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, 2007 PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS

2 TABLE OF CONTENTS CONSOLIDATED BALANCE SHEET... 3 CONSOLIDATED INCOME STATEMENT... 5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY... 6 CONSOLIDATED CASH FLOW STATEMENT... 8 DESCRIPTION OF SIGNIFICANT DIFFERENCES BETWEEN PAS AND IFRS

3 CONSOLIDATED BALANCE SHEET Assets December 31, 2007 December 31, 2006 Intangible assets Goodwill on consolidation Property, plant and equipment Investment property Financial assets Held-to-maturity investments Available-for-sale financial instruments Financial instruments 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 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.) Equity and liabilities December 31, 2007 December 31, 2006 Equity Issued share capital and other capital attributable to the equity holders of the parent company Share capital Other capital Reserve capital Revaluation reserve Cumulative exchange differences on translation of foreign entities (17 954) (2 072) Retained earnings Accumulated profits (losses) from previous years Net profit (loss) for the period 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 guaranteed and defined terms at the account and risk of policyholder Employee benefits provision Other provisions Deferred tax liability Current income tax liability Derivative financial instruments 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 Consolidated income statement January 1, January 1, 2007 December 31, 2007 December 31, 2006 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 (9 047) (8 402) Net premium written Movements in unearned premium provision in property and casualty insurance ( ) (38 265) Reinsurers share in unearned premium provision in property and casualty insurance ( ) Movements in unearned premium provision in life insurance (1 952) Reinsurers share in unearned premium provision in life insurance - - Net change in unearned premium provision ( ) ( ) Net premiums earned Fee and commission income Net income from financial assets Realized gains and losses and impairment losses on financial assets Net change in the value of financial assets or liabilities re-measured to fair value Other operating 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 - (39) Net claims and benefits paid out ( ) ( ) Expenses in pension insurance ( ) ( ) Investment benefits (86 750) ( ) Acquisition costs ( ) ( ) Administrative expenses ( ) ( ) Other operating expenses ( ) ( ) Operating result Finance costs - - Share in the net profits/ (losses) of entities accounted for using the equity method - - Gross result Corporate income tax - current ( ) ( ) - deferred Net result from continuing operations Net result from discontinued operations and on re-measurement to fair value less costs to sell of assets held for sale or disposal groups - - Net result, of which: result attributable to the equity holders of the parent company minority gains (losses) 13 (90) Net result from continuing activities Net result from discontinued operations - - Basic and diluted weighted average number of ordinary shares Basic and diluted earnings/ (loss) per ordinary share from continuing activities (in PLN) 41,23 41,12 Basic and diluted earnings (loss) per ordinary share from discontinued operations (in PLN) - - Basic and diluted earnings (loss) per ordinary share (in PLN) 41,23 41,12 5

6 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital Issued capital and reserves attributable to the equity holders of the parent company Reserve capital Other reserves Retained earnings Revaluation reserve Cumulative exchange differences on translation of foreign entities Accumulated profits/ (losses) from previous years Net profit/ (loss) for the year Total Minority interest Total equity Balance as at January 1, (2 072) Measurement of available-for-sale financial instruments - - (34 151) (34 151) - (34 151) Cumulative exchange differences on translation of foreign entities Total net increase/ (decrease) recognized directly in equity (after taxation) (15 882) - - (15 882) (10) (15 892) - - (34 151) (15 882) - - (50 033) (10) (50 043) Net profit/ (loss) for the financial year Total increases/ (decreases) - - (34 151) (15 882) Other changes, of which: (16) - ( ) - (16) - (16) Transfer from financial result to reserve capital ( ) Other (16) - (399) - (16) - (16) Balance as at December 31, (17 954)

