12.1 Related party transactions

in PLN millions, unless otherwise stated

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.

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 2022 and in the period from 1 January to 31 December 2022, the Group realised 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 229 million (as at 31 December 2021: PLN 228 million); including payables due to mining usufruct for the extraction of mineral resources recognised in costs in the amount of PLN 31 million (as at 31 December 2021: 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 18 million, interest costs  in the amount of PLN 3 million (as at 31 December 2021, payables in the amount of PLN 68 million and interest costs for the period from 1 January to 31 December 2021 in the amount of PLN 6 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,
• due to disposal towards Polski Holding Hotelowy sp. z o.o. of all shares in the company INTERFERIE S.A. and Interferie Medical SPA sp. z o.o., revenues in the amount of PLN 167 million, details were presented in Note 9.8.2.

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 ordinary, 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 2022, the turnover from these transactions amounted to PLN 2 914 million (from 1 January to 31 December 2021: PLN 1 663 million), and, as at 31 December 2022, the unsettled balance of liabilities from these transactions amounted to PLN 340 million (as at 31 December 2021: PLN 224 million),
• sales to Polish State Treasury Companies. In the period from 1 January to 31 December 2022, the turnover from these sales amounted to PLN 430 million (from 1 January to 31 December 2021: PLN 146 million), and, as at 31 December 2022, the unsettled balance of receivables from these transactions amounted to PLN 241 million (as at 31 December 2021: PLN 24 million).