Report of the Board of Directors of SIF Banat-Crișana · REPORT OF THE BOARD OF DIRECTORS OF SIF BANAT-CRIȘANA FOR 2012 ... The NBR draft data show that the direct net foreign ...

FREE TRANSLATION1

REPORT OF THE BOARD OF DIRECTORS OF SIF BANAT-CRIȘANA FOR 2012 FINANCIAL YEAR |1

1TRANSLATOR’S EXPLANATORY NOTE: The above translation of the Report of the Board of Directors is provided as a free

translation from Romanian which is the official and binding version.

MAIN FINANCIAL AND OPERATIONAL INFORMATION 2

1. ANALYSIS OF THE ACTIVITY OF SIF BANAT-CRIȘANA 3

General information 3

The economic environment in 2012 4

The portfolio managed by SIF Banat-Crișana 6

Net assets value 6

Analysis of the portfolio 7

The investment activity 11

The research activity 12

Risk management 13

Human resources 16

2013 Outlook 17

2. THE MARKET OF THE SECURITIES ISSUED BY SIF BANAT-CRIȘANA 18

The characteristics of shares issued 18

SIF1 shares on Bucharest Stock Exchange 19

Dividends 19

3. CORPORATE GOVERNANCE 20

Company management 20

Observing the shareholders rights 26

Transparency in communication 28

Financial reporting 29

Internal control and risk management 30

Conflict of interests and transactions with related parties 32

Corporate information regime 32

Social responsibility 33

4. ACCOUNTING AND FINANCIAL POSITION 33

Balance sheet 34

Profit and loss account 35

Cash flow statement 36

Realization of income and expenses budget for 2012 37

5. OTHER SIGNIFICANT INFORMATION 37

6. SUBSEQUENT EVENTS 38

7. THE PROPOSAL OF THE BOARD OF DIRECTORS REGARDING THE PROFIT APPROPRIATION 38




MAIN FINANCIAL AND OPERATIONAL INFORMATION

MAIN BALANCE SHEET ITEMS [RON mn]

2010 2011 2012 Total assets, of which 655.96 733.93 959.06

Total financial assets 647.37 727.52 952.77

Equity 538.55 642.60 874.62

Total current liabilities 63.01 37.86 33.06

FINANCIAL PERFORMANCE [RON mn]

2010 2011 2012 Total revenues 113.51 141.75 159,13

Total expenses 48.31 65.06 42,29

Gross profit 65.20 76.69 116.84

Net profit 63.00 63.01 100.51

FINANCIAL INDICATORS [%]

2010 2011 2012 ROE (net profit / equity) 11.7 9.8 11.5

ROA (net profit / total assets) 9.6 8.6 10.5

Gross profit margin ratio (gross profit/total income) 57.4 54.1 73.4

Effective income tax rate (tax expense/gross profit) 3.4 17.8 14

Dividend payout ratio 89.7 87.1 *

SHARES AND NET ASSETS PERFORMANCE

2010 2011 2012 Market price (at year-end, in RON ) 1.014 0.9030 1.213

NAV per share** (RON) 2.4805 2.3698 2.4061

PER 8.83 7.87 6.62

Dividend per share (RON) 0.103 0.100 *

Book value per share (RON) 1.0798 1.2682 1.6871

Par value of share (RON) 0.1 0.1 0.1

No. of shares 548,849,268 548,849,268 548,849,268

OPERATIONAL DATA

2010 2011 2012 Number of permanent employees 78 78 78

Number of branches 4 4 4

SHAREHOLDING STRUCTURE AT 31 DECEMBER 2012

Number of shareholders Holdings

Romanian individuals 5,808,665 51.25%

Foreign individuals 1,793 0.57%

Romanian legal entities 295 24.67%

Foreign legal entities 63 23.51%

TOTAL 5,810,816 100%

* in accordance with GSM approval

** calculated in accordance with CNVM Regulation no. 15/2004 and CNVM Measures no. 9 and 21/20120

CONTACT Investor Relations: email [email protected] tel +40257 250 181




General Information Societatea de Investiții Financiare BANAT-CRIȘANA S.A. (referred to as ”SIF Banat-Crisana” or

”The Company”) is a Romanian legal entity, set-up as a joint stock company, with local private

capital.

SIF Banat-Crișana was set-up as a joint stock company in November 1996, through reorganization

and transformation of the Private Ownership Fund I Banat-Crisana, under law no. 133/1996 for

the conversion of Private Ownership Funds in financial investment companies.

SIF Banat-Crișana is registered at the Trade Register of the Arad Court, under number

J02/1898/1992, with unique registration number 2761040.

SIF Banat-Crisana operates as a closed investment company with a diversified investment policy,

in accordance with the regulations issued by the National Securities Commission (CNVM).

The Company is self-managed and is registered in the Register of CNVM in the category "Other

Undertakings for Collective Investments ' (AOPC) under number RJR09SIIR/020002/2006.

The subscribed and paid up share capital at 31 December 2012 is RON 54,884,926.8, consisting of

548,849,268 shares with a nominal value of RON 0.10 per share. SIF Banat-Crisana shares are

listed on the Bucharest Stock Exchange (First Tier) and are traded on this market since 01/11/1999,

under the ticker SIF1.

The record of the Company’s shares and shareholders is held by S.C. Depozitarul Central S.A.

Bucharest.

Assets depository services are ensured by ING Bank N.V. AMSTERDAM Bucharest Branch.

The financial statements and the statements regarding the Company’s operations are audited by

KPMG Audit S.R.L, Bucharest.

The main activities

The main activity of SIF Banat-Crișana, according to National Classification of Economic Activities,

is financial intermediation, except insurance and pension fund activities (CAEN code 64), and the

main object of activity is other financial intermediation (CAEN code 6499), as follows: a)

undertaking financial investments in order to maximize the value of the shares in accordance with

existing regulations; b) investment portfolio management and exercise of all rights associated with

the instruments invested in; c) other auxiliary and related activities, in accordance with the

regulations in force.

Branches

SIF Banat-Crișana has four branches, located in the following municipalities: Bistrița, Bucharest,

Cluj-Napoca and Satu Mare. Branches are entities with no legal personality, having the same

activity field as the parent-company. During 2012 there were no significant reorganizations of the

activity of SIF Banat-Crișana.




The Economic Environment in 2012 Macroeconomic indicators for Romania

The Gross Domestic Product increased by 0.2% in 2012 compared to 2011, the economy

being affected by the weak agricultural production, decease in investments, low uptake of

EU funds, the instability of internal policy and international crisis. The GDP in the 4th quarter

of 2012 was, in real terms 0.2% higher compared with the 3rd quarter (according with the

first estimations of the National Institute of Statistics – seasonal data). Compared with the

same period of the last year, the GDP has increased by 0.3% on gross series and 0.1%

seasonally adjusted.

The draft version of the GDP in the 4th quarter and for 2012 will be announced on 6 March

by the National Institute of Statistics.

The Inflation Rate at the end the period, December 2012/December 2011, was 4.95%

(source: National Bank of Romania). The average annual rate was 3.4%, above 2.6% which is

the European Union (27) average in terms of inflation (source: Eurostat).The NBR’s target

was 3% ± 1 pp. The target was not met if we take into consideration the inflation at the end

of the period.

The Unemployment rate for December 2012 was 6.5%, compared with the average rate in

EU (27) of 10.7% (source: Eurostat). The total number of unemployed persons as of

December according to the records of the County Agencies for work force employment was

493,775 (source: ANOFM).

The Medium and long term foreign debt amounted to EUR 78.1 billion as at 30 November

2012 (78.4% of the total foreign debt), higher by 3% compared with 31 December 2011. The

short term foreign debt as at 30 November 2012 amounted to EUR 21.5 billion, lower by

5.7% compared with 31 December 2011.

Romania’s Long term debt in foreign currency, registered the following ratings from the

international rating agencies (source: Ministry of Finance): Baa3, with a negative perspective

from Moody’s, rating that keeps us in the recommended investment zone, BBB- stable

perspective from Fitch; BBB- from Japan Credit Rating Agency (JCR) ratings that keeps us as

well in the recommended investment zone; BB+ stabile perspective Standard Poor’s.

The NBR draft data show that the direct net foreign investments amounted EUR 1.55 billion

in 2012, a decrease of 15.3% compared with 2011, when a level of EUR 1.83 billion was

recorded.

Stock market

According to WFE (World Federation of Exchanges) analysis on 54 stock markets, the global

stock market capitalization increased by 15.1% in 2012 (USD quotations used), up to the

aggregated value of USD 54,569.8 billion. The increase can be traced as follows: America

+17.2%, Asia-Pacific 15.4% and Europe and Middle East 11.6%. Nevertheless, the volume of

products traded significantly declined. Thus, the global volume of Electronic Trade Orders




(ETO) decreased with 22.5% whereas the global trading of the derivative contracts decreased

by approximately 20%. The market capitalization of Bucharest Stock Exchange (“BVB”) in USD

increased by 37.1%, up to 29.06 billion USD, placing it on the 47th place in the WFE analysis

on increase of the market capitalization.

The Romanian Stock Market had an upward trend, being aligned to the evolution of the

international stock markets, registering increases in RON of 18.74% for BET, 6.28% for BET-C

and 32.1% for BET-FI, and a decrease of -10.46% of RASDAQ-C.

PER multiple for BVB has continued the decrease in 2012 compared to 2011 from 8.39 to 7.64.

PBV multiple has increased from 0.8 to 0.94 while the dividend yield increased from 5.46% in

2011 up to 6.94% in 2012. This aspect, correlated with the decrease of PER made the

companies which distribute dividends more attractive.

Monetary market and credit market

The Monetary policy interest rate was at the end of the year of 5.25%. During 2012 the

interbank market yields have continuously decreased (source: NBR).

The rate of non-performing loans for which the debt service is higher than 90 days and/or

with legal procedures initiated against has sharply increased from 14.33% at the end of 2011

up to 17.92% as at 30 November 2012, representing an increase of 25% in 11 months. In the

same period the credit risk rate has increased from 23.28% up to 28.32%, representing a

21.6% increase.

Foreign exchange market

In 2012, EURO appreciated against the RON, from RON 4.3219 for 1 EURO as at 4 January 2012

up to RON 4.4287 for 1 EURO, at the end of 2012, representing an increase of 2.47%. The USD

recorded a slower appreciation compared to the RON, from RON 3.3208 for 1 USD as at 4

January 2012 up to RON 3.3575 for 1 USD, representing an increase of 1.1%v (source: NBR).

-50

-40

-30

-20

-10

0

10

20

30

40

50Evolution of the percentage returns of BET-C and BET-Fi in 2012

BET_C%

BET_Fi%




The Portfolio Managed by SIF Banat-Crișana Net Assets Value

SIF Banat-Crișana reported a Net Asset Value (NAV) of RON 1,320.57 million as at 31 December

2012, higher by 1.53% than the value as at 31 December 2011 (RON 1,300.65 million).

