SIF Moldova SA Directors’ Consolidated Report – 2016
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Contents:
1. Presentation of the development and performance of SIF Moldova’s Group activities and position
1.1. Consolidation area
1.2. Abstract regarding subsidiaries (object of activity, main financial results)
1.3. Influences resulted from consolidation operations
1.3.1. Comparative assets status
1.3.2. Comparative status of liabilities and equity
1.3.3. Comparative analysis of overall result
1.4. Predictable development of SIF Moldova Group and activities in the research and
development areas.
1.4.1. Group’s objectives and strategies for 2017
1.4.2. Estimation of 2017 investment budget
2. Analysis of IFRS results of SIF Moldova Group
2.1. Key financial indicators (comparative presentation)
2.1.1. Liquidity indicators
2.1.2. Activity indicators
2.1.3. Profitability indicators
2.1.4. Other indicators
3. Description of the main risks and uncertainties the SIF Moldova Group is facing
3.1. Risk management objectives and policies, including the policies for their coverage.
3.1.1. Market risk
3.1.2. Credit risk
3.1.3. Liquidity risk
3.1.4. Tax related risks
3.1.5. Risk corresponding to the economic environment
3.1.6. Operational risk
3.2. Exposure to market risk, credit risk, liquidity risk and treasury flow risk
3.2.1. Market risk exposure
3.2.2. Credit risk exposure
3.2.3. Liquidity risk exposure
3.2.4. Treasury flow exposure
4. Important events occurred after the end of the financial year
4.1. SIF Moldova SA
4.2. Mecanica Ceahlau SA
4.3. Regal SA
4.4. Agrointens SA
4.5. Hotel Sport Cluj SA
4.6. Tesatoriile Reunite SA
4.7. Opportunity Capital SA
4.8. Real Estate Asset SA
4.9. Casa SA
5. Information regarding own share purchase by SIF Moldova Group
6. Corporate Governance
6.1. Corporate Governance Code
6.1.1. Structure and operation method of the board of directors, management bodies,
supervision bodies and Group Committees
6.1.1.1. General Shareholders’ Meeting
6.1.1.2. Board of Directors
6.1.1.3. Audit Committee
6.1.1.4. Investment policies – strategies Committee
6.1.1.5. Appointing committee
SIF Moldova SA Directors’ Consolidated Report – 2016
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6.1.1.6. SIF Moldova ‘s Executive Management
6.1.2. Protecting SIF Moldova’s interests/assets through legal procedures
6.2. Main characteristics of the internal control and risks management systems of SIF
Moldova Group
6.2.1. Internal control system
6.2.2. Internal audit system
6.2.2. Risk management system
Legend:
IFRS = International Financial Reporting Standards
Note: all amounts are presented in RON if not otherwise specified.
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1. Presentation of the development and performance of SIF Moldova’s
Group activities and position
SIF Moldova SA („The Company”) is a collective placement organism functioning in Romania in
compliance with (a) special regulations regarding financial investment companies; (b) regulations
regarding companied allowed for trading on a regulated market; (c) legal provisions regarding
companies; (d) provisions of the Memorandum of Association and internal regulations.
The Company is the succesor of Fondul Proprietății Private II Moldova, reorganized and transformed in
compliance with the provisions of Law no. 133/1996.
The Company is headquartered in Str. Pictor Aman no. 94C, Bacău municipality, Bacău district,
Romania.
The Company also operated through its agencies headquartered in Iaşi and Bucharest.
The main object of activity of the Company is financial investments. The main object of activity of the
Company (as per NACE) is: 6499 – Other financial services n.c.a – and consists in:
Administration and management of financial instruments, derived financial instruments and other
instrument qualified as such through the regulations of the National Securities Commission (CNVM),
whose attributions and prerogatives have been taken over by the Financial Supervision Authority
(F.S.A);
Administration and management of shares, bonds and other rights derived from them, in companies
that are not traded or closed;
Other auxiliary and connected activities, in compliance with applicable regulations.
The company is self-managed in unitary system.
The shares of the Company have been entered with Bucharest Stock Exchange, 1st category, with SIF2
identifier, stating with November 1st, 1999.
The shares and shareholders records are kept according to the law, by S.C. Depozitarul Central S.A.
București.
The assets storage services are provided by BRD - Société Générale S.A. – company certified by the
National Securities Commission.
1.1. Consolidation area
The consolidated financial statements for the financial year concluded on December 31st, 2016 comprise
the Company and its subsidiaries (hereinafter referred to as “Group”) as well as the interests of the
Group in its associated entities.
The subsidiaries are entities under the Group’s control. Control represents the power to lead the
financial and operational policies of an entity in order to obtain benefits from activities. The financial
statements of the subsidiaries are included in the consolidated financial statements from the time control
begins to be exercised up to the time control ceases. The accounting policies of the Group have been
modified for the purpose of aligning them to those of the Group.
Associated entities are those companies in which the Group can exercise a significant influence but
not control over financial and operational policies. The consolidated financial statements include the
quota of the Group from the results of the associated entities, based on the equivalence method, from the
date the Group has started to exercise significant influence, up to the date when this influence ceases. SIF
Moldova Group does not have associates on December 31st 2016.
The Group’s policies regarding consolidation bases can be found in the notes of the Group’s consolidated
financial statements.
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Based on the analysis of direct and indirect holdings from SIF Moldova’s portfolio for year 2016, the
following entities have been identified as subsidiaries:
No. Subsidiary name % SIF Moldova holding 31.12.2016 Company type (closed/ listed)
1 Mecanica Ceahlau SA 63,30 BVB - REGS (MECF)
2 Regal Galati SA 93,02 BVB – ATS (REGL)
3 Tesatoriile Reunite SA 99,99 not traded
4 Casa SA 99,02 not traded
5 Asset Invest SA 99,99 not traded
6 Real Estate Asset SA 99,99 not traded
7 Opportunity Capital SA 99,99 not traded
8 Agrointens SA 99,99 not traded
9 Agroland Capital SA 99,99 not traded
10 Hotel Sport Cluj SA indirect holding through Opportunity Capital SA holding 99,99% of capital. not traded
Note: In comparison to 2015, the number of companies in the consolidation has decreased from eleven
to ten (Agribusiness Capital SA being cancelled following the voluntary liquidation process).
Note: The presented percentages represent the holding quota of SIF Moldova in the share capital of the entities presented, on December 31st 2016.
Hotel Sport Cluj
Indirect holding
CASA Bacău
99,02%
Mecanica Ceahlău Piatra Neamț
63,30%
Agrointens București
99,99%
Agroland Capital Bacău
99,99%
Asset Invest Bacău
99,99%
Opportunity Capital Bacău
99,99%
Ţesătoriile Reunite București
99,99%
SIF Moldova
Regal Galați
93,02%
Real Estate Asset Bacău
99,99%
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Status of reciprocal holdings of entities included in the consolidation area
Subsidiary name Shareholders No. shares % holding Nominal value (lei)
Agrointens SA
SIF Moldova SA 1.132.716 99,99
10 CASA SA 1 0,001
TOTAL 1.132.717 100
Agroland Capital SA
SIF Moldova SA 12.000 99,992
10 Asset Invest SA 1 0,008
TOTAL 12.001 100
Opportunity Capital SA
SIF Moldova SA 222.336.440 99,999
0,1 Asset Invest SA 1.900 0,001
TOTAL 222.338.340 100
Hotel Sport Cluj SA
Opportunity Capital SA 19.329.398 99,999
1 CASA SA 1.936 0,001
TOTAL 19.331.334 100
Real Estate Asset SA
SIF Moldova SA 683.237.050 99,9997
0,1 Asset Invest SA 1.900 0,0003
TOTAL 683.238.950 100
Asset Invest SA
SIF Moldova SA 38.330.420 99,997
0,1 CASA SA 1.000 0,003
TOTAL 38.331.420 100
CASA SA
SIF Moldova SA 3.248.682 99,026
2,5 Other shareholders 31.946 0,974
TOTAL 3.280.628 100
Tesatoriile Reunite SA
SIF Moldova SA 4.587.525 99,999
2,5 CASA SA 1 0,001
TOTAL 4.587.526 100
Regal SA
SIF Moldova SA 1.116.258 93,021
0,1 A.A.A.S. BUCURESTI 29.035 2,42
Other shareholders 54.707 4,559
TOTAL 1.200.000 100
Mecanica Ceahlau SA
SIF Moldova SA 151.866.807 63,30
0,1 Roumanian Investment.Fund 72.468.784 30,21
Other shareholders 15.572.869 6,49
TOTAL 239.908.460 100
The consolidated financial statement of the Company for the financial year concluded on December 31st
2016 include the Company and its subsidiaries (hereinafter referred to as “Group”) as well as the Group’s
interests in associated entities.
1.2. Abstract regarding subsidiaries (object of activity, main financial results)
The Group’s basic activities are the financial investments carried out by the Company, as well as the
activities carried out by the subsidiaries, consisting mainly in the following activities :
Business and management consultancy;
Rental and sale of own real estate;
Manufacture of agricultural machines and equipment;
Food manufacture and sale;
Fabric manufacture;
Fruit growing;
Wood exports;
Hotel activities
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Mecanica Ceahlău S.A.
The activity of the Company is the manufacture of agricultural machines and logging.
Setup in 1921, S.C. Mecanica Ceahlău S.A. Piatra – Neamț is today one of the most well-known
manufacturers of agricultural machines both in Romania and abroad.
The machines and equipment manufactured by „Mecanica Ceahlău” cover all agricultural works, from
solid preparation for seeding to harvesting.
Țesătoriile Reunite S.A.
The main object of activity is real estate development.
The company Tesatoriile Reunite has been setup in 1933.
At present it comprises a unit operating in the field of industrial real estate renting.
Main financial results (IFRS)
2016 2015 Evolution
Total assets 23.704.647 17.881.542 32,56%
Turnover 5.590.813 1.227.884 455,3%
Profit (loss) (491.960) (475.743) n/a
ROE % n/a n/a n/a
ROA % n/a n/a n/a
Regal S.A.
The main objects of activity of the company are public food provision – restaurants, production of pastry
and confectionary products and selling these products, as well as the rental of own real estate.
S.C. Regal S.A. was set up in 1990 through the resolution of Galati district prefecture, as a joint stock
company, based on Law no. 15/1991 and Law no. 31/1990.
The company has its own confectionary – pastry laboratory providing the clients with a large variety of
high-quality products. .
Casa S.A.
Setup in 1999 as a joint stock company, based on Law no. 31/1990, the main object of activity of the
Company consists in consultancy for business and management.
Main financial results (IFRS)
2016 2015 Evolution
Total assets 58.321.538 58.065.581 0,44%
Turnover 39.146.703 30.173.750 28,49%
Profit (loss) 2.105.150 2.243.040 -6,15%
ROE % 5,18 4,28 0,9 pp
ROA % 3,61 3,86 -0.25 pp
Main financial results (IFRS)
2016 2015 Evolutie
Total assets 3.477.000 3.530.888 -3,12%
Turnover 1.086.098 1.053.151 3,12%
Profit (Loss) 85.689 117.681 -27,18
ROE % 2,59 3,54 -0,95 pp
ROA % 2,46 3,33 -0.87 pp
Main financial results (IFRS)
2016 2015 Evolution
Total assets 9.941.365 9.690.504 3,17%
Turover 1.259.384 1.247.606 0,94%
Profit (Loss) 172.379 235.671 -26,85%
ROE % 1,75 2,47 -0,72 pp
ROA % 1,73 2,43 -0,7pp
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Asset Invest S.A.
The main object of activity is business and management consultancy.
Real Estate Asset S.A.
Setup in 2014 as a joint stock company based on Law no. 31/1990, the main activity object of the
company is consultancy for business and management.
Main financial results (IFRS)
2016 2015 Evolution
Total assets 67.071.842 67.634.803 -0,83%
Turnover 14.982 - n/a
Profit (Loss) (525.592) (668.216) n/a
ROE % n/a n/a n/a
ROA % n/a n/a n/a
Agrointens S.R.L.
Setup in 2014 as a joint stock company based on Law. 31/1990, the main object of activity of the
company is business and management consultancy.
Hotel Sport S.A.
Setup in 2015, the company Hotel Sport S.A. operated as a closed-type joint stock company and carries
out its activity based on Law no. 31/1990.
According to NACE classification (code 5510) the main object of activity of the company is hotel activity
and other similar accommodation services.
Main fiancnial results (IFRS)
2016 2015 Evolution
Total assets 26.136.809 27.796.936 -5,97
Turnover 1.807.876 132.329 1.266
Profit (Loss) (1.350.217) (124.425) n/a
ROE % n/a n/a n/a
ROA % n/a n/a n/a
Main Financial results (IFRS)
2016 2015 Evolution
Total assets 3.922.987 3.754.022 4,5%
Turnover 633.339 397.609 59,28%
Profit (loss) 66.504 (27.098) 245,42
ROE % 1,76 n/a n/a
ROA % 1,70 n/a n/a
Main financial results (IFRS)
2016 2015 Evolution
Total assets 13.504.552 12.201.715 10,68
Turnover 3.841.627 3.135.258 22,53
Profit (Loss) 200.573 726.237 -72,38
ROE % 3,09 6,03 -2,94
ROA % 1,49 5,95 -4,46
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Agroland Capital S.A.
Setup in 2014 as joint stock company based on Law no. 31/1990, the main object of activity of the
company is the purchase and sale of own real estate property.
Main financial resutls (IFRS)
2016 2015 Evolution
Total assets 87.398 112.186 -22,09
Turnover 271 - n/a
Profit (Loss) (23.667) (10.025) n/a
ROE % n/a n/a n/a
ROA % n/a n/a n/a
1.3. Influences resulted from consolidation operations
1.3.1. Comparative assets status
The table below presents the comparative status of assets based on the figures in the individual financial
statements and consolidated statements drafted in compliance with IFRS.
Balance position Copany Group Differences
Cash and cash equivalents 931.024 7.570.471 6.639.447 Bank deposits 117.794.735 128.163.158 10.368.423 Financial assets at fair value through the progit or loss account 128.999.673 132.052.544 3.052.871 Financial assets available for sale 1.448.569.452 1.299.085.922 (149.483.530) Investments held to maturity 9.573.804 9.573.804 0 Real estate investments 3.505.273 11.329.891 7.824.618 Intangible assets 113.180 9.495.295 9.382.115 Tangible assets 8.140.477 70.148.481 62.008.004 Biologic assets - 1.868.564 1.868.564 Other assets 1.347.293 42.230.149 40.882.856 Total assets 1.718.974.911 1.711.518.279 (7.456.632)
1.3.2. Comparative status of liabilities and equity
The table below presents the comparative statements of liabilities and equity based on the figures in the
individual and consolidated financial statements, drafted in compliance with IFRS.
Balance position Company Group Differences
Loans - 9.145.719 9.145.719 Dividends to pay 29.258.494 29.319.122 60.628 Provisions for risks and expenses 3.452.286 5.020.583 1.568.297 Liabilities regarding deferred profit tax 69.089.754 66.139.361 (2.950.393) Liabilities regarding current profit tax - 543.845 543.845 Other liabilities 17.082.627 12.783.782 (4.298.845) Total liabilities 118.883.161 122.952.412 4.069.251 Share capital 539.720.149 539.720.149 - Reported result 445.783.128 485.007.295 39.224.167 Reserves from the reevaluation of tangible assets 9.095.516 8.618.009 (477.507) Reserves from the reevaluation of financial assets available for sale 616.216.703 545.110.922 (71.105.781) Other equity elements (10.723.746) (10.723.746) - Total equity assignable to company shareholders 1.600.091.750 1.567.732.629 (32.359.121) Minority interest 20.833.238 20.833.238 Total equity 1.600.091.750 1.588.565.867 (14.913.264)
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1.3.3. Comparative analysis of overall result
Overall result position status Company Group Differences
Revenue
Revenue from dividends
118.775.487 118.065.476 (710.011) Revenue from interest 1.216.794 1.279.014 62.220 Other operational revenue 3.639.068 57.198.874 53.559.806 Earning from investments
Net earnings from assets sale 94.672.066 94.747.761 75.695 (Net loss)/Net earnings from the reevaluation of financial assets at fair value through profit or loss
(6.263.193) (6.502.197) (239.004)
Expenses Losses from assets impairment (46.908.657) (47.065.756) (157.099)
Expenses with the creation of provisions for risks and expenses
(145.628)
(729.456) (583.828)
Other operational expenses (31.182.914) (82.968.956) (51.786.042) Operational profit 133.803.023 134.024.760 221.737 Financing expenses - (436.067) (436.067) Profit before taxation 133.803.023 133.588.693 (214.330) Profit tax (10.505.003) (11.146.941) (641.938) Net profit of the financial year 123.298.020 122.441.752 (856.268) Other overall result elements
Reserve increase/ (decrease) from the reevaluation of tangible assets, net of deferred tax 1.418.212 5.727.039 4.308.827 Reserve transfer from the reevaluation to the reported result following the sale of tangible assets - - - Net modification of reserve from the reevaluation at fair value of financial assets available for sale. 165.342.680 129.426.263 (35.916.417) Other overall result elements 166.760.892 135.153.302 (31.607.590) Total overall result for the period 290.058.912 257.595.054 (32.463.858)
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1.4. Predictable development of SIF Moldova Group and research and
development activities.
1.4.1. Group’s objectives and strategies for 2017
“Key” elements of the 2017 Activity Program
The “key” elements of the multiannual investment strategy presented and approved by the shareholders
in the General Meeting in 2014-2017 is based on an assigning of resources that insures the sustainable
development of SIF Moldova’s activity and satisfying shareholders’ interests, both on the short and on
the long term:
The solid/ sustained investment policy is the base of the long-term increase of the managed assets
value, a basic elements for the consolidation of investors’ trust.
The predictable dividend policy, which remunerates invested capital at a higher yield than those
offered by monetary placements, is meant to satisfy the short-term interests of the shareholders. At the
same time, the presence of low yields on the monetary market favors investments, which serves the
average and long-term interests of the shareholders.
Capital operations through the running of a share buy-back program for the purpose of reducing the
share capital.
The main objectives of own shares buy-back program are:
increase of unitary assets and profit per share, as well as the lowering of net assets and trading
price discount
increasing the shareholders’ yields based on the possible sustaining of trading quotation increase
increasing the weight of capital holding for existent shareholders
The running of a buy-back program with the reduction of the share capital is beneficial both for the
company and for the shareholders, irrespective whether the latter chose to sell or keep their holdings
In 2016 we have continued the programs started in the private equity area in 2015. 2017 will lay under
the continuity sign both from the perspective of developing initiated programs, and from the perspective
of identifying new ones.
Strategies defined for assets portfolios:
Increase for the Majority Holdings portfolio – “private equity” type approach within existent majority
holdings (real estate, agriculture, other sectors)
Recalibration for the CORE portfolio – listed portfolio which offers liquidity for SIF Moldova assets,
representing the main income and source generator for new investments.
Restructure for the SELL portfolio – continuation of the restructure/ sale of the “historic” portfolio.
Portfolio weight in total assets value:
CORE69.4%
Majority Holdings10.03%
SELL6.65%
Other assets13.82%
Portfolio srtucture on31.12.2016
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5.60%
11.73%10.02%
0.00%
10.00%
20.00%
2014 2015 2016
Evolutie Portofoliu DM(% in valoare totala active)
Assets structure and investment policy
In 2017, the directors’ strategy aims to manager resources/ assets in order to increase net assets on
average and long-term, at the same time with the implementation of a rigorous control of potential risks.
The investment activity is carried out abiding by prudential and legal exposure limits, in agreement with
macroeconomic tendencies.
In 2017 as well, private- equity type investments will target the real-estate and agriculture sectors, given
the average and long-term increase potential of these sectors. In the real estate sector, residential
developments started in 2016 will continue. Extension/consolidation opportunities in the agricultural
area will be analyzed, for future management under return conditions and sale at higher prices.
We will maintain exposure on the energy and utilities sector, since these are able to supply constant and
predictable liquidities.
The financial –banking sector, which in 2015 indicated a real stabilization through the rerunning of
credits, remains in SIF Moldova’s attention, as it has already important recources in a solid bank, under
constant development after the absorption of another bank and the acquiring of performing assets held
in a bank in difficulty.
In year 2017 we will conclude the SIF Moldova Group restructure process for the purpose of increasing
the efficiency of its activity through new approaches that would lead to the improvement of financial
performance for the managed projects portfolio.
Majority Holding portfolio (MH)
SIF Moldova, through its Strategy for 2014-2018 has
proposed investments with a private equity-type
approach in sectors with increase potential, on which
investors (mainly the international ones) cannot be
exposed to with ease, selected in order to generate
NAV yield increase, on the long-term.
Mention: The 10,02% weight of Majority Holding
Portfolio does not include the value of Hotel Sport Cluj
SA since on 31.12.2016 Opportunity Capital SA
company (shareholder of Hotel Sport Cluj SA is still
under voluntary liquidation procedure.
Later event: In January 2017 Opportunity Capital SA was cancelled. Thus the inclusion of Hotel Sport
Cluj SA value would lead to a weight of about 11.14% of total assets value for MHP
The development of this portfolio abides by a set of conditions:
abidance by the prudential limits of the investment policy, as defined by specific regulations.
notification of the shareholders, through press releases in compliance with the principles taken on
through the corporate governance of SIF Moldova Group.
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The investment policy will focus on businesses with average/long-
term increase potential based on successful entrepreneurs and
professional management, low risk/reward ratio, financial support
of running projects. Investments will provide value generation
through attractive yields in comparison to other investment
options.
The condition to accept an investment is that the internal
return rate be higher than the financial cost of the investment
intended. In order to maximize project return, we can go for a mix
of sources, credits and capital increases. We intend to continue this
approach in 2017 as well.
Risk analysis also includes the project sensitivity analysis. The
sensitivity analysis determines the way in which performance
indicators evolve, depending on specific indicators.
2017 Investment budget will be assigned on the 2 main
portfolios (“Majority Holding” and “CORE”) with
recalibration possibility, depending on the opportunities
offered by the market.
In 2017 as well, private equity investments will target real-estate
and agriculture, given the high average and long-term increase
potential of these sectors. In the real estate sector, we will continue
the residential developments begun in 2016. We will analyse
extension/consolidation possibilities in the hotel, agriculture, social
work/ health fields, targeting professional management under
rentability conditions and sale at higher prices.
The yield/risk benchmarks of each investment will be carefully monitored through internal procedural
structures.
In a report published by Eurostat on 19.01.2017, it is stated the housing prices in Romania have
registered an increase of 7,1% in the 3rd quarter of 2016 in comparison to the similar period in 2015;
while in the Euro area, the increase has been of ,4% and of 4,3% in the European area.
For year 2017 we maily forecast :
the beginning of construction for the “Baba Novac Residence” Project, Bucharest (which includes 6
blocks of flats with 363 appartments). We think that the come-back of the market is mainly there,
and along with the constant demand for appartments at reasonable prices for average sizes, this
sector is well qualified for investment;
In the Veranda Mall project we aim to start negotiations to prepare a most advantageous exit sooner
than initially intended;
The purchase and financing of new real-estate projects of average size, in order to optimize risks and
reduce the execution and exit times.
Real Estate Sector
Rules applied as per AFIA
legislation
Private-equity type investment
policy to obtain control over
untraded companies is in
agreement with the multiannual
investment strategy and legal and
prudential risk limits of SIF
Moldova without being the main
investment policy.
In the selection and monitoring of
investment in untraded shares SIF
Moldova applied a high legel of
diligence: the staff has proper
professional competence and
knowledge for the assets it invest
in, the same diligence requirements
being applied in the negotiation
phase, before the conclusion of an
agreement.
SIF Moldova is a shareholder with
over 95% holding in all untraded
companies setup according to the
2014- 2018 investment strategy.
These assets are evaluated in
compliance with the evaluation
policies and procedures, their value
being reported on a monthly basis.
SIF Moldova SA Directors’ Consolidated Report – 2016
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The tourism sector has increase potential in the following years, given the economic increase and
increase of people’s incomes. In a Eurostat statistic report on 28.09.2016 Romania is presented to have
recorded in the 1st half of 2016 an increase of nights spent in tourist units of 8,8% in comparison to the
same period in 2015, while in the EU, the increase has been of only 2.9%.
In 2017 we will also start the project to upgrade Hotel Sport Cluj.
Research objectives focus on the selection of projects in the agricultural field, that woul lead to the
meeting of rentability indicators and capital increase. The purchase of a blueberry farm by Agrointens,
has aimed the obtaining of income through specialized and professional management and later sale at
higher prices.
The advantages of blueberry cultures are based on the long-term exploitation period (40 to 50 yers), high
tolerance to diseases and pests, increasing external demand, as well as high production yield. The
investment in intensive blueberry culture was grounded on the average and long-term value increase
potential of this type of plantation.
In 2017 Agrointens SA aims to implement the investment project « Extension of BLUEBERRY Farm ;
Purchase of new lands and setup of new blueberry plantations ».
Investment structure:
land purchase;
plantation setup, purchase of machines and equipment, work capital, etc.
We are analyzing the opportunity of expending investment projects in the field of social work and health.
1.4.2. Investment budget estimate
The 2017 Activity Program will abide by the principles implemented in the previous years, regarding:
the management of the three defined portfolios (MH, CORE and SELL),
continuation of majority holdings development strategies
use of CORE and SELL holdings depending on the market opportunities and resource need
abidance by legal conditions, namely:
20% limit applied to intangible assets, less debts, balance;
20% of total assets in tangible assets and monetary market instruments not allowed for trading ;
Liquidities management plays an important role in creating an optimum structure in order to insure the
fruition of investment opportunities, payment of dividends to the shareholders, ressources necessary for
the company to carry out its activity.
2017 ACTIVITY PROGRAM OBJECTIVES
70 mil. lei revenue from investments
Profit net of 95 mil. lei
Investment program: 250 mil. lei
Hotel sector
Agriculture sector
Social work/ health sector
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2. Analysis of IFRS results for SIF Moldova Group
2.1. Financial key indicators (coparative presentation)
2.1.1. Liquidity indicators
Through the analysis of the liquidity indicators we determine the company’s ability to
honor, at a certain point, the payment obligations taken on, based on current assets.
The liquidity term indicates the ability of an asset to be turned into money with minimal
value loss.
Current liquidity indicators measure the Company’s ability to honor its short-term debts. Current
liquidity indicators is calculated as a ratio between the company’s current assets and its short-term debts.
The higher the value of the current liquidity indicator, the higher the Company’s ability to honor its
short-term debts, without resorting to long-term financing ressources. Otherwise, when the obtained
value is subunitary. the Company will have to resort to external financing ressources.
Irrespective of the activity sector the company operates in, the value that is considered optimal for the
current liquidity indicators is of about 2. For an accurate interpretation of the level of current liquidity
rate, it must be compared with the average level per branch or that registered by competitors.
Quick liquidity indicator shows the Company’s ability to honor its short-term debts through the most
liquid current assets of the Company.
Indicator name 2014 2015 2016
Current liquidity indicator 3,47 4,48 7,41
Quick liquidity indicator 3,33 4,22 6,77
2.1.2. Activity indicators
Activity indicators reveal the efficiency a company has in using its assets.
Fixed-assets turnover indicator is calculated as a ratio beteen the revenue from current activity and
fixed assets.
The turnover speed of fixed-assets evaluates the efficiency of fixed-assets management through the
analysis of the turnover obtained by a certain quantity of fixed-assets.
Total assets turnover indicator is calculated as a ratio between turnover and total assets.
Total assets turnover speed analysis the turnover obtained by a certain quantity of total assets.
Indicator name 2014 2015 2016
Fixed-assets turnover speed 0,25 0,15 0,19
Total assets turnover speed 0,21 0,12 0,18
2.1.3. Profitability indicators
Profitability indicators reflect the efficiency of activities carried out by a company,
regarding its ability to generate profit from available ressources.
Return on equity (ROE) is calculated as a ratio between profit before the payment of interest and
profit tax expenses and equity.
The return on equity represents one of the most impotant indicators used to measure a company’s
performance. The main objective of any business is to maximize the investments made by shareholders.
SIF Moldova SA Directors’ Consolidated Report – 2016
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Therefore, a high ROE value indicates that the investment made by the shareholders has been turned
into a large profit by the company’s management.
Return on assets (ROA) is calculated as a ratio between net profit and total assets of the company and
measures the efficiency with which assets are used from the point of view of the profit obtained,
indicating how many lei are obtained for each leu invested in company’s assets.
Return on assets is, along with return on equity, one of the most important return indicators of a
company.
Result per basic share is ascertained as a ratio between net profit or loss of a company during a
financial yer, and the number of ordinary shares present over that period.
Result per basic share represents, from financial point of view, an important indicator when the results
of a company over a period of time are compared, or when the results obtained are compared to the
results of other companies in the same sector of activity.
For a proper interpretation of this indicator, its evolution over a period of several years should be taken
into consideration. .
Indicator name 2014 2015 2016
ROE (%) 0,18 0,09 0,08
ROA (%) 0,14 0,07 0,08
Result per basic share (lei/share) 0,34 0,09 0,12
Dividend per share 0,06 0,05 0,12
2.1.4. Other indicators
Indicator name 2014 2015 2016
Debt recovery period 25,53 44,25 22,12
Debt payment period 154,22 252,31 169,72
Degree of indeptment (%) 8,67 8,60 8,26
Equity return (%) 18,25 8,88 8,44
SIF Moldova SA Directors’ Consolidated Report – 2016
17
3. Description of the mains risks and uncertainties the SIF Moldova
Group is facing
3.1.The risk management objectives and policies, including policies for their
coverage.
The management of the Group thinks that risk management should be carried out in a consistent
methodological framework and that their management is an important part of the strategy regarding
return maximization, obtaining the targeted level of profit while maintaining an acceptable risk exposure
and abidance by legal regulations. The risk management structure set by the management of the Group is
an integral part of the Group’s strategic objectives.
The investment activity exposes the Group to a series of risks associated to the financial instruments held
and the financial markets it operates on. The main risks the Group is exposed to are:
Market risk (interest rate risk, currency risk and price risk)
Liquidity risk;
Credit risk;
Taxation risk;
Risk corresponding to the economic environment;
Operational risk.
The general risk management policy aims to maximize the Group’s profit reported to the risk level it is
exposed to and lower potential adverse variations on the Group’s financial performance. The Group has
implemented policies and procedures for the management and evaluation of the risks it is exposed to.
These policies and procedures are presented within the section dedicated to each risk type.
3.1.1. Market risk
The market risk is defined as the risk to register a loss, or not to obtain the expected profit, as a result of
price, interest rate and currency exchange rate fluctuations. For an efficient market risk management, we
use methods of technical and fundamental analysis, forecasts regarding the evolution of economic
branches and financial markets, taking into consideration:
return evaluations corresponding to the share portfolio
setting the concentration limits for assets in the same market, geographic position or economic sector
setting the presence limits on new markets
setting bearable risk limits
tolerance to risk concentrations
strategic assignment of long term investments based on the principle according to which the market
will correctly determine the fundamental value
tactical, short-term assignment which involves the use of the market’s short-term variations in order
to obtain profit.
The selection of investment opportunities is carried out through:
technical analysis;
Fundamental analysis – ascertaining the issuer’s ability to generate profit;
Comparative analysis – ascertaining the relative value of an issuer, in relation to the market or other
similar companies
Statistical analysis – ascertaining tendencies and correlations using price history and traded
volumes.
The Group is exposed to the following market risk categories:
SIF Moldova SA Directors’ Consolidated Report – 2016
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(i) Price risk
The Group is exposed to price risk as there is the possibility that the value of financial instrument
fluctuate following the change of market prices.
(ii) Interest rate risk
The Group is confronted with interest rate risk due to its exposure to the negative interest rate
fluctuations. The change of the interest rate on the market directly influences the income and expenses
corresponding to the financial assets and debts bearing variable interest, as well as the market value of
those bearing fixed interest.
The Group does not use derived financial instruments in order to protect itself from interest rate
fluctuations.
(iii) Currency risk
Currency risk is the risk of registering losses or failing to achieve the estimated profit following the
negative fluctuations of the currency rate. The Group is exposed to currency rate fluctuations, but it does
not have a formalized policy to cover currency risk. Most of the Group’s financial assets and liabilities are
expressed in national currency; the other currencies used for operations are EUR, USD, GBP, CZK, PLN
and CAD.
