fondulproprietatea.ro
Fondul
Proprietatea SA
Annual Sole Director’s Report
for the Financial Year Ended
31 December 2022
This is a translation from the official Romanian version.
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Annual Sole Director’s Report 2022
CONTENTS
Annexes
Annex 1 Audited Financial Statements for the year ended 31 December 2022, prepared in
accordance with the International Financial Reporting Standards as endorsed by the
European Union and applying the Financial Supervisory Authority 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
Annex 2 Statement of Assets and Obligations of Fondul Proprietatea SA as at 31 December
2022, prepared in accordance with FSA Regulation no. 7/2020 (Annex no.11)
Annex 3 Statement of persons responsible
Annex 4 Compliance with the corporate governance requirements
Annex 5 The remuneration report of Fondul Proprietatea SA for 2022 financial year
Annex 6 Actual versus Budget Analysis for the year ended 31 December 2022
Annex 7 Constitutive Act of Fondul Proprietatea in force as at 31 December 2022
Annex 8 Annual Cash Distribution Policy of Fondul Proprietatea in force as at 31 December 2022
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List of Abbreviations
ABB Accelerated Bookbuild
ACDP Annual Cash Distribution Policy
AIF Alternative Investment Fund
AIF Law
Romanian Law no. 243/2019 on the regulation of alternative investment funds and
amending and supplementing certain normative acts
AIF Regulation
Regulation no. 7/2020 on the authorisation and functioning of alternative
investment funds, issued by the Financial Supervisory Authority
AIFM Alternative Investment Fund Manager
AIFM Directive Directive 2011/61/EU on Alternative Investment Fund Managers
AIFRI Alternative investment fund for retail investors
ALFI Association of the Luxembourg Fund Industry
AML Anti-Money Laundering
ANAF Romanian National Agency for Fiscal Administration
ANAR National Administration for Romanian Water
ANRE Romanian National Energy Regulatory Authority
ASPAAS Authority for the Public Supervision of the Statutory Audit Activity
ATS Alternative Trading System
AVC Audit and Valuation Committee of Fondul Proprietatea SA
BoN Board of Nominees of Fondul Proprietatea SA
BVB Bucharest Stock Exchange
NBR National Bank of Romania
CAEN Classification of Economic Activities in Romania
CE Oltenia Complexul Energetic Oltenia SA
CIIF Certification of Registration of Financial Instruments
CNVM National Securities Commission (currently FSA)
Companies’ Law Law no. 31/1990 regarding companies, with subsequent amendments
CRS Common Reporting Standard
CSRD
Directive (EU) 2022/2464 of the European Parliament and of the Council of 14
December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC,
Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability
reporting
DCM Discount Control Mechanism
Depositary Bank/
Depositary
BRD – Groupe Societe Generale SA
Depozitarul Central SA Romanian Central Depositary
DLOM Discount of Lack of Marketability
EBIT Operating profit
EBITDA Operating profit before depreciation and amortisation
EGM Extraordinary General Shareholders Meeting
ESG Environmental, Social and Governance
EU European Union
FATCA The Foreign Account Tax Compliance Act
Fondul Proprietatea/ the
Fund/ FP
Fondul Proprietatea SA
FSA Romanian Financial Supervisory Authority
FT Franklin Templeton
FTIML Franklin Templeton Investment Management Limited United Kingdom
FTIS/ AIFM/ Sole Director Franklin Templeton International Services S.à r.l.
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GDP Gross Domestic Product
GDPR
Regulation (EU) 2016/679 of the European Parliament and of the Council on the
protection of natural persons with regard to the processing of personal data and
on the free movement of such data (General Data Protection Regulation)
GDR Global Depositary Receipt
GEO Government Emergency Ordinance
GEO no. 1/2020
GEO no. 1/ 9 January 2020 regarding some fiscal-budgetary measures and the
amendment and completion of some normative acts
GEO no. 74/2020 GEO no. 74/ 19 May 2020 for modifying the Romanian Energy Law no. 123/2012
GEO no. 108/2022 GEO no. 108/2022 regarding the decarbonisation of the energy sector
GEO no. 119/2022
GEO no. 119/2022 regulating the Romanian energy market and which further
amends GEO no. 27/2022 on the measures applicable to final consumers of
electricity and natural gas for the period 1 April 2022 to 31 March 2023
GO Government Ordinance
GRI Global Reporting Initiative
GSM General Shareholders Meeting
H1/ H2 First/ second semester
IFRS International Financial Reporting Standards as endorsed by the European Union
INS Romanian National Institute of Statistics
IMF International Monetary Fund
IPO Initial Public Offering
IPS Investment Policy Statement
Law no. 334/2022
Law no. 334/2022 regarding the approval of GEO no. 108/2022 regarding the
decarbonisation of the energy sector
LME London Metal Exchange
LSE London Stock Exchange
MA
Management Agreement signed between Fondul Proprietatea and FTIS
Luxembourg, as Sole Director and Alternative Investment Fund Manager
MiFID II
Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014
on markets in financial instruments and amending Directive 2002/92/EC and
Directive 2011/61/EU
NAV Net Asset Value
NRC Nomination and Remuneration Committee of Fondul Proprietatea SA
