12.1 Related party transactions
The accounting policies and significant estimates and assumptions presented in Parts 2 and 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 S.C.M.,
- 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 12.9.
Operating income from related entities
|
from 1 January 2021 |
from 1 January 2020 |
|
|---|---|---|
| Revenues from sales of products, merchandise and materials to a joint venture | 23 | 20 |
| Interest income on loans granted to a joint venture | 494 | 377 |
| Revenues from other transactions with a joint venture | 69 | 55 |
| Revenues from other transactions with other related parties | 11 | 9 |
| Total | 597 | 461 |
Purchase from related entities
|
from 1 January 2021 |
from 1 January 2020 |
|
|---|---|---|
| Purchase of services, merchandise and materials | 30 | 27 |
| Other purchase transactions | 2 | 2 |
| Total | 32 | 29 |
Trade and other receivables from related parties
| As at 31 December 2021 |
As at 31 December 2020 |
|
| From the joint venture Sierra Gorda S.C.M. (loans) | 8 314 | 6 069 |
| From the joint venture Sierra Gorda S.C.M. (other) | 66 | 369 |
| From other related parties | 3 | 4 |
| Total | 8 383 | 6 442 |
Trade and other payables towards related parties
| As at 31 December 2021 |
As at 31 December 2020 |
|
| Towards joint venture | 58 | 25 |
| Towards other related parties | 1 | 3 |
| Total | 59 | 28 |
In 2021, the Parent Entity and its subsidiaries did not conclude any significant transactions with related parties on terms other than market ones.
The State Treasury is an entity controlling KGHM Polska Miedź S.A. at the highest level. The Company makes use of the exemption to disclose a detailed scope of information on transactions with the Polish Government and entities controlled or jointly controlled by the Polish Government, or over which the Polish Government has significant influence (IAS 24.25).
Pursuant to the scope of IAS 24.26, as at 31 December 2021, the Group concluded the following transactions with the Polish Government and entities controlled or jointly controlled by the Polish Government, unusual due to their nature or amount:
- due to an agreement on setting mining usufruct for the extraction of mineral resources and for the exploration for and assessment of mineral resources – balance of payables in the amount of PLN 228 million (as at 31 December 2020: PLN 202 million); including payables due to mining usufruct for the extraction of mineral resources recognised in costs in the amount of PLN 30 million (as at 31 December 2020: PLN 30 million),
- due to a reverse factoring agreement with the company PEKAO FAKTORING SP. Z O.O. – a payable in the amount of PLN 68 million, interest costs in the amount of PLN 6 million (as at 31 December 2020, payables in the amount of PLN 974 million and interest costs for the period from 1 January to 31 December 2020 in the amount of PLN 12 million),
- other transactions and economic operations related to spot currency exchange, depositing cash, granting bank loans, guarantees, and letters of credit (including documentary letters of credit), running bank accounts, processing of a documentary collection, servicing of special purpose funds and entering into transactions on the forward currency market with banks related to the State Treasury.
Apart from the aforementioned transactions entered into by the Group with the Polish Government and with entities controlled or jointly controlled by the Polish Government, or over which the government has significant influence, which were significant due to their nature and the amount, there also occurred transactions arising from extraordinary administrative orders based on art. 11 of the act dated 2 March 2020 on particular solutions related to preventing and counteracting COVID-19, other infectious diseases and the crisis-related situations caused thereby (Journal of laws from 2020, item 374 with subsequent amendments) involving the sale of built and equipped hospitals in the amount of PLN 17 million in 2021, while in 2020 they involved the sale of personal protective equipment in the amount of PLN 193 million. As at 31 December 2021 there was no balance of receivables due to these transactions (as at 31 December 2020 the balance amounted to PLN 2 million).
State Treasury companies may purchase bonds issued by KGHM Polska Miedź S.A.
The remaining transactions 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. These transactions concerned the following:
- the purchase of goods (energy, fuels, services) to meet the needs of current operating activities. In the period from 1 January to 31 December 2021, the turnover from these transactions amounted to PLN 1 663 million (from 1 January to 31 December 2020: PLN 1 263 million), and, as at 31 December 2021, the unsettled balance of liabilities from these transactions amounted to PLN 224 million (as at 31 December 2020: PLN 203 million),
- sales to Polish State Treasury Companies. In the period from 1 January to 31 December 2021, the turnover from these sales amounted to PLN 146 million (from 1 January to 31 December 2020: PLN 119 million), and, as at 31 December 2021, the unsettled balance of receivables from these transactions amounted to PLN 24 million (as at 31 December 2020: PLN 18 million).