 2023 and at the date of signing of these financial statements, the Parent Entity’s share capital, in
accordance with the entry in the National Court Register, amounted to PLN 2 000 million and was divided into 200 000 000
shares, series A, fully paid, each having a face value of PLN 10. All of the shares are bearer shares. KGHM Polska Miedź
S.A. has not issued preference shares. Each share grants the right to one vote at the general meeting. The Parent Entity
does not have treasury shares.
In the years ended 31 December 2023 and 31 December 2022, there were no changes in either registered share capital or
in the number of issued shares.
In 2023, the following changes in the ownership structure of significant blocks of shares of KGHM Polska Miedź S.A. took
place:
• On 5 January 2023 the Parent Entity was informed about the merger of the companies Powszechne Towarzystwo
Emerytalne Allianz Polska Spółka Akcyjna (PTE Allianz Polska S.A.) and Aviva Powszechne Towarzystwo Emerytalne Aviva
Santander Spółka Akcyjna. As a result of the merger, the total number of shares of KGHM Polska Miedź S.A. held on the
accounts of funds managed by PTE Allianz Polska S.A.: Allianz Otwarty Fundusz Emerytalny, Allianz Polska Dobrowolny
Fundusz Emerytalny and Drugi Allianz Polska Otwarty Fundusz Emerytalny (Drugi Allianz OFE) amounted to 12 241 453
shares, representing 6.12% of the share capital of the Parent Entity.
• On 16 May 2023, the Company was informed by PTE Allianz Polska S.A. that as a result of the liquidation of Drugi Allianz
OFE by transferring its assets to Allianz Polska Otwarty Fundusz Emerytalny (Allianz OFE), the share held in the total
number of votes in KGHM Polska Miedź S.A. on the accounts of Allianz OFE amounted to more than 5%, that is on the
accounts of Allianz OFE were 11 961 453 shares representing 5.98% of the share capital of the Parent Entity.
As a result of the above, the shareholder structure of KGHM Polska Miedź S.A. as at 31 December 2023 and at the date
these financial statements were signed, established on the basis of notifications received by the Parent Entity pursuant to
art. 69 of the Act on public offerings and conditions governing the introduction of financial instruments to organised
trading, and on public companies, was as follows:
Shareholder
Number of
shares/votes
Total nominal
value of shares
(PLN)
Percentage held
in share
capital/total
number of votes
State Treasury
1)
63 589 900
635 899 000
31.79%
Allianz Polska Otwarty Fundusz Emerytalny
2)
11 961 453
119 614 530
5.98%
Nationale-Nederlanden Otwarty Fundusz Emerytalny
3)
10 104 354
101 043 540
5.05%
Other shareholders
114 344 293
1 143 442 930
57.18%
Total
200 000 000
2 000 000 000
100.00%
1)
based on a notification received by the Company dated 12 January 2010
2)
based on a notification received by the Company dated 16 May 2023
3)
based on a notification received by the Company dated 18 August 2016
In 2022, there were no changes in the ownership of significant blocks of shares of KGHM Polska Miedź S.A.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
96
Note 8.2.2 Changes of other equity items
Other reserves from measurement of financial
instruments
Investments in
equity instruments
measured at fair
value
through other
comprehensive
income
Other reserves
from
measurement of
future cash flow
hedging financial
instruments
Other
reserves from
measurement
of financial
instruments,
total
Actuarial
gains
/(losses) on
post-
employment
benefits
programs
Exchange
differences from
the translation of
statements of
operations with a
functional currency
other than PLN
Retained
earnings
As at 1 January 2022
( 410)
(1 295)
(1 705)
( 400)
2 619
24 532
Transactions with owners - Dividend
-
-
-
-
-
( 600)
Profit for the period
-
-
-
-
-
4 772
Fair value losses on financial assets measured at fair value through other
comprehensive income
( 95)
-
( 95)
-
-
-
Note 7.2
Impact of the effective part of cash flow hedging transactions
-
1 239
1 239
-
-
-
Note 7.2
Amount transferred to profit or loss due to settlement of hedging instruments
-
432
432
-
-
-
Note 11.2
Actuarial losses on post-employment benefits
-
-
-
( 422)
-
-
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
-
-
-
-
( 65)
-
Note 5.1.1
Deferred income tax
19
( 317)
( 298)
80
-
-
Other comprehensive income
( 76)
1 354
1 278
( 342)
( 65)
-
Total comprehensive income
( 76)
1 354
1 278
( 342)
( 65)
4 772
As at 31 December 2022
( 486)
59
( 427)
( 742)
2 554
28 704
Transactions with owners - Dividend
-
-
-
-
-
( 200)
Loss for the period
-
-
-
-
-
(3 698)
Fair value gains on financial assets measured at fair value through other
comprehensive income
309
-
309
-
-
-
Note 7.2
Impact of the effective part of cash flow hedging transactions
-
944
944
-
-
-
Note 7.2
Amount transferred to profit or loss due to settlement of hedging instruments
-
( 387)
( 387)
-
-
-
Note 11.2
Actuarial losses on post-employment benefits
-
-
-
( 311)
-
-
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
-
-
-
-
( 78)
-
Note 5.1.1
Deferred income tax
( 56)
( 106)
( 162)
59
-
-
Other comprehensive income
253
451
704
( 252)
( 78)
-
Total comprehensive income
253
451
704
( 252)
( 78)
(3 698)
As at 31 December 2023
( 233)
510
277
( 994)
2 476
24 806
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
97
Based on the Act of 15 September 2000, i.e. the Commercial Partnerships and Companies Code, the Parent Entity is required
to create reserve capital for any potential (future) or existing losses, to which no less than 8% of a given financial year’s
profit is transferred until the reserve capital has been built up to no less than one-third of the registered share capital. The
reserve capital created in this manner may not be employed otherwise than in covering the loss reported in the financial
statements. As at 31 December 2023 the statutory reserve capital in the Group’s entities amounted to PLN 760 million, of
which PLN 667 million relates to the Parent Entity, and is recognised in retained earnings.
Information related to dividends paid may be found in Note 12.2.
Note 8.3 Liquidity management policy
The Management Board of the Parent Entity is responsible for financial liquidity management in the Group and compliance
with adopted policy. The Financial Liquidity Committee is a body supporting the Management Board in this regard.
The management of financial liquidity in the Group is performed in accordance with the Financial Liquidity Management
Policy in the KGHM Polska Miedź S.A. Group. This document describes processes of managing financial liquidity in the
Group, which are realised by Group companies, while their organisation, coordination and supervision is performed by the
Parent Entity by using appropriate procedures and instruments. The basic principles resulting from this document are:
• assuring the stable and effective financing of the Group’s activities,
• continuous monitoring of the Group’s debt level,
• effective management of working capital, and
• coordination, by the Parent Entity, of processes of financial liquidity management in the Group companies.
Under the liquidity management process, the Group utilises instruments which enhance its effectiveness. One of the
instruments used by the Group to deal with on-going operating activities is cash pooling – locally in PLN, USD and EUR, and
internationally - in USD. The cash pooling service is aimed at optimising the management of cash resources, limiting interest
costs, the effective financing of current working capital needs and the support of short-term financial liquidity in the Group.
In order to support current liquidity and to optimise the service of cash management in a group of accounts, the Parent
Entity fulfils the function of the Coordinator and entered into an overdraft facility agreement in the amount of PLN 250
million with availability to 30 June 2024 and the option of automatic extension by subsequent two years with the bank in
which the cash pooling system operates.
In 2023, the Parent Entity carried out the process of obtaining short-term financing and continued actions connected with
developing the reverse factoring program.
In order to support the process of working capital management, the Parent Entity continuously transfers trade payables to
reverse factoring.
The available reverse factoring program is treated by the Group as an efficient tool supporting the process of working
capital management and is aimed at diversification of sources of financing of working capital. Contracts with factors were
entered into for an indefinite period.
Moreover, work connected with prolonging the availability of long-term financing was carried out in the reporting period.
Actions were continued aimed at conducting safe and responsible financial policy by basing the financing on diversified and
long-term instruments.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
98
Note 8.3.1 Contractual maturities for financial liabilities
Financial liabilities – as at 31 December 2023
Maturity period
Total
(without
discounting)
Carrying
amount
Contractual maturities from the
end of the reporting period
up to
3 months
over 3 months
to 12 months
over 1 to
3 years
over
3 years
Borrowings
143
419
1 029
1 833
3 424
2 939
Debt securities liabilities
-
534
240
1 899
2 673
2 002
Lease liabilities
32
91
206
1 274
1 603
784
Trade payables
3 061
41
37
338
3 477
3 319
Similar payables – reverse factoring
2 268
753
-
-
3 021
3 021
Derivatives – currency contracts*
83
362
39
-
484
483
Derivatives – commodity contracts –
metals*
5
6
-
-
11
11
Derivatives – interest rates
-
-
-
80
80
181
Embedded derivatives
26
-
-
-
26
26
Other financial liabilities
253
34
23
9
319
321
Total
5 871
2 240
1 574
5 433
15 118
13 087
*Financial liabilities arising from derivatives are calculated at their intrinsic values excluding the discount effect.
Overdue liabilities
Overdue period
up to 1 month
over 1 months
to 12 months
over 1 year to
3 years
over
3 years
Total/Carrying
amount
Trade payables
28
15
1
1
45
The above tables regarding maturities do not include financial guarantees in the amount of PLN 872 million, which are due
if there is a breach in contractual terms by parties to which the guarantees were granted and toward which the Group
cannot postpone payments, that is they must be paid on demand within 3 months. Details on financial guarantees and
their maturity dates were described in Note 8.6.
Financial liabilities – as at 31 December 2022
Maturity period
Total
(without
discounting)
Carrying
amount
Contractual maturities from the
end of the reporting period
up to
3 months
over 3 months
to 12 months
over 1 to 3
years
over
3 years
Borrowings
803
390
946
1 778
3 917
3 697
Debt securities liabilities
-
174
699
2 093
2 966
2 002
Lease liabilities
27
63
165
1 303
1 558
744
Trade payables
3 013
11
26
344
3 394
3 210
Similar payables – reverse factoring
5
13
-
-
18
18
Derivatives – currency contracts*
-
2
1
-
3
146
Derivatives – commodity contracts –
metals*
13
26
1
-
40
395
Derivatives – interest rates
-
-
28
348
376
569
Embedded derivatives
43
-
-
-
43
43
Other financial liabilities
120
38
51
7
216
211
Total
4 024
717
1 917
5 873
12 531
11 035
*Financial liabilities arising from derivatives are calculated at their intrinsic values excluding the discount effect.
Overdue liabilities
Overdue period
up to 1 month
over 1 months
to 12 months
over 1 year to
3 years
over
3 years
Total/Carrying
amount
Trade payables
12
3
36
1
52
The above tables on maturity periods do not contain financial guarantees in the amount of PLN 969 million, which are due
if contractual terms are breached by the parties towards which the guarantee was granted and the Group does not have
an option to delay the payment, that is it must be paid on demand within 3 months.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
99
Note 8.4 Borrowings
Accounting policies
Liabilities arising from borrowings are initially recognised at fair value, less (in the case of payment) or plus (in the case of
accrual) transaction costs which are an integral part of the financing drawn, and are measured at amortised cost at the
reporting date using the effective interest rate method. Accrued interest is recognised in finance costs, unless it is
capitalised through property, plant and equipment or intangible assets.
Note 8.4.1 Net debt
As at
31 December 2023
As at
31 December 2022
Bank loans
637
573
Loans
1 849
1 987
Debt securities
1 600
2 000
Leases
675
660
Note 7.1
Non-current liabilities due to borrowings
4 761
5 220
Bank loans
30
690
Loans
423
447
Debt securities
402
2
Leases
109
84
Note 7.1
Current liabilities due to borrowings
964
1 223
Total borrowings
5 725
6 443
Note 8.5
Free cash and cash equivalents
1 702
1 179
Net debt
4 023
5 264
Liabilities due to borrowings, debt securities and leases - breakdown by currency (translated into PLN) and by type
of interest rate
As at
31 December 2023
As at
31 December 2022
PLN/WIBOR
2 083
2 069
EUR/EURIBOR
17
16
EUR/fixed
25
32
USD/USD LIBOR
-
528
USD/SOFR
982
-
PLN/fixed
802
794
USD/fixed
1 755
2 961
CAD/fixed
49
41
Other
12
2
Total
5 725
6 443
As at 31 December 2023, the Group’s liabilities due to borrowing, debt securities issued and leases, translated into PLN,
amounted to PLN 5 725 million, or broken down by currencies: USD 695 million, PLN 2 885 million, EUR 10 million, CAD 16
million and in other currencies in the amount of PLN 12 million (as at 31 December 2022 liabilities, translated into PLN,
amounted to PLN 6 443 million, or broken down by currencies: USD 793 million, PLN 2 863 million, EUR 10 million, CAD 13
million and in other currencies in the amount of PLN 2 million).
As at 31 December 2023, the balance of trade payables transferred to reverse factoring by the Group amounted
to PLN 3 021 million (as at 31 December 2022: PLN 18 million).
Trade payables transferred to reverse factoring are presented in the statement of financial position as “Trade and similar
payables” and are in the category of “similar”, as due to the significant judgment of the Group presented in Note 10.3 of
these consolidated financial statements, such a presentation most accurately presents the nature of these transactions.
The structure of debt confirms the effective advancing of the strategy of the Group, aimed at ensuring long term financial
stability by basing the financial structure on diversified and long term financing sources.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
100
Note 8.4.2 Net debt changes
As at
31 December
2022
Cash flows
Accrued
interest
Exchange
differences
Other
changes*
As at
31 December
2023
Liabilities due to borrowing
Bank loans
1 263
( 572)
75
( 95)
( 4)
667
Loans
2 434
23
90
( 264)
( 11)
2 272
Debt securities
2 002
( 172)
172
-
-
2 002
Leases
744
( 124)
41
( 1)
124**
784
Total debt
6 443
( 845)
378
( 360)
109
5 725
Free cash and cash equivalents
1 179
523
-
-
-
1 702
Net debt
5 264
(1 368)
378
( 360)
109
4 023
Proceeds from/(expenditures
on) derivatives associated with
external financing
-
91
-
-
-
-
Cash flows associated with
borrowing following the
inclusion of impact of
derivatives
-
(1 277)
-
-
-
-
* Including at the date of obtaining control of INVEST PV 7 Sp. z o.o. - leases PLN (2) million.
** Including PLN 126 million due to modification and conclusion of new lease agreements.
As at
31 December 2021
Cash
flows
Accrued
interest
Exchange
differences
Other
changes
As at
31 December
2022
Liabilities due to borrowing
Bank loans
735
530
68
( 25)
( 45)
1 263
Loans
2 568
( 417)
79
206
( 2)
2 434
Debt securities
2 001
( 130)
131
-
-
2 002
Leases
645
( 93)
33
-
159**
744
Total debt
5 949
( 110)
311
181
112
6 443
Free cash and cash equivalents
1 880
( 701)
-
-
-
1 179
Net debt
4 069
591
311
181
112
5 264
Proceeds from/(expenditures
on) derivatives associated with
external financing
-
41
-
-
-
-
Cash flows associated with
borrowing following the
inclusion of impact of
derivatives
-
632
-
-
-
-
** Including PLN 165 million due to modification and conclusion of new lease agreements
Reconciliation of cash flows associated with borrowing following the inclusion of impact of derivatives in the
consolidated statement of cash flows
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
I. Financing activities
( 503)
142
Proceeds from borrowings
1 673
677
Proceeds from derivatives associated with external financing
70
130
Repayment of borrowings
(2 051)
( 425)
Repayment of lease liabilities
( 83)
( 59)
Repayment of interest on borrowings and debt securities
( 30)
( 79)
Repayment of interest on leases
( 1)
( 10)
Expenditures on derivatives associated with external financing
( 81)
( 92)
II. Investing activities
( 251)
( 214)
Paid capitalised interest on borrowings
( 353)
( 214)
Proceeds on settlement of an instrument
hedging interest rate of bonds
102
-
III. Changes in free cash and cash equivalents
523
( 701)
TOTAL (I+II+III)
(1 277)
629
Currency risk and interest rate risk are related to borrowings. A description of exposures to financial risks may be found
in Note 7.5.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
101
Note 8.4.3 Detailed information concerning the main sources of borrowings
As at 31 December 2023, the Group had open credit lines, loans and debt securities with a total balance of available
financing in the amount of PLN 14 937 million, out of which PLN 4 941 million had been drawn (as at 31 December 2022
the Group had open credit lines and investment loans with a total balance of available financing in the amount of PLN
15 386 million, out of which PLN 5 699 million had been drawn).
The structure of financing sources is presented below.
Unsecured, revolving syndicated credit facility
A credit facility in the amount of USD 1 500 million (PLN 5 903 million), obtained on the basis of a financing agreement
concluded by the Parent Entity with a syndicate of banks in 2019 with a maturity of 20 December 2024 and an option to
extend it by a further 2 years (5+1+1). In the years 2020-2021 the Parent Entity received consent from Syndicate Members
to extend the term of the agreement by 2 years in total, i.e. to 20 December 2026. The limit of available financing during
the extension period will amount to USD 1 438 million (PLN 5 659 million). The funds acquired through this credit facility
are used to finance general corporate purposes. Interest is based on SOFR plus a bank margin, depending on the net
debt/EBITDA financial ratio.
The credit facility agreement obliges the Group to comply with the financial covenant and non-financial covenants.
Financing parameters meet the standard conditions of these types of transactions. Pursuant to contractual terms and
conditions, the Parent Entity is obliged to report the level of financial covenant for the reporting periods, i.e. as at 30 June
and as at 31 December. The Parent Entity continuously monitors the risk of exceeding the level of the financial covenant
stipulated in the credit facility agreement. As at the reporting date, during the financial year and after the reporting date,
up to the publication of these consolidated financial statements, the value of the financial covenant subject to the
obligation to report as at 30 June 2023 and as at 31 December 2023, complied with the provisions of the agreement.
2023
2022
Amount granted
5 903
6 603
Amount of the liability
-
528
Investment loans
Loans, including investment loans granted to the Parent Entity by the European Investment Bank in the total amount
of PLN 3 340 million:
1. Investment loan in the amount of PLN 2 000 million, with three instalments drawn and the payback periods expiring
on 30 October 2026, 30 August 2028 and 23 May 2029 and utilised to the maximum available amount. The funds
acquired through this loan were used to finance Parent Entity investment projects related to modernisation of
metallurgy and development of the Żelazny Most tailings storage facility. The loan’s instalments are based on a fixed
interest rate.
2. Investment loan in the amount of PLN 1 340 million granted in December 2017 with a financing period of 12 years. The
Parent Entity has drawn four instalments under this loan with maturities on 28 June 2030, 23 April 2031, 11 September
2031 and 6 March 2035. The funds acquired through this loan are used to finance the Parent Entity’s projects related
to development and replacement at various stages of the production process. Interest on the loan’s three instalments
is based on a fixed interest rate. The last instalment received in 2023 was drawn based on the variable SOFR rate plus
a bank margin, which is dependent on the net debt/EBITDA financial ratio.
