Translation from the original Polish version

Transcription

1 POLISH FINANCIAL SUPERVISION AUTHORITY Consolidated quarterly report QSr 4/ (In accordance with 86, section 2 and 87, section 1 of the Decree of the Minister of Finance dated 19 October 2005 Journal of Laws No. 209, point 1744) for issuers of securities involved in production, construction, trade or services activities For the fourth quarter of the financial year comprising the period from 1 October to Containing the condensed consolidated financial statements according to International Financial Reporting Standards in PLN, and condensed financial statements according to International Financial Reporting Standards in PLN. KGHM Polska Miedź Spółka Akcyjna (name of the issuer) publication date: 27 February 2009 KGHM Polska Miedź S.A. Metals industry (name of issuer in brief) (issuer branch title per the Warsaw Stock Exchange) LUBIN (postal code) (city) M. Skłodowskiej Curie 48 (street) (number) (48 76) (48 76) (telephone) (fax) IR@BZ.KGHM.pl ( ) (website address) (NIP) (REGON) Translation from the original Polish version

2 SELECTED FINANCIAL ITEMS data concerning the condensed consolidated financial statements of KGHM Polska Miedź S.A. in '000 PLN 4 quarters accrued for the 12 4 quarters accrued for the 12 in '000 EUR 4 quarters accrued for the 12 4 quarters accrued for the 12 I. Sales II. Operating profit III. Profit before income tax IV. Profit for the period V. Profit for the period attributable to shareholders of the Parent Entity of the Group VI. Profit for the period attributable to minority interest (313) 957 (89) 253 VII. Number of shares issued VIII. Earnings per ordinary share (in PLN/EUR) IX. Net cash generated from operating activities X. Net cash used in investing activities ( ) ( ) ( ) ( ) XI. Net cash used in financing activities ( ) ( ) ( ) ( ) XII. Total net cash flow ( ) ( ) At At At At XIII. Non-current assets XIV. Current assets XV. Non-current assets held for sale XVI. Total assets XVII. Non-current liabilities XVIII. Current liabilities XIX. Equity XX. Minority interest data concerning the condensed financial statements of KGHM Polska Miedź S.A. in '000 PLN 4 quarters accrued for the 12 4 quarters accrued for the 12 in '000 EUR 4 quarters accrued for the 12 4 quarters accrued for the 12 I. Sales II. Operating profit III. Profit before income tax IV. Profit for the period V. Number of shares issued VI. Earnings per ordinary share (in PLN/EUR) VII. Net cash generated from operating activities VIII. Net cash used in investing activities ( ) ( ) ( ) ( ) IX. Net cash used in financing activities ( ) ( ) ( ) ( ) X. Total net cash flow ( ) ( ) At At At At XI. Non-current assets XII. Current assets XIII. Non-current assets held for sale XIV. Total assets XV. Non-current liabilities XVI. Current liabilities XVII. Equity Translation from the original Polish version

3 for the period from 1 October to Table of contents to the consolidated quarterly report A Consolidated financial statements Consolidated balance sheet 2 Consolidated income statement 3 Consolidated statement of changes in equity 4 Consolidated cash flow statement 5 Selected explanatory data to the consolidated financial statements: 6 I Policies applied in preparing the financial statements 6 1 Introduction 6 2 Exchange rates applied 8 3 Accounting policies 8 II Information on significant changes in estimates 8 1 Provisions for future liabilities 8 2 Deferred income tax 9 III Financial assets and property, plant and equipment 9 IV Selected additional explanatory notes: 11 1 Sales 11 2 Costs by type 11 3 Other operating income 12 4 Other operating costs 13 5 Net finance costs 13 6 Borrowings and liabilities due to finance leases 14 7 Adjustments to profit for the period in the consolidated cash flow statement 14 V Situation and results of significant companies 14 VI Information on seasonal or cyclical activities 16 VII Information on the issuance, redemption and repayment of debt and equity securities 16 VIII Information related to a paid (or declared) dividend 16 IX Subsequent events 16 X Contingent and other off-balance sheet items 17 XI Business segments 18 XII Effects of changes in the structure of the economic entity, including due to the combination of economic entities, to the takeover or sale of entities of the KGHM Polska Miedź S.A. Group, to longterm investments, or to the separation, restructurisation or discontinuation of activities 20 B Other information to the consolidated quarterly report 21 Page C Quarterly financial information of KGHM Polska Miedź S.A. Balance sheet 23 Income statement 24 Statement of changes in equity 25 Cash flow statement 26 Selected explanatory data: 27 I Selected additional notes 27 1 Changes in provisions for other liabilities and charges 27 2 Sales 28 3 Costs by type 28 4 Other operating income 29 5 Other operating costs 30 6 Net finance costs 31 7 Adjustments to profit for the period in the cash flow statement 31 II Items affecting assets, liabilities, equity, profit for the period or cash flow, which are unusual as respects their type, amount or degree of influence 32 1 List of significant achievements or failures during the reported period, together with a list of the most important related events 32 2 Measurement of financial assets and property, plant and equipment 33 3 Type and amounts of changes in estimates 33 4 Factors and events, in particular those of an unusual nature, having a significant impact on the financial results achieved by the Company 34 III Contingent and other off-balance sheet items 38 Translation from the original Polish version 1/38

