Fund Information / Factsheet • Jun 10, 2021
Fund Information / Factsheet
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Translation from Romanian into English
No. 6273/ 10.06.2021
To: BUCHAREST STOCK EXCHANGE Fax no.: 021-307.95.19
FINANCIAL SUPERVISORY AUTHORITY Financial Instruments and Investments Sector
Fax no.: 021-659.60.51
according to Law no. 24/2017 and FSA Regulation no. 5/2018 regarding the issuers and securities transactions
Report date: 10.06.2021 Name of the issuer: Societatea de Investiţii Financiare OLTENIA S.A. Headquarters: Dolj County, Craiova, 1 Tufănele Street, postal code 200767 Phone/Fax: 0251-419.335 / 0251-419.340 Fiscal Registration Code: RO 4175676 Order number at the Trade Register: J16/1210/30.04.1993 FSA Register Number: PJR09FIAIR/160001/08.06.2021 ISIN: ROSIFEACNOR4 LEI Code: 254900VTOOM8GL8TVH59 Depozitory-Custodian: Raiffeisen Bank S.A. Depozitory: Depozitarul Central Bucuresti Share capital subscribed and paid: 52,214,914.30 lei Regulated market on wich the issued securities are traded on: Bucharest Stock Exchange – Shares, Premium Tier (market symbol SIF5)
S.I.F. Oltenia S.A. informs shareholders and investors that, starting with 10.06.2021, on the company's website www.sifolt.ro, in the section: About us / Corporate Governance / F.I.A.I.R., are available the operating documents approved by the Authority of Financial Supervision in the authorization process as an Alternative Investment Fund for Retail Investors, according to the provisions of the F.S.A. Regulation no. 7/2020.
We attach the Investor Information Note containing an impact analysis on the investment portfolio of S.I.F. Oltenia S.A. generated by the transformation operation into the new category of F.I.A.I.R.
There are no other events to report.
Sorin-Iulian Cioacă President/General Manager
Viorica Bălan Compliance Officer
| 200767, Craiova, Str. Tufănele nr. 1 | BVB – categoria Premium (SIF5) | Număr Registru A.S.F.: PJR071AFIAA/160004/15.02.2018 |
|---|---|---|
| www.sifolt.ro, e-mail: [email protected] | Capital social: 52.214.914,30 lei | LEI (Legal Entity Identifier): 254900VTOOM8GL8TVH59 |
| Tel.: 0251-419.397, 419.398, 419.338, 419.347 | Fax: 0251-419.340 | CUI/CIF: RO 4175676 J16/1210/30.04.1993 |
On 08 June 2021, the Financial Supervisory Authority (F.S.A.) issued Authorization no.94 of 08 June 2021, by which - pursuant to the provisions of Law no. 243/2019 on the regulation of alternative investment funds and on amending and supplementing certain normative acts - S.I.F. Oltenia S.A.'s application for authorization as a closed, diversified type of Retail Investors Alternative Investment Fund was approved.
S.I.F. Oltenia S.A. is established as a legal entity under private law, of Romanian nationality, organized as a joint stock company based on Companies Law no. 31/1990, being registered at the Trade Register Office attached to the Dolj Court of Law under number J16/1210/30.04.1993, having Sole Registration Code RO 4175676.
S.I.F. Oltenia S.A. is authorized by the Financial Supervision Authority as an Administrator of Alternative Investment Funds, in accordance with Law no. 74/2015 by Authorization number 45 of 15.02.2018, being registered in the ASF Public Register with AFIA number PJR07.1AFIAA / 160004 of 15.02.2018.
The information note is a presentation document of S.I.F. OLTENIA S.A. addressed to its shareholders and possible investors.
| Shareholders no. | No. of Shares |
Percent | |
|---|---|---|---|
| Resident natural entities | 5,732,054 | 227,586,423 | 43.59 |
| Non-resident natural entities | 1,885 | 2,156,547 | 0.41 |
| Resident legal entities | 187 | 226,636,576 | 43.40 |
| Non-resident legal entities | 32 | 65,769,597 | 12.60 |
| TOTAL | 5,734,158 | 522,149,143 | 100 |
On April 30, 2021, the simplified structure of the shareholders of S.I.F. OLTENIA S.A. is:
The authorization issued by the regulatory authority of the company, as retail investors alternative investment fund, involves the application of efficient organizational and administrative provisions in the interest of S.I.F. Oltenia S.A. and its shareholders, in compliance with the legal principles contained in the specific rules.
On 30.04.2021, the structure of the S.I.F. Oltenia S.A. portfolio, grouped by categories of financial instruments, is:
| Category of financial instruments | Share in total portfolio (market values) |
|---|---|
| Listed shares | 91.48% |
| Unlisted shares | 6.97% |
| U.C.I.T.S. / AOPC equity interests |
0.18% |
| Monetary instruments (deposits, cash) | 0.81% |
| Other assets | 0.56% |
On the same date (30.04.2021), the structure of the portfolio of S.I.F. Oltenia S.A., grouped by activity sectors, is as follows:
| Activity Field | The share of activity fields in the total portfolio (market values) |
|---|---|
| Finances and banking | 49.57% |
| oil, methane gas and ancillary services | 14.99% |
| lease and sublease of movable property |
11.05% |
| energy and gas transport | 6.53% |
| tourism, public catering, leisure | 4.61% |
| Pharmaceutic industry |
3.88% |
| financial intermediation | 2.84% |
| food industry | 2.54% |
| machine builders, processing industry | 2.38% |
| electronics, electrical engineering industry |
1.32% |
| other economic sectors | 0.29% |
The graphic representation of the sectoral distribution of investments held by S.I.F. Oltenia S.A. as of 30 April 2021 is:
From the point of view of the market on which it is traded, the portfolio of shares held by S.I.F. Oltenia S.A. has the following structure:
| No. of companies |
The total market value of the share package |
||
|---|---|---|---|
| - RON - |
- % - |
||
| companies listed by Bucharest Stock Exchange |
14 | 1,755,188,035 | 80.24 |
| AERO listed companies | 9 | 238,756,923 | 10.92 |
| listed and non-traded companies | 3 | 38,548,770 | 1.76 |
| closed companies | 11 | 154,935,932 | 7.08 |
| companies in reorganization, judicial liquidation |
3 | 0 | 0.00 |
| TOTAL securities | 40 | 2,187,429,660 | 100.00 |
A graphical representation of the distribution of the markets on which the companies in the portfolio of S.I.F. Oltenia S.A. are traded on 30 April 2021 is:
From the point of view of the weight held in the share capital of the companies in the portfolio of S.I.F. Oltenia S.A., the structure of the portfolio is:
| The size of the stock packages | No. of companies |
The total market value of the share package |
|
|---|---|---|---|
| - RON - |
- % - |
||
| ■ holdings up to 5% | 13 | 1,621,651,373 | 74.13 |
| ■ holdings between 5% - 33% |
15 | 252,169,796 | 11.53 |
| ■ holdings between 33% - 50% |
- | - | - |
| ■ holdings over 50% | 12 | 313,608,491 | 14,34 |
| TOTAL | 40 | 2,187,429,660 | 100.00 |
A graphical representation of the distribution of S.I.F. Oltenia S.A. holdings within the companies in the portfolio, on 30 April 2021, is:
The S.I.F. Oltenia S.A. General Shareholders' Meeting is the supreme governing body of the company, which decides on its economic policy and its activity, in accordance with the mandate received from the shareholders. The elaboration and implementation of the investment strategy of S.I.F. Oltenia S.A. is carried out only after the express approval received from the S.I.F. Oltenia S.A. General Shareholders' Meeting, in compliance with the legal provisions in force and the regulations of the Financial Supervisory Authority. The implementation of the decisions of the General Shareholders' Meeting is the attribute of the management structure, according to the provisions of the company's Articles of Association and of the legal regulations which apply to the activity of S.I.F. Oltenia S.A.
