SIF Oltenia. Individual financial statements prepared under International Standards of Financial Reporting ( IFRS ) on 31 st December 2011

Transcription

1 SIF Oltenia Individual financial statements prepared under International Standards of Financial Reporting ( IFRS ) on 31 st December 2011

2 Contents page Situation of global result... 1 Situation of financial position 2... Situation of modification of own equity... 3 Situation of treasury flows... 4 Notes to individual financial statements

3 S.I.F. Oltenia S.A. Situation of global result for the financial exercise concluded on 31 st December 2011 In lei Note Incomes Incomes from dividends Incomes from interests Other operational incomes Net profit from differences of exchange rate Net profit from sale of assets Expenses Commissions and administration and supervision fees ( ) ( ) Expenses with emoluments given to administration, leadership and supervision bodies ( ) ( ) Incomes from commissions for risks and expenses Other operational expenses 10 ( ) ( ) Profit before taxation Profit tax 11 ( ) ( ) Net profit of the financial exercise Other elements of the global result Net modification of financial assets available for sale ( ) Total global result related to the period ( ) Result on share 22 Basic 0,151 0,098 The financial statements were approved by the Administration Board in the meeting from and were signed on its behalf by: Administrator associate professor PhD ec. Ciurezu Tudor Economic Manager ec. Sichigea Elena legal advisor Radu Anina Notes from page 5 to page 44 are integrant part of the present financial statements. page 1

4 S.I.F. Oltenia S.A. Situation of financial position for the financial exercise concluded on 31 st December 2011 In lei Note 31 st December st December st January 2010 Assets Cash and cash equivalents Deposits placed in banks Financial assets available for sale Credits and receivables Investments held until due time Tangible assets Other asstes Total assets Debts Payments dividends Taxes and fees Debts with postponed tax Other debts Total debts Own capitals 21 Social capital Accumulated loss ( ) ( ) ( ) Current profit Legal and statutory reserves Reserves from revaluation of tangible assets Reserves from revaluation of financial assets available for sale and other reserves Total own capitals Total own debts and capitals The financial statements were approved by the Administration Board in the meeting from and were signed on its behalf by: Administrator associate professor PhD ec. Ciurezu Tudor Economic Manager ec. Sichigea Elena legal advisor Radu Anina Notes from page 5 to page 44 are integrant part of the present financial statements. pag 2

5 S.I.F. Oltenia S.A. Situation of modifications of own capital for the financial exercise concluded on 31 st December lei Name of the element Balance on INCREASES 2010 REDUCTION S 2010 Balance at the end of the financial exercise 2010 INCREASES 2011 REDUCTION S 2011 Balance at the end of the financial exercise Subscribed capital Capital premiums Reserves from revaluation Legal reserves Reserves formed from the adjustments for value losses of financial assets e (balance account D) ( ) ( ) ( ) ( ) ( ) ( ) ( ) 6 Statutory or contractual reserves Reserves formed from the value of financial assets acquired with free title Reserves from revaluation at fair value Reserves representing the surplus accomplished from revaluation reserves Other reserves Own shares 12 Gains connected to the instruments of own capitals 13 Losses connected to instruments of own capitals 14 The result carried forward representing not Balance C allocated profit or not covered loss Balance D ( ) ( ) ( ) 15 The result carried forward derived from the Balance C adoption for the first time of IAS less IAS 29 Balance D 16 The result carried forward derived from the Balance C correction of accountant errors Balance D 0 0 (38.128) (38.128) Balance C The result of the financial exercise Balance D 18 Profit allocation 19 Total own capitals Notes from page 5 to page 44 are integrant part of the present financial statements. pag 3

6 S.I.F. Oltenia S.A. Situation of treasury flows for the financial exercise concluded on 31 st December lei - Financial exercise Name of the element A Treasury flows from exploitation activities Cashes from customers, other cashes , , ,00 Cashes from sales of financial investments (securities) , , ,00 Payments to suppliers and employees, other payments ( ,00) ( ,00) ( ,00) Payments to state budget and social insurances budget ( ,00) ( ,00) ( ,00) Interests paid Profit tax paid ( ,00) ( ,00) ( ,00) Cashes from insurance against earthquakes Net treasury from exploitation activities Treasury flows from investments activities: , , ,00 Payments for acquisition of shares ( ,00) ( ,00) ( ,00) Payments for acquisition of tangible assets (18.099,00) (26.299,00) ( ,00) Cashes from sales of tangible assets 2.421, ,00 - Interests cashed , , ,00 Dividends cashed , , ,00 Net treasury from investment activities ( ,00) ( ,00) ,00 Treasury flows from financing activities: Cashes from emission of shares Cashes from loans on long term Payment of debts related to financial leasing Dividends paid ( ,00) ( ,00) ( ,00) Tax dividends paid ( ,00) ( ,00) ( ,00) Net treasury from financing activities ( ,00) ( ,00) ( ,00) Treasury net increase and of treasury equivalents ( ,00) ( ,00) ,00 Treasury and treasury equivalents at the beginning of the financial exercise , , ,00 Treasury and treasury equivalents at the end of the financial exercise , , ,00 Notes from page 5 to page 44 are integrant part of the present financial statements. 4

