Annual Report • Apr 30, 2015
Annual Report
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31 December 2014
PREPARED IN ACCORDANCE WITH LAW NO 297/2004, CNVM REGULATION NO 1/2006 AND CNVM REGULATION NO 4/2011
| Company Information | 2 |
|---|---|
| Administrator's Letter to Shareholders | 4 |
| Analysis of the Activity of the Fund | 11 |
| General Information Analysis of the Portfolio of the Fund Financial Risk Management Key Financial Activity of the Fund Litigations & Other Contingencies |
11 16 31 32 34 |
| Market for Securities Issued By the Fund | 36 |
| Trading of the Fund's Shares Distributions to Shareholders 2014 Profit Allocation Proposal Buy-back Programmes |
36 37 37 38 |
| Corporate Governance of the Fund | 39 |
| Financial Statements Analysis | 52 |
| Significant Post Balance Sheet Events | 58 |
| Annex 1 | Financial Statements as at 31 December 2014, prepared in Accordance with the National Securities Commission ("CNVM") Regulation no. 4/2011 regarding accounting regulations compliant with EEC Directive IV applicable to the entities authorised, regulated and monitored by the Financial Supervisory Authority ("FSA"), approved by CNVM Order no. 13/2011, and with CNVM Instruction no. 2/2007 regarding the preparation and submission of annual financial statements, applicable to the entities authorised, regulated and monitored by the FSA, as subsequently amended ("Romanian Accounting Regulations") |
60 |
|---|---|---|
| Annex 2 | Statement of Assets and Obligations of Fondul Proprietatea as at 31 December 2014, prepared in accordance with CNVM Regulation 4/2010(Annex no.4). |
109 |
| Annex 3 | Financial Statements for the year ended 31 December 2014, prepared in accordance with International Financial Reporting Standards ("IFRS") |
113 |
| Annex 4 | Statement of Persons Responsible | 169 |
| Annex 5 | Changes to the first Investment Management Agreement during 2014 | 170 |
| Annex 6 | Approval of the Renewal of the Fund Manager Mandate 173 | |
| Annex 7 | New Investment Management Agreement | 175 |
| Annex 8 | The Constitutive Act of Fondul Proprietatea in force as at 31 December 2014 | 198 |
| Annex 9 | Major contracts concluded by Fondul Proprietatea during 2014 | 216 |
| Annex 9.1. | Tender Offer Document | 216 |
| Annex 10 New Investment Policy Statement of Fondul Proprietatea SA | 231 | |
| Annex 11 Corporate Governance Statement "Comply or Explain" for year 2014. | 235 |
The following table shows a summary of the financial position of the Fund:
| Year End | ||||
|---|---|---|---|---|
| 31 December | 31 December | 31 December | ||
| NAV and Share Price Developments | Notes | 2014 | 2013 | 2012 |
| Total Shareholders' Equity (RON million) | a | 9,339.0 | 10,885.0 | 11,836.8 |
| Total NAV (RON million) | b, d | 13,236.7 | 15,013.7 | 14,979.2 |
| NAV per Share (RON) | b, d | 1.2125 | 1.2436 | 1.1371 |
| NAV per Share change in the period (%)* | -2.5% | +9.4% | +5.4% | |
| NAV per Share Total Return (%)* | c | +1.4% | +13.3% | +8.9% |
| Share Price as at the end of the period (RON) | 0.8960 | 0.8335 | 0.5495 | |
| Share Price Low (RON)1 | 0.7590 | 0.5705 | 0.4270 | |
| Share Price High (RON)1 | 0.9535 | 0.8605 | 0.6050 | |
| Share Price change in the period (%)* | +7.5% | +51.7% | +28.7% | |
| Share Price Total Return (%)* | c | +14.5% | +61.3% | +38.3% |
| Discount to NAV as at the end of the period | 26.1% | 33.0% | 51.7% | |
| Average Discount for the period | 30.7% | 41.3% | 50.2% | |
| Total Share Turnover (RON million) | 3,735.8 | 4,097.0 | 3,218.8 | |
| Average Daily Share Turnover (RON million) | 14.9 | 16.4 | 13.0 |
Source: Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch and BVB *Compared to the end of the previous year
1 Closing prices. Source: BVB
| Share Capital Information | 31 December 2014 |
31 December 2013 |
31 December 2012 |
|---|---|---|---|
| Issued Share Capital (RON) | 11,815,279,886.85 | 13,778,392,208 | 13,778,392,208 |
| Paid Share Capital (RON) | 11,469,658,154.35 | 13,413,137,586 | 13,412,780,166 |
| Number of Shares in Issue | 12,437,136,723 | 13,778,392,208 | 13,778,392,208 |
| Number of Paid Shares | 12,073,324,373 | 13,413,137,586 | 13,412,780,166 |
| Nominal Value per Share (RON) Notes: |
0.95 | 1 | 1 |
In June 2014 the FSA endorsed (FSA Endorsement no.75/25 June 2014) the decrease of the subscribed share capital of the Fund, through the decrease of the nominal value of the Fund's shares with RON 0.05 (from RON 1 to RON 0.95 per share).
In September 2014, the FSA endorsed (FSA Endorsement no 164/25 September 2014) the decrease of the subscribed share capital from RON 12,861,183,036.65 to RON 11,815,279,886.85, following the cancellation of 1,100,950,684 treasury shares acquired by the Fund during the second buy-back programme carried out in 2013.
| Share Information | |
|---|---|
| Listing | Bucharest Stock Exchange |
| Since | 25 January 2011 |
| Bucharest Stock Exchange Symbol | FP |
| Bloomberg | FP RO |
| Reuters | FP.BX |
| ISIN | ROFPTAACNOR5 |
| FSA Register No | PJR09SIIR/400006/18.08.2010 |
| CIVM Registration No | AC-4025-4/13.02.2015 |
| Shareholder Categories | % of subscribed share capital |
% of paid-up share capital |
% of voting rights |
|---|---|---|---|
| Foreign institutional shareholders | 51.84% | 53.40% | 59.04% |
| Romanian private individuals | 19.82% | 20.41% | 22.57% |
| Romanian institutional shareholders | 10.72% | 11.05% | 12.21% |
| Foreign private individuals | 5.39% | 5.55% | 6.14% |
| Ministry of Public Finance3 | 0.04% | 0.04% | 0.04% |
| Treasury shares4 | 9.27% | 9.55% | - |
| Unpaid shares5 | 2.92% | - | - |
There were 8,306 shareholders as at 31 December 2014.
Address: 78-80 Buzesti Street (7th floor), District 1, Postal Code 011017, Bucharest, Romania.
Web: www.fondulproprietatea.ro
E-mail: [email protected]
Telephone: +40 21 200 9600
Fax: +40 21 200 9631/32
2 Source: Central Depositary
3 The percentage represents the paid shares; the percentage of subscribed share capital of Ministry of Public Finance is 2.96%, including the Unpaid shares
4 252,858,056 treasury shares acquired by the Fund through the third buy-back programme and 900,617,879 treasury shares acquired through the fourth buy-back program. 5 Shares unpaid by Romanian State represented by Ministry of Public Finance
Fondul Proprietatea registered again a year of strong performance in terms of share price, despite various challenges, and delays encountered along the way. During the year, our focus remained unwavered on creating shareholder value through our active management approach and close supervision of the portfolio companies, and a constant focus on value-enhancing corporate strategies.
In 2014, the total return on the NAV per share of the Fund was 1.4% and it was 24.5% since the inception of performance calculations in September 2010. The Fund reported a NAV of RON 13.24 billion and a NAV per share of RON 1.2125 as at 31 December 2014. The share price increased throughout the year to reach a historic high of RON 0.9535 per share on 3 October 2014. The share price total return was 14.5% in 2014, and 78.1% since January 2011 when the Fund was listed on the Bucharest Stock Exchange. The discount of the Fund's share price to the NAV continued its downward trend throughout the year, and narrowed to 26.1% as at 31 December 2014, from 33.0% at the end of 2013. In 2014, the discount ranged between a high of 37.9% and a record low of 21.7%.
Source: FTIML, based on NAV reports submitted to FSA.
In 2014, the Bucharest Stock Exchange outperformed the largest markets in Central Europe in both local currency and EUR terms, as shown in the table below.
| % change in 2014 | in local currency | in EUR |
|---|---|---|
| BET-XT (Romania) | 6.32% | 6.28% |
| PX (Czech Republic) | -4.27% | -5.38% |
| WIG20 (Poland) | -3.54% | -6.56% |
| ATX (Austria) | -15.18% | -15.18% |
| BUX (Hungary) | -10.40% | -15.66% |
We provide details on the portfolio management on a monthly basis via Factsheets and also via the Quarterly Results Reports. We encourage you to read the full details given in the section Analysis of the Portfolio of the Fund.
The Fund's 2014 audited net profit was RON 1,012,898,265. The Fund is obliged to make transfers of at least 5% of the Fund's profit to the legal reserves, until these reserves reach a value equivalent to 20% of the value of the issued share capital of the Fund. Following the 2014 transfer of RON 51,476,313, the value of these reserves is RON 243,735,507 (being 2.1% of the issued share capital).
The Fund Manager proposes to keep the remaining RON 961,421,952 within unallocated retained earnings, due to the fact that, according to the official interpretation of the FSA on the definition of "net asset value" for the Fund, dividend distributions cannot be made to shareholders at the present time, because the Fund's shareholders' equity calculated in accordance with Romanian Accounting Regulations, RON 9,339.0 million is lower than the share capital of the Fund, RON 11,815.3 million.
The Fund Manager has already recommended, and the shareholders have approved (on 21 January 2015), a cash distribution of RON 0.05 per share via the decrease of the share capital through the reduction of the nominal value of the Fund's shares. Based on our current understanding of Romanian tax law, no Romanian tax will arise for the Fund or its shareholders on this distribution.
The decrease of share capital is subject to the endorsement from the FSA. The payments to shareholders for this cash distribution is expected to start on 29 June 2015.
In addition, the Fund Manager will seek to return further value to shareholders by continuing to buy-back shares.
Please see the Analysis of the Activity of the Fund section for the official interpretation of the FSA on the definition of the "net asset value" for the Fund, and for the update of the Fund's annual cash distribution policy.
Some of the key objectives achieved in 2014 are:
Placement of 2.0 million shares held in Conpet SA, via an accelerated bookbuilding process on the Bucharest Stock Exchange;
Shareholders' approval for key corporate actions:
On 25 January 2011 the Fund was listed on the BVB. After four years, the Fund continues to be the most actively traded company on the BVB:
In 2014, in our efforts to increase the visibility and profile of the Fund, as well as of the local capital market, and Romania, to a broader international institutional investor base, we participated in 13 global and regional emerging and frontier market conferences in London, New York, Warsaw, Zürs, Stegersbach, and Prague, where we met with over 170 investment analysts and portfolio managers interested in finding out more details about the Fund and its equity story, and to receive updates on the Fund, its corporate actions, and its main portfolio holdings.
We also organised 11 road-shows in the most important financial centres in Europe (London), the United States (New York) and the Middle-East (Dubai). During the road-shows, the Fund's management team had individual and group meetings with representatives from over 100 institutional investment firms, both current shareholders and potential investors.
In February, we organised in New York, in collaboration with the Bucharest Stock Exchange and Raiffeisen Bank, the "Romania Investor Days" event, the first such event focused on Romania and the local capital market. More than 60 representatives from international institutional investors with assets under management of over EUR 700 billion participated in the event. The first day featured presentations from the Romanian Prime Minister's Advisor, the Deputy Governor of the Romanian National Bank, the Privatisation Director of the Energy Department from the Ministry of Economy, the Secretary of State within the Ministry of Economy, the Secretary of State within the Ministry of Public Finance, the President of the Romanian Fiscal Council, the CEO and the President of the Bucharest Stock Exchange, the Vice-President of Raiffeisen Treasury and Capital Markets, and the Fund Manager of Fondul Proprietatea. During the second day, over 100 individual and group meetings were organised between the institutional investors and the 11 Romanian listed and unlisted companies participating in the conference.
On 31 March, as part of our ongoing efforts to ensure a broader understanding of the Fund and the underlying holdings, we held the third edition of the Analysts Day event, addressed to analysts covering the Fund. Also, as part of our efforts to promote the Fund, the Romanian local market, and the country in general, we continued our series of events focused on analysts and institutional investors, and in June and November 2014, we organised the 6th and the 7th editions of the Fondul Proprietatea Analyst and Investor Days. Over 170 institutional investors (with EUR 900 billion in assets under management), analysts covering the Fund, and corporates, participated on both occasions in the three days events.
The participants had the opportunity to visit the nuclear reactors of Nuclearelectrica SA, in Cernavoda, the operations of the Port of Constanta, the OMV Petrom Refinery and Power-Plant in Ploiesti, and Salrom's salt mine in Slanic Prahova. Also, the events featured presentations from the United States ("U.S.") Chargé d'Affaires and the U.K. Ambassador, the Minister of Energy, the International Monetary Fund ("IMF"), the World Bank, the National Bank of Romania, the Fiscal Council, the Financial Supervisory Authority, the Romanian Senate, the Bucharest Stock Exchange, the Privatization Office within the Energy Department, A.T. Kearney, Renaissance Capital, and the Fund, as well as the management of the top portfolio companies: OMV Petrom SA, Romgaz SA, Nuclearelectrica SA, CE Oltenia SA, Transelectrica SA, Hidroelectrica SA, and Posta Romana SA. Over 200 individual and group meetings were organised during these events, between institutional investors and the management of some of the largest listed and unlisted companies in Romania.
In November, we held the first Retail Investor Day event, dedicated to the Fund's retail shareholders, in order to update them on the ongoing and future corporate actions envisaged by the Fund Manager, and to answer any queries.
Communication between the Fund Manager and investors remains our top priority as we aim to ensure that investors are informed about the latest developments and obtain their feedback as we continue to focus on maximising shareholder value. Therefore, during the year, we held four conference calls with analysts and investors related to the Fund's 2013 preliminary financial results, and to the 2014 quarterly financial results. We also facilitated at the end of February a conference call between investors and analysts and the judicial administrator of Hidroelectrica SA, following the Court of Appeal's decision to reopen the insolvency procedure of Hidroelectrica.
In addition, the Fund's management team had 60 individual meetings with current and prospective investors, as well as over 80 conference calls with institutional investors interested in the Fund and its underlying portfolio holdings.
On 26 November, the Romanian Financial Supervisory Authority announced that it did not met the condition for the approval of the Depository Interests ("DI") Regulation needed to complete the Fund's listing in London in December 2014, according to the mandate given by the Fund's shareholders in April 2014. The Fund Manager considers that the Fund's listing on the LSE would be in the best long-term interest of the Fund and its shareholders as it should broaden the foreign institutional investor base not currently active in Romania, it should increase the research coverage from international brokers, and the incremental demand for the Fund's shares generated by the listing on the LSE should contribute to the narrowing of the discount to NAV at which the Fund's shares currently trade.
Although the Fund's listing on the LSE could not be completed in December 2014 through the use of DIs, the recent regulatory changes now allow for the Fund to be listed on the LSE via the use of Global Depositary Receipts ("GDR"). The Fund Manager remains committed to working with the FSA to approve the DI regulation, but ultimately the final decision and the timing of that is solely under the control of the FSA. In December 2014, Elliott Associates proposed a resolution for the General Shareholders Meeting on 21 January 2015 for a new mandate to list the Fund in London until 10 July 2015, which shareholders have approved. The Fund Manager will work to achieve the Fund's listing on the LSE as soon as possible through GDRs; however, if the DI regulation is approved by the FSA in the meantime, the Fund Manager will pursue this route to complete the LSE listing.
The third buy-back programme, approved by shareholders on 22 November 2013, started in March 2014. On 24 July, the Fund announced the completion of the programme, through which the Fund Manager acquired 252,858,056 shares of the Fund (equivalent to 2.02% of the Fund's paid share capital) through daily acquisitions on the Bucharest Stock Exchange. The total value of the buy-back programme was RON 205,460,540 (excluding brokerage fees and other acquisition related costs), and the average price was approximately RON 0.8125 per share. The shareholders approved the cancellation of the shares repurchased in the third buy-back programme at the 23 September 2014 General Shareholders' Meeting ("GSM").
For further details regarding the cancellation of the shares repurchased in the third buy-back programme, please read the Share Cancellation and Significant Post Balance Sheet Events sections.
The fourth buy-back programme refers to the acquisition of a maximum number of 990,855,616 shares. The price range is a minimum of RON 0.2 per share and a maximum of RON 2.0 per share. The buy-back programme started on 1 October 2014 and can be executed until 27 November 2015. The shares repurchased during the fourth buy-back programme will be cancelled. On 20 October, the Fund Manager announced its intention to accelerate the buy-back programme via a Public Tender Offer to acquire 750 million shares, and selected Raiffeisen Bank to provide brokerage services for the Tender Offer. The price offered was RON 1.11 per share and the subscription period was 3 November – 2 December. On 4 December, the Fund Manager announced the results of the Tender Offer: 10,109,789,738 total shares subscribed (an oversubscription rate of 13.48, and an allocation ratio of 0.0741855191). As at 31 December 2014, the total number of shares repurchased during the fourth buy-back programme was 904.5 million, representing 91.3% of the total programme, at an average share price of RON 1.0743 per share.
As at 31 December 2014, the total value of the shares acquired in the fourth buy-back programme was RON 986.5 million, out of which related fees were RON 14.7 million, including fees charged by the FSA in amount of RON 12.5 million.
For further details regarding the completion of the fourth buy-back programme, please read Significant Post Balance Sheet Events section.
On 19 November 2014 the Fund's shareholders approved the fifth buy-back programme that refers to the acquisition of a maximum number of (i) 227,572,250 shares or (ii) 10% of the subscribed share capital at the relevant time, whichever is the lesser, starting with the date when the share capital decrease approved through EGM Resolution on 23 September 2014 (regarding the cancelation of the shares purchased by the Fund during the third buy-back programme) is effective until August 2016. The buy-back shall be performed at a price that cannot be lower than RON 0.2 per share or higher than RON 2 per share. The buy-back transaction can only be applied for fully paid shares. The shares purchased will be cancelled. This buy-back programme implementation will be subject to the availability of the necessary cash.
For further details regarding the fifth buy-back programme, please read Significant Post Balance Sheet Events section.
On 24 February 2014, the Fund Manager received from the FSA the decision regarding the approval of the decrease of the Fund's share capital through the cancellation of the 240.3 million shares repurchased during the first buy-back programme. The decision was effective beginning with the same day.
On 28 April 2014, shareholders voted for the decrease of the share capital through the cancellation of 1.1 billion shares repurchased by the Fund during the second buy-back programme. On 25 September 2014, the FSA issued Decision no. 164 through which it endorsed the change of the Constitutive Act reflecting the decrease of the Fund's subscribed share capital through the cancellation of 1.1 billion shares repurchased during the second buyback programme. The decision was effective beginning with 26 September 2014.
During the Extraordinary General Shareholders' Meeting ("EGM") held on 23 September 2014, shareholders approved the decrease of the share capital through the cancellation of 252,858,056 shares repurchased by the Fund during the third buy-back programme. The share capital decrease is effective beginning with 27 January 2015. For further details on the cancellation of shares acquired during the third buy-back programme, please read Significant Post Balance Sheet Events section.
Romania continued to outpace other countries in the European Union with one of the highest Gross Domestic Product (GDP) growth rates of 2.9% in 2014, and 2.6% in the fourth quarter of the year. Rising private consumption, supported by growing wages, and continued fall in the unemployment rate has contributed significantly to this evolution, while exports, industrial production, and agriculture have also positively impacted GDP growth last year.
We expect private demand to further benefit from low inflation and falling interest rates in 2015, and that should positively influence consumer confidence as well. The GDP growth of Romania can continue to accelerate in 2015 and we expect the growth rate to be around 3% this year, if the current momentum of exports is maintained, and if Government spending will pick-up. This target may even be exceeded if the 2015 harvest turns out to be similar to the one in the previous two years.
The Public finances have been stable over the past few years, following efforts undertaken by the Romanian Government to comply with requests made by the IMF as part of several stand-by agreements. Public debt to GDP is still low within the EU, less than 40%, and we do not expect major changes in 2015. The budget deficit target for 2015 agreed with the IMF is 1.83%, and the Government has established a good track record on meeting its targets.
We do not expect higher inflation over the next 12 months, and we do not expect significant weakening of the Romanian Leu (RON). Following the two cuts in the Romanian Central Bank's base rate in early 2015 to a record low of 2.25%, we believe that interest rates could decline further this year.
The Romanian capital market should continue its progress towards a future upgrade from frontier to emerging market status. For the time being, the current frontier market status remains very beneficial to the local market, as investors' interest in the asset class continues to grow, new products dedicated to frontier markets are still being launched, and Romania's weight in this frontier markets index should increase and attract international institutional interest and demand for the local shares. At the same time, the local pension funds, as well as mutual funds continue to see significant inflows, which could be invested in the local equity market. Higher participation of retail investors can also contribute to the development of the capital market, and we expect to see this in 2015 as the record low interest rates should be beneficial for equities, as investors will be looking for higher yields. Given strong potential demand for equities, the Government should be encouraged to continue with IPOs of State-Owned Enterprises. From the Fund's portfolio, Aeroporturi Bucuresti SA, Administratia Porturilor Maritime Constanta SA, and Societatea Nationala a Sarii Salrom SA (Salrom) are prime candidates for a listing in 2015 and we will be working closely with the Government to support these IPOs.
On the political front, 2015 is not marked by any elections, so there are no scheduled political events that could slow the reform process. We hope that the Government will remain committed to the development of the local capital market, following successful listings of Romgaz SA and Electrica SA.
Overall, we believe in a continuation of a positive growth trend experienced in the previous years by the Romanian economy and the local capital market.
As we look to generate further value for the Fund's shareholders and not only meet, but exceed the performance objectives included in the Investment Policy Statement (discount of 15% or less for at least two thirds of the trading days between 1 October 2014 – 30 June 2015 and a higher adjusted NAV per share than the NAV per share reported as at 30 September 2013 of RON 1.16106 ), we will continue to actively manage the Fund, work closely with the Government to ensure successful implementation of the corporate governance code, and expand the IPO calendar to include other companies that are prepared for a listing (as mentioned above, the prime candidates are Societatea Nationala a Sarii (Salrom) SA, Administratia Porturilor Maritime Constanta SA and Aeroporturi Bucuresti SA).
We will continue to focus on enhancing the profitability of these assets to secure a growing dividend income trend for the Fund. Furthermore, value-enhancing corporate actions such as share buy-backs and cash distributions to shareholders, complemented by the completion of the secondary listing of the Fund in London and continued promotion of the Fund and of the Romanian capital market should allow the Fund's NAV to be better reflected in the share price.
6 The adjusted NAV for a given date will be calculated as the sum of: the reported NAV as at the end of the reporting period, any returns to shareholders following reductions of the share capital (return of nominal value) implemented after 30 September 2013, and any Distribution Fee and any transaction costs relating to non-dividend distributions including buy-backs executed after 30 September 2013. The adjusted NAV per share will be equal to the adjusted NAV divided by the total number of the Fund's paid shares, less treasury shares, on the last day of the reporting period.
We are confident that our active, bottom-up investment process will allow us to continue delivering the best longterm results for our shareholders and we look forward to the opportunities ahead for Fondul Proprietatea.
Last but not least, we would like to take this opportunity to invite all shareholders to attend the Annual General Meeting of Shareholders to be held in Bucharest on 27 April 2015, starting with 1.00 p.m., where you will have the opportunity to receive the latest updates about the Fund.
Grzegorz Maciej Konieczny Dr. Mark Mobius Legal Representative and Portfolio Manager Executive Chairman Franklin Templeton Investment Management Ltd. Templeton Emerging Markets Group United Kingdom, Bucharest Branch
Fondul Proprietatea is a Romanian legal entity, incorporated as a joint stock closed-end investment company. The Fund is registered with the FSA in the category "Other Organisations for Collective Investments – AOPC" and has been listed on the regulated market of the BVB since 25 January 2011.
The main activities of the Fund according to the National Statistics Classification of Economic Activities in Romania ("CAEN") and the Fund's own Constitutive Act are the business of operating mutual funds and other similar financial entities (CAEN reference 643) and the main activity is financial investments (CAEN reference 6430).
The Fund was incorporated by the Romanian State in 2005 as a joint stock company with the initial purpose of providing compensation to individuals whose real property assets were illegally confiscated by the Romanian State during the Communist regime, and which can no longer be returned to those individuals in kind.
The Fund's original Constitutive Act was enacted by Government Decision no. 1481/2005 regarding the incorporation of Fondul Proprietatea S.A. ("Government Decision 1481"), which determined that the Fund would be an undertaking for collective investments organised as a closed-end investment company. However, the Fund was only officially registered by CNVM (currently FSA) as a closed-end investment company in 2010 (by CNVM decision no. 34/18 August 2010).
The initial sole shareholder of the Fund was the Romanian State. Since the Fund's launch, the shares have been awarded by the National Authority for Property Restitution to individuals legally entitled to receive compensation from the Romanian State and who chose to convert their compensation entitlements into shares issued by the Fund. As a result of the compensation and conversion process the Romanian State's participation in the share capital of the Fund has continuously decreased to 4,688,467 shares as at 31 December 2014. Beginning with 15 March 2013, the date when Government Emergency Ordinance no.4/2012 entered into force the compensation process was suspended. In January 2015 entered into force the Law no. 10/2015 confirming that Romanian State will not use the compensation scheme using Fondul Proprietatea shares anymore in future.
As at 31 December 2014 the Fund had no employees. Given that the Fund is administrated by the Fund Manager, it is not expected that the Fund will have any employees in the future.
The evolution of the shareholder structure during the year is illustrated by the following chart:
| Shareholder Categories | % of subscribed share capital |
% of paid-up share capital |
% of voting rights |
|---|---|---|---|
| Foreign institutional shareholders | 51.84% | 53.40% | 59.04% |
| Romanian private individuals | 19.82% | 20.41% | 22.57% |
| Romanian institutional shareholders | 10.72% | 11.05% | 12.21% |
| Foreign private individuals | 5.39% | 5.55% | 6.14% |
| Ministry of Public Finance7 | 0.04% | 0.04% | 0.04% |
| Treasury shares8 | 9.27% | 9.55% | - |
| Unpaid shares9 | 2.92% | - | - |
At the beginning of 2014, the subscribed capital of the Fund was RON 13,778,392,208, and the paid-up capital was RON 13,413,137,586.
On 24 February 2014, the Fund Manager received from the FSA the decision regarding the approval of the decrease of the Fund's share capital through the cancellation of the 240.3 million shares repurchased during the first buy-back programme. The decision was effective beginning with the same day.
On 28 April 2014, shareholders voted for the decrease of the share capital through the cancellation of 1.1 billion shares repurchased by the Fund during the second buy-back programme. On 25 September 2014, the FSA issued Decision no. 164 through which it endorsed the change of the Constitutive Act reflecting the decrease of the Fund's subscribed share capital through the cancellation of 1.1 billion shares repurchased during the second buyback programme. The decision was effective beginning with 26 September 2014.
During the Extraordinary General Shareholders' Meeting held on 23 September 2014, shareholders approved the decrease of the share capital through the cancellation of 252,858,056 shares repurchased by the Fund during the third buy-back programme. The share capital decrease is effective beginning with 27 January 2015. For further details on the cancellation of shares acquired during the third buy-back programme, please see Significant Post Balance Sheet Events section.
On 3 February 2014, the Fund's shareholders approved by EGM Resolution no. 2/2014 the reduction of the Fund's share capital by reducing the nominal value of the shares from RON 1 to RON 0.95 and the return of the RON 0.05 per share to the shareholders registered at the registration date (30 April 2014), proportionally with their participation to the Fund's paid-up share capital.
On 25 June 2014, the FSA endorsed the above-mentioned share capital reduction, and thus, in accordance with the provisions of the Shareholders' Resolution no. 2/2014, the payment started on 25 July 2014.
By 31 December 2014, shareholders had collected over 98% of the total distribution of RON 601.3 million.
On 30 April 2014, the Fund filed with the FSA a request for obtaining an official interpretation regarding the scope of article 17 of CNVM Regulation 4/2010, as amended, providing for the methodology of computation of the "net asset value" of the Fund, in connection with article 69 of the Companies Law. The need for this request
7 The percentage represents the paid shares; the percentage of subscribed share capital of Ministry of Public Finance is 2.96%, including the Unpaid shares
8 252,858,056 treasury shares acquired by the Fund through the third buy-back programme and 900,617,879 treasury shares acquired through the fourth buy-back program. 9 Shares unpaid by Romanian State represented by Ministry of Public Finance
became apparent after receiving certain letters from public authorities that were inconsistent with previous letters from public authorities on aspects of potential relevance for this topic.
In response to the request, the Fund received on 19 June 2014 the FSA Endorsement no. 71/19.06.2014 stating, in essence, that the "net asset value" determined in accordance with Regulation no. 4/2010 is for regulatory reporting and investors' information purposes only. The FSA confirmed that the Endorsement has effect prospectively from the date of its publication.
Based on our review, the FSA's official interpretation has the direct effect that the ability to distribute dividends should be established based on the concept of "total shareholders' equity" calculated in accordance with CNVM Regulation no. 4/2011 regarding accounting regulations compliant with EEC Directive IV applicable to the entities authorised, regulated and monitored by the Financial Supervisory Authority (Regulation 4/2011).
For the prior year, as at 31 December 2013, the "total shareholders' equity" in the financial statements (prepared in accordance with Regulation 4/2011) was RON 10,885.0 million, which was below the share capital of the Fund of RON 13,778.4 million. Therefore, according to the FSA interpretation, the Fund Manager could not propose nor make any dividend distributions to the Fund's shareholders. The situation remains the same as at 31 December 2014, because the "total shareholders' equity" in the financial statements (prepared in accordance with Regulation 4/2011) was RON 9,339.0 million, which is below the share capital of the Fund of RON 11,815.3 million.
According to Regulation 4/2011, the financial assets (i.e. the Fund's portfolio holdings), both listed and unlisted (which are the main asset category of Fondul Proprietatea), can only be valued in the financial statements of the Fund at the historical cost (i.e. cost / initial value less cumulated adjustments for impairment), even if their fair values would be higher than this cost / initial value. This has a negative impact on the "total shareholders' equity" computed based on Regulation 4/2011.
| Regulation no. 4/2011 (Romanian Accounting Regulations, "total shareholders' equity") |
Regulation no. 4/2010 ("Net asset value" computation for regulatory reporting) |
|
|---|---|---|
| Listed shares | Valued at cost less adjustments for impairment |
Valued at closing market prices (regulated markets) Valued at reference prices (Rasdaq market)* |
| Unlisted or illiquid listed shares | Valued at cost less adjustments for impairment |
Valued as per latest issued annual financial statements (proportionally with the stake held) or using fair valuation methodologies |
| Total shareholders' equity / net asset value as at 31 Dec 2013 |
RON 10,885,061,292 | RON 15,013,742,081.74 |
| Total shareholders' equity / net asset value as at 31 Dec 2014 |
RON 9,339,030,996 | RON 13,236,700,614.13 |
Please find below a table outlining the main differences in the valuation of the Fund's financial assets in accordance with CNVM Regulation no. 4/2010 and CNVM Regulation no. 4/2011.
* Reference price is considered the closing price for the shares listed on section RGBS of Rasdaq and the average price for the securities listed on sections XMBS of Rasdaq and UNLS.
The Fund Manager analysed the interpretation and amended the Fund's policy for annual cash distributions to shareholders.
Following the official interpretation received from the FSA on computation methodology for the "net asset value" to be used by the Fund in the application of Article 69 of Companies Law no. 31/1990, related to the distribution of profits to shareholders, which in essence limits the Fund's current ability to distribute dividends, the Fund Manager remains committed to returning cash to shareholders on an annual basis (subject to applicable law and necessary approvals) and has amended the Fund's annual cash distribution policy as follows:
"In the absence of exceptional market conditions or circumstances, and subject to any restrictions under Romanian legal or tax regulations, the Fund Manager intends to recommend to shareholders a cash distribution related to each financial year equivalent to 100% of the sum of (i) the Fund's dividend income from portfolio companies, (ii) plus interest on cash balances, (iii) less expenses and taxation and (iv) less compulsory allocations to reserves according to the regulations in force, in each case for that year. The cash distributions would be paid to shareholders either in the form of a return of capital (by decreasing the nominal value per share) or in the form
of dividends, in each case subject to any restrictions under Romanian legal or tax regulations. In the case of dividend distributions (where permitted by applicable law), the distributable amount will be assessed based on audited financial information. In the case of a return of capital, the distributable amount will be based on a best estimate according to the latest management accounts at the time of proposing the resolution".
The annual cash distribution policy does not limit additional cash returns and share buy-backs that can be recommended by the Fund Manager separately, subject to available cash and depending on the discount level, according to the Investment Policy Statement.
During 2014, the Fund's paid-up share capital changed as follows:
As a result of these decisions, as at 31 December 2014, the subscribed share capital of the Fund is RON 11,815,279,886.85 and the paid-up share capital increased to RON 11,469,658,154.35.
There are no ongoing litigations that could impact the unpaid share capital.
The execution of the third buy-back programme started on 25 March 2014. The programme was approved by shareholders on 22 November 2013 and referred to the repurchase of a maximum number of 252,858,056 shares at a minimum price of RON 0.2 per share and a maximum of RON 1.5 per share. The shares repurchased would be cancelled.
On 24 July 2014, the Fund announced the completion of the third buy-back programme, through which the Fund Manager acquired 252,858,056 shares of the Fund (equivalent to 2.02% of the Fund's paid-up share capital) through daily acquisitions on the Bucharest Stock Exchange. The total value of the buy-back programme was RON 205,460,540 (excluding brokerage fees and other acquisition related costs), and the average price was approximately RON 0.8125 per share. At the 23 September 2014 General Shareholders' Meeting, the Fund's shareholders approved the decrease of the share capital through the cancellation of 252,858,056 shares repurchased by the Fund during the third buy-back programme.
The share capital decrease is effective beginning with 27 January 2015. For further details on the cancellation of shares acquired during the third buy-back programme, please see the Significant Post Balance Sheet Events section.
The fourth buy-back programme refers to the acquisition of a maximum number of 990,855,616 shares. The price range is a minimum of RON 0.2 per share and a maximum of RON 2.0 per share. The buy-back programme can be executed until 27 November 2015. The shares repurchased during the fourth buy-back programme will be cancelled. The Fund Manager also announced that following the evaluation of the offers submitted in the brokers' selection process, Raiffeisen Bank was selected to provide brokerage services for this programme. For further details on the fourth buy-back programme, please read Significant Post Balance Sheet Events section.
Furthermore, to ensure that the Fund Manager will be able to continue with the share repurchases, the Fund Manager has proposed on the agenda of the 19 November 2014 General Shareholders' Meeting the approval of the fifth buy-back programme that refers to the acquisition of a maximum number of (i) 227,572,250 shares or (ii) 10% of the subscribed share capital, whichever is the lesser at the relevant time, starting with the date when the share capital decrease approved through the EGM Resolution on 23 September 2014 (regarding the cancelation of the shares purchased by the Fund during the third buy-back programme) is effective until August 2016. The buyback shall be performed at a price that cannot be lower than RON 0.2 per share or higher than RON 2 per share. The buy-back transaction can only be applied for fully paid shares. The shares purchased will be cancelled.
The shareholders' decision regarding the share capital decrease and the change of the Constitutive Act will be approved by the shareholders, with the observance of the provisions of the Constitutive Act, being agreed that the shareholders may approve one or more share capital decreases as the shares are being bought back and the shareholders are convened by the Sole Administrator. This buy-back programme implementation will be subject to the availability of the necessary cash.
For further details on the fifth buy-back programme, please read Significant Post Balance Sheet Events section.
The Fund operates in accordance with the applicable provisions of the following laws:
During 2014 the Fund had no branches.
During 2014, the Fund controlled the following companies, which under Romanian applicable laws qualify as subsidiaries of the Fund, all of which are incorporated and operate in Romania. In the Fund Manager's opinion, none of these subsidiaries qualifies as a significant subsidiary.
| Name | Ownership interest |
|---|---|
| Alcom SA | 71.89% |
| Comsig SA | 69.94% |
| Primcom SA | 68.97% |
| Zirom SA | 100.00% |
There was no corporate reorganisation of the Fund or its subsidiaries in 2014.
The key performance indicator of the Fund is its Net Asset Value ("NAV"). The Fund is required to publish a monthly net asset value per share in accordance with local rules issued by the capital market regulator, no later than 15 calendar days after the reporting month end.
All NAV reports are published on the Fund's website at www.fondulproprietatea.ro, together with share price and discount information.
CNVM Regulation no 4/2010, as subsequently amended allows the NAV calculation based on best international practice suitable for a listed closed-end fund.
Listed securities are valued at closing market prices - if listed on regulated markets, or reference prices - if listed on Rasdaq (the reference price is considered to be the closing price for the securities listed on section RGBS of Rasdaq, and the average price for the securities listed on section XMBS of Rasdaq and on UNLS). Illiquid or unlisted securities are valued using either the value of shareholders' equity, as per the latest available annual financial statements, proportionally with the stake held, or according to international valuation standards which permit fair valuation.
Starting December 2012, the shares in the companies going through an insolvency or a reorganisation procedure are valued either at zero, or at the value provided by an independent valuer, using valuation methods in accordance with international valuation standards which permit fair valuation (previously such holdings were valued at zero, until the procedure was finalised). The shares in the companies under a judicial liquidation procedure, or any other liquidation procedures, as well as in the companies under temporary or final suspension of operation, are valued at zero until the procedure is finalised.
Beginning December 2012, the treasury shares acquired through buy-backs are excluded from the number of shares used in NAV per share computation.
The following chart shows information on the monthly published NAVs per share for the period 31 December 2013 to 31 December 2014:
Source: FTIML, based on NAV reports submitted to FSA.
The orange section within the June 2014 NAV represents the value per share of the return of capital approved by shareholders in February 2014, which was recorded in June, following the FSA's endorsement of this share capital decrease, resulting in a corresponding reduction in the NAV.
During the first quarter of 2014 the NAV per share decreased by 5% mainly due to the negative impact of the decrease of the share prices of certain listed holdings, principally OMV Petrom (impact on the Fund's NAV of RON 460.5 million or RON 0.0382 per share), and Romgaz (impact on the Fund's NAV of RON 68.8 million or RON 0.0057 per share), and due to the update of the independent valuation of the holding in Hidroelectrica in February 2014, after the Bucharest Court of Appeal decided to place Hidroelectrica back under the reorganisation procedure (the impact was a decrease of RON 134.2 million or RON 0.0111 per share).
In the second quarter of 2014, the NAV per share had a moderate upward trend, due mainly to the positive share price evolution of Fund's listed holdings, principally OMV Petrom (impact on the Fund's NAV of RON 591.7 million or RON 0.0499 per share as at 30 June versus 31 March 2014), and to the third buy-back programme carried out by the Fund during this period.
The holding in Electrica Furnizare SA (previously valued at zero) was independently valued in May 2014. The valuation was performed by KPMG Romania, in accordance with International Valuation Standards. The impact was an increase of RON 88 million of the total NAV. Five unlisted holdings were independently valued in June 2014 (for Complexul Energetic Oltenia SA this was a valuation update, while for the other holdings, the previous valuation was based on the shareholders' equity from the most recent annual financial statements, according to FSA regulations in force). The valuation was performed by KPMG Romania, in accordance with International Valuation Standards. The overall impact as at 30 June 2014, compared to the previous month NAV, was a decrease of RON 123.1 million or RON 0.0101 per share.
The Fund's NAV per share had a slight downward trend in the third quarter of 2014, mainly due to the negative impact of the decrease of the share price of certain portfolio companies, principally OMV Petrom (impact of RON 125.9 million or RON 0.0106 per share), while the increase of the share price of other portfolio companies, mainly Romgaz (impact of RON 50.1 million or RON 0.0042 per share) had a positive influence. During the third quarter of 2014, there was no change in the valuation of the Fund's unlisted holdings.
In the last quarter of 2014, the NAV per share had a slight downward trend which was mainly due to the decrease of OMV Petrom share price (impact of RON 670.3 million or RON 0.0614 per share as at 31 December versus 30 September 2014), while the fourth buy-back programme (including the tender offer of 750 million shares) carried out by the Fund during this quarter had a positive impact.
At the end of the year, 20 unlisted holdings, representing 99.5% of the total unlisted portfolio, were independently valued (including valuation updates for 17 of the holdings). The valuations were performed by KPMG Romania and Ernst & Young Service, in accordance with International Valuation Standards. The overall impact was an increase of RON 241.7 million or RON 0.0205 per share, as compared to the previous valuation (28 November 2014 NAV).
| Portfolio company name | Value in 31 Dec 2014 NAV (RON Million) |
Value in 28 Nov 2014 NAV (RON Million) |
Impact on Total NAV (RON Million) |
Impact on NAV per share* (RON) |
|
|---|---|---|---|---|---|
| 1 | Hidroelectrica SA | 2,178.1 | 2,105.1 | 73.0 | 0.0062 |
| 2 | ENEL Distributie Banat SA | 640.5 | 573.2 | 67.3 | 0.0057 |
| 3 | ENEL Distributie Muntenia SA | 465.8 | 473.1 | (7.3) | (0.0006) |
| 4 | GDF Suez Energy Romania SA | 461.3 | 404.4 | 56.9 | 0.0048 |
| 5 | E.ON Distributie Romania SA** | 441.4 | 510.6 | (69.2) | (0.0059) |
| 6 | ENEL Distributie Dobrogea SA | 396.9 | 379.1 | 17.8 | 0.0015 |
| 7 | CN Aeroporturi Bucuresti SA | 332.3 | 287.7 | 44.6 | 0.0038 |
| 8 | Electrica Distributie Muntenia Nord SA | 235.6 | 296.2 | (60.6) | (0.0051) |
| 9 | Electrica Distributie Transilvania Sud SA | 206.5 | 192.0 | 14.5 | 0.0012 |
| 10 | Electrica Distributie Transilvania Nord SA | 201.6 | 206.7 | (5.1) | (0.0004) |
| 11 | Societatea Nationala a Sarii SA (Salrom) | 142.9 | 114.1 | 28.8 | 0.0024 |
| 12 | E.ON Energie Romania SA | 133.9 | 130.9 | 3.0 | 0.0003 |
| 13 | Administratia Porturilor Maritime Constanta SA |
132.6 | 69.5 | 63.1 | 0.0053 |
| Portfolio company name | Value in 31 Dec 2014 NAV (RON Million) |
Value in 28 Nov 2014 NAV (RON Million) |
Impact on Total NAV (RON Million) |
Impact on NAV per share* (RON) |
|
|---|---|---|---|---|---|
| 14 | Electrica Furnizare SA | 126.4 | 88.0 | 38.4 | 0.0033 |
| 15 | Complexul Energetic Oltenia SA | 108.5 | 120.0 | (11.5) | (0.0010) |
| 16 | ENEL Energie SA | 74.4 | 74.3 | 0.1 | - |
| 17 | ENEL Energie Mutenia SA | 65.1 | 65.1 | - | - |
| 18 | Posta Romana SA | 55.9 | 60.8 | (4.9) | (0.0004) |
| 19 | Zirom SA | 39.3 | 43.5 | (4.2) | (0.0004) |
| 20 | Plafar SA | 1.8 | 4.8 | (3.0) | (0.0003) |
| TOTAL | 6,440.8 | 6,199.1 | 241.7 | 0.0205 |
* computed based on the number of shares used in NAV per share computation as at 28 November 2014
** E.ON Distributie Romania was created at 31 December 2014 through the merger of E.ON Gaz Distributie SA (the absorbing company, whose name was changed) and E.ON Moldova Distributie SA (the absorbed company)
The Fund's Investment Objective is the maximisation of returns and per-share capital appreciation via investments mainly in Romanian equities and equity-linked securities. The equity exposure amounted to 98% of the Fund's NAV as at 31 December 2014. As at that date, the portfolio was composed of holdings in 53 companies (17 listed and 36 unlisted), containing a combination of privately held and state-controlled entities.
Net cash and receivables include bank deposits, current bank accounts, government securities, dividend receivables, as well as other assets, net of all liabilities and provisions.
Source: Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, data as at 31 December 2014
The portfolio remained heavily weighted in power, oil and gas sectors (approx. 88.7% of the NAV), through a number of listed and unlisted Romanian companies.
Source: Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, data as at 31 December 2014, based on NAV reports submitted to FSA.
Source: Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, data as at 31 December 2014, based on NAV reports submitted to FSA.
| Value as at 31 December |
% of NAV as at |
|||
|---|---|---|---|---|
| No | Name | Fund's Stake (%) | 2014 (RON million) |
31 December 2014 |
| 1 | OMV Petrom SA | 18.99% | 4,389.5 | 33.2% |
| 2 | Hidroelectrica SA | 19.94% | 2,178.1 | 16.5% |
| 3 | Romgaz SA | 10.00% | 1,362.9 | 10.3% |
| 4 | ENEL Distributie Banat SA | 24.12% | 640.5 | 4.8% |
| 5 | ENEL Distributie Muntenia SA | 12.00% | 465.8 | 3.5% |
| 6 | GDF Suez Energy Romania SA | 12.00% | 461.3 | 3.5% |
| 7 | E.ON Distributie Romania SA* | 18.35% | 441.5 | 3.3% |
| 8 | ENEL Distributie Dobrogea SA | 24.09% | 396.9 | 3.0% |
| 9 | CN Aeroporturi Bucuresti SA | 20.00% | 332.3 | 2.5% |
| 10 | Electrica Distributie Muntenia Nord SA | 21.99% | 235.6 | 1.8% |
| 11 | BRD-Groupe Societe Generale SA | 3.64% | 222.1 | 1.7% |
| 12 | Nuclearelectrica SA | 9.72% | 212.1 | 1.6% |
| 13 | Electrica Distributie Transilvania Sud SA | 22.00% | 206.5 | 1.6% |
| 14 | Electrica Distributie Transilvania Nord SA | 22.00% | 201.6 | 1.5% |
| 15 | Banca Transilvania SA | 2.88% | 143.2 | 1.1% |
| 16 | Societatea Nationala a Sarii SA (Salrom) | 49.00% | 142.9 | 1.1% |
| 17 | E.ON Energie Romania SA | 13.39% | 133.9 | 1.0% |
| 18 | CN Administratia Porturilor Maritime SA | 20.00% | 132.6 | 1.0% |
| 19 | Electrica Furnizare SA | 22.00% | 126.4 | 0.9% |
| 20 | Complexul Energetic Oltenia SA | 21.55% | 108.5 | 0.8% |
| Top 20 equity holdings | 12,534.2 | 94.7% | ||
| Total equity holdings | 12,972.8 | 98.0% | ||
| Net cash and receivables | 263.9 | 2.0% | ||
| Total NAV | 13,236.7 | 100.0% |
Source: Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, data as at 31 December 2014, based on NAV reports submitted to FSA. * E.ON Distributie Romania was created at 31 December 2014 through the merger of E.ON Gaz Distributie SA (the absorbing company, whose name was changed) and E.ON Moldova Distributie SA (the absorbed company)
In 2014, the Fund sold its entire holding in Transelectrica SA (9,895,212 ordinary shares at RON 21.50 per share, following the completion of the book building process which was announced on 9 July 2014), Erste Group Bank, Raiffeisen Bank, Resib SA, Turdapan SA, Transilvania Com SA, Severnav SA and part of its holdings in Romgaz SA (19,243,000 shares, at a price of RON 33.50 per share or USD 10.32 per GDR, through an accelerated book building offering), Conpet SA (2,047,095 shares at a price of RON 48.75 following the completion of the book building process), Oil Terminal SA and Primcom SA (134,793 shares, at a price of RON 30 per share, in a buy-back tender offer conducted by Primcom SA).
In January 2014, Primcom SA performed a capital return to its shareholders following the decrease of its share capital by reducing the nominal value of the shares from RON 2.5 to RON 0.1.
In 2014, the Fund received, in compensation for the receivable related to the unpaid share capital:
In May 2014, the Fund received 35,438 bonus shares from Administratia Porturilor Dunarii Maritime SA, following a share capital increase through the incorporation of reserves. At the same time, there was also a cash share capital increase in which Fondul Proprietatea did not participate and decided to challenge it in Court. After these changes in the company's share capital, the new total number of shares held by the Fund in Administratia Porturilor Dunarii Maritime SA increased to 56,675 shares (from 21,237 shares held previously), while the percentage holding decreased to 7.7% (from a 20% holding). The Fund continues to seek a Court annulment of the share capital increase operation.
In July 2014, Banca Transilvania completed the registration of a share capital increase (from incorporation of reserves and earnings) with the Central Depositary and the number of 10,347,302 bonus shares received by the Fund in May 2014, were reflected as part of its portfolio (previously these shares were reflected in the other current assets category in the Fund's NAV report).
In October 2014, Carbid Fox SA was erased from the Trade Register, at the end of the bankruptcy procedure.
In November 2014, the General Shareholders Meetings of E.ON Gaz Distributie SA and E.ON Moldova Distributie SA approved the merger of the companies, with E.ON Gaz Distributie SA as the absorbing company and E.ON Moldova Distributie SA as the absorbed company. Following the merger, E.ON Gaz Distributie SA changed its name to E.ON Distributie Romania SA and E.ON Moldova Distributie SA was erased from the Trade Register. The registration of the new company was completed by the Trade Registry on 31 December 2014. After the merger, the Fund holds 18.34% in E.ON Distributie Romania SA.
The Romanian National Energy Regulatory Authority ("ANRE") modified the tariff setting methodology for the electricity distribution service (Order 112 / 29.10.2014), with the most significant changes being the possibility given to the regulator to revise the regulatory rate of return ("RRR") starting from the second year of the ongoing five year regulatory period (2014 - 2018). Subsequently, ANRE effectively reduced the level of the RRR (before tax and expressed in real terms) to 7.70% from the previous 8.52% level (Order 146/ 10.12.2014). The ANRE decision was challenged in Administrative court by Fondul Proprietatea and the distribution companies.
The proposed timetable for gradual elimination of the regulated electricity prices for non-household consumers and for household consumers is according with the table below:
| Non-household consumers – | Household consumers – | |
|---|---|---|
| % acquisition from the | % acquisition from the | |
| Starting date | competitive market | competitive market |
| 01.01.2013 | 30 | - |
| 01.04.2013 | 45 | - |
| 01.07.2013 | 65 | 10 |
| 01.09.2013 | 85 | 10 |
| 01.01.2014 | 100 | 20 |
| 01.07.2014 | 100 | 30 |
| 01.01.2015 | 100 | 40 |
| 01.07.2015 | 100 | 50 |
| 01.01.2016 | 100 | 60 |
| 01.07.2016 | 100 | 70 |
| 01.01.2017 | 100 | 80 |
| 01.07.2017 | - | 90 |
| 31.12.2017 | - | 100 |
The implementation of the calendar for gradual elimination of regulated gas prices started on 1 February 2013. Following the implementation of the 6th increase on 1 April 2014, prices have increased in line with the calendar to 89.4 RON/MWh for non-household consumers and to 51.8 RON/MWh for household consumers.
On 24 June 2014, the Government Emergency Ordinance no. 35/2014, which modifies Law no. 123/2012 regarding Electricity and Natural Gas, entered into force. The changes were done in order to introduce the obligation for natural gas producers to sell a certain percentage of their production on the regulated market, as per the decisions of ANRE, the Romanian energy market regulator. Following these changes, the remaining price increases for the year in the liberalisation calendar were no longer implemented. The Government subsequently decided to postpone the further liberalisation of gas prices for household consumers until at least June 2015, while the liberalisation process for non-household consumers was considered finalised by the Romanian Government, given that local prices have reached a level close to the European prices. Starting 1 January 2015, ANRE no longer sets reference prices for non-household consumers. Gas prices for household consumers have been frozen at RON 53.3/MWh until 30 June 2015. ANRE will have to publish a new calendar for the gas price liberalization for household consumers starting 1 July 2015 until 1 July 2021.
On 25 February 2014 the Bucharest Court of Appeal took the following decisions:
| 9 months | 9 months | ||||
|---|---|---|---|---|---|
| RON million | 2012 | 2013 | 2013 | 2014 | 2014* |
| Operating income | 1,587.3 | 1,759.6 | 1,147.7 | 1,449.3 | 942.0 |
| Net impairment losses | 379.6 | 414.3 | 280.5 | 442.0 | 430.0 |
| Net profit | 346.5 | 408.6 | 240.2 | 338.1 | 512.0** |
Source: based on IFRS financial statements
**Gross profit
April: Bank of Cyprus reported a transaction through which it sold the entire 9.99% stake held in Banca Transilvania SA.
The bank reported results for the first quarter of 2014. Operating revenues increased by 19% to RON 424.8 million and net income increased by 22.6% to RON 103.4 million. Total assets increased by 2.7% to RON 32.9 billion.
*Budgeted figures
May: Horia Ciorcila, the President of the bank's Board of Directors was reported to have a holding of 5.06%, of which 4.89% is held through an investment vehicle.
June: Fitch has confirmed their BB- rating for Banca Transilvania's long-term foreign currency financing and B for short-term foreign currency financing.
August: Banca Transilvania SA reported the results for the first 6 months of 2014: compared to the same period of 2013, operating revenues increased by 23.6% to RON 906.6 million, operating expenses increased by 5.5% to RON 404.2 million, net impairment losses increased by 81.7% to RON 256.3 million, and net profit increased by 17.7% to RON 212.1 million.
October: Banca Transilvania SA reported the results for the first 9 months of 2014: compared to the same period of 2013, operating revenues increased by 26.3% to RON 1,449.3 million, net impairment losses increased by 57.6% to RON 442.0 million, and net profit increased by 40.8% to RON 338.1 million.
November: The bank announced the registration with the Central Depository of a share capital increase following the conversion into shares of previously issued convertible bonds. Following this operation, the total number of issued shares increased by 49.44 million shares, to 2,559.18 million shares.
December: The bank announced that its Board of Directors approved the transaction regarding the acquisition of 100% of Volksbank Romania. The two entities are to operate separately until all legal procedures are fulfilled and all approvals are obtained. The value of the transaction was not disclosed.
February 2015: According to preliminary unconsolidated IFRS financial statements, in 2014 the bank reported a net profit of RON 448.1 million, which represents an increase of 19.5% compared to the net profit of RON 374.9 million reported in 2013. In 2014, the operating revenues increased by 20.3% y.o.y to RON 1,995.6 million, operating expenses increased 3.4% y.o.y to RON 836.5 million and net impairment losses increased by 56.6% y.o.y to RON 637.8 million.
| 9 months | 9 months | ||||
|---|---|---|---|---|---|
| RON million | 2012 | 2013 | 2013** | 2014** | 2014* |
| Expected decrease due to | |||||
| Net banking income | 3,046.6 | 2,836.3 | 2,059.4 | 1,878.8 | lower net interest income |
| Gross operating income | 1,613.5 | 1,491.3 | 1,111.0 | 970.2 | n/a |
| Net cost of risk | 1,943.0 | 2,130.8 | 1,041.4 | 951.7 | Significant improvement |
| Expected return to | |||||
| Net profit/ (loss) | (298.8) | (387.5) | 50.5 | 20.1 | profitability |
| Dividends | - | - |
Source: Based on consolidated IFRS financial statements
* Budget
** IFRS unconsolidated results
August: The bank published the unconsolidated IFRS financial statements for the first half of the year. During the first six months of the year, the bank reported a net profit of RON 122.9 million (vs. RON 62.2 million during the similar period of the previous year). Net banking income decreased by 8.6% year on year ("y.o.y") to RON 1,243.7 million, while general operating expenses decreased by 0.9% y.o.y. to RON 608 million, leading to a gross operating results of RON 636 million, down by 15.0% y.o.y. Net cost of risk decreased by 25.3% y.o.y. compared to the similar period of the previous year, to RON 492.1 million.
November: The bank published the unconsolidated IFRS financial statements for the first nine months of the year. During the period, the bank reported a net profit of RON 20.1 million (compared with RON 50.5 million during the similar period of the previous year). Net banking income decreased by 8.8% y.o.y to RON 1,878.8 million, while general operating expenses decreased by 4.2% y.o.y. to RON 909 million, leading to a gross operating results of RON 970.2 million, down by 12.7% y.o.y. Net cost of risk decreased by 8.6% y.o.y. compared to the similar period of the previous year, to RON 951.7 million.
February 2015: According to preliminary unconsolidated IFRS financial statements, in 2014 the bank reported a net profit of RON 43.2 million compared to RON 385.7 million net loss reported in 2013. Net banking income decreased by 8.4% y.o.y to RON 2,497.6 million, while general operating expenses decreased by 2.9% y.o.y. to RON 1,254.8 million, leading to a gross operating results of RON 1,242.8 million, down by 13.3% y.o.y. Net cost of risk decreased by 42.7% y.o.y. compared to the previous year, to RON 1,192.9 million.
| RON million | 2012 | 2013 | H1 2013 | H1 2014 | 2014* |
|---|---|---|---|---|---|
| Total revenues | 284.8 | 302.4 | 142.6 | 140.5 | 297.1 |
| Operating profit | 46.2 | 76.6 | 33.7 | 50.9 | 43.3 |
| Net profit | 35.6 | 65.0 | 29.7 | 41.8 | 31.0 |
| Dividends | 26.7 | 50.6 | 13.5 |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations * Budgeted figures
September: The company's results for the first 6 months of the year include a 3.6% increase in operating revenues compared to the same period of 2013, to RON 137.2 million, a 51% increase in operating profits to RON 50.9 million, and a 40.1% increase in net profit to RON 41.8 million.
December: According to a decision of the Constitutional Court of Romania, the law which allocated 20% of the company to the Local Council of Constanta is unconstitutional. As a result, the 20% will be allocated back to the Ministry of Transports.
| RON million | 2012 | 2013 | H1 2013 | H1 2014 | 2014* |
|---|---|---|---|---|---|
| Sales | 555.5 | 582.6 | 268.5 | 294.1 | 676.8 |
| Operating profit | 80.9 | 91.0 | 40.5 | 60.8 | 40.1 |
| Net profit | 53.1 | 69.0 | 31.1 | 52.6 | 25.3 |
| Dividends | 45.7 | 61.6 | - | - | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations
* Budgeted figures
May: The company's entire Board of Directors was replaced in a shareholder meeting held on 29 May. The General Manager was also suspended from his position in the same GSM. A new Board and General Manager were appointed on an interim basis, until the implementation of the selection and the appointment procedures as outlined by the Emergency Government Ordinance ("EGO") 109/2011. Fondul Proprietatea has contested in the courts the legality of the decisions taken by this GSM.
Total passenger traffic for the first five months of 2014 reached 2.94 million passengers, representing a 6% increase compared to the same period in 2013.
August: The company reported passenger traffic numbers for the first 7 months of 2014, which showed a 7.46% increase y.o.y to 5.23 million passengers.
Unaudited financial statements for the first 6 months of 2014 show a 7.9% increase in operating revenues to RON 305.3 million, a 50% increase in operational profits to RON 60.8 million, and a 68.9% increase in net income to RON 52.6 million.
December: The number of passengers serviced in 2014 reached 8.32 million, which represents an 8.8% increase compared to 2013.
February 2015: The company preliminary results for the year end 31 December 2014 show a 17.6% increase in sales to RON 685.1 million, a 40.4% increase in operating profit to RON 127.8 million, and a 54.2% increase in net profit to RON 106.4 million compared with the results of 2013.
| RON million | 2012 | 2013 | H1 2013 | H1 2014 |
|---|---|---|---|---|
| Sales | 3,347.1 | 4,278.2 | 2,023.9 | 1,899.4 |
| Operating profit / (loss) | 44.5 | (28.0) | 26.5 | (157.3) |
| Net profit / (loss) | 118.3 | 4.5 | 76.9 | (193.5) |
| Dividends* | 57.2 | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations
* CE Oltenia was created in 2012, through the merger of CE Craiova, CE Rovinari, CE Turceni and SNLO; Dividends distributed by the merged companies to the Fund were: 2011 (CE Rovinari RON 6.5 million, CE Craiova RON 0.03 million)
May: In the first quarter of 2014 CE Oltenia SA reported a net electricity production of 2.72 TWh (+2.6% y.o.y.), operating revenues of RON 1,013.9 million (-13.3% y.o.y.), operating profit of RON 58.4 million (-45.5% y.o.y.), and a gross profit of RON 40.1 million (-73% y.o.y.). The reasons for the decreases in revenues and
profitability are mainly related to a 13% drop in the average selling price of electricity y.o.y. from RON 208.2 /MWh in first quarter of 2013, to RON 181.2 /MWh in the same period of 2014.
July: the General Shareholders' Meeting approved an extension of one year of the contract signed with the consortium of brokers that includes BRD – Groupe Societe Generale, and SSIF Swiss Capital for the intermediation of the IPO process.
August: the General Shareholders' Meeting approved the creation of CEO Trading, a subsidiary 100% owned by CE Oltenia SA, with the main purpose of dealing with export contracts.
October: The shareholders approved to mandate the Directorate to negotiate with CET Govora (a state owned company) the sale of its mining assets from the Berbesti branch. The main reason for selling the mining assets is the large value of overdue receivables (approx. RON 188 million as at 30 June 2014) to be recovered from CET Govora which buys all the coal produced by Berbesti. The Fund requested to have the final terms and conditions of the asset sale contract approved in a subsequent shareholders meeting.
E.ON Distributie Romania SA was created on 31 December 2014 through the merger of E.ON Gaz Distributie SA (as the absorbing company, whose name was changed) and E.ON Moldova Distributie SA (as the absorbed company):
| E.ON Gaz Distributie SA | E.ON Moldova Distributie SA | ||||||
|---|---|---|---|---|---|---|---|
| RON million | 2012 | 2013 | 2014* | RON million | 2012 | 2013 | 2014* |
| Operating Revenues | 764.5 | 796.4 | 748.0** | Operating Revenues | 688.8 | 766.4 | 679.0** |
| Operating profit | 82.7 | 73.9 | 50.0 | Operating profit | 83.8 | 106.7 | 85.0 |
| Net profit | 73.0 | 67.8 | 37.0 | Net profit | 71.3 | 87.0 | 71.0 |
| Dividends | - | 249.5*** | - | Dividends | - | - | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations *Budgeted figures
** Distribution revenues
***The dividend was distributed to shareholders in December 2013 out of past years' retained earnings
April: Starting 1 April 2014, the regulated gas distribution tariff of E.ON Gaz Distributie SA increased by 28% to 33%, depending on the consumption category (based on ANRE Order no. 26 issued on 28 March 2014).
July: According to a merger project endorsed by the boards of the two companies and made public at the beginning of July, E.ON intends to merge through absorption the electricity distributor E.ON Moldova Distributie SA with the gas distributor E.ON Gaz Distributie SA.