OCR Ongoing charge ratio
OGM Ordinary General Shareholders Meeting
PNRR National Recovery and Resilience Plan
PRIIPs Packaged retail and insurance-based investment products
Q1/ Q2/ Q3/ Q4 First/ second/ third/ fourth quarter
REGS Main market (Regular) of Bucharest Stock Exchange
RRR Regulatory Rate of Return
Salrom Societatea Nationala a Sarii SA
SAPE Societatea de Administrare a Participatiilor in Energie SA
SFDR
Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27
November 2019 on sustainability-related disclosures in the financial services sector
SME Small and Medium Enterprise
TO Tender Offer
UCI Undertakings for Collective Investment
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UCITS Undertakings for Collective Investment in Transferable Securities
Water Law Romanian Water Law no. 107/1996
9M/ 9MO 9-month period
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Annual Sole Director’s Report 2022
Sole Director’s Letter to Shareholders
Dear Shareholders,
2022 was marked by uncertainty at both macroeconomic and geopolitical level, with significant
volatility and declines in global and local markets, affecting investor sentiment. Global economic risks
have been continuously reassessed following the start of the war on Ukraine, with forecasts being
adjusted downwards from previous levels, while inflationary pressures intensified, with emerging
economies, including Romania seeing significant inflation levels compared to the previous years.
Though uncertainty and restrictions associated with the COVID-19 pandemic decreased, supply chain
disruptions and trade blockages continued to pose a challenge. These were also enhanced by the
sanctions imposed on Russia and the reduction of transport capacity in Ukraine, considering that
these countries have an important role in the production and global export of grains and raw
materials, including natural gas and oil in the case of Russia.
Our focus throughout the year remained unwavered on protecting and creating shareholder value
for the Fund’s shareholders through our active management approach, close supervision of the
portfolio companies, and a constant focus on value-enhancing corporate actions.
The Fund’s performance in 2022
The NAV total return in 2022 was 19.1%, the total return for the local shares was 12.2%, while the total
return for the GDRs was 3.9% (due to a stronger US dollar). Since the start of the calculation of the
Fund’s performance
1
, the NAV total return was 325.5%, while the total return for local shares was
651.4%, and 237.6% for the GDRs.
On the BVB, the shares traded throughout the year at a discount
2
to NAV between 2.1% and 39.4%,
ending the year at 20.4%. On LSE, the GDRs traded at a discount
2
to NAV between 1.7% and 39.5%,
ending the year at 20.1%. The average annual discount for ordinary shares was 21.6%, while for GDRs
was 22.4%.
We are pleased that we have been able to continue to generate positive NAV and share price returns
for the Fund’s shareholders, and we will continue our efforts to create shareholder value, with share
buy-backs and cash distributions as key actions that are under our control.
Maximising shareholder value in 2023
As we look to generate further value for the Fund’s shareholders, we will continue to actively
manage the Fund, collaborate closely with the Government with the aim that the state-controlled
companies in the Fund’s portfolio continue the progress registered in the past years, and finalise the
listing of Hidroelectrica SA and Societatea Nationala a Sarii SA.
Value-enhancing corporate actions, such as share buybacks and cash distributions to shareholders,
and continued promotion of the Fund and of the Romanian capital market, are aimed at allowing the
Fund’s NAV to be better reflected in the share price.
1
Source: BVB, Bloomberg, Fund Manager calculations. The Performance Inception date for the NAV is 31 December 2010, for the
Share Price is 25 January 2011, and for the GDRs is 29 April 2015.
2
Calculated as the discount/premium between FP share closing price on BVB - REGS/ FP GDR closing price on LSE and the latest
available published NAV per share at the date of calculation.
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Annual Sole Director’s Report 2022
We are confident that our active, bottom-up investment process will allow us to continue delivering
appealing long-term results for our shareholders and we look forward to the opportunities ahead for
Fondul Proprietatea.
Outlook for 2023
According to the IMF
1
, the global fight against inflation, Russia’s war in Ukraine, and a resurgence of
COVID-19 in China weighed on global economic activity in 2022, and the first two factors will continue
to do so in 2023.
Global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, then rise again to
3.1% in 2024. For Romania, according to October 2022 World Economic Outlook published by IMF, the
real GDP growth for 2021 was 5.9% and this is expected to decrease to 4.8% in 2022 and further to 3.1%
to 2023
1
.
IMF projections from January 2023
1
forecast global inflation to fall from 8.8% in 2022 to 6.6% in 2023
and 4.3% in 2024. According to Eurostat
2
, the EU annual inflation rate was 9.2% in December 2022,
down from 10.1% in November. For Romania, according with National Statistics Institute
3
the annual
inflation rate in December 2022 was 16.4%.
