Fondul
Proprietatea SA
Quarterly Report for the quarter ended 31 March 2024
This is a translation from the official Romanian version.
fondulproprietatea.ro
Quarterly Report for the quarter ended 31 March 2024 | 2 |
CONTENTS
Net Asset Value | 15 |
Portfolio | 17 |
Corporate Strategy | 27 |
Financial Information | 31 |
Subsequent Events | 38 |
Annexes
Annex 1 Condensed Interim Financial Statements for the three-month period ended 31 March 2024, prepared in accordance with IAS 34 Interim Financial Reporting and applying the FSA Norm no. 39/ 2015, regarding the approval of the accounting regulations in accordance with IFRS, applicable to the entities authorised, regulated, and supervised by the FSA - Financial Investments and Instruments Sector and to the Fund for Investors Compensation
Annex 2 Statement of Assets and Obligations of Fondul Proprietatea SA as at 31 March 2024,
prepared in accordance with FSA Regulation no. 7/2020 (Annex no. 11)
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Quarterly Report for the quarter ended 31 March 2024 | 3 |
List of Abbreviations
Directive 2013/34/EU of the European Parliament and of the Council of 26 June | |
Accounting Directive | 2013 on the annual financial statements, consolidated financial statements and |
related reports of certain types of undertakings, amending Directive 2006/43/EC of | |
the European Parliament and of the Council and repealing Council Directives | |
78/660/EEC and 83/349/EEC, with subsequent amendments | |
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 |
ATS | Alternative Trading System |
BoN | Board of Nominees of Fondul Proprietatea SA |
BVB | Bucharest Stock Exchange |
CAEN | Classification of Economic Activities in Romania |
CEAM | Centralised Electricity Acquisition Mechanism |
CE Oltenia | Complexul Energetic Oltenia SA |
CIIF | Certification of Registration of Financial Instruments |
Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 | |
CSRD | 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 | |
Depositary Bank/ | BRD - Groupe Societe Generale SA |
Depositary | |
Depozitarul Central SA | Romanian Central Depositary |
EGM | Extraordinary General Shareholders Meeting |
ESG | Environmental, Social and Governance |
EU | European Union |
Fondul Proprietatea/ the | Fondul Proprietatea SA |
Fund/ FP | |
FSA | Romanian Financial Supervisory Authority |
FT | Franklin Templeton |
FTIS/ AIFM/ Sole Director/ | Franklin Templeton International Services S.à r.l. |
Fund Manager | |
GDP | Gross Domestic Product |
GDR | Global Depositary Receipt |
GEO | Government Emergency Ordinance |
GEO no. 27/2023 | GEO no. 27/2023 regarding amendments of some normative acts in the energy |
field, as well as for the establishment of some exemptions | |
GEO no. 32/2024 for the amendment and completion of GEO no. 27/2022 regarding | |
GEO no. 32/2024 | measures applicable to final customers in the electricity and natural gas market |
during the period 1 April 2022 - 31 March 2023, as well as for the amendment and | |
completion of certain legal acts in the energy sector and adopting certain | |
measures in the energy sector | |
GRI | Global Reporting Initiative |
GSM | General Shareholders Meeting |
IFRS | International Financial Reporting Standards as endorsed by the European Union |
fondulproprietatea.ro | |
Quarterly Report for the quarter ended 31 March 2024 | 4 |
INS | Romanian National Institute of Statistics |
IMF | International Monetary Fund |
IPO | Initial Public Offering |
IPS | Investment Policy Statement |
Law no. 24/2017 | Law no. 24/2017 on issuers of financial instruments and market operations |
LSE | London Stock Exchange |
NAV | Net Asset Value |
NBR | National Bank of Romania |
FSA Norm no. 39/ 2015 regarding the approval of the accounting regulations in | |
Norm no. 39/ 2015 | accordance with IFRS, applicable to the entities authorised, regulated, and |
supervised by the FSA - Financial Investments and Instruments Sector and to the | |
Fund for Investor Compensation | |
Norm no. 4/2024 | FSA Norm 4/2024 for amending Norm no. 39/ 2015 |
OGM | Ordinary General Shareholders Meeting |
Order no. 85/2024 | Ministry of Finance Order no. 85/2024 for the regulation of sustainability reporting |
issues | |
Q1/ Q2/ Q3/ Q4 | First/ second/ third/ fourth quarter |
REGS | Main market (Regular) of Bucharest Stock Exchange |
Salrom | Societatea Nationala a Sarii 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 | |
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 | |
Taxonomy Regulation | June 2020 on the establishment of a framework to facilitate sustainable |
investment and amending Regulation (EU) 2019/2088 | |
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Quarterly Report for the quarter ended 31 March 2024 | 5 |
Activity of the Fund
The Fund
Fondul Proprietatea was incorporated on 28 December 2005 as a joint stock company operating as a closed-end investment company. The duration of Fondul Proprietatea is until 31 December 2031 and this may be extended by the EGM with additional periods of 5 years each.
