KGHM Polska Miedź S.A. on the Capital Market

The credo of KGHM Polska Miedź is to engage in open dialogue with all capital market participants and maintain transparency. We develop and utilize nascent technological solutions and we implement solutions to devise and communicate the company’s equity story by incorporating ESG. In July, 25 years will have passed since KGHM Polska Miedź S.A. went public. That was an important event not just for the company itself, but also for the Polish capital market. Today, after 25 years, we can say with a feeling of pride that KGHM continues to be one of the main driving forces on the Warsaw Stock Exchange. We believe that the future is made of copper, including in the context of the capital market.

Janusz Krystosiak

Director of the Investor Relations Department

KGHM Polska Miedź S.A. debuted on the Warsaw Stock Exchange (WSE) in July 1997. The Company’s shares are traded on the primary market of the WSE in the continuous trading system and are a component of the WIG, WIG20 and WIG30 main indices as well as the WIG–ESG index published since 3 September 2019, comprising listed companies which adhere to the principles of corporate social responsibility.

KGHM Polska Miedź S.A. is also a component of the sector index WIG-Mining, which in the past year was generally in a rising trend. Moreover, KGHM Polska Miedź S.A. is a component company of the prestigious FTSE4Good Index Series. The FTSE4Good Index Series is part of the group of ethical investment indicators, reflecting criteria of corporate social responsibility and ESG risk management.

In 2021, the share price of KGHM Polska Miedź S.A. on the WSE recorded new historic records numerous times. Already in January the Company’s share price exceeded PLN 200, and on 13 May reached the highest closing price during the year of PLN 223.80. From that time the share price of KGHM Polska Miedź S.A. entered into a declining trend, with the minimum closing price of PLN 133.10 being reached on 26 November. Ultimately, the Company’s share price had fallen by 24% and at the close of trade on 30 December 2021 amounted to PLN 139.40. During the same period the price of copper – the Company’s main product – recorded an increase of 25%, alongside an increase in the average USD/PLN exchange rate by 8.0%. At the same time the market indices WIG, WIG20 and WIG30 increased respectively by 22%, 14% and 20%. In contrast the London-based FTSE 350 mining index – comprised of companies from the mining sector listed on the London Stock Exchange – fell by 9%.

223.80

PLN

on 13 May reached the highest closing price during the year

Source: own work, Bloomberg

Key share price data of KGHM Polska Miedź S.A. on the WSE in the years 2020-2021 are presented in the following table:

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Key share price data of the company on the Warsaw Stock Exchange

Symbol: KGH, ISIN: PLKGHM000017	Unit	2021	2020
Number of shares issued	million	200	200
Market capitalisation of the Company at year’s end	PLN bn	27.9	36.6
Average trading volume per session	shares	584,783	720,721
Turnover	PLN mn	26,308.89	18,784.44
Change in share price from the end of the prior year	%	-23.8	+91.5
Highest closing price during the year	PLN	223.80	189.35
Lowest closing price during the year	PLN	133.10	49.40
Closing price from the last day of trading in the year	PLN	139.40	183.00

Source: own work, WSE Statistic Bulletin for 2020 and 2021, Bloomberg

Dividend

In accordance with Resolution No. 7/2021 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 7 June 2021 regarding the appropriation of profit for the year 2020, the profit in the amount of PLN 1,779 million, was appropriated as follows: as a shareholders dividend in the amount of PLN 300 million (1.50 PLN/share) while the amount of PLN 1,479 million was transferred to the Company’s reserve capital. The Ordinary General Meeting of KGHM Polska Miedź S.A. set the dividend date for 2020 at 21 June 2021 and the dividend payment date for 2020 at 29 June 2021. All of the Company’s shares are ordinary shares.

Investor relations

The Investor Relations team, on behalf of the Management Board of KGHM Polska Miedź S.A., maintains an open dialogue with capital market participants pursuant to its policy of ensuring a transparent company and adherence to stock exchange Best Practices. For KGHM Polska Miedź S.A., as a global company operating on four continents, it is a priority to ensure equal access to information to all members of the global capital markets. KGHM Polska Miedź S.A.’s actions are aimed at maintaining regular communication and transparent dialogue with analysts, institutional and individual investors as well as at ensuring conformance with regulatory legal obligations. The Company fulfils its disclosure obligations by publishing regulatory filings and periodic reports via the official reporting system (ESPI).

2021 was another year of intense activities by KGHM Polska Miedź S.A. in terms of communicating with investors. The COVID-19 pandemic affected the manner in which communicating with capital market participants was conducted. During this period, activities aimed at maintaining relations with investors using a virtual, online format were successfully engaged. The main actions taken by the company were as follows:

The Company actively meets with investors and analysts in Poland and abroad during conferences organised by brokers. In 2021, the Company took part in more than a dozen investor conferences and in about 100 meetings with portfolio managers and analysts representing investment and pension funds as well as other asset management firms.

