POLISH FINANCIAL SUPERVISION AUTHORITY
Consolidated annual report SRR 2024
(in accordance with § 60 sec. 2 of the Decree regarding current and periodic information)
for issuers of securities involved in production, construction, trade or services activities
for the financial year 2024 comprising the period from 1 January 2024 to 31 December 2024 containing the consolidated financial
statements according to International Financial Reporting 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.
35 320
33 467
8 206
7 390
II.
3 767
( 1 640)
875
( 362)
III.
4 608
( 3 600)
1 071
( 795)
IV.
2 870
( 3 691)
666
( 815)
V.
2 868
( 3 698)
666
( 817)
VI.
2
7
-
2
VII.
( 144)
373
( 33)
82
VIII.
2 726
( 3 318)
633
( 733)
IX.
2 725
( 3 324)
633
( 734)
X.
1
6
-
1
XI.
200 000 000
200 000 000
200 000 000
200 000 000
XII.
14.34
(18.49)
3.33
(4.09)
XIII.
4 690
6 051
1 090
1 336
XIV.
( 5 506)
( 4 798)
( 1 279)
( 1 060)
XV.
( 217)
( 747)
( 50)
( 165)
XVI.
( 1 033)
506
( 239)
111
XVII.
42 285
37 981
9 896
8 736
XVIII.
11 607
13 402
2 716
3 082
XIX.
53 892
51 383
12 612
11 818
XX.
11 828
11 136
2 768
2 561
XXI.
11 006
11 617
2 576
2 672
XXII.
31 058
28 630
7 268
6 585
XXIII.
30 990
28 565
7 252
6 570
XXIV.
68
65
16
15
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
CONSOLIDATED
FINANCIAL STATEMENTS
FOR 2024
Lubin, March 2025
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
2
Table of contents
CONSOLIDATED STATEMENT OF PROFIT OR LOSS ................................................................................................................ 4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ............................................................................................... 5
CONSOLIDATED STATEMENT OF CASH FLOWS ...................................................................................................................... 6
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ....................................................................................................... 8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ......................................................................................................... 9
Part 1 – General information ................................................................................................................................................ 10
Note 1.1 Corporate information ................................................................................................................................................... 10
Note 1.2 Composition of the Group ............................................................................................................................................. 11
Note 1.3 Going concern ................................................................................................................................................................. 16
Note 1.4 Declaration by the Management Board on the accuracy of the prepared financial statements........................ 21
Note 1.5 Basis of preparation and presentation ........................................................................................................................ 21
Note 1.6 Impact of new and amended standards and interpretations .................................................................................. 25
Note 1.7 Published standards and interpretations, which are not yet in force and were not applied earlier by the
Group ................................................................................................................................................................................................ 26
Part 2 – Information on segments and revenues .............................................................................................................. 30
Note 2.1 Operating segments ....................................................................................................................................................... 30
Note 2.2 Financial results of reporting segments ...................................................................................................................... 33
Note 2.3 Revenues from contracts with customers of the Group – breakdown by products ............................................. 36
Note 2.4 Revenues from contracts with customers of the Group – breakdown by category ............................................. 41
Note 2.5 Revenues from contracts with customers of the Group – geographical breakdown reflecting the location of
end customers................................................................................................................................................................................. 43
Note 2.6 Main customers .............................................................................................................................................................. 44
Note 2.7 Non-current assets – geographical breakdown ......................................................................................................... 44
Part 3 – Impairment of assets .............................................................................................................................................. 45
Note 3.1 Impairment losses on assets as at 31 December 2024 ............................................................................................. 45
Note 3.2 Impairment losses on assets as at 31 December 2023 ............................................................................................. 53
Part 4 - Explanatory notes to the statement of profit or loss .......................................................................................... 60
Note 4.1 Expenses by nature ........................................................................................................................................................ 60
Note 4.2 Other operating income and (costs) ............................................................................................................................ 61
Note 4.3 Finance income and (costs) ........................................................................................................................................... 62
Note 4.4 Reversal and (recognition) of impairment losses recognised in the statement of profit or loss ........................ 62
Part 5 – Taxation .................................................................................................................................................................... 63
Note 5.1 Income tax in the consolidated statement of profit or loss ..................................................................................... 63
Note 5.2 Other taxes and charges ................................................................................................................................................ 69
Note 5.3 Tax assets and liabilities ................................................................................................................................................ 70
Part 6 – Involvement in joint ventures ............................................................................................................................... 71
Note 6.1 Joint ventures accounted for using the equity method ............................................................................................ 71
Note 6.2 Loans granted to a joint venture (Sierra Gorda S.C.M.) ............................................................................................ 74
PART 7 – Financial instruments and financial risk management .................................................................................... 76
Note 7.1 Financial Instruments ..................................................................................................................................................... 76
Note 7.2 Derivatives ....................................................................................................................................................................... 82
Note 7.3 Other financial instruments measured at fair value ................................................................................................. 87
Note 7.4 Other financial instruments measured at amortised cost ....................................................................................... 88
Note 7.5 Financial risk management ........................................................................................................................................... 89
Part 8 – Borrowings and the management of liquidity and capital............................................................................... 110
Note 8.1 Capital management policy ......................................................................................................................................... 110
Note 8.2 Equity .............................................................................................................................................................................. 111
Note 8.3 Liquidity management policy ...................................................................................................................................... 114
Note 8.4 Borrowings ..................................................................................................................................................................... 116
Note 8.5 Cash and cash equivalents .......................................................................................................................................... 121
Note 8.6 Liabilities due to guarantees granted ........................................................................................................................ 121
Part 9 – Non-current assets and related liabilities .......................................................................................................... 123
Note 9.1 Mining and metallurgical property, plant and equipment and intangible assets ............................................... 123
Note 9.2 Other property, plant and equipment and intangible assets ................................................................................ 129
Note 9.3 Depreciation/amortisation .......................................................................................................................................... 132
Note 9.4 Provision for decommissioning costs of mines and other technological facilities ............................................. 132
Note 9.5 Capitalised borrowing costs ........................................................................................................................................ 134
Note 9.6 Carrying amount of the assets of Group companies representing collateral of repayment of liabilities ....... 134
Note 9.7 Lease disclosures – the Group as a lessee ................................................................................................................ 135
Note 9.8 Greenhouse gas emissions allowances ..................................................................................................................... 136
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
3
Note 9.9 Assets held for sale (disposal group) and liabilities associated with them .......................................................... 137
Part 10 – Working capital .................................................................................................................................................... 139
Note 10.1 Inventories ................................................................................................................................................................... 139
Note 10.2 Trade receivables ........................................................................................................................................................ 142
Note 10.3 Trade and other payables ......................................................................................................................................... 143
Note 10.4 Changes in working capital ....................................................................................................................................... 145
Part 11 – Employee benefits ............................................................................................................................................... 148
Note 11.1 Employee benefits liabilities ..................................................................................................................................... 149
Note 11.2 Changes in liabilities related to future employee benefits programs ................................................................ 150
Part 12 – Other notes .......................................................................................................................................................... 153
Note 12.1 Related party transactions ........................................................................................................................................ 153
Note 12.2 Dividends paid ............................................................................................................................................................ 154
Note 12.3 Other assets ................................................................................................................................................................ 155
Note 12.4 Other liabilities ............................................................................................................................................................ 156
Note 12.5 Provisions for liabilities and other charges ............................................................................................................. 156
Note 12.6 Assets and liabilities not recognised in the statement of financial position ...................................................... 157
Note 12.7 Litigation and claims .................................................................................................................................................. 157
Note 12.8 Capital commitments related to property, plant and equipment and intangible assets................................. 158
Note 12.9 Employment structure ............................................................................................................................................... 158
Note 12.10 Remuneration of key managers ............................................................................................................................. 158
Note 12.11 Remuneration of the entity entitled to audit the financial statements and of entities related to it, in PLN
thousands ...................................................................................................................................................................................... 160
Note 12.12 Subsequent events ................................................................................................................................................... 160
Part 13 – Quarterly financial information of the Group ................................................................................................. 161
CONSOLIDATED STATEMENT OF PROFIT OR LOSS .................................................................................................................. 161
Note 13.1 Expenses by nature .................................................................................................................................................... 162
Note 13.2 Other operating income and (costs) ........................................................................................................................ 163
Note 13.3 Finance income/(costs) .............................................................................................................................................. 164
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Note 2.3
Revenues from contracts with customers
35 320
33 467
Note 4.1
Cost of sales
(29 348)
(32 907)
Gross profit on sales
5 972
560
Note 4.1
Selling costs and administrative expenses
(2 205)
(2 200)
Profit/(loss) on sales
3 767
(1 640)
Note 6.2
Gain due to the reversal of allowances for
impairment of loans granted to a joint venture
226
101
Note 6.2
Interest income on loans granted to a joint venture
calculated using the effective interest rate method
552
597
Profit or loss on involvement in a joint venture
778
698
Note 4.2
Other operating income, including:
1 562
906
other interest calculated using the effective interest
rate method
63
56
Note 4.2
Other operating costs, including:
(1 118)
(3 723)
impairment losses on financial instruments
( 1)
( 4)
Note 4.3
Finance income
135
529
Note 4.3
Finance costs
( 516)
( 370)
Profit/(loss) before income tax
4 608
(3 600)
Note 5.1
Income tax expense
(1 738)
( 91)
PROFIT/(LOSS) FOR THE PERIOD
2 870
(3 691)
Profit/(loss) for the period attributable to:
shareholders of the Parent Entity
2 868
(3 698)
non-controlling interest
2
7
Weighted average number of ordinary shares
(million)
200
200
Basic/diluted earnings per share (in PLN)
14.34
( 18.49)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
5
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Profit/(loss) for the period
2 870
(3 691)
Note 8.2.2
Measurement and settlement of hedging
instruments net of the tax effect
( 445)
451
Exchange differences from translation of
statements of operations with a functional currency
other than PLN
15
( 79)
Other comprehensive income, which will be
reclassified to profit or loss
( 430)
372
Note 8.2.2
Measurement of equity financial instruments at fair
value through other comprehensive income, net of
the tax effect
6
253
Actuarial gains/(losses) net of the tax effect
271
( 252)
Surplus from the fair value remeasurement of
investment properties, as at the day of
reclassification from fixed assets, net of the tax effect
9
-
Other comprehensive income which will not be
reclassified to profit or loss
286
1
Total other comprehensive net income
( 144)
373
TOTAL COMPREHENSIVE INCOME
2 726
(3 318)
Total comprehensive income attributable to:
shareholders of the Parent Entity
2 725
(3 324)
non-controlling interest
1
6
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
6
CONSOLIDATED 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
4 608
(3 600)
Note 9.3
Depreciation/amortisation recognised in profit or loss
2 006
2 311
Note 6.2
Interest on loans granted to a joint venture
( 552)
( 597)
Other interest
183
97
Part 3
Impairment losses on property, plant and equipment and intangible
assets
312
4 036
Gain on reversal of impairment losses on property, plant and
equipment and intangible assets
( 74)
( 56)
Note 6.2
Gain due to the reversal of allowances for impairment of loans
granted to a joint venture
( 226)
( 101)
Losses on disposal of property, plant and equipment and intangible
assets
25
21
Exchange differences, of which:
( 411)
958
from investment activities and cash
( 495)
1 314
from financing activities
84
( 356)
Change in provisions for decommissioning of mines, liabilities
related to future employee benefits programs and other provisions
425
464
Change in other receivables and liabilities other than working capital
163
( 288)
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
( 33)
30
Exclusions of income and costs, total
1 370
7 496
Income tax, of which:
( 413)
(1 646)
payments of income tax
(1 027)
(1 678)
refunds of income tax
614
32
Note 10.4
Changes in working capital, including:
( 875)
3 801
change in trade payables within the reverse factoring mechanism
(1 007)
2 868
Net cash generated from/(used in) operating activities
4 690
6 051
Cash flow from investing activities
Note 9.1.3
Expenditures on mining and metallurgical assets, including:
(5 176)
(4 112)
Note 8.4.2
paid capitalised interest on borrowings
( 331)
( 353)
proceeds on settlement of an instrument hedging interest rate
of bonds
70
102
Expenditures on other property, plant and equipment and intangible
assets
( 679)
( 664)
Expenditures on financial assets designated for decommissioning
of mines and other technological facilities
( 45)
( 40)
Expenditures on acquisition of subsidiaries
( 63)
( 7)
Advances granted on property, plant and equipment and intangible
assets
( 31)
( 156)
Proceeds from financial assets designated for decommissioning
of mines and other technological facilities
-
2
Proceeds from repayment of loans granted to a joint venture (principal)
346
28
Proceeds from disposal of property, plant and equipment and intangible
assets
46
41
Interest received on loans granted to a joint venture
118
135
Other
( 22)
( 25)
Net cash generated from/(used in) investing activities
(5 506)
(4 798)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
7
Cash flow from financing activities
Note 8.4.2
Proceeds from issuance of debt financial instruments
1 000
-
Note 8.4.2
Proceeds from borrowings
1 940
1 673
Proceeds from derivatives related to sources of external financing
64
70
Note 8.4.2
Redemption of debt financial instruments
( 400)
-
Note 8.4.2
Repayment of borrowings
(2 154)
(2 051)
Note 8.4.2
Repayment of lease liabilities
( 97)
( 83)
Expenditures due to derivatives related to sources of external financing
( 75)
( 81)
Interest paid, of which:
( 202)
( 81)
due to trade payables within the reverse factoring mechanism
( 164)
( 50)
Note 8.4.2
due to borrowings
( 38)
( 31)
Expenditures due to dividends paid to shareholders of the Parent Entity
( 300)
( 200)
Other
7
6
Net cash generated from/(used in) financing activities
( 217)
( 747)
NET CASH FLOW
(1 033)
506
Exchange gains/(losses)
19
23
Cash and cash equivalents at beginning of the period
1 729
1 200
Cash and cash equivalents at end of the period, including:
715
1 729
restricted cash
24
27
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
31 December
2024
As at
31 December
2023
ASSETS
Mining and metallurgical property, plant and equipment
24 050
20 798
Mining and metallurgical intangible assets
2 830
2 697
Note 9.1
Mining and metallurgical property, plant and equipment and intangible
assets
26 880
23 495
Other property, plant and equipment
3 087
2 941
Other intangible assets
213
313
Note 9.2
Other property, plant and equipment and intangible assets
3 300
3 254
Note 6.2
Involvement in joint ventures – loans granted
9 800
9 096
Note 7.2
Derivatives
286
233
Note 7.3
Other financial instruments measured at fair value
883
905
Note 7.4
Other financial instruments measured at amortised cost
557
475
Financial instruments, total
1 726
1 613
Note 5.1.1
Deferred tax assets
302
137
Note 12.3
Other non-financial assets
277
386
Non-current assets
42 285
37 981
Note 10.1
Inventories
8 063
8 425
Note 10.2
Trade receivables, including:
1 345
932
trade receivables measured at fair value through profit or loss
707
414
Note 5.3
Tax assets
453
985
Note 7.2
Derivatives
219
760
Note 12.3
Other financial assets
317
296
Note 12.3
Other non-financial assets
366
275
Note 8.5
Cash and cash equivalents
715
1 729
Note 9.9
Non-current assets held for sale (disposal group)
129
-
Current assets
11 607
13 402
TOTAL ASSETS
53 892
51 383
EQUITY AND LIABILITIES
Note 8.2.1
Share capital
2 000
2 000
Note 8.2.2
Other reserves from measurement of financial instruments
( 162)
277
Note 8.2.2
Accumulated other comprehensive income, other than from
measurement of financial instruments
1 778
1 482
Note 8.2.2
Retained earnings
27 374
24 806
Equity attributable to shareholders of the Parent Entity
30 990
28 565
Equity attributable to non-controlling interest
68
65
Equity
31 058
28 630
Note 8.4.1
Borrowings and leases
2 310
3 161
Note 8.4.1
Debt securities
2 600
1 600
Note 7.2
Derivatives
269
202
Note 11.1
Employee benefits liabilities
2 784
3 117
Note 9.4
Provisions for decommissioning costs of mines and other
technological facilities
2 084
1 923
Note 5.1.1
Deferred tax liabilities
1 384
646
Note 12.4
Other liabilities
397
487
Non-current liabilities
11 828
11 136
Note 8.4.1
Borrowings and leases
1 259
562
Note 8.4.1
Debt securities
2
402
Note 7.2
Derivatives
44
499
Note 10.3
Trade and other payables
5 132
6 188
Note 11.1
Employee benefits liabilities
2 019
1 709
Note 5.3
Tax liabilities
1 049
611
Note 12.5
Provisions for liabilities and other charges
280
194
Note 12.4
Other liabilities
1 061
1 452
Note 9.9
Liabilities related to disposal group
160
-
Current liabilities
11 006
11 617
Non-current and current liabilities
22 834
22 753
TOTAL EQUITY AND LIABILITIES
53 892
51 383
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to shareholders of the Parent Entity
Share capital
Other reserves
from
measurement of
financial
instruments
Accumulated
other
comprehensive
income
Retained
earnings
Total
Equity
attributable to
non-controlling
interest
Total equity
As at 31 December 2022
2 000
( 427)
1 812
28 704
32 089
57
32 146
Transactions with non-controlling interest
-
-
-
-
-
2
2
Note 12.2
Transactions with owners – dividend approved
and paid
-
-
-
( 200)
( 200)
-
( 200)
Profit/(loss) for the period
-
-
-
(3 698)
(3 698)
7
(3 691)
Note 8.2.2
Other comprehensive income
-
704
( 330)
-
374
( 1)
373
Total comprehensive income
-
704
( 330)
(3 698)
(3 324)
6
(3 318)
As at 31 December 2023
2 000
277
1 482
24 806
28 565
65
28 630
Transactions with non-controlling interest
-
-
-
-
-
2
2
Note 12.2
Transactions with owners – dividend approved
and paid
-
-
-
( 300)
( 300)
-
( 300)
Profit for the period
-
-
-
2 868
2 868
2
2 870
Note 8.2.2
Other comprehensive income
-
( 439)
296
-
( 143)
( 1)
( 144)
Total comprehensive income
-
( 439)
296
2 868
2 725
1
2 726
As at 31 December 2024
2 000
( 162)
1 778
27 374
30 990
68
31 058
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated 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 Parent Entity”, “the Company”) with its registered office in Lubin at 48 M. Skłodowskiej-Curie
Street is a joint stock company registered at the Regional Court for Wrocław Fabryczna in Wrocław, Section IX (Economic)
of the National Court Register, entry no. KRS 23302, on the territory of the Republic of Poland.
KGHM Polska Miedź S.A. has a multi-divisional organisational structure, comprised of a Head Office and 10 divisions:
3 mines (Lubin Mine Division, Polkowice-Sieroszowice Mine Division, Rudna Mine Division), 3 metallurgical plants (Głogów
Smelter/Refinery, Legnica Smelter/Refinery, Cedynia Wire Rod Division), the Concentrator Division, the Tailings Division, the
Mine-Smelter Emergency Rescue Division and the Data Center Division.
The shares of KGHM Polska Miedź S.A. are listed on the Warsaw Stock Exchange.
The Parent Entity’s principal activities include:
− the mining of copper and non-ferrous metals ores; and
− the production of copper, precious and non-ferrous metals.
In addition, the KGHM Polska Miedź S.A. Group (“the Group”) conducts other activities, which are described in Note 2.1.
The KGHM Polska Miedź S.A. Group carries out exploration and the mining of copper, nickel and precious metals based
on concessions given for the Polish deposits to KGHM Polska Miedź S.A., and also based on legal titles held by companies
of the KGHM INTERNATIONAL LTD. Group for the exploration for or mining of these resources in the USA, Canada and Chile.
Detailed information is presented in the Management Board’s report on the activities of KGHM Polska Miedź S.A and of the
KGHM Polska Miedź S.A. Group in 2024 (sections 1.3.1 and 1.3.2).
In 2024, the Parent Entity of the Group consolidated 63 subsidiaries and used the equity method to account for the shares
of two joint ventures (Sierra Gorda S.C.M. and NANO CARBON Sp. z o.o. in liquidation).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
11
Note 1.2 Composition of the Group
Percentage of Group’s share
Company
Head office
As at
31 December
2024
As at
31 December
2023
BIPROMET S.A.
Katowice
100
100
CBJ sp. z o.o.
Lubin
100
100
CENTROZŁOM WROCŁAW S.A.
Wrocław
100
100
Polska Grupa Uzdrowisk sp. z o.o.
Wrocław
100
100
"Energetyka" sp. z o.o.
Lubin
100
100
Fundusz Hotele 01 Sp. z o.o.
Wrocław
-
100
Fundusz Hotele 01 Sp. z o.o. S.K.A.
Wrocław
-
100
INOVA spółka z o.o.
Lubin
100
100
KGHM CUPRUM sp. z o.o. - CBR
Wrocław
100
100
CUPRUM Development sp. z o.o.
Wrocław
100
100
KGHM Kupfer AG i. L.
Weißwasser
100
100
KGHM Metraco S.A.
Legnica
100
100
KGHM (SHANGHAI) COPPER TRADING CO., LTD.
Shanghai
100
100
KGHM ZANAM S.A.
Polkowice
100
100
"MIEDZIOWE CENTRUM ZDROWIA" S.A.
Lubin
100
100
NITROERG S.A.
Bieruń
87.12
87.12
NITROERG SERWIS Sp. z o.o.
Wilków
87.12
87.12
PeBeKa S.A.
Lubin
100
100
MERCUS Logistyka sp. z o.o.
Polkowice
100
100
PHU "Lubinpex" Sp. z o.o.
Lubin
100
100
Future 1 Sp. z o.o.
Lubin
100
100
KGHM Centrum Analityki Sp. z o.o.
Lubin
-
100
Future 3 Sp. z o.o.
Lubin
100
100
Future 4 Sp. z o.o.
Lubin
100
100
Future 5 Sp. z o.o.
Lubin
100
100
PMT Linie Kolejowe Sp. z o.o.
Owczary
100
100
POL-MIEDŹ TRANS Sp. z o.o.
Lubin
100
100
Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU
Jelenia Góra
99.12
98.85
Uzdrowiska Kłodzkie S.A. - Grupa PGU
Polanica Zdrój
100
100
Uzdrowisko Połczyn Grupa PGU S.A.
Połczyn Zdrój
100
100
Uzdrowisko Świeradów-Czerniawa Sp. z o.o. - Grupa PGU
Świeradów Zdrój
99.46
99.48
WMN "ŁABĘDY" S.A.
Gliwice
84.98
84.98
WPEC w Legnicy S.A.
Legnica
100
100
Zagłębie Lubin S.A.
Lubin
100
100
OOO ZANAM VOSTOK
Gay (Russia)
100
100
Invest PV 7 Sp. z o.o.
Lubin
100
100
Invest PV 40 Sp. z o.o.
Lubin
100
-
Invest PV 58 Sp. z o.o.
Lubin
100
-
Invest PV 59 Sp. z o.o.
Lubin
100
-
TUW Cuprum
Lubin
99.49
99.49
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
12
Percentage of Group’s share
Company
Head office
As at
31 December
2024
As at
31 December
2023
KGHM INTERNATIONAL LTD. Group
KGHM INTERNATIONAL LTD.
Canada
100
100
KGHM AJAX MINING INC.
Canada
80
80
Sugarloaf Ranches Ltd.
Canada
80
80
KGHMI HOLDINGS LTD.
Canada
100
100
Quadra FNX Holdings Chile Limitada
Chile
100
100
Aguas de la Sierra Limitada
Chile
100
100
Quadra FNX FFI S.à r.l.
Luxembourg
100
100
Robinson Holdings (USA) Ltd.
USA
100
100
Wendover Bulk Transhipment Company
USA
100
100
Robinson Nevada Mining Company
USA
100
100
Carlota Holdings Company
USA
100
100
Carlota Copper Company
USA
100
100
FNX Mining Company Inc.
Canada
100
100
DMC Mining Services Ltd.
Canada
100
100
Quadra FNX Holdings Partnership
Canada
100
100
DMC Mining Services Mexico, S.A. de C.V.
Mexico
100
100
FNX Mining Company USA Inc.
USA
100
100
DMC Mining Services Corporation
USA
100
100
Centenario Holdings Ltd.
Canada
100
100
Minera Carrizalillo SpA
Chile
100
100
KGHM Chile SpA
Chile
100
100
FRANKE HOLDINGS LTD.
Canada
100
100
0899196 B.C. Ltd.
Canada
100
100
DMC Mining Services (UK) Ltd.
The United Kingdom
100
100
DMC Mining Services Colombia SAS
Colombia
100
100
DMC Mining Services Chile SpA
Chile
100
100
Project Nikolas Company INC.
Canada
100
-
Changes in the organisational structure of the KGHM Polska Miedź S.A. Group
Acquisition of Companies: INVEST PV 40 sp. z o.o., INVEST PV 58 sp. z o.o. and INVEST PV 59 sp. z o.o.
On 29 February 2024, KGHM Polska Miedź S.A. acquired 100% of the shares of companies: INVEST PV 40 sp. z o.o., INVEST
PV 58 sp. z o.o. and INVEST PV 59 sp. z o.o. The value of the transaction amounted to PLN 215 million (PLN 141 million paid
in 2023, PLN 74 million paid in the current reporting period), of which PLN 41 million was a payment for the acquisition of
shares, while PLN 174 million concerned subrogation of liabilities (owner loans). As at the end of the reporting period, the
final acquisition price of shares was determined to amount to PLN 31 million. The transaction’s value included the working
capital of companies in the amount of PLN 19 million. The total value of shares (enterprise value) for the three
aforementioned companies amounted to PLN 186 million.
In accordance with the requirements of IFRS 3 Business Combinations, an analysis was conducted as to whether the acquired
assets and liabilities meet the definition of a business and the transaction should be settled in accordance with IFRS 3 as a
business combination, or whether the acquired assets do not constitute a business and the transaction should be settled
as an acquisition of assets. After conducting a concentration test and further quality analysis, the Group concluded that the
transaction constituted an acquisition of assets and was recognised as such in these consolidated financial statements.
The acquired assets are property, plant and equipment mainly constituting expenditures incurred on the construction of
photovoltaic farms (i.e. steel structures, Energy Performance Contracting costs) and land usufruct under tenancy
agreements. (Note 9.2 Other property, plant and equipment and intangible assets).
Merger of Companies: KGHM CUPRUM sp. z o.o. – CBR (Acquiring Company) and KGHM Centrum Analityki Sp. z o.o.
(Acquired Company)
On 18 September 2024, the Extraordinary Shareholders Meetings of the companies: KGHM CUPRUM sp. z o.o. – CBR and
KGHM Centrum Analityki Sp. z o.o. adopted resolutions on consent to the merger of the above-mentioned companies in
the manner specified in art. 492 § 1 point 1 of the Commercial Partnerships and Companies Code.
On 30 September 2024, the above merger was registered in the National Court Register. Due to the nature of the transaction
(merger of entities under joint control), it had no impact on the Group's consolidated financial statements as at 31
December 2024.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
13
Merger of Companies: Polska Grupa Uzdrowisk sp. z o.o. (Acquiring Company) and Fundusz Hotele 01 sp. z o.o.
and Fundusz Hotele 01 sp. z o.o. S.K.A. (Acquired Companies)
On 30 October 2024, the Extraordinary Shareholders Meetings of the company Polska Grupa Uzdrowisk sp. z o.o. adopted
a resolution on consent to its merger with two subsidiaries: Fundusz Hotele 01 sp. z o.o. and Fundusz Hotele 01 sp. z o.o.
S.K.A. in the manner specified in art. 492 § 1 point 1 of the Commercial Partnerships and Companies Code.
On 2 December 2024, the above merger was registered in the National Court Register. Due to the nature of the transaction
( the Acquiring Company has 100% share in the Acquired Companies), it had no impact on the Group's consolidated financial
statements as at 31 December 2024.
Establishment of Project Nikolas Company INC., a special purpose company
Project Nikolas Company INC. is a special purpose company established by the Group for the purpose of carrying out a
particular transaction – further information is presented in Note 9.9.1.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
14
Diagram of the KGHM Polska Miedź S.A. Group as at 31 December 2024
* entity excluded from consolidation due to its insignificant impact on the consolidated financial statements.
Parent Entity
KGHM Polska Miedź S.A.
PeBeKa S.A.
100%
KGHM CUPRUM sp. z o.o. – CBR
100%
Zagłębie Lubin S.A.
100%
MIEDZIOWE CENTRUM ZDROWIA S.A.
100%
CBJ sp. z o.o.
100%
INOVA spółka z o.o.
100%
KGHM ZANAM S.A.
100%
KGHM (SHANGHAI) COPPER TRADING CO., LTD.
100%
Energetyka sp. z o.o.
100%
WPEC w Legnicy S.A.
100%
POL-MIEDŹ TRANS Sp. z o.o.
100%
MERCUS Logistyka sp. z o.o.
100%
PHU Lubinpex Sp. z o.o.
100%
BIPROMET S.A.
100%
NITROERG S.A.
87.12%
CENTROZŁOM WROCŁAW S.A.
100%
Walcownia Metali Nieżelaznych ŁABĘDY S.A.
84.98%
KGHM Metraco S.A.
100%
Uzdrowiska Kłodzkie S.A. – Grupa PGU
100%
Uzdrowisko Połczyn Grupa PGU S.A.
100%
Uzdrowisko Cieplice Sp. z o.o. – Grupa PGU
99.12%
Uzdrowisko Świeradów-Czerniawa Sp. z o.o. –
Grupa PGU
99.46%
Future 1 Spółka z o.o.
100% (continued on next page)
NITROERG SERWIS Sp. z o.o
87.12%
Polska Grupa Uzdrowisk sp. z o.o.
100%
CUPRUM Development sp. z o.o.
100%
PMT LK Sp. z o.o.
100%
Future 3 Spółka z o.o.
100%
Future 4 Spółka z o.o.
100%
Future 5 Spółka z o.o.
100%
OOO ZANAM VOSTOK
100%
TUW Cuprum *
99.49%
Invest PV 7 Sp. z o.o.
100%
Invest PV 40 Sp. z o.o.
100%
Invest PV 58 Sp. z o.o.
100%
Invest PV 59 Sp. z o.o.
100%
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
15
Future 1 Spółka z o.o.
100%
KGHM INTERNATIONAL LTD.
100%
FNX Mining Company Inc.
100%
0899196 B.C. Ltd.
100%
CENTENARIO HOLDINGS LTD.
100%
Minera Carrizalillo SpA
100%
KGHM Chile SpA
100%
FRANKE HOLDINGS LTD.
100%
DMC Mining Services Ltd.
100%
Quadra FNX Holdings Partnership
100%
DMC Mining Services Mexico, S.A. de C.V.
100%
FNX Mining Company USA Inc.
100%
DMC Mining Services Corporation
100%
Robinson Holdings (USA) Ltd.
100%
Wendover Bulk Transhipment Company
100%
Robinson Nevada Mining Company
100%
Carlota Holdings Company
100%
Carlota Copper Company
100%
KGHMI HOLDINGS LTD.
100%
Quadra FNX Holdings Chile Limitada
100%
Aguas de la Sierra Limitada
100%
Quadra FNX FFI S.á r.l.
100%
KGHM AJAX MINING INC.
80%
Sugarloaf Ranches Ltd.
80%
KGHM Kupfer AG i. L.
100%
DMC Mining Services Colombia SAS
100%
DMC Mining Services (UK) Ltd.
100%
DMC Mining Services Chile SpA
100%
Project Nikolas Company INC.
100%
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
16
Note 1.3 Going concern
The consolidated financial statements were prepared under the assumption that the Group’s companies will continue
as a going concern during a period of at least 12 months from the end of the reporting period in a significantly unaltered
form and business scope, and there are no reasons to suspect any intentional or forced discontinuation or significant
limitation of its current activities. As at the date of signing of the consolidated financial statements the Management Board
of the Parent Entity is not aware of any facts or circumstances that may cast doubt about the going concern in the
foreseeable future.
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 and the
Group’s operations in the foreseeable future.
During the assessment of the Company’s and the Group’s capacity to continue operations, forecasts of financial liquidity,
debt levels, key debt ratios and profitability were taken into account.
The Group 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 Group takes actions aimed at ensuring safety and financial
stability by diversifying the sources of financing and ensuring their long-term maturities. The Group 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 Group and confirms its stable financial condition. During the process of managing the
liquidity and capital, the Group 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 Group 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 individual reporting segments (Part 2 Information on segments and revenues).
To assess the capacity to continue operations by the Company and the Group, 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 impact
of risks associated with the climate change on activities of the Group (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 and the Group’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 1.3.1 Monitored areas – macroeconomic conditions
The following macroeconomic factors have the most significant impact on the activities and financial results of the Group:
copper and silver prices, prices of fuel, electricity and energy carriers as well as market interest rates, USD/PLN exchange
rate, inflation manifested by fluctuations in prices of materials and services, which results in a salary pressure.
Stock prices of copper, silver and gold as well as the USD/PLN exchange rate shape the amount of revenues from sales and
constitute a part of a market risk which is managed by the Group by, among others, derivatives transactions hedging the
price as well as the exchange rate. Moreover, they have a significant impact on some of the Group’s costs, while the following
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 Group in the balance sheet measurement of assets
and liabilities recognised in the statement of financial position.
All of the aforementioned risk factors have an impact on the measurement of recoverable amount of the Group’s assets,
where of significance is not only the current volatility of commodities and exchange rates shaping the amount of revenues
and a significant part of costs, but above all volatility of forecasts on shaping these factors in subsequent periods, since they
have an impact on production and investment plans. Moreover, due to the long-term nature of mining and metallurgical
assets, the applied discount rate, which remains under the influence of market interest rates, is of particular importance.
The description of impact of macroeconomic factors on individual areas of operations as well as assets and liabilities of the
Group was presented in the following notes:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
17
Impact observation areas
Note/Part
Operating segments and information on revenues – onerous contracts and variable overheads
2.3
Impairment of assets
Part 3
Receivables due to loans granted
6.2
Financial instruments – fair value
7.1
Market risk – price of commodities, exchange rate, interest rates, prices of energy and energy
carriers
7.5.1
Liquidity risk
8.1
Provision for decommissioning costs of mines and other technological facilities
9.4
Future employee benefits liabilities
Part 11
Note 1.3.2 Monitored areas – impact of war in Ukraine
In the reporting period, the Group 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 Group’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 Group’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 Group’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, the Group 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 Group and may lead to
unfavourable deviations in the continuity of materials and services supply chains in the KGHM Polska Miedź S.A. Group as
well as in the receipt of products, caused among others by logistical restrictions and the availability of materials, fuels and
energy on international markets. Taking into consideration the continuity of supply of energy carriers (natural gas, coal,
coke), at the present time, the KGHM Polska Miedź S.A. Group is fully capable of maintaining the continued operation of the
core production business and of all production processes.
Impact on the activities of the Parent Entity and other companies of the Group
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. or other companies of the Group, while the
risk of interruptions to the operational continuity of the Company and the KGHM Polska Miedź S.A. Group 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 Group holds no bank loans drawn from institutions threatened
with sanctions.
In KGHM Polska Miedź S.A. as well as in all international mines of the KGHM Polska Miedź S.A. Group as well as in Sierra
Gorda S.C.M., 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 Parent Entity takes place without any major disturbances.
Preventive actions in the Group
The strategy of diversification of suppliers applied by the entire KGHM Polska Miedź S.A. Group and the use of alternative
solutions effectively, at this point in time, mitigates the risk of interruptions in the supply chains of raw and other materials.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
18
Due to the centralisation of the process of obtaining external financing for the entire Group’s needs, the realisation of intra-
group liquidity transfers is made using a debt instrument in the form of owner loans, which support the process of
investment activities, and to support current activities the Group uses local and international cash pooling.
The Group continues to advance its investment projects in accordance with established schedules and therefore does not
identify any increase in risk related to their continuation due to the war in Ukraine.
No significant, negative impact of the aforementioned factors has been recorded on the continued operations of the core
production business, sales or continuity of the supply chain for materials and services yet. The Parent Entity continuously
monitors the global economic situation in order to assess its potential negative impact on the KGHM Polska Miedź S.A.
Group and to take preventive actions to mitigate this impact.
Note 1.3.3 Monitored areas – risks and hazards associated with the climate
The KGHM Polska Miedź S.A. Group (the KGHM Group) 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 KGHM
Group continuously evaluates the risk associated with the climate and the impact on its operations under the process of
Corporate Risk Management of the KGHM Polska Miedź S.A. Group, which was described in more detail in the Management
Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group in 2024, section 1.5
Risk Management/1.5.1 Corporate risk – key risks and risk factors and mitigation.
The negative impact of climate change on the activities of the KGHM Group is analysed using the classification presented
below:
The KGHM Group 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
KGHM Group by, among others, through disruptions in the supply chain, the continuity of the core production business
and an increase in operating costs directly related to the core business as well as through more difficult working conditions.
The climate risk related to the transition, to which the KGHM Group is exposed, arises from the need to adapt the economy
to gradual climate change. This risk category comprises questions related to legal requirements, technological progress
towards a low-carbon economy and changes in demand and supply for certain products and services, whose production is
associated with the climate risk as well as the growing expectations of stakeholders regarding the KGHM Group as to the
reduction of its impact on the climate. A detailed description of identified, key climate risks associated with the negative
impact of climate changes on the activities of the KGHM Group, including description of actions undertaken by the KGHM
Group to mitigate their impact, is presented in the Management Board’s report on the activities of KGHM Polska Miedź S.A.
and the KGHM Polska Miedź S.A. Group in 2024, section 1.5 Risk Management/1.5.1 Corporate risk – key risks and risk
factors and mitigation.
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 KGHM Group. As part of the analyses carried out, in particular in the case of volatile costs
of CO
2
emission allowances, the increase in costs of electricity purchase, costs associated with research and additional
expenditures on development of internal energy sources, the following areas were subjected to detailed assessment:
• adopted periods of economic utility of fixed assets and their residual values,
• existence of indications of the possibility of impairment of property, plant and equipment and intangible assets
and assumptions adopted for impairment testing of these assets,
• assumptions adopted for the measurement of loans granted,
• revaluation of the provision for future decommissioning costs of mines and other technological facilities,
• revaluation of provisions for additional costs of sales, selling costs and administrative expenses,
• liabilities and liabilities due to guarantees associated with potential fines and environmental penalties.
As a result of the aforementioned work, as at 31 December 2024 no material impact of climate risk on the aforementioned
areas was identified.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
19
Note 1.3.4 Monitored areas – impact of risk associated with activities in other countries
Within the KGHM Polska Miedź S.A. Group, a risk management process is realised, under which the current and future,
actual and potential impact of risk on the Group’s operations is assessed. In companies of the Group, including entities
conducting business activities in countries other than Poland, the documents regulating this area are consistent with the
ones in force within the Parent Entity. A detailed description of approach to the corporate risk management and key risk
categories, including among others risks specific to the KGHM INTERNATIONAL LTD. Group, may be found 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 1.5 Risk Management. The key risk categories, which are characteristic due to diversified locations of production
assets of the KGHM Polska Miedź S.A. Grout outside Poland, that is USA, Chile and Canada are presented below.
Key risk categories
The most significant risk categories related to conducting business activities in other countries which impact the Group’s
operations are:
• the regulatory environment specific for a given country,
• the geopolitical situation,
• cultural and social differences,
• the exchange risk (USD/CLP, USD/CAD),
• the specific location impacting the technical and production infrastructure,
• the risk associated with climate changes.
The Group continuously and in detail analyses factors influencing the increase in exposure to the aforementioned risk
categories. Within KGHM Polska Miedź S.A., there is a dedicated organisational division responsible for, among others,
supervision over international production and development assets.
