- optimal utilisation of the resource base and of the production capacity of the Company, and
- optimisation of copper content in ore and concentrate.
Economic results of the segment KGHM Polska Miedź S.A.
586
kt
Copper production
2.38
USD/lb
C1 cost
28,429
PLN million
Revenues
5,400
PLN million
Adjusted EBITDA
3,533
PLN million
Profit/loss for the period
Production
The goals set required advancement of the following actions:
- expanding mining operations within the Deep Głogów (Głogów Głęboki-Przemysłowy) area,
- continuation of work related to exploration of the „Radwanice” and „Retków” copper ore deposits,
- improvement of the ore extraction technology, greater mining efficiency and improved occupational health and safety, by:
- adapting the geometry of mining systems to local geological and mining conditions,
- improving the efficiency of technological and active methods of limiting the threat of rock bursts and of other associated natural threats, and
- proper barren rock management in mining areas (selective extraction, siting of rock, mechanical ore mining),
- a greater scope of work with respect to identifying gas-related threats and the use of new technical solutions and means of prevention to counteract this threat,
- sinking the GG-1 shaft to the target depth of 1,351 m (in the breach),
- continued construction of the Surface-based Air Conditioning Station at the GG-1 Shaft with target capacity of 40 MW,
- expansion of the mine dewatering system,
- maintaining the efficiency of mining vehicles in an assortment required to execute production tasks along with successive replacement of the machine park,
- realisation of the planned scope of mine development and access work using the commissioning system at the level of 56.6 thousand meters.
- maintaining the production capacity of individual areas of the Concentrators Division Areas to the amount and quality of ore supplied,
- maintaining the production of concentrates in an amount and quality necessary for optimal use of the production capacity of the fire phases of the smelters and refineries,
- tests were conducted on flotation machinery of new construction under 1/4th technical scale conditions, dedicated to the recovery of small grains,
- the continuity of concentrate deliveries to the Rudna Region concentrator continued despite the simultaneous advancement of investment tasks and breakdowns of a technical-construction nature (limited amount of thickeners, modernisation of press filters, driers, modernisation of concentrate loading and haulage),
- an installation for the removal of carbonates from the product of flotation and treatment of concentrates was brought online in the Polkowice Region concentrator,
- 8.53 million tonnes of ore were processed versus the planned amount of 8.3 million tonnes in the Lubin Region concentrator – the coordination of maintenance work requiring a shutdown and in the logistics of transport and storage was improved.
- the share of imported concentrates and copper scrap was increased in order to carry out the planned high level of electrolytic copper production,
- planned maintenance of the flash furnace complex at the Głogów II Copper Smelter and Refinery was carried out,
- minimisation of environmental impacts by actions designed to improve the effectiveness of the dedusting and hermetic sealing processes, as well as optimisation of water and sewage management,
- optimal utilisation of infrastructure enabled the full execution of production tasks in terms of the main products,
- increase of the share of recycling in copper production as a result of bigger processing of scrap at the Głogów Copper Smelter and Refinery furnaces and maximisation of scrap processing at all furnace stages at the Legnica Copper Smelter and Refinery.
- the activisation and moderation of the engagement of all Company employees in the question of occupational health and safety,
- consistent implementation of the Employee Safety Improvement Program – „Think About the Consequences”,
- the implementation of agreed elements of the Program to eliminate the most frequent threats to workplace safety through utilisation of innovative technology,
- constant monitoring of threats occurring in the workplace and the realisation of organisational and technical goals aimed at limiting professional risks and accident rates,
- the commencement of additional organisational and technical initiatives aimed at improving workplace safety, in particular with respect to the Company’s mines,
- continuous improvement of the occupational safety and hygiene management system implemented by the Company pursuant to the PN ISO 45000:2018 standard.
Mining production
In 2022 extraction of ore (dry weight) amounted to 30.5 million tonnes and was higher by 0.5 million tonnes than in 2021.
The average copper content in extracted ore amounted to 1.45% and was lower than the level achieved in 2021. The content of silver in the extracted ore was lower at 50.4 g/t.
As a result the amount of copper in extracted ore was higher than in 2021 by 0.1 thousand tonnes of copper and amounted to 442.7 thousand tonnes. The volume of silver in ore increased by 12 tonnes and amounted to 1,533 tonnes.
In 2022, 30.5 million tonnes of ore (dry weight) were processed (535 thousand tonnes more than in 2021). The greater volume of ore with poorer Cu content extracted by the Mining Divisions directly translated into a higher amount of copper in concentrate, which was 392.5 thousand tonnes.