November: At the beginning of the month the General Shareholders' Meetings of both companies voted in favour of the merger. Based on the merger project, the Fund's stake in the combined entity will be around 18.3%. The effective date of the merger was 31 December 2014.
| RON million | 2012 | 2013 | 2014* |
|---|---|---|---|
| Operating Revenues | 5,369.3 | 4,766.7 | 5,326.0 |
| Operating profit / (Loss) | (15.8) | 226.6 | 159.0 |
| Net profit / (Loss) | (32.6) | 224.5 | 131.0 |
| Dividends | - | - | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations *Budgeted figures
| RON million | 2012 | 2013 | H1 2013 | H1 2014 |
|---|---|---|---|---|
| Total revenues | 752.3 | 792.8 | 396.9 | 388.3 |
| Operating profit | 99.1 | 132.6 | 78.1 | 78.1 |
| Net profit | 87.1 | 126.5 | 74.9 | 75.8 |
| Dividends | 73.7 | 105.5 |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations
December: Starting 1 January 2015, the regulated electricity distribution tariffs decreased by 2% for high voltage, and by 3% for medium and low voltage (based on ANRE Order no. 154 issued on 15 December 2014).
| RON million | 2012 | 2013 | H1 2013 | H1 2014 |
|---|---|---|---|---|
| Total revenues | 609.1 | 656.3 | 325.4 | 332.8 |
| Operating profit | 68.8 | 88.0 | 60.7 | 70.4 |
| Net profit | 53.1 | 63.7 | 50.8 | 61.1 |
| Dividends | - | - | ||
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations
December: Starting 1 January 2015, the regulated electricity distribution tariffs increased by 2% for high voltage, by 1.5% for medium voltage, and by 0.6% for low voltage (based on ANRE Order no. 155 issued on 15 December 2014).
| RON million | 2012 | 2013 | H1 2013 | H1 2014 |
|---|---|---|---|---|
| Total revenues | 674.4 | 716.1 | 354.8 | 366.1 |
| Operating profit | 61.7 | 90.3 | 45.7 | 76.3 |
| Net profit | 45.8 | 69.3 | 33.6 | 66.5 |
| Dividends | - | 55.2 |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations
December: Starting 1 January 2015, the regulated electricity distribution tariffs decreased by 0.2% for high and medium voltage, and by 1.5% for low voltage (based on ANRE Order no. 156 issued on 15 December 2014).
| RON million | 2012 | 2013 | H1 2013 | H1 2014 |
|---|---|---|---|---|
| Operating Revenues | 4,524.9 | 4,792.8 | 2,453.8 | 2,056.0 |
| Operating profit | 99.0 | 100.1 | 54.8 | 141.6 |
| Net profit | 90.5 | 101.5 | 55.1 | 130.6 |
| Dividends | 42.1 | 89.3 | - | - |
| RON million | 2012 | 2013 | 2014* |
|---|---|---|---|
| Operating revenues | 636.6 | 659.3 | 571.8 |
| Operating profit | 181.1 | 203.4 | 191.3 |
| Net profit | 167.2 | 190.7 | 176.1 |
| Dividends | - | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations *Budgeted figures
April: Starting 30 April 2014, Toni Volpe is the Country Manager and CEO of Enel Romania. Between 2011 and 2014 he was Head of Human Resources Planning, Compensation, Development, Training and Recruiting at Group level, reporting to the Enel Head of Human Resources and Organization. From 2005 to 2011, he was Country Manager in North America for Enel Green Power.
July: Enel Italy announced its intention to withdraw its presence from the Romanian market in the electricity distribution and supply business. Citibank and Unicredit were selected by Enel to advise on the transactions. In the case of Enel Distributie Muntenia SA and Enel Energie Muntenia SA, Fondul Proprietatea has tag along rights for its shares according to the privatisation contract.
December: Starting 1 January 2015, the regulated electricity distribution tariffs decreased by 3.1% for high voltage, by 2.9% for medium voltage, and by 2.2% for low voltage (based on ANRE Order no. 151 issued on 15 December 2014).
| RON million | 2012 | 2013 | 2014* |
|---|---|---|---|
| Operating revenues | 509.4 | 544.5 | 480.7 |
| Operating profit | 103.0 | 148.9 | 154.7 |
| Net profit | 94.5 | 133.5 | 130.6 |
| Dividends | - | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations *Budgeted figures
December: Starting 1 January 2015, the regulated electricity distribution tariffs decreased by 0.1% for high and low voltage, and by 0.4% for medium voltage (based on ANRE Order no. 152 issued on 15 December 2014).
| RON million | 2012 | 2013 | 2014* |
|---|---|---|---|
| Operating revenues | 966.7 | 997.7 | 903.4 |
| Operating profit | 172.4 | 220.9 | 287.7 |
| Net profit | 206.3 | 267.2 | 254.0 |
| Dividends | - | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations *Budgeted figures
December: Starting 1 January 2015, the regulated electricity distribution tariffs decreased by 0.1% for high voltage, but increased by 0.3% for medium voltage, and by 0.7% for low voltage (based on ANRE Order no. 153 issued on 15 December 2014).
| RON million | 2012 | 2013 | H1 2013 | H1 2014 | 2014* |
|---|---|---|---|---|---|
| Turnover | 4,047.0 | 4,127.1 | 2,242.4 | 2,332.7 | 4,448.6 |
| Operating profit | 423.3 | 518.7 | 428.4 | 416.9 | 453.3 |
| Net profit | 360.1 | 447.1 | 346.7 | 352.6 | 352.2 |
| Dividends** | 190.0 | 33.6 |
Source: IFRS consolidated financial statements
*Budgeted figures
**Dividends are based on the separate financial statements
April: Starting 1 April 2014 the regulated prices paid by the final consumers connected to the distribution network were reduced, on average, by 3.8% for non-household consumers and 5.7% for households10.
July: The company announced that it finalised the acquisition of a controlling stake (85.8%) in Congaz Constanta from E.ON Ruhrgas and OMV Petrom. Congaz Constanta is a regional gas distributor which operates approximately 850 km of network. Before this transaction, GDF Suez Energy Romania owned 28.6% in Congaz Constanta.
| 9 months | 9 months | ||||
|---|---|---|---|---|---|
| RON million | 2012 | 2013 | 2013 | 2014 | 2014* |
| Turnover | 2,402.8 | 3,083.0 | 2,283.0 | 2,477.0 | 2,522.0** |
| Operating profit | (321.6) | 1,016.0 | 740.0 | 832.0 | 399.9 |
| Net profit / (loss) | (508.0) | 718.0 | 544.0 | 661.0 | 246.5 |
| Dividends | - |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations
*Budgeted figures
**Operating revenues
July: New top and middle management has been hired for most of the company's key positions: Trading, Finance, Investments, IT, Internal Audit, Internal Control, Procurement and Strategy.
December: Following the implementation of the initiatives to optimise the cost base, and the increase in revenues due to better hydrology, the company reported for the 11 month-period, the strongest profitability in its history: pre-tax profit of RON 1,073 million compared with a pre-tax profit of RON 841 million in 2013.
February 2015: The company preliminary results for the year end 31 December 2014 include a 33% increase in pre-tax profit from RON 901.0 million to RON 1.2 billion.
10 ANRE Order no. 22 issued on 28 March 2014
| 9 months | 9 months | ||||
|---|---|---|---|---|---|
| RON million | 2012 | 2013 | 2013** | 2014** | 2014* |
| Sales | 1,652.4 | 1,932.5 | 1,425.4 | 1,306.3 | 1,816.3 |
| Operating profit | 156.5 | 459.3 | 357.4 | 108.0 | 103.1 |
| Net profit | 19.9 | 426.9 | 313.6 | 99.8 | 99.0 |
| Dividends*** | 28.5 | 340.9 | 47.7 |
Source: Based on IFRS consolidated financial statements audited
* Budgeted figures
** Based on IFRS separate financial statements unaudited
***Dividends for 2012 are based on the financial statements prepared in accordance with applicable Romanian accounting regulations; Dividends for 2013 are based on the separate IFRS financial statements
January: The company disclosed the ANRE decision no. 3906/20.12.2013 for 2014 whereby Nuclearelectrica will reduce the electricity sold on the regulated market to 3.74 TWh (approx. 35.5% of the electricity production estimated for 2014) from 5.3 TWh in 2013, at a regulated tariff of RON 145.8 /MWh (+2.6% y.o.y). On 23 January 2014 the company started a litigation against this decision due to the fact that the regulator did not recognise in the regulated tariff part of the costs incurred by Nuclearelectrica.
March: The Board appointed Mr Mihai Darie as CFO after a selection process assisted by Quest Advisors, an independent HR company. Mr Darie graduated from the Academy of Economic Studies and he is a member of the ACCA (UK) and CFA Institutes. He has 14 years of experience in the financial industry.
The shareholders' meeting approved Nuclearelectrica's equity investment in Hidro Tarnita SA project company by subscribing new shares with a total value of RON 8.9 million, and also the company's participation to the setup of HVDCC Romania-Turkey S.A. project Company by subscribing new shares with a total value of EUR 2 million. The Fund challenged in Court the GSM decisions of Nuclearelectrica regarding the approval of the participation to the project and the case is ongoing.
The company released the 2013 preliminary financial statements and the Board submitted its proposal for the dividend payment; 2013 was the best year in the company's history in terms of profitability. The payout ratio proposed by the Board is 81.6%, respectively a gross dividend of RON 1.21 per share. The General Shareholders' Meeting approved the 2013 financial statements on 29 April, together with the proposal for the dividend distributions as approved by the Board.
May: The company released the first quarter 2014 financial results: operating revenues of RON 461 million (- 10% y.o.y.), operating profit of RON 89 million (-50% y.o.y.), and net profit of RON 101.8 million (-30% y.o.y.). Electricity production sold was flat y.o.y. at 2.8 TWh, but the average selling price on the competitive market dropped by 13% y.o.y. Profitability was negatively impacted by the tax on special infrastructure, which diminished the operating profit by RON 22 million.
June: The company announced a change in the ANRE's decision for the regulated tariff which will increase starting with 1 July 2014 by 5.6%, from RON 145.8 /MWh to RON 154.07 /MWh.
July: On 31 July 2014 the General Shareholders' Meeting of Nuclearelectrica SA rejected Fondul Proprietatea's proposal to grant variable remuneration linked to the performance of the company's shares for the company's directors.
September: The company announced that it is analysing the opportunity to expand their investment portfolio given the announced potential disposal of Enel's operations in Romania. Any investment decision will be subject to shareholders' decision in a future GSM.
The company updated the bottom line estimate at RON 99 million (vs RON 27.9 million in the previous budget), and a gross profit of RON 124.3 million (+213.5% vs. previous budget). Revenues are increasing by RON 89.7 million mainly on the back of (1) results achieved in the 7 months of 2014 and contracts concluded until end of August, both on the competitive and regulated market, (2) the increase of the transport tariff for the electricity billed to customers from RON 10.02 /MWh to RON 10.32 /MWh as of 1 July (this is matched by the corresponding increase in the cost of energy transport), and (3) first half year of 2014 foreign exchange gains larger than budgeted for the entire 2014 result. Expenses are increasing by RON 5.1 million (+0.3%).
China General Nuclear Power Holding Corporation ("CGN") submitted the only non-binding bid for the EUR 6 billion construction project for two new nuclear reactors at the Cernavoda plant. Nuclearelectrica and CGN may sign an agreement to set up a new project company for the reactors by the year end.
October: The shareholders approved a RON 239.2 million share capital increase of which RON 194.4 million represent the cash contribution of the Romanian State and RON 44.8 million is the maximum amount to be subscribed for by the other shareholders in case they do not want to be diluted. The Fund would need to bring approximatively RON 23.2 million (approximatively EUR 5.3 million) in the share capital increase in order to maintain its current 9.72% stake in the company. As we previously mentioned, the Fund will use all the legal rights to block the share capital increase.
Shareholders also approved the purchase of support services, legal advice and/or representation, brokerage services etc. in connection with a possible acquisition of the assets on sale owned by Enel Group in Romania, and the drafting by the year end of a Board of Directors' report on Nuclearelectrica's development strategy for 2015- 2025.
The company announced that CGN was designated the selected investor for the development of Cernavoda Units 3&4. CGN was the sole company to submit an offer for the project, in which CGN would have at stake of at least 51%. The Joint Letter of Intent was signed on 17 October 2014, while the memorandum of understanding will be submitted for Nuclearelectrica's shareholders approval.
November: The company released the 2014 third quarter results: gross electricity production for the quarter was up 0.1% y.o.y. at 3.1 TWh, and electricity sales were down 0.9% y.o.y. to 2.8 TWh. Starting July, the price for the regulated market was hiked to RON 154.1 /MWh, from RON 145.8 /MWh in the first six months of 2014. The net realised price on the competitive market was RON 160 /MWh, down 15% y.o.y.. The average net price in the third quarter of 2014 was RON 158.3 /MWh, down 5% y.o.y., corresponding to a gross price of RON 168.6 /MWh. The 2014 third quarter net profit stood at RON 39 million, down 66% y.o.y., while for the first 9 months 2014 the stand-alone net profit was RON 100 million, down 68% y.o.y..
December: ANRE issued the decision no. 2719/15.12.2014 whereby Nuclearelectrica will reduce the electricity sold on the regulated market to 2.25 TWh (approx. 21.4% of the electricity production estimated for 2015), from 3.74 TWh in 2014 at a regulated tariff of RON 158.63 /MWh (+2.9% vs the regulated tariff for the second half year 2014).
February 2015: According to the preliminary unconsolidated IFRS financial statements for the year ended 31 December 2014, the company reported a net profit of RON 137.1 million (a decrease of 67.6% y.o.y), but over the budgeted net profit approved by the shareholders.
| RON million | 2012 | 2013 | 9 months 2013 |
9 months 2014 |
2014* |
|---|---|---|---|---|---|
| Sales | 26,258.1 | 24,185.2 | 18,150.0 | 16,195.0 | 17,140.0 |
| Operating profit | 5,662.0 | 5,957.9 | 4,556.0 | 3,449.0 | 4,405.0 |
| Net profit | 3,946.1 | 4,824.0 | 3,666.0 | 2,407.0 | 3,936.0 |
| Dividends** | 1,586.0 | 1,744.6 |
Source: Based on consolidated IFRS financial statements
*Budgeted figures
**Dividends based on separate individual IFRS financial statements
January: OMV Petrom and Exxon Mobil Exploration and Production Ltd. became titleholders for the deep water portion of the XV Midia block, following a Government decision validating the transfer agreement through which the exploration rights were bought from Sterling Resources in October 2012. The participating interests in this block are: ExxonMobil 42.5%, OMV Petrom 42.5%, Gas Plus 15%.
March: The Company announced the decision to consolidate multiple support services into a newly established entity called OMV Petrom Global Solutions SRL, which will provide services to the Petrom and OMV Groups in the countries where they operate. This is part of the company's ongoing efforts to increase efficiency.
May: The company reported results for first quarter 2014: Total sales decreased by 9% to RON 5.3 billion, EBIT decreased by 7% to RON 1.47 billion and net income decreased by 19% to RON 1.07 billion. Total hydrocarbon production reached 16.36 million barrels of oil equivalent ("boe"), a decline of 1% compared to the same period in 2013.
July: OMV Petrom announced a new oil discovery in the shallow water region of the Black Sea, 60 kilometres from shore. The Marina 1 exploration well, which required investments of around EUR 19 million, showed production potential of 1,500-2,000 barrels of oil equivalent per day.
The company announced the start of drilling at the Domino-2 test well in the deep water sector of the Neptun Block offshore Romania in the Black Sea. Data collected during this upcoming drilling program will be used to assess the size and commercial viability of the gas field discovered by the Domino-1 well in 2012. The Domino-2 well is located 200 kilometres offshore and is being drilled from the Ocean Endeavor rig in waters with depths of around 800 meters.
The company announced that it finalised the modernisation project for the Petrobrazi refinery. Total investment in the project was around EUR 600 million over 4 years. The refinery is now fully adapted to process the company's entire crude production in Romania, the product yield structure is better adapted to market demand through increased diesel output, energy consumption has been reduced by 25% compared to 2009 levels, while the refinery's Nelson index has increased to 11.28.
OMV Petrom announced the sale of its 28.59% holding in Congaz Constanta, a gas distribution and supply company with activities in Constanta and along the Black Sea Coast, to GDF Suez SA. This sale was part of the company's exit strategy from the distribution and supply of natural gas to the regulated market. The value of the transaction was not disclosed.
October: The company announced the start of drilling on a new exploration well in the Neptun Block targeting a new prospect 155 km offshore in the Romanian sector of the Black Sea. OMV Petrom is exploring this area in a joint venture with ExxonMobil Exploration where each company holds a 50% stake.
November: OMV Petrom announced results for the first nine months of 2014: compared with the same period of 2013 sales decreased by 10.7% to RON 16,195.0 million, EBIT decreased by 24.3% to RON 3,449.0 million, while net profit decreased by 34.4% to RON 2,407.0 million.
OMV Petrom announced the implementation of a field redevelopment project worth EUR 30 million over 2014- 2015 on the Tuzlau field located in North East Romania, with the objective of unlocking additional oil reserves of 3.2 million barrels.
December: The company announced a new onshore discovery of oil and gas in Buzau County, which could potentially be the largest such discovery in the last 30 years in the Muntenia region. Estimates from production tests indicate potential production of 1,200 to 2,100 boe per day from two geological layers. Total investment in the exploration well amounted to EUR 5 million. OMV Petrom is exploring this area in partnership with Hunt Oil.
| 9 months | 9 months | ||||
|---|---|---|---|---|---|
| RON million | 2012 | 2013 | 2013 | 2014 | 2014** |
| Sales | 3,837.9 | 3,894.3 | 2,587.1 | 3,286.7 | 5,089.5 |
| Net profit | 1,119.2 | 995.6 | 796.9 | 1,114.0 | 1,160.6 |
| Dividends* | 1,060.1 | 990.6 |
Source: Based on audited IFRS financial statements
* Dividends for 2012 are based on the financial statements prepared in accordance with applicable Romanian accounting regulations / dividends for 2013 are based on the separate IFRS financial statements.
**Budgeted figures
March: The company announced that starting 1 April 2014, Mr Dragos Doros resigned from his position as member of the Board of Directors. The Board initiated the process for selecting a new Board member for this vacant position.
May: The company reported results for first quarter 2014. Total sales increased by 25.3% to RON 1.45 billion and net income increased by 82.8% to RON 608.4 million. Gas production was stable compared to the same quarter of 2013 at 1.48 billion cubic meters.
June: Mr. Dumitru Chisalita was appointed as a new member of the company's Board of Directors. Mr. Chisalita has extensive experience in the gas sector, having previously held several roles in Romgaz, including that of CEO and Head of the Commercial Department.
The company announced that starting 13 June 2014, Mr. Adrian Volintiru resigned from his position as member of the Board of Directors. The Board initiated the process for selecting a new Board member for this vacant position.
Romgaz announced that Electrocentrale Galati SA, which is amongst the company's 5 largest clients in terms of volumes delivered, filed for insolvency on 16 June. In 2013 total sales of Romgaz to Electrocentrale Galati reached RON 131 million, equivalent to 4.7% of revenues from domestic gas sales, while in first quarter 2014
sales to this client amounted to RON 54.5 million, equivalent to 5% of revenues from domestic gas sales. As at the end of first quarter 2014, Romgaz reported total provisions related to receivables from Electrocentrale Galati of RON 50.3 million.
July: On 30 July 2014, the General Shareholders' Meeting of Romgaz SA rejected Fondul Proprietatea's proposal to grant variable remuneration linked to the performance of the company's shares to the administrators of the company. In the same meeting, the shareholders appointed Sergiu Manea, Executive Vice-President, Corporate Banking and Capital Markets at BCR, as member of the Board of Administrators.
August: Romgaz announced results for the first 6 months of 2014: compared to the same period of 2013 sales increased by 32.9% to RON 2,526 million, while net profit increased by 39.9% to RON 870.9 million. Total extracted gas increased by 0.1% to 2.86 billion cubic meters, total gas sold increased by 11.6% to 2.92 billion cubic meters, while sales of imported gas decreased by 67.4% to 69.9 million cubic meters.
October: A General Shareholders' Meeting decided, amongst other points, that the company's Board of Directors will draft by the end of 2014 the company's Development Strategy for the period 2015-2025.
November: Romgaz announced results for the first 9 months of 2014: compared to the same period of 2013 sales increased by 27.1% to RON 3,286.8 million, while net profit increased by 39.8% to RON 1,114 million. Total extracted gas increased by 0.7% to 4.23 billion cubic meters, total gas sold increased by 7.9% to 3.84 billion cubic meters, while sales of imported gas decreased by 69.4% to 72.9 million cubic meters.
December: A General Shareholders' Meeting decided, amongst other points, the creation of a separate entity for the activity of underground gas storage, which is 100% owned by Romgaz. This was done in order to comply with EU regulations regarding the separation of natural gas storage and production activities.
According to provisions of Emergency Government Ordinance 86/17.12.2014, the state entity which holds the shares in Romgaz controlled by the Romanian state is the Ministry of Energy, Small and Medium Sized Enterprises and Business Environment.
| RON million | 2012 | 2013 | H1 2013 | H1 2014 |
|---|---|---|---|---|
| Operating Revenues | 303.5 | 326.9 | 146.6 | 133.9 |
| Operating profit | 25.3 | 48.8 | 21.0 | 17.6 |
| Net profit | 20.8 | 42.8 | 18.3 | 13.4 |
| Dividends | 19.0 | 40.4 |
Source: Based on the financial statements prepared in accordance with applicable Romanian accounting regulations
July: the company released the 2014 semi-annual results - compared with the same period of 2013, the revenues decreased by 8.7% to RON 133.9 million, operating profits by 16% to RON 17.6 million, and net profit by 36.6% to RON 13.4 million.
The following companies from the Fund's portfolio are in insolvency, bankruptcy or dissolution:
The holdings in these companies are reflected at zero value in the NAV.
Given the nature of its business, the Fund is exposed to various risks, which include: market risk, credit risk, liquidity risk, operational risk and the risks related to the economic environment. The management monitors the reduction of the potential adverse effects associated with these risk factors on the financial performance of the Fund.
With effect from 29 September 2010, the Fund Manager implemented financial risk management procedures consistent with those applied globally by Franklin Templeton Investments.
Market risk includes foreign currency risk, interest rate risk and price risk.
The Fund can make investments in financial instruments or perform transactions denominated in foreign currency. As a result, the Fund is exposed to the risk that fluctuations in exchange rates can have an adverse effect on the value of the net assets of the Fund denominated in foreign currency.
Cash accounts with banks (EUR 295, USD 103, GBP 58), receivables (EUR 231,496) and liabilities (EUR 11,499; GBP 16,136) denominated in foreign currency are not material.
The Fund considers that its functional currency is the local currency (RON).
The majority of the financial assets of the Fund are not interest bearing. The interest bearing financial assets (deposits and government securities) generally have short-term maturity: deposits generally up to 3 months, treasury bills and short-term government bonds up to 12 months. As a result, the Fund has a limited exposure to variations in interest rates.
Price risk is the risk that the value of the securities fluctuates as a result of changes occurring on the capital market, and it is determined by factors specific to an issuer, industry, country or region or that otherwise influence the capital market overall. This is the most significant source of risk and variability in the value of the Fund.
This risk became more significant in previous years, especially since the latter half of 2008, given the large reductions in value of the stock exchange quotations for some of the securities in the Fund's portfolio. It has been necessary to book impairment adjustments in certain cases in that period, and these negatively influenced Fund's shareholders' equity. During the following years, including 2014, the impairment adjustments previously booked were partially reversed due to market recoveries, but in certain periods, on downward market trends, additional impairment adjustments were recorded for some of the listed equity investments of the Fund.
Credit risk is the risk of financial loss to the Fund if counterparties to financial instruments fail to meet their contractual obligations, and arises principally from cash and deposits with banks, government securities and dividends receivable.
For government securities held, the credit risk is assessed as low to moderate, given that their issuer is the Romanian State through the Ministry of Public Finance.
Cash held by the Fund that is not invested in portfolio companies or government securities may be invested in short-term bank deposits. After the Fund's management was taken over by the Fund Manager, a formal policy regarding bank counterparty risks and limits was established.
The Fund only establishes new deposits where the financial institution or the institution's corporate parent, have a credit rating above investment grade (BBB- or better). The counterparty credit risk is also diversified by allocating the cash and cash equivalents across several banks. The selection of financial institutions as deposit takers was made and the exposure limits were decided upon based on their credit ratings.
Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Fund's reputation.
The Fund's equity investments include unlisted securities, which are not traded on a regulated market and generally may be considered illiquid. As a result, the Fund may not be able to liquidate quickly some of its investments in these instruments in order to meet its liquidity requirements, or to respond to specific events such as deterioration in the credit worthiness of any particular issuer.
Part of the equity securities held by the Fund are listed on the Bucharest Stock Exchange. However, not all the shares listed on the Bucharest Stock Exchange are considered liquid due to insufficient volumes of transactions.
The Fund prudently manages liquidity risk by maintaining sufficient liquid assets to settle the current liabilities.
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Fund's processes, service providers, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Fund's operations.
The Fund's objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Fund's reputation with overall cost effectiveness and avoidance of control procedures that restrict initiative.
The ongoing uncertainty about the direction of European fiscal politics, responding central bank action and fears of a renewed possible breakup of the European Union (or single countries leaving, like a now less unthinkable Greek exit), continue to add volatility to equity markets, especially for countries with strong links to Europe.
Further uncertainty is linked to recent spikes in volatility in commodity markets, especially from the dramatic fall in oil prices. Companies with a heavy reliance on commodities will face increased uncertainty and their cash flow can be affected.
Both political uncertainty and volatility in commodities can impact the value of the Romanian economy and consequently also the Fund's portfolio companies and its shares.
Management is unable to predict all developments which could have an impact on the Romanian economy and consequently what effect, if any, they could have on the performance of the Fund and its financial statements.
The existence, operation and even the initial structure of the Fund's portfolio are regulated by primary legislation, as well as by secondary legislation such as government decisions and FSA regulations. Hence, it may not be ruled out that the current legal framework be changed so as to directly affect the Fund, and therefore its shareholders.
This risk is sustained by the legislative history of the past few years that reveals a series of laws which have changed also the Fund's portfolio compositions. Such legal changes would have to be carried out in compliance with the constitutional principles regulating the guarantee of the private property.
Notwithstanding to the general principle described above, the numerous instances where the relevant institutional structures have ruled on the unconstitutionality of certain laws, prove that the risk of legislative changes which may adversely affect the Fund and which may be passed in breach of the Constitution may not be ruled out.
| RON million | 31 Dec 2013 | 31 Mar 2014 | 30 Jun 2014 | 30 Sep 2014 | 31 Dec 2014 |
|---|---|---|---|---|---|
| Current accounts | 5.6 | 1.3 | 0.7 | 1.1 | 6.9 |
| Bank deposits | 232.1 | 144.2 | 490.6 | 333.2 | 109.4 |
| Treasury bills and Short-Term government bonds |
213.6 | 289.1 | 933.5 | 893.7 | 194.6 |
| Total liabilities | (31.2) | (35.0) | (639.9) | (50.1) | (41.4) |
| Net cash & cash equivalents | 420.1 | 399.6 | 784.9 | 1,177.9 | 269.5 |
| Net Assets Value | 15,013.7 | 14,253.3 | 14,850.5 | 14,703.4 | 13,236.7 |
| % net cash & cash equivalents in NAV | 2.8% | 2.8% | 5.2% | 8.0% | 2.0% |
The table above shows the change in the net cash position as a percentage of the NAV.
The overall decrease of the bank deposits and treasury bills and short-term government bonds as at 31 December 2014, as compared with the end of previous year, was principally due to the funding of the third and fourth buy-back programmes (RON 1,188.7 million) and payment of the return of capital of RON 0.05 per share (total payments in 2014: RON 589.9 million), net of the proceeds from the disposals of portfolio holdings (RON 1,080.2 million) and cash inflows from dividends collected from portfolio companies during the year (RON 682.1 million).
During 2014, net cash & cash equivalent fluctuated, reaching a maximum level, 8% of the NAV, at the end of September, before the beginning of the fourth buy-back programme.
Total expense ratio of the Fund as at 31 December 2014 was 0.85%, while excluding transaction related expenses this would be 0.73% (2013: 0.58%, and excluding transaction related expenses 0.51%). This figure represents the total expenses of the Fund divided by the period-end NAV. For the purpose of this calculation, expenses do not include foreign exchange losses, cost of equity investments disposed, impairment adjustments, fair value adjustments, expenses with amortisation and provisions or corporate income tax expenses.
The increase is due mainly to higher Fund's expenses (please see Financial Statements Analysis section for more details on the Fund expenses), but also to the lower total NAV at the end of 2014.
The main objective of the Fund is the maximisation of returns and per-share capital appreciation via investments mainly in Romanian equities and equity-linked securities. As at 31 December 2014, the Fund's exposure to Romanian equities accounted for 98.0% of the NAV (the remaining 2.0% being net cash and cash equivalents).
The BET-XT index, which reflects the performance of the top 25 most liquid stock listed on the Tier 1 of the BVB, increased by 6.32% over the course of 2014.
Source: BVB
The income arising from the main activities of the Fund was influenced by the performance of the portfolio companies and their decisions on dividend distributions, as well as by money market performance.
Further information on the Fund's financial results can be found in the Financial Statements Analysis section.
Intangible assets include the value of the licences and implementation costs of the Fund's accounting and reporting software, net of accumulated amortisation.
As at 31 December 2014 the Fund was involved in certain litigations, either as defendant or claimant.
The Fund discloses in the financial statements those which may have significant effects on the Fund's financial position or profitability. The most important litigations were as follows:
Some minority shareholders of the Fund (acting individually) have filed litigations against the Fund on various grounds, including some seeking the cancellation of certain resolutions of the General Shareholders' Meeting and others seeking to block the registration of some resolutions with the Trade Register. These litigations are at various stages of process within the Romanian Court system and updates are frequently reported by management through the Stock Exchange news system.
In one of these cases, on 10 October 2012 the Bucharest Court of Appeal rejected the appeal filed by the Fund and upheld the decision of the Bucharest Court to partly admit a claim to annul certain resolutions from the 6 September 2010 GSM relating to among others, the approval of a new Constitutive Act and the first appointment of FTIML as the administrator of the Fund. Also, in November 2013 Court of Appeal has ruled against the Fund in a case filed by litigant shareholder, Ioana Sfiraiala and annulled the EGM Resolution no. 5/2010 for modifying the Constitutive Act.
These decisions are irrevocable and they were implemented by Trade Register, without any changes in the Management of the Fund considering that:
Therefore, FTIML as the Fund Manager of Fondul Proprietatea is liable to observe the current Constitutive Act and the shareholders' resolutions in force, and consequently will continue to manage the Fund in accordance with these and its management agreement.
In June 2014, in another case started by the Fund against the same shareholder the court confirmed her circumstantiated abuse of procedural rights against the Fund. Also, there are several court decisions confirming the fact that this shareholder did not prove a legitimate interest to promote certain annulment actions, and in one of these cases the decision is final – the Bucharest Court of Appeal issued the final decision in November 2014. In another file in December 2014 the Bucharest Court of Appeal issued an irrevocable decision maintaining as legal and valid the shareholders' resolutions approved by shareholders in April and November 2013 challenged initially.
The outcome of the ongoing cases cannot be determined with certainty at this stage. However, the Fund Manager intends to defend the interests of the Fund and its shareholders in all these cases in accordance with the applicable laws.
Other contingencies of the Fund included:
2.1. The Fund is due to receive the following amounts from the Romanian State:
These amounts should be recorded as payments for the unpaid capital or as increases of the share capital by the Romanian State once they are collected, with the approval of shareholders, according to the legislation in force.
2.2 The receivables from World Trade Center Bucharest SA:
Title II, Article 4 of EGO 81/2007 stipulates the transfer from the Authority for State Assets Recovery ("AVAS") to the Fund of receivables from World Trade Center Bucharest SA amounting to USD 68,814,198 (including the original principal and related interest and penalties) on 29 June 2007.
Until 31 December 2014, the Fund recovered from World Trade Center Bucharest SA, USD 510,131, EUR 148,701, RON 8,724,888. Given the uncertainties regarding the recoverability of the amounts due by World Trade Center Bucharest SA, the above amounts were recognised on receipt basis in the Fund's financial statements.
In August 2013, World Trade Center Bucuresti SA filed a claim against the Fund asking to pay back the amounts received through the enforcement procedure during 2010 and 2011 (EUR 148,701, USD 10,131 and RON 8,829,663). The amounts recovered from the enforcement procedure were originally accounted for by the Fund as contributions of Ministry of Public Finance to the share capital of the Fund, decreasing the receivable related to the unpaid capital.
Consequently, these amounts are to be recovered by the Fund from the Ministry of Public Finance (being accounted for as a receivable over this shareholder of the Fund, for which an impairment ajustment was recorded), while the legal interest was recorded as an expense with provisions for litigations. The next hearing in front of Bucharest Court for this file was set for 27 February 2015.
Currently, World Trade Center Bucharest SA is the object of insolvency procedure, the next hearing being set for 25 March 2015.
By article IV of Law no. 10/2015, the Parliament decided that "Beginning with the date when this law is in force the receivable mentioned at article 4 of Title II from Emergency Ordinance of the Government no. 81/2007 […] will be transferred from Fondul Proprietatea to Ministry of Public Finance together with additional interests". As a result if this law the Fund will ask the courts to call the Ministry of Public Finance in the two files mentioned above.
For further details regarding the updates on the change of legislation regarding the Fund's activity, please read Significant Post Balance Sheet Events section.
In September 2014 the shareholders approved the execution of the Addendum no. 2 to the Management Agreement no. 45 dated 29 April 2014 ("new IMA"), signed between the Fund and FTIML ("Addendum no. 2"), referring to the distribution fees payable by the Fund to the Fund Manager in relation to the non-dividend distributions to shareholders. The Addendum no. 2 will enter into force only after FSA endorsement, and it was not approved by FSA as at 31 December 2014. However, in January 2015, the Title VII of Law no. 247/2005 governing mainly the organisation and functioning of the Fund was amended, clarifying the status of private company of the Fund, the shareholders being able to freely decide with respect to its governing and functioning. Following this change in legislation, the endorsement of the Addendum no. 2 by the FSA is expected.
According to Addendum no. 2, a distribution fee of 2% (in the period 30 September 2014 – 31 October 2015) and 1% (in the period 1 November 2015 – 30 September 2016) of the value of non-dividend distributions would be payable by the Fund to the Fund Manager. The Addendum no. 2, states that the distribution fee is payable retrospectively, starting 30 September 2014.
The contingent liability of the Fund related to the distribution fees for the period 30 September – 31 December 2014 is of RON 19.4 million.
As at 31 December 2010 the shares issued by the Fund were not traded on any stock exchange. Pursuant to Law no. 142/2010, the Fund was required to apply for admission to trading on the regulated market of the BVB within 90 business days as of the date of registration with the CNVM as an undertaking for collective investment (closedend investment company), which was on 18 August 2010. Since no public offering of the Fund's shares was made, the admission to trading on the regulated market of BVB was intended to be purely administrative in nature.
The Fund applied for admission to trading in December 2010 in the Tier I category of the BVB. The Fund's listing prospectus was approved by the CNVM on 16 December 2010.
The prospectus included all material information about the Fund, as required by the European Union and CNVM regulations, including profiles of all the companies in the Fund's portfolio. The information provided in the prospectus allows shareholders and potential investors to better assess the value of the Fund. A copy of the prospectus and its annexes are available at www.fondulproprietatea.ro.
Since 25 January 2011 the Fund shares have been listed in the Tier I category of the regulated market of the BVB under ISIN number ROFPTAACNOR5, and market symbol FP.
The records of shares and shareholders of the Fund are kept under the conditions of the applicable law by an independent registrar, Depozitarul Central SA ("Central Depositary"), with the registered office at Bucuresti, 34- 36 Carol I Avenue, floors 3, 8 and 9, 2nd district.
Source: BVB, Bloomberg
Source: BVB
Key information on the Fund's distribution history is included in the table set out below:
| Status of | Deadline for | |||||
|---|---|---|---|---|---|---|
| Gross | distribution | distribution | ||||
| Paid | distribution | Gross distribution | Total number of | payment | collection by | |
| Description | in | declared (RON) | per Share | shares * | (%) | shareholders |
| 2006 Dividend | 2007 | 36,076,046 | 0.00250 | 14,240,540,675 | 30 June 2012 | |
| (Dividend collection | ||||||
| right cancelled) | ||||||
| 2007 Dividend | 2008 | 89,997,678 | 0.00660 | 13,644,179,910 | 30 June 2012 | |
| (Dividend collection | ||||||
| right cancelled) | ||||||
| 2008-2009 Dividend | 2010 | 1,124,316,804 | 0.08160 | 13,778,392,208 | 11 October 2013 | |
| (aggregate) | (Dividend collection | |||||
| right cancelled) | ||||||
| 2010 Dividend | 2011 | 432,729,046 | 0.03141 | 13,776,792,208 | 30 June 2014 | |
| (Dividend collection | ||||||
| right cancelled) | ||||||
| 2011 Dividend | 2012 | 507,658,517 | 0.03854 | 13,172,250,055 | > 99% | 30 June 2015 |
| 2012 Dividend | 2013 | 536,437,206 | 0.04089 | 13,119,031,695 | > 98% | 28 June 2016 |
| Distribution - Return of capital |
2014 | 601,325,852 | 0.05000 | 12,026,517,031 | >98% | 25 July 2017 |
* Being the number of shares qualifying for the dividend, defined as the number of shares in issue, excluding any unpaid shares and any treasury shares acquired via buybacks (where applicable) at the registration date decided upon by the Ordinary General Shareholders' Meeting ("OGSM") approving the dividend distribution.
The Fund's 2014 audited net profit was RON 1,012,898,265. The Fund is obliged to make transfers of at least 5% of the Fund's profit to the legal reserves until these reserves reach a value equivalent to 20% of the value of the issued share capital of the Fund. Following the 2014 transfer of RON 51,476,313 the value of these reserves is RON 243,735,507 (being 2.1% of the issued share capital).
The Fund Manager proposes to keep the remaining RON 961,421,952 within unallocated retained earnings, due to the fact that, according to the official interpretation of the FSA on the definition of 'net asset value' for the Fund, dividend distributions cannot be made to shareholders at the present time, because the Fund's shareholders' equity calculated in accordance with Romanian Accounting Regulations, RON 9,339.0 million is lower than the share capital of the Fund, RON 11,815.3 million.
The Fund Manager has already recommended, and the shareholders have approved (on 21 January 2015), a cash distribution of RON 0.05 per share via the decrease of the share capital through the reduction of the nominal value of the Fund's shares. Based on our current understanding of Romanian tax law, no Romanian tax will arise for the Fund or its shareholders on this distribution.
The decrease of share capital is subject to the endorsement from the FSA. The payments to shareholders for this cash distribution is expected to start on 29 June 2015.
In addition, the Fund Manager will seek to return further value to shareholders by continuing to buy-back shares.
Please see the Analysis of the Activity of the Fund section for the official interpretation of the FSA on the definition of "net asset value" for the Fund and for the update of the Fund's annual cash distribution policy.
The third buy-back programme, approved by shareholders on 22 November 2013, started in March 2014. On 24 July, the Fund announced the completion of the programme, through which the Fund Manager acquired 252,858,056 shares of the Fund (equivalent to 2.02% of the Fund's paid-up share capital) through daily acquisitions on the Bucharest Stock Exchange. The total value of the buy-back programme was RON 205,460,540 (excluding brokerage fees and other acquisition related costs), and the average price was approximately RON 0.8125 per share. The shareholders approved the cancellation of the shares repurchased in the third buy-back programme at the 23 September 2014 General Shareholders' Meeting. For further details regarding the cancellation of the shares repurchased in the third buy-back programme, please read Share Cancellation section and Significant Post Balance Sheet Events sections.
The fourth buy-back programme refers to the acquisition of a maximum number of 990,855,616 shares. The price range is a minimum of RON 0.2 per share and a maximum of RON 2.0 per share. The buy-back programme started on 1 October and can be executed until 27 November 2015. The shares repurchased during the fourth buyback programme will be cancelled. On 20 October, the Fund Manager announced its intention to accelerate the buy-back programme via a Public Tender Offer to acquire 750 million shares, and selected Raiffeisen Bank to provide brokerage services for the Tender Offer. The price offered was RON 1.11 per share and the subscription period was 3 November – 2 December. On 4 December, the Fund Manager announced the results of the Tender Offer: 10,109,789,738 total shares subscribed (an oversubscription rate of 13.48 and an allocation ratio of 0.0741855191). As at 31 December 2014, the total number of shares repurchased during the fourth buy-back programme was 904.5 million, representing 91.3% of the total programme, at an average share price of RON 1,0743 per share.
As at 31 December 2014, the total value of the shares acquired in the fourth buy-back programme was RON 986.5 million, out of which related fees were RON 14.7 million, including fees charged by the FSA in amount of RON 12.5 million.
For further details on the fourth buy-back programme, please read Significant Post Balance Sheet Events section.
On 19 November 2014 the Fund's shareholders approved the fifth buy-back programme that refers to the acquisition of a maximum number of (i) 227,572,250 shares or (ii) 10% of the subscribed share capital at the relevant time, whichever is the lesser, starting with the date when the share capital decrease approved through EGM Resolution on 23 September 2014 (regarding the cancelation of the shares purchased by the Fund during the third buy-back programme) is effective until August 2016. The buy-back shall be performed at a price that cannot be lower than RON 0.2 per share or higher than RON 2 per share. The buy-back transaction can only be applied for fully paid shares. The shares purchased will be cancelled. This buy-back programme implementation will be subject to the availability of the necessary cash.
For further details on the fifth buy-back programme, please read Significant Post Balance Sheet Events section.
None of the subsidiaries of the Fund hold shares in the Fund, according to the information made available to the Fund.
The Fund had no bonds or other debt securities in issue during 2014.
The Fund has a clear and transparent corporate governance framework that was concluded in 2011. The framework sets out clearly, for public reference, the main aspects of the Fund's corporate governance structure, the respective functions of the Board of Nominees and the Fund's Sole Administrator, as well as their powers and responsibilities and is published on the website of the Fund. The Fund develops and updates its corporate governance framework, so that it can meet new demands and opportunities.
The Fund has a transparent decision making process, relying on clear rules, in order to enhance shareholder confidence. It also contributes to the protection of shareholders' rights, improving the overall performance of the Fund, offering better access to capital and risk mitigation.
The Fund lends great importance to the principles of good corporate governance and, coinciding with its listing at the start of 2011, has adhered to the Bucharest Stock Exchange Code of Corporate Governance.
In September 2010, a one-tier system of governance was implemented in the Fund, as a result of the implementation of the rules established by Government Ordinance 81/2007. Although the Fund is currently administrated under a one-tier system, the role of the Board of Nominees is similar to the role of a Supervisory Board, with a few exceptions.
Since adopting the one-tier system, the Fund is administrated by the Sole Administrator, who is also the Fund Manager. The Sole Administrator manages the daily operations of the Fund and, as Fund Manager, implements the investment strategy on behalf of the Fund. The Board of Nominees, appointed by the shareholders, acts as a monitoring body and follows the activity of the Sole Administrator and Fund Manager, verifying the execution of the Investment Management Agreement.
The powers and duties of the above mentioned bodies are described in a number of official documents:
In accordance with best corporate governance practice, the Fund is managed in a climate of transparency, based on open discussions between the Sole Administrator and the Board of Nominees.
Both Sole Administrator and its employees and the members of the Board of Nominees have a duty of care and loyalty towards the Fund. Hence, the Sole Administrator and the Board of Nominees pass their resolutions as required for the welfare of the Fund, primarily in consideration of the interests of shareholders and investors.
Any General Shareholders Meeting shall be convened whenever necessary by the Sole Administrator, with the prior approval of the Board of Nominees, in accordance with the provisions of the law. The date of the meeting may not be less than 30 (thirty) calendar days after publishing the convening notice in the Official Gazette of Romania Part IV. The convening notice shall be published in the Official Gazette of Romania, Part IV, and in one of the widely distributed newspapers in Romania.
In exceptional cases, when the Fund's interest requires it, the Board of Nominees may convene the General Shareholders' Meeting. Any convening notice will be sent to the Bucharest Stock Exchange and to the Financial Supervisory Authority (former National Securities Commission) in accordance with the capital markets regulations. Any convening notice will also be published on the Fund's website in the General Shareholders' Meeting section, together with any explanatory document related to items included on the meeting agenda.
The annual financial statements are made available starting with the date of the convening notice of the Annual Ordinary General Shareholders Meeting convened to resolve upon them.
The GSM is usually chaired by one of the legal representatives of the Sole Administrator, who may designate another person to chair the assembly. The chairman of the Meeting designates two or more technical secretaries to verify the fulfilment of the formalities required by law for the carrying out of the Meeting and for the drafting of the minutes thereof.
The minutes, signed by the Chairman and by the technical secretaries, shall ascertain the fulfilment of the formalities relating to the convening notice, the date and place of the Meeting, the agenda, the shareholders present, the number of shares, a summary of the issues discussed, the resolutions passed and, upon the request of the shareholders, the statements made by such shareholders during the meeting.
The resolutions of the General Shareholders Meeting shall be drafted pursuant to the minutes and shall be signed by the person empowered by the shareholders to do this. In observance of the capital market regulations, the resolutions of the General Shareholders Meeting will be disseminated to the Bucharest Stock Exchange and the Financial Supervisory Authority (former National Securities Commission) within 24 hours after the event. The resolutions will also be made available on the Fund's website under the respective General Shareholders Meeting section.
The main duties of the Ordinary General Shareholders Meeting are the following:
The Extraordinary General Shareholders Meeting is entitled to decide mainly upon:
f) issue new bonds;
non-current assets of Fondul Proprietatea whose value exceeds, either individually or cumulatively during a financial year, 20% of the total value of the non-current assets, less any receivables;
i) change of the management system of Fondul Proprietatea;
During 2014, there were 7 General Shareholders' Meetings and issued 20 Extraordinary General Shareholders' Meeting resolutions and 19 Ordinary General Shareholders' Meeting resolutions.
The Board of Nominees consists of five members appointed by the Ordinary General Shareholders Meeting in accordance with the provisions of the Constitutive Act in force.
The Board of Nominees has a sufficient number of members in order to have effective capacity to supervise, scrutinise and evaluate the activity of the Sole Administrator and the fair treatment of all the shareholders.
The composition of the Board of Nominees is balanced so as to enable it to take well-informed decisions. The decision-making process is a collective responsibility of the board, which remains fully liable for decisions taken within its field of competence.
An independent member is defined as one who does not maintain, nor has recently maintained, directly or indirectly, any business relationships with the Fund or persons linked to the Fund, or shareholders of the Fund, of such significance as to potentially influence them.
The Board of Nominees ensures that consultative committees (Nomination and Remuneration Committee and Audit Committee) are constituted to examine specific topics chosen by the Board and to report to the Board. One independent Board of Nominees member sits on each such committee. The mandate of each member of the Board of Nominees imposes the same kind of restrictions around confidentiality of the Fund's information and the same kind of reporting and consent requirements on the individual's ability to personally trade in the Fund's shares as are in place for the Sole Administrator's staff.
The members of the Board of Nominees may be shareholders of the Fund.
The structure of the Board of Nominees as at 1 January 2014 was the following:
| Name | Position |
|---|---|
| Mr Sorin-Mihai Mîndruţescu | Chairman |
| Mr Mark Gitenstein | Member |
| Mr Julian Rupert Francis Healy | Member |
| Mr Steven Cornelis van Groningen | Member |
| Mr Piotr Rymaszewski | Member |
During 2014 there were no changes in the structure of Board of Nominees.
Mr Sorin-Mihai Mîndruţescu is the Chairman of the Board of Nominees. Mr Mîndruţescu has extensive experience in corporate finance and in the banking industry. From 1994 until 2001 he held various senior positions in a number of large Romanian credit institutions. From 2009 until 2012 Mr Mîndruţescu was Chairman of the Board of Directors of the American Chamber of Commerce Romania (AmCham). Currently Mr Mîndruţescu is a managing director with Oracle Romania. Mr Mîndruţescu holds MBA qualifications from both The University of Edinburgh Management School and ENCP School of International Management in Paris. As at 31 December 2014 Mr Mîndruţescu held no shares issued by the Fund. Mr Mîndruţescu is an independent member.
Mr Mark Gitenstein is special counsel in the Government & Global Trade practice in Mayer Brown's Washington DC office. He was appointed in 2009 by President Barack Obama to serve as the United States Ambassador to Romania, completing his term of service at the end of 2012. As US Ambassador to Romania, he worked to strengthen relations with Romania on a variety of issues. He actively promoted deeper development of Romania's equity market, as well as a fair and transparent business environment for all investors. He also encouraged greater private sector involvement in state-owned enterprises (SOEs), including the introduction of a corporate governance code for SOEs. In 2012, Romanian President Traian Băsescu awarded Mark with the "Star of Romanian Grand Cross," the country's highest civil order and that same year Nine O'clock designated him as the Best Foreign Diplomat for 2012. Before undertaking his ambassadorial role, Mr Mark Gitenstein spent two decades as a partner at Mayer Brown. Additionally, he was a non-resident senior fellow in governance studies at
the Brookings Institution, where he specialised in issues related to national security and civil liberties. Before joining Mayer Brown Mark served for 17 years on the staff of the US Senate Judiciary and Intelligence committees, 13 of those years working for then Senator Joe Biden. He is the author of Matters of Principle, an award winning book on his experience managing the Judiciary Committee staff during the confirmation battle over the nomination of Robert Bork to the Supreme Court. As at 31 December 2014, Mr Gitenstein held no shares issued by the Fund. Mr Gitenstein is an independent member.
Mr Julian Healy has long and extensive experience of banking and investment management in emerging markets and particularly in Central and Eastern Europe. He is a Member of the Institute of Chartered Accountants in England and Wales. Mr Healy also acts as a non-executive director on a number of company boards of directors. As at 31 December 2014, Mr Healy held no shares issued by the Fund. Mr Healy is an independent member.
Mr Steven Cornelis van Groningen has extensive experience in banking area, and is the President and CEO of Raiffeisen Bank SA Romania. Mr van Groningen previously occupied senior management positions in ABN AMRO Bank (in Romania, Russia and Hungary). Mr van Groningen is the Vice-President of Foreign Investors Council in Romania. As at 31 December 2014, Mr van Groningen held 462,908 shares issued by the Fund. Mr van Groningen is an independent member.
Mr Piotr Rymaszewski has experience in finance, turnaround, real estate and law. He is a CEO of Octava S.A., a company listed on the Warsaw Stock Exchange. He also acts as executive and non-executive director on a number of boards of both listed and unlisted companies. As at 31 December 2014, Mr Rymaszewski held no shares issued by the Fund.
The main duties of the Board of Nominees include:
a list of major transactions occurring in the Fondul Proprietatea portfolio for the period under review;
the total profit of the portfolio and comparison of profit with the appropriate market benchmark;
The Board of Nominee shall draft and present to the General Shareholders Meeting an annual report regarding the monitoring activity performed or a monitoring report for another period agreed by the General Shareholders Meeting;
During 2014 there were meetings of Board of Nominees and there were issued 70 decisions.
An Audit Committee composed of two Board of Nominees members was established to provide assistance to the governing bodies of the Fund in the area of internal control and financial reporting. This committee reviews the annual financial statements and the proposal for profit distribution. In addition, the Audit Committee analyses the proposal for appointing the independent financial auditor, who is appointed by shareholders at an Ordinary General Meeting.
The Committee also supervises the Fund's risk management strategy and its financial performance and assesses any issues brought to its attention by the internal auditor.
The Sole Administrator reports to the Audit Committee at least once a year on the audit plan and any material relevant matters.
The Audit Committee includes members that have the necessary expertise in the area of financial audit and accounting. As at 31 December 2014 the Audit Committee members were Mr Healy and Mr van Groningen.
A Nomination and Remuneration Committee composed of three Board of Nominees members was established to provide assistance to the governing bodies of the Fund in the area of nomination and changes in remuneration.
As at 31 December 2014 the Nomination and Remuneration Committee members were Mr Gitenstein, Mr Mîndruţescu and Mr Rymaszewski.
The AIFMD is a European Union Directive that entered into force on 22 July 2013. This Directive lays down comprehensive and effective regulatory and supervisory rules for managers of alternative investment schemes that are addressed to professional investors. The harmonised European standards for alternative investment fund managers have the objective of enhancing the transparency of the activities of AIFM and the funds they manage towards investors and public authorities. The Directive regulates:
AIFMD implementation in Romania suffered a material delay and in October 2014 the European Commission sent a formal request to Romanian Government for notification regarding full enactment of the AIFMD.
Based on the current available public information, it is envisaged that AIFMD will be implemented in Romania via a law to be approved by the Parliament. The draft of law was published on the webpage of the Romanian Senate and we expect that transposition will take place by the end of March 2015. According to the draft published on the webpage of the Romanian Senate the law enters into force within 30 days after its publication in Official Gazette and the managers have the obligation to file the documentation in order to licence within 12 months after the law enters into force.
The Fund Manager will announce its proposal regarding the application of Law for implementing AIFMD after the law is published in Official Gazette.
The Sole Administrator is appointed and/or revoked by the Ordinary General Shareholders Meeting.
During 2014 there were two mandates for the Fund Manager and Sole Administrator of the Fund.
A. Between 1 January and 29 September 2014 it was in force the Sole Administrator's mandate started on 29 September 2010 that run until 29 September 2014.
In November 2013 the shareholders of Fondul Proprietatea approved a change of the Constitutive Act regarding the duration of the mandate of the Fund Manager, as follows:
"The mandate of the Fund Manager is of 2 years. The Fund Manager will call an Ordinary General Meeting of the Shareholders to be held at least 6 months before the termination of the duration of the mandate of the Fund Manager with the agenda of approving the renewal of the Fund Manager's mandate or starting the selection process of a new Fund Manager and the negotiation of the management agreement to be concluded with the selected candidate. After the selection of the candidate, the Fund Manager will immediately call an Ordinary General Meeting of the Shareholders with the agenda of appointing the selected candidate as Fund Manager and authorising the execution of the relevant investment management agreement and fulfilment of all relevant formalities for the authorisation and legal completion of such appointment".
This change of the Constitutive Act was endorsed by the FSA on 17 April 2014 and entered into force on 17 April 2014.
B. On 28 April 2014, the shareholders of the Fund approved the renewal of the mandate of the Fund Manager and Sole Director for two years beginning with 30 September 2014. The new mandate was registered with the Trade Register and endorsed by the FSA. The new Investment Management Agreement, as amended by Addendum 1, entered into force beginning with 30 September 2014.
The Sole Administrator issues decisions regularly and whenever necessary for the daily operations of the Fund.
Currently, the Fund is managed by a Sole Administrator and the same legal entity acts as Fund Manager, responsible for investment decisions. This arrangement enables the Fund Manager to perform these functions in a complementary, effective and efficient manner.
The Sole Administrator is responsible for the Fund's executive management. It acts in the best interests of the Fund and protects the general interests of the shareholders.
FTIML, as Sole Administrator, is regulated by the Romania Financial Supervisory Authority. Franklin Templeton Investment Management Limited United Kingdom is authorised and regulated by the UK Financial Conduct Authority ("FCA") and is registered as a foreign investment adviser with the United States Securities and Exchange Commission ("SEC"). Franklin Templeton Investment Management Limited United Kingdom applies global best practices to meet its regulatory obligations and compliance with laws. These include:
As provided by the Constitutive Act, the Investment Management Agreement and Investment Policy Statement, the main duties of the Sole Administrator, performed under the control of the General Shareholders Meeting and the monitoring of the Board of Nominees, are:
proposes for the prior approval of the Board of Nominees and further, of the General Shareholders Meeting, of the yearly income and expenditure budget and business plan;
proposes for the prior approval of the Board of Nominees and further, of the General Shareholders Meeting of Fondul Proprietatea, the general strategy in accordance with the investment policy of Fondul Proprietatea;
The Sole Administrator coordinates the strategy of the Fund.
The Sole Administrator ensures that the provisions of the relevant European and Romanian capital markets legislation are complied with and implemented by the Fund, as earlier presented within this chapter. Likewise, the Sole Administrator ensures the implementation and operation of an accounting, risk management and internal controlling system which meets the requirements of the Fund.
The employees of the Sole Administrator and the persons closely related to them and to the Sole Administrator (the latter term was defined in the applicable capital markets regulations under the Romanian phrase of "persoană aflată în relaţii apropiate cu persoane exercitând funcţii de conducere") have the duty to report to the Sole Administrator and to the FSA any and all trading/business performed for their own account with (i) shares or other securities issued by the Fund and admitted for trading on regulated markets; and/or (ii) derivative financial instruments relating to securities issued by the Fund and/or (iii) any other instruments relating thereto.
The Sole Administrator has the duty to disclose immediately to the Board of Nominees any material personal interests it may have in transactions of the Fund as well as all other conflicts of interest.
Sole Administrator conducts all business according to the principle that it must manage any conflicts of interest fairly between itself and its client (including the Fund) or between multiple clients. The Franklin Templeton group has group-wide policies for managing conflicts of interest and ensuring the ethical conduct of its entire staff which apply to the Sole Administrator. These policies were designed to evidence compliance with the conflicts of interest requirements as set out in the European Markets in Financial Instruments Directive of 2004 and were also submitted to FSA during the course of the Sole Administrator's licensing application.
All business transactions between the Fund and the Sole Administrator as well as persons or companies closely related to it must be in accordance with the normal industry standards and applicable corporate regulations.
During 2014, the Sole Administrator issued 52 resolutions on all matters requiring its approval in accordance with the Constitutive Act.
In June 2009, the Fund nominated Franklin Templeton Investment Management Limited United Kingdom as winner of the international tender procedure organised by the Fund for the selection of the Fund's investment Manager and Sole Administrator.
In September 2009, the Fund's shareholders approved the investment policy and the financial offer proposed by Franklin Templeton Investment Management Limited United Kingdom. The Bucharest Branch of Franklin Templeton Investment Management Limited United Kingdom was established in September 2009 and is subject to the global policies, procedures and best practices already in place within the Franklin Templeton group, and Franklin Templeton Investment Management Limited United Kingdom specifically.
In February 2010, the Fund's Ordinary General Shareholders Meeting approved the final form of the Investment Management Agreement which was endorsed by CNVM Decision no. 254 dated 23 February 2010. The Investment Management Agreement was signed on 25 February 2010, its entry into force being dependent on the cumulative fulfilment of the following conditions: (i) the execution of the Investment Management Agreement, (ii) the publication of the General Shareholders Meeting resolution with the Official Gazette, (iii) the completion of the registration of the Bucharest Branch of Franklin Templeton Investment Management Limited United Kingdom and (iv) the conclusion between the Fund and the Fund Manager of the handover protocol regarding the portfolio.
By decision no. 613 dated 11 May 2010, CNVM authorised the Bucharest Branch of Franklin Templeton Investment Management Limited United Kingdom for the purpose of investment management of the Fund.
With effect from 29 September 2010, Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch took over as the Sole Administrator of the Fund for a period of 4 years.
On 28 April 2014, the shareholders of the Fund approved the renewal of the mandate of the Fund Manager and Sole Director for two years beginning with 30 September 2014. The new mandate was registered with the Trade Register and endorsed by the FSA. The new Investment Management Agreement as amended by Addendum 1 entered into force beginning with 30 September 2014.
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch did not have any agreement, understanding or family relationship with the shareholders responsible for appointing it to the position of Sole Administrator. On 31 December 2014 Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch held no shares issued by the Fund.
At the date of this report, Grzegorz Maciej Konieczny, Adrian Cighi and Oana Valentina Truţa are the legal representatives of Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, each of them having full management powers.
Grzegorz Konieczny, executive vice president/portfolio manager, joined the Franklin Templeton organization in 1995. He has research and portfolio management responsibilities in Central and Eastern Europe. From September 2010 he has been the Portfolio Manager on Fondul Proprietatea, the largest closed-end investment fund in Romania. Prior to joining Templeton, Mr. Konieczny was director of Capital Market Transactions at Bank Gdanski SA, one of the largest financial institutions in Poland at the time. Mr. Konieczny earned a master's degree in economics and foreign trade from the University of Gdansk (Poland). In 1994, he obtained an investment advisor license from the Polish Securities and Exchange Commission. Mr. Konieczny speaks Polish, English, and Russian. As at 31 December 2014, Mr Konieczny held no shares issued by the Fund.
Adrian Cighi has experience in investment management and portfolio analysis. Mr Cighi has earned a bachelor's degree in Finance from the American International University in London and a master's degree in Accounting and Finance from the London School of Economics and Political Science. He was employed as an analyst by major international investment banking and securities firms, such as Goldman Sachs (London) and Lehman Brothers (London). Locally, Mr Cighi has acted as an investment analyst at BT Asset Management (Cluj) and management
counsellor at Rematinvest (Cluj). He joined the Bucharest office of Franklin Templeton in 2010. As at 31 December 2014, Mr Cighi held no shares issued by the Fund.
Oana Truţa has experience in investment management and portfolio analysis. Ms Truţa has earned a bachelor's degree in Finance and Insurance from the Babes Bolyai University in Cluj-Napoca and a master's degree in Quantitative Economics and Finance from the same university. Prior to joining Franklin Templeton Ms Truţa has acted as an investment analyst at Interdealer Capital Invest. She joined the Bucharest office of Franklin Templeton in 2010. As at 31 December 2014, Ms Truţa held no shares issued by the Fund.
The fee = the fixed fee multiplied by the notional amount, multiplied by the number of calendar days the payment is related to divided by 365.
Where:
The fixed fee per year is composed of:
The Fund Manager provided to the Board of Nominees monthly, quarterly and annually reports.
The payment was done within 30 business days since the receipt of the invoice.
B. The fees due to the Fund Manager in accordance with the new Investment Management Agreement that entered into force on 30 September 2014 shall be calculated and paid in RON by the Fund in compliance with the following provisions.
The remuneration of the Fund Manager shall be calculated based on a Base fee.
The Base Fee Rate multiplied by the notional amount, multiplied by the number of calendar days of payment, divided by 365, where the Base Fee Rate = 60 basis points per year;
1 basis point = 0.0001; and
the notional amount is the market capitalization of the Fund which is defined as the number of the Fund's paid-up shares, minus the weighted average number of the Fund's settled own shares held in treasury over the calculation period, then multiplied by the weighted average market price of the Fund's shares calculated for the corresponding quarter. The weighted average market price is computed based on the daily average market prices of the Fund's shares and corresponding daily volumes, as published by Bucharest Stock Exchange REGS section. If the number of shares relevant for the computation of the Base Fee (described above) changes over the calculation period, the Base Fee will be an aggregation of the computation for each sub-period.
