POLISH FINANCIAL SUPERVISION AUTHORITY
Consolidated annual report SRR 2025
(in accordance with § 61 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 2025 comprising the period from 1 January 2025 to 31 December 2025 containing the consolidated financial statements
according to International Financial Reporting Standards in PLN.
publication date: 25 March 2026
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
2025
2024
2025
2024
I.
36 366
35 320
8 576
8 206
II.
3 959
3 767
934
875
III.
5 409
4 608
1 276
1 071
IV.
3 688
2 870
870
666
V.
3 687
2 868
870
666
VI.
1
2
-
-
VII.
( 1 851)
( 144)
( 437)
( 33)
VIII.
1 837
2 726
433
633
IX.
1 837
2 725
433
633
X.
-
1
-
-
XI.
200 000 000
200 000 000
200 000 000
200 000 000
XII.
18.44
14.34
4.35
3.33
XIII.
4 035
4 690
952
1 090
XIV.
( 4 321)
( 5 506)
( 1 019)
( 1 279)
XV.
( 111)
( 217)
( 26)
( 50)
XVI.
( 397)
( 1 033)
( 93)
( 239)
XVII.
45 015
42 285
10 650
9 896
XVIII.
13 225
11 607
3 129
2 716
XIX.
58 240
53 892
13 779
12 612
XX.
13 273
11 828
3 140
2 768
XXI.
12 069
11 006
2 855
2 576
XXII.
32 898
31 058
7 784
7 268
XXIII.
32 828
30 990
7 767
7 252
XXIV.
70
68
17
16
Average EUR/PLN exchange rate announced by the National Bank of Poland
2025
2024
Average exchange rate for the period
4.2402*
4.3042**
Exchange rate at the end of the period
4.2267
4.2730
*Exchange rate is the arithmetical average of the current average exchange rates announced by the National Bank of Poland for every day, from January to December 2025.
**Exchange rate is the arithmetical average of the current average exchange rates announced by the National Bank of Poland on the last day of each month, from January to December
2024.
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 2025
Lubin, March 2026
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 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 ..................................... 22
Note 1.5 Basis of preparation and presentation ................................................................................................................................... 22
Note 1.6 Impact of new and amended standards and interpretations .............................................................................................. 26
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 ........................................................................................................................................................................ 43
Note 2.7 Non-current assets – geographical breakdown ..................................................................................................................... 43
PART 3 – Impairment of assets .......................................................................................................................................................... 44
Note 3.1 Impairment losses on assets as at 31 December 2025 ........................................................................................................ 44
Note 3.2 Impairment losses on assets as at 31 December 2024 ........................................................................................................ 50
PART 4 – Explanatory notes to the statement of profit or loss ..................................................................................................... 58
Note 4.1 Expenses by nature .................................................................................................................................................................. 58
Note 4.2 Other operating income and (costs) ....................................................................................................................................... 59
Note 4.3 Finance income and (costs) ...................................................................................................................................................... 60
Note 4.4 Reversal and (recognition) of impairment losses recognised in the statement of profit or loss ..................................... 60
PART 5 – Taxation ................................................................................................................................................................................ 61
Note 5.1 Income tax in the consolidated statement of profit or loss ................................................................................................. 61
Note 5.2 Other taxes and charges .......................................................................................................................................................... 67
Note 5.3 Tax assets and liabilities ........................................................................................................................................................... 68
PART 6 – Involvement in joint ventures ........................................................................................................................................... 69
Note 6.1 Joint ventures accounted for using the equity method ........................................................................................................ 70
Note 6.2 Loans granted to a joint venture Sierra Gorda S.C.M. .......................................................................................................... 72
PART 7 – Financial instruments and financial risk management ................................................................................................. 74
Note 7.1 Financial Instruments ............................................................................................................................................................... 74
Note 7.2 Derivatives ................................................................................................................................................................................. 80
Note 7.3 Other financial instruments measured at fair value ............................................................................................................. 85
Note 7.4 Other financial instruments measured at amortised cost ................................................................................................... 86
Note 7.5 Financial risk management ...................................................................................................................................................... 86
PART 8 – Borrowings and the management of liquidity and capital .......................................................................................... 108
Note 8.1 Capital management policy ...................................................................................................................................................108
Note 8.2 Equity .......................................................................................................................................................................................109
Note 8.3 Liquidity management policy ................................................................................................................................................112
Note 8.4 Borrowings ..............................................................................................................................................................................114
Note 8.5 Cash and cash equivalents .....................................................................................................................................................118
Note 8.6 Liabilities due to guarantees granted ...................................................................................................................................118
PART 9 – Non-current assets and related liabilities ...................................................................................................................... 120
Note 9.1 Mining and metallurgical property, plant and equipment and intangible assets ............................................................120
Note 9.2 Other property, plant and equipment and intangible assets .............................................................................................126
Note 9.3 Depreciation/amortisation .....................................................................................................................................................129
Note 9.4 Provision for decommissioning costs of mines and other technological facilities ..........................................................129
Note 9.5 Capitalised borrowing costs ...................................................................................................................................................131
Note 9.6 Carrying amount of the assets of Group companies representing collateral of repayment of liabilities .....................131
Note 9.7 Lease disclosures – the Group as a lessee ...........................................................................................................................132
Note 9.8 Greenhouse gas emissions allowances ................................................................................................................................133
Note 9.9 Assets held for sale (disposal group) and liabilities associated with them .......................................................................134
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
3
PART 10 – Working capital ................................................................................................................................................................ 136
Note 10.1 Inventories .............................................................................................................................................................................136
Note 10.2 Trade receivables ..................................................................................................................................................................139
Note 10.3 Trade and other payables ....................................................................................................................................................140
Note 10.4 Change in working capital ....................................................................................................................................................143
PART 11 – Employee benefits ........................................................................................................................................................... 145
Note 11.1 Employee benefits liabilities ................................................................................................................................................146
Note 11.2 Change in liabilities related to future employee benefits programs ...............................................................................147
PART 12 – Other notes ...................................................................................................................................................................... 150
Note 12.1 Related party transactions ...................................................................................................................................................150
Note 12.2 Dividends paid ......................................................................................................................................................................151
Note 12.3 Other assets ..........................................................................................................................................................................152
Note 12.4 Other liabilities ......................................................................................................................................................................153
Note 12.5 Provisions for liabilities and other charges ........................................................................................................................153
Note 12.6 Assets and liabilities not recognised in the statement of financial position ..................................................................154
Note 12.7 Litigation and claims .............................................................................................................................................................154
Note 12.8 Contractual commitments for the acquisition of property, plant and equipment and intangible assets ...................155
Note 12.9 Employment structure .........................................................................................................................................................155
Note 12.10 Remuneration of key managers ........................................................................................................................................155
Note 12.11 Remuneration of the entity entitled to audit the financial statements and of entities related to it, in PLN thousands
..................................................................................................................................................................................................................157
Note 12.12 Subsequent events .............................................................................................................................................................158
PART 13 – Quarterly financial information of the Group ............................................................................................................. 159
CONSOLIDATED STATEMENT OF PROFIT OR LOSS .............................................................................................................................159
Note 13.1 Expenses by nature ..............................................................................................................................................................160
Note 13.2 Other operating income and (costs) ...................................................................................................................................161
Note 13.3 Finance income/(costs) .........................................................................................................................................................162
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
4
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Note 2.3
Revenues from contracts with customers
36 366
35 320
Note 4.1
Cost of sales
(30 126)
(29 348)
Gross profit on sales
6 240
5 972
Note 4.1
Selling costs and administrative expenses
(2 281)
(2 205)
Profit on sales
3 959
3 767
Note 6.1
Share in profits of a joint venture accounted for using
the equity method
1 608
-
Note 6.1
Reversal of an impairment loss on shares in a joint
venture
252
-
Note 6.2
Gain due to the reversal of allowances for impairment of
loans granted to a joint venture
484
226
Note 6.2
Interest income on loans granted to a joint venture
calculated using the effective interest rate method
557
552
Profit or loss on involvement in a joint venture
2 901
778
Note 4.2
Other operating income, including:
661
1 562
other interest calculated using the effective interest rate
method
52
63
Note 4.4
reversal of impairment losses on financial instruments
3
-
Note 4.2
Other operating costs, including:
(2 284)
(1 118)
Note 4.4
impairment losses on financial instruments
-
( 1)
Note 4.3
Finance income
418
135
Note 4.3
Finance costs
( 246)
( 516)
Profit before income tax
5 409
4 608
Note 5.1
Income tax expense
(1 721)
(1 738)
PROFIT FOR THE PERIOD
3 688
2 870
Profit for the period attributable to:
shareholders of the Parent Entity
3 687
2 868
non-controlling interest
1
2
Weighted average number of ordinary shares (million)
200
200
Basic/diluted earnings per share (in PLN)
18.44
14.34
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
5
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Profit for the period
3 688
2 870
Note 8.2.2
Effective portion of the change in the fair value of
hedging instruments and the cost of hedging, net of the
tax effect
(2 301)
( 445)
Exchange differences from translation of statements of
operations with a functional currency other than PLN
( 290)
15
Other comprehensive income, which will be
reclassified to profit or loss
(2 591)
( 430)
Note 8.2.2
Measurement of equity financial instruments at fair
value through other comprehensive income, net of the
tax effect
734
6
Actuarial gains, net of the tax effect
15
271
Surplus from the fair value remeasurement of
investment properties, as at the day of reclassification
from fixed assets, net of the tax effect
-
9
Transfer of surplus from the fair value remeasurement
of investment properties to retained earnings due to
their disposal, net of the tax effect
( 1)
-
Share in other comprehensive income of a joint venture
accounted for using the equity method
( 8)
-
Other comprehensive income which will not be
reclassified to profit or loss
740
286
Total other comprehensive net income
(1 851)
( 144)
TOTAL COMPREHENSIVE INCOME
1 837
2 726
Total comprehensive income attributable to:
shareholders of the Parent Entity
1 837
2 725
non-controlling interest
-
1
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
6
CONSOLIDATED STATEMENT OF CASH FLOWS
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Profit before income tax
5 409
4 608
Note 9.3
Depreciation/amortisation recognised in profit or loss
2 366
2 006
Note 6.1
Share in profits of a joint venture accounted for using
the equity method
(1 608)
-
Note 6.1
Reversal of an impairment loss on shares in a joint
venture
( 252)
-
Note 6.2
Interest on loans granted to a joint venture
( 557)
( 552)
Other interest
47
183
Part 3
Impairment losses on property, plant and equipment
and intangible assets
382
312
Gain on reversal of impairment losses on property,
plant and equipment and intangible assets
-
( 74)
Note 6.2
Gain due to the reversal of allowances for impairment
of loans granted to a joint venture
( 484)
( 226)
Losses on disposal of property, plant and equipment
and intangible assets
19
25
Note 9.9
Gain on disposal of subsidiaries
( 70)
-
Exchange differences, of which:
1 004
( 411)
from investment activities and cash
1 320
( 495)
from financing activities
( 316)
84
Change in provisions for decommissioning of mines,
liabilities related to future employee benefits
programs and other provisions
388
425
Change in other receivables and liabilities other than
working capital
551
163
Change in assets and liabilities due to derivatives
151
180
Note 7.2
Reclassification of other comprehensive income to
profit or loss due to the realisation of hedging
derivatives
( 30)
( 628)
Other adjustments
( 31)
( 33)
Exclusions of income and costs, total
1 876
1 370
Income tax, of which:
( 915)
( 413)
payments of income tax
( 917)
(1 027)
refunds of income tax
2
614
Note 10.4
Changes in working capital, including:
(2 335)
( 875)
change in trade payables within the reverse factoring
mechanism
( 593)
(1 007)
Net cash generated from/(used in) operating activities
4 035
4 690
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
7
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Note 9.1.3
Expenditures on mining and metallurgical assets,
including:
(4 887)
(5 176)
Note 8.4.2
paid capitalised interest on borrowings
( 354)
( 331)
proceeds on settlement of an instrument hedging
interest rate of bonds
47
70
Expenditures on other property, plant and equipment
and intangible assets
( 632)
( 679)
Expenditures on financial assets designated for
decommissioning of mines and other technological
facilities
( 45)
( 45)
Expenditures on acquisition of subsidiaries
-
( 63)
Advances granted on property, plant and equipment and
intangible assets
( 9)
( 31)
Proceeds from repayment of loans granted to a joint
venture (principal)
785
346
Proceeds from disposal of property, plant and equipment
and intangible assets
50
46
Proceeds from disposal of subsidiaries
13
-
Interest received on loans granted to a joint venture
421
118
Other
( 17)
( 22)
Net cash generated from/(used in) investing activities
(4 321)
(5 506)
Note 8.4.2
Proceeds from issuance of debt financial instruments
1 599
1 000
Note 8.4.2
Proceeds from borrowings
957
1 940
Proceeds from derivatives related to sources of external
financing
100
64
Note 8.4.2
Redemption of debt financial instruments
(1 599)
( 400)
Note 8.4.2
Repayment of borrowings
( 935)
(2 154)
Note 8.4.2
Repayment of lease liabilities
( 95)
( 97)
Expenditures due to derivatives related to sources of
external financing
( 30)
( 75)
Interest paid, of which:
( 120)
( 202)
due to trade payables within the reverse factoring
mechanism
( 101)
( 164)
Note 8.4.2
due to borrowings
( 19)
( 38)
Expenditures due to dividends paid to shareholders of
the Parent Entity
-
( 300)
Other
12
7
Net cash generated from/(used in) financing activities
( 111)
( 217)
NET CASH FLOW
( 397)
(1 033)
Exchange gains/(losses)
125
19
Cash and cash equivalents at beginning of the period
715
1 729
Cash and cash equivalents at end of the period,
including:
443
715
restricted cash
18
24
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
31 December 2025
As at
31 December 2024
ASSETS
Mining and metallurgical property, plant and equipment
25 711
24 050
Mining and metallurgical intangible assets
2 799
2 830
Note 9.1
Mining and metallurgical property, plant and equipment and intangible
assets
28 510
26 880
Other property, plant and equipment
3 089
3 087
Other intangible assets
181
213
Note 9.2
Other property, plant and equipment and intangible assets
3 270
3 300
Note 6.1
Joint ventures accounted for using the equity method
1 814
-
Note 6.2
Loans granted to joint ventures
8 436
9 800
Note 6.2
Involvement in joint ventures
10 250
9 800
Note 7.2
Derivatives
168
286
Note 7.3
Other financial instruments measured at fair value
1 792
883
Note 7.4
Other financial instruments measured at amortised cost
566
557
Financial instruments, total
2 526
1 726
Note 5.1.1
Deferred tax assets
189
302
Note 12.3
Other non-financial assets
270
277
Non-current assets
45 015
42 285
Note 10.1
Inventories
9 608
8 063
Note 10.2
Trade receivables, including:
1 885
1 345
trade receivables measured at fair value through profit or loss
1 342
707
Note 5.3
Tax assets
659
453
Note 7.2
Derivatives
128
219
Note 12.3
Other financial assets
237
317
Note 12.3
Other non-financial assets
265
366
Note 8.5
Cash and cash equivalents
443
715
Note 9.9
Non-current assets held for sale (disposal group)
-
129
Current assets
13 225
11 607
TOTAL ASSETS
58 240
53 892
EQUITY AND LIABILITIES
Note 8.2.1
Share capital
2 000
2 000
Note 8.2.2
Other reserves from measurement of financial instruments
(1 729)
( 162)
Note 8.2.2
Accumulated other comprehensive income, other than from
measurement of financial instruments
1 495
1 778
Note 8.2.2
Retained earnings
31 062
27 374
Equity attributable to shareholders of the Parent Entity
32 828
30 990
Equity attributable to non-controlling interest
70
68
Equity
32 898
31 058
Note 8.4.1
Borrowings and leases
2 434
2 310
Note 8.4.1
Debt securities
2 600
2 600
Note 7.2
Derivatives
1 626
269
Note 11.1
Employee benefits liabilities
2 892
2 784
Note 9.4
Provisions for decommissioning costs of mines and other technological
facilities
2 123
2 084
Note 5.1.1
Deferred tax liabilities
1 227
1 384
Note 12.4
Other liabilities
371
397
Non-current liabilities
13 273
11 828
Note 8.4.1
Borrowings and leases
811
1 259
Note 8.4.1
Debt securities
4
2
Note 7.2
Derivatives
1 440
44
Note 10.3
Trade and other payables
4 510
5 132
Note 11.1
Employee benefits liabilities
2 216
2 019
Note 5.3
Tax liabilities
1 746
1 049
Note 12.5
Provisions for liabilities and other charges
137
280
Note 12.4
Other liabilities
1 205
1 061
Note 9.9
Liabilities related to disposal group
-
160
Current liabilities
12 069
11 006
Non-current and current liabilities
25 342
22 834
TOTAL EQUITY AND LIABILITIES
58 240
53 892
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 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 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
Transactions with non-controlling interest
-
-
-
-
-
2
2
Other changes
-
-
-
1
1
-
1
Profit for the period
-
-
-
3 687
3 687
1
3 688
Note 8.2.2
Other comprehensive income
-
(1 567)
( 283)
-
(1 850)
( 1)
(1 851)
Total comprehensive income
-
(1 567)
( 283)
3 687
1 837
-
1 837
As at 31 December 2025
2 000
(1 729)
1 495
31 062
32 828
70
32 898
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
10
PART 1 – General information
Note 1.1 Corporate information
KGHM Polska Miedź S.A. is the Parent Entity of the KGHM Polska Miedź S.A. Group (“the Parent Entity”, “the Company”)
with its registered office in Lubin at 48 M. Skłodowskiej-Curie Street and 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. Since 1997, the shares of KGHM Polska Miedź S.A. have been listed on the Warsaw Stock Exchange. As at
the date of preparation of these consolidated financial statements, the State Treasury is the largest shareholder of the Company,
with 31.79% share.
The main business activities of the Parent Entity include the mining of copper ore and non-ferrous metal deposits, carried out by
mines on the basis of concessions granted to KGHM Polska Miedź S.A., as well as the production of electrolytic copper, precious
metals (including silver and gold) and other non-ferrous metals, carried out in metallurgical plants, using advanced technologies.
The Company's operations are characterised by a highly integrated technology chain. The Company carries out tasks on its own,
from exploration and acquisition of raw materials through their extraction, production, transport, reaching customers and
stakeholders to responsible waste management, so as to limit its negative impact on the environment as much as possible. The
Parent Entity has a multi-divisional organisational structure, comprised of a Head Office and 10 divisions located in Lower Silesia:
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.
Also in the case of the KGHM Polska Miedź S.A. Group (the Group), the exploration and mining of copper, nickel and precious metals
ore deposits is a key area of activity. On international markets, mining activities are carried out by companies of the KGHM
INTERNATIONAL LTD. Group (a subgroup), which hold legal titles for exploration for and mining of raw materials in the USA, Canada
and Chile. The Group's international presence enables the diversification of raw material sources and strengthens its competitive
position on the global metals market. Detailed information on the scope of mining and metallurgical activities and the location of
production assets 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 2025 (section 1.3.1 and 1.3.2). Moreover, the Group conducts activities that include a number of other
supporting and supplementary activities, which are described in Note 1.2 and Note 2.1.
In 2025, the Parent Entity included 60 subsidiaries in its consolidated financial statements and used the equity method to account
for the shares of the joint venture Sierra Gorda S.C.M.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
11
Note 1.2 Composition of the Group
Percentage of Group’s
share
Entity
Head office
Business activities
As at
31
December
2025
As at
31
December
2024
BIPROMET S.A.
Katowice
construction, urban and technological design;
construction of complete buildings or parts thereof; civil
engineering; rental of real estate
100
100
CBJ sp. z o.o.
Lubin
physico-chemical tests and analyses; immission and
emission measurements; industrial research
100
100
CENTROZŁOM WROCŁAW S.A.
Wrocław
purchase and sale of steel and cast iron scrap,
non-ferrous metals and steel alloys, sale of metallurgical
products and construction reinforcement, waste
recycling
100
100
Polska Grupa Uzdrowisk sp. z
o.o.
Wrocław
financial holding activities, financial service activities,
trading and servicing of the real estate market
100
100
"Energetyka" sp. z o.o.
Lubin
generation, distribution and sale of electricity and heat;
water and sewage management
100
100
INOVA spółka z o.o.
Lubin
research and control of machines, research and
development
100
100
KGHM CUPRUM sp. z o.o. -
CBR
Wrocław
research and development activities
100
100
CUPRUM Development
sp. z o.o.
Wrocław
activities related to real estate market services,
construction, design and financial services
100
100
KGHM Kupfer AG i. L.
Weißwasser
exploration and evaluation of deposits of copper and
other metals in Europe
-
100
KGHM Metraco S.A.
Legnica
wholesale of scrap and waste, lead, non-ferrous metals,
chemical products and salt, forwarding services
100
100
KGHM (SHANGHAI) COPPER
TRADING CO., LTD.
Shanghai
wholesale, import, export of copper/silicon and chemical
products, mechanical and electrical equipment, office
supplies, provision of trade consulting services
100
100
KGHM ZANAM S.A.
Polkowice
maintenance and construction of machines
100
100
"MIEDZIOWE CENTRUM
ZDROWIA" S.A.
Lubin
hospitals; medical practice; healthcare-related activities;
occupational medicine
100
100
NITROERG S.A.
Bieruń
production of explosives and initiating agents used in
mining
87.12
87.12
NITROERG SERWIS Sp. z o.o.
Wilków
sale and transport of blasting agents, drilling and
blasting works
87.12
87.12
PeBeKa S.A.
Lubin
mining, underground construction, tunnel construction
100
100
MERCUS Logistyka sp. z o.o.
Polkowice
trade, production of electrical wire harnesses
100
100
PHU "Lubinpex" Sp. z o.o.
Lubin
food retail, gastronomy
100
100
Future 1 Sp. z o.o.
Lubin
holding functions in relation to the KGHM
INTERNATIONAL LTD. Group
100
100
Future 3 Sp. z o.o.
Lubin
functions within the structure related to the
establishment of the Tax Group
100
100
Future 4 Sp. z o.o.
Lubin
functions within the structure related to the
establishment of the Tax Group
100
100
Future 5 Sp. z o.o.
Lubin
functions within the structure related to the
establishment of the Tax Group
100
100
PMT Linie Kolejowe
Sp. z o.o.
Owczary
management of railway infrastructure
100
100
POL-MIEDŹ TRANS Sp. z o.o.
Lubin
rail and road transport services; trade in petroleum
products
100
100
Uzdrowisko Cieplice
Sp. z o.o. - Grupa PGU
Jelenia Góra
spa activities
99.15
99.12
Uzdrowiska Kłodzkie S.A. -
Grupa PGU
Polanica Zdrój
spa activities, production and sale of mineral water
100
100
Uzdrowisko Połczyn Grupa
PGU S.A.
Połczyn Zdrój
spa activities
100
100
Uzdrowisko Świeradów-
Czerniawa Sp. z o.o. - Grupa
PGU
Świeradów Zdrój
spa activities
99.46
99.46
OOO ZANAM VOSTOK
Gay (Russia)
mining machinery maintenance services
100
100
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
12
Percentage of Group’s
share
Entity
Head office
Business activities
As at
31
December
2025
As at
31
December
2024
WMN "ŁABĘDY" S.A.
Gliwice
production of non-ferrous metals, non-
ferrous metal products, sale of services
95.74
84.98
WPEC w Legnicy S.A.
Legnica
generation, transmission and distribution
of thermal energy
100
100
Zagłębie Lubin S.A.
Lubin
running a football section and organising
sports competitions
100
100
Invest PV 7 Sp. z o.o.
Lubin
electricity production
100
100
Invest PV 40 Sp. z o.o.
Lubin
electricity production
100
100
Invest PV 58 Sp. z o.o.
Lubin
electricity production
100
100
Invest PV 59 Sp. z o.o.
Lubin
electricity production
100
100
TUW Cuprum
Lubin
insurance services
100
99.49
KGHM INTERNATIONAL LTD. Group
KGHM INTERNATIONAL LTD.
Canada
establishing, developing, managing or
exercising control over other companies
100
100
KGHM AJAX MINING INC.
Canada
mining of copper and gold ore
80
80
Sugarloaf Ranches Ltd.
Canada
agricultural activities
80
80
KGHMI HOLDINGS LTD.
Canada
managing and exercising control over other
companies
100
100
Quadra FNX Holdings Chile Limitada
Chile
managing and exercising control over other
companies
100
100
Aguas de la Sierra Limitada
Chile
water management services for the Sierra
Gorda project
100
100
Quadra FNX FFI S.à r.l.
Luxembourg
managing and exercising control over other
companies
100
100
Robinson Holdings (USA) Ltd.
USA
technical and management services for US
subsidiaries
100
100
Wendover Bulk Transhipment Company
USA
handling services for the Robinson mine
100
100
Robinson Nevada Mining Company
USA
copper ore mining, copper production and
sales
100
100
Carlota Holdings Company
USA
managing and exercising control over other
companies
100
100
Carlota Copper Company
USA
copper ore leaching, copper production and
sales
100
100
FNX Mining Company Inc.
Canada
copper and nickel ore mining, copper and
nickel production and sales, Victoria project
development
100
100
DMC Mining Services Ltd.
Canada
mining services contracting
100
100
Quadra FNX Holdings Partnership
Canada
managing and exercising control over other
companies
100
100
DMC Mining Services Mexico, S.A. de C.V. En
Liquidacion
Mexico
mining services contracting
-
100
FNX Mining Company USA Inc.
USA
managing and exercising control over other
companies
100
100
DMC Mining Services Corporation
USA
mining services contracting
100
100
Centenario Holdings Ltd.
Canada
managing and exercising control over other
companies
100
100
Minera Carrizalillo SpA
Chile
managing and exercising control over other
companies
100
100
KGHM Chile SpA
Chile
providing exploration services for the Sierra
Gorda project and the Franke mine
100
100
FRANKE HOLDINGS LTD.
Canada
managing and exercising control over other
companies
100
100
0899196 B.C. Ltd.
Canada
managing and exercising control over other
companies
100
100
DMC Mining Services (UK) Ltd.
The United
Kingdom
mining services contracting
100
100
DMC Mining Services Colombia SAS en
liquidacion
Colombia
mining services contracting
-
100
DMC Mining Services Chile SpA
Chile
mining services contracting
100
100
Project Nikolas Company INC.
Canada
copper ore mining, copper production and
sales
-
100
DMC Underground LLC
Mongolia
mining services contracting
100
-
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
13
Changes in the organisational structure of the KGHM Polska Miedź S.A. Group
Sale of the subsidiary Project Nikolas Company Inc.
On 28 February 2025, the sale transaction of 100% of shares in the subsidiary of the KGHM INTERNATIONAL LTD. Group – Project
Nikolas Company Inc. was carried out. Detailed information regarding this transaction is presented in Note 9.9 Assets held for sale
(disposal group) and liabilities associated with them.
Liquidation of the subsidiary KGHM Kupfer AG i. L.
In the current reporting period, the liquidation process of the subsidiary KGHM Kupfer AG i.L. was completed. On 27 August 2025,
the aforementioned subsidiary was removed from the relevant court register.
The above transaction had no material impact on these consolidated financial statements.
Conclusion of bankruptcy proceedings concerning the joint venture Nano Carbon sp. z o.o. in bankruptcy
During the current reporting period, the bankruptcy proceedings concerning the joint venture Nano Carbon sp. z o.o. in bankruptcy
were concluded. On 28 August 2025, the aforementioned entity was removed from the National Court Register.
The above transaction had no impact on these consolidated financial statements.