As at 31 December 2012, the Net Asset Value per Share (NAV/share) was of RON 2.4061 compared

to RON 2.3698 recorded as at 31 December 2011.

The following chart presents the monthly net asset value in 2012:

The net asset value is calculated in accordance with the National Securities Commission (“CNVM”)

- Regulation no. 15/2004 and Disposal of Measures no. 9/2010 and no. 21/2010 - the value being

certified by ING BANK NV AMSTERDAM Bucharest Branch, the depository of the assets of the

Company.

Monthly net asset values per share have been submitted to CNVM and BVB and published by

SIF Banat-Crișana on its website, www.sif1.ro, not later than 15 calendar days after the reporting

month end, in accordance with the CNVM regulations in force.

1.301

1.223

1.3131.362 1.354

1.3261.269

1.2391.199

1.2441.291

1.328 1.321

dec. '11 ian. feb. mar. apr. mai iun. iul. aug. sept. oct. nov. dec. '12

400

600

800

1.000

1.200

1.400

RO

N m

illio

n

MONTHLY EVOLUTION OF THE NET ASSET VALUE




Analysis of the portfolio

The investment objective of SIF Banat-Crișana is the management of a diversified portfolio

comprising of quality assets that ensure both short-term income generation and medium and

long- term capital maintenance and growth.

The management of SIF Banat-Crișana has permanently considered compliance with regulatory

requirements regarding the diversification of investments, so that throughout the year 2012,

assets under management fell within the prudential limits of ownership allowed by Law no.

297/2004 and CNVM Regulation no. 15/2004.

The evolution of the structure and value of the assets managed by SIF Banat-Crișana is shown

below:

ASSETS UNDER MANAGEMENT

31 December 2011 31 December 2012 Value

annual

variance Categories of assets1

RON

Weight

in total

assets

RON

Weight

in total

assets

State bonds, Treasury bills 25,896,401 1.93% 25,580,832 1.89% -1.22%

Available cash 508,935 0.04% 104,893 0.01% -79.39%

Receivables 228,185 0.02% 382,629 0.03% 67.68%

Deposits at banks 123,796,531 9.25% 126,324,373 9.33% 2.04%

Corporate bonds 1,042,456 0.08% 1,042,647 0.08% 0.02%

Listed shares 867,657,667 64.82% 1,037,797,357 76.67% 19.61%

Unlisted shares 312,014,489 23.31% 146,718,869 10.84% -52.98%

Other assets 5,835,940 0.44% 5,593,739 0.41% -4.15%

AOPC bonds 1,535,410 0.11% 10,131,939 0.75% 559.88%

TOTAL ASSETS 1,338,516,014 100% 1,353,677,278 100% 1.13

Total liabilities+ deferred income 37,863,920 2.83% 33,103,142 2.45% -12.57%

NET ASSET VALUE 1,300,652,094 97.17% 1,320,574,136 97.55% 1.53

NET ASSET VALUE per share 2.3698 2.4061 1.53

1 The value of the assets is calculated in accordance with CNVM Regulation no. 15/2004 and CNVM measures no.

9/2010 and 21/2010

Significant changes in the structure of assets under management in 2012:

The weight of the shares held in listed companies increased by 19.61%, mainly due to the entry

into the portfolio of Erste Group Bank AG shares and the positive evolution of the market prices

for the listed companies.

Decrease by 52.98% of the weight of unlisted shares in total assets, mainly due to the disposal

of Banca Comercială Română shares through the transaction with Erste Group Bank AG Erste

Group Bank AG and Banca Comercială Română;

The increase of unit funds because of the increase in the participation in Fondul Proprietatea.

The shares of Fondul Proprietatea are presented under this category of assets, according to

CNVM regulations.

At 31 December 2012, the equity exposure amounted to 88.23% of total assets under

management.




STOCK PORTFOLIO SECTOR BREAKDOWN

Sector Number of issuers The market value1 of the

portfolio (RON)

2011 2012 31 dec. 2011 31 dec. 2012

Financial and banking 13 14 717,243,109 724,874,889

Tourism and public food service 10 11 107,058,335 109,449,543

Commerce and real estate 48 44 93,452,294 92,449,688

Pharmaceuticals 3 4 43,799,840 47,233,599

Pulp and paper 8 8 44,095,484 43,841,154

Energy and utilities 12 17 22,207,868 30,388,257

Chemicals and plastics 8 8 19,474,199 15,935,541

Wood processing 47 45 10,884,220 13,042,117

Construction 8 7 6,497,679 6,696,929

Steel processing 7 10 8,315,897 4,136,566

Food industry 8 9 5,409,717 2,467,899

Other industries 31 35 90,262,117 91,537,977

Other activities 59 56 12,272,956 12,341,256

TOTAL 262 268 1,180,973,716 1,194,395,415 * calculated in accordance with CNVM Regulation no. 15/2004 and CNVM measures no. 9/2010 and 21/2010

The portfolio of shares shows a significant exposure towards the financial and banking sector,

representing 54.89% of the NAV. The holdings in this sector have increased by 1.06% compared

to 31 December 2011, due to increase in listed market prices, mainly the increase of the market

price of Erste Group Bank AG shares.

TOP 10 HOLDINGS as at 31 December 2012

Issuer Sector % holding

The value

of shares

held

(RON)*

% of NAV

Erste Group Bank AG Financial-banking 1.00 363,136,065 27.50%

BRD - Groupe Société Générale Financial-banking 4.63 243,181,735 18.41%

Banca Transilvania Financial-banking 4.52 102,047,860 7.73%

Napomar Cluj-Napoca Machinery 99.43 47,225,993 3.58%

Biofarm București Pharmaceuticals 19.51 42,645,367 3.23%

Calipso Oradea Tourism and public food service

96.65 42,599,248 3.23%

Vrancart Adjud Pulp and paper 74.72 37,336,263 2.83%

Comalim Arad Commerce and real estate 91.17 31,140,491 2.36%

Arta Culinara Cluj-Napoca Public food service and real estate

89.45 28,313,244 2.14%

IAMU Blaj Machinery 76.69 21,077,527 1.60%

TOTAL 958,703,793 72.60% * calculated in accordance with Regulation no. 15/2004 and CNVM measures no. 9/2010 and 21/2010




At the end of 2012, SIF Banat-Crișana holds majority positions in the share capital of 30

issuers, same as in the previous year. The total value for this group of participations at 31

December 2012, calculated according to CNVM regulations, amounts to RON 313.72 million,

representing 23.76% of the net asset value. The list of the companies controlled by SIF Banat-

Crișana is presented in appendix no. 4

SIF Banat-Crișana, through its specialists, has been actively involved into the management

of these companies, offering advice on preparing and optimizing budgets, negotiating the

performance criteria with the management team and carefully a great attention on

monitoring the results, advice for efficiency of activities, optimizing the costs and the

processes.

up to 5%

5-33%

33-50%

over 50%

structure by shareholding as at 31 ecember 2012

Shareholding up to 5% in 110 issuers

Total value RON 770.77 mn (2011: RON 757.89 mn)

Shareholding between 5 - 33% in 124 issuers


Shareholding between 33-50% in 4 issuers


Majority shareholding, over 50%, in 30 issuers


Values calculated as at 31 December 2012 in accordance with CNVM

Regulation no.15/2004 and CNVM measures no.9 and 21/2012

69%

31%

Romania

RON 825 mn value of holdings in 232 companies

Foreign markets

RON 369 mn value of holdings in: Austria (2 companies),

Germany (5), Spain (3), Finland (6), France (10), Italy (2),

Luxembourg (1), Netherlands (6), Sweden (1)

Values calculated in accordance with CNVM Regulation no. 15 / 2004 and

CNVM Measures no. 9 and no. 21/2010




In September 2012, SC Calipso SA Oradea, a company where SIF Banat–Crișana is a majority

shareholder, finalized the investment in the 5 stars hotel from Oradea - “Double Tree Hotel by

Hilton”, in amount of EUR 21.65 million. This investment was made possible both through the effort

of the shareholders who have effected share capital increases in the period 2008 -2011 and by

using own financing resources and other resources attracted (investment loans).

In 2012 the judiciary reorganization procedure for SA ARIO SA Bistrița, initiated in 2009, was

continued.

In 2012, 12 companies have been written off from the portfolio of SIF Banat-Crișana, being

liquidated. The value of the capital owned by SIF Banat-Crișana in these companies amounted to

RON 6.8 million, entirely provided for in the previous years.

At 31 December 2012, 75 companies from the portfolio are in bankruptcy/insolvency/dissolving

procedures. The value of these companies is zero in the net assets value, computed in accordance

with CNVM Regulations

The Investment activity

In 2012, SIF Banat-Crișana has made the following significant acquisitions:

Shares acquisitions on domestic and foreign markets, in amount of RON 37.85 million, of

which RON 18.38 million transactions at BVB and RON 19.47 million transactions on foreign

markets. Shares acquisition at Fondul Proprietatea (RON 8.3 million), Biofarm (RON 2.92

million), OMV Petrom (RON 2.95 million), SNTGN Transgaz (RON 2.36 million);

Erste Group Bank AG shares in amount of RON 177.83 million, acquired as a result of the

participation at the share capital increase with in-kind contribution of Banca Comercială

Română (“BCR”) shares.

49,55%

33,21%0,66%

10,57%

6,01%

bank deposits

foreign currency bank deposits (RON eq.)

corporate bonds

foreign currency treasury certificates on the primary market (RON eq.)

treasury certificates on the primary market

total value* of portfolio (in RON eq.): RON 150.89 mn.

the annual average return in 2012 on RON placements was of 6.55%,

compared to the inflation rate of 4.95%

the average return on EUR placements in 2012 was of 4.17%, compared to

average EURIBOR for the same period of 1.10%

* calculated in accordance with CNVM Regulation no. 15 / 2004 and CNVM

Measures no. 9 and no. 21/2010




Shares received at no cost following the share capital increases effected by several

companies in the portfolio through incorporation of reserves, the nominal amount of shares

received at no cost is RON 5.95 million, of which RON 5.9 million are represented by Banca

Transilvania shares.

In 2012, SIF Banat-Crișana has made the following significant sales:

Share sales through transactions at BVB and on the external markets in amount of RON 26.83

million, with a profit in amount of RON 9.89 million. The sales shares of ERSTE (RON 8.8

million), Electromagnetica (RON 1.36 million), and BRD GSG (RON 1.36 million) are the most

significant in value.

Sales of shares held in closed companies in amount of RON 73.02 mill, with a profit of RON

71.17 million the exercise of the sale option of BCR shares represents 99.8% of total sales.