The investment objective of S.I.F. Oltenia S.A. is to increase the value of the portfolio through investments made in the categories of assets allowed by the legislation specific to alternative closed-end investment funds, intended for retail investors, diversified category (such as securities and money market instruments, equity securities of OPCVM or FIA, derivative financial instruments, shares of limited liability companies, etc.).
The objectives are met through direct exposure to the underlying assets of the investment.
The investments are made mainly through transactions on the Bucharest Stock Exchange, according to the strategy approved by the S.I.F. Oltenia S.A. General Shareholders' Meeting.
Any change in the investment strategy of S.I.F. Oltenia S.A. shall be notified to the Financial Supervisory Authority 7 days prior to the entry into force of such changes.
The amendments proposed by S.I.F. Oltenia S.A. enter into force only if the Financial Supervisory Authority does not formulate restrictions or observations.
According to the Law no.243/2019 on the regulation of alternative investment funds and for the amendment and completion of some normative acts, S.I.F. Oltenia S.A. cannot be transformed into a category of alternative investment fund intended for professional investors.
S.I.F. Oltenia S.A. will not actively use the leverage effect in the process of managing its own portfolio of financial instruments.
S.I.F. Oltenia S.A. cannot make short sales, defined by Regulation (EU) no.236/2012 on short selling and aspects of credit risk swaps, other than for the purpose of hedging risks, respectively hedging.
The main objectives for 2021, approved by the General Shareholders' Meeting on 28 April 2021, are in full accordance with the provisions of the F.I.A.I.R. incident regulatory framework, and aim at:
▪ improving the portfolio, by pursuing a balance of risk-return;
The investments made will be in line with the company's risk profile and the applicable prudential limits, targeting the capital market and the money market as a matter of priority, without affecting the company's financial situation, which will be financed from its own sources.
The performance and future potential of the companies that will be the subject of investment will be analysed in advance, as well as the inflows and outflows from the portfolio taking into account the changes in the market due to the current economic context.
The investments intended to be made by S.I.F. Oltenia S.A. are within the express limitations provided by the normative framework in force.
Listed companies, unlisted companies that can add value to the company's asset portfolio, new listings on the stock market and public sale / purchase offers can be opportunities that will be analysed by the management of S.I.F. Oltenia S.A.
▪ management of portfolio holdings;
The activity of the companies in the portfolio - especially those in which S.I.F. Oltenia S.A. holds controlling or majority holdings - will be further monitored, the main objectives being:
− establishing the modalities regarding a possible capitalization of the held participations. The company believes that many of the economic sectors represented in the portfolio will feel the effects of this global crisis. As a result, S.I.F. Oltenia S.A. will carefully monitor macroeconomic and sectoral developments, in order to implement a prudent approach to capitalizing on investment opportunities, within the assumed risk limits.
▪ strengthening the portfolio by identifying those returns with a solid dividend yield;
The company's revenues are largely based on dividends received from companies in the portfolio. The financial-banking sector and the pharmaceutical sector have been and, in the medium and long term, will be sectors that will traditionally distribute dividends to their shareholders. However, S.I.F. Oltenia S.A. monitors and analyses developments in the regulation and supervision of these sectors, in order to identify certain decisions or recommendations of supervisors which may have an impact on the dividend policy of companies in the portfolio of S.I.F. Oltenia S.A. For this purpose, S.I.F. Oltenia S.A. analyses the recommendations set forth by the European Central Bank, the National Bank of Romania or the Financial Supervisory Authority, in the exercise of their legal attributions, in order to maintain the systemic stability of the financial-banking market.
▪ share buy-back programme;
Rewarding the company's shareholders through own shares within the buy-back programmes carried out by S.I.F. Oltenia S.A. proved to have a positive impact, both for the company and for its own shareholders. By running such programmes we believe that shareholders will be able to have an additional benefit, with a positive impact on the share price of SIF5 and the reduction of the discount to the unit value of net assets.
▪ improving transparency and corporate governance mechanisms;
The company carries out its activity in accordance with the provisions of the Romanian legislation and pays special attention to the observance of the rights of its shareholders. S.I.F. Oltenia S.A. makes every effort to ensure a fair treatment of all its shareholders, providing them with relevant and current information that will enable them to exercise their rights in a fair manner. The company also pays close attention to strengthening corporate governance mechanisms at the company level.
The trust of shareholders and investors is closely linked to both the financial performance of the company but also to a transparent communication, so that access to information is the same for all those interested. The relevant information is published on the Bucharest Stock Exchange website and on its own website, both in Romanian and in English.
