Quarterly Report • Mar 31, 2016
Quarterly Report
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Quarterly Report For the Quarter Ended 31 March 2016
Prepared in accordance with CNVM Regulation no 1/2006
(This is a translation from the official Romanian version)
| Company Information. | 2 |
|---|---|
| Overview | 5 |
| Significant Events | 7 |
| Analysis of the Activity of the Fund | 15 |
| Financial Statements Analysis. | 26 |
| Annex 1 | Condensed Interim Financial Statements for the three-month period ended 31 March 2016, prepared in accordance with | |
|---|---|---|
| IAS 34 Interim Financial Reporting, based on International Financial Reporting Standards ("IFRS"). | 30 | |
| Annex 2 | Statement of Assets and Obligations of Fondul Proprietatea SA as at 31 March 2016, prepared in accordance with CNVM Regulation 4/2010 (Annex no. 4) |
56 |
| NAV* and Share Price Developments | Notes | Q1 2016 | Q1 2015 | YE 2015 |
|---|---|---|---|---|
| Total Shareholders' Equity (RON million) | a | 11,393.8 | 12,566.7 | 12,053.1 |
| Total NAV (RON million) | b, c | 11,440.1 | 12,605.2 | 12,087.8 |
| NAV per Share (RON) | b, c | 1.1004 | 1.1706 | 1.1564 |
| NAV per Share change in the period (%) | d | -4.8% | -3.5% | -4.6% |
| NAV per Share Total Return (%) | d | -4.8% | -3.5% | -0.6% |
| Share Price as at the end of the period (RON) | 0.7710 | 0.8635 | 0.8100 | |
| Share Price Low (RON) | e | 0.7000 | 0.8315 | 0.7250 |
| Share Price High (RON) | e | 0.8040 | 0.8990 | 0.9270 |
| Share Price change in the period (%) | d | -4.8% | -3.6% | -9.6% |
| Share Price Total Return (%) | d | -4.8% | -3.6% | -4.1% |
| Share Price discount to NAV as at the end of the period (%) | 29.9% | 26.2% | 30.0% | |
| Average Discount for the period (%) | 32.7% | 27.9% | 28.9% | |
| Total Share Turnover (RON million) | 355.2 | 547.6 | 2,029.6 | |
| Average Daily Share Turnover (RON million) | f | 5.6 | 8.8 | 8.1 |
| GDR Price as at the end of the period (USD) | 9.6600 | n.a. | 9.9000 | |
| GDR Price Low (USD) | h | 8.5000 | n.a. | 9.4500 |
| GDR Price High (USD) | h | 9.9000 | n.a. | 11.5500 |
| GDR Price change in the period (%) | g | -2.4% | n.a. | -13.5% |
| GDR Price Total Return (%) | g | -2.4% | n.a. | -4.1% |
| GDR Price discount to NAV as at the end of the period (%) | 30.9% | n.a. | 29.0% | |
| Average GDR Price discount for the period (%) | 31.4% | n.a. | 29.2% | |
| Total GDR Turnover (USD million) | i | 39.0 | n.a. | 266.9 |
| Average Daily GDR Turnover (USD million) | i | 0.6 | n.a. | 1.5 |
| Source: FTIML |
The following table shows a summary of the financial position of the Fund:
* Net Asset Value
| Share Capital Information | 31 March 2016* | 31 March 2015 | 31 December 2015 |
|---|---|---|---|
| Issued Share Capital (RON) | 9,869,265,720.90 | 11,575,064,733.65 | 10,074,080,745.90 |
| Paid Share Capital (RON) | 9,541,834,605.90 | 11,229,443,001.15 | 9,746,649,630.90 |
| Number of Shares in Issue | 10,965,850,801 | 12,184,278,667 | 11,193,423,051 |
| Number of Paid Shares | 10,602,038,451 | 11,820,466,317 | 10,829,610,701 |
| Nominal Value per Share (RON) | 0.90 | 0.95 | 0.90 |
* On 14 March 2016, the Trade Registry registered Resolution no. 8/ 29 October 2015 of the Fund's Extraordinary General Shareholders Meeting ("EGM") for approving the decrease of the subscribed share capital from RON 10,074,080,745.90 to RON 9,869,265,720.90, pursuant to the cancellation of 227,572,250 own shares acquired by the Fund during the fifth buy-back programme, endorsed by the Financial Supervisory Authority through the Endorsement no. 74/ 25 February 2016.
| Bucharest Stock Exchange |
|---|
| 25 January 2011 |
| SFM of LSE |
| 29 April 2015 |
| FP |
| FP. |
| FP RO |
| FP/ LI |
| FP.BX |
| ROFPTAACNOR5 |
| PJR09SIIR/400006/18.08.2010 |
| AC-4199-3/ 23.03.2016 |
| Shareholder Categories | % of subscribed share capital |
% of paid-in share capital |
% of voting rights1 |
|---|---|---|---|
| The Bank of New York Mellon (depository bank for global depository receipts)2 |
33.62% | 34.78% | 35.43% |
| Foreign institutional shareholders | 24.33% | 25.16% | 25.65% |
| Romanian private individuals | 20.05% | 20.73% | 21.14% |
| Romanian institutional shareholders | 12.99% | 13.44% | 13.7% |
| Foreign private individuals | 3.83% | 3.96% | 4.03% |
| Ministry of Public Finance3 | 0.05% | 0.04% | 0.05% |
| Treasury shares4 | 1.82% | 1.89% | - |
| Unpaid shares5 | 3.31% | - | - |
Source: Romanian Central Depositary
| As at | % of voting rights |
|---|---|
| 21 October 2015 | 21.06% |
| 5 April 2016 | 5.04% |
Source: ownership disclosure submitted by shareholders
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
1 The unpaid shares of the Romanian State, represented by the Ministry of Public Finance, and the treasury shares held by Fondul Proprietatea were not taken into consideration at the calculation of the total number of voting rights
2 Out of which Fondul Proprietatea held 66,204 global depository receipts (3,310,200 shares equivalent)
3 The percentage represents the paid shares; the percentage of subscribed share capital of Ministry of Public Finance is 3.36%, including the unpaid shares
4 199,908,490 treasury shares acquired by the Fund in the sixth buy-back programme (159,784,790 ordinary shares acquired and 40,123,700 shares corresponding to GDRs acquired, converted into shares) 5 Shares unpaid by Romanian State represented by Ministry of Public Finance
Franklin Templeton International Services S.À.R.L, as Sole Administrator and Alternative Investment Fund Manager of Fondul Proprietatea presents the results of the Fund in accordance with IFRS for the first quarter of 2016, with an unaudited net loss of RON 585.6 million, as compared to the net loss of RON 668.7 million for the quarter ended 31 March 2015. Total shareholders' equity was RON 11,393.8 million as at 31 March 2016, a decrease of 5.5% compared to the value of RON 12,053.1 million as at 31 December 2015. During the first quarter of 2016 Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch was the Sole Administrator and Fund Manager of Fondul Proprietatea, but the results are presented by Franklin Templeton International Services S.À.R.L as starting with 1 April 2016 it is the new Sole Administrator of the Fund.
The main factor behind the loss in the first quarter of 2016 was the unrealised negative net change in fair value related to equity investments classified at fair value through profit or loss, principally concerning OMV Petrom SA, due to the negative evolution of the share price of this company during the period (a decrease of 17.2%).
The Fund reported a Net Asset Value of RON 11,440.1 million as at 31 March 2016 and a Net Asset Value per Share ("NAV per share") of RON 1.1004 (a negative NAV per Share total return of 4.8% as compared to 31 December 2015). The NAV is prepared in accordance with the local rules issued by the capital market regulator.
In the first quarter of 2016, the Bucharest Stock Exchange had an average performance as compared to the other markets in Central Europe, in both local currency and EUR terms, as shown below:
| % change in the first quarter of 2016 | in local currency | in EUR |
|---|---|---|
| BUX (Hungary) | 10.58% | 10.37% |
| WIG20 (Poland) | 7.45% | 7.72% |
| BET-XT (Romania) | -4.55% | -3.26% |
| ATX (Austria) | -5.28% | -5.28% |
| PX (Czech Republic) | -5.90% | -5.99% |
Source: Bloomberg
The discount of the Fund's share price to NAV was 29.9% as at 31 March 2016. In the first quarter of 2016, the discount ranged between 27.4% and 39.5%.
The following table shows a summary of the financial position of the Fund:
| Note | Q1 2016 | Q1 2015 | YE 2015 | Q1 2016 vs. Q1 2015 |
Q1 2016 vs. YE 2015 |
|---|---|---|---|---|---|
| a | 11,393.8 | 12,566.7 | 12,053.1 | -9.3% | -5.5% |
| b, d | 11,440.1 | 12,605.2 | 12,087.8 | -9.2% | -5.4% |
| b, d | 1.1004 | 1.1706 | 1.1564 | -6.0% | -4.8% |
| c, e | -4.8% | -3.5% | -0.6% | ||
| 0.7710 | 0.8635 | 0.8100 | -10.7% | -4.8% | |
| c, e | -4.8% | -3.6% | -4.1% | ||
| 29.9% | 26.2% | 30.0% | |||
| 9.6600 | n.a. | 9.9000 | n.a. | -2.4% | |
| f | -2.4% | n.a. | -4.1% | ||
| 30.9% | n.a. | 29.0% | |||
| - | - | 0.0500 | |||
Notes:
a. Prepared on the basis of IFRS
b. Prepared on the basis of local rules issued by the capital market regulator
c. Calculated with dividend/ capital return reinvested, where applicable
d. The difference in change (%) between total NAV and NAV per share is accounted for by the change in the number of treasury shares during the period (treasury shares acquired through buy-backs, both ordinary shares and GDRs, are excluded from the number of shares used in NAV per share computation)
e. Compared to the end of the previous year
f. Compared to the end of the previous year (for YE 2015, compared to the date of GDR listing on LSE, i.e. 29 April 2015)
As at 31 March 2016, the NAV (calculated according to local rules issued by the capital market regulator) is very similar with the shareholders' equity (calculated according to IFRS) due to similar valuation methodologies applied to financial assets, as illustrated in the following table:
| Local Capital Market Regulations* | IFRS | |
|---|---|---|
| Listed securities Valued at closing market prices (regulated markets) |
Valued at fair value | |
| Valued at reference prices (Alternative Trading Systems)** |
||
| Unlisted or illiquid listed securities |
Valued as per latest issued annual financial statements (proportionally with the stake held) or using fair valuation methodologies |
Valued at fair value |
* Details on the valuation methods used for the holding in each company are presented in the Annex 2 to this report; the shares of companies under insolvency or reorganisation procedure are valued either at zero or at a value assessed by an independent authorised valuer, using valuation methods in accordance with International Valuation Standards (fair value principles). The shares of companies under judicial liquidation procedure or any other liquidation procedure, as well as of companies under temporary or final suspension of operations, must be valued at zero until the respective procedures are completed.
** Reference price is considered to be the average price for the securities listed on an Alternative Trading System.
Average Daily Turnover in the first quarter of 2016 (RON million)
Source: BVB, Bloomberg
Source: BVB
For the reporting period between 1 July 2015 and 30 June 2016, according to the Fund's Investment Policy Statement, there are two performance objectives that the Fund Manager is aiming to achieve. The NAV objective refers to a higher adjusted NAV6 per share as at 30 June 2016, compared to the NAV per share as at 30 June 2015, i.e. higher than RON 1.1851 per share. The discount objective implies the discount between the closing price of the Fund's shares and the latest reported NAV per share to be equal to or lower than 15%, in at least 2/3 of the trading days in the period from 1 July 2015 to 30 June 2016.
As at 31 March 2016, the adjusted NAV per share was 7.1% lower than the 30 June 2015 NAV per share of RON 1.1851.
During the first nine months of the reporting period, the Fund's NAV has been negatively impacted by the decrease in the value of the listed holdings in the portfolio, primarily OMV Petrom SA.
| NAV Objective | Amount RON | Details |
|---|---|---|
| Total NAV as at 31 March 2016 | 11,440,104,894 | |
| Costs related to the 2015 return of capital after 30 June 2015, until 31 March 2016 |
3,326 Fees charged by Central Depositary and Paying Agent for the payments performed after 30 June 2015 |
|
| Costs related to buy-backs after 30 June 2015, until 31 March 2016 |
238,702 Fees related to fifth buy-back programme after 30 June 2015 and sixth buy-back programme up to 31 March 2016 |
|
| Distribution fees | 3,204,540 FTIML distribution fees for distributions to shareholders (buy-backs) after 30 June 2015, up to 31 March 2016 |
|
| Total Adjusted NAV as at 31 March 2016 | 11,443,551,462 | |
| Number of Fund's paid shares, less treasury shares and GDRs held as at 31 March 2016 |
10,396,059,391 | |
| Adjusted NAV per share as at 31 March 2016 | 1.1007 | |
| NAV per share as at 30 June 2015 | 1.1851 | |
| Difference | (0.0844) | |
| % | (7.1%) |
Source: FTIML
In the period between 1 July 2015 and 31 March 2016, the discount to NAV was greater than 15%, for both shares and GDRs.
FTIML and FTIS will continue the efforts to reduce the discount to NAV as we firmly believe that the Fund's shares should be trading at a significantly lower discount than the current levels, given the quality of the underlying portfolio assets, our track record in working with the portfolio companies to improve efficiency and profitability, the attractive cash distribution yield of around 6%, the ongoing buy-back programmes and our transparency, disclosure, and proactive investor relations efforts.
The significant depreciation of oil prices, increased volatility in the emerging and frontier markets, as well as the delays in the IPOs of the state owned companies in the Fund's portfolio, prolonged insolvency of Hidroelectrica SA, and no agreement concluded with Electrica SA until 31 March 2016, have been the main obstacles in our efforts to further reduce the Fund's discount to NAV.
6 The adjusted NAV for a given date is calculated as the sum of: (1) the reported NAV as at the end of the reporting period, (2) any returns to shareholders, following reductions of the share capital (return of nominal value) implemented after 30 June 2015, and (3) any distribution fee and any transaction costs relating to non-dividend distributions including buy-backs of shares and/ or GDRs executed after 30 June 2015. The adjusted NAV per share is equal to the adjusted NAV divided by: the total number of the Fund's paid shares, less treasury shares (FP ordinary shares bought back) and less equivalent in FP ordinary shares of FP GDRs acquired and not yet converted into FP ordinary shares, on the last day of the reporting period.
| Discount at 31 March 2016 |
Minimum discount in the reporting period |
Maximum discount in the reporting period |
Average discount for the period 1 July 2015 – 31 March 2016 |
|---|---|---|---|
| 29.3% | 25.9% | 40.1% | 31.5% |
Source: FTIML
In the first quarter of 2016, in our efforts to increase the visibility and the profile of the Fund, as well as the local capital market, and Romania, to a broader international institutional investor base, the Fund's management team participated in 9 global and regional emerging and frontier market conferences in Vienna, London, New York, Singapore, Warsaw and Paris, and met with over 75 investment professionals 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.
FTIML also organised 5 road-shows in the most important financial centres in Europe (London), the United States (New York), Asia (Singapore), and South Africa (Cape Town). During the road-shows, FTIML participated in individual and group meetings with representatives of more than 50 international institutional investment firms, both current shareholders and potential investors.
Between 29 February and 1 March, in collaboration with WOOD & Company, FTIML organised in London the third edition of the "Romania Investor Days" event. 113 representatives of 64 international investments firm, with assets under management of over EUR 4,500 billion, and 40 representatives from 22 Romanian companies (listed or candidates for IPOs) participated in the event. The first part of the first day of the event featured presentations and speeches from the Romanian Chargé d'Affaires to the United Kingdom, the Presidential Adviser and Head of the Presidential Chancellery, the State Secretary and Chief of Staff of the Romanian Government, the Minister of Finance, the State Secretary of the Ministry of Public Finance, the Secretary of State of the Ministry of Energy, a Board member of the Romanian National Bank, the Director of the Strategy and Financial Stability Division of the Romanian FSA, the Co-President of Franklin Templeton Investments, the Head of UK Large Caps – Primary Markets of the London Stock Exchange, and the Fund Manager of Fondul Proprietatea. During the second part of the day, and the second day, over 360 meetings were held between the investors and the management teams of the corporations present at the event.
On 15 February, FTIML held a conference call to discuss the Fund's 2015 Preliminary Annual Results. 50 analysts and investors participated in the call in order to find out more details about the preliminary results for 2015, released on the same day.