According to the monthly BVB report
4
for December 2022, BVB reached a new record in 2022 in
terms of liquidity, with the total trading value on all markets exceeding RON 24 billion. The average
daily liquidity reached a new high of RON 95.6 million (11% increase compared to 2021).
Also, the number of investors reached over 128,000 at the end of September 2022, an all-time high
for the Romanian capital market. In terms of performance, the BET index, which includes the 20
most liquid companies listed on the BVB decreased by 10.7% in 2022, following the trend of
international stock markets, in the context of rising interest rates and increasing fears regarding the
possibility of a recession in developed markets.
On 11 January 2023, the Board of the National Bank of Romania once again raised its key monetary
policy rate by 0.25% to 7.0%, the eighth consecutive rate hike in the last 12 months, in line with the
trend followed by most central banks across the world.
Whilst the potential for further interest rates increases is high, we expect inflationary pressure to be
more subdued through 2023. With the right mix of fiscal and economic policy, Romania once again
has strong prospects to become one of the best performing economies in the European Union.
1
World Economic Outlook, January 2023, www.imf.org
2
Eurostat – Euro Indicators Publication no. 2/6 January 2023, www.ec.europa.eu/eurostat
3
National Statistics Institute, Press Release no. 13/ 13 January 2023, www.insse.ro
4
BVB – Monthly report – December 2022, www.bvb.ro
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Annual Sole Director’s Report 2022
2023 Annual General Shareholders Meeting
We would like to take this opportunity to invite shareholders to attend the 2023 Annual General
Shareholders Meeting convened for 21 April 2023 at “InterContinental Athenee Palace Bucharest”
Hotel, 1-3 Episcopiei Street, 1
st
district, Bucharest, starting with 11 a.m. Romania time, where you will
have the opportunity to receive the latest updates about the Fund. The agenda of the Annual
General Shareholders Meeting and support documents are published on
www.fondulproprietatea.ro
.
Profit Appropriation Proposal
As per the annual audited IFRS financial
statements, the Fund recorded an audited
net profit of RON 2,769,448,871 for the
financial year ended 31 December 2022.
The Fund’s Sole Director proposal, subject to
shareholders’ approval, for the appropriation
of the net accounting profit for the 2022
financial year is as follows:
RON 283,440,306
to dividends (RON 0.05 per share);
RON 908,845,064
to other reserves (to be used for coverage of
estimated negative reserves to arise at the
cancellation of shares acquired within the 13
th
buy-back programme);
RON 1,577,163,501
unallocated profit that remains
available to the Fund’s shareholders.
The Sole Director intends to propose the distribution of a special dividend in 2023 which is
dependent upon the cash inflows related to portfolio events. The exact amount is expected to be
announced during 2023. The potential distribution of special dividends will be subject to a future
GSM. This special dividend will be separate from any distributions that may be proposed as a result
of the ongoing listing projects.
Johan Meyer
CEO of FTIS Bucharest Branch, Portfolio Manager of Fondul Proprietatea SA
Permanent Representative of FTIS in relation to Fondul Proprietatea SA
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Annual Sole Director’s Report 2022
Overview of 2022
1/22 4/22 5/22 6/22
10/22
12/22
x Start of the 13
th
buy-back programme
x 1
st
OMV Petrom ABB
x Fund’s authorization as
an AIF
Start of the 10
th
Tender Offer
Cancellation of
the shares
bought back in
the 12
th
buy-back
programme
x Completion of the
13
th
buy-back
programme
x 2
nd
OMV Petrom ABB
Fondul
Proprietatea 2022
Annual GSM
x Start of the RON 0.125
gross dividend
distribution (RON
774.3 million)
x Completion of the 10
th
Tender Offer
x Approval of the
14
th
buy-back
programme
x Approval of
Hidroelectrica SA
listing by FP
2/22 11/22
Start of RON 0.06
Special Gross
Dividend
Distribution (RON
351.2 million)
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Annual Sole Director’s Report 2022
Key 2022 highlights
x Continued efforts to promote the Fund and raise its visibility, as well as the visibility of the
Romanian capital market, the local companies (listed or candidates for being listed), and of
Romania in general, in online and in person conferences, roadshows and events;
x Completion of the 13
th
buy-back programme for 549.0 million shares (460.6 in the form of
shares and 88.4 million in the form of GDRs). The total value of the programme excluding
transaction costs was RON 1,157.2 million, and the average share price was RON 2.11 per share;
x Completion of the 10
th
Tender offer of 325 million shares (264.6 million in the form of shares and
60.4 million in the form of GDRs), at a purchase price of RON 2.19 per share and the USD
equivalent of RON 109.50 per GDR, executed to accelerate the 13t
h
buy-back programme;
x Payment to shareholders in February 2022 of the special dividend distribution of RON 0.06 per
share (RON 351.2 million) approved in December 2021 – 97.0% of the distribution collected until
31 December 2022;
x Payment to shareholders in June 2022 of the dividend distribution from 2021 annual profit of
RON 0.125 per share (RON 774.3 million) – 96.1% of the distribution collected until 31 December
2022;
x Completion of two ABB offerings for the entire holding of the Fund in OMV Petrom SA, namely
4,052,067,726 shares for a total value of RON 1,742.4 million;
x FSA authorisation of Fondul Proprietatea as a closed-end type Alternative Investment Fund
intended to retail investors on 28 January 2022;
x Payment to the Fund by the Romanian State, represented by the Ministry of Finance on 1
February 2022 of RON 189,182,422, as payment for unpaid shares owned by the Romanian State
in the Fund (363,812,350 unpaid shares, each share having a nominal value of RON 0.52).