In the current pandemic context, for the protection of shareholders, on the occasion of the General Shareholders' Meetings, the company makes every effort to ensure that access to information materialsis carried out properly, mainly using electronic means of communication. The voting procedure shall be made available to shareholders in a timely manner so that their vote can be cast with all the information on which to exercise their rights.
Transparent communication and compliance with the principles of corporate governance are the basis of investor confidence in the company's management.
▪ adapting company documents to legislative changes;
The entry into force of Law no. 243/2019 on the regulation of alternative investment funds and for the amendment and completion of some normative acts determined the alignment of the company's operating documents to the new legislative provisions.
The company shall ensure that its documents are constantly correlated to any legislative changes requested by the regulatory authorities.
The shares of S.I.F. Oltenia S.A. are addressed to investors who pursue the appreciation of capital in the medium and long term and who are willing to accept the risks associated with the exposure to the investments made (mainly shares). This type of investment does not fit the profile of the investor who does not have the capacity to assume losses and wants a constant income.
Any natural/ legal person, resident/ non-resident who legally acquires shares issued by the company becomes a shareholder of S.I.F. Oltenia S.A.
The shares are traded on the Bucharest Stock Exchange regulated market and the company applies the transparency and reporting requirements imposed by corporate governance, which allows any investor to be properly informed and understand the opportunities, risks and recommended duration of the investment, as set out in the Simplified Prospectus.
The minimum recommended duration of holding the investment is 5 (five) years. However, the shares issued by S.I.F. Oltenia S.A. can be traded at any time on the regulated market organized by the Bucharest Stock Exchange, during the trading program.
S.I.F. Oltenia S.A. recommends investors to be constantly informed about its activity and the changes in its documents, following the information and communications sent in order to ensure good transparency. On the website of S.I.F. Oltenia S.A., www.sifolt.ro, at least the following documents can be consulted: the Articles of Association, internal regulations, summons and decisions of the General Shareholders' Meetings, methods of asset valuation, monthly net asset reporting, monthly newsletters, current reports and press releases.
In carrying out its activity, S.I.F. Oltenia S.A. is exposed to the influence of diversified categories of risks, which the company manages in accordance with the relevant legal provisions.
The asset portfolio of the S.I.F. Oltenia S.A. was maintained in the medium risk category according to the risk profile approved by the Board of Directors, aiming to classify all specific risks (liquidity, market, operational, credit) at medium level.
Market risk represents the current or future risk of affecting the profits, determined by the market fluctuations of the securities prices - regarding the activities belonging to the trading portfolio - of the interest rate, as well as the exchange rate fluctuations for the entire activity of the company. The company monitors market risk with the aim of optimizing profitability in relation to the associated risk, in accordance with approved policies and procedures.
From the point of view of S.I.F. Oltenia S.A., the relevant market risks are: price risk (position risk), foreign exchange risk, interest rate risk.
Position risk it is generated by the volatility of market prices, such as fluctuations in the market for financial instruments, as a result of changes in market prices, changes caused either by factors affecting all instruments traded on the market or by factors specific to individual instruments or their issuer. S.I.F. Oltenia S.A. monitors both the systemic component (general risk determined by factors at macro level) and the specific risk, determined by the issuers' own activity, so that when price risks are not in accordance with internal policies and procedures to act in consequence by rebalancing the asset portfolio.
Interest rate risk represents the current or future risk of impairment of profits and capital as a result of adverse changes in interest rates. The interest rate directly influences the income and expenses attached to variable interest-bearing financial assets and liabilities.
Foreign exchange risk it is the risk that the value of a financial instrument will be affected as a result of fluctuations in foreign exchange market quotations. This risk takes into account all positions held by S.I.F. Oltenia S.A. in foreign currency deposits, financial instruments denominated in foreign currency, regardless of the holding period or the level of liquidity recorded by those positions. The Company does not use derivative financial instruments to hedge against interest rate fluctuations. The company constantly aims to minimize the possible adverse effects associated with market risk, through an active policy of prudential diversification of the managed financial asset portfolio.
Liquidity risk represents the risk of impairment as a result of operations associated with illiquid financial instruments (which could cause difficulties in buying or selling these financial instruments in a reasonable time, with minimal loss), as well as that determined by the possibility that S.I.F. Oltenia S.A. will not be able to fulfil its short-term financial obligations. S.I.F. Oltenia S.A. aims to maintain a level of liquidity adequate to its underlying obligations, based on an assessment of the relative liquidity of the assets on the market, taking into account the period required for liquidation and the price or value at which those assets can be liquidated, their sensitivity to market risks or other external factors. The company systematically monitors the liquidity profile of the asset portfolio, taking into account the contribution of each asset to liquidity, as well as significant liabilities and commitments, contingent or otherwise, that the company may have in relation to its underlying obligations.
When assessing the liquidity level related to a financial instrument within the portfolio of S.I.F. Oltenia S.A., the following factors are taken into account: the size of the position related to the financial instrument, related to its liquidity level and the depth of the market registered at the trading place where it is listed/ relevant, the period of time in which it is desired to close the position on the respective financial instrument, in relation to the average liquidity of the respective financial instrument (for a period of time), as well as the possibility that the portfolio of financial instruments can be restructured/ counterbalanced negative effects in an optimal time horizon, in case of accelerated depreciation of stock indices with an impact on value portfolio.
Operational risk refers to losses resulting from acts undertaken (or negligence) in the conduct of business activities. Operational risk is also assimilated to legal risk. In order to assess the level of operational risk to which it is exposed, S.I.F. Oltenia S.A. acts to identify and classify operational risk events in specific categories, which would allow the establishment of the most effective methods of control and mitigation of potential effects. The functional departments within S.I.F. Oltenia S.A. are responsible for the preliminary analysis of the operational risks arising in their area of activity.
S.I.F. Oltenia S.A. uses self-assessment as a tool for analysing and managing operational risk.
Credit risk represents the risk that S.I.F. Oltenia S.A. will record losses as a result of the insolvency of its debtors. Credit risk expresses the possibility that borrowers or issuers of debt financial instruments will not meet their obligations at maturity due to the deterioration of the borrower's financial situation and insolvency or due to the general situation of the economy. Credit risk arises in relation to any type of debt.
