The 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, and provides for the centralisation of borrowing at the level of the Parent Entity. Financial liquidity management involves securing an appropriate amount of cash and available lines of credit in the short, medium and long term.
Liabilities due to borrowings of the Group at the end of 2020 amounted to PLN 7,335 million and decreased as compared to the end of 2019, 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 2020 amounted to PLN 2,501 million, are of a short term nature.
| 31.12.2020 | 31.12.2019 | Change (%) | 30.09.2020 | 30.06.2020 | 31.03.2020 | |
|---|---|---|---|---|---|---|
| Liabilities due to: | 7,335 | 7,873 | (6.8) | 7,497 | 8,898 | 9,622 |
| Bank loans | 1,994 | 2,386 | (16.4) | 2,016 | 3,257 | 3,808 |
| Other loans | 2,685 | 2,794 | (3.9) | 2,806 | 2,937 | 3,073 |
| Debt securities | 2,000 | 2,001 | – | 2,010 | 2,000 | 2,017 |
| Leases | 656 | 692 | (5.2) | 665 | 704 | 724 |
| Free cash and cash equivalents | 2,501 | 982 | x2.5 | 1,084 | 1,922 | 2,173 |
| Net debt | 4,834 | 6,891 | (29.9) | 6,413 | 6,976 | 7,449 |
| 31.12.2020 | 31.12.2019 | Change (%) | 30.09.2020 | 30.06.2020 | 31.03.2020 | |
|---|---|---|---|---|---|---|
| Liabilities due to: | 7,115 | 7,620 | (6.6) | 7,258 | 8,588 | 9,235 |
| Bank loans | 1,860 | 2,294 | (18.9) | 1,913 | 3,164 | 3,711 |
| Other loans | 2,461 | 2,686 | (8.4) | 2,591 | 2,729 | 2,888 |
| Debt securities | 2,000 | 2,001 | – | 2,009 | 2,000 | 2,017 |
| Cash pooling | 284 | 130 | x2.2 | 230 | 180 | 80 |
| Leases | 510 | 509 | +0.2 | 515 | 515 | 539 |
| Free cash and cash equivalents | 2,120 | 489 | x4.3 | 761 | 1,688 | 1,882 |
| Net debt | 4,995 | 7,131 | (30) | 6,497 | 6,900 | 7,353 |
As at 31 December 2020, the Group held open lines of credit, loans and debt securities with a total available amount of PLN 13,145 million, out of which PLN 6,679 million had been drawn.
| Unsecured, revolving syndicated credit facility in the amount of USD 1.5 billion | Credit in the amount of USD 1,500 million (PLN 5,638 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 the Parent Entity obtained the consent of the Syndicate Participants to extend the term of the agreement by 1 year, i.e. till 19 December 2025. The limit of available financing during the extension period will amount to USD 1,438 million (PLN 5,405 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. |
| Investment loans, including from the European Investment Bank in the total amount of PLN 2.9 billion with a financing periods of up to 12 years |
Financing agreements signed by the Parent Entity with the European Investment Bank:
Interest on the instalments drawn is based on a fixed interest rate. |
| Debt securities in the amount of PLN 2.0 billion | 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. |
|
Bilateral bank loans in the amount of up to PLN 2.4 billion |
The Group has open lines of credit in the form of bilateral agreements in the total amount of PLN 2,379 million. These are working capital facilities and overdraft facilities with availability of up to 4 years. Interest is based on a fixed interest rate or on the variable interest rates WIBOR, LIBOR, EURIBOR plus a margin.
The funds obtained under the aforementioned bank loan agreements are a tool supporting the management of current financial liquidity.Środki uzyskane w ramach ww. umów kredytowych są narzędziem wspierającym zarządzanie bieżącą płynnością finansową. |
The aforementioned sources fully cover the current, medium- and long-term liquidity needs of the Group.
The following table presents the structure of borrowings used by the Group and the extent to which they were utilised.
| Amount drawn as at 31.12.20(1 | Amount drawn as at 31.12.19(2 | Change (%) | Amount available as at 31.12.20 | Amount drawn (%) 31.12.20 |
|
|---|---|---|---|---|---|
| Unsecured, revolving syndicated credit facility | – | 18 | – | 5,638 | – |
| Loans | 2,685 | 2,794 | (3.9) | 3,128 | 8.,8 |
| Bilateral bank loans | 2,011 | 2,368 | (15.1) | 2,379 | 84.5 |
| Debt securities | 2,000 | 2,001 | – | 2,000 | 100.0 |
| Total | 6,696 | 7,181 | (7.0) | 13,145 | 50.9 |
As at 31 December 2020, 60% of the Group’s debt came from loans drawn in USD, 38% in PLN, and 1% in EUR and CAD, each.
In 2020, 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 2020, the Group held PLN 2,501 million of free cash and cash equivalents and had open credit lines for total available financing of PLN 13,145 million, out of which PLN 6,679 million had been drawn.
In 2020, the Group continued activities aimed at ensuring long-term financial stability by basing the financing structure on diversified, long-term sources of financing.
In December 2020 the Parent Entity took advantage of the option to extend by 1 year the term of the unsecured revolving syndicate facility agreement in the amount of USD 1,500 million (PLN 5,638 million) concluded in 2019. As a result of the decision of Syndicate Participants, the available limit of funds under the granted financing during the extension period will amount to USD 1,438 million (PLN 5,405 million).
In addition, in 2020 efforts were continued to optimize the financial liquidity management process through focusing on efficient working capital management. The Group uses factoring and reverse factoring resulting in shortening the days receivable cycle and extending the days payable cycle. As at 31 December 2020, the balance of trade receivables transferred to reverse factoring amounted to PLN 1,264 million.
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 2020 and 31 December 2020 complied with the provisions of the agreements.
| 31.12.2020 | 31.12.2019 | Change (%) | 30.09.2020 | 30.06.2020 | 31.03.2020 | |
|---|---|---|---|---|---|---|
| Net debt / EBITDA(1 | 0.9 | 1.5 | (40.0) | 1.4 | 1.6 | 1.7 |
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. 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.
