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

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.

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.

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.).