Regulatory environment specific for a given country
One of the most complex aspects of global operations is ensuring conformity with Polish, European as well as local
regulations in force in a given country/jurisdiction. Functioning in many legal systems requires not only the familiarisation
with local regulations, but also the ability to adapt to dynamically changing requirements, and the lack of compliance with
regulations may lead to sanctions, fines and negatively impact the Group’s reputation, and in the worst case limit the
activities of individual entities. The most important questions regarding the specifics of regulatory environment in
diversified locations concern ensuring conformity with environmental requirements, labour law, taxation and associated
with mine restoration and closure. These questions are characterised by being significantly different from the Polish and
European legal system.
First of all, in order to mitigate, legislative changes are monitored, compliance with law in force is analysed and cooperation
is ensured with specialised entities providing legal and consulting services. The above also aimed at enabling, in advance,
the undertaking of actions necessary to obtain new or updating held administrative decisions.
Geopolitical situation
The geopolitical situation, which nowadays is characterised by a significant uncertainty, may have an impact on the Group’s
operations by, among others, potential changes on global markets, increased restrictions in customs policies, tightening
economic sanctions and on-going armed conflicts. The following may serve as examples: the ongoing conflict in Ukraine,
conflicts in the Middle East, unpredictable international and trade politics of USA.
One of the important aspects is the announced increase of tariffs on imports by USA (Mexico, Canada, China), which may
have an impact on the European Union and global supply chains. Currently, it is hard to estimate the direct consequences
of these actions due to their very early phase. At the same time, USA’s scepticism towards questions related to the climate
change and policies of the European Union towards the European Green Deal may be observed, which was reflected in,
among others, USA’s withdrawal from the Paris Agreement. The above may have an indirect impact on meeting the climate
reporting obligations of the Group, including the realisation of goals of the Group’s climate policy.
The Group continuously monitors the international economic situation in order to assess its potential negative impact on
the KGHM Polska Miedź S.A. Group and to undertake actions mitigating this impact in advance.
Cultural and social differences
Cultural and social differences are an important aspect of conducting activities and have a significant impact on the manner
in which a company functions, communication, team management and decision making. These elements may concern not
only the Group’s employees, but also broadly understood stakeholders. The above also has an impact on the availability of
highly qualified personnel, which may differ depending on the location.
KGHM Polska Miedź S.A., as a company aware of the existing differences, takes care to adapt its actions in individual parts
of the world to their local specifics. At the same time the Group actively supports the development of local communities
and respects their culture by respecting rights of indigenous people (which is of particular importance in case of
international companies of the Group). In order to secure the realisation of the company’s strategic goals in terms of
international assets, for many years the Group consistently invests in employee development while respecting their
diversity. Human resources play a key role in development of all areas within the business model, contribute to the global
position of the company and the Group supports local communities and closely cooperates with schools and academic
communities.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
20
Currency risk (USD/CLP, USD/CAD)
International assets of the KGHM Polska Miedź S.A. Group are exposed to the market risk associated with volatility of
exchange rates, in particular of the USD/CLP and USD/CAD exchange rates.
More information on currency risk, including on principles and techniques of managing this risk may be found in these
consolidated financial statements, note 7.5.1 Market risk and 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 1.5 Risk Management/1.5.1 Corporate risk – key
risks and risk factors and mitigation and 1.5.4 Market, credit and liquidity risks.
Specific location impacting the technical and production infrastructure
International assets of the KGHM Polska Miedź S.A. Group are exposed to the risk associated with the specific location of
individual production assets (e.g. desert areas). Risk factors concern, among others, the availability and maintenance of
appropriate technical infrastructure (for example: access to water, energy sources, railway infrastructure/automotive
infrastructure) or issues related to supply chain and availability of materials necessary for basic operations.
The strategy of diversifying suppliers, applied throughout the entire KGHM Polska Miedź S.A. Group and the application of
alternative solutions is currently effective in mitigating the risk associated with disruptions in supply chains of resources
and materials. In the case of infrastructure, it was designed while taking into account local conditions which may affect its
availability, and operations are conducted pursuant to instructions and procedures in force, alongside a simultaneous
realisation of inspections and maintenance work aimed at keeping individual elements at appropriate technical condition,
including investments and modernisation work.
Risk associated with climate change
Exposure to risk associated with climate change may differ depending on the continent, or even a region, in which a given
entity conducts its operations. Due to the above, in its approach to the management of climate risk the Group takes into
account different factors and conditions due to the location, both in respect of violent and chronic physical risks.
More information on the impact of identified, key categories of climate risk associated with negative impact of climate
change on the Group’s operations, including factors specific for international entities, may be found in:
1) The Management Board’s report on the activities of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A.
Group in 2024, in the following sections:
• 1.5 Risk Management/1.5.1 Corporate risk – key risks and risk factors and mitigation,
• 4 Sustainable development reporting/4.1 General information/4.1.1 [ESRS 2] General information
disclosure/[SBM-3] Material impacts, risks and opportunities and their interaction with strategy and business
model,
2) the Note 1.3.3 of these consolidated financial statements: Monitored areas – risks and hazards associated with the
climate.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
21
Note 1.4 Declaration by the Management Board on the accuracy of the prepared financial statements
The Management Board of KGHM Polska Miedź S.A. declares that, according to its best judgement, the annual consolidated
financial statements for 2024 and the comparative data have been prepared in accordance with accounting principles
currently in force, and give a true, fair and clear view of the financial position of the KGHM Polska Miedź S.A. Group and the
profit or loss for the period of the Group.
The Management Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group
in 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 consolidated financial statements were authorised for publication and signed by the Management Board of the Parent
Entity on 25 March 2025.
Note 1.5 Basis of preparation and presentation
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union, on the basis of historical cost, except for financial instruments classified
as measured at fair value and investment properties measured at fair value.
Accounting Policies
The accounting policies of the Group which apply to the consolidated financial statements as a whole, as well
as significant estimates and their impact on amounts presented in the consolidated financial statements, are presented
in the following note.
Topic
Accounting policies
Significant estimates and judgments
Consolidation
principles
The consolidated financial statements include the financial
statements of the Parent Entity and its subsidiaries.
Subsidiaries are understood as being entities which are
either directly controlled by the Parent Entity or indirectly
through its subsidiaries.
Obtaining control of a subsidiary, which is a business, is
accounted for using the acquisition method.
Subsidiaries are fully consolidated from the date on which
control is obtained to the date on which control is lost.
Balances, incomes, expenses and unrealised gains
recognised in assets from intra-group transactions, are
eliminated.
Determining whether the Parent
Entity has control over a company
requires an assessment as to
whether it has rights to direct
relevant activities of the company.
Determining what constitutes
relevant activities of the company
and by which investor it is controlled
requires a judgment.
Among others, the following factors
are taken into consideration when
assessing the situation and
determining the nature of
relationships: voting rights, relative
voting power, dilution of voting
rights of other investors and their
ability to appoint members of key
management personnel or members
of the supervisory board.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
22
Fair value
measurement
Fair value is the price that would be received from selling an
asset or would be paid for a transfer of a liability in an orderly
transaction between market participants at the
measurement date. For financial reporting purposes, a fair
value hierarchy was established that categorises the inputs
into three levels:
Level 1 Value is based on inputs from active markets, as
they are seen as the most reliable source of data.
Level 2 Value is based on inputs other than from active
markets, which are nevertheless observable
(unbiased, measurable).
Level 3 Value is based on unobservable inputs, used when
appropriate observable input data is not available.
Unobservable input data reflect assumptions that
would be adopted by market participants in order
to calculate the price of an asset or a liability,
including risk assumptions.
Transfer between levels of the fair value hierarchy takes
place if there is a change of sources of input data used for
fair value measurement, such as:
• active market,
• lack of an active market, but there is observable data on
the market,
• subjective input data.
It is acknowledged that transfers between levels of the fair
value hierarchy take place at the end of the reporting
period.
Fair value presents current estimates
which may be subject to change in
subsequent reporting periods due to
market conditions or due to other
factors. There are many methods of
measuring fair value, which may
result in differences in fair values.
Moreover, assumptions constituting
the basis of fair value measurement
may require estimating the changes
in costs/prices over time, the
discount rate, inflation rate or other
significant variables.
Certain assumptions and estimates
are necessary to determine to which
level of fair value hierarchy a given
instrument should be classified.
Financial
statements of
operations
with a
functional
currency other
than PLN
For purposes of preparing the consolidated financial
statements in the presentation currency of the KGHM Polska
Miedź S.A. Group, i.e. in PLN, individual items of financial
statements of foreign operations whose functional
currencies are other than PLN are translated in the following
manner:
(i) assets and liabilities – at the closing rate, i.e. at the
average exchange rate for that currency announced by
the NBP at the end of the reporting period,
(ii) items of the statement of profit or loss, the statement of
comprehensive income and the statement of cash flows
- at the arithmetical average of average exchange rates
announced for a given currency by the NBP at the end of
each month of a given reporting period. If there is a
significant volatility of exchange rates in a given period,
revenues and costs in the statement of profit or loss and
the statement of comprehensive income are translated
using the exchange rates as at the transaction date.
Exchange differences from the translation of statements of
operations with a functional currency other than PLN are
recognised in other comprehensive income of a given period.
The consolidated financial
statements are presented in PLN,
which is also the functional currency
of the Parent Entity and the Group’s
subsidiaries, with the exception of:
the subsidiary Future 1 Sp. z o.o. and
entities of the subgroup KGHM
INTERNATIONAL LTD. in which
mainly the US dollar (USD) is the
functional currency.
The balance of exchange differences
from the translation of statements of
the aforementioned operations
amounted to:
in 2024 – PLN 2 491 million,
in 2023 – PLN 2 476 million
(see Note 8.2.2 Changes of other
equity items).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
23
Foreign
currency
transactions
and the
measurement
of items
denominated
in foreign
currencies
At the moment of initial recognition, foreign currency
transactions are translated into the functional currency:
• at the average exchange rate prevailing on the date of
conclusion of the transaction, where the exchange rate
prevailing on the date of conclusion of the transaction is
the average NBP exchange rate (for Group entities in
which PLN is the functional currency) from the last working
day preceding the transaction date in the case of
conversion of currency sale and purchase transactions as
well as of payments of receivables and liabilities on bank
accounts in a currency of the transaction (including in the
measurement of transactions involving the receipt,
granting or repayment of borrowings) and for recognition
of other transactions (including sales and purchases),
• at the actual exchange rate applied, i.e. at the buy or sell
exchange rate applied by the bank in which the transaction
occurs, in the case of the sale or purchase of currencies
and the payment of receivables or liabilities on a bank
account in a currency other than the operation currency.
At the end of each reporting period, foreign currency
monetary items are translated at the closing rate prevailing
on that date.
Foreign exchange gains or losses on the settlement of foreign
currency transactions, and on the measurement of foreign
currency monetary assets and liabilities (other than
derivatives), are recognised in profit or loss.
Foreign exchange gains or losses on the measurement of
foreign currency derivatives are recognised in profit or loss as
a fair value measurement, provided they do not represent a
change in the fair value of the effective cash flow hedge.
In such a case, they are recognised in other comprehensive
income in accordance with hedge accounting policies.
Foreign exchange gains or losses on non-monetary items,
such as equity instruments classified as financial assets
measured at fair value through other comprehensive income,
are recognised in other comprehensive income and are
presented in measurement at fair value.
Foreign exchange gains or losses on monetary items
measured at fair value through profit or loss (e.g. loans
granted measured at fair value) are recognised as a part of
the fair value measurement.
-
As compared to the reporting period ended on 31 December 2023, there were no significant changes to the estimation
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 consolidated 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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
24
Note
Title
Amount recognised in
the financial statements
Accounting
policies
Important
estimates,
assumptions
and
judgements
2024
2023
2.3
Revenues from contracts with customers
35 320
33 467
X
X
3
Impairment of assets
(400)
(4 482)
X
5.1
Income tax in the statement of profit or
loss
(1 738)
(91)
X
5.1.1
Deferred income tax in the period
(551)
466
X
X
5.3
Tax assets
453
985
X
5.3
Tax liabilities
(1 049)
(611)
X
6.1
Joint ventures accounted for using the
equity method
-
-
X
X
6.2
Loans granted to a joint venture
9 800
9 096
X
X
7.2
Derivatives
192
292
X
X
7.3
Other financial instruments measured at
fair value
883
905
X
X
7.4
Other financial instruments measured at
amortised cost
557
475
X
X
8.2
Equity attributable to shareholders of the
Parent Entity
(30 990)
(28 565)
X
8.4
Borrowings
(6 171)
(5 725)
X
8.5
Cash and cash equivalents
715
1 729
X
8.6
Labilities due to guarantees granted
(1 373)
(1 389)
X
X
9.1
Mining and metallurgical property, plant
and equipment and intangible assets
26 880
23 495
X
X
9.2
Other property, plant and equipment and
intangible assets
3 300
3 254
X
9.4
Provisions for decommissioning costs of
mines and other facilities*
(2 128)
(1 974)
X
X
9.7
Lease disclosures – the Group as a lessee
666
704
X
X
9.8
Greenhouse gas emissions allowances
589
882
X
10.1
Inventories
8 063
8 425
X
X
10.1.1
Property rights arising from certificates of
origin of energy from renewable sources
and from energy efficiency
11
40
X
10.2
Trade receivables
1 345
932
X
10.3
Trade and other payables
(5 327)
(6 385)
X
X
10.4
Changes in working capital
(875)
3 801
X
X
11.1
Employee benefits liabilities
(4 803)
(4 826)
X
X
12.3
Other assets
960
957
X
12.4
Other liabilities
(1 458)
(1 939)
X
* Current provisions for decommissioning costs of mines and other technological facilities are recognised in the statement of financial position, in
the item Provisions for liabilities and other charges.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
25
The accounting policies described in this note and in individual notes were applied by the Group in a continuous manner
to all presented periods.
Note 1.6 Impact of new and amended standards and interpretations
Amendments to standards applied for the first time in the consolidated 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.
Up to the date of publication of these consolidated financial statements, the aforementioned amendments to the standards
were adopted for use by the European Union.
In the Group’s opinion, the aforementioned amendments to the standards:
• IFRS 16 do not have an impact on these consolidated 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 Group 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 Group has the right to defer settlement of a liability for over 12 months after the reporting date and at the
same time the potential Group’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 Group as current or non-current as at the end of the reporting period. On the basis of bank loan agreements
held, the Group is obliged to maintain a certain level of covenants at the end of the half-year and annual reporting
periods. Disclosures regarding covenants and related obligations are presented in Part 8 of these consolidated
financial statements.
• IAS 7 and IFRS 7 on disclosure requirements regarding supplier finance arrangements, were included in these
consolidated financial statements as part of the information disclosed on reverse factoring utilised in the Group 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 in the Group on consolidated financial statements.
However, the Group 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 Group 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 Group.
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 Group, after performed verification, slightly
corrected the scope of disclosures in Note 2.2 by extending the disclosure by the amount of costs of sales, selling costs
and administrative expenses.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
26
Note 1.7 Published standards and interpretations, which are not yet in force and were not applied earlier by the
Group
Published standards and interpretations which are not yet in force, adopted for use by the European Union:
• Amendments to 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 companies’ 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 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 Group’s consolidated 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, investment properties,
deposited cash and involvement in a joint venture. In the Group’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 Group.
Moreover, in the Group’s preliminary opinion, the performance measure currently disclosed by the Group 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
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
27
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 Group 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 consolidated financial statements of the Group.
In the Group’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 consolidated financial statements of the Group.
• 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). The limitation of disclosures as compared to full disclosures required by
individual IFRSs and their Interpretations is aimed at simplifying the reporting system and procedures associated with
it, which in turn should result in lowering costs of preparing financial statements pursuant to IFRSs as well as
contribute to disclosure of information more adequate to the scope of activities of a given qualifying associate, while
keeping a sufficient level of utility of reports for their users At the same time, entities applying IFRS 19 should continue
to fully apply other requirements of individual IFRSs, in particular in the scope of recognition, classification,
measurement and presentation. IFRS 19 defines an entity with public accountability as an entity whose debt or equity
instruments are traded in a public market (domestic or international), as well as in Over-The-Counter market, whether
locally or regionally. The application of IFRS 19 by qualifying associates will be voluntary and will not have an impact
on the Group’s consolidated financial statements, because the Group does not meet the criterion of an entity without
public accountability.
• 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
consolidated financial statements of the Group, since the Group 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:
(a) the entity has no practical ability to withdraw, stop or cancel the payment instruction,
(b) the entity has no practical ability to access the cash to be used for settlement as a result of the payment
instruction, and
(c) 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 chosen, 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 Group entity.
The Group 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 bank account of the Group entity, therefore the above changes
will not affect the consolidated financial statements of the Group.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
28
- 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 Group 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 Group.
- 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 consolidated financial
statements of the Group.
- 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 consolidated
financial statements of the Group.
- 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 a significant impact on the consolidated financial statements
of the Group.
- 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 consolidated
financial statements of the Group.
• 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, and
- 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 not have a significant impact on the consolidated financial statements of the
Group, since the Group does not have PPA – type agreements (Power Purchase Agreement) on the purchase of
electricity from RES outside of the Group.
The Group intends to apply all of the aforementioned amendments 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 Group’s opinion,
amendments to the standards will be applicable to its activities in the scope of future economic operations, transactions or
other events, towards which the amendments to the standards are applicable.
Impact of the international tax system reform – pillar 2 of the BEPS 2.0 project
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 PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
29
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 KGHM Polska Miedź S.A. 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 Group 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 consolidated financial statements of the
Group, 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 Group 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 consolidated financial statements do not contain any amounts arising from the reform
of the international tax system – pillar 2 and the Group does not have to pay the top-up tax for 2024.
As regards the assessment of the Group's future exposure to the risk of payment of top-up tax, the Group 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 Group 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 located in high-
tax jurisdictions, according to the Group's current assessment, 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
30
Part 2 – Information on segments and revenues
Note 2.1 Operating segments
The operating segments identified in the KGHM Polska Miedź S.A. Group reflect the structure of the Group, the manner
in which the Group and its individual entities are managed and the regular reporting to the Parent Entity’s Management
Board.
Based on the aggregation of operating segments and taking into account the criteria stipulated in IFRS 8, the following
reporting segments are currently identified within the KGHM Polska Miedź S.A. Group:
Reporting segment
Operating segments
aggregated in a given
reporting segment
Indications of similarity of economic characteristics of
segments, taken into account in aggregations
KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A.
Not applicable (it is a single operating and reporting
segment)
KGHM INTERNATIONAL
LTD.
Companies of the KGHM
INTERNATIONAL LTD. Group, in
which the following mines,
deposits or mining areas and
mining enterprises constitute
operating segments: Sudbury
Basin (held for sale), Robinson,
Carlota, DMC, Victoria and Ajax
projects.
Operating segments within the KGHM INTERNATIONAL
LTD. Group are located in North and South America.
The Management Board analyses the results of the
following operating segments: Sudbury Basin (held for
sale), Robinson, Carlota, Victoria and Ajax projects and
other. In addition, the Management Board receives and
analyses reports on the whole KGHM INTERNATIONAL
LTD. Group. Operating segments are engaged in the
exploration and mining of copper, molybdenum, silver,
gold, nickel, platinum and palladium deposits.
The operating segments were aggregated based on the
similarity of long term margins achieved by individual
segments, and the similarity of products, processes and
production methods.
Sierra Gorda S.C.M.
Sierra Gorda S.C.M. (joint
venture)
Not applicable (it is a single operating and reporting
segment)
Other segments
This item includes other Group
companies (every individual
company is a separate
operating segment).
Aggregation was carried out as a result of not meeting the
criteria necessitating the identification of a separate
additional reporting segment.
The following companies were not included in any of the aforementioned segments:
• Future 1 Sp. z o.o., which acts as a holding company with respect to the KGHM INTERNATIONAL LTD. Group,
• Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o., which operate in the structure related to the establishment of
a Tax Group.
These companies do not conduct operating activities which could impact the results achieved by individual segments, and
as a result their inclusion could distort the data presented in this part of the consolidated financial statements
due to significant settlements with other Group companies.
Each of the segments KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD. and Sierra Gorda S.C.M. have their own
Management Board, which reports the results of their business activities to the Management Board of the Parent Entity.
The segment KGHM Polska Miedź S.A. is composed only of the Parent Entity, and the segment Sierra Gorda S.C.M.
is composed only of the joint venture Sierra Gorda S.C.M. Other companies of the KGHM Polska Miedź S.A. Group are
presented below by segment: KGHM INTERNATIONAL LTD. and Other segments.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
31
The SEGMENT KGHM INTERNATIONAL LTD.
Location
Company
The United States of America
Carlota Copper Company, Carlota Holdings Company, DMC Mining Services
Corporation, FNX Mining Company USA Inc., Robinson Holdings (USA) Ltd.,
Robinson Nevada Mining Company, Wendover Bulk Transhipment Company
Chile
Aguas de la Sierra Limitada, Minera Carrizalillo SpA, KGHM Chile SpA,
Quadra FNX Holdings Chile Limitada, DMC Mining Services Chile SpA
Canada
KGHM INTERNATIONAL LTD., 0899196 B.C. Ltd., Centenario Holdings Ltd.,
DMC Mining Services Ltd., FNX Mining Company Inc., FRANKE HOLDINGS LTD.,
KGHM AJAX MINING INC., KGHMI HOLDINGS LTD., Quadra FNX Holdings
Partnership, Sugarloaf Ranches Ltd., Project Nikolas Company INC.
Mexico
DMC Mining Services Mexico, S.A. de C.V.
Colombia
DMC Mining Services Colombia SAS
The United Kingdom
DMC Mining Services (UK) Ltd.
Luxembourg
Quadra FNX FFI S.à r.l.
OTHER SEGMENTS
Type of activity
Company
Support of the core business
BIPROMET S.A., CBJ sp. z o.o., „Energetyka” sp. z o.o., INOVA Spółka z o.o.,
KGHM CUPRUM sp. z o.o. – CBR**, KGHM ZANAM S.A., KGHM Metraco S.A.,
PeBeKa S.A., POL-MIEDŹ TRANS Sp. z o.o., WPEC w Legnicy S.A.
Sanatorium-healing and hotel services
Uzdrowiska Kłodzkie S.A. - Grupa PGU, Uzdrowisko Cieplice Sp. z o.o. - Grupa
PGU, Uzdrowisko Połczyn Grupa PGU S.A., Uzdrowisko Świeradów - Czerniawa
Sp. z o.o. – Grupa PGU
Investment funds, financing activities
Fundusz Hotele 01 Sp. z o.o.***, Fundusz Hotele 01 Sp. z o.o. S.K.A.***,
Polska Grupa Uzdrowisk sp. z o.o.***
Other activities
CENTROZŁOM WROCŁAW S.A., CUPRUM Development sp. z o.o., KGHM
(SHANGHAI) COPPER TRADING CO., LTD., KGHM Kupfer AG i L., MERCUS
Logistyka sp. z o.o., MIEDZIOWE CENTRUM ZDROWIA S.A., NITROERG S.A.,
NITROERG SERWIS Sp. z o.o., PHU "Lubinpex" Sp. z o.o., PMT LK Sp. z o.o.,
Walcownia Metali Nieżelaznych "ŁABĘDY" S.A., Zagłębie Lubin S.A., OOO
ZANAM VOSTOK, KGHM Centrum Analityki Sp. z o.o.**, 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.*
* Entities acquired on 29 February 2024 (Note 1.2)
** Entities merged on 30 September 2024 (Note 1.2).
*** Entities merged on 2 December 2024 (Note 1.2).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
32
Location of mining assets of the KGHM Polska Miedź S.A. Group
The Parent Entity and the KGHM INTERNATIONAL LTD. Group (a subgroup) have a fundamental impact on the assets
and the generation of revenues in the KGHM Polska Miedź S.A. Group. The activities of KGHM Polska Miedź S.A.
are concentrated on the mining industry in Poland, while those of the KGHM INTERNATIONAL LTD. Group are concentrated
on the mining industry in the countries of North and South America. The profile of activities of the majority of the remaining
subsidiaries of the KGHM Polska Miedź S.A. Group differs from the main profile of the Parent Entity’s activities.
The Parent Entity’s Management Board monitors the operating results of individual segments in order to make decisions
on allocating the Group’s resources and to assess the financial results achieved.
Financial data prepared for management reporting purposes is based on the same accounting policies as those applied
when preparing the consolidated financial statements of the Group, while the financial data of individual reporting
segments constitutes the amounts presented in appropriate financial statements prior to consolidation adjustments
at the level of the KGHM Polska Miedź S.A. Group, i.e.:
• The segment KGHM Polska Miedź S.A. – comprises data from the separate financial statements of the Parent Entity
prepared in accordance with IFRSs. In the separate financial statements, investments in subsidiaries (including
indirect interest in KGHM INTERNATIONAL LTD.) are measured at cost, including impairment losses,
• The segment KGHM INTERNATIONAL LTD. – comprises consolidated data of the KGHM INTERNATIONAL LTD. Group
prepared in accordance with IFRSs. The involvement in Sierra Gorda S.C.M. is accounted for using the equity method,
• The segment Sierra Gorda S.C.M. – comprises the 55% share of assets, liabilities, revenues and costs of this venture
presented in the financial statements of Sierra Gorda S.C.M. prepared in accordance with IFRSs,
• Other segments – comprises aggregated data of individual subsidiaries after excluding transactions and balances
between them.
The Management Board of the Parent Entity assesses a segment’s performance based on adjusted EBITDA and the profit
or loss for the period.
The Group defines adjusted EBITDA as profit/loss for the period pursuant to IFRS, excluding taxes (current
and deferred income tax as well as the mining tax), finance income and costs, other operating income and costs, profit or
loss on involvement in joint ventures, depreciation/amortisation recognised in expenses by nature, recognition/reversal of
impairment losses on property, plant and equipment and intangible assets included in the cost of sales, selling costs and
administrative expenses.
Since adjusted EBITDA is not a measure defined by IFRS, it is not a standardised measure and therefore its method of
calculation may vary between entities, and consequently the presentation and calculation of adjusted EBITDA applied by
the Group may not be comparable to that applied by other market entities.
Revenues from transactions with external entities and inter-segment transactions are carried out at arm’s length.
Eliminations of mutual settlements, revenues and costs between segments were presented in the item “Consolidation
adjustments”.
Unallocated assets and liabilities concern companies which have not been allocated to any segment. Assets which have not
been allocated to the segments comprise cash and trade receivables. Liabilities which have not been allocated to the
segments comprise trade liabilities and deferred tax liabilities.
Legend:
Mines of KGHM
Mine projects of KGHM
Metallurgical facilities of KGHM
CANADA
(Ontario, Sudbury Basin)
McCreedy
West (Cu, Ni, TPM)
Victoria (Cu, Ni, TPM)
Exploration in the region
CANADA
(British Columbia)
Ajax
(Cu, Au)
USA
(Nevada & Arizona)
Robinson (Cu, Au, Mo)
Carlota
(Cu)
Exploration in the region
CHILE
(Antofagasta & Atacama)
Sierra
Gorda
(Cu, Mo, Au, Ag)
Exploration in the region
POLAND
(Lower Silesia)
Polkowice
-
Sieroszowice (Cu, Ag)
Lubin (Cu, Ag)
Rudna (Cu, Ag)
Deep Głogów (Cu, Ag)
Exploration in the region
Głogów I & Głogów II smelters/refineries
Legnica smelter/refinery
Cedynia (wire rod)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
33
Note 2.2 Financial results of reporting segments
from 1 January 2024 to 31 December 2024
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data of
the segment
Sierra Gorda S.C.M
Consolidation
adjustments****
Consolidated
financial
statements
Note 2.3
Revenues from contracts with customers, of which:
29 894
3 394
3 556
12 910
(3 556)
(10 878)
35 320
- inter-segment
679
16
-
10 199
-
(10 878)
16
- external
29 215
3 378
3 556
2 711
(3 556)
-
35 304
Cost of sales, selling costs and administrative expenses
(27 038)
(2 398)
(2 529)
(12 908)
2 529
10 791
(31 553)
Segment result – profit/(loss) for the period
2 788
1 283
218
( 50)
( 218)
(1 151)
2 870
Additional information on significant
revenues/costs items of the segment
Depreciation/amortisation recognised
in expenses by nature
(1 607)
( 674)
( 850)
( 258)
850
26
(2 513)
(Recognition)/reversal of impairment losses on non-
current assets, including:
1 075
244
-
( 216)
-
(1 115)
( 12)
reversal of impairment losses on investments in
subsidiaries
1 169
-
-
-
-
(1 169)
-
(recognition)/reversal of allowances for impairment
of loans granted
( 89)
226
-
-
-
89
226
As at 31 December 2024
Segment assets
50 405
16 422
14 245
6 889
(14 245)
(19 824)
53 892
Liabilities, including:
19 251
19 990
13 742
3 848
(13 742)
(20 255)
22 834
Segment liabilities
19 251
19 990
13 742
3 848
(13 742)
(20 478)
22 611
Liabilities unallocated to segments
-
-
-
-
-
223
223
Other information
from 1 January 2024 to 31 December 2024
Cash expenditures on property, plant and equipment
and intangible assets – cash flows
3 635
1 636
1 123
505
(1 123)
79
5 855
Production and cost data
from 1 January 2024 to 31 December 2024
Payable copper (kt)
588.7
60.5
80.5
Molybdenum (million pounds)
-
0.1
3.3
Silver (t)
1 316.3
1.0
23.3
TPM (koz t)
86.8
53.5
33.1
C1 cash cost of producing copper in concentrate
(USD/lb)**
3.07
1.52
1.60
Segment result - adjusted EBITDA
4 463
1 643
1 877
474
-
-
8 457
EBITDA margin***
15%
48%
53%
4%
-
-
22%
* 55% of the Group’s share in Sierra Gorda S.C.M.’s financial and production data.
** Unit cash cost of payable copper production, reflecting ore mining and processing costs, transport costs, the minerals extraction tax, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-product value. C1 cost is in regard
to payable copper in own concentrate in the case of the segment KGHM Polska Miedź S.A. and payable copper in end products of individual mines of the segment KGHM International Ltd. and the segment Sierra Gorda S.C.M. C1 cost in PLN/lb was calculated using the average
exchange rate by the NBP (arithmetical average of daily quotations per the NBP’s tables).
*** Adjusted EBITDA to revenues from contracts with customers. For the purposes of calculating the Group’s EBITDA margin (22%), the consolidated revenues from contracts with customers were increased by revenues from contracts with customers of the segment
Sierra Gorda S.C.M. [8 457 / (35 320 + 3 556) * 100]
**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
34
Financial results of reporting segments for the comparable period
from 1 January 2023 to 31 December 2023
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data of
the segment
Sierra Gorda S.C.M
Consolidation
adjustments****
Consolidated
financial
statements
Note 2.3
Revenues from contracts with customers, of which:
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
- inter-segment
732
38
-
9 921
-
(10 653)
38
- external
28 352
2 413
3 319
2 664
(3 319)
-
33 429
Cost of sales, selling costs and administrative expenses
(30 004)
(3 306)
(2 286)
(12 521)
2 286
10 724
(35 107)
Segment result – profit/(loss) for the period
(1 153)
(1 120)
68
28
( 68)
(1 446)
(3 691)
Additional information on significant
revenues/costs items of the segment
Depreciation/amortisation recognised in expenses by nature
(1 675)
( 706)
( 770)
( 295)
770
35
(2 641)
(Recognition)/reversal of impairment losses on non-current
assets, including:
(2 935)
( 150)
219
2
( 219)
( 796)
(3 879)
(recognition)/reversal of impairment losses on
investment in subsidiaries
827
-
-
-
-
( 827)
-
(recognition)/reversal of allowances for impairment of
loans granted
15
101
-
-
-
( 15)
101
As at 31 December 2023
Segment assets
48 896
13 916
12 597
6 671
(12 597)
(18 100)
51 383
Liabilities, including:
20 078
18 581
12 905
3 771
(12 905)
(19 677)
22 753
Segment liabilities
20 078
18 581
12 905
3 771
(12 905)
(19 790)
22 640
Liabilities unallocated to segments
-
-
-
-
-
113
113
Other information
from 1 January 2023 to 31 December 2023
Cash expenditures on property, plant and equipment and
intangible assets – cash flows
3 074
984
1 106
602
(1 106)
116
4 776
Production and cost data
from 1 January 2023 to 31 December 2023
Payable copper (kt)
592.4
39.9
78.7
Molybdenum (million pounds)
-
0.1
3.5
Silver (t)
1 403.3
2.7
22.3
TPM (koz t)
111.0
40.6
32.9
(C1) cash cost of producing payable copper
(USD/lb)**
2.98
4.15
1.68
Segment result - adjusted EBITDA
3 563
( 142)
1 584
357
-
-
5 362
EBITDA margin***
12%
(6%)
48%
3%
-
-
15%
* 55% of the Group’s share in Sierra Gorda S.C.M.’s financial and production data.
** Unit cash cost of payable copper production, reflecting ore mining and processing costs, transport costs, the minerals extraction tax, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-product value. C1 cost is in regard to payable copper in own
concentrate in the case of the segment KGHM Polska Miedź S.A. and payable copper in end products of individual mines of the segment KGHM International Ltd. and the segment Sierra Gorda S.C.M. C1 cost in PLN/lb was calculated using the average exchange rate by the NBP (arithmetical average of daily
quotations per the NBP’s tables).
*** Adjusted EBITDA to revenues from contracts with customers. For the purposes of calculating the Group’s EBITDA margin (23%) the consolidated revenues from contracts with customers were increased by revenues from contracts with customers of the segment
Sierra Gorda S.C.M. [5 362 / (33 467 + 3 319) * 100]
**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
35
Reconciliation of adjusted EBITDA
from 1 January 2024 to 31 December 2024
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Other
segments
Consolidation
adjustments*
Consolidated
financial
statements
Sierra Gorda
S.C.M. **
Adjusted
EBITDA
(segments, total)
1
2
3
4
5
(1+2+3+4)
6
7
(5+6-4)
Profit/(Loss) for the period
2 788
1 283
( 50)
(1 151)
2 870
218
[-] Profit or loss on involvement in joint ventures
-
778
-
-
778
-
[-] Current and deferred income tax, mining tax***
(1 197)
( 387)
( 43)
( 111)
(1 738)
( 71)
[-] Depreciation/amortisation recognised
in expenses by nature
(1 607)
( 674)
( 258)
26
(2 513)
( 850)
[-] Finance income and (costs)
( 425)
(1 050)
( 59)
1 153
( 381)
( 755)
[-] Other operating income and (costs)
1 554
946
50
(2 106)
444
17
[-] (Recognition)/reversal of impairment losses
on non-current assets recognised in cost of
sales, selling costs and administrative expenses
-
27
( 214)
( 34)
( 221)
-
Segment result - adjusted EBITDA
4 463
1 643
474
( 79)
6 501
1 877
8 457
Reconciliation of adjusted EBITDA
from 1 January 2023 to 31 December 2023
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Other
segments
Consolidation
adjustments*
Consolidated
financial
statements
Sierra Gorda
S.C.M. **
Adjusted
EBITDA
(segments, total)
1
2
3
4
5
(1+2+3+4)
6
7
(5+6-4)
Profit/(Loss) for the period
(1 153)
(1 120)
28
(1 446)
(3 691)
68
[-] Profit or loss on involvement in joint ventures
-
698
-
-
698
-
[-] Current and deferred income tax, mining tax***
( 123)
250
( 48)
( 170)
( 91)
( 150)
[-] Depreciation/amortisation recognised
in expenses by nature
(1 675)
( 706)
( 295)
35
(2 641)
( 770)
[-] Finance income and (costs)
120
(1 028)
( 51)
1 118
159
( 778)
[-] Other operating income and (costs)
( 230)
( 185)
63
(2 465)
(2 817)
( 37)
[-] (Recognition)/reversal of impairment losses
on non-current assets recognised in cost of
sales, selling costs and administrative
expenses
(2 808)
( 7)
2
88
(2 725)
219
Segment result - adjusted EBITDA
3 563
( 142)
357
( 52)
3 726
1 584
5 362
* Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
**55% share of the Group in the financial data of Sierra Gorda S.C.M.
***Mining tax concerns only the segment Sierra Gorda S.C.M.
A detailed description of the results of individual segments is presented in the following sections of the Management Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska
Miedź S.A. Group in 2024:
− the segment KGHM Polska Miedź S.A. in section 2.5,
− the segment KGHM INTERNATIONAL LTD. in section 2.6,
− the segment Sierra Gorda S.C.M. in section 2.7.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
36
Note 2.3 Revenues from contracts with customers of the Group – breakdown by products
Accounting policies
Revenues arising from ordinary operating activities of the Group, i.e. revenues from sales of products, merchandise and
materials, are recognised in the statement of profit or loss as revenues from contracts with customers.
The Group generates its revenues mainly from the sale of: copper, silver and gold. Other, smaller streams of revenues arise
from the sale of services (including distribution of electricity, other utilities and mine construction services) and other products
(including electricity), merchandise and materials (including steel, petroleum and its derivatives).
The Group recognises revenue from contracts with customers when the Group satisfies a performance obligation by
transferring a promised good or providing a service to a customer, which is when the customer obtains control of that asset,
i.e. the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset, as well as the ability to
prevent other entities from directing the use of, and obtaining the benefits from, the asset.
The Group recognises as a performance obligation every contractual promise to transfer to a customer a good or provide a
service that is distinct, or a series of distinct goods or services that are substantially the same and that have the same pattern
of transfer to the customer. For each performance obligation, the Group determines (based on contractual terms), whether
the obligation will be performed over time or at a specified moment. In particular, in contracts for the sale of copper, silver and
gold, every measurement unit of a transferred good (e.g. 1 tonne of copper or 1 kg of silver) is a separate performance
obligation. Therefore, for every sale or transfer of goods, constituting a multiplication of a measurement unit of a transferred
product, which is realised at the same time, the Group fulfils its performance obligation and at the same time recognises
revenues. The performance obligation is fulfilled by the Group in the same manner as in the case of other Group products,
such as: lead, salt, steel, petroleum, blasting materials, mining machinery, fuel additives and other products.
Since in the majority of sales transactions, following the shipment of the promised product or good and transferring control
over it, the Group has an unconditional right to consideration from the customer, and the only condition of receiving it is time
lapse, the Group recognises the consideration from contracts with customers as receivables and therefore the Group does not
recognise contractual assets.
In trade contracts in which the performance obligation is met at a specified time, the Group uses various payment conditions,
including prepayments of up to several days before delivery and deferred payments of up to 120 days, although the deferred
payments do not concern silver. Payment dates depend on the evaluation of the recipient’s credit risk and the possibility of
securing receivables. The consideration becomes due depending on contractual conditions, that is prior to the realisation of
the delivery (prepayment) by the Group or after the Group meets its performance obligation. If the Group receives payment
from the customer before it meets its performance obligation, it recognises it as contractual payables. However, in the case of
deferred payments terms, the Group recognises due consideration from the customer as a receivable only after the transfer
of promised products to the customer and the issuance of the invoice.
Moreover, revenues from the sale of services are recognised by the Group in profit or loss over time if one of the following
criteria is met:
− the customer simultaneously receives and consumes the benefits provided by the Group’s performance to the extent that
it performs its obligations, or
− the Group satisfies a performance obligation and creates or enhances an asset (for example, work in progress) that the
customer controls as the asset is created or enhanced, or
− the Group satisfies a performance obligation and creates an asset without an alternative use to the Group and the Group
has an enforceable right to payment for performance completed to date.
If the Group recognises revenues on the basis of assessment pursuant to the adopted method of measurement the degree of
advancement, prior to the issue of the invoice, it recognises due consideration as a contractual asset and transfers it to
receivables at the moment the right to consideration becomes unconditional.
The Group fulfils its performance obligation while performing the service and therefore it recognises revenues over time, under
contracts for mine construction and other geological work, sanatorium-spa services and sale of electricity, including distribution
of electricity.
Revenues from contracts with customers are recognised in the amount of the transaction price, consisting of the amount of
consideration to which – in accordance with the Group’s expectations – it will be given in return for the transfer of promised
goods or services to the customer, excluding consideration collected on behalf of third parties.
