fondulproprietatea.ro
Fondul
Proprietatea SA
Annual Sole Director’s Report
for the Financial Year Ended
31 December 2024
This is a translation from the official Romanian version.
2
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
CONTENTS
List of Abbreviations ..................................................................................................................................... 3
Sole Director’s Letter to Shareholders.................................................................................................... 5
Overview of 2024 ............................................................................................................................................ 8
Portfolio ........................................................................................................................................................... 20
Corporate Strategy ....................................................................................................................................... 30
Financial Information ................................................................................................................................. 38
Company Information ................................................................................................................................. 46
Net Asset Value .............................................................................................................................................. 55
Corporate Governance ................................................................................................................................ 59
Risk Management ......................................................................................................................................... 84
Subsequent Events ....................................................................................................................................... 90
Annexes
Annex 1
Audited
Financial Statements for the year ended 31 December 2024, prepared in
accordance with
IFRS accounting standards as adopted in EU 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
and to the Fund for Investors Compensation
Annex 2
Statement of Assets and Obligations of Fondul Proprietatea SA as at 31 December
202
4, 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
Actual versus Budget Analysis for the year ended 31 December 202
4
Annex
6
Constitutive Act of Fondul Proprietatea in force
as at 31 December 2024
Annex
7
Annual Cash Distribution Policy of Fondul Proprietatea in force
as at 31 December
202
4
3
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
List of Abbreviations
Accounting Directive
Directive 2013/34/EU of the European Parliament and of the Council of 26 June
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
AVC
Audit and Valuation Committee
BB
Buy-back
BNYM
The Bank of New York Mellon
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
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
Depositary Bank/
Depositary
BRD – Groupe Societe Generale SA
Depozitarul Central SA
Romanian Central Depositary
Deutsche Numis
Numis Securities Limited, member of Deutsche Bank Group
EGM
Extraordinary General Shareholders Meeting
ESG
Environmental, Social and Governance
EU
European Union
Fondul Proprietatea/
the Fund/ FP
Fondul Proprietatea SA
FSA
Romanian Financial Supervisory Authority
FT
Franklin Templeton
FTIS/ AIFM/ Sole
Director/ Fund Manager
Franklin Templeton International Services S.à r.l.
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, for the establishment of some exemptions, as well as the amendment of
Article II, paragraphs (1) and (3) of the GEO no. 34/2023 regarding certain fiscal-
budgetary measures, the extension of certain deadlines, and the amendment and
supplementation of certain normative acts.
GEO no. 32/2024
GEO no. 32/2024 for the amendment and completion of GEO no. 27/2022
regarding 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
4
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
amendment and completion of certain legal acts in the energy sector and
adopting certain measures in the energy sector
GEO no. 71/2024
GEO no. 71/2024 for the amendment and completion of certain legal acts as well
as for setting up measures against aggressive publicity and communication
techniques used by entities not included in the FSA Register
GEO no. 137/2024
GEO no. 137/2024 for amending and supplementing Law no. 162/2017 on the
statutory audit of the annual financial statements and consolidated annual
financial statements and amending certain normative acts, of the GEO no.
75/1999 regarding the financial audit activity, as well as the modification and
completion of some normative acts
GEO no. 156/2024
GEO no. 156/2024 regarding certain fiscal-budgetary measures in the field of
public expenditures for the foundation of the consolidated general budget for the
year 2025, for the amendment and completion of certain normative acts, as well
as for the extension of certain deadlines
GRI
Global Reporting Initiative
GSM
General Shareholders Meeting
H1/ H2
First semester/ second semester of the year
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. 24/2017
Law no. 24/2017 on issuers of financial instruments and market operations
Law no. 162/2017
Law no. 162/2017 regarding the statutory audit of annual financial statements
and annual consolidated financial statements and on amending other
pronouncements
LSE
London Stock Exchange
NAV
Net Asset Value
NBR
National Bank of Romania
Norm no. 39/ 2015
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 Investor Compensation
Norm no. 4/2024
FSA Norm 4/2024 for amending Norm no. 39/ 2015
NRC
Nomination and Remuneration Committee
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 of the year
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
Taxonomy Regulation
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18
June 2020 on the establishment of a framework to facilitate sustainable
investment and amending Regulation (EU) 2019/2088
Y.O.Y.
