Subsidiaries are entities controlled by the parent company, which means that the parent company has a direct or indirect impact on the financial and operating policy of the given entity in order to gain economic benefits from its operations.
In the case of PKO Leasing S.A. (PKOL, the Company), control of Polish Lease Prime 1 DAC is exercised despite not holding an equity interest. Polish Lease Prime 1 DAC is a special purpose vehicle (SPV) formed to securitise receivables arising from PKOL’s leases, which include car, truck, plant and equipment leases.
The SPV meets the definition of a structured entity subject to consolidation (under IFRS 12). PKOL’s power is manifested, among other things, in the fact that the Company acts as the Servicer and therefore has influence over the SPV’s key activities (providing funds for the SPV’s ongoing debt service). The results of the SPV’s operations are, in principle, determined by the performance of the portfolio subject to the securitisation transaction, and the maintenance of the portfolio’s profitability is determined by PKOL through its debt collection activities (the Company decides on its own on the activities, including the initiation of hard debt collection measures). In addition, the receivables portfolio’s loss ratio does not exceed the share of Junior Funding received from PKOL and therefore it is PKOL that is exposed to the credit risk arising from the receivables.
The PKO Bank Polski SA Group does not meet the definition of “an investment entity”.