Integrated Report of KGHM Polska Miedź S.A.
and the KGHM Polska Miedź S.A. Group
for 2020

1.4 Published standards and interpretations, which are not yet in force and were not applied earlier by the Group

in PLN millions, unless otherwise stated


The Group did not decide to apply early published standards, interpretations or amendments to existing standards before their entry into force in these financial statements.

Other standards and interpretations published but not yet in force:

  • Amendments to IFRS 10 and IAS 28 with respect to the sale or contribution of assets between an investor and its associate or joint venture,
  • IFRS 17 Insurance contracts and amendments to IFRS 17,
  • Amendments to IFRS 4 on extension of the temporary exemption from applying IFRS 9,
  • Amendments to IAS 1 on classification of liabilities as current or non-current.
  • Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 on  the interest rate benchmark reform – Phase 2,
  • Amendments to IFRS 3 on  references to the Conceptual Framework,
  • Amendments to IAS 16 on proceeds before intended use of an item of property, plant and equipment,
  • Amendments to IAS 37 on cost of fulfilling onerous contracts,
  • Amendments to IAS 1 on the disclosure of accounting policies,
  • Amendments to IAS 8 on the definition of accounting estimates,
  • Annual amendments to IFRS, 2018-2020.

The aforementioned standards, with the exception of amendments to IFRS 4 on extension of the temporary exemption from applying IFRS 9 and amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 on  the interest rate benchmark reform – Phase 2, are awaiting adoption by the European Union. The Group aims to apply all of the amendments at their effective dates. Except for IFRS 17 and amendments to IFRS 4, which will not have an impact on the Group’s financial statements, in the Group’s opinion as at 31 December 2020, these standards will be applicable to its activities in the scope of future economic operations, transactions or other events, towards which the amendments to standards are applicable.

In particular, in the case of amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 on the interest rate benchmark reform – Phase 2, the Group analysed present items in the consolidated financial statements with regards to the impact of the IBOR reform on its consolidated financial statements. Pursuant to current decisions of entities designated to implement the reform, only the LIBOR rate will be replaced, and it will be replaced by a risk-free rate based on the overnight rate. The Group identified agreements with clauses based on the LIBOR rate and which will be amended following the replacement of the reference rate. These are mainly borrowing agreements (bank loans, loans), deposit agreements, agreements for bank guarantees and letters of credit as well as factoring agreements. Replacement of the LIBOR rate by an alternative ratio will also result in introducing appendices to the current agreements, analysing the eventual change of interest rates from variable to fixed, introducing changes to internal methodologies and procedures and adapting IT tools to new calculation methods.

Moreover, the Group uses the LIBOR rate to estimate the incremental borrowing rate of the lessee in lease agreements based on USD, for which it is not possible to otherwise determine the lease interest rate, and to measure to fair value  loans granted by applying in the discounting process the current LIBOR market interest rate from the Reuters system.
In such cases, there is no formal risk and in the Company’s opinion, the impact of this amendment on the measurement of loans will be immaterial due to the fact that despite the new calculation method, the new reference rate will differ from the LIBOR rate by only 1-2 basis points, depending on the date and currency.

The KGHM Polska Miedź S.A. Group continuously monitors the recommendations of entities leading the IBOR reform. Due to the fact that many issues have not yet been formally regulated, the scale and scope of changes to the aforementioned financial instruments and their impact on the Group’s consolidated financial statements cannot currently be determined. The IBOR reform will not have an impact on the interest rate of derivatives, because CIRS and bonds are based on WIBOR, which will not be replaced by an alternative ratio.




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