POLISH FINANCIAL SUPERVISION AUTHORITY

Annual report RR 2020

(in accordance with § 60 sec. 1 point 3 of the Decree regarding current and periodic information)

for issuers of securities involved in production, construction, trade or services activities

for the financial year 2020 comprising the period from 1 January 2020 to 31 December 2020 containing the financial statements according to International Accounting Standards in PLN.

Publication date: 24 March 2021

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

 

 

2020

2019

2020

2019

I.

Revenues from contracts with customers

 19 326

 17 683

 4 319

 4 111

II.

Profit on sales

 3 165

 2 392

  707

  556

III.

Profit before income tax

 2 767

 1 927

  618

  448

IV.

Profit for the period

 1 779

 1 264

  398

  294

V.

Other comprehensive income

(  942)

(  420)

(  211)

(  98)

VI.

Total comprehensive income

  837

  844

  187

  196

VII.

Number of shares issued

200 000 000

200 000 000

200 000 000

200 000 000

VIII.

Earnings per ordinary share (in PLN/EUR)

8.90

 6.32

 1.99

 1.47

IX.

Net cash generated from operating activities

 4 816

 4 043

 1 076

  940

X.

Net cash used in investing activities

( 2 764)

( 2 854)

(  618)

(  663)

XI.

Net cash used in financing activities

(  507)

( 1 265)

(  113)

(  294)

XII.

Total net cash flow

 1 545

(  76)

  345

(  17)

XIII.

Non-current assets

 32 367

 30 111

 7 014

 7 071

XIV.

Current assets

 6 975

 5 878

 1 511

 1 380

XV.

Total assets

 39 342

 35 989

 8 525

 8 451

XVI.

Non-current liabilities

 11 687

 11 105

 2 533

 2 608

XVII.

Current liabilities

 6 929

 4 995

 1 501

 1 173

XVIII.

Equity

 20 726

 19 889

 4 491

 4 670

Average EUR/PLN exchange rate announced by the National Bank of Poland

 

 

 

 

2020

2019

 

 

Average exchange rate for the period*

4.4742

4.3018

 

 

Exchange rate at the end of the period

4.6148

4.2585

 

 

*Exchange rates are the arithmetical average of the current average exchange rates announced by the National Bank of Poland on the last day of each month respectively of 2020 and 2019

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.

ImageAlt1

in PLN millions, unless otherwise stated

                 

Table of contents

STATEMENT OF PROFIT OR LOSS. 5

STATEMENT OF COMPREHENSIVE INCOME. 5

STATEMENT OF CASH FLOWS. 6

STATEMENT OF FINANCIAL POSITION.. 7

STATEMENT OF CHANGES IN EQUITY.. 8

PART 1 – General information.. 9

PART 2 – Operating segments and information on revenues. 13

PART 3 – Impairment of assets. 20

Note 3.1 Impairment losses on assets as at 31 December 2020. 20

Note 3.2 Impairment losses on assets as at 31 December 2019. 26

PART 4 – Explanatory notes to the statement of profit or loss. 32

Note 4.1 Expenses by nature. 32

Note 4.2 Other operating income/(costs) 33

Note 4.3 Finance income/(costs) 34

Note 4.4 Reversal / recognition of impairment losses on assets in the statement of profit or loss. 35

PART 5 – Taxation.. 36

Note 5.1 Income tax in the statement of profit or loss. 36

Note 5.2 Other taxes and charges. 41

Note 5.3 Tax assets and liabilities. 41

PART 6 – Investments in subsidiaries. 43

Note 6.1 Subsidiaries. 43

Note 6.2 Receivables due to loans granted. 45

PART 7 – Financial instruments and financial risk management. 48

Note 7.1 Financial Instruments. 48

Note 7.2 Derivatives. 56

Note 7.3 Other financial instruments measured at fair value. 59

Note 7.4 Other non-current financial instruments measured at amortised cost 60

Note 7.5 Financial risk management 60

PART 8 – Borrowings and the management of liquidity and capital 82

Note 8.1 Capital management policy. 82

Note 8.2 Equity. 83

Note 8.3 Liquidity management policy. 86

Note 8.4 Borrowings. 89

Note 8.5 Cash and cash equivalents. 93

Note 8.6 Liabilities due to guarantees granted. 94

PART 9 – Non-current assets and related liabilities. 96

Note 9.1 Mining and metallurgical property, plant and equipment and intangible assets. 96