7 Issued capital and reserves attributable to the equity holders of the parent company Minority interest Total equity CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital Reserve capital Other reserves Retained earnings Revaluation reserve Cumulative exchange differences on translation of foreign entities Accumulated profits/ (losses) from previous years Net profit/ (loss) for the year Balance as at January 1, Measurement of available-for-sale financial instruments Total Cumulative exchange differences on translation of foreign entities Reclassification of property from property, plant and equipment to investment property Total net increase/ (decrease) recognized directly in equity (after taxation) (2 072) - - (2 072) 3 (2 069) (2 072) Net profit/ (loss) for the financial year (90) Total increases/ (decreases) (2 072) (87) Other changes, of which: ( ) - ( ) 231 ( ) Dividend paid in the financial year ( ) - ( ) - ( ) Issuance of own shares, of which: non-merger issuance of shares Transfer from financial result to reserve capital ( ) Other (85) - (2) - (2) Balance as at December 31, (2 072)

8 CONSOLIDATED CASH FLOW STATEMENT Consolidated cash flow statement January 1, 2007 December 31, 2007 January 1, 2006 December 31, 2006 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 (2 163) (3 062) gross claims paid out ( ) ( ) benefits paid out under investment contracts ( ) ( ) acquisition costs ( ) ( ) administrative expenses ( ) ( ) interest expenses (176) (53) income tax expense ( ) ( ) other operating expenses ( ) ( ) Net cash flow from operating activities Cash flow from investing activities Inflows proceeds from investment property sale of intangible assets and property, plant and equipment sale of shares realization of debt securities liquidation of term-deposits with financial institutions liquidation of other deposits interest received dividends received other inflows from investments Outflows ( ) ( ) purchase of investment property (4 095) (1 876) expenditure related to investment property maintenance (16 310) (26 098) purchase of intangible assets and property, plant and equipment ( ) ( ) purchase of shares ( ) ( ) purchase of debt securities ( ) ( ) purchase of term deposits with financial institutions ( ) ( ) purchase of other term deposits ( ) ( ) other expenditure related to investments (63 069) (52 458) Net cash flow from investing activities ( ) ( ) Cash flows from financing activities Inflows loans and advances and issuance of debt securities other financial inflows Outflows (3 141) ( ) dividends paid to the equity holders of the parent company (341) ( ) repayment of loans and advances and redemption of debt securities (2 797) (6 542) other financial outflows (3) (766) Net cash flow from financing activities (346) ( ) 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 (1 334) (2 035) Cash and cash equivalents at the end of the period, of which: of restricted use

9 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, which affect the consolidated financial result or the consolidated equity. 1. Valuation of property 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. As at the date of transition to IFRS, the deemed cost of owner-occupied property was determined and the difference [from the acquisition cost] was taken to the Accumulated profits/ (losses) from previous years. In the ensuing reporting periods, this will result in a difference in the amount of the depreciation charge and accumulated depreciation. According to IFRS, investment property is valued at fair value determined as at the balance sheet date with any changes in the fair value during the reporting period taken to the income statement for the period 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. According to IFRS, a free of charge receipt of assets with no additional conditions shall be recognized as income upon asset receipt, if there is no allocation key for the received assets to be assigned to other reporting periods than that in which they were received. The perpetual usufruct right has also been covered by adjustments described in Point Revaluation reserve In accordance with the Accounting Act and based on separate regulations relating to revaluation of property, plant and equipment in 1995, 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 do not meet the requirements of IAS Risk equalization reserve in property and casualty insurance 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 PAS, risk equalization reserve is the cost of the current period, while in accordance with IFRS an appropriation item for the net profit. 5. Catastrophe and exceptional risk reserve in property and casualty insurance 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 a catastrophe and exceptional risks reserve. This reserve does not relate to any specific obligations under insurance policy contracts. In accordance with PAS, catastrophe and exceptional risks reserve is the cost of the current period, while in accordance with IFRS an appropriation item for the net profit. 6. Technical rates in life insurance In accordance with IFRS 4, if the shareholder valued its insurance contracts with sufficient prudence, then it should not introduce any additional elements that could increase the level of the prudence already accepted. For the purpose of the consolidated financial statements prepared in accordance with Polish Accounting Standards, a decrease in technical rate for group insurance and continued employee and family insurance (type P and D ) and group life insurance, type P was made to the level of 3.30% (from 3.40%), while for the purpose of consolidated financial statements prepared in accordance with IFRSthe technical rate was left at 3.40%, i.e. the 9