The Fund is registered with the Bucharest Trade Register under the number J40/21901/2005 and has the sole registration code 18253260.
The main activities of the Fund according to the National Statistics CAEN and the Fund's own Constitutive Act are the business of operating mutual funds and other similar financial entities (CAEN reference 643) and the main activity is financial investments (CAEN reference 6430).
On 28 January 2022, FSA authorised Fondul Proprietatea as an AIF closed-end type intended to retail investors, with BRD - Groupe Societe Generale as depositary. The Fund is registered within the FSA Register - Section 9 - 'Alternative Investment Funds' under no. PJR09FIAIR/400018 as Alternative Investment Fund intended for retail investors.
The Fund's investment objective is the maximisation of returns to shareholders and the increase of the net asset value per share via investments mainly in Romanian equities and equity-linked securities.
Since 25 January 2011, the Fund's shares have been listed on BVB. Since 29 April 2015, the Fund's GDRs issued by The Bank of New York Mellon as GDR Depositary, having the Fund's shares as support, have been listed on the Specialist Fund Market of LSE.
Share information
Primary listing | Bucharest Stock Exchange - since 25 January 2011 |
Secondary listing | London Stock Exchange - since 29 April 2015 |
BVB symbol | FP |
LSE symbol | FP. |
Bloomberg ticker on BVB | FP RO |
Bloomberg ticker on LSE | FP/ LI |
Reuters ticker on BVB | FP.BX |
Reuters ticker on LSE | FPq.L |
ISIN | ROFPTAACNOR5 |
FSA register no | PJR09FIAIR/400018/28.01.2022 |
LEI code | 549300PVO1VWBFH3DO07 |
CIIF registration no | AC-4522-10/16.10.2023 |
Management of the Fund
Franklin Templeton has been the Sole Director of the Fund starting 29 September 2010, with successive mandates of two or four years.
Management Agreement in force during 1 April 2022 - 31 March 2024
During the quarter ended 31 March 2024, the Fund was managed by FTIS as its Sole Director and AIFM under the AIFM Directive and local implementation regulations, based on the Management Agreement in force between 1 April 2022 - 31 March 2024. The portfolio management and the administrative activities are performed by FTIS via its Bucharest Branch.
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The table below presents the key commercial terms of the Management Agreement in force during 1 April 2022 - 31 March 2024:
Base Fee per year | • | 0.45% | |||
Consideration for the Base Fee | • Weighted average market capitalisation of the Fund | ||||
• 2.50% applied to the value of the distributions during 1 April | |||||
Distribution Fee for all distributions | 2022 - 31 March 2023 | ||||
• 1.75% applied to the value of the distributions during 1 April | |||||
2023 - 31 March 2024 | |||||
• Share buy-backs and GDR buy-backs | |||||
Consideration for the Distribution Fee | • | Public tender buy-backs | |||
• Return of share capital and dividends | |||||
Duration | • | 2 years | |||
Management Agreement for the period 1 April 2024 - 31 March 2025
During 25 September 2023 GSM the shareholders approved the renewal of FTIS mandate as Sole Director and AIFM of the Fund for a duration of 1 year (1 April 2024 - 31 March 2025).