Note 9.2 Other property, plant and equipment and intangible assets. 101

Note 9.3 Depreciation/amortisation. 103

Note 9.4 Provision for decommissioning costs of mines and other facilities. 103

Note 9.5 Capitalised borrowing costs. 104

Note 9.6 Lease disclosures – The Company as a lessee. 104

Note 9.7 Non-current assets held for sale and liabilities associated with them... 105

PART 10 – Working capital 106

Note 10.1 Inventories. 106

Note 10.2 Trade receivables. 107

Note 10.3 Trade and similar payables. 108

Note 10.4 Changes in working capital 110

PART 11 – Employee benefits. 113

Note 11.1 Employee benefits liabilities. 114

Note 11.2  Changes in liabilities related to future employee benefits programs. 115



in PLN millions, unless otherwise stated

                 

in PLN millions, unless otherwise stated

                 

STATEMENT OF PROFIT OR LOSS

from 1 January 2020 to 31 December 2020

from 1 January 2019

 to 31 December 2019

Part 2

Revenues from contracts with customers

19 326

17 683

Note 4.1

Cost of sales

(15 151)

(14 296)

Gross profit

4 175

3 387

Note 4.1

Selling costs and administrative expenses

(1 010)

( 995)

Profit on sales

3 165

2 392

Note 4.2

Other operating income, including:

1 008

1 228

interest income calculated using the effective interest rate method

 266

 269

reversal of impairment losses on financial instruments

 21

 156

Note 4.2

Other operating costs, including:

(1 406)

(1 189)

recognition of impairment losses on financial instruments

( 82)

( 54)

Note 4.3

Finance income

 260

 37

Note 4.3

Finance costs

( 260)

( 541)

Profit before income tax

2 767

1 927

Note 5.1

Income tax expense

( 988)

( 663)

PROFIT FOR THE PERIOD

1 779

1 264

 

Weighted average number of ordinary shares (million)

200

200

Basic/diluted earnings per share (in PLN)

 8.90

 6.32

STATEMENT OF COMPREHENSIVE INCOME

from 1 January 2020 to 31 December 2020

from 1 January 2019

 to 31 December 2019

Note 8.2.2

Profit for the period

1 779

1 264

Note 8.2.2

Measurement of hedging instruments

net of the tax effect

 

( 850)

 

( 315)

 

Other comprehensive income which will be reclassified to profit or loss

 

( 850)

 

( 315)

Note 8.2.2

Measurement of equity financial instruments at fair value through other comprehensive income, net of the tax effect

 

 158

 

( 76)

Note 8.2.2

Actuarial losses net of the tax effect

 

( 250)

 

( 29)

 

Other comprehensive income, which will not be reclassified to profit or loss

 

( 92)

 

( 105)

Total other comprehensive net income

( 942)

( 420)

TOTAL COMPREHENSIVE INCOME

 837

 844

in PLN millions, unless otherwise stated

                 

STATEMENT OF CASH FLOWS

from 1 January 2020

to 31 December 2020

from 1 January 2019

 to 31 December 2019

Cash flow from operating activities

 

 

Profit before income tax

2 767

1 927

Note 9.3

Depreciation/amortisation recognised in profit or loss

1 293

1 220

Interest on investment activities

( 246)

( 239)

Other interest

 175

 232

Dividends income

( 20)

( 37)

Fair value losses/(gains) on financial assets measured at fair value through profit or loss

 10

( 97)

Note 4.4

Impairment losses on non-current assets

 210

 512

Note 4.4

Reversal of impairment losses on non-current assets

( 18)

( 155)

Exchange differences, of which:

( 204)

 200

from investment activities and cash

( 14)

( 13)

from financing activities

( 190)

 213

Change in provisions for decommissioning of mines, employee benefits liabilities and other provisions

( 50)

 59

Change in other receivables and liabilities other than working capital

 663

( 73)

Change in assets and liabilities due to derivatives

( 150)

 12

Reclassification of other comprehensive income to profit or loss due to the realisation of hedging derivatives

( 42)

( 86)

Note 12.8

Other adjustments

 88

 60

Exclusions of income and costs, total

1 709

1 608

Income tax paid

( 730)

