Fondul Proprietatea SA (FP) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Fondul Proprietatea First Half 2026 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Daniel Naftali, Portfolio Manager. Daniel, please go ahead.

Thank you. Good afternoon and welcome, everyone, to our conference call to discuss the H1 2026 results and the July 2026 NAV development. Calin Metes, Portfolio Manager; Catalin Cadaru, Head of Financial Reporting; and I, are pleased to host today's call. The H1 2026 results report can be found on the Fund's website in the Financial Results section and the presentation that we will be discussing is available on our website, fondulproprietatea.ro in the Investor Relations Call section. After the presentation, we will have a 30-minute Q&A session. As a reminder, this conference call is being recorded, and the recording will be available on the Fund's website after the call. That being the agenda, I would like to start with Slide 2 of the presentation, where we highlight the key facts about the Fund. At the end of July, the Fund's NAV was RON 2.67 billion or USD 0.59 billion and NAV per share reached RON 0.9049 were $0.1985. On the right-hand side, you can see the evolution of the fund adjusted share price and the discount since the funds listing in January 2011. As at Friday is closed, the Fund was trading at a discount of 31.6% for the shares. On Slide 3, we present the Fund's shareholder structure at the end of July with no major changes since our last results conference call in May 2026. On Slide 4, we show a summary of the NAV and share price performance since 2011, and the evolution of Fund's average an annual discount on the Bucharest Stock Exchange. The NAV per share total return in H1 2026 was 14%, but the total return for the local shares was 13.6%. For the first 7 months of the year, the NAV per share total return was 13.9%, while total return for the local shares was 0.5%. In the following section, we would like to provide an update on the fund portfolio. On Slide 6, we show the portfolio structure as at the end of July as 87.3% were unlisted companies, 4.4% in listed equities and 8.3% in net cash and receivables. Net cash and receivables position as of the end of July was USD 48.5 million. On Slide 7, we present the main portfolio companies end of July, eventing 89% of the Fund's NAV. On Slide 8, we present an overview of the NAV evolution during the first 6 months of the year. Fondul Proprietatea's equity portfolio was increased by 11.1% to RON 2.45 billion compared to end of December 2025, mainly driven by the strong appreciation of Bucharest Airports and Constanta Port, which more than offset the modest decline recorded by Salrom and other holdings. On Slide 9, we present the H1 2026 figures for Bucharest Airports. On the financial side, we note operating revenues increasing by 6.6% to RON 815 million, operating results reaching RON 397.9 million from RON 392.4 million during the similar period of the previous year. Net income was RON 373.6 million, up 5% year-on-year. Truck orders during the same period, traffic reached 8.5 million passengers, an increase of 5% year-on-year, while revenues growth continue to outperform it. Profitability improved in line with overall traffic trend. Concerning the new terminal project, well, we have some updates considering the capacity constraints of the current infrastructure at Henri Coanda International Airport. The most important midterm development project would be the construction of a second terminal at this location. The public tender for consultancy services, referring to design services for studies, concept, detail design and technical assistance for airport infrastructure was awarded to a consortium led by [indiscernible] Group. The contract envisages 2 years for the design phase, 3.5 years for technical assistance during the execution phase and 5 years of technical assistance for the guarantee period. According to the tender documentation, the new terminal would have a surface of 176,000 square meters, almost twice the surface of the existing terminal and could double the passenger processing capacity at Henri Coanda. GSM for approving the -- the GSM for approving the purchases of minority stakes held by the Fund in [indiscernible]. As you know, on January 9, the shareholders approved the intention by 80%. [indiscernible] launched in mid-July, the public tender to select its own adviser for the potential transaction and offers are being submitted by late August. As we already communicated, the Fund manager is treating the potential transaction with appropriate diligence, including by selecting adviser on our own on Fondul side as well for specifically studies for such a process. Concerning the share capital increase, well, there are -- there is just ongoing information, as you know, in July 2025, the Ministry of Transport approved within GSM resolution to start the valuation process for the share capital increase with the value of land at Baneasa Airport, the Fund challenged this GSM decision in court and the next hearing is set for October 8, 2026. On the corporate governance front. As you know, there is a Board appointed for 4 years in July 2024. We raised some aspects of legality regarding disappointments and which we view the disappointments did not observe all provision of corporate governance calling forced, and there is a new hearing schedule for 28th of October 2026. On Slide 10, we show first half 2026 figures for Constanta Port. Operating