POLISH FINANCIAL SUPERVISION AUTHORITY

Consolidated annual report SRR 2020

(in accordance with § 60 sec. 2 of the Decree regarding current and periodic information)

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

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

 23 632

 22 723

 5 282

 5 282

II.

Profit on sales

 3 161

 2 455

  706

  571

III.

Profit before income tax

 2 756

 2 122

  616

  493

IV.

Profit for the period

 1 797

 1 421

  401

  330

V.

Profit for the period attributable to shareholders

of the Parent Entity

 1 800

 1 421

  402

  330

VI.

Profit for the period attributable to

non-controlling interest

(  3)

-

(  1)

-

VII.

Other comprehensive income

(  918)

(  444)

(  205)

(  103)

VIII.

Total comprehensive income

  879

  977

  196

  227

IX.

Total comprehensive income attributable to shareholders of the Parent Entity

  882

  977

  197

  227

X.

Total comprehensive income attributable to

non-controlling interest

(  3)

-

(  1)

-

XI.

Number of shares issued

200 000 000

200 000 000

200 000 000

200 000 000

XII.

Earnings per ordinary share (in PLN/EUR) attributable to shareholders of the Parent Entity

9.00

7.11

2.01

1.65

XIII.

Net cash generated from operating activities

 5 656

 5 048

 1 264

 1 173

XIV.

Net cash used in investing activities

( 3 661)

( 3 643)

(  818)

(  847)

XV.

Net cash generated from/(used in) financing activities

(  548)

( 1 308)

(  122)

(  304)

XVI.

Total net cash flow

 1 447

  97

  324

  22

XVII.

Non-current assets

 34 047

 31 669

 7 378

 7 436

XVIII.

Current assets

 8 733

 7 740

 1 892

 1 818

XIX.

Total assets

 42 780

 39 409

 9 270

 9 254

XX.

Non-current liabilities

 13 792

 13 171

 2 989

 3 093

XXI.

Current liabilities

 7 907

 6 036

 1 713

 1 417

XXII.

Equity

 21 081

 20 202

 4 568

 4 744

XXIII.

Equity attributable to shareholders of the Parent Entity

 20 992

 20 110

 4 549

 4 722

XXIV.

Equity attributable to non-controlling interest

  89

  92

  19

  22

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

CONSOLIDATED STATEMENT OF PROFIT OR LOSS. 5

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME. 6

CONSOLIDATED STATEMENT OF CASH FLOWS. 7

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 Basis of preparation and presentation.. 10

Note 1.3 Impact of new and amended standards and interpretations. 15

Note 1.4 Published standards and interpretations, which are not yet in force and were not applied earlier by the Group.. 15

Part 2 – Information on segments and revenues. 16

Note 2.1 Operating segments. 16

Note 2.2 Financial results of reporting segments. 19

Note 2.3 Revenues from contracts with customers of the Group – breakdown by products. 24

Note 2.4 Revenues from contracts with customers of the Group – breakdown by category. 29

Note 2.5  Revenues from contracts with customers of the Group – geographical breakdown reflecting the location of end customers. 31

Note 2.6 Main customers. 33

Note 2.7 Non-current assets – geographical breakdown.. 33

Part 3 – Impairment of assets. 34

Note 3.1. Impairment of assets as at 31 December 2020. 34

Note 3.2. Impairment of assets as at 31 December 2019. 44

Part 4 - Explanatory notes to the statement of profit or loss. 52

Note 4.1 Expenses by nature. 52

Note 4.2 Other operating income and (costs) 53

Note 4.3 Finance income and (costs) 54

Note 4.4 Reversal and recognition of impairment losses on assets recognised in the statement of profit or loss. 54

Part 5 - Taxation.. 55

Note 5.1 Income tax in the consolidated statement of profit or loss. 55

Note 5.2 Other taxes and charges. 62

Note 5.3 Tax assets and liabilities. 63

Part 6 – Involvement in joint ventures. 64

Note 6.1 Joint ventures accounted for using the equity method.. 64

Note 6.2 Loans granted to a joint venture (Sierra Gorda S.C.M.) 67

Part 7 – Financial instruments and financial risk management. 68

Note 7.1 Financial Instruments. 68

Note 7.2 Derivatives. 73

Note 7.3 Other financial instruments measured at fair value. 77

Note 7.4 Other financial instruments measured at amortised cost. 78

Note 7.5 Financial risk management. 79

Part 8 – Borrowings and the management of liquidity and capital 103

Note 8.1 Capital management policy. 103

Note 8.2 Equity. 104

Note 8.3 Liquidity management policy. 106

Note 8.4 Borrowings. 108

Note 8.5 Cash and cash equivalents. 113

Note 8.6 Liabilities due to guarantees granted.. 114

Part 9 – Non-current assets and related liabilities. 116

Note 9.1 Mining and metallurgical property, plant and equipment and intangible assets. 116