Most financial assets and liabilities of the Group are expressed in national currency and therefore
currency rate fluctuations do not significantly affect the Group’s activity. The exposure to currency rate
fluctuations are mainly due to deposits and shares in currency.
3.1.2. Credit risk
The Group is exposed to the credit risk corresponding to the financial instruments stemming from the
possible failure to fulfill the payment obligations that a third party has towards the Group. The Group is
exposed to credit risk following investment made in bank deposits and bonds issued by municipalities or
companies, current accounts and other claims.
3.1.3. Liquidity risk
Liquidity risk represents the risk of registering loss or failing to reach estimated profits, resulted from the
impossibility to at any time honor short-term payment obligations, without these involving excessive
costs or losses that cannot be borne by the Group.
The Group’s financial instruments may include investments in shares that are not traded on an organized
market and that consequently may have low liquidity. Therefore the Group may have difficulties in the
quick liquidation of investments in these instruments at a value close to the one set in the company’s net
asset calculation model for financial investment companies, as foreseen by Regulation no..15/2004
issued by CNVM in order to fulfill its own liquidity requirements.
3.1.4. Taxation risk
The Romania tax system is subject to various interpretation and constant changes that might be
retroactive. In certain situations, tax authorities might adopt a position that is different to that of the
Group and may calculated interest and tax penalties. Although the tax corresponding to a transaction
may be minimal, penalties may be large, depending on the interpretation of the tax authority.
SIF Moldova SA Directors’ Consolidated Report – 2016
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Moreover, Romanian Government has under its subordination a number of agencies authorized to
control Romanian and foreign companies carrying out their activities in Romania. These verifications are
largely similar to those carried out in many other countries, but they may also extend on legal or
regulation areas the Romanian authorities might be interested in.
Statements regarding taxes and levies may be subjected to control and revision over a period of five
years, usually after their submittal date. In compliance with legal provisions applicable in Romania, the
controls may be subjected to additional verifications in the future.
The management of the Group thinks that it has registered accurate values int eh tax accounts, and other
debts to the state, but there is a chance that the authorities will have a position that is different from that
of the Group.
Starting with January 1st 2007, following Romania’s adherence to the European Union, the Group had to
be subjected to the tax regulations of the European Union, and implement the changes brought on by
European law. The way in which the Group has implemented these changes remains open for tax audit
for a priod of 5 years.
The last control of the Ministry of Public Fiancée the Group was subjected to covered the period up to
January 1st 2010. Therefore the Group’s debts at this date may be the object of future verifications.
3.1.5. Risk corresponding to the economic environment
Romanian economy continues to show the specific traits of an emerging economy and there is a high
uncertainty risk regarding the development of the politic, economic and social environment in the future.
The management of the Group is interested to estimate the nature of the changes that will take place in
the economic environment of Romania and what their effect will be on the financial, operational and
treasury status of the Group.
Among the characteristics of Romanian economy we have the presence of a currency that is not fully
convertible outside borders and a low liquidity degree of the capital market.
The management of the Group cannot foresee the effects of the crisis that will impact the financial sector
in Romania nor their potential impact of the current financial statements.
The management of the Group considers that it has taken the necessary measures for the sustainability
and development of the Group under current market conditions.
3.1.6. Operational risk
Operational risk is defined as the risk of registering loss or failure to reach estimated profit due to some
internal factors, such as improper running of some internal activities, the presence of improper staff or
systems or due to external factors such as economic conditions, changes on the capital market,
technological progress. Operational risk is inherent to all Group activities.
The policies defined for the management of operational risk have taken into consideration all event types
that might generate significant risks and methods of their manifestation, in order to eliminate or lower
financial or reputational losses.
SIF Moldova SA Directors’ Consolidated Report – 2016
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3.2. Exposure to market risk, credit risk, liquidity risk and treasury flow risk.
3.2.1. Market Risk Exposure
Exposure to price risk
The group is exposed to price risk as there is the possibility that financial instruments fluctuate following
changes on the market.
The Group is exposed to the risk associated to the variation of financial assets at fair value through the
profit or loss account and financial assets available for sale 80% of the total shares with active market
held by the Group on December 31st 2016 (31st December 2016:73%) represented investments in
companies that were part of the BET index of Bucharest Stock Exchange, index weighted with stock
exchange capitalization and created to reflect the general tendency of the prices of the ten most liquid
shares traded on Bucharest Stock Exchange.
A positive variation of 10% of the financial assets at fair value through the profit or loss account would
lead to an increase of profit before taxation with 11.092.414 lei (December 31st 2015: 9.677.111 lei), a
negative variation of 10% having an equal net impact, of negative value.
A positive variation of 10% of the prices of financial assets available for sale would lead to an increase of
equity, net of profit tax, of 108.569.389 lei (December 31st 2015: of 90.684.207 lei), a negative
variation of 10% having an equal net impact, of negative value. The Group holds shares in companies
operating in various sectors of activity, as follows:
December 31st 2016 % December 31st 2015 % Financial activities, banking and insurance 758.892.143 57 741.281.794 68 Transport, storage communication 153.922.945 12 108.758.953 10 Chemical and petrol industry 130.259.303 10 64.510.364 6 Textile industry 25.081.439 2 6.222.922 1 Pharmaceutical industry 38.769.224 3 40.419.219 4 Manufacture of machines, equipment and tools 34.944.926 3 18.680.167 2 Whole sale, retail sale, tourism and restaurants 76.220.574 5,7 4.251.844 0,4 Manufacture of transportation means 74.387.804 6 61.303.469 6 Energy industry 29.765.604 2 29.714.636 3 Real estate transaction, rental, other services 8.042.463 0,6 1.992.113 0,2 Construction materials industry 117 0,0 4.876.839 0,4 Other 6.017.801 0,5 4.729.005 0,4 TOTAL 1.336.304.342 100 1.086.741.325 100
As it can be observed in the table above, on December 31st 2016 the Group mainly held shares in
companies from the financial-banking and insurance field, with a 57% ratio of total portfolio, in decrease
in comparison to the ratio held on December 31st 2015.
Exposure to interest rate risk
On December 31st 2016 and December 31st 2015, most Group assets and liabilities are not bearing
interest. Therefore the Group is not significantly affected by the interest rate fluctuation rate. The cash
excess or other similar money availabilities in invested in short-term investment titles, with a maturity of
1 to 6 months.
SIF Moldova SA Directors’ Consolidated Report – 2016
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The following tables present the Group’s exposure to interest rate risk
Net value on December 31st 2016
< 1 month
1-3 months 3-12
months >1 year
No interest rate risk
Financial assets Cash and cash equivalents 7.570.471 - - - 7.570.471 Bank deposits 128.163.158 8.561.769 119.310.773 290.617 - - Financial assets available for sale at fair value though the profit or loss account
132.052.544 - - - 132.052.544
Financial assets available for sale 1.299.085.922 - - - 1.299.085.922 Investments held to maturity 9.573.804 212.619 37.440 9.323.745 - Other financial assets 16.026.551 - - - 16.026.551 Total financial assets 1.592.472.451 8.561.769 119.523.392 328.057 9.323.745 1.454.735.488
Financial liabilities
Dividends to pay 29.319.122 - - - 29.319.122 Other financial liabilities 11.201.400 - - - 11.201.400 Loans 9.145.719 - 924.379 8.221.340 - Total financial liabilities 49.666.241 - - 924.379 8.221.340 40.520.522
Net value on December 31st
2015 < 1 month 1-3 months 3-12 months >1 year No interest risk
Financial assets Cash and cash equivalents 5.512.013 - - - - 5.512.013 Bank deposits 99.706.272 - 89.633.395 10.018.741 - 54.136 Financial assets at fair value through the profit or loss account 115.203.699 - - - -
115.203.699
Financial assets available for sale 1.124.199.137 - - - -
1.124.199.137
Investments held to maturity 9.593.199
220.256 37.437
9.335.506 - Other financial assets 22.461.687 - - - - 22.461.687 Total financial assets 1.376.676.007 - 89.853.651 10.056.178 9.335.506 1.267.430.672 Financial liabilities Dividends to pay 42.542.917 - - - - 42.542.917 Other financial liabilities 11.486.935 - - - - 11.486.935 Loans 8.551.468 - - - 8.551.468 - Total financial liabilities 62.581.320 - - - 8.551.468 54.029.852
The impact on the Group’s net profit of a modification of ± 100 bp of the interest rate corresponding to
the variable interest bearing assets and liabilities, and expressed in other currency, corroborated with a
modification of ± 500 bp of the interest rate corresponding to assets and liabilities bearing variable
interest and expressed in lei is 6.821.456 (December 31st 2015: ± 5.040.225 lei ).
Currency risk exposure
The assets expressed in lei and in other currency on December 31st 2016 and December 31st 2015 are
presented in the tables below
RON EUR USD Other
currency December 31st 2016 Financial assets Cash and cash equivalents 7.085.648 373.327 15.346 96.150 Bank deposits 126.528.362 1.634.796 - Financial assets at fair value through the profit or loss account 132.052.544 - Financial assets available for sale 1.296.731.256 - 2.354.666 Investments held to maturity 2.357.600 7.216.204 - Other financial assets 16.026.551 - Total financial assets 1.580.781.961 9.224.327 15.346 2.450.816 Financial liabilities Dividends to pay 29.319.122 Other financial liabilities 11.201.400 - Loans 9.145.719 - Total financial liabilities 49.666.241 - - -
SIF Moldova SA Directors’ Consolidated Report – 2016
22
RON EUR USD Other
currency December 31st 2015 Financial assets Cash and cash equivalents 5.102.979 305.506 13.210 90.318 Bank deposits 99.706.272 - - - Financial assets at fair value through the profit or loss account 115.203.699 - - - Financial assets available for sale 1.123.617.348 - - 581.789 Investments held to maturity 9.593.199 7.223.701 - - Other financial assets 22.461.687 - - - Total financial assets 1.375.685.184 7.529.207 13.210 672.107 Financial liabilities Dividends to pay 42.542.917 - - - Other financial liabilities 11.486.935 - - - Loans 8.551.468 - - - Total financial liabilities 62.581.320 - - -
The net impact on the Group’s profit of a modification of ± 15% of RON/EUR currency exchange
corroborated with a modification of ± 15% of RON/USD, RON/GBP, RON/CZK. RON/PLN namely
RON/CAD currency exchange on December 31st 2016, all other variables remaining constant is
of1.753.573 lei (December 31st 2015± 148.623 lei).
3.2.2. Credit risk exposure
On December 31st 2016 and December 31st 2015, the Group did not hold real guarantees as insurance, nor
other improvements of credit rating. On December 31st 2016 and December 31st 2015, the Group did not
register any outstanding financial assets that are not depreciated. The maximum credit risk exposure of
the Group is 161.030.722 lei on December 31st 2016 and 137.199.171 on December 31st 2015 and can be
analyzed as follows:
Exposure from deposits and current accounts
December 31st 2016 December 31st 2015 Banca Transilvania 122.409.199 84.995.095 BRD - Group Societe Generale 5.243.928 8.489.791 BCR 906.887 1.905.223 Other commercial banks 6.870.352 9.754.175 Total 135.430.366 105.144.284
Exposure from investments held to maturity
31 decembrie 2016 31 decembrie 2015 Bacău Municipal bonds 117.920 129.820 Horezu Municipal bonds - - GDF Suez Bonds 2.239.680 2.239.678 Felix Municipal bonds - - Banca Transilvania bonds 7.216.204 7.223.701 Total 9.573.804 9.593.199
Various debtors and trade receivables
December 31st 2016 December 31st 2015 AAS Bucuresti 53.890.207 46.350.276 Banca Transilvania - - Depozitarul Central 1.047.218 1.278.266 BRS Depozitar (94.907) 4.395.490 Other various debtors and trade receivables 19.515.572 23.039.259 Adjustments for depreciation (58.331.538) (52.601.602) Total 16.026.552 22.461.687
The adjustments for depreciation cover all amounts of trade receivables for AAS Bucuresti.
SIF Moldova SA Directors’ Consolidated Report – 2016
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3.2.3. Liquidity risk
The structure of assets and debts of the Group has been analyzed for the remaining period from the
balance date until the contractual maturity date, for the financial year concluded on December 31st 2016
and the financial year concluded on December 31st 2015 as follows
Accounting value < 3 months 3 - 12 months > 1 year No pre-set maturity
December 31st 2016 Financial assets
Cash and cash equivalents 7.570.471 7.570.471 - - - Bank deposits 128.163.158 127.872.541 290.617 - Financial assets at fair value through the profit and loss account
132.052.544 - - - 132.052.544
Financial assets available for sale
1.299.085.922 - - - 1.299.085.922
Investments held to maturity 9.573.804 212.619 37.440 9.323.745 - Other financial assets 16.026.551 - - - 16.026.551 Total financial assets 1.592.472.451 135.655.632 328.057 9.323.745 1.447.165.017 Financial liabilities Dividends to pay 29.319.122 - - - 29.319.122 Other financial liabilities 11.201.400 - - - 11.201.400 Loans 9.145.719 - 924.379 8.221.340 - Total financial liabilities 49.666.241 - 924.379 8.221.340 40.520.522
Accounting value < 3 months 3 - 12 months > 1 year No pre-set maturity
December 31st 2015 Financial assets Cash and cash equivalents 5.512.013 5.512.013 - - - Bank deposits 99.706.272 89.633.395 10.018.741 - 54.136 Financial assets at fair value through the profit and loss account 115.203.699 - - - 115.203.699
Financial assets available for sale
1.124.199.137 - - - 1.124.199.137 Investments held to maturity 9.593.199 220.256 37.437 9.335.506 - Other financial assets 22.461.687 - - - 22.461.687 Total financial assets 1.376.676.007 95.365.664 10.056.178 9.335.506 1.261.918.660 Financial liabilities Dividends to pay 42.542.917 - - - 42.542.917 Other financial liabilities 11.486.935 - - - 11.486.935 Loans 8.551.468 - - 8.551.468 - Total financial liabilities 62.581.320 - - 8.551.468 54.029.852
3.2.4. Exposure to treasury flow risk
2016 2015 Net cash resulted from exploitation activities 82.672.753 97.917.721 Net cash used in investment activities (1.133.104) (32.360.842) Net cash used in financing activities (41.302.465) (41.129.520) Net increase in cash and cash equivalents 40.237.185 24.427.359 Cash and cash equivalents on 1st January 95.205.828 70.778.469 Cash and cash equivalents of December 31st 135.443.013 95.205.828
SIF Moldova SA Directors’ Consolidated Report – 2016
24
Cash and cash equivalents include the items presented in the table below: December 31st 2016 December 31st 2015 Cash with the cashier 303.263 74.000 Current bank deposits 7.267.208 5.438.013 Bank deposits with maturity under 3 months 127.814.518 89.633.395 Attached receivables 58.023 60.420 Cash and cash equivalents 135.443.013 95.205.828 Bank deposits with maturity over 3 months 290.617 9.958.320 Blocked deposits - 54.136 Total 290.617 10.012.456
In the table below you can find the reconciliation of cash and cash equivalents with the accounting
balance:
December 31st 2016 December 31st 2015 Cash and cash equivalents 7.570.471 5.512.013 Bank deposits 128.163.159 99.706.272 less deposits with a maturity over 3 months and blocked deposits (290.617) (10.012.457) Cash and cash equivalents in the cash flow statement 135.443.013 95.205.828
SIF Moldova SA Directors’ Consolidated Report – 2016
25
4. Important events occurred after the end of the financial year 4.1. SIF Moldova SA
1. Extraordinary General Meeting of Shareholders on 04.04.2017 at first convening;
Adopted resolutions (current report 04.04.2017):
Resolution 1
Approves the election of the secretariat of the Extraordinary General Meeting comprised of 3 individuals
entered in the vote ballots, from among the company’s shareholders, in compliance to art. 129 line (2)
Law no. 31/1990 regarding companies: Nicolaescu George Catalin, Puscas Michaela, Sofian Virginia.
Resolution 2
Approves the running of a share buy-back program with the purpose of reducing the share capital, with
the following main characteristics:
a) Purpose of the program: The company will buy-back shares in the Program in order to reduce its
share capital, through the cancellation of the shares in compliance with applicable legal provisions. .
b) the maximum number of shares that can be bought back : 29.000.000 shares.
c) minimum price per share: the minimum purchase price will the the BVB market price at the time the
purchase is made.
d) maximum price per share: 1,5 lei.
e) Program duration: max. 12 months from the date the resolution is published in Romania’s Official
Gazette part IV.
f) the payment of bought-back shares will be made from the distributed profit entered in the 2016
financial statements, according to the provisions of art. 103 index 1 Law no. 31/1990 regarding
companies.
g) Share purchase within the Program will be run through all allowed market operations, which can also
include public purchase offers initiated by the Company, while abiding by the law.
Authorizing the Board of Directors and its members individually, to adopt all necessary resolutions in
order to fulfill the decision regarding the running of the share buy-back program.
Resolution 3
Approves the modification of Art. 7 line 3, thesis 1 of SIF Moldova’s Memorandum of Association, as
follows:
Current form: „The company is managed by a board of Directors comprised of 7 members, natural
individuals, elected or appointed by the Ordinary General Meeting for a period of 4 years with the
possibility of being re-elected.
Draft modification: „The company is managed by a Board of Directors comprised of 5 members,
natural individuals, elected or appointed by the ordinary General Meeting for a period of 4 years, with
the possibility of being re-elected.”
Resolution 4
Approves the modification of Art. 7, line 19 of SIF Moldova’s Memorandum of Association, by including
letter i) index 1 with the following content:
”Art. 7, line (19) The Board of Directors has the following attributions:
i^1) adopting the proper measures for the setting and application of corporate governance principles,
regarding the following items, without limitation to them:
1. Setting the relevant criteria for the monitoring of executive /higher company management activity
and the activity of the company as a whole, as well as annual evaluation of the criteria application
method;
SIF Moldova SA Directors’ Consolidated Report – 2016
26
2. analyzing the adequacy, efficiency and update of the risk management system in order to have an
efficient management of held assets, as well as of the way the corresponding risks the company is
exposed to, are managed;
3. making sure that the requirements regarding the outsourcing/assignment of some operational
activities or positions, both before the occurrence and over the entire duration of the
outsourcing/assignment are abided by;
4. analyzing and setting the remuneration policy so that it corresponds to the business strategy, long-
term objectives and interests and comprise measures for the prevention of conflict of interest
occurrence;
5. insuring the development and application of ethical and professional standards in order to insure a
professional and responsible conduct on the company level and prevent the occurrence of conflict of
interest;
6. approval of the Company’s risk appetite and tolerance limits, as well as of the procedure to identify,
evaluate, monitor, manage and report the significant risks that the company is or could be exposed
to;
7. drafting the plans to insure activity continuity and for emergency situations and their half-yearly
evaluation.”
Resolution 5
Approves 21.04.2017 as registration date (ex-date 20.04.2017) for the shareholders impacted by the
effects of the resolutions adopted by the Extraordinary General Meeting of Shareholders.
Resolution 6
Empowers the Board of Directors and its individual members to fulfill the resolutions adopted by the
Extraordinary General Meeting of Shareholders.
2. Ordinary General Meeting of Shareholders on 04.04.2017 at first convening; Adopted
resolutions (current report on 04.04.2017):
Resolution 1
Approves the election of the Ordinary General Meeting secretariat comprised of 3 individuals entered on
the vote ballots, from among the shareholders of the company, in compliance with art. 129 line (2) Law
no. 31/1990 regarding companies: Nicolaescu George Catalin, Puscas Michaela, Sofian Virginia.
Resolution 2
Approves the Activity Report of the Board of Directors for year 2016, including the “Corporate
Governance Code” of SIF Moldova revised, in compliance with the provisions of FSA Regulation no.
2/2016.
Resolution 3
Approves the individual financial statements (IFRS), for financial year 2016, accompanied by
the opinion of the financial auditor:
total revenue 212.040.222 lei
total expenses 78.237.199 lei
profit before taxation 133.803.023 lei
profit tax 10.505.003 lei
net profit 123.298.020 lei
Resolution 4 - approves:
a) a) The 2016 net profit distribution, as follows:
- net profit to be distributed 123.298.020 lei
- legal reserves 1.545.865 lei
SIF Moldova SA Directors’ Consolidated Report – 2016
27
- Dividends 44.975.884 lei
- Other reserves 76.776.271 lei
b) gross dividend of 0,044 lei/share.
c) the costs corresponding to the payments are borne from net dividend value.
d) The payment of dividends is made through the Central Depository and payment agent Banca
Transilvania in order to insure the continuity of the dividend payment process for SIF Moldova
shareholders.
e) Approves the date of 12.09.2017 as registration date (ex-date 11.09.2017) and date 02.10.2017 as
dividend payment date
Resolution 5
Approves the expiry of dividends corresponding to financial year 2013 set by OGMS on 15.04.2014,
uncollected by 14.07.2017 and their registration according to applicable regulations.
Resolution 6
Approves the discharge of administration for financial year 2016.
Resolution 7
Approves the 2017 Activity Report, in agreement with 2014-2018 Investment Policies Statement (OGMS
Resolution no. 8/15.04.2014).
Approves the revenue and expense budget for financial year 2017:
total revenue: 157.458.164 lei
total expenses: 47.625.091 lei
gross profit: 109.833.073 lei
net profit: 95.049.774 lei
Resolution 8
Approves the election of the Board of Directors for a 4 years’ mandate (2017 – 2021), with the
maintaining, during the mandate period, of the Administration Agreement and Management Agreements
approved through EGMS no. 2/01.04.2015 published in Romania’s Official Gazette part 4, no. 2207 of
29.04.2015; OGMS no. 15, 16 and 17 of 05.04.2013 published in Romania’s official gazette part IV no.
2213 of 22.04.2013.
Resolution 8.1.
Approves the result of administrator’s election through secrete vote: Ceocea Costel, Ciorcila Horia Doros
Liviu Claudiu, Iancu Catalin-Jianu-Dan, Radu Octavian Claudiu.
Resolution 9
Approves the appointment of Deloitte Audit SRL as financial auditor for a period of 2 years (2017-2019),
given the result of secret vote and provisions of SIF Moldova’s Memorandum of Association. .
Resolution 10
Approves the date of 21.04.2017, as registration date (ex-date: 20.04.2017) of the shareholders impacted
by the effects of the resolutions adopted by the ordinary general meeting of shareholders, with the
exception of the resolution concerning dividend.
Resolution 11
Empowers the Board of Directors and its individuals member for the fulfillment of the resolutions
adopted by the Ordinary General Meeting of Shareholders.
***
SIF Moldova SA Directors’ Consolidated Report – 2016
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The General Shareholders Meeting has taken note of the resolutions adopted by the Board of Directors in
its first extraordinary meeting regarding the management structures for the 2017-2021 mandate, namely:
Election for the positions of President of the Board of Directors –Mr. Costel Ceocea.
Election for the positions of vice-president of the Board of Directors - Mr.Radu Octavian Claudiu
Appointment of General Manager- Mr.Doros Liviu-Claudiu
Appointment of adjunct General Manager - Mr.Iancu Catalin-Jianu-Dan.
The fulfillment of compliance obligations, based on the resolutions adopted by the General Meetings of
Shareholders on 04.04.2017 was carried out as follows:
Through current report no. 1797 of 04.04.2017 the shareholders and investors were informed about
the election of the management structure;
Through current report no.. 1798 of 04.04.2017 EGMS and OGMS resolutions were published, at the
same time they were submitted to the Trade Registry for mentions and publication in Romania’s
Official Gazette part IV, making sure they are opposable to third parties.
In order to insure the continuation of the company’s management and engagement until FSA authorizes
the modifications occurred in the management structure, SIF Moldova has informed third parties
(banks, institutions, etc), the provisions of the company’s Memorandum of Association (FSA approval
no. 217/17.06.2015), according to which “In the transitionary period between the date the mandates of
the former directors expire and the date the new directors are validated by the competent authority,
the company’s management is insured by the former directors”.
3. Offering SIF2 shares to managers, directors and employees of the company, according
to the company’s remuneration policy (current report of 11.04.2017)
Following OGMS resolution no. 3/04.04.2017 to approve the individual financial statements (IFRS) for
financial year 2016, together with the opinion of the financial auditor, the Board of Directors has
approved “The share-based payment plan 2016” as part of the benefits plan for year 2016. The shares
offered that are to be assigned to the managers, directors and employees are part of the shares bought-
back by SIF Moldova, according to the buy-back programs approved by EGMS resolution no.
4/01.04.2015 and no. 8/25.04.2016. The receipt of rights (share transfer) will be carried out at the time
each beneficiary exercises his right, after the fulfillment of the 12 months period from the signing of the
“Share based payment agreement”, but no more than 15 months from the signing date. “The notification
document” drafted in compliance to CNVM Regulation no. 1/2006 (Annex no. 21) has been made public
through current report on 11.04.2017 and posted on the website www.sifm.ro.
4. Approval of the public share buy-back offer issued by SIF Modlova – FSA resolution no. 734/30.05.2017 (current report 31.05.2017) Through FSA resolution no. 734/30.05.2017 the public share purchase offer for SIF Moldova shares has
been approved with the mail following characteristics :
number of shares that are object of the offer: 25.000.000 (2,4081% of share capital);
purchase price: 1 leu/share;
run period: 07.06.2017 – 27.06.2017;
Subscription locations: as per offer document presented on www.sifm.ro .
The purpose of the program is the reduction of the share capital through the cancellation of bought-back
shares. The capital reduction will pe presented for approval in the following general meeting of
shareholders.
The program objectives is the lowering of discount between unitary value of net asset and trading price,
increase of quotation and liquidity for SIF2share with the effect of increasing profit per share.
Results of the public offer:
Number of shares subscribed: 27.163.657
Allocation index: 0,9203473597
(Announcement of June 27, 2017)
SIF Moldova SA Directors’ Consolidated Report – 2016
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4.2. Mecanica Ceahlau SA
The Ordinary General Meeting of Shareholders on 26.04.2017 has approved the assignment of the net
profit obtained in financial year 2016 of 2.105.150 lei as follows:
Net profit 31st December 2016 lei
Net profit to be assigned 2.105.150
Legal reserves 126.928
Dividends 1.175.551,45
Other reserves 802.670,55
4.3. Regal SA
The Ordinary General Meeting of shareholders on 20.04.2017 has approved the assignment of the net
profit obtained in financial year 2016, worth 85.689 lei as follows:
Net profit 31st December 2016 lei
Net profit to be assigned 85.689
Loss coverage of previous years 21.204
Dividends 64.485
4.4. Agrointens SA
Important contracts:
GRATIAN BERATUNG & IMMOBILIEN SRL – service agreement for 4 months, starting on
01.06.2017.
Subscription type contract 20 hours, entered with FAST UK – blueberry consultant.
On 21.04.2017 land was purchased in the Mandra/Brasov area, through 3 sale-purchase agreement
with a total purchase value of 2.506.470,93 lei, corresponding to 552.001 euro at an exchange rate of
4,5407 lei. Through the agreements thus entered, a total of 441.600 square meters of land was
purchased. The Mandra lands are located about 30 km away from the Vistea farm.
Other events:
EGMS on 03.04.2017 approved
the contracting of a credit facility for a work capital of 1.5 mil lei from Banca Transilvania ;
approves the guaranteeing of the credit with a mortgage on the collections and current balance;
(ii) mortgage contract type 1 on the real estate in AI property as well as on the blueberry
plantations cultivated on these lands; (iii) mortgage on the agricultural machines, transportation
means and office supplies corresponding to the plantation;
the contracting of a credit facility for investments of 2.5 mil lei from Banca Transilvania for the
setup of cultures and purchase of equipment. Approves the guaranteeing of the credit with: (i)
mortgage contract on the collections and current account, (ii) mortgage contract type II on the
real property of AI as well as on the blueberry plantation on the lands; (iii) mortgage contract on
the agricultural equipment, transportation means and office supplies corresponding to the
plantation;
EGMS on 14.04.2017 has approved: the proposal of CA Agrointens SA regarding the project
"Extension of BLUEBERRY farm investment; purchase of Manda land, about 45,46 ha worth
568.250 euros and purchase recovery of land Vistea 5ha worth 85.0000 euro; increase of Agrointes
SA capital with the amount of 3.004.950 lei for investment financing, through the contribution of
shareholder SIF Moldova.
Significant events that might influence the basic activity (blueberry production): in June 2017 there
was a weather event, namely hale, that affected the plantation in Vistea. Following this event, the
damages are currently being evaluated with the insurer Gothaer, for possible damages.
SIF Moldova SA Directors’ Consolidated Report – 2016
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On 30.04.2017, the accounting value of tangible assets mortgaged represents 62,66% of the total assets
of the company. The total assets value of the company was 15.121.281 lei.
4.5. Hotel Sport Cluj SA
EGMS on 16.01.2017: approved the modification of the company Memorandum of Association following
the modification of the shareholding structure, through the entry of SIF Moldova, with a number of
19.329.398 shares representing 99,99% of total capital based on assets transfer document no.
175/17.11.2016 and Trade Registry Office resolution no. 48/04.01.2017 on the cancellation of
Opportunity Capital SA.
After obtaining the building permit for updating and façade laying for the hotel in December 2016, the
company is working on the PT phase of the project in order to obtain the quantity needs list and the
working instructions needed for the auction phase of the execution works.
4.6. Tesatoriile Reunite SA
EGMS on 16.06.2017 approved: the investment in “Baba Novac Residence” in concomitant execution
phases; the valuation of the land Spataru Preda in the preparing phase, increasing the share capital with
14.204.380 lei, in order to partially finance the building of the Baba Novac Residence project and
expenses for land preparation in Spataru Preda 5.
Important contracts
16.01.2017: Brokerage contract with the partner real estate agency - CBAR Moșilor-Dacia S.R.L, in
return for a total commission of 3% of the sale price (VAT included) for the living unit the real estate
transaction is closed for. At present the Agency is preparing the launch campaign of the BNR project,
drafting of BNR website, participation to real estate fairs. de
22.05.2017 the building permits for “Baba Novac Residence” project was obtained.
20.06.2017 contract signing with the general entrepreneur Octagon Contracting & Engineering SA to
build the residential complex and start construction.
4.7. Opportunity Capital SA
Based on the voluntary liquidation process, the company is cancelled on 04.01.2017, as per TRO Bacau
resolution no.. 48.
4.8. Real Estate Asset SA
01.01.2017: REA goes under the administration of the General Department for Large Taxpayers
Administration (notification no. 589-SA/27.12.2016)
31.01.2017: CA al Professional Imo Partners SA – majority shareholder of Veranda Obor SA – has
approved the signing of addenda to the credit contracts entered with Raiffeisen Bank. The extension
of the limit date for project completion has a direct impact on the issuing of the guarantees instituted
on the shares held by REA at Nord SA. CEFS/Veranda Obor representatives have requested the
financing bank to analyze the possibility of issuing the guarantees before the formal Project
completion date ( deferred for 30.06.2017)
EGMS on 04.05.2017 decided: Reduction of capital with the amount of 536.053 lei representing the
value of the shares subscribed and not paid in the capital increase approved by EGMS on 31.07.2015;
Proper modification of REA’s Memorandum of association; voluntary dissolution, liquidation and
cancellation of REA, appointment of liquidator Arbanas & Negrii; delivery of REA archive to Casa SA;
method to fulfill the liquidator’s mandate regarding the running of the procedure and assignment of
patrimony (assignment to SIF Moldova of the shares held by REA in the companies Professional Imo
Partners SA, that is 24.307.608 shares Nord SA, that is 1.658.681 shares).
4.9. CASA SA
EGMS on 28.04.2017 has decided to sell by auction the space in Bacau, Str. Marasesti no. 4. No bidder
showed up in the first stage.
SIF Moldova SA Directors’ Consolidated Report – 2016
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5. Information regarding own share purchase by SIF Moldova Group
Through current report on 06.03.2017 investors were informed about the completion of the own share
buy-back program, as per EGMS resolution of SIF Moldova no. 4/25.04.2016.