Year-over-year
9M
Nine-month period
9M 2024
Nine-month period ended 30 September 2024
5
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
Sole Director’s Letter to Shareholders
Dear Shareholders,
2024 proved to be a challenging year for Fondul Proprietatea in many respects, key among which is
the uncertainty created by the ongoing selection process as approved by shareholders of the Fund
in September 2023. Additionally, a cap was imposed on the share buyback program to 10% of
issued shares, thereby limiting the flexibility of the Sole Director in the implementation of the
Discount Control Mechanism.
Key milestones include the sale of the holding in Engie Romania SA, finalised in February 2024 for a
consideration of RON 432.6 million. Also, in March 2024 the Bucharest Court of Appeal ruled in
favour of Fondul Proprietatea in annulling the CN Aeroporturi Bucuresti SA shareholder meeting
decision that approved a share capital increase with the in-kind contribution of the Romanian State
with the land inside the Baneasa Airport perimeter.
In June a special dividend of RON 0.06 per share was paid to the shareholders of the Fund, with
returns to shareholders being further supplemented by a tender offer executed in September 2024.
Total distributions to shareholders during the year amounted to RON 429 million, representing a
distribution yield of close to 30% based on the average share closing price in 2024, which is the 2
nd
highest since 2010.
Also in September, shareholders approved a further one-year mandate of Franklin Templeton to
continue as Sole Director of Fondul Proprietatea from 1 April 2025 until 31 March 2026, subject to
the selection process for a fund manager not being completed prior to the start of the one-year
term. In the same shareholder meeting, the selection criteria for a fund manager of Fondul
Proprietatea were approved by shareholders.
As evidenced by the abovementioned transaction and ongoing activities in relation to the holdings
in the Fund portfolio, our focus throughout the year remained on protecting and unlocking value
for the Fund’s shareholders through an active management approach, close supervision of the
portfolio companies, and a constant focus on value-enhancing corporate actions.
I would like to take this opportunity to extend a special word of gratitude to my colleagues at
Franklin Templeton, for always meeting challenges with remarkable resilience and their continued
commitment to act in best interest of Fondul Proprietatea and its stakeholders.
The Fund’s performance in 2024
In 2024 the NAV recorded a total positive return of 17.0%, while the total return for the local
shares and GDRs was negative (-32.1% and -36.7% respectively). Since the start of the calculation
of the Fund’s performance
1
, the NAV total return was 386.0%, while the total return for local shares
was 639.5%, and 188.1% for the GDRs.
On the BVB, the shares traded throughout the year at a discount
2
to NAV between 13.7% and
58.6%, ending the year at 52.4%. On LSE, the GDRs traded at a discount
2
to NAV between 15.6%
and 57.2%, ending the year at 54.1%. The average annual discount for ordinary shares was 34.2%,
while for GDRs was 34.7%.
The Fund’s discount to NAV during 2024 increased significantly. During this period new legislation
was introduced limiting share buy-backs to 10% of share capital. Furthermore, during 2024 there
1
Source: BVB, Bloomberg, Sole Director 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
Discount is calculated according to the IPS, based on the latest published NAV per share available for the day of the calculation.
6
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
has been a significant shift in the shareholder structure of the Fund from institutional investors to
retail investors, which underlines the selling pressure which has led to the widening of the discount
to NAV.
Outlook for 2025
According to the IMF
1
, the global inflation has largely been stabilised, even though price pressure
continue in some countries. Also, despite the tightening of monetary policies around the world, the
global economy has remained resilient throughout the disinflationary process, avoiding a global
recession. The main risks for the following period include an escalation in regional conflicts,
monetary policy remaining tight for too long, and potential volatility of financial markets.
Global GDP growth
1
was 3.2% in 2024 and it is projected at 3.3% for both 2025 and 2026. For
Romania, the real GDP growth
1
is estimated at 1.9% in 2024 and this is expected to increase to
3.3% in 2025.
