ACTIVITY PROGRAM. INVESTMENT POLICY. REB -2013 1 I. THE ACTIVITY PROGRAM FOR 2013 and INVESTMENT POLICY A. MACROECONOMIC ASSUMPTIONS A.1. RETROSPECTIVE FOR 2012 Retrospectively, 2012, as well as 2011, was a year marked by turmoil on financial markets, which was due, on one side, to the difficulty registered by the Euro Zone in controlling the sovereign debts crisis efficiently and, on the other side to the complicated political situation in the USA, under the pressure of presidential elections. The central banks were the engine of the financial markets, their monetary policies being increasingly loose, trying to determine investors to have trust in the measures taken and in the ability to overpass the 2011 critical moment. The effects of the decision to maintain low interest rates, supplementing supporting programs through liquidities, unlimited bonds acquisition, determined emphasized growth of the shares markets. The evolution of the financial markets in 2012 was defined by elements such as: • excellent performances of the high yields and secured, fixed-income debentures of the emerging markets as well as the fast decline of the risk premiums; • investors focus change towards German and American government securities; • comforting financial indexes and massive cash pumps by the central banks; • Greece complicated situation generated anxiety in the markets, determining massive decrese in the positions of risk; • steps taken by the European leaders towards a larger economical and political integration of the 17 states members of the Euro Zone, opening the paths towards a direct support for the vulnerable banks, without having a negative impact on the national governments budget; • ECB policy change towards a strong position of a last resort creditor greately reduced the systemic risk in the Euro Zone; • continuous instability of the European government securities temporarily calmed down by a massive decrease of the premium risks for countries such as Italy and Spain without the ECB; • actions in cyclic sectors outrun the performance of the defensive ones which became rather expensive; • launching of theFED third QE round registered modest effects; • Middle East turmoil impacted the petrol price; OGMS 04/05 apr 2013 It. 7 Approval of the Activity Program for 2013 and Investment Policies of SIF Moldova Approval of the Revenue and Expense Budget for 2013
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ACTIVITY PROGRAM. INVESTMENT POLICY. REB -2013
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I. THE ACTIVITY PROGRAM FOR 2013 and INVESTMENT POLICY
A. MACROECONOMIC ASSUMPTIONS
A.1. RETROSPECTIVE FOR 2012
Retrospectively, 2012, as well as 2011, was a year marked by turmoil on financial markets,
which was due, on one side, to the difficulty registered by the Euro Zone in controlling the
sovereign debts crisis efficiently and, on the other side to the complicated political
situation in the USA, under the pressure of presidential elections. The central banks were
the engine of the financial markets, their monetary policies being increasingly loose, trying
to determine investors to have trust in the measures taken and in the ability to overpass
the 2011 critical moment. The effects of the decision to maintain low interest rates,
supplementing supporting programs through liquidities, unlimited bonds acquisition,
determined emphasized growth of the shares markets. The evolution of the financial
markets in 2012 was defined by elements such as:
• excellent performances of the high yields and secured, fixed-income debentures of
the emerging markets as well as the fast decline of the risk premiums;
• investors focus change towards German and American government securities;
• comforting financial indexes and massive cash pumps by the central banks;
• Greece complicated situation generated anxiety in the markets, determining
massive decrese in the positions of risk;
• steps taken by the European leaders towards a larger economical and political
integration of the 17 states members of the Euro Zone, opening the paths towards a
direct support for the vulnerable banks, without having a negative impact on the
national governments budget;
• ECB policy change towards a strong position of a last resort creditor greately
reduced the systemic risk in the Euro Zone;
• continuous instability of the European government securities temporarily calmed
down by a massive decrease of the premium risks for countries such as Italy and
Spain without the ECB;
• actions in cyclic sectors outrun the performance of the defensive ones which became
rather expensive;
• launching of theFED third QE round registered modest effects;
• Middle East turmoil impacted the petrol price;
OGMS 04/05 apr 2013
It. 7
Approval of the Activity Program for 2013 and Investment
Policies of SIF Moldova
Approval of the Revenue and Expense Budget for 2013
ACTIVITY PROGRAM. INVESTMENT POLICY. REB -2013
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• the development rhythm of the global economy slowed down, as in Europe, at the
end of the year, there were discussions about Euro Zone economy falling back into
recession.