The results of the operation run between 15.06.2016 – 03.03.2017 are the following:
No. of purchase shares: 9.581.936 (0,923 % of share capital)
Average price: 0,7661 lei
Total share value: 7.341.134 lei
On the reporting day, the total holding of SIF2 shares is 16.000.000, as per OGMS resolution no.
8/25.04.2016, including the shares purchased as per EGMS resolution no. 4 /01.04.2015 and not
assigned.
Through FSA resolution no. 734/30.05.2017 the public share purchase offer for SIF Moldova shares has
been approved with the mail following characteristics :
number of shares that are object of the offer: 25.000.000 (2,4081% of share capital);
purchase price: 1 leu/share;
run period: 07.06.2017 – 27.06.2017;
Subscription locations: as per offer document presented on www.sifm.ro .
Results of the public offer:
Number of shares subscribed: 27.163.657
Allocation index: 0,9203473597
(Announcement of June 27, 2017)
Stock Option Plan program coordinates corresponding for 2016
OGMS on 25.04.2016 has approved the running of “stock option plan” (SOP)-type programs, to
distribute SIF2 shares free of charge to the directors, managers and employees of SIF Moldova, the
source being the shares not used in the buy-back program approved by EGMS on 01.04.2016 and
shares that are to be bought-back through the program approved by EGMS on 25/26.04.2016, a
maximum of 16.000.000 shares of which a maximum 10.400.000 shares can be used for 2016.
The Board of Directors has been empowered to adopt all measures necessary to fulfill the resolution
within legal and statutory limits, by going through all stages and formalities for program
implementation. de
The running of a SOP as part of the benefits plan for directors, manager and employees for year 2016
(Variable remuneration) can be achieved within the limitation of the Memorandum of Association
and CCM 2016-2017, and in compliance with AFIA law, namely:
for managers and directors – the actual level of the benefit plan is set by the Board of Directors,
after the approval of the annual financial statements 2016 by the General Meeting of
Shareholders.
for employees – the share plan can be assigned according to the law and in compliance with the
remuneration policy annually set by the Board of Directors.
at least 50% of the variable remuneration will consist in SIF2 shares (e.g. awarded through SOP)
The number of shares to be assigned to each beneficiary is set on the date the beneficiary rights are
awarded (date of the conclusion of the share-based payment agreement entered between SIF
Moldova and the Beneficiaries), after the approval of the annual financial statements 2016 by the
General Meeting of Shareholders. Exercising the right to receive shares free of charge will be within a
minimum deadline of 12 months from the signing date of the share-based payment contract, entered
between the company and shareholders.
SIF Moldova SA Directors’ Consolidated Report – 2016
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6. Corporate Governance
6.1. Corporate Governance Code
We have run the process of aligning the Corporate Governance Code of SIF Moldova to the
provisions of ASF regulation no. 2/2016. Its revised form (including articles from Reg. 2/2016)
is structured as follows:
Chapter. 1. ORGANIZATIONAL STRUCTURE. ASSIGNMENT OF POSITIONS AND
RESPONSIBILITIES (ASF reg no. 2/2016 – art. 4 line.2; a) insuring a transparent and
proper organizational structure; b) proper assignment and proper separation of
responsibilities)
1.1. GENERAL SHAREHOLDERS’ MEETING
1.2. BOARD OF DIRECTORS (Reg. 2/2016 Chapter II Board Responsibilities art. 7 – 22)
1.3. EXECUTIVE MANAGEMENT (Reg. 2/2016 Chapter III Responsibilities of executive
management (…) art. 23 – 28)
1.4. KEY POSITIONS (Reg. 2/2016 Chapter III Responsibilities (…) of the individuals holding
key positions art. 29 – 31)
Cap. 2. CONFLICT OF INTEREST AND THEIR MANAGEMENT (Reg. 2/2016 Chapter IV – Conflict
of interests and their management art. 32 – 40)
Cap. 3. PERMANENT RISK MANAGEMENT POSITION (Reg. 2/2016 – art. 4 line 2: c) proper risk
management/ risk management; Chapter V Risk Management and Risk Management
Position art. 41 – 48)
Cap. 4. PERMANENT INTERNAL CONTROL POSITION (ASF regulation no. 2/2016 – art. 4 line 2:
d) adequacy of policies and strategies such as the internal control mechanisms)
Cap. 5. PERMANENT INTERNAL AUDIT POSITION (Reg. ASF no. 2/2016 – art. 4 line.2: d)
adequacy of internal control policies and strategies and management)
Cap. 6. COMMUNICATION STRATEGY (ASF regulation no. 2/2016 – art. 4 line 2 e) insuring an
efficient communication system and information issue)
Cap. 7. CONFIDENTIAL INFORMATION REGIME ( ASF register no. 2/2016 – art. 4 line 2 f)
applying solid operational procedures, that prevent the issue of confidential information)
Cap. 8. SHAREHOLDERS’ RIGHTS
Cap. 9. FINANCIAL REPORTING
Cap. 10. INVESTMENT STRATEGY
Cap. 11. ASSETS MANAGEMENT
Cap. 12. DIVIDEND POLICY. SHARE BUY-BACK.
Cap. 13. EVALUATION OF COMPANY AND SIF2 SHARE PERFORMANCE
Cap. 14. POLICIES IN THE FIELD OF HUMAN RESOURCES. REMUNERATION POLICY.
Cap. 15 RESTRUCTURE PROCESS. COMPANY REORGANISATION.
Cap. 16. SOCIAL RESPONSIBILITY
Cap. 17. CODE REVISAL
The corporate governance code of SIF Moldova aligned to the provisions of ASF regulation no.
2/2016 regarding the application of corporate governance code by authorized entities, regulated and
supervised by ASF.
Statement regarding the application of corporate governance principles according to the
provisions of ASF reg. no. 2/2016 regarding the application of corporate governance code by
authorized entities, regulated and supervised by ASF.
The corporate governance code of SIF Moldova, abides by all 41 principles foreseen in the new
Corporate Governance Code of BVB (current reports no. 12.01.2016; 25.04.2016).
Statement regarding the abidance by the corporate governance code stipulated in the
Corporate Governance Code of Bucharest Stock Exchange.
SIF Moldova SA Directors’ Consolidated Report – 2016
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6.1.1. Structura si modul de operare ale organelor de administratie, organelor de
conducere, a organelor de supraveghere si a Comitetelor Grupului
6.1.1.1. THE GENERAL MEETING OF SHAREHOLDERS
The supreme government body of SIF Moldova is the General Meeting of Shareholders (GMS). Ordinary
and Extraordinary General Meetings of Shareholders are convened by the Board of Directors in
compliance with legal and statutory provisions.
The General Meeting of Shareholders adopts resolutions based on drafts proposed by the Board of
Directors and/or shareholders. GMS resolutions, signed by the president of the meeting, are reported to
FSA and BVB and made public by publishing in a national newspaper, Romanian Official Gazette, part
IV, FSA Bulletin, presented on the official website and at the headquarters. GMS resolutions are
enforceable (to be applied immediately) from the moment they are adopted, if there is no other date on
which they should become enforceable, mentioned in their wording, or stipulated by legal provisions.
Running and voting procedures
Recommended principles:
Directors have a legal obligation to look after the interests of all shareholders. If
shareholders do not vote they cannot complain when their views are not taken into
account..
The settlement of participation and voting procedures is an exclusive attribute of the Board of Directors.
Ever since the General Meeting of Shareholders of April 2008, SIF Moldova has implemented the vote by
correspondence with electronic transmission, in accordance with the Directive 2007/36/CE of the
European Parliament and of the Council from 11th of July 2007 receiving the notice of CNVM for
elaborated procedure. Subsequently, the implementation of the provisions of Directive in the Regulation
no.6/2009, has maintained the compliance of the Procedure content with the Regulation requirements.
The Board of Directors will be able to decide the holding of GMS, by electronic means, consisting in:
1. the transmission in real time of the General Meeting of Shareholders;
2. the bidirectional communication in real time, fact that allows shareholders to address
the Board of Directors at a long distance;
3. a voting system during the GMS that does not need a representative physically present
at the meeting
This procedure observes the community legislation in the field, “Directive 2007/36/CE of the European
Parliament and of the Council from the 11th of July 2007, on the exercise of certain shareholders’ rights
within the quoted commercial companies”, transposed in the national legislation in the “Regulation no.
6/2009 on the exercise of certain shareholders’ rights within the annual general meetings of commercial
companies”.
The Board of directors recommends that for certain issues relating to the agenda of the GMS, such as the
discussion, approval and/or modification of the annual financial statements, the dividend settlements,
election/revocation of Board members, the appeal of Board members, the dissolution/liquidation of the
company - not to use the electronic online voting.
Quorum requirements and decision making
Articles 18, 19 of SIF Moldova’s Memorandum of Association, foresee the following requirements
concerning quorum requirements and decision-making:
SIF Moldova SA Directors’ Consolidated Report – 2016
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(18) for the validity of deliberations in the ordinary general meeting the presence of
shareholders holding at least one fourth of the total number of vote rights is necessary. The
resolutions of the ordinary general meetings are taken with a majority of votes cast. If the
ordinary general meeting cannot work because the requirements in the previous paragraph are
not met, the meeting will adjourn following a second convening, where it can deliberate on the
items on the agenda of the first meeting, irrespective of the quorum, taking decisions with the
majority of votes cast.
(19) For the validity of deliberations of the extraordinary general meeting the presence of
shareholders holding at least ¼ of total vote rights is required, and for the following convening,
the presence of shareholders representing at least 1/5 of total vote rights. Decisions are taken
with the majority of votes held by the present or represented shareholders. The decision to
modify the main object of activity of the company, reduce or increase share capital, change the
legal form, merge, dissolve or divide the company is taken with a majority of at least 1/3 of vote
rights held by present or represented shareholders.
Mentions regarding the holding limit of 5% of SIF Moldova’s capital.
The acquiring, holding and selling of SIF Moldova shares is made abiding by the provisions of Law no.
297/2004 regarding capital market and FSA regulations regarding the interdiction to directly or
indirectly hold more than 5% of vote rights.
SIF Moldova has harmonized its Memorandum of Associations with the provisions of art. 2811 of Law
297/2004. Thus, art 3 of the Memorandum of Association foresees that:
(8) Any individual can acquire under any title, or can hold, along or together with the individuals its
acts concentrated with, shares issued by the financial investment company resulted from the
transformation of Fondul Proprietatii Private, but no more than 5% of the capital of the
financial investment company.
(9) The exercise of the right to vote is suspended for the shares held by shareholders exceeding the limit
foreseen by art. (8).
The persons mentioned at paragraph (8) have the obligation, at achieving the 5% threshold, to inform
in no more than 3 working days the financial investment company, CNVM and the regulated market
where the respective obligations are traded
Within 3 months from the date of exceeding the limit of 5% of the registered capital of the financial
investment company, the shareholders who are in this situation are obliged to sell the shares that
exceed the limit of ownership.
The regulation for the application of art 2861 of Law no. 297/2004 on the capital market in Romania by
FSA has been made through FSA instruction no. 6/2012 (approved by FSA Order 140/14.12.2012),
that has annulled FSA instruction no. 1/2006.
6.1.1.1.1. Vote policy for the general meetings of the companies in the portfolio
The exercise of shareholder attributions conferred by Law no. 31/1990 R and FSA regulation has been
made through the representatives in the General Meetings of Shareholders.
The exercise of SIF Moldova’s shareholder attributions in the companies in its portfolio is regulated
through:
- internal regulations;
- system, operational and work systems.
SIF Moldova has set a procedure for its activity regarding the exercise of SIF Moldova’s shareholder
attributions in the companies in its portfolio, the procedure including the general framework for the
operations concerning:
SIF Moldova SA Directors’ Consolidated Report – 2016
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1) drafting of retranslation mandates entered between SIF Moldova as Representative and
Represented or in the General Meeting of Shareholders.
2) mail analysis elements of the convening notice for the general meetings – form aspects regarding
lawfulness aspects, as well as fund aspects regarding the issues on the agenda from the point of
view of the interest it presents to the company and shareholders;
3) preparing for GMS participation: analysis of the documentation/information provided to the
sharehodlers and justification of the vote option.
4) granting the representation mandate/ special/mandate / power of attorney, vote through
correspondence.
The Board of Directors of SIF Moldova aims to make regular analysis on internal procedures in order to
improve them in agreement with new situations in current practice and update them with all
modifications of applicable law.
SIF Moldova evaluates its vote right only following a conscious decision.
Depending on the issued discussed for which the shareholders’ right is requested to adopt decisions in
the interest of the shareholders and company, our vote can be to support the suggestions of managers or
reject them.
VOTE POLICY FOR THE COMPANIES IN THE PORTFOLIO
A. Aspects concerning the management of companies
In compliance with the best practices, SIF Moldova supports the proposals of the managers of the
companies regarding:
- name change
- headquarters change;
- stock market listing
- setting the location and date of the annual general meeting
- acceptance/approval of financial statements;
- certification to transfer reserves and assign revenue;
- amendment to the individuals with signature authorization;
- approval of the modification of accounting records keeping methods
- acceptance of work agreements;
- appointment of internal auditors;
- approval of protocols and other formalities.
In the best interest of the shareholders, SIF Moldova will consider the vote “against” for any proposal in
case there are no information or the information have been insufficiently presented.
B. Election of the auditors
In compliance with the best practices and in order to reach the shareholders’ best interest, under normal
conditions, SIF Moldova will consider the “for” vote for the following proposals:
- election/authorization of auditors;
- interdiction for the auditors to engage in non-audit services for the company.
SIF Moldova will consider to vote “against” for the cases when:
- there is a certain concern regarding the independence of the auditors or the activity carried out by
them for the company in the past;
- there are suggestions that request the companies: to look for offers from other auditors; rotate
audit companies only for opportunist and/or comfort reasons.
C. Board of Directors
Regarding aspects connected to the Board of directors, normally SIF Moldova wants to support the
management. Nevertheless, the company will vote against the management in case corporate
performance has been low or in case the Board seems to lack independence.
SIF Moldova SA Directors’ Consolidated Report – 2016
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In compliance with best practices and for the best interest of the shareholders, SIF Moldova will
normally vote “for” the following proposals:
- retribution of managers for the actions carried out in good will, the vote against will be
considered for proposals of unfair retribution, given the performances of the company.
- modifications of the Board number of members, that seems to have a legitimate business purpose
and does not mainly target reasons against take-over.
SIF Moldova will consider voting “against” in case there is:
- a limitation regarding the shares held by directors;
- a time limitation for the shareholder’s mandate. The companies benefit from experienced
managers and shareholders’ control is best exercised through annual vote;
- requirement for syndicate or special representation of interests in the Board of Directors;
- requirement to offer two candidates for each position in the board of directors.
D. Election of the Board of Directors
In elections of directors that have not been contested, SIF Moldova will consider the vote “against” for:
- directors who have had a low performance
- directors who have not acted in the interest of the company
In the following cases SIF Moldova will vote following a case to case analysis:
- in case of electing directors who have been challenged;
- in case of some low performance, the support for the election of a majority of independent
directors will be taken into consideration;
SIF Moldova will consider voting „for”:
- cumulative vote;
- increase of shareholder’s ability to request special general meetings.
SIF Moldova will consider voting “against” :
- limitation of shareholder’s ability to appoint or revoke managers. SIF Moldova aims to support
the proposals to reestablish the shareholders’ authority in this field. From case to case, a series of
suggestions that authorize the Board of Directors to make interim appointment;
- classes of shares with unequal vote right;
- awarding rights to the board of directors that are not compliant with applicable law.
E. Capital Structure
The management of companies must be very flexible regarding the setting of the company’s financial
structure and it is recommended that the proposals of management in this field, are supported.
Nevertheless the rejection of the proposal must be considered when these impose barriers against
potential take-overs.
SIF Moldova will consider voting „for” :
- increasing share capital with reserve contributions
- share buy-back programs in case all shareholders can participate under equal conditions;
- diminishing the share capital following the annulment of bought back shares
When following capital operations there are the premises that SIF Moldova’s interests will be affected,
the vote will be the object of case-to case analysis.
SIF Moldova will consider the vote “against”:
- increasing the share capital with contribution in kind
- share capital increases without preference right granted to shareholders
For votes on the issues below, SIF Moldova will make case to case analysis:
- contracting credits and pawning/mortgaging company goods;
- issue of corporate bonds;
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- mergere or division of companies;
- conversion of shares from one category to another;
- conversion of a bond category in another or in shares.
F. Corporate governance
In case of voting for the following issues, SIF Moldova will make a case to case analysis:
- modifications of the memorandum of association. Support must be offered to the revisions of
memorandum of associations that are solidly business motivated. It is recommended that those
that seem to be made exclusively for the purpose of consolidating defense against a take-over
should be opposed.
- setup or closing of secondary offices: branches, agencies, or other such units without legal
personality;
- anticipatory dissolution of the company
SIF Moldova will consider voting „against” :
- consultative shareholders committes. Since management must request action indications from
shareholders, it is recommended that action methods be left to the latitude of management;
- limitations regarding share holding or vote rights;
The justification of the vote option is made based on a careful analysis of the documents provided to the
shareholders, made by investment analysist, taking into consideration the approaches/proposals of he
board of directors and in compliance with sharehodlers’ interests.
Participation to the General Meetings of Shareholders is made through:
- legal representative – president, vice president, managing directors
- appointed representative from among employees;
- external collaborators;
- vote through correspondence and electronic vote.
Usually vote is cast through proxies/ mandates for the benefit and best interest of SIF Moldova’s
shareholders, in order to reduce the costs of representation in general meetings.
Company financing (incl. agencies)
In case of OGMS and EGMS convened by agencies of SIF Moldova, based on justification notes drafted
« Special Power of Attorneys » are submitted for the approval of :
- DCD – if the requests of the agencies entered on the agenda abide by the sectorial strategy
approved by BD, within the maximum limits assigned as well as the expected profitability interval
for investments in that particular sector ;
- if the request of the agency, entered on the agenda does not abide by the sectorial strategy
approved by BD within the maximum limits assigned and the profitability internal expected for
investments in that particular sector,the appoval for the revision of SIF indicators/position in
GMS of the branch is requested;
Special power of attorneys are submitted to the GMS secretariat and written down in the GMS Protocol
register, in the agency.
With regards to SIF Moldova subsidiaries, the investment analyst in collaboration with the Majority
Holdings Portfolio will report on a quarterly basis (on the basis of the requested information / GMS
decisions adopted) on the economic and financial situation, the stage of the Budget fulfillment, the
investment program and the performance / profitability criteria proposed.
Non-attendance at GMS
There are situations that justify the non-attendance proposal.
a) possible conflict of interest between SIF and company
b) Lack of relevant information that would allow adopting a decision regarding the operation
submitted for approval;
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c) conflicting and unclarified information that might manipulate the will of the shareholders.
d) other specific situations.
In case based on professional reasoning and taking into consideration the actual status regarding that
particular company, it is ascertained that the involvement of shareholder SIF Moldova in GMS is not
necessary due to a conjunctural situation or general policy interests of SIF Moldova in relation to the
companies classified in various categories, the non-attendance proposal of SIF shareholder to GMS is
issued and information on the resolutions adopted during the GMS will be obtained at a later date.
6.1.1.2. BOARD OF DIRECTORS
Abidance by the provisions of Reg. 2/2016 ChII Board’s responsibilities art. 7 - 22
The structure and members of the Board of Directors are set according to the requirements of specific
law, applicable to each category of regulated entities, so that it efficiency meets the obligations
assigned to it. (art. 7)
The basic responsibilities of the Board concerning the application of corporate governance are
presented in the Memorandum of Association and developed in internal policies and/or regulations, in
compliance with the specific legislation applicable to each category of regulated entities. (art. 8)
The Board, can create, depending on the nature, volume and complexity of the regulated entity’s
activity, consulting committees assigned with the drafting of basic recommendation for the Board. (art.
9)
The assignment of board responsibilities to executive/ higher management is made according to the
provisions of Companies Law no. 31/1990, republished with the later amendments and additions, and
specific law applicable to each category of regulated entities. (art. 10)
The board of directors is responsible for strategic management, meeting the objectives set ad,
depending on the management system, drafts/ approves the Business Plan, and has the obligation,
based on formal and transparent orders, to evaluate the financial position. (art. 11. - (1))
The Board is bound to set relevant criteria for the monitoring of executive /higher management
activity results and SIF Moldova as a whole, and to evaluate the way these criteria are applied, on an
annual basis. (art. 11. - (2))
The activities carried out by SIF Moldova and their development perspectives are analyzed at least
once a year by the Board. (art. 12.)
The Board is responsible to make sure that there is a proper framework for the verification of the way
in which specific law regarding F.S.A reporting is applied (art. 13)
The Board can decide, together with the financial auditor on a formal and transparent framework
through which correct, complete and on time information are provided, concerning the way in which
financial reporting principles and practices, including prudential reporting ones, are applied. (art. 14)
The Board is responsible to making sure there is a proper framework in place, for the verification of
information sent to FSA, at its request, regarding certain actions carried out by the regulated authority
(Art. 15).
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The Board analysis the adequacy, efficiency and update of the risk management/administration
system, for an efficient management of assets held by SIF Moldova, as well as the way the risks the
company is exposed to, are managed. (Art. 16.1).
The risk administration/management system previously mentioned insures the concordance of control
activities with the risks generated by the activities and processes that are subject to the control. (art. 16.
2)
The internal control system of SIF Moldova is created on the proper hierarchic level and reports
directly to the Board of executive/higher management, depending on the case, independent of the
organizational, operational and support structures that it controls and monitors. (art. 17. 1)
The internal control system of SIF Moldova insures the verification of the adequacy of the risk
identification, evaluation, monitoring, management and reporting actions, the viability of financial
and non-financial information reported internally and externally, and their compliance with specific,
applicable law, as well as with SIF Moldova’s internal decisions. (art. 17. 2)
The Board insures the abidance by the requirements regarding the outsourcing/assignment of some
operational activities or functions, both before they are carried out and while these are
outsourced/assigned (art. 18-(1)).
The outsourcing/ assignment of some operational activities or functions is made only according to
specific legislation and provided none of the following consequences will occur :
a) significant deterioration of the quality of SIF Moldova’s governance system
b) unjustified increase of operational risk ;
c) impossibility of FSA to monitor the abidance by SIF Moldova by its assigned obligations ;
d) prevention of the provision of continuous and quality services to the consumers of financial
products. (art. 18. - (2))
The Board analysis and sets the remuneration policy so that it corresponds to the business strategies,
long-term objectives and interests and includes measures for the prevention of conflict of interest
occurrence. (art. 19. - (1))
The Board makes sure that all engagements regarding remuneration are correctly and responsibly
structures and that the remuneration policies allow the promotion of efficient risk management
without taking on risks that exceed SIF Moldova’s risk tolerance level . (art. 19. - (2))
The remuneration policy is set based on a fundamental analysis of the individual performance of the
paid individual, a careful assignment of the expenses of the regulated entity, where possible, as well as
avoiding the setting of bonuses that allow excessive risk taking.(art. 19. - (3))
The remuneration level is set in strict connection with the responsibilities and engagements
corresponding to the attributions. (art. 20)
The Board, executive/high management, depending on the case, are bound to communicate with the
interested parties, based on a communication strategy, that abide by at least the following
requirements :
a) insuring an equitable treatment of shareholders and interested parties ;
b) information communication in due time;
c) insurance of a transparent communication framework (art. 21)
For the groups where the mother-company has its headquarters in Romania and is one of the regulated
entities foreseen under art. 4, the Board of the mother-company has the general responsibility of
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insuring a proper internal governance of the group, a governance systems corresponding to the
structure, activities and risks, both on the group and agency level. (art. 22. - (1))
The Board of the mother- company sets a governance system that contributes to an efficient
supervision of its agencies, and taken the nature, volume and complexity of risks to which the group
and agencies are exposed into consideration, while at the same time abiding by the legal and
governance responsibilities of the agencies (art. 22. - (2))
The Board of the agency applies internal governance principles and policies similar to those of the
mother company with the exception of the case where legal requirements stipulate own policies should
be set. (art. 22. - (3))
The Board of the agency together with the board of the mother company which has its headquarters in
Romania and is a regulated entity (…) evaluate the decisions and practices on the group level in order
to make sure that these abide by legal provisions or prudential norms applicable to the agency and do
not affect a healthy and prudent management. (art. 22. - (4))
Detailing of the assignment of functions and responsibilities of the Board of Directors –
excerpt from the corresponding regulations -part of AFIA certification documentation -
The company is managed by a Board of Directors comprised of at least 5 members, natural individuals,
elected or appointed by the general meeting for a four years’ period, with the possibility of being re-
elected. The members of the Board of Directors are FSA approved.
In its activity, the Board of Directors adopts resolutions. The resolutions of the board of directors are
valid if more than half its members are present and decisions are adopted with the majority vote of
present members. The president of the Board of Directors will have decisive vote in case of a tie. The
president of the board of directors who, at the same time, is CEO of the Company cannot have a decisive
vote. Legally adopted resolutions are mandatory for the directors and other managers, and are
enforceable from the time they are communicated in writing or from the general notice sent through the
secretariat of the Board of Directors, if they do not foresee a later deadline on which they are to come into
force, in their wording.
The Board of Directors elects a president and vice-president from among its members. The president of
the Board of Directors can also cover the CEO position in the company, the vice-president can also cover
the adjunct CEO position. The president chairs the meetings. In case the president is absent, the works
are conducted by the vice-president.
The members of the Board of Directors can be represented in the board meetings only by other members.
An attending member can only represent a single absent member.
The statutory provisions regulate the situations concerning:
a) the management of the company in the interim period from the date the mandates of the former
directors expire up to the validation date of the new directors by the competent authority;
b) Board completion procedure, when there are vacant positions ;
c) organization and course of Board of Directors meeting.
The Board of Directors has the following basic competencies, which cannot be assigned:
setting the company’s main activity and development direction;
setting the accounting and financial control policies, as well as approval of financial planning;
appointing and revoking directors and setting their rights and obligations;
supervision of directors’ activity;
drafting the annual report, organization of the general shareholders’ meeting and implementation of
its resolutions;
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submission of the request for the opening of the company’s insolvency procedure;
accurate fulfillment of all attributions set for the Board of Directors by the general meeting of
shareholders;
setup/ closing of agencies and other secondary offices, without legal personality, or change of their
headquarters;
setting and approval of the vote procedures in the general meeting of shareholders;
setup of other companies or legal entities, including holdings in the share capital of other
companies, according to legal regulations;
pledging, renting, setup of first degree movable security and mortgage on the company’s property.
approval of the exceeding of the limit set by the provisions of Law no. 31/1990, with the approval of
the competent authority and in compliance with the regulations issued by it, for the buyback of own
shares, issued according to art. 4 of Law no. 133/1996, in the property of their initial buyers. The
acquired shares can be used, based on the resolution of the Board of Directors, with the approval of
the competent authority, for the purpose of lowering the share capital or regulating the course of
own shares on the capital market.
Other attributions of the Board of Directors:
drafting general investment policies;
contracting bank loans;
entering contracts with the depositor, auditor and entity keeping the shareholders’ records;
assignment of company representation right to other directors or employees, setting the limitations
of the mandate;
approval of the company’s internal regulation and internal control procedures, internal audit, risk
management and legal assistance for employees, directors and members of the Board of Directors;
negotiation of the collective employment contract;
approval of the setup/dissolution of the Management Committee with the quorum for adopting
resolutions foreseen in the Memorandum of Association;
approval of the organization of the company, organization chart, functions status and wage
limitations;
appointment and revoking of director replacements and setting their remuneration;
approval of the appointing, employment, discharge of office or firing of department directors, setting
their rights and obligations
making sure that the company has an IT system that allows the safe keeping of market price records
for each asset in the portfolio, net asset value, unitary value of net asset for the regulated reporting
periods, records of the calculation method for all commissions, taxes and fees due, keeping the
records of these operations for at least five years;
approval of the regular reports of the internal audit, internal control and risk management
departments;
approval of the investigation plan of internal control;
ordering measures for the remedy of any infringement of the law, applicable regulations for the
capital market or internal procedure by SIF Moldova or by its employees, following the analysis of the
proposals presented in writing by the internal control department representative;
notification of FSA and involved capital market institutions, about the situations identified by the
representative of the internal control department regarding the infringement of legal regime
applicable to the capital market and on the measures adopted;
approval of the multiannual and annual internal audit plan and necessary resources;
approval and periodical revision of the Risk management policy, procedures and methodologies for
the identification, measurement, management and monitoring of relevant risks to which the
company is or could be subjected to, at any time;
approval of risk profile and risk tolerance for significant risks;
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approval of the crisis simulation results and recommendation presented by the risk management
function
approval of the periodic risk reports from the risk management department;
evaluation and periodic examination (half-yearly) of the efficiency of the measures and procedures
implemented for risk management and ordering proper measures for the improvement of possible
deficiencies;
approval of the results of the periodical self-evaluation of operational risks and internal control
system, as well as the answer to risk plan which includes measures for the prevention and lowering of
operational risks;
approval and regular(half-yearly) evaluation of the business continuity plan and the plan for
emergency situations, in order to eliminate or lower risks;
approval of the classification of information on insider and confidential categories and of the
measures taken to manage them
approval of the assets evaluation methods as per International Evaluation Standards, namely:
o market-based approach methods;
o income-based approach methods;
o cost-based approach methods;
o other applicable methods.
approval and examination of any modification of the assets evaluation policy and procedures
periodical evaluation and examination of the efficiency of policies, measures and procedures
instituted to meet the obligations foreseen by AFIA legislation
settling any other issued set by the general meeting of shareholders or legal regulations or
provisions.
The main objective of the Board of Directors on the average and long term, defined and determined by
the particularities of SIF Moldova and the macroeconomic context it operates in, is to insure a balance
between the continuity of the activity under optimal conditions and meeting the shareholders’
expectations.
The obligations and responsibilities of the directors are regulated by the provisions regarding the
mandate and the ones especially foreseen by Law no. 31 /1990 with its later amendments and additions,
Law no. 297/2004 with its later amendments and additions, applicable FSA regulations and statutory
ones.
The members of the board of directors hold the proper knowledge, competencies and experience to
understand the activities of the company, especially the main risks associated to these activities, as well
as the assets SIF Moldova invests in.
6.1.1.3. Audit Committee
The audit committee is a permanent committee, independent of SIF Moldova management,
subordinated to the Board of Directors. The Audit Committee supports the Board of Directors in fulfilling
its responsibilities in the field of financial reporting, internal and external control and risk management.
The members of the Audit Committee are set by the Board of Directors.
The audit committee is comprised of at least two members elected from non-executive managers.
The members of the Audit Committee must have the proper experience corresponding to the attributions
they have within the committee. At least one member of the Audit Committee must have accounting
and/or audit competence.
Attributions. responsibilities:
it monitors the financial reporting process;
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it monitors the efficiency of internal control, audit and risk management systems within SIF
Moldova;
approves the Internal audit Chart and internal audit and control procedures;
analyses and approves the multiannual internal audit plan and the resource need for this activity;
analyses and approves the annual investigation plan of internal control and its modifications;
it makes sure that the internal audit and internal control analysis and reports drafted are in
compliance with the audit and control plans approved by the Board of Directors;
receives the internal audit report, analyses and approves the findings and recommendation of
internal audit and measures plan for their implementation;
receives the report of the internal control representative, analyses and approves the ascertainments
and recommendations of internal control and the measures plan for their implementation;
analyses and approves the annual report regarding internal audit activity;
analyses and approves the annual report regarding internal control activity;
analyses and approves the annual report regarding risk management;
analyses and approves the risk reports of the risk management department, analyses and periodically
monitors (half –yearly) the efficiency of the risk management system, based on the risk report;
approves the Accounting Policies Handbook of SIF Moldova
monitors the credibility and integrity of the financial information issued by the Company, especially
through the revision of the relevance and consistency of accounting standards adopted by it;
makes recommendations to the Board of Directors regarding the election of the external auditor;
monitors the auditing of annual and consolidated financial statements;
collaborates with the external financial auditor in order to clarify relevant aspects stemming from the
financial reports;
analyses the findings and recommendation of the financial auditor regarding significant deficiencies
of internal control concerning financial reporting;
analyses the audit report and/or opinion of the financial auditor regarding essential aspects resulting
from financial audit, as well as regarding the financial reporting process and recommends necessary
measures;
verifies and monitors the financial auditor’s independence, and especially, the delivery of additional
services.