The production of concentrate (dry weight) increased by 14 thousand tonnes compared to 2021.
The amount of silver in concentrate was higher than in 2021 by 1%.
Mining production of KGHM Polska Miedź S.A.
| Unit | 2022 | 2021 | Change (%) | Q4 22 | Q3 22 | Q2 22 | Q1 22 | |
|---|---|---|---|---|---|---|---|---|
| Mined ore (wet weight) | million t | 32,1 | 31,6 | +1,6 | 7,9 | 8,1 | 8,0 | 8,2 |
| Mined ore (dry weight) | million t | 30,5 | 30,0 | +1,7 | 7,5 | 7,6 | 7,6 | 7,7 |
| Copper grade | % | 1,45 | 1,48 | (2,0) | 1,44 | 1,43 | 1,47 | 1,48 |
| Copper in ore | kt | 442,7 | 442,6 | +0,0 | 108,2 | 108,8 | 111,2 | 114,4 |
| Silver grade | g/t | 50,4 | 50,7 | (0,6) | 50,4 | 49,9 | 51,0 | 50,1 |
| Silver in ore | t | 1 533,3 | 1 521,7 | +0,8 | 377,7 | 380,8 | 386,8 | 388,0 |
| Production of concentrate (dry weight) | kt | 1 755 | 1 741 | +0,8 | 434 | 435 | 442 | 443 |
| Copper in concentrate | kt | 392,5 | 391,3 | +0,3 | 97,1 | 96,4 | 98,9 | 100,0 |
| Silver in concentrate | t | 1 315,8 | 1 302,9 | +1,0 | 326,9 | 326,6 | 331,9 | 330,3 |
Metallurgical production
The production of electrolytic copper as compared to 2021 increased by 8.4 thousand tonnes, or by 1.5%. The higher production of electrolytic copper was the result of an increase in the supply of purchased metal-bearing materials. By supplementing own concentrate with purchased metal-bearing materials in the form of scrap, copper blister and imported concentrate, existing technological capacity was effectively used.
The production of other metallurgical products (silver, wire rod, OFE rod) derives from the level of Cu concentrate processing and silver content, and in the case of copper products also depends on market demand and the production capacity of the Cedynia Copper Wire Rod Plant.
In comparison to 2021, the production of metallic gold increased by 187 kg, or by 7.4%, to 87.3 koz t, while metallic silver production was lower by 33.8 tonnes, or -2.5%, closing the year at 1,298 tonnes.
Metallurgical production of KGHM Polska Miedź S.A.
| Unit | 2022 | 2021 | Change (%) | Q4 22 | Q3 22 | Q2 22 | Q1 22 | |
| Electrolytic copper, including: | kt | 586.0 | 577.6 | +1.5 | 143.5 | 146.2 | 145.2 | 151.1 |
| – production from own concentrates | kt | 381.5 | 381.4 | +0.0 | 107.6 | 96.3 | 81.1 | 96.6 |
| – production from purchased materials | kt | 204.5 | 196.2 | +4.2 | 35.9 | 50.0 | 64.1 | 54.5 |
| Wire rod, OFE and CuAg rod | kt | 277.8 | 281.9 | (1.5) | 60.0 | 73.8 | 71.7 | 72.3 |
| Metallic silver | t | 1,298.4 | 1,332.2 | (2.5) | 298.6 | 331.3 | 328.7 | 339.8 |
| Metallic gold | koz t | 87.3 | 81.3 | +7.4 | 25.5 | 20.9 | 19.8 | 21.1 |
| Refined lead | kt | 28.8 | 30.1 | (4.3) | 7.2 | 5.9 | 7.9 | 7.8 |
Sales
In 2022, the level of sales of copper products by the Company was higher than that achieved in 2021 and amounted to 565.0 thousand tonnes, versus 561.5 thousand tonnes in the prior year. In 2022, sales of copper cathodes amounted to 279.7 thousand tonnes, meaning an increase by 0.1% compared to 2021. Sales of copper wire rod and OFE rod increased however by 2%, amounting to 282.3 thousand tonnes in 2022. The structure of sales of copper products results from the year-long high demand for higher-margin products compared to processed copper cathodes.
Sales of metallic silver in 2022 amounted to 1,338 t, meaning an increase by 7% compared to 2021, alongside a decrease in production by 3%. Silver inventory at the end of 2022 was designated to meet the sales schedule in 2023. Sales of gold in 2022 reached 80.5 koz t.
