2. Information on segments and revenues
Note 2.1 Operating segments
The operating segments identified in the KGHM Polska Miedź S.A. Group reflect the structure of the Group, the manner in which the Group and its individual entities are managed and the regular reporting to the Parent Entity’s Management Board.
Based on the aggregation of operating segments and taking into account the criteria stipulated in IFRS 8, the following reporting segments are currently identified within the KGHM Polska Miedź S.A. Group:
Reporting segment | Operating segments aggregated in a given reporting segment | Indications of similarity of economic characteristics of segments, taken into account in aggregations |
---|---|---|
KGHM Polska Miedź S.A. | KGHM Polska Miedź S.A. | Not applicable (it is a single operating and reporting segment) |
KGHM INTERNATIONAL LTD. | Companies of the KGHM INTERNATIONAL LTD. Group, where the following mines, deposits or mining areas constitute the operating segments: Sudbury Basin, Robinson, Carlota, Franke and Ajax. | Operating segments within the KGHM INTERNATIONAL LTD. Group are located in North and South America. The Management Board analyses the results of the following operating segments: Sudbury Basin, Robinson, Carlota, Franke, Ajax and other. In addition, the Management Board receives and analyses reports on the whole KGHM INTERNATIONAL LTD. Group. Operating segments are engaged in exploration and assessment of deposits of copper, molybdenum, silver, gold and nickel. The operating segments were aggregated based on the similarity of long term margins achieved by individual segments, and the similarity of products, processes and production methods |
Sierra Gorda S.C.M. | Sierra Gorda S.C.M. (joint venture) | Not applicable (it is a single operating and reporting segment) |
Other segments | This item includes other Group companies (every individual company is a separate operating segment). | Aggregation was carried out as a result of not meeting the criteria necessitating the identification of a separate additional reporting segment. |
The following companies were not included in any of the aforementioned segments:
- Future 1 Sp. z o.o., which as a result of merging with the companies Fermat 1 S. á r. l., Fermat 2 S. á r. l. and Fermat 3 S. á r. l. – took over their functions within the holding structure founded to acquire KGHM INTERNATIONAL LTD.
- Future 2 Sp. z o.o., Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o., Future 6 Sp. z o.o. and Future 7 Sp. z o.o., which operate in the structure related to the establishment of a Tax Group.
These companies do not conduct operating activities, which could impact the results achieved by individual segments, and as a result their inclusion could distort the data presented in this part of the consolidated financial statements due to significant settlements with other Group companies.
Each of the segments KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD. and Sierra Gorda S.C.M. have their own Management Board, which reports the results of their business activities directly to the President of the Management Board of the Parent Entity.
The segment KGHM Polska Miedź S.A. is composed only of the Parent Entity, and the segment Sierra Gorda S.C.M. is composed only of the joint venture Sierra Gorda. Other companies of the KGHM Polska Miedź S.A. Group are presented below by segment: KGHM INTERNATIONAL LTD. and Other segments.