6.1.1.4. Investment policies- strategies Committee
(optional committee, setup through BD resolution in relation to BD structure and investment strategy).
Role, establishment method:
The Investment Policies- Strategies Committee is a permanent consultative committee, independent
from the executive management of SIF Moldova, subordinate to the Board of Directors.
The Investment Policies –Strategies Committee assists the Board of Directors in fulfilling its
responsibilities in the field of drafting investment policies and strategies, following-up the abidance by
resolutions concerning the application of investment policies, analysis of the portfolio of financial
instruments and management of connected risks.
The members of the Investment Policies –Strategies Committee are set by the Board of Directors. The
Investment Policies –Strategies Committee is comprised of at least 2 elected members, usually non-
executive managers.
The members of the Investment Policies –Strategies Committee must have an experience appropriate for
the attributions it is assigned within the committee.
Attributions, responsibilities:
Issues recommendations to the Board of Directors regarding the annual/ multiannual investment/
disinvestment strategy.
Issues recommendations to the Board of Directors regarding:
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o maximization of financial instruments portfolio performance;
o assignment of assets for performance increase, correlated to the GMS approved activity
program with the investment/disinvestment strategy approved by the Board of Directors
and economic forecasts;
For the justification of the recommendations presented to the Board of Directors, it drafts
documents and investigations in its competence area.
6.1.1.5. Appointing Committee
Role, establishment method:
The appointing committee is a permanent committee, with consultative function, independent from the
executive management of SIF Moldova, subordinate to the Board of Directors.
The Committee assist the Board of Directors in fulfilling its responsibilities in the field of appointing
members for management positions and their payment.
The Committee is comprised of a number of at least 2 members elected from among non-executive
directors, abiding by the independence requirement foreseen by Companies Law.
Attributions, responsibilities:
The Appointing Committee has the following main attributions (the list is not exhaustive):
drafts recommendation regarding the policy for the appointing of company managers and directors to
be presented for GMS approval;
drafts recommendations regarding the remuneration policy for managers, directors and employees of
the company;
can draft recommendations regarding the remuneration policy on the level of SIF Moldova group.
submits to the Board of Directors the annual report regarding the indemnity and other advantages
granted to the managers and directors during the financial year;
approves the documentation that is provided to the financial auditor for the analysis of transactions
reported according to art. 225 Law no. 297/2004 and, following the audit report, will recommend the
measures that should be taken, if any;
drafts recommendations regarding the covering of vacant positions in the Board of Directors, with the
abidance by GMS resolutions and applicable law;
drafts recommendations regarding the adopting of the resolution of the Board of Directors and/or
executive management for the appointing, employment, discharge of office, or dismissal of
department managers and staff in key positions and control position, as well as for setting the their
indemnity level and rights and obligations;
drafts recommendations regarding the appointing of candidates for various management positions;
periodically evaluates the level of acquirement and application of specialized knowledge and makes
recommendation regarding the continuous update process of the professional knowledge of managers
and directors ;
makes recommendations for the improvement of knowledge regarding the company’s activity for the
purpose of applying best corporate governance practices ;
monitors the abidance by the transparency, information and reporting requirements and obligations,
concerning information in this activity area ;
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6.1.1.6. EXECUTIVE MANAGEMENT
Abidance by the provisions of Reg. 2/2016 Ch. III Responsibilities of executive
management (…) art. 23 - 28
Executive/ higher management is responsible for the management and good running of the activities of
the regulated entity, including those of the application of policies, strategies and objective reaching.
(art. 23)
SIF Moldova includes in its internal procedures/policies/ regulations, provisions regarding the
recruiting and selection of the members of executive/higher management and renewal of the mandate
of existent ones. (art. 24 – (1))
SIF Moldova makes sure that the members of executive management/ higher management prove to
have the professional competence and relevant experience in compliance with the activity carried out
and assigned attributions, knowledge about the applicable law and good practices and have a good
reputation and integrity. (art. 24 – (2))
To fulfill its attributions and exercise its competence executive/higher management acts within a well-
structured framework with specific objectively, clearly defined and in compliance with applicable
specific legislation. (art. 25)
Executive/higher management supplies the Board with qualitative and quantitative information in due
time, at its request or through its own initiative, following the fulfillment of obligations in an operative
and efficient manner. (art. 26)
Executive/higher management is responsible for the integrity and accuracy of reports and other
information regarding the activity and financial status of the regulated entity, according to applicable
specific legislation. (art. 27)
Executive/higher management makes sure that the information foreseen under art. 15 Reg 2/2016:
“The Board is responsible to make sure that there is a proper framework for the verification of
information sent to FSA, at the latter’s request, regarding some actions carried out by the
regulated entity”
are available according to specific law applicable to each category of regulated entities and that the
information reporting deadline has been abided. (art. 28)
Detailing the assignment of functions and responsibilities of executive management –
excerpt from the applicable regulation
The executive management of the company is insured, in compliance with the provisions of the
Memorandum of Association, resolutions of the board of directors and applicable regulations, by the
General manager, adjunct general manager and executive manager, who act as directors of the company
in the sense of Companies Law no. 31/1990.
The executive management is appointed by the Board of Directors, according to statutory provisions.
Executive management:
is empowered to manager and coordinate the daily activity of the company, corresponding to the
activity coordinated by each director.
is responsible for the application of general investment policies, insurance of the abidance by internal
regulations and work procedures.
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informs the Board of Directors regarding the activity carried out between its regular meetings.
In the field of risk management, executive management is responsible for:
insures the implementation of the Risk management policy, procedures and method for the
identification, measurement, management and monitoring of risks to which the company is or could
be exposed to, approved by the Board of Directors;
adopting proper and efficient measures, processes and techniques for the monitoring and control of
all relevant risks, in compliance with the risk management policy;
insurance of the resources necessary for the implementation of the risk management system;
setting the competences and responsibilities concerning risk management on each line of activity;
application and proper and efficient abidance by the risk limits taken on, including in crisis
situations, as well as abiding by the risk profile approved by the Board of Directors;
insurance of crisis simulations;
setting and maintaining a proper risk exposure system;
periodic (half-yearly) evaluation of the business continuity plan for emergency situations in order to
eliminate risks or lower them;
development of an integrated risk culture on the level of SIF Moldova, based on a full understanding
of the risks the company faces and the way these are managed, taking into consideration its risk
tolerance/appetite.
In the field of compliance insurance, the directors are responsible for:
approval of compliance policy;
analysis, at least once a year, of the compliance policy and its implementation method within SIF
Moldova;
insurance of the resources necessary for the implementation of conformity policies;
ordering of measures for the control of compliance risk.
President of the Board of Directors
The president is elected by the Board of Directors from among its members and also covers position of
Chief Executive Officer in the company.
As President of the Board of Directors:
he convenes the Board of Directors;
he chairs the meetings of the Board of Directors;
he follows the fulfillment of Board of Directors’ resolutions;
he conducts GMS works and presents for debate and approval the items entered of GMS agenda.
The Chief Executive Officer enforces the resolutions of the Board of Directors, for which purpose he
issues written resolutions and orders. His decisions and orders are immediately enforceable and produce
effects from the moment they are submitted to the individuals competent to fulfill them
The CEO has the following attributions:
a) direct and effective management of the company’s activity in compliance with the general objectives
set by GMS ;
b) implementation of general investment policies of the company;
c) management of the company’s patrimony within the limits set by the law, Memorandum of
Associations and GMS or Board of Directors resolutions;
d) patrimonial engagement of the company in its legal relationship with third parties, through his own
signature ;
e) enters agreements, with the exception of those that are the competence of the Board of Directors ;
f) approval of measures regarding the protection of the integrity of tangible, intangible assets in the
patrimony of the company;
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g) trading and/or negotiating attributions in the relationship with third parties, regarding the assets or
rights of the company within the limitations foreseen by the law, Memorandum of Association, GMS
or the Board of Directors;
h) representation of the company in the relationship with third parties in before courts, as well as the
right to transfer representation rights to employees or third parties based on written mandate ;
i) collaboration with the company’s auditor, Depository of the company and entity keeping the
shareholders’ records, as well as with the other control or supervision bodies of the company;
j) approval of the content of market and shareholders informational reports regarding any action that
is subjected to a reporting obligation ;
k) internal (functional) organization of the company, taking into consideration the legal provisions,
Memorandum of Association of the company, internal regulation, organizational chart as well as the
resolutions of the Board of Directors ;
l) employment, promotion and dismissal of the company’s employees as well as taking disciplinary
measures for the employees of the company in compliance with legal and internal regulations;
m) periodical notification of the company’s employees as well as the negotiation of the individual
employment contracts and work conditions with them ;
n) remuneration of employees within the limitations set by CCM and/or the Board of Directors ;
o) verification and control attribution for the way the company’s employees fulfill their tasks or other
individual under a contractual relationship with the company ;
p) notification of the Board of Directors and company regarding the activity carried out, according to
applicable legislation;
q) other attributions set by the Board of Directors of the company through resolution or expressly
foreseen by legal provisions.
The President CEO coordinates the entire activity of the company in compliance with the attribution of
executive staff and organizational chart. The President CEO coordinates the daily activity of the following
departments: Internal Audit, Internal Control, Risk Management, Financial Department, Legal
Department, Corporate Governance Code, the activity regarding labor safety and health and the fire
prevention and extinction activity.
The CEO directs and coordinates the Management Committee.
In case of absence, the attributions assigned by the Board of Directors will be the competence of the vice-
president and the actual management of the company will be insured by the Adjunct CEO and executive
director.
The Vice-president of the board of directors
The vice-president is elected by the Board of Directors from among its members and also covers the
Adjunct CEO position in the company.
In the absence of the President CEO, he fulfills his attributions corresponding to his quality of President
of the Board of Directors and along with the directors in the Management Committee, he insures the
actual management of the company.
As Adjunct CEO he has the following attributions:
a) implementation of Board of Directors’ resolutions;
b) direct and actual management of the company’s activity in compliance with the general objectives
set by GMS;
c) management of the company’s patrimony within the limitations set by the law, Memorandum of
Association, resolution of the general meetings of shareholders or Board of Directors;
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d) patrimonial engagement of the company in its legal relationship with third parties through his own
signature in agreement with the provisions of internal regulations and within the set competence
limitations;
e) conclusion of contracts, with the exception of those that are the competence of the Board of
Directors and/or President CEO;
f) approves the measures regarding the protection of the integrity of movable and immovable assets in
the patrimony of the company;
g) trading and/or negotiating attributions in the relationship with third parties, regarding the assets or
rights of the company within the limitations foreseen by the law, Memorandum of Association, GMS
or the Board of Directors
h) representation of the company in the relationship with third parties in before courts, as well as the
right to transfer representation rights to employees or third parties based on written mandate ;
i) collaboration with the company’s auditor, Depository of the company and entity keeping the
shareholders’ records, as well as with the other control or supervision bodies of the company;
j) approval of the content of market and shareholders informational reports regarding any action that
is subjected to a reporting obligation ;
k) internal (functional) organization of the company, taking into consideration the legal provisions,
Memorandum of Association of the company, internal regulation, organizational chart as well as the
resolutions of the Board of Directors;
l) control and promotion of company employees according to legal and internal regulations;
m) remuneration of employees within the limitations set by CCM and/or the Board of Directors ;
n) verification and control attributions regarding the way the company’s employees or other individuals
in a contractual relationship with the company fulfill their tasks;
o) notification of the Board of Directors of the company regarding the activity carried out, according to
applicable law;
p) other attributions set by the Board of Directors of the company through resolutions or expressly
foreseen by legal provisions.
Vice-president Adjunct CEO insures the daily coordination of the following departments: “CORE”
Portfolio, “SELL” Portfolio, “Transactions” Office. The competence of the portfolio is set through BD
resolution.
In case of absence, the attributions assigned by the Board of Directors will be the competence of the
President and the effective management will be insured by the CEO and Executive Director.
Executive Director
The Executive Director is appointed by the Board of Directors who sets his specific attributions.
The Executive Director insures the daily coordination of the “Majority Holdings” Portfolio activity. The
competence of the “Majority Holding” Portfolio is set through BD resolution.
The Executive Director has the following attributions:
a) direct and actual management of the company’s activity, according to the general objectives set by
GMS;
b) management and coordination of the management of the company’s portfolio where SIF Moldova
holds a majority position, according to internal regulations;
c) representation of the company in the relationship with third parties, regarding the exercise of
shareholder right in the companies where SIF Moldova has a majority position, as well as the right to
transfer representation rights to employees or third parties, through a written mandate;
d) approves the content of the market and shareholders notification reports regarding any action or
deed that is object of a legal reporting obligation, connected to the activity it coordinates;
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e) verification and control attributions of the way the employees carrying out the coordinated activity
fulfill their tasks;
f) notification of the Board of Directors and the company regarding the activity carried out, according
to applicable law;
g) other attributions set by the Board of Directors and the company through resolutions or expressly
foreseen by legal provisions.
In case of absence his attribution will be the competence of the Vice-president adjunct CEO.
When the CEO and adjunct CEO are absent from the company for a reason, the Executive Director
insures the actual management of SIF Moldova along with the director replacement appointed within the
limitation of the following competences:
1. approves collection and payment operations.
2. Signs documents to third parties.
3. Approves the transaction of financial instruments including participations to capital increase, within
the limitation of the amount set through the decision of the Board of Directors.
4. approves the conclusion, modification or cancellation of contracts, within BVC limitations approved
and the limitations set by the Board of Directors.
5. approves legal actions for the purpose of protecting the interests of SIF Moldova in the litigations
with other institutions or companies.
Management Committee
According to statutory provisions the Board of Directors can assign part of its attributions to a
Management Committee comprised of managers that can also be directors of the company.
Through the decision of the Board of Directors it was decided that the Management Committee be
comprised of three members, namely: President CEO, Vice-president adjunct CEO and Executive
Director.
The Management Committee insures the supervision of the company’s activity between the meetings of
the Board of Directors, within the limitations of its assigned competencies.
The Board of Directors has assigned the following attributions to be the competence of the Management
Committee:
1. adopting decisions regarding the implementation of general investment policies set by the Board of
Directors;
2. adopting decisions regarding the harmonization of the specific objectives of the portfolios
coordinated by the directors;
3. solving any other issues set by the Board of Directors.
Organization and conduct of the Management Committee’s activity
Between the meetings of the Board of Directors, the Management Committee carries out its activity
within the competence limitations set and presents in the Board of Directors meeting the decisions
adopted and status of the running operations.
The legally adopted decisions are mandatory for the directors and employees and enforceable from the
time they are communicated in writing, if there is no other later deadline for their becoming enforceable
mentioned in their content. The decisions of the Management Committee are adopted with a majority of
its members’ votes. Vote cannot be cast through a representative in the Management Committee.
The CEO manages and coordinated the Management Committee and in this quality, he:
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a) convenes the Management Committee whenever necessary to present issues that fall under its
competence for debate and approval;
b) follows up the fulfillment of the Management Committee’s resolutions;
c) informs on adopted decisions, in each meeting of the Management Committee.
6.1.2. The protection of SIF Moldova interests/assets by legal and out-of -court
procedures
The legal assistance, consultancy and representation procedure is carried out by the Legal Department in
agreement with SIF Moldova’s objectives with stress being laid on legal counsel, the solving of possible
conflict amiably, and approach of alternate solutions to prevent / solve divergences.
The department is specialized, having attributions and responsibilities on specific activity categories.
According to internal norms and procedures, the Legal Department insures the collection, registration,
submittal of specific notifications and correspondence, the diligent representation in all cases where the
company acts as party, as well as the technical-legal monitoring of the activities carried out by attorneys
employed by SIF Moldova.
In the legal assistance, counsel and representation the corporate governance principles are abided by,
and there is a constant concern for the initiation of all measures to protect the legitimate rights and
interests of the company, at the same time with the insurance of a full and diligent information of
shareholders regarding the status and solving method of litigations.
6.2. Main features of the internal control and risk management systems of SIF
Moldova Group
6.2.1. Internal Control System
FSA reg . 2/2016 – art. 4 line 2: d) adequacy of policies and strategies; as well as internal control
mechanisms
SIF Moldova institutes and maintains a permanent and efficient compliance verification
function, which is independent.
The Internal Control department is structurally and hierarchically subordinated to the Board of
Directors.
The Internal control department insures the supervision of SIF Moldova’s abidance by applicable law for
the capital market, as well as internal procedures and regulations.
In fulfilling the attributions assigned to him, the representative of the internal control department
reports to the Board of directors and notifies directors. In case during the activity it ascertains that the
legal regiment applicable to the capital market, including internal procedures of the company are
infringed, it is bound to inform the Board of Directors and directors of SIF Moldova within one working
day; in case the members of the Board of directors receive such a notification, they immediately notify
FSA and capital market institutions involved about the ascertained situation and measures adopted.
Staff of the department
Each individual employed in the internal control department is subjected to FSA certification and
entered in FSA Public Register. In case the company presents more individuals with internal control
attributions for certification, the certification request is accompanied by the detailed responsibilities of
each individual employed in the internal control department.
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The compliance officer position is similar to that of internal control department representative.
In case one of the individuals with internal control attributions is absent, his attributions and
responsibilities are automatically taken over by another certified individual. In case SIF Moldova no
longer has a representative of the internal control department, or in case he is temporarily unavailable,
according to applicable legal provisions, one of the directors will temporarily fill the position of internal
control department representative, abiding by the legally set time frame and FSA notification
In order to allow the individual(s) appointed as representative(s) of the internal control department to
fulfill their responsibilities correctly and independently, SIF Moldova must make sure that the following
requirements are met:
a) the person(s) has/have the authority, resources and experience needed, as well as access to all
relevant information;
b) the person(s) appointed as representative of the internal department bear(s) the responsibility of
abiding by the attributions corresponding to the internal control position and for any reporting
concerning the abidance by applicable regulations, in which he will especially state if the proper
measures have been taken to remedy possible deficiencies;
c) in case of SIF Moldova, given the nature, volume and complexity of its activity as well as given the
nature and variety of services and activities carried out, the representative of the internal control
department can be involved in the carrying out of services and activities that he monitors, with the
abidance by applicable legal provisions and prior notification sent to FSA
d) on setting the remuneration of individuals the following must be taken into account: the
remuneration level must allow SIF Moldova to employ qualified and experiences staff; the
individuals’ objectivity must not be affected by the method remuneration is set; variable
remuneration must be based on objectives that are specific for the position and must be set
exclusively based on performance criteria on AFIA level; remuneration is directly supervised by
the Remuneration Committee.
e) individuals are evaluated for the fulfillment, and maintaining the requirements regarding
professional competence and experience, integrity and good reputation and governance, during the
entire time they carry out their activity, according to applicable legal provisions
The attributions and responsibilities of the representative(s) of the internal control department are the
following:
a) monitors and regularly verifies the application of legal provisions incidental to SIF Moldova’s
activity, of internal rules and procedures and acts according to its competencies in order to prevent
and suggest measures for the remedial of any situation when the law, applicable incidental
regulations for the capital market or internal regulations and procedures of SIF Moldova are
infringed by SIF Moldova or its employees; monitors the implementation of suggestions and
recommendations;
b) periodically monitors and evaluates the adequacy and efficiency of measures, policies and procedures
set according to applicable regulations and actions taken to remedy deficiencies concerning the
company’s abidance by its obligations;
c) offers counseling and assistance to relevant persons responsible for carrying out activities for the
abidance of requirements imposed to SIF Moldova, according to applicable regulations.
d) makes sure that the reports that SIF Moldova must submit to F.S.A and capital market entities are
submitted within the deadline set by applicable regulations;
e) analyses and approves the documents submitted by SIF Moldova to F.S.A in order to obtain the
certifications foreseen by F.S.A regulations;
f) analyses and approved informative /advertising materials of SIF Moldova;
g) analyses and approves the documents drafted by SIF Moldova according to work procedures;
h) approves the development of new strategies, investment policies, relevant organizational changes and
investments on new markets and in new products;
i) verifies the abidance by prudential regulations;
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j) insures the notification of SIF Moldova and its employees regarding the legal regimen applicable to
the capital market, both in regard to approved norms and in draft legislation that present interest for
the activity of the company, in order to make suggestions/ recommendations/ observations, if
needed;
k) is responsible for the supervision of the solving and management of complaints regarding SIF
Moldova activity on the capital market, keeping the complaints register and periodical reporting to
ASF of the status of recorded complaints.
Through CEO decision, a permanent committee is set up to analyze all shareholder’s petitions and
suggest, if the case be, measures adopted by management to improve the situations notified, the
communication of the answer to the complaint make is made abiding by legal deadline.
l) creates a process to identify, register, monitor, prevent and disclosure of conflicts of interests,
manages the internal procedure regarding Conflict of interest.
m) manages the specific work procedure regarding the Supervision of international sanction
application on the capital market - in applying express regulations of FSA; RCCI who can be a
member of the Committee (through CEO resolution), in which quality he also insures the relationship
with FSA.
n) manages the specific work procedure regarding the Prevention and fight against money laundering
and finance of terrorist acts – in applying national legislation and express FSA regulations; RCCI who
can be a member of the Committee (through CEO resolution) a quality in which he insures the
relationship with FSA and National Office for the Prevention and Fight against Money Laundering.
Carrying out permanent and regular control :
1. drafting of the annual investment plan(s) abiding by the following principles/ criteria:
(a) includes control objectives according to applicable legal regulations and represents part of an
integrated control process within SIF Moldova( internal control, internal audit and risk
management);
(b) is drafted based on the risk analysis that might occur from the activities carried out by SIF Moldova,
considering the “ Register of Operational risks identified which might affect SIF Moldova’s activity”,
drafted by the Risk Management Department;
(c) the activities that it carries out, in order to verify the compliance of the company’s activity to
applicable legal regulation, SIF Moldova’s policy and procedures, are periodical and permanent
control activities;
(d) the main component of the activity is pro-active permanent control, exercised through the
continuous supervision and monitoring of activities that fall under the competence of internal
control, in order to prevent the occurrence of legal and internal non-compliance;
2. Making investigations and reporting to higher management:
(a) presents a report regarding the investigation plan to the Board of Directors of SIF Moldova, for
debate and approval; the report is priory approved by the Audit Committee
(b) reports to the Board of Directors and directors on the cases when the legal framework applicable to
the capital market, internal regulations and work procedures have been infringed, within one
working day, in order to remedy the ascertained situations.
(c) submits an activity report to the Board of directors on a quarterly basis
(d) annually sends the Board of Directors a report regarding activities carried out and the investigation
program/plan suggested for the following year. The report and investigation plan approved by the
Board of Directors are submitted to FSA.
6.2.2. Internal Audit System
FSA regulation no. 2/2016 – art. 4 line 2: d) adequacy of internal control policies, strategies and
mechanisms
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SIF Moldova sets and maintains the permanent internal audit function that is separate
and independent from other functions and activities if SIF Moldova
The department is subordinated to the Board of Directors.
For the purpose of guiding the activity, the internal audit department develops policies and procedures
aligned to the requirements of internal standards for the professional practise of internal audit.
Attributions and responsibilities:
a) helps the company, both as a whole and its structure, through opinions and recommendations;
b) assists the company in risk management;
c) contributes to the improvement of risk management, control and governance processes;
d) evaluates the adequacy and efficiency of controls regarding governance, operations and systems of
SIF Moldova;
e) draft policies and procedure for the exercise of the audit activity, as well as any modification of them;
f) conducts risk evaluations for the activities carried out by SIF Moldova, at least once a year;
g) sets, implements and maintains an audit plan in order to evaluate and examine the efficiency and
adequacy of the internal control systems and mechanisms, and procedures of SIF Moldova;
h) notifies the Audit Committee and Board of Directors about the plan regarding internal audit activity,
and necessary resources, including significant interim modifications;
i) carries out the missions included in the annual plan;
j) issues recommendations based on the results of the activity carried out;
k) at the request of the Audit Committee, Board of Directors or directors carries out missions on the
spot or exceptional missions (not included in the internal audit annual plan) ;
l) verifies the abidance by recommendations;
m) at the end of each mission, reports on issues concerning internal audit and regarding the adequacy of
the adopted measures to remedy possible deficiencies;
n) records any relevant information that supports the conclusions and results of the engagement isi
coordoneaza activitatea cu auditorul financiar, pentru a asigura indeplinirea corespunzatoare a
obiectivelor de audit si pentru a minimiza suprapunerea;
o) periodically reports to the Board of Directors and the Audit Committee about the purpose of the audit
activity, authority, responsibility and functioning of the internal audit activity, in relation to the set
plan;
p) verifies if management has accepted a level of residual risk that would be unacceptable for SIF
Moldova and notifies the Board of Directors about the cases when no decision regarding residual risk
was taken, in order to solve this situation;
q) carries out formalized counsel missions (included in the Internal Audit Plan), informal, exceptional
or in emergency cases, at the express request of the Board of Directors or executive management.
Internal audit carried out insurance missions and counseling missions.
Insurance missions offer an independent evaluation of the governance processes, risk management
and control process within SIF Moldova. Insurance missions are carried out through the following
stages: planning of the internal audit activity, preparation of the internal audit mission, on-site
intervention, internal audit report, following-up the recommendations and quality analysis.
Activitatea se defsfasoara astfel:
1. planificarea activitatii de audit intern: intocmirea, avizarea si aprobarea planului
multianual de audit intern si a planului anual de audit intern, in conformitate cu cerintele
Standardelor internationale pentru practica profesionala a auditului intern si cu reglementarile
nationale.
2. preparation of internal audit mission:
informing the leader of the activity that is to be audited, regarding the tart of the internal
audit mission;
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collection and processing of information regarding the structure, activity, program/project or
audited operations, in order to facilitate the drafting of procedures regarding risk analysis and
verification;
identification and analysis of specific risks and evaluation of internal control in the audited
process/ activity/ structure, so that the audit effort be oriented towards the riskiest areas;
drafting the internal audit mission program to make sure the internal audit mission is carried
out under good conditions, in order to cover all auditable objectives and their associated risks;
meeting the representatives of the audited structure in order to introduce the members of the
internal audit team, purpose of the mission, objectives set for the internal audit mission and
work methods, as well as setting a calendar for the meetings.
3. on-site intervention:
collection of audit evidence for the purpose of the audit team’s building an opinion about the
strong and weak points of the process/ activity/ organizational structure audited and
submittal of audit evidence based on which the ascertainments, recommendation and general
conclusion of the audit mission will be presented;
ascertainment and reporting of identified irregularities.
4. drafting the internal audit report:
drafting the internal audit report project; sending the internal audit report project to the
audited structure for the purpose of having it analyzed and for the presentation of its
standpoint regarding the ascertainments and recommendations of auditors;
analysis of the observations submitted by the audited structure concerning the internal audit
report project
analysis, endorsement and approval of the internal audit report and action plan for the
implementation of recommendations.
5. follow-up of recommendations: insurance that the recommendations presented following
the internal audit missions are properly implemented on the set deadlines and evaluation of
consequences in case they are not applied.
6. analysis of the quality of the internal audit activity: for the purpose of offering a
reasonable insurance that the internal audit abides by its Charter, functions efficiency and
contributes to the creation of added value and improvement of company’s operations and in order
to make sure that in the internal audit missions all internal audit mission objectives have been
achieved at a high quality standard
Counseling missions are consultative and connected activities that have the role of adding value and
improvement the governance, risk management and control processes of SIF Moldova, without the
auditors taking on the responsibility of management.
The specific methodology for the formalized counseling missions involves going through specific
activities: initiation of counseling mission, opening meeting, collecting and processing information,
drafting the counseling mission program, collection and analysis of audit evidence, making the analysis
and formulating the ascertainments, revision of work documents, drafting and communicating the report
of the counseling mission and follow-up of recommendations.
6.2.3. Risk management system
FSA regulation no. 2/2016 – art. 4 line.2: c) proper risk administration / risk management
Law no. 74/2015 – Ch. II, art. 5, line (2) : main activities that an AFIA may carry out while managing a
FIA are the following: b) risk management .
Abidance by the provisions of Reg. 2/2016 Ch V Risk management/ administration and
risk management/ administration function art. 41 - 48
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SIF Moldova applies procedures and strategies for the management/ administration of risks and sets
the requirements for their periodical revision. (art. 41)
The Board approves the risk appetite and risk tolerance limitations for SIF Moldova, as well as the
procedure for the identification, evaluation, supervision, management and reporting of significant
risks to which SIF Moldova is, or could be exposed to. (art. 42)
The procedure for the identification, evaluation, monitoring, management and reporting of significant
risks foreseen in the previous paragraph comprises references to at least the following aspects:
a) definition of risk categories and their evaluation methods;
b) presentation of the way in which the regulated entity manages each relevant risk category and
area, as well as possible risk accumulations;
c) maintaining risk tolerance limits for each relevant risk category, depending on the general risk
appetite, in compliance with specific requirements of the law in the field;
d) setting the frequency and description of the periodical stress tests and presentation of situations
justifying the carrying out of tests, on the spot.
(art. 43)
The Board, executive/higher management, depending on the case, makes sure that the procedure
mentioned under art. 42 is applied, and that the proper instruments, techniques and mechanisms are
used in its application (art. 44).
The evaluation of the risk management/administration system efficiency, as adopted by SIF Moldova
is made by the board of directors on a half-yearly basis based on the risk report, depending on the
policies, procedures and verifications carried out. (art. 45).
The risk management/administration function reports to the executive/higher management the risks
identified as being potentially significant, in compliance with the applied procedure. (art. 46)
The risk management/administration position has the obligation to report on specific risk areas both of
its own initiative and at the request of the Board of executive/higher management( art. 47).
SIF Moldova drafts clear action plans in order to insure business continuity for emergency situations
in order to eliminate or minimalize risks. (art. 48. - (1))
The plans to insure business continuity and in case of emergency situations are evaluated on a half-
yearly basis by the Board and executive/higher management. (art. 48. - (2))
Risk management policy - excerpt from AFIA certification documentation
1. General risk management framework
Risk management is an important component of the strategic objectives of SIF Moldova in the process of
maximizing profit and minimalizing risk exposure.
The Board of Directors of SIF Moldova understands that risk management must be carried out within a
consistent methodological framework.
Risk management system is comprised of:
relevant elements of SIF Moldova’s organizational structure, with a central role for the permanent
risk management function.
policies and procedures regarding risk management that are relevant for the company’s
investment policy
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measures, processes and techniques connected to the measurement and management of risks
that SIF Moldova uses.
1.1. Relevant elements of SIF Moldova’s organizational structure with a central role for
the permanent risk management position.
One of the central components of the risk management system is the permanent risk management
position. This position plays a central role in defining the policy regarding the management and
monitoring of risks in the company, in order to insure permanent compliance of the risk level with the
risk profile of the company.
Risk management responsibility is not limited to the level of the specialists in the risk field or control
functions. Operational structures, under the supervisions of the management functions are first of all
responsible for the daily management of risks, taking into consideration the risk appetite and in
compliance with the policies, procedures and controls of SIF Moldova.
SIF Moldova management aims to dedicate enough time for the examination of risk connected issued
through active involvement and provision of proper resources for the management of all relevant risks
the company is subjected to.
The general corporate governance model in the field of risk management in SIF Moldova is the 3 lines of
defense model:
1. First line of “defense” – is provided by the business and support areas that have the first
responsibility and importance for the effective control of risks in the daily operations carried out.
The first line of defense takes on and manages daily operations carried out on a daily basis, in
compliance with the activities carried out. Individuals in the functional department from the
business and support areas pro-actively manage risks through the development of procedures
that keep the risks specific for the activity carried out, under control.
The first line of delimiting risk is responsible for the execution of risk policies, minimal standards
and the framework set by the second line of risk delimitation.
2. The second line of “defense” – is provided by the compliance/ internal control function and
the risk management function, that supply proper mechanisms to the first line of “defense”.
The risk management position is independent from the activity that generate risk exposures, it
develops policies and procedures for risk management on the level of the entire company and
insure risk management of the whole process.
3. The third line of “defense” – is provided by the internal and external audit position. The
mission of this line is to offer a specialized, independent evaluation of the efficiency of the risk
management process and internal control/compliance system.