Note 9.2 Other property, plant and equipment and intangible assets. 122

Note 9.3 Depreciation/amortisation.. 125

Note 9.4 Provision for decommissioning costs of mines and other facilities. 125

Note 9.5 Capitalised borrowing costs. 126

Note 9.6 Carrying amount of the assets of Group companies representing collateral of repayment of liabilities. 126

Note 9.7 Lease disclosures – The Group as a lessee. 127

Note 9.8 Non-current assets held for sale and liabilities associated with them... 129

in PLN millions, unless otherwise stated

                 

in PLN millions, unless otherwise stated

                 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

 

from 1 January 2020 to 31 December 2020

 

from 1 January 2019 to 31 December 2019

Note 2.3

Revenues from contracts with customers

23 632

22 723

Note 4.1

Cost of sales

(18 981)

(18 767)

Gross profit on sales

4 651

3 956

Note 4.1

Selling costs and administrative expenses

(1 490)

(1 501)

Profit on sales

3 161

2 455

Note 6.1

Share of losses of a joint venture accounted for using the equity method

( 204)

( 438)

Note 6.2

Gains due to the reversal of allowances for impairment of loans granted to a joint venture

 74

 106

Note 6.2

Interest income on loans granted to a joint venture calculated using the effective interest rate method

 377

 341

Profit or loss on involvement in a joint venture

 247

 9

Note 4.2

Other operating income, including:

 702

 809

other interest calculated using the effective interest rate method

 4

 9

Note 4.2

Other operating costs, including:

(1 326)

( 623)

impairment losses on financial instruments

( 6)

( 17)

Note 4.3

Finance income

 259

 38

Note 4.3

Finance costs

( 287)

( 566)

Profit before income tax

2 756

2 122

Note 5.1

Income tax expense

( 959)

( 701)

PROFIT FOR THE PERIOD

1 797

1 421

Profit for the period attributable to:

 

 

Shareholders of the Parent Entity

1 800

1 421

Non-controlling interest

( 3)

-

Weighted average number of ordinary shares (million)

200

200

Basic/diluted earnings per share (in PLN)

 9.00

 7.11



in PLN millions, unless otherwise stated

                 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

from 1 January 2020 to 31 December 2020

 

from 1 January 2019 to 31 December 2019

Profit for the period

1 797

1 421

Note 8.2.2

Measurement of hedging instruments net of the tax effect

 

( 850)

 

( 315)

Exchange differences from translation of foreign operations statements  with a functional currency other than PLN

 

 39

 

( 6)

 

Other comprehensive income, which will be reclassified to profit or loss

 

( 811)

 

( 321)

Note 8.2.2

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

 

 158

 

( 78)

     Actuarial losses net of the tax effect

 

( 265)

 

( 45)

 

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

 

( 107)

 

( 123)

Total other comprehensive income

( 918)

( 444)

TOTAL COMPREHENSIVE INCOME

 879

 977

Total comprehensive income attributable to:

 

 

Shareholders of the Parent Entity

 882

 977

Non-controlling interest

( 3)

-



in PLN millions, unless otherwise stated

                 

CONSOLIDATED 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

2 756

2 122

Note 9.3

Depreciation/amortisation recognised in profit or loss

1 963

1 920

Note 6.1

Share of losses of a joint venture accounted for using the equity method

 204

 438

Note 4.4

Gains due to the reversal of allowances for impairment of loans granted to a joint venture

( 74)

( 106)

Note 6.2

Interest on loans granted to a joint venture

( 377)

( 341)

Other interest 

 159

 244

Impairment losses on non-current assets

 239

 51

Exchange differences, of which:

( 101)

 184

from investment activities and cash

 87

( 29)

from financing activities

( 188)

 213

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

-

 114

Change in other receivables and liabilities other than working capital

 584