Powszechny Zaklad Ubezpiecze? Spólka Akcyjna : Financial statement of the PZU Group 2023

Warsaw, 20 March 2024

Management Board of Powszechny Zakład Ubezpieczeń Spółka Akcyjna

Motion

to the PZU SA Ordinary Shareholder Meeting

regarding:

the approval of the consolidated financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with International Financial Reporting Standards.

Content of the proposal:

We request that the PZU SA Ordinary Shareholder Meeting approve the consolidated financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with International Financial Reporting Standards.

Reasons:

The subject of the Ordinary Shareholder Meeting should be the consideration and approval of the Group's financial statements as defined in the accounting regulations. In addition, the annual consolidated financial statements are subject to approval by the Ordinary Shareholder Meeting no later than within 6 months of the balance sheet date (pursuant to Article 395 § 1 and § 5 of the Commercial Company Code, in conjunction with Article 63c(4) of the Accounting Act of 29 September 1994 and § 10(1) and § 18(1) of the Articles of Association of PZU SA).

The Management Board of PZU SA, by Resolution No. UZ/63/2024 of 20 March 2024, approved and the PZU SA Supervisory Board, by Resolution No. URN/50/2024 of 20 March 2024, positively evaluated the consolidated financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with International Financial Reporting Standards, and recommended their approval to the PZU SA Ordinary Shareholder Meeting.

The motion is presented by:

/Maciej Rapkiewicz/

/Tomasz Kulik/

Attachment:

1. draft resolution of the Shareholder Meeting of PZU SA on approval of the consolidated financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with International Financial Reporting Standards.

Draft

Re: Item 11 of the Agenda

RESOLUTION NO. ..../2024

ADOPTED BY THE ORDINARY SHAREHOLDER MEETING

OF POWSZECHNY ZAKŁAD UBEZPIECZEŃ SPÓŁKA AKCYJNA

ON 18 JUNE 2024

regarding the approval of the consolidated financial statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December 2023, prepared in accordance with International Financial Reporting Standards

Pursuant to Article 395 § 5 of the Commercial Company Code, in conjunction with Article 63c(4) of the Accounting Act of 29 September 1994 and § 18(1) of the Articles of Association of PZU SA, the PZU SA

Ordinary Shareholder Meeting hereby resolves as follows:

§ 1

The PZU SA Ordinary Shareholder Meeting, after consideration, approves the consolidated financial

statements of the Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group for the year ended 31 December

2023, prepared in accordance with International Financial Reporting Standards, including:

1. consolidated statement of financial position as of 31 December 2023, which shows a total of PLN 467,893 million (four hundred and sixty-seven billion, eight hundred and ninety-three million zlotys) on the assets and capitals and liabilities side,
2. consolidated profit and loss account for the period from 1 January to 31 December 2023, showing a net profit of PLN 12,452 million (in words: twelve billion four hundred and fifty-two million zlotys),
3. consolidated statement of comprehensive income for the period from 1 January to 31 December 2023, showing a comprehensive income of PLN 15,264 million (in words: fifteen billion, two hundred and sixty-four million zlotys),
4. consolidated statement of changes in equity for the period from 1 January to 31 December 2023, showing an increase in equity in the amount of PLN 12,054 million (in words: twelve billion fifty-four million zlotys),
5. consolidated statement of cash flows for the period from 1 January to 31 December 2023, showing an increase in cash in the amount of PLN 1,742 million (in words: one billion seven hundred and forty- two million zlotys),
6. supplementary information and notes.

§ 2

The Resolution comes into force when adopted.

