Acquisition of Raiffeisen-Leasing Polska SA by PKO Leasing SA (in 2016)

Description of the transaction

On 2 November 2016, PKO Bank Polski SA (as the guarantor) and PKO Leasing SA (as the acquirer) signed an agreement on purchase of 100% shares in Raiffeisen-Leasing Polska SA (RLPL) with Raiffeisen Bank International AG (as the seller). The transaction was closed on 1 December 2016 after the conditions precedent had been met, including, among other things, gaining the required anti-monopoly consents in Poland and Ukraine.

As a result of the aforementioned transaction, PKO Leasing SA purchased 1,500,038 ordinary shares in Raiffeisen-Leasing Polska SA with a nominal value of PLN 100 each, representing 100% of the Company’s share capital and entitling it to 100% of the voting rights at the General Meeting of the company. The purchase price amounted to PLN 850 million. The purchase of the shares was financed entirely with a loan granted by PKO Bank Polski SA. The business operations of the acquired company consist of conducting leasing activities and granting loans.

Due to the purchase of RLPL, its subsidiaries joined the PKO Leasing SA Group in accordance with the International Financial Reporting Standards with an auditor’s opinion: Raiffeisen-Leasing Real Estate Sp. z o.o. (financing real properties), “Raiffeisen Insurance Agency” Sp. z o.o. (insurance intermediation), Raiffeisen-Leasing Service Sp. z o.o. (storage and sale of post-lease items) and ROOF Poland Leasing 2014 DAC with its registered office in Ireland (special-purpose vehicle established to handle the securitization of lease receivables).

On 28 April 2017, the merger of PKO Leasing SA (as the acquiring company) and RLPL (as the target company) was registered in the National Court Register (KRS) competent for the acquirer. The merger was carried out by way of transferring all assets of RLPL to PKO Leasing SA (merger through acquisition), without increasing the share capital of PKO Leasing SA and without replacing the shares. Therefore, PKO Leasing SA assumed all the rights and obligations of RLPL. The process of integration of the companies will be completed with an operating merger, which will be concluded in 2018.

Moreover, on 28 April 2017, the following changes in the names of companies in the PKO Leasing SA Group were registered in KRS:

• Raiffeisen-Leasing Real Estate Sp. z o.o. to PKO Leasing Nieruchomości Sp. z o.o.;
• “Raiffeisen Insurance Agency” Sp. z o.o. to PKO Agencja Ubezpieczeniowa Sp. z o.o.;
• Raiffeisen-Leasing Service Sp. z o.o. to PKO Leasing Finanse Sp. z o.o.

Settlement of the acquisition transaction

As at 31 December 2017, the final settlement of the acquisition of RLPL was carried out under the acquisition method in accordance with IFRS 3. The date of 1 December 2016 was adopted as the date of assuming control.

As at the date of assuming control, a preliminary valuation of assets from lease receivables and loans granted as well as contingent liabilities was carried out and was recognized in the consolidated financial statements for 2016 in the preliminary values. The final settlement of the transaction on 31 December 2017 did not change in respect of the settlement presented in the consolidated financial statements for 2016.

The purchase price of RLPL shares amounted to PLN 850 million and was paid entirely in cash. PKO Leasing SA had the right to bring, within 3 months of the acquisition date, claims against RBI AG with regard to financial and other transactions stipulated in the agreement for the purchase of shares in RLPL SA which could result in an outflow of cash and conducted within the RLPL Group between 1 July 2016 and the acquisition date. The amount of claims identified and reported, resulting from this condition of the purchase agreement amounted to PLN 2,787 thousand, however until 31 December 2017 the final value of the respective RBI liability had not been agreed by the parties. Therefore, claims reported to RBI were not taken into account in the final purchase price. The future potential reimbursement of the amount from RBI will be recognized in the income statement when received.

The final settlement of the purchase transaction is presented below (in PLN million):

Information on the assumptions and valuation methods of individual identifiable assets acquired, liabilities assumed as at 1 December 2016 were disclosed in the Group’s consolidated financial statements for 2016.