The loan agreements with the European Investment Bank oblige the Group to comply with the financial covenant and
non-financial covenants commonly stipulated in such types of agreements. Pursuant to contractual terms and conditions,
the Parent Entity is obliged to report the level of the financial covenant for the reporting periods, i.e. as at 30 June and as
at 31 December. The Parent Entity continuously monitors the risk of exceeding the levels of the financial covenant
stipulated in the loan agreements. As at the reporting date, during the financial year and after the reporting date, up to
the publication of these consolidated financial statements, the value of the financial covenant subject to the obligation to
report as at 30 June 2023 and as at 31 December 2023, complied with the provisions of the loan agreements.
2023
2022
Amount granted
3 582
3 528
Amount of the liability
2 272
2 434
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
102
Other bank loans
Bilateral bank loans in the total amount of PLN 3 452 million, are used to finance working capital and are a supporting
tool in the management of financial liquidity and support financing of advanced investment undertakings. The Group
holds lines of credit in the form of short-term and long-term credit agreements. The funds under open lines of credit are
available in PLN, USD and EUR, with interest based on a fixed interest rate or variable WIBOR, SOFR and EURIBOR plus a
margin.
2023
2022
Amount granted
3 452
3 255
Amount of the liability
667
735
Debt securities
A bond issue program of the Parent Entity was established on the Polish market by an issue agreement on 27 May 2019.
The issue with a nominal value of PLN 2 000 million took place on 27 June 2019, under which bonds were issued
with a maturity of 5 years in the amount of PLN 400 million and a redemption date of 27 June 2024 as well as bonds
with a maturity of 10 years in the amount of PLN 1 600 million and a redemption date of 27 June 2029.
The nominal value of one bond is PLN 1 000, and the issue price is equal to the nominal value. Interest on the bonds is
based on variable WIBOR plus a margin.
The funds from the issue of the bonds are used to finance general corporate purposes.
2023
2022
Nominal value of the issue
2 000
2 000
Amount of the liability
2 002
2 002
The aforementioned sources ensure the availability of external financing in the amount of PLN 14 937 million. The funds
available for use from these sources fully cover the liquidity needs of the Group.
The syndicated credit in the amount of USD 1 500 million (PLN 5 903 million), the investment loans in the amount
of PLN 3 340 million, and the bilateral bank loans granted to the Parent Entity in the amount of PLN 3 398 million, are
unsecured.
Repayment of a part of the liabilities of other Group companies due to bilateral bank loans and other loans are secured
amongst others by statements on submitting to an enforcement regime, contractual mortgages, registered pledges
or the assignment of receivables. The carrying amount of guarantees of repayment of external financing as at 31 December
2023 amounted to PLN 230 million, including property, plant and equipment in the amount of PLN 114 million (as at 31
December 2022: PLN 243 million, including property, plant and equipment in the amount of PLN 117 million).
Note 8.5 Cash and cash equivalents
Accounting policies
Cash and cash equivalents include mainly cash in bank accounts and deposits with maturities of up to three months
from the date of their placement (the same applies to the statement of cash flows). Cash is measured at its nominal
amount plus interest, including a loss allowance for expected credit losses (Note 7.5.2.1).
Total bank and other loans, debt securities
2023
2022
Amount granted / Nominal value of the issue
14 937
15 386
Amount of the liability
4 941
5 699
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
103
As at
31 December 2023
As at
31 December 2022
Cash in bank accounts
602
619
Other financial assets with a maturity of up to 3 months
from the date of acquisition - deposits
1 119
573
Other cash
8
8
Total cash and cash equivalents, of which:
1 729
1 200
Restricted cash
27
21
Note 8.4.1
Free cash and cash equivalents
1 702
1 179
As at 31 December 2023, the Group had cash in bank deposits in the amount of PLN 73 million (as at 31 December 2022
PLN 66 million), which are funds in separate VAT accounts, designated for servicing split payments. These funds are
gradually used, mainly to pay the VAT payables to suppliers and other payments mandated by law.
Note 8.6 Liabilities due to guarantees granted
Guarantees are an essential financial liquidity management tool of the Group, thanks to which the Group’s companies and
the joint venture Sierra Gorda S.C.M. do not have to use their cash in order to secure their liabilities towards other entities.
Accounting policies
The Group issued guarantees which meet the definition of contingent liabilities pursuant to IAS 37 and recognises them
in contingent liabilities and guarantees, which meet the definition of financial guarantees under IFRS 9, and which are
measured and recognised as financial instruments pursuant to this standard.
At the moment of initial recognition, the Group recognises in the statement of financial position a financial guarantee at
its fair value, in the item:
• financial assets measured at amortised cost (other financial assets),
• other liabilities (deferred income)
The liability due to the financial guarantee granted as at the end of the reporting period is recognised at the higher of two
amounts: the initial value of the issued guarantee less the amount of profits recognised in profit or loss on guarantees,
or the amount of an allowance for expected credit losses – set pursuant to the principles of the general model, described
in accounting policies in Note 7.5.2.
Important estimates, assumptions and judgements
For the calculation of expected credit losses – ECL - the Group adopts estimates for the rating, PD (probability of default)
and LGD (loss given default) parameters. Calculation of the expected credit losses takes place in the horizon remaining
to the end of the guarantee, while the rating of a guarantee’s beneficiary is adopted as the rating of the entity used for
the purposes of calculating the PD parameter.
As at 31 December 2023, the liabilities of the Group due to guarantees and letters of credit granted amounted to a total of
PLN 1 132 million (as at 31 December 2022, PLN 1 156 million) and due to promissory note payables amounted to PLN 257
million (as at 31 December 2022, PLN 170 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
104
The most significant items of liabilities due to guarantees granted are liabilities of the Parent Entity aimed at securing the
following obligations:
− Sierra Gorda S.C.M. – a corporate guarantee in the amount of PLN 866 million (USD 220 million) set as security on a
bank loan drawn by Sierra Gorda S.C.M. The guarantee’s validity period falls on September 2024. The carrying amount
of the liability due to a financial guarantee granted was recognised in the amount of PLN 18 million – the initial amount
of the issued guarantee decreased by the amount of revenues recognised in profit or loss due to guarantees (the
amount of expected credit losses (Stage 2) is PLN 10 million)*,
− other entities, including the Parent Entity:
- PLN 107 million - securing the proper execution by the Parent Entity of future environmental obligations related
to the obligation to restore terrain, following the conclusion of operations of the Żelazny Most tailings storage
facility (as at 31 December 2022 in the amount of PLN 126 million), the guarantee is valid for up to 1 year,
- PLN 100 million - securing the obligations incurred by Brokerage House due to settlements of transactions
entered into by the Parent Entity on the markets run by Towarowa Giełda Energii S.A, the guarantee is valid for
up to 1 year,
- PLN 16 million - securing claims to cover costs by the Group related to collecting and processing waste, the
guarantee is valid up to 5 years,
- PLN 35 million (PLN 15 million, EUR 3 million and CAD 2 million) securing the obligations related to proper
execution of agreements concluded by the Group (as at 31 December 2022 in the amount of PLN 37 million, or
PLN 30 million and CAD 2 million), the guarantee is valid for up to 5 years,
- PLN 2 million - securing obligations related to tax and customs duties, the guarantee is valid indefinitely,
- PLN 6 million – financial guarantees, securing the obligations of Group companies, the guarantees are valid for
up to 1 year*.
As far as the Group is aware, at the end of the reporting period the Group determined the probability of payments resulting
from the liabilities due to guarantees granted as low.
* The financial guarantee was recognised pursuant to par. 4.2.1. point c of IFRS 9.
Guarantees securing the restoration of tailings storage facilities:
- in the Parent Entity - a guarantee securing potential claims against the Parent Entity in connection with art. 137 section
2 of the Act of 14 December 2012 on waste, based on which the manager of a tailings storage facility is obliged to create
a restoration fund comprised of cash to execute the obligations related to closure, restoration, and oversight, including
monitoring of the tailings storage facility. The fund may be in the form of a separate bank account, a provision or a bank
guarantee. In 2022, the Parent Entity changed the form of the Tailings Storage Facility Restoration Fund from a bank
account to a bank guarantee. As at 31 December 2023, the guarantee amounted to PLN 120 million (as at 31 December
2022: PLN 98 million).
- in KGHM INTERNATIONAL LTD. - bank guarantees securing funds to execute the obligations related to closure,
restoration and oversight, including monitoring of the tailings storage facilities in accordance with the regulatory
requirements of countries where the company has mines and projects. As at 31 December 2023, the guarantees
amounted to PLN 623 million(as at 31 December 2022, PLN 531 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
105
Part 9 – Non-current assets and related liabilities
Note 9.1 Mining and metallurgical property, plant and equipment and intangible assets
Accounting policies – property, plant and equipment
The most important property, plant and equipment of the Group is property, plant and equipment related to the mining
and metallurgical operations, comprised of land, buildings, water and civil engineering structures, such as: primary
mine tunnels (including, in underground mines: shafts, wells, galleries, drifts, primary chambers), backfilling, drainage
and firefighting pipelines, piezometric holes and electricity, signal and optical fiber cables. Pre-stripping costs in open
pit mines and machines, technical equipment, motor vehicles and other movable fixed assets, as well as right-to-use
assets recognised in accordance with IFRS 16 Leases, including perpetual usufruct rights to land, are also included in
mining and metallurgical property, plant and equipment.
Property, plant and equipment, excluding usufruct right-to-use assets, are recognised at cost less accumulated
depreciation and accumulated impairment losses.
In the initial cost of items of property, plant and equipment the Group includes discounted decommissioning costs of
fixed assets related to underground and surface mining and other facilities which, in accordance with binding laws, will
be incurred following the conclusion of activities. Principles of recognition and measurement of decommissioning costs
are presented in Note 9.4.
An asset’s carrying amount includes costs of significant components, regular, major overhauls and significant periodic
repairs, the performance of which determines further use of the asset.
Costs are increased by borrowing costs (i.e. interest and exchange differences representing an adjustment to interest
cost) that were incurred for the purchase or construction of a qualifying item of property, plant and equipment.
Right-to-use assets are initially measured at cost, which comprises the initial lease liability and all lease payments paid
on the date the lease began and before that date, less any lease incentives received, any initial direct costs incurred
by the lessee and an estimate of costs which will be incurred by the lessee due to the disassembly or removal of a base
asset or renovation of the site in which it was placed.
The perpetual usufruct right to land is measured at the amount of the liability on the perpetual usufruct right to land,
which is measured using the perpetual rent method and all lease payments paid on the date the lease began or before
that date (including payments for acquisition of this right on the market).
After the initial recognition, a right-to-use asset, excluding the perpetual usufruct right to land measured using
the perpetual rent method, is measured at cost decreased by accumulated depreciation/amortisation and accumulated
impairment losses, adjusted by the updated measurement of lease liabilities.
Items of property, plant and equipment (excluding land and perpetual usufruct rights to land) are depreciated
by the Group, pursuant to the model of consuming the economic benefits from the given item of property, plant
and equipment:
• using the straight-line method, for items which are used in production at an equal level throughout the period
of their usage,
• using the units of production method, for items in respect of which the consumption of economic benefits is
directly related to the quantity of ore extracted from the deposit or quantity of units produced, and this extraction
or production is not spread evenly through the period of their usage. In particular it relates to buildings and
structures of the mines machines and mining equipment, except for the items of property, plant and equipment
used in metallurgical plants, where their usage results from the useful economic life of the given item of property,
plant and equipment.
The useful lives, and therefore the depreciation rates of fixed assets used in the production of copper are adapted to
the plans for the closure of operations, and in the case of right-to-use assets to the earlier of these two dates – either
to the useful life end date or to the lease end date, unless the ownership of an asset is transferred to the Group before
the end of the lease, in which case depreciation rates are adjusted to the estimated useful life end date.
For individual groups of fixed assets, the following useful lives have been adopted, estimated based on the anticipated
useful lives of mines and metallurgical plants with respect to deposit content:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
106
For own fixed assets:
Group
Fixed assets type
Total useful lives
Buildings and land
Land
Not subject to depreciation
Buildings:
- buildings in mines and metallurgical plants,
- sheds, reservoirs, container switchgears
40-100 years
20-30 years
Primary mine tunnels
22-90 years
Pipelines:
- backfilling to transfer sand with water,
- technological, drainage, gas and firefighting
6-9 years
22-90 years
Electricity, signal and optical fibre cables
10-70 years
Technical equipment,
machines, motor
vehicles and other fixed
assets
Technical equipment, machines:
- mining vehicles, mining roof support
- conveyor belts, belt weigher
- switchboards, switchgears
4-10 years
10-66 years
4-50 years
Motor vehicles:
- underground electric locomotives,
- mining vehicles, railway vehicles, tankers,
transportation platforms
- trolleys, forklift, battery-electric truck
- cars, trucks, special vehicles
- underground diesel locomotives
20-50 years
7-35 years
7-22 years
5-22 years
10-20 years
Other fixed assets, including tools and
equipment
5-25 years
Pre-stripping costs
Total useful life depends on the expected
individual mine life:
- Robinson
- Carlota
14 years
2 years
The individual significant parts of a fixed asset (significant components), whose useful lives are different from the
useful life of the given fixed asset as a whole are depreciated separately, applying a depreciation rate which reflects
its anticipated useful life.
For the property, plant and equipment due to right-to-use assets:
Group
Type of right-to-use
Total period of use
Buildings and land
Perpetual usufruct right to land measured
using the perpetual rent method
Not subject to depreciation
Transmission easements
6-54 years
(period of depreciation
depends on the period of
depreciation of an asset in
respect of which a transmission
easement was established)
Land
5-30 years
Buildings and Structures
3-5 years
Computer sets
3 years
Technical
equipment,
machines, motor
vehicles and other
fixed assets
Machines and technical equipment
3-4 years
Motor vehicles
3 years
Equipment and other
5 years
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
107
Accounting policies – intangible assets
Mining and metallurgical intangible assets are mainly comprised of exploration and evaluation assets, and water rights
in Chile.
Exploration and evaluation assets
The following expenditures are classified as exploration and evaluation assets:
• geological projects,
• obtaining environmental decisions,
• obtaining concessions and mining usufruct for geological exploration,
• work related to drilling (drilling; geophysical and hydrogeological research; geological, analytical and geotechnical
services; etc.),
• the purchase of geological information,
• the preparation of geological documentation and its approval,
• the preparation of economic and technical assessments of resources for the purpose of making decisions
regarding applying for mine operating concessions, and
• equipment usage costs (property, plant and equipment) used in exploratory work.
Expenditures on exploration and evaluation assets are measured at cost less accumulated impairment losses and are
recognised as intangible assets not yet available for use.
The Group is required to test an individual entity (project) for impairment when:
• the technical feasibility and commercial viability of extracting mineral resources is demonstrable; and
• the facts and circumstances indicate that the carrying amount of exploration and evaluation assets may exceed
their recoverable amount.
Any potential impairment losses are recognised prior to reclassification resulting from the demonstration of the
technical and economic feasibility of extracting the mineral resources.
Significant estimates, assumptions and judgments
Significant estimates and assumptions relating to impairment of mining and metallurgical property, plant and
equipment and intangible assets are presented in Note 3.
The net value of mining and metallurgical property, plant and equipment which are subject to depreciation using the
natural method as at 31 December 2023 amounted to PLN 1 156 million (as at 31 December 2022: PLN 1 694 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
108
Mining and metallurgical property, plant and equipment and intangible assets
Property, plant and equipment
Intangible assets
Buildings and
land
Technical
equipment,
machines, motor
vehicles and other
fixed assets
Fixed assets
under
construction
Water rights
Exploration and
evaluation assets
Other
Total
As at 1 January 2022
Gross carrying amount
21 852
16 851
5 791
253
3 095
1 295
49 137
Accumulated depreciation/amortisation
(10 438)
(8 859)
-
-
-
( 333)
(19 630)
Impairment losses
(2 766)
( 806)
( 61)
( 186)
(1 664)
( 25)
(5 508)
Net carrying amount, of which:
8 648
7 186
5 730
67
1 431
937
23 999
own fixed assets and intangible assets, of which:
8 191
7 152
5 730
67
1 431
937
23 508
recognised in assets held for sale (disposal group)
-
-
-
-
119
-
119
recognised as “mining and metallurgical property, plant and equipment and
intangible assets”
8 191
7 152
5 730
67
1 312
937
23 389
leased fixed assets (right-to-use)
457
34
-
-
-
-
491
Changes in 2022 net
Settlement of fixed assets under construction
691
1 750
(2 441)
-
-
-
-
Purchase
-
-
1 901
4
114
18
2 037
Leases – new contracts, modification of contracts
133
12
-
-
-
-
145
Stripping cost in surface mines
367
-
-
-
-
-
367
Self-constructed
-
-
1 027
-
68
2
1 097
Capitalised borrowing costs
-
-
182
-
42
2
226
Note 9.4
Change in provisions for decommissioning costs of mines and tailings storage
facilities
( 42)
-
-
-
-
-
( 42)
Note 4.1
Depreciation/amortisation, of which:
( 784)
(1 239)
-
-
-
( 20)
(2 043)
own fixed assets and intangible assets
( 756)
(1 230)
-
-
-
( 20)
(2 006)
leased fixed assets (right-to-use)
( 28)
( 9)
-
-
-
-
( 37)
Note 4.4
(Recognition)/reversal of impairment losses
-
( 7)
( 6)
-
( 55)
( 2)
( 70)
own fixed assets and intangible assets
-
( 7)
( 6)
-
( 55)
( 2)
( 70)
leased fixed assets (right-to-use)
-
-
-
-
-
-
-
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
77
51
40
6
108
2
284
Liquidation, sale, donations and free of charge transfer
( 5)
( 40)
( 19)
-
-
( 5)
( 69)
Settlement from fixed assets under construction into intangible assets
-
-
( 38)
-
-
-
( 38)
As at the date of loss of control of a subsidiary
-
-
-
-
( 125)
-
( 125)
Transfer of mining and metallurgical property, plant and equipment into other
property, plant and equipment
-
-
( 197)
-
-
-
( 197)
Other changes
( 3)
( 24)
( 56)
( 4)
94
88
95
As at 31 December 2022
Gross carrying amount
23 383
17 466
6 147
274
3 480
1 411
52 161
Accumulated depreciation/amortisation
(11 463)
(9 449)
-
-
-
( 362)
(21 274)
Impairment losses
(2 838)
( 328)
( 24)
( 201)
(1 803)
( 27)
(5 221)
Net carrying amount, of which:
9 082
7 689
6 123
73
1 677
1 022
25 666
own fixed assets and intangible assets
8 521
7 652
6 123
73
1 677
1 022
25 068
leased fixed assets (right-to-use)
561
37
-
-
-
-
598
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
109
As at 31 December 2022
Gross carrying amount
23 383
17 466
6 147
274
3 480
1 411
52 161
Accumulated depreciation/amortisation
(11 463)
(9 449)
-
-
-
( 362)
(21 274)
Impairment losses
(2 838)
( 328)
( 24)
( 201)
(1 803)
( 27)
(5 221)
Net carrying amount, of which:
9 082
7 689
6 123
73
1 677
1 022
25 666
own fixed assets and intangible assets
8 521
7 652
6 123
73
1 677
1 022
25 068
leased fixed assets (right-to-use)
561
37
-
-
-
-
598
Changes in 2023 net
Settlement of fixed assets under construction
1 392
2 110
(3 502)
( 2)
-
2
-
Purchase
-
-
2 313
2
167
91
2 573
Leases – new contracts, modification of contracts, other changes
11
53
-
-
-
-
64
Stripping cost in surface mines
174
-
-
-
-
-
174
Self-constructed
-
-
1 290
-
110
2
1 402
Capitalised borrowing costs
-
-
177
-
69
1
247
Note 9.4
Change in provisions for decommissioning costs of mines and tailings storage
facilities
100
-
-
-
-
-
100
Note 4.1
Depreciation/amortisation, of which:
( 898)
(1 369)
-
-
-
( 29)
(2 296)
own fixed assets and intangible assets
( 855)
(1 348)
-
-
-
( 29)
(2 232)
leased fixed assets (right-to-use)
( 43)
( 21)
-
-
-
-
( 64)
Note 4.4
(Recognition)/reversal of impairment losses, of which:
(1 542)
(1 109)
( 946)
23
( 365)
( 43)
(3 982)
own fixed assets and intangible assets
(1 453)
(1 103)
( 946)
23
( 365)
( 43)
(3 887)
leased fixed assets (right-to-use)
( 89)
( 6)
-
-
-
-
( 95)
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
( 82)
( 93)
( 48)
( 7)
( 154)
-
( 384)
Liquidation, sale, donations and free of charge transfer
( 7)
( 30)
( 5)
-
-
( 10)
( 52)
Other changes
4
14
( 103)
( 1)
34
35
( 17)
As at 31 December 2023
Gross carrying amount
23 887
18 503
6 265
245
3 541
1 493
53 934
Accumulated depreciation/amortisation
(11 688)
(9 890)
-
-
-
( 354)
(21 932)
Impairment losses
(3 965)
(1 348)
( 966)
( 157)
(2 003)
( 68)
(8 507)
Net carrying amount, of which:
8 234
7 265
5 299
88
1 538
1 071
23 495
own fixed assets and intangible assets
7 794
7 202
5 299
88
1 538
1 071
22 992
leased fixed assets (right-to-use)
440
63
-
-
-
-
503
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
110
Note 9.1.1 Mining and metallurgical property, plant and equipment – major fixed assets under construction
As at
31 December 2023
As at
31 December 2022
Deposit Access Program
3 449
3 318
Construction of the SW-4 shaft
625
589
Outfitting the mines
233
163
Investment activity related to the development and
operation of the Żelazny Most Tailings Storage Facility
173
280
Development of pipeline network in mines
95
52
Purchase of mining machinery
70
36
Construction of conveyors - the Lubin mine
67
74
Damówka pumping station with a backwater pipeline in the
Tailings Division
36
145
BAT As – Installation for arsenic and mercury removal from
gases before Solinox installation
1
117
Note 9.1.2 Exploration and evaluation assets
Significant expenditures on exploration and evaluation assets are presented in the table below.