4 for the period from 1 October to Consolidated financial statements Consolidated balance sheet Assets Non-current assets Note At Property, plant and equipment Intangible assets Investment property Investments in associates Deferred tax assets Available-for-sale financial assets Held-to-maturity investments Derivative financial instruments Trade and other receivables Current assets Inventories Trade and other receivables Current corporate tax receivables Derivative financial instruments Cash and cash equivalents Non-current assets held for sale TOTAL ASSETS Equity and liabilities EQUITY Equity attributable to shareholders of the Parent Entity Share capital Other reserves Retained earnings Minority interest TOTAL EQUITY LIABILITIES Non-current liabilities Trade and other payables Borrowings and finance lease liabilities A.IV Derivative financial instruments Deferred tax liabilities Liabilities due to employee benefits Provisions for other liabilities and charges Current liabilities Trade and other payables Borrowings and finance lease liabilities A.IV Current corporate tax liabilities Derivative financial instruments Liabilities due to employee benefits Provisions for other liabilities and charges TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES Translation from the original Polish version 2/38

5 for the period from 1 October to Consolidated income statement Note for the 3 Financial period for the 3 CONTINUED ACTIVITIES: Sales A.IV Cost of sales A.IV.2 ( ) ( ) ( ) ( ) Gross profit Selling costs A.IV.2 (44 389) ( ) (63 300) ( ) Administrative expenses A.IV.2 ( ) ( ) ( ) ( ) Other operating income A.IV Other operating costs A.IV.4 ( ) ( ) ( ) ( ) Operating profit Finance costs - net A.IV.5 (18 060) (57 494) (10 692) (35 159) Share of profits of associates accounted for using the equity method Profit before income tax Income tax expense (86 801) ( ) ( ) ( ) Profit for the period attributable to: shareholders of the Parent Entity minority interest (1 249) (313) (554) 957 Earnings per share attributable to the shareholders of the Parent Entity during the period (in PLN per share) - basic diluted Translation from the original Polish version 3/38

6 for the period from 1 October to Consolidated statement of changes in equity Attributable to shareholders of the Parent Entity Share capital Other reserves Retained earnings Attributable to minority interest Total equity At 1 January as previously stated ( ) Prior period error At 1 January ( ) Impact of cash flow hedging valuation Fair value losses on available-for-sale financial assets - (6 727) - - (6 727) Deferred tax - ( ) - - ( ) Total income/(expenses) recognised directly in equity Profit for the period Total recognised income/(expenses) Dividends for ( ) - ( ) Transactions with minority interest At At 1 January Impact of cash flow hedging valuation Fair value gains on available-for-sale financial assets Deferred tax - ( ) - - ( ) Total income/(expenses) recognised directly in equity Profit/(loss) for the period (313) Total recognised income/(expenses) (313) Dividends for - - ( ) (74) ( ) Transactions with minority interest At Translation from the original Polish version 4/38

7 for the period from 1 October to Consolidated cash flow statement Cash flow from operating activities Note Financial period Profit for the period Adjustments to profit for the period A.IV Income tax paid ( ) ( ) Net cash generated from operating activities Cash flow from investing activities Purchase of subsidiaries, less acquired cash and cash equivalents (28 969) (724) Purchase of shares in associates ( ) - Proceeds from sale of shares in associates Purchase of property, plant and equipment and intangible assets ( ) ( ) Proceeds from sale of property, plant and equipment and intangible assets Proceeds from sale of investment property Purchase of held-to-maturity investments (77 796) ( ) Proceeds from sale of held-to-maturity investments Purchase of available-for-sale financial assets ( ) ( ) Proceeds from sale of available-for-sale financial assets Purchase of held-to-maturity investments financed from the resources of Mine Closure Fund Proceeds from sale of held-to-maturity investments financed from the resources of Mine Closure Fund (25 481) (43 876) Expenses connected with loans granted (100) - Repayments of loans granted Interest received Dividends received Expenses connected with advances granted for purchase of property, plant and equipment and intangible assets (14 629) (9 732) Other investment expenses (7 409) (6 272) Net cash used in investing activities ( ) ( ) Cash flow from financing activities Proceeds connected to transactions with minority interest Proceeds from loans and borrowings Repayments of loans and borrowings (85 190) (17 166) Payments of liabilities due to finance leases (4 484) (5 501) Interest paid (15 317) (9 059) Dividends paid to the shareholders of the Parent Entity ( ) ( ) Dividends paid to the minority interest (74) - Net cash used in financing activities ( ) ( ) Total net cash flow ( ) Exchange gains/(losses) on cash and cash equivalents (42 609) Movements in cash and cash equivalents ( ) Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period including restricted cash and cash equivalents Translation from the original Polish version 5/38