The main elements of credit risk identified, which can significantly influence the activity of S.I.F. Oltenia S.A. are:
the risk of non-collection of dividends from portfolio companies;
the risk of non-collection of the value of the contract, in the case of the activity of selling the packages of shares to "closed" type companies, through a sale-purchase contract;
the risk that in the event of the liquidation of a company in the portfolio, the value obtained will be less than the value of the initial investment or even nothing will be recovered;
settlement risk in the case of transactions with shares issued by listed companies;
concentration risk
The strategy regarding the management of significant risks considers the process of analysis and determination of the risk profile that S.I.F. Oltenia S.A. considers acceptable, in order to optimize the ratio between risk and profit and to correlate the capital requirements on different lines of activity. The risk management policies, which are implemented at the level of S.I.F. Oltenia S.A., include all the necessary procedures so that the company to assess the exposure to the main relevant risk categories, which may have a significant impact on the stability and performance of S.I.F. Oltenia S.A.
S.I.F. Oltenia S.A. assumed an appetite for medium risk, aiming to classify all specific risks at medium level.
In addition to these, the specific risk factors of S.I.F. Oltenia S.A. include:
country risk, represented by the possibility of losses, which occurs with the manifestation of political or economic instability and which negatively influences the capital market;
sectoral risk, generated by making investments in companies that belong to the same economic branch or are dependent on a single branch. In the event of an economic instability related to the respective sector, all these companies will be adversely affected and, possibly, the value of the share of S.I.F. Oltenia S.A.
issuer risk, generated by the issuer's previous and current performance. One method of reducing this type of risk is to diversify the investment portfolio.
liquidity risk, which derives from the reduced possibility of recovering capital quickly, due to the small number of transactions or the small trading volume in the markets where the assets in the company's portfolio are traded;
the risk of suspending the shares of S.I.F. Oltenia S.A. from trading, which appears as an effect of some decisions of the Financial Supervisory Authority or of the market operator, adopted in order to protect the interests of investors and to maintain an orderly market;
the risk of implementing the strategy of S.I.F. Oltenia S.A. regarding the companies in the portfolio, which appears in the case of the companies in the portfolio in which S.I.F. Oltenia S.A. does not hold a controlling position; the implementation of its own strategy for improving the transparency and activity of the respective companies does not depend exclusively on the will of S.I.F. Oltenia S.A.
The shares of S.I.F. Oltenia S.A. are nominative, issued in dematerialized form and grant equal rights to their holders. The nominal value of a share is RON 0.1.
The shares of S.I.F. Oltenia S.A. have been listed in the Premium category of the Bucharest Stock Exchange since 1999.
S.I.F. Oltenia S.A. can increase the share capital by issuing new shares.
The operation of increasing the share capital is done with the approval of the Extraordinary General Shareholders' Meeting which establishes the conditions of the increase: the issue value of a share, the total number of shares issued, the registration date necessary to determine the shareholders who can participate in the increase, etc.
S.I.F. Oltenia S.A. may carry out share buy-back programmes only with the prior approval of the Extraordinary General Shareholders' Meeting, under the conditions of art.1031 of Companies Law no. 31/1990, republished, with subsequent amendments and completions. The buy-back of the shares by S.I.F. Oltenia S.A. can take place under the following conditions: a) the authorization to acquire its own shares is granted by the Extraordinary General Shareholders' Meeting, which will establish the conditions of such repurchase, in particular the maximum number of shares to be acquired, the duration for which the authorization is granted and may not exceed 18 months the date of publication of the decision in the Official Gazette of Romania, Part IV, and, in case of an acquisition for consideration, their minimum and maximum value;
b) the nominal value of the treasury shares acquired by the company, including those already in its portfolio, may not exceed 10% of the subscribed share capital;
c) the transaction may have as object only fully paid-up shares;
d) the payment of the shares thus acquired will be made only from the distributable profit or from the available reserves of the company, entered in the last approved annual financial statement, except for the legal reserves.
The Financial Supervisory Authority, as well as S.I.F. Oltenia S.A., may temporarily decide to limit the issuance and/ or buy-back of equity interests in one of the following situations and/ or conditions:
difficulties in fair valuation of assets;
significant exposures in the company's net assets to financial instruments suspended from trading by decision of F.S.A., ESMA or another competent authority in another Member State; - the existence of divergences regarding the valuation of the assets between the company and the depositary of assets, likely to lead to the refusal of the trustee to certify V.A.N.;
finding the impossibility of achieving the investment objectives of the company for reasons not attributable to the directors;
other situations justified by the protection of the public interest and investors.
The company's shares are listed on the Bucharest Stock Exchange, Premium category. The purchase of shares may be made at any time during the trading hours through financial investment services companies.
During the Extraordinary General Shareholders' Meeting of S.I.F. Oltenia S.A. on 29 October 2020, the duration of the company's operation was set at 25 years. However, according to the applicable legislation, the duration of operation may be subsequently amended, based on a decision of the Extraordinary General Shareholders' Meeting of S.I.F. Oltenia S.A., adopted under the necessary conditions of validity.
The investments of S.I.F. Oltenia S.A. will be made in financial instruments allowed by law and in compliance with the investment limits, while analysing the possibility of diversifying investments to new instruments allowed by law. S.I.F. Oltenia S.A. invests mainly in securities and, in order to ensure immediate liquidity, in money market instruments. In this line, S.I.F. Oltenia S.A. has invested and aims to invest mainly in shares, equity securities of collective investment undertakings and alternative investment funds, as well as in money market instruments, bank deposits and current accounts.
S.I.F. Oltenia S.A. invests cash only in assets and financial instruments that can be assessed and whose risks can be adequately identified, measured, monitored, managed, controlled and reported.