7 1. The reporting entity Societatea de Investitii Financiare Oltenia S.A. ( The Company") was founded on in Craiova - Romania, based on the provisions of Law no. 133/1996, law for the transformation of the Funds of the Private Property in Companies of Financial Investments. The company was founded by the transformation of the Fund of Private Property V Oltenia. It is a company with fully private capital and is functioning based on the Law no. 31/1990 regarding commercial companies and Law no. 297/2004 regarding capital market. The company has its registered office in Craiova, Tufănele street, no. 1, code , Dolj county. The company is registered with: The Chamber of Commerce and Industry Oltenia Sole Registration Code , fiscal attribute RO; The National Commission of Securities with the Decision no. 1858/ , registered in the R.N.S.C. Register with no. PJR09SIIR/160003/ ; The Evidence Office of Securities according to the certificate no 419/ The shares of the company are registered at the quote of Bucharest Stock Exchange, category I, with the indicative SIF5 as of The evidence of shareholders and shares of the company is kept by SC DEPOZITARUL CENTRAL S.A. Bucharest. The depositing activity provided by the legislation and the R.N.S.C. regulations was assured by ING Bank NV Amsterdam, Bucharest Branch According to the articles of association, the company has the following object of activity: The management and administration of shares in commercial companies for which own shares were issued, corresponding to the Property Certificates and the Nominative Privatization Coupons subscribed by citizens according to the provisions of art. 4 paragraph 6 of the Law no. 55/1995; The administration of the own portfolio of securities and the fulfillment of investments in securities according to the regulations in force; - Other similar and adjacent activities, according to the regulations in force, as well as administration of the own assets; 2. BASES OF ELABORATION a) Statement of compliance The present financial statements of the company were prepared under International Standards of Financial Reporting adopted by the European Union ( IFRS ), less IAS 29 Reporting in hyper-inflationist economies. The present Financial Statements represent the first financial statements prepared under IFRS 1 The adoption for the first time of IFRS. The transition date to IFRS was January 1 st 2010, therefore the company presents comparative information on 31 st December 2010 and 31 st December These statements represent the second set of financial statements and are prepared according to RNSC Instruction no. 6/2011 regarding the application of International Standards of Financial Reporting by authorized entities, settled and supervised by the National Commission of Securities, for information purpose, obtained by restatement of information presented in pag 5

8 2. Bases of elaboration (continuation) annual financial statements according to accounting evidence organized under Accounting Regulations in compliance with the IVth Directive of European Economic Communities, approved by the RNSC Order no. 13/2011. The accounting records of the Company are reflected in lei, according to Romanian Accounting Regulations ( RCR ). The accounts presented resulted from restatement of reports according to RCR to reflect differences between RCR and IFRS. The accounts from reports according to RCR were adjusted if it was necessary in order to harmonize these financial statements in their significant aspects, with IFRS adopted by the European Union. The main restatements of financial information presented in the financial statements prepared in accordance with Romanian accounting regulations ( RCR ) supposed: - grouping of several elements into more comprehensive categories; - fair value adjustments in accordance with IAS 39 Financial instruments recognition and assessment, respectively depreciation of financial assets value; - adjustments of situation of global result for the registration of incomes from dividends at the moment when they are declared and at gross value; - adjustments of fixed assets available for sale, for their evaluation in accordance with IFRS; - adjustments regarding reversal from profit and loss account of free shares received and their registration under the position Reserves and respectively in the Result carried forward for those previous to 2009; - adjustments for the recognition of receivables and debts regarding profit tax postponed according to IAS 12 "Profit tax"; - presentation requirements according to IFRS. b) Presentation of financial statements IFRS financial statements are presented in accordance with IAS 1 Presentation of financial statements. Given that the company presents for the first time IFRS financial statements, IFRS 1 provisions were also adopted Adoption for the first time of IFRS which supposes, among other things restatement of financial statements of the past period for comparability. The presentation adopted by the company is based on the liquidity in the financial position, and the presentation of incomes and expenses was made in respect of their nature within the global result. The financial position of the Company is presented in dynamics for a period of 3 years ( ) and the situation of the global result is presented in dynamics for a period of 2 years ( ). c) Use of estimations The preparation of financial statements according to IFRS supposes the use of accounting estimates. It also involves the use of judgements and assumptions by the company leadership which affect the application of accounting policies within the Company. The company periodically reviews the estimates and assumptions underlying the accounting registrations. The revisions of accounting estimates are recognized in the period in which the estimate is revised or in the respective period and future periods if the estimate revision affects these periods too. pag 6