THE SEGMENT KGHM INTERNATIONAL LTD. | |
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Location | Company |
The United States of America | Carlota Copper Company, Carlota Holdings Company, DMC Mining Services Corporation, FNX Mining Company USA Inc., Robinson Holdings (USA) Ltd., Robinson Nevada Mining Company, Wendover Bulk Transhipment Company |
Chile | Aguas de la Sierra Limitada, Minera Carrizalillo Limitada, Minera y Exploraciones KGHM International SpA, Quadra FNX Holdings Chile Limitada, Sociedad Contractual Minera Franke |
Canada | KGHM INTERNATIONAL LTD., 0899196 B.C. Ltd., Centenario Holdings Ltd., DMC Mining Services Ltd., FNX Mining Company Inc., Franke Holdings Ltd., KGHM AJAX MINING INC., KGHMI HOLDINGS LTD., Sugarloaf Ranches Ltd. |
Greenland | Malmbjerg Molybdenum A/S |
Mexico | Raise Boring Mining Services S.A. de C.V. |
Luxembourg | Quadra FNX FFI S.à.r.l |
OTHER SEGMENTS | |
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Type of activity | Company |
Support of the core business | BIPROMET S.A., CBJ sp. z o.o., Energetyka sp. z o.o., INOVA Spółka z o.o., KGHM CUPRUM sp. z o.o. – CBR, KGHM ZANAM S.A., KGHM Metraco S.A., PeBeKa S.A., POL-MIEDŹ TRANS Sp. z o.o., WPEC w Legnicy S.A. |
Sanatorium-healing and hotel services | Interferie Medical SPA Sp. z o.o., INTERFERIE S.A., Uzdrowiska Kłodzkie S.A. - Grupa PGU, Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU, Uzdrowisko Połczyn Grupa PGU S.A., Uzdrowisko Świeradów - Czerniawa Sp. z o.o. – Grupa PGU |
Investment funds, financing activities | Fundusz Hotele 01 Sp. z o.o., Fundusz Hotele 01 Sp. z o.o. S.K.A., KGHM TFI S.A. , KGHM I FIZAN, KGHM IV FIZAN, KGHM V FIZAN, Polska Grupa Uzdrowisk Sp. z o.o. |
Other activities | CENTROZŁOM WROCŁAW S.A., CUPRUM Development sp. z o.o., CUPRUM Nieruchomości sp. z o.o., KGHM (SHANGHAI) COPPER TRADING CO., LTD., KGHM Kupfer AG, MERCUS Logistyka sp. z o.o., MIEDZIOWE CENTRUM ZDROWIA S.A., NITROERG S.A., NITROERG SERWIS Sp. z o.o., PeBeKa Canada Inc., PHU "Lubinpex" Sp. z o.o., PMT Linie Kolejowe Sp. z o.o., PMT Linie Kolejowe 2 Sp. z o.o., Staropolanka Sp. z o.o., WMN "ŁABĘDY" S.A., Zagłębie Lubin S.A., OOO ZANAM VOSTOK |
Location of mining assets of the KGHM Polska Miedź S.A. Group
*TPM – precious metals
The Parent Entity and the KGHM INTERNATIONAL LTD. Group (a subgroup) have a fundamental impact on the assets and the generation of revenues in the KGHM Polska Miedź S.A. Group. The activities of KGHM Polska Miedź S.A. are concentrated on the mining industry in Poland, while those of the KGHM INTERNATIONAL LTD. Group are concentrated on the mining industry in the countries of North and South America. The profile of activities of the majority of the remaining subsidiaries of the KGHM Polska Miedź S.A. Group differs from the main profile of the Parent Entity’s activities.
The Parent Entity’s Management Board monitors the operating results of individual segments in order to make decisions on allocating the Group’s resources and assess the financial results achieved.
Financial data prepared for management reporting purposes is based on the same accounting policies as those applied when preparing the consolidated financial statements of the Group, while the financial data of individual reporting segments constitutes the amounts presented in appropriate financial statements prior to consolidation adjustments at the level of the KGHM Polska Miedź S.A. Group, i.e.:
- The segment KGHM Polska Miedź S.A. - comprises data from the separate financial statements of the Parent Entity prepared in accordance with IFRSs. In the separate financial statements, investments in subsidiaries (including investment in KGHM INTERNATIONAL LTD.) are measured at cost.
- The segment KGHM INTERNATIONAL LTD. – comprises consolidated data of the KGHM INTERNATIONAL LTD. Group prepared in accordance with IFRSs and including fair value adjustments from the settlement of the acquisition of this Group by KGHM Polska Miedź S.A. in 2012. The involvement in Sierra Gorda S.C.M. is accounted for using the equity method,
- The segment Sierra Gorda S.C.M – comprises the 55% share of assets, liabilities, revenues and costs of this venture presented in the separate financial statements of Sierra Gorda S.C.M. prepared in accordance with IFRSs after fair value adjustments of assets and liabilities of this venture, determined when accounting for the acquisition of the KGHM INTERNATIONAL LTD. Group in 2012.
- Other segments – comprises aggregated data of individual subsidiaries after excluding transactions and balances between them.
The Management Board of the Parent Entity assesses a segment’s performance based on adjusted EBITDA and the profit or loss for the period.
