8.1 Capital management policy
in PLN millions, unless otherwise stated
In accordance with market practice, the Group monitors the level of financial security, among others on the basis of the Net Debt/Adjusted EBITDA ratio presented in the table below:
| Ratios | Calculations | 31 December 2022 | 31 December 2021 |
|---|---|---|---|
| Net Debt/Adjusted EBITDA | relation of net debt to adjusted EBITDA | 0,8 | 0,6 |
| Net Debt* | borrowings, debt securities and lease liabilities less free cash and its equivalents | 5 264 | 4 069 |
| Adjusted EBITDA** | profit on sales plus depreciation/amortisation recognised in profit or loss and impairment losses on non-current assets | 6 675 | 7 160 |
** Adjusted EBITDA for the period of 12 months ended on the last day of the reporting period excluding EBITDA of the joint venture Sierra Gorda S.C.M.
In the management of liquidity and capital, the Group also pays attention to adjusted operating profit, which is the basis for calculating the financial covenant and which is comprised of the following items:
| from 1 January 2022 to 31 December 2022 |
from 1 January 2021 to 31 December 2021 |
|
| Profit on sales | 4 344 | 4 710 |
| Interest income on loans granted to a joint venture | 582 | 494 |
| Other operating income and (costs) | 962 | 711 |
| Adjusted operating profit* | 5 888 | 5 915 |
As at the end of the reporting period, in the financial period and after the end of the reporting period, up to the date of publication of these Consolidated financial statements, the value of the financial covenant subject to the obligation to report as at 30 June 2022 and 31 December 2022, met the conditions stipulated in the credit agreements.