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 you to the Fondul Proprietatea 2025 preliminary annual results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. If you do have a web question, please type your web question in the presentation box on the right-hand corner of your screen and press enter. Thank you. I would now like to turn the conference over to Daniel Naftali, Portfolio Manager. Daniel, please go ahead.
Hello. Thank you. Good afternoon and welcome, everyone, to our conference call to discuss the 2025 preliminary annual results on end of December 2025 NAV developments. Cătălin Cadaru, Financial Reporting Manager, and I are pleased to host today's call. The 2025 prelim annual results report can be found on the Fund's website in the Financial Results section, and the presentation that will be discussed is available on our website at fondulproprietatea.ro in the Investor Relation 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 two of the presentation where we highlight the key facts about the Fund.
At the end of December, the Fund's NAV was RON 2.34 billion, approximately $0.54 billion, and an NAV per share of RON 0.7944 per share. On the right-hand side, you can see the evolution of the Fund's adjusted share price and the discount premium since the Fund's listing in January 2011. As at Friday's close, the Fund was trading at a discount of 16.79% for the shares. On slide three, we present the Fund's shareholder structure as of end December 2025, with no major changes since our last results conference call in August 2025. On slide four, we show a summary of the NAV share price and GDR performance since 2011 and the evolution of the Fund's average annual discount to BVB.
Please note that the effective cancellation of the trading at the listing of the GDRs from the specialist Fund segment of the main market of LSE took place on April 25, 2025. Fondul Proprietatea did not hold any GDRs at the listing date. The NAV per share total return in 2025 was 22.4%, while total return for the local shares was 94.7%. In the following session, we'd like to provide an update on the Fund's portfolio. On slide six, we show the portfolio structure as of end of December: 88.7% were in unlisted companies, 5.3% in listed equities, 6% in net cash and receivables. Net cash and receivables position as of end of December was RON 140.4 million. On slide seven, we present the main portfolio companies at the same date, representing 90.8% of the Fund's total NAV.
On slide eight, we show an overview of the NAV evolution during full year 2025. The Fund's total equity portfolio rose from 1.98 billion RON to 2.20 billion RON, driven mainly by Bucharest Airport, which posted strong growth, a plus of 32.2% year-on-year. Constanța Port was broadly stable, while Salrom and other holdings declined year-on-year. Overall, the strong performance of Bucharest Airport more than offset these drops, resulting in an overall 11.1% year-on-year increase in total equity portfolio. On slide nine, we present the nine months 2025 figures for Bucharest Airport. We note on the financial side, operating revenues up 20% year-on-year to 1.2 billion RON, operating results reaching 752.2 million RON from 600.5 million RON during the same similar period last year. Traffic continued to rise by a steady 9% year-on-year at the end of September, reaching 13.3 million passengers.
This trend was the main positive driver for the improved operational profitability, which was up 25.3%. Regarding the litigation, we note that on July 2025, the Ministry of Transport approved the GSM resolution to restart the valuation process for the share capital increase with the value of lands in Băneasa Airport. The Fund has challenged this GSM in court before the Ilfov Tribunal, and the first hearing is set for February 5 this year. Regarding the GSM for approving the purchase of the minority stake held by the Fund in CNAB, we note on 5th of December, the CNAB informed the Fund of the convening notice for 8th of January 2026 regarding the intention to repurchase the minority stake held by the Fund, an initiative on which the Fund's manager has not been consulted.
On January 9, on the second calling of the GSM, shareholders approved the intention with an 80% majority. In light of this decision, the Fund manager will engage with the company's management, its advisor, and all other relevant stakeholders to ensure the best outcome for the Fund shareholders. On the corporate governance front, the board of the company has finalized the selection process for the CEO and CFO position. They appointed Mr. Bogdan Mândrescu, former state secretary in the Ministry of Transport and CEO, and Ms. Mădălina Rusu as CFO, who occupied a similar position in a subsidiary of Electrica Group. Their mandates will end in July 28. We remind shareholders that the board itself was appointed in July 2024 for a four-year mandate.