Chairman

of the PZU SA Ordinary Shareholder Meeting

Powszechny Zakład Ubezpieczeń Spółka Akcyjna

Group

Consolidated financial statements for the year ended

31 December 2023 prepared in accordance with International Financial Reporting Standards

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Consolidated financial statements in accordance with IFRS for the year ended 31 December 2023

Table of contents

Consolidated profit and loss account	4
Consolidated statement of other comprehensive income	5
Consolidated statement of financial position	6
Consolidated statement of changes in equity	8
Consolidated cash flow statement	10
Supplementary information and notes	12
1.	Introduction	12
2.	Composition of PZU Group	15
3.	Shareholder structure	30
4.	Key management - Management Board and Group Directors	31
5.	Supervisory Board of the parent company	33
6.	Significant accounting policies and significant estimates and judgments	34
7.	Segment reporting	53
8.	Risk management	60
9.	Equity management	103
10.	Fair value	105
11.	Insurance and reinsurance contracts	116
12.	Result on investment activity	179
13.	Interest income calculated using the effective interest rate	182
14.	Other net investment income	183
15.	Result on derecognition of financial instruments and investments	183
16.	Movement in allowances for expected credit losses and impairment losses on financial instruments	184
17.	Net movement in fair value of assets and liabilities measured at fair value	185
18.	Revenue from commissions and fees	185
19.	Fee and commission expenses	186
20.	Operating costs of banks	186
21.	Interest expenses	187
22.	Employee expenses	187
23.	Other operating income	188
24.	Other operating expenses	188
25.	Income tax	188
26.	Earnings per share	190
27.	Goodwill	190
28.	Intangible assets	193
29.	Other assets	196
30.	Property, plant and equipment	197
31.	Investment property	199
32.	Entities accounted for using the equity method	200
	2

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group
Consolidated financial statements in accordance with IFRS for the year ended 31 December 2023
33.	Loan receivables from clients	201
34.	Financial derivatives	203
35.	Assets pledged as collateral for liabilities	214
36.	Investment financial assets	215
37.	Other receivables	220
38.	Expected credit losses and impairment of financial assets	220
39.	Cash and cash equivalents	230
40.	Equity attributable to the equity holders of the parent company	231
41.	Subordinated liabilities	233
42.	Liabilities on the issue of own debt securities	234
43.	Liabilities to banks	236
44.	Liabilities to clients under deposits	237
45.	Other liabilities	238
46.	Provisions	240
47.	Deferred tax	246
48.	Assets and liabilities held for sale	249
49.	Leases	250
50.	Assets securing receivables, liabilities and contingent liabilities	253
51.	Contingent assets and liabilities	253
52.	Offsetting financial assets and financial liabilities	253
53.	Notes to the consolidated cash flow statement	255
54.	Disputes	255
55.	Related party transactions	258
56.	Headcount	262
57.	Other information	262

3

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Consolidated financial statements in accordance with IFRS for the year ended 31 December 2023 (in millions of PLN)

Consolidated profit and loss account

				1 January -		1 January -
Consolidated profit and loss account		Note			31 December 2022
		31 December 2023
					(restated) 1)
Insurance service result before reinsurance				4,122		3,600
Insurance revenue			26,868	24,745
Insurance service expenses				(22,746)		(21,145)
Net income or expenses from reinsurance contracts held			(103)	63
Reinsurance premium allocation				(1,514)		(1,126)
Amounts recoverable from reinsurers			1,411	1,189
Insurance service result		11		4,019		3,663
Insurance finance income or expenses				(1,786)		(408)
Reinsurance finance income or expenses			38	30
Interest income calculated using the effective interest rate		13		27,579		18,265
Other net investment income	14	406	(57)
Result on derecognition of financial instruments and investments		15		592		(366)
Movement in allowances for expected credit losses and impairment losses on	16	(1,225)	(3,193)
financial instruments
Net movement in fair value of assets and liabilities measured at fair value		17		863		704
Revenue from commissions and fees		18		5,528		5,136
Fee and commission expenses	19	(1,742)	(1,449)
Operating costs of banks		20		(6,332)		(5,450)
Interest expenses	21	(8,890)	(4,767)
Other operating income		23		1,859		1,662
Other operating expenses	24	(4,842)	(5,608)
Operating profit				16,067		8,162
Share of the net financial results of entities measured by the equity method			10	(25)
Profit before tax				16,077		8,137
Income tax	25	(3,625)	(2,471)
Net profit, including:				12,452		5,666
- profit attributable to the equity holders of the Parent Company			5,766	3,781
- profit (loss) attributable to holders of non-controlling interests				6,686		1,885
Weighted average basic and diluted number of common shares		26		863,378,107		863,390,384
Basic and diluted profit (loss) per common share (in PLN)	26	6.68	4.38

1. The restatement of the comparative data resulting from the first application of IFRS 17 is described in section 6.2.1, while the restatement of data resulting from the change of presentation of interest income from hedge derivatives - in section 6.3.1.