Risk management department insures the permanent risk management function, it is hierarchically
and functionally independent from the activities that generate risk exposures and has the following
responsibly:
it drafts and implements efficient policies, procedures and methodologies for risk management, as
well as any modification of them
constant identification, measurement, management and monitoring of all relevant risks for the
investment policy and to which SIF Moldova is or could be exposed (art.42);
it reports to the board of directors the risks identified as being potentially significant in compliance
with applied procedures.
reports regarding specific risk areas both from its own initiative and at the request of the Board of
executive/higher management.
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substantiates and proposes risk limits, monitors and abides by them and notifies the management
structure in due time, in case it thinks that the risk profile is not compliant with these regulations or
if there is a significant risk that the risk profile become non-compliant with these limitations;
it makes sure that the risk profile of SIF Moldova, as notified to the investors, abides by the risk
limitations set to cover at least the market, issuer, liquidity and operational risks;
it notifies the Board of Directors of SIF Moldova, on a quarterly basis updated information regarding
the following aspects:
o abidance of the company’s risk profile as notified to investors by the set risk limits;
o adequacy and efficiency of risk management process.
it periodically notifies the Board of Directors about information connected to the current risk level
that SIF Moldova is exposed to as well as to any existent identification of existent or possible
exceeding of set risk limits, in order to make sure that quick and proper measures can be taken;
it suggests measures to prevent and lower risks and monitors their implementation;
evaluates the company’s risk profile depending on the risk appetite and tolerance by the Board of
Directors;
it analyses on a quarterly basis the relevant risks that SIF Moldova is exposed to and drafts risk
reports to the Board of Directors, regarding them.
it makes crisis stimulations under the conditions and with the frequency foreseen by internal
procedures and regulations of FSA.
it offers assistance to the Board of Directors / executive management regarding the identification of
SIF Moldova’s risk profile (art.42);
it monitors that the assets categories of SIF Moldova abide by legal and internal, applicable
prudential limits, including abidance by the assets value of the relevant benchmark and abiding by
the own fund and own additional funds requirements
classification on risk classes of the assets portfolio form the point of view of the assets’ liquidity
degree
analysis of risks associated to SIF Moldova’s engaging in new activities
participates to the examination of the proper nature of the plans to insure business continuity and for
emergency situations, drafted by the specialized department
monitors and verifies the implementation or all corrective measures to prevent and lower risks,
resulted in the self-evaluation of operational risks and internal control within departments;
it initiates the self-evaluation of operational risks within all departments of SIF Moldova, providing
counsel regarding the identification and evaluation of risks and setting the proper measures to limit
possible consequences of these risks. The results of the self-evaluations made in the department are
quantified by the Risk Management department in the “Risk Map” of the company and the “Risk
Answer Plan”. based on the exposure to operational risk, the profile of operational risks is then
drafted.
Each individual employed in the risk management department must have competence, professional
experience as well as good reputation and integrity. At the same time, each individual is subject to FSA
certification and must meet the edibility requirements and be registered in FSA Public Register.
The permanent risk management function has the necessary authority and access to all relevant
information in order to fulfill its specific functions and maintain regular contact with executive
management and the board of Directors of SIF Moldova, in order to supply them with updated
information, based on which quick remedy measures can be taken, if necessary.
1.2. Policies and procedures regarding the management of relevant risks for the
company’s investment policy.
The risk management policy represents another pillar of the risk management system. SIF Moldova
sets, implements and maintains a proper and formalized policy for risk management which:
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identifies all relevant risks that SIF Moldova is or could be exposed to ;
comprises the policies necessary to allow the evaluation of the company’s exposure to market risk,
issuer (credit) risk and liquidity risk, as well as exposure on all other relevant risks that could have a
significant level, including operational risks.
The risk management policy includes at least the following elements:
techniques, processes, instruments and proper and efficient measures for :
o the identification, measurement, management and monitoring of risks that the company is or
could be exposed to, at any given time
o including the abidance by quantitative and qualitative risk limits, or both, set to cover all relevant
risks
techniques, instruments and measures that allow the evaluation and monitoring of the company’s
liquidity risk under normal and exceptional liquidity conditions, including through crisis
stimulations made regularly
assignment of responsibilities regarding risk management within the company
quantitative, qualitative risk management or both set in order to cover all relevant risks and the
abidance by the company’s risk profile, communicated to investors
conditions, content, frequency and destination or reports drafted by the permanent risk management
function
protection measures against conflict of interest of the risk management function.
The risk management policy:
covers all business structure, control/compliance, support functions, being adequate for the size and
complexity of the company’s activity.
it is proper for the nature of the company’s activity, taking into consideration that SIF Moldova:
o is a closed investment fund, that does not have exercisable buyback rights and whose actions are
allowed for trading on the capital market;
o does not resort to loans in carrying out its activity and does not invest in derived financial
instruments to increase the equity yield, thus not being exposed to the the leverage
effect.
is correlated to the investment policy, aiming to cover the risks specific to each assets category in
which SIF Moldova invests, as well as with its support obligations.
In order to insure the efficiency of the risk management policy, it is revised at least annually by the Board
of Directors.
SIF Moldova applys procedures and methodologies to manage/administer risks and set the conditions of
their periodical revision.
Procedures for the identification, evaluation, monitoring, management and reporting of significant
risks include reference to at least the following aspects:
defining the risk categories and their evaluation method;
presentation of the method in which SIF Moldova manages each category of relevant risk area, as
well as possible risk accumulations;
mentioning of the risk tolerance limits for each category of relevant risk category, depending on the
general risk appetite, in compliance to specific requirements of the law in the field ;
setting the frequency and description of the periodical stress tests and presentation of the
circumstances that justify the organization of other stress tests on the spot . (art. 43)
The Board of Directors makes sure that on the level of SIF Moldova, the procedures for the identification,
evaluation, monitoring, management and reporting of significant risks are applied, and in their
application proper instruments, techniques and mechanisms are used. (art. 44).
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1.3. Measures, processes and techniques connected to the measurement and management
of risks, used by SIF Moldova
SIF Moldova has the proper means, processes and techniques, that are efficient, and properly formalized,
to insure:
the identification, measurement, management and monitoring of risks that the company is or could
be exposed to, at any given time;
the accurate measurement, based on solid and viable data, of the risks corresponding to the positions
held and of their contribution to the global risk profile
abidance by the set risk limits
the carrying out, when needed of regular ex post tests, in order to examine the validity of the risk
measurement methods which include model-based forecasts and estimates
the carrying out of crisis simulations and proper periodical analysis of scenarios to answer to the
risks coming from potential changes of the market conditions that might have a negative effect on SIF
Moldova.
the abidance by the current risk level by the set risk limitations
the institution, application and maintaining of proper procedures, which in case of actual or
anticipated infringements of SIF Moldova’s risk limits would allow the tanking of quick corrective
measures in the investors’ interests.
the existence of proper systems and procedures to manage liquidities, according to the requirements
st by applicable regulations.
The measures, processes and techniques mentioned above and proportional to the nature, volume and
complexity of SIF Moldova’s activity and correspond to the risk profile of the company, as communicated
to investors.
The risk management process is carried out by going through the following stages:
risk identification – the risks are defined as perceived by the company, the component elements are
identifed and risk generating events are described.
risk evaluation and measurement – are made for each type of identified risk, with the held of some
quantitative and qualitative methods using preset databases and indicators
risk monitoring – the risk indicators are monitored as they evolve, as well as their abidance by legal
and internal rules set
risk management and control – measures are suggested to keep risks under control in case it is
ascertained that these exceed the limits, and are then reported to the management structure.
2. Functional and hierarchical separation of the risk management position
The risk management position is separated from a functional and hierarchic point of view from the
operational units, including the investment (portfolio) monitoring function, the following conditions
being met:
the individuals involved in exercising the risk management function are not supervised by individuals
responsible for the performance of operational units, including the management position for SIF
Moldova’s investments (portfolio). I
individuals involved in exercising the risk management function are not engaged in activities within
the operational units or investment (portfolio) management function, thus insuring their
independence;
individuals involved in exercising the risk management function are paid according to meeting the
objectives connected to this function, independent from the performance of operational units,
including that of investment (portfolio) management. The payment of the staff in risk management
positions is directly supervised by the appointing committee.
The functional and hierarchic separation of the risk management position is insured on the entire level of
SIF Moldova SA Directors’ Consolidated Report – 2016
60
SIF Moldova’s hierarchic structure, up to the management body.
3. Specific protection methods against conflict of interest in the risk managmeent activity
SIF Moldova maintains a proper policy in order to prevent, manage and monitor conflict of interests in
the risk management process.
Conflicts of interest might occur under the following situations, without being limited to them:
the risk management staff carrying out business or support activities, particularly investment
management activities.
payment of the staff responsible for risk management depending on the performance of the business
units, especially the performance of investment management position.
Subordination of the risk management staff to some operational structures, particularly the
investment management function.
Specific protection methods against conflict of interest in the risk management area, consist in:
making sure, through the organizational chart and internal regulations that the risk management
function is functionally and hierarchically separated from the business and support structures,
particularly those in investment management. The risk management activity is organized in an
individual department, subordinated to the Board of Directors;
the risk management function is represented in the board of directors by the president CEO whose
authority is on the level of the investment (portfolio) function represented by the vice-president
adjunct CEO and Executive Director, thus insuring the necessary authority in the relationship with
the investment management function.
The payment of individuals involved in exercising the risk management function is set according to
objectives connected to its position, independent of the performances achieved by the business
position, thus insuring objectivity in the evaluation of investment connected risks. The payment of
individuals in risk management positions is directly supervised by the Appointing Committee.
The decisions made by the risk management position are based on viable data, that are subjected to a
proper degree of control according to risk management procedures;
The risk management position is subjected to the independent examination of internal audit and
audit committee, in order to make sure that the decisions are the result of an independent process.
The audit committee has the necessary resources to examine the risk management position and its
members are independent.
do not fulfill any tasks that would come into conflict with this position and are not supervised by an
individual covering a position that would conflict with the risk management function, making
decisions based on data that they can be properly evaluated, the decision-making process being up
for revisal.
The individuals responsible for risk management function are bound to:
o inform the Board of Directors, audit committee and executive management if their objectiveness
or independence is actually or apparently affected by actions such as: limitation of the activity
purpose, limitation of the access to financial or informational resources, etc;
o report to the management structure as well as to the Board of Directors, any situation when its
objectivity and impartially can be actually or potentially influenced, or if there are uncertainties
regarding a situation that might be considered to prejudice their objectivity or impartiality;
o avoid any action or connection with or form another employee, shareholders, representative of
issuers in the investment program if these could create the impression that the objectivity of the
staff would be prejudices (for example: accepting money, presents or entertainment, etc. of
significant value).
The Board of Directors of the Company and the Audit committee set the protection measures against
conflict of interest, periodically examine their efficiency and take corrective measures on time in order to
remedy possible deficiencies.
SIF Moldova SA Directors’ Consolidated Report – 2016
61
4. Evaluation, monitoring and revision of risk management systems
The evaluation of the efficiency of the risk management system adopted by SIF Moldova is made by the
Board of Directors on a half-yearly basis, based on the risk report, depending on the policies, procedures
and controls made.
The Board of Directors evaluates, monitors and re-examines the following aspects on a half-yearly basis:
adequacy and efficiency of the risk management policy, the measures, processes and techniques for :
o the identification, measurement, management and monitoring of risks that the company is or
could be exposed to, at any time
o insurance of set risk limits ;
o extent to which the company abides by the risk management policy, above mentioned measures,
processes and techniques;
adequacy and efficiency of measures taken to improve deficiencies occurred in the running of the risk
management process
fulfillment of risk management position;
adequacy and efficiency of the measures aimed to insure the functional and hierarchic separation of
the risk management position
Moreover, the risk management systems are revised when:
risk management processes and procedures and the processes and techniques for the identification,
measurement, management and monitoring of risks at any time, are subjected to significant changes
internal or external events indicate that an addition re-examination is needed
SIF Moldova’s investment policy and objectives are subjected to significant change.
SIF Moldova updates its risk management systems based on the results of the above mentioned re-
examination and notifies FSA regarding any significant modification of the risk management policy and
of the measures, processes and techniques used to manage risks.
5. Risk limits
SIF Moldova sets and applies quantitative and qualitative risk limits or both, taking into consideration all
relevant risks. In case only qualitative limits are set, SIF Moldova must be able to justify this approach
before the competent authority .
Qualitative and quantitative risk limits cover at least the following risks :
market risk;
credit risk (since SIF Moldova does not grant loans, the issuer risk is managed);
liquidity risks;
counterparty risk (not applicable);
operational risks.
On setting risk limits, SIF Moldova takes into account investment policy and used assets. These risk
limitations correspond to the risk profile of SIF Moldova communicated to investors and approved by the
Board of Directors.
***
The consolidated management report for 2016 has been approved by the Board of SIF
Moldova on June 30, 2017.
President & CEO
Costel Ceocea
Chief Accountant
Cristina Andries
Internal Control
Michaela Puscas
SIF MOLDOVA SA
Consolidated Financial Statements
for the year ended as at December 31, 2016
Prepared in accordance with International Financial Reporting Standards
as adopted by the European Union
CONTENTS:
PAGE:
Independent auditor’s report 1 – 2
Consolidated statement of comprehensive income 3 – 4
Consolidated statement of financial position 5
Consolidated statement of changes in shareholders’ equity 6 – 7
Consolidated statement of cash flows 8 – 9
Notes to the consolidated financial statements 10 – 65
SIF MOLDOVA SA
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
AS AT DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
Notes attached are an integral part of these consolidated financial statements.
3
In LEI Note 2016 2015
Revenue
Revenue from dividends 9 118.065.476 26.837.170
Revenue from interest 10 1.279.014 1.691.426
Other operational revenue 11 57.198.874 38.397.618
Earning from investments
Net earnings from assets sale 12 94.747.761 122.313.846
(Net loss)/ Net earning from the reevaluation of financial
assets at fair value through the profit or loss account 13 (6.502.197) (3.972.242)
Expenses
(Losses) / re-running losses from assets impairment 14 (47.065.756) (1.953.011)
Expenses with the setup of risk and expenses provisions (729.456) 1.106.690
Other operational expenses 15 (82.968.956) (63.593.684)
Operational profit 134.024.760 120.827.813
Financing expenses (436.067) (77.798)
Profit before taxation 133.588.693 120.750.015
Profit tax 16 (11.146.941) (23.081.481)
Net profit of financial year 122.441.752 97.668.534
Other overall result elements
(Increase) /Decrease of reserve from the reevaluation of
tangible assets net of deferred tax 5.727.039 (126.973)
Transfer from the revaluation reserve to retained earnings
following the sale of tangible assets - -
Revaluation of assets available for sale fair value, net of
deferred tax 19 e) 215.845.820 (46.689.351)
Reserve decrease due to the sale of financial assets
available for sale 19 e) (86.419.557) 110.633.603
Other overall result elements 135.153.302 63.817.279
Total overall result corresponding to the period 257.595.054 161.485.813
SIF MOLDOVA SA
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
AS AT DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
Notes attached are an integral part of these consolidated financial statements.
4
In Lei 2016 2015
Net profit pertaining to
Company shareholders 121.661.692 96.781.127
Non-controlling interest 29 780.060 887.406
122.441.752 97.668.533
Comprehensive income pertaining to 258.144.455 165.615.846
Company shareholders (549.401) (4.130.033)
257.595.054 161.485.813
The consolidated financial statements were approved by the Board of Directors on June 29, 2017 and
were signed on its behalf by:
Costel Ceocea, Cristina Andrieş,
President Chief Accountant
SIF MOLDOVA SA
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
Notes attached are an integral part of these consolidated financial statements.
5
In LEI Note 31st December
2016
31st December
2015
Assets
Cash and cash equivalents 17 7.570.471 5.512.013
Deposits at banks 18 128.163.158 99.706.272
Financial assets at fair value through profit or loss 19 a 132.052.544 115.203.699
Financial assets available for sale 19 b 1.299.085.922 1.124.199.137
Investments held to maturity 19 c 9.573.804 9.593.199
Investment property 20 11.329.891 11.213.326
Intangible assets 21 9.495.295 5.476.491
Tangible assets 21 70.148.481 77.351.594
Biological assets 1.868.564 1.868.564
Other assets 22 42.230.149 38.389.615
Total assets 1.711.518.279 1.488.513.910
Liabilities
Borrowings 23 9.145.719 8.551.468
Dividends payable 24 29.319.122 42.542.917
Provisions for risk and charges 25 5.020.583 4.290.795
Deferred tax liability 26 66.139.361 54.537.734
Current tax liability 27 543.845 2.852.688
Other liabilities 27 12.783.782 15.292.055
Total liabilities 122.952.412 128.067.657
Equity
Equity 28 539.720.149 539.720.149
Share capital 485.007.295 383.412.453
Retained earnings 8.618.009 7.624.546
Reserves from revaluation of property, plant and
equipment 19 e)
545.110.922 415.684.659
Reserves from revaluation of financial assets
available for sale
(10.723.746) (7.378.192)
Total equity attributable to Company
shareholders 1.567.732.629 1.339.063.615
Non-controlling interest 29 20.833.238 21.382.638
Total equity 1.588.565.867 1.360.446.253
Total liabilities and equity 1.711.518.279 1.488.513.910
The consolidated financial statements were approved by the Board of Directors on June 29, 2017 and
were signed on its behalf by:
Costel Ceocea, Cristina Andrieş,
President Chief Accountant
SIF MOLDOVA SA
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
Notes attached are an integral part of these consolidated financial statements.
6
In LEI Share capital Reserves from the
reevaluation of
tangible assets
Reserves from the
reevalaution of
financial assets
available for sale
Reported result Other equity
elements
Total assignable
to the
shareholders
Non-controlling
interests
Total
Balance on 1st January 2016 539.720.149 7.624.546 415.684.659 383.412.453 (7.378.192) 1.339.063.615 21.382.638 1.360.446.253
Overall result
Finacial year profit 121.661.692 121.661.692 780.060 122.441.752
Other overall result elements - -
Incease (decrease ) of reserve from the revaluation of
tangible assets 993.463 4.809.154 5.802.617 (75.578) 5.727.039
Transfer of reserve from revaluation to reported result
following the sale of tangible assets - - -
Revaluation at fair value of financial assets available for
sale, net of deferred tax 215.845.820 215.845.820 215.845.820
Reserve decrease following the sale of financial assets
available for sale (86.419.557) (86.419.557) (86.419.557)
Changes in subsidiaries holding (2.303.417) (2.303.417) (1.253.884) (3.557.300)
Total shareholders transactions, directly aknowledged
in equity
- 993.463 129.426.263 124.167.429 - 254.587.155 (549.401) 254.037.754 Shareholders transactions directly aknowledged in
equity -
Share capital increase - - - -
Own bought-back shares (3.345.554) (3.345.554) (3.345.554)
Other transfers - - -
out-dated dividends according to the law 23.678.296 23.678.296 23.678.296
Dividends to pay for 2015 (46.250.883) (46.250.883) (46.250.883)
Total shareholders transactions, directly aknowledged
in equity
- - - (22.572.587) (3.345.554) (25.918.141) - (25.918.141)
Balance on December 31st 2016 539.720.149 8.618.009 545.110.922 485.007.295 (10.723.746) 1.567.732.629 20.833.238 1.588.565.867
SIF MOLDOVA SA
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
Notes attached are an integral part of these consolidated financial statements.
7
In LEI Share capital Reserves from the Reserves for the Reported result Other elements Total assignable Non-controlling Total
Balance on January 1st 2015 487.811.191 7.276.334 351.740.408 368.013.009 - 1.214.840.942 25.512.671 1.240.353.613
Overall result
Profit of the financial year 96.781.127 96.781.127 887.406 97.668.533
Other overall result elements - -
Increase (Decrease) of reserve from the revaluation of
tangible assets 426.599 (450.917) (24.318) (169.817) (194.135)
Reserve transfer from the revaluation to reported result
following the sale of tangible assets (78.387) (78.387) (78.387)
Revaluation at fair value of financial assets available for
sale, net of deferred tax (46.689.351) (46.689.351) (46.689.351)Reserve decrease following the sale of financial assets
available for sale 110.633.603 110.633.603 110.633.603
Changes in subsidiaries holding 1.708.846 1.708.846 (4.847.623) (3.138.776)
Total overall result corresponding to the period - 348.212 63.944.251 98.039.056 - 162.331.519 (4.130.033) 158.201.485
Transaction with shareholders, directly aknowledged in
equity -
Share capital increase 51.908.958 (51.908.958) - -
Own bought-back shares (7.378.192) (7.378.192) (7.378.192)
Other transfers 81.438 81.438 81.438
out-dated divideds according to the law 21.719.773 21.719.773 21.719.773
Dividends to pay for 2014 (52.531.866) (52.531.866) (52.531.866)
Total transactions with shareholders directly acknowledged in equity 51.908.958 - - (82.639.612) (7.378.192) (38.108.847) - (38.108.847)
Balance on December 31st 2015 539.720.149 7.624.546 415.684.659 383.412.453 (7.378.192) 1.339.063.615 21.382.638 1.360.446.253
SIF MOLDOVA SA
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
Notes attached are an integral part of these consolidated financial statements.
8
In LEI 2016 2015
Cash flows from operating activities:
Profit before tax 133.588.693 120.750.015
Adjustments for:
Reversals of impairment of financial assets 47.065.756 1.953.011
Gain / loss on sale of tangible assets - 3.931
Net gain (Net loss) on financial assets at fair value through profit or loss 6.502.197 3.974.232
Adjustment for financial assets available for sale (80.985.879) (79.367.246)
Dividend income (118.065.476) (26.837.170)
Interest income (1.279.014) (1.691.426)
Charges of provisions for risk and charges 729.456 (1.106.690)
Write back of provisions for other assets (3.025) (1.388.841)
Other adjustments 2.054.230 3.523.438
Changes in operating assets and liabilities:
Acquisition of financial assets at fair value through profit or loss (24.320.318) (14.956.544)
Sales of financial assets at fair value through profit or loss 785.091 8.013.853
Acquisition of financial assets available for sale (166.534.478) (143.167.624)
Sales of financial assets available for sale 168.262.363 210.795.941
Changes in the investments held to maturity 12.760 1.184.500
Changes in deposits with maturity more than 3 months 9.721.840 17.468.201
Other assets changes (767.382) (10.811.096)
Other liabilities changes 8.201 840.075
Collected dividends 112.384.821 23.242.268
Collected income 1.288.046 1.881.734
Income tax paid (7.775.129) (16.386.839)
Net cash resulted from exploitation activities 82.672.754 97.917.723
Investment activities
Payments for the purchase of tangible assets (1.133.104) (32.360.842)
Collection from the sale of intangible assets and real estate investments - -
Net cash used in investment activities (1.133.104) (32.360.842)
Financing activities
Dividends paid (35.796.383) (42.302.795)
Changes in short-term loans 594.251 8.551.468
Buy-back shares (6.100.333) (7.378.192)
Net cash used in financing activities (41.302.465) (41.129.520)
Net increase in cash and cash equivalents 40.237.185 24.427.359
Cash and cash equivalents on January 1st 95.205.828 70.778.469
Cash and cash equivalents on December 31st 135.443.013 95.205.828
SIF MOLDOVA SA
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
Notes attached are an integral part of these consolidated financial statements.
9
Reconciliation of cash and cash equivalents with the balance sheet:
In LEI 31st December
2016
31st December
2015
Deposits at banks 7.570.471 5.512.013
Placements with banks with maturity of less than 3 months and blocked deposits 128.163.159 99.706.272
Less deposits with maturity over 3 months and blocked deposits (290.617) (10.012.457)
Cash and cash equivalents in the cash flow statement
135.443.013 95.205.828
The consolidated financial statements were approved by the Board of Directors on June 29, 2017 and
were signed on its behalf by:
Costel Ceocea, Cristina Andrieş,
President Chief Accountant
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
10
1. REPORTING ENTITY
SIF Moldova S.A. (“the Company”) is a collective investment body operating in Romania in accordance
with the provisions of Law 31/1990 on commercial companies and Law 297/2004 on capital market, as
subsequently amended and supplemented.
The Company is the successor of Fondul Proprietatea Privată II Moldova, reorganized and transformed in
accordance with the provisions of Law no. 133/1996.
The registered office of the Company is located at strada Pictor Aman, nr. 94C, Bacău municipality,
Bacău County, Romania. The Company also operates through its representative offices located in Iași and
Bucharest.
According to its statute, the Company’s core field of activity is:
administration and management of financial instruments, derivative financial instruments and other
instruments qualified as such by the regulations of the National Securities Commission (NSC);
administration and management of shares, bonds and other rights arising therefrom in companies
not traded or closed;
other ancillary and related activities, in accordance with the regulations in force.
The Company is self-administered.
The Company's shares are listed on the Bucharest Stock Exchange, Category I, code SIF2, starting from
November 1, 1999.
The shares and shareholders are recorded according to law by S.C. Depozitarul Central S.A. Bucharest.
The assets are deposited with BRD – Société Générale S.A. – company authorized by the National
Securities Commission.
The Company’s consolidated financial statements for the year ended December 31, 2016 refer to the
Company and its subsidiaries (herein after “the Group”) and the Group’s interests in associates.
The Group’s core activities consist in the financial investment activity carried out by the Company, and
the activities carried out by subsidiaries consisting primarily in business consultancy and management,
renting and operating of own or leased real estate, manufacture of machinery and equipment, restaurants,
cultivation of bearer shrubs, strawberries, nut trees and other bearer trees.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
11
2. BASES OF PREPARATION
(a) Statement of Compliance
The consolidated financial statements are prepared by the Company in accordance with the International
Financial Reporting Standards adopted by the European Union (“IFRS”). The consolidated financial
statements were prepared in accordance with the Rule of the Financial Supervisory Authority no. 39/2015
for the approval of accounting regulations in accordance with International Financial Reporting Standards
applicable to entities authorized, regulated and supervised by the Financial Supervisory Authority,
operating in the Financial Instruments and Investments Sector (FSA).
Within the meaning of Rule 39/2015, International Financial Reporting Standards, hereinafter referred to
IFRS, are the standards adopted according to the procedure provided by Regulation no. 1606/2002 of the
European Parliament and the EU Council of 19 July 2002 on the application of international accounting
standards, as subsequently amended and supplemented.
The Company subsidiaries’ accounting is kept in RON in accordance with Romanian Accounting
Standards (“RAS”). Such accounts are restated to reflect the existing differences between accounts
according to RAS and those according to International Financial Reporting Standards adopted by the
European Union (“IFRS”). Accordingly, RAS accounts are adjusted in all material respects to reflect the
IFRS provisions adopted by the European Union.
The most important changes made to the Romanian Accounting Standards financial statements to align
them to the requirements of the International Financial Reporting Standards (“IFRS”) adopted by the
European Union are:
the grouping of more elements in more comprehensive categories;
adjustment of investment property for valuation at fair value in accordance with IAS 40 –
“Investment property” (according to RAS, investment property is not recognized separately, since
it represents property, plant and equipment measured in accordance with IAS 16 “Property, plant
and equipment);
adjustments of property, plant and equipment for valuation in accordance with the Group’s
accounting policies and IAS 16 “Property, plant and equipment”;
adjustments for the recognition of deferred income tax assets and liabilities, in accordance with
IAS 12 “Income tax” (according to RAS, deferred tax is not recognized); and
disclosure requirements in accordance with International Financial Reporting Standards adopted by
the European Union (“IFRS”).
(b) Presentation of financial statements
The consolidated financial statements are presented in accordance with IAS 1 “Presentation of financial
statements”. The Group has adopted a liquidity-based presentation in the statement of financial position
and a presentation of income and expenses by their nature in the statement of comprehensive income, as it
considers that such presentation methods offer reliable and more relevant information compared to those
that would have been presented using alternative methods permitted by IAS 1.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
12
2. BASES OF PREPARATION (continued)
(c) Functional and presentation currency
The Group management considers that the functional currency, as defined by IAS 21 “Effects of changes
in foreign exchange rates”, is the Romanian Leu (RN). The consolidated financial statements are
presented in RON, rounded at the closest RON value, which the Company’s management has chosen as
presentation currency.
(d) Bases of measurement
The consolidated financial statements are prepared at fair value for derivative financial instruments,
financial assets and liabilities at fair value through profit and loss and available-for-sale financial assets
except those for which fair value cannot be reliably determined.
Other financial assets and liabilities, and non-financial assets and liabilities are carried at amortized cost,
revalued amount or historical cost.
(e) Use of estimates and judgments
The preparation of the consolidated financial statements in accordance with IFRS requires the
management to make estimates and assumptions that affect the application of accounting policies and the
reported values of assets and liabilities, income and expenses. The judgments and assumptions related to
such estimates are based on the historical experience and other factors deemed reasonable for such
estimates. The results of such estimates are the basis of the judgments regarding the carrying amounts of
assets and liabilities which cannot be obtained from other sources. Actual results may differ from these
estimates.
The judgments and assumptions underlying the financial statements are revised periodically. The
revisions of accounting estimates are recognized when the estimate is revised if it affects only that period
or in the period when the estimate is revised and in future periods if the revision affects both the current
and future periods.
3. BASES OF CONSOLIDATION
(a) Subsidiaries
Subsidiaries are entities controlled by the Group. Control is when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns through
its power over the investee. When evaluating control, the Group must also consider the potential or
convertible voting rights exercisable at that time.
The subsidiaries’ financial statements are included in the consolidated financial statements as of the
moment when control is exercised until the cessation thereof. The accounting policies of the Group’s
subsidiaries have been changed to be aligned to the Group’s policies.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
13
BASES OF CONSOLIDATION (continued)
(a) Subsidiaries (continued)
The list of consolidated subsidiaries as at December 31, 2016 is as follows:
Field of activity December 31,
2016
December 31,
2015
Casa
Business and other management consultancy
activities 99,02%
99,02%
Mecanica Ceahlău
Manufacture of agricultural
and forestry machinery 63,30% 60,81%
Regal
Manufacture of pastry goods
and cakes, and renting of own
or leased real estate 93,02% 93,01%
Ţesătoriile Reunite Real estate development 99,99% 99,99%
Asset Invest
Business and other
management consultancy
activities 99,99% 99,99%
Agribusiness Capital S.A
Business and other
management consultancy
activities 0,00% 99,99%
Opportunity Capital
Business and other
management consultancy
activities 99,99% 99,99%
Real Estate Asset S.A.
Business and other
management consultancy
activities 99,99% 99,99%
Agroland Capital
Buying and selling of own
real estate 99,99% 99,99%
Agrointens
Business and other
management consultancy
activities 99,99% 99,99%
Hotel Sport
Hotels and similar
accommodation 99,99% 99,99%
(b) Associates Associates are companies in which the Group may exercise significant influence but not control over the
financial and operational policies.
The consolidated financial statements include the Group’s share in the result of associates according to
the equity method, as of the date when the Group started to have significant influence until the date when
such influence ceases. If the Group’s share in the associates’ loss exceeds the carrying amount of the
investment, then the carrying amount is reduced to nil value and subsequent losses are not recognized
except if the Group has the legal or constructive obligation to make payments on behalf of the associate.
Interests where the Group holds between 20% and 50% of the voting rights, but over which it exerts no
significant influence are classified as available-for-sale financial assets.
Associates are accounted for using the equity method and are initially carried at cost. The Group’s
investment includes the goodwill identified at acquisition less cumulated impairment. The consolidated
financial statements include the Group’s share in income and expenses and changes in the associates’
equity, after adjustments to align the accounting policies to the Group’s policies, as of the date when the
significant influence begins until it ceases. When the Group’s share in losses exceeds the interest in the
entity accounted for using the equity method, then the book value of such interest (including any long-
term investments) is reduced to nil value and the recognition of future losses is disrupted except when the
Group has a liability or made payments on behalf of the investee.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
14
3. BASES OF CONSOLIDATION (continued)
(b) Associates (continued)
Based on the analysis of quantitative and qualitative criteria presented in IAS 28 “Investments in
Associates and Joint Ventures” (revised in 2011), the Group concluded that it holds no investments in
associates as at December 31, 2016 and December 31, 2015.