8 for the period from 1 October to Selected explanatory data to the consolidated financial statements I. Policies applied in preparing the financial statements 1. Introduction The Parent Entity of the KGHM Polska Miedź S.A. Group is KGHM Polska Miedź S.A. with its registered head office in Lubin, whose shares are traded on a regulated market. The core business of the Company is the production of copper and silver. The principal activities of the Group comprise: mining of non-ferrous metals ore, excavation of gravel and sand, production of copper, precious and non-ferrous metals, production of salt, casting of light and non-ferrous metals, forging, pressing, stamping and roll forming of metal - powder metallurgy, waste management, wholesale based on direct or contractual payments, warehousing and storage of goods, holding management activities, geological and exploratory activities, general construction activities with respect to mining and production facilities, generation and distribution of electricity, steam and hot water, production of gas and distribution of gaseous fuels through a supply network, professional rescue services, scheduled and non-scheduled air transport, and telecommunication and IT activities. Activities involving the exploitation of copper ore, salt deposits and common minerals are carried out based on licenses held by KGHM Polska Miedź S.A., which were issued by the Minister of Environmental Protection, Natural Resources and Forestry in the years The business activities of the Group also include: production of goods from copper and precious metals, underground construction services, production of machinery and mining equipment, transport services, activities in the areas of research, analysis and design, production of road-building materials, and recovery of metals associated with copper ores. Translation from the original Polish version 6/38

9 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) Organisational structure of the KGHM Polska Miedź S.A. Group at Parent entity KGHM Polska Miedź S.A. "Energetyka" sp. z o.o KGHM Ecoren S.A. Subsidiaries and indirect subsidiaries subject to consolidation PeBeKa S.A. POL-MIEDŹ TRANS Sp. z o.o. KGHM Metraco S.A. Zagłębie Lubin Spółka Akcyjna KGHM Polish Copper Ltd. KGHM Kupferhandelsges. m.b.h KGHM CONGO S.P.R.L. "MIEDZIOWE CENTRUM ZDROWIA" S.A. KGHM CUPRUM sp. z o.o. - CBR CBJ sp. z o.o. DFM ZANAM - LEGMET Sp. z o.o. INTERFERIE S.A. Walcownia Metali Nieżelaznych spółka z o.o. WM "ŁABĘDY" S.A. INOVA Spółka z o.o. WFP Hefra SA DKE Spółka z o.o. PMT Linie Kolejowe sp. z o.o. KGHM LETIA S.A. DIALOG S.A. PHP "MERCUS" sp. z o.o. AVISTA MEDIA Sp. z o.o. Petrotel Sp. z o.o. PHU "Lubinpex" Sp. z o.o. Subsidiaries and indirect subsidiaries not subject to consolidation "Mercus Software" sp. z o.o. PCPM sp. z o.o. TUW-CUPRUM Associates Polkomtel S.A. Indirect associates not accounted for using the equity method PHU "Mercus Bis" Sp. z o.o. Translation from the original Polish version 7/38

