KGHM has reviewed its assumptions and updated the recognised impairment losses

On 8 February 2016 KGHM announced that due to the unfavourable macroeconomic situation and the requirements imposed by International Financial Reporting Standards, the Company recognised impairment losses on the carrying amounts of certain assets.  These impairment losses are of a non-cash nature.

During the work on the Company’s budget for 2016 the market price forecasts of individual commodities were updated. As a result, the need arose to review the previous calculations of carrying amount and recognised impairment numbers.

“Following trends in the sector we have adopted new, more conservative macroeconomic assumptions, in particular with respect to copper prices over the next four years. As a result it became necessary to perform an additional update of the value of some of the Group’s international assets,” says Stefan Świątkowski, Vice President (Finance) of KGHM Polska Miedź SA. “The impairment losses which have been recognised have no impact on the financial stability of KGHM. Such accounting losses are being recognised at the moment by numerous companies in the commodities sector in Poland and around the world.  By strictly adhering to our reporting obligations, we are demonstrating our transparency and predictability.”

The losses recognised are in respect of the impairment of the investment in Sierra Gorda SCM, the Robinson and Franke mines and the mines in the Sudbury Basin. The total value of the impairment losses recognised in the consolidated financial statements after including the tax effect amounts to USD 1 298 million (PLN 5 063 million). In terms of the separate financial statements of KGHM the amount is PLN 4 854 million.

“We are carefully reviewing and analysing our assumptions and investment plans in the Group in the short and medium terms. At the same time we are striving to further reduce costs. Thanks to all of these efforts our financial condition is stable and guarantees development over the long term. We also continue to foresee a high long-term copper price. Should there be a substantial improvement in the macroeconomic situation, the Company will be able, under accounting standards, to reverse these losses,” says Krzysztof Skóra, President of KGHM Polska Miedź SA.

The impairment losses recognised remain estimates. The final results of the testing will be presented in the separate and consolidated financial statements for 2015, the publication of which is planned for 17 March 2016.