revenues increased 9.5% to RON 261 million. As we note in the report, such increase was also related to some pass-through costs related to the supply of energy. Operating profit is -- at half year is RON 69.3 million, down from RON 76.2 million during the similar period of the previous year, while net income is RON 85.1 million, down 3% year-on-year. There is -- over the first 6 months of the year, we noted a slight decrease in overall traffic, 1% to 30.8 million tons due to weaker volumes of series. On profit distribution, we note that in 2025, but we know the 2025 5 financial statements were approved a bit late on fifth of August 2026. In that GSM, shareholders approved a regular dividend distribution of RON 26.3 million out of 2025 profit. So the attributable regular profit attributable to Fund is RON 5.3 million. At the same time, shareholders approved an additional dividend of a total dividend of RON 105.2 million from undistributed earnings generated in 2023 and 2024, of which approximately would RON 21 million would be attributable to the Fund. So given that the company did not distribute any dividend to the interim industry, 2024, we remind that the company did not distribute dividend. So the Fund -- the special dividend distribution was included on the GSM agenda as a Fund's proposal, and we are happy that we got the full support also of the Ministry of Transport. On June 4, as you know, the Ministry of Transport approved a purchase pricing share purchase agreement in February. And subsequently, the transaction was closed in April 2026. At the same time, the GSM took place at the end of March 2026, approved the share capital increase for a total value of RON 281.6 million. The Fund manager exercise is preemption rise in the context of the share capital increase approved by resolution by the resolution taken at the end of March for the purpose of maintaining the Fund's existing shareholding percentage. So the company -- the process itself was not yet finalized. The company that for Constanta Port called another AGM that is to take place on August 20 to finalize the legal procedures for the share capital increase. As you know though, as we have already announced the fund has challenging court necessity of a share capital increase given the company's large net cash position. On the corporate governance front, the selection process for a 4-year Board mandate was completed and new members were appointed at the end of January. We, Fondul Proprietatea, appointed one member to [indiscernible] vote. At the same time, following the appointment of the Board for 4 years, there was a selection process for CEO and CFO. The selection process for the CEO position was finalized. And Mr. Matadoresk, who was appointed for a fully full year mandate, basically few. He already was an interim CEO at the [indiscernible]. At the same time, the selection process for the CFO position is still ongoing at the current moment. On Slide 11, we provide you some information about [indiscernible]. So at H1, operating revenues increased by 9% to RON 257.8 million, while operating profit was -- reached RON 70.7 million, up from RON 12.9 million. Net income increased significantly to RON 64.5 million compared to the previous year. Also, we have noted that in H1 results against which current results are presented. So in H1 2025, the results were affected by the private mine accident. On the other hand, the company's budget for 2026 reflects conservative top line approach and lower reported profitability driven by material nonrecurring expenditure, approximately RON 48.3 million, mainly comprising hydrological works at [indiscernible] assortment studies and mine development cost along 5 compensatory payments leading to personnel restructuring in total amount for personnel restructuring, budgeted RON 7.3 million covering approximately 116 full-time employees. As we noted in the report, [indiscernible] announced the submission of [indiscernible] project under the [indiscernible] project launched by European Commission Innovation fine aiming to secure RON 21.4 million for the deferral model of first industrial facility in European Union to apply innovative technology, but that significantly reduces carbon foot point, water consumption and the waste generation across the entire process for the extraction and primary processing of natural graphite at Baia de Fier, Gorj County. The project builds on Salrom project of initiatives. FPS is submitted under the European Commission's critical raw material act project cost covering graphite extraction, battery grade processing and circular revitalization of mining residues, which together form an integrated value chain. According to management, the European Commission is expected to complete the evaluation by September this year and communicate results in October, November this year. On the corporate government front in Salrom, we know that company currently has an interim Board starting from October 2025. Fondul Proprietatea proposed 2 members of cumulative vote. The selection process for full mandates as for the requirement of corporate governance code was approved and initiated at the end of January this year. However, at the reporting date, the announcement for the initiation of the recruitment process has not been published. On Slide 12, we show key financials for the funds large just holding, including the 2025 figures approved by shareholders. Moving to Corporate Actions section, I would like to invite Calin to comment.

