POLISH FINANCIAL SUPERVISION AUTHORITY
Annual report RR 2024
(in accordance with § 60 sec. 1 point 3 of the Decree regarding current and periodic information)
for issuers of securities involved in production, construction, trade or services activities
for the financial year 2024 comprising the period from 1 January 2024 to 31 December 2024 containing the separate
financial statements according to International Accounting Standards in PLN.
Publication date: 26 March 2025
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
2024
2023
2024
2023
I.
Revenues from contracts with customers
29 894
29 084
6 945
6 423
II.
Profit/(Loss) on sales
2 856
( 920)
664
( 203)
III.
Profit/(Loss) before income tax
3 985
( 1 030)
926
( 227)
IV.
Profit/(Loss) for the period
2 788
( 1 153)
648
( 255)
V.
Other comprehensive income
( 152)
496
( 35)
110
VI.
Total comprehensive income
2 636
( 657)
613
( 145)
VII.
Number of shares issued
200 000 000
200 000 000
200 000 000
200 000 000
VIII.
Earnings per ordinary share
13.94
( 5.77)
3.24
(1.27)
IX.
Net cash generated from/(used in) operating activities
2 532
5 639
588
1 245
X.
Net cash generated from/(used in) investing activities
( 3 652)
( 4 332)
( 848)
( 957)
XI.
Net cash generated from/(used in) financing activities
3
( 809)
1
( 179)
XII.
Total net cash flow
( 1 117)
498
( 259)
109
XIII.
Non-current assets
40 107
36 781
9 386
8 460
XIV.
Current assets
10 298
12 115
2 410
2 786
XV.
Total assets
50 405
48 896
11 796
11 246
XVI.
Non-current liabilities
9 409
9 468
2 202
2 178
XVII.
Current liabilities
9 842
10 610
2 304
2 440
XVIII.
Equity
31 154
28 818
7 291
6 628
Average EUR/PLN exchange rate announced by the National Bank of Poland
2024
2023
Average exchange rate for the period*
4.3042
4.5284
Exchange rate at the end of the period
4.2730
4.3480
*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
2024 and 2023
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.
SEPARATE
FINANCIAL STATEMENTS
FOR 2024
Lubin, March 2025
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
3
Table of contents
SEPARATE STATEMENT OF PROFIT OR LOSS ........................................................................................................................................................ 5
SEPARATE STATEMENT OF COMPREHENSIVE INCOME ....................................................................................................................................... 5
SEPARATE STATEMENT OF CASH FLOWS .............................................................................................................................................................. 6
SEPARATE STATEMENT OF FINANCIAL POSITION ............................................................................................................................................... 8
SEPARATE STATEMENT OF CHANGES IN EQUITY ................................................................................................................................................. 9
PART 1 – General information ............................................................................................................................................................................ 10
Note 1.1 Corporate information................................................................................................................................................................................. 10
Note 1.2 Going concern ............................................................................................................................................................................................... 10
Note 1.3 Declaration by the Management Board on the accuracy of the prepared separate financial statements ...................................... 13
Note 1.4 Basis of preparation and presentation ...................................................................................................................................................... 13
Note 1.5 Foreign currency transactions and the measurement of items denominated in foreign currencies ............................................... 14
Note 1.6 Impact of new and amended standards and interpretations ................................................................................................................ 14
Note 1.7 Published standards and interpretations, which are not yet in force and were not applied earlier by the Company ................... 15
PART 2 – Operating segments and information on revenues ........................................................................................................................ 20
PART 3 – Impairment of assets ........................................................................................................................................................................... 26
PART 4 – Explanatory notes to the statement of profit or loss ..................................................................................................................... 37
Note 4.1 Expenses by nature ...................................................................................................................................................................................... 37
Note 4.2 Other operating income and costs ............................................................................................................................................................ 38
Note 4.3 Finance income and costs ........................................................................................................................................................................... 39
Note 4.4 Reversal / recognition of impairment losses on assets in the statement of profit or loss ................................................................. 39
PART 5 – Taxation ................................................................................................................................................................................................. 40
Note 5.1 Income tax in the statement of profit or loss ........................................................................................................................................... 40
Note 5.2 Other taxes and charges ............................................................................................................................................................................. 44
Note 5.3 Tax assets and liabilities .............................................................................................................................................................................. 44
PART 6 – Investments in subsidiaries ................................................................................................................................................................ 46
Note 6.1 Shares ............................................................................................................................................................................................................ 46
Note 6.2 Receivables due to loans granted .............................................................................................................................................................. 47
PART 7 – Financial instruments and financial risk management .................................................................................................................. 51
Note 7.1 Financial Instruments .................................................................................................................................................................................. 51
Note 7.2 Derivatives ..................................................................................................................................................................................................... 58
Note 7.3 Other financial instruments measured at fair value ................................................................................................................................ 61
Note 7.4 Other long-term financial instruments measured at amortised cost ................................................................................................... 62
Note 7.5 Financial risk management ......................................................................................................................................................................... 62
PART 8 – Borrowings and the management of liquidity and capital ............................................................................................................ 83
Note 8.1 Capital management policy ........................................................................................................................................................................ 83
Note 8.2 Equity ............................................................................................................................................................................................................. 84
Note 8.3 Liquidity management policy ...................................................................................................................................................................... 87
Note 8.4 Borrowings .................................................................................................................................................................................................... 91
Note 8.5 Cash and cash equivalents .......................................................................................................................................................................... 95
Note 8.6 Liabilities due to guarantees granted ........................................................................................................................................................ 96
PART 9 – Non-current assets and related liabilities ........................................................................................................................................ 98
Note 9.1 Mining and metallurgical property, plant and equipment ...................................................................................................................... 98
Note 9.2 Other property, plant and equipment and intangible assets ............................................................................................................... 104
Note 9.3 Depreciation/amortisation ........................................................................................................................................................................ 106
Note 9.4 Provision for decommissioning costs of mines and other technological facilities ............................................................................ 106
Note 9.5 Capitalised borrowing costs ...................................................................................................................................................................... 107
Note 9.6 Lease disclosures – the Company as a lessee ........................................................................................................................................ 108
Note 9.7 Greenhouse gas emissions allowances ................................................................................................................................................... 109
Note 9.8 Non-current assets held for sale and liabilities associated with them ................................................................................................ 110
PART 10 – Working capital ................................................................................................................................................................................111
Note 10.1 Inventories ................................................................................................................................................................................................ 111
Note 10.2 Trade receivables ..................................................................................................................................................................................... 113
Note 10.3 Trade and other payables ....................................................................................................................................................................... 114
Note 10.4 Changes in working capital ..................................................................................................................................................................... 117
PART 11 – Employee benefits ............................................................................................................................................................................119
Note 11.1 Employee benefits liabilities ................................................................................................................................................................... 120
Note 11.2 Changes in liabilities related to future employee benefits programs .............................................................................................. 121
PART 12 – Other notes .......................................................................................................................................................................................124
Note 12.1 Related party transactions ...................................................................................................................................................................... 124
Note 12.2 Dividends paid .......................................................................................................................................................................................... 125
Note 12.3 Other assets .............................................................................................................................................................................................. 125
Note 12.4 Other liabilities ......................................................................................................................................................................................... 126
Note 12.5 Provisions for liabilities and other charges ........................................................................................................................................... 126
Note 12.6 Assets and liabilities not recognised in the statement of financial position .................................................................................... 126
Note 12.7 Capital commitments related to property, plant and equipment and intangible assets................................................................ 127
Note 12.8 Employment structure ............................................................................................................................................................................. 127
Note 12.9 Remuneration of key managers ............................................................................................................................................................. 127
Note 12.10 Remuneration of the entity entitled to audit the financial statements and of entities related to it ........................................... 129
Note 12.11 Disclosure of information on the Company’s activities regulated by the Act on Energy .............................................................. 129
Note 12.12 Subsequent events ................................................................................................................................................................................ 135
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
4
PART 13 - Quarterly financial information of KGHM Polska Miedź S.A. ......................................................................................................136
SEPARATE STATEMENT OF PROFIT OR LOSS .......................................................................................................................................................... 136
Explanatory notes to the statement of profit or loss ...................................................................................................................................137
Note 13.1 Expenses by nature .................................................................................................................................................................................. 137
Note 13.2 Other operating income and costs ........................................................................................................................................................ 138
Note 13.3 Finance income and costs ....................................................................................................................................................................... 139
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
5
SEPARATE STATEMENT OF PROFIT OR LOSS
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Part 2
Revenues from contracts with customers
29 894
29 084
Note 4.1
Cost of sales
(25 503)
(28 414)
Gross profit
4 391
670
Note 4.1
Selling costs and administrative expenses
(1 535)
(1 590)
Profit/(Loss) on sales
2 856
( 920)
Note 4.2
Other operating income, including:
3 064
2 564
interest income calculated using the effective
interest rate method
435
377
fair value gains on financial assets measured at
fair value through profit or loss
141
668
gains due to reversal of impairment losses on
financial instruments measured at amortised cost
2
18
Note 4.2
Other operating costs, including:
(1 510)
(2 794)
impairment losses on financial instruments
measured at amortised cost
( 94)
-
Note 4.3
Finance income
134
531
Note 4.3
Finance costs
( 559)
( 411)
Profit/(Loss) before income tax
3 985
(1 030)
Note 5.1
Income tax expense
(1 197)
( 123)
PROFIT/(LOSS) FOR THE PERIOD
2 788
(1 153)
Weighted average number of ordinary shares
(million)
200
200
Basic/diluted earnings per share (in PLN)
13.94
( 5.77)
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Note 8.2.2
Profit/(Loss) for the period
2 788
(1 153)
Note 8.2.2
Measurement of hedging instruments
net of the tax effect
( 446)
451
Other comprehensive income which will be
reclassified to profit or loss
( 446)
451
Note 8.2.2
Measurement of equity financial instruments at fair
value through other comprehensive income, net of
the tax effect
9
264
Note 8.2.2
Actuarial gains/(losses) net of the tax effect
285
( 219)
Other comprehensive income, which will not be
reclassified to profit or loss
294
45
Total other comprehensive net income
( 152)
496
TOTAL COMPREHENSIVE INCOME
2 636
( 657)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
6
SEPARATE STATEMENT OF CASH FLOWS
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Cash flow from operating activities
Profit/(Loss) before income tax
3 985
(1 030)
Note 9.3
Depreciation/amortisation recognised in profit or loss
1 542
1 597
Interest on investment activities
( 324)
( 292)
Other interest
246
167
Dividends income
( 10)
-
Losses on modification of financial assets
169
-
Losses on disposal of shares
-
1
Note 6.2
Fair value (gains)/losses on financial assets measured at fair value
through profit or loss
( 18)
( 563)
Note 4.4
(Gains)/losses due to impairment on financial assets measured at
amortised cost
89
( 15)
Note 4.4
(Gains)/losses due to impairment of property, plant and equipment
and intangible assets
5
3 777
Note 4.4
(Gains)/losses due to change in the value of investments in
subsidiaries
(1 169)
( 827)
Exchange differences, of which:
( 166)
310
from investment activities and cash
( 255)
668
from financing activities
89
( 358)
Change in provisions for decommissioning of mines, liabilities related
to future employee benefits program and other provisions
339
391
Change in other receivables and liabilities other than working capital
( 123)
( 207)
Change in assets and liabilities due to derivatives
180
906
Note 7.2
Reclassification of other comprehensive income to profit or loss due
to the realisation of hedging derivatives
( 628)
( 285)
Other adjustments
43
156
Exclusions of income and costs, total
175
5 116
Income tax, of which:
( 406)
(1 631)
payments of income tax
(1 018)
(1 631)
refunds of income tax
612
-
Note 10.4
Changes in working capital, including:
(1 222)
3 184
change in trade payables within the reverse factoring mechanism
(1 007)
2 886
Net cash generated from/(used in) operating activities
2 532
5 639
Cash flow from investing activities
Note 9.1.2
Expenditures on mining and metallurgical assets, including:
(3 597)
(3 037)
paid capitalised interest on borrowings
( 247)
( 254)
proceeds on settlement of an instrument hedging interest rate of
bonds
55
78
Expenditures on other property, plant and equipment and intangible
assets
( 38)
( 37)
Expenditures due to loans granted (principal)
( 248)
( 829)
Expenditures on the acquisition of subsidiaries
( 218)
( 228)
Expenditures on financial assets designated for decommissioning of mines
( 44)
( 40)
Advances granted for the purchase of property, plant and equipment and
intangible assets
( 24)
( 143)
Advances granted for the purchase of financial assets
-
( 141)
Note 7.5.2.5
Proceeds from repayment of loans granted (principal)
412
107
Interest received on loans granted
84
8
Other
21
8
Net cash generated from/(used in) investing activities
(3 652)
(4 332)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
7
Cash flow from financing activities
Note 8.4.2
Proceeds from borrowings
1 884
1 514
Note 8.4.2
Proceeds from issuance of debt financial instruments
1 000
-
Proceeds from cash pooling
210
30
Proceeds from derivatives related to sources of external financing
64
70
Note 8.4.2
Repayment of received borrowings
(2 051)
(1 936)
Note 8.4.2
Redemption of debt financial instruments
( 400)
-
Expenditures due to dividends paid to shareholders of the Company
( 300)
( 200)
Interest paid, of which:
( 259)
( 145)
Note 8.4.2
trade payables within the reverse factoring mechanism
( 163)
( 50)
borrowings
( 96)
( 95)
Expenditures due to derivatives related to sources of external financing
( 76)
( 81)
Repayment of lease liabilities
( 69)
( 62)
Other
-
1
Net cash generated from/(used) in financing activities
3
( 809)
NET CASH FLOW
(1 117)
498
Exchange differences on cash and cash equivalents
3
( 2)
Cash and cash equivalents at beginning of the period
1 481
985
Note 8.5
Cash and cash equivalents at end of the period, including:
367
1 481
restricted cash
8
18
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
8
SEPARATE STATEMENT OF FINANCIAL POSITION
As at
31 December
2024
As at
31
December
2023
ASSETS
Mining and metallurgical property, plant and equipment
21 007
19 006
Mining and metallurgical intangible assets
1 284
1 419
Note 9.1
Mining and metallurgical property, plant and equipment and intangible assets
22 291
20 425
Other property, plant and equipment
119
111
Other intangible assets
49
54
Note 9.2
Other property, plant and equipment and intangible assets
168
165
Note 6.1
Investments in subsidiaries – shares
6 146
4 807
Note 6.2
Loans granted, of which:
9 727
9 638
measured at fair value through profit or loss
3 668
3 766
measured at amortised cost
6 059
5 872
Note 7.2
Derivatives
286
233
Note 7.3
Other financial instruments measured at fair value through other comprehensive
income
814
803
Note 7.4
Other financial instruments measured at amortised cost
578
445
Financial instruments, total
11 405
11 119
Note 12.3
Other non-financial assets
97
265
Non-current assets
40 107
36 781
Note 10.1
Inventories
7 037
7 506
Note 10.2
Trade receivables, including:
885
471
Trade receivables measured at fair value through profit or loss
506
211
Note 5.3
Tax assets
396
932
Note 7.2
Derivatives
219
760
Note 7.1
Cash pooling receivables
683
424
Note 12.3
Other financial assets, including:
540
327
Loans granted
246
73
Note 12.3
Other non-financial assets
171
214
Note 8.5
Cash and cash equivalents
367
1 481
Current assets
10 298
12 115
TOTAL ASSETS
50 405
48 896
EQUITY AND LIABILITIES
Note 8.2.1
Share capital
2 000
2 000
Note 8.2.2
Other reserves from measurement of financial instruments
(117)
320
Note 8.2.2
Accumulated other comprehensive income
(636)
(921)
Note 8.2.2
Retained earnings
29 907
27 419
Equity
31 154
28 818
Note 8.4.1
Borrowings and leases
2 055
2 908
Note 8.4.1
Liabilities due to issuance of debt financial instruments
2 600
1 600
Note 7.2
Derivatives
269
202
Note 11.1
Employee benefits liabilities
2 467
2 821
Note 9.4
Provisions for decommissioning costs of mines and other technological facilities
1 263
1 389
Deferred tax liabilities
460
328
Note 12.4
Other liabilities
295
220
Non-current liabilities
9 409
9 468
Note 8.4.1
Borrowings and leases
1 133
431
Note 8.4.1
Liabilities due to issuance of debt financial instruments
2
402
Note 8.4.1
Cash pooling liabilities
561
350
Note 7.2
Derivatives
44
499
Note 10.3
Trade and other payables
4 825
6 065
Note 11.1
Employee benefits liabilities
1 569
1 315
Note 5.3
Tax liabilities
786
405
Note 12.5
Provisions for liabilities and other charges
227
82
Note 12.4
Other liabilities
695
1 061
Current liabilities
9 842
10 610
Non-current and current liabilities
19 251
20 078
TOTAL EQUITY AND LIABILITIES
50 405
48 896
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
9
SEPARATE STATEMENT OF CHANGES IN EQUITY
Share
capital
Other
reserves from
measurement
of financial
instruments
Accumulated
other
comprehensive
income
Retained
earnings
Total equity
As at 1 January 2023
2 000
( 395)
( 702)
28 772
29 675
Transactions with owners – dividend
approved and paid
-
-
-
( 200)
( 200)
Loss for the period
-
-
-
(1 153)
(1 153)
Note 8.2.2
Other comprehensive income
-
715
( 219)
-
496
Total comprehensive income
-
715
( 219)
(1 153)
( 657)
As at 31 December 2023
2 000
320
( 921)
27 419
28 818
Note 12.2
Transactions with owners – dividend
approved and paid
-
-
-
( 300)
( 300)
Profit for the period
-
-
-
2 788
2 788
Note 8.2.2
Other comprehensive income
-
( 437)
285
-
( 152)
Total comprehensive income
-
( 437)
285
2 788
2 636
As at 31 December 2024
2 000
( 117)
( 636)
29 907
31 154
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
10
PART 1 – General information
Note 1.1 Corporate information
KGHM Polska Miedź S.A. (“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, 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 Company’s principal activities include:
– the mining of copper and non-ferrous metals ores; and
– the production of copper, precious and non-ferrous metals.
KGHM Polska Miedź S.A. carries out copper ore mining activities based on concessions given for specific mine deposits, and
also based on mining usufruct agreements and mine operating plans.
KGHM Polska Miedź S.A. is a parent entity of the KGHM Polska Miedź S.A. Group (“Group”).
Note 1.2 Going concern
The separate financial statements were prepared under the assumption of continuing 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 financial statements the Management Board is not aware of any facts or circumstances
that may cast doubt about the going concern in the foreseeable future.
The Management Board of KGHM Polska Miedź S.A. continuously monitors individual business areas in terms of indications
of significant uncertainty as to the capacity to continue operations or a threat to the continuance of the Company’s
operations in the foreseeable future.
During the assessment of the capacity to continue operations, forecasts of financial liquidity, debt level, key debt ratios and
profitability were taken into account.
The Company identifies and actively manages the liquidity risk understood as the possibility of losing the capacity or
limitation of the ability to cover its current expenses, ensuring the appropriate level of cash and availability of a wide
portfolio of flexible sources of financing in order to ensure capacity to timely meeting the current and future financial
obligations. In order to minimise the risk of occurrence of a liquidity gap, the Company takes actions aimed at ensuring
safety and financial stability of the Group by diversifying the sources of financing and ensuring their long-term maturities.
The Company monitors the level of financial security by, among others, the Net Debt/Adjusted EBITDA ratio. The level of
this ratio achieved in 2024 is in line with the assumptions adopted by the Company and confirms its stable financial
condition. During the process of managing the liquidity and capital, the Company also pays attention to the adjusted
operating profit, which is the basis of calculating the Net Debt/EBITDA financial covenant, the value of which as at 31
December 2024 met the conditions stipulated in the bank loans agreements. The Company is fully capable of meeting its
payment obligations on time. The selected questions on liquidity management, with particular emphasis on ratios, debt
level and available sources of financing, are described in Part 8 Borrowings and the management of liquidity and capital.
Moreover, during the assessment of capacity to continue operations, of significance is the analysis of profitability by
monitoring the EBITDA Margin ratio, which is one of the measures of assessing the activities of the Company (Part 2
Information on segments and revenues).
To assess the capacity to continue operations by the Company, the Management Board analysed the current risks, assessed
the impact of armed conflicts throughout the world, including the war in Ukraine (Note 1.2.2) and the risks associated with
the climate change on activities of the Company (Note 1.2.3).
As at the date of signing of these financial statements, no indications of circumstances were identified pointing out the
threat to the continuance of the Company’s operations in the foreseeable future, that is in the period of no less than 1 year
from the end of the reporting period.
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 Company:
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 Company by, among others, derivatives transactions hedging the
price as well as the exchange rate. Moreover, they have a significant impact on some of the Company’s costs, while the
following prices have a direct impact on the level of costs: fuels, energy carriers and electricity. Furthermore, the level of
market interest rates was reflected in the level of discount rates used by the Company in the balance sheet measurement
of assets and liabilities recognised in the statement of financial position.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
11
All of the aforementioned risk factors have an impact on the measurement of recoverable amount of the Company’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 impact of macroeconomic factors on individual areas of operations as well as assets and liabilities of the Company was
presented in the following notes:
Impact observation areas
Note
Operating segments and information on revenues – onerous contracts and variable overheads
Part 2
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 war in Ukraine
In the reporting period, the Company did not record any negative impact from factors related to the war in Ukraine, and
the uncertainty related to their impact in subsequent periods is assessed as low.
Key risk categories
The most significant risk factors related to the war in Ukraine and impacting the Company’s activities are:
• change in the supply chain and the availability of materials and components, fuels and energy on international
markets,
• volatility in copper and silver prices on the metals market,
• volatility in the USD/PLN exchange rate,
• volatility in prices of energy carriers and electricity, and
• the general uncertainty on financial markets.
To assess the impact of the above-mentioned risk categories on the Company’s operations, a detailed analysis of
information on production, sales, supply chain, personnel management and finance is carried out on an ongoing basis.
Impact on the metals market and shares price
From the Company’s point of view, the war in Ukraine had an impact on market risk associated with volatility in metals
prices and stock exchange indices during the reporting period. More information is presented in the note 3.1 Assessment
of the risk of impairment of production assets of KGHM Polska Miedź S.A. in the context of the market capitalisation of
KGHM Polska Miedź S.A.
Impact on the fuels and energy carriers markets and on the availability of raw and other materials
Currently, KGHM Polska Miedź S.A. 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 may have a significantly negative impact in subsequent periods on suppliers and customers of the Company and
may lead to unfavourable deviations in the continuity of materials and services supply chains in the Company 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, KGHM Polska Miedź S.A. 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 operation of the core production
business and of all production processes.
Impact on the activities of the Company
The geopolitical situation associated with the direct aggression of Russia on Ukraine and the implemented system of
sanctions currently does not limit the operations of KGHM Polska Miedź S.A., while the risk of interruptions to the
operational continuity of the Company in this regard continues to be considered as low.
The ongoing war in Ukraine and limited availability of Russian cathodes on European markets had been discounted by the
market, and did not constitute an additional factor affecting the sales results of basic copper products in 2024. At the same
time, the situation associated with the war in Ukraine is not a significant factor in shaping the demand for copper semi-
finished products (ETP wire rod and OFE wire). In this product market, the good economic situation is mainly driven by
significant investments related to the energy transformation in Europe.
In terms of the availability of capital and the level of debt, the Company holds no bank loans drawn from institutions
threatened with sanctions.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
12
In the Company, no production stoppages which would have been directly attributable to the war in Ukraine were recorded.
There have been no significant changes in the payment morality of customers, and therefore the inflow of receivables in
the Company takes place without any major disturbances.
Preventive actions
The strategy of diversification of suppliers applied by the Company 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.
KGHM Polska Miedź S.A. 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 Company continuously
monitors the international economic situation in order to assess its potential negative impact on the Company and to take
preventive actions to mitigate this impact.
Note 1.2.3 Monitored areas – risks and hazards associated with the climate
KGHM Polska Miedź S.A. is a conscious and responsible participant in the energy transition, and considers adaptation to
climate changes and the management of climate risk to be of key importance. The Company 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 2024, section 2.3 Risk management.
The negative impact of climate change on the activities of KGHM Polska Miedź S.A. is analysed using the classification
presented below:
The Company is exposed to physical climate risk, arising from specific 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
Company 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 Company 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 Company 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 KGHM Polska Miedź S.A., including description of actions undertaken by the
Company 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 2024, section 2.3 Risk management and section 4.2 Climate impact
management.
Framework rules for identification and assessment of the impact of climate risk on financial and non-financial reporting of
the Group were established in the Company. While assessing the impact of identified climate risks on the Company’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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
13
As a result of the aforementioned work, as at 31 December 2024 no material impact of climate risk on the aforementioned
areas was identified.
Note 1.3 Declaration by the Management Board on the accuracy of the prepared separate financial statements
The Management Board of KGHM Polska Miedź S.A. declares that according to its best judgement, the annual separate
financial statements for 2024 and the comparable 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 KGHM Polska Miedź S.A. and the profit for
the period of the Company.
The Management Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group in
2024 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 separate financial statements were authorised for publication and signed by the Management Board of the Company
on 25 March 2025.
Note 1.4 Basis of preparation and presentation
These separate 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. These financial statements are the separate financial statements of KGHM Polska Miedź S.A. pursuant to IAS
27.
In order to fully understand the financial position and results of the Company’s activities as the Parent Entity of the Group,
these separate financial statements should be read jointly with the annual consolidated financial statements of the KGHM
Polska Miedź S.A. Group for the year ended on 31 December 2024. These financial statements are available at the
Company’s website www.kghm.com from the dates indicated in the regulatory filing on publication dates for the Company’s
annual report and the Group’s consolidated annual report for 2024.
The accounting policies described in this note and in individual notes were applied by the Company in a continuous manner
for all presented periods.
Note 12.11 of these separate financial statements contains information on the Company’s activities regulated by the Act on
Energy, pursuant to article 44 section 2 of the Act dated 10 April 1997.
As compared to the period ended on 31 December 2023, there were no significant changes to the measurement methods.
Changes in estimates as at 31 December 2024 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 these financial statements, individual detailed notes contain
important information on the accounting policies and important estimates, assumptions and judgments, pursuant to the
information presented in the table below.
Note
Title
Amount recognised in
the financial statements
Accounting
policy
Important
estimates,
assumptions
and judgements
2024
2023
2
Revenues from contracts with customers
29 894
29 084
x
x
3.1
Impairment losses on non-current assets
(159)
(3 777)
x
5.1
Income tax in the statement of profit or
loss
(1 197)
(123)
x
5.1.1
Deferred income tax
(132)
377
x
x
5.3
Tax assets
396
932
x
5.3
Tax liabilities
(786)
(405)
x
6.1
Investments in subsidiaries
6 146
4 807
x
x
6.2
Loans granted*
9 973
9 711
x
x
7.2
Derivatives
192
292
x
x
7.3
Other financial instruments measured at
fair value
814
803
x
x
7.4
Other long-term financial instruments
measured at amortised cost
578
445
x
x
8.2
Equity
(31 154)
(28 818)
x
8.4
Borrowings
(6 351)
(5 691)
x
8.5
Cash and cash equivalents
367
1 481
x
8.6
Labilities due to guarantees granted
(2 015)
(1 537)
x
x
9.1
Mining and metallurgical property, plant
and equipment and intangible assets
22 291
20 425
x
x
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
14
9.2
Other property, plant and equipment and
intangible assets
168
165
x
9.4
Provision for decommissioning costs of
mines and other facilities**
(1 301)
(1 401)
x
x
9.6
Lease disclosures – the Company as a
lessee
479
562
x
x
10.1
Inventories
7 037
7 506
x
x
10.2
Trade receivables
885
471
x
x
10.3
Trade and other payables
(5 020)
(6 261)
x
x
10.4
Changes in working capital
(1 222)
3 184
x
x
11.1
Employee benefits liabilities
(4 036)
(4 136)
x
x
12.3
Other assets
808
806
x
12.4
Other liabilities
(990)
(1 281)
x
* Amounts include data on long-term and short-term loans. In the statement of financial position short-term loans are recognised in the item “other
financial assets”.
** Amounts include data on non-current and current provisions for decommissioning costs of mines and other technological facilities. 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”.
Note 1.5 Foreign currency transactions and the measurement of items denominated in foreign currencies
The financial statements are presented in Polish zloty (PLN), which is both the functional and presentation currency of the
Company.
At the moment of initial recognition, foreign currency transactions are translated into the functional currency:
• 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 average exchange rate set for a given currency, prevailing on the date of the transaction for other transactions.
The exchange rate prevailing on the date of the transaction is the average NBP rate announced on the last working
day preceding the transaction date.
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.
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.
Note 1.6 Impact of new and amended standards and interpretations
Amendments to standards applied for the first time in the separate financial statements for 2024:
• Amendments to IFRS 16 Leases on lease liabilities in a sale and leaseback, effective on or after 1 January 2024,
• Amendments to IAS 1 Presentation of financial statements on:
- classification of liabilities as current or non-current (including changes due to deferral of effective date), effective
on or after 1 January 2024, and
- non-current liabilities associated with covenants, effective on or after 1 January 2024,
• Amendments to IAS 7 and IFRS 7 on disclosure requirements regarding supplier finance arrangements, effective on
or after 1 January 2024.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
15
Up to the date of publication of these separate financial statements, the aforementioned amendments to the standards
were adopted for use by the European Union.
In the Company’s opinion, the aforementioned amendments to the standards:
• IFRS 16 do not have an impact on these separate financial statements or on the comparable period,
• IAS 1 do not have an impact on the current classification of liabilities due to borrowing, since the Company presents
these liabilities in a manner similar to new requirements, that is during the classification of liabilities as non-current
or current, it adheres to contractual maturity dates and classifies liabilities as non-current only if at the reporting date
the Company has the right to defer settlement of a liability for over 12 months after the reporting date and at the
same time the potential Company’s intent as to the early repayment does not have an impact on this classification.
• IAS 1 on disclosure of information on non-current liabilities with covenants, in particular 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
of the Company as current or non-current as at the end of the reporting period. On the basis of bank loan agreements
held, the Company is obliged to maintain a certain level of covenants at the end of the half-year and annual reporting
periods. Disclosures on covenants and related liabilities are presented in Part 8 of these financial statements.
• IAS 7 and IFRS 7 on disclosure requirements regarding supplier finance arrangements, were included in these
separate financial statements as part of the information disclosed on reverse factoring utilised by the Company in
notes: 8.3 Liquidity management policy, 10.3 Trade and other payables and 10.4 Changes in working capital. The
scope of disclosed information did not significantly increase as compared to information presented in prior years on
the impact of the reverse factoring mechanism applied by the Company on separate financial statements.
However, the Company points out that in order to adjust to nomenclature used to describe supplier finance arrangements
applied in the amended IAS 7 and IFRS 7, it resolved to replace the current description of the item used in the financial
statements from “faktoring dłużny (reverse factoring)” to „mechanizm faktoringu odwrotnego (reverse factoring
mechanism)” or “faktoring odwrotny (reverse factoring)” and slightly adjusted the description of the item in the statement
of financial position, in which trade payables subject to supplier finance arrangements are presented, to: “Trade and other
payables” (previously: “Trade and similar payables”), and trade payables subject to reverse factoring are presented in the
category “other”. The Company emphasises that the aforementioned changes do not have an impact on principles of
operation of this factoring or on the management of working capital or liquidity by the Company.
• In addition, in terms of the decision of the International Financial Reporting Interpretations Committee
(IFRIC) of July 2024 on Disclosure of Revenues and Expenses for Reportable Segments, as a result of which
entities should verify the adequacy of the information disclosed within the reportable segments in relation to the
requirements of IFRS 8 and IAS 1 in the context of the scope and nature of the business activities conducted, the
Company, after performed verification, assumed that the scope of disclosures is sufficient.
Note 1.7 Published standards and interpretations, which are not yet in force and were not applied earlier by the
Company
Published standards and interpretations which are not yet in force, adopted for use by the European Union:
• Amendments to IAS 21 – the Effects of changes in foreign exchange rates, 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.
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 postponed indefinitely by IASB),
• The new standard 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 entities’ financial results. IFRS 18 retains a significant amount of requirements transferred
from IAS 1, and simultaneously introduces significant changes to the structure of the statement of profit or loss,
disclosure of information on management-defined performance measures and rearrangement of selected
nomenclature, by defining the so-called primary statements, in which the entity presents financial data and
accompanying notes disclosing supplementary information to primary statements.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
16
In the case of the statement of profit or loss, entities will be obliged to classify their income and expenses recognised
in the statement of profit or loss to one of the following five categories: operating, investing, financing, income taxes
and discontinued operations. While IFRS 18 indicates which revenues and costs should be presented by entities in
investing, financing, income taxes and discontinued operations categories, the operating category is a residual
category, in which, first of all, income and expenses arising from entity’s main business activities and the income and
expenses which could not be presented within other categories. Moreover, this standard introduces three obligatory
subtotals in the statement of profit or loss: operating profit or loss, profit or loss before financing and income taxes
and profit or loss.
