| 31.12.2022 | 31.12.2021 | Change (%) | 30.09.2022 | 30.06.2022 | 31.03.2022 | |
|---|---|---|---|---|---|---|
| Liabilities due to: | 6,443 | 5,949 | +8.3 | 6,918 | 6,036 | 5,956 |
| Bank loans | 1,263 | 735 | +71.8 | 1,393 | 736 | 692 |
| Other loans | 2,434 | 2,568 | (5.2) | 2,845 | 2,675 | 2,593 |
| Debt securities | 2,002 | 2,001 | – | 2,046 | 2,001 | 2,022 |
| Leases | 744 | 645 | +15.3 | 634 | 624 | 649 |
| Free cash and cash equivalents | 1,179 | 1,880 | (37.3) | 2,115 | 2,619 | 3,329 |
| Net debt | 5,264 | 4,069 | +29.4 | 4,803 | 3,417 | 2,627 |
Financing model
The KGHM Polska Miedź S.A. Group manages its financial resources based on the approved Financial Liquidity Management Policy in the Group. Its primary goal is to ensure continuous operations by securing the availability of funds required to achieve the Group’s business goals, while optimising incurred costs.
Moreover, the Policy regulates the Group’s borrowing principles, the principles of managing debt and for monitoring the level of the Group’s debt. Financial liquidity management involves securing an appropriate amount of cash and available lines of credit in the short, medium and long term.
Net debt in the Group
Liabilities due to borrowings of the Group at the end of 2022 amounted to PLN 6,441 million, with the structure based on diversified and long-term financing sources ensuring financial stability in the long run.
The Group’s free cash and cash equivalents, which at 31 December 2022 amounted to PLN 1,179 million, are of a short-term nature.
| 31.12.2022 | 31.12.2021 | Change (%) | 30.09.2022 | 30.06.2022 | 31.03.2022 | |
|---|---|---|---|---|---|---|
| Liabilities due to: | 6,445 | 5,922 | +8.8 | 6,906 | 5,980 | 5,958 |
| Bank loans | 1,194 | 593 | ×2.0 | 1,324 | 658 | 612 |
| Other loans | 2,241 | 2,387 | (6.1) | 2,627 | 2,473 | 2,385 |
| Debt securities | 2,002 | 2,001 | – | 2,046 | 2,001 | 2,022 |
| Cash pooling | 321 | 360 | (10.8) | 329 | 267 | 340 |
| Leases | 687 | 581 | +18.2 | 581 | 580 | 599 |
| Free cash and cash equivalents | 971 | 1,318 | (26.3) | 1,693 | 2,020 | 2,633 |
| Net debt | 5,474 | 4,604 | +18.9 | 5,213 | 3,960 | 3,325 |
Sources of financing in the Group
As at 31 December 2022, the Group held open lines of credit, loans and debt securities with a total available amount of PLN 15,386 million, out of which PLN 5,699 million had been drawn.
Credit in the amount of USD 1,500 million (PLN 6,603 million), acquired on the basis of a financing agreement entered into by the Parent Entity with a syndicate banks group in 2019, with maturity falling on 19 December 2024 and the option of extending for a further 2 years (5+1+1). In 2020-2021, the Parent Entity obtained the consent of the syndicate’s members to extend the tenor by an additional 2 years, or to 20 December 2026. The available financing limit during the period of extension will be USD 1,438 million (PLN 6,330 million). Interest is based on LIBOR plus a margin, which depends on the level of the net debt/EBITDA ratio.
The funds acquired under this credit were used to finance general corporate goals.
Financing agreements signed by the Parent Entity with the European Investment Bank:
- in August 2014 for PLN 2,000 million, which was drawn in the form of three instalments with maturities falling on 30 October 2026, 30 August 2028 and 23 May 2029 and used to the full available amount. The funds raised under the loan were earmarked to finance selected investment projects associated with the modernisation of metallurgy and the expansion of the Żelazny Most mining waste neutralisation facility.
- in December 2017 for PLN 1,340 million, under which three tranches were drawn with maturities falling on 28 June 2030, 23 April 2031 and 11 September 2031. The availability of the unused loan amount of PLN 440 million will expire in April 2023. The funds acquired through this loan are being used to finance the Parent Entity’s development and replacement projects at various stages of the core production line.