The invoices for the Base Fee shall be submitted to the Depositary of the Fund`s assets.
The Fund Manager shall provide to the BoN quarterly and on an annual basis and upon reasonable request of the BoN a detailed report regarding the fees collected under this Investment Management Agreement, in the form reasonably required by the BoN.
The payment shall be done within 30 business days since receipt of the invoice.
The rights of the Fund's minority shareholders are adequately protected according to the relevant domestic legislation.
The Fund is committed to effectively and actively communicate with its shareholders and ensure that all shareholders have equal access to public information.
According to the provision of the Constitutive Act in force (Annex 8 of this report), each share issued by the Fund which is rightfully owned and paid up by a shareholder carries the following rights: (i) voting right at the shareholders' meetings, (ii) to elect and revoke the members of the Board of Nominees as well as to elect and revoke the Sole Administrator and (iii) right to participate in the distribution of profits.
At present, the Constitutive Act does not specify any further special conditions on such rights than those specified by the law.
The Romanian legislation imposes another restriction regarding unpaid shares and as a result, as long as the Romanian state has unpaid shares, it has no voting rights for those unpaid shares and has no right to receive dividends in relation to them.
With respect to the right to receive dividends, the Constitutive Act set out that the Fund's net profit shall be distributed based on the decision of the General Shareholders Meeting, each shareholder being entitled to receive dividends proportionally to the number of paid-up shares held in the Fund's share capital. Pursuant to the Companies' Law, the payment of dividends shall be carried out no later than 6 months from the approval of the annual financial statements for the previous year, under penalty of default interest payment.
Other than as presented above, no rights, preference or restrictions are attached to the shares. Pursuant to the Companies' Law, as a rule, the shares issued by a company entitle each holder to equal rights. Such rights mainly refer to the shareholders' involvement in the operations of a company and the resulting benefits and are regulated by the applicable laws. Shareholders must exercise their rights in good faith, without breaching the interest of other shareholders or that of the company.
The Fund is committed to encouraging shareholders to participate in shareholders general meetings, as well as the full exercise of their rights and to raise questions concerning items to be debated during such meetings. General Shareholders Meetings enable and encourage dialogue between the shareholders and the Fund and its representatives. The Fund encourages its shareholders to take part in meetings, and those who cannot attend are able to vote in absentia by sending the votes to the headquarter of the Fund, using the voting bulletin for the votes by correspondence made available by the Fund at the headquarters and/or on the Fund's website.
Furthermore, the Fund ensures that its shareholders have access to relevant material information, so as to allow them to fully exercise their rights. The Fund has a dedicated section on its website (www.fondulproprietatea.ro) that can be easily identified and accessed. This information typically includes: the time and place of meetings; information on how to exercise voting rights including the proxy process with relevant forms; meeting agendas, as well as detailed documents relating to specific agenda items and draft of shareholders resolutions.
The Fund Manager has established a dedicated investor relations team. This experienced team is responsible for handling relationships with both private and institutional investors locally and abroad.
In conclusion, in present the Fund observes the one paid share, one vote, and one dividend principle. There are no shares conferring the right to more than one vote or preference shares.
Shareholders holding at least 5% of the paid-up share capital may ask for calling of a General Shareholders Meeting. Such shareholders have also the right to add new items on the agenda of a General Shareholders
Meeting, provided such proposals are accompanied by a justification or a draft resolution proposed for approval and copies of the identification documents of the shareholders who make the proposals.
Proposals with respect to adding new items on the agenda of such General Shareholders Meeting can be submitted at the headquarters of the Fund, or by e-mail having attached an extended electronic signature, in compliance with the Law no. 455/2001 on digital signature.
Likewise, the shareholders holding at least 5% of the paid-up share capital are entitled to propose revised versions of resolutions for the items listed on the agenda or proposed by other shareholders to be added on the agenda of such General Shareholders Meeting.
The shareholders may attend in person or may be represented in the General Shareholders Meetings either by their legal representatives or by representatives having a special proxy, based on the special proxy template made available by the Fund. Such proxy template may be obtained from the Fund's headquarters and/or can be found on the Fund's website, under the respective General Shareholders Meeting section item.
The shareholders of the Fund, regardless of the stake of the share capital held, may submit written questions with respect to the items on the agenda of the General Shareholders Meetings. The shareholders may also send such questions by e-mail. The answers will be provided during the General Shareholders Meeting based on public information or non-public and non-material information.
Should the questions require elaborate answers, a Q&A (questions and answers) form will be made available on the Fund's website. The disclosure of commercially sensitive information that could result in a loss or competitive disadvantage for the Fund will be avoided when providing the answers, in order to protect the interest of our shareholders.
FATCA is a United States federal law that requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the U.S., and requires foreign financial institutions to report to the Internal Revenue Service ("IRS") about their U.S. clients.
Romania, like most of the European countries, decided to conclude an intergovernmental agreement ("IGA") to facilitate the implementation of FATCA requirements. IGA negotiations with U.S. are in progress. For further details, please visit the following link: http://www.mfinante.ro/acordfatca.html?pagina=domenii.
The Fund and the Sole Administrator supports gender diversity and promotion of women in management positions.
While there are currently no female members of the Board of Nominees, the Sole Administrator has women in its management.
More than 50% of the members with key positions of the Sole Administrator are women and the overall proportion of women in the structure of the Sole Administrator is approximately 60%.
The Fund has adhered to the Bucharest Stock Exchange Code of Corporate Governance. Details on compliance with the principles and recommendations stipulated under the Bucharest Stock Exchange Code of Corporate Governance are presented in the "Comply or Explain" Statement, which is the Annex 11 to the 2014 Annual Report.
The Sole Administrator has implemented internal policy and procedures to ensure that timely and accurate disclosure is made on all material matters regarding the Fund, including the financial position, performance, ownership and governance of the Fund. In addition, strict internal rules, designed to protect the Fund's interests, have been established in the areas of financial reporting, internal control and risk management.
Pursuant to article 62 of the Law 297/2004 regarding capital market, with subsequent amendments, the Sole Administrator has established a compliance department responsible for managing the compliance risk of the company with the applicable legislation as well as with internal policies and procedures. The registered Compliance Officer is part of Franklin Templeton International Compliance Department and reports directly to the Compliance Manager – Advisory EMEA.
The compliance department is responsible for providing regulatory guidance, advice and compliance training to operational departments, assisting them in managing the reputational risk in relation to legal or regulatory requirements and codes of conduct and performing 2nd level compliance controls.
The Sole Administrator has implemented a Risk Management Policy. The purpose of this policy is to establish an effective risk framework which meets regulatory requirements, and thereby enhances the Administrator's governance structure throughout the business.
The European Risk Committee of Franklin Templeton is responsible for the oversight of all risk management processes, including those relating to Anti Money Laundering (AML), and is made up of senior management from the business areas and key risk and control functions. Meeting quarterly, it reviews risk reports and input from business management and maintains a detailed register of risk items and resolutions.
The Board of Directors of Franklin Templeton Investment Management Limited United Kingdom provides oversight by being aware of risk management practices and their deployment within the firm, staying apprised of significant risks and management responses. The Board of Directors of Franklin Templeton Investment Management Limited United Kingdom has assigned this responsibility to the Audit Committee of Franklin Templeton Investment Management Limited United Kingdom.
In addition, the Sole Administrator oversees the risk based on its Compliance Monitoring Policy. The risk assessment is a critical element of Compliance's oversight and monitoring program. The compliance monitoring programme is updated annually with findings reported to Senior Management on a monthly basis. At a minimum, high risk areas are monitored annually; medium risk areas are monitored on an 18 month cycle and low risk items on a 3 year cycle. The compliance monitoring programs will be updated to reflect the results of the final risk assessment for each fiscal year.
In respect of the portfolio monitoring activity, the Franklin Templeton Investment Management Limited United Kingdom has implemented procedures and controls which are designed to ensure that all assets are managed prudently and in accordance with client mandates. In addition Franklin Templeton has a dedicated team Global Investment Adviser Compliance ("GIAC") of specialists who are responsible for the rigorous day-to-day monitoring of all client accounts, including Fondul Proprietatea, against the agreed investment guidelines and constraints.
The front office trade management system has embedded compliance functionality which enables investment restrictions, regulatory and internal requirements to be included within the system. All trade orders (with the exception of foreign exchange trades and certain debt and derivative security trades) are automatically checked against the relevant investment restrictions in our system prior to trading.
Post trade compliance checks are automatically run overnight for all portfolios against the investment restrictions included within our trade management system. Any exceptions are investigated and cleared by Franklin Templeton GIAC team. Investment restrictions that cannot be automated are reviewed periodically.
All active and passive breaches are reported to the relevant investment managers and operating departments. Corrective action is taken as necessary to address and resolve any issues. Trading errors are monitored by the Global Compliance department of Franklin Templeton.
The Global Compliance department of Franklin Templeton produces monthly reports which provide details on significant compliance matters and initiatives, updates on monitoring activities, and current complaints and breaches. These reports are circulated to the relevant senior management.
FTIML adopted operating solutions suitable to facilitate the identification and adequate handling of any situations in which a member of the Board of Nominees or an employee of the Sole Administrator/Fund Manager has an actual or potential conflict of interest between the interest of the Fund and his/her own or on behalf of third parties. The Fund Manager will adopt operating solutions suitable for the adequate handling of any situations arising from related parties transactions.
The members of the Board of Nominees and the Sole Administrator/Fund Manager shall keep confidential any documents and information acquired in the performance of their duties.
The audited financial statements for the year ended 31 December 2014 prepared in compliance with Romanian Accounting Regulations are included in full in Annex 1 to this Report.
This section provides a commentary on the principal elements of the Fund's financial position and results for the year ended 31 December 2014 and the two prior years.
| RON million | 31 December 2012 | 31 December 2013 | 31 December 2014 |
|---|---|---|---|
| Audited | Audited | Audited | |
| Intangible assets | 0.3 | 0.8 | 0.8 |
| Financial assets | 11,097.8 | 10,490.6 | 9,075.2 |
| Non-current assets - total | 11,098.1 | 10,491.4 | 9,076.0 |
| Current assets - total | 776.5 | 454.1 | 319.5 |
| Prepaid expenses | 0.1 | - | - |
| Payables within one year | 21.1 | 31.2 | 41.4 |
| Total assets less current liabilities | 11,853.6 | 10,914.3 | 9,354.1 |
| Provisions | 16.8 | 29.3 | 15.1 |
| Shareholders' equity | 11,836.8 | 10,885.0 | 9,339.0 |
As at 31 December 2014 and in previous years, intangible assets included the value of the licenses and the implementation costs of the Fund's accounting and reporting software, net of accumulated amortisation.
Financial assets include the Fund's listed and unlisted equity investments. According to Romanian Accounting Regulations, both listed and unlisted equity investments are valued at cost (or their initial value) less adjustments for impairment.
For listed investments, the impairment adjustment records any adverse difference between cost and closing price (an impairment adjustment is booked if closing price is lower than cost). For unlisted or illiquid listed equity investments, the impairment test compares the cost to the Fund's share of shareholders' equity as per the portfolio companies' latest available financial statements or using values assessed by independent valuers, and any adverse result is booked as impairment. In performing the impairment test, the financial information from the most recent financial statements of the companies is corroborated with the most recent publicly available qualitative and quantitative information regarding the assets.
During 2014, the value of financial assets decreased by RON 1,415.4 million mainly due to the disposals of the entire holdings in Transelectrica SA (total impact RON 156.2 million), Raiffeisen Bank International AG (total impact RON 77.8 million), and Erste Group Bank (total impact RON 45.1 million), and also part of the holding in Romgaz SA (total impact RON 138.8 million), combined with the increase of the impairment adjustments for the holdings in OMV Petrom SA (RON 664.9 million), Nuclearelectrica SA (RON 94.6 million) and CE Oltenia SA (RON 213.2 million).
During 2013, the value of financial assets decreased by RON 607.2 million, mainly due to the disposals of equity investments in this period: the entire holding in Transgaz SA (impact of RON 177.4 million) and part of the holdings in OMV Petrom SA (impact of RON 270.8 million) and Raiffeisen Bank International AG (impact of RON 24.6 million). The increase of the impairment adjustments for Nuclearelectrica SA (net: RON 320.4 million) and CE Oltenia SA (RON 348.4 million), were partially offset by the reversal of the impairment adjustments for Hidroelectrica SA (RON 104.2 million) and OMV Petrom SA (RON 448.6 million).
The decrease in current assets, in 2014, of RON 134.6 million was mainly due to the funding of the third and fourth buy-back programme (RON 1,188.7 million) and by the payment of the return of capital to shareholders started in 25 July 2014 (RON 589.9 million), net of the proceeds from the disposals of portfolio holdings, mainly Romgaz SA, Transelectrica SA, Conpet SA, Raiffeisen Bank International AG and Erste Group Bank (RON 1,080.2 million) and dividends collected from portfolio companies during the year (RON 682.1 million).
The fall in the current assets in 2013, of RON 322.4 million was principally due to the funding of the second buyback programme (RON 974.8 million) and payment of 2012 dividends and related taxes (RON 530.7 million), net of the proceeds from the disposal of portfolio holdings (RON 570.8 million) and dividends collected from portfolio companies during the year (RON 696.3 million).
The provisions decreased by RON 14.2 million, due to the reversal of the provisions for taxes (related to the reserves for bonus shares received from portfolio companies that increased their share capital through incorporation of reserves in previous years), as a result of a change to the Romanian Fiscal Code. With effect from 1 January 2014, no income tax was applied to the sale of equity instruments held in Romanian entities or entities resident in a country with which Romania has a tax treaty, where the holding represent at least 10% of the share capital of the issuer and has been held for an uninterrupted period of at least 1 year.
During 2013, the increase in provisions of RON 12.5 million mainly related to the legal case started by World Trade Center Bucuresti against the Fund in August 2013, requesting the Fund to pay back the amounts recovered from the enforcement procedure against this company during 2010 and 2011 and to pay the related legal interest. The amounts recovered from the enforcement procedure (approximately RON 9.5 million equivalent) were originally accounted for by the Fund as contributions of Ministry of Public Finance to the share capital of the Fund, decreasing the receivable from the state related to the subscribed unpaid share capital. Consequently, these amounts are to be recovered by the Fund from the Ministry of Public Finance (being accounted for as a receivable over this shareholder of the Fund, for which an impairment adjustment was recorded), while the legal interest was recorded as an expense with provisions for litigations.
| RON million | 2012 | 2013 | 2014 |
|---|---|---|---|
| Audited | Audited | Audited | |
| Revenues from current activity, out of which: | 871.8 | 1,311.2 | 1,822.7 |
| Revenues from financial assets | 619.0 | 649.7 | 682.1 |
| Interest income | 34.9 | 36.2 | 20.9 |
| Reversal of impairment adjustments & provisions | 5.7 | 48.3 | 37.0 |
| Revenues from disposal of financial assets | 208.1 | 573.1 | 1,079.0 |
| Revenues from foreign exchange differences | 0.1 | 0.3 | 1.5 |
| Other income from current activity | 4.0 | 3.6 | 2.2 |
| Expenses from current activity, out of which: | 304.8 | 629.0 | 793.2 |
| Expenses from disposal of financial assets | 195.1 | 528.7 | 661.7 |
| Expenses from foreign exchange differences | 0.3 | 0.2 | 2.3 |
| Depreciation, provisions, losses from receivables and sundry debtors |
49.7 | 13.0 | 8.2 |
| Commissions and fees | 16.2 | 26.3 | 30.9 |
| Other expenses from current activity * | 43.5 | 60.8 | 90.1 |
| Gross profit | 567.0 | 682.2 | 1,029.5 |
| Income tax expense | - | - | 16.6 |
| Net profit | 567.0 | 682.2 | 1,012.9 |
* Other expenses from current activity include third party expenses, bank charges, utilities expenses, remuneration expenses, as well as duties and other taxes
Revenues from financial assets represent dividend income earned from the Fund's portfolio companies. In 2014, most of the dividend income derived from OMV Petrom SA (RON 331.4 million), Romgaz SA (RON 148.5 million) and GDF Suez Energy Romania SA (RON 33.6 million).
Interest income arose from deposits held with banks and from short-term government securities. The lower level of interest income during 2014 compared to 2013 is a reflection of both, lower level of interest rates and a lower average level of interest bearing assets during 2014.
Revenues from disposal of financial assets represent the proceeds from the sales of portfolio holdings (mainly Traselectrica SA, Romgaz SA, Conpet SA, Raiffeisen Bank International AG, Erste Group Bank in 2014), while the expenses from disposal of financial assets represent the cost of the investments disposed of.
Commissions and fees mainly include the FSA's 0.1% per annum fee, calculated on the basis of the Fund's NAV, amounting to RON 14.6 million in 2014 (2013: RON 15.1 million, 2012: RON 14.1 million), and the depositary bank's fees of RON 1.8 million (2013: RON 1.8 million, 2012: RON 1.7 million). During 2014 commissions and fees included also the intermediaries fees related to the disposals of equity investments, in the amount of RON 11.8 million (2013: RON 7.7 million, 2012: RON 0.4 million) and FSA and BVB fees related to the disposals, in amount of RON 2.0 million (2013: RON 1.3 million, 2012: nil).
The income tax expense arising in 2014 is tax due, among others, from the cancellation of treasury shares bought back by the Fund in the first buy-back programme and the second buy-back programme, and from the decrease in the nominal value of the treasury shares held by the Fund on the date the return of capital was recorded, which were treated for tax purposes as taxable revenues. In 2014 the main non-taxable revenues constituted of dividends received from portfolio companies and proceeds from the sale of securities of portfolio companies subject to the above mentioned holding exemption. On the other hand, the main non-tax-deductible expenses constituted of expenses related to the disposal of portfolio securities covered with the holding exemption.
Other expenses from current activity can be analysed as follows:
| RON million | 2012 Audited |
2013 Audited |
2014 Audited |
|---|---|---|---|
| FTIML investment management and administration fees | 34.3 | 45.3 | 56.4 |
| Remunerations and similar expenses | 0.7 | 0.9 | 1.2 |
| Stamp duties for litigations | 0.1 | 0.1 | 0.1 |
| Other expenses | 8.4 | 14.5 | 32.4 |
| Other expenses from current activity | 43.5 | 60.8 | 90.1 |
During 2014, other expenses from current activity increased by RON 29.3 million, mainly due to the rise in the FTIML investment management and administration fees (due to the increase of the Fund's share price upon which the fees are based and due to the change in the base fee rate effective from September 2014, when the new IMA entered into force).
In 2014, other expenses included mainly litigation assistance and legal advisory expenses (including expenses related to portfolio transactions), other expenses related to transactions (including withholding tax expenses, where applicable), investor relations expenses, expenses related to the valuation of the unlisted holdings, other advisory fees (for the Fund or Board of Nominees members), expenses related to secondary listing and sponsorship expenses (the full amount of sponsorship expenses was deduced, according to the provisions of Romanian Fiscal Code, from the corporate tax expense for 2014). The increase of this category of expenses was mainly due to the higher value of capital market transactions and advisory related costs.
During 2013, other expenses from current activity increased by RON 17.3 million compared to 2012. This was mainly due to the increase of the FTIML's investment management and administration fees, in line with the increase of the Fund's share price upon which they were based. In 2013, other expenses included mainly litigation assistance and legal advisory expenses and investor relations expenses.
Although this report covers the year ended 31 December 2014, given that the Fund reports on a quarterly basis, the following split has been prepared to show the actual results per quarter in 2014.
| RON million | Quarters | |||||||
|---|---|---|---|---|---|---|---|---|
| Q1 2014 Unaudited |
Q2 2014 Unaudited |
Q3 2014 Unaudited |
Q4 2014 Unaudited |
Year ended 31 December 2014 Audited |
||||
| Revenues from current activity, out of which: | 135.2 | 1,317.4 | 246.8 | 123.3 | 1,822.7 | |||
| Revenues from financial assets | - | 649.8 | 20.0 | 12.3 | 682.1 | |||
| Interest income | 3.7 | 4.7 | 8.4 | 4.1 | 20.9 | |||
| Reversal of impairment adjustments & provisions | 16.2 | 13.8 | 0.2 | 6.8 | 37.0 | |||
| Revenues from disposal of financial assets | 114.9 | 647.5 | 216.7 | 99.9 | 1,079.0 | |||
| Revenues from foreign exchange differences | 0.3 | 1.0 | 0.1 | 0.1 | 1.5 | |||
| Other income from current activity | 0.1 | 0.6 | 1.4 | 0.1 | 2.2 | |||
| Expenses from current activity, out of which: | 209.8 | 173.4 | 307.7 | 102.3 | 793.2 | |||
| Expenses from disposal of financial assets | 186.9 | 141.3 | 277.4 | 56.1 | 661.7 | |||
| Expenses from foreign exchange differences | 0.6 | 1.5 | 0.1 | 0.1 | 2.3 | |||
| Depreciation, provisions, losses from receivables and sundry debtors |
0.2 | 1.8 | 0.1 | 6.1 | 8.2 | |||
| Commissions and fees | 4.6 | 9.5 | 9.0 | 7.8 | 30.9 | |||
| Other expenses from current activity * | 17.5 | 19.3 | 21.1 | 32.2 | 90.1 | |||
| Gross Profit/ (Loss) | (74.6) | 1,144.0 | (60.9) | 21.0 | 1,029.5 | |||
| Income tax expense | 4.4 | 10.5 | 9.1 | (7.4) | 16.6 | |||
| Net Profit/ (Loss) | (79.0) | 1,133.5 | (70.0) | 28.4 | 1,012.9 |
* Other expenses from current activity include third party expenses, bank charges, utilities expenses, remuneration expenses, as well as duties and other taxes
| RON million | 31 December 2012 Audited |
31 December 2013 Audited |
31 December 2014 Audited |
|---|---|---|---|
| Cash flows from operating activities | |||
| Payments to suppliers and similar payments | (61.5) | (62.5) | (92.8) |
| Payments to employees and similar payments, including related taxes and contributions |
(0.7) | (1.0) | (1.1) |
| Payments of other taxes and commissions | (14.3) | (15.7) | (16.5) |
| Other payments, net of other receipts | - | - | (2.5) |
| Income tax paid | (0.1) | - | (23.5) |
| Net cash used in operating activities | (76.6) | (79.2) | (136.4) |
| Cash flow from investments | |||
| Dividends received | 625.4 | 696.3 | 682.1 |
| Interests received | 30.3 | 33.2 | 20.1 |
| Payments for the acquisition of intangible assets | (0.3) | (0.5) | (0.3) |
| Payments for acquisitions of financial assets | (0.1) | - | - |
| Subscriptions to share capital increases of portfolio companies | (2.6) | (42.7) | - |
| Proceeds from the sales of financial assets | 207.9 | 570.8 | 1,080.2 |
| Other receipts related to financial assets | 1.8 | 1.4 | 3.8 |
| Net proceeds from / (payments for) treasury bills and bonds | (254.6) | 245.9 | 14.7 |
| Net creation of deposits with maturity of more than 3 months | - | - | (25.0) |
| Net cash from investment activities | 607.8 | 1,504.4 | 1,775.6 |
| Cash flow from financing activities | |||
| Dividends paid, including related withholding tax | (510.5) | (530.7) | (6.0) |
| Payments to shareholders related to the return of capital | - | - | (589.9) |
| Payments for buy-backs | - | (974.8) | (1,188.7) |
| Net cash flow used in financing activities | (510.5) | (1,505.5) | (1,784.6) |
| Net increase/ (decrease) in cash and cash equivalents | 20.7 | (80.3) | (145.4) |
| Cash and cash equivalents at the beginning of the year | 297.4 | 317.9 | 237.6 |
| Foreign exchange differences related to transactions in foreign currency | (0.2) | - | (1.0) |
| Cash and cash equivalents at the end of the year | 317.9 | 237.6 | 91.2 |
| 31 December 2012 |
31 December 2013 |
31 December 2014 |
|
|---|---|---|---|
| Current accounts and cash | 1.9 | 5.6 | 6.9 |
| Deposits with banks with original maturity less than 3 months | 316.0 | 232.0 | 84.3 |
| Total cash and cash equivalents | 317.9 | 237.6 | 91.2 |
Payments of other taxes and commissions mainly comprise fees paid to the FSA (RON 14.6 million in 2014, RON 15.1 million in 2013 and RON 14.1 million in 2012).
Income tax paid in 2014 is tax due on the cancellation of treasury shares bought back by the Fund in the 2011 buy-back (the first buy-back programme) as well as in the 2013 buy-back (the second buy-back programme) and on the decrease in the nominal value of the treasury shares held by the Fund on the date the return of capital was recorded.
In 2014, proceeds from the sales of financial assets related mainly to the disposals in Traselectrica SA, Romgaz SA, Conpet SA, Raiffeisen Bank International AG and Erste Group Bank, and in 2013 was mainly related to the disposal of Fund's entire holding in Transgaz SA and to the partial disposal of its holdings in OMV Petrom SA and Raiffeisen Bank International AG.
Dividends paid in 2013 principally included the payments of distributable profits for 2012 (RON 0.04089 per share gross), while dividends paid in 2012 related to 2011 profits (RON 0.03854 per share gross).
Payments to shareholders related to the return of capital in 2014 include the return of the RON 0.05 per share to the shareholders following the reduction of the Fund's share capital by reducing the nominal value of the shares from RON 1 to RON 0.95.
Payments for buy-backs represent the acquisition cost (including brokerage fees and other costs directly related to the acquisition) of the own shares bought back by the Fund in the buy-back programmes carried out during the period. In 2014, the Fund carried out the third and part of the fourth buy-back programmes, buying back a total number of shares of 1.2 billion shares. In 2013, the Fund carried out the second buy-back programme, buying back 1.1 billion shares.
The Romanian State represented by the Ministry of Public Finance controlled the Fund in previous years, but during 2011 its holding fell below the control threshold (as at 31 December 2014: 2.96% of issued share capital, respectively 0.04% of paid-up share capital).
The Fund has the following subsidiaries, all of which are incorporated in Romania:
| Ownership interest | 2013 | 2014 |
|---|---|---|
| Alcom SA | 72% | 72% |
| Comsig SA | 70% | 70% |
| Primcom SA | 75% | 69% |
| Zirom SA | 100% | 100% |
During 2014, the Fund carried out the following transactions with its subsidiaries: (1) in January 2014, Primcom SA performed a capital return to its shareholders following the decrease of its share capital by reducing the nominal value of the shares from RON 2.5 to RON 0.1 and (2) in June 2014, the Fund sold part of its holding in Primcom SA in a buy-back programme carried out by this company.
During 2013, the Fund recorded and received a dividend of RON 24,4 thousand from Alcom SA.
| Ownership interest | 2013 | 2014 |
|---|---|---|
| OMV Petrom SA | 19% | 19% |
| Societatea Nationala a Sarii SA | Not an associate | 49% |
| Plafar SA | Not an associate | 49% |
In 2014 the Fund recorded and received from OMV Petrom SA a dividend of RON 331.4 million (2013: RON 319.0 million).
The transactions with the related parties were performed in the normal course of business of the Fund.
During 2014, the Fund recorded the following expenses payable to Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, the Fund Manager of the Fund: investment management and administration fees RON 56.5 million (2013: RON 45.3 million), rent expense RON 86.3 thousand (2013: RON 104.2 thousand) and related operating costs RON 23.0 thousand (2013: RON 28.9 thousand).
During 2014 the Fund also recorded an amount of RON 3.0 million (2013: RON 1.8 million), representing expenses incurred by the Fund Manager on Fund's behalf. These expenses were primarily related to promotional activities for the Fund (investor relations) and valuation services. The recharge of these expenses to the Fund followed the provisions of the Investment Management Agreement, and was subject to Board of Nominees approval.
As at 31 December 2014 the liability to the Fund Manager related to the above mentioned transactions amounted to RON 17.2 million (31 December 2013: 14.0 million).
The main decisions of the shareholders at the 21 January 2015 GSM were the following:
On 4 February 2015, the Fund announced the completion of the 4th buy-back programme, through which the Fund acquired 990,855,616 shares of the Fund (equivalent to 8.13% of the Fund's subscribed share capital) through a tender offer for 750,000,000 shares (shares actually purchased: 749,998,142) and daily acquisitions on the Bucharest Stock Exchange. The total value of the buy-back programme was RON 1,046,128,420.15 (excluding brokerage fees and other acquisition related costs), and the weighted average price was approximately RON 1.0557 per share. The Fund Manager will request shareholders' approval for the cancellation of the shares repurchased during this buy-back programme at the next general shareholders' meeting.
The Fund Manager intends to continue with share buy-backs in accordance with the Fund's Investment Policy Statement, and started the fifth buy-back programme, approved by shareholders on 19 November 2014, on 10 February 2015.
The FSA, through Notice no. 25/27 January 2015, endorsed the decrease of the subscribed share capital from RON 11,815,279,886.85 to RON 11,575,064,733.65, following the cancellation of 252,858,056 treasury shares acquired by the Fund in the third buy-back programme in 2014. The share capital decrease is effective beginning with 27 January 2015. Therefore, starting with 27 January 2015, the new value of the Fund's subscribed share capital is RON 11,575,064,733.65, divided into 12,184,278,667 shares with a nominal value of RON 0.95 per share. The value of the paid-up share capital is RON 11,229,443,001.15, divided into 11,820,466,317 shares with a nominal value of RON 0.95 per share.
On 12 January 2015, Law no. 10/2015 was published in the Part I of the Official Gazette no. 22 ("Law 10"). Law 10 amends, among others, Title VII of Law no. 247/2005 governing mainly the organization and functioning of the Fund ("Fund Law"). Law 10 will enter into force on 15 January 2015, according to Article 78 of the Constitution, and from this moment onwards the following main amendments related to the Fund are applicable, namely:
A consolidated version of the Fund Law containing the amendments brought by Law 10 can be found on the Fund's website.
On 19 April 2007, the Authority for State Assets Recovery (AVAS) filed an ownership claim with the 5th District First Instance Court against the Fund, the Central Depositary, the FSA and Conpet SA, requesting the Court to rule upon the ownership rights of the claimant over a number of 524,366 shares in Conpet SA's share capital and to impose on the other defendants the obligation to register accordingly the shares in the shareholders' registry. Beginning with 2007 there were several rounds of hearings and court decisions and several reorganisations, as the plaintiff in this case is in present the Department of Energy as a successor of AVAS.
On 19 March 2014 Bucharest Court ruled in favour of the Fund and rejected the request of Department of Energy. Against this decision of the Bucharest Tribunal, the Department of Energy file an appeal and on 30 January 2015 the Bucharest Court of Appeal ruled in favour of the Department of Energy obliging the Fund to transfer a number of 524,366 shares in Conpet SA's share capital to Department of Energy. The Fund can file the final appeal against the decision of Bucharest Court of Appeal within 15 days after the full decision is received from the Court.
This litigation was in progress as at 31 December 2014.This indicates that these conditions existed before the end of Fund's reporting period and meet the requirements of an adjusting event after the end of the reporting period. As a result, at 31 December 2014, the Fund recorded impairment adjustment for the holding in Conpet (RON 14.1 million).
In August 2014 the FSA issued Instruction no 2/ 06.08.2014, according to which, starting 1 January 2015 the entities authorised, regulated and monitored by the FSA – Financial Investments and Instruments Sector, including Fondul Proprietatea, will apply IFRS, as endorsed by European Union as basis of accounting. As a result, starting the financial year 2015, the Fund will adopt IFRS as endorsed by European Union as the statutory accounting framework.
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch acting in the capacity of Sole Administrator of Fondul Proprietatea S.A.
Grzegorz Maciej Konieczny Mihaela Moleavin 18 February 2015
Prepared by Legal Representative Financial Reporting Manager
prepared in Accordance with the National Securities Commission ("CNVM") Regulation no. 4/2011 regarding accounting regulations compliant with EEC Directive IV applicable to the entities authorised, regulated and monitored by the Financial Supervisory Authority ("FSA"), approved by CNVM Order no. 13/2011 and with CNVM Instructions no. 2/2007 regarding the preparation and submission of annual financial statements, applicable to the entities authorised, regulated and monitored by the FSA, as subsequently amended ("Romanian Accounting Regulations")
| Independent Auditor's Report | 62 |
|---|---|
| Balance Sheet (Code 10) | 65 |
| Income Statement (Code 20) | 67 |
| Statement of Cash Flows | 68 |
| Statement of Changes in Shareholders' Equity | 69 |
| Notes to the Financial Statements | 71 |
| Informative Data (Code 30) | 104 |
| Statement of Non-Current Assets (Code 40) | 107 |
This is a translation from the official Romanian version.
| • Total shareholder's equity: | RON 9,339,031 thousand |
|---|---|
| • Profit/loss for the year: | RON 1.012.898 thousand, profi |
(all amounts are expressed in RON, unless otherwise specified)
The format of the Financial Statements as at 31 December 2014 for the entities authorised, regulated and monitored by the Financial Supervisory Authority ("FSA"), for the closed-end funds (AOPC) set up under articles of association
County: Bucharest Ownership type: 22 Legal entity: Fondul Proprietatea S.A. Main activity: Address: Bucharest, District 1,(CAEN group): 643 78-80, Buzeşti Street, 7th Floor CAEN class: 6430 Telephone: 021/200 96 00, Fax: 021/200 96 31 Sole Registration Code: 18253260 Trade Register no.: J40/21901/2005
| Balance | ||||
|---|---|---|---|---|
| Row | Note | 1 January 2014 | 31 December 2014 | |
| A | B | 1 | 2 | |
| A. NON-CURRENT ASSETS | ||||
| I. INTANGIBLE ASSETS | ||||
| 3.Concessions, patents, licences, trademarks and similar rights and | ||||
| other intangible assets (acc. 205 + 208 - 2805 - 2808 - 2905 - 2908) | 03 | 760,113 | 474,262 | |
| 5. Advances and intangible assets in progress | ||||
| (acc. 233+234-2933) | 05 | - | 363,126 | |
| TOTAL: (rows 01 to 05) | 06 | 1 a) | 760,113 | 837,388 |
| III. FINANCIAL ASSETS | ||||
| 1. Shares held in subsidiaries | ||||
| (acc. 261 - 2961) | 12 | 67,481,778 | 52,286,860 | |
| 3. Investments in associates | ||||
| (acc. 263 - 2963) | 14 | 5,054,412,918 | 4,467,710,174 | |
| 5. Other investments held as financial assets | ||||
| (acc. 262 + 264 + 265 + 266 - 2696 - 2962 - 2964) | 16 | 5,368,734,780 | 4,555,184,931 | |
| TOTAL: (rows 12 to 17) | 18 | 1 b) | 10,490,629,476 | 9,075,181,965 |
| NON-CURRENT ASSETS - TOTAL | ||||
| (rows 06 + 11 + 18) | 19 | 10,491,389,589 | 9,076,019,353 | |
| B. CURRENT ASSETS | ||||
| II. RECEIVABLES | ||||
| 1. Trade receivables | ||||
| (acc. 2675 + 2676 + 2678 + 2679 - 2966 - 2969 + 4092 + 411 + 413 + | ||||
| 418 – 491) | 24 | 1,712 | 227 | |
| 4. Other receivables (acc. 425 + 4282 + 431 + 437 + 4382 + 441 + 4424 + 4428 + 444 + 445 + 446 + 447 + 4482 + 4582 + 461 + 473 - 496 + |
||||
| 5187) | 27 | 2,907,389 | 8,702,027 | |
| TOTAL: (rows 24 to 28) | 29 | 5 | 2,909,101 | 8,702,254 |
| III. SHORT TERM INVESTMENTS | ||||
| 2. Other short term investments (acc. 5031 +5032 + 505 + 5061 + | ||||
| 5062 + 5071 + 5072 + 5081 + 5082 + 5088 + 5089 - 593 - 595 - 596 - | ||||
| 597 - 598 +5113 +5114) | 31 | 213,635,521 | 194,588,981 | |
| TOTAL: (rows 30 to 31) | 32 | 13 | 213,635,521 | 194,588,981 |
| IV. CASH AND BANK ACCOUNTS | ||||
| (acc. 5112 + 5121 + 5122 + 5123 + 5124 + 5125 + 5311 + 5314 + 5321 | ||||
| + 5322 + 5323 + 5328 + 5411 + 5412 + 542) | 33 | 12 | 237,573,615 | 116,158,127 |
| Balance | ||||
|---|---|---|---|---|
| Row | Note | 1 January 2014 | 31 December 2014 | |
| A | B | 1 | 2 | |
| CURRENT ASSETS - TOTAL | ||||
| (rows 23 + 29 + 32 + 33) | 34 | 454,118,237 | 319,449,362 | |
| C. PREPAID EXPENSES | ||||
| (acc. 471) D. PAYABLES WITHIN ONE YEAR |
35 | 43,882 | 44,627 | |
| 4. Trade payables (acc. 401 + 404 + 408) | ||||
| 8. Other payables, including tax and social security payables (acc. 1623 + 1626 + 167 + 1687 + 2698 + 421 + 423 + 424 + 426 + 427 + 4281 + 431 + 437 + 4381 + 441 + 4423 + 4428 + 444 + 446 + 447 + 4481 + 4551 + 4558 + 456 + 457 + 4581 + 462 + 473 + 509 + |
39 | 17,189,337 | 19,348,098 | |
| 5186 + 5193 + 5194 + 5195 + 5196 + 5197) | 43 | 13,974,834 | 22,048,305 | |
| TOTAL: (rows 36 to 43) | 44 | 5 | 31,164,171 | 41,396,403 |
| E. NET CURRENT ASSETS OR NET CURRENT LIABILITIES (rows 34 + 35 - 44 - 60.2) |
45 | 422,997,948 | 278,097,586 | |
| F. TOTAL ASSETS LESS CURRENT | ||||
| LIABILITIES (rows 19 + 45) | 46 | 10,914,387,537 | 9,354,116,939 | |
| H. PROVISIONS | ||||
| 2. Provisions for taxes (acc. 1516) | 57 | 18,222,179 | 3,688,260 | |
| 3. Other provisions | ||||
| (acc. 1511+1512+1513+1514+1518) | 58 | 11,104,066 | 11,397,683 | |
| TOTAL PROVISIONS (rows 56 +57 + 58) | 59 | 2 | 29,326,245 | 15,085,943 |
| J. SHARE CAPITAL AND RESERVES | ||||
| I. SHARE CAPITAL (rows 62 to 63) | ||||
| out of which: | 61 | 7 | 13,778,392,208 | 11,815,279,887 |
| - subscribed unpaid share capital (acc. 1011) |
62 | 365,254,622 | 345,621,733 | |
| - subscribed paid in capital (acc. 1012) | 63 | 13,413,137,586 | 11,469,658,154 | |
| IV. RESERVES (rows 68-69+70+71+72+73+74) | 67 | (2,531,739,371) | (2,981,254,084) | |
| 1. Legal reserves (acc. 1061) | 192,259,194 | 243,735,507 | ||
| 2. Reserves related to impairment adjustments of financial assets (acc.1062 - debit balance) |
68 69 |
2,869,929,030 | 3,627,783,973 | |
| 4. Reserves for financial assets received free of charge (acc.1065) | 71 | 25,630,909 | 36,332,591 | |
| 7. Other reserves (acc.1068) | 74 | 120,299,556 | 366,461,791 | |
| TREASURY SHARES (acc.109 – debit balance) | 75 | 1,095,093,250 | 1,189,918,464 | |
| V. RETAINED EARNINGS (acc. 117) | ||||
| Credit balance | 78 | 85,455,026 | 733,501,705 | |
| VI. RESULT FOR THE YEAR (acc. 121) | ||||
| Credit balance | 80 | 682,154,399 | 1,012,898,265 | |
| Profit allocation (acc. 129 – debit balance) | ||||
| TOTAL SHAREHOLDERS' EQUITY | 82 | 3 | 34,107,720 | 51,476,313 |
| (rows 61 + 64 + 65 - 66 + 67 -75+76-77+78 -79+80-81-82) | 83 | 10,885,061,292 | 9,339,030,996 |
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch acting in the capacity of Sole Director of Fondul Proprietatea S.A.
Grzegorz Maciej Konieczny Mihaela Moleavin
Prepared by Legal Representative Financial Reporting Manager
This is a translation from the official Romanian version.
(all amounts are expressed in RON, unless otherwise specified)
| Financial year ended | ||||
|---|---|---|---|---|
| Element | Row | Note 31 December 2013 | 31 December 2014 | |
| A | B | 1 | 2 | |
| A. REVENUE FROM CURRENT ACTIVITY – TOTAL | ||||
| (rows 02 to 11) | 01 | 4 | 1,311,202,217 | 1,822,717,746 |
| 1. Revenue from financial assets (acc. 761) | 02 | 15 | 649,701,517 | 682,104,761 |
| 4. Revenue from disposal of financial assets (acc.758(part)+764) | 05 | 573,117,053 | 1,079,000,354 | |
| 6. Revenue from provisions, receivables previously written off and | ||||
| sundry debtors (acc.754+781+786) | 07 | 48,323,844 | 36,985,540 | |
| 7. Revenue from foreign exchange differences (acc.765) | 08 | 275,376 | 1,484,534 | |
| 8. Interest income (acc.766) | 09 | 36,143,817 | 20,896,979 | |
| 10. Other income from current activity | ||||
| (acc. 705+706+708+741+758(part)+767+768 +7815) | 11 | 3,640,610 | 2,245,578 | |
| B. EXPENSES FROM CURRENT ACTIVITY – TOTAL | ||||
| (rows 13 to 20) | 12 | 4 | 629,047,818 | 793,191,489 |
| 12. Expenses from disposal of financial assets (acc. 658(part) +664) | 14 | 528,672,074 | 661,720,488 | |
| 13. Expenses from foreign exchange differences (acc. 665) | 15 | 241,275 | 2,308,361 | |
| 15. Commissions and fees (acc.622) | 17 | 26,318,786 | 30,933,812 | |
| 16. Expenses for bank services and similar expenses (acc.627) | 18 | 74,337 | 93,338 | |
| 17. Depreciation and amortisation, provisions, losses from receivables | ||||
| and sundry debtors (acc.654+681+686) | 19 | 13,045,331 | 8,134,255 | |
| 18. Other expenses from current activity | ||||
| (rows 21+22+23+26+27) | 20 | 60,696,015 | 90,001,235 | |
| c. Salary expenses (rows 24+25), of which: | 23 | 947,635 | 1,120,313 | |
| c1. Salaries (acc.621+641+642 +644) | 24 | 8 | 779,052 | 913,360 |
| c2. Social security contributions (acc. 645) | 25 | 168,583 | 206,953 | |
| d. Third party expenses | ||||
| (acc.611+612+613+614+623+624+625+626+628+ 658(part)+667 | ||||
| +668) | 26 | 59,408,117 | 86,549,475 | |
| e. Other taxes, duties and similar expenses (acc. 635) | 27 | 340,263 | 2,331,447 | |
| C. CURRENT RESULT | ||||
| - Profit (row 01 - 12) | 28 | 682,154,399 | 1,029,526,257 | |
| 19. TOTAL REVENUE (rows 01+30) | 34 | 1,311,202,217 | 1,822,717,746 | |
| 20. TOTAL EXPENSES (rows 12+31) | 35 | 629,047,818 | 793,191,489 | |
| G. GROSS PROFIT: | ||||
| - Profit (row 34 - 35) | 36 | 682,154,399 | 1,029,526,257 | |
| 21. INCOME TAX EXPENSE | ||||
| - Income tax expense (acc.691) | 38 | 10 | - | 16,627,992 |
| H. RESULT FOR THE YEAR | ||||
| - Profit (row 36-38-39) | 40 | 682,154,399 | 1,012,898,265 |
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch acting in the capacity of Sole Director of Fondul Proprietatea S.A.
Grzegorz Maciej Konieczny Mihaela Moleavin Legal Representative Financial Reporting Manager
Prepared by
This is a translation from the official Romanian version.
(all amounts are expressed in RON, unless otherwise specified)
| For financial year ended | |||
|---|---|---|---|
| 31 December 2013 | 31 December 2014 | ||
| Cash flows from operating activities | |||
| Payments to suppliers and similar payments | (62,510,251) | (92,762,094) | |
| Payments to employees and similar payments, including related taxes and contributions |
(968,578) | (1,130,718) | |
| Payments related to other taxes and fees | (15,705,597) | (16,481,330) | |
| Other payments, net of other receipts | - | (2,512,012) | |
| Income tax paid | - | (23,521,512) | |
| Net cash flows used in operating activities | (79,184,426) | (136,407,666) | |
| Cash flows from investment activities | |||
| Dividends received | 696,286,935 | 682,066,477 | |
| Interest received | 33,209,977 | 20,084,898 | |
| Payments for the acquisition of tangible and intangible assets | (576,672) | (390,417) | |
| Subscriptions to share capital increases of portfolio companies | (42,713,841) | - | |
| Proceeds from disposal of financial assets | 570,774,068 | 1,080,212,251 | |
| Other receipts related to financial assets | 1,439,583 | 3,813,259 | |
| Net proceeds from/(payments for) treasury bonds & bills | 245,947,135 | 14,735,529 | |
| Net creation of deposits with original maturity greater than 3 months | - | (25,000,000) | |
| Net cash flows generated from investment activities | 1,504,367,185 | 1,775,521,997 | |
| Cash flows from financing activities | |||
| Dividends paid, including related withholding tax | (530,673,777) | (5,975,898) | |
| Payments to shareholders related to the return of capital | - | (589,890,948) | |
| Payments for buybacks | (974,824,667) | (1,188,701,549) | |
| Net cash flows used in financing activities | (1,505,498,444) | (1,784,568,395) | |
| Net decrease in cash and cash equivalents | (80,315,685) | (145,454,064) | |
| Cash and cash equivalents as at the beginning of the year | 317,885,969 | 237,573,615 | |
| Foreign exchange differences related to transactions in foreign currency | 3,331 | (961,424) | |
| Cash and cash equivalents as at the end of the year | 237,573,615 | 91,158,127 |
| 31 December 2013 | 31 December 2014 | |
|---|---|---|
| Current accounts and cash | 5,552,477 | 6,879,129 |
| Deposits with banks with original maturity less than 3 months | 232,021,138 | 84,278,998 |
| Total cash and cash equivalents | 237,573,615 | 91,158,127 |
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch acting in the capacity of Sole Director of Fondul Proprietatea S.A.
| Prepared by | |
|---|---|
| Grzegorz Maciej Konieczny | Mihaela Moleavin |
| Legal Representative | Financial Reporting Manager |
(all amounts are expressed in RON, unless otherwise specified)
| Increases | Decreases | |||||
|---|---|---|---|---|---|---|
| Element of equity | Balance as at 1 January 2013 |
Total | Of which, by transfer |
Total | Of which, by transfer |
Balance as at 31 December 2013 |
| Subscribed paid in share capital | 13,412,780,166 | 357,420 | 357,420 | - | - | 13,413,137,586 |
| Subscribed unpaid share capital | 365,612,042 | - | - | 357,420 | 357,420 | 365,254,622 |
| Legal reserves – Credit balance | 158,151,474 | 34,107,720 | 34,107,720 | - | - | 192,259,194 |
| Reserves related to impairment adjustments of financial assets – Debit Balance |
(2,738,430,054) (2,318,097,048) | - | (2,186,598,072) | - | (2,869,929,030) | |
| Other reserves – Credit Balance | 120,299,556 | - | - | - | - | 120,299,556 |
| Reserves from shares received free of charge – Credit balance |
16,731,205 | 8,899,704 | - | - | - | 25,630,909 |
| Treasury shares – Debit Balance | (120,268,583) | (974,824,667) | - | - | - | (1,095,093,250) |
| Result from the adjustment of accounting errors – Credit Balance |
74,136,468 | - | - | - | - | 74,136,468 |
| Retained earnings representing profit not allocated – Credit |
||||||
| Balance | 9,115,385 | 538,640,379 | 538,640,379 | 536,437,206 | - | 11,318,558 |
| Result for the year (profit) – Credit Balance |
566,988,651 | 682,154,399 | - | 566,988,651 | 566,988,651 | 682,154,399 |
| Allocation of profit – Debit Balance |
(28,348,272) | (34,107,720) | (34,107,720) | (28,348,272) | (28,348,272) | (34,107,720) |
| Total equity | 11,836,768,038 (2,062,869,813) | 538,997,799 | (1,111,163,067) | 538,997,799 | 10,885,061,292 |
This is a translation from the official Romanian version.
.
| Increases | Decreases | |||||
|---|---|---|---|---|---|---|
| Element of equity | Balance as at 1 January 2014 |
Total | Of which, by transfer |
Total | Of which, by transfer |
Balance as at 31 December 2014 |
| Subscribed paid in share | ||||||
| capital (see Note 7) | 13,413,137,586 | 1,433,610 | 1,433,610 | 1,944,913,042 | 1,286,207,951 | 11,469,658,154 |
| Subscribed unpaid share | ||||||
| capital (see Note 7) | 365,254,622 | - | - | 19,632,889 | 1,433,610 | 345,621,733 |
| Legal reserves – Credit | ||||||
| Balance (see Note 2) | 192,259,194 | 51,476,313 | 51,476,313 | - | - | 243,735,507 |
| Reserves related to impairment adjustments of financial assets |
||||||
| – Debit Balance (see Note 1) | (2,869,929,030) (1,677,115,177) | - | (919,260,234) | - | (3,627,783,973) | |
| Other reserves – Credit | ||||||
| Balance | 120,299,556 | 246,162,235 | 246,162,235 | - | - | 366,461,791 |
| Reserves from shares received | ||||||
| free of charge – Credit Balance | 25,630,909 | 10,701,682 | - | - | - | 36,332,591 |
| Treasury shares – Debit | ||||||
| Balance | (1,095,093,250) (1,192,250,169) | - | (1,097,424,955) (1,040,045,716) | (1,189,918,464) | ||
| Result from the adjustment of | ||||||
| accounting errors – Credit | ||||||
| Balance | 74,136,468 | - | - | - | - | 74,136,468 |
| Retained earnings representing | ||||||
| profit not allocated – Credit | ||||||
| Balance (see Note 2) | 11,318,558 | 648,046,679 | 648,046,679 | - | - | 659,365,237 |
| Result for the year (profit) – | ||||||
| Credit Balance | 682,154,399 | 1,012,898,265 | - | 682,154,399 | 682,154,399 | 1,012,898,265 |
| Allocation of profit – Debit | ||||||
| Balance (see Note 2) | (34,107,720) | (51,476,313) | (51,476,313) | (34,107,720) | (34,107,720) | (51,476,313) |
| Total equity | 10,885,061,292 | (950,122,875) | 895,642,524 | 595,907,421 | 895,642,524 | 9,339,030,996 |
The decrease of the Subscribed paid in share capital includes the cancellation of the Treasury shares acquired by the Fund in 2011 and 2013 (RON 1,286,207,951) and the decrease of nominal value of the shares from RON 1 to RON 0.95 per share (total amount was RON 658,705,091, out of which the amount of RON 601,325,852 has been distributed to the shareholders of the Fund).
The increase in Other reserves represents the gain on the cancellation of treasury shares acquired at an acquisition cost lower than the nominal value, in amount of RON 246,162,235 (31 December 2013: nil).
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch acting in the capacity of Sole Director of Fondul Proprietatea S.A.
Grzegorz Maciej Konieczny Mihaela Moleavin
Prepared by Legal Representative Financial Reporting Manager
(all amounts are expressed in RON, unless otherwise specified)
| Intangible assets in progress |
Intangible assets | |
|---|---|---|
| Gross value (acquisition cost) | ||
| Balance as at 1 January 2014 | - | 900,085 |
| Acquisitions | 363,126 | 27,291 |
| Balance as at 31 December 2014 | 363,126 | 927,376 |
| Accumulated amortisation | ||
| Balance as at 1 January 2014 | - | 139,972 |
| Amortisation in the year | - | 313,142 |
| Balance as at 31 December 2014 | - | 453,114 |
| Net book value as at 1 January 2014 | - | 760,113 |
| Net book value as at 31 December 2014 | 363,126 | 474,262 |
As at 31 December 2014, intangible assets included the value of licences and implementation costs of the Fund's specialised accounting and reporting software, net of accumulated amortisation.
The movements in the portfolio of investments held as financial assets are presented below:
| Financial Assets | |
|---|---|
| Gross value (acquisition cost/initial value) | |
| Balance as at 1 January 2014 | 13,367,556,872 |
| Shares received as contributions in kind to share capital | 1,433,610 |
| Bonus shares received from portfolio companies – incorporation of reserves | 10,701,682 |
| Disposals | (667,125,837) |
| Return of share capital from portfolio companies | (3,748,755) |
| Balance as at 31 December 2014 | 12,708,817,572 |
| Adjustments for impairment of financial assets | |
| Balance as at 1 January 2014 | (2,876,927,396) |
| Adjustments for impairment during the period through reserves (acc.1062) | (1,677,115,177) |
| Reversal of adjustments for impairment during the period through reserves (acc.1062) | 919,260,235 |
| Reversal of adjustments for impairment during the period through income statement (acc. 7863) | 1,146,731 |
| Balance as at 31 December 2014 | (3,633,635,607) |
| Net book value as at 1 January 2014 | 10,490,629,476 |
| Net book value as at 31 December 2014 | 9,075,181,965 |
The difference between the balance of Adjustments for impairment of financial assets and of the Reserves related to impairment adjustments of financial assets (acc.1062) represents the value of adjustments for impairment of financial assets recorded through profit or loss in 2007.
In 2014, the Fund sold its entire holdings in Erste Group Bank, Raiffeisen Bank, Resib SA, Severnav, Transelectrica SA, Transilvania Com SA, Turdapan SA and part of its holding in Conpet SA, Oil Terminal SA, Primcom SA, Romgaz SA.
In January 2014, Primcom SA performed a capital return to its shareholders following the decrease of its share capital by reducing the nominal value of the shares from RON 2.5 to RON 0.1.
In October 2014 Carbid Fox SA was erased from Romanian Trade Register, at the end of bankruptcy procedure.
In 2014 the Fund received 116,457 shares in Hidroelectrica SA (having a total nominal value of RON 1,164,570) and 26,904 shares in Complexul Energetic Oltenia SA (having a total nominal value of RON 269,040), following the share capital increase of these company accounted for as contributions in kind by the Romanian state, represented by the Ministry of Public Finance, to the share capital of the Fund.
In May 2014 the Fund received 35,438 bonus shares in CN Administratia Porturilor Dunarii Maritime SA (having a nominal value of RON 10 per share) and 10,347,302 bonus shares (having a nominal value of RON 1 per share) in Banca Transilvania SA, as a result of the share capital increase of these companies through incorporation of reserves.
In November 2014, the General Shareholders Meetings of E.ON Gaz Distributie SA and E.ON Moldova Distributie SA approved the merger of the companies, with E.ON Gaz Distributie SA as absorbing company and E.ON Moldova Distributie SA as absorbed company. Following the merger, E.ON Gaz Distributie SA changed its name to E.ON Distributie Romania SA and E.ON Moldova Distributie SA was erased from the Trade Register. The registration of the merger with the Trade Register was completed on 31 December 2014. The merger did not have any impact over the total portfolio value, as the holding in E.ON Distributie Romania SA was recorded at the cumulated values of the holdings in the two companies that merged.
Before the merger, the Fund held 12% in E.ON Gaz Distributie SA and 22% in E.ON Moldova Distributie SA. After the merger, the Fund holds 18.34% in E.ON Distributie Romania SA.
On 25 February 2014 the Bucharest Court of Appeal has taken the following decisions:
As at 31 December 2014, Hidroelectrica was still under reorganisation procedure.
This is a translation from the official Romanian version.
The movements in impairment adjustment for the financial assets during 2014 are presented below:
| Name of the company | Balance as at 1 January 2014 |
Adjustments for impairment during the year |
Reversal of adjustments for impairment to income statement |
Reversal of adjustments for impairment during the year through reserves |
Balance as at 31 December 2014 |
|---|---|---|---|---|---|
| Adjustments for impairment of shares held in subsidiaries | |||||
| Primcom SA | 4,335,472 | 15,662,608 | - | 10,413,623 | 9,584,457 |
| Zirom SA | 3,682,453 | 4,126,000 | - | - | 7,808,453 |
| Total – adjustments for impairment of shares held in subsidiaries |
8,017,925 | 19,788,608 | - | 10,413,623 | 17,392,910 |
| Adjustments for impairment of investments in associates | |||||
| OMV Petrom SA | 342,508,810 | 1,256,610,108 | - | 591,725,650 | 1,007,393,268 |
| Plafar SA | - | 1,326,329 | - | - | 1,326,329 |
| Total - adjustments for impairment of investments in associates |
342,508,810 | 1,257,936,437 | - | 591,725,650 | 1,008,719,597 |
| Adjustments for impairment in other investments held as financial assets | |||||
| Hidroelectrica SA | 1,001,342,426 | 1,163,230 | - | 72,931,660 | 929,573,996 |
| Nuclearelectrica SA | 691,827,333 | 99,766,507 | - | 5,207,592 | 786,386,248 |
| Complexul Energetic Oltenia SA | 348,440,812 | 213,439,040 | - | - | 561,879,852 |
| BRD - Group Societe Generale SA | 97,670,532 | 38,969,745 | - | 32,622,881 | 104,017,396 |
| Alro SA | 71,029,181 | 21,646,760 | - | 728,847 | 91,947,094 |
| Romaero SA | 37,809,231 | 2,361,044 | 219,374 | 2,535,178 | 37,415,723 |
| Posta Romana SA | 23,874,380 | 4,894,000 | - | - | 28,768,380 |
| Romplumb SA | 19,249,219 | - | - | - | 19,249,219 |
| Uzina Mecanica Bucuresti SA | 20,024,890 | - | - | 5,804,436 | 14,220,454 |
| Conpet SA | - | 14,134,212 | - | - | 14,134,212 |
| Oil Terminal SA | 7,471,069 | 926,505 | - | 1,921,473 | 6,476,101 |
| Forsev SA | 3,123,366 | - | - | - | 3,123,366 |
| Simtex SA | 3,059,858 | - | - | - | 3,059,858 |
| Others | 201,478,364 | 2,089,089 | 927,357 | 195,368,895 | 7,271,201 |
| Total adjustments for impairment in other investments held as financial assets |
2,526,400,661 | 399,390,132 | 1,146,731 | 317,120,962 | 2,607,523,100 |
| TOTAL | 2,876,927,396 | 1,677,115,177 | 1,146,731 | 919,260,235 | 3,633,635,607 |
List of the financial assets as at 31 December 2014:
| Name of the company | % of the share capital held as at 31 December 2014 |
Cost as at 31 December 2014 |
Adjustment for impairment as at 31 December 2014 |
Cost less impairment adjustment as at 31 December 2014 |
|---|---|---|---|---|
| Shares held in subsidiaries | ||||
| Zirom SA | 100.00% | 47,146,452 | 7,808,452 | 39,338,000 |
| Primcom SA | 68.97% | 21,929,632 | 9,584,457 | 12,345,175 |
| Alcom SA | 71.89% | 471,052 | - | 471,052 |
| Comsig SA | 69.94% | 132,633 | - | 132,633 |
| Total - Shares held in subsidiaries | 69,679,769 | 17,392,909 | 52,286,860 | |
| Investments in associates | ||||
| OMV Petrom SA | 18.99% | 5,396,921,727 | 1,007,393,268 | 4,389,528,459 |
| Societatea Nationala a Sarii SA | 48.99% | 76,347,715 | - | 76,347,715 |
| Plafar SA | 48.99% | 3,160,329 | 1,326,329 | 1,834,000 |
| Total - Investments in associates | 5,476,429,771 | 1,008,719,597 | 4,467,710,174 | |
| Other investments held as financial assets | ||||
| Hidroelectrica SA | 19.94% | 3,107,667,996 | 929,573,996 | 2,178,094,000 |
| Romgaz SA | 10.00% | 277,909,477 | - | 277,909,477 |
| BRD-Group Societe Generale SA | 3.64% | 326,157,637 | 104,017,397 | 222,140,240 |
| Nuclearelectrica SA | 9.72% | 998,527,117 | 786,386,248 | 212,140,869 |
| E.ON Distributie Romania SA | 18.34% | 169,541,165 | - | 169,541,165 |
| Electrica Distributie Muntenia Nord SA | 21.99% | 165,221,141 | - | 165,221,141 |
| ENEL Distributie Banat SA | 24.12% | 141,578,929 | - | 141,578,929 |
| CN Aeroporturi Bucuresti SA | 20.00% | 131,168,263 | - | 131,168,263 |
| Electrica Distributie Transilvania Sud SA | 21.99% | 125,918,629 | - | 125,918,629 |
| ENEL Distributie Dobrogea SA | 24.09% | 114,760,053 | - | 114,760,053 |
| Electrica Distributie Transilvania Nord SA | 22.00% | 113,299,904 | - | 113,299,904 |
| Complexul Energetic Oltenia SA | 21.55% | 670,353,852 | 561,879,852 | 108,474,000 |
| ENEL Distributie Muntenia SA | 12.00% | 107,277,263 | - | 107,277,263 |
| Alro SA | 10.21% | 176,493,362 | 91,947,094 | 84,546,268 |
| Banca Transilvania SA | 2.87% | 79,102,958 | - | 79,102,958 |
| CN Administratia Porturilor Maritime SA | 19.99% | 65,441,294 | - | 65,441,294 |
| GDF Suez Energy Romania SA | 11.99% | 62,522,462 | - | 62,522,462 |
| Posta Romana SA | 25.00% | 84,664,380 | 28,768,380 | 55,896,000 |
| E.ON Energie Romania SA | 13.39% | 45,765,358 | - | 45,765,358 |
| ENEL Energie SA | 12.00% | 26,124,808 | - | 26,124,808 |
| Romaero SA | 20.99% | 58,533,950 | 37,415,724 | 21,118,226 |
| Electrica Furnizare SA | 22.00% | 17,819,672 | - | 17,819,672 |
| CN Administratia Canalelor Navigabile SA | 20.00% | 15,194,210 | - | 15,194,210 |
| Oil Terminal SA | 6.31% | 9,761,986 | 6,476,101 | 3,285,885 |
| ENEL Energie Muntenia SA | 12.00% | 2,833,769 | - | 2,833,769 |
| Palace SA | 15.42% | 1,860,419 | - | 1,860,419 |
| Aeroportul International Mihail Kogalniceanu - Constanta SA |
20.00% | 1,490,898 | - | 1,490,898 |
| Name of the company | % of the share | Cost as at | Adjustment for impairment as at 31 |
Cost less impairment |
|---|---|---|---|---|
| capital held as at 31 December 2014 |
31 December 2014 |
December 2014 |
adjustment as at 31 December 2014 |
|
| Other investments held as financial assets (continued) | ||||
| Aeroportul International Timisoara - Traian Vuia SA |
20.00% | 2,652,588 | 1,454,203 | 1,198,385 |
| Comcereal Cluj SA | 11.36% | 913,756 | - | 913,756 |
| CN Administratia Porturilor Dunarii Fluviale | ||||
| SA | 20.00% | 675,810 | - | 675,810 |
| Forsev SA | 26.50% | 3,780,366 | 3,123,366 | 657,000 |
| Mecon SA | 12.51% | 484,544 | - | 484,544 |
| Electroconstructia Elco Cluj SA | 7.61% | 319,656 | - | 319,656 |
| IOR SA | 2.81% | 348,756 | 57,976 | 290,780 |
| Cetatea SA | 20.43% | 118,840 | - | 118,840 |
| Conpet Ploiesti SA | 6.05% | 14,134,212 | 14,134,212 | - |
| Salubriserv SA | 17.48% | 207,601 | 207,601 | - |
| CN Administratia Porturilor Dunarii Maritime SA |
7.70% | 1,706,051 | 1,706,051 | - |
| Bat Service SA | 33.00% | 656,686 | 656,686 | - |
| Gerovital Cosmetics SA | 9.76% | 340,996 | 340,996 | - |
| Petrotel - Lukoil SA | 1.18% | 2,787,316 | 2,787,316 | - |
| Romplumb SA | 33.26% | 19,249,219 | 19,249,219 | - |
| Uzina Mecanica Bucuresti SA | 36.59% | 14,220,455 | 14,220,455 | - |
| Simtex SA | 30.00% | 3,059,858 | 3,059,858 | - |
| World Trade Center Bucuresti SA | 19.90% | 42,459 | 42,459 | - |
| World Trade Hotel SA | 19.90% | 17,911 | 17,911 | - |
| Fecne SA | 12.12% | - | - | - |
| Total – other investments held as financial assets |
7,162,708,032 | 2,607,523,101 | 4,555,184,931 | |
| TOTAL | 12,708,817,572 | 3,633,635,607 | 9,075,181,965 |
| Transfers | ||||
|---|---|---|---|---|
| Provisions | 1 January 2014 | Increase | Reversal | 31 December 2014 |
| Provisions for litigation | 11,104,066 | 293,617 | - | 11,397,683 |
| Provisions for taxes | 18,222,179 | 1,655,568 | 16,189,487 | 3,688,260 |
| TOTAL | 29,326,245 | 1,949,185 | 16,189,487 | 15,085,943 |
The provisions for litigations are related to the legal case started by World Trade Center Bucuresti against the Fund in August 2013, asking the Fund to pay back the amounts recovered from the enforcement procedure against this company during 2010 and 2011 and to pay the related legal interest. For more details regarding the litigation with World Trade Center Bucuresti, please see Note 17 Contingent assets and liabilities and for details regarding the changes in legislation with impact on this litigation, please see Note 18 Subsequent events.