(c) Transactions written off upon consolidation
Inter-Group settlements and transactions as well as unrealized gains resulting from inter-Group
transactions shall be eliminated entirely from the consolidated financial statements. Unrealized gains on
transactions with associates or jointly controlled entities shall be eliminated within the limit of the
Group’s holding percentage. Unrealized gains from transactions with an associate shall be eliminated
against the investment in the associate. Unrealized losses shall be eliminated identically to unrealized
gains, but only if there is no indication of impairment.
4. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies have been applied consistently to all periods presented in the consolidated
financial statements prepared by the Group.
The consolidated financial statements have been prepared on a going concern basis which assumes that
the Group will continue to operate in the foreseeable future. To assess the applicability of this
assumption, the management analyzes the cash inflow forecasts.
(a) Foreign currency transactions
Operations denominated in foreign currencies are recorded in RON at the official exchange rate on the
transaction date. Monetary assets and liabilities denominated in foreign currencies at the balance sheet
date are translated into RON at the exchange rate of that date.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the
exchange rate at the end of the year of monetary assets and liabilities denominated in a foreign currency
are recognized in the statement of comprehensive income except those recognized in equity as a result of
their registration based on hedge accounting.
Translation differences on elements in the form of interests held at fair value through profit or loss are
presented as gains or losses on fair value. The translation differences on elements in the form of financial
instruments classified as available-for-sale are included in the reserve from the change of fair value of
such financial instruments.
The exchange rates of the main foreign currencies were:
Currency
December 31,
2016
December 31,
2015 Variation
EUR 1: LEU 4.5411 1: LEU 4.5245 -0.37%
USD 1: LEU 4.3033 1: LEU 4.1477 +3.62%
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
15
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Accounting for the effect of hyperinflation
In accordance with IAS 29, the financial statements of an entity whose functional currency is the currency
of a hyperinflationary economy shall be stated in terms of the measuring unit current at the end of the
reporting period (non-monetary items shall be restated using a general price index as at the acquisition or
contribution date).
According to IAS 29, an economy is hyperinflationary if, inter alia, the cumulative inflation rate over
three years exceeds 100%.
The continued decrease of the inflation rate and other factors related to the characteristics of the
Romanian economic environment indicate that the economy whose functional currency was adopted by
the Group is no longer hyperinflationary, the effects of which were felt in the financial periods starting
from January 1, 2004. Thus, the provisions of IAS 29 have been adopted in the preparation of the
consolidated financial statements as at December 31, 2003.
Thus, values expressed in the current measuring unit as at December 31, 2003 are treated as basis for the
accounting values reported in the consolidated financial statements and do not represent valued amounts,
replacement cost or any other measurement of the current value of the assets or the prices of the potential
current transactions.
For the purpose of preparing the consolidated financial statements, the Group adjusts the following non-
monetary items to express them in the current measuring unit as at December 31, 2003:
- share capital;
- available-for-sale financial assets carried at cost;
- property, plant and equipment (land) and intangible assets.
(c) Cash and cash equivalents
Cash and cash equivalents include: actual cash, current accounts and deposits with banks (including
blocked deposits and interest on bank deposits).
In the preparation of the statement of cash flows, the Group considers the following as cash and cash
equivalents: actual cash, current bank accounts, deposits with initial maturity of less than 90 days and
interest thereon (excluding blocked deposits).
(d) Financial assets and liabilities
(i) Classification
The Group classifies financial instruments it holds in the following categories:
Financial assets or financial liabilities at fair value through profit or loss
Such category includes financial assets or financial liabilities held for trading and financial instruments
designated as at fair value through profit or loss upon initial recognition.
The Group includes a financial asset or liability in this category if such has been acquired primarily for
purpose of speculation (to generate short-term profit).
Derivative financial instruments are classified as held for trading if they are not instruments used for
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
16
hedging.
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and liabilities (continued)
(i) Classification (continued)
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturity that the Group has the positive intention and ability to hold to maturity. Held-to-maturity
investments are carried at amortized cost using the effective interest method less impairment.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market, other than those that the Group intends to sell immediately or in the near term.
They consist primarily in bank deposits.
Available-for-sale financial assets
Available-for-sale financial assets are those financial assets that are not classified as loans and
receivables, held-to-maturity investments or financial assets at fair value through profit or loss.
Upon initial recognition, equity instruments classified as available-for-sale financial assets for which
there is an active market are measured at fair value and changes in fair value other than impairment
losses, such as gains and losses on the exchange rate variation related to financial instruments, are
recognized directly to equity.
When the asset is derecognized, the cumulated gain or loss is transferred to profit or loss.
(ii) Recognition
The assets and liabilities are recognized when the Group becomes contract party in the conditions of the
instrument. Financial assets and liabilities are measured upon initial recognition at fair value plus directly
attributable trading costs, except investments in shares whose fair value could not be reliably determined
and which are initially carried at cost.
(iii) Offset
The Company offsets financial assets and liabilities, and the net result is presented in the statement of
financial position if and only if it has a legally enforceable right of set-off intends either to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis if and only if it is permitted by accounting standards or
for the gain or loss resulting from a pool of similar transactions such as those deriving from the
Company’s trading.
(iv) Measurement at amortized cost
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or
financial liability is measured at initial recognition minus principal repayments, plus or minus the
cumulative amortization using the effective interest method, minus any impairment losses.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
17
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and liabilities (continued)
(v) Measurement at fair value
Fair value is the amount for which an asset could be exchanged, a liability settled, between
knowledgeable, willing parties in an arm's length transaction.
The fair value of financial assets and liabilities is determined based on the quotations in an active market.
A financial instrument has an active market if quoted prices are readily and regularly available for such
instrument and such prices reflect regular arm’s length market transactions.
Instruments traded in an active market are measured at fair value by multiplying the number of shares
held by the closing price of the last trading day in the corresponding reporting period.
If a financial asset is quoted in more active markets, then the Group uses the quotation of the most
advantageous market, considering all barriers/costs associated to accessing each of the markets.
Available-for-sale financial assets for which there is no active market and for which fair value cannot be
reliably determined are carried at cost and are tested periodically for impairment.
For all other financial instruments, fair value is calculated using measurement techniques. Measurement
techniques include techniques based on net discounted value, discounted cash flows, comparison with
similar instruments for which there is no observable market price and other measurement techniques.
The value resulting from using a measuring model is adjusted depending on certain factors, as
measurement techniques do not reliably reflect all the factors considered by market participants when
entering into a transaction. Adjustments are registered so as to reflect risk models, the differences
between sale and purchase quotes, liquidity risks and other factors. The management considers that such
adjustments are required to reliably present the financial instruments at fair value in the statement of
financial position.
(vi) Identification and evaluation of loss of value
Financial assets carried at amortized cost
The Group analyzes at each reporting date whether there is any objective evidence of the impairment of a
financial asset. A financial asset is impaired and impairment losses are incurred if, and only if, there is
objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated.
To determine whether an asset is impaired, the Group takes into account relevant loss generating events
such as significant long-term decline in fair value below cost; market and industry conditions, to the
extent that they influence the recoverable amount of the asset; financial conditions and near-term
prospects of the issuer, including any specific adverse events that may influence the operations of the
issuer, the issuer's recent losses, the qualified independent auditor's report on the most recent financial
statements of the issuer etc.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
18
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and liabilities (continued)
(vi) Identification and evaluation of loss of value (continued)
If there is objective evidence that an impairment loss on financial assets carried at amortized cost has
been incurred, the amount of the loss is measured as the difference between the asset's carrying amount
and the present value of estimated future cash flows using the effective interest rate of the financial asset
at initial recognition.
If a financial assets measured at amortized cost has a variable interest rate, the discount rate for measuring
any impairment loss is the current variable interest rate determined under the contract.
The carrying amount of an asset is reduced through use of an allowance account. The amount of the loss
shall be recognized in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related to
an event occurring after the impairment was recognized, the previously recognized impairment loss shall
be reversed by adjusting an allowance account. The amount of the impairment loss decrease shall be
recognized in profit or loss.
Available-for-sale financial assets
In case of available-for-sale financial assets, when a decline in the fair value of an available-for-sale
financial asset has been directly recognized in equity and there is objective evidence that the asset is
impaired, the cumulative loss that had been directly recognized in equity shall be reclassified from equity
to comprehensive income even though the financial asset has not been derecognized.
The amount of the cumulative loss that is reclassified from equity to comprehensive income shall be the
difference between the acquisition cost (net of any principal repayment and amortization) and current fair
value, less any impairment loss on that financial asset previously recognized in comprehensive income.
Impairment losses recognized in comprehensive income for an investment classified as available-for-sale
shall not be reversed through profit or loss. If, in a subsequent period, the fair value of an impaired
investment increases, the amount of the increase shall be recognized directly to other comprehensive
income.
Thus, in the period ended December 31, 2016, SIF Moldova recognized in the statement of
comprehensive income the impairment of the securities of SNP, BVB, ELMA, Casa de Bucovina,
Agribusiness, Reale Estate Asset, Opportunity, Lactate Natura, Catalist in total amount of RON 45.4
million, further to the decrease of their fair value below cost by over 30%.
To determine whether an available-for-sale financial asset carried at cost because the fair value cannot be
reliably established is impaired, the Group considers relevant loss events, such as the significant long-
term decrease of fair value below cost; the market conditions and the conditions of the field of activity, to
the extent they influence the recoverable value of the asset; the financial conditions and short-term
perspectives of the issuer, including any specific adverse events likely to influence the issuer’s operations,
issuer’s recent losses, the independent auditor’s qualified report on the latest financial statements of the
issuer etc.
Given the inherent limitations of the methodologies applied and the significant uncertainty of how assets
are measured in local and international markets, the Group’s estimates can be substantially revised
subsequent to the approval of the financial statements.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
19
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Financial assets and liabilities (continued)
(vii) Derecognition
The Group derecognizes a financial asset when the rights to the cash flows from the financial asset expire,
or when the Group has transferred the contractual rights to the cash flows from the financial asset in a
transaction in which it has transferred substantially all the risks and rewards of ownership.
Any interest in the transferred financial assets retained by the Group or created for the Group is
recognized separately as asset or liability.
The Group derecognizes a financial liability when the contractual obligations terminated or when the
contractual obligations are annulled or expire.
In accordance with IAS 39, if an entity transfers a financial asset in a transfer that qualifies for
derecognition in its entirety and retains the right to service the financial asset for a fee, it shall recognize
either a servicing asset or a servicing liability for that servicing contract. If the fee to be received is not
expected to compensate the entity adequately for performing the servicing, a servicing liability for the
servicing obligation shall be recognized at its fair value. If the fee to be received is expected to be more
than adequate compensation for the servicing, a servicing asset shall be recognized for the servicing right
In addition, in accordance with IAS 39, if, as a result of a transfer, a financial asset is derecognized in its
entirety but the transfer results in the entity obtaining a new financial asset or assuming a new financial
liability, or a servicing liability, the entity shall recognize the new financial asset, financial liability or
servicing liability at fair value.
On derecognition of a financial asset in its entirety, the difference between:
- the carrying amount; and
- the sum of (i) the consideration received (including any new asset obtained less any new liability
assumed) and (ii) any cumulative gain or loss that had been recognized in other comprehensive
income shall be recognized in profit or loss.
If the transferred asset is part of a larger financial asset (e.g. when an entity transfers interest cash flows
that are part of a debt instrument) and the part transferred qualifies for derecognition in its entirety, the
previous carrying amount of the larger financial asset shall be allocated between the part that continues to
be recognized and the part that is derecognized, based on the relative fair values of those parts on the date
of the transfer. For this purpose, a servicing asset shall be treated as a part that continues to be recognized.
The difference between:
- the carrying amount allocated to the part derecognized; and
- the sum of (i) the consideration received for the part derecognized (including any new asset
obtained less any new liability assumed) and (ii) any cumulative gain or loss allocated to it that had
been recognized in other comprehensive income shall be recognized in profit or loss. A cumulative
gain or loss that had been recognized in other comprehensive income is allocated between the part
that continues to be recognized and the part that is derecognized, based on the relative fair values of
those parts.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
20
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Other financial assets and liabilities
Other financial assets and liabilities are carried at amortized cost using the effective interest method, less
any impairment losses.
(f) Inventories
Inventories encompass goods purchased and held for resale in the ordinary course of business, work in
progress, awaiting sale in the normal course of business, or assets in the form of raw materials, materials
and other consumables, awaiting use in the production process or to deliver services.
Inventories are measured at the lower of cost and net realizable value. The cost of inventories shall
comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to
their present location and condition. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary to make the
sale. The cost of inventories of items that are not ordinarily interchangeable and goods or services
produced and segregated for specific projects shall be assigned by using specific identification of their
individual costs. The cost of interchangeable inventories is determined using the “first-in, first-out”
(FIFO) formula.
(g) Investment property
Investment property is property (land or a building — or part of a building) held by the Group to earn
rentals or for capital appreciation or both, rather than for:
- use in the production or supply of goods or services or for administrative purposes; or
- sale in the ordinary course of business.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of goods or services or for administrative purposes.
If these portions can be sold separately (or leased out separately under a finance lease), the Company
accounts for the portions separately. If the portions cannot be sold separately, the property is treated as
investment property only if an insignificant portion is held for use in the production or supply of goods or
services or for administrative purposes.
(i) Recognition
Investment property shall be recognized as an asset when, and only when:
- it is probable that the future economic benefits that are associated with the investment property will
flow to the Group; and;
- the cost of the investment property can be measured reliably.
(ii) Measurement
Initial measurement
An investment property shall be measured initially at its cost. Transaction costs shall be included in the
initial measurement. The cost of a purchased investment property comprises its purchase price and any
directly attributable expenses (for example, professional fees for legal services, property transfer taxes
and other transaction costs).
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
21
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Investment property(continued)
(ii) Measurement (continued)
The value of the Group’s investment property as at December 31, 2016 and December 31, 2015 is
presented in Note 19.
Subsequent measurement
The Group’s accounting policy on the subsequent measurement of investment property is based on the
fair value model. Such policy is applied consistently for all investment property. The fair value
measurement of investment property is conducted by valuers of the National Association of Romanian
Valuers (ANEVAR). Fair value is based on market price quotations adjusted, if applicable, so as to reflect
the differences in the nature, location or conditions of such asset. Such valuations are periodically revised
by the Group’s management.
Gains or losses from the change of the fair value of investment property are recognized in the profit or
loss of the period in which they occur.
The fair value of investment property reflects the market conditions as at the balance sheet date.
The Company’s last fair value measurement of investment property was performed on December 31,
2016 by SC Evaluări Consultanţă Management – ECM SRL Bacău, for subsidiary Mecanica Ceahlău as
at December 31, 2016 the Company conducted the revaluation of investment property through an own
commission of specialists and through SC IPIEV Consulting SRL for Ţesătoriile Reunite as at December
31, 2016.
(iii) Transfers
Transfers to or from investment property are performed when and only when there is a change in the use
of such asset.
To transfer one investment property measured at fair value to property, plant and equipment, the implicit
cost of the asset for the purpose of its subsequent registration shall be its fair value as at the date when the
use is changed.
(iv) Derecognition
The carrying amount of an investment property shall be derecognized on disposal or when the investment
is withdrawn from use for good and no future economic benefits are expected from its disposal.
The gain or loss arising from the disposal or sale of an investment property shall be included in profit or
loss when the property is disposed of or sold.
(h) Tangible and intangible assets
(i) Recognition and measurement
Property, plant and equipment recognized as assets are initially carried at cost by the Group. The cost of
an item of property, plant and equipment comprises the cost of purchase, including unrecoverable fees,
after deducting all trade price discounts and any directly attributable costs incurred in bringing the asset to
its present location and condition so that it can be used as intended by the management, such as:
employee related expenses arising directly from the construction or acquisition of the asset, site layout
costs, initial delivery and handling costs, installation and assembly costs, professional fees.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
22
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(h) Tangible and intangible assets (continued)
(i) Recognition and measurement (continued)
The value of the Group’s tangible and intangible assets as at December 31, 2016 and December 31, 2015
is detailed in Note 20.
Property, plant and equipment are classified by the Group into the following classes of assets of the same
nature and with similar uses:
- land;
- buildings;
- plant and machinery;
- vehicles;
- other property, plant and equipment.
Buildings are stated at revalued amount, which represents the fair value as at the revaluation date less any
subsequently cumulated depreciation and any impairment losses.
The fair value is based on market price quotations, if applicable adjusted to reflect the differences in the
nature, location or conditions of such asset.
Revaluations are performed by specialized valuers, ANEVAR members. The frequency of the
revaluations of the Group’s buildings is imposed by the dynamics of the markets.
The other categories of property, plant and equipment are carried at cost, less cumulated depreciation and
impairment allowance.
Repairs of maintenance and repair of property, plant and equipment are registered by the Group in the
statement of comprehensive income as they appear, and significant improvements to property, plant and
equipment which increase the value or useful life thereof, or significantly increase the capacity to
generate economic benefits are capitalized.
(ii) Depreciation
Depreciation is calculated on a straight-line basis over their estimated useful life, as follows:
Buildings 40 years
Equipment 2-12 years
Vehicles 4-8 years
Furniture and other property, plant and equipment 4-12 years
Land is not depreciated.
Intangible assets fulfilling the recognition criteria of the International Financial Reporting Standards are
carried at cost less cumulated amortization. The amortization of intangible assets is registered in profit or
loss on a straight-line basis over an estimated period of maximum 3 years.
The depreciation/amortization methods, estimated useful lives and residual values are revised by the
Group management at each reporting date.
Property, plant and equipment which is disposed of or sold are deregistered from the balance sheet along
with the corresponding cumulated depreciation. Any gain or loss arising from such operation is included
in the current profit or loss.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
23
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Impairment of assets other than financial assets
The carrying amount of Group assets that are not in the form of financial asset, other than deferred tax,
are revised at each reporting date to identify any impairment evidence. If such evidence exists, the
Company estimates the recoverable value of such assets.
An impairment loss is recognized when the carrying amount of an asset or a cash-generating unit exceeds
its recoverable amount. A cash-generating unit is the smallest identifiable group of assets that generates
cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Impairment losses are recognized in the statement of comprehensive income.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of
disposal and its value in use.
To determine the value in use, future cash flows are discounted using a discount rate before tax which
reflects the current market conditions and risks specific for such asset.
Impairment losses recognized in previous periods are measured at each reporting date to determine if they
have decreased or still exist. Impairment losses are reversed if a change occurred in the estimates to
determine the recoverable value. Impairment losses are reversed if and only if the carrying amount of the
asset does not exceed the carrying amount which would have been calculated, net of
amortization/depreciation and impairment, should the impairment loss had not been recognized.
(j) Share capital
Ordinary shares are recognized in the share capital. Incremental costs directly attributable to an issuance
of ordinary shares are deducted from capital, net of taxation effects.
(k) Non-controlling interests
Represent a share of profit or loss and net assets not held, directly or indirectly, by the Group and
presented in the consolidated statement of profit or loss and other comprehensive income and in equity in
the consolidated statement of financial position, separately from the equity of the parent company’s
shareholders. The changes in holdings in subsidiaries which do not result in a loss of control are
accounted for as transactions between shareholders in their capacity of shareholders.
(l) Dividends to be paid
Dividends are treated as profit allocation in the period in which they have been declared and approved by
the General Meeting of Shareholders.
Dividends declared prior to the reporting date are registered as liabilities as at the reporting date.
(m) Provisions for risks and charges
Provisions are recognized in the statement of financial position when an obligation arises for the Group
from past events, the settlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits and the value of the obligation can be reliably estimated. To determine the
provision, future cash flows are discounted using a discount rate before taxation, which reflects current
market conditions and the risks specific to such liability.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
24
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(n) Income from the sale of goods and delivery of services
Income from the sale of goods and delivery of services is registered net of trade discounts, value added
tax and other turnover taxes.
Income from the sale of goods shall be recognized in profit or loss when the Group has transferred to the
buyer the significant risks and rewards of ownership of the goods, which most often coincides with the
delivery thereof.
Income from the delivery of services is recognized in profit or loss depending on the execution stage
thereof.
(o) Interest income
Interest income and expenses are recognized in the statement of comprehensive income using the
effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future
cash payments or receipts through the expected life of the financial instrument or, when appropriate, a
shorter period to the net carrying amount of the financial asset or financial liability.
(p) Dividend income
Dividend income is recognized in profit or loss on the date the right to receive it is established.
In case of dividends received as shares as alternative to cash payment, dividend income is recognized at
the level of the cash that would have been received, according to the increase of the related participation.
The Group does not register dividend income on the shares received under a free title when they are
distributed proportionally to all shareholders.
The Group registers dividend income at gross value which includes dividend tax, which is recognized as
current income tax expense. The actual calculation is made in accordance with the tax provisions in force
as at the calculation date.
(q) Rental income
Income from rentals arise from investment property leased by the Group as operating leases and are
recognized in profit or loss on a straight-line basis over the entire lease.
(r) Employee benefits
(i) Short-term benefits
Employee short-term benefits include salaries, premiums and social security contributions. Employee
short-term benefits are recognized as expenses when the services are delivered. The Group recognizes a
provision for the amounts expected to be paid as short-term cash premiums or profit sharing schemes
when the Group has a present legal or constructive obligation to pay such amounts as a result of past
services delivered by employees and when such obligation can be reliably estimated.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
25
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(r) Employee benefits (continued)
(ii) Defined contribution plans
The Group makes payments on behalf of its employees to the Romanian state pension scheme, health and
unemployment fund in the ordinary course of business.
All the Group’s employees are members of the plan and also have the legal obligation to contribute
(through the social contributions) to the Romanian state pension scheme (a State defined contribution
plan). All related contributions are recognized in the profit or loss of the period when they are incurred.
The Group does not have any other additional obligations.
The Group is not enrolled in any independent pension scheme and, consequently, does not have any other
obligations in this respect. The Group is not enrolled in any other post-retirement benefit scheme. The
Group does not have the obligation to deliver further services for its former or current employees.
(iii) Employee long-term benefits
The Group’s net obligation as regards long-term services benefits consists of the future benefits which
employees earned in exchange for the services delivered by them in current and previous periods.
The Group does not have the obligation to grant employees benefits on the retirement date.
(s) Gains or losses on foreign exchange differences
Foreign exchange transactions are registered in the functional currency (Leu), by converting the foreign
currency amount at the official exchange rate communicated by the National Bank of Romania on the
transaction date.
As at the reporting date, foreign exchange monetary items are translated using the closing exchange rate.
Exchange differences arising on the settlement of monetary items or on translating monetary items at
rates different from those at which they were translated on initial recognition during the period or in
previous financial statements shall be recognized in profit or loss in the period in which they arise.
(t) Income tax
Income tax comprises current and deferred tax. Current income tax comprises tax on dividend income
recognized at gross value.
Income tax is recognized in the statement of comprehensive income or in other elements of
comprehensive income if the tax refers to items of equity.
Current tax is the tax payable on the profit obtained in the current year, determined based on the
percentages applied as at the reporting date and all adjustments from previous periods.
For the financial year ended December 31, 2016, the income tax rate was 16% (December 31, 2015:
16%). The tax rate related to taxable dividend income was 5% (December 31, 2015: 16%). Deferred tax is
determined using the balance sheet method for temporary differences arising between the tax base for
calculating tax for assets and liabilities and their carrying amount, used for reporting purposes in the
consolidated financial statements.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
26
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(t) Income tax (continued)
Deferred tax shall not be recognized for the following temporary differences: initial recognition of
goodwill, initial recognition of an asset or liability in a transaction which is not a business combination
and affects neither accounting profit nor taxable profit and differences associated with investments in
subsidiaries, provided they are not reversed in the near future.
Deferred tax is calculated based on the taxation percentages expected to be applicable to temporary
differences when reversed, based on the legislation in force as at the reporting date. Deferred tax assets
and liabilities are offset if and only if there is a legally enforceable right to set off current tax assets
against current tax liabilities and if the deferred tax assets and the deferred tax liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity; or different taxable entities
which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and
settle the liabilities simultaneously.
Deferred tax assets are recognized if and only if future profit is probable, which can be used to cover the
tax loss. The asset is revised at the closing of each financial year and is decreased if the related tax benefit
is improbable to be realized. Additional taxes arising from the distribution of dividends are recognized on
the same date as the obligation to pay the dividends.
(u) Earnings per share
The Group presents basic and diluted earnings per share for ordinary shares. Earnings per share are
calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares for the reporting period. Earnings per share are calculated by adjusting
the profit or loss attributable to ordinary shareholders of the Company and the weighted average number
of ordinary shares to the dilution effects generated by the potential ordinary shares.
Dividends are treated as profit allocation in the period in which they have been declared and approved by
the General Meeting of Shareholders. The profit available for distribution is the profit for the year
registered in the financial statements prepared in accordance with International Financial Reporting
Standards.
(v) Segment reporting
A segment is a distinct component of the Group involved in income and expense generating operations
(including income and expenses determined by the interaction with the other Group elements) whose
operating results are periodically revised by the entity’s decision-maker regarding the resources to be
allocated to the segment and its performance is assessed, and for which financial information is available.
The criteria based on which the Group determines operating segments in accordance with IFRS 8
“Operating segments”, are:
The reported income of the operating segment, including sales to external clients and inter-segment
sales or transfers, account for 10% or more of the combined income, internal or external, of all
operating segments;
The reported absolute value of the profit or loss of the operating segment accounts for 10% or more of
the higher absolute value of (i) the reported combined profit for all operating segments that have not
reported any loss and (ii) the reported combined loss in all the operating segments that have reported
loss;
The assets of the operating segment account for 10% or more of the combined assets of all operating
segments;
If the management considers that an operating segment identified as reportable segment in the
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
27
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(v) Segment reporting (continued)
immediately preceding period maintains its relevance, the information of such segment shall be
reported separately in the current period, regardless of whether or not they meet the reporting criteria.
The Group operates mainly in the following areas: Business and other management consultancy activities,
renting and selling own real estate, manufacture of agricultural machinery and equipment, manufacture
and sale of food products, manufacture of fabrics, growing of fruits, forestry exports and hotel activities.
(w) New standards and interpretations
The following sections present: the list of new standards, amendments and interpretations of already
existing standards effective in the financial year ended December 31, 2015, the list of new standards,
and amendments and interpretations of the standards adopted by the International Accounting Standards
Board (IASB) and the European Union (UE) but not effective yet for the financial year ended December
31, 2015 and the list of new standards, and amendments and interpretations of the standards adopted by
the International Accounting Standards Board, but not adopted yet by the European Union for the
financial year ended December 31, 2015.
(i) Standards and interpretations effective in the current period
The following standards and amendments to the existing standards issued by the International
Accounting Standards Board („IASB”) and adopted by the EU are effective for the current period:
Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests
in Other Entities” and IAS 28 “Investments in Associates and Joint Ventures” - Investment
Entities: Applying the Consolidation Exception - adopted by the EU on 22 September 2016
(effective for annual periods beginning on or after 1 January 2016),
Amendments to IFRS 11 “Joint Arrangements” – Accounting for Acquisitions of Interests in Joint
Operations - adopted by the EU on 24 November 2015 (effective for annual periods beginning on
or after 1 January 2016);
Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure Initiative - adopted by
the EU on 18 December 2015 (effective for annual periods beginning on or after 1 January 2016),
Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets” -
Clarification of Acceptable Methods of Depreciation and Amortization - adopted by the EU on 2
December 2015 (effective for annual periods beginning on or after 1 January 2016,
Amendments to IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture” - Agriculture:
Bearer Plants - adopted by the EU on 23 November 2015 (effective for annual periods beginning
on or after 1 January 2016),
Amendments to IAS 19 “Employee Benefits” - Defined Benefit Plans: Employee Contributions -
adopted by the EU on 17 December 2014 (effective for annual periods beginning on or after 1
February 2015),
Amendments to IAS 27 “Separate Financial Statements” - Equity Method in Separate Financial
Statements - adopted by the EU on 18 December 2015 (effective for annual periods beginning on
or after 1 January 2016),
Amendments to various standards “Improvements to IFRSs (cycle 2010-2012)” resulting from the
annual improvement project of IFRS (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS
38) primarily with a view to removing inconsistencies and clarifying wording - adopted by the EU
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
28
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) New standards and interpretations (continued)
(i) Standards and interpretations effective in the current period (continued)
on 17 December 2014 (amendments are to be applied for annual periods beginning on or after 1
February 2015),
Amendments to various standards “Improvements to IFRSs (cycle 2012-2014)” resulting from the
annual improvement project of IFRS (IFRS 5, IFRS 7, IAS 19 and IAS 34) primarily with a view
to removing inconsistencies and clarifying wording - adopted by the EU on 15 December 2015
(amendments are to be applied for annual periods beginning on or after 1 January 2016).
(ii) Standards and interpretations issued by IASB and adopted by the EU but not yet effective
At the date of reporting these financial statements, the following standards, amendments and
interpretations were issued by IASB and adopted by the EU, but not yet effective:
IFRS 9 “Financial Instruments” - adopted by the EU on 22 November 2016 (effective for annual
periods beginning on or after 1 January 2018),
IFRS 15 “Revenue from Contracts with Customers” and amendments to IFRS 15 “Effective date of
IFRS 15” - adopted by the EU on 22 September 2016 (effective for annual periods beginning on or
after 1 January 2018).
IFRS 9 includes requirements on financial instruments regarding recognition, classification and
measurement, impairment losses, derecognition and hedge accounting:
Recognition and Measurement: IFRS 9 comes with a new approach regarding the classification of
financial assets, and comprises three main categories of financial assets: measured at amortized
cost, at fair value through other comprehensive income, at fair value through profit or loss,
determined by the characteristics of cash flows and the business model based on which an asset is
held. Such unique principle-based approach replaces the classification categories of financial assets
under IAS 39: held to maturity, loans and advances and available-for-sale financial assets. The
new model will also determine a single impairment model applicable to all financial instruments.
According to IFRS 9, embedded derivatives in contracts where the host instrument is a financial
instrument for the purpose of this standard, are not separate, the entire hybrid instrument is taken
into account for classification.
Impairment losses: IFRS 9 introduces a new model for impairment losses, based on expected loss,
which will require the faster recognition of expected losses on the impairment of receivables. The
standard provides that entities should register expected impairment losses on receivables upon the
initial recognition of the financial instruments and also recognize much faster expected impairment
losses throughout the entire useful life thereof.
Hedge accounting: IFRS 9 introduces a model which is significantly improved regarding hedge
accounting, which comprises additional disclosure requirements regarding risk management. The
new model is a significant update of hedge accounting, which enables the accounting treatment to
be aligned to risk management activities.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
29
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) New standards and interpretations (continued)
Own credit risk: IFRS 9 eliminates the volatility in the profit or loss arising from the change in
credit risk related to liabilities measured at fair value. The change in the accounting requirements
related to such liabilities implies that revenues from the mitigation of an entity’s own credit risk
will no longer be recognized through profit or loss.
(iii) Standards and interpretations issued by IASB, but not yet adopted by the EU
As at the reporting date of these financial statements, IFRS as adopted by the EU, do not significantly
differ from the regulations adopted by the IASB, except for the following standards, amendments and
interpretations whose application has not been approved by the EU yet as at the authorization date of
these financial statements:
IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1
January 2016) – the European Commission decided not to initiate the adoption of this interim
standard, and to wait the issue of the final standard;
IFRS 16 „Leasing” (effective for annual periods beginning on or after 1 January 2019);
Amendments to IFRS 2 “Share-based Payment” - Classification and Measurement of Share-based
Payment Transactions (effective for annual periods beginning on or after 1 January 2018), the
adoption is expected in the second half of 2017,
Amendments to IFRS 4 “Insurance Contracts” - Applying IFRS 9 Financial Instruments with
IFRS 4 Insurance Contracts (effective for annual periods beginning on or after 1 January 2018 or
when IFRS 9 “Financial Instruments” is applied first time), the adoption is expected in 2017,
Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in
Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture with subsequent amendments (the effective date has been postponed
indefinitely until the research project regarding the equity method is complete),
Amendments to IFRS 15 “Revenue from Contracts with Customers” - Clarifications to IFRS 15
Revenue from Contracts with Customers (effective for annual periods beginning on or after 1
January 2018),
Amendments to IAS 7 “Statement of Cash Flows” - Disclosure Initiative (effective for annual
periods beginning on or after 1 January 2017),
Amendments to IAS 12 “Income Taxes” - Recognition of Deferred Tax Assets for Unrealised
Losses (effective for annual periods beginning on or after 1 January 2017),
Amendments to IAS 40 “Investment Property” - Transfers of Investment Property (effective for
annual periods beginning on or after 1 January 2018),
Amendments to various standards “Improvements to IFRSs (cycle 2014-2016)” resulting from the
annual improvement project of IFRS (IFRS 1, IFRS 12 and IAS 28) primarily with a view to
removing inconsistencies and clarifying wording (amendments to IFRS 12 are to be applied for
annual periods beginning on or after 1 January 2017 and amendments to IFRS 1 and IAS 28 are to
be applied for annual periods beginning on or after 1 January 2018),
IFRIC 22 “Foreign Currency Transactions and Advance Consideration” (effective for annual
periods beginning on or after 1 January 2018).