In addition, during the first quarter of 2016, FTIML organised 21 individual meetings with analysts, brokers, current and prospective investors, as well as 19 conference calls with institutional investors interested in the latest developments regarding the Fund's corporate actions, and its portfolio companies.
Communication between the Fund Manager, FTIS 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.
The GDR facility is limited to one-third of the Fund's subscribed share capital under the Romanian securities regulations, or 74,622,820 GDRs between 12 August 2015 and 14 March 2016 and 73,105,672 GDRs after this date, each GDR representing 50 shares. As at 31 March 2016, 33.6% of the Fund's issued shares were converted into GDRs.
On 22 January 2016 The Bank of New York Mellon, the depositary bank of the GDRs, has notified that total GDR holdings have reached the limit for GDR issuance, of one third of the Fund's issued share capital, as provided by the regulations in force. As a result, until further notice from The Bank of New York Mellon with respect to the GDR facility, no new GDRs can be issued.
7 The daily discount is calculated in accordance with the Investment Policy Statement, i.e. the discount between the FP shares closing price on the Bucharest Stock Exchange for each trading day and the latest reported NAV per share.
On 17 December 2015 the Fund and Citibank Europe Plc Dublin - Romania Branch agreed to extend the existing revolving committed credit facility of RON 500 million, with a potential increase by a further RON 500 million, subject to future mutual agreement of the parties. The availability period of the facility started on 4 January 2016 and ends on 31 August 2016. The final reimbursement should take place on 30 September 2016, at the latest.
On 7 March 2016 the Fund and Citibank Europe Plc Dublin - Romania Branch signed the Addendum no. 2 to the credit facility agreement, amending certain provisions among which splitting the committed facility of RON 500 million into a committed facility of maximum RON 375 million and an uncommitted facility of maximum RON 125 million.
The Fund did not use the credit facility during the first quarter of 2016.
During the first quarter of 2016 the Fund has finalised the cancellation process for the shares acquired during the fifth buy-back programme and continued the implementation of the sixth buy-back programme. The seventh buy-back programme was approved by shareholders during the October 2015 General Shareholders Meeting ("GSM") and the Fund Manager together with FTIS can start its implementation after the cancelation of the shares acquired during fifth buy-back programme is effective, i.e. 14 March 2016.
All the buy-back programmes carried out by the Fund are aimed at share capital decrease, in accordance with the shareholders' approval. During the first quarter of 2016 the Fund bought back a total number of 56,329,436 own shares within the sixth buy-back programme (out of which 50,470,236 ordinary shares and 5,859,200 ordinary shares corresponding to GDRs), representing 0.5% of the total issued shares as at 31 March 2016, for a total acquisition value, including transaction costs, of RON 42,801,664.
The shares acquired within the fifth buy-back programme were cancelled in March 2016. On 21 March 2016 the Fund converted a number of 802,474 own GDRs acquired within the sixth buy-back programme into ordinary shares (40,123,700 ordinary shares respectively).
The total number of own shares bought back and held by the Fund as at 31 March 2016 is 205,979,060 (including the equivalent number of ordinary shares corresponding to the 86,204 GDRs held), having a total nominal value of RON 185,381,154 (RON 0.9 per share).
During the 27 April 2015 GSM the shareholders approved the sixth buy-back programme for a maximum number of 891,770,055 shares or the equivalent number of global depositary receipts corresponding to the shares of Fondul Proprietatea, valid until 15 November 2016. The buy-backs shall be performed at a price between RON 0.2 per share and RON 2 per share. The buy-back transactions can only be applied to fully paid shares and the repurchased shares will be cancelled. The implementation of this buy-back programme is subject to the availability of the necessary cash.
The execution of the buy-back programme started on 9 September 2015 and until 31 March 2016, the total number of shares repurchased was 205,979,060 (161,545,160 ordinary shares and 44,433,900 equivalent shares of the GDRs repurchased, where 1 GDR represents 50 ordinary shares), at a total acquisition value, including transaction costs, of RON 164,299,154.
On 14 January 2016 the Fund filed with the FSA an application for a buy-back tender offer, to accelerate the sixth buy-back programme, by acquiring 430 million shares or the equivalent number of GDRs corresponding to the shares of the Fund, from the Fund's shareholders. However this was withdrawn on 25 January 2016 due to material market volatility, which significantly impacted stock market prices and the value of portfolio holdings. The Fund Manager considered that in the market environment at that time it was important to stay prudent in cash management and limit the leverage of the Fund. In order to ensure that the tender offer is priced appropriately relative to the market price, to maximise value for the Fund's shareholders, the Fund Manager, together with FTIS, will continue to closely monitor the market developments and is prepared to restart the process when market conditions are more supportive.
On 29 October 2015 the Fund's shareholders approved the seventh buy-back programme that refers to the acquisition of a maximum number of shares computed so that all the outstanding treasury shares (acquired during this programme and/ or previous ones) will not exceed 10% of the issued share capital at the relevant time, starting with the date when the share capital decrease regarding the cancellation of the shares repurchased within the fifth buy-back programme is effective, valid until 26 May 2017. 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 transactions can only be applied to fully paid shares, global depositary receipts or depositary interests corresponding to the shares of the Fund, which will be cancelled. The implementation of this buy-back programme will be subject to the availability of the necessary cash.
During the 29 October 2015 GSM the shareholders approved the cancellation of 227,572,250 shares repurchased by the Fund during the fifth buy-back programme. The shareholders resolution was published in the Official Gazette of Romania on 12 November 2015.
On 14 March 2016, the Trade Registry registered Resolution no. 8/ 29 October 2015 of the Fund's EGM for approving the decrease of the subscribed share capital from RON 10,074,080,745.90 to RON 9,869,265,720.90, pursuant to the cancellation of 227,572,250 own shares acquired by the Fund during the fifth buy-back programme, endorsed by the FSA Endorsement no. 74/ 25 February 2016. Therefore, starting with 14 March 2016, the new value of the Fund's subscribed share capital is RON 9,869,265,720.90, being divided into 10,965,850,801 shares with a nominal value of RON 0.90 per share. The value of the paid-in share capital is RON 9,541,834,605.90, being divided into 10,602,038,451 shares.
In the 27 January 2016 GSM, the Fund's shareholders approved the return to shareholders of RON 0.05 per share, following the share capital decrease through the reduction of the nominal value of the shares of the Fund from RON 0.90 to RON 0.85. The decrease was motivated by the optimisation of the share capital of Fondul Proprietatea, involving the return to the shareholders of a part of their contributions, proportionally with their participation in the paid-in share capital of the Fund. The shareholders resolution was published in the Official Gazette of Romania on 22 February 2016 and the endorsement by the FSA of the new Constitutive Act reflecting the share capital decrease is expected in May 2016. The shareholders registered with Central Depositary on 6 June 2016 will have the right to receive RON 0.05 per share, proportionally with their participation in the paid-in share capital of the Fund. The payment date is 27 June 2016.
According to FSA Norm no. 39/2015 regarding the approval of the accounting regulations in accordance with IFRS, applicable to the entities authorised, regulated and supervised by FSA – Financial Investments and Instruments sector ("Norm 39/2015"), starting with the annual financial statements for the year ended 31 December 2015, IFRS are the official accounting regulations (the statutory basis of accounting) for the regulated entities, including Fondul Proprietatea. According to this regulation, starting 1 January 2016 the Fund maintains the daily accounting records in accordance with IFRS, these being used for the preparation of this report.
The FSA issued Endorsement no. 1/ 7 January 2016 whereby it endorsed with comments the Addendum no. 4/ 2 November 2015 to the Investment Management Agreement concluded between the Fund and the Fund Manager on 29 April 2014, proposing a different wording related to the calculation of the distribution fee between 1 November 2015 and 31 March 2016, which was approved by shareholders during 26 April 2016 GSM.
In consequence, the distribution fee rate applicable is 100 basis points for the period between 1 November 2015 and 6 January 2016 and 200 basis points for the period between 7 January 2016 and 31 March 2016.
The Law 74/2015 implementing AIFM Directive was published in the Official Gazette of Romania on 23 April 2015. Following the entry into force of the Law 74/2015 on 24 May 2015, the FSA approved Regulation 10/ 2015 regarding the alternative investment funds management ("Regulation 10/ 2015") on 22 July 2015, which was published in the Official Gazette of Romania on 28 July 2015. According to the FSA Regulation 10/2015, the Fund is qualified as an Alternative Investment Fund under the Romanian law implementing the AIFM Directive and needs to comply with the provisions of the law implementing AIFM Directive and Regulation 10/2015 before 24 May 2016.
On 29 October 2015 the GSM approved the AIFM Directive implementation plan for the Fund as follows:
On 28 January 2016 the FSA issued Endorsements no. 25, respectively Endorsement no. 26, whereby it endorsed the following amendments brought to the Fund's registration documents, which were approved by the Fund's shareholders during the 29 October 2015 GSM:
According to the FSA Board Resolution from 27 January 2016, the new Management Agreement signed between Fondul Proprietatea and FTIS, as its AIFM and Sole Director, as approved by OGM Resolution no. 8/ 29 October 2015 with effect as of 1 April 2016, does not require the FSA's endorsement prior to entering into force. Furthermore, the FSA considers that Commission de Surveillance du Sector Financier of Luxemburg, as the competent authority of the AIFM home state member, has oversight obligations in respect of the management performed by FTIS, based on the notification sent regarding the new Management Agreement.
The main decisions of the shareholders during 27 January 2016 GSM were the following:
The plan for implementing AIFM Directive for the management of Fondul Proprietatea was completed by 1 April 2016. All the necessary actions (shareholders' and Board of Nominees approvals, regulatory approvals and notifications, registrations with Romanian Trade Register) were implemented and starting with 1 April 2016 FTIS is the Sole Director and Alternative Investment Fund Manager of Fondul Proprietatea.
FTIS decided to delegate certain portfolio management and administrative activities to FTIML. The delegation expressly excludes the delegation of the risk management activities of the Fund, which shall remain the sole prerogative of FTIS. The delegation of the portfolio management allows FTIML, among others, to:
The delegation of the administration services allows FTIML, among others, to:
draft the annual budget;
co-operate at drafting the IPS;
The main shareholders decisions at the 26 April 2016 GSM were the following:
On 21 April 2016 the Fund sold its entire holding of 22,542,960 existing shares in Romgaz SA (20,286,910 in the form of ordinary shares and 2,256,050 in the form of global depositary receipts) to qualified investors and certain other investors, not exceeding 150 natural or legal persons per Member State, other than qualified investors (all within the meaning of paragraphs (2)(a) and (2)(b) of Article 3 of the Prospectus Directive). The shares were priced at RON 24/ USD 6.09 (in relation to disposals via dollar-denominated global depositary receipts, based on the National Bank of Romania's exchange rate of RON 3.9434 per USD as of 20 April 2016).
The key performance indicator of the Fund is its Net Asset Value. 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 the 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 an Alternative Trading System ("ATS"). In case of shares listed on ATS the reference price is considered to be the average price.
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.
The shares in the companies under insolvency or reorganisation procedures are valued either at zero, or at the value provided by an independent valuer, using the valuation methods in accordance with the International Valuation Standards. 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.
The treasury shares acquired through buy-backs are excluded from the number of shares used in the NAV per share computation.
Due to the fact that in substance the Fund's GDRs are similar to the ordinary shares to which they correspond, in the computation of the number of shares used in the calculation of NAV per share, the equivalent number of shares corresponding to the GDRs bought back and held by the Fund as at NAV reporting date are also deducted, together with the number of ordinary own shares bought back and held (treasury shares).
The following chart shows information on the monthly published NAVs per share for the period 31 December 2015 to 31 March 2016:
Source: FTIML, based on NAV reports submitted to FSA *Based on Romanian Accounting Regulation for non-portfolio items
** Based on IFRS for non-portfolio items
During the first quarter of 2016 the NAV per share decreased by 4.8%, mainly due to the negative impact of the decrease of the share prices of certain listed holdings, principally OMV Petrom SA (impact on the Fund's NAV of RON 537.9 million or RON 0.0517 per share).
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 98.3% of the Fund's NAV as at 31 March 2016. As at that date, the portfolio was composed of holdings in 48 companies (14 listed and 34 unlisted), containing a combination of privately held and state-controlled entities.
• Net cash and receivables includes bank deposits, current bank accounts, bonds, dividend receivables, as well as other assets, net of all liabilities (including liabilities to shareholders related to the returns of capital and dividends from previous years) and provisions.
Source: FTIML, data as at 31 March 2016
| Prower & Gas Utilities: transport. | |
|---|---|
| distribution, supply 31.0% | |
| ■ Oil & Gas | |
| Power utilities: generation 25.0% | |
| ■ Infrastructure | |
| ■ Banks | |
| ■ Others | |
| Net Cash and Receivables 1.7% | |
• The portfolio remained heavily weighted in power, oil and gas sectors (approx. 84.3% of the NAV), through a number of listed and unlisted Romanian companies.
Source: FTIML, data as at 31 March 2016
Source: FTIML, data as at 31 March 2016
• The largest unlisted holding is Hidroelectrica SA (36.8% of the total value of unlisted holdings in the portfolio)
Source: FTIML, data as at 31 March 2016
• The largest listed holding is OMV Petrom SA (64.1% of the total value of listed holdings in the portfolio)
Source: FTIML, data as at 31 March 2016
| No | Name | Fund's stake (%) | Value as at 31 March 2016 |
% of NAV as at |
|---|---|---|---|---|
| (RON million) | 31 March 2016 | |||
| 1 | Hidroelectrica SA | 19.94% | 2,654.1 | 23.2% |
| 2 | OMV Petrom SA | 18.99% | 2,582.1 | 22.6% |
| 3 | ENEL Distributie Banat SA | 24.13% | 624.0 | 5.5% |
| 4 | Romgaz SA* | 5.85% | 607.5 | 5.3% |
| 5 | E.ON Distributie Romania SA | 18.35% | 510.4 | 4.5% |
| 6 | CN Aeroporturi Bucuresti SA | 20.00% | 497.8 | 4.4% |
| 7 | ENEL Distributie Muntenia SA | 12.00% | 455.4 | 4.0% |
| 8 | Engie Romania SA | 12.00% | 446.1 | 3.9% |
| 9 | ENEL Distributie Dobrogea SA | 24.09% | 401.2 | 3.5% |
| 10 | BRD Groupe Societe Generale SA | 3.64% | 266.1 | 2.3% |
| 11 | Electrica Distributie Muntenia Nord SA | 22.00% | 253.9 | 2.2% |
| 12 | Banca Transilvania SA | 2.88% | 234.3 | 2.0% |
| 13 | Electrica Distributie Transilvania Sud SA | 22.00% | 222.3 | 1.9% |
| 14 | Electrica Distributie Transilvania Nord SA | 22.00% | 215.6 | 1.9% |
| 15 | Societatea Nationala a Sarii SA | 49.00% | 177.4 | 1.6% |
| 16 | CN Administratia Porturilor Maritime SA | 20.00% | 175.1 | 1.5% |
| 17 | Electrica Furnizare SA | 22.00% | 149.6 | 1.3% |
| 18 | Nuclearelectrica SA | 9.09% | 146.4 | 1.3% |
| 19 | E.ON Energie Romania SA | 13.40% | 126.5 | 1.1% |
| 20 | Alro SA | 10.21% | 86.0 | 0.8% |
| Top 20 equity holdings | 10,831.8 | 94.8% | ||
| Total equity holdings | 11,246.5 | 98.3% | ||
| Net cash and receivables | 193.6 | 1.7% | ||
| Total NAV | 11,440.1 | 100.0% |
Source: FTIML, data as at 31 March 2016, based on NAV reports submitted to FSA. *The Fund sold the entire holding in Romgaz SA on 21 April 2016.
In the first quarter of 2016 there were no changes in the Fund's portfolio.
On 28 March 2016 the Fund Manager publicly announced that no agreement has been reached in the recent negotiations with Electrica SA ("Electrica") regarding a potential transaction between the Fund and Electrica in relation to the Fund's holdings in the four companies in which Electrica is the majority shareholder, respectively Electrica Distributie Transilvania Sud SA, Electrica Distributie Transilvania Nord SA, Electrica Distributie Muntenia Nord SA and Electrica Furnizare SA.
After several rounds of negotiations, the final asking price of the Fund for Electrica would have been RON 769 million. The effective price offered by Electrica for the Fund's holdings in the four subsidiaries was RON 684 million, which is more than an 18% discount to the valuation of those holdings in the Fund's monthly NAV of RON 841 million, as at 29 February 2016.