Share buy-back in amount of RON 3.43, with a gain in amount of RON 3.09 million.

Finalizing the transaction with BCR shares

In the first part of 2012, SIF Banat-Crișana exercised the option of sale and contribution stipulated

in the contract of sale and contribution signed on 8 November 2011 with Erste Group Bank AG

(EGB) referring to the share stake held in BCR.

On 3 February 2012, SIF Banat-Crișana exercised the option of contribution through exchange of

shares for 296,185,195 BCR shares, at an exchange rate of 127.9583 BCR shares for one EGB share,

thus receiving 2,314,700 EGB Shares.

On 9 April 2012, SIF Banat-Crișana exercised the option of sale of 70,188,162 BCR shares at a selling

price of RON 1.0385 per share for which it received RON 72.89 million.

After the transactions with Erste Group Bank AG, SIF Banat-Crișana held 1.02% of the share capital

of Erste Group Bank AG.

Enhancing transactions on foreign markets

In 2012, SIF Banat–Crișana has enhanced the transactions on foreign markets, aiming the

construction of a diversified and flexible portfolio focused on companies listed on the

European stock market.

The investments have been directed mainly towards issuers whose evolution versus the

benchmark of the market (STOX EUROPE 600 Index) had an aggressive character, achieving

a return on invested capital of 12.1%.

At 31 December 2012, the investments on the external markets comprised 351 issuers, with

a sectorial and geographical exposure as shown in the following graphs:

1 does not include Erste Group Bank AG, classified as participation interest




The detailed investments of SIF Banat-Crișana at 31 December 2012 are presented in

appendix no. 3 to the report.

The Research activity

Taking into consideration the nature of the Company’s activity, the research activity aims at the

development of proprietary models of studying the investment opportunities, development of

informational and technical tools, continuous development of methods and models used, analysis

and prospecting of markets and their perspective, identifying areas of diversification of the activity.

In 2012, the main research topics have been:

3%

16%

30%

10%8%

2%

11%

18%

2% Austria Finland FranceGermanyItaly Luxembourg Netherlands Spain Sweden

2% 4%3% 2%

5%

2%

29%23%

6%

3%

21%

aerodefence

consumer discretionary

consumer staples

energy

financials

healthcare

industrials

information technology

materials

telecommunication

utilities




Assessments and studies of the simplified investment analysis models and of the numerical

simulations Monte-Carlo-type application, in the simplified proprietary model on BSE listed

issuers, at the request and proposal of portfolio managers.

Analysis of business plans for companies from the automotive industry, where SIF Banat-Crișana

is shareholder, using Monte-Carlo simulation. The result has been presented in “in house”

workshops and discussed with internal simulation analysts.

Organizing thematic seminars applicable in the investment activity:

o Forecasting techniques: simple regression, multiple regression, correlations, with

applications on BSE listed companies from the energy and utilities market;

o Simplified investment model adapted according to the modifications to the International

Valuation Standards, showing the differences that arise on one company listed at BSE.

Forecasting methods through numerical simulations Monte-Carlo applied to the same BSE

listed entity, of interest to SIF Banat-Crișana.

Sectorial analysis on areas of interest to SIF Banat-Crișana:

o Financial sector, banking industry: Global Outlook, EU, ECE, Romania with identification of

some segments that offer the possibility to invest, of dominant trends and major risks,

finalized with a portrait of the banks desired to be part of the portfolio.

o Energy sector, oil industry and gas industry: Global Outlook, EU Outlook; CEE; Romania

focusing on natural gases and shale gases in the perspective of their listing on the Romanian

capital market, finalized with specific recommendations.

Monthly analysis of the investment funds industry and permanent activities for monitoring and

market research, including the monitoring of mergers and acquisitions market in Romania and

update of information regarding transactions on this market in order to facilitate the investment

process by developing a reference for transactions.

Scientific actions

SIF Banat-Crișana organized on 19 October 2012, in Timișoara, together with the Faculty of

Economics and Business Administration (FEEA) of the West University from Timisoara, and

Academic Society of Management from Romania, the conference “Strategic approach in business

management”.

Some of the results of the research activities carried out in SIF Banat- Crisana were presented and

published at different scientific meetings, conferences, symposia, scientific sessions, of which we

mention: the Conference “Valuation for Capital Market” Conference X-th edition, organized by the

Academy of Economic Studies and ANEVAR in Bucharest; the Conference ”Valuation for Financial

Reporting” organized by ANEVAR in Cluj; „Academic Days of Arad”, XXI edition, organized by the

University of West „Vasile Goldiș” Arad and the University Foundation „Vasile Goldiș” in Arad, “The

9th AFE International Conference on Applied Financial Economics” organized by the Research and

Training Institute of East Aegean.

Risk Management The management of SIF Banat-Crișana recognizes the importance of an adequate risk

management system and how it protects the Company and the interests of its shareholders and

monitors permanently the risks to which the Company is exposed and takes the necessary

measures in order to avoid or mitigate their effects.

The main risks to which the Company is exposed are: market risk, credit risk, liquidity risk, cash-

flow risk, operational risk, taxation risk and operating environment risk. Market risk includes

foreign currency risk, interest rate risk and price risk.




Currency risk In 2012, the Company carried out transactions both in the Romanian Currency (Leu) and in foreign

currency. The Romanian currency has fluctuated during 2012 compared to foreign currencies, EUR

and USD, at the end of the year registering a depreciation of its value.

The financial instruments used enable the conservation of the value of monetary assets held in

RON, by making investments and receiving interest depending on the term of maturity.

The Company has not carried out any transactions with derivatives during 2011 and 2012.

Interest rate risk Interest rate risk comprises of the risk of fluctuation in the value of a financial instrument due to

interest rate changes and of the risk of the interest re-pricing gap between interest bearing assets

and interest bearing liabilities used to finance the respective assets.

The period that the interest rate remains fixed for a financial instrument indicates in which

measure it is exposed to interest rate risks. Financial instruments bear interest at market rates;

therefore it is considered that the fair values did not differ significantly from the carrying amounts.

Most of the financial assets owned by SIF Banat-Crisana are held in stable currencies, whose

interest rates are not likely to vary significant.

Price risk During 2012, the market capitalization of listed issuers the Company's portfolio has increased

compared to 2011. Given that the Company holds a significant number of quoted shares in the

portfolio, it was favorably affected by price risk in 2012.

Credit risk Financial assets which subject the Company to potential concentrations of credit risk consist mainly

of receivables from the core activity. They are presented net of the adjustment for doubtful

receivables. Management is closely and constantly monitoring the credit risk exposure so that the

Company does not incur losses due to credit concentration in a particular sector or industry.

Liquidity risk The Company monitors the evolution of the liquidity level to be able to settle the obligations at the

due date. Assets and liabilities are analyzed based on the remaining period until to the contractual

maturity.

Cash flow risk Through the nature of its activities, the Company is not subject to a major risk of change in the

projected cash flows, both arising from financial instruments evolution and interest rate changes.

Operational risk Operational risk is the risk of direct or indirect loss record resulting from a wide range of factors

associated to processes, personnel and internal systems of the Company or external factors (other

than credit, market or liquidity risk) such as those from legal and regulatory requirements and

generally accepted standards of investment management. Operational risks result from all

activities of the Company. The Company's objective is to manage the operational risk so as to

maintain a balance between the measures taken to mitigate financial losses and damage to the

reputation and investment objectives of generating income for investors.




Taxation risk Starting 1 January 2007, following Romania's accession to the European Union, the Company had

to comply with EU regulations, and therefore it prepared to implement changes brought by

European legislation. The Company implemented these changes, but the method of

implementation remains open to fiscal controls for 5 years.

Interpretation of texts and the practical implementation of new tax regulations may vary and it is

likely, in some cases, that the tax authorities could adopt a position different from that of the

Company’s.

In addition, the Romanian Government has a number of agencies authorized to audit (control)

companies operating in Romania. These controls are similar to tax audits in other countries, and

may cover not only fiscal issues, but other legal and regulatory issues of interest to these agencies.

The Company may be subject to fiscal controls as new tax regulations are issued.

Economic environment risk The process of risk repricing on international financial markets in recent years has severely affected

their performance, including the financial market in Romania, leading to increased uncertainty

about future economic developments.

The effects of the international financial crisis were also felt on the Romanian financial market

particularly in the form of: significant increase of non-performing loans volume in the local banking

system, making access to finance more difficult both for population and economic agents, banks

aiming more towards financing of the state authorities through purchases of government bonds

rather financing economic and consumption development, national currency depreciation, lower

real estate prices, the negative evolution of macroeconomic indicators (inflation, budget deficit,

current account deficit, decrease of foreign direct investment, rising unemployment etc.)

SIF Banat-Crișana’s management cannot predict all the effects of the crisis affecting the financial

sector in Romania, but considers that in 2012 has adopted the measures necessary for

sustainability and development of the Company in existing financial market conditions, by

monitoring cash flows and adequacy of the investment policies.

The avoidance of risks and mitigation of their effects are provided by the Company through an

investment policy that complies with prudential rules imposed by laws and applicable regulations.

SIF Banat-Crișana adopted risk management policies through which an active management is

performed, being applied specific procedures for the identification, assessment, measurement

and control of risks, in order to provide reasonable assurance regarding the objectives of

Company, a constant balance between risk and expected profit being sought.

The risk management process aims: (i) identification and assessment of significant risk with impact

in meeting the investment objective and activities development to counter the risks identified, (ii)

adapting the risk management policies to the financial developments of the capital market,

performance monitoring and improvement of risk management procedures, (iii) reviewing

investment decisions in relation to capital market development, (iv) compliance with current

legislation.




Human Resources Labor relations

SIF Banat-Crisana’s number of employees at 31 December 2012 was of 78 individuals with

permanent employment contract, of which 66 in the headquarters in Arad and 12 in branches. The

staff has a high level of training, 77% of the employees having superior studies.

The staff’s commitment to enhance its studies can be demonstrated by a few key figures: 4

individuals have a PhD (three in economics and one in mathematics), 2 persons have completed

an MBA, 11 persons have extensive studies (master in business administration, marketing,

financial markets and stock exchanges, accounting expertise, finance and project management, IT

applied in economics) and 11 people are graduates of a second university (mainly economics and

law).

No union was created within the Company, the employees being represented for the negotiation

of the collective labor contract by representatives elected in accordance with the legal

requirements in force.

The employment relationships are regulated by the Individual Labor Contracts and by the

Collective Labor Contract. During 2012, the Collective Employment Contract was re-negotiated and

registered with the D.M.S.S.F. Arad under the no. 298/14 August 2012.