The company's own funds and cash may not be used in transactions having as counterpart a collective investment undertaking managed by S.I.F. Oltenia S.A. S.I.F. Oltenia S.A.'s investments may be made in financial instruments allowed by the legislation in force, namely in one or more of the following classes of assets:
transferable securities and money market instruments registered or traded on a trading venue in Romania or in a Member State;
securities and money market instruments admitted to official listing on a third-country stock exchange which operate regularly and are recognized and open to the public, provided that the choice of stock exchange is approved by the F.S.A., in accordance with the eligibility conditions in the regulations issued by the F.S.A., and to be provided in the fund rules or in the Articles of Association of the investment company, approved by the F.S.A.;
newly issued securities, which are the subject of a public offering for admission to trading, subject to the cumulative compliance of the following conditions: the issuance documents include a firm commitment that admission to trading will be required within a trading venue, or trading on a third-country stock exchange that operates regularly and is recognized and open to the public, provided that the choice of trading venue or stock exchange is approved by the F.S.A. or is provided for in the fund rules or the Articles of Association of the investment company, approved by F.S.A.; this admission must be ensured within a maximum of one year from the issue;
equity interests of U.C.I.T.S. or A.I.F.s established or not established in Member States, with the cumulative fulfilment of the following conditions:
* A.I.F. are authorized or registered;
* the activities of the A.I.F. are subject to periodic reports, which allow an assessment of the assets and liabilities, income and operations during the reporting period, in accordance with the buy-back frequency offered to investors, as appropriate;
* the A.I.F. profile is in line with the liquidity profile of the A.I.F. established by the A.I.F.M.
deposits made with credit institutions, which are repayable on request or offer the right of withdrawal, with a maturity not exceeding 12 months provided that the registered office of the credit institution is located in Romania, in a Member State or in a third country, in the latter case provided that the credit institution is subject to prudential rules equivalent to those issued by the European Union;
derivative financial instruments, with final settlement in cash or in the underlying share of the instrument, traded on a trading venue or on a stock exchange in a third country, and/ or derivative financial instruments, traded outside regulated markets, with cumulative fulfilment of the following conditions:
the underlying asset consists of the instruments provided for in this Article, as well as financial indexes, interest rates, precious metals, energy products and the exchange rate in which the A.I.F. may invest, in accordance with its investment objectives, as the Articles of Association of the investment company;
derivative financial instruments traded outside regulated markets are subject to daily and verifiable valuation and may, at the initiative of the external A.I.F.M. or the selfgoverning A.I.F., be sold, liquidated or the position may be closed daily, at their fair value, by a reverse transaction.
money market instruments, other than those traded on a trading venue, that are liquid and have a value that can be accurately determined at any time, with the exception of trading effects, provided that the issue or issuer is subject to regulations to protect investors and their savings, and the instruments:
be issued or guaranteed by an administrative authority, central, local or regional, a central bank of a Member State, the European Central Bank, the European Union or the European Investment Bank, a third country or, in the case of Member States, by a member of the federation or by an international public body, of which one or more Member States are members; or
be issued by other entities belonging to the categories approved by the F.S.A., provided that investments in such instruments are subject to investor protection, equivalent to that provided for in the previous points, and that the issuer is a company whose capital and reserves to amount to at least the equivalent in lei of 10,000,000 euros, which presents and publishes its annual financial statements, according to the applicable European legislation, or an entity that, within a group of companies containing one or more listed companies, has the role of financing the group or is an entity dedicated to the financing of securitization vehicles that benefit from a bank financing line;
shares of limited liability companies regulated by Law no. 31/1990 republished, with subsequent amendments and completions, whose annual financial statements are audited according to law;
-securities defined in art. 3 para. (1) pt. Government Emergency Ordinance no. 32/2012 which are not admitted to trading on a trading venue or are not traded on a stock exchange in a third country;
treasury bonds,
real estate assets, in compliance with the F.S.A. regulations and the provisions assumed in the F.I.A.I.R. documents;
greenhouse gas emission certificates as defined in art. 3 lit. b) of the Government Decision no. 780/2006 on the establishment of the trading scheme for greenhouse gas emission certificates, with subsequent amendments and completions;
movable and immovable property strictly necessary for the conduct of the company's business.
Depending on the existing opportunities on the market and in accordance with its own risk profile, S.I.F. Oltenia S.A. may decide to expand the range of asset classes in which it has invested predominantly so far (shares, equity securities of mutual funds or mutual funds). alternative investments, bank deposits, current accounts), by considering other classes of assets, from those allowed by the incident legislation, in compliance with prudential requirements.
SIF Oltenia may use in the portfolio management techniques and instruments related to securities and money market instruments, under the established conditions and limits, provided that the respective techniques and instruments are used for an efficient and prudent management of the portfolio and in compliance with legal regulations. Under no circumstances will these operations cause the company to breach its investment objectives set out in the prospectus.
Within the active portfolio management strategy, a series of specific and integrated tools / techniques will be used (such as fundamental analysis, statistical analysis, analysis of market indicators, analysis of macroeconomic conditions, etc.) to provide a real picture of the market. capital in Romania and to offer the possibility to identify the most attractive investment opportunities for the shareholders of S.I.F. Oltenia S.A.
Currently, S.I.F. Oltenia S.A. has not made investments in derivative financial instruments. However, S.I.F. Oltenia S.A. could invest in derivative financial instruments, in compliance with the limitations induced by the applicable legislation.
S.I.F. Oltenia S.A. cannot make short sales, defined by Regulation (EU) no.236/2012 on short selling and aspects of credit risk swaps, other than for the purpose of hedging risks, respectively hedging.