Despite the resilient efforts and willingness to find a realistic middle ground, it was not possible to reach a satisfactory agreement on price and conclude a deal in the negotiations with Electrica. The Fund Manager remains committed and willing to resume negotiations at a future point if there is a similar commitment from Electrica.
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 – % acquisition from the |
Household consumers – % 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 |
Source: ANRE webpage
Source: Bloomberg, Hidroelectrica SA Note: Day Ahead Market – monthly average for base load
| January – February 2016 | January – February 2015 | % change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Total | Production | Import | Total | Production | Import | Total | Production | Import | |
| Coal | 941.7 | 857.2 | 84.5 | 935.5 | 821.5 | 114.0 | 0.7 | 4.3 | (25.9) |
| Oil | 1,709.5 | 591.4 | 1,118.1 | 1,674.5 | 611.3 | 1,063.2 | 2.1 | (3.3) | 5.2 |
| Natural gas | 1,530.0 | 1,471.3 | 112.7 | 1,495.9 | 1,497.0 | 52.9 | 2.3 | (1.7) | 113.0 |
| Hidro, Nuclear, and Import energy |
924.7 | 863.7 | 61.0 | 929.2 | 882.6 | 46.6 | (0.5) | (2.1) | 30.9 |
| Import oil products | 273.5 | 0.0 | 273.5 | 267.0 | 0.0 | 267.0 | 2.4 | 0.0 | 2.4 |
| Others | 84.8 | 0.0 | 84.8 | 76.6 | 0.0 | 76.6 | 10.7 | 0.0 | 10.7 |
| Total resources | 5,464.2 | 3,783.6 | 1,734.6 | 5,378.7 | 3,812.4 | 1,620.3 | 1.6 | (0.8) | 7.1 |
Source: National Institute of Statistics webpage
Gas prices have increased starting 1 February 2013, pursuant to the schedule for gradual elimination of regulated gas prices. As of 1 January 2015, prices for supply to non-household consumers are determined freely, based on direct negotiation or acceptances of supplier's standard offer. Based on Government Decision no. 488/2015, the Government approved the updated schedule for gas price liberalisation for household consumers and heat producers (for the energy used in residential heating) for the period 1 July 2015 – 1 April 2020.
Source: Government Decision no. 488/2015
Source: Bloomberg, ANRE
| Budget | Budget | |||
|---|---|---|---|---|
| RON million | 2014 | 2015 | 2015* | 2016* |
| Turnover | 2,108.4 | 2,422.8 | 2,665.6 | 2,191.9 |
| Operating profit | 51.0 | 185.9 | 318.1 | 133.7 |
| Net profit/ (loss) | (63.6) | (0.02) | 255.5 | 55.9 |
| Dividends | - | - | - | - |
Source: Consolidated IFRS financial statements
*Budgeted figures do not include any change in the fair value of the derivative embedded in the electricity purchase contract concluded with Hidroelectrica SA. Budget refers to Alro SA individual financial statements. The amounts were converted from USD to RON using the RON/ USD National Bank of Romania exchange rate at budget publishing date (i.e. 27 March 2015/ 28 March 2016)
January: The company informed the market that following an investigation regarding the electricity contracts signed with Hidroelectrica SA, the Competition Council imposed on Alro SA a fine of RON 21.2 million or 1.1% of 2014 turnover.
| RON million | 2014 | 2015 | Q1 2015 | Q1 2016 | Budget 2015* |
Budget 2016*** |
|---|---|---|---|---|---|---|
| Operating income | 2,078.0 | 2,854.3 | 561.5 | 620.7 | 2,015.0 | 2,738.3 |
| Net impairment losses | 684.4 | 797.6 | 133.9 | 59.0 | 550.0 | 693.9 |
| Net profit | 442.5 | 2,448.0 | 159.1 | 231.1 | 596.0** | 848.2 |
Source: Consolidated IFRS financial statements
*Budgeted figures before revision in October 2015
** Refers to budgeted gross profit, 2015 budget does not include a line for net profit
***Budgeted figures as stated in 2015 Report of the Board of Directors
January: The merger of Banca Transilvania and Volksbank Romania, in which Banca Transilvania is the acquiring company, has been finalised on schedule, the effective date of the merger being 31 December 2015.
March: BT Securities, the brokerage company of Banca Transilvania Financial Group, took over the investment banking activity of Capital Partners, Romania's leading independent M&A and Corporate Finance consultant. As a result, BT Securities will be rebranded as BT Capital Partners.
The bank published the 2015 audited consolidated financial results. Highlights include: 32.9% increase in total assets to RON 47,579.1 million, 37.4% increase of operating income to RON 2,854.3 million and net profit of RON 2,448.0 million from RON 442.5 million in 2014. A significant part of the growth in total assets and an extraordinary gain of RON 1.7 billion recorded as revenue in 2015 are as a result of Volksbank Romania integration.
April: The bank reported results for the first three months of 2016 and the highlights on the consolidated numbers include: 10.5% increase y.o.y of operating income to RON 620.7 million, 45.3% increase of net profit to RON 231.1 million and 1.5% increase in total net loans to RON 25.6 billion.
| RON million | 2014 | 2015 | Q1 2015* | Q1 2016 | Budget 2015** |
Budget 2016** |
|---|---|---|---|---|---|---|
| Net banking income | 2,623.0 | 2,507.2 | 628.6 | 647.3 | Around 3% increase |
Around 5% increase |
| Net operating profit | 1,295.3 | 1,209.9 | 216.7 | 242.7 | Around 5% increase |
|
| Net cost of risk | 1,215.4 | 658.2 | 114.5 | 151.5 | Significant decrease |
Further normalisation trajectory |
| Net profit | 63.1 | 465.8 | 84.5 | 71.4 | Significant improvement |
n.a. |
| Dividends | - | 223.0 | - | - | - | - |
Source: Consolidated IFRS financial statements
** Budgeted figures based on individual IFRS financial statements
April 2016: For the full year 2015 the bank reported a net profit of RON 465.8 million compared to a net profit of RON 63.1 million in 2014. The net banking income decreased by 4.4% y.o.y to RON 2,507.2 million, while general operating expenses decreased by 2.3% y.o.y to RON 1,297.2 million, leading to a net operating profit of RON 1,209.9 million, representing a decrease of 6.6% y.o.y. Net cost of risk decreased by 45.8% compared to the similar period of the previous year, to RON 658.2 million.
| Budget | Budget | |||
|---|---|---|---|---|
| RON million | 2014 | 2015* | 2015 | 2016 |
| Total revenue | 305.8 | 325.6 | 306.1 | 322.9 |
| Operating profit | 83.8 | 114.0 | 55.1 | 61.3 |
| Net profit | 70.3 | 97.4 | 39.8 | 48.9 |
| Dividends | 32.3 | 45.7 | 17.6 | 24.5 |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* The financial statements for the year ended 31 December 2015 are subject to shareholders approval on 27 May 2016
February: Total traffic for the first 2 months of 2016 reached 8.4 million tons, which represents a decrease of 7.6% compared to the same period of 2015. The decline was mostly due to a 36.9% decrease of activity for cereals, while most of other goods recorded slight increases.
| Budget | |||
|---|---|---|---|
| 2014 | 2015* | 2015 | 2016** |
| 689.7 | 783.7 | 725.8 | 842.9 |
| 124.4 | 222.1 | 40.6 | 127.4 |
| 98.8 | 185.7 | 44.3 | 104.8 |
| 51.2 | 95.1 | 24.4 | 55.4 |
| Budget |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* Preliminary figures
** Draft 2016 Budget, to be approved by shareholders
February: Total traffic reached 1.4 million passengers in the first 2 months of 2016, which represents an 18.1% increase compared to the same period of 2015.
*Restated values
| RON million | 2014* | 2015** | Budget 2015 |
Budget 2016 |
|---|---|---|---|---|
| Operating revenue | 798.8 | 1,683.3 | 1,448.0*** | 1,423.0*** |
| Operating profit | 96.8 | 320.1 | 217.0 | 281.0 |
| Net profit | 83.0 | 260.3 | 180.0 | 236.0 |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* 2014 figures reflect only gas distribution business
** The financial statements for the year ended 31 December 2015 are subject to shareholders approval on 26 May 2016
*** Power and gas distribution revenue
April: Based on ANRE Order 21 published in the Official Gazette of Romania on 28 April 2016, starting 1 May 2016 the gas distribution tariffs for E.ON Distributie Romania SA have been reduced on average by around 8.9%.
| RON million | 2014 | 2015* | Budget 2015 |
Budget 2016 |
|---|---|---|---|---|
| Operating revenue | 4,871.9 | 5,005.4 | 4,821.4** | 5,040.5** |
| Operating profit | 108.6 | 123.7 | 125.1 | 143.1 |
| Net profit | 94.0 | 111.8 | 110.3 | 121.1 |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* The financial statements for the year ended 31 December 2015 are subject to shareholders approval on 27 May 2016
**Power and gas sales revenue
| RON million | 2014 | 2015* | Budget 2015 |
Budget 2016 |
|---|---|---|---|---|
| Total revenue | 805.4 | 798.6 | 778.3 | 741.8 |
| Operating profit | 159.7 | 182.9 | 165.5 | 147.6 |
| Net profit | 140.3 | 153.2 | 139.0 | 123.9 |
| Dividends | 112.1 | 122.3 | 111.1 | - |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* The financial statements for the year ended 31 December 2015 are subject to shareholders approval on 17 May 2016
| RON million | 2014 | 2015* | Budget 2015 |
Budget 2016 |
|---|---|---|---|---|
| Total revenue | 674.8 | 720.2 | 685.1 | 707.1 |
| Operating profit | 119.7 | 186.6 | 146.0 | 173.6 |
| Net profit | 95.3 | 158.8 | 120.3 | 145.6 |
| Dividends | 75.9 | 127.1 | 96.1 | - |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* The financial statements for the year ended 31 December 2015 are subject to shareholders approval on 17 May 2016
| Budget | Budget | |||
|---|---|---|---|---|
| RON million | 2014 | 2015* | 2015 | 2016 |
| Total revenue | 739.3 | 775.3 | 779.3 | 775.9 |
| Operating profit | 121.5 | 178.1 | 142.2 | 154.1 |
| Net profit | 100.1 | 152.6 | 110.4 | 127.3 |
| Dividends | 79.9 | 119.7 | 87.8 | - |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* The financial statements for the year ended 31 December 2015 are subject to shareholders approval on 17 May 2016
| RON million | 2014 | 2015* | Budget 2015 |
Budget 2016 |
|---|---|---|---|---|
| Total revenue | 4,055.4 | 4,205.7 | 4,097.5 | 4,196.7 |
| Operating profit | 223.7 | 143.1 | 108.4 | 126.5 |
| Net profit | 204.7 | 131.1 | 95.1 | 113.4 |
| Dividends | 174.0 | 111.5 | - | - |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
* The financial statements for the year ended 31 December 2015 are subject to shareholders approval on 26 May 2016
| Budget | Budget | |||
|---|---|---|---|---|
| RON million | 2014 | 2015 | 2015 | 2016 |
| Total revenue | 649.7 | 646.9 | 587.2 | 559.8 |
| Operating profit | 188.4 | 181.5 | 188.1 | 175.6 |
| Net profit | 172.2 | 157.9 | 161.8 | 143.3 |
| Dividends | 85.7 | 69.7 | - | - |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
February: Following the resignation of Toni Volpe as CEO and Country Manager, Georgios Stassis was appointed as head of Enel operations in Romania.
March: Following the resignations of Toni Volpe, Giuseppe Fanizi, Alessandra Proietti and Ludovica Parodi, Enel recommended and shareholders approved the appointment of Georgios Stassis, Mina Kolarova, Federico Panone and Alexandra Burcea as board members.
| Budget | Budget | |||
|---|---|---|---|---|
| RON million | 2014 | 2015 | 2015 | 2016 |
| Total revenue | 533.4 | 546.0 | 481.7 | 476.2 |
| Operating profit | 102.7 | 136.3 | 154.7 | 129.7 |
| Net profit | 87.7 | 114.8 | 129.3 | 97.3 |
| Dividends | 43.6 | 50.0 | - | - |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
March: Following the resignations of Toni Volpe, Giuseppe Fanizi, Alessandra Proietti and Ludovica Parodi, Enel recommended and shareholders approved the appointment of Georgios Stassis, Mina Kolarova, Federico Panone and Alexandra Burcea as board members.
| Budget | Budget | |||
|---|---|---|---|---|
| RON million | 2014 | 2015 | 2015 | 2016 |
| Total revenue | 1,073.1 | 1,055.8 | 931.8 | 885.4 |
| Operating profit | 246.3 | 256.3 | 244.1 | 189.9 |
| Net profit | 240.8 | 237.9 | 211.7 | 151.0 |
| Dividends | - | - | - | - |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
March: Following the resignations of Toni Volpe, Giuseppe Fanizi and Alessandra Proietti, Enel recommended and shareholders approved the appointment of Georgios Stassis, Federico Panone and Alexandra Burcea as board members.
| RON million | 2014 | 2015 | Budget 2015* |
Budget 2016* |
|---|---|---|---|---|
| Turnover | 4,290.9*** | 4,416.4 | 4,441.4 | 4,529.1 |
| Operating profit | 560.9 | 474.9 | 262.1 | 287.2 |
| Net profit | 443.1 | 378.5 | 278.8 | 238.8 |
| Dividends** | 200.0 | - | - | - |
Source: Consolidated IFRS financial statements
*Budgeted figures based on separate IFRS financial statements
**Dividends are based on the separate IFRS financial statements
*** Restated values
February: Shareholders approved the change of the company name from GDF Suez Energy Romania SA to Engie Romania SA, following the rebranding strategy of GDF Suez Group at the global level.
April: The Romanian State revoked Gelu Diaconu and Ghimpau Aurelian as board members, while Engie revoked Pierre Chatain, Bart Boesmans and Valerie Limpens. The new board members are Vlad Vasiliu and Catalin Deaconescu recommended by the Romanian State and Etienne Jacolin, Olivier Bloeyaert and Marleene Delvaux recommended by Engie.
According to ANRE Order no. 20/2016, starting with 1 May 2016 the regulated supply tariffs for households were increased by approximately 11%.
| Budget | ||
|---|---|---|
| RON million | 2014 | 2015 |
| Turnover | 3,406.0 | 2,851.3* |
| Operating profit | 1,207.9 | 489.7 |
| Net profit | 941.5 | 371.9 |
| Dividends | 646.4 | 174.5 |
| Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations |
*Operating revenue
April: According to the preliminary results for 2015, the gross profit was RON 1,105 million.
May: In May 2016 the company had only two ongoing cases with Bucharest Court (syndic judge) as part of the insolvency procedure. The following hearings for the two files are on 25 May 2016 and 8 June 2016.
| RON million | 2014 | 2015 | Budget 2015** |
Budget 2016** |
|---|---|---|---|---|
| Sales | 1,794.6 | 1,748.7 | 1,884.0 | 1,700.3 |
| Operating profit/ (loss) | 173.8 | 159.1 | 57.7 | 59.7 |
| Net profit | 131.4 | 147.4 | 30.8 | 41.1 |
| Dividends* | 90.4 | 99.5 | 15.7 | 20.9 |
Source: Consolidated IFRS financial statements
*Dividends are based on the separate IFRS financial statements
**Based on individual IFRS financial statements
March: The budget for 2016 was approved by the GSM with sales at RON 1,700.3 million (a decrease of 2.8% compared to 2015), operating profit of RON 59.7 million (a decrease of 62.7% compared to 2015) and a net profit of RON 41.1 million (a decrease of 72.4% compared to 2015).
| Budget | Budget | |||||
|---|---|---|---|---|---|---|
| RON million | 2014 | 2015 | Q1 2015 | Q1 2016 | 2015** | 2016** |
| Sales | 21,541.3 | 18,145.0 | 4,270.7 | 3,558.5 | 12,571.0 | 10,764.0 |
| Operating profit/(loss) | 3,338.3 | (529.8) | 494.2 | 342.6 | 1,121.0 | 62.0 |
| Net profit/ (loss) | 2,099.7 | (689.7) | 345.3 | 288.2 | 1,102.0 | 199.0 |
| Dividends* | 634.4 | - | - | - | - | - |
Source: Consolidated IFRS financial statements
*Based on separate IFRS financial statements
January: Peter Rudolf Zeilinger was appointed on the Executive Board of OMV Petrom SA, in charge of the Upstream activity starting 1 April 2016. The appointment follows the resignation of Gabriel Selinschi, who will continue his career in OMV Group as Senior Vice President responsible for the Group's activities in Australasia area.