The next significant area of changes to IFRS 18 concerns disclosure of information on management-defined
performance measures. Currently, many entities use individualised performance measures defined by the
management, which are not required by the IFRS accounting standards. IFRS 18 requires the disclosure of information
on performance measures in a separate note and introduces new regulations on management-defined performance
measures and defines them as appropriately aggregated items of income and expenses, which meet all of the
following criteria:
(i) are used in public communications outside financial statements, such as comments of the management board,
press releases and investor presentations,
(ii) are used to communicate to investors management’s view of an aspect of the financial performance of the
entity as a whole,
(iii) are not listed in IFRS 18 (e.g. as subtotals) or specifically required by other IFRSs.
The introduction of IFRS 18 will have an impact on the Company’s separate financial statements, in particular by
introducing a new structure of the statement of profit or loss, that is a division of income and expenses on categories
and presentation of certain subtotals. In the case of introduced categories, some items which are currently presented
in other operating costs/income will be transferred to the investing category, which currently does not exist in the
statement of profit or loss. These will be mainly income and costs generated by items such as loans granted and
deposited cash. In the Company’s opinion, division by new categories will not have a significant impact on items
classified to the financing category, since the requirements of IFRS 18 in this regard are in line with current rules of
classification applied by the Company.
Moreover, in the Company’s preliminary opinion, the performance measure currently disclosed by the Company and
not defined by IFRSs, that is adjusted EBITDA, will meet the criteria of a management-defined performance measure
pursuant to IFRS 18.
As a result of publication of IFRS 18, other standards will also change significantly, among others: IAS 7, IAS 8.
Pursuant to the amended IAS 7, in the cash flow statement, operating profit/loss subtotal will be the starting point for
reporting cash flows from operating activities using the indirect method rather than the current profit before income
tax. It will have an impact on the categories of items recognised in cash flow from operating activities which adjust
the output item. The amended IAS 7 will also remove the presentation alternatives for interest and dividend cash
flows, which under the amended IAS 7 may be presented only in investing or financing categories, respectively.
Moreover, IAS 7 indicates that interest paid that have been capitalised at initial value of fixed assets will be presented
by entities in cash flows from financing activities. Currently, the Company recognises this interest in investing
activities.
The scope of IAS 8 will be broadened by elements transferred from IAS 1 on general features of financial statements
(that is: fair presentation, going concern, accrual basis of accounting (paragraphs 17-28 of IAS 1), and disclosure of
accounting principles (policies), subjective judgments and sources of estimation uncertainty (paragraphs 117, 117A-
117E, 122-133 of IAS 1). As a result of broadening the scope of IAS 8, its name was changed to Basis of Preparation of
Financial Statements. The amendment to IAS 8 will not have an impact on the separate financial statements of the
Company.
In the Company’s opinion, the application of IFRS 18 will have a significant impact on the structure of the statement
of profit or loss and on the statement of cash flows presented in the separate financial statements of the Company.
• The new standard IFRS 19 Subsidiaries without public accountability: disclosures, effective on or after
1 January 2027. The scope of this standard introduces requirements on limited disclosure of information in financial
statements prepared pursuant to IFRSs and is dedicated to related parties which do not have public accountability
and whose parent entity (intermediate or ultimate) publish consolidated financial statements pursuant to IFRSs (these
are the so-called qualifying subsidiaries). IFRS 19 does not concern the Company KGHM Polska Miedź S.A., which is a
public entity and therefore IFRS 19 will not have an impact on the separate financial statements of the Company, since
the Company does not meet the criteria of an entity without public accountability.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
17
• Amendments to IFRS 9 and IFRS 7 – Amendments to the classification and measurement of financial
instruments, effective on or after 1 January 2026. As a result of conducting a post-implementation review of the
application of IFRS 9 Financial Instruments by the International Accounting Standards Board, the Board published
amendments to IFRS 9 and IFRS 7 on:
- classification of financial instruments (mainly loans granted) associated with ESG features, that is the interest of
which is dependent on climate, environmental or social factors. The objective of the amendment to IFRS 9 is the
elimination of discrepancies in approach of entities to the measurement of these instruments, that is whether to
measure at amortised cost or at fair value (SPPI test). The amendment to IFRS 9 will not have an impact on the
separate financial statements of the Company, since the Company does not have any such instruments.
- principles of derecognition of a liability, when it is settled in cash using an electronic payment system. In 2021, the
IFRS Interpretations Committee confirmed that in principle, an entity should derecognise financial liabilities and
financial assets as at the date of settlement. This approach and current principles on derecognition of financial
assets and liabilities described in IFRS 9 remain in force. However, due to problems raised by some stakeholders
with adjustment to this requirement in terms of derecognition of financial liabilities regulated by electronic payment
systems, the International Accounting Standards Board decided to permit an entity to apply a voluntary exception
regarding the cancellation of financial liabilities, what gives a possibility to deem a financial liability to be discharged
earlier, that is before the settlement date if the entity has initiated a payment instruction and the following
conditions have been met:
(i) the entity has no practical ability to withdraw, stop or cancel the payment instruction,
(ii) the entity has no practical ability to access the cash to be used for settlement as a result of the payment
instruction, and
(iii) the settlement risk associated with the electronic payment system is insignificant (refers to the risk that a
transaction will not be successfully settled).
If this voluntary exception is applied, the adopted solutions should be applied consequently to all settlements made
using the same electronic payment system.
Simultaneously, no such exception was introduced in relation to the settlement of receivables using electronic
payment systems, therefore, receivables will be cancelled from the balance sheet only at the moment of cash inflow
on the bank account of the Company.
The Company derecognises financial liabilities that are settled in cash using an electronic payment system at the
date of settlement, and receivables after receiving cash on the Company’s bank account, therefore the above
changes will not affect separate financial statements.
- introduction of additional information disclosure requirements to IFRS 7 paragraph 11A on equity instruments
designated at fair value through other comprehensive income, by limiting the disclosure of fair value of each such
investment at the end of the reporting period and simultaneous introduction of a requirement to disclose the
change in fair value during the reporting period. The Company holds such instruments and will appropriately adjust
the scope of disclosure to amended requirements.
• Annual improvements to IFRS Accounting Standards – volume 11, effective on or after 1 January 2026. As part of
slight amendments, mainly of a clarificatory nature, changes were introduced to:
- IFRS 1 First-time adoption of International Financial Reporting Standards, on retrospective designation of currently
applied hedge accounting. This change will not have an impact on the Company.
- IFRS 7 Financial Instruments: Disclosures, in paragraph B38 on gain or loss on derecognition, an erroneous reference
was corrected and three amendments were introduced to IFRS 7 Implementation Guidance, that is in Introduction
it was explained that Guidance on Implementing does not illustrate all the aspects of the application of IFRS 7; in
case of disclosure on credit risk, editing of paragraph IG20B was corrected with no impact on the current wording;
under the amendment to paragraph IG14 it was indicated that if, at the moment of initial recognition of an acquired
asset for which an active market does not exist, there is a difference between its fair value calculated using the
measurement techniques and the transaction price, this difference will be settled in subsequent periods in
accordance with IFRS 9 guidelines and the appropriate accounting policy, which should be subsequently disclosed
in the financial statements. Amendments to IFRS 7 will not have a significant impact on the separate financial
statements of the Company.
- IFRS 9 Financial Instruments, introducing the following amendments: in the case of derecognition of lease liabilities,
in paragraph 2.1b(ii) a reference was added to paragraph 3.3.3 IFRS 9 and paragraph 5.1.3 on measurement, at the
initial recognition, of trade receivables that do not contain a significant financing component, wording that they
should be recognised at transaction price as defined in IFRS 15 was replaced by wording that they should be
recognised at the amount determined by applying IFRS 15. Amendments to IFRS 9 will not have a significant impact
on the separate financial statements of the Company.
- IFRS 10 Consolidated financial statements, in paragraph B74, correcting wording that in certain situations could hinder
the correct application of paragraph B73 on the basis of which, an entity being an investor shall consider the nature
of its relationship with other parties and whether those other parties are acting on the investor’s behalf, i.e. they
are “de facto agents”. Amendments to IFRS 10 will not have an impact on the separate financial statements of the
Company.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
18
- IAS 7 Statement of cash flows, in paragraph 37, on accounting for an investment in a subsidiary, an associate or a joint
venture, word “method” after “cost” was deleted, since the phrase “at cost method” is no longer used in IFRS
accounting standards, and in return word “method” was added after the “equity”, and therefore there are now two
phrases used: “the equity method” and “at cost”. The amendment to IAS 7 will not have an impact on the separate
financial statements of the Company.
• Amendments to IFRS 9 and IFRS 7 – Contracts referencing nature-dependent electricity, effective on or after
1 January 2026. Amendments concern contracts, which expose the entity (purchaser of electricity) to variability in the
underlying amount of electricity because the electricity is generated from a source dependent on uncontrollable
natural conditions (such as wind and sun). Introduced changes concern:
- explanation of application of requirements concerning the purchase of electricity “for own use”, on the basis of which
it is possible to exempt contracts for the purchase of renewable electricity from the scope of IFRS 9,
- permission to apply hedge accounting if contracts referencing nature-dependent electricity are used as hedging
instruments,
- an addition to IFRS 7 of new requirements on disclosure of information to enable investors to understand the impact
of these contracts on financial results and cash flows of an entity.
Amendments to IFRS 9 and IFRS 7 will have an impact on the separate financial statements of the Company, since the
Company has PPA – type agreements (Power Purchase Agreement) on the purchase of renewable electricity.
The Company intends to apply the published standards and interpretations which are not yet in force and were not applied
earlier by the Company, at their entry into force. In the scope of impact of amendments to standards that were not
described in detail in the information provided above, in the Company’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.
Impact of the international tax system reform – pillar 2 of the BEPS 2.0 reform
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 was 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 rules of the Directive to their domestic legal systems, in accordance with legislative rules in force in
individual states.
In the case of Poland, the regulations of the Directive were implemented to the Polish legal system by the Act of 6 November
2024 on top-up taxation of individual companies of international and Polish groups. The Polish legal regulations, which put
obligations directly on liable entities, came into force on 1 January 2025 (for all three top-up taxes, that is a global top-up
tax, Polish top-up tax and a top-up tax on undertaxed profits) with an option for voluntary application from 1 January 2024
(in the case of the global top-up tax and the Polish top-up tax), but the Company will not voluntarily apply these regulations
from 1 January 2024.
The Polish act is based on OECD Model Rules of 2021 and the EU Directive of 2022 and incorporates provisions of OECD
Administrative Guidance on the application of regulations on the BEPS 2.0 reform, which were published in 2023.
The analysis of the OECD Framework, the Directive and the act leads to the conclusion that the Company KGHM Polska
Miedź S.A., as a so-called MNE (multinational enterprise), will be obliged to report a specific level of the tax rate of
subsidiaries at the level of individual jurisdictions.
The Company, as the Parent Entity, continuously monitors progress of the legislative work aimed at implementation of the
rules of the reform of pillar 2 of the BEPS 2.0 project in all jurisdictions in which subsidiaries of the Group operate, and
analyses their potential impact on the Company and the Group. As at the date of publication of these separate financial
statements of the Company, regulations on the global and domestic top-up tax were implemented in several jurisdictions
in which the Group operates, such as Canada, Luxembourg, the United Kingdom, Germany and Poland.
While the rules of the Directive should encompass the year 2024, the OECD Framework includes a transitional period, which
postpones the obligations in this regard by 3 subsequent years. Based on an analysis of the assumptions stipulated in
transitional rules, it is expected that the Group will be able to use them in all jurisdictions. In accordance with IAS 12
paragraph 88A, the Company has applied an exception that allows not to recognise deferred tax assets and liabilities related
to income taxes of pillar 2 and not to disclose information about these assets and liabilities. In connection with the Group's
use of safe harbours for 2024 these separate financial statements do not contain any amounts arising from the reform of
the international tax system – pillar 2 and the Group, including the Parent Entity, does not have to pay the top-up tax for
2024.
As regards the assessment of the Company’s future exposure to the risk of payment of top-up tax, the Company will be
required to pay the top-up tax for the years 2025 and 2026 if the conditions of maintaining the exemption under the
temporary safe harbours for these periods are not met and if in any of the jurisdictions, in which the Group is present, the
effective tax rate, calculated in accordance with the BEPS (Base erosion and profit shifting) rules, is below 15%. In the years
following 2026, the Company will be obliged to pay the top-up tax if in any of the jurisdictions, in which the Group is present,
the effective tax rate, calculated in accordance with the BEPS rules, is below 15%. Since the Group's entities are generally
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
19
located in high-tax jurisdictions, according to the Group's current assessment, including the Parent Entity’s, the probability
of paying the top-up tax in the future is assessed as low.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
20
PART 2 – Operating segments and information on revenues
Operating segments
Based on an analysis of the Company’s organisational structure, its system of internal reporting and the management
model, it was determined that the Company’s activity constitutes a single operating and reporting segment, which may be
defined as “Production of copper, precious metals and other metallurgical products”.
The core business of the Company is the production of copper and silver. Production is a fully integrated process, in which
the end-product of one stage is the half-finished product used in the next stage. Copper ore extracted in the mines is
transported to concentrators where the enrichment process is carried out. As a result of this process, copper concentrate
is produced, which is then supplied to the metallurgical plants where it is smelted and fire refined into anode copper. Then,
during the process of electrolytic refining, the anode copper is converted into copper cathodes, which are a commercial
product, or a material to produce wire rod.
Anode slimes, which arise from the process of copper electrorefining, is a raw material used to produce silver and gold.
Lead-bearing dust which is generated from the smelting processes is used to produce lead. Nickel sulphate and copper
sulphate are recovered from the processing of used electrolyte. Gases generated from the smelting furnaces are used to
produce sulphuric acid. Economic use is also made of smelter slags, which are sold as road-building materials.
Settlements between organisational units are carried out based on measurement of production at cost, and as a result the
internal organisational units (i.e. mines, concentrators, metallurgical plants) in the production cycle do not generate profit
on sales.
The financial data prepared for management accounting purposes is based on the same accounting policies which are used
to prepare the financial statements. The Management Board of the Company, which is responsible for allocating resources
and for the financial results of the Company, regularly reviews financial reports in the process of making major operational
decisions.
The organisational structure of KGHM Polska Miedź S.A. has the Head Office and 10 Divisions, including: mines,
concentrators and metallurgical plants. The Head Office carries out sales of the Company’s basic products, i.e. electrolytic
copper cathodes, wire rod and silver, and support functions, particularly including the management of financial assets,
centralised finance and accounting services, marketing, legal and other services.
The Management Board of the Company assesses a segment’s performance based on Adjusted EBITDA and the profit or
loss for the period. The manner of calculating Adjusted EBITDA is presented in the table “Reconciliation of Adjusted EBITDA”.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
21
Segment assets and liabilities
As at
31 December 2024
As at
31 December 2023
Assets
50 405
48 896
Liabilities
19 251
20 078
Production of main products
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Electrolytic copper (kt), of which:
588.7
592.4
- electrolytic copper from own concentrates (kt)
383.7
385.5
Silver (t)
1 316.3
1 403.3
C1 unit cash cost of production of payable copper in own
concentrate (USD/lb)*
3.07
2.98
C1 unit cash cost of production of payable copper in own
concentrate (PLN/lb)*
12.21
12.52
*C1 cost reflects 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 was calculated using the average
exchange rate by the NBP, which is set as arithmetical average of daily quotations per the NBP’s tables.
Segment financial results
from 1 January 2024
to 31 December 2024
from 1 January 2023 to
31 December 2023
Total revenues from contracts with customers, including:
29 894
29 084
Revenues from sales, for which the sales price is set after the date
of recognition of the sales (M+ principle), of which:
18 813
20 681
settled
18 209
20 294
unsettled
604
387
Cost of sales, selling costs and administrative expenses*
(27 038)
(30 004)
Depreciation/amortisation recognised in expenses by nature
(1 607)
(1 675)
(Recognition)/reversal of an impairment loss on non-current
assets, recognised in cost of sales, selling costs and administrative
expenses
-
(2 808)
Adjusted EBITDA
4 463
3 563
EBITDA Margin**
15%
12%
Profit/(Loss) for the period, including:
2 788
(1 153)
(recognition)/reversal of impairment losses on non-current
assets
1 075
(2 935)
* Cost of products, merchandise and materials sold plus selling costs and administrative expenses.
** Adjusted EBITDA divided by revenues from contracts with customers
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Total revenues from contracts with customers, of which:
29 894
29 084
in factoring
8 871
8 852
not in factoring
21 023
20 232
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Revenues from contracts with customers, of which:
29 894
29 084
transferred at a certain moment
29 238
28 235
transferred over time
656
849
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
22
Reconciliation of “Adjusted EBITDA” (which is not defined in IFRSs) with “Profit/(loss) for the period” (which is defined in
IFRSs) and “Profit on sales” is presented in the following tables:
Reconciliation of Adjusted EBITDA
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Profit/(Loss) for the period
2 788
(1 153)
[–] Current and deferred income tax
(1 197)
( 123)
[–] Depreciation/amortisation recognised in expenses by nature
(1 607)
(1 675)
[–] Finance income and (costs)
( 425)
120
[–] Other operating income and (costs)
1 554
( 230)
[–] (Recognition)/reversal of an impairment loss on non-current
assets, recognised in cost of sales, selling costs and administrative
expenses
-
(2 808)
[=] Adjusted EBITDA*
4 463
3 563
* The Company defines adjusted EBITDA as profit/loss for the period pursuant to IFRS, excluding income tax (current and deferred),
finance income and costs, other operating income and costs, depreciation/amortisation and recognition/reversal of impairment
losses on property, plant and equipment included in the cost of sales, selling costs and administrative expenses.
Accounting policies
Revenues arising from ordinary operating activities of the Company, 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 Company 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 IT services) and other products,
merchandise and materials (including refined lead, sulphuric acid, heat and electricity as well as other production waste).
The Company recognises revenue from contracts with customers when the Company 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. Since in every
case, following the shipment of the promised good and transferring control over it, the Company has an unconditional
right to consideration from the customer, and the only condition of receiving it is time lapse, the Company recognises the
consideration from contracts with customers as receivables and therefore the Company does not recognise contractual
assets.
The Company 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 Company 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 Company fulfils its performance
obligation and at the same time recognises revenues.
Apart from contracts for supplying goods with transport services, there are no other contracts including more than one
performance obligation. The attribution of transaction prices to individual performance obligations are made on the basis
of unit sale prices.
In trade contracts in which the performance obligation is met at a specified time, the Company 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 sale transactions of silver and gold. 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) or after the Company
meets its performance obligation. If the Company 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 Company
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.
Revenues from sales of other services, such as distribution of utilities, rentals, leases, sharing IT systems and other are
recognised over time by the Company as it meets its obligations, as the customers simultaneously receive and gain
economic benefits arising from the Company’s performance and the Company has an unconditional right to
consideration.
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 Company’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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
23
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. The Company did not identify significant financing components in sales transactions to customers
realised in the current and comparable periods.
In the case of copper and silver products sales transaction 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 accounted 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 Company 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 place (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 Company is also obliged to organise a shipping service. In these cases, the obligation to sell goods
and the obligation to provide a shipping service are treated as separate services promised in the contract. With respect
to transport services, the Company acts as a principal, as it has control over the service before its completion.
Revenues from sales of other services, such as distribution of utilities, rentals, leases, sharing IT systems and other are
recognised over time by the Company as it meets its obligations, as the customers simultaneously receive and gain
economic benefits arising from the Company’s performance and the Company has an unconditional right to
consideration.
Onerous contracts and variable consideration
Taking into account the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, in case of identification
of onerous contracts and greater volatility of the macroeconomic environment, which has a significant impact on the
Company’s financial results, it 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 Company 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, prices are based on quotations
of the London Bullion Market Association. For other significant products of the Company, that is gold and lead products,
prices also 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 Company’s products (among others: sulphuric acid, copper sulphate, nickel sulphate and refined lead) are by-
products of the copper production process, which, after further processing, the Company sells to external clients.
When making a decision to process and sell them, the Company takes into account both the potential, future economic
benefits arising from sales as well as the level of costs that 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 some by-products 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. their disposal.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
24
Therefore, the Company does not identify 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 Company’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 Company did not identify the occurrence of onerous contracts under IAS 37 as at
31 December 2024.
As at 1 January 2024, the balance of trade payables due to contracts with customers amounted to PLN 2 million and was
fully recognised in revenues for 2024. As at 31 December 2024, the balance of trade payables due to contracts with
customers amounted to PLN 8 million.
In 2024, the Company recognised an adjustment to revenues on performance obligations realised in 2023 in the amount
of PLN 2 million, which arose due to the final determination of sales price in 2024.
In 2023, the Company recognised revenues on performance obligations realised in 2022 in the amount of PLN 71 million,
which arose due to the final determination of sales price in 2023.
If the Company has remaining performance obligations as at the end of the reporting period that are unsatisfied, it is
necessary to disclose the transaction price allocated to these obligations (IFRS 15.120). The Company uses a practical
approach and does not disclose performance obligations that are part of contracts with initial period of one year or less.
Moreover, the Company has several long-term contracts, the price of which is based mainly on variable consideration that
the Company does not include in estimating the transaction price.
Revenues from contracts with customers – breakdown by products
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Copper
22 789
22 290
Silver
4 917
4 389
Gold
853
932
Lead
285
264
Services
228
199
Merchandise
279
525
Energy
148
123
Waste and production materials
116
121
Sulphuric acid
85
62
Copper sulphate
51
52
Other
143
127
TOTAL, including:
29 894
29 084
impact of hedging transactions
on revenues from contracts with customers
608
635
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
25
Sales revenue – geographical breakdown reflecting the location of end customers
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Europe
Poland
7 453
7 074
Germany
4 716
6 070
Italy
2 400
2 172
Czechia
2 296
2 279
The United Kingdom
1 814
990
Hungary
1 457
1 439
Switzerland
1 095
1 358
France
713
881
Sweden
672
146
Austria
307
401
Greece
197
-
Slovakia
184
210
Bulgaria
171
251
Romania
112
155
Slovenia
99
108
Belgium
72
33
Finland
37
9
Estonia
33
24
Bosnia and Herzegovina
24
12
Spain
14
11
The Netherlands
8
7
Denmark
5
13
North and South Americas
The United States of America
1 409
1 163
Canada
56
41
Other
7
2
Australia
445
393
Asia
China
2 683
2 982
Türkiye
562
231
Thailand
300
327
Saudi Arabia
181
102
South Korea
99
15
India
70
-
Singapore
29
-
Malesia
20
52
Taiwan
-
49
Other
5
2
Africa
Algeria
72
80
Egypt
59
-
Morocco
18
2
TOTAL
29 894
29 084
Main customers
In the period from 1 January to 31 December 2024 and in the comparable period, revenues from no single customer
exceeded 10% of the sales revenue of the Company.
Non–current assets – geographical breakdown
The property, plant and equipment of KGHM Polska Miedź S.A. are located in Poland.
Cash expenditures on property, plant and equipment and intangible assets
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Cash expenditures on mining and metallurgical assets
(3 597)
(3 037)
Cash expenditures on other property, plant and equipment
and intangible assets
( 38)
( 37)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
26
PART 3 – Impairment of assets
Note 3.1 Impairment losses on assets as at 31 December 2024
Assessment of the risk of impairment of assets of KGHM Polska Miedź S.A. in the context of the market
capitalisation of KGHM Polska Miedź S.A.
In 2024, the share price of KGHM Polska Miedź S.A. remained under pressure of continued uncertainty as to the
development of the global macroeconomic situation. As a result, the share price of the Company fell in 2024 by 6.3% as
compared to the share price at the end of 2023 and as at 30 December 2024 it amounted to PLN 115 (the average share
price in 2024 amounted to PLN 133.58). At the same time the WIG 20 index fell by 6.4%, while WIG increased by 1.4%. As
the result, the market capitalisation of the Company fell from PLN 24 540 million to PLN 23 000 million, which means
that as at 31 December 2024 it remained 23.3% below the level of the Company’s net assets. However, it should be noted
that the average ratio between the market capitalisation and net assets throughout 2024 amounted to 91%.
As at 20 March 2025, the Company’s share price amounted to PLN 138.20, which is an increase by 20.2% as compared
to the price as at 30 December 2024 (the average share price in the period from the end of the financial year to 20 March
2025 amounts to PLN 129.48).
An analysis in the area of Polish assets indicated that not all the factors which affect the level of market capitalisation of
KGHM Polska Miedź S.A. are the factors related to the business activities.
From the point of view of the Company’s operations, the key factor influencing the level of market capitalisation is the
copper price. It continued to be in a sideways trend from the beginning of 2024 to the turn of the first and second quarter
and did not deviate significantly from the level of 8 500 USD/t. In April, the weakening of USD and accumulation of
information on limitation of expected supply and increase of metal deficit on the copper market sparked a new hope
among investors as to the increase in copper price, and in May its price rose to the average level of
10 129 USD/t. In the following months of 2024, the investors’ optimism did not last when confronted with arguments
coming from the fundamentals of the copper market. Finally, the average price of copper in 2024 amounted to
9 147 USD/t, which is a level higher than prices noted in 2023 (average of 8 478 USD/t).
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 are usually to a large extent offset by
changes in the USD/PLN exchange rate. The average USD/PLN exchange rate in 2024 amounted to PLN 3.98, which is at
a lower level than the exchange rate noted in 2023 (average of PLN 4.20).
Finally, the average copper price in 2024 in PLN amounted to 36 403 PLN/t, which was 2% higher than the prices observed
in 2023 (an average of 35 632 PLN/t).
In the current period, there were no significant changes in the level of market interest rates. From the beginning of 2024
we may observe a stabilisation in WIBOR 1M, WIBOR 3M and WIBOR 6M at around 5.85%. The yield of 10-year bonds
stabilised around the level of the NBP’s reference rate.
The Management Board of KGHM Polska Miedź S.A. assessed the adequacy of assumptions adopted as at 31 December
2023 for impairment testing of Polish production assets (mining and metallurgical assets), including mainly
macroeconomic assumptions, medium- and long-term production plans and the level of operating costs as well as
planned capital expenditures. No indications were identified suggesting the necessity of revision of previously adopted
key assumptions.
KGHM Polska Miedź S.A. maintains full operational capacity and consistently advances planned production, sales and
investment budget targets. The financial results achieved by the Company exceed the budget targets, which is also a
result of conducted optimisation initiatives and cost discipline applied in response to macroeconomic conditions.
The Company continued actions aimed at making the subsequent parts of the copper deposit available and at
construction of the mining infrastructure. Current, long-term production plans are up to 2055 and in the current period
no indications were identified that could negatively impact the future availability of deposits. KGHM Polska Miedź S.A.
continues exploration work on the basis of its concessions and concession proceedings aimed at ensuring the resource
base appropriate for operating activities and prolonging mine life.
In the context of risks and hazards associated with climate, in the current period, no material impact on the activities of
KGHM Polska Miedź S.A. was identified. Detailed information are presented in Note 1.2.3 Monitored areas – risks and
hazards associated with the climate.
The Company is discussing changes, with the Ministry of Finance and the Ministry of State Assets, to the formula for the
so-called copper tax. At the present stage of advancement of discussions, the potential scope and term of legislative
changes are not possible to set, likewise the assessment of the impact of legislative changes on the Company’s cash
flows.
As a result of the assessment made, no connection was identified between the decrease in the share price of KGHM
Polska Miedź S.A. and the Company’s activities in Poland. Consequently, there were no indications identified suggesting
the risk of impairment of the Polish production assets as well as indications suggesting the possibility of reversing the
impairment losses which were already made, and therefore there was no impairment testing of these assets as at 31
December 2024.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
27
Impairment testing of shares in FUTURE 1 Sp. z o.o.
KGHM Polska Miedź S.A. is involved in Future 1 Sp. z o.o. in the form of:
• loans granted in the amount of PLN 4 572 million, and
• shares measured at cost less impairment losses, which as at 31 December 2024 before the recognition of
results of impairment testing amounted to PLN 2 852 million (comprised of PLN 4 770 million – value at cost,
PLN 1 921 million – the amount of impairment loss and PLN 3 million – the amount of discount on receivables
due to returnable payments to capital).
Information on loans granted are presented in 6.2.
As at 31 December 2024, due to the occurrence of indications of changes in the recoverable amount of shares in the
company Future 1 Sp. z o.o., a test for impairment of these shares was conducted. Future 1 Sp. z o.o. is a holding company,
through which KGHM Polska Miedź S.A. holds shares in KGHM INTERNATIONAL LTD. (whose main assets are the Victoria
project (in the pre-operational phase), the Robinson mine and the Carlota mine) and in the joint venture Sierra Gorda
S.C.M., and provides financing to the KGHM INTERNATIONAL LTD. Group and Sierra Gorda S.C.M.
The key indications to perform impairment testing were:
• changes in the scenario analysis of loans granted to the joint venture Sierra Gorda S.C.M. as a result of
annexing agreements on loans granted to Sierra Gorda S.C.M. – an indication that the recoverable amount
may be higher than the carrying amount,
• annexes to loan agreements for other debt streams, in particular no capitalisation of interest on debt streams
which finance Sierra Gorda S.C.M. – an indication that the recoverable amount may be higher than the carrying
amount,
• an update of assumptions and production plans of the Victoria Project (in the pre-operational phase), in
particular indications that:
o the recoverable amount may be higher than the carrying amount:
▪ changes to the economic assumptions of the model;
o the recoverable amount may be lower than the carrying amount:
▪ changes to the technical assumptions of the model,
▪ update of the mine construction schedule,
▪ update of capital expenditures.
In order to estimate the recoverable amount, in the conducted test the fair value of the CGU was calculated using an
income-based approach, i.e. the method of discounted cash flows. The same method was used in previous years. Cash
flows were discounted using the weighted average cost of capital at the level of 11.52%.
The fair value measurement was classified to level 3 of the fair value hierarchy.
Basic macroeconomic assumptions adopted for cash flow estimation – metal prices
The Company adopted price paths on the basis of internal macroeconomic assumptions developed based on available
long-term forecasts from financial and analytical institutions. A detailed forecast was prepared for the period 2025-2029,
while for the period 2030-2034 a technical adjustment of prices was applied between the last year of the detailed forecast
and 2035, from which a long-term metal price forecast was assumed at the following level:
• for copper – 8 800 USD/t (3.99 USD/lb),
• for gold – 1 900 USD/oz,
• for nickel – 18 739 USD/t (8.50 USD/lb).
In the detailed forecast period for the period 2025-2029 the following levels of metal prices were assumed:
• for copper – from 9 500 USD/t to 10 000 USD/t,
• for gold – from 1 800 USD/oz to 2 600 USD/oz,
• for nickel – from 17 086 USD/t (7.75 USD/lb) to 18 739 USD/t (8.50 USD/lb).
Assumption
Sierra Gorda
Victoria
Robinson
Carlota
Mine life / forecast period
23
15
12
4
Level of copper production during mine life (kt)
3 488
266
488
12
Level of nickel production during mine life (kt)
-
218
-
-
Level of gold production during mine life (koz t)
966
220
433
-
Average operating margin during mine life
47,6%
63%
43%
-1%
Capital expenditures to be incurred during mine life
(USD million)
6 225
1 637
1 092
15
Including capitalised stripping costs (USD million)
4 204
-
638
2
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
28
Results of the test performed as at 31 December 2024 are presented in the following table:
Test elements
PLN million
Discounted future cash flows of the KGHM INTERNATIONAL LTD. Group less by all
of liabilities (including the repayment of loans towards KGHM Polska Miedź S.A.)
3 965
Recoverable amount of other assets
250
Recoverable amount of investment in KGHM INTERNATIONAL LTD.
(Enterprise value) after the repayment of liabilities towards KGHM Polska
Miedź S.A. due to loans granted
4 215
Less receivables due to return payment to capital of Future 1 Sp. z o.o.
(40)
Carrying amount of shares in Future 1 Sp. z o.o. (before the test for impairment)
2 852
Recoverable amount of shares in Future 1 Sp. z o.o. (test result)
4 175
Reversal of impairment loss on shares in Future 1
1 323
The reversal of the impairment loss on the shares in the amount of PLN 1 323 million was recognised in the statement of
financial position in other operating activities (Note 4.2).
Sensitivity analysis of the recoverable amount of the shares of Future 1 Sp. z o.o. determined that the key assumptions
adopted for the impairment testing were the assumed price paths and the discount rate. The assumptions regarding the
price paths and the discount rate were adopted while taking into account the professional judgement 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 shares of FUTURE 1 Sp. z o.o.
Recoverable amount per discount rate
lower by 1 pp.
per test
higher by 1 pp.