There were no conflicting aspects in 2012 between management and employees. SIF Banat-

Crisana provides a positive working environment and offers equal opportunities to all of its

employees throughout the entire period from employment date to end of working relationships.

Human resource development and performance management

Starting from the premise the employees’ development represents the basis of all of the

Company’s activities and projects, in 2012, a series of human capital development programs have

been implemented and continued. Among the key projects, we note the implementation of the

individual development plan correlated with the process of performance management.

In 2012, 75% of the specialized employees have been included in a professional development

program. The training curricula covered a thematic area correlated with the need to improve the

knowledge specific for the activities carried out or the personal development level; the relevant

themes have been:

Development of specialized knowledge – technical analysis and trading, financial analysis, risk

management, applying IFRS for the financial statements, insolvency and bankruptcy, IT,

judiciary regulations, international valuation standards.

Skills development – effective decision techniques, coaching, development of managerial skills.

In 2012 SIF Banat–Crișana has participated at Global Management Challenge a competition based

on an interactive business simulator meant to allow learning through direct experimentation, in a

competitive environment, of the strategies to run a business; the Company succeeded to qualify

in the national final.




2013 Outlook The Strategy of SIF Banat-Crișana aims to increase the value and attractiveness of the portfolio

managed in order to create the premises for increased medium and long term growth of the value

of the Company for its shareholders. To this end, an adequate alignment of the corporate

processes and risk management process to the growth objectives targeted will be pursued.

The priorities for 2013 refer to the following:

Investment process

The Company aims to make new investments on the Romanian Capital Market and on the external

markets, in accordance with its objective of obtaining higher yields and a more efficient

management of the investments.

Larger investments projects, which ensure faster recovery and higher return rate will be targeted.

The investments will be focused on business growth in the areas where the Company has expertise

and expanding investments in areas with higher profitability potential.

The methods to adopt the investment decisions will diversify, aiming at the possibility of faster

identification of the opportunities offered by the capital market.

Managing the investments

The Company will set-up centralized management structures in the companies where it has

majority stakes, depending on the nature of their activities:

Increasing the efficiency of activities;

Implementing unitary management techniques;

Adopting measures to rationalize the use of resources and cost optimization;

Coordination of the main investment process;

Enhancing the attractiveness and value of sale.

The evolution of the activities and of the value of the companies in the portfolio will be more

closely monitored and divesting decisions will be taken more rapidly by selling the stakes in

the companies without growth potential and by re-investing the amounts obtained in

projects with higher value-added.

Strengthening the brand

The communication with shareholders, investors and analysts community will be enhanced,

in order to increase the level of interest in the opportunities offered by SIF Banat-Crișana

and to highlight the tangible and intangible parameters considered when evaluating the

Company.

The brand SIF Banat-Crișana will be more actively promoted in local and regional corporate

social responsibility events. By increasing the transparency and improvement of the

presentation of the information regarding SIF Banat-Crișana the aim is to increase the

attractiveness and the interest of the existing shareholders and other investors in SIF1

shares.




THE CARACTERISTIC OF SHARES ISSUED BY SIF BANAT-CRIȘANA Total number of shares issued (31 December 2012)

548,849,268

Par Value 0.1000 RON /share

Type of shares common, ordinary, registered, dematerialized, indivisible Trading market Regulated spot market of the BBV, Tier I- from 1 November 1999 Free float 100% BVB Ticker SIF1 International Identifier Bloomberg BBGID: BBG000BMN388 ISIN Code ROSIFAACNOR2 Indices containing SIF 1 share Indices BSE: BET-FI. BET-XT and BET-BK

Since its set-up, SIF Banat-Crișana has not acquired and has not held its own shares.

Since its set-up, SIF Banat-Crișana has not issued bonds or other debt instruments.

SIF1 SHARES ON BSE

2010 2011 2012 Market price

minimum[RON] 0.895 0.701 0.800

maximum [RON] 1.780 1.325 1.260

closing, yearend [RON] 1.014 0.903 1.213

Net profit per share 0.1148 0.1148 0.1831

Price/Unitary profit 8.83 7.87 6.62

NAV per share (RON) 2.4805 2.3698 2.4061

Dividend [RON/share] 0.103 0.100 *

Market capitalization **[mil. RON] 556.53 495.61 665.75

* in accordance with GSM approval

** Calculated using the closing price of last trading session of the year

The evolution of SIF1 market price and trading volumes in 2012 are presented in the following

chart:

0,0 RON

0,2 RON

0,4 RON

0,6 RON

0,8 RON

1,0 RON

1,2 RON

1,4 RON

0

1

2

3

4

5

mili

on

sh

ares

volume closing priceJan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

4.52 milion shares

RON 1.26

2.63 milion shares

RON 0.8

2.57 milion shares

RON 1.213




In 2012, the peak price was 1.26 RON per share, on 13 February and the minimum price was

0.80 RON per share, on 1 June, ending the year with an increase of 32.6%, from RON 0.915 up

to RON 1.213;

The share volatility was relatively high, the quotations growing in the first part of the year, only

to depreciate in March by 14.4%, followed by a consolidation period between the limits 1.02 –

1.09 RON per share, in March – April, in May suffering a correction of 26% up to 0.80 RON/share.

In the second part of the year following an upward trend and recovering the loss incurred,

ending the year with 32.6% increase compared to 2011

SIF1 liquidity was relatively low; a number of RON 149,911,000 shares representing 27.11% of

the total shares issued being traded, with almost 11% less than in 2011.

on "DEAL" market, there were 15 transactions, totaling 67,337,500 shares and RON 77.9 million.

The maximum daily volume in 2012, of 4,519,000 shares, was recorded on 24 January.

Dividends

Dividend distribution is made in accordance with the decision of the General Shareholders Meeting

(GSM) of SIF Banat-Crișana, following the proposal of the Board of Directors which aims to achieve

a balance between shareholders remuneration through dividend and the need to finance

investments.

All existing shareholders on record date are entitled to dividends approved by the Ordinary

General Meeting of Shareholders of the Company. Payment of dividends is made in accordance

with legal requirements and decisions of the GSM, within maximum 6 months from the GSM date.

DIVIDENDS DISTRIBUTION

during the last three financial years

Dividends\Financial year 2009 2010 2011 Net profit* (RON million) 112.19 63 63.01

Number of shares 548,849,268 548,849,268 548,849,268

Gross dividends payable (RON million) 27.44 56.48 54.88

Net dividends payable (RON million) 24.01 48.84 47.83

Gross dividend per share (RON million) 0.05 0.103 0.1

Dividend payout ratio 24.5% 89.7% 87.1%

* * In accordance with GSM approval

On 18 May 2012, the record date for the GSM of 26 April 2012, SIF Banat-Crișana had 5,817,926

shareholders entitled to receive dividends.

Payment of dividends has been made in accordance with GSM and Board of Directors decisions,

the payment procedure being made public in the market. Due to the large number of

shareholders and their dispersion, the following methods of payment have been used: through

the Central Depository at postal office for Romanian individuals with holdings between 50 and

10,000 shares; through the Central Depository in the accounts of custodian banks or SSIFs,

through bank transfer for legal entities and individuals with holdings over 10,000 shares or




irrespective of the holding, upon request; through the front office from the headquarters and

branches for individuals with holdings below 50 shares.

Until 31 December 2012, 69.84% from the total dividends approved by the shareholders on 26

April 2012 was paid.

SIF Banat-Crișana understands that solid corporate governance is essential for ensuring an

efficient decisional process leading to the long term business viability, attaining the

objectives and creating sustainable value for all the interested parties (shareholders,

management, employees, partners etc).

Starting with 2011 the Board of Directors has voluntarily adopted the Corporate Governance

Code of the Bucharest Stock Exchange. In February 2011, the Corporate Governance

Regulation of SIF Banat-Crișana was adopted in accordance with the Recommendation no. 3

from the Corporate Governance Code (CGC) applicable on the Bucharest Stock Exchange

(BSE).

The level of implementation in SIF Banat–Crisana of the principles and recommendations

stated in the CGC are reported in the statement "Comply or Explain", according to the

Recommendation no. 3 from the CGC, which will be communicated to BSE along with the

annual report for 2012 approved by the GSM and posted on the Company’s website

www.sif1.ro, cases of non-compliance being explained.

Company Management

Board of Directors

In accordance with the By-Laws provisions, SIF Banat-Crişana is managed based on an

unitary system, specific to collective investment organizations regulated by CNVM. This

system is able to ensure an efficient operation of the company, in accordance with the

targets of good corporate governance and the protection of the shareholder’s interests.

The administration of the Company is ensured by a Board of Directors, comprising of seven

members, elected by the General Shareholders’ Meeting for a mandate of four years, with

the possibility of being reelected.

The Board of Directors has decisional powers regarding the management of the Company

in between the general shareholders meetings, except for decisions that the law or the

Company By-Laws provide exclusively for the general meeting.

The Board has elected from its members a Chairman and a vice-chairman. Through the

SIF Banat-Crișana Statute, the president also holds the General Director position. The

http://www.sif1.ro/




chairman, and in his absence, the vice-chairman, are representing the Company in dealing

with third parties.

The responsibilities of the chairman and the vice-chairman are established through the

internal regulations of SIF Banat-Crișana, approved by the Board and endorsed by CNVM.

On 29 June 2012, following the resignation of Mr. Emil Cazan, vice-chairman of the Board of

Directors, the board elected for this position Mr. Dragoș-George Bîlteanu.

On 26 October 2012, following the resignation of Mr. Ioan Cuzman, Chairman of the Board

of Directors, starting with 1 December 2012, the Board of Directors elected for this position Mr.

Dragoș-George Bîlteanu.

On 28 November 2012, the Board of Directors elected Mr. Ioan Cuzman as Vice-Chairman of

the Board of Directors.

The members of the Board of Directors cumulatively comply with the general conditions

stipulated by Company Law no. 31/1990 and with the special conditions stipulated by Capital

Market Law no. 297/2004 and CNVM regulations for the exercise of the respective functions

and are authorized in these positions by CNVM.