March: The company published the audited consolidated financial statements for 2015: sales declined 15.8% to RON 18,145.0 million, the company recorded losses at EBIT level of RON 529.8 million from RON 3,338.3 million profit in 2014 and a net loss of RON 689.7 million from a net profit of RON 2,099.7 million in 2014. The results include extraordinary items with a total impact of RON 2.48 billion on the net result.
The Supervisory Board approved the recommendation of the Executive Board to pay no dividends in 2016. This proposal was approved by shareholders at the Annual GSM held on 26 April 2016.
May: The company reported results for the first quarter of 2016. The highlights include: sales declined by 16.7% compared to the same period of 2015 to RON 3,558.5 million, EBIT declined by 30.7% compared to the same period of 2015 to RON 342.6 million and net profit declined by 16.5% compared to the same period of 2015 to RON 288.2 million. The declines were despite the 41% decrease of the average realised oil price to 26.7 USD per barrel. Total hydrocarbons production declined 3% to 15.9 million barrels of oil equivalent while sales of refined products increased 4% to 1.1 million tons.
| RON million | 2014 | 2015 | Budget 2015* |
Budget 2016** |
|---|---|---|---|---|
| Sales | 4,493.3 | 4,052.6 | 4,587.5 | 4,497.9 |
| Net profit | 1,409.9 | 1,194.3 | 1,511.9 | 1,323.9 |
| Dividends | 1,214.1 | 1,040.6 | - | 1,043.6 |
Source: Separate IFRS financial statements
*Budgeted figures based on the Romanian Accounting Regulations
**The proposal for 2016 Budget was not approved by GSM
March: Aristotel Jude was appointed as a member of the Board of Directors following the expiration of the mandate of Dragos Dorcioman. Mr. Jude was recommended to this position by the Ministry of Energy and his mandate will expire on 17 May 2017.
Sebastian-Gabriel Tcaciuc was appointed as a member of the Board of Directors, following the resignation of Sorana-Rodica Baciu. Mr. Tcaciuc has been recommended to this position by the European Bank for Reconstruction and Development.
April: The company's Board of Directors has decided to continue the commercial relationship with Electrocentrale Bucuresti SA until the end of May, under the same terms as contract no. 34/ 2015. The company announced that due to lack of response to the company's offer from Electrocentrale Bucuresti SA by 29 April, starting 1 May 2016 all contractual arrangements with this client have expired.
Romgaz SA announced that a contract previously signed with E.ON Energie Romania SA has been cancelled. The estimated value of gas still to be delivered on that contract was RON 281.4 million. The contract did not stipulate any penalties in case of cancelation.
| 2014 | Budget 2015 |
Budget 2016 |
|---|---|---|
| 297.6 | 324.6 | 329.7 |
| 31.8 | 47.0 | 69.5 |
| 24.5 | 40.2 | 57.3 |
| 20.9 | 37.0 | 45.4 |
Source: Financial statements prepared in accordance with applicable Romanian Accounting Regulations
February: Alexandra Pana, the Chairman of the Board of Directors, resigned for personal reasons.
According with the latest shareholders resolution, the initial public offering approval was postponed until the selection of a new board based on the Government Emergency Ordinance 109/2011 will be completed, which is expected to happen by mid-June 2016.
The unaudited Financial Statements for the three-month period ended 31 March 2016 prepared in compliance with IAS 34 Interim Financial Reporting, based on IFRS are included in full in Annex 1 to this Report.
Starting with the annual financial statements for the year ended 31 December 2015, according to the FSA Norm 39/2015, IFRS are the official accounting regulations (the statutory basis of accounting) for the Fund.
This section provides a commentary on the principal elements of the Fund's financial position and results for the quarter ended 31 March 2016.
| RON million | 31 March 2016 |
31 December 2015 |
|
|---|---|---|---|
| Unaudited | Audited | ||
| Cash and current accounts | 0.5 | 0.6 | |
| Deposits with banks | 89.6 | 197.8 | |
| Treasury bills | - | 20.0 | |
| Government bonds | 125.0 | 59.0 | |
| Equity investments | 11,200.1 | 11,800.7 | |
| Other assets | 31.1 | 29.6 | |
| Total assets | 11,446.3 | 12,107.7 | |
| Total liabilities | 52.5 | 54.6 | |
| Total equity | 11,393.8 | 12,053.1 | |
| Total liabilities and equity | 11,446.3 | 12,107.7 |
As at 31 March 2016, deposits with banks included bank deposits denominated in RON with maturities of up to one month, held with banks in Romania.
As at 31 March 2016, government bonds comprised short-term government bonds with coupon, denominated in RON, with residual maturities up to one month, issued by the Ministry of Public Finance of Romania.
The overall decrease in liquid assets in the first quarter of 2016 of RON 62.3 million was mainly due to the cash outflows used for funding the sixth buy-back programme carried out by the Fund during this period (RON 41.5 million in total).
Starting 1 January 2014, Fondul Proprietatea applied the Amendments to IFRS 10, IFRS 12 and IAS 27 - Investment Entities, the Fund being an investment entity. As a result, the Fund classified and measured its investments in subsidiaries and associates as financial assets at fair value through profit or loss. The other equity investments were classified as financial assets available for sale.
The equity investments at fair value through profit or loss are initially recognised at fair value and the transaction costs are recorded in profit or loss. Subsequent measurement is at fair value and all changes in fair value are accounted for through profit or loss. Equity investments at fair value through profit or loss are not subject to the review for impairment.
The equity investments classified as available for sale are measured at fair value, with the changes in fair value recognised in other comprehensive income (equity). At the derecognition of an available for sale equity investment, the cumulative gain or loss previously recognised in other comprehensive income is transferred to profit or loss. Impairment losses on available for sale equity investments are recognised by transferring the cumulative loss that was recognised in other comprehensive income to profit or loss. If, in a subsequent period, the fair value of an impaired equity investment classified as available for sale increases, this is recognised in other comprehensive income (equity).
As at 31 March 2016, all the equity investments of the Fund were carried at fair value.
Listed shares traded in an active market were measured at fair value, using quoted prices in an active market for that instrument at the reporting date. A market is considered active if transactions for the asset take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
In case of unlisted shares and listed shares that are not traded in an active market, where sufficient information was available, the fair values of equity investments were determined by independent valuers, using valuation techniques, in accordance with International Valuation Standards (99.7% of the total unlisted portfolio).
Investments in equity securities that do not have a quoted price in an active market, and whose fair values determined by independent valuers were not available, are measured 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 on monthly basis (only an insignificant part of the portfolio).
The decrease of equity investments by RON 600.6 million in the first quarter of 2016 was mainly due to the 17.2% decrease of OMV Petrom SA share price (impact of RON 537.9 million).
As at 31 March 2016, the net deferred tax position is nil due to the fact that the Fund recognised a deferred tax asset for the unused tax losses carried forward, only to the level of the deferred tax liability arising from the taxable temporary differences (with impact recognised in profit or loss or other comprehensive income, depending on the nature of the corresponding item).
| RON million | 31 March 2016 | 31 March 2015 |
|---|---|---|
| Unaudited | Unaudited | |
| Net loss from equity investments at fair value through profit or loss | (535.9) | (476.2) |
| Impairment losses on equity investments available for sale | (29.8) | (20.1) |
| Interest income | 1.2 | 1.1 |
| Other items of income/ (expense), net* | 1.9 | 0.1 |
| Net operating loss | (562.6) | (495.1) |
| Operating expenses | (18.9) | (20.9) |
| Finance costs | (0.2) | - |
| Loss before income tax | (581.7) | (516.0) |
| Income tax expense | (3.9) | (152.7) |
| Loss for the period | (585.6) | (668.7) |
| Other comprehensive income | (30.9) | 15.4 |
| Total comprehensive income for the period | (616.5) | (653.3) |
* Other items of income/ (expense), net included the net foreign exchange losses, the (reversal of) impairment losses on receivables and other income.
The net loss from equity investments at fair value through profit or loss for the first three months of 2016 and 2015 represent the unrealised loss from the negative net change in fair value related to equity investments classified at fair value through profit or loss, principally OMV Petrom SA, due to the negative evolution of the share price of this company.
In performing the impairment test for the equity investments available for sale, 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. The most significant impairment losses on equity investments available for sale in the first quarter of 2016 were related to the holding in Nuclearelectrica SA (RON 29.6 million). In the first three months of 2015 the most significant impairment losses recorded were related to the holdings in Nuclearelectrica SA (RON 12.1 million) and in Alro SA (RON 8.0 million).
Interest income arose from deposits held with banks and from short-term government securities.
The other comprehensive income comprised the changes in fair value of equity investments available for sale, net of related deferred tax, where applicable.
The income tax expenses for the first three months of 2016 represent the partial reversal of the deferred tax asset for the unused tax losses carried forward recognised as at 31 December 2015, as this is recognised, at each reporting date, only to the level of the deferred tax liability arising from the taxable temporary differences. The income tax expense in the first three months of 2015 represents the reversal of the deferred tax asset recorded as at 31 December 2014 as a result of the postponement of the adoption of IFRS as official accounting regulation (and fiscal basis).
| RON million | 31 March 2016 | 31 March 2015 | |
|---|---|---|---|
| Unaudited | Unaudited | ||
| Investment management and administration fees | 12.6 | 14.1 | |
| FSA monthly fees | 2.7 | 2.9 | |
| Depositary fees | 0.2 | 0.3 | |
| Other operating expenses | 3.4 | 3.6 | |
| Operating expenses | 18.9 | 20.9 |
Investment management and administration fees payable to the Fund Manager represent the main operating expenses component, which decreased compared to the previous period in line with the decrease of the Fund's share price, upon which these fees are based. The total investment management and administration fees in the first quarter of 2016 included the base fee in amount of RON 11.8 million (quarter ended 31 March 2015: RON 13.8 million) and the distribution fee in amount of RON 0.8 million (quarter ended 31 March 2015: RON 0.3 million).
FSA monthly fees recorded a slight decrease generated by the decrease of the Fund's total NAV basis on which these fees are calculated.
Other operating expenses in the first three months of 2016 included mainly litigation assistance, Board of Nominees related expenses, advisory expenses and GSM organisation related expenses.
| Description | 31 March 2016 | |||
|---|---|---|---|---|
| 1. | Current liquidity ratio | |||
| Current Assets Current Liabilities |
= | 4.69 | ||
| 2. | Debt-to-equity ratio (%) | |||
| Borrowings Shareholders' Equity |
x 100 | = | - | |
| *The Fund had no borrowings as at 31 March 2016 , therefore this ratio is nil |
||||
| 3. | Receivables turnover ratio - customers (number of days) | |||
| Average balance of receivables Turnover or sales This ratio is not applicable to an investment fund and cannot be calculated. |
x 365 | = | n.a. | |
| 4. | Turnover of non-current assets | |||
| Gross turnover Non-current assets |
= | 0.00011 | ||
| For the computation of this ratio "Gross turnover" included interest income and dividend income, while "Non-current assets" included equity investments (which do not have a fixed maturity) |
||||
| This ratio has no real significance for an investment fund. |
Franklin Templeton International Services S.À.R.L acting in the capacity of Sole Director of Fondul Proprietatea SA
Oana Truta Permanent Representative 13 May 2016
Prepared by Mihaela Moleavin Financial Reporting Manager
Prepared in accordance with IAS 34 Interim Financial Reporting
(This is a translation from the official Romanian version)
| Condensed Statement of Comprehensive Income | 32 |
|---|---|
| Condensed Statement of Financial Position | 33 |
| Condensed Statement of Changes in Shareholders' Equity. | 34 |
| Condensed Statement of Cash Flows. | 36 |
| Notes to the Condensed Interim Financial Statements | 37 |
(all amounts are in RON unless otherwise stated)
| Note | 3 months ended 31 March 2016 |
3 months ended 31 March 2015 |
|
|---|---|---|---|
| Net loss from equity investments at fair value through profit or loss |
5 | (535,892,358) | (476,204,320) |
| Impairment losses on equity investments available for sale |
9 | (29,845,379) | (20,130,037) |
| Interest income | 1,217,700 | 1,063,387 | |
| (Impairment losses) / Reversal of impairment losses on receivables, net |
(451,572) | 15,272 | |
| Net foreign exchange losses | (3,547) | (29,004) | |
| Other income, net | 2,328,655 | 195,204 | |
| Net operating loss | (562,646,501) | (495,089,498) | |
| Operating expenses | 6 | (18,854,194) | (20,904,677) |
| Finance costs | 7 | (170,313) | - |
| Loss before income tax | (581,671,008) | (515,994,175) | |
| Income tax expense | 8 | (3,937,454) | (152,678,949) |
| Loss for the period | (585,608,462) | (668,673,124) | |
| Other comprehensive income | |||
| Net change in fair value of available for sale equity investments |
(34,856,399) | 15,329,641 | |
| Deferred tax on other comprehensive income | 3,937,454 | - | |
| Total other comprehensive income | (30,918,945) | 15,329,641 | |
| Total comprehensive income for the period | (616,527,407) | (653,343,483) | |
| Basic and diluted earnings per share | (0.0525) | (0.0545) |
The financial statements were authorised for issue on 13 May 2016 by:
Franklin Templeton International Services S.À.R.L acting in the capacity of Sole Director of Fondul Proprietatea SA
| Prepared by | |
|---|---|
| Oana Truta | Mihaela Moleavin |
| Permanent Representative | Financial Reporting Manager |
| Note | 31 March 2016 | 31 December 2015 | |
|---|---|---|---|
| Assets | |||
| Cash and current accounts | 491,254 | 648,858 | |
| Deposits with banks | 89,636,579 | 197,825,552 | |
| Treasury bills | - | 19,957,311 | |
| Government bonds | 125,018,667 | 59,004,410 | |
| Equity investments | 9 | 11,200,110,482 | 11,800,704,619 |
| Other assets | 31,032,623 | 29,577,289 | |
| Total assets | 11,446,289,605 | 12,107,718,039 | |
| Liabilities | |||
| Other liabilities | 11 | 52,526,461 | 54,625,824 |
| Total liabilities | 52,526,461 | 54,625,824 | |
| Equity | |||
| Share capital | 12 | 9,869,265,721 | 10,074,080,746 |
| Fair value reserve on available for sale financial assets |
12 | 4,201,891,455 | 4,232,810,400 |
| Other reserves | 545,671,056 | 527,397,886 | |
| Treasury shares | 12 | (164,299,154) | (308,039,345) |
| Retained earnings | (3,058,765,934) | (2,473,157,472) | |
| Total equity | 11,393,763,144 | 12,053,092,215 | |
| Total liabilities and equity | 11,446,289,605 | 12,107,718,039 |
| Share capital | Fair value reserve on available for sale financial assets |
Other reserves | Treasury shares | Retained earnings / (Accumulated losses) |
Total attributable to the equity holders of the Fund |
|
|---|---|---|---|---|---|---|
| Balance as at 1 January 2016 | 10,074,080,746 | 4,232,810,400 | 527,397,886 | (308,039,345) | (2,473,157,472) | 12,053,092,215 |
| Comprehensive income for the period Loss for the period |
- | - | - | - | (585,608,462) | (585,608,462) |
| Other comprehensive income | ||||||
| Net change in fair value of available for sale equity investments |
- | (34,856,399) | - | - | - | (34,856,399) |
| Deferred tax on other comprehensive income | - | 3,937,454 | - | - | - | 3,937,454 |
| Total other comprehensive income | - | (30,918,945) | - | - | - | (30,918,945) |
| Total comprehensive income for the period | - | (30,918,945) | - | - | (585,608,462) | (616,527,407) |
| Transactions with owners, recorded directly in equity | ||||||
| Acquisition of treasury shares | - | - | - | (42,801,664) | - | (42,801,664) |
| Cancellation of treasury shares | (204,815,025) | - | 18,273,170 | 186,541,855 | - | - |
| Total transactions with owners recorded directly in | ||||||
| equity | (204,815,025) | - | 18,273,170 | 143,740,191 | - | (42,801,664) |
| Balance as at 31 March 2016 | 9,869,265,721 | 4,201,891,455 | 545,671,056 | (164,299,154) | (3,058,765,934) | 11,393,763,144 |
(all amounts are in RON unless otherwise stated)
| Share capital | Fair value reserve on available for sale financial assets |
Other reserves | Treasury shares | Retained earnings / (Accumulated losses) |
Total attributable to the equity holders of the Fund |
|
|---|---|---|---|---|---|---|
| Balance as at 1 January 2015 | 11,815,279,887 | 4,020,355,472 | 610,197,299 | (1,189,918,464) | (1,908,041,171) | 13,347,873,023 |
| Comprehensive income for the period Loss for the period |
- | - | - | - | (668,673,124) | (668,673,124) |
| Other comprehensive income | ||||||
| Net change in fair value of available for sale equity | ||||||
| investments | - | 15,329,641 | - | - | - | 15,329,641 |
| Total other comprehensive income | - | 15,329,641 | - | - | - | 15,329,641 |
| Total comprehensive income for the period | - | 15,329,641 | - | - | (668,673,124) | (653,343,483) |
| Transactions with owners, recorded directly in equity | ||||||
| Acquisition of treasury shares | - | - | - | (127,830,669) | - | (127,830,669) |
| Cancellation of treasury shares | (240,215,153) | - | 36,762,174 | 203,452,979 | - | - |
| Total transactions with owners recorded directly in | ||||||
| equity | (240,215,153) | - | 36,762,174 | 75,622,310 | - | (127,830,669) |
| Balance as at 31 March 2015 | 11,575,064,734 | 4,035,685,113 | 646,959,473 | (1,114,296,154) | (2,576,714,295) | 12,566,698,871 |
(all amounts are in RON unless otherwise stated)
| 3 months ended 31 March 2016 |
3 months ended 31 March 2015 |
|
|---|---|---|
| Cash flows from operating activities | ||
| Disposals/ maturity of treasury bills and bonds | 51,217,097 | 94,533,114 |
| Interest received | 596,001 | 999,051 |
| Suppliers and other taxes and fees paid | (21,413,224) | (25,035,972) |
| Acquisitions of treasury bills and bonds | (94,428,901) | (9,526,507) |
| Remunerations and related taxes paid | (356,100) | (274,454) |
| Subscriptions to share capital increase of portfolio companies | (3,070,150) | (88,350) |
| Realised foreign exchange loss on cash and cash equivalents | (19,330) | (7,676) |
| Other receipts | 1,161,209 | 64,120 |
| Net cash flows from/ (used in) operating activities | (66,313,398) | 60,663,326 |
| Cash flows from financing activities | ||
| Return of capital to shareholders | (104,156) | (599,737) |
| Acquisition of treasury shares | (41,896,079) | (130,843,593) |
| Dividends paid (including related taxes) | (26,822) | (114,187) |
| Net cash flows used in financing activities | (42,027,057) | (131,557,516) |
| Net decrease in cash and cash equivalents | (108,340,455) | (70,894,190) |
| Cash and cash equivalents at the beginning of the period | 198,467,448 | 116,158,127 |
| Cash and cash equivalents at the end of the period | 90,126,993 | 45,263,937 |
| 31 March 2016 | 31 March 2015 | |
| Cash | 491,254 | 1,274,011 |
| Bank deposits with original maturities of less than three months | 89,635,739 | 43,989,926 |
| 90,126,993 | 45,263,937 |
(all amounts are in RON unless otherwise stated)
Fondul Proprietatea SA (referred to as "Fondul Proprietatea" or "the Fund") was incorporated as a joint stock company and is operating as an undertaking for collective investment, 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 measures, 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. Fondul Proprietatea is an alternative investment fund starting 1 April 2016.
