KGHM Polska Miedz S.A. (KGH) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Tadeusz Kocowski, and I am Chairman of the Supervisory Board. And as such, I have the honor of opening today's Ordinary General Meeting of Shareholders of the KGHM. My role is quite limited because I will chair the course of the meeting until you select the person who will be conducting the meeting. Therefore, let me open today's ordinary General Meeting of Shareholders of the KGHM. Let me start by welcoming all the shareholders who are attending our meeting and there are representatives as the most important people in this room. I will also take the liberty of welcoming representatives of the Supervisory Board of the KGHM represented by Aleksander Cieslinski, Zbyslaw Dobrowolski, Boguslaw Szarek, Przemyslaw Darowski and Józef Czyczerski. I would also like to give a warm welcome to the Management Board of the company represented by the CEO, Andrzej Szydlo, Deputy CEO, Piotr Stryczek, the CFO, Deputy CFO; Piotr Krzyzewski and the CPO, Miroslaw Laskowski. Let me also welcome all the representatives of the media who are accompanying us at the meeting and representatives of the employees of the KGHM. Welcome to all of you. Ladies and gentlemen, the minutes of today's ordinary general meeting will be drawn by notary [indiscernible]. Now the most important thing that I should do today, and that is the electing the Chairman of the Ordinary General Meeting. Therefore, I now instruct that the Chairman is Andrzej Leganowicz, shareholder, owner of one share.

And I would like to be a candidate for the Chairman of today's meeting. And if I am selected, I will assume the position. Okay. Thank you very much.

Okay. Thank you very much. So we have a candidate for the Chairman of the Ordinary General Meeting and I should also ask if there's any other candidates, if anyone would like to be a Chairman as well. I cannot see anyone so I understand that Mr. Andrzej Leganowicz is the candidate and the candidate for the Chairman of the General Meeting of Shareholders. Please, well, because technology is very advanced. And so the voting process is more complicated than it used to. It used to be much simpler. People just would raise their hands. And therefore, I would now like to ask a representative of a programmer company that is handling technically today's general meeting to let you know about the technicalities behind the voting process. Ladies and gentlemen, I'm sorry, I cannot hear the speaker. He does not have his mic turned on. He is instructing the attendees on how to vote. The speakers microphone is off. Okay. The mic is on now. So I now order voting for the Chairman of the Ordinary General Meeting of Shareholders. Let me remind you that we have only one candidate represented by Andrzej Leganowicz. Okay, it's time to vote. [Voting]

I have just been informed that when you stop hearing the beeping sound, please check if everybody has cast his/her vote. I can hear the sound of voting being in progress. Let me ask you if all of you have cast the votes, if this is the case, so the voting is closed, and please display the results of the voting. We will see the results in a moment, and I will read it officially out. Thank you very much. And let me read the protocol referring to the selection of the Chairman of the Ordinary General Meeting of Shareholders of the KGHM and 139,243,303 votes have been cast in total and the same number stands for valid votes. In favor of adopting the resolution, 138,009,548 votes have been cast, which represents 99.14% of the vote. There was nobody voted against. And 1,233,755 votes were withheld, which represents less than 1% of the total number of votes. Therefore, let me say that the resolution has been legally adopted and that they chose -- the selection of the Chairman has been -- the Chairman has been selected according to the votes. And I would like to give the floor to the new Chairman.