A.2. ASSUMPTIONS FOR 2013
Considering the macroeconomic context in which the economy developed in 2012, it can be
stated that 2013 will be defined by the following evolutions:
• the global economical environment remains fragile, with a slow recovery of the
developed countries which will impact an increased growth of the global economy;
• Global GDP drops down (due to a drop down of the economic activity in Europe and
fiscal and budgetary issues in USA) to a diminishing revised average of 3.4%1;
• World economy might recover in the first part of the year, being able to potentially
stabilize and accelerate in the last part of the year; World Bank forecast (percentage change from previous year, except interest rates and oil price) 2009 2010 2011e 2012f 2013f
Global GDP growth World -2.3 4.1 2.7 2.5 3.1 Memo item: World (PPP weights) -0.9 5.0 3.7 3.4 4.0 High income -3.7 3.0 1.6 1.4 2.0 OECD Countries -3.7 2.8 1.4 1.3 1.9 Euro Area -4.2 1.7 1.6 -0.3 1.1 Japan -5.5 4.5 -0.9 1.9 1.6 United States -3.5 3.0 1.7 2.2 2.4 Non-OECD countries -1.5 7.2 4.5 3.2 4.1
Source: The World Bank: ”The global outlook in summary, 2010-2014, Jan 2013”
• Forecast on the evolution of
emerging countries are not so
optimistical, suffering negative
corrections as compared with
the initial forecasts;
Sursa: The World Bank: ”The global outlook in summary, 2010-2014, ian 2013
• In developed economies, the growth could register an average of 1.3%2 considering
reducing the expenses, increased unemployment3 rate and fragility of consumer’s
trust and business environment.
Forecast of the economic growth for 2013/2014
Year over Year Q4 over Q4
projection
Difference to WEO Oct 2012
Estimate Projection
1Source: OMCD, FMI - "Perspectives of the global economy", Octobere 2012, Reuters 2 Source: World Bank, FMI World Outlook 2013, Reuters 3 In Europe for example, apart of Germany, the unemployment rates register an increasing trend putting pressure on consumption decrease
Euro Zone 1.40 –0.4 –0.2 1.00 –0.3 –0.1 –0.7 0.50 1.00
Other developed countries 3.30 1.90 2.70 3.30 –0.3 –0.1 2.00 3.50 3.20 New Asian industrialized economies 4.00 1.80 3.20 3.90 –0.4 –0.2 2.40 3.90 3.80
Emerging markets and developing countries 6.30 5.10 5.50 5.90 –0.1 0.00 5.50 5.90 6.20 Central and Eastern Europe 5.30 1.80 2.40 3.10 –0.1 0.00 1.60 3.20 3.10
Source: FMI "World Economic Outlook Update"
• 1.8% the IAPC inflation rate for 2013 in Euro Zone, amid anticipating an
emphasized moderation of the shocks recently generating the price increase for the
raw materials, consolidated with the loosening of inflationary pressure put by the
cost evolution unitary with labour force4;
• 0.14% the 3 month EURIBOR interest rate for 2013 due to new potential measures
to boost the economic activities in the euro zone 3
Source: NBR assumptions based on data prpvided by European Commission, Consensus Economics and Bloomberg
* Effective index, calculated based on structuring Romanian exports on countries of destination within EU.
Considering the above, the following can be anticipated:
• A growth between 3.4% an 3.8% for the global economy;
• Improvement of the general economic background, mainly due to the revival of
USA’s private sector as well as to constraints related to supplying with raw
materials;
• Continuation of the monetary relaxation policy advanced by FED for a period longer
than expected by the markets (the main scenario considers the assumption that
USA will manage an economic program aiming at supporting the economic growth
and a reduced inflation, to allow a relaxed monetary policy, based on a political
transition, with lower energy and transportation costs to support the comeback of
the industrial growth);
4 Source: NBR assumptions based on data provided by European commission, Consensus Economics and Bloomberg
ACTIVITY PROGRAM. INVESTMENT POLICY. REB -2013
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• Mitigation of risk in the euro zone in the context of political and institutional
measures (mainly the banking association) which might lessen the crisis (the danger
of maintaining political risks in PIIGS countries needs to be considered);
• Maintaining the economic imbalances between the periphery and center of
European Union which might overheat the German economy;
• Uncertainties in Germany and Italy, specific for election years;
• Differences between emerging countries as regards to growth
In the general macroeconomic context of possible slowdown in the global economy and
under regional constraints pressure, we estimate that Romania's evolution in 2013 will be
characterized by the following external projection assumptions:
GDP - growth forecast: about 1.6%, in line with IMF estimates made at the end
of 29 ian.2013 assessment missions and official data on building Romanian Budget
for this year5 and given that real GDP growth in 2012 was 0.2%. Simultaneously,
the National Commission for Prognosis estimates for 2013 a more optimistic GDP
growth – about 2%6
Inflation - forecast of 3.5% + / -
1.8%, given that inflation rose to 5% at
the end of 2012, partly because of
higher food prices as a result of poor
harvest. IMF7 anticipates a decline in
the inflation index in the second half of
2013, exceeding then the 3.5% level
gently until the end of the year.