Registration of the subsidiary DMC Underground LLC
On 9 October 2025, the new subsidiary of the KGHM INTERNATIONAL LTD. Group – DMC Underground LCC with its registered office
in Mongolia, was registered.
Liquidation of the subsidiary DMC Mining Services Colombia SAS en liquidacion
In the current reporting period, the liquidation process of the subsidiary of the KGHM INTERNATIONAL LTD. Group, DMC Mining
Services Colombia SAS en liquidacion, was concluded. On 28 November 2025, the aforementioned subsidiary was removed from
the relevant court register.
Liquidation of the subsidiary DMC Mining Services Mexico, S.A. de C.V. En Liquidacion
In the current reporting period, the liquidation process of the subsidiary of the KGHM INTERNATIONAL LTD. Group, DMC Mining
Services Mexico, S.A. de C.V. En Liquidacion, was concluded. On 18 December 2025, the aforementioned subsidiary was removed
from the relevant court register.
PART 1 – General information
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
14
Diagram of the KGHM Polska Miedź S.A. Group as at 31 December 2025
* entity excluded from consolidation due to its insignificant impact on the consolidated financial statements.
PART 1 – General information
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
15
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 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
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 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 1.3.2) and the impact of risks
associated with the climate change on activities of the Group (Note 1.3.3).
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.
Market-quoted 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 prices
as well as the exchange rate. At the same time, these parameters have a significant impact on some of the Group’s costs, while the
prices of fuels, energy carriers and electricity also have a direct impact on the level of costs. With regard to energy resources, the
Group applies hedging through, among others, concluding bilateral agreements, forward purchases and the use of derivatives,
which are part of a comprehensive market risk management system. 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
consolidated 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 is
not only the current volatility of prices of commodities and exchange rates shaping the amount of revenues and a significant part
of costs is of significance, but above all the volatility of forecasts on shaping these factors in subsequent periods, since they have
an impact on production and investment plans. Moreover, due to the long-term nature of mining and metallurgical assets, the
applied discount rate, which remains under the influence of market interest rates, is of particular importance.
The impact of macroeconomic factors on individual areas of operations as well as assets and liabilities of the Group was presented
in the following notes:
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
17
Impact observation areas
Note
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 the war in Ukraine, effects of customs policy and global trade war, conflict in the
Middle East
Impact of the war in Ukraine
In the reporting period, the Group did not record any negative impact due to the war in Ukraine, and the potential impact in
subsequent periods is assessed as low.
The most significant risk factors related to the war in Ukraine and which could have an impact on the Group’s activities are changes
in the supply chains, the availability of materials, components, fuels and energy on international markets, the volatility of prices of
copper and silver on commodity markets, the volatility of the USD/PLN exchange rate, volatility in prices of energy carriers and
electricity, and the general uncertainty on financial markets.
From the Group’s point of view, the war in Ukraine has an impact on market risk related to fluctuations in metals prices and stock
market indices in the reporting period. For more information, see Note 3.1 Impairment losses on assets.
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.
Since the beginning of the war in Ukraine, the KGHM Polska Miedź S.A. Group has not experienced a significantly negative impact
of volatility of supply chains on its business activities. Taking into account the continuity of energy supplies (natural gas, coal, coke),
the Group currently has full capacity to maintain the continuity of operation of the core production line and all production
processes.
Nevertheless, 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 lead to unfavourable
deviations in the continuity of materials and services supply chains in the Group.
However, the geopolitical situation associated with the 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 is considered to be low.
The ongoing war in Ukraine and limited availability of Russian cathodes on European markets as a result of the war and sanctions
had been discounted by the market, and did not constitute an additional factor affecting the sales results of basic copper products
in 2025. 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.
Effects of customs policy and global trade war (USA, China, European Union)
In the reporting period, the Group did not record a negative impact on its business activities due to customs policy and the global
trade war involving the USA, China and the European Union, and the potential impact on the Group in subsequent periods is judged
to be low. The US market does not play a significant role in the geographical structure of sales of products manufactured by the
KGHM Polska Miedź S.A. Group outside of the USA’s borders and therefore the direct impact of announced tariffs will be limited.
Trade of copper and copper-made products is excluded from the general trade agreement and is regulated by other provisions
under the detailed procedure “Section 232”, wherein tariffs are varied for copper at different processing stages. Trade barriers
announced by the USA on copper and copper-made products will have the greatest impact on the American market. In October
2025, China announced the implementation of more restrictive regulations on the export of rare earth metals and products
containing them. China controls most of the processing capacity for these metals, and according to European Commission data, a
significant portion of import of rare earth metals required by European industry comes from China. These changes may result in
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
18
delays or difficulties in obtaining export licenses, particularly in relation to the energy transition. Renewable energy components
may therefore become more expensive and less available, which may cause delays in investments in wind farms (especially offshore
wind farms). It should be noted that in response to Chinese trade restrictions, there is a noticeable change in the approach of
European countries to trade with China in terms of, among others, components for the energy transition. In December 2025, Italy
was the first EU country to hold an auction for the supply of solar panels, which banned the participation of Chinese modules, cells
and inverters. In 2026, it is possible that other countries will introduce similar restrictions, aimed at giving priority to components
manufactured in the European Union. With regard to the Polish economy, difficulties in obtaining Chinese-made parts necessary
to increase the capacity of RES installations may potentially result in a slowdown in the energy transition, hindering the reduction
of CO₂ emissions and limiting the growth rate of the share of RES in the Polish energy mix.
Mining and production operations in Poland are and will continue to be of key importance for KGHM. However the potential
escalation of trade barriers in various regions of the world could negatively impact the dynamics of global economic growth and,
consequently, the demand for raw materials. Therefore, economic and political processes affecting international trade are
continuously monitored and analysed by the Company.
Conflict in the Middle East
In the reporting period, the Group did not record any negative impact from factors related to the conflict in the Middle East.
Due to the escalation of geopolitical tensions in the Middle East, including the commencement of military operations by the United
States and Israel against Iran, the most significant categories of conflict-related risks affecting the operations of the Company and
the Group are the following:
• potential impact on the global economies,
• volatility of oil and natural gas prices,
• volatility of exchange rates (mainly USD/PLN),
• volatility of gold and silver prices,
• supply chain disruptions and availability of fuels and energy on international markets.
Due to the high uncertainty related to development of the political situation in the Middle East, neither its scale nor the potential
impact on the KGHM Polska Miedź S.A. Group as at the publication date can be estimated for subsequent periods.
Note 1.3.3 Monitored areas – risks and hazards associated with the climate
The KGHM Polska Miedź S.A. 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.
As part of the risk management process, KGHM Polska Miedź S.A. takes climate changes into account by conducting a scenario
analysis based on six baseline scenarios considered in three time perspectives: short - up to 1 year, medium - from 1 to 5 years and
long - over 5 years, with several assumptions:
• in the case of scenarios for transition risk, in terms of the implementation of the adopted climate policy and the resulting
changes in parameters important from KGHM's perspective – e.g. prices of emission allowances, energy consumption,
changes in demand for copper,
• in the case of scenarios for physical risk scenarios, the starting point for the analysis is the levels of greenhouse gas
concentrations in the atmosphere and the resulting changes in the Earth's temperature and the following consequences.
The climate risk related to the transition, to which the 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 Group as to the reduction of its impact on the climate.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
19
The 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, for example: 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 Group
by, among others, disruptions in the supply chain, the continuity of the core production business and an increase in operating costs
directly related to the business activities as well as through more difficult working conditions.
The Group continuously evaluates the risk associated with the climate and its impact on the 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 2025, section 1.5.
A detailed description of identified, key climate risks associated with the negative impact of climate changes on the activities of the
Group, including description of actions undertaken by the 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 2025, section 1.5.
Impact of climate risk on the financial statements
Under the analyses conducted to assess the impact of climate risk on items presented in the Group’s consolidated financial
statements (in particular in the case of variable costs of CO
2
emission allowances, the increase in electricity purchase costs, costs
associated with research and additional expenditures on development of internal energy sources, included in the Energy
Development Program under the Decarbonisation Program), the following areas were subjected to detailed assessment:
• adopted economic useful lives 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 2025 no material impact of climate risk on the aforementioned areas
was identified.
Details on the analysis of the impact of climate risk on the verification of the economic useful lives of fixed assets are presented in
Note 9.1, and on the revaluation of the provision for decommissioning costs of mines in Note 9.4.
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 2025, 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. Group 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, including environmental aspects,
• 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
The risk category is most relevant to operations in the USA, Canada and Chile. 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,
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
20
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 as well as obtaining legal rulings from local and national
tax authorities on an ongoing basis to ensure the correct application of the rules relevant to the region. The above also aimed at
enabling, in advance, the undertaking of actions necessary to obtain new or updating held administrative decisions.
Geopolitical situation
The risk category is most relevant to operations in the USA, Canada and Chile. 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 shaping the global economic situation is the current US trade policy. From the point of view of the
international assets of the KGHM Polska Miedź S.A. Group (mainly in Canada and the USA), changes and instability of trade policy
are a potential risk factor in the area of procurement. The most important threats are:
• potential cost increases – duties on imported equipment, materials or components can lead to higher purchase costs,
• potential supply chain disruptions – tariffed suppliers may face delays or limited availability of goods,
• provisions in contracts with counterparties – existing contracts with suppliers may not take into account sudden increases
in costs, which may lead to the need to renegotiate contracts.
The KGHM INTERNATIONAL LTD. Group conducts active risk mitigation activities, such as securing alternative sources of supply,
testing alternative materials in terms of meeting restrictive quality criteria, pre-emptive purchases, securing contractual clauses
and other purchasing strategies.
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
The risk category is most relevant to operations in Canada and Chile. 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 KGHM Polska Miedź S.A. 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 KGHM Polska Miedź
S.A. Group supports local communities and closely cooperates with schools and academic communities.
Currency risk (USD/CLP, USD/CAD)
The risk category is most relevant to operations in Canada and Chile. 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 2025, section 1.5.5 Market, credit and liquidity risks.
Specific location impacting the technical and production infrastructure
The risk category is most relevant to operations in the USA, Canada and Chile. 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.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
21
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.
In addition, conducting business in geographically diverse locations is associated with exposure to specific environmental risks and
raises the need to closely monitor local conditions and diverse legal requirements in the field of environmental protection. In each
entity of the KGHM Polska Miedź S.A. Group, in accordance with the applicable corporate risk management documentation,
activities involving active management of specific environmental risks are carried out, as well as each of the identified risks is
assessed in terms of potential impact on the natural environment. The developed approach ensures that effective actions are taken
to minimize the negative impact of the Group's operations on the environment and ensure compliance with regulations on natural
environment protection.
Risk associated with climate change
The risk category is most relevant to operations in the USA, Canada and Chile. 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 KGHM Polska Miedź S.A. 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 KGHM Polska Miedź S.A Group’s operations, including factors specific for international entities, 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
2025, in the 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,
• Note 1.3.3 of these consolidated financial statements: Monitored areas – risks and hazards associated with the climate.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
22
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 2025 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 2025 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 24 March 2026.
Note 1.5 Basis of preparation and presentation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted for use 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 important estimates
and their impact on amounts presented in the consolidated financial statements, are presented in the following note.
Consolidation principles
Accounting policies
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.
Important estimates and judgments
The assessment of whether the Parent Entity has control over a company requires determining 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.
Fair value measurement
Accounting policies
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.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
23
Important estimates and judgments
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.
Important judgments and estimates on fair value measurement may be found in Note 7.1 The fair value hierarchy of financial
instruments measured at fair value and amortised cost in the statement of financial position.
Financial statements of operations with a functional currency other than PLN
Accounting policies
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
Important estimates and judgments
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 Future 1 Sp. z o.o. and entities of the subgroup KGHM INTERNATIONAL LTD. for which
the functional currency is primarily the US dollar (USD).
The balance of exchange differences from the translation of statements of the aforementioned operations amounted to
PLN 2 202 million in 2025 and PLN 2 491 million in 2024 (Note 8.2.2 Changes of other equity items).
Foreign currency transactions and the measurement of items denominated in foreign currencies
Accounting policies
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, for the Group entities in which PLN is the functional currency, the average NBP
exchange rate from the working day preceding the transaction date,
• 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.
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 2024, there were no significant changes to the estimation methods.
Changes in estimates as at 31 December 2025 as compared to the aforementioned period arise from changes in assumptions as a
result of changes in business circumstances and/or other variables.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
24
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.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
25
Note
Title
Amount recognised in
the financial statements
Accounting
policies
Important
estimates,
assumptions
and judgements
2025
2024
2.3
Revenues from contracts with customers
36 366
35 320
X
X
3 and 4.4
Impairment of assets
(412)
(400)
X
5.1
Income tax in the statement of profit or
loss
(1 721)
(1 738)
X
5.1.1
Deferred income tax in the period
(36)
(551)
X
X
5.3
Tax assets
659
453
X
5.3
Tax liabilities
(1 746)
(1 049)
X
6.1
Joint ventures accounted for using the
equity method
1 814
-
X
X
6.2
Loans granted to a joint venture
8 436
9 800
X
X
7.2
Derivatives
(2 770)
192
X
X
7.3
Other financial instruments measured at
fair value
1 792
883
X
X
7.4
Other financial instruments measured at
amortised cost
566
557
X
X
8.2
Equity attributable to shareholders of the
Parent Entity
(32 828)
(30 990)
X
8.4
Borrowings
(5 849)
(6 171)
X
8.5
Cash and cash equivalents
443
715
X
8.6
Labilities due to guarantees granted
(2 951)
(1 373)
X
X
9.1
Mining and metallurgical property, plant
and equipment and intangible assets
28 510
26 880
X
X
9.2
Other property, plant and equipment and
intangible assets
3 270
3 300
X
9.4
Provisions for decommissioning costs of
mines and other facilities*
(2 132)
(2 128)
X
X
9.7
Lease disclosures – the Group as a lessee
652
666
X
X
9.8
Greenhouse gas emissions allowances
472
589
X
10.1
Inventories
9 608
8 063
X
X
10.1.1
Property rights arising from certificates of
origin of energy from renewable sources
and from energy efficiency
13
11
X
10.2
Trade receivables
1 885
1 345
X
10.3
Trade and other payables
(4 705)
(5 327)
X
X
10.4
Changes in working capital
(2 335)
(875)
X
X
11.1
Employee benefits liabilities
(5 108)
(4 803)
X
X
12.3
Other assets
772
960
X
12.4
Other liabilities
(1 576)
(1 458)
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.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
26
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 2025:
• Amendments to IAS 21 on how to approach the issue of assessment as to whether a given currency is exchangeable and
how to determine a spot exchange rate if it is not exchangeable, effective on or after 1 January 2025.
Up to the date of publication of these consolidated financial statements, the aforementioned amendment was adopted for use by
the European Union and in the Group’s opinion it does not have an impact on these financial statements.
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 IFRS 9 and IFRS 7 – Amendments to the classification and measurement of financial instruments,
effective on 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 (hereafter: the Board), the Board published amendments to
IFRS 9 and IFRS 7 on:
- classification of financial instruments (mainly loans granted) associated with ESG features, i.e. in respect of which the interest
is dependent on climate, environmental or social factors. The objective of the amendment is the elimination of
discrepancies in the approach of entities to the measurement of these instruments, that is whether to measure them 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 liabilities, when they are 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 their settlement. This approach and current principles on derecognition of financial assets and liabilities
described in IFRS 9 remain in force. However, due to problems with adjustment to this requirement in terms of
derecognition of financial liabilities regulated by electronic payment systems, the Board decided to permit an entity to
apply a voluntary exception regarding the cancellation of financial liabilities, which enables the 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 (this refers to the risk that a
transaction will not be successfully settled).
If this voluntary exception is applied, the adopted solutions should be applied consequently to all settlements made using
the same electronic payment system. The exception introduced by the Board does not apply to the settlement of liabilities
using electronic payment systems. Therefore, liabilities should be removed from the statement of financial position only
when the cash is received in the Group entity's bank account.
The aforementioned change will not have an impact on the consolidated financial statements of the Group, because the
Group derecognises a financial liability which is settled in cash using an electronic payment system as at the date of
settlement.
- introduction to IFRS 7 paragraph 11A of changes in information disclosure requirements 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 disclosing its total value while simultaneously introducing 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 the amended requirements.
• Annual improvements to IFRS Accounting Standards – volume 11, effective on 1 January 2026. As part of the minor
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, i.e. in the introduction it was
explained that the implementation guidance does not illustrate all the aspects of the application of IFRS 7; in the case of
disclosure regarding credit risk, the editing of paragraph IG20B was corrected with no impact on the current wording and
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
27
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 should 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. The
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, and the 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. The 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”. The 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,
the word “method” after “cost” was deleted, since the phrase “at cost method” is no longer used in IFRS accounting
standards, and instead of the word “method” was added after the word “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
1 January 2026. The 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, sun). The introduced changes concern:
- explanation of the 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 the financial results and cash flows of an entity.
The amendments to IFRS 9 and IFRS 7 will not have a significant impact on the Group's consolidated financial statements. As
at the date of preparation of these consolidated financial statements, the Group has one nature-dependent PPA agreement
for the purchase of electricity. This agreement does not provide for the possibility of resale by the Group of the electricity
produced in this source, and the Group uses all the energy purchased from this source for its own needs as a standard.
• 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 still 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 financial data is presented 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 this
statement 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 in the categories of investing, financing, income taxes
and discontinued operations, the operating category is a residual category, in which, first of all, income and expenses arising
from an 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 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:
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
28
(i) they are used in public communications outside the financial statements, such as comments of the management board,
press releases and investor presentations,
(ii) they are used to communicate to investors the management’s view of an aspect of the financial performance of the
entity as a whole,
(iii) they 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 on the structure
of the statement of profit or loss, i.e. on the breakdown of income and expenses into categories and on the presentation of
certain subtotals (i.e. a new subtotal will appear: “operating profit or loss”). In the case of the 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 interest in a joint venture. The category of financing, in turn, will
distinguish between financial revenues and costs divided into those arising from transactions constituting solely the
acquisition of financing and those arising from transactions that do not constitute solely the acquisition of financing,
including, for example, interest costs on specific benefit programs.
Moreover, in the Group’s preliminary opinion, the performance measure currently disclosed by the Group and not defined
by IFRSs, meaning adjusted EBITDA, will meet the criteria of a management-defined performance measure pursuant to IFRS
18.
As a result of the publication of IFRS 18, other standards will also change significantly, among others: IAS 7, IAS 8.
Pursuant to the amended IAS 7, in the statement of cash flows in which operating cash flows are prepared using the indirect
method, the starting point for determining operating cash flows will be operating profit or loss instead of the current profit
before income tax. It will have an impact on the categories of items recognised in cash flow from operating activities which
adjust the output item. The amended IAS 7 will also remove the presentation alternatives for interest and dividend cash flows,
which under the amended IAS 7 may be presented only in investing or financing categories, respectively. Moreover, IAS 7
indicates that interest paid that has been capitalised at the initial value of fixed assets will be presented by entities in cash
flows from financing activities. Currently, the Group presents this interest under cash flows from investing activities.
The scope of IAS 8 will be broadened by elements transferred from IAS 1 on the 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), and 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 financial statements of the Group, in
particular 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.
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. 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. The date of entry into force was postponed indefinitely by IASB.
• The new standard IFRS 19 Subsidiaries without public accountability: disclosures and amendments to IFRS 19,
effective on or after 1 January 2027. IFRS 19 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 purpose of limiting disclosures in relation to the full disclosures required by individual
International Financial Reporting Standards and their Interpretations is to simplify the reporting system and related
procedures, which in turn should ultimately translate into a reduction in the costs of preparing financial statements in
accordance with IFRS, as well as contribute to the disclosure of information more relevant to the scope of a given qualifying
related entity activities, while maintaining a sufficient level of usefulness of the reports for their users. At the same time,
entities applying IFRS 19 should continue to comply fully with the other requirements of individual IFRSs, in particular with
regard to recognition, classification, measurement and presentation. Under IFRS 19, entities with public accountability are
defined as entities whose debt or equity financial instruments have been admitted to public trading on domestic and
international stock exchanges, as well as on the OTC market and on local and regional markets. In 2025, amendments were
made to IFRS 19 to limit disclosure requirements in relation to standards and amendments issued between February 2021
and May 2024. The application of IFRS 19 by qualifying related entities will be voluntary and will not affect the Group's
consolidated financial statements because the Group does not meet the criterion of an entity without public accountability.
PART 1 – General information
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
29
• Amendments to IAS 21 on translating financial statements for the purposes of presentation in the currency of a
hyperinflationary economy, effective on or after 1 January 2027.
The Group intends to apply all of the aforementioned amendments at their entry into force. In terms of the 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 as regards future economic operations, transactions or other events, in respect of which
the amendments to the standards are applicable.
Impact of the international tax system reform: pillar 2 of the BEPS 2.0 project
The act of 6 November 2024 on top-up taxation of individual companies of international and Polish groups (hereafter: the Act)
implemented rules 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 Union to the Polish legal system. Adoption of the Act is the
realisation of guidelines of the so-called pillar 2 of the BEPS 2.0 project, which introduces a general framework for a global minimum
tax approved under the work of the OECD forum.
The Polish legal acts entered into force on 1 January 2025 with the possibility of their 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. did not exercise the voluntary application
option as of 1 January 2024.
The current wording of the 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. Pursuant
to the Act, the Company KGHM Polska Miedź S.A. meets the criteria of a so-called MNE (multinational enterprise) and therefore is
obliged to report a specific level of the tax rate of its 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 Parent
Entity 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 the following jurisdictions in which the Group operates: Canada, Luxembourg,
the United Kingdom, Germany and Poland.
While the rules of the Directive should have been in force from 2024, the OECD Framework (including OECD guidelines published
in January 2026) include a transitional period, which postpones the obligations in this regard by 4 subsequent years. Based on a
detailed technical analysis of the assumptions stipulated in transitional rules, it is assessed that the Group will be able to use them
in the majority of jurisdictions in which it operates. Moreover, according to the current estimates, the probability of paying the top-
up tax in any of the jurisdictions is judged by the Group to be low.
In accordance with the requirements of IAS 12 paragraph 88A, the Group does not recognise deferred tax assets and liabilities
related to income taxes of pillar 2 and does not disclose information about these assets and liabilities. Based on the results of the
conducted analyses, these consolidated financial statements do not contain any amounts arising from the reform of the
international tax system – pillar 2.
For 2025, the Group did not incur any liability due to the top-up tax and therefore the Group is not obliged to pay it. However, the
Group will be required to pay the top-up tax for the years 2026 and 2027 if the conditions of maintaining the exemption under the
temporary safe harbours for this period are not met, and if at the level of any of the jurisdictions in which the subsidiaries of the
Group are currently present, their effective tax rate (calculated in accordance with the BEPS (Base erosion and profit shifting) rules)
is below 15%. In the years following 2027, 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 knowledge and judgment, the probability of paying the
top-up tax in the future is judged as low.
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 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*, Robinson, Carlota, DMC,
Victoria and Ajax projects.
Operating segments within the KGHM INTERNATIONAL LTD.
Group are located in North and South America.
The Management Board analyses the results of the following
operating segments: Sudbury Basin*, Robinson, Carlota,
Victoria and Ajax projects and other. In addition, the
Management Board receives and analyses reports on the
whole KGHM INTERNATIONAL LTD. Group. Operating
segments are engaged in the exploration and mining of
copper, molybdenum, silver, gold, nickel, platinum and
palladium deposits.
The operating segments were aggregated based on the
similarity of long term margins achieved by individual
segments, and the similarity of products, processes and
production methods.
Sierra Gorda S.C.M.
Sierra Gorda S.C.M. (joint
venture)
Not applicable (it is a single operating and reporting segment)
Other segments
This item includes other Group
companies (every individual
company is a separate operating
segment).
Aggregation was carried out as a result of not meeting the
criteria necessitating the identification of a separate additional
reporting segment.
*The sale of the assets of the Sudbury Basin and liabilities associated with them took place on 28 February 2025 (Note 9.9).
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.
PART 2 – Information on segments and revenues
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 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. En Liquidacion**
Colombia
DMC Mining Services Colombia SAS en liquidacion***
The United Kingdom
DMC Mining Services (UK) Ltd.
Mongolia
DMC Underground LLC****
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., MERCUS Logistyka sp. z o.o., NITROERG S.A.,
PMT LK Sp. z o.o.
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
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.*****, MIEDZIOWE
CENTRUM ZDROWIA S.A., NITROERG SERWIS Sp. z o.o., PHU "Lubinpex" Sp. z o.o.,
Walcownia Metali Nieżelaznych "ŁABĘDY" S.A., Zagłębie Lubin S.A., OOO ZANAM
VOSTOK, 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., WPEC w Legnicy S.A.
*Entity sold on 28 February 2025 (Note 9.9).
**Entity liquidated on 18 December 2025.
*** Entity liquidated on 28 November 2025.
**** Entity registered on 9 October 2025
***** Entity liquidated on 27 August 2025.
PART 2 – Information on segments and revenues
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
32
Location of mining assets of the KGHM Polska Miedź S.A. Group
* the McCreedy West mine was disposed of on 28 February 2025 (transaction conclusion)
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 and metallurgical industries 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 EBITDA measures 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 below in the item “Consolidation adjustments”.
Unallocated liabilities concern companies which have not been classified into any segment. Liabilities which have not been allocated
to the segments comprise trade liabilities and deferred tax liabilities.
PART 2 – Information on segments and revenues
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
33
Note 2.2 Financial results of reporting segments
from 1 January 2025 to 31 December 2025
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:
30 964
3 439
4 619
13 487
(4 619)
(11 524)
36 366
- inter-segment
606
18
-
10 918
-
(11 524)
18
- external
30 358
3 421
4 619
2 569
(4 619)
-
36 348
Cost of sales, selling costs and administrative expenses
(27 808)
(2 442)
(1 965)
(13 642)
1 965
11 485
(32 407)
Segment result – profit/(loss) for the period
1 946
2 249
1 224
( 132)
(1 224)
(375)
3 688
Additional information on significant
revenues/costs items of the segment
Depreciation/amortisation recognised
in expenses by nature
(1 753)
( 783)
( 902)
( 311)
902
29
(2 818)
(Recognition)/reversal of impairment losses on non-current
assets, including:
490
652
441
( 242)
(441)
( 546)
354
reversal of an impairment loss on investments in
subsidiaries
384
-
-
-
-
( 384)
-
reversal of allowances for impairment of loans granted
162
484
-
-
-
( 162)
484
reversal of an impairment loss on shares in a joint
venture
-
252
-
-
-
-
252
Share in the profit or loss of a joint venture accounted for
using the equity method
-
1 608
-
-
-
-
1 608
As at 31 December 2025
Segment assets
53 560
16 614
12 959
6 923
(12 959)
(18 857)
58 240
Liabilities, including:
22 046
17 544
11 334
3 649
(11 334)
(17 897)
25 342
Segment liabilities
22 046
17 544
11 334
3 649
(11 334)
(18 155)
25 084
Liabilities unallocated to segments
-
-
-
-
-
258
258
Other information
from 1 January 2025 to 31 December 2025
Cash expenditures on property, plant and equipment
and intangible assets – cash flows
3 910
1 016
1 104
533
(1 104)
60
5 519
Production and cost data
from 1 January 2025 to 31 December 2025
Payable copper (kt)
570.9
52.2
86.8
Molybdenum (million pounds)
-
0.2
5.0
Silver (t)
1 323.3
0.1
24.0
TPM – precious metals (koz t)
88.6
43.4
28.1
(C1) cash cost of producing copper in concentrate
(USD/lb)**
3.16
1.03
0.86
Segment result - adjusted EBITDA
4 909
1 860
3 115
392
-
-
10 276
EBITDA margin***
16%
54%
67%
3%
-
-
25%
* 55% of the Group’s share in Sierra Gorda S.C.M.’s financial and production data from the financial statements of Sierra Gorda S.C.M. reviewed for management purposes. The financial data of Sierra Gorda S.C.M. presented in Note 6.1 differ from the above data due to the
Group’s more conservative approach to the assumptions used for impairment testing of Sierra Gorda S.C.M.’s assets in previous years.