Sales volume of basic products of KGHM Polska Miedź S.A.
| Unit | 2022 | 2021 | Change (%) | Q4 22 | Q3 22 | Q2 22 | Q1 22 | |
| Cathodes and cathode parts | kt | 279.7 | 279.3 | +0.1 | 69.6 | 69.9 | 74.2 | 66.1 |
| Copper wire rod and OFE rod | kt | 282.3 | 278.0 | +1.5 | 64.8 | 66.6 | 74.5 | 76.4 |
| Other copper products | kt | 3.0 | 4.2 | (28.6) | 0.8 | 0.7 | 0.8 | 0.7 |
| Total copper and copper products | kt | 565.0 | 561.5 | +0.6 | 135.1 | 137.2 | 149.5 | 143.2 |
| Metallic silver | t | 1,338.3 | 1,248.9 | +7.2 | 300.9 | 323.8 | 333.1 | 380.5 |
| Metallic gold | koz t | 80.5 | 78.0 | +3.2 | 16.5 | 22.2 | 17.5 | 24.3 |
| Refined lead | kt | 29.3 | 30.7 | (4.6) | 7.5 | 6.7 | 8.1 | 7.0 |
Total revenues from sales by KGHM Polska Miedź S.A. in 2022 amounted to PLN 28,429 million, representing an increase by 15% versus 2021, when revenues amounted to PLN 24,618 million.
Revenues from sales of copper products in 2022 increased by 16% and amounted to PLN 22,207 million (compared to revenues in 2021 of PLN 19,079 million).
Revenues from metallic silver sales in 2022 also increased (+9%) to PLN 4,341 million compared to PLN 3,990 million in 2021. Revenues from sales of metallic gold in 2022 increased to PLN 649 million, versus PLN 548 million in 2021 (+18%).
The increase in revenues from contracts with customers compared to the previous year by PLN 3,811 million was mainly due to higher prices of copper, silver and gold (+PLN 1,683 million) and higher volume (+PLN 427 million), with a lower negative adjustment of revenues due to hedging transactions (+PLN 1,469 million) than in the prior year.
Revenues from contracts with customers of KGHM Polska Miedź S.A. (in million PLN)
| 2022 | 2021 | Change % | Q4 22 | Q3 22 | Q2 22 | Q1 22 | |
| Cathodes and cathode parts | 10,803 | 9,462 | +14.2 | 2,658 | 2,521 | 2,946 | 2,678 |
| Copper wire rod and OFE rod | 11,283 | 9,461 | +19.3 | 2,518 | 2,542 | 3,107 | 3,115 |
| Other copper products | 122 | 156 | (21.8) | 29 | 26 | 36 | 31 |
| Total copper and copper products | 22,207 | 19,079 | +16.4 | 5,205 | 5,089 | 6,089 | 5,824 |
| Metallic silver | 4,341 | 3,990 | +8.8 | 980 | 1,030 | 1,117 | 1,214 |
| Metallic gold | 649 | 548 | +18.4 | 133 | 184 | 142 | 190 |
| Refined lead | 294 | 271 | +8.9 | 76 | 67 | 82 | 70 |
| Other goods and services | 570 | 452 | +26.1 | 138 | 121 | 147 | 164 |
| Merchandise and materials | 367 | 278 | +32.0 | 114 | 82 | 79 | 92 |
| Total revenues from contracts with customers | 28,429 | 24,618 | +15.5 | 6,646 | 6,572 | 7,656 | 7,555 |
Geographical breakdown of sales
In 2022, KGHM Polska Miedź S.A. earned most of its revenues from domestic sales, which accounted for 25% of total revenue. Amongst KGHM’s other customers, the largest ones were from Germany (19%), Italy (8%), the Czech Republic (8%), China (8%) and the UK (6%).
Costs
The Company’s cost of sales, selling costs and administrative expenses (cost of products, merchandise and materials sold plus selling costs and administrative expenses) in 2022 amounted to PLN 24,463 million and was 19% higher as compared to the corresponding period of 2021. The Company’s cost of sales, selling costs and administrative expenses was substantially affected by the increase in production of electrolytic copper by 8.4 thousand tonnes of copper and a substantial increase in the purchase prices of technological materials, fuels and energy, due to the current market situation.