Discount rate 11.52% (test)
3 755
4 175
4 652
Recoverable amount per copper price
lower by 0.1 USD/lb
per test
higher by 0.1 USD/lb
Copper price paths
3 897
4 175
4 533
Recoverable amount per nickel price
lower by 0.1 USD/lb
per test
higher by 0.1 USD/lb
Nickel price paths
4 152
4 175
4 204
Impairment testing of shares of POL-MIEDŹ TRANS Sp. z o.o.
As at 31 December 2024, due to the occurrence of indications of changes in the recoverable amount, impairment testing
was performed of the capital involvement in the shares of the company POL-MIEDŹ TRANS Sp. z o.o.
The key indication to perform a test were negative financial results which maintained the level below the assumed ones,
including the loss in operating activities in 2024.
The carrying amount of shares of POL-MIEDŹ TRANS Sp. z o.o. as at 31 December 2024 amounted to PLN 120 million.
In order to estimate the recoverable amount, in the conducted test the value in use of shares was measured using the
income-based approach, i.e. the method of discounted cash flows.
Basic assumptions adopted for impairment testing
Assumption
Level adopted in the test
Detailed forecast period
January 2025 – December 2029
Operating margin
0.5% in the forecast period,
1.1% in the residual value
Capital expenditures in the forecast period
PLN 243 million
Discount rate
5.65% (real, after taxation)
Growth rate following the forecast period
0%
As a result of the impairment testing of the shares of POL–MIEDŹ TRANS Sp. z o.o., the recoverable amount of the tested
shares was determined to be lower than the carrying amount of this asset, which provided a basis for the recognition of
an impairment loss in the amount of PLN 90 million.
The valuation of shares of POL–MIEDŹ TRANS Sp. z o.o. indicated a significant sensitivity to the adopted levels of discount
rates and operating margin. The impact of changes to these parameters on the valuation of shares is presented in the
following table.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
29
Sensitivity analysis of the recoverable amount of shares of POL-MIEDŹ TRANS Sp. z o.o.
Recoverable amount at a given discount rate
lower by 1 pp.
per test
higher by 1 pp.
Discount rate 5.65% (test)
43
30
20
Recoverable amount at a given operating margin
lower by 1 pp.
per test
higher by 1 pp.
Operating margin 0.5%, 1.1% in residual value
(test)
(17)
30
77
In order to monitor the risk of impairment of assets in the subsequent reporting periods it was determined that the
recoverable amount would be equal to the carrying amount if the discount rate decreased to the level of 2.13% or if the
operating margin increased by 1.9 percentage point.
Impairment testing of shares of companies INVEST PV 7 sp. z o.o., INVEST PV 40 sp. z o.o., INVEST PV 58 sp. z o.o.
and INVEST PV 59 sp. z o.o.
KGHM Polska Miedź S.A. is involved in INVEST PV 7 sp. z o.o., INVEST PV 40 sp. z o.o., INVEST PV 58 sp. z o.o. oraz INVEST
PV 59 sp. z o.o. in the form of:
● loans granted in the amount of PLN 141 million, and
● shares measured at purchase price, which as at 31 December 2024 r. before the recognition of the results of
test for impairment amounted to PLN 39 million.
Information on loans granted are presented in 6.2.
As at 31 December 2024, due to the occurrence of indications of changes in the recoverable amount of shares of the
following companies: INVEST PV 7 sp. z o.o., INVEST PV 40 sp. z o.o., INVEST PV 58 sp. z o.o. and INVEST PV 59 sp. z o.o.,
involved in generation and sale of electricity from photovoltaic installations, tests for impairment of capital involvement
in the shares of these companies have been conducted.
The key indications that the value of shares of the above-mentioned companies may be lower than their carrying amount
were the following:
● the continued unfavourable prices on the electricity market,
● the decisions made on non-market redistribution, i.e. orders issued by the operators of the power system on
reduction of energy generation in order to ensure the stability of National Grid System.
The carrying amount of shares in individual companies as at 31 December 2024 was as follows:
● INVEST PV 7 sp. z o.o. – PLN 8 million,
● INVEST PV 40 sp. z o.o. – PLN 16 million,
● INVEST PV 58 sp. z o.o. – PLN 7 million,
● INVEST PV 59 sp. z o.o. – PLN 8 million.
In order to estimate the recoverable amount in the conducted tests, the value in use of shares was calculated using an
income-based approach, i.e. the method of discounted cash flows.
Basic assumptions adopted for impairment testing
Assumption
INVEST PV 7
sp. z o.o.
INVEST PV 40
sp. z o.o.
INVEST PV 58
sp. z o.o.
INVEST PV 59
sp. z o.o.
Detailed forecast period
2025-2053, i.e. until the predicted end of life of projects
Prices of electricity
Price paths were adopted on the basis of averages of available long-term forecasts from
analytical institutions concerning photovoltaics. An average price of electricity in the
detailed forecast period amounts to 370 PLN/MWh.
Electricity production levels
in the detailed forecast
period
142 792 MWh
269 749 MWh
359 842 MWh
502 206 MWh
Average EBITDA margin in
the detailed forecast period
50%
64%
70%
71%
Average nominal discount
rate in the detailed forecast
period *
7.54%
7.54%
7.54%
7.54%
*the presented data are after taxation despite the model of value in use. The application of data before taxation does not have a
significant impact on the recoverable amount.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
30
As a result of the performed impairment testing of companies INVEST PV 7 sp. z o.o., INVEST PV 40 sp. z o.o., INVEST PV 58
sp. z o.o. and INVEST PV 59 sp. z o.o., the recoverable amount was determined at the level of 0, which provided the basis
to perform impairment testing in the amount presented in the following table:
CGU
Carrying amount of shares
Recoverable amount of shares
Impairment loss
INVEST PV 7 sp. z o.o.
8
0
8
INVEST PV 40 sp. z o.o.
16
0
16
INVEST PV 58 sp. z o.o.
7
0
7
INVEST PV 59 sp. z o.o.
8
0
8
In order to monitor the risk of impairment of shares in the subsequent reporting periods and to monitor the possibility of
reversal of the impairment loss it was determined that the recoverable amount would be equal to the carrying amount of
shares if the discount rate or the average price of energy was as presented below:
Discount rate
Average price of energy
INVEST PV 7 sp. z o.o.
0.52%
+66%
INVEST PV 40 sp. z o.o.
1.91%
+58%
INVEST PV 58 sp. z o.o.
2.35%
+57%
INVEST PV 59 sp. z o.o.
2.93%
+49%
Impairment testing of shares of ZAGŁĘBIE LUBIN S.A.
As at 31 December 2024, due to the occurrence of indications of changes in the recoverable amount of investment in
shares of Zagłębie Lubin S.A. (with a carrying amount of PLN 138 million), a test for impairment of this asset was
performed.
The key indications of a change in the recoverable amount of the asset included:
• financial results worse than forecasted,
• value of net assets of Zagłębie Lubin S.A. lower than the value of investment in the statement of financial
position of KGHM Polska Miedź S.A.
In order to estimate the recoverable amount, in the conducted test the fair value of the company Zagłębie Lubin S.A.
was estimated.
Basic assumptions adopted for impairment testing
The fair value of the investment was estimated using the asset-based approach, i.e. the adjusted net assets method (a
measurement classified to level 3 of the fair value hierarchy).
The key assumptions adopted for the measurement:
• revenues generated by the company from sponsoring in market values and revenues from the sale of tickets
and passes,
• during the detailed forecast period, there are no planned capital expenditures on the stadium,
• the value of rights to player cards and to the team were set on the basis of market values of football players
published on the transfer website www.transfermarkt.de, which is recognised as one of the best sources of
information on market value of players and is widely used by the European and international clubs as well as
football federations,
• the period of detailed forecast of cash flows was adopted on the basis of the 5-year financial plan of Zagłębie
Lubin S.A., taking into account the residual value,
• the growth rate following the period of detailed forecast was adopted at the conservative level of 0.0%,
• the WACC real discount rate was adopted at the level of 5.63%.
As a result of the conducted impairment testing of shares in Zagłębie Lubin S.A., the recoverable amount in the investment
was estimated to be lower than the carrying amount and therefore there was justification to recognise an impairment loss
in the amount indicated in the table below.
CGU
Carrying amount
Recoverable amount
Impairment loss
Zagłębie Lubin S.A.
138
113
25
The conducted sensitivity analysis indicates that the recoverable amount is moderately vulnerable to changes in key
parameters influencing the result of the measurement.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
31
IMPAIRMENT TESTING OF SHARES OF PeBeKa S.A.
As at 31 December 2024, an analysis was performed in terms of the existence of indications of the possibility of
impairment of PeBeKa S.A. shares. The following CGUs comprising the business activity of the company PeBeKa S.A.
were subjected to analysis:
1. Product 1 – Horizontal works (mining, drift, construction, underground drilling),
2. Product 2 – Vertical works (shaft and assembly),
3. Product 3 – Construction, engineering and tunnelling works,
4. Product 4 – Surface drilling works,
5. Product 5 – Other business activities (property maintenance, sale of materials).
As a result of the analysis, a decrease in profitability and a loss on the sale of Product 1 were identified as indications of
possible impairment of shares of PeBeKa S.A.
In order to estimate the recoverable amount of shares, in the conducted test the fair value of the company PeBeKa S.A.
was estimated.
Basic assumptions adopted for impairment testing
The fair value of the investment was estimated using the asset-based approach, i.e. the adjusted net assets method. The
key assumptions adopted for the measurement of buildings and perpetual usufruct rights to land excluding investment
properties – the fair value was determined using measurement methods consistent with the market approach
(comparative), based on transactions on the local market of similar properties, the selling costs were assumed at the
level of 2.5% of estimated market value of assets.
The fair value was classified to level 3 of the fair value hierarchy.
As a result of the conducted tests, it was estimated that the recoverable amount of shares of PeBeKa S.A. is at the level of
PLN 214 million which is higher than the carrying amount of these assets (the carrying amount of PLN 84 million), and
therefore was not a basis to recognise an impairment loss.
Sensitivity analysis of the recoverable amount of shares of Zagłębie Lubin S. A
Recoverable amount at a given discount rate
lower by 1 pp.
per test
higher by 1 pp.
Discount rate 5.63% (test)
117
113
110
Recoverable amount at the change in published valuations on the
transfer website
lower by 5 pp.
per test
higher by 5 pp.
The value of rights to player cards and to
the team
111
113
115
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
32
Note 3.2 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.
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 year and slightly decreased as compared to 31 December
2022, and at the end of the reporting period it amounted to 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 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 available
long-term forecasts 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.
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).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
33
Discount rate*
7.0% - 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
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.
20 348
16 577
3 771
* 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 expenditures
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 3 771 million. The calculated impairment loss was
recognised in the following items: “Cost of sales” in the amount of PLN 2 675 million, “Selling costs and administrative
expenses” in the amount of PLN 131 million and “Other operating costs” in the amount of PLN 965 million. A deferred tax
on impairment losses was recognised in the amount of PLN 710 million, which decreased deferred tax liabilities.
The impairment loss was allocated to the following types of assets: buildings and land (PLN 1 622 million), technical
equipment, machines, motor vehicles and other fixed assets (PLN 1 138 million), fixed assets under construction
(PLN 954 million), intangible assets – other (PLN 57 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
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
Impairment testing of shares in FUTURE 1 Sp. z o.o.
KGHM Polska Miedź S.A. is involved in Future 1 Sp. z o.o. in the form of:
• loans granted in the amount of PLN 4 691 million, and
• shares measured at cost less impairment losses, which as at 31 December 2023 before the recognition of results
of impairment testing amounted to PLN 2 111 million (comprised of PLN 4 770 million – value at cost,
PLN 2 663 million – the amount of impairment loss and PLN 4 million – the amount of discount on receivables
due to returnable payments to capital).
As at 31 December 2023, due to the occurrence of indications of changes in the recoverable amount of shares in the
company Future 1 Sp. z o.o., a test for impairment of these shares was conducted. Future 1 Sp. z o.o. is a holding company,
through which KGHM Polska Miedź S.A. holds shares in KGHM INTERNATIONAL LTD. (whose main assets are the Victoria
project (in the pre-operational phase), the Robinson mine and less important mines of the Sudbury Basin and the Carlota
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
34
mine) and in the joint venture Sierra Gorda S.C.M., and provides financing to the KGHM INTERNATIONAL LTD. Group and
Sierra Gorda S.C.M.
The key indications to perform impairment testing were:
• a change in market forecasts of commodities prices,
• a change in the level of market interest rates,
• an update of assumptions and production plans of the Victoria Project (in the pre-operational phase),
• a change in technical and economic parameters of all mining assets in the operational phase in terms of:
production volumes, planned operating costs, capital expenditures and changes of the individual lives of mines.
The main indications that the recoverable amount may be higher than the carrying amount of shares were:
• a higher assumed volume of production from mining assets and an increase in revenues,
• an increase in price paths of metals.
The main indications that the recoverable amount may be lower than the carrying amount of shares were:
• changes in technical and economic parameters of the Victoria project,
• changes in technical and economic parameters of mining assets, among other an increase in operating costs
and planned capital expenditures during mine lives.
In order to estimate the recoverable amount, in the conducted test the fair value of the CGU was calculated using an
income-based approach, i.e. the method of discounted cash flows. The same method was used in previous years. Cash
flows were discounted using the weighted average cost of capital at the level of 12.29%.
The fair value measurement was classified to level 3 of the fair value hierarchy.
Basic macroeconomic assumptions adopted for cash flow estimation – metal prices
Price paths were adopted on the basis of available long-term forecasts 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, from which a long-term metal price forecast is used at
the following level:
• for copper – 8 250 USD/t (3.74 USD/lb);
• for gold – 1 600 USD/oz;
• for nickel – 18 739 USD/t (8.50 USD/lb).
Other key assumptions for cash flow estimation
Assumption
Sierra Gorda
Victoria
Sudbury
Robinson
Carlota
Mine life / forecast period
24
16
5
13
4
Level of copper production during mine life (kt)
3 732
266
16
569
11
Level of nickel production during mine life (kt)
-
229
5
-
-
Level of gold production during mine life (koz t)
1 043
205
12
478
-
Average operating margin during mine life
43%
64%
9%
41%
3%
Capital expenditures to be incurred during mine
life (USD million)
5 809
1 686
8
1 236
31
Including capitalised stripping costs (USD
million)
4 102
-
-
745
7
Key factors responsible for the modification of technical and economic assumptions
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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
35
Victoria
Update of the mine construction schedule, update of capital expenditures and calculation of operating
costs.
Sierra Gorda
Update of assumptions on production, operating costs and capital expenditures.
Results of the test performed as at 31 December 2023 are presented in the following table:
Test elements
PLN million
Discounted future cash flows of the KGHM INTERNATIONAL LTD. Group less by all
of liabilities (including the repayment of loans towards KGHM Polska Miedź S.A.)
2 643
Recoverable amount of other assets
249
Recoverable amount of investment in KGHM INTERNATIONAL LTD.
(Enterprise value) after the repayment of liabilities towards KGHM Polska
Miedź S.A. due to loans granted
2 892
Less receivables due to return payment to capital of Future 1 Sp. z o.o.
(40)
Carrying amount of shares in Future 1 Sp. z o.o. (before the test for impairment)
2 111
Recoverable amount of shares in Future 1 Sp. z o.o. (test result)
2 852
Reversal of impairment loss on shares in Future 1
741
The reversal of the impairment loss on the shares in the amount of PLN 741 million was recognised in the statement of
financial position in other operating activities (Note 4.2).
Sensitivity analysis of the recoverable amount of the shares of Future 1 Sp. z o.o. determined that the key assumptions
adopted for the impairment testing were the assumed price paths and the discount rate. The assumptions regarding the
price paths and the discount rate were adopted while taking into account the professional judgement of the Management
Board as to the performance of these amounts in the future, and was reflected in the estimated recoverable amount. For
the purposes of monitoring the risk of impairment of the tested asset in subsequent periods, the following determinations
were made:
• discount rate – the adoption at a level higher by 1 percentage point would result in a reversal of the impairment
loss in the total amount of PLN 445 million, and at a level lower by 1 percentage point would result in a reversal
of the impairment loss in the total amount of PLN 1 080 million,
• price paths for copper – the adoption of prices at a level lower by 0.1 USD/lb would result in a reversal of the
impairment loss in the amount of PLN 453 million, and at a level higher by 0.1 USD/lb would result in a reversal
of the impairment loss in the amount of PLN 1 114 million.
• price paths for nickel – the adoption of prices at a level lower by 0.1 USD/lb would result in a reversal of the
impairment loss in the amount of PLN 713 million, and at a level higher by 0.1 USD/lb would result in a reversal
of the impairment loss in the total amount of PLN 769 million.
Impairment testing of shares in KGHM METRACO S.A.
As at 31 December 2023, due to the occurrence of indications of changes in the recoverable amount of investment in
shares in KGHM Metraco S.A., a test for impairment of this asset was conducted.
The key indications of a change in the recoverable amount of the asset are:
• better financial results than anticipated in forecasts,
• value of net assets of KGHM Metraco S.A. higher than the value of investment in the statement of financial
position of KGHM Polska Miedź S.A., despite dividends paid out in the past which decreased the company’s
equity,
• identification of indications and conduction of impairment testing of the investment of KGHM Metraco S.A. in
shares of the subsidiary Centrozłom Wrocław S.A.
In order to estimate the recoverable amount, in the conducted test the fair value of shares was calculated using an
income-based approach, i.e. the method of discounted cash flows.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
36
Basic assumptions adopted for impairment testing
• continuation of the strategy of KGHM Metraco S.A. and continuation of current business activities, in an
unchanged significantly scope,
• the period of disclosed forecast of cash flows was adopted on the basis of the 5-year financial plan of KGHM
Metraco S.A.,
• cash flows adopted on the basis of the financial plan for the years 2024 – 2028, approved by the Management
Board of KGHM Metraco S.A.
• WACC real discount rate of 6.74%, since the real cash flows were adopted in the model,
• following the period of the disclosed forecast, the growth rate was conservatively adopted at the level of 0.0%,
• average yearly EBITDA in the forecast period at the conservative level of PLN 23 million.
As a result of the conducted impairment testing of shares in KGHM Metraco S.A., the recoverable amount in the investment
was estimated to be PLN 451 million, which is higher than the net carrying amount of the investment (PLN 335 million),
which provided the Company with a justification to reverse the entirety of the previously recognised impairment loss on
the investment in shares in KGHM Metraco S.A. in the amount of PLN 86 million, which was recognised in the statement of
profit or loss in other operating activities (Note 4.2).
The conducted sensitivity analysis indicates that the recoverable amount is moderately vulnerable to the adopted level of
discount rate and the growth rate following the forecast period:
• an increase in the discount rate by 1 percentage point results in a decrease in the estimated recoverable amount by
PLN 16 million, a decrease by 1 percentage point results in an increase in the recoverable amount by PLN 22 million,
• an increase in the growth rate by 1 percentage point results in an increase in the recoverable amount by PLN 18 million,
a decrease by 1 percentage point results in a decrease in the recoverable amount by PLN 13 million,
while other parameters remain unchanged.
Impairment testing of shares in ZAGŁĘBIE LUBIN S.A.
As at 31 December 2023, due to the occurrence of indications of changes in the recoverable amount of investment in
shares in Zagłębie Lubin S.A. (with a carrying amount of PLN 113 million), a test for impairment of this asset was
performed.
The key indications of a change in the recoverable amount of the asset included:
• financial results are worse than anticipated in forecasts,
• value of net assets of Zagłębie Lubin S.A. is lower than the value of investment in the statement of financial
position of KGHM Polska Miedź S.A.
In order to estimate the recoverable amount, in the conducted test the fair value of the company Zagłębie Lubin S.A. was
estimated.
Basic assumptions adopted for impairment testing
The fair value of the investment in Zagłębie Lubin was estimated using the asset-based approach, i.e. the adjusted net
assets method (a measurement classified to level 3 of the fair value hierarchy).
The key assumptions adopted for measurement of the fair value of shares in the company were:
• revenues generated by the Zagłębie Lubin company from sponsoring and revenues from the sale of tickets and
passes,
• during the detailed forecast period, there are no planned capital expenditures on the stadium,
• the value of rights to player cards and to the team were set on the basis of market values of football players
published on the transfer website www.transfermarkt.de, which is recognised as one of the best sources of
information on market value of players and is widely used by the European and international clubs as well as
football federations,
• the period of detailed forecast of cash flows was adopted on the basis of the 5-year financial plan of Zagłębie
Lubin S.A., taking into account the residual value,
• the growth rate following the period of detailed forecast was adopted at the conservative level of 0.0%,
• the WACC real discount rate was adopted at the level of 6.65%.
As a result of the conducted impairment testing of shares in Zagłębie Lubin S.A., the recoverable amount in the investment
was estimated to be higher than the carrying amount of the investment (PLN 113 million) and therefore there is no
justification to recognise an impairment loss on shares.
The conducted sensitivity analysis indicates that the recoverable amount is moderately vulnerable to changes in key
parameters influencing the result of the measurement:
• an increase in the discount rate by 1 percentage point results in a decrease in the estimated recoverable amount of
the company to PLN 115 million, while a decrease by 1 percentage point results in an increase in the recoverable
amount to PLN 120 million,
• an increase in the valuations published by the transfer website by 5 percentage points results in an increase in the
estimated recoverable amount of the company to PLN 120 million, while a decrease by 5 percentage points results in
a decrease in the recoverable amount to PLN 115 million,
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
37
PART 4 – Explanatory notes to the statement of profit or loss
Note 4.1 Expenses by nature
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Note 9.3
Depreciation of property, plant and equipment
and amortisation of intangible assets
1 607
1 675
Note 11.1
Employee benefits expenses
5 891
5 475
Materials and energy, including:
11 650
12 955
purchased metal-bearing materials
7 439
7 712
electrical and other energy
1 699
2 224
External services, including:
2 793
2 638
transport
354
340
repairs, maintenance and servicing
936
854
mine preparatory work
727
736
Note 5.2
Minerals extraction tax
3 865
3 496
Note 5.2
Other taxes and charges
686
632
Advertising costs and representation expenses
63
83
Property and personal insurance
46
41
Part 3
Recognition of impairment losses on property,
plant and equipment and intangible assets
-
2 808
Reversal of write down of inventories
( 10)
( 13)
Recognition of write-downs of inventories
16
44
Other costs
22
25
Total expenses by nature
26 629
29 859
Cost of merchandise and materials sold (+)
348
545
Change in inventories of products and work in
progress (+/-)
291
( 174)
Cost of products for internal use (-)
( 230)
( 226)
Total cost of sales, selling costs and
administrative expenses, including:
27 038
30 004
Cost of sales
25 503
28 414
Selling costs
177
170
Administrative expenses
1 358
1 420
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
38
Note 4.2 Other operating income and costs
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Gains on derivatives, of which:
617
366
Note 7.1
measurement
68
202
Note 7.1
realisation
549
164
Note 7.1
Exchange differences on financial assets and
liabilities other than borrowings
310
-
Interest on loans granted and other financial
receivables
439
382
Fees and charges on re-invoicing of bank
guarantees costs securing payments of liabilities
21
23
Reversal of impairment losses on financial
instruments measured at amortised cost, including:
2
18
Note 6.2
gains on reversal of allowances for impairment of
loans granted
2
15
Fair value gains on financial assets measured at fair
value through profit or loss, including:
141
668
Note 6.2
loans
141
657
Part 3
Reversal of impairment losses on shares in
subsidiaries
1 323
827
Dividends income
10
-
Release of provisions
115
30
Assistance under the government program “Aid for
energy-intensive sectors related to sudden increases
in natural gas and electricity prices in 2024 and
2023”*
14
178
Other
72
72
Total other operating income
3 064
2 564
Losses on derivatives, of which:
( 565)
( 634)
Note 7.1
measurement
( 13)
( 188)
Note 7.1
realisation
(552)
( 446)
Impairment losses on financial instruments
measured at amortised cost, including:
( 94)
-
Note 6.2
allowances for impairment of loans granted
( 91)
-
Note 7.1
Exchange differences on financial assets and
liabilities other than borrowings
-
( 770)
Fair value losses on financial assets measured at fair
value through profit or loss, including:
( 259)
( 223)
Note 6.2
loans
( 123)
( 94)
trade receivables
( 136)
( 129)
Part 3
Impairment losses on shares in subsidiaries
( 154)
-
Provisions recognised
( 149)
( 6)
Donations granted
( 68)
( 66)
Losses on disposal of property, plant and
equipment (including costs associated with disposal)
( 12)
( 19)
Losses on modification of financial assets
( 169)
-
Compensations, fines and penalties paid and costs
of litigations
( 2)
( 9)
Part 3
Impairment losses on fixed assets under
construction and intangible assets not yet available
for use
( 5)
( 969)
Other
( 33)
( 98)
Total other operating costs
(1 510)
(2 794)
Other operating income / (costs)
1 554
( 230)
*The Company recognises grants in the year in which it receives the confirmation of the grant from the funding body.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
39
Note 4.3 Finance income and costs
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Note 7.1
Gains on derivatives - realisation
134
173
Note 7.1
Exchange differences on measurement and
realisation of borrowings
-
358
Total finance income
134
531
Interest on borrowings, including:
( 70)
( 67)
leases
( 7)
( 9)
Interest on trade payables within the reverse
factoring mechanism
( 150)
( 75)
Fees and charges on external financing
( 26)
( 26)
Note 7.1
Exchange differences on measurement and
realisation of borrowings
( 89)
-
Note 7.1
Losses on derivatives – realisation
( 146)
( 183)
Unwinding of the discount effect
( 78)
( 60)
Total finance costs
( 559)
( 411)
Finance income /(costs)
( 425)
120
Note 4.4 Reversal / recognition of impairment losses on assets in the statement of profit or loss
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Reversal of impairment losses on assets recognised in:
cost of sales, of which:
10
13
reversal of write-down of inventories
10
13
other operating income, of which:
1 325
844
reversal of impairment losses on shares in subsidiaries
1 323
827
reversal of allowance for impairment of loans measured at
amortised cost
2
15
reversal of allowance for impairment of other financial
receivables
-
2
Reversal of impairment losses, total
1 335
857
Impairment losses on assets recognised in:
cost of sales and selling costs, of which:
( 16)
(2 852)
impairment losses on property, plant and equipment and
intangible assets
-
(2 808)
write-down of inventories
( 16)
( 44)
other operating costs, of which:
( 253)
( 969)
loans measured at amortised cost
( 91)
-
impairment losses on fixed assets under construction and
intangible assets not yet available for use
( 5)
( 969)
impairment losses on shares in subsidiaries
( 154)
-
allowance for impairment of other financial receivables
( 3)
-
Impairment losses, total
( 269)
(3 821)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
40
PART 5 – Taxation
Note 5.1 Income tax in the 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.
Income tax
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Current income tax
1 031
670
Note 5.1.1
Deferred income tax
169
( 488)
Current tax adjustments for prior periods
( 3)
( 59)
Income tax
1 197
123
The increase in current income tax in 2024 as compared to 2023 was solely the result of an increase in taxable income.
In 2024, KGHM Polska Miedź S.A. paid an income tax in the amount of PLN 1 018 million to the appropriate tax office
(in 2023: PLN 1 631 million). In 2024 as well as in 2023, income tax advances were incurred by the Company in the fixed
amount, on the basis of an individual decision issued by the Head of the First Mazovian Tax Office on limiting collection of
income tax advances.
In 2024, the Company received the refund from the annual income tax settlement for 2023 in the amount of PLN 458 million
and the refund due to an adjustment to the tax settlement for the years 2017, 2018, 2020 and 2021 in the amount of
PLN 154 million.
The table below presents an identification of differences between income tax on profit before tax and the income tax
calculated according to the principles resulting from the Corporate Income Tax Act:
Reconciliation of effective tax rate
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Profit/(Loss) before tax
3 985
(1 030)
Tax calculated using a rate of 19%
757
( 196)
Tax effect of non-taxable income, including:
( 295)
( 308)
reversal of allowances for impairment of loans granted to
subsidiaries
( 24)
( 148)
reversal of impairment losses on shares in subsidiaries
( 251)
( 158)
Tax effect of expenses not deductible for tax purposes,
including:
878
690
minerals extraction tax
734
664
impairment losses on shares in subsidiaries
22
-
Current tax adjustments for prior periods
( 3)
( 59)
Current tax from settlement of the Tax Group
( 140)
( 4)
Income tax in profit or loss: 30.04% for 2024,
(11.94)% for 2023
1 197
123
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
41
Note 5.1.1 Deferred income tax
Accounting policies
Important estimates, assumptions and judgments
Deferred 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 nor 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 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 the
Company by the same taxation authority.
The assessment of probability that deferred tax assets
will be realised with future tax income is based on the
Company’s budget. The Company recognises deferred
tax assets in its books to the extent that it is probable
that taxable profit will be available against which the
deductible temporary differences can be utilised.
Maturities of deferred tax assets/(deferred tax liabilities) were as follows:
As at 31 December 2024
As at 31 December 2023
Maturity over the 12 months from the end of the reporting
period (net value)
( 615)
( 321)
Maturity of up to 12 months from the end of the reporting
period (net value)
155
( 7)
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Deferred tax at the beginning of the period, of which:
( 328)
( 705)
Deferred tax assets
1 558
1 280
Deferred tax liabilities
(1 886)
(1 985)
Deferred tax in the period, of which:
( 132)
377
Recognised in profit or loss
( 169)
488
Recognised in other comprehensive income
37
( 111)
Deferred tax at the end of the period, of which:
( 460)
( 328)
Deferred tax assets
1 433
1 558
Deferred tax liabilities
(1 893)
(1 886)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
42
Deferred tax assets and liabilities
Credited/(Charged)
As at
31 December
2023
Credited/(Charged)
As at
31 December
2024
Deferred tax assets
As at
1 January
2023
profit
or loss
other
comprehensive
income
profit
or loss
other
comprehensive
income
Interest
20
( 1)
-
19
2
-
21
Provision for decommissioning of mines and
other technological facilities
172
19
-
191
( 4)
-
187
Measurement of forward transactions other than
hedging instruments as understood by hedge
accounting
42
2
-
44
( 40)
-
4
Differences between the value of fixed assets for
accounting and tax purposes
65
144
-
209
( 3)
-
206
Future employee benefits
499
29
51
579
4
( 67)
516
Equity instruments measured at fair value
121
-
( 55)
66
-
( 1)
65
Recognition/reversal of allowances for
impairment of loans
3
9
-
12
7
-
19
Re-measurement of hedging instruments
13
-
( 4)
9
-
( 3)
6
Lease liabilities
88
1
-
89
( 18)
-
71
Short-term accruals for remuneration
111
( 30)
-
81
30
-
111
Liability related to the fixed fee due to setting
mining usufruct
36
3
-
39
( 1)
-
38
Recognition/reversal of other impairment losses
on assets
6
162
-
168
( 44)
-
124
Other
104
( 52)
-
52
13
-
65
Total
1 280
286
( 8)
1 558
( 54)
( 71)
1 433
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
43
As at
1 January
2023
(Credited)/Charged
As at
31 December
2023
(Credited)/Charged
As at 31
December
2024
Deferred tax liabilities
profit or loss
other
comprehensive
income
profit or loss
other
comprehensive
income
Measurement of forward transactions other than
hedging instruments as understood by hedge
accounting
39
7
-
46
( 29)
-
17
Re-measurement of hedging instruments
26
-
103
129
-
( 108)
21
Differences between the value of fixed assets for
accounting and tax purposes, including:
1 321
( 300)
-
1 021
85
-
1 106
due to the depreciation rates of leases
88
( 18)
-
70
( 16)
-
54
Accrued and unpaid interest on loans
298
57
-
355
46
-
401
Measurement of financial assets at fair value
78
30
-
108
( 4)
-
104
Difference between the carrying amount and tax base of
expenditures on fixed assets under construction and
intangible assets not yet available for use
178
17
-
195
29
-
224
Other
45
( 13)
-
32
( 12)
-
20
Total
1 985
( 202)
103
1 886
115
( 108)
1 893
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
44
Note 5.2 Other taxes and charges
The following table presents the minerals extraction tax incurred by the Company.
Presentation in items of financial statements
from 1
January 2024
to
31 December
2024
from 1
January 2023
to
31 December
2023
Basis for
calculating tax
Tax rate
from 1
January 2024
to
31 December
2024
from 1
January 2023
to
31 December
2023
Minerals
extraction
tax, of
which:
3 865
3 496
tax rate calculated
for every reporting
period*
3 855
9
3 405
91
tax recognised
in cost of sold
products
tax recognised
in inventories
- copper
3 157
2 946
Amount of copper
in produced
concentrate,
expressed in
tonnes
- silver
708
550
Amount of silver in
produced
concentrate,
expressed in
kilograms
* 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.
Other taxes and charges:
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Royalties
143
127
Excise tax
7
6
Real estate tax
276
252
Other taxes and charges, including:
260
247
costs of redemption of CO
2
emission allowances
126
90
Total
686
632
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 Company’s liabilities towards the Polish Tax Office arising from the corporate income tax,
including due to the withholding tax, personal income tax and liabilities towards Customs Chamber due to the minerals
extraction tax and the excise tax.
