CAPITAL GROUP OF POWSZECHNY ZAKŁAD UBEZPIECZEŃ SPÓŁKA AKCYJNA

Transcription

1 CAPITAL GROUP OF POWSZECHNY ZAKŁAD UBEZPIECZEŃ SPÓŁKA AKCYJNA CONSOLIDATED FINANCIAL DATA FOR THE YEAR ENDED DECEMBER 31, 2005 PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS

2 TABLE OF CONTENTS CONSOLIDATED BALANCE SHEET... 3 CONSOLIDATED INCOME STATEMENT... 5 STATEMENT OF CHANGES IN CONSOLIDATED EQUITY... 6 CONSOLIDATED CASH FLOW STATEMENT... 7 DESCRIPTION OF SIGNIFICANT DIFFERENCES BETWEEN PAS AND IFRS

3 CONSOLIDATED BALANCE SHEET (in PLN thousands) Assets Intangible assets Goodwill on consolidation Property, plant and equipment Investment property Entities accounted for using the equity method - - Financial assets Held-to-maturity investments Available-for-sale financial instruments Financial assets at fair value through profit or loss Loans and receivables Receivables, including insurance receivables Reinsurers share in technical provisions Estimated salvages and subrogations Deferred tax assets Current income tax receivables Deferred acquisition costs Prepayments Other assets, of which: inventories Cash and cash equivalents Assets related to continuing activities Non-current assets held for sale and disposal groups Total assets

4 CONSOLIDATED BALANCE SHEET (cont.) (in PLN thousands) Equity and liabilities Equity Issued capital and reserves attributable to equity holders of the parent company Share capital Other reserves Retained earnings Minority interest - - Total equity Liabilities Technical provisions Unearned premium provision and unexpired risk provision Life insurance (mathematical) provision s Outstanding claims provisions Annuities provisions Provisions for bonuses and rebates for the insured Other technical provisions Technical provisions in unit-linked life insurance Investment contracts - with discretionary participation features measured at amortized cost measured at fair value Employees benefits provision Other provisions Deferred tax liability Current income tax liability Derivatives Other liabilities Accruals and deferred income Accrued costs Deferred income Liabilities relating to continuing activities Liabilities relating to non-current assets held for sale and disposal groups - - Total liabilities Total equity and liabilities

5 CONSOLIDATED INCOME STATEMENT (in PLN thousands) Consolidated income statement January January Gross premium written in property and casualty insurance Reinsurers share in gross premium written in property and casualty insurance ( ) ( ) Gross premium written in life insurance Reinsurers share in gross premium written in life insurance (8 645) (7 826) Net premium written Movements in unearned premium provision in property and casualty insurance ( ) ( ) Reinsurers share in unearned premium provision in property and casualty insurance (13 587) Movements in unearned premium provision in life insurance (1 521) (6 971) Reinsurers share in unearned premium provision in life insurance - - Net movements in unearned premium provision ( ) ( ) Net premiums earned Commissions in pension insurance Net income from financial assets Realised gains and losses and impairment losses on financial assets Result on revaluation of assets to fair value Other operating income Net income Claims and benefits paid out and movements in technical provisions in property and casualty insurance ( ) ( ) Reinsurers share in claims and benefits paid out and in movements in technical provisions in property and casualty insurance Claims and benefits paid out and movements in technical provisions in life insurance ( ) ( ) Reinsurers share in claims and benefits paid out and in movements in technical provisions in life insurance Net claims and benefits paid out ( ) ( ) Expenses in pension insurance (85 565) (82 530) Investment benefits (29 107) (11 174) Acquisition costs ( ) ( ) Administration costs ( ) ( ) Other operating expenses ( ) ( ) Costs ( ) ( ) Operating result Finance costs - - Share in profits/ (losses) of entities accounted for using the equity method - - Gross result Corporate income tax - current ( ) ( ) - deferred (40 687) ( ) Net result from continuing operations Net result from discontinued operations and on revaluation to fair value less costs to sell of assets held for sale or disposal groups - - Net result, of which; result attributable to equity holders of the parent company Net result from continuing activities Net result from discontinued operations - - Net result attributable to equity holders of the parent company Basic and diluted weighted average number of shares Basic and diluted earnings/ (loss) per ordinary share from continuing activities (in PLN) 36,13 24,70 Basic and diluted earnings (loss) per ordinary share from discontinued operations (in PLN) - - Basic and diluted earnings/ (loss) per ordinary share (in PLN) 36,13 24,70 5

