In 2017, the following most significant events affected the structure of the PKO Bank Polski SA Group.
On 8 September 2017, PKO Bank Polski SA (as the guarantor) and its subsidiary PKO BP Finat Sp. z o.o. (as the purchaser) signed a preliminary agreement with KBC Asset Management NV with its registered office in Belgium (as the seller) for the purchase of 100% of shares in KBC Towarzystwo Funduszy Inwestycyjnych SA (KBC TFI SA).
The transaction was closed on 12 December 2017, after obtaining approval from the President of the Office of Competition and Consumer Protection and the Polish Financial Supervision Authority.
As a result of the above-mentioned transaction, PKO BP Finat Sp. z o.o. purchased 100% of shares in KBC TFI SA, representing 100% of the share capital of KBC TFI SA and entitling it to 100% of votes at the General Meeting of the company.
The company’s core business activities include creating and managing of investment funds.
In connection with the acquisition of KBC TFI SA, the PKO BP Finat Sp. z o.o. Group includes its subsidiary Net Fund Administration Sp. z o.o. (NetFA Sp. z o.o.) the operations of which comprise providing transfer agent services.
Eventually, in 2018, KBC TFI SA is to be merged with PKO TFI SA and NetFA Sp. z o.o. is to be merged with PKO BP Finat Sp. z o.o.
The business combination with KBC TFI would additionally accelerate the current dynamic development of PKO TFI SA, which is already a leader in the retail funds segment.
On 26 January 2017, PKO Bank Polski SA acquired 100% of shares in ZenCard Sp. z o.o. and took up shares in the increased capital of the company. The above-mentioned changes were registered in the National Court Register on 14 March 2017.
ZenCard Sp. z o.o. conducts service activities in the scope of IT and computer technologies. The company developed a platform for creating rebate and loyalty programmes, which at the same time enables the virtualization of loyalty cards. The platform is integrated with the payment terminal and enables resigning from numerous separate loyalty cards or separate applications installed on telephones, as it offers one customer payment card, which at the same time is a virtual loyalty card for each of the sales agents. The company’s strategic partner is CEUP eService Sp. z o.o. – one of the largest clearing agents in Poland. The Bank is interested in using the know-how of the company and its founders within the scope of the solutions developed by the company, in particular in the area of loyalty programmes using payment cards and support of own promotions.
On 28 April 2017, a business combination between PKO Leasing SA (as the acquirer) and Raiffeisen-Leasing Polska SA (as the acquiree) was registered in the National Court Register (KRS). The business combination was carried out by transferring all the assets of RLPL to PKO Leasing SA (merger by acquisition), without increasing the share capital of PKO Leasing SA and without an exchange of shares. As a result, PKO Leasing SA entered into all the rights and obligations of RLPL. The integration process will be closed by an operating merger, which will close in 2018.
At the same time, on 28 April 2017, the following changes in the names of companies belonging to the PKO Leasing SA Group were registered in the National Court Register:
- 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.
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):
| Statement of the financial position - ASSETS | Data of the RLPL Group as at the acquisition date 01.12.2016 (amounts derived from the financial statements) | Adjustments due to fair value measurement and customer relationships | Fair value of assets acquired |
|---|---|---|---|
| Amounts due from banks | 279 | - | 279 |
| Loans and advances to customers | 6 059 | 25 | 6 084 |
| Inventories | 78 | - | 78 |
| Intangible assets | 14 | 64 | 78 |
| Tangible fixed assets | 159 | - | 159 |
| Current income tax receivables | 17 | - | 17 |
| Deferred income tax assets | 433 | (17) | 416 |
| Other assets | 59 | - | 59 |
| TOTAL ASSETS | 7 098 | 72 | 7 170 |
| Statement of the financial position - LIABILITIES AND NET ASSETS | Data of the RLPL Group as at the acquisition date 01.12.2016 (amounts derived from the financial statements) | Adjustments due to fair value measurement and customer relationships | Fair value of liabilities assumed |
|---|---|---|---|
| Amounts due from banks | 4 006 | - | 4 006 |
| Amounts due to customers | 696 | - | 696 |
| Debt securities in issue | 1 557 | - | 1 557 |
| Other liabilities | 113 | - | 113 |
| Current income tax liabilities | 4 | - | 4 |
| Provisions | 1 | - | 1 |
| TOTAL LIABILITIES | 6 377 | - | 6 377 |
| NET ASSETS | 721 | 72 | 793 |
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.