Operating segment
Description
As at
31 December 2023
As at
31 December 2022
Gross
carrying
amount
Impairment
losses
Gross
carrying
amount
Impairment
losses
KGHM
INTERNATIONAL LTD.
Expenditures related to exploratory
work, mainly within the Victoria project
located in the Sudbury Basin in Canada
2 164
1 102
2 192
832
KGHM
INTERNATIONAL LTD.
Expenditures related to exploratory
work within the Ajax project
614
614
671
671
Note 9.1.3 Expenses related to mining and metallurgical assets
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Purchase
(2 573)
(2 037)
Self-constructed fixed assets
(1 402)
(1 097)
Stripping costs of surface mines
( 174)
( 367)
Costs of external financing
( 247)
( 226)
Change in liabilities due to purchases
229
( 21)
Other
55
70
Total*
(4 112)
(3 678)
* Including expenses on exploration and evaluation assets in the amount of PLN 340 million (in 2022: PLN 159 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
111
Note 9.2 Other property, plant and equipment and intangible assets
Accounting policies
Other property, plant and equipment are recognised at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is done using the straight-line method.
For individual groups of fixed assets, the following useful lives have been adopted:
The Group
Total useful lives
Buildings
25-60 years
Technical equipment and machines
4-15 years
Motor vehicles
3-14 years
Other fixed assets
5-10 years
Intangible assets presented as “other intangible assets” include in particular: acquired property rights not related to
mining operations and software as well as CO
2
emission allowances (the appropriate accounting policies in this regard
may be found in Note 9.8). These assets are measured at cost less any accumulated amortisation and impairment losses.
Intangible assets are amortised using the straight-line method over their anticipated useful lives. The useful lives
of the main groups of intangible assets are as follows:
The Group
Total useful lives
Acquired property rights
not related to mining activities
5-50 years
Software
2-5 years
Other intangible assets
40-50 years
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
112
Other property, plant and equipment and intangible assets
Property, plant and equipment
Buildings and land
Technical equipment,
machines,
motor vehicles
and other fixed assets
Fixed assets
under construction
Intangible
assets
Total
As at 1 January 2022
Gross carrying amount
2 897
3 058
216
624
6 795
Accumulated depreciation/amortisation
( 993)
(1 676)
-
( 230)
(2 899)
Impairment losses
( 404)
( 258)
( 5)
( 144)
( 811)
Net carrying amount, of which:
1 500
1 124
211
250
3 085
own fixed assets and intangible assets, of which:
1 334
1 078
211
250
2 873
recognised in assets held for sale (disposal group)
197
11
2
-
210
recognised as “other property, plant and equipment and intangible assets”
1 137
1 067
209
250
2 663
leased fixed assets (right-to-use), of which:
166
46
-
-
212
recognised in assets held for sale (disposal group)
32
-
-
-
32
recognised as “other property, plant and equipment and intangible assets”
134
46
-
-
180
Changes in 2022 net
Settlement of fixed assets under construction
267
284
( 551)
-
-
Purchase
-
-
218
107
325
Self-constructed
-
-
111
-
111
Leases – new contracts, modification of contracts
4
16
-
-
20
Note 4.1
Depreciation/amortisation, of which:
( 94)
( 236)
-
( 25)
( 355)
own fixed assets and intangible assets
( 93)
( 218)
-
( 25)
( 336)
leased fixed assets (right-to-use)
( 1)
( 18)
-
-
( 19)
Note 4.4
(Recognition)/reversal of impairment losses
( 62)
( 3)
( 1)
( 8)
( 74)
Liquidation, sale, donations and free of charge transfer
-
( 9)
-
( 32)
( 41)
Exchange differences from the translation of statements of operations with a functional currency other
than PLN
27
-
-
-
27
Transfer from mining and metallurgical property, plant and equipment to other property, plant and
equipment
-
-
197
-
197
Recognition/(redemption) of CO
2
emission allowances received free of charge
-
-
-
( 78)
( 78)
As at the date of loss of control of a subsidiary
( 229)
( 11)
( 2)
-
( 242)
Other changes
( 20)
18
( 13)
4
( 11)
As at 31 December 2022
Gross carrying amount
2 919
3 194
176
620
6 909
Accumulated depreciation/amortisation
(1 058)
(1 753)
-
( 250)
(3 061)
Impairment losses
( 468)
( 258)
( 6)
( 152)
( 884)
Net carrying amount, of which:
1 393
1 183
170
218
2 964
own fixed assets and intangible assets
1 263
1 140
170
218
2 791
leased fixed assets (right-to-use)
130
43
-
-
173
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
113
Property, plant and equipment
Buildings and land
Technical equipment,
machines,
motor vehicles
and other fixed assets
Fixed assets
under construction
Intangible
assets
Total
As at 31 December 2022
Gross carrying amount
2 919
3 194
176
620
6 909
Accumulated depreciation/amortisation
(1 058)
(1 753)
-
( 250)
(3 061)
Impairment losses
( 468)
( 258)
( 6)
( 152)
( 884)
Net carrying amount, of which:
1 393
1 183
170
218
2 964
own fixed assets and intangible assets
1 263
1 140
170
218
2 791
leased fixed assets (right-to-use)
130
43
-
-
173
Changes in 2023 net
Settlement of fixed assets under construction
115
324
( 439)
-
-
Purchase
-
-
323
249
572
Self-constructed
-
-
126
-
126
Leases – new contracts, modification of contracts, other changes
1
51
-
-
52
Note 4.1
Depreciation/amortisation, of which:
( 66)
( 252)
-
( 27)
( 345)
own fixed assets and intangible assets
( 65)
( 227)
-
( 27)
( 319)
leased fixed assets (right-to-use)
( 1)
( 25)
-
-
( 26)
Note 4.4
(Recognition)/reversal of impairment losses
-
3
-
( 1)
2
Liquidation, sale, donations and free of charge transfer
( 1)
( 12)
1
( 23)
( 35)
Exchange differences from the translation of statements of operations with a functional currency other
than PLN
( 54)
-
-
-
( 54)
As at the date of obtaining control of a subsidiary
4
21
-
-
25
own fixed assets and intangible assets
2
21
-
-
23
leased fixed assets (right-to-use)
2
-
-
-
2
(Recognition) / redemption of CO
2
emission allowances received free of charge
-
-
-
( 112)
( 112)
Other changes
3
3
44
9
59
As at 31 December 2023
Gross carrying amount
2 925
3 432
231
747
7 335
Accumulated depreciation/amortisation
(1 082)
(1 856)
-
( 282)
(3 220)
Impairment losses
( 448)
( 255)
( 6)
( 152)
( 861)
Net carrying amount, of which:
1 395
1 321
225
313
3 254
own fixed assets and intangible assets
1 263
1 252
225
313
3 053
leased fixed assets (right-to-use)
132
69
-
-
201
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
114
Note 9.3 Depreciation/amortisation
Property, plant and equipment
Intangible assets
from
1 January 2023
to
31 December 2023
from
1 January 2022
to
31 December 2022
from
1 January 2023
to
31 December
2023
From
1 January 2022
to
31 December 2022
Note 4.1
Total
2 585
2 353
56
45
settled in profit or loss
2 260
2 198
51
41
cost of manufacturing
products
2 214
2 153
47
37
administrative expenses
37
36
4
4
selling costs
9
9
-
-
being part of the
manufacturing cost of assets
325
155
5
4
Note 9.4 Provision for decommissioning costs of mines and other technological facilities
Accounting policies
Important estimates, assumptions and judgments
The provision for future decommissioning costs of mines
and other technological facilities is recognised based on
the estimated expected costs of decommissioning of such
facilities and of restoring the sites to their original
condition following the end of operations, which are
made on the basis of ore extraction forecasts (for mining
facilities), and technical-economic studies prepared either
by specialist firms or by the Parent Entity.
In the case of surface mines, certain actions and costs
may influence the scope of restoration work, such as
costs of hauling barren rock, incurred during mine life and
due to its operations, are recognised as operating costs
being an integral part of the production process and are
therefore excluded from costs that are a basis of
calculating the provision for mine decommissioning.
Revaluation of this provision is made in two stages:
1) estimation of the costs of decommissioning mines to
the current value in connection with the change in
prices using the price change indices of construction-
assembly production published by the Central
Statistical Office.
2) discounting of the decommissioning costs to the
current value using effective discount rates calculated
based on the nominal interest rates and the inflation
rate (quotient of the nominal rate and the inflation
rate), whereby:
− the nominal interest rate in the Parent Entity is
based on the yield on treasury bonds at the end of
the reporting period, with maturities nearest to
the planned financial outflow and if there are no
treasury bonds with maturities close to the
planned financial outflows - the nominal interest
rate is determined by the professional judgment
of the Parent Entity’s Management on the basis of
the consistency of the adopted assumptions. In
the KGHM INTERNATIONAL LTD. Group it is the
rate of return on investments in ten- and twenty-
year treasury bills of the US Federal Reserve and
the rate of return on investments in five–year
treasury bonds issued by the governments of
Canada and Chile.
For the measurement of provision, the Parent Entity adopted,
for the years 2024-2025, inflation rates at the level of the
NBP’s forecast from November 2023, that is 4.6% and 3.7%,
respectively, and for subsequent periods at the level of 2.5%,
in line with the long-term inflation target (in the comparable
period, the Parent Entity revised its approach to the discount
rates used to measure environmental provisions. At the end
of 2022, with a bond yield of +/- 6.845% and inflation of +/-
13.1%, the Parent Entity received and applied for the years
2022-2023 a negative real discount rate of -5.53% instead of
a rate of 0%. For the subsequent two measurement periods,
that is for 2024 and 2025, the Parent Entity adopted inflation
rates at the level of the NBP’s forecast, that is 5.9% and 3.5%,
respectively, and for subsequent periods, following the NBP’s
forecast - at the level of 2.5%, in line with the long-term
inflation target).
Moreover, for the first 10 years of measurement of the
provision (that is to 2033), the Parent Entity adopted a risk-
free rate of 5.2% (yield of 10-year treasury bonds) due to the
fact that it is the only publicly available information on the
risk-free rate for the subsequent 10 years, and pursuant to
the adopted judgment, this rate was not modified. The Parent
Entity will adjust the risk-free rate to the level of this rate
announced at every subsequent end of the reporting period
in order to measure the provision at those days (in the
comparable period, for the first 10 years of measurement of
the provision (that is to 2032), a risk-free rate of 6.845% was
adopted).
In turn, taking into account the high volatility of the risk-free
rate that took place in the last period, based on yield of 10-
year treasury bonds, the Parent Entity applied a professional
judgment to determine this rate for the estimation of
provisions falling after a period of 10 years from the end of
the annual reporting period based on the historical
observation of the ratio of the risk-free rate to the assumed
inflation target. As a result of the judgement, the Parent Entity
adopted the risk-free rate of 3.5% for the estimation of
provision after a period of 10 years from the end of the
annual reporting period, which translated into a real discount
rate of 0.98% (in the comparable period the same
assumptions were adopted).
In the KGHM INTERNATIONAL LTD. Group, in the current
period for the purpose of the measurement of the provision
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
115
− the inflation rate is based on the forecast of future
inflation used in the calculation of future
employee benefits liabilities.
A change in the discount rate or in the estimated
decommissioning cost adjusts the value of the relevant
item of fixed assets, unless it exceeds the carrying
amount of the item of fixed assets (any surplus above this
amount is recognised in other operating income).
The increase in the provision due to the time lapse is
recognised in finance costs.
The provision for decommissioning costs of mines and
other technological facilities includes the balance of the
Mine Closure Fund and Tailings Storage Facility
Restoration Fund, which the Parent Entity creates under
separate regulations, i.e. the Act of 9 June 2011
Geological and Mining Law and the Act of 14 December
2012 on waste, respectively. The role of the Funds is to
secure cash for the future realisation by the Parent Entity
of its obligations related to the closure, decommissioning
and restoration of mines and tailings storage facilities, by
collecting them in the manner provided for by the laws.
In the case of the Mine Closure Fund, the Parent Entity
has separated a bank cash account to which it transfers
cash equivalent to 3% of the depreciation charges on
fixed assets of mines, determined in accordance with the
provisions of the Income Tax Act. Details on the credit risk
related to the cash accumulated on the separate account
of Mine Closure Fund are presented in Note 7.5.2.4.
In the case of Tailings Storage Facility Restoration Fund, in
July 2022 the Parent Entity changed the form of securing
the funds of this Fund, replacing a separate bank account
with financial guarantees issued by the bank on demand
of the Parent Entity, of which the Parent Entity is also a
beneficiary. The value of guarantees is updated on an
annual basis. The Parent Entity strives to fully secure
funds for the restoration of individual tailings storage
facilities in the year for which the liquidation and
restoration schedule provides for the closure of a given
tailings storage facility, by systematically increasing the
value of these guarantees.
for decommissioning of mines and other technological
facilities located in the United States of America and Canada,
a real discount rate at the level of 1.17% to 1.90% was
adopted depending on the mine (in the comparable period at
the level of 1.19% to 1.67%).
With regard to the costs of some activities carried out during
the exploratory work of surface mines, which at the same
time serve to restore (recultivate) such pits, the Group made
a judgment and recognised that these costs are mostly
current production costs, because these activities primarily
determine the current mine production and revenue
generation, and their restoration is a secondary effect.
Therefore, the costs of such activities are not included in the
measurement of the restoration provision.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
116
Expenditures on the decommissioning of mines and other facilities in the years 2023-2072
2023*- 2032
2033-2042
2043-2052
2053-2062
2063-2072
Total
Mines
335
529
511
932
151
2 458
Smelters
112
98
2
2
-
214
Total
447
627
513
934
151
2 672
*Expenditures on decommissioning of mines and other facilities in the Parent Entity in 2023 amounted to PLN 2 million.
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Provisions at the beginning of the reporting period
1 893
1 552
Note 9.1
Changes in estimates recognised in fixed assets
100
( 42)
Reclassification of the balance of the Mine Closure
Fund and Tailings Storage Facility Restoration Fund
-
496*
Changes due to loss of control of subsidiaries
-
( 91)
Other
( 19)
( 22)
Provisions at the end of the reporting period, of
which:
1 974
1 893
- non-current provisions
1 923
1 859
- current provisions
51
34
*Change in the presentation to the presentation together with the non-current part of provision for decommissioning costs of mines and other
facilities, which is a result of the change in judgments in 2022 as to the period of expected cash outflows from the fund.
Impact of the change in discount rate on the provision for decommissioning costs of mines and other
technological facilities
As at
31 December 2023
As at
31 December 2022
increase in discount rate by 1 percentage point
( 361)
( 341)
decrease in discount rate by 1 percentage point
482
795
Note 9.5 Capitalised borrowing costs
During the period from 1 January 2023 to 31 December 2023, the Group recognised PLN 251 million of borrowing costs
in property, plant and equipment and intangible assets.
During the period from 1 January 2022 to 31 December 2022, the Group recognised PLN 228 million of borrowing costs
in property, plant and equipment and intangible assets.
The capitalisation rate applied by the Group to determine borrowing costs in 2023 amounted to 5.36%,
in 2022: 4.45%.
Note 9.6 Carrying amount of the assets of Group companies representing collateral of repayment of liabilities
As at
31 December 2023
As at
31 December 2022
Buildings
136
136
Technical equipment and machines
30
33
Land
8
8
Total
174
177
The carrying amount of assets representing collateral of repayment of financial liabilities as at 31 December 2023 amounted
to PLN 174 million, including the carrying amount of assets set as collaterals of repayment of external financing of the
companies of the KGHM Polska Miedź S.A. Group as at 31 December 2023 in the amount of PLN 117 million (as at 31
December 2022: PLN 177 million and PLN 117 million, respectively).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
117
Note 9.7 Lease disclosures – the Group as a lessee
Accounting policies
As a lessee, the Group identifies leases in usufruct agreements, inter alia, land, perpetual usufruct right to land, and
transmission easements, as well as technical equipment, machines, and transport vehicles.