6 STATEMENT OF CHANGES IN CONSOLIDATED EQUITY (in PLN thousands) STATEMENT OF CHANGES IN CONSOLIDATED EQUITY Issued capital and reserves attributable to the equity holders of the parent company Share capital Reserve capital Revaluation reserve Other reserves Retained earnings Accumulated profits/ (losses) from previous years Net profit/ (loss) for the year Total Total equity Balance as at January 1, Revaluation of available-for-sale financial instruments Total net increase/ (decrease) recognized directly in equity (after taxation) Net profit/ (loss) for the financial year Total increases/ (decreases) Other movements, of which: ( ) - ( ) ( ) Dividend paid in the financial year ( ) - ( ) ( ) Transfer of net result to reserve capital ( ) Other (520) - (7) (7) Balance as at STATEMENT OF CHANGES IN CONSOLIDATED EQUITY Issued capital and reserves attributable to the equity holders of the parent company Other reserves Retained earnings Share capital Reserve capital Revaluation reserve Accumulated profits/ (losses) from previous years Net profit/ (loss) for the year Total Total equity Balance as at January 1, Revaluation of available-for-sale financial instruments Total net increase/ (decrease) recognized directly in equity (after taxation) Net profit/ (loss) for the financial year Total increases/ (decreases) Other movements, of which: ( ) - ( ) ( ) Dividend paid in the financial year ( ) - ( ) ( ) Transfer of net result to reserve capital ( ) Other (314) - (150) (150) Balance as at

7 CONSOLIDATED CASH FLOW STATEMENT (in PLN thousands) Consolidated cash flow statement January January Cash flow from operating activities Inflows cash inflows from gross premium written cash inflows from investment contracts cash flows from reinsurance commissions and shares in reinsurers profits amounts paid by reinsurers due to their share in claims paid other operating inflows Outflows ( ) ( ) - premiums paid to reinsurers ( ) ( ) - commissions paid out and share of profits from reinsurance inwards (1 899) (1 291) - gross claims paid out ( ) ( ) - investment benefits paid out ( ) (27 861) - acquisition expenditures ( ) ( ) - administration expenditures ( ) ( ) - interest expenditures (66 107) (7) - income tax expenditures ( ) ( ) - other operating expenditures ( ) ( ) Net cash flow from operating activities Cash flow from investing activities Inflows proceeds from sale of investment property proceeds from investment property proceeds from sale of intangible assets and property, plant and equipment proceeds from sale of associates and not consolidated subsidiaries proceeds from sale of shares in other entities realization of debt securities issued by associates and not consolidated subsidiaries and repayment of loans issued to those entities - realization of debt securities issued by other entities liquidation of term-deposits with financial institutions liquidation of other deposits interest received dividends received other inflows from investments Outflows ( ) ( ) - purchase of investment property (3 471) (11 892) - expenditures related to investment property maintenance (38 376) (25 638) - purchase of intangible assets and property, plant and equipment ( ) ( ) - purchase of shares in related parties ( ) (76 265) - purchase of shares in other entities ( ) ( ) - purchase of debt securities issued by related parties (2 241) (755) - purchase of debt securities issued by other entities ( ) ( ) - purchase of term deposits with financial institutions ( ) ( ) - purchase of other term deposits ( ) ( ) - other expenditures related to investments (39 247) (28 580) Net cash flow from investing activities ( ) ( ) Cash flows from financing activities Inflows - - Outflows ( ) ( ) - dividend paid to the equity holders of the parent company ( ) ( ) Net cash flow from financing activities ( ) ( ) Total net cash flow Cash and cash equivalents at the beginning of the period Change in cash and cash equivalents due to foreign exchange differences (63) (22) Cash and cash equivalents at the end of the period, of which: of restricted use