The provisions for taxes are related to the reserves for bonus shares received from portfolio companies that increased their share capital through incorporation of reserves. The decrease in 2014 was due to the reversal as a result of a change to the Romanian Fiscal Code. With effect from 1 January 2014, no income tax is applied to the sale of equity instruments held in Romanian entities or in entities resident in a country with which Romania has concluded a tax treaty, where the holding is at least 10% of the company's share capital and has been held for an uninterrupted period of at least 1 year. The provision for taxes has been reduced for the bonus shares received by the Fund from companies that meet these conditions.
| Destination | 1 January 2014 | 31 December 2014 |
|---|---|---|
| Net profit to be allocated, of which: | 682,154,399 | 1,012,898,265 |
| - Legal reserve | 34,107,720 | 51,476,313 |
| Profit not allocated | 648,046,679 | 961,421,952 |
In 2014, the Fund did not distribute dividends from 2013 profits, dividend distribution being replaced with a cash distribution to shareholders of RON 0.05 per share, via the decrease of the share capital through the reduction of the nominal value of the Fund's shares
The Fund's 2014 audited net profit was RON 1,012,898,265. In accordance with article 183 of the Companies Law (Law 31/1990 republished, as subsequently amended), the Fund is obliged to make transfers of at least 5% of the profit to the legal reserves, until those reserves reach a value equivalent to 20% of the value of the issued share capital of the Fund. As at 31 December 2014 the legal reserves of the Fund were in amount of RON 243,735,507 (being 2.1% of the issued share capital).
In June 2014, the FSA has issued the Endorsement ("Aviz") no.71/19.06.2014, which states the fact that the methodology for net asset value computation in accordance with CNVM Regulation 4/2010 shall not be applied in the context of the requirements of article 69 in Law 31/1990, with the subsequent amendments. The FSA has also clarified that the Endorsement is applicable prospectively from the date of its official publication, respectively 19 June 2014.
According to this Official interpretation of the FSA regarding the computation of Fund 'net asset value', dividend distributions cannot be made to shareholders at the present time because the Fund's shareholders' equity computed in accordance with Romanian Accounting Regulations (RON 9,339,030,996 as at 31 December 2014) is lower than the share capital of the Fund (RON 11,815,279,887 as at 31 December 2014).
The Fund Manager remains committed to ensuring annual cash distributions to the Fund's shareholders, based on the compliance with the applicable regulations.
| Caption | 2013 | 2014 |
|---|---|---|
| Revenue from financial assets (acc.761) | 649,701,517 | 682,104,761 |
| Revenue from disposal of financial assets (acc.764) | 573,117,053 | 1,079,000,354 |
| Revenue from foreign exchange differences (acc.765) | 275,376 | 1,484,534 |
| Interest income (acc.766) | 36,143,817 | 20,896,979 |
| Revenue from reversals of provisions and impairment adjustments (acc.781 + acc.786), including: |
48,323,844 | 36,985,540 |
| - from provisions for taxes (acc.7812) | - | 16,189,487 |
| - from adjustments for impairment of dividend receivables (acc.7814) | 47,089,931 | 16,432 |
| - from adjustment for impairment of financial assets (acc.7863) | 876,493 | 1,146,731 |
| - from adjustments for impairment of receivables related to subscribed unpaid share capital (acc.7864) |
357,420 | 19,632,890 |
| Other income from current activity (acc.706 + acc.708 + acc.758 + acc.767 ) | 3,067,763 | 1,493,210 |
| Other financial income (acc. 768) | 572,847 | 752,368 |
| REVENUE FROM CURRENT ACTIVITY | 1,311,202,217 | 1,822,717,746 |
Revenue from financial assets included dividends receivable from portfolio companies, net of withholding tax on dividends, where applicable.
Revenue from disposal of financial assets represent the proceeds from the sales of portfolio company holdings.
Interest income arose from deposits held with banks and from short-term government securities.
Revenue from adjustments for impairment of receivables related to unpaid capital included mainly the reversal of the impairment adjustment related to the receivable due by the Romanian state to the Fund (for unpaid share capital), following the reduction in nominal value of Fund's shares from RON 1 to RON 0.95 per share.
In 2014, other income from current activity mainly includes the penalties charged by the Fund to portfolio companies for late payment of dividends related to the financial years 2012 and 2013, litigation expenses recovered and income resulting from the cancellation of dividends unclaimed by shareholders, related to year 2010 (RON 1,405,602).
| Caption | 2013 | 2014 |
|---|---|---|
| Expenses from disposal of financial assets (acc.664) | (528,672,074) | (661,720,488) |
| Expenses from foreign exchange differences (acc.665) | (241,275) | (2,308,361) |
| Expenses with banking and similar charges (acc.627) | (74,337) | (93,338) |
| Commissions and fees (acc.622) | (26,318,786) | (30,933,812) |
| Depreciation and amortisation, impairment adjustments and provisions expenses (acc.681+ acc.686), including: |
(13,045,331) | (8,134,255) |
| amortisation of software (acc.6811) | (139,972) | (313,142) |
| provisions for litigations and for taxes (acc.6812) | (3,132,378) | (1,949,185) |
| impairment of dividend and related receivables (acc. 6814 (part)) | (377,340) | (67,493) |
| impairment of receivables related to subscribed unpaid share capital (acc. 6814 (part)) |
(9,395,641) | (5,804,435) |
| Other expenses from current activity, including: | (60,696,015) | (90,001,235) |
| remunerations and similar expenses, including: |
(947,635) | (1,120,313) |
| - remunerations (acc.641+ acc.642) | (779,052) | (913,360) |
| - social security (acc.645) | (168,583) | (206,953) |
| external services, including: |
(58,898,026) | (81,055,987) |
| - third parties services (acc.628) | (57,724,271) | (77,356,292) |
| - protocol and public relations (acc.623) | (805,339) | (830,612) |
| - rents (acc.612) | (134,229) | (133,724) |
| - insurance premiums (acc.613) | (199,193) | (199,327) |
| - other expense (acc.611+ acc.658) | (34,994) | (2,536,032) |
| other financial expenses ( acc.668) | (510,091) | (5,493,488) |
| other taxes and similar expenses (acc.635) | (340,263) | (2,331,447) |
| EXPENSES FROM CURRENT ACTIVITY | (629,047,818) | (793,191,489) |
| GROSS RESULT FROM CURRENT ACTIVITY | 682,154,399 | 1,029,526,257 |
Expenses from disposal of financial assets represent the cost of the portfolio holdings sold.
In 2014, commissions and fees mainly comprised the monthly fees payable to FSA, at 0.1% per annum calculated based on Net Asset Value, amounting to RON 14,582,299 (2013: RON 15,098,151) and the depositary banks' fees of RON 1,767,065 (2013: RON 1,780,597). Commissions and fees also included the brokerage fees related to the disposals of equity investments, in the amount of RON 11,756,815 in 2014 (2013: RON 7,653,492) and FSA and Bucharest Stock Exchange fees related to these disposals, in amount of RON 1,974,112 (2013: RON 1,292,929).
In 2014 third party services included investment management and administration fees payable to the Fund Manager, of RON 56,479,028 (2013: RON 45,273,318).
Until 30 September 2014, the investment management and administration fee was calculated as 0.479% per year (out of which investment management fee was 0.379% per year and the administration fee was 0.10% per year) applied to the market capitalisation of the Fund, calculated by multiplying the number of issued shares with the average share price of Fondul Proprietatea's shares in the quarter for which the fee was calculated.
Starting with 30 September 2014, the investment management and administration fee (base fee) is calculated as 0.60% per year applied to the market capitalisation of the Fund, calculated by multiplying the number of Fund's issued and paid shares minus the number of settled treasury shares, with the weighted average share price of Fondul Proprietatea's shares, in the quarter for which the fee is calculated.
In 2013 and 2014, the investment management and administration fees were invoiced and paid on quarterly basis.
This is a translation from the official Romanian version.
| Due date | |||||
|---|---|---|---|---|---|
| Receivables | 31 December 2014 | < 1 year | 1 – 5 years | > 5 years | |
| Col.1=2+3+4 | 2 | 3 | 4 | ||
| Interest receivable | 145,932 | 145,932 | - | - | |
| Profit tax receivable | 7,330,440 | 7,330,440 | - | - | |
| Trade receivables | 227 | 227 | - | - | |
| Other receivables | 1,225,655 | 1,225,655 | - | - | |
| TOTAL | 8,702,254 | 8,702,254 | - | - |
| Due date | |||||
|---|---|---|---|---|---|
| Receivables | 1 January 2014 | < 1 year | 1 – 5 years | > 5 years | |
| Col.1=2+3+4 | 2 | 3 | 4 | ||
| Interest receivable | 88,875 | 88,875 | - | - | |
| Profit tax receivable | 436,920 | 436,920 | - | - | |
| Trade receivables | 1,712 | 1,712 | - | - | |
| Other receivables | 2,381,594 | 2,381,594 | - | - | |
| TOTAL | 2,909,101 | 2,909,101 | - | - |
Interest receivable included interest receivables on bank deposits.
As at 31 December 2014, other receivables included mainly the tax recoverable from the Austrian tax authorities relating to dividends distributed in 2013 by Austrian portfolio companies, amounting to RON 1,037,586, equivalent of EUR 231,496 (1 January 2014: RON 1,038,188, equivalent of EUR 231,496).
This is a translation from the official Romanian version.
| Due date | ||||
|---|---|---|---|---|
| Payables | 31 December 2014 | < 1 year | 1 – 5 years | > 5 years |
| Col.1=2+3+4 | 2 | 3 | 4 | |
| Accrued expenses | 19,032,507 | 19,032,507 | - | - |
| Payable to shareholders related to the return of capital |
11,434,904 | 11,434,904 | - | - |
| Dividends payable | 5,455,306 | 5,455,306 | - | - |
| Payable related to buybacks under settlement | 3,468,114 | 3,468,114 | - | - |
| Other taxes and fees payables | 1,664,561 | 1,664,561 | - | - |
| Trade payables | 315,591 | 315,591 | - | - |
| Taxes on salaries | 25,420 | 25,420 | - | - |
| TOTAL | 41,396,403 | 41,396,403 | - | - |
| Due date | ||||
|---|---|---|---|---|
| Payables | 1 January 2014 | < 1 year | 1 – 5 years | > 5 years |
| Col.1=2+3+4 | 2 | 3 | 4 | |
| Accrued expenses | 16,915,596 | 16,915,596 | - | - |
| Dividends payable | 11,250,020 | 11,250,020 | - | - |
| Other taxes and fees payables | 2,686,807 | 2,686,807 | - | - |
| Trade payables | 273,741 | 273,741 | - | - |
| Taxes on salaries | 35,825 | 35,825 | - | - |
| Sundry creditors | 2,182 | 2,182 | - | - |
| TOTAL | 31,164,171 | 31,164,171 | - | - |
As at 31 December 2014, accrued expenses mainly included investment management and administration fees payable to the Fund Manager of RON 16,064,203 (1 January 2014: RON 13,471,953).
As at 31 December 2014, dividends payable included dividends payable to Fund's shareholders related to the financial year 2012 of RON 4,035,381 and dividends related to the financial year 2011 of RON 1,419,925.
As at 31 December 2014, Payable to shareholders related to the return of capital, included the amount due to shareholders, following the share capital decrease through the reduction of the nominal value of Fund's shares from RON 1 to RON 0.95 per share.
These financial statements are the responsibility of the Management of the Fund and have been prepared in accordance with the National Securities Commission ("CNVM") Regulation no. 4/2011 regarding accounting regulations compliant with Economic European Commission Directive IV ("EEC Directive IV"), applicable to the entities authorised, regulated and monitored by the Financial Supervisory Authority ("FSA"), approved by CNVM Order no. 13/2011 ("CNVM Order 13/2011") and with CNVM Instructions no. 2/2007 regarding the preparation and submission of annual financial statements by the entities authorised, regulated and monitored by the FSA, as subsequently amended.
The accounting regulations compliant with EEC Directive IV, approved by CNVM Order 13/2011 are applicable together with the Accounting Law no. 82/1991 (as revised).
The financial statements have been prepared on a historical cost basis. The CNVM Order 13/2011 regarding the approval of the "Accounting Regulations compliant with EEC Directive IV applicable to the entities authorised, regulated and monitored by the National Securities Commission" provides for the preparation of the financial statements at historical cost.
The Fund is required to prepare for information purposes, financial statements in compliance with the International Financial Reporting Standards as endorsed by European Union ("IFRS") and these will be published in accordance with the requirements of the legislation in force.
These financial statements are prepared and expressed in RON and are rounded to the nearest unit. The financial statements have been prepared on the basis of the accounting records held by the Fund, in accordance with the Romanian accounting regulations applicable to the institutions regulated and monitored by FSA.
The financial statements were prepared in compliance with the accrual basis of accounting. Thus, the effects of the transactions and of other events are recognised when they occur and are recorded in the accounts and reported in the financial statements of the related periods.
The general accounting principles applied are as follows:
The preparation of financial statements in accordance with CNVM Order 13/2011, with subsequent amendments, requires the management to make estimates and assumptions that affect the reported value of assets and liabilities, disclosure of contingent assets and contingent liabilities at balance sheet date, and income and expenses reported to the respective financial year. Although the estimates and assumptions are made by Management using the most reliable information available at balance sheet date, the actual results may differ from these estimates.
These financial statements were prepared based on the going concern principle, which assumes that the Fund will continue its activity in the foreseeable future. In order to evaluate the applicability of this assumption, the Fund's administrator analyses the forecasted future cash flows.
Based on this analysis, the administrator believes that the Fund will continue its activity in the foreseeable future, and, therefore, the applicability of the going concern principle is justified.
(i) Functional and presentation currency
The functional and presentation currency of the financial statements is the local currency, RON.
(ii) Translation of the transactions in foreign currency
The Fund's foreign currency transactions are translated to RON at the official exchange rate published by the National Bank of Romania ("NBR") for the transaction date. The foreign currency balances are translated to RON at the exchange rates published by NBR for balance sheet date. Any gains or losses resulting from settlement of foreign currency transactions and from conversion of foreign currency monetary assets and liabilities are recognised in the income statement.
The exchange rates of the main foreign currencies as at the closing date of the financial year were the following:
| 31 December 2013 | 31 December 2014 | |
|---|---|---|
| 1 Dollar (USD) | RON 3.2551 | RON 3.6868 |
| 1 Euro (EUR) | RON 4.4847 | RON 4.4821 |
This is a translation from the official Romanian version.
As at 31 December 2014 and 1 January 2014, the Fund classified as non-current financial assets all shares held in subsidiaries, investments in associates and other investments held as financial assets.
Subsidiaries are entities controlled by the Fund. Control exists when the Fund has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account, when applicable.
Associates are those entities in which the Fund has significant influence, but not control or joint control, over the financial and operating policies. The existence of significant influence is determined by analysing the ownership structure of the companies in which the Fund holds 20% or more of the voting power of the investee, their articles of incorporation and the Fund's power to participate in the financial and operating policy decisions of the investee. The Fund does not exercise significant influence in a number of companies in which it holds between 20 and 50% of the voting power, where the Fund's rights as minority shareholder are protective in nature, and not participative and the major shareholder, or a group of shareholders holding majority ownership of the investee, operates without regard to the views of the Fund.
All equity investments of the Fund as at 31 December 2014 and 1 January 2014 were classified as non-current financial assets, as the Fund's investment objective is long-term capital appreciation via investments in equities or equity-linked securities.
If the Fund holds below the threshold of 20% from the share capital, but has a significant influence, based on the criteria analysis which indicate the existence of significant influence, those holdings were considered and presented in these financial statements, as investments in associates. As at 31 December 2014, the Fund had three holdings which met these criteria (as at 31 December 2013 there was only one holding).
The Fund recognises the financial assets as at the date when they have been transferred to the Fund and these are recorded at acquisition cost, including brokerage fees and other costs directly related to the acquisition (where applicable) or at the value determined based on the transfer documents.
In the case of listed companies, all securities purchases which involve a settlement in a certain period, determined according to the regulations in place or upon market agreement, are recognised at the date that the transaction is recorded at the exchange where the shares are traded (trade date).
In the case of unlisted companies, the securities purchases are recognised at the date of registration at the Trade Register and securities disposals are accounted for at the date of the transfer of ownership.
Mergers of portfolio companies are recognised at the date when the merger is registered at the Trade Register. The value of the holding of the Fund in the merged entity is recorded as the cumulated values before the merger of the holdings in the entities that merged.
The initial book value represents the value of the participating securities received by the Fund as contribution to the share capital and was calculated according to the specific laws for Fondul Proprietatea.
The cost (initial value) of financial assets which are contributed in kind by the Romanian State to the Fund's share capital is determined in accordance with the provisions of Law 247/2005 regarding the reform in property and justice, as well as certain adjacent measures, with subsequent amendments ("Law 247/2005"), as follows:
the book value of the shareholders' equity at 31 December 2004, determined in accordance with statutory financial statements, multiplied by the Fund's holding percentage, for unlisted companies and for listed companies whose trading volume over the last 90 trading days represented less than 0.3% of their share capital;
Financial assets are initially recognised at acquisition cost.
Subsequent to the initial recognition, according to the provisions of CNVM Order 13/2011, with subsequent amendments, financial assets are carried in the balance sheet at historical cost, less accumulated adjustments for impairment.
As at balance sheet date, the carrying value (acquisition cost /initial value plus additions) should be compared with the recoverable value. The negative differences between the recoverable amount and the carrying value shall be recorded as impairment adjustment in a dedicated shareholders' equity account (account 1062 – Reserves related to impairment adjustments of financial assets), while the positive differences shall not be recorded.
For financial assets, the recoverable value is determined as follows:
In performing the above-mentioned impairment test, the financial information from the most recent financial statements of the companies is corroborated with the most recent public available qualitative and quantitative information regarding the assets.
The impairment adjustment can be reversed if a change in the conditions existing at the time of determining the recoverable value occurred. The reversal of an impairment adjustment can only be made such that the net carrying amount of the asset after reversal does not exceed its historical cost. The adjustments for impairment are reversed as follows:
The Fund derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or when it transfers the rights to receive the contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.
This is a translation from the official Romanian version.
The derecognition of any financial asset disposed of is recognised on the date when ownership is transferred. Gains or losses arising from derecognition are calculated based on proceeds on disposal of financial assets and assets historical cost/ initial value and are recorded in the income statement.
The Fund uses the weighted average cost method (WAC) to determine the cost/ initial value of financial assets disposed of.
Cash and cash equivalents are recorded in the balance sheet at cost. For the purposes of the Statement of Cash Flows, cash and cash equivalents include the petty cash, current accounts with banks and placements in bank deposits with original maturity less than 3 months.
Short term investments include government bonds and treasury bills. The inventory relief method used for the disposal of these financial instruments is "first in first out" (FIFO).
The provisions are recognised when the Fund has a legal or constructive obligation resulting from past events, when in order to settle the obligation an outflow of resources embodying economic benefits is necessary and when a reliable estimate can be made with regard to the value of the obligation.
The Fund has no employees, but from the benefits point of view, the members of the Board of Nominees and the special administrator appointed in portfolio companies in insolvency have the same legal status as employees, even if they have concluded mandate agreements and not labour agreements with the Fund. During the normal course of business, the Fund makes payments to the state health, pensions and unemployment funds related to the members of the Board of Nominees and for the special administrator appointed in portfolio companies in insolvency, in accordance with the regulations in force. All the Board of Nominees members and the special administrator appointed in portfolio companies in insolvency are members of the public pension plan of the Romanian State. Such costs are recognised in the income statement together with the recognition of the related remunerations.
The Fund does not operate any other pensions plan or post-retirement benefits plan and therefore has no obligations regarding pensions.
The Fund records the current income tax liabilities based on the taxable income in the tax reporting, according to the relevant Romanian laws. The income tax rate for the year 2014 is 16% (2013: 16%).
Expenses from disposal of financial assets represent the cost of the investments disposed of on the date of the sale, using the weighted average cost method (WAC).
The commissions and fees and the operating expenses of the Fund are recognised in income statement at the date the services they are referring to are received.
Dividend income distributed by listed companies is recognised at the ex-dividend date. Dividend income distributed by unlisted companies is recorded on the date when such companies' General Shareholders Meetings approve the dividend distribution.
Interest income is recognised according to the accrual principle, taking into consideration the interest receivable according to contractual clauses during the financial year, to the extent that it is certain that upon the due date the interest can actually be collected.
Gains or losses from the disposal of the financial assets are recognised in the income statement at the date of derecognition of the financial assets.
The bonus shares from the incorporation of reserves of portfolio companies are recorded at nominal value as at the date of entering the portfolio of the respective shares. The value of these shares is recorded in account 1065 - Reserves for financial assets received free of charge.
Bonus shares are recorded in accounting as a financial asset at the date when they are recorded with the Central Depositary (for listed shares) or with the Trade Register (for unlisted shares).
The shares received from the Romanian state as in kind contributions to the share capital of the Fund are recorded at nominal value.
According to the provisions of Law 247/2005 (title VII, article 9 paragraph (6)), as subsequently amended), the nominal value of the shares in companies owned by the Fund and the Romanian state which are received by the Fund as in kind contributions from the Romanian state to the Fund's share capital, will be used to reduce the subscribed unpaid share capital of the Romanian State in the Fund.
The Fund recognises treasury shares (repurchases of own shares) at the date when the transaction is recorded at the exchange where shares are traded (trade date) and are recorded at acquisition cost, including brokerage fees and other costs directly related to the acquisition.
Upon cancellation of treasury shares, the difference between the nominal value and the acquisition cost of the shares (including brokerage fees and other costs directly related to the acquisition), is initially recorded through a special equity account and then recorded in other reserves.
Dividends declared by the Fund are recorded as dividends payable when the Fund's General Shareholders Meeting approves the dividend distribution, as the Fund is then legally obliged to pay them.
According to the provisions of the legislation in force, the Fund is allowed to cancel the rights of shareholders to collect any dividends which have remained unclaimed for at least 3 years after the date when the respective dividend distribution commenced. Upon cancellation, the Fund records the value of these dividends as income in the income statement.
The Fund is not a taxable legal entity for the purposes of the provisions of the Fiscal Code. As a result, value added tax is recognised as part of the expenses for the acquisition of services or as part of the acquisition value for the purchases of goods (inventories or fixed assets).
Events after the balance sheet date are those events, favourable and unfavourable, that occur between the balance sheet date and the date when the financial statements are authorised for issue. Two types of events can be identified:
In case of adjusting events after the balance sheet date, the Fund needs to adjust the amounts recorded in the annual financial statements, to reflect the events after the balance sheet date. In case of non-adjusting events after the balance sheet date, the Fond does not adjust the amounts recorded in the annual financial statements, those being disclosed in the notes of the financial statements.
This is a translation from the official Romanian version.
As at 31 December 2014, the share capital subscribed was RON 11,815,279,886.85 representing 12,437,136,723 shares with a nominal value of 0.95 RON per share, out of which 363,812,350 shares were unpaid.
The shareholder structure as at 31 December 2014 is as follows:
| % of subscribed | % of paid–up | % of voting | ||
|---|---|---|---|---|
| No. | Shareholder Type | share capital | share capital | rights |
| 1 | Foreign institutional shareholders | 51.84% | 53.40% | 59.04% |
| 2 | Romanian private individuals | 19.82% | 20.41% | 22.57% |
| 3 | Romanian institutional shareholders | 10.72% | 11.05% | 12.21% |
| 4 | Treasury shares | 9.27% | 9.55% | 0.00% |
| 5 | Foreign private individuals | 5.39% | 5.55% | 6.14% |
| 6 | Ministry of Public Finance | 2.96% | 0.04% | 0.04% |
| TOTAL | 100.00% | 100.00% | 100.00% |
The total number of shareholders as at 31 December 2014 was 8,306.
Unpaid share capital represents the net value of certain contributions due from the Romanian State represented by the Ministry of Public Finance, as shareholder to the Fund that were recorded in previous years as paid capital (based on Law 247/2005, with subsequent amendments).
In 2014, the paid-up capital of the Fund:
Following all these changes, as at 31 December 2014 the paid-up capital of the Fund decreased from RON 13,413,137,586 to RON 11,469,658,154.35 (divided in 12,073,324,373 shares with a nominal value of RON 0.95 per share) and the subscribed share capital of the Fund decreased from RON 13,778,392,208 to RON 11,815,279,886.85 (divided in 12,437,136,723 shares with a nominal value of RON 0.95 per share).
The Fund's General Shareholders Meeting in September 2010 approved a first buyback programme of up to 10% of the Fund's share capital at prices ranging between 0.2 - 1.5 RON, which was valid until March 2012. The buyback programme started in May 2011 and by 30 September 2011 the Fund completed this programme by acquiring 240,304,801 shares equivalent to 1.74% of the Fund subscribed share capital for a total acquisition value, including transaction costs, of RON 120,268,583. The cancellation of the shares acquired within this buyback programme through the decrease of the subscribed share capital of the Fund was endorsed by FSA on 21 February 2014 and was effective on 24 February 2014.
At the General Shareholders Meeting on April 2012, the shareholders approved a second buyback programme: subject to availability of cash, the Fund Manager was authorised to repurchase a maximum number of 1.1 billion shares within the next 18 months within the price range of RON 0.2 per share to RON 1.5 per share to be cancelled upon completion of the buyback programme. The second buy-back programme started on 12 April 2013 and by 31 December 2013 the Fund had acquired all the 1,100,950,684 shares subject to the buy-back programme at a total acquisition value, including transaction costs, of RON 974,824,667. In the 28 April 2014 Annual General Shareholders Meeting, the shareholders approved the decrease of the subscribed share capital of the Fund through the cancellation of the treasury shares acquired by the Fund in the second buy-back programme. The cancellation of the shares acquired within this buyback programme was effective on 26 September 2014.
At the General Shareholders Meeting in November 2013, the shareholders approved a third buyback programme: the Fund Manager was authorised to repurchase a maximum number of 252,858,056 shares or 1.89% of the paid-up share capital, within 18 months of the date when the shareholders' resolution is published in the Official Gazette, within the price range of RON 0.2 per share to RON 1.5 per share, to be cancelled upon completion of the buyback programme. The execution of the third buy-back programme started on 25 March 2014 and until 23 July 2014, all 252,858,056 treasury shares were acquired, at a total acquisition value, including transaction costs, of RON 205,784,683. The shares acquired during the third buyback programme were not cancelled until 31 December 2014. The share capital decrease is effective beginning with 27 January 2015. For further details on the cancellation of shares acquired in the third buy-back programme, please see Note 18 Subsequent Events.
In the 28 April 2014 Annual General Shareholders Meeting, the shareholders approved the fourth buy-back programme, for a maximum number of (i) 990,855,616 shares or (ii) 10% of the issued share capital at the relevant time, whichever is the lesser, starting with the date when the third buy-back programme is completed. As with previous buy-back, the programme can be executed within 18 months of the date when the shareholders' resolution is published in the Official Gazette of Romania. The buy-back shall be performed at a price that cannot be lower than RON 0.2 per share or higher than RON 2 per share and the shares repurchased will be cancelled. The execution of the fourth buy-back programme started on 1 October 2014 and until 31 December 2014, 904,491,044 treasury shares were acquired, at a total acquisition value, including transaction costs, of RON 986,465,485.
In the 19 November 2014 General Shareholders' Meeting, the shareholders approved the fifth buy-back programme, that refers to the acquisition of a maximum number of (i) 227,572,250 shares or (ii) 10% of the subscribed share capital at the relevant time, whichever is the lesser, starting with the date when the share capital decrease approved through EGM Resolution on 23 September 2014 (regarding the cancelation of the shares purchased by the Fund during the third buy-back programme) is effective until August 2016. The buy-back shall be performed at a price that cannot be lower than RON 0.2 per share or higher than RON 2 per share. The shares purchased will be cancelled. The shareholders' decision regarding the share capital decrease and the change of the Constitutive Act will be approved by the shareholders, with the observance of the provisions of the Constitutive Act, being agreed that the shareholders may approve one or more share capital decreases as the shares are being bought back and the shareholders are convened by the Sole Administrator. This buy-back programme implementation will be subject to the availability of the necessary cash.
| 2013 | 2014 | |
|---|---|---|
| Gross remuneration: | ||
| Members of the Board of Nominees | 779,052 | 900,000 |
| Special administrator of a portfolio company | - | 13,360 |
| Total remuneration expenses | 779,052 | 913,360 |
The expenses representing the Fund's contribution to the social security fund, health insurance fund, unemployment and social protection funds are not included in the amounts above. All the amounts presented above are gross amounts and include the taxes and contributions owed by the members of the Board of Nominees and by the special administrator of a portfolio company in insolvency, according to the laws in force.
On 29 September 2010 the administration and management of Fondul Proprietatea was taken over by Franklin Templeton Investment Management Limited, United Kingdom, Bucharest Branch ("FTIML"), which was appointed as Sole Director. The mandate of Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch as the Fund Manager and Sole Director of the Fund was renewed for 2 years beginning with 30 September 2014. According to the Investment Management Agreement, FTIML also acts as the Fund Manager of the Fund. The activity of the Fund Manager is supervised by the Board of Nominees, composed of 5 members appointed by the shareholders.
| 31 December 2013 | 31 December 2014 | |
|---|---|---|
| a) Current liquidity ratio (number of times) | ||
| Current assets = | ||
| Current liabilities | 14.57 | 7.72 |
| b) Quick liquidity ratio/acid test (number of times) | ||
| Current assets – Inventories = | ||
| Current liabilities | 14.57 | 7.72 |
| c) Payment capacity ratio | ||
| Cash and bank accounts + Short term financial investments = | ||
| Current liabilities | 14.48 | 7.51 |
| 2. Risk ratios | ||
| 31 December 2013 | 31 December 2014 | |
| a) Gearing ratio | ||
| Borrowed capital = | ||
| Shareholders' equity | - | - |
| b) Solvency ratio | ||
| Total assets = |
||
| Current liabilities | 351.22 | 226.96 |
The gearing ratio is zero, as the Fund had no borrowings as at 31 December 2013 and 31 December 2014.
| 31 December 2013 | 31 December 2014 | ||
|---|---|---|---|
| a) Turnover of non-current assets (number of times) | |||
| Turnover* = |
|||
| Non-current assets | 0.125 | 0.201 | |
| b) Turnover of total assets (number of times) | |||
| Turnover* = |
|||
| Total assets | 0.120 | 0.194 | |
* For the calculation of this ratio, the Total revenue from current activity were used
| 31 December 2013 | 31 December 2014 | |
|---|---|---|
| a) Profitability of capital employed (%) | ||
| Profit before interest and income tax /Capital employed* | 6.27% | 11.02% |
| b) Return on Assets (%) | ||
| Net Profit = |
||
| Total assets | 6.23% | 10.78% |
| c) Return on Equity (%) | ||
| Net Profit = |
||
| Shareholders' equity | 6.27% | 10.85% |
| d) Dividend yield (%) | ||
| Dividend per share = | ||
| Share price** | 4.91% | -*** |
| e) Dividend pay-out ratio | ||
| Dividend per share = | ||
| Profit per share | 0.95 | -*** |
| * Capital employed includes Shareholders' equity |
** Closing price as at 31 December 2013 and 31 December 2014
*** In 2014, dividend distribution was replaced by a return of capital to shareholders, following the decrease of the nominal value of shares by RON 0.05 per share.
The Fund is an undertaking for collective investments, in the form of a closed end investment company, established in accordance with Law no. 247/2005, as subsequently amended ("Law 247/2005") and registered in Bucharest on 28 December 2005. During the reporting period, the address of the Fund's registered office was 78 – 80, Buzeşti Street, 7th Floor, District 1, Bucharest.
When established, the Fund was an entity controlled by the Romanian state represented by the Ministry of Public Finance, the stake of the state decreasing below the control threshold, as the compensation process in accordance with Law 247/2005 continued.
The Fund undertakes its activities in accordance with Law 297/2004, regarding the securities market, as amended ("Law 297/2004") and Law no. 31/1990 regarding companies, republished, with subsequent amendments ("Law 31/1990"). In accordance with its statute, the main activity of the Fund is performing financial investments (Code CAEN 6430 – mutual funds and other similar financial entities).
The Fund's investment objective is long-term capital appreciation via investments mainly in Romanian equities or equity-linked securities.
The Fund was established to allow the payment through equivalent of compensations in respect of abusive expropriations undertaken by the Romanian State during the communist period, where properties could not be returned in kind.
The records of the shares and shareholders are kept by Depozitarul Central SA, according to the law.
Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch is the Fund Manager and Sole Director of the Fund, effective since 29 September 2010. The mandate of Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch as the Fund Manager and Sole Director of the Fund was renewed for 2 years beginning with 30 September 2014.
Starting 25 January 2011, Fondul Proprietatea has been a listed company on the spot regulated market managed by the Bucharest Stock Exchange in Tier I shares of the Equity Sector of the market (renamed, starting 5 January 2015 as Premium Tier shares),, under ISIN number ROFPTAACNOR5, with the market symbol "FP".
The details regarding the related parties' transactions and the nature of the relationships with them are disclosed in Note 14.
| 2013 | 2014 | |
|---|---|---|
| Gross profit | 682,154,399 | 1,029,526,257 |
| Tax deduction related to the allocation of profit to the | ||
| legal reserve | (1,866,023) | - |
| Income from provisions and impairment adjustments - Non taxable | (48,323,844) | (36,985,540) |
| Income from dividends from Romania entities - Non taxable | (644,833,933) | (654,246,883) |
| Income from disposal of financial assets - Non taxable | - | (964,229,782) |
| Gain on cancellation of treasury shares – taxable equity item | - | 191,114,701 |
| Gain on decrease of nominal value of treasury shares – taxable equity item | - | 57,379,239 |
| Expenses with provisions and impairment adjustments - Non deductible | 12,905,358 | 7,821,113 |
| Expenses related to disposal of financial assets - Non deductible | - | 473,045,554 |
| Other non-deductible expenses | 1,089,440 | 18,263,974 |
| Taxable profit / (Fiscal loss) for the current year | 1,125,397 | 121,688,633 |
| Tax losses carried forward | (3,264,077) | (2,138,680) |
| Taxable profit / (Fiscal loss) taking into account tax losses carried | ||
| forward from previous year | (2,138,680) | 119,549,953 |
| Current income tax (16%) | - | 19,127,992 |
| - deductions for sponsorship expenses | - | (2,500,000) |
| Income tax expense | - | 16,627,992 |
| Income tax paid for the current year | - | 23,958,432 |
| Income tax receivable | 436,920 | 7,330,440 |
In accordance with the changes to the Romanian Fiscal Code, with effect from 1 January 2014, no income tax is applied to the sale of equity instruments held in Romanian entities or entities resident in a country with which Romania has a tax treaty, where the holding is at least 10% of the share capital of the entity and has been held for an uninterrupted period of at least 1 year.
Turnover includes total revenue from current activity, consisting mainly of dividend income, interest income and revenue from disposal of financial assets.
The financial auditor of Fondul Proprietatea for the year 2014 is Deloitte Audit SRL. The audit fee for the audit of the financial statements prepared in accordance with Romanian accounting regulations (CNVM Order 13/2011) of the year 2014 (statutory audit) is of RON 96,365 excluding VAT and is recorded in the period when the services are provided (partially in 2014 and partially in 2015).
| % of the share capital held as at 31 |
Cost (Initial value) as | Market value as at 31 | |
|---|---|---|---|
| Name of the company | December 2014 | at 31 December 2014 | December 2014 |
| Listed companies | |||
| Alcom SA | 71.89% | 471,052 | 4,399,976 |
| Alro SA | 10.21% | 176,493,362 | 84,546,268 |
| Banca Transilvania SA | 2.87% | 79,102,958 | 143,234,554 |
| BRD-Group Societe Generale SA | 3.64% | 326,157,637 | 222,140,240 |
| Comcereal Cluj SA | 11.36% | 913,756 | 974,649 |
| Conpet SA Ploiesti | 6.05% | 14,134,212 | - |
| Forsev SA | 26.50% | 3,780,366 | 6,117,932 |
| IOR SA | 2.81% | 348,756 | 786,682 |
| Mecon SA | 12.51% | 484,544 | 240,216 |
| Nuclearelectrica SA | 9.72% | 998,527,117 | 212,140,869 |
| Oil Terminal SA | 6.31% | 9,761,986 | 3,285,885 |
| OMV Petrom SA | 18.99% | 5,396,921,727 | 4,389,528,460 |
| Palace SA | 15.42% | 1,860,419 | 2,216,343 |
| Primcom SA | 68.97% | 21,929,633 | 12,345,176 |
| Romaero SA | 20.99% | 58,533,949 | 21,118,225 |
| Romgaz SA | 10.00% | 277,909,477 | 1,362,879,066 |
| Romplumb SA | 33.26% | 19,249,219 | - |
| Total – Listed companies | 7,386,580,170 | 6,465,954,541 | |
| Unlisted companies | |||
| Aeroportul International Mihail Kogalniceanu - Constanta SA |
20.00% | 1,490,898 | 2,279,999 |
| Aeroportul International Timisoara - Traian Vuia SA | 20.00% | 2,652,588 | 1,657,295 |
| Bat Service SA | 33.00% | 656,686 | - |
| Cetatea SA | 20.43% | 118,840 | 363,259 |
| CN Administratia Canalelor Navigabile SA | 20.00% | 15,194,209 | 16,246,340 |
| CN Administratia Porturilor Dunarii Fluviale SA | 20.00% | 675,810 | 3,541,224 |
| CN Administratia Porturilor Dunarii Maritime SA | 7.70% | 1,706,051 | - |
| CN Administratia Porturilor Maritime SA | 19.99% | 65,441,294 | 132,593,826 |
| CN Aeroporturi Bucuresti SA | 20.00% | 131,168,263 | 332,285,906 |
| Complexul Energetic Oltenia SA | 21.55% | 670,353,852 | 108,472,675 |
| Comsig SA | 69.94% | 132,633 | 1,538,490 |
| E.ON Distributie Romania SA | 18.34% | 169,541,165 | 441,450,580 |
| E.ON Energie Romania SA | 13.39% | 45,765,358 | 133,899,606 |
| Electrica Distributie Muntenia Nord SA | 21.99% | 165,221,141 | 235,599,683 |
| Electrica Distributie Transilvania Nord SA | 22.00% | 113,299,904 | 201,599,594 |
| Electrica Distributie Transilvania Sud SA | 21.99% | 125,918,629 | 206,499,494 |
| Electrica Furnizare SA | 22.00% | 17,819,672 | 126,367,968 |
| Electroconstructia Elco Cluj SA | 7.61% | 319,656 | 717,565 |
| ENEL Distributie Banat SA | 24.12% | 141,578,929 | 640,490,828 |
| ENEL Distributie Dobrogea SA | 24.09% | 114,760,053 | 396,894,780 |
| ENEL Distributie Muntenia SA | 12.00% | 107,277,263 | 465,768,833 |
| ENEL Energie Muntenia SA | 12.00% | 2,833,769 | 65,143,965 |
| ENEL Energie SA | 12.00% | 26,124,808 | 74,376,960 |
| % of the share capital | |||
|---|---|---|---|
| held as at 31 | Cost as at 31 | Market value as at 31 | |
| Name of the company | December 2014 | December 2014 | December 2014 |
| Unlisted companies | |||
| Fecne SA | 12.12% | - | - |
| GDF Suez Energy Romania SA | 11.99% | 62,522,462 | 461,320,893 |
| Gerovital Cosmetics SA | 9.76% | 340,996 | - |
| Hidroelectrica SA | 19.94% | 3,107,667,996 | 2,178,093,960 |
| Petrotel - Lukoil SA | 1.18% | 2,787,316 | - |
| Plafar SA | 48.99% | 3,160,329 | 1,833,999 |
| Posta Romana SA | 25.00% | 84,664,380 | 55,894,726 |
| Salubriserv SA | 17.48% | 207,601 | - |
| Simtex SA | 30.00% | 3,059,858 | - |
| Societatea Nationala a Sarii SA | 48.99% | 76,347,715 | 142,881,926 |
| Uzina Mecanica Bucuresti SA | 36.59% | 14,220,455 | - |
| World Trade Center Bucuresti SA | 19.90% | 42,459 | - |
| World Trade Hotel SA | 19.90% | 17,912 | - |
| Zirom SA | 100.00% | 47,146,452 | 39,337,981 |
| Total unlisted companies | 5,322,237,402 | 6,467,152,355 | |
| Total | 12,708,817,572 | 12,933,106,896 |
The market values for the financial assets presented above are the values as per the 31 December 2014 NAV report (except for those holdings in portfolio companies whose values were adjusted due to the identification of adjusting post-balance sheet date events). They are determined according to regulations currently applying to Fondul Proprietatea (CNVM Regulation no. 4/2010, as subsequently amended), as follows:
This is a translation from the official Romanian version.
| 1 January 2014 | 31 December 2014 | |
|---|---|---|
| Current accounts and cash | 5,552,477 | 6,879,129 |
| Deposits with banks with original maturity less than or equal to 3 months | 232,021,138 | 84,278,998 |
| Deposits with banks with original maturity greater than 3 months | - | 25,000,000 |
| Total | 237,573,615 | 116,158,127 |
| 1 January 2014 | 31 December 2014 | |
|---|---|---|
| Term deposits with banks in RON | 208,000,000 | 93,700,000 |
| Overnight deposits with banks in RON | 24,021,138 | 15,578,998 |
| Subtotal deposits with banks | 232,021,138 | 109,278,998 |
| Current accounts with banks in RON | 62,232 | 5,560,105 |
| Current accounts with banks in RON – payment | ||
| of dividends and return of capital | 1,643,996 | 1,316,445 |
| Current accounts with banks in foreign currency | 3,846,063 | 2,041 |
| Cash in hand | 186 | 538 |
| Subtotal current accounts and cash | 5,552,477 | 6,879,129 |
| Total | 237,573,615 | 116,158,127 |
A breakdown of deposits with banks, by counterparty, is presented below:
| Bank | 1 January 2014 | 31 December 2014 |
|---|---|---|
| Banca Comerciala Romana SA | - | 68,700,000 |
| Unicredit Tiriac Bank | 75,000,000 | 25,000,000 |
| BRD Groupe Societe Generale | 24,021,138 | 15,578,998 |
| ING Bank NV Sucursala Bucuresti | 75,000,000 | - |
| Citi Bank Romania | 58,000,000 | - |
| TOTAL | 232,021,138 | 109,278,998 |
| Description | Interest as at 31 December Deposit amount 2014 |
Weigh in | Date | |||||
|---|---|---|---|---|---|---|---|---|
| Bank | Acc. | Due date<60 days |
Due date > 60 days |
% | Amount | total Deposit amount |
Start date |
Maturity date |
| Term Deposits | ||||||||
| Banca Comerciala Romana SA | 5121 | 68,700,000 | - | 0.40% | 1,527 | 62.87% 30-Dec-14 | 05-Jan-15 | |
| Unicredit Tiriac Bank | 5121 | - | 25,000,000 | 1.55% | 144,236 | 22.88% 20-Aug-14 | 20-Feb-15 | |
| Total Term Deposits | 68,700,000 | 25,000,000 | 145,763 | 85.75% | ||||
| Overnight Deposits | ||||||||
| BRD Groupe Societe Generale | 5121 | 15,578,998 | - | 0.39% | 169 | 14.25% 31-Dec-14 | 05-Jan-15 | |
| Total Overnight Deposits | 15,578,998 | - | 169 | 14.25% | ||||
| Total Deposits | 84,278,998 | 25,000,000 | 145,932 | 100.00% |
Short-term investments include treasury bills and short-term government bonds.
As at 31 December 2014 the treasury bills comprise treasury bills with discount, with residual maturity up to 12 months and with face value at maturity of RON 164,110,000.
The implicit interest rates calculated (based on the yield to maturity for each issue) ranged between 1.7% and 2.09% per year.
| SHORT-TERM INVESTMENTS | 1 January 2014 | 31 December 2014 |
|---|---|---|
| Treasury bills | 129,887,376 | 162,839,400 |
| Government bonds | 83,748,145 | 31,749,581 |
| TOTAL | 213,635,521 | 194,588,981 |
| Cumulated | ||||||||
|---|---|---|---|---|---|---|---|---|
| interest as at | ||||||||
| Treasury Bills | 31 December | |||||||
| (Acquisition value) | 2014 | Date | ||||||
| Acquisition | Maturity | Maturity | Starting | Maturity | ||||
| Intermediary | ISIN | value | < 60 days | > 60 days | % | Amount | date | date |
| BRD Groupe Societe | ||||||||
| Generale | RO1415CTN024 | 10,842,298 | - | 10,842,298 | 1.80% | 79,149 | 07-Aug-14 | 26-Jan-15 |
| Banca Comerciala | ||||||||
| Romana SA | RO1415CTN057 | 24,718,688 | - | 24,718,688 | 1.70% | 178,592 | 30-Jul-14 | 30-Mar-15 |
| Raiffeisen Bank SA | RO1415CTN073 | 58,498,508 | - | 58,498,508 | 1.70% | 428,177 | 30-Jul-14 27-May-15 | |
| Banca Comerciala | ||||||||
| Romana SA | RO1415CTN081 | 27,544,935 | - | 27,544,935 | 1.95% | 217,834 | 08-Aug-14 | 09-Jun-15 |
| BRD Groupe Societe | ||||||||
| Generale | RO1415CTN0B1 | 39,998,773 | - | 39,998,773 | 2.09% | 332,446 | 07-Aug-14 | 10-Aug-15 |
| TOTAL | 161,603,202 | 161,603,202 | 1,236,198 |
| Government bonds | Date | |||||||
|---|---|---|---|---|---|---|---|---|
| Intermediary | ISIN | Value as at 31 December 2014 |
Nominal value |
Maturity < 60 days |
Maturity > 60 days |
Coupon rate % |
Starting date |
Maturity date |
| BRD Groupe Societe Generale |
RO1015DBN010 | 31,749,581 | 30,000,000 | - | 31,749,581 | 6.00% | 07-Aug-14 | 30-Apr-15 |
| TOTAL | 31,749,581 | 30,000,000 | - | 31,749,581 |
Transactions with related parties have been performed in the normal course of business of the Fund.
The Romanian State represented by the Ministry of Public Finance controlled the Fund during 2010, but during 2011 its holding fell below the control threshold (as at 31 December 2014: 2.96% of issued share capital, respectively 0.04% of paid-up share capital).
The Fund has the following subsidiaries, all of which are incorporated in Romania:
| Ownership interest | 2013 | 2014 |
|---|---|---|
| Alcom SA Timisoara | 72% | 72% |
| Comsig SA Sighisoara | 70% | 70% |
| Primcom SA Bucuresti | 75% | 69% |
| Zirom SA Giurgiu | 100% | 100% |
During 2014, the Fund carried out the following transactions with its subsidiaries: (1) in January 2014, Primcom SA performed a capital return to its shareholders following the decrease of its share capital by reducing the nominal value of the shares from RON 2.5 to RON 0.1 and (2) in June 2014, the Fund sold part of its holding in Primcom SA in a buyback programme carried out by this company.
During 2013, the Fund recorded and received a dividend of RON 24,392 from Alcom SA.
| Ownership interest | 2013 | 2014 |
|---|---|---|
| OMV Petrom SA | 19% | 19% |
| Societatea Nationala a Sarii SA | Not an associate | 49% |
| Plafar SA | Not an associate | 49% |
In 2014, the management has reassessed the indicators of significant influence regarding the portfolio companies and concluded that, in case of Societatea Nationala a Sarii SA and Plafar SA, the Fund has significant influence over the financial and operating policies of these companies due to the active representation in the board of directors and active participation in policy making process. In consequence, starting 2014, in addition to OMV Petrom SA, Societatea Nationala a Sarii SA and Plafar SA are also classified as Fund's associates.
In 2014, the Fund recorded and collected from OMV Petrom SA a dividend of RON 331,366,364 (2013: RON 318,951,645) and from Societatea Nationala a Sarii SA a dividend of RON 19,808,541.
During 2014, the Fund recorded the following expenses payable to Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, the Fund Manager of the Fund: investment management and administration fees of RON 56,479,028 (2013: RON 45,273,318), rent expenses of RON 86,289 (2013: RON 104,237) and related operating costs of RON 22,951 (2013: RON 28,894).
During 2014 the Fund also recorded an amount of RON 2,986,573 (2013: RON 1,754,236), representing expenses incurred by the Fund Manager on Fund's behalf. These expenses were primarily related to promotional activities for the Fund (investor relations) and valuation services. The recharge of these expenses to the Fund followed the provisions of the Investment Management Agreement, and was subject to Board of Nominees approval.
As at 31 December 2014 the total liability to Fund Manager related to the above mentioned transactions was in the amount of RON 17,189,421 (1 January 2014: 14,019,201).
| TOTAL | 649,701,517 | 682,104,761 |
|---|---|---|
| IOR SA | 68 | - |
| Ciocirlia SA | 22,393 | - |
| Alcom SA | 24,392 | - |
| Oil Terminal SA | 35,229 | - |
| Erste Group Bank AG | 656,048 | - |
| Raiffeisen Bank International AG | 4,211,536 | - |
| Complexul Energetic Oltenia SA | 10,343,621 | - |
| E.ON Gaz Distributie SA | 29,933,522 | - |
| Transgaz SA | 37,568,760 | - |
| Aeroportul International Timisoara - Traian Vuia SA | 672,674 | - |
| CN Administratia Porturilor Dunarii Fluviale SA | 473,250 | 3,771 |
| CN Administratia Canalelor Navigabile SA | 856,672 | 175,612 |
| CN Administratia Porturilor Dunarii Maritime SA | 227,764 | 260,440 |
| Conpet SA | 8,403,049 | 8,773,485 |
| CN Administratia Porturilor Maritime SA | 5,355,572 | 10,118,832 |
| Electrica Distributie Transilvania Nord SA | - | 11,666,194 |
| CN Aeroporturi Bucuresti SA | 9,135,228 | 12,318,258 |
| Electrica Distributie Transilvania Sud SA | - | 12,733,949 |
| Electrica Furnizare SA | 9,260,589 | 19,637,608 |
| Societatea Nationala a Sarii SA | 9,297,643 | 19,808,541 |
| Transelectrica SA | 3,997,666 | 22,046,532 |
| Electrica Distributie Muntenia Nord SA | 16,206,230 | 23,212,251 |
| Nuclearelectrica SA | 2,326,200 | 27,857,878 |
| GDF Suez Energy Romania SA | 22,800,000 | 33,600,000 |
| Romgaz SA | 158,941,766 | 148,525,046 |
| OMV Petrom SA | 318,951,645 | 331,366,364 |
| Company | 2013 | 2014 |
Given the nature of its business, the Fund is exposed to various risks, which include: market risk, credit risk, liquidity risk, operational risk and the risks related to the economic environment. The management monitors the reduction of the potential adverse effects associated with these risk factors on the financial performance of the Fund.
With effect from 29 September 2010 the Fund Manager implemented financial risk management procedures consistent with those applied globally by Franklin Templeton Investments.
Market risk includes foreign currency risk, interest rate risk and price risk.
The Fund can make investments in financial instruments or perform transactions denominated in foreign currency. As a result, the Fund is exposed to the risk that fluctuations in exchange rates can have an adverse effect on the value of the net assets of the Fund denominated in foreign currency.
Cash accounts with banks (EUR 295, USD 103, GBP 58), receivables (EUR 231,496) and liabilities (EUR 11,499; GBP 16,136) denominated in foreign currency are not material.
The Fund considers that its functional currency is the local currency (RON).
The majority of the financial assets of the Fund are not interest bearing. The interest bearing financial assets (deposits and government securities) generally have short-term maturity: deposits generally up to 3 months, treasury bills and short-term government bonds up to 12 months. As a result, the Fund has a limited exposure to variations in interest rates.
Price risk is the risk that the value of the securities fluctuates as a result of changes occurring on the capital market, and it is determined by factors specific to an issuer, industry, country or region or that otherwise influence the capital market overall. This is the most significant source of risk and variability in the value of the Fund.
This risk became more significant in previous years, especially since the latter half of 2008, given the large reductions in value of the stock exchange quotations for some of the securities in the Fund's portfolio. It has been necessary to book impairment adjustments in certain cases in that period, and these negatively influenced Fund's shareholders' equity. During the following years, including 2014, the impairment adjustments previously booked were partially reversed due to market recoveries, but in certain periods, on downward market trends, additional impairment adjustments were recorded for some of the listed equity investments of the Fund.
Credit risk is the risk of financial loss to the Fund if counterparties to financial instruments fail to meet their contractual obligations, and arises principally from cash and deposits with banks, government securities and dividends receivable.
For government securities held, the credit risk is assessed as low to moderate, given that their issuer is the Romanian State through the Ministry of Public Finance.
Cash held by the Fund that is not invested in portfolio companies or government securities may be invested in short-term bank deposits. After the Fund's management was taken over by the Fund Manager, a formal policy regarding bank counterparty risks and limits was established.
The Fund only establishes new deposits where the financial institution or the institution's corporate parent, have a credit rating above investment grade (BBB- or better). The counterparty credit risk is also diversified by allocating the cash and cash equivalents across several banks. The selection of financial institutions as deposit takers was made and the exposure limits were decided upon based on their credit ratings.
This is a translation from the official Romanian version.
Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Fund's reputation.
The Fund's equity investments include unlisted securities, which are not traded on a regulated market and generally may be considered illiquid. As a result, the Fund may not be able to liquidate quickly some of its investments in these instruments in order to meet its liquidity requirements, or to respond to specific events such as deterioration in the credit worthiness of any particular issuer.
Part of the equity securities held by the Fund are listed on the Bucharest Stock Exchange. However, not all the shares listed on the Bucharest Stock Exchange are considered liquid due to insufficient volumes of transactions.
The Fund prudently manages liquidity risk by maintaining sufficient liquid assets to settle the current liabilities.
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Fund's processes, service providers, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Fund's operations.
The Fund's objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Fund's reputation with overall cost effectiveness and avoidance of control procedures that restrict initiative.
The ongoing uncertainty about the direction of European fiscal politics, responding central bank action and fears of a renewed possible breakup of the European Union (or single countries leaving, like a now less unthinkable Greek exit), continue to add volatility to equity markets, especially for countries with strong links to Europe.
Further uncertainty is linked to recent spikes in volatility in commodity markets, especially from the dramatic fall in oil prices. Companies with a heavy reliance on commodities will face increased uncertainty and their cash flow can be affected.
Both political uncertainty and volatility in commodities can impact the value of the Romanian economy and consequently also the Fund's portfolio companies and its shares.
Management is unable to predict all developments which could have an impact on the Romanian economy and consequently what effect, if any, they could have on the performance of the Fund and its financial statements.
Management is unable to reliably estimate the effects on the Fund's financial statements of any further deterioration in the liquidity of the financial markets, devaluation of financial assets influenced by the increased volatility in the currency and equity markets.
As at 31 December 2014 the Fund was involved in certain litigations, either as defendant or claimant.
The Fund discloses in the financial statements those which may have significant effects on the Fund's financial position or profitability. The most important litigations were as follows:
Some minority shareholders of the Fund (acting individually) have filed litigations against the Fund on various grounds, including some seeking the cancellation of certain resolutions of the General Shareholders Meeting ("GSM") and others seeking to block the registration of some resolutions with the Trade Register. These litigations are at various stages of process within the Romanian Court system and updates are frequently reported by management through the Stock Exchange news system.
In one of these cases, on 10 October 2012 the Bucharest Court of Appeal rejected the appeal filed by the Fund and upheld the decision of the Bucharest Court to partly admit a claim to annul certain resolutions from the 6 September 2010 GSM relating to (inter alia) approval of a new Constitutive Act and the first appointment of FTIML as the administrator of the Fund. Also, in November 2013 Court of Appeal has ruled against the Fund in a case filed by Sfiraiala and annulled the EGM Resolution no. 5/2010 for modifying the Constitutive Act.
These decisions are irrevocable and they were implemented by Trade Register, without any changes in the Management of the Fund considering that:
Therefore, FTIML as the Fund Manager of Fondul Proprietatea is liable to observe the current Constitutive Act and the shareholders' resolutions in force, and consequently will continue to manage the Fund in accordance with these and its management agreement.
In June 2014, in another case started by the Fund against the same shareholder, the court confirmed her circumstantiated abuse of procedural rights against the Fund. Also, there are several court decisions confirming the fact that this shareholder did not prove a legitimate interest to promote certain annulment actions, and in one of these cases the decision is final – the Bucharest Court of Appeal issued the final decision in November 2014. In another file in December 2014 the Bucharest Court of Appeal issued an irrevocable decision maintaining as legal and valid the shareholders' resolutions approved by shareholders in April and November 2013 challenged initially.
The outcome of the ongoing cases cannot be determined with certainty at this stage. However, Management intends to defend the interests of the Fund and its shareholders in all these cases in accordance with the applicable laws.
i. The Fund is due to receive the following amounts from the Romanian State:
These amounts should be recorded as payments for the unpaid capital or as increases of the share capital by the Romanian State once they are collected, with the approval of shareholders, according to the legislation in force.
ii. The receivables from World Trade Center Bucharest SA:
Title II, Article 4 of GEO 81/2007 stipulates the transfer from the Authority for State Assets Recovery ("AVAS") to the Fund of receivables from World Trade Center Bucharest SA amounting to USD 68,814,198 (including the original principal and related interest and penalties) on 29 June 2007.
Until 31 December 2014, the Fund recovered from World Trade Center Bucharest SA, USD 510,131, EUR 148,701, RON 8,724,888. Given the uncertainties regarding the recoverability of the amounts due by World Trade Center Bucharest SA, the above amounts were recognised on receipt basis in the Fund's financial statements.
In August 2013, World Trade Center Bucuresti SA filed a claim against the Fund asking to pay back the amounts received through the enforcement procedure during 2010 and 2011 (EUR 148,701, USD 10,131 and RON 8,829,663). The amounts recovered from the enforcement procedure were originally accounted for by the Fund as contributions of Ministry of Public Finance to the share capital of the Fund, decreasing the receivable related to the unpaid capital.
Consequently, these amounts are to be recovered by the Fund from the Ministry of Public Finance (being accounted for as a receivable over this shareholder of the Fund, for which an impairment adjustment was recorded), while the legal interest was recorded as an expense with provisions for litigations. The next hearing in front of Bucharest Court for this file was set for 27 February 2015.
Currently, World Trade Center Bucharest SA is the object of insolvency procedure, the next hearing being set for 25 March 2015.
By article IV of Law no. 10/2015, the Parliament decided that "Beginning with the date when this law is in force the receivable mentioned at article 4 of Title II from Emergency Ordinance of the Government no. 81/2007 […] will be transferred from Fondul Proprietatea to Ministry of Public Finance together with additional interests". As a result if this law the Fund will ask the courts to call the Ministry of Public Finance in the two files mentioned above.
In September 2014 the shareholders approved the execution of the Addendum no. 2 to the Management Agreement no. 45 dated 29 April 2014, signed between the Fund and FTIML ("Addendum no. 2"), referring to the distribution fees payable by the Fund to the Fund Manager in relation to the non-dividend distributions to shareholders. The Addendum no. 2 will enter into force only after FSA endorsement, and it was not approved by FSA as at 31 December 2014. However, in January 2015, the Title VII of Law no. 247/2005 governing mainly the organisation and functioning of the Fund was amended, clarifying the status of private company of the Fund, the shareholders being able to freely decide with respect to its governing and functioning. Following this change in legislation, the endorsement of the Addendum no. 2 by the FSA is expected.
According to Addendum no. 2, a distribution fee of 2% (in the period 30 September 2014 – 31 October 2015) and 1% (in the period 1 November 2015 – 30 September 2016) of the value of non-dividend distributions would be payable by the Fund to the Fund Manager. The Addendum no. 2, states that the distribution fee is payable retrospectively, starting 30 September 2014.
The contingent liability of the Fund related to the distribution fees for the period 30 September – 31 December 2014 is of RON 19.4 million.
The main decisions of the shareholders at the 21 January 2015 GSM were the following:
On 4 February 2015, the Fund announced the completion of the 4th buy-back programme, through which the Fund acquired 990,855,616 shares of the Fund (equivalent to 8.13% of the Fund's subscribed share capital) through a tender offer for 750,000,000 shares (shares actually purchased: 749,998,142) and daily acquisitions on the Bucharest Stock Exchange. The total value of the buy-back programme was RON 1,046,128,420.15 (excluding brokerage fees and other acquisition related costs), and the weighted average price was approximately RON 1.0557 per share. The Fund Manager will request shareholders' approval for the cancellation of the shares repurchased during this buy-back programme at the next general shareholders' meeting.