x Approval of Hidroelectrica SA listing on BVB by the company’s shareholders during 31 March
2022 GSM;
x Main shareholders’ approvals during 2022:
– Sale of the (entire/ part of the) shares held by FP in Hidroelectrica SA within a secondary
public offering;
– Decrease of the subscribed and paid-up share capital from RON 3,334,342,422.84 to RON
3,233,269,110.76 pursuant to the cancellation of 194,371,754 own shares acquired during 2021
in the 12
th
buy-back programme;
– Appointment of a new member in the Board of Nominees;
– Continuation of FTIS mandate as AIFM and Sole Director of FP;
– Distribution of a gross dividend of RON 0.125 per share from the 2021 net accounting profit
(Payment Date 27 June 2022);
– Approval of the buy-back programme for 2023 (the 14
th
buy-back programme);
– The 2023 budget;
– Amendment of the Management Agreement in force starting 1 April 2022 between the Fund
and FTIS, as requested by the FSA;
– Increase of the remuneration for the Board of Nominees members and the increase in the
notice period in case of withdrawal from the Board position.
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Annual Sole Director’s Report 2022
Capital markets
In 2022, BVB registered the slowest decline in both local and EUR terms compared to the largest
markets in Central Europe, as shown in the table below:
%Changein2022 In local currency in EUR
BET-XT (Romania) -1.9% -1.8%
PX (Czech Republic) -15.7% -13.2%
ATX (Austria) -19.0% -19.0%
BUX (Hungary) -13.7% -20.1%
WIG20 (Poland) -20.9% -22.5%
Source: Bloomberg
The BET-XT index, which reflects the performance of the top 25 most traded companies listed on
BVB’s Regulated Market, including the financial investment companies (SIFs), decreased by 10.8%
during 2022 compared to the end of 2021.
BET-XT index evolution
Source: Bucharest Stock Exchange
BET-BK index is a free float market capitalisation weighted index of the Romanian and foreign
stocks listed on BVB’s regulated market with the highest free-float market capitalisation adjusted
with liquidity factors. BET-BK decreased by 12.4% during 2022 compared to the end of 2021.
BET-BK index evolution
Source: Bucharest Stock Exchange
850
900
950
1,000
1
1,050
1,100
1
1,150
1,200
12/21 2/22 3/22 4/22 5/22 6/22 8/22 9/22 10/22 11/22
12/22
1,800
1
1,950
2,100
2
2,250
2,400
2
2,550
2,700
12/21 2/22 3/22 4/22 6/22 7/22 8/22 10/22 11/22
12/22
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Annual Sole Director’s Report 2022
Trading on the Bucharest Stock Exchange
Since the listing on the BVB on 25 January 2011, the Fund continues to be among the most actively
traded companies:
x 1.13 billion shares were traded on BVB in 2022, equivalent to 18.2% of the Fund’s paid shares as at
31 December 2022;
x In 2022, the value of trading in Fondul Proprietatea shares was RON 2.28 billion / USD 492.5
million / EUR 461.4 million (based on NBR exchange rates as at 31 December 2022). The total
trading value since the listing reached RON 30.6 billion / USD 6.6 billion / EUR 6.2 billion (based on
NBR exchange rates as at 31 December 2022);
x The average daily trading volume in 2022 was 4.5 million shares.
Trading on the London Stock Exchange
x In 2022, 3.8 million GDRs were traded on LSE, for a total value of USD 82.4 million/ EUR 77.1
million/ RON 381.7 million (based on NBR exchange rates as at 31 December 2022);
x Since the listing on the LSE on 29 April 2015, the total trading volume was 144.2 million GDRs,
reaching USD 1.9 billion/ EUR 1.8 billion/ RON 8.8 billion (based on NBR exchange rates as at 31
December 2022);
x The average daily trading volume in 2022 was 15.1 thousand GDRs.
Average Daily Turnover in 2022 (RON million)
Source: BVB, Bloomberg
Note: The values for FP, Electrica, OMV Petrom and Romgaz also include the GDR trading on LSE. The values for FP include the tender offer
from June 2022. The values for OMV Petrom include the 4.1 billion shares sold by FP in January and December 2022 under accelerated
bookbuild offerings.
