1.4 Settlement of the new acquisitions
Acquisition of the PKP Energetyka Capital Group
As described in note 32.5 to these financial statements, on 3 April 2023, the transaction of PGE’s direct acquisition of 100% of shares in PKP Energetyka Holding sp. z o.o., and consequently the indirect acquisition of 100% of shares in PKP Energetyka S.A. and shares in other subsidiaries of PKP Energetyka Holding sp. z o.o. by PGE S.A. was completed.
In the second half of 2023, the valuation of property, plant and equipment, intangible assets and rights to use assets of the acquired entities was carried out and, as a result, the final accounting for the acquisition of the assets and liabilities of the acquired entities is presented in these financial statements in accordance with IFRS3 Business Combinations.
The following table summarises assets and liabilities recognised at the date of acquisition.
| Value as at 3 April 2023 | |||
|---|---|---|---|
| Preliminary settlement | Adjustments | Final settlement | |
| Property, plant and equipment, intangible assets and rights to use assets | 6,001 | 976 | 6,977 |
| Other non-current assets | 111 | 151 | 262 |
| Loans and other financial receivables | 1,665 | 46 | 1,711 |
| Cash and cash equivalents | 387 | – | 387 |
| Other current assets | 806 | (13) | 793 |
| Total assets | 8,970 | 1.160 | 10,130 |
| Credits and loans | 5,045 | (1,968) | 3,077 |
| Provisions | 379 | (3) | 376 |
| Other liabilities | 1,502 | 2,101 | 3,603 |
| Total liabilities | 6,926 | 130 | 7,056 |
| NET ASSETS OF ACQUIRED ENTITIES | 2,044 | 1,030 | 3,074 |
| Value as at 3 April 2023 | |||
|---|---|---|---|
| Preliminary settlement | Adjustments | Final settlement | |
| Net assets of acquired entities | 2,044 | 1,030 | 3,074 |
| Transferred cash and cash equivalents | 1,873 | – | 1,873 |
| Acquired liabilities under loans | 1,543 | 3 | 1,546 |
| Total acquisition price | 3,416 | 3 | 3,419 |
| Goodwill from consolidation | 1,372 | (1,027) | 345 |
The goodwill recognised by the PGE Capital Group results from the fact that, according to the PGE Group’s assumptions, the discounted cash flows from operating activities, which will be generated by the purchased assets, will be higher than the value of the net assets of the acquired companies, determined in accordance with IFRS 3. The goodwill was fully attributed to the Railway Power Engineering segment. The goodwill recognised does not constitute goodwill for tax purposes.
As a result of the final settlement of the acquisition of the PKP Energetyka Group, the “Customer relations” asset was recognised in intangible assets, reflecting the favourable impact of relationships and contracts with overhead contact line network customers on profitability and the achievement of higher margins than market averages. The value of customer relationships amounts to PLN 471 million and was estimated using the Multi-period Excess Earnings Method as the discounted excess of trading results projected at the acquisition date over trading results forecast earlier by the PGE Capital Group.
Performance of acquired entities
From 3 April 2023 to 31 December 2023, the share of the acquired companies in the results of the PGE Capital Group was as follows:
- The share in consolidated revenue amounted to PLN 4.724 million (after consolidation exclusions and adjustments).
- The share in net profit the amounted to PLN 874 million (after consolidation exclusions and adjustments).
During the course of 2023, the acquired entities recorded sales revenue of PLN 7,118 million (net of consolidation exclusions and adjustments) and net profit of PLN 618 million (net of consolidation exclusions and adjustments).
Acquisition of LongWing Polska sp. z o.o.
On 20 September 2023, PGE Energia Odnawialna S.A. acquired 100% of shares in LongWing Polska sp. z o.o. with a value of EUR 17.5 million from Solar Energy Resources S.A. R.L. and Ser WindPark Zalesie GmbH. The newly acquired company owns the Zalesie wind farm with a capacity of 24.85 , located in the Warmińsko-Mazurskie Province.
In accordance with the requirements of IFRS 3 Business combinations, a preliminary analysis was performed to determine whether the acquired assets and liabilities met the definition of a business and the transaction should be accounted for under IFRS 3 as a business combination, or whether the acquired assets did not constitute a business and the transaction should be accounted for as an asset acquisition.
In these financial statements, the transaction is tentatively shown as an asset acquisition. However, the analyses have not yet been completed.
The combined value of the transaction amounted to PLN 338 million. The amount of PLN 82 million represented the remuneration for the shares, while the amount of PLN 256 million related to the subrogation of liabilities.
According to the requirements of IFRS 3, the PGE Capital Group should complete the accounting for the acquisition within one year from the acquisition date.