Source: NIS, NBR calculation and forecast
Inflation target assumed by NBR for 2013 is lower, of 2.5%, but the forecast is of
3.5% with uncertainty interval of +/- 1.8% as a stage of multiannual inflation target,
compatible with the stability definition of prices for medium term in the Romanian
economy – intermediate period meant to ensure the transition to the stage of long
5 5 Romania's budget for 2013 has been built on macroeconomic indicators, predicting "an 1.6% economic growth in GDP, an average exchange rate of 4.5 lei per euro and inflation of 4.3%, "according to statements of Finance Minister Daniel Chitoiu. 6 6 National Commission for Prognosis - Designed key economic indicators for the period 2012-2016 7 7 www.imf.org/external/country/ROU
Euros in 2013 and other 4.5 billion Euros in 2014), which might influence the
interval 4,510-4,55 RON for one Euro, occurring the possibility of exceeding the
superior limit (considering that, in 2012, RON exceeded the psychological threshold
of 4.5RON/Euro, reaching a record minimum level of 4.6481 RON for one Euro).
The estimate considered to construct the Romania’s budget11was of 4.5 RON for 1
Euro.
Implementing the decision of including Romania in the index JPMorgan GBI-EM
Index Series positively influenced the national currency in relation with the
European currency and the efficiency for the government bonds, but it is
considered12that the effects are already included in the exchange rate.
• Signing the stand-by agreement with IMF will allow the preservation of the current
level registered in 2012 on the credit default swaps (CDS) market, where on
January 21, 2013 Romania’s spread was of only 190 (lower than that of other
countries in the region);
• For capital changes13 – positive estimates, considering that Romania is placed
sixth in a Bloomberg Markets Magazine classification of the best 25 border markets
for investors.
10 Coface anticipates an exchange rate of 4.5 RON/Euro, at the half of this year 11 In accordance with the statements of Minister of Finance, Daniel Chitoiu. 12 Declaration of Coface Romania’s country manager 13 Bloomberg Markets Magazine
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B. THE ACTIVITY PROGRAM 2013. INVESTMENT POLICY
The activity program for 2013 is based on multiannual coordinates of the Investment policy,
structured on type of financial instrument and sector, as was shown in the Investment Policy
Statement 2011-2013 form, approved by shareholders.
In the portfolio optimization process we follow the need to re-examine the exposure limits
according to trends in the macroeconomic environment, while respecting the prudential
procedures and the information of return / risk provided by IT applications.
As general, we will properly diversify assets, in order to avoid excessive reliance on any particular asset or issuer. In this respect, for the main issuers of portfolio we follow a general level of exposure of 10% of total assets on issue; exceptional cases generated by a significant growth potential, aiming at falling within this limit multiannually, by complying with the law.
In the same time, to develop the
investment policy, we consider
identifying new solutions for
improving SIF Moldova’s
performance, by making
researches among privately
owned projects in the sector of
renewable energy, as well as in
agriculture and high-tech. Source: INS “Directions in the evolution of economic activity for the period January - March 2013”
Listed shares
In the process of restructuring and dynamic
replacement of assets, we aim at building a portfolio
consisting primarily of shares, especially in the
listed / traded category, primarily on the Romanian
market, but also in the region, this orientation being
favored by central banks policy by maintaining very
low rates of the interest, massive liquidity support
and especially the new measures promoted by
complex and innovative monetary policy.