9 2. Bases of elaboration (continuation) d) Functional and presentation currency Leadership believes that the functional currency the way it is defined by IAS 21 Effects of exchange rate variation is the Romanian leu. The present financial statements are prepared in lei, rounded to the nearest leu, which is also the presentation currency. e) Bases of evaluation The financial statements of the Company are prepared based on fair value convention for financial instruments derived, assets and financial debts at fair value through the profit and loss account and financial assets available for sale, except for those for which a fair value cannot be credibly established. Other assets and financial debts, as well as assets and non financial debts are presented at amortized cost, reassessed value or historic cost. 3. Significant accounting policies The main accounting policies applied in preparing the financial statements are presented below. These policies have been consistently applied on all financial statements presented. The present financial statements are prepared using the principle of activity continuity by the company in the foreseeable future. a) Subsidiaries and associated entities Subsidiaries are entities controlled by the Company. Control exists when SIF has the power to govern, directly or indirectly, the financial and operating policies of an entity so as to obtain benefits from its activity. At the moment of assessing the control, the potential or convertible voting rights that may be exercised at the time must also be taken into account. Associated entities are those entities over which the Company can exercise a significant influence, but no control on the financial and operating policies. The list of subsidiaries and associated entities on , respectively , is presented in Note 24. The company classified all securities held as financial assets available for sale according to IAS 39. b) Foreign currency transactions and balances Transactions in foreign currency are registered in lei at the official exchage rate on the settlement date of transactions. Monetary assets and liabilities registered in estimates existing on the date of accounting balance sheet are transformed into lei at the exchange rate on the date of the financial statements. Gains or losses from settlement are recognized in the situation of global result, except for cases in which the rate differences derive from translation of financial instruments classified as being available for sale, which are included in the reserve derived from the change in the fair value of these financial instruments. Foreign currency exchange rates used on the reporting date were: pag 7

10 3. Significant accounting policies (continuation) Currency 31 st December st December st December 2009 EUR 4,3197 4,2848 4,2282 USD 3,3393 3,2045 2,9361 c) Accounting for the effect of hyperinflation According to IAS 29 and IAS 21, the financial statements of a company whose functional currency is the currency of a hyperinflationary economy should be stated in terms of current purchasing power of the currency on the balance sheet date, that is the non monetary elements are restated by applying the general price index from acquisition or contribution date. IAS 29 states that an economy is considered hyperinflationary if, among other factors, the cumulated index of inflation exceeds 100% over a period of three years. The continuous decrease of inflation rate and other factors related to the economic environment in Romania, indicates the fact that the economy has ceased to be hyperinflationary with effect on the financial periods starting from 1 st January Taking into account the object of activity of the company, SIF disregarded in the preparation of consolidated financial statements, the provisions of IAS29 Financial reporting in hyperinflationary economies. The elements of asset, namely financial assets available for sale (held in the social capital of other companies), with over 94% share of the total assets of the company, are expressed in the consolidated financial statements at the fair value and the possible application of the provisions of IAS 29 would lead to unjustified amplification of their costs, which compared to the fair value from would determine unjustified adjustments and negative conclusions regarding the efficiency and profit potential of the portfolio held, especially by persons who do not possess sufficient knowledge of IFRS. However, the application of IAS 29 provisions to the securities held until 1 st January 2004, would result in incomparable costs, unjustified within the same placement, when the company has made further acquisitions also after January 1 st, 2004 (the costs of which would not adjust), exaggerated differences which could be due only to application of some correction indexes for the hyperinflationary period. An example in this regard, the fact that the acquisition value at initial holdings, respectively from December 31 st 1996, should be amplified by 13,542 times, respectively to corresponding adjustments, which would lead to completely wrong conclusions from the point of view of effectiveness of certain placements (BCR, BRD, OMV- Petrom etc.), and to an unnecessary working volume. Tangible assets are presented at restated value on Also, the non monetary element in the liabilities of the balance sheet, Social Capital, was not subject to adjustment in accordance with the provisions of IAS 29 Financial reporting in hyperinflationary economies because the correction that should be registered must be reflected with an opposite sign in the Retained result, and overall would have not produced any change in the own capitals. Instead, it would have created the possibility of interpretation, in the sense of changing the social capital by interventions of the shareholders on it (increases or decreases) by persons who do not possess sufficient knowledge in the IFRS field. pag 8