The Group defines adjusted EBITDA as profit/loss for the period pursuant to IFRS, excluding income tax (current and deferred), finance income/(costs), other operating income and costs, the share of losses of joint ventures accounted for using the equity method, impairment losses on interest in a joint venture, depreciation/amortisation and impairment losses on property, plant and equipment included in the cost of sales, selling costs and administrative expenses. Since adjusted EBITDA is not a measure defined by IFRS, it is not a standardised measure and therefore its method of calculation may vary between entities, and consequently the presentation and calculation of adjusted EBITDA applied by the Group may not be comparable to that applied by other market entities.
Unallocated assets and liabilities concern companies which have not been allocated to any segment. Assets which have not been allocated to the segments comprise cash and trade receivables. Liabilities which have not been allocated to the segments comprise trade liabilities and current corporate tax liabilities.
Note 2.2 Financial results of reporting segments
Note | 2017 | |||||||
---|---|---|---|---|---|---|---|---|
KGHM Polska Miedź S.A. | KGHM INTERNATIONAL LTD. | Sierra Gorda S.C.M.* | Other segments | Reconciliation items to consolidated data | Consolidated financial statements | |||
Elimination of data of the segment Sierra Gorda S.C.M | Consolidation adjustments | |||||||
Sales revenue | 16 024 | 2 602 | 1 993 | 6 478 | (1 993) | (4 748) | 20 358 | |
| Inter-segment sales revenue | 276 | - | - | 4 465 | - | (4 741) | - |
| External sales revenue | 15 748 | 2 602 | 1 993 | 2 013 | (1 993) | (5) | 20 358 |
| Segment result | 1 323 | ( 561) | ( 525) | 38 | 525 | 725 | 1 525 |
| Additional information on significant revenue/cost items of the segment | |||||||
| Depreciation/amortisation recognised in profit or loss | (1 035) | ( 351) | ( 465) | ( 234) | 465 | 11 | (1 609) |
| Recognition/reversal of impairment loss on non-current assets, including: | ( 940) | ( 495) | - | - | - | 932 | ( 503) |
| Impairment loss on investments in subsidiaries | ( 330) | - | - | - | - | 330 | - |
| Allowance for impairment of loans granted | ( 606) | ( 23) | - | - | - | 606 | (23) |
| Share of losses of joint ventures accounted for using the equity method | - | ( 474) | - | - | - | - | ( 474) |
| Deferred tax due to impairment losses on non-current assets | - | 168 | - | - | - | - | 168 |
| | | ||||||
| Assets, including: | 30 947 | 7 807 | 8 114 | 5 400 | (8 114) | (10 032) | 34 122 |
| Segment assets | 30 947 | 7 807 | 8 114 | 5 400 | (8 114) | (10 071) | 34 083 |
| Joint ventures accounted for using the equity method | - | - | - | - | - | 8 | 8 |
| Assets unallocated to segments | | | | | | 31 | 31 |
| Liabilities, including: | 13 691 | 12 701 | 11 240 | 2 007 | (11 240) | (12 062) | 16 337 |
| Segment liabilities | 14 200 | 16 853 | 12 880 | 1 943 | (12 880) | (12 204) | 16 195 |
| Liabilities unallocated to segments | | | | | | 142 | 142 |
| Other information | |||||||
| Cash expenditures on property, plant and equipment and intangible assets | 1 991 | 549 | 564 | 253 | ( 564) | 3 | 2 796 |
| Production and cost data | |||||||
| Payable copper (kt) | 522,0 | 81,0 | 53,4 | | | | |
| Molybdenum (million pounds) | - | 0,7 | 19,7 | | | | |
| Silver (t) | 1 281,1 | 1,6 | 14,4 | | | | |
| TPM (koz t) | 117,3 | 74,0 | 28,0 | | | | |
| C1 cash cost of producing copper in concentrate (USD/lb)** | 1,52 | 1,92 | 1,67 | | | | |
| Adjusted EBITDA | 4 160 | 707 | 609 | 277 | - | - | 5 753 |
EBDITA margin*** | 26% | 27% | 31% | 4% | - | - | 26% |
* 55% of the Group’s share in Sierra Gorda S.C.M.’s financial and production data.
** unit cash cost of payable copper production, reflecting ore mining and processing costs, transport costs, the minerals extraction tax, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-product value.