The investments of S.I.F. Oltenia S.A. will be made in compliance with the following limits, according to the incident legal provisions:
may not hold more than 10% of the assets in securities and money market instruments issued by the same issuer, except for securities or money market instruments issued or guaranteed by a Member State, the local public authorities of the Member State, a third country or international public bodies to which one or more Member States belong. The limit of 10% may be increased up to a maximum of 40%, provided that the total value of the securities held by S.I.F. Oltenia S.A. in each of the issuers in which it has holdings of more than 40% does not exceed in any case 80% of the value of its assets;
may not hold more than 50% of the assets in transferable securities and money market instruments issued by entities belonging to the same group. In the case of the group to which he belongs A.I.F.M. managing that A.I.F., this limit is 40%;
the exposure to counterparty risk in a transaction with derivative financial instruments traded outside regulated markets may not exceed 20% of its assets, regardless of the counterparty of the transaction;
the overall exposure to derivative financial instruments may not exceed the total value of its assets;
the amount of current accounts and cash to be within 20% of its assets; the limit may be exceeded up to a maximum of 50%, provided that the amounts in question come from the issue of equity securities, maturing investments or the sale of financial instruments in the portfolio, and that the excess does not exceed 90 days;
may not set up and hold bank deposits made with the same bank representing more than 30% of its assets;
may not hold more than 20% of its assets in shares not admitted to trading on a trading venue or on a stock exchange in a third country, issued by a single A.I.F. to retail investors;
may not hold more than 10% of its assets in shares not admitted to trading on a trading venue or on a stock exchange in a third country, issued by a single A.I.F. to professional investors;
may not hold more than 50% of its assets in shares not admitted to trading on a trading venue or on a stock exchange in a third country, issued by other open-ended A.I.F. In the case of the group to which the A.I.F.M. which manages that A.I.F. belongs, the holding limit is 40% of its assets;
may not hold more than 40% of its assets in units issued by a single U.C.I.T.S. authorized by the F.S.A. or by a national competent authority of another Member State, as well as in units issued by a single investment body collectively admitted to trading on a trading venue in Romania, another Member State or on a stock exchange in a third country;
may not lend financial instruments that represent more than 20% of its assets, the loan period may not exceed 12 calendar months, in accordance with the regulations issued by the F.S.A. on margin transactions and lending operations. The limit of 20% of its assets can be increased up to 30%, with the approval of the F.S.A., under the conditions established by the F.S.A. regulations;
may not grant cash loans, may not participate in / subscribe to syndicated loans, may not guarantee cash loans in favour of a third party, except for entities in the group to which F.I.A.I.R. belongs as an investment company within 10% of the assets and may not acquire, in whole or in part, loan portfolios issued by other financial or non-financial institutions, except for investment investments in financial instruments issued by internationally recognized financial institutions, credit institutions or non-bank financial institutions authorized by the NBR or other banks plants in a Member State or in third countries;
may not hold more than 40% of the value of its assets in transferable securities, money market instruments not traded on a trading venue or on a stock exchange in another third country, excluding government securities and bonds issued by the Ministry of Public Finance, as well as of the holdings acquired by the respective F.I.A.I.R. by law, in case of which the holding limit is not established;
may not hold more than 20% of the value of its assets in shares issued by limited liability companies, regulated by Law no. 31/1990, republished, as subsequently amended and supplemented.
may not hold more than 10% of the value of its assets in certificates issued with a greenhouse effect.
S.I.F. Oltenia may invest no more than 35% of its assets in money market instruments such as promissory notes, in accordance with its investment policy and in compliance with certain limits, namely the exposure obtained by the company through direct and indirect investments in money market instruments such as promissory notes must not exceed 20% of its assets.
S.I.F. Oltenia may not hold - as a shareholder of a market operator - directly or together with the persons with whom it acts in concert, more than 20% of the total voting rights.
S.I.F. Oltenia S.A. complies with the investment limits presented and those provided by the incident regulations in force as a result of the authorization as F.I.A.I.R., constantly monitoring the manner of fulfilling the legal obligations.
The valuation rules of the assets of S.I.F. Oltenia S.A. are those provided in the national legislation.
S.I.F. Oltenia S.A. ensures that the valuation process is carried out thoroughly, transparently and properly formalized, so as to carry out a proper and independent valuation of the assets in accordance with the corresponding specific legislation and the provisions of the Articles of Association.
The value of assets represents the value quantification of financial assets using various specific benchmarks (stock quotation, acquisition cost, registration value in net assets, etc.), according to the incident regulations.
In accordance with IFRS 9 "Financial Instruments", S.I.F. Oltenia S.A. classifies financial instruments held in financial assets and financial liabilities.
The Company classifies financial assets as: measured at depreciated cost, fair value through other comprehensive income or fair value through profit or loss, based on the company's business model for managing financial assets and the characteristics of the contractual cash flows of the financial asset.
In accordance with IFRS 9, the company classifies financial assets into one of the following categories:
1. Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss are:
equity instruments held for trading;
equity instruments designated to be valued at fair value through profit or loss; debt instruments
A financial asset or financial liability is held for trading if it cumulatively meets the following conditions: it is held for sale and buy-back in the near future and, on initial recognition, is part of a portfolio of identified financial instruments, which are managed together and for which there is evidence of a recent real pattern of short-term profit tracking.
This category includes financial assets or financial liabilities held for trading and financial instruments designated at fair value through profit or loss at the time of initial recognition.
Derivative financial instruments are classified as held for trading if they are not instruments used for hedge accounting.
Financial assets measured at fair value through other comprehensive income are equity instruments designated to be measured at fair value through other comprehensive income and debt instruments.
A financial asset of the nature of debt instruments must be measured at fair value through other comprehensive income if the conditions are met:
the financial asset is held within a business model whose objective is achieved through the collection of contractual cash flows and the sale of financial assets, and
the contractual terms of the financial asset give rise, on certain dates, to cash flows which are exclusively payments of principal and interest on the amount of principal due.
The Company's investments in equity instruments (shares) are fully classified as financial assets measured at fair value through other comprehensive income.
The Company's investments in fund units are classified and measured at fair value through profit or loss.
The remaining financial assets and liabilities are presented at depreciated cost, revalued amount or historical cost.
The method used to highlight the company's investments in equity instruments (shares) is "first in, first out", in terms of quantifying and evaluating the company's performance based on fair value.
Financial assets measured at fair value through other comprehensive income are measured at fair value through other comprehensive income.
Changes in fair value are recognized in other comprehensive income until the investment is derecognised when the cumulative gain or loss is reclassified from other comprehensive income to a deferred income statement for the period.
Dividends received from entities in which the company holds shares are recognized in profit or loss at gross value only when:
the company's right to receive payment of the dividend is established;
the economic benefits associated with the dividend are likely to be generated for the company, and
the value of the dividend can be measured reliably.
Financial assets measured at depreciated cost are debt instruments. A financial asset must be measured at depreciated cost if the following conditions are met:
the financial asset is held in a business model whose purpose is to hold financial assets for the purpose of collecting contractual cash flows, and
the contractual terms of the financial asset give rise, on certain dates, to cash flows which are exclusively payments of principal and interest on the amount of principal due.