The Investor Relations Department organises meetings with the Management Board to discuss the financial results of the Company and Group. In 2021, the publication of financial results was accompanied by results conferences open to all stakeholders via webcasts in Polish and English, with the possibility of submitting questions by email. Video recordings of these conferences are available on the Company’s website, www.kghm.com, in the section Investors.

The Company regularly organises events for the capital market. This type of meeting is aimed at familiarising investors with the degree of advancement of the development strategy as well as with the current operating and financial situation of the KGHM Group and its individual assets. In 2021, due to the COVID-19 pandemic as well as concern for the health and well-being of our employees and investors, the Company decided to defer the organisation of an Analyst Day and an Individual Investor Day.

In 2021, KGHM Polska Miedź S.A., once again actively participated in the WallStreet conference and was a Strategic Partner for the 25th edition of the Conference. The situation related to the epidemic meant that once again, the largest meeting of individual investors in Poland and was conducted online. As part of activities, representatives of KGHM took part in the discussion panel and in the online Your Investments Forum, as well as conducted a thematic discussion and provided an interview in the investor magazine Akcjonariusz. Throughout the conference KGHM maintained a virtual stand on the conference website.

Representatives of the Company are available to individual investors during on-line chats. These are organised on a regular basis following the publication of the Company’s financial statements. In 2021, four investor chats were held.

The Company continues its participation in processes related to ESG (Environmental, Social & Corporate Governance) and in accordance with the adopted Strategy engages in communicating in this area with the capital market, investors and rating agencies. An expression of our concern for stakeholders is the creation and continuous development of our ESG section under Investors tab on the Company’s corporate website, which is dedicated to the ESG issues in a broad sense and facilitates access to a broad scope of information related to non-financial and integrated reporting by KGHM Polska Miedź S.A. In 2021, the Company for the second time submitted to the CDP Climate survey and provided a broader scope of information, such as on Scope 3 emissions. Moreover, two of KGHM’s metallurgical facilities received the prestigious Copper Mark certificate. The Company also published the Climate Policy of KGHM Polska Miedź S.A. To maintain the highest diligence, transparency and compliance with best practice of listed companies, the Investor Relations team regularly provides responses to surveys, questionnaires or information requests regarding ESG, among others: Sustainalytics, CDP, FTSE Russell, MSCI, Refinitiv, Vigeo Eiris, Corporate Knights and BlackRock.

The initiative related to publication of the IR Newsletter for Investors was continued, which summarises the most important quarterly events and is distributed to subscribers via email. The goal of the IR Newsletter is to assure its recipients with an accurate source of knowledge about KGHM and the global copper market and to facilitate analysis and assessment of the possibilities associated with investing in the Company’s shares. The IR Newsletter has met with the appreciation of Investors and other participants in the capital market.

A KGHM Investor Relations profile was created on the social media platform LinkedIn, which is dedicated to investors and analysts. This is a place where, in addition to the official reporting system (ESPI), we share news which might be of interest to capital market participants.

In 2021, sell-side reports on KGHM Polska Miedź S.A. were published by 9 sell-side analysts based in Poland and 8 based abroad.

Brokerages which prepare reports on KGHM Polska Miedź S.A

Poland
Biuro Maklerskie mBanku	Dom Maklerski BOŚ	Santander Biuro Maklerskie
Dom Maklerski Banku Handlowego	Erste Group	IPOPEMA Securities
Biuro Maklerskie PKO BP	Trigon Dom Maklerski	Pekao Investment Banking
Abroad
Bank of America Merrill Lynch	Global Mining Research	Goldman Sachs
Morgan Stanley	UBS	WOOD & Company
JP Morgan	EVA Dimensions

1st place for the KGHM IR Team as judged by individual investors, in a survey on IR quality by the magazine „Parkiet” and the Brokerages Council.

The jury of the market newspaper Gazeta Giełdy i Inwestorów „Parkiet”, comprised of journalists and editors, decided to award KGHM Polska Miedź with the title „Company of the Year from the WIG 20 index”.

KGHM Polska Miedź S.A. was again awarded the title The Best of The Best in the competition „The Best Annual Report 2020” organised by the Institute of Accounting and Taxes.

Shareholder structure of KGHM Polska Miedź S.A.

As at 31 December 2021 and as at the date of signing this report, the share capital of the Company, in accordance with the entry in the register of entrepreneurs of the National Court Register, amounted to PLN 2,000 million and was divided into 200,000,000 shares, series A, fully paid, having a face value of PLN 10 each. All shares are bearer shares. The Company has not issued preferred shares. Each share grants the right to one vote at the General Meeting. The Company does not hold any treasury shares.