** 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. In the case of the segment KGHM Polska
Miedź S.A. the cost was converted from PLN to USD using the average exchange rate (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 (25%), the consolidated revenues from contracts with customers were increased by revenues from contracts with customers of the segment
Sierra Gorda S.C.M. [10 276 / (36 366 + 4 619) * 100]
**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
PART 2 – Information on segments and revenues
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
34
Financial results of reporting segments for the comparable period
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)
(recognition)/reversal of impairment losses on
investment 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 – precious metals (koz t)
86.8
53.5
33.1
(C1) cash cost of producing payable copper
(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 from the financial statements of Sierra Gorda S.C.M. reviewed for management purposes. The financial data of Sierra Gorda S.C.M. presented in Note 6.1 differ from the above data due to the
Group’s more conservative approach to the assumptions used for impairment testing of Sierra Gorda S.C.M.’s assets in previous years.
** 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. In the case of the segment KGHM Polska Miedź
S.A. the cost was converted from PLN to USD using the average exchange rate (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.
PART 2 – Information on segments and revenues
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
35
Reconciliation of adjusted EBITDA
from 1 January 2025 to 31 December 2025
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
1 946
2 249
( 132)
( 375)
3 688
1 224
[-] Profit or loss on involvement in joint ventures
-
2 901
-
-
2 901
-
[-] Current and deferred income tax, mining tax***
(1 434)
( 205)
( 37)
( 45)
(1 721)
(781)
[-] Depreciation/amortisation recognised
in expenses by nature
(1 753)
( 783)
( 311)
29
(2 818)
( 902)
[-] Finance income and (costs)
160
(1 092)
( 49)
1 153
172
( 629)
[-] Other operating income and (costs)
64
( 352)
109
(1 444)
(1 623)
( 20)
[-] (Recognition)/reversal of impairment losses
on non-current assets recognised in cost of
sales, selling costs and administrative expenses
-
( 80)
( 236)
-
( 316)
441
Segment result - adjusted EBITDA
4 909
1 860
392
( 68)
7 093
3 115
10 276
* 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.
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
* 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 Management Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group in
2025:
− 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.
PART 2 – Information on segments and revenues
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 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 (including steel, petroleum and its derivatives) and materials (including waste from
metallurgical furnaces generated as a result of production processes, e.g. scrap of Pb-Zn concentrate).
Performance obligations and the moment when the performance obligation is satisfied
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.
Depending on the moment when the performance obligation is satisfied, the recognition of revenues by the Group may take
place at a specific moment (if the performance is carried out at a specific moment) or the revenue may be recognised over time
(if the performance is carried out over time).
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 satisfied 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 satisfies its performance obligation and at the same specific moment recognises revenues.
The performance obligation is satisfied by the Group in the same manner (at a specific moment) as in the case of other Group
products, such as: lead, salt, steel, petroleum, blasting materials, mining machinery, fuel additives and other products. The
method of determining the moment when the performance obligation is satisfied at a specific point in time is described below
in Important estimates, assumptions and judgments.
In trade contracts in which the performance obligation is satisfied 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 satisfies its performance obligation. If the Group receives payment from
the customer before it satisfies 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.
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 the case of performance is carried out over time, the Group recognises revenues from sales 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.
In particular, the Group recognises revenues over time from services provided under agreements for the construction of mines
and other geological works, spa, sanatorium and treatment services, and from the sale of electricity, including electricity
distribution services.
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 method of determining the moment when the performance obligation is satisfied for a performance carried out over time
is described below in Important estimates, assumptions and judgments.
Determining of the transaction price
Revenues from contracts with customers are recognised in the amount of the transaction price, consisting of the amount of the
consideration which – in accordance with the Group’s expectations – it will receive in return for the transfer of promised goods
or services to the customer.
PART 2 – Information on segments and revenues
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
37
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 the realised contracts of sales to customers, the Group identified a significant financing component in the contract with Franco
Nevada. 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 was also an element of variable consideration.
Due to the sale of assets and liabilities of the Sudbury Basin in Canada in February 2025, the contract with Franco Nevada is no
longer being executed by the Group.
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.
The Group adjusts sales revenues by the result on the settlement of derivatives hedging future cash flows, in the part effectively
hedging at the moment when the hedged position affects the 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).
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 for supply of commodities, with prices based mainly on a variable consideration, that is on future
stock market prices of commodities. As the result, the Group does not include this variable consideration in the estimation of the
transaction price, which otherwise would be recognised as performance obligations, which were not satisfied at the end of the
reporting period and disclosed pursuant to the requirements of IFRS 15.120.
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 2025, the total transaction price allocated to performance obligations, which remained
unsatisfied at the end of the reporting period, amounted to PLN 1 008 million, of which the amount of PLN 779 million will be
realised in 2026, the amount of PLN 210 million will be realised in 2027 and the amount of PLN 19 million will be realised in or
after 2028 (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 1 164 million, of which the amount of PLN 682 million was 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). These
contracts do not have an element of variable consideration.
Balances of trade payables due to contracts with customers as at 1 January 2025, 1 January 2024 as well as at 31 December 2025
were immaterial. Therefore, the recognised adjustment to revenues in 2025 and 2024 due to the final determination of the sale
price was insignificant.
PART 2 – Information on segments and revenues
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
38
Onerous contracts
Taking into account the greater volatility of the macroeconomic environment, which has a significant impact on the Parent Entity’s
financial results and requirements of IAS 37 as regards identification of onerous contracts, the Parent Entity periodically analyses
concluded contracts in terms of the potential occurrence of a situation under which the contractual sales price does not exceed
the estimated, unavoidable costs of realisation of such contracts.
For the sales contracts of main products (copper, silver, gold) the Parent Entity has limited options of transferring the potential
increase in production costs to the sales price of its final products, since the level of revenues from sales of these products mainly
depends on stock exchange quotations and currency exchange rates.
Some of the Parent Entity’s products are by-products of the copper production process (among others: sulphuric acid, copper
sulphate, nickel sulphate and lead), which, after further processing, may be sold to external clients. When making a decision to
process and sell them, the Parent Entity is not only guided by the potential future economic benefits of such contracts, but also
pays attention to other costs avoided in this way, which would have to be incurred in order to dispose of them. Despite the fact
that the currently observed and expected sales prices of some of these products (lead, sulphate) do not allow for achieving positive
margins on these products, the result on this activity is more favourable compared to the available alternative solutions (e.g. their
disposal). Therefore, the Parent Entity does not recognise certain contracts as onerous contracts, because in a broader perspective,
it generates profit for the overall copper production process, in which utilisation of by-products is its integral part.
On the basis of conducted analyses, the Parent Entity did not identify the occurrence of onerous contracts under IAS 37 as at
31 December 2025.
PART 2 – Information on segments and revenues
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
39
Revenues from contracts with customers of the Group – breakdown by products
from 1 January 2025 to 31 December 2025
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
22 378
1 999
3 672
10
(3 672)
( 38)
24 349
Silver
6 133
32
128
-
( 128)
-
6 165
Gold
1 144
594
395
-
( 395)
-
1 738
Services
238
793
-
3 003
-
(2 241)
1 793
Energy
110
-
-
461
-
( 314)
257
Salt
24
-
-
-
-
11**
35
Blasting materials and explosives
-
-
-
340
-
( 149)
191
Mining machinery, transport vehicles
and other types of machinery and
equipment
-
-
-
393
-
( 337)
56
Fuel additives
-
-
-
110
-
-
110
Lead
258
-
-
-
-
-
258
Products from other
non-ferrous metals
-
-
-
115
-
-
115
Other products
298
21
424
868
( 424)
( 591)
596
Merchandise and materials
Steel
-
-
-
278
-
( 56)
222
Petroleum and its derivatives
-
-
-
391
-
( 337)
54
Salt
-
-
-
35
-
(35)**
-
Energy
256
-
-
-
-
( 112)
144
Other merchandise and materials
125
-
-
7 483
-
(7 325)
283
TOTAL
30 964
3 439
4 619
13 487
(4 619)
(11 524)
36 366
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
** Including: PLN 35 million – reclassification from revenues from the sale of merchandise and materials to revenues from the sale of products.
Detailed information on the assignment of individual assortments listed in the table above to the categories of revenues recognised at a specific point in time or over time is provided in Note 2.4.
PART 2 – Information on segments and revenues
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
40
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)**
-
Energy
242
-
-
-
-
( 75)
167
Other merchandise and materials
155
-
-
6 955
-
(6 820)
290
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.
Detailed information on the assignment of individual assortments listed in the table above to the categories of revenues recognised at a specific point in time or over time is provided in note 2.4.
PART 2 – Information on segments and revenues
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
41
Note 2.4 Revenues from contracts with customers of the Group – breakdown by category
from 1 January 2025 to 31 December 2025
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
30 964
3 439
4 619
13 487
(4 619)
(11 524)
36 366
19 617
2 647
4 386
811
(4 386)
( 920)
22 155
18 861
1 524
2 279
802
(2 279)
( 911)
20 276
756
1 123
2 107
9
(2 107)
( 9)
1 879
-
774
-
286
-
( 271)
789
11 347
18
233
12 390
( 233)
(10 333)
13 422
30 964
3 439
4 619
13 487
(4 619)
(11 524)
36 366
7 816
128
-
192
-
( 192)
7 944
23 148
3 311
4 619
13 295
(4 619)
(11 332)
28 422
* 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 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
36 366
35 320
34 172
33 175
2 194
2 145
The Group derives its main revenue streams from the sale of metals such as copper, silver and gold. In the case of basic metals and other products such as: lead, salt, steel, petroleum, blasting
materials, mining machinery, fuel additives and others, the Group satisfies its performance obligations at a specific moment, which is identical to the moment of transferring control over the promised
goods to the customer.
In turn, over time, the Group recognises revenues from the sale of energy (which is both a product of the Group and a commodity) and its distribution, mine construction services, geological works,
spa, sanatorium and treatment services.
Details regarding the determination of the moment when the performance obligation is satisfied from the contracts concluded by the Group are presented in note 2.3 in the description of the
Accounting Policies and Important estimates, assumptions and judgments.
PART 2 – Information on segments and revenues
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
42
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
869
(3 555)
( 966)
21 319
settled
18 209
996
1 788
821
(1 788)
( 936)
19 090
unsettled
604
1 607
1 767
48
(1 767)
( 30)
2 229
Revenues from realisation of long-term mine construction
contracts
-
774
-
190
-
( 170)
794
Revenues from other sales contracts
11 081
17
1
11 851
( 1)
(9 742)
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.
PART 2 – Information on segments and revenues
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 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 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Percentage
share
2025
Percentage
share
2024
Europe, of which:
26 793
26 114
73.68%
73.94%
Poland
9 131
9 204
25.1%
26.1%
Germany
4 931
4 804
13.6%
13.6%
The United Kingdom
2 737
1 817
7.5%
5.1%
Czechia
2 193
2 309
6.0%
6.5%
Italy
1 918
2 412
5.3%
6.8%
Switzerland
1 591
1 099
4.4%
3.1%
Hungary
1 395
1 462
3.8%
4.1%
Sweden
787
704
2.2%
2.0%
France
770
719
2.1%
2.0%
Other countries
1 340
1 584
3.7%
4.5%
Asia, of which:
4 677
5 243
12.9%
14.8%
China
2 349
3 957
6.5%
11.2%
Türkiye
641
572
1.8%
1.6%
South Korea
489
99
1.3%
0.3%
Japan
462
3
1.3%
0.0%
Other countries
736
612
2.0%
1.7%
North America, of which:
4 040
2 982
11.1%
8.4%
The United States of America
2 919
1 881
8.0%
5.3%
Canada
1 121
1 101
3.1%
3.1%
South America
332
379
0.9%
1.1%
Australia
314
445
0.9%
1.3%
Africa
210
157
0.6%
0.4%
TOTAL, of which:
36 366
35 320
100.0%
100.0%
Poland
9 131
9 204
25.1%
26.1%
Other countries
27 235
26 116
74.9%
73.9%
A description of geopolitical and other risks is provided in Notes 1.3.1, 1.3.2 and 1.3.4.
Note 2.6 Main customers
In the period from 1 January 2025 to 31 December 2025 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 2025
As at
31 December 2024
Poland
27 548
25 542
Canada
2 345
2 207
The United States of America
1 961
2 385
Chile
333
291
TOTAL*
32 187
30 425
* 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 12 828 million as at 31 December 2025 (PLN 11 860 million as at 31 December 2024).
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
44
PART 3 – Impairment of assets
Note 3.1 Impairment losses on assets as at 31 December 2025
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.
The Management Board of KGHM Polska Miedź S.A. assessed the existence of indications of the possibility of impairment of
assets, pursuant to the requirements of International Accounting Standard 36 – Impairment of assets. The analysis was carried
out taking into account both external factors resulting from the economic and market environments, as well as internal factors
relating to the unique nature of the entity's operations, the efficiency of the use of assets and changes in their expected utility.
In 2025, the share price of KGHM Polska Miedź S.A. was characterised by high dynamics, supported, among others, by rising
prices of metals, especially copper and silver. The average price of the Company's shares in 2025 increased by 29.2% compared
to the share price at the end of 2024 and as at 31 December 2025 amounted to PLN 280.80 (the average share price in 2025 was
PLN 148.57). In the same period, the average WIG20 index increased by 26.8%, and the average WIG index increased by 28.2%.
As a result, the Company's market capitalisation increased from PLN 23 000 million to PLN 56 160 million, which means that as
at 31 December 2025 it remained at the level of 181% of the value of the Company's net assets. However, it should be noted
that the average ratio of market capitalisation to book value of net assets throughout 2025 was 93%.
From the point of view of the Company's operations, the key factor influencing the level of market capitalisation is the price of
copper. In 2025, the copper price maintained its upward trend, peaking in December 2025 due to the weakening of the US dollar,
global trade tensions and supply shortages in the copper market. The average copper price in 2025 was 9 945 USD/t, which is
higher than the prices recorded in 2024 (average of 9 147 USD/t).
In the case of the Polish assets, the price of metals in PLN is of significant importance, which is also affected by the USD/PLN
exchange rate. Fluctuations in copper prices are usually largely compensated by changes in the USD/PLN exchange rate. The
average exchange rate of the US dollar against the PLN in 2025 was PLN 3.76, which is lower than the exchange rate observed
in 2024 (average of PLN 3.98).
Finally, the average copper price in PLN in 2025 was 37 303 PLN/t, which was higher by 2.5% compared to the prices recorded
in 2024 (average of 36 401 PLN/t).
More significant fluctuations could be observed on the precious metals market. The price of gold, supported by stable central
bank purchases, a weak US dollar, and a climate of macroeconomic and geopolitical uncertainty, rose almost continuously
throughout the year, reaching USD 4 308 per ounce at the end of December 2025 (compared to USD 2 611 per ounce at the end
of 2024). Along with gold, the price of silver also rose from USD 29 per ounce at the end of 2024 to USD 72 per ounce at the end
of December 2025.
After the balance sheet date, prices of metals continued their dynamic upward trend, reaching maximums on 29 January 2026
at 13 844 USD/t for copper, USD 5 502 per ounce of gold and USD 118 per ounce of silver alongside further weakening of the
US dollar. This trend was broken in the following days when there were sharp declines in metals prices , which shows significant
uncertainty about the development of prices in the future.
Favourable macroeconomic data in 2025 contributed to a decrease in market interest rates, to around 4.04 for WIBOR 1M, 3.99
for WIBOR 3M and 3.87 for WIBOR 6M at the end of December 2025, which has a positive impact on the profitability of the
business. The yield on 10-year bonds was 1.15 percentage points higher than the NBP reference rate.
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 is presented in Note 1.3.3 Monitored areas – risks and hazards associated
with the climate.
On 1 January 2026, the Act of 21 November 2025 amending the act on the minerals extraction tax and certain other acts,
introducing a temporary reduction of the coefficient in the tax calculation formula for copper and silver (2026-2028) and a
mechanism for deducting part of capital expenditures from tax (from 2029), entered into force.
In accordance with the aforementioned Act, the burden of reducing the amount of the copper tax will rest, to a large extent, on
the investment relief mechanism. For this reason, it will de facto serve as a source of financing capital expenditures and will not
have to directly translate into a significant change in free cash flows.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
45
The Company will be able to deduct a maximum of 40% of the value of eligible expenditures (no more than 30% of the input
tax), which will require the involvement of significant capital in order to fully use the reduction on the minerals extraction tax.
Moreover, in the case of KGHM Polska Miedź S.A., a significant group of investments eligible for tax deduction are development
investments, which by definition are not included in the impairment test in the model of value in use. As a result, the
amendments to the act on the minerals extraction tax do not constitute an indication to change the recoverable amount of the
Company's assets.
The Management Board of KGHM Polska Miedź S.A. assessed the assumptions adopted as at 31 December 2023 for impairment
testing of the 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.
Taking into account the significant uncertainty and dynamic changes in the environment, which make it difficult to draw
conclusions about long-term trends, in the opinion of KGHM Polska Miedź S.A. , there were no indications of the risk of
impairment of the Polish production assets, nor of indications of the possibility of reversing the impairment losses already made.
As a result, no impairment tests were carried out for these assets as at 31 December 2025.
Due to the continuing uncertainty and significant volatility of key macroeconomic parameters, in particular metal prices and
exchange rates, KGHM Polska Miedź S.A. will continue to monitor global economic conditions on an ongoing basis in terms of
stabilisation or non-stabilisation of the indicated trends. If the persistence of the observed changes is confirmed, the Company
will assess their impact on the recoverable amount of the assets, pursuant to the principles described in IAS 36.
Impairment testing of the investment in Sierra Gorda S.C.M. – the Sierra Gorda S.C.M. segment
As at 31 December 2025, due to the occurrence of indications of the possibility of a change in the recoverable amount of the
investment in Sierra Gorda S.C.M., which is part of the KGHM INTERNATIONAL LTD. Group, an impairment test of shares in the
joint venture was performed. For the purposes of estimating the recoverable amount, the Sierra Gorda S.C.M. joint venture has
been identified as a cash-generating unit (CGU).
The key indication for conducting the test on shares in Sierra Gorda S.C.M. was to perform an impairment testing of assets at
the level of Sierra Gorda S.C.M.
The carrying amount of the shares in the joint venture determined using the equity method as at 31 December 2025 was
USD 434 million (PLN 1 562 million at the average exchange rate as at 31 December 2025 announced by the National Bank of
Poland). For the purposes of determining the recoverable amount of the investment in Sierra Gorda S.C.M., the test performed
measured its net assets at fair value (less estimated cost of sales) using the income approach, i.e. the discounted cash flow
method.
The fair value has been classified to level 3 of the fair value hierarchy.
Basic macroeconomic assumptions adopted in the impairment test as at 31 December 2025 – commodity prices
The Company adopted price paths on the basis of internal macroeconomic assumptions developed based on available long-term
forecasts from financial and analytical institutions. A detailed forecast was prepared for the period 2026-2030, while for the
period 2031-2035 a technical adjustment of prices was applied between the last year of the detailed forecast and 2036, for which
a long-term metal price forecast was assumed at the following level:
• for copper – 9 250 USD/t (4.20 USD/lb),
• for gold – 2 500 USD/oz.
In the detailed forecast period for the period 2026-2030 the following levels of metal prices were assumed:
• for copper – from 10 000 USD/t to 10 472 USD/t,
• for gold – from 2 800 USD/oz to 3 800 USD/oz.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
46
Assumptions adopted for impairment testing as at 31 December 2025
Sierra Gorda
Mine life / forecast period
23
Level of copper production during mine life (kt)
3 513
Level of molybdenum production during mine life (mn lb)
204
Level of gold production during mine life (koz t)
1 015
Applied discount rate
8,38%
Average operating margin during mine life
46,6%
Capital expenditures to be incurred during mine life (USD million)
6 342
Including capitalised stripping costs (USD million)
4 012
Costs to sell
2%
As a result of the test, the recoverable amount of the Group's share in the joint venture Sierra Gorda S.C.M. was determined to be
USD 504 million (PLN 1 814 million at the average exchange rate as at 31 December 2025 announced by the National Bank of
Poland), which was higher than its carrying amount as at 31 December 2025 determined using the equity method, which provided
the basis for reversing the impairment loss on shares in the joint venture in the amount of USD 70 million, recognised in previous
years (PLN 252 million at the average exchange rate as at 31 December 2025 announced by the National Bank of Poland).
Sensitivity analysis of the recoverable amount of the Group’s share in the joint
venture Sierra Gorda S.C.M.
Recoverable amount
in USD million
Discount rate 9.38%
302
Discount rate 8.38% (test)
504
Discount rate 7.38%
732
Sensitivity analysis of the recoverable amount of the Group’s share in the joint
venture Sierra Gorda S.C.M.
Recoverable amount
in USD million
Copper price –0.10 $/lb
438
Copper price (test)
504
Copper price +0.10 $/lb
670
A sensitivity analysis of the recoverable amount of the shares showed that potential changes to the key assumptions adopted for
the tests as at 31 December 2025 (presented in the table above), within the upper range of recoverable amount, could result in a
full reversal of the impairment loss on the shares in the joint venture recognised in previous years – up to a maximum of
USD 116 million.
Impairment testing of property, plant and equipment of the company PMT Linie Kolejowe Sp. z o.o. – Segment – Other
segments
As at 31 December 2025, due to the occurrence of indications of a possible change in the recoverable amount of property, plant
and equipment of the company PMT Linie Kolejowe Sp. z o.o, impairment testing of these assets was performed. The key
indication to perform the impairment test was the significant decrease in forecasted future economic results.
The carrying amount of property, plant and equipment of PMT Linie Kolejowe Sp. z o.o. as at 31 December 2025 amounted to
PLN 240 million. In order to estimate the recoverable amount, in the conducted test the value in use of property, plant and
equipment was measured using the income-based approach, i.e. the method of discounted cash flows.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
47
Basic assumptions adopted for impairment testing as at 31 December 2025
Assumption
Level adopted in the test
Detailed forecast period
January 2026 – December 2030
Operating margin
2% in the forecast period,
2.8% in the residual value
Capital expenditures in the forecast period
PLN 57 million
Discount rate
4.61% (real, after taxation)
Growth rate following the forecast period
0%
As a result of the impairment testing of property, plant and equipment of PMT Linie Kolejowe Sp. z o.o., the recoverable amount of
the tested assets was determined to be at the level of PLN 24 million, which is lower than the carrying amount of these assets,
which provided a basis for the recognition of an impairment loss in the amount of PLN 216 million, which was recognised in the
item “Cost of sales”.
The recoverable amount of non-current assets of PMT Linie Kolejowe Sp. z o.o. indicated a significant sensitivity to the adopted
levels of discount rates and operating margin. The impact of changes to these parameters on the valuation of assets is presented
in the following table.
Sensitivity analysis of the recoverable amount of property, plant and equipment of PMT Linie Kolejowe Sp. z o.o.
Recoverable amount at a given discount rate
lower by 1 pp.
per test
higher by 1 pp.
Discount rate 4.61% (test)
36
24
16
Recoverable amount at a given operating margin
lower by 1 pp.
per test
higher by 1 pp.
Operating margin 2%, 2.8% in residual value
(test)
9
24
39
Impairment testing of property, plant and equipment of the company CENTROZŁOM WROCŁAW S.A. – Segment – Other
segments
As at 31 December 2025, 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 testing was the company's continued negative financial results (net loss for 2024 at the level of PLN 25 million, for
2025 at the level of PLN 26 million, respectively).
To determine the recoverable amount of the company’s property, plant and equipment, the fair value measurement less costs
to sell was adopted.
The recoverable amount was determined at the level of fair value less costs to sell, on the basis of available valuation reports
and an expert’s opinion, 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 costs to sell 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. Verification was made on the basis of
active market.
The fair value was classified to the level 3 of the fair value hierarchy.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
48
Properties for which valuation reports were prepared at the company’s
request*
Carrying amount
Recoverable
amount
in Chróścina
1
3
in Wrocław
11
76
in Poznań
12
17
in Konin
2
4
in Opole
1
3
in Łódź
9
14
Total
36
117
Properties for which valuation reports were prepared at the request of local
municipal authorities
Carrying amount
Recoverable
amount
8
15
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 on these assets 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
3
3
3
in Wrocław
72
76
80
in Poznań
16
17
18
in Konin
4
4
4
in Opole
2
3
2
in Łódź
14
14
15
At the request of local municipal authorities
14
15
16
TOTAL
125
133
138
The Company also performed a sensitivity analysis of all property, plant and equipment for market price fluctuations by 5%.
Property, plant and equipment
Price lower
by 5%
Recoverable amount
(test)
Price higher
by 5%
177
187
196
IMPAIRMENT TESTING OF NON-CURRENT ASSETS OF UZDROWISKA KŁODZKIE S.A. – GRUPA PGU – Segment – Other
segments
Due to the occurrence of indications of the possibility of a change in the recoverable amount of property, plant and equipment
and intangible assets of Uzdrowiska Kłodzkie S.A. – Grupa PGU, impairment testing of these assets was carried out. The key
indication for conducting the impairment test was the recognition of a loss for 2025 and a negative change in the forecasted
operating cash flows for one of the cash-generating unit – The mineral water production plant (CGU). The amount of property,
plant and equipment and intangible assets of CGU as at 31 December 2025 was PLN 24 million. For the purposes of estimating
the recoverable amount in the test performed, the value in use of the CGU was measured using the income approach, i.e. the
discounted cash flow method.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
49
Basic assumptions adopted for impairment testing as at 31 December 2025
Assumption
Level adopted in the test
Detailed forecast period
January 2026 – December 2030
Operating margin
-3.8% in the forecast period,
1.8% in the residual value
Capital expenditures in the forecast period
PLN 22 million
Discount rate
6.51% (nominal)
Growth rate following the forecast period
1%
As a result of the impairment testing of property, plant and equipment and intangible assets of the tested CGU, the recoverable
amount of the tested assets was determined at the level of PLN 0 million, which gave a basis to recognise an impairment loss in
the amount of PLN 24 million, of which PLN 21 million was recognised in the item "Cost of sale" and PLN 3 million under the item
"Other operating costs".
The recoverable amount of the CGU shows a sensitivity to changes in the operating margin.
Sensitivity analysis of the recoverable amount of property, plant and equipment and intangible assets of the CGU
Recoverable amount at a given operating margin
per test
higher by 1 pp
Operating margin -6.4%, 1.8% in residual
value (test)
0
4
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.
As at 31 December 2025, the Group assessed the factors impacting the recoverable amount of the rights and assessed that there
were no basis for recognising an impairment loss or reverse an impairment loss, as both the price of water and the estimated
amount of extractable water did not change as compared to the levels of these assumptions adopted for testing as at 31
December 2024. The carrying amount of water rights as at 31 December 2025 and as at 31 December 2024 was USD 22 million
(as at 31 December 2025: PLN 81 million, as at 31 December 2024: PLN 92 million).
The fair value of water rights is classified to the level 2 of the fair value hierarchy, in which fair value measurements are based on
significant observable input data, other than market prices.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
50
Note 3.2 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 the WIG index increased by 1.4%. As a 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 is presented in Note 1.3.3 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 nor of 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.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
51
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.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
52
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.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
53
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:
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
54
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.