10 same level as at December 31, The necessity to reduce the technical rate for life insurance for the purpose of the consolidated financial statements prepared in accordance with Polish Accounting Standards resulted from the level of rates published by the Polish Financial Supervision Authority. 7. Prevention fund In accordance with the Insurance Act, PZU and PZU Życie, i.e. the PZU Group companies with their registered offices in Poland, 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 but rather treated as an item for appropriation of the net profit with simultaneous recognition of costs of prevention activities when they are incurred. 8. Valuation of equity instruments classified as financial instruments available-for-sale In accordance with PAS, certain equity instruments classified as financial instruments available-for-sale 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 recognized impairment losses increases the value of the given asset and is recognized under finance income. 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. 9. Classification of financial assets In accordance with PAS, financial assets classified to the categories than held-for-trading may be re-classified to the held-for-trading category on the condition that there is high probability that economic benefits resulting from the contract made can be achieved in a short period of time. In accordance with IAS 39, no reclassification can be made of financial instruments to the category of financial assets at fair value through profit or loss from the moment of instrument taking up or issuance. 10. Intangible assets with indefinite useful life, including goodwill According to PAS, intangible assets with indefinite useful life are subject to amortization. In accordance with IFRS, such assets are not subject to amortization but are tested for impairment at each balance sheet date. In subsequent reporting periods, this will result in a difference in the amount of amortization charge and accumulated amortization of those assets. 11. Social Fund If the Annual General Meeting of one of the key companies of the PZU Group decides to transfer a part of its net profit for the priori year to the Social Fund, then in the consolidated financial statements prepared in accordance with PAS this fact is recognized as appropriation of the net profit for the prior year not affecting the net result for the year, in which such appropriation was made. The above transaction meets the definition of expenses under IFRS and in accordance with IAS 1 it is recognized in the consolidated income statement for the year in which such transfer to the Social Fund was made. In addition, due to the fact that transfer of a part of the prior year net profit to the Social Fund became the expected practice at certain PZU Group companies, it was assumed that as at December 31, 2007, the PZU Group companies had constructive obligation to appropriate a part of their net profit for the previous financial year to the Social Fund. As a result, the amounts transferred to the Social Fund in 2008, in the course of the 2007 profit appropriation were recognized as costs of

11 12. Deferred taxation Where appropriate, for all differences between PAS and IFRS described, the effect of deferred tax was calculated and included in the calculation of all adjustments. 13. 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 for previous years. 14. Presentation of assets held-for-sale In accordance with IFRS 5, as at December 31, 2006, PZU classified certain elements of property, plant and equipment and investment property into Assets held-for-sale and disposable groups. 15. Minority interest According to IFRS the minority interest is presented as equity item, while accoding to PAS - it represents a separate item of equity and liabilities, however, not classified under equity or liabilities. 16. Reconciliation of equity as at December 31, 2007 and net profit for the year 2007 prepared in accordance with PAS and IFRS Description Note Net profit Equity Consolidated PAS financial data Property valuation Perpetual usufruct right 2 (3 778) Risk equalization reserve in property and casualty insurance 4 (68 085) Catastrophe and exceptional risk reserve in property and casualty insurance 5 ( ) Technical rate in life insurance Prevention fund Valuation of equity instruments classified as available-for-sale 8 (12 058) Classification of financial assets Intangible assets with indefinite useful lives, including goodwill Social Fund 11 (20 000) (20 000) Minority interest Other Total adjustments (40 096) Consolidated IFRS financial data Reconciliation of equity as at December 31, 2006 and net profit for the year 2006 prepared in accordance with PAS and IFRS Description Note Net profit Equity Consolidated PAS financial data Property valuation Perpetual usufruct right Risk equalization reserve in property and casualty insurance Catastrophe and exceptional risk reserve in property and casualty insurance 5 ( ) Prevention fund 7 (13 119) Valuation of equity instruments classified as available-for-sale 8 (5 024) (15 679) Intangible assets with indefinite useful lives, including goodwill Social Fund 11 (60 550) (30 150) Minority interest 15 (90) 144 Other 13, 14 (114) 26 Total adjustments ( ) Consolidated IFRS financial data