Fondul has challenged the legality of this appointment in court due to irregularities in the selection process and the outcomes, which in our view go against the provision of Ordinance 109. The next court hearing is scheduled for April 2026. On slide 10, we show the nine-month result of Constanța Port. Here, operating revenues decreased 8% year-on-year to 367.6 million RON. Operating profit was down to 118.3 million RON, while net income was 154.6 million RON, down compared to the previous year, 43.3%. We note the traffic reached 51.7 million tons, 14.4% lower in the context of a continued drop of volumes linked to Ukraine. Operating profit dropped significantly also, but after adjusting for the one-off reversal of provision from 2024, the operating profit declined by 22% year-on-year. For nine months 2025, the net profit stands at 154.6 million RON versus 101.5 million RON budgeted for the full year.
We note that on the corporate governance front, all board members have interim mandates. The selection process for a full four-year board has started, and we expect the process to be finalized in the coming month. Also, a development, an update on the Giurgiulești Port. As you know, the board of Constanța Port convened for 12th of February 2026 to seek shareholders' approval for the purchase for the acquisition of 100% of the shares in Giurgiulești Port in Moldova, Republic of Moldova, as well as the share purchase agreement. We have previously informed shareholders that on June 19, 2025, the Ministry of Transport approved the company to submit a binding offer for the potential purchase of 100% of the shares in Giurgiulești Port.
Also, somehow in connection to the same topic, there is a GSM decision approved in May 2025 by the Ministry of Transport for the company, Constanța Port, namely, to procure external legal services to support a potential cash share capital increase of up to $99 million. On slide 11, we provide latest numbers on Salrom and update. At nine months, operating revenues decreased by 6% year-on-year to 329.5. Operating profit was down 20.8 million from 87.5 million in 2024, while net income was down 71% to 23.9. Of course, this is a result also of the impact of the flooding of a salt mine in Praid.
Just to everybody to be on the same page, in early May 2025, heavy rainfall in Harghita County caused major water infiltration into the Praid salt mine galleries, prompting Salrom to suspend mining and tourism from May 5. The company, of course, mobilized technical teams and worked with authorities on urgent measures. However, in spite of the efforts, end of June, the dam built underground by Salrom gave way under pressure of water that which entered beneath. Following the flooding, the Praid salt mine, both mining operation and tourism activity have ceased. Based on Government Decision 530, Salrom applied for state aid for a total amount of RON 76.5 million to offset some of the losses incurred. As an update, the state aid was received by the company on 23rd of December.
On the corporate governance side, we note that currently Salrom has an interim board, but at the same time, we note that the GSM was convened for the 26th of January this year for the initiation of the selection procedure for candidates to fill in permanent position for the board of directors. So on slide 12, we show key financials for the Fund's largest holding, including the 2024 figures approved by shareholders. Moving to corporate actions on slide 14, we outlined Fund's distribution since we started managing the Funds. The 2025 amounts are based on buybacks executed, the finalized tender offer, the dividend distribution approved by shareholders including April GSM and the 29th of September GSM, as well as on the numbers of paid shares, including treasury shares up to the end of December.
Total distribution made since 2010, included the amounts for 2025, reached RON 29.5 billion, that is $7.1 billion. On slide 15, we outlined the latest updates on the Fund's buyback program. The 16th buyback program was finalized in December, and the cancellation of the share repurchase last year will be subject to shareholders' approval at the general shareholder meetings called for February 26 this year. In addition, the 17th buyback program, which aims to repurchase up to 294,868,717 shares, is also included on the agenda of the GSM. On the next slide, we show the main details of the offer finalized in September 25. The offer was for 80 million share, and the purchase price was 0.6975 per share. On slide 17, we include details on the Fund's annual dividends and dividend payout ratio for the largest portfolio company as of December, based on the figures approved by shareholders.
The total amount for top holding is RON 155 million for the dividends approved in 2025 out of 2024 profit. On the following slide, we show a summary of total dividend income received from the portfolio companies in the last 5-10 years. Total dividends approved, regular and special received in 2025 amount to RON 155.6 million. On slide 19, we show financial calendar for Fondul Proprietatea. On the following slide, we present the main points for the OGM and EGM agenda called for 26, 27 of February. On the EGM agenda, the main topics are this first item added on the agenda by the Board of Nominees: presentation of the Board of Nominees on the outcome of shareholder questionnaire and engagement process carried out with shareholders, and link to this approval to mandate the Fund manager to implement the conclusion of the shareholders' consultation in the Fund's investment policy statement.
