Economic performance of the Group

In 2022, the Group’s copper output shrank by 3%, or 20.6 thousand tonnes compared to 2021. The decrease concerned KGHM INTERNATIONAL LTD. (-15.5 thousand tonnes) and Sierra Gorda S.C.M. (-13.6 thousand tonnes for a 55% share) and was not completely offset by an increase in output by Polska Miedź (+8.4 thousand tonnes).

The greater copper output at KGHM Polska Miedź S.A. in 2022 was driven by an increase in consumption of purchased copper-bearing materials and a greater degree of core production line availability.

The decrease in copper output at Sierra Gorda S.C.M. was largely due to the mining of ore with a lower Cu content and lower yield.

The decrease in output in the KGHM INTERNATIONAL LTD. segment was caused predominantly by the absence of production from the Franke mine from April 2022 (-8.0 thousand tonnes) and the lower output by the Robinson mine (-6.8 thousand tonnes). Improved copper output from the year before was recorded by the Sudbury Basin mines (+0.6 thousand tonnes).

Detailed information about production results can be found in the chapters devoted to the individual segments. The Group’s production results are summarised below.

In accordance with the adopted principle of consolidation by the equity method, sales revenue does not include revenues of the segment Sierra Gorda S.C.M.

Net cash flows from operating activities in 2022 stood at +PLN 2,464 million and comprised a pre-tax profit of +PLN 6,489 million, increased mainly by a depreciation and amortisation adjustment of +PLN 2,239 million, a reclassification of other comprehensive income to profit and loss due to the realisation of hedging derivatives in the amount of +PLN 492 million and impairment losses on non-current assets of +PLN 147 million.

The lower cash flows from operating activities in 2022 were mostly related to the movement in working capital by -PLN 2,317 million, income tax paid of -PLN 1,696 million, adjustment of gain on the reversal of impairment of loans granted to a joint venture of -PLN 873 million, adjustment of foreign exchange differences of -PLN 661 million, adjustment of interest on loans granted to a joint venture of -PLN 582 million, movement in derivative assets and liabilities of -PLN 353 million, adjustment of gain on the disposal of subsidiaries of -PLN 180 million and gain on the disposal of property, plant and equipment and intangible assets of -PLN 108 million.

Net cash flows from investing activities in 2022 reached -PLN 2,695 million and mainly comprised expenditures on the purchase of property, plant and equipment and intangible assets in the amount of PLN 4,118 million, proceeds from the repayment of loans plus interest on loans granted to a joint venture of PLN 789 million, proceeds from the disposal of subsidiaries of PLN 243 million and proceeds from the disposal of property, plant and equipment and intangible assets of PLN 394 million.

Net cash flows from financing activities in 2022 stood at -PLN 446 million and mainly comprised the balance of inflows and outflows from loans and borrowings of PLN 252 million, the disbursement of a dividends to shareholders of the Parent Entity of PLN 600 million and interest payments of PLN 92 million.

After reflecting the exchange differences on cash and cash equivalents, cash and cash equivalents at the end of 2022 decreased by PLN 704 million to PLN 1,200 million.

At the end of 2022, total assets in the consolidated statement of financial position amounted to PLN 53,444 million and were higher as compared to 31 December 2021 by PLN 5,417 million.

As at 31 December 2022, non-current assets totalled PLN 40,379 million, up by PLN 3,715 million compared to the end of 2021. The increase in non-current assets was predominantly related to the rise in value of loans granted to joint ventures by PLN 1,736 million and property, plant and equipment and intangible assets by PLN 1,907 million.

The increase in current assets by PLN 1,702 million was caused chiefly by growth in inventories by PLN 2,565 million, receivables from customers by PLN 168 million, derivative financial instruments by PLN 542 million and other financial and non-financial assets by PLN 289 million. The decrease in current assets was largely caused by declines in assets held for sale by PLN 734 million, cash by PLN 684 million and loans granted to a joint venture by PLN 447 million.

Equity as at the end of 2022 amounted to PLN 32,146 million and was higher by PLN 5,008 million than at the end of 2021, mainly due to an increase in retained earnings by PLN 4,172 million.

Non-current liabilities of the KGHM Polska Miedź S.A. Group as at 31 December 2022 amounted to PLN 12,113 million and were higher by PLN 762 million compared to the end of 2021, mainly due to an increase in employee benefit liabilities by PLN 315 million, provisions for decommissioning costs of other facilities by PLN 617 million and deferred tax liabilities by PLN 508 million, with a simultaneous decrease in liabilities from loans by PLN 189 million and liabilities from derivative financial instruments by PLN 415 million.

Current liabilities of the KGHM Polska Miedź S.A. Group as at 31 December 2022 amounted to PLN 9,185 million and were lower by PLN 353 million compared to the end of 2021, mainly due to a decrease in derivative financial instruments by PLN 455 million, tax liabilities by PLN 220 million, other liabilities by PLN 332 million and liabilities related to assets held for sale by PLN 462 million. The increase in current liabilities results mainly from loans, borrowings and lease liabilities up by PLN 768 million, employee benefits by PLN 262 million and trade and similar payables by PLN 120 million.

As at 31 December 2022, contingent assets amounted to PLN 366 million and related mainly to promissory notes receivables in the amount of PLN 147 million and guarantees received in the amount of PLN 195 million.

As at 31 December 2022, the Group’s liabilities under guarantees and letters of credit totalled PLN 1,156 million (PLN 849 million as at 31 December 2021), while those under promissory notes amounted to PLN 170 million (PLN 173 million as at 31 December 2021).