| Goodwill | Total RLPL Group companies |
|---|---|
| Consideration paid | 850 |
| Net amount of identifiable acquired assets and liabilities assumed | 793 |
| Goodwill | 57 |
| of which attributable to the following segments: | |
| corporate segment | 16 |
| retail segment | 41 |
Other changes to companies comprising the Group
Description of the transaction
On 8 September 2017, PKO Bank Polski SA (as the guarantor) and PKO BP Finat Sp. z o.o. (as the acquirer) signed a preliminary agreement with KBC Asset Management NV (as the seller) on the purchase of 100% of shares in KBC Towarzystwo Funduszy Inwestycyjnych SA (KBC TFI). The transaction was closed on 12 December 2017, upon prior approval of the President of the Office for Competition and Consumer Protection (UOKiK), and Polish Financial Supervision Authority (KNF).
As a result of the aforementioned transaction, PKO BP Finat Sp. z o.o. purchased 25,257,983 ordinary shares in KBC TFI with a nominal value of PLN 1 (one) each, representing 100% of the share capital of KBC TFI and entitling it to 100% of the voting rights at the General Shareholders’ Meeting of the company. The purchase price amounted to PLN 32.9 million. The purchase of the shares was financed from PKO BP Finat Sp. z o.o.’s own funds.
The company’s core activities include creating and managing investment funds.
As a result of the acquisition of KBC TFI, the PKO BP Finat Sp. z o.o. Group included its subsidiary, Net Fund Administration Sp. z o.o. (NetFA), with its core activities comprising the provision of transfer agent services. As at 31 December 2017, the Company’s share capital amounted to PLN 6 652 500 thousand and is divided into 13 305 shares with a nominal value of PLN 500 each.
Ultimately, in 2018, KBC TFI is to be merged with PKO Towarzystwo Funduszy Inwestycyjnych SA, and NetFA is to be merged with PKO BP Finat Sp. z o.o.
The purpose of the acquisition of KBC TFI shares was for the Group to earn economic benefits by reinforcing the position of the subsidiaries of PKO Bank Polski SA in individual segments of the financial market. The planned merger with KBC TFI will accelerate the hitherto dynamic development of PKO TFI and will reinforce its ability to offer customers various attractive forms of investing.
Settlement of the acquisition transaction
The transaction was settled using the acquisition method in accordance with IFRS 3, the application of which requires: identifying the acquirer, determining the date of acquisition, recognizing and measuring identifiable assets acquired, liabilities assumed measured at fair value as at the date of acquisition, and all non-controlling shares in the acquiree, as well as recognizing and measuring goodwill or gains from occasional purchase.
Given that the assumption of control over KBC TFI and its subsidiaries occurred on 12 December 2017, the purchase transaction was settled based on KBC TFI financial statements as at 11 December 2017.
The purchase price of KBC TFI SA shares was determined in the amount paid in cash (PLN 32.9 million). As at the date of preparing the consolidated financial statements of the Group for 2017, a preliminary, temporary valuation of the purchase transaction settlement was carried out. The final transaction settlement may differ from the preliminary settlement presented in these financial statements. In accordance with IFRS 3.45, the Group has 12 months – i.e. to 11 December 2018 to determine the final amounts.
As a result of the settlement of the purchase of KBC TFI shares, a gain from a bargain purchase was recognized constituting the difference between the consideration transferred and the net amount of identifiable assets acquired, and the liabilities assumed were measured in accordance with IFRS.
| SETTLEMENT OF THE ACQUISITION TRANSACTION | 12.12.2017 |
|---|---|
| Fair value of consideration transferred | 33 |
| Fair value of net assets acquired | (35) |
| GAIN FROM A BARGAIN PURCHASE1 | (2) |
1 negative value as a result of the excess of net assets fair value over the fair value of the payment transferred.
In 2017, the following events which had impact on the Group’s structure and relating to joint ventures and associates, including capital injection, took place.
ZenCard Sp. z o.o.
On 26 January 2017, PKO Bank Polski SA purchased 1 374 shares in ZenCard Sp. z o.o. with a nominal value of PLN 50 PLN each, representing 100% of the company’s share capital and 100% shares at the shareholders’ meeting. At the same time, on 26 January 2017, the Extraordinary Shareholders’ Meeting of ZenCard Sp. z o.o. (represented by PKO Bank Polski SA as the sole shareholder) adopted a resolution on increasing the company’s share capital by PLN 22 050 by creating 441 new shares with a nominal value of PLN 50 each. The said changes were registered in the National Court Register on 14 March 2017.