Directors at 31 December 2012

Position Other Information

Dragoș-George

BÎLTEANU (1977)

Chairman of the Board of

Directors and General Director

Studies: Executive MBA (2004-2005); International Business Relations (ASE București) (1995 – 1999) Experience: SIF Banat-Crișana – Member in BoD starting with Jan 2010, Vice-President BoD from June 2012, Chairman of the BoD and General Director starting with December 2012; Vrancart S.A. – Member of BoD (March 2012 – present) Romenergo S.A. - Member of BoD (2008 – present), General Manager (2008 – October 2012); BG Management Consultants SRL – Unique administrator (2005 – present); INTEC S.A., București – representative of the majority shareholder (2007 – present); AGAM Development SRL, București – unique administrator (2007 - present); Retail Development S.R.L. – representative of the significant associate and unique administrator (2007 – 2008); IEMI S.A. – main shareholder and unique administrator (2005 – 2007); ENERGOREPARAȚII SERV S.A. – significant shareholder and representative of the majority holder (2004 – 2006). BG Conta SRL – (1997 – 2004) coordinating associate. Specializations: Accounting Expert, CECCAR Member(Body of Expert and Licensed Accountants of Romania); Financial Auditor, member of Chamber of Financial Auditors of Romania Fiscal advisor, member of Chamber of Tax Consultants in Romania Insolvency practitioner, member of UNPIR ( National Union of Insolvency Practitioners in Romania)

Ioan CUZMAN

(1944)

Vice- Chairman of the BoD, non-

executive director

Studies PhD in Economics, Specialization Economic and Financial analysis(1999); Faculty of Economics, West University of Timișoara (1981) Experience: SIF Banat-Crișana - chairman – General director (1997 – 2012); BRD – Groupe Société Générale - Member of BoD (2007 – present); Biofarm - Member of BoD (2006 – present); Vrancart - Member of BoD (2000 – present); University Lecturer, from 2010 Professor at Faculty of Economics, „Vasile Goldiș”West University of Arad (1994 – present) Specializations: Investments advisor, course organized by the Millenium – financial training(2004); Accounting regulations harmonized with the Fourth European Economic Directive and the International Accounting Standards, course organized by the Financial Institute of Romania (2001); Financial analysis, Financial management, consultant of placements in securities, competitive management.




Directors at 31 December 2012

Position Other Information

Emil CAZAN (1949) Member of the BoD, non-executive

director

Studies PhD in Economics (1984); Faculty of Economics, West University of Timișoara (1971) Experience: West University of Timișoara – PhD Professor / Resources Vice-rector / Doctoral supervisor in Management / Dean at Faculty of Economics/ University Lecturer / Assistant Professor (1975 - present); Specializations: G.I.I.L. Timișoara - economist (1973 – 1975) D.T.C.R. Timișoara - financial inspector (1971 – 1973) Specializations: Business valuation, post-graduate specialization organized by ANEVAR (1991); International Marketing, Postgraduate(1976); Organizing the production, Postgraduate (1975)

Ion STANCU

(1950)

Member of the BoD, non-executive

director, Member of Audit

committee

Studies: PhD in Economics, Bucharest Academy of Economic Studies (1976 – 1980); Economist, Bucharest Academy of Economic Studies, București (1969 – 1973). Experience: Bucharest Academy of Economic Studies , București (Vice - rector / Doctoral supervisor/ Professor / Vice Dean / Associate Professor/ Lecturer / Assistant Professor (1974 – present); Banca Românească - Member of BoD, President of Internal Audit Committee (2003 – present) Financial Auditor, member of Chamber of Financial Auditors of Romania (2000 – present) Specializations: Academical Documentation in Corporate Finance at Ottawa University, Canada (1999) Academical Documentation in Finance and stock markets at University of Reading, Berkshire, UK (1997); Academical Documentation in Direct Investments; Capital markets at Université de Genève, Switzerland (1996)

Zoltan HOSSZU

(1944)


director, Member of Audit

committee

Studies Law Faculty, Universitatea „Babeș – Bolyai”, Cluj-Napoca (1971) Experience: Lawyer at “Arad Bar” specialized in Civil Law, commercial, financial and banking (1973 – present); Senator, Member of Permanent Commission of Privatization within the Romanian Senate 1992 – 1996, with contributions in enactment of Capital Market Institutions (1990 – 1996).

Marius Ioan

PANTEA (1974)


director

Studies PhD in Economics, PhD in Management at Faculty of Economics, Universitatea de Vest din Timișoara (UVT) (1998 – 2003); Master degree in Strategic Management at Faculty of Economics, UVT (1997 – 1998); Economist, Bachelor in Industry Management at Faculty of Economics, UVT (1992 – 1997); Experience: Faculty of Economics and Business Administration, UVT - Associate Professor/ Lecturer / Assistant Professor (1997 – present); ISE Performer Consult SRL, Timișoara – Advisor / Senior associate. Specializations: Internship for expert evaluator under PHARE for Romania, Internship under Regional Development Agency (1999); Grant financed by World Bank, at The Nottingham Trent University, England, (1998).

Ștefan DUMITRU

(1980)


director

Studies: National Institute for Training Lawyers (2004 – 2005) Law Faculty, University București (1999 – 2003) Experience: Societatea Civilă de Avocați „Stănescu, Miloș, Dumitru & Asociații” – partner (2006 – present) Societatea Civilă de Avocați „Călin Andrei Zamfirescu” – lawyer (2004 – 2006) RVA Insolvency Specialists SPRL – partner (2011 – present);




The activity of the Board of Directors in 2012

The Board of Directors gathered 16 times in 2012, in accordance with statutory provisions.

The convocation of the Board of Directors meetings was performed at least five days in

advance of the date of the meeting.

The presence of Board members at the meetings in 2012 was in accordance with the legal

requirements.

All meetings of 2012 were chaired by the Chairman of the Board of Directors.

As a result of the meetings, a number of 60 management decisions were adopted. All decisions

were taken by the vote "for" by the majority of those present.

From the 60 decisions adopted in 2012, 40 were decisions related to specific objectives to be

attained, 20 were decisions for approval of procedures, required reports and activity reports,

namely: 4 decisions for the approval of working procedures, one decision for the update of

accounting policies, 11 decisions for the approval of compulsory periodical reports (annual,

bi-annual and quarterly reports sent to CNVM, BSE, the Ministry of Finance) and 4 decisions

for the approval of activity reports of the departments, divisions and compartments.

The analysis of the implementation of the 60 Board of Directors decisions shows that they

have all been fulfilled.

PARTICIPATION OF BOARD MEMBERS in the capital share of SIF Banat-Crișana

Name

Holdings at 31 December 2012

Number of

shares Percentage of share capital

Dragoș-George BÎLTEANU 406 0.00007%

Ioan CUZMAN 548,849 0.1000%

Emil CAZAN - -

Zoltan HOSSZU 120,435 0.0219%

Ion STANCU 24,425 0.0045%

Marius Ioan PANTEA 15,000 0.0027%

Ștefan DUMITRU - -

For 2012, in accordance with legal provisions, the board members' remuneration, limits on

the additional remuneration of all board members and limits on the remuneration of board

members have been approved by the Ordinary General Meeting of Shareholders from

26.04.2012

The Board of Directors has assessed the independence of its non-executive members in

accordance with the criteria laid down in Art. 138^2 of Law no. 31/1990, republished and

updated and in the Recommendation 16 of the Corporate Governance Code of the

Bucharest Stock Exchange.

The members of the Board of Directors have been elected in the General Meeting of

Shareholders based on the vote of shareholders. Consequently, there are no agreements or

family ties between the Company’s board members and third parties that could have led to

the appointment of the directors in their position.




Audit Committee

Within the Board of Directors, an audit committee having a consultative role and made up

of two non-executive members of the Board of Directors was set-up, in accordance with the

legal requirements. As at 31.12.2012, the members of the Audit Committee were Mr. Ion

STANCU and Mr. Zoltan HOSSZU.

The Audit Committee assists the Board of Directors in order to fulfill the responsibilities

related to financial reporting, internal control and risk management.

In 2012, the audit committee gathered four times. These meetings were dedicated to:

monitoring the financial reporting process; monitoring the effectiveness of the internal

control systems or internal audit systems within the Company; monitoring the statutory

audit of annual financial statements; verifying and monitoring the independence of the

statutory auditor.

Executive Management Board

The Board of Directors has delegated part of its powers to the General Director, in

accordance with Law no. 31/1990, within the limits set by the law, the incorporation

documents and Board decisions.

Starting 1 December 2012, upon the resignation of Mr. Ioan CUZMAN from the position of

Chairman – General Director of SIF Banat-Crisana and following the election of Mr. Dragoș-

George BÎLTEANU as Chairman of the Board of Directors in accordance with the Company

By-Laws, Mr. Dragos-George BÎLTEANU also took over the position of General Director of SIF

Banat-Crisana.

The executive management board of SIF Banat-Crisana is ensured by three executive

managers, appointed by the Board of Directors in accordance with CNVM Regulation no.

15/2004. In the period 1 January – 30 November 2012, the executive managers of SIF Banat-

Crișana were: Mr. Ioan CUZMAN, Mrs. Gabriela GRIGORE and Mrs. Carmen DUMITRESCU –

authorized in this position by the National Securities Commission through decision no. 7

from 24 January 2006.

Following the appointment of Mr. Dragoș-George BÎLTEANU as General Director, the

structure of the Executive Management Board of SIF Banat-Crișana changed as of

1 December 2012. The executive managers of SIF Banat-Crișana as of that date are:

Mr. Dragoș-George BÎLTEANU, Mrs. Gabriela GRIGORE and Mrs. Carmen DUMITRESCU –

authorized in this position by the National Securities Commission through decision no. 43

from 29 November 2012.

The executive managers are empowered to lead and coordinate the daily activities of the

Company and are invested with the power to engage the responsibility of the Company.

The executive managers cumulatively meet the general requirements of Law no. 31/1990 to

perform this function and those established by Law no. 297/2004 regarding the capital

market and CNVM Regulation No. 15/2004.

In 2012, the executive managers have participated at all the board of Directors meetings,

informing or reporting to the Board on the topics on the agenda.




EXECUTIVE MANAGERS OF SIF BANAT-CRIȘANA as at 31 December 2012

Name Position Other information

Dragoș-George

BÎLTEANU

Chairman of the Board of

Directors and General

Director

Studies: Executive MBA (2004-2005); International Business Relations (ASE București) (1995 – 1999) Experience: SIF Banat-Crișana – Member in BOD starting with Jan 2010, Vice- Chairman of the BoD from June 2012, Chairman of the BoD and General Director starting with December 2012; Vrancart S.A. – Member of BoD (March 2012 – present) Romenergo S.A. - Member of BoD (2008 – present), General Manager (2008 – October 2012); BG Management Consultants SRL – Unique administrator (2005 – present); INTEC S.A., București – representative of the majority shareholder (2007 – present); AGAM Development SRL, București – unique administrator (2007 - present); Retail Development S.R.L. – representative of the significant associate and unique administrator (2007 – 2008); IEMI S.A. – main shareholder and unique administrator (2005 – 2007); ENERGOREPARAȚII SERV S.A. – significant shareholder and representative of the majority holder (2004 – 2006). BG Conta SRL – (1997 – 2004) coordinating associate. Specializations: Accounting Expert, CECCAR Member(Body of Expert and Licensed Accountants of Romania); Financial Auditor, member of Chamber of Financial Auditors of Romania Fiscal advisor, member of Chamber of Tax Consultants in Romania Insolvency practitioner, member of UNPIR ( National Union of Insolvency Practitioners in Romania)

Gabriela

GRIGORE

Deputy General Director -

Operations

Studies Economic Sciences University, Timișoara University(1975 – 1979) Experience SIF Banat-Crișana, Arad (1992 – present)

Deputy General Director - Operations, 2004 – present Finance Director, 1995 – 2004 Head of Finance Department, 1992 – 1995

Vrancart S.A., Adjud – BoD member (2000 – present) Prodplast S.A., București – BoD member (2007 – present) Astra Vagoane S.A., Arad (1979 – 1992)

Head of Finance Department (1985-1992) Chief Accountant – Technical Assitance and Services Division (1982 – 1985) Trainee Economist (1979-1982)

Responsibilities Coordinates the investment activity on the financial markets, the management of SIF Banat-Crisana’s portfolio and the research activity.

