7.1 Financial Instruments
in PLN millions, unless otherwise stated
|
Financial assets |
As at 31 December 2022 | As at 31 December 2021 | ||||||||
| At fair value through other comprehensive income | At fair value through profit or loss | At amortised cost | Hedging instruments | Total | At fair value through other comprehensive income | At fair value through profit or loss | At amortised cost | Hedging instruments | Total | |
| Non-current | 521 | 90 | 10 072 | 709 | 11 392 | 615 | 32 | 8 366 | 585 | 9 598 |
| Loans granted to a joint venture | – | – | 9 603 | – | 9 603 | – | – | 7 867 | – | 7 867 |
| Derivatives | – | 5 | – | 709 | 714 | – | 10 | – | 585 | 595 |
| Other financial instruments measured at fair value | 521 | 85 | – | – | 606 | 615 | 22 | – | – | 637 |
| Other financial instruments measured at amortised cost* | – | – | 469 | – | 469 | – | – | 499 | – | 499 |
| Current | – | 829 | 1 926 | 755 | 3 510 | – | 632 | 2 920 | 249 | 3 801 |
| Loans granted to a joint venture | – | – | – | – | – | – | – | 447 | – | 447 |
| Trade receivables* | – | 751 | 426 | – | 1 177 | – | 627 | 397 | – | 1 024 |
| Derivatives | – | 41 | – | 755 | 796 | – | 5 | – | 249 | 254 |
| Cash and cash equivalents* | – | – | 1 200 | – | 1 200 | – | – | 1 904 | – | 1 904 |
| Other financial assets | – | 37 | 300 | – | 337 | – | – | 172 | – | 172 |
| Total | 521 | 919 | 11 998 | 1 464 | 14 902 | 615 | 664 | 11 286 | 834 | 13 399 |
| As at 31 December 2022 | As at 31 December 2021 | |||||||
| Financial liabilities | At fair value through profit or loss | At amortised cost | Hedging instruments | Total | At fair value through profit or loss | At amortised cost | Hedging instruments | Total |
| Non-current | 19 | 5 460 | 700 | 6 179 | 78 | 5 696 | 1 056 | 6 830 |
|
Borrowings, lease and debt securities* |
– | 5 220 | – | 5 220 | – | 5 475 | – | 5 475 |
|
Derivatives |
19 | – | 700 | 719 | 78 | – | 1 056 | 1 134 |
|
Other financial liabilities |
– | 240 | – | 240 | – | 221 | – | 221 |
| Current | 188 | 4 440 | 280 | 4 908 | 200 | 3 587 | 848 | 4 635 |
|
Borrowings, lease and debt securities* |
– | 1 223 | – | 1 223 | – | 474 | – | 474 |
|
Derivatives |
154 | – | 280 | 434 | 41 | – | 848 | 889 |
|
Trade payables* |
– | 3 076 | – | 3 076 | – | 2 919 | – | 2 919 |
|
Similar payables – reverse factoring |
– | 18 | – | 18 | – | 95 | – | 95 |
|
Other financial liabilities* |
34 | 123 | – | 157 | 159 | 99 | – | 258 |
| Total | 207 | 9 900 | 980 | 11 087 | 278 | 9 283 | 1 904 | 11 465 |
| Financial assets – held for sale (disposal group) | As at 31 December 2021 | ||
| At fair value through profit or loss | At amortised cost | Total | |
| Non-current | – | 3 | 3 |
| Other financial instruments measured at amortised cost | – | 3 | 3 |
| Current | 13 | 22 | 35 |
| Trade receivables | 13 | 2 | 15 |
| Cash and cash equivalents | – | 20 | 20 |
| Total | 13 | 25 | 38 |
| Financial liabilities at amortised cost – liabilities related to disposal group | As at 31 December 2021 |
| Non-current | 66 |
| Borrowings, lease and debt securities | 66 |
| Current | 66 |
| Borrowings, lease and debt securities | 19 |
| Trade payables | 40 |
| Other financial liabilities | 7 |
| Total | 132 |
| Financial assets – excluding assets held for sale (disposal group) | Stan na 31.12.2021 | ||||
| At fair value through other comprehensive income | At fair value through profit or loss | At amortised cost | Hedging instruments | Total | |
| Non-current | 615 | 32 | 8 363 | 585 | 9 595 |
| Loans granted to a joint venture | – | – | 7 867 | – | 7 867 |
| Derivatives | – | 10 | – | 585 | 595 |
| Other financial instruments measured at fair value | 615 | 22 | – | – | 637 |
| Other financial instruments measured at amortised cost | – | – | 496 | – | 496 |
| Current | – | 619 | 2 898 | 249 | 3 766 |
| Loans granted to a joint venture | – | – | 447 | – | 447 |
| Trade receivables | – | 614 | 395 | – | 1 009 |
| Derivatives | – | 5 | – | 249 | 254 |
| Cash and cash equivalents | – | – | 1 884 | – | 1 884 |
| Other financial assets | – | – | 172 | – | 172 |
| Total | 615 | 651 | 11 261 | 834 | 13 361 |
| Financial liabilities – excluding liabilities related to disposal group |
As at 31 December 2021 |
|||
| At fair value through profit or loss | At amortised cost | Hedging instruments | Total | |
| Non-current | 78 | 5 630 | 1 056 | 6 764 |
| Borrowings, lease and debt securities | – | 5 409 | – | 5 409 |
| Derivatives | 78 | – | 1 056 | 1 134 |
| Other financial liabilities | – | 221 | – | 221 |