Thank you very much for entrusting me with the function of Chairman and let me just sign the attendance list. It's been signed by the Chairman, the attendance list has been displayed for your reference until the end of the general meeting of the shareholders, whoever new wishes to see that has the opportunity until finalizing -- making the appointment, we've executed 0.2, 0.3, is checking the authority to adopt resolutions. At this point, I'd like to inform you that today's ordinary general meeting of the shareholders has been held according to the regulations enforced and statutory provisions. They are available at the website of KGHM at www.kghm.com on 10th of May 2024. It was upheld until today. The content of the announcement meets the requirements of Article 402.22 of the commercial code of the dated the same. The company has sent the report, the current report containing the content about the GMS and draft the resolutions. Those were #24/2024 in case of the announcing or calling up the GMS and '25/2024 that contained that resolutions. The document provided -- submitted to the General Meeting of the Shareholders has been shared on the company's website at www.kghm.com. The materials and documentation have been made available until today. I also wanted to let you know that one of the shareholders that is state treasury in the document dated 25th of April this year, requested changing the composition of the Supervisory Board and that hasn't been taken account -- take into account. The Report '22/2024 covered that issue, and it was dated 30th of April 2024. So the request was numbered as item 15 in the agenda. The number of participants, authorized participants has been set according to Article 406 of the code in paragraph 25.1of the statute. So the general meeting of the shareholders can adopt resolutions if at least 1/4 of capital is represented at the meeting. And the current attendance is as follows. We have 667 shareholders, either personally or by proxy. The number of shares represented is 139,243,304 shares. The same number of votes can be cast of those shares. Capital represented is 69.622%. So this meeting is capable of adopting shares -- adopting resolutions. I also wanted to add that today's meeting has -- cannot be attended digitally, remotely. So all the votes are cast directly by the persons present in this room. The result in majority for resolution is an ordinary majority. Furthermore, I wanted to add that the general meeting of the shareholders is attended with the representatives of media. Could you introduce yourselves, please?

[indiscernible]

Thank you. I also wanted to let you know that the meeting is broadcast online to the web. I hereby confirm that this meeting has been called properly, and it is capable of taking resolutions related as specified in the agenda. Any of you would like to make any reservations regarding representatives of media? I see none, therefore, let's proceed. We also have a representative of an auditor of the company, [indiscernible] from PricewaterhouseCoopers. As for the correctness of calling up the ordinary general meeting of the shareholders and its capacity to adopt resolutions. That's item 3 in the agenda. Item 4 is adopting the approval of the agenda of the Annual General Meeting. Would any of you like to hear and read out loud? Let me remind you that the agenda was published together with all the other materials made public for the general meeting of the shareholders required so if they're -- if it's not necessary to read the agenda, we assume that the agenda has been -- is known to all the participants, to all the shareholders present. Would any of you like to make any comments or reservations regarding the agenda or the manner that it is to be executed? If there are none, let me move on to voting. That will be resolution subsequent number of /2024 dated 7th of June 2024 on adoption of the agenda of the Ordinary General Meeting of the shareholders of KGHM. The ordinary general meeting results as follows. The following agenda of the General Meeting of the shareholder, is adopted. And then we have the agenda consisting of 16 items. Some items have subitems, paragraph too. The election -- the resolution comes into force upon adoption. Any comments to that? Since I see none, then let's move on to voting of that resolution on adopting the agenda. Please cast your votes. It will be subject to ordinary majority, and it's an open ballot vote. [Voting]

The total number of votes cast is 139, 243,303. All the votes were for adopting the resolution as drafted. Therefore, the approval has been adopted in an open ballot. Let's move on to the reporting part of this General Meeting of the shareholders. I'd like to suggest that we start with reviewing or considering all the publications presented to the general meeting of the shareholders. Let me propose that Items 5 and 6 of the agenda where discussed together that we'll start with a presentation prepared by the Board of the company, and that will be the main topic, the main theme discussed at today's GMS. Are there any reservations to that? Since I see no reservations, I'd like to ask the Board to present the material draft.