The Fund undertakes its activities in accordance with Law 247/2005, Law 297/2004 regarding the capital market, as subsequently amended ("Law 297/2004"), Law 31/1990 regarding companies, republished as subsequently amended ("Law 31/1990"), and Law 74/2015 regarding Alternative Investment Fund Managers ("Law 74/2015") and it is an entity authorised, regulated and supervised by the Financial Supervisory Authority ("FSA"), formerly known as the 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.
The Sole Administrator of the Fund was Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch ("FTIML" or "Fund Manager") until and including 31 March 2016. The first mandate was effective since 29 September 2010 for a period of 4 years, and the mandate was renewed for 2 years with effect from 30 September 2014.
Considering the legal requirements to implement the Directive 2011/61/EU on Alternative Investment Fund Managers ("AIFM Directive") the shareholders of the Fund approved, on 29 October 2015, the change of the management structure and the termination of the mandate of FTIML as Fund Manager and Sole Administrator, with the mutual consent of both parties, starting with 1 April 2016. Subsequent to the termination, the Fund appointed Franklin Templeton International Services S.À.R.L ("FTIS") as its Sole Administrator and Alternative Investment Fund Manager under AIFM Directive and local implementation regulations, and executed a new Management Agreement in order to reach AIFM Directive compliance (the FTIS mandate commenced on 1 April 2016). As part of the new management structure, FTIS delegates the role of investment manager and certain administrative functions to FTIML.
Starting 25 January 2011, Fondul Proprietatea became 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 as of 5 January 2015 as Premium Tier shares), under ISIN number ROFPTAACNOR5 with the market symbol "FP".
Starting 29 April 2015, the Fund's Global Depositary Receipts ("GDR") have been listed on the London Stock Exchange – Specialist Fund Market, under ISIN number US34460G1067, with the market symbol "FP.". The Bank of New York Mellon has been appointed by the Fund to act as depositary bank in relation to the GDR facility. The GDR facility is limited to one-third of the Fund's subscribed share capital under the Romanian securities regulations, each GDR representing 50 shares, and the currency of the GDRs is US dollar.
These condensed interim financial statements for the three month period ended 31 March 2016 are not audited.
According to the provisions of FSA Norm no. 39/ 28 December 2015, regarding the approval of the accounting regulations in accordance with International Financial Reporting Standards as adopted by European Union ("IFRS"), applicable to the entities authorised, regulated and supervised by FSA – Financial Investments and Instruments Sector ("Norm 39/2015"), IFRS became the official accounting regulations for the regulated entities, including Fondul Proprietatea, starting with the annual financial statements for the year ended 31 December 2015.
(all amounts are in RON unless otherwise stated)
These condensed interim financial statements for the three month period ended 31 March 2016 have been prepared in accordance with IAS 34 Interim financial reporting. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2015, prepared in accordance with IFRS.
Due to the application of the Amendments to IFRS 10, IFRS 12 and IAS 27 (Investment Entities) starting 1 January 2014, being an investment entity, the Fund no longer consolidates its subsidiaries and in consequence, the Fund no longer prepares consolidated financial statements, the separate financial statements being the Fund's only financial statements. The Fund has reassessed the criteria for being an investment entity for the quarter ended 31 March 2016 and continues to meet them.
These condensed interim financial statements have been prepared on a fair value basis for the main part of the Fund's assets (equity investments, treasury bills and short-term government bonds respectively), and on a historical cost or amortised cost basis for the rest of the items included in the condensed interim financial statements.
These condensed interim 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 the condensed interim 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 condensed interim financial statements is included in the following notes:
The accounting policies applied in these condensed interim financial statements are the same as those applied in the Fund's financial statements as at and for the year ended 31 December 2015 and have been applied consistently to all periods presented in these condensed interim financial statements.
The table below presents the carrying amounts and fair values of the Fund's financial assets and financial liabilities:
| At fair value | ||||||
|---|---|---|---|---|---|---|
| Loans and | through profit or | Other amortised | Total carrying | |||
| receivables | Available for sale | loss | cost | amount | Fair value | |
| 31 March 2016 | ||||||
| Cash and current accounts | 491,254 | - | - | - | 491,254 | 491,254 |
| Deposits with banks | 89,636,579 | - | - | - | 89,636,579 | 89,636,579 |
| Government bonds | - | 125,018,667 | - | - | 125,018,667 | 125,018,667 |
| Equity investments | - | 8,386,978,183 | 2,813,132,299 | - | 11,200,110,482 | 11,200,110,482 |
| Other receivables | 22,276,350 | - | - | - | 22,276,350 | 22,276,350 |
| Other liabilities | - | - | - | (39,897,839) | (39,897,839) | (39,897,839) |
| 112,404,183 | 8,511,996,850 | 2,813,132,299 | (39,897,839) | 11,397,635,493 | 11,397,635,493 | |
| At fair value | ||||||
| Loans and receivables |
Available for sale | through profit or loss |
Other amortised cost |
Total carrying amount |
Fair value | |
| 31 December 2015 | ||||||
| Cash and current accounts | 648,858 | - | - | - | 648,858 | 648,858 |
| Deposits with banks | 197,825,552 | - | - | - | 197,825,552 | 197,825,552 |
| Treasury bills | - | 19,957,311 | - | - | 19,957,311 | 19,957,311 |
| Government bonds | - | 59,004,410 | - | - | 59,004,410 | 59,004,410 |
| Equity investments | - | 8,451,679,962 | 3,349,024,657 | - | 11,800,704,619 | 11,800,704,619 |
| Other receivables | 19,721,473 | - | - | - | 19,721,473 | 19,721,473 |
| Other liabilities | - | - | - | (41,962,841) | (41,962,841) | (41,962,841) |
| 218,195,883 | 8,530,641,683 | 3,349,024,657 | (41,962,841) | 12,055,899,382 | 12,055,899,382 |
(all amounts are in RON unless otherwise stated)
| 3 months ended | 3 months ended | |
|---|---|---|
| 31 March 2016 | 31 March 2015 | |
| Unrealised net loss from equity investments | 535,892,358 | 476,204,320 |
| Total | 535,892,358 | 476,204,320 |
The net loss from equity investments at fair value through profit or loss for the first three months of 2016 and 2015 was unrealised and was mainly generated by the negative net change in the fair value for the holding in OMV Petrom SA, due to the decrease of the share price of the shares of this company. No realised net gain or loss from equity investments at fair value through profit or loss was recorded in the three month periods ended 31 March 2016 and 31 March 2015 as there was no disposal.
| 3 months ended | 3 months ended | |
|---|---|---|
| 31 March 2016 | 31 March 2015 | |
| Investment management and administration fees | 12,567,842 | 14,061,723 |
| Financial Supervisory Authority monthly fees | 2,703,775 | 2,925,317 |
| Depositary fee | 225,766 | 347,950 |
| Remunerations and related taxes | 357,951 | 275,268 |
| Third party services | 2,571,356 | 2,987,738 |
| Other operating expenses | 427,504 | 306,681 |
| 18,854,194 | 20,904,677 |
Investment management and administration fees decreased in the first quarter of 2016 as compared to the first quarter of 2015 in line with the decrease of the Fund's share price upon which these fees are based. The total investment management and administration fees in the first quarter of 2016 included the base fee in amount of RON 11.8 million (quarter ended 31 March 2015: RON 13.8 million) and the distribution fee in amount of RON 0.8 million (quarter ended 31 March 2015: RON 0.3 million). The investment management and administration fees are invoiced and paid on a quarterly basis.
Financial Supervisory Authority monthly fees slightly decreased due to the decrease of the Fund's total NAV based on which these fees are calculated.
Remunerations and related taxes included the remunerations paid to the members of the Board of Nominees and to the special administrator appointed in Hidroelectrica SA (portfolio company in insolvency) as required by the insolvency legislation in force and the related taxes and contributions payable to the Romanian state budget, as follows:
| 3 months ended 31 March 2016 |
3 months ended 31 March 2015 |
|
|---|---|---|
| Members of the Board of Nominees | 300,000 | 225,000 |
| Special administrator appointed in portfolio companies in insolvency |
3,987 | 3,987 |
| Contributions to social security fund | 38,124 | 34,341 |
| Contributions to health insurance fund | 15,840 | 11,940 |
| 357,951 | 275,268 |
(all amounts are in RON unless otherwise stated)
In the first quarter of 2016 the finance costs category comprised the commitment fee on undrawn amounts from the credit facility concluded by Fondul Proprietatea with Citibank Europe Plc, Dublin – Romania Branch. The purpose of the credit facility is for general corporate use, including share buy-backs (via ordinary shares or GDRs) and return of capital, but excluding investments. It is intended to be a bridging loan.
In December 2015, the Fund and Citibank Europe Plc, Dublin - Romania Branch agreed to extend the revolving committed credit facility of RON 500 million. The availability period of the facility started on 4 January 2016 and ends on 31 August 2016, while the final reimbursement should take place no later than 30 September 2016. On 7 March 2016, the Fund and Citibank Europe Plc, Dublin - Romania Branch agreed to split the credit facility into a committed facility of maximum RON 375 million and an uncommitted facility of maximum RON 125 million.
In the first quarter of 2016 the Fund did not use the credit facility, the outstanding balance as at 31 March 2016 being nil (31 December 2015: nil).
| 3 months ended 31 March 2016 |
3 months ended 31 March 2015 |
|
|---|---|---|
| Current tax expense | ||
| Current tax (16%) | - | - |
| - | - | |
| Deferred tax related to: | ||
| Equity investments | - | (152,678,949) |
| Fiscal loss | (3,937,454) | - |
| (3,937,454) | (152,678,949) | |
| Income tax expense | (3,937,454) | (152,678,949) |
The effective tax rate used to calculate the deferred tax position of the Fund was 16% (standard tax rate).
| 3 months ended 31 March 2016 |
3 months ended 31 March 2015 |
|
|---|---|---|
| Reconciliation of effective tax rate | ||
| Loss for the period | (585,608,462) | (668,673,124) |
| Income tax expense | (3,937,454) | (152,678,949) |
| Loss excluding income tax | (581,671,008) | (515,994,175) |
| Income tax using the standard tax rate (16%) | 93,067,361 | 82,559,068 |
| Effect of: | ||
| Gain on cancellation of treasury shares (taxable equity item) |
(1,778,480) | (17,007,926) |
| Non-taxable income | 170,411,077 | 2,975 |
| Non-deductible expenses | (256,382,634) | (18,837) |
| Impact of non-recognition of deferred tax on fiscal loss |
(5,317,324) | (507,432,672) |
| Fiscal impact of the transition to IFRS | - | 441,897,392 |
| Reversal through profit or loss of deferred tax previouly recognised |
(3,937,454) | (152,678,949) |
| Income tax expense | (3,937,454) | (152,678,949) |
(all amounts are in RON unless otherwise stated)
| 3 months ended | 3 months ended | |
|---|---|---|
| 31 March 2016 | 31 March 2015 | |
| Income tax recognised directly in equity: | ||
| On equity investments carried at fair value | 3,937,454 | - |
Please see note 10 for details regarding deferred tax computation and recognition.
The equity investments of the Fund are classified as financial assets at fair value through profit or loss (respectively Fund's associates and subsidiaries) or as financial assets available for sale (all the other equity investments) and are valued as follows:
The movement in the carrying amounts of equity investments in the first quarter of 2016 and the first quarter of 2015 is presented below:
| Equity investments at fair value through profit or loss |
Equity investments available for sale |
Total equity investments |
|
|---|---|---|---|
| 1 January 2016 | 3,349,024,657 | 8,451,679,962 | 11,800,704,619 |
| Impairment losses | - | (29,845,379) | (29,845,379) |
| Net change in fair value of available for sale equity investments (recorded in other comprehensive income) |
- | (34,856,400) | (34,856,400) |
| Net loss from equity investments at fair value through profit or loss |
(535,892,358) | - | (535,892,358) |
| 31 March 2016 | 2,813,132,299 | 8,386,978,183 | 11,200,110,482 |
| Equity investments at fair value through profit or loss |
Equity investments available for sale |
Total equity investments |
|
|---|---|---|---|
| 1 January 2015 | 4,591,866,101 | 8,335,790,680 | 12,927,656,781 |
| Impairment losses | - | (20,130,037) | (20,130,037) |
| Net change in fair value of available for sale | |||
| equity investments (recorded in other comprehensive income) |
- | 15,329,641 | 15,329,641 |
| Net loss from equity investments at fair value through profit or loss |
(476,204,320) | - | (476,204,320) |
| 31 March 2015 | 4,115,661,781 | 8,330,990,284 | 12,446,652,065 |
(all amounts are in RON unless otherwise stated)
During the first quarter of 2016 the Fund recorded impairment adjustments of RON 29,845,379 (first quarter of 2015: RON 20,130,037) for the equity investments available for sale presented below (only listed holdings), based on fair values assessed by reference to published prices quotations on the stock exchange. All impairment losses are recognised through profit or loss.
