5.16 Equity

5.16.1. Share capital

Share capital is recognized in the amount specified in the parent entity’s bylaws and registered in the National Court Register.

5.16.2. Treasury shares

Acquired treasury shares and the ones held by the consolidated entities within PZU Group are recognized at the acquisition price.

5.16.3. Supplementary capital

Under “Supplementary capital”, the following are recognized:

• effect of profit distribution, in accordance with the legal regulations of the country where the company has its registered office (in Poland, in accordance with the provisions of the Code of Commercial Companies) and the bylaws of PZU Group entities.
• capital resulting from sale of investment property which was earlier reclassified from own property, in accordance with the rules described in point 5.10;
• difference between the decrease in value of non-controlling interest and fair value of payment made in the transaction of purchase of the non-controlling interest in subsidiaries.

5.16.4. Revaluation reserve

The item “Revaluation reserve” includes the effects of:

• revaluation of financial assets classified as available for sale;
• remeasurement of the value of property to their fair value as at the date of their reclassification from property used for internal purposes to investment property;
• valuation of security instruments, in the share that constitutes effective protection;

including the corresponding change in the deferred tax assets and liabilities.

5.16.5. Actuarial gains and losses concerning provisions for employee benefits

This item includes actuarial profits and losses resulting from an increase or a decrease in the present value of defined benefit liabilities due to changes in actuarial assumptions and ex post adjustments thereto. The item includes profits and losses resulting from changes in demographic assumptions (such as mortality, employee turnover ratio) as well as financial assumptions (such as the discount rate or the projected pay growth rates).

5.16.6. Exchange differences from translation

The item includes foreign exchange differences from translation of foreign operations financial data using the exchange rates and in accordance with the principles described in point 5.3.

5.16.7. Unappropriated result

The item “Unappropriated result” includes:

• previous year net profit which has not been distributed by the General Meeting/Shareholders’ Meeting;
• current year net profit/loss;
• uncovered net loss.

Net profit distribution (or loss coverage) of the parent entity and PZU Group entities takes place only with respect to the net profit (loss) recognized in the company’s separate financial statements prepared according to the local accounting standards effective in the country of residence of a given company.

5.16.8. Non-controlling interest

Non-controlling interest represents the part of a subsidiary’s equity which may not be attributed to the parent entity, whether directly or indirectly. Non-controlling interest is measured as the proportional share in the fair value of identifiable net assets of a subsidiary.