The investment, the IPS, will be presented for approval to the Fund shareholder in accordance with the constitutive act of Fondul Proprietatea. We have also a point proposed by shareholders holding more than 5%, the in-principle approval of the consolidation of the nominal value of a share of Fondul Proprietatea by increasing the nominal value of the shares simultaneously with the reduction of the total number of shares. So 100 shares with a nominal value of 0.52 RON per share would be one share with a nominal value of 52 RON per share. Of course, if this is approved, we as Fund manager will be mandated to implement in due course this shareholder approval in principle. The approval, of course, then we have the approval to decrease the subscribed and paid share capital of Fondul Proprietatea, which relates to the execution of the 16 buyback program.
Of course, we have the point about the authorization of a new buyback program via trading or regular market on which shares are, okay, so basically a new buyback program for 294.8 million shares. On the OGM agenda on slide 21 and 22, the main topics are first point, the appointment of Franklin Templeton International Services as Sole Director of Fondul Proprietatea, as the alternative investment fund manager of Fondul Proprietatea for a duration of four years starting with April 1, 2026 until April 2030, together with the commercial term and the execution of the new approval of the new management agreement between Fondul and Franklin Templeton. Next point, so this point was added on the agenda by the Board of Nominees at the request of the Board of Nominees.
Another point, the appointment for a period of three years of one member of the Board of Nominees of Fondul Proprietatea, then approval of the operating rules of the Audit and Valuation Committee as adopted by the Board of Nominees in accordance with previous resolution of the Fund shareholder GSM, the approval of operating rules of the Board of Nominees in accordance with the resolution of also the November GSM. We have also a point, several points added on the agenda at the request of a group of shareholders holding more than 5%, namely the approval of the implementation of a permanent market-making program to ensure deep and consistent liquidity for the Fund share across the market. The Sole Director is hereby mandated to identify, implement relevant measures in relation to the market-making program in accordance with the regulatory framework and the legal responsibility of the Fund manager.
And also at the request of a group of shareholders, we have the approval of the implementation of enhanced transparency and disclosure standards, including clear strategic guidance on the company's future. The Sole Director is mandated to identify, implement relevant measures in a reasonable timeframe in accordance with the regulatory framework and legal responsibilities of the Fund manager. Also, we have a point added by a group of shareholders representing more than 5% approval for the initiation of a full cost and fee structure review to ensure total alignment with shareholder value creation. As such, to be implemented. So basically, assuming this point is approved, the Sole Director is mandated to identify, implement relevant measures in a reasonable timeframe in accordance with other resolutions of the GSM, the regulatory framework, and the legal responsibilities of the Fund manager.
The Fund's financial results for the period are presented on the next slide, and I would like to invite my colleague Cătălin Cadaru, Head of Financial Reporting, to comment. Cătălin?
Thank you, Daniel. Hello everybody. On slide 24, we see the preliminary unaudited statement of comprehensive income. According to the preliminary results, the Fund ended the 2025 with an unaudited profit of 448 million RON compared to 252 in the previous calendar year. The main driver of this result is the unrealized fair value gain arising under evaluation of the portfolio of holdings, with the most significant change coming from Bucharest Airport, as already mentioned by Daniel earlier.
At the date of the publication of the preliminary report, the financial audit procedures are still ongoing, and they will include various analyses, including subsequent events analysis for the period between 31st of October 2025, which is the valuation date for the reports, including the NAV, up to the date when the IFRS financial statements will be authorized for issuing. Any significant impact on valuation of the holdings that may arise under this analysis will be reflected in the final audited IFRS financial statements of the Fund for the year ended 31st December 2025 and in subsequent NAV reports as applicable. The dividend income during 2025 was higher by RON 10 million compared to the previous period, with the two contributors being Bucharest Airport and Salrom.
The total administration fees recognized in profit and loss are similar to the one in the prior period, with an increase in the base fee driven by the market capitalization and a decrease of the dividend distribution fees. The distribution fees for buybacks are recognized directly in equity together with underlying shares, and there was a decrease during 2025 compared to 2024. Other operating expenses also decreased by 1.6 million RON during 2025. Moving to the next slide, we see the unaudited statement of financial positions. The increase in the equity investment portfolio of approximately 300 million RON was mainly driven by the revaluation of Bucharest Airport, partially offset by Salrom with a fair value decrease during the period.
The most important cash inflows during 2025 were related to the dividends collected from the portfolio companies, 155 million RON, while the most important outflows relate to net dividends paid, 167 million RON, acquisition of treasury shares within the 2016 buyback program, including the tender offer that was settled during September 2025 in the amount of 118 million RON.