The equity investments for which the Fund recorded impairment losses were the following:
| 3 months ended | |
|---|---|
| 31 March 2016 | 31 March 2015 |
| 12,059,688 | |
| 244,328 | - |
| - | 8,017,319 |
| 53,030 | |
| 29,845,379 | 20,130,037 |
| 3 months ended 29,601,051 - |
The structure of the Fund's portfolio was the following:
| 31 March 2016 | 31 December 2015 | |
|---|---|---|
| Equity investments at fair value through profit or | ||
| loss | ||
| OMV Petrom SA | 2,582,075,565 | 3,120,007,974 |
| Societatea Nationala a Sarii SA | 177,419,000 | 177,419,000 |
| Zirom SA | 23,275,000 | 23,275,000 |
| Primcom SA | 16,320,410 | 14,280,358 |
| Other | 14,042,325 | 14,042,325 |
| 2,813,132,299 | 3,349,024,657 |
(all amounts are in RON unless otherwise stated)
| Equity investments available for sale | 31 March 2016 | 31 December 2015 |
|---|---|---|
| Hidroelectrica SA | 2,654,133,000 | 2,654,133,000 |
| Enel Distributie Banat SA | 624,000,000 | 624,000,000 |
| Romgaz SA | 607,532,772 | 613,168,512 |
| E.ON Distributie Romania SA | 510,400,000 | 510,400,000 |
| CN Aeroporturi Bucuresti SA | 497,841,000 | 497,841,000 |
| Enel Distributie Muntenia SA | 455,400,000 | 455,400,000 |
| Engie Romania SA | 446,100,000 | 446,100,000 |
| Enel Distributie Dobrogea SA | 401,200,000 | 401,200,000 |
| BRD Groupe Societe Generale SA | 266,060,539 | 307,188,218 |
| Electrica Distributie Muntenia Nord SA | 253,900,000 | 253,900,000 |
| Electrica Distributie Transilvania Sud SA | 222,300,000 | 222,300,000 |
| Electrica Distributie Transilvania Nord SA | 215,600,000 | 215,600,000 |
| Banca Transilvania SA | 234,250,053 | 211,608,784 |
| Nuclearelectrica SA | 146,360,755 | 175,961,806 |
| Administratia Porturilor Maritime SA | 175,109,000 | 175,109,000 |
| Electrica Furnizare SA | 149,600,000 | 149,600,000 |
| E.ON Energie Romania SA | 126,500,000 | 126,500,000 |
| Alro SA | 86,003,963 | 96,207,822 |
| Enel Energie SA | 76,600,000 | 76,600,000 |
| Enel Energie Muntenia SA | 64,000,000 | 64,000,000 |
| Complexul Energetic Oltenia SA | 62,840,000 | 62,840,000 |
| Posta Romana SA | 58,698,000 | 58,698,000 |
| Other | 52,549,102 | 53,323,820 |
| 8,386,978,183 | 8,451,679,962 | |
| Total equity investments | 11,200,110,482 | 11,800,704,619 |
None of the equity investments are pledged as collateral for liabilities.
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:
(all amounts are in RON unless otherwise stated)
The table below presents the classification of the financial instruments carried at fair value by fair value hierarchy level, based on the inputs used in making the measurement:
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| Equity investments | 3,925,830,782 | - | 7,201,015,000 | 11,126,845,782 |
| Government bonds | 125,018,667 | - | - | 125,018,667 |
| 4,050,849,449 | - | 7,201,015,000 | 11,251,864,449 | |
| As at 31 December 2015: | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Equity investments | 4,528,025,097 | - | 7,201,015,000 | 11,729,040,097 |
| Treasury bills | 19,957,311 | - | - | 19,957,311 |
| Government bonds | 59,004,410 | - | - | 59,004,410 |
| 4,606,986,818 | - | 7,201,015,000 | 11,808,001,818 |
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 adjustments 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 assessment of what constitutes observable requires significant judgment 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 investments 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 2015 or 31 August 2015, in case of the holdings in Electrica Distributie Muntenia Nord SA, Electrica Distributie Transilvania Sud SA, Electrica Distributie Transilvania Nord SA and Electrica Furnizare SA (for 31 March 2015: as at 30 September 2014), based on financial information available for the companies under valuation as at the respective dates, the Fund's management has 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 significant impact on the fair values of the equity investments as at the reporting date, as they are presented in these condensed interim 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 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.
(all amounts are in RON unless otherwise stated)
A corresponding impact on the Fund's profitability cannot be estimated reliably as of the date of these condensed interim financial statements.
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 March 2016, the equity investments included equity investments valued at values used in the calculation of the net asset value of the Fund as at that date, determined in accordance to the regulations issued by the FSA/CNVM, in amount of RON 73,264,700 (31 December 2015: RON 71,664,522).
As at 31 March 2016, unlisted equity investments with a carrying amount of RON 7,201,015,000 (31 December 2015: RON 7,201,015,000) were classified into Level 3 of the fair value hierarchy. Out of this, an amount of RON 3,619,032,941 represents total net change in fair value recognised in equity (other comprehensive income) as at 31 March 2016 (31 December 2015: RON 3,619,032,941). 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 March 2016 and 31 December 2015 in measuring equity instruments categorised on Level 3 of the fair value hierarchy:
| Financial assets |
Fair value as at 31 March 2016 |
Valuation technique |
Unobservable inputs range (weighted average) |
Relationship between unobservable inputs and fair value |
|---|---|---|---|---|
| Total | 7,201,015,000 | |||
| Unlisted equity |
6,875,297,000 | Market approach - comparable |
EBITDA multiple ranging from 4.19 to 10.45 (6.75) |
The higher EBITDA multiple, the higher the fair value. |
| instruments | companies (based on EBITDA multiple) |
Discount for lack of marketability: 15% or 20% (17%) |
The lower discount for lack of marketability, the higher the fair value. |
|
| Unlisted equity instruments |
202,606,000 | Income approach - discounted cash flow method |
Weighted average cost of capital ranging from 10.81% to 14.31% (13.98%) |
The lower the weighted average cost of capital, the higher the fair value. |
| Discount for lack of marketability ranging from |
The lower discount for lack of marketability, the higher the fair value. |
|||
| 12% to 16.7% (14.9%) | The lower discount for lack of control, | |||
| Discount for lack of control ranging from 0% to 22.96% (20%) |
the higher the fair value. | |||
| Long-term revenue growth rate: 1.5% (1.5%) |
The higher the long-term revenue growth rate, the higher the fair value. |
|||
| Unlisted equity |
62,840,000 | Market approach - comparable |
Revenue multiple: 0.93 (0.93) |
The higher Revenue multiple, the higher the fair value. |
| instruments | companies (based on Revenue multiple) |
Discount for lack of marketability: 20% (20%) |
The lower discount for lack of marketability, the higher the fair value. |
|
| Unlisted equity |
58,698,000 | Market approach - comparable |
Price Earnings value: 10.29 (10.29) |
The higher Price /Earnings multiple, the higher the fair value. |
| instruments | companies (based on Price /Earnings multiple) |
Discount for lack of marketability: 24% (24%) |
The lower discount for lack of marketability, the higher the fair value. |
|
| Unlisted equity |
1,574,000 | Market approach - comparable |
Price/ Book value: 0.48 (0.48) |
The higher Price/ Book value multiple, the higher the fair value. |
| instruments | companies (based on value multiple) |
Discount for lack of marketability: 15% (15%) |
The lower discount for lack of marketability, the higher the fair value. |
(all amounts are in RON unless otherwise stated)
| Financial assets |
Fair value as at 31 December 2015 |
Valuation technique |
Unobservable inputs range (weighted average) |
Relationship between unobservable inputs and fair value |
|
|---|---|---|---|---|---|
| Total | 7,201,015,000 | ||||
| Unlisted equity |
6,875,297,000 | Market approach - comparable |
EBITDA multiple ranging from 4.19 to 10.45 (6.75) |
The higher EBITDA multiple, the higher the fair value. |
|
| instruments | companies (based on EBITDA multiple) |
Discount for lack of marketability: 15% or 20% (17%) |
The lower discount for lack of marketability, the higher the fair value. |
||
| Unlisted equity instruments |
202,606,000 | Income approach - discounted cash flow method |
Weighted average cost of capital ranging from 10.81% to 14.31% (13.98%) |
The lower the weighted average cost of capital, the higher the fair value. |
|
| Discount for lack of marketability ranging from |
The lower discount for lack of marketability, the higher the fair value. |
||||
| 12% to 16.7% (14.9%) | The lower discount for lack of control, | ||||
| Discount for lack of control ranging from 0% to 22.96% (20%) |
the higher the fair value. | ||||
| Long-term revenue growth rate: 1.5% (1.5%) |
The higher the long-term revenue growth rate, the higher the fair value. |
||||
| Unlisted equity |
62,840,000 | Market approach - comparable |
Revenue multiple: 0.93 (0.93) |
The higher Revenue multiple, the higher the fair value. |
|
| instruments | companies (based on Revenue multiple) |
Discount for lack of marketability: 20% (20%) |
The lower discount for lack of marketability, the higher the fair value. |
||
| Unlisted equity |
58,698,000 | Market approach - comparable |
Price Earnings value: 10.29 (10.29) |
The higher Price /Earnings multiple, the higher the fair value. |
|
| instruments | companies (based on Price /Earnings multiple) |
Discount for lack of marketability: 24% (24%) |
The lower discount for lack of marketability, the higher the fair value. |
||
| Unlisted equity |
1,574,000 | Market approach - comparable |
Price/ Book value: 0.48 (0.48) |
The higher Price/ Book value multiple, the higher the fair value. |
|
| instruments | companies (based on Price/ Book value multiple) |
Discount for lack of marketability: 15% (15%) |
The lower discount for lack of marketability, the higher the fair value. |
(all amounts are in RON unless otherwise stated)
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 company 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.
Price / Earnings multiple: the P/E ratio is a market prospect ratio that calculates the market value of an investment relative to its earnings by comparing the market price per share by the earnings per share. It shows what the market is willing to pay for an investment based on its current earnings. Investors often use this ratio to evaluate what an investment's fair market value should be by predicting future earnings per share.
Price /book value multiple: often expressed simply as "price-to-book", measures a company's market price in relation to its book value (net assets). It reflects how many times the book value per share investors are ready to pay for a share. The Price/book ratio varies dramatically between industries. A company that requires more assets (e.g. a manufacturing company with factory space and machinery) will generally post a drastically lower price to book than a company whose earnings come from the provision of a service (e.g. a consulting firm).
| 31 March 2016 | 31 December 2015 | |
|---|---|---|
| Temporary differences on equity investments | (658,662,014) | (683,271,099) |
| Fiscal loss carried forward | 658,662,014 | 683,271,099 |
| Recognised deferred tax at 16% | - | - |
The effective tax rate used to calculate the deferred tax position of the Fund was 16% (standard tax rate).
As at 31 March 2016 and 31 December 2015, the net deferred tax position is nil due to the fact that the Fund recognised a deferred tax asset for the unused tax losses carried forward, only to the level of the deferred tax liability arising from the taxable temporary differences (recognised either in profit or loss or other comprehensive income, depending on the nature of the corresponding item).
(all amounts are in RON unless otherwise stated)
| 31 March 2016 | 31 December 2015 | |
|---|---|---|
| Payable to shareholders related to the return of capital | 22,629,131 | 22,972,691 |
| Investment management and administration fees | 12,567,842 | 13,878,424 |
| Provision for litigations | 11,606,329 | 11,567,805 |
| Payables related to treasury shares under settlement | 1,741,933 | 848,468 |
| Prior years dividends payable | 1,330,950 | 1,349,398 |
| Financial Supervisory Authority fees | 886,271 | 905,581 |
| Other liabilities | 1,764,005 | 3,103,457 |
| 52,526,461 | 54,625,824 |
The provisions for litigations are related to the legal case started by World Trade Center București SA 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 March 2016, the subscribed share capital was RON 9,869,265,720.90 (31 December 2015: RON 10,074,080,745.90) representing 10,965,850,801 shares (31 December 2015: 11,193,423,051 shares) with a nominal value of RON 0.90 per share (31 December 2015: RON 0.90 per share), out of which 363,812,350 shares were unpaid (31 December 2015: 363,812,350 unpaid shares). The paid-in share capital of the Fund as at 31 March 2016 was RON 9,541,834,605.90 (31 December 2015: RON 9,746,649,630.90) representing 10,602,038,451 shares (31 December 2015: 10,829,610,701 shares) with a nominal value of RON 0.90 per share (31 December 2015: RON 0.90 per share).
During first quarter of 2016, the paid-in share capital of the Fund decreased by RON 204,815,025 following the cancellation of 227,572,250 treasury shares acquired by the Fund during the fifth buy-back programme carried on in 2015.
Unpaid share capital as at 31 March 2016, in amount of RON 327,431,115 (31 December 2015: RON 327,431,115), represents the net value of certain contributions due to the Fund by the Romanian State represented by the Ministry of Public Finance as shareholder, that were recorded in previous years as paid-in share capital (based on Law 247/2005) and subsequently were considered unpaid following the results of several litigations that took place in the past. Holders of unpaid shares are not entitled to vote or to receive dividends or other cash distributions, until the matters are legally clarified.
The Fund recorded an impairment adjustment for the entire receivable related to the unpaid share capital from Ministry of Public Finance.
As at 31 March 2016, the Romanian State's share in the Fund's subscribed share capital was 3.36% (31 December 2015: 3.29%) and the share in the Fund's paid-in share capital was of only 0.04% (31 December 2015: 0.04%).
The fair value reserve of RON 4,201,891,455 as at 31 March 2016 (31 December 2015: RON 4,232,810,400) comprised the cumulative net change in the fair value of available for sale financial assets recognised in other comprehensive income until the investments are derecognised or impaired, net of the related deferred tax recognised through equity, where applicable.
(all amounts are in RON unless otherwise stated)
During the 27 April 2015 General Shareholders Meeting ("GSM"), the shareholders approved the sixth buy-back programme for a maximum number of (i) 891,770,055 shares or the equivalent number of global depositary receipts corresponding to the shares of Fondul Proprietatea or (ii) 10% of the subscribed share capital at the relevant time, whichever is the lesser, until 15 November 2016. The buy-back shall be performed at a price that is neither lower than RON 0.2 per share nor higher than RON 2 per share. The buy-back transactions can only be applied for fully paid shares. The shares repurchased will be cancelled. The implementation of this buy-back programme is subject to the availability of the necessary cash. The execution of the six buy-back programme started on 9 September 2015 and until 31 March 2016, the total number of shares repurchased was 205,979,060 (161,545,160 ordinary shares and 44,433,900 equivalent shares of the GDRs repurchased, where 1 GDR represents 50 ordinary shares), at a total acquisition value, including transaction costs, of RON 164,299,154.
On 29 October 2015 the Fund's shareholders approved the seventh buy-back programme that refers to the acquisition of a maximum number of shares computed so that all the outstanding treasury shares (acquired during this programme and/ or previous ones) will not exceed 10% of the subscribed share capital at the relevant time, starting with the date when the share capital decrease regarding the cancellation of the shares repurchased within the fifth buy-back programme is effective, valid until 26 May 2017. 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 transaction can only have as object fully paid shares and global depositary receipts corresponding to the shares of the Fund. The buy-back programme is aimed at the share capital decrease. This buy-back programme implementation will be subject to the availability of the necessary cash.
At the 27 January 2016 GSM, the Fund's shareholders approved the return to shareholders of RON 0.05 per share, following the share capital decrease through the reduction of the nominal value of Fund's share from RON 0.90 to RON 0.85. The shareholders resolution was published in the Official Gazette of Romania on 22 February 2016 and the endorsement by the FSA of the new Constitutive Act reflecting the share capital decrease is expected to be received in late May 2016.
The shareholders registered in the shareholders' registry with the Central Depositary on 6 June 2016 have the right to receive RON 0.05 per share, proportionally with their participation in the paid-in share capital of the Fund. The payment will start on 27 June 2016. Based on our current understanding of Romanian tax law, no Romanian tax will arise for the Fund or its shareholders on this distribution.
As at 31 March 2016 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 has disclosed in these condensed interim financial statements those which may have significant effects on the Fund's financial position or profitability. The most important litigations were as follows:
(all amounts are in RON unless otherwise stated)
This decision is irrevocable and it was implemented by Trade Register, without any changes in the management of the Fund considering that:
As at 31 March 2016 the litigant is no longer a shareholder of Fondul Proprietatea.
Therefore, FTIS as Sole Director and FTIML as Investment Manager of Fondul Proprietatea are 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 with the Management Agreement in force.