*** Adjusted EBITDA to sales revenue. For the purposes of calculating the Group’s EBITDA margin (26%), the consolidated sales revenue were increased by sales revenues of the segment Sierra Gorda S.C.M.
[5 753 / (20 358 + 1 993) * 100]
**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
Financial results of reporting segments for the comparable period
Note | 2016 | |||||||
---|---|---|---|---|---|---|---|---|
KGHM Polska Miedź S.A. | KGHM INTERNATIONAL LTD. | Sierra Gorda S.C.M.* | Other segments | Reconciliation items to consolidated data | Consolidated financial statements | |||
Elimination of data of the segment Sierra Gorda S.C.M | Consolidation adjustments | |||||||
2.3 | Sales revenue | 15 112 | 2 535 | 1 394 | 6 409 | (1 394) | (4 900) | 19 156 |
| Inter-segment sales revenue | 260 | - | 29 | 4 665 | ( 29) | (4 925) | - |
| External sales revenue | 14 852 | 2 535 | 1 365 | 1 744 | (1 365) | 25 | 19 156 |
156 | Segment result | (4 085) | (6 828) | (6 015) | ( 235) | 6 015 | 6 699 | (4 449) |
| Additional information on significant revenue/cost items of the segment | |||||||
| Depreciation/amortisation recognised in profit or loss | ( 956) | ( 517) | ( 843) | ( 236) | 843 | 11 | (1 698) |
| Recognition/reversal of impairment loss on non-current assets, including: | (6 197) | (5 718) | (6 728) | ( 89) | 6 728 | 6 078 | (5 926) |
| Impairment loss on investments in subsidiaries | (4 856) | - | - | ( 91) | - | 4 947 | - |
| Allowance for impairment of loans granted | (1 130) | (4 394) | - | - | - | 1 130 | (4 394) |
| Share of losses of joint ventures accounted for using the equity method | - | (1 199) | - | - | - | 1 | (1 200) |
| Deferred tax due to impairment losses on non-current assets | 69 | 183 | 1 854 | - | (1 854) | - | 252 |
| | | | | | | | |
| Assets, including: | 30 100 | 9 472 | 9 185 | 5 249 | (9 185) | (11 379) | 33 442 |
| Segment assets | 33 100 | 9 472 | 9 185 | 5 249 | (9 185) | (11 407) | 33 414 |
| Joint ventures accounted for using the equity method | - | - | - | - | - | 27 | 27 |
| Assets unallocated to segments | | | | | | 1 | 1 |
| Liabilities, including: | 14 200 | 16 853 | 12 800 | 1 943 | (12 880) | (15 465) | 17 531 |
| Segment liabilities | 14 200 | 16 853 | 12 800 | 1 943 | (12 800) | (15 651) | 17 345 |
| Liabilities unallocated to segments | | | | | | 186 | 186 |
| Other information | |||||||
| Cash expenditures on property, plant and equipment and intangible assets | 2 604 | 430 | 586 | 209 | ( 586) | 8 | 3 251 |
| Production and cost data | |||||||
| Payable copper (kt) | 535,6 | 89,8 | 51,5 | | | | |
| Molybdenum (million pounds) | - | 0,8 | 12,2 | | | | |
| Silver (t) | 1 191,1 | 1,7 | 14,1 | | | | |
| TPM (koz t) | 113,8 | 92,1 | 22,9 | | | | |
| C1 cash cost of producing copper in concentrate (USD/lb)** | 1,30 | 1,63 | 1,96 | | | | |
| Adjusted EBITDA | 3 551 | 614 | 189 | 312 | - | - | 4 666 |
EBITDA margin*** | 23% | 24% | 14% | 5% | - | - | 23% |
* 55% of the Group’s share in Sierra Gorda S.C.M.’s financial and production data.
** unit cash cost of payable copper production, reflecting ore mining and processing costs, transport costs, the minerals extraction tax, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-product value.
*** Adjusted EBITDA to sales revenue. For the purposes of calculating the Group’s EBITDA margin (23%), the consolidated sales revenue were increased by sales revenues of the segment Sierra Gorda S.C.M.