The management agreement for the period 1 April 2024 - 31 March 2025, under substantially same terms as the previous Management Agreement and in line with the current IPS of the Fund, was approved by shareholders during 26 March 2024 GSM. The main change relates to the increase of the base fee rate from 0.45% in the Management Agreement until 31 March 2024 to 1.35% in the Management Agreement starting 1 April 2024. All the documentation related to the 26 March 2024 GSM is available on the Fund's website, section Investor Relations -GSM Information.
The table below presents the key commercial terms of the Management Agreement in force during 1 April 2024 - 31 March 2025:
Base Fee per year | • | 1.35% |
Consideration for the Base Fee | • Weighted average market capitalisation of the Fund | |
Distribution Fee for all distributions | • 1.75% applied to the value of the distributions | |
• Share buy-backs and GDR buy-backs | ||
Consideration for the Distribution Fee | • | Public tender buy-backs |
• Return of share capital and dividends | ||
Duration | • | 1 year |
Appointment of a new Sole Director starting 1 April 2025
During 25 September 2023 GSM the shareholders also approved that the BoN should launch a transparent and competitive selection procedure for the appointment of a new Sole Director starting 1 April 2025, based on investment expertise and experience, in accordance with the legal provisions in force. The shareholders also approved that the BoN is empowered to establish new terms and conditions for the evaluation and remuneration of the fund manager, corresponding to the new objectives, in line with international best practices and present them for approval by the GSM.
For more details on this topic, please see the update provided by the Board of Nominees on the Fund's website, section FAQs - Selection of a new Fund Manager - Board of Nominees update as of 4 March 2024.
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Shareholder structure
Shareholder structure as at 31 March 2024
% of subscribed | % of total | ||
Shareholder categories1 | and paid-up | % of total | exercisable |
share capital | voting rights | voting rights | |
Treasury shares2 | 37.26% | 37.26% | - |
Romanian institutional shareholders | 24.83% | 24.83% | 39.58% |
Romanian private individuals | 23.68% | 23.68% | 37.74% |
Romanian State represented by Ministry of Finance | 6.54% | 6.54% | 10.43% |
Foreign private individuals | 3.48% | 3.48% | 5.55% |
Foreign institutional shareholders | 2.14% | 2.14% | 3.40% |
The Bank of New York Mellon (GDRs)3 | 2.07% | 2.07% | 3.30% |
Source: Depozitarul Central SA
- Information provided based on settlement date of transactions. The suspended voting rights related to the Fund's treasury shares acquired under the buyback programmes, either in the form of shares and/or GDRs, were not included in the computation of the exercisable voting rights.
- 2,112,378,889 treasury shares acquired in 2023 within the 14th buyback program (either in the form of shares and/or GDRs)
- The shares underlying the GDRs issued by the Bank of New York Mellon are held in the name of the Bank of New York Mellon and for the account of the GDRs holders. Out of BNY holding, the GDRs held by Fondul Proprietatea were excluded, namely 0 GDRs (0 shares equivalent - the Fund did not hold any GDR as at 31 March 2024).
As at 31 March 2024, the Fund had 22,795 shareholders. The total number of voting rights was 5,668,806,128, out of which a total of 3,556,427,239 exercisable voting rights.
Largest shareholders - based on ownership disclosures submitted by shareholders
According to Art. 71(1) of Law no. 24/2017, if a shareholder acquires or disposes of shares from an issuer listed on a regulated market, having attached voting rights, the shareholder must notify the issuer about the percentage of voting rights held following the acquisition or disposal in discussion, when the percentage reaches, exceeds or falls below one of the thresholds: 5%, 10%, 15%, 20%, 25%, 33%, 50% and 75%.
As a result of this legal requirement, the Fund has received ownership disclosures from shareholders as per the table below - the information is presented based on the data included in the notification at the respective dates, while the voting rights percentage at 31 March 2024 might be different.