The transaction price also reflects the effects of the time value of money if a contract with a customer contains a significant
financing element, which is determined based on the contractual payment terms, regardless of whether the promise of
financing is explicitly stated in the contract. In determining whether a financing component is significant for a given agreement,
all of the facts and circumstances are taken into consideration, including the eventual difference between the promised
consideration and the cash selling price of the promised goods and services, as well as the total impact of the following two
factors: (i) the estimated period from the moment an entity transfers the promised goods or services to a customer to the
moment the customer pays for these goods or services, and (ii) prevailing interest rates on a given market. In the realised
contracts of sales to customers in the current year and the comparable period, the Group identified a significant financing
component in the contract with Franco Nevada (contract described below in Important estimates, assumptions and judgments).
The Group presents the results of financing (interest costs) separately from revenues from contracts with customers in the
statement of comprehensive income. In the Franco Nevada contract, there is also an element of variable consideration. In such
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
37
a situation, the Group recognises revenues by estimating the amount of consideration, to which it will be entitled to in exchange
for transferring the good to the customer, and includes a part or all of the amount of variable consideration in the transaction
price only to such an extent to which it is highly probable that there will not be a reversal of a significant part of previously
recognised accumulated revenues at the moment when uncertainty as to the amount of consideration ceases to exist.
In the case of copper and silver products sales transactions, for which the price is set after the date of recognition of a given
sale, at the moment of initial recognition of a transaction an adjustment of revenues from sales is made, arising from the
difference between the forward price of a metal expressed in USD from the date of recognition of a sale in the period
corresponding to the period of settlement of the transaction, and the price from provisional invoice. This adjustment brings
the amount of the transaction to the expected amount as a transaction price at the moment of initial recognition. This only
concerns cases where the change in transaction price arises from a change in the metal’s price. For these types of variable
revenues, the limitation of IFRS 15 on recognising variable consideration only to the amount in respect of which it is highly
probable that a reversal will not be recognised, is not applicable. Changes to the booked amount after the moment of
recognition do not impact the revenues from sales but are fair value gains/losses on measurement of receivables pursuant to
the accounting policies presented in Note 10.2.
Sales revenue is adjusted for the gain or loss on the settlement of future cash flow hedging derivatives, in accordance with the
general principle that the portion of gain or loss on a derivative hedging instrument that is determined to be an effective hedge
is recognised in the same position of profit or loss in which the gain or loss on the hedged item is recognised at the moment
when the hedged item affects profit or loss.
Important estimates, assumptions and judgments
The Group recognises revenues from the sale of products, merchandise and materials in profit or loss once, when the
performance obligation is satisfied (in particular in accordance with the applied INCOTERMS principles. In the majority of
contracts, control is transferred to the customer after delivery of the goods, which is also understood as delivery of the goods
to the carrier or to a designated facility (DAP, FCA and EX WORKS bases). In other contracts, control is transferred to the
customer at the moment it is handed over to the carrier and loaded aboard a ship (CFR, CIF, CPT and CIP bases). In these
contracts, the Group is also obliged to organise the shipment. In these cases, the Group acts as a principal, as it has control
over the service before its completion and transfer to the customer. At the same time, the Group allocates a part of the
transaction price to the transport service and recognises these revenues over time.
The Group recognises revenues over time due to realised mine construction services and other geological work. The Group
meets liabilities in time, because the customer simultaneously receives and makes use of economic benefits arising from the
performed service as it is performed, or because components are made which do not have an alternative application for the
Group and simultaneously the Group has an enforceable right to payment. To measure the degree of advancement of
performance obligation, the Group applies a method based on expenses incurred while meeting the performance obligation
on the basis of incurred costs and for other contracts, a method based on results, where the unit cost set in advance is applied
to measure the unit of production (e.g. to measure meters of drilled tunnelling).
The contract with Franco Nevada
Performance obligation
The Group realises the streaming arrangement contract, which is a source of financing available on the market for entities
operating in the mining sector.
The contract concerns the sale of half of the production of gold, platinum and palladium contained in the ore extracted during
the lives of the following mines: Morrison, McCreedy West and Podolsky, which are within the CGU Sudbury. Pursuant to the
terms of the contract, Quadra FNX Mining Ltd. received a prepayment in the amount of CAD 400 million. Moreover, in
accordance with the contract, the selling price for one ounce of gold equivalent is the lower of these two amounts: (a) USD 400,
increased by 1% each year beginning from 2011, or (b) the market price of gold. The received prepayment covers the difference
between the market price of ore sold and its fixed selling price. The Group recognised a liability due to the contract in the
amount of prepayment due to the obligation put on the entity to meet the obligation to transfer or be ready to transfer goods
or services in the future. The balance of liability as at 31 December 2024 in the amount of PLN 122 million is presented in the
note 9.9.1. The Group ceases to recognise this contractual obligation and recognises revenues at the moment it transfers these
goods or services to the customer and therefore meets its performance obligation.
Variable consideration
In the contract with Franco Nevada the total transaction price is variable and depends on the amount of the raw material sold,
and this in turn depends on ore extraction in the future throughout the life of the mine (including for example on the size of
the deposit). Therefore, if in subsequent reporting periods the Group changes its judgment regarding the planned amount of
ore to be extracted, and consequently to the amount of raw material sold, the transaction price will also be updated.
The Group recognises amounts related to satisfied performance obligations as revenue or as a decrease of revenue in the
period in which the transaction price was changed.
Significant financing component
In the context of the contract with Franco Nevada, taking into consideration the expected period from the moment when
prepayment is received to the moment when the Group transfers the promised good (the life of the mine, or several decades)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
38
and the nature of this contract, it was determined that the extension of payments over time provides benefits to the Group
due to the financing of deliveries of raw material by the buyer (Franco Nevada), and as a result the contract includes a significant
financing element.
The Group presents the effects of financing (interest costs) separately from revenue from contracts with customers in the
statement of profit or loss. Interest costs are recognised solely to the extent to which the liabilities related to the contract with
Franco Nevada were recognised.
Determination of the transaction price allocated to other performance obligations
If the Group has other performance obligations at the end of the reporting period, it is required to disclose the transaction
price allocated to these performance obligations (IFRS 15.120-122). The Group applies a practical expedient and does not
disclose performance obligations which are a part of a contract that has an original expected duration of one year or less.
Moreover, the Group has long-term contracts with prices based mainly on a variable consideration, which is not included by
the Group when estimating the transaction price.
Moreover, the Group (via the company DMC) advances long-term contracts for mine construction, in which it uses a method
based on expenditures to recognise revenues, which meets the criteria for recognising revenues in the amount, that the Group
has a right to invoice. As at 31 December 2024, the total transaction price allocated to performance obligations, which remained
unsatisfied at the end of the reporting period, amounted to PLN 1 164 million, of which the amount of PLN 682 million will be
realised in 2025, the amount of PLN 325 million will be realised in 2026 and the amount of PLN 156 million will be realised in
or after 2027 (in the comparable period the total transaction price allocated to performance obligations, which remained
unsatisfied at the end of the reporting period, amounted to PLN 940 million, of which the amount of PLN 489 million will be
realised in 2024, the amount of PLN 335 million will be realised in 2025 and the amount of PLN 116 million will be realised in
or after 2026). These contracts do not have an element of variable 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 the greater volatility of the macroeconomic environment, which has a significant impact on the Parent
Entity’s financial results, the Parent Entity periodically analyses concluded contracts in terms of the potential occurrence of a
situation under which the contractual sales price does not exceed the estimated, unavoidable costs of realisation of such
contracts.
For the sales contracts of main products (copper, silver, gold) the Parent Entity has limited options of transferring the potential
increase in production costs to the sales price of its final products, since the level of revenues from sales of these products mainly
depends on stock exchange quotations and currency exchange rates.
Stock quotations are the basis used to determine the sales price of copper products in physical contracts (“Cash Settlement” of
the London Metal Exchange are the most commonly used). In the case of silver products, prices are based on quotations of the
London Bullion Market Association. For other significant products of the Parent Entity, that is gold and lead products, the 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 Parent Entity’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 Parent Entity sells to external clients.
When making a decision to process and sell them, the Parent Entity 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.
Therefore, the Parent Entity 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
Parent Entity’s actions aimed at protecting the natural environment as well as minimising the negative impact on this environment
as a result of conducted economic activity.
On the basis of conducted analyses, the Parent Entity did not identify the occurrence of onerous contracts under IAS 37 as at
31 December 2024.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
39
Revenues from contracts with customers of the Group – breakdown by products
from 1 January 2024 to 31 December 2024
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda S.C.M.*
Other
segments
Elimination of data of
the segment Sierra
Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Products
Copper
22 789
2 055
2 839
9
(2 839)
( 36)
24 817
Silver
4 917
14
88
-
( 88)
-
4 931
Gold
853
439
333
-
( 333)
-
1 292
Services
228
790
-
2 773
-
(2 086)
1 705
Energy
148
-
-
473
-
( 348)
273
Salt
56
-
-
-
-
(2)**
54
Blasting materials
and explosives
-
-
-
309
-
( 143)
166
Mining machinery, transport vehicles
and other types of machinery and
equipment
-
-
-
370
-
( 310)
60
Fuel additives
-
-
-
116
-
-
116
Lead
285
-
-
-
-
-
285
Products from other
non-ferrous metals
-
-
-
113
-
( 1)
112
Other products
221
96
296
878
( 296)
( 579)
616
Merchandise and materials
Steel
-
-
-
447
-
( 67)
380
Petroleum and its derivatives
-
-
-
413
-
( 357)
56
Salt
-
-
-
54
-
(54)**
-
Other merchandise and materials
397
-
-
6 955
-
(6 895)
457
TOTAL
29 894
3 394
3 556
12 910
(3 556)
(10 878)
35 320
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
** Including: PLN 54 million – reclassification from revenues from the sale of merchandise and materials to revenues from the sale of products.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
40
from 1 January 2023 to 31 December 2023
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL LTD.
Sierra Gorda S.C.M.*
Other
segments
Elimination of data of
the segment Sierra
Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Products
Copper
22 290
1 409
2 677
10
(2 677)
( 44)
23 665
Silver
4 389
34
72
-
( 72)
-
4 423
Gold
932
211
277
-
( 277)
-
1 143
Services
199
681
-
2 711
-
(2 070)
1 521
Energy
123
-
-
519
-
( 388)
254
Salt
56
-
-
-
-
25**
81
Blasting materials
and explosives
-
-
-
313
-
( 152)
161
Mining machinery, transport
vehicles and other types of
machinery and equipment
-
-
-
383
-
( 331)
52
Fuel additives
-
-
-
103
-
-
103
Lead
264
-
-
-
-
-
264
Products from other
non-ferrous metals
-
-
-
141
-
( 9)
132
Other products
184
116
293
883
( 293)
( 572)
611
Merchandise and materials
Steel
-
-
-
440
-
( 73)
367
Petroleum and its derivatives
-
-
-
435
-
( 361)
74
Salt
-
-
-
81
-
(81)**
-
Other merchandise and materials
647
-
-
6 566
-
(6 597)
616
TOTAL
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
** Including: PLN 81 million – reclassification from revenues from the sale of merchandise and materials to revenues from the sale of products.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
41
Note 2.4 Revenues from contracts with customers of the Group – breakdown by category
from 1 January 2024 to 31 December 2024
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL
LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data
of the segment
Sierra Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Total revenues from contracts with customers, of which:
29 894
3 394
3 556
12 910
(3 556)
(10 878)
35 320
Revenues from sales contracts, for which the sales price is
set after the date of recognition of the sales (M+ pricing
formula**), of which:
18 813
2 603
3 555
211
(3 555)
( 308)
21 319
settled
18 209
996
1 788
-
(1 788)
( 115)
19 090
unsettled
604
1 607
1 767
211
(1 767)
( 193)
2 229
Revenues from realisation of long-term contracts for mine
construction
-
774
-
190
-
( 170)
794
Revenues from other sales contracts
11 081
17
1
12 509
( 1)
(10 400)
13 207
Total revenues from contracts with customers, of which:
29 894
3 394
3 556
12 910
(3 556)
(10 878)
35 320
in factoring
8 871
-
-
279
-
( 279)
8 871
not in factoring
21 023
3 394
3 556
12 631
(3 556)
(10 599)
26 449
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
**the M+ pricing formula means that for individual transactions for the sale of copper and silver products, the final sales price is determined after the date of recognition of the sale, based on, for example, the average of the stock exchange quotations of a given metal in the month
of sale or in the month following the month of sale.
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Total revenues from contracts with customers, of which:
35 320
33 467
transferred at a certain moment
33 175
31 356
transferred over time
2 145
2 111
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
42
from 1 January 2023 to 31 December 2023
Reconciliation items to consolidated data
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL
LTD.
Sierra Gorda
S.C.M.*
Other
segments
Elimination of data
of the segment
Sierra Gorda S.C.M
Consolidation
adjustments
Consolidated
data
Total revenues from contracts with customers, of which:
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
Revenues from sales contracts, for which the sales price is
set after the date of recognition of the sales (M+ pricing
formula**), of which:
20 681
1 771
3 307
169
(3 307)
( 141)
22 480
settled
20 294
975
1 621
167
(1 621)
( 139)
21 297
unsettled
387
796
1 686
2
(1 686)
( 2)
1 183
Revenues from realisation of long-term mine construction
contracts
-
642
-
166
-
( 128)
680
Revenues from other sales contracts
8 403
38
12
12 250
( 12)
(10 384)
10 307
Total revenues from contracts with customers, of which:
29 084
2 451
3 319
12 585
(3 319)
(10 653)
33 467
in factoring
8 852
-
-
246
-
( 246)
8 852
not in factoring
20 232
2 451
3 319
12 339
(3 319)
(10 407)
24 615
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
**the M+ pricing formula means that for individual transactions for the sale of copper and silver products, the final sales price is determined after the date of recognition of the sale, based on, for example, the average of the stock exchange quotations of a given metal in the month
of sale or in the month following the month of sale.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
43
Note 2.5 Revenues from contracts with customers of the Group – geographical breakdown reflecting the location of end customers
from 1 January 2024 to 31 December 2024
from 1 January 2023 to 31 December 2023
Reconciliation items to consolidated data
KGHM Polska Miedź S.A. Group
KGHM
Polska Miedź S.A.
KGHM
INTERNATIONAL
LTD.
Sierra Gorda S.C.M.*
Other
segments
Elimination of data of
the segment Sierra
Gorda S.C.M.
Consolidation
adjustments
Consolidated
data
Poland
7 453
-
-
12 574
-
(10 823)
9 204
8 718
Austria
307
-
-
24
-
-
331
423
Belgium
72
-
-
8
-
-
80
44
Bulgaria
171
-
-
26
-
-
197
267
Czechia
2 296
-
-
13
-
-
2 309
2 302
Estonia
33
-
-
2
-
-
35
26
Finland
37
-
-
6
-
-
43
14
France
713
-
-
6
-
-
719
885
Greece
197
-
-
13
-
-
210
12
Spain
14
190
-
3
-
-
207
13
The Netherlands
8
-
73
1
( 73)
-
9
7
Lithuania
2
-
-
7
-
-
9
13
Germany
4 716
-
-
88
-
-
4 804
6 136
Romania
112
-
-
2
-
-
114
157
Slovakia
184
-
-
12
-
-
196
224
Slovenia
99
-
-
3
-
-
102
111
Sweden
672
-
-
32
-
-
704
175
Hungary
1 457
-
-
5
-
-
1 462
1 447
The United Kingdom
1 814
-
-
3
-
-
1 817
994
Italy
2 400
-
-
12
-
-
2 412
2 186
Australia
445
-
-
-
-
-
445
393
Bosnia and Herzegovina
24
-
-
2
-
-
26
14
Chile
-
372
655
1
( 655)
( 1)
372
276
China
2 683
1 274
2 112
-
(2 112)
-
3 957
4 058
India
70
-
107
-
( 107)
-
70
-
Japan
3
-
538
-
( 538)
-
3
-
Canada
56
1 098
-
-
-
( 53)
1 101
945
South Korea
99
-
49
-
( 49)
-
99
15
The United States of America
1 409
460
4
13
( 4)
( 1)
1 881
1 341
Switzerland
1 095
-
-
4
-
-
1 099
1 361
Türkiye
562
-
-
10
-
-
572
246
Saudi Arabia
181
-
-
6
-
-
187
103
Singapore
29
-
-
-
-
-
29
-
Malaysia
20
-
-
-
-
-
20
52
Algeria
72
-
-
-
-
-
72
79
Brazil
6
-
18
-
( 18)
-
6
-
Morocco
18
-
-
-
-
-
18
-
Egypt
59
-
-
-
-
-
59
1
Taiwan
-
-
-
-
-
-
-
49
Thailand
300
-
-
-
-
-
300
327
Other countries
6
-
-
34
-
-
40
53
TOTAL
29 894
3 394
3 556
12 910
(3 556)
(10 878)
35 320
33 467
*55% of the Group’s share in revenues of Sierra Gorda S.C.M.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
44
Note 2.6 Main customers
In the period from 1 January 2024 to 31 December 2024 and in the comparable period the revenues from no single customer
exceeded 10% of the sales revenue of the Group.
Note 2.7 Non-current assets – geographical breakdown
As at
31 December 2024
As at
31 December 2023
Poland
25 542
23 309
Canada
2 207
1 791
The United States of America
2 385
1 613
Chile
291
228
TOTAL*
30 425
26 941
*non-current assets, excluding: derivatives, other financial instruments, other non-financial assets and deferred tax assets (IFRS 8.33b) in the total amount
of PLN 11 860 million as at 31 December 2024 (PLN 11 041 million as at 31 December 2023).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
45
Part 3 – Impairment of assets
Note 3.1 Impairment losses on assets as at 31 December 2024
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.
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 consequence, the Company's share price in 2024 fell by 6.3%
compared to the share price at the end of 2023 and as at 30 December 2024 amounted to PLN 115 (the average share
price in 2024 was 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).
The analysis of Polish assets showed that not all factors that influence the level of market capitalisation of KGHM Polska
Miedź S.A. are factors related to the conducted 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 price of copper in 2024 amounted to 36 403 PLN/t, and was 2% higher than the price noted in 2023
(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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
46
Test for the impairment of assets of the KGHM INTERNATIONAL LTD. Group - the Segment KGHM
INTERNATIONAL LTD.
As at 31 December 2024, as a result of the identification of indications of a possible change in the recoverable amount
of the pre-operational phase of the Victoria project within the KGHM INTERNATIONAL LTD. Group, an impairment test
of this asset was performed. In order to estimate the recoverable amount, the Victoria project was identified as a Cash
Generating Unit (CGU).
The key indication that the recoverable amount may be lower than the carrying amount is the planned decrease in cash
flows caused by:
o changes to the technical assumptions in the model,
o update of the mine construction schedule,
o update of capital expenditures,
alongside an increase in the carrying amount of the project.
In order to estimate the recoverable amount of the Victoria project, in the conducted test the fair value (decreased by
estimated costs to sell) was calculated using an income-based approach, i.e. the method of discounted cash flows.
Basic macroeconomic assumptions adopted for impairment testing as at 31 December 2024 – metal prices
Price paths were adopted on the basis of available long-term forecasts from financial and analytical institutions. A detailed
forecast is being 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 is used at
the following levels:
- for copper – 8 800 USD/t (3.99 USD/lb);
- for nickel – 8.5 USD/lb (18 739 USD/t).
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 nickel – from 17 086 USD/t (7.75 USD/lb) to 18 739 USD/t (8.50 USD/lb).
Assumptions adopted for impairment testing as at 31 December 2024
Victoria
Mine life / forecast period
15
Level of copper production during mine life (kt)
266
Level of nickel production during mine life (kt)
218
Average operating margin during mine life
63%
Capital expenditures to be incurred during mine life
[USD million]
1 637
Applied discount rate after taxation for assets in the pre-operational phase *
8.7%
Costs to sell
2%
Level of fair value hierarchy to which the measurement at fair value was classified
Level 3
* Discount rate of 9.4% was used in the last impairment testing as at 31 December 2023.
Key factors responsible for the changes in technical and economic assumptions adopted for impairment
testing as at 31 December 2024
Victoria
Update of the mine construction schedule, production assumptions, update of capital expenditures
and calculation of operating costs.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
47
Results of the test performed as at 31 December 2024 are presented in the following table:
CGU
Segment
(Part 2)
Carrying amount*
Recoverable amount
Impairment loss
USD mn
PLN mn
USD mn
PLN mn
USD mn
PLN mn
Victoria
KGHM
INTERNATIONAL
LTD.
430**
1 765
430
1 765
-
-
* The carrying amount of non-current assets decreased by the provision for future decommissioning costs of mines and the balance of deferred tax.
** Including the capitalised borrowing costs in the amount of PLN 68 million (USD 17 million)
The results of the performed test confirmed that the recoverable amount of the Victoria project is equal to the carrying
amount of the CGU.
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Discount rate 9.7%
317
Discount rate 8.7% (test)
430
Discount rate 7.7%
561
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Copper price -0.10 $/lb
417
Copper price (test)
430
Copper price +0.10 $/lb
444
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Nickel price -0.10 $/lb
419
Nickel price (test)
430
Nickel price +0.10 $/lb
441
Impairment testing of property, plant and equipment 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. – Segment – Other segments
As at 31 December 2024, due to the occurrence of indications of changes in the recoverable amount of property, plant
and equipment 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. which are involved in the generation and sale of electricity from photovoltaic installations,
impairment testing of these assets was performed. In order to estimate the recoverable amount, assets of individual
companies were identified as separate cash generating units (CGUs).
The key indications that the recoverable amounts of individual CGUs may be lower than their carrying amounts were:
● the continued unfavourable prices on the electricity market,
● the decisions regarding non-market redistribution, i.e. orders issued by power system operators to limit
electricity generation to ensure the stability of the national power system.
In order to estimate the recoverable amount of individual CGUs, in the conducted test the value in use of their non-
current assets 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
48
Basic assumptions adopted for impairment testing
Assumption
CGU INVEST PV 7
CGU INVEST PV 40
CGU INVEST PV 58
CGU INVEST PV 59
Detailed forecast period
2025-2053, that is to the end of life of the projects
Electricity prices
Price paths were adopted on the basis of averages of available, long-term forecasts of
analytical institutions covering the photovoltaics profile. The average price of electricity in
the detailed forecast period amounts to 370 PLN/MWh.
Level of electricity
production in the detailed
forecast period
142 792 MWh
269 749 MWh
359 842 MWh
502 206 MWh
Average EBITDA margin
during the detailed forecast
period
50%
64%
70%
71%
Average notional discount
rate during the detailed
forecast period*
7.54%
7.54%
7.54%
7.54%
* Assumptions are presented after taxation, despite the measurement model of value in use. The application of data before taxation would not have
a significant impact on the recoverable amount.
Results of the test performed as at 31 December 2024 are presented in the following table:
CGU
Carrying amount
Recoverable amount
Impairment loss
INVEST PV 7
23
11
12
INVEST PV 40
43
26
17
INVEST PV 58
60
38
22
INVEST PV 59
80
54
26
As a result of the conducted tests, an impairment loss on non-current assets was recognised in the total amount of
PLN 77 million – by comparing the carrying amount with the recoverable amount. The impairment loss was recognised in
the item “Cost of sales”.
The recoverable amounts of individual CGUs indicate a significant sensitivity to a change in adopted level of discount rates
and electricity prices.
The following table presents the impact of changes in these parameters on the measurement:
Recoverable amount
Average electricity price
decrease by 10%
per test
increase by 10%
INVEST PV 7
9
11
13
INVEST PV 40
22
26
30
INVEST PV 58
33
38
43
INVEST PV 59
46
54
61
Discount rate 7.54% (test)
decrease by 20%
per test
increase by 20%
INVEST PV 7
13
11
10
INVEST PV 40
30
26
23
INVEST PV 58
44
38
33
INVEST PV 59
62
54
47
In order to monitor the risk of impairment of assets 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
assets if the discount rate or the average electricity price was as presented below:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
49
Discount rate
Average electricity price
INVEST PV 7
0.95%
+59%
INVEST PV 40
2.70%
+46%
INVEST PV 58
3.14%
+44%
INVEST PV 59
3.73%
+37%
Impairment testing of property, plant and equipment of the company POL-MIEDŹ TRANS Sp. z o.o. – Segment –
Other segments
As at 31 December 2024, due to indications of changes in the recoverable amount of property, plant and equipment of
the company POL-MIEDŹ TRANS Sp. z o.o., impairment testing on these assets was performed. The key indication to
perform an impairment 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 property, plant and equipment of POL-MIEDŹ TRANS Sp. z o.o. as at 31 December 2024 amounted
to PLN 313 million. In order to estimate the recoverable amount, in the conducted test the value in use
of the property, plant and equipment was calculated using an income-based approach, i.e. the method of discounted
cash flows.
Basic assumptions adopted for impairment testing as at 31 December 2024
Assumption
Level adopted in testing
Detailed forecast period
January 2025 – December 2029
Operating margin
0.5% during the forecast period,
1.1% in the residual value
Capital expenditures during 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 property, plant and equipment of POL–MIEDŹ TRANS Sp. z o.o., the recoverable
amount of the tested assets was determined at the level of PLN 134 million, which was lower than the carrying amount of
these assets, which provided a basis for the recognition of an impairment loss in the item “Cost of sales” in the amount of
PLN 179 million.
The measurement of property, plant and equipment of POL–MIEDŹ TRANS Sp. z o.o. indicates a significant sensitivity to the
adopted discount rates and the operating margin. The following table presents the impact of changes to these parameters
on the measurement of the assets.
Sensitivity analysis of the recoverable amount of property, plant and equipment 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)
147
134
124
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)
87
134
181
In order to monitor the risk of impairment of the property, plant and equipment in the subsequent reporting periods, it
was determined that the recoverable amount would be equal to the carrying amount of the property, plant and equipment
if the discount rate decreased to the level of 1.28% or if the operating margin increased by 3.8 pp.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
50
Impairment testing of property, plant and equipment of the company CENTROZŁOM WROCŁAW S.A. – Segment
– Other segments
As at 31 December 2024, as a result of the occurrence of indications of changes in the recoverable amount
of property, plant and equipment of the company Centrozłom Wrocław S.A., impairment testing of these assets was
performed. The key indication to perform impairment testing was an incurred loss for 2024 by the company in the
amount of PLN 25 million.
To determine the recoverable amount of the company’s property, plant and equipment, in accordance with IAS 36, the
fair value measurement was adopted as a higher one of the two values (the fair value and the value in use).
The test was conducted using the fair value less costs to sell method, on the basis of available valuation reports and an
expert’s opinion, in order to determine the recoverable amount of non-current assets, taking into account the following
assumptions:
1. buildings and land - the fair value was determined using valuation techniques consistent with the market
approach (comparative), based on transactions on the local market for similar properties, the selling costs were
assumed at the level of 3%, and through an expert opinion by the technical services of the company on the
basis of determined market value of similar objects in individual locations,
2. machinery and equipment - the fair value was determined through an expert opinion by the technical services
of the company and on the basis of auction websites and the level of achieved prices.
The fair value was classified to the level 3 of the fair value hierarchy.
Properties for which valuation reports were prepared at the company’s
request*
Carrying amount
Recoverable
amount
in Chróścina
1
3
in Wrocław
9
75
in Poznań
11
17
in Konin
2
4
in Opole
1
2
in Łódź
9
14
Total
33
115
Properties for which valuation reports were prepared at the request of
local municipal authorities*
Carrying amount
Recoverable
amount
8
15
*Costs to sell at the level of 3%
Machinery and equipment
Carrying amount
Recoverable
amount
31
31
As a result of the performed tests, the recoverable amount of property, plant and equipment was determined to be
significantly higher than their carrying amounts. Therefore, no impairment loss was recognised.
Sensitivity analysis of the recoverable amount of property to volatility of market prices for land and
accompanying buildings, for which valuation reports were prepared:
At the company’s request
Price lower
by 5%
Recoverable
amount
(test)
Price higher
by 5%
in Chróścina
2.9
3.1
3.2
in Wrocław
71.6
75.4
79.2
in Poznań
15.8
16.6
17.4
in Konin
4.0
4.2
4.4
in Opole
2.3
2.4
2.5
in Łódź
12.8
13.5
14.2
At the request of local municipal authorities
14.3
15.1
15.8
TOTAL
123.7
130.3
136.7
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
51
Impairment testing of non-current assets of the company ZAGŁĘBIE LUBIN S.A. – Segment – Other segments
As at 31 December 2024, due to the occurrence of indications of changes in the recoverable amount of non-current
assets of the company Zagłębie Lubin S.A., an impairment testing of these assets was performed.
The key indications of a change in the recoverable amount of the assets included:
• financial results worse than anticipated in forecasts,
• 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 assets 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).
Basic assumptions adopted for impairment testing
The key assumptions adopted for the measurement:
• revenues generated by the company from sponsoring and revenues from the sale of tickets and passes,
• in 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 testing, the recoverable amount of non-current assets was determined to be at the level of
PLN 104 million, which is significantly higher than the carrying amount of these assets (PLN 53 million). Therefore, no
impairment loss was recognised.
The conducted sensitivity analysis indicates that the recoverable amount is moderately vulnerable to changes in key
parameters influencing the result of the measurement:
Sensitivity analysis of the recoverable amount of property, plant and equipment of Zagłębie Lubin S.A.
Recoverable amount at a given discount rate
lower by 1 pp.
per test
higher by 1 pp.
Stadium - discount rate 5.63% (test)
108
104
102
Recoverable amount at a change in the published
valuations according to the transfer website
lower by 5 pp.
per test
higher by 5 pp.
Rights to player cards and to the team
107
104
101
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
52
Impairment testing of property, plant and equipment of the company PeBeKa S.A. – Segment – Other
segments
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. assets. The following CGUs comprising the company's business activity were subjected to
analysis:
1. Product 1 – Horizontal works (mining, 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 assets.
Taking the above into account, an impairment test was performed of buildings and perpetual usufruct rights to land –
excluding investment properties – the fair value was determined using valuation 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 determined that the recoverable amount of non-current assets subject to
measurement is significantly higher than the carrying amount, and therefore no impairment loss was recognised.
EVALUATION OF IMPAIRMENT OF WATER RIGHTS
In the Group, water rights in Chile are annually subjected to impairment testing by comparing their carrying amount
to the recoverable amount, which is set at fair value decreased by costs to sell. The fair value of water rights is classified
under level 2 of the fair value hierarchy, in which fair value measurements are based on significant observable input data,
other than market prices.
For the year ended on 31 December 2024, the Group assessed the factors impacting the recoverable amount of the asset
and determined that there is no basis to recognise an impairment loss or reverse an impairment loss, since both the price
as well as the estimated amount of water available for extraction did not change as compared to the levels of these factors
adopted for testing as at 31 December 2023. The carrying amount of water rights amounted to PLN 92 million as at 31
December 2024 (as at 31 December 2023: PLN 88 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
53
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. – the Segment KGHM Polska Miedź S.A.
Pursuant to the adopted accounting policy, KGHM Polska Miedź S.A. recognises a significant or prolonged decrease in
market capitalisation of an entity as compared to the carrying amount of its net assets as an indication to perform
impairment testing of the carrying amount of the Company’s assets. The Company’s market capitalisation was below the
carrying amount of net assets during the entire year 2023 and slightly decreased as compared to 31 December 2022,
and at the end of the reporting period it amounted to approx. 79% of this amount. Moreover, other indications of
impairment occurred, which may be found below.
As at 31 December 2023, due to the occurrence of indications of changes in the recoverable amount of the Company’s
assets, the Management Board of the Parent Entity performed impairment testing of the Polish production assets
(mining and metallurgical assets) of KGHM Polska Miedź S.A. In order to estimate the recoverable amount, these assets
constitute a single cash generating unit (CGU).
The main indications that the recoverable amount of the CGU may be lower than its carrying amount were the following:
● the forecasted increase in operating cost and planned increase in capital expenditures on replacement,
● the update of assumptions on medium-term production volumes,
● strengthening of the PLN exchange rate versus the USD.
Some of the analysed factors have a positive impact on the profitability of the CGU’s activities, and therefore on the value
of the Company’s assets, and these are as follows:
● an increase in the forecasted price paths of copper, silver and gold,
● a decrease in market interest rates,
● rich deposits in the concession areas (current long-term production plans of the Company are up to the horizon
of 2055 and this period does not arise from exhausting the deposit but from the current validity of mining
concessions held).
In order to estimate the recoverable amount of the CGU, in the conducted test the value in use of its non-current assets
was calculated using the DCF method, i.e. the method of discounted cash flows.
Basic macroeconomic assumptions adopted for impairment testing as at 31 December 2023 – metal prices and
the exchange rate
The Company adopted price paths on the basis of internal macroeconomic assumptions prepared based on 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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
54
Other assumptions adopted for impairment testing as at 31 December 2023
Assumption
Level adopted in the test
Detailed forecast period
A 5-year detailed forecast period was adopted for the years 2024-2028 on the
basis of assumptions of the Budget of KGHM Polska Miedź S.A. for 2024 and the
Company’s assumptions on production in the years 2024-2028 arising from the
Mine and Copper Concentrate Production Plan for the years 2024-2028.
Mine production level
The total mine production level adopted for testing in the detailed forecast period
(2024-2028) amounted to 1 913 thousand tonnes of copper in concentrate.
Margin level
The average level of EBIT margin adopted for testing in the detailed forecast
period and in the residual period does not differ significantly from the historically
observable level of the Company’s profitability in relatively stable macroeconomic
conditions.
Capital expenditures on
replacement
Total level of expenditures on replacement adopted for testing in the detailed
forecast period (2024-2028) amounted to PLN 12 338 million; in the residual
period, capital expenditures on replacement were adopted at a level which allows
matching the Company’s assets to the planned decrease in own mine production.
Rate of increase/decrease
following the forecast period
-1.43%, resulting from the planned decrease in production of copper in ore and in
own concentrates assumed in current long-term plans (up to 2055).
Discount rate*
7.0% - 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
Segment
Carrying amount
as at
31 December 2023*
Recoverable amount
as at
31 December 2023
Impairme
nt loss
PLN mn
PLN mn
PLN mn
Polish production assets
(mining and metallurgical)
of KGHM Polska Miedź S.A.
KGHM Polska Miedź S.A.
20 166
16 577
3 589
* The carrying amount of non-current assets adjusted by key non-production assets, decreased by employee benefits liabilities. The CGU’s carrying
amount does not include provisions for the decommissioning costs of mines, just as the calculation of value in use does not include losses on the
decommissioning of mines.
As a result of the performed test, as at 31 December 2023 the value in use of mining and metallurgical assets of KGHM
Polska Miedź S.A. was lower than their carrying amount by PLN 3 589 million. The calculated impairment loss was
recognised in the following items: “Cost of sales” in the amount of PLN 2 587 million, “Selling costs and administrative
expenses” in the amount of PLN 131 million and “Other operating costs” in the amount of PLN 871 million. A deferred tax
on impairment losses was recognised in the amount of PLN 666 million, which decreased deferred tax liabilities in the
segment KGHM Polska Miedź S.A.
The impairment loss was allocated to the following types of assets: buildings and land (PLN 1 570 million), technical
equipment, machines, motor vehicles and other fixed assets (PLN 1 102 million), fixed assets under construction (PLN 874
million), intangible assets – other (PLN 43 million).
Sensitivity analysis of the recoverable amount of operating assets of KGHM Polska Miedź S.A. determined that the key
assumptions adopted for the impairment testing were the adopted price paths, the exchange rate and the discount rate.
The assumptions regarding the price paths, the exchange rate and the discount rate were adopted while taking into account
the professional judgment of the Management Board as to the performance of these amounts in the future, and was
reflected in the estimated recoverable amount.
Sensitivity analysis of the recoverable amount of the CGU (PLN million)
Recoverable amount
Discount rate 7.5%
15 263
Discount rate 7.0% (test)
16 577
Discount rate 6.5%
18 080
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
55
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
TEST FOR THE IMPAIRMENT OF ASSETS OF THE KGHM INTERNATIONAL LTD. GROUP - the Segment KGHM
INTERNATIONAL LTD.
As at 31 December 2023, as a result of the identification of indications of a possible change in the recoverable amount
of some of the international mining assets of the KGHM INTERNATIONAL LTD. Group, the Parent Entity’s Management
Board performed impairment testing of these assets. The following cash generating units (CGUs) have been selected to
evaluate the recoverable amount of the assets of the KGHM INTERNATIONAL LTD. Group, in which indications of a
possible change in the recoverable amount were identified:
• The Robinson mine,
• The Carlota mine,
• The Sudbury Basin, comprising the Morrison mine, the Podolsky mine and the McCreedy mine,
• The pre-operational Victoria project.
The key indications to perform impairment testing of the individual CGUs:
The Robinson mine:
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices,
o a change in technical and economic parameters in terms of production volumes,
o a change in technical and economic parameters in terms of production volumes (including mining
from the Ruth West 6 pit), planned operating costs and capital expenditures;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o a change in discount rates.
The Carlota mine:
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices,
o a decrease in a discount rate compared to the discount rate from the date of the last test;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o a change in technical and economic parameters in terms of production volumes (including mining
from the Cactus pit – Phase III), planned operating costs, capital expenditures and a change of the
life of the mine.
The Sudbury Basin:
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o a change in discount rates,
o a change in technical and economic parameters in terms of production volumes, planned operating
costs, capital expenditures and a change of the life of the mine.
The pre-operational Victoria project;
• the following indications were identified that the recoverable amount may be higher than the carrying amount:
o a change in market forecasts of commodities prices,
o a change in discount rates,
o a change in technical assumptions in the model;
• the following indications were identified that the recoverable amount may be lower than the carrying amount:
o an update of the mine construction schedule,
o an update of capital expenditures,
o a change in economic assumptions in the model.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
56
In order to determine the recoverable amount of assets of individual CGUs, in the test conducted the fair value
(decreased by estimated costs to sell) was calculated using the DCF method, i.e. the method of discounted cash flows,
for the following CGUs: Sudbury, Victoria, Robinson and Carlota.
There was a change in the measurement model of recoverable amount of the CGU Robinson; in the last impairment
testing of this asset as at 30 June 2021 the model of value in use was applied.
Basic macroeconomic assumptions adopted for impairment testing as at 31 December 2023 – metal prices
Price paths were adopted on the basis of available long-term forecasts from financial and analytical institutions. A detailed
forecast is being prepared for the period 2024-2028, while for the period 2029-2033 a technical adjustment of prices was
applied between the last year of the detailed forecast and 2034, from which a long-term metal price forecast is used at
the following levels:
- for copper – 8 250 USD/t (3.74 USD/lb);
- for gold – 1 600 USD/oz;
- for nickel – 8.5 USD/lb (18 739 USD/t).
CGU
Date of the last impairment
testing
Discount rate used in the
last impairment testing
Sudbury
31 December 2021
7.5%
Robinson
30 June 2021
7.5%
Carlota
31 December 2019
9.5%
Victoria
30 June 2021
10.5%
Key factors responsible for the modification of technical and economic assumptions adopted for impairment
testing as at 31 December 2023
Sudbury
The increase in the production volume of payable metal by the McCreedy West mine. The finance model
was updated on the basis of a change in operational assumptions.
Robinson
An update of the production plan which includes mining from the Ruth West 6 pit and changes in mining
sequence in the Liberty pit, which enabled the extension of LOM to 2036. The finance model was
updated on the basis of a change in operational assumptions.
Carlota
An update of the production plan which includes mining from the Cactus pit – Phase 3, which enabled
the extension of LOM to 2027. The finance model was updated on the basis of a change in operational
assumptions.
Victoria
Update of the mine construction schedule, update of capital expenditures and calculation of operating
costs.