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
30
5. Segment reporting
Segment reporting is disclosed depending on the Group’s and the parent company’s activities.
Transactions between business segments are made at arm’s length. The segment assets and liabilities
include both elements directly attributable to such segments, and elements that may be allocated using a
reasonable basis. The Group and parent company consist of the following business segments:
Financial investment services
Manufacture of agricultural equipment and machinery
Others: the Group and the parent company include in this category services and products offered by
Group companies in the following fields: business and management consultancy, renting and
selling of own real estate, manufacture and trade of food, cultivation of fruits, hotel activities.
5.1 Segmenting of revenue, expenses and the result
Group Financial investments Mecanica Other
In LEI 31st December 2016 31st December 2016 31st December 2016 31st December 2016
Revenue
Revenue from dividends 118.065.476 118.045.995 - 19.481
Revenue from interest 1.279.014 1.216.794 2.307 59.912
Other revenue from investments - - - -
Other revenue from operations 57.198.874 3.880.001 39.144.395 14.174.478
Earnings from investments
Net earnings from currency rate differences - - - -
Net earnings from assets sale 94.747.761 94.672.066 64.656 11.038
Net earnings from the reevaluation of financial assets
at fair value through the profit and loss account (6.502.197) (6.504.125) - 1.928
Expenses
Loss from asset impairment (47.065.756) (46.908.657) 208.538 (365.637)
Expenses with risk and expenses provisions (729.456) (146.072) 164.836 (748.220)
Other operational expenses (82.968.956) (31.182.470) (36.822.737) (14.963.750)
Operational profit 134.024.760 133.073.532 2.761.996 (1.810.769)
Financing expenses (436.067) - (50.006) (386.061)
Profit before taxation 133.588.693 133.073.532 2.711.990 (2.196.831)
Profit tax (11.146.941) (10.505.003) (606.840) (35.098)
Net profit of financial year 122.441.752 122.568.529 2.105.150 (2.231.928)
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
31
5.1 Segmenting of revenue, expenses and the result (continued)
Group Financial investments Mecanica Other
In LEI Notes 31st December 2015 31st December 2015 31st December 2015 31st December 2015
Revenue
Revenue from dividends 26.837.170 26.837.170 - -
Revenue from interest 1.691.426 1.563.181 8.019 120.226
Other revenue from investments 420 - - 420
Other revenue from operations 38.397.198 1.035.876 30.128.591 7.232.731
Earnings from investments
Net earnings from currency rate differences - - - -
Net earnings from assets sale 122.313.846 122.075.073 218.484 20.289
Net earnings from the reevaluation of financial assets
at fair value through the profit and loss account (3.972.242) (3.974.232) - 1.990
Expenses
Loss from asset impairment (1.953.011) 359.143 - (2.312.154)
Expenses with risk and expenses provisions 1.106.690 359.113 763.577 (16.000)
Other operational expenses (63.593.685) (26.594.729) (28.113.692) (8.885.264)
Operational profit 120.827.812 121.660.595 3.004.979 (3.837.762)
Financing expenses (77.798) - (48.357) (29.441)
Profit before taxation 120.750.014 121.660.595 2.956.622 (3.867.203)
Profit tax (23.081.481) (22.195.661) (713.583) (172.237)
Net profit of financial year 97.668.533 99.464.934 2.243.039 (4.039.440)
The accounting policies on segment reporting are the Group’s policies described in Note 4.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
32
5.2 Segmenting of assets and liabilities
Group Financial
investment
services
Manufacture of
agricultural
machines and
equipment
Other
In LEI31 st December
2016
31 st December
2016
31 st December
2016
31st December
2016
Assetss
Cash and cash equivalents 7.570.471 931.024 4.980.904 1.658.543
Bank deposits 128.163.158 117.794.735 629 10.367.794
Fianncial assets at fair value through the profit and
loss account 132.052.544 128.999.673 3.046.521 6.350
Financial assets available for sale 1.299.085.922 1.230.473.042 - 68.612.880
Investments held to maturity 9.573.804 9.573.804 - -
Real-estate investments 11.329.891 3.505.273 465.632 7.358.987
Intangible assets 9.495.295 113.180 571.122 8.810.993
Tangible assets 70.148.481 10.511.485 21.778.510 37.858.486
Total assets 44.098.713 1.334.639 27.478.221 15.285.854
Total assets 1.711.518.279 1.503.236.854 58.321.538 149.959.887
Liabilities
Loans 9.145.719 - - 9.145.719
Dividends to pay 29.319.122 29.258.494 60.628 (0)
Risk and expenses provisions 5.020.583 3.452.286 803.745 764.552
Liabilities regarding deferred profit tax 66.139.361 68.877.438 - (2.738.078)
Liabilities regarding current profit tax 543.845 4.636 539.209 -
Other liabilities 12.783.783 17.028.309 3.624.083 (7.868.609)
Total liabilities 122.952.413 118.621.163 5.027.666 (696.416)
Group Financial
investments
Manufacture of
agricultural
machines and
equipment
Other
In LEI31st December
2015
31st December
201531st December 2015 31st December 2015
Assetss
Cash and cash equivalents 5.512.013 613.851 2.319.371 2.578.791
Bank deposits 99.706.272 91.015.193 450 8.690.629
Fianncial assets at fair value through the profit and
loss account 115.203.699 112.215.485 2.981.865 6.349
Financial assets available for sale 1.124.199.137 1.028.735.266 - 95.463.871
Investments held to maturity 9.593.199 9.593.199 - -
Real-estate investments 11.213.326 3.264.341 465.631 7.483.356
Intangible assets 5.476.491 293.905 72.968 5.109.618
Tangible assets 77.351.594 7.165.148 22.228.260 47.958.188
Total assets 40.258.177 6.269.024 29.997.036 3.992.117
Total assets 1.488.513.908 1.259.165.412 58.065.581 171.282.919
Liabilities
Loans 8.551.468 - - 8.551.468
Dividends to pay 42.542.917 42.394.161 33.542 115.214
Risk and expenses provisions 4.290.795 3.306.214 968.581 16.000
Liabilities regarding deferred profit tax 54.537.734 57.326.171 - (2.788.437)
Liabilities regarding current profit tax 2.852.688 2.555.318 364.389 (67.019)
Other liabilities 15.292.056 16.150.938 4.230.636 (5.089.518)
Total liabilities 128.067.658 121.732.802 5.597.148 737.708
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
33
6. MANAGEMENT OF SIGNIFICANT RISKS
The Group’s management considers that risk management must be done in a consistent methodological
framework and that risk management is an important component of the strategy of return maximization,
obtaining a desired level of profit by maintaining an acceptable risk exposure and compliance with legal
regulations. Formalizing risk management procedures determined by the Group’s management is integral
to the strategic objectives of the Group.
The Group’s investing activity exposes it to various risks associated with financial instruments held and
the financial markets in which it operates. The main risks to which the Group is exposed are:
market risk (interest rate risk, currency risk and price risk);
liquidity risk;
credit risk;
tax risk;
economic environment risk;
operating risk.
The general risk management strategy seeks to maximize the Group’s profit by reference to the level of
risk to which it is exposed and maximize any adverse variations on the Group’s financial performance.
The Group has implemented risk management and assessment policies and procedures. Such policies and
procedures are presented in the section dedicated to each type of risk.
(a) Market risk
Market risk is defined as the risk of incurring a loss or not obtaining the expected profit, as a result of
price fluctuations, interest rates and foreign exchange rates.
For an efficient market risk management, the Group uses technical and fundamental analysis methods,
forecasts on the evolution of economic branches and financial markets, taking into account:
the return evaluations corresponding to the share portfolio;
the limits of concentration of assets in the same market, geographical area or economic sector;
the limits of presence in new markets;
the tolerable risk limits;
tolerance to risk concentrations;
the strategic allocation of long-term investments based on the principle according to which the
market will determine the correct fundamental value;
the short-term tactical allocation, which requires the use of short-term market variations to obtain
profit.
The selection of investment opportunities is made through:
a technical analysis;
fundamental analyses – determining the issuer’s capacity to generate profit;
comparative analyses – determining the relative value of an issuer in relation to the market or other
similar companies;
statistic analyses-determining the value based on prices history and transactions volumes.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
34
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(a) Market risk (continued)
The Group is exposed to the following categories of market risk:
(i) Price risk
The Group is exposed to price risk, given that the value of financial instruments is likely to fluctuate due
to market price changes.
The Group is exposed to the risk associated with the variation of the price of financial assets at fair value
through profit or loss and available-for-sale financial assets. 80% of the Group’s total shares traded in an
active market as at December 31, 2016 (December 31, 2015: 73%) represented investments in companies
part of the BET index of the Bucharest Stock Exchange, weighted by the stock capitalization and created
to reflect the overall tendency of the prices of the ten most liquid shares traded on the Bucharest Stock
Exchange.
A 10% positive variation of the price of financial assets at fair value through profit or loss would lead to a
profit increase after taxation by RON 11,092,414 (December 31, 2015: RON 9,677,111), a 10% negative
variation having an equal and opposite net impact.
A 10% positive variation of the price of available-for-sale financial assets would lead to an equity
increase, net of income tax, by RON 108,569,389 (December 31, 2015: by RON 90,684,207), a 10%
negative variation having an equal and opposite net impact.
The Group holds shares in companies operating in various sectors of activity, as follows:
In LEI 31st
December
2016
% 31st December
2015
%
Financial brokerage and insurance 758.892.143 57% 741.281.794 68%
Transport, storage and communication 153.922.945 12% 108.758.953 10%
Chemical and petrochemical industry 130.259.303 10% 64.510.364 6%
Textile industry 25.081.439 2% 6.222.922 1%
Pharmaceutical industry 38.769.224 3% 40.419.219 4%
Manufacture of machinery and equipment 34.944.926 3% 18.680.167 2%
Wholesale, retail, tourism and restaurants 76.220.574 5,7% 4.251.844 0,4%
Manufacture of vehicles 74.387.804 6% 61.303.469 6%
Energy industry 29.765.604 2% 29.714.636 3%
Real estate, renting and other services 8.042.463 0,6% 1.992.113 0,2%
Building materials industry 117 0,0% 4.876.839 0,4%
Others 6.017.801 0,5% 4.729.005 0,4%
TOTAL 1.336.304.342 100% 1.086.741.325 100%
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
35
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(a) Market risk (continued)
As it revealed in the table above, as at December 31, 2016 the Group was holding primarily shares in
companies operating in finance and banking and insurance, accounting for 57% of the total portfolio, less
than the percentage was registered as at December 31, 2015.
(ii) Interest rate risk
The Group faces interest rate risk due to its exposure to negative interest rate fluctuations. Changes in the
market interest rate directly influences income and expenses regarding variable interest bearing financial
assets and liabilities, and the market value of fixed interest financial assets and liabilities.
As at December 31, 2016 and December 31, 2015, most of the Group’s assets and liabilities are not
interest bearing. Therefore, the Group is not significantly affected by the risk of interest rate fluctuations.
The excess of cash or other assimilated cash equivalents is invested in short-term investment titles with
maturity between 1 to 6 months.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
36
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(a) Market risk (continued)
(ii) Interest rate risk (continued)
The Group does not use derivative financial instruments to hedge interest rate fluctuations.
The following tables present the Group’s exposure to interest rate risk as at December 31, 2016 and December 31, 2015.
In LEI
Net
amount as at
December 31,
2016
Less than 1
month
1 to
3 months
3 to 12
months
more than
1 year
No interest risk
Financial assets
Cash and cash equivalents 7.570.471 - - - - 7.570.471
Deposits at banks 128.163.158 8.561.769 119.310.773 290.617 - -
Financial assets at fair value through profit
or loss 132.052.544
-
- - - 132.052.544
Available for sale financial assets 1.299.085.922 - - - - 1.299.085.922
Investments held to maturity 9.573.804 - 212.619 37,440 9.323.745
Other financial assets 16.026.551 - - - - 16.026.551
Total financial assets 1.592.472.451
8.561.769
119.523.392 328.057 9.323.745 1.454.735.488
Financial liabilities
Dividends payable 29.312.122 - - - - 29.312.122
Other financial liabilities 11.201.400 - - - - 11.201.400
Borrowings 9.145.719 - - 924.379 8.221.340 -
Total financial liabilities
49.666.241
-
-
924.379
8,551,468
40.520.522
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
37
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(a) Market risk (continued)
(ii) Interest rate risk (continued)
In LEI
Net
amount as at
December 31,
2015
Less
than 1
month
1 to
3 months
3 to 12
months
more than
1 year
No interest risk
Financial assets
Cash and cash equivalents 5,512,013 - - - - 5,512,013
Deposits at banks 99,706,272 - 89,633,395 10,018,741 - 54,136
Financial assets at fair value through profit
or loss 115,203,699
-
- - - 115,203,699
Available for sale financial assets 1,124,199,137 - - - - 1,124,199,137
Investments held to maturity 9,593,199 - 220,256 37,437 9,335,506
Other financial assets 22,461,687 - - - - 22,461,687
Total financial assets 1,376,676,007
-
89,853,651 10,056,178 9,335,506 1,267,430,672
Financial liabilities
Dividends payable 42,542,917 - - - - 42,542,917
Other financial liabilities 11,486,935 - - - - 11,486,935
Borrowings 8,551,468 - - - 8,551,468 -
Total financial liabilities
62,581,320
-
-
-
8,551,468
54,029,852
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
38
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(a) Market risk (continued)
(ii) Interest rate risk (continued)
The impact on the Group’s net profit of a change of ± 100 bp in the interest on variable interest bearing
assets and liabilities and expressed in other currencies corroborated with a change of ± 500 bp in the
interest on variable interest bearing assets and liabilities and expressed in RON is 6.821.456 (December
31, 2015: ± RON 5.040.225).
(iii) Currency risk
Currency risk is the risk that the Group incurring losses or not realizing profit as a result of unfavorable
fluctuations in the exchange rate. The Group is exposed to foreign exchange rate fluctuations, but misses
a formalized policy to hedge currency risk.
Most of the Group’s financial assets and liabilities are expressed in the national currency and, therefore,
exchange rate fluctuations do not significantly affect the Group’s activity. The exposure to foreign
currency fluctuations is mainly due to deposits and shares in foreign currency.
As at December 31, 2016 and December 31, 2015, assets expressed in Lei and other currencies are
presented in the following tables.
În LEI RON EUR USD Other
currency
31st December 2016
Financial assets
Cash and cash equivalents 7.085.648 373.327 15.346 96.150
Deposit at banks 126.528.362 1.634.796 - -
Financial assets at fair value through profit or loss 132.052.544 - - -
Available for sale financial assets 1.296.731.257 - - 2.354.666
Investments held to maturity 2.357.600 7.216.204 - -
Other financial assets 16.026.551 - - -
Total financial assets 1.580.781.961 9.224.327 15.346 2.450.816
Financial liabilities
Dividends to pay 29.319.122 - - -
Other financial liabilities 11.201.400 - - -
Loans 9.145.719
Total financial liabilities 49.666.241 - - -
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
39
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(a) Market risk (continued)
(iii) Currency risk (continued)
In LEI RON EUR USD Other
currency
31st December 2015
Financial assets
Cash and cash equivalents 5.102.979 305.506 13.210 90.318
Deposit at banks 99.706.272 - - -
Financial assets at fair value through profit
or loss 115.203.699 - - -
Available for sale financial assets 1.123.617.348 - - 581.789
Investments held to maturity 9.593.199 7.223.701 - -
Other financial assets 22.461.687 - - -
Total financial assets 1.375.685.184 7.529.207 13.210 672.107
Financial liabilities
Dividends to pay 42.542.917 - - -
Other financial liabilities 11.486.935 - - -
Loans 8.551.468
Total financial liabilities 62.581.320 - - - The net impact on the Group’s profit of a change of ± 15% of the RON/EUR exchange rate corroborated
with a change of ± 15% of the RON/USD, RON/GBP, RON/CZK, RON/PLN and RON/CAD exchange
rates as at December 31, 2016, with all the other variables remaining constant, is RON 1.753.573
(December 31, 2015: RON ± 148.623).
(a) Credit risk
The Group is exposed to credit risk related to financial instruments, arising from any non-fulfillment by a
third party of its obligations towards the Group. The Group is exposed to credit risk further to investment
in bank deposits and bonds issued by municipalities or business entities, or further to current accounts and
other receivables.
As at December 31, 2016 and December 31, 2015 the Group did not hold real guarantees as insurance, or
other improvements of credit rating. As at December 31, 2016 and December 31, 2015 the Company did
not register overdue, but not impaired, financial assets.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
40
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(b) Credit risk (continued)
The Group’s maximum exposure to credit risk is in amount of RON 161.030.722 as at December 31,
2016, in amount of RON 137.199.171 as at December 31, 2015 and can be analyzed as follows:
Exposures from held-to-maturity investments
In LEI 31st December
2016
31st December
2015
Banca Transilvania 122.409.199 84.995.095
BRD - Group Societe Generale 5.243.928 8.489.791
BCR 906.887 1.905.223
Other commercial banks 6.870.352 9.754.175
Total 135.430.366 105.144.284
The annual average interest rate for exposures from current accounts and bank deposits is 0.47%.
Exposure from bonds- HTM
In LEI 31st December
2016
31st December
2015
Bacău municipal bonds 117.920 129.820
GDF Suez bonds 2.239.680 2.239.678
Banca Transilvania bonds 7.216.204 7.223.701
Total 9.573.804 9.593.199 Government bonds Bacău are due on October 31, 2026 and the interest rate is the average of 6M ROBID
and 6M ROBOR reference rates, plus a 0,85% margin. Bonds GDF Suez Energy Romania are due on
October 30, 2017 and the interest rate of 7,4%. Bonds Banca Transilvania are due on May 22, 2020 and
the interest rate is the 6M EURIBOR reference rate, plus 6,25% margin.
Sundry debtors and trade receivables
In LEI 31st December
2016
31st December
2015
AAAS Bucuresti 53.890.207 46.350.276 Banca Transilvania - -
Central depository 1.047.218 1.278.266
BRD Depositary (94.907) 4.395.490
Other various debtors and
commercial debts 19.515.572 23.039.259
Impairment adjustments (58.331.538) (52.601.602)
16.026.552 22.461.687 Impairment allowances cover all the amounts corresponding to the trade receivables against AAAS
Bucharest.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
41
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(c) Liquidity risk
Liquidity risk is the risk of registering losses or not realizing the estimated profit, arising from the impossibility to honor at any time the short-time payment
obligations, without this involving excessive costs or losses that cannot be supported by the Group.
The Group’s financial instruments may include investments in shares not traded in an organized market and which may therefore have low liquidity. Therefore,
the Group may face difficulties in rapidly liquidating its investments in such instruments at a value close to the value determined based on the computation model
of the net assets of financial investment companies provided by Regulation no. 09/2014 issued by FSA to fulfill its own liquidity requirements.
The structure of the Group’s assets and liabilities has been analyzed based on the remainder of the period spanning from the balance sheet date until the contract
maturity date, both for the financial year ended December 31, 2016 and the financial year ended December 31, 2015, as follows:
In LEI Accounting value under 3 months between 3 and
12 months
over 1 year no pre-set maturity
31 decembrie 2016
Financial assets
Cash and cash equivalents 7.570.471 7.570.471 - - -
Deposits at banks 128.163.158 127.872.541 290.617 - -
Financial assets at fair value through
the profit or loss account 132.052.544 - - - 132.052.544
Financial assets available for sale 1.299.085.923 - - - 1.299.085.923
Investments held to maturity 9.573.804 212.619 37.440 9.323.745 -
Other financial assets 16.026.551 - - - 16.026.551
Total financial assets 1.592.472.451 135.655.632 328.057 9.323.745 1.447.165.018
Financial liabilities
Dividends to pay 29.319.122 - - - 29.319.122
Other financial liabilities 11.201.400 - - - 11.201.400
Loans 9.145.719 924.379 8.221.340 -
Total datorii financiare 49.666.241 - 924.379 8.221.340 40.520.522
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
42
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(b) Liquidity risk (continued)
In LEI Accounting value under 3 months between 3 and
12 months
Over 1 year no pre-set maturity
31st December 2015
Financial assets
Cash and cash equivalents 5.512.013 5.512.013 - - -
Deposits at banks 99.706.272 89.633.395 10.018.741 - 54.136
Financial assets at fair value through
the profit or loss account 115.203.699 - - - 115.203.699
Financial assets available for sale 1.124.199.137 - - - 1.124.199.137
Investments held to maturity 9.593.199 220.256 37.437 9.335.506 -
Other financial assets 22.461.687 - - - 22.461.687
Total financial assets 1.376.676.007 95.365.664 10.056.178 9.335.506 1.261.918.659
Financial liabilities
dividends to pay 42.542.917 - - - 42.542.917
Other financial liabilities 11.486.935 - - - 11.486.935
Loans 8.551.468 8.551.468 -
Total financial liabilities 62.581.320 - - 8.551.468 54.029.852
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
43
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(d) Tax risk
The Romanian tax system is subject to various interpretations and permanent changes that may be
retroactive. In certain cases, the tax authorities may adopt difference positions from the Group’s position
and may calculate interest and penalties. Although the tax for a transaction may be minimum, penalties
may be high, depending on the interpretations of the tax authorities.
In addition, there are agencies subordinated to the Government of Romania, which are authorized to
control both Romanian and foreign entities operating in Romania. Such controls are largely similar to the
controls conducted in many other countries, but can also extend to legal or regulatory fields of interest for
the Romanian authorities.
The tax statements may be subject to control and review for a period of five years, generally after their
submission date. In accordance with the legal regulations in force in Romania, the periods under review
may be subject to additional controls in the future.
The Group’s management considers that it has accurately registered the amounts in the accounts
corresponding to taxes, levies and other State liabilities; however, the authorities may have a different
position than the Group.
Starting from January 1, 2007, after Romania joined the European Union, the Group had to comply with
the tax regulations of the European Union and implement the changes brought by the European
legislation. The way in which the Group has implemented such changes remains subject to tax audit for a
period of five years.
The latest control conducted by the Ministry of Public Finance covered the period up to January 1, 2010.
Therefore, the Group’s liabilities up to that date may be subject to a further verification.
(e) Economic environment risk
The Romanian economy is still having the characteristics of an emerging economy and there is a
significant degree of uncertainty regarding the future development of the political, economic and social
environment. The Group’s management attempts to estimate the nature of the changes that will occur in
the Romanian economic environment and their effect on the financial standing and operating and cash
flow result of the Group.
Among the characteristics of the Romanian economy are also a currency that is not fully translatable
abroad and a low degree of liquidity in the capital market.
The Group’s management cannot predict all of the effects of the crisis that will affect the Romanian
financial sector or the potential impact thereof on these financial statements. The Group’s management
considers that it has taken all the required measures for the Group to be sustainable and develop in the
current market conditions.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
44
6. MANAGEMENT OF SIGNIFICANT RISKS (continued)
(f) Operating risk
Operating risk is defined as the risk of registering losses or not realizing the estimated profit due to
internal factors such as the improper carrying out of internal activities, existence of improper personnel or
systems or due to external factors such as economic conditions, changes in the capital market,
technological advances. Operating risk is inherent to all of the Group’s activities.
The described policies for operating risk management considered any type of event that may cause
significant risks and modalities in which they may manifest, to eliminate or reduce financial or
reputational losses.
(g) Capital adequacy
The management policy regarding capital adequacy focuses on maintaining a robust capital base in order
to support the Group’s continued development and the achievement of its investment objectives.
The Group’s equity includes share capital, various types of reserves and retained earnings. As at
December 31, 2016, the Group registered equity in amount of RON 1.588.565.867 (December 31, 2016:
RON 1.360.446.253).
The Group or the Company do not form the object of capital adequacy legal requirements.
7. PURCHASES AND SALES OF SUBSIDIARIES
(a) Purchases of subsidiaries
In 2016, SIF Moldova participated in the subsidiaries’ increase of share capital as follows:
Tesatoriile Reunite SA Bucharest – in-kind contribution in total amount of RON 6.727.500
Opportunity Capital SA - in-kind contribution in total amount of RON 4.005.000.
SIF Moldova set itself to make investments in 2016 that require the development of existing majority
holdings (real estate), but also new investments through special entities (hotel industry, agriculture);
investment decisions have a degree of maturity/impact on the estimated profit on the long and medium
term.
(b) Sales of subsidiaries
Further to the restructuring and optimization plan, the Board of Directors of SIF Moldova approved in
March 2016 the restructuring of the architecture of the SIF group by eliminating level N-1, investment
management companies, further to which the subsidiaries kept their specific investment operator activity.
In 2016, the Group maintained its control over all subsidiaries.
As at December 31, 2016 Agribusiness Capital SA initiated the voluntary liquidation proceedings, further
to which SIF Moldova became a direct shareholder in Agrointens SA and Agroland Capital.
Opportunity Capital SA is in voluntary liquidation.
After the reporting period, the restructuring of group SIF Moldova will continue, in order to streamline
the business through new approaches leading to an improvement of the financial performance of the
portfolio of projects managed.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
45
8. FINANCIAL ASSETS AND LIABILITIES
Accounting classifications and fair values
The table below summarizes the carrying amounts and fair values of the Group’s financial assets and liabilities as at December 31, 2016:
In LEI Fincial assets at fair
value through the
profit and loss
account, on initial
aknowledgement
Available for sale Amortized cost Total accounting
value
Fair value
Cash and cash equivalents - - 7.570.471 7.570.471 7.570.471
Deposits at bank - - 128.163.158 128.163.158 128.163.158
Financial assets at fair value through the profit and
loss account 132.052.544 - - 132.052.544 132.052.544
Financial assets available for sale 1.299.085.923 1.299.085.923 1.299.085.923
Investments held to maturity - - 9.573.804 9.573.804 9.573.804
Other financial assets - - 16.026.552 16.026.552 16.026.552
Total financial assets 132.052.544 1.299.085.923 161.333.985 1.592.472.451 1.592.472.451
Dividends to pay - - 29.319.122 29.319.122 29.319.122
Loans - - 9.145.719 9.145.719 9.145.719
Other financial liabilities - - 11.201.400 11.201.400 11.201.400
Total datorii financiare - - 49.666.241 49.666.241 49.666.241
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
46
FINANCIAL ASSETS AND LIABILITIES (continued)
The table below summarizes the carrying amounts and fair values of the Group’s financial assets and liabilities as at December 31, 2015:
In LEI Financial assets at
fair value through
the profit and loss
account, on initial
aknowledgement
Available for sale Amortized cost Total accounting
value
Fair value
Cash and cash equivalents - - 5.512.013 5.512.013 5.512.013
Deposits at bank - - 99.706.272 99.706.272 99.706.272
Financial assets at fair value through the profit and
loss account 115.203.699 - - 115.203.699 115.203.699
Financial assets available for sale 1.124.199.137 1.124.199.137 1.124.199.137
Investments held to maturity - - 9.593.199 9.593.199 9.684.481
Other financial assets - - 22.461.687 22.461.687 22.461.687
Total financial assets 115.203.699 1.124.199.137 137.273.171 1.376.676.007 1.376.767.289
Dividends to pay - - 42.542.917 42.542.917 42.542.917
Loans - - 8.551.468 8.551.468 8.551.468
Other financial liabilities - - 11.486.935 11.486.935 11.486.935
Total datorii financiare - - 62.581.320 62.581.320 62.581.320
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
47
9. DIVIDEND INCOME
Dividend income is registered at gross value. The tax rates of dividends for the financial year ended
December 31, 2016 were 5% and nil (2015: 16%). Dividend income by main accounts is presented in the
table below:
In LEI 2016 2015
Banca Transilvania 86.043.802 -
SNTGN Transgaz 7.398.707 5.841.790
OMV Petrom - 2.410.709
Aerostar 1.910.879 2.004.698
Transelectrica 2.701.331 2.857.600
SIF Oltenia 3.738.805 3.415.483
SNGN Romgaz SA 7.155.000 2.992.500
Biofarm 2.147.315 2.013.108
Other 6.969.637 5.301.282
Total 118.065.476 26.837.170
10. INTEREST INCOME
În LEI 2016 2015
Interest income on deposits and current accounts 658.313 1.016.393
Interest income on held to maturity investments 620.701 675.033
Total 1.279.014 1.691.426
11. OTHER OPERATING REVENUES
In Lei 2016 2015
Revenue from production sale 32.016.004 28.357.071 Revenue from service delivery 697.852 471.179
Revenue from rents 3.457.782 3.450.849
Revenue from merchandize sale 8.733.700 4.453.832
Stock variation 4.277.197 -
Revenue from recovered debts 568.342 365.866 Revenue from damages, fines, penalties - -
Other operational revenue 7.447.997 1.298.821
Total 57.198.874 38.397.618
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
48
11. OTHER OPERATING REVENUES (continued)
In Income from sale of production, Mecanica Ceahlau accounts for 88 % with RON 28.219.699 (RON
25.233.657, namely 89% in 2015), representing the sale of own goods.
In Income from sale of merchandise, Mecanica Ceahlau accounts for 98% with RON 8.601.777 (RON
4.211.875 namely 95% in 2015) representing the sale of goods in distribution (tractors, herbicide
equipment, front loaders).
In Other operating revenues, SIF Moldova accounts for 41% with RON 3.073.751 (RON 251.881 namely 19%
in 2015), of which RON 2.415.314 represents revenues from assignment of litigating rights of Textila
Oltul.
The revenues from changes in inventories come from the capitalization of costs in project Baba Novac
Residence of Tesatoriile Reunite.
In Rental income, Tesatoriile Reunite registers RON 930.221 (RON 788.884 in 2015), followed by Casa SA
with RON 819.164 (RON 889,055) and Regal SA with RON 739.199 (RON 786,437 in 2015).
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
49
12. NET GAINS ON THE SALE OF ASSETS
In Lei 2016 2015
Net revenue from the sale of financial assets available
for sale 94.994.675 120.758.471
Net loss from the sale of financial assets at fair value
through the profit and loss account (246.914) 1.555.375
Total 94.747.761 122.313.846
Income from sales of shares classified as available-for-sale financial assets was in amount of RON
165.699.850 (2015: RON 190.689.588), the cost related thereto being RON 92.359.826 (2015: RON
85.661.134), of which RON 21.578.956 represents the fair value adjustment registered previously in the
revaluation reserve related to available-for-sale assets and transferred upon the sale to profit or loss. The
gain obtained was RON 94.994.675 (2015: RON 120.758.471). Such transactions from 2016 consisted
primarily in selling the shares held with Antibiotice, Banca Transilvania, Fondul Proprietatea and Sanex.
13. NET LOSS / (GAIN) ON THE REVALUATION OF THE ASSETS AT FAIR VALUE THROUGH
PROFIT OR LOSS
In LEI 2016 2015
Net loss/ (net earning from the re-evaluation of
financial assets held for trading (6.504.125) 3.974.231
Net loss / (net earnings) from the re-evaluation of
derived financial instruments 1.928 (1.989)
Total (6.502.197) 3.972.242
The net gain of RON 6.504.125 (2015: loss of RON 3.974.231) represents the difference from the
revaluation at fair value of shares and fund units held at fair value through profit or loss.