Interest on the instalments drawn is based on a fixed interest rate.
The program to issue bonds on the Polish market was established under an issue agreement dated 27 May 2019. Issue with a nominal value of PLN 2,000 million under which 5-year bonds were issued in the amount of PLN 400 million with maturity falling on 27 June 2024 and 10-year bonds in the amount of PLN 1,600 million with maturity falling on 27 June 2029. Interest is based on LIBOR plus a margin.
The funds acquired under this bond issue are earmarked to finance general corporate goals.
The Group has contracted credit facilities under short-term and long-term bilateral agreements for a total amount of PLN 3,255 million. Interest is based on a fixed interest rate or on the variable interest rates WIBOR, LIBOR, SOFR, EURIBOR plus a margin.
The funds obtained under the aforementioned bank loan agreements are a tool supporting the management of current financial liquidity and supporting the funding of investment projects.
Detailed information on the above loans is found in notes 8.4.3 of the Financial Statements.
An additional source of support for the Group’s liquidity is the debt factoring service, which is used by the Group as and when justified. Contracts with factors have been entered into for an indefinite term and remain active with the option of immediate utilisation of the limits offered.
Utilisation of external financing as at 31 December 2022
The following table presents the structure of borrowings used by the Group and the extent to which they were utilised.
Amount available and drawn by the Group (in PLN million)
| Financing utilised as at 31 December 2022 | Financing utilised as at 31 December 2021 | Change (%) | Financing available as at 31 December 2022 | Amount drawn (%) 31 Dec 2022 | |
| Unsecured, revolving syndicated credit facility | 528 | (14)1 | × | 6,603 | +8.0 |
| Loans | 2,434 | 2,568 | (5.2) | 3,528 | +69.0 |
| Bilateral bank loans | 735 | 749 | (1.9) | 3,255 | +22.6 |
| Debt securities | 2,002 | 2,001 | +0.0 | 2,000 | +100.1 |
| Total | 5,699 | 5,304 | +7.4 | 15,386 | +37.0 |
2 Preparation fee reducing the commitment for the utilisation of the loan
As at 31 December 2022, 61% of the Group’s debt came from loans drawn in USD, 38% in PLN and 1% in EUR.
Evaluation of financial resources management
In 2022, the KGHM Polska Miedź S.A. Group was fully capable of meeting its obligations associated with contracted liabilities. The cash and cash equivalents held by the Group along with the secured external financing ensure that liquidity will be maintained and enable the implementation of its investment plans.
As at 31 December 2022, the Group held PLN 1,179 million of free cash and cash equivalents and had open credit lines for total available financing of PLN 15,386 million, out of which PLN 5,699 million had been drawn.
Under the unsecured syndicated credit facility, the two bilateral bank loans and the investment loans from the European Investment Bank, the Group is obliged to maintain the financial covenant at specified level. At the balance sheet date, during the financial year and following the balance sheet date, as at the date of this report, the level of the reportable financial covenant as at 30 June 2022 and 31 December 2022 complied with the provisions of the agreements.
Net debt / EBITDA of the Group
| 31 Dec 2022 | 31 Dec 2021 | Change (%) | 30 Sep 2022 | 30 Jun 2022 | 31 Mar 2022 | |
| Net debt/EBITDA3 | 0,8 | 0,6 | 33,3 | 0,7 | 0,5 | 0,3 |
3 Adjusted EBITDA for the 12 month period, ending on the last day of the reporting period, excluding EBITDA of the joint venture Sierra Gorda S.C.M.
As at 31 December 2022, the balance of receivables on account of loans granted by the Parent Entity, as per IFRS 9 valuation, stood at PLN 8,785 million, while the balance of receivables on account of loans granted by the Group, as per IFRS 9 valuation, was PLN 9,623 million.
In managing its financial liquidity, the Group utilises tools which support its efficiency. One of the basic instruments used by the Group is the cash pooling management system – domestically in PLN, USD and EUR and abroad in USD, and additionally in CAD in the KGHM INTERNATIONAL LTD. Group. The cash pooling system is aimed at optimising cash management, limiting interest costs, the effective financing of current needs in terms of working capital and supporting short term financial liquidity in the Group.