Liabilities not representing financial liabilities are measured at the amount due.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
45
Tax assets
As at
31 December 2024
As at
31 December 2023
Current corporate income tax assets
-
520
VAT receivables
396
412
Tax assets
396
932
The receivables due to other taxes comprise mainly VAT receivables.
Tax liabilities
As at
31 December 2024
As at
31 December 2023
Current corporate income tax liabilities
277
-
Other tax liabilities
509
405
Tax liabilities
786
405
A significant factor for the increase in other tax liabilities was the liability due to the minerals extraction tax, which was
determined by the increase in taxable volume of copper and silver as well as the real tax rate of copper and silver.
Tax authorities may audit accounting books and tax settlements during the 5 years since the end of the year in which the
tax declarations were submitted and charge the Company with an additional tax together with penalties and interest. In
the Management Board’s opinion, there are no circumstances indicating the possibility that significant tax liabilities may
occur.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
46
PART 6 – Investments in subsidiaries
Note 6.1 Shares
Accounting policies
Important estimates, assumptions and judgments
In the financial statements of the Company, subsidiaries
are those entities which are directly controlled by the
Company. Investments in subsidiaries are measured at
cost plus any granted non-returnable increases in share
capital, including for the coverage of losses presented in
the financial statements of a subsidiary and as a result of
discounting interest-free returnable payments, less any
impairment losses. Pursuant to IAS 36, impairment is
measured by comparing the carrying amount with the
higher of the following amounts:
− fair value, decreased by costs to sell; and
− value in use.
The Company controls an entity if it simultaneously:
− has power over the entity it invested in;
− is exposed to variable returns or has rights to
them; and
− can use its power over the entity to affect the
amount of its returns.
In the Company’s opinion, power over individual entities
recognised as subsidiaries is exercised through ownership of
the majority of the total number of votes in the governing
bodies of such entities.
Important estimates, assumptions and judgments related to
the assessment of the risk of impairment were presented in
part 3 of these financial statements.
2024
2023
As at 1 January
4 807
3 701
Acquisition of shares, of which:
31
8
Invest PV 40 Sp. z o.o.
16
-
Invest PV 59 Sp. z o.o.
8
-
Invest PV 58 Sp. z o.o.
7
-
Invest PV 7 Sp. z o.o.
-
8
Increase in share capital, of which:
95
276
PMT Linie Kolejowe Sp. z o.o.
70
17
Zagłębie Lubin S.A.
25
30
Energetyka Sp. z o.o.
-
159
POL-MIEDŹ TRANS Sp. z o.o.
-
57
TFI S.A.
-
2
KGHM ZANAM S.A.
-
11
Impairment losses, of which:
( 154)
-
POL-MIEDŹ TRANS Sp. z o.o.
( 90)
-
Zagłębie Lubin S.A.
( 25)
-
Invest PV 40 Sp. z o.o.
( 16)
-
Invest PV 59 Sp. z o.o.
( 8)
-
Invest PV 58 Sp. z o.o.
( 7)
-
Invest PV 7 Sp. z o.o.
( 8)
-
Sale of the shares in TFI S.A.
-
( 5)
Reversal of impairment losses, of which:
1 323
827
FUTURE 1 Sp. z o.o.
1 323
741
KGHM METRACO S.A.
-
86
Discount on receivables due to the returnable payments to capital of
PMT Linie Kolejowe Sp. z o.o.
44
-
As at 31 December
6 146
4 807
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
47
The balance of impairment losses on the investments as at 31 December 2024 and as at 31 December 2023 by individual
investments in subsidiaries is presented in the following table:
The most significant investments in subsidiaries (direct share)
Entity
Head
Office
Scope of activities
Carrying amount of
shares/investment certificates
as at
31 December
2024
as at
31 December
2023
FUTURE 1 Sp. z o.o.
Lubin
management and control of
other companies, including the
KGHM INTERNATIONAL LTD.
Group
4 175
2 852
Polska Grupa Uzdrowisk sp. z o.o.
(formerly Cuprum Zdrowie sp. z o.o.)
Wrocław
activities of financial holdings
376
376
KGHM Metraco S.A.
Legnica
trade, agency and
representative services
421
421
"Energetyka” sp. z o.o.
Lubin
generation, distribution and
sale of electricity and heat
276
276
PMT Linie Kolejowe Sp. z o.o.*
Lubin
Railway maintenance and
construction
168
55
* There was an increase in share capital in 2024 as well as a discount on receivables due to the returnable payments to capital
As at 31 December 2024 and as at 31 December 2023, the percentage of share capital held as well as the percentage of
voting power in the above-mentioned subsidiaries was 100%.
Note 6.2 Receivables due to loans granted
Accounting policies
The Company classifies loans granted to individual categories using the following policies:
Loans measured at amortised cost – to this category, the Company classifies loans that met two conditions: they are in
a business model whose objective is to collect contractual cash flows due to holding assets, and have passed the SPPI
(solely payments of principal and interest) test, that is they are maintained in order to collect the principal amount and
interest. They are initially recognised at fair value adjusted by costs directly associated with the loan and are measured
at the end of the reporting period at amortised cost using the effective interest rate method, including impairment
calculated using the model of expected credit losses on the basis of discounted cash flows.
POCI loans – the Company classifies as POCI, at the moment of initial recognition, financial assets that are credit-impaired
due to high credit risk at the moment they are granted or if the loans were purchased at a significant discount. POCI
loans are measured at the end of the reporting period at amortised cost using the effective interest rate adjusted by the
credit risk, including impairment calculated using the model of expected credit losses (ECL) on the basis of discounted
cash flows in the horizon of the expected repayment of the loan. The loss allowance for ECL is calculated on the basis of
expected credit losses during the whole life of the instrument. Accumulated changes to the expected credit losses are
recognised as an increase or a reversal of an already recognised loss allowance for expected credit losses. Currently
As at
31 December 2024
As at
31 December 2023
Energetyka Sp. z o.o.
388
388
MCZ S.A.
14
14
Zagłębie Lubin S.A.
106
81
FUTURE 1 Sp. z o.o.
599
1 922
POL-MIEDŹ TRANS Sp. z o.o.
90
-
Invest PV 40 Sp. z o.o.
16
-
Invest PV 59 Sp. z o.o.
8
-
Invest PV 58 Sp. z o.o.
7
-
Invest PV 7 Sp. z o.o.
8
-
Total
1 237
2 405
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
48
presented POCI loans are loans granted (not acquired). Classification was set due to the implementation of IFRS 9 in 2018
due to the recognised impairment at the moment of initial recognition.
The loans measured at fair value through profit or loss – to this category, the Company classifies loans that did not pass
the SPPI (solely payments of principal and interest) test. The fair value of these loans is set at present value of future cash
flows, including the change of market risk and credit risk factors during the loans’ life.
Financial assets, for which the Company has to calculate the expected credit losses pursuant to IFRS 9, are classified to
one of three degrees of a model of impairment. Classification to individual degrees of impairment model is at the level
of a single financial instrument (a single exposure).
To the degree 2, the Company classifies financial instruments with an identified significant increase in credit risk,
understood as a significant increase in probable default in the remaining time of the instrument as compared to the date
of its initial recognition, but there were no objective indicators of impairment. The expected credit losses for the degree
2 are estimated during the entire life of these instruments.
If at the end of the reporting period the analysis proves that for a given financial instrument, since the day of its initial
recognition, there was not a significant increase in credit risk and no default status was granted, the instrument is
classified to the degree 1 of a model of impairment. For exposures classified to the degree 1, the expected credit losses
are estimated in a horizon of 12 months.
Balances with an identified, objective indication of impairment are included in the degree 3. For this reason, as at the end
of the reporting period, the Company classified loans granted to Invest PV 7, Invest PV 40, Invest PV 58 and Invest PV 59
to the degree 3.
Important estimates, assumptions and judgments
Failed SPPI test - The Company assumes that the solely payments of principal and interest (SPPI) test for loans granted is
not passed if, among others, in the structure of financing the target recipient of funds, debt is changed at the last stage
into an equity investment.
Indications to classify the loan to the degree 2 of impairment model is the occurrence of one of the following:
• for exposition of the borrower’s rating - at the level of Baa3 (per the Moody’s methodology or a corresponding one
for the S&P/Fitch ratings) or better (investment rating) – a drop in the borrower’s rating by at least 5 levels,
• for exposition of the borrower’s rating - at the level of Ba1 (per the Moody’s methodology or a corresponding one
for the S&P/Fitch ratings) or worse (below investment rating) – a drop in the borrower’s rating by at least 3 levels,
• deterioration of operational cash flows forecasts of a borrower – in the time horizon of the exposure, which does
not result in the impossibility of settling the liability arising from a given loan,
• change in conditions of the loan due to the worsening financial position of the borrower, which has an impact of
less than 1% of the value of the loan at the date of change (a change in the conditions of the loan from reasons
other than the worsening financial position of the borrower are not included in the assessment of occurrence of
a given indication),
• delay in the repayment of over 30 days (after the maturity date of interest or capital).
Balances with an identified, objective indication of impairment are included in the degree 3. The Company recognises
occurrence of at least one of the following events as an objective indication of default:
• borrower’s rating at the level of Ca (per the Moody’s methodology or a corresponding one for the S&P/Fitch ratings) or
lower,
• deterioration of operational cash flows forecasts of a borrower – in the time horizon of the exposure, which results
in the impossibility of settling the liability arising from a given loan,
• change in conditions of the loan due to the worsening financial position of the borrower, which has an impact of
more than 1% of the value of the loan at the date of change (a change in the conditions of the loan from reasons
other than the worsening financial position of the borrower are not included in the assessment of occurrence of
a given indication),
• delay in the repayment of over 30 days (after the maturity date of interest or capital) – if at the date of analysis the
loan was at stage 2 of calculating the allowance for impairment,
• delay in the repayment of over 90 days (after the maturity date of interest or capital) – if at the date of analysis the
loan was at stage 1 of calculating the allowance for impairment.
The Company reclassifies a loan to an earlier stage only if all of the following conditions are met:
• indications that resulted in the classification of a loan to a given stage no longer occur,
• no indications occur (to classify to a given or worse stage) for the period of at least 12 months from the moment it
was determined that no indications occur that are mentioned in the bullet above.
In order to calculate expected credit losses (ECL), the Company uses, among others, the following parameters:
• the borrower’s rating - is granted using internal methodology of the Company based on the Moody’s methodology.
The Company granted loans mainly to subsidiaries, of which over 99% of borrowers were assigned ratings between
Baa2 – Ba1 (in the comparable period: A3 – Baa3).
• the curve of accumulated parameters of PD (parameter of probability of default, used to calculate the expected
credit losses) for a given borrower is set on the basis of market sector quotations of Credit Default Swap contracts
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
49
from the Reuters system, which quantify the market expectations as for the probability of default in a given sector
and in a given rating. As at 31 December 2024, PD parameters for the adopted ratings were as follows:
Baa2 – Ba1 ratings according to Moody’s (31 December 2024)
Up to one year
0.83% - 1.05%
1-3 years
4.32% - 5.86%
More than 3 years (at the date of
loans’ maturity)
17.97% - 39.36%
A3 to Baa3 ratings according to Moody’s (31 December 2023)
Up to one year
0.75% - 1.01%
1-3 years
0.75% – 4.63%
More than 3 years (at the date of loans’
maturity)
0.75% – 25.87%
The level of the LGD parameter (loss given default, expressed as the percentage of the amount outstanding) for the
purposes of estimating expected credit losses for loans classified to the stage 1 and 2 is adopted at the level of 75%
(based on estimations from Moody’s Default and recovery rates for project finance bank loans, 1983-2021).
As at 31 December 2024 no decision was made whether to demand the repayment of loans with a contractual on-demand
payment clause, including in the period of 12 months from the balance sheet date, and no joint decision was made by
the owners of Sierra Gorda S.C.M. in this regard.
The Company classifies loans granted to one of the three following categories:
1. Measured at amortised cost, which were determined to be credit-impaired at the moment of initial recognition (POCI),
2. Measured at amortised cost, which were not determined to be credit-impaired at the moment of initial recognition,
3. Measured at fair value through profit or loss.
Loans that at the last stage of cash flows between companies in the Future 1 Sp. z o.o. holding structure or KGHM
INTERNATIONAL LTD. were transferred as loans to a joint venture Sierra Gorda S.C.M., advanced by the KGHM
INTERNATIONAL LTD. Group, were classified as POCI loans (identified allowance for impairment due to a credit risk at the
moment of granting). These loans, pursuant to the terms of the annexes from December 2024, are paid on demand, but
not later than on 31 December 2032. The original maturity was on 15 December 2024.
The Company presents, in the category of loans classified as measured at fair value through profit or loss, loans that at the
last stage of cash flows between companies in the Future 1 Sp. z o.o. holding structure or KGHM INTERNATIONAL LTD. were
transferred mainly as increases in share capital of Sierra Gorda S.C.M.
At the end of the reporting period, the Company performed a measurement of loans classified to level 3 of the fair value
hierarchy (measured at fair value as well as at amortised cost (for disclosure purposes) designated mainly for financing the
joint venture Sierra Gorda S.C.M. The basis of measuring the level of recoverability of loans at the level of the separate
financial statements of KGHM Polska Miedź S.A. is the estimation of cash flows generated by Sierra Gorda S.C.M and other
significant international production assets, which are subsequently allocated by the Company in individual loans at various
levels of the current financing structure. The estimate of cash flows generated by Sierra Gorda S.C.M. and other mines was
determined on the basis of current forecasts of pricing paths of commodities and current mining plans.
The expected repayments of loans were 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 3.69% - 6.64% - for loans measured at amortised cost,
• the market interest rate at the level of 5.59% - 8.31% - for loans measured at fair value.
In the period from 1 January to 31 December 2024, the following was recognised:
• expected credit losses on loans granted classified as POCI in the amount of PLN 27 million (USD 7 million
translated at exchange rates from the dates of recognition of allowances for impairment),
• for loans measured at fair value – an estimated total increase in fair value by the amount of PLN 18 million, of
which:
o in other operating income an increase of PLN 141 million,
o in other operating costs a decrease of PLN 123 million.
In the case of other loans measured at amortised cost, the Company calculated the allowance for impairment on the
basis of the model of expected credit losses.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
50
The following table presents receivables due to loans granted by the Company.
as at
31 December 2024
as at
31 December 2023
Loans measured at amortised cost –
gross amount
6 469
6 016
Allowances for impairment
( 164)
( 71)
Loans measured at fair value
3 668
3 766
Total loans, including:
9 973
9 711
- long-term loans
9 727
9 638
- short-term loans
246
73
The most significant items are loans granted to companies of the KGHM Polska Miedź S.A. Group, which are connected with
the realisation of mining projects executed by indirect subsidiaries of KGHM Polska Miedź S.A. from the KGHM
INTERNATIONAL LTD. Group. Credit risk related to loans granted was described in Note 7.5.2.5.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
51
PART 7 – Financial instruments and financial risk management
Note 7.1 Financial Instruments
As at 31 December 2024
As at 31 December 2023
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
814
3 668
6 637
286
11 405
803
3 804
6 317
195
11 119
Note 6.2
Loans granted
-
3 668
6 059
-
9 727
-
3 766
5 872
-
9 638
Note 7.2
Derivatives
-
-
-
286
286
-
38
-
195
233
Note 7.3
Other financial
instruments
measured at fair value
814
-
-
-
814
803
-
-
-
803
Note 7.4
Other financial
instruments
measured at amortised
cost
-
-
578
-
578
-
-
445
-
445
Current
-
531
1 969
194
2 694
-
647
2 492
324
3 463
Note 10.2
Trade receivables
-
506
379
-
885
-
211
260
-
471
Note 7.2
Derivatives
-
25
-
194
219
-
436
-
324
760
Note 8.5
Cash and cash equivalents
-
-
367
-
367
-
-
1 481
-
1 481
Cash pooling receivables*
-
-
683
-
683
-
-
424
-
424
Note 12.3
Other financial assets
-
-
540
-
540
-
-
327
-
327
Total
814
4 199
8 606
480
14 099
803
4 451
8 809
519
14 582
* Receivables from companies within the KGHM Polska Miedź S.A. Group which indebted themselves in the cash pooling system.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
52
As at 31 December 2024
As at 31 December 2023
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
12
4 862
257
5 131
38
4 722
164
4 924
Note 8.4
Borrowings, leases and debt
securities
-
4 655
-
4 655
-
4 508
-
4 508
Note 7.2
Derivatives
12
-
257
269
38
-
164
202
Other financial liabilities
-
207
-
207
-
214
-
214
Current
14
6 661
33
6 708
480
7 590
26
8 096
Note 8.4
Borrowings, leases and debt
securities
-
1 135
-
1 135
-
833
-
833
Note 8.4
Cash pooling liabilities*
-
561
-
561
-
350
-
350
Note 12.4
Other liabilities due to settlement
under cash pooling contracts **
-
27
-
27
-
34
-
34
Note 7.2
Derivatives
11
-
33
44
473
-
26
499
Note 10.3
Trade payables
-
2 825
-
2 825
-
3 044
-
3 044
Note 10.3
Trade payables within the reverse
factoring mechanism
-
2 000
-
2 000
-
3 021
-
3 021
Other financial liabilities
3
113
-
116
7
308
-
315
Total
26
11 523
290
11 839
518
12 312
190
13 020
* Liabilities of KGHM Polska Miedź S.A. towards the Group companies within the credit limit of the group of accounts participating in the cash pooling system.
** Other current liabilities towards participants in the cash pooling system to return, after the end of the reporting period, cash transferred by them which were not used by KGHM Polska Miedź S.A. for its own
needs.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
53
Gains/(losses) on financial instruments
from 1 January 2024 to 31 December 2024
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 4.3
Interest income
-
439
-
-
439
Note 4.3
Interest costs
-
-
( 235)
15
( 220)
Losses due to modifications of financial assets
-
( 169)
-
-
( 169)
Note 4.2
Foreign exchange gains/(losses) on instruments
other than borrowings
-
336
( 26)
-
310
Note 4.3
Foreign exchange losses on borrowings
-
-
( 89)
-
( 89)
Note 4.2
Fair value gains/(losses) on financial assets
measured at fair value through profit or loss
( 118)
-
-
-
( 118)
Note 4.4
Reversal/(recognition) of impairment losses
-
( 92)
-
-
( 92)
Note 7.2
Revenues from contracts with customers
-
-
-
608
608
Note 4.2
Note 4.3
Gains on measurement and realisation of
derivatives
731
-
-
20
751
Note 4.2
Note 4.3
Losses on measurement and realisation of
derivatives
( 711)
-
-
-
( 711)
Note 4.3
Fees and charges on bank loans drawn
-
-
( 26)
-
( 26)
Other
-
-
( 9)
-
( 9)
Total net gain/(loss)
( 98)
514
( 385)
643
674
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
54
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
Interest income
-
382
-
-
382
Note 4.3
Interest costs
-
-
( 166)
24
( 142)
Note 4.2
Foreign exchange gains/(losses) on instruments
other than borrowings
-
( 811)
41
-
( 770)
Note 4.3
Foreign exchange losses
-
-
358
-
358
Note 4.2
Fair value gains/(losses) on financial assets
measured at fair value through profit or loss
445
-
-
-
445
Note 4.4
Reversal/(recognition) of impairment losses
-
17
-
-
17
Note 7.2
Revenues from contracts with customers
-
-
-
635
635
Note 4.2
Gains on measurement and realisation of
derivatives
539
-
-
-
539
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)
Other
-
-
( 12)
-
( 12)
Total net gain/(loss)
517
( 412)
195
309
609
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
55
Fair value measurement
Accounting policies
Important estimates, assumptions and
judgements
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. The fair
value hierarchy levels are as follows:
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 it is
not possible to acquire data from the first two
measurement levels. It includes all measurements
based on subjective inputs.
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 measurement is not a specific measurement
for a given unit, but should be based on market,
including any assumptions which market participants
would consider in the process of measurement.
In case of limited availability of inputs, carrying out a
fair value measurement requires selecting appropriate
measurement techniques, under which a unit should
make maximum use of observable data. In the case of
the Company’s assets, this involves in particular
derivatives. The assumptions and estimates applied in
their measurement are presented in Note 7.1.
To determine fair value, the adoption of specified
assumptions and judgments is especially required for
assets whose fair value measurement cannot be made
based on inputs arising from an active market or from
the use of other data, regardless of how amenable
they are to objective and measurable observation.
Details on assumptions adopted for fair value
measurement may be found in the further part of the
Note 7.1 Methods and techniques used in determining
fair value.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
56
The fair value hierarchy of financial instruments measured at fair value in the statement of financial position
As at 31 December 2024
As at 31 December 2023
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
-
-
3 668
3 668
-
-
3 766
3 766
Listed shares
685
-
-
685
680
-
-
680
Unquoted shares
-
129
-
129
-
106
-
106
Trade receivables
-
506
-
506
-
211
-
211
Other financial assets
-
34
-
34
-
48
-
48
Assets due to derivatives
-
505
-
505
-
993
-
993
Liabilities due to derivatives
-
(313)
-
(313)
-
(701)
-
(701)
Other financial liabilities
-
(3)
-
(3)
-
(7)
-
(7)
The fair value hierarchy of financial instruments measured at amortised cost in the statement of financial position
As at 31 December 2024
As at 31 December 2023
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
-
1 191
4 654
6 305
-
895
5 050
5 945
Received long-term bank and other loans
-
(1 538)
-
(1 538)
-
(2 306)
-
(2 306)
Long-term debt securities
(2 657)
-
-
(2 600)
(1 627)
-
-
(1 600)
Loans granted measured at amortised cost
Discount rate adopted for disclosure of fair value of loans granted measured at amortised cost.
As at 31 December 2024
As at 31 December 2023
discount rate
carrying
amount
discount rate
carrying
amount
Loans per impairment model
level 1
level 2
level 3
level 1
level 2
level 3
1
st
degree (fixed interest rate)
x
6.34%
x
868
x
6.15%
x
808
1
st
and 3
rd
degree (variable interest rate)
x
5.82% (Wibor 1M),
4.49% (SOFR)
7.54%
354
x
5.83% (Wibor
1M)
x
87
1
st
degree (fixed interest rate)
x
x
5.60%
3 333
x
x
6.16%
3 342
POCI (fixed interest rate)*
x
x
8.31%
1 750
x
x
9.13%
1 708
Total
6 305
Total
5 945
*Real discount rate
*Real discount rate
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
57
Methods and measurement techniques used by the Company 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
Long-term loans granted
The fair value of loans measured at amortised cost 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. IBOR current market interest rare acquired
from the Reuters system is used in the discounting process.
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.
Other financial assets/liabilities
The fair value of receivables/payables due to the settlement of derivatives, whose date of payment falls two working days
after the end of the reporting period was set per the reference price applied in the settlement of these transactions.
Currency and currency-interest derivatives
To determine the fair value of derivatives on the currency market and currency-interest transactions (CIRS), the forward
prices from the maturity dates of individual transactions were used. 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 were taken from the Reuters system. The standard Garman-Kohlhagen model is used to measure options
on currency markets.
Metals derivatives
To determine the fair value of derivatives on the commodity market, forward prices from the maturity dates of individual
transactions were used. In the case of copper, official closing prices from the London Metal Exchange were applied, 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
approximation to the Black-Scholes model was used for Asian options pricing on metals markets.
Received long-term bank and other loans
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. Fair value differs from the
carrying amount by the amount of the premium paid to acquire the financing.
Level 3
Long-term loans granted
The fair value of loans was estimated using the forecasted cash flows of international assets (Sierra Gorda S.C.M.), which
pursuant to IFRS 13 are unobservable input data, and the fair value of assets determined using the same data is classified
to level 3 of the fair value hierarchy.
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 was presented in Note 7.5.2.5.
The Company does not disclose the fair value of financial instruments measured at amortised cost (except for long-term
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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
58
There was no transfer in the Company of financial instruments between levels of the fair value hierarchy in the reporting
period.
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.
The Company applies hedge accounting for cash flows according to the requirements of IFRS 9. Hedge accounting aims
at reducing volatility in the Company’s net result, arising from periodic changes in the measurement of transactions
hedging individual types of market risk to which the Company is exposed. Hedging instruments may be derivatives as
well as bank and other loans in foreign currencies.
The designated hedges mostly 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 Company 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 Company 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 Company 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. In addition, as a cost of hedging, the Company 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.
The Company ceases to account for derivatives 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 Company 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 the
underlying instrument and is measured pursuant to 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 Company
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 and assumptions
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 Company in determining fair values of each class of financial
assets or financial liabilities” and in tables in point 7.2. of this part.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
59
Derivatives – open items as at the end of the reporting period
As at 31 December 2024
As at 31 December 2023
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:
286
193
(257)
(33)
189
195
323
(164)
(26)
328
Derivatives – Metals (price of copper, silver)
Options – seagull* (copper)
55
132
(12)
(7)
168
-
-
-
-
-
Options – collar (silver)
19
25
(6)
(4)
34
-
-
-
-
-
Derivatives – Currency (USDPLN exchange rate)
Options – collar
34
29
(23)
(13)
27
-
-
-
-
-
Options – seagull*
1
5
(1)
(5)
-
-
-
-
-
-
Options – collar + purchased call options*
-
2
-
(4)
(2)
Options – put spread
-
-
-
-
-
28
315
(2)
(7)
334
Derivatives – Currency-interest rate
Cross Currency Interest Rate Swap CIRS
177
-
(215)
-
(38)
167
8
(162)
(19)
(6)
Trade instruments, of which:
-
26
(12)
(11)
3
-
1
(38)
(473)
(510)
Derivatives – Metals (price of copper, gold)
Sold put option (copper)
-
-
(12)
(9)
(21)
-
-
-
-
-
QP adjustment swap transactions (copper)
-
9
-
-
9
-
-
-
(5)
(5)
QP adjustment swap transactions (gold)
-
1
-
(1)
-
-
1
-
(6)
(5)
Derivatives – Currency (USDPLN exchange rate)
Sold put option
-
-
-
(1)
(1)
-
-
(38)
(436)
(474)
Purchased call option
-
1
-
-
1
-
-
-
-
-
Embedded derivatives (price of copper, gold)
Purchase contracts for metal-bearing materials
-
15
-
-
15
-
-
-
(26)
(26)
Instruments initially designated as hedging instruments
excluded from hedge accounting, of which:
-
-
-
-
-
38
436
-
-
474
Derivatives – Currency (USDPLN exchange rate)
Options - collar
-
-
-
-
-
38
436
-
-
474
TOTAL OPEN DERIVATIVES
286
219
(269)
(44)
192
233
760
(202)
(499)
292
* Collar structures, i.e. purchased put options and sold call options were designated as hedging under seagull options structures and collar + purchased call options (CFH – Cash Flow Hedge).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
60
The table below presents detailed data on derivative transactions designated as hedging, held by the Company as at
31 December 2024.
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]
from
to
from
to
Type of derivative
Commodity option structures
Copper – seagull*
46 500
9 579 – 11 311
Jan‘25
- June‘26
Jan‘25
- July‘26
Silver – collar
5.25
28.96 – 43.50
Jan‘25
- June‘26
Jan‘25
- July‘26
Currency option structures
USD/PLN – collar + purchased call*
120
3.92-4.32
Jan‘25
- June‘25
Jan‘25
- July‘25
USD/PLN – collar
720
4.04-4.54
Jan‘25
- June‘26
Jan‘25
- July‘26
USD/PLN – seagull *
120
3.92-4.52
July‘25
- Dec‘25
July‘25
- Jan‘26
Currency-interest rate transactions
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 and collar + purchased call
options (CFH – Cash Flow Hedge).
** 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 Company 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 option structures
USD/PLN – put spread
660
3.60 - 4.48
Jan’24
- Dec’24
Jan’24
- Jan’25
Currency-interest rate transactions
CIRS*
400
3.78 and 3.23%
June‘24
June‘24
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 impact of derivatives and hedging transactions on the items of the statement of profit or loss and on the items of the
statement of other comprehensive income is presented below.
Statement of profit or loss
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Revenues from contracts with customers (reclassification adjustment)
608
635
Other operating income / (costs) (including the reclassification
adjustment):
51
(268)
realisation of derivatives
(3)
(282)
measurement of derivatives
54
14
Finance income / (costs) (including the reclassification adjustment):
3
13
realisation of derivatives
(12)
(11)
interest on borrowings
15
24
Impact of derivatives and hedging instruments
on profit or loss for the period (excluding the tax effect)
662
380
The Company reclassifies the amounts corresponding to the effective portion of hedging of the copper and silver sales
price and the USD exchange rate to revenues from contracts with customers.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
61
The Company reclassifies the settled hedging cost (mainly time value of options hedging the revenues from sales), changes
in fair value of trade and embedded derivatives, and also settlements of trade derivatives to other operating income /
(costs).
The Company reclassifies the settlement of interest payments of the hedging instrument CIRS in the interest part to the
finance income / (costs).
Statement of other comprehensive income
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Measurement of hedging transactions (effective portion)
148
944
Reclassification to revenues from contracts with customers due to
realisation of a hedged item
(608)
(635)
Reclassification to finance costs due to realisation of a hedged
item
(15)
(24)
Reclassification to non-current assets due to realisation of a
hedged item*
(55)
(78)
Reclassification to other operating (income)/costs due to
realisation of a hedged item (settlement of the hedging cost)
(20)
350
Impact of hedging transactions (excluding the tax effect)**
(550)
557
TOTAL COMPREHENSIVE INCOME
112
937
*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.
Note 7.3 Other financial instruments measured at fair value
Accounting policies
The item “Other financial instruments measured at fair value” 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 financial result.
These assets 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 fair value of listed shares is calculated based on the closing price as at the end of the reporting period.
The translations of shares expressed in a foreign currency are 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 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 fixed-term deposits in financial
institutions, and the risk-free discount rate published by the European Insurance and Occupational Pensions Authority).
As at
31 December 2024
As at
31 December 2023
Shares of companies listed on the Warsaw Stock Exchange, of which:
685
680
TAURON POLSKA ENERGIA S.A.
685
680
Unquoted shares
129
123
Other financial instruments measured at fair value
814
803
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, which however is not from an active market).
In 2024 as well as in 2023, there were no dividends from companies in which the Company had shares classified as other
financial instruments measured at fair value.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
62
In 2024 as well as in 2023, there were no transfers of accumulated gain or loss within equity in respect of companies in
which the Company holds shares classified as other financial instruments measured at fair value.
Due to investments in listed companies, the Company 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 the accumulated amount recognised in equity.
The following table presents the sensitivity analysis of the measurement of listed companies’ shares to price changes.
As at
31 December
2024
Percentage change of share
price
As at
31 December
2023
Percentage change of share
price
15%
-15%
13%
-13%
Carrying amount
Other
comprehensive
income
Other
comprehensive
income
Carrying amount
Other
comprehensive
income
Other
comprehensive
income
Listed
shares
685
103
(103)
680
88
(88)
Sensitivity analysis for significant types of market risk to which the Company is exposed presents the estimated impact of
potential changes in individual risk factors (at the end of reporting period) on 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 index for a period of 3 calendar years ended at the end of the reporting period.
Note 7.4 Other long-term financial instruments measured at amortised cost
Accounting policies
Important estimates, assumptions and judgements
The item other long-term financial instruments measured
at amortised cost includes financial assets (mainly cash
and cash equivalents which were included in non-current
assets because of the restrictions on their use for at least
12 months from the end of the reporting period),
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 is presented in Note 7.5.1.4.
As at
31 December 2024
As at
31 December 2023
Cash held in the Mine Closure Fund
440
394
Increases in share capital
47
39
Receivables due to guarantees granted
83
-
Other financial receivables
8
12
Total
578
445
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 Company 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,
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
63
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 Company’s Management Board manages identified financial risk factors in a conscious and responsible manner, using
the Market Risk Management Policy, the Financial Liquidity Management Policy and the Credit Risk Management Policy
adopted by the Company. Understanding the threats arising from the Company's exposure to risk and maintaining an
appropriate organisational structure and applied procedures enable an effective achievement of tasks. The Company
identifies and measures financial risk on an ongoing basis, and also takes actions aimed at minimising its impact on the
financial position of the Company.
The process of financial risk management in the Company is supported by the work of the Market Risk Committee, the
Energy Committee, the Financial Liquidity Committee and the Credit Risk Committee.
Note 7.5.1 Market risk
The market risk to which the Company is exposed to is understood as the possible occurrence of negative impact on the
Company's results arising from changes in the market prices of commodities, exchange rates and interest rates, as well as
the share prices of listed companies.
Note 7.5.1.1 Principles and techniques of market risk management
The Company actively manages the market risk to which it is exposed.
In accordance with the adopted policy, the goals of the market risk management process are as follows:
▪ decrease the probability of losing financial liquidity;
▪ increase the probability of meeting budget targets;
▪ maintain the good financial condition of the Company;
▪ limit the negative impact of volatility in prices of market factors on cash flows and financial results of the Company;
▪ support the process of strategic decision making related to investment activities, including financing sources of
investments.