In the years ending 31 December 2021 and 31 December 2020 there was no change in either registered share capital or in the number of outstanding shares issued. Moreover, in 2021 and 2020 there were no changes in the ownership structure of significant blocks of shares of KGHM Polska Miedź S.A.

The Company’s shareholder structure as at 31 December 2021 and at the date this report was signed, established on the basis of notifications received by the Company pursuant to art. 69 of the Act on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies, was as follows:

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Shareholder structure as at 31 december 2021 and at the date this report was signed

Shareholder	Number of shares/votes	Interest in the share capital
State Treasury*	63,589,900	31.79%
Nationale-Nederlanden Otwarty Fundusz Emerytalny**	10,104,354	5.05%
Aviva Otwarty Fundusz Emerytalny Aviva Santander^***	10,039,684	5.02%
Other shareholders	116,266,062	58.14%
Total	200,000,000	100.00%

*based on a notification received by the Company dated 12 January 2010
**based on a notification received by the Company dated 18 August 2016
***based on a notification received by the Company dated 17 July 2018

Other shareholders, whose combined interest in the share capital and in the total number of votes amounts to 58.14%, are mainly institutional investors, both international and domestic.

Following is the geographic distribution of the shareholder structure of KGHM Polska Miedź S.A. The data is based on research into the Company’s shareholder structure performed in February 2022.

Geographic shareholder structure of KGHM Polska Miedź S.A. (%)

Source: CMi2i, February 2022

The Management Board of the Company is unaware of any agreements which could result in changes in the proportion of the Company’s shares held by present shareholders in the future and bondholders. Similarly, the Management Board is unaware of any agreements between bondholders, which could result in changes in the number of bonds held by them.

Based on information held by KGHM Polska Miedź S.A., as at 31 December 2021 and as at the date this report was signed, neither the Members of the Management Board nor of the Supervisory Board of the Company held shares of KGHM Polska Miedź S.A. or rights to them.

Based on the knowledge of the Company, as at 31 December 2021 and as at the date this report was signed, neither the Members of the Management Board nor of the Supervisory Board of KGHM Polska Miedź S.A. held shares of the related parties of KGHM Polska Miedź S.A.

In 2021, the Company did not have an employee share incentive program.

Bonds of KGHM Polska Miedź S.A. on the Catalyst market

On 27 May 2019 an issue agreement was signed under which the Management Board of KGHM Polska Miedź S.A. established a bond issue program to the amount of PLN 4 billion. The Parties to the Issue Agreement were KGHM Polska Miedź S.A. as Issuer and Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna, Bank Handlowy w Warszawie Spółka Akcyjna, Bank Polska Kasa Opieki Spółka Akcyjna and Santander Bank Polska Spółka Akcyjna as Organizers and Dealers. The issue took place in June 2019, the maximum total nominal value of bonds amounted to PLN 2 billion. Under the Bond Issue Program, Series A and Series B bonds were issued. The bond offer was made through a private placement and was directed toward no more than 149 investors and was offered exclusively in Poland.

billion PLN

Bond issue program to the amount

On 20 September 2019, by a resolution of the Management Board of the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.) bearer bonds Series A and Series B of KGHM Polska Miedź S.A. were introduced to the alternative trading system on the Catalyst. The first day of trading of the bonds on the Alternative Trading System was set at 3 October 2019.

Detailed information is available on the Company’s website, www.kghm.com in the section Investors – Shares and bonds – Bonds.

Best practice

KGHM Polska Miedź S.A. in detail on its climate impact

In 2021, KGHM Polska Miedź S.A. participated in the international project organized by the CDP for the second time. The Company significantly expanded the scope of climate data it provided. The CDP Climate Change 2021 Questionnaire for 2020 contained disclosures concerning, among others, climate-related risks, data on energy consumption and on indirect Scope 3 emissions.

CDP is a global environmental organization operating an information reporting system that enables companies, cities, and regions to measure and manage their environmental impact. CDP holds the world’s most comprehensive collection of reported data and is viewed as the gold standard for environmental reporting by the global economy, so participation in this initiative is critical for the Company.

The completion of work on the Climate Policy offers among others the opportunity to define CO₂ emission reduction targets. This means that in 2022, the data provided by KGHM to the CDP (for 2021) may be, for the first time, subject to a full and detailed classification assessment, which will further emphasize the Company’s efforts to implement best practices and solutions – including in communication of its environmental, social and corporate activities.

The expansion of disclosures was made possible by the effective cooperation between many departments in KGHM and KGHM CUPRUM Sp. z o.o. (CBR), coordinated by the Investor Relations Department.

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