Carmen

DUMITRESCU

Deputy General Director -

Development

Studies MBA at Case Western Reserve University School of Management Cleveland, Ohio (1997 – 1999); Post-graduate course on robotics and automated machines at Technical University, Timișoara (1990 – 1991); Mechanical University from the Polytechnic Institute, Cluj-Napoca (1981 – 1986) Experience SIF Banat-Crișana, Arad (1993 – present)

Deputy General Director (1999 – present) Head of Strategy Division (1994 – 1997) Analyst in FPP I Banat-Crișana (1993 – 1994)

Depozitarul Central S.A. București Vice-president of the BoD (July 2012 – present) BoD member (December 2006 – July 2012)

Bancpost, București - BoD member (September 2004 – May 2012) Napomar S.A., Cluj-Napoca – BoD member (2001 – present) The Institute for Research and Design of Railway Wagons, Arad – design engineer (1989 – 1993) Astra Vagoane S.A., Arad – engineer (1986 – 1989) Responsibilities Coordinates the preparation and monitoring of the financial plan of the company and of the organizational development plans, the investors relationships, IT, legal and strategy activities




EXECUTIVE MANAGERS

as at 31.12.2012 and their participation in the capital share of SIF Banat-Crișana

Name Position Holdings as at 31.12.2012

Number of shares Percentage of

share capital

Dragoș-George BÎLTEANU Chairman, General Director 406 0.00007%

Carmen DUMITRESCU Deputy General Director, Development

178,078 0.032%

Gabriela GRIGORE Deputy General Director, Operations

- -

In 2012, no litigations or administrative procedures were started against the members of the

Board of Directors or against the Executive Management Board, with impact on the share

price or on their ability to hold the membership in the above-mentioned corporate

structures.

Observing the Shareholders’ rights SIF Banat-Crișana ensures an equitable treatment of all shareholders, including the minority

and foreign shareholders in accordance with legal requirements and the Company’s By-

Laws.

As at 31.12.2012, the number of shareholders of the Company is of 5,810,816, as reported

by S.C. Depozitarul Central SA Bucharest, the company that holds the shareholders’ registry.

The right to vote SIF Banat-Crișana endeavors to facilitate the participation of shareholders

at the general meetings of shareholders (“GSM”). SIF Banat-Crișana shareholders have the

opportunity to participate in the GSM directly by designating a representative by power of

attorney or can vote by correspondence (through the post or by electronic voting available

on the Company’s website).

For the two Ordinary General Meetings of Shareholders in 2012, the Board of Directors

approved the procedures for the orderly and efficient organization of the workings of GSM,

51,25%

0,57%24,67%

23,51%

Romanian individuals (5,808,665 shareholders)

Non-resident individuals (1,793 shareholders)

Romanian legal entities (295 shareholders)

Non-resident legal entities (63 shareholders)




in accordance with the legal requirements and related CNVM regulations. The information

and materials related to the General Meeting of Shareholders were made available to

shareholders at the Company's headquarters and posted on its website: the convening

notice of the meeting, informative materials and documents proposed for discussion and

submitted for approval by the GSM, participation and voting procedures, special proxy forms

and correspondence voting forms and the decisions adopted by the GSM and voting results

for each item on the agenda.

In 2012, the Board called twice the General Meeting of Shareholders.

for 25/26 April 2012 – the ordinary general meeting of shareholders gathered on the

second call on 26 April 2012 and approved the following: financial statements for the

year 2011; profit appropriation and dividend per share, revenue and expenditure budget

and work program for 2012, the remuneration of board members and limits on the fees

and additional remuneration of all directors.

for 1/2 March 2012 - the extraordinary general meeting of shareholders was called for

the approval of the amendments to the By-Laws of SIF Banat-Crișana in order to comply

with the Capital Market law no. 297/2004, as amended by Law no. 11/2012 with respect

to the increase of the maximum holding percentage from 1% to 5% of the share capital

of the Company. The conditions necessary for the validity of the decisions of the

extraordinary general meeting of shareholders have not been complied with in any of

the two days, consequently, no decisions were adopted. Thus, SIF Banat-Crișana

amended the By-Laws in accordance with the requirements of Law no. 11/2012 issued

for the amendment of Law no. 297/2004 regarding the capital market.

In the General Meetings of Shareholders, the cancellation of voting rights above the legal

and statutory ownership threshold was made in accordance with the legal provisions. In

2012, CNVM has endorsed the amendments to the By-Laws of SIF Banat-Crișana, as updated

in accordance with the requirements of Law no. 11/2012 issued for the amendment of Law

no. 297/2004 regarding the capital market, which state that any individual may acquire or

hold, alone or together with other persons acting in a concerted manner, shares issued by

the Company up to a maximum of 5% of the share capital.

Right to information SIF Banat-Crișana observes the right to information of shareholders,

providing them relevant information to enable them to exercise their rights in a fair manner.

Information on the Company's activity considered to affect the price of shares on the stock

exchange was subject to current reports transmitted or communicated within 24 hours to

the market, being immediately made available to investors on the BSE website and on the

Company’s website, www.sif1.ro. To ensure equal access to information for investors,

posting on the Company’s website of reports and press releases to the market participants

is made after the information being posted by the market operator, BSE.

The organizational structure that ensures the relationship with shareholders and the

interested public is the Communication and Investor Relations Department. Contact: Calea

Victoriei 35A, 310158 Arad, Romania, tel / fax: 0257 304 446, email: [email protected].

Entitlement to dividend All existing shareholders on record date are entitled to dividends

approved by the Ordinary General Meeting of Shareholders of the Company. The payment

is made in compliance with the regulations stipulated at the point no. 2 from this report.

mailto:[email protected]




Transparency in communication SIF Banat-Crișana pays a great importance to transparency in communication, being

convinced that the trust of the public is essential for the activity of the Company. SIF Banat-

Crișana aims to ensure continuous and periodic reporting in an objective and fair manner,

covering all the important aspects of the company's business and results achieved.

The Company’s website is a useful platform for communication with shareholders. The

section dedicated to investor relations hosts information of interest to shareholders and all

communications and reports of the Company, are made available in Romanian and English.

The list of information published or made available by SIF Banat-Crișana during January to

December 2012 is attached to the report.

20 years of activity

In 2012, SIF Banat-Crișana celebrated 20 years of institutional activity. The event was marked

by the opening of the trading session on the Bucharest Stock Exchange on 23 October 2012

by the representatives of SIF Banat-Crișana management.

The event enjoyed a large auditorium and brought together representatives of the

Commission for Budget and Finance from the Chamber of Deputies, of the National

Securities Commission, of the Bucharest Stock Exchange, of financial investment services

companies, of asset management companies, banks, analysts, auditors, mass-media.

The anniversary has been a good opportunity to present the results and activities of SIF

Banat-Crișana.

Refreshment for the visual identity

In 2012, at 20 years of institutional activity, SIF Banat-Crișana has refreshed the corporate

visual identity.

Taking into account the fact that the logo and the visual identity which were previously in

use presented symbolic, style and technical deficiencies, in order to better convey its values,

SIF Banat-Crisana has effected technical and stylistic changes. The company has developed

a modern and versatile trademark, which inspires confidence and safety, experience,

strength and stability, characteristics associated with the lion symbol. The new visual identity

was not aimed to re-brand the Company, but to improve the logo for a better expression of

the brand values and to ease its use in the corporate communication materials and various

contexts.

The new visual identity was formalized in a brand handbook, which contains rules and

documents for internal and external communication, being created templates for all written

internal and external communication methods. The new visual identity was launched and

used for the preparation of the visual and promotional materials in the context of the 20

years anniversary.




The need to improve the relationship between the investors and the Company and to

enhance the value of the brand as well as the existing technical limitations which made

difficult the operation of the website of SIF Banta–Crișana by the users led to the

development in 2012 of a new version of the internet page of the company.

The new website of SIF Banat-Crișana was designed and developed on the fundamental

principles of ergonomic IT architecture, in order to facilitate the communication and

interaction with investors and other categories of interested public users (analysts, media,

etc). The process was perceived as a method of positive differentiation of SIF Banat-Crișana

from its competitors, offering a high degree of satisfaction to its users, thus increasing

notoriety and prestige.

Financial reporting

The financial statements of 2012 were prepared in accordance with the Accounting

Regulations compliant with Directive IV of the EEC applicable to entities authorized,

regulated and supervised by the CNVM, approved by the Order of the President of CNVM

no. 13/2011, which is applicable together with the Accounting Law no. 82/1991 (republished

and amended). In preparing the annual financial statements, CNVM Order no. 3/2013 for the

approval of Instruction no. 1/2013 for the modification of the Instruction no. 2/2007 related

to preparing and filling of financial statements by the entities authorized, regulated and

supervised by the National Securities Commission was also considered.

On 31 August 2012, the company published the consolidated financial statements for 2011

– prepared in accordance with CNVM Order no. 12/2011 for the approval of the Regulation

no. 3/2011 regarding the Accounting Regulations compliant with EU Directive no. VII

applicable to the entities authorized, regulated and supervised by CNVM and in accordance

with the Decision no. 1176/15.09.2010 related to the obligation of the financial investment

companies registered with CNVM as Other collective investment organizations with a diversified

investment policy to prepare and submit to CNVM annual consolidated financial statements in

accordance with the International Financial Reporting Standards adopted by the European Union

(IFRS), within 8 months from the closing of the financial year – accompanied by the Administrator’s

Report.

On 26 September 2012, the company published separate financial statements for 31

December 2011 – prepared in accordance with the International Financial Reporting

Standards adopted by the European Union (IFRS) and in accordance with the requirements

of CNVM Instruction no. 6/2011 regarding the application of International Financial

Reporting Standards by entities authorized, regulated and supervised by the National

Securities Commission, modified by Measure no. 14/21.06.2012.