Ladies and gentlemen, the presentation of the results for 2023, it was subject to a review while discussing the annual results, but let me highlight the most important parameters starting with macro environment. In 2023, we saw a change in the market, the copper market. [ 7.8000 ] to [ 9.4000 ] per tonne. That translated into average exchange rate 4% below '22 figure. As for zloty against the dollar, the price of copper expressed in zloty was 9% lower year-over-year and it was PLN 35,060 per tonne. But looking at the silver market year-over-year, the prices in dollars went up by 7%. In zloty terms, the price went up by 2%. Let's take a look at our production figures. We can see very similar, very slight decrease at the level, at the mining 30.4 million tonnes dry product. As for production, 30.5 million tonnes overburden was processed given the higher copper content translated into higher out electrolytic copper yield over 395,000 tonnes. As for market data and market figures, silver production, the target of 1,400 tonnes was exceeded in 2023 as for production of gold, year-over-year, the increase was over 27% in weight terms, it's over 700 metallic gold more. So take a look at the basic parameters or basic indices. CapEx year-over-year went up by 21%. The main parameter was price increases, but also delivering greater orders such as mining, machinery, 32 of those were ordered more. As for income, that is the result of relatively lower, 2 major factors: lower exchange rate of zloty in copper. And on the other hand, higher production. So the drop year-to-year -- year-over-year of income was less than 1%. That translated into lower income of PLN 380 million debt safe level below 2.1. Now let's take a look at the income figures, the group's income was over PLN 33.4 billion. EBITDA corrected PLN 5.3 billion and net result minus PLN 3.691 million. Now KGHM only respectively, over PLN 29 billion, EBITDA corrected over PLN 3.5 billion and net result, PLN 1.153 million, the zloty below the previous year. Let me remind you what were the reasons for the one-off event such as test of -- the loss of value being a stock exchange company based on HMSS 36, we were obliged to run that test. The basis for that was that the price of shares in the second horizon in 2023 was lower than the balance value of the net assets. That obligation to run the test was supported by the auditor. The auditor obliged the company during one of -- during the audit. As the Board, we were called for at the beginning of March, and we completed the test according to international standards. On the 8th of May, the Board adopted a resolution on recommending to the Ordinary General Meeting of Shareholders to cover the loss from the reserve capital and also to pay a dividend of PLN 300 million, which -- from the profits, previous profits. Thank you very much for your attention. This is it as for the Management Board's presentation.

Thank you. And according to our -- my previous announcement, I would like to open the discussion covering Items 5 and 6 of the agenda. With reference to the documents mentioned in the items, would you like to comment on it starting a discussion? I cannot see any volunteers. So we can -- I guess, we can adopt Items 5 and 6. The documents have been presented and reviewed and item 7 is submission of the report on representation expenses, expenses for legal services, marketing services, public relations and social communication services and management consulting services for the year 2023, together with the opinion of the Supervisory Board of the KGHM. Would anyone like to take a stand? And no one. So we can assume that Item 7 on the agenda has been adopted. And Item 8 says consideration of the report of the Supervisory Board on the results of its evaluation of the financial statement of KGHM for 2023, the consolidated financial statement of the group of KGHM for 2023, the report of the Management Board on the activities of KGHM Polska Miedz and the Polska Miedz Group in 2023. And then Item 9, as consideration of the report of the Supervisory Board on the results of its evaluation of the proposal of the Management Board of KGHM regarding coverage of the loss for 2023 and payment of a dividend and Item 10 presentation by the Supervisory Board of reports listed in the subsequent subpoints, and I suggest that items 8, 9 and 10 of the agenda be discussed together again. And first, let me refer to the publications of the company documents published before the General Meeting of Shareholders hoping that we will open a discussion where the interested parties will be able to take the floor. Is this procedure acceptable? I can see that it's acceptable. So let me refer to items 8, 9 and 10 of the agenda. I would like to refer to the publications -- to the documents published by the company before the General Meeting of Shareholders and the documents mentioned in these items have been revealed with a due notice. Would anyone like to refer to the content of these documents as part of our discussion? I cannot see anyone, so let's assume that the reports mentioned in items 8, 9 and 10 of the agenda have been presented to the General Meeting of Shareholder and reviewed by the meeting. And now Item 11 on the agenda. That is a series of votings and the subpoints a says, to approve the financial statements of KGHM for the fiscal year ended on the 31st of December 2023. And the draft was published together with the other documents before the General Meeting of Shareholders. Would anyone like me to read the entire draft? I, therefore, assume that the content of the resolution for the consolidated financial statement is known to the shareholders present here. Would anyone like to comment on the content? No remarks. And therefore, I would like to vote on the resolution of the approval of the financial statement of KGHM for the fiscal year ended on the 31st of December 2023. And I would like to ask you to cast your votes, and this is an open ballot with an ordinary majority. [Voting]