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
55
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
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
56
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 the 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
PART 3 – Impairment of assets
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
57
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).
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
58
PART 4 – Explanatory notes to the statement of profit or loss
Note 4.1 Expenses by nature
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Note 9.3
Depreciation of property, plant and equipment and
amortisation of intangible assets
2 818
2 513
Note 11.1
Employee benefits expenses
9 517
8 965
Materials and energy, including:
14 242
13 328
purchased metal-bearing materials
8 335
7 439
electrical and other energy
1 825
1 677
External services
3 060
3 091
Note 5.2
Minerals extraction tax
4 693
3 865
Other taxes and charges
992
939
Advertising costs and representation expenses
74
75
Property and personal insurance
94
92
Note 4.4
Reversal of impairment losses on property, plant and
equipment and intangible assets
-
( 69)
Note 4.4
Reversal of write-downs of inventories
( 19)
( 14)
Part 3
Note 4.4
Recognition of impairment losses on property, plant and
equipment and intangible assets
316
290
Note 4.4
Recognition of write-downs of inventories
30
84
Other costs
92
83
Total expenses by nature
35 909
33 242
Cost of merchandise and materials sold (+)
412
547
Change in inventories of finished goods and work in
progress (+/-)
(1 720)
180
Cost of products for internal use of the Group (-) *
(2 194)
(2 416)
Total costs of sales, selling costs and administrative
expenses, of which:
32 407
31 553
Cost of sales
30 126
29 348
Selling costs
482
529
Administrative expenses
1 799
1 676
*The amount is mainly comprised of cost of manufacturing non-current assets by the Group.
PART 4 - Explanatory notes to the statement of profit or loss
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
59
Note 4.2 Other operating income and (costs)
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Note 7.1
Gains on derivatives, of which:
197
617
measurement
74
68
realisation
123
549
Note 7.1
Exchange differences on financial assets and liabilities
other than borrowings
-
555
Interest income calculated using the effective interest
rate method
52
63
Reversal of impairment losses on fixed assets under
construction and intangible assets not yet available for
use
-
5
Note 4.4
Reversal of allowance for impairment on trade
receivables and other financial receivables
3
-
Fair value gains on trade receivables and other financial
assets
65
9
Release of provisions
104
133
Gain on disposal of intangible assets
7
4
Note 9.9
Gain on disposal of subsidiaries
70
-
Government grants received
24
16
Income from servicing of letters of credit and
guarantees
6
18
Compensation, fines and penalties received
29
35
Other
104
107
Total other operating income
661
1 562
Note 7.1
Losses on derivatives, of which:
( 457)
( 566)
measurement
( 185)
( 14)
realisation
( 272)
( 552)
Note 4.4
Impairment losses on trade receivables
-
( 1)
Fair value losses on trade receivables
( 83)
( 136)
Part 3
Note 4.4
Impairment losses on fixed assets under construction
and intangible assets not yet available for use
( 66)
( 22)
Note 7.1
Exchange differences on financial assets and liabilities
other than borrowings
(1 498)
-
Provisions recognised
( 42)
( 220)
Losses on disposal of property, plant and equipment
( 26)
( 29)
Donations granted
( 49)
( 68)
Other
( 63)
( 76)
Total other operating costs
(2 284)
(1 118)
Other operating income and (costs)
(1 623)
444
PART 4 - Explanatory notes to the statement of profit or loss
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
60
Note 4.3 Finance income and (costs)
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Note 7.2
Exchange differences on measurement and realisation of
borrowings
317
-
Note 7.1
Gains on derivatives - realisation
29
134
Result of settlement of a transaction hedging interest rate
risk due to the issuance of bonds with a variable interest
rate
71
-
Other
1
1
Total finance income
418
135
Note 7.1
Interest on lease liabilities
( 4)
( 10)
Interest on trade payables within the reverse factoring
mechanism
( 94)
( 150)
Unwinding of the discount effect due to:
( 100)
( 92)
provisions for decommissioning of mines
( 89)
( 82)
financial liabilities
( 11)
( 10)
Bank fees and charges on drawn borrowings
( 11)
( 23)
Note 7.1
Losses on derivatives - realisation
( 30)
( 146)
Note 7.1
Exchange differences on measurement and realisation of
borrowings
-
( 84)
Other
( 7)
( 11)
Total finance costs
( 246)
( 516)
Finance income and (costs)
172
( 381)
Note 4.4 Reversal and (recognition) of impairment losses recognised in the statement of profit or loss
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Reversal of impairment losses on assets recognised in:
cost of sales, of which:
21
85
Note 4.1
reversal of impairment loss on property, plant and
equipment and intangible assets
-
69
Note 10.1
reversal of write-down of inventories
21
16
Note 6.1
reversal of impairment loss on shares in a joint venture
252
-
Note 6.2
gain due to reversal of allowances for impairment of
loans granted to a joint venture
484
226
other operating income, of which:
3
5
reversal of impairment losses on fixed assets under
construction and intangible assets not yet available for
use
-
5
Note 4.2
reversal of allowance for impairment on trade receivables
and other financial receivables
3
-
Reversal of impairment losses, total
760
316
Impairment losses on assets, recognised in:
cost of sales and selling costs, of which:
( 346)
( 377)
Note 4.1
impairment loss on property, plant and equipment and
intangible assets
( 316)
( 290)
Note 10.1
write-down of inventories
( 30)
( 87)
other operating costs, of which:
( 66)
( 23)
Note 4.2
impairment losses on fixed assets under construction and
intangible assets not yet available for use
( 66)
( 22)
Note 4.2
allowance for impairment of trade receivables
-
( 1)
Impairment losses, total
( 412)
( 400)
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
61
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 functioned for the first time in the years 2016 - 2018.
On 17 October 2024, an agreement was signed to indefinitely extend the operations of PGK KGHM II founded in 2019, which is in
force from 1 January 2025.
Income tax
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Current income tax
1 338
1 153
Note 5.1.1
Deferred income tax
403
590
Current tax adjustments for prior periods
( 20)
( 5)
Income tax
1 721
1 738
In 2025, Group entities paid income tax in the amount of PLN 917 million (in 2024: PLN 1 027 million) to the appropriate tax offices.
These consolidated financial statements do not include any amounts of current income tax resulting from the reform of the
international tax system - pillar 2 of the BEPS project, since no obligation arose to pay this tax by the Group.
PART 5 – Taxation
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
62
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 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Profit before income tax
5 409
4 608
Tax calculated using the Parent Entity’s rate (2025; 2024: 19%)
1 028
876
Effect of applying other tax rates abroad
192
41
Tax effect of non-taxable income
( 17)
( 65)
Tax effect of expenses not deductible for tax purposes, including:
946
798
minerals extraction tax*
892
734
Tax effect of income on the valuation of shares in a joint venture
using the equity method and of income on the reversal of an
impairment loss on shares in a joint venture
( 502)
-
Unrecognised deferred tax assets on deductible temporary
differences
105**
234
Utilisation in the period of previously-unrecognised tax losses
( 135)
( 44)
Adjustments of current tax for prior periods
( 20)
( 5)
Tax losses and tax credits in the period from which there was no
recognition of deferred tax assets
38
23
Deferred tax on eliminated interest on intra-Group loans
( 63)
( 80)
Other
149
( 40)
Income tax in profit or loss
1 721
1 738
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 four years without the right to offset assets with liabilities due to current income tax.
*details on the recognition of the minerals extraction tax were described in Note 5.2.
**the amount of USD 28 million translated at the average exchange rate for 2025.
PART 5 – Taxation
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
63
Note 5.1.1 Deferred income tax
Accounting policies
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 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.
In accordance with the requirements of IAS 12 paragraph 88A, the Group has applied the exception as regards the nonrecognition
of deferred tax to the extent resulting from pillar 2 of the BEPS project and therefore, it does not recognise deferred tax assets
and liabilities related to BEPS income taxes and it does not disclose information on these assets and liabilities.
Important estimates, assumptions and judgments
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.
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Deferred net income tax at the beginning of the period, of which:
(1 082)
( 509)
Deferred tax assets
302
137
Deferred tax liabilities
(1 384)
( 646)
Deferred income tax due to obtaining control of subsidiaries:
-
1
Deferred tax assets
-
1
Deferred income tax during the period, of which:
( 36)
( 551)
Recognised in profit or loss
( 403)
( 590)
Recognised in other comprehensive income
367
39
Exchange differences from translation of balances of deferred
income tax of statements of operations with a functional currency
other than PLN
89
( 23)
Deferred income tax due to loss of control of subsidiaries:
( 9)
-
Deferred tax assets
( 9)
-
Deferred net income tax at the end of the period, of which:
(1 038)
(1 082)
Deferred tax assets
189
302
Deferred tax liabilities
(1 227)
(1 384)
PART 5 – Taxation
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
64
Maturities of deferred tax assets and deferred tax liabilities were as follows:
Deferred tax assets
Deferred tax liabilities
As at
31 December 2025
As at
31 December 2024
As at
31 December 2025
As at
31 December 2024
Maturity over the 12 months
from the end of the reporting
period
106
198
(1 652)
(1 529)
Maturity of up to 12 months from
the end of the reporting period
83
104
425
145
Total
189
302
(1 227)
(1 384)
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 2025
As at
31 December 2024
Unused tax
losses
Expiry date
Unused tax
credits
Expiry
date
Unused tax
losses
Expiry
date
Unused tax
credits
Expiry
date
Luxembourg
-
2037
-
-
339
2037
-
-
Chile
90
indefinite
-
-
103
indefinite
-
-
Canada
1 594
2045
48
2039
1 814
2044
55
2039
Other
90
2026-2030
-
-
74
2025-2029
-
-
Total
1 774
48
2 330
55
As at 31 December 2025, the amount of deductible temporary differences from which the Group did not recognise deferred tax
assets amounted to PLN 2 168 million (USD 602 million), as at 31 December 2024 PLN 1 842 million (USD 450 million), because
there is low possibility that they will be reversed in the foreseeable future and that taxable income will be achieved against which
the deductible temporary differences can be utilised. The deductible temporary differences from which the deferred tax assets
were 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 companies of the KGHM INTERNATIONAL LTD. Group for accounting and tax purposes.
As at 31 December 2025, 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 3 088 million (as at 31 December 2024: PLN 1 990 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.
PART 5 – Taxation
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
65
Deferred tax assets (prior to offsetting with deferred tax liabilities at the level of individual companies of the Group)
As at
31 December
2023
Credited/(Charged)
As at
31
December
2024
Credited/(Charged)
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
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
2025
Provision for decommissioning of mines and other
technological facilities
209
-
( 3)
-
1
207
-
-
( 2)
205
Measurement of forward transactions other than hedging
instruments
45
-
( 40)
-
-
5
31
-
-
36
Differences between the value of property, plant and
equipment for accounting and tax purposes
236
-
9
-
-
245
19
-
( 1)
263
Future employee benefits
637
-
11
( 63)
-
585
23
( 4)
-
604
Equity instruments measured at fair value
68
-
-
( 1)
-
67
-
( 66)
-
1
Lease liabilities
100
-
( 19)
-
-
81
4
-
-
85
Accrued and unpaid interest on borrowings
309
-
1
-
13
323
( 3)
-
( 37)
283
Recognition/reversal of impairment losses on assets
207
-
( 37)
-
-
170
( 40)
-
-
130
Short-term accruals for remuneration
95
-
31
-
-
126
19
-
-
145
Re-measurement of hedging instruments
10
-
-
( 3)
-
7
-
520
-
527
Liabilities related to fixed fee due to setting mining usufruct
38
-
( 1)
-
-
37
-
-
-
37
Employee benefits (holidays)
18
-
3
-
-
21
2
-
-
23
Unpaid remuneration with surcharges
2
-
-
-
-
2
-
-
-
2
Tax losses from prior periods
51
-
93
-
4
148
( 109)
-
( 13)
26
Other
154
3
41
-
-
198
( 63)
-
-
135
Total
2 179
3
89
( 67)
18
2 222
( 117)
450
( 53)
2 502
Offset with deferred tax liabilities*
(2 042)
-
-
-
-
(1 920)
-
-
-
(2 313)
Deferred tax asset recognised in the statement of
financial position
137
-
-
-
-
302
-
-
-
189
*Offset includes offset within the Tax Group.
PART 5 – Taxation
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
66
Deferred tax liabilities (prior to offsetting with deferred tax assets at the level of individual companies of the Group)
As at
31
December
2023
(Credited)/Charged
As at
31 December
2024
(Credited)/Charged
As at
31
December
2025
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
profit or
loss
other
comprehensive
income
exchange
differences
from
translation of
statements of
operations
with a
functional
currency other
than PLN
changes due
to loss of
control of
subsidiaries
Measurement of forward transactions other than
hedging instruments
47
-
( 28)
-
-
19
( 7)
-
-
-
12
Differences between the value of property, plant and
equipment for accounting and tax purposes,
including:
1 386
-
400
-
19
1 805
50
-
( 65)
9
1 799
related to depreciation of right-to-use assets
76
-
( 12)
-
-
64
( 9)
-
-
-
55
Accrued and unpaid interest on loans
759
-
145
-
19
923
118
-
( 66)
-
975
Re-measurement of hedging instruments
128
-
-
( 108)
-
20
-
( 20)
-
-
-
Equity instruments measured at fair value
113
( 4)
-
-
109
( 13)
103
-
-
199
Other
255
2
166
2
3
428
138
-
( 11)
-
555
Total
2 688
2
679
( 106)
41
3 304
286
83
( 142)
9
3 540
Offset with deferred tax assets*
(2 042)
-
-
-
-
(1 920)
-
-
-
-
(2 313)
Deferred tax liabilities recognised in the
statement of financial position
646
-
-
-
-
1 384
-
-
-
-
1 227
*Offset includes offset within the Tax Group.
PART 5 – Taxation
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
67
Note 5.2 Other taxes and charges
Minerals extraction tax
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Copper
3 361
3 157
Silver
1 332
708
Total
4 693
3 865
Minerals extraction tax – presentation in items of financial
statements
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Tax recognised in cost of sold products
4 386
3 855
Tax recognised in inventories
307
10
Total
4 693
3 865
Pursuant to the wording of the Act of 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 and silver 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.
On 1 January 2026, the Act of 21 November 2025 amending the act on the minerals extraction tax and certain other acts entered
into force, introducing a reduction in the coefficients in the tax rate calculation formulas for 2026-2028 and a mechanism for
deducting part of capital expenditures from the tax (from 2029). For details, see Note 3.1 of these consolidated financial statements.
Other taxes and charges, with a breakdown by geographical location, were as follows:
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Poland
892
836
Real estate tax
340
320
Royalties
151
143
Excise tax
9
8
Environmental fees
123
67
Costs of redemption of CO
2
emission allowances
170
199
Contributions to the State Fund for the Rehabilitation of the
Disabled People (PFRON)
40
38
Other taxes and charges
59
61
Other countries
157
153
Total
1 049
989
PART 5 – Taxation
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
68
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 2025
As at
31 December 2024
Current corporate income tax assets
24
20
Assets due to other taxes
635
433
Tax assets
659
453
The receivables due to other taxes comprise mainly VAT receivables.
As at
31 December 2025
As at
31 December 2024
Current corporate income tax liabilities
625
325
Liabilities due to other taxes
1 121
724
Tax liabilities
1 746
1 049
The balance of other tax liabilities was significantly affected by an increase in liabilities due to the minerals extraction tax of the
Parent Entity.
PART 6 – Involvement in joint ventures
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
69
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 fair value measurements 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.
Important 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.
Adjustments made at the moment of initial recognition as part of the settlement of the cost
At the moment of initial recognition, the Group recognised the investment in the joint venture at cost representing the fair value
of the investment, i.e. USD 1 251 million, of which the Group’s share in the net fair value of the identifiable assets and liabilities
of the joint venture amounted to USD 1 135 million. The difference between the cost of the investment and the share in the fair
value of the net assets amounted to USD 116 million and represented the company’s goodwill recognised in the carrying amount
of the investment.
In determining the share in the fair value of net assets, the Group identified mineral resources that were not previously
recognised in the Sierra Gorda S.C.M.’s financial statements and determined its share in their fair value in the amount of
USD 619 million, taking into account the deferred tax liability in respect of the temporary exchange gains arising from the
identified mineral resources.
As at 31 December 2015, the recognised surplus resulting from the settlement of the cost was fully covered by an impairment
loss.
The Group’s share in unsettled losses of Sierra Gorda
The Group ceased to recognise its share of Sierra Gorda S.C.M.'s losses at the moment when the value of this share exceeded
the carrying amount of the share in the investment in Sierra Gorda S.C.M. and therefore the carrying amount of the shares in
Sierra Gorda S.C.M. amounted to PLN 0.
After reducing the share to zero, the Group carried out an analysis of the existence of a legal or customarily expected obligation
to make payments on behalf of Sierra Gorda S.C.M., which would give rise to an obligation for the Group to recognise the
liability in this regard. Based on the analyses carried out, the Group did not identify the existence of a legal or expected
obligation to make payments on behalf of Sierra Gorda S.C.M. referred to in IAS 28.39.
Starting from 2021, Sierra Gorda S.C.M. began to achieve positive financial results which made it possible to gradually settle
the Group's share in unsettled losses from previous years. In 2025, the Group's share in Sierra Gorda S.C.M.'s profits exceeded
the value of accumulated unsettled losses and following the recognition of an adjustment due to unrealised gains, the Group
recognised a positive carrying amount of shares in the joint venture in the amount of USD 434 million (PLN 1 562 million) as at
31 December 2025.
The Group also analysed the terms and conditions of the guarantee granted to Sierra Gorda S.C.M. as collateral for the repayment
of the loan instalment, which meets the definition of a financial guarantee in accordance with IFRS 9. Details of the guarantees
granted to Sierra Gorda S.C.M. are described in Note 8.6.
PART 6 – Involvement in joint ventures
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
70
Conducting an impairment test
As at 31 December 2025, Sierra Gorda S.C.M., due to the identification of indications of an increase in the recoverable amount
of assets, i.e. an improvement in the forecasted cash flows, as a result of the testing estimated that the recoverable amount of
assets is higher than their carrying amount, which provided the basis for reversing a part of the impairment losses made in
previous years.
The result of the tests was adjusted by the assumptions adopted by the KGHM Polska Miedź S.A. Group for the measurement
of the recoverable amount of Sierra Gorda S.C.M.'s non-current assets and recognised in the valuation using the equity method
under the item "Group's share in the joint venture's profit for the period".
The impairment test at the level of assets of Sierra Gorda S.C.M. was an indication for the KGHM Polska Miedź S.A. Group to
conduct an impairment test of its shares in Sierra Gorda S.C.M. as at 31 December 2025.
As a part of impairment testing of shares in the joint venture Sierra Gorda S.C.M., the Group determined the recoverable
amount of shares as the fair value less costs to sell. The fair value was determined based on discounted cash flows
(DCF method) generated by the joint venture, adjusted by the value of other assets and liabilities recognised in Sierra Gorda
S.C.M.'s balance sheet. The adjustment included adjusting balance sheet items to fair value when there were differences
between the fair value and the carrying amount. As a result of the test, the recoverable amount of the shares in Sierra Gorda
S.C.M. was determined at a level higher than their carrying amount determined using the equity method, which gave a basis
to reverse a part of the impairment loss on the shares made in previous years in the amount of USD 70 million (PLN 252 million).
Detailed information on the test performed as at 31 December 2025 is presented in Part 3.
Note 6.1 Joint ventures accounted for using the equity method
Value of the investment in the consolidated statement of financial position
2025
2024
As at 1 January
-
-
Share of profit for the reporting period
1 759
218
Reversal of an impairment loss on shares in the joint venture
252
-
Adjustment due to unrealised gains on transactions between the Group and the
joint venture
345
-
Settlement of the Group’s share of unsettled losses from prior years (accumulated
comprehensive losses)
( 496)
( 221)
Share in other comprehensive income for the reporting period
( 8)
-
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
( 38)
3
As at 31 December
1 814
-
Unrecognised share of the Group of the losses of Sierra Gorda S.C.M.
2025
2024
As at 1 January
( 576)
( 765)
Settlement of the Group’s share of unsettled losses from prior years (accumulated
comprehensive losses)
496
221
Exchange differences resulting from the remeasurement of balances of unsettled
losses on different balance sheet dates
80
(32)
As at 31 December
-
( 576)
Condensed financial data of Sierra Gorda S.C.M.
The data are derived from the financial statements of Sierra Gorda S.C.M. prepared in accordance with International Financial
Reporting Standards and audited by the auditor, with the exception of items marked with an asterisk (*), which take into account
the result of fair value measurement at the date of obtaining joint control and the effect of changing the assumptions adopted by
the KGHM Polska Miedź S.A. Group for the measurement of the recoverable amount of Sierra Gorda S.C.M.’s non-current assets.
PART 6 – Involvement in joint ventures
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
71
As at
31 December 2025
As at
31 December 2024
Non-current assets, including:*
21 079
22 559
surplus from the fair value measurement at the acquisition date
2 229
2 539
adjustment to the surplus from the fair value measurement at the acquisition
date
(2 229)
(2 539)
Current assets, including:
2 491
2 244
Cash and cash equivalents
365
477
Non-current liabilities, including:
19 202
23 276
Borrowings and leases
1 823
2 091
Liabilities due to loans granted by jointly-controlling entities
16 827
20 595
Current liabilities, including:
1 404
1 710
Borrowings and leases
99
105
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Revenues from contracts with customers
8 399
6 466
Depreciation/amortisation
(1 640)
(1 546)
Reversal of an impairment loss on property, plant and equipment, of which:*
2 045
-
from financial statements of Sierra Gorda S.C.M.
801
-
adjustments to net assets taking into account the effect of changes in the
assumptions adopted by the Group as to the measurement of recoverable
amount of non-current assets of Sierra Gorda S.C.M.
1 244
-
Interest costs
(1 154)
(1 318)
Other incomes/(costs)
(2 762)
(3 077)
Profit before income tax*
4 888
525
Income tax, of which:*
(1 690)
( 129)
from financial statements of Sierra Gorda S.C.M.
(1 418)
(129)
adjustments to net assets taking into account the effect of changes in the
assumptions adopted by the Group as to the measurement of recoverable
amount of non-current assets of Sierra Gorda S.C.M.
(272)
-
Profit for the period, of which:*
3 198
396
from financial statements of Sierra Gorda S.C.M.
2 226
396
adjustments to net assets taking into account the effect of changes in the
assumptions adopted by the Group as to the measurement of recoverable
amount of non-current assets of Sierra Gorda S.C.M.
972
-
Exchange differences from the translation of Sierra Gorda S.C.M.’s net assets to
the PLN presentation currency*
( 47)
( 18)
Total comprehensive income*
3 151
378
As at
31 December 2025
As at
31 December 2024
Carrying amount of net assets from the financial statements of Sierra Gorda
S.C.M.
2 954
914
Adjustments to net assets taking into account the effect of changes in the
assumptions adopted by the Group as to the measurement of recoverable
amount of non-current assets of Sierra Gorda S.C.M. from the Group’s level
10
( 1 097)
Carrying amount of net assets
2 964
( 183)
The Group’s share in net assets (55%)
1 630
( 100)
Total unrecognised accumulated shares of loss of Sierra Gorda S.C.M.
(accumulated comprehensive losses)
-
576
Reversal of impairment loss on shares in Sierra Gorda S.C.M.
252
-
Adjustments due to unrealised gains on transactions between the Group and
the joint venture
( 68)
( 476)
Value of the investment in the consolidated statement of financial position
1 814
-
PART 6 – Involvement in joint ventures
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
72
Other information on the Group’s involvement in the joint venture Sierra Gorda S.C.M.
As at
31 December 2025
As at
31 December 2024
Group’s share in investment and operating commitments
9 476
7 629
Group’s share in the total amount of future lease gross
payments due to lease agreements for mining equipment
361
442
Note 8.6
Guarantees granted by the Group
793
904
Note 6.2 Loans granted to a joint venture Sierra Gorda S.C.M.
Accounting policies
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.
Important estimates, assumptions and judgments
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). For each balance sheet date, the Group estimates the expected cash flows due to the repayment of
the loan granted. As at 31 December 2025 and 31 December 2024, the expected credit losses estimated at the moment of initial
recognition have 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 2024, there were repayments
in the total amount of USD 116 million (PLN 464 million). Further payments were made in 2025 in the total amount of USD 330
million (PLN 1 206 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 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 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).
PART 6 – Involvement in joint ventures
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
73
2025
2024
As at 1 January
9 800
9 096
Repayment of loans (principal and interest)
(1 206)
( 464)
Accrued interest
557
552
Note 4.4
Gain due to the reversal of allowances for impairment
on loans granted to Sierra Gorda S.C.M.
484
226
Exchange differences
(1 199)
390
As at 31 December
8 436
9 800
The loan granted to Sierra Gorda S.C.M. has a fixed interest rate of 8%.
As at 31 December 2025, the Group estimated the expected cash flows on repayment of receivables due to a loan 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 484 million (USD 134 million), in particular due to the inclusion of better forecasted operating results of the
joint venture. In the comparable period, a gain due to the reversal of an allowance for impairment was recognised in the amount
of PLN 226 million (USD 55 million).
To estimate cash flows of Sierra Gorda S.C.M. as at 31 December 2025, the Group 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 2026-2030, while for the period 2031-2035 a technical adjustment of prices was applied
between the last year of the detailed forecast and 2036, for which a long-term metals price forecast was used at the following level:
− for copper– 9 250 USD/t;
− for gold – 2 500 USD/oz.
In the detailed forecast for the period 2026-2030 the following levels of metal prices were assumed:
− for copper – from 10 000 USD/t to 10 472 USD/t;
− for gold – from 2 800 USD/oz to 3 800 USD/oz.
As for the estimation of cash flows of Sierra Gorda S.C.M. as at 31 December 2024, the Group 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 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 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.
Other key assumptions used for estimation of cash flows of Sierra Gords S.C.M.
31 December 2025
31 December 2024
Mine life / forecast period (years)
23
23
Level of copper production during mine life (kt)
3 513
3 488
Level of molybdenum production during mine life (mn lb)
204
214
Level of gold production during mine life (koz)
1 015
966
Average operating margin during mine life
46.6%
47.6%
Applied discount rate after taxation
8.38%
8.31%
Capital expenditures to be incurred during mine life (USD million)
6 342
6 225
including capitalised stripping costs (USD million)
4 012
4 204
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
74
PART 7 – Financial instruments and financial risk management
Note 7.1 Financial Instruments
As at 31 December 2025
As at 31 December 2024
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
1 744
49
9 002
167
10 962
837
46
10 357
286
11 526
Loans granted to Sierra Gorda
S.C.M.