11 3. Significant accounting policies (continuation) d) Cash and cash equivalents Cash and cash equivalents contain the effective cash, current accounts and deposits made in banks, included related interests. The situation of treasury flows was prepared considering as cash and cash equivalent: effective cash, current accounts in banks, bank deposits formed in banks and interests related to them. e) Financial assets and debts Classification The financial instruments held by the Company are classified in the following categories: Assets or financial debts evaluated at fair value through profit and loss account In this category are included assets or financial debts held for trading if they were acquired or appeared for the purpose to be sold or to be repurchased in the near future or if on the date of the initial recognition are part of the portfolio of identifiable financial investments that are managed together and for which there is a tendency to achieve short term profit. An asset or a financial debt is thus classified by the Company if it was purchased mainly for speculative purpose. The financial instruments derived are classified as being held for trading if they do not represent instruments used for covering accountancy. Investments held to maturity Investments held to maturity represent those non derived financial assets with fixed or determinable payments and fixed maturity, which the Company has the positive intent and ability to hold to maturity. Investments held to maturity are measured at amortized cost by the method of effective interest minus depreciation losses. Credits and receivables Credits and receivables are non-derived financial assets, with fixed or determinable payments, not listed on an active market, other than: those that the Company intends to sell immediately or in a short time (which the Company must classify as financial instruments held for trading); those that the Company, on initial recognition, classified them as available for sale or; those that the Company may not recover all the initial investment for other reasons than because of credit deterioration and which must be classified as available for sale. In this category are included mainly bank deposits. Financial assets available for sale Financial assets available for sale are those non-derived financial assets which are not classified as: loans and receivables, investments held to maturity or financial assets at fair value through profit and loss account. After initial recognition, these assets for which there is an active market, are assessed at fair value, the differences in respect of it other than losses from depreciation, including costs and losses resulting from the exchange rate variation, are recognized directly in the own capitals. On derecognition of the asset, the cumulated gain or loss is recorded in the profit and loss account. The Company classified all participations held in the social capital of other issuers as financial assets available for sale under IAS 39. pag 9

12 3. Significant accounting policies (continuation) Recognition Assets and financial debts are recognized on the date when the Company becomes a contracting party to the conditions of the respective instrument. Assets and financial debts are measured at the moment of initial recognition at fair value plus directly attributable trading costs, except for investments in shares whose fair value cound not be reliably determined and which are initially recognized at cost. Offsets Financial assets and debts are offset and the net result is presented in the statement of financial position only when there is a legally offset right and there is the intention of their settlement on a net basis or if it is intended to realize the asset and debt extinction simultaneously. Incomes and expenses are presented net only when permitted by accounting standards, or for profit and loss arising from a group of similar transactions like those from the trading activity of the company. Evaluation at amortized cost The amortized cost of a financial asset or financial debts is the value at which the financial asset or financial debt is evaluated at initial recognition minus principal repayments, plus or minus the cumulated amortization using the effective interest method for each difference between the initial value and value at maturity and minus any reduction for depreciation or impossibility of recovery. Evaluation at fair value The fair value is the amount for which an asset can be traded or a debt settled, between interested parties and aware of the cause, within a transaction developed in objective conditions on the evaluation date. The determination of fair value of assets and financial debts is based on the quotations of an active market. A financial instrument has an active market if for that instrument are available quickly and regularly quoted prices, and these prices reflect market transactions performed regularly in objective market conditions. The financial assets available for sale for which there is not an active market and therefore is not possible to reliably determine a fair value, are evaluated at cost and are periodically tested for value depreciation. For all the other financial instruments, the fair value is determined by using evaluation techniques. The evaluation techniques include techniques based on net updated value, the method of updated cash flows, the method of comparisons with similar instruments for which there is no observable market price and other evaluation methods. The value resulting from the use of an assessment model is adjusted depending on a number of factors, since the evaluation techniques do not reliably reflect all factors taken into account by the participants on the market when they conclude a transaction. Adjustments are recorded as to reflect risk models, differences between sale and purchase quotations, liquidity risks as well as other factors. The company leadership considers that these adjustments are necessary in order to present a faithful measure of the value of financial instruments held at fair value in the situation of financial position. pag 10