Objective (% of total value of assets) 2010 2011 target actual 2012
Maintaining the main weight in quoted securities 60,9 81,5 82
+/- 5 83,0
60.9%
81.5% 83.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-10 Dec-11 Dec-12
Evolutia ponderii titlurilor cotate in total active
ACTIVITY PROGRAM. INVESTMENT POLICY. REB -2013
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In perspective, the period 2013 – 2014 could be decisive in supporting global revival, reason
for which a more optimistic view is shaped, as compared with the previous period.
Unlisted shares
Regarding historical sub-portfolio of closed companies, we continue the restructuring
process, following quantitative decrease of holdings in unlisted companies, which have no
growth potential in the medium / long term, while obtaining liquidity to support investment
programs.
Unlisted companies in SIF Moldova’s portfolio are being permanently monitored in order to
evaluate their growth potential and/or that of distributing dividends, with the scope of being
kept in portfolio or removed. In parallel, we are carrying out the activity of direct
administration, which demands SIF Moldova’s
direct involvement, in it’s quality of shareholder
within companies management.
In the long run, the market value of unlisted
companies decreased substantially, due to selling
the holding in BCR and the listing of FP.
Annually, substantial effort made to reduce
exposure on unlisted companies continued,
although the economic and financial situation was
not favorable, the negotiations being carried out
in a specific "buyer's market".
As well, we take into account the issuers’ stages of
financial and operational restructuring in the progress of exits and in transforming minority
holdings in liquidities. Considering the extension of systemic crisis only a few issuers reached
a favourable position as regards to a possible transaction, most of them still being in need of
financial and operational restructuring before being put on sale.
Other instruments
UCITS investments- in both equity and fixed income instruments funds, mainly aimed to
obtain a higher yield compared to bank interest and also an increase of performance on
particular sectors/ issuers.
Objective (% of total value of assets) 2010 2011 target actual 2012
Maintaining the main weight in quoted securities 28.7 3.22 2 3.29
28.7%
3.22% 3.29%
0%
10%
20%
30%
40%
Dec-10 Dec-11 Dec-12
Evolutia ponderii titlurilor necotate in total active
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Bond segment, less represented, is built for placing financial resources with a relatively
stable performance, combined with moderate growth potential, in the context of Romania's
inclusion in JP Morgan bonds index that can attract a large influx of foreign investors.
Considering an optimistic scenario of macroeconomic evolution, we aim at finding
opportunities on corporate bonds’ segment. The anticipations of having an inflation and
capital cost appreciation are influenced by the coercion of Basel III directives which limit
credit availability for certain debtors, as we can determine an attempt to roll over the debts by
issuing mandatory credits on shares markets. The tendency is very acute in Western Europe
where 83% of these companies now include bonds in their shares structure. As well 71% of the
companies in Western Europe keep their debts redenominated in multiple currencies.
Sectoral allocation
Sectorally, if in the 2009-2013 mandate the asset allocation strategy aimed at reducing
overexposure on banking sector and growth of the energy-utilities sector, according to the
basket of assets listed on the stock market, in the current program, the basic criterion is
orientation for finishing the sectoral structures already built, prevailing essentially qualitative
aspects, related to the liquidity and performance potential.
Banking sector
Objective (% of total value of assets) 2010 2011 target actual 2012
Reducing the financial sector’s weight by maintaining it as main sector
61,8 52,4 50
+/- 10 47,3
Sizing banking exposures will individualize and will depend crucially on the ability of
individual banks to revive lending process
and reduce the level of non-performing
loans, given that some issuers have already
increased their risk management14 capacity
and revealed a viable appetite for
involvement in real economy. We believe
that the global recovery will return to
sustained pace as from the beginning of the
last year and recover the slowdown caused
by disappointments of euro- crisis, carrying
along the cyclic sectors.
14The Weekly Report Chart Advisor Investopia
61.8%
52.4% 47.3%
0%
10%
20%
30%
40%
50%
60%
70%
Dec-10 Dec-11 Dec-12
Evolutia ponderii titlurilor bancare in total active
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Sizing trading operations within the financial sector aims at maintaining an optimal balance
between the need of cash for further investment programs and dividend expectations of
shareholders.
