Financial statements of JSW S.A. for 2012

35. Transactions with related entities

As at 31 December 2012, the State Treasury was the majority shareholder of the Company.

Information on transactions with related entities

In 2012, the State Treasury was a higher-level parent. Accordingly, all companies owned by the State Treasury (directly or indirectly) are the Company’s related entities. In these financial statements, the Management Board has disclosed transactions with significant affiliated entities identified as such according to the best knowledge of the Management Board.

In 2012, no individual transactions were identified between JSW S.A. and the State Treasury and entities related to the State Treasury which would be significant due to a non-standard scope or amount.

In the period from 1 January 2011 to 31 December 2011, two individual transactions were identified between JSW S.A. and the State Treasury which were significant due to a non-standard scope or amount. The transactions pertain to the acquisition of WZK Victoria S.A. for PLN 413.9 million and acquisition of shares in KK Zabrze S.A. in exchange for a share issue of PLN 267.4 million. A detailed description of the acquisitions is provided in Note 9.

The remaining transactions from 1 January 2012 to 31 December 2012 and from 1 January to 31 December 20111 concluded by the Company with subsidiaries of the State Treasury, which are significant in aggregate, are related to the Company's current operations. In 2012, the Company’s most important State Treasury-controlled suppliers were: CSRG S.A., CBiDGP Sp. z o.o., LOTOS S.A. Group. The key purchases included: mine rescue services, maintenance reviews and tests, expert services, purchase of materials necessary for operations and other. In 2012, the Company’s most important State Treasury-controlled buyers were: Węglokoks S.A., PGE Polska Grupa Energetyczna S.A., Energa Elektrownie Ostrołęka S.A., Tauron S.A. Group

Transactions with subsidiaries, associates and a co-subsidiary are presented below:

	2012	2011
Transactions with subsidiaries
Purchases in the period	2,268.6	387.2
Balance of liabilities at the end of the period *	254.7	97.6
Transactions with co-subsidiaries
Purchases in the period	0.6	0.7
Balance of liabilities at the end of the period *	-	0.1
Transactions with associates
Purchases in the period	38.1	15.3
Balance of liabilities at the end of the period *	13.5	6
Total purchases	2,307.3	403.2
Total balance of liabilities	268.2	103.7

* including VAT

download table

Sales values and receivable amounts are presented below:

	2012	2011
Transactions with subsidiaries
Sales in the period	2,697.9	3,538.9
Balance of receivables as at the end of the period *	370.9	436.3
Transactions with associates
Sales in the period	0.3	0.3
Balance of receivables as at the end of the period *	-	-
Total sales	2,698.2	3,539.2
Total balance of receivables	370.9	436.3

* including VAT

download table

In its receivables, the Company posts SEJ bonds it purchased, which are described in Note 11 and Note 15. In 2012, the Company earned interest income of PLN 9.4 million on those bonds (PLN 0.4 million in 2011).

In 2012, all transactions between the Company and its related entities were typical and were executed in the normal course of business on an arm’s length basis.

Information on transactions with Management Board and Supervisory Board members

The Management Board of JSW S.A. is the Company's key management personnel.

Remuneration of JSW S.A. Management Board Members

	2012 (PLN thous.)	2011 (PLN thous.)
Short-term employee benefits:
- remuneration, management services*	4,146.1	1,454.2
- annual bonus **	2,055.0	1,378.5
- benefits, income from other sources	-	350.4
- income earned in subsidiaries	-	206.3
Total	6,201.1	3,389.4

* This item includes the cost of remuneration paid out under management contracts
** For 2012, this item includes the annual bonus due for 2012 in the maximum contractual amount. The bonus is paid out upon request of the President of the Management Board, depending on the level of KPIs achieved, after a Supervisory Board aproval. For 2011, this item includes the annual bonus paid out in 2010 and the annual bonus due for 2011

download table

The management contracts stipulate that if the contract is terminated, the Management Board member is entitled to a severance pay equal to 6 times the fixed monthly remuneration. Moreover, under non compete agreements, Management Board members will receive compensation in the period of 12 months after their management contract is dissolved. Details of the agreements concluded with the managers are provided in section 1.6. of the Management Board report on the activity of Jastrzębska Spółka Węglowa S.A. for the financial year ended 31 December 2012.

Remuneration of the JSW S.A. Supervisory Board

	2012 (PLN thous.)	2011 (PLN thous.)
Short-term benefits	478.3	434.4
Total	478.3	434.4

download table

Additional information on remuneration of Management Board and Supervisory Board members for the financial year ended 31 December 2012 are provided in section 1.5 of the Management Board Report on the activity of Jastrzębska Spółka Węglowa S.A.

In 2012, no loans were granted to any members of the JSW S.A. Management or Supervisory Boards.