The statutory financial statements prepared in accordance with the Order of the President

of the National Securities Commission no. 13/2011 and the separate financial statements

prepared in accordance with IFRS are audited by KPMG Audit SRL, the independent financial

auditor, appointed by General Shareholders Meeting on 28 April 2011 for a period of two

years.




Internal control and risk management

Risk management includes a dedicated and representative system of the company, made

up of regulations and well integrated procedures.

Internal control

In accordance with CNVM Regulation no. 15/2004, the Board of Directors established under

its authority a Department of Internal Control, whose role is to supervise the Company’s and

its employees’ compliance with laws, regulations, instructions and procedures for capital

market and the internal rules and procedures of the Company.

The representative of the Department of Internal Control is authorized by CNVM Decision

no. 3521/29.12.2005 and is registered with CNVM under no. PFR13/RCCI/020033.

In 2012, the activity of the Department of internal control was conducted in accordance with

the Investigation Control Plan approved by the Board on 27 January 2012, CNVM Regulation

no. 15/2004, internal work procedures and internal regulations.

Lines of action considered: monitoring compliance with the specific regulations of the capital

market/or internal procedures, provision of information to the Company and the employees

on the legal framework of the capital market, the approval of documents submitted by

SIF Banat-Crisana to CNVM to obtain permits under CNVM regulations, approval of reports

submitted to CNVM and the capital market entities, advising on the Company’s information

and publicity materials, and other activities related to compliance with the legislation specific

to the capital market and internal regulations.

As part of internal control activity during 2012, the compliance with work procedures and

the capital market legislation was verified in the following areas: trading securities,

calculation of net assets, maintenance of the portfolio of assets within the regulated limits,

compliance with the legal reporting requirements, calculation and payment of the rate of

0.1% of net asset to CNVM, prevention of money laundering and financing of terrorist acts

through capital markets, compliance with legal provisions on people with access to inside

information.

Following the control actions, no breach of the law, regulations and procedures was signaled.

Proposals and recommendations for improvement working procedures were made during

the control activities.

Internal audit

In SIF Banat-Crișana an internal audit department was set-up, which audits the Company's

regular activities in order to provide an independent assessment of the operations carried

out, of the control and processes, assessing possible exposure to risks of various business

segments (security of assets, compliance with regulations and contracts, integrity of financial

and operational information, etc.), making recommendations to improve systems, controls

and procedures to ensure efficiency and effectiveness of operations and following-up on the

proposed corrective actions and results.

The Internal audit activity is exercised under the following forms: evaluation of management

and internal control systems – audit of systems; assessment of the results in relation to the




objectives targeted and assessment of the actual impact - performance audit, compliance

with legal norms - compliance audit.

The internal audit activity is carried out based on the audit plan developed in accordance

with the Company’s objectives. The audit plan and the necessary resources are approved by

the Audit Committee and by the Board, being pursued the inclusion of all activities and

operations of the Company.

The internal audit activity is an independent and objective activity which grants the company

assurance on controls over operations and which is carried out in accordance with the procedures

elaborated. Each internal audit assignment is performed based on a detailed program, which

comprises the scope, objectives, allocated resources and timing of activities.

The internal audit aims to assist the company in identifying and evaluating the significant

risks in order to provide an independent assessment of the risk management, control,

governance processes and to assist the company in maintaining an effective and efficient

control system.

During 2012, the main activities and operations of the Company subject to internal audit

included:

managing the portfolio of financial instruments; documenting investment/disinvestment

decisions and compliance with the approved limits of competence;

trading securities, compliance with the short-term investment policy and the approved

procedures of work;

compliance with work procedures related to economical and administrative tasks,

including the inventory of the Company’s assets;

Managing the human resources, compliance with the Collective Labor Agreement,

internal regulations and approved regulations;

Compliance with the legislation and work procedures in connection with the calculation

and reporting of the net assets of the Company;

the procedures for distributing and recording dividends due to shareholders of

SIF Banat-Crișana;

monitoring and collecting the dividends from the companies in the portfolio;

compliance with the archiving procedures.

The internal audit reports to the Audit Committee and to Board of Directors about audit

results, conclusions, recommendations and proposals. No significant issues that would

require intervention from the Board of Directors were identified in 2012.

The internal audit appreciate that the activities and operations performed by SIF Banat–

Crișana in 2012 which were subject to the audit, are compliant with the policies, programs

of the company and with the legal and internal regulations.

Operational risk management

The primary responsibility for developing and implementing of operational risk controls lies

with the Board of Directors. This responsibility is sustained by the implementation of general

standards on operational risk management in the following areas: necessity for adequate

segregation of duties between different functions, roles and responsibilities; requirements




for reconciliation and transaction monitoring, compliance with regulatory requirements and

other legal requirements; documentation of the controls and procedures; requirements for

periodic assessment of operational risks faced by the Company and the adequacy of controls

and procedures for addressing identified risks; emergency plans; standards and business

ethics; mitigating risks, including insurance when appropriate.

The documented work procedures implemented at the organizational level contain

preventative and corrective actions aimed at enabling the management of this risk.

Procedures are made available by being posted on the Company intranet to be consulted by

those responsible.

At the end of 2012 there were 46 documented procedures, which follow compliance with the

legal requirements, the generation of information flows and effective operations and

strengthening of internal control.

SIF Banat-Crișana obtained the certification for Information Security and Management, in

accordance with ISO 27001:2005, from United Registrar of System LTD, UKAS accredited

(United Kingdom Accreditation Service). The audit for obtaining the certificate has been

conducted according to CNVM Instruction no. 2/2011, regarding the audit of the

informational systems used by entities authorized, regulated and supervised by CNVM.

Conflict of interest and transactions with related parties

The Board of Directors adopted operational solutions to facilitate proper identification and

resolution of situations where a manager or an employee had a material interest in its own

name or on behalf of third parties.

Each Board member ensures that he/she avoids any direct or indirect conflict of interest with

SIF Banat-Crișana or with the companies controlled by it. To the extent that there is a conflict

of interest, the concerned administrator has the obligation to inform the Board and shall

refrain from debate and vote on those issues.

The Board adopted a Code of Ethics and Business Conduct, which includes a series of

mandatory rules for management and employees in order to protect shareholders’ interest

and market integrity. The Code provides clear rules regarding: compliance with legal

requirements and compliance with internal procedures, the conflict of interest, information

privacy, inside information, prohibited transactions, insiders’ trading, refraining from actions

of market manipulation.

In accordance with Law no. 297/2004 and CNVM Regulation no. 1 / 2006, insiders and people

with access to inside information about SIF Banat-Crișana are obliged to notify the CNVM

and the Company of any transaction with SIF Banat-Crișana shares. Notifications are

published on the BSE website. SIF Banat-Crișana disseminated these notifications

throughout 2012 on its website as well.

Corporate information regime

The Board members, directors and employees of SIF Banat-Crișana are required to maintain

the confidentiality of documents and corporate data and comply with the Code of Ethics and

Business Conduct and with the procedures approved by the Board regarding corporate

information.




The Board of Directors adopted procedures regarding the Company’s internal circuit and

third party documents disclosure and disclosure of information relating to SIF Banat-Crisana,

giving special importance to inside information, as defined by Law no. 297/2004, which may

influence the market price of the shares issued by the Company.

Social Responsibility SIF Banat-Crișana has been involved in the life of the community, supporting local

community projects with impact on the community, in health, sport, education, culture and

cults.

In 2011-2012, the sponsorship made by SIF Banat-Crisana for the health system in Arad has

been in amount of RON 400,000, from which RON 320,000 has been distributed to

Department of Pediatrics, Emergency Department, Urological Department and Surgery

Department from Spitalul Clinic judetean de Urgenta Arad;

In the last years, SIF Banat-Crisana has purchased for Spitalul Clinic judetean de Urgenta

Arad a water installation for urology, cardiology machinery and improved the conditions

from the pediatrics.

In 2012, the surgery department of the hospital has been equipped following a new

sponsorship of over EUR 60,000 by SIF Banat-Crișana. Also SIF Banat-Crișana acquired 40

work equipment (uniforms) for SMURD Arad at the end of 2012.

The financial statements for 2012 have been prepared in accordance with the Accounting

Regulations compliant with Directive IV of EEC applicable to entities authorized, regulated

and supervised by CNVM, approved by Order of the President of CNVM no. 13/2011 and with

applicability along with the Accounting Law no. 82/1991 (republished and amended). In

preparing the annual financial statements, CNVM Order no. 3/2013 for the approval of

Instruction no. 1/2013 for the modification of the Instruction no. 2/2007 related to preparing

and filling of financial statements by the entities authorized, regulated and supervised by

the National Securities Commission was also considered.

The individual annual financial statements are attached to this report. The following are

comments on the main elements of the financial statements and also on budget realization

for 2012.




BALANCE SHEET

(all amounts are in RON) 2009 2010 2011 2012 Securities and other non-current financial instruments

487,806,342 538,642,535 590,765,130 809,243,201

Receivables 130,964,344 94,239,811 584,861 748,040

Short-term financial investments 3,743,173 16,394,070 136,234,798 143,374,756

Other assets 6,737,654 6,688,471 6,344,874 5,698,632

TOTAL ASSETS 629,251,513 655,964,887 733,929,663 959,064,629

Current liabilities 67,577,178 63,012,355 37,863,920 33,058,982

Long-term liabilities 5,078,110 0 0 0

Provisions 56,068,188 54,081,011 53,467,411 51,337,769

Other liabilities 324,771 324,757 0 44,160

Equity 500,203,266 538,546,764 642,598,332 874,623,718

TOTAL LIABILITIES 629,251,513 655,964,887 733,929,663 959,064,629

The securities and other non-current financial instruments mainly include the value of

shares held in companies, carried at their historical cost adjusted with the allowances for

impairment set-up at the end of the year and having the most significant share in total

assets. The 37% increase of the non-current financial assets in 2012 compared to the

previous year is mainly due to the execution of the sale and share contribution transactions

with BCR securities stipulated in the Sale option/share contribution Contract, concluded with

Erste Group Bank AG in 2011.

The decrease in the receivables starting with 2011 compared to the previous years is the

effect of the exclusion of the monetary investments held with a tenor under 1 year (bank

deposits, bonds) and of their presentation as short-term financial investments, according to

the accounting Regulations applicable from 2011. At the end of 2012 the receivables’ share

in the total assets has been reduced to 0.08%

The short-term financial investments include the value of the shares owned for the short

term, fund units, bank deposits and treasury certificates, with maturity less than 1 year. As

at 31 December 2012, this caption increased compared to 2011 as a result of investments in

foreign markets.

Other assets mainly include the value of tangible assets held by the Company at its

headquarters and branches with operational and administrative use.