At the end of 2012, the financial-banking sector represented
47.33% of SIF Moldova’s total assets. Main listings of total assests
in the financial banking sector were represented by Erste Bank
(25.25%), BRD (10.63%) and Banca Transilvania (9.8%).
Through ERSTE BANK operations we aim at capitalizing the
profits generated by the potential of this issuer who has a high
volatility, considering its ascension in 2012, when applied
management policies succeeded in counteracting a part of the
consequences recession had on banks. On this equity, we monitor the risk, both from the
perspective of volatility (as a measure of the total risk which includes both systemic option as
well as the unsystemic one -28% quarter IV 2012), and beta index (as a measure for the market
risk, systemically reported to the overall risk of the stock exchange market -1,6 quarter IV 2012).
Important domestic banking holdings (BRD, TLV) have as bench-mark the general listing
limit level on issuer of maximum 10% out of total assets, being able to exceed it by 1% to
capitalize the cumulation, respectively selling opportunities. Operations on each equity are
based on technical analysis indexes (P/BV, P/E, capital adequacy indexes, credit risk costs,
NPL ratio and NPL coverage), in comparison with sector’s global indexes and quantitative
analysis indexes (performance/risk).
We aim at listing on the financial banking sector maximum 50% out of total assets,
with the possibility of temporarily exceeding it, considering that fundamental data for
banks improved, the systemic risk of Euro Zone disintegration diminished, financing costs
reduced and an economic recovery would support a growth of credits, interest margins and
would facilitate provisioning credits. Out of caution, we do not ignore, in the stated
procyclical attitude, the political risks which might come back in the limelight, joined by
nervousness and volatility, determining fast intervention in the banking listing which is
sensitive to these events.
Energy sector (oil & gas, utilities)
Continuing the assumed long-term strategy, we consider strengthening the energetic pylon as
it was provided (electricity, oil, gas, utilities, related services, plus holdings through Fondul
Proprietatea, possibly renewable energy projects), by addition of holdings in companies for
which the listing process for the sale of State holdings has not developed in 2012.
The smooth adjustment between sectors considers balancing operations between new set
entries (Romgaz, Transgaz, Nuclearelectrica, Hidroelectrica etc.) and previous business line
investments, to improve performance neeed to support BVC objectives, simultaneously with
Objective (% of total value of assets) 2010 2011 target achieved
2012
Growing the weight on the energy sector 13,2 17,2 25 22,6
EBS
BRD
TLV
altele
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managing the commited risk. Selectively, from the sector we mainly aim at considering the oil
and natural gas subsector, for which there are fewer price set constraints in comparison with
the utility sector.
We consider substantial grants, taking into account that the listing programs will be made in
2013/2014, offering major opportunities for high potential investments that could reach
maturity on a medium term.
We aim the completion of the energy sector with attractive issuers as performance, efficiency,
predictability and potential of dividend achievement. Also, besides the already established
markets, the analysis will intensify for regional markets, targeting also Eastern European
companies, with privatization / listing potential.
The oil& gas subsector appreciation perspective mainly depends on: recovery degree of the
developed economies (main consumers), level and dynamics of the global demand, USD
evolution, level of global oil stock, annual appreciation degree of production and the existence
of conflict zones in main oil extraction/production sites. Investments in oil companies having
an important gas component or own a gas division in which the massively invested are
encouraged, as the risk of oil price evolution is low (investments are considered profitable
until the value of 100USD/bbl).
SIF Moldova continues the analysis on renewable energy projects15 (solar, wind, hydro,
biomass, etc.) with the possibility of initiating investments in profitable conditions.
The selection of these privately owned projects is made based on rigorous criteria that look at
both initiators’ renown (quality and size of assets portfolio, success of previous projects), and
rewarding profitable conditions (attractive rate of return, financial amortization no longer
than 5-7 years, clear contractual clauses that allow exit), in agreement with financial
resources available for such a project.
At the end of 2012, the energy-utilities sector represented 22.5%
of the total assets of SIF Moldova. The main exposure of the
total assets consisted of OMV Group (7.8%), Transgaz (2.8%)
and Fondul Proprietatea (9.5%) as a specialized vehicle with
majority exposure by this sector and real perspectives of
appreciation, considering the effects of the listing process of
governmental holdings in its portfolio. We maintain the
previous exposure limit of 25% out of total assest with a
variation margin of +/-10%.