10 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) In the current quarter KGHM Polska Miedź S.A. consolidated 26 subsidiary entities, while one associated entity was accounted for using the equity method. Beginning from 1 January 2005 (based on IAS 8 par. 8, which allows exemption from the application of principles described in IFRS if the results of such an exemption are immaterial), the following subsidiaries were not consolidated - Polskie Centrum Promocji Miedzi sp. z o.o., Mercus Software Sp. z o.o (former PU Mercus Serwis Sp. z o.o.), and TUW Cuprum. Altogether, in the presented consolidated financial statements 3 subsidiaries were not consolidated, and the shares in one associated entity were measured at cost less an impairment loss. Exclusion of these entities from consolidation does not effect the honest presentation of the assets, financial result and cash flow of the Group. The following quarterly report includes: 1. the consolidated financial statements of KGHM Polska Miedź S.A. for the current period from 1 October to 31 December and the comparable period from 1 October to, together with selected explanatory data to the consolidated financial statements, and 2. other information to the consolidated quarterly report. The quarterly financial information of KGHM Polska Miedź S.A. for the current period from 1 October to and the comparable period from 1 October to is an integral part of the report. The financial statements for the fourth quarter of and the financial statements for the fourth quarter of have been restated, and are being audited by the auditor. 2. Exchange rates applied The following currency rates were applied in the calculation of selected financial data in EUR: - for the calculation of turnover, financial results and cash flow for the current period, the rate of PLN/EUR, - for the calculation of assets, equity and liabilities at, the rate of PLN/EUR, - for the calculation of turnover, financial results and cash flow for the comparative period, the rate of PLN/EUR, - for the calculation of assets, equity and liabilities at, the rate of PLN/EUR 3. Accounting policies The following consolidated financial statements and separate financial statements have been prepared in accordance with International Financial Reporting Standards approved by the European Union. The above-mentioned policies were published on 22 April in the consolidated annual report RS. Presentation of these statements is based on IAS 34, Interim Financial Reporting, applying these same principles for the current and comparable periods, adjusting the comparable period to the changes of presentation adopted in the statement in the current period: a) in the income statement the result on measurement and realisation of derivative instruments was presented separately (negative and positive effects) because of its significance. The results of this change in the amount of PLN thousand increased other operating costs and increased other operating income (in the separate financial statements other operating costs were increased and other operating income were increased in the amount of PLN thousand). b) presentation of the Mine Closure Fund and of the financial assets financed from the resources of this Fund has been changed - they are presented separately, adjusting their presentation to the manner of presentation of the provision for the decommissioning of mines and other facilities. The result of the change in presentation is an increase in the total assets at in the amount of PLN thousand (an increase in the total assets at in the separate financial statements in the amount of PLN thousand). II. Information on significant changes in estimates 1. Provisions for future liabilities The effects of revaluation or recognition of estimates of future liabilities (provisions) were settled in the financial result of the current quarter, and in particular: 1.1 provisions for future employee benefits due to one-off retirement or disability payments, jubilee awards and postemployment coal equivalent payments. The result of this change in estimates, mainly due to the increase in coal prices and revaluation of mortality tables, is an increase in the provision and a decrease in the financial result in the amount of PLN thousand (after reflecting the results in deferred tax a decrease in profit in the amount of PLN thousand), (an accrued decrease in profit, after reflecting the results in deferred tax, by PLN thousand since the beginning of the financial year) 1.2 provision for future costs of decommissioning (restoration) of the Parent Entity s mines. This provision includes the estimated costs of dismantling and removing technological facilities, for which the obligation for restoration upon the conclusion of activities is a result of separate law or standard practice. The result of this change in estimates is an increase in the provision in the amount of PLN thousand which decreased the financial result in the amount of PLN thousand and increased property, plant and equipment in the amount of PLN thousand. The increase in the provision resulted in an increase in deferred tax assets in the amount of PLN thousand, (an accrued increase in the provision by PLN thousand since the beginning of the financial year, of which PLN thousand was settled as an increase in property, plant and equipment and PLN thousand was settled as a decrease in the financial result) 1.3 provisions for liabilities towards BOBMARK INTERNATIONAL with its registered head office in Warsaw. Based on the decision of Regional Court in Legnica, which dismissed the claim in its entirety and judged it as unfounded, the provision in the amount of PLN thousand was released, Translation from the original Polish version 8/38

11 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) 1.4 provisions for future employee remuneration costs together with charges in the amount of PLN thousand, paid (in accordance with the Collective Labour Agreements) on the occasion of mining and smelting holidays and after approval of the annual financial statements. (after reflecting payouts of remuneration in the fourth quarter and in previous quarters, the provision at amounts to PLN thousand and relates to the annual bonus paid after approval of the financial statements and the provision for the payout of remuneration based on the Metallurgist s Charter) The recognition of other provisions for liabilities did not significantly impact the current period financial result. 2. Deferred income tax The result of differences between the carrying amount and the tax base of balance sheet items is a change in the estimated value of the deferred tax asset and the deferred tax liabilities. There was an increase in the deferred tax asset in the current quarter in the amount of PLN thousand, which was settled: - as an increase of the financial result, PLN thousand, - as an increase of the revaluation reserve on cash flow hedging financial instruments and on available-for-sale financial assets, PLN 176 thousand. Other increases in the deferred tax asset in the amount of PLN thousand represent the deferred tax asset in a subsidiary at the date the Group obtained control of the subsidiary. (an accrued increase in the deferred tax asset by PLN thousand since the beginning of the financial year, of which the following was settled: - as an increase of the financial result, PLN thousand - as an increase of the revaluation reserve on cash flow hedging financial instruments, PLN 57 thousand. Other increases in the deferred tax asset in the amount of PLN thousand represent the deferred income tax asset in a subsidiary at the date the Group obtained control of the subsidiary.) There was an increase in the deferred tax liability in the amount of PLN thousand, of which the following was settled: - as a decrease of the financial result, PLN thousand - as a decrease of the revaluation reserve on cash flow hedging financial instruments and on available-for-sale financial assets, PLN thousand. Other increases in the deferred tax liability in the amount of PLN 247 thousand represent the deferred tax liability in a subsidiary at the date the Group obtained control of the subsidiary. (an accrued increase in the deferred tax liability by PLN thousand since the beginning of the financial year, of which the following was settled: - as a decrease of financial result, PLN thousand - as a decrease of the revaluation reserve on cash flow hedging financial instruments and on available-for-sale financial assets, PLN thousand. Other increases in the deferred tax liability in the amount of PLN 247 thousand represent the deferred tax liability in a subsidiary at the date the Group obtained control of the subsidiary.) After offsetting the deferred tax asset and deferred tax liability, the deferred tax asset at the end of the reporting period was set at PLN thousand, while the deferred tax liability was set at PLN thousand. III. Financial assets and property, plant and equipment In the current quarter changes in financial assets were with respect to: - in investments in associates - increase in assets value due to acquisition of shares of Polkomtel S.A., in the amount of PLN thousand (of which PLN thousand in goodwill, determined based on provisional settlement of the acquisition), - an increase in the value of investments as a result of applying the equity method, in the amount of PLN thousand (accrued since the beginning of the financial year: - increase in assets value due to acquisition of shares of Polkomtel S.A., in the amount of PLN thousand (of which PLN thousand in goodwill, determined based on provisional settlement of the acquisition), - decrease in the value of shares of Polkomtel S.A. by the dividend received in the amount of PLN thousand, and an increase due to the share in profits for the financial period in the amount of PLN thousand - decrease due to settlement of the retirement of shares of Minova-Ksante Sp. z o.o. in the amount of PLN thousand, and an increase due to the share in profits until the disposal date in the amount of PLN 658 thousand) - in available-for-sale financial assets, non-current: - the settlement of gains on measurement of assets in other reserves in the amount of PLN thousand, - a sale of assets in the amount of PLN 200 thousand, - a reclassification of shares to available-for-sale financial assets in the amount of PLN thousand, (accrued since the beginning of the financial year: - the settlement of gains on measurement of assets in other reserves in the amount of PLN thousand, - the reversal of an impairment loss in other operating income in the amount of PLN 78 thousand, - an impairment loss in the amount of PLN 45 thousand, - the purchase of assets in the amount of PLN 222 thousand, - a sale of assets in the amount of PLN thousand Translation from the original Polish version 9/38