All the eligible individuals have cast their votes. And so the voting is -- has ended, and please sum up the results. In total, 139,243,303 votes have been cast. In favor of the resolution, 138,456,746 against 34,713 and of 751,844 of vote is abstaining. So the resolution has been adopted. And now in under item 18, we have a subitem to approve the consolidated financial statements of the KGHM Group for the fiscal year ended on the 31st of December '23. Would anyone like me to read the full draft of this resolution and the draft was -- has been published together with the other materials for today's general meeting. I can say that you are all familiar with the content of the draft, would anyone like to comment on the suggested content of the resolution? No remarks. Therefore, I would like to now vote for the approval of the consolidated financial statements of the KGHM Group for the financial year ended on the 31st of December 2023. This is an open ballot with an ordinary majority of votes. [Voting]

Have all the eligible individuals cast their vote? The voting is over, and please present us the results. In total, 139,243,303 votes have been cast in favor of 138,456,746 votes against 34,713 with 751,844 votes abstaining. And therefore, the resolution has been adopted -- 751,844 votes abstained. Therefore, the resolution has been adopted by the general meeting in an open ballot. And now subpoint c, approval of the report of the Management Board on the activities of KGHM and the KGHM Group in 2023. And the resolution goes as follows: the Ordinary General Meeting of KGHM Polska Miedz approves the report of the management vote on the activities of KGHM Polska Miedz S.A. and the KGHM Group in 2023, Paragraph 2 says the resolution comes into force upon adoption. Are there any remarks on the content of the resolution? And no remarks. And therefore, let's vote in an open ballot with an ordinary majority of votes. [Voting]

I can see that all the eligible individuals have casted their vote, and the voting has ended. Please present us with the results. In total, 139,243,302 votes have been cast including 138,419,458 in favor of. No vote against the resolution and 751,844 abstaining and therefore, the resolution has been adopted by the general meeting of shareholders in an open ballot. Subitem d, coverage of loss for 2023 and the resolution reads as follow draft. Paragraph 1, the Ordinary General Meeting of KGHM decides to cover the loss of -- for the year 2023 in the amount of PLN 1,153,112,535 from the supplementary capital and the resolution comes into force upon adoption. Are there any remarks on the suggested wording of the resolution? No remarks. Therefore, let's start voting on this draft and this is an open ballot with an ordinary majority of votes. [Voting]

Has anyone not casted their vote? The voting is over. Please present the results. In total, 139,243,303 votes, valid votes have been cast, all of them in favor of adopting the resolution as presented. And therefore, the resolution has been adopted unanimously. Subpoint f, in Item 11, approval of the report of the Supervisory Board -- sorry, payment of dividends from retained earnings and determination of the dividend -- and the dividend payment date, and it reads as follows: in Paragraph 1 item 1, the Ordinary General Meeting of KGHM resolves to pay a dividend to shareholders for 2023 in the amount of PLN 300 million, which represents 1 point of PLN 5 per share. Item 2, the dividend for 2023 will be paid out of KGHM's profits from previous years. Article 2, the Ordinary General Meeting of the KGHM establishes Item 1 dividend date for June 28, 2024. Item 2, the dividend payment date of July 16, 2024. Article 3, the resolution comes into force upon adoption. Would anyone like to take the floor with respect to this resolution? No one. So let's start voting, the voting, and we will be voting for or against this resolution with an ordinary majority of votes in an open ballot. [Voting]

Thank you very much. The voting is over, and please provide us with the results. In total, 139,243,303 votes have been cast and the number in favor of the resolution, 139,232,635 votes have been cast against 10,668 votes. And no one has abstained from voting and therefore, the resolution has been adopted in an open ballot. Item f, of Paragraph 11 that's payment -- that's approval of the report of the Supervisory Board of KGHM Polska Miedz for the year 2023, the draft resolution is as follows: Paragraph 1, the Ordinary General Meeting of KGHM, please approves the report of the Board of Directors and Supervisory Board of KGHM for the year '23. The resolution comes in force upon adoption. Are there any comments or remarks regarding the proposed wording of the resolution? Therefore, let's move on to voting of the resolution, the resolving majority is ordinary majority, and this is an open ballot. [Voting]