[4 666 / (19 156 + 1 394) * 100]
**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.
Reconciliation of adjusted EBITDA | 2017 | |||
---|---|---|---|---|
KGHM Polska Miedź S.A. | KGHM INTERNATIONAL LTD. | Sierra Gorda S.C.M.* | Other segments | |
Profit/(Loss) for the period | 1 323 | (561) | (525) | 38 |
[-] Share of losses of joint ventures accounted for using the equity method | - | (474) | - | - |
[-] Current and deferred income tax | ( 831) | 670 | 146 | ( 26) |
[-] Depreciation/amortisation recognised in profit or loss | ( 1 035) | ( 351) | ( 465) | ( 234) |
[-] Finance income / (costs) | 1 033 | ( 948) | ( 781) | ( 7) |
[-] Other operating income and (costs) | (2 004) | ( 422) | ( 34) | 28 |
[=] EBITDA | 4 160 | 964 | 609 | 277 |
[-] (Recognition)/reversal of impairment losses on non-current assets recognised in cost of sales, selling costs and administrative expenses | - | 257 | - | - |
Adjusted EBITDA | 4 160 | 707 | 609 | 277 |
Profit/(loss) on sales (EBIT) | 3 125 | 613 | 144 | 43 |
[-] Depreciation/amortisation recognised in profit or loss | (1 035) | ( 351) | ( 465) | ( 234) |
[=] EBITDA | 4 160 | 964 | 609 | 277 |
[-] (Recognition)/reversal of impairment losses on non-current assets recognised in cost of sales, selling costs and administrative expenses | - | 257 | - | - |
[=] Adjusted EBITDA | 4 160 | 707 | 609 | 277 |
* 55% udziału Grupy Kapitałowej w danych finansowych Sierra Gorda S.C.M.
Reconciliation of adjusted EBITDA | 2016 | |||
---|---|---|---|---|
KGHM Polska Miedź S.A. | KGHM INTERNATIONAL LTD. | Sierra Gorda S.C.M.* | Other segments | |
(Loss) for the period | (4 085) | (6 828) | (6 015) | ( 235) |
[-] Share of losses of joint ventures accounted for using the equity method | - | (1 199) | - | - |
[-] Impairment loss on interest in a joint venture | - | ( 671) | - | - |
[-] Current and deferred income tax | ( 710) | 137 | 2 259 | ( 33) |
[-] Depreciation/amortisation recognised in profit or loss | ( 956) | ( 517) | ( 843) | ( 236) |
[-] Finance income / (costs) | ( 541) | ( 657) | ( 805) | ( 15) |
[-] Other operating income and (costs) | (5 429) | (4 938) | ( 153) | ( 264) |
[=] EBITDA | 3 551 | 346 | (6 473) | 313 |
[-] (Recognition)/reversal of impairment losses on non-current assets recognised in cost of sales, selling costs and administrative expenses | - | ( 268) | (6 662) | 1 |
Adjusted EBITDA | 3 551 | 614 | 189 | 312 |
Profit/(loss) on sales (EBIT) | 2 529 | ( 171) | (7 316) | 77 |
[-] Depreciation/amortisation recognised in profit or loss | ( 956) | ( 517) | ( 843) | ( 236) |
[=] EBITDA | 3 551 | 346 | (6 473) | 313 |
[-] (Recognition)/reversal of impairment losses on non-current assets recognised in cost of sales, selling costs and administrative expenses | - | ( 268) | (6 662) | 1 |
[=] Adjusted EBITDA | 3 551 | 614 | 189 | 312 |
*55% share of the Group in the financial data of Sierra Gorda S.C.M.