The Fund Manager intends to continue with share buy-backs in accordance with the Fund's Investment Policy Statement, and started the fifth buy-back programme, approved by shareholders on 19 November 2014, on 10 February 2015.
The FSA, through Notice no. 25/27 January 2015, endorsed the decrease of the subscribed share capital from RON 11,815,279,886.85 to RON 11,575,064,733.65, following the cancellation of 252,858,056 treasury shares acquired by the Fund in the third buy-back programme in 2014. The share capital decrease is effective beginning with 27 January 2015. Therefore, starting with 27 January 2015, the new value of the Fund's subscribed share capital is RON 11,575,064,733.65, divided into 12,184,278,667 shares with a nominal value of RON 0.95 per share. The value of the paid-up share capital is RON 11,229,443,001.15, divided into 11,820,466,317 shares with a nominal value of RON 0.95 per share.
On 12 January 2015, Law no. 10/2015 was published in the Part I of the Official Gazette no. 22 ("Law 10"). Law 10 amends, among others, Title VII of Law no. 247/2005 governing mainly the organization and functioning of the Fund ("Fund Law"). Law 10 will enter into force on 15 January 2015, according to Article 78 of the Constitution, and from this moment onwards the following main amendments related to the Fund are applicable, namely:
This is a translation from the official Romanian version.
On 19 April 2007, the Authority for State Assets Recovery (AVAS) filed an ownership claim with the 5th District First Instance Court against the Fund, the Central Depositary, the FSA and Conpet SA, requesting the Court to rule upon the ownership rights of the claimant over a number of 524,366 shares in Conpet SA's share capital and to impose on the other defendants the obligation to register accordingly the shares in the shareholders' registry.
Beginning with 2007 there were several rounds of hearings and court decisions and several reorganisations, as the plaintiff in this case is in present the Department of Energy as a successor of AVAS.
On 19 March 2014 Bucharest Court ruled in favour of the Fund and rejected the request of Department of Energy. Against this decision of the Bucharest Tribunal, the Department of Energy file an appeal and on 30 January 2015 the Bucharest Court of Appeal ruled in favour of the Department of Energy obliging the Fund to transfer a number of 524,366 shares in Conpet SA's share capital to Department of Energy. The Fund can file the final appeal against the decision of Bucharest Court of Appeal within 15 days after the full decision is received from the Court.
This litigation was in progress as at 31 December 2014.This indicates that these conditions existed before the end of Fund's reporting period and meet the requirements of an adjusting event after the end of the reporting period. As a result, at 31 December 2014, the Fund recorded an impairment adjustment for the holding in Conpet SA in amount of RON 14.1 million.
In August 2014, the FSA issued Instruction no 2/ 06.08.2014, according to which, starting 1 January 2015 the entities authorised, regulated and monitored by the FSA – Financial Investments and Instruments Sector, including Fondul Proprietatea, will apply IFRS, as endorsed by European Union as basis of accounting. As a result, starting the financial year 2015, the Fund will adopt IFRS as endorsed by European Union as the statutory accounting framework.
This is a translation from the official Romanian version.
(all amounts are expressed in RON, unless otherwise specified)
| No | No of units | Amounts (RON) | |
|---|---|---|---|
| I. Data regarding the financial result | Row | 1 | 2 |
| Units that incurred profit | 01 | 1 | 1,012,898,265 |
| Units that incurred losses | 02 | - | - |
| Of which: | ||||
|---|---|---|---|---|
| II. Data regarding the overdue payments A |
No row B |
For the current activity 2 |
For the investment activity 3 |
|
| Overdue Liabilities-total (row 05+09+15 to 19+23), of which: |
04 | 51,540 | 51,540 | - |
| Overdue Suppliers – total (row 06 to 08), of which: |
05 | 51,540 | 51,540 | - |
| - over 90 days | 07 | 51,540 | 51,540 | - |
| IV. Payments of interest, dividends and royalties during the | No | ||
|---|---|---|---|
| reporting period. Collected subsidies and overdue receivables | row | Amounts | |
| A | B | 1 | |
| Gross dividends income paid to non-residents, of which: | 40 | 2,033,301 | |
| - taxes owed to the state budget | 41 | - | |
| Gross services income paid to non-residents, of which: | 56 | 12,970,143 | |
| - taxes owed to the state budget | 57 | 1,383,213 | |
| Gross services income paid to non-residents in European Union | |||
| member states, of which: | 58 | 12,938,277 | |
| - taxes owed to the state budget | 59 | 1,383,213 |
| No | |||
|---|---|---|---|
| VIII. Other information | row | 31 December 2013 | 31 December 2014 |
| A | B | 1 | 2 |
| Financial assets, gross values (row 78 + 87), of which: | 77 | 13,367,556,872 | 12,708,817,572 |
| Shares held in subsidiaries, investments in associates, other non | |||
| current investments and bonds, gross values (row 79 to 86), of which: |
78 | 13,367,556,872 | 12,708,817,572 |
| - listed shares issued by residents | 79 | 7,856,448,552 | 7,386,580,170 |
| - unlisted shares issued by residents | 80 | 5,327,181,204 | 5,322,237,402 |
| - shares and social parts issued by non-residents | 85 | 183,927,116 | - |
| Trade receivables, advances to suppliers and other similar | |||
| accounts, gross values (account 4092 + 411 + 413 + 418), of | |||
| which: | 90 | 1,485 | - |
| -trade receivables not collected in due time (from account 4092 + from | |||
| account 411 + from account 413) | 92 | 1,485 | - |
| Receivables from social security and state budget (account 431 + | |||
| 437 + 4382 + 441 + 4424 + 4428 + 444 + 445 + 446 + 447 + 4482), | |||
| (row 95 to 99), of which: | 94 | 475,225 | 7,518,509 |
| - receivables from social securities (account 431 + 437 + 4382) | 95 | 38,305 | 38,305 |
| - fiscal receivables from state budget (account 441 + 4424+ 4428 + 444 + 446) |
96 | 436,920 | 7,480,204 |
| Other receivables (account 452 + 456 + 4582 + 461 + 471 + 473), | |||
| of which: | 102 | 17,239,130 | 2,156,778 |
| - settlements from equity investments, settlements with shareholders/ | |||
| associates related to share capital, settlements related to joint | |||
| ventures (from account 452 + 456 + 4582) | 103 | 13,828,455 | - |
| - other receivables from private individuals and legal entities, other | |||
| than receivables from public institutions, (from account 461 + from | |||
| account 471 + from account 473) | 104 | 3,410,675 | 2,156,778 |
| Interests receivables (account 5187), of which: | 106 | 88,875 | 145,932 |
| - from non-residents | 107 | - | - |
| Short term investments, in gross amounts (account 501 + 503 + 505 + 506 + 507+ from the account 508) (row 110 to 118), of |
|||
| which: | 109 | 213,635,521 | 194,588,981 |
| - treasury bonds issued by residents | 113 | 213,635,521 | 194,588,981 |
| Petty cash in RON and foreign currency (row 121 + 122), of | |||
| which: | 120 | 186 | 538 |
| - in RON (account 5311) | 121 | 186 | 538 |
| Bank accounts, in RON and foreign currency (row 124+ 126), of | |||
| which: | 123 | 237,573,429 | 116,157,589 |
| - in RON (account 5121), of which | 124 | 233,727,366 | 116,155,548 |
| Bank accounts in RON opened with non-residents banks | 125 | - | - |
| - in foreign currency (account 5124) ), of which | 126 | 3,846,063 | 2,041 |
| Bank accounts in foreign currency opened with non-residents banks | 127 | - | - |
| No | |||
|---|---|---|---|
| VIII. Other information (continued) | row | 31 December 2013 | 31 December 2014 |
| Liabilities (row 132 + 135 + 138 + 141 + 144 + 147 + 150 + 153 + 156 | |||
| + 159 + 162 + 163 + 167 + 169 + 170 + 175 + 176 + 177 + 183), of | |||
| which: | 131 | 31,164,171 | 41,396,403 |
| Trade payables, advances from clients and other similar | |||
| accounts, gross values (account 401 + 403 + 404 + 405 + 408 + | |||
| 419), of which: | 167 | 17,189,337 | 19,348,098 |
| - external trade payables, advances from foreign clients and other | |||
| similar accounts, gross values (from account 401 + from account 403 | |||
| + from account 404 + from account 405 + from account 408 + from | |||
| account 419) | 168 | 14,856 | 144,211 |
| Liabilities to social security and state budget (account 431 + 437 | |||
| + 4381 + 441 + 4423 + 4428 + 444 + 446 + 447 + 4481), (row 171 to | |||
| 174), of which: | 170 | 2,722,632 | 1,689,981 |
| - liabilities regarding social securities (account 431 + 437 + 4381) | 171 | 25,420 | 25,241 |
| - fiscal liabilities to state budget (account 441 + 4423+ 4428 + 444 + | |||
| 446) | 172 | 2,697,212 | 1,664,740 |
| Other liabilities (account 452 + 456 +457 + 4581+ 462 + 472 + 473 | |||
| + 269 + 509), of which: | 177 | 11,252,202 | 20,358,324 |
| - settlements from equity investments, settlements with shareholders/ | |||
| associates related to share capital, settlement related to joint | |||
| ventures (from account 452 + 456 + 457 + 4581) | 178 | 11,250,020 | 16,890,210 |
| - other liabilities from private individuals and legal entities, other than | |||
| liabilities to public institutions, (from account 462 + from account 472 + | |||
| from account 473) | 179 | 2,182 | 3,468,114 |
| Subscribed paid in share capital (account 1012), (row 186 to 189), | |||
| of which: | 185 | 13,413,137,586 | 11,469,658,154 |
| - listed shares | 186 | 13,413,137,586 | 11,469,658,154 |
| Patents and licences (from account 205) | 190 | 5,139 | 5,139 |
| Nr. | |||||
|---|---|---|---|---|---|
| IX. Subscribed paid in share capital | rd. | 31.12.2013 | 31.12.2014 | ||
| A | B | 1 | 2 | ||
| Amount | % | Amount | % | ||
| (1) | (2) | (1) | (2) | ||
| Subscribed paid in share capital (account 1012) | |||||
| (row 192 + 195 + 199 to 201) | 191 | 13,413,137,586 | 100.00% | 11,469,658,154 | 100.00% |
| - share capital owned by public institutions, of | |||||
| which: | 192 | 3,266,961 | 0.02% | 4,473,771 | 0.04% |
| - public institution with Central subordination | 193 | 3,266,961 | 0.02% | 4,473,771 | 0.04% |
| - owned by companies with private capital | 199 | 9,574,240,933 | 71.38% | 8,227,502,714 | 71.73% |
| - owned by private individuals | 200 | 3,540,182,439 | 26.40% | 2,977,948,011 | 25.97% |
| - owned by other entities | 201 | 295,447,253 | 2.20% | 259,733,658 | 2.26% |
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch acting in the capacity of Sole Director of Fondul Proprietatea S.A.
Grzegorz Maciej Konieczny Mihaela Moleavin
Prepared by Legal Representative Financial Reporting Manager
(all amounts are expressed in RON, unless otherwise specified)
| Gross Values | ||||||||
|---|---|---|---|---|---|---|---|---|
| Decrease | ||||||||
| Elements of non-current assets | No of row |
Initial Balance | Increase | Total | Of which: Dismantling and scrapped |
Final Balance (col. 5=1+2-3) |
||
| A | B | 1 | 2 | 3 | 4 | 5 | ||
| Intangible assets | ||||||||
| Other assets -software | 02 | 905,224 | 27,291 | - - |
932,515 | |||
| Advances and intangible assets in progress |
03 | - | 363,126 | - - |
363,126 | |||
| Total (row 01 to 03) | 04 | 905,224 | 390,417 | - - |
1,295,641 | |||
| Tangible assets | ||||||||
| Computers | 07 | 6,608 | - | - - |
6,608 | |||
| Total (row 05 to 09) | 10 | 6,608 | - | - - |
6,608 | |||
| Financial assets | 11 | 13,367,556,872 | 12,135,292 | 670,874,592 | - | 12,708,817,572 | ||
| Total non-current assets | ||||||||
| (row 4 + 10 + 11) | 12 | 13,368,468,704 | 12,525,709 | 670,874,592 | - | 12,710,119,821 |
| Elements of non-current assets | No of row |
Initial balance |
Amortisation during the year |
Amortisation of the assets removed from the records |
Amortisation at the end of the year (col. 9 = 6+7-8) |
|---|---|---|---|---|---|
| A | B | 6 | 7 | 8 | 9 |
| Intangible assets | |||||
| Other assets - software | 14 | 145,111 | 313,142 | - | 458,253 |
| Total (row 13+14) | 15 | 145,111 | 313,142 | - | 458,253 |
| Tangible assets | |||||
| Computers | 18 | 6,608 | - | - | 6,608 |
| Total (row 16 to 19) | 20 | 6,608 | - | - | 6,608 |
| Total (row 15+20) | 21 | 151,719 | 313,142 | - | 464,861 |
| Elements of non-current assets |
No of row |
Initial balance | Adjustments for impairment during the year |
Reversal of adjustments for impairment |
Final Balance (col. 13=10+11-12) |
|---|---|---|---|---|---|
| A | B | 10 | 11 | 12 | 13 |
| Financial assets | 32 | 2,876,927,396 | 1,677,115,177 | 920,406,966 | 3,633,635,607 |
| Total impairment adjustments (row 25+31+32) |
33 | 2,876,927,396 | 1,677,115,177 | 920,406,966 | 3,633,635,607 |
Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch acting in the capacity of Sole Director of Fondul Proprietatea S.A.
Grzegorz Maciej Konieczny Mihaela Moleavin
Prepared by Legal Representative Financial Reporting Manager
| Item | % o f th |
31 % o f th tal e to |
Dec ber 20 13 em |
% o f th et |
31 % o f th |
Dec ber 20 14 em |
Diff ere nce s |
|||
|---|---|---|---|---|---|---|---|---|---|---|
| e net set as |
et ass |
Cur ren cy |
RO N |
e n et ass |
e tota l as set |
Cu rren cy |
RO N |
RO N |
||
| I. | Tot al a ts sse |
100 .402 9% |
100 .000 0% |
15,0 74,2 32,4 95.9 |
0 100 .426 5% |
100 .000 0% |
13,2 93, 182 ,958 .63 |
(1,7 81,0 49,5 37.2 7) |
||
| 1 | Sec urit ies and rke t in t of wh ich* stru nts mo ney ma me , ou : |
55.4 689 % |
55.2 463 % |
8,32 7,95 7,03 7.42 |
49. 306 5% |
49. 097 2% |
6,52 6,57 0,47 0.26 |
(1,8 01,3 86,5 67. 16) |
||
| 1.1. | ritie d m arke t ins ad mitt ed o ded gula ted ket from Ro ia, o f wh ich: trum ents r tra ut o s ecu s an one y m on a re mar man |
54.6 503 % |
54.4 310 % |
- | 8,20 5,06 3,26 8.47 |
49. 306 5% |
49. 097 2% |
- | 6,5 26, 570 ,470 .26 |
(1,6 78,4 92,7 98.2 1) |
| 1.1. 1 lis ted sha trad ed i n th e la st tr adin g 3 0 da res ys |
54. 025 8% |
53.8 089 % |
- | 8,1 11,2 88, 173 .86 |
49. 011 2% |
48. 803 3% |
- | 6,4 87,4 88, 092 .22 |
(1,6 23, 800 ,08 1.64 ) |
|
| 1.1. 2 lis ted sha trad ed i n th e la adin g 3 0 da not st tr res ys |
0.06 67% |
0.06 65% |
- | 10,0 26, 949 .09 |
0.0 554 % |
0.0 551 % |
- | 7,3 32, 797 .35 |
(2,6 94, 151 .74) |
|
| 3 G 1.1. ent bon ds ove rnm |
0.55 78% |
0.55 56% |
- | 83,7 48, 145 .52 |
0.23 99% |
0.2 388 % |
- | 31, 749 ,58 0.69 |
(51 ) ,998 ,56 4.83 |
|
| 1.1. 4 al lotm righ dmi tted trad ing ent ts n ot a at |
- | - | - | - | - | - | - | - | - | |
| 1.2. | ritie d m arke t ins trum ents ad mitt ed o r tra ded gula ted ket from ber stat ut o f wh ich: s ecu s an one y m on a re mar a m em e, o |
0.8 185 % |
0.8 153 % |
EUR 27 ,402 ,896 .28 |
122 ,893 ,768 .95 |
- | - | - | - | (12 2,8 93,7 68.9 5) |
| 1.2. 1 lis ted sha trad ed i n th e la st tr adin g 3 0 da res ys |
% 0.8 185 |
% 0.8 153 |
EUR 27 ,402 ,89 6.28 |
122 ,893 ,768 .95 |
- | - | - | - | (122 5) ,89 3,7 68.9 |
|
| 1.3. | 1.2. 2 lis ted sha trad ed i n th e la adin g 3 0 da not st tr res ys ritie d m arke t ins trum ents ad mitt ed o stoc k ex cha fro sta te n ot a mbe iate othe |
- | - | - | - | - | - | - | - | - |
| got s ecu s an one y m n a nge m a me r or ne s on an r ulat ed ket from tate t a ber , tha t op tes ular ba sis and is r gniz ed a nd o ed t o th ubli reg mar a s no mem era on a reg eco pen e p c, d by the FS A. app rove |
- | - | - | - | - | - | - | - | - | |
| 2 | New iss ued uriti sec es |
- | - | - | - | - | - | - | - | - |
| 3 | Oth ritie d m arke t ins trum ents ntio ned at art. 18 7 le tter a) of t he Reg ulat ion 15/2 004 t of whi ch: er s ecu s an one y m me no. , ou |
42.4 618 % |
42.2 914 % |
- | 6,37 5,10 1,37 2.72 |
48. 939 8% |
48. 732 1% |
- | 6,4 78,0 30,6 91.2 5 |
102 ,929 ,318 .53 |
| - sh t ad mitt ed a ding t tra are s no |
42.4 618 % |
42.2 914 % |
- | 6,3 75, 101 ,372 .72 |
48. 939 8% |
48. 732 1% |
- | 6,4 78,0 30, 691 .25 |
102 ,92 9,3 18.5 3 |
|
| 4 | Ban k de its, of w hich out pos : |
1.54 59% |
1.53 98% |
232 ,110 ,012 .77 |
0.8 267 % |
0.8 232 % |
109 ,424 ,929 .82 |
(12 2,6 85,0 82.9 5) |
||
| 4.1 | ban k de its m ade wit h cr edit ins titut ions fro m R nia pos oma |
1.54 59% |
1.53 98% |
- | 232 ,11 0,0 12.7 7 |
0.8 267 % |
0.8 232 % |
- | 109 ,424 ,92 9.82 |
(12 2,6 85,0 82.9 5) |
| - in lei |
1.54 59% |
1.53 98% |
232 ,11 0,0 12.7 7 |
0.8 267 % |
0.8 232 % |
109 ,424 ,92 9.82 |
(12 2,6 85,0 82.9 5) |
|||
| - in eur o |
- | - | - | - | - | - | - | - | - | |
| 4.2 | ban k de its m ade wit h cr edit ins titut ions fro n E U s tate pos m a |
- | - | - | - | - | - | - | - | - |
| 4.3 | ban k de its m ade wit h cr edit ins titut ions fro EU stat pos m a n n on- e |
- | - | - | - | - | - | - | - | - |
| 5 | Der ivat ives fina ncia l ins ded gula ted ket trum ents tra on a re mar |
- | - | - | - | - | - | - | - | - |
| 6 | Cur rent ts a nd p etty h ou t of whi ch: acc oun cas |
0.03 70% |
0.03 68% |
5,55 2,4 76.9 5 |
0.0 520 % |
0.0 517 % |
6,87 9,12 8.79 |
1,3 26,6 51.8 4 |
||
| - in lei - in |
0.0 114 % 0.02 56% |
0.0 113 % 0.02 |
- EUR 857 7.4 |
1,70 6,4 14.3 5 |
0.0 520 % |
0.0 517 % |
- - E UR 295 |
6,8 77,0 87.9 0 3.5 7 |
5,1 70,6 73.5 5 05.3 |
|
| eur o - in USD |
55% | ,47 1 USD 115 .92 |
3,84 5,52 8.95 377 |
- | .30 - U SD 103 |
1,32 381 |
(3,8 8) 44,2 3.74 |
|||
| - in GB P |
- - |
- | GB P 29. 05 |
.33 156 .32 |
- | .36 - G BP 58.5 5 |
.07 336 .25 |
179 .93 |
||
| 7 | . (1 ) let g) o f La Mon arke t ins trum ents , oth tha n th tra ded gula ted ket, ord ing to a rt. 1 01 ter ey m ers ose on a re mar acc par w n o. |
- | - | |||||||
| 297 /20 04 ard ing the ital ket, wit h su bse ddit ions d a dme t of whi ch: nt a nts, reg cap mar que an men ou |
0.86 52% |
0.86 17% |
- | 129 ,887 ,375 .20 |
1.2 302 % |
1.2 250 % |
- | 162 ,839 ,40 1.16 |
32, 952 ,025 .96 |
|
| - Tr bills wit h o rigin al m ritie s of les s th 1 ye atu eas ury an ar |
0.86 52% |
0.86 17% |
- | 129 ,88 7,37 5.2 0 |
1.2 302 % |
1.2 250 % |
- | 162 ,83 9,40 1.16 |
32, 952 ,025 .96 |
|
| 8 | Par ticip atio n tit les of U CIT S a nd/o r of OC IU ( A.O .P.C ./ O .P.C .V.M .) |
- | - | - | - | - | - | - | - | - |
| 9 | Oth f wh ich: ts o ut o er a sse |
0.02 42% |
0.02 40% |
- | 3,62 4,2 20. 84 |
0.0 713 % |
0.0 708 % |
- | 9,43 8,33 7.35 |
5,8 14,1 16.5 1 |
| ceiv able late d to ctio nde ttlem tra ent - re s re nsa ns u r se |
0.00 87% |
0.00 87% |
EUR 290 ,80 6.08 |
1,30 4,1 78.0 3 |
- | - | - | - | (1,3 04, 178 .03) |
|
| - di vide nd with hold ing to b d fr Aus trian Ta x A utho ritie tax e re cov ere om s |
0.00 69% |
0.00 69% |
EUR 231 ,495 .58 |
1,03 8,18 8.23 |
0.0 078 % |
0.0 078 % |
EU R 2 31,4 95.5 8 |
1,0 37,5 86.3 4 |
(60 ) 1.89 |
|
| Sta - tax divi den ds t o be red from the te B udg et on rec ove |
- | - | - | - | 0.0 011 % |
0.0 011 % |
- | 149 ,764 .00 |
149 ,764 .00 |
|
| fit to be d fr the Sta te B udg - tax et on pro reco vere om |
0.00 29% |
0.00 29% |
- | 436 ,92 0.00 |
0.0 554 % |
0.0 551 % |
- | 7,3 30,4 40. 00 |
6,8 93,5 20. 00 |
|
| - int ible sets ang as |
0.00 51% |
0.00 50% |
- | 760 ,113 .40 |
0.0 063 % |
0.0 063 % |
- | 837 ,38 7.74 |
77,2 74.3 4 |
|
| - ot her ivab les rece |
0.00 03% |
0.00 02% |
- | 40, 939 .63 |
0.0 003 % |
0.0 002 % |
- | 38, 531 .79 |
(2,4 4) 07.8 |
|
| id e - pr epa xpe nse s |
0.00 03% |
0.00 03% |
- | 43, 881 .55 |
0.0 004 % |
0.0 003 % |
- | 44, 627 .48 |
745 .93 |
|
| II. | Tot al l iab ilitie s |
0.40 29% |
0.40 12% |
60,4 90,4 14.1 6 |
0.4 265 % |
0.4 249 % |
56,4 82,3 44.5 0 |
(4,0 08,0 69.6 6) |
||
| 1 | of f ny ( S.A .I.) Liab ilitie s in rel atio ith t he p ents du e to the inv estm ent t co n w aym ees man age men mpa |
97% 0.08 |
94% 0.08 |
- | 13,4 71,9 52.6 0 |
% 0.1 213 |
% 0.1 208 |
- | 16,0 64,2 03.3 2 |
2,5 92,2 50.7 2 |
| 2 | Liab ilitie late d to the fee yab le to the de itary ba nk s re s pa pos |
0.00 13% |
0.00 12% |
- | 188 ,217 .96 |
0.0 015 % |
0.0 015 % |
- | 201 ,047 .17 |
12, 829 .21 |
| 3 | Liab ilitie late d to the fee yab le to inte diar ies s re s pa rme |
0.0 135 % |
0.0 135 % |
- | 2,02 7,85 1.77 |
- | - | - | - | (2,0 .77) 27, 851 |
| 4 | Liab ilitie late d to issio nd o the r ba nk s ices s re co mm ns a erv |
- | - | - | - | - | - | - | - | - |
| 5 | Inte rest yab le pa |
- | - | - | - | - | - | - | - | - |
| 6 | Issu anc e ex pen se |
- | - | - | - | - | - | - | - | - |
| 7 8 |
Liab ilitie s in rel atio ith t he f /co issio ns t o F SA n w ees mm Aud it fe es |
0.00 84% - |
0.00 84% |
- | 1,26 2,9 76.6 3 |
0.0 088 % - |
0.0 088 % |
- | 1,16 4,8 64.6 3 |
(98 ,112 .00) |
| 9 | Oth er L iabi litie f wh ich: ut o s, o |
0.29 00% |
- 0.28 87% |
- - |
- 43, 539 ,415 .20 |
0.2 949 % |
- 0.2 938 % |
- - |
- 39,0 52,2 29. 38 |
- (4,4 87, 185 .82) |
| pita l re turn to be dist ribu ted to s har eho lder - ca s |
- | - | - | - | 0.0 863 % |
0.0 860 % |
- | 11, 434 ,90 3.6 0 |
11, 434 ,90 3.6 0 |
|
| yab le d ivid end - pa s |
0.0 749 % |
0.0 746 % |
- | 11,2 50, 020 .23 |
0.0 412 % |
0.0 410 % |
- | 5,4 55,3 06. 19 |
(5,7 94, 714 .04) |
|
| - tax divi den ds on |
0.00 95% |
0.00 94% |
- | 1,42 3,83 0.00 |
- | - | - | - | (1,4 .00) 23, 830 |
|
| ovis ions for risk d ex - pr s an pen ses |
0.19 54% |
0.19 45% |
- | 29, 326 ,244 .33 |
0.1 139 % |
0.1 135 % |
- | 15, 085 ,94 1.78 |
(14 ,24 0,30 2.5 5) |
|
| yab les rela ted to b uyb ack der lem sett ent - pa s un |
- | - | - | - | 0.0 262 % |
0.0 261 % |
- | 3,4 68, 113 .79 |
3,4 68, 113 .79 |
|
| larie d re late d co ntrib utio - sa s an ns |
0.00 02% |
0.00 02% |
- | 35,8 25. 00 |
0.0 002 % |
0.0 002 % |
- | 25, 420 .00 |
(10 ,405 .00) |
|
| - VA T pa yab le to Sta te B udg et |
- | - | - | - | 0.0 038 % |
0.0 038 % |
- | 499 ,69 6.28 |
499 ,69 6.28 |
|
| her liab ilitie t of whi ch: - ot s ou |
0.0 100 % |
0.0 100 % |
- | 1,50 3,49 5.64 |
0.0 233 % |
0.0 232 % |
- | 3,0 82,8 47. 74 |
1,5 79,3 52. 10 |
|
| - in lei |
0.00 99% |
0.00 99% |
- | 1,48 8,64 0.0 7 |
0.0 222 % |
0.0 221 % |
- | 2,9 38, 636 .95 |
1,4 49,9 96.8 8 |
|
| - in eur o |
0.00 01% |
0.00 01% |
EUR 3,3 12.5 0 |
14,8 55.5 7 |
0.0 004 % |
0.0 004 % |
EU R 11,4 99.0 0 |
51, 539 .67 |
36,6 84. 10 |
|
| - in GB P |
- | - | - | - | 0.0 007 % |
0.0 007 % |
GB P 16,1 36.3 6 |
92, 671 .12 |
92,6 71. 12 |
|
| III. | (I - II) Net As set Va lue |
100 .000 0% |
99.5 988 % |
15,0 13,7 42,0 81.7 |
4 100 .000 0% |
99. 575 1% |
13,2 36,7 00,6 14.1 3 |
(1,7 1) 77,0 41,4 67.6 |
* = Includes also the value of holdings in companies admitted to trading on Rasdaq market
| Item | 31 Dec ber 20 14 em |
31 Dec ber 20 13 em |
Diff ere nce s |
|---|---|---|---|
| Net As Va lue set |
13,2 36,7 00,6 14.1 3 |
15,0 13,7 42, 081 .74 |
(1,7 77,0 41,4 67.6 1) |
| Num ber of o and ing sha utst res |
10,9 15,9 75,2 73 |
12,0 71,8 82, 101 |
(1,1 55,9 06,8 28) |
| Uni tary t as set valu ne e |
1.21 25 |
1.24 36 |
(0.0 311 ) |
1.1listed shares traded in the last 30 trading days
| Dat f th e o e last tra din g |
Sta ke i n th e is r's sue |
Sta ke i n F ond ul Pro prie tate a to tal |
Sta ke i n F ond ul P riet ate rop a |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Issu er |
Sym bol |
sio n N ses |
f sh s h eld No o. o are |
min al v alu e |
Sha alu re v e |
Tot al v alu e |
ital cap |
et ass |
net set as |
Eva luat ion tho d* me |
|
| SA Alc om |
ALC Q |
15/D ec/2 014 |
89,2 49 |
2.5 | 49. 300 0 |
4,3 99,9 75.7 0 |
9% 71.8 |
31% 0.03 |
32% 0.03 |
Ref pri Av pric ere nce ce - era ge e |
|
| Alro SA |
ALR | 30/ Dec /20 14 |
72,8 84,7 14 |
0.5 | 1.16 00 |
84, 546 ,268 .24 |
10.2 1% |
0.63 60% |
0.63 87% |
Clo sing pri ce |
|
| Ban ca T ilva nia SA rans |
TLV | 30/ Dec /20 14 |
75,0 70,5 21 |
1 | 1.90 80 |
143 ,234 ,554 .07 |
2.87 % |
1.07 75% |
1.08 21% |
Clo sing pri ce |
|
| Gr e S te G SA BRD ocie rale oup ene |
BRD | 30/ /20 Dec 14 |
25, 387 ,456 |
1 | 8.75 00 |
222 ,140 ,240 .00 |
% 3.64 |
11% 1.67 |
82% 1.67 |
Clo sing pri ce |
|
| Con pet SA Plo iest i |
CO TE |
30/ Dec /20 14 |
524 ,366 |
3.3 | 55.0 500 |
28, 866 ,348 .30 |
6.05 % |
0.2 172 % |
0.2 181 % |
Clo sing pri ce |
|
| IOR SA |
IOR B |
14/N ov/2 014 |
2,62 2,2 73 |
0.1 | 0.30 00 |
786 ,68 1.90 |
2.8 1% |
0.00 59% |
0.00 59% |
Ref pri Av pric ere nce ce - era ge e |
|
| Nuc lear elec trica SA |
SN N |
30/ Dec /20 14 |
27,4 08,3 81 |
10 | 7.74 00 |
212 ,140 ,868 .94 |
9.72 % |
1.59 59% |
1.60 27% |
Clo sing pri ce |
|
| Oil Ter min al S A |
OIL | 30/ Dec /20 14 |
36,7 96,0 26 |
0.1 | 0.08 93 |
3,2 85,8 85. 12 |
6.3 1% |
0.02 47% |
0.02 48% |
Clo sing pri ce |
|
| OM V P m S A etro |
SN P |
30/ Dec /20 14 |
10,7 58,6 48, 186 |
0.1 | 0.40 80 |
4,3 89,5 28,4 59.8 9 |
18.9 9% |
33.0 209 % |
33. 161 8% |
Clo sing pri ce |
|
| Pala ce S A |
PAC Y |
8/D ec/2 014 |
5,83 2,4 82 |
0.1 | 0.38 00 |
2,2 16,3 43. 16 |
15.4 2% |
0.0 167 % |
0.0 167 % |
Ref pri Av pric ere nce ce - era ge e |
|
| Prim SA com |
PRI B |
30/ Dec /20 14 |
1,42 7,18 8 |
0.1 | 8.65 00 |
12, 345 ,176 .20 |
68.9 7% |
0.09 29% |
0.09 33% |
Ref pri Av pric ere nce ce - era ge e |
|
| Rom o S A aer |
RO RX |
17/D ec/2 014 |
1,31 1,69 1 |
2.5 | 16.1 000 |
21, 118 ,225 .10 |
20. 99% |
0.15 89% |
0.15 95% |
Ref pri Av pric ere nce ce - era ge e |
|
| Soc ieta tea Nat iona la d e G aze |
SNG | 30/ Dec /20 14 |
38,5 42, 960 |
1 | 35.3 600 |
1,3 62,8 79,0 65.6 0 |
10.0 0% |
10.2 525 % |
10.2 962 % |
Clo sing pri ce |
|
| Nat le R az S A ura omg |
|||||||||||
| Tot al |
6,48 7,48 8,09 2.22 |
48.8 033 % |
49. 011 2% |
* = According to the letter received from the Financial Supervision Authority in December 2013, the securities traded on Rasdaq market (part of Bucharest Stock Exchange) should be valued based on the Reference Price method as at NAV date, respectively the closing price for the securities listed on section RGBS of Rasdaq and the average price for the securities listed on sections XMBS and UNLS of Rasdaq.
| Dat f th e o e |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| last din tra g |
Nom ina l |
Sta ke i n th e |
Sta ke i n F ond ul |
Sta ke i n F ond ul |
||||||
| Issu er |
Sym bol |
sio ses n |
No. of sha he ld res |
val ue |
Sha alu re v e |
Tot al v alu e |
issu er's pita l ca |
Pro prie tate a to tal et ass |
Pro prie tate et a t a n sse |
Eva luat ion tho d me |
| Com al C luj S A cere |
CO CL |
9/O ct/2 013 |
256 ,116 |
2.5 | 3.80 55 |
974 ,649 .44 |
11.3 6% |
0.00 73% |
0.00 74% |
Sha reh olde quit y/sh rs e are |
| For SA sev |
FOR S |
26/ Nov /20 09 |
954 ,376 |
2.5 | 6.4 104 |
6,1 17,9 31.9 1 |
26. 50% |
0.04 60% |
0.04 62% |
Sha reh olde quit y/sh rs e are |
| Mec on S A |
ME CP |
1/Ju l/20 14 |
60,0 54 |
11. 6 |
4.0 000 |
240 ,216 .00 |
12.5 1% |
0.00 18% |
0.00 18% |
Fai lue / sh (la adin ice) st tr r va are g pr |
| Rom plum b S A |
RO MR |
5/O ct/2 001 |
1,59 5,52 0 |
2.5 | - | - | 33.2 6% |
- | - | Pric ed a t ze ro ( y in ins olve ) com pan ncy |
| Tot al |
7,33 2,79 7.35 |
0.05 51% |
0.0 554 % |
Unlisted shares
| Acq uis itio n |
Sta ke i n |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| pric e (t l pr ice ota |
the | Sta ke i n F ond ul |
Sta ke i n F ond ul |
|||||||
| No. of |
Dat f e o |
of a isit ion of cqu |
issu er's |
Pro prie tate a |
Pro prie tate et a n |
|||||
| Issu er |
sha he ld res |
uis itio n* acq |
sha res |
) Sh lue are va |
Tot al v alu e |
ital cap |
tota l as set |
et ass |
Co sta tus mp any |
Eva luat ion tho d me |
| Aer rtul Inte rnat iona l Mi hail Ko galn icea Co nsta nta opo nu - |
23, 159 |
19/J ul/2 005 |
1,4 90,8 98 |
98. 449 8 |
2,2 79,9 98.9 2 |
20. 00% |
0.0 172 % |
0.0 172 % |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| SA | ||||||||||
| Aer rtul Inte rnat iona l Tim isoa Tra ian Vui a S A opo ra - |
32,0 16 |
19/J ul/2 005 |
2,6 52,5 88 |
51. 764 6 |
1,6 57,2 95.4 3 |
20. 00% |
0.0 125 % |
0.0 125 % |
Unl iste d co nies , in fun ctio mpa n |
Sha reh olde quit y/sh rs e are |
| BAT Se rvic e S A |
194 ,022 |
19/J ul/2 005 |
656 ,686 |
- | - | 33. 00% |
- | - | Dis solu tion |
Pric ed a t ze ro |
| Cet SA atea |
354 ,468 |
19/J ul/2 005 |
118 ,840 |
1.0 248 |
363 ,258 .81 |
43% 20. |
% 0.0 027 |
27% 0.00 |
fun Unl iste d co nies , in ctio mpa n |
Sha y/sh reh olde quit rs e are |
| CN Adm inis trat ia C lelo r Na viga bile SA ana |
203 ,160 |
19/J ul/2 005 |
15, 194 ,209 |
79. 968 2 |
16, 246 ,339 .51 |
20. 00% |
0.1 222 % |
0.12 27% |
Unl iste d co nies , in fun ctio mpa n |
Fair lue / sh (Sh hold ers' uity adj uste d w ith d ivid end va are are eq s |
| dec lare d/ s har e) |
||||||||||
| CN Adm inis trat ia P ortu rilor Du ii Fl uvia le S A nar |
27, 554 |
19/J ul/2 005 |
675 ,810 |
128 .519 4 |
3,5 41, 223 .55 |
20. 00% |
0.0 266 % |
0.02 68% |
Unl iste d co nies , in fun ctio mpa n |
Fair lue / sh (Sh hold ers' uity adj uste d w ith d ivid end va are are eq s |
| dec lare d/ s har e) |
||||||||||
| CN Adm inis ia P rilor Du ii M arit ime SA trat ortu nar |
56,6 75 |
19/J ul/2 005 |
1,7 06,0 51 |
- | - | 7.7 0% |
- | - | Unl iste d co nies , in fun ctio mpa n |
Fair lue/ sha Nil va re: |
| CN Adm inis trat ia P ortu rilor Ma ritim e S A |
2,65 1,11 3 |
19/J ul/2 005 |
65, 441 ,294 |
50. 014 4 |
132 ,593 ,826 .03 |
19. 99% |
0.9 975 % |
1.00 17% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| CN Aer rtur i Bu sti S A ** opo cure |
2,87 5,44 3 |
5/F eb/2 010 |
131 ,168 ,263 |
115 .559 9 |
332 ,285 ,905 .54 |
20. 00% |
2.4 997 % |
2.5 103 % |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| Com plex ul E ic O lten ia S A get ner |
27, 387 ,940 |
3 1/M ay/2 012 |
670 ,353 ,852 |
3.9 606 |
108 ,472 ,675 .16 |
21. 55% |
0.8 160 % |
0.8 195 % |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde alua tor's ort) nt v ue a s pe epe rep |
| Com sig SA |
75,6 55 |
19/J ul/2 005 |
132 ,633 |
20. 335 6 |
1,5 38,4 89.8 2 |
69. 94% |
0.0 116 % |
0.0 116 % |
Unl iste d co nies , in fun ctio mpa n |
Sha reh olde quit y/sh rs e are |
| E.O N D istri buti e R nia SA *** oma |
56,7 49, 014 |
19/J ul/2 005 |
169 ,54 1,16 5 |
7.77 90 |
441 ,450 ,579 .91 |
18. 34% |
3.3 209 % |
3.33 50% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| E.O N E ie R nia SA nerg oma |
9,90 3,52 4 |
19/J ul/2 005 |
45, 765 ,358 |
13. 520 4 |
133 ,899 ,605 .89 |
13. 39% |
1.0 073 % |
1.01 16% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde alua tor's ort) nt v ue a s pe epe rep |
| Elec trica Dis trib utie Mu nten ia N ord SA |
7,79 6,02 2 |
19/J ul/2 005 |
165 ,22 1,14 1 |
30. 220 5 |
235 ,599 ,682 .85 |
21. 99% |
1.7 723 % |
1.77 99% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| Elec trica Dis trib utie Tra nsil ia N ord SA van |
8,16 7,8 13 |
19/J ul/2 005 |
113 ,299 ,904 |
24. 682 2 |
201 ,599 ,594 .03 |
22. 00% |
1.5 166 % |
1.52 30% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| Elec trica Dis trib utie Tra nsil ia S ud S A van |
9,32 7,28 2 |
19/J ul/2 005 |
125 ,918 ,629 |
22. 139 3 |
206 ,499 ,494 .38 |
21. 99% |
1.5 534 % |
1.56 01% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde alua tor's ort) nt v ue a s pe epe rep |
| Elec trica Fu rniz SA *** are |
1,36 6,4 12 |
22/J ul/2 011 |
17, 819 ,672 |
92. 481 6 |
126 ,367 ,968 .02 |
22. 00% |
0.9 506 % |
0.95 47% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| Elec troc truc tia E lco Cluj SA ons |
322 ,530 |
19/J ul/2 005 |
319 ,656 |
2.2 248 |
717 ,564 .74 |
7.6 1% |
0.0 054 % |
0.00 54% |
Unl iste d co nies , in fun ctio mpa n |
Sha reh olde quit y/sh rs e are |
| ENE L D istri buti e B t SA ana |
9,22 0,64 4 |
19/J ul/2 005 |
141 ,578 ,929 |
69. 462 7 |
640 ,490 ,827 .98 |
24. 12% |
4.8 182 % |
4.8 387 % |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde alua tor's ort) nt v ue a s pe epe rep |
| ENE L D istri buti e D obr a S A oge |
6,75 3,12 7 |
19/J ul/2 005 |
114 ,760 ,053 |
58. 772 0 |
396 ,894 ,780 .04 |
24. 09% |
2.9 857 % |
2.9 984 % |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| Ene l Di strib utie Mu nten ia S A |
3,25 6,39 6 |
19/J ul/2 005 |
107 ,277 ,263 |
143 .032 0 |
465 ,768 ,832 .67 |
12. 00% |
3.5 038 % |
3.5 188 % |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| Ene l En ie M nia SA unte erg |
444 ,054 |
19/J ul/2 005 |
2,8 33,7 69 |
146 .702 8 |
65, 143 ,965 .15 |
12. 00% |
0.4 901 % |
0.49 21% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde alua tor's ort) nt v ue a s pe epe rep |
| ENE L E ie S A nerg |
1,68 0,00 0 |
19/J ul/2 005 |
26, 124 ,808 |
44. 272 0 |
74, 376 ,960 .00 |
12. 00% |
0.5 595 % |
0.56 19% |
Unl iste d co nies , in fun ctio mpa n |
Fair lue / sh (Va lue er i nde den t va luat or's ort) va are as p pen rep |
| FEC NE SA |
778 ,442 |
19/J ul/2 005 |
- | - | - | 12. 12% |
- | - | Ban krup tcy |
Pric ed a t ze ro |
| GD F S SA En y R ania uez erg om |
2,38 1,86 3 |
19/J ul/2 005 |
62, 522 ,462 |
193 .680 7 |
461 ,320 ,893 .14 |
99% 11. |
% 3.4 704 |
52% 3.48 |
fun Unl iste d co nies , in ctio mpa n |
ue / re ( ort) Fair val sha Val r ind nde nt v alua tor's ue a s pe epe rep |
| Ger ovit al C etic s S A osm |
1,35 0,98 8 |
19/J ul/2 005 |
340 ,996 |
- | - | 9.7 6% |
- | - | Dis solu tion |
Pric ed a t ze ro |
| Hid lect rica SA roe |
89,3 78,2 35 |
19/J ul/2 005 |
3,1 07,6 67,9 96 |
24. 369 4 |
2,17 8,09 3,96 0.0 1 |
19. 94% |
16. 385 0% |
16. 455 0% |
Jud icia l reo nisa tion rga |
Fair lue / sh (Va lue er i nde den luat or's ort) t va va are as p pen rep |
| il SA Pet rote l - L uko |
2,15 2,2 91 |
19/J ul/2 005 |
2,7 87,3 16 |
- | - | 8% 1.1 |
- | - | fun Unl iste d co nies , in ctio mpa n |
ro ( ) Pric ed a t ze ativ uity neg e eq |
| Plaf ar S A |
132 ,784 |
28/J un/2 007 |
3,1 60,3 29 |
13. 811 9 |
1,8 33,9 99.3 3 |
48. 99% |
0.0 138 % |
0.0 139 % |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde nt v alua tor's ort) ue a s pe epe rep |
| Pos ta R na S A oma |
14,8 71,9 47 |
19/J ul/2 005 |
84, 664 ,380 |
3.7 584 |
55, 894 ,725 .60 |
25. 00% |
0.4 205 % |
0.42 23% |
Unl iste d co nies , in fun ctio mpa n |
Fair lue / sh (Va lue er i nde den luat or's ort) t va va are as p pen rep |
| Sal ubr iser v S A |
43, 263 |
19/J ul/2 005 |
207 ,60 1 |
251 .446 7 |
10, 878 ,338 .58 |
17. 48% |
0.0 818 % |
0.08 22% |
Unl iste d co nies , in fun ctio mpa n |
Sha reh olde quit y/sh rs e are |
| Sim tex SA |
132 ,859 |
28/J un/2 007 |
3,0 59,8 58 |
- | - | 30. 00% |
- | - | Jur idic al re anis atio org n |
Pric ed a t ze ro |
| Soc ieta Nat iona la a Sa rii S A tea |
2,00 5,88 4 |
28/J un/2 007 |
76, 347 ,715 |
71. 231 4 |
142 ,88 1,92 5.56 |
48. 99% |
1.0 749 % |
1.07 94% |
Unl iste d co nies , in fun ctio mpa n |
Fair val ue / sha re ( Val r ind nde alua tor's ort) nt v ue a s pe epe rep |
| Wo rld T rad e C ente r Bu sti S A cure |
198 ,860 |
19/J ul/2 005 |
42,4 59 |
- | - | 19. 90% |
- | - | Inso lven cy |
Pric ed a t ze ro |
| Wo rld T rad e H otel SA |
17,9 12 |
19/J ul/2 005 |
17,9 12 |
- | - | 19. 90% |
- | - | Unl iste d co nies , in fun ctio mpa n |
Pric ed a t ze ro ( lack of ual fina ncia l sta tem ents for the ann yea r end ed 3 1 D mbe r 20 13) ece |
| Ziro m S A |
4,7 35,9 21 |
28/J un/2 007 |
47, 146 ,452 |
8.3 063 |
39, 337 ,980 .60 |
100 .00% |
0.2 959 % |
0.29 72% |
Unl iste d co nies , in fun ctio mpa n |
Fair lue / sh (Va lue er i nde den t va luat or's ort) va are as p pen rep |
| Tot al |
5,30 8,0 16,9 47 |
6,47 8,03 0,69 1.25 |
48. 732 1% |
48. 939 8% |
* = where the date of acquisition is shown as earlier than Fondul Proprietatea's date of incorporation (28 December 2005), the date of acquistion refers to the date of publishing in the Official Gazette of Law no. 247 / 19 July 2005, which determined that these investments would be transferred to Fondul Proprietatea on its future incorporation.
** = company formed as a result of the merger between CN "Aeroportul International Henri Coanda - Bucuresti" S.A. and S.N. "Aeroportul International Bucuresti Baneasa - Aurel Vlaicu" S.A.
*** = company formed as a result of the merger between S.C. Electrica Furnizare Transilvania Nord S.A., S.C. Electrica Furnizare Transilvania Sud S.A. and S.C. Electrica Furnizare Muntenia Nord S.A.
**** = company formed as a result of the merger between S.C. Complexul Energetic Turceni S.A., S.C. Complexul Energetic Craiova S.A., S.C. Complexul Energetic Rovinari S.A., Societatea Nationala a Lignitului Oltenia S.A.
***** = on 31 Dec 2014, E.ON Moldova Distribuţie S.A. merged into E.ON Gaz Distribuţie S.A. and the name of the combined entity became E.ON Distribuţie România S.A.
Note: Uzina Mecanica Bucuresti SA was not included in Fondul Proprietatea's portfolio because Ministry of Public Finance actually did not transfer to the Fund the holding in this company.
| Sta ke i n F ond ul |
Sta ke i n F ond ul |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Ser ies and mb f th nu er o e |
Cum ulat ive |
Pro prie tate a |
Pro prie tate et a n |
||||||||
| bon d |
No of b ond s D ate |
of uis itio acq n |
Mat urit y d ate |
Init ial v alu e |
Dai ly in tere st |
inte t res |
Cu lue t va rren |
l as tota set |
et ass |
Inte dia ry B ank rme |
Eva luat ion tho d me |
| RO 141 5CT N02 4 |
2,1 87 |
7/A ug/2 014 |
26/J an/2 015 |
10, 842 ,298 .35 |
542 .11 |
79, 148 .78 |
10, 921 ,447 .13 |
0.0 822 % |
0.08 25% |
BR D G pe S ocie te G rale rou ene |
|
| RO 141 5CT N05 7 |
5,00 0 |
30/J ul/2 014 |
30/ Mar /20 15 |
24, 718 ,687 .60 |
1,1 67.2 7 |
178 ,592 .52 |
24, 897 ,280 .12 |
0.1 873 % |
0.18 81% |
Ban ca C rcia la R ome om ana |
uisi tion ulat ed with the rel ated |
| RO 5CT 141 N07 3 |
11,8 66 |
30/J ul/2 014 |
27/ /20 May 15 |
58, 498 ,508 .44 |
2,7 62.4 3 |
428 ,176 .71 |
58, 926 ,685 .16 |
% 0.4 433 |
52% 0.44 |
ffeis Rai Ban k en |
Acq pri ce cum inte sin he a isiti on d rest ce t ate |
| RO 141 5CT N08 1 |
5,60 0 |
8/A ug/2 014 |
9/Ju n/20 15 |
27, 544 ,934 .72 |
1,4 92.0 2 |
217 ,834 .53 |
27, 762 ,769 .25 |
0.2 088 % |
0.20 97% |
Ban ca C rcia la R ome om ana |
cqu |
| RO 141 5CT N0B 1 |
8,16 9 |
7/A ug/2 014 |
10/A ug/2 015 |
39, 998 ,773 .29 |
2,3 24. 80 |
332 ,446 .21 |
40, 331 ,219 .50 |
0.3 034 % |
0.30 47% |
BR D G pe S ocie te G rale rou ene |
|
| Tot al |
162 ,839 ,401 .16 |
1.2 250 % |
1.23 02% |
| Dat f th e o e |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| last din tra g |
No. of Dat f e o |
Dai ly Cum ulat |
ed Cum ulat ed |
Sta ke i n F P |
Sta ke i n F P |
||||||
| Issu er |
ISIN de co |
sio ses n |
bon ds uis itio acq n |
Co n d ate upo |
Due Da Init ial V alu te e |
inte inte t res |
dis t nt res cou |
Mar ket pric e C alu nt v urre e |
l as tota set s |
net set as |
Eva luat ion tho d me |
| Min istry of Fina nce |
RO 101 5DB N01 0 |
8/D ec/2 014 |
3,00 0 7 /Au g/20 14 |
30/ Apr /20 14 30/ |
Apr /20 15 31, 365 ,692 .58 |
4,9 31.5 1 1 ,213 ,150 |
.69 - |
10,1 78.8 1 3 1,74 9,58 0.69 |
0.2 388 % |
0.2 399 % |
Clo sing pri ce ( Gro rice ) ss p |
| Tot al |
31,7 49,5 80.6 9 |
0.2 388 % |
0.2 399 % |
| Sta ke i n F ond ul |
Sta ke i n F ond ul P riet ate rop a |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Nam f th e b ank e o |
Sta rtin g d ate |
Mat urit y d ate |
Init ial v alu e |
Dai ly In tere st |
Cu mu |
lativ e in tere st |
Cur t va lue ren |
Pro prie tate a to tal et ass |
net set as |
Eva luat ion tho d me |
|
| Uni cred it Ti riac Ba nk |
20- .-20 14 aug |
20- feb .-20 15 |
RO N 25,0 00,0 00.0 0 |
RO N |
1,07 6.39 |
RO N |
144 ,236 .11 |
RO N 25, 144 ,236 .11 |
0.18 92% |
0.19 00% |
|
| Ban ca C rcia la R ome oma na |
30- dec .-20 14 |
5-ia n.-2 015 |
RO N 68,7 00,0 00.0 0 |
RO N |
763 .34 |
RO N |
1,52 6.67 |
RO N 68,7 01,5 26.6 7 |
0.5 168 % |
0.5 190 % |
Ter m d sit v alue mul ated wit h th epo cu e rela ted inte rest |
| BRD G pe S ocie te G rale rou ene |
31- dec .-20 14 |
5-ia n.-2 015 |
RO N 15,5 78,9 98.2 7 |
RO N |
168 .77 |
RO N |
168 .77 |
RO N 15,5 79, 167 .04 |
0.1 172 % |
0.1 177 % |
|
| Tot al |
109 ,424 ,929 .82 |
0.82 32% |
0.82 67% |
| Yea r T- 1 / 3 1 D ec 2 012 |
Yea r T/ 31 Dec 20 13 |
Yea r T/ 31 Dec ber 20 14 em |
|
|---|---|---|---|
| Net As set |
14,9 79,2 02,0 05.6 4 |
15,0 13,7 42, 081 .74 |
13,2 36,7 00,6 14.1 3 |
| NAV /sha re |
1.13 71 |
1.24 36 |
1.21 25 |
Franklin Templeton Investment Management Ltd United Kingdom Bucharest Branch, acting as Sole Administrator on behalf of FONDUL PROPRIETATEA S.A. BRD Groupe Societe Generale
Grzegorz Maciej Konieczny Marius Nechifor Claudia Ionescu Victor Strâmbei
Legal representative Compliance Officer Director Manager Depositary Department
Prepared in accordance with International Financial Reporting Standards
| Independent Auditor's Report. | 115 |
|---|---|
| Statement of Comprehensive Income | 117 |
| Statement of Financial Position | 118 |
| Statement of Changes in Shareholders' Equity. | 119 |
| Statement of Cash Flows | 121 |
| Notes to the Financial Statements | 122 |
| Note | Year ended 31 December 2014 |
Year ended 31 December 2013 As restated |
|
|---|---|---|---|
| Gross dividend income | 7 | 687,411,023 | 652,380,173 |
| Gain on disposal of equity investments available for sale, net |
8 | 645,546,303 | 115,106,096 |
| Interest income | 20,896,979 | 36,143,817 | |
| Reversal of impairment losses on receivables, net | 19,581,829 | 37,674,370 | |
| Net gain/ (loss) from equity instruments at fair value through profit or loss |
9 | (604,219,630) | 422,350,522 |
| Impairment losses on equity investments available for sale |
15 | (344,087,673) | (835,772,382) |
| Net foreign exchange gains / (losses) | (823,827) | 34,102 | |
| Other income /(expenses), net | (6,072,824) | 3,910,032 | |
| Net operating income | 418,232,180 | 431,826,730 | |
| Operating expenses | 10 | (113,641,656) | (88,427,445) |
| Profit before income tax | 304,590,524 | 343,399,285 | |
| Income tax (expense)/ benefit | 11 | 122,595,766 | (382,143,213) |
| Profit/ (Loss) for the period | 427,186,290 | (38,743,928) | |
| Other comprehensive income | |||
| Net change in fair value of available for sale equity investments |
616,204,928 | 4,066,505,032 | |
| Deferred tax on other comprehensive income | 7,806,738 | 16,887,972 | |
| Decrease in fair value reserve following the disposal of available for sale equity investments |
8 | (616,774,944) | (200,205,152) |
| Total other comprehensive income | 7,236,722 | 3,883,187,852 | |
| Total comprehensive income for the period | 434,423,012 | 3,844,443,924 | |
| Basic and diluted earnings per share | 0.0321 | (0.0028) |
The financial statements were authorised for issue on 16 February 2015 by:
Grzegorz Maciej Konieczny
as Legal Representative on behalf of
Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch acting in the capacity of Sole Director of Fondul Proprietatea S.A.
| Note | 31 December 2014 | 31 December 2013 | 1 January 2013 | |
|---|---|---|---|---|
| As restated | As restated | |||
| Assets | ||||
| Cash and current accounts | 12 | 6,879,129 | 5,552,477 | 1,857,628 |
| Deposits with banks | 13 | 109,424,930 | 232,110,013 | 317,309,452 |
| Treasury bills | 14 | 162,839,401 | 129,887,375 | 454,732,857 |
| Government bonds | 14 | 31,749,581 | 83,748,146 | - |
| Dividends receivable | - | - | 799,994 | |
| Equity investments | 15 | 12,927,656,781 | 14,312,229,125 | 11,273,299,681 |
| Deferred tax assets | 16 | 152,678,949 | 342,189 | 362,918,773 |
| Other assets | 9,438,338 | 3,624,222 | 2,189,053 | |
| Total assets | 13,400,667,109 | 14,767,493,547 | 12,413,107,438 | |
| Liabilities | ||||
| Other liabilities | 17 | 52,794,086 | 42,268,236 | 21,064,179 |
| Total liabilities | 52,794,086 | 42,268,236 | 21,064,179 | |
| Equity | ||||
| Share capital | 18 | 11,815,279,887 | 13,778,392,208 | 13,778,392,208 |
| Fair value reserve on available for sale financial assets |
18 | 4,020,355,472 | 4,013,118,750 | 129,930,898 |
| Other reserves | 18 | 610,197,299 | 312,558,751 | 278,451,032 |
| Treasury shares | 18 | (1,189,918,464) | (1,095,093,250) | (120,268,583) |
| Retained earnings | ||||
| Total equity | (1,908,041,171) 13,347,873,023 |
(2,283,751,148) 14,725,225,311 |
(1,674,462,296) 12,392,043,259 |
|
| Total liabilities and equity | 13,400,667,109 | 14,767,493,547 | 12,413,107,438 | |
(all amounts are in RON unless otherwise stated)
| Sh ita l ar e c ap |
Fa ir lue va res erv es on ail for ab le le av sa fin cia l a ts an sse |
Ot he r r ese rv es |
Tr sh ea su ry ar es |
Re tai d e nin ne ar gs / ( Ac lat ed cu mu los ) ses |
T l a ibu tab le ota ttr uit to the eq y ho lde of the Fu nd rs |
|
|---|---|---|---|---|---|---|
| iou Ba lan 31 D mb 20 12 sly d at rte ce ece er , a s p rev re po of ch s in tin oli cie Im ct pa an ge ac co un g p s |
13 77 8, 39 2, 20 8 , - |
12 9, 93 0, 89 8 - |
27 8, 45 1, 03 2 - |
( 12 0, 26 8, 58 3) - |
( 1, 98 1, 18 6, 50 6) 30 6, 72 4, 21 1 |
12 08 5, 31 9, 04 9 , 30 6, 72 4, 21 1 |
| 1 J 20 13 d est ate an ua ry , a s r |
13 77 8, 39 2, 20 8 , |
12 9, 93 0, 89 8 |
27 8, 45 1, 03 2 |
( 12 0, 26 8, 58 3) |
( 1, 67 4, 46 2, 29 5) |
12 39 2, 04 3, 26 0 , |
| Co reh siv e i e f th eri od mp en nc om or e p Pr ofi t/ ( Lo ss) fo r th eri od e p |
- | - | - | - | ( 38 74 3, 92 8) , |
( 38 74 3, 92 8) , |
| Ot he eh siv e i r c om pr en nc om e |
||||||
| Ne ha e i n f air lue of ail ab le for le uit t c ng va av sa eq y inv est nts me in fa ir v alu e f oll ing th e d isp l o f a ila ble fo De cre ase ow osa va r |
- | 4, 06 6, 50 5, 03 2 |
- | - | - | 4, 06 6, 50 5, 03 2 |
| sal ity in stm ts e e qu ve en De fer red n i nd ise d d ire ctl in ta x o nc om e a ex pe ns e r eco gn y |
- | ( 20 0, 20 5, 15 2) |
- | - | - | ( 20 0, 20 5, 15 2) |
| uit eq y |
- | 16 88 97 2 7, , |
- | - | - | 16 88 7, 97 2 , |
| To tal he eh siv e i ot r c om pr en nc om e |
- | 3, 88 3, 18 7, 85 2 |
- | - | - | 3, 88 3, 18 7, 85 2 |
| siv e i e f eri To tal reh th od co mp en nc om or e p |
- | 3, 88 3, 18 7, 85 2 |
- | - | ( 38 74 3, 92 8) , |
3, 84 4, 44 3, 92 4 |
| Tr tio ith rd ed di tly in uit an sac ns w ow ne rs, re co rec eq y |
||||||
| sfe the Tr r t an o o r r ese ve s |
- | - | 34 10 7, 71 9 , |
- | ( 34 10 7, 71 9) , |
- |
| Ac isi tio f tr ha qu n o ea sur y s res |
- | - | - | ( 97 4, 82 4, 66 7) |
- | ( 97 4, 82 4, 66 7) |
| Di vid ds de cla red en |
- | - | - | - | ( 6) 53 6, 43 7, 20 |
( 6) 53 6, 43 7, 20 |
| To tal tio ith de d d ire ctl in tr an sac ns w ow ne rs rec or y uit eq y |
- | - | 34 10 7, 71 9 , |
( 97 4, 82 4, 66 7) |
( 57 0, 54 4, 92 5) |
( 1, 51 1, 26 1, 87 3) |
| Ba lan 31 D mb 20 13 d at est ate ce ece er , a s r |
13 8, 39 2, 20 8 77 , |
4, 01 3, 11 8, 0 75 |
31 2, 8, 1 55 75 |
( 1, 09 09 3, 25 0) 5, |
( 2, 28 3, 1, 14 8) 75 |
14 72 22 31 1 5, 5, , |
(all amounts are in RON unless otherwise stated)
| Ba lan 31 D mb 20 13 d at est ate ce ece er , a s r |
Sh ita l ar e c ap 13 77 8, 39 2, 20 8 , |
Fa ir lue va res erv es on ail ab le for le av sa fin cia l a ts an sse 4, 01 3, 11 8, 75 0 |
Ot he r r ese rv es 31 2, 55 8, 75 1 |
Tr sh ea su ry ar es ( 1, 09 5, 09 3, 25 0) |
Re tai d e nin ne ar gs / ( Ac lat ed cu mu ) los ses ( 2, 28 3, 75 1, 14 8) |
T l a ibu tab le ota ttr uit to the eq y of ho lde the Fu nd rs 14 72 5, 22 5, 31 1 , |
|---|---|---|---|---|---|---|
| Co reh siv e i e f the rio d mp en nc om or pe |
||||||
| fit/ ( ss) fo r th eri od Pro Lo e p |
- | - | - | - | 42 186 29 0 7, , |
42 7, 18 6, 29 0 |
| Ot he eh siv e i r c om pr en nc om e |
||||||
| Ne ha e i n f air lue of ail ab le for le ity t c ng va av sa equ |
||||||
| inv est nts me |
- | 61 6, 20 4, 92 8 |
- | - | - | 61 6, 20 4, 92 8 |
| in fa ir v alu e f oll ing th e d isp l o f a ila ble fo De cre ase ow osa va r sal ity in stm ent e e qu ve s |
- | ( 61 6, 77 4, 94 4) |
- | - | - | ( 61 6, 77 4, 94 4) |
| fer red n i nd ise d d ire ctl in De ta x o nc om e a ex pe nse re co gn y |
||||||
| ity equ |
- | 80 6, 73 8 7, |
- | - | - | 7, 80 6, 73 8 |
| To tal he eh siv e i ot r c om pr en nc om e |
- | 7, 23 6, 72 2 |
- | - | - | 7, 23 6, 72 2 |
| To tal reh siv e i e f the rio d co mp en nc om or pe |
- | 7, 23 6, 72 2 |
- | - | 42 7, 18 6, 29 0 |
43 4, 42 3, 01 2 |
| tio wi di in uit Tr th rd ed tly an sac ns ow ne rs, re co rec eq y |
||||||
| De of th ina l v alu f th ha (n 18 ) ote cre ase e n om e o e s res |
( 0) 67 6, 90 4, 37 |
- | - | 57 37 9, 23 9 , |
- | ( 61 9, 52 5, 13 1) |
| Tr sfe he r to ot an r r ese ve s |
51 47 6, 31 3 , |
( 51 47 6, 31 3) , |
- | |||
| Ac isi tio f tr sh qu n o eas ury are s |
- | - | - | ( 1, 192 25 0, 169 ) , |
- | ( 1, 19 2, 25 0, 16 9) |
| Ca ell ati of sha tre nc on asu ry res |
( 1, 28 6, 20 7, 95 1) |
- | 24 6, 162 23 5 , |
1, 04 0, 04 5, 71 6 |
- | - |
| tio wi ire in To tal th de d d ctl tr an sac ns ow ne rs rec or y |
||||||
| uit eq y |
( 1, 96 3, 11 2, 32 1) |
- | 29 7, 63 8, 54 8 |
( 94 82 5, 21 4) , |
( 51 47 6, 31 3) , |
( 1, 81 1, 77 5, 30 0) |
| Ba lan 31 D mb 20 14 at ce ece er |
11 81 5, 27 9, 88 7 , |
4, 02 0, 35 5, 47 2 |
61 0, 19 7, 29 9 |
( 1, 18 9, 91 8, 46 4) |
( 1, 90 8, 04 1, 17 1) |
13 34 7, 87 3, 02 3 , |
| Year ended | Year ended | |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| Cash flows from operating activities | ||
| Proceeds from sale of equity instruments | 1,080,212,251 | 570,774,069 |
| Acquisitions of treasury bills and bonds | (1,361,207,874) | (1,037,189,824) |
| Disposals and maturity of treasury bills and | ||
| bonds | 1,375,943,403 | 1,283,136,960 |
| Dividends received (net of withholding tax) | 682,066,477 | 696,286,935 |
| Interest received | 20,084,897 | 33,209,977 |
| Suppliers and other taxes and fees paid | (109,633,840) | (78,792,523) |
| Creation of bank deposits with original | ||
| maturities of more than three months | (25,000,000) | - |
| Income tax paid | (23,521,512) | - |
| Remunerations and related taxes paid | (1,130,718) | (968,578) |
| Realised foreign exchange gain / (loss) on cash | ||
| and cash equivalents | (961,424) | 3,330 |
| Subscriptions to share capital increase of | ||
| portfolio companies | - | (42,713,841) |
| Other receipts, net | 1,301,247 | 1,439,583 |
| Net cash flows from operating activities | 1,638,152,907 | 1,425,186,088 |
| Cash flows from financing activities | ||
| Return of capital to shareholders | (589,890,948) | - |
| Acquisition of treasury shares | (1,188,701,549) | (974,824,667) |
| Dividends paid (including related taxes) | (5,975,898) | (530,673,777) |
| Net cash flows used in financing activities | (1,784,568,395) | (1,505,498,444) |
| Net decrease in cash and cash equivalents | (146,415,488) | (80,312,356) |
| Cash and cash equivalents at the beginning of | ||
| the period | 237,573,615 | 317,885,971 |
| Cash and cash equivalents at the end of the | ||
| period | 91,158,127 | 237,573,615 |
| 31 December 2014 | 31 December 2013 | |
| Cash | 6,879,129 | 5,552,477 |
| Bank deposits with original maturities of less | ||
| than three months | 84,278,998 | 232,021,138 |
| 91,158,127 | 237,573,615 |
Fondul Proprietatea SA (referred to as "Fondul Proprietatea" or "the Fund") is an undertaking for collective investments, in the form of a closed end investment company, established in accordance with Law 247/2005 regarding the reform in property and justice, as well as certain adjacent measure, as subsequently amended ("Law 247/2005") and registered in Bucharest on 28 December 2005. The address of the Fund's registered office is 78 - 80, Buzeşti Street, 7th Floor, District 1, Bucharest.