| Current | 200 | 3 521 | 848 | 4 569 |
| Borrowings, lease and debt securities | – | 455 | – | 455 |
| Derivatives | 41 | – | 848 | 889 |
| Trade payables | – | 2 879 | – | 2 879 |
| Similar payables – reverse factoring | – | 95 | – | 95 |
| Other financial liabilities | 159 | 92 | – | 251 |
| Total | 278 | 9 151 | 1 904 | 11 333 |
| from 1 January 2022 to 31 December 2022 |
Financial assets/liabilities measured at fair value through
profit or loss |
Financial assets measured at amortised cost | Financial liabilities measured at amortised cost | Hedging instruments | Total | |
|
Note 4.2 Note 6.2 |
Interest income | – | 636 | – | – | 636 |
| Note 6.2 | Gain due to the reversal of allowances for impairment of loans granted to a joint venture | – | 873 | – | – | 873 |
| Note 4.3 | Interest income/(costs) | – | – | (60) | 60 | – |
| Note 4.2 | Foreign exchange gains/(losses) other than borrowings | 233 | 767 | (51) | – | 949 |
| Note 4.3 | Foreign exchange losses on borrowings | – | – | (179) | – | (179) |
| Note 4.4 | Reversal of impairment losses | – | 5 | – | – | 5 |
| Note 4.4 | Impairment losses | – | (5) | – | – | (5) |
| Note 7.2 | Revenues from contracts with customers | – | – | – | (182) | (182) |
|
Note 4.2 Note 4.3 |
Gains on measurement and realisation of derivatives | 400 | – | – | – | 400 |
|
Note 4.2 Note 4.3 |
Losses on measurement and realisation of derivatives | (329) | – | – | (310) | (39) |
| Note 4.3 | Fees and charges on bank loans drawn | – | – | (29) | – | (29) |
| Note 4.2 | Fair value losses on financial receivables | (58) | – | – | – | (58) |
| Other gains/(losses) | – | 2 | (2) | – | – | |
| Total net gain/(loss) | 246 | 2 278 | (321) | (432) | 1 771 |
| from 1 January 2021 to 31 December 2021 |
Financial assets/liabilities measured at fair value through
profit or loss |
Financial assets measured at amortised cost | Financial liabilities measured at amortised cost | Hedging instruments | Total | |
|
Note 4.2 Note 6.2 |
Interest income | – | 495 | – | – | 495 |
| Note 6.2 | Gain due to the reversal of allowances for impairment of loans granted to a joint venture | – | 2 380 | – | – | 2 380 |
| Note 4.3 | Interest costs | – | – | (94) | – | (94) |
| Note 4.2 | Foreign exchange gains/(losses) other than borrowings | 181 | 1 358 | (545) | – | 994 |
| Note 4.3 | Foreign exchange losses on borrowings | – | – | (299) | – | (299) |
| Note 4.4 | Impairment losses | – | (13) | – | – | (13) |
| Note 4.4 | Reversal of impairment losses | – | 27 | – | – | 27 |
| Note 7.2 | Revenues from contracts with customers | – | – | – | (1 651) | (1 651) |
|
Note 4.2 Note 4.3 |
Gains on measurement and realisation of derivatives | 453 | – | – | – | 453 |
|
Note 4.2 Note 4.3 |
Losses on measurement and realisation of derivatives | (848) | – | – | – | (848) |
| Note 4.3 | Fees and charges on bank loans drawn | – | – | (25) | – | (25) |
| Note 4.2 | Fair value losses on financial receivables | (39) | – | – | – | (39) |
| Other losses | – | – | (8) | – | (8) | |
| Total net gain/(loss) | (253) | 4 247 | (971) | (1 651) | 1 372 |
| As at 31 December 2022 | As at 31 December 2021 | |||||||
| fair value | carrying amount | fair value | carrying amount | |||||
| Classes of financial instruments | level 1 | level 2 | level 3 | level 1 | level 2 | level 3 | ||
| Loans granted | – | 20 | 7 787 | 9 623 | – | 22 | 8 193 | 8 336 |
| Listed shares | 422 | – | – | 422 | 516 | – | – | 516 |
| Unquoted shares | – | 99 | – | 99 | – | 99 | – | 99 |
| Trade receivables | – | 751 | – | 751 | – | 627 | – | 627 |
| Derivatives, of which: | – | 357 | – | 357 | – | (1 174) | – | (1 174) |
| assets | – | 1 510 | – | 1 510 | – | 849 | – | 849 |
| liabilities | – | (1 153) | – | (1 153) | – | (2 023) | – | (2 023) |
| Received long-term bank and other loans | – | (2 560) | – | (2 560) | – | (2 913) | – | (2 901) |
| Long-term debt securities | (1 952) | – | – | (2 000) | (2 034) | – | – | (2 000) |
| Other financial assets | – | 37 | 65 | 102 | – | – | – | – |
| Other financial liabilities | – | (34) | – | (34) | – | (159) | – | (159) |
The Group does not disclose the fair value of financial instruments measured at amortised cost (except for loans granted, long-term bank and other loans received and long-term debt securities) in the statement of financial position, because it makes use of the exemption arising from IFRS 7.29. (Disclosure of information on fair value is not required when the carrying amount is approximate to the fair value).