All objectives of market risk management should be considered as a whole, and the manner of their realisation is
determined mainly by the appetite for risk, the Company’s internal situation and market conditions. Actions and decisions
concerning market risk management in the Company should be analysed in the context of the KGHM Polska Miedź S.A.
Group’s global exposure to market risk.
Taking into account the potential scope of their impact on the Company’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 Company’s total
exposure to market
risk
Copper price
A strategic approach is applied to this group, aimed at
systematically building up a portfolio of instruments
mitigating the market risk identified in the area of costs
and revenues from sales while taking into account the
long-term cyclical nature of various markets. A portfolio of
open instruments 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
This group is comprised of less significant risks, 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
The Company manages market risk by applying various approaches to particular, identified exposure groups.
The Company considers the following factors when selecting hedging strategies or restructuring hedging positions: current
and forecasted market conditions, the internal situation of the Company, the effective level and cost of hedging, and the
impact of the minerals extraction tax.
The Company 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 Company executes derivative transactions only if it has the ability to assess their value internally, using standard pricing
models appropriate for a particular type of derivative, and which can be traded without significant loss of value with a
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
64
counterparty other than the one with whom the transaction was initially entered into. In evaluating the market value of
given instruments, the Company uses information obtained from leading information services, banks, and brokers.
The Company's internal policy, which regulates market risk management principles, 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). Primarily 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 Company in the reporting period is continually monitored and assessed (details in Note 7.2 Derivatives –
accounting policies).
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 Company aims to ensure a maximal match between these parameters to minimise the sources of ineffectiveness.
The Company quantifies its market risk exposure using a consistent and comprehensive measure. Market risk management
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 of the Company to market risk.
One of the measures used as an auxiliary tool in making decisions in the market risk management process 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 90% 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.
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, the Company has set limits with respect to
commitment in derivatives:
▪ with respect to instruments representing the rights of the Company - up to 85% of planned, monthly sales
volumes of copper, silver and gold from own concentrates, and up to 85% of planned, monthly revenues from the
sale of products from own concentrates in USD or of the monthly, contracted net foreign currency cash flows in
case of other currencies,
▪ with respect to instruments representing the obligations of the Company (transactions financing the hedging
strategies) - up to 50% of planned, monthly sales volumes of copper and silver from own concentrates, and up to
50% of planned, monthly revenues from the sale of products from own concentrates in USD.
The expenses for servicing the debt denominated in USD decrease the nominal amount of exposure to hedge the planned
revenues from the sales of metals.
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 Company 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 Company.
With respect to the risk of changes in interest rates, the Company 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.
Note 7.5.1.2. Commodity risk
The Company is exposed to the risk of changes in the prices of the metals it sells: copper, silver, gold and lead. The price
formulas used in physical delivery contracts are mainly based on average monthly quotations from the London Metal
Exchange for copper and lead and from the London Bullion Market Association for silver and gold. The Company’s
commercial policy is to 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
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
65
contracts with respect to the Company’s benchmark profile, in particular in terms of the reference prices and the quotation
periods.
On the metals market, the Company has a so-called long position, which means it has higher sales than purchases. The
analysis of the Company’s exposure to market risk should be performed by deducting from the volume of metals sold the
amount of metal in purchased materials.
The Company’s strategic exposure to the risk of changes in the price of copper and silver in the years 2023-2024 is presented
in the table below.
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Net
Sales
Purchase
Net
Sales
Purchase
Copper [t]
395 714
589 620
193 906
379 430
584 749
205 319
Silver [t]
1 321
1 347
26
1 319
1 352
33
The notional amount of copper price hedging strategies settled in 2024 represented approx. 2% (32% in 2023) of the total
sales of this metal realised by the Company (it represented approx. 2% of net sales
1
in 2024 and 50% in 2023).
The notional amount of silver price hedging strategies settled in 2024 represented approx. 2% of the total sales of this metal
realised by the Company (10% in 2023).
In 2024, pursuant to the Market Risk Management Policy, the Company continuously monitored and analysed 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). As part of the realisation of the strategic hedging plan of the Company against market risk, in 2024,
transactions hedging the planned revenues from copper and silver sales were implemented. On the copper market, seagull
option structures (Asian options) for the period from July 2024 to June 2026 for the total tonnage of 56.25 thousand tonnes
were entered into, while on the silver market, collar option structures (Asian options) for the period from July 2024 to June
2026 for the total tonnage of 6.3 million troy ounces were implemented.
In 2024 QP adjustment swap transactions were entered into on the copper and gold markets with maturities of up to June
2025, as part of the management of a net trading position
2
.
As a result, as at 31 December 2024, the Company held an open derivatives position for:
• 53.1 thousand tonnes of copper (of which 46.5 thousand tonnes arose from the strategic management of market
risk, while 6.6 thousand tonnes came from the management of a net trading position),
• 5.25 million troy ounces of silver, and
• 16.5 thousand troy ounces of gold.
As at 31 December 2023, the Company held open derivatives positions on metals market entered into solely under
management of a net trading position for 9.2 thousand tonnes of copper and 18.3 thousand ounces of gold.
Condensed tables of open transactions in derivatives held by the Company as at 31 December 2024, entered into as part
of the strategic management of market risk, are presented below (the hedged notional amounts of transactions in the
presented periods are allocated evenly on a monthly basis). As at 31 December 2023 the Company has not held open
derivatives on the copper and silver markets entered into as part of the strategic management of market risk.
Hedging against copper price risk – open derivatives as at 31 December 2024
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.
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
copper price
hedging
participation
limited to
[tonnes]
[USD/t]
[USD/t]
[USD/t]
[USD/t]
[USD/t]
1st
half
seagull
9 750
7 489
9 549
11 049
-
9 549
seagull
9 000
7 500
9 600
11 500
(100)
9 500
2nd
half
seagull
9 750
7 489
9 549
11 049
-
9 549
seagull
9 000
7 500
9 600
11 500
(100)
9 500
TOTAL I-XII 2025
37 500
1st
half
seagull
9 000
7 500
9 600
11 500
(100)
9 500
TOTAL I-VI 2026
9 000
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
66
Hedging against silver price risk – open derivatives as at 31 December 2024
An analysis of the Company’s sensitivity to the risk of changes in commodity prices in the years 2023-2024
In order to determine the potential changes in metals prices for purposes of sensitivity analysis of commodity risk factors
(copper - CU, silver - Ag, gold - Au), the mean reverting Schwarz model (the geometrical Ornstein-Uhlenbeck process) was
used.
Assumed changes
as at 31 December 2024
Assumed changes
as at 31 December 2023
increase in metals prices
decrease in metals prices
increase in metals prices
decrease in metals prices
Copper forward prices [USD/t]
+16%
-17%
+21%
-21%
Silver forward prices [USD/ounce]
+21%
-24%
-
-
Gold forward prices [USD/ounce]
+12%
-12%
+16%
-16%
Financial assets and liabilities
exposed to risk of changes in metals
prices as at 31 December 2024
Value at
risk
Carrying
amount as
at 31
December
2024
Impact of price
increases
Impact of price
decreases
financial
result
other
comprehen
sive income
financial
result
other
comprehen
sive income
Copper price risk
Derivatives
156
156
9
(115)
(121)
309
Embedded derivatives
20
20
(51)
-
63
-
Silver price risk
Derivatives
34
34
-
(59)
-
100
Gold price risk
Derivatives
-
-
(9)
-
19
-
Embedded derivatives
(5)
(5)
(20)
28
Impact on financial result
(71)
-
(11)
-
Impact on other comprehensive income
-
(174)
-
409
Financial assets and liabilities
exposed to risk of changes in metals
prices as at 31 December 2023
Value at
risk
Carrying
amount as
at 31
December
2023
Impact of price
increases
Impact of price
decreases
financial
result
other
comprehen
sive income
financial
result
other
comprehen
sive income
Copper price risk
Derivatives
(5)
(5)
(28)
-
47
-
Embedded derivatives
(17)
(17)
(78)
-
99
-
Gold price risk
Derivatives
(5)
(5)
(19)
-
28
-
Embedded derivatives
(9)
(9)
(24)
-
26
-
Impact on profit or loss
(149)
-
200
-
Impact on other comprehensive income
-
-
-
-
Note 7.5.1.3 Risk of changes in foreign exchange rates
Regarding the risk of changes in foreign exchange rates, the following types of exposures were identified:
▪ transaction exposure related to the volatility of cash flows in the base (functional) currency, and
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
silver price
hedging
participation
limited to
[mn ounces]
[USD/ounce]
[USD/ounce]
[USD/ounce]
[USD/ounce]
[USD/ounce]
1st
half
collar
1.05
-
26.43
40.29
-
26.43
collar
1.05
-
30.64
45.64
(0.50)
30.14
2nd
half
collar
1.05
-
26.43
40.29
-
26.43
collar
1.05
-
30.64
45.64
(0.50)
30.14
TOTAL I-XII 2025
4.20
1st
half
collar
1.05
-
30.64
45.64
(0.50)
30.14
TOTAL I-VI 2026
1.05
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
67
▪ 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, the value of which expressed in the
base (functional) currency depend on future levels of exchange rates of the foreign currencies with respect to the base
(functional) currency (for KGHM Polska Miedź S.A. it is the Polish zloty). 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 transaction exposure to currency risk in the Company’s business operations are the proceeds from sales
of products (with respect to metals prices, processing and producer margins).
The Company’s exposure to currency risk also derives from items in the statement of financial position denominated in
foreign currencies, which under the existing accounting regulations must be translated, upon settlement or periodic
valuation, 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 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. 19% of the total revenues from sales of copper and silver realised by the Company in 2024 (in 2023: 26%).
In 2024, as part of the strategic management of currency risk, collar option structures were purchased for the total amount
of USD 720 million of planned revenues from sales for the period from January 2025 to June 2026, and also collar + purchased
call options structures (i.e. collar with participation opened in potential exchange rate rises) for USD 120 million for the
period from January 2025 to June 2025 and seagull option structures for USD 120 million of planned revenues from sales in
the period from July 2025 to December 2025.
As a result, as at 31 December 2024 the Company held an open position on the currency market for the notional amount
of USD 960 million (USD 660 million as at 31 December 2023), and Cross Currency Interest Rate Swap (CIRS) transactions for
the notional amount of PLN 1.6 billion, and a redemption in June 2029, hedging revenues from sales in the currency as well
as the variable interest of issued bonds (as at 31 December 2023 for the notional amount of PLN 2 billion).
The condensed tables of open transactions in derivatives on the currency market as at 31 December 2024 and 31 December
2023 are 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 2024
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
Instrument/
option
sold put option
purchased put
option
sold call
option
purchased
call option
hedge
limited to
exchange rate
hedging
participation
limited to
participation
opened
[USD mn]
[USD/PLN]
[USD/PLN]
[USD/PLN]
[USD/PLN]
[PLN per USD 1]
[USD/PLN]
1st half
collar
+ purchased call
option
120
-
3.92
4.32
4.62
(0.04)
3.88
collar
240
-
4.04
4.54
-
(0.05)
3.99
2nd
half
seagull
120
3.60
3.92
4.52
-
(0.04)
3.88
collar
240
-
4.04
4.54
-
(0.05)
3.99
TOTAL I-XII 2025
720
1st
half
collar
240
-
4.04
4.54
-
(0.05)
3.99
TOTAL I-VI 2026
240
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
68
Hedging against USD/PLN currency risk – open derivatives as at 31 December 2023
Hedging against currency risk on revenues from sales in USD and interest rate risk connected with the issuance
of bonds with a variable interest rate in PLN – open derivatives as at 31 December 2024
Instrument
Notional
Average interest rate
Average exchange rate
[PLN mn]
[fixed interest rate for USD]
[USD/PLN]
VI
2029
CIRS
1 600
3.94%
3.81
TOTAL
1 600
Hedging against currency risk on revenues from sales in USD and interest rate risk connected with the issuance
of bonds with a variable interest rate in PLN – open derivatives as at 31 December 2023
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
As for managing currency risk, the Company applies natural hedging by borrowing in the currency in which it has revenues.
As at 31 December 2024, following their translation to PLN, the bank loans and the investment loans which were drawn in
USD amounted to PLN 2 420 million (as at 31 December 2023: PLN 2 648 million).
The currency structure of financial instruments exposed to currency risk (changes in the USD/PLN and EUR/PLN exchange
rates) is presented in the table below. An analysis for other currencies is not presented due to the immateriality.
Financial instruments
Value at risk
as at 31 December 2024
Value at risk
as at 31 December 2023
total
PLN million
USD million
EUR million
total
PLN million
USD million
EUR million
Trade receivables
702
152
19
243
31
28
Cash and cash equivalents
185
39
6
1 176
268
28
Long-term loans granted
9 647
2 352
-
9 614
2 443
-
Cash pooling receivables
683
167
-
424
108
-
Other financial assets
210
50
1
48
12
1
Derivatives*
192
50
-
292
9
-
Trade and other payables
(1 630)
(112)
(274)
(1 901)
(184)
(270)
Borrowings
(2 436)
(590)
(4)
(2 665)
(673)
(4)
Other financial liabilities
(16)
(2)
(2)
(17)
(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.
An analysis of the Company’s sensitivity to the currency risk as at 31 December 2024 and as at 31 December 2023 is
presented in the tables on the next page. In order to determine the potential changes in the USD/PLN and EUR/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
put spread
330
3.60
4.48
-
(0.01)
4.47
2nd
half
put spread
330
3.60
4.48
-
0.01
4.49
TOTAL 2024
660
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
69
An analysis of the Company’s sensitivity to the currency risk in the years 2023-2024
Value at risk
Carrying amount
31 December 2024
Change in USD/PLN exchange rate
Change in EUR/PLN exchange rate
4.48 (+9%)
3.74 (-9%)
4.55 (+6%)
4.11 (-4%)
Financial assets and (liabilities) exposed
to the currency risk
as at 31 December 2024
profit or loss
other
comprehensive
income
profit or loss
other
comprehensive
income
profit or loss
profit or loss
Trade receivables
702
885
57
-
(55)
-
5
(3)
Cash and cash equivalents
185
367
15
-
(14)
-
2
(1)
Long-term loans granted
9 647
9 727
883
-
(844)
-
-
-
Cash pooling receivables
683
683
63
-
(60)
-
-
-
Other financial assets
210
1 932
19
-
(18)
-
-
-
Derivatives
192
192
9
(285)
(7)
390
-
-
Trade and other payables
(1 630)
(4 825)
(42)
-
40
-
(76)
46
Borrowings
(2 436)
(6 351)
(222)
-
212
-
(1)
1
Other financial liabilities
(16)
(351)
(1)
-
1
-
(1)
-
Impact on profit or loss
781
-
(745)
-
(71)
43
Impact on other comprehensive income
-
(285)
-
390
-
-
Value at risk
Carrying amount
31 December 2023
Change in USD/PLN exchange rate
Change in EUR/PLN exchange rate
4.46 (+13%)
3.50 (-11%)
4.79 (+10%)
4.13 (-5%)
Financial assets and (liabilities) exposed
to the currency risk
as at 31 December 2023
profit or
loss
other comprehensive
income
profit or loss
other
comprehensive
income
profit or loss
profit or loss
Trade receivables
243
471
17
-
(14)
-
12
(6)
Cash and cash equivalents
1 176
1 481
142
-
(116)
-
12
(6)
Long-term loans granted
9 614
9 638
1 293
-
(1 054)
-
-
-
Cash pooling receivables
424
424
57
-
(46)
-
-
-
Other financial assets
48
1 558
6
-
(5)
-
-
-
Derivatives
292
292
(4)
(500)
4
413
-
-
Trade and other payables
(1 901)
(6 065)
(97)
-
79
-
(119)
58
Borrowings
(2 665)
(5 691)
(356)
-
290
-
(2)
1
Other financial liabilities
(17)
(562)
(1)
-
1
-
(1)
1
Impact on profit or loss
1 057
-
(861)
-
(98)
48
Impact on other comprehensive income
-
(500)
-
413
-
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
70
Note 7.5.1.4 Interest rate risk
In 2024 the Company was exposed to the risk of changes in interest rates due to loans granted, investing free cash,
participating in a cash-pooling service and borrowing.
Positions with variable interest rates expose the Company 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 the profit or loss).
Positions with fixed interest rates expose the Company to the risk of fair value changes of a given position, excluding items
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 2024
As at
31 December 2023
Cash flow
risk
Fair value
risk
Total
Cash flow
risk
Fair value
risk
Total
Cash and cash equivalents*
835
-
835
1 888
-
1 888
Note 6.2
Loans granted
80
3 668
3 748
67
3 766
3 833
Note 7.1
Borrowings
(3 802)
(1 988)
(5 790)
(2 983)
(2 358)
(5 341)
Cash pooling receivables
683
-
683
424
-
424
Cash pooling liabilities
(561)
-
(561)
(350)
-
(350)
Trade payables within the reverse
factoring mechanism
(2 000)
-
(2 000)
(3 021)
-
(3 021)
*Presented amounts include cash accumulated in the separate bank accounts of special purpose funds: Mine Closure Fund and Social
Fund
As at 31 December 2024 the Company had CIRS transactions (Cross Currency Interest Rate Swap) in the notional amount of
PLN 1.6 billion with maturity falling in June 2029, hedging both the sales revenues in the USD currency, as well as the variable
interest rate of issued bonds (as at 31 December 2023, in the notional amount of PLN 2 billion). The open hedging position
as at 31 December 2024 and as at 31 December 2023 is presented in the table in Note 7.5.1.3.
An analysis of the Company’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 2024
change in interest rate
31 December 2023
change in interest rate
+100 bps
(PLN, USD, EUR)
-100 bps
(PLN, USD, EUR)
+50 bps
(PLN, USD, EUR)
-150 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*
8
-
(8)
-
9
-
(28)
-
Borrowings
(38)
-
38
-
(15)
-
45
-
Cash pooling
1
-
(1)
-
-
-
(1)
-
Loans granted measured at
fair value
(317)
-
356
-
(132)
-
384
-
Derivatives – interest rate
-
56
-
(63)
-
31
-
(107)
Trade payables within the
reverse factoring
mechanism
(20)
-
20
-
(15)
-
45
-
Impact on profit or loss
(366)
-
405
-
(153)
-
445
-
Impact on other
comprehensive income
56
(63)
-
31
(107)
*Presented amounts include cash accumulated in the separate bank accounts of special purpose funds: Mine Closure Fund and Social Fund
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
71
In 2024 the Company used the financial instruments based on SOFR, CME TERM SOFR and EURIBOR (instruments in foreign
currencies) and WIBOR (instruments in PLN).
In December 2024, 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, chose the reference rate which will replace WIBOR.
An index from the WIRF family was chosen, based on unsecured deposits of credit and financial institutions, and on 24
January 2025, an announcement was made on the selection of the target name POLSTR (Polish Short Term Rate) for the
proposed index. The planned changes shall come into force in 2027.
Until 2027, the IBOR reform will not have an impact on the interest rate applied in the Company’s derivatives, because the
CIRS transactions entered into (open cross currency interest rate swaps) and bonds issued by the Company are based on
the WIBOR reference rate. In the case of this benchmark, until 2027 the transitional period continues, 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 Company 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 2024, the Company estimated that the impact of IBOR reform on the financial statements will be
immaterial.
As at 31 December 2024, the Company held financial instruments based on variable interest rates, which were not yet
replaced by an alternative rate. The amount of financial instruments that are based on a rate subject to planned reform
are presented in the following table:
Type of instrument
Carrying amount
as at
31 December 2024
Carrying amount
as at
31 December 2023
Loans granted
WIBOR 1M, 3M
222
86
Bank loans
WIBOR 3M
(167)
-
Debt securities
WIBOR 6M
(2 602)
(2 002)
Trade payables within the reverse factoring
mechanism
WIBOR 1M
(970)
(1 757)
Derivatives (CIRS for 2029, PLN 1 600 million)
WIBOR 6M
(38)
5
Total
(3 555)
(3 668)
7.5.1.5 Risk of changes in prices of energy and energy carriers
The risk of changes in prices of electricity and energy commodities is a commodity risk for the Company, the measurement
of which is based on its impact on cash flow.
The Company’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 Company’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 Company being higher than the level of greenhouse gas emissions for which the
Company 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 Company 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 the risk 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 Company purchases electricity in forward products (RTEE) as
well as on the intra-day and next-day market. Moreover, the Company 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 Company 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 PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
72
In 2024, the Company acquired an additional 7 photovoltaic installations on the Renewable Energy Sources market.
The concluded transaction is the first step on the road towards the realisation of the energy transition strategy aimed at
the diversification of sources and decoupling the Company from volatility of prices on the energy market.
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).
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 Company from planned amounts. In terms of changes in
the prices of CO
2
emission allowances, the Company 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 Company’s needs. In 2024 and 2023, the Company 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 Company 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). The Company sells electricity mostly to customers which provide services to the Company on
properties belonging to the Company.
Exposure of the Company to a given risk – demand volume for own needs (purchase) by titles:
Merchandise
Unit
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
CO
2
emission allowances*
EUA
206 851
282 901
Property rights, so-called green certificates
GWh
101
251
Property rights, so-called blue certificates
GWh
10
10
Property rights, so-called white certificates
TOE
2 531
2 403
Gas
GWh
2 450
2 282
Electricity
GWh
2 517
2 614
* Redemption of CO
2
emission allowances (in line with the actual emission in the given year) less settled allowances received free of charge.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
73
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 2023-2024 (net of the tax effect).
As at 31 December 2024
from 1 January 2024
to 31 December 2024
from 1 January 2024
to 31 December 2024
As at 31 December 2023
from 1 January 2023
to 31 December 2023
from 1 January 2023
to 31 December 2023
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
137
-
(128)
137
-
-
-
-
intrinsic value
128
-
-
128
-
-
-
-
time value
9
-
-
9
-
-
-
-
Commodity risk (silver)
Options – Sales revenue
28
-
(9)
28
-
-
-
-
intrinsic value
9
-
-
9
-
-
-
-
time value
19
-
-
19
-
-
-
-
Currency risk (USD)
Options – Sales revenue
(17)
-
-
(17)
77
604
(623)
469
intrinsic value
-
-
-
-
107
545
-
619
time value
(17)
-
-
(17)
(30)
59
-
(150)
Loans – Sales revenue
-
(32)
-
-
-
(48)
-
-
intrinsic value
-
(32)
-
-
-
(48)
-
-
Currency-interest rate risk
CIRS – Sales revenue
(215)
-
50
(54)
(180)
-
(439)
388
intrinsic value
(215)
-
-
(54)
(180)
-
-
388
CIRS – Finance income/costs
177
-
(5)
10
175
-
172
(140)
intrinsic value
177
-
-
10
175
-
-
(140)
Total, including:
110
(32)
(92)
104
72
556
(890)
717
Total intrinsic value
99
(32)
-
93
102
497
-
867
Total time value
11
-
-
11
(30)
59
-
(150)
The inefficiency of the hedging which was recognised in profit or loss in the reporting periods of 2023 and 2024 was immaterial.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
74
The table below presents information on the impact of hedge accounting on the statement of profit or loss and other comprehensive income (net of the tax effect).
from 1 January 2024 to 31 December 2024
from 1 January 2023 to 31 December 2023
relation type
risk type
instrument type
Profit or (loss) 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
to statement of
profit or loss
to non-current
assets
Cash flow hedging
Commodity risk (copper)
Options*
146
9
-
(128)
(160)
-
Commodity risk (silver)
Options*
28
-
-
(6)
13
-
Currency risk (USD)
Options*
(26)
672
-
738
459
-
Loans**
(16)
-
-
(16)
-
Currency-interest rate risk
CIRS***
-
(22)
55
340
13
78
Total
148
643
55
944
309
78
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 2023
and 2024.
2024
2023
Effective value *
Cost of hedging **
Total
Effective value *
Cost of hedging **
Total
Other comprehensive income due to cash flow hedging
– as at 1 January
603
25
628
68
3
71
Impact of measurement of hedging transactions (effective part)
145
3
148
1 272
(328)
944
Reclassification to the statement of profit or loss and non-current
assets due to realisation of hedged item
(678)
(20)
(698)
(737)
350
(387)
Other comprehensive income due to cash flow hedging
– as at 31 December
70
8
78
603
25
628
* 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.
Separate financial statements for 2024 Translation from the original Polish version
75
Note 7.5.2 Credit risk
Credit risk is defined as the risk that the Company’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 Company is exposed to credit risk due to:
▪ 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 Company 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 Company 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 Company 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. The detailed principles of
classification of loans granted to individual degrees of loss allowance for expected credit losses was described in note
6.2.
Under the simplified model the Company 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 Company periodically allocates free cash alongside maintaining financial liquidity and limiting risk and in order to
protect capital and maximise interest income.
As at 31 December 2024, the total amount of free and restricted cash and cash equivalents of PLN 367 million (as at 31
December 2023, PLN 1 481 million) was held in bank accounts and in short-term deposits. The detailed structure of cash
and cash equivalents is presented in note 8.5.
All entities with which deposit transactions are entered into by the Company operate in the financial sector. These are solely
banks registered in Poland or operating in Poland as branches of foreign banks, which belong to European, American and
Chinese financial institutions with medium-high and medium ratings, an appropriate level of equity and a strong, stable
market position. Credit risk in this regard is continuously monitored through the ongoing review of the financial standing
and by maintaining an appropriately low level of concentration of resources in individual financial institutions.
The following table presents the level of concentration of cash and deposits allocated in financial institutions, including
their assessed creditworthiness.
Rating level
As at
31 December 2024
As at
31 December 2023
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
80%
95%
Medium
from BBB+ to BBB- according to S&P and Fitch, and from
Baa1 to Baa3 according to Moody’s
20%
5%
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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
76
As at 31 December 2024 the maximum single entity share of the amount exposed to credit risk arising from cash and bank
deposits amounted to 56%, or PLN 207 million (as at 31 December 2023: 41%, or PLN 608 million).
As at
31 December 2024
As at
31 December 2023
Amount
Rating
Amount
Rating
Counterparty 1
207
A2/Moody's
608
A2/Moody's
Counterparty 2
39
BBB/Fitch
317
A/S&P
Counterparty 3
34
A-/S&P
315
A+/S&P
Counterparty 4
34
A-/Fitch
80
A-/S&P
Other
53
-
161
-
Total
367
1 481
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 Company 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 the
impairment loss is insignificant. These assets are classified to Degree 1 of the impairment model.
Note 7.5.2.2 Credit risk related to derivatives transactions
All entities with which derivative transactions are entered into by the Company operate in the financial sector
3
.
The Company’s credit exposure related to derivatives by main counterparties is presented in the table below.
Exposure to credit risk by main counterparties
As at 31 December 2024
As at 31 December 2023
Open
derivatives
Settled
derivatives
Exposure to
credit risk
Open
derivatives
Settled
derivatives
Exposure to credit
risk
Financial
receivables
Net financial
receivables
4
Financial
receivables
Net financial
receivables
3
Counterparty 1
148
3
151
238
8
246
Counterparty 2
63
2
65
236
5
241
Counterparty 3
63
2
65
149
6
155
Other
216
27
243
370
29
399
Total
490
34
524
993
48
1 041
Taking into consideration the receivables due to open derivatives transactions entered into by the Company (excluding
embedded derivatives) as at 31 December 2024 and net receivables due to settled derivatives, the maximum single entity
share of the amount exposed to credit risk arising from these transactions amounted to 29%, or PLN 151 million (as at 31
December 2023: 24%, or PLN 246 million).
In order to reduce cash flows and at the same time to limit credit risk, the Company 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 template 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.
3
Excludes embedded derivatives in purchase contracts for metal-bearing materials.
4
The Company offsets receivables and liabilities due to settled derivatives (that is for which the future cash 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.
Separate financial statements for 2024 Translation from the original Polish version
77
Settled derivatives by main counterparties
As at 31 December 2024
Gross financial
receivables
Gross financial
liabilities
Subject to compensation
Net financial
receivables
Net financial
liabilities
Financial receivables
Financial liabilities
Counterparty 1
3
-
-
-
3
-
Counterparty 2
2
-
-
-
2
-
Counterparty 3
7
(8)
5
(8)
2
(3)
Other
52
(25)
39
(25)
27
-
Total
64
(33)
44
(33)
34
(3)
As at 31 December 2023
Gross financial
receivables
Gross financial
liabilities
Subject to compensation
Net financial
receivables
Net financial
liabilities
Financial receivables
Financial liabilities
Counterparty 1
15
(7)
15
(7)
8
-
Counterparty 2
19
(14)
19
(14)
5
-
Counterparty 3
13
(7)
12
(7)
6
-
Other
38
(16)
9
(14)
29
(7)
Total
85
(44)
55
(42)
48
(7)
Despite the concentration of credit risk associated with derivatives’ transactions, the Company 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 Company had derivatives
transactions, representing exposure to credit risk.
Rating level
As at
31 December 2024
As at
31 December 2023
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
92%
71%
Medium
from BBB+ to BBB- according to S&P and Fitch, and from
Baa1 to Baa3 according to Moody’s
8%
29%
Note 7.5.2.3 Credit risk related to trade receivables
For many years, the Company has been cooperating with a large number of customers, which affects the geographical
diversification of trade receivables. The majority of sales go to EU countries.
Trade receivables (net)
As at
31 December 2024
As at
31 December 2023
Poland
26%
53%
European Union (excluding Poland)
8%
21%
Asia
42%
9%
Other countries
24%
17%
Accounting policies
The Company 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 following the 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 Company applies a
provision matrix, made on the basis of historical levels of payment of trade receivables, which is periodically recalibrated
in order to update it.
The Company 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 of delays in
payment, according to ranges presented below as “Important estimates and assumptions”.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
78
The Company defines default 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, the Company takes into account also collaterals
by allocating expected recovery rates to the particular types of collaterals.
Moreover, the Company takes into account forward-looking factor 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
Company recognises any deterioration in them in comparison to the previous period, in the ECL calculation the forward
looking factor, which corrects the risk connected with any decrease in receivables recovery, is taken into account. As at
the end of the reporting period, on 31 December 2024, no deterioration of macroeconomic factors was noted.
* Intra-group receivables were excluded from the calculation of allowance for impairment
The following table presents the change in trade receivables measured at amortised cost.
2024
2023
Gross amount as at 1 January
260
166
Change in the balance of receivables
119
94
Note 10.2
Gross amount as at 31 December
379
260
The following table presents the change in the estimation of expected credit losses on trade receivables measured at
amortised cost.
2024
2023
Loss allowance for expected credit losses as at 1 January
-
1
Change in the allowance
1
(1)
Note 10.2
Loss allowance for expected credit losses as at 31 December
1
-
The Company 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 2024, the amount of receivables transferred to factoring, for which payment from factors was
not received, amounted to PLN 13 million (as at 31 December 2023: PLN 10 million). Information on the amount of revenues
from sales subjected to factoring in the financial period is presented in part 2.
An inseparable element of the credit risk management process performed by the Company 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 Company 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.
Important estimates and assumptions
31 December 2024
31 December 2023
Time frame
in days
Percent
(allowance for
impairment)
Gross amount of
receivables*
Allowance for
impairment in
individual time
frames
Gross amount of
receivables
Allowance for
impairment in
individual time
frames
Not overdue
0.42
262
-
127
-
<1,30)
2.28
2
-
3
-
<30,60)
33.68
1
-
1
-
<60,90)
68.81
-
-
-
-
Default
100
-
-
-
-
Total
265
-
131
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
79
Taking into account the aforementioned forms of collateral and the credit limits received from the insurance company, as
at 31 December 2024 the Company had secured 80% of its trade receivables (as at 31 December 2023: 56%).
The total net value of the Company’s trade receivables as at 31 December 2024, excluding the fair value of collaterals,
up to the value of which the Company may be exposed to credit risk, amounts to PLN 885 million (as at 31 December 2023:
PLN 471 million).
The concentration of credit risk in the Company is related to the payment dates allowed to key clients. Consequently, as at
31 December 2024 the balance of receivables from the Company’s 7 largest clients, in terms of trade receivables at the end
of the reporting period, represented 74% of the balance of trade receivables (as at 31 December 2023: 49%). Despite the
concentration of this type of risk, the Company believes that due to the available historical data and the many years of
experience in cooperating with its clients, as well as to securities used, the level of credit risk is low.
Note 7.5.2.4 Credit risk related to other financial assets
As at 31 December 2024, the major items in other financial assets were:
• cash accumulated on the separate bank account of the special purpose Mine Closure Fund in the amount
of PLN 443 million (as at 31 December 2023: PLN 398 million);
• receivables due to cash pooling in the amount of PLN 683 million (as at 31 December 2023: PLN 424 million). Credit
risk in this regard is continuously monitored through the review of the financial standing and assets of the
subsidiaries participating in the cash pooling.