Assumptions adopted for impairment testing as at
31 December 2023
Victoria
Sudbury
Robinson
Carlota
Mine life / forecast period
16
5
13
4
Level of copper production during mine life (kt)
266
16
569
11
Level of nickel production during mine life (kt)
229
5
-
-
Level of gold production during mine life (koz t)
205
12
478
-
Average operating margin during mine life
64%
9%
41%
3%
Capital expenditures to be incurred during mine life
[USD million]
1 686
8
1 236
31
Including capitalised stripping costs [USD million]
-
-
745
7
Applied discount rate after taxation for assets in the
operational phase
-
7.9%
7.9%
9.9%
Applied discount rate after taxation for assets in the
pre-operational phase
9.4%
-
-
-
Costs to sell
2%
Level of fair value hierarchy to which the measurement
at fair value was classified
Level 3
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
57
Results of the test performed as at 31 December 2023 are presented in the following table:
CGU
Segment
(Part 2)
Carrying amount*
Recoverable amount
Recognised impairment
loss
USD mn
PLN mn
USD mn
PLN mn
USD mn
PLN mn
Victoria
KGHM
INTERNATIONAL
LTD.
428***
1 683
320
1 259
108
424
Sudbury
(50)
(197)
(46)**
(164)
-
-
Robinson
358***
1 409
431
1 696
-
-
Carlota
(47)
(185)
(47)
(185)
-
-
* The carrying amount of non-current assets decreased by the provision for future decommissioning costs of mines and the balance of deferred tax.
** Includes liabilities due to the Franco Nevada contract.
*** Including the amount of activated borrowing costs for the Robinson of USD 7 million, for the Victoria Project of USD 44 million.
As a result of the conducted test, an impairment loss was recognised on the assets of the CGU Victoria in the amount of
PLN 424 million (USD 108 million), which was recognised in the item: “Other operating costs”. Due to the recognition of an
impairment loss, a deferred income tax was charged in the amount of PLN (75) million, which was recognised in the item
“Income tax”.
The results of tests performed as at 31 December 2023 for:
• the CGU Sudbury confirmed that the recoverable amount is higher than the CGU’s carrying amount, however the
difference between the recoverable and carrying amounts of the CGU is insignificant, and therefore the
impairment loss recognised in previous periods was not reversed.
• the CGU Robinson indicated that the recoverable amount of the CGU exceeded the carrying amount. Due to the
lack of impairment losses recognised in previous periods that could be reversed, the carrying amount of CGU
Robinson did not change.
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Discount rate 10.4%
235
Discount rate 9.4% (test)
320
Discount rate 8.4%
461
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Copper price -0.10 $/lb
327
Copper price (test)
320
Copper price +0.10 $/lb
351
Sensitivity analysis of the recoverable amount of CGU Victoria (USD mn)
Recoverable amount
Nickel price -0.10 $/lb
329
Nickel price (test)
320
Nickel price +0.10 $/lb
350
Sensitivity analysis of the recoverable amount of CGU Robinson (USD mn)
Recoverable amount
Discount rate 8.9%
396
Discount rate 7.9% (test)
431
Discount rate 6.9%
469
Sensitivity analysis of the recoverable amount of CGU Robinson (USD mn)
Recoverable amount
Copper price -0.10 $/lb
355
Copper price (test)
431
Copper price +0.10 $/lb
507
The sensitivity analysis of the recoverable amount of the CGUs Sudbury and Carlota, due to the low carrying amount of
assets, was not presented.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
58
EVALUATION OF IMPAIRMENT OF WATER RIGHTS
In the Group, water rights in Chile are annually subjected to impairment testing by comparing their carrying amount
to the recoverable amount, which is set at fair value decreased by costs to sell. The fair value of water rights is classified
under level 2 of the fair value hierarchy, in which fair value measurements are based on significant observable input data,
other than market prices.
For the year ended on 31 December 2023, the Group assessed the factors impacting the recoverable amount of the asset.
The Group engaged an independent advisor that, by using a polynomial model taking into account technical, legal and
administrative aspects, performed a measurement of water rights held by the Group. As a result of the conducted
analysis, taking into account a change in water price and the estimated amount of water available for extraction as
compared to the level of these factors adopted for the measurement as at 31 December 2022, an impairment loss was
reversed on this asset in the amount of PLN 23 million (USD 6 million) which was recognised in the item “Other operating
income”. The carrying amount of water rights amounted to PLN 88 million as at 31 December 2023 (as at 31 December
2022: PLN 73 million).
IMPAIRMENT TESTING OF PROPERTY, PLANT AND EQUIPMENT OF THE COMPANY CENTROZŁOM WROCŁAW S.A. –
Segment – Other segments
As at 31 December 2023, as a result of the identification of indications of a possible change in the recoverable amount
of property, plant and equipment of the company Centrozłom Wrocław S.A., the company performed impairment testing
of these assets in 2023. The key indication to perform impairment testing was the achievement of a loss for 2023 by the
company in the amount of PLN 42 million. The test was conducted using the fair value less costs to sell method, on the
basis of available valuation reports and an expert’s opinion, in order to confirm the recoverable amount of non-current
assets.
The basis used to determine the recoverable amount during impairment testing:
1) land:
• valuation reports prepared by external entities at the company’s request,
• valuation reports prepared at the request of local municipal authorities,
2) buildings and structures:
• valuation reports prepared by external entities at the company’s request,
• an expert opinion by the technical services of the company on the basis of determined market value of similar
objects in individual locations
3) machinery and equipment:
− an expert opinion by the technical services of the company on the basis of auction websites and the level of
achieved prices
Properties for which valuation reports were prepared at the
company’s request*
Carrying amount
Recoverable
amount
in Chróścina
1
3
in Wrocław
9
76
in Poznań
11
16
in Konin
2
4
in Opole
1
2
in Łódź
9
14
Total
33
115
Properties for which valuation reports were prepared at the request of
local municipal authorities*
Carrying amount
Recoverable
amount
8
15
* cost to sell at the level of 3%
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
59
Sensitivity analysis of the recoverable amount of property to volatility of market prices for land and
accompanying buildings, for which valuation reports were prepared:
At the company’s request
Price lower
by 5%
Recoverable
amount
(test)
Price higher
by 5%
in Chróścina
2.9
3.1
3.2
in Wrocław
71.6
75.4
79.2
in Poznań
15.1
15.9
16.7
in Konin
4.0
4.2
4.4
in Opole
2.3
2.4
2.5
in Łódź
12.8
13.5
14.2
At the request of local municipal authorities
14.3
15.1
15.8
TOTAL
123.0
129.6
136.0
Sensitivity analysis of the fair value of machinery
and equipment to volatility of market prices for
machinery and equipment
Price lower
by 5%
Recoverable amount
(test)
Price higher
by 5%
31
32
34
As a result of the performed tests, the recoverable amount of property, plant and equipment was determined to be at the
level of PLN 176 million, which is significantly higher than the carrying amount of property, plant and equipment (PLN 87
million). Therefore, no impairment loss was recognised.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
60
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
2 513
2 641
Note 11.1
Employee benefits expenses
8 965
8 296
Materials and energy, including:
13 328
14 872
purchased metal-bearing materials
7 439
7 712
External services
3 091
2 960
Note 5.2
Minerals extraction tax
3 865
3 496
Other taxes and charges
939
874
Advertising costs and representation expenses
75
96
Property and personal insurance
92
87
Note 4.4
Reversal of impairment losses on property, plant and
equipment and intangible assets
( 69)
( 3)
Note 4.4
Reversal of write-downs of inventories
( 14)
( 19)
Part 3
Note 4.4
Recognition of impairment losses on property, plant
and equipment and intangible assets
290
2 728
Note 4.4
Recognition of write-downs of inventories
84
429
Other costs
83
83
Total expenses by nature
33 242
36 540
Cost of merchandise and materials sold (+)
547
679
Change in inventories of finished goods and work in
progress (+/-)
180
( 275)
Cost of products for internal use of the Group (-) *
(2 416)
(1 837)
Total costs of sales, selling costs and
administrative expenses, of which:
31 553
35 107
Cost of sales
29 348
32 907
Selling costs
529
481
Administrative expenses
1 676
1 719
*The amount is mainly comprised of cost of manufacturing non-current assets by the Group
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
61
Note 4.2 Other operating 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, of which:
617
367
measurement
68
202
realisation
549
165
Note 7.1
Exchange differences on financial assets and
liabilities other than borrowings
555
-
Interest income calculated using the effective
interest rate method
63
56
Reversal of impairment losses on fixed assets under
construction and intangible assets not yet available
for use
5
53
Fair value gains on other financial assets
9
-
Release of provisions
133
54
Gain on disposal of intangible assets
4
7
Government grants received
16
17
Income from servicing of letters of credit and
guarantees
18
21
Compensation, fines and penalties received
35
47
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
93
106
Total other operating income
1 562
906
Note 7.1
Losses on derivatives, of which:
( 566)
( 634)
measurement
( 14)
( 188)
realisation
( 552)
( 446)
Note 4.4
Impairment losses on financial instruments
( 1)
( 4)
Fair value losses on trade receivables
( 136)
( 104)
Part 3
Note 4.4
Impairment losses on fixed assets under
construction and intangible assets not yet available
for use
( 22)
(1 308)
Note 7.1
Exchange differences on financial assets and
liabilities other than borrowings
-
(1 414)
Provisions recognised
( 220)
( 36)
Losses on disposal of property, plant and
equipment
( 29)
( 28)
Donations granted
( 68)
( 66)
Other
( 76)
( 129)
Total other operating costs
(1 118)
(3 723)
Other operating income and (costs)
444
(2 817)
* The Group 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
62
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
Exchange differences on measurement and
realisation of borrowings
-
356
Note 7.1
Gains on derivatives - realisation
134
173
Other
1
-
Total finance income
135
529
Note 7.1
Interest on lease liabilities
( 10)
( 1)
Interest on trade payables within the reverse factoring
mechanism
( 150)
( 75)
Unwinding of the discount effect
( 92)
( 72)
Bank fees and charges on drawn borrowings
( 23)
( 26)
Note 7.1
Losses on derivatives - realisation
( 146)
( 183)
Note 7.1
Exchange differences on measurement and
realisation of borrowings
( 84)
-
Other
( 11)
( 13)
Total finance costs
( 516)
( 370)
Finance income and (costs)
( 381)
159
Note 4.4 Reversal and (recognition) of impairment losses recognised 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:
85
24
Note 4.1
reversal of impairment loss on property, plant and
equipment and intangible assets
69
3
Note 10.1
reversal of write-down of inventories
16
21
Note 6.2
gain due to reversal of allowances for
impairment of loans granted to a joint venture
226
101
other operating income, of which:
5
53
reversal of impairment losses on fixed assets
under construction and intangible assets not yet
available for use
5
53
Reversal of impairment losses, total
316
178
Impairment losses on assets, recognised in:
cost of sales and selling costs, of which:
( 377)
(3 170)
Note 4.1
impairment loss on property, plant and
equipment and intangible assets
( 290)
(2 728)
Note 10.1
write-down of inventories
( 87)
( 442)
other operating costs, of which:
( 23)
(1 312)
Note 4.2
impairment losses on fixed assets under
construction and intangible assets not yet
available for use
( 22)
(1 308)
Note 4.2
allowance for impairment of trade receivables
( 1)
( 4)
Impairment losses, total
( 400)
(4 482)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
63
Part 5 – Taxation
Note 5.1 Income tax in the consolidated statement of profit or loss
Accounting policies
Income tax recognised in profit or loss comprises current income tax and deferred income tax.
Current income tax is calculated in accordance with current tax laws.
Taking into account the tax optimisation within the KGHM Polska Miedź S.A. Group, the “PGK KGHM I” Tax Group was
founded, which operated in the years 2016-2018. Real benefits were noted in the period of operation of PGK KGHM,
including the possibility of current utilisation of losses generated by some of the companies within PGK to settle them with
the profits of other companies, and the positive result of an analysis of companies of the Group with respect to meeting
the criteria indicated in the act on corporate income tax were a basis to found a new tax group – PGK KGHM II. It operated
in the years 2019-2021, and in October 2021 an agreement was signed to extend its operations by a subsequent 3 tax
years, that is from 2022 to 2024.
On 17 October 2024, an agreement was signed to indefinitely extend the operations of PGK KGHM II, which is in force from
1 January 2025. The following companies joined the agreement:
1) KGHM Polska Miedź S.A.
2) „Energetyka” sp. z o.o.
3) Zagłębie Lubin S.A.
4) Miedziowe Centrum Zdrowia S.A.
5) KGHM CUPRUM sp. z o.o. – Centrum Badawczo-Rozwojowe
6) INOVA Centrum Innowacji Technicznych sp. z o.o.
7) PeBeKa S.A.
8) KGHM ZANAM S.A.
9) POL-MIEDŹ TRANS Sp. z o.o.
10) Mercus Logistyka sp. z o.o.
11) KGHM Metraco S.A.
12) Special purpose companies: Future 1 Sp. z o.o., Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o.,
13) Centrum Badań Jakości Sp. z o.o.
14) BIPROMET S.A.
Income tax
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Current income tax
1 153
682
Note 5.1.1
Deferred income tax
590
( 569)
Current tax adjustments for prior periods
( 5)
( 37)
Income tax on controlled foreign companies
-
15
Income tax
1 738
91
The increase in current income tax in 2024 as compared to 2023 was solely the result of an increase in taxable income.
In 2024, Group entities paid income tax in the amount of PLN 1 027 million (in 2023: PLN 1 678 million) to the appropriate
tax offices.
In 2024, the Parent Entity 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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
64
The table below presents differences between income tax from profit before income tax for the Group and the income tax
which could be achieved if the Parent Entity’s tax rate was applied:
Reconciliation of effective tax rate
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Profit/(loss) before income tax
4 608
(3 600)
Tax calculated using the Parent Entity’s rate
(2024: 19%, 2023: 19%)
876
( 684)
Effect of applying other tax rates abroad
41
( 88)
Tax effect of non-taxable income
( 65)
( 9)
Tax effect of expenses not deductible for tax purposes,
including:
798
723
minerals extraction tax
734
664
Unrecognised deferred tax assets on deductible temporary
differences
234
76
Utilisation in the period of previously-unrecognised tax losses
( 44)
( 45)
Adjustments of current tax for prior periods
( 5)
( 37)
Tax losses and tax credits in the period from which there was
no recognition of deferred tax assets
23
53
Deferred tax on eliminated interest on intra-Group loans
( 80)
( 72)
Income tax on controlled foreign companies
-
15
Other
( 40)
159
Income tax in profit or loss
1 738
91
In Poland, tax bodies are empowered to audit tax declarations for a period of five years, although during this period
companies may offset tax assets with tax liabilities being the income of the State Treasury (including due to current income
tax). In Canada, tax declarations may be audited for a period of three years without the right to offset assets with liabilities
due to current income tax.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
65
Note 5.1.1 Deferred income tax
Accounting policies
Significant estimates, assumptions and judgments
Deferred income tax is determined using tax rates and tax laws
that are expected to be applicable when the asset is realised
or the liability is settled based on tax rates and tax laws that
have been enacted or substantively enacted at the end of the
reporting period.
Deferred tax liabilities and deferred tax assets are recognised
for temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements, with the exception of temporary differences
arising from initial recognition of assets or liabilities in
transactions other than business combinations, which do not
have an impact either on profit/(loss) before tax or on the
taxable profit/(tax loss) at the moment they are concluded, and
at the date of the transaction does not result in the occurrence
of equal amounts of taxable and deductible temporary
differences.
Deferred tax assets are recognised if it is probable that taxable
profit will be available against which the deductible temporary
differences and unused tax losses can be utilised.
Deferred tax assets and deferred tax liabilities are offset
if the company has a legally enforceable right to set off current
tax assets and current tax liabilities, and if the deferred tax
assets and deferred tax liabilities relate to income taxes levied
on a given entity by the same tax authority.
The assessment of probability of realising deferred tax
assets with future tax income is based on the budgets
of the companies of the Group. Companies of the
Group recognised deferred tax assets in their
accounting books to the extent that it is probable that
taxable profit will be available against which the
deductible temporary differences can be utilised.
Companies of the Group which historically have
generated losses, and whose financial projections
do not foresee the achievement of taxable profit
enabling the deduction of deductible temporary
differences, do not recognise deferred tax assets
in their accounting books.
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Deferred net income tax at the beginning of the period, of
which:
( 509)
(1 014)
Deferred tax assets
137
137
Deferred tax liabilities
( 646)
(1 151)
Deferred income tax due to obtaining control of
subsidiaries:
1
-
Deferred tax assets
1
-
Deferred income tax during the period, of which:
( 551)
466
Recognised in profit or loss
( 590)
569
Recognised in other comprehensive income
39
( 103)
Exchange differences from translation of balances of
deferred income tax of statements of operations with a
functional currency other than PLN
( 23)
39
Deferred net income tax at the end of the period, of which:
(1 082)
( 509)
Deferred tax assets
302
137
Deferred tax liabilities
(1 384)
( 646)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
66
Maturities of deferred tax assets and deferred tax liabilities were as follows:
Deferred tax assets
Deferred tax liabilities
As at
31 December 2024
As at
31 December 2023
As at
31 December 2024
As at
31 December 2023
Maturity over the 12 months
from the end of the reporting
period
198
42
(1 529)
( 615)
Maturity of up to 12 months
from the end of the reporting
period
104
95
145
( 31)
Total
302
137
(1 384)
( 646)
Expiry dates of unused tax losses and tax credits, for which deferred tax assets were not recognised in individual countries,
are presented in the following table:
As at
31 December 2024
As at
31 December 2023
Unused tax
losses
Expiry date
Unused tax
credits
Expiry
date
Unused tax
losses
Expiry
date
Unused
tax credits
Expiry
date
Luxembourg
339
2037
-
-
325
2037
-
-
Chile
103
indefinite
-
-
97
indefinite
-
-
Canada
1 814
2044
55
2039
1 663
2043
53
2039
Other
74
2025-2029
-
-
5
2024-2028
-
-
Total
2 330
55
2 090
53
As at 31 December 2024, the Group did not recognise a deferred tax asset on deductible temporary differences in the
amount of PLN 1 768 million (as at 31 December 2023: PLN 556 million) because there is low possibility that they will be
reversed in the foreseeable future and that taxable income, on which it could be recognised, will be achieved. The
deductible temporary differences from which the deferred tax asset was not recognised mainly relate to the provisions for
decommissioning costs of mines and other technological facilities in the Robinson and Carlota mines in the KGHM
INTERNATIONAL LTD. Group, as well as the difference in interest on loans granted by the Parent Entity and the subsidiary
Future 1 to the KGHM INTERNATIONAL LTD. Group for accounting and tax purposes.
As at 31 December 2024, at the level of the consolidated financial statements, there was no recognition of deferred tax
liabilities on taxable temporary differences in the amount of PLN 1 990 million (as at 31 December 2023: PLN 1 273 million)
related to investments in subsidiaries and shares in joint ventures, as the conditions stipulated in IAS 12.39 were met, i.e.
the Parent Entity is able to control the dates of reversal of these differences and it is probable that they will not reverse in
the foreseeable future.
The following tables present deferred income tax assets and liabilities before their compensation at the level of individual
companies of the Group.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
67
Deferred tax assets (deferred tax assets prior to offsetting with deferred tax liabilities at the level of individual companies of the Group)
As at
31 December
2022
Credited/(Charged)
As at
31 December
2023
Credited/(Charged)
profit or loss
other
comprehensive
income
exchange
differences from
translation of
statements of
operations with
a functional
currency other
than PLN
changes due to
obtaining control
of subsidiaries
profit or loss
other
comprehensive
income
exchange
differences from
translation of
statements of
operations with
a functional
currency other
than PLN
As at
31 December
2024
Provision for decommissioning of mines and other
technological facilities
194
17
-
( 2)
209
-
( 3)
-
1
207
Measurement of forward transactions other than hedging
instruments
44
1
-
-
45
-
( 40)
-
-
5
Differences between the value of property, plant and
equipment for accounting and tax purposes
95
141
-
-
236
-
9
-
-
245
Future employee benefits
545
33
59
-
637
-
11
( 63)
-
585
Equity instruments measured at fair value
123
1
( 56)
-
68
-
-
( 1)
-
67
Lease liabilities
94
6
-
-
100
-
( 19)
-
-
81
Accrued and unpaid interest on borrowings
297
44
-
( 32)
309
-
1
-
13
323
Recognition/reversal of impairment losses on assets
40
167
-
-
207
-
( 37)
-
-
170
Short-term accruals for remuneration
125
( 30)
-
-
95
-
31
-
-
126
Re-measurement of hedging instruments
13
-
( 3)
-
10
-
-
( 3)
-
7
Liabilities related to fixed fee due to setting mining usufruct
35
3
-
-
38
-
( 1)
-
-
37
Employee benefits (holidays)
13
5
-
-
18
-
3
-
-
21
Unpaid remuneration with surcharges
27
( 25)
-
-
2
-
-
-
-
2
Tax losses from prior periods
-
54
-
( 3)
51
-
93
-
4
148
Other
199
( 45)
-
-
154
3
41
-
-
198
Total
1 844
372
-
( 37)
2 179
3
89
( 67)
18
2 222
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
68
Deferred tax liabilities (deferred tax liabilities prior to offsetting with deferred tax assets at the level of individual companies of the Group)
As at
31
December
2022
(Credited)/Charged
As at
31 December
2023
(Credited)/Charged
profit or loss
other
comprehensive
income
exchange
differences
from
translation of
statements of
operations with
a functional
currency other
than PLN
changes due to
obtaining control
of subsidiaries
profit or loss
other
comprehensive
income
exchange
differences
from
translation of
statements of
operations with
a functional
currency other
than PLN
As at
31 December
2024
Measurement of forward transactions other than
hedging instruments
41
6
-
-
47
-
( 28)
-
-
19
Differences between the value of property, plant and
equipment for accounting and tax purposes, including:
1 840
( 418)
-
( 36)
1 386
-
400
-
19
1 805
related to depreciation of right-to-use assets
89
( 13)
-
-
76
-
( 12)
-
-
64
Accrued and unpaid interest on loans
643
158
-
( 42)
759
-
145
-
19
923
Re-measurement of hedging instruments
25
-
103
-
128
-
-
( 108)
-
20
Equity instruments measured at fair value
84
29
-
-
113
-
( 4)
-
-
109
Other
225
28
-
2
255
2
166
2
3
428
Total
2 858
( 197)
103
( 76)
2 688
2
679
( 106)
41
3 304
As at 31 December 2024, the deferred tax assets and liabilities that will be subject to offsetting within the companies of the Tax Group amount to PLN 1 935 million and PLN 2 556 million, respectively
(as at 31 December 2023: PLN 2 026 million and PLN 2 399 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
69
Note 5.2 Other taxes and charges
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
3 405
tax
recognised
in cost of
sold
products
- 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
9
91
tax
recognised
in
inventories
* In accordance with conditions specified by the Act dated 2 March 2012 on the minerals extraction tax, the amount of tax depends on the amount
of copper and silver in concentrate as well as the tax rates. Tax rates are set separately for copper (Cu) and silver (Ag) on the basis of formulas
specified in the Act and depend on average prices of these metals (stock quotations from LME/LBMA) as well as the USD exchange rate.
The minerals extraction tax paid by the Parent Entity is calculated from the amount of copper and silver in produced
concentrate and depends on the stock prices of these metals as well as on the USD/PLN exchange rate. The tax is accounted
for under manufacturing costs of basic products and is not deductible for corporate income tax purposes.
Other taxes and charges, with a breakdown by geographical location, were as follows:
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Poland
836
803
Real estate tax
320
293
Royalties
143
127
Excise tax
8
7
Environmental fees
67
96
Costs of redemption of CO
2
emission allowances
199
190
Contributions to the State Fund for the Rehabilitation of
the Disabled People (PFRON)
38
34
Other taxes and charges
61
56
Other countries
153
78
Total
989
881
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
70
Note 5.3 Tax assets and liabilities
Accounting policies
Tax assets comprise current income tax assets and the settlement related to VAT.
Assets not representing financial assets are initially recognised at nominal value and are measured at the end
of the reporting period at the amount due.
Tax liabilities comprise the Group’s liabilities towards the tax office arising from the corporate income tax, including due
to the withholding tax, personal income tax and liabilities due to the minerals extraction tax and the excise tax.
Liabilities not representing financial liabilities are measured at the amount due.
As at
31 December 2024
As at
31 December 2023
Current corporate income tax assets
20
558
Assets due to other taxes
433
427
Tax assets
453
985
The receivables due to other taxes comprise mainly VAT receivables.
As at
31 December 2024
As at
31 December 2023
Current corporate income tax liabilities
325
-
Liabilities due to other taxes
724
611
Tax liabilities
1 049
611
The other tax liabilities comprise mainly liability due to the minerals extraction tax of the Parent Entity.
A significant factor for the increase in other tax liabilities was the increase in a liability due to the minerals extraction tax of
the Parent Entity, which was determined by the increase in taxable volume of copper and silver as well as the real tax rate
of copper and silver.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
71
Part 6 – Involvement in joint ventures
Accounting policies
The item “involvement in joint ventures” comprises investments in joint ventures accounted for using the equity method
and loans granted to joint ventures.
The Group classifies as investments accounted for using the equity method interests in joint ventures which are joint
contractual arrangements, in which the parties sharing control have the right to the net assets of a given entity. Joint
control occurs when decisions on the relevant activities of joint ventures require the unanimous consent of the parties
sharing control.
Investments are initially recognised at cost. The Group’s share in the profit or loss of entities accounted for using the
equity method (assessed while taking into account the impact of measurements to fair value at the investment’s
acquisition date) from the acquisition date is recognised in profit or loss, while its share in changes of accumulated other
comprehensive income from the acquisition date is recognised in the relevant item of accumulated comprehensive
income.
Unrealised gains and losses on transactions between the investor and the joint venture are eliminated in an amount
proportional to the investor’s share in these profits/(losses), and correspond with the carrying amount of the Group’s
share in this unit. If, at the end of the reporting period, the Group’s share in the unrealised gains on transactions between
the Group and the joint venture exceeds the carrying amount of the investment in this unit, the Group’s share in these
gains is eliminated to the level of the carrying amount of the Group’s interest in this unit. Elimination of unrealised gains,
proportionally to the Group’s share, unsettled in the period in which the transaction occurred, is performed in
subsequent reporting period at the moment the carrying amount of the Group’s interest in this unit exceeds zero.
If there are any indications of a possibility of impairment, an investment is tested for impairment by calculating the
recoverable amount.
Significant estimates, assumptions and judgments
Joint control
The Group classifies Sierra Gorda S.C.M. with its head office in Chile as a joint venture under IFRS 11, in which KGHM
INTERNATIONAL LTD.’s share equals 55%. Classification of Sierra Gorda S.C.M. as a joint venture, despite the 55% share
of the Group, was made based on analysis of the terms of the agreements between the parties and contractual
stipulations which indicated joint control. Pursuant to the terms of the agreements, all relevant activities of Sierra Gorda
S.C.M. require the unanimous consent of both owners. The Group and other owners have three members each in the
appointed Owners Council.
The Owners Council makes strategic decisions and is responsible for overseeing their execution. Moreover, it approves
the appointment of senior management. In the reporting period, there were no changes to provisions that were
the basis of classifying the investment as a joint venture.
Pursuant to the Group’s judgment, loans granted to the joint venture Sierra Gorda S.C.M. do not meet the criteria
of recognition as net investments in a joint venture, because the loans’ settlement is planned and probable
in the foreseeable future.
Note 6.1 Joint ventures accounted for using the equity method
Value of the investment in the consolidated statement of
financial position
2024
2023
As at 1 January
-
-
Share of profit for the reporting period
218
68
Settlement of the Group’s share of unsettled losses from prior years
(accumulated comprehensive losses)
( 209)
( 120)
Exchange differences from the translation of statements of operations
with a functional currency other than PLN
( 9)
52
As at 31 December
-
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
72
Unrecognised share of the Group of the losses of Sierra Gorda
S.C.M.
2024
2023
As at 1 January
(1 054)
(1 174)
Settlement of the Group’s share of unsettled losses from prior years
(accumulated comprehensive losses)
209
120
As at 31 December
( 845)
(1 054)
As at 31 December 2024, the KGHM Polska Miedź S.A. Group’s share of the unsettled accumulated losses of Sierra Gorda
S.C.M. amounted to PLN 845 million (USD 287 million), as at 31 December 2023: PLN 1 054 million (USD 342 million).
The Group stopped recognising its share of losses of Sierra Gorda S.C.M. at the moment the value of this share exceeded
the carrying amount of the interest in the investment in Sierra Gorda S.C.M. Recognition of the Group’s share of losses of
Sierra Gorda S.C.M. caused the carrying amount of shares in Sierra Gorda S.C.M. to be equal to PLN 0. After reducing the
share to zero, the Group performed an analysis as to whether there is a legal or customary obligation to pay on Sierra
Gorda S.C.M.’s behalf, which would result in an obligation of the Group to recognise a liability for this reason. On the basis
of conducted analyses, the Group does not identify the existence of a legal or customary obligation to pay
on Sierra Gorda S.C.M.’s behalf, which is described in IAS 28.39.
Moreover, the Group analysed the terms of the guarantee granted to Sierra Gorda S.C.M. to secure repayment of an
instalment of the credit facility, which meets the definition of a financial guarantee pursuant to IFRS 9. Details on the
guarantees granted to Sierra Gorda S.C.M. are described in Note 8.6.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
73
Condensed financial data of Sierra Gorda S.C.M. is presented in the table below
As at
31 December 2024
As at
31 December 2023
Non-current assets
22 559
20 752
Current assets, including:
2 244
2 151
Cash and cash equivalents
477
609
Non-current liabilities, including:
23 276
669
Borrowings and leases
2 091
525
Liabilities due to loans granted by jointly-controlling entities
20 595
-
Current liabilities, including:
1 710
22 795
Borrowings and leases
105
1 667
Liabilities due to loans granted by jointly-controlling entities
-
19 504
Carrying amount of net assets (incorporating the fair value
measurement from the date of obtaining joint control)
( 183)
( 561)
The Group’s share in net assets (55%)
( 100)
( 309)
Total unrecognised accumulated share of losses of Sierra Gorda
S.C.M. (accumulated comprehensive losses)
845
1 054
Balance of impairment loss on interest in Sierra Gorda S.C.M.
( 671)
( 671)
Unrecognised adjustment due to unrealised gains on a
transaction between the Group and the joint venture (sale of the
Oxide project)
( 74)
( 74)
Value of the investment in the consolidated statement of
financial position
-
-
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Revenues from contracts with customers
6 466
6 035
Depreciation/amortisation
(1 546)
(1 400)
Reversal of an impairment loss on property, plant and
equipment
-
399
Interest costs
(1 318)
(1 391)
Other incomes/(costs)
(3 077)
(3 247)
Profit before income tax
525
396
Income tax
( 129)
( 273)
Profit for the period
396
123
Exchange differences from the translation of Sierra Gorda S.C.M.’s
net assets to the PLN presentation currency
( 18)
96
Total comprehensive income
378
219
Other information on the Group’s involvement in the joint venture Sierra Gorda S.C.M.
As at
31 December
2024
As at
31 December
2023
Group’s share in commitments (investment and operating)
7 629
7 758
Group’s share in the total amount of future lease gross
payments due to lease agreements for mining equipment
442
480
Note 8.6
Guarantees granted by the Group
904
866
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
74
Note 6.2 Loans granted to a joint venture (Sierra Gorda S.C.M.)
Accounting policies
Significant estimates, assumptions and judgments
Loans granted to Sierra Gorda S.C.M. were
classified as credit-impaired financial assets
due to the high credit risk at the moment of initial
recognition (POCI). POCI loans are measured
at amortised cost using the effective interest rate,
adjusted by the credit risk using the scenario
analysis and available free cash of Sierra Gorda
S.C.M.
The terms of repayment of loans granted to finance operations
abroad, including planned repayment dates, were set in individual
agreements. Thanks to the signed agreement with South32 and the
annexation of loan agreements granted to Sierra Gorda S.C.M. by the
Owners, in accordance with the current terms of the agreement, the
principal and interest are paid on demand in the contractual order,
i.e. interest first, then principal, unless the Lenders agree otherwise,
but no later than up to 31 December 2032. Due to the lack of
expected repayment of the loan within 12 months from the end of
the reporting period, and due to the fact that each repayment
requires the consent of both partners of the joint venture, and such
consents did not exist as at the reporting date and as at the date of
signing of the consolidated financial statements, the Group presents
the balance of loans as a non-current receivable.
Due to the implementation of IFRS 9, as at 1 January 2018, the
expected, undiscounted credit loss at the moment of initial
recognition was estimated at the amount of PLN 6 105 million (USD
1 754 million per the 3.4813 USD/PLN exchange rate of NBP dated 29
December 2017). As at 31 December 2024 and 31 December 2023,
the expected credit losses estimated at the moment of initial
recognition has decreased and gains on reversal of these expected
credit losses increased the loan’s balance.
The repayments of loans by Sierra Gorda S.C.M. depend on that
company’s financial standing. In 2023, there were repayments in the
total amount of USD 39 million (PLN 163 million). Further payments
were made in 2024 in the total amount of USD 116 million
(PLN 464 million). Due to the fact that settling the loan is planned and
probable in the foreseeable future, the loan is not a net investment
under IAS 21.15.
Pursuant to the requirements of IFRS 9.5.5.17, the Group performed
impairment testing of the loan. To estimate the expected credit
losses, scenario analysis (IFRS 9.5.5.18) was used, comprising the
Group’s assumptions on the repayment of the loan granted. The
scenario analysis was based on cash flows of Sierra Gorda S.C.M.,
estimated on the basis of current market paths of commodities price
forecasts, which were subsequently discounted using the effective
interest rate adjusted by the credit risk, determined at the initial
recognition of the loan pursuant to IFRS 9.B5.5.45 at the level of
6.42%.
Other important assumptions used in the measurement of the loan
concern the following:
• the probability of realisation of individual measurement
scenarios,
• the level of production,
• the level of costs,
• the level of capital expenditures,
• the external financing of Sierra Gorda S.C.M.,
• the form and level of financing of Sierra Gorda S.C.M. by the
owners,
• taxation at the level of Sierra Gorda S.C.M.,
• the distribution of cash.
Future realisation, or not, of assumptions will depend on many
macroeconomic, operational and financial factors, as well as on the
agreements made between the JV partners (sensitivity analysis of the
carrying amount of the loan is presented in Note 7.5.2.4).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
75
2024
2023
As at 1 January
9 096
9 603
Repayment of loans (principal and interest)
( 464)
( 163)
Accrued interest
552
597
Note 4.4
Gain due to the reversal of allowances for impairment
on loans granted to a joint venture
226
101
Exchange differences
390
(1 042)
As at 31 December
9 800
9 096
The loan granted to Sierra Gorda S.C.M. has a fixed interest rate of 8%.
As at 31 December 2024, the Group estimated the expected cash flows on repayment of receivables due to loans granted
to Sierra Gorda S.C.M., as a result of which, pursuant to IFRS 9.5.5.14, a gain on reversal of an allowance for impairment
was recognised in the amount of PLN 226 million (USD 55 million), in particular due to a change in the scenario analysis of
loans and annexing the loan agreements. In the comparable period, a gain due to the reversal of an allowance for
impairment was recognised in the amount of PLN 101 million (USD 26 million).
The Group adopted price paths on the basis of internal macroeconomic assumptions prepared based on available, long-
term forecasts from financial and analytical institutions to estimate cash flows of Sierra Gorda S.C.M. 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, for which a long-term metals price forecast was used at the
following level:
− for copper– 8 800 USD/t;
− for gold – 1 900 USD/oz.
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.
As at 31 December 2023, the Group adopted price paths on the basis of internal macroeconomic assumptions prepared
based on available long-term forecasts from financial and analytical institutions to estimate cash flows of Sierra Gorda
S.C.M. 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 metals price forecast
was used at the following level:
− for copper– 8 250 USD/t;
− for gold – 1 600 USD/oz.
In the detailed forecast period for the period 2024-2028 the following levels of metal prices were assumed:
− for copper – from 8 500 USD/t to 9 200 USD/t;
− for gold – from 1 600 USD/oz to 1 900 USD/oz.
Other key assumptions used for estimation of cash flows
2024
2023
Mine life / forecast period
23
23
Level of copper production during mine life (kt)
3 488
3 578
Level of molybdenum production during mine life (mn lbs)
214
223
Level of gold production during mine life (koz)
966
996
Average operating margin during mine life
47.6%
43.8%
Applied discount rate after taxation
(used to calculate the fair value for disclosure purposes in Part 7)
8.31%
9.13%
Capital expenditures to be incurred during mine life (USD million)
2 021
1 399
Capitalised stripping costs during mine life (USD million)
4 204
3 820
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
76
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
837
46
10 357
286
11 526
829
114
9 571
195
10 709
Loans granted to a joint venture
-
-
9 800
-
9 800
-
-
9 096
-
9 096
Derivatives
-
-
-
286
286
-
38
-
195
233
Other financial instruments measured at
fair value
837
46
-
-
883
829
76
-
-
905
Other financial instruments measured at
amortised cost
-
-
557
-
557
-
-
475
-
475
Current
-
808
1 595
193
2 596
-
919
2 475
323
3 717
Trade receivables
-
707
638
-
1 345
-
414
518
-
932
Derivatives
-
26
-
193
219
-
437
-
323
760
Cash and cash equivalents
-
-
715
-
715
-
-
1 729
-
1 729
Other financial assets
-
75
242
-
317
-
68
228
-
296
Total
837
854
11 952
479
14 122
829
1 033
12 046
518
14 426
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
77
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
5 130
257
5 399
38
4 991
164
5 193
Borrowings, leases and debt securities
-
4 910
-
4 910
-
4 761
-
4 761
Derivatives
12
-
257
269
38
-
164
202
Other financial liabilities
-
220
-
220
-
230
-
230
Current
14
6 517
33
6 564
480
7 433
26
7 939
Borrowings, leases and debt securities
-
1 261
-
1 261
-
964
-
964
Derivatives
11
-
33
44
473
-
26
499
Trade payables
-
3 132
-
3 132
-
3 167
-
3 167
Trade payables within the reverse factoring mechanism
-
2 000
-
2 000
-
3 021
-
3 021
Other financial liabilities
3
124
-
127
7
281
-
288
Total
26
11 647
290
11 963
518
12 424
190
13 132
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
78
Gains/(losses) on financial instruments recognised in profit/(loss) for the period
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 6.2
Interest income
-
615
-
-
615
Note 6.2
Gain due to the reversal of allowances for impairment of loans
granted to a joint venture
-
226
-
-
226
Note 4.3
Interest income/(costs)
-
-
( 160)
( 160)
Note 4.2
Foreign exchange gains/(losses) on instruments other than
borrowings
-
581
( 26)
-
555
Note 4.3
Foreign exchange losses on borrowings
-
-
( 84)
-
( 84)
Note 4.4
Impairment losses
-
( 1)
-
-
( 1)
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
( 712)
-
-
-
( 712)
Note 4.3
Fees and charges on bank loans drawn
-
-
( 23)
-
( 23)
Note 4.2
Fair value (losses)/gains on financial assets
( 127)
-
-
-
( 127)
Other gains/(losses)
-
4
( 10)
-
( 6)
Total net gain/(loss)
( 108)
1 425
( 303)
628
1 642
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
79
from 1 January 2023
to 31 December 2023
Financial assets/liabilities
measured at fair value through
profit or loss
Financial assets
measured at
amortised cost
Financial liabilities
measured at
amortised cost
Hedging
instruments
Total
Note 4.2
Note 6.2
Interest income
-
653
-
-
653
Note 6.2
Gain due to the reversal of allowances for impairment of loans
granted to a joint venture
-
101
-
-
101
Note 4.3
Interest income/(costs)
-
-
( 76)
-
( 76)
Note 4.2
Foreign exchange gains/(losses) on instruments other than
borrowings
-
(1 455)
41
-
(1 414)
Note 4.3
Foreign exchange gains on borrowings
-
-
356
-
356
Note 4.4
Impairment losses
-
( 4)
-
-
( 4)
Note 7.2
Revenues from contracts with customers
-
-
-
635
635
Note 4.2
Note 4.3
Gains on measurement and realisation of derivatives
540
-
-
-
540
Note 4.2
Note 4.3
Losses on measurement and realisation of derivatives
( 467)
-
-
( 350)
( 817)
Note 4.3
Fees and charges on bank loans drawn
-
-
( 26)
-
( 26)
Note 4.2
Fair value losses on financial receivables
( 104)
-
-
-
( 104)
Other gains
-
6
-
-
6
Total net gain/(loss)
( 31)
( 699)
295
285
( 150)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
80
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
-
21
-
21
-
22
-
22
Listed shares
705
-
-
705
703
-
-
703
Unquoted shares
-
132
-
132
-
126
-
126
Trade receivables
-
707
-
707
-
414
-
414
Assets due to derivatives
-
505
-
505
-
993
-
993
Liabilities due to derivatives
-
( 313)
-
( 313)
-
( 701)
-
( 701)
Other financial assets
-
34
66
100
-
48
74
122
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
-
-
8 780
9 800
-
-
7 778
9 096
Received long-term bank and other loans
-
(1 686)
-
(1 686)
-
(2 486)
-
(2 486)
Long-term debt securities
(2 657)
-
-
(2 600)
(1 627)
-
-
(1 600)
The Group does not disclose the fair value of other than presented in the table above financial instruments measured at amortised cost in the statement of financial position, because it makes use of
the exemption arising from IFRS 7.29. (Disclosure of information on fair value is not required when the carrying amount is approximate to the fair value).