Total expenses by nature in 2022 as compared to 2021 were higher by 18%, despite higher consumption of purchased metal-bearing materials by PLN 1,727 million (a higher amount by 15 thousand tonnes and a higher price by 16%).
The minerals extraction tax charge was lower by PLN 502 million (-14%) despite higher copper prices expressed in PLN/t, as during the period January-November 2022 the Company took advantage of a statutory reduction in the tax rate by 30%.
Expenses by nature of KGHM Polska Miedź S.A. (in million PLN)
| 2022 | 2021 | Change (%) | Q4 22 | Q3 22 | Q2 22 | Q1 22 | |
| Depreciation of property, plant and equipment and amortisation of intangible assets | 1,504 | 1,435 | +4.8 | 387 | 376 | 377 | 364 |
| Costs of employee benefits | 4,832 | 4,249 | +13.7 | 1,344 | 1,168 | 1,332 | 988 |
| Materials and energy, including: | 13,687 | 10,242 | +33.6 | 3,446 | 3,291 | 3,640 | 3,310 |
| – purchased metal-bearing materials | 8,859 | 7,132 | +24.2 | 2,158 | 2,077 | 2,420 | 2,204 |
| – electrical and other energy | 1,921 | 1,230 | +56.2 | 415 | 574 | 450 | 482 |
| Third party services | 2,238 | 1,884 | +18.8 | 684 | 548 | 530 | 476 |
| Minerals extraction tax | 3,046 | 3,548 | (14.1) | 746 | 647 | 809 | 844 |
| Other taxes and charges | 487 | 398 | +22.4 | 140 | 112 | 22 | 213 |
| Other costs | 101 | 145 | (30.3) | 43 | 13 | 33 | 12 |
| Total expenses by nature | 25,895 | 21,901 | +18.2 | 6,790 | 6,155 | 6,743 | 6,207 |
- consumption of materials and energy (+PLN 1,718 million) – mainly due to higher prices for natural gas, electricity, coke and technological materials,
- labour costs (+PLN 583 million) – due to an increase in wage rates,
- external services (+PLN 354 million) – mainly due to an increase in transportation services, repairs and maintenance and mine development work,
- depreciation/amortisation (+PLN 69 million) – an increase due to investments advanced in prior periods.
The Company’s operating expenses are decisively impacted by the costs of electrolytic copper production (prior to the decrease by the value of by-products), whose share is around 96%.
Cost of producing copper in concentrate – C1 (unit cash cost of producing payable copper in concentrate, reflecting costs of ore extraction and processing, transport costs, the minerals extraction tax, administrative costs during the mining stage, and smelter treatment and refining charges (TC/RC), less the value of by-products) was 2.26 USD/lb in 2021 and 2.38 USD/lb in 2022. The increase in this cost by 5% was mainly due to the higher costs of materials, external services and labour described above, but also to a lower valuation of by-products due to a decrease in silver prices. Positive impact on this cost came from a strengthening in the USD as compared to the PLN and to a lower minerals extraction tax charge.
The pre-precious metals credit unit cost of copper production from own concentrate (unit cost prior to decrease by the value of anode slimes containing among others silver and gold) was higher than that recorded in 2021 by 5,520 PLN/t (16.6%), with a similar volume of production from own concentrate. The increase in the unit cost was mainly due to the higher prices of energy, fuels and technological materials, third-party services and higher costs of labour. The total unit cost of copper production from own concentrate was higher compared to 2021 by 5,565 PLN/t (25%) with a slightly lower valuation of anode slimes due to lower silver prices.
Financial results of the KGHM Polska Miedź S.A. segment
Statement of profit or loss
In 2022, the Company recorded profit for the period in the amount of PLN 3,533 million, or by PLN 1,636 million (32%) lower than in the prior year.