Financial liabilities are measured at depreciated cost, except for financial liabilities classified at fair value through profit or loss. Financial assets and liabilities are recognized on the date on which the company becomes a contractual party under the terms of that instrument. When a company recognizes a financial asset for the first time, it classifies it at depreciated cost, at fair value through profit or loss or at fair value through other comprehensive income (in accordance with paragraphs 4.1.1 to 4.1.5 of IFRS 9) and measures in accordance with IFRS 9 (a financial asset or financial liability is measured at fair value plus or minus, in the case of a financial asset or financial liability that is not at fair value through profit or loss, the costs of the transaction that are directly attributable to the acquisition or issue of the asset or liability).
The company initially recognizes deposits with banks on the date they are set up.
All other financial assets and liabilities are initially recognized at the date of the transaction.
After initial recognition, the company classifies all financial liabilities at depreciated cost, except:
financial liabilities at fair value through profit or loss.
financial liabilities that arise when the transfer of a financial asset does not meet the conditions for derecognition;
financial guarantee contracts, valued at the higher of the value of the loss provision and the amount initially recognized less accumulated income;
commitments to provide a loan at an interest rate below market value, valued at the higher of the value of the provision for losses and the amount initially recognized less accumulated income;
the contingent consideration recognized by an acquirer in a business combination (to which IFRS 3 applies). Such a contingent consideration must subsequently be measured at fair value through profit or loss.
S.I.F. Oltenia S.A. measures the fair value of a financial instrument using the prices quoted on an active market for that instrument. A financial instrument has an active market if quoted prices are available quickly and regularly for that instrument. The company measures instruments listed on active markets using the closing price.
A financial instrument is considered to be quoted in an active market when the quoted prices are available immediately and regularly from an exchange, a dealer, a broker, an industry association, a pricing service or a regulatory agency, and these prices reflect transactions that occur in a real and regular manner, conducted under objective market conditions.
The category of shares listed on an active market includes all those shares admitted to trading on the Stock Exchange or on the alternative market and which present frequent transactions. The market price used to determine fair value is the closing price of the market on the last trading day before the valuation date.
For the calculation of fair value, for equity instruments (shares), the company uses the following hierarchy of methods:
Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (e.g., prices) or indirectly (e.g., price derivatives);
Level 3: evaluation techniques based largely on unobservable elements. This category includes all instruments for which the valuation technique includes elements that are not based on observable data and for which unobservable input parameters may have a significant effect on the valuation of the instrument.
The fair value measurement of the equity instruments (shares) held is performed as follows:
for securities listed and traded during the reporting period, the market value was determined taking into account the quotation on the last trading day (closing quotation on the main capital market for those listed on the regulated market - BUCHAREST STOCK EXCHANGE, respectively the reference price for the alternative system - AERO for level 1, and for level 2 the quotations for the shares traded in the last 30 trading days are taken);
for listed securities that have not been traded in the last 30 days of the reporting period, as well as for unlisted securities, the market value is determined as it results from the entity's last approved annual financial statement;
for securities not admitted to trading on a regulated market or in an alternative trading system in Romania issued by issuers in which holdings of more than 33% of the share capital are held, they are valued exclusively in accordance with International Valuation Standards based on an evaluation report updated at least annually;
for securities of companies in insolvency proceedings or reorganization, the valuation is made at zero.
The equity securities issued by mutual funds are valued taking into account the last unit value of the net asset, calculated and published.
If the company reclassifies the financial assets, then all affected financial assets will be reclassified. Financial liabilities cannot be reclassified after initial recognition.
The Company applies the reclassification of financial assets prospectively from the date of reclassification. Any previously recognized gains, losses or interest will not be restated.
In the event of a reclassification, the company proceeds as follows:
when reclassifying an asset from the depreciated cost category to fair value through profit or loss, the fair value is determined at the date of reclassification. The difference between the depreciated cost and the fair value is recognized in profit or loss;
on the reclassification of an asset from the fair value through profit or loss category to the depreciated cost, the fair value at the date of reclassification becomes the new gross carrying amount;
when reclassifying an asset from the depreciated cost category to fair value through other comprehensive income, the fair value is determined at the date of reclassification. The difference between depreciated cost and fair value is recognized in other comprehensive income without adjusting the effective interest rate or expected credit loss;
at the reclassification of an asset from the fair value category through other elements of the overall result in that of the depreciated cost, the reclassification is performed at the fair value of the asset from the date of reclassification. The amounts previously recognized in other comprehensive income are eliminated in relation to the fair value of the asset, without affecting the profit or loss account. The effective interest rate and expected credit losses are not adjusted as a result of the reclassification;
when an asset is reclassified from fair value through profit or loss to that of fair value through other comprehensive income, the asset continues to be measured at fair value;
when an asset is reclassified from fair value through other comprehensive income to profit or loss, the financial asset continues to be measured at fair value. The amounts previously recognized in other comprehensive income are reclassified from equity to the income statement as an adjustment from reclassification (in accordance with IAS 1).
Other financial assets and liabilities are measured at depreciated cost using the effective interest method.
Intangible assets are initially measured at cost. After initial recognition, an intangible asset is recognized at cost less accumulated depreciation and any accumulated impairment losses.
Tangible fixed assets recognized as assets are initially measured at acquisition cost (for those purchased for consideration), at the value of the contribution (for those received as a contribution in kind when establishing / increasing the share capital), respectively at the fair value from the acquisition date for those received free of charge. Tangible fixed assets are classified by S.I.F. Oltenia S.A. in the following asset classes of the same nature and with similar uses:
land and constructions
machinery and equipment and means of transport;
furniture, office equipment, equipment for the protection of human and material values and other tangible assets.
For subsequent recognition, the company adopted the revaluation model.
After recognition as an asset, items of property, plant and equipment in the nature of construction and land whose fair value can be measured reliably are recognized at revalued value, which is fair value at the date of revaluation less any subsequent amortization and any accumulated impairment losses.
Other property, plant and equipment are measured at cost less accumulated depreciation and any impairment losses.
Revaluations must be made with sufficient regularity to ensure that the carrying amount does not differ materially from what would have been determined using fair value at the reporting period. If an item of property, plant and equipment is revalued, then the entire class of property, plant and equipment to which that item belongs is subject to revaluation.
If the carrying amount of an asset is increased as a result of a revaluation, the increase is recognized in other comprehensive income and accumulated in equity, as a revaluation surplus. However, the increase will be recognized in profit or loss to the extent that it offsets a decrease in the revaluation of the same asset previously recognized in profit or loss.