There was no transfer in the Group of financial instruments between individual levels of the fair value hierarchy in the current reporting period.
Methods and measurement techniques used by the Group in determining fair values of each class of financial assets or financial liabilities.
Listed shares
Shares are measured based on quotations from the Warsaw Stock Exchange and the TSX Venture Exchange in Toronto.
Long-term debt securities
Long-term debt securities are measured based on quotations from the Catalyst Market of the Warsaw Stock Exchange.
Unquoted shares
Unquoted shares are measured using the adjusted net assets. Observable Input data other than the ones from the active market were used in the measurement (e.g. transaction prices of real estate similar to the one subjected to measurement, market interest rates of State Treasury bonds and term deposits in financial institutions, and the risk-free discount rate published by the European Insurance and Occupational Pensions Authority).
Trade receivables
Receivables arising from the realisation of sales under contracts which are finally settled using future prices were measured using forward prices, depending on the period/month of contractual quoting. Forward prices are from the Reuters system.
For trade receivables transferred to non-recourse factoring, a fair value is assumed at the level of the amount of the trade receivables transferred to the factor (nominal value from the invoice) less interest, which are the factor’s compensation. Due to the short term between the transfer of receivables to the factor and their payment, fair value is not adjusted by the credit risk of the factor and impact of time lapse.
Loans granted
This item comprises loans measured at fair value, the fair value of which was estimated on the basis of contractual cash flows (per the contract) using the model of discounted cash flows, including the borrower’s credit risk.
Other financial assets/liabilities
Receivables/payables due to the settlement of derivatives, whose date of payment falls two working days after the of the reporting period, were recognised in this item. These instruments were measured at fair value set per the reference price applied in the settlement of these transactions.
Currency and currency-interest derivatives
In the case of derivatives on the currency market and currency-interest transactions (CIRS), the forward prices from the maturity dates of individual transactions were used to determine their fair value. The forward price for currency exchange rates was calculated on the basis of fixing and appropriate interest rates. Interest rates for currencies and the volatility ratios for exchange rates are taken from Reuters. The standard Garman-Kohlhagen model is used to measure European options on currency markets.
Metals derivatives
In the case of derivatives on the commodity market, forward prices from the maturity dates of individual transactions were used to determine their fair value. In the case of copper, official closing prices from the London Metal Exchange were used, and with respect to silver and gold – the fixing price set by the London Bullion Market Association. Volatility ratios and forward prices for measurement of derivatives at the end of the reporting period were obtained from the Reuters system. Levy’s approximation to the Black-Scholes model was used for Asian options pricing on metals markets.
Received long-term bank and other loans
The fair value of bank and other loans is estimated by discounting the cash flows associated with these liabilities in timeframes and under conditions arising from agreements, and by applying current rates. Fair value differs from the carrying amount by the amount of the premium paid to acquire the financing.
Loans granted
Loans granted measured at amortised cost in the statement of financial position are included in this category, because of the use of unobservable assumptions in the fair value measurement. With respect to estimating the fair value of these loans, a significant element of the estimation are the forecasted cash flows of Sierra Gorda S.C.M., which are unobservable input data, and pursuant to IFRS 13 the fair value of these assets is classified to level 3 of the hierarchy. The discount rate adopted to calculate the fair value of loans measured at amortised cost is 9.75% (as at 31 December 2021: 8%).
Detailed disclosures on the assumptions adopted for the measurement of loans were presented in Note 6.2, while the sensitivity of the fair value classified to level 3 for loans granted – in Note 7.5.2.4. As at 31 December 2022, assumptions adopted for forecasted cash flows which were applied to measurement of fair value are consistent with assumptions adopted for the calculation of the carrying amount, while the difference between the carrying amount and the fair value arises from the adoption of different discount rates.
Other financial assets
This item includes receivables due to conditional payments associated with the agreement on the sale of a subsidiary S.C.M. Franke, which were estimated based on a probabilistic model stipulated in the binding offer and including the discount of payments for subsequent years.