Basic items of the statement of profit or loss of KGHM Polska Miedź S.A. (in million PLN)
| 2022 | 2021 | Change (%) | Q4,22 | Q3,22 | Q2,22 | Q1,22 | |
|---|---|---|---|---|---|---|---|
| Revenues from contracts with customers | 28,429 | 24,618 | +15.5 | 6,646 | 6,572 | 7,656 | 7,555 |
| – adjustment of income from hedging transactions | (182) | (1,651) | (89.0) | 71 | 124 | (161) | (216) |
| Cost of sales, selling costs and administrative expenses | (24,463) | (20,514) | +19.3 | (6,053) | (5,943) | (6,514) | (5,953) |
| Profit or loss on sales | 3,966 | 4,104 | (3.4) | 593 | 629 | 1,142 | 1,602 |
| Other operating income and (costs) | 1,299 | 3,088 | (57.9) | (901) | 807 | 1,052 | 341 |
| – exchange differences on assets and liabilities other than borrowings | 500 | 511 | (2.2) | (796) | 600 | 477 | 219 |
| – measurement and realisation of derivatives | (222) | (445) | (50.1) | (127) | (102) | 64 | (57) |
| – interest on loans granted and other financial receivables | 348 | 304 | +14.5 | 94 | 97 | 103 | 54 |
| – fair value gains on financial assets measured at fair value through profit or loss | 631 | 1,070 | (41.0) | (175) | 337 | 409 | 60 |
| – fair value losses on financial assets measured at fair value through profit or loss | (87) | (63) | +38.1 | (6) | 55 | (96) | (40) |
| – reversal of impairment losses on shares in subsidiaries | – | 1,010 | × | – | – | – | – |
| – impairment losses on shares and investment certificates in subsidiaries | – | (182) | × | – | – | – | – |
| – reversal of impairment losses on financial instruments measured at amortised cost | 213 | 807 | (73.6) | 31 | (10) | 139 | 53 |
| – other | (84) | 76 | × | 78 | (170) | (44) | 52 |
| Finance income and (costs) | (269) | (476) | (43.5) | 447 | (355) | (256) | (105) |
| – exchange differences on borrowings | (179) | (338) | (47.0) | 436 | (315) | (223) | (78) |
| – interest on borrowings | (48) | (92) | (47.8) | 17 | (30) | (20) | (15) |
| – other | (42) | (46) | (8.7) | (6) | (10) | (13) | (12) |
| Profit/(loss) before income tax | 4,996 | 6,716 | (25.6) | 139 | 1,081 | 1,938 | 1,838 |
| Income tax | (1,463) | (1,547) | (5.4) | (144) | (351) | (455) | (513) |
| PROFIT/LOSS FOR THE PERIOD | 3,533 | 5,169 | (31.7) | (5) | 730 | 1,483 | 1,325 |
| Depreciation/amortisation recognised in profit or loss | (1,434) | (1,363) | +5.2 | (370) | (369) | (373) | (322) |
| Adjusted EBITDA1 | 5,400 | 5,474 | (1.4) | 963 | 998 | 1,515 | 1,924 |
1 Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment loss (-reversal of impairment losses) on non-current assets, recognised in cost of sales, selling costs and administrative expenses
Main factors impacting the change in profit or loss of KGHM Polska Miedź S.A.
| Item | Impact on change of profit or loss (PLN million) | Description |
|---|---|---|
| An increase in revenues from contracts with customers (+PLN 3.811 million) | +3,963 | An increase in revenues from sales of basic products (copper, silver, gold) due to a more favourable average USD/PLN exchange rate (a change from 3.86 to 4.46 USD/PLN) |
| (2,279) | A decrease in revenues due to lower prices of copper (-520 USD/t, -6%) and silver (‑3.41 USD/oz t, -14%) with unchanged gold prices | |
| +1,469 | A change in the adjustment of revenues due to hedging transactions from -PLN 1,651 million to ‑PLN 182 million | |
| +427 | An increase in revenues due to higher volume of sales of copper (+3.5 kt, +1%), silver (+89 t, +7%) and gold (+2.4 koz t, +3%) | |
| +231 | An increase in other revenues from sales, including revenues from the sale of merchandise, waste and production materials (+PLN 87 million), sulphuric acid (+PLN 59 million), refined lead (+PLN 24 million), copper sulphate (+PLN 19 million) and nickel sulphate (+PLN 18 million) | |
| An increase in cost of sales, selling costs and administrative expenses2 | (3,949) | Mainly an increase in expenses by nature by PLN 3,994 million, mainly due to higher costs: consumption of purchased metal-bearing materials (+PLN 1,727 million), other materials and energy (+PLN 1,718 million), employee benefits (+PLN 583 million) and a higher minerals extraction tax charge (+PLN 502 million). |
| Reversal of impairment losses on shares in subsidiaries | (1,010) | The total amount is in respect of 2021 and shares of the holding company Future 1 Sp. z o.o. which holds indirectly 100% of the shares of KGHM INTERNATIONAL LTD. |