8 DESCRIPTION OF SIGNIFICANT DIFFERENCES BETWEEN PAS AND IFRS Presented below is a description of significant differences between the accounting policies applied for the purpose of preparing the consolidated financial statements in accordance with PAS and IFRS. 1. Valuation of property 1.1 Valuation of property used for own needs (owner occupied property ) at fair value as at the date of transition to IFRS In accordance with the provisions of the Decree on specific accounting principles for insurance companies, owner-occupied property is stated at cost less any accumulated depreciation as at the balance sheet date and less any accumulated impairment losses. In accordance with paragraph 16 of IFRS 1, as at the date of transition to IFRS i.e. January 1, 2004, an entity may measure the items of its property, plant and equipment at their fair value as at that date. The fair value determined as at the date of transition to IFRS is then treated as the initial cost of the item of property, plant and equipment, and represents a point of reference for the subsequent measurement of property, plant and equipment in accordance with IAS 16. As at the transition date the PZU Group entities performed the valuation of owner-occupied property to their fair value and recorded the resulting difference in Accumulated results from previous years. 1.2 Valuation of owner occupied property in the reporting periods after transition to IFRS For the purpose of the IFRS consolidated financial statements, owner-occupied property is measured at cost less straight-line depreciation. This method of measurement is in accordance with both IAS 16 and with the method of valuation of owner-occupied property for the purpose of PAS. However, due to a difference between the cost of the property IFRS and PAS (described in Note 1.1), there is a difference in the amount of the depreciation charges and accumulated depreciation on this property. 1.3 Valuation of investment property In accordance with PAS, property (including investment property) is measured as at the balance sheet date at cost less any accumulated depreciation and less any accumulated impairment losses. As at the date of transition to IFRS, the PZU Group entities adopted the fair value model for valuation of investment property. In accordance with IAS 40, the PZU Group entities measure their investment property at fair value as at the balance sheet date with changes in the fair value recognised in the consolidated income statement for the period in which they arose. 2. Perpetual usufruct right According to PAS, the perpetual usufruct right received free of charge on the basis of an administrative decision has the corresponding entry under deferred income and is subsequently amortized. In accordance with the definition of revenue included in paragraph 7 of IAS 18 a free of charge receipt of assets with no additional conditions shall be recognized as income upon asset receipt. The perpetual usufruct right has also been covered by adjustments described in Notes 1.1, 1.2 and 1.3 to the consolidated financial statements. 3. Revaluation reserve In accordance with the Accounting Act and based on separate regulations relating to revaluation of property, plant and equipment during the 90-ties, the entities of the PZU Group performed revaluations of non-current assets and recognized the resulting gains and losses in the revaluation reserve. The revaluations of non-current assets recorded in the Polish books of account do not meet the requirements of IAS 29. Due to the fact that the assets subject to revaluation (except for the property that as at the date of transition to IFRS, i.e. January 1, were measured in accordance with IFRS 1 and IAS 40) have been fully depreciated, the amount included in the revaluation reserve has been transferred to accumulated results from previous years. 8