-
-
8 436
-
8 436
-
-
9 800
-
9 800
Derivatives
-
1
-
167
168
-
-
-
286
286
Other financial instruments
measured at fair value
1 744
48
-
-
1 792
837
46
-
-
883
Other financial instruments
measured at amortised cost
-
-
566
-
566
-
-
557
-
557
Current
-
1 388
1 182
123
2 693
-
808
1 595
193
2 596
Trade receivables
-
1 342
543
-
1 885
-
707
638
-
1 345
Derivatives
-
5
-
123
128
-
26
-
193
219
Cash and cash equivalents
-
-
443
-
443
-
-
715
-
715
Other financial assets
-
41
196
-
237
-
75
242
-
317
Total
1 744
1 437
10 184
290
13 655
837
854
11 952
479
14 122
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
75
As at 31 December 2025
As at 31 December 2024
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
21
5 248
1 605
6 874
12
5 130
257
5 399
Borrowings, leases and debt securities
-
5 034
-
5 034
-
4 910
-
4 910
Derivatives
21
-
1 605
1 626
12
-
257
269
Other financial liabilities
-
214
-
214
-
220
-
220
Current
215
5 542
1 283
7 040
14
6 517
33
6 564
Borrowings, leases and debt securities
-
815
-
815
-
1 261
-
1 261
Derivatives
157
-
1 283
1 440
11
-
33
44
Trade payables
-
3 213
-
3 213
-
3 132
-
3 132
Trade payables within the reverse factoring mechanism
-
1 297
-
1 297
-
2 000
-
2 000
Other financial liabilities
58
217
-
275
3
124
-
127
Total
236
10 790
2 888
13 914
26
11 647
290
11 963
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
76
Gains/(losses) on financial instruments recognised in profit/(loss) for the period
from 1 January 2025
to 31 December 2025
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
-
609
-
-
609
Note 6.2
Gain due to the reversal of allowances for impairment of
loans granted to Sierra Gorda S.C.M.
-
484
-
-
484
Note 4.3
Interest income/(costs)
-
-
( 98)
71
( 27)
Note 4.2
Foreign exchange gains/(losses) on instruments other
than borrowings
-
(1 575)
77
-
(1 498)
Note 4.3
Foreign exchange gains on borrowings
-
-
317
-
317
Note 7.2
Revenues from contracts with customers
-
-
-
107
107
Note 4.2
Note 4.3
Gains on measurement and realisation of derivatives
226
-
-
-
226
Note 4.2
Note 4.3
Losses on measurement and realisation of derivatives
( 411)
-
-
( 76)
( 487)
Note 4.3
Fees and charges on bank loans drawn
-
-
( 11)
-
( 11)
Note 4.2
Fair value (losses)/gains on financial assets
( 18)
-
-
-
( 18)
Other gains/(losses)
-
7
( 1)
-
6
Total net gain/(loss)
( 203)
( 475)
284
102
( 292)
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
77
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 Sierra Gorda S.C.M.
-
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 receivables
( 127)
-
-
-
( 127)
Other gains/(losses)
-
4
( 10)
-
( 6)
Total net gain/(loss)
( 108)
1 425
( 303)
628
1 642
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2024 Translation from the original Polish version
78
The fair value hierarchy of financial instruments measured at fair value in the statement of financial position
As at 31 December 2025
As at 31 December 2024
Classes of financial instruments
level 1
level 2
level 3
carrying
amount
level 1
level 2
level 3
carrying
amount
Loans granted
-
22
-
22
-
21
-
21
Listed shares
1 612
-
-
1 612
705
-
-
705
Unquoted shares
-
132
-
132
-
132
-
132
Trade receivables
-
1 342
-
1 342
-
707
-
707
Assets due to derivatives
-
296
-
296
-
505
-
505
Liabilities due to derivatives
-
(3 066)
-
(3 066)
-
( 313)
-
( 313)
Other financial assets
-
23
44
67
-
34
66
100
Other financial liabilities
-
( 58)
-
( 58)
-
( 3)
-
( 3)
The fair value hierarchy of financial instruments measured at amortised cost in the statement of financial position
As at 31 December 2025
As at 31 December 2024
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
-
-
7 729
8 436
-
-
8 780
9 800
Received long-term bank and other loans
-
(1 814)
-
(1 814)
-
(1 686)
-
(1 686)
Long-term debt securities
(2 620)
-
-
(2 600)
(2 657)
-
-
(2 600)
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.
Fair value hierarchy of investment property measured at fair value in the statement of financial position
In addition to financial instruments, the Group also measures investment properties at fair value in the statement of financial position.
As at 31 December 2025
As at 31 December 2024
fair value
carrying
amount
fair value
carrying
amount
level 1
level 2
level 3
level 1
level 2
level 3
Investment properties
-
60
129
189
-
65
112
177
level 2 The fair value of the property was estimated using the pairwise comparison method.
level 3 The fair value of the property was estimated using the revenue stream discounting method and the estimation ratios method.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
79
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 settlement prices of futures contracts from the COMEX exchange. 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, taking into account the credit risk of Group companies.
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.
Detailed disclosures on the assumptions adopted for the measurement of loans were presented in Note 6.2, while the information
on the sensitivity of the fair value classified to level 3 for loans granted can be found in Note 7.5.2.4. As at 31 December 2025,
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.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
80
Other financial assets
This item includes receivables due to conditional payments associated with the agreement on the sale of subsidiaries S.C.M. Franke
and Project Nikolas Company INC., 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 and reclassifies this
hedging cost to profit or loss at the moment the hedged item affects profit or loss. The Parent Entity recognises changes in the
time value until the hedged item is realised in other comprehensive income and reclassifies it to profit or loss on a one-off basis
at the time the hedged item is realised.
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.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
81
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.
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
82
Derivatives – open items as at the end of the reporting period
In the process of market risk management, the Parent Entity implements, among others, seagull strategies. Within these structures, it applies cash flow hedge accounting in accordance with IFRS 9
and it designates for hedge accounting (CFH – Cash Flow Hedge) only purchased put options and sold call options (collar structures). However, the Company treats the sold put options financing
these strategies as trade instruments. Therefore, the impact of the valuation of open hedging derivatives, as shown in the table below for seagull option structures, applies to the collar structures
designated as hedging.
As at 31 December 2025
As at 31 December 2024
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:
167
123
(1 605)
(1 283)
(2 598)
286
193
(257)
(33)
189
Derivatives – Metals (price of copper, silver)
Options – seagull* (copper)
87
15
(323)
(308)
(529)
55
132
(12)
(7)
168
Options – seagull* (silver)
66
-
(873)
(79)
(886)
-
-
-
-
-
Options – collar (silver)
14
3
(409)
(896)
(1 288)
19
25
(6)
(4)
34
Derivatives – Currency (USDPLN exchange rate)
Options – collar
-
105
-
-
105
34
29
(23)
(13)
27
Options – seagull*
-
-
-
-
-
1
5
(1)
(5)
-
Options – collar + purchased call options*
-
-
-
-
-
-
2
-
(4)
(2)
Derivatives – Currency-interest rate
Cross Currency Interest Rate Swap CIRS
-
-
-
-
-
177
-
(215)
-
(38)
Trade instruments, of which:
1
5
(21)
(157)
(172)
-
26
(12)
(11)
3
Derivatives – Metals (price of copper, silver, gold)
Sold put option (copper seagull)
-
-
(14)
(1)
(15)
-
-
(12)
(9)
(21)
Sold put option (silver seagull)
-
-
(5)
-
(5)
-
-
-
-
-
QP adjustment swap transactions (copper)
-
-
-
(21)
(21)
-
9
-
-
9
QP adjustment swap transactions (gold)
-
4
-
(23)
(19)
-
1
-
(1)
-
Derivatives – Currency (USDPLN exchange rate)
Sold put option
-
-
-
-
-
-
-
-
(1)
(1)
Purchased call option
-
-
-
-
-
-
1
-
-
1
Derivatives – Energy resources (natural gas)
Options – seagull (TTF)
1
1
(2)
(2)
(2)
-
-
-
-
-
Embedded derivatives (price of copper, gold)
Purchase contracts for metal-bearing materials
-
-
-
(110)
(110)
-
15
-
-
15
TOTAL OPEN DERIVATIVES
168
128
(1 626)
(1 440)
(2 770)
286
219
(269)
(44)
192
* Data concerns collar structures, i.e. purchased put options and sold call options designated as hedging (CFH – Cash Flow Hedge) entered into under the individual strategies hedging market risk.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
83
The table below presents detailed data on derivative transactions designated as hedging, held by the Parent Entity as at
31 December 2025.
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]
[USD/t]
[USD/ounce]
[USD/PLN]
from
to
from
to
Type of derivative
Commodity option structures
Copper – seagull*
132 000
9 640 – 11 723
Jan‘26
- Dec‘27
Jan‘26
- Jan’28
Silver – seagull*
11.25
39.99 – 55.55
July’26
- Dec’28
July’26
- Jan‘29
Silver – collar
16.17
36.91 – 50.73
Jan’26
- Dec‘27
Jan’26
- Jan‘28
Currency option structures
USD/PLN – collar
240
4.04-4.54
Jan’26
- June‘26
Jan’26
- July‘26
* Data concerns collar structures, i.e. purchased put options and sold call options designated as hedging (CFH – Cash Flow Hedge) entered into under the
individual strategies hedging market risk.
** Reclassification of profits or losses on a cash flow hedging instrument from other comprehensive income to the statement of profit or loss takes place in
the reporting period in which the hedged position impacts profit or loss (as an adjustment of a hedged position and to other operating income/costs for the
settled hedging cost). However, the recognition of the result on the settlement of the transaction takes place on the date of its settlement.
The table below presents detailed data on derivative transactions designated as hedging, held by the Company as at 31 December
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
* Data concerns collar structures, i.e. purchased put options and sold call options designated as hedging (CFH – Cash Flow Hedge) entered into under the
individual strategies hedging market risk.
** 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
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
84
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 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Revenues from contracts with customers (reclassification adjustment)
107
608
Other operating income / (costs) (including the reclassification
adjustment):
(260)
51
realisation of derivatives
(149)
(3)
measurement of derivatives
(111)
54
Finance income / (costs) (including the reclassification adjustment):
80
(12)
realisation of derivatives
(1)
(12)
interest on borrowings
81
-
Impact of derivatives and hedging instruments
on profit or loss for the period (excluding the tax effect)
(73)
647
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.
The Company recognises due to reclassification, 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).
Statement of other comprehensive income
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Measurement of hedging transactions (effective portion and cost of
hedging)
(2 683)
148
Reclassification to revenues from contracts with customers due to
realisation of a hedged item
(107)
(608)
Reclassification to finance costs due to realisation of a hedged item
(81)
-
Reclassification to non-current assets due to realisation of a hedged
item*
(47)
(70)
Reclassification to other operating (income)/costs due to realisation
of a hedged item (settlement of the hedging cost)
77
(20)
Impact of hedging transactions (excluding the tax effect)**
(2 841)
(550)
TOTAL COMPREHENSIVE INCOME
(2 914)
97
*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.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
85
Note 7.3 Other financial instruments measured at fair value
Accounting policies
The item of the statement of financial position “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. Therefore,
a classification into this measurement category was mandatory.
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 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 loans’ 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 2025
As at
31 December 2024
Other financial instruments measured at fair value through other
comprehensive income
1 744
837
Shares of listed companies (Warsaw Stock Exchange and TSX Venture
Exchange in Toronto), of which:
1 612
705
TAURON POLSKA ENERGIA S.A.
1 574
685
GRUPA AZOTY S.A.
15
15
Other listed shares
23
5
Unquoted shares
132
132
Other financial instruments measured at fair value through profit or
loss
48
46
Loans granted
22
21
Receivables due to conditional payments associated with the agreement
on the sale of a subsidiary S.C.M. Franke
26
25
Total other financial instruments measured at fair value
1 792
883
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 and loans granted is
classified to level 2 of the hierarchy (i.e. measurement based on observable data, which however is not from an active market).
In 2025 as well as in 2024, there were no dividends from companies in which the Group had shares classified as other financial
instruments measured at fair value.
Similarly in these years, 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 through other comprehensive income.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
86
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
2025
Percentage change of share price
As at
31 December
2024
Percentage change of share price
15%
-15%
15%
-15%
Carrying
amount
Other
comprehensive
income
Other
comprehensive
income
Carrying
amount
Other
comprehensive
income
Other
comprehensive
income
Listed shares
1 612
242
(242)
705
106
(106)
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 annual reporting period.
Note 7.4 Other financial instruments measured at amortised cost
Accounting policies
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.
Important estimates, assumptions and judgements
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 2025
As at
31 December 2024
Cash held in the Mine Closure Fund
525
489
Other non-current financial receivables
41
68
Note 7.1
Total
566
557
Cash designated for decommissioning mines are exposed to the credit risk described in Note 7.5.2.5.
Details regarding revaluation of the provision for the decommissioning costs of mines and other technological facilities are
described in Note 9.4.
Note 7.5 Financial risk management
In the course of its business activities the Group is exposed to the following main financial risks:
• market risks:
o commodity risk,
o risk of changes in foreign exchange rates,
o risk of changes in interest rates,
o risk of changes in other merchandise, including energy and energy carriers,
o price risk related to investments in shares of listed companies (Note 7.3),
• credit risk, and
• liquidity risk (the process of financial liquidity management is described in Note 8).
The Group identifies and measures financial risk on an ongoing basis, and also takes actions aimed at minimising its impact on the
financial position.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
87
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 fair value measurements).
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
Group II –
other exposure to
market risk
Prices of other metals and
merchandise
From the Group’s point of view, this group is comprised of less
significant risks, although sometimes these risks are significant from
an individual entity’s point of view. Therefore, it is tactically managed
- on an ad-hoc basis, depending on the market conditions.
Note 7.2
Other exchange rates
Note 7.2
Interest rates
In market risk management various approaches are applied for particular, identified exposure groups. The Parent Entity considers
the following factors when selecting hedging strategies or restructuring hedging positions: current and forecasted market
conditions, the internal situation of the Parent Entity, the effective level and cost of hedging, and the impact of the minerals
extraction tax.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
88
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,
• 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.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
89
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 2024-2025 is presented
in the table below.
from 1 January 2025 to 31 December 2025
from 1 January 2024 to 31 December 2024
Net
Sales
Purchase
Net
Sales
Purchase
Copper [t]
432 704
624 811
192 107
445 440
649 886
204 446
Silver [t]
1 330
1 339
9
1 337
1 349
12
The notional amount of copper price hedging strategies settled in 2025 represented approx. 9% (2% in 2024) of the total sales of
this metal realised by the Parent Entity (it represented approx. 14% of net sales
1
in 2025 and 2% in 2024).
The notional amount of silver price hedging strategies settled in 2025 represented approx. 12% of the total sales of this metal
realised by the Company (2% in 2024).
As part of the realisation of the strategic hedging plan of the Parent Entity against market risk, in 2025, transactions hedging the
planned revenues from metals sales were implemented. On the copper market, seagull option structures (Asian options) for the
period from March 2025 to December 2027 for the total tonnage of 138.33 thousand tonnes were entered into. On the silver
market, collar option structures (Asian options) for the period from July 2025 to December 2027 for the total tonnage of 16.11
million troy ounces and seagull option structures (Asian options) for the period from July 2026 to December 2028 for the total
tonnage of 11.25 million troy ounces were implemented. In accordance with hedge accounting principles, collar structures, which
are a part of the seagull strategy, were designated as hedging sales revenues.
In 2025 QP adjustment swap transactions were entered into on the copper and gold markets with maturities of up to June 2026, as
part of the management of a net trading position
2
.
As a result, as at 31 December 2025, the Parent Entity held an open derivatives position for:
• 136.8 thousand tonnes of copper (of which 132 thousand tonnes arose from the strategic management of market risk,
while 4.8 thousand tonnes came from the management of a net trading position),
• 27.42 million troy ounces of silver, and
• 36.8 thousand troy ounces of gold (net).
1
Copper sales less copper in purchased metal-bearing materials.
2
Applied in order to react to changes in contractual arrangements with customers, non-standard pricing terms as regards metals sales and the purchase of
copper-bearing materials.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
90
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 (net).
In 2025 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 2025 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
2025 and 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).
The purchased put options represent the hedging against the risk of changes in metals prices, the sold call options limit the
participation in prices increases, while the sold put options limit the hedge in the case of a price decrease.
Management of the risk of changes in copper prices – open derivatives as at 31 December 2025
Management of the risk of changes in copper prices – open derivatives as at 31 December 2024
Instrument/
option
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
sold
put option
purchased
put option
sold
call option
[tonnes]
[USD/t]
[USD/t]
[USD/t]
[USD/t]
[USD/t]
1st half
seagull
9 000
7 500
9 600
11 500
(100)
9 500
seagull
9 450
7 500
9 300
11 300
(143)
9 157
seagull
9 600
7 600
9 213
11 563
(134)
9 079
seagull
9 600
7 800
9 800
11 800
(132)
9 668
2nd half
seagull
9 450
7 500
9 300
11 300
(143)
9 157
seagull
9 600
7 600
9 213
11 563
(134)
9 079
seagull
9 300
7 500
9 465
11 565
(142)
9 323
seagull
9 600
7 800
9 800
11 800
(132)
9 668
Total I-XII 2026
75 600
1st
half
seagull
9 600
7 600
9 213
11 563
(134)
9 079
seagull
9 300
7 500
9 465
11 565
(142)
9 323
seagull
9 600
7 800
9 800
11 800
(132)
9 668
seagull
9 300
7 700
10 297
12 297
(115)
10 182
2nd
half
seagull
9 300
7 700
10 297
12 297
(115)
10 182
seagull
9 300
7 700
10 229
12 229
(74)
10 155
Total I-XII 2027
56 400
Instrument/
option
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
sold
put option
purchased
put option
sold
call option
[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
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
91
Management of the risk of changes in silver prices – open derivatives as at 31 December 2025
Management of the risk of changes in silver prices – open derivatives as at 31 December 2024
An analysis of the Parent Entity’s sensitivity to the risk of changes in commodity prices in the years 2024-2025
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 Schwartz model (the geometrical Ornstein-Uhlenbeck process) was used.
Assumed changes
as at 31 December 2025
Assumed changes
as at 31 December 2024
increase in metals prices
decrease in metals prices
increase in metals prices
decrease in metals prices
Copper forward prices [USD/t]
+11%
-20%
+16%
-17%
Silver forward prices [USD/ounce]
+12%
-30%
+21%
-24%
Gold forward prices [USD/ounce]
+13%
-13%
+12%
-12%
Instrument/
option
Notional
Average weighted option strike price
Average weighted
premium
Effective
hedge price
sold
put option
purchased
put option
sold
call option
[mn ounces]
[USD/ounce]
[USD/ounce]
[USD/ounce]
[USD/ounce]
[USD/ounce]
1st
half
2nd
half
1st
half
collar
1.05
-
30.64
45.64
(0.50)
30.14
collar
0.99
-
31.00
45.00
(0.59)
30.41
collar
1.95
-
34.54
47.54
(0.45)
34.09
collar
2.10
-
37.50
50.50
(0.40)
37.10
collar
1.02
-
42.75
58.25
-
42.75
2nd
half
seagull
0.99
22.00
33.48
45.48
(0.38)
33.10
collar
1.95
-
34.54
47.54
(0.45)
34.09
collar
2.10
-
37.50
50.50
(0.40)
37.10
collar
1.02
-
42.75
58.25
-
42.75
Total I-XII 2026
13.17
1st
half
2nd
half
seagull
0.99
22.00
33.48
45.48
(0.38)
33.10
collar
1.95
-
34.54
47.54
(0.45)
34.09
seagull
2.10
22.71
39.64
55.64
-
39.64
collar
1.02
-
42.75
58.25
-
42.75
2nd
half
seagull
2.10
22.71
39.64
55.64
-
39.64
collar
1.02
-
42.75
58.25
-
42.75
seagull
0.99
26.00
45.05
62.05
-
45.05
Total I-XII 2027
10.17
1st
half
2nd
half
seagull
2.10
22.71
39.64
55.64
-
39.64
seagull
0.99
26.00
45.05
62.05
-
45.05
2nd
half
seagull
0.99
26.00
45.05
62.05
-
45.05
Total I-XII 2028
4.08
Instrument/
option
Notional
Average weighted option strike price
Average weighted
premium
Effective
hedge price
sold
put option
purchased
put option
sold
call option
[mn ounces]
[USD/ounce]
[USD/ounce]
[USD/ounce]
[USD/ounce]
[USD/ounce]
1st
half
2nd
half
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
2nd
half
collar
1.05
-
30.64
45.64
(0.50)
30.14
Total I-VI 2026
1.05
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
92
Financial assets and liabilities
exposed to risk of changes
in metals prices
as at 31 December 2025
Value at
risk
Carrying
amount as
at 31
December
2025
Impact of price increases
Impact of price decreases
financial
result
other
comprehensive
income
financial
result
other
comprehensive
income
Copper price risk
Derivatives
(565)
(565)
(2)
(507)
(39)
755
Embedded derivatives
(51)
(51)
(79)
-
69
-
Silver price risk
Derivatives
(2 179)
(2 179)
1
(748)
(13)
1 721
Embedded derivatives
(26)
(26)
(30)
-
76
-
Gold price risk
Derivatives
(19)
(19)
(21)
-
33
-
Embedded derivatives
(33)
(33)
(35)
-
42
-
Impact on financial result
(166)
-
168
-
Impact on other comprehensive income
-
(1 255)
2 476
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
comprehensive
income
financial
result
other
comprehensive
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
Note 7.5.1.3 Risk of changes in foreign exchange rates
Regarding the risk of changes in foreign exchange rates within the KGHM Polska Miedź S.A. Group, the following types
of exposures were identified:
• transaction exposure related to the volatility of cash flows in the base (functional) currency,
• exposure related to the volatility of selected items of the statement of financial position in the base (functional) currency.
The transaction exposure to currency risk derives from cash flow-generating contracts, whose values expressed in the base
(functional) currency depend on future levels of exchange rates of the foreign currencies with respect to the base (functional)
currency. Cash flows exposed to currency risk may possess the following characteristics:
• denomination in the foreign currency – cash flows are settled in foreign currencies other than the functional currency,
and
• indexation in the foreign currency – cash flows may be settled in the base currency, but the price (i.e. of a metal) is set in
a different foreign currency.
The key source of exposure to currency risk in the Parent Entity’s business operations are the proceeds from sales
of products (with respect to metals prices, processing and producer margins).
The exposure to currency risk also derives from items in the consolidated statement of financial position denominated
in foreign currencies, which under the existing accounting regulations must be translated, upon settlement or periodic valuation,
including the translation of foreign operations statements, by applying the current exchange rate of the foreign currencies versus
the base (functional) currency. Changes in the carrying amounts of such items between valuation dates result in the volatility of
profit or loss for the period or of other comprehensive income.
Items in the consolidated statement of financial position which are exposed to currency risk include in particular:
• trade receivables and trade payables related to purchases and sales denominated in foreign currencies;
• financial receivables due to loans granted in foreign currencies;
• financial liabilities due to borrowings in foreign currencies;
• cash and cash equivalents in foreign currencies; and
• derivatives on metals market.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
93
As for the currency market, the notional amount of settled transactions hedging revenues from metals sales amounted to approx.
9% (in 2024: 19%) of the total revenues from sales of copper and silver realised by the Parent Entity in 2025.
In 2025, the Parent Entity did not implement any hedging transactions on the currency market. Nevertheless, on the interest rates
markets the hedging position has been restructured. Cross Currency Interest Rate Swap (CIRS) transactions in the notional amount
of PLN 1.6 billion with a maturity date of 27 June 2029 hedging both the sales revenues in the currency, as well as the variable
interest rate of issued bonds have been closed. As a result of the carried out closure of CIRS transactions, the Parent Entity
generated the positive cash flow from a positive valuation of the instrument and effectively moved to the prior, variable interest
rate of bonds in PLN.
As a result, as at 31 December 2025 the Parent Entity held an open position on the currency market for the notional amount
of USD 240 million (USD 960 million as at 31 December 2024).
The condensed tables of open transactions in derivatives of the Parent Entity on the currency market as at 31 December 2025 and
31 December 2024 are presented below (the hedged notional in the presented periods is allocated evenly on a monthly basis).
Management of the risk of changes in the USD/PLN exchange rate – open derivatives as at 31 December 2025
Management of the risk of changes in the USD/PLN exchange rate – open derivatives as at 31 December 2024
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 2025, following their translation to PLN, the bank loans and the investment loans which were drawn in USD
amounted to PLN 2 173 million (as at 31 December 2024: PLN 2 420 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.
Instrument/
option
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
sold put option
purchased put
option
sold call option
[USD mn]
[USD/PLN]
[USD/PLN]
[USD/PLN]
[PLN per USD 1]
[USD/PLN]
1st
half
2nd
half
1st
half
collar
240
-
4.04
4.54
(0.05)
3.99
TOTAL I-VI 2026
240
Instrument/
option
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
sold put option
purchased put
option
sold call
option
purchased
call option
[USD mn]
[USD/PLN]
[USD/PLN]
[USD/PLN]
[USD/PLN]
[PLN per USD 1]
[USD/PLN]
1st
half
collar
+purchase 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
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
94
Financial instruments
Value at risk as at 31 December 2025
total PLN million
USD million
EUR million
CAD million
Shares
23
-
-
9
Trade receivables
1 348
303
57
6
Cash and cash equivalents
183
28
2
28
Long-term loans granted to a joint venture
8 436
2 342
-
-
Other financial assets
155
26
2
20
Derivatives*
(2 770)
(798)
-
-
Trade and other payables
(2 049)
(218)
(286)
(21)
Borrowings
(2 307)
(614)
(15)
(13)
Other financial liabilities
(69)
(17)
(2)
-
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.
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
95
An analysis of the Group’s sensitivity to the currency risk in 2025 and 2024
Value at risk
Carrying
amount
31 December
2025
Change in the USD/PLN exchange rate
Change in the EUR/PLN
exchange rate
Change in the CAD/PLN
exchange rate
3.91 (+9%)
3.28 (-9%)
4.46 (+4%)
4.05 (-5%)
2.85 (+8%)
2.40 (-9%)
Financial assets and liabilities
exposed to the currency risk
as at 31 December 2025
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
23
1 744
-
-
-
-
-
-
2
(2)
Trade receivables
1 348
1 885
94
-
(96)
-
13
(10)
1
(1)
Cash and cash equivalents
183
443
9
-
(9)
-
-
-
6
(6)
Long-term loans granted to a joint
venture
8 436
8 436
729
-
(746)
-
-
-
-
-
Other financial assets
155
851
8
-
(8)
-
-
-
4
(2)
Derivatives
(2 770)
(2 770)
(14)
(302)
15
316
-
-
-
-
Trade and other payables
(2 049)
(4 705)
(68)
-
69
-
(67)
51
(5)
5
Borrowings
(2 307)
(5 849)
(191)
-
195
-
(3)
3
(3)
3
Other financial liabilities
(69)
(294)
(5)
-
6
-
-
-
-
-
Impact on profit or loss
562
-
(574)
-
(57)
44
5
(3)
Impact on other comprehensive income
(302)
316
-
-
-
-
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
-
-
-
-
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
96
Note 7.5.1.4 Interest rate risk
In 2025 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.
In 2025 the Parent Entity restructured the hedging position. Cross Currency Interest Rate Swap (CIRS) transactions in the notional
amount of PLN 1.6 billion with a maturity date of 27 June 2029, hedging both the sales revenues in the currency as well as the
variable interest rate of issued bonds, have been closed. As a result of the carried out closure of CIRS transactions, the Company
generated positive cash flow from a positive valuation of the instrument and effectively transitioned to the prior, variable interest
rate of bonds in PLN.
The main items which are exposed to interest rate risk are presented below:
As at
31 December 2025
As at
31 December 2024
Cash flow
risk
Fair value
risk
Total
Cash flow risk
Fair value
risk
Total
Cash and cash
equivalents
443
-
443
715
-
715
Loans granted
-
22
22
-
21
21
Note 7.1
Borrowings
(4 151)
(1 698)
(5 849)
(3 960)
(2 211)
(6 171)
Trade payables within
the reverse factoring
mechanism
(1 297)
-
(1 297)
(2 000)
-
(2 000)
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 2025
change in interest rate
(PLN, USD, EUR)
31 December 2024
change in interest rate
(PLN, USD, EUR)
+100 bp
-100 bp
+50 bp
-150 bp
profit or loss
profit or loss
profit or loss
other
comprehensive
income
profit or loss
other
comprehensive
income
Cash and cash equivalents
4
(4)
7
-
(7)
-
Borrowings
(42)
42
(40)
-
40
-
Derivatives – interest rate
-
-
-
56
-
(63)
Trade payables within the reverse factoring
mechanism
(13)
13
(20)
-
20
-
Impact on profit or loss
(51)
51
(53)
-
53
Impact on other comprehensive income
-
-
-
56
(63)
Impact of the reference rates reform
In 2025 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 will come into force in 2027.
