Correction of a judgment on the functional currency of a subsidiary

Friday, 27 October, 2017
28/2017

In reference to regulatory filing no. 6/2017 dated 28 April 2017 on exchange differences  in the first quarter of 2017, the Management Board of KGHM Polska Miedź S.A. (“the Company”) announces that today it decided to correct its judgment on the functional currency of the subsidiary Future 1 Sp. z o.o. (Future 1) and to change it from the Polish zloty (PLN) to the US dollar (USD) for the purposes of the consolidated financial statements. The change was made as a result of a reassessment of the currency of the primary economic environment in which Future 1 operates.

Below, we present in brief the impact of the aforementioned change on the consolidated financial statements:

  • as at 31 December 2016:

–    an increase in accumulated other comprehensive income from PLN 855 million to PLN 2 216 million – a change in the amount of PLN 1 361 million,

–    a decrease in retained earnings (undistributed profit) from PLN 13 100 million to PLN 11 739 million – a change in the amount of PLN 1 361 million,

–    no impact on the financial result for 2016,

  • for the period from 1 January 2017 to 31 March 2017:

– an increase in profit for the period from PLN 398 million to PLN 710 million – a change in the amount of PLN 312 million,

–  a decrease in other comprehensive income from PLN 462 million to PLN 150 million – a change in the amount of PLN 312 million,

  • for the period from 1 January 2017 to 30 June 2017:

– an increase in profit for the period from PLN 494 million to PLN 1 054 million – a change in the amount of PLN 560 million,

– a decrease in other comprehensive income from PLN 981 million to PLN 333 million – a change in the amount of PLN 648 million,

– a decrease in deferred tax assets from PLN 460 million to PLN 372 million – a change in the amount of PLN 88 million.

Data for the first half of 2017 are of a preliminary nature and will be verified by the auditor.

The aforementioned change is of a non-cash nature and has no impact on the liquidity of the KGHM Polska Miedź S.A. Group.

Correction of the functional currency will not have an impact on the separate financial statements of KGHM Polska Miedź S.A.

The detailed impact of changes on the published consolidated results of the KGHM Polska Miedź S.A. Group are presented in appendix no. 1 to this report.

The consolidated financial statements of the KGHM Polska Miedź S.A. Group as at
30 September 2017, which are a part of the consolidated quarterly report QSr 3/2017, will take into account the correction of the functional currency.

As a result of the correction of the judgment, the amended periodic report for the first quarter of 2017 (QSr 1/2017) which will take into account the aforementioned change, will be published without delay, while the amended periodic report for the first half of 2017 (PSr 2017), which will take into account the aforementioned changes, together with the auditor’s review report, will be published by the Company before the publication of the consolidated quarterly report for the third quarter of 2017.

Legal basis: art. 17 (1) of MAR (Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of the European Union dated 12 June 2014, no. L 173/1) and § 6 sec. 5 of the Decree of the Minister of Finance dated 19 February 2009 regarding current and periodic information published by issuers of securities and conditions for recognising as equivalent information required by the laws of a non-member state (unified text: Journal of Laws 2014.133 with subsequent amendments)

Appendix No 1 Results of change of currency F1

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