9 4. Risk equalization reserve in property and casualty insurance (PZU) The Decree on specific accounting policies for insurance companies defines the principles for creation and use of risk equalization reserve. This reserve does not relate to any specific obligations under insurance policy contracts. In accordance with paragraph 14.a of IFRS 4, the insurer shall not expense catastrophe reserve and risk equalization reserve in the consolidated income statement. Given the above, PZU (the only entity of the PZU Group that is concerned) does not expense such reserves in the consolidated income statement for IFRS reporting purposes. The current balance of the risk equalisation reserve arising from Polish regulations is disclosed in retained earnings. 5. Catastrophe reserve in property and casualty insurance (PZU) In accordance with the provisions of the Decree on specific accounting policies for insurance companies, and based on the Company s Articles of Association and the Regulations concerning technical reserves, PZU creates catastrophe reserve. As described in Note 4 above, IFRS 4 does not allow creating such provision against the costs of the current period. For the purpose of IFRS reporting, PZU (the only company of the PZU Group that is affected) does not expense such reserve in the consolidated income statement. The current balance of this reserve is presented in retained earnings. 6. Prevention fund In accordance with the Insurance Act, PZU and PZU Życie may expense amounts transferred to the prevention fund in the consolidated income statement for the current reporting period. In accordance with the Decree on specific accounting principles for insurance companies, this fund is presented in Special funds in liabilities. In accordance with IAS 37 funds of this type should not be expensed. PZU and PZU Życie allocate part of their net results to the funds and any expenses resulting from preventive activities are recognised at the moment they are incurred. The current balance of the prevention fund created in accordance with PAS is disclosed in retained earnings. 7. Valuation of subsidiaries and associates According to PAS, not consolidated subsidiaries and associates have been measured at cost less any impairment losses. In accordance with the provisions of the Accounting Act, if the reason for which the impairment loss of a financial asset was made is no longer valid, the equivalent of the whole or appropriate part of the previously made impairment losses increases the value of the given asset and is recognized under financial income. In accordance with the Decree on specific accounting principles for insurance companies, shares in subsidiaries and associates are accounted for using the equity method. Gains on such valuation are taken to revaluation reserve, while any decreases in the carrying amount below the cost of these shares are charged to the consolidated income statement. For the purpose of IFRS reporting, the PZU Group classifies shares in not consolidated subsidiaries and associates not accounted for using the equity method as available-for-sale and measured at fair value and if the fair value cannot be reliably estimated at cost any less impairment losses. In accordance with the provisions of paragraph 66 of IAS 39, it is not possible to reverse impairment losses recognized on unquoted equity instruments that are measured at cost less impairment losses and for which fair value cannot be reliably determined. 8. Goodwill on consolidation According to PAS, goodwill on consolidation is amortized over five years, commencing in the month following the month, in which the goodwill was recognised. According to IFRS, goodwill on consolidation is not amortized, but is subject to impairment tests at each balance sheet date. At the date of transition to IFRS, i.e. January 1, 2004, the PAS net goodwill on consolidation calculated on that date became goodwill on consolidation for the purpose of the restated balance sheet and calculation of amortization charges ceased to be calculated for the purpose of the IFRS reporting. 9