4.78
8.14
8.84
2.32
2.39
2.02
1.61
0.30
0.89
0.56
13.61
10.62
7.89
3.23
2.46
1.76
1.48
1.04
1.00
0.95
2021 2022
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Annual Sole Director’s Report 2022
Fund’s Adjusted Share Price (RON/share) and Premium / (Discount) History (%)
Source: Bloomberg for Adjusted Share Price (price adjusted with cash distributions), Fund Manager calculations for Discount / Premium
Note: The (discount) / premium is calculated in accordance with the IPS i.e. the (discount) / premium between the FP shares closing price
on the BVB - REGS for each trading day and the latest published NAV per share at the date of calculation.
Key portfolio updates
Significant developments
On 31 March 2022, the GSM of Hidroelectrica approved the initiation of the listing process on BVB
following a public offering of the company’s shares held by the Fund. Also, the Fund’s shareholders
approved the sale of the shares held by FP in Hidroelectrica SA during the GSM convened for 15
November 2022. The Fund and Hidroelectrica SA continue to prepare for an IPO during 2023.
The Fund completed two ABB offerings, in January 2022 and December 2022, for all the Fund’s
holding in OMV Petrom SA, namely 4,052,067,726 shares for a total value of RON 1,742.4 million.
Valuation of unlisted holdings
Even if at the beginning of 2022, the risks associated with the COVID 19 pandemic decreased, the
Russian invasion of Ukraine brought new turmoil on the global and regional markets. The Fund
continued to closely monitor the evolution of financial markets and that of the specific industries the
unlisted holdings operate in for each NAV reporting date and whenever necessary, updates on the
valuation of unlisted holdings were prepared in accordance with the International Valuation
Standards, with the assistance of KPMG Advisory and Darian DRS.
Following the valuation updates throughout the year, the unlisted holdings portfolio increased by
RON 1,977.1 million (14.9%) in the 31 December 2022 NAV compared to the 31 December 2021 NAV.
Dividends from portfolio companies
During 2022, 8 companies in the Fund’s portfolio declared annual dividends related to the 2021
financial year and/ or special dividends. The total amount of the gross dividend income recorded by
the Fund in 2022 was RON 934.9 million, and the most significant amounts relate to Hidroelectrica SA
and OMV Petrom SA.
-65%
-
-57%
-49%
-
-41%
-33%
-
-25%
-17%
-
-9%
-1%
7%
0.10
0
0.33
0.56
0
0.79
1.02
1
1.25
1.48
1
1.71
1.94
2
2.17
01/11 01/12 01/13 01/14 01/15 01/16 01/17 01/18 01/19 01/20 01/21 12/21 12/22
Adjuste
d
d Shar
e
e Price Discoun
t
t
/
/ Premiu
m
m (%)
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Annual Sole Director’s Report 2022
Performance objectives
According to the Management Agreement in force starting with 1 April 2022, the First Reporting
Period of the mandate is from 1 January 2022 until 31 December 2022 and the Second Reporting
Period is from 1 January 2023 until 31 December 2023.
In accordance with the Fund’s IPS, there are two performance objectives that the AIFM is aiming to
achieve. The NAV objective refers to an Adjusted NAV per share
1
in the last day of the Reporting
Period higher than the reported NAV per share as at the end of the previous Reporting Period. The
discount objective implies the discount between the closing price of the Fund’s shares on BVB –
REGS 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 Reporting Period.
NAV Objective – First reporting period
The Adjusted NAV per share as at 31 December 2022 was 20.1% higher than the 31 December 2021 NAV
per share of RON 2.2624.
NAV Objective
Amount
RON Details
Total NAV as at 31 December 2022 14,569,538,085
Dividend distribution 774,290,893 Gross dividend distribution approved on 20 Apr
2022 of RON 0.125 per share with Ex-Date on 2 Jun
2022, and Payment Date on 27 Jun 2022
Costs related to buy-backs after 31 December 2021 9,249,962 Fees related to the 13
th
buy-back programme,
excluding the distribution fees for buy-backs
Distribution fees for buy-backs performed after 31
December 2021
27,866,008 Distribution fees for buy-backs
Distribution fees for cash distributions (return of
capital/ dividend) after 31 December 2021
19,321,869 Distribution fee for dividend distributions
Costs related to the returns of capital and dividends
after 31 December 2021
84,067 Fees charged by the Central Depositary and Paying
Agent for the payments performed
Total Adjusted NAV as at 31 December 2022 15,400,350,883
Number of Fund's paid shares, less treasury shares and
GDRs held as at 31 December 2022
5,668,806,128
Adjusted NAV per share as at 31 December 2022 2.7167
NAV per share as at 31 December 2021 2.2624
Difference 0.4543
% 20.1%
Source: Fund Manager calculations
The Sole Director is committed to its continued efforts towards protecting shareholders’ value and
implementing the necessary measures in accordance with the IPS to address the volatile
environment which marked the last years. For 2022, the Sole Director proposed, and shareholders
1
The adjusted NAV for a given date is calculated as the sum of: (i) the reported NAV as at the end of the Reporting Period; (ii) any
distributions to shareholders, being either dividend or non-dividend ones (i.e. in the last case following reductions of the par value of the
shares and distribution to the shareholders), implemented after the end of the previous Reporting Period, and (iii) any distribution fee and
any transaction/ distribution costs relating to either dividend or non-dividend distributions including buy-backs of shares/ GDRs/ depositary
interests executed through daily acquisitions or public tenders after the end of the previous Reporting Period. The adjusted NAV per share
is equal to the adjusted NAV divided by the total number of the Fund’s paid shares, less 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. For more
details, please refer to the IPS available on the Fund’s webpage.