In June 2014, in another case started by the Fund against the former shareholder mentioned above, the court confirmed the shareholder's 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 other files in December 2014 and February 2015 the Bucharest Court of Appeal issued irrevocable decisions maintaining as legal and valid the shareholders' resolutions approved by shareholders in November 2012, April and November 2013, which were challenged initially in these files.
The outcome of the ongoing cases cannot be determined with certainty at this stage; however, the management of the Fund 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 the receivables from World Trade Center București SA as follows:
Title II, Article 4 of Government Emergency Ordinance no. 81/2007 stipulates the transfer from the Authority for State Assets Recovery to the Fund of receivables from World Trade Center București SA amounting to USD 68,814,198 (including the original principal and related interest and penalties) on 29 June 2007.
Until 31 December 2015, the Fund recovered from World Trade Center București 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 București SA, the above amounts were recognised on receipt basis in the Fund's financial statements.
(all amounts are in RON unless otherwise stated)
In August 2013, World Trade Center București 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 20 May 2016, the Ministry of Public Finance being also a party in this case.
Currently, World Trade Center București SA is the object of insolvency procedure, but the Fund is not a creditor in this file, while the Ministry of Public Finance is a creditor in accordance with article IV of Law no. 10/2015 "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".
| 3 months ended 31 March 2016 |
3 months ended 31 March 2015 |
|
|---|---|---|
| Remunerations | ||
| Members of the Board of Nominees | 300,000 | 225,000 |
There were no loans to or other transactions between the Fund and the members of the Board of Nominees in the first quarter of 2016 or in the first quarter of 2015.
Franklin Templeton Investment Management Limited United Kingdom Bucharest Branch was both the Fund Manager and Sole Director of the Fund until and including 31 March 2016.
The transactions carried between the Fund and Fund Manager were the following:
| 3 months ended | 3 months ended | |
|---|---|---|
| Transactions | 31 March 2016 | 31 March 2015 |
| Investment management and administration fees | 12,567,842 | 14,061,723 |
| Rental expense | 16,481 | 16,812 |
| Operating cost | 5,690 | 5,938 |
| 12,590,013 | 14,084,473 |
During the first quarter of 2016, the Fund recorded also an amount of RON 46,567 representing expenses incurred by the Fund Manager on its behalf (quarter ended 31 March 2015: RON 275,624). These expenses were primarily related to promotional activities for the Fund (investor relations). 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 March 2016, the Fund owed an amount of RON 12,569,701 to the Fund Manager (31 December 2015: RON 15,050,105).
There are no other elements of compensation for key management.
(all amounts are in RON unless otherwise stated)
The Fund had the following subsidiaries, all of which are incorporated in Romania:
| 31 March 2016 | 31 December 2015 | |
|---|---|---|
| Ownership interest | ||
| Alcom SA | 72% | 72% |
| Comsig SA | 70% | 70% |
| Primcom SA | 68% | 68% |
| Zirom SA | 100% | 100% |
In March 2016, the Fund participated in the cash share capital increase of Zirom SA subscribing 300,000 new shares at the nominal value of RON 10 per share (in total of RON 3,000,000). The share capital increase became effective on 7 April 2016, when the registration with the Trade Register was completed.
On 13 February 2015, Primcom SA finalised the registration within the Romanian Central Depositary of its share capital decrease by RON 19,237 through the cancellation of 192,372 shares according with the resolution of the General Shareholders Meeting held on 17 July 2014. The number of shares owned by Fondul Proprietatea in Primcom SA, respectively 1,427,188 shares did not change, but the holding percentage increased from 69% to 76%.
The fair value of investments in subsidiaries is presented in the below table:
| 31 March 2016 | 31 December 2015 | |
|---|---|---|
| Zirom SA | 23,275,000 | 23,275,000 |
| Primcom SA | 16,320,410 | 14,280,358 |
| Alcom SA | 10,409,423 | 10,409,423 |
| Comsig SA | 1,720,902 | 1,720,902 |
| 51,725,734 | 49,685,683 |
As at 31 March 2016, 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. As at 31 March 2016 and 31 December 2015, there is no restriction on the ability of any of the subsidiaries to transfer funds to Fondul Proprietatea in any form of distributions. During first quarter of 2016 and the first quarter of 2015, the Fund did not carry out any transaction with its subsidiaries.
As at 31 March 2016 and 31 December 2015, the Fund had three associates, all of them incorporated in Romania:
| 31 March 2016 | 31 December 2015 | |
|---|---|---|
| Ownership interest | ||
| OMV Petrom SA | 19% | 19% |
| Societatea Nationala a Sarii SA | 49% | 49% |
| Plafar SA | 49% | 49% |
The Fund did not carry out any transactions with its associates during the first quarter of 2016 and during the first quarter of 2015.
(all amounts are in RON unless otherwise stated)
The main shareholders decisions at the 26 April 2016 GSM were the following:
On 21 April 2016 the Fund sold its entire holding of 22,542,960 existing shares in Romgaz SA (20,286,910 in the form of ordinary shares and 2,256,050 in the form of global depositary receipts) to qualified investors and certain other investors, not exceeding 150 natural or legal persons per Member State, other than qualified investors (all within the meaning of paragraphs (2)(a) and (2)(b) of Article 3 of the Prospectus Directive). The shares were priced at RON 24/ USD 6.09 (in relation to disposals via dollar-denominated global depositary receipts, based on the National Bank of Romania's exchange rate of RON 3.9434 per USD as of 20 April 2016).
| Item | 31 December 2015 | 31 March 2016 | Differences | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| % of the net asset | % of the total asset |
Currency | RON | % of the net asset |
% of the total asset |
Currency | RON | RON | ||
| I. | Total assets | 100.4517% | 100.0000% | 12,148,082,016.47 | 100.4593% | 100.0000% | 11,492,631,355.03 | (655,450,661.44) | ||
| 1 | Securities and money market instruments, out of which:* | 38.6935% | 38.5198% | 4,679,379,747.81 | 36.2828% | 36.1168% | 4,150,777,640.51 | (528,602,107.30) | ||
| 1.1. securities and money market instruments admitted or traded on a regulated market from Romania, out of which: |
38.6935% | 38.5198% | - 4,679,379,747.81 | 36.2828% | 36.1168% | - | 4,150,777,640.51 | (528,602,107.30) | ||
| 1.1.1 listed shares traded in the last 30 trading days | 38.1175% | 37.9464% | - 4,609,725,698.56 | 35.0969% | 34.9364% | - | 4,015,109,334.40 | (594,616,364.16) | ||
| 1.1.2 listed shares not traded in the last 30 trading days | 0.0881% | 0.0877% | - | 10,649,639.24 | 0.0931% | 0.0927% | - | 10,649,639.24 | - | |
| 1.1.3 government bonds | 0.4879% | 0.4857% | - | 59,004,410.01 | 1.0928% | 1.0877% | - | 125,018,666.87 | 66,014,256.86 | |
| 1.1.4 allotment rights not admitted at trading on a regulated market | - | - | - | - | - | - | - | - | - | |
| 1.2. securities and money market instruments admitted or traded on a regulated market from a member state, out of which: |
- | - | - | - | - | - | - | - | - | |
| 1.2.1 listed shares traded in the last 30 trading days | - | - | - | - | - | - | - | - | - | |
| 1.2.2 listed shares not traded in the last 30 trading days | - | - | - | - | - | - | - | - | - | |
| 1.3. | securities and money market instruments admitted on a stock exchange from a non-member state or negotiated on another regulated market from a non-member state, that operates on a regular basis and is recognised and opened to the public, approved by the FSA |
- | - | - | - | - | - | - | - | - |
| 2 | New issued securities | - | - | - | - | - | - | - | - | - |
| 3 | Other securities and money market instruments mentioned at art. 187 letter a) of the Regulation no.15/2004, out of which: |
59.7075% | 59.4391% | - 7,220,693,259.75 | 63.1173% | 62.8288% | - | 7,220,693,259.75 | - | |
| - shares not admitted at trading on a regulated market | 59.7075% | 59.4391% | - 7,220,693,259.75 | 63.1173% | 62.8288% | - | 7,220,693,259.75 | - | ||
| 4 | Bank deposits, out of which: | 1.6358% | 1.6286% | 197,825,552.00 | 0.7836% | 0.7799% | 89,636,579.21 | (108,188,972.79) | ||
| 4.1. bank deposits made with credit institutions from Romania | 1.6358% | 1.6286% | - | 197,825,552.00 | 0.7836% | 0.7799% | - | 89,636,579.21 | (108,188,972.79) | |
| - in RON - in EUR |
1.6358% - |
1.6286% - |
- | 197,825,552.00 - |
0.7836% - |
0.7799% - |
- | 89,636,579.21 - |
(108,188,972.79) - |
|
| 4.2. bank deposits made with credit institutions from an EU state | - | - | - | - | - | - | - | - | - | |
| 4.3. bank deposits made with credit institutions from a non-EU state | - | - | - | - | - | - | - | - | - | |
| 5 | Derivatives financial instruments traded on a regulated market | - | - | - | - - |
- | - | - | - | |
| 6 | Current accounts and petty cash out of which: | 0.0053% | 0.0053% | 648,858.28 | 0.0043% | 0.0043% | 491,254.26 | (157,604.02) | ||
| - in RON | 0.0053% | 0.0053% | - | 644,341.11 | 0.0043% | 0.0043% | - | 486,406.97 | (157,934.14) | |
| - in EUR | 0.0000% | 0.0000% | EUR 550.27 | 2,489.70 | 0.0000% | 0.0000% | EUR 590.03 | 2,639.68 | 149.98 | |
| - in USD | 0.0000% | 0.0000% | USD 249.87 | 1,036.39 | 0.0000% | 0.0000% | USD 252.88 | 995.06 | (41.33) | |
| - in GBP Money market instruments, others than those traded on a regulated market, according to art. 101 par. (1) |
0.0000% | 0.0000% | GBP 161.24 | 991.08 | 0.0000% | 0.0000% | GBP 214.36 | 1,212.55 | 221.47 | |
| 7 | letter g) of Law no. 297/2004 regarding the capital market, with subsequent additions and amendments, out of which: |
0.1650% | 0.1643% | - | 19,957,310.85 | - | - | - | - | (19,957,310.85) |
| - Treasury bills with discount, with original maturities of less than 1 year | 0.1650% | 0.1643% | - | 19,957,310.85 | - | - | - | - | (19,957,310.85) | |
| 8 | Participation titles of OCIU and/or of UCITS (A.O.P.C./ O.P.C.V.M.) | - | - | - | - | - | - | - | - | - |
| 9 | Other assets out of which: | 0.2446% | 0.2429% | - | 29,577,287.78 | 0.2713% | 0.2702% | - | 31,032,621.30 | 1,455,333.52 |
| - receivable representing the amount transferred to Central Depositary for 2015 return of capital and not yet paid to / collected by shareholders until the end of the period |
0.1588% | 0.1580% | - | 19,207,349.00 | 0.1658% | 0.1651% | - | 18,967,946.05 | (239,402.95) | |
| - dividend withholding tax to be recovered from Austrian Tax Authorities | 0.0087% | 0.0086% EUR231,495.58 | 1,047,401.75 | - | - | - | - | (1,047,401.75) | ||
| - tax on dividends to be recovered from the State Budget | 0.0056% | 0.0056% | - | 681,562.00 | 0.0060% | 0.0060% | - | 689,936.00 | 8,374.00 | |
| - tax on profit to be recovered from the State Budget | 0.0606% | 0.0602% | - | 7,330,440.00 | 0.0641% | 0.0638% | - | 7,330,440.00 | - | |
| - intangible assets - other receivables, out of which: |
0.0066% 0.0038% |
0.0065% 0.0037% |
- - |
796,412.31 452,263.51 |
0.0064% 0.0269% |
0.0064% 0.0268% |
- - |
735,896.79 3,075,263.96 |
(60,515.52) 2,623,000.45 |
|
| - in RON | 0.0038% | 0.0037% | - | 452,263.51 | 0.0269% | 0.0268% | - | 3,075,263.96 | 2,623,000.45 | |
| - prepaid expenses | 0.0005% | 0.0003% | - | 61,859.21 | 0.0020% | 0.0021% | - | 233,138.50 | 171,279.29 | |
| II. | Total liabilities | 0.4517% | 0.4497% | 54,625,823.74 | 0.4593% | 0.4570% | 52,526,461.12 | (2,099,362.62) | ||
| 1 | Liabilities in relation with the payments of fees due to the investment management company (S.A.I.) | 0.1148% | 0.1142% | - | 13,878,424.02 | 0.1099% | 0.1094% | - | 12,567,842.38 | (1,310,581.64) |
| 2 | Liabilities related to the fees payable to the depositary bank | 0.0007% | 0.0007% | - | 84,979.19 | 0.0007% | 0.0007% | - | 75,415.77 | (9,563.42) |
| 3 | Liabilities related to the fees payable to intermediaries | 0.0037% | 0.0037% | - | 446,715.00 | - | - | - | - | (446,715.00) |
| 4 5 |
Liabilities related to commissions and other bank services Interest payable |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
| 6 | Liabilities related to issuance costs | - | - | - | - | - | - | - | - | - |
| 7 | Liabilities in relation with the fees/commissions to FSA | 0.0075% | 0.0075% | - | 905,580.70 | 0.0077% | 0.0077% | - | 886,270.56 | (19,310.14) |
| 8 | Liabilities related to audit fees | - | - | - | - | - | - | - | - | - |
| Item | 31 December 2015 | 31 March 2016 | Differences | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| % of the total | % of the net | % of the total | ||||||||
| % of the net asset | asset | Currency | RON | asset | asset | Currency | RON | RON | ||
| 9 | Other liabilities, out of which: | 0.3250% | 0.3236% | - | 39,310,124.83 | 0.3411% | 0.3392% | - | 38,996,932.41 | (313,192.42) |
| - liabilities related to the return of capital | 0.1900% | 0.1891% | - | 22,972,690.65 | 0.1978% | 0.1969% | - | 22,629,131.40 | (343,559.25) | |
| - dividends payable | 0.0111% | 0.0111% | - | 1,349,397.52 | 0.0117% | 0.0116% | - | 1,330,949.56 | (18,447.96) | |
| - provisions | 0.0956% | 0.0952% | - | 11,567,804.85 | 0.1015% | 0.1010% | - | 11,606,328.79 | 38,523.94 | |
| - liabilities related to buybacks under settlement | 0.0070% | 0.0070% | - | 848,468.13 | 0.0153% | 0.0151% | - | 1,741,933.37 | 893,465.24 | |
| - remunerations and related contributions | 0.0003% | 0.0003% | - | 32,689.00 | 0.0003% | 0.0003% | - | 34,540.00 | 1,851.00 | |
| - VAT payable to State Budget | 0.0011% | 0.0011% | - | 132,207.55 | 0.0010% | 0.0009% | - | 109,647.97 | (22,559.58) | |
| - other liabilities, out of which: | 0.0199% | 0.0198% | - | 2,406,867.13 | 0.0135% | 0.0134% | - | 1,544,401.32 | (862,465.81) | |
| - in RON | 0.0195% | 0.0194% | - | 2,354,839.90 | 0.0121% | 0.0120% | - | 1,381,884.97 | (972,954.93) | |
| - in USD | - | - | - | - | 0.0009% | 0.0009% | USD 25,413.47 | 99,999.46 | 99,999.46 | |