The account of the special purpose fund, used to accumulate cash in order to cover the costs of decommissioning of mines
is managed by a bank with a medium-high rating (principles of credit risk management connected with allocation of cash
in financial institutions are described in Note 7.5.2.1).
Impairment losses on cash accumulated on the bank account of the Mine Closure Fund was determined based on an
external bank rating. The analysis determined that these assets have a low credit risk at the end of the reporting period.
The Company 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 expected impairment loss is
insignificant.
Note 7.5.2.5 Credit risk related to loans granted
Entities which were granted loans do not have ratings assigned to them by independent rating agencies. The following table
presents a structure of ratings of entities which were granted loans by the Company, per the internal methodology of the
Company:
Rating level
As at
31 December 2024
As at
31 December 2023
Medium-high
from A+ to A- according to S&P and Fitch,
and from A1 to A3 according to Moody’s
-
48%
Medium
from BBB+ to BBB- according to S&P and Fitch,
and from Baa1 to Baa3 according to Moody’s
47%
52%
Below-medium
from BB+ to B+ according to S&P and Fitch,
and from Ba1 to B1 according to Moody’s
53%
-
Loans granted measured at amortised cost
The Company estimates expected credit losses related to loans granted measured at amortised cost in accordance with
the general approach.
Loans granted do not have collaterals limiting the exposure to credit risk, therefore the maximum amount exposed to loss
due to credit risk is the gross amount of the loans, less expected credit losses recognised pursuant to IFRS 9.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
80
The following tables present the change in the gross amount of loans granted measured at amortised cost.
Total
Degree 1
Medium
rating
Degree 2
Medium
rating
Degree 3
Below-
medium
rating
POCI
Below-
medium
rating
Gross amount as at 1 January 2024
6 016
901
3 361
-
1 754
transfer between the degrees of
impairment
-
3 317
(3 515)
198
-
loans granted
248
248
-
-
-
subrogation of loans
165
165
-
-
-
repayment
(379)
(143)
(127)
-
(109)
modification of terms to the
agreement
(169)
(169)
-
-
-
exchange differences
255
39
144
-
72
interest accrued using the effective
interest rate
333
83
137
4
109
Gross amount as at 31 December 2024
6 469
4 441
-
202
1 826
Total
Degree 1
Medium
rating
Degree 2
Medium-
high rating
Degree 3
POCI
Medium
rating
Gross amount as at 1 January 2023
5 604
145
3 622
-
1 837
loans granted
812
812
-
-
-
subrogation of loans
17
17
-
-
-
repayment
(85)
(29)
(17)
-
(39)
exchange differences
(670)
(80)
(390)
-
(200)
interest accrued using the effective interest rate
299
36
146
-
117
reversal of loss allowance
39
-
-
-
39
Gross amount as at 31 December 2023
6 016
901
3 361
-
1 754
The following tables present the change in the loss allowances for expected credit losses for loans measured at amortised
cost.
Total
Degree 1
Degree 2
Degree 3
POCI
Loss allowance for expected credit losses
as at 1 January 2024
71
8
19
-
44
transfer between the degrees of
impairment
-
(1)
-
1
-
changes in risk parameters
89
20
(19)
60
28
exchange differences
4
-
-
-
4
Loss allowance for expected credit losses
as at 31 December 2024
164
27
-
61
76
Total
Degree 1
Degree 2
Degree 3
POCI
Loss allowance for expected credit losses
as at 1 January 2023
52
2
50
-
-
changes in risk parameters
24
7
(27)
-
44
exchange differences
(5)
(1)
(4)
-
-
Loss allowance for expected credit losses
as at 31 December 2023
71
8
19
-
44
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
81
Loans measured at amortised cost
(Note 6.2)
Carrying
amount
Degree 1
Degree 2
Degree 3
POCI
As at 1 January 2023
5 552
143
3 572
-
1 837
As at 31 December 2023 / 1 January 2024
5 945
893
3 342
-
1 710
As at 31 December 2024
6 305
4 414
-
141
1 750
In December 2024, the Company restructured loan streams granted to finance the Sierra Gorda project, and as a result
annexes to these loans were signed which extend the repayment periods and change the interest rate level to the market
one based on an analysis of transfer prices. According to IFRS 9, based on an analysis of quantitative and qualitative factors,
the Company decided that the introduced changes are immaterial modifications, and as a result they were not
derecognised.
As at 31 December 2024, in connection with the lasting improvement of expected cash flows allocated to the repayment of
loans granted to Future 1, the Company decided that the indications qualifying this group of loans to the degree 2 ceased
to exist. Therefore, these loans were brought back to the degree 1 of impairment.
As at 31 December 2024, due to the worsening in generated cash flows and the identification of an impartial indication of
an allowance for impairment, the Company classified loans granted to Invest PV 7, Invest PV 40, Invest PV 58 and Invest PV
59 to the degree 3 of measurement.
For loans measured at amortised cost (excluding POCI), interest is accrued on the gross value using the IRR rate set at the
moment of initial recognition of the loan.
For POCI loans, interest is accrued on the gross value less any allowance for impairment recognised at the moment of initial
recognition, an IRR rate adjusted by credit risk defined at the moment of the loan’s initial recognition (CEIR, credit-adjusted
effective interest rate).
Loans granted measured at fair value
The carrying amount of loans measured at fair value as at 31 December 2024 amounted to PLN 3 668 million.
As at 31 December 2023, the carrying amount was PLN 3 766 million. More disclosures on the fair value measurement were
presented in Note 7.1.
The loans granted do not have collaterals limiting exposure to credit risk, therefore the Company estimates the maximum,
potential losses due to credit risk in the amount of 100% of their current fair value, i.e. USD 888 million (PLN 3 641 million),
of which the amount of USD 754 million is due to the nominal value of loans granted.
The following table presents changes in the carrying amount of loans granted measured at fair value during the period.
2024
2023
Carrying amount as at 1 January
3 766
3 233
Loans repaid
(116)
(30)
Note 4.2
Fair value gains
141
657
Note 4.2
Fair value losses
(123)
(94)
Carrying amount as at 31 December
3 668
3 766
Sensitivity analysis of the fair value of loans due to the change in forecasted cash flows of Sierra Gorda
As at 31 December 2024 and in the comparable period, the Company 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 unobservable
parameter, begin the forecasted cash flows of Sierra Gorda S.C.M. More disclosures on the main assumptions (including
unobservable input data) assumed for the calculation of cash flows of Sierra Gorda were presented in the consolidated
financial statements of the KGHM Polska Miedź S.A. Group in Note 7.5.2.4.
Because of the significant sensitivity of the forecasted cash flows of Sierra Gorda S.C.M. to changes in the copper price,
pursuant to IFRS 13 para. 93.f the Company performed a sensitivity analysis of the fair value (level 3) of loans to changes in
copper prices.
Price paths adopted to estimate the cash flows of Sierra Gorda S.C.M. are presented in Note 3.1.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
82
31 December 2024
Fair value
31 December 2023
Fair value
Classes of financial
instruments
Fair
value
Carrying
amount
Base plus
0.1 USD/lb
(220 USD/t)
during mine
life
Base minus
0.1 USD/lb
(220 USD/t)
during mine
life
Fair
value
Carrying
amount
Base plus
0.1 USD/lb
(220 USD/t)
during mine
life
Base minus
0.1 USD/lb
(220 USD/t)
during mine
life
Loans granted
measured at fair
value
3 668
3 668
3 745
3 610
3 766
3 766
3 929
3 435
Loans granted
measured at
amortised cost
4 654
5 083
4 685
4 623
4 822
5 050
4 856
4 783
Concentration risk
The Company estimates the concentration risk to be at the level of 100%, since receivables due to loans granted are intra-
group loans (Note 12.1), and 88% of the balance are loans granted to subsidiaries Future 1 Sp. z o.o., Quadra FNX FFI s.a.r.l
and Quadra FNX Holding Chile Limitada, and the majority of which was transferred to finance the joint venture Sierra Gorda
S.C.M.; 10% of the balance are loans granted to KGHM INTERNATIONAL LTD., and 2% of the balance are loans granted to
companies in Poland. Detailed information on the loan granting transactions are presented in Note 6.2.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
83
PART 8 – Borrowings and the management of liquidity and capital
Note 8.1 Capital management policy
Capital management in the Company is aimed at securing funds for business development and maintaining the appropriate
level of liquidity.
The Company monitors the Group’s level of financial security, among others using the Net Debt/Adjusted EBITDA ratio
presented in the table below, which was calculated on the basis of data presented in the Consolidated financial statements
of the KGHM Group.
Ratios
Calculations
31 December 2024
31 December 2023
Net Debt/Adjusted EBITDA
Relation of net debt to adjusted EBITDA
0.81
1.02
Net Debt
Borrowings, debt securities and lease
liabilities less free cash and its
equivalents, taking into account the
impact of derivatives related to external
sources of financing
5 303
3 848
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
6 580
3 778
*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 2024 is consistent with the assumptions adopted by the Group
in the reporting period and confirms its stable financial condition.
The Company 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 Company 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 Company’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 Company’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 process of managing liquidity and capital, the Company also pays attention to adjusted operating profit, calculated
on the basis of data from the Consolidated financial statements of the KGHM Polska Miedź S.A. Group, which is the basis
for calculating EBITDA pursuant to the definition of the financial covenant and which is comprised of the following items:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
84
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Profit/(Loss) on sales
3 767
(1 640)
Interest income on loans granted to a joint venture
552
597
Other operating income and costs
444
(2 817)
Adjusted operating profit/(loss)*
4 763
(3 860)
*Presented amount does not include the impairment loss and the gain on reversal of allowances for impairment of loans granted
to a joint venture
As at 31 December 2024 the carrying amount of liabilities drawn under the agreements containing the financial covenant
amounted to PLN 1 794 million.
Financial covenant Net debt/EBITDA is calculated based on consolidated data, pursuant to definitions stipulated in
borrowing agreements. As at the reporting date, in the financial year and after the reporting date, up to the date of
publication of these financial statements, the value of a financial covenant subject to the obligation to report as at 30 June
2024 and 31 December 2024, met the conditions stipulated in the credit agreements.
There are no indications that the Group will have difficulties with fulfilling the liabilities due to meeting the financial
covenants when they will be checked again on 30 June 2025.
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 measured at fair value through other
comprehensive income (Note 7.3, Accounting policies) less any deferred tax effect.
Accumulated other comprehensive income consists of actuarial gains/losses on post-employment benefits less any
deferred tax effect (Part 11, Accounting policies).
Note 8.2.1 Share capital
As at 31 December 2024 and at the date of signing of these financial statements, the Company’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. The Company has not issued
preference shares. Each share grants the right to one vote at the general meeting. The Company does not have treasury
shares.
In the years ended 31 December 2024 and 31 December 2023, there were no changes in either registered share capital or
in the number of issued shares.
In 2024, there were no changes in the ownership of significant blocks of shares of KGHM Polska Miedź S.A.
The Company’s shareholder structure as at 31 December 2024 and at the date these financial statements were signed,
established on the basis of notifications received by the Company 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:
The Company’s shareholder structure as at 31 December 2024 and at the date these financial statements were
signed
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 PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
85
Note 8.2.2 Changes of other equity items in the period
Other reserves from measurement of financial
instruments
Retained earnings
Investments in
equity
instruments
measured at
fair value
through other
comprehensive
income
Other reserves
from
measurement
of future cash
flow hedging
financial
instruments
Total other
reserves from
measurement
of financial
instruments
Accumulated
other
comprehensive
income
Reserve capital
created in
accordance with
the Commercial
Partnerships
and Companies
Code, art. 396
Reserve
capital
created
from profit
in
accordance
with the
Company’s
Statutes
Profit/(loss)
from
previous
years
As at 1 January 2023
( 454)
59
( 395)
( 702)
667
24 133
3 972
Dividend paid
-
-
-
-
-
-
( 200)
Transfer of profit for the period to reserve capital
-
-
-
-
-
3 333
(3 333)
Total comprehensive income, of which:
264
451
715
( 219)
-
-
(1 153)
Loss for the period
-
-
-
-
-
-
(1 153)
Other comprehensive income
264
451
715
( 219)
-
-
-
Change in fair value of investments in equity instruments
320
-
320
-
-
-
-
Note 7.2
Impact of effective cash flow hedging transactions entered into
-
944
944
-
-
-
-
Note 7.2
Amount transferred to profit or loss in connection with realisation
of derivatives
-
( 387)
( 387)
-
-
-
-
Note 11.2
Actuarial losses on post-employment benefits
-
-
-
( 270)
-
-
-
Note 5.1.1
Deferred income tax
( 56)
( 106)
( 162)
51
-
-
-
As at 31 December 2023
( 190)
510
320
( 921)
667
27 466
( 714)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
86
Other reserves from measurement of financial
instruments
Retained earnings
Investments in
equity
instruments
measured at
fair value
through other
comprehensive
income
Other reserves
from
measurement
of future cash
flow hedging
financial
instruments
Total other
reserves from
measurement
of financial
instruments
Accumulated
other
comprehensive
income
Reserve capital
created in
accordance with
the Commercial
Partnerships and
Companies Code,
art. 396
Reserve
capital
created
from profit
in
accordance
with the
Company’s
Statutes
Profit/(loss)
from
previous
years
As at 1 January 2024
( 190)
510
320
( 921)
667
27 466
( 714)
Dividend paid
-
-
-
-
-
( 300)
-
Coverage of loss from reserve capital
-
-
-
-
-
(1 153)
1 153
Total comprehensive income, of which:
9
( 446)
( 437)
285
-
-
2 788
Profit for the period
-
-
-
-
-
-
2 788
Other comprehensive income
9
( 446)
( 437)
285
-
-
-
Change in fair value of investments in equity instruments
9
-
9
-
-
-
-
Note 7.2
Impact of effective cash flow hedging transactions entered
into
-
148
148
-
-
-
-
Note 7.2
Amount transferred to profit or loss in connection with
realisation of derivatives
-
( 698)
( 698)
-
-
-
-
Note 11.2
Actuarial gains on post-employment benefits
-
-
-
352
-
-
-
Note 5.1.1
Deferred income tax
-
104
104
( 67)
-
-
-
As at 31 December 2024
( 181)
64
( 117)
( 636)
667
26 013
3 227
Based on the Act of 15 September 2000, i.e. the Commercial Partnerships and Companies Code, the Company is required to create reserve capital for any potential (future) or existing losses, to which no less than 8%
of a given 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 2024 the statutory reserve capital in the Company amounted to PLN 667 million, and is recognised in retained earnings in the item reserve capital created in accordance with art. 396 of the
Commercial Partnerships and Companies Code.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
87
Information related to dividends paid may be found in Note 12.2.
Note 8.3 Liquidity management policy
Liquidity management in the Company is the process based on assuring an adequate level of cash and access to a broad
portfolio of flexible sources of financing in order to ensure the capacity to meet the current as well as future financial
obligations, taking into account the costs of obtaining liquidity.
The Company continuously forecasts and monitors the liquidity based on expected cash flows. In order to minimise the
risk of a liquidity gap, the Company takes actions which guarantee safety and financial stability through diversification of
sources of financing and assuring their long-term maturity period.
The Management Board is responsible for financial liquidity management in the Company, and it is performed based on
the approved, appropriate Policy. The Financial Liquidity Committee is a body supporting the Management Board.
The basic principles arising from the Financial Liquidity Management Policy are:
• assuring the stable and effective financing of the Company’s activities,
• investment of financial surpluses in safe financial instruments,
• limits for individual financial investment categories,
• limits for the concentration of funds in financial institutions,
• a required investment level rating for banks in which the funds are deposited, and
• effective management of working capital.
In order to support the process of liquidity management, the Company makes use of the reverse factoring program under
which it continuously transfers trade payables to factors. The available reverse factoring program is treated by the Company
as an efficient tool supporting the process of working capital management and is aimed at diversification of sources of
financing working capital.
The Company identifies the concentration of liquidity risk due to the application of reverse factoring. In order to limit the
concentration of the risk, reverse factoring contracts are entered into with different factors for an indefinite period.
All entities which concluded reverse factoring agreements with the Company are renowned financial institutions. The level
of utilisation of factoring limits for an individual factor is continuously monitored.
Under the liquidity management process, the Company also utilises other instruments which enhance its effectiveness.
One of the instruments used by the Company to deal with ongoing 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 in the bank in
which the system operates, the Company extended the availability of an overdraft facility agreement in the amount of PLN
250 million by another period, i.e. until 30 June 2025.
Accounting policies
In cash flows from operating activities in the statement of cash flows, the Company presents receivables due to cash
pooling and other liabilities due to settlements within cash pooling agreements in the item “change in other receivables
and liabilities”. Receivables due to cash pooling are receivables from Group companies, which at the end of the reporting
period incurred a debt within the cash pooling agreement. Other liabilities due to settlement within cash pooling
agreements are liabilities of the Company towards participants in the cash pooling system to repay, after the end of the
reporting period, of cash transferred by them, which were not used by the Company for its own needs.
Within cash flows from financing activities, the Company presents proceeds and expenses due to cash pooling and they
represent the Company’s debt towards participants in the cash pooling system, that is cash which the Company uses for
its own needs.
Important estimates, assumptions and judgments
The cash pooling system was implemented in the KGHM Polska Miedź S.A. Group to actively manage the current
shortages and surpluses of cash on bank accounts of companies participating in the system to possibly the most
efficiently manage the cash and limits of debt with high volatility and liquidity. KGHM Polska Miedź S.A., as a participant
in the system as well as a coordinator in the system, does not treat this activity as an investment activity established in
order to invest free cash and generate profits, but solely as supporting Group companies in managing their current
shortages and surpluses.
In 2024, the Company carried out the process of obtaining short-term financing and continued actions connected with
developing the reverse factoring program.
In 2024, the Company obtained additional external financing in the form of bilateral bank loans in the amount of USD 150
million and PLN 200 million.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
88
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 financial instruments.
In 2024, a credit facility agreement was entered into with Bank Gospodarstwa Krajowego in the amount of USD 450 million
and an availability period of 5 years and the option to extend it by a further 2 years. The resources acquired from this
agreement serve to finance the working capital and support the management of current financial liquidity.
On 29 May 2024, the Company concluded a Bond Issuance Program agreement, up to the amount of PLN 4 000 million for
a period of 10 years, under which on 26 June 2024 the 7-year bonds, with a nominal value of PLN 1 000 million were issued
with a redemption date of 26 June 2031.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
89
Note 8.3.1 Contractual maturities for financial liabilities
Financial liabilities – as at 31 December 2024
Contractual maturities from the end of the reporting period
Maturity period
Total
(without
discounting)
Carrying
amount
Financial liabilities
up to 3 months
over 3
to 12 months
over 1
to 3 years
over
3 years
Borrowings
140
984
859
878
2 861
2 587
Debt securities liabilities
-
189
377
3 022
3 588
2 602
Lease liabilities
24
68
198
1 009
1 299
601
Cash pooling payables*
561
-
-
-
561
561
Other liabilities due to settlement under cash pooling contracts**
27
-
-
-
27
27
Trade payables
2 800
24
29
338
3 191
3 021
Trade payables within the reverse factoring mechanism
1 378
622
-
-
2 000
2 000
Derivatives – currency contracts***
-
-
-
-
-
47
Derivatives – commodity contracts – metals***
-
1
-
-
1
51
Derivatives – interest rates***
-
-
-
134
134
215
Other financial liabilities
91
26
9
3
129
129
Total
5 021
1 914
1 472
5 384
13 791
11 841
* Liabilities of KGHM Polska Miedź S.A. towards the Group companies within the cash pooling’s credit limit
** Other current financial liabilities due to the return of cash deposits towards all participants in cash pooling which presented a positive balance at the end of the reporting period
*** Financial liabilities arising from derivatives are calculated at their intrinsic values excluding the discount effect
The table above regarding maturities does not encompass financial guarantees. Details on financial guarantees and their maturity dates were described in Note 8.6.
Overdue financial liabilities as at 31 December 2024
Overdue period
up to 1 month
Total /
Carrying amount
Trade payables
1
1
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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90
Financial liabilities – as at 31 December 2023
Contractual maturities from the end of the reporting period
Maturity period
Total
(without
discounting)
Carrying
amount
Financial liabilities
up to 3 months
over 3
to 12 months
over 1
to 3 years
over
3 years
Borrowings
112
332
898
1 773
3 115
2 648
Debt securities liabilities
-
534
240
1 900
2 674
2 002
Lease liabilities
24
76
192
1 091
1 383
691
Cash pooling payables*
350
-
-
-
350
350
Other liabilities due to settlement under cash pooling contracts**
34
-
-
-
34
34
Trade payables
2 998
35
36
338
3 407
3 240
Trade payables within the reverse factoring mechanism
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
288
29
11
7
335
333
Total
6 188
2 127
1 416
5 189
14 920
13 020
* Liabilities of KGHM Polska Miedź S.A. towards the Group companies within the cash pooling’s credit limit
** Other current financial liabilities due to the return of cash deposits towards all participants in cash pooling which presented a positive balance at the end of the reporting period
***Financial liabilities arising from derivatives are calculated at their intrinsic values excluding the discount effect
The table above on maturities does not encompass financial guarantees. Details on financial guarantees and their maturities may be found in Note 8.6.
Overdue financial liabilities – as at 31 December 2023
Overdue period
up to 1 month
over 1 month
to 3 months
over 3 months
to 12 months
over
1 year
Total /
Carrying amount
Trade payables
4
1
4
1
10
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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91
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
2024
As at
31 December
2023
Bank loans
100
590
Loans
1 438
1 715
Debt securities
2 600
1 600
Leases
517
603
Total non-current liabilities due to borrowings
4 655
4 508
Bank loans
693
-
Loans
356
343
Cash pooling liabilities*
561
350
Debt securities
2
402
Leases
84
88
Total current liabilities due to borrowings
1 696
1 183
Total borrowings
6 351
5 691
[-] Free cash and cash equivalents
359
1 463
[-] Derivatives related to external sources of financing
177
175
[=] Net debt
5 815
4 053
* Liabilities of KGHM Polska Miedź S.A. towards the Group companies within the credit limit in the group of accounts participating
in the cash pooling system
Liabilities due to borrowings, debt securities and leases – breakdown by currency (translated into PLN) and by type
of interest rate
As at
31 December 2024
As at
31 December 2023
USD/SOFR
1 033
982
PLN/WIBOR*
3 330
2 351
USD/fixed
1 387
1 667
EUR/fixed
16
16
PLN/fixed
585
675
Total
6 351
5 691
* The amount includes KGHM Polska Miedź S.A.’s liabilities towards Group companies due to cash pooling in the amount
of PLN 561 million (PLN 350 million in 2023) within the credit limit.
As at 31 December 2024, the Company’s liabilities due to borrowings, issued debt securities, leases and cash pooling
amounted to PLN 6 351 million, or USD 590 million, PLN 3 915 million and EUR 4 million (as at 31 December 2023 liabilities
amounted to PLN 5 691 million, or USD 673 million, PLN 3 027 million and EUR 4 million).
In general, the structure of debt did not change in comparison to 2023. Pursuant to the adopted strategy, the external
financing is aimed at ensuring long term financial stability whose structure is based on diversified short and long-term
financing instruments.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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92
Note 8.4.2 Net debt changes
As at
1 January 2024
Cash flows
Accrued interest
Exchange
differences
Other changes
As at
31 December 2024
Liabilities due to borrowing
[+] Bank loans
590
100
80
19
4
793
[+] Loans
2 058
( 411)
70
77
-
1 794
[+] Debt securities
2 002
429
171
-
-
2 602
[+] Leases
691
( 102)
33
-
(21)*
601
[+] Cash pooling liabilities
350
200
11
-
-
561
[=] Total debt
5 691
216
365
96
( 17)
6 351
[-] Free cash and cash equivalents
1 463
(1 104)
-
-
-
359
[-] Derivatives related to sources of external financing
175
58
-
-
( 56)
177
[=] Net debt, including:
4 053
1 262
365
96
39
5 815
Net debt excluding derivatives
4 228
1 320
365
96
( 17)
5 992
*A conclusion and modification of lease agreements
Liabilities due to borrowings
As at
1 January 2023
Cash flows
Accrued
interest
Exchange differences
Other changes
As at
31 December 2023
[+] Bank loans
1 194
( 581)
72
( 95)
-
590
[+] Loans
2 241
3
78
( 264)
-
2 058
[+] Debt securities
2 002
( 172)
172
-
-
2 002
[+] Leases
687
( 95)
33
( 1)
67*
691
[+] Cash pooling liabilities
321
18
11
-
-
350
[=] Total debt
6 445
( 827)
366
( 360)
67
5 691
[-] Free cash and cash equivalents
971
492
-
-
-
1 463
[-] Derivatives related to sources of external financing
315
91
-
-
( 231)
175
[=] Net debt, including:
5 159
(1 410)
366
( 360)
298
4 053
Net debt excluding derivatives
5 474
-
-
-
-
4 228
*A conclusion and modification of lease agreements
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.
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93
Reconciliation of cash flows associated with borrowings following the inclusion of impact of derivatives in
the separate statement of cash flows
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December
2023
Financing activities
[+] Proceeds from borrowings
1 884
1 514
[-] Proceeds from derivatives related to sources of external
financing
64
70
[+] Proceeds from the issuance of debt financial instruments
1 000
-
[+] Redemption of debt financial instruments
( 400)
-
[-] Proceeds from bond security
15
24
[+] Proceeds from/(Expenditures on) cash pooling
210
30
[+] Repayment of borrowings
(2 051)
(1 936)
[+] Repayment of lease liabilities
( 69)
( 62)
[+] Repayment of interest on borrowings and debt securities
( 103)
( 111)
[+] Repayment of interest on leases
( 8)
( 8)
[-] Expenditures on derivatives related to sources of external
financing
( 76)
( 81)
Investing activities
[+] Paid capitalised interest on borrowings
( 247)
( 254)
[-] Proceeds on settlement of an instrument hedging interest rate
of bonds
55
78
[-] Change in free cash and cash equivalents
(1 104)
492
[=] TOTAL
1 262
(1 410)
Note 8.4.3 Detailed information concerning the main sources of borrowings
As at 31 December 2024, the Company had open credit lines, investment loans and debt securities with a total balance
of available financing in the amount of PLN 16 081 million, out of which PLN 5 189 million had been drawn (as at 31
December 2023 the Company had open credit lines, investment loans and debt securities with a total balance of
available financing in the amount of PLN 14 641 million, out of which PLN 4 650 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 1 438 million (PLN 5 898 million), obtained on the basis of a financing
agreement concluded with a syndicate of banks in 2019 for the amount of USD 1 500 million, 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 Company
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 amounts to USD 1 438 million (PLN
5 898 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 Company 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 Company 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 Company continuously monitors the risk of exceeding the
levels 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 this Report, the value of the financial covenant
resulting in the obligation to report as at 30 June 2024 and as at 31 December 2024, complied with the provisions
of the agreement.
As at 31 December 2024
As at 31 December 2023
Amount granted
5 898
5 903
Amount of the liability
-
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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94
Investment loans
Loans granted 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 the Company’s 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 by the European Investment Bank in December 2017
with a financing period of 12 years. The Company 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 Company’s projects related to development and replacement at various stages of the
production process. Interest on the loan’s instalments is based on a fixed interest rate. The last instalment of the
loan drawn in 2023 is based on the SOFR rate plus a bank margin, which is dependent on the net debt/EBITDA
financial ratio.
The loan agreements oblige the Company to comply with the financial covenant and non-financial covenants
commonly stipulated in such types of agreements. Pursuant to contractual terms and conditions, the Company 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 Company 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 this Report, the value of the financial covenant resulting in the obligation to report as at 30 June 2024
and as at 31 December 2024, complied with the provisions of the loan agreements.
As at 31 December 2024
As at 31 December 2023
Amount granted
3 340
3 340
Amount of the liability
1 794
2 058
Other bank loans
Bank loans in the total amount of PLN 4 243 million are used to finance working capital and support the
management of current financial liquidity. The Company holds lines of credit in the form of credit agreements. These
are working capital facilities and credit accounts with availability of up to 5 years. The funds under open lines of
credit are available in USD,
EUR and PLN with interest based on a fixed interest rate or variable SOFR, EURIBOR and WIBOR plus a margin.
As at 31 December 2024
As at 31 December 2023
Amount granted
4 243
3 398
Amount of the liability
793
590
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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95
Debt securities
A bond issuance program was established on the Polish market by an issuance agreement on 27 May 2019 under
which bonds were issued with a maturity of 10 years in the amount of PLN 1 600 million and a redemption date of
27 June 2029.
A bond issuance program was established on the Polish market by an issuance agreement on 29 May 2024 under
which bonds were issued with a maturity of 7 years in the amount of PLN 1 000 million and a redemption date of
26 June 2031.
The nominal value of one bond is PLN 1 000, and the issuance price is equal to the nominal value. Interest on the
bonds is based on variable WIBOR plus a margin.
The funds from the issuance of the bonds are used to finance general corporate purposes.
Due to the requirement, resulting from art. 35 sec. 1 point 2 of the Act on bonds, to disclose information as regards
forecasts of financial liabilities due to borrowings, the issuance of debt securities and leases on the last day of the
reporting year, the Company has presented on its website the forecasted amount of liabilities, i.e. PLN 6 745 million
(the unaudited amount). The actual amount of financial liabilities based on separate financial statements as at 31
December 2024 is PLN 5 790 million.
In terms of the separate financial statements there is a deviation of the actual amount of financial liabilities as at
the end of 2024 from the published estimated amounts resulting from the following factors:
- the achieved EBITDA was at the level higher than forecasted;
- the realised net cash flows on loans agreements within the Group were at a higher level than the forecasted
amount; and
- the incurred cash expenditures on property, plant and equipment were lower than forecasted.
As at 31 December 2024
As at 31 December 2023
Nominal value of the issuance
2 600
2 000
Amount of the liability
2 602
2 002
The aforementioned sources ensure the availability of external financing in the amount of PLN 16 081 million. The
funds available for use from these sources cover the liquidity needs of the Company and the Group.
The syndicated credit in the amount of USD 1 438 million (PLN 5 898 million), the investment loans in the amount
of PLN 3 340 million, and other bank loans in the amount of PLN 4 243 million, are unsecured.
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).
As at
31 December 2024
As at
31 December 2023
Cash in bank accounts
218
364
Other financial assets with a maturity of up to 3 months from the
date of acquisition – deposits
149
1 117
Total cash and cash equivalents
367
1 481
Restricted cash
8
18
Free cash and cash equivalents
359
1 463
Total bank and other loans, debt securities
As at 31 December 2024
As at 31 December 2023
Amount granted / Nominal value of the issuance
16 081
14 641
Amount of the liability
5 189
4 650
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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96
As at 31 December 2024, the Company had cash in bank deposits in the amount of PLN 8 million (as at 31 December
2023 PLN 29 million), which are funds in separate VAT accounts, designated for servicing split payments. These funds
are gradually used to pay the VAT payables to suppliers.
Note 8.6 Liabilities due to guarantees granted
Guarantees and letters of credit are an essential financial liquidity management tool of the Company.
Accounting policies
The Company 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.
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 and assumptions
For the calculation of expected credit loss, the Company adopts estimates for the rating, PD (probability of default)
and LGD parameters (loss given default) similarly as for the loans granted (Note 6.2). 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 2024, the Company held liabilities due to guarantees and letters of credit granted in the total
amount of PLN 2 015 million.
The most significant items of liabilities due to guarantees granted - contingent liabilities
Guarantees - contingent liabilities (IAS 37)
The guarantee amount
Validity
period
As at
31 December
2024
As at
31 December
2023
Security on the proper execution by the Company of future
environmental obligations related to the obligation to
restore terrain, following the conclusion of operations of
the Żelazny Most tailings storage facility
PLN 109 mn
PLN 107 mn
up to 1 year
Security on the obligations incurred by Brokerage House
due to settlements of transactions on the markets run by
Towarowa Giełda Energii S.A
PLN 70 mn
PLN 100 mn
up to 1 year
Security on the obligations related to proper execution of
concluded agreements
PLN 26 mn
(PLN 3 mn,
CAD 3 mn,
EUR 2 mn,
USD 1 mn)
PLN 35 mn
(PLN 15 mn,
EUR 3 mn,
CAD 2 mn)
up to 5 years
Security on claims to cover costs related to collecting and
processing waste
PLN 17 mn
PLN 16 mn
up to 2 years
The most significant items of liabilities due to financial guarantees granted
Financial guarantees (IFRS 9)
Carrying amount*
Amount of guarantees
Validity
period
As at
31 December
2024
As at
31 December
2023
As at
31 December
2024
As at
31 December
2023
Guarantee set as security on
payment obligations of KGHM
International Ltd. towards South32
Chile Copper Holdings Pty Ltd.
PLN 55 mn
(USD 14 mn)
-
PLN 402 mn
(USD 98 mn)
-
until
June 2036
Guarantee set as security on a
bank loan drawn by Sierra Gorda
S.C.M.