Thank you. The voting is over. Let us see the results. The total number of votes cast is 139,243,303, out of which 138,491,459 were cast in favor of the resolution. There were no votes against 751,844 votes were upheld. Therefore, the resolution has been adopted. Now 11G that is an opinion on the report on the remuneration of members of the Management Board and Supervisory Board of KGHM for the year 2023. Let me read the draft resolution. That's resolution subsequent number /2024 of The Ordinary General Meeting of KGHM Polska Miedz S.A. with its registered seat in Lubin dated 7th June 2024 on the opinion of the General Meeting of KGHM on the report on remuneration of the members of the Management Board and Supervisory Board of KGHM for the year 2023. The Ordinary General Meeting of KGHM Polska Miedz S.A.acting on the basis of article 9G Section 6 of the dated July 29, 2005, on public offerings and conditions governing the introduction of financial instruments to organized trading and on public companies hereinafter the Act and Article 395. One the commercial partnership and company's code, having reviewed the contents of the report on the remuneration of the members of the Managing Board and Supervisory Board prepared by the Supervisory Board of KGHM for the year 2023, hereinafter the report reviewed by the auditor, PricewaterhouseCoopers Polska Spólka [Foreign Language] resolves as follows: Paragraph 1, the Ordinary General Meeting of KGHM Polska Miedz S.A. expresses a positive opinion on the content of the report. The resolution comes in force upon adoption. Would any of you like to take a stance regarding this matter? Since no one has any requests, let's move on to voting of the resolution. Do cast your votes. It's an open ballot and with ordinary majority. [Voting]

Thank you. I hereby close the voting. Please display the outcome. In the voting, the total number of votes cast is 139,243,303 votes, in favor 93,869,788, 45,373,515 were cast against. There were no votes withheld. Therefore, the resolution in the open voting was adopted. Therefore, we've completed Item 11. And now I give the floor to the representative of the State Treasury, [indiscernible].

I wanted to motion for a resolution to withhold the meeting and continue it at a later point and a draft resolution. Let me present the draft resolution. Do the proxies need a technical break to consult the matter of voting with -- if so, please confirm. You do not need any technical break. Nobody, in what respect. I saw someone. How long would that be? 5 minutes. Let's have a 5-minute technical break. It's 12:02. We are resuming at 12:07. [Break]

I'm hereby resuming the meeting, the General Meeting of the Shareholders of KGHM. Now let's vote on the resolution submitted by the representative of the State Treasury for suspending the meeting until the 5th of July 2024, 11 a.m. The draft resolution has the following word. It will be numbered subsequently /2024, dated 7th of June 2024. On a break in the General Meeting of the Shareholders, the Ordinary General Meeting of the Shareholders, Polska Miedz, with this headquarters in Lubin according to Paragraph 22 suspends the meeting until the 5th of July 2024, 11 a.m., and the meeting will be continued in the company's registered seat in Lubin. The majority required for adopting the resolution is 2/3 of valid cast votes -- the ballot, the voting will be in an open ballot. Do cast your votes. [Voting]

Thank you. I understand all the interested stakeholders cast their votes. Let us see the results. The total number of votes cast in the voting is 139,243,302 in favor of the resolution 101,641,853, 24 votes were abstained or cast withheld against and 37,601,425 were abstained. The percentage share of the votes cast for adopting the resolution was 72.996%. Therefore, the majority required for adopting the resolution for adjourning the meeting has been reached. Therefore, the resolution has been adopted. Therefore, this part of the general meeting of the shareholders is closed and 2 more pieces of information for proxies. Make sure that the proxy document that using today has not been drafted for a specific day, that is today, make sure it does not expire as of tomorrow. If the power is -- if the powers do not specify that, there will be no problem otherwise make proper adjustment or update it. The other comment, obviously, all other powers of attorney or proxy powers remain valid for every part of the general meeting of the shareholders. Thank you.