ANNUAL REPORT

Transcription

1 ANNUAL REPORT

2 TABLE OF CONTENTS 1. ANALYSIS OF THE COMPANY ACTIVITY 1.1. a) PORTFOLIO MANAGEMENT 1.1. b) INVESTMENTS AND TRANSACTIONS 1.1. c) MONEY INSTRUMENTS MANAGEMENT 1.1. d) STRUCTURE OF ASSETS MANAGED ON e) NET ASSET EVOLUTION 1.1. f) EVOLUTION OF S.I.F. OLTENIA S.A. SHARES AT BUCHAREST STOCK EXCHANGE GENERAL ASSESSMENT ELEMENTS: a) PROFIT b) TURNOVER c) EXPORT d) COSTS e) % OF MARKET HELD f) LIQUIDITY EVALUATION OF THE COMPANY TECHNICAL LEVEL DESCRIPTION OF MAIN PRODUCTS MADE AND/OR SERVICES PROVIDED a) MAIN SALES MARKETS b) WEIGHT OF EACH CATEGORY OF PRODUCTS OR SERVICES IN INCOMES AND IN THE TOTAL TURNOVER c) NEW PRODUCTS TAKEN INTO ACCOUNT IN THE FUTURE FINANCIAL YEAR THE EVALUATION OF TECHNICAL-MATERIAL SUPPLY ACTIVITY (INDIGENOUS SOURCES, IMPORT SOURCES) EVALUATION OF SALE ACTIVITY EVALUATION OF ASPECTS CONNECTED TO COMPANY EMPLOYEES / PERSONNEL EVALUATION OF ASPECTS CONNECTED TO THE IMPACT OF THE ISSUER`S BASIC ACTIVITY ON THE SURROUNDING ENVIRONMENT EVALUATION OF RESEARCH AND DEVELOPMENT ACTIVITY EVALUATION OF THE COMPANY ACTIVITY REGARDING RISK MANAGEMENT RISK RELATED TO ECONOMIC ENVIRONMENT LIQUIDITY RISK FOREIGN EXCHANGE RISK INTEREST RISK CREDIT RISK RISK RELATED TO TAXATION MARKET RISK OPERATIONAL RISK PORTFOLIO RISK PERSPECTIVE ELEMENTS REGARDING THE COMPANY BUSINESS 2. TANGIBLE ASSETS OF THE COMPANY 1

3 3. MARKET OF SECURITIES ISSUED BY THE COMPANY 3.1. STATEMENT OF THE MARKETS IN ROMANIA AND OTHER COUNTRIES WHERE THE SECURITIES ISSUED BY THE COMPANY ARE NEGOTIATED 3.2. DESCRIPTION OF COMPANY POLICY ON DIVIDENDS 3.3. DESCRIPTION OF ANY COMPANY ACTIVITIES INVOLVING ACQUISITION OF OWN SHARES 3.4. REGISTERED BRANCHES OF S.I.F. OLTENIA S.A BONDS AND/OR OTHER DEBT SECURITIES ISSUED BY S.I.F. OLTENIA S.A. 4. COMPANY MANAGEMENT 5. SITUATION OF LITIGATIONS 6. FULFILLMENT OF COMMUNICATION OBLIGATIONS ESTABLISHED BY LAW 7. OTHER IMPORTANT EVENTS 8. ECONOMIC-FINANCIAL RESULTS AND PATRIMONY STATUS 9. CORPORATE GOVERNANCE 2

4 ANNUAL REPORT of the Administration Board according to Regulations no. 1 / 2006 of the National Commission of Securities for the financial year 2013 Report date: Name of commercial company: SOCIETATEA DE INVESTIŢII FINANCIARE OLTENIA S.A. Social headquarters: Dolj county, Craiova city, Tufănele street, no. 1, zip code Phone/fax number: ; Fiscal Registration Code: RO Order number in the Trade Register: J16/1210/ Number in R.N.S.C. Register: PJR09SIIR/160003/ Settled market where securities issued are transacted: Bucharest Stock Exchange Social capital subscribed and transferred: lei The main characteristics of securities issued by the commercial company : S.I.F. OLTENIA S.A. shares are nominative, issued in dematerialized form and give equal rights to their holders. The nominal value of one share is 0,1 lei. 1. ANALYSIS OF THE COMPANY ACTIVITY Societatea de Investiţii Financiare OLTENIA S.A. - Romanian legal person incorporated as a commercial company on shares on according to Law no. 133/1996, has the Fiscal Registration Code RO and is registered in the Trade Register under the no. J16/1210/ According to the articles of incorporation, the company has the following object of activity: - Administration and management of shares in commercial companies for which own shares were issued, according to Property Certificates and Privatization Nominative Coupons subscribed by citizens, according to the provisions of art. 4 paragraph 6 of the Law no. 55/1995; - Management of own securities portfolio and making investments in securities in accordance with regulations in force; - Other similar and adjacent activities, according to the regulations in force, 3

5 as well as of administration of own assets. The social capital subscribed and transferred, registered on , was of lei, divided in shares with nominal value of 0,1 lei/share. During the reporting period, S.I.F. OLTENIA S.A. developed its activity in compliance with the legal provisions contained in: - Law no. 31/1990 R, as subsequently amended and supplemented; - Law no. 297/2004, as subsequently amended and supplemented; - R.N.S.C. (A.S.F.) Regulations no. 15/2004; - R.N.S.C. (A.S.F.) Regulations no. 1/2006; - Code of Bucharest Stock Exchange; - Code of Corporate Governance of Bucharest Stock Exchange ; - The other normative acts concerning the matter and - Articles of Incorporation (Statute and Company Contract). The accomplishment of the storage activities provided by the legislation and regulations of the National Commission of Securities (currently A.S.F.) during the period analyzed was provided by ING Bank NV Amsterdam Bucharest Branch. Following the unilateral termination by ING Bank NV Amsterdam Bucharest Branch of the existing contract as of , entered into force, after approval by the A.S.F. the Framework Contract for the storage and preservation of S.I.F. OLTENIA S.A. assets, concluded with Raiffeisen Bank SA, so that, from the above date, the custodial and storage services for S.I.F. OLTENIA S.A. are provided by Raiffeisen Bank. The evidence of S.I.F. OLTENIA S.A. shareholders is kept by DEPOZITARUL CENTRAL S.A. Bucharest. S.C. The shares of S.I.F. OLTENIA S.A. are included in the Ist category of Bucharest Stock Exchange, being negotiable and freely transferable, in compliance with legal provisions. During the financial year 2013 there has been no significant merger or reorganization of Societatea de Investiţii Financiare OLTENIA S.A. or of the commercial companies controlled by it. 4