| Reversal of impairment losses on financial instruments measured at amortised cost | (594) | A lower level of reversals of impairment losses on financial instruments measured at amortised cost, from PLN 807 million to PLN 213 million. This change is mainly (+PLN 539 million) in respect of loans granted to Future 1 Sp. z o.o. and the KGHM INTERNATIONAL LTD. Group (a decrease from PLN 752 million to PLN 213 million). |
| Impact of derivatives and hedging transactions | +214 | An increase by PLN 223 million in the result due to the measurement and realisation of derivatives in other operating activities |
| A decrease by PLN 9 million in the result due to the measurement and realisation of derivatives in financing activities | ||
| Impairment losses on shares and investment certificates in subsidiaries | +182 | No losses in 2022 versus -PLN 182 million in the prior year, entirely in respect of impairment of the shares in Energetyka Sp. z o.o. |
| Fair value gains on financial assets measured at fair value through profit or loss | (439) | A decrease in fair value gains on financial assets measured at fair value through profit or loss, from PLN 1,070 million to PLN 631 million. This change is mainly (-PLN 455 million) in respect of loans (a decrease from PLN 1,056 million to PLN 601 million). |
| Impact of exchange differences | +148 | A decrease by PLN 11 million in foreign exchange differences on the measurement of assets and liabilities other than borrowings – in other operating activities. |
| An increase by PLN 159 million in foreign exchange differences on borrowings (presented in finance costs). | ||
| Decrease in income tax | +84 | The decrease in income tax resulted from a decrease in current income tax by PLN 186 million, with an increase in deferred income tax by PLN 51 million and a change in the adjustment of current tax for prior periods by PLN 51 million |
2 Costs of products, merchandise and materials sold plus selling costs and administrative expenses
Cash flows
Cash flow of KGHM Polska Miedź S.A. (in million PLN)
| 2022 | 2021 | Change (%) | Q4 22 | Q3 22 | Q2 22 | Q1 22 | |
| Profit before income tax | 4,996 | 6,716 | ×0.7 | 139 | 1,081 | 1,938 | 1,838 |
| Exclusions of income and costs, total | 247 | (1,216) | × | 848 | (516) | (850) | 765 |
| Income tax paid | (1,575) | (707) | ×2.2 | (192) | (194) | (1,020) | (169) |
| Changes in working capital | (1,877) | (2,830) | ×0.7 | (725) | (65) | (492) | (595) |
| Net cash generated from/(used in) operating activities | 1,791 | 1,963 | ×0.9 | 70 | 306 | (424) | 1,839 |
| Expenditures on property, plant and equipment and intangible assets | (2,731) | (2,407) | ×1.1 | (735) | (647) | (568) | (781) |
| Proceeds/expenditures due to loans granted | 1,043 | 1,655 | ×0.6 | 52 | (11) | 576 | 426 |
| Other | 59 | 145 | ×0.4 | 7 | 84 | (6) | (26) |
| Net cash generated from/(used in) investing activities | (1,629) | (607) | ×2.7 | (676) | (574) | 2 | (381) |
| Proceeds/expenditures due to borrowings drawn | 253 | (1,684) | × | (99) | 507 | (65) | (90) |
| Expenditures due to dividends paid to shareholders of the Company | (600) | (300) | ×2.0 | – | (600) | – | – |
| Other | (159) | (107) | ×1.5 | (10) | 36 | (153) | (32) |
| Net cash used in financing activities | (506) | (2,091) | ×0.2 | (109) | (57) | (218) | (122) |
| NET CASH FLOW | (344) | (735) | ×0.5 | (715) | (325) | (640) | 1,336 |
| Exchange differences on cash and cash equivalents | (3) | (68) | ×0.0 | (3) | (1) | 15 | (14) |
| Cash and cash equivalents at beginning of the period | 1,332 | 2,135 | ×0.6 | 1,332 | 2,029 | 2,654 | 1,332 |
| Cash and cash equivalents at end of the period | 985 | 1,332 | ×0.7 | 985 | 1,703 | 2,029 | 2,654 |
Net cash generated from operating activities in 2022 amounted to +PLN 1,791 million and mainly comprised profit before income tax in the amount of PLN 4,996 million, adjusted by the exclusion of income and costs in the amount of +PLN 247 million, less income tax paid in the amount of PLN 1,575 million and a decrease in working capital by PLN 1,877 million. The change in working capital was mainly due to the following: a decrease in inventories (-PLN 2,027 million) with an increase in trade payables by PLN 225 million.