The Group applies a uniform lease accounting model, which assumes that the lessee recognises the right-to-use assets
and lease liabilities related to all lease agreements, including exemptions. The Group does not recognise lease assets
and liabilities in relation to:
• short-term leases - for agreements without the option to purchase an asset, concluded for a period shorter than
12 months from the commencement of the agreement, including agreements concluded for an indefinite period
with a short notice period if there is no reasonable certainty that the Group will not make use of termination.
• leases in respect of which the underlying asset has a low value.
In the case of an agreement that is or includes a lease, the Group recognises each lease component under
the agreement as a lease, separately from non-lease components.
The right-to-use assets and the measurement policy for these assets are presented in Note 9.1.
The Group initially measures the lease liability at the present value of lease payments due to be paid as at the date
of initial recognition, which include: fixed lease payments, variable lease payments which are dependent on an index
or rate, amounts which the lessee is expected to pay under the guaranteed residual value, the strike price call option if
it is reasonably certain that the lessee will exercise the option, and penalties for terminating the lease if the given lease
period was set with the assumption that the lessee will terminate the agreement. In fixed lease payments, the Group
also includes payments for the exclusion of land from forestry and agricultural production, if they relate to land used
under lease agreements.
The lease payments exclude variable payments made by the lessee to the lessor for the right to use the underlying asset
during the lease period, which depend on external factors other than payments based on a rate or index.
After the date the lease began, the Group measures the carrying amount of lease liabilities by:
- an increase due to interest on lease liabilities,
- a decrease due to paid lease payments,
- an update due to reassessment or modification of a lease agreement.
Lease liabilities are presented in Note 8.4.
Lease rate - lease payments are discounted by the Group using the incremental borrowing rate of the lessee because
generally speaking, the interest rate of a lease agreement is not readily determinable.
Important estimates, assumptions and judgments
Identification of non-lease components
In the agreements for the lease of mining machinery, apart from the lease component, the Group identified non-lease
components related to the provision of services other than the lease of assets. To separate the lease and non-lease
components, the Group made a judgment, respectively allocating the remuneration for a given agreement to both
components, based on the relative unit price of the lease component and the total unit price of the non-lease
components.
Estimation of the incremental borrowing rate of the lease
For the purpose of calculating the discount rates under IFRS 16, the Group assumes that the discount rate should reflect
the cost of financing that would be incurred to purchase the leased item. The Group calculates the incremental borrowing
rates, for individual time ranges of lease agreements, on a quarterly basis and this rate is used to measure lease liabilities
arising from lease agreements concluded or modified during a given quarter.
The materiality threshold for leases of low-value of underlying assets is set at PLN 20 000.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
118
Lease disclosures – the Group as a lessee
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Note 9.1
Note 9.2
Depreciation/amortisation cost
90
56
Note 4.3
Interest cost
1
9
Short-term lease cost
7
7
Cost associated with leases of low-value of
underlying assets not recognised as short-term
agreements
1
1
Cost associated with variable lease payments not
recognised in the measurement of lease liabilities
7
8
Note 8.4.2
Total cash outflows due to leases
124
93
Note 9.1
Note 9.2
Increase in right-to-use assets
116
165
As at
31 December 2023
As at
31 December 2022
Note 9.1
Note 9.2
Carrying amount of right-to-use assets (division by
underlying assets in notes, pursuant to references)
704
771
Note 8.4.2
Carrying amount of right-to-use liabilities
784
744
In 2023 and in comparable period, the Group did not enter into sales and leaseback transactions.
As at 31 December 2023, the Group had lease agreements that contained extension options and termination options, and
the estimated value of future cash outflows, to which the Group is potentially exposed and are not included in the
measurement of lease liabilities amount to PLN 15 million and PLN 35 million respectively (as at 31 December 2022:
PLN 19 million and PLN 37 million). The Group has lease agreements with guaranteed residual values, but they were
included in the measurement of lease liabilities. Moreover, the Group has lease agreements that have not commenced yet,
to which it is obliged as a lessee, and the value of future cash outflows in this respect amounts to PLN 14 million (as at
31 December 2022: PLN 10 million).
Note 9.8 Greenhouse gas emissions allowances
Accounting policies
CO
2
emission allowances received free of charge and purchased, intended to be used for the entity's own needs, are
recognised as intangible assets.
At the moment of initial recognition:
• CO
2
emission allowances received free of charge and related non-financial subsidies (recognised as the settlement of
deferred income) are measured at fair value corresponding to the market value of these allowances on the date of
their initial recognition.
• purchased CO
2
emission allowances are measured at cost.
At the end of the reporting period, emission allowances are measured at initial value less amortisation and impairment
losses. The value of the CO
2
emission allowances is not subject to depreciation/amortisation, if their end value is equal
to or higher than their carrying amount.
Disposals of the emission allowances recognised as intangible assets are carried out in accordance with the FIFO method.
CO
2
emission allowances recognised as intangible assets are settled and excluded from the register whenever they are
redeemed* by the Group. The settlement of CO
2
emission allowances is recognised in the provision which is created in
accordance with the obligation to redeem the allowances.
This provision is recognised when the obligation to provide redemption allowances arises, respectively to the amounts
of the pollutants emitted. The provision is measured in relation to the value of emission allowances held, at the carrying
amount of these rights and in the case of their deficit, at the market value of the emission allowances as at the date the
provision was created.
The provision is recognised in the production cost.
In the statement of profit or loss, the Group settles the subsidy recognised in deferred income in the period for which it
was granted. The subsidy settled up to the cost of the created provision (respectively to the tonnage of CO
2
emissions
covered by the provision) is offset in the Statement of profit or loss by the cost of the created provision. The subsidy in
the amount which exceeds the cost of the created provision (both in terms of the amount as well as the value) is
recognised as other operating income.
* redemption means fulfilling the obligation imposed by the provisions of the Act on greenhouse gas emission trading scheme
on the owner of the Installation, consisting of the redemption of allowances on the allowance account by persons authorised to
operate accounts in the Union Registry, for each Installation separately, in the number covering the actual emissions of
pollutants for the previous year.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
119
Financial statements item
As at 31 December 2023
As at 31 December 2022
amount (t)
value
amount (t)
value
Intangible assets
2 240 969
882
1 978 607
717
Accruals
1 658 097
673
1 656 311
600
Financial statements item
from
1 January 2023
to
31 December 2023
from
1 January 2022
to
31 December 2022
Financial result (excluding the tax effect), of which:
196
208
Cost of sold products
190
199
Other operating income
6
9
Note 9.9 Assets held for sale (disposal group) and liabilities associated with them
Accounting policies
Non-current assets (or disposal groups) are classified by the Group as held for sale, if their carrying amount will be
recovered by a sale transaction rather than by continued usage, contingent on their availability for immediate sale in
their current condition and maintaining conditions that are customarily applied in the sale of these assets (or disposal
groups) and their sale is highly probable. A sale is understood as highly probable if the Group is determined to fulfil the
plan to sell an asset or a disposal group, actions were undertaken to actively search for a buyer, an asset is offered at
cost, which is rational as compared to its current fair value, and the Group intends to sell an asset within a year from the
classification day. Extension of the period required to conclude the sale by more than one year is possible only if the
delay was caused by events or circumstances outside of the Group’s control, and the Group itself may prove that it is
determined to fulfil the plan to sell an asset.
At the moment of reclassification, these assets are measured at the lower of the following values: the carrying amount
or the fair value decreased by costs to sell. The difference between the measurement at fair value is recognised in other
operating costs. At the moment of later measurement, the potential reversal of fair value is recognised in other operating
income.
In the current period, a sale transaction was realised of assets held for sale (disposal group) and liabilities associated with
them of the company KGHM TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH S.A. Details are described below.
Note 9.9.1 KGHM TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH S.A.
On 13 March 2023, KGHM Polska Miedź S.A. concluded an Agreement for the sale of 100% of the shares of KGHM
TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH SPÓŁKA AKCYJNA (“Shares”) with Agencja Rozwoju Przemysłu S.A. (“Buyer”).
The sale of the Shares was contingent on meeting the conditions precedent, among others no objections raised by the
Polish Financial Supervision Authority. The ownership rights to the Shares are transferred to the Buyer at the moment an
appropriate entry is made in the Share Register. The sale of the Shares is the last stage of the reorganisation under the
Group’s structure, which comprised the liquidation of closed-end, non-public investment
funds.
At the turn of the half-year, the Polish Financial Supervision Authority issued a decision on a lack of objections to the
acquisition of shares by the Buyer. On 27 July 2023 the transaction was concluded.
On 3 August 2023, the buyer of the shares, i.e. Agencja Rozwoju Przemysłu S.A. was entered into the Share Register as the
owner of 100% of the shares of KGHM TFI S.A.
The sale price of the shares amounted to PLN 4 million and was higher than the net assets of KGHM TFI S.A. by PLN 1
million. The result on sale (profit) was recognised in the item “Other operating income”.
Due to their insignificant value, the main assets and liabilities of the company classified to the disposal group are not
presented in the note.
In the comparable period, a sale transaction was carried out of assets held for sale (disposal group) and associated liabilities
of the companies S.C.M. Franke, Interferie S.A. and Interferie Medical SPA sp. Z o. o., and a reclassification took place of
assets held for sale (disposal group) and associated liabilities of the company Carlota Copper Company to continued
operations. Details are presented below.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
120
Note 9.9.2 S.C.M. Franke and Carlota Copper Company
On 26 April 2022 subsidiaries of KGHM INTERNATIONAL LTD., Franke Holdings Ltd. and Centenario Holdings Ltd., signed an
agreement for the sale of 100% of the shares of the company Sociedad Contractual Minera Franke, being the owner of the
Franke mine in Chile, to Minera Las Cenizas S.A. for the negotiated initial purchase price of USD 25 million.
In accordance with the sale agreement, the negotiated initial purchase price was adjusted by, among others, the change in
net working capital, cash and borrowings between 31 March 2022 and the transaction date. The initial adjusted purchase
price for 100% of the shares of S.C.M. Franke amounted to USD 23 million (payable in cash). The carrying amount of assets
and liabilities that were subject to the sales transaction as at the transaction date amounted to USD 19 million.
Apart from the initial payment (initial purchase price), the pricing mechanism reflects contingent payments in the maximum
amount of USD 45 million. Taking into account the probability of receiving these payments and the period of their
realisation, they were measured at the discounted amount of USD 13 million and recognised in the item gain on disposal.
The gain on the disposal of S.C.M. Franke was recognised in “Other operating income”.
Settlement of the transaction for the sale of S.C.M. Franke
USD mn
PLN mn
Initial purchase price
25
109
Change in net working capital, cash and borrowings between
31 March 2022 and 26 April 2022
( 2)
( 9)
Initial adjusted purchase price
23
100
Carrying amount of assets and liabilities that were subject to the sales
transaction
19
86
Measurement of contingent payments at the date of disposal
13
60
Re-measurement of contingent payments at the reporting date
1
5
Gain on disposal
18
79
Exchange differences reclassified from other comprehensive income to
gain on disposal
-
64
Gain on disposal in the consolidated statement of profit or loss
-
143
As at 30 June 2022, the criteria set forth in IFRS 5 under which Carlota Copper Company was classified as an asset held for
sale were reassessed. As a result of the analysis conducted, the Management Board of the Parent Entity as at 30 June 2022
reclassified the assets and liabilities of the company back to continued activities, because the sale was not highly probable.
The process of selling the mining assets of Carlota Copper Company was not completed.
In accordance with IFRS 5.27, the recoverable amount of the assets of Carlota Copper Company was determined
immediately following the reclassification. There were no substantial differences compared to the carrying amount as at 30
June 2022.
In November 2022, the process of selling Carlota Copper Company was resumed, however, in the opinion of the
Management Board of the Parent Entity, it was not advanced enough to conclude that the sale is highly probable. Therefore,
as at 31 December 2022 and as at 31 December 2023, the company's assets and related liabilities were not recognised as
held for sale.
The activities of the companies S.C.M. Franke and Carlota Copper Company were presented as part of the segment KGHM
INTERNATIONAL LTD.
The financial data of the above-mentioned companies were presented together with continued operations in the
consolidated statement of profit or loss, in the consolidated statement of cash flows and explanatory notes to these
statements because they do not represent a major line of business and they are not a part of a larger plan to dispose of a
major line of business (IFRS 5.32 a and b).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
121
Financial data of the companies S.C.M. Franke and Carlota Copper Company are presented in the tables below:
Main groups of assets and liabilities classified
to disposal Group
As at
26 April 2022
(sale date – date of
loss of control)
As at
31 December 2021
(presentation under assets and
liabilities classified to disposal
Group)
S.C.M. Franke
S.C.M. Franke
Carlota Copper
Company
ASSETS
Mining and metallurgical intangible assets
125
116
3
Other financial instruments measured
at amortised cost
2
3
-
Non-current assets
127
119
3
Inventories
91
87
62
Trade receivables, including:
14
13
-
trade receivables measured at fair value through
profit or loss
14
13
-
Tax assets
5
3
-
Other non-financial assets
15
3
-
Cash and cash equivalents
8
5
-
Current assets
133
111
62
TOTAL ASSETS IN DISPOSAL GROUP
260
230
65
LIABILITIES
Borrowings, leases and debt securities
-
-
1
Provisions for decommissioning costs of mines and
other technological facilities
91
75
214
Non-current liabilities
91
75
215
Borrowings, leases and debt securities
1
2
1
Trade payables
58
26
7
Employee benefits liabilities
6
5
3
Tax liabilities
1
1
-
Provisions for liabilities and other charges
-
-
1
Other liabilities
18
21
4
Current liabilities
84
55
16
TOTAL LIABILITIES IN DISPOSAL GROUP
175
130
231
Statement of profit or loss of operations
held for sale
from 1 January 2022
to 26 April 2022
from 1 January 2021
to 31 December 2021
S.C.M. Franke
S.C.M.
Franke
Carlota
Copper
Company
Revenues
132
497
209
Costs
( 197)
( 443)
( 111)
Profit/(loss) on operating activities
( 65)
54
98
Finance costs
( 1)
( 3)
( 5)
Profit/(loss) before income tax
( 66)
51
93
Income tax expense
-
-
-
PROFIT/(LOSS) FOR THE PERIOD
( 66)
51
93
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
122
Cash flow of operations held for sale
from 1 January
2022
to 26 April 2022
from 1 January 2021
to 31 December 2021
S.C.M. Franke
S.C.M.
Franke
Carlota
Copper
Company
Net cash generated from/(used in) operating activities, including:
( 40)
( 7)
11
change in provision for decommissioning of mines
10
( 6)
( 5)
Net cash used in investing activities
-
( 5)
( 10)
Net cash generated from/(used in) financing activities
42
( 2)
( 2)
TOTAL NET CASH FLOW
2
( 14)
( 1)
Note 9.9.3 Interferie S.A. and Interferie Medical SPA Sp. z o.o.
On 21 February 2022, KGHM VII Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych (hereafter: the Fund), with 100%
of its Investment Certificates held by KGHM Polska Miedź S.A., sold all of its directly held shares in the company Interferie
Medical SPA Sp. z o.o. with its head office in Legnica, that is 41 309 shares representing 67.37% of the share capital and the
same percent of votes at the shareholders’ meeting to Polski Holding Hotelowy sp. z o.o. The Fund’s indirect subsidiary –
INTERFERIE S.A. – held the remaining 32.63% of the share capital of the company Interferie Medical SPA Sp. z o.o.
On 28 February 2022, as a result of the settlement of the call for the sale of shares of INTERFERIE S.A. (hereafter “the
company”), announced by Polski Holding Hotelowy sp. z o.o., the portfolio companies of the Fund: Fundusz Hotele 01 Sp. z
o.o. S.K.A. and Fundusz Hotele 01 Sp. z o.o sold all of their shares in the company, that is in total 10 152 625 shares,
representing 69.71% of the share capital and the same percent of votes at the general meeting.
Due to the above, neither the Parent Entity nor any entities of the Group has any shares in the companies: INTERFERIE S.A.
and Interferie Medical SPA Sp. z o.o.
The total sale price for the shares of both companies (payable in cash) amounted to PLN 167 million and exceeded the
value of net assets attributable to the Group by PLN 37 million. The result on the sale (income) was recognised in the item
„Other operating income”.
The activities of the companies Interferie S.A. and Interferie Medical SPA Spółka z o.o. were presented in the segment -
Other segments.
The financial data of the above-mentioned companies were presented together with continued operations in the
consolidated statement of profit or loss, the consolidated statement of cash flows and explanatory notes to these
statements because they do not represent a major line of business and they are not a part of a larger plan to dispose of a
major line of business (IFRS 5.32 a and b).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
123
Financial data of the companies INTERFERIE S.A. and Interferie Medical SPA Sp. z o.o. are presented in the tables
below:
Main groups of assets and liabilities classified to disposal Group
As at
28 February 2022
As at
31 December 2021
ASSETS
Other property, plant and equipment
244
244
Other property, plant and equipment and intangible assets
244
244
Non-current assets
244
244
Inventories
1
1
Trade receivables
2
2
Tax assets
1
1
Other non-financial assets
3
-
Cash and cash equivalents
15
15
Current assets
22
19
TOTAL ASSETS IN DISPOSAL GROUP
266
263
LIABILITIES
Borrowings, leases and debt securities
65
65
Employee benefits liabilities
1
1
Other liabilities
6
3
Non-current liabilities
72
69
Borrowings, leases and debt securities
12
16
Trade payables
6
7
Employee benefits liabilities
1
4
Tax liabilities
4
1
Other liabilities
5
4
Current liabilities
28
32
TOTAL LIABILITIES IN DISPOSAL GROUP
100
101
Statement of profit or loss of operations held for sale
from 1 January 2022
to 28 February 2022
from 1 January 2021
to 31 December 2021
Revenues
14
71
Costs
( 15)
( 68)
Profit/(loss) on operating activities
( 1)
3
Finance costs
-
( 2)
Profit/(loss) before income tax
( 1)
1
Income tax expense
-
-
PROFIT/(LOSS) FOR THE PERIOD
( 1)
1
Cash flow of operations held for sale
from 1 January 2022
to 28 February 2022
from 1 January 2021 to
31 December 2021
Net cash generated from operating activities
1
4
Net cash used in investing activities
( 1)
( 11)
Net cash generated from financing activities
-
17
TOTAL NET CASH FLOW
-
10
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
124
Note 9.9.4 The Oxide project in the KGHM INTERNATIONAL LTD. Group
In the fourth quarter of 2021, an agreement for the sale of the Oxide project, which was held by the subsidiary KGHM Chile
SpA, to Sierra Gorda S.C.M. was concluded between KGHM Polska Miedź S.A. and the second partner in the joint venture
Sierra Gorda S.C.M. – Sumitomo (Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation). On 15 December 2021 the
sales agreement was signed, with the sale date set at 1 January 2022.
As at 31 December 2021 the Oxide project was reclassified from intangible assets not yet available for use (assets related
to exploration and evaluation of mineral resources) to non-current assets held for sale in the amount of PLN 176 million.
The cash inflow from the sale transaction took place on 4 March 2022. The profit on the sale in the amount of PLN 135
million was recognised in the item “Other operating income”.