10 As of the date of transition to IFRS, goodwill on consolidation is subject to impairment tests at each balance sheet day. 9. Presentation of participation units in open-end investment funds managed by TFI PZU As at 2005, 2004 and as at the transition date PZU Życie had participation units in the following open-end investment funds: PZU Fundusz Inwestycyjny Otwarty Akcji KRAKOWIAK ( KRAKOWIAK Fund ), PZU Specjalistyczny Fundusz Inwestycyjny Otwarty Stabilnego Wzrostu MAZUREK ( MAZUREK Fund ) and PZU Fundusz Inwestycyjny Otwarty Papierów Dłużnych POLONEZ ( POLONEZ Fund ). PZU Życie exercises control over the management company of those funds, i.e. Towarzystwo Funduszy Inwestycyjnych PZU S.A., the share of PZU Życie in the net assets of each of those funds exceeded 50% and the funds met the conditions required to treat them as special purpose entities ( SPE ). Given the above, KRAKOWIAK Fund, MAZUREK Fund and POLONEZ Fund have been consolidated as in the opinion of the parent company only such recognition ensures a true and fair presentation of the PZU Group financial position. 10. Social Fund 10.1 Social Fund assets In accordance with Polish law, the PZU Group entities manage Social Funds on behalf of their employees. Contributions made to the Social Fund are kept on separate bank accounts. According to PAS, assets financing Social Funds have been classified as cash and cash equivalents or receivables. According to IFRS, no Social Funds assets were recognized due to the lack of expected future economic benefits that may contribute to the inflow of cash and cash equivalents to the Group account Allocation of accumulated profits from previous years to the Social Funds During the year 2005, the Annual General Shareholders Meeting of certain PZU Group entities decided to allocate a part of net profit for the prior year to their Social Funds. In the PAS consolidated financial statements, such transactions were recorded as appropriation of net prior year profit and did not affect the consolidated net profit for the financial year The above-described transactions meet definition criteria of costs provided by IFRS and in accordance with paragraph 99 of IAS 1 are recognized in the consolidated income statement of the year Deferred taxation Where appropriate, for differences between PAS and IFRS, the effect of deferred tax was calculated and included in the calculation of all adjustments. 12. Classification of the products as investment contracts Based on the analysis made, the Management Board of PZU Życie stated that among their products are such products that transfer insignificant insurance risk (some products with guaranteed rate of return and some unitlinked products) and therefore do not meet definition criteria of an insurance contract as required by IFRS 4 and were classified for the purpose of the IFRS consolidated financial statements as investment contracts measured in accordance with IAS 39, i.e. depending on the structure of the product at amortized cost or at fair value. 13. Presentation of assets and liabilities resulting from life insurance with equity fund In accordance with PAS, the net assets of equity funds are presented as separate item. In accordance with IFRS, the related assets and liabilities are classified as financial assets or other liabilities, as appropriate. 14. Discounting of non-insurance provisions Non-insurance provisions have been discounted in the IFRS consolidated financial statements. These liabilities were not subject to discounting in the PAS consolidated financial statements. 15. Presentation of assets held for sale In accordance with IFRS 5, as at 2005 and 2004, PZU classified certain elements of property, plant and equipment and investment property into Assets held for sale and disposable groups. 10

11 16. Presentation of reinsurers share in technical provisions and estimated salvages and subrogations In accordance with PAS, the reinsurers share in technical provisions and the amount of estimates salvages and subrogations was presented as a liability item (with negative value). According to IFRS, the reinsurers share in technical provisions and estimates salvages and subrogations have been presented under assets. 17. Reconciliation of equity prepared in accordance with PAS and IFRS as at the date of transition to IFRS, i.e. as at January 1, 2004 Item Note Equity Consolidated PAS financial data Property valuation Perpetual usufruct right Risk equalization reserve in property and casualty insurance (PZU) Catastrophe reserve in property and casualty insurance (PZU) Prevention fund Presentation of participation units in open-end investment funds managed by TFI PZU Discounting of non-technical provisions Total adjustments Consolidated IFRS financial data Reconciliation of equity as at 2004 and net profit for the year 2004 prepared in accordance with PAS and IFRS Description Note Net profit Equity Consolidated PAS financial data Property valuation 1 (4 807) Perpetual usufruct right Risk equalization reserve in property and casualty insurance (PZU) 4 (18 393) Catastrophe reserve in property and casualty insurance (PZU) 5 (16 012) Prevention fund Measurement of subsidiaries and associates Goodwill Presentation of participation units in open-end investment funds managed by TFI PZU Discounting of non-technical provisions 14 (145) 238 Total adjustments Consolidated IFRS financial data Comparability of the consolidated PAS financial statements with the consolidated IFRS financial statements for the year ended 2005 Item Note Net profit Equity Consolidated PAS financial data Property valuation 1 (6 191) Perpetual usufruct right 2 (2 774) Risk equalization reserve in property and casualty insurance (PZU) Catastrophe reserve in property and casualty insurance (PZU) 5 (48 963) Prevention fund Valuation of subsidiaries and associates 7 (20 587) (9 757) Goodwill Presentation of participation units in open-end investment funds managed by TFI PZU 9 (1 966) - Social Fund 10 (29 857) - Discounting of non-technical provisions 14 (99) 139 Total adjustments (94 518) Consolidated IFRS financial data

