Note 12.1 Related party transactions

The accounting policies and significant estimates and assumptions presented in Part 10 are applicable to transactions entered into with related parties.

The transactions between the Group and related parties include transactions with:

• the joint venture Sierra Gorda,
• entities controlled or jointly controlled by the State Treasury or over which it has significant influence, and
• the management board and the supervisory board (remuneration) – Note 12.11.

Operating income from related entities

Purchases from related entities

Trade and other receivables from related parties

Trade and other payables towards related parties

Pursuant to IAS 24, the Group is obliged to disclose unsettled balances, including payables towards the Polish Government and entities controlled or jointly controlled by the Polish Government, or over which the Polish Government has significant influence.

As at 31 December 2018,  balances of unsettled payables concerned the agreements necessary to conduct principal operating activities of the Parent Entity in the amount of PLN 200 million (as at 31 December 2017: PLN 202 million)
due to:

• setting mining usufruct for the extraction of ore – fixed fees and setting mining usufruct for the exploration for and assessment of deposits – total in the amount of PLN 170 million (as at 31 December 2017: PLN 171 million),
• setting mining usufruct for the extraction of ore – variable part of the fee (recognised in costs) in the amount of PLN 30 million (as at 31 December 2017: PLN 31 million),

In the current and comparable periods, no other individual transactions were identified which would be considered as significant in terms of unusual scope and amount.

The remaining transactions, which were collectively significant, between the Group and the Polish Government and with entities controlled or jointly controlled by the Polish Government, or over which the government has significant influence, were within the scope of normal, daily economic operations, carried out at arm’s length. These transactions concerned the following:

• the purchase of goods to meet the needs of current operating activities. In the period from 1 January to 31 December 2018, the turnover from these transactions amounted to PLN 1 217 million (from 1 January to 31 December 2017:
  PLN 991 million), and, as at 31 December 2018, the unsettled balance of liabilities from these transactions amounted to PLN 158 million (as at 31 December 2017: PLN 107 million),
• sales to Polish State Treasury Companies. In the period from 1 January to 31 December 2018, the turnover from these sales amounted to PLN 57 million (from 1 January to 31 December 2017: PLN 82 million), and, as at 31 December 2018, the unsettled balance of receivables from these transactions amounted to PLN 8 million (as at 31 December 2017: PLN 7 million).

Note 12.2 Dividends paid

In accordance with Resolution No. 10/2018 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 6 July 2018 regarding appropriation of the profit for financial year 2017, the entirety of the profit was transferred to the Parent Entity’s reserve capital.
In the comparable period, in accordance with Resolution No. 7/2017 of the Ordinary General Meeting of KGHM Polska Miedź S.A. dated 21 June 2017 regarding the dividend payout from prior years’ profits, setting the dividend date and the dividend payment date, the amount of PLN 200 million was allocated as a shareholder dividend, representing PLN 1.00 per share.
The dividend date (the day on which the right to dividend is set) was set at 14 July 2017 with the dividend being paid in two instalments: 17 August 2017 – the amount of PLN 100 million (representing PLN 0.50 per share) and 16 November 2017 – the amount of PLN 100 million (representing PLN 0.50 per share).  
All shares of the Parent Entity are ordinary shares.

Note 12.3 Other assets

Note 12.4 Other liabilities

*These accruals are due to purchase costs of cogeneration property rights of consumed electricity, fees for the discharging of gases and dusts to the atmosphere and other recognised operating costs.

Note 12.5 Assets and liabilities not recognised in the statement of financial position

The value of contingent assets and liabilities and other liabilities not recognised in the statement of financial position were determined based on estimates.

Note 12.6 Capital commitments related to property, plant and equipment and intangible assets

Capital commitments incurred in the reporting period, but not yet recognised in the statement of financial position, were as follows (as at 31 December of a given year):

The Group’s share in capital commitments of joint ventures accounted for using the equity method (Sierra Gorda S.C.M.) is presented in Note 6.1 [Joint ventures accounted for using the equity method].

Note 12.7 The right of perpetual usufruct of land

The Parent Entity and the Group’s Polish subsidiaries obtained the right of perpetual usufruct of land mostly free of charge on the basis of  laws in force. The land subject to perpetual usufruct is industrial area related to the core business activities, which also includes protective zones in which environmental quality standards have been exceeded as a result of the activities carried out.
Due to the nature of the use of the above-mentioned land, as at 31 December 2018 the Group had not determined fair values for these perpetual usufruct rights.

The table below contains information on future payments due to the right of perpetual usufruct of land.

The Group’s liabilities due to the right of perpetual usufruct of land, which were not recognised in the statement of financial position, were estimated on the basis of annual payment rates resulting from recent administrative decisions and the useful life of the land subject to this right.

Note 12.8 Employment structure

Note 12.9 Other adjustments in the statement of cash flows

Note 12.10 Remuneration of key managers

Based on the definition of key management personnel according to IAS 24 and based on an analysis of the rights and scope of responsibilities of managers of the Group arising from corporate documents and from management contracts, the members of the Board of Directors of KGHM INTERNATIONAL LTD. and the President of the Management Board of KGHM INTERNATIONAL LTD. were recognised as other key managers of the Group.

Note 12.11 Remuneration of the entity entitled to audit the financial statements and of entities related to it in PLN thousands

Note 12.12 Composition of the Group

Diagram of the KGHM Polska Miedź S.A. Group as at 31 December 2018

Note 12.13 Subsequent events after the reporting period

Extension of the deadline for repayment of a bank loan
On 1 February 2019, the Parent Entity extended the period of availability of the USD 100 million credit line in Bank Gospodarstwa Krajowego to 2 February 2020. Interest on the credit is based on LIBOR plus a margin.

Signing of financing agreements
On 13 February 2019, the Parent Entity signed an overdraft credit agreement for the amount of PLN 100 million with Bank Pekao S.A. in Warsaw. Interest on the credit is based on WIBOR plus a margin. The credit’s period of availability expires on 13 February 2020.

On 27 February 2019, the Parent Entity signed an unsecured, working capital facility agreement with Bank Gospodarstwa Krajowego with a financing period of up to 84 months, as a revolving credit line in the amount of USD 450 million for a period of 60 months, with the option to transform it into a non-revolving credit after 60 months. Interest on the credit is based on LIBOR plus a margin.