in PLN millions, unless otherwise stated
Trade and similar payables are initially recognised at fair value less transaction cost and are measured at amortised cost at the end of the reporting period.
Accrued interest due to repayment of payables at a later date, in particular transferred to reverse factoring, is recognised in profit or loss, in the item “finance costs”.
Trade and similar payables presented in the Statement of financial position also contain trade payables transferred to reverse factoring, which are in the category of “similar”. Moreover, the item “similar liabilities” also includes intra-group trade payables transferred by the debtor to the factor, for which the debtor received payment from the factor.
At the moment of transfer of the liabilities to reverse factoring, the Parent Entity recognises payables towards the factor, who due to the subrogation of receivables, from the legal point of view, assumes the rights and obligations common for trade payables.
Reverse factoring is not directly regulated by IFRS, and as a result of the ambiguous nature of the transaction, it was necessary for the Parent Entity to make an important judgment on the presentation of balances of liabilities transferred to factoring in the Statement of financial position and the presentation of transactions in the Statement of cash flows.
In the Parent Entity’s opinion, in presenting the balance of trade payables transferred to reverse factoring as „Trade and similar payables” (assigned to the category of “similar”) together with other trade payables and not as debt liabilities, the following aspects had a crucial impact:
Moreover, although the Parent Entity identified characteristics which indicate the nature of reverse factoring as liabilities due to financing (liability due to credit granted by the factor), they were judged by the Parent Entity to be insufficient for the purpose of recognising that, at the moment of transfer of trade payables to reverse factoring, there is a complete change in the nature of the relationship from that of a trade to a debt one, which would necessitate presentation in the Statement of financial position as debt financial liabilities and presentation in the Statement of cash flows, in financial activities:
In December 2020, the International Financial Reporting Interpretations Committee (Committee) published its opinion on the presentation of reverse factoring transactions in the statement of financial position and statement of cash flows. The above-mentioned opinion stated that the current standards provide a sufficient basis for establishing the correct presentation of reverse factoring transactions in the financial statements, as well as for establishing the required additional disclosures. The Parent Entity analysed the summary of the key requirements of standards related to analysing the issue stated in the Committee’s position, and in the Parent Entity’s opinion the aspects indicated by the Committee do not have an impact on the conclusions of the assessment on this issue conducted by KGHM Polska Miedź S.A. in 2019. The Committee, recommending the appropriate presentation of liabilities subject to reverse factoring, indicated the same issues that were analysed and disclosed by the Parent Entity as part of important judgments in the financial statements for 2019 and above, in the current financial statements.
In particular, in the context of the areas of analysis indicated by the Committee, the Parent Entity confirms that:
The Parent Entity indicates that the actual deadline for the payment of trade payables subject to reverse factoring is longer (up to 180 days) than the deadline for the payment of other trade payables, which are not transferred to factoring, which usually amounts to 60 days, which may indicate a change in the nature of these liabilities from trade to debt. However, this characteristic has been judged by the Parent Entity to be insufficient to conclude that when the trade liability was transferred to reverse factoring, the nature of the liability changed completely. Apart from the above criteria, no other terms of liabilities covered by reverse factoring differ from the terms of other trade payables.
Therefore, the Parent Entity’s assessment of the nature of trade payables transferred to reverse factoring and their presentation, made in the light of the Committee’s position, remains unchanged, which means that the trade payables transferred to reverse factoring are presented by the Parent Entity in the statement of financial position under „Trade and similar payables „, including those under the ” similar” category.
| As at 31 December 2021 |
As at 31 December 2020 |
|
| Non-current trade payables | 187 | 169 |
| Current trade payables | 2 919 | 2 329 |
| Current similar payables – reverse factoring | 95 | 1 264 |
| Nota 10.4 Trade and similar payables, of which: | 3 201 | 3 762 |
| recognised in liabilities related to disposal group | 40 | – |
| recognised as “trade and similar payables” and “other non-current liabilities” |
3 161 | – |
In 2021, the factors’ total participation limit in the Group amounted to PLN 1 563 million (including PLN 1500 million in the Parent Entity). In 2020, the Parent Entity concluded the second agreement for the provision of reverse factoring services which was implemented in 2019 in order to make it possible for suppliers to receive repayment of receivables faster, as part of the standard procurement process executed by the Parent Entity, alongside an extension of payment dates of payables by the Parent Entity to the factor. In the current financial year, liabilities in the total amount of PLN 1 055 million (in the previous year: PLN 2 495 million) were transferred to the factors by the Group. As at 31 December 2021 the value of trade payables transferred to reverse factoring amounted to PLN 95 million (as at 31 December 2020, PLN 1 264 million). Due to the stabilisation of the economic situation and improvement of the macroeconomic conditions, the Parent Entity reduced borrowings drawn under the reverse factoring program. In the current financial year, the Group made payments towards the factors in the amount of PLN 2 213 million (in the financial year ended 31 December 2020: PLN 1 842 million).
Interest costs accrued and paid towards the factor in 2021 amounted to PLN 9 million (in 2020 they amounted to PLN 12 million).
Repayment dates of receivables due to reverse factoring do not exceed 12 months, and consequently all payables transferred to reverse factoring are presented as short-term.
The item trade payables contains payables due to the purchase and construction of fixed and intangible assets which, as at 31 December 2021, amounted to PLN 186 million in the non-current part and PLN 649 million in the current part (as at 31 December 2020, PLN 162 million and PLN 464 million, respectively).
The Group is exposed to currency risk arising from trade payables and to liquidity risk. Information on currency risk is presented in Note 7.5.1.3 and on liquidity risk in Note 8.3.1. The fair value of trade payables approximates their carrying amount.