2.4 Changes in the scope of consolidation and structure of the PZU Group

The detailed accounting policy pertaining to settlement of acquisition transactions are presented in section 5.6.

The acquisition of entities providing medical services (in 2018 it was: Centrum Medyczne św. Łukasza sp. z o.o. and Specjalistyczny Zakład Opieki Zdrowotnej Multimed sp. z o.o.) is aimed at supplementing the insurance and health services offered by the PZU Group. Development of the medical service and health insurance offering is one of the core elements of the PZU Group strategy. Provision of some of the services in own centers will increase the PZU Group’s competitiveness in this market. The goodwill recognized in the consolidated financial statements is the effect of the planned increase of the scale of this business and the volume of services generated by health insurance, combined with improvement of the profitability of these services thanks to retaining some of the margin in the PZU Group.

2.4.1. Acquisition of shares in Pekao

On 8 December 2016 PZU, acting in a consortium with PFR signed the Pekao share purchase agreement (“SPA”) with UniCredit S.p.A. („Seller”, „UniCredit”).

On the closing date, i.e. on 7 June 2017, PZU directly acquired a stake in Pekao representing approximately 20% of the total number of votes and at the same time PFR directly acquired a stake in Pekao representing approximately 12.8% of the total number of votes.

As a result of this transaction PZU recognized that it acquired control over Pekao on 7 June 2017.

The price agreed by the Parties is PLN 123 per share, which entailed the total price of PLN 10,589 million for the whole stake to be acquired by PZU and PFR, of which the price for the stake to be acquired by PZU was PLN 6,457 million. The price also included payment for the acquired right to the dividend adopted by the Pekao Ordinary Shareholder Meeting held on 19 April 2017 in the amount of PLN 8.68 per share, i.e. PLN 456 million in total.

Final settlement of the Pekao acquisition

The settlement for the acquisition of the stake in Pekao on the date of obtaining control was made on the basis of the data prepared on 31 May 2017. No material differences in accounting data transpired between 31 May and 7 June 2017.

The consolidated financial statements contain the final fair value of the assets and liabilities acquired (in particular, of the loan portfolio). In the process of calculating goodwill:

• the goodwill carried in Pekao’s financial statements was written down;
• intangible assets not carried thus far in Pekao’s financial statements were recognized;
• the assets and liabilities in Pekao’s financial statements were measured at fair value – the loan portfolio, the property portfolio (owner-occupied property, investment property and property for sale), financial assets held to maturity (measured by Pekao at amortized cost) and available for sale (measured by Pekao at historical cost);
• no contingent liabilities requiring recognition were identified;

no potential indemnification assets requiring recognition were identified.

The final settlement of the transaction is presented below on the basis of the fair value of the acquired assets and liabilities.

In the settlement of the acquisition, the PZU Group reduced the consideration transferred by PLN 456 million, which was the price for the right to receive a dividend payable from profits earned by Pekao before the date of acquisition; on the date of PZU’s obtaining control that amount was presented as a receivable, and it was received on 6 July 2017.

Goodwill will not reduce taxable income.

2.4.2. Purchase of other companies 

On 9 January 2018, PZU Zdrowie SA acquired 360 shares in Centrum Medyczne św. Łukasza sp. z o.o. representing 100% of the share capital and 100% of the votes at the shareholder meeting with a par value of PLN 600 each.

Since the date of obtaining control, i.e. 9 January 2018, Centrum Medyczne św. Łukasza sp. z o.o. has been consolidated.

On 31 December 2018, Elvita acquired 500 shares in Specjalistyczny Zakład Opieki Zdrowotnej Multimed sp. z o.o. representing 100% of the share capital and 100% of the votes at the shareholder meeting with a par value of PLN 1 thousand each.

Since the date of obtaining control, i.e. 31 December 2018, Specjalistyczny Zakład Opieki Zdrowotnej Multimed sp. z o.o. has been consolidated.

Settlement of the acquisition

Goodwill will not reduce taxable income.

Consolidated profit and loss account taking into account acquired entities

The table below presents the amounts of revenues and profits of the PZU Group, taking into account the financial data of acquired subsidiaries (Centrum Medyczne św. Łukasza sp. z o.o. and Specjalistyczny Zakład Opieki Zdrowotnej Multimed sp. z o.o.) calculated as if the beginning of the year was the acquisition date for all the combinations effected during the year.

2.4.3. Changes to consolidation of mutual funds

Since control was gained over the PZU FIZ Akcji Focus fund, it is consolidated as of 1 April 2018.

In addition, the following newly-created funds, namely inPZU Inwestycji Ostrożnych, inPZU Obligacje Polskie are consolidated (as of 10 April 2018) while the following funds, namely inPZU Akcje Polskie, inPZU Akcji Rynków Rozwiniętych, inPZU Obligacji Rynków Rozwiniętych, inPZU Obligacji Rynków Wschodzących are consolidated (as of 10 May 2018).

On 24 December 2018 the liquidation of the PZU FIZ Aktywów Niepublicznych Witelo Fund was completed. The fund was consolidated until its liquidation date.

2.4.4. Transactions under joint control

On 24 April 2018 PTE PZU received the KNF’s decisions consenting to the acquisition of management of Pekao OFE and Pekao DFE. PZU PTE and Pekao PTE entered into a business transfer agreement on 18 May 2018 encompassing i.a. the operations of Pekao OFE and Pekao DFE, involving the management of Pekao OFE and Pekao DFE. The business was acquired effectively on 19 May 2018. According to KNF’s decision the date for commencing the winding up of Pekao OFE is 1 August 2018, while this process will end and the assets of Pekao OFE were merged with the assets of OFE PZU “Złota Jesień” on 12 October 2018. The winding up of DFE Pekao was in progress since 19 May 2018 was completed on 28 September 2018.

On 4 June 2018 the National Court Register registered PFS’s share capital increase in connection with the spin off (organizational, functional and financial) and the transfer of the branch of the PZU CO transfer agent (forming an organization part of a business) to PFS within the meaning of Article 530 § 2 of the Commercial Company Code. The transaction was executed on the basis of the agreement concluded on 16 March 2018 by and between PZU, Pekao, PFS and PZU CO and the spin off plan executed on 27 February 2018 by and between PZU CO (company being spun off) and PFS (acquiring company). PZU CO’s net asset value transferred to PFS on the date of the spin off was PLN 7 million. From the spin off date the transfer agent services rendered thus far by PZU CO are rendered by PFS.

On 6 September 2018, Elvita merged with NZOZ Trzebinia.

The transactions did not affect the consolidated financial statements.

2.4.5. Acquisition of an associate

On 15 November 2018 Alior Bank acquired, for PLN 4 million, 2,510 shares with the total par value of PLN 125,500, representing 20% shares in GTR Finanse sp. z o.o. (currently PayPo sp. z o.o.).