Pursuant to the accounting policy adopted by the Group, the Group’s share in unrealised profit on the transaction between
the Group and the entity accounted for using the equity method, decreased the profit due to this transaction in
correspondence with the carrying amount of the Group’s interest in this entity. Since as at 31 December 2022 the carrying
amount of the Group’s interest in the joint venture Sierra Gorda S.C.M. amounted to PLN 0, elimination of the unrealised
profit proportionally to the Group’s interest (55%) will be recognised when the carrying amount of the Group’s interest in
Sierra Gorda S.C.M. will be above the level of PLN 0.
Note 9.9.5 KGHM TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH S.A.
As at 31 December 2022, the Group identified the assets and related liabilities of the subsidiary - KGHM TOWARZYSTWO
FUNDUSZY INWESTYCYJNYCH S.A. as held for sale due to the fulfilment of the criteria set in IFRS 5 (i.e. they are available for
immediate sale in their current state, the sale is highly probable, and it is expected that it will take place within 1 year from
the date of classification as held for sale). Due to their insignificant value, these assets and liabilities were not separated in
the statement of financial position to separate items "Assets held for sale (disposal group)" and "Liabilities associated with
disposal group".
Note 9.9.6 Property, plant and equipment of Mercus Logistyka Sp. z o.o.
As at 31 December 2022, the Group identified property, plant and equipment of a subsidiary Mercus Logistyka Sp. z o.o. as
held for sale due to the fulfilment of the criteria set in IFRS 5 (i.e. they are available for immediate sale in their current state,
the sale is highly probable, and it is expected that it will take place within 1 year from the date of classification as held for
sale). Due to their insignificant value, these assets were not separated in the statement of financial position to a separate
item "Assets held for sale (disposal group)".
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
125
Part 10 – Working capital
Note 10.1 Inventories
Accounting policies
Important estimates, assumptions and judgments
The Group measures inventories at cost, not higher than
the sales price less costs of completing production
and costs to sell.
Any differences in the value of finished goods constitutes
a write-down and is recognised in the costs of sold
products.
Fixed indirect costs of production are allocated on the
basis of the normal level of production capacity
utilisation.
The valuation of the inventory component disposal is
made according to the weighted average purchase price
and the weighted average actual production cost.
The Group also classifies as inventories stand-by spare
parts that do not meet the criteria for recognition as
property, plant and equipment in accordance with IAS 16
par. 7 and in accordance with the principles of
capitalization of significant components, adopted in the
accounting principles of the Parent Entity, where a
materiality threshold of at least PLN 300 thousand has
been set, for which the spare parts are analysed in terms
of meeting the capitalization criteria of IAS 16. In relation
to the above, stand-by spare parts are in particular
recognised as inventories, the value of which is
insignificant or are not replaced at regular intervals, or
which, after their installation, due to the failure of a spare
part in an item of property, plant and equipment, will not
contribute to the obtainment of higher economic
benefits from further use of this component than those
assumed at the moment of initial recognition of the
component and putting it into use. The costs of such
stand-by spare parts as a current maintenance cost of
assets are recognized in profit or loss as they are
consumed.
In the consolidated financial statements the volume
of those inventories of the KGHM INTERNATIONAL LTD. Group
which arise from the leaching process, is determined based
on the estimated recovery of metal from ore. The nature of
the process of leaching copper from ore limits the precision
of monitoring the level of inventories arising during this
process. In subsequent reporting periods, adjustments are
made to the estimated recovery of copper from the leaching
of ore in a given reporting period to the level of production
achieved in the subsequent period.
As at 31 December 2023 the provisionally-set value
of inventories amounted to PLN 25 million (as at 31 December
2022, PLN 38 million).
The Group measures inventories at cost, not higher than the
net realisable value. The Group determines the net sales price
of copper at the end of the reporting period on the basis of
forward LME (London Metal Exchange) curve for the metal, set
for months in which the sale of copper inventories will be
made.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
126
As at
31 December 2023
As at
31 December 2022
Materials
1 843
2 084
Half-finished goods and work in progress
4 552
4 835
Finished products
1 902
1 777
Merchandise
128
206
Note 10.4
Total carrying amount of inventories
8 425
8 902
Note 4.4
Write-down of inventories during the reporting
period
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Write-down recognised in cost of sales*
( 442)
( 79)
Write-down reversed in cost of sales
21
55
Maturities of inventories
As at
31 December 2023
As at
31 December 2022
Maturity over the 12 months from the end of the
reporting period
429
426
Maturity of up to 12 months from the end of the
reporting period
7 996
8 476
* Including: PLN 370 million in 2023 due to a write-down recognised in KGHM INTERNATIONAL LTD. (in 2022 respectively PLN 44 million) since the
cost was higher than the net realisable value.
As at 31 December 2023 and in the comparable period, the value of inventories with a maturity of over 12 months mainly
includes stand-by inventories of materials and spare parts to maintain production continuity and the finished rhenium
product. Moreover, the KGHM INTERNATIONAL LTD. Group has an inventory of ore which will be used in the period of over
12 months concurrently with the higher quality ore extracted in the current period.
Note 10.1.1 Property rights arising from certificates of origin for electricity generated in renewable energy
sources and from energy efficiency
Accounting policies
Property rights to energy are certificates attesting to the source of electricity which confirm that the electricity is generated
by renewable energy sources (RES). The generation of energy by renewable energy sources is attested to by so-called green,
blue and violet property rights to energy.
Energy efficiency certificates, so-called white certificates, are certificates confirming the claims of market participants
related to declarations of energy savings resulting from their application of measures, or the implementation of actions
aimed at improving the energy efficiency.
Recognition of acquired property rights to energy and of certificates attesting to energy efficiency
Acquired property rights to energy and certificates attesting to energy efficiency are recognised in the Statement of financial
position as merchandise, and at the date of acquisition are measured at cost, comprised of:
- the value of certificates of origin (based on the current market price), or
- the amount of the negotiated contractual price, in cases where these rights are purchased in off-trading sessions.
At the end of the reporting period, property rights to energy and certificates attesting to energy efficiency are measured at
cost less any impairment losses, though no higher than the net sale price.
Recognition of freely acquired property rights to energy and certificates attesting to energy efficiency
Freely acquired, granted by the President of the Energy Regulatory Office, certificates of origin for energy from renewable
sources and certificates resulting from the act on energy efficiency are recognised as merchandise, while their free
acquirement is treated as a non-financial subsidy and is measured at the moment of initial recognition at fair value.
The subsidy resulting from the receipt of freely acquired property rights to coloured energy is recognised in the Statement
of profit or loss as reduction of cost of generating the energy from renewable energy resources at the moment of initial
recognition.
Initial recognition in the accounting books of property rights arising from certificates of origin of renewable energy occurs
on the date of production of a given type of energy, as the entitlement of energy producer to receive the property rights
resulting from the certificates of origin arises at the moment of the production of the given type of energy.
The subsidy resulting from the receipt of freely acquired certificates attesting to energy efficiency are recognised as a
subsidy to assets, in deferred income, and is systematically settled in the financial result in other operating income,
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
127
following the depreciation of fixed assets, whose acquisition/generation resulted in the arising of the energy efficiency for
which the Group received the certificates.
Initial recognition in the accounting books of property rights arising from certificates of origin resulting from the act on
energy efficiency occurs at the moment of their receipt.
At the end of the reporting period, freely acquired property rights to energy and certificates attesting to energy efficiency
are measured at initial cost less any impairment losses, though no higher than the net sale price.
Recognition of income and disposal of property rights to energy and of certificates attesting to energy efficiency
Measurement of the disposal of property rights and of certificates attesting to energy efficiency are made using the FIFO
method. The disposal resulting from the sale is transferred to the financial result and is recognised as the value of
merchandise sold. The income from the sale of property rights to energy and of certificates attesting to energy efficiency is
recognised in the financial result as income from the sale of merchandise.
The deficit of property rights to energy and of certificates attesting to energy efficiency is supplemented by their purchase
or by a payment of a substitute fee. Any failure to carry out an obligatory redemption of property rights arising from
certificates for renewable energy sources or from energy efficiency, or any failure to pay a substitute fee, results in the
incurring a financial penalty by a company. The amount of the penalty incurred is recognised in other operating costs.
Provision for costs of meeting the obligation to redeem property rights to energy and of certificates attesting to
energy efficiency
Due to the obligation to redeem property rights to energy and of certificates attesting to energy efficiency, the entities of
the Group create a provision in accruals.
The Group creates a provision:
- charged to the costs of merchandise sold to the extent in which the obligation to redeem rights and certificates attesting
to energy efficiency involves electricity purchased and resold to an end-user,
- charged to the costs of production to the extent in which the obligation to redeem rights involves electricity purchased
and consumed to meet the company’s own needs, and
- charged to the generation cost of energy sold to the extend in which the obligation to redeem rights involves electricity
produced by a company and sold to an end-user.
This provision is measured at the carrying amount of the property rights to energy or certificates attesting to energy
efficiency held and, in the case of their deficit, at the market value of the property rights (certificates) at the date the
provision is created or at the amount of the substitute fee corresponding to the amount of the energy sold, depending on
which of these amounts is lower.
Settlement of the amount of the provision and the redemption of property rights occurs at the date of redemption of these
rights by the President of the Energy Regulatory Office.
Recognition of property rights to coloured energy and white certificates
Financial statements item
As at
31 December 2023
As at
31 December 2022
amount
(MWh)/TOE
value
amount
(MWh)/TOE
value
Inventories - merchandise, of which:
40
82
green property rights
267 850
32
394 269
72
blue property rights
7 790
2
10 576
3
white certificates
2 851
6
3 241
7
Accruals, of which:
43
91
provision for redemption of green property rights
(MWh)
267 268
32
431 996
80
provision for redemption of blue property rights
(MWh)
11 136
3
11 676
3
provision for redemption of white certificates (TOE)
4 235
8
4 126
8
Item from the statement of profit or loss
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Financial result (excluding the tax effect), of which:
43
94
Cost of products sold
38
86
Cost of merchandise sold
3
6
Other operating income
2
2
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
128
Note 10.2 Trade receivables
Accounting policies
Trade receivables are initially recognised at the transaction price (unless the receivables contains a significant financial
component subject to separation and therefore the receivables are initially recognised at fair value). After initial
recognition, trade receivables are measured as follows:
− receivables not transferred to non-recourse factoring and not based on the M+ pricing formula*: at amortised cost
while taking into account the loss allowance for expected credit losses (ECL). Trade receivables with maturity dates
of less than 12 months are not discounted.
− receivables transferred to non-recourse factoring: at fair value through profit or loss, where the fair value
is determined in the amount of their carrying amount less the factor’s compensation, which include, among others,
interest costs and risk assumption costs. Because of the short duration between the transferral of receivables to the
factor and its payment and due to the low credit risk of the counterparty (factor), the fair value of these receivables
does not include the impact of these factors. Receivables transferred to non-recourse factoring are obligatorily
designated to the category of financial assets measured at fair value through profit or loss, because they were
classified to a business model in which cash flows are realised solely by selling financial assets.
− receivables based on the M+ pricing formula: at fair value through profit or loss, where fair value is set
as the nominal value (i.e. at the price in the invoice), adjusted by the impact of market and credit risks. Adjustment
due to the market risk is calculated as the difference between the current market price for a given pricing period in
the future (the period in which there will be a final determination of the settlement price) and the receivables’ price
recognised in the accounting books (multiplied by the sales volume). Adjustment due to the credit risk is calculated
analogously to the calculation of expected credit losses for trade receivables measured at amortised cost.
Receivables based on the M+ pricing formula are obligatorily designated to the category of financial assets measured
at fair value through profit or loss, because these receivables do not pass the SPPI contractual cash flow test (solely
payments of principal and interest) because of the element of variable price after the date of initial recognition of
the receivables.
Receivables measured at fair value may be measured based on the applied M+ pricing formula as well as due
to transferral to factoring. The measurements are carried out independently of each other. The result of both
measurements is recognised in the profit or loss in other operating income/(costs).
* the M+ pricing formula means that for individual transactions for the sale of copper and silver products, the final sales price is determined after
the date of recognition of the sale, based on, for example, the average of the stock exchange quotations of a given metal in the month of sale or in
the month following the month of sale.
The Group is exposed to the credit risk and currency risk related to trade receivables. Credit risk management
and assessment of the credit quality of receivables is presented in Note 7.5.2.3. Information on currency risk is presented
in Note 7.5.1.3.
The following table presents the carrying amounts of trade receivables and the loss allowances for an expected credit loss:
As at
31 December 2023
As at
31 December 2022
Trade receivables measured at amortised cost
- gross value
557
466
Loss allowance for expected credit losses
( 39)
( 39)
Trade receivables measured at amortised cost
- net value
518
427
Trade receivables measured at fair value
414
751
Note 10.4
Total
932
1 178
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
129
Note 10.3 Trade and similar payables
Accounting policies
Trade and similar payables are initially recognised at fair value less transaction cost and are measured at amortised cost
at the end of the reporting period.
Accrued interest due to repayment of payables at a later date, in particular transferred to reverse factoring, is recognised
in profit or loss, in the item “finance costs”.
Important estimates, assumptions and judgments
Trade and similar payables presented in the statement of financial position also contain trade payables transferred to
reverse factoring, which are in the category of “similar”.
Moreover, the item “similar liabilities” also includes intra-group trade payables transferred by the debtor to the factor, for
which the debtor received payment from the factor. At the moment of transfer of the liabilities to reverse factoring, the
Parent Entity recognises payables towards the factor, who due to the subrogation of receivables, from the legal point of
view, assumes the rights and obligations common for trade payables.
Reverse factoring is not directly regulated by IFRS, and as a result of the ambiguous nature of the transaction, it was
necessary for the Parent Entity to make an important judgment on the presentation of balances of liabilities transferred
to factoring in the statement of financial position and the presentation of transactions in the statement of cash flows.
In the Parent Entity’s opinion, in presenting the balance of trade payables transferred to reverse factoring as „Trade
and similar payables” (assigned to the category of “similar”) together with other trade payables and not as debt liabilities,
the following aspects had a crucial impact:
• from the legal point of view, at the moment of subrogation of liability by the reverse factoring there is a transfer
of rights and obligations arising from the liabilities, rather than their expiry and the establishment of new rights
and obligations in respect of the factor,
• there is no establishment of new guarantees related to the reverse factoring, nor are there any changes
in commercial terms related to any breach of the contract terms and annulment of a contract,
• the goal of the program is not only to improve the Parent Entity’s liquidity, but also to provide support to suppliers
engaged in obtaining favourable financing in order to build long term business relationships,
• the established payment deadlines, as well as payment models (including as regards interest and discounting)
do not change in respect of trade payables towards a given supplier which are not subject to reverse factoring.
In light of the above, as well as taking into account the established interest rates and discounts and extended
repayment periods, cash flows related to the liabilities transferred to reverse factoring do not change by more than
10%,
• costs related to reverse factoring are incurred both by the Parent Entity and its suppliers. The Parent Entity incurs
interest cost arising from the payment of liabilities over an extended period, while the supplier incurs a discount
cost due to early (that is, before the end of the base term, which is usually 60 days) payment received from the
factor,
• the Parent Entity, together with individual suppliers, on the basis of signed contracts, will determine which invoices
will be transferred to reverse factoring, and what the deadline for early payment to the supplier through the factor
will be.
Moreover, although the Parent Entity identified characteristics which indicate the nature of reverse factoring as liabilities
due to financing (liability due to credit granted by the factor), they were judged by the Parent Entity to be insufficient for
the purpose of recognising that, at the moment of transfer of trade payables to reverse factoring, there is a complete
change in the nature of the relationship from that of a trade to a debt one, which would necessitate presentation in the
Statement of financial position as debt financial liabilities and presentation in the Statement of cash flows, in financial
activities:
• the factor is a bank, and at the moment of subrogation by the factor there is a change in the debtor,
• in order to obtain more favourable terms, the factoring agreement was negotiated with the factor by the Parent
Entity and not directly by the suppliers,
• the actual deadline for the payment of trade payables subject to reverse factoring is longer (and amounts to up
to 180 days) than the deadline for the payment of other trade payables, which are not transferred to factoring
(which usually amounts to 60 days),
• the main costs of reverse factoring are incurred by the Parent Entity, and suppliers are charged only if they receive
payment on the date before the date stipulated in the trade contract, which usually amounts to 60 days from the
day of receiving the invoice by the Company (discount for the payment before 60 days or other, stipulated in the
trade contract).
As part of the analysis of IFRS in the context of presenting the balance of trade payables transferred to reverse factoring,
the Parent Entity also analysed the statement published in December 2020 by the International Financial Reporting
Interpretations Committee (Committee) on the presentation of reverse factoring transactions in the statement of financial
position and the statement of cash flows. In the Parent Entity’s opinion, the aspects indicated by the Committee as well
as the summary of the key requirements related to the analysed issue do not have an impact on the conclusions of the
assessment conducted by the Parent Entity. The Committee, recommending the appropriate presentation of liabilities
subject to reverse factoring, indicated the same issues that were analysed and disclosed by the Parent Entity as part of
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
130
important estimates, assumptions and judgments above. In particular, in the context of the areas of analysis indicated
by the Committee, the Parent Entity confirms that:
• the transfer of liabilities to reverse factoring did not require the establishment of any additional collateral for
the bank-factor, nor there are any additional guarantees related to reverse factoring established. Furthermore,
there is no change in the trade terms and conditions related to non-compliance with the terms of the contract and
the cancellation of the contract,
• taking the above into consideration, and taking into account the agreed interest and discount rates, and the
extended repayment date, the cash flows related to the liability transferred to reverse factoring will not change by
more than 10%; thus, the criteria of ceasing the disclosure of liabilities, i.e. the 10% test and the other criteria for
ceasing the disclosure of liabilities under IFRS 9 have not been met,
• the agreed payment dates as well as the payment pattern (including interest and discount rates) do not change
in relation to trade payables towards a given supplier, which are not covered by reverse factoring,
• liabilities transferred to reverse factoring are part of the working capital used by the unit in the unit’s regular
operating cycle.
The Parent Entity indicates that the actual deadline for the payment of trade payables subject to reverse factoring
is longer (up to 180 days) than the deadline for the payment of other trade payables, which are not transferred
to factoring, which usually amounts to 60 days, which may indicate a change in the nature of these liabilities from trade
to debt. However, this characteristic has been judged by the Parent Entity to be insufficient to conclude that when the
trade liability was transferred to reverse factoring, the nature of the liability changed completely. Apart from the above
criteria, no other terms of liabilities covered by reverse factoring differ from the terms of other trade payables.
Therefore, the Parent Entity's assessment of the nature of trade payables transferred to reverse factoring and their
presentation, means that the trade payables transferred to reverse factoring are presented by the Company in the
statement of financial position under "Trade and similar payables ", including those under the " similar" category.