Warsaw, 20 March 2024

The accompanying notes form an integral part of the consolidated financial statements.

4

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Consolidated financial statements in accordance with IFRS for the year ended 31 December 2023 (in millions of PLN)

Consolidated statement of other comprehensive income

					1 January -		1 January -
Consolidated statement of other comprehensive income		Note			31 December 2022
		31 December 2023
						(restated) 1)
	Net profit				12,452		5,666
Net other comprehensive income			2,812	350
	Subject to subsequent transfer to profit or loss				2,807		238
	Valuation of debt instruments			2,064	(2,228)
	Reclassification of debt instruments valuation for the profit and loss account				39		29
	Measurement of loan receivables from clients			5	(5)
	Insurance finance income or expenses				(1,678)		4,144
	Reinsurance finance income or expenses			38	(120)
	Foreign exchange translation differences				(137)		22
	Cash flow hedging			3,160	(1,551)
	Income tax		25		(684)		(53)
	Not to be transferred to profit or loss in the future			5	112
	Valuation of equity instruments				-		155
	Reclassification of real property from property, plant and equipment to			27	2
	investment property
	Actuarial gains and losses related to provisions for employee benefits				(27)		(20)
	Income tax	25	5	(25)
	Total comprehensive income				15,264		6,016
- comprehensive income attributable to equity holders of the Parent Company			5,932	5,764
	- comprehensive income attributable to holders of non-controlling interests				9,332		252

1. The restatement of the comparative data resulting from the first application of IFRS17 is described in section 6.2.1.

Warsaw, 20 March 2024

The accompanying notes form an integral part of the consolidated financial statements.

5

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Consolidated financial statements in accordance with IFRS for the year ended 31 December 2023 (in millions of PLN)

Consolidated statement of financial position

Assets		Note		31 December 2023		31 December 2022		1 January 2022
							(restated) 1)		(restated) 1)
	Goodwill		27		2,801		2,808		2,778
Intangible assets	28	3,404	3,282	3,403
	Deferred tax assets		47		2,207		3,103		3,078
Other assets	29	483	462	331
	Property, plant and equipment		30		4,445		4,304		4,144
Investment property	31	3,098	3,021	2,773
	Entities accounted for using the equity method		32		62		52		93
Insurance contract assets	11	111	68	64
	Reinsurance contract assets		11		3,469		2,336		1,509
Assets pledged as collateral for liabilities	35	1,708	972	1,336
	Assets held for sale		48		621		654		643
Loan receivables from clients	33	218,808	212,693	215,008
	Financial derivatives		34		11,396		16,197		8,328
Investment financial assets	36	192,332	153,861	136,954
	Measured at amortized cost				135,875		106,013		82,893
	Measured at fair value through other comprehensive income			44,366	39,725	44,896
	Measured at fair value through profit or loss				12,091		8,123		9,165
Current income tax receivables			19	305	223
	Other receivables		37		5,227		9,108		6,556
Cash and cash equivalents	39	17,702	15,960	9,447
	Total assets				467,893		429,186		396,668

1. The restatement of the comparative data resulting from the first application of IFRS 17 is described in section 6.2.1, while the restatement of data resulting from the change of presentation of current income tax receivables - in section 6.3.2.

Warsaw, 20 March 2024

The accompanying notes form an integral part of the consolidated financial statements.