PLN 47 mn
(USD 11 mn)
PLN 18 mn
(USD 5 mn)
PLN 904 mn
(USD 220 mn)
PLN 866 mn
(USD 220 mn)
until
September
2027
* The carrying amount was set at the initial value of the guarantee granted less the amount of revenues recognised in profit
or loss due to guarantees
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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97
The most significant items of liabilities due to guarantees granted – off-balance-sheet liabilities
Guarantees - off-balance-sheet liabilities
Amount of guarantees
Validity
period
As at
31 December 2024
As at
31 December 2023
Guarantee securing potential claims against the
Company in connection with the obligation of a
manager of a tailings storage facility to create a
restoration fund. The fund may be in the form of a
separate bank account, a provision or a bank
guarantee.
PLN 128 mn
PLN 120 mn
up to 1 year
Bank guarantees securing funds to execute
obligations of KGHM INTERNATIONAL LTD related to
closure, restoration and oversight, including
monitoring of the tailings storage facilities in
accordance with the regulatory requirements of
countries where KGHM INTERNATIONAL LTD has
mines and projects.
PLN 474 mn
PLN 405 mn
up to 1 year
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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98
PART 9 – Non-current assets and related liabilities
Note 9.1 Mining and metallurgical property, plant and equipment
Accounting policies – property, plant and equipment
The most important property, plant and equipment of the Company 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 shafts, wells, galleries, drifts, primary chambers), backfilling, drainage and
firefighting pipelines, piezometric holes and electricity, signal and optical fibre cables. 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
Company includes discounted decommissioning costs of fixed assets related to 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, fees and exchange differences in the part 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 restoration 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 the perpetual usufruct right to land 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 Company, 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 units produced, and this production is not spread evenly through the
period of their usage. In particular it relates to machines and mining equipment in gas-steam blocks.
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 dates – either
to the useful life end date or to the lease end date, unless the ownership of an asset is transferred to the Company
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:
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:
6-9 years
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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99
- backfilling to transfer sand with water,
- technological, drainage, gas and firefighting
22-90 years
Electricity, signal and optical fibre cables
10-70 years
Technical equipment,
machines, motor
vehicles and other fixed
assets
Technical equipment and 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
For right-to-use fixed 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 – warehouses
22 years
Other buildings
3-5 years
Structures
3 years
Computer sets
3 years
Technical equipment,
machines, motor
vehicles and other
fixed asset
Machines and technical equipment
3-4 years
Motor vehicles
3 years
Equipment and other
5 years
The Company performs regular reviews of its property, plant and equipment in terms of the adequacy of applied
useful lives to current operating conditions.
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 rates which
reflects its anticipated useful life.
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that their
carrying amount may not be recoverable.
Accounting policies – intangible assets
Mining and metallurgical intangible assets are mainly comprised of exploration and evaluation assets.
Exploration and evaluation assets are measured at cost less accumulated impairment losses.
The expenditures incurred on the following are recognised in the cost of the asset:
− geological projects;
− obtaining environmental decisions;
− obtaining concessions and mining usufruct for geological exploration;
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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100
− 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 Company 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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
101
Property, plant and equipment
Intangible assets
Buildings and
land
Technical
equipment,
machines, motor
vehicles and other
fixed assets
Fixed assets under
construction
Exploration
and evaluation
assets
Other
Total
As at 1 January 2023
Gross carrying amount
14 278
15 086
5 771
467
1 020
36 622
Accumulated depreciation/amortisation
(6 036)
(7 986)
-
-
( 118)
(14 140)
Impairment losses
( 1)
( 14)
( 7)
( 118)
-
( 140)
Net carrying amount
8 241
7 086
5 764
349
902
22 342
Net changes in 2023
Settlement of fixed assets under construction
1 387
1 663
(3 050)
-
-
-
Purchases
-
-
2 848
127
94
3 069
Liquidation
( 7)
( 16)
( 4)
-
-
( 27)
Leases – new contracts, modification of contracts
14
35
-
-
-
49
Self-constructed
-
-
93
2
-
95
Capitalised borrowing costs
-
-
172
-
1
173
Change in provisions for decommissioning costs of mines, other
technological facilities of mines and tailings storage facilities
90
-
-
-
-
90
CO
2
emission allowances received
-
-
-
-
410
410
Redemption of CO
2
emission allowances
-
-
-
-
( 382)
( 382)
Depreciation/amortisation, of which:
( 439)
(1 179)
-
-
( 13)
(1 631)
own fixed assets
( 394)
(1 151)
-
-
( 13)
(1 558)
leased fixed assets
( 45)
( 28)
-
-
-
( 73)
Recognition of impairment losses, of which:
(1 624)
(1 138)
( 957)
-
( 57)
(3 776)
own fixed assets
(1 530)
(1 117)
( 957)
-
-
(3 604)
leased fixed assets
( 94)
( 21)
-
-
-
( 115)
Utilisation of impairment losses
-
7
4
-
-
11
Other changes
1
16
( 1)
-
( 12)
4
As at 31 December 2023
Gross carrying amount
15 705
16 222
5 829
596
1 119
39 471
Accumulated depreciation/amortisation
(6 417)
(8 603)
-
-
( 121)
(15 141)
Impairment losses
(1 625)
(1 145)
( 960)
( 118)
( 57)
(3 905)
Net carrying amount, of which:
7 663
6 474
4 869
478
941
20 425
own fixed assets and intangible assets
7 206
6 370
4 869
478
941
19 864
leased fixed assets
457
104
-
-
-
561
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
102
Property, plant and equipment
Intangible assets
Buildings and
land
Technical
equipment,
machines, motor
vehicles and other
fixed assets
Fixed assets under
construction
Exploration
and evaluation
assets
Other
Total
As at 1 January 2024
Gross carrying amount
15 705
16 222
5 829
596
1 119
39 471
Accumulated depreciation/amortisation
(6 417)
(8 603)
-
-
( 121)
(15 141)
Impairment losses
(1 625)
(1 145)
( 960)
( 118)
( 57)
(3 905)
Net carrying amount
7 663
6 474
4 869
478
941
20 425
Net changes in 2024
Settlement of fixed assets under construction
1 261
1 897
(3 158)
-
-
-
Purchases
-
-
3 324
65
59
3 448
Liquidation
( 8)
( 21)
( 2)
-
( 4)
( 35)
Leases – new contracts, modification of contracts, termination
( 29)
7
-
-
-
( 22)
Self-constructed
-
-
124
6
-
130
Capitalised borrowing costs
-
-
208
-
-
208
Change in provisions for decommissioning costs of mines, other
technological facilities of mines and tailings storage facilities
( 64)
-
-
-
-
( 64)
CO
2
emission allowances received
-
-
-
-
260
260
Redemption of CO
2
emission allowances
-
-
-
-
( 508)
( 508)
Depreciation/amortisation, of which:
( 409)
(1 141)
-
-
( 13)
(1 563)
own fixed assets
( 373)
(1 115)
-
-
( 13)
(1 501)
leased fixed assets
( 36)
( 26)
-
-
-
( 62)
Recognition of impairment losses, of which:
-
-
( 2)
-
( 3)
( 5)
own fixed assets
-
-
( 2)
-
( 3)
( 5)
Utilisation of impairment losses
3
8
2
-
4
17
Reclassification of an impairment loss due to the settlement of
expenditures on property, plant and equipment
( 145)
( 126)
270
-
-
( 1)
Other changes
( 2)
4
-
-
( 1)
1
As at 31 December 2024
Gross carrying amount
16 831
17 504
6 325
667
919
42 246
Accumulated depreciation/amortisation
(6 794)
(9 139)
-
-
( 128)
(16 061)
Impairment losses
(1 767)
(1 263)
( 690)
( 118)
( 56)
(3 894)
Net carrying amount, of which:
8 270
7 102
5 635
549
735
22 291
own fixed assets and intangible assets
7 878
7 016
5 635
549
735
21 813
leased fixed assets
392
86
-
-
-
478
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
103
Note 9.1.1 Mining and metallurgical property, plant and equipment– fixed assets under construction
As at
31 December 2024
As at
31 December 2023
Deposit Access Program
3 504
3 449
Construction of the SW-4 shaft
718
625
Outfitting the mines
363
233
Investment activity related to the development and operation of
the Żelazny Most Tailings Storage Facility
176
173
Construction of conveyors in the Lubin mine
136
67
Work involving actions to restrict the level of the water hazard
carried out as part of the project called “Anti-filtration barrier”
100
-
Development of pipeline network in mines
88
95
Purchase of mining machinery
61
70
Note 9.1.2 Expenses related to mining and metallurgical assets
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Purchase
(3 448)
(3 069)
Change in liabilities due to purchase
89
275
Other
( 238)
( 243)
Total*
(3 597)
(3 037)
* Including expenses related to assets for exploration for and evaluation of mineral resources in the amount of PLN 45 million
(in 2023: PLN 158 million)
Note 9.1.3 Significant expenditures on exploration and evaluation of mineral resources
Description
As at 31 December 2024
As at 31 December 2023
Gross
carrying
amount
Impairment
loss
Gross
carrying
amount
Impairment
loss
Exploration for and evaluation of a deposit of potassium
and magnesium salts in the vicinity of Puck “PUCK”
205
-
195
-
Exploration for and evaluation of economic assessment of
copper mineralisation in the Retków Ścinawa region
168
-
158
-
Exploration for and evaluation of economic assessment of
copper mineralisation in the Synklina Grodziecka region -
SYNKLINA
118
118
118
118
Exploration and evaluation of economic assessment of
copper mineralisation in the Głogów region - Głogów
63
-
55
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
104
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. The policy regarding impairment is presented in Note 9.1. Depreciation is done using the straight-
line method.
For individual groups of fixed assets, the following useful lives have been adopted:
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 may be found
in Note 9.7). 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:
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.
Separate financial statements for 2024 Translation from the original Polish version
105
Property, plant and equipment
Intangible
assets
Buildings and
land
Technical
equipment,
machines, motor
vehicles and
other fixed
assets
Fixed assets
under
construction
Other
intangible
assets
Total
As at 1 January 2023
Gross carrying amount
66
266
10
216
558
Accumulated depreciation/amortisation
(41)
(197)
-
(165)
(403)
Net carrying amount as at 1 January 2023
25
69
10
51
155
As at 31 December 2023
Gross carrying amount
67
273
18
242
600
Accumulated depreciation/amortisation
(42)
(205)
-
(188)
(435)
Net carrying amount as at 31 December 2023
25
68
18
54
165
own fixed assets and intangible assets
24
68
18
54
164
leased fixed assets
1
-
-
-
1
Net changes in 2024
Settlement of fixed assets under construction
9
27
(36)
-
-
Other changes
-
-
-
1
1
Depreciation/amortisation, of which:
(2)
(26)
-
(16)
(44)
property, plant and equipment and intangible assets
(2)
(26)
-
(16)
(44)
As at 31 December 2024
Gross carrying amount
76
278
18
253
625
Accumulated depreciation/amortisation
(44)
(209)
-
(204)
(479)
Net carrying amount, of which:
32
69
18
49
168
own fixed assets and intangible assets
30
69
18
49
166
leased fixed assets
2
-
-
-
2
As at 31 December 2024 and 31 December 2023 the Company did not have any assets pledged as security for liabilities.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
106
Note 9.3 Depreciation/amortisation
Property, plant and equipment
Intangible assets
from
1 January 2024
to
31 December 2024
from
1 January 2023
to
31 December 2023
from
1 January 2024
to
31 December 2024
from
1 January 2023
to
31 December 2023
Note 4.1
Depreciation/amortisation
1 578
1 645
29
30
recognised in profit or loss, of
which:
1 517
1 569
25
28
cost of manufacturing
products
1 489
1 538
25
25
administrative expenses
28
31
-
3
being part of the
manufacturing costs of assets
61
76
4
2
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. Estimation of
this provision is based on specially-prepared studies using ore
extraction forecasts (for mining facilities), and technical-economic
studies prepared either by specialist firms or by the Company.
The amount of provision represents the estimated future
decommissioning costs of mines and other technological facilities
discounted to present value. Revaluation of this provision is made in
two stages:
1) calculating of the estimated decommissioning costs 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
real 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 is based on the yield on treasury bonds
at the end of the reporting period, with maturities nearest to the
planned financial outflows 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
Company's Management on the basis of the consistency of the
adopted assumptions,
− 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 balances of the Mine Closure Fund
and Tailings Storage Facility Restoration Fund, which the Company
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 Company of its obligations related to the
For the measurement of provision, the
Company adopted, for the years 2025-2026,
inflation rates at the level of the NBP’s forecast
from November 2024, that is 5.6% and 2.70%,
respectively, and for subsequent periods at the
level of 2.5%, in line with the long-term inflation
target (in the comparable period 4.6% and 3.7%
and for subsequent periods 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 2034), the Company
adopted a risk-free rate of 5.87% (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 Company 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
2033), a risk-free rate of 5.2% 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 Company 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
Company 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 PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
107
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 Company 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. Income from
cash transferred to a separate bank account increases their value
and is recognised in profit or loss as other operating income. 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 accordance with the regulations, one of the forms of securing the
funds of the Tailings Storage Facility Restoration Fund are financial
guarantees issued by the bank on demand of the Company, the
beneficiary of which is the Company. As at 31 December 2024, the
guarantees amounted to PLN 128 million, and their value is updated
on an annual basis. The Company 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.
Expenditures on the decommissioning of mines and other technological facilities planned for 2025-2074
2025-2034
2035-2044
2045-2054
2055-2064
2065-2074
Total
Mines
90
385
186
1 093
6
1 760
Smelters
155
64
2
1
-
222
Total
245
449
188
1 094
6
1 982
As at
31 December
2024
As at
31 December
2023
Provisions at the beginning of the reporting period
1 401
1 261
Note 9.1
Changes in estimates recognised in fixed assets
( 64)
90
Utilisation
( 1)
( 2)
Interest
-
23
Other
( 35)
29
Provisions at the end of the reporting period, including:
1 301
1 401
- non-current provisions, including:
1 263
1 389
Mine Closure Fund and Tailings Storage Facility Restoration Fund
482
548
- current provisions
38
12
Impact of the change in discount rate on the provision for decommissioning costs of mines and other technological
facilities
As at
31 December 2024
As at
31 December 2023
increase in discount rate by 1 percentage point
(288)
( 284)
decrease in discount rate by 1 percentage point
374
397
Note 9.5 Capitalised borrowing costs
During the period from 1 January 2024 to 31 December 2024, the Company recognised PLN 209 million of borrowing costs
in property, plant and equipment and intangible assets (during the period from 1 January 2023 to 31 December 2023: PLN
173 million).
The capitalisation rate applied by the Company to determine borrowing costs in 2024 amounted to 4.67% (in 2023: 3.92%).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
108
Note 9.6 Lease disclosures – the Company as a lessee
Accounting policies
As a lessee, the Company identifies leases in usufruct agreements, inter alia, land, perpetual usufruct right to land, and
transmission easements, buildings and constructions as well as technical equipment and machines.
The Company 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 Company 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 Company 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 Company 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 Company 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 lease period
was set with the assumption that the lessee will terminate the agreement. In fixed lease payments, the Company 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 Company 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.
Lease rate - lease payments are discounted by the Company using the incremental borrowing rate of the lessee, except
when the interest rate of a lease agreement can be easily determined.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
109
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Note 9.1
Depreciation/amortisation cost
62
73
Note 4.3
Interest cost
7
9
Short-term lease cost
14
14
Costs recognised in profit or loss, associated with
leases of low-value of underlying assets, which are
not recognised as short-term agreements
2
1
Cost associated with variable lease payments not
recognised in the measurement of lease liabilities
1
1
Note 8.4.2
Total cash outflows due to leases
( 102)
( 95)
Note 9.1
Increase/(decrease) in right-to-use assets
( 22)
49
As at
31 December 2024
As at
31 December 2023
Note 9.1
Note 9.2
Carrying amount of right-to-use assets (division by
underlying assets in notes, pursuant to references)
479
562
Note 8.4.2
Carrying amount of right-to-use liabilities
601
691
As at 31 December 2024, the Company had lease agreements that contained extension options and termination options,
and the estimated value of future cash outflows, to which the Company is potentially exposed and are not included in the
measurement of lease liabilities amounted to PLN 10 million and PLN 32 million respectively. The Company has lease
agreements containing guaranteed residual values, which have been included in the measurement of lease liabilities.
Moreover, as at the end of the reporting period, the Company did not have any lease agreements that had not commenced
yet, to which it was obliged as a lessee.
Note 9.7 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 Company. 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 Company 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 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.
Separate financial statements for 2024 Translation from the original Polish version
110
Financial statements item
As at 31 December 2024
As at 31 December 2023
amount (t)
value
amount (t)
value
Intangible assets, of which:
1 497 907
458
1 622 724
656
purchased CO
2
emission allowances
340 053
98
168 792
53
CO
2
emission allowances received free
of charge
1 157 854
360
1 453 932
603
Accruals
1 197 557
374
1 218 359
501
Financial statements item
from
1 January 2024
to
31 December 2024
from
1 January 2023
to
31 December 2023
Cost of sold products
126
90
Other operating income
5
6
Note 9.8 Non-current assets held for sale and liabilities associated with them
As at 31 December 2024, the Company did not have any non-current assets held for sale.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
111
PART 10 – Working capital
Note 10.1 Inventories
Accounting policies
The Company 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 Company 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 Company, 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 are recognised in profit or loss as they are consumed, as current maintenance costs
of assets.
Important estimates, assumptions and judgments
The Company measures inventories at cost, not higher than the net realisable value. The potential difference in the
amounts represents a write-down of inventories of copper, silver and other products (at various processing stages), up
to the net realisable value is recognised in the cost of manufacturing of sold products in the period, in which the write-
down was recognised.
The Company 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 metal inventories will be made.
As at
31 December 2024
As at
31 December 2023
Materials
1 206
1 367
Half-finished goods and work in progress
4 243
4 300
Finished goods
1 578
1 800
Merchandise
10
39
Total net carrying amount of inventories
7 037
7 506
Write-down of inventories in the financial year
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Write-down recognised in cost of sales
16
44
Write-down reversed in cost of sales
10
13
Maturities of inventories
As at
31 December 2024
As at
31 December 2023
Over 12 months from the end of the reporting period
109
92
Up to 12 months from the end of the reporting period
6 928
7 414
As at 31 December 2024 and in the comparable period, the value of inventories with a maturity of over 12 months was
mainly comprised of stand-by inventories of materials and spare parts to ensure production continuity, packages of spare
parts deposited as part of contractual obligations and the finished rhenium product.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
112
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
and blue 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 negotiated contractual price, in cases where these rights are purchased in off-trading sessions.
At the end of the reporting period these assets are measured at cost less any impairment losses, though no higher than
the net sale price.
Recognition of freely acquired certificates attesting to energy efficiency
Freely acquired 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. 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.
Subsidies resulting from the receipt of freely acquired certificates attesting to energy efficiency are recognised, as a subsidy
to assets, in accruals, and are subsequently settled systematically in the financial result in other operating income, following
the depreciation of fixed assets, whose acquisition/generation resulted in the arising of the energy efficiency for which the
Company received the certificates.
At the end of the reporting period, freely acquired 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 their 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 Company
creates a provision in accruals.
The Company 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, and
- 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.
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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
113
Recognition of property rights to coloured energy and white certificates
Financial statements item
As at
31 December 2024
As at
31 December 2023
amount
(MWh)/TOE
value
amount
(MWh)/TOE
value
Inventories - merchandise, of which:
-
10
-
39
green property rights
115 579
6
267 576
32
blue property rights
11 128
3
7 789
2
white certificates
404
1
2 483
5
Accruals, of which:
-
16
-
41
provision for redemption of green property
rights (MWh)
107 174
5
267 132
32
provision for redemption of blue property rights
(MWh)
10 717
3
11 131
3
provision for redemption of white certificates
(TOE)
3 245
8
3 187
6
Item from the statement of profit or loss
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Financial result (excluding the tax effect),
of which:
18
42
Cost of products sold
15
38
Cost of merchandise sold
2
3
Other operating income
1
1
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, 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 (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 an adjustment by 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 the 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 assets do not pass the SPPI (solely payments of principal and interest) test because of the
element of variable price after the date of initial recognition of the receivables.
Receivables may be measured at fair value both based on the M+ pricing formula as well as due to the transfer 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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
114
The Company 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. while information on the currency risk is
presented in Note 7.5.1.3.
The following table presents the carrying amounts of trade receivables and the loss allowance for expected credit loss:
Note 10.3 Trade and other payables
Accounting policies
Trade and other payables are initially recognised at fair value less transaction cost and are measured at amortised cost
at the end of the reporting period.
Interest due to repayment of payables at a later date, in particular trade payables within the reverse factoring mechanism,
is recognised in profit or loss, in the item “finance costs”.
Important estimates, assumptions and judgments
Trade and other payables presented in the statement of financial position also contain trade payables within the reverse
factoring mechanism, which are in the category of “other”.
At the moment of transfer of the trade payables to reverse factoring, the Company 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 such transactions, it was necessary for the Company 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 Company’s opinion, in presenting the balance of trade payables within the reverse factoring mechanism as „Trade
and other payables” (assigned to the category of “other”) 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 trade payables within the reverse factoring
mechanism 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 supplier financing mechanism, 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 Company’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 the reverse factoring
mechanism. 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 trade payable within the reverse factoring mechanism do
not change by more than 10%,
• costs related to reverse factoring are incurred both by the Company and its suppliers. The Company 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 Company, together with individual suppliers, on the basis of signed contracts, will determine which invoices
will be subject to the reverse factoring mechanism, and what the deadline for early payment to the supplier
through the factor will be.
as at
31 December 2024
as at
31 December 2023
Trade receivables measured at amortised cost
- gross value
380
260
Loss allowance for expected credit loss
( 1)
-
Trade receivables measured at amortised cost
- net value
379
260
Trade receivables measured at fair value
506
211
Total trade receivables
885
471
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
115
Moreover, although the Company 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 Company to be insufficient for the
purpose of recognising that, at the moment of covering the trade payables by the reverse factoring mechanism, 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 financial institution, 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 Company
and not directly by the suppliers,
• the actual deadline for the payment of trade payables subject to reverse factoring amounts to up
to 180 days and is longer 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 trade payables within the reverse factoring mechanism are incurred by the Company, 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 within the reverse factoring
mechanism, the Company also analysed the statement published in December 2020 by the International Financial
Reporting Interpretations Committee (Committee) on the presentation of transactions within the reverse factoring
mechanism in the statement of financial position and the statement of cash flows. In the Company’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 Company. The Committee, recommending the
appropriate presentation of liabilities subject to reverse factoring mechanisms, indicated the same issues that were
analysed and disclosed by the Company as part of important judgments. In particular, in the context of the areas of
analysis indicated by the Committee, the Company confirms that:
• covering the trade payables by the reverse factoring mechanism 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 trade payable within the reverse factoring mechanism 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 mechanism,
• trade payables within the reverse factoring mechanism are part of the working capital used by the unit in the unit’s
regular operating cycle.
The Company 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 Company to be insufficient to conclude that when the trade
payable was covered by reverse factoring mechanism, 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 Company's assessment of the nature of trade payables transferred to reverse factoring and their
presentation, means that the trade payables within the reverse factoring mechanism are presented by the Company in
the statement of financial position under "Trade and other payables ", including those under the " other" category.
Commencing with the annual financial statements published for the year beginning on 1 January 2024, the Company is
bound by amendments to IAS 7 and IFRS 7 on the disclosure of information regarding supplier financing mechanisms.
The amendments to IAS 7 and IFRS 7 do not affect the method of making judgments, including the criteria analysed above
regarding the presentation of trade payables covered by supplier financing programs, because they concern only the
disclosure of information on such programs. However, in order to adapt to the most commonly used names of supplier
financing programs in the amended IAS 7, paragraph 44G, the Company decided to use the name "reverse factoring" as
consistent with the nomenclature used in the IFRS accounting standards and at the same time adequate to the principles
of the implemented program. This change is intended to increase the information value for users of the financial
statements.
*The Company has agreements for the provision of reverse factoring services with financial institutions that are factoring companies or banks.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
116
As at
31 December 2024
As at
31 December 2023
Non-current trade payables
195
196
Current trade payables
2 825
3 044
Other payables – trade payable within the reverse factoring mechanism
2 000
3 021
Trade and other payables
5 020
6 261
In 2024, the factors’ total participation limit amounted to PLN 4 500 million (in 2023: PLN 3 000 million). Currently, the
Company has concluded open-ended agreements for the provision of reverse factoring services with several factors. The
cost of reverse factoring, depending on the terms arising from the concluded agreements, is at the following level:
for PLN (WIBOR 1M + a margin), for EUR (EURIBOR 1M + a margin), for USD (Term SOFR 1M/SOFR ON + a margin).
The program was implemented in 2019 in order to make it possible for the Company’s suppliers to receive repayment of
receivables faster, as part of the standard procurement process executed by the Company, alongside an extension of
payment dates of payables by the Company. In 2024, liabilities in the amount of PLN 7 087 million were transferred to
factors and as at 31 December 2024 the trade payables covered by reverse factoring amounted to PLN 2 000 million
(in 2023 liabilities in the amount of PLN 4 247 million were transferred to factors and as at 31 December 2023 the trade
payables covered by reverse factoring amounted to PLN 3 021 million); in the current year, payments made towards factors
amounted to PLN 8 131 million (in the year ended 31 December 2023 the payments amounted to PLN 1 209 million).
Interest costs paid towards factors in 2024 amounted to PLN 164 million (in the year ended 31 December 2023 the interest
costs paid amounted to PLN 50 million).
Factors' share in the amount of trade payables transferred to reverse factoring
As at
31 December 2024
As at
31 December 2023
Factor A
13 %
0 %
Factor B
66 %
67 %
Factor C
21 %
16 %
Factor D
0 %
17 %
100 %
100 %
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.
Comparison of repayment dates of receivables within reverse factoring mechanism towards the factor with
comparable receivables from suppliers whose receivables were not transferred to reverse factoring
Segment
Type of supplier
Liabilities
Repayment date
KGHM Polska Miedź S.A.
Suppliers of production
materials, work and services
Covered by reverse factoring
Extended to 180 days
Comparable trade payables not
covered by the supplier financing
mechanism
30-60 days
The item “trade and other payables” contains payables due to the purchase or construction of fixed and intangible assets
which, as at 31 December 2024, amounted to PLN 195 million in the non-current part and PLN 1 214 million in the current
part (as at 31 December 2023, PLN 195 million and PLN 1 141 million respectively).
The Company is exposed to currency and interest rates risk arising from trade and other payables, which is presented in
Note 7.5.1.3 and 7.5.1.4, as well as to liquidity risk described in Note 8.3.
The fair value of trade and other payables approximates their carrying amount.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
117
Note 10.4 Changes in working capital
Accounting policies
Cash flows arising from interest on trade payables within the reverse factoring mechanism 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. Moreover, the Company, as regards the changes in working capital
in the statement of cash flows, presented a separate line “Change in trade payables within the reverse factoring
mechanism” for the purposes of clear and transparent presentation.
Important estimates, assumptions and judgments
Due to the lack of uniform market practice with respect to the presentation of reverse factoring transactions in the
Statement of cash flows, the Management Board had to apply its own judgment in this regard. In the case of these
transactions, the Company 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 Company’s view:
• presentation of the repayment of the principal amounts of receivables in the trade payables within the reverse
factoring mechanism 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
a legal subrogation of receivables is made by the factor, from a legal standpoint, the factor assumes 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),
• 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 Company for the presentation of interest cost of trade payables
within the reverse factoring mechanism in the financial activities.
Moreover, in terms of judgment regarding the presentation of cash flows resulting from reverse factoring transactions in
the statement of cash flows in operating activities, the Company also relies on the position of 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 its position, the Committee emphasized that the main problem requiring a decision, in terms of presenting reverse
factoring transactions in the statement of cash flow under IAS 7, is to determine whether cash flows should be presented
as a part of operating or finance activities. The Committee considers that the decision regarding the classification of cash
flows resulting from reverse factoring transactions may result from the previously determined classification of the
relevant liabilities in the statement of financial position. If an entity concludes that a trade payable within the reverse
factoring mechanism is a “Trade and other payable”, and in this way declares it as part of the working capital which is
used in the core business of an entity that generates the revenues, the entity shall present the outflow from the payment
for those liabilities as arising on operating activities in the statement of cash flows. Otherwise, these cash flows should
be recognised in finance activities.
Taking into account the above, the Company assesses the nature of trade payables within the reverse factoring
mechanism and presents them in the statement of financial position as "trade and other payables" (information
presented in Note 10.3), which confirms the Company's judgment as to the method of presentation of these transactions
in the statement of cash flows as presented in the accounting policies in Note 10.4.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
118
* Trade payables within the reverse factoring mechanism
Inventories
Trade
receivables
Trade
payables
Other
payables*
Working
capital
As at 1 January 2023
(7 523)
( 620)
2 819
-
(5 324)
As at 31 December 2023
(7 506)
( 471)
3 044
3 021
(1 912)
Impact of changes in the statement of
financial position
17
149
225
3 021
3 412
Depreciation/amortisation recognised in
inventories
72
-
-
-
72
Change in liabilities due to the purchase of
property, plant and equipment
-
-
( 165)
( 110)
( 275)
Change in liabilities due to interest
-
-
-
( 25)
( 25)
Adjustments
72
-
( 165)
( 135)
( 228)
Change in the statement of cash flows from
operating activities
89
149
60
2 886
3 184
* Trade payables within the reverse factoring mechanism
Inventories
Trade
receivables
Trade
payables
Other
payables*
Working
capital
As at 1 January 2024
(7 506)
( 471)
3 044
3 021
(1 912)
As at 31 December 2024
(7 037)
( 885)
2 825
2 000
(3 097)
Impact of changes in the statement of
financial position
469
( 415)
( 219)
(1 021)
(1 186)
Depreciation/amortisation recognised in
inventories
57
-
-
-
57
Change in liabilities due to the purchase of
property, plant and equipment
-
-
( 107)
-
( 107)
Change in liabilities due to interest
-
-
-
14
14
Adjustments
57
-
( 107)
14
( 36)
Change in the statement of cash flows from
operating activities
526
( 415)
( 326)
(1 007)
(1 222)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
119
PART 11 – Employee benefits
Accounting policies
The Company 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
those of the liabilities due to be paid.
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 (for example benefits due to jubilee bonuses) are recognised in profit or loss.
Important 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 Company 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.
The actuarial assumptions adopted for the purpose of measurement of employee benefits in the Company reflect the
economic relations between such factors as inflation, the salary growth rate, the discount rate and the coal price growth
rate.
The assumptions used in the measurement as at 31 December 2024 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 the financial statements, that is the Projected Unit Credit Method. In order to analyse the 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 result of analysis shows the impact of change in only one selected
factor.
Impact of changes in the assumptions on the balance of liabilities as at 31 December 2024
Discount rate
Planned base increases*
-1 pp.
+1 pp.
-1 pp.
+1 pp.
Retirement and disability benefits
35
(31)
(34)
43
Coal equivalent
228
(182)
(192)
236
Jubilee awards
35
(31)
(34)
44
Other benefits
3
(2)
(2)
3
Total liabilities
301
(246)
(262)
326
Impact on profit or loss
35
(31)
(34)
44
Impact on other comprehensive income
266
(215)
(228)
282
* 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.
Separate financial statements for 2024 Translation from the original Polish version
120
Impact of changes in the assumptions on the balance of liabilities 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.
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 the most sensitive to changes in assumptions. For
these benefits, the deviation ranges from -17.7% to 22.9% (in the comparable period: from -17.7% to 25%).
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 -6.2% to 8.6% (in the comparable period:
from -6.6% to 9.1%).