6 1.1. a) PORTFOLIO MANAGEMENT On , in the shares portfolio of S.I.F. OLTENIA S.A. holdings are found in a number of 71 issuers, the nominal value of the packages of shares being lei, with a market value of lei (calculated in accordance with the provisions of the Disposition of measures no. 23/ of R.N.S.C. (A.S.F.) superior with 191,24% to the nominal one. The evaluation of S.I.F. OLTENIA S.A. assets in accordance with the Disposition of measures no. 23/ of R.N.S.C. (A.S.F.), was made starting with the assets of March The assets for the months January and February 2013 were calculated according to RNSC (A.S.F.) Regulations no. 15/2004. S.I.F. OLTENIA S.A. also continued in 2013 the policy of restructuring the portfolio by reducing the number of holdings. From a total of 86 issuers existing in the portfolio on , a number of 71 issuers is recorded on , 3 new issuers entering in the portfolio, while 18 issuers left the portfolio. In terms of holdings which left the portfolio they were disposed as follows: 11 holdings by sale on the capital market; - S.C. COMCEREAL Mehedinţi S.A. Drobeta Turnu Severin - S.C. EL - CO S.A. Târgu Secuiesc - S.C. ISLAZ S.A. Alexandria (Ofertă Publică) - S.C. LACTA S.A. Giurgiu (Ofertă Publică) - S.C. SEMROM MUNTENIA S.A. Bucureşti - S.C. FORAJ SONDE S.A. Videle - S.C. STEAUA ELECTRICĂ S.A. Fieni - S.C. MECANICA ROTES S.A. Târgovişte - S.C. COMCEREAL S.A. Tulcea - S.C. OIL TERMINAL S.A. Constanţa - S.C. RAFO S.A. Oneşti - 1 holding following the finalization of the dissolution and voluntary liquidation procedure - S.C. COMCEREAL S.A. Gorj Târgu Jiu - 1 holding by the radiation of the commercial company from the Trade Register after bankruptcy - S.C. FORAJ SONDE S.A. Moreni 5

7 - 4 holdings by sale and purchase contracts of shares (shares cession) closed type companies; - S.C. MINERVA S.A. Bucharest - S.C. COMCEREAL S.A. Dâmboviţa - S.C. MIRFO INDUSTRIES S.A. Târgu Jiu - S.C. BURSA ROMÂNĂ DE MĂRFURI S.A. Bucharest - 1 holding following the withdrawal of S.I.F. OLTENIA S.A. from the company shareholding; - RAIFFEISEN BANK S.A. Bucureşti The three new companies entered in the portfolio of SIF OLTENIA S.A. are: - S.C. COMCEREAL S.A. Tulcea - S.C. FONDUL PROPRIETATEA S.A. - S.C. NORD S.A. Bucharest In the disinvestment policy, it was mainly pursued the sale of minority packages of shares held in commercial companies with weak financial and economic results, which did not bring to S.I.F. OLTENIA S.A. incomes in the form of dividends and which had no real chances of recovery. Another criterion applied in the disinvestment policy was that of rendering valuable, at good prices, certain investments which reached maturity. We mention that during the year 2013 was sold almost all the stake held in S.C. BIOFARM S.A. Bucharest, a residual package of shares being subsequently sold. Thus, the company exited completely the portfolio in January At the same time, in order to achieve the profit objective, respectively the fulfilment of the dividend policy, holdings were sold in commercial companies with good results, but without high weight in the assets of S.I.F. OLTENIA S.A., which were fructified at high prices on share. The nominal value of the portfolio has seen a slight depreciation (of 3,60%), due the exit of 18 commercial companies from the portfolio. This depreciation (despite a 17,44% reduction in the number of companies present in the portfolio) is due to the fact that in 2013 too, consistent with the investment strategy developed by S.I.F. OLTENIA S.A. during the entire period of operation, there has been an extensive investment process, aimed at qualitative appreciation of the portfolio. Thus, 81% of the amounts come from disinvestment were allocated to shares acquisition activity. The market value of the portfolio administered appreciated during the 6

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9 fructfication of certain packages of shares (BANCA TRANSILVANIA S.A. Cluj- Napoca, B.R.D. GROUPE SOCIETE GENERALE S.A. Bucharest). The market value of the issuers quoted on Bucharest Stock Exchange is superior with 221,71% to the nominal value. The value of the shares portfolio of S.I.F. OLTENIA S.A. is in proportion of 62,53% determined by the quotations of the shares listed. Since in the portfolio is found the holding in the Romanian Commercial Bank (B.C.R.) which, in a stable economic period, with a favourable evolution of the banking sector, will be fructified efficiently, adding the value of this holding to the market value of the companies listed, we note that 91,70 % of the portfolio of SIF OLTENIA S.A. is a liquid portfolio. The year 2013 was a good year for international shares markets, the shares indices registered important increases, thus continueing the ascendant trend initiated in Main indexes - % Dow Jones Industrials + 26,5 + 7,3 + 5,5 NASDAQ Composite + 38,3 + 15,9-1,8 DAX ,5 + 29,1-14,7 FTSE ,4 + 5,8-6,7 CAC ,2-17 The Romanian capital market also registered an ascendant trend, the main stock exchange indexes ending the year 2013 in increase, as follows: - the BET index which indicates the evolution of the 10 most liquid shares traded - concluded the year 2013 with an increase of 26,1%; - the BET C index composite index, which reflects the overall evolution of all companies listed on the B.V.B., the market segment settled, except for the companies of financial investments - gained 20,04% during the year 2013; - the BET FI index the index of the 5 Companies of Financial Investments and Property Fund gained 23,32%. The market value of shares of the companies in S.I.F. OLTENIA S.A. portfolio experienced a positive experience, in tune with the evolution of main stock exchange indices. We indicate that the market value of shares listed and traded is calculated 8

