2.3 Non-controlling interest

Reference Areas:
Health
Investments
Banking
Best Pratices in PZU

2.3.1. Accounting policy

Non-controlling interests constitute that part of capital in a subsidiary that is not directly or indirectly attributable to the parent company. Non-controlling interests are measured at the at the non-controlling interest’s proportionate share in the fair value of the subsidiary’s identifiable net assets.

2.3.2. Quantitative data

The table below presents subsidiaries with certain non-controlling interest (at present or in the past):

Name of the entity31 December 201731 December 2016
Pekao 1)79.98%n/a
Alior Bank 2)67.77%70.55%
Centrum Medyczne Gamma sp. z o.o.39.54%39.54%
Przedsiębiorstwo Usług Medycznych PROELMED sp. z o.o.43.00%43.00%
Sanatorium Uzdrowiskowe “Krystynka” sp. z o.o.0.91%0.91%
UAB PZU Lietuva Gyvybes Draudimas0.66%0.66%
NZOZ Trzebinia0.25%n/a
AAS Balta0.01%0.01%

1) As a result, PZU also holds non-controlling interests in Pekao’s subsidiaries listed in the table in section 2.2.

2) As a result, PZU also holds non-controlling interests in Alior Bank’s subsidiaries listed in the table in section 2.2.

Carrying amount of non-controlling interests31 December 201731 December 2016 (restated)
Pekao Group18,605n/a
Alior Bank Group4,3684,080 1)
Other66
Total22,9794,086

1) Restatement of data as at 31 December 2016 resulted from the final settlement of the purchase of Bank BPH’s Core Business. De tailed information on this matter is presented in item 2.4.5.

Presented below is condensed financial information for the Pekao Group and the Alior Bank Group included in the consolidated financial statements. The data also contain values resulting from the acquisition of Bank BPH’s Core Business for the period when control was exercised (i.e. from 4 November 2016). Restatement of data as at 31 December 2016 resulted from the final settlement of the purchase of Bank BPH’s Core Business. Detailed information on this matter is presented in item 2.4.5.

AssetsPekao Group 1) 31 December 2017Alior Bank Group
  31 December 201731 December 2016 (restated)
Goodwill692--
Intangible assets2,032662666
Other assets953668
Property, plant and equipment1,683476486
Investment property22--
Financial assets172,82365,27157,078
Held to maturity3,5001,339220
Available for sale33,59312,2599,522
Measured at fair value through profit or loss3,080453419
Hedge derivatives2598872
Loans132,39151,13246,845
Deferred tax assets924619603
Receivables2,017785776
Cash and cash equivalents5,2821,3381,126
Assets held for sale64-1
Total assets185,63469,18760,804

  Equity and liabilities  Pekao Group 1) 31 December 2017Alior Bank Group
  31 December 201731 December 2016 (restated)
Equity   
Equity attributable to equity holders of the Parent23,2636,4455,784
Share capital2621,2931,293
Other capital20,5625,0194,298
Retained earnings2,439133193
Non-controlling interest-11
Total equity23,2636,4465,785
    
Liabilities   
Provisions for employee benefits4254343
Other provisions30577276
Deferred tax liability38--
Financial liabilities157,90360,86353,266
Other liabilities3,7001,7581,434)
Total liabilities162,37162,74155,019
Total equity and liabilities185,63469,18760,804

1) Since control over Pekao was obtained on 7 June 2017, no data is presented for comparative periods (31 December 2016).

The table below presents consolidated data of the PZU Group with separated data of the Pekao Group and Alior Bank Group incorporating the effect of adjustments resulting from the measurement of assets and liabilities to fair value as at the date control was acquired and their subsequent amortization over time.