13 3. Significant accounting policies (continuation) Identification and evaluation of value depreciation Financial assets measured at amortized cost On the date of each balance sheet, the Company analyzes whether there is any adequate objective indication of which a financial asset or a group of financial assets is depreciated. A financial asset or a group of financial assets is depreciated if and only if there is objective evidence of depreciation incurred as a result of one or more events that occurred after the initial recognition of the asset ( loss generating event ), and loss generating event or events have an impact on future treasury flows of the financial asset or of the group of financial assets which can be reliably estimated. If there is objective evidence that there has been a depreciation loss of financial assets measured at amortized cost, then the loss is measured as a difference between the accounting value of the asset and the updated value of future cash flows using the rate of effective interest of the financial asset at the initial moment. If a financial asset measured at amortized cost has a variable interest rate, the update rate for the evaluation of any loss from amortization is the current variable rate of the interest, specified in the contract. The accounting value of the asset is impaired by using a commission account. The expense with the value depreciation is recognized in the global result. If in a subsequent period an event occurring after the depreciation recognition moment determines the reduction of loss from depreciation, the depreciation loss previously recognized is retaken either directly, or by adjusting a commission account. The reduction of loss from depreciation is recognized in the global result. Financial assets available for sale In case of financial assets available for sale, when a decline in their fair value was recognized in other elements of the global result and there is objective evidence that the asset is depreciated, the cumulated loss which was recognized in other elements of the global result must be reclassified from own capitals in profit or loss as an adjustment from reclassification even if the financial asset has not been derecognized. The amount of cumulated loss which is removed from own capitals and recognized in profit or loss, must be the difference between the acquisition cost (net of any payment of the principal and from amortization) and current fair value, minus any depreciation loss for that financial asset previously recognized in profit or loss. If in a subsequent period, the fair value of a debt instrument, classified as available for sale increases and that increase can be objectively related to an event that would occur after the depreciation loss was recognized in profit or loss, the loss from depreciation must be retaken and the retaking amount must be recognized in profit or loss. If there is objective evidence regarding a depreciation loss of unlisted share which is not presented at the fair value because the fair value cannot be reliably measured, or regarding a derived financial assets which is linked or is to be settled by such an unquoted instrument, the value of depreciation loss is measured as a difference between the accounting value of the financial asset and the updated value of future cash flows using current internal profitableness rate of the market for a similar financial asset. pag 11

14 3. Significant accounting policies (continuation) These losses from depreciation are not retaken in the profit and loss account. To determine whether an asset is depreciated, the Company takes into consideration the relevant loss generating events, like significant and long-term decrease of the fair value below cost; the market conditions and of the activity field, to the extent that they influence the recoverable value of the asset; the financial conditions and short-term prospects of the issuer, including any unfavourable specific events which may influence the operations carried by the issuer, recent losses of the issuer, the qualified report of the independent auditor on the most recent financial statements of the issuer, etc. Given the inherent limitations of the methodologies used and the significant uncertainty of the evaluation of assets on international and local markets, the estimates of the Company may be significantly revised after the approval date of the financial statements. Derecognition The company derecognizes a financial asset when the rights to receive cash flows from that financial asset expire, or when the Company has transferred its rights to receive the contractual cash flows attributable to that financial asset in a transaction in which has transferred significantly all risks and benefits of ownership right. Any interest in transferred financial assets retained by the company or created for the Company is recognized separately as an asset or liability. The company derecognizes a financial debt when the contractual obligations are over or when contractual obligations are cancelled or expire. f) Other assets and financial debts Other assets and financial debts are evaluated at amortized cost using the method of effective interest minus any losses from depreciation. g) Tangible assets Tangible assets recognized as assets are initially evaluated at cost. The cost of an item of property comprises the purchase price, including irrecoverable taxes, after deducting any price discounts of commercial nature and any directly attributable costs of bringing to the location and necessary condition for it to be used in accordance with the destination established by the management. Tangible assets are classified by the company in the following classes of assets of the same nature and with similar uses: lands, constructions, technological equipments, devices and equipments for measurement, control and regulation; transport means; furniture; office equipment. Lands and constructions are stated at revaluated amount, representing the fair value on the date of revaluation minus accumulated amortization and depreciation losses. Revaluations are performed by evaluators members of ANEVAR. The other categories of tangible assets are stated at cost, less accumulated amortization on the date of the financial statements and commissions for depreciation. Maintenance costs of tangible assets are recorded in the account of results when they appear. Amortization is calculated by using straight-line method over the estimated useful life of assets as follows: Constructions years Technological equipments 3-20 years pag 12