Net cash used in investing activities in 2022 amounted to -PLN 1,629 million and mainly comprised expenditures on property, plant and equipment and intangible assets in the amount of -PLN 2,731 million and the balance of proceeds and expenditures due to loans granted, +PLN 1,043 million.
Net cash used in financing activities during the same period amounted to -PLN 506 million and mainly comprised dividends paid to shareholders in the amount of PLN 600 million.
After reflecting exchange differences on cash and cash equivalents, in 2022 cash and cash equivalents decreased by PLN 347 million to PLN 985 million.
Assets and sources of asset financing
Assets of KGHM Polska Miedź S.A. (in million PLN)
| 31 Dec 2022 |
31 Dec 2021 |
Change (%) |
30 Sep 2022 |
30 Jun 2022 |
31 Mar 2022 |
|
| Property, plant and equipment and intangible assets | 22,497 | 20,995 | +7.2 | 21,855 | 21,511 | 20,789 |
| Investments in subsidiaries, other than loans granted | 3,701 | 3,691 | +0.3 | 3,701 | 3,698 | 3,691 |
| Financial instruments, including: | 10,392 | 9,931 | +4.6 | 11,419 | 10,684 | 9,898 |
| – loans granted | 8,763 | 8,249 | +6.2 | 9,590 | 8,605 | 8,190 |
| Other non-financial assets | 117 | 54 | ×2.2 | -12,927 | -35,841 | -34,327 |
| Non-current assets | 36,707 | 34,671 | +5.9 | 24,048 | 52 | 51 |
| Inventories | 7,523 | 5,436 | +38.4 | 6,673 | – | – |
| Trade receivables | 620 | 600 | +3.3 | 740 | 6,534 | 5,838 |
| Tax assets | 312 | 301 | +3.7 | 227 | 873 | 837 |
| Derivatives | 796 | 254 | ×3.1 | 826 | 249 | 193 |
| Cash pooling receivables | 588 | 498 | +18.1 | 489 | 587 | 192 |
| Other financial assets | 322 | 289 | +11.4 | 432 | 351 | 106 |
| Other non-financial assets | 142 | 77 | +84.4 | 170 | 248 | 178 |
| Cash and cash equivalents | 985 | 1,332 | (26.1) | 1,703 | 245 | 144 |
| Non-current assets held for sale | – | – | × | – | 2,029 | 2,654 |
| Current assets | 11,288 | 8,787 | +28.5 | 11,260 | 11,261 | 10,142 |
| TOTAL ASSETS | 47,995 | 43,458 | +10.4 | 35,308 | 47,206 | 10,193 |
As at 31 December 2022, total assets amounted to PLN 47,995 million, or an increase as compared to the end of 2021 by PLN 4,537 million, or by 10%, mainly due to increases in the following items:
- inventories by PLN 2,087 million, including half-finished products and work in progress (+PLN 1,235 million, finished goods (+PLN 479 million) and materials (+PLN 379 million),
- property, plant and equipment and intangible assets by PLN 1,502 million, resulting from advancement of investments – cash expenditures on property, plant and equipment and intangible assets in 2021 amounted to PLN 2,741 million,
- long-term financial instruments by PLN 461 million, including loans granted (+PLN 514 million),
- short-term financial instruments by PLN 542 million,
alongside a decrease in the value of cash and cash equivalents by -PLN 347 million.