12 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) - a loss on sales settled in other operating costs in the amount of PLN 109 thousand - a reclassification of shares to available-for-sale financial assets in the amount of PLN thousand) current: - the disposal of assets in the amount of PLN thousand - the realisation of assets and reversal of measurement, settled in equity, in other operating income in the amount of PLN 571 thousand (accrued since the beginning of the financial year: - the acquisition of participation units in the amount of PLN thousand - the disposal of assets in the amount of PLN thousand - the measurement of assets in the amount of PLN thousand settled as an increase of other reserves, - the realisation of assets and reversal of measurement, settled in equity, in other operating income in the amount of PLN thousand, - the reclassification of shares of Vivid.pl S.A. from the category of subsidiaries to available-for-sale financial assets due to a loss of control in the amount of PLN thousand, - an impairment loss on the shares of Vivid.pl S.A. settled in other operating costs in the amount of PLN thousand) - in held-to-maturity investments non-current financial assets financed from the resources of the Mine Closure Fund were acquired in the amount of PLN thousand. (an accrued acquisition in the amount of PLN thousand since the beginning of the financial year) - in derivative financial instruments due to a change in macroeconomic conditions there was an increase in the fair value of derivative instruments; due to this change the financial result was increased by PLN thousand. For the detailed information on derivatives see pages 34-37, Risk management. (an accrued increase in the financial result due to measurement and realisation by PLN thousand (of which: an increase in revenues from sales in the amount of PLN thousand and a decrease in the result on other operating activities in the amount PLN thousand) and an increase in other reserves by PLN thousand since the beginning of the financial year) - in financial receivables an impairment allowance in the amount of PLN thousand (an excess of the impairment allowance recognised, PLN thousand over reversed, PLN thousand), of which the most important item is the impairment allowance on trade receivables. (an accrued impairment allowance in the amount of PLN thousand since the beginning of the financial year (an excess of impairment recognised of PLN thousand over reversed of PLN thousand) - in loans granted an impairment loss was reversed in the amount of PLN 7 thousand (an accrued impairment loss in the amount of PLN thousand since the beginning of the financial year (an excess of impairment recognised of PLN thousand over reversed of PLN 7 thousand) In addition in the current quarter the following impairment losses on other assets were recognised or reversed: property, plant and equipment and intangible assets - impairment loss recognised PLN thousand - impairment loss reversed PLN 75 thousand (accrued since the beginning of the financial year - impairment loss recognised PLN thousand - impairment loss reversed PLN thousand) non-financial receivables - impairment allowance reversed PLN 313 thousand (accrued since the beginning of the financial year - impairment allowance recognised PLN thousand - impairment allowance reversed PLN thousand) inventories - write-down recognised PLN thousand - write-down reversed PLN 123 thousand (accrued since the beginning of the financial year - write-down recognised PLN thousand - write down reversed PLN thousand) Translation from the original Polish version 10/38