15 3. Significant accounting policies (continuation) devices and equipments for measurement, control and regulation 3-8 years transport means 5-10 years furniture, office equipment 3-15 years Amortization methods, estimated useful life time, as well as residual values are reviewed at each reporting date. Tangible assets retired or sold are removed from the accounting records together with related accumulated amortization. Profit or loss resulting from such operations are included in the global result. h) Social capital Social capital is formed of ordinary shares. i) Provisions for risks and charges Provisions are recognized in the results account when an obligation arises for the company related to a past event ans it is likely that future consumption of economic resources will be necessary in order to extinguish this obligation and a reasonable estimation of the obligation amount can be made. j) Employees` benefits Short-term benefits Short-term benefits of employees include salaries, bonuses and social security contributions. The obligations with short-term benefits granted to employees are not updated and are recognized in the global result as the related service is provided. Short-term benefits of the employees are recognized as an expense when the services are rendered. A provision is recognized for the amounts expected to be paid as short-term cash bonus or personnel participation to profit under a legal or constructive obligation to pay such amounts as a result of past services provided by the employees and whether the respective obligation can be reliably estimated. Payments are made on behalf of their own employees to the pensions system of the Romanian state, to health insurance and unemployment fund, during the development of normal activity. All employees are members and have the legal obligation to contribute (through social contributions) to the pensions system of the Romanian state. There are no other further obligations or commitments to another independent pensions system and neither post retirement benefits toward former or current employees. All related contributions are recognized in the global result of the period when they are made. k) Incomes from interests Incomes and expenses from interests are recognized in the situation of global result through the method of effective interest. The effective interest rate represents the rate that exactly updates expected payments and cashes in cash in the future for the expected life duration of asset or financial debt at the accounting value of asset or financial debt. pag 13

16 3. Significant accounting policies (continuation) l) Incomes from dividends Incomes from dividends are recognized in the global result on the date when the right to receive dividends is established (ex-dividend date). The incomes from dividends are recorded at gross value which includes tax on dividends, which is recognized as current expense with profit tax. m) Dividends paid Dividends proposed to SIF Oltenia SA shareholders are shown as debt at the moment of their ratification by the General Assembly of Shareholders. n) Profit tax The tax on profit related to the exercise comprises the current tax and deferred tax. Current tax is expected tax payable related to profit obtained during the current period, calculated based on the percentage applied on the balance sheet date, with adjustments covered. On 31 st December 2011 the applicable rate of profit tax is of 16%. The current profit tax includes tax on dividends income recognized at the gross value. The taxation rate related to taxable dividends incomes was on of 16%. Deferred tax is determined using the balance method for those temporary differences which appear between the fiscal calculation basis of the tax for assets and debts and their accounting value used for reporting in financial statements. The receivable regarding deferred tax is recognized only to the extent that it is likely the realization of profits that can be used to cover the fiscal loss. o) Result per share Profit available for distribution is the profit of the year recorded in the financial statements prepared under RCR and is different from the profit reflected in the financial statements of IFRS. The company presents the result per share basic and diluted for ordinary shares. The result per basic share is determined by dividing profit or loss attributable to ordinary shareholders of the company at the weighed average number of ordinary shares related to the reporting period. p) Reporting on segments A segment is a distinct component of the company which provides certain products or services or provides products and services in a geographical environment and which is submitted to risks and benefits that are different from those of other segments. On 31 st December 2011 the company did not identify significant reportable activity or geographical segments. r) New standards and interpretations The preparation of financial statements in accordance with IFRS requires the use of significant accounting estimates. Also, assumes that the governance of the financial investments company exercises the professional judgement in the process of applying accounting policies of S.I.F. The significant areas of professional judgement are expressed in the notes to the financial statements. Standards and amendments that were applicable on January 1st 2011 The amendments brought to IAS 24 Presentations of related parties clarifies the definition of a related party. The new definition clarifies the circumstances in which persons and key pag 14