6

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Consolidated financial statements in accordance with IFRS for the year ended 31 December 2023 (in millions of PLN)

Consolidated statement of financial position (continued)

Equity and liabilities	Note	31 December 2023	31 December 2022	1 January 2022
			(restated) 1)	(restated) 1)
Equity
Equity attributable to the equity holders of the parent company		30,022	26,162	22,072
Share capital	40.1	86	86	86
Other capital	40.3	18,225	17,205	13,611
Retained earnings		11,711	8,871	8,375
Retained profit		5,945	5,090	8,375
Net profit		5,766	3,781	-
Non-controlling interest	2.5	30,457	22,263	22,914
Total equity		60,479	48,425	44,986
Liabilities
Insurance contract liabilities	11	42,328	37,518	40,610
Reinsurance contract liabilities	11	35	31	28
Subordinated liabilities	41	6,166	6,184	6,274
Liabilities on the issue of own debt securities	42	12,003	11,090	5,940
Liabilities to banks	43	7,047	7,720	7,470
Liabilities to clients under deposits	44	303,781	278,058	265,155
Financial derivatives	34	11,656	20,956	11,880
Current income tax liabilities		1,991	328	147
Other liabilities	45	16,980	14,301	11,011
Provisions	46	2,307	1,711	1,206
Deferred tax liability	47	3,088	2,831	1,933
Liabilities related directly to assets classified as held for sale	48	32	33	28
Total liabilities		407,414	380,761	351,682
Total equity and liabilities		467,893	429,186	396,668

1. The restatement of the comparative data resulting from the first application of IFRS 17 is described in section 6.2.1, while the restatement of data resulting from the change of presentation of current income tax liabilities - in section 6.3.2.

Warsaw, 20 March 2024

The accompanying notes form an integral part of the consolidated financial statements.

7

Powszechny Zakład Ubezpieczeń Spółka Akcyjna Group

Consolidated financial statements in accordance with IFRS for the year ended 31 December 2023 (in millions of PLN)

Consolidated statement of changes in equity

											Equity attributable to equity holders of the parent company
													Other capital
	Consolidated statement of												Accumulated other comprehensive income								Non-controlling		Total
		Share				Supple		Other												Retained
	changes in equity			Treasury						Insurance		Reinsurance		Actuarial gains and					Total		interest		equity
			capital			mentary		reserve							Foreign exchange		earnings
							Revaluation		finance		finance		losses related to
					shares		capital		capital						translation
									reserve		income or		income or		provisions for
															differences
													expenses		expenses		employee benefits
	Note	40.1																					2.5
	As at 1 January 2023		86		(4)		15,315		1,721		(2,455)		2,622		(79)		(6)		91		8,871		26,162		22,263		48,425
	Total comprehensive income		-		-		-		-		1,639		(1,364)		31		(2)		(138)		5,766		5,932		9,332		15,264
	Net profit (loss)	-	-	-	-	-	-	-	-	-	5,766	5,766	6,686	12,452
	Net other comprehensive		-		-		-		-		1,639		(1,364)		31		(2)		(138)		-		166		2,646		2,812
	income
	Transaction with the
	shareholders of the parent	-	-	357	497	-	-	-	-	-	(2,926)	(2,072)	(1,138)	(3,210)
	company
	Distribution of financial		-		-		1,653		497		-		-		-		-		-		(2,150)		-		(1,138)		(1,138)
	result
	PZU dividend	-	-	(1,296)	-	-	-	-	-	-	(776)	(2,072)	-	(2,072)
	Other changes		-		-		132		-		(132)		-		-		-		-		-		-		-		-
	Sales of equity instruments
	designated	-	-	130	-	(130)	-	-	-	-	-	-	-	-
	at fair value through other
	comprehensive income
	Sale of revalued properties		-		-		2		-		(2)		-		-		-		-		-		-		-		-
	and other
	As at 31 December 2023	86	(4)	15,804	2,218	(948)	1,258	(48)	(8)	(47)	11,711	30,022	30,457	60,479

Warsaw, 20 March 2024

The accompanying notes form an integral part of the consolidated financial statements.

8