As at 31 December 2017, the company’s share capital amounted to PLN 90 750 thousand and was divided into 1 815 shares with a nominal value of PLN 50 each.
ZenCard Sp. z o.o. is a technological company. The Bank is interested in using the company’s and its founders’ know-how in respect of solutions developed by the company, in particular in respect of creating loyalty programmes with the use of payment cards and supporting its own promotional campaigns.
As a result of the settlement of the purchase of ZenCard Sp. z o.o. shares, goodwill was recognized constituting the difference between the consideration transferred and the net amount of identifiable assets acquired, liabilities assumed measured in accordance with IFRS.
| SETTLEMENT OF THE ACQUISITION TRANSACTION | 26.01.2017 |
|---|---|
| Fair value of consideration transferred | 14 |
| Fair value of net assets acquired | 2 |
| GOODWILL | 12 |
PKO Bank Hipoteczny SA
In 2017 (on 12 April, 11 September, and 16 November, respectively) an increase of the company’s share capital totalling PLN 400 000 000 was recorded in the National Court Register (KRS). All shares in the increased share capital were taken up by the existing sole shareholder, PKO Bank Polski SA. As at 31 December 2017, the company’s share capital amounted to PLN 1 200 000 000 thousand and was divided into 1 200 000 000 shares with a nominal value of PLN 1 each.
NEPTUN – fundusz inwestycyjny zamknięty aktywów niepublicznych (FIZ AN)
On 25 April 2017, PKO Bank Polski SA purchased 2,000,000 E-series investment certificates issued by NEPTUN – fundusz inwestycyjny zamknięty aktywów niepublicznych (closed-ended investment fund of non-public assets).
“Inter-Risk Ukraina” additional liability company
On 28 April 2017, PKO Bank Polski SA sold within the Group, 100% of its shares in the share capital of “Inter-Risk Ukraina” an additional liability company, of which: 99.9% shares – to Bankowe Towarzystwo Kapitałowe SA, and 0.1% to Finansowa Kompania “Prywatne Inwestycje” Sp. z o.o.
On 28 April 2017, an amendment to the Articles of Association of “Inter-Risk Ukraina” additional liability company with the aforesaid ownership changes was registered in the Single national register of legal entities, individuals-entrepreneurs and organizations of the Ukraine.
Bankowe Towarzystwo Kapitałowe SA
On 18 July 2017, the company’s share capital increase of PLN 30 000 000 was registered in KRS. All shares in the increased share capital were taken up by the existing sole shareholder – NEPTUN – fundusz inwestycyjny zamknięty aktywów niepublicznych, whose 100% investment certificates are held by PKO Bank Polski SA.
As at 31 December 2017, the company’s share capital amounted to PLN 63 243 900 thousand and was divided into 632 439 shares with a nominal value of PLN 100 each.
PKO Finance AB
On 1 August 2017, the company’s share capital increase of EUR 5 491 884 was registered in the Swedish register of business activities (Bolagsverket). All shares in the increased share capital were taken up by the existing sole shareholder, PKO Bank Polski SA.
As at 31 December 2017, the company’s share capital amounted to EUR 5 547 358 thousand and was divided into 500 000 shares with a nominal value of EUR 11.09 each.
Qualia Development Sp. z o.o. Group
- Qualia Hotel Management Sp. z o.o.
On 6 February 2017, the company’s share capital increase of PLN 1 149 700 was registered in KRS. All shares were taken up and paid up in October 2016 by the existing sole shareholder – Qualia Development Sp. z o.o.
As at 31 December 2017, the Company’s share capital amounted to PLN 1 411 500 thousand and is divided into 28 230 shares with a nominal value of PLN 50 each.
- Sarnia Dolina Sp. z o.o.
On 6 April 2017, the company’s share capital increase of PLN 5 000 was registered in KRS. All shares were taken up by the existing sole shareholder – Qualia Development Sp. z o.o.
As at 31 December 2017, the company’s share capital amounted to PLN 6 979 000 thousand and was divided into 13 958 shares with a nominal value of PLN 500 each.
On 7 April 2017, the Extraordinary Shareholders’ Meeting of Sarnia Dolina Sp. z o.o. adopted a resolution on returning to Qualia Development Sp. z o.o. shareholder’s contributions totalling PLN 21 549 527 brought to the company in accordance with Art. 177-179 of the Commercial Companies Code. On the same day, the funds were transferred.