17 management personnel affect relationships between associated parties of the entity. The new definition also 3. Significant accounting policies (continuation) introduces and exception from the general presentation requirements for transactions with a government and entities which are controlled, jointly controlled or significantly influenced by this government as a reporting entity. The adoption of the amendment had no impact on the financial position and of the company of financial investments performance. IFRS 7 (amendment) Financial instruments: Presentations. This amendment was part of the annual improvement project of IFRS by IASB expressed in May The amendment focuses on the interaction between quantitative and qualitative presentations in connection with the nature and extent of risks associated to financial instruments. Ahe adoption of this amendment did not have a significant impact on the financial statements of the company. There are no other standards, interpretations or amendments to the actual standards and which could have an impact on the company. Improvements to IFRS is a document issued in May 2010 and contains multiple amendments of IFRS which IASB considers not to be urgent, but necessary. Improvements to IFRS comprises amendments with the purpose to produce accounting modifications regarding the presentation, recognition and measurement, as well as on the terminology and editorial changes of each standard. Most amendments apply starting with periods after 1 st January No changes of accounting policies are predicted as a result of these amendments. New standards, amendments and interpretations issued, but which are not applicable for the financial year 2012 and which were not adopted earlier. IFRS 9 Financial instruments which comes into force in the annual periods starting on / or after January 1 st, 2015, shows the way in which an entity must classify and measure financial assets and liabilities, including hybrid contracts. The standard develops and simplifies the approach of classification and measurement of financial assets compared to IAS 39. Most of the requirements of IAS 39 regarding the classification and evaluation of financial debts remained unchanged. The standard has a consistent approach on the classification of financial assets and replaces more of the categories existing in IAS 39, each having its own defined criteria. It does not provide the standard to have a significant impact on the financial position of the company or its performance. IFRS 10 Consolidated financial statements which comes into force in the periods starting with / or after January 1st 2013 is based on the existing principles on the concept of control as a determinant factor of the decision to include in the consolidation or not an entity. The standard presents additional guidance as an aid in difficult cases for determining the existence of control. The new standard does not have a significant impact on the individual financial statements. IFRS 12 Presentation of interests in other entities which comes into force in the periods starting on / or after the date of 1 st January 2013, includes presentation requirements for all forms of interests in other entities, including joint arrangements, associated companies, companies with a special purpose or other off-balance sheet vehicles. The new standard does not have a significant impact on the individual financial statements. pag 15

18 There are no other standards, interpretations or amendments to the existing standards which are not applicable and which could have a significant impact on the financial statements of the company. 4. The administration of financial risks The company strategy is to find those means that will lead to the achievement of an attractive portfolio that allows obtaining high profits, as well as increase of its market value, respectively of the main indicator that quantifies this net asset value. An important component of this strategy is the risk management policy that allows low risk exposure of the portfolio and its classification in the legal provisions requiring a certain structure of the portfolio managed. Given that the financial investments of the company are made both on the capital market and on the money market, the main risks arising from the nature of the given portfolio are: market risk (price risk, currency risk, interest rate risk) credit risk liquidity risk risk related to taxation risk related to economic environment operational risk The company has implemented risks assessment policies to which it is exposed. These policies, approved by the Administration Board, are presented in the section dedicated to each risk. a) Market risk According to the investment strategy adopted, the company holds in the portfolio securities (listed and unlisted on the capital market), securities issued by the investments funds (in an insignificant share), instruments of the money market (bank deposits). The company does not hold derivated instruments in the portfolio. The market risk is defined as the risk to register a loss or obtain the expected profit, as a result of the prices fluctuation, interest and exchange rates. Efficient management of market risk is made by using the fundamental analysis which gives indications on the soundness of an investment, as well as by estimation of the potential of certain companies, and taking into account the forecasts on the evolution of economic sectors and of financial markets. The main issues pursued in the market risk analysis are: the evaluation of the shares portfolio in terms of profitability and growth potential, strategic allocation of long-term investments, identification of short-term investments to take advantage of price fluctuations on the capital market, setting limits for concentration of assets in a particular economic sector. The categories of market risk to which the Company is subject include: Price risk The market value of the portfolio of listed shares (on BVB, SIBEX, RASDAQ, SIBEX-ATS), on , represents 58,55% of the total value of the shares portfolio managed. Under these conditions, the company has a high risk associated to the variation of financial assets prices on the capital market. pag 16