IMF projections
1
forecast global inflation to fall from an annual average of 5.7% in 2024 to 4.2% in
2025 and 3.5% in 2026. According to Eurostat
2
, the EU annual inflation rate was 2.7% in December
2024, down from 3.4% in December 2023. For Romania, according with National Statistics
Institute
3
the annual inflation rate in December 2024 was 5.1%.
According to the BVB
4
, the Romanian capital market increased by 19.0% in 2024 compared to
2023, taking into account the total market capitalisation.
On 8 August 2024, the Board of the National Bank of Romania decided to decrease its key
monetary policy rate by 0.25% to 6.50%, this representing the second drop since January 2023,
after the decrease by 0.25% in July 2024.
The potential for further interest rates surges has significantly decreased and we expect
inflationary pressure to be more subdued throughout 2025. With the appropriate combination of
fiscal and economic policies, Romania once again has strong prospects to become one of the best
performing economies in the European Union.
Maximising shareholder value in 2025
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.
Value-enhancing corporate actions, such as share buybacks and cash distributions to shareholders
combined with 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.
We are confident that our time tested active, bottom-up investment process will allow us to
continue delivering results for our shareholders and we look forward to the opportunities ahead
for Fondul Proprietatea during 2025.
1
World Economic Outlook, October 2024, January 2025, www.imf.org
2
Eurostat – Euro Indicators Publication from 17 January 2025, www.ec.europa.eu/eurostat
3
National Institute of Statistics, Press Release no. 10/ 14 January 2025, www.insse.ro
4
BVB Monthly Bulletin – December 2024 - www.bvb.ro
7
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
2025 Annual General Shareholders Meeting
We would like to take this opportunity to invite shareholders to attend the 2025 Annual General
Shareholders Meeting convened for 29 April 2025 at Intercontinental Athenee Palace Bucharest
Hotel, Le Diplomate Salon, 1-3 Episcopiei street, 1
st
District, Bucharest, Romania, starting with 11
AM 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 the supporting documentation
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 251,532,565.52 for the
financial year ended 31 December 2024.
The Fund’s Sole Director proposal, subject
to shareholders’ approval, for the
appropriation of the net accounting profit
for the 2024 financial year is as follows:
RON 130,912,086.70
to dividends (RON 0.0409 per share);
RON 85,338,460.39
to cover the remaining balance of negative
reserve from Buyback programme no. 14
RON 1,366,923.22
To set up other reserves to be used in future
periods for covering the negative reserve from
cancellation of the shares acquired within BB15
programme
RON 33,915,095.21
unallocated profit that remains
available to the Fund’s shareholders.
Johan Meyer
CEO of FTIS Bucharest Branch, Portfolio Manager of Fondul Proprietatea SA
Permanent Representative of FTIS in relation to Fondul Proprietatea SA
8
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
Overview of 2024
2/24
4/24
6/24
8/24
9/24
12/24
•
13 Feb 2024 GSM
•
Completion of Engie
Romania SA disposal
•
Start of the RON 0.06
special dividend
distribution (RON 212.5
million)
•
27 Sep 2024 GSM
•
Completion of the
13
th
Tender Offer
•
2 Dec 2024 GSM
•
Start of 15
th
buy-back
programme
•
Fondul
Proprietatea 2024
Annual GSM
•
Cancellation of the
shares bought
back in the 14
th
buy-back
programme
•
Completion of the 15
th
buy-back programme
3/24
10/24
•
Court decision
regarding CNAB
litigation
•
26 March 2024
GSM
9
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
Key 2024 highlights
• 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;
• Completion of the disposal of Fund’s entire stake in Engie Romania SA for RON 432.6 million
within a transaction completed in February 2024;
• Payment to shareholders in June 2024 of the special dividend distribution of RON 0.06 per
share (RON 212.5 million) – 94.6% of the distribution collected until 31 December 2024;
• Introduction of the limit for share buy-backs to 10% of share capital by GEO no. 71/2024;
• Completion of the 15
th
buy-back programme for 355.6 million shares (338.9 million in the
