36.6. Climate risks

The impact of climate risks on the Group operations has been described in the report on the operations of the Group.

As at the date of preparing the financial statements for 2023, owing to its specifics and nature, the climate issues did not affect:

• the balance of inventories disclosed in the balance sheet;
• the sales revenue disclosed;
• the presentation of financial instruments;
• the information and estimates related to non-current assets (there were identified no non-current assets whose useful life or residual value would be expected to change due to the above issues);
  the estimated cash flows or other assumptions made for the estimation of the impairment of assets in compliance with IAS 36;
• the recognition of provisions, including provisions for land reclamation;
• the expected credit losses for the purpose of measuring write-downs of receivables (due to the fast turnover of receivables);
• the assumption of operations continuation in the foreseeable future, i.e. in the period of at least 12 months of the balance-sheet date. In the test assumptions, no alternative scenarios for cash flows related to climate changes have been included.

There were no agreements of major importance whose terms and conditions would refer to climate issues.

Moreover, global climate change results and is still expected to result in natural catastrophes and extreme weather conditions, such as droughts, fires, storms, sea level rising, floods, heat or cold waves, which will occur more frequently or with higher intensity. Such extreme events are reflected in the market development, stakeholder’s expectations, as well as local, domestic and international policies and regulations with regard to climate change.

The operations of the Company and the companies of the Capital Group are carried out in moderate climate zone, where no risk preventing the operations as a result of extreme weather conditions has been identified. The production activities of the Company and the companies of the Capital Group are carried out in areas exposed to short-lasting weather events (intense rainfall, strong wind, whirlwind), the frequency of which may increase with climate changes, however, their impact (possible value of assets exposed to the risk of losses) and frequency of occurrence do not threaten, in the opinion of the Company, the continuity operations of the Company itself and other companies of the Capital Group. Bearing in mind that the Company and the companies of the Capital Group are not dependent on individual suppliers or customers, the Company and the companies of the Capital Group do not expect that extreme weather conditions which may occur at the locations of the suppliers or recipients might significantly affect their operations.