Fondul Proprietatea : 2021 Quarterly Report 30 September 2021

Fondul Proprietatea SA

Quarterly Report

For the Quarter Ended 30 September 2021

(This is a translation from the official Romanian version)

Fondul Proprietatea SA

Contents

List of Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Analysis of the Fund's Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Regulated Stock Market Trading. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Performance Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Management and Governance of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
General Shareholders Meeting Resolutions in the Third Quarter of 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
GDR Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Credit Facility Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Dividend Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Investor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Buy-back Programmes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Impact of COVID-19 Pandemic on the Fund's Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Regulatory Updates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Portfolio Analysis and Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
NAV Methodology and NAV Evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Investment Strategy and Portfolio Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Energy Sector Updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Update on the Largest 10 Portfolio Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Financial Statements Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34
Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38

Annexes

Annex 1 Condensed Interim Financial Statements for the nine-month period ended 30 September 2021, prepared in accordance with IAS 34 Interim Financial Reporting and applying the FSA Norm no. 39/ 2015, regarding the approval of the

accounting regulations in accordance with IFRS, applicable to the entities authorised, regulated and supervised by the FSA - Financial Investments and Instruments Sector

Annex 2 Statement of Assets and Obligations of Fondul Proprietatea SA as at 30 September 2021, prepared in accordance with CNVM Regulation 4/2010 (Annex no. 4)

Fondul Proprietatea SA	Quarterly Report for the quarter ended 30 September 2021	1

Fondul Proprietatea SA

List of Abbreviations

AIF	Alternative Investment Fund
AIF Law	Romanian Law no. 243/2019 on the regulation of alternative investment funds and
amending and supplementing certain normative acts
AIF Regulation	Regulation no. 7/2020 on the authorisation and function of alternative investment
funds, issued by the Financial Supervisory Authority
AIFM	Alternative Investment Fund Manager
AIFM Directive	Directive 2011/61/EU on Alternative Investment Fund Managers
ANAR	National Administration of Romanian Waters
ANRE	Romanian Energy Regulatory Authority
ATS	Alternative Trading System
BRM	Romanian Commodities Exchange
BVB	Bucharest Stock Exchange
CIVM	Certification of registration of securities
CNVM	National Securities Commission (currently FSA)
Companies' Law	Law 31/1990 regarding companies, with subsequent amendments
Depozitarul Central SA	Romanian Central Depositary
EGSM	Extraordinary General Meeting of Shareholders
ESEF	European single electronic format
ESG	Environmental, Social and Governance
EU	European Union
Fondul Proprietatea/ the Fund/ FP	Fondul Proprietatea SA
FSA	Romanian Financial Supervisory Authority
FTIS/ Alternative Investment Fund	Franklin Templeton International Services S.à r.l.
Manager/ Sole Director
GDP	Gross Domestic Product
GDR	Global Depositary Receipt
GEO	Government Emergency Ordinance
GEO 114/2018	GEO 114/29 December 2018 on the implementation of certain measures in the field of
public investments and of fiscal-budgetary measures and the amendment and
	completion of certain normative acts
GEO 118/2021	GEO 118/20211 for establishing the compensation scheme for consumption of
electricity and natural gas for the cold season 2021-2022
GEO 1/2020	GEO 1/ 9 January 2020 regarding some fiscal-budgetary measures and the
amendment and completion of some normative acts
GEO 70/2020	GEO 70/ 14 May 2020 on the regulation of certain measures, starting with 15 May
2020, in the context of the epidemiological situation caused by the spread of SARS-
	CoV-2 coronavirus
GEO 84/2021	GEO 84/ 5 August 2021 which brought modifications to GEO 70/2020
GSM	General Shareholders Meeting
IFRS	International Financial Reporting Standards as endorsed by the European Union
IPS	Investment Policy Statement
LSE	London Stock Exchange
NAV	Net Asset Value
PRIIPs	Packaged retail and insurance-based investment products
OGSM	Ordinary General Meeting of Shareholders
REGS	Main market (Regular) of Bucharest Stock Exchange
RRR	Regulatory Rate of Return

Fondul Proprietatea SA	Quarterly Report for the quarter ended 30 September 2021	2

Fondul Proprietatea SA

Overview

Company Information

Fondul Proprietatea was incorporated on 28 December 2005 as a joint stock company operating as a closed-end investment company. The Fund is registered with the Bucharest Trade Register under the number J40/21901/2005 and has the sole registration code 18253260.

The Fund's investment objective is the maximisation of returns to shareholders and the increase of the net asset value per share via investments mainly in Romanian equities and equity-linked securities.

During the reporting period, the Fund was managed by FTIS as its Sole Director and AIFM under the AIFM Directive and local implementation regulations, based on the Management Agreement in force between 1 April 2020 - 31 March 2022. The portfolio management and the administrative activities are performed by FTIS via its Bucharest Branch.

Since 25 January 2011, the Fund's shares have been listed on BVB. Since 29 April 2015, the Fund's GDRs issued by The Bank of New York Mellon as GDR Depositary, having the Fund's shares as support, have been listed on the Specialist Fund Market of LSE.