form of shares and 16.7 million in the form of GDRs). The total value of the programme
excluding transaction costs was RON 216.3 million;
• Completion of the 13
th
Tender Offer of 269 million shares (255.5 million in the form of shares
and 13.5 million in the form of GDRs), executed to accelerate the 15
th
buy-back programme;
• Main shareholders’ approvals during 2024:
– disposal of the Fund’s entire stake in Engie Romania SA
– approval of 15
th
BB programme for 2024, and the approval of 16
th
BB programme for 2025
– renewal of FTIS mandate as AIFM and Sole Director of FP for a period 1 year (1 April 2024
– 31 March 2025) and subsequently with 1 additional year (1 April 2025 – 31 March 2026)
subject to certain conditions
– decrease of the subscribed and paid-up share capital of the Fund by RON 1,098,437,022.28,
from RON 2,947,779,186.56 to RON 1,849,342,164.28, pursuant to the cancellation of
2,112,378,889 own shares acquired during 2023 through the 14
th
BB programme
– appointing two new members in the BoN for a period of 3 years (Mr. Marius-Alin Andries
and Ms. Ileana - Lacramioara Isarescu) following the expiration of Mr. Omer Tetik’s
mandate and resignation of Mr. Martin Bernstein, and reappointment of Mr. Nicholas Paris
for a period of 3 years
– coverage of negative reserves from 13
th
buy-back programme and coverage from various
elements of retained earnings of RON 904.1 million accounting loss incurred in FY 2023
– distribution of RON 0.06 gross dividend per share from 2022 unallocated profits (Payment
Date 7 June 2024)
– decrease of the legal reserve in line with the share capital decrease
– various changes to the Constitutive Act of the Fund
– appointment of Ernst & Young Assurance Services as the Fund’s financial auditor for FY
2025
– approval of the selection criteria, based on which the BoN shall select the AIFM of the Fund
– appointment of Deutsche Numis as selection advisor through the members of the BoN and
of a maximum selection advisory budget of RON 3.8 million
– delisting of the Fund’s GDRs issued by BNYM from the Specialist Fund Segment of the LSE
– decrease of the subscribed and paid-up share capital of the Fund by RON 184,934,215.96,
from RON 1,849,342,164.28 to RON 1,664,407,948.32, pursuant to the cancellation of
355,642,723 own shares acquired during 2024 through the 15
th
BB programme
10
fondulproprietatea.ro
Annual Sole Director’s Report for 2024
Sole Director and AIFM
Franklin Templeton has been the Sole Director of the Fund starting 29 September 2010, with
successive mandates of two or four years. The portfolio management and the administrative
activities are performed by FTIS via its Bucharest Branch. As at 31 December 2024, Mr. Johan
Meyer is the permanent representative of the AIFM, being also the portfolio manager of the
Fund. At the same date, Mr. Daniel Naftali is the substitute for the permanent representative, in
accordance with the provisions of Article 34, paragraph 12 of Law no. 74/2015 on alternative
investment fund managers.
During period 1 January - 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.
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 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.
For more information regarding the Sole Director and AIFM of the Fund after 31 March 2025
and the ongoing process carried out by the BoN for the selection of a new AIFM of the Fund,
please see chapter Company information - section Sole Director and AIFM.
Capital markets
In the 2024, BVB recorded an average performance in both EUR and local currency terms
compared to the largest markets in Central Europe:
% Change in 2024
in local currency
in EUR
PX Index (Czech Republic)
+24.48%
+22.16%
BUX Index (Hungary)
+30.86%
+21.66%
BET-XT (Romania)
+9.16%
+9.14%
ATX (Austria)
+6.64%
+6.64%
WIG20 Index (Poland)
-6.44%
-4.94%
Source: Bloomberg
Trading on the Bucharest Stock Exchange
• 2.0 billion shares were traded on BVB in 2024, equivalent to 57.4% of the Fund’s paid shares as
at 31 December 2024;
• In 2024, the value of trading in the Fund shares was RON 884.6 million / USD 185.2 million
1
/
EUR 177.8 million
1
. The total trading value since the listing reached RON 33.7 billion / USD 7.1
billion
1
/ EUR 6.8 billion
1
;
• The average daily trading volume in 2024 was 8.2 million shares.
1
based on NBR exchange rates as at 31 December 2024