10 according with the Disposition of measures no. 23/ and represents the closing price of the market section considered the main market or the reference price provided in other systems than the regulated markets, including alternative systems related to the day for which the calculation is made. The structure of the portfolio on categories of holdings is: Quota held from the issuer`s total social capital No. sc Weight in the Nominal value total portfolio No. of the packages of shares sc. - lei - % Nominal value of the packages - lei - Weight in the total portfolio of shares % 0,01% - 5% , ,82 5,01% - 33% , ,26 33,01% - 50% , ,58 50,01% - 100% , ,34 TOTAL , ,00 A decrease is noticed in the number of portfolio holdings in which S.I.F. OLTENIA S.A. holds a quota below 33% of the social capital, from 68 on , to 53 on are: The main sectors of activities represented in the portfolio on

11 Sha re, a t nom ina l va lue, of the a ctivity se ctors in the tota l portfolio on 31st De ce m be r 2013 finances, banks, insurances, financial intermediations, management of f inancial markets Oil resources and related services Electricity and gas transport Tourism, public alimentation, leisure Metallurgical industry Food industry Car manuf acture industry, processing Mutual f unds and other similar financial entities Electronic, electrical engineering industry Letting and subletting real estate property Wood, cellulose, paper industry Constructions Domestic trade Pharmaceutical industry Estate development (promotion) Glass, china, pottery industry Chemical industry A uto transport agriculture former I.A.S.-s Leather, f ur, footw ear industry services Other industries Other activities

12 Share, at market value, of the activity sectors in the total portfolio on 31st December 2013 finances, banks, insurances, financial intermediations, management of financial markets Oil resources and related services Electricity and gas transport Food industry Tourism, public alimentation, leisure Pharmaceutical industry Electronic, electrical engineering industry Letting and subletting real estate property Domestic trade Estate development (promotion) Metallurgical industry Mutual funds and other similar financial entities Car manufacture industry, processing Glass, china, pottery industry Chemical industry Wood, cellulose, paper industry Constructions other 6 activity fields, each less than 0.1%

13 The finances-banks-insurances sector, financial intermediations, financial markets administration, the best represented in the portfolio, has a weight of 36,64% of the total nominal value of the portfolio, respectively 49,27% of the market value. Regarding the market value of the portfolio of S.I.F. OLTENIA S.A., the first two sectors, as weight, represent 68,68%. These are areas where S.I.F. OLTENIA S.A. has invested heavily in recent years. S.I.F. OLTENIA S.A. is a shareholder in the most important banks of the system (depending on the value of assets). During the year 2013, the value of participations held in BRD GROUPE SOCIETE GENERALE S.A. Bucharest and BANCA TRANSILVANIA S.A. Cluj-Napoca decreased, as an effect of the speculative activity (both selling and buying transactions took place on the two issuers), the transactions having as a purpose the achievement of the profitability indicator provided in the Incomes and Expenditures Budget. Despite the reduction of these holdings, the strategy of S.I.F. OLTENIA S.A. is to maintain high participations in the financial-banking field, because we believe that a modern economy cannot exist outside a solid banking system and, that in Romania the degree of financial intermediation is low, so there is potential for growth. In 2013 we witnessed a good evolution of the banking system, which ended the year with a cumulative profit of 497 mil. lei, while 23 banks had profit, and 17 banks recorded losses. We remind that in 2012 the banking system reported loss of 2,1 billion lei and in 2011 of 777 mil. lei. The cumulative gain of the 23 banks with profit was of 2,05 billion lei, while 17 banks amounted to a loss of 1,55 billion lei. Restoring the profitability of the banking system opens good perspectives also for S.I.F. OLTENIA S.A., which has a high exposure of the portfolio in the banking system. The activity of the commercial companies in the portfolio especially those in which we hold controlling or majority holdings was constantly monitored, the main objectives pursued being: 12

14 - the evaluation of the real potential of companies; - the estimation of investment needs for business development; - the improvement of economic-financial results; - the promotion of an efficient management; - establishing arrangements regarding an eventual recovery of the holdings. The exercise of the shareholders attributions conferred by Law no.31/1990 R, as subsequently supplemented and amended, was accomplished through representatives in the General Assemblies of Shareholders. At the level of the commercial companies where we had representatives in the Administration Boards, the involvement in the companies management was more pronounced, S.I.F. OLTENIA S.A. maintaining a continuous contact with its representatives. S.I.F. OLTENIA S.A. was actively involved in the management of some commercial companies where the share of participation in the social capital allowed it seeking solutions to reduce expenses, identification of new sales markets, providing financial resources (in the form of participation to the increases of social capital). Through representatives in the administration boards and supervisory bodies (internal control, auditors) S.I.F. OLTENIA S.A. conducted an intense analysis, monitoring and administration activity of companies in the portfolio in which it holds a majority stake, in order to preserve the patrimonies of the companies concerned and render efficient the economic indicators. S.I.F. OLTENIA S.A. holds majority stake in 14 commercial companies: 13