13 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) IV. Selected additional explanatory notes 1. Sales for the 3 months ended Financial period for the 3 months ended Copper, precious metals, smelter by-products Energy Services Mining machinery, transport vehicles for mining and other Goods for resale Wastes and materials Other goods Total Costs by type Depreciation of property, plant and equipment and amortisation of intangible assets for the 3 months ended Financial period for the 3 months ended Employee benefit costs Materials and energy consumption External services Taxes and charges Advertising costs and representation expenses Property and personal insurance Research and development costs not capitalised in intangible assets Other costs, of which: Impairment of property, plant and equipment, intangible assets Write-down of inventories Allowance for impairment of trade receivables Reversal of impairment of property, plant and equipment, intangible assets (75) (14 501) (3) (3) Reversal of write-down of inventories (123) (1 518) (469) (1 714) Reversal of allowance for impairment of trade receivables Losses from the disposal of financial instruments (2 636) (12 703) (18 363) Other operating costs Total costs by type Cost of goods for resale and materials sold (+), of which: Allowance for impairment of receivables Reversal of allowance for impairment of receivables Change in inventories of finished goods and work in progress (+/-) Cost of manufacturing products for internal use (-) Total cost of sales, selling and administrative costs (111) (505) (45) (789) ( ) (1 448) ( ) ( ) (93 626) ( ) Translation from the original Polish version 11/38

14 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) 3. Other operating income Income and gains on financial instruments, classified under other operating activities, resulting from: Measurement and realisation of derivative instruments Gains from the disposal of financial instruments for the 3 Financial period for the (19 197) (60 015) Interest on financial instruments Reversal of impairment losses on availablefor-sale financial assets Foreign exchange gains Reversal of allowance for impairment of loans and receivables Gains from the disposal of investment property Increase in fair value of investment property Gains from the disposal of a subsidiary and an associate Gains from the disposal of perpetual usufruct of land (23) 391 Gains from the disposal of intangible assets (44) Other interest Dividends received Reversal of impairment losses on assets under construction Reversal of allowance for impairment of other non-financial receivables Government grants and other donations received Release of unused provisions Penalties and compensation received Surpluses identified in tangible current assets and cash and cash equivalents Excess payments of property tax Foreign exchange gains - non-financial Other operating income/gains (2 645) Total other operating income Translation from the original Polish version 12/38

15 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) 4. Other operating costs for the 3 months ended Financial period for the 3 months ended Costs and losses on financial instruments, classified as other operating costs, resulting from: Measurement and realisation of derivative instruments (80 521) Losses from the disposal of financial instruments Interest on financial liabilities Impairment losses on available-for-sale financial assets (4 279) Allowances for impairment of loans and receivables Foreign exchange losses Decrease in the fair value of investment property ( ) (3 700) Losses from the sale of shares in subsidiaries Allowances for impairment of other nonfinancial receivables Losses from the disposal of intangible assets Losses on the sale of property, plant and equipment Impairment losses on assets under construction Impairment losses on intangible assets not yet available for use Interest on overdue non-financial liabilities Donations granted Provisions for liabilities Penalties and compensation paid Non-culpable shortages in tangible current assets and cash and losses from fortuitous events Other operating costs/losses Total other operating costs Net finance costs for the 3 months ended Financial period for the 3 months ended Interest expense: On bank and other loans Due to finance leases Net exchange (gains)/losses on borrowings (1 327) Changes in the value of provisions due to unwinding of discount Other net finance costs (216) (298) Total net finance costs Translation from the original Polish version 13/38

16 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) 6. Borrowings and liabilities due to finance leases At Non-current Bank loans Loans Finance lease liabilities Current Bank loans Loans Finance lease liabilities Total Adjustments to profit for the period in the consolidated cash flow statement Financial period months ended months ended Income tax from the income statement Depreciation/amortisation Impairment losses on property, plant and equipment, intangible assets, available-for-sale financial assets and loans Share of profits of associates accounted for using the equity method ( ) ( ) Interest and share in profits (dividends) Foreign exchange (gains)/losses (16 585) Change in provisions Change in derivative instruments (69 699) Other adjustments (16 394) Changes in working capital: ( ) Inventories Trade and other receivables ( ) Trade and other payables (14 004) (27 233) Total adjustments to profit for the period V. Situation and results of significant companies DIALOG S.A. Financial data of DIALOG S.A. included in the consolidated financial statements of KGHM Polska Miedź S.A. from 1 October to from 1 October to from 1 January to 31 December from 1 January to 31 December Change* Sales Operating profit/loss (9 109) ( ) ( ) x EBITDA ** ** 64.1 Profit/loss for the period ( ) ( ) x * = 100 ** - EBITDA (EBIT adjusted by amortisation/depreciation and impairment) Translation from the original Polish version 14/38