( 465)

Note 10.4

Changes in working capital, including:

1 070

 973

change in trade payables transferred to factoring

 652

 595

Net cash generated from operating activities

4 816

4 043

 

Cash flow from investing activities

 

Note 9.1.2

Expenditures on mining and metallurgical assets, including:

(2 373)

(2 294)

paid capitalised interest on borrowings

( 122)

( 123)

Expenditures on other property, plant and equipment and intangible assets

( 49)

( 72)

Expenditures due to acquisition of shares and investment certificates

( 43)

( 430)

Loans granted

( 288)

( 445)

Advances granted on property, plant and equipment and intangible assets

( 29)

( 36)

Proceeds from redemption of investment certificates

-

 404

Dividends received

 20

 37

Other

( 2)

( 18)

Net cash used in investing activities

(2 764)

(2 854)

 

Cash flow from financing activities

 

Proceeds from borrowings

4 052

4 669

Proceeds from the issue of debt financial instruments

-

2 000

Proceeds from cash pooling

 154

 50

Proceeds from derivatives related to sources of external financing

 52

-

Repayments of borrowings

(4 478)

(7 726)

Repayment of lease liabilities

( 36)

( 30)

Interest paid, including due to:

( 173)

( 228)

Note 8.4.2

borrowings

( 162)

( 227)

Expenditures due to derivatives related to sources of external financing

( 78)

-

Net cash used in financing activities

( 507)

(1 265)

 

 

NET CASH FLOW

1 545

( 76)

Foreign exchange gains/(losses) on cash and cash equivalents

 74

( 35)

Cash and cash equivalents at beginning of the period

 516

 627

Note 8.5

Cash and cash equivalents at end of the period, including:

2 135

 516

restricted cash

 15

 27

in PLN millions, unless otherwise stated

                 

STATEMENT OF FINANCIAL POSITION

As at

31 December

2020

As at

31 December

2019

ASSETS

 

Mining and metallurgical property, plant and equipment

19 162

 

18 092

Mining and metallurgical intangible assets

675

 

651

Note 9.1

Mining and metallurgical property, plant and equipment and intangible assets

19 837

 

18 743

Other property, plant and equipment

102

 

103

Other intangible assets

65

 

61

Note 9.2

Other property, plant and equipment and intangible assets

167

 

164

Note 6.1

Investments in subsidiaries

2 848

 

2 946

Note 6.2

Loans granted, including:

7 648

 

7 217

measured at fair value through profit or loss

2 477

 

2 271

measured at amortised cost

5 171

 

4 946

Note 7.2

Derivatives

789

 

123

Note 7.3

Other financial instruments measured at fair value through other comprehensive income

589

 

403

Note 7.4

Other financial instruments measured at amortised cost

433

 

457

Financial instruments, total

9 459

 

8 200

Note 12.3

Other non-financial assets

56

 

58

Non-current assets

32 367

 

30 111

Note 10.1

Inventories

3 555

 

3 783

Note 10.2

Trade receivables, including:

351

 

243

trade receivables measured at fair value through profit or loss

260

 

139

Note 5.3

Tax assets

217

 

435

Note 7.2

Derivatives

210

 

291

Note 7.1

Cash pooling receivables

128

 

335

Note 12.3

Other financial assets

268

 

221

Note 12.3

Other non-financial assets

66

 

54

Note 8.5

Cash and cash equivalents

2 135

 

516

Note 9.7

Non-current assets held for sale

45

 

-

Current assets

6 975

 

5 878

TOTAL ASSETS

39 342

 

35 989

EQUITY AND LIABILITIES

 

 

Note 8.2.1

Share capital

2 000

 

2 000

Note 8.2.2

Other reserves from measurement of financial instruments, including:

(1 390)

 

(698)

Accumulated losses due to fair value measurement associated with non-current assets held for sale

(21)

 

-

Note 8.2.2

Accumulated other comprehensive income

(872)

 

(622)

Note 8.2.2

Retained earnings

20 988

 

19 209

Equity

20 726

 

19 889

Note 8.4.1

Borrowings, lease and debt securities

6 525

 

7 215

Note 7.2

Derivatives

981

 

131

Note 11.1

Employee benefits liabilities

2 724

 

2 363

Note 9.4

Provisions for decommissioning costs of mines and other technological facilities