Shareholder | Latest ownership disclosure | % of voting rights | |||
Ministry of Finance | 1 April 2022 | 5.97% | |||
NN Private Pension Funds | 11 April 2022 | 11.24% | |||
Silver Point Capital Funds | 5 April 2023 | 4.89% | |||
Allianz Tiriac pension funds and Allianz Tiriac | 12 December 2023 | 4.13% | |||
Asigurari SA | |||||
Metropolitan Life Pension Fund and Metropolitan | 22 December 2023 | 4.74% | |||
Insurance | |||||
Source: ownership disclosures submitted by shareholders
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Quarterly Report for the quarter ended 31 March 2024 | 8 |
GDR facility
The GDR facility is limited to one-third of the Fund's subscribed share capital under the Romanian securities regulations, or 37,792,040 GDRs (1,889,602,000 shares equivalent) as at 31 March 2024, each GDR representing 50 shares. As at 31 March 2024, 117,514,850 of the Fund's issued shares were held by The Bank of New York Mellon, the GDR depositary bank, accounting for 2,350,297 GDRs, representing 6.2% of the GDR facility.
Share capital information
31 March 2024 | 31 December 2023 | 31 March 2023 | ||
Issued share capital (RON) | 2,947,779,186.56 | 2,947,779,186.56 | 3,233,269,110.76 | |
Paid in share capital (RON) | 2,947,779,186.56 | 2,947,779,186.56 | 3,233,269,110.76 | |
Number of shares in issue | 5,668,806,128 | 5,668,806,128 | 6,217,825,213 | |
Number of paid shares | 5,668,806,128 | 5,668,806,128 | 6,217,825,213 | |
Nominal value per share (RON) | 0.52 | 0.52 | 0.52 | |
Source: National Trade Registry |
Capital markets
In the first quarter of 2024, BVB registered the strongest performance in both local currency and EUR terms compared to the largest markets in Central Europe, as shown in the table below:
% Change in Q1 2024 | in RON | in EUR |
BET-XT Index | 9.78% | 9.89% |
BUX Index | 7.86% | 4.71% |
PX Index | 7.15% | 4.55% |
WIG20 Index | 3.97% | 4.90% |
ATX Index | 2.94% | 2.94% |
Source: Bloomberg
Average Daily Turnover (RON million)
16.8
13.5
9.0
6.7
5.4
Q1 2024
Q1 2023
7.6
4.1 3.7
1.8 | 2.1 | 2.5 | 1.9 | 2.3 | 2.2 | ||||
- | 0.8 | 0.2 | 0.9 | ||||||
Hidroelectrica | FP | Banca | OMV | Romgaz | Electrica | BRD | Aquila Prod | One United | |
Transilvania | Petrom | Properties |
Source: BVB, Bloomberg
Note: The values for FP, OMV Petrom and Romgaz also include the GDR trading on LSE (OMV Petrom GDRs were delisted from LSE and their trading was cancelled on 26 October 2023). The values for FP include the tender offer settled in March 2023. The average daily turnover for Hidroelectrica SA in Q1 2023 is nil, as the first trading day on BVB was 12 July 2023.
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Quarterly Report for the quarter ended 31 March 2024 | 9 | |||||||||||||||||||
Fund's Adjusted Share Price (RON/share) and Premium / (Discount) History (%) | ||||||||||||||||||||
0.60 | Adjusted Share Price | Discount / Premium (%) | 7% | |||||||||||||||||
0.50 | -1% | |||||||||||||||||||
-9% | ||||||||||||||||||||
0.40 | -17% | |||||||||||||||||||
0.30 | -25% | |||||||||||||||||||
-33% | ||||||||||||||||||||
0.20 | -41% | |||||||||||||||||||
0.10 | -49% | |||||||||||||||||||
-57% | ||||||||||||||||||||
0.00 | -65% | |||||||||||||||||||
01/11 | 01/12 | 12/12 | 11/13 | 10/14 | 10/15 | 09/16 | 08/17 | 07/18 | 07/19 | 06/20 | 05/21 | 05/22 | 04/23 | 03/24 |
Source: Bloomberg for Adjusted Share Price (price adjusted with cash distributions), Sole Director 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. However, the discount to NAV for the trading days 7-14 September 2023 was calculated based on the 31 August 2023 NAV (published on 15 September 2023), in order to eliminate the mismatch between the NAV per share and FP BVB market price that was adjusted on 7 September 2023 (the Ex-date of 29 September 2023 dividend distribution).