17 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) In the company recorded a loss on operating activities, mainly due to impairment of assets, including an impairment loss on property, plant and equipment (IAS 36) of PLN thousand. In DIALOG S.A continued its strategy aimed at successively increasing the customer base, in both voice and internet services, leading to consistent growth in the company s revenues. Thanks to its investments and its active search for new customers, DIALOG S.A. broke the general market trend away from fixed-line telephony, and despite strong competition from mobile operators there was an increase in the number of customers using voice services based on its own network. At the end of the company had thousand ringing lines within its network. Simultaneously the company increased the number of customers using services based on the Telekomunikacja Polska S.A. network by 83% during the analysed period, as compared to. At the end of the company had thousand active WLR customers. DIALOG S.A. is dynamically expanding its base of internet customers, in particular with respect to broadband internet access. At the end of the company had thousand internet customers, including 8.6 thousand BSA service users, meaning an increase as compared to respectively by 120% and 412%. In February DIALOG S.A. commenced sales of DIALOGmedia services, comprising digital television, video on demand, broadband internet and fixed-line telephony. At the end of the number of DIALOGmedia customers amounted to During the year the company also worked on introducing a new product MVNO thanks to which it will be offering mobile services as a so-called virtual operator. From August to January 2009 it has been testing the technical platform and services of MVNO. The company assumes implementation of this project and the commercial commencement of these services in On 6 November DIALOG S.A. acquired shares of PETROTEL Sp. z o.o. with a nominal value of PLN per share, representing 75 % of the share capital of this company, based on a contingent agreement for the acquistion of shares dated 22 September entered into between PKN ORLEN S.A. and DIALOG S.A. Based on this contingent agreement, DIALOG S.A. presented an offer to the minority shareholders to acquire the remaining shares, representing 25 % of the share capital of PETROTEL Sp. z o.o. At the turn of /2009 DIALOG S.A. purchased shares from these minority shareholders with a nominal value of PLN per share, as a result of which the ownership percentage of DIALOG S.A. in the share capital of PETROTEL Sp. z o.o. increased to 99.56%. Simultaneously DIALOG S.A. became the owner of a modern telecommunications infrastructure valued at approx. PLN 40 million, which is currently being used by over 20 thousand fixed-line telephony customers and 10 thousand internet users in the region of Płock and its vicinity. On 24 September the Management Board of Vivid.pl S.A., 100% owned by DIALOG S.A., filed a bankruptcy petition for the company. The bankruptcy was announced by the court on 29 September. Vivid.pl S.A. generated losses and required regular capital injections, while its liabilities exceeded the value of the company s assets, both in respect of the owner and the company s customers. On 4 April court registration took place of a decrease in the share capital of DIALOG S.A. from PLN thousand to PLN thousand, i.e. by PLN thousand, through a decrease in the existing face value of all existing company shares from PLN to PLN per share. The purpose of this decrease in share capital was to cover the losses incurred by the company in prior years in the amount of PLN thousand. The funds in the amount of PLN thousand, remaining after the coverage of losses, were allocated to the reserve capital of the company. Polkomtel S.A. The carrying amount of the shares of Polkomtel S.A. in the consolidated financial statements at accounted for using the equity method amounted to PLN thousand. Financial results of Polkomtel S.A. from 1 October to from 1 October to from 1 January to 31 December from 1 January to 31 December Change* Sales Operating profit EBITDA Profit for the period * = 100 In the company, in comparison to, increased its revenues, which is related to an increase in the customer base by thousand persons. At the end of the customer base exceeded thousand. On 28 March the Ordinary General Shareholders' Meeting of Polkomtel S.A. resolved to distribute profit for, pursuant to which the amount of PLN thousand was allocated as a shareholder dividend. Of this amount, based on a resolution of the Supervisory Board of the company, in December an interim dividend payment of PLN thousand was made to shareholders. The remainder, PLN thousand, was paid in two instalments: PLN thousand in May, and PLN thousand in November. KGHM Polska Miedź S.A. received a total dividend for of PLN thousand, proportionally to its shareholding in the company. In proceedings were concluded in the dispute respecting the Agreement on the Acceptance of the Offer and Conditional Transfer of Shares in Polkomtel S.A. entered into on 10 March 2006 between KGHM Polska Miedź S.A., PKN ORLEN S.A., PSE S.A. and Węglokoks S.A. as the purchasers, and TDC Mobile International A/S as the seller, which had been contested by Vodafone Americas Inc. Details of this agreement were described in the current report dated 10 March 2006 and in the consolidated annual report for. Translation from the original Polish version 15/38