There was no transfer in the Group of financial instruments between individual levels of the fair value hierarchy in the current reporting period.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
81
Methods and measurement techniques used by the Group in determining fair values of each class of financial
assets or financial liabilities.
Level 1
Listed shares
Shares are measured based on quotations from the Warsaw Stock Exchange and the TSX Venture Exchange in Toronto.
Long-term debt securities
Long-term debt securities are measured based on quotations from the Catalyst Market of the Warsaw Stock Exchange.
Level 2
Unquoted shares
Unquoted shares are measured using the adjusted net assets. Observable input data other than the ones from the active
market were used in the measurement (e.g. transaction prices of real estate similar to the one subjected to measurement,
market interest rates of State Treasury bonds and term deposits in financial institutions, and the risk-free discount rate
published by the European Insurance and Occupational Pensions Authority).
Trade receivables
Receivables arising from the realisation of sales under contracts which are finally settled using future prices were measured
using forward prices, depending on the period/month of contractual quoting. Forward prices are from the Reuters system.
For trade receivables transferred to non-recourse factoring, a fair value is assumed at the level of the amount of the trade
receivables transferred to the factor (nominal value from the invoice) less interest, which are the factor’s compensation.
Due to the short term between the transfer of receivables to the factor and their payment, fair value is not adjusted by the
credit risk of the factor and the impact of time lapse.
Loans granted
This item comprises loans measured at fair value, the fair value of which was estimated on the basis of contractual cash
flows (per the contract) using the model of discounted cash flows, including the borrower’s credit risk.
Other financial assets/liabilities
Receivables/payables due to the settlement of derivatives, whose date of payment falls two working days after the end
of the reporting period, were recognised in this item. These instruments were measured at fair value set per the reference
price applied in the settlement of these transactions.
Currency and currency-interest derivatives
In the case of derivatives on the currency market and currency-interest transactions (CIRS), the forward prices from the
maturity dates of individual transactions were used to determine their fair value. The forward price for currency exchange
rates was calculated on the basis of fixing and appropriate interest rates. Interest rates for currencies and the volatility
ratios for exchange rates are taken from the Reuters system. The standard Garman-Kohlhagen model is used to measure
European options on currency markets.
Metals derivatives
In the case of derivatives on the commodity market, forward prices from the maturity dates of individual transactions were
used to determine their fair value. In the case of copper, official closing prices from the London Metal Exchange were used,
and with respect to silver and gold - the fixing price set by the London Bullion Market Association. Volatility ratios and
forward prices for measurement of derivatives at the end of the reporting period were obtained from the Reuters system.
Levy’s approximation to the Black-Scholes model was used for Asian options pricing on metals markets.
Long-term bank and other loans received
The fair value of bank and other loans is estimated by discounting the cash flows associated with these liabilities in
timeframes and under conditions arising from agreements, and by applying current rates.
Level 3
Loans granted
Loans granted measured at amortised cost in the statement of financial position are included in this category, because of
the use of unobservable assumptions in the fair value measurement. With respect to estimating the fair value of these
loans, a significant element of the estimation are the forecasted cash flows of Sierra Gorda S.C.M., which are unobservable
input data, and pursuant to IFRS 13 the fair value of these assets is classified to level 3 of the hierarchy. The discount rate
adopted to calculate the fair value of loans measured at amortised cost is 8.31% (as at 31 December 2023: 9.13%).
Detailed disclosures on the assumptions adopted for the measurement of loans were presented in Note 6.2, while the
sensitivity of the fair value classified to level 3 for loans granted – in Note 7.5.2.4. As at 31 December 2024, assumptions
adopted for forecasted cash flows which were applied to measurement of fair value are consistent with assumptions
adopted for the calculation of the carrying amount, while the difference between the carrying amount and the fair value
arises from the adoption of different discount rates.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
82
Other financial assets
This item includes receivables due to conditional payments associated with the agreement on the sale of a subsidiary S.C.M.
Franke, which were estimated based on a probabilistic model stipulated in the binding offer and including the discount of
payments for subsequent years.
Note 7.2 Derivatives
Accounting policies
Derivatives are classified as financial assets/liabilities measured at fair value through profit or loss, unless they have not
been designated as hedging instruments.
Purchases or sales of derivatives are recognised at the transaction date.
Derivatives not designated as hedges, defined as trade derivatives, are initially recognised at fair value and at the end
of the reporting period are measured at fair value, with recognition of the gains/losses on measurement in profit
or loss.
In the KGHM Polska Miedź S.A. Group, the Parent Entity applies hedge accounting for cash flows according to the
requirements of IFRS 9. Hedge accounting aims at reducing volatility in the Parent Entity’s net result, arising from periodic
changes in the measurement of transactions hedging individual types of market risk to which the Parent Entity is exposed.
Hedging instruments may be derivatives as well as bank and other loans in foreign currencies.
The designated hedges relate to the future sales transactions forecasted as assumed in the Sales Plan for a given year.
These plans are prepared based on the production capacities for a given period. The Parent Entity estimates that
the probability that transactions included in the production plan will occur is very high, as from the historical point
of view sales were always realised at the levels assumed in Sales Plans. Future cash flows arising from interest on bonds
issued in PLN also represent a hedged position.
The Parent Entity may use natural currency risk hedging through the use of hedge accounting for bank and other loans
denominated in USD, and designates them as positions hedging foreign currency risk, which relates to future revenues
of the Parent Entity from sales of copper, silver and other metals, denominated in USD.
Gains and losses arising from changes in the fair value of the cash flow hedging instrument are recognised in other
comprehensive income, to the extent by which the change in fair value represents an effective hedge of the associated
hedged item. The Group recognises in other reserves from measurement of financial instruments a part of the change of
the hedging instrument arising from changes in the time value of the option, the forward element and currency margin.
The portion which is ineffective is recognised in profit or loss as other operating income or costs. Gains
or losses arising from the cash flow hedging instrument are recognised in profit or loss as a reclassification adjustment,
in the same period or periods in which the hedged item affects profit or loss.
Derivatives are no longer accounted for as hedging instruments when they expire, are sold, terminated or settled,
or when the goal of risk management for a given relation has changed.
The Parent Entity may designate a new hedging relationship for a given derivative, change the intended use of the
derivative, or designate it to hedge another type of risk. In such a case, for cash flow hedges, gains or losses which arose
in the periods in which the hedge was effective are retained in accumulated other comprehensive income until the hedged
item affects profit or loss.
If the hedge of a forecasted transaction ceases to function because it is probable that the forecasted transaction will not
occur, then the net gain or loss recognised in other comprehensive income is immediately transferred to profit or loss as
a reclassification adjustment.
If a hybrid contract has an underlying instrument which is not a financial asset, the derivative is separated from an
underlying instrument and is measured pursuant to the rules for derivatives only if (i) the economic characteristic and
risk of the embedded instrument are not strictly related to the character of the host contract and its risks, (ii) a separate
instrument, whose characteristics reflect the traits of the embedded derivative, would fulfil the conditions of the
derivatives, and (iii) the combined instrument is not classified to financial assets measured at fair value, whose results of
revaluation are recognised in other income or other operating costs in the reporting period. If an embedded derivative is
separated, the underlying instrument is measured pursuant to appropriate accounting principles. The Parent Entity
separates embedded derivatives in commodities transactions with settlement periods in the future, after the date of
recognising a purchase invoice in the books up to the date of final settlement of the transaction.
If a hybrid contract has an underlying instrument, which is a financial asset, the criteria for classification of financial assets
are applied to the whole contract.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
83
Important estimates, assumptions and judgments
Assumptions and estimates adopted for the measurement of fair value of derivatives were presented in note 7.1, in the
item „Methods and measurement techniques used by the Group in determining fair values of each class of financial
assets or financial liabilities” and in tables in Note 7.2. below.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A.
Separate financial statements for 2024 Translation from the original Polish version
84
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
Sold put option (USDPLN)
-
-
-
(1)
(1)
-
-
(38)
(436)
(474)
Purchased call option (USDPLN)
-
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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
85
The table below presents detailed data on derivative transactions designated as hedging, held by the Parent Entity 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 Parent Entity as at
31 December 2023.
Open hedging derivatives
Notional
Average weighted price
/exchange rate/interest
rate
Maturity
settlement
period
Period of profit/loss
impact**
currency [USD mn]
CIRS [PLN mn]
[USD/PLN]
[USD/PLN, fixed interest
rate for USD]
Type of derivative
from
to
from
to
Currency 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
(267)
realisation of derivatives
(3)
(281)
measurement of derivatives
54
14
Finance income / (costs) (including the reclassification adjustment)
due to realisation of derivatives
(12)
(11)
Impact of derivatives and hedging instruments
on profit or loss for the period (excluding the tax effect)
647
357
The Parent Entity 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
86
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 Parent Entity reclassifies the settlement of interest payments of the hedging instrument CIRS in the interest part to the
finance income / (costs).
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Statement of other comprehensive income
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 non-current assets due to realisation of a
hedged item*
(70)
(102)
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
97
914
*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.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
87
Note 7.3 Other financial instruments measured at fair value
Accounting policies
The item “Other financial instruments measured at fair value” mainly includes: shares (listed and unquoted) which were
not acquired for trading purposes, for which the option of measurement at fair value through other comprehensive
income was selected in order to limit the volatility of the financial result, and loans granted measured at fair value through
profit or loss, as they did not pass the contractual cash flow test (SPPI), because in the financing structure at the last stage
of the target recipient of funds, debt is changed into a share, and that is why they were obligatorily classified to this
measurement category.
Shares are initially recognised at fair value increased by transaction costs, and at the end of the reporting period they are
measured at fair value with recognition of gains/losses from measurement in other comprehensive income. The amounts
recognised in accumulated other comprehensive income are not transferred later to profit or loss, while accumulated
gains/losses on a given equity instrument are transferred within equity to retained earnings at the moment an equity
instrument ceases to be recognised. Dividends from such investments are recognised in profit or loss.
The translation of items expressed in a foreign currency is performed according to the accounting policies described
in Note 1.5.
Important estimates, assumptions and judgments
The fair value of unquoted shares is calculated using the adjusted net assets method. The application of this method
is due to the specific nature of the assets of companies whose shares are subject to measurement. Observable Input data
other than the ones from the active market were used in the measurement (e.g. transaction prices of real estate similar to
one subjected to measurement, market interest rates of State Treasury bonds and fixed-term deposits in financial
institutions, and the risk-free discount rate published by the European Insurance and Occupational Pensions Authority).
The fair value of listed shares is calculated based on the closing price as at the end of the reporting period.
The loan’s fair value is set at the present value of future cash flows, including any change in market risk and credit risk
factors during the loans’ life.
As at
31 December 2024
As at
31 December 2023
Other financial instruments measured at fair value through other
comprehensive income
837
829
Shares of listed companies (Warsaw Stock Exchange
and TSX Venture Exchange), of which:
705
703
TAURON POLSKA ENERGIA S.A.
685
680
GRUPA AZOTY S.A.
15
19
Other listed shares
5
4
Unquoted shares
132
126
Other financial instruments measured at fair value through profit
or loss
46
76
Loans granted
21
22
Receivables due to conditional payments associated with the
agreement on the sale of a subsidiary S.C.M. Franke
25
54
Total other financial instruments measured at fair value
883
905
The measurement of listed shares is classified to level 1 of the fair value hierarchy (i.e. measurement is based on the prices
of these shares listed on an active market at the measurement date), while the measurement of unquoted shares is
classified to level 2 (i.e. measurement based on observable data, not deriving from an active market).
The measurement of loans granted is classified to level 2 of the fair value hierarchy.
In 2024 as well as in 2023, there were no dividends from companies in which the Group had shares classified as other
financial instruments measured at fair value.
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 Group holds shares classified as other financial instruments measured at fair value.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
88
Due to investments in listed companies, the Group is exposed to price risk. Changes in the listed share prices of these
companies resulting from the current macroeconomic situation may have a significant impact on the level of other
comprehensive income and on the accumulated amount recognised in equity.
The following table presents the sensitivity analysis of 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
705
106
(106)
703
91
(91)
Sensitivity analysis for significant types of market risk to which the Group is exposed presents the estimated impact
of potential changes in individual risk factors (at the end of reporting period) on other comprehensive income.
Potential changes in share prices at the end of the reporting period were determined at the level of standard deviations
from the WIG20 and mWIG40 indices respectively for a period of 3 calendar years ended at the end of the reporting period.
Note 7.4 Other financial instruments measured at amortised cost
Accounting policies
Important estimates, assumptions and judgements
The item other financial instruments measured at
amortised cost includes financial assets (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 and of investments in debt securities 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
489
439
Other non-current financial receivables
68
36
Note 7.1
Total
557
475
Financial assets designated for decommissioning mines and restoring tailings storage facilities are exposed to the credit
risk described in Note 7.5.2.5.
Details regarding revaluation of the provision for the decommissioning costs of mines and other technological facilities are
described in Note 9.4.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
89
Note 7.5 Financial risk management
In the course of its business activities the Group is exposed to the following main financial risks:
• market risks:
o commodity risk,
o risk of changes in foreign exchange rates,
o risk of changes in interest rates,
o risk of changes in other merchandise, including energy and energy carriers,
o price risk related to investments in shares of listed companies (Note 7.3),
• credit risk, and
• liquidity risk (the process of financial liquidity management is described in Note 8).
The Group identifies and measures financial risk on an ongoing basis, and also takes actions aimed at minimising its impact
on the financial position.
The Parent Entity manages identified financial risk factors in a conscious and responsible manner, using the adopted
Market Risk Management Policy, the Financial Liquidity Management Policy and the Credit Risk Management Policy.
The process of financial risk management in the Parent Entity is supported by the work of the Market Risk Committee, the
Energy Committee, the Financial Liquidity Committee and the Credit Risk Committee.
Note 7.5.1 Market risk
The market risk to which the Group is exposed to is understood as the possible occurrence of negative impact
on the Group's results arising from changes in the market prices of commodities, exchange rates, interest rates, and debt
securities, as well as the share prices of listed companies.
Note 7.5.1.1 Principles and techniques of market risk management
In market risk management (especially commodity and currency risk) the scale and profile of activities of the Parent Entity
and of production companies of KGHM INTERNATIONAL LTD. is of the greatest significance and impact the results
of the KGHM Polska Miedź S.A. Group.
The Parent Entity actively manages market risk by taking actions and making decisions in this regard within the context
of the KGHM Polska Miedź S.A. Group’s global exposure as a whole.
In accordance with the adopted policy, the goals of the market risk management process in the Group are as follows:
• decrease the probability of losing financial liquidity;
• increase the probability of meeting budget targets;
• maintain the good financial condition of the Group;
• limit the negative impact of volatility in prices of market factors on cash flows and financial results of the Group;
• support the process of strategic decision making related to Group’s 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 Group’s internal situation and market conditions.
The goals of market risk management at the Group level are achieved through their realisation in individual production
companies of the Group, with the coordination of these activities at the Parent Entity’s level, in which key tasks related
to the process of market risk management in the Group were centralised (such as coordination of the identification
of sources of exposure to market risk, proposing hedging strategies, contacting financial institutions in order to sign,
confirm and settle derivative transactions, and calculating measurements to fair value).
One of the market risk management techniques in the Parent Entity are hedging strategies using derivatives. The natural
hedging is also used. The Parent Entity uses hedging transactions under the hedge accounting.
Taking into account the potential scope of their impact on the Group’s results, market risk factors were divided into the
following groups:
Group
Market risk
Approach to risk management
Note 7.2
Group I – factors
with the greatest
impact on
the Group’s total
exposure to market
risk
Copper price
A strategic approach is applied to this group, aimed at
systematically building up a 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
Prices of other metals
and merchandise
From the Group’s point of view, this group is comprised of less
significant risks, although sometimes these risks are significant
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
90
Note 7.2
Group II – other
exposure to market
risk
Other exchange rates
from an individual entity’s point of view. Therefore, it is tactically
managed - on an ad-hoc basis, depending on the market
conditions.
Note 7.2
Interest rates
In market risk management various approaches are applied for particular, identified exposure groups. The Parent Entity
considers the following factors when selecting hedging strategies or restructuring hedging positions: current and
forecasted market conditions, the internal situation of the Parent Entity, the effective level and cost of hedging,
and the impact of the minerals extraction tax.
The Parent Entity applies an integrated approach to managing the market risk to which it is exposed. This means
a comprehensive approach to market risk, and not to each element individually. An example is the hedging transactions
on the currency market, which are closely related to contracts entered into on the metals market. The hedging of metals
sales prices determines the probability of achieving specified revenues from sales in USD, which represent a hedged
position for the strategy on the currency market.
The Parent Entity only executes those derivatives which it has the ability to evaluate internally, using standard pricing
models appropriate for a particular type of derivative, and which can be traded without significant loss of value with
a counterparty other than the one with whom the transaction was initially entered into. In the market valuation of a given
instrument, the Parent Entity uses information obtained from leading information services, banks, and brokers.
The Market Risk Management Policy in the Group permits the use of the following types of derivatives:
• swaps,
• forwards and futures,
• options, and
• structures combining the above instruments.
The instruments applied may be, therefore, either of standardised parameters (publicly traded instruments) or non-
standardised parameters (over-the-counter instruments). The primary instruments applied are cash flow hedging
instruments meeting the requirements for effectiveness as understood by hedge accounting. The effectiveness
of the financial hedging instruments applied by the Parent Entity in the reporting period is continually monitored and
assessed (details in Note 7.2 Derivatives - accounting policies).
The economic relationship between a hedging instrument and a hedged position is based on the sensitivity of the value of
the position to the same market factors (metals prices, exchange rates or interest rates) and on matching appropriate key
parameters of the hedging instrument and the hedged position (volume/notional amount, maturity date).
The hedge ratio of the established hedging relationship is set at the amount ensuring the effectiveness of the relationship
and is consistent with the actual volume of the hedged position and the hedging instrument. Sources of potential
ineffectiveness of the relationship arise from a mismatch of the parameters of the hedging instrument and the hedged
position (e.g. the notional amount, maturity, base instrument, impact of credit risk). When structuring a hedging
transaction, the Parent Entity aims to ensure a maximal match between these parameters to minimise the sources
of ineffectiveness.
The Parent Entity quantifies its market risk exposure using a consistent and comprehensive measure. Market risk
management in the Group is supported by simulations (such as scenario analysis, stress-tests, backtests) and calculated
risk measures. The risk measures being used are mainly based on mathematical and statistical modelling, which uses
historical and current market data concerning risk factors and takes into consideration the current exposure to market
risk.
One of the measures used as an auxiliary tool in making decisions in the market risk management process in the Parent
Entity is EaR - Earnings at Risk. This measure indicates the lowest possible level of profit for the period for a selected level
of confidence (for example, with 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. EBITDA-at-Risk ratio is calculated for both the KGHM INTERNATIONAL
LTD. Group and the JV Sierra Gorda S.C.M.
Due to the risk of production cutbacks (for example because of force majeure) or failure to achieve planned foreign
currency revenues, as well as purchases of metals contained in purchased materials, limits with respect to commitment in
derivatives have been set.
For the Parent Entity limits on metals and currency markets were set at:
• 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,
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
91
• 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.
Whereby expenses for servicing the debt denominated in USD decrease the nominal amount of exposure to hedge the
planned revenues from sales of metals.
With respect to the risk of changes in interest rates, the Parent Entity has set a limit of commitment in derivatives
of up to 100% of the debt’s nominal value in every interest period, as stipulated in the signed agreements.
For selected production companies in the Group, limits were set for commitment in derivatives on the currency markets at
the same levels as those functioning in the Parent Entity or lower (75%), while with respect to transactions on the copper
market the limit of 75% was set for instruments representing the rights of a company and 40% for instruments representing
obligations of a company. The limit with respect to commitment in derivatives on nickel, silver and gold markets amounts
up to 60% of planned, monthly sales volume from own concentrates of selected production companies.
The maximum time horizon within which the Group decides to limit market risk is set in accordance with the technical and
economic planning process and amounts to 5 years, whereas in terms of interest rate risk, the time horizon reaches up to
the maturity date of the long-term financial liabilities of the Group.
Note 7.5.1.2 Commodity risk
The Parent Entity is exposed to the risk of changes in the prices of the metals it sells: copper, silver, gold and lead.
Furthermore, the KGHM INTERNATIONAL LTD. Group is exposed to the risk of changes in the prices of copper, gold, nickel,
molybdenum, platinum and palladium.
In the Parent Entity and the KGHM INTERNATIONAL LTD. Group, the price formulas used in physical delivery contracts are
mainly based on average monthly quotations from the London Metal Exchange for copper and other common metals and
from the London Bullion Market for precious metals. Within the commercial policy, the Parent Entity and the KGHM
INTERNATIONAL LTD. Group set the price base for physical delivery contracts as the average price of the appropriate future
month.
The permanent and direct link between sales proceeds and metals prices, without similar relationships on the expenditures
side, results in a strategic exposure. In turn, operating exposure is a result of possible mismatches in the pricing of physical
contracts with respect to the Group’s benchmark profile, in particular in terms of the reference prices and the quotation
periods.
On the metals market, the Group has a so-called long position, which means it has higher sales than purchases. The analysis
of the Group’s strategic exposure to market risk should be performed by deducting from the volume of metals sold the
amount of metal in purchased materials.
The Group’s strategic exposure to the risk of changes in the price of copper and silver in the years 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]
445 440
649 886
204 446
416 122
628 130
212 008
Silver [t]
1 337
1 349
12
1 343
1 361
18
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 Parent Entity (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 Parent Entity (10% in 2023).
In 2024, pursuant to the Market Risk Management Policy, the Parent Entity monitored and analysed on an ongoing basis
the macroeconomic environment and the situation on financial markets, and also identified and measured market risk
related to changes in metals prices (testing the impact of market risk factors on the financial result, balance sheet and the
statement of cash flows). As part of the realisation of the strategic hedging plan of the Parent Entity 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.
1
Copper sales less copper in purchased metal-bearing materials.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
92
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 Parent Entity 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 Parent Entity held open derivatives positions on metals market entered into solely under
strategic management of a net trading position for 9.2 thousand tonnes of copper and 18.3 thousand ounces of gold.
In 2023 and in 2024, neither the KGHM INTERNATIONAL LTD. Group nor any of the production companies implemented
any forward transactions on the commodity market.
As at 31 December 2023 and 2024, the risk of changes in metals prices was also related to derivatives embedded in the
purchase contracts for metal-bearing materials entered into by the Parent Entity.
Condensed tables of open transactions in derivatives held by the Company on the copper and silver markets 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).
Hedging against copper price risk – open derivatives as at 31 December 2024
Hedging against silver price risk – open derivatives as at 31 December 2024
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.
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
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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
93
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 within the KGHM Polska Miedź S.A. Group, the following types
of exposures were identified:
• transaction exposure related to the volatility of cash flows in the base (functional) currency,
• exposure related to the volatility of selected items of the statement of financial position in the base (functional)
currency.
The transaction exposure to currency risk derives from cash flow-generating contracts, whose values expressed
in the base (functional) currency depend on future levels of exchange rates of the foreign currencies with respect to the
base (functional) currency. Cash flows exposed to currency risk may possess the following characteristics:
• denomination in the foreign currency – cash flows are settled in foreign currencies other than the functional
currency, and
• indexation in the foreign currency – cash flows may be settled in the base currency, but the price (i.e. of a metal)
is set in a different foreign currency.
The key source of exposure to currency risk in the Parent Entity’s business operations are the proceeds from sales
of products (with respect to metals prices, processing and producer margins).
The exposure to currency risk also derives from items in the consolidated statement of financial position denominated
in foreign currencies, which under the existing accounting regulations must be translated, upon settlement or periodic
valuation, including the translation of foreign operations statements, by applying the current exchange rate of the foreign
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
94
currencies versus the base (functional) currency. Changes in the carrying amounts of such items between valuation dates
result in the volatility of profit or loss for the period or of other comprehensive income.
Items in the consolidated statement of financial position which are exposed to currency risk include in particular:
• trade receivables and trade payables related to purchases and sales denominated in foreign currencies;
• financial receivables due to loans granted in foreign currencies;
• financial liabilities due to borrowings in foreign currencies;
• cash and cash equivalents in foreign currencies; and
• derivatives on metals market.
As for the currency market, the notional amount of settled transactions hedging revenues from metals sales amounted to
approx. 19% (in 2023: 26%) of the total revenues from sales of copper and silver realised by the Parent Entity in 2024.
In 2024, as part of the strategic management of currency risk, the Parent Entity purchased collar option structures 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 Parent Entity 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 of the Parent Entity 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
Hedging against USD/PLN currency risk – open derivatives as at 31 December 2023
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
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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
95
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 issue 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
The table of open derivative transactions entered into by Polish companies on the currency market is not presented, due
to its immateriality for the Group.
As for managing currency risk, the Parent Entity applies natural hedging by borrowing in the currency in which it has
revenues. As at 31 December 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 2 737 million).
The currency structure of financial instruments exposed to currency risk (change in the USD/PLN, EUR/PLN and CAD/PLN
exchange rates) of the KGHM Polska Miedź S.A. Group and sensitivity analysis to the risk of changes in the exchange rates
are presented in the tables below. In order to determine the potential changes in the USD/PLN, EUR/PLN and CAD/PLN
exchange rates for sensitivity analysis purposes, the Black-Scholes model (the geometrical Brownian motion) was used.
Financial instruments
Value at risk as at 31 December 2024
total PLN million
USD million
EUR million
CAD million
Shares
5
-
-
2
Trade receivables
960
200
27
9
Cash and cash equivalents
416
75
8
25
Long-term loans granted to a joint venture
9 800
2 390
-
-
Other financial assets
228
40
1
21
Derivatives*
192
50
-
-
Trade and other payables
(2 050)
(151)
(320)
(24)
Borrowings
(2 556)
(604)
(7)
(17)
Other financial liabilities
(17)
(2)
(2)
-
*Transactions on the commodities market which are denominated in USD and translated to PLN at the exchange rate as at the end of the reporting
period are presented in the item “derivatives”, in the column “USD million”, while the column “total PLN million” also includes the fair value of
derivatives which are denominated solely in PLN and their value depends on exchange rates.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
96
Financial instruments
Value at risk as at 31 December 2023
total PLN million
USD million
EUR million
CAD million
Shares
4
-
-
1
Trade receivables
524
89
34
8
Cash and cash equivalents
1 306
280
31
24
Long-term loans granted to a joint venture
9 096
2 311
-
-
Other financial assets
174
30
1
17
Derivatives*
292
9
-
-
Trade and other payables
(2 238)
(229)
(298)
(14)
Borrowings
(2 828)
(695)
(10)
(16)
Other financial liabilities
(18)
(1)
(3)
-
*Transactions on the commodities market which are denominated in USD and translated to PLN at the exchange rate as at the end of the reporting
period are presented in the item “derivatives”, in the column “USD million”, while the column “total PLN million” also includes the fair value of
derivatives which are denominated solely in PLN and their value depends on exchange rates.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
97
An analysis of the Group’s sensitivity to the currency risk in 2024 and 2023
Value at
risk
Carrying
amount
31 December
2024
Change in the USD/PLN exchange rate
Change in the EUR/PLN
exchange rate
Change in the CAD/PLN
exchange rate
4.48 (+9%)
3.74 (-9%)
4.55 (+6%)
4.11 (-4%)
3.14 (+10%)
2.66 (-7%)
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
profit or loss
profit or loss
Shares
5
837
-
-
-
-
-
1
-
Trade receivables
960
1 345
75
-
(72)
-
8
(5)
3
(2)
Cash and cash equivalents
416
715
28
-
(27)
-
2
(1)
7
(5)
Long-term loans granted to a joint
venture
9 800
9 800
897
-
(858)
-
-
-
-
-
Other financial assets
228
920
15
-
(14)
-
-
-
6
(2)
Derivatives
192
192
9
(285)
(7)
390
-
-
-
-
Trade and other payables
(2 050)
(5 327)
(57)
-
54
-
(89)
53
(7)
5
Borrowings
(2 556)
(6 171)
(227)
-
217
-
(2)
1
(5)
3
Other financial liabilities
(17)
(152)
(1)
-
1
-
(1)
-
-
-
Impact on profit or loss
739
-
(706)
-
(82)
48
5
(1)
Impact on other comprehensive income
-
(285)
-
390
-
-
-
-
Value at
risk
Carrying
amount
31 December
2023
Change in the USD/PLN exchange rate
Change in the EUR/PLN
exchange rate
Change in the CAD/PLN
exchange rate
4.46 (+13%)
3.50 (-11%)
4.79 (+10%)
4.13 (-5%)
3.27 (+10%)
2.77 (-7%)
Financial assets and liabilities
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
profit or loss
profit or loss
Shares
4
829
-
-
-
-
-
-
-
-
Trade receivables
524
932
47
-
(38)
-
15
(7)
2
(2)
Cash and cash equivalents
1 306
1 729
148
-
(121)
-
14
(7)
7
(5)
Long-term loans granted to a joint
venture
9 096
9 096
1 223
-
(997)
-
-
-
-
-
Other financial assets
174
847
16
-
(13)
-
-
-
5
(3)
Derivatives
292
292
(4)
(500)
4
413
-
-
-
-
Trade and other payables
(2 238)
(6 385)
(121)
-
99
-
(131)
64
(4)
3
Borrowings
(2 828)
(5 725)
(368)
-
300
-
(4)
2
(5)
3
Other financial liabilities
(18)
(321)
(1)
-
1
-
(1)
1
-
-
Impact on profit or loss
940
-
(765)
-
(107)
53
5
(4)
Impact on other comprehensive income
-
(500)
-
413
-
-
-
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
98
Note 7.5.1.4 Interest rate risk
In 2024 the Group was exposed to the risk of changes in interest rates due to loans granted to a joint venture, investing
cash, the reverse factoring program and using borrowings.
Positions with variable interest rates expose the Group to the risk of changes in cash flow from a given position
as a result of changes in interest rates (i.e. it has an impact on the interest costs or income recognised in profit or loss).
Positions with fixed interest rates expose the Group to the risk of fair value changes of a given position, excluding positions
measured at amortised cost, for which the change in fair value does not affect their measurement and profit or loss.
The main items which are exposed to interest rate risk are presented below:
As at
31 December 2024
As at
31 December 2023
Cash flow
risk
Fair value
risk
Total
Cash flow risk
Fair value
risk
Total
Cash and cash
equivalents
715
-
715
1 729
-
1 729
Loans granted
-
21
21
-
22
22
Note 7.1
Borrowings
(3 960)
(2 211)
(6 171)
(2 714)
(3 011)
(5 725)
Trade payables
within the reverse
factoring mechanism
(2 000)
-
(2 000)
(3 021)
-
(3 021)
As at 31 December 2024 the Parent Entity 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 Group’s sensitivity to interest rate risk, assuming changes in interest rates for the balance sheet items in
PLN, USD and EUR (presented in basis points, bps) is presented in the following table. An expert method including
recommendations of the ARMA model was used to determine the potential volatility of interest rates.
31 December 2024
change in interest rate
31 December 2023
change in interest rate
+100 bp
(PLN, USD, EUR)
-100 bp
(PLN, USD, EUR)
+50 bp
(PLN, USD, EUR)
-150 bp
(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
7
-
(7)
-
9
-
(26)
-
Borrowings
(40)
-
40
-
(14)
-
41
-
Financial derivatives –
interest rate
-
56
-
(63)
-
31
-
(107)
Trade payables within the
reverse factoring
mechanism
(20)
-
20
-
(15)
-
45
-
Impact on profit or loss
(53)
-
53
(20)
-
60
-
Impact on other
comprehensive income
-
56
(63)
-
31
-
(107)
Impact of the reference rates reform
In 2024 the Group 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 Group’s derivatives, because the
CIRS transactions entered into (open cross currency interest rate swaps) and bonds issued by the Parent Entity are based
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
99
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 Group applied temporary
exemptions from application of specific requirements of hedge accounting under IFRS 9 due to the IBOR reform and
adopted an assumption that it may continue the hedge relationships. The notional amounts of hedging instruments to
which these exemptions apply are disclosed in the following table.
As at 31 December 2024, the Group estimated that the impact of IBOR reform on the financial statements will be
immaterial.
As at 31 December 2024 and 31 December 2023, the Group held financial instruments based on variable interest rates,
which were not yet replaced by alternative rates. The amount of financial instruments that are based on a rate subject to
planned reform are presented in the following table.
Type of financial instrument
Carrying amount
as at
31 December
2024
Carrying amount
as at
31 December
2023
Bank loans
WIBOR 1M, 3M
(201)
(39)
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
(3 811)
(3 793)
Note 7.5.1.5 Risk of changes in prices of energy and energy carriers
In market risk management resulting from changes in prices of energy and energy carriers, the scale and profile of activities
of the Parent Entity is of the greatest significance and impact on the results of the KGHM Polska Miedź S.A. Group. The risk
of changes in prices of electricity and energy commodities is a commodity risk for the Parent Entity, the measurement of
which is based on its impact on cash flow.
The Parent Entity’s exposure to the risk of volatility in electricity prices, energy commodities and related merchandise
involves the following markets:
• electricity and natural gas, which are required to engage in mining and processing operations, including natural
gas used to generate electricity to meet the Parent Entity’s needs in its own generating sources,
• CO
2
emission allowances, which need to be redeemed due to the level of greenhouse gas emissions by
installations operated by the Parent Entity being higher than the level of greenhouse gas emissions for which the
Parent Entity received freely-granted rights to emit CO
2
,
• property rights to energy resulting from certificates of origin of energy from renewable sources (RES)
and energy efficiency certificates (hereafter: property rights), subject to redemption (required for purposes of
redemption due to the sale of electricity by the Parent Entity to end users as well as the consumption of purchased
electricity for own needs).
The management of commodity price risk with respect to planned purchases of electricity and natural gas is based on the
management of exposure to the risk of changes in the prices of electricity and natural gas in a time horizon of up to 36
subsequent months, resulting from electricity and gas purchase plans, less previously-signed purchase contracts with
delivery in future periods.
In the case of 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 Parent Entity purchases electricity in forward products (RTEE)
as well as on the intra-day and next-day 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 Parent Entity from planned amounts. In terms of changes
in the prices of CO
2
emission allowances, the Parent Entity has a net short position, resulting from the obligation to redeem
rights due to CO
2
systemic emissions which occur as a result of the combustion of coal within coal-bearing materials in
installations functioning in the copper smelters, and also as a result of the combustion of gas in the CCGT (Combined Cycle
Gas Turbine) blocks generating electricity to meet the Parent Entity’s needs. In 2024 and 2023, the Parent Entity purchased
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
100
CO
2
emission allowances in forward transactions to secure its own needs. Such derivatives, which are acquired and
maintained to secure own needs, are excluded under IFRS 9 Financial Instruments and are not subject to measurement as
at the end of the reporting period.
In terms of the risk of changes in property rights, the Parent Entity has a net short position resulting from the obligation
to redeem property rights due to the sale of electricity to an end user as well as to the consumption of purchased electricity
for own needs, while the source of exposure are mainly the prices of property rights on the wholesale market, (i.e. on the
Polish Power Exchange). KGHM Polska Miedź S.A. sells electricity mostly to customers which provide services to the Parent
Entity on properties belonging to KGHM Polska Miedź S.A..
Exposure of the Parent Entity to a given risk – demand volume 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 a given year) less settled allowances received free
of charge.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
101
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 2024-2023 (excluding the tax effect).
In hedging relations, only the intrinsic value of the option is designated as a hedging instrument. The time value approximates zero in the horizon of a hedging relation. The hedge’s inefficiency
recognised in the statements of profit or loss in the reporting periods 2023-2024 was immaterial.
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)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
102
The table below presents information on the impact of hedge accounting on the statement of profit or loss and other comprehensive income (excluding the tax effect).
from 1 January 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 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***
-
(37)
70
340
(11)
102
Total
148
628
70
944
285
102
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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
103
Note 7.5.2 Credit risk
Credit risk is defined as the risk that the Group’s counterparties will not be able to meet their contractual liabilities
and involves three main areas:
• the creditworthiness of the customers with whom physical sales transactions are undertaken,
• the creditworthiness of the financial institutions (banks/brokers) with whom, or through whom, hedging
transactions are undertaken, as well as those in which free cash and cash equivalents are deposited, and
• the financial standing of subsidiaries - borrowers.
In particular, the sources of exposure to credit risk are:
• cash and cash equivalents and deposits,
• derivatives,
• trade receivables,
• loans granted (Note 6.2),
• guarantees granted (Note 8.6), and
• other financial assets.
Accounting policies
The Group recognises impairment loss on expected credit losses on financial assets measured at amortised cost.
Expected credit losses are credit losses weighed by the default probability. The Group applies the following models
for designating impairment losses:
- the simplified model – for trade receivables,
- the general (basic) model – for other financial assets.
Under the general model the Group monitors changes in the level of credit risk related to a given financial asset
and classifies financial assets to one of three stages of determining impairment losses – based on observations of changes
in the level of credit risk compared to an instrument’s initial recognition. In particular, the following are monitored: the
credit rating and the financial condition of the customer and the payment delay period. Depending on which degree it is
classified to, an impairment loss is estimated for a 12-month period (degree 1) or in the horizon of lifetime (degree 2 and
degree 3). The absolute indicator of default is an overdue period of more than 90 days.
Under the simplified model the Group does not monitor changes in the level of credit risk during an instrument’s life and
estimates the expected credit loss over the time horizon of maturity of the instrument based on historical data respecting
the repayments of receivables.
Note 7.5.2.1 Credit risk related to cash, cash equivalents and bank deposits
The Group allocates periodically free cash in accordance with the requirements to maintain financial liquidity and limit risk
and in order to protect capital and maximise interest income.
As at 31 December 2024, the total amount of free and restricted cash and cash equivalents of PLN 711 million was held in
bank accounts and in short-term deposits (in total as at 31 December 2023: PLN 1 724 million).
All entities with which deposit transactions are entered into by the Group operate in the financial sector. Analysis of
exposure to this type of risk indicated that these are solely banks with the highest, medium-high and medium ratings, and
which have an appropriate level of equity and a strong, stable market position. The credit risk in this regard is monitored
through the on-going review of the financial standing and by maintaining an appropriately low concentration levels in
individual financial institutions.
The following table presents the level of concentration of cash and deposits allocated to financial institutions,, including
the assessment of their creditworthiness.
Rating level
As at
31 December 2024
As at
31 December 2023
Highest
from AAA to AA- according to S&P and Fitch, and from Aaa
to Aa3 according to Moody’s
21%
8%
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
48%
84%
Medium
from BBB+ to BBB- according to S&P and Fitch, and from
Baa1 to Baa3 according to Moody’s
31%
8%
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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
104
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 29%, or PLN 207 million (as at 31 December 2023: 35%, or PLN 608 million).