If the carrying amount of an asset is reduced as a result of a revaluation, that decrease is recognized in profit or loss. However, the reduction will be recognized in other comprehensive income to the extent that the revaluation surplus shows a credit balance for that asset. Transfers from revaluation surplus to retained earnings are not made through profit or loss.
The revaluation surplus included in equity relating to an item of property, plant and equipment is transferred directly to retained earnings as amortization and when the asset is derecognised on disposal or disposal.
Land and buildings are shown at revalued value, which represents the fair value at the date of revaluation less accumulated depreciation and impairment losses. The re-evaluations are performed by specialized evaluators, members of A.N.E.V.A.R.. The frequency of revaluations is dictated by the dynamics of the markets to which the land and buildings owned by the company belong.
If the carrying amount of an asset is impaired as a result of a revaluation, that impairment must be recognized in profit or loss. However, the reduction must be recognized in other comprehensive income to the extent that the revaluation surplus shows a credit balance for that asset. The reduction recognized in other comprehensive income decreases the amount accumulated in equity as a revaluation surplus.
The land does not depreciate. The depreciation of other tangible assets is calculated using the straight-line method, allocating costs related to the residual value, in accordance with the related useful life.
Tangible assets that are scrapped or sold are removed from the balance sheet together with the appropriate cumulative depreciation. The gain or loss resulting from the derecognition of an item of property, plant and equipment is included in the current income statement when the item is derecognised.
Real estate investments are real estate (land, buildings or parts of a building) owned by the company for the purpose of renting or for increasing value or both.
Some properties include a part that is owned for rent or for the purpose of increasing value and another part that is owned for the purpose of producing goods, providing services or for administrative purposes. A real estate investment is recognized as an asset if and only if:
a future economic benefit associated with real estate investment is likely to enter society;
the cost of the real estate investment can be measured reliably.
A real estate investment is initially measured at cost, including transaction costs. The cost of a purchased real estate investment consists of its purchase price plus any directly attributable expenses (for example, professional fees for the provision of legal services, fees for the transfer of ownership and other transaction costs). The subsequent valuation of real estate investments is based on the fair value model performed by valuers that are members of the National Association of Authorised Romanian Valuers (A.N.E.V.A.R.). These valuations are periodically reviewed by the company's management. Gains or losses resulting from a change in the fair value of real estate investments are recognized in the income statement in the period in which they occur. The fair value of real estate investments reflects market conditions at the balance sheet date.
Transfers to and from the category of real estate investments must be made when and only when there is a change in the use of the asset highlighted by:
start of use by the company - for transfers from the category of real estate investments to the category of tangible assets;
the beginning of the arrangement process in the perspective of the sale - for the transfers from the category of real estate investments in the category of stocks;
termination of use by the company - for transfers from the category of property, plant and equipment to the category of real estate investments;
starting an operational lease with another party - for transfers from the category of stocks to the category of real estate investments.
The carrying amount of a real estate investment is derecognised at the time of the disposal or when the investment is permanently withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses resulting from the sale or disposal of a real estate investment are recognized in the income statement when it is sold or disposed of.
The carrying amount of non - financial assets of the company, other than deferred tax assets, is reviewed at each reporting date to identify impairment. If there are such indications, the recoverable amount of those assets is estimated.
The recoverable amount of an asset or a cash-generating unit is the maximum of its value in use and its fair value less costs to sell that asset or unit. To determine the net value in use, future cash flows are discounted using a pre-tax discount rate that reflects current market conditions and the specific risks of the asset.
The rules for valuing the assets of S.I.F. Oltenia S.A. are those provided in the national legislation, respectively those provided by the provisions of art. 113-122 of Regulation no. 9/2014 on the authorization and operation of investment management companies, collective investment undertakings and depositories of collective investment undertakings, as well as the provisions of Regulation no. 7/2020 on the authorization and operation of alternative investment funds.
The evaluation function within S.I.F. Oltenia S.A. is performed internally, the evaluation task being functionally independent from the portfolio administration and the remuneration policy. Also, for companies in the portfolio of S.I.F. Oltenia S.A. that are not listed on a regulated market or alternative trading system, the valuation is made by an authorized external valuer, in accordance with the legal provisions.
S.I.F. Oltenia S.A. identified valuation methodologies for each type of asset existing in the managed portfolio. These methodologies are those provided for in national legislation.
If S.I.F. Oltenia S.A. will invest in other types of assets allowed by law, but which require valuation models, the following measures will be taken:
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Before being used, the model to be used for asset valuation, built internally by S.I.F. Oltenia S.A. will be validated by a person with sufficient specialized knowledge (who meets the conditions of professional training and seniority in the specific activity provided by law) . The person who will validate the evaluation model will not be involved in the process of elaborating the respective model. The model is subject to prior approval by the senior management of S.I.F. Oltenia S.A. The approval of the model by the senior management of S.I.F. Oltenia S.A. is without prejudice to the right of the Financial Supervisory Authority to request that the model be verified by an evaluator or an external expert.
The review of the valuation rules / policies / procedures is done annually during December and is communicated to investors within 60 days from the end of each year.
The risk management function provides adequate assistance on the policies and procedures adopted for asset valuation.
The asset valuation method is in full accordance with the provisions of the relevant legislation, and S.I.F. Oltenia S.A. is to adapt the asset valuation methodology in order to capitalize on investment opportunities, which fall into the categories of eligible assets provided by the regulatory framework.
the eligible investment universe is extended, in accordance with the provisions of the incident legislation (being practically possible the realization of investments in all classes of eligible assets defined in art.35 of Law no.243/2019;
the strategy approved by the shareholders of S.I.F. Oltenia S.A. on the occasion of the Ordinary General Shareholders' Meeting of 28 April 2021 is fully compatible with the incidental regulatory framework F.I.A.I.R., meaning that we estimate that there will be no significant changes in the portfolio structure in the near future;
the flexibility and adaptability of the investment process at the level of S.I.F. Oltenia S.A. are improved, for an efficient exploitation of market opportunities (as an effect of expanding the range of eligible assets), respecting the level of risk tolerance of the company and the incident risk limits.
Yours faithfully,
Sorin-Iulian Cioacă
President – General Manager
Viorica Bălan
Compliance Officer
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