Note 2.3 External sales revenue of the Group – breakdown by products
Accounting policies |
---|
The Group generates revenues mainly from sales of copper, silver and gold. Other, smaller streams of revenues come from services provided and other products, merchandise and materials. Sales revenue is recognised at the fair value of the consideration received or receivable less VAT. In the case of metals sales, mainly copper and silver products, for which the price is set after the date of recognition of a given sale, revenues are accounted for based on the forward prices from the date of sale. Revenues from the sale of copper are adjusted by the gain or loss from the settlement of derivatives hedging cash flows from forecasted sales transactions (accounting policies are presented in Note 7.2). The Group recognises revenues from metal sales, when the significant risk and rewards of ownership have been transferred to the buyer, the amount of revenues and costs can be measured reliably and the receivables collection is probable. In the case of metal sales, the transfer of risk and rewards is usually performed using one of the following formulas: when merchandise is loaded on a ship chosen by the seller (maritime transport) [CIF, CFR], when merchandise is delivered to an agreed destination to be at the buyer’s disposal (land transport) [DAP] or when merchandise is loaded on the transportation vehicle arranged by the buyer [FCA]. |
2017 | |||||||
---|---|---|---|---|---|---|---|
KGHM Polska Miedź S.A. | KGHM INTERNATIONAL LTD. | Sierra Gorda S.C.M.* | Other segments | Reconciliation items to consolidated data | Consolidated data | ||
Elimination of data of the segment Sierra Gorda S.C.M | Consolidation adjustments | ||||||
Copper | 12 213 | 1 702 | 1 182 | 8 | (1 182) | ( 22) | 13 901 |
Silver | 2 441 | 16 | 29 | - | ( 29) | - | 2 457 |
Gold | 556 | 187 | 134 | - | ( 134) | - | 743 |
Services | 142 | 449 | - | 1 910 | - | (1 399) | 1 102 |
Other | 672 | 248 | 648 | 4 560 | ( 648) | (3 325) | 2 155 |
TOTAL | 16 024 | 2 602 | 1 993 | 6 478 | (1 993) | (4 746) | 20 358 |
2016 | |||||||
---|---|---|---|---|---|---|---|
KGHM Polska Miedź S.A. | KGHM INTERNATIONAL LTD. | Sierra Gorda S.C.M.* | Other segments | Reconciliation items to consolidated data | Consolidated data | ||
Elimination of data of the segment Sierra Gorda S.C.M | Consolidation adjustments | ||||||
Copper | 11 064 | 1 510 | 895 | 6 | ( 895) | (19) | 12 561 |
Silver | 2 798 | 17 | 32 | - | ( 32) | - | 2 815 |
Gold | 556 | 275 | 119 | - | ( 119) | - | 831 |
Services | 93 | 493 | - | 2 259 | - | (1 858) | 987 |
Other | 601 | 240 | 348 | 4 144 | ( 348) | (3 023) | 1 962 |
TOTAL | 15 112 | 2 535 | 1 394 | 6 409 | (1 394) | (4 900) | 19 156 |
* 55% of the Group’s share in revenues of Sierra Gorda S.C.M.
** Smelter treatment and refining charges
Note 2.4 External sales revenue of the Group – geographical breakdown reflecting the location of end clients
| 2017 | 2016 |
---|---|---|
Europe | ||
Poland | 5 575 | 5 031 |
Germany | 2 186 | 2 335 |
The United Kingdom | 1 795 | 1 623 |
Czechia | 1 383 | 1 207 |
France | 992 | 601 |
Switzerland | 766 | 616 |
Hungary | 657 | 504 |
Italy | 437 | 476 |
Austria | 278 | 206 |
Romania | 103 | 62 |
Slovakia | 99 | 83 |
Sweden | 74 | 24 |
Denmark | 71 | 6 |
Slovenia | 69 | 53 |
Finland | 48 | 42 |
Bulgaria | 26 | 85 |
Belgium | 16 | 55 |
Other countries (dispersed sale) | 121 | 251 |
North and South America | ||
The United States of America | 1 360 | 1 262 |
Canada | 770 | 758 |
Chile | 60 | 102 |
Other countries (dispersed sale) | 1 | 4 |
Australia | ||
Australia | 3 | 128 |
Asia | ||
China | 2 990 | 2 170 |
Singapore | 3 | 676 |
South Korea | 4 | 324 |
India | 156 | 159 |
Turkey | 273 | 140 |
Taiwan | 10 | 101 |
Japan | 6 | 52 |
Other countries (dispersed sale) | 3 | 11 |
Africa | 23 | 9 |
TOTAL | 20 358 | 19 156 |
Note 2.5 Main customers
In the period from 1 January 2017 to 31 December 2017 and in the comparable period the revenues from no single contractor exceeded 10% of the sales revenue of the Group.