Note 11.1 Employee benefits liabilities
As at
31 December 2024
As at
31 December 2023
Non-current
2 467
2 821
Current
253
227
Liabilities due to future employee benefits programs
2 720
3 048
Employee remuneration liabilities
658
591
Accruals (unused annual leave, bonuses, other)
658
497
Employee liabilities
1 316
1 088
Total employee benefits liabilities
4 036
4 136
Employee benefits expenses
from 1 January 2024
to 31 December
2024
from 1 January 2023
to 31 December
2023
Remuneration
4 057
3 682
Costs of social security and other benefits
1 597
1 428
Costs of future benefits
237
365
Note 4.1
Employee benefits expenses
5 891
5 475
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
121
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 2023
2 631
406
361
1 836
28
Note 11.1
Total costs recognised in profit or loss, of which:
365
172
43
147
3
interest costs
178
28
24
124
2
current service costs
70
27
19
23
1
actuarial losses recognised in profit or loss
117
117
-
-
-
Note 8.2.2
Actuarial losses recognised in other comprehensive income
270
-
97
170
3
Benefits paid
( 218)
( 60)
( 31)
( 126)
( 1)
As at 31 December 2023
3 048
518
470
2 027
33
Note 11.1
Total costs recognised in profit or loss, of which:
237
48
51
135
3
interest costs
157
27
24
104
2
current service costs
95
36
27
31
1
actuarial gains recognised in profit or loss
( 15)
( 15)
-
-
-
Note 8.2.2
Actuarial gains recognised in other comprehensive income
( 352)
-
( 14)
( 332)
( 6)
Benefits paid
( 213)
( 61)
( 34)
( 116)
( 2)
As at 31 December 2024
2 720
505
473
1 714
28
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
122
As at 31 December
2024
2023
2022
2021
2020
Present value of liabilities due to employee
benefits
2 720
3 048
2 631
2 170
2 848
Main actuarial assumptions adopted for measurement as at 31 December 2024:
2025
2026
2027
2028
2029
and
beyond
- discount rate
5.80%
5.80%
5.80%
5.80%
5.80%
- coal price growth rate
-20.48%
0.00%
2.50%
2.50%
2.50%
- rate of growth of the lowest salary
8.51%
4.20%
4.00%
4.00%
4.00%
- expected inflation
5.60%
2.70%
2.50%
2.50%
2.50%
- future expected increase in salary
8.50%
4.20%
4.00%
4.00%
4.00%
Main actuarial assumptions adopted for measurement as at 31 December 2023:
2024
2025
2026
2027
2028
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%
For purposes of reassessment of the liabilities at the end of the 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 adopted for measurement as at 31 December 2024 versus individual assumptions
adopted as at 31 December 2023
Change in financial assumptions
( 376)
Change in demographic assumptions
54
Other changes
( 44)
Total actuarial gains
( 366)
Actuarial (gains)/losses adopted for measurement as at 31 December 2023 versus individual assumptions
adopted as at 31 December 2022
Change in financial assumptions
137
Change in demographic assumptions
57
Other changes
193
Total actuarial losses
387
The change in actuarial gains/losses was caused by a change in the assumptions in respect of the discount rate, coal prices
and future expected changes of salary.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
123
Maturity profile of future employee benefits liabilities
Year of maturity:
Total
liabilities
jubilee
awards
retirement
and disability
benefits
coal
equivalent
post-
mortem
benefits
2025
253
64
58
129
2
2026
229
47
77
103
2
2027
159
42
21
94
2
2028
153
38
24
89
2
2029
147
35
27
83
2
Other years
1 779
279
266
1 216
18
Total liabilities in the statement of
financial position as at 31 December 2024
2 720
505
473
1 714
28
Maturity profile of future employee benefits liabilities
Year of maturity:
Total
liabilities
jubilee
awards
retirement
and disability
benefits
coal
equivalent
post-
mortem
benefits
2024
227
54
60
111
2
2025
241
52
69
118
2
2026
181
42
26
111
2
2027
168
40
21
105
2
2028
159
37
22
98
2
Other years
2 072
293
272
1 484
23
Total liabilities in the statement of
financial position as at 31 December 2023
3 048
518
470
2 027
33
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
124
PART 12 – Other notes
Note 12.1 Related party transactions
The accounting policies and important estimates and assumptions presented in Note 10 are applicable to transactions
entered into with related parties.
Operating income from related parties
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
From subsidiaries
1 079
1 097
From other related parties
18
21
Total
1 097
1 118
In 2024, the Company received dividends from subsidiaries in the amount of PLN 10 million (in the comparable period
the Company did not receive dividends from subsidiaries).
As at
31 December 2024
As at
31 December 2023
Trade and other receivables from related parties
11 062
10 514
From subsidiaries, including:
11 015
10 496
loans granted
9 973
9 711
From other related parties
47
18
Payables towards related parties
1 890
1 798
Towards subsidiaries
1 843
1 780
Towards other related parties
47
18
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Purchases from related entities
10 130
9 832
Purchase of products, merchandise, materials and other
purchases from subsidiaries
10 130
9 832
In 2024, the Company did not enter into significant transactions with related entities under other than arm’s length
conditions.
The State Treasury is an entity controlling KGHM Polska Miedź S.A. at the highest level. The Company 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).
Pursuant to the scope of IAS 24.26, in the period from 1 January to 31 December 2024, the Company concluded 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 as at 31 December 2024 in the amount of PLN 241 million (as
at 31 December 2023: PLN 243 million), including payables due to mining usufruct for the extraction of mineral
resources recognised in costs in the amount of PLN 34 million (for 2023: PLN 31 million),
• due to a reverse factoring agreement – as at 31 December 2024, the Company had a payable in the amount of
PLN 1 727 million (as at 31 December 2023: PLN 2 528 million),
• banks related to the State Treasury executed the following transactions and economic operations on the Company’s
behalf: spot currency exchange, depositing cash, cash pooling, granting bank loans, guarantees and letters of credit
(including documentary letters of credit), processing of a documentary collection, running bank accounts, servicing of
business credit cards, servicing of special purpose funds and entering into transactions on the forward currency market.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
125
State Treasury companies may purchase bonds issued by KGHM Polska Miedź S.A.
Other transactions between the Company 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 materials, merchandise and services to meet the needs of current operating activities. In the period
from 1 January to 31 December 2024, the turnover from these transactions amounted to PLN 2 277 million (from 1
January to 31 December 2023: PLN 2 911 million), and, as at 31 December 2024, the unsettled balance of liabilities from
these transactions amounted to PLN 170 million (as at 31 December 2023: PLN 294 million),
• sales to Polish State Treasury companies. In the period from 1 January to 31 December 2024, the turnover from these
sales amounted to PLN 234 million (from 1 January to 31 December 2023: PLN 386 million), and, as at 31 December
2024, the unsettled balance of receivables from these transactions amounted to PLN 128 million (as at 31 December
2023: PLN 173 million).
Note 12.2 Dividends paid
In accordance with Resolution No. 7/2024 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 7 June 2024
regarding the payment of a dividend from profits for previous years for the year ended 31 December 2023, it was decided
to pay a dividend to shareholders in the amount of PLN 300 million (PLN 1.50/share). The Ordinary General Meeting of
KGHM Polska Miedź S.A. set the dividend date for 2023 at 28 June 2024 and the dividend payment date for 2023 at 16 July
2024.
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.
All shares of the Company are ordinary shares.
As at the date of publication, no decision was made on the dividend payout or allocation of profit for 2024.
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.
Accounting policies concerning financial assets were described in Note 7.
As at
31 December 2024
As at
31 December 2023
Other non-current non-financial assets
97
265
Receivables due to overpayment of property tax
68
72
Non-financial advances
22
186
Prepayments
7
7
Other current assets
711
541
Note 7.1
Other current financial assets
540
327
Receivables due to guarantees granted
16
18
Receivables due to settled derivatives
34
48
Receivables due to compensation for energy-
intensive sector due to allocation the costs of
purchasing CO
2
emission allowances in the price
of electricity
148
144
Receivables due to payments for letters of credit
6
1
Loans granted
246
73
Other
90
43
Other current non-financial assets
171
214
Non-financial advances
137
182
Prepayments
29
26
Other
5
6
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
126
Note 12.4 Other liabilities
Accounting policies
Other financial liabilities are initially recognised at fair value less transaction cost, and at the end of the reporting period
they are measured at amortised cost.
As at
31 December 2024
As at
31 December 2023
Trade payables
195
196
Other
100
24
Other non-current liabilities
295
220
Accruals, including:
458
620
provision for purchase of property rights related to
electricity
16
41
charge for discharging of gases and dusts to the air
374
501
Liabilities due to the settlement of the Tax Group
36
197
Deferred income
31
23
Other liabilities due to settlements under cash pooling
contracts
27
34
Other
143
187
Other current liabilities
695
1 061
Note 12.5 Provisions for liabilities and other charges
Provisions
As at
31 December 2024
As at
31 December 2023
decommissioning costs of mines and other technological
facilities
38
12
decommissioning costs of fixed assets and fixed assets
under construction
16
16
disputed issues and court proceedings
63
47
other provisions for expected losses, expenses and
liabilities
110
7
Total
227
82
Note 12.6 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 2024
As at
31 December 2023
Contingent assets
425
531
Guarantees received
148
147
Promissory note receivables
275
383
Other
2
1
Contingent liabilities
862
696
Note 8.6
Guarantees granted
698
665
Financial support granted to municipalities in the form of
a donation
131
-
Other
33
31
Other liabilities not recognised in the statement of
financial position
-
26
Liabilities towards local government entities due to
expansion of the tailings storage facility
-
26
* The Company’s obligation to provide financial support (cash donations) resulting from agreements concluded with the municipalities of Polkowice,
Rudna and Grębocice, where the "Żelazny Most" Tailings Storage Facility is located. These donations are intended to reduce the inconvenience resulting
from the Company's current operations in the areas of these municipalities as well as to support them in meeting their needs in the scope of technical,
economic and social infrastructure development and relate to events that will or may occur in the coming years. The agreements specify the maximum
amount of support available in each year and the maximum total amount of payments in the years 2025-2036. Payments are subject to the
municipalities preparing applications in accordance with the terms specified in the agreements. The issue of submitting applications by the
municipalities is not beyond the Company's control. The municipalities are also required to prepare a report on the expenditure of the funds received,
which is verified by the Company.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
127
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 statement of financial position, were
as follows:
As at
31 December 2024
As at
31 December 2023
Capital commitments due to the purchase of:
property, plant and equipment
2 693
3 269
intangible assets
14
51
Total capital commitments
2 707
3 320
Note 12.8 Employment structure
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
White-collar employees
5 027
4 960
Blue-collar employees
13 858
13 915
Total (full-time)
18 885
18 875
Note 12.9 Remuneration of key managers
from 1 January 2024 to 31 December 2024
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 2024
Andrzej Szydło
06.03-31.12
1 155
-
-
1 155
Zbigniew Bryja
13.02-31.12
1 078
-
-
1 078
Piotr Krzyżewski
06.03-31.12
1 136
-
-
1 136
Mirosław Laskowski
06.03-31.12
1 141
-
-
1 141
Iga Dorota Lis
01.09-31.12
448
-
-
448
Piotr Stryczek
06.03-31.12
1 171
-
-
1 171
Members of the Management Board not
serving in the function as at 31 December 2024
Tomasz Zdzikot
01.01-13.02
186
-
1 049
1 235
Mirosław Kidoń
01.01-31.03
332
-
-
332
Marek Pietrzak
01.01-13.02
160
-
652
812
Marek Świder
01.01-09.01
33
-
-
33
Mateusz Wodejko
01.01-13.02
175
-
652
827
TOTAL
7 015
-
2 353
9 368
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
128
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 2024 to 31 December 2024
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 2024
Aleksander Cieśliński
13.02-31.12
-
166
166
Zbysław Dobrowolski
13.02-31.12
-
165
165
Józef Czyczerski
01.01-31.12
26
186
212
Przemysław Darowski
01.01-31.12
-
187
187
Dominik Januszewski
13.02-31.12
-
165
165
Bogusław Szarek
01.01-31.12
336
186
522
Tadeusz Kocowski
13.02-31.12
-
182
182
Marian Noga
13.02-31.12
-
164
164
Piotr Prugar
13.02-31.12
165
165
Members of the Supervisory Board not serving in the
function as at 31 December 2024
Zbigniew Bryja
13.02-06.03
-
91
91
Agnieszka Winnik-Kalemba
01.01-13.02
-
25
25
Katarzyna Krupa
01.01-13.02
-
22
22
Wojciech Zarzycki
01.01-13.02
-
23
23
Andrzej Kisielewicz
01.01-13.02
-
23
23
Marek Wojtków
01.01-13.02
-
23
23
Radosław Zimroz
01.01-13.02
-
23
23
Piotr Ziubroniewicz
01.01-13.02
-
23
23
TOTAL
362
1 819
2 181
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
129
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
-
167
167
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
654
1 689
2 343
Note 12.10 Remuneration of the entity entitled to audit the financial statements and of entities related to it
(in PLN thousands)
PricewaterhouseCoopers Polska Spółka z ograniczoną odpowiedzialnością Audyt Sp.k. (PwC) performed audits of financial
statements of KGHM Polska Miedź S.A. for 2023 and 2024.
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
PricewaterhouseCoopers Polska Spółka z ograniczoną
odpowiedzialnością Audyt Sp.k.
3 131
1 872
Audit of annual financial statements
1 027
1 120
Assurance services, of which:
2 104
752
review of financial statements
595
572
assurance on sustainability reporting
850
-
other assurance services
659
180
Other companies of PricewaterhouseCoopers Polska
126
99
Note 12.11 Disclosure of information on the Company’s activities regulated by the Act on Energy
Note 12.11.1 Introduction
KGHM Polska Miedź S.A. meets the definition of an “energy enterprise” under the Act on Energy. Pursuant to article 44 of
the Act on Energy, the Company is required to prepare, on the basis of the Company’s accounting records, information
about its regulated activities. The scope of information concerning regulated activities, pursuant to article 44 of the
aforementioned Act, constitute the Company’s business activities in:
• distribution of electricity;
• distribution of gaseous fuels; and
• trade in gaseous fuels.
Note 12.11.2 Description of regulated activities
KGHM Polska Miedź S.A. conducts the following types of energy-related activities:
- Distribution of electricity – an activity which consists of distributing the electricity, used to meet the needs of clients
conducting business activities;
- Trade in gaseous fuels – an activity which consists of trading in nitrogen-enriched natural gas and is conducted to
meet the needs of clients engaged in business activities; and
- Distribution of gaseous fuels – an activity which consists of distributing nitrogen-enriched natural gas by utilising the
distribution grids located in the Legnica and Głogów municipalities in order to meet the needs of clients conducting
business activities.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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130
Note 12.11.3 Basic principles of regulatory accounting
Regulatory accounting is a specific type of accounting, if compared to the accounting carried out in accordance with the
Accounting Act of 29 September 1994, conducted by an entrepreneur for its regulated activities including energy activities.
In addition to the accounting policy which was described in the financial statements and was the basis for the keeping of
the accounting records and for preparation of the Company’s financial statements, KGHM Polska Miedź S.A. applies the
following accounting principles for the purposes of regulatory accounting:
Causality principle
The allocation of particular revenue and costs is made in accordance with a given assets’ intended purpose and utilisation
of assets to meet the needs of a specified type of activity or service, with the causality principle governing the recognition
of items of revenue and costs in specified types of activity and with the principle of consistency between recognition by
types of activity of items of revenue and costs, which stems from the fact that these items reflect different aspects of the
same events.
Objectivity and non-discrimination principle
The allocation of assets, liabilities, equity, revenue and costs is done objectively and is not aimed at making profits or
incurring losses.
Continuation and comparability principle
The methods and principles used in preparing the report on regulatory accounting are applied in a continuous manner.
This report was prepared using the same principles for the current and comparable periods.
Transparency and consistency principle
The methods applied in preparing the report on regulatory accounting are transparent and consistent with the methods
and principles applied in other calculations performed for regulatory purposes and with the methods and principles applied
in preparing the financial statements.
Materiality principle (feasibility principle)
The Company permits certain simplifications in measurement, recognition and allocation of items of assets, liabilities,
equity, revenue and costs as long as it does not significantly distort the true picture of the financial position and assets
presented in the financial statements on regulated activities.
Note 12.11.4 Detailed principles of regulatory policy – methods and principles governing the allocation of assets,
liabilities, equity, costs and revenues
The Company prepares financial information on its regulated activities by overlapping the regulated activities’ structure
with the Company’s organisational structure. The Company applies, in a continuous manner, various methods for the
allocation of revenue, costs, assets and liabilities to specific types of regulated activities. The following methods were used:
− specific (direct) identification method – applied if a direct identification of value is possible, for example the level
of revenue from certain activities,
− direct allocation method (e.g. the purchase cost of production fuel) – this method is applied if there is a direct cause-
and-effect relationship between the consumed resource and the corresponding cost,
− indirect allocation method on the basis of a predetermined allocation key, this method is used among others, to
allocate cost in a situation where no direct cause-and-effect relationship between the utilised resource and the cost
item exists and there is a need to use a cost driver (an allocation key) which enables linkage of items with their
respective cost. The most commonly used allocation keys are:
• revenue key – value of revenue is the allocation key;
• production key – production units are the allocation key;
• power key – the installed power of machines and equipment is used for the allocation of indirect costs;
• cost key – the value of costs is the allocation key;
• mixed keys, which combine elements of several different keys; and
• other keys appropriate for a specific case.
Assets
In the statement of financial position of KGHM Polska Miedź S.A. for the current and comparable periods, the following
items of assets of regulated activities were recognised:
Non-current assets:
1.Fixed assets,
2.Fixed assets under construction,
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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131
Current assets:
1. Trade receivables.
Other items of assets in the Company’s statement of financial position were allocated to other activities due to the lack of
a link between these items and regulated activities, or because the share of these items in regulated activities is immaterial.
Fixed assets
The identification and allocation of specific items of fixed assets to regulated activities takes place when these items of fixed
assets are brought into use. Based on the key consumption for energy carriers, being the quantitative share in sales of the
energy carrier in the total volume of the purchased energy carrier less losses, the percentage in the carrying amount of
fixed assets used in the energy activities is established.
Share =
Volume of energy carriers sold externally in the reporting period x 100%
Total volume of purchased energy carrier for the reporting period – losses
Fixed assets under construction
The allocation of fixed assets under construction to regulated activities is achieved by the detailed identification of
expenditures on fixed assets under construction which are related to regulated activities, based on the analysis of
accounting records. The remaining expenditures on fixed assets under construction are recognised in other activities of the
Company.
The Company recognises the full amount of deferred tax assets due to other deductible temporary differences under other
activities, due to their immaterial share in regulated activities.
Trade receivables
Allocation of receivables in specific types of regulated activities is done on the basis of detailed identification of revenues
from specific types of regulated activities, by analysing the accounting records with respect to unsettled sales invoices. The
remaining amount of trade receivables is recognised in other activities. The Company recognises the full amount of other
receivables (i.e. apart from trade receivables) in other activities due to their immaterial share in regulated activities.
Equity and liabilities
In the statement of financial position, the following items were recognised in equity and liabilities for the current and
comparable periods with respect to regulated activities:
Equity
Liabilities
I. Non-current liabilities:
1. Deferred tax liabilities;
2. Future employee benefits liabilities.
II. Current liabilities:
1. Future employee benefits liabilities.
The full amount of other items of liabilities are recognised by the Company in other activities, due to their immaterial share
in regulated activities.
Equity
The Company allocates equity to regulated activities as an item offsetting the assets and liabilities.
Deferred tax liabilities
With respect to regulated activities, deferred tax liabilities were identified arising from taxable temporary differences
between the depreciation of property, plant and equipment and intangible assets for tax purposes and their carrying
amount.
The allocation of deferred tax liabilities due to the depreciation of property, plant and equipment and the amortisation of
intangible assets, with respect to regulated activities, is performed through the use of indicators set for property, plant and
equipment and intangible assets. The Company allocates all deferred tax liabilities arising from other taxable temporary
differences to other operating activities.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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132
Non-current and current liabilities due to future employee benefits
Liabilities due to future employee benefits are allocated to individual types of regulated activities using a revenue key
through the indirect allocation method.
Revenues from sales
Following an analysis of revenues in terms of their allocation to individual types of regulated activities, the Company
identified groups of operations which met the following conditions:
• revenues from the sale of electricity – distribution;
• revenues from the sale of nitrogen-enriched natural gas – distribution; and
• revenues from the sale of nitrogen-enriched natural gas – trade.
Revenues from sales are allocated to individual types of regulated activities using the individual identification method.
Operating costs
Following an analysis of costs in terms of their allocation to individual types of regulated activities, the following types of
operating costs were identified:
• costs of electricity distribution services and the distribution of natural gas;
• the value of the sold merchandise related to trade in natural gas; and
• administrative expenses associated with electricity sold.
Costs of sales, selling costs and administrative expenses are allocated to separate types of regulated activities based on the
Company's account of the actual costs.
Income tax
The amount of income tax presented in the statement of profit or loss for individual types of regulated activities is set as a
multiple of the financial result and the effective tax rate. The amount of current income tax decreases or increases deferred
income tax, which is calculated from the difference between the carrying amount and the taxable amount of the respective
assets of regulated activities.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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133
Statement of financial position pursuant to article 44 of the Act on Energy
Company in
total
Principal
activities
Energy
activities,
of which:
Electricity
Gas
As at 31 December 2024
Distribution
Trade
Distribution
ASSETS
Property, plant and equipment
21 126
21 063
63
60
-
3
Intangible assets
1 333
1 333
-
-
-
-
Other non-current assets
17 648
17 648
-
-
-
-
Non-current assets
40 107
40 044
63
60
-
3
Inventories
7 037
7 037
-
-
-
-
Trade receivables
885
867
18
12
5
1
Other current assets
2 376
2 376
-
-
-
-
Current assets
10 298
10 280
18
12
5
1
TOTAL ASSETS
50 405
50 324
81
72
5
4
EQUITY AND LIABILITIES
Equity
31 154
31 088
66
59
4
3
Deferred tax liabilities
460
455
5
5
-
-
Employee benefits liabilities
2 467
2 462
5
5
-
-
Provisions for decommissioning
costs of mines and other
technological facilities
1 263
1 263
-
-
-
-
Other non-current liabilities
5 219
5 219
-
-
-
-
Non-current liabilities
9 409
9 399
10
10
-
-
Employee benefits liabilities
1 569
1 569
-
-
-
-
Other current liabilities
8 273
8 268
5
4
1
-
Current liabilities
9 842
9 837
5
4
1
-
TOTAL LIABILITIES
19 251
19 236
15
14
1
-
TOTAL EQUITY AND LIABILITIES
50 405
50 324
81
73
5
3
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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134
Company
in total
Principal
activities
Energy
activities,
of which:
Electricity
Gas
As at 31 December 2023
Distribution
Turnover
Distribution
ASSETS
Property, plant and equipment
19 117
19 035
82
78
-
4
Intangible assets
1 473
1 473
-
-
-
-
Other non-current assets
16 191
16 191
-
-
-
-
Non-current assets
36 781
36 699
82
78
-
4
Inventories
7 506
7 506
-
-
-
-
Trade receivables
471
456
15
9
6
-
Other current assets
4 138
4 138
-
-
-
-
Current assets
12 115
12 100
15
9
6
-
TOTAL ASSETS
48 896
48 799
97
87
6
4
EQUITY AND LIABILITIES
Equity
28 818
28 742
76
71
1
4
Deferred tax liabilities
328
321
7
7
-
-
Employee benefits liabilities
2 821
2 816
5
5
-
-
Provisions for decommissioning costs
of mines and other technological
facilities
1 389
1 389
-
-
-
-
Other non-current liabilities
4 930
4 930
-
-
-
-
Non-current liabilities
9 468
9 456
12
12
-
-
Employee benefits liabilities
1 315
1 313
2
2
-
-
Other current liabilities
9 295
9 288
7
2
5
-
Current liabilities
10 610
10 601
9
4
5
-
TOTAL LIABILITIES
20 078
20 057
21
16
5
-
TOTAL EQUITY AND LIABILITIES
48 896
48 799
97
87
6
4
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
135
Statement of profit or loss pursuant to article 44 of the Act on Energy
Company
in total
Principal
activities
Energy
activities,
of which:
Electricity
Gas
from 1 January 2024
to 31 December 2024
Distribution
Trade
Distribution
Revenues from contracts with
customers
29 894
29 790
104
60
39
5
Cost of sales
(25 503)
(25 443)
( 60)
( 31)
( 27)
( 2)
Gross profit
4 391
4 347
44
29
12
3
Selling costs and administrative
expenses
(1 535)
(1 535)
-
-
-
-
Profit on sales
2 856
2 812
44
29
12
3
Other operating income and costs
1 554
1 554
-
-
-
-
Finance income/(costs)
( 425)
( 425)
-
-
-
-
Profit before income tax
3 985
3 941
44
29
12
3
Income tax expense
(1 197)
(1 183)
( 14)
( 11)
( 2)
( 1)
Profit for the period
2 788
2 758
30
18
10
2
Company
in total
Principal
activities
Energy
activities,
of which:
Electricity
Gas
from 1 January 2023
to 31 December 2023
Distribution
Trade
Distribution
Revenues from contracts with
customers
29 084
28 926
158
60
93
5
Cost of sales
(28 414)
(28 305)
( 109)
( 34)
( 73)
( 2)
Gross profit
670
621
49
26
20
3
Selling costs and administrative
expenses
(1 590)
(1 590)
-
-
-
-
(Loss) / Profit on sales
( 920)
( 969)
49
26
20
3
Other operating income and costs
( 230)
( 230)
-
-
-
-
Finance (costs)/income
120
120
-
-
-
-
(Loss) / Profit before income tax
(1 030)
(1 079)
49
26
20
3
Income tax expense
( 123)
( 112)
( 11)
( 9)
( 2)
-
(Loss) / Profit for the period
(1 153)
(1 191)
38
17
18
3
Note 12.12 Subsequent events
Appointment of a member of the Supervisory Board of the Company
On 8 January 2025, the Extraordinary General Meeting of KGHM Polska Miedź S.A. appointed Joanna Zakrzewska to the
composition of the Supervisory Board of KGHM Polska Miedź S.A.
Agreements on providing reverse factoring services
In the first quarter of 2025, the total available limit increased to PLN 450 million under the concluded reverse factoring
agreements.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
136
PART 13 - Quarterly financial information of KGHM Polska Miedź S.A.
SEPARATE STATEMENT OF PROFIT OR LOSS
from
1 October 2024
to
31 December 2024
unaudited and
unreviewed
from
1 October 2023
to
31 December 2023
unaudited and
unreviewed
from
1 January 2024
to
31 December 2024
from
1 January 2023
to
31 December
2023
Revenues from contracts with
customers
7 633
6 614
29 894
29 084
Cost of sales
(6 500)
(8 819)
(25 503)
(28 414)
Gross profit / (loss)
1 133
(2 205)
4 391
670
Selling costs and administrative
expenses
( 481)
( 602)
(1 535)
(1 590)
Profit / (Loss) on sales
652
(2 807)
2 856
( 920)
Other operating income, including:
1 986
1 227
3 064
2 564
interest income calculated using
the effective interest rate
method
129
99
435
377
fair value gains on financial
assets measured at fair value
through profit or loss
33
-
141
668
gains due to reversal of
impairment losses on financial
instruments
( 15)
-
2
18
Other operating costs, including:
( 399)
(2 335)
(1 510)
(2 794)
impairment losses on financial
instruments
( 72)
( 68)
( 94)
-
Finance income
( 13)
393
134
531
Finance costs
( 238)
( 148)
( 559)
( 411)
Profit / (Loss) before income tax
1 988
(3 670)
3 985
(1 030)
Income tax expense
( 404)
780
(1 197)
( 123)
PROFIT / (LOSS) FOR THE PERIOD
1 584
(2 890)
2 788
(1 153)
Weighted average number of
ordinary shares (million)
200
200
200
200
Basic/diluted earnings / (loss) per
share (in PLN)
7.92
( 14.45)
13.94
( 5.77)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
137
Explanatory notes to the statement of profit or loss
Note 13.1 Expenses by nature
from
1 October 2024
to
31 December 2024
unaudited and
unreviewed
from
1 October 2023
to
31 December 2023
unaudited and
unreviewed
from
1 January 2024
to
31 December 2024
from
1 January 2023
to
31 December 2023
Depreciation of property, plant and
equipment and amortisation of
intangible assets
409
400
1 607
1 675
Employee benefits expenses
1 650
1 410
5 891
5 475
Materials and energy, including:
2 743
3 058
11 650
12 955
purchased metal-bearing materials
1 749
1 915
7 439
7 712
electrical and other energy
319
365
1 699
2 224
External services, including:
823
754
2 793
2 638
transport
92
80
354
340
repairs, maintenance and servicing
307
279
936
854
mine preparatory work
208
188
727
736
Minerals extraction tax
996
699
3 865
3 496
Other taxes and charges
164
179
686
632
Advertising costs and representation
expenses
20
31
63
83
Property and personal insurance
12
10
46
41
Impairment losses on property, plant
and equipment and intangible assets
-
2 808
-
2 808
Reversal of write-down of inventories
-
-
( 10)
( 13)
Write-downs of inventories
5
11
16
44
Other costs
8
8
22
25
Total expenses by nature
6 830
9 368
26 629
29 859
Cost of merchandise and materials sold
(+)
94
110
348
545
Change in inventories of products
and work in progress (+/-)
127
8
291
( 174)
Cost of products for internal use (-)
( 70)
( 65)
( 230)
( 226)
Total cost of sales, selling costs and
administrative expenses, including:
6 981
9 421
27 038
30 004
Cost of sales
6 500
8 819
25 503
28 414
Selling costs
46
42
177
170
Administrative expenses
435
560
1 358
1 420
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
138
Note 13.2 Other operating income and costs
from
1 October 2024
to
31 December
2024
unaudited and
unreviewed
from
1 October 2023
to
31 December
2023
unaudited and
unreviewed
from
1 January
2024
to
31 December
2024
from
1 January
2023
to
31 December
2023
Gains on derivatives, of which:
132
95
617
366
measurement
77
-
68
202
realisation
55
95
549
164
Exchange differences on assets and liabilities
other than borrowings
514
-
310
-
Interest on loans granted and other financial
receivables
132
100
439
382
Fees and charges on re-invoicing of costs of
bank guarantees securing payments of liabilities
-
11
21
23
Reversal of impairment losses on financial
instruments measured at amortised cost,
including:
-
-
2
18
gains due to reversal of an allowance for
impairment of loans granted
-
-
2
15
Fair value gains on financial assets measured at
fair value through profit or loss, including:
33
-
141
668
loans
60
-
141
657
Reversal of impairment losses on shares in
subsidiaries
1 323
827
1 323
827
Dividends income
-
-
10
-
Release of provisions
109
21
115
30
Assistance under the government program “Aid
for energy-intensive sectors related to sudden
increases in natural gas and electricity prices in
2023 and 2024”*
14
178
14
178
Other
39
( 5)
72
72
Total other operating income
2 296
1 227
3 064
2 564
Losses on derivatives, of which:
( 44)
( 227)
( 565)
( 634)
measurement
-
( 87)
( 13)
( 188)
realisation
( 44)
( 140)
( 552)
( 446)
Impairment losses on financial instruments
measured at amortised cost, including:
( 87)
( 68)
( 94)
-
allowances for impairment of loans granted
( 86)
( 78)
( 91)
-
Exchange differences on financial assets and
liabilities other than borrowings
-
( 676)
-
( 770)
Fair value losses on financial assets measured at
fair value through profit or loss, including:
( 168)
( 352)
( 259)
( 223)
loans
( 123)
( 329)
( 123)
( 94)
Impairment losses on shares in subsidiaries
( 154)
-
( 154)
-
Provisions recognised
( 68)
( 1)
( 149)
( 6)
Donations granted
( 25)
( 13)
( 68)
( 66)
Losses due to modification of contract terms
( 169)
-
( 169)
-
Compensations, fines and penalties paid and
costs of litigations
-
( 1)
( 2)
( 9)
Losses on disposal of property, plant and
equipment (including costs associated with
disposal)
19
( 8)
( 12)
( 19)
Impairment losses on fixed assets under
construction and intangible assets not yet
available for use
( 1)
( 967)
( 5)
( 969)
Other
( 12)
( 22)
( 33)
( 98)
Total other operating costs
( 709)
(2 335)
(1 510)
(2 794)
Other operating income and (costs)
1 587
(1 108)
1 554
( 230)
*The Company recognises grants in the year in which it receives the confirmation of the grant from the funding body.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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139
Note 13.3 Finance income and costs
from
1 October 2024
to
31 December 2024
unaudited and
unreviewed
from
1 October 2023
to
31 December 2023
unaudited and
unreviewed
from
1 January 2024
to
31 December 2024
from
1 January 2023
to
31 December 2023
Gains on derivatives - realisation
60
86
134
173
Exchange differences on
measurement and realisation of
borrowings
-
307
-
358
Total income
60
393
134
531
Interest on borrowings, including:
( 14)
( 10)
( 70)
( 67)
leases
( 1)
( 2)
( 7)
( 9)
Interest on trade payables within
the reverse factoring mechanism
( 44)
( 40)
( 150)
( 75)
Bank fees and charges on
borrowings
( 7)
( 6)
( 26)
( 26)
Exchange differences on
measurement and realisation of
borrowings
( 162)
-
( 89)
-
Losses on derivatives - realisation
( 66)
( 90)
( 146)
( 183)
Unwinding of the discount effect
( 18)
( 2)
( 78)
( 60)
Total costs
( 311)
( 148)
( 559)
( 411)
Finance income/(costs)
( 251)
245
( 425)
120
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
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140
SIGNATURES OF ALL MEMBERS OF THE MANAGEMENT BOARD
These financial statements were authorised for issue on 25 March 2025.
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
Iga Dorota Lis
Vice President
of the Management Board
Piotr Stryczek
SIGNATURE OF PERSON RESPONSIBLE FOR ACCOUNTING
Executive Director
of Accounting Services Centre
Chief Accountant
Agnieszka Sinior