15 No. ite m Name of the company Holding percentage S.I.F. OLTENIA S.A. - % - 1. S.C. VOLTALIM S.A. CRAIOVA 99,99 2. S.C. MAGAL S.A. CRAIOVA 99,99 3. S.C. CONSTRUCTII MONTAJ 1 S.A. CRAIOVA 96,56 4. S.C. GEMINA TOUR S.A. RM.VILCEA 88,29 5. S.C. ELARS S.A. RM.SARAT 87,61 6. S.C. MERCUR S.A. CRAIOVA 85,85 7. S.C. CONSTRUCTII FEROVIARE S.A. CRAIOVA 77,50 8. S.C. FLAROS S.A. BUCURESTI 77,11 9. S.C. COMPLEX HOTELIER S.A. DAMBOVITA 75, S.C. UNIVERS S.A. RM.VALCEA 73, S.C. PROVITAS S.A. BUCURESTI 70, S.C. TURISM S.A. PUCIOASA 69, S.C. ARGUS S.A. CONSTANŢA 55, S.C. ALIMENTARA S.A. SLATINA 51,99 From a macroeconomic perspective, 2013 was a good year, Romania knowing a GDP growth of 3,5%, significantly above the forecasts of authorities of 2,8% - and analysts. This annual increase is placed at the highest values from the year 2008 to the present. Basically, Romania had the strongest GDP growth in the European Union in The national currency continued to slightly depreciate, the course registered on being of 4,4847 RON/EUR compared to 4,4287 RON /EUR at the end of Although the macroeconomic environment has significantly improved, the activity of commercial companies is not yet at a high potential, due to lack of markets, difficult access to finance, some blocks due to arrears, the entrance on a robust growth trend being late in appearing. 14

16 The evolution of the shares portfolio during the period Number of commercial companies in the portfolio - piece - Portfolio nominal value - lei / 2012 % , ,40 -lei- % -lei- % -lei- % Portfolio market value , , ,00 113,07 Value of commercial companies closed , , ,47 104,14 Value of commercial companies listed , , ,53 119,21 Net Asset Value ,96 Unitary Net Asset Value 2,4418 2,4695 2, ,95 15

17 During the year 2013, the evolution of the shares portfolio witnessed, in synthesis, the following evolution: - the number of commercial companies decreased with 17,44% (from 86 commercial companies to 71); - the nominal value of the shares portfolio registered a slight decrease, by 3,60%, as a result of the opportunity to fructify some of the stakes held; - the market value of the portfolio has appreciated by 13,07%, which proves the continuity of the ongoing concern for its quality improvement, consistency and economic vision, for which it was based the portfolio restructuring strategy adopted by the Administration Board for the year b) INVESTMENTS AND TRANSACTIONS During the year 2013 large sums were allocated to investments in shares, especially by acquiring packages of shares in the secondary market, aiming at strengthening the position of S.I.F. OLTENIA S.A. in the shareholding of certain issuers. There were purchased mainly shares issued by companies listed on the settled market administered by Bucharest Stock Exchange. In the year 2013, the total value of investments in financial assets such as shares was of lei, an increase of 143,96% compared to ( lei). The investments made by the company in the last three years, with the purpose to modernize and increase the value of the heritage, as well as of its future ability to generate profit and to lead to increase of price per share, have evolved like this: Year - mil. lei , , ,48 16

18 Investments accomplished by S.I.F. OLTENIA S.A. during the financial exercises mill. RON year 2011 year 2012 year 2013 In 2013, the most important investments were in securities issued by: - OMV PETROM S.A. Bucharest - FONDUL PROPRIETATEA S.A. Bucharest - SNTGN TRANSGAZ S.A. Mediaş - B.R.D. GROUPE SOCIETE GENERALE S.A. Bucharest - S.C. ARGUS S.A. Constanţa - C.N.T.E.E. TRANSELECTRICA S.A. Bucharest - S.C. BIOFARM S.A. Bucharest - S.C. NORD S.A. Bucharest - S.C. ANTIBIOTICE S.A. Iaşi - S.C. COMCEREAL TULCEA S.A. Transactions During 2013, important sales transactions were accomplished, given the opportunities offered by the capital market. Thus, the incomes of financial investements ceded were of lei, representing 87,79% of total incomes in the period analyzed. The amount obtained from disinvestment is higher with 185,91% to that achieved in the year ( lei). The disinvestment activity had as a purpose both the portfolio restructuring and yield increase, but also speculative actions on the capital market, that could allow the accomplishment of the profitability indicator provided in the Budget of Revenues and Expenditures of the year

19 For the portfolio restructuration were sold especially packages of shares held in commercial companies with weak financial and economic results over several years and which did not bring in the past to S.I.F. OLTENIA S.A. incomes in the form of dividends. Packages of shares held in liquid issuers were also sold, in order to achieve the profitability indicator. The main sales transactions targeted the following issuers: - S.C. BIOFARM S.A. Bucharest - BRD GROUPE SOCIETE GENERALE Bucharest - FONDUL PROPRIETATEA S.A. Bucharest - S.C. COMCEREAL TULCEA S.A. - S.C. ISLAZ S.A. Alexandria - OMV PETROM S.A. Bucharest - C.N.T.E.E. TRANSELECTRICA S.A. Bucharest - BANCA TRANSILVANIA S.A. Cluj-Napoca The gross profit obtained from sales transactions was of lei, resulting a profitability of 76,30% c) MONEY INSTRUMENTS MANAGEMENT The placement policy of cash reserves was prudent and pursued the diversification of risk both by using several types of investment instruments, and by collaborating with several bank institutions. In the year 2013, banks with whom we collaborated were: BANCA COMERCIALĂ ROMÂNĂ, BANCA TRANSILVANIA, RAIFFEISEN BANK, ING BANK, MARFIN BANK. The money reserves were placed, after a rigorous analysis of the opportunities offered by money market, in deposits in lei and foreign currency. They hold a weight of 2,24% of the total assets administered. The placements were generally made on short terms, on different maturity dates, in order to have provided necessary liquidities for the payment of due debts and to diminish, also in this way, the investment risk. 18