Consolidated profit and loss account for the period from 1 January to 31 December 2017PZU GroupExclusion of Pekao data1)Exclusion of Alior Bank dataElimination of consolidation adjustmentsPZU Group without Pekao and Alior Bank
Gross written premiums22,847---22,847
Reinsurers’ share in gross written premium(612)---(612)
Net written premiums22,235---22,235
Movement in net provision for unearned premiums(881)---(881)
Net earned premium21,354---21,354
      
Revenue from commissions and fees2,341(1,279)(853)15224
Net investment income9,051(3,677)(3,900)131,487
Net result on realization and impairment losses on investments(960)209901-150
Net movement in fair value of assets and liabilities measured at fair value411(5)(67)-339
Other operating income1,178(185)(169)-824
      
Claims, benefits and movement in technical provisions(15,376)---(15,376)
Reinsurers’ share in claims, benefits and movement in technical provisions435---435
Net insurance claims and benefits(14,941)---(14,941)
Fee and commission expense(557)196343-(18)
Interest expense(1,365)607650(13)(121)
Acquisition expenses(2,901)--(15)(2,916)
Administrative expenses(5,364)1,9111,806-(1,647)
Other operating expenses(2,737)721479-(1,537)
Operating profit (loss)5,510(1,502)(810)-3,198
Share of the net financial results of entities measured by the equity method16(22)--(6)
Profit (loss) before tax5,526(1,524)(810)-3,192
Income tax(1,293)368235-(690)
Net profit (loss)4,233(1,156)(575)-2,502

1) Data for the period from 1 June to 31 December 2017.

Since control over Pekao was obtained on 7 June 2017, no data are presented for the period from 1 January to 31 December 2016.

Consolidated profit and loss account for the period from 1 January to 31 December 2016  PZU GroupExclusion of Alior Bank dataElimination of consolidation adjustmentsGroup without Alior Bank
Gross written premiums20,219-1920,238
Reinsurers’ share in gross written premium(431)--(431)
Net written premiums19,788-1919,807
Movement in net provision for unearned premiums(1,163)--(1,163)
Net earned premium18,625-1918,644
     
Revenue from commissions and fees817(599)-218
Net investment income4,111(2,804)111,318
Net result on realization and impairment losses on investments(935)763-(172)
Net movement in fair value of assets and liabilities measured at fair value335(161)-174
Other operating income1,336(589)-747
     
Claims, benefits and movement in technical provisions(12,888)--(12,888)
Reinsurers’ share in claims, benefits and movement in technical provisions156--156
Net insurance claims and benefits(12,732)--(12,732)
     
Fee and commission expense(273)248-(25)
Interest expense(697)605(11)(103)
Acquisition expenses(2,613)--(2,613)
Administrative expenses(2,923)1,279-(1,644)
Other operating expenses(2,060)554(19)(1,525)
Operating profit (loss)2,991(704)-2,287
Share in net profit (loss) of entities measured by the equity method(3)--(3)
Profit (loss) before tax2,988(704)-2,284
Income tax(614)84-(530)
Net profit (loss)2,374(620)-1,754

Statement of comprehensive incomePekao Group 1)Alior Bank Group
1 June – 31 December 20171 January – 31 December 20171 January – 31 December 2016
Net profit1,156575620
Other comprehensive income2486(87)
Measurement of financial instruments available for sale686(56)
Net cash flow hedges11-(31)
Actuarial gains and losses related to employee provisions7- 
Total net comprehensive income1,180661533

1) Data for the period of control by the PZU Group. Since control over Pekao was obtained on 7 June 2017, no data are presented for the period from 1 January to 31 December 2016.

Cash flow statementPekao Group 1)Alior Bank Group
 1 June – 31 December 20171 January – 31 December 20171 January – 31 December 2016
Net cash flows from operating activities10,2333,067(2,226)
Net cash flows from investing activities(9,729)(3,651)(643)
Net cash flows from financing activities(184)8692,376
Total net cash flows320285(493)

1) Data for the period of control by the PZU Group.  Since control over Pekao  was obtained on 7  June 2017, no data are presented  for the period from 1 January to 31 December 2016.

On 19 April 2017, the Ordinary Shareholder Meeting of Pekao adopted a resolution to pay out a dividend of PLN 2,278 million (PLN 8.68 per share).

 

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