Thank you, Cătălin. At this point, I would like to open it up for your questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you have a web question, please type your question in the question box at the bottom of your screen and press enter. And we have no phone questions at this time.
All right. So I see in the chat a number of questions.
Let me, Corina, can you help me with the first question? Start. I see there is a question in Romanian. Was there a discussion with Franklin Templeton for a mandate extension? Well, basically, we as Franklin Templeton have expressed, and we have made public that we informed the Board of Nominees that we are interested to continue for a four-year mandate and through direct negotiation, and that's what we are doing currently. So yes, Franklin Templeton, and we are discussing with the Board of Nominees for a new mandate of four years, and this is also in line with the approval in the September GSM when there was a renewal in principle by shareholders, a renewal with a very large majority by shareholders for a new mandate from Franklin Templeton. The Board of Nominees being mandated to negotiate with Franklin the duration and the exact terms.
I think this answers your questions. Another question refers to the amounts coming from unclaimed dividends following the sale of Hidroelectrica and I guess the subsequent decision to distribute the dividends. I think we are, of course, there is this term of prescription, which shareholders, it's a three-year prescription period, but at least as a general comment, there is always a legal discussion and a legal analysis when such amounts are prescribed, and this is carried out by legal team, by specialists in this field. But once they are prescribed, they become part of the retained earnings. The decision itself is not, it's based on a quite detailed legal analysis, taking into consideration specific circumstances. Question number two, does the Fund manager intend to commission and fund independent external market-based valuation for Constanța Port and Bucharest Airport before asking shareholders to approve any potential disposal?
I would make a general comment here. First of all, I mean, on what we know for sure is Bucharest Airport, Constanța Port, we have this general news. We have seen this potential intention, similar intention from the Ministry of Transport. However, there is no official communication, there's no discussion or official indication from the part of the government or the Ministry of Transport in this sense. On Bucharest Airport, we have this GSM resolution which was taken without consulting us. Of course, we acknowledge it, and our interest is really to act in the best interest of shareholders. And as we have noted also in our financial reports, we will and we are engaging with the company, with the Ministry, with all the consultants of their advisors to understand the process and to put in and to come to the best conclusion for shareholders.
As you have seen also in the case of Hidroelectrica transaction, of course, a transaction of such a proportion, we will pay very high attention. We may also engage on our side consultants. It may be well, it could be a range of consultants, but the exact details, I think it's best to be disclosed by us as the process advances and as there are relevant developments in the market. So be assured that on our side, we are making all efforts to ensure that the interests of the Fund and shareholders are well represented. Can we go? Any other question? Do you have enough liquidity and retained earnings for the 17th buyback program? Of course, liquidity is also, so we manage the Fund, of course, and we have to pay close attention to liquidity needs.
And also, we have made even some comments in our annual report about how we are looking at this. Of course, we are looking and we are expecting, as the portfolio company, the main source of funding on an ongoing basis are the portfolio companies. So of course, we are very closely monitoring how they will be reporting the results and what dividends they will be proposing. And based on this, we will make, first, we have the dividend policy in place, which basically states that the cash flow, cash and the dividends that we receive from portfolio companies, we pass to our shareholders regular dividends, of course, minus operating expenses. And of course, any other cash that we have for disposal from any others, we can use for other means, special dividends, buybacks, and so on.
So basically, of course, we have put on, as always, the buyback program on the EGM agenda to have in place the framework to be able to execute the buyback program. Profit for the year 2025 is RON 449 million. Can total amount be paid to shareholders? First of all, I would, and I think Cătălin agrees with me, this is a preliminary financial result. The final audited financial results are still in progress, so to say. But okay, I understand your questions. The Fund doesn't have, this is part of this result, as also was mentioned, comes from a change in the valuation of underlying holdings. So it's a non-cash. So our proposal of dividend will take into account primarily the available cash coming from portfolio companies. I see a question from Peter Crivit. How much excess cash do you have today?
As I said, we are waiting to see exactly the dividends that the portfolio companies are going to pay. Really to make the proposal of dividends and to, so basically, as we noted on the financials, everybody has noted that we had to balance even in 2025, we didn't execute in full the buyback program. Also from taking into consideration cash management consideration. I think this kind of answers your questions. Just maybe to, even if it's in writing in the Fund's reports, just everybody to note, the sole director is managing the liquidity of the Fund by prudently observing the cash required to cover ongoing DCM measures, that is distribution, operating cost of the Fund for at least 