18 for the period from 1 October to Selected explanatory data to the consolidated financial statements (continuation) On 25 March the International Court of Arbitration in Vienna issued a so-called partial verdict, followed on 6 November by a final verdict in the matter of the claim filed on 10 March 2006 by Vodafone Americas Inc. at the International Court of Arbitration of the Federal Chamber of Commerce in Vienna (Vodafone Americas Inc. had filed claims against six entities, naming TDC Mobile International A/S as the Principle Respondent, Polkomtel S.A. as the First Auxiliary Respondent and KGHM Polska Miedź S.A., PKN ORLEN S.A., PSE S.A. and Węglokoks S.A. as further Auxiliary Respondents). In the statement of its claims, Vodafone Americas Inc. had challenged, among others, the method of setting the price by TDC International A/S in the offer addressed to the other shareholders. In these verdicts the Court of Arbitration dismissed all claims of Vodafone Americas Inc. which could have blocked acquisition by the Polish shareholders of Polkomtel S.A. of the respective portion of the shares of this company held by TDC A/S. This favourable decision for KGHM Polska Miedź S.A. confirmed the validity of the agreement signed 10 March 2006 between KGHM Polska Miedź S.A., PKN ORLEN S.A., PSE S.A., Węglokoks S.A. and TDC Mobile International A/S on the acceptance of the offer and conditional transfer of shares in Polkomtel S.A As a result of these verdicts by the Court of Arbitration, on 21 November the District Court in Warsaw issued a decision on cancellation of the prior decision of the Court dated 24 February 2006 prohibiting, among others, sale of the shares of Polkomtel S.A held by TDC A/S. Once this decision became legally binding, the condition precedent of the Agreement on the Acceptance of the Offer and Conditional Transfer of Shares in Polkomtel S.A. dated 10 March 2006 was met. In an agreement signed on 19 November, all of the shareholders of Polkomtel S.A. - KGHM Polska Miedź S.A., PKN ORLEN S.A., PGE Polska Grupa Energetyczna S.A., Węglokoks S.A., TDC A/S and Vodafone Americas Inc. - consented to the purchase by Vodafone Americas Inc. of shares in Polkomtel S.A. from TDC A/S, to which it was entitled, via another member of the Vodafone Group. Pursuant to this Agreement, Vodafone Americas Inc. committed to submit a request to the District Court in Warsaw respecting lifting of the injunction on the shares of Polkomtel S.A. held by TDC A/S, which was imposed by a decision of the Court dated 24 February 2006 prohibiting TDC A/S from selling such shares to KGHM Polska Miedź S.A., PKN ORLEN S.A., PGE Polska Grupa Energetyczna S.A. and Węglokoks S.A. Once the decision of the District Court in Warsaw became legally binding, the Agreement respecting the sale of the shares of Polkomtel S.A. was able to be realised. Finally, on 18 December KGHM Polska Miedź S.A. purchased ordinary registered shares in Polkomtel S.A., with a nominal value of PLN 100 each, representing approx. 4.78% of the share capital of Polkomtel S.A. As a result of this transaction, the percentage ownership of KGHM Polska Miedź S.A. in the share capital of this company changed from 19.61% to %. VI. Information on seasonal or cyclical activities The Group is not affected by seasonal or cyclical activities. VII. Information on the issuance, redemption and repayment of debt and equity securities There was no issuance, redemption or repayment of debt and equity securities in the Group during the reported period. VIII. Information related to a paid (or declared) dividend In accordance with Resolution No. 5/ of the Ordinary General Shareholders Meeting of KGHM Polska Miedź S.A. dated 26 June regarding the appropriation of Company profit for financial year and setting of the right to dividend date and dividend payment date, the amount of PLN thousand, representing PLN 9.00 per share, was allocated as a shareholders dividend from profit for financial year. The right to dividend date was set at 18 July, and dividend payment date at 7 August. All Company shares are ordinary shares. IX. Subsequent events Acquisition of shares of Biowind Sp. z o.o. by Energetyka sp. z o.o. On 5 January 2009 an agreement for the acquisition of the shares of the company Biowind Sp. z o.o. with its registered head office in Gdańsk was entered into between Energetyka sp. z o.o. (a subsidiary of KGHM Polska Miedź S.A.) and two physical persons. Based on this agreement, Energetyka sp. z o.o. acquired 1000 shares with a nominal value of PLN 50 each, having a total nominal value of PLN 50 thousand, representing 100% of the shares of Biowind Sp. z o.o. and granting 100% of the votes at the General Shareholders Meeting of Biowind Sp. z o.o. The purchase price for the shares amounts to PLN 450 thousand. The shares were paid for in cash. The share capital of Biowind Sp. z o.o. amounts to PLN 50 thousand and is divided into 1000 shares with a nominal value of PLN 50 per share. The carrying amount of the assets in the accounts of Energetyka sp. z o.o. is PLN 450 thousand. The acquisition of these assets was financed using the internal funds of Energetyka sp. z o.o. The assets acquired are of a long-term, equity investment nature. The purchase of shares of Biowind Sp. z o.o., holding a lease on property (around 300 hectares) in the Warmińsko- Mazurskie Voivodeship, enables the commencement of formal procedures aimed at realising an investment related to the construction of a wind farm. Translation from the original Polish version 16/38