20 Structure of placements in monetary instruments on Deposits in lei 89.73% Reserves in the account - (lei and foreign currency) 0.17% Deposits in foreign currency 10.09% The amounts placed in money instruments on were of lei - according to data from asset, including interests to be cashed - showing a decrease from ( lei), respectively of 0,82% d) STRUCTURE OF ASSETS MANAGED ON On , the value of the managed assets calculated in accordance with Disposition of measures no. 23/ of R.N.S.C. (A.S.F.) is of lei, increasing by 11,67% to the value recorded on No. Item Asset type Value - lei - Weight - % - 1 Shares quoted ,42 2 Shares not quoted ,20 3 Bank deposits ,24 4 OPCVM and/or AOPC securities ,13 6 Reserves ,00 7 Other assets ,01 TOTAL ,00 19

21 Structure of assets administered on 31st December 2013 total = 1,742,909,601 RON Shares not quoted 630,950,781 RON 36.20% Shares quoted 1,053,018,016 RON 60.42% Reserves 68,377 RON 0.00% OPCVM and/or AOPC securities 2,251,971 RON 0.13% Bank deposits 39,091,517 RON 2.24% Other assets 17,528,939 RON 1.01% It is found that the shares quoted represent 60,42% of the assets managed. The financial assets such as shares have a market value of lei, respectively 96,62% of the total assets. In respect of the value registered on ( lei), the market value of shares on , appreciated by 13,07%. 20

22 The main 10 participations in the portfolio No item. 1. issuer BANCA COMERCIALĂ ROMÂNĂ S.A. Bucharest No Shares SIF OLTENIA SA Market value Weight in the issuer`s social capital Weight in the total asset of SIF OLTENIA SA Weight in the net asset of SIF OLTENIA SA No. Shares SIF OLTENIA SA Market value Weight in the issuer`s social capital Weight in the total asset of SIF OLTENIA SA Weight in the net asset of SIF OLTENIA SA , , , , , , OMV PETROM S.A. Bucharest , , , , , , BRD GROUPE SOCIETE GENERALE S.A. Bucharest C.N.T.E.E. TRANSELECTRICA Bucureşti BANCA TRANSILVANIA S.A. Cluj-Napoca , , , , , , ,2583 4,8202 5, ,3484 3,4136 3, ,0355 4,2519 4, ,5799 6,6207 7, S.C ARGUS S.A. Constanţa ,8922 3,3505 3, ,9391 1,4252 1, SNTGN TRANSGAZ Mediaş ,1237 2,6577 2, ,6224 0,9391 1, S.C. ANTIBIOTICE S.A. Iaşi ,4561 2,4623 2, ,0954 1,3752 1, EXIMBANK BANCA DE EXPORT-IMPORT A ROMÂNIEI S.A. Bucureşti ,2702 1,9157 2, ,2702 2,2942 2, S.C. ELECTROMAGNETICA S.A. Bucureşti ,1134 1,8656 2, ,1389 1,7424 1, Total , , , ,412 Total asset Net asset

23 The market value on of the first 10 issuers present in the portfolio represents 80,35% of the total asset of S.I.F. OLTENIA S.A., calculated in accordance with Disposition of measures no. 23/ of R.N.S.C. (A.S.F.). As a result of investments undertaken, S.I.F. OLTENIA S.A. increased its participation in the share capital of: - OMV PETROM S.A. Bucharest - C.N.T.E.E. TRANSELECTRICA Bucharest - S.C. ARGUS S.A. Constanţa - SNTGN TRANSGAZ S.A. Mediaş - S.C. ANTIBIOTICE S.A. Iaşi - S.C. ELECTROMAGNETICA S.A. Bucharest The participation in C.N.T.E.E. TRANSELECTRICA Bucharest increased from a weight of 6,35% in the social capital of the issuer on to a weight of 7,26% on C.N.T.E.E. TRANSELECTRICA Bucharest has a strategic importance in the economy of our country, so that we believe the investment in these securities to be a long term investment, providing stability to the portfolio managed. In order to achieve the profit indicators, but also for the need to capitalize investments which reached maturity, packages of shares were sold in: S.C. BIOFARM S.A. Bucharest, BRD GROUPE SOCIETE GENERALE S.A. Bucharest and BANCA TRANSILVANIA S.A. Cluj-Napoca, thus it decreased the rate of participation to their share capital. In these issuers acquisitions of shares were also made during the year 2013, but their value was much lower than the value of sales. 22

24 1.1. e) NET ASSET EVOLUTION With a value of 2,7647 lei on , the unit net asset registers, in respect of , an appreciation of 11,95%. Evolution of Unitary Net Asset during the period January December The net asset was calculated for the months January and February 2013 according to the provisions of R.N.S.C. (A.S.F.) Regulations no. 15/2004. Starting from the month of March 2013, the evaluation of SIF Oltenia SA assets is made according to the Disposition of measures no. 23/ of R.N.S.C. (A.S.F.) 1.1. f) THE EVOLUTION OF S.I.F. OLTENIA S.A. SHARES AT BUCHAREST STOCK EXCHANGE In the year 2013, the securities of S.I.F. OLTENIA S.A. had an upward trend (with some small corrections for short intervals), the appreciation of shares being much higher over the level registered in the other companies of financial investments, so that the discount level between the market value and the unitary value of net asset significantly decreased compared to the previous year, which demonstrates the steady increase of investors interest in the securities of SIF OLTENIA SA. The shares of SIF OLTENIA SA were traded at the end of the year with a discount of 28,24% compared to the value of unitary net asset. The closing price on the last trading day of the year 2013 for a SIF 5 share was of 1,9840 lei, which represents an appreciation with 41,41% toward the closing price of the year