| - in EUR | 0.0004% | 0.0004% | EUR11,499.00 | 52,027.23 | 0.0005% | 0.0005% | EUR 13,974.00 | 62,516.89 | 10,489.66 | |
| III. | Net Asset Value (I - II) | 100.0000% | 99.5503% | 12,093,456,192.73 | 100.0000% | 99.5430% | 11,440,104,893.91 | (653,351,298.82) | ||
* = Includes also the value of holdings in companies admitted to trading on AeRo market (alternative trading system)
| Item | 31 March 2016 | 31 December 2015 | Differences |
|---|---|---|---|
| Net Asset Value | 11,440,104,893.91 | 12,093,456,192.73 (653,351,298.82) | |
| Number of outstanding shares | 10,396,059,391 | 10,452,388,827 | (56,329,436) |
| Unitary net asset value | 1.1004 | 1.1570 | (0.0566) |
1.1 listed shares traded in the last 30 trading days
| Stake in Fondul | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Date of the last | No. of shares | Nominal | Stake in the | Proprietatea total | Stake in Fondul | ||||
| Issuer | Symbol | trading session | held | value | Share value | Total value | issuer's capital | asset | Proprietatea net asset Evaluation method |
| Alro Slatina SA | ALR | 29/Mar/2016 | 72,884,714 | 0.5 | 1.1800 | 86,003,962.52 | 10.21% | 0.7483% | 0.7518% Closing price |
| Banca Transilvania SA | TLV | 31/Mar/2016 | 87,081,804 | 1 | 2.6900 | 234,250,052.76 | 2.87% | 2.0383% | 2.0476% Closing price |
| BRD-Groupe Societe Generale SA | BRD | 31/Mar/2016 | 25,387,456 | 1 | 10.4800 | 266,060,538.88 | 3.64% | 2.3151% | 2.3257% Closing price |
| Conpet SA | COTE | 31/Mar/2016 | 524,366 | 3.3 | 88.4000 | 46,353,954.40 | 6.05% | 0.4033% | 0.4052% Closing price |
| IOR SA | IORB | 30/Mar/2016 | 2,622,273 | 0.1 | 0.3020 | 791,926.45 | 2.81% | 0.0069% | 0.0069% Reference price - Average price |
| Oil Terminal SA | OIL | 31/Mar/2016 | 36,796,026 | 0.1 | 0.0964 | 3,547,136.91 | 6.31% | 0.0309% | 0.0310% Closing price |
| OMV Petrom SA | SNP | 31/Mar/2016 | 10,758,648,186 | 0.1 | 0.2400 | 2,582,075,564.64 | 18.99% | 22.4672% | 22.5704% Closing price |
| Palace SA | PACY | 28/Mar/2016 | 5,832,482 | 0.1 | 0.4000 | 2,332,992.80 | 15.42% | 0.0203% | 0.0204% Reference price - Average price |
| Primcom SA | PRIB | 30/Mar/2016 | 1,275,032 | 0.1 | 12.8000 | 16,320,409.60 | 67.93% | 0.1420% | 0.1427% Reference price - Average price |
| Romaero SA | RORX | 24/Mar/2016 | 1,311,691 | 2.5 | 17.9000 | 23,479,268.90 | 20.99% | 0.2043% | 0.2052% Reference price - Average price |
| Romgaz SA | SNG | 31/Mar/2016 | 22,542,960 | 1 | 26.9500 | 607,532,772.00 | 5.84% | 5.2863% | 5.3106% Closing price |
| Nuclearelectrica SA | SNN | 31/Mar/2016 | 27,408,381 | 10 | 5.3400 | 146,360,754.54 | 9.09% | 1.2735% | 1.2794% Closing price |
| Total | 4,015,109,334.40 | 34.9364% | 35.0969% |
| Issuer | Symbol | Date of the last | trading session No. of shares held | Nominal value |
Share value | Total value | Stake in the issuer's capital |
Stake in Fondul Proprietatea total asset |
Stake in Fondul Proprietatea net asset Evaluation method |
|---|---|---|---|---|---|---|---|---|---|
| Alcom SA | ALCQ | 27/Jul/2015 | 89,249 | 2.5 | 116.6335 | 10,409,423.24 | 71.89% | 0.0906% | 0.0910% Fair value / share (Shareholders' equity as of 31 December 2014 adjusted with dividends declared/ share) |
| Mecon SA | MECP | 14/Jul/2015 | 60,054 | 11.6 | 4.0000 | 240,216.00 | 12.51% | 0.0021% | 0.0021% Fair value / share (last trading price) |
| Total | 10,649,639.24 | 0.0927% | 0.0931% |
Unlisted shares
| Acquisition price (total |
Stake in | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| No. of shares |
Date of | price of acquisition of |
Share | the issuer's |
Stake in Fondul Proprietatea total |
Stake in Fondul Proprietatea net |
|||
| Issuer | held | acquisition * | shares) | value | Total value | capital | asset | asset Company status | Evaluation method |
| Aeroportul International Mihail Kogalniceanu - Constanta SA |
23,159 | 19/Jul/2005 | 1,490,898 | 67.9649 | 1,573,999.12 | 20.00% | 0.0137% | 0.0138% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
| Aeroportul International Timisoara - Traian Vuia SA | 32,016 | 19/Jul/2005 | 2,652,588 | 81.6466 | 2,613,997.55 | 20.00% | 0.0227% | 0.0228% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
| BAT Service SA | 194,022 | 19/Jul/2005 | 656,686 | 0.0000 | 0.00 | 33.00% | 0.0000% | 0.0000% Bankruptcy | Priced at zero |
| Cetatea SA | 354,468 | 19/Jul/2005 | 118,840 | 0.9504 | 336,886.39 | 20.43% | 0.0029% | 0.0029% Unlisted companies, in function | Shareholders' equity as of 31 December 2014/ share |
| CN Administratia Canalelor Navigabile SA | 203,160 | 19/Jul/2005 | 15,194,209 | 81.0905 | 16,474,345.98 | 20.00% | 0.1433% | 0.1440% Unlisted companies, in function | Fair value / share (Shareholders' equity as of 31 December 2014 adjusted with dividends declared/ share) |
| CN Administratia Porturilor Dunarii Fluviale SA | 27,554 | 19/Jul/2005 | 675,810 | 0.0000 | 0.00 | 20.00% | 0.0000% | 0.0000% Unlisted companies, in function | Fair value/share: Nil |
| CN Administratia Porturilor Dunarii Maritime SA | 56,675 | 19/Jul/2005 | 1,706,051 | 20.4381 | 1,158,329.32 | 7.70% | 0.0101% | 0.0101% Unlisted companies, in function | Fair value / share (Shareholders' equity as of 31 December 2014 adjusted with dividends declared/ share) |
| CN Administratia Porturilor Maritime SA | 2,651,113 | 19/Jul/2005 | 65,441,294 | 66.0511 175,108,929.87 | 19.99% | 1.5237% | 1.5307% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| CN Aeroporturi Bucuresti SA ** | 2,875,443 | 5/Feb/2010 | 131,168,263 | 173.1354 497,840,973.98 | 20.00% | 4.3318% | 4.3517% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| Complexul Energetic Oltenia SA**** | 27,387,940 | 31/May/2012 | 670,353,852 | 2.2944 | 62,838,889.54 | 21.55% | 0.5468% | 0.5493% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
| Comsig SA | 75,655 | 19/Jul/2005 | 132,633 | 22.7467 | 1,720,901.59 | 69.94% | 0.0150% | 0.0150% Unlisted companies, in function | Shareholders' equity as of 31 December 2014/ share |
| E.ON Distributie Romania SA* | 56,749,014 | 19/Jul/2005 | 169,541,165 | 8.9939 510,394,957.01 | 18.34% | 4.4411% | 4.4615% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| E.ON Energie Romania SA | 9,903,524 | 19/Jul/2005 | 45,765,358 | 12.7732 126,499,692.76 | 13.39% | 1.1007% | 1.1058% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| Electrica Distributie Muntenia Nord SA | 7,796,022 | 19/Jul/2005 | 165,221,141 | 32.5678 253,899,285.29 | 21.99% | 2.2092% | 2.2194% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 31 August 2015) |
|
| Electrica Distributie Transilvania Nord SA | 8,167,813 | 19/Jul/2005 | 113,299,904 | 26.3962 215,599,225.51 | 22.00% | 1.8760% | 1.8846% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 31 August 2015) |
|
| Electrica Distributie Transilvania Sud SA | 9,327,282 | 19/Jul/2005 | 125,918,629 | 23.8333 222,299,910.09 | 21.99% | 1.9343% | 1.9432% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 31 August 2015) |
|
| Electrica Furnizare SA *** | 1,366,412 | 22/Jul/2011 | 17,819,672 | 109.4838 149,599,978.13 | 22.00% | 1.3017% | 1.3077% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 31 August 2015) |
|
| Enel Distributie Banat SA | 9,220,644 | 19/Jul/2005 | 141,578,929 | 67.6742 623,999,706.18 | 24.12% | 5.4296% | 5.4545% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| Enel Distributie Dobrogea SA | 6,753,127 | 19/Jul/2005 | 114,760,053 | 59.4095 401,199,898.51 | 24.09% | 3.4909% | 3.5070% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| Enel Distributie Muntenia SA | 3,256,396 | 19/Jul/2005 | 107,277,263 | 139.8478 455,399,816.53 | 12.00% | 3.9625% | 3.9807% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| Enel Energie Muntenia SA | 444,054 | 19/Jul/2005 | 2,833,769 | 144.1266 | 63,999,993.24 | 12.00% | 0.5569% | 0.5594% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
| Enel Energie SA | 1,680,000 | 19/Jul/2005 | 26,124,808 | 45.5952 | 76,599,936.00 | 12.00% | 0.6665% | 0.6696% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
| Engie Romania SA | 2,390,698 | 19/Jul/2005 | 62,610,812 | 186.5982 446,099,943.54 | 11.99% | 3.8816% | 3.8994% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| Gerovital Cosmetics SA | 1,350,988 | 19/Jul/2005 | 340,996 | 0.0000 | 0.00 | 9.76% | 0.0000% | 0.0000% Bankruptcy | Priced at zero |
| Hidroelectrica SA | 89,378,235 | 19/Jul/2005 | 3,107,667,996 | 29.6955 2,654,131,377.44 | 19.94% | 23.0942% | 23.2002% Judicial reorganisation | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
|
| Plafar SA | 132,784 | 28/Jun/2007 | 3,160,329 | 14.3993 | 1,911,996.65 | 48.99% | 0.0166% | 0.0167% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
| Posta Romana SA | 14,871,947 | 19/Jul/2005 | 84,664,380 | 3.9468 | 58,696,600.42 | 25.00% | 0.5107% | 0.5131% Unlisted companies, in function | Fair value / share (Value as per independent valuator's report as at 30 September 2015) |
| Romplumb SA | 1,595,520 | 28/Jun/2007 | 19,249,219 | 0.0000 | 0.00 | 33.26% | 0.0000% | 0.0000% Juridical reorganisation | Priced at zero |
| Salubriserv SA | 43,263 | 19/Jul/2005 | 207,601 | 0.0000 | 0.00 | 17.48% | 0.0000% | 0.0000% Insolvency | Priced at zero |
| Simtex SA | 132,859 | 28/Jun/2007 | 3,059,858 | 0.0000 | 0.00 | 30.00% | 0.0000% | 0.0000% Juridical reorganisation | Priced at zero Fair value / share (Value as per independent valuator's report as at |
| Societatea Nationala a Sarii SA | 2,005,884 | 28/Jun/2007 | 76,347,715 | 88.4492 177,418,835.09 | 48.99% | 1.5438% | 1.5508% Unlisted companies, in function | 30 September 2015) | |
| World Trade Center Bucuresti SA | 198,860 | 19/Jul/2005 | 42,459 | 0.0000 | 0.00 | 19.90% | 0.0000% | 0.0000% Insolvency | Priced at zero Priced at zero (lack of annual financial statements for the year |
| World Trade Hotel SA | 17,912 | 19/Jul/2005 | 17,912 | 0.0000 | 0.00 | 19.90% | 0.0000% | 0.0000% Unlisted companies, in function | ended 31 December 2014) Fair value / share (Value as per independent valuator's report as at |
| Zirom SA | 4,985,083 | 28/Jun/2007 | 49,638,072 | 4.6689 | 23,274,854.02 100.00% | 0.2025% | 0.2034% Unlisted companies, in function | 30 September 2015) | |
| Total | 5,326,739,164 | 7,220,693,259.75 | 62.8288% | 63.1173% |
* = where the date of acquisition is shown as earlier than Fondul Proprietatea's date of incorporation (28 December 2005), the date of acquisition 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" SA and S.N. "Aeroportul International Bucuresti Baneasa - Aurel Vlaicu" SA
*** = company formed as a result of the merger between S.C. Electrica Furnizare Transilvania Nord SA, S.C. Electrica Furnizare Transilvania Sud SA and S.C. Electrica Furnizare Muntenia Nord SA
**** = company formed as a result of the merger between S.C. Complexul Energetic Turceni SA, S.C. Complexul Energetic Craiova SA, S.C. Complexul Energetic Rovinari SA, Societatea Nationala a Lignitului Oltenia SA
***** = on 31 December 2014, E.ON Moldova Distribuţie SA (absorbed company) merged into E.ON Gaz Distribuţie SA (absorbing company) and the name of the combined entity became E.ON Distribuţie România SA
| Total | 125,018,666.87 | 1.0877% | 1.0928% | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ministry of Finance | RO1116DBN024 | 12/Jun/2015 | 1,415 | 30/Mar/2016 | 30/Apr/2016 30/Apr/2016 14,150,000.00 | 2,319.67 | 781,729.51 | - | 10,399.68 | 15,497,276.71 | 0.1348% | 0.1355% | |||
| Ministry of Finance | RO1116DBN024 | 12/Jun/2015 | 2,500 | 15/Mar/2016 | 30/Apr/2016 30/Apr/2016 25,000,000.00 | 4,098.36 | 1,381,147.54 | - | 10,399.68 | 27,380,347.54 | 0.2382% | 0.2393% | Closing price (Gross price) | ||
| Ministry of Finance | RO1116DBN024 | 12/Jun/2015 | 5,000 | 28/Jan/2016 | 30/Apr/2016 30/Apr/2016 50,000,000.00 | 8,196.72 | 2,762,295.08 | - | 10,399.68 | 54,760,695.08 | 0.4765% | 0.4787% | |||
| Ministry of Finance | RO1116DBN024 | 12/Jun/2015 | 2,500 | 25/Nov/2015 | 30/Apr/2016 30/Apr/2016 25,000,000.00 | 4,098.36 | 1,381,147.54 | - | 10,399.68 | 27,380,347.54 | 0.2382% | 0.2393% | |||
| Issuer | ISIN code | trading session | bonds | acquisition | Coupon date | Due Date | Initial Value | interest | interest | discount Market price | Current value | total asset | asset Evaluation method | ||
| Date of the last | No. of | Date of | Daily | Cumulated | Cumulated | Proprietatea | Proprietatea net | ||||||||
| Stake in Fondul | Stake in Fondul |
| Stake in Fondul | ||||||||
|---|---|---|---|---|---|---|---|---|
| Proprietatea total | Stake in Fondul | |||||||
| Name of the bank | Starting date | Maturity date | Initial value | Daily interest | Cumulative interest | Current value | asset | Proprietatea net asset Evaluation method |
| Unicredit Tiriac Bank | 29/Mar/2016 | 1/Apr/2016 | RON 23,000,000.00 | RON 191.67 | RON 575.00 | RON 23,000,575.00 | 0.2001% | 0.2011% |
| Banca Comerciala Romana | 30/Mar/2016 | 6/Apr/2016 | RON 4,500,000.00 | RON 15.00 | RON 30.00 | RON 4,500,030.00 | 0.0392% | 0.0393% |
| BRD Groupe Societe Generale | 31/Mar/2016 | 1/Apr/2016 | RON 4,562,077.87 | RON 45.62 | RON 45.62 | RON 4,562,123.49 | 0.0397% | Bank deposit value cumulated with the daily 0.0399% |
| ING Bank | 31/Mar/2016 | 14/Apr/2016 | RON 24,000,000.00 | RON 133.33 | RON 133.33 | RON 24,000,133.33 | 0.2088% | related interest for the period from starting 0.2098% |
| CITI Bank | 31/Mar/2016 | 7/Apr/2016 | RON 24,000,000.00 | RON 53.33 | RON 53.33 | RON 24,000,053.33 | 0.2088% | date 0.2098% |
| BRD Groupe Societe Generale | 31/Mar/2016 | 1/Apr/2016 | RON 9,573,661.40 | RON 2.66 | RON 2.66 | RON 9,573,664.06 | 0.0833% | 0.0837% |
| Total | 89,636,579.21 | 0.7799% | 0.7836% |
| 31 December 2014 | 31 December 2015 | 31 March 2016 | |
|---|---|---|---|
| Net Asset | 13,236,700,614.13 | 12,093,456,192.73 | 11,440,104,893.91 |
| NAV/share | 1.2125 | 1.1570 | 1.1004 |
Franklin Templeton International Services S.À.R.L acting in the capacity of Sole Director of Fondul Proprietatea SA BRD Groupe Societe Generale
| Oana Truta | Marius Nechifor | Claudia Ionescu | Victor Strâmbei |
|---|---|---|---|
| Permanent representative |
Compliance Officer | Director | Manager Depositary Department |
Fondul Proprietatea SA Premium Point (7th Floor) 78-80 Buzesti Street, 1st District Bucharest 011017 Romania
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