Equity and liabilities of KGHM Polska Miedź S.A. (in million PLN)
| 31 Dec 2022 |
31 Dec 2021 |
Change (%) |
30 Sep 2022 |
30 Jun 2022 |
31 Mar 2022 |
|
| Share capital | 2,000 | 2,000 | – | 2,000 | 2,000 | 2,000 |
| Other reserves from measurement of financial instruments | (395) | (1,670) | (76.3) | (1,049) | (643) | (1,921) |
| Accumulated other comprehensive income | (702) | (329) | ×2.1 | (602) | (428) | (440) |
| Retained earnings | 28,772 | 25,839 | +11.4 | 28,777 | 28,047 | 27,164 |
| Equity | 29,675 | 25,840 | +14.8 | 29,126 | 26,976 | 26,803 |
| Liabilities on account of loans, borrowings, leases and debt securities | 5,000 | 5,180 | (3.5) | 5,298 | 4,590 | 4,559 |
| Derivatives | 719 | 1,133 | (36.5) | 1,543 | 1,078 | 1,163 |
| Employee benefits liabilities | 2,394 | 2,040 | +17.4 | 2,323 | 2,062 | 2,104 |
| Provisions for decommissioning costs of mines and other technological facilities | 1,233 | 811 | +52.0 | 896 | 888 | 460 |
| Other non-current liabilities | 965 | 543 | +77.7 | (9,757) | (8,368) | (8,027) |
| Non-current liabilities | 10,311 | 9,707 | +6.2 | 303 | 250 | 259 |
| Liabilities on account of loans, borrowings, leases and debt securities | 1,124 | 382 | ×2.9 | 1,279 | 1,122 | 1,059 |
| Cash pooling liabilities | 321 | 360 | (10.8) | 329 | 267 | 340 |
| Derivatives | 434 | 888 | (51.1) | 519 | 369 | 1,147 |
| Trade and similar payables | 2,819 | 2,613 | +7.9 | 2,503 | 2,732 | 2,438 |
| Employee benefits liabilities | 1,365 | 1,130 | +20.8 | 1,162 | 1,329 | 1,244 |
| Tax liabilities | 1,061 | 1,291 | (17.8) | 1,152 | 1,072 | 1,660 |
| Provisions for liabilities and other charges | 110 | 98 | +12.2 | 169 | 94 | 96 |
| Other current liabilities | 775 | 1,149 | (32.6) | 1,218 | 1,833 | 1,202 |
| Current liabilities | 8,009 | 7,911 | +1.2 | 8,331 | 8,818 | 9,186 |
| Non-current and current liabilities | 18,320 | 17,618 | +4.0 | 19,165 | 18,230 | 17,926 |
| TOTAL EQUITY AND LIABILITIES | 47,995 | 43,458 | +10.4 | 48,291 | 45,206 | 44,729 |
- equity by PLN 3,835 million, mainly with respect to the profit for 2022 in the amount of PLN 3,533 million,
- employee benefits liabilities (+PLN 589 million),
- borrowings, lease and debt securities (+PLN 562 million),
- provisions for decommissioning costs of mines and other technological facilities (+PLN 422 million),
- deferred tax liabilities (+PLN 415 million),
- trade and similar payables (+PLN 206 million)
- derivatives (-PLN 868 million),
- tax liabilities (-PLN 230 million).
Contingent assets and liabilities under guarantees and warranties granted
As at 31 December 2022, contingent assets amounted to PLN 373 million and related mainly to promissory notes receivables in the amount of PLN 253 million and guarantees received by the Company in the amount of PLN 115 million.
As at 31 December 2022, the Company held liabilities due to guarantees granted and letters of credit in the total amount of PLN 1,609 million.
- Sierra Gorda S.C.M. – a guarantee for the performance of agreements in the amount of PLN 969 million (as at 31 December 2021: PLN 670 million); PLN 969 million (USD 220 million) – a corporate (financial) guarantee securing repayment of a Revolving Credit Facility, the guarantee is in force to September 2024. The carrying amount of the liabilities due to financial guarantees granted and recognised in the accounts is PLN 57 million (as at 31 December 2021: PLN 58 million).
- PLN 126 million – a guarantee for the proper execution by the Company of future environmental obligations related to the obligation to restore terrain, following the discontinuation of operations of the Żelazny Most tailings storage facility (as of 31 December 2021 in the amount of PLN 124 million), the guarantee is in force for up to 1 year,
- PLN 461 million (USD 90 million, CAD 18 million) – a guarantee for the restoration costs of the Robinson mine, the Podolsky mine and the Victoria project (as at 31 December 2021 in the amount of PLN 402 million, or USD 90 million, CAD 12 million), the guarantee is in force for up to 1 year,
- PLN 14 million – a guarantee for claims by the Marshal of the Voivodeship of Lower Silesia to cover costs related to the collection and processing of waste, the guarantee is in force until 6 March 2023,
- PLN 2 million – a guarantee to cover liabilities related to customs-tax duties, the guarantee is in force indefinitely,
- PLN 7 million (PLN 2 million and CAD 2 million) – a guarantee to cover liabilities related to the proper execution of agreements entered into by KGHM Polska Miedź S.A. and Group companies (as at 31 December 2021 in the amount of PLN 10 million, or PLN 3 million and CAD 2 million), the guarantee is in force for up to 3 years,
- PLN 30 million – a guarantee to cover liabilities incurred by a Brokerage due to the settlement of transactions on markets operated by the energy trading market Towarowa Giełda Energii S.A., the guarantee is in force until 31 December 2022.