One of the key events in 2025 was the formal adoption of documentation required by the Benchmark Regulation with respect to
the proposed POLSTR index and the start of its publication. The Steering Committee of the National Working Group announced
that on 2 June 2025 the official designation of the POLSTR index commenced, and the first application of the POLSTR index took
place on 1 September 2025. Therefore, the POLSTR index gained the status of reference rate pursuant to the requirements of the
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
97
Benchmark Regulation. In 2026, indicators as to the occurrence of a regulatory event defined under article 23c sec. 1 of the
Benchmark Regulation are to be verified. The occurrence of a regulatory event may be a reason for the initiation of a regulatory
procedure leading to the issuance of a decree of the Minister of Finance, which will indicate a replacement for the key reference
rate WIBOR. This decree will also define the adjusting spread and the date from which the replacement will be applied.
As at 31 December 2025, the Group estimated that the impact of IBOR reform on the financial statements will be immaterial.
As at 31 December 2025 and 31 December 2024, 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 2025
Carrying amount
as at
31 December 2024
Bank loans
WIBOR 1M, 3M
(145)
(201)
Debt securities
WIBOR 6M
(2 604)
(2 602)
Trade payables within the reverse factoring mechanism
WIBOR 1M
(407)
(970)
Derivatives
WIBOR 6M
-
(38)
Total
(3 156)
(3 811)
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. Moreover, the Parent Entity entered into a contract for the supply of electricity from renewable
energy sources under a PPA (Power Purchase Agreement), which was entered into to meet the own needs of the Company and, in
accordance with the exemption provided for under IFRS 9 para. 2.4, is not subject to measurement and recognition as a financial
instrument.
In 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). As part of the management of risk of changes in the prices of energy resources, the
Parent Entity entered into option transactions on the TTF (Title Transfer Facility) gas market. Seagull option structures on the contract
Endex ICE TTF Natural Gas Month Ahead were entered into.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
98
Hedging against risk of changes in natural gas prices – open derivatives as at 31 December 2025
A sensitivity analysis of open instruments to the risk of changes in natural gas prices TTF as at 31 December 2025
Value at risk
Carrying
amount
31 December
2025
Impact of an increase in
prices +92%
Impact of a decrease in
prices -49%
profit or loss
profit or loss
Derivatives
(2)
(2)
22
(11)
Impact on profit or loss
22
(11)
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
Company’s needs.
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 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
CO
2
emission allowances*
EUA
222 444
206 851
Property rights, so-called green certificates**
GWh
34
101
Property rights, so-called blue certificates***
GWh
2
10
Property rights, so-called white certificates****
TOE
3 070
2 531
Gas
GWh
2 053
2 450
Electricity
GWh
2 702
2 517
* Redemption of CO
2
emission allowances (in line with the actual emission in the given year) less settled allowances received free of charge
(933.9 thousand EUA in 2025, 975.5 thousand in 2024).
** 5% of electricity consumption for own needs in 2024, taking into account the obligation for industrial customers of 80% and 8.5% of electricity
consumption for own needs in 2025, taking into account the obligation for industrial customers of 15%.
*** 0.5% of electricity consumption for own needs in 2024, taking into account the obligation for industrial customers of 80% in 2024 and 0.5% of electricity
consumption for own needs in 2025, taking into account the obligation for industrial customers of 15%.
**** 1.5% of electricity consumption purchased at Polish Power Exchange for own needs/11.63 (11.63 TOE per MWh conversion).
Instrument/
option
Notional
Average weighted option strike price
Average
weighted
premium
Effective
hedge price
sold
put option
purchased
put option
sold call
option
[GWh]
[EUR/MWh]
[EUR/MWh]
[EUR/MWh]
[EUR/MWh]
[EUR/MWh]
Q1
seagull
26.9
31.5
42.0
55.0
-
42.0
Q2
seagull
26.2
26.4
35.5
50.0
-
35.5
seagull
26.2
22.8
32.0
50.0
-
32.0
Q3
seagull
33.1
26.4
35.5
50.0
-
35.5
seagull
33.1
22.8
32.0
50.0
-
32.0
Q4
seagull
39.8
26.4
35.5
50.0
-
35.5
seagull
39.8
22.8
32.0
50.0
-
32.0
Total I-XII 2026
225.1
Q1
seagull
38.9
26.4
35.5
50.0
-
35.5
seagull
38.9
22.8
32.0
50.0
-
32.0
Q2
seagull
26.2
22.8
32.0
50.0
-
32.0
Q3
seagull
33.1
22.8
32.0
50.0
-
32.0
Q4
seagull
39.8
22.8
32.0
50.0
-
32.0
Total I-XII 2027
176.9
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
99
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 2024-2025 (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 2024-2025 was immaterial.
As at 31 December 2025
from 1 January 2025
to 31 December 2025
from 1 January 2025
to 31 December 2025
As at 31 December 2024
from 1 January 2024
to 31 December 2024
from 1 January 2024
to 31 December 2024
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
(662)
-
686
(686)
137
-
(128)
137
intrinsic value
(281)
-
-
(300)
128
-
-
128
time value
(381)
-
-
(386)
9
-
-
9
Commodity risk (silver)
Options – Sales revenue
(2 205)
-
2 219
(2 214)
28
-
(9)
28
intrinsic value
(1 925)
-
-
(1 926)
9
-
-
9
time value
(280)
-
-
(288)
19
-
-
19
Currency risk (USD)
Options – Sales revenue
95
-
(96)
96
(17)
-
-
(17)
intrinsic value
105
-
-
105
-
-
-
-
time value
(10)
-
-
(9)
(17)
-
-
(17)
Loans – Sales revenue
-
(16)
-
-
-
(32)
-
-
intrinsic value
-
(16)
-
-
-
(32)
-
-
Currency-interest rate risk
CIRS – Sales revenue
-
24
-
-
(215)
-
50
(54)
intrinsic value
-
24
-
-
(215)
-
-
(54)
CIRS – Finance income/costs
-
-
-
-
177
-
(5)
10
intrinsic value
-
-
-
-
177
-
-
10
Total, including:
(2 772)
8
2 809
(2 804)
110
(32)
(92)
104
Total intrinsic value
(2 101)
8
-
(2 121)
99
(32)
-
93
Total time value
(671)
-
-
(683)
11
-
-
11
PART 7 – Financial instruments and financial risk management
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
100
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 2025 to 31 December 2025
from 1 January 2024 to 31 December 2024
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*
(829)
(31)
-
146
9
-
Commodity risk (silver)
Options*
(2 303)
(70)
-
28
-
-
Currency risk (USD)
Options*
260
148
-
(26)
672
-
Loans**
-
(16)
-
-
(16)
-
Currency-interest rate risk
CIRS***
189
80
47
-
(37)
70
Total
(2 683)
111
47
148
628
70
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, (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 2024 and 2025.
2025
2024
Effective value *
Cost of hedging **
Total
Effective value *
Cost of hedging **
Total
Other comprehensive income due to cash flow hedging
– as at 1 January
70
8
78
603
25
628
Impact of measurement of hedging transactions (effective part
and cost of hedging)
(1 927)
(756)
(2 683)
145
3
148
Reclassification to the statement of profit or loss and non-current
assets due to realisation of hedged item
(235)
77
(158)
(678)
(20)
(698)
Other comprehensive income due to cash flow hedging
– as at 31 December
(2 092)
(671)
(2 763)
70
8
78
* 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)
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
101
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 2025, the total amount of free and restricted cash and cash equivalents of PLN 438 million was held in bank
accounts and in short-term deposits (in total as at 31 December 2024: PLN 711 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 2025
As at
31 December 2024
Highest
from AAA to AA- according to S&P and Fitch, and from Aaa to
Aa3 according to Moody’s
26%
21%
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
40%
48%
Medium
from BBB+ to BBB- according to S&P and Fitch, and from Baa1
to Baa3 according to Moody’s
34%
31%
The risk level of a financial institution arising from depositing cash on bank accounts or deposits in the said institution, and taking
into consideration the risk of these instruments, is almost the same, and therefore they are presented jointly.
As at 31 December 2025 the maximum single entity share of the amount exposed to credit risk arising from cash and bank deposits
amounted to 27%, or PLN 117 million (as at 31 December 2024: 29%, or PLN 207 million).
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
102
As at
31 December 2025
As at
31 December 2024
Amount
Rating
Amount
Rating
Counterparty 1
117
BBB+/Fitch
Counterparty 1
207
A2/Moody's
Counterparty 2
85
AA-/S&P
Counterparty 2
174
BBB/Fitch
Counterparty 3
69
A2/Moody's
Counterparty 3
92
AA-/S&P
Counterparty 4
30
BBB-/Fitch
Counterparty 4
54
A-/S&P
Counterparty 5
30
A-/Fitch
Counterparty 5
39
A+/Fitch
Other
107
-
Other
145
-
Total
438
Total
711
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 2025
As at 31 December 2024
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
47
-
47
148
3
151
Counterparty 2
41
4
45
63
2
65
Counterparty 3
42
-
42
63
2
65
Other
166
19
185
216
27
243
Total
296
23
319
490
34
524
Taking into consideration the receivables due to open derivatives transactions entered into by the Parent Entity (excluding
embedded derivatives) as at 31 December 2025 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 15%, or PLN 47 million (as at 31 December 2024:
29%, or PLN 151 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.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
103
Financial assets and liabilities due to settled derivatives by main counterparties as at 31 December 2025
As at 31 December 2025
Gross financial
receivables
Gross financial
liabilities
Subject to compensation
Net financial
receivables
Net financial
liabilities
Financial receivables
Financial liabilities
Counterparty 1
-
(9)
-
-
-
(9)
Counterparty 2
5
(4)
1
(4)
4
(3)
Counterparty 3
-
(8)
-
-
-
(8)
Other
19
(38)
-
-
19
(38)
Total
24
(59)
1
(4)
23
(58)
Financial assets and liabilities due to settled derivatives by main counterparties as at 31 December 2024
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)
The Parent Entity determines 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 2025
As at
31 December 2024
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
100%
92%
Medium
from BBB+ to BBB- according to S&P and Fitch, and from Baa1 to
Baa3 according to Moody’s
-
8%
Note 7.5.2.3 Credit risk related to trade receivables
The following Group companies had significant trade receivables as at 31 December 2025:
As at
31 December 2025
As at
31 December 2024
KGHM Polska Miedź S.A.
1 137
759
KGHM INTERNATIONAL LTD. Group
433
282
WPEC w Legnicy S.A.
66
63
„MCZ” S.A.
56
35
CENTROZŁOM WROCŁAW S.A.
44
69
NITROERG S.A.
40
38
KGHM ZANAM S.A.
15
13
MERCUS Logistyka sp. z o.o.
14
6
KGHM Metraco S.A.
13
13
WMN "Łabędy" S.A.
12
16
Uzdrowiska Kłodzkie S.A. - Grupa PGU
11
8
The total net amount of trade receivables of the Group as at 31 December 2025, excluding the fair value of accepted collateral, up
to the amount of which the Group may be exposed to credit risk, amounts to PLN 1 885 million (as at 31 December 2024:
PLN 1 345 million).
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
104
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
2025, the amount of receivables transferred to factoring, for which payment from factors was not received, amounted to
PLN 3 million (as at 31 December 2024: PLN 13 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 2025 the Parent Entity had secured 87% of its trade receivables (as at 31 December 2024, 80%).
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 2025 the balance of receivables from the 7 largest customers represented 68%
of trade receivables (as at 31 December 2024: 51%). 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 2025
As at
31 December 2024
Poland
31%
27%
Canada
9%
8%
European Union (excluding Poland)
2%
8%
Asia
13%
34%
Other countries
45%
23%
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
105
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 2025, no deterioration of macroeconomic factors was noted.
Important estimates and assumptions
31 December 2025
31 December 2024
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
0.01-9.53
486
(4)
0.04-7.2
604
(4)
<1,30)
0.07-19.49
58
(1)
0.3-50
34
(1)
<30,60)
0.05-77.72
4
(1)
0.4-77.7
4
-
<60,90)
0.28-88.85
2
(1)
6-88.8
1
-
Default
100
28
(28)
100
35
(35)
Total
578
(35)
678
(40)
*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.
2025
2024
Gross amount as at 1 January
678
557
Change in the balance of receivables
(98)
121
Utilisation of a loss allowance in the period
(2)
-
Note 10.2
Gross amount as at 31 December
578
678
The following table presents the change in the estimation of expected credit losses on trade receivables measured at amortised
cost.
2025
2024
Loss allowance for expected credit losses as at 1 January
40
39
Change in allowance in the period recognised in profit or loss
(3)
1
Utilisation of a loss allowance in the period
(2)
-
Note 10.2
Loss allowance for expected credit losses as at 31 December
35
40
As at 31 December 2025, disputed receivables amounted to PLN 17 million (as at 31 December 2024, PLN 27 million). The Group is
taking actions aimed at recovering these receivables or explaining the validity of pursuing claims.
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
106
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 2025, the Group classified the fair value measurement 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 2025
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
7 729
7 818
7 626
Loans granted measured at amortised cost
(USD million)
2 146
2 171
2 117
Carrying amount
as at
31 December 2025
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
8 436
8 485
8 373
Loans granted measured at amortised cost
(USD million)
2 342
2 356
2 325
PART 7 – Financial instruments and financial risk management
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
107
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
Note 7.5.2.5 Credit risk related to other financial assets
As at 31 December 2025, the most significant item in other financial assets was cash accumulated on the separate, special purpose
bank accounts of the Mine Closure Fund in the amount of PLN 532 million (as at 31 December 2024: PLN 491 million).
All special purpose bank accounts 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 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 2025
As at
31 December 2024
Highest
AAA to AA- according to S&P and Fitch, and from Aaa to
Aa3 according to Moody’s
8%
10%
Medium-high
from A+ to A- according to S&P and Fitch, and from A1 to A3
according to Moody’s
92%
90%
As at
31 December 2025
As at
31 December 2024
Counterparty 1
488
443
Counterparty 2
44
48
Total
532
491
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.
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
108
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 2025
31 December 2024
Net Debt/Adjusted EBITDA
Relation of net debt to adjusted EBITDA
0.76
0.81
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
5 424
5 303
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.
7 161
6 580
*Adjusted EBITDA for the period of 12 months ending on the last day of the reporting period, total of adjusted EBITDA of reporting segments excluding adjusted
EBITDA of the reporting segment joint venture Sierra Gorda S.C.M.
The level of the Net Debt/Adjusted EBITDA ratio achieved in 2025 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 risk of 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 creditworthiness, understood as the possibility of obtaining and
servicing debt. 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.
The second indicator monitored by the Group in the liquidity and capital management process, in particular in order to meet the
obligations arising from the borrowing agreements concluded by the Parent Entity, is the value of adjusted operating profit, which
is the basis for calculating EBITDA, which is a part of the financial covenant. The value of this ratio is presented in the table below:
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
109
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Profit on sales
3 959
3 767
Interest income on loans granted to a joint venture
557
552
Other operating income and (costs)
(1 623)
444
Adjusted operating profit*
2 893
4 763
* 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 unified definitions stipulated in
borrowing agreements. Information on liabilities for which covenants apply is presented in Note 8.4.
As at 31 December 2025 the carrying amount of liabilities drawn under the agreements containing the financial covenant amounted
to PLN 1 447 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 2025
and 31 December 2025, 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 are checked again as at 30 June 2026.
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 2025 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 share. In the years ended 31
December 2025 and 31 December 2024, there were no changes in either registered share capital or in the number of issued shares.
In 2025, 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 2025 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 2025 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 15 May 2023
3)
based on a notification received by the Company dated 18 August 2016
PART 8 – Borrowings and the management of liquidity and capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
110
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
Surplus from
the fair value
remeasurement
of investment
properties as at
the date of
reclassification
from fixed
assets
Exchange
differences
from
the
translation
of
statements
of
operations
with a
functional
currency
other than
PLN
Share in other
comprehensive
income of a
joint venture
accounted for
using the
equity method
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 transactions hedging effective portion
of cash flow and hedging cost
-
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 the valuation 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
PART 8 – Borrowings and the management of liquidity and capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
111
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 date of
reclassification
from fixed
assets
Exchange
differences
from
the
translation
of
statements
of
operations
with a
functional
currency
other than
PLN
Share in other
comprehensive
income of a
joint venture
accounted for
using the
equity method
Retained
earnings
As at 1 January 2025
( 227)
65
( 162)
( 722)
9
2 491
-
27 374
Other changes
-
-
-
-
-
-
-
1
Profit for the period
-
-
-
-
-
-
-
3 687
Fair value gains on financial assets measured
at fair value through other comprehensive
income
903
-
903
-
-
-
-
-
Note 7.2
Impact of transactions hedging effective
portion of cash flow and hedging cost
-
(2 683)
(2 683)
-
-
-
-
-
Note 7.2
Amount transferred to profit or loss and
non-current assets due to settlement of
hedging instruments
-
( 158)
( 158)
-
-
-
-
-
Note 11.2
Actuarial gains on post-employment benefits
-
-
-
19
-
-
-
-
Exchange differences from the translation of
statements of operations with a functional
currency other than PLN
-
-
-
-
-
( 289)
-
-
Note 5.1.1
Deferred income tax
( 169)
540
371
( 4)
-
-
-
-
Other
-
-
-
-
( 1)
-
( 8)
-
Other comprehensive income
734
(2 301)
(1 567)
15
( 1)
( 289)
( 8)
-
Total comprehensive income
734
(2 301)
(1 567)
15
( 1)
( 289)
( 8)
3 687
As at 31 December 2025
507
(2 236)
(1 729)
( 707)
8
2 202
( 8)
31 062
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
112
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 2025 the statutory reserve capital in the Group’s entities amounted to PLN 762 million, of which PLN 667 million relates
to the Parent Entity, and is recognised in retained earnings.
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, supported by the Financial Liquidity Committee, is responsible for financial liquidity
management in the Group and it is performed based on the approved, appropriate Policy.
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.
As a part of the process of liquidity management, the Group makes use of the reverse factoring program which supports the
process of working capital management and diversifies the sources of working capital financing.
The level of utilisation of factoring limits of individual factors is monitored on an ongoing basis. Since the Group identifies the
possibility of liquidity risk concentration due to the application of reverse factoring, in order to reduce it, reverse factoring
agreements are concluded with various factors for an indefinite period of time.
All entities which concluded reverse factoring agreements with the Group are renowned financial institutions.
Under the liquidity management process, the Group also utilises other instruments which enhance its effectiveness such as 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.
Moreover, 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.
As part of the implementation of the above assumption, on 2 December 2025 the Parent Entity entered into an unsecured revolving
credit facility agreement in the amount of USD 1 500 million with an international consortium of banks for a period of 5 years with
an option to extend for another 2 years (5+1+1). The agreement also includes a non-binding option to increase the loan amount
by a total amount not exceeding USD 500 million on terms identical to the terms of the base amount. The credit facility replaced
the revolving syndicated credit facility in the amount of USD 1 500 million dated 20 December 2019.
On 17 December 2025, under the Bond Issuance Program agreement entered into in 2024, the Parent Entity issued 7-year bonds,
D series, with a nominal value of PLN 1 600 million and a redemption date of 17 December 2032. The funds raised from the issuance
were used for an earlier redemption of 10-year B series bonds issued in June 2019. The Parent Entity’s exercise of the right to early
redemption of series B bonds was associated with the need to pay a premium to bondholders.
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
113
Note 8.3.1 Contractual maturities for financial liabilities
Financial liabilities – as at 31 December 2025
Maturity periods
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 year
to
3 years
over
3 years
Borrowings
369
405
1 335
591
2 700
2 515
Debt securities liabilities
-
130
261
3 044
3 435
2 604
Lease liabilities
35
86
183
1 259
1 563
730
Trade payables
3 137
16
32
324
3 509
3 391
Other payables – reverse factoring
837
460
-
-
1 297
1 297
Derivatives – commodity contracts –
metals*
243
963
1 129
9
2 344
2 952
Derivatives – embedded
110
-
-
-
110
110
Derivatives – energy resources
-
-
-
-
-
4
Other financial liabilities
264
6
16
5
291
294
Total
4 995
2 066
2 956
5 232
15 249
13 897
*Financial liabilities arising from derivatives are calculated at their intrinsic values excluding the discount effect.
Overdue liabilities
Overdue periods
Total/
Carrying amount
up to 1 month
over 1 months
to 12 months
over 1 year
to 3 years
over
3 years
Trade payables
9
8
-
-
17
The above tables do not include financial guarantees in the amount of PLN 2 421 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 2024
Maturity periods
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 year
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*
-
-
-
-
-
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 periods
Total/
Carrying amount
up to 1 month
over 1 months
to 12 months
over 1 year
to 3 years
over
3 years
Trade payables
9
4
1
2
16
The above tables do not contain financial guarantees in the amount of PLN 915 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.
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
114
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 2025
As at
31 December 2024
Bank loans
795
130
Loans
1 018
1 556
Debt securities
2 600
2 600
Leases
621
624
Note 7.1
Non-current liabilities due to borrowings
5 034
4 910
Bank loans
314
726
Loans
388
424
Debt securities
4
2
Leases
109
109
Note 7.1
Current liabilities due to borrowings
815
1 261
Total borrowings
5 849
6 171
Note 8.5
[-] Free cash and cash equivalents
425
691
[-] Derivatives related to external sources of financing
-
177
[=] Net debt
5 424
5 303
Liabilities due to borrowings, debt securities and leases - breakdown by currency (translated into PLN) and by type of
interest rate
As at
31 December 2025
As at
31 December 2024
PLN/WIBOR
2 848
2 769
EUR/EURIBOR
41
-
EUR/fixed
21
31
USD/SOFR
1271
1 033
PLN/fixed
688
834
USD/fixed
940
1 443
CAD/fixed
35
49
other
5
12
Total
5 849
6 171
As at 31 December 2025, the Group’s liabilities due to borrowing, debt securities issued and leases, translated into PLN, amounted
to PLN 5 849 million, or broken down by currencies: USD 614 million, PLN 3 536 million, EUR 15 million, CAD 13 million and in other
currencies in the amount of PLN 5 million (as at 31 December 2024 liabilities, 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 2025, the balance of trade payables transferred to reverse factoring by the Group amounted to
PLN 1 297 million (as at 31 December 2024: PLN 2 000 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, 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.
PART 8 – Borrowings and the management of liquidity and capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
115
Note 8.4.2 Net debt changes
As at
1 January 2025
Cash flows
Accrued interest
Exchange
differences
Other changes
As at
31 December 2025
[+] Bank loans
856
295
76
( 118)
-
1 109
[+] Loans
1 980
( 417)
61
( 212)
( 6)
1 406
[+] Debt securities
2 602
( 198)
200
-
-
2 604
[+] Leases
733
( 135)
41
( 4)
95*
730
[=] Total debt
6 171
( 455)
378
( 334)
89
5 849
[-] Free cash and cash equivalents
691
( 266)
-
-
-
425
[-] Derivatives related to sources of external
financing
177
128
-
-
( 305)
-
[=] Net debt, including:
5 303
( 317)
378
( 334)
394
5 424
Net debt excluding derivatives**
5 480
( 189)
378
( 334)
89
5 424
* The signing and modification of lease agreements.
**Net debt excluding derivatives - calculated in accordance with the definition of net debt for the purposes of calculating covenants in bank loans agreements.
As at
1 January 2024
Cash flows
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
931
377
96
53
5 480
*The signing and modification of lease agreements.
**Net debt excluding derivatives - calculated in accordance with the definition of net debt for the purposes of calculating covenants in bank loans agreements.
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
116
Reconciliation of cash flows associated with borrowing following the inclusion of impact of derivatives in the consolidated
statement of cash flows
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Financing activities
[+] Proceeds from the issuance of debt financial instruments
1 599
1 000
[+] Proceeds from borrowings
957
1 940
[-] Proceeds from derivatives related to sources of external financing
39
64
[+] Redemption of debt financial instruments
(1 599)
( 400)
[-] Proceeds from collateral for bonds
81
-
[+] Repayment of borrowings
( 935)
(2 154)
[+] Repayment of lease liabilities
( 95)
( 97)
[-] Expenditures on derivatives related to sources of external
financing
( 30)
( 75)
[+] Repayment of interest on borrowings and debt securities
( 15)
( 28)
[+] Repayment of interest on leases
( 4)
( 10)
Investing activities
[+] Paid capitalised interest on borrowings
( 354)
( 331)
[-] Proceeds on settlement of an instrument hedging interest rate of
bonds
47
70
[-] Change in free cash and cash equivalents
( 266)
(1 011)
[=] TOTAL
( 317)
872
Structure of sources of external financing
The structure of financing sources is presented below.
Unsecured, revolving syndicated credit facility
2025
2024
Amount granted
5 402
(USD 1 500 mn)
5 898
(USD 1 438 mn)
Amount of the liability
-
-
Purpose: general corporate purposes
Covenants: the agreement obliges the Parent Entity to comply with a financial covenant Net Consolidated Total Debt/Consolidated EBITDA
and non-financial covenants; the obligation exists to report the level of financial covenant as at 30 June and as at 31 December.
A breach of a financial covenant constitutes an event of default and may result in the termination of the agreement by the syndicate. The
Parent Entity’s management does not identify circumstances indicating that the Group may have difficulties in meeting the covenants.
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 2025 and as at 31 December 2025,
complied with the conditions of the agreement.
Interest: based on SOFR plus a margin, which is dependent on the financial covenant.
Maturity: 2 December 2030 with an option to extend it by another 2 years (5+1+1)
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
117
Investment loans
2025
2024
Amount granted
3 479
3 521
Amount of the liability
1 406
1 980
Purpose: financing of investment projects
Covenants: the agreements concluded by the Parent Entity oblige the Group to comply with a financial covenant Net Consolidated
Total Debt/Consolidated EBITDA and non-financial covenants; the obligation exists to report the level of financial covenant as at
30 June and as at 31 December.
A breach of a financial covenant constitutes grounds for early repayment of loans.. The Parent Entity’s management does not
identify circumstances indicating that the Group may have difficulties in meeting the covenants.
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 2025 and as at 31
December 2025, complied with the provisions of the agreement.
Interest: individual instalments of the loans drawn by the Parent Entity are based on a fixed interest rate or on SOFR rate plus a
margin, which is dependent on the financial covenant.
Maturities of individual instalments: 30 October 2026, 30 August 2028, 23 May 2029, 28 June 2030, 23 April 2031,
11 September 2031, 6 March 2035
Other bank loans
2025
2024
Amount granted
4 333
4 294
Amount of the liability
1 109
856
Purpose: general corporate purposes and financing of investment projects
Interest: based on a fixed interest rate or variable WIBOR, SOFR, EURIBOR plus a margin
Maturities: up to 5 years
Debt securities
2025
2024
Nominal value of the issuance
2 600
2 600
Amount of the liability
2 604
2 602
Purpose: general corporate purposes
The Company issued bonds on the Polish market under the bond issuance program up to the amount of PLN 4 000 million which
was established by an issuance agreement dated 29 May 2024.