15 Source: World Bank: Romania is committed to achieve EU objectives 20-20-20 regarding climate and renewable
energy, whose role is reducing carbon dioxide emissions by 20%, increasing the share of renewable energy in the energy
mix to 20% and improving energy efficiency by 20%, all by 2020. For this purpose, among others, it has to develop an
extensive funding program in climate changing field and green growth in the next programming period for EU funding
The gold mining producers sector remains in our attention as possibility to protect against
inflation and potential risk of slippages in the growth trend and / or shocks from other causes
(natural disasters) in the context of "competitive devaluation process"16 of currencies that
can create potential for the gold price.
The gold mining producers sector intitially came to our attention through Rosia Montana
project, considered to be viable and cost effective. The investment target on this segment
developed by considering global macro influences and materialized through other
investments in large international gold producing companies.
Fundamentally, the arguments sustaining this type of investment are the high value of
liquidities own by mining gold companies and the possibility of OPEX structure lessening,
impacting business line companies.
Investment process requires maintaining a majority share in Romanian securities
portfolio assets.
Considering the principle of asset renewal and investment programs development, research
programs / investments in sectors like health, IT-telecom, high technology and
agriculture will be initiated / continued.
As pharmaceutical sector recorded continuous increases in recent years, inclusively
during the crisis and further growth potential is expected because the consumption is far
below the real need for medication, this sector remains interesting, also through the provision
of dividend distributions and we consider the consolidation of exposures on market issuers.
Other high-tech industries (cf. Eurostat, besides pharmaceutical, sector includes IT,
electronics & optical and aviation) are in our attention due to the development and therefore
the price performance potential (eg Aerostar, Biofarm investments).
Maintaining of an optimal level of liquidity (deposits, bonds, current accounts and cash),
as expression of the management quality, aims a range between 5% and 10% of total assets,
ensuring financial stability, renewal of investment flows and performance under normal
conditions. Level achieved at the end of 2012 is 7.70%.
In order to improve the asset management efficiency, we consider the possibility of
transfering companies in various stages of insolvency to a vehicle owned by SIF Moldova.
Transfer operation does not involve changes in the net asset value, holdings concerned being
valued at "zero", but the nature of the tax and legal implications could lead to increased costs.
16 16 Overall monetary and exchange rate policy applied for national currency depreciation
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Under the condition of the Extraordinary General Meeting of Shareholders approval of
starting a share repurchase program, initiated as a result of shareholders consultation, the
performance indicators of SIF2 title (NAV: Net asset value / share, EPS: net profit value /
share, dividend / share) will improve , with effect on reducing the discount between price and
net asset value.
In order to set up a solid foundation needed to make decisions and encourage proactive
management, the software solution for optimizing the efficiency-risk ratio was implemented
and is continuously developed.
A series of risk strategies are approached in order to achieve the investment policy:
in selecting the assest we aim at achiving the objectives established through the risk
administration strategy, as it follows:
o efficiency objective: shares are the actives adding important value and implying
a high risk tolerance.
o time objective: on a long term, the strategy recommends conservative portfolios
aiming at minimum risk, as they bring consistent share growth.
o liquidity objective: assests with a transaction volume allowing easy market
entrance and exit.
o Cost effective-risk objective: assets with a cost effectiveness potential, they can
imply a higher risk.
Selection of assets from an already existing portfolio in order to set up subportfolios as
well as new portfolios is made by considering several parameters:
o by weighing up the allowable existing risk and expected cost effectiveness for a
certain period of time.
o by balancing earnings from price fluctuation and dividends.
o by correlating expected efficiency with accepted level of risk and time factor.
o by correlating high risk financial instruments - creating alfa, with medium risk
ones – in market trend.
o by correlating general fluctuation in the economic environment with those of
the sector in which investement is placed.
Dividend policy The Board of Administration maintains its predictable dividend policy, announced in the "Investment Policy Statement for 2011-2013", respectively: “in the absence of extraordinary market circumstances, SIF Moldova will provide to shareholders a dividend yield of minimum 5%, based on the market price of SIF2 share, given that the price moves up to a level of 2 lei / share. Above this level, the dividend yield will be at least 3%. Reference for calculation is the average price of the SIF2 share in the last 90 trading days of the year for which dividend is calculated. "
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Objectives of the investment program 2013
The objectives set for 2013 will be within the limits of prudence, in accordance with the laws
and regulations NSC, regarding tactical changes, derived from both investment experience
and the evolution of the economic environment.