Thank you, Daniel. On Slide 14, we outlined the Fund distribution since we started managing the fund. The 2026 amounts are estimations we made based on dividend distribution submitting for shareholders' approval during the 29, 30 September 2026 GSM. And the number of paid shares, excluding treasury shares as reported in the December 2025 NAV. Total distributions made since 2010, including the amount for 2026, reached RON 29.3 billion, approximately $7.1 billion. On Slide 15, we outlined the latest updates on the fund's buyback program. The 16th buyback program was completed in 2025. During the 23rd July 2026 GSM, the Fund shareholders approved the cancellation of shares bought back last year, and the process is currently ongoing. On Slide 16, we include details on the fund's annual net dividends and dividend payout ratios for the largest portfolio companies as of end of July based on the figures approved by shareholders. Total amount for top holdings is approximately RON 154 million for the dividends approved this year from 2025 profits. Please note that the Fund is entitled to receive a special dividend of RON 21 million from Constanta Port, representing the distribution of retained earnings from previous years according to the 5th of August 2026 GSM resolution. On the following slide, #17, we show a summary of the total dividend income received from the portfolio companies in the last 10 years. Total dividends approved and received this year amount so far to RON 149 million. This amount does not include the dividend distribution approved by shareholders of Constanta Port during the 5th of August GSM. On Slide 18, we include the financial calendar for Fondul Proprietatea. On the following slides, we present the main points of the upcoming GSM at the end of September. On the extraordinary general shareholders meeting agenda on Slide 19, the main topics are the approval of 2 amendments to the consecutive act of Fondul Proprietatea as well as the approval of the decrease of the legal results of Fondul Proprietatea by RON 26 million from RON 332 billion to [ RON 20 billion ]. On the ordinary GSM agenda on Slides 20 and 21, the main topics are, the approval of the appointment of a new tenant investment fund manager, they will act also as the sole Director of Fondul Proprietatea for a mandate of 4 years, starting with 1st of April 2027 until 1st of April 2031. And from the 3 candidates of the selection process, respectively, Frac Temple to international services, INBL Asset Management UAB and Simultaneous Investor as well as any other potential candidates; and two, the corresponding management agreement, including the remuneration of the that will act also as sole director in the event that the OGM appoints a candidate resulting from the selection process or, respectively, the approval of the empowerment of the Board of nominees to negotiate the management agreement with the appointed candidate resulting from qualifying candidate proposals received from any shareholder of unappropriate. This item was included on the agenda by the fund manager at the request of the Board of nominees, considering the ongoing selection process and in accordance with the Fund's contributing act. This will be a secret vote. The second point on the OGM agenda is subject to unconditional on item 1 above not being approved by the OGM, the expansion of the mandate of FTIS as the sole Director of Fondul Proprietatea that acts also as the alternative investment fund manager of FP for a period of 1 year, starting with 1st of April 2027, until 1st of April 2028. And the corresponding expansion of the terms of the management agreement executed between FP and FTIS on 26th of March 2026, as approved by the resolutions of #1 of February 26, 2026 until 1st November 2028. This will be also a secret vote. The third point on the OGM agenda will be the approval of the distribution of a gross dividend in the amount of RON 0.046 per share to all shareholders of the company entitled to receive such dividend in accordance with the breakable loan. This item on the agenda was added at the request of the shareholder line capital, which holds more than 5% of the of Fondul Proprietatea is supported by the sole director. The fourth item on the agenda is the approval of the additional fees to be paid to Ernst & Young as the Fund's financial auditor for the audit of the financial statements of FP for the full year of -- ended in 31st December 2025, amounting to EUR 9,000 before VAT. The Fund's financial results for the period are presented on the next slide, and I would like to invite Catalin Cadaru, Head of Financial Reporting to comment.

Thank you, Calin. On Slide 23, we can see the summary of the main balance sheet developments. A significant decrease in the distribution account balance during the first half year of 2026 is connected to the cash paid to shareholders for the ongoing distribution payments of the fund, mainly in respect of the distribution paid after the [indiscernible] listing during 2023. A corresponding decrease in the liabilities to shareholders also occurred with no impact on the total NAV. The cash position of the Fund during the period also decreased as during May 2026, as mentioned by Daniel earlier, the Fund subscribed to the share capital increase of [indiscernible] by RON 56.3 million in order to maintain its shareholding in the company. The dividend receivables shown at the end of June '26 is mostly related to the amount recorded from Bucharest Airports and Salrom and total amounts have been collected at the date of one authorization report authorization. The increase in the equity investment of RON 242 million during the first 6 months of 2026 was generated by the valuation update of the top 3 portfolio companies and it mainly relates to the valuation of Bucharest Airports. On the next slide, the Fund ended H1 period with an unaudited profit of RON 334.6 million, mainly driven by the unrealized fair value changes coming from the revaluation of the listed holdings and also the dividends approved by the portfolio of companies during the period. The increase in the base fee during the first 6 months compared to the same period last year is mainly driven by a higher market capitalization of the Fund and also a higher base year rate applicable starting with 1st of April 2026.