The issuance dated 26 June 2024 in the amount of PLN 1 000 million, under which 7-year bonds, C-series, were issued with a
redemption date of 26 June 2031.
The issuance dated 17 December 2025 in the amount of PLN 1 600 million, under which 7-year bonds, D-series, were issued with
a redemption date of 17 December 2032.
Interest: based on WIBOR 6M
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 Group’s liabilities, i.e. PLN 10 121 million (the unaudited amount).
The actual amount of financial liabilities based on consolidated financial statements as at 31 December 2025 was PLN 5 850
million. The deviation of the actual amount of financial liabilities of the Group as at the end of 2025 from the published estimated
amounts results from the achieved EBITDA at a level higher than forecasted.
Total bank and other loans, debt securities
2025
2024
Amount granted / Nominal value of the issuance
15 814
16 313
Amount of the liability
5 119
5 438
The aforementioned sources ensure the availability of external financing in the amount of PLN 15 814 million. The funds available
for use from these sources fully cover the liquidity needs of the Group.
The syndicated credit in the amount of USD 1 500 million (PLN 5 402 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 4 268 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 as at 31 December 2025 amounted to PLN 271 million, including collateral on
property, plant and equipment in the amount of PLN 155 million (as at 31 December 2024: PLN 238 million, including collateral on
property, plant and equipment in the amount of PLN 122 million).
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
118
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 2025
As at
31 December 2024
Cash in bank accounts
340
534
Other financial assets with a maturity of up to 3 months
from the date of acquisition - deposits
98
160
Other cash
5
21
Total cash and cash equivalents, of which:
443
715
Restricted cash
18
24
Note 8.4.1
Free cash and cash equivalents
425
691
As at 31 December 2025, the Group had cash in bank deposits in the amount of PLN 63 million (as at 31 December 2024
PLN 61 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 2025, the contingent liabilities of the Group due to guarantees and letters of credit granted amounted to a total
of PLN 2 740 million (as at 31 December 2024, PLN 1 150 million) and due to promissory note payables amounted to
PLN 211 million (as at 31 December 2024, PLN 223 million).
PART 8 – Borrowings and the management of liquidity and capital
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
119
The most significant items of liabilities due to guarantees granted - contingent liabilities
Guarantees - contingent liabilities (IAS 37)
Guarantee amount
As at
31 December 2025
As at
31 December 2024
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
Validity period up to 1 year.
137
109
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.
Validity period up to 1 year.
85
70
Security on claims to cover costs by the Group related to collecting and
processing waste
Validity period up to 2 years.
21
17
Security on the obligations related to proper execution of agreements
concluded by the Group
Validity period up to 5 years.
53
(PLN 4 mn,
CAD 2 mn,
EUR 2 mn,
USD 10 mn)
26
(PLN 3 mn,
CAD 3 mn,
EUR 2 mn,
USD 1 mn)
The most significant items of liabilities due to financial guarantees granted
Financial guarantees (IFRS 9)
Carrying amount*
Guarantee amount
As at
31 December
2025
As at
31 December
2024
As at
31 December
2025
As at
31 December
2024
Guarantee set as security on a bank loan drawn by
Sierra Gorda S.C.M.
Validity period until September 2027.
11
(USD 3 mn)
47
(USD 11 mn)
793
(USD 220 mn)
904
(USD 220 mn)
Guarantee set as security on payment obligations of
KGHM INTERNATIONAL LTD towards Robinson
Holdings (USA) Ltd.
Validity period until December 2026.
26
(USD 7 mn)
-
1 621
(USD 450 mn)
-
* 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
amount of expected credit loss (Stage 1) is PLN 9 million)
The most significant items of liabilities due to off-balance-sheet guarantees granted
Guarantees - off-balance-sheet liabilities
Guarantee amount
As at
31 December 2025
As at
31 December 2024
Guarantee securing potential claims against the Parent Entity in connection
with the obligation of a manager of a tailings storage facility to create a
restoration fund. The fund may be in the form of a separate bank account,
a provision or a bank guarantee.
Validity period up to 1 year.
141
128
Bank guarantees securing funds to execute obligations 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.
Validity period up to 1 year.
802
750
PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
120
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.
Important estimates and assumptions
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 of the asset.
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
121
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:
For own fixed assets:
Group
Fixed assets type
Total useful lives
Buildings and land
Land
Not subject to depreciation
Buildings in mines and metallurgical plants,
Sheds, reservoirs, container switchgears
Primary mine tunnels
40-100 years
20-30 years
22-90 years
Backfilling pipelines to transfer sand with water,
Technological pipelines, 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
Mining vehicles, mining roof support
Conveyor belts, belt weigher
Switchboards, switchgears
4-10 years
10-66 years
4-50 years
Underground electric locomotives,
Underground diesel locomotives
Mining vehicles, railway vehicles, tankers,
transportation platforms
Trolleys, forklift, battery-electric truck
Cars, trucks, special vehicles
Other fixed assets, including tools and equipment
20-50 years
10-20 years
7-35 years
7-22 years
5-22 years
5-25 years
Pre-stripping costs
Total useful life depends on the expected individual
mine life to which the costs applies:
- 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
Technical equipment,
machines, motor vehicles
and other fixed assets
Machines and technical equipment
3-4 years
Motor vehicles
3 years
Computer sets
3 years
Equipment and other
5 years
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
122
The Group performs regular reviews of its property, plant and equipment in terms of the adequacy of adopted economic useful
lives to current operating conditions, including the impact of climate changes.
Limiting the environmental impact by reducing greenhouse gas emissions may apply, in particular, to vehicles with combustion
engines used in the Group’s mines if the European Union or Polish regulators introduce changes to regulations on exhaust
emission standards. As at the end of the annual reporting period, the Group has not identified any significant regulatory risk
in this area in the foreseeable future.
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate a risk that their carrying
amount may not be recoverable.
Accounting policies – intangible assets
Mining and metallurgical intangible assets are mainly comprised of exploration and evaluation assets, 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.
Important estimates, assumptions and judgments
Important 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 2025 amounted to PLN 1 287 million (as at 31 December 2024: PLN 1 454 million).
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
123
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 2024
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
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
Utilisation of impairment losses
3
8
2
1
-
-
14
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
Transfer of mining and metallurgical property, plant and equipment into other
property, plant and equipment
( 145)
( 125)
270
-
-
-
-
Other changes
( 10)
( 2)
( 22)
( 1)
2
2
( 31)
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
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
124
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 2025
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
Changes in 2025 net
Settlement of fixed assets under construction
900
2 031
(2 931)
( 4)
2
2
-
Purchase
-
-
2 362
4
119
9
2 494
Leases – new contracts, modification of contracts, other changes
52
4
-
-
-
-
56
Stripping cost in surface mines
400
-
-
-
-
-
400
Self-constructed
-
-
1 548
-
49
-
1 597
Capitalised borrowing costs
-
-
266
-
40
-
306
Note 9.4
Change in provisions for decommissioning costs of mines and other technological
facilities
58
-
-
-
-
-
58
Note 4.1
Depreciation/amortisation, of which:
( 898)
(1 521)
-
-
-
( 18)
(2 437)
own fixed assets and intangible assets
( 868)
(1 500)
-
-
-
( 18)
(2 386)
leased fixed assets (right-to-use)
( 30)
( 21)
-
-
-
-
( 51)
Note 4.4
(Recognition)/reversal of impairment losses, of which:
( 27)
( 53)
( 44)
-
( 7)
( 9)
( 140)
own fixed assets and intangible assets
( 27)
( 53)
( 44)
-
( 7)
( 9)
( 140)
leased fixed assets (right-to-use)
-
-
-
-
-
-
-
Exchange differences from the translation of statements of operations with a
functional currency other than PLN
( 159)
( 149)
( 78)
( 11)
( 184)
( 2)
( 583)
Utilisation of impairment losses
3
21
51
-
3
12
90
Accepted from the settlement of intangible assets not yet available for use
-
16
-
-
-
-
16
Liquidation, sale, donations and free of charge transfer
( 14)
( 43)
( 52)
-
( 3)
( 12)
( 124)
Settlement of fixed assets under construction into intangible assets
-
-
( 56)
-
56
-
-
Recognition/(redemption) of CO
2
emission allowances
-
-
-
-
-
( 68)
( 68)
Transfers between groups
-
-
( 21)
-
-
-
( 21)
Reclassification of an impairment loss due to the settlement of expenditures on
property, plant and equipment
( 62)
( 50)
110
-
-
-
( 2)
Other changes
( 10)
8
( 1)
-
1
( 10)
( 12)
As at 31 December 2025
Gross carrying amount
23 202
20 490
7 903
224
3 700
1 184
56 703
Accumulated depreciation/amortisation
(11 050)
(10 545)
-
-
-
( 357)
(21 952)
Impairment losses
(2 312)
(1 407)
( 570)
( 143)
(1 748)
( 61)
(6 241)
Net carrying amount, of which:
9 840
8 538
7 333
81
1 952
766
28 510
own fixed assets and intangible assets
9 442
8 485
7 333
81
1 952
766
28 059
leased fixed assets (right-to-use)
398
53
-
-
-
-
451
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
125
Note 9.1.1 Mining and metallurgical property, plant and equipment – major fixed assets under construction
As at
31 December 2025
As at
31 December 2024
Deposit Access Program
4 068
3 504
Construction of the SW-4 shaft
752
718
Underground copper and nickel mine construction project in
Canada - Victoria project
655
519
Investment activity related to the development and operation of
the Żelazny Most Tailings Storage Facility
297
176
Outfitting the mines
277
363
Work involving actions to restrict the level of the water hazard
carried out as part of the project called Anti-filtration barrier
248
100
Construction of conveyors in the Lubin mine
126
136
Development of pipeline network in mines
65
88
Purchase of mining machinery
32
61
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 2025
As at
31 December 2024
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”
209
-
205
-
KGHM Polska Miedź S.A.
Exploration for and evaluation of
economic copper mineralisation in the
Retków Ścinawa region
183
-
168
-
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
-
63
-
KGHM INTERNATIONAL LTD.
Expenditures related to exploratory
work, mainly within the Victoria project
located in Canada
2 248
1 023
2 404
1 148
KGHM INTERNATIONAL LTD.
Expenditures related to exploratory
work within the Ajax project
542
542
588
588
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
126
Note 9.1.3 Expenses related to mining and metallurgical assets
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Purchase
(2 494)
(3 051)
Self-constructed fixed assets
(1 597)
(1 424)
Stripping costs of surface mines
( 400)
( 711)
Costs of external financing
( 306)
( 280)
Change in liabilities due to purchases
( 221)
107
Other
131
183
Total*
(4 887)
(5 176)
* Including expenses on exploration and evaluation assets in the amount of PLN 206 million (in 2024: PLN 199 million).
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
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
127
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 2024
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
Settlement of fixed assets under construction
161
307
( 468)
-
-
Purchase
-
-
486
48
534
Self-constructed
-
-
165
-
165
Leases – new contracts, modification of contracts
1
28
-
-
29
Note 4.1
Depreciation/amortisation, of which:
( 29)
( 265)
-
( 23)
( 317)
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, of which:
( 17)
( 231)
-
( 2)
( 250)
own fixed assets and intangible assets
( 11)
( 231)
-
( 2)
( 244)
right-to-use (leased fixed assets)
( 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, of which:
42
159
1
-
202
own fixed assets and intangible assets
18
159
1
-
178
right-to-use (leased fixed assets)
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
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
128
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 2025
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
Changes in 2025 net
2
Settlement of fixed assets under construction
326
318
( 644)
-
-
Purchase
-
-
485
77
562
Self-constructed
-
-
105
-
105
Leases – new contracts, modification of contracts, other changes
2
30
-
-
32
Note 4.1
Depreciation/amortisation, of which:
( 96)
( 265)
-
( 20)
( 381)
own fixed assets and intangible assets
( 95)
( 236)
-
( 20)
( 351)
leased fixed assets (right-to-use)
( 1)
( 29)
-
-
( 30)
Note 4.4
(Recognition)/reversal of impairment losses, of which:
( 201)
( 35)
( 4)
( 2)
( 242)
own fixed assets and intangible assets
( 180)
( 35)
( 4)
( 2)
( 221)
right-to-use (leased fixed assets)
( 21)
-
-
-
( 21)
Liquidation, sale, donations and free of charge transfer
( 2)
( 35)
( 2)
( 24)
( 63)
Exchange differences from the translation of statements of operations
with a functional currency other than PLN
( 35)
-
-
-
( 35)
Transfers between groups
-
-
21
-
21
Recognition/(redemption) of CO
2
emission allowances received free of charge
-
-
-
( 69)
( 69)
Utilisation of impairment losses
4
16
-
-
20
Other changes
10
-
4
6
20
As at 31 December 2025
Gross carrying amount
3 158
3 886
412
641
8 097
Accumulated depreciation/amortisation
(1 165)
(2 043)
-
( 306)
(3 514)
Impairment losses
( 644)
( 506)
( 9)
( 154)
(1 313)
Net carrying amount, of which:
1 349
1 337
403
181
3 270
own fixed assets and intangible assets
1 220
1 265
403
181
3 069
leased fixed assets (right-to-use)
129
72
-
-
201
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
129
Note 9.3 Depreciation/amortisation
Property, plant and equipment
Intangible assets
from
1 January 2025
to
31 December 2025
from
1 January 2024
to
31 December 2024
from
1 January 2025
to
31 December 2025
from
1 January 2024
to
31 December 2024
Note 4.1
Total depreciation/amortisation
2 780
2 470
38
43
settled in profit or loss, of which:
2 333
1 968
33
38
cost of manufacturing products
2 289
1 925
31
36
administrative expenses
34
34
2
2
selling costs
10
9
-
-
being part of the manufacturing
cost of assets
447
502
5
5
Note 9.4 Provision for decommissioning costs of mines and other technological facilities
Accounting policies
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 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 execution 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 2025 the guarantees amounted to PLN 141 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.
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
130
Important estimates, assumptions and judgments
For the measurement of provision, the Company adopted an inflation rate at the level of 2.9% for 2026 and for subsequent
periods at the level of 2.5%, in line with the long-term inflation target (in the comparable period - 5.6% for 2025 and 2.7% for
2026 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 up to 2035), the Company adopted a risk-free rate of
5.15% (yield of 10-year treasury bonds) due to the fact that it is the only publicly available information on the risk-free rate for
the subsequent 10 years, and pursuant to the adopted judgment, this rate was not modified. The Company will adjust the risk-
free rate to the level of this rate announced at every subsequent end of the reporting period in order to measure the provision
at those days (in the comparable period, for the first 10 years of measurement of the provision, that is up to 2034, a risk-free
rate of 5.87% was adopted).
In turn, taking into account the high volatility of the risk-free rate that took place in the last period, based on yield of 10-year
treasury bonds, the Company applied a professional judgment to determine this rate for the estimation of provisions falling
after a period of 10 years from the end of the annual reporting period based on the historical observation of the ratio of the
risk-free rate to the assumed inflation target. As a result of the judgement, the Company adopted the risk-free rate of 3.5% for
the estimation of provision after a period of 10 years from the end of the annual reporting period, which translated into a real
discount rate of 0.98% (in the comparable period, the same assumptions were adopted).
Estimation of this provision is based on specially-prepared studies using ore extraction forecasts (for mining facilities), and
technical-economic expertise. The latest update of the study was prepared as at the end of 2025. Decommissioning costs are
calculated based on current prices of the sector for construction and assembly services, which incorporate climate risk by
reflecting the current level of costs incurred by the industry to adapt to climate change and to mitigate the effects of climate
risks. In the future, as the industry's climate protection costs increase, this indicator will increasingly include climate risk
mitigation expenditures. An example of the construction and assembly industry adapting to climate risk is the gradual
replacement of combustion-powered machinery with low-emission ones (e.g. battery-powered), used to decommission facilities
covered by the provision for decommissioning costs of mines and other technological facilities.
In the KGHM INTERNATIONAL LTD. Group, in the current period for the purpose of the measurement of the provision for
decommissioning costs of mines and other technological facilities located in the United States of America and Canada, a real
discount rate at the level of 1.87% to 2.62% was adopted depending on the mine (in the comparable period at the level of 1.07%
to 2.48%).
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.
Expenditures on the decommissioning of mines and other technological facilities planned for 2026-2075
2026-2035
2036-2045
2046-2055
2056-2065
2066-2075
Total
nominal value
Mines
345
665
565
1 207
87
2 869
Smelters
224
79
3
2
-
308
Total
569
744
568
1 209
87
3 177
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
131
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Provisions at the beginning of the reporting period
2 128
1 974
Note 9.1
Changes in estimates recognised in fixed assets
58
135
Utilisation
( 2)
( 2)
Other
( 52)
21
Provisions at the end of the reporting period, of which:
2 132
2 128
non-current provisions, including:
2 123
2 084
Mine Closure Fund and Tailings Storage Facility
Restoration Fund
599
482
current provisions
9
44
Impact of the change in discount rate on the provision for decommissioning costs of mines and other technological
facilities
As at
31 December 2025
As at
31 December 2024
increase in discount rate by 1 percentage point
( 391)
( 408)
decrease in discount rate by 1 percentage point
525
522
Note 9.5 Capitalised borrowing costs
During the period from 1 January 2025 to 31 December 2025, the Group recognised PLN 313 million of borrowing costs in property,
plant and equipment and intangible assets and in the period from 1 January 2024 to 31 December 2024 - PLN 288 million.
The capitalisation rate applied by the Group to determine borrowing costs in 2025 amounted to 5.33%, in 2024: 4.77%.
Note 9.6 Carrying amount of the assets of Group companies representing collateral of repayment of liabilities
As at
31 December 2025
As at
31 December 2024
Buildings
170
142
Technical equipment and machines
5
31
Land
1
8
Total
176
181
The carrying amount of assets representing collateral of repayment of financial liabilities as at 31 December 2025 amounted to
PLN 176 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 2025 in the amount of PLN 154 million (as at 31 December 2024:
PLN 181 million and PLN 120 million, respectively).
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
132
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.
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
133
Lease disclosures – the Group as a lessee
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Note 9.1
Note 9.2
Depreciation/amortisation cost
81
84
Note 4.3
Interest cost
4
10
Short-term lease cost
8
6
Cost associated with leases of low-value of underlying
assets not recognised as short-term agreements
2
5
Cost associated with variable lease payments not
recognised in the measurement of lease liabilities
9
8
Note 8.4.2
Total cash outflows due to leases
135
137
Note 9.1
Note 9.2
Increase in right-to-use assets
88
28
As at
31 December 2025
As at
31 December 2024
Note 9.1
Note 9.2
Carrying amount of right-to-use assets (division by
underlying assets in notes, pursuant to references)
652
666
Note 8.4.2
Carrying amount of right-to-use liabilities
730
733
In 2025 and in comparable period, the Group did not enter into sales and leaseback transactions.
As at 31 December 2025, the Group has lease agreements that contain 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 16 million and PLN 29 million respectively (as at 31 December 2024: PLN 26 million and PLN 42
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 13 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 in 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.
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
134
Financial statements item
As at 31 December 2025
As at 31 December 2024
amount (t)
value
amount (t)
value
Intangible assets of which:
1 616 575
472
1 949 883
589
purchased CO
2
emission allowances
185 786
52
646 298
187
CO
2
emission allowances received free of charge
1 430 789
420
1 303 585
402
Accruals
1 646 001
501
1 615 578
496
Financial statements item
from
1 January 2025
to
31 December 2025
from
1 January 2024
to
31 December 2024
Financial result (excluding the tax effect), of which:
170
204
Cost of sold products
170
199
Other operating income
-
5
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, part of the assets of the Sudbury Basin and liabilities associated with them, which in the comparable period
were reclassified to held for sale (disposal groups), were disposed. Details are presented in the information below.
Assets and liabilities of the Sudbury Basin in the KGHM INTERNATIONAL LTD. Group
In connection to a Share Purchase Agreement which was entered into on 11 September 2024 for the sale of shares of the special
purpose company Project Nikolas Company Inc. by FNX Mining Company Inc. to Magna Mining Inc., the sale transaction of a part
of the assets of the Sudbury Basin, i.e the mines McCreedy West, Levack/Morrison and Podolsky, as well as exploration concessions:
Kirkwood, Falconbridge, NW Foy, Rand and North Range, and liabilities associated with them, was concluded on 28 February 2025.
The agreed purchase price comprised the cash contribution in the amount of CAD 5.3 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 profit on the sale in the amount of PLN 70 million was recognised in the item “Other operating income”.
PART 9 – Non-current assets and related liabilities
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
135
Settlement of the sale transaction of assets and liabilities of Sudbury Basin
PLN million
Initial purchase price – cash received
15
Deferred payment (current value)
5
Value of received Magna Mining Inc. shares
6
Initial acquisition price
26
Carrying amount of assets and liabilities subject to the sale transaction
( 29)
Cash contributed to Project Nikolas Company Inc. before disposal
1
Value of contingent payments
15
Profit on the sale
69
Exchange differences reclassified from other comprehensive income to gains on disposal
1
Gain on disposal in consolidated statement of profit or loss
70
The individual assets held for sale and liabilities associated with them were presented in the segment KGHM INTERNATIONAL LTD.
The value of the assets sold 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
28 February 2025
(date of disposal -
date of loss of
control)
As at
31 December 2024
(presented under
assets and liabilities
classified to Disposal
group)
ASSETS
Mining and metallurgical property, plant and equipment
80
82
Mining and metallurgical intangible assets
14
17
Mining and metallurgical property, plant and equipment and
intangible assets
94
99
Deferred tax assets
9
-
Non-current assets
103
99
Inventories
22
24
Current assets
22
24
TOTAL ASSETS HELD FOR SALE (DISPOSAL GROUP)
125
123
LIABILITIES
Provisions for decommissioning costs of mines and other
technological facilities
37
38
Other liabilities – liabilities due to Franco Nevada streaming
contract
100
108
Non-current liabilities
137
146
Other liabilities – liabilities due to Franco Nevada streaming
contract
17
14
Current liabilities
17
14
TOTAL LIABILITIES RELATED TO DISPOSAL GROUP
154
160
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
136
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 2025 the provisionally-set value of inventories amounted to PLN 9 million (as at 31 December 2024, PLN 21
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 the forward LME (London Metal Exchange) curve for the metal, set for months
in which the sale of copper inventories will be made.
As at
31 December 2025
As at
31 December 2024
Materials
1 648
1 736
Half-finished goods and work in progress
6 460
4 566
Finished products
1 409
1 664
Merchandise
91
97
Note 10.4
Total inventories
9 608
8 063
Note 4.4
Write-downs of inventories in the financial year
from 1 January 2025
to 31 December 2025
from 1 January 2024 to
31 December 2024
Write-down recognised in cost of sales
( 30)
(87)*
Write-down reversed in cost of sales
21
16
Maturities of inventories
As at
31 December 2025
As at
31 December 2024
Over 12 months from the end of the reporting period
725
510
Up to 12 months from the end of the reporting period
8 883
7 553
* Including: PLN 55 million due to a write-down recognised in KGHM INTERNATIONAL LTD. since the cost was higher than the net realisable value.
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
137
As at 31 December 2025 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 and packages of spare parts
deposited as part of contractual obligations. 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).
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.
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.
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.
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 based on the current market price.
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.
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, following the depreciation
of fixed assets, whose acquisition/generation resulted in the arising of the energy efficiency for which the Group received the
certificates.
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.
Measurement of the disposal of property rights and of certificates attesting to energy efficiency are made using the FIFO method.
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.
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.
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.
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
138
Recognition of property rights to coloured energy and white certificates
Financial statements item
As at
31 December 2025
As at
31 December 2024
amount
value
amount
value
Inventories - merchandise, of which:
13
11
green property rights (MWh)
87 829
1
158 009
6
blue property rights (MWh)
3 459
1
11 128
3
white certificates (TOE)
766 214
11
640
2
Accruals, of which:
12
17
provision for redemption of green property rights (MWh)
46 143
1
107 229
5
provision for redemption of blue property rights (MWh)
2 683
1
10 723
3
provision for redemption of white certificates (TOE)
4 413
10
3 640
9
Item from the statement of profit or loss
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Profit or loss (excluding the tax effect), of which:
13
18
Cost of products sold
9
15
Cost of merchandise sold
3
2
Other operating income
1
1
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
139
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 in which case 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 2025
As at
31 December 2024
Trade receivables measured at amortised cost
- gross value
578
678
Loss allowance for an expected credit loss
( 35)
( 40)
Trade receivables measured at amortised cost
- net value
543
638
Trade receivables measured at fair value
1 342
707
Note 10.4
Total trade receivables
1 885
1 345
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
140
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).
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
141
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 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 of the financial statements for their users.
*The Company has agreements for the provision of reverse factoring services with financial institutions that are factoring companies or banks.
As at
31 December 2025
As at
31 December 2024
Non-current trade payables
195
195
Note 10.4
Current trade payables
3 213
3 132
Note 10.4
Other payables – trade payables within the reverse
factoring mechanism
1 297
2 000
Trade and other payables
4 705
5 327
In 2025, the factors’ total participation limit in the Parent Entity amounted to PLN 5 150 million (as at 31 December 2024 it amounted
to PLN 4 500 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 at the level of: for PLN - WIBOR 1M + margin, for EUR
- EURIBOR 1M + margin, for USD - Term SOFR 1M/SOFR ON + margin. The reverse factoring 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
2025, the Parent Entity transferred to the factors payables in the amount of PLN 5 975 million, and as at 31 December 2025 the
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
142
trade payables within the reverse factoring mechanism (i.e. trade payables paid by the factor) amounted to PLN 1 297 million (in
the year ended 31 December 2024, the Parent Entity transferred payables in the amount of PLN 7 087 million and the trade
payables within the reverse factoring mechanism (i.e. trade payables paid by the factor) amounted to PLN 2 000 million).
In the current year, payments made towards the factors by the Parent Entity amounted to PLN 6 670 million (in the year ended
31 December 2024, PLN 8 131 million). Interest costs paid by the Group towards the factors in 2025 amounted to PLN 101 million
(in the year ended 31 December 2024, interest costs paid amounted to PLN 164 million).
Factors' share in the amount of trade payables transferred to reverse factoring
As at
31 December 2025
As at
31 December 2024
Factor A
53%
13%
Factor B
33%
66%
Factor C
14%
21%
Factor D
0%
0%
Factor E
0%
-
Total
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 2025, amounted to PLN 193 million in the non-current part and PLN 720 million in the current part
(as at 31 December 2024, PLN 195 million and PLN 847 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.
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
143
Note 10.4 Change 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 reverse 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 (detailed information may be found in
Note 10.3).
Since market practice with respect to the presentation of reverse factoring transactions in the statement of cash flows
is not uniform, the Management Board had to apply its own judgment in this regard. In the case of these transactions, the Parent
Entity had to make an assessment as to whether expenses related to payments towards the factor should be classified to cash
flows from operating activities or to cash flows from financing activities in the statement of cash flows. Pursuant to IAS 7.11, an
entity should present cash flows from operating, investing and financing activities in a manner which is most appropriate to its
business, because it provides information that allows users of financial statements to assess the impact of those activities on the
financial position of the entity and the amount of its cash and cash equivalents.
Due to the above, in the Parent Entity’s view:
• presentation of the repayment of the principal amounts of receivables in the 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.