The Fund undertakes its activities in accordance with Law 247/2005, Law 297/2004 regarding the capital market, with subsequent amendments ("Law 297/2004"), and Law 31/1990 regarding companies, republished with subsequent amendments ("Law 31/1990") and it is an entity regulated and monitored by the Financial Supervisory Authority ("FSA"), former National Securities Commission ("CNVM").
In accordance with its Constitutive Act, the main activity of the Fund is the management and administration of its portfolio.
The Fund was established to allow the payment in shares equivalent of compensations in respect of abusive expropriations undertaken by the Romanian State during the communist period, when properties were not returned in kind.
Franklin Templeton Investment Management Ltd United Kingdom Bucharest Branch ("Fund Manager" or "FTIML") was appointed on 29 September 2010 as the Fund Manager and Sole Director of the Fund and the mandate was renewed on 30 September 2014 for two years.
Starting 25 January 2011, Fondul Proprietatea is a listed company on the spot regulated market managed by the Bucharest Stock Exchange in Tier I shares of the Equity Sector of the market (renamed starting 5 January 2015 as Premium Tier shares), under ISIN number ROFPTAACNOR5 with the market symbol "FP".
These financial statements are the annual financial statements of Fondul Proprietatea prepared for the year ended 31 December 2014 in accordance with the International Financial Reporting Standards as adopted by European Union ("IFRS").
The purpose of the preparation of these financial statements in Romania is to comply with CNVM Instruction 6/2011 regarding the application of the International Financial Reporting Standards by the entities regulated and monitored by CNVM, as subsequently amended ("Instruction 6/2011"). According to the article 2 of the Instruction 6/2011, effective from 1 February 2012, the Fund has been required to prepare its separate IFRS financial statements. This regulation is transposing certain articles of Regulation (EC) 1606/2002 of the European Parliament and of the Council from 19 July 2002 on the application of International Financial Reporting Standards.
Due to the application of the Amendments to IFRS 10, IFRS 12 and IAS 27 (Investment Entities), being an investment entity, the Fund shall not consolidate its subsidiaries starting 1 January 2014. In consequence, the Fund will no longer prepare financial statements on consolidated basis effective for the year ended 31 December 2014, the separate financial statements being Fund's only financial statements.
These financial statements have been prepared on the fair value basis for the main part of the Fund's assets, respectively equity investments, treasury bills and short-term government bonds, and on historical cost basis for the rest of the items included in the financial statements.
These financial statements are presented in Romanian Lei (RON), which is the Fund's functional currency. All financial information presented in RON has been rounded to the nearest unit.
The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant impact on the amounts recognised in the financial statements is included in the following notes:
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, with the exceptions stated in note 4.
In addition, the Fund reclassified certain items in the Statement of comprehensive income and Statement of cash flows for the year ended 31 December 2013 in order to be consistent with current period presentation.
The Fund applied the Amendments to IFRS 10, IFRS 12 and IAS 27 (Investment Entities) (the "Amendments"), starting 1 January 2014 when these Amendments became effective, after their adoption by the European Union.
After analysing the criteria presented in the Amendments, the management concluded that Fondul Proprietatea meets the definition of an investment entity. As a result, the Fund changed its accounting policies for investments in subsidiaries and associates, measuring them at fair value through profit or loss.
Please see note 4 for a detailed presentation of the changes in accounting policies.
Subsidiaries are entities controlled by the Fund. The Fund controls an investee when the Fund is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Associates are those entities in which the Fund has significant influence over the financial and operating policies, but not control or joint control. The existence of significant influence is determined, in each reporting period, by analysing the ownership structure of the companies in which the Fund holds 20% or more of the voting power of the investee, their articles of incorporation and the Fund's power to participate in the financial and operating policy decisions of the investee.
However in situations where the Fund holds less than 20% of the voting power of an investee, it is a significant shareholder and demonstrates that it has significant influence through Board representation and participates in the policy making decisions, this investee is considered an associate.
The Fund does not exercise significant influence in a number of companies in which it holds between 20% and 50% of the voting power, where the Fund's rights as minority shareholder are protective in nature, and not participative and where the major shareholder, or a group of shareholders holding majority ownership of the investee, operate without regard to the views of the Fund.
As at 31 December 2014, the Fund had three portfolio companies which met these criteria for classification as associates (as at 31 December 2013: one portfolio company). The lists of subsidiaries and associates as at 31 December 2014 and 31 December 2013 are disclosed in note 20 (b) and (c).
Please see note 4 for a detailed presentation of the application of the Amendments.
Transactions in foreign currencies are translated into the functional currency of the Fund at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
The exchange rates of the main foreign currencies, published by the National Bank of Romania at 31 December 2014 were as follows: 4.4821 RON/EUR, 3.6868 RON/USD and 5.7430 RON/GBP (31 December 2013: 4.4847 RON/EUR, 3.2551 RON/USD and 5.3812 RON/GBP).
The Fund recognises financial assets and liabilities on the date it becomes a party to the contractual provisions of the instrument.
Financial assets and liabilities are recognised initially at fair value plus, in case of financial assets and financial liabilities not measured at fair value through profit or loss, any directly attributable transaction costs (including brokerage fees), except for the investments in equity securities whose fair value cannot be reliably measured, which are recognised initially at cost.
Mergers of portfolio companies are recognised at the date when the merger is registered at the Trade Register.
The bonus shares received by the Fund from portfolio companies that increased their share capital through incorporation of reserves are not recognised.
See accounting policies 3(d), (e), (f), (g) and (h).
The Fund derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.
Gains or losses arising from derecognition of equity investments are calculated as the difference between proceeds on disposal of the financial asset and its fair value at the beginning of the reporting period, and are recorded in profit or loss.
The Fund derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
Financial assets and liabilities are offset and the net amount is presented in the Statement of financial position when, and only when, the Fund has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions.
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal market, or in its absence, the most advantageous market to which the Fund has access at that date.
When available, the Fund measures the fair value of an equity instrument using quoted prices in an active market for that instrument at the reporting date. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair values of equity instruments that are not traded in an active market are determined by independent valuers, using valuation techniques (for the main part of the portfolio).
The Fund uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used are generally recognised as standard within the industry and include the use of comparable recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and other valuation techniques commonly used by market participants, making maximum use of market inputs and relying as little as possible on entity-specific inputs. Some of the inputs to these models may not be observable in the market and are therefore estimated based on various assumptions.
The valuation techniques selected incorporate all the factors that market participants would take into account in pricing a transaction. The valuation reports were prepared as at 30 September 2014 (for 2013: as at 30 September 2013), based on financial information available for the companies under valuation as at the respective dates.
The Fund is also analysing available financial information from the portfolio companies, for the period between the date of the financial information used for the valuation reports until the end of the reporting period. If any significant change which may impact the fair values becomes available, the Fund requests the independent valuer to adjust the valuation so that the financial assets are reflected in the financial statements at their fair value as at the reporting date.
The output of a valuation model is always an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions the Fund holds. Therefore, where appropriate, the valuations are adjusted to allow for additional factors including model risk, liquidity risk and counterparty risk.
The Fund presents the transfers between levels of the fair value hierarchy as at the end of the reporting period during which the change has occurred.
At each reporting date, the Fund assesses whether there is objective evidence that financial assets are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows of the asset that can be estimated reliably.
Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against the financial assets. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Impairment losses on available for sale equity investments carried at fair value are recognised by transferring the cumulative loss that has been recognised directly in equity (other comprehensive income) to profit or loss. The cumulative loss removed from equity (other comprehensive income) and recognised in profit or loss is the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised in profit or loss. If, in a subsequent period, the fair value of an impaired equity investment increases, the recovery is recognised in equity (other comprehensive income).
For assessing which equity investments are impaired, the Fund considers all relevant factors, such as: significant or prolonged decline in fair value below cost, market and industry conditions, to the extent that they influence the recoverable amount of the investment, financial conditions and near-term prospects of the issuer, any specific adverse events that may influence the issuer's operations, recent losses of the issuer, qualified independent auditor's report on the issuer's most recent financial statements, etc.
Financial assets at fair value through profit or loss are initially recognised at fair value and transaction costs are recorded in the profit or loss. Subsequent measurement is at fair value and all changes in fair value are accounted through profit or loss. Financial assets at fair value through profit or loss are not subject to the review for impairment.
As a result of the application of the Amendments, starting 1 January 2014, the Fund changed its accounting policies for its investments in subsidiaries and associates, measuring them at fair value through profit or loss.
In this respect, the Fund retrospectively adjusted both the period that immediately precedes the date of initial application (year ended 31 December 2013) and the Statement of financial position at the beginning of the immediately preceding period (1 January 2013) for the difference between the previous carrying value and the fair value of these equity investments.
Held to maturity investments are non-derivative assets with fixed or determinable payments and fixed maturity that the Fund has the positive intent and ability to hold to maturity, and which are not designated at fair value through profit or loss or as available for sale.
Held to maturity investments are carried at amortised cost using the effective interest method. Any sale or reclassification of a more than insignificant amount of held to maturity investments not close to their maturity would result in the reclassification of all held to maturity investments as available or sale, and prevent the Fund from classifying investment securities as held to maturity for the current and the following two financial years.
The Fund did not classify any investments as held to maturity as at 31 December 2014 and 31 December 2013.
The Fund's investments in treasury bills, government bonds and in equity securities (other than subsidiaries and associates) are classified as available for sale financial assets. The inventory relief method used for the disposal of treasury bills and government bonds is "first-in first-out" (FIFO) method.
Starting 2014, subsequent to initial recognition, equity investments available for sale are measured either at fair value (the main part of the portfolio) or at values considered to be equivalent to fair values, being the values used in the calculation of the net asset value of the Fund, determined in accordance to the regulations issued by the FSA/CNVM and reported monthly (only for an insignificant part of the portfolio). Changes therein, other than impairment losses, are recognised directly in equity (other comprehensive income).
Investments in equity securities that do not have a quoted market price in an active market, and whose fair value were not available, are measured to the values used in the calculation of the net asset value of the Fund, determined in accordance to the regulations issued by the FSA/CNVM and reported on monthly basis. They are estimated as follows:
Before 1 January 2014, equity instruments that were not traded in an active market (including certain equity investments listed on the Bucharest Stock Exchange not actively traded) and that were not assessed by independent valuers, using valuation techniques, for which fair values were not available as at that dates, were carried at cost less impairment.
When an equity investment is derecognised, the cumulative gain or loss previously recognised in equity (other comprehensive income) is transferred to profit or loss.
The equity investments in associates and subsidiaries previously classified under this category were classified as equity investments at fair value through profit or loss as a result of the application of the Amendments in both current and restated periods.
Cash includes petty cash and current accounts held with banks.
Deposits with banks include deposits with original maturities of less than three months and deposits with original maturities of more than three months and less than one year.
Cash and deposits with banks are carried at amortised cost.
Deposits with banks with original maturities of less than three months are included as a component of cash and cash equivalents for the purpose of the Statement of cash flows.
Other financial assets and liabilities are measured at amortised cost using the effective interest method, less any impairment losses (in case of financial assets).
Intangible assets are measured at cost less accumulated amortisation and impairment losses and are amortised on a straight-line basis over the useful life of three years. The Fund intangible assets consist of computer software licenses and software development and implementation costs.
Cost includes the expenditure that is directly attributable to the acquisition of the asset.
Amortisation method, useful lives and residual values are reviewed at each reporting date.
The carrying amounts of the Fund's non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in profit or loss.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount after reversal does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effect.
A provision is recognised if, as a result of a past event, the Fund has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Dividend income related to listed equity investments is recognised in profit or loss on the ex-dividend date. Dividend distributions from unlisted equity investments are recognised in profit or loss as dividend income when declared.
When the Fund receives or chooses to receive dividends in the form of additional shares rather than cash, the dividend income is recognised for the amount of the cash dividend alternative with the corresponding debit treated as an additional investment.
When bonus shares are received with no cash alternative and if only certain shareholders are granted additional shares, these are measured at fair value and a corresponding amount of dividend income is recognised. However, if all shareholders receive bonus shares in proportion to their shareholdings, no dividend income is recognised as the fair value of the Fund's interest should be unaffected by the bonus issue.
The Fund recognises dividends from subsidiaries and associates as income in its financial statements when its right to receive the dividend is established.
For late dividend payments, the Fund initiates legal recovery measures (conciliation, litigations etc.). The Fund is entitled to charge penalties for overdue amounts from net dividends, applying the legal penalty interest rate according to the legislation in force. Penalty income on dividends is recognised when collection is virtually certain.
Dividend income is presented gross of dividend withholding taxes, which are separately recognised as income tax expense.
Interest income and expense are recognised in profit or loss using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability.
Interest income relates to current accounts, deposits held with banks, treasury bills and government bonds.
Gains or losses from the disposal of the financial assets are recognised in profit or loss at the date of derecognising of the financial assets. When an available for sale equity investment carried at fair value is derecognised, on sale or other disposal, or is impaired, the cumulative fair value changes previously recognised in equity (other comprehensive income) are reclassified to profit or loss as a reclassification adjustment.
Foreign currency gains and losses are reported on a net basis and include realised and unrealised foreign exchange differences.
All expenses are recognised in profit or loss on an accrual basis.
Income tax expense comprises current and deferred tax. Current tax includes also dividend withholding taxes.
Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity (other comprehensive income), in which case it is recognised in equity (other comprehensive income).
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that are enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, which intend to settle current tax liabilities and assets on a net basis or whose tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
The effect on deferred tax of any changes in tax rates is charged to profit or loss, except to the extent that it relates to items previously recognised directly in equity (other comprehensive income), which are recognised in equity (other comprehensive income).
The applicable tax rate is 16% (standard tax rate and also, the dividend withholding tax).
The Fund has no employees, but from the benefits point of view, the members of the Board of Nominees and the special administrator appointed in portfolio companies in insolvency have the same legal treatment as employees, even if they have mandate agreements (no labour agreements). During the normal course of business, the Fund makes payments due to the state health, pensions and unemployment funds related to the members of the Board of Nominees and for the special administrator appointed in portfolio companies in accordance with the regulations in force. All members of the Board of Nominees and the special administrator appointed in portfolio companies are members of the pension plan of the Romanian State. Such costs are recognised in profit or loss together with the recognition of the remunerations. The Fund does not operate any other pensions plan or post-retirement benefits plan and therefore has no obligations regarding pensions.
The Fund recognises the treasury shares (repurchases of own shares) at the date when the transaction is recorded at the exchange where shares are traded (trade date); treasury shares are recorded at acquisition cost, including brokerage fees and other costs directly related to the acquisition.
Dividends declared by the Fund are recorded as dividend payable when the Fund's General Shareholders Meeting approves them, as the Fund is then legally obliged to pay them.
According to the provisions of the legislation in force, the Fund is allowed to cancel the rights of shareholders to collect any dividends which have remained unclaimed at least 3 years after the date when the respective dividend distribution commenced. Upon cancellation, the Fund records the value of these dividends as income in profit or loss.
The following standards, amendments to the existing standards issued by the International Accounting Standards Board and adopted by the European Union are effective for the current period:
The adoption of these amendments to the existing standards, except for IAS 27, IAS 36, IAS 39 and Amendments to IFRS 10, will not lead to any changes in the Fund's accounting policies.
At the date of authorisation of these financial statements the following standards, amendments to the existing standards and interpretations issued by IASB and adopted by the EU were in issue but not yet effective:
The Fund anticipates that the adoption of these standards, revisions and interpretations, except for IFRS 13, will have no material impact on its financial statements in the period of initial application.
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board (IASB) except from the following standards, amendments to the existing standards and interpretations, which were not endorsed as at the date of authorisation of these financial statements:
The Fund anticipates that the adoption of these standards, amendments to the existing standards and interpretations, except for IFRS 9, will have no material impact on its financial statements in the period of initial application.
The IASB also provided entities with an accounting policy choice between applying the hedge accounting requirements of IFRS 9 and continuing to apply the existing hedge accounting requirements in IAS 39 "Financial Instruments: Recognition and Measurement" for all hedge accounting. Currently, the Fund does not use any hedging instruments. In consequence according to the Fund's estimates, a change in application of hedge accounting for the portfolio of financial assets or liabilities from IAS 39 to IFRS 9, would not significantly impact the financial statements, if applied as at the balance sheet date.
The Fund applied the Amendments to IFRS 10, IFRS 12 and IAS 27 (Investment Entities), starting 1 January 2014 when these Amendments became effective, after their adoption by the European Union.
After analysing the criteria presented in the Amendments, the management concluded that Fondul Proprietatea meets the definition of an investment entity. As a result, the Fund changed its accounting policies for investments in subsidiaries and associates, measuring them at fair value through profit or loss.
The Amendments introduced an exception to the principle in IFRS 10 Consolidated Financial Statements, that all subsidiaries shall be consolidated. Being an investment entity, the Fund is required, throughout the current period and all comparative periods presented, to apply the exception to consolidation for all of its subsidiaries in accordance with IFRS 10, and it will present the separate financial statements as its only financial statements.
The Amendments define an investment entity and require a parent that is an investment entity to measure its investments in subsidiaries at fair value through profit or loss instead of consolidating those subsidiaries in its consolidated financial statements.
Before adoption of the Amendments, given the materiality consideration (the effect of their consolidation to the Fund was considered immaterial), investments in subsidiaries of the Fund were accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement ("IAS 39") as available for sale financial assets, in both consolidated and separate financial statements, with changes in fair value recorded in equity (other comprehensive income).
Before adoption of the Amendments, the Fund accounted for the investments in associates using equity method in the consolidated financial statements. In the separate financial statements, the investments in associates were accounted for in accordance with IAS 39 as available for sale financial assets, with changes in fair value recorded in equity (other comprehensive income).
All the other equity investments of the Fund remained classified as in previous years, as available for sale financial assets. Where available, equity investments were measured at their fair values.
As at 31 December 2014, all Fund's equity investments were carried at fair value.
In accordance with the transitional provisions of the Amendments, the Fund has applied the new accounting policies retrospectively and restated the comparative information.
In this respect, the Fund retrospectively adjusted both the period that immediately precedes the date of initial application (year ended 31 December 2013) and the statement of financial position at the beginning of the immediately preceding period (1 January 2013) for the difference between the previous carrying value and the current fair value of the equity investments for which the change in accounting policies mentioned before applies.
The cumulative amount of fair value adjustments previously recognised in equity (other comprehensive income) for the equity investments reclassified at fair value through profit or loss was transferred to retained earnings at the beginning of the immediately preceding period (1 January 2013).
The tables below present, in respect of the period immediately preceding the date of initial application of the Amendments, the resulting changes for each financial statement line affected.
Statement of financial position
| 31 December 2013 | 31 December 2013 | ||
|---|---|---|---|
| As restated | Adjustments | As previously reported | |
| Assets | |||
| Cash and current accounts | 5,552,477 | 5,552,477 | |
| Deposits with banks | 232,110,013 | 232,110,013 | |
| Treasury bills | 129,887,375 | 129,887,375 | |
| Government bonds | 83,748,146 | 83,748,146 | |
| Equity instruments | 14,312,229,125 | 5,058,611,960 | 9,253,617,165 |
| Investment in associate | - | (5,059,270,088) | 5,059,270,088 |
| Deferred tax assets | 342,189 | 342,189 | |
| Other assets | 3,624,222 | 3,624,222 | |
| Total assets | 14,767,493,547 | (658,128) | 14,768,151,675 |
| Liabilities | |||
| Other liabilities | 42,268,236 | 42,268,236 | |
| Total liabilities | 42,268,236 | - | 42,268,236 |
| Equity | |||
| Share capital | 13,778,392,208 | 13,778,392,208 | |
| Fair value reserve on | |||
| available for sale financial assets |
4,013,118,750 | (29,665,250) | 4,042,784,000 |
| Other reserves | 312,558,751 | 312,558,751 | |
| Treasury shares | (1,095,093,250) | (1,095,093,250) | |
| Accumulated losses | (2,283,751,148) | 29,007,122 | (2,312,758,270) |
| Total equity | 14,725,225,311 | (658,128) | 14,725,883,439 |
| Total liabilities and equity | 14,767,493,547 | (658,128) | 14,768,151,675 |
| Year ended 31 December 2013 As restated |
Adjustments | Reclassifications | Year ended 31 December 2013 As previously reported |
|
|---|---|---|---|---|
| Net gain from equity instruments at fair value through profit | ||||
| or loss | 422,350,522 | 422,350,522 | - | |
| Gain on disposal of equity investments available for sale | 115,106,096 | (1,827,208) | (991,122) | 117,924,426 |
| Gross dividend income | 652,380,173 | 318,951,645 | 333,428,528 | |
| Reversal of impairment losses on receivable, net | 37,674,370 | 37,674,370 | - | |
| Interest income | 36,143,817 | 36,143,817 | ||
| Net foreign exchange gains | 34,102 | 34,102 | ||
| Impairment losses on equity investments available for sale | (835,772,382) | (835,772,382) | ||
| Reversal of impairment losses/ (impairment losses) on dividends receivable, net |
- | (46,907,126) | 46,907,126 | |
| Reversal of impairment losses/ (impairment losses) on | ||||
| receivables in respect of equity contributions, net | - | 9,038,221 | (9,038,221) | |
| Impairment losses on other assets | - | 194,535 | (194,535) | |
| Other income, net | 3,910,032 | 779,514 | 3,130,519 | |
| Share of profit in associates (net of income tax) | - | (916,085,196) | 916,085,196 | |
| Net operating income | 431,826,730 | (176,610,237) | (211,608) | 608,648,576 |
| Personnel expenses | - | 947,635 | (947,635) | |
| Operating expenses | (88,427,445) | (736,027) | (87,691,418) | |
| Operating expenses | (88,427,445) | - | 211,608 | (88,639,053) |
| Profit before income tax | 343,399,285 | (176,610,237) | - | 520,009,523 |
| Income tax expense | (382,143,213) | (101,423,029) | (280,720,184) | |
| Profit /(Loss) of the period | (38,743,928) | (278,033,266) | - | 239,289,339 |
| Other comprehensive income | ||||
| Net change in fair value of available for sale equity | ||||
| investments | 4,066,505,032 | 2,367,574 | 4,064,137,458 | |
| Deferred tax on other comprehensive income | 16,887,972 | - | 16,887,972 | |
| Decrease in fair value reserve following the disposal of | (200,205,152) | (168,172,328) | ||
| available for sale equity investments Total other comprehensive income |
3,883,187,852 | 2,367,574 | - | 3,912,853,102 |
| Total comprehensive income for the period | ||||
| 3,844,443,924 | (275,665,692) | - | 4,152,142,441 | |
| Basic and diluted earnings per share | (0.0028) | 0.0174 |
The Fund's investment portfolio comprises listed and unlisted equity investments.
The Fund's investing activities expose it to various types of risks that are associated with the financial instruments and with the markets in which it invests. The most important types of financial risks to which the Fund is exposed are market risk, credit risk and liquidity risk.
Starting 29 September 2010 the Fund Manager implemented financial risk management procedures consistent with those applied globally by Franklin Templeton Investments.
Market risk is the risk that changes in market prices and rates, such as equity prices, interest rates and foreign exchange rates will affect the Fund's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Equity price risk is the risk that the value of an equity instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to its issuer or factors affecting all instruments traded in the market.
Equity price risk arises from changes in the value of equity securities and is the primary risk impacting the Fund. Diversification across securities and industries, to the extent possible given the unique investment mandate, is the primary technique for mitigating equity price risk. The companies in which the Fund holds equity securities operate in different industries. The Fund has concentrated exposures to the "Oil and gas", "Power and gas utilities industries: transport, distribution and supply" and "Power utilities: generation" sectors.
The Fund's exposure to industries was as follows:
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Oil and gas | 5,755,693,411 | 7,151,416,711 |
| Power and gas utilities: transport, distribution, supply |
3,449,421,000 | 3,259,422,077 |
| Power utilities: generation | 2,498,708,869 | 2,733,504,783 |
| Infrastructure | 488,604,858 | 361,491,795 |
| Banks | 365,374,794 | 458,174,184 |
| Heavy industry | 203,995,225 | 147,808,896 |
| Aluminium | 84,546,268 | 105,464,181 |
| Postal services | 55,896,000 | 60,790,000 |
| Others | 25,416,356 | 34,156,498 |
| 12,927,656,781 | 14,312,229,125 |
The Fund has equity investments of RON 6,417,755,342 at 31 December 2014 (31 December 2013: RON 8,178,000,261) listed on the Bucharest Stock Exchange (at either BSE or RASDAQ segment) or Vienna Stock Exchange. During 2014 the Fund disposed of the entire holdings in equity investments listed on Vienna Stock Exchange.
As at 31 December 2014, for such investments, a ten per cent increase in the BET-BK index at the reporting date would have increased equity by RON 599,484,456 (31 December 2013, computed based on BET-C, respectively ATX index: RON 864,618,657) out of which impact on other comprehensive income of RON 167,993,808 (31 December 2013: RON 228,773,512) and impact on profit or loss account of RON 431,490,648 (31 December 2013: RON 635,845,145).
An equal change in the opposite direction as at 31 December 2014 would have decreased equity by RON 599,484,456 (31 December 2013, computed based on BET-C, respectively ATX index: RON 864,618,657) out of which impact on other comprehensive income of RON 167,993,808 (31 December 2013: RON 228,773,512) and impact on profit or loss account of RON 431,490,648 (31 December 2013: RON 635,845,145).
This analysis assumes that all other variables remain constant.
The Fund places cash into fixed rate bank deposits, treasury bills and short-term government securities with original maturities of up to one year.
At the reporting date the interest rate profile of the Fund's interest-bearing financial instruments was:
| Fixed rate instruments | 31 December 2014 | 31 December 2013 |
|---|---|---|
| Bank deposits with original maturities of more than three months and less than one year |
25,000,000 | - |
| Bank deposits with original maturities of less than three months |
84,278,998 | 232,021,138 |
| Treasury bills | 161,603,202 | 128,173,052 |
| Government bonds | 30,536,430 | 80,470,607 |
| 301,418,630 | 440,664,797 |
Fund's exposure to currency risk is insignificant. The Fund held current accounts with banks and receivables and payables denominated in foreign currencies, (EUR, USD or GBP), but the balances were immaterial during the reporting period.
The local currency slightly appreciated compared to the EUR during 2014 (from 4.4847 RON/EUR at 31 December 2013 to 4.4821 RON/EUR at 31 December 2014), but depreciated compared to the USD (from 3.2551 RON/USD at 31 December 2013 to 3.6868 RON/USD at 31 December 2014) and to GBP (from 5.3812 RON/GBP at 31 December 2013 to 5.7430 RON/GBP at 31 December 2014).
The Fund's exposure to currency risk was as follows:
(iii) Currency risk (continued)
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| RON | ||
| Monetary assets | ||
| Petty cash | 538 | 186 |
| Current accounts with banks | 6,876,550 | 1,706,229 |
| Bank deposits with original maturities of more than | ||
| three months and less than one year | 25,000,000 | - |
| Bank deposits with original maturities of less than | ||
| three months | 84,278,998 | 232,021,138 |
| Interest accrued on bank deposits | 145,932 | 88,875 |
| Treasury bills | 162,839,401 | 129,887,375 |
| Government bonds | 31,749,581 | 83,748,146 |
| Other receivables | 8,400,752 | 1,281,855 |
| 319,291,752 | 448,733,804 | |
| Monetary liabilities | ||
| Other liabilities | (52,649,875) | (42,253,379) |
| (52,649,875) | (42,253,379) | |
| 266,641,877 | 406,480,425 | |
| 31 December 2014 | 31 December 2013 | |
| EUR (in RON equivalent) | ||
| Monetary assets | ||
| Current accounts with banks | 1,324 | 3,845,529 |
| Other receivables | 1,037,586 | 2,342,366 |
| 1,038,910 | 6,187,895 | |
| Monetary liabilities | ||
| Other liabilities | (51,540) | (14,856) |
| (51,540) | (14,856) | |
| 987,370 | 6,173,039 |
(iii) Currency risk (continued)
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| USD (in RON equivalent) | ||
| Monetary assets | ||
| Current accounts with banks | 381 | 377 |
| GBP (in RON equivalent) | ||
| Monetary assets | ||
| Current accounts with banks | 336 | 156 |
| Monetary liabilities | ||
| Other liabilities | (92,671) | - |
| (92,671) | - | |
| (92,335) | 156 |
A ten percent strengthening of the RON against the EUR, USD and GBP respectively as at 31 December 2014 and 31 December 2013 would have the following impact in profit or loss (the analysis assumes that all other variables remain constant):
| Profit or loss | 31 December 2014 | 31 December 2013 |
|---|---|---|
| EUR | (98,737) | (617,304) |
| USD | (38) | (38) |
| GBP | 9,234 | (16) |
As at 31 December 2014, the Fund did not hold any equity investment denominated in other currency than RON.
As at 31 December 2013, the Fund held equity investments denominated in EUR with a fair value of EUR 27,402,896 equivalent of RON 122,893,769.
Credit risk is the risk of financial loss to the Fund if counterparties to financial instruments fail to meet their contractual obligations, and arises principally from cash and deposits with banks, treasury bills, government bonds and dividends receivable. The Fund's maximum exposure to credit risk from cash and deposits with banks was RON 116,303,521 at 31 December 2014 (31 December 2013: RON 237,662,304). Cash and deposits are held with the following banks:
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Cash and deposits held with | ||
| BCR | 68,759,620 | 58,733 |
| Unicredit Tiriac Bank | 25,144,609 | 75,057,641 |
| BRD - Groupe Societe Generale | 22,396,694 | 29,511,355 |
| ING Bank | 1,834 | 75,029,849 |
| CITI Bank | 394 | 58,003,992 |
| Raiffeisen Bank | 370 | 427 |
| RBS Bank* | - | 306 |
| 116,303,521 | 237,662,304 |
*in 2014, the corporate clients' portfolio of RBS Bank was taken over by Unicredit Tiriac Bank
Current accounts and deposits are held with banks in Romania. The Fund Manager implemented a formal policy regarding bank counterparty risks and limits. The Fund only establishes new deposits with financial institutions where the institution or the institution's corporate parent, have a credit rating above investment grade (BBB- or better). The counterparty credit risk is also diversified by allocating the cash and cash equivalents across several banks. The selection of financial institutions as deposit takers was made and the exposure limits were decided upon based on their credit ratings.
The Fund's maximum exposure to credit risk from treasury bills was RON 162,839,401 as at 31 December 2014 (31 December 2013: RON 129,887,375).
| Value as at | |||||
|---|---|---|---|---|---|
| ISIN | 31 December 2014 | Settlement Date | No. of units | Interest rate | Maturity date |
| RO1415CTN057 | 24,897,280 | 01-Aug-14 | 5,000 | 1.70% | 30-Mar-15 |
| RO1415CTN024 | 10,921,447 | 08-Aug-14 | 2,187 | 1.80% | 26-Jan-15 |
| RO1415CTN0B1 | 40,331,220 | 11-Aug-14 | 8,169 | 2.09% | 10-Aug-15 |
| RO1415CTN081 | 27,762,769 | 08-Aug-14 | 5,600 | 1.95% | 09-Jun-15 |
| RO1415CTN073 | 58,926,685 | 30-Jul-14 | 11,866 | 1.70% | 27-May-15 |
| Total | 162,839,401 |
As of 31 December 2014, the Fund held the following treasury bills with discount, RON denominated:
| Value as at | Settlement | ||||
|---|---|---|---|---|---|
| ISIN | 31 December 2013 | Date | No. of units | Interest rate | Maturity date |
| RO1314CTN0E7 | 53,519,131 | 23-Dec-13 | 10,800 | 2.72% | 30-Apr-14 |
| RO1314CTN060 | 44,630,882 | 27-Jun-13 | 4,500 | 4.35% | 12-Mar-14 |
| RO1314CTN060 | 31,737,362 | 02-Jul-13 | 3,200 | 4.35% | 12-Mar-14 |
| Total | 129,887,375 |
The Fund's maximum exposure to credit risk from government bonds was RON 31,749,581 as at 31 December 2014 (31 December 2013: RON 83,748,146).
As of 31 December 2014, the Fund held the following government bonds, denominated in RON:
| Value as at | Settlement | ||||
|---|---|---|---|---|---|
| ISIN | 31 December 2014 | Date | No. of units | Interest rate | Maturity date |
| RO1015DBN010 | 31,749,581 | 07-Aug-14 | 3,000 | 6.00% | 30-Apr-15 |
| Total | 31,749,581 |
As of 31 December 2013, the Fund held the following government bonds, denominated in RON:
| Value as at | |||||
|---|---|---|---|---|---|
| ISIN | 31 December 2013 | Settlement Date | No. of units | Coupon rate | Maturity date |
| RO1214DBN027 | 48,971,641 | 14-Aug-13 | 4,647 | 5.95% | 23-Apr-14 |
| RO1214DBN027 | 34,776,504 | 23-Dec-13 | 3,300 | 5.95% | 23-Apr-14 |
| Total | 83,748,146 |
The Fund has no credit risk from dividend receivable as at 31 December 2014 and 31 December 2013.
Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Fund's reputation.
The following are the residual maturities of the Fund's financial assets and financial liabilities:
| Less than 1 month | 1 to 3 months | 3 to 12 months No fixed maturity | ||
|---|---|---|---|---|
| 31 December 2014 | ||||
| Financial assets | ||||
| Cash and current accounts | 6,879,129 | - | - | - |
| Deposits with banks | 84,280,694 | 25,144,236 | - | - |
| Treasury bills | 10,921,447 | 24,897,280 | 127,020,674 | - |
| Government bonds | - | - | 31,749,581 | - |
| Equity investments at fair value | ||||
| through profit and loss | - | - | - | 4,591,866,101 |
| Equity instruments available for sale | - | - | - | 8,335,790,680 |
| Other receivables | 9,438,338 | - | - | - |
| 111,519,608 | 50,041,516 | 158,770,255 | 12,927,656,781 | |
| Financial liabilities | ||||
| Other liabilities | 52,794,086 | - | - | - |
| 52,794,086 | - | - | - | |
| Less than 1 month | 1 to 3 months | 3 to 12 months | No fixed maturity | |
| 31 December 2013 | ||||
| Financial assets | ||||
| Cash and current accounts | 5,552,477 | - | - | - |
| Deposits with banks | 232,110,013 | - | - | - |
| Treasury bills | - | 76,368,245 | 53,519,130 | - |
| Government bonds | - | - | 83,748,146 | - |
| Equity investments at fair value | ||||
| through profit and loss | - | - | - | 5,127,828,720 |
| Equity instruments available for sale | - | - | - | 9,184,400,405 |
| Other receivables | 3,624,222 | - | - | - |
| 241,286,712 | 76,368,245 | 137,267,276 | 14,312,229,125 | |
| Financial liabilities | ||||
| Other liabilities | 42,268,236 | - | - | - |
| 42,268,236 | - | - | - |
The Fund's equity investments include unlisted securities, which are not traded in a regulated market and generally may be considered be illiquid. As a result, the Fund may not be able to liquidate quickly some of its investments in these instruments in order to meet its liquidity requirements, or to respond to specific events such as deterioration in the credit worthiness of any particular issuer.
Not all shares listed on Bucharest Stock Exchange are considered liquid due to insufficient volumes of transactions. The Fund prudently manages liquidity risk by maintaining sufficient liquid assets to finance current liabilities.
On 1 January 2007 Romania became a member of the European Union and therefore has to apply detailed and complex rules on the basis of the EU Treaties, Regulations and Directives. The Fund had to conform to EU legislation from 1 January 2007 and, therefore, had to apply the changes arising from the EU legislation. These changes were implemented and the tax authorities had up to 5 years to audit the way these changes were implemented.
Interpretation of the text and practical implementation procedures of the EU tax regulations could vary, and there is a risk that certain transactions, for example, could be viewed differently by the tax authorities as compared to the Fund's treatment.
Furthermore, the Romanian Government has a number of agencies that are authorised to conduct audits (controls) of companies operating in Romania. These controls are similar in nature to tax audits performed by tax authorities in many countries, but may extend not only to tax matters but to other legal and regulatory matters in which the applicable agency may be interested. It is likely that the Fund will continue to be subject to regular controls as new laws and regulations are issued.
The ongoing uncertainty about the direction of European fiscal politics, responding central bank action and fears of a renewed possible breakup of the European Union (or single countries leaving, like a now less unthinkable Greek exit), continue to add volatility to equity markets, especially for countries with strong links to Europe.
Further uncertainty is linked to recent spikes in volatility in commodity markets, especially from the dramatic fall in oil prices. Companies with a heavy reliance on commodities will face increased uncertainty and their cash flow can be affected.
Both political uncertainty and volatility in commodities can impact the value of the Romanian economy and consequently also the Fund's portfolio companies and its shares.
Management is unable to predict all developments which could have an impact on the Romanian economy and consequently what effect, if any, they could have on the performance of the Fund and its financial statements.
Management is unable to reliably estimate the effects on the Fund's financial statements of any further deterioration in the liquidity of the financial markets, devaluation of financial assets influenced by the increased volatility in the currency and equity markets.
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Fund's processes, service providers, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Fund's operations.
The Fund's objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Fund's reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
Fund's policy is to maintain a strong capital base so as to maintain shareholders' confidence and to sustain future developments.
The Fund's capital (shareholders' equity) comprises share capital, fair value and other reserves and retained earnings. The shareholders' equity was RON 13,347,873,023 at 31 December 2014 (31 December 2013: RON 14,725,225,311).
The Fund was not subject to externally imposed capital requirements.
(all amounts are in RON unless otherwise stated)
The table below presents the carrying amounts and fair values of the Fund's financial assets and financial liabilities:
| A fa ir lu t va e |
||||||
|---|---|---|---|---|---|---|
| Lo d an s a n |
hr h f i t t o ou g p ro r |
O he ise d t t r a m or |
To l c in ta ar ry g |
|||
| iv b les re ce a |
Av i fo la b le le a r s a |
lo ss |
t co s |
t am ou n |
ir Fa lu va e |
|
| 3 1 De be 2 0 1 4 ce m r |
||||||
| Ca h a d c t a nt s n ur ren cc ou s |
6, 8 9, 1 2 9 7 |
- | - | - | 6, 8 9, 1 2 9 7 |
6, 8 9, 1 2 9 7 |
| its it h ba ks De p os n w |
1 0 9, 4 2 4, 9 3 0 |
- | - | - | 1 0 9, 4 2 4, 9 3 0 |
1 0 9, 4 2 4, 9 3 0 |
| b i l ls Tr ea su ry |
- | 1 6 2, 8 3 9, 4 0 1 |
- | - | 1 6 2, 8 3 9, 4 0 1 |
1 6 2, 8 3 9, 4 0 1 |
| bo ds Go t ve rn m en n |
- | 3 1, 7 4 9, 5 8 1 |
- | - | 3 1, 7 4 9, 5 8 1 |
3 1, 7 4 9, 5 8 1 |
| Eq ity inv tm ts u es en |
- | 8, 3 3 5, 7 9 0, 6 8 0 |
4, 5 9 1, 8 6 6, 1 0 1 |
- | 1 2, 9 2 7, 6 5 6, 7 8 1 |
1 2, 9 2 7, 6 5 6, 7 8 1 |
| O he iva b les t r r ec e |
9, 4 3 8, 3 3 8 |
- | - | - | 9, 4 3 8, 3 3 8 |
9, 4 3 8, 3 3 8 |
| he l ia b i l it ies O t r |
- | - | - | ( ) 5 2, 7 9 4, 0 8 6 |
( ) 5 2, 7 9 4, 0 8 6 |
( ) 5 2, 7 9 4, 0 8 6 |
| 1 2 5, 7 4 2, 3 9 7 |
8, 5 3 0, 3 7 9, 6 6 2 |
4, 5 9 1, 8 6 6, 1 0 1 |
( 5 2, 7 9 4, 0 8 6 ) |
1 3, 1 9 5, 1 9 4, 0 7 4 |
1 3, 1 9 5, 1 9 4, 0 7 4 |
|
| A fa ir lu t va e |
||||||
| Lo d an s a n |
hr h f i t t o ou g p ro r |
O he ise d t t r a m or |
To l c in ta ar ry g |
|||
| iv b les re ce a |
Av i la b le fo le a r s a |
lo ss |
t co s |
t am ou n |
Fa ir lu va e |
|
| 3 1 De be 2 0 1 3 ce m r |
||||||
| Ca h a d c t a nt s n ur ren cc ou s |
2, 4 5, 5 5 7 7 |
- | - | - | 2, 4 5, 5 5 7 7 |
2, 4 5, 5 5 7 7 |
| its it h ba ks De p os w n |
2 3 2, 1 1 0, 0 1 3 |
- | - | - | 2 3 2, 1 1 0, 0 1 3 |
2 3 2, 1 1 0, 0 1 3 |
| b i l ls Tr ea su ry |
- | 1 2 9, 8 8 7, 3 7 5 |
- | - | 1 2 9, 8 8 7, 3 7 5 |
1 2 9, 8 8 7, 3 7 5 |
| bo ds Go t ve rn m en n |
- | 8 3, 7 4 8, 1 4 6 |
- | - | 8 3, 7 4 8, 1 4 6 |
8 3, 7 4 8, 1 4 6 |
| ity inv Eq tm ts es en u |
- | 9, 1 8 4, 4 0 0, 4 0 5 |
5, 1 2 7, 8 2 8, 7 2 0 |
- | 1 4, 3 1 2, 2 2 9, 1 2 5 |
1 4, 3 1 2, 2 2 9, 1 2 5 |
| he iva b les Ot r r ec e |
3, 6 2 4, 2 2 2 |
- | - | - | 3, 6 2 4, 2 2 2 |
3, 6 2 4, 2 2 2 |
| Ot he l ia b i l it ies r |
- | - | - | ( 4 2, 2 6 8, 2 3 6 ) |
( 4 2, 2 6 8, 2 3 6 ) |
( 4 2, 2 6 8, 2 3 6 ) |
| 2 4 1, 2 8 6, 7 1 2 |
9, 3 9 8, 0 3 5, 9 2 6 |
5, 1 2 7, 8 2 8, 7 2 0 |
( 4 2, 2 6 8, 2 3 6 ) |
1 4, 7 2 4, 8 8 3, 1 2 2 |
1 4, 7 2 4, 8 8 3, 1 2 2 |
| Year ended | Year ended | |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| OMV Petrom S.A. | 331,366,364 | 318,951,645 |
| Romgaz S.A. | 148,525,046 | 158,941,766 |
| GDF Suez Energy Romania S.A. | 33,600,000 | 22,800,000 |
| Nuclearelectrica S.A. | 33,164,141 | 2,769,286 |
| Electrica Distributie Muntenia Nord S.A. | 23,212,248 | 16,206,229 |
| Transelectrica S.A. | 22,046,532 | 3,997,666 |
| Societatea Nationala a Sarii S.A. | 19,808,540 | 9,297,643 |
| Electrica Furnizare S.A. | 19,637,608 | 9,260,589 |
| Electrica Distributie Transilvania Sud S.A. | 12,733,949 | - |
| CN Aeroporturi Bucuresti S.A. | 12,318,257 | 9,135,228 |
| Electrica Distributie Transilvania Nord S.A. | 11,666,197 | - |
| CN Administratia Porturilor Maritime S.A. | 10,118,830 | 5,355,572 |
| Conpet S.A. | 8,773,485 | 8,403,049 |
| CN Administratia Canalelor Navigabile S.A. | 175,612 | 856,672 |
| Transgaz S.A. | - | 37,568,760 |
| Complexul Energetic Oltenia S.A. | - | 12,312,014 |
| Raiffeisen Bank International AG | - | 4,433,195 |
| E.ON Gaz Distributie S.A. | 29,933,522 | |
| Aeroportul International Timisoara - Traian Vuia | ||
| S.A. | - | 672,674 |
| Others | 264,214 | 1,484,663 |
| 687,411,023 | 652,380,173 |
The dividend income was subject to 16% withholding tax for Romanian equity investments and 5% withholding tax for Austrian equity investments. In cases where the relevant shareholding was larger than 10% of total issued shares for at least one year (2013- two years) prior to the dividend distribution, no withholding tax was due.
In 2014, the Fund sold its entire holdings in Erste Group Bank, Raiffeisen Bank, Resib SA, Severnav SA, Transelectrica SA, Transilvania Com SA, Turdapan SA and part of its holding in Conpet SA, Oil Terminal SA, Romgaz SA. In October 2014 Carbid Fox SA was erased from Romanian Trade Register, at the end of bankruptcy procedure.
The net gain on disposal of these equity investments was RON 645,546,303 representing the difference between the proceeds from disposals (RON 1,074,882,392) and the carrying values of the equity investments as at disposal date (RON 1,046,111,033), plus the net unrealised gain related to these investments disposed, transferred from equity (other comprehensive income) to profit or loss upon their derecognition (RON 616,774,944).
In 2013, the gain on disposal of these equity investments was RON 115,106,096 representing the difference between the proceeds from disposals (RON 324,702,758) and the carrying values of the equity investments as at disposal date (RON 409,801,814), plus the net unrealised gain related to these investments disposed, transferred from equity (other comprehensive income) to profit or loss upon their derecognition (RON 200,205,152).
| Year ended | Year ended | |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| Realised net gain/ (loss) from equity instruments | 2,023,243 | (24,456,521) |
| Unrealised net gain/ (loss) from equity instruments | (606,242,873) | 446,807,043 |
| Total | (604,219,630) | 422,350,522 |
Realised net gain / (loss) from equity investments was calculated as the difference between the proceeds from the disposal of equity investments at fair value through profit or loss during the period and the fair value of the equity investments disposed of at the beginning of the period.
If we calculate the realised net gain from equity investments by reference to the historical cost, this would be RON 1,972,612 (31 December 2013: a net loss of RON 71,250,429).
| Year ended 31 December 2014 |
Year ended 31 December 2013 |
|
|---|---|---|
| Investment management and administration fees | 56,479,028 | 45,273,318 |
| Financial Supervisory Authority monthly fees | 14,582,299 | 15,098,151 |
| Intermediaries fees related to disposal of portfolio holdings |
11,756,815 | 7,653,492 |
| Other fees related to disposal of portfolio holdings | 1,974,112 | 1,292,929 |
| Depositary fee | 1,767,065 | 1,780,597 |
| Remunerations and related taxes | 1,120,313 | 947,635 |
| Third party services | 22,023,450 | 13,220,265 |
| Other operating expenses | 3,938,574 | 3,161,058 |
| 113,641,656 | 88,427,445 |
Until 30 September 2014, the investment management and administration fee was calculated as 0.479% per year (out of which investment management fee was 0.379% per year and the administration fee was 0.10% per year) applied to the market capitalisation of the Fund, calculated by multiplying the number of issued shares with the average share price of Fondul Proprietatea's shares in the quarter for which the fee was calculated.
Starting with 30 September 2014, the investment management and administration fee (base fee) is calculated as 0.60% per year applied to the market capitalisation of the Fund, calculated by multiplying the number of Fund's issued and paid shares minus the number of settled treasury shares, with the weighted average share price of Fondul Proprietatea's shares, in the quarter for which the fee is calculated.
In 2013 and 2014, the investment management and administration fees were invoiced and paid on quarterly basis.
| Year ended | Year ended | |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| Current tax expense | ||
| Current tax (16%) | (16,627,992) | - |
| Dividend withholding tax | (5,306,263) | (2,678,657) |
| (21,934,255) | (2,678,657) | |
| Deferred tax related to: | ||
| Equity investments | 144,872,210 | (379,284,493) |
| Fiscal loss carried forward/ (used) | (342,189) | (180,063) |
| 144,530,021 | (379,464,556) | |
| Income tax (expense) / benefit | 122,595,766 | (382,143,213) |
The effective tax rate used to calculate the deferred tax position of the Fund for the years ended 31 December 2014 and 31 December 2013 was 16% (standard tax rate).
| Year ended | Year ended | |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| Reconciliation of effective tax rate | ||
| Profit/ (loss) for the period | 427,186,290 | (38,743,928) |
| Income tax (expense)/ benefit | 122,595,766 | (382,143,213) |
| Profit excluding income tax | 304,590,524 | 343,399,285 |
| Income tax using the standard tax rate (16%) | (48,734,484) | (54,943,886) |
| Effect of: | ||
| Lower or nil tax rate on dividend income | 100,222,241 | 101,150,910 |
| Gain on cancellation of treasury shares (taxable | ||
| equity item) | (39,385,958) | - |
| Decrease of the nominal value of the treasury shares | ||
| (taxable equity item) | (373,073) | - |
| Profit appropriation to legal reserve | - | 298,564 |
| Non-taxable income | 157,420,659 | 7,591,576 |
| Non-deductible expenses | (78,325,115) | (1,982,699) |
| Impact of non-recognition of deferred tax on change | ||
| in fair value of equity investments | 29,271,496 | (54,716,995) |
| Sponsorship expenses | 2,500,000 | - |
| Reversal of deferred tax following the changes in | ||
| the fiscal legislation | - | (379,284,494) |
| Austrian dividend withholding tax non deductible | ||
| from fiscal point of view | - | (256,189) |
| Income tax (expense)/ benefit | 122,595,766 | (382,143,213) |
In 2014, the non-taxable income and non-deductible expenses included mainly the proceeds (RON 964,229,782, with a tax effect on reconciliation of RON 154,276,765) and respectively the cost (RON 473,045,554, with a tax effect on reconciliation of RON 75,687,289) related to the disposal of equity investments where Fund's holding was greater than 10% of the share capital of the company, for an uninterrupted period of at least 1 year.
| Year ended 31 December 2014 |
Year ended 31 December 2013 |
|
|---|---|---|
| Tax income/ (expense) recognised directly in | ||
| equity: | ||
| On equity investments carried at fair value | 7,806,738 | 16,887,972 |
Please see note 16 for details regarding deferred tax assets computation and recognition.
| 31 December 2014 | 31 December 2013 |
|---|---|
| 538 | 186 |
| 6,878,591 | 5,552,291 |
| 6,879,129 | 5,552,477 |
The current accounts held with banks are not pledged as collateral for liabilities.
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Bank deposits with original maturities of more than | ||
| three months and less than one year | 25,000,000 | - |
| Bank deposits with original maturities of less than | ||
| three months | 84,278,998 | 232,021,138 |
| Interest accrued on bank deposits | 145,932 | 88,875 |
| 109,424,930 | 232,110,013 |
None of the deposits held with banks is pledged as collateral for liabilities.
In 2014 and 2013, the Fund acquired discounted treasury bills denominated in RON issued by the Ministry of Public Finance of Romania. As at 31 December 2014 and 31 December 2013 the treasury bills balance comprises treasury bills with residual maturity up to 12 months, with implicit interest rates (based on the yield to maturity for each issue) ranging between 1.7% and 2.09% per year as at 31 December 2014 (31 December 2013: 2.72% – 4.35% per year).
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Treasury bills with original maturities of more than three months and less than one year |
162,839,401 | 53,519,130 |
| Treasury bills with original maturities of less than | ||
| three months | - | 76,368,245 |
| 162,839,401 | 129,887,375 |
In 2014 and 2013, the Fund acquired government bonds with coupon, denominated in RON, issued by the Ministry of Public Finance of Romania. The government bonds as at 31 December 2014 amounted RON 31,749,581 (31 December 2013: 83,748,146), have original maturities of more than three months and less than one year and coupon rate of 6% per year (31 December 2013: 5.95% per year).
In accordance with Law 247/2005, as amended by Government Emergency Ordinance no.209/2005, the Fund received, at its establishment on 28 December 2005, shares in 117 companies as contribution in kind from the Romanian State, as sole shareholder.
In June 2007, Government Emergency Ordinance no. 81/2007 for the acceleration of the procedure for granting compensations for the property abusively nationalised ("GEO 81/2007") came into force, in accordance with which:
The valuation of the shares contributed by the Romanian state in December 2005 and June 2007 was performed in October 2007 by an independent valuer (Finevex S.R.L. Constanta), who followed the valuation methodology set forth by Law 247/2005. The value of the shareholdings, as determined by the valuer, represented the cost (initial value) of the equity investments.
Equity investments are classified as financial assets at fair value through profit or loss (respectively Fund's associates and subsidiaries) and financial assets available for sale (all the other equity investments).
As a result of the application of the Amendments starting 1 January 2014, the Fund changed its accounting policies and classified all its equity investments in subsidiaries and associates at fair value through profit or loss while all the other equity investments remained classified as available for sale financial assets, carried at fair value.
In this respect, the Fund retrospectively adjusted both the period that immediately precedes the date of initial application (year ended 31 December 2013) and the Statement of financial position at the beginning of the immediately preceding period (1 January 2013) for the difference between the previous carrying value and the fair value of these equity investments.
Equity investments classified as financial assets at fair value through profit or loss are valued:
Equity investments classified as financial assets available for sale are valued:
The movement in the carrying amounts of equity investments is presented below:
(all amounts are in RON unless otherwise stated)
| i in Eq ty tm ts u ve s en lu d in i ty va e us g eq u ho d t m e |
i in Eq ty tm ts t u ve s en a fa ir lu hr h t va e ou g f i lo t o p ro r ss |
Eq i in ty tm ts u ve s en i la b le fo le av a r s a |
To l e i ta ty q u in tm ts ve s en |
|
|---|---|---|---|---|
| io 3 1 De be 2 0 1 2, ly d te ce m r as p re v us re p or |
4, 0 6, 8 2 9, 8 1 8 7 |
- | 6, 3 9 3, 2 0 1, 5 0 6 |
1 1, 1 0 0, 0 3 1, 3 2 4 |
| f c ha in in l icy Im t o t p ac ng e ac co un g p o |
( 4, 0 6, 8 2 9, 8 1 8 ) 7 |
4, 9 4 1, 8 6 2 1 7 5, |
( 6 1, 6 8 4 4 ) 7, 7 |
1 7 3, 2 6 8, 3 5 6 |
| 1 Ja 2 0 1 3, d ta te nu ar y as re s |
- | 4, 9 4 1, 7 8 5, 6 2 1 |
6, 3 3 1, 5 1 4, 0 5 9 |
1 1, 2 7 3, 2 9 9, 6 8 0 |
| ha i bu ion in k in d by S S tr t ta te re s c on s |
- | 3 4 2 0 5 7, |
3 5 4 2 0 7, |
|
| Ca h c i bu ion fo l io ies tr t to t s on s p or co mp an ha ita l in s re ca p cre as es |
1 1, 1 1 5, 7 5 0 |
3 1, 5 9 8, 0 9 1 |
4 2, 7 1 3, 8 4 1 |
|
| isp ls D os a |
( ) 2 7 1, 8 7 9, 6 9 4 |
( ) 4 0 9, 8 0 1, 8 1 4 |
( 6 8 1, 6 8 1, 5 0 8 ) |
|
| irm lo Im t p a en ss |
- | ( 8 3 5, 7 7 2, 3 8 2 ) |
( 8 3 5, 7 7 2, 3 8 2 ) |
|
| C ha in fa ir lu hr h e ity t ng es va e ou g q u re se rv e |
- | 4, 0 6 6, 5 0 5, 0 3 1 |
4, 0 6 6, 5 0 5, 0 3 1 |
|
| in / ( lo ) fro fa ir Ne t g t a t a ss m m ea su re m en lu hr h p f it lo t va e ou g ro or ss |
4 4 6, 8 0 7, 0 4 3 |
- | 4 4 6, 8 0 7, 0 4 3 |
|
| 3 1 2 0 1 3, De be d ta te ce m r as re s |
- | 5, 1 2 8 2 8, 2 0 7, 7 |
9, 1 8 4, 4 0 0, 4 0 5 |
1 4, 3 1 2, 2 2 9, 1 2 5 |
(all amounts are in RON unless otherwise stated)
| Eq i in ty tm ts u ve s en lu d in i ty va e us g eq u ho d t m e |
Eq i in ty tm ts t u ve s en a fa ir lu hr h t va e ou g f i lo t o p ro r ss |
Eq i in ty tm ts u ve s en i fo la b le le av a r s a |
To l e i ta ty q u in tm ts ve s en |
|
|---|---|---|---|---|
| 3 1 De be 2 0 1 3, io ly d te ce m r as p re us re p or v |
5, 0 5 9, 2 7 0, 0 8 8 |
- | 9, 2 5 3, 6 1 7, 1 6 5 |
1 4, 3 1 2, 8 8 7, 2 5 3 |
| f c ha in in l icy Im t o t p ac ng e ac co un g p o |
( 0 9, 2 0, 0 8 8 ) 5, 5 7 |
1 2 8 2 8, 2 0 5, 7, 7 |
( 6 9, 2 1 6, 6 0 ) 7 |
( 6 5 8, 1 2 8 ) |
| 3 1 De be 2 0 1 3, d ta te ce m r as re s Eq i inv las i f ie d a inv ty tm ts tm ts u es en c s s es en |
- | 5, 1 2 7, 8 2 8, 7 2 0 |
9, 1 8 4, 4 0 0, 4 0 5 |
1 4, 3 1 2, 2 2 9, 1 2 5 |
| in ia in 2 0 1 4 te tar t as so c s s g |
6, 0 4 9, 6 7 5 5 |
( 6, 0 4 9, 6 ) 7 5 5 |
- | |
| ha i bu ion in k in d by S S tr t ta te re s c on s |
- | 1, 4 3 3, 6 1 0 |
1, 4 3 3, 6 1 0 |
|
| isp ls D os a |
( 2, 0 2 0, 4 8 ) 5 |
( 1, 0 4 6, 1 1 1, 0 3 4 ) |
( 1, 0 4 8, 1 3 1, 5 8 2 ) |
|
| irm lo Im t p a en ss |
- | ( ) 3 4 4, 0 8 7, 6 7 3 |
( 3 4 4, 0 8 6 3 ) 7, 7 |
|
| Re f s ha i l o f p fo l io ies tu ta t rn o re ca p or co mp an |
( 3, 7 4 8, 7 5 3 ) |
- | ( ) 3, 7 4 8, 7 5 3 |
|
| C ha in fa ir lu hr h i t ty ng es va e ou g eq re se rv e u |
- | 6 1 6, 2 0 4, 9 2 8 |
6 1 6, 2 0 4, 9 2 8 |
|
| in / ( lo ) fro fa ir N t g t a t e a ss m m ea su re m en |
||||
| lu hr h p f i lo t t o va e ou g ro r ss |
( 6 0 6, 2 4 2, 8 3 ) 7 |
- | ( 6 0 6, 2 4 2, 8 7 3 ) |
|
| 3 1 De be 2 0 1 4 ce m r |
- | 4, 5 9 1, 8 6 6, 1 0 1 |
8, 3 3 5, 7 9 0, 6 8 0 |
1 2, 9 2 7, 6 5 6, 7 8 1 |
In 2014, the management has reassessed the indicators of significant influence regarding the portfolio companies and concluded that, in case of Societatea Nationala a Sarii SA and Plafar SA, the Fund has significant influence over the financial and operating policies of these companies due to the active representation in the board of directors and active participation in policy making process. In consequence, starting 2014, in addition to OMV Petrom SA, Societatea Nationala a Sarii SA and Plafar SA are also classified as Fund's associates and, as a result, valued at fair value through profit or loss.