As at
31 December 2023
As at
31 December 2022
Non-current trade payables
197
186
Current trade payables
3 167
3 076
Current similar payables – reverse factoring
3 021
18
Note 10.4
Trade and similar payables
6 385
3 280
In 2023, the factors’ total participation limit in the Parent Entity amounted to PLN 3 000 million, while Group companies did
not have agreements with factors (in 2022 participation in the Group amounted to PLN 1 553 million, including in the Parent
Entity: PLN 1 500 million). Currently, the Parent Entity has three concluded agreements for the provision of factoring
services, which was implemented in 2019 in order to make it possible for suppliers to receive repayment of receivables
faster, as part of the standard procurement process executed by the Parent Entity, alongside an extension of payment
dates of payables by the Parent Entity to the factor. In 2023, the Parent Entity transferred to the factor payables in the
amount of PLN 4 247 million, while Group companies did not transfer any payables to the factor in 2023 (in 2022 no
payables were transferred from the Parent Entity to the factor; Group companies transferred payables in the amount of
PLN 72 million), and the balance of trade payables covered by reverse factoring as at 31 December 2023 amounted to PLN
3 021 million (as at 31 December 2022, in the Parent Entity no trade payables were covered by reverse factoring; in Group
companies the balance amounted to PLN 18 million); in the current year, payments made towards the factors by the Parent
Entity amounted to PLN 1 209 million and by Group companies PLN 18 million (in the year ended 31 December 2022 in the
Parent Entity amounted to PLN 55 million, in the Group companies PLN 95 million). Interest costs accrued and paid by the
Group towards the factor in 2023 amounted to PLN 50 million (in the year ended 31 December 2022, interest costs accrued
and paid amounted to PLN 3 million).
Repayment dates of receivables due to reverse factoring do not exceed 12 months, and consequently all payables
transferred to reverse factoring are presented as short-term.
The item trade and similar payables contains payables due to the purchase and construction of fixed and intangible assets
which, as at 31 December 2023, amounted to PLN 196 million in the non-current part and PLN 713 million in the current
part (as at 31 December 2022, PLN 185 million and PLN 627 million, respectively).
The Group is exposed to currency risk arising from trade payables and to liquidity risk. Information on currency risk
is presented in Note 7.5.1.3 and on liquidity risk in Note 8.3.1.
The fair value of trade and similar payables approximates their carrying amount.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
131
Note 10.4 Changes in working capital
Accounting policies
Cash flows arising from interest on reverse factoring transactions are presented in cash flows from financing activities.
The actually repaid principal amounts of receivables transferred to reverse factoring to a factor are presented in cash
flows from operating activities, and partially also from investment activities. Moreover, the Parent Entity, as regards
changes in working capital in the statement of cash flows, presented a separate line “Change in trade payables transferred
to factoring” for the purposes of clear and transparent presentation.
Important estimates, assumptions and judgments
The Parent Entity implemented reverse factoring in the period ended on 31 December 2019 (more information may be
found in Note 10.3).
Since market practice with respect to the presentation of reverse factoring transactions in the statement of cash flows
is not uniform, the Management Board had to apply its own judgment in this regard. In the case of these transactions,
the Parent Entity had to make an assessment as to whether expenses related to payments towards the factor should be
classified to cash flows from operating activities or to cash flows from financing activities in the statement of cash flows.
Pursuant to IAS 7.11, an entity should present cash flows from operating, investing and financing activities in a manner
which is most appropriate to its business, because it provides information that allows users of financial statements to
assess the impact of those activities on the financial position of the entity and the amount of its cash and cash equivalents.
Due to the above, in the Parent Entity’s view:
- presentation of the repayment of the principal amounts of receivables in the reverse factoring in cash flows from
operating activities is compliant with the objective of individual transaction elements and consistent with
the presentation of these transactions in the statement of financial position. When legal subrogation of receivables
is made by the factor, from a legal standpoint they assume the rights and responsibilities characteristic for trade
receivables. Only cash flows from the repayment of principal amounts of receivables from liabilities due to the
purchase and construction of fixed assets and intangible assets are presented under investing activities (more
information may be found in Note 10.3).
- however, the financial aspect related to the factoring transaction is indicated in the presentation of interest in
financing activities. This is consistent with recognising this interest in financing costs in the statement of profit or loss
pursuant to the accounting policy adopted by the Parent Entity for the presentation of interest cost of reverse
factoring in the financial activities.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
132
Inventories
Trade
receivables
Trade
payables
Similar
payables
Working
capital
As at 1 January 2022
(6 487)
(1 026)
3 106
95
(4 312)
As at 31 December 2022
(8 902)
(1 178)
3 262
18
(6 800)
Change in the statement of financial position
(2 415)
( 152)
156
( 77)
(2 488)
Exchange differences from translation of
statements of operations with a functional
currency other than PLN
43
16
( 17)
-
42
Depreciation/amortisation recognised in
inventories
117
-
-
-
117
Change in liabilities due to purchase of property,
plant and equipment and intangible assets
-
-
41
-
41
Reclassification to property, plant and equipment
( 10)
-
-
-
( 10)
Reclassification from property, plant and
equipment
16
-
-
-
16
As at a date of loss of control of a subsidiary
( 94)
( 20)
79
-
( 35)
Adjustments
72
( 4)
103
-
171
Change in the statement of cash flows
(2 343)
( 156)
259
( 77)
(2 317)
Inventories
Trade
receivables
Trade
payables
Similar
payables
Working
capital
As at 1 January 2023
(8 902)
(1 178)
3 262
18
(6 800)
As at the date of obtaining control of a subsidiary
-
-
1
-
1
As at 31 December 2023
(8 425)
( 932)
3 364
3 021
(2 972)
Change in the statement of financial position
477
246
101
3 003
3 827
Exchange differences from translation of
statements of operations with a functional
currency other than PLN
( 64)
( 37)
25
-
( 76)
Depreciation/amortisation recognised in
inventories
296
-
-
-
296
Change in liabilities due to purchase of property,
plant and equipment and intangible assets
-
-
( 161)
( 110)
( 271)
Change in liabilities due to interest on reverse
factoring
-
-
-
( 25)
( 25)
Reclassification to property, plant and equipment
( 16)
-
-
-
( 16)
Adjustments
216
( 37)
( 136)
( 135)
( 92)
Change in the statement of cash flows
693
209
( 35)
2 868
3 735
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
133
Part 11 – Employee benefits
Accounting policies
The Group is obliged to pay specified benefits following the period of employment (retirement benefits due to one-off
retirement-disability rights, post-mortem benefits and the coal equivalent) and other long-term benefits (jubilee
bonuses), in accordance with the Collective Labour Agreement.
The amount of the liabilities due to both of these benefits is estimated at the end of the reporting period
by an independent actuary using the projected unit credit method.
The present value of liabilities from these benefits is determined by discounting estimated future cash outflow using the
interest rates on treasury bonds expressed in the currency of the future benefits payments, with maturities similar to the
date of settlement for liabilities.
Actuarial gains and losses from the measurement of specified benefits following the period of employment are
recognised in other comprehensive income in the period in which they arose. Actuarial gains/losses from
the measurement of other benefits (benefits due to jubilee bonuses) are recognised in profit or loss.
Significant estimates and assumptions
The carrying amount of the liability due to future employee benefits is equal to the present value of the liabilities due
to defined benefits. The amount of the liability depends on many factors, which are used as assumptions
in the actuarial method. Any changes to the assumptions may impact the carrying amount of the liability. The interest
rate is one of the basic parameters for measuring the liability. At the end of the reporting period, based on the opinion
of an independent actuary, an appropriate discount rate for the Group’s entities is used for setting the present value of
estimated future cash outflow due to these benefits. In setting the discount rate for the reporting period, the actuary
extrapolates current interest rates of treasury bonds along the yield curve expressed in the currency of the future benefits
payments, to obtain a discount rate enabling the discounting of payments with maturities which are longer than the
maturities of the bonds.
Other macroeconomic assumptions used to measure liabilities due to future employee benefits, such as the inflation rate
or the minimum salary, are based on current market conditions.
Pursuant to IAS 19 paragraph 78, actuarial assumptions adopted for measurement of employee benefits in the Group
are consistent because they reflect the economic relationships between factors such as inflation, the salary growth rate,
the discount rate and the coal price growth rate.
The assumptions used for measurement as at 31 December 2023 are presented in Note 11.2.
The following sensitivity analysis is based on the same measurement method which was used to measure liabilities
recognised in these financial statements, that is the Projected Unit Credit Method. During the analysis of impact of a given
factor (assumption), its value is changed by +/- 1 percentage point, while leaving all other assumptions and the database
of people entitled to benefits unchanged. Therefore, the analysis shows the impact of change in only one selected factor.
Impact of changes in the assumptions on the balance of liabilities (the Parent Entity) as at 31 December 2023
Discount rate
Planned base increases*
-1 pp
+1 pp
-1 pp
+1 pp
Retirement and disability benefits
37
(32)
(35)
44
Coal equivalent
289
(229)
(247)
307
Jubilee awards
39
(34)
(37)
47
Other benefits
3
(3)
(3)
4
Total liabilities
368
(298)
(322)
402
Impact on profit or loss
39
(34)
(37)
47
Impact on other comprehensive income
329
(264)
(285)
355
* Changes in the lowest salary were included in the retirement and disability benefits, jubilee awards and other benefits, while the coal
equivalent includes the inflation changes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
134
Impact of changes in the assumptions on the balance of liabilities as at 31 December 2022
Discount rate
Planned base increases*
-1 pp
+1 pp
-1 pp
+1 pp
Retirement and disability benefits
25
(22)
(25)
32
Coal equivalent
222
(181)
(173)
230
Jubilee awards
28
(25)
(27)
34
Other benefits
3
(2)
(2)
3
Total liabilities
278
(230)
(227)
299
Impact on profit or loss
28
(24)
(27)
34
Impact on other comprehensive income
250
(206)
(200)
265
* Changes in the lowest salary were included in the retirement and disability benefits, jubilee awards and other benefits, while the coal
equivalent includes the inflation changes
As the above analysis indicates, the benefits with the longest maturity horizon, i.e. coal equivalents that will be paid to
current employees following their retirement or disability leave, are most sensitive to changes in assumptions. For these
benefits, the deviation ranges from -17.7% to 25% (in the comparable period: from -15.7% to 20.2%).
The least sensitive to changes in assumptions are benefits with a relatively short maturity period, e.g. jubilee awards
depending on the length of service, for which the deviation ranges from -6.6% to 9.1% (in the comparable period: from
-6.1% to 8.4%).
Note 11.1 Employee benefits liabilities
Components of the item: employee benefits liabilities
As at
31 December 2023
As at
31 December 2022
Non-current
3 117
2 621
Current
267
272
Note 11.2
Total liabilities due to future employee benefits
programs
3 384
2 893
Employee remuneration liabilities
421
358
Social security liabilities
357
296
Accruals (unused annual leave, bonuses, other)
664
773
Other current employee liabilities
1 442
1 427
Total employee benefits liabilities
4 826
4 320
Employee benefits expenses
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Remuneration
5 881
5 370
Costs of social security and other benefits
1 988
1 784
Costs of future benefits
427
179
Note 4.1
Employee benefits expenses
8 296
7 333
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
135
Note 11.2 Changes in liabilities related to future employee benefits programs
Total
liabilities
Jubilee
awards
Retirement and
disability benefits
Coal
equivalent
Other
benefits
As at 1 January 2022
2 468
552
442
1 354
120
Note 11.1
Total costs recognised in profit or loss
179
52
44
72
11
Interest costs
88
19
16
49
4
Current service costs
98
40
28
23
7
Actuarial gains recognised in profit or loss
( 7)
( 7)
-
-
-
Note 8.2.2
Actuarial (gains)/losses recognised in other comprehensive income
422
-
( 20)
480
( 38)
Benefits paid
( 175)
( 68)
( 33)
( 70)
( 4)
Changes due to loss of control of subsidiaries
( 1)
-
( 1)
-
-
As at 31 December 2022
2 893
536
432
1 836
89
Note 11.1
Total costs recognised in profit or loss
427
223
53
147
4
Interest costs
194
36
29
124
5
Current service costs
97
46
24
23
4
Past service costs
( 5)
-
-
-
( 5)
Actuarial losses recognised in profit or loss
141
141
-
-
-
Note 8.2.2
Actuarial losses recognised in other comprehensive income
311
-
114
170
27
Benefits paid
( 247)
( 79)
( 39)
( 126)
( 3)
As at 31 December 2023
3 384
680
560
2 027
117
As at 31 December
2023
2022
2021
2020
2019
Present value of liabilities due to employee benefits
3 384
2 893
2 468
3 169
2 770
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
136
Main actuarial assumptions (of the Parent Entity) adopted for measurement as at 31 December 2023:
2023
2024
2025
2026
2027 and
beyond
- discount rate
5.20%
5.20%
5.20%
5.20%
5.20%
- coal price growth rate
-20.57%
3.60%
2.50%
2.50%
2.50%
- rate of growth of the lowest salary
19.44%
5.20%
4.00%
4.00%
4.00%
- expected inflation
4.60%
3.70%
2.50%
2.50%
2.50%
- future expected increase in salary
9.60%
8.40%
4.00%
4.00%
4.00%
Main actuarial assumptions (of the Parent Entity) adopted for measurement as at 31 December 2022:
2023
2024
2025
2026
2027 and
beyond
- discount rate
6.75%
6.75%
6.75%
6.75%
6.75%
- coal price growth rate
87.90%
5.90%
3.50%
2.50%
2.50%
- rate of growth of the lowest salary
19.60%
5.70%
5.00%
4.00%
4.00%
- expected inflation
13.10%
5.90%
3.50%
2.50%
2.50%
- future expected increase in salary
16.00%
9.00%
5.00%
4.00%
4.00%
The change in actuarial gains/losses was caused by a change in the assumptions in respect of the increase in the discount
rate, the increase in coal prices and future expected increase in salary.
For purposes of reassessment of the liabilities at the end of the current period, the parameters assumed were based
on available forecasts of inflation, analysis of coal prices rates and of the lowest salary rates, and also based on the
anticipated profitability of long-term treasury bonds.
Actuarial (gains)/losses as at 31 December 2023 versus assumptions adopted as at 31 December 2022
Change in financial assumptions
180
Change in demographic assumptions
64
Other changes
208
Total actuarial losses
452
Actuarial (gains)/losses as at 31 December 2022 versus assumptions adopted as at 31 December 2021
Change in financial assumptions
(7)
Change in demographic assumptions
(40)
Other changes
462
Total actuarial losses
415
Maturity profile of future employee benefits liabilities
Year of maturity:
Total
liabilities
Jubilee
awards
Retirement
and disability
benefits
Coal
equivalent
Other
benefits
2024
266
72
71
111
12
2025
268
68
76
118
6
2026
207
58
33
111
5
2027
191
54
27
105
5
2028
181
50
28
98
5
Other years
2 271
378
325
1 484
84
Total liabilities in the statement of
financial position as at 31 December
2023
3 384
680
560
2 027
117
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
137
Maturity profile of future employee benefits liabilities
Year of maturity:
Total
liabilities
Jubilee
awards
Retirement
and disability
benefits
Coal
equivalent
Other
benefits
2023
272
68
64
129
11
2024
251
54
63
129
5
2025
198
48
22
123
5
2026
189
44
26
114
5
2027
173
42
21
105
5
Other years
1 810
280
236
1 236
58
Total liabilities in the statement of
financial position as at 31 December
2022
2 893
536
432
1 836
89
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
138
Part 12 – Other notes
Note 12.1 Related party transactions
The accounting policies and significant estimates and assumptions presented in Parts 2 and 10 are applicable to
transactions entered into with related parties.
The transactions between the Group and related parties include transactions with:
• the joint venture Sierra Gorda S.C.M.,
• entities controlled or jointly controlled by the State Treasury or over which it has significant influence, and
• the Management Board and the Supervisory Board (remuneration) – Note 12.9.
Operating income from related entities
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Revenues from sales of products, merchandise and
materials to a joint venture
38
38
Interest income on loans granted to a joint venture
597
582
Revenues from other transactions with a joint venture
21
376
Revenues from other transactions with other related
parties
23
11
Total
679
1 007
Purchase from related entities
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Purchase of services, merchandise and materials
34
32
Other purchase transactions
4
3
Total
38
35
Trade and other receivables from related parties
As at
31 December 2023
As at
31 December 2022
From the joint venture Sierra Gorda S.C.M. – loans granted
9 096
9 603
From the joint venture Sierra Gorda S.C.M. - other
receivables
29
69
From other related parties
5
5
Total
9 130
9 677
Trade and other payables towards related parties
As at
31 December 2023
As at
31 December 2022
Towards joint venture
18
58
Towards other related parties
3
2
Total
21
60
The State Treasury is an entity controlling KGHM Polska Miedź S.A. at the highest level. The Group makes use of the
exemption to disclose a detailed scope of information on transactions with the Polish Government and entities controlled
or jointly controlled by the Polish Government, or over which the Polish Government has significant influence (IAS 24.25).
In 2023, the Parent Entity and subsidiaries did not enter into significant transactions with related parties under other than
arm’s length conditions.
Pursuant to the scope of IAS 24.26, as at 31 December 2023 and in the period from 1 January to 31 December 2023, the
Group realised the following transactions with the Polish Government and entities controlled or jointly controlled by the
Polish Government, unusual due to their nature or amount:
• due to an agreement on setting mining usufruct for the extraction of mineral resources and for the exploration for
and assessment of mineral resources – balance of payables in the amount of PLN 243 million (as at 31 December
2022: PLN 229 million); including payables due to mining usufruct for the extraction of mineral resources recognised
in costs in the amount of PLN 31 million (as at 31 December 2022: PLN 31 million),
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
139
• due to a reverse factoring agreement the Group had payables in the amount of PLN 2 528 million and interest costs
for the period from 1 January to 31 December 2023 in the amount of PLN 55 million (as at 31 December 2022, payables
in the amount of PLN 18 million and interest costs for the period from 1 January to 31 December 2022 in the amount
of PLN 3 million),
• other transactions and economic operations related to spot currency exchange, depositing cash, granting bank loans,
guarantees, and letters of credit (including documentary letters of credit), running bank accounts, servicing of
business credit cards, processing of a documentary collection, servicing of special purpose funds and entering into
transactions on the forward currency market as part of cooperation with banks related to the State Treasury,
State Treasury companies may purchase bonds issued by KGHM Polska Miedź S.A.
The remaining transactions between the Group and the Polish Government and with entities controlled or jointly controlled
by the Polish Government, or over which the government has significant influence, were within the scope of ordinary, daily
economic operations. These transactions concerned the following:
• the purchase of goods (energy, fuels, services), merchandise, materials and fixed assets to meet the needs of current
operating activities. In the period from 1 January to 31 December 2023, the turnover from these transactions amounted
to PLN 3 554 million (from 1 January to 31 December 2022: PLN 3 816 million), and, as at 31 December 2023, the
unsettled balance of liabilities from these transactions amounted to PLN 378 million (as at 31 December 2022: PLN 340
million),
• sales to Polish State Treasury Companies. In the period from 1 January to 31 December 2023, the turnover from these
sales amounted to PLN 864 million (from 1 January to 31 December 2022: PLN 430 million), and, as at 31 December
2023, the unsettled balance of receivables from these transactions amounted to PLN 240 million (as at 31 December
2022: PLN 241 million).