Value quantification of the objectives is the following:
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C. Approval of Revenue and Expense Budget for 2013
The functioning of the Company based on the going concern principle, the harmonization of
short term objectives with long term objectives, in the context of the domestic and foreign
financial market, led to the motivation of the 2013 Revenue and Expense Budget to start from
the analysis of the budget execution up to Dec 31, 2012, by adopting main work hypotheses,
as follows:
Ensuring a growth of the net profit of 10% compared to the forecast of the 2012
Revenue and Expense Budget;
The elimination of exceptional events that are not certainly repeatable in 2013
Anticipated taxes are calculated according to fiscal regulations as of the date of
drafting the budget;
No influences were estimated for which there is no certain prediction information;
The principle of coordination with personnel policy – in order to stimulate motivation
and adhesion to the strategic objectives pursued.
Total revenue proposed to be realized in 2013 – are influenced by the macroeconomic
context and rest on the following basic hypotheses:
Revenue from financial non-current assets
o The estimation of a low rate of distribution of the net profit as dividends by the
companies where SIF Moldova has holdings, a consequence of the companies’
need to retain their profits as sources for own financing in a period of financial
crisis – including in the banking sector. In most situations, the profits estimated
are significantly lower and it is predictable that companies would request
shareholders the support of activities by accepting the non-distribution of
dividends;
o As a minority shareholder, SIF Moldova may not influence the rate of distribution
of the profit as a dividend, in companies.
Revenue from interest – the forecasted evolution of cash flows in 2012 was taken
into account, as well as the forecasted interest rates. The estimations may vary
considerably, depending on the evolution of the monetary market as well as on the
requirements for investments, correlated with the evolution of the capital market.
Revenue from ceded financial investment – is the main source for the
realization of financial revenue, estimating the acceleration of trading on the capital
market.
Revenue from operations – mainly consists of :
o Estimated revenue from the rent of available real estate;
o Revenue from the update of provisions constituted for participation in benefit
plans, distributed.
o Revenue from prescribed dividends.
Revenue from provisions – cannot be accurately estimated, since the receivables
they refer to (from SARA) are under litigation, the moment of recovery not being
possible to certainly predict, in case court decisions are favorable.
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Total expenses, proposed to be realized in 2013 – are significantly influenced by the
forecasted evolution of the capital market and have the following main hypotheses as their
basis:
Expenses with ceded financial investment - represent the estimated equivalent
of the cost of securities sold, calculated through the method of the weighted average
cost;
Other financial expenses - represent the equivalent of trading commissions,
differences from the exchange rate, expenses with banking services;
Expenses with provisions - cannot be predicted, as the evaluation of receivables
and of short term financial investments is recorded throughout the fiscal year;
Expenses with operations - mainly consist of:
o Staff expenses – estimating savings of about 22% compared to 2012;
o Expenses with management contracts – calculated according to stipulations in
the valid contracts at the moment of forecasting
o Expenses with staff and directors regarding participation in 2012 benefit plans.
These expenses do not influence the level of the net profit to attain in 2013, as
they are updated as revenue, at the moment of payment;
o Expenses with external services – mainly consist of expenses with commissions
and fees for the support of the patrimonial activity, namely: the commission
paid to the NSC, the Depository Company, the Registry of Shareholders, the
BVB, the auditing of financial statements and the auditing of the information
system. These expense elements have the size of the net assets as a basis for
calculation and are determined by the estimation of the ascending evolution of
the capital market;
o Provisions – consisting of the constitution of the funds for participation in the
benefit plans for 2013 for employees, according to the clauses of the work
contract as well as for directors, according to the approval of the general
assembly of shareholders.
