2.3 Non-controlling interest
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 entity | 31 December 2017 | 31 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 Draudimas | 0.66% | 0.66% |
| NZOZ Trzebinia | 0.25% | n/a |
| AAS Balta | 0.01% | 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 interests | 31 December 2017 | 31 December 2016 (restated) |
|---|---|---|
| Pekao Group | 18,605 | n/a |
| Alior Bank Group | 4,368 | 4,080 1) |
| Other | 6 | 6 |
| Total | 22,979 | 4,086 |
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.
| Assets | Pekao Group 1) 31 December 2017 | Alior Bank Group | |
| 31 December 2017 | 31 December 2016 (restated) | ||
| Goodwill | 692 | - | - |
| Intangible assets | 2,032 | 662 | 666 |
| Other assets | 95 | 36 | 68 |
| Property, plant and equipment | 1,683 | 476 | 486 |
| Investment property | 22 | - | - |
| Financial assets | 172,823 | 65,271 | 57,078 |
| Held to maturity | 3,500 | 1,339 | 220 |
| Available for sale | 33,593 | 12,259 | 9,522 |
| Measured at fair value through profit or loss | 3,080 | 453 | 419 |
| Hedge derivatives | 259 | 88 | 72 |
| Loans | 132,391 | 51,132 | 46,845 |
| Deferred tax assets | 924 | 619 | 603 |
| Receivables | 2,017 | 785 | 776 |
| Cash and cash equivalents | 5,282 | 1,338 | 1,126 |
| Assets held for sale | 64 | - | 1 |
| Total assets | 185,634 | 69,187 | 60,804 |
| Equity and liabilities | Pekao Group 1) 31 December 2017 | Alior Bank Group | |
| 31 December 2017 | 31 December 2016 (restated) | ||
| Equity | |||
| Equity attributable to equity holders of the Parent | 23,263 | 6,445 | 5,784 |
| Share capital | 262 | 1,293 | 1,293 |
| Other capital | 20,562 | 5,019 | 4,298 |
| Retained earnings | 2,439 | 133 | 193 |
| Non-controlling interest | - | 1 | 1 |
| Total equity | 23,263 | 6,446 | 5,785 |
| Liabilities | |||
| Provisions for employee benefits | 425 | 43 | 43 |
| Other provisions | 305 | 77 | 276 |
| Deferred tax liability | 38 | - | - |
| Financial liabilities | 157,903 | 60,863 | 53,266 |
| Other liabilities | 3,700 | 1,758 | 1,434) |
| Total liabilities | 162,371 | 62,741 | 55,019 |
| Total equity and liabilities | 185,634 | 69,187 | 60,804 |
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 2017 | PZU Group | Exclusion of Pekao data1) | Exclusion of Alior Bank data | Elimination of consolidation adjustments | PZU Group without Pekao and Alior Bank |
| Gross written premiums | 22,847 | - | - | - | 22,847 |
| Reinsurers’ share in gross written premium | (612) | - | - | - | (612) |
| Net written premiums | 22,235 | - | - | - | 22,235 |
| Movement in net provision for unearned premiums | (881) | - | - | - | (881) |
| Net earned premium | 21,354 | - | - | - | 21,354 |
| Revenue from commissions and fees | 2,341 | (1,279) | (853) | 15 | 224 |
| Net investment income | 9,051 | (3,677) | (3,900) | 13 | 1,487 |
| Net result on realization and impairment losses on investments | (960) | 209 | 901 | - | 150 |
| Net movement in fair value of assets and liabilities measured at fair value | 411 | (5) | (67) | - | 339 |
| Other operating income | 1,178 | (185) | (169) | - | 824 |
| Claims, benefits and movement in technical provisions | (15,376) | - | - | - | (15,376) |
| Reinsurers’ share in claims, benefits and movement in technical provisions | 435 | - | - | - | 435 |
| Net insurance claims and benefits | (14,941) | - | - | - | (14,941) |
| Fee and commission expense | (557) | 196 | 343 | - | (18) |
| Interest expense | (1,365) | 607 | 650 | (13) | (121) |
| Acquisition expenses | (2,901) | - | - | (15) | (2,916) |
| Administrative expenses | (5,364) | 1,911 | 1,806 | - | (1,647) |
| Other operating expenses | (2,737) | 721 | 479 | - | (1,537) |
| Operating profit (loss) | 5,510 | (1,502) | (810) | - | 3,198 |
| Share of the net financial results of entities measured by the equity method | 16 | (22) | - | - | (6) |
| Profit (loss) before tax | 5,526 | (1,524) | (810) | - | 3,192 |
| Income tax | (1,293) | 368 | 235 | - | (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 Group | Exclusion of Alior Bank data | Elimination of consolidation adjustments | Group without Alior Bank |
| Gross written premiums | 20,219 | - | 19 | 20,238 |
| Reinsurers’ share in gross written premium | (431) | - | - | (431) |
| Net written premiums | 19,788 | - | 19 | 19,807 |
| Movement in net provision for unearned premiums | (1,163) | - | - | (1,163) |
| Net earned premium | 18,625 | - | 19 | 18,644 |
| Revenue from commissions and fees | 817 | (599) | - | 218 |
| Net investment income | 4,111 | (2,804) | 11 | 1,318 |
| Net result on realization and impairment losses on investments | (935) | 763 | - | (172) |
| Net movement in fair value of assets and liabilities measured at fair value | 335 | (161) | - | 174 |
| Other operating income | 1,336 | (589) | - | 747 |
| Claims, benefits and movement in technical provisions | (12,888) | - | - | (12,888) |
| Reinsurers’ share in claims, benefits and movement in technical provisions | 156 | - | - | 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 tax | 2,988 | (704) | - | 2,284 |
| Income tax | (614) | 84 | - | (530) |
| Net profit (loss) | 2,374 | (620) | - | 1,754 |
| Statement of comprehensive income | Pekao Group 1) | Alior Bank Group | |
| 1 June – 31 December 2017 | 1 January – 31 December 2017 | 1 January – 31 December 2016 | |
| Net profit | 1,156 | 575 | 620 |
| Other comprehensive income | 24 | 86 | (87) |
| Measurement of financial instruments available for sale | 6 | 86 | (56) |
| Net cash flow hedges | 11 | - | (31) |
| Actuarial gains and losses related to employee provisions | 7 | - | |
| Total net comprehensive income | 1,180 | 661 | 533 |
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 statement | Pekao Group 1) | Alior Bank Group | |
| 1 June – 31 December 2017 | 1 January – 31 December 2017 | 1 January – 31 December 2016 | |
| Net cash flows from operating activities | 10,233 | 3,067 | (2,226) |
| Net cash flows from investing activities | (9,729) | (3,651) | (643) |
| Net cash flows from financing activities | (184) | 869 | 2,376 |
| Total net cash flows | 320 | 285 | (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).