25 As a whole, the situation of closing prices in the last two years, appears, for the five S.I.F.s, as follows: Closing price Closing price / S.I.F. BANAT CRIŞANA S.A. 1,2920 1, ,51% S.I.F. MOLDOVA S.A. 1,4700 1, ,38% S.I.F. TRANSILVANIA S.A. 0,6715 0, ,38% S.I.F. MUNTENIA S.A. 0,8820 0, ,55% S.I.F. OLTENIA S.A. 1,9840 1, ,41% The total number of shares traded: ; Value of transactions: lei; Average trading price: 1,5460 lei; Market capitalization of S.I.F. Oltenia S.A. on was of lei (255 mil. EUR) Asset Value - lei Net Asset Value - lei Unitary Net Asset Value - lei - 2,4418 2,4695 2,7647 B.V.B. Quotation - lei - (closing price on last trading day of the year) 1,0570 1,4030 1,9840 B.V.B. Quotation / Value of Unitary Net Asset - % - 43,29 56,81 71,76 Discount -%- 56,71 43,19 28, GENERAL ASSESSMENT ELEMENTS: a) PROFIT Gross profit registered on affected including by the provision reflected in Note 2 to the financial statements formed for the participation fund to profit of the personnel, of the effective and administrative management of the company, is of lei. After recording a profit tax of lei, a net profit of lei resulted, superior with 43,93% to the net profit provided in the Budget of Revenues and Expenditures for the year

26 b) TURNOVER According to the specific activity, S.I.F. Oltenia S.A. registers incomes from the current activity of lei. c) EXPORT not applicable. d) COSTS The expenditures from the current activity are, on , of lei. According to the specific activity, the main groups of expenditures are: - Expenditures regarding financial investments ceded of lei, representing 82,68% of the total expenditures; - Expenditures for maintaining the company on trading ( Central Depository, B.V.B., Depozitory, fee of 0,1% of the net asset paid R.N.S.C.) of lei, representing 0,87% of the total expenditures; - Expenditures with the personnel - of lei (of which: lei salaries and lei expenses with social insurances), representing 5,03% of the total expenditures regarding the current activity. The expenditures with the personnel represent 0,69% of total assets, respectively 0,75% of company net asset e) % OF MARKET HELD not applicable. f) LIQUIDITY On , money reserves of S.I.F. Oltenia S.A. - according to the balance sheet data were of lei, of which lei (excluding interests) representing 99,64% - placed in bank deposits EVALUATION OF THE COMPANY TECHNICAL LEVEL DESCRIPTION OF MAIN PRODUCTS MADE AND/OR SERVICES PROVIDED a) MAIN SALES MARKETS not applicable THE WEIGHT OF EACH CATEGORY OF PRODUCTS OR SERVICES IN INCOMES AND THE TOTAL TURNOVER 25

27 Name of indicator lei- % -lei- % -lei- % TOTAL INCOMES (incomes from current activity) of which: , , ,0 0 - Incomes from financial assets , , ,05 - Incomes from financial investments ceded , , ,79 - Incomes from interests , , ,30 The incomes from financial assets increased in 2013 by 2,38% compared to a) NEW PRODUCTS TAKEN INTO ACCOUNT IN THE FUTURE FINANCIAL YEAR not applicable THE EVALUATION OF THE TECHNICAL-MATERIAL SUPPLY ACTIVITY (INDIGENOUS SOURCES, IMPORT SOURCES) The technical and material supply of the company is linked to products and materials necessary to conduct current administrative activities, the weight of these costs being insignificant EVALUATION OF THE SALE ACTIVITY not applicable EVALUATION OF ASPECTS CONNECTED TO COMPANY EMPLOYEES / PERSONNEL S.I.F. OLTENIA S.A. had, on , a number of 51 employees and 2 leaders. Among employees, 33 are employed in jobs requiring higher education. The number of employees decreased by 18% (on a number of 62 employees was recorded), the reduction happening as a consequence of: - staff restructuring for the purpose of reducing salary expenditures 9 persons, - leave on demand 1 person; - retirement 1 person. In the company a union was not organized. The employees designated a representative to represent their interests in relation with the company management. 26

28 EVALUATION OF THE ASPECTS CONNECTED TO THE IMPACT OF THE ISSUER`S BASIC ACTIVITY ON THE SURROUNDING ENVIRONMENT Not applicable EVALUATION OF RESEARCH AND DEVELOPMENT ACTIVITY Not applicable EVALUATION OF THE COMPANY ACTIVITY REGARDING RISK MANAGEMENT Risk management is an integral part of all decision-making and business processes within the company. The leadership of S.I.F. OLTENIA S.A. continuously assesses risks that may affect reaching the company`s objectives and takes the appropriate measures regarding any modification in the conditions in which they develop their activity. S.I.F. OLTENIA S.A., by the complexity of activity it develops, is subject to various risks. The company leadership pays special attention to identifying risks. Company`s exposure to the risks inherent to the business, by daily operations and transactions (especially operations on the capital market) is identified and aggregated by the risk management infrastructure implemented: audit committee, internal auditor, internal control, operational monitoring, hierarchical levels of authorization and validation of transactions. Risks monitoring is performed on eache hierarchical level, existing supervision and approval procedures of the decision-making and trading limits. The internal reporting of risk exposure is continuously made, on activity lines, the company management is permanently kept informed about inherent risks that may appear in conducting business. The main risk factors identified at the level of S.I.F. OLTENIA S.A. are: risk related to economic environment, liquidity risk, currency risk, interest risk, credit risk, portfolio risk, operational risk, reputational risk. RISK RELATED TO ECONOMIC ENVIRONMENT This risk is extremely important, having both direct effects on the activity of S.I.F. OLTENIA S.A., as well as indirect, through commercial companies in which 27