19 Within the portfolio managed can be found a number of 7 issuers, of the 10 that constitute the BET index of Bucharest Stock Exchange. 4. The administration of financial risks (continuation) The market value according to IFRS of the packages of shares held in the 7 issuers, represents 72,95% of the market value of shares held in listed companies. Thus, the risk associated to the variation of BET index of BVB is high. The Administration Board of the Company monitors the market risk and gives competence regarding trading limits on the capital market to the effective leadership of the company. On 31 st risk: December 2011 the company has the following structure of assets submitted to price In lei No. comp anies Market value No. co mp ani es Market value No. comp anies Market value Capital investmenrs Companies listed Companies unlisted Fund units Total capital investments Securities Total financial assets Placements held in companies whose securities are listed and traded on the capital market of Romania, plus placement held in the Romanian Commercial Bank, represent 92% of the fair value of investments made on the capital market. The Company also monitors the concentration of risk on activity sectors which appear as follows : Structure of portfolio Economic sectors with weight in the value portfolio of SIF (in decreasing order): No. SC Issuers Total nominal value of the package Total market value of the package % (lei) % (lei) % 31 st December , , ,00 finances,banks,insurances 11 9, , ,71 Oil resources and annexed services 3 2, , ,6 Other activities 19 16, , ,87 Pharmaceutical industry 2 1, , ,67 services 10 8, , ,66 Food industry 6 5, , ,26 Internal trade 13 11, , ,86 Electronic, electrotechnical industry 9 7, , ,46 Tourism, public alimentation, recreation 6 5, , ,16 Car manufacture industry, processing 15 12, , ,27 Metallurgical industry 3 2, , ,26 Constructions 7 5, , ,38 pag 17

20 Chemical industry 3 2, , ,35 Wood, cellulose, paper industry 3 2, , ,33 TOTAL SECURITES , , ,84 FUND UNITS 7 5, , ,16 4. The administration of financial risks (continuation) Structure of portfolio Economic sectors with weight in the value portfolio of SIF (in decreasing order): Nr. SC Issuers Total nominal value of the package Total market value of the package % (lei) % (lei) % 31 st December , , ,00 finances,banks,insurances 10 7, , ,32 Oil resources and annexed services 3 2, , ,79 Other activities 22 16, , ,73 Pharmaceutical industry 2 1, , ,12 Internal trade 14 10, , ,31 services 11 8, , ,21 Metallurgical industry 3 2, , ,84 Car manufacture industry, processing 19 14, , ,51 Electronic, electrotechnical industry 10 7, , ,34 Food industry 8 6, , ,29 Tourism, public alimentation, recreation 6 4, , ,17 Chemical industry 5 3, , ,49 constructions 9 6, , ,42 Wood, cellulose, paper industry 3 2, , ,30 TOTAL SECURITES , , ,84 FUND UNITS 7 5, , ,16 01 st January , , ,00 finances,banks,insurances 10 6, , ,21 Oil resources and annexed services 4 2, , ,51 Other activities 28 17, , ,91 Pharmaceutical industry 2 1, , ,07 Internal trade 18 11, , ,42 Car manufacture industry, processing 21 13, , ,25 Metallurgical industry 3 1, , ,86 Services 14 8, , ,70 Non metallic mineral products industry 2 1, , ,58 Tourism, public alimentation, recreation 7 4, , ,55 Electronic, electrotechnical industry 14 8, , ,45 Food industry 8 5, , ,31 Chemical industry 5 3, , ,97 constructions 11 7, , ,78 Wood, cellulose, paper industry 3 1, , ,28 TOTAL SECURITES , , ,84 FUND UNITS 6 3, , ,16 pag 18

21 From the analysis of data presented above on the Company held mainly shares operating in the finances, banks, insurances field accounting for 62,71% of the total portfolio, down from , when in the same activity sector registered a share of 69,32% and from of 66,21%. 4. The administration of financial risks (continuation) Currency risk Currency risk is the risk of loss registering or achieving the estimated profit due to unfavourable fluctuations of the exchange rate. The company has assets and liabilities, in most cases, expressed in national currency. The exposure to currency risk is due to foreign currency deposits, some of the monetary availabilities being placed in foreign currency, respectively USD and EUR. Foreign currency holdings, placed in bank deposits, represent on only 3,47% of the total assets managed, so that the currency risk is insignificant. Due to low share of assets expressed in foreign currency, the company does not have a formal hedging policy of the currency risk. Investments in bank deposits in foreign currencies are constantly monitored and investment, disinvestment actions are taken, according to the forecast evolution of exchange rate. The concentration of assets and liabilities on types of currencies is summarized in the following table: In lei 31 st December 2011 Financial assets Accounting value Lei EUR USD Cash and cash equivalents Deposits placed in banks Financial assets available for sale Receivables and credits Other financial assets Total financial assets Financial debts Payment dividends Other financial debts Total financial debts st December 2010 Financial assets Cash and cash equivalents Deposits placed in banks Financial assets available for sale Receivables and credits Other financial assets Total financial assets Financial debts pag 19