PART 10 – Working capital
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
144
* 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)
* Trade payables within the reverse factoring mechanism
Inventories
Trade
receivables
Trade
payables
Other
payables*
Working
capital
As at 1 January 2025
(8 063)
(1 345)
3 132
2 000
(4 276)
As at 31 December 2025
(9 608)
(1 885)
3 213
1 297
(6 983)
Impact of changes in the statement of financial
position
(1 545)
( 540)
81
( 703)
(2 707)
Exchange differences from translation of statements
of operations with a functional
currency other than PLN
( 71)
( 42)
25
-
( 88)
Depreciation/amortisation recognised in inventories
352
-
-
-
352
Change in liabilities due to purchase of property,
plant and equipment and intangible assets
-
-
7
103
110
Change in liabilities due to interest
-
-
-
7
7
Reclassification to property, plant and equipment
( 9)
-
-
-
( 9)
Adjustments
272
( 42)
32
110
372
Change in the statement of cash flows from
operating activities
(1 273)
( 582)
113
( 593)
(2 335)
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
145
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.
Important estimates and assumptions
The carrying amount of the liability due to future employee benefits is equal to the present value of the liabilities due
to defined benefits. The amount of the liability depends on many factors, which are used as assumptions in the actuarial method.
Any changes to the assumptions may impact the carrying amount of the liability. The interest rate is one of the basic parameters
for measuring the liability. At the end of the reporting period, based on the opinion of an independent actuary, an appropriate
discount rate for the 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 2025 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 (of the Parent Entity) as at 31 December 2025
Discount rate
Planned base increases*
-1 pp.
+1 pp.
-1 pp.
+1 pp.
Retirement and disability benefits
39
(34)
(37)
48
Coal equivalent
248
(197)
(195)
242
Jubilee awards
39
(34)
(37)
47
Other benefits
3
(2)
(3)
3
Total liabilities
329
(267)
(272)
340
Impact on profit or loss
39
(34)
(37)
47
Impact on other comprehensive
income
290
(233)
(235)
293
* 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.
PART 11 – Employee benefits
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
146
Impact of changes in the assumptions on the balance of liabilities (of the Parent Entity) 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
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 -17.6% to 23.5% (in the comparable period: from -17.7% to 22.9%).
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 -6.3% to 8.8% (in the comparable period: from -6.2% to 8.6%).
Note 11.1 Employee benefits liabilities
Components of the item: employee benefits liabilities
As at
31 December 2025
As at
31 December 2024
Non-current
2 892
2 784
Current
290
297
Note 11.2
Liabilities due to future employee benefits programs
3 182
3 081
Employee remuneration liabilities
503
469
Social security liabilities
457
392
Accruals (unused annual leave, bonuses, other)
966
861
Other current employee liabilities
1 926
1 722
Total employee benefits liabilities
5 108
4 803
Employee benefits expenses
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Remuneration
6 806
6 454
Costs of social security and other benefits
2 356
2 232
Costs of future benefits
355
279
Note 4.1
Employee benefits expenses
9 517
8 965
PART 11 – Employee benefits
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
147
Note 11.2 Change in liabilities related to future employee benefits programs
Total
liabilities
Jubilee
awards
Retirement and
disability benefits
Coal
equivalent
Other
benefits
As at 1 January 2024
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
Note 11.1
Total costs recognised in profit or loss, of which:
355
151
65
125
14
interest costs
179
39
33
100
7
current service costs
116
52
32
25
7
actuarial losses recognised in profit or loss
60
60
-
-
-
Note 8.2.2
Actuarial (gains)/losses recognised in other comprehensive income
( 19)
-
41
( 22)
( 38)
Benefits paid
( 235)
( 92)
( 45)
( 92)
( 6)
As at 31 December 2025
3 182
729
629
1 725
99
As at 31 December
2025
2024
2023
2022
2021
Present value of liabilities due to employee benefits
3 182
3 081
3 384
2 893
2 468
PART 11 – Employee benefits
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
148
Main actuarial assumptions (of the Parent Entity) adopted for measurement as at 31 December 2025:
2026
2027
2028
2029
2030 and
beyond
- discount rate
5.25%
5.25%
5.25%
5.25%
5.25%
- coal price growth rate
-6.10%
2.50%
2.50%
2.50%
2.50%
- rate of growth of the lowest salary
3.00%
4.00%
4.00%
4.00%
4.00%
- expected inflation
2.90%
2.50%
2.50%
2.50%
2.50%
- future expected increase in salary
6.40%
4.00%
4.00%
4.00%
4.00%
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%
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 2025 versus assumptions adopted as at 31 December 2024
Change in financial assumptions
15
Change in demographic assumptions
15
Other changes
11
Total actuarial losses
41
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)
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
2026
289
88
88
100
13
2027
259
73
84
96
6
2028
190
62
32
90
6
2029
177
53
33
86
5
2030
180
58
36
81
5
Other years
2 087
395
356
1 272
64
Total liabilities in the statement of
financial position as at 31 December 2025
3 182
729
629
1 725
99
PART 11 – Employee benefits
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
149
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 2025 Translation from the original Polish version
150
PART 12 – Other notes
Note 12.1 Related party transactions
The accounting policies and important 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 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Revenues from sales of products, merchandise and materials to
a joint venture Sierra Gorda S.C.M.
18
16
Interest income on loans granted to a joint venture Sierra Gorda
S.C.M.
557
552
Revenues from other transactions with a joint venture Sierra
Gorda S.C.M.
6
18
Revenues from other transactions with other related parties
33
14
Total
614
600
Purchase from related entities
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Purchase of services, merchandise and materials
39
37
Other purchase transactions
5
7
Total
44
44
Trade and other receivables from related parties
As at
31 December 2025
As at
31 December 2024
From the joint venture Sierra Gorda S.C.M. – loans granted
8 436
9 800
From the joint venture Sierra Gorda S.C.M. - other receivables
16
50
From other related parties
6
5
Total
8 458
9 855
Trade and other payables towards related parties
As at
31 December 2025
As at
31 December 2024
Towards joint venture Sierra Gorda S.C.M.
11
47
Towards other related parties
6
5
Total
17
52
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 2025, 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 indicated in IAS 24.26, the Group informs that as at 31 December 2025 and in the period from
1 January to 31 December 2025, it 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 242 million (as at 31 December 2024: PLN 241
million); including payables due to mining usufruct for the extraction of mineral resources recognised in costs in the amount
of PLN 35 million (2024: PLN 34 million),
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
151
• due to a reverse factoring agreement - payables in the amount of PLN 438 million and interest costs for the period from 1
January to 31 December 2025 in the amount of PLN 61 million (as at 31 December 2024, 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 119 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, advising on concluding a syndicated
revolving loan agreement, advising on issuing corporate bonds 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 2025, the turnover from these transactions amounted to PLN 2 946
million (from 1 January to 31 December 2024: PLN 2 935 million), and, as at 31 December 2025, the unsettled balance of
liabilities from these transactions amounted to PLN 202 million (as at 31 December 2024: PLN 271 million),
• sales to Polish State Treasury companies. In the period from 1 January to 31 December 2025, the turnover from these sales
amounted to PLN 739 million (from 1 January to 31 December 2024: PLN 806 million), and, as at 31 December 2025, the
unsettled balance of receivables from these transactions amounted to PLN 234 million (as at 31 December 2024:
PLN 189 million).
Note 12.2 Dividends paid
In accordance with Resolution No. 6/2025 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 18 June 2025 regarding
the allocation of profit of KGHM Polska Miedź S.A. for 2024, it was decided to allocate the profit in the amount of PLN 2 788 million,
in its entirety to the Company’s reserve capital.
In accordance with Resolution No. 7/2024 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 7 June 2024 regarding
the payment of a dividend from profits for previous years, 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.
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 2025.
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
152
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 2025
As at
31 December 2024
Other non-current non-financial assets
270
277
Note 7.1
Investment property
189
177
Prepayments
6
10
Non-financial advances
12
22
Receivables due to overpayment of property tax
63
68
Other current assets
502
683
Note 7.1
Financial
237
317
Amounts retained (collateral) due to long-term contracts
1
5
Receivables due to guarantees granted
6
16
Receivables due to settled derivatives
23
34
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
114
148
Receivables due to conditional payments associated with
the agreement on the sale of a subsidiary
S.C.M. Franke
18
41
Receivables due to settlement of the Franco Nevada
streaming contract
20
28
Other
55
45
Non-financial
265
366
Non-financial advances
76
162
Receivables due to measurement of long-term contracts
105
127
Receivables due to property and personal insurance
40
35
Other
44
42
Other non-current and current assets, total
772
960
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
153
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 2025
As at
31 December 2024
Deferred income
123
143
Trade payables
195
195
Other financial liabilities
19
25
Other non-financial liabilities
34
34
Other non-current liabilities
371
397
Deferred income, including:
42
47
trade payables
21
14
Accruals, including:
818
818
provision for purchase of property rights related to electricity
11
16
charges for discharging gases and dusts to the air
372
374
other costs accounted on the basis of contracts entered into
182
189
Liabilities due to settled derivatives
58
3
Other financial liabilities
217
124
Other non-financial liabilities
70
69
Other current liabilities
1 205
1 061
Other non-current and current liabilities, total
1 576
1 458
Note 12.5 Provisions for liabilities and other charges
Provisions
As at
31 December 2025
As at
31 December 2024
For decommissioning costs of mines and other technological facilities
9
44
For decommissioning costs of fixed assets and fixed assets under
construction
20
20
For disputed issues and court proceedings
83
81
Other provisions for expected losses, expenses and liabilities
25
135
Total
137
280
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
154
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 was
determined based on estimates.
As at
31 December 2025
As at
31 December 2024
Contingent assets
490
428
Guarantees received
256
297
Promissory notes receivables
216
107
Other
18
24
Contingent liabilities
774
784
Note 8.6
Guarantees and letters of credit
319
235
Note 8.6
Promissory note payables
211
223
Property tax on underground mine workings
-
8
Liability due to a claim arising from the executed contract
29
31
Financial support granted to municipalities in the form of a
donation*
120
131
Tax audit in a subsidiary of the Group – KGHM INTERNATIONAL
LTD.**
25
83
Other
70
73
* 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 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 (“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 in the amount of PLN 17 million
(USD 4.6 million), as it determined that the amount of costs recognised in profit or loss for 2020 was, in their opinion, not correct. 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. The formal response from SII on
rejecting the appeal was received on 24 February 2025. On 3 March 2025 Quadra Chile filed a so-called hierarchical appeal, which was rejected by
the Director of the SII Legal Department in May 2025. Having exhausted its administrative options, on 2 July 2025, the company filed a complaint
with the court, and the legal proceedings remain pending.
On 17 December 2025 the Chilean tax authorities began an audit of the financial year 2022. It is estimated that the fine, together with interest
associated with the audited years 2020 and 2022 will amount to PLN 31.6 million (USD 8.8 million) for which in the current reporting period a PLN
15.8 million (USD 4.4 million) provision has been recognised. The liability has been reclassified from a contingent liability to a provision due to the
increasing advancement of the administrative and legal proceedings and the increasing likelihood of a sanction being imposed.
The financial year 2021 is no longer subject to audit due to the expiry of the statute of limitations. The Company expects that SII may also begin a
control in other unexpired periods (that is: 2023 and 2024) and impose fines of a similar nature, since the method of calculating costs was the same
in this period. The total estimated potential impact of fines, together with interest, for the following years: 2023 (USD 3.8 million), 2024 (USD 3.1
million) amounts in total to PLN 25 million (USD 6.9 million). Liabilities in the above years were recognised as contingent liabilities due to the lack
of initiation of proceedings for the years 2023-2024.
Note 12.7 Litigation and claims
A proceeding pending since 26 September 2007 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 2025, in section 1.6.5 Litigation and claims.
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
155
Note 12.8 Contractual commitments for the acquisition of property, plant and equipment and intangible assets
Contractual commitments incurred in the reporting period, but not yet recognised in the consolidated statement of financial
position, were as follows:
As at
31 December 2025
As at
31 December 2024
Contractual commitments for the acquisition of:
property, plant and equipment
2 015
1 303
intangible assets
15
11
Total capital commitments
2 030
1 314
The Group’s share in capital commitments of the joint venture (Sierra Gorda S.C.M.) is presented in Note 6.1.
Note 12.9 Employment structure
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
White-collar employees
11 518
11 430
Blue-collar employees
22 903
23 062
Total (full-time)
34 421
34 492
Note 12.10 Remuneration of key managers
from 1 January 2025 to 31 December 2025
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 2025
Andrzej Szydło
01.01-31.12
2 633
-
-
2 633
Zbigniew Bryja
01.01-31.12
2 548
-
-
2 548
Piotr Krzyżewski
01.01-31.12
2 587
-
-
2 587
Mirosław Laskowski
01.01-31.12
2 603
-
-
2 603
Anna Sobieraj-Kozakiewicz
02.06-31.12
808
-
-
808
Piotr Stryczek
01.01-31.12
2 692
-
-
2 692
Members of the Management Board not serving in the
function as at 31 December 2025
Iga Dorota Lis
01.01-09.04
841
-
359
1 200
TOTAL
14 712
-
359
15 071
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
156
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
from 1 January 2025 to 31 December 2025
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 2025
Aleksander Cieśliński
01.01-31.12
-
181
181
Zbysław Dobrowolski
01.01-31.12
-
174
174
Józef Czyczerski
01.01-31.12
4
174
178
Przemysław Darowski
01.01-31.12
156
173
329
Dominik Januszewski
01.01-31.12
-
173
173
Bogusław Szarek
01.01-31.12
347
179
526
Tadeusz Kocowski
01.01-31.12
-
190
190
Marian Noga
01.01-31.12
-
173
173
Piotr Prugar
01.01-31.12
-
173
173
Joanna Zakrzewska
08.01-31.12
-
170
170
TOTAL
507
1 760
2 267
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
157
from 1 January 2024 to 31 December 2024
Remuneration of members
of the Supervisory Board
(in PLN thousands)
Period when
function served
Current employee
benefits
Current benefits
due to serving in
the function
Total earnings
Members of the Supervisory Board serving in the
function as at 31 December 2024
Aleksander Cieśliński
13.02-31.12
-
166
166
Zbysław Dobrowolski
13.02-31.12
-
165
165
Józef Czyczerski
01.01-31.12
26
186
212
Przemysław Darowski
01.01-31.12
151
187
338
Dominik Januszewski
13.02-31.12
-
165
165
Bogusław Szarek
01.01-31.12
336
186
522
Tadeusz Kocowski
13.02-31.12
-
182
182
Marian Noga
13.02-31.12
-
164
164
Piotr Prugar
13.02-31.12
-
165
165
Members of the Supervisory Board not serving in the
function as at 31 December 2024
Zbigniew Bryja
13.02-06.03
-
91
91
Agnieszka Winnik-Kalemba
01.01-13.02
-
25
25
Katarzyna Krupa
01.01-13.02
-
22
22
Wojciech Zarzycki
01.01-13.02
-
23
23
Andrzej Kisielewicz
01.01-13.02
-
23
23
Marek Wojtków
01.01-13.02
-
23
23
Radosław Zimroz
01.01-13.02
-
23
23
Piotr Ziubroniewicz
01.01-13.02
-
23
23
TOTAL
513
1 819
2 332
from 1 January 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Current employee benefits of other key managers
(in PLN thousands)*
6 446
4 917
*The remuneration of other key managers represents the remuneration of the members of the Board of Directors of KGHM INTERNATIONAL LTD. earned in
companies of the KGHM Polska Miedź S.A. Group. The increase in the remuneration results from the appointment of Company’s employees as members of the
Board of Directors of KGHM INTERNATIONAL LTD. in the current reporting period.
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 2025
to 31 December 2025
from 1 January 2024
to 31 December 2024
Companies of the PricewaterhouseCoopers group, total
6 928
7 087
From the contract for the review and audit of financial
statements and contracts for assurance services, of which:
6 820
6 961
audit of annual financial statements
4 598
4 598
assurance services, of which:
2 222
2 363
review of financial statements
914
854
mandatory assurance on sustainability reporting
1 025
850
other assurance services
283
659
From realisation of other contracts
108
126
PART 12 – Other notes
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
158
Note 12.12 Subsequent events
Change in the composition of the Supervisory Board of the Parent Entity
On 20 January 2026 the Extraordinary General Meeting of KGHM Polska Miedź S.A. dismissed the following persons from the
composition of the Supervisory Board of the Parent Entity:
- Aleksander Cieśliński,
- Zbysław Dobrowolski,
- Dominik Januszewski,
- Tadeusz Kocowski,
as well as appointed the following persons to the composition of the Supervisory Board of KGHM Polska Miedź S.A.:
- Zbigniew Ćwiąkalski,
- Remigiusz Paszkiewicz,
- Artur Ulrich,
- Łukasz Żelewski.
Change in the composition of the Management Board of the Parent Entity
On 30 January 2026 the Supervisory Board of the Company adopted a resolution on dismissal of the following persons from the
12
th
term Management Board of KGHM Polska Miedź S.A.:
- Andrzej Szydło – President of the Management Board of KGHM Polska Miedź S.A.,
- Piotr Stryczek – Vice President of the Management Board (Corporate Affairs).
Moreover, the Supervisory Board of the Company adopted a resolution on delegation of Remigiusz Paszkiewicz - a member of the
Supervisory Board, to temporarily carry out the duties of the President of the Management Board of KGHM Polska Miedź S.A. and
the Vice President of the Management Board (Corporate Affairs) of KGHM Polska Miedź S.A. for the period from 30 January 2026
to the date of results of the qualification proceedings for the positions of President of the Management Board of KGHM Polska
Miedź S.A. and the Vice President of the Management Board (Corporate Affairs) of KGHM Polska Miedź S.A., but not longer than for
a period of three months.
Bank loan from Bank Gospodarstwa Krajowego
On 3 February 2026, Bank Gospodarstwa Krajowego (BGK) granted a bank loan in the amount of PLN 209 million to the Parent
Entity. In this way, the Company will finance the construction of four photovoltaic installations with a total capacity of 94 MW.
The investment will contribute to increasing the volume of electricity consumed from RES, reducing the carbon footprint of final
products and consistently advancing the Company's decarbonization program. The expansion of its own, zero- and low-emission
generation sources by ensuring a sustainable supply of its own cheap electricity is to provide the Company with greater
independence from fluctuations in market electricity prices.
Conclusion of an annex to the agreement with the NKT Group for the sale of copper wire rod
On 16 February 2026 the Company concluded an annex to a long-term agreement with one of the largest recipients of copper wire
rod – the NKT Group. The annex extends cooperation with the NKT Group until December 2036. The total estimated value of the
extended contract is from a minimum of PLN 22.77 billion up to a maximum of PLN 29.28 billion.
Changes in the Supervisory Board of the Parent Entity
On 24 February 2026 the Management Board of KGHM Polska Miedź S.A. received a declaration from Remigiusz Paszkiewicz
announcing his resignation, upon the submission of the declaration, from the delegation as a Member of the Supervisory Board of
KGHM Polska Miedź S.A. to temporarily carry out the duties of the President of the Management Board of KGHM Polska Miedź S.A.
and the Vice President of the Management Board (Corporate Affairs) of KGHM Polska Miedź S.A. as well as his resignation from
serving in the function of a member of the Supervisory Board of the Company.
Change in the composition of the Management Board of the Parent Entity
On 24 February 2026 the Supervisory Board of the Company adopted a resolution on appointing Remigiusz Paszkiewicz to the
12
th
term Management Board of KGHM Polska Miedź S.A. granting him the function of President of the Management Board of
KGHM Polska Miedź S.A. At the same time, the Supervisory Board adopted a resolution in which it decided to determine the number
of Members of the 12
th
term Management Board of KGHM Polska Miedź S.A. at five Members of the Management Board.
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
159
PART 13 – Quarterly financial information of the Group
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
from
1 October 2025
to
31 December 2025
unaudited and
unreviewed
from
1 October 2024
to
31 December 2024
unaudited and
unreviewed
from
1 January 2025
to
31 December 2025
from
1 January 2024
to
31 December 2024
Note 2.3
Revenues from contracts with
customers
10 495
9 181
36 366
35 320
Note 4.1
Cost of sales
(8 797)
(7 751)
(30 126)
(29 348)
Gross profit on sales
1 698
1 430
6 240
5 972
Note 4.1
Selling costs and administrative
expenses
( 699)
( 649)
(2 281)
(2 205)
Net profit on sales
999
781
3 959
3 767
Note 6.1
Share in the profits of a joint
venture accounted for using the
equity method
1 608
-
1 608
-
Note 6.1
Reversal of an impairment loss on
shares in a joint venture
252
-
252
-
Note 6.2
Allowances for impairment of
loans granted to a joint venture
-
253
-
-
Note 6.2
Gain due to the reversal of
allowances for impairment of
loans granted to a joint venture
326
226
484
226
Note 6.2
Interest income on loans granted
to a joint venture calculated using
the effective interest rate method
133
122
557
552
Profit or loss on involvement in a joint
venture
2 319
601
2 901
778
Note 4.2
Other operating income, including:
210
1 225
661
1 562
other interest calculated using the
effective interest rate method
12
38
52
63
reversal of impairment losses on
financial instruments
2
( 1)
3
-
Note 4.2
Other operating costs, including:
( 407)
( 149)
(2 284)
(1 118)
impairment losses on financial
instruments
1
2
-
( 1)
Note 4.3
Finance income
88
61
418
135
Note 4.3
Finance costs
( 39)
( 299)
( 246)
( 516)
Profit before income tax
3 170
2 220
5 409
4 608
Note 5.1
Income tax expense
( 495)
( 664)
(1 721)
(1 738)
PROFIT FOR THE PERIOD
2 675
1 556
3 688
2 870
Profit for the period attributable to:
shareholders of the Parent Entity
2 675
1 555
3 687
2 868
non-controlling interest
-
1
1
2
Weighted average number of
ordinary shares (million)
200
200
200
200
Basic/diluted earnings per share (in
PLN)
13.38
7.78
18.44
14.34
PART 13 – Quarterly financial information of the Group
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
160
Explanatory notes to the consolidated statement of profit or loss
Note 13.1 Expenses by nature
from 1 October 2025
to 31 December 2025
unaudited and
unreviewed
from 1 October 2024
to 31 December 2024
unaudited and
unreviewed
from 1 January 2025
to 31 December 2025
from 1 January 2024 to
31 December 2024
Depreciation of property, plant and
equipment and amortisation of
intangible assets
700
646
2 818
2 513
Employee benefits expenses
2 710
2 477
9 517
8 965
Materials and energy, including:
3 979
3 161
14 242
13 328
purchased metal-bearing
materials
2 521
1 749
8 335
7 439
electrical and other energy
401
305
1 825
1 677
External services
821
868
3 060
3 091
Minerals extraction tax
1 541
996
4 693
3 865
Other taxes and charges
270
255
992
939
Advertising costs and representation
expenses
45
23
74
75
Property and personal insurance
21
25
94
92
Recognition of impairment losses on
property, plant and equipment and
intangible assets
314
264
316
290
Reversal of write-down of
inventories
( 5)
( 2)
( 19)
( 14)
Reversal of impairment losses on
property, plant and equipment and
intangible assets
-
( 1)
-
( 69)
Recognition of write-downs of
inventories
11
12
30
84
Other costs
27
26
92
83
Total expenses by nature
10 434
8 750
35 909
33 242
Cost of merchandise and materials
sold (+)
88
125
412
547
Change in inventories of finished
goods and work in progress (+/-)
( 313)
220
(1 720)
180
Cost of products for internal use of
the Group (-)
( 713)
( 695)
(2 194)
(2 416)
Total cost of sales, selling costs
and administrative expenses, of
which:
9 496
8 400
32 407
31 553
Cost of sales
8 797
7 751
30 126
29 348
Selling costs
122
133
482
529
Administrative expenses
577
516
1 799
1 676
PART 13 – Quarterly financial information of the Group
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
161
Note 13.2 Other operating income and (costs)
from 1 October 2025
to 31 December 2025
unaudited and
unreviewed
from 1 October 2024
to 31 December 2024
unaudited and
unreviewed
from 1 January 2025
to 31 December 2025
from 1 January 2024 to
31 December 2024
Gains on derivatives, of which:
75
41
197
617
measurement
( 2)
( 14)
74
68
realisation
77
55
123
549
Interest income calculated using the
effective interest rate method
12
38
52
63
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
-
5
Fair value gains on trade receivables
and other financial assets
18
9
65
9
Reversal of impairment losses on
trade receivables and other financial
receivables
2
( 1)
3
-
Provisions released
73
126
104
133
Gain on disposal of intangible assets
-
-
7
4
Gain on disposal of subsidiaries
( 19)
-
70
-
Government grants received
8
6
24
16
Income from servicing of letters of
credit and guarantees
-
-
6
18
Compensation, fines and penalties
received
17
4
29
35
Other
24
69
104
107
Total other operating income
210
1 225
661
1 562
Losses on derivatives, of which:
( 195)
46
( 457)
( 566)
measurement
( 55)
90
( 185)
( 14)
realisation
( 140)
( 44)
( 272)
( 552)
Impairment losses on trade
receivables and other financial
receivables
1
2
-
( 1)
Fair value losses on trade receivables
( 19)
( 45)
( 83)
( 136)
Impairment losses on fixed assets
under construction and intangible
assets not yet available for use
( 25)
31
( 66)
( 22)
Exchange differences on financial
assets and liabilities other than
borrowings
( 105)
-
(1 498)
-
Provisions recognised
( 16)
( 125)
( 42)
( 220)
Losses on disposal of property, plant
and equipment
( 21)
10
( 26)
( 29)
Donations granted
( 5)
( 24)
( 49)
( 68)
Other
( 22)
( 44)
( 63)
( 76)
Total other operating costs
( 407)
( 149)
(2 284)
(1 118)
Other operating income/(costs)
( 197)
1 076
(1 623)
444
PART 13 – Quarterly financial information of the Group
in PLN millions, unless otherwise stated
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
162
Note 13.3 Finance income/(costs)
from 1 October 2025
to 31 December 2025
unaudited and
unreviewed
from 1 October 2024
to 31 December 2024
unaudited and
unreviewed
from 1 January 2025 to
31 December 2025
from 1 January 2024 to
31 December 2024
Exchange differences on
measurement and realisation of
borrowings
16
-
317
-
Gains on derivatives - realisation
-
60
29
134
Result of settlement of a transaction
hedging interest rate risk due to the
issuance of bonds with a variable
interest rate
71
-
71
-
Other
1
1
1
1
Total finance income
88
61
418
135
Interest on borrowings due to
leases
-
( 3)
( 4)
( 10)
Interest on trade payables within
the reverse factoring mechanism
( 18)
( 44)
( 94)
( 150)
Unwinding of the discount effect,
including:
( 23)
( 21)
( 100)
( 92)
provision for decommissioning of
mines
( 21)
( 22)
( 89)
( 82)
financial liabilities
( 2)
1
( 11)
( 10)
Bank fees and charges on
borrowings
6
( 5)
( 11)
( 23)
Losses on derivatives - realisation
-
( 66)
( 30)
( 146)
Exchange differences on
measurement and realisation of
borrowings
-
( 157)
-
( 84)
Other
( 4)
( 3)
( 7)
( 11)
Total finance costs
( 39)
( 299)
( 246)
( 516)
Finance income /(costs)
49
( 238)
172
( 381)
KGHM Polska Miedź S.A. Group
Consolidated financial statements for 2025 Translation from the original Polish version
163
SIGNATURES OF ALL MEMBERS OF THE MANAGEMENT BOARD
These financial statements were adopted for issue on 24 March 2026.
President
of the Management Board
Remigiusz Paszkiewicz
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
Anna Sobieraj - Kozakiewicz
SIGNATURE OF PERSON RESPONSIBLE FOR ACCOUNTING
Executive Director
of Accounting Services Centre
Chief Accountant
Agnieszka Sinior