As at
31 December 2024
As at
31 December 2023
Amount
Rating
Amount
Rating
Counterparty 1
207
A2/Moody's
Counterparty 1
608
A2/Moody's
Counterparty 2
174
BBB/Fitch
Counterparty 2
317
A+/S&P
Counterparty 3
92
AA-/S&P
Counterparty 3
315
A/S&P
Counterparty 4
54
A-/S&P
Counterparty 4
102
BBB/Fitch
Counterparty 5
39
A+/Fitch
Counterparty 5
80
A-/S&P
Other
145
-
Other
302
-
Total
711
Total
1 724
Impairment losses on cash and cash equivalents were determined individually for each balance of a given financial
institution. External bank ratings were used to measure credit risk. The analysis determined that these assets have a low
credit risk at the reporting date. The Group used a simplification permitted by the standard and the impairment loss was
determined on the basis of 12-month credit losses. The calculation of impairment determined that the amount of
impairment loss is insignificant. These assets are classified to Degree 1 of the impairment model.
Note 7.5.2.2 Credit risk related to derivative transactions
All entities with which derivative transactions (excluding embedded derivatives) are entered into by the Group operate
in the financial sector.
The Group’s credit exposure related to derivatives by main counterparties is presented in the table below
3
.
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 Group (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 Parent Entity carries out net settlements (based
on standard framework agreements entered into with its customers, regulating the trade of financial instruments, meaning
ISDA or based on a formula of the Polish Bank Association). Moreover, the resulting credit risk is continuously monitored
by reviewing the credit ratings and is limited by striving to diversify the portfolio while implementing hedging strategies.
3
Excludes embedded derivatives.
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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
105
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 Parent Entity has determined that,
due to its cooperation solely with renowned financial institutions, as well as continuous monitoring of their ratings, it is not
materially exposed to credit risk as a result of transactions concluded with them.
The following table presents the structure of ratings of the financial institutions with whom the Group had derivatives
transactions, representing exposure to credit risk.
Rating level
As at
31 December 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
The following Group companies had significant trade receivables as at 31 December 2024:
As at
31 December 2024
As at
31 December 2023
KGHM Polska Miedź S.A.
759
322
The KGHM INTERNATIONAL LTD. Group
282
283
CENTROZŁOM WROCŁAW S.A.
69
70
WPEC w Legnicy S.A.
63
70
KGHM Metraco S.A.
13
35
NITROERG S.A.
38
30
„MCZ” S.A.
35
33
WMN "Łabędy" S.A.
16
18
KGHM ZANAM S.A.
13
10
Energetyka Sp. z o.o.
10
10
The total net amount of trade receivables of the Group as at 31 December 2024, excluding the fair value of accepted
collateral, up to the amount of which the Group may be exposed to credit risk, amounts to PLN 1 345 million
(as at 31 December 2023: PLN 932 million).
The Parent Entity limits its exposure to credit risk related to trade receivables by evaluating and monitoring the financial
condition of its customers, setting credit limits, requiring collateral, and non-recourse factoring. The terms of factoring
agreements entered into meet the criteria of removing receivables from the books at the moment of their purchase
by the factor. As at 31 December 2024, the amount of receivables transferred to factoring, for which payment from factors
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
106
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 Note 2.4.
An inseparable element of the credit risk management process performed by the Parent Entity is the continuous
monitoring of receivables and the internal reporting system.
Buyer’s credit is only provided to proven customers. In the case of new customers, an effort is made to ensure that sales
are based on prepayments or trade financing instruments which transfer the credit risk to financial institutions.
The Parent Entity makes use of the following forms of collateral:
• registered pledges, bank guarantees, promissory notes, notarial enforcement declarations, corporate
guarantees, cessation of receivables, mortgages and documentary collection;
• ownership rights to goods to be transferred to the buyer only after payment is received;
• a receivables insurance contract, which covers receivables from entities with buyer’s credit which have not
provided strong collateral or have provided collateral which does not cover the total amount of the receivables.
Taking into account the above forms of collateral and the credit limits received from the insurance company, as at
31 December 2024 the Parent Entity had secured 80% of its trade receivables (as at 31 December 2023, 56%).
Although KGHM INTERNATIONAL LTD. does not use collateral, credit risk connected with trade receivables is subject
to monitoring, and the majority of sales are to proven, long-term customers conducting international activities.
Assessment of concentration of credit risk in the Group:
Sector
concentration
While KGHM Polska Miedź S.A. and KGHM INTERNATIONAL LTD. operate in the same sector, these two
companies are different both in terms of their portfolios of products as well as in terms
of the geographic location and nature of their customers, and consequently this sector concentration
of credit risk is considered to be acceptable.
Other companies of the Group operate in various economic sectors, such as transport, construction,
commerce, industrial production and energy. As a consequence, in the case of most Group companies,
in terms of sectors, there is no concentration of credit risk.
Customers
concentration
As at 31 December 2024 the balance of receivables from the 7 largest customers represented 51%
of trade receivables (2023: 25%). Despite the concentration of this type of risk, it is believed that due to
the availability of historical data and the many years of experience cooperating with its customers, as
well as to the securing used, the level of credit risk is low.
Geographical
concentration
Companies of the Group have been cooperating for many years with a large number of customers,
which affects the geographical diversification of trade receivables. Geographical concentration
of credit risk for trade receivables is presented in the table below.
Trade receivables (net)
As at
31 December 2024
As at
31 December 2023
Poland
27%
43%
Canada
8%
14%
European Union (excluding Poland)
8%
8%
Asia
34%
23%
Other countries
23%
12%
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
107
Accounting policies
The Group applies the simplified model of calculating the allowance for impairment of trade receivables (regardless
of their maturity). The expected credit loss on trade receivables is calculated at the closest ending date of the reporting
period after the moment of recognition of a receivable in the statement of financial position and is updated at every
subsequent reporting period ending date. In order to estimate the expected credit loss on trade receivables, the Group’s
entities apply provision matrices, made on the basis of historical levels of payment of trade receivables, which are
periodically recalibrated in order to update them.
The Group adopted an assumption that the receivable risk is characterised by the number of days of delay and this
parameter determines the estimated PD, i.e. the probability of a delay in payment of trade receivables by at least 90 days.
For the purpose of estimating PD, 5 risk groups have been selected based on the criteria of number of days in payment,
according to ranges presented below as “Important estimates and assumptions”.
Default is defined as being a failure by a customer to meet its liabilities after a period of 90 days from the due date.
In order to estimate the loss allowance for expected credit losses, collateral is also taken into account by allocating
expected recovery rates to the particular types of collateral.
Moreover, forward-looking information is taken into account in the applied parameters of the model for estimating
expected losses, by adjusting the base coefficients of default probability. This means that if as a result of analysis
of macroeconomic data, such as for example: current GDP dynamics, inflation, unemployment rate, or WIG index, the
Group recognises any deterioration in them in comparison to the previous period, in the ECL calculation the forward
looking factor, which corrects risk connected with any decrease in receivables recovery, is taken into account. As at the
end of the reporting period, on 31 December 2024, no deterioration of macroeconomic factors was noted.
Important estimates and assumptions
31 December 2024
31 December 2023
Time frame
in days
Percent of
allowance for
impairment*
Gross
amount of
receivables
Allowance for
impairment in
individual time
frames**
Percent of
allowance for
impairment*
Gross
amount of
receivables
Allowance for
impairment in
individual time
frames**
Not overdue
0.04-7.2
604
(4)
0.1-4.4
487
(2)
<1,30)
0.3-50
34
(1)
0.3-9.0
29
(1)
<30,60)
0.4-77.7
4
-
5.4-41.4
9
(4)
<60,90)
6-88.8
1
-
34.1-70.7
-
-
Default
100
35
(35)
100
32
(32)
Total
678
(40)
557
(39)
*Probability of default is represented in thresholds, calculated individually by Group companies on the basis of real historical data as respects the
number of days of delay, pursuant to the model for calculating expected credit losses adopted by the Group for trade receivables.
**The amount of allowance for impairment includes the recovery due to collateral.
The following table presents the change in trade receivables measured at amortised cost.
2024
2023
Gross amount as at 1 January
557
466
Change in the balance of receivables
121
95
Utilisation of a loss allowance in the period
-
(4)
Note 10.2
Gross amount as at 31 December
678
557
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
39
39
Change in allowance in the period recognised in profit or loss
1
4
Utilisation of a loss allowance in the period
-
(4)
Note 10.2
Loss allowance for expected credit losses as at 31 December
40
39
As at 31 December 2024, disputed receivables amounted to PLN 27 million (as at 31 December 2023, PLN 30 million).
The Group is taking actions aimed at recovering these receivables or explaining the validity of pursuing claims.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
108
Note 7.5.2.4 Credit risk related to loans granted to the joint venture Sierra Gorda S.C.M. (POCI)
Credit risk related to loans granted depends on risk related to the realisation of the joint mining venture in Chile (Sierra
Gorda S.C.M.). These loans, as a result of the impairment recognised at the moment of initial recognition due to credit risk,
were classified as POCI, and are measured at the end of the subsequent reporting periods at amortised cost using the
effective interest rate method and the effective discount rate adjusted by credit risk.
The basis for accruing interest on POCI loans is their gross value less any allowance for impairment at the moment
of initial recognition.
The loan granted does not have collateral limiting the exposure to credit risk, therefore the maximum amount exposed to
potential loss due to credit risk is the gross amount of the loan, less expected credit losses recognised pursuant to IFRS 9.
Changes in the value of POCI loans in the reporting and comparable periods are presented in Note 6.2.
Neither in the reporting period nor in the comparable period was there any expected impairment of POCI loans.
Sensitivity analysis of the fair value of loans due to the change in forecasted cash flows of Sierra Gorda S.C.M.
As at 31 December 2024, the Group classified the measurement to fair value of loans granted to level 3 of the fair value
hierarchy because of the utilisation in the measurement of a significant unobservable parameter, being the forecasted
cash flows of Sierra Gorda S.C.M. These cash flows are the most sensitive to changes in copper prices, which implies other
assumptions such as forecasted production and operating margin. Therefore, pursuant to IFRS 13 p.93.f, the Group
performed a sensitivity analysis of the fair value (level 3) of loans to changes in copper prices.
Price paths adopted to estimate the cash flows of Sierra Gorda S.C.M. are presented in Note 6.2.
Sensitivity analysis of the fair value to
changes in copper price
Classes of financial instruments
Fair value
as at
31 December 2024
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 amortised cost
8 780
9 039
8 624
Loans granted measured at amortised cost
(USD million)
2 141
2 204
2 103
Carrying amount
as at
31 December 2024
Sensitivity analysis of the carrying amount
to changes in copper price
Classes of financial instruments
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 amortised cost
9 800
10 023
9 701
Loans granted measured at amortised cost
(USD million)
2 390
2 444
2 365
Sensitivity analysis of the fair value to
changes in copper price
Classes of financial instruments
Fair value
as at
31 December 2023
Base plus 0.1 USD/lb
(220 USD/t)
during mine life
Base minus 0.1 USD/lb
(220 USD/t)
during mine life
Loans granted measured at amortised cost
7 778
7 969
7 567
Loans granted measured at amortised cost
(USD million)
1 977
2 025
1 923
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
109
Carrying amount
as at
31 December 2023
Sensitivity analysis of the carrying amount
to changes in copper price
Classes of financial instruments
Base plus 0.1 USD/lb
(220 USD/t)
during mine life
Base minus 0.1 USD/lb
(220 USD/t)
during mine life
Loans granted measured at amortised cost
9 096
9 223
8 956
Loans granted measured at amortised cost
(USD million)
2 311
2 344
2 276
Note 7.5.2.5 Credit risk related to other financial assets
As at 31 December 2024, the most significant item in other financial assets was cash accumulated on the separate bank
account of the special purpose Mine Closure Fund in the amount of PLN 491 million (as at 31 December 2023:
PLN 442 million).
All special purpose deposits of the Group, which are dedicated to collection of cash for future decommissioning costs of
mines, are carried out by banks with the highest or medium-high ratings confirming the security of the deposited cash.
The following tables present the level of cash concentration within special purpose funds dedicated to the collection of
cash by the Group for future decommissioning costs of mines, according to the credit ratings of financial institutions in
which cash is held on special purpose accounts.
Rating level
As at
31 December 2024
As at 31
December 2023
Highest
AAA to AA- according to S&P and Fitch,
and from Aaa to Aa3 according to Moody’s
10%
10%
Medium-high
from A+ to A- according to S&P and Fitch,
and from A1 to A3 according to Moody’s
90%
90%
As at
31 December 2024
As at 31
December 2023
Counterparty 1
443
398
Counterparty 2
48
44
Total
491
442
Impairment losses on cash accumulated on the bank accounts of special purpose funds: the Mine Closure Fund, were
determined individually for each balance of a given financial institution. External bank ratings were used to measure credit
risk. The analysis determined that these assets have a low credit risk at the end of the annual reporting period. The Group
used a simplification permitted by the standard and the impairment loss was determined on the basis of 12-month credit
losses. The calculation of impairment determined that the amount of impairment loss is insignificant. These assets are
classified to Degree 1 of the impairment model.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
110
Part 8 – Borrowings and the management of liquidity and capital
Note 8.1 Capital management policy
Capital management in the Group is aimed at securing funds for business development and maintaining the appropriate
level of liquidity.
In accordance with market practice, the Group monitors the level of financial security, among others on the basis of the
Net Debt/Adjusted EBITDA ratio presented in the table below:
Ratios
Calculations
31 December 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 Group forecasts the coverage ratio of financial needs by available sources of financing, in order to identify, at a
sufficiently early stage, the possible occurrence of a liquidity gap.
The overriding principle in this process is to ensure the Group’s financial security and stability, while the main tool used to
limit risk is the diversification of financing sources and ensuring they are of long-term maturities.
When making decisions about the use of financial instruments, the Group analyses factors of significance for managing
liquidity, amongst which the basic parameter is the level of interest rates and forecasts regarding their future direction.
The level of interest rates primarily has an impact on the Group’s borrowing potential, understood as the possibility of
obtaining and servicing debt, and consequently its subsequent refinancing. To limit the unfavourable impact of increases
in market interest rates, some of the Group’s borrowings are based on fixed interest rates.
Details regarding the impact of changes in interest rates on the occurrence of liquidity risks are presented in Note 7.5.1.4.
In the management of liquidity and capital, the Group also pays attention to adjusted operating profit, which is the basis
for calculating EBITDA pursuant to the definition of financial covenant and which is comprised of the following items:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
111
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 profit due to reversal of allowances for impairment of loans granted to a joint venture.
Financial covenant Net debt/EBITDA is calculated based on consolidated data, pursuant to definitions stipulated in
borrowing agreements. Information on liabilities for which covenants apply is presented in Note 8.4.
As at 31 December 2024 the carrying amount of liabilities drawn under the agreements containing the financial covenant
amounted to PLN 1 794 million.
As at the end of the reporting period, in the financial year and after the end of the reporting period, up to the date of
publication of these consolidated financial statements, the value of the financial covenant subject to the obligation to report
as at 30 June 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 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 at fair value through other
comprehensive income (Note 7.3, Accounting policies) less any deferred tax effect.
Accumulated other comprehensive income consists of exchange differences from the translation of statements of
operations with a functional currency other than PLN (Note 1.5, Accounting policies) and actuarial gains/losses on post-
employment benefits programs less any deferred tax effect (Part 11, Accounting policies).
Note 8.2.1 Share capital
As at 31 December 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 consolidated 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 consolidated 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
112
Note 8.2.2 Changes of other equity items
Other reserves from measurement of financial
instruments
Investments in
equity
instruments
measured at
fair value
through other
comprehensive
income
Other reserves
from
measurement
of future cash
flow hedging
financial
instruments
Total other
reserves from
measurement
of financial
instruments
Actuarial gains
/(losses) on post-
employment
benefits
programs
Exchange differences from
the translation of
statements of operations
with a functional currency
other than PLN
Retained
earnings
As at 1 January 2023
( 486)
59
( 427)
( 742)
2 554
28 704
Transactions with owners – Dividend approved and paid
-
-
-
-
-
( 200)
Loss for the period
-
-
-
-
-
(3 698)
Fair value gains on financial assets measured at fair value through
other comprehensive income
309
-
309
-
-
-
Note 7.2
Impact of the effective part of cash flow hedging transactions
-
944
944
-
-
-
Note 7.2
Amount transferred to profit or loss and non-current assets due to
settlement of hedging instruments
-
( 387)
( 387)
-
-
-
Note 11.2
Actuarial losses on post-employment benefits
-
-
-
( 311)
-
-
Exchange differences from the translation of statements of
operations with a functional currency other than PLN
-
-
-
-
( 78)
-
Note 5.1.1
Deferred income tax
( 56)
( 106)
( 162)
59
-
-
Other comprehensive income
253
451
704
( 252)
( 78)
-
Total comprehensive income
253
451
704
( 252)
( 78)
(3 698)
As at 31 December 2023
( 233)
510
277
( 994)
2 476
24 806
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
113
Other reserves from measurement of financial
instruments
Investments in
equity
instruments
measured at fair
value
through other
comprehensive
income
Other reserves
from
measurement of
future cash flow
hedging
financial
instruments
Other
reserves from
measurement
of financial
instruments,
total
Actuarial
gains
/(losses) on
post-
employment
benefits
programs
Surplus from the
fair value
remeasurement
of investment
properties, as at
the day of
reclassification
from fixed
assets
Exchange
differences from
the translation of
statements of
operations with a
functional
currency other
than PLN
Retained
earnings
As at 1 January 2024
( 233)
510
277
( 994)
-
2 476
24 806
Transactions with owners – Dividend approved and paid
-
-
-
-
-
-
( 300)
Profit for the period
-
-
-
-
-
-
2 868
Fair value gains on financial assets measured at fair value through other
comprehensive income
7
-
7
-
-
-
-
Note 7.2
Impact of the effective part of cash flow hedging transactions
-
148
148
-
-
-
-
Note 7.2
Amount transferred to profit or loss and non-current assets due to
settlement of hedging instruments
-
( 698)
( 698)
-
-
-
-
Note 11.2
Actuarial gains on post-employment benefits
-
-
-
335
-
-
-
Gains on measurement of investment properties
-
-
-
-
11
-
-
Exchange differences from the translation of statements of operations
with a functional currency other than PLN
-
-
-
-
-
15
-
Note 5.1.1
Deferred income tax
( 1)
105
104
( 63)
( 2)
-
-
Other comprehensive income
6
( 445)
( 439)
272
9
15
-
Total comprehensive income
6
( 445)
( 439)
272
9
15
2 868
As at 31 December 2024
( 227)
65
( 162)
( 722)
9
2 491
27 374
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
114
Based on the Act of 15 September 2000, i.e. the Commercial Partnerships and Companies Code, the Parent Entity is required
to create reserve capital for any potential (future) or existing losses, to which no less than 8% of a given financial year’s
profit is transferred until the reserve capital has been built up to no less than one-third of the registered share capital. The
reserve capital created in this manner may not be employed otherwise than in covering the loss reported in the financial
statements. As at 31 December 2024 the statutory reserve capital in the Group’s entities amounted to PLN 773 million, of
which PLN 667 million relates to the Parent Entity, and is recognised in retained earnings.
Information related to dividends paid may be found in Note 12.2.
Note 8.3 Liquidity management policy
Liquidity management in the Group 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 Group continuously forecasts and monitors the liquidity based on expected cash flows. In order to minimise the risk
of a liquidity gap, the Group takes actions which guarantee safety and financial stability through diversification of sources
of financing and assuring their long-term maturity period.
The Management Board of the Parent Entity is responsible for financial liquidity management in the Group and it is
performed based on the approved, appropriate Policy. The Financial Liquidity Committee is a body supporting the
Management Board in this regard.
The basic principles arising from the Financial Liquidity Management Policy in the Group are:
• assuring the stable and effective financing of the Group’s activities,
• continuous monitoring of the Group’s debt level,
• effective management of working capital, and
• coordination, by the Parent Entity, of processes of financial liquidity management in the Group companies.
In order to support the process of liquidity management, the Group 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 Group
as an efficient tool supporting the process of working capital management and is aimed at diversification of sources of
financing working capital.
The Group 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 Group are renowned financial institutions.
The level of utilisation of factoring limits for an individual factor is continuously monitored.
Under the liquidity management process, the Group utilises also other instruments which enhance its effectiveness.
One of the instruments used by the Group to deal with on-going operating activities is cash pooling – locally in PLN, USD
and EUR, and internationally - in USD. The cash pooling service is aimed at optimising the management of cash resources,
limiting interest costs, the effective financing of current working capital needs and the support of short-term financial
liquidity in the Group.
In order to support current liquidity and to optimise the service of cash management in a group of accounts, the Parent
Entity fulfils the function of the Coordinator and extended the availability of an overdraft facility agreement in the amount
of PLN 250 million by another period, i.e. until 30 June 2025, with the bank in which the cash pooling system operates.
In 2024, the Parent Entity carried out the process of obtaining short-term financing and continued actions connected with
developing the reverse factoring program.
In 2024, the Parent Entity acquired additional external financing in the form of bilateral bank loans in the amount of
USD 150 million and PLN 200 million.
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 Parent Entity 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
115
Note 8.3.1 Contractual maturities for financial liabilities
Financial liabilities – as at 31 December 2024
Maturity period
Total
(without
discounting)
Carrying
amount
Contractual maturities from the
end of the reporting period
up to
3 months
over 3 months
to 12 months
over 1 to
3 years
over
3 years
Borrowings
174
1 053
941
948
3 116
2 836
Debt securities liabilities
-
189
377
3 022
3 588
2 602
Lease liabilities
32
86
231
1 186
1 535
733
Trade payables
3 063
24
29
338
3 454
3 311
Other payables – reverse factoring
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
96
31
19
5
151
165
Total
4 743
2 006
1 597
5 633
13 979
11 960
*Financial liabilities arising from derivatives are calculated at their intrinsic values excluding the discount effect.
Overdue liabilities
Overdue period
up to 1 month
over 1 months
to 12 months
over 1 year to
3 years
over
3 years
Total/Carrying
amount
Trade payables
9
4
1
2
16
The above tables regarding maturities do not include financial guarantees in the amount of PLN 915 million, which are due
if there is a breach in contractual terms by parties to which the guarantees were granted and toward which the Group
cannot postpone payments, that is they must be paid on demand within 3 months. Details on financial guarantees and
their maturity dates were described in Note 8.6.
Financial liabilities – as at 31 December 2023
Maturity period
Total
(without
discounting)
Carrying
amount
Contractual maturities from the
end of the reporting period
up to
3 months
over 3 months
to 12 months
over 1 to 3
years
over
3 years
Borrowings
143
419
1 029
1 833
3 424
2 939
Debt securities liabilities
-
534
240
1 899
2 673
2 002
Lease liabilities
32
91
206
1 274
1 603
784
Trade payables
3 061
41
37
338
3 477
3 319
Other payables – reverse factoring
2 268
753
-
-
3 021
3 021
Derivatives – currency contracts*
83
362
39
-
484
483
Derivatives – commodity contracts –
metals*
5
6
-
-
11
11
Derivatives – interest rates*
-
-
-
80
80
181
Embedded derivatives
26
-
-
-
26
26
Other financial liabilities
253
34
23
9
319
321
Total
5 871
2 240
1 574
5 433
15 118
13 087
*Financial liabilities arising from derivatives are calculated at their intrinsic values excluding the discount effect.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
116
Overdue liabilities
Overdue period
up to 1 month
over 1 months
to 12 months
over 1 year to
3 years
over
3 years
Total/Carrying
amount
Trade payables
28
15
1
1
45
The above tables on maturity periods do not contain financial guarantees in the amount of PLN 872 million, which are due
if contractual terms are breached by the parties towards which the guarantee was granted and the Group cannot postpone
payments, that is they must be paid on demand within 3 months.
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
130
637
Loans
1 556
1 849
Debt securities
2 600
1 600
Leases
624
675
Note 7.1
Total non-current liabilities due to borrowings
4 910
4 761
Bank loans
726
30
Loans
424
423
Debt securities
2
402
Leases
109
109
Note 7.1
Total current liabilities due to borrowings
1 261
964
Total borrowings
6 171
5 725
Note 8.5
[-] Free cash and cash equivalents
691
1 702
[-] Derivatives related to external sources of financing
177
175
[=] Net debt
5 303
3 848
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
PLN/WIBOR
2 769
2 083
EUR/EURIBOR
-
17
EUR/fixed
31
25
USD/SOFR
1 033
982
PLN/fixed
834
802
USD/fixed
1 443
1 755
CAD/fixed
49
49
other
12
12
Total
6 171
5 725
As at 31 December 2024, the Group’s liabilities due to borrowing, debt securities issued and leases, translated into PLN,
amounted to PLN 6 171 million, or broken down by currencies: USD 604 million, PLN 3 603 million, EUR 7 million,
CAD 17 million and in other currencies in the amount of PLN 12 million (as at 31 December 2023 liabilities, translated into
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
117
PLN, amounted to PLN 5 725 million, or broken down by currencies: USD 695 million, PLN 2 885 million, EUR 10 million,
CAD 16 million and in other currencies in the amount of PLN 12 million).
As at 31 December 2024, the balance of trade payables transferred to reverse factoring by the Group amounted
to PLN 2 000 million (as at 31 December 2023: PLN 3 021 million).
Trade payables within the reverse factoring mechanism are presented in the statement of financial position as “Trade and
other payables” and are in the category of “other”, as due to the significant judgment of the Group presented in Note 10.3
of these consolidated financial statements, such a presentation most accurately presents the nature of these transactions.
The structure of debt confirms the effective advancing of the strategy of the Group, aimed at ensuring long term financial
stability by basing the financial structure on diversified and long term financing sources.
Note 8.4.2 Net debt changes
As at
31 December
2023
Cash flows
related to
debt
Accrued
interest
Exchange
differences
Other
changes
As at
31 December
2024
[+] Bank loans
667
82
82
19
6
856
[+] Loans
2 272
( 454)
82
77
3
1 980
[+] Debt securities
2 002
429
171
-
-
2 602
[+] Leases
784
( 137)
42
-
44*
733
[=] Total debt
5 725
( 80)
377
96
53
6 171
[-] Free cash and cash equivalents
1 702
(1 011)
-
-
-
691
[-] Derivatives related to sources
of external financing
175
59
( 57)
177
[=] Net debt, including:
3 848
872
377
96
110
5 303
Net debt excluding derivatives**
4 023
5 480
* A conclusion and modification of lease agreements.
**Net debt excluding derivatives is presented for the purposes of covenants calculation in bank loans agreements.
As at
31 December 2022
Cash
flows
related to
debt
Accrued
interest
Exchange
differences
Other
changes*
As at
31 December
2023
[+] Bank loans
1 263
( 572)
75
( 95)
( 4)
667
[+] Loans
2 434
23
90
( 264)
( 11)
2 272
[+] Debt securities
2 002
( 172)
172
-
-
2 002
[+] Leases
744
( 124)
41
( 1)
124**
784
[=] Total debt
6 443
( 845)
378
( 360)
109
5 725
[-] Free cash and cash equivalents
1 179
523
-
-
-
1 702
[-] Derivatives related to sources
of external financing
175
175
[=] Net debt, including:
5 264
(1 543)
378
( 360)
109
3 848
Net debt excluding derivatives***
5 264
4 023
*Including at the date of obtaining control of INVEST PV 7 Sp. z o.o. - leases PLN (2) million.
** Including PLN 126 million due to modification and conclusion of new lease agreements.
**Net debt excluding derivatives is presented for the purposes of covenants calculation in bank loans agreements.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
118
Reconciliation of cash flows associated with borrowing following the inclusion of impact of derivatives in the
consolidated statement of cash flows
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Financing activities
[+] Proceeds from the issuance of debt financial instruments
1 000
-
[+] Proceeds from borrowings
1 940
1 673
[-] Proceeds from derivatives related to sources of external financing
64
70
[+] Redemption of debt financial instruments
( 400)
-
[+] Repayment of borrowings
(2 154)
(2 051)
[+] Repayment of lease liabilities
( 97)
( 83)
[-] Expenditures on derivatives related to sources of external
financing
( 75)
( 81)
[+] Repayment of interest on borrowings and debt securities
( 28)
( 30)
[+] Repayment of interest on leases
( 10)
( 1)
Investing activities
[+] Paid capitalised interest on borrowings
( 331)
( 353)
[-] Proceeds on settlement of an instrument hedging interest rate of
bonds
70
102
[-] Change in free cash and cash equivalents
(1 011)
523
[=] TOTAL
872
(1 459)
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 by the Parent Entity with a syndicate of banks in 2019 with a maturity of 20 December 2024 and an option to
extend it by a further 2 years (5+1+1). In the years 2020-2021 the Parent Entity received consent from Syndicate Members
to extend the term of the agreement by 2 years in total, i.e. to 20 December 2026. The limit of available financing during
the extension period 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 margin, depending on the Consolidated Net
Total Debt/ Consolidated EBITDA financial ratio.
The credit facility agreement obliges the Group to comply with the financial covenant and non-financial covenants.
Financing parameters meet the standard conditions of these types of transactions. Pursuant to contractual terms and
conditions, the Parent Entity is obliged to report the level of financial covenant for the reporting periods, i.e. as at 30 June
and as at 31 December. The Parent Entity continuously monitors the risk of exceeding the level of the financial covenant
stipulated in the credit facility agreement. As at the reporting date, during the financial year and after the reporting date,
up to the publication of these consolidated financial statements, the value of the financial covenant subject to the
obligation to report as at 30 June 2024 and as at 31 December 2024, complied with the provisions of the agreement.
2024
2023
Amount granted
5 898
5 903
Amount of the liability
-
-
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
119
Investment loans
Loans, including investment loans granted to the Parent Entity by the European Investment Bank in the total amount
of PLN 3 340 million:
1. Investment loan in the amount of PLN 2 000 million, with three instalments drawn and the payback periods expiring
on 30 October 2026, 30 August 2028 and 23 May 2029 and utilised to the maximum available amount. The funds
acquired through this loan were used to finance Parent Entity investment projects related to modernisation of
metallurgy and development of the Żelazny Most tailings storage facility. The loan’s instalments are based on a fixed
interest rate.
2. Investment loan in the amount of PLN 1 340 million granted in December 2017 with a financing period of 12 years. The
Parent Entity has drawn four instalments under this loan with maturities on 28 June 2030, 23 April 2031, 11 September
2031 and 6 March 2035. The funds acquired through this loan are used to finance the Parent Entity’s projects related
to development and replacement at various stages of the production process. Interest on the loan’s three instalments
is based on a fixed interest rate. The last instalment received in 2023 was drawn based on the variable SOFR rate plus
a bank margin, which is dependent on the net debt/EBITDA financial ratio.
The loan agreements with the European Investment Bank oblige the Group to comply with the financial covenant and
non-financial covenants commonly stipulated in such types of agreements. Pursuant to contractual terms and conditions,
the Parent Entity is obliged to report the level of the financial covenant for the reporting periods, i.e. as at 30 June and as
at 31 December. The Parent Entity continuously monitors the risk of exceeding the levels of the financial covenant
stipulated in the loan agreements. As at the reporting date, during the financial year and after the reporting date, up to
the publication of these consolidated financial statements, the value of the financial covenant subject to the obligation to
report as at 30 June 2024 and as at 31 December 2024, complied with the provisions of the loan agreements.
2024
2023
Amount granted
3 521
3 582
Amount of the liability
1 980
2 272
Other bank loans
Bilateral bank loans in the total amount of PLN 4 294 million, are used to finance working capital and are a supporting
tool in the management of financial liquidity and support financing of advanced investment undertakings. The Group
holds lines of credit in the form of short-term and long-term credit agreements. The funds under open lines of credit are
available in PLN, USD and EUR, with interest based on a fixed interest rate or variable WIBOR, SOFR and EURIBOR plus a
margin.
2024
2023
Amount granted
4 294
3 452
Amount of the liability
856
667
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
120
Debt securities
The Parent Entity carried out two bond issuances on the Polish market:
1. The issuance dated 27 June 2019 under which bonds were issued with a maturity of 5-year in the amount of PLN
400 million which were redeemed by the Parent Entity on 27 June 2024 and bonds with a maturity of 10-year in the
amount of PLN 1 600 million and a redemption date of 27 June 2029.
2. The issuance dated 26 June 2024 in the nominal amount of PLN 1 000 million which was carried out under the bonds
issuance program, up to the amount of PLN 4 000 million established by an issuance agreement from 29 May 2024.
The Parent Entity issued bonds with a maturity of 7-year 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 Parent Entity has presented on its website the forecasted amount of liabilities of the Group,
i.e. PLN 7 275 million (the unaudited amount). The actual amount of financial liabilities based on consolidated financial
statements as at 31 December 2024 is PLN 6 171 million.
The deviation of the actual amount of financial liabilities of the Group as at the end of 2024 from the published estimated
amounts results from an achievement of EBITDA at the level higher than forecasted.
2024
2023
Nominal value of the issue
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 16 313 million. The funds
available for use from these sources fully cover the liquidity needs of the Group.
The syndicated credit in the amount of USD 1 438 million (PLN 5 898 million), the investment loans in the amount
of PLN 3 340 million, and the bilateral bank loans granted to the Parent Entity in the amount of PLN 4 244 million, are
unsecured.
Repayment of a part of the liabilities of other Group companies due to bilateral bank loans and other loans are secured
amongst others by statements on submitting to an enforcement regime, contractual mortgages, registered pledges
or the assignment of receivables. The carrying amount of guarantees of repayment of external financing as at 31 December
2024 amounted to PLN 238 million, including property, plant and equipment in the amount of PLN 122 million
(as at 31 December 2023: PLN 230 million, including property, plant and equipment in the amount of PLN 114 million).
Total bank and other loans, debt securities
2024
2023
Amount granted / Nominal value of the issue
16 313
14 937
Amount of the liability
5 438
4 941
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
121
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
534
602
Other financial assets with a maturity of up to 3 months
from the date of acquisition - deposits
160
1 119
Other cash
21
8
Total cash and cash equivalents, of which:
715
1 729
Restricted cash
24
27
Note 8.4.1
Free cash and cash equivalents
691
1 702
As at 31 December 2024, the Group had cash in bank deposits in the amount of PLN 61 million (as at 31 December 2023
PLN 73 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 and other payments mandated by law.
Note 8.6 Liabilities due to guarantees granted
Guarantees are an essential financial liquidity management tool of the Group, thanks to which the Group’s companies and
the joint venture Sierra Gorda S.C.M. do not have to use their cash in order to secure their liabilities towards other entities.
Accounting policies
The Group issued guarantees which meet the definition of contingent liabilities pursuant to IAS 37 and recognises them
in contingent liabilities and guarantees, which meet the definition of financial guarantees under IFRS 9, and which are
measured and recognised as financial instruments pursuant to this standard.
At the moment of initial recognition, the Group recognises in the statement of financial position a financial guarantee at
its fair value, in the item:
• financial assets measured at amortised cost (other financial assets),
• other liabilities (deferred income)
The liability due to the financial guarantee granted as at the end of the reporting period is recognised at the higher of two
amounts: the initial value of the issued guarantee less the amount of profits recognised in profit or loss on guarantees,
or the amount of an allowance for expected credit losses – set pursuant to the principles of the general model, described
in accounting policies in Note 7.5.2.
Important estimates, assumptions and judgements
For the calculation of expected credit losses – ECL - the Group adopts estimates for the rating, PD (probability of default)
and LGD (loss given default) parameters. Calculation of the expected credit losses takes place in the horizon remaining
to the end of the guarantee, while the rating of a guarantee’s beneficiary is adopted as the rating of the entity used for
the purposes of calculating the PD parameter.
As at 31 December 2024, the liabilities of the Group due to guarantees and letters of credit granted amounted to a total of
PLN 1 150 million (as at 31 December 2023, PLN 1 132 million) and due to promissory note payables amounted to
PLN 223 million (as at 31 December 2023, PLN 257 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
122
The most significant items of liabilities due to guarantees granted - contingent liabilities
Guarantees - contingent liabilities (IAS 37)
Amount of guarantees
Validity period
As at
31 December
2024
As at
31 December
2023
Security on the proper execution by the Parent Entity of
future environmental obligations related to the obligation
to restore terrain, following the conclusion of operations of
the Żelazny Most tailings storage facility
PLN 109 mn
PLN 107 mn
up to 1 year
Security on the obligations incurred by Brokerage House
due to settlements of transactions entered into by the
Parent Entity on the markets run by Towarowa Giełda
Energii S.A
PLN 70 mn
PLN 100 mn
up to 1 year
Security on claims to cover by the Group costs related to
collecting and processing waste
PLN 17 mn
PLN 16 mn
up to 2 years
Security on the obligations related to proper execution of
agreements concluded by the Group
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
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 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
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 Parent Entity
in connection with the obligation of a manger 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
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 750 mn
PLN 623 mn
up to 1 year
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
123
Part 9 – Non-current assets and related liabilities
Note 9.1 Mining and metallurgical property, plant and equipment and intangible assets
Accounting policies – property, plant and equipment
The most important property, plant and equipment of the Group is property, plant and equipment related to the mining
and metallurgical operations, comprised of land, buildings, water and civil engineering structures, such as: primary
mine tunnels (including, in underground mines: shafts, wells, galleries, drifts, primary chambers), backfilling, drainage
and firefighting pipelines, piezometric holes and electricity, signal and optical fiber cables. Pre-stripping costs in open
pit mines and machines, technical equipment, motor vehicles and other movable fixed assets, as well as right-to-use
assets recognised in accordance with IFRS 16 Leases, including perpetual usufruct rights to land, are also included in
mining and metallurgical property, plant and equipment.
Property, plant and equipment, excluding usufruct right-to-use assets, are recognised at cost less accumulated
depreciation and accumulated impairment losses.
In the initial cost of items of property, plant and equipment the Group includes discounted decommissioning costs of
fixed assets related to underground and surface mining and other facilities which, in accordance with binding laws, will
be incurred following the conclusion of activities. Principles of recognition and measurement of decommissioning costs
are presented in Note 9.4.
An asset’s carrying amount includes costs of significant components, regular, major overhauls and significant periodic
repairs, the performance of which determines further use of the asset.
Costs are increased by borrowing costs (i.e. interest and exchange differences 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 Group, pursuant to the model of consuming the economic benefits from the given item of property, plant
and equipment:
• using the straight-line method, for items which are used in production at an equal level throughout the period
of their usage,
• using the units of production method, for items in respect of which the consumption of economic benefits is
directly related to the quantity of ore extracted from the deposit or quantity of units produced, and this extraction
or production is not spread evenly through the period of their usage. In particular it relates to buildings and
structures of the mines machines and mining equipment, except for the items of property, plant and equipment
used in metallurgical plants, where their usage results from the useful economic life of the given item of property,
plant and equipment.
The useful lives, and therefore the depreciation rates of fixed assets used in the production of copper are adapted to
the plans for the closure of operations, and in the case of right-to-use assets to the earlier of these dates – either to the
useful life end date or to the lease end date, unless the ownership of an asset is transferred to the Group before the
end of the lease, in which case depreciation rates are adjusted to the estimated useful life end date.