Note 2.6 Non-current assets – geographical breakdown
Property, plant and equipment, intangible assets and investment properties | ||
---|---|---|
2017 | 2016 | |
Poland | 18 430 | 17 413 |
Canada | 1 055 | 2 275 |
The United States of America | 989 | 557 |
Chile | 236 | 323 |
TOTAL | 20 710 | 20 568 |
The following were also recognised in non-current assets: joint ventures accounted for using the equity method, derivatives, other instruments measured at fair value, other financial and non-financial assets and deferred tax assets.
Note 2.7 Information on segments' results
The segment KGHM Polska Miedź S.A.
In 2016, the adjusted EBITDA of the segment KGHM Polska Miedź S.A. amounted to PLN 3 551 million, which represents a decrease of 15% as compared to the level recorded in the previous year (EBITDA in the amount of PLN 4 163 million).
The decrease in the operating result is mainly the result of lower copper prices, which were partially offset by a USD/PLN exchange rate more favourable for the Parent Entity. The temporary limitation of production related to bringing the flash furnace on-line, which replaced the shaft furnace at the Głogów I Copper Smelter and Refinery, was also of significance as it contributed to the decrease in sales volume, and therefore sales revenue of copper and silver. This decrease was, to a certain degree, offset by selling copper concentrate (132 thousand tonnes of dry weight). Moreover, in 2016 the adjustments due to settlement of hedging transactions which increased revenues was lower, by PLN 479 million, than the amount recorded in the comparable prior year period. As a result of the aforementioned factors, revenues from sales were lower by PLN 827 million as compared to 2015.
Cost of sales, selling costs and administrative expenses did not change significantly and amounted to PLN 12 517 million.
In 2016, the Parent Entity’s financial result was mainly impacted by impairment losses on non-current assets in the amount of PLN 6 197 million, including PLN 4 856 million on investments in subsidiaries, and PLN 1 130 million on loans granted. As a result, this segment’s loss for the period amounted to PLN 4 085 million, which is a decrease in the financial result as compared to 2015 by PLN 1 297 million.
The production and financial results of KGHM Polska Miedź S.A. are described in more detail in section 7 of the Management Board’s report on the activities of KGHM Polska Miedź S.A and KGHM Polska Miedź S.A. Group in 2016.
The segment KGHM INTERNATIONAL LTD.
In 2016, the adjusted EBITDA of the segment KGHM INTERNATIONAL LTD. amounted to PLN 614 million, which represents an increase by PLN 245 million as compared to the previous year.
The increase in the segment’s operating results was impacted by a decrease in costs of sales, selling costs and administrative expenses, i.e. as a result of undertaken saving initiatives.
In 2016, the segment’s loss for the period in the amount of PLN 6 828 million was mainly impacted by recognising impairment losses on non-current assets and share of losses of Sierra Gorda S.C.M. accounted for using the equity method in the total net amount of PLN 6 734 million.
The production and financial results of the KGHM INTERNATIONAL LTD. Group are described in more detail in section 8 of the Management Board’s report on the activities of KGHM Polska Miedź S.A and KGHM Polska Miedź S.A. Group in 2016.
The segment Sierra Gorda S.C.M.
The adjusted EBITDA of the segment Sierra Gorda (55% share) amounted to PLN 189 million, which represents a significant increase as compared to the negative EBITDA recorded in 2015 in the amount of PLN 101 million. It should be noted however, that the results for 2015 concern the second half of that year, i.e. since commercial production started. Moreover, in 2016 the company continued activities aimed at improving the stability of the technological parameters of ore processing and concentrate production, most of all of molybdenum, the recovery of which is below our expectations.
The segment recorded a loss for the period in the amount of PLN 6 015 million, which represents a 55% share of losses of Sierra Gorda S.C.M.
The main factor responsible for the negative net result is the impairment loss on non-current assets. Proportionally to the share in the company, the impairment loss amounted to PLN 6 728 million before taxation and PLN 4 874 million net of tax. The next significant factor was accrued interest on the owner loan granted to finance the mine’s construction.
The production and financial results of Sierra Gorda S.C.M. are described in more detail in section 9 of the Management Board’s report on the activities of KGHM Polska Miedź S.A and KGHM Polska Miedź S.A. Group in 2016.