	Share information
	Primary listing	Bucharest Stock Exchange - since 25 January 2011
	Secondary listing	London Stock Exchange - since 29 April 2015
	BVB symbol	FP
	LSE symbol	FP.
	Bloomberg ticker on BVB	FP RO
	Bloomberg ticker on LSE	FP/ LI
	Reuters ticker on BVB	FP.BX
	Reuters ticker on LSE	FPq.L
	ISIN	ROFPTAACNOR5
	FSA register no	PJR09SIIR/400006/18.08.2010
	LEI code	549300PVO1VWBFH3DO07
	CIVM registration no	AC-4522-7/3.11.2021
	Source: Fondul Proprietatea

Shareholder Information

Shareholder Structure as at 30 September 20211

Shareholder categories	% of subscribed	% of paid-in share	% of voting
	share capital	capital	rights2
Romanian institutional shareholders	32.74	34.48	40.06
Romanian private individuals	17.57	18.51	21.50
The Bank of New York Mellon (GDRs)3	15.61	16.44	19.07
Foreign institutional shareholders	12.87	13.55	15.74
Foreign private individuals	2.88	3.03	3.52
Romanian State represented by Ministry of Public Finance	5.14	0.10	0.11
Treasury shares4	13.19	13.89	-

Source: Depozitarul Central SA

As at 30 September 2021 the Fund had 10,052 shareholders and the total number of voting rights was 5,893,890,599.

1. Information provided based on settlement date of transactions
2. The unpaid shares of the Romanian State, represented by the Ministry of Public Finance, and the treasury shares held by FP were not taken into consideration at the calculation of the total number of voting rights
3. Fondul Proprietatea held 25,951 GDRs (equivalent to 1,297,550 shares) as at 30 September 2021
4. 951,157,755 treasury shares out of which 797,961,287 treasury shares acquired in the eleventh buyback program and 153,196,468 treasury shares acquired in the twelfth buyback program (based on Depozitarul Central SA). Please see subsequent events section for updated information.

Fondul Proprietatea SA	Quarterly Report for the quarter ended 30 September 2021	3

Fondul Proprietatea SA

Largest Shareholders

Shareholder	Latest ownership	% of voting
disclosure	rights
NN Group	6 March 2020	10.01%
Silver Point Capital Funds	4 May 2021	5.07%
Allianz-Tiriac private pension funds	1 July 2019	5.05%

Source: ownership disclosures submitted by shareholders

Share Capital Information

Share capital information	30 September 2021	30 September 2020	31 December 2020
Issued share capital (RON)	3,749,282,292.08	3,749,282,292.08	3,749,282,292.08
Paid in share capital (RON)	3,560,099,870.08	3,560,099,870.08	3,560,099,870.08
Number of shares in issue	7,210,158,254	7,210,158,254	7,210,158,254
Number of paid shares	6,846,345,904	6,846,345,904	6,846,345,904
Nominal value per share (RON)	0.52	0.52	0.52

Source: Fondul Proprietatea

Note: Please see Subsequent events section for updated information.

Summary of Financial Results

The following table shows a summary of the financial information of the Fund during the period:

NAV* and share price developments**	Notes	Q1 2021	Q2 2021	Q3 2021	Q3 2020
Total shareholders' equity at the end of the period		10,850.8	11,428.7	12,264.3	9,909.2
(RON million)
Total shareholders' equity change in period (%)		+5.7%	+5.3%	+7.3%	-2.3%
Total NAV at the end of the period (RON million)	a	10,850.8	11,428.7	12,264.3	9,909.1
Total NAV change in period (%)		+5.7%	+5.3%	+7.3%	-2.3%
NAV per share at the end of the period (RON)	a	1.8166	1.9309	2.0812	1.5881
NAV per share at the end of the period (USD)	a	0.4329	0.4661	0.4879	0.3816
NAV per share change in the period (%)		+7.0%	+6.3%	+7.8%	+1.7%
NAV per share total return in the period (%)	g	+7.0%	+10.7%	+11.9%	+1.7%
Share price as at the end of the period (RON)	b	1.7450	1.8500	1.8100	1.2950
Share price low in the period (RON)	b	1.4400	1.6700	1.7340	1.1450
Share price high in the period (RON)	b	1.7450	1.8600	1.8780	1.3300
Share price change in the period (%)		+20.3%	+6.0%	-2.2%	+2.8%
Share price total return in the period (%)	h	+20.3%	+10.4%	+1.7%	+2.8%
Share price (discount) to NAV as at the end of the	d	-3.9%	-4.2%	-13.0%	-18.5%
period (%)
Average share price (discount) / premium in the	d	-7.1%	-1.2%	-3.1%	-20.7%
period (%)
Average daily share turnover in the period (RON	c, j	3.9	4.8	2.4	7.2
million)
GDR price as at the end of the period (USD)	e	20.4000	22.6000	20.8000	15.5000
GDR price low in the period (USD)	e	17.4000	20.2000	20.6000	13.6000
GDR price high in the period (USD)	e	20.4000	22.6000	22.6000	15.8000
GDR price change in the period (%)		+19.3%	+10.8%	-8.0%	+7.6%
GDR price total return in the period (%)	i	+19.3%	+15.0%	-4.7%	+7.6%
GDR price discount to NAV as at the end of the	d	-5.8%	-3.0%	-14.7%	-18.8%
period (%)
Average GDR price (discount) / premium in the	d	-9.5%	-2.2%	-4.6%	-20.6%
period (%)
Average daily GDR turnover in the period (USD	f, k	0.7	1.8	0.3	0.8
million)

Source: Fondul Proprietatea, BVB (for shares) and Bloomberg (for GDRs)

• NAV for the end of each period was computed in the last working day of the month
• Period should be read as Q1 2021, Q2 2021, Q3 2021, and Q3 2020 respectively

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