Management Board recommendation on payment of dividend

Tuesday, 29 May, 2012
Report no. 24/2012

The Management Board of KGHM Polska Miedź S.A. announces that it will recommend to the Ordinary General Meeting of KGHM Polska Miedź S.A. the payment of a dividend for 2011 in the amount of PLN 3 400 000 thousand (i.e. 17 PLN/share). 

The level of dividend recommended by the Management Board allows for realisation of the planned investment program alongside a safe level of borrowing, without exposing the Company to excessive liquidity risk, reflecting: 

  • the volatile situation on the financial market, 
  • the high sensitivity of the Company’s results to macroeconomic conditions, and 
  • the long-term nature of the investment program, one which is typical for the mining sector. 

The proposed level of dividend, in the opinion of the Management Board, represents a compromise between the current interests of shareholders and the need to ensure realisation of the Company’s long-term program of development. 
Simultaneously, the Management Board of KGHM Polska Miedź S.A. announces that it will propose to the Ordinary General Meeting of KGHM Polska Miedź S.A. the following dates concerning the dividend from profit for financial year 2011: 

  • a right to dividend date of 16 July 2012, 
  • a dividend payment date of 20 August 2012. 

The proposed period between the right to dividend date and the payment date is longer than the 15 working days recommended by the Code of Best Practice for WSE-Listed Companies. 
Setting a longer period between these dates is justified by the need to execute taxpayer obligations by KGHM with respect to the flat-rate corporate income tax on dividends paid in a timely manner and in accordance with laws in force. 
Beginning from 1 January 2011, there has been a change to the Corporate Income Tax Act dated 15 February 1992, among others with respect to tax exemptions. Additionally, art. 6 sec. 1 of the updated law exempted from taxation joint investment bodies and pension funds acting on the basis of law on the Organisation and Operation of Pension Funds, having their head office in an EU member country other than the Republic of Poland or in another country belonging to the European Economic Area, under condition that they meet all of a variety of specified criteria, requiring documentation pursuant to laws in force. 
The aforementioned changes to the laws place on the Company and Brokerage Firms additional obligations to collect documents which must be obtained from shareholders and verified prior to the dividend payment date.
Under the current obligatory process of setting the net amount of dividend payment set forth in the „Detailed Rules of Operation of the National Depository for Securities”, the Issuer, i.e. KGHM Polska Miedź S.A., receives from Participants (Brokerage Firms) shareholder data, including data on the right to the dividend, tax residency certificates, and also since 2011, declarations arising from the updated law on CIT, as mentioned above. These documents should be collected by Brokerage Firms within four working days from the right to dividend date. 
The above proposals of the Management Board, prior to submission to the Ordinary General Meeting, require evaluation by the Supervisory Board of KGHM Polska Miedź S.A. 
The final decision on the setting of a right to dividend date and dividend payment date, and on the appropriation of profit of KGHM Polska Miedź S.A for financial year 2011 will be made by the Ordinary General Meeting of KGHM Polska Miedź S.A. 

Legal basis: § 38 sec. 1 point 11 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 (Journal of Laws from 2009 No. 33, item 259 with subsequent amendments)