The Company's current liabilities as at 31 December 2012 consist mainly of unclaimed

shareholder dividends afferent to the previous financial years, trade payables, liabilities

related to personnel, social security and taxes. The decrease in the amount of liabilities as

at 31 December 2012 compared to the previous year is the result of the decline in income

tax obligations.

The provisions primarily include provisions for taxes, representing the income tax calculated

on the reserves afferent to shares held, revaluation reserves of fixed assets and reserves

from tax incentives. The volume of provisions is decreasing as a result of decrease of the

volume of taxable reserves afferent to the portfolio.

Equity holds the majority share in the structure of liabilities. The increase of the value and

the weight in total liabilities is the effect of appropriating to equity a part from the result of

each financial year.




The increase in equity as at 31 December2012 compared to 2011 was generated by the increase

in the reserves (reserves from the share value and release of the reserves for impairment and

adjustments of the shares) and by the increase in the current year result.

PROFIT AND LOSS ACCOUNT

(all amounts are in RON) 2009 2010 2011 2012

Income from non-current financial assets 90,414,635 51,891,144 12,500,230 14,106,496

Income from disposal of financial assets 62,056,894 33,441,654 94,312,744 118,856,410

Income from reversal of provisions, re-

activated receivables and sundry debtors 15,795,863 17,041,212 10,318,045 10,862,121

Interest income 9,966,533 7,693,136 6,337,124 9,104,342

Other income 2,298,163 3,444,489 18,284,026 6,203,413

TOTAL INCOME 180,532,088 113,511,635 141,752,169 159,132,782

Expenses with the disposal of financial

assets 43,598,125 25,665,672 24,658,409 15,637,769

Fees and commissions expense 1,888,724 2,337,960 2,548,099 2,367,196

Expenses with depreciation, amortization,

provisions, losses from receivables and

sundry debtors 5,986,417 3,147,922 19,108,918 5,569,138

Other operating expenses 10,621,041 17,158,650 18,747,569 18,714,389

TOTAL EXPENSES 62,094,307 48,310,204 65,062,995 42,288,492

GROSS PROFIT 118,437,781 65,201,431 76,689,174 116,844,290

INCOME TAX 6,252,121 2,205,115 13,682,655 16,330,246

NET PROFIT 112,185,660 62,996,316 63,006,519 100,514,044

Total revenues show a different pattern over the years, both in volume and structure. The

increase by 12.3% of total income in 2012 compared to 2011 is due to the achievement of a

significant volume of revenues from disposal of financial investments (the sale of a part of

the shares held in BCR, according to the contract concluded with Erste Group Bank AG in

2011).

The evolution of revenues with significant weight:

The income from financial assets (dividends) has registered an increase in 2012, due to a

higher volume of dividends obtained from some companies form SIF Banat-Crișana’s

portfolio.

The income on disposal of financial investments (sales of shares and short term financial

investments) has an oscillating evolution. The significant increase of these revenues in 2012

is the effect of the sale/contribution contract concluded with Erste Group Bank AG and

related to BCR shares.

Income from reversal of provisions, re-activated receivables and sundry debtors mainly

include the reversal of value adjustments for impairment losses on securities upon disposal

or increase in value. In 2012, the same level as in 2011 was maintained.

The interest income includes the interest on bank deposits, government bonds, treasury

certificates and municipal bonds. These revenues are directly influenced by the amount of

monetary placements (shown in the cash flow statement). In 2012, the increased volume of

interest income is a result of the increase in the average volume of monetary placements.




The other income registered a lower volume in 2012 compared to 2011. This is due to the collection

through enforcement actions of a claim against AVAS in 2011.

On the main items of expenses, the evolution is as follows:

The evolution of total expenses is primarily related to the cost of disposal of financial investments.

The decrease of total expenditure by 35% in 2012 compared with the previous year was caused by

the decrease of the expenses with disposed financial investments and expenses with depreciation,

provisions and losses from receivables.

Expenses with the disposal of financial investments has a significant share in the total annual

expenses, their level and dynamics are influenced by the sales of securities made and the

relationship between the historical cost of such securities and any reserves for shares received at

no cost.

In 2012, the volume of these expenses is under the level of the previous year.

Expenses with depreciation, amortization, provisions, losses from receivables and sundry debtors

significantly decreased in 2012, due to the reduction of expenditure with permanent impairment

losses related to the companies which went into liquidation in 2012 and from which a prompt

recovery of the activity is not expected.

The category of other expenses includes mainly administrative expenses (consumables, energy,

water, travel, phones, etc.), staff costs, depreciation expenses, advertising and publicity and other

administrative expenses. The 2012 expenses are at the level of 2011 ones.

CASH FLOW STATEMENT

( all amounts in LEI ) 2009 2010 2011 2012 Receipts from customers 717,944 225,996 16,419,074 370,203

Payments to suppliers and employees -11,064,937 -16,880,668 -15,548,727 -16,746,482

Income tax paid -6,143,725 -2,586,112 -645,015 -28,440,859

CASH FLOW USED IN OPERATING ACTIVITIES -16,490,718 -19,240,784 225,332 -44,817,138

Receipts from sale of financial assets and other receipts from investing activities 70,775,845 45,761,341 97,008,431 117,658,539

Payments for acquisition of financial assets and other payments from investing activities -26,198,475 -50,059,849 -47,264,422 -48,264,959

Dividends received 72,756,098 13,131,098 13,515,309 15,373,836

Interest received 8,905,664 8,300,943 6,638,604 8,122,265

Receipts from sale of tangible and intangible assets 648,600 103,200 487,304 0

Payments to acquire tangible and intangible assets -40,922 -360,937 -320,045 -71,750

CASH FLOW from investing activities 126,846,810 16,875,796 70,065,181 92,817,931

Dividends paid -12,462,674 -24,648,800 -42,402,042 -44,093,205

Cash flow used in financing activities -12,462,674 -24,648,800 -42,402,042 -44,093,205

Total CASH FLOW 97,893,418 -27,013,788 27,888,471 3,907,588

Cash and cash equivalents at the beginning of the period 21,455,224 119,348,642 92,334,854 120,223,325

Cash and cash equivalents at the end of the period 119,348,642 92,334,854 120,223,325 124,130,913




The significant increase in 2012, compared with the previous year, of the cash flow used in

operating activities is mainly due to decreasing customer receipts (in 2011 a claim from AVAS,

which generated a cash surplus from operations, has been recovered by enforcement) and due to

payments of income tax.

The higher volume of revenue from the sale of financial assets and other receivables from

investment activity has produced a cash surplus higher than the one achieved in 2011.

Payment of a gross dividend per share for 2011 higher than what was distributed in the previous

year led to a more significant outflow of cash from financing activities in 2012.

Total cash flow realized in 2012 generated an increase in cash and cash equivalents compared to

the beginning of the year.

BUDGET OF INCOME AND EXPENSES REALIZATIONS FOR 2012

% realization 2011 to

(all amounts are expressed in RON, unless otherwise stated)

realization

2011

forecast

2012

realization

2012 2011

forecast

2012 I. TOTAL INCOME, WHICH 141,752,169 135,992,000 159,132,782 112.3 117.0

II. TOTAL EXPENSES, WHICH 65,062,995 39,363,000 42,288,492 65.0 107.4

III. GROSS RESULT 76,689,174 96,629,000 116,844,290 152.4 120.9

IV. INCOME TAXES 13,682,655 16,022,290 16,330,246 119.3 101.9

V. RESULT FOR THE YEAR 63,006,519 80,606,710 100,514,044 159.5 124.7

Total income is 17%% over the provisions of 2012 and by 12.3% over the achievements of 2011.

Total expenses in 2012 are 7.4% above the forecast, but represent 65% of the achievements of

2011.

Gross profit amounted to RON 116,844,290, significantly exceeding the forecast for 2012 as a

result of achieving a higher volume of revenues compared with the increase of the expenses.

Income tax is at the level of the forecast and above 2011, as a result of the increase in the gross

result.

Net income for the year amounted to RON 100,514,044 exceeded the forecast of 2012 and the

realization of the previous year.

Pending litigations status

As at 31 December 2012, the Company was involved in 109 litigations in Court trial. The Company

is the claimant in 54 litigation cases, the defendant in 43 cases, and in 12 of the litigation cases, the

Company is the intervening party.




In cases where the Company is the claimant, the subject of the litigation is the annulment of some

decisions of the general meeting of shareholders from the companies in the portfolio or the

recovery of the unpaid dividends from companies in operation or liquidation.

The trials where the Company is defendant are represented by the obligation of making a takeover

offer of SC ARGUS CONSTANTA SA, or other requests from the privatization period.

In December 2012, CNVM has issued the measure no. 23/20.12.2012 regarding the valuation of

the assets of Undertakings for Collective Investments authorized/approved by CNVM, which

establishes harmonized measures regarding the valuation of assets, until the modification of

CNVM Regulation no. 15/2004. The Company has the obligation to comply with these rules in

maximum 90 days from the effective date of the measure.

For the moment, the Company is not able to evaluate the impact of applying this measure.

On 15 February 2013, the Company notified CNVM and the Competition Council with respect to its

decision to acquire the controls share of S.A.I Muntenia Invest S.A. Until the finalization of the deal,

the terms of the transaction are confidential.

The Board of Directors of SIF Banat-Crișana proposes and recommends to the Ordinary General

Meeting of Shareholders the distribution of net profit for the financial year 2012, amounting

to RON 100,514,044, according to the following three options:

Destination 1st version 2nd version 3rd version

1. Other reserves, for its own

sources of financing used in the

future according to the decision of

the Ordinary General Meeting of

shareholders

RON 100,514,044 RON 78,560,073 RON 34,652,132

2. Dividends, payable to

shareholders who own shares at the

record date approved by the GSM

-

RON 21,953,971

(RON 0.04

gross per share)

RON 65,861,912

(RON 0.12

gross per share)




The report is accompanied by the following appendices:

Appendix 1 Financial Statements as at 31 December 2012

Appendix 2 Net asset statement as at 31 December 2012 (according to the Appendix 16 of

CNVM Regulation no. 15/2004)

Appendix 3 Detailed Statement of Investments as at 31 December 2012 (according to the

Appendix 17 of CNVM Regulation no. 15/2004)

Appendix 4 List of the Companies controlled by SIF Banat-Crișana as at 31 December 2012

Appendix 5 Statement of reports and public press releases issued by SIF Banat-Crișana in

2012

The report of the Board of Directors was approved by the Board of SIF Banat-Crișana in the

meeting of 28 February 2013.

Dragoș-George BÎLTEANU Ștefan DOBA Chairman, General Director Director of Economic Department

Report of the Board of Directors of SIF Banat-Crișana · REPORT OF THE BOARD OF DIRECTORS OF SIF BANAT-CRIȘANA FOR 2012 ... The NBR draft data show that the direct net foreign ...

Documents