Note 12.2 Dividends paid
In accordance with Resolution No. 7/2023 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 21 June 2023
regarding the appropriation of profit for the year ended 31 December 2022, the profit in the amount of PLN 3 533 million
was appropriated as follows: as a shareholders dividend in the amount of PLN 200 million (PLN 1.00 per share) and transfer
of PLN 3 333 million to the Company’s reserve capital. The Ordinary General Meeting of KGHM Polska Miedź S.A. set the
dividend date for 2022 at 27 July 2023 and the dividend payment date for 2022 at 10 August 2023.
In accordance with Resolution No. 6/2022 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 21 June 2022
regarding the appropriation of profit for the year ended 31 December 2021, the profit in the amount of PLN 5 169 million
was appropriated as follows: as a shareholders dividend in the amount of PLN 600 million (PLN 3.00 per share) and transfer
of PLN 4 569 million to the Company’s reserve capital. The Ordinary General Meeting of KGHM Polska Miedź S.A. set the
dividend date for 2021 at 7 July 2022 and the dividend payment date for 2021 at 14 July 2022.
All shares of the Parent Entity are ordinary shares.
As at the date of publication, no decision was made as to covering the loss for 2023.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
140
Note 12.3 Other assets
Accounting policies
Receivables not constituting financial assets are initially recognised at nominal value, and at the end of the reporting
period they are measured in the amount receivable.
As at
31 December 2023
As at
31 December 2022
Other non-current non-financial assets
386
220
Investment property
120
106
Prepayments
9
14
Non-financial advances
185
30
Receivables due to overpayment of property tax
72
69
Other
-
1
Other current assets
571
623
Note 7.1
Financial
296
337
Amounts retained (collateral) due to long-term
construction contracts
7
13
Receivables due to guarantees granted
18
29
Receivables due to settled derivatives
48
37
Receivables due to compensation for energy-intensive
sector due to allocation of the costs of purchasing CO
2
emission allowances to the price of electricity
144
98
Receivables due to conditional payments associated
with the agreement on the sale of a subsidiary
S.C.M. Franke
20
-
Receivables due to settlement of the Franco Nevada
streaming contract
13
113
Other
46
47
Non-financial
275
286
Non-financial advances
103
108
Receivables due to measurement of long-term contracts
75
99
Receivables due to property and personal insurance
29
26
Other
68
53
Other non-current and current assets, total
957
843
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
141
Note 12.4 Other liabilities
Accounting policies
Other financial liabilities are initially recognised at fair value less transaction costs, and at the end of the reporting period
they are measured at amortised cost.
As at
31 December 2023
As at
31 December 2022
Deferred income, including:
222
238
Liabilities due to Franco Nevada streaming contract
128
137
Trade payables
197
186
Other financial liabilities
33
54
Other non-financial liabilities
35
65
Other liabilities – non-current
487
543
Deferred income, including:
67
134
Trade payables
33
87
Accruals, including:
1 046
976
Provision for purchase of property rights related to
electricity
41
91
Charges for discharging gases and dusts to the air
501
600
Other accounted costs, proportional to achieved
revenues, which are future liabilities estimated on the
basis of contracts entered into
224
220
Liabilities due to settled derivatives
7
34
Other financial liabilities
281
123
Other non-financial liabilities
51
62
Other liabilities – current
1 452
1 329
Total – non-current and current liabilities
1 939
1 872
Note 12.5 Assets and liabilities not recognised in the statement of financial position
The value of contingent assets and liabilities and other liabilities not recognised in the statement of financial position were
determined based on estimates.
As at
31 December 2023
As at
31 December 2022
Contingent assets
459
366
Guarantees received
324
195
Promissory notes receivables
111
147
Other
24
24
Contingent liabilities
589
452
Note 8.6
Guarantees and letters of credit
260
187
Note 8.6
Promissory note payables
257
170
Property tax on underground mine workings
6
34
Other
66
61
Other liabilities not recognised in the statement of
financial position - liabilities towards local government
entities due to expansion of the tailings storage facility
26
34
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
142
Note 12.6 Litigation and claims
A proceeding regarding the payment of royalties for the use of invention project no. 1/97/KGHM called „Method for
increasing the production capacity of the electrorefining sections of the Metallurgical Plants”. Details are presented in The
Management Board’s Report on the activities of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group in 2023,
in section 2.10 Litigation and claims.
Note 12.7 Capital commitments related to property, plant and equipment and intangible assets
Capital commitments incurred in the reporting period, but not yet recognised in the consolidated statement of financial
position, were as follows:
As at
31 December 2023
As at
31 December 2022
Capital commitments due to the purchase of:
property, plant and equipment
1 668
1 390
intangible assets
22
18
Total capital commitments
1 690
1 408
The Group’s share in capital commitments of joint ventures (Sierra Gorda S.C.M.) is presented in Note 6.1.
Note 12.8 Employment structure
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
White-collar employees
10 968
10 650
Blue-collar employees
22 914
23 004
Total (full-time)
33 882
33 654
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
143
Note 12.9 Remuneration of key managers
from 1 January 2023 to 31 December 2023
Remuneration of members of
the Management Board
(in PLN thousands)
Period
when
function
served
Remuneration
for the period
of service as a
member of the
Management
Board
Remuneration
after the period
of service as a
member of the
Management
Board
Benefits due to
termination of
employment
Total
earnings
Members of the Management
Board serving in the function
as at 31 December 2023
Tomasz Zdzikot*
01.01-31.12
1 648
-
-
1 648
Mirosław Kidoń
01.01-31.12
1 181
-
-
1 181
Marek Pietrzak*
01.01-31.12
2 244
-
-
2 244
Marek Świder*
01.01-31.12
2 004
-
-
2 004
Mateusz Wodejko
01.01-31.12
1 207
-
-
1 207
Members of the Management
Board not serving in the function
as at 31 December 2023
Marcin Chludziński
-
-
874
-
874
Adam Bugajczuk
-
-
697
-
697
Paweł Gruza
-
-
631
( 163)
468
Andrzej Kensbok
-
-
975
-
975
TOTAL
8 284
3 177
( 163)
11 298
* The amount includes the variable part of remuneration for 2022 settled in 2023.
from 1 January 2022 to 31 December 2022
Remuneration of members of
the Management Board
(in PLN thousands)
Period
when
function
served
Remuneration
for the period
of service as a
member of the
Management
Board
Remuneration
after the period
of service as a
member of the
Management
Board
Benefits due to
termination of
employment
Total
earnings
Members of the Management
Board serving in the function
as at 31 December 2022
Tomasz Zdzikot
01.09-31.12
373
-
-
373
Mirosław Kidoń
10.12-31.12
64
-
-
64
Marek Pietrzak
01.01-31.12
1 079
-
-
1 079
Marek Świder
15.03-31.12
836
-
-
836
Mateusz Wodejko
21.12-31.12
32
-
-
32
Members of the Management
Board not serving in the function
as at 31 December 2022
Marcin Chludziński
01.01-11.10
1 939
-
435
2 374
Adam Bugajczuk
01.01-31.08
1 667
-
-
1 667
Paweł Gruza
01.01-09.08
1 604
-
163
1 767
Andrzej Kensbok
01.01-06.12
1 679
-
298
1 977
Katarzyna Kreczmańska-Gigol
-
-
277
-
277
Jerzy Paluchniak
01.09-11.10
120
-
-
120
Radosław Stach
-
-
277
-
277
Dariusz Świderski
01.01-21.02
148
600
14
762
TOTAL
9 541
1 154
910
11 605
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
144
from 1 January 2023 to 31 December 2023
Remuneration of members of the
Supervisory Board
(in PLN thousands)
Period when
function
served
Current employee
benefits
Current benefits
due to serving in
the function
Total
earnings
Members of the Supervisory Board
serving in the function
as at 31 December 2023
Agnieszka Winnik -Kalemba
01.01-31.12
-
185
185
Katarzyna Krupa
01.01-31.12
-
167
167
Wojciech Zarzycki
01.01-31.12
-
167
167
Józef Czyczerski
01.01-31.12
328
168
496
Przemysław Darowski
01.01-31.12
126
167
293
Andrzej Kisielewicz
01.01-31.12
-
167
167
Bogusław Szarek
01.01-31.12
326
167
493
Marek Wojtków
01.01-31.12
-
167
167
Radosław Zimroz
01.01-31.12
-
167
167
Piotr Ziubroniewicz
01.01-31.12
-
167
167
TOTAL
780
1 689
2 469
from 1 January 2022 to 31 December 2022
Remuneration of members of the
Supervisory Board
(in PLN thousands)
Period when
function
served
Current employee
benefits
Current benefits
due to serving in
the function
Total earnings
Members of the Supervisory Board
serving in the function
as at 31 December 2022
Agnieszka Winnik -Kalemba
01.01-31.12
-
164
164
Katarzyna Krupa
01.01-31.12
-
149
149
Wojciech Zarzycki
22.06-31.12
-
78
78
Józef Czyczerski
01.01-31.12
203
150
353
Przemysław Darowski
01.01-31.12
109
149
258
Andrzej Kisielewicz
01.01-31.12
-
149
149
Bogusław Szarek
01.01-31.12
372
149
521
Marek Wojtków
07.10-31.12
-
35
35
Radosław Zimroz
07.10-31.12
-
35
35
Piotr Ziubroniewicz
24.11-31.12
-
15
15
Members of the Supervisory Board
not serving in the function
as at 31 December 2022
Piotr Dytko
22.06-07.10
-
44
44
Jarosław Janas
01.01-21.06
-
71
71
Robert Kaleta
01.01-07.10
-
115
115
Bartosz Piechota
01.01-21.06
-
71
71
TOTAL
684
1 374
2 058
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
145
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Current employee benefits of other key managers
(in PLN thousands)
3 141
3 496
Based on the definition of key management personnel according to IAS 24 and based on an analysis of the rights
and scope of responsibilities of members of management bodies of the KGHM Polska Miedź S.A. Group arising from
corporate documents and from management contracts, the members of the Board of Directors of KGHM INTERNATIONAL
LTD. and the President of the Board of Directors of KGHM INTERNATIONAL LTD. were recognised as other key managers
of the Group.
Note 12.10 Remuneration of the entity entitled to audit the financial statements and of entities related
to it in PLN thousands
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Companies of the PricewaterhouseCoopers group, total
5 653
5 429
From the contract for the review and audit of financial
statements and contracts for assurance services, of which:
5 554
5 330
audit of annual financial statements
4 541
4 307
assurance services, of which:
1 013
1 023
review of financial statements
833
818
other assurance services
180
205
From realisation of other contracts
99
99
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
146
Note 12.11 Composition of the Group
% of Group’s share
Company
Head office
As at
31 December
2023
As at
31 December
2022
BIPROMET S.A.
Katowice
100
100
CBJ sp. z o.o.
Lubin
100
100
CENTROZŁOM WROCŁAW S.A.
Wrocław
100
100
Polska Grupa Uzdrowisk sp. z o.o. (formerly CUPRUM Zdrowie
sp. z o.o. )
Wrocław
100
100
"Energetyka" sp. z o.o.
Lubin
100
100
Fundusz Hotele 01 Sp. z o.o.
Wrocław
100
100
Fundusz Hotele 01 Sp. z o.o. S.K.A.
Wrocław
100
100
INOVA Spółka z o.o.
Lubin
100
100
KGHM CUPRUM sp. z o.o. – CBR
Wrocław
100
100
CUPRUM Development sp. z o.o.
Wrocław
100
100
KGHM Kupfer AG
Weißwasser
100
100
KGHM Metraco S.A.
Legnica
100
100
KGHM (SHANGHAI) COPPER TRADING CO., LTD.
Shanghai
100
100
KGHM TFI S.A.
Wrocław
-
100
KGHM ZANAM S.A.
Polkowice
100
100
"MIEDZIOWE CENTRUM ZDROWIA" S.A.
Lubin
100
100
NITROERG S.A.
Bieruń
87.12
87.12
NITROERG SERWIS Sp. z o.o.
Wilków
87.12
87.12
PeBeKa S.A.
Lubin
100
100
MERCUS Logistyka sp. z o.o.
Polkowice
100
100
PHU "Lubinpex" Sp. z o.o.
Lubin
100
100
Future 1 Sp. z o.o.
Lubin
100
100
KGHM Centrum Analityki Sp. z o.o.
Lubin
100
100
Future 3 Sp. z o.o.
Lubin
100
100
Future 4 Sp. z o.o.
Lubin
100
100
Future 5 Sp. z o.o.
Lubin
100
100
PMT Linie Kolejowe Sp. z o.o.
Owczary
100
100
POL-MIEDŹ TRANS Sp. z o.o.
Lubin
100
100
Polska Grupa Uzdrowisk sp. z o.o.
Wrocław
-
100
Uzdrowisko Cieplice Sp. z o.o.-Grupa PGU
Jelenia Góra
98.85
98.85
Uzdrowiska Kłodzkie S.A. - Grupa PGU
Polanica Zdrój
100
100
Uzdrowisko Połczyn Grupa PGU S.A.
Połczyn Zdrój
100
100
Uzdrowisko Świeradów-Czerniawa Sp. z o.o.-Grupa PGU
Świeradów Zdrój
99.48
99.40
WMN "ŁABĘDY" S.A.
Gliwice
84.98
84.98
WPEC w Legnicy S.A.
Legnica
100
100
Zagłębie Lubin S.A.
Lubin
100
100
OOO ZANAM VOSTOK
Gay (Russia)
100
100
Invest PV 7 Sp. z o.o.
Lubin
100
-
TUW Cuprum
Lubin
99.49
99.49
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
147
% of Group’s share
Company
Head office
As at
31 December 2023
As at
31 December 2022
KGHM INTERNATIONAL LTD. Group
KGHM INTERNATIONAL LTD.
Canada
100
100
KGHM AJAX MINING INC.
Canada
80
80
Sugarloaf Ranches Ltd.
Canada
80
80
KGHMI HOLDINGS LTD.
Canada
100
100
Quadra FNX Holdings Chile Limitada
Chile
100
100
Aguas de la Sierra Limitada
Chile
100
100
Quadra FNX FFI S.à r.l.
Luxembourg
100
100
Robinson Holdings (USA) Ltd.
USA
100
100
Wendover Bulk Transhipment Company
USA
100
100
Robinson Nevada Mining Company
USA
100
100
Carlota Holdings Company
USA
100
100
Carlota Copper Company
USA
100
100
FNX Mining Company Inc.
Canada
100
100
DMC Mining Services Ltd.
Canada
100
100
Quadra FNX Holdings Partnership
Canada
100
100
DMC Mining Services Mexico, S.A. de C.V.
Mexico
100
100
FNX Mining Company USA Inc.
USA
100
100
DMC Mining Services Corporation
USA
100
100
Centenario Holdings Ltd.
Canada
100
100
Minera Carrizalillo SpA
Chile
100
100
KGHM Chile SpA
Chile
100
100
FRANKE HOLDINGS LTD.
Canada
100
100
0899196 B.C. Ltd.
Canada
100
100
DMC Mining Services (UK) Ltd.
The United
Kingdom
100
100
DMC Mining Services Colombia SAS
Colombia
100
100
DMC Mining Services Chile SpA
Chile
100
100
Changes in the organisational structure of the KGHM Polska Miedź S.A. Group
Merger of Companies: CUPRUM Zdrowie sp. z o.o. (acquiring company) and Polska Grupa Uzdrowisk spółka z o.o.
(acquired company)
On 4 May 2023, the following announcement was published in the Court and Commercial Gazette (Monitor Sądowy i
Gospodarczy) – a Merger Plan agreed on 26 April 2023 between the Management Board of the acquiring company and the
Management Board of the acquired company, acting under art. 491 and subsequent articles of the Act of 15 September
2020, the Commercial Partnerships and Companies Code.
The acquiring company holds 100% of the shares in the share capital of the acquired company, and the intention of the
merging companies is to merge by transferring all of the assets of the acquired company to the acquiring company under
the simplified mode of companies merger, following which the acquired company will be liquidated without engaging in
liquidation proceedings, while its assets will be transferred to the acquiring company without increasing the share capital
of the acquiring company.
The fundamental goal of the merger is to improve and simplify the structure of the group created by CUPRUM Zdrowie sp.
z o.o., improve its management efficiency and increase the value of subsidiaries. CUPRUM Zdrowie sp. z o.o. operates as a
holding company for subsidiaries, including the spa companies. The Acquiring Company has financial and controlling know-
how as well as corporate oversight. Polska Grupa Uzdrowisk sp. z o.o. is a centre for joint services, provided to the spa
subsidiaries of CUPRUM Zdrowie sp. z o.o., and has know-how in the area of management and optimisation of procurement
processes, investment projects and the coordination of marketing and communication activities, as well as, to a limited
degree, in the legal area.
On 28 June 2023, the Management Board of KGHM Polska Miedź S.A. adopted a resolution on the merger of the company
CUPRUM Zdrowie sp. z o.o. with the company Polska Grupa Uzdrowisk sp. z o. o. and approval of the amendment to the
Articles of Association of the company CUPRUM Zdrowie sp. z o.o. On 14 July 2023 the Shareholders Meetings of the
merging companies expressed consent to the merger.
On 1 August 2023, the aforementioned merger was registered in the National Court Register.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
148
Acquisition of shares in the company INVEST PV7 sp. z o.o.
On 10 October 2023, KGHM Polska Miedź S.A. acquired shares in the company INVEST PV7 sp. z o.o. – the first of several
photovoltaic farms with a capacity of 5.2 MW, this acquisition being the result of a preliminary contingent agreement signed
on 12 September 2023 for the purchase of shares in special purpose companies being the owners of photovoltaic farms
projects with a combined capacity of approx. 47 MW. The farms are located in the following voivodeships: Lower Silesia,
Łódź, Pomerania and Greater Poland.
In accordance with the requirements of IFRS 3 Business Combinations, an analysis was conducted as to whether the
acquired assets and liabilities meet the definition of a business and the transaction should be settled in accordance with
IFRS 3 as a business combination, or whether the acquired assets do not constitute a business and the transaction should
be settled as an acquisition of assets.
After conducting a concentration test, the Group concluded that the transaction constituted an acquisition of assets and
was recognised as such in the consolidated financial statements.
The acquired assets are property, plant and equipment mainly constituting expenditures incurred on the construction of a
photovoltaic farm (i.e. steel structures, Energy Performance Contracting costs) and land usufruct under a tenancy
agreement.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
149
Diagram of the KGHM Polska Miedź S.A. Group as at 31 December 2023
* Unit excluded from consolidation due to its insignificant impact on the consolidated financial statements.
Parent Entity
KGHM Polska Miedź S.A.
PeBeKa S.A.
100%
KGHM CUPRUM sp. z o.o. – CBR
100%
Zagłębie Lubin S.A.
100%
MIEDZIOWE CENTRUM ZDROWIA S.A.
100%
CBJ sp. z o.o.
100%
INOVA Spółka z o.o.
100%
KGHM ZANAM S.A.
100%
KGHM (SHANGHAI) COPPER TRADING CO., LTD.
100%
Energetyka sp. z o.o.
100%
WPEC w Legnicy S.A.
100%
POL-MIEDŹ TRANS Sp. z o.o.
100%
MERCUS Logistyka sp. z o.o.
100%
PHU Lubinpex Sp. z o.o.