In 2014, the Fund sold its entire holdings in Erste Group Bank, Raiffeisen Bank, Resib SA, Severnav SA, Transelectrica SA, Transilvania Com SA, Turdapan SA and part of its holding in Conpet SA, Oil Terminal SA, Primcom SA, Romgaz SA.
In January 2014, Primcom SA performed a capital return to its shareholders following the decrease of its share capital by reducing the nominal value of the shares from RON 2.5 to RON 0.1.
In October 2014 Carbid Fox SA was erased from Romanian Trade Register, at the end of bankruptcy procedure.
In 2014 the Fund received 116,457 shares in Hidroelectrica SA (with a total nominal value of RON 1,164,570) and 26,904 shares in Complexul Energetic Oltenia SA (with a total nominal value of RON 269,040), following the share capital increase of these companies. The value of these shares was accounted for as contributions in kind by the Romanian state, represented by the Ministry of Public Finance, to the share capital of the Fund, in compensation for the receivable for unpaid capital.
In November 2014, the General Shareholders Meetings of E.ON Gaz Distributie SA and E.ON Moldova Distributie SA approved the merger of the companies, with E.ON Gaz Distributie SA as absorbing company and E.ON Moldova Distributie SA as absorbed company. Following the merger, E.ON Gaz Distributie SA changed its name to E.ON Distributie Romania SA and E.ON Moldova Distributie SA was erased from the Trade Register. The registration of the new company was completed by the Trade Register on 31 December 2014. After the merger, the Fund holds 18.34% in the newly created company E.ON Distributie Romania SA.
On 25 February 2014 the Bucharest Court of Appeal has taken the following decisions:
As at 31 December 2014, Hidroelectrica was still under reorganisation procedure.
In 2014, the Fund recorded impairment adjustments of RON 344,087,673 (2013: RON 835,772,382) for the equity investments presented below, based on either fair values assessed by independent valuers or by reference to published prices quotations on the stock exchange (for listed holdings). All impairment losses are recognised through profit or loss. During 2014, an amount of RON 124,199,717 (2013: RON 158,703,880) has been reclassified from equity (other comprehensive income) to profit or loss, due to the prolonged decline in the value of some equity investments.
The equity investments for which the Fund recorded impairment adjustments were:
| Company | Year ended | Year ended |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| Complexul Energetic Oltenia S.A. | 213,440,365 | 348,440,812 |
| Nuclearelectrica S.A. | 94,832,999 | 305,472,325 |
| Alro S.A. | 12,370,750 | - |
| Conpet S.A. | 10,649,104 | - |
| BRD - Groupe Societe Generale S.A. | 6,346,864 | 97,670,533 |
| Posta Romana S.A. | 4,895,274 | 20,032,000 |
| Administratia Porturilor Dunarii Maritime S.A. | 1,344,716 | - |
| Salubriserv S.A. | 207,601 | - |
| Raiffeisen Bank International AG | - | 43,870,195 |
| Erste Group Bank AG | - | 17,163,151 |
| Forsev S.A. | - | 3,123,366 |
| Total | 344,087,673 | 835,772,382 |
The structure of the Fund's portfolio was the following:
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Equity investments at fair value through profit | ||
| or loss | ||
| OMV Petrom S.A. | 4,389,528,460 | 5,054,412,918 |
| Societatea Nationala a Sarii S.A.* | 142,882,000 | - |
| Zirom S.A. | 39,338,000 | 43,464,000 |
| Primcom S.A. | 12,345,176 | 23,414,095 |
| Other | 7,772,465 | 6,537,707 |
| 4,591,866,101 | 5,127,828,720 |
* Starting 2014, Societatea Nationala a Sarii SA was classified as Fund's associates and, consequently, was valued at fair value through profit or loss.
| Equity investments available for sale | 31 December 2014 | 31 December 2013 |
|---|---|---|
| Hidroelectrica S.A. | 2,178,094,000 | 2,105,161,000 |
| Romgaz S.A. | 1,362,879,066 | 1,975,701,972 |
| Enel Distributie Banat S.A. | 640,491,000 | 573,250,000 |
| Enel Distributie Muntenia S.A. | 465,769,000 | 473,070,000 |
| GDF Suez Energy Romania | 461,321,000 | 404,410,000 |
| E.ON Distributie Romania S.A. ** | 441,456,000 | - |
| Enel Distributie Dobrogea S.A. | 396,895,000 | 379,110,000 |
| CN Aeroporturi Bucuresti S.A. | 332,286,000 | 287,654,000 |
| Electrica Distributie Muntenia Nord S.A. | 235,600,000 | 296,200,000 |
| BRD - Groupe Societe Generale S.A. | 222,140,240 | 228,487,104 |
| Nuclearelectrica S.A. | 212,140,869 | 306,699,783 |
| Electrica Distributie Transilvania Sud S.A. | 206,500,000 | 192,000,000 |
| Electrica Distributie Transilvania Nord S.A. | 201,600,000 | 206,700,000 |
| Banca Transilvania S.A. | 143,234,554 | 106,793,311 |
| E.ON Energie Romania S.A . | 133,900,000 | 45,765,358 |
| Administratia Porturilor Maritime S.A. | 132,594,000 | 52,621,414 |
| Electrica Furnizare S.A. | 126,368,000 | - |
| Complexul Energetic Oltenia S.A. | 108,474,000 | 321,644,000 |
| Alro Slatina S.A. | 84,546,268 | 105,464,181 |
| Enel Energie S.A. | 74,377,000 | 19,278,553 |
| Enel Energie Muntenia S.A. | 65,144,000 | 2,833,769 |
| Posta Romana S.A. | 55,896,000 | 60,790,000 |
| Conpet S.A. | - | 115,715,745 |
| Transelectrica S.A. | - | 156,245,397 |
| Raiffeisen Bank International AG | - | 77,793,309 |
| Erste Group Bank AG | - | 45,100,460 |
| E.ON Moldova Distributie S.A. ** | - | 345,359,000 |
| E.ON Gaz Distributie S.A. ** | - | 165,200,000 |
| Societatea Nationala a Sarii S.A.* | - | 76,049,556 |
| Other | 54,084,683 | 59,302,491 |
| 8,335,790,680 | 9,184,400,405 | |
| Total equity investments | 12,927,656,781 | 14,312,229,125 |
* Starting 2014, Societatea Nationala a Sarii SA was classified as Fund's associates and, consequently, was valued at fair value through profit or loss. ** In November 2014, the General Shareholders Meetings of E.ON Gaz Distributie S.A. and E.ON Moldova Distributie S.A. approved the merger of the companies, with E.ON Gaz Distributie S.A. as absorbing company and E.ON Moldova Distributie S.A. as absorbed company. Following the merger, E.ON Gaz Distributie S.A. changed its name to E.ON Distributie Romania S.A. and E.ON Moldova Distributie was erased from the Trade Register
None of the equity investments are pledged as collateral for liabilities.
The table below analyses equity investments carried at fair value, by valuation method.
The Fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurement, the different levels being defined as follows:
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| Equity investments | 6,417,755,342 | - | 6,443,756,000 | 12,861,511,342 |
| Treasury bills | 162,839,401 | - | - | 162,839,401 |
| Government bonds | 31,749,581 | - | - | 31,749,581 |
| 6,612,344,324 | - | 6,443,756,000 | 13,056,100,324 | |
| At 31 December 2013: | Level 1 | Level 2 | Level 3 | Total |
| Equity investments | 8,178,000,258 | - | 5,854,669,000 | 14,032,669,258 |
| Treasury bills | 129,887,375 | - | - | 129,887,375 |
| Government bonds | 83,748,146 | - | - | 83,748,146 |
| 8,391,635,779 | - | 5,854,669,000 | 14,246,304,779 | |
The level in the fair value hierarchy within which the fair value measurement is categorised, is determined on the basis of the lowest level input that is significant to the fair value measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety.
If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that financial instrument is classified in Level 3. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset. The determination of what constitutes observable requires significant judgments by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
For all Level 3, the equity instruments valuation was performed by independent valuers, based on financial information provided by the Fund using valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs, under the supervision and review of the Fund's Management, who ensures that all underlying data used in the report is accurate, and appropriate inputs are used in the valuation. As the valuation reports were prepared as at 30 September 2014 (for 31 December 2013: as at 30 September 2013), based on financial information available for the companies under valuation as at the respective date, the Fund's Management have analysed, based on the available information, the period between the date of the valuation reports and the reporting date. There was no information known or available to the Fund's Management which may have impact on the fair values of the equity investments as at the reporting date, as they are presented in these financial statements.
Fair value estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties to the extent that the Fund believes that a third party market participant would take into account these factors in pricing a transaction.
As a result of strong volatility in the capital market and severe restrictions in the credit markets both globally and in Romania, notwithstanding any potential economic stabilisation measures that may be put into place by the Romanian State, economic uncertainties arose surrounding the continual availability and cost of credit for the Fund's counterparties, future development of the market and demand for goods and services they produce.
The economic uncertainties are expected to continue in the foreseeable future and, as a consequence, there is a possibility that assets of the Fund are not recovered at their carrying amount in the ordinary course of business. A corresponding impact on the Fund's profitability cannot be estimated reliably as of the date of these financial statements.
As at 31 December 2014, the equity investments included equity investments valued at values used in the calculation of 31 December 2014 net asset value of the Fund, determined in accordance to the regulations issued by the FSA/CNVM, in amount of RON 66,145,439.
As at 31 December 2013, the equity investments included equity investments valued at cost less impairment in amount of RON 249,608,066 and equity investments valued at values used in the calculation of 31 December 2013 net asset value of the Fund, in amount of RON 29,951,801.
For the equity investments classified under Level 1, the Fund had sufficient available information with respect to active markets, with sufficient trading volume for accurate price discovery.
As at 31 December 2014, unlisted equity investments with a carrying amount of RON 6,443,756,000 (31 December 2013: RON 5,854,669,000) were classified into Level 3 of the fair value hierarchy. Out of this, an amount of RON 2,836,777,204 represents the total net change in fair value recognised in equity (other comprehensive income) as at 31 December 2014 (31 December 2013: RON 2,293,368,230). The fair values for these equity investments were assessed by independent valuers, using valuation methods in accordance with International Valuation Standards.
The following table sets out information about significant unobservable inputs used at 31 December 2014 and 31 December 2013 in measuring financial instruments categorised as Level 3 in the fair value hierarchy:
| Financial assets | Fair value at 31 December 2014 |
Valuation technique | Unobservable inputs |
Relationship of unobservable inputs to fair value |
|---|---|---|---|---|
| Total | 6,443,756,000 | |||
| Unlisted equity instruments |
6,094,675,000 | Market approach - comparable companies (based on |
EBITDA multiple ranging from 3.88 to 9.36 |
The higher EBITDA multiple, the higher the fair value. |
| EBITDA multiples) | Discount for lack of marketability: 15% or 20% |
The lower discount for lack of marketability, the higher the fair value. |
||
| Unlisted equity instruments |
108,474,000 | Market approach - comparable companies (based on Revenue multiple) |
Revenue multiple: 1 | The higher Revenue multiple, the higher the fair value. |
| Discount for lack of marketability: 20% |
The lower discount for lack of marketability, the higher the fair value. |
|||
| Unlisted equity instruments |
240,607,000 | Income approach - discounted cash flow method |
Weighted average cost of capital ranging from 12.17% to 16.26%. |
The lower the weighted average cost of capital, the higher the fair value. |
| Discount for lack of marketability ranging from 0% to 15%. |
The lower discount for lack of marketability, the higher the fair value. |
|||
| Discount for lack of control ranging from 0% to 20%. |
The lower discount for lack of control, the higher the fair value. |
|||
| Long-term revenue growth rate ranging from 1.5% to 2.5% |
The higher the revenue growth rate, the higher the fair value. |
| Financial assets | Fair value at 31 December 2013 |
Valuation technique |
Unobservable inputs | Relationship of unobservable inputs to fair value |
|---|---|---|---|---|
| Total | 5,854,669,000 | |||
| Unlisted equity instruments |
5,749,758,000 | Market approach - comparable companies |
EBITDA multiple ranging from 5.52 to 9.18 |
The higher EBITDA multiple, the higher the fair value. |
| (based on EBITDA multiples) |
Discount for lack of marketability: 10% or 25% |
The lower discount for lack of marketability, the higher the fair value. |
||
| Unlisted equity instruments |
104,911,000 | Income approach - discounted cash flow method |
Weighted average cost of capital ranging from 13% to 15%. |
The lower the weighted average cost of capital, the higher the fair value. |
| Discount for lack of marketability: 0% or 5% or 10% |
The lower discount for lack of marketability, the higher the fair value. |
|||
| Discount for lack of control: 0% or 20% |
The lower discount for lack of control, the higher the fair value. |
|||
| Long-term revenue growth rate ranging from 2% to 2.5% |
The higher the revenue growth rate, the higher the fair value. |
Significant unobservable inputs are the following:
Revenue multiple: is a tool used to appraise businesses based on market comparison to similar public companies. Revenue based business value estimation may be preferred to earnings multiple valuation whenever there is uncertainty or doubt regarding some of the company's expenses. The most common tendency is to value a firm based on its sales whenever this number is the most direct indication of the company's earning capacity.
EBITDA multiple: represents the most relevant multiple used when pricing the investments and it is calculated using information from comparable public companies (similar geographic location, industry size, target markets and other factors that valuers consider to be reasonable). The traded multiples for the comparable companies are determined by dividing the enterprise value of the company by its EBITDA and further discounted for considerations such as the lack of marketability and other differences between the comparable peer group and specific company.
Discount for lack of marketability: represents the discount applied to the comparable market multiples to reflect the liquidity differences between a portfolio companies relative to the comparable peer group. Valuers estimate the discount for lack of marketability based on professional judgement after considering market liquidity conditions and company-specific factors.
Discount for lack of control: represents the discount applied to reflect the absence of the control power and it was considered under the discounted cash flow method, in order to derive the value of a minority shareholding in the equity of the subject companies.
Weighted average cost of capital: represents the calculation of a company's cost of capital in nominal terms (including inflation), based on the "Capital Asset Pricing Model". All capital sources – shares, bonds and any other long-term debts - are included in a weighted average cost of capital calculation.
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Temporary differences deductible (taxable) | ||
| On equity investments | 954,243,433 | - |
| Fiscal loss carried forward | - | 2,138,680 |
| Recognised deferred tax asset at 16% | 152,678,949 | 342,189 |
The effective tax rate used to calculate the deferred tax position of the Fund as at 31 December 2014 and as at 31 December 2013 was 16% (standard tax rate).
The movement in the deferred tax assets position is presented in the below tables:
| Recognized in equity | ||||
|---|---|---|---|---|
| Balance at 1 January | Recognized in profit | (other comprehensive | Balance at 31 | |
| 2014 | 2014 | or loss | income) | December 2014 |
| Equity investments | - | 144,872,211 | 7,806,738 | 152,678,949 |
| Fiscal loss carried forward/ (used) | 342,189 | (342,189) | - | - |
| 342,189 | 144,530,022 | 7,806,738 | 152,678,949 |
| Balance at 1 January | Recognized in profit | Recognized in equity (other comprehensive |
Balance at 31 | |
|---|---|---|---|---|
| 2013 | 2013 | or loss | income) | December 2013 |
| Equity investments | 362,396,521 | (379,284,493) | 16,887,972 | - |
| Fiscal loss carried forward/ (used) | 522,252 | (180,063) | - | 342,189 |
| 362,918,773 | (379,464,556) | 16,887,972 | 342,189 |
In accordance with the changes to the Romanian Fiscal Code, with effect from 1 January 2014, no income tax will be applied to the sale of equity instruments held in Romanian entities or entities resident in a country with which Romania has a tax treaty, where the holding is at least 10% of the share capital of the entity and has been held for an uninterrupted period of at least 1 year.
Starting 1 January 2015, IFRS, as adopted by EU will become the official accounting standards in Romania for entities regulated and monitored by the FSA - Financial Investment and Instruments Sector (including Fondul Proprietatea). In consequence, the IFRS accounting basis will become the tax basis going forward.
This accounting change results in deferred tax related to the equity investments at fair value through profit or loss, irrespective of the holding of the Fund in the share capital of the issuer.
As at 31 December 2014, the Fund recognised only the net deferred tax asset generated by the equity investments at fair value through profit or loss, considering that the negative changes in the fair value of these equity investments (tax deductible expenses) are due to temporary market conditions and are expected to be reversible in the foreseeable future, and, consequently, will be offset by future positive changes in fair value (taxable income).
In addition, as at 31 December 2014 and 31 December 2013, the Fund had temporary differences on equity investments available for sale, resulting in a potential future tax asset in amount of RON 277,711,292, respectively RON 100,910,009 (please see details in the table below). The Fund has assessed that sufficient taxable profits will not be available in the future for such assets to be recovered and, as a result, it was not recognised.
The total temporary differences and related potential deferred tax asset and the part of the temporary differences and related deferred tax asset not recognised are summarised in the below table:
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Total temporary differences deductible (taxable) |
||
| On equity investments | 2,689,939,004 | 630,687,559 |
| Fiscal loss carried forward | - | 2,138,680 |
| Total deferred tax asset at 16% Out of which: |
430,390,241 | 101,252,198 |
| Deferred tax asset recognised | (152,678,949) | (342,189) |
| Not recognised deferred tax asset | 277,711,292 | 100,910,009 |
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Investment Management and Administration fees | 16,064,203 | 13,471,953 |
| Payable to shareholders related to the return of capital |
11,434,904 | - |
| Provision for litigations | 11,397,683 | 11,104,066 |
| Prior years dividends payable | 5,455,306 | 11,250,020 |
| Payables related to treasury shares under settlement | 3,468,114 | - |
| Financial Supervisory Authority fees | 1,164,865 | 1,262,977 |
| Tax on dividends | - | 1,423,830 |
| Other liabilities | 3,809,011 | 3,755,390 |
| 52,794,086 | 42,268,236 |
The provisions for litigations are related to the legal case started by World Trade Center Bucharest against the Fund in August 2013, requesting the Fund to pay back the amounts recovered from the enforcement procedure against this company during 2010 and 2011 and to pay the related legal interest.
As at 31 December 2014, the subscribed share capital was RON 11,815,279,886.85 representing 12,437,136,723 shares with a nominal value of 0.95 RON per share, out of which 363,812,350 shares were unpaid.
Unpaid share capital represents the net value of certain contributions due from the Romanian State represented by the Ministry of Public Finance, as shareholder, to the Fund that were recorded in previous years as paid capital (based on Law 247/2005, with subsequent amendments).
In 2014, the paid-up capital of the Fund:
Holders of unpaid shares are not entitled to vote or to receive dividends.
Following all these changes, as at 31 December 2014 the paid-up capital of the Fund decreased from RON 13,413,137,586 to RON 11,469,658,154.35 (divided in 12,073,324,373 shares with a nominal value of RON 0.95 per share) and the subscribed share capital of the Fund decreased from RON 13,778,392,208 to RON 11,815,279,886.85 (divided in 12,437,136,723 shares with a nominal value of RON 0.95 per share).
By 31 December 2014, the State's share in the Fund's issued capital was 2.96% (31 December 2013: 2.67%) out of which only 0.04% was paid.
The movements in share capital components are presented below:
| Share capital | |||
|---|---|---|---|
| Share capital paid in | unpaid | Total share capital | |
| 31 December 2012 | 13,412,780,166 | 365,612,042 | 13,778,392,208 |
| Shares contributed in kind by the State | 357,420 | (357,420) | - |
| 31 December 2013 | 13,413,137,586 | 365,254,622 | 13,778,392,208 |
| Shares contributions in kind by State | 1,433,610 | (1,433,610) | - |
| Decrease of the nominal value of the shares | (658,705,091) | (18,199,279) | (676,904,370) |
| Cancellation of treasury shares | (1,286,207,951) | - | (1,286,207,951) |
| 31 December 2014 | 11,469,658,154 | 345,621,733 | 11,815,279,887 |
The fair value reserves of RON 4,020,355,472 at 31 December 2014 (31 December 2013: RON 4,013,118,750) comprised the cumulative net change in the fair value of available for sale financial assets until the investments are derecognised or impaired.
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Legal reserve | 243,735,507 | 192,259,194 |
| Other reserves | 366,461,792 | 120,299,557 |
| 610,197,299 | 312,558,751 |
As required by the Romanian law, a minimum 5% of the statutory profit for the year must be transferred to the legal reserve until the reserve equals 20% of the issued share capital.
The statutory financial statements have been prepared in accordance with the CNVM Regulation 4/2011 regarding accounting regulations compliant with EEC Directive IV applicable to the entities authorised, regulated and monitored by the FSA, approved by CNVM Order no. 13/2011 and with CNVM Instructions no. 2/2007 regarding the preparation and submission of annual financial statements, applicable to the entities authorised, regulated and monitored by the FSA, as subsequently amended ("Romanian Accounting Regulations").
The legal reserve cannot be used for distributions to shareholders.
In 2014, the Fund transferred to the legal reserves an amount of RON 51,476,313 representing 5% of the 2014 statutory gross profit of RON 1,029,526,257 (in 2013: RON 34,107,720 representing 5% of the 2013 statutory gross profit of RON 682,154,399).
Other reserves comprise the part of 2006 and 2007 profit allocated to other reserves, in amount of RON 120,299,557 (31 December 2013: RON 120,299,557) and the reserves related to the gain on cancellation of treasury shares acquired at an acquisition value lower than the nominal value, in amount of RON 246,162,235 (31 December 2013: nil).
The Fund's General Shareholders Meeting in September 2010 approved a first buyback programme of up to 10% of the Fund's share capital at prices ranging between 0.2 - 1.5 RON, which was valid until March 2012. The buyback programme started in May 2011 and by 30 September 2011 the Fund completed this programme by acquiring 240,304,801 shares equivalent to 1.74% of the Fund subscribed share capital for a total acquisition value, including transaction costs, of RON 120,268,583. The cancellation of the shares acquired within this buyback programme through the decrease of the subscribed share capital of the Fund was endorsed by FSA on 21 February 2014 and was effective on 24 February 2014.
At the General Shareholders Meeting on April 2012, the shareholders approved a second buyback programme: subject to availability of cash, the Fund Manager was authorised to repurchase a maximum number of 1.1 billion shares within the next 18 months within the price range of RON 0.2 per share to RON 1.5 per share to be cancelled upon completion of the buyback programme. The second buy-back programme started on 12 April 2013 and by 31 December 2013 the Fund had acquired all the 1,100,950,684 shares at a total acquisition value, including transaction costs of RON 974,824,667. In the 28 April 2014 Annual General Shareholders Meeting, the shareholders approved the decrease of the subscribed share capital of the Fund through the cancellation of the treasury shares acquired by the Fund in the second buy-back programme. The cancellation of the shares acquired within this buyback programme was effective on 26 September 2014.
At the General Shareholders Meeting in November 2013, the shareholders approved a third buyback programme: the Fund Manager was authorised to repurchase a maximum number of 252,858,056 shares or 1.89% of the paidup share capital, within 18 months starting the date when the shareholders' resolution is published in the Official Gazette, within the price range of RON 0.2 per share to RON 1.5 per share to be cancelled upon completion of the buyback programme. The execution of the third buy-back programme started on 25 March 2014 and until 23 July 2014, all 252,858,056 treasury shares were acquired, at a total acquisition value, including transaction costs, of RON 205,784,683.
The shares acquired during the third buyback programme were not cancelled until 31 December 2014. The share capital decrease is effective beginning with 27 January 2015. For further details on the cancellation of shares acquired in the third buy-back programme, please see note 21.
In the 28 April 2014 Annual General Shareholders Meeting, the shareholders approved the fourth buy-back programme, for a maximum number of (i) 990,855,616 shares or (ii) 10% of the issued share capital at the relevant time, whichever is the lesser, starting with the date when the third buy-back programme is completed. As with previous buy-back, the programme can be executed within 18 months starting the date when the shareholders' resolution is published in the Official Gazette of Romania. The buy-back shall be performed at a price that cannot be lower than RON 0.2 per share or higher than RON 2 per share and the repurchased shares will be cancelled. The execution of the fourth buy-back programme started on 1 October 2014 and until 31 December 2014, 904,491,044 treasury shares were acquired, at a total acquisition value, including transaction costs, of RON 986,465,485.
In the 19 November 2014 General Shareholders' Meeting, the shareholders approved the fifth buy-back programme, that refers to the acquisition of a maximum number of (i) 227,572,250 shares or (ii) 10% of the subscribed share capital at the relevant time, whichever is the lesser, starting with the date when the share capital decrease approved through EGM Resolution on 23 September 2014 (regarding the cancelation of the shares purchased by the Fund during the third buy-back programme) is effective. The buy-back programme will be carried out until August 2016. The buy-back shall be performed at a price that cannot be lower than RON 0.2 per share or higher than RON 2 per share and the purchased shares will be cancelled. The shareholders' decision regarding the share capital decrease and the change of the Constitutive Act will be approved by the shareholders, with the observance of the provisions of the Constitutive Act, being agreed that the shareholders may approve one or more share capital decreases as the shares are being bought back and the shareholders are convened by the Sole Administrator. This implementation of the buy-back programme will be subject to the availability of the necessary cash.
In 2014, the Fund did not distribute dividends from 2013 profits, dividend distribution being replaced with a cash distribution to shareholders of RON 0.05 per share, via the decrease of the share capital through the reduction of the nominal value of the Fund's shares.
In June 2014, the FSA has issued the Endorsement ("Aviz") no.71/19.06.2014, which states the fact that the methodology for net asset value computation in accordance with CNVM Regulation 4/2010 shall not be applied in the context of the requirements of article 69 in Law 31/1990, with the subsequent amendments. The FSA has also clarified that the Endorsement is applicable prospectively from the date of its official publication, respectively 19 June 2014.
According to this Official interpretation of the FSA regarding the computation of Fund 'net asset value', dividend distributions cannot be made to shareholders at the present time because the Fund's shareholders' equity computed in accordance with Romanian Accounting Regulations (RON 9,339,030,996 as at 31 December 2014) is lower than the share capital of the Fund (RON 11,815,279,887 as at 31 December 2014).
The Fund Manager remains committed to ensuring annual cash distributions to the Fund's shareholders, based on the compliance with the applicable regulations.
As at 31 December 2014 the Fund was involved in certain litigations, either as defendant or claimant. According to the requirements of the IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" the Fund discloses in the financial statements those which may have significant effects on the Fund's financial position or profitability. The most important litigations were as follows:
These decisions are irrevocable and they were implemented by Trade Register, without any changes in the Management of the Fund considering that:
Therefore, FTIML as the Fund Manager of Fondul Proprietatea is liable to observe the current Constitutive Act and the shareholders' resolutions in force, and consequently will continue to manage the Fund in accordance with these and its management agreement.
In June 2014, in another case started by the Fund against the same shareholder the court confirmed her circumstantiated abuse of procedural rights against the Fund. Also, there are several court decisions confirming the fact that this shareholder did not prove a legitimate interest to promote certain annulment actions, and in one of these cases the decision is final – the Bucharest Court of Appeal issued the final decision in November 2014. In another file in December 2014 the Bucharest Court of Appeal issued an irrevocable decision maintaining as legal and valid the shareholders' resolutions approved by shareholders in April and November 2013 challenged initially.
The outcome of the ongoing cases cannot be determined with certainty at this stage. However, Management intends to defend the interests of the Fund and its shareholders in all these cases in accordance with the applicable laws.
Other contingencies of the Fund included:
These amounts should be recorded as payments for the unpaid capital or as increases of the share capital by the Romanian State once they are collected, with the approval of shareholders, according to the legislation in force.
Title II, Article 4 of GEO 81/2007 stipulates the transfer from the Authority for State Assets Recovery ("AVAS") to the Fund of receivables from World Trade Center Bucharest SA amounting to USD 68,814,198 (including the original principal and related interest and penalties) on 29 June 2007.
Until 31 December 2014, the Fund recovered from World Trade Center Bucharest SA, USD 510,131, EUR 148,701, RON 8,724,888. Given the uncertainties regarding the recoverability of the amounts due by World Trade Center Bucharest SA, the above amounts were recognised on receipt basis in the Fund's financial statements.
In August 2013, World Trade Center Bucuresti SA filed a claim against the Fund asking to pay back the amounts received through the enforcement procedure during 2010 and 2011 (EUR 148,701, USD 10,131 and RON 8,829,663). The amounts recovered from the enforcement procedure were originally accounted for by the Fund as contributions of Ministry of Public Finance to the share capital of the Fund, decreasing the receivable related to the unpaid capital.
Consequently, these amounts are to be recovered by the Fund from the Ministry of Public Finance (being accounted for as a receivable over this shareholder of the Fund, for which an impairment ajustment was recorded), while the legal interest was recorded as an expense with provisions for litigations. The next hearing in front of Bucharest Court for this file was set for 27 February 2015.
Currently, World Trade Center Bucharest SA is the object of insolvency procedure, the next hearing being set for 25 March 2015.
By article IV of Law no. 10/2015, the Parliament decided that "Beginning with the date when this law is in force the receivable mentioned at article 4 of Title II from Emergency Ordinance of the Government no. 81/2007 […] will be transferred from Fondul Proprietatea to Ministry of Public Finance together with additional interests". Based on this law the Fund will ask the courts to call the Ministry of Public Finance in the two files mentioned above.
In September 2014 the shareholders approved the execution of the Addendum no. 2 to the Management Agreement no. 45 dated 29 April 2014, signed between the Fund and FTIML ("Addendum no. 2"), referring to the distribution fees payable by the Fund to the Fund Manager in relation to the non-dividend distributions to shareholders. The Addendum no. 2 will enter into force only after FSA endorsement, and it was not approved by FSA as at 31 December 2014. However, in January 2015, the Title VII of Law no. 247/2005 governing mainly the organisation and functioning of the Fund was amended, clarifying the status of private company of the Fund, the shareholders being able to freely decide with respect to its governing and functioning. Following this change in legislation, the endorsement of the Addendum no. 2 by the FSA is expected.
According to Addendum no. 2, a distribution fee of 2% (in the period 30 September 2014 – 31 October 2015) and 1% (in the period 1 November 2015 – 30 September 2016) of the value of non-dividend distributions would be payable by the Fund to the Fund Manager. The Addendum no. 2, states that the distribution fee is payable retrospectively, starting 30 September 2014.
The contingent liability of the Fund related to the distribution fees for the period 30 September – 31 December 2014 is of RON 19.4 million.
| Year ended | Year ended | |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| Remunerations | ||
| Members of the Board of Nominees | 900,000 | 779,052 |
There were no loans to or other transactions between the Fund and the members of the Board of Nominees in 2014 or in 2013.
Franklin Templeton Investment Management Ltd United Kingdom Bucharest Branch is both the Fund Manager and Sole Director of the Fund.
The transactions carried between the Fund and Fund Manager were the following:
| Year ended | Year ended | |
|---|---|---|
| Transactions | 31 December 2014 | 31 December 2013 |
| Investment management and administration fees | 56,479,028 | 45,273,318 |
| Rental expense | 86,289 | 104,237 |
| Operating cost | 22,951 | 28,894 |
| 56,588,268 | 45,406,449 |
During 2014 the Fund also recorded an amount of RON 2,986,573 (2013: RON 1,754,236), representing expenses incurred by the Fund Manager on Fund's behalf. These expenses were primarily related to promotional activities for the Fund (investor relations) and valuation services. The recharge of these expenses to the Fund followed the provisions of the Investment Management Agreement, and was subject to Board of Nominees approval.
As at 31 December 2014 the total liability to Fund Manager related to the above mentioned transactions was in the amount of RON 17,189,421 (31 December 2013: RON 14,019,201).
There are no other elements of compensation for key management.
The Fund had the following subsidiaries, all of which are incorporated in Romania:
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Ownership interest | ||
| Alcom S.A. | 72% | 72% |
| Comsig S.A. | 70% | 70% |
| Primcom S.A. | 69% | 75% |
| Zirom S.A. | 100% | 100% |
During 2014, the Fund carried out the following transactions with its subsidiaries: (1) in January 2014, Primcom SA performed a capital return to its shareholders following the decrease of its share capital by reducing the nominal value of the shares from RON 2.5 to RON 0.1 and (2) in June 2014, the Fund sold part of its holding in Primcom SA in a buyback programme carried out by this company.
During 2013, the Fund recorded and received a dividend of RON 24,392 from Alcom SA.
Before adoption of the Amendments, given the materiality considerations, investments in subsidiaries were not consolidated but accounted for in accordance with IAS 39, as available-for-sale financial assets, with changes in fair value recorded in equity (other comprehensive income). As a result of the adoption of Amendments, the Fund changed its accounting policies for investments in subsidiaries, measuring them at fair value through profit or loss.
The fair value of investments in subsidiaries is presented in the table below:
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Alcom S.A. | 4,399,976 | 4,908,695 |
| Comsig S.A. | 1,538,490 | 1,629,011 |
| Primcom S.A. | 12,345,176 | 23,414,095 |
| Zirom S.A. | 39,338,000 | 43,464,000 |
| 57,621,642 | 73,415,801 |
As at 31 December 2014, the Fund has no commitment or intention to provide financial or other support to its subsidiaries, including commitments or intentions to assist the subsidiaries in obtaining financial support. Also, no financial or other support was provided by the Fund during the reporting periods.
As at 31 December 2014 and 31 December 2013, there was no restriction on the ability of any of the subsidiaries to transfer funds to Fondul Proprietatea in any form of distributions.
As at 31 December 2014, the Fund has three associates (31 December 2013: one associate), all of them incorporated in Romania:
| 31 December 2014 | 31 December 2013 | |
|---|---|---|
| Ownership interest | ||
| OMV Petrom S.A. | 19% | 19% |
| Societatea Nationala a Sarii S.A. | 49% | not associate in 2013 |
| Plafar S.A. | 49% | not associate in 2013 |
In 2014, the management has reassessed the indicators of significant influence regarding the portfolio companies and concluded that, in case of Societatea Nationala a Sarii SA and Plafar SA, the Fund has significant influence over the financial and operating policies of these companies due to the active representation in the board of directors and active participation in policy making process. In consequence, starting 2014, in addition to OMV Petrom SA, Societatea Nationala a Sarii SA and Plafar SA are considered Fund's associates.
The transactions carried between the Fund and its associates are presented below:
| Year ended | Year ended | |
|---|---|---|
| 31 December 2014 | 31 December 2013 | |
| Gross dividend income | ||
| OMV Petrom S.A. | 331,366,364 | 318,951,645 |
| Societatea Nationala a Sarii S.A. | 19,808,540 | not associate in 2013 |
| 31 December 2014 | 31 December 2013 | |
| Dividends received | ||
| OMV Petrom S.A. | 331,366,364 | 318,951,645 |
| Societatea Nationala a Sarii S.A. | 19,808,540 | not associate in 2013 |
The main decisions of the shareholders at the 21 January 2015 GSM were the following:
On 12 January 2015, Law no. 10/2015 was published in the Part I of the Official Gazette no. 22 ("Law 10"). Law 10 amends, among others, Title VII of Law no. 247/2005 governing mainly the organization and functioning of the Fund ("Fund Law"). Law 10 will enter into force on 15 January 2015, according to Article 78 of the Constitution, and from this moment onwards the following main amendments related to the Fund are applicable, namely:
On 4 February 2015, the Fund announced the completion of the 4th buy-back programme, through which the Fund acquired 990,855,616 shares of the Fund (equivalent to 8.13% of the Fund's subscribed share capital) through a tender offer for 750,000,000 shares (shares actually purchased: 749,998,142) and daily acquisitions on the Bucharest Stock Exchange. The total value of the buy-back programme was RON 1,046,128,420.15 (excluding brokerage fees and other acquisition related costs), and the weighted average price was approximately RON 1.0557 per share. The Fund Manager will request shareholders' approval for the cancellation of the shares repurchased during this buy-back programme at the next general shareholders' meeting.
The Fund Manager intends to continue with share buy-backs in accordance with the Fund's Investment Policy Statement, and started the fifth buy-back programme, approved by shareholders on 19 November 2014, on 10 February 2015.
The FSA, through Notice no. 25/27 January 2015, endorsed the decrease of the subscribed share capital from RON 11,815,279,886.85 to RON 11,575,064,733.65, following the cancellation of 252,858,056 treasury shares acquired by the Fund in the third buy-back programme in 2014. The share capital decrease is effective beginning with 27 January 2015. Therefore, starting with 27 January 2015, the new value of the Fund's subscribed share capital is RON 11,575,064,733.65, divided into 12,184,278,667 shares with a nominal value of RON 0.95 per share. The value of the paid-up share capital is RON 11,229,443,001.15, divided into 11,820,466,317 shares with a nominal value of RON 0.95 per share.
On 19 April 2007, the Authority for State Assets Recovery (AVAS) filed an ownership claim with the 5th District First Instance Court against the Fund, the Central Depositary, the FSA and Conpet SA, requesting the Court to rule upon the ownership rights of the claimant over a number of 524,366 shares in Conpet SA's share capital and to impose on the other defendants the obligation to register accordingly the shares in the shareholders' registry.
Beginning with 2007 there were several rounds of hearings and court decisions and several reorganisations, as the plaintiff in this case is in present the Department of Energy as a successor of AVAS.
On 19 March 2014 Bucharest Court ruled in favour of the Fund and rejected the request of Department of Energy. Against this decision of the Bucharest Tribunal, the Department of Energy file an appeal and on 30 January 2015 the Bucharest Court of Appeal ruled in favour of the Department of Energy obliging the Fund to transfer a number of 524,366 shares in Conpet SA's share capital to Department of Energy. The Fund can file the final appeal against the decision of Bucharest Court of Appeal within 15 days after the full decision is received from the Court.
This litigation was in progress as at 31 December 2014.This indicates that these conditions existed before the end of Fund's reporting period and meet the requirements of an adjusting event after the end of the reporting period. As a result, at 31 December 2014, the Fund recorded impairment adjustment for the holding in Conpet SA in amount of RON 10.7 million.
In August 2014 the FSA issued Instruction no 2/ 06.08.2014, according to which, starting 1 January 2015 the entities authorised, regulated and monitored by the FSA – Financial Investments and Instruments Sector, including Fondul Proprietatea, will apply IFRS, as endorsed by European Union as basis of accounting. As a result, starting the financial year 2015, the Fund will adopt IFRS as endorsed by European Union as the statutory accounting framework.
Provisions of Art.30 of Accounting Law no. 82/1991 and
CNVM Regulations no. 1/2006, Art.1121 , par. 1, letter c
The annual financial statements as at 31 December 2014 prepared for:
Entity: Fondul Proprietatea S.A.
Address: Bucharest, District 1, 78–80, Buzeşti Street, 7th Floor
Trade Registry Number: J40/21901/28.12.2005
Form of property: 22 (joint ownership with public capital under 50%, domestic and foreign public and private capital companies)
CAEN code and name: 6430 "Trusts, funds and similar financial entities"
Sole Registration Code: 18253260
The undersigned, Grzegorz Maciej Konieczny, Legal representative, and Mihaela Moleavin, Financial reporting manager with Franklin Templeton Investment Management Ltd. United Kingdom, Bucharest Branch, as sole administrator of Fondul Proprietatea S.A, undertake the responsibility for the preparation of the annual financial statements on 31 December 2014 and confirm that:
Grzegorz Maciej Konieczny Mihaela Moleavin
Legal Representative Financial Reporting Manager
This Addendum no. 3 to the Management Agreement is made on ______________ 2013
Between:
FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED of the Adelphi, 1-11 John Adam Street, London WC2N 6HT, United Kingdom ("Fund Manager") ("S.A.I." in Romanian language); and
FONDUL PROPRIETATEA S.A. of 78-80 Buzesti Street 17, 1st District, Bucharest, Romania (the "Customer").
The Management Agreement signed on 25 February 2010 between SC Fondul Proprietatea SA and Franklin Templeton Investment Management Limited United Kingdom, as was modified through the Addendum number 1, will be modified as follows:
"(vi) preparing an annual report on the management of Fondul Proprietatea, to be presented to the Board of Nominees for approval prior to its submission to the general meeting of the shareholders;
(vii) proposing for the prior approval of the Board of Nominees and further to such, of the general meeting of the shareholders, of the yearly income and expenditure budget;"
"6.2. The Fund Manager shall perform its duties under this Management Agreement in line with the Customer's best interest, with respect to participating to public offerings or other corporate actions in connection with the securities in the Portfolio."
The Fund Manager's remuneration for its services under this Management Agreement is established according to the requirements in the Regulation for Organizing the International Tender, the Tender Book and the final offer formulated following the negotiations and the annexes of this agreement.
Customer shall bear, or shall reimburse the Fund Manager when the Fund Manager has incurred them in advance, the following expenses:
a) expenses related to the payment of fees owed to the Depositary;
Save as provided above, the Fund Manager shall be liable for the following out of pocket expenses incurred when performing its duties hereunder, including, but not limited to:
9.3 In the execution of this Management Agreement, the Fund Manager shall not use "soft dollars" practices. All transactions in connection to the Portfolio shall be made in the best interest of the Customer and according to the IPS, and shall be consistent with the principles of best execution.
9.4 Any director's fees or other fees received by the Fund Manager's employees, agents or representatives from any of the Portfolio companies will be either paid over to the Customer or deducted from the management fee.
"15.4. All notices or any other communication to be given under this Agreement must be in writing, in Romanian language, and must be: (i) personally delivered; (ii) delivered by fax; (iii) sent by courier with return receipt; or (iv) by e-mail."
"19.5. The Fund Manager shall promptly notify the Customer in writing of any changes in the portfolio managers, primarily responsible for the Portfolio, or in senior staff responsible for setting the investment and business policy of the Fund Manager. The Fund Manager will prepare yearly, within 30 days from the beginning of the calendar year, a list with portfolio managers, the primarily responsible for the Portfolio, and senior staff responsible for setting the business and investment policy within the Fund Manager. In case of a need to change a portfolio manager or a person primarily responsible for the Portfolio, the replacement shall have equal or superior qualifications and professional experience and similar time allocation for the Customer."
The other clauses of the Management Agreement signed on 25 February 2010 between SC Fondul Proprietatea SA and Franklin Templeton Investment Management Limited United Kingdom, as was modified through the Addendum number 1 remain unchanged.
This Addendum will be signed in Romanian language and executed in 3 number of counterparts, all of which taken together constitute the agreement.
AS WITNESS the signatures of the duly authorized representatives of the parties on the date which appears first on page 1.
Signed by and for FONDUL PROPRIETATEA S.A.
______________________
______________________
Signed by and for FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED UNITED KINGDOM
Headquarters: 78-80 Buzesti Street, 7th floor, 1st District, Bucharest, registered with the Trade Register under number J40/21901/2005, fiscal registration code 18253260
Today, 28 April 2014, 11:00 AM, the shareholders of Fondul Proprietatea S.A. ("the Fund") have met during the Shareholders' Ordinary General Meeting ("OGM") of the Fund, at its first summoning, at "JW Marriott" Hotel, "Constanta" Room, 90 Calea 13 Septembrie Street, 5th District, Postal Code 050726, Bucharest, Romania, the OGM being opened by its Chairman, namely Mr. Grzegorz Maciej Konieczny, in his capacity of legal representative of Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, having its headquarters in Bucharest, 78-80 Buzesti Street, 7th and 8th floors, 1st District, registered with the Trade Register under no. J40/8587/2009, sole identification code 25851096 ("the Sole Administrator") and with the Public Register of the Romanian National Securities Commission ("CNVM") under number PJM05SSAM/400001.
Following debates, the Fund's shareholders decide as follows:
I. The approval of the OGM agenda.
This item is adopted with 4,418,546,295 votes representing 99.93% of the total validly casted votes, in accordance with Article 14 (1), second paragraph of the Articles of Association and Article 112 (1), second paragraph of Law no. 31/1990. The casted votes have been recorded as follows: 4,418,546,295 votes "for" and 2,783,296 votes "against". Also, there have been recorded 5,161,052 "abstains" and 180,282,105 votes have been annulled.
II. The approval of the renewal / extension of the current mandate of Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch with its headquarters in Bucharest, 78-80 Buzeşti St., 7th and 8th floors, 1st District, registered with the Trade Register under no. J40/8587/2009, with Fiscal Registration Code RO 25851096, registered with the Public Register of the National Securities Commission under no. PJM05SSAM/400001 as a branch of an Investment Management Company from a Member State of European Union as Sole Administrator and Fund Manager of Fondul Proprietatea SA for a duration of 2 years starting with 30 September 2014. This point of the agenda is effective subject to the endorsement without comments by FSA of EGM Resolution no. 17/22 November 2013 by the date of this meeting. If the shareholders of Fondul Proprietatea SA will vote in favour of the said renewal / extension and the endorsement of EGM Resolution no. 17/22 November 2013 is received without comments by the date of this meeting, the renewal / extension is effective after it is endorsed by FSA, where required by applicable law or regulation.
This item is adopted with 4,421,983,509 votes representing 99.77% of the total validly casted votes, in accordance with Article 14 (1), second paragraph of the Articles of Association and Article 112 (1), second paragraph of Law no. 31/1990. The casted votes have been recorded as follows: 4,421,983,509 votes "for"
and 9,999,284 votes "against". Also, there have been recorded 1,267,321 "abstains" and 180,282,105 votes have been annulled.
III. The empowerment, with authority to be substituted, of Grzegorz Maciej KONIECZNY, as legal representative of Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch, to sign the shareholders' resolutions, as well as any other documents in connection therewith, and to carry out all procedures and formalities set out by law for the purpose of implementing the shareholders' resolution, including formalities for publication and registration thereof with the Trade Register or with any other public institution.
This item is adopted with 4,418,185,764 votes representing 99.89% of the total validly casted votes, in accordance with Article 14 (1), second paragraph of the Articles of Association and Article 112 (1), second paragraph of Law no. 31/1990. The casted votes have been recorded as follows: 4,418,185,764 votes "for" and 4,470,199 votes "against". Also, there have been recorded 4,976,398 "abstains" and 187,150,507 votes have been annulled.
IV. The approval of 15 May 2014 as the registration date, in accordance with the provisions of Article 238 para. (1) of Capital Market Law no. 297/2004.
This item is adopted with 4,432,467,350 votes representing 99.92% of the total validly casted votes, in accordance with Article 14 (1), second paragraph of the Articles of Association and Article 112 (1), second paragraph of Law no. 31/1990. The casted votes have been recorded as follows: 4,432,467,350 votes "for" and 3,276,484 votes "against". Also, there have been recorded 715,721 "abstains" and 180,282,105 votes have been annulled.
This decision is drafted and signed on behalf of the shareholders by:
________________________ Grzegorz Maciej KONIECZNY
Chairman of the meeting
Florin-Daniel Gavrilă Meeting secretary
_______________________
_______________________
Valeriu Ioniță
Technical secretary
DATED …………...2014
THIS AGREEMENT is made on ………...2014
In this Management Agreement, unless the context otherwise requires, it is agreed that:
In this Management Agreement, the following capitalised terms shall, unless the context otherwise requires or it is otherwise provided, have the following meanings:
Account means the account maintained by the depositary and sub-custodian(s), as the Customer has notified in writing to the Fund Manager;
Affiliate means, with respect to any person, any other person directly or indirectly controlling, directly or indirectly controlled by, or under common control with such person;
AOPC means the collective investment undertakings other than the undertakings for collective investment in transferable securities (OPCVM) which are established as closed-end investment funds or closed-end investment companies as defined by art. 114 para. (1) of Law no. 297/2004;
Associated Company (when used in relation to the Fund Manager) means any company which is an Affiliate of the Fund Manager;
BoN means the Board of Nominees ("Comitetul Reprezentantilor" in Romanian language) which supervises the Fund Manager, appointed by the GSM and under direct supervision of the GSM;
BoN Review Report has the meaning ascribed to such term in clause 9.5;
Central Depositary means a legal person established as a joint-stock company, authorised and supervised by the FSA, performing deposit, registration, clearing and settlement services for transactions with financial instruments and related activities;
CNVM means the Romanian National Securities Commission, having the duties established in the Government Emergency Ordinance no. 25/2002 on the approval of the By-laws of the National Securities Commission, approved with amendments by Law no. 514/2002, as subsequently amended; in April 2013 the CNVM was reorganized as the FSA;
Companies Law means Law no. 31/1990 on companies;
Constitutive Act means the Articles of Incorporation of the Customer;
Control means, in relation to any person, the power of another person, directly or indirectly, to secure that the affairs of such person are conducted in accordance with the wishes of that other person, (a) by means of the holding of shares or the possession of voting power in relation to that or any other person, or (b) by virtue of any powers conferred by the constitutional or corporate documents, or by contract or any other document or other legal relationship, or by applicable law, regulating that or any other person;
Customer means "Fondul Proprietatea" S.A., a closed - end investment company established in 2005 by the Romanian Government in accordance with, among others, Law no. 247/2005, as amended and operating in accordance with the Constitutive Act;
Damages mean any and all losses, claims, liabilities, damages, taxes or expenses;
Delegate means any entity to which the Fund Manager delegates or outsources any of its obligations under this Management Agreement;
Depositary is that credit institution in Romania, authorized by Romania's National Bank, according to banking legislation, or a branch in Romania of a credit institution, authorized in a Member State, endorsed by the CNVM / FSA to hold and safeguard financial assets in compliance with the provisions of Law no. 297/2004 and the GEO No. 32/2012, in the deposit of which are entrusted for safekeeping all assets of the Customer;
Discount Objective has the meaning ascribed to such term in the IPS;
Dispute has the meaning ascribed to such term in clause 19.2(a);
EGM means the Extraordinary General Meeting of the Customer's Shareholders;
Force Majeure Event means, in relation to any party, any act, event or circumstance, the cause of which is not of such party's making nor within that party's reasonable control, including without limitation (to the extent not of that party's making nor within that party's reasonable control) act of God, war, hostilities (whether or not war has been declared), terrorist acts, acts of any civil or military authority, governmental or regulatory direction or restriction, suspension or withdrawal of licences or consents, currency restrictions, devaluations and fluctuations,
market conditions affecting the execution or settlement of transactions or the value of assets, failure or breakdown in communications, the failure of any relevant exchange or clearing house, riot, insurrection, civil commotion, public demonstration, sabotage, acts of vandalism, fire, flood, earthquake, extreme weather conditions, epidemic or pandemic, explosion, aircraft crashes or things falling from aircraft, release of ionising radiation or contamination by radioactivity, chemical or biological contamination, the order of any court or governmental or regulatory authority, delay in transportation or communications, breakage of or accidental damage to equipment, any strike, lock-out or other industrial trade dispute (not involving solely the employees of that party), structural shift or subsidence;
FSA means the Romanian Financial Supervisory Authority, having the duties established in the Government Emergency Ordinance no. 93/2012, as subsequently amended;
Fund Manager means Franklin Templeton Investment Management Limited, an asset management company and a foreign legal person, which is set up as an English private company authorized by the competent authority in its home Member State to carry out the role of a discretionary investment manager and which has set up a branch on Romania's territory, and which is registered with the FSA Registry. The Fund Manager is designated as sole director of the Customer according to the provisions of this Management Agreement and of the Constitutive Act;
GEO no. 81/2007 means the Emergency Government Ordinance no. 81/2007 for the acceleration of the procedure on granting damages in relation to assets abusively taken, published in the Official Gazette No. 446 of 29 June 2007, Part I;
GEO no. 32/2012 means the Emergency Government Ordinance no. 32/2012 published in the Official Gazette No. 435 of 30.06.2012, Part I;
GSM means the General Meeting of the Customer's Shareholders;
Indemnified Party means the Customer, its officers (but not the Sole Director), employees, agents and representatives;
IPS means the "Investment Policy Statement", i.e. the investment objectives and parameters governing investment decisions over the Portfolio which the Fund Manager has proposed and the GSM has approved;
Law No. 297/2004 means the Capital Market Law no. 297/2004, published in the Official Gazette of Romania No. 571 of 29 June 2004, Part I, as further amended and completed;
Law No. 247/2005 means the Law no. 247/2005 regarding the Property and Judicial Reform, as well as Adjacent Measures, published in the Official Gazette No. 653 of 22 July 2005, Part I, as further amended and completed;
Member State means the Member States of the European Union and the other States which belong to the European Economic Area;
Management Agreement means this Management Agreement entered into between the Customer and the Fund Manager;
NAV means the net asset value of the Customer, which is determined according to CNVM Regulation no. 4/2010, as subsequently amended, supplemented directly or indirectly or replaced;
NAV Objective has the meaning ascribed to such term in the IPS;
New Appointment Date means, in relation to the appointment of a new fund manager and sole director, or, in the event the Customer becomes a self-managed fund, new directors of the Customer following termination of this Management Agreement, the later of: (i) the date when the new or, if decided by the Customer, interim, fund manager and sole director, or, as the case may be, new directors, are registered with the Trade Registry or any other competent authority as per the applicable legal provisions; and (ii) the date when the FSA issues its approval in relation to the appointment of the new, or, if decided by the Customer, interim, sole director and fund manager as the case may be, new directors, and, (iii) the date when all other mandatory legal requirements for the replacement of the Fund Manager have been satisfied, and, in each of the cases under paragraphs (i), (ii) and (iii), being effective on the date that the Fund Manager received notice (or ought reasonably to have received notice) of the event;
October GSM has the meaning ascribed to such term in clause 9.2;
OGM means the Ordinary General Meeting of the Customer's Shareholders;
OPCVM means undertakings for collective investment in transferable securities; meaning open-end investment funds and investment companies as defined by Art. 5 of GEO no. 32/2012;
Party means any of the Customer or the Fund Manager;
Performance Objectives has the meaning ascribed to such term in clause 9.1;
Performance Report has the meaning ascribed to such term in clause 9.3;
Portfolio means the portfolio of assets of the Customer, including uninvested cash designated from time to time by the Customer as subject to the management of the Fund Manager pursuant to this Management Agreement;
Reporting Period has the meaning ascribed to such term in clause 9.3;
Sole Director means the legal person appointed by the GSM to manage the Customer, within the limits provided by the applicable Romanian law, the Constitutive Act and the decisions of the GSM. For the purposes of this Management Agreement, any reference to the Sole Director is a reference to the Fund Manager;
Soft Dollar Practices mean arrangements under which assets or services, other than execution of securities transactions, are obtained by a fund manager from or through a broker in exchange for the fund manager directing to the respective broker trades concluded on behalf of the undertaking for collective investment managed by that fund manager;
Termination Notice means a termination notice given by the Customer or the Fund Manager, as per clause 13;
Termination Notice Date means the date when a Termination Notice is given, as per clause 13.
The scope of this Management Agreement is to appoint the Fund Manager as the Sole Director of the Customer, and discretionary investment manager of the Customer and to establish the parties' rights and obligations in relation to such appointment.
By this Management Agreement, the Customer appoints the Fund Manager as the Sole Director of the Customer and also as its discretionary investment manager for the Portfolio.
The Fund Manager accepts its appointment as Sole Director of the Customer and as discretionary investment manager for the Portfolio upon the terms of this Management Agreement.
(iii) ensure that, if requested by any of the shareholders, a copy of the minutes of the GSM shall be given to them and also, after the calling of the annual OGM is published, make available to the shareholders the financial statements of the company and the reports of the Fund Manager and of the company's financial auditors;
(iv) prepare the annual financial statements, draft the annual activity report, the Performance Report, examine the financial auditors' report, present them to the BoN before submitting such documents to the GSM for approval and making proposals on the distribution of the profit, after obtaining the prior approval of the BoN;
(xviii) any other responsibilities set according to the Constitutive Act and applicable legislation;
6.2. The Fund Manager shall perform its duties under this Management Agreement in line with the Customer's best interest and the highest standards of professional conduct and integrity, including without limitation with respect to responding to public offerings or other corporate actions relating to the securities in the Portfolio.
a) at all times make all reasonable efforts to avoid conflicts of interest, provided that the Customer understands that the services the Fund Manager provides to the Customer are not exclusive and that the Fund Manager may provide similar services to other customers. Where a conflict arises, the Fund Manager will promptly disclose this to the Customer and use all reasonable efforts to resolve the conflict fairly;
b) will not effect any transaction in relation to the Portfolio knowingly and intentionally acting as agent for any of the Fund Manager's or other clients of its Associated Companies unless the Fund Manager shall have obtained the prior written consent of the Customer to such transaction, having given the Customer all material information relating thereto;
c) shall comply with all applicable laws and regulations, including the FCA Handbook (and overseas equivalents) insofar as they are relevant to this Management Agreement, the Fund Manager's performance of its functions under it in any countries in which it performs its duties and carries out its activities pursuant to this Management Agreement and shall procure that all its employees and Delegates, and shall use all reasonable steps to procure that all its agents, shall comply with such laws, regulations and rules as are applicable to them in relation to their involvement with the affairs of the Customer;
d) shall not enter into any transaction in relation to the Portfolio where the officers or employees by which the Fund Manager acts for the purposes of this Management Agreement are aware or ought reasonably to be aware that the Fund Manager or any Associated Company has a material interest in such transaction, unless it obtains the prior written consent of the Customer to such transaction, having first given the Customer all material information relating thereto, and for the purposes of this paragraph a material interest means a direct or indirect pecuniary interest, whether present or expected (other than a pecuniary interest consisting of a normal commission, rate or price differential or similar remuneration receivable in the ordinary course of business for effecting securities, deposit or foreign exchange transactions) which might reasonably be expected to influence a person, knowingly having that interest, to enter into or refrain from entering into such transaction;
e) shall account to the Customer for all advantages and benefits received from third parties resulting from bulk dealing involving the assets in the Portfolio and other securities and investments as are attributable (using a pro rata basis of calculation) to the assets in the Portfolio; and
f) shall account to the Customer for all allowances, rebates, discounts and refunds received (if any) in respect of any transaction involving the assets of the Portfolio from commission brokerage or other charges which are made to the Fund Manager of the Customer in any transaction and will not authorise any other person on behalf of the Customer to retain such.
6.7. When entering into transactions on behalf of the Customer in accordance with this Clause 6, the Fund Manager will ensure that brokers' and dealers' terms of business and terms and conditions with other third parties entered into with or by the Fund Manager and applicable to transactions in listed securities for the Portfolio (whether or not such terms and conditions are specifically intended to apply to transactions for the Portfolio) do not:
(a) disapply or waive best execution or other regulatory protections normally applicable to professional clients (as defined in the EU Markets in Financial Instruments Directive) for the Customer;
The transactions to be effected in relation to the Portfolio are subject to the legal regulations in force, including the Companies Law no. 31/1990, Law no. 297/2004, GEO no. 32/2012 and secondary regulations issued by the FSA as well as Law no. 247/2005, GEO no. 81/2007, the Constitutive Act of as well as any other applicable legislation.
a) the report on the fulfilment of the Discount Objective (as such term is defined in the IPS);
b) report on the fulfilment of the NAV Objective (as such term is defined in the IPS);
As remuneration for its services under this Management Agreement, the Fund Manager shall receive the fees set forth in the Annex to this Management Agreement.
j) expenses related to appointing legal advisers and other advisors to act on behalf of the Customer;
k) expenses related to contracts with external service providers existing as of execution of this Management Agreement until the expiry or termination of the contract;
11.3. The Fund Manager shall keep accurate and detailed records of all investments, receipts, disbursements and other transactions relating to the Portfolio which it shall send to the Customer in a monthly report.
11.4. The Fund Manager shall supply on demand to the Customer copies of all accounts entries and other records relating to the Portfolio. The Fund Manager will extend its normal working hours as and when reasonably requested by the Customer and will provide, without unnecessary delay, all necessary facilities and assistance to the Customer's auditors and other authorised representatives, including representatives of its shareholders and/or of the BoN, to audit and verify records of the Fund Manager relating to the securities, papers and other assets in the Portfolio, according to the applicable legislation. The scope of the audit shall not be limited by the Fund Manager and may include the examination of the Fund's accounting system, procedures, records, internal controls, and any other documents or information in the Fund Manager's possession to the extent relevant to the Customer (and subject to redaction to the extent required to respect the confidentiality of other clients) that the Customer or the auditor deems necessary acting reasonably to verify in order to facilitate formulation by the Customer of any opinion on the costs, both direct and indirect, or other amounts billed to the Customer and the performance of the Portfolio and the Fund Manager. The Fund Manager shall co-operate as necessary and facilitate the performance of any such audits, including securing for the aforementioned auditors and other authorised representatives assistance from the Fund Manager's compliance officer and internal auditors.
ensure that all matters relating to the Portfolio will be kept strictly confidential. Before the Fund Manager discloses confidential information under let. a), it shall inform the Customer to this end.
(d) the mandate as Sole Director does not end between the Termination Notice Date and the New Appointment Date, unless such ending is caused by deliberate actions of the Fund Manager, in which case the condition under this paragraph (d) will not apply.
13.6 Termination of this Management Agreement shall not terminate rights and obligations which are capable of surviving termination, including in particular, duties of the Fund Manager to report to the Customer, to provide information to the Customer and to keep matters confidential and for the Customer to indemnify the Fund Manager in accordance with clause 17.4(c), which, for the avoidance of any doubt, will never extend to Damages for termination in accordance with this clause 13. Transactions in progress shall be dealt with in accordance with the Customer's instructions or, in the absence of such instructions, having regard to the best interests of the Portfolio.
15.1. Subject to the provisions of clause 13, the duration of this Management Agreement and of the Fund Manager and the Sole Director mandates is two years simultaneously starting as of 30 September 2014.
If addressed to the Fund Manager:
Address:
Premium Point Building
78-80 Buzeşti Street, 7th -8th floor, Bucharest
District 1, Postal Code 011017
Fax: (021) 200 96 31/32
To the attention of: Mr. Grzegorz Maciej Konieczny
If addressed to the Customer:
At the contact details provided by the representative of the Customer appointed in accordance with Section 15.1.
c) fraud;
(f) material breach of the Agreement.