29 S.I.F. OLTENIA S.A. holds participations. The Romanian economy continues to have the characteristics of an emergent economy, and there is a high degree of uncertainty regarding the development of political, economic and social environment. The year 2013 was, economically, a good year, the growth of Romania GDP being of 3,5%, the largest increase among EU member countries. Regarding the developed EU countries, Germany and France, the largest European economies, recorded an economic growth above expectations in the last quarter of the past year, propelling the economy of the Euro zone. In all of 2013, the economy of Euro zone contracted by 0,4% while the EU GDP grew by 0,1%. Romania`s GDP growth, although very good, is given mainly by agriculture and exports (automotive industry). For the year 2014 the Romanian Government and FMI estimate, for our country, an economic advance of 2.2% - 2.5%. Given that the economic growth of Romania is due, in particular, to the results recorded by two sectors (agriculture and automotive industry) and the EU GDP growth is insignificant, we believe that for the year 2014 the economic prospects are not extremely favourable. LIQUIDITY RISK This is particularly linked to holdings held in commercial companies of closed type, existing in the portfolio administered. Thus, the sale of certain holdings- in the event of apparition of certain negative aspects in their economic and financial situation or if the obtainment of liquidities is pursued is particularly heavy, existing the risk of not being possible to obtain a higher price or at least equal to the one that these holdings are evaluated at in the calculation of net asset, in accordance with the A.S.F. Regulations (former R.N.S.C.). At the same time, the low liquidity of the capital market in Romania, makes often difficult even the trading of certain holdings in commercial companies listed on settled markets. Looking ahead to 2014, we anticipate the maintaining of the low level of liquidity for the capital market, due to uncertainties related to Euro area. This aspect is permanently in the attention of the management, seeking solutions to increase the liquidity of the portfolio managed. 28

30 FOREIGN EXCHANGE RISK Given the fact that most of S.I.F. OLTENIA S.A. assets are expressed in national currency, the fluctuations of the exchange rate do not directly affect the company activity. These fluctuations influence the evaluation of investments such as foreign currency deposits. The exposure to this type of risk is also due to holdings in commercial companies of leasing kind, with export activity, etc, whose activity was influenced by the fluctuations of the exchange rate and whose financial results are less predictable. For 2014 we anticipate a stabilization of the level of exchange rate to the current quotations, so that the currency risk is pretty low. INTEREST RISK The year 2013 was characterized by a continous decrease in interests. For 2014, analysts hope for maintaining the economic growth, even if the GDP growth rate is not high enough in order to hope for a revival of economic activity, which will lead to maintaining or even lowering the interests level. In orde to take advantage of the interest volatility, for greater flexibility in the allocation policy of money reserves, we will pursue that the placement of money reserves in monetary instruments to be made especially on short term, of 3-6 months. In 2014 too, it will be pursued the maintaining of a high level of liquidities placed on the monetary market. CREDIT RISK According to the legal provisions, S.I.F. OLTENIA S.A. has not granted any kind of credits or guarantees to third parties. This risk can affect the activity of S.I.F. OLTENIA S.A. indirectly, being the case of the commercial companies from the portfolio which face financial difficulties in paying their payment obligations corresponding to dividends. RISK RELATED TO TAXATION The tax system in Romania is subject to various interpretations and permanent changes. In some cases, the tax authorities may adopt different interpretations toward the company of some fiscal aspects and interests and penalties can be calculated. Statements concerning taxes and duties may be subject to control and 29

31 revision for a five year period, generally after the date of their submission. According to Romanian law, the controlled periods may be subject in the future to additional checks. The company leadership believes that, although, in its opinion, fair values for duties, taxes and other debts to the state were recorded, there is however a risk that authorities, in some respects, have a different view towards society. MARKET RISK For market risk management are used especially methods of fundamental analysis, forecasts on the evolution of economic sectors and financial markets. In the analysis of market risk it is taken into account: - the evaluation of profitableness of various classes of assets; - concentration of assets in the same market, geographically, or economic sector. - the strategic allocation of long-term investments. OPERATIONAL RISK Operational risk is defined as being The risk of loss resulting from inadequate or improperly implemented internal procedures, by people, systems or external events. (Basel Committee on Banking Supervising 2001) So the operational riks is connected to management of human resources, as well as to external events. In the context of an investment company, the operational risk represents the risk of recording financial losses or failure to accomplish the estimated profits. This is determined by: - internal factors - the existence of sufficient qualified personnel; - inadequate ongoing of certain activities, due to insufficient internal regulations; - the existence of inadequate information systems. - external factors - Hostile macroeconomic conditions ; - Socio-political events; - Frequent changes in the business environment, as a result of changes in legislation. 30

32 Managing operational risk supposes the management of processes regarding identification, evaluation and assessment of operational risks, establishing responsibilities, taking measures to mitigate or anticipate them, periodic review and progress monitoring. It should be noted the fact that, in managing the operational risk, models and techniques are not the most important, but the attitude towards the risk, which is formed over time and is an aspect of organizational culture. PORTFOLIO RISK THE CLASSIFICATION OF THE CATEGORIES OF ASSETS WITHIN THE LIMITS IMPOSED BY LAW According to the provisions of art. 235 (1) of the R.N.S.C. Regulations no. 15/2004, S.I.F. OLTENIA S.A. falls within the AOPC category (Other Organisms of Collective Placement) with a diversified investments policy. The ownership limits on different categories of assets are regulated by art. 188 of the R.N.S.C. Regulations no. 15/2004. During the year 2013, the structure of the portfolio and its compliance with the legal provisions was periodically analyzed. The structure of the portfolio of financial assets on appears as follows: a) Securities and instruments of the monetary market not admitted to trading allowed limit: 20% of assets Asset type Shares held in companies of "closed" * type Value of assets according to the Disposition of measures no. 23/ of R.N.S.C. (A.S.F.) - lei - Weight in net asset - % - Weight in assets - % ,72 8,02 Bank deposits ,44 2,24 TOTAL ,16 10,26 * The calculation did not take into account according to art. 275 (2) of R.N.S.C. Regulations no. 15/2004 the holding possessed in Banca Comercială Română S.A. Bucharest. 31

