8.3 Liquidity management policy
in PLN millions, unless otherwise stated
The Management Board of the Parent Entity is responsible for financial liquidity management in the Group and compliance with adopted policy. The Financial Liquidity Committee is a body supporting the Management Board in this regard.
The management of financial liquidity in the Group is performed in accordance with the Financial Liquidity Management Policy in the KGHM Group. This document describes processes of managing financial liquidity in the Group, which are realised by Group companies, while their organisation, coordination and supervision is performed by the Parent Entity by using appropriate procedures and instruments. The basic principles resulting from this document are:
- assuring the stable and effective financing of the Group’s activities,
- continuous monitoring of the Group’s debt level,
- effective management of working capital, and
- coordination, by the Parent Entity, of processes of financial liquidity management in the Group companies.
Under the liquidity management process, the Group utilises instruments which enhance its effectiveness. One of the instruments used by the Group to deal with on-going operating activities is cash pooling – locally in PLN, USD and EUR, and internationally – in USD and CAD. The cash pooling service is aimed at optimising the management of cash resources, limiting interest costs, the effective financing of current working capital needs and the support of short-term financial liquidity in the Group.
In 2022 the Group modified the cash pooling system in order to optimise the process of exchanging currencies by the domestic companies of the Group. The modified system ensures the daily (automatic) conversion into PLN of the positive and negative balances in EUR and USD on the accounts of the companies participating in the cash pool. In order to support current liquidity and to optimise these services, the Company entered into an overdraft facility agreement with the bank in which the cash pooling system operates in the amount of PLN 200 million with availability to 15 May 2023 and the possibility of utilisation in the following currencies: PLN, USD and EUR.