Performance objectives
According to the IPS in force, starting with 1 April 2022, the current reporting period for the performance objectives is from 1 January 2024 until 31 December 2024.
In accordance with the Fund's IPS, there are two performance objectives that the Sole Director is aiming to achieve. The NAV objective refers to an Adjusted NAV per share1 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.
Discount Objective - interim monitoring
In the period 1 January 2024 - 31 March 2024, the discount to NAV was above 15% in all trading days.
Discount at | Discount at | Average Discount | Discount Range | |
3 Jan 2024 | 29 Mar 2024 | 3 Jan - 29 Mar 2024 | 3 Jan - 29 Mar 2024 | |
FP share | -18.6% | -20.8% | -21.7% | min -16.4%/ max -29.3% |
FP GDR | -20.0% | -24.6% | -24.2% | min -20.0%/ max -29.7% |
Source: Sole Director calculations
Note: discount is calculated according to the IPS, based on the latest published NAV per share available for the day of the calculation
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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Quarterly Report for the quarter ended 31 March 2024 | 10 |
It is the Sole Director's intention to continue its efforts to minimise the discount to NAV through close collaboration with underlying portfolio companies 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.
NAV Objective - interim monitoring
The Adjusted NAV per share as at 31 March 2024 was RON 0.6569 per share, 0.59% lower than the 31 December 2023 NAV per share of RON 0.6608.
NAV Objective | Amount RON | Details |
Total NAV as at 31 Mar 2024 | 2,336,376,273 | |
Other costs related to buy-backs starting 1 Jan 2024 | 17,640 | Fees related to the 14th buy-back |
programme invoiced after 31 Dec | ||
2023, excluding the distribution | ||
fees for buy-backs | ||
Other costs related to dividends paid starting 1 Jan | 2,575 | Central Depositary and Paying |
2024 | Agent fees | |
Dividend distributions starting 1 Jan 2024 | - | No dividend distribution in Q1 2024 |
Distribution fees for dividend distributions | - | No dividend distribution in Q1 2024 |
performed starting 1 Jan 2024 | ||
Distribution fees for buy-backs starting 1 Jan 2024 | - | No buy-backs in Q1 2024 |
Total Adjusted NAV as at 31 Mar 2024 | 2,336,396,488 | |
Number of paid shares, less treasury shares and | 3,556,427,239 | |
GDRs held as at 31 Mar 2024 | ||
Adjusted NAV per share as at 31 Mar 2024 | 0.6569 | |
NAV per share as at 31 Dec 2023 | 0.6608 | |
Difference | (0.0039) | |
% | -0.59% | |
Source: Sole Director calculations
During 13 February 2024 the shareholders approved the 15th buyback programme for 1 billion shares - for more details regarding the start of the programme, please see section Subsequent events.
Also, the Sole Director proposed a special dividend distribution of RON 0.06 per share with payment date on 7 June 2024, subject to shareholders approval during 30 April 2024 Annual GSM - for more details please see section Subsequent events.
Investor relations
In the first three months of the year, in our efforts to increase the visibility and the profile of the Fund, as well as the local capital market, and Romania, to a broader international institutional investor base, the Fund's management team organised one road-show in Cluj and met with retail investors 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, as well as on the Romanian macroeconomic environment.
During the first quarter, we also participated in one investor conference in Bucharest.
On 29 February we organised Fondul Proprietatea 2023 Preliminary Annual results Conference Call with institutional investors and financial analysts, where 14 professionals participated.
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Fondul Proprietatea SA published this content on 15 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 05:49:01 UTC.