For investments in tangible and intangible non-current assets, own sources of financing are
to be used. (lei)
Planned for 2012 Planned for 2013 2013/2012 (%)
A. Total revenue 163.900.000 177.482.621 108 B. Financial revenue 142.000.000 159.500.000 112 · Revenue from financial investments (dividends) 12.000.000 18.000.000 150
· Revenue from receivables (banking interest +
bonds)
3.500.000 4.000.000 114
· Revenue from ceded financial investments 126.000.000 135.000.000 107
· Revenue from exchange rate differences 0 2.000.000
· Revenue from provisions 0 0
- Other financial revenue 500.000 500.000 100
C. Revenue from operations 21.900.000 17.982.621 82 - Revenue from rents and associated 1.200.000 1.500.000 125 - Revenue from provisions 15.700.000 10.482.621 67 - Other revenue from operations 5.000.000 6.000.000 120
D. Total expenses 76.967.437 76.245.252 99 E. Financial expenses 33.760.000 33.450.000 99
ACTIVITY PROGRAM. INVESTMENT POLICY. REB -2013
17
· Expenses related to ceded financial investments 32.500.000 30.000.000 92
· Expenses related to commissions for
transactions
600.000 700.000 117
· Expenses related to exchange rate diff. 0 2.000.000
· Expenses with banking services 60.000 150.000 250
- Expenses with provisions 0 0
· Other financial expenses 600.000 600.000 100
F. Expenses with operations 43.207.437 42.795.252 99 G. Gross profit 86.932.563 101.237.369 116 H. Taxable profit 64.993.161 94.819.069 146 I. Profit tax 10.398.906 15.171.051 146 J. Net profit 76.533.657 86.066.318 112
Draft of Decision
Approves the 2013 Revenue and Expense Budget, mandating The Board of
Administration for the correction of income and expense items, given the
occurrence of random/ unpredictable events.
Total revenue 177.482.621 lei
Total expenses 76.245.252 lei
Gross profit 101.237.369 lei
Net profit 86.066.318 lei
ACTIVITY PROGRAM. INVESTMENT POLICY. REB -2013
18
Bibilography Annex: Bibilography:
o NBR, “Aiming at inflation. Quarterly report on inflation”
o NBR Convergence program 2011-2014 o NBR report on financial stability 2012 o NBR macro indicators - January 2013 o NBR – future of international banking
system o ECB monthly bulletin-January 2013 o National Commission for Prognosis,
“Prognoza pe termen mediu 2012 – 2016 “ o National Institute for Statistics, “Romania
in numbers 2012” o Eurostat , statistics data o Mondial Bank, “A targeted investment
climate?”, “Global Economic Prospects” o CFA Institute - “Global Market Sentiment
Survey 2013 Results” o Goldman Sachs – “2013 Global Economic
Forecast” o ERSTE BANK - EBS specialists forecasts
on the evolution of global economy in 2013 o BRD – reportt “ Industry – Multi- sector
overview” o UNICREDIT TIRIAC BANKraport “
Macroeconomic & Strategic Analysis” o NATIONAL COMMISSION FOR
PROGNOSIS „ Projection of main macroeconomic indexes for the period 2012 - 2016 „
o Institute for Political Research STRATFOR, G. Friedman: Europe in 2013 – the year of major decisions
o ING Annual Report 2012 o ING – periodical reports Market Expres,
ING Houseview o ING –IM Marketscope o OMCD - FMI - "Perspectives of global
economy" o CITI CEEMEA Overview o CITI 2013 Investment Themes o CITI 2013 Corporate finance priorities o Word Bank “WDR 2013” o FMI - "Perspectives of global economy",
October 2012, World Outlook 2013, Romania Outlook 2013
o World Bank, WB Global Economic Raport Final Full Jan 2013
o Thomson Reuters Agency o Citibank “Global Perspectives 7 Solutions -
2013 Corpotate Finances Priorities” o Investopia The Weekly Report Chart
Advisor o Unicredit Focus (periodic) o STOCK EXCHANGE indexes – calculation
– Reuters Eikon o CNP currency rate exchange forecasts
2013 o Konieczny - strategia FP
o World Ecomomic Forum (WEF) – 2013 report on global risks
o Investopia – Chart Advisor – The Weekly Report
o KPMG at Davos o KPMG 2013 – Global study showing that
in the auto industry the challenges on environment, urbanization, continuously changing customer behaviour and growing of emerging markets are continuously developing and drive a re evaluation of the traditional business models.
o Dedicated media – points of view2013 of: governor Mugur Isarescu, Mark Mobius, Strategia FP - Greg Konieczny
o USL governing program o ECB bulletin for December 2012