14. LOSSES (IMPAIRMENT REVERSALS) ON THE IMPAIRMENT OF ASSETS
In Lei 2016 2015
Losses (impairment re-run) from the impairment of
financial assets available for sale 47.274.294 1.953.011
Losses (impairment re-run) from the impairment of
other assets (208.538) -
Total 47.065.756 1.953.011
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
50
15. OTHER OPERATING EXPENSES
In LEI 2016 2015
Expenses with wages and other staff expenses 25.231.490 21.882.695
Expenses with external services 19.385.990 13.898.029
Expenses with commissions 6.107.346 6.612.597
Expenses for protocol and advertising 567.455 515.083
Other operational expenses 31.676.676 20.685.280
Total 82.968.956 63.593.684
Other operating expenses include expenses with the amortization of non-current assets, travel expenses
and telecommunications, expenses with repair and maintenance, etc. The average number of employees
for the financial year ended December 31, 2016 was 232 (2015: 297).
16. INCOME TAX
In LEI 2016 2015
Current profit tax
Current profit tax (16%) 5.684.079 17.104.670
Dividend tax (16%) 5.680.655 3.594.902
11.364.734 20.699.572
Deferred profit tax
Financial assets available for sale 124.209 4.713.523
Real-estate investments - 5.221
Financial assets at fair value through the profit and
loss account - (41.205)
Provisions for management benefits (451.723) (1.180.183)
Provisions for risks and other expenses 109.721 (1.115.448)
(217.793) 2.381.909
Total 11.146.941 23.081.481
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
51
16. INCOME TAX (continued)
The reconciliation between profit before tax and expense with income tax through profit or loss:
In LEI 2016 2015
Profit before taxation 133.588.694 120.750.015
Tax in compliance with the statutory tax rate of
16% (2015: 16%) 21.374.191 19.320.002
Profit tax effect of
non-deductible expenses 12.469.088 24.015.405
non-taxable income (22.454.788) (20.423.926)#NAME? 5.235.370
Registration and re-runs of time differences (241.550) 170.000
Profit tax 11.146.941 23.081.481
The effective income tax rate in 2016 is 8 % (2015 - 19%).
17. CASH AND CASH EQUIVALENTS
December 31,
2016 December 31,
2015
Current accounts in bank 303.263 74.000
Total cash and cash equivalents
7.267.208 5.438.013
7.570.471
5,512,013
The current bank accounts are permanently at the Group’s disposal and are not restricted.
18. BANK DEPOSITS
In LEI December 31,
2016 December 31,
2015
Term deposits 128.105.135 99.591.716
Attached receivables 58.023 60.420
Blocked deposits 54.136
Total deposits at banks
128.163.158
99.706.272
Bank deposits are permanently at the Group’s disposal and are not restricted.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
52
19. FINANCIAL ASSETS
a) Financial assets at fair value through profit or loss
In LEI 31st December
2016
31st December
2015
Fund units 20.976.907 21.305.471
Shares 111.075.637 93.898.228
Total 132.052.544 115.203.699
b) Available-for-sale financial assets
In LEI 31st December
2016
31st December
2015
Shares evaluated at fair value 1.218.635.508 1.068.259.739
Shares evaluated at estimated
fair value 6.593.197 18.481.586
Fund units evaluated at fair
value 73.857.217 37.457.813
Total 1.299.085.922 1.124.199.137
As at December 31, 2016 and December 31, 2015 the category of shares measured at fair value includes
primarily the value of the shares held with Banca Transilvania, BRD - Groupe Societe Generale S.A.,
OMV Petrom.
Shares at fair value have been measured by multiplying the number of shares held as at the balance sheet
date with the closing price on the last trading day of the reporting period.
The movement of available-for-sale financial assets in the financial years ended December 31, 2016 and
December 31, 2015 is presented in the table below: In LEI Shares evaluated at fair
value
Shares evaluated at
estimated value Fund units Total
31st December 2014 969.056.185 20.289.828 48.862.305 1.038.208.318
Net variation during the period 2.111.337 777.185 (10.721.988) (7.833.466)
Transfer between categories 290.568 (290.568) - -
Losses from impairment - (3.449.846) (682.504) (4.132.350)
Fair value modification 96.801.649 1.154.986 - 97.956.635
31st December 2015 1.068.259.739 18.481.586 37.457.813 1.124.199.137
Net variation during the period 49.959.639 (6.606.336) 35.017.494 78.370.797
Transfer between categories 4.477.402 (4.477.402) - -
Losses from impairment (3.338.111) (804.649) - (4.142.760)
Fair value modification 99.276.839 - 1.381.910 100.658.749
31st December 2016 1.218.635.508 6.593.197 73.857.217 1.299.085.922
Information on the inter-category transfer represents the net value of shares that migrated from the
category of shares measured at fair value/cost to the category of shares measured at cost/fair value, due to
the arising/fall of an active market for such instruments.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
53
19. FINANCIAL ASSETS (continued)
c) Held-to-maturity investments
In LEI 31st December
2016
31st December e
2015
Corporate bonds 9.455.884 9.463.379
Municipal bonds 117.920 129.820
Total 9.573.804 9.593.199 d) Fair value hierarchy
The table below analyzes the financial instruments carried at fair value depending on the measurement
method. The fair value levels depending on the input in the measurement model have been defined as
follows:
Level 1: quoted prices (not adjusted) in active markets for identical assets or liabilities
Level 2: inputs other than the quoted prices included in Level 1, observable for assets or liabilities
either directly (e.g.: prices), or indirectly (e.g.: price derivatives)
Level 3: inputs for assets or liabilities that are not based on observable market data (unobservable
inputs). 31st December 2016
In LEI Level 1 Level 2 Level 3 Total
Financial assets at fair value
through the profit and loss
account 132.052.544 - - 132.052.544
Financial assets available for
sale 1.228.527.354 70.558.569 1.299.085.922
1.360.579.898 - 70.558.569 1.431.138.466
31st December 2015
In LEI Level 1 Level 2 Level 3 Total
Financial assets at fair value
through the profit and loss
account 115.203.699 - - 115.203.699
Finacial assets available for sale 1.057.907.804 - 21.666.096 1.079.573.901
1.173.111.503 - 21.666.096 1.194.777.600 Change in level 3 fair value
In LEI2016 2015
On January 1st 21.666.096 25.268.573
Total loss acknowledged in the profit or
loss account 950.290 (2.051.779)
Total earnings acknowledged in other
overall result elements 46.465.800 -
Purchases during the period 313.533 977.911
Sales during the period (6.970) (6.667.987)
Level 3 transfers from fair value hierarchy 1.169.820 4.139.378
On 31st December 2016/2015 70.558.569 21.666.096
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
54
19. FINANCIAL ASSETS (continued)
c) Held-to-maturity investments (continued)
Transfers to fair value level 3 represent listed investments for which the company considered that there is
no active market and the company prepared valuation reports for December 31, 2016. The main
transferred companies are: Iasitex, Chimcomplex, Rulmenti, etc.
In 2016, the Company classified in Level 1 securities measured based on the closing prices of the BSE,
TSX stock exchanges on the last trading day. This measurement level includes fund units measured based
on their net asset unit value certified by the fund depository and shares without active market measured at
the last quoted price.
The investments classified in Level 3 have been measured by independent valuers, based on the financial
information provided by the monitoring departments, using measurement techniques that maximize the
use of relevant observable inputs and minimize the use of unobservable inputs, with the management’s
supervision and review, which makes sure that all inputs underlying the valuation reports are accurate and
adequate. Level 3 also includes investments that have not been subject to valuation, their amount being
insignificant.
Financial
assets
Fair value as
at December
31, 2016
Measurement
method
Unobservable input,
value ranges
Unobservable input vs.
Fair value – sensitivity
Listed
majority
holdings
25,750,352
Income-based
approach –
discounted cash
flow method
Weighted average cost of
capital 8.97% - 11.29%
The lower the weighted
average cost of capital, the
higher the fair value, and
vice versa.
Discount for lack of
control, values ranging
from 7.05% to 10.5%
The lower the discount for
lack of control, the higher
the fair value and vice versa.
Discount for lack of
liquidity, values ranging
from 9.8% to 16.8%
The lower the discount for
lack of liquidity, the higher
the fair value and vice versa.
Long-term income rate of
growth: max. 2%
The higher the long-term
income rate of growth, the
higher the fair value and
vice versa.
Unlisted
minority
holdings
32,780,287
Income-based
approach –
discounted cash
flow method
Weighted average cost of
capital 8.4% - 12.75%
The lower the weighted
average cost of capital, the
higher the fair value, and
vice versa.
Discount for lack of
control, values ranging
from 7.71% to 20.46%
The lower the discount for
lack of control, the higher
the fair value and vice versa.
Discount for lack of
liquidity, values ranging
from 9.8% to 16.8%
The lower the discount for
lack of liquidity, the higher
the fair value and vice versa.
Long-term income rate of
growth: max. 3%
The higher the long-term
income rate of growth, the
higher the fair value and
vice versa.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
55
Unlisted
minority
holdings
410,468
Market approach
– comparable
companies
EBITDA multiple - max.
9.7
The higher the EBITDA
multiple, the higher the fair
value and vice versa.
Discount for lack of
liquidity, values ranging
from 9.8% to 16.8%
The lower the discount for
lack of liquidity, the higher
the fair value and vice versa.
TOTAL 58,941,107
The valuation model applied determines in a consistent manner a single impairment model applicable to all
financial instruments.
EBITDA multiple: means the most relevant multiple used in measuring a participation and is calculated
using information available for comparable listed companies (in the same geographical location, size of
industry, target markets and other factors that the valuers consider relevant).
The trading multiples for comparable companies are determined by dividing the company’s net worth by
the related EBITDA ratio and then applying the discounts, for reasons such as lack of liquidity and other
differences among the companies under review and the valued company.
Discount for lack of liquidity: means the discount applicable to comparable market multiples, to reflect the
liquidity differences between the portfolio company subject to valuation and the comparable companies
considered. The valuers estimate the discount for lack of liquidity based on their professional judgment,
considering the market conditions for liquidity and the particularity of the assessed company.
Discount for lack of control: means the discount applied to reflect the absence of control and is used in the
discounted cash flow method for determining the value of minority interests in the assessed company’s
equity.
Weighted average cost of capital: means the cost of the company’s capital in nominal terms (inflation
included), based on a Capital Asset Pricing Model. All capital sources – shares, bonds and other long-term
debts – are factored in in the calculation of the weighted average cost of capital.
Net price / profit (P/E): the P/E ratio is a prospective market ratio which calculates the value of an
investment relative to the resulting profits, by share price to net share profit. Such ratio shows how willing
the market is to pay for a company based on its current profits. Investors often use this ratio to assess the
market value of an investment based on future estimated profits per share.
Price / book value of equity (P/BV): the P/BV ratio assesses the market price of a company relative to
equity (net asset). Such ratio reflects the ratio that investors are willing to pay for the value of the net asset
per share. The P/BV ratio varies significantly depending on the field of activity. A company that requires
more assets (for instance, a manufacturing company that has production spaces and equipment) will
generally register a Price/ book value of equity significantly lower than in the case of a company whose
revenues come from services provision (for instance, consulting company).
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
56
19. FINANCIAL ASSETS (continued)
e) Reserve from fair value revaluation of available-for-sale financial asset net of deferred tax
In LEI 2016 2015
On January 1st 415.684.659 351.740.408
Net earnings from the revaluation of
financial assets available for 175.618.159 173.552.873
(Earnings) / Loss corresponding to the
transfer into the profit or loss account
following the sale of financial assets
available for sale
(86.419.557) (110.633.603)
Effect of the loss in the profit and loss
account from the impairment of financial
assets available for sale
40.227.661 1.024.981
On december 31st 545.110.922 415.684.659
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
57
20. INVESTMENT PROPERTY
In LEI 31st December
2016
31st December
2015
Balance on January 1st 11.213.326 11.250.815
Fair value changes - -
Increases (decreases) 116.565 (37.489)
Balance on 31st December 11.329.891 11.213.326
The increase means the result of the revaluation of investment property at fair value determined in valuation
reports as at December 31, 2016.
The fair value valuation of investment property is conducted by independent external valuers, members of the
National Associations of Valuers in Romania (ANEVAR), except for the investment property held by
Mecanica Ceahlau, which determined the market value of investment property in amount of RON
465.631 through its own committee of specialists.
Fair value is based on market price quotations, adjusted, if needed, so as to reflect the differences in the nature,
location and conditions of such asset. Such valuations are revised periodically by the Company’s
management.
The last fair value measurement of the Company’s investment property was made as at December 31, 2016 by
Evaluări Consultanţă Management ECM SRL Bacău, for Casa SA Bacău the latest fair value
measurement of investment property was conducted as at December 31, 2012 by Evaluări Consultanţă
Management ECM SRL Bacău.
The investment property held as at December 31, 2016 are classified in Level 3 fair value.
21. INTANGIBLE AND TANGIBLE ASSETS
Gross accounting value January 1st 2016 Increases Decrases
31st December
2016
Intangible assets 7.294.674 4.509.874 1.441 11.803.108
Intangible assets 726.158 - - 726.158
Pending intangible assets
8.020.832 4.509.874 1.441 12.529.265
Total
Tangible assets 34.601.882 420.938 7.927.216 27.095.605
Land 28.810.572 495.240 580.530 28.725.282
Buildings 21.625.991 630.677 108.628 22.148.040
Equipment 7.640.660 1.227.068 540.028 8.327.700
Transportation means 706.541 38.195 69.543 675.193
Other fixed means 610.905 1.491.960 716.649 1.386.216
Pending tangible assets
93.996.550 4.304.079 9.942.593 88.358.036
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
58
21. INTANGIBLE AND TANGIBLE ASSETS (continued)
Cummulated amotization 1st January 2016 Increases Decreases
31st December
2016
Intangible assets 2.544.339 491.072 1.441 3.033.970
Intangible assets
2.544.339 491.072 1.441 3.033.970
Total
Tangible assets - - - -
Lands 2.945.908 2.115.267 690.527 4.370.648
Buildings 12.054.868 - - 12.054.868
Equipment 1.148.925 145.240 26.460 1.267.705
Transportation means 495.256 21.410 332 516.334
Other fixed means
16.644.956 2.281.917 717.319 18.209.555
Total
Net accounting value 2.772.990 as per BS 9.495.295 Cheltuieli cu
amortizarea 9.495.295
Intangible assets 70.148.481
Tangible assets as per BS 70.148.481
In 2016, Agrointens purchased land in total amount of RON 413.803. The decrease in the land value is
due to the transfer of the land held by Tesatoriile Reunite on Street Eufrosina Popescu, in the category of
goods in progress, in order to execute the Baba Novac real estate project.
Impairment losses recognized in profit or loss were classified to expenses with the
amortization/depreciation and impairment of non-current assets.
The carrying amount of tangible assets mortgaged or pledged under the loan contracts entered into by the
Group entities as at December 31, 2016 amounts to RON 24.419.212 (December 31, 2015: RON
20.900.000).
The net book value of fixed assets purchased in finance lease as at December 31, 2016 is RON 445,541.
22. OTHER ASSETS
In LEI 31st December
2016
31st December
2015
Vairous debtors 74.358.091 75.063.289
Divideds to collect -
Other assets 26.203.596 15.927.928
Minus adjustment for various
debtors impairment (58.331.538) (52.601.602)
Total 42.230.149 38.389.615 Sundry debtors include primarily amounts arising from final court decisions in amount of RON
56.496.561. For doubtful amounts, the Group calculated impairment allowances.
Other assets include primarily inventories from subsidiaries Mecanica Ceahlau and Tesatoriile Reunite.
They are detailed herein below:
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
59
22. OTHER ASSETS (continued)
In LEI 31st December
2016
31st December 2015
Raw materials and materials 1.398.854 1.427.267
Production in manufacturing process 14.100.367 1.986.556
half-staff 64.112 -
Finisches products 9.423.228 10.616.461
Commodities 2.044.870 928.815
Adjustment for value impairment (264.826) (138.702)
Stocks at net value 26.766.605 14.820.397
The impairment allowance for sundry debtors can be analyzed as follows:
În LEI 31st December
2016
31st December
2015
On January 1st (52.601.602) (40.132.128)
Setup (5.838.591) (13.630.085)
Rerun 108.655 1.160.611
On december 31st (58.331.538) (52.601.602)
23. BORROWINGS
As at December 31, 2016, the Group registered outstanding borrowings of RON 9.145.719.
Hotel Sport Cluj signed with Banca Transilvania a loan contract in December 2015, the value of the
mortgaged plant, property and equipment being RON 20.900.000. The loan was contracted for a 10-year
term, at a variable annual interest rate of 4.42%.
24. DIVIDENDS PAYABLE
În LEI 31st December
2016
31st December
2015
Dividends payable for 2012 642 24.012.576
Dividends payable for 2013 6.866.746 7.044.594
Dividends payable for 2014 10.963.755 11.485.747
Dividends payable for 2015 11.487.979 -
Total dividende de plată 29.319.122 42.542.917 Dividends payable not collected within 3 years from the date of their declaration are annulled for
exceeding the limitation period, according to law.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
60
25. PROVISIONS FOR RISKS AND CHARGES
În LEI 31st December
2016
31st December
2015
Provision for litigation 5.020.583 4.290.795
Total 5.020.583 4.290.795
Regarding the amounts collected by the Group through court officers, AAAS filed legal proceedings
contesting the enforced amounts. The provisions for litigation represent amounts collected by the Group
through court officers between 2011 and 2016 and subsequently contested by AAAS.
The litigation provision can be analyzed as follows:
În LEI 31st December
2016
31st December
2015
1-Jan 4.290.795 5.397.486
Charge 2.525.733 2.035.594
Release (1.795.945) (3.142.285)
31-Dec 5.020.583 4.290.795
26. DEFERRED INCOME TAX LIABILITIES
Deferred income tax liabilities as at December 31, 2016 are triggered by the elements detailed in the table
below:
In LEI Assets Liabilities Net
Intangible assets - - -
Tangible assets (169.005) - (169.005)
Financial assets at fair value through the profit and
loss account (899.476) - (899.476)
Financial assets available for sale 437.891.557 - 437.891.557
Real-estate investments 2.289.544 - 2.289.544
Provisions for management benefits - (10.052.459) (10.052.459)
Provisions for litigations and other provisions - (3.452.286) (3.452.286)
Other assets (12.236.871) - (12.236.871)
Total 413.371.004
Temporary net differences 16% quota 413.371.004
Liabilities regarding deferred profit tax 66.139.361
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
61
26. DEFERRED INCOME TAX LIABILITIES (continued)
Other assets includes the difference between the accounting base and the fiscal base for goods in progress
existing at Tesatoriile Reunite transferred from property, plant and equipment.
Deferred income tax liabilities as at December 31, 2015 are triggered by the elements detailed in the table
below:
Assets
Liabilities
Net
Intangible assets - - -
Property, plant, equipment - 12,057,243 (12,057,243)
Financial assets at fair value through profit or loss - 257,529 (257,529)
Available for sale financial assets 358,142,877 (2,491,219) 360,634,096
Investment property 3,033,767 - 3,033,767
Provision for management benefices (7,376,146) - (7,376,146)
Provisions for litigation and other provisions (3,116,106) - (3,116,106)
Total
340,860,839
Net temporary differences - 16% 340,860,839
Deferred tax liability
54,537,734
The changes in outstanding deferred tax liabilities for 2016 and 2015 are as follows:
December 31,
2016 December 31,
2015
Balance as at January 1 54.537.734 39.961.977
Changes through profit or loss (217.793) 2.345.901
Changes through other comprehensive income 11.819.420 12.229.856
Balance as at December 31
66.139.361
54.537,734
As at December 31, 2016, deferred income tax recognized directly by reducing equity amounts to RON
66.357.154 (December 31, 2015: RON 55.147.982), being generated by tangible assets and available-for-
sale financial assets measured at fair value.
27. OTHER LIABILITIES
In LEI December 31,
2016 December 31,
2015
Suppliers – invoices not received 725.405 807.279
Current income tax liability 543.845 2,852.688
Tax and duties 1.148.940 2,997.841
Profit sharing liability 10.052.459 7,376.146
Other liabilities 856.978 4,110,789
Total
13.327.627
18.144.743
Profit-sharing liabilities represent the amounts that will be distributed from the net profit of the year to
employees according to the provisions of the Collective Employment Contract and directors according to
management contracts. Current income tax liabilities have been paid by the Group on term.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
62
28. EQUITY AND RESERVES
(a) Share capital
The Group’s shareholding as at December 31, 2016 and December 31, 2015 is as follows:
31st December 2016 No. of
shareholders
No. of shares Amount
(RON)
(%)
Natural individuals 5.768.263 453.939.226 45.393.923 43%
Natural persons 269 584.239.950 58.423.995 57%
Total 5.768.532 1.038.179.176 103.817.918 100%
31st December 2015 No of
shareholders
No. of shares Amount
(RON)
(%)
Natural persons 5.774.995 461.331.672 46.133.168 44%
Companies 304 576.847.504 57.684.750 56%
Total 5.775.299 1.038.179.176 103.817.918 100%
All shares are ordinary, subscribed and fully paid in as at December 31, 2016. All shares entitle to the
same voting right and have a nominal value of RON 0.1/share. The number of shares authorized for
issuance equals the number of shares issued. In 2016 and 2015, there were no changes in the number of
shares issued.
Thus, the share capital in 2016 is RON 103.817.918 (December 31, 2015: RON 103.817.918).
The right to hold shares up to 1% of the share capital has been amended by Law 11 of January 6, 2012
(effective from January 13, 2012), to 5% of the share capital, namely 51.908.959 shares.
(b) Reserves from the revaluation of available-for-sale financial assets
Such reserve includes the net cumulated changes in the fair values of available-for-sale financial assets
from the date they are classified as such to the date they are derecognized or impaired.
Reserves from the revaluation of available-for-sale financial assets are registered at a value net of the
related deferred tax. The value of deferred tax recognized directly through the reduction of equity is
presented in Note 25.
(c) Legal reserves
According to the legal requirements, the Company establishes legal reserves in amount of 5% of the profit
registered according to RAS, up to 20% of the share capital. The value of the legal reserve as at
December 31, 2016 is RON 27.392.670 (December 31, 2015: RON 25.828.070).
Legal reserves cannot be distributed to shareholders.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
63
EQUITY AND RESERVES (continued)
(d) Dividends
In 2016, the Group declared dividends in amount of RON 46.250.883 related to 2015 (2014: RON
52.531.866 related to 2014), and RON 0.04/share (2015: RON 0.05/share).
In 2016, the Group annulled the distribution of dividends in amount of RON 23.678.295 related to 2012
(2015: RON 21.719.773 related to 2011).
(e) Other items of equity – Own shares
In 2016, the Company completed the last program of buy-back of SIF2 shares rolled out between August
6, 2015 and February 2, 2016 in accordance with SIF Moldova EGMS Resolution no. 4/April 1, 2015.
The cumulated results of such operation are as follows:
- maximum number of shares to acquire 10.381.791 (1% of the share capital);
- the average price per purchase is RON 0,7939;
- the total value of shares is RON 8.242.350.
- objective: allocation of shares to administrators and employees, according to law.
Out of such shares, the Company allocated to employees and directors a number of 3.963.711 (0.3818%
of the share capital) in total amount of RON 3.151.547 representing the profit sharing for 2015 – share
component.
By EGMS Resolution no. 4/April 25, 2016 SIF Moldova approved the second buy-back program of
maximum 1% of the share capital with the aim of allocating shares to directors, officers and employees,
according to law and the constitutive act:
- the maximum number of shares to acquire 10.381.791 (1% of the share capital);
- maximum acquisition price RON 62,5 considering the completion of the nominal value
consolidation;
- maximum duration of the program: 18 months from the publication of the EGMS in the Official
Journal Part IV;
- objective: allocation of shares to administrators and employees, according to law and the
constitutive act.
As at December 31, 2016 under such program, 7.006.423 shares in total amount of RON 5.215.869 were
purchased (0.6749% of the share capital), at an average price of purchase of RON 0.7445/share.
The total shares purchased in 2016 amount to 8.285.570 representing 0,7981% of the share capital (2015
– 9.102.628 representing 0,8768% of the share capital) in total amount of RON 6.497.101 (2015 – RON
7.378.192).
Total own shares of the Company as at December 31, 2016: 13.424.487 representing 1,2931% of the
share capital (2015 – 9.102.628 representing 0,8768% of the share capital).
The buy-back program complies with the exemption conditions provided by the legislation regarding
market abuse, which allow transactions in the issuer’s closed periods (art. 5(1) of EU Regulation no.
596/2014; art. 4(2) letters a) and b) of EU Delegated Regulation no. 1052/2016).
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
64
28. EQUITY AND RESERVES (continued)
(e) Other items of equity – Own shares (continued)
The outset of the Stock Option Plan program for 2016 are:
the OGMS of April 25, 2016 approved the roll-out of stock option plans (SOP) for the gratuitous
allocation of SIF2 shares to the directors, officers and employees of SIF Moldova, from the
shares not used in the buy-back program approved EGMS of April 1, 2015 and the shares to be
buy-bought through the program submitted to the approval of the EGMS of 25/26 April 2016, of
maximum 16.000.000 shares of which maximum 10.400.000 shares will be used for 2016.
The Board of Directors was authorized to take all the measures to put into practice the resolution
within the legal and statutory limits, by going through all the stages and formalities required to
implement the programs.
A SOP, as part of the benefit plan for administrators, managers and employees for 2016 (variable
remuneration), may be rolled out within the limits provided by the Constitutive Act and the
Collective Employment Contract for 2016-2017 and in accordance with the AFIA legislation,
namely:
- for directors and officers – the actual level of the benefit plan is determined by the Board of
Directors, after the General Meeting of Shareholders approves the annual financial statements
for 2016
- for employees – the shares may be granted according to law and the remuneration policy
established annually by the Board of Directors
- at least 50% of the variable remuneration shall consist of SIF2 shares (i.e. granted under the
SOP).
The number of shares that will be allocated to each beneficiary shall be established when the
beneficiaries’ right is granted (date of conclusion of the share-based payment agreement between SIF
Moldova and beneficiaries), after the approval of the annual financial statements for 2016 by the General
Meeting of Shareholders. The right to receive shares under a free title shall be exercised within minimum
12 months from signing the share-based payment agreement between the company and beneficiaries.
29. Non-controlling interest
Represent a share of the profit or loss and the net assets not held, directly or indirectly, by the Group and
presented in the consolidated statement of profit or loss and other comprehensive income and in equity in
the consolidated statement of financial position, separately from the equity of the parent company’
shareholders. The changes in holdings in subsidiaries which do not result in a loss of control are
accounted for as transactions between shareholders in their capacity of shareholders.
December 31,
2016 December 31,
2015
Balance as at January 1 21.382.638 25.512.671
Profit attributable to non-controlling interests 780.060 887.406
Changes in the Group’s structure (1.329.460) (5.017.439)
Balance as at December 31
20.833.238 21.382.638
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
65
30. EARNINGS PER SHARE
The earnings per share have been calculated based on the profit attributable to ordinary shareholders and
the average weighted number of ordinary shares:
December 31,
2016 December 31,
2015
Profit attributable to ordinary shareholders 123.298.020 96.781.127
Average weighted number of ordinary shares 1.038.179.176 1.038.179.176
Basic earnings per share
0,119
0,093
Diluted earnings per share equal the basic earnings per share, as the Group has not registered potential
ordinary shares.
31. CONTINGENT COMMITMENTS AND LIABILITIES
(a) Legal proceedings
As at December 31, 2016, the Company was involved in 32 lawsuits as defendant and 103 lawsuits as
plaintiff.
The lawsuits in which the Company acts as either defendant or plaintiff and whose object influence the
Company’s patrimony are registered in accounting.
Out of the 103 pending lawsuits in which the Company acts as plaintiff, 65 files relate to AAAS disputes.
For the amounts claimed by the Company and obtained by final and irrevocable court decisions, the
Company registered in accounting AAAS receivables – for a part of which the enforcement proceedings
have been filed.
Out of the 32 files in which the Company is involved as defendant, 15 files have been opened by AAAS
further to the enforcements executed by SIF Moldova.
The lawsuits filed by AAAS against the enforcements executed by the Company are detailed below:
Total contingencies at the beginning of the period RON 20.065.528
Disputes initiated in 2016 RON 4.391.336
Court rulings in favor of SIF RON 13.332.558
Contingent liabilities as at 31.12.2016 RON 11.124.306
Out of the total contingent assets registered as at December 31, 2016 in amount of RON 23.474.435,
RON 7.981.037 represents the counter value of the agreement for the takeover of litigating rights
concluded between Textila Oltul and SIF Moldova, RON 3.644.554 represents the counter value of shares
and interest owed by Vastex after SIF Moldova’s withdrawal from the shareholding, and RON 634.672
represents amounts claimed by SIF Moldova in lawsuits against AAAS, having as their object the
recovery of trial expenses and damages claimed in connection with amounts obtained in lawsuits.
Amounts representing contingent assets will be registered in the balance sheet when a final and
irrevocable court decision is obtained or when they are received.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
66
31. CONTINGENT COMMITMENTS AND LIABILITIES (continued)
(b) Environment contingencies
Environment regulations are still developing in Romania, and the Company has not registered any
liabilities as at December 31, 2016 and December 31, 2015 for any expected costs, including legal and
consulting fees, site surveys, the design and implementation of recovery plans, related to environmental
matters.
The Company’s management does not deem significant the expenses with any environmental matters.
(c) Transfer pricing
The Romanian tax legislation has been providing rules on transfer pricing between affiliates ever since
2000. The current legislative framework defines the principle of “market value” for transactions between
affiliates as well as the methods of determining transfer prices. Thus, it is probable that the tax authorities
should conduct verifications of the transfer pricing to verify that the tax result and/or customs value of
imported goods is not distorted by the effect of the prices practiced in the relations with affiliates. The
Group cannot measure the result of such verifications.
(d) Other contingent commitments and liabilities
As at December 31, 2016, subsidiary Mecanica is involved in 52 lawsuits as plaintiff for the receivables
not received, for which is established impairment allowances of 100%, namely RON 400.140 and 91
lawsuits in which it acts as defendant (of which 90 lawsuits related to labor disputes). The Company
established an allowance of RON 7.100 for the lawsuits against MTM Proiect Construct SRL (contract
no. 28/15.05.2014).
32. TRANSACTIONS AND BALANCES WITH RELATED PARTIES
Associates of the Group
The balances and transactions between the Group members were removed in the consolidation process
and are not disclosed in this note.
As at December 31, 2016 and December 31, 2015, the Group has not registered associates.
Key management personnel
December 31, 2016
The members of the Board of Directors of SIF Moldova S.A. are: Ceocea Costel (President and CEO),
Doros Claudiu (Vice-president and Deputy CEO), Catalin Jianu Dan Iancu (Head of Steering Committee)
Horia Ciorcila, Radu Hanga, Octavian Claudiu Radu and Gheorghe Albu.
December 31, 2015
The members of the Board of Directors of SIF Moldova S.A. are: Ceocea Costel (President and CEO),
Doros Claudiu (Vice-president and Deputy CEO), Catalin Jianu Dan Iancu (Head of Steering Committee)
Horia Ciorcila, Radu Hanga, Octavian Claudiu Radu and Gheorghe Albu.
SIF MOLDOVA SA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
(all amounts are expressed in RON, unless specified otherwise)
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32. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (continued)
The Group has not concluded transactions with affiliates nor has it registered outstanding amounts in
relation to them. The Group has not received or granted guarantees in favor of any related party.
The salaries and allowances paid or payable to the key management personnel as at December 31, 2016
amounted to RON 6.669.225 (December 31, 2015: RON 5.583.484).
Directors received profit-sharing payments in amount of RON 5.329.766 (December 31, 2015: RON
7.114.443).
As at December 31, 2016, the members of the Board of Directors held shares in SIF Moldova in total
amount of 14.059.070 shares accounting for 1,35% of the share capital (as at December 31, 2015 they
held 11.289.727 shares representing 1,09% of the share capital).
33. SUBSEQUENT EVENTS
In January 2017, the voluntary liquidation and de-registration of Opportunity Capital SA (99.99%) were
registered.
Further to such process, SIF Moldova registered ownership interests in Hotel Sport SA.
The consolidated financial statements were approved by the Board of Directors on June 29, 2017 and
were signed on its behalf by: