Annual Report of the Administrator S.A.I
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ANNUAL REPORT OF THE ADMINISTRATOR S.A.I. MUNTENIA INVEST S.A. ON SIF MUNTENIA S.A.’S ACTIVITY IN 2020 Prepared in accordance with Law no. 24/2017 on issuers of financial instruments and market operations, Law 74/2015 on managers of alternative investment funds, FSA Regulations no. 5/2018 regarding the issuers of financial instruments and market operations, the Bucharest Stock Exchange Code - Regulated Market Operator - and Rule no. 39/2015 for the approval of the Accounting Regulations compliant with the International Financial Reporting Standards, applicable to entities authorized, regulated and supervised by the Financial Supervisory Authority in the Financial Instruments and Investments Sector Reporting date: 31.12.2020 GENERAL INFORMATION Societatea de Investiții Financiare Muntenia S.A. (hereinafter reffered to as “SIF COMPANY NAME Muntenia” or “The Company”) • Tax Identification Code 3168735 • Trade Register Number J40/27499/1992 REGISTRATIONS • LEI Code 2549007DHG4WLBMAAO98 • FSA Register number PJR09SIIR/400005 78,464,520.10 lei – subscribed and paid-up share capital SHARE CAPITAL 784,645,201 – issued shares, under circulation 0.1 lei – nominal value CHARACTERISTICS OF THE SHARES Common, nominative, indivisible, dematerialized REGULATED MARKET ON WHICH Bucharest Stock Exchange, main segment, premium tier, SIF4 symbol THE SECURITIES ISSUED ARE TRADED The main field of activity is, according to the classification of activities in the national economy (CANE): financial intermediation except insurance and pension fund activities (CANE code 64), and the main object of activity is: Mutual funds and other similar financial entities (CANE code 6430): • making financial investments in order to maximize the value of its own MAIN ACTIVITY shares, in accordance with the regulations in force; • managing the investment portfolio and exercising all the rights associated with the instruments in which it is invested; • risk management • other ancillary and adjacent activities, in accordance with the regulations in force. SHAREHOLDING STRUCTURE 100% private FREE-FLOAT 100% DEPOSITARY AND CUSTODIAN BRD Groupe Societe Generale SERVICES SHARES AND SHAREHOLDERS Depozitarul Central S.A. REGISTER FINANCIAL AUDITOR KPMG Audit S.R.L. Romania, Bucharest, 46-48 Serghei Vasilievici RahmaninovSt., nr.46-48, ground CONTACT floor, room 2, sector 2, code 020199 Tel: +40 213 873 210 Fax: +40 213 873 209 www.sifmuntenia.ro e-mail: [email protected] This report is a translation from its Romanian version. In case of any difference between the Romanian and the English versions, the Romanian version shall prevail TABLE OF CONTENTS 1 GENERAL INFORMATION .............................................................................................................................................. 1 2 ECONOMIC ENVIRONMENT .......................................................................................................................................... 2 3 IMPORTANT EVENTS RELATED TO THE COMPANY’S ACTIVITY DURING 2020 .............................................................. 5 4 ACTIVITY ANALYSIS ....................................................................................................................................................... 6 4.1 SHARES SUB-PORTFOLIO ..................................................................................................................................... 9 4.2 SUBSIDIARIES ..................................................................................................................................................... 17 4.3 OTHER SUB-PORTFOLIOS................................................................................................................................... 19 5 LITIGATIONS ................................................................................................................................................................ 20 6 RISK MANAGEMENT DURING 2020 ............................................................................................................................ 21 7 SHARES ISSUED BY THE COMPANY ............................................................................................................................. 27 8 CORPORATE GOVERNANCE ........................................................................................................................................ 29 9 FINANCIAL ACCOUNTING STATEMENT ....................................................................................................................... 42 10 EXECUTION OF THE BUDGET OF REVENUES AND EXPENDITURES.............................................................................. 47 11 SUBSEQUENT EVENTS ................................................................................................................................................. 48 12 PROSECTS FOR 2021 ................................................................................................................................................... 48 13 ANNEXES ..................................................................................................................................................................... 50 Annual Report of SIF Muntenia S.A. for the 2020’s financial year 1 GENERAL INFORMATION SIF Muntenia S.A. (hereinafter referred to as “the Company”) is a Romanian legal entity, incorporated as a joint stock company with wholly private capital. The operation of the Company is regulated by the provisions of ordinary and special Romanian laws applicable in the field of investment companies and the Romanian capital market. According to the old classification of the Subsections of Section no. 91, until 23rd July 2020, inclusive, the Company was registered with the Financial Supervisory Authority (hereinafter referred to as “FSA”) in the Register of financial instruments and investments in the section of Alternative or closed type investment companies under no. PJR09SIIR / 400005 of 15.06.2006. At the date of publication of this report, the documents for the Company's approval as an Alternative Investment Fund dedicated to retail investors are under authorization by the FSA. The company operates in Romania in accordance with the provisions of the Companies Law no. 31/1990, Law no. 297/2004 on the capital market, Law no. 74/2015 on the administrators of alternative investment funds and Law no. 24/2017 on issuers of financial instruments and market operations. The Company's depositary is BRD Société Générale S.A. (hereinafter referred to as the “Depositary”). During 2020 there were no reorganizations, mergers or divisions of the Company. The acquisitions and disposals of assets carried out by the Company during 2020, refer to the transactions of sale and purchase of financial securities. Details of these transactions are presented below in Chapter 4 of this Report. During the period ended 31 December 2020, the Company continued to meet the conditions to be an investment entity. There were no changes in the classification criteria as an investment entity. In applying the investment policy of the Company, SAI Muntenia Invest S.A. (hereinafter referred to as “the Administrator”) does not perform securities financing transaction (SFT) operations nor does it use total return swap instruments, as defined in Regulation (EU) no. 2015/2365 of the European Parliament and of the Council of 25 November 2015 on the transparency of financing operations through financial instruments and the transparency of re- use and amendment of Regulation (EU) no. 648/2012. 1 the new denominaion of Subsection no. 9 is AIFRI - Alternative investment funds for retail investors established in Romania 1 Annual Report of SIF Muntenia S.A. for the 2020’s financial year 2 ECONOMIC ENVIRONMENT The event that marked the year 2020 was the outbreak of the COVID-19 pandemic, with a strong socio-economic impact, which globally became the largest source of disturbance of the economic activity. To a large extent, the year 2020 was characterized by the decrease of financial markets, interruptions of economic activities that led to the decrease of production and consumption, the increase of unemployment, increase of budget deficits, etc. Due to the specifics of the activity carried out, the Company's performance is affected both by the changes that take place in Romania and by the events that take place globally, in terms of the contagion effect. The events presented in this chapter had a negative effect on the Company's performance, the details being presented in this Report. INTERNATIONAL ECONOMIC ENVIRONMENT The COVID-19 virus appeared in December 2019 in China, spreading rapidly in January 2020 in the Wuhan region. Initially, the spread of COVID-19 led to a sharp slowdown in the economic activity in China, but the impact spread through financial markets and commodity channels, resulting in massive declines in energy prices (especially oil) and metals, affecting global trade flows, amid much lower demand from China and the decline in tourism / HORECA activity, due to strict measures imposed by states to prevent the spread of the virus. Although the response of the European Union (EU) Member States to the COVID-19 virus has been relatively rapid and has included measures in support of those affected in some Member States, the EU and euro area economies have felt strongly the effects of the crisis caused by the COVID-19 pandemic. The emergence, earlier than anticipated, of effective anti-COVID-19 vaccines has paved the way