12 Assets PAS financial data Note Adjustment IFRS financial data Intangible assets Goodwill on consolidation Property, plant and equipment (1 482) Investment property (124) Entities accounted for using the equity method Financial assets Held-to-maturity financial instruments Available-for-sale financial instruments (11 661) Financial instruments at fair value through profit or loss Loans and receivables Receivables, including insurance receivables (10 612) (23 594) Reinsurers share in technical provisions Estimated salvages and subrogations Deferred tax assets Current income tax receivables Deferred acquisition costs Prepayments Other assets, of which: inventories Cash and cash equivalents (22 552) (29 422) Assets related to continuing activities Non-current assets held for sale and disposal groups Total assets Equity and liabilities PAS Note Adjustment IFRS Equity Issued capital and reserves attributable to equity holders of the parent company Share capital Other reserves (19 905) Unpaid share capital Treasury shares Reserve capital Revaluation reserve (19 905) (21 536) 7 8 Retained earnings Accumulated results from previous years

13 Equity and liabilities PAS Note Adjustment IFRS Net profit/ (loss) for the year (94 518) Minority interest Total equity Liabilities Technical provisions Unearned premium provision and unexpired risk provision Life insurance (mathematical) provisions ( ) ( ) Outstanding claims provisions (635) Annuities provisions Provision for bonuses and rebates for the insured Other technical provisions ( ) ( ) 5 ( ) Technical provisions in unit-linked life insurance ( ) Investment contracts with discretionary participation feature measured at amortized cost measured at fair value Employees benefits provisions Other provisions (6 476) (6 337) 14 (139) Deferred tax liability (1 904) Current income tax liability Derivatives Other liabilities ( ) ( ) (53 016) Accruals and deferred income Accrued costs Deferred income (16 016) Liabilities relating to continuing activities Liabilities relating to non-current assets held for sale and disposal groups Total liabilities Total equity and liabilities

14 Consolidated income statement PAS Note Adjustment IFRS Gross premium written in property and casualty insurance Reinsurers share in gross premium written in casualty and property insurance ( ) - ( ) Gross premium written in life insurance ( ) Reinsurers share in gross premium written in life insurance (8 645) - (8 645) Net premium written ( ) Movements in unearned premium provision in property and casualty insurance ( ) - ( ) Reinsurers share in movements in unearned premium provision in property and casualty insurance (13 587) - (13 587) Movements in unearned premium provision in life insurance (1 521) - (1 521) Net movements in unearned premium provision ( ) - ( ) Net premiums earned ( ) Commissions in pension insurance Net income from financial assets Realised gains and losses and impairment losses on financial assets (47 321) (450) 7 (81 089) Result on revaluation of asset to fair value (34 518) Other operating income (3 264) (498) 2 (2 766) Net income ( ) Claims and benefits paid out and movements in technical provisions in property and casualty insurance ( ) (58 401) ( ) (60 448) Reinsurers share in claims and benefits paid out and in movements in technical provisions in property and casualty insurance Claims and benefits paid out and movements in technical provisions in life insurance ( ) ( ) Reinsurers share in claims and benefits paid out and in movements in technical provisions in life insurance Net claims and benefits paid out ( ) ( ) Expenses in pension insurance (85 565) - (85 565) Investment benefits - (29 107) (29 107) 9 (10 954) 12 (18 153) Acquisition costs ( ) - ( ) Administration costs ( ) (30 520) ( ) 1 (863) 10 (29 657) - Other operating expenses ( ) (457) ( ) 14

15 Consolidated income statement PAS Note Adjustment IFRS 1 (5 046) 2 (8) (10 150) 10 (200) 14 (99) Costs ( ) ( ) Operating result ( ) Gross result ( ) Corporate income tax current ( ) - ( ) - deferred (53 178) (40 687) (389) (2 906) Net result on continuing operations (94 518) Net result (94 518)