100%
BIPROMET S.A.
100%
NITROERG S.A.
87.12%
CENTROZŁOM WROCŁAW S.A.
100%
WMN ŁABĘDY S.A.
84.98%
KGHM Metraco S.A.
100%
Fundusz Hotele 01 Sp. z o.o.
100%
Fundusz Hotele 01 Sp. z o.o. S.K.A.
100%
Uzdrowiska Kłodzkie S.A. – Grupa PGU
100%
Uzdrowisko Połczyn Grupa PGU S.A.
100%
Uzdrowisko Cieplice Sp. z o.o. – Grupa PGU
98.85%
Uzdrowisko Świeradów-Czerniawa Sp. z o.o. –
Grupa PGU
99.48%
Future 1 Spółka z o.o.
100% (continued on next page)
NITROERG SERWIS Sp. z o.o
87.12%
Polska Grupa Uzdrowisk sp. z o.o.
100%
CUPRUM Development sp. z o.o.
100%
PMT Linie Kolejowe Sp. z o.o.
100%
KGHM Centrum Analityki Spółka z o.o.
100%
Future 3 Spółka z o.o.
100%
Future 4 Spółka z o.o.
100%
Future 5 Spółka z o.o.
100%
OOO ZANAM VOSTOK
100%
TUW Cuprum *
99.49%
Invest PV 7 Sp. z o.o.
100%
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
150
Future 1 Spółka z o.o.
100%
KGHM INTERNATIONAL LTD.
100%
FNX Mining Company Inc.
100%
0899196 B.C. Ltd.
100%
CENTENARIO HOLDINGS LTD.
100%
Minera Carrizalillo SpA
100%
KGHM Chile SpA
100%
FRANKE HOLDINGS LTD.
100%
DMC Mining Services Ltd.
100%
Quadra FNX Holdings Partnership
100%
DMC Mining Services Mexico, S.A. de C.V.
100%
FNX Mining Company USA Inc.
100%
DMC Mining Services Corporation
100%
Robinson Holdings (USA) Ltd.
100%
Wendover Bulk Transhipment Company
100%
Robinson Nevada Mining Company
100%
Carlota Holdings Company
100%
Carlota Copper Company
100%
KGHMI HOLDINGS LTD.
100%
Quadra FNX Holdings Chile Limitada
100%
Aguas de la Sierra Limitada
100%
Quadra FNX FFI S.á r.l.
100%
KGHM AJAX MINING INC.
80%
Sugarloaf Ranches Ltd.
80%
KGHM Kupfer AG
100%
DMC Mining Services Colombia SAS
100%
DMC Mining Services (UK) Ltd.
100%
DMC Mining Services Chile SpA
100%
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
151
Note 12.12 Subsequent events
Convening of an Extraordinary General Meeting
On 8 January 2024, the Parent Entity’s Management Board announced the convening of the Extraordinary General Meeting
of KGHM Polska Miedź S.A., which took place on 13 February 2024 at the head office of the Parent Entity in Lubin, at the
address ul. Marii Skłodowskiej-Curie 48.
Resignation of a Member of the Management Board of the Parent Entity
On 9 January 2024, Marek Świder resigned from the function of Vice President of the Management Board of KGHM Polska
Miedź S.A. (Production), and thus from membership in the Management Board of KGHM Polska Miedź S.A., as of 9 January
2024.
Conclusion of a contract with Prysmian S.p.A. for the sale of copper wire rod
On 11 January 2024, the Parent Entity signed a long-term sales contract with one of the largest customers of copper wire
rod – the Prysmian S.p.A. Group. The minimum value of the contract is estimated at USD 1.73 billion (PLN 6.88 billion), while
the maximum value at USD 2.46 billion (PLN 9.77 billion). The contract is a continuation of a long-standing cooperation with
the Prysmian Group.
Conclusion of an agreement and an annex to the guarantee agreement
On 11 January 2024, the Parent Entity signed an annex to the agreement for granting guarantee under the available line
with a bank with its registered office in Warsaw, increasing the value of the agreement from PLN 500 million to
PLN 700 million, and on 7 February 2024, it concluded an agreement for granting guarantee under the line up to the amount
of USD 50 million (PLN 202 million).
Consent to sign a credit agreement
On 7 February 2024 the Management Board of the Company consented to sign an unsecured, revolving credit agreement
with Bank Gospodarstwa Krajowego in the amount of USD 450 million for a financing period of up to 60 months, with an
option to extend it by a subsequent 24 months. During the credit’s availability period, that is 36 months from the date of
signing the Agreement, the credit is a renewable credit line (every repayment renews the available credit limit) and
beginning from the first day after the period of 36 months from the date of signing the Agreement, the credit will be
transformed into a non-renewable loan to be repaid in four equal, semi-annual principal instalments (unless it is extended
as per the conditions described below). Every repayment of a principal instalment will decrease the amount of credit until
the credit is fully repaid. Moreover, the credit has 2 options to extend its availability period in the form of a renewable credit
line:
− 1st extension option by a subsequent 24 months at the Company’s request after 30 months,
− 2nd extension option by a subsequent 24 months at the Company’s request after 54 months.
Pursuant to the terms of the Agreement, the credit may be drawn in USD. The financial resources acquired from the credit
will be used to finance general corporate purposes. Interest on the credit was set based on SOFR plus a margin, depending
on the level of the financial ratio of net debt/EBITDA. Other credit terms are standard terms for these types of transactions.
The aforementioned Agreement replaces the credit agreement with Bank Gospodarstwa Krajowego from 2019, which was
announced by the Company via regulatory filing no. 7/2019 dated 25 February 2019. The credit agreement was signed on
23 February 2024.
Granting a loan to KGHM INTERNATIONAL LTD.
On 12 February 2024, the Parent Entity granted a loan to KGHM INTERNATIONAL LTD. in the amount of USD 30.6 million
(PLN 122.9 million) for financing the purchase of mining machinery in the Robinson mine.
Conclusion of reverse factoring agreements
On 12 February 2024 and on 1 March 2024, KGHM Polska Miedź S.A. concluded reverse factoring agreements with two
financial institutions, with a total available limit of PLN 600 million. Ultimately, this limit will amount to PLN 1 billion.
Changes in the composition of the Supervisory Board of the Parent Entity
On 13 February 2024, the Extraordinary General Meeting of KGHM Polska Miedź S.A. dismissed the following persons from
the composition of the Supervisory Board of the Parent Entity:
− Andrzej Kisielewicz,
− Katarzyna Krupa,
− Agnieszka Winnik – Kalemba,
− Marek Wojtków,
− Wojciech Zarzycki,
− Radosław Zimroz,
− Piotr Ziubroniewicz
as well as appointed the following persons to the composition of the Supervisory Board of KGHM Polska Miedź S.A.:
− Zbigniew Bryja,
− Aleksander Cieśliński,
− Zbysław Dobrowolski,
− Dominik Januszewski,
− Tadeusz Kocowski,
− Marian Noga,
− Piotr Prugar.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
152
Changes in the composition of the Management Board of the Parent Entity
On 13 February 2024, the Supervisory Board of the Company adopted resolutions on dismissal from the composition of
the 11th term Management Board of KGHM Polska Miedź S.A following persons:
− Tomasz Zdzikot, President of the Management Board of KGHM Polska Miedź S.A.,
− Mateusz Wodejko, Vice President of the Management Board (Finance) of KGHM Polska Miedź S.A.,
− Marek Pietrzak, Vice President of the Management Board (Corporate Affairs).
Moreover, the Supervisory Board of the Company adopted a resolution on delegation of Zbigniew Bryja - a member of the
Supervisory Board, to temporarily carry out the duties of the President of the Management Board of KGHM Polska Miedź
S.A., the Vice President of the Management Board (Finance) of KGHM Polska Miedź S.A., the Vice President of the
Management Board (Corporate Affairs) of KGHM Polska Miedź S.A. and Vice President of the Management Board
(Development) of KGHM Polska Miedź S.A. for the period from 13 February 2024 to the date of results of the qualification
proceedings for the positions of President of the Management Board of KGHM Polska Miedź S.A. and at least one of the
Vice Presidents of the Management Board of KGHM Polska Miedź S.A., but not longer than for a period of three months.
Acquisition of photovoltaic farms
On 29 February 2024, KGHM Polska Miedź S.A. acquired additional 7 photovoltaic farms on the Renewable Energy Sources
market. The concluded transaction is the first step on the road towards the realisation of the energy transformation
strategy. It is a step towards the diversification of sources and decoupling the Parent Entity from volatility of prices on the
energy market. The transaction price amounted to PLN 215 million, paid by a bank transfer in the amount of PLN 141
million in 2023 (an advance due to acquisition of financial assets) and in the amount of PLN 74 million in 2024.
The acquired assets are located in four voivodeships: Lower Silesia, Pomerania, Greater Poland and Łódź. The company
responsible for their construction is Projekt Solartechnik, a part of the Grenevia (Famur) group and TDJ.
Pursuant to the requirements of IFRS 3 Business Combinations, the Group is analysing whether the acquired assets and
liabilities meet the definition of a business and whether the transaction should be settled pursuant to IFRS 3 as a business
combination, or whether acquired assets do not constitute a business and the transaction should be settled as an
acquisition of assets. The results of the concentration test will be recognised in the consolidated financial statements for
the first quarter of 2024.
Resignation of a Member of the Supervisory Board of the Parent Entity, temporarily delegated to carry out the
duties of a Member of the Management Board
On 6 March, the Company received a declaration from Zbigniew Bryja announcing his resignation, upon the submission of
the declaration, from the delegation as a Member of the Supervisory Board of KGHM Polska Miedź S.A. to temporarily carry
out the duties of the President of the Management Board of KGHM Polska Miedź S.A., the Vice President of the
Management Board (Finance) of KGHM Polska Miedź S.A., the Vice President of the Management Board (Corporate Affairs)
of KGHM Polska Miedź S.A. and Vice President of the Management Board (Development) of KGHM Polska Miedź S.A., as
well as his resignation from serving in the function of a member of the Supervisory Board of the Parent Entity.
Appointment of Members of the Management Board of the Parent Entity
On 6 March 2024, the Supervisory Board of the Company adopted resolutions on appointing the following persons to the
Management Board of KGHM Polska Miedź S.A.:
- Andrzej Szydło as a Member of the Management Board of KGHM Polska Miedź S.A., granting him the function of
President of the Management Board of KGHM Polska Miedź S.A.
- Piotr Stryczek as a Member of the Management Board of KGHM Polska Miedź S.A., granting him the function of Vice
President of the Management Board (Corporate Affairs) of KGHM Polska Miedź S.A.
- Mirosław Laskowski as a Member of the Management Board of KGHM Polska Miedź S.A., granting him the function of
Vice President of the Management Board (Production) of KGHM Polska Miedź S.A.
- Zbigniew Bryja as a Member of the Management Board of KGHM Polska Miedź S.A., granting him the function of Vice
President of the Management Board (Development) of KGHM Polska Miedź S.A.
- Piotr Krzyżewski as a Member of the Management Board of KGHM Polska Miedź S.A., granting him the function of Vice
President of the Management Board (Finance) of KGHM Polska Miedź S.A
Resignation of a Member of the Management Board of the Parent Entity
On 29 March 2024 Mirosław Kidoń resigned from the function of Vice President of the Management Board (International
Assets) of KGHM Polska Miedź S.A., and thus from membership in the Management Board of KGHM Polska Miedź S.A., as
of 1 April 2024.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
153
Part 13 – Quarterly financial information of the Group
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
from 1 October 2023
to 31 December 2023
unaudited
from 1 October 2022
to 31 December 2022
unaudited
from 1 January
2023 to 31
December 2023
from 1 January 2022
to 31 December
2022
Note 2.3
Revenues from contracts with
customers
7 819
8 151
33 467
33 847
Note 4.1
Cost of sales
(9 753)
(6 898)
(32 907)
(27 541)
Gross (loss)/profit
(1 934)
1 253
560
6 306
Note 4.1
Selling costs and administrative
expenses
( 795)
( 595)
(2 200)
(1 962)
(Loss)/profit on sales
(2 729)
658
(1 640)
4 344
Note 6.2
Gains due to the reversal of
allowances for impairment of
loans granted to a joint
venture
( 392)
90
101
873
Note 6.2
Interest income on loans
granted to a joint venture
calculated using the effective
interest rate method
151
105
597
582
Profit or loss on involvement in a
joint venture
( 241)
195
698
1 455
Note 4.2
Other operating income, including:
204
24
906
1 881
other interest calculated using
the effective interest rate
method
12
13
56
54
reversal of impairment losses on
financial instruments
( 3)
1
-
5
Other operating costs, including:
(2 769)
(1 676)
(3 723)
( 919)
impairment losses on financial
instruments
2
-
( 4)
( 5)
Finance income
391
537
529
148
Note 4.3
Finance costs
( 148)
( 114)
( 370)
( 420)
(Loss)/ profit before income tax
(5 292)
( 376)
(3 600)
6 489
Note 5.1
Income tax expense
765
( 117)
( 91)
(1 715)
(LOSS)/PROFIT FOR THE PERIOD
(4 527)
( 493)
(3 691)
4 774
(Loss)/Profit for the period
attributable to:
Shareholders of the Parent Entity
(4 526)
( 494)
(3 698)
4 772
Non-controlling interest
( 1)
1
7
2
Weighted average number of
ordinary shares (million)
200
200
200
200
Basic/diluted earnings per share
(in PLN)
( 22.63)
( 2.47)
( 18.49)
23.86
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
154
Explanatory notes to the consolidated statement of profit or loss
Note 13.1 Expenses by nature
from 1 October 2023
to 31 December 2023
unaudited
from 1 October 2022
to 31 December 2022
unaudited
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Depreciation of property, plant
and equipment and amortisation
of intangible assets
756
663
2 641
2 398
Employee benefits expenses
2 170
2 009
8 296
7 333
Materials and energy, including:
3 576
4 045
14 872
15 876
purchased metal-bearing
materials
1 915
2 158
7 712
8 859
External services
812
800
2 960
2 604
Minerals extraction tax
699
746
3 496
3 046
Other taxes and charges
272
249
874
786
Reversal of impairment losses on
property, plant and equipment
and intangible assets
( 1)
( 2)
( 3)
( 3)
Reversal of write-down of
inventories
( 1)
( 15)
( 19)
( 55)
Advertising costs and
representation expenses
37
34
96
89
Property and personal insurance
21
22
87
80
Impairment losses on property,
plant and equipment and
intangible assets
2 720
36
2 728
83
Write-down of inventories
87
34
429
74
Other costs
26
20
83
77
Total expenses by nature
11 174
8 641
36 540
32 388
Cost of merchandise and
materials sold (+)
138
136
679
792
Change in inventories of finished
goods and work in progress (+/-)
( 108)
( 827)
( 275)
(2 008)
Cost of products for internal use
of the Group (-)
( 656)
( 457)
(1 837)
(1 669)
Total cost of sales, selling costs
and administrative expenses,
of which:
10 548
7 493
35 107
29 503
Cost of sales
9 753
6 898
32 907
27 541
Selling costs
134
149
481
560
Administrative expenses
661
446
1 719
1 402
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
155
Note 13.2 Other operating income and (costs)
from 1 October 2023
to 31 December 2023
unaudited
from 1 October 2022
to 31 December 2022
unaudited
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Gains on derivatives, of which:
( 31)
( 12)
367
270
measurement
( 127)
( 61)
202
109
realisation
96
49
165
161
Interest income calculated using
the effective interest rate method
12
13
56
54
Exchange differences on financial
assets and liabilities other than
borrowings
-
-
-
949
Reversal of impairment losses on
fixed assets under construction
23
-
53
-
Reversal of impairment losses on
financial instruments
( 3)
1
-
5
Provisions released
( 33)
( 36)
54
62
Gain on disposal of intangible
assets
( 1)
( 1)
7
134
Gain on disposal of subsidiaries
-
7
1
180
Government grants received
( 4)
5
17
19
Income from servicing of letters
of credit and guarantees
11
-
21
28
Compensation, fines and
penalties received
14
3
47
66
Assistance under the government
program “Aid for energy-intensive
sectors related to sudden
increases in natural gas and
electricity prices in 2022 and
2023”
178
-
178
-
Other
38
44
105
114
Total other operating income
204
24
906
1 881
Losses on derivatives, of which:
( 100)
( 113)
( 634)
( 490)
measurement
40
( 10)
( 188)
( 116)
realisation
( 140)
( 103)
( 446)
( 374)
Impairment losses on financial
instruments
2
-
( 4)
( 5)
Fair value losses on financial
assets
( 9)
11
( 104)
( 58)
Impairment losses on fixed assets
under construction and intangible
assets not yet available for use
(1 306)
( 58)
(1 308)
( 64)
Exchange differences on financial
assets and liabilities other than
borrowings
(1 274)
(1 519)
(1 414)
-
Provisions recognised
( 30)
69
( 36)
( 27)
Financial support granted to
municipalities
-
( 1)
( 7)
( 100)
Losses on disposal of property,
plant and equipment
( 10)
( 17)
( 28)
( 26)
Donations granted
( 12)
( 21)
( 66)
( 55)
Other
( 30)
( 27)
( 122)
( 94)
Total other operating costs
(2 769)
(1 676)
(3 723)
( 919)
Other operating income/(costs)
(2 565)
(1 652)
(2 817)
962
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
156
Note 13.3 Finance income/(costs)
from 1 October 2023
to 31 December 2023
unaudited
from 1 October 2022
to 31 December 2022
unaudited
from 1 January 2023
to 31 December 2023
from 1 January 2022
to 31 December 2022
Exchange differences on
measurement and realisation of
borrowings
305
438
356
-
Gains on derivatives - realisation
86
83
173
130
Result of the settlement of a
transaction hedging against
interest rate risk due to the issue
of bonds with a variable interest
rate
-
16
-
18
Total finance income
391
537
529
148
Interest on borrowings,
including:
( 40)
( 3)
( 76)
( 18)
leases
-
( 2)
( 1)
( 9)
Unwinding of the discount of
provisions effect
( 3)
( 6)
( 60)
( 21)
Bank fees and charges on
borrowings
( 8)
( 6)
( 26)
( 29)
Losses on derivatives - realisation
( 90)
( 98)
( 183)
( 149)
Exchange differences on
measurement and realisation of
borrowings
-
-
-
( 179)
Other
( 7)
( 1)
( 25)
( 24)
Total finance costs
( 148)
( 114)
( 370)
( 420)
Finance income /(costs)
243
423
159
( 272)
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2023 Translation from the original Polish version
157
SIGNATURES OF ALL MEMBERS OF THE MANAGEMENT BOARD
These financial statements were authorised on 23 April 2024.
President
of the Management Board
Andrzej Szydło
Vice President
of the Management Board
Zbigniew Bryja
Vice President
of the Management Board
Piotr Krzyżewski
Vice President
of the Management Board
Mirosław Laskowski
Vice President
of the Management Board
Piotr Stryczek
SIGNATURE OF PERSON RESPONSIBLE FOR ACCOUNTING
Executive Director
of Accounting Services Centre
Chief Accountant
Agnieszka Sinior