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Annual Sole Director’s Report 2022
approved during the 20 April 2022 GSM, a dividend distribution of RON 0.125 per share with payment
date on 27 June 2022.
Also, on 18 February 2022 the Fund started the payment of the special dividend distribution of RON
0.06 per share, approved by shareholders during 15 December 2021 GSM. The remaining cash balance
was distributed to shareholders through a combination of daily share buybacks and a Tender offer
settled on 29 June 2022. Following the above, the total distributions to the Fund’s shareholders
during 2022 amount to RON 2,282.7 million
1
.
Discount Objective – First reporting period
In the period between 1 January 2022 and 31 December 2022, the discount to NAV was below 15% in 81
trading days (32.3% of the period) while in the remaining 170 days it was above 15% (67.7% of the
period).
Discount evolution
Discount at
the Start of the
Reporting Period
– 3 Jan 2022
Discount at
the End of the
Reporting Period –
31 Dec 2022
Average Discount for
the Reporting Period
3 Jan – 31 Dec 2022
Discount Range
for the Reporting
Period
3Jan– 31 Dec 2022
Share price -3.8% -20.4% -21.6% min -2.1%/ max -39.4%
GDR -4.2% -20.1% -22.4% min -1.7%/ max -39.5%
Source: Fund Manager calculations
Note: The discount is calculated based on the latest published NAV available for the day of the calculation.
The AIFM will continue its efforts to minimise the discount to NAV, through close collaboration with
underlying portfolio assets to improve governance, efficiency, and profitability, as well as ongoing
implementation of the Discount Control Mechanism, transparent communication, and disclosure,
supported by proactive investor relations.
Financial results summary
The table below presents the audited results of the Fund in accordance with IFRS for the financial
year ended 31 December 2022:
RON million 31 December 2022 31 December 2021
Profit for the year ended 2,769.4 5,012.6
Shareholders’ equity 14,569.5 13,757.5
Source: audited IFRS financial statements of the Fund
The main contributors to the profit recorded in 2022 were: (1) the net gain from equity instruments
at fair value through profit or loss of RON 1,843.8 million (mainly generated by the valuation updates
for Hidroelectrica SA), and (2) the gross dividend income from portfolio companies of RON 934.9
million.
1
Out of which: RON 351.2 million for February 2022 distribution, RON 774.3 million for June 2022 distribution and RON 1,157.2 million
for 13
th
buy-back programme.
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Key financial highlights
The tables below show a summary of the Fund’s financial performance for the last 3 years and during
each quarter of 2022:
NAV
1
and share price developments
2
Notes
31 December
2022
31 December
2021
31 December
2020
Total shareholders’ equity at the end of the period (RON
million)
14,569.5 13,757.5 10,266.9
Total shareholders’ equity change in period (%) +5.9% +34.0% -13.5%
Total NAV at the end of the period (RON million) a 14,569.5 13,244.6 10,266.9
Total NAV change in period (%) +10.0% +29.0% -13.5%
NAV per share at the end of the period (RON) a2.57012.26241.6974
NAV per share at the end of the period (USD) a 0.5546 0.5176 0.4280
NAV per share (RON) change in the period (%) +13.6% +33.3% -2.1%
NAV per share total return in the period (%) g +19.1% +47.8% +2.2%
Share price as at the end of the period (RON) b 2.0400 1.9900 1.4500
Share price low in the period (RON) b 1.7080 1.4400 0.9980
Share price high in the period (RON) b 2.1900 1.9900 1.4500
Share price change in the period (%) +2.5% +37.2% +19.8%
Share price total return in the period (%) h +12.2% +48.5% +26.4%
Share price discount to NAV as at the end of the period (%) d-20.6% -12.0% -14.6%
Average share price discount in the period (%) d-21.6% -5.7% -21.1%
Average daily share turnover in the period (RON million) c, j 9.1 3.6 7.4
GDR price as at the end of the period (USD) e 21.6000 22.6000 17.1000
GDR price low in the period (USD) e 17.5000 17.4000 11.2000
GDR price high in the period (USD) e 24.2000 22.6000 17.3000
GDR price change in the period (%) -4.4% +32.2% +24.8%
GDR price total return in the period (%) i +3.9% +42.0% +31.1%
GDR price discount to NAV as at the end of the period (%) d -22.1% -12.7% -20.1%
Average GDR price discount in the period (%) d -22.4% -7.6% -21.7%
Average daily GDR turnover in the period (USD million) f, j 0.3 1.0 0.8
Source: BVB (for shares), Bloomberg (for GDRs), Fund Manager calculations
1. NAV for the end of each period was computed in the last working day of the month until 31 December 2021 NAV and in the last calendar
day of the month starting with the 31 January 2022 NAV.
2. Period should be read as year 2022/ year 2021/ year 2020, respectively
NAV
1
and share price developments
2
Notes Q1 2022 Q2 2022 Q3 2022
Q4 2022
Total NAV at the end of the period (RON million) a 14,535.9 16,327.3 15,433.3 14,569.5
Total NAV change in period (%) +9.7% +12.3% -5.5% -5.6%
NAV per share at the end of the period (RON) a 2.3466 2.7817 2.6935 2.5701
NAV per share at the end of the period (USD) a 0.5272 0.5866 0.5337 0.5546
NAV per share total return in the period (%) g +3.7% +24.3% -3.2% -4.6%
Share price as at the end of the period (RON) b 2.1100 2.0600 1.7500 2.0400
Share price total return in the period (%) h +9.2% +3.8% -15.1% +16.6%
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NAV
1
and share price developments
2
Notes Q1 2022 Q2 2022 Q3 2022
Q4 2022
Share price discount to NAV as at the end of the period (%) d -10.1% -25.9% -35.0% -20.6%
GDR price as at the end of the period (USD) e 23.4000 21.8000 18.1000 21.6000
GDR price total return in the period (%) i +6.5% -1.5% -17.0% +19.3%
GDR price discount to NAV as at the end of the period (%) d -11.2% -25.7% -32.2% -22.1%
Source: BVB (for shares), Bloomberg (for GDRs), Fund Manager calculations
1. NAV for the end of each period was computed in the last working day of the month until 31 December 2021 NAV and in the last calendar
day of the month starting with the 31 January 2022 NAV.
2. Period should be read as Q1 2022/ Q2 2022/ Q3 2022/ Q4 2022, respectively
Notes:
a. Prepared based on local rules issued by the capital market regulator (NAV in USD calculated using the
NBR FX rate at the reporting date)
b. Source: BVB - REGS market - Closing prices
c. Source: BVB
d. Share Price/ GDR Price discount/ premium to NAV as at the end of the period (%) is calculated as the
discount/ premium between FP share closing price on BVB - REGS/ FP GDR closing price on LSE on the
last trading day of the period and the NAV per share at the end of the period; the average discount/
premium is calculated according to IPS, using the latest published NAV per share at the date of the
calculation (NAV in USD is calculated using the NBR FX rate at the reporting date) and includes both
the days with premium and with discount.
e. Source: Bloomberg - Closing prices
f. Source: Bloomberg
g. The NAV per Share Total Return is calculated in RON by geometrically linking total returns for all
intermediate periods when official NAV is published. Each total return for a single period is calculated
using the following formula: the NAV per share at the end of the period plus any cash distribution
during the period, dividing the resulting sum by the official NAV per share at the beginning of the
period. The resulting single period total returns are geometrically linked to result in the overall total
return. The Fund uses this indicator as it is directly related to the performance objectives of the Fund
included in the IPS
h. The Share Price Total Return is calculated in RON by geometrically linking daily total returns. Daily total
return is calculated as the closing price at the end of the day, plus any cash distributions on that day,
dividing the resulting sum by the closing price of the previous day. The resulting single period total
returns are geometrically linked to result in the overall total return. The Fund uses this indicator as it is
directly related to the performance objectives of the Fund included in the IPS
i. The GDR Price Total Return is calculated in USD by geometrically linking daily total returns. Daily total
return is calculated as the closing price at the end of the day, plus any cash distributions on that day,
dividing the resulting sum by the closing price of the previous day. The resulting single period total
returns are geometrically linked to result in the overall total return. The Fund uses this indicator as it is
directly related to the performance objectives of the Fund included in the IPS
j. Including the tender offers carried out by the Fund in June 2022/ March 2020/ September 2020/
December 2020.
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Important notice to shareholders
This dividend payment is subject to the general statute of limitation. As such, shareholders may request
the payments only within a three-year term starting with the Payment Date, namely by 27 June 2025.
Corporate actions
2021 Financial Year Dividend Distribution
On 20 April 2022, the shareholders approved the distribution of a gross dividend of RON 0.1250 per
share, with Ex-date on 2 June 2022, Registration date on 3 June 2022, and Payment date on 27 June
2022. As at 31 December 2022, 96.1% of the RON 774.3 million gross dividend was distributed to
shareholders.