For individual groups of fixed assets, the following useful lives have been adopted, estimated based on the anticipated
useful lives of mines and metallurgical plants with respect to deposit content:
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
124
For own fixed assets:
Group
Fixed assets type
Total useful lives
Buildings and land
Land
Not subject to depreciation
Buildings:
- buildings in mines and metallurgical plants,
- sheds, reservoirs, container switchgears
40-100 years
20-30 years
Primary mine tunnels
22-90 years
Pipelines:
- backfilling to transfer sand with water,
- technological, drainage, gas and firefighting
6-9 years
22-90 years
Electricity, signal and optical fibre cables
10-70 years
Technical equipment,
machines, motor
vehicles and other fixed
assets
Technical equipment, machines:
- mining vehicles, mining roof support
- conveyor belts, belt weigher
- switchboards, switchgears
4-10 years
10-66 years
4-50 years
Motor vehicles:
- underground electric locomotives,
- mining vehicles, railway vehicles, tankers,
transportation platforms
- trolleys, forklift, battery-electric truck
- cars, trucks, special vehicles
- underground diesel locomotives
20-50 years
7-35 years
7-22 years
5-22 years
10-20 years
Other fixed assets, including tools and
equipment
5-25 years
Pre-stripping costs
Total useful life depends on the expected
individual mine life:
- Robinson
- Carlota
14 years
2 years
The individual significant parts of a fixed asset (significant components), whose useful lives are different from the
useful life of the given fixed asset as a whole are depreciated separately, applying a depreciation rate which reflects
its anticipated useful life.
For the property, plant and equipment due to right-to-use assets:
Group
Type of right-to-use
Total period of use
Buildings and land
Perpetual usufruct right to land measured
using the perpetual rent method
Not subject to depreciation
Transmission easements
6-54 years
(period of depreciation
depends on the period of
depreciation of an asset in
respect of which a transmission
easement was established)
Land
5-30 years
Buildings and Structures
3-5 years
Computer sets
3 years
Technical
equipment,
machines, motor
vehicles and other
fixed assets
Machines and technical equipment
3-4 years
Motor vehicles
3 years
Equipment and other
5 years
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
125
Accounting policies – intangible assets
Mining and metallurgical intangible assets are mainly comprised of exploration and evaluation assets, and water rights
in Chile.
Exploration and evaluation assets
The following expenditures are classified as exploration and evaluation assets:
• geological projects,
• obtaining environmental decisions,
• obtaining concessions and mining usufruct for geological exploration,
• work related to drilling (drilling; geophysical and hydrogeological research; geological, analytical and geotechnical
services; etc.),
• the purchase of geological information,
• the preparation of geological documentation and its approval,
• the preparation of economic and technical assessments of resources for the purpose of making decisions
regarding applying for mine operating concessions, and
• equipment usage costs (property, plant and equipment) used in exploratory work.
Expenditures on exploration and evaluation assets are measured at cost less accumulated impairment losses and are
recognised as intangible assets not yet available for use.
The Group is required to test an individual entity (project) for impairment when:
• the technical feasibility and commercial viability of extracting mineral resources is demonstrable; and
• the facts and circumstances indicate that the carrying amount of exploration and evaluation assets may exceed
their recoverable amount.
Any potential impairment losses are recognised prior to reclassification resulting from the demonstration of the
technical and economic feasibility of extracting the mineral resources.
Significant estimates, assumptions and judgments
Significant estimates and assumptions relating to impairment of mining and metallurgical property, plant and
equipment and intangible assets are presented in Note 3.
The net value of mining and metallurgical property, plant and equipment which are subject to depreciation using the
natural method as at 31 December 2024 amounted to PLN 1 454 million (as at 31 December 2023: PLN 1 156 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
126
Mining and metallurgical property, plant and equipment and intangible assets
Property, plant and equipment
Intangible assets
Buildings and
land
Technical
equipment,
machines, motor
vehicles and other
fixed assets
Fixed assets
under
construction
Water rights
Exploration and
evaluation assets
Other
Total
As at 1 January 2023
Gross carrying amount
23 383
17 466
6 147
274
3 480
1 411
52 161
Accumulated depreciation/amortisation
(11 463)
(9 449)
-
-
-
( 362)
(21 274)
Impairment losses
(2 838)
( 328)
( 24)
( 201)
(1 803)
( 27)
(5 221)
Net carrying amount, of which:
9 082
7 689
6 123
73
1 677
1 022
25 666
own fixed assets and intangible assets
8 521
7 652
6 123
73
1 677
1 022
25 068
leased fixed assets (right-to-use)
561
37
-
-
-
-
598
Changes in 2023 net
Settlement of fixed assets under construction
1 392
2 110
(3 502)
( 2)
-
2
-
Purchase
-
-
2 313
2
167
91
2 573
Leases – new contracts, modification of contracts
11
53
-
-
-
-
64
Stripping cost in surface mines
174
-
-
-
-
-
174
Self-constructed
-
-
1 290
-
110
2
1 402
Capitalised borrowing costs
-
-
177
-
69
1
247
Note 9.4
Change in provisions for decommissioning costs of mines and other technological
facilities
100
-
-
-
-
-
100
Note 4.1
Depreciation/amortisation, of which:
( 898)
(1 369)
-
-
-
( 29)
(2 296)
own fixed assets and intangible assets
( 855)
(1 348)
-
-
-
( 29)
(2 232)
leased fixed assets (right-to-use)
( 43)
( 21)
-
-
-
-
( 64)
Note 4.4
(Recognition)/reversal of impairment losses, of which:
(1 542)
(1 109)
( 946)
23
( 365)
( 43)
(3 982)
own fixed assets and intangible assets
(1 453)
(1 103)
( 946)
23
( 365)
( 43)
(3 887)
leased fixed assets (right-to-use)
( 89)
( 6)
-
-
-
-
( 95)
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
( 82)
( 93)
( 48)
( 7)
( 154)
-
( 384)
Liquidation, sale, donations and free of charge transfer
( 7)
( 30)
( 5)
-
-
( 10)
( 52)
Other changes
4
14
( 103)
( 1)
34
35
( 17)
As at 31 December 2023
Gross carrying amount
23 887
18 503
6 265
245
3 541
1 493
53 934
Accumulated depreciation/amortisation
(11 688)
(9 890)
-
-
-
( 354)
(21 932)
Impairment losses
(3 965)
(1 348)
( 966)
( 157)
(2 003)
( 68)
(8 507)
Net carrying amount, of which:
8 234
7 265
5 299
88
1 538
1 071
23 495
own fixed assets and intangible assets
7 794
7 202
5 299
88
1 538
1 071
22 992
leased fixed assets (right-to-use)
440
63
-
-
-
-
503
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
127
As at 31 December 2023
Gross carrying amount
23 887
18 503
6 265
245
3 541
1 493
53 934
Accumulated depreciation/amortisation
(11 688)
(9 890)
-
-
-
( 354)
(21 932)
Impairment losses
(3 965)
(1 348)
( 966)
( 157)
(2 003)
( 68)
(8 507)
Net carrying amount, of which:
8 234
7 265
5 299
88
1 538
1 071
23 495
own fixed assets and intangible assets
7 794
7 202
5 299
88
1 538
1 071
22 992
leased fixed assets (right-to-use)
440
63
-
-
-
-
503
Changes in 2024 net
Settlement of fixed assets under construction
1 267
2 502
(3 769)
( 4)
-
4
-
Purchase
-
-
2 872
4
116
59
3 051
Leases – new contracts, modification of contracts
( 30)
29
-
-
-
-
( 1)
Stripping cost in surface mines
711
-
-
-
-
-
711
Self-constructed
-
-
1 369
-
54
1
1 424
Capitalised borrowing costs
-
-
212
-
68
-
280
Note 9.4
Change in provisions for decommissioning costs of mines and other technological
facilities
135
-
-
-
-
-
135
Note 4.1
Depreciation/amortisation, of which:
( 781)
(1 394)
-
-
-
( 20)
(2 195)
own fixed assets and intangible assets
( 747)
(1 372)
-
-
-
( 20)
(2 139)
leased fixed assets (right-to-use)
( 34)
( 22)
-
-
-
-
( 56)
Note 4.4
(Recognition)/reversal of impairment losses, of which:
21
6
( 2)
-
( 9)
( 4)
12
own fixed assets and intangible assets
21
6
( 2)
-
( 9)
( 4)
12
leased fixed assets (right-to-use)
-
-
-
-
-
-
-
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
48
50
21
4
57
1
181
Note 9.9
Reclassification to assets held for sale, of which:
( 57)
( 27)
( 4)
-
( 17)
-
( 105)
gross carrying amount
(3 668)
( 571)
( 4)
-
( 125)
-
(4 368)
accumulated depreciation/amortisation
1 887
455
-
-
-
-
2 342
impairment losses
1 724
89
-
-
108
-
1 921
Donations and gratuitous receipt of other entities’ assets
-
-
-
-
-
-
-
Liquidation, sale, donations and free of charge transfer
( 8)
( 38)
( 2)
-
-
( 4)
( 52)
Settlement of fixed assets under construction into intangible assets
-
-
( 67)
-
67
-
-
Recognition/(redemption) of CO
2
emission allowances
-
-
-
-
-
( 248)
( 248)
Transfers between groups
209
-
-
-
-
-
209
Reclassification of an impairment loss due to the settlement of expenditures on
property, plant and equipment
( 145)
( 125)
270
-
-
-
-
Other changes
( 7)
6
( 20)
-
2
2
( 17)
As at 31 December 2024
Gross carrying amount
22 785
19 664
6 873
255
3 797
1 302
54 676
Accumulated depreciation/amortisation
(10 732)
(9 990)
-
-
-
( 371)
(21 093)
Impairment losses
(2 456)
(1 400)
( 694)
( 163)
(1 921)
( 69)
(6 703)
Net carrying amount, of which:
9 597
8 274
6 179
92
1 876
862
26 880
own fixed assets and intangible assets
9 221
8 204
6 179
92
1 876
862
26 434
leased fixed assets (right-to-use)
376
70
-
-
-
-
446
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
128
Note 9.1.1 Mining and metallurgical property, plant and equipment – major 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 Exploration and evaluation assets
Significant expenditures on exploration and evaluation are presented in the table below.
Operating segment
Description
As at
31 December 2024
As at
31 December 2023
Gross
carrying
amount
Impairment
losses
Gross
carrying
amount
Impairment
losses
KGHM Polska Miedź S.A.
Exploration for and evaluation of a
deposit of potassium and magnesium
salts in the vicinity of Puck “PUCK”
205
-
195
-
KGHM Polska Miedź S.A.
Exploration for and evaluation of
economic copper mineralisation in
the Retków Ścinawa region
168
-
158
-
KGHM Polska Miedź S.A.
Exploration for and evaluation of
economic copper mineralisation in
the Synklina Grodziecka region -
SYNKLINA
118
118
118
118
KGHM Polska Miedź S.A.
Exploration and evaluation of
economic copper mineralisation in
the Głogów region - Głogów
63
-
55
-
KGHM INTERNATIONAL
LTD.
Expenditures related to exploratory
work, mainly within the Victoria
project located in Canada
2 404
1 148
2 164
1 102
KGHM INTERNATIONAL
LTD.
Expenditures related to exploratory
work within the Ajax project
588
588
614
614
Note 9.1.3 Expenses related to mining and metallurgical assets
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Purchase
(3 051)
(2 573)
Self-constructed fixed assets
(1 424)
(1 402)
Stripping costs of surface mines
( 711)
( 174)
Costs of external financing
( 280)
( 247)
Change in liabilities due to purchases
107
229
Other
183
55
Total*
(5 176)
(4 112)
* Including expenses on exploration and evaluation assets in the amount of PLN 199 million (in 2023: PLN 340 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
129
Note 9.2 Other property, plant and equipment and intangible assets
Accounting policies
Other property, plant and equipment are recognised at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is done using the straight-line method.
For individual groups of fixed assets, the following useful lives have been adopted:
The Group
Total useful lives
Buildings
25-60 years
Technical equipment and machines
4-15 years
Motor vehicles
3-14 years
Other fixed assets
5-10 years
Intangible assets presented as “other intangible assets” include in particular: acquired property rights not related to
mining operations and software as well as CO
2
emission allowances (the appropriate accounting policies in this regard
may be found in Note 9.8). These assets are measured at cost less any accumulated amortisation and impairment losses.
Intangible assets are amortised using the straight-line method over their anticipated useful lives. The useful lives
of the main groups of intangible assets are as follows:
The Group
Total useful lives
Acquired property rights
not related to mining activities
5-50 years
Software
2-5 years
Other intangible assets
40-50 years
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
130
Other property, plant and equipment and intangible assets
Property, plant and equipment
Buildings and land
Technical equipment,
machines,
motor vehicles
and other fixed assets
Fixed assets
under construction
Intangible
assets
Total
As at 1 January 2023
Gross carrying amount
2 919
3 194
176
620
6 909
Accumulated depreciation/amortisation
(1 058)
(1 753)
-
( 250)
(3 061)
Impairment losses
( 468)
( 258)
( 6)
( 152)
( 884)
Net carrying amount, of which:
1 393
1 183
170
218
2 964
own fixed assets and intangible assets
1 263
1 140
170
218
2 791
leased fixed assets (right-to-use)
130
43
-
-
173
Changes in 2023 net
Settlement of fixed assets under construction
115
324
( 439)
-
-
Purchase
-
-
323
249
572
Self-constructed
-
-
126
-
126
Leases – new contracts, modification of contracts
1
51
-
-
52
Note 4.1
Depreciation/amortisation, of which:
( 66)
( 252)
-
( 27)
( 345)
own fixed assets and intangible assets
( 65)
( 227)
-
( 27)
( 319)
leased fixed assets (right-to-use)
( 1)
( 25)
-
-
( 26)
Note 4.4
(Recognition)/reversal of impairment losses
-
3
-
( 1)
2
Liquidation, sale, donations and free of charge transfer
( 1)
( 12)
1
( 23)
( 35)
Exchange differences from the translation of statements of operations
with a functional currency other than PLN
( 54)
-
-
-
( 54)
As at the date of obtaining control over a subsidiary
4
21
-
-
25
own fixed assets and intangible assets
2
21
-
-
23
leased fixed assets (right-to-use)
2
-
-
-
2
Recognition/(redemption) of CO
2
emission allowances received free of charge
-
-
-
( 112)
( 112)
Other changes
3
3
44
9
59
As at 31 December 2023
Gross carrying amount
2 925
3 432
231
747
7 335
Accumulated depreciation/amortisation
(1 082)
(1 856)
-
( 282)
(3 220)
Impairment losses
( 448)
( 255)
( 6)
( 152)
( 861)
Net carrying amount, of which:
1 395
1 321
225
313
3 254
own fixed assets and intangible assets
1 263
1 252
225
313
3 053
leased fixed assets (right-to-use)
132
69
-
-
201
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
131
As at 31 December 2023
Gross carrying amount
2 925
3 432
231
747
7 335
Accumulated depreciation/amortisation
(1 082)
(1 856)
-
( 282)
(3 220)
Impairment losses
( 448)
( 255)
( 6)
( 152)
( 861)
Net carrying amount, of which:
1 395
1 321
225
313
3 254
own fixed assets and intangible assets
1 263
1 252
225
313
3 053
leased fixed assets (right-to-use)
132
69
-
-
201
Changes in 2024 net
2
Settlement of fixed assets under construction
161
307
( 468)
-
-
Purchase
-
-
486
48
534
Self-constructed
-
-
165
-
165
Leases – new contracts, modification of contracts, other changes
1
28
-
-
29
Note 4.1
Depreciation/amortisation, of which:
( 29)
( 266)
-
( 23)
( 318)
own fixed assets and intangible assets
( 27)
( 240)
-
( 23)
( 290)
leased fixed assets (right-to-use)
( 2)
( 26)
-
-
( 28)
Note 4.4
(Recognition)/reversal of impairment losses
( 17)
( 231)
-
( 2)
( 250)
own fixed assets and intangible assets
( 11)
( 231)
-
-
( 242)
leased fixed assets (right-to-use)
( 6)
-
-
-
( 6)
Liquidation, sale, donations and free of charge transfer
-
( 10)
( 1)
( 34)
( 45)
Exchange differences from the translation of statements of operations
with a functional currency other than PLN
16
-
-
-
16
As at the date of obtaining control over a subsidiary
42
159
1
-
202
own fixed assets and intangible assets
18
159
1
-
178
leased fixed assets (right-to-use)
24
-
-
-
24
Transfers between groups
( 209)
-
-
-
( 209)
Recognition/(redemption) of CO
2
emission allowances received free of charge
-
-
-
( 96)
( 96)
Other changes
( 19)
-
30
7
18
As at 31 December 2024
Gross carrying amount
2 922
3 736
444
664
7 766
Accumulated depreciation/amortisation
(1 116)
(1 941)
-
( 299)
(3 356)
Impairment losses
( 465)
( 487)
( 6)
( 152)
(1 110)
Net carrying amount, of which:
1 341
1 308
438
213
3 300
own fixed assets and intangible assets
1 192
1 237
438
213
3 080
leased fixed assets (right-to-use)
149
71
-
-
220
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
132
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
Total
depreciation/amortisation
2 470
2 585
43
56
settled in profit or loss, of
which:
1 968
2 260
38
51
cost of manufacturing
products
1 925
2 214
36
47
administrative expenses
34
37
2
4
selling costs
9
9
-
-
being part of the
manufacturing cost of assets
502
325
5
5
Note 9.4 Provision for decommissioning costs of mines and other technological facilities
Accounting policies
Important estimates, assumptions and judgments
The provision for future decommissioning costs of mines
and other technological facilities is recognised based on
the estimated expected costs of decommissioning of such
facilities and of restoring the sites to their original
condition following the end of operations, which are
made on the basis of ore extraction forecasts (for mining
facilities), and technical-economic studies prepared either
by specialist firms or by the Parent Entity.
In the case of surface mines, certain actions and costs
may influence the scope of restoration work, such as
costs of hauling barren rock, incurred during mine life and
due to its operations, are recognised as operating costs
being an integral part of the production process and are
therefore excluded from costs that are a basis of
calculating the provision for mine decommissioning.
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 effective discount rates calculated
based on the nominal interest rates and the inflation
rate (quotient of the nominal rate and the inflation
rate), whereby:
− the nominal interest rate in the Parent Entity is
based on the yield on treasury bonds at the end of
the reporting period, with maturities nearest to
the planned financial outflow and if there are no
treasury bonds with maturities close to the
planned financial outflows – the nominal interest
rate is determined by the professional judgment
of the Parent Entity’s Management on the basis of
the consistency of the adopted assumptions. In
the KGHM INTERNATIONAL LTD. Group it is the
rate of return on investments in ten- and twenty-
year treasury bills of the US Federal Reserve and
the rate of return on investments in five–year
For the measurement of the provision, the Parent Entity
adopted, for the years 2025-2026, inflation rates at the level
of the NBP’s forecast from November 2024, that is 5.6% and
2.7%, respectively, and for subsequent periods at the level of
2.5%, in line with the long-term inflation target (in the
comparable period, the Parent Entity adopted, for the years
2024-2025, inflation rates at the level of the NBP’s forecast
from November 2023, that is 4.6% and 3.7%, respectively, and
for subsequent periods at the level of 2.5%, in line with the
long-term inflation target).
Moreover, for the first 10 years of measurement of the
provision (that is to 2034), the Parent Entity 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 Parent
Entity will adjust the risk-free rate to the level of this rate
announced at every subsequent end of the reporting period
in order to measure the provision at those days (in the
comparable period, for the first 10 years of measurement of
the provision (that is to 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 Parent Entity applied a professional
judgment to determine this rate for the estimation of
provisions falling after a period of 10 years from the end of
the annual reporting period based on the historical
observation of the ratio of the risk-free rate to the assumed
inflation target. As a result of the judgement, the Parent Entity
adopted the risk-free rate of 3.5% for the estimation of
provision after a period of 10 years from the end of the
annual reporting period, which translated into a real discount
rate of 0.98% (in the comparable period the same
assumptions were adopted).
In the KGHM INTERNATIONAL LTD. Group, in the current
period for the purpose of the measurement of the provision
for decommissioning of mines and other technological
facilities located in the United States of America and Canada,
a real discount rate at the level of 1.07% to 2.48% was
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
133
treasury bonds issued by the governments of
Canada and Chile.
− 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 Parent Entity creates under
separate regulations, i.e. the Act of 9 June 2011
Geological and Mining Law and the Act of 14 December
2012 on waste, respectively. The role of the Funds is to
secure cash for the future realisation by the Parent Entity
of its obligations related to the closure, decommissioning
and restoration of mines and tailings storage facilities, by
collecting them in the manner provided for by the laws.
In the case of the Mine Closure Fund, the Parent Entity
has separated a bank cash account to which it transfers
cash equivalent to 3% of the depreciation charges on
fixed assets of mines, determined in accordance with the
provisions of the Income Tax Act. Income from cash
transferred to a separate bank account increases their
value and are 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 Parent Entity, of which the Parent
Entity is a beneficiary. As at 31 December 2024 the
guarantees amounted to PLN 128 million and their
amount is updated on an annual basis. The Parent Entity
strives to fully secure funds for the restoration of
individual tailings storage facilities in the year for which
the liquidation and restoration schedule provides for the
closure of a given tailings storage facility, by
systematically increasing the value of these guarantees.
adopted depending on the mine (in the comparable period at
the level of 1.17% to 1.90%).
With regard to the costs of some activities carried out during
the exploratory work of surface mines, which at the same
time serve to restore (recultivate) such pits, the Group made
a judgment and recognised that these costs are mostly
current production costs, because these activities primarily
determine the current mine production and revenue
generation, and their restoration is a secondary effect.
Therefore, the costs of such activities are not included in the
measurement of the restoration provision.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
134
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
364
912
554
1 175
35
3 040
Smelters
155
64
2
1
-
222
Total
519
976
556
1 176
35
3 262
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Provisions at the beginning of the reporting period
1 974
1 893
Note 9.1
Changes in estimates recognised in fixed assets
135
100
Utilisation
( 2)
( 3)
Other
21
( 16)
Provisions at the end of the reporting period, of
which:
2 128
1 974
- non-current provisions, including:
2 084
1 923
Mine Closure Fund and Tailings Storage Facility
Restoration Fund
482
548
- current provisions
44
51
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
( 408)
( 361)
decrease in discount rate by 1 percentage point
522
482
Note 9.5 Capitalised borrowing costs
During the period from 1 January 2024 to 31 December 2024 , the Group recognised PLN 288 million of borrowing costs
in property, plant and equipment and intangible assets.
During the period from 1 January 2023 to 31 December 2023, the Group recognised PLN 251 million of borrowing costs
in property, plant and equipment and intangible assets.
The capitalisation rate applied by the Group to determine borrowing costs in 2024 amounted to 4.77%,
in 2023: 5.36%.
Note 9.6 Carrying amount of the assets of Group companies representing collateral of repayment of liabilities
As at
31 December 2024
As at
31 December 2023
Buildings
142
136
Technical equipment and machines
31
30
Land
8
8
Total
181
174
The carrying amount of assets representing collateral of repayment of financial liabilities as at 31 December 2024 amounted
to PLN 181 million, including the carrying amount of assets set as collaterals of repayment of external financing of the
companies of the KGHM Polska Miedź S.A. Group as at 31 December 2024 in the amount of PLN 120 million (as at 31
December 2023: PLN 174 million and PLN 117 million, respectively).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
135
Note 9.7 Lease disclosures – the Group as a lessee
Accounting policies
As a lessee, the Group identifies leases in usufruct agreements, inter alia, land, perpetual usufruct right to land, and
transmission easements, as well as technical equipment, machines, and transport vehicles.
The Group applies a uniform lease accounting model, which assumes that the lessee recognises the right-to-use assets
and lease liabilities related to all lease agreements, including exemptions. The Group does not recognise lease assets
and liabilities in relation to:
• short-term leases - for agreements without the option to purchase an asset, concluded for a period shorter than
12 months from the commencement of the agreement, including agreements concluded for an indefinite period
with a short notice period if there is no reasonable certainty that the Group will not make use of termination.
• leases in respect of which the underlying asset has a low value.
In the case of an agreement that is or includes a lease, the Group recognises each lease component under
the agreement as a lease, separately from non-lease components.
The right-to-use assets and the measurement policy for these assets are presented in Note 9.1.
The Group initially measures the lease liability at the present value of lease payments due to be paid as at the date
of initial recognition, which include: fixed lease payments, variable lease payments which are dependent on an index
or rate, amounts which the lessee is expected to pay under the guaranteed residual value, the strike price call option if
it is reasonably certain that the lessee will exercise the option, and penalties for terminating the lease if the given lease
period was set with the assumption that the lessee will terminate the agreement. In fixed lease payments, the Group
also includes payments for the exclusion of land from forestry and agricultural production, if they relate to land used
under lease agreements.
The lease payments exclude variable payments made by the lessee to the lessor for the right to use the underlying asset
during the lease period, which depend on external factors other than payments based on a rate or index.
After the date the lease began, the Group measures the carrying amount of lease liabilities by:
- an increase due to interest on lease liabilities,
- a decrease due to paid lease payments,
- an update due to reassessment or modification of a lease agreement.
Lease liabilities are presented in Note 8.4.
Lease rate - lease payments are discounted by the Group using the incremental borrowing rate of the lessee, except
when the interest rate of a lease agreement can be easily determined.
Important estimates, assumptions and judgments
Identification of non-lease components
In the agreements for the lease of mining machinery, apart from the lease component, the Group identified non-lease
components related to the provision of services other than the lease of assets. To separate the lease and non-lease
components, the Group made a judgment, respectively allocating the remuneration for a given agreement to both
components, based on the relative unit price of the lease component and the total unit price of the non-lease
components.
Estimation of the incremental borrowing rate of the lease
For the purpose of calculating the discount rates under IFRS 16, the Group assumes that the discount rate should reflect
the cost of financing that would be incurred to purchase the leased item. The Group calculates the incremental borrowing
rates, for individual time ranges of lease agreements, on a quarterly basis and this rate is used to measure lease liabilities
arising from lease agreements concluded or modified during a given quarter.
The materiality threshold for leases of low-value of underlying assets is set at PLN 20 000.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
136
Lease disclosures – the Group as a lessee
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Note 9.1
Note 9.2
Depreciation/amortisation cost
84
90
Note 4.3
Interest cost
10
1
Short-term lease cost
6
7
Cost associated with leases of low-value of
underlying assets not recognised as short-term
agreements
5
1
Cost associated with variable lease payments not
recognised in the measurement of lease liabilities
8
7
Note 8.4.2
Total cash outflows due to leases
137
124
Note 9.1
Note 9.2
Increase in right-to-use assets
28
116
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)
666
704
Note 8.4.2
Carrying amount of right-to-use liabilities
733
784
In 2024 and in comparable period, the Group did not enter into sales and leaseback transactions.
As at 31 December 2024, the Group had lease agreements that contained extension options and termination options, and
the estimated value of future cash outflows, to which the Group is potentially exposed and are not included in the
measurement of lease liabilities amount to PLN 26 million and PLN 42 million respectively (as at 31 December 2023:
PLN 15 million and PLN 35 million). The Group has lease agreements with guaranteed residual values, but they were
included in the measurement of lease liabilities. Moreover, in the comparable period, the Group had lease agreements that
had not commenced yet, to which it is obliged as a lessee, and the value of future cash outflows in this respect amounted
to PLN 14 million.
Note 9.8 Greenhouse gas emissions allowances
Accounting policies
CO
2
emission allowances received free of charge and purchased, intended to be used for the entity's own needs, are
recognised as intangible assets.
At the moment of initial recognition:
• CO
2
emission allowances received free of charge and related non-financial subsidies (recognised as the settlement of
deferred income) are measured at fair value corresponding to the market value of these allowances on the date of
their initial recognition.
• purchased CO
2
emission allowances are measured at cost.
At the end of the reporting period, emission allowances are measured at initial value less amortisation and impairment
losses. The value of the CO
2
emission allowances is not subject to depreciation/amortisation, if their end value is equal
to or higher than their carrying amount.
Disposals of the emission allowances recognised as intangible assets are carried out in accordance with the FIFO method.
CO
2
emission allowances recognised as intangible assets are settled and excluded from the register whenever they are
redeemed* by the Group. The settlement of CO
2
emission allowances is recognised in the provision which is created in
accordance with the obligation to redeem the allowances.
This provision is recognised when the obligation to provide redemption allowances arises, respectively to the amounts
of the pollutants emitted. The provision is measured in relation to the value of emission allowances held, at the carrying
amount of these rights and in the case of their deficit, at the market value of the emission allowances as at the date the
provision was created.
The provision is recognised in the production cost.
In the statement of profit or loss, the Group settles the subsidy recognised in deferred income in the period for which it
was granted. The subsidy settled up to the cost of the created provision (respectively to the tonnage of CO
2
emissions
covered by the provision) is offset in the Statement of profit or loss by the cost of the created provision. The subsidy in
the amount which exceeds the cost of the created provision is recognised as other operating income.
* redemption means fulfilling the obligation imposed by the provisions of the Act on greenhouse gas emission trading scheme
on the owner of the Installation, consisting of the redemption of allowances on the allowance account by persons authorised to
operate accounts in the Union Registry, for each Installation separately, in the number covering the actual emissions of
pollutants for the previous year.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
137
Financial statements item
As at 31 December 2024
As at 31 December 2023
amount (t)
value
amount (t)
value
Intangible assets of which:
1 949 883
589
2 240 969
882
purchased CO
2
emission allowances
646 298
187
640 231
213
CO
2
emission allowances received free of
charge
1 303 585
402
1 600 738
669
Accruals
1 615 578
496
1 658 097
673
Financial statements item
from
1 January 2024
to
31 December 2024
from
1 January 2023
to
31 December 2023
Financial result (excluding the tax effect), of which:
204
196
Cost of sold products
199
190
Other operating income
5
6
Note 9.9 Assets held for sale (disposal group) and liabilities associated with them
Accounting policies
Non-current assets (or disposal groups) are classified by the Group as held for sale, if their carrying amount will be
recovered by a sale transaction rather than by continued usage, contingent on their availability for immediate sale in
their current condition and maintaining conditions that are customarily applied in the sale of these assets (or disposal
groups) and their sale is highly probable. A sale is understood as highly probable if the Group is determined to fulfil the
plan to sell an asset or a disposal group, actions were undertaken to actively search for a buyer, an asset is offered at
cost, which is rational as compared to its current fair value, and the Group intends to sell an asset within a year from the
classification day. Extension of the period required to conclude the sale by more than one year is possible only if the
delay was caused by events or circumstances outside of the Group’s control, and the Group itself may prove that it is
determined to fulfil the plan to sell an asset.
At the moment of reclassification, these assets are measured at the lower of the following values: the carrying amount
or the fair value decreased by costs to sell. The difference between the measurement at fair value is recognised in other
operating costs. At the moment of later measurement, the potential reversal of fair value is recognised in other operating
income.
In the current period, there was primarily a reclassification of part of the assets of the Sudbury Basin and liabilities
associated with them to held for sale (disposal groups). Details are presented in the information below.
Note 9.9.1 Assets and liabilities of the Sudbury Basin
The Management Board of the Parent Entity undertook corporate decisions enabling the sale of international mining assets
within the KGHM INTERNATIONAL LTD. Group – part of the assets of the Sudbury Basin, i.e the mines McCreedy West,
Levack/Morrison and Podolsky, as well as mining concessions: Kirkwood, Falconbridge, NW Foy, Rand and North Range.
Based on the conducted due diligence process, two binding offers were received for the acquisition of these assets, as a
result of which the Management Board of the Parent Entity accepted the terms of the offer from Magna Mining Inc.
Based on the agreed commercial terms and the structure of the transaction carried out, the subject of the sale is the
acquisition by Magna Mining Inc. of 100% of the shares in the target company Project Nikolas Company Inc., to which, at
the moment of the transaction, the assets and liabilities related to the assets being sold will be transferred.
On 11 September 2024 a Share Purchase Agreement was entered into between FNX Mining Company Inc. (the owner of
the special purpose company), KGHM INTERNATIONAL LTD. (guarantor), Project Nikolas Company Inc. (special purpose
company) and Magna Mining Inc. (buyer), which assumes the sale by FNX Mining Company Inc. of 100% of the shares of the
special purpose company Project Nikolas Company Inc. to Magna Mining Inc. The agreed purchase price comprises the
cash contribution in the amount of CAD 5 million at the moment of closure of the transaction, CAD 2 million deferred to 31
December 2026 as an unconditional cash payment, the acquisition by FNX Mining Company Inc. of 1 180 705 shares in the
company Magna Mining Inc. in the amount of CAD 2 million and conditional payments in the total maximum amount of up
to CAD 24 million.
The transaction was concluded following the end of the reporting period (details in Note 12.12 Subsequent events).
In light of the above, the Management Board of the Parent Entity considers that the criteria set by IFRS 5 have been met,
and as at 30 September 2024 the assets of the Sudbury Basin being the subject of the sale transaction and their related
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
138
liabilities, were reclassified to disposal Group. In accordance with IFRS 5.15, immediately prior to reclassification the carrying
amount of the aforementioned assets and liabilities was set. Therefore, an impairment loss on property, plant and
equipment and intangible assets was reversed in the amount of PLN 63 million, which was recognised in the items “Cost of
sales” in the amount of PLN 59 million and “Other operating income” in the amount of PLN 4 million. In these carrying
amounts they were recognised in assets held for sale and liabilities associated with them, as they were lower than their fair
value less cost to sell.
The individual assets reclassified to assets held for sale and liabilities associated with them are presented in the segment
KGHM INTERNATIONAL LTD.
The value of the assets reclassified as held for sale and liabilities associated with them have been presented together with
continued activities in the consolidated statement of profit or loss, the consolidated statement of cash flows and in the
explanatory notes to these statements, as they represent neither a material part of the activities nor an element of the
broader plan of disposal of a material part of the activities (IFRS 5.32 a and b).
Main groups of selected assets and liabilities of the Sudbury Basin classified to disposal Group
As at
31 December 2024
ASSETS
Mining and metallurgical property, plant and equipment
82
Mining and metallurgical intangible assets
17
Mining and metallurgical property, plant and equipment and intangible assets
99
Non-current assets
99
Inventories
24
Current assets
24
TOTAL ASSETS HELD FOR SALE (DISPOSAL GROUP)
123
LIABILITIES
Provisions for decommissioning costs of mines and other technological facilities
38
Other liabilities – liabilities due to Franco Nevada streaming contract
108
Non-current liabilities
146
Other liabilities – liabilities due to Franco Nevada streaming contract
14
Current liabilities
14
TOTAL LIABILITIES REALTED TO DISPOSAL GROUP
160
In the comparable period, a sale transaction was realised of assets held for sale (disposal group) and liabilities associated
with them of the company KGHM TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH S.A. Details are described below.
Note 9.9.2 KGHM TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH S.A.
On 13 March 2023, KGHM Polska Miedź S.A. concluded an Agreement for the sale of 100% of the shares of KGHM
TOWARZYSTWO FUNDUSZY INWESTYCYJNYCH SPÓŁKA AKCYJNA (“Shares”) with Agencja Rozwoju Przemysłu S.A. (“Buyer”).
The sale of the Shares was contingent on meeting the conditions precedent, among others no objections raised by the
Polish Financial Supervision Authority. The ownership rights to the Shares are transferred to the Buyer at the moment an
appropriate entry is made in the Share Register. The sale of the Shares is the last stage of the reorganisation under the
Group’s structure, which comprised the liquidation of closed-end, non-public investment
funds.
At the turn of the half-year, the Polish Financial Supervision Authority issued a decision on a lack of objections to the
acquisition of shares by the Buyer. On 27 July 2023 the transaction was concluded.
On 3 August 2023, the buyer of the shares, i.e. Agencja Rozwoju Przemysłu S.A. was entered into the Share Register as the
owner of 100% of the shares of KGHM TFI S.A.
The sale price of the shares amounted to PLN 4 million and was higher than the net assets of KGHM TFI S.A.
by PLN 1 million. The result on sale (profit) was recognised in the item “Other operating income”.
Due to their insignificant value, the main assets and liabilities of the company classified to the disposal group are not
presented in the note.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
139
Part 10 – Working capital
Note 10.1 Inventories
Accounting policies
The Group measures inventories at cost, not higher than the sales price less costs of completing production
and costs to sell.
Any differences in the value of finished goods constitutes a write-down and is recognised in the costs of sold products.
Fixed indirect costs of production are allocated on the basis of the normal level of production capacity utilisation.
The valuation of the inventory component disposal is made according to the weighted average purchase price and the
weighted average actual production cost.
The Group also classifies as inventories stand-by spare parts that do not meet the criteria for recognition as property,
plant and equipment in accordance with IAS 16 par. 7 and in accordance with the principles of capitalization of significant
components, adopted in the accounting principles of the Parent Entity, where a materiality threshold of at least PLN 300
thousand has been set, for which the spare parts are analysed in terms of meeting the capitalization criteria of IAS 16. In
relation to the above, stand-by spare parts are in particular recognised as inventories, the value of which is insignificant
or are not replaced at regular intervals, or which, after their installation, due to the failure of a spare part in an item of
property, plant and equipment, will not contribute to the obtainment of higher economic benefits from further use of
this component than those assumed at the moment of initial recognition of the component and putting it into use. The
costs of such stand-by spare parts as a current maintenance cost of assets are recognized in profit or loss as they are
consumed.
Important estimates, assumptions and judgments
In the consolidated financial statements the volume of those inventories of the KGHM INTERNATIONAL LTD. Group which
arise from the leaching process, is determined based on the estimated recovery of metal from ore. The nature of the
process of leaching copper from ore limits the precision of monitoring the level of inventories arising during this process.
In subsequent reporting periods, adjustments are made to the estimated recovery of copper from the leaching of ore in
a given reporting period to the level of production achieved in the subsequent period.
As at 31 December 2024 the provisionally-set value of inventories amounted to PLN 21 million (as at 31 December 2023,
PLN 25 million).
The Group measures inventories at cost, not higher than the net sales price. The Group determines the net sales price of
copper at the end of the reporting period on the basis of forward LME (London Metal Exchange) curve for the metal, set
for months in which the sale of copper inventories will be made.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
140
As at
31 December 2024
As at
31 December 2023
Materials
1 736
1 843
Half-finished goods and work in progress
4 566
4 552
Finished products
1 664
1 902
Merchandise
97
128
Note 10.4
Total carrying amount of inventories
8 063
8 425
Note 4.4
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*
( 87)
( 442)
Write-down reversed in cost of sales
16
21
Maturities of inventories
As at
31 December 2024
As at
31 December 2023
Over 12 months from the end of the reporting
period
510
429
Up to 12 months from the end of the reporting
period
7 553
7 996
* Including: PLN 55 million in 2024 due to a write-down recognised in KGHM INTERNATIONAL LTD. (in 2023 respectively PLN 370 million) since the
cost was higher than the net realisable value.
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 rhenium inventories. Moreover, the KGHM INTERNATIONAL LTD.
Group has an inventory of ore which will be used in the period of over 12 months.
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.
As at the end of reporting period, these assets are measured at cost less any impairment losses, though no higher than the
net sale price.
Recognition of freely acquired property rights to energy and certificates attesting to energy efficiency
Freely acquired, granted by the President of the Energy Regulatory Office, certificates of origin for energy from renewable
sources and certificates resulting from the act on energy efficiency are recognised as merchandise, while their free
acquirement is treated as a non-financial subsidy and is measured at the moment of initial recognition at fair value.
The subsidy resulting from the receipt of freely acquired property rights to coloured energy is recognised in the Statement
of profit or loss as reduction of cost of generating the energy from renewable energy resources at the moment of initial
recognition.
Initial recognition in the accounting books of property rights arising from certificates of origin of renewable energy occurs
on the date of production of a given type of energy, as the entitlement of energy producer to receive the property rights
resulting from the certificates of origin arises at the moment of the production of the given type of energy.
The subsidy resulting from the receipt of freely acquired certificates attesting to energy efficiency are recognised as a
subsidy to assets, in deferred income, and is systematically settled in the financial result in other operating income,
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
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141
following the depreciation of fixed assets, whose acquisition/generation resulted in the arising of the energy efficiency for
which the Group received the certificates.
Initial recognition in the accounting books of property rights arising from certificates of origin resulting from the act on
energy efficiency occurs at the moment of their receipt.
At the end of the reporting period, freely acquired property rights to energy and certificates attesting to energy efficiency
are measured at initial cost less any impairment losses, though no higher than the net sale price.