17.2. The Fund Manager shall also be liable for the negligence, wilful default, fraud or material breach of this Management Agreement by its Delegates, or its or their employees. As exception, the Fund Manager shall not be liable if it can show that the Damage arose from events beyond its and its Delegates' (or its or their employees') reasonable control provided it maintains reasonable back up and disaster recovery systems. The Fund Manager shall make reasonable efforts to resume normal performance of the services following, and to mitigate the consequences of, an event beyond its and its Delegates' reasonable control.
or currency and damage caused to office premises and contents due to burglary or vandalism; and (iii) electronic and computer crime for an insured amount of at least EUR 50 Million.
17.6. Upon request of the Customer, the Fund Manager shall provide to the Customer evidence that the premium for the insurance described at pt. 17.5 above has been paid.
under the LCIA Rules of Arbitration. The Party requesting the initiation of the arbitration proceedings shall serve the other Party with a written notice that such proceedings will be initiated.
shall notify the Customer forthwith of any event or matter which would, if these warranties were repeated, render them untrue, inaccurate or misleading.
This Management Agreement will be signed in the English language and executed in 3 originals, one for the Fund Manager and two for the Customer. The Fund Manager will prepare Romanian language translations to be submitted with the GSM and the necessary authorities.
Signed by and for the Fund Manager
FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED
[…] Signed by and for the Customer
[…]
The fees due to the Fund Manager in accordance with clause 10 of this Management Agreement shall be calculated and paid in RON by the Customer in compliance with the following provisions.
The fee shall be calculated based on a (i) Base Fee, and (ii) a Distribution Fee.
the Base Fee Rate multiplied by the notional amount, multiplied by the number of calendar days of payment, divided by 365,
where
the Base Fee Rate = 60 basis points per year;
1 basis point = 0.0001; and
the notional amount is the market capitalization of the Customer which is defined as the number of the Customer's paid shares, minus the weighted average number of the Customer's settled own shares held in treasury over the calculation period, then multiplied by the weighted average market price of the Customer's shares calculated for the corresponding quarter. The weighted average market price is computed based on the daily average market prices of the Customer's shares and corresponding daily volumes, as published by Bucharest Stock Exchange REGS section. If the number of shares relevant for the computation of the Base Fee (described above) changes over the calculation period, the Base Fee will be an aggregation of the computation for each sub-period.
Reference is made to distributions being "made available" to clarify that any failure on the part of any shareholder to collect, or to take the necessary steps to facilitate the receipt of, these distributions will not result in any adjustment of the calculation of the Distribution Fee due to the Fund Manager. The calculation of the Distribution Fee shall be made when such distributions become available to shareholders (e.g. payment start date). In case of repurchase of own shares, the calculation of the Distribution Fee shall be made at the date when the own shares repurchase transactions are settled.
The Distribution Fee shall be paid by the Customer quarterly, based on the invoices to be issued by the Fund Manager within twenty (20) business days following the end of the quarter in which the relevant date for calculating the distribution amount occurred.
The invoices for the Base Fee and the Distribution Fee shall be submitted to the Depositary of the Customer`s assets.
The Fund Manager shall provide to the BoN quarterly and on an annual basis and upon reasonable request of the BoN a detailed report regarding the fees collected under this Management Agreement, in the form reasonably required by the BoN.
The payment shall be done within 30 business days since receipt of the invoice.
Between:
FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED of the Adelphi, 1-11 John Adam Street, London WC2N 6HT, United Kingdom, acting through its Romanian branch having its registered office at Premium Point, 78-80 Buzesti Str., 7-8th floors, 1st. District, Bucharest, Romania ("Fund Manager") ("S.A.I." in Romanian language); and,
FONDUL PROPRIETATEA S.A. of 78-80 Buzesti Street 78-80, 1st District, Bucharest, Romania (the "Customer"),
the Fund Manager and the Customer together, the "Parties".
The Investment Management Agreement no. 45 signed on 29 April 2014 between the Customer and the Fund Manager, will be modified as follows.
"Force Majeure Event means, in relation to any party, any act, event or circumstance, the cause of which is not of such party's making nor within that party's reasonable control, including without limitation (to the extent not of that party's making nor within that party's reasonable control) act of God, war, hostilities (whether or not war has been declared), terrorist acts, acts of any civil or military authority, governmental or regulatory direction or restriction, suspension or withdrawal of licences or consents, currency restrictions, market conditions affecting the execution or settlement of transactions or the value of assets, failure or breakdown in communications, the failure of any relevant exchange or clearing house, riot, insurrection, civil commotion, public demonstration, sabotage, acts of vandalism, fire, flood, earthquake, extreme weather conditions, epidemic or pandemic, explosion, aircraft crashes or things falling from aircraft, release of ionising radiation or contamination by radioactivity, chemical or biological contamination, the order of any court or governmental or regulatory authority, delay in transportation or communications, breakage of or accidental damage to equipment, any strike, lock-out or other industrial trade dispute (not involving solely the employees of that party), structural shift or subsidence";
"New Appointment Date means, in relation to the appointment of a new fund manager and sole director, or, in the event the Customer becomes a self-managed fund, new directors of the Customer following termination of this Management Agreement, the later of: (i) the date when the new fund manager and sole director, or, as the case may be, new directors, are registered with the Trade Registry or any other competent authority as per the applicable legal provisions; and (ii) the date when the FSA issues its approval in relation to the appointment of the new sole director and fund manager as the case may be, new directors, and, (iii) the date when all other mandatory legal requirements for the replacement of the Fund Manager have been satisfied, and, in each of the cases under paragraphs (i), (ii) and (iii), being effective on the date that the Fund Manager received notice (or ought reasonably to have received notice) of the event";
"9.6. The Performance Report, together with the BoN Review Report will be reviewed by the shareholders in the October GSM. The agenda of each October GSM will allow the shareholders the opportunity to vote on (i) the continuation or termination of this Management Agreement and the Fund Manager's mandate, any proposed termination ensuring the simultaneous termination of the Fund Manager's mandate and the Management Agreement and (ii) the start of the procedures set out by the legislation in force for the selection of a new fund manager and sole director or the transformation of the company into a self-managed closed-end fund".
"13.3 The Fund Manager may terminate this Management Agreement and resign its mandate as Sole Director with six months' prior written notice. Not later than five business days following the Termination Notice Date, but subject to timely approval of the GSM agenda by the BoN, the Fund Manager will call the OGM having on the agenda the notification of the shareholders regarding the unilaterally termination of the agreement and the initiation of the procedures set out by the legislation in force for the selection of a new fund manager and sole director or the transformation of the company into a self-managed closed-end fund".
"(b) if material obligations under this Management Agreement can no longer be fulfilled due to changes in the applicable law compared to the date of signing this Agreement, provided that the Fund Manager has used reasonable endeavours to comply with, but despite those efforts compliance would not be possible; or"
"14.3 To the extent that changes in the applicable law or regulation following the signing of this Management Agreement (including, without limitation, the future provisions implementing the Directive 2011/61/EU on Alternative Investment Fund Managers under Romanian legislation) impose requirements on the Fund Manager in the performance of this Management Agreement with which the Fund Manager cannot comply, the Fund Manager undertakes to use reasonable endeavours to continue performance of the services to the extent legally possible and, to the extent not legally possible, the implementation of any amendments to this Management Agreement is subject to consent by the Customer, at its full discretion and nothing in this Management Agreement shall be construed as an expressed prior consent in this respect".
"18.4 If any Force Majeure Event shall substantially impair the ability of the Fund Manager to carry out its duties under this Management Agreement, the Customer shall urgently convene the GSM for the initiation of the legal procedures for the selection of a new fund manager and sole director or the adoption of a resolution regarding the transformation of the company into a self-managed closed-end fund".
"19.1. This Management Agreement is governed by and shall be construed in accordance with the Romanian laws".
"19.2. Dispute Resolution
a) Any dispute or difference arising out of or in connection with the Management Agreement, including without limitation any disputes regarding its valid conclusion, existence, interpretation, nullity, breach, amendment, termination in any way of this Management Agreement (each a "Dispute"), that cannot be resolved by amicable negotiations within a reasonable period of time from the notice served by any of the Parties relating to the potential Dispute shall be finally resolved by the Paris Court of Arbitration under its Rules of arbitration. The Party requesting the initiation of the arbitration proceedings shall serve the other Party with a written notice that such proceedings will be initiated.
b) The place of the arbitration shall be Paris, the language of the arbitration shall be English, and the tribunal shall consist of three (3) arbitrators appointed in accordance with the Rules of arbitration of ICC Paris".
"21.2. For the duration of this Management Agreement the Fund Manager undertakes that (i) it will not, without the prior express written approval of the BoN, change, replace or dismiss, save as a result of misconduct by the employee, Mr. Grzegorz Maciej Konieczny from acting in his capacity as the Fund Manager's and the Sole Director's representative with respect to the Customer, nor do any similar acts or things or do anything which may have a similar effect, and (ii) it will use all reasonable efforts to procure that Mr. Grzegorz Maciej Konieczny must, for the duration of his employment by the Fund Manager in the course of this Management Agreement, devote the necessary time for the management of the Portfolio".
"This Management Agreement will be signed in Romanian and English language and executed in 3 originals, one for the Fund Manager and two for the Customer".
The provisions regarding Distribution fees/Distributions of the Annex are deleted and the Annex will have the following content:
The fees due to the Fund Manager in accordance with clause 10 of this Management Agreement shall be calculated and paid in RON by the Customer in compliance with the following provisions.
The fee shall be calculated based on a Base Fee.
the Base Fee Rate multiplied by the notional amount, multiplied by the number of calendar days of payment, divided by 365,
where
the Base Fee Rate = 60 basis points per year;
1 basis point = 0.0001; and
the notional amount is the market capitalization of the Customer which is defined as the number of the Customer's paid shares, minus the weighted average number of the Customer's settled own shares held in treasury over the calculation period, then multiplied by the weighted average market price of the Customer's shares calculated for the corresponding quarter. The weighted average market price is computed based on the daily average market prices of the Customer's shares and corresponding daily volumes, as published by Bucharest Stock Exchange REGS section. If the number of shares relevant for the computation of the Base Fee (described above) changes over the calculation period, the Base Fee will be an aggregation of the computation for each sub-period.
The invoices for the Base Fee shall be submitted to the Depositary of the Customer`s assets.
The Fund Manager shall provide to the BoN quarterly and on an annual basis and upon reasonable request of the BoN a detailed report regarding the fees collected under this Management Agreement, in the form reasonably required by the BoN.
The payment shall be done within 30 business days since receipt of the invoice."
This Addendum will be signed in Romanian and English languages and executed in a number of three (3) counterparts, all of which taken together constitute the agreement, one (1) for the Fund Manager and two (2) for the Customer.
AS WITNESS the hands of the duly authorized representatives of the parties on the date which appears first on page 1.
Signed by and for:
FONDUL PROPRIETATEA S.A.
______________________
Sorin Mindrutescu, Chairman of the Board of Nominees
Signed by and for: FRANKLIN TEMPLETON INVESTMENT MANAGEMENT LIMITED UNITED KINGDOM
_______________________
Konieczny Grzegorz Maciej, Legal Representative of the Romanian Branch
Name of the company, legal form, headquarters and duration
The duration of Fondul Proprietatea is unlimited.
The purpose of Fondul Proprietatea is the management and administration of the portfolio.
(1) Fondul Proprietatea has as main object of activity the management and administration of the portfolio.
(2) The main domain of activity of Fondul Proprietatea is the one described by CAEN Code 643 – mutual funds and other similar financial entities, and the main activity is financial investments - CAEN Code 6430.
(3) The business object of Fondul Proprietatea is the following:
a) management and administration of the portfolio;
b) other additional and adjacent activities, according to the regulations in force.
b) incorporating reserves, except for the legal reserves and of the reserves created out of the re-evaluation of the patrimony, as well as of the benefits and issuing premiums.
(5) The share capital may be decreased by:
a) decreasing the number of shares;
Fondul Proprietatea is authorized to issue bonds in accordance with the provisions of the law. Fondul Proprietatea is not allowed to conclude loan agreements for investment reasons.
(1) The general meeting of the shareholders may be ordinary and extraordinary.
(2) The ordinary general meeting of the shareholders has the following competencies, duties and functions:
a) to discuss, approve and amend the annual financial statements after reviewing the reports of the Fund Manager and financial auditor;
b) to establish the distribution of the net profit and to establish the dividends;
c) to appoint the members of the Board of Nominees ("BoN") and to cancel their appointment;
d) to appoint the Fund Manager in accordance with the law and to cancel its appointment;
e) to appoint and cancel the appointment of the financial auditor and to set the minimum duration of the financial audit agreement;
f) to set the level of the remuneration of the members of the Board of Nominees, the Fund Manager and of the financial auditor for financial audit services for the ongoing fiscal year;
g) to rule over the management of the Fund Manager and to evaluate his/her performances and to discharge him/her from its management,
h) to decide on the action in a court of law against the Fund Manager or, as the case may be, against the financial audit, for damages caused to Fondul Proprietatea;
i) to approve the strategies and the development policies of Fondul Proprietatea;
j) to establish the annual income and expenditure budget for the following financial year;
k) to decide upon the pledge, lease or the creation of the movable securities or mortgages on the assets of Fondul Proprietatea;
l) to decide on any other aspects regarding Fondul Proprietatea, according to the legal duties.
(3) The extraordinary general meeting of the shareholders is entitled to decide on the following:
a) set-up or closing of some secondary units: branches, agencies, representative offices or other such units with no legal personality;
b) share capital increase;
c) share capital decrease or re-completion thereof by issuing new shares;
d) conversion of shares from one category to another;
e) conversion of a category of bonds to another category or to shares;
f) issue new bonds;
g) approves the admission for trading and nominates the regulated market on which the shares of Fondul Proprietatea will be traded;
h) execution of any agreement / legal document which may create binding obligations to Fondul Proprietatea including, without limitation to, agreements for purchase, sale or exchange or creation of encumbrances of the non-current assets of Fondul Proprietatea whose value exceeds, either individually or cumulatively during a financial year, 20% of the total value of the non-current assets, less any receivables;
i) change of the management system of Fondul Proprietatea;
j) limitation or cancellation of the preference right of the shareholders;
k) approves the Investment Policy Statement;
l) any other amendment of the constitutive act or any other resolution requiring the approval of the extraordinary general meeting of the shareholders, according to applicable law or to this Constitutive Act.
(12) The chairperson of Board of Nominees may request to the Fund Manager the calling of the general meeting according to article 16 paragraph (4) second sentence.
(13) The Fund Manager immediately call the general meeting of the shareholders, upon written request of the shareholders, individually or jointly, representing at least 5% of the share capital, in case the request includes dispositions that fall under the responsibility of the general meeting of shareholders.
a) upon the first convocation, the attendance of the shareholders representing at least a fourth of the shares having voting rights, and the decisions are taken with majority of votes held by the shareholders attending or being represented;
b) upon the second convocation, the general meeting of the shareholders may deliberate on the items included in the agenda of the first meeting in the presence of the shareholders representing at least one fifth of the total number of the shares having voting rights, taking decisions by majority of votes held by the shareholders attending or being represented.
(ii) at least one fifth of the total number of the shares having voting rights, upon the second convocation is required.
II. Procedure of the meetings
(7) On the day and hour established in the convocation, the general meeting of the shareholders shall be opened by the permanent representative of the Fund Manager or, in its absence, by the one holding its place. A legal representative of the Fund Manger or a person appointed by the legal representative of the Fund Manager shall be the chairman of the meeting. The members of the Board of Nominees shall participate at the meetings, as well.
working days subsequent to the date of publication of the informative material and is prior to the convocation date of the general meeting of the shareholder by at least 48 hours.
(4) The Board of Nominees elects from amongst its members a chairman of the Board.
The Board of Nominees has the followings duties and functions:
(5) Receives from the Fund Manager for analysis the yearly income and expenditure budget before it is submitted to the approval of the general meeting of shareholders and presents an opinion to the Fund Manager and to the general meeting of the shareholders regarding such;
(6) Receives from the Fund Manager for analysis the strategy in accordance with the Fondul Proprietatea' s investment policy before to be submitted to the approval of the general meeting of the shareholders and presents an opinion to the Fund Manager and to the general meeting of the shareholders;
The Board of Nominee shall draft and present to the general meeting of the shareholders an annual report regarding the monitoring activity performed or a monitoring report for another period agreed by the general meeting of shareholders;
(19) Following of proposal of Fund Manager, recommends to the Extraordinary General Meeting of the Shareholders the appointment of the public offer intermediate, as well as on his remuneration , when it will become necessary that such a company be appointed related to the admission to trading of Fondul Proprietatea.
(20) Approves the delegation by the Fund Manager of certain activities. The delegation will be in force after the approval of NSC, where required by legislation in force.
persons specified in paragraphs (8) and (9) than the ones usually practiced by Fondul Proprietatea towards third parties
(11) The Board of Nominees shall promptly decide on all requests for approval from the Fund manager within a reasonable time frame to allow the Fund Manager to comply with it's own obligations.
The Fund Manager shall appoint a natural person as its permanent representative. The Fund Manager can make changes of its permanent representatives (that are the legal representatives and managers of the Fund Manager), with the prior authorisation of NSC. All changes will be registered at Trade Register.
xii) propose to the ordinary general meeting of the shareholders the conclusion of the financial audit agreement according to the legal provisions in force, upon obtaining the prior approval of the Board of Nominees, as well as approve the procedure of internal audit and the audit plan;
xiii) decide the relocation of the registered office, provided that the registered office shall at all times be registered in Romania;
(1) The financial statements of Fondul Proprietatea are subject to financial audit. Also, Fondul Proprietatea shall organise its internal audit in accordance with the legal provisions in force.
For the fulfilment of the business object and in accordance with the attributions established, Fondul Proprietatea uses the financial sources established pursuant to the law, banking credits and other financial sources. Fondul Proprietatea is not allowed to conclude loan agreements for investment reasons.
The financial year begins on 1st of January and terminates on 31st December of each year.
(1) The accounting is kept in Romanian language and in national currency.
(2) Fondul Proprietatea must draft the annual financial statements according to legal previsions in force.
(3) Fondul Proprietatea creates legal reserves and other reserves, pursuant to the law.
(4) The payment of dividends owed to the shareholders is made by Fondul Proprietatea, according to the law.
Fondul Proprietatea shall maintain, by care of the Fund Manager and internal auditors, all registries provided by the law. The shareholders registry is kept by the Central Depository.
(1) The dissolution of Fondul Proprietatea shall take place in the following cases:
a) impossibility of performing the company's business object;
b) declaring the company's nullity;
The calculation method of the net asset is made according to the legal provisions in force.
The litigations of any type shall be amiably resolved and if this is not possible, they shall be solved by the competent arbitral or judicial courts.
The provisions of this constitutive act are completed by the provisions of Company Law No. 31/1990, republished, as further amended and completed, and other applicable legal provisions in force as well as by the provisions of the capital market legislation governing the issuers whose shares are admitted on trading.
Annex 9.1.Tender Offer Document
Issuer: Fondul Proprietatea SA
Price of ________ lei (RON)/share
during _________-____________
Bidder: Fondul Proprietatea SA
Intermediary
RAIFFEISEN BANK S.A.
THIS OFFER IS ADDRESSED ONLY TO SHAREHOLDERS OF FONDUL PROPRETATEA, IN ACCORDANCE WITH REGULATIONS IN FORCE
APPROVED BY THE FINANCIAL SUPERVISORY AUTHORITY ("FSA") BY DECISION __________DATED _______________
THE AUTHORIZATION ENDORSEMENT ON THE OFFER DOCUMENT SHALL NOT BE CONSTRUED AS A GUARANTEE NOR REPRESENTS OTHER FORM OF APPRECIATION BY THE FSA WITH RESPECT TO THE OPPORTUNITY, ADVANTAGES OR DISADVANTAGES, PROFIT OR RISKS THAT MAY BE IMPLIED BY THE TRANSACTIONS TO BE CARRIED OUT IN CONNECTION WITH THE TENDER SUBJECT TO THE AUTHORIZATION DECISION; THE AUTHORIZATION DECISION CERTIFIES ONLY THE COMPLIANCE OF THE OFFER DOCUMENT WITH THE LEGAL REQUIREMENTS AND THE NORMS ADOPTED FOR THE APPLICATION THEREOF.
NOT FOR DISTRIBUTION TO ANY PERSON RESIDENT OR LOCATED IN A RESTRICTED JURISDICTION.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or what action you should take, you should consult a person authorised under the Capital Markets Law no. 297/2004, as amended, or if you are resident outside Romania, a person authorised by the appropriate regulator in your jurisdiction, who specialises in advising on the acquisition of shares and other securities before taking any action. The whole of the text of this document should be read carefully.
The main purpose of this document is to provide general information in order to assist Shareholders to form an opinion regarding the tender offer to be launched by the Bidder in respect of the shares issued by the Issuer (as detailed in this document).
This Offer Document has not been prepared with the intent to be the sole basis for assessing the Issuer and making the decision to sell. Also, this Offer Document must not be interpreted as the Intermediary's or the Bidder's or the Issuer's recommendation to sell. Each Shareholder must independently assess the Issuer and the proposed Offer. Each Shareholder is advised to consult with its own legal, financial, tax or other advisors, and with its accountants or other consultants with respect to legal, tax, business and financial issues or with any issue dealing with the decision to sell its shares, the Issuer and the Intermediary declining any liability with respect to such issues.
This document constitutes the English version of the Offer Document approved by the FSA by Decision no. ________ dated ______________________. This translation of the Offer Document from Romanian to English language is not an official translation and is made available for information purposes only, prepared solely for the convenience of the non-Romanian speaking shareholders of Fondul Proprietatea SA and potential investors and is not a substitute for the original Romanian version of the Offer Document. This translation is not required by any law or regulation and hence has not been reviewed or approved by the FSA. The accuracy or completeness of this translation is not guaranteed. In the event of any inconsistencies between this English translation and the Romanian version, the Romanian version shall prevail.
The availability of the Offer to persons who are not resident in Romania may be affected by the laws of their relevant jurisdiction. Such persons should inform themselves about and observe any applicable legal or regulatory requirements of their relevant jurisdiction. Unless otherwise permitted by applicable law and regulation, the Offer is not being and will not be, made, directly or indirectly, in or, into, and will not be capable of acceptance from or within any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure for the Bidder if information or documentation concerning the Offer is sent or made available to the Shareholders in that jurisdiction (the "Restricted Jurisdiction"). Accordingly, copies of this document, the Subscription Form and any other accompanying document are not being, and must not be, directly or indirectly mailed or otherwise forwarded, distributed or sent in, into or from Restricted Jurisdiction. Persons receiving this document, the Subscription Form (including custodians, nominees and trustees) should observe these restrictions and must not mail or otherwise distribute or send them in, into or from any such jurisdictions as doing so may be a breach of applicable law and regulation in that jurisdiction and may invalidate any purported acceptance of the Offer. Any person (including custodians, nominees and trustees) who would, or otherwise intends to, or may have a legal or contractual obligation to, forward this document, the Subscription Form and/or any related document to any jurisdiction outside Romania, should inform themselves and observe any applicable legal or regulatory requirements of any relevant jurisdiction and seek appropriate advice.
The Issuer's activity, financial condition, financial results obtained and the information included in the Offer Document may subsequently change. Fondul Proprietatea both in its quality as Bidder and as Issuer and the Intermediary undertakes no obligation to update or revise the information contained in this Offer Document.
Publication
A copy of this document is and will be available free of charge, subject to restrictions relating to persons
resident in any Restricted Jurisdiction:
The tender offer (hereinafter called "Public Offer" or "Offer") is initiated by Fondul Proprietatea S.A., a company established and operating according to the Romanian law, with the registered office in 78-80 Buzesti Street (7th floor), District 1, Postal Code 011017, Bucharest, Romania, registered at the Trade Registry J40/21901/2005 (hereinafter called "Bidder" or "Fund"), through Raiffeisen Bank S.A. ("Raiffeisen Bank") with the registered office in Sky Tower building located at 246C Calea Floreasca, 1st District, Bucharest, postal code 014476, registered at the Trade Registry under no. J40/44/1991, unique registration code 361820, registered in the Bank Registry under no. RB-PJR-40-009/1999, in FSA Registry under no. PJR01INCR/400009 and at the Register of personal data operators under no. 1967 and 189, acting as intermediary in connection with the Offer (hereinafter called "Intermediary"), and targets the acquisition of a number of 750,000,000 shares of Fondul Proprietatea S.A., as issuer of the shares subject to the Offer (in this capacity, hereinafter called "Issuer") fully paid that are not owned by the Bidder, according to the provisions specified below. This tender offer document (hereinafter called "Offer Document") was approved by the Financial Supervisory Authority (hereinafter called "FSA") by decision __________/________________.
The target company under the Public Offer is Fondul Proprietatea SA, identified according to the following data:
| | Legal form: | Joint stock company, registered and operating under Romanian law |
|---|---|---|
| | Registered office: | 78-80 Buzesti Street (7th floor), District 1, Postal Code 011017, Bucharest, Romania |
| | Fiscal code: | 18253260 |
| | Registration number at the Trade Registry: |
J40/21901/2005 |
| | Main object of activity: | NACE code 6430 - financial investments |
| | Share capital: | Subscribed share capital (as registered in the trade registry, as at 17.10.2014): RON 11,815,279,886.85, divided into a number of 12,437,136,723 ordinary registered shares, issued in a dematerialized form, each share having a nominal value of RON 0.95 and granting equal rights to its owner. |
The share capital of the Fund as registered on the date of this Offer Document in the shareholders' registry kept by the Central Depository is RON 12,861,183,036.65 divided into a number of 13,538,087,407 shares, each with a nominal value of RON 0.95 (hereinafter, the "Initial Share Capital").
Following the endorsement by the FSA of the share capital reduction approved by the Fund's shareholders by way of decision no. 7 of 28.04.2014 (from RON 12,861,183,036.65 to RON 11,815,279,886.85 by way of annulment of a number of 1,100,950,684 shares with a nominal value of RON 0.95/share), the Fund has registered with the trade registry the reduced share capital and as at 17.10.2014 the share capital of the Fund as registered with the trade registry was as follows ("Reduced Share Capital"):
T th The share cap he issuance o pital reductio of the securit on will be reg ties registrati gistered with ion certificat h the shareho e correspond olders' regist ding to the R try kept by th Reduced Shar he Central D re Capital. Depository, a after
B by Based on the y the Centra Initial Share l Depository e Capital, th y was the foll e synthetic s lowing: structure of I Issuer's shar reholders on 13 October 2014, provid ded
| Shareholder's name | No. of shares | Participation $(\% )$ |
|---|---|---|
| MANCHESTER SECURITIES CORP. | 2,087,618,216 | 15.4203% |
| FONDUL PROPRIETATEA SA | 1,377,638,940 | 10.1760\% |
| OTHER SHAREHOLDERS | 10,072,830,251 | 74.4037% |
| TOTAL | 13,538,087,407 | 100% |
A th As of 25.01.2 he Bucharest 2011, the sha t Stock Exch ares issued by hange (the "B y the Issuer a BSE"), tier I u are admitted under ticker d to trading o FP and havin on the spot re ng ISIN ROF egulated mar FPTAACNO rket operated OR5. d by
T p The following rior to subm g chart show itting the Pub ws the evolut blic Offer do tion of the sh ocumentation hare price o n with the FS f FP, expres SA for appro ssed in RON oval: N, during the last 12 mon nths
T su 2 The closing p ubmission of 014. price of the f this Offer shares issue Document w ed by the Is with the FSA ssuer's on th A was of 0,8 he trading d 8950 RON/sh date immedia hare, price e ately preced established o ing the date on October 1 e of 17th,
The Bidder is Fondul Proprietatea SA, identified with the following data:
| | Legal form: | Joint stock company, registered and operating under Romanian law |
|---|---|---|
| | Registered office: | 78-80 Buzesti Street (7th floor), District 1, Postal Code 011017, Bucharest, Romania |
| | Sole registration number: | 18253260 |
| | Registration number at the Trade Registry: |
J40/21901/2005 |
| | Object of activity: | NACE code 6430 - financial investments |
| | Share capital: | Subscribed share capital (as registered in the trade registry, as at 17.10.2014): RON 11,815,279,886.85, divided into a number of 12,437,136,723 ordinary registered shares, issued in a dematerialized form, each share having a nominal value of RON 0.95 and granting equal rights to its owner. |
Based on the Initial Share Capital, the synthetic structure of Bidder's shareholders on 13 October 2014, as provided by the Central Depository, was the following:
| Shareholder's name | No. of shares | Participation (%) |
|---|---|---|
| MANCHESTER SECURITIES CORP. | 2,087,618,216 | 15.4203% |
| FONDUL PROPRIETATEA SA | 1,377,638,940 | 10.1760% |
| OTHER SHAREHOLDERS | 10,072,830,251 | 74.4037% |
| TOTAL | 13,538,087,407 | 100% |
B. Bidder's Presentation
• The Bidder was incorporated on 28 December 2005 as a joint stock company and was subsequently authorized by the National Securities Commission as a closed-end investment company. The Fund is registered with the FSA as other undertakings for collective investment under number PJR09SIIR/400006/18.08.2010.
• The Fund's investment objective is the maximization of returns and per-share capital appreciation.
• The sole director and fund manager of the Fund is Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch ("Fund Manager" or "FTIML").
• Since 25 January 2011 the Fund's shares are admitted to trading on the spot regulated market operated by the Bucharest Stock Exchange.
| Information about the Bidder | |
|---|---|
| Listing | Bucharest Stock Exchange |
| Since | 25 January 2011 |
| Ticker | FP |
| Bloomberg | FP RO |
| Reuters | FP.BX |
| ISIN | ROFPTAACNOR5 |
| FSA Registration No | PJR09SIIR/400006/18.08.2010 |
| Securities Registration No | AC-4025-1/12 August 2014 |
| Address: | 78-80 Buzesti Street (7th floor), District 1, | ||||
|---|---|---|---|---|---|
| Postal Code 011017, Bucharest, Romania. | |||||
| Web: | www.fondulproprietatea.ro |
E-mail: [email protected]
Telephone: +40 21 200 9600
Fax: +40 21 200 9631/32
The Bidder is not aware of the existence of other persons acting in concert with it in relation to the Issuer.
The Bidder holds directly a number of 1,377,638,940 shares issued by the Issuer, representing 10.1760% of the Issuer's Initial Share Capital (subscribed) as at 13 October 2014, in accordance with the Registry excerpt provided by the Central Depository and statement of account provided by BRD Groupe Société Générale, the Bidder custodian .
The Bidder intends to acquire through the Public Offer a number of 750,000,000 fully paid shares issued by the Issuer (which do not include shares already owned on the date of this Offer Document) (the "Offered Shares"). The Public Offer is addressed to all natural and legal persons other than the Bidder holding shares issued by the Issuer during the Offer Period (the "Shareholders").
The acquisition by the Bidder of Offered Shares in the Public Offer has been authorized by the resolution of the extraordinary general shareholders' meeting of the Bidder no. 9 dated 28 April 2014 published with the Official Gazette of Romania Part IV no. 2995 dated 27.05.2014 and is part of the programme for the buy-back of own shares the purpose of which is the decrease of the Bidder's share capital.
After the closing of the Public Offer, the Bidder intends to cancel the acquired shares and decrease its share capital with the corresponding nominal value of the cancelled shares.
The price per Offered Share to be paid by the Bidder within the Public Offer is of ________ lei (RON)/share (hereinafter called "Offer Price").
Shareholders who shall validly accept the Offer in accordance with the terms of this Offer Document shall receive the Offer Price per Offered Shares sold in the Offer, less any commissions and transaction fees charged by the intermediaries and any applicable bank transfer fees. Certain costs are detailed in the Subscription Form for the Public Offer; Shareholders intending to participate in the Public Offer should verify the total costs of the sale of the Offered Share with the intermediary through which they intend to subscribe in the Offer. Any profit made by an investor from the sale of the allocated shares in the Offer is a capital gain from a tax perspective and consequently the Bidder is not responsible for withholding or payment of and has not withheld nor paid any taxes, or other fiscal duties in relation to the Offer Price payable to the Shareholders who have sold shares within the Public Offer. Each Shareholder shall seek independent advice from their legal, tax or financial advisors and shall duly comply with any tax obligations which may arise in respect of the income derived in connection to the shares sold within the Public Offer.
The Offer Price was established according to Law no. 297/2004 regarding the capital markets ("Capital Markets
Law"), as amended and the Regulation of the National Securities Commission no. 1/2006 regarding the issuers and the operations with securities, as amended ("Regulation no. 1/2006"). According to the provisions of art. 57, paragraph 1 of Regulation no. 1/2006, the price in a tender offer should be equal to at least the highest of:
Based on the price determination criteria set out above, the Offer Price is of _______ RON/share.
The total value of the Public Offer (hereinafter called "Offer Value") will be equal to the number of Offered Shares acquired by the Bidder in the Offer multiplied with the Offer Price. The maximum value of the Public Offer amounts to _____________ lei (RON).
According to the regulations in force, the Offer Price may be increased during the Public Offer by the Bidder according to the procedure described in Section Amendment of the Public Offer of this Offer Document. In this situation, the Shareholders who have validly accepted the Public Offer before the amendment of the Offer Price will receive the increased price.
This Public Offer is opened for a period of 21 (twenty one) working days and will be initiated on the fourth working date following the date of publication of the tender announcement in two (2) national newspapers. Offer period is between ___________ and ___________ (hereinafter called "Offer Period"). The validity period of the Public Offer may be extended by the Bidder according to the procedure described in Section Amendment of the Public Offer of this Offer Document. Throughout its duration, the Public Offer is irrevocable. On expiry of the Offer Period, the Public Offer becomes obsolete.
In accordance with the Capital Markets Law and Regulation no. 1/2006, occurrence of any new event or change in the initial information presented in the Offer Document, that may affect the investment decision during the Offer Period shall trigger the obligation on the Bidder to prepare a supplement to this Offer Document.
During the Offer Period, the Bidder may change the initial terms and conditions of the Offer, with the observance of the following conditions:
Any request to amend the Offer Document shall be submitted to the FSA for approval not later than one (1) working day prior to the last date of the Offer Period.
The amendments to the Offer Document are valid and may be implemented only if approved by the FSA and published in accordance with the applicable law. The FSA may approve the amendments to the Offer Document according to the applicable law or may refuse to grant approval. In case the request to approve amendments to the Offer Document refers to the price or to other elements of the Offer Document, other than the closing of the Offer Period, the FSA is entitled to extend the Offer Period, so that there is a period of at least two (2) working days between the date of publication of the supplement and the closing date of the Offer Period. The amendment is valid from the date of its publication by way of a supplement to the Offer Document through the same channels used for the publication of the Offer Document.
If the amendment to the Offer Document consists in increasing the Offer Price, all subscribers in the Offer, including those that have already subscribed prior to price amendment, shall receive the increased price.
The Public Offer shall be carried out exclusively through the trading systems operated by the BSE.
The Offer Document shall be made available to the public free of charge, as follows:
Shareholders may subscribe in the Offer in accordance with the terms of this Offer Document by completing and signing the subscription form in the form made available to interested Shareholders by authorized intermediaries (hereinafter called "Subscription Form"), attached as Annex 1 to this Offer Document, and by delivering before the expiry of the Offer Period, all necessary documents, at one of the following locations:
On the last day of the Offer Period, Subscription Forms may be submitted with the authorized intermediaries indicated above only until 12:00 PM Eastern European Time (GMT+2).
The execution of the Subscription Form in accordance with this Offer Document represents the unconditional acceptance of the terms and conditions of the Public Offer and of the Offer Document in its entirety, the relevant Shareholder confirming that it has received, read, accepted and agreed with the terms and conditions of this Offer Document and that it has subscribed in compliance therewith. After the expiry of the Offer Period, the subscriptions will remain irrevocable until completion of the operations set forth in this Offer Document.
Each Shareholder intending to subscribe in the Public Offer may only subscribe a number of shares held in the Issuer for which it is a registered owner on the date of submission of the Subscription Form with the authorized intermediary in the Offer or with a custodian, unless the respective Shareholder sells a part or all of its shares in the Issuer until the trade date of the Offer. Each intermediary authorized for the purpose of the Offer undertakes to check upon receiving each subscription form with the accompanying documents that the number of shares in the Issuer subscribed by each Shareholder and set in the subscription form does not exceed the number of shares held at that time by the respective Shareholder in the Issuer as registered in the account opened with the respective intermediary of with the custodian. Each intermediary authorized for the purpose of the Offer may only validate the subscription made by a Shareholder and place the corresponding sell order into the trading system of the BSE after it has performed the above described checking process. Each intermediary authorized for the purpose of the Offer is fully liable for any damages caused to the Bidder or any third parties, directly or indirectly, by failure to comply with the above described process in respect of the subscriptions submitted with the respective intermediary.
In case the Shareholder has concluded a valid brokerage contract with one of the intermediaries authorized for the purpose of the Offer, the respective Shareholder may send to the respective intermediary a standard sale order in respect of the shares in the Issuer intended to be sold in the Offer, without being required to submit any other additional documentation excepting the evidence of ownership of the shares in the form of a statement issued by the custodian. The respective intermediary will fill in the Subscription Form on behalf of the respective Shareholder.
In case the Shareholder has not concluded a valid brokerage contract with an intermediary authorized for the purpose of the Offer, the Subscription Form will have attached any other documents requested by the intermediary for the purpose of carrying out its duty to comply with the "know your client" rules, based on applicable regulation and on internal norms and procedures for client identification.
Documents in a different language than Romanian or English, submitted by a Shareholder legal person or an entity without legal personality shall be accompanied by a translation thereof in Romanian or English language.
If (a) a Subscription Form contains factual or legal errors or is not accompanied by the required documentation and/or (b) any shares intended to be subscribed in the Offer by a Shareholder (i) are restricted in any way from transfer and such restriction in registered with the Central Depositary and/or (ii) are subject to any options or other rights in favor of a third party and/or (iii) are not held in the account by the Shareholder or the number of shares indicated in the Subscription Form exceeds the number of shares actually held by the Shareholder, the relevant Subscription Forms shall be deemed null and void and shall not be validated by the relevant intermediaries.
The Intermediary and the intermediaries authorized for the purpose of the Offer shall check the validity of the Subscription Forms and related documentation and validate them in accordance with the terms and conditions of this Offer Document prior to introducing the sale orders into the trading system of the BSE.
Immediately after the validation of a subscription by a Shareholder, the relevant intermediary authorized for the purpose of the Offer will block the Offered Shares subscribed by that Shareholder or, in case the Shareholder is serviced by a custodian, the Shareholder is obliged to instruct its custodian to block the subscribed Offered Shares until the trade date of the Offer. Each intermediary authorized for the purpose of the Offer and each custodian of Shareholders subscribing in the Offer are required to take all the measures necessary to ensure an effective blocking of the subscribed Offered Shares into the relevant accounts opened with the respective intermediary or with the respective custodian.
Any subscribed Offered Shares that will not be allocated for the purpose of the Offer will be unblocked by the respective intermediary/custodian after allocation of the subscribed Offered Shares in the Offer on the trade date of the Offer. Also, if a Shareholder revokes its subscription in the Offer, the subscribed Offered Shares will be unblocked immediately after the intermediary validates the revocation form.
All subscribed Offered Shares that will be allocated in the Offer shall be unblocked for transfer immediately prior to and for the purpose of the registration of the transactions in the Offer in the trading system of the Bucharest Stock Exchange.
The Intermediary and each of the intermediaries whose access in the Public Offer is authorized by the Intermediary must inform the Shareholders subscribing through it in connection with the terms and conditions of the Offer and each of them is exclusively liable for carrying out of the Public Offer and the observance of this Offer Document and the FSA regulations, including without limitation for the completion of the settlement of the trades carried out pursuant to the orders collected, validated and registered in the BSE systems related to the Offer and corresponding payments to the beneficiaries.
The Bidder intends to acquire through the Public Offer a number of 750,000,000 fully paid shares issued by the Issuer that are not owned by the Bidder.
In case the total number of shares subscribed by the Shareholders accepting the Public Offer in accordance with this Offer Document exceeds the number of Offered Shares, the allocation of shares will be done on a pro-rata basis. For the avoidance of doubt, in such a case, any Shareholder accepting the Public Offer will sell a number of shares equal with the number of shares indicated in the Subscription Form and validated by the relevant intermediary in accordance with this Offer Document multiplied with the ratio between the total number of Offered Shares and total number of shares subscribed in the Offer by the Shareholders as indicated in the validated Subscription Forms. Any fractions of shares resulting from such pro rata allocation shall be rounded down to the nearest natural number of shares. For the avoidance of doubt, a Shareholder owning more than the maximum number of Offered Shares is entitled to tender in the Offer up to the total number of shares held in the Issuer and such number of shares tendered will be considered in the total number of shares tendered in the Offer when assessing the pro rata allocation, but the maximum number of shares that will be sold under this Public Offer by the respective Shareholder in the Offer shall be calculated by applying the allocation ratio to the number of shares tendered in the Offer. Subscriptions are not allowed for fractional shares.
The allocation ratio will be made public on the last date of the Offer Period, via the Bucharest Stock Exchange electronic system.
The payment of the Offer Price for the Offered Shares acquired by the Bidder in the Offer shall start immediately after the settlement of the trades in the Offer without exceeding 3 (three) working days from the settlement date. No payments will be made before the expiry of the Offer Period.
The trades in the Public Offer will take place on the business day immediately following the closing date of the Offer Period and will consist in the automatic recording in the electronic system of the BSE of two (2) types of orders: a set of sell orders in the account of the selling Shareholders that subscribed under the Public Offer and a purchase order in the Bidder's account. The settlement of the trades in the Offer shall occur on the second trading date following the trade date (T+2).
The intermediaries authorized by the FSA whose access in the Public Offer was authorized by the Intermediary and set up by the BSE will have to abide by the terms of the Public Offer by signing the Letter of Engagement.
The Bidder shall not be liable for the payment of any capital gains tax, any transaction fees and charges or other charges and commissions payable by the Shareholders who have sold shares within the Public Offer. Each Shareholder will receive payment for the sold shares in accordance with the option specified by the Shareholder in the Subscription Form, while any related costs are to be borne by the Shareholders who have accepted the Public Offer.
The Bidder shall finance the Offer using funds already available.
| Million RON | 2011 | 2012 | 2013 |
|---|---|---|---|
| Total assets | 11,177 | 11,875 | 10,946 |
| Revenues from current activity | 618 | 872 | 1,311 |
| Gross profit | 546 | 567 | 682 |
| Net profit | 544 | 567 | 682 |
Source: Annual audited financial statements of Fondul Proprietatea S.A. for years 2011 – 2013, prepared in accordance with Romanian accounting regulations (CNVM Regulation no. 4/2011)
The Bidder and the Intermediary state on oath that the information contained in the Offer Document is true and no omission was made that is likely to affect significantly the content of the Offer Document.
In accordance with Article 182 of Law 297/2004 regarding the Capital Markets Law, the Bidder and the
Intermediary are jointly liable for the preparation of this Document Offer and for compliance with the legal provisions regarding the truthfulness, accuracy and exactness of the information in the Offer Document and in the Offer Announcement, as the case may be. Initiation and completion of this Public Offer are governed by Capital Markets Law and implementing regulations adopted by the Romanian National Securities Commission/Financial Supervisory Authority in the application thereof.
The legal relationship between the Bidder and the Shareholders who have subscribed under the Public Offer, will be governed by the Romanian law. Any dispute arising under or in connection with this relationship will be resolved by the Romanian competent courts, according to the rules of jurisdiction laid down by the Romanian law.
Grzegorz Maciej Konieczny
Dana Mirela Ionescu Head of Investment Banking and Capital Markets
Franklin Templeton Investment Management Ltd United Kingdom Bucharest Branch, acting as sole director on behalf of FONDUL PROPRIETATEA S.A.
Approved by decision of the Financial Supervisory Authority no. 1591 dated 28 October 2014
("Offer Document")
Issuer: Fondul Proprietatea S.A. Bidder: Fondul Proprietatea SA
Intermediary RAIFFEISEN BANK S.A.
APPROVED BY THE FINANCIAL SUPERVISORY AUTHORITY ("FSA") BY DECISION __________DATED _______________
THE AUTHORIZATION ENDORSEMENT ON THE OFFER DOCUMENT SHALL NOT BE CONSTRUED AS A GUARANTEE NOR REPRESENTS OTHER FORM OF APPRECIATION BY THE FSA WITH RESPECT TO THE OPPORTUNITY, ADVANTAGES OR DISADVANTAGES, PROFIT OR RISKS THAT MAY BE IMPLIED BY THE TRANSACTIONS TO BE CARRIED OUT IN CONNECTION WITH THE TENDER SUBJECT TO THE AUTHORIZATION DECISION; THE AUTHORIZATION DECISION CERTIFIES ONLY THE COMPLIANCE OF THE OFFER DOCUMENT WITH THE LEGAL REQUIREMENTS AND THE NORMS ADOPTED FOR THE APPLICATION THEREOF.
Date of the amendment 5 November 2014
NOT FOR DISTRIBUTION TO ANY PERSON RESIDENT OR LOCATED IN A RESTRICTED JURISDICTION.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or what action you should take, you should consult a person authorised under the Capital Markets Law no. 297/2004, as amended, or if you are resident outside Romania, a person authorised in your jurisdiction, specialising in advising on the acquisition of shares and other securities before taking any action. The entire text of this document should be read carefully.
The main purpose of this document is to provide updated information in connection with certain information presented in the Offer Document and shall be read only together with the Offer Document and in the context of the Offer described in the Offer Document. Thus, all restrictions to participate in the Offer and/or to receive/disseminate this document or of any other document related to the Offer, including the restrictions in
respect of restricted jurisdictions apply accordingly and are included by reference in this document. Neither Fondul Proprietatea S.A., in its capacity of bidder and issuer in relation to the Offer, nor Raiffeisen Bank S.A., in its capacity of intermediary, have updated other information than the data presented within this
supplement, all the other information presented in the Offer Document being accurate and complete as at the date of the Offer Document. Thus, neither Fondul Proprietatea S.A in its capacity of bidder and issuer in relation to the Offer, nor Raiffeisen Bank S.A. in its capacity of intermediary, undertakes any liability regarding the accuracy and completeness of the information presented in the Offer Document at any date after the date of the Offer Document, except for the information presented in this supplement.
A copy of this document, together with the Offer Document will be available free of charge, subject to restrictions relating to persons resident in any Restricted Jurisdiction:
c. on paper, free of charge, at Raiffeisen Bank S.A. office, in Calea Floreasca 246D, Office Building, 1st District, postal code 014476, Bucharest, fax 021.230.06.84 and at the Bidder's registered office, respectively 78-80 Buzesti Street (7th floor), District 1, Postal Code 011017, Bucharest, Romania, telephone 021.200.96.00, starting with the date of publication of the supplement announcement, and
d. in electronic form, by posting on the website of the Bucharest Stock Exchange (www.bvb.ro), on the website of the Intermediary (www.raiffeisen.ro), as well as on the Bidder's website (www.fondulproprietatea.ro).
Whereas:
On the basis of provisions of art. 9 from NSC Regulation no. 1/2006 regarding issuers and operations in securities.
Fondul Proprietatea S.A., as bidder in the offer described in the Offer Document (the "Offer") has drawn up and submitted with the FSA for approval this supplement to the Offer Document, by which it amends the provisions of the Offer Document referring to the share capital of Fondul Proprietatea S.A., as follows:
Furthermore, the consolidated structure of the holders of financial instruments holding at least 10% in the share capital of Fondul Proprietatea as at 28 October 2014, as issued by Depozitarul Central S.A on 3 November 2014 was the following:
| Name of the holder | Number of shares | Percentage (%) |
|---|---|---|
| MANCHESTER SECURITIES CORP. loc New York USA | 2,087,618,216 | 16.7854% |
| Legal persons | 7,120,748,392 | 57.2539% |
| Natural persons | 3,228,770,115 | 25.9607% |
| TOTAL | 12,437,136,723 | 100% |
Source: Depozitarul Central S.A.
(B) On 28 October 2014, Fondul Proprietatea S.A. held a number of 289,208,256 own shares.
| Date: 5 November 2014 | |
|---|---|
| BIDDER | INTERMEDIARY |
| Fondul Proprietatea SA | RAIFFEISEN BANK S.A. |
| Oana Valentina Truța | Dana Mirela Ionescu |
| Head of Investment Banking and Capital Markets |
Franklin Templeton Investment Management Ltd United Kingdom, Bucharest Branch, acting as sole director on behalf of Fondul Proprietatea S.A.
This investment policy statement (hereinafter referred to as the "Investment Policy Statement" or " IPS") sets the prudential rules concerning the investment policy of Fondul Proprietatea S.A. (hereinafter referred to as "Fondul Proprietatea" or "FP") and presents the investment goals, objectives and the decision-making process for selecting investments in accordance with the investment objectives.
The IPS provides criteria against which investment results will be measured and serves as a review document to monitor, evaluate and compare the performance of the Fund Manager on a regular basis.
The IPS shall be reviewed when needed b y the Fund Manager together with the Board of Nominees, in accordance with the provisions of FP's Constitutive Act and the applicable legal provisions.
The IPS is set forth within the legal framework established by Title VII of Law 247/2005 and any related and ancillary legislation in force, and, in accordance with FP's Constitutive Act, the Extraordinary Gen eral Shareholders' Assembly is responsible for approval of the IPS.
A. Fund Manager. The Fund Manager is appointed by the General Shareholders Meeting and performs its activity based on an Investment Management Agreement entered into between Fondul Proprietatea and the Fund Manager (hereinafter referred to as the "IMA").
The Fund Manager has the power to make all decisions concerning the investments to be made by Fondul Proprietatea, in accordance with the restrictions provided in this IPS, the Constitutive Act of Fondul Proprietatea, the IMA and applicable laws and regulations.
B. Board of Nominees. The Board of Nominees monitors the activity of the Fund Manager and represents the shareholders in rel ation to the Fund Manager. The exact roles and responsibilities of the Board of Nominees are detailed in the Constitutive Act of Fondul Proprietatea.
C. General Shareholders Meeting. The General Shareholders Meeting is the supreme corporate body of Fondul Proprietatea. Certain transactions performed by Fondul Proprietatea require the prior approval of the General Shareholders Meeting, in accordance with the Constitutive Act and the applicable legislation.
The FP's investment objective is t he maximization of returns and per-share capital appreciation via investments mainly in Romanian equities and equity-linked securities.
The discount between the closing price for each trading day of the shares issued by FP and the latest reported NAV per Share should be equal to or lower than 15% in at least two thirds of the trading days during the Reporting Period (as defined in the IMA) (the "Discount Objective").
The Fund Manager should achieve a level of Adjusted NAV per Share (as defined below) higher than the reported NAV as at September 30th 2013 (the "NAV Objective").
The adjusted NAV (the "Adjusted NAV") for a given date will be calculated as the sum of:
The Board of Nominees and the General Shareholders Meeting review the performance of the Fund Manager, on an annual basis, for the period of time established as the Reporting Period (as defined and further detailed in the IMA).
In the absence of investment opportunities offering better returns for shareholders, the Fund Manager will use all or a significant part of the proceeds from dividends and disposal of portfolio companies to implement measures aimed at maximizing cash returns to sh areholders and fulfi lling the Performance Objectives. Discount management techniques may include (but are not limited to) the following:
In order to achieve the objectives in the IPS, the Fund Manager should pay attention to:
The Fund Manager is responsible for proper balancing of risk and expected returns.
The Fund Manager should implement appropriate tools and processes in order to monitor operational and investment risks and to respond to developments in a timely fashion.
The investment policy will observe the prudential limits of investments provided for by t he applicable laws and regulations in force and the Constitutive Act of FP.
Under normal market conditions, the Fund should have at least 80 % of its net assets invested in Romanian equity and equity-linked securities.
Investments limits, include but are not limited to the following:
* Shares received from Romanian State on the basis of Law No. 247/2005 are exempted from the general rules on allocation. Where the Fund acquires further securities in the same issuer as securities received from Romanian State, the general rules on allocation shall apply to the newly acquired securities only. For the calculation of the ownership limit for securities not admitted to trade, shall be excluded from the value of assets not admitted to trade the value of securities not admitted to trade owed from the Romanian State on the basis of Law No. 247/2005. Therefore, any part of the current Fondul Proprietatea Portfolio (as it has been set up, on securities not admitted to trade owed from the Romanian State on the basis of Law No. 247/2005 and including the modifications made by GEO No. 81/2007) shall be exempted from the general rules on allocation. However, any new acquisition made by the Fund shall observe the general rules on allocation.
All investment restrictions are available on Fondul Proprietatea website, Investment Policy Statement Section.
Subject to applicable legal provisions in force and the FP Constitutive Act, all decisions regarding sector and security selection, portfolio construction, timing of buy or sell transactions and choice of venue and structure of transaction are delegated to the Fund Manager.
Subject to the applicable legal provisions and F P's Constitutive Act, t he Fund Manager on behalf of t he Fund, may buy, sell, exchange, exercise all rights, has a good and valid title to sell and transfer any rights and to enter into conditional contractual liabilities. This includes, without limitation, the power to enter into derivatives and to negotiate and execute loan agreements, repurchase agreements and/ or securities lending agreements, in accordance with the legal applicable provisions in force and FP's Constitutive Act, als o taking into account the cases when a prior approval of the Extraordinary General Shareholders Meeting is needed.
Transactions which involve a broker acting as a "principal", where the broker is also the investment manager (or an affiliate of such i nvestment manager) who makes the transaction (or an affiliate of such investment manager) are not permitted.
Transactions should be executed at the lowest possible cost (including commissions, efficiency of execution and the impact of the market) and best execution should be provided at all times.
Cash allocation is made by the Fund Manager, based on market conditions. It should be aimed at reducing risks to the Portfolio
Valuation of assets shall be made in accordance with the regulations in force issued by the Financial Supervisory Authority and in accordance with the internal regulations of Fondul Proprietatea.
The Fund Manager assumes the management over the entire Portfolio, subject to the terms of the IPS and the IMA.
The Fund Manager is subject to the limitations set out by this IPS, the Co nstitutive Act of Fondul Proprietatea and the existing applicable legal provisions in force.
The Fund Manager shall maintain adequate liquidity in order to at least meet the following requirements:
The duration of Fondul Proprietatea is not limited in time.
The FP is established as a commercial undertaking and is subject to corporate tax in accordance with the Romanian Fiscal Code. In managing the investment portfolio and seeking to achieve the objectives, the Fund Manager shall have due regard to the potential impact of tax regulations.
The FP shall not invest in any other type of asset class, except those specifically mentioned in the applicable legislation and the Constitutive Act. The use of derivatives is permitted subject to the limitations contained in applicable legislation in force. Short selling of securities is prohibited.
Borrowing is allowed only in accordance with the FSA regulations applicable to other undertakings for collective investment and FP's Constitutive Act.
The IPS shall be reviewed on regular basis by the Fund manager and Board of Nominees in order to ensure that it remains consistent with overall objectives of FP.
Any changes to the investment policy proposed by the Fund Manager and/or the Board of Nominees shall be approved by the General Shareholders Meeting, with observance of investment limits provided in the applicable legislation in force.
Franklin Templeton Investment Management Ltd United Kingdom Bucharest Branch, acting as sole director on behalf of S.C. FONDUL PROPRIETATEA S.A.
According to BVB Corporate Governance Code
| Principle/ Question |
YES | NO | If NOT, please EXPLAIN |
|---|---|---|---|
| Recommen | |||
| dation |
| P19 | Is the issuer managed under a dualist system? | X | Until 28 September 2010, Fondul Proprietatea S.A. was administered in a two-tier system, and after this date, an untypical unitary administration system was introduced, as regulated by Law no. 247/2005, as amended and supplemented. However, even if ruled after a one-tier system, the existence of the Board of Nominees that has the main duty to follow the execution of the Investment Management Agreement creates a similar framework as for a two tier system. |
||
|---|---|---|---|---|---|
| P1 | R1 | Has the issued drawn up the By-laws/Corporate Governance Regulations to describe the main aspects of the corporate |
X | ||
| governance? The By-laws/Corporate Governance Regulations are posted on the company website, indicating the date of the last update? |
X | ||||
| R2 | In The By-laws/Corporate Governance Regulations are there defined the corporate governance structures, positions, components and responsibilities of the Bard of Directors (BD) and of the executive management? |
X | |||
| R3 | Does the issuer's Annual report provide for a chapter on corporate governance where they describe all the relevant events related to the corporate governance, recorded during the previous financial exercise? |
X | |||
| Does the issuer circulate on the company website the information related to the following aspects of their corporate governance policy: |
X | ||||
| a) a description of their corporate governance structures? | |||||
| b) the updated articles of incorporation? | X | ||||
| c) the operation bylaws/essential aspects for each specialty? |
X | ||||
| d) the "Comply or explain" Statement? | X | ||||
| e) the list of the BD members mentioning which members are independent and/or nonexecutive, of the members of the executive management and those of the specialty commissions/committees? |
X | ||||
| f) a brief description of the CV for each BD member of the executive management? |
X | ||||
| P2 | Does the issuer abide by the rights of the financial instrument holders, providing them with the equal treatment and submitting to the approval any modification of the rights in the special meetings of these holders? |
X | |||
| P3 | R4 | Does the issuer publish in a spate part of the website the details of the General Meetings of Shareholders (GMS): a) GMS summons? |
X |
| b) materials/documents corresponding to the agenda as well | X | |||
|---|---|---|---|---|
| as any information on the agenda? | ||||
| c) special power of attorney forms? | X | |||
| R6 | Has the drawn and proposed to GMS the procedures for the | X | ||
| efficient and proper development of the GMS agenda without | ||||
| any damage to the right of any shareholder to express their free | ||||
| opinion on the debated topics? | ||||
| R8 | Does the issuer publish in a spate part of the website the details | X | ||
| of the shareholders' rights as well as the regulations for the | ||||
| attendance at GMS? | ||||
| Does the issuer provide the information in due time | X | |||
| (immediately after the GMS) of all the shareholders through the | ||||
| separate section on their website: | ||||
| a) on the decisions made within GMS? | ||||
| b) on the detailed result of the vote? | X | |||
| Do the issuers circulate through the special section of the | X | |||
| website, that is easily identifiable and accessible: | ||||
| a) current/communicated reports? | ||||
| b) the financial schedule, the annual reports, the quarter | X | |||
| and semester reports? | ||||
| R9 | Is there within the issuer's company a special department / | X | ||
| person dedicated to the relation with the investors? | ||||
| P4, P5 R10 Does the BD meet at least once a trimester for the monitoring | X | |||
| and the activity of the issuer? | ||||
| R12 Does the issuer have a set of rules referring to the reporting | X | |||
| conduct and obligations of the transactions of the shares or | ||||
| other financial instruments issued by the company ("company | ||||
| assets") made on their name by the directors and other persons? | ||||
| If a BD member or a member of the executive management or | X | |||
| any other person made on their interest a transaction with the | ||||
| company deeds, then, the transaction is circulated through the | ||||
| company website, according to the corresponding Regulations? | ||||
| P6 | Does the structure of the Board of Directors of the Issuer | X | ||
| provide a balance between the executive and nonexecutive | ||||
| members (and especially independent nonexecutive directors) | ||||
| so that no person or group of persons may dominate the BD | ||||
| decision-making process of BD? | ||||
| P7 | Does the structure of the Board of Directors provide a sufficient | X | ||
| number of independent members? | ||||
| P8 | R15 During their activity, does BD have the support of consultative | X | ||
| commissions / committees for the examination of specific | ||||
| topics, chosen by BD for their counselling on these themes? | ||||
| Do the consultative commissions/committees forward activity | X | |||
| reports to the BD on their specific themes? | ||||
| R16 For the assessment of the independence of their nonexecutive | X | |||
| members, does the Board of Directors use the assessment | ||||
| criteria listed in the Recommendation 16? | ||||
| R17 Do the BD members permanently improve their knowledge | X | |||
| through training / formation in corporate governance? | ||||
| P9 | Does the selection of the BD members have a procedure based | X | ||
| on transparency (objective criteria regarding the | ||||
| P10 | personal/professional qualification etc.)? Is there an Appointment Committee within the company? |
X | ||
| P11 | R21 Does the Board of Directors analyze t least once a year the need to register a remuneration/remuneration policy committee for the directors and members of the executive management? |
X | ||
|---|---|---|---|---|
| Has the remuneration policy been approved by the GMS? | X | |||
| R22 Is there a Remuneration Committee made exclusively of nonexecutive directors? |
X | |||
| R24 Is the company remuneration policy of the company provided in the Bylaws/ Corporate Governance Regulations? |
X | |||
| P12, P13 |
R25 Does the issuer circulate, in the English language, the information representing the subject of the reporting requirements: a) periodic information (providing information periodically)? |
X | ||
| b) continuous information (providing information periodically)? |
X | |||
| Does the Issuer provide and circulate the financial report according to IFRS? |
X | |||
| R26 Does the issuer promote, at least once a year, meetings with the financial analysts, brokers, rating agents and other market specialists with the view to presenting the financial elements relevant to the investment decision? |
X | |||
| R27 Is there an Audit Committee within the company? | X | |||
| R28 Does the BD of the Audit Committee, as the case may be, examine on regular basis, the efficiency of the financial report, the internal control and the control of the risk management system passed by the company? |
X | |||
| R29 Is the Audit Committee made of nonexecutive directors and is there a sufficient number of independent directors? |
X | |||
| R30 Does the Audit committee meet at least twice a year; are these meetings dedicated to drawing up and circulating the quarter and annual results to the shareholders? |
X | |||
| R32 Does the Audit Committee recommend to BD the selection, appointment, re-appointment and replacement of the financial auditor, as well as the terms and conditions of their remuneration? |
X | |||
| P14 | Has the BD passed a procedure with the view to identifying and settling adequately the conflicts of interests? |
X | ||
| P15 | R33 Do the directors inform BD on the conflicts of interests as they occur and do they refrain from the debates and the vote on those matters, according to the legal provisions? |
X | ||
| P16 | R34/ R35 |
Has the BD passed the specific procedures in order to provide their procedure accuracy (identification criteria of the significant transactions, relevant for transparency, objectivity, non-concurrence, etc.) for defining the transactions? |
X | |
| P17 | R36 Has BD passed a procedure of the internal circuit and the disclosure to third parties of the documents and information referring to the issued, with emphasis on the information that can influence the price of the assets issued by them? |
X | ||
| P18 | R37/ R38 |
Does the issuer have activities regarding Social Responsibility and Company Environment? |
X |
Franklin Templeton Investment Management Limited Bucharest Branch Premium Point 78-80 Buzesti Street, 1st District Bucharest 011017 Romania
Fondul Proprietatea S.A. Premium Point (7th Floor) 78-80 Buzesti Street, 1st District Bucharest 011017 Romania
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