Buy-back programmes
During 2022 the Fund completed the cancellation of the shares acquired within the 12
th
buy-back
programme (carried on during 2021) and acquired shares within the 13
th
buy-back programme,
which are proposed for cancellation to shareholders during 21 April 2023 GSM.
In 2022, the Fund bought back a total number of 549,019,085 own shares within the 13
th
buy-back
programme (out of which 460,629,885 ordinary shares and 88,389,200 ordinary shares
corresponding to GDRs), representing 8.8% of the total issued shares as at 31 December 2022, for
a total acquisition value of RON 1,157,219,018.3, excluding transaction costs. The total number of
own shares (including shares corresponding to GDRs) held by the Fund as at 31 December 2022 is
549,019,085, having a total nominal value of RON 285,489,924.20 (RON 0.52 per share). As at 31
December 2022, the Fund held 84,465 GDRs (based on transaction date).
The 14
th
buy-back programme to be implemented during 2023 was approved by shareholders
during the 15 November 2022 GSM, for a total number of 3,500 million shares in the form of
ordinary shares and GDRs, at a price that cannot be lower than RON 0.2 per share, or higher than
RON 3.0 per share. The duration of the 14
th
buy-back programme is 1 January 2023 – 31 December
2023. Please see Subsequent Events section for more details regarding the ongoing tender offer
within the 14
th
buy-back programme.
The Fund selected Auerbach Grayson in consortium with Swiss Capital to provide brokerage services
for the programme. The Fund is allowed to buy back daily up to 25% of the average daily volume of
the Fund’s shares (in the form of ordinary shares or GDRs) on the regulated market on which the
purchase is carried out, calculated in accordance with the applicable law.
Tender Offer within the 13th buy-back programme
Between 18 May and 24 June 2022, the Fund executed a Tender offer in relation to the acceleration
of the 13
th
buy-back programme. The purchase price was RON 2.19 per share and the USD equivalent
of RON 109.50 per GDR.
Under the tender offer, the Fund repurchased 325 million shares (264.6 million in the form of shares
and 60.4 million shares in the form of GDRs, namely 1.21 million GDRs). Total subscriptions were
1,358.02 million shares representing 417.8511% of the Offer.
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Share capital decrease
On 19 October 2022, the Fund finalised the registration of the decrease of the subscribed share
capital from RON 3,334,342,422.84 to RON 3,233,269,110.76 pursuant to the cancellation of
194,371,754 shares acquired during 2021 within the 12
th
buy-back programme, which was endorsed by
FSA through Endorsement no. 146/29 September 2022.
Investor relations
In 2022, 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, and to keep investors
and shareholders up to date with the effects of the geopolitical and macroeconomic developments,
the Fund’s management team organised 6 road-shows in the United States and the United Kingdom,
and met with 58 investment professionals interested in finding out more details about Fondul
Proprietatea and its equity story, and in receiving updates on the Fund, its corporate actions, and the
main portfolio holdings.
During the year, we participated to 9 online and in person investor conferences organised by
international brokers and investment banks, where we discussed with representatives of 92
international asset managers. Furthermore, we had 21 meetings and 72 additional conference calls
with analysts, brokers, current and prospective investors interested in the latest developments
regarding the Fund’s corporate actions and its portfolio companies.
As part of our communication strategy to update the institutional investors and analysts covering
Fondul Proprietatea on its financial results, the latest events involving the Fund and its portfolio
companies, and the planned corporate actions, we organised the 2021 annual results, 2022 first
quarter, 2022 first half, and 2022 third quarter results conference calls, with 27 analysts and investors
participating on average to the calls.
Also, on 2 February we organised a conference call for institutional investors and financial analysts to
inform them about the latest developments regarding Fondul’s share capital and the payment made
by the Romanian Ministry of Finance on 1 February for unpaid shares owned by the Romanian State
in Fondul Proprietatea. 28 investors and analysts participated to the call.
Between 14 and 16 September, we organised the 25th edition of our investor days conferences. The
event took place in Bucharest, and 76 investors from 45 investment houses participated to the
event. Also, representatives of the Romanian Government, UK Embassy in Romania, the National
Bank of Romania, Ministry of Finance, WOOD & Company, Ministry of Energy, OMV Petrom,
Hidroelectrica, Enel Romania, European Bank for Reconstruction and Development, Bucharest Stock
Exchange, London Stock Exchange, and other related parties joined the event, bringing the total
number of attendees to over 190.
During the first day of the event, we organised a group site visit to the Hidroelectrica Iron Gates
power plant on the Danube, the third largest in Europe. The first half of the second day of the event
was dedicated to speeches from representatives of the Romanian Government, and the UK Embassy
in Romania, and to 3 panels on Romanian macroeconomics, Romanian energy sector, and Romanian
capital market. In the second part of the day, and the entire day on 16 September, we organised
together with WOOD & Company, the Frontier Investor Days conference. 266 investor meetings –
individual and group meetings - were organised between the institutional investors and the 76
representatives of the 27 corporates present at the event, Romanian listed and unlisted companies,