- Qualia spółka z ograniczoną odpowiedzialnością – Projekt 1 Sp. k.
On 10 March 2017, the company’s shareholders adopted a resolution on dissolving the company without liquidation proceedings. On 5 May 2017, the company was deleted from the National Court Register (KRS) (the date of deletion from KRS becoming valid).
- Qualia 2 spółka z ograniczoną odpowiedzialnością – Nowy Wilanów Sp. k.
On 27 April 2017, the company’s partners adopted a resolution on reducing the capital share of the limited partner – Qualia Development Sp. z o.o. by PLN 28 000 000 through the distribution of funds accumulated in the partnership’s reserves arising from additional contributions brought to the partnership in accordance with Art. 177-179 of the Commercial Companies Code, before transforming the entity from a limited liability company to a limited partnership. The funds were transferred in April 2017.
- Qualia 3 spółka z ograniczoną odpowiedzialnością – Neptun Park Sp. k.
On 12 September 2017, the company’s partners adopted a resolution on reducing the capital share of the limited partner – Qualia Development Sp. z o.o. by PLN 15 000 000 through the distribution of funds accumulated in the partnership’s reserves arising from additional contributions brought to the partnership in accordance with Art. 177-179 of the Commercial Companies Code, before transforming the entity from a limited liability company to a limited partnership. The funds were transferred in September 2017.
- Business combination of selected subsidiaries in the Qualia Development Sp. z o.o. Group
On 13 October 2017, a business combination of Qualia sp. z o.o. – Sopot Sp. k. and Giełda Nieruchomości Wartościowych Sp. z o.o. (the acquirees) with Qualia Sp. z o.o. (the acquirer) by transferring all the acquirees’ assets to the acquirer. The merger plan announced on 26 June 2017 in Monitor Sądowy i Gospodarczy, only provided for increasing the share capital of the acquirer and exchange of shares. Before the business combination in 2017 (on 18 January and 10 April, respectively) amendments to the Articles of Association of Qualia sp. z o.o. – Sopot Sp. k. were registered in the KRS, in respect of reducing the contribution of the limited partner – Qualia Development Sp. z o.o. from PLN 10 200 000 to PLN 2 200 000, including a reduction in the general amount from PLN 4 700 000 to PLN 2 200 000. The funds from the reduction in the limited partner’s contribution were returned to Qualia Development Sp. z o.o., including the amount of PLN 5 500 000 in December 2016. As at 31 December 2017, the share capital of Qualia Sp. z o.o. amounted to PLN 65 600 thousand and was divided into 1 312 shares with a nominal value of PLN 50 each. Qualia Development Sp. z o.o. is the company’s sole shareholder.
Relating to joint ventures and associates
- Bank Pocztowy SA Group
On 29 November 2017, an increase in the share capital of Bank Pocztowy SA of PLN 18 145 200 was registered in KRS. PKO Bank Polski SA took up 453 630 shares with a total nominal value of PLN 4 536 300 and with a total issue value of PLN 22 500 048. The remaining shares were taken up by Poczta Polska SA. Eventually, Bank Pocztowy SA received a capital injection from its existing shareholders amounting to PLN 90 000 192. As a result of the aforesaid share capital increase, PKO Bank Polski SA still holds 25% of the company’s share capital plus 10 shares. As at 31 December 2017, the share capital of Bank Pocztowy SA amounted to PLN 128 278 080 thousand and was divided into 12 827 808 shares with a nominal value of PLN 10 each. In 2017, the fact that Centrum Operacyjne Sp. z o.o. (a subsidiary of Bank Pocztowy SA) was put into liquidation, was registered in the KRS.
- Centrum Elektronicznych Usług Płatniczych eService Sp. z o.o. Group
In 2017 (on 11 January and 1 March, respectively) an increase in the share capital of EVO Payments International Sp. z o.o. totalling PLN 364 400 was recorded in the National Court Register (KRS). Shares in the increased share capital of the company were taken up in 2016 by the sole shareholder – Centrum Elektronicznych Usług Płatniczych eService Sp. z o.o. (a joint venture of PKO Bank Polski SA).
- FERRUM SA Group
In 2017, the fact that Walcowania Rur FERRUM Sp. z o.o. was put into liquidation, was registered in the KRS. The company is a subsidiary of FERRUM SA – an associate of PKO Bank Polski SA. Until 7 February 2017, the company operated under the name Walcowania Blach Grubych Batory Sp. z o.o. and was a direct subsidiary of FERRUM SA.