33 b) Securities and/or instruments of the monetary market issued by the same issuer exposure on one issuer: 10% of assets BANCA TRANSILVANIA S.A. Cluj Napoca (market symbol TLV) Asset type Shares issued by Banca Transilvania S.A. Cluj Napoca Value of assets according to the Disposition of measures no. 23/ of R.N.S.C. (A.S.F.) - lei - Weight in net asset - % - Weight in assets - % ,62 4,25 Bank deposits ,53 1,41 TOTAL ,15 5,66 The holding possessed in OMV PETROM S.A. Bucharest represented, on , 18,76% of assets, respectively 20,38% of net assets, determined in accordance with the Disposition of measures no. 23/ of R.N.S.C. (A.S.F.), falling however in the exception provided in art. 188 letter b) of these regulations. c) Financial instruments issued by entities belonging to the same group - allowed limit: 50% of assets Group name Asset Value according to the Disposition of measures no. 23/ of R.N.S.C. (A.S.F.) - lei - Weight in the net asset - % - Weight in assets - % - The Group Banca Transilvania, of which: - shares Banca Transilvania ,62 4,25 - shares BT ASSET MANAGEMENT ,05 0,05 SAI - shares BT INDEX ,08 0,07 Bank deposits ,53 1,41 TOTAL ,28 5,78 32

34 d) The exposure to the counterpart risk in a transaction with derived financial instruments not applicable e) The value of current accounts and cash maximum limit allowed: 10% of the assets value The value of current accounts and cash highlighted in the net asset on is of lei value that contains up to date interests for bank deposits - representing 2,24% of the assets value. f) Bank deposits in the same bank allowed limit: 30% of assets Total holdings in bank deposits is of lei, representing 2,24% of the assets value. g) Global exposure toward financial instruments derived - not applicable. h) Participation titles in AOPC allowed limit: 50% of assets. S.I.F. OLTENIA S.A. holds participation titles in OPCVM/AOPC registered in the net asset on , worth lei, representing 0,13% of the assets value. S.I.F. OLTENIA S.A. funded the entire activity from its own sources, on de not having committed any credits PERSPECTIVE ELEMENTS REGARDING THE COMPANY BUSINESS a) The liquidity of S.I.F. OLTENIA S.A. shares portfolio formed on at the rate of 62,53% of participations in the social capital of certain commercial companies listed (on Bucharest Stock Exchange, R.A.S.D.A.Q. and SIBEX) - is closely related to the liquidity of the capital market. Given that, in the year 2014, the liquidity of the capital markets will remain low, the liquidity of the portfolio will be affected. b) The capital expenditures that we propose in the year 2014, respectively the investments that will be made both on the capital market, and on the monetary market, will not affect the financial situation of the company, which will be accomplished from own sources. 33

35 c) In the year 2014 it is anticipated that the economy of Romania will keep on growing, with an appreciation of approximately 2,2% 2,5% of GDP. 2. THE TANGIBLE ASSETS OF THE COMPANY S.I.F. OLTENIA S.A., by nature of the activity, does not hold in property production facilities. The tangible assets in property have an unsignificant value, being recorded in accountancy with lei and represent 1,46% of the value of fixed assets. They are represented by lands and fixed assets. The main fixed assets are buildings, electrical and heating installations, calculation technique and cars needed to carry out current administrative activity. There are no litigations concerning the ownership right on the tangible assets of the patrimony. 3. MARKET OF SECURITIES ISSUED BY THE COMPANY 3.1. STATEMENT OF THE MARKETS IN ROMANIA AND OTHER COUNTRIES WHERE THE SECURITIES ISSUED BY THE COMPANY ARE NEGOTIATED The shares of S.I.F. OLTENIA S.A. are listed starting with in the Ist category of Bucharest Stock Exchange DESCRIPTION OF COMPANY POLICY ON DIVIDENDS S.I.F. OLTENIA S.A. distributed dividends throughout the entire period of operation. The dividends policy aimed at meeting both the interests of short term investors, and the institutional development on medium and long term, so that some of the net profit was allocated to reserves, in order to create own sources necessary to the investment activity. 34

36 lei lei lei proposal- - lei - Gross dividends to be distributed - total Gross dividends paid - total Gross dividends paid / Gross dividends to be distributed - % - 76,70 77,56 76,73 - Gross dividend /share 0,075 0,13 0,13 0,16 Net profit Allocation from net profit for dividends - % - 53,72 90,39 85,34 71,40 The General Assembly of Shareholders from approved with majority of votes the distribution of dividends due for the financial exercise of the year 2012, starting with the month of September The expenses related to dividends payment, according to the decisions of the General Assemblies of Shareholders, were borne by shareholders, in proportion to the amounts due. The dividends payment was made through Banca Comerciala Româna S.A. Bucharest, Compania Naţionala Poşta Română (resident natural persons), by bank transfer or cash office. Information about dividends payment was communicated to shareholders according to the information requests of the regulations of the R.N.S.C. (A.S.F.) Bucharest Stock Exchange. For the year 2013, the Administration Board proposes to the General Assembly of Shareholders the distribution of a gross dividend of 0,16 lei/ share, which represents a distribution rate of 71,40% of the total net profit realized in the fiscal year Arrangements for payment of dividends are proposed to be: I. By means of a bank (branches, subsidiaries, agencies) Resident natural persons shareholders who hold on the registration date at least 500 shares, who in the domicile locality have opened a functional entity (branch/subsidiary/agency) of the bank, may raise dividends from this entity, based 35