Recognition of income and disposal of property rights to energy and of certificates attesting to energy efficiency
Measurement of the disposal of property rights and of certificates attesting to energy efficiency are made using the FIFO
method. The disposal resulting from the sale is transferred to the financial result and is recognised as the value of
merchandise sold. The income from the sale of property rights to energy and of certificates attesting to energy efficiency is
recognised in the financial result as income from the sale of merchandise.
The deficit of property rights to energy and of certificates attesting to energy efficiency is supplemented by their purchase
or by a payment of a substitute fee. Any failure to carry out an obligatory redemption of property rights arising from
certificates for renewable energy sources or from energy efficiency, or any failure to pay a substitute fee, results in the
incurring a financial penalty by a company. The amount of the penalty incurred is recognised in other operating costs.
Provision for costs of meeting the obligation to redeem property rights to energy and of certificates attesting to
energy efficiency
Due to the obligation to redeem property rights to energy and of certificates attesting to energy efficiency, the entities of
the Group create a provision in accruals.
The Group creates a provision:
- charged to the costs of merchandise sold to the extent in which the obligation to redeem rights and certificates attesting
to energy efficiency involves electricity purchased and resold to an end-user,
- charged to the costs of production to the extent in which the obligation to redeem rights involves electricity purchased
and consumed to meet the company’s own needs, and
- charged to the generation cost of energy sold to the extend in which the obligation to redeem rights involves electricity
produced by a company and sold to an end-user.
This provision is measured at the carrying amount of the property rights to energy or certificates attesting to energy
efficiency held and, in the case of their deficit, at the market value of the property rights (certificates) at the date the
provision is created or at the amount of the substitute fee corresponding to the amount of the energy sold, depending on
which of these amounts is lower.
Settlement of the amount of the provision and the redemption of property rights occurs at the date of redemption of these
rights by the President of the Energy Regulatory Office.
Recognition of property rights to coloured energy and white certificates
Financial statements item
As at
31 December 2024
As at
31 December 2023
amount
value
amount
value
Inventories - merchandise, of which:
11
40
green property rights (MWh)
158 009
6
267 850
32
blue property rights (MWh)
11 128
3
7 790
2
white certificates (TOE)
640
2
2 851
6
Accruals, of which:
17
43
provision for redemption of green property rights
(MWh)
107 229
5
267 268
32
provision for redemption of blue property rights
(MWh)
10 723
3
11 136
3
provision for redemption of white certificates (TOE)
3 640
9
4 235
8
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
43
Cost of products sold
15
38
Cost of merchandise sold
2
3
Other operating income
1
2
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
142
Note 10.2 Trade receivables
Accounting policies
Trade receivables are initially recognised at the transaction price (unless the receivables contains a significant financial
component subject to separation and therefore the receivables are initially recognised at fair value). After initial
recognition, trade receivables are measured as follows:
− receivables not transferred to non-recourse factoring and not based on the M+ pricing formula*: at amortised cost
while taking into account the loss allowance for expected credit losses (ECL). Trade receivables with maturity dates
of less than 12 months are not discounted.
− receivables transferred to non-recourse factoring: at fair value through profit or loss, where the fair value
is determined in the amount of their carrying amount less the factor’s compensation, which include, among others,
interest costs and risk assumption costs. Because of the short duration between the transferral of receivables to the
factor and its payment and due to the low credit risk of the counterparty (factor), the fair value of these receivables
does not include the impact of these factors. Receivables transferred to non-recourse factoring are obligatorily
designated to the category of financial assets measured at fair value through profit or loss, because they were
classified to a business model in which cash flows are realised solely by selling financial assets.
− receivables based on the M+ pricing formula: at fair value through profit or loss, where fair value is set
as the nominal value (i.e. at the price in the invoice), adjusted by the impact of market and credit risks. Adjustment
due to the market risk is calculated as the difference between the current market price for a given pricing period in
the future (the period in which there will be a final determination of the settlement price) and the receivables’ price
recognised in the accounting books (multiplied by the sales volume). Adjustment due to the credit risk is calculated
analogously to the calculation of expected credit losses for trade receivables measured at amortised cost.
Receivables based on the M+ pricing formula are obligatorily designated to the category of financial assets measured
at fair value through profit or loss, because these receivables do not pass the SPPI contractual cash flow test (solely
payments of principal and interest) because of the element of variable price after the date of initial recognition of
the receivables.
Receivables may be measured at fair value both based on the applied M+ pricing formula as well as due
to transferral to factoring. The measurements are carried out independently of each other. The result of both
measurements is recognised in the profit or loss in other operating income/(costs).
* the M+ pricing formula means that for individual transactions for the sale of copper and silver products, the final sales price is determined after
the date of recognition of the sale, based on, for example, the average of the stock exchange quotations of a given metal in the month of sale or in
the month following the month of sale.
The Group is exposed to the credit risk and currency risk related to trade receivables. Credit risk management
and assessment of the credit quality of receivables is presented in Note 7.5.2.3. Information on currency risk is presented
in Note 7.5.1.3.
The following table presents the carrying amounts of trade receivables and the loss allowances for an expected credit loss:
As at
31 December 2024
As at
31 December 2023
Trade receivables measured at amortised cost
- gross value
678
557
Loss allowance for an expected credit loss
( 40)
( 39)
Trade receivables measured at amortised cost
- net value
638
518
Trade receivables measured at fair value
707
414
Note 10.4
Total trade receivables
1 345
932
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
143
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”.
Moreover, this item also includes intra-group trade payables transferred by the debtor to the factor, for which the debtor
received payment from the factor. At the moment of transfer of the liabilities to reverse factoring, the Parent Entity
recognises payables towards the factor*, who due to the subrogation of receivables, from the legal point of view, assumes
the rights and obligations common for trade payables.
Reverse factoring is not directly regulated by IFRS, and as a result of the ambiguous nature of these transactions, it was
necessary for the Parent Entity to make an important judgment on the presentation of balances of payables transferred
to factoring in the statement of financial position and the presentation of transactions in the statement of cash flows.
In the Parent Entity’s opinion, in presenting the balance of trade payables transferred to reverse factoring as „Trade
and other payables” 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 by the reverse factoring there is a
transfer of rights and obligations arising from the liabilities, rather than their expiry and the establishment of new
rights and obligations in respect of the factor,
• there is no establishment of new guarantees related to the reverse factoring, nor are there any changes
in commercial terms related to any breach of the contract terms and annulment of a contract,
• the goal of the program is not only to improve the Parent Entity’s liquidity, but also to provide support to suppliers
engaged in obtaining favourable financing in order to build long term business relationships,
• the established payment deadlines, as well as payment models (including as regards interest and discounting)
do not change in respect of trade payables towards a given supplier which are not subject to reverse factoring.
In light of the above, as well as taking into account the established interest rates and discounts and extended
repayment periods, cash flows related to the liabilities transferred to reverse factoring do not change by more than
10%,
• costs related to reverse factoring are incurred both by the Parent Entity and its suppliers. The Parent Entity incurs
interest cost arising from the payment of liabilities over an extended period, while the supplier incurs a discount
cost due to early (that is, before the end of the base term, which is usually 60 days) payment received from the
factor,
• the Parent Entity, together with individual suppliers, on the basis of signed contracts, will determine which invoices
will be transferred to reverse factoring, and what the deadline for early payment to the supplier through the factor
will be.
Moreover, although the Parent Entity identified characteristics which indicate the nature of reverse factoring as liabilities
due to financing (liability due to credit granted by the factor), they were judged by the Parent Entity to be insufficient for
the purpose of recognising that, at the moment of transfer of trade payables to reverse factoring, there is a complete
change in the nature of the relationship from that of a trade to a debt one, which would necessitate presentation in the
statement of financial position as debt financial liabilities and presentation in the statement of cash flows, in financial
activities:
• the factor is a bank, and at the moment of subrogation by the factor there is a change in the debtor,
• in order to obtain more favourable terms, the factoring agreement was negotiated with the factor by the Parent
Entity and not directly by the suppliers,
• the actual deadline for the payment of trade payables subject to reverse factoring amounts 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 Parent Entity, and
suppliers are charged only if they receive payment on the date before the date stipulated in the trade contract,
which usually amounts to 60 days from the day of receiving the invoice by the Company (discount for the payment
before 60 days or other, stipulated in the trade contract).
As part of the analysis of IFRS in the context of presenting the balance of trade payables within the reverse factoring
mechanism, the Parent Entity 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 Parent Entity’s opinion, the
aspects indicated by the Committee as well as the summary of the key requirements related to the analysed issue do not
have an impact on the conclusions of the assessment conducted by the Parent Entity. The Committee, recommending
the appropriate presentation of liabilities subject to reverse factoring, indicated the same issues that were analysed and
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
144
disclosed by the Parent Entity as part of important judgments above. In particular, in the context of the areas of analysis
indicated by the Committee, the Parent Entity 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 payables 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,
• the 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 Parent Entity indicates that the actual deadline for the payment of trade payables subject to reverse factoring
is longer (up to 180 days) than the deadline for the payment of other trade payables, which are not transferred
to factoring, which usually amounts to 60 days, which may indicate a change in the nature of these liabilities from trade
to debt. However, this characteristic has been judged by the Parent Entity to be insufficient to conclude that when the
trade payables 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 Parent Entity's assessment of the nature of trade payables transferred to reverse factoring and their
presentation, means that the trade payables transferred to reverse factoring are presented by the Group 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 Group 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 Group 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.
As at
31 December 2024
As at
31 December 2023
Non-current trade payables
195
197
Current trade payables
3 132
3 167
Other payables – trade payables within the reverse
factoring mechanism
2 000
3 021
Note 10.4
Trade and other payables
5 327
6 385
In 2024, the factors’ total participation limit in the Parent Entity amounted to PLN 4 500 million (as at 31 December 2023 it
amounted to PLN 3 000 million). Group companies do not have agreements for the provision of reverse factoring services.
Currently, the Parent Entity has concluded open-ended agreements for the provision of reverse factoring services with
several factors. The cost of reverse factoring, depending on the terms of the concluded agreements, is as follows:
for PLN (WIBOR 1M + margin), for EUR (EURIBOR 1M + margin) for USD (Term SOFR 1M/SOFR ON + margin). The program
was implemented in 2019 in order to make it possible for the Parent Entity’s suppliers to receive repayment of receivables
faster, as part of the standard procurement process executed by the Parent Entity, alongside an extension of payment
dates of payables by the Parent Entity. In 2024, the Parent Entity transferred to the factors payables in the amount of PLN
7 087 million, and as at 31 December 2024 the trade payables within the reverse factoring mechanism (i.e. trade payables
paid by the factor) amounted to PLN 2 000 million (in the year ended 2023, the Parent Entity transferred liabilities in the
amount of PLN 4 247 million and the trade payables within the reverse factoring mechanism (i.e. trade payables paid by
the factor) amounted to PLN 3 021 million).
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
145
In the current year, payments made towards the factors by the Parent Entity amounted to PLN 8 131 million (in the year
ended 31 December 2023, in the Parent Entity the payables amounted to PLN 1 209 million). Interest costs paid by the
Group towards the factors in 2024 amounted to PLN 164 million (in the year ended 31 December 2023, 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 up 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 847 million in the current
part (as at 31 December 2023, PLN 196 million and PLN 713 million, respectively).
The Group is exposed to currency risk arising from trade and other payables, as well as to liquidity risk. Information on
currency risk is presented in Note 7.5.1.3 and on liquidity risk in Note 8.3.1.
The fair value of trade and other payables approximates their carrying amount.
Note 10.4 Changes in working capital
Accounting policies
Cash flows arising from interest on reverse factoring transactions are presented in cash flows from financing activities.
The actually repaid principal amounts of receivables transferred to reverse factoring to a factor are presented in cash
flows from operating activities, and partially also from investment activities. Moreover, the Parent Entity, as regards
changes in working capital in the statement of cash flows, presented a separate line “Change in trade payables transferred
to factoring” for the purposes of clear and transparent presentation.
Important estimates, assumptions and judgments
The Parent Entity implemented reverse factoring in the period ended on 31 December 2019 (more information may be
found in Note 10.3).
Since market practice with respect to the presentation of reverse factoring transactions in the statement of cash flows
is not uniform, the Management Board had to apply its own judgment in this regard. In the case of these transactions,
the Parent Entity had to make an assessment as to whether expenses related to payments towards the factor should be
classified to cash flows from operating activities or to cash flows from financing activities in the statement of cash flows.
Pursuant to IAS 7.11, an entity should present cash flows from operating, investing and financing activities in a manner
which is most appropriate to its business, because it provides information that allows users of financial statements to
assess the impact of those activities on the financial position of the entity and the amount of its cash and cash equivalents.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
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146
Due to the above, in the Parent Entity’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 legal
subrogation of receivables is made by the factor, from a legal standpoint they assume the rights and responsibilities
characteristic for trade receivables. Only cash flows from the repayment of principal amounts of receivables from
liabilities due to the purchase and construction of fixed assets and intangible assets are presented under investing
activities (more information may be found in Note 10.3).
• the financial aspect related to the factoring transaction is indicated in the presentation of interest in financing
activities. This is consistent with recognising this interest in financing costs in the statement of profit or loss pursuant
to the accounting policy adopted by the Parent Entity for the presentation of interest cost of reverse factoring in the
financial activities.
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.
* Trade payables within the reverse factoring mechanism
Inventories
Trade
receivables
Trade
payables
Other
payables*
Working
capital
As at 1 January 2024
(8 425)
( 932)
3 167
3 021
(3 169)
As at the date of obtaining control of a subsidiary
-
( 2)
1
-
( 1)
As at 31 December 2024
(8 063)
(1 345)
3 132
2 000
(4 276)
Impact of changes in the statement of
financial position
362
( 411)
( 36)
(1 021)
(1 106)
Exchange differences from translation of
statements of operations with a functional
currency other than PLN
18
12
( 8)
-
22
Depreciation/amortisation recognised in
inventories
349
-
-
-
349
Change in liabilities due to purchase of property,
plant and equipment and intangible assets
-
-
( 127)
-
( 127)
Change in liabilities due to interest
-
-
-
14
14
Reclassification to property, plant and equipment
( 27)
-
-
-
( 27)
Adjustments
340
12
( 135)
14
231
Change in the statement of cash flows from
operating activities
702
( 399)
( 171)
(1 007)
( 875)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
147
Inventories
Trade
receivables
Trade
payables
Other
payables*
Working
capital
As at 1 January 2023
(8 902)
(1 178)
3 262
18
(6 800)
As at the date of obtaining control of a subsidiary
-
-
1
-
1
As at 31 December 2023
(8 425)
( 932)
3 167
3 021
(3 169)
Impact of changes in the statement of
financial position
477
246
( 96)
3 003
3 630
Exchange differences from translation of
statements of operations with a functional
currency other than PLN
( 64)
( 37)
25
-
( 76)
Depreciation/amortisation recognised in
inventories
296
-
-
-
296
Change in liabilities due to purchase of property,
plant and equipment and intangible assets
-
-
102
( 110)
( 8)
Change in liabilities due to interest
-
-
-
( 25)
( 25)
Reclassification to property, plant and equipment
( 16)
-
-
-
( 16)
Adjustments
216
( 37)
127
( 135)
171
Change in the statement of cash flows from
operating activities
693
209
31
2 868
3 801
* Trade payables within the reverse factoring mechanism
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
148
Part 11 – Employee benefits
Accounting policies
The Group is obliged to pay specified benefits following the period of employment (retirement benefits due to one-off
retirement-disability rights, post-mortem benefits and the coal equivalent) and other long-term benefits (jubilee
bonuses), in accordance with the Collective Labour Agreement.
The amount of the liabilities due to both of these benefits is estimated at the end of the reporting period
by an independent actuary using the projected unit credit method.
The present value of liabilities from these benefits is determined by discounting estimated future cash outflow using the
interest rates on treasury bonds expressed in the currency of the future benefits payments, with maturities similar to the
date of settlement for liabilities.
Actuarial gains and losses from the measurement of specified benefits following the period of employment are
recognised in other comprehensive income in the period in which they arose. Actuarial gains/losses from
the measurement of other benefits (benefits due to jubilee bonuses) are recognised in profit or loss.
Significant estimates and assumptions
The carrying amount of the liability due to future employee benefits is equal to the present value of the liabilities due
to defined benefits. The amount of the liability depends on many factors, which are used as assumptions
in the actuarial method. Any changes to the assumptions may impact the carrying amount of the liability. The interest
rate is one of the basic parameters for measuring the liability. At the end of the reporting period, based on the opinion
of an independent actuary, an appropriate discount rate for the Group’s entities is used for setting the present value of
estimated future cash outflow due to these benefits. In setting the discount rate for the reporting period, the actuary
extrapolates current interest rates of treasury bonds along the yield curve expressed in the currency of the future benefits
payments, to obtain a discount rate enabling the discounting of payments with maturities which are longer than the
maturities of the bonds.
Other macroeconomic assumptions used to measure liabilities due to future employee benefits, such as the inflation rate
or the minimum salary, are based on current market conditions.
The actuarial assumptions adopted for measurement of employee benefits in the Group reflect the economic
relationships between factors such as inflation, the salary growth rate, the discount rate and the coal price growth rate.
The assumptions used for measurement as at 31 December 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 these 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
149
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 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
Components of the item: employee benefits liabilities
As at
31 December 2024
As at
31 December 2023
Non-current
2 784
3 117
Current
297
267
Note 11.2
Total liabilities due to future employee benefits
programs
3 081
3 384
Employee remuneration liabilities
469
421
Social security liabilities
392
357
Accruals (unused annual leave, bonuses, other)
861
664
Other current employee liabilities
1 722
1 442
Total employee benefits liabilities
4 803
4 826
Employee benefits expenses
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Remuneration
6 454
5 881
Costs of social security and other benefits
2 232
1 988
Costs of future benefits
279
427
Note 4.1
Employee benefits expenses
8 965
8 296
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
150
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
2 893
536
432
1 836
89
Note 11.1
Total costs recognised in profit or loss, of which:
427
223
53
147
4
interest costs
194
36
29
124
5
current service costs
97
46
24
23
4
past service costs
( 5)
-
-
-
( 5)
actuarial losses recognised in profit or loss
141
141
-
-
-
Note 8.2.2
Actuarial losses recognised in other comprehensive income
311
-
114
170
27
Benefits paid
( 247)
( 79)
( 39)
( 126)
( 3)
As at 31 December 2023
3 384
680
560
2 027
117
Note 11.1
Total costs recognised in profit or loss, of which:
279
72
61
134
12
interest costs
173
35
28
104
6
current service costs
113
44
33
30
6
actuarial gains recognised in profit or loss
( 7)
( 7)
-
-
-
Note 8.2.2
Actuarial (gains)/losses recognised in other comprehensive income
( 335)
-
( 10)
( 331)
6
Benefits paid
( 247)
( 82)
( 43)
( 116)
( 6)
As at 31 December 2024
3 081
670
568
1 714
129
As at 31 December
2024
2023
2022
2021
2020
Present value of liabilities due to employee benefits
3 081
3 384
2 893
2 468
3 169
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
151
Main actuarial assumptions (of the Parent Entity) 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 (of the Parent Entity) 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 as at 31 December 2024 versus assumptions adopted as at 31 December 2023
Change in financial assumptions
( 377)
Change in demographic assumptions
60
Other changes
( 25)
Total actuarial gains
( 342)
Actuarial (gains)/losses as at 31 December 2023 versus assumptions adopted as at 31 December 2022
Change in financial assumptions
180
Change in demographic assumptions
64
Other changes
208
Total actuarial losses
452
The changes in actuarial (gains)/losses are caused by a change in the assumptions in respect of the discount rate, coal prices
and future expected increase in salary.
Maturity profile of future employee benefits liabilities
Year of maturity:
Total
liabilities
Jubilee
awards
Retirement
and disability
benefits
Coal
equivalent
Other
benefits
2025
297
84
71
129
13
2026
260
66
85
103
6
2027
185
58
28
94
5
2028
176
53
29
89
5
2029
170
49
33
83
5
Other years
1 993
360
322
1 216
95
Total liabilities in the statement of
financial position as at 31 December
2024
3 081
670
568
1 714
129
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
152
Maturity profile of future employee benefits liabilities
Year of maturity:
Total
liabilities
Jubilee
awards
Retirement
and disability
benefits
Coal
equivalent
Other
benefits
2024
266
72
71
111
12
2025
268
68
76
118
6
2026
207
58
33
111
5
2027
191
54
27
105
5
2028
181
50
28
98
5
Other years
2 271
378
325
1 484
84
Total liabilities in the statement of
financial position as at 31 December
2023
3 384
680
560
2 027
117
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
153
Part 12 – Other notes
Note 12.1 Related party transactions
The accounting policies and significant estimates and assumptions presented in Parts 2 and 10 are applicable to
transactions entered into with related parties.
The transactions between the Group and related parties include transactions with:
• the joint venture Sierra Gorda S.C.M.,
• entities controlled or jointly controlled by the State Treasury or over which it has significant influence, and
• the Management Board and the Supervisory Board (remuneration) – Note 12.10.
Operating income from related entities
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Revenues from sales of products, merchandise and
materials to a joint venture Sierra Gorda S.C.M.
16
38
Interest income on loans granted to a joint venture
Sierra Gorda S.C.M.
552
597
Revenues from other transactions with a joint venture
Sierra Gorda S.C.M.
18
21
Revenues from other transactions with other related
parties
14
23
Total
600
679
Purchase from related entities
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Purchase of services, merchandise and materials
37
34
Other purchase transactions
7
4
Total
44
38
Trade and other receivables from related parties
As at
31 December 2024
As at
31 December 2023
From the joint venture Sierra Gorda S.C.M. – loans granted
9 800
9 096
From the joint venture Sierra Gorda S.C.M. - other
receivables
50
29
From other related parties
5
5
Total
9 855
9 130
Trade and other payables towards related parties
As at
31 December 2024
As at
31 December 2023
Towards joint venture Sierra Gorda S.C.M.
47
18
Towards other related parties
5
3
Total
52
21
The State Treasury is an entity controlling KGHM Polska Miedź S.A. at the highest level. The Group makes use of the
exemption to disclose a detailed scope of information on transactions with the Polish Government and entities controlled
or jointly controlled by the Polish Government, or over which the Polish Government has significant influence (IAS 24.25).
In 2024, the Parent Entity and subsidiaries did not enter into significant transactions with related parties under other than
arm’s length conditions.
Pursuant to the scope of IAS 24.26, as at 31 December 2024 and in the period from 1 January to 31 December 2024, the
Group realised the following transactions with the Polish Government and entities controlled or jointly controlled by the
Polish Government, or over which the Polish Government has significant influence, unusual due to their nature or amount:
• due to an agreement on setting mining usufruct for the extraction of mineral resources and for the exploration for
and assessment of mineral resources – balance of payables in the amount of PLN 241 million (as at 31 December
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
154
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 (2023: PLN 31 million),
• due to a reverse factoring agreement - payables in the amount of PLN 1 727 million and interest costs for the period
from 1 January to 31 December 2024 in the amount of PLN 150 million (as at 31 December 2023, payables in the
amount of PLN 2 528 million and interest costs for the period from 1 January to 31 December 2023 in the amount of
PLN 55 million),
• other transactions and economic operations related to spot currency exchange, depositing cash, granting bank loans,
guarantees, and letters of credit (including documentary letters of credit), running bank accounts, servicing of
business credit cards, processing of a documentary collection, servicing of special purpose funds and entering into
transactions on the forward currency market as part of cooperation with banks related to the State Treasury,
State Treasury companies may purchase bonds issued by KGHM Polska Miedź S.A.
The remaining transactions between the Group and the Polish Government and with entities controlled or jointly controlled
by the Polish Government, or over which the government has significant influence, were within the scope of ordinary, daily
economic operations. These transactions concerned the following:
• the purchase of goods (energy, fuels, services), merchandise, materials and fixed assets to meet the needs of current
operating activities. In the period from 1 January to 31 December 2024, the turnover from these transactions amounted
to PLN 2 935 million (from 1 January to 31 December 2023: PLN 3 554 million), and, as at 31 December 2024, the
unsettled balance of liabilities from these transactions amounted to PLN 271 million (as at 31 December 2023:
PLN 378 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 806 million (from 1 January to 31 December 2023: PLN 864 million), and, as at 31 December
2024, the unsettled balance of receivables from these transactions amounted to PLN 189 million (as at 31 December
2023: PLN 240 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, it was decided to pay a dividend to shareholders in the amount of PLN 300 million
(PLN 1.50/share). The dividend for 2023 was paid from the profits of KGHM Polska Miedź S.A. for previous years.
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 Parent Entity are ordinary shares.
As at the date of publication, no decision was made on the allocation of profit for 2024.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
155
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.
Investment properties (other than those used under a lease agreement) are measured at initial recognition at cost or cost
of sold product. Initial measurement takes into account transaction costs. Investment properties held by the lessee as a
right-to-use asset are measured at cost in accordance with IFRS 16 Leases. At the end of the reporting period, investment
properties, both owned and held as right-to-use assets, are measured at fair value. A gain or loss resulting from a change
in the fair value of investment properties affects the financial result in the period in which the change occurs and is
recognised in other income or other operating costs, respectively. In the case of reclassification of an item of property,
plant and equipment to investment properties, the surplus of the fair value over the carrying amount of the reclassified
item of property, plant and equipment, determined on the reclassification date, is recognised in other comprehensive
income within the revaluation reserve. This surplus is not subject to reclassification to the financial result in subsequent
periods. At the time of disposal of the investment property, this amount will be transferred to retained earnings, omitting
the financial result, in accordance with IAS 40.62.
As at
31 December 2024
As at
31 December 2023
Other non-current non-financial assets
277
386
Investment property
177
120
Prepayments
10
9
Non-financial advances
22
185
Receivables due to overpayment of property tax
68
72
Other current assets
683
571
Note 7.1
Financial
317
296
Amounts retained (collateral) due to long-term
construction contracts
5
7
Receivables due to guarantees granted
16
18
Receivables due to settled derivatives
34
48
Receivables due to compensation for energy-intensive
sector due to incurrence of the costs of purchasing CO
2
emission allowances in the prices of electricity
148
144
Receivables due to conditional payments associated
with the agreement on the sale of a subsidiary
S.C.M. Franke
41
20
Receivables due to settlement of the Franco Nevada
streaming contract
28
13
Other
45
46
Non-financial
366
275
Non-financial advances
162
103
Receivables due to measurement of long-term contracts
127
75
Receivables due to property and personal insurance
35
29
Other
42
68
Other non-current and current assets, total
960
957
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
156
Note 12.4 Other liabilities
Accounting policies
Other financial liabilities are initially recognised at fair value less transaction costs, and at the end of the reporting period
they are measured at amortised cost.
As at
31 December 2024
As at
31 December 2023
Deferred income, including:
143
222
Note 9.9
Liabilities due to Franco Nevada streaming contract*
-
128
Trade payables
195
197
Other financial liabilities
25
33
Other non-financial liabilities
34
35
Other non-current liabilities
397
487
Deferred income, including:
47
67
Trade payables
14
33
Accruals, including:
818
1 046
Provision for purchase of property rights related to
electricity
16
41
Charges for discharging gases and dusts to the air
374
501
Other costs accounted on the basis of contracts
entered into
189
224
Liabilities due to settled derivatives
3
7
Other financial liabilities
124
281
Other non-financial liabilities
69
51
Other current liabilities
1 061
1 452
Other non-current and current liabilities, total
1 458
1 939
*As at the end of the reporting period, these liabilities were reclassified to assets held for sale.
Note 12.5 Provisions for liabilities and other charges
Provisions for:
As at
31 December 2024
As at
31 December 2023
decommissioning costs of mines and other technological
facilities
44
51
decommissioning costs of fixed assets and fixed assets
under construction
20
16
disputed issues and court proceedings
81
58
other provisions for expected losses, expenses and
liabilities
135
69
Total
280
194
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
157
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
428
459
Guarantees received
297
324
Promissory notes receivables
107
111
Other
24
24
Contingent liabilities
784
589
Note 8.6
Guarantees and letters of credit
235
260
Note 8.6
Promissory note payables
223
257
Property tax on underground mine workings
8
6
Liability due to a claim arising from the executed contract
31
8
Financial support granted to municipalities in the form of a
donation*
131
-
Audit in a subsidiary of the Group – KGHM INTERNATIONAL
LTD.**
83
-
Other
73
58
Other liabilities not recognised in the statement of
financial position - liabilities towards local government
entities due to expansion of the tailings storage facility
-
26
* The Parent Entity'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 Parent Entity.
** In 2023, Chilean tax authorities ((Servicio de Impuestos Internos or "SII") under the Audit Program “Financial operations with related international
companies” commenced the control procedure against Quadra FNX Holding Chile Limitada, a company within the KGHM INTERNATIONAL LTD. Group
(hereafter: “Quadra Chile” or “the Company”) for the financial year 2020. On 30 August 2024, SII issued a decision on imposing a sanction, as it
determined that the amount of costs recognised in profit or loss for 2020 was, in their opinion, not correct. A fine was imposed on Quadra Chile in
the amount of PLN 19 million (USD 4.6 million). Pursuant to the Chilean law, the fine is not to be paid until all remedies have been exhausted.
Since Quadra Chile did not agree with SII’s decision, on 15 October 2024 an administrative appeal was filed. As at 31 December 2024, no decisions
were made on this matter. The formal response from SII on rejecting the appeal was received after the balance sheet date, on 24 February 2025.
Currently, the Company is considering possible next steps and continues the available legal actions in this matter. The lawyers engaged by the
Company assessed the probability of cash outflow due to this matter as “possible”, which qualifies it to be disclosed as a contingent liability.
It is estimated that the fine, together with interest associated with the audited year 2020 will amount to PLN 20 million (USD 5.0 million). However,
the Company expects that SII may begin a control in other finished periods (that is: 2021, 2022, 2023 and 2024) and impose fines of a similar nature,
since the method of calculating costs did not change in this period. The total estimated potential impact of fines, together with interest, amounts to
PLN 83 million (USD 20.3 million).
Note 12.7 Litigation and claims
A proceeding regarding the payment of royalties for the use of invention project no. 1/97/KGHM called „Method for
increasing the production capacity of the electrorefining sections of the Metallurgical Plants”. Details are presented in The
Management Board’s Report on the activities of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group in 2024,
in section 1.6.4 Litigation and claims.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
158
Note 12.8 Capital commitments related to property, plant and equipment and intangible assets
Capital commitments incurred in the reporting period, but not yet recognised in the consolidated statement of financial
position, were as follows:
As at
31 December 2024
As at
31 December 2023
Capital commitments due to the purchase of:
property, plant and equipment
1 303
1 668
intangible assets
11
22
Total capital commitments
1 314
1 690
The Group’s share in capital commitments of joint ventures (Sierra Gorda S.C.M.) is presented in Note 6.1.
Note 12.9 Employment structure
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
White-collar employees
11 430
10 968
Blue-collar employees
23 062
22 914
Total (full-time)
34 492
33 882
Note 12.10 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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
159
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
Tadeusz Kocowski
13.02-31.12
-
182
182
Aleksander Cieśliński
13.02-31.12
-
166
166
Bogusław Szarek
01.01-31.12
336
186
522
Józef Czyczerski
01.01-31.12
26
186
212
Przemysław Darowski
01.01-31.12
151
187
338
Zbysław Dobrowolski
13.02-31.12
-
165
165
Dominik Januszewski
13.02-31.12
-
165
165
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
513
1 819
2 332
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
160
from 1 January 2023 to 31 December 2023
Remuneration of members of the
Supervisory Board
(in PLN thousands)
Period when
function
served
Current employee
benefits
Current benefits
due to serving in
the function
Total
earnings
Members of the Supervisory Board serving in the function as at 31 December 2023
Agnieszka Winnik -Kalemba
01.01-31.12
-
185
185
Katarzyna Krupa
01.01-31.12
-
167
167
Wojciech Zarzycki
01.01-31.12
-
167
167
Józef Czyczerski
01.01-31.12
328
168
496
Przemysław Darowski
01.01-31.12
126
167
293
Andrzej Kisielewicz
01.01-31.12
-
167
167
Bogusław Szarek
01.01-31.12
326
167
493
Marek Wojtków
01.01-31.12
-
167
167
Radosław Zimroz
01.01-31.12
-
167
167
Piotr Ziubroniewicz
01.01-31.12
-
167
167
TOTAL
780
1 689
2 469
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Current employee benefits of other key managers
(in PLN thousands)
4 917
3 141
Based on the definition of key management personnel according to IAS 24 and based on an analysis of the rights
and scope of responsibilities of members of management bodies of the KGHM Polska Miedź S.A. Group arising from
corporate documents and from management contracts, the members of the Board of Directors of KGHM INTERNATIONAL
LTD. and the President of the Board of Directors of KGHM INTERNATIONAL LTD. were recognised as other key managers
of the Group.
Note 12.11 Remuneration of the entity entitled to audit the financial statements and of entities related
to it, in PLN thousands
from 1 January 2024
to 31 December 2024
from 1 January 2023
to 31 December 2023
Companies of the PricewaterhouseCoopers group, total
7 087
5 653
From the contract for the review and audit of financial
statements and contracts for assurance services, of which:
6 961
5 554
audit of annual financial statements
4 598
4 541
assurance services, of which:
2 363
1 013
review of financial statements
854
833
assurance on sustainability reporting
850
-
other assurance services
659
180
From realisation of other contracts
126
99
Note 12.12 Subsequent events
Appointment of a member of the Supervisory Board of the Parent Entity
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.
Conclusion of the sales transaction involving a part of the assets of the Sudbury Basin
On 28 February 2025, a transaction for the sale of a part of the assets of the Sudbury Basin within the KGHM
INTERNATIONAL LTD. Group was concluded. Details are described in Note 9.9 Assets held for sale (disposal group) and
liabilities associated with them.
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. Group
Consolidated financial statements for 2024 Translation from the original Polish version
161
Part 13 – Quarterly financial information of the Group
CONSOLIDATED 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
Note 2.3
Revenues from contracts with
customers
9 181
7 819
35 320
33 467
Note 4.1
Cost of sales
(7 751)
(9 753)
(29 348)
(32 907)
Gross profit/(loss) on sales
1 430
(1 934)
5 972
560
Note 4.1
Selling costs and administrative
expenses
( 649)
( 795)
(2 205)
(2 200)
Net profit/(loss) on sales
781
(2 729)
3 767
(1 640)
Note 6.2
Allowances for impairment of
loans granted to a joint venture
253
-
-
-
Note 6.2
Gains due to the reversal of
allowances for impairment of
loans granted to a joint venture
226
( 392)
226
101
Note 6.2
Interest income on loans
granted to a joint venture
calculated using the effective
interest rate method
122
151
552
597
Profit or loss on involvement in a
joint venture
601
( 241)
778
698
Note 4.2
Other operating income, including:
1 225
204
1 562
906
other interest calculated using
the effective interest rate method
38
12
63
56
reversal of impairment losses on
financial instruments
( 1)
( 3)
-
-
Note 4.2
Other operating costs, including:
( 149)
(2 769)
(1 118)
(3 723)
impairment losses on financial
instruments
2
2
( 1)
( 4)
Note 4.3
Finance income
61
391
135
529
Note 4.3
Finance costs
( 299)
( 148)
( 516)
( 370)
Profit/(loss) before income tax
2 220
(5 292)
4 608
(3 600)
Note 5.1
Income tax expense
( 664)
765
(1 738)
( 91)
PROFIT/(LOSS) FOR THE PERIOD
1 556
(4 527)
2 870
(3 691)
Profit/(loss) for the period
attributable to:
shareholders of the Parent Entity
1 555
(4 526)
2 868
(3 698)
non-controlling interest
1
( 1)
2
7
Weighted average number of
ordinary shares (million)
200
200
200
200
Basic/diluted earnings per share
(in PLN)
7.78
( 22.63)
14.34
( 18.49)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
162
Explanatory notes to the consolidated 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
646
756
2 513
2 641
Employee benefits expenses
2 477
2 170
8 965
8 296
Materials and energy, including:
3 161
3 576
13 328
14 872
purchased metal-bearing
materials
1 749
1 915
7 439
7 712
External services
868
812
3 091
2 960
Minerals extraction tax
996
699
3 865
3 496
Other taxes and charges
255
272
939
874
Advertising costs and
representation expenses
23
37
75
96
Property and personal insurance
25
21
92
87
Impairment losses on property,
plant and equipment and
intangible assets
264
2 720
290
2 728
Reversal of write-down of
inventories
( 2)
( 2)
( 14)
( 19)
Reversal of impairment losses on
property, plant and equipment
and intangible assets
( 1)
( 1)
( 69)
( 3)
Write-downs of inventories
12
88
84
429
Other costs
26
26
83
83
Total expenses by nature
8 750
11 174
33 242
36 540
Cost of merchandise and
materials sold (+)
125
138
547
679
Change in inventories of finished
goods and work in progress (+/-)
220
( 108)
180
( 275)
Cost of products for internal use
of the Group (-)
( 695)
( 656)
(2 416)
(1 837)
Total cost of sales, selling costs
and administrative expenses,
of which:
8 400
10 548
31 553
35 107
Cost of sales
7 751
9 753
29 348
32 907
Selling costs
133
134
529
481
Administrative expenses
516
661
1 676
1 719
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
163
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:
41
( 31)
617
367
measurement
( 14)
( 127)
68
202
realisation
55
96
549
165
Interest income calculated using
the effective interest rate method
38
12
63
56
Exchange differences on financial
assets and liabilities other than
borrowings
932
-
555
-
Reversal of impairment losses on
fixed assets under construction
and intangible assets not yet
available for use
1
23
5
53
Fair value gains on other financial
assets
9
-
9
-
Reversal of impairment losses on
financial instruments
( 1)
( 3)
-
-
Provisions released
126
( 33)
133
54
Gain on disposal of intangible
assets
-
( 1)
4
7
Government grants received
6
( 4)
16
17
Income from servicing of letters
of credit and guarantees
-
11
18
21
Compensation, fines and
penalties received
4
14
35
47
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
14
178
Other
55
38
93
106
Total other operating income
1 225
204
1 562
906
Losses on derivatives, of which:
46
( 100)
( 566)
( 634)
measurement
90
40
( 14)
( 188)
realisation
( 44)
( 140)
( 552)
( 446)
Impairment losses on financial
instruments
2
2
( 1)
( 4)
Fair value losses on trade
receivables
( 45)
( 9)
( 136)
( 104)
Impairment losses on fixed
assets under construction and
intangible assets not yet available
for use
31
(1 306)
( 22)
(1 308)
Exchange differences on financial
assets and liabilities other than
borrowings
-
(1 274)
-
(1 414)
Provisions recognised
( 125)
( 30)
( 220)
( 36)
Losses on disposal of property,
plant and equipment
10
( 10)
( 29)
( 28)
Donations granted
( 24)
( 12)
( 68)
( 66)
Other
( 44)
( 30)
( 76)
( 129)
Total other operating costs
( 149)
(2 769)
(1 118)
(3 723)
Other operating income/(costs)
1 076
(2 565)
444
(2 817)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
164
Note 13.3 Finance income/(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
Exchange differences on
measurement and realisation of
borrowings
-
305
-
356
Gains on derivatives -
realisation
60
86
134
173
Other
1
-
1
-
Total finance income
61
391
135
529
Interest on borrowings due to
leases
( 3)
-
( 10)
( 1)
Interest on trade payables
within the reverse factoring
mechanism
( 44)
( 40)
( 150)
( 75)
Unwinding of the discount
effect
( 21)
( 6)
( 92)
( 72)
Bank fees and charges on
borrowings
( 5)
( 8)
( 23)
( 26)
Losses on derivatives -
realisation
( 66)
( 90)
( 146)
( 183)
Exchange differences on
measurement and realisation of
borrowings
( 157)
-
( 84)
-
Other
( 3)
( 4)
( 11)
( 13)
Total finance costs
( 299)
( 148)
( 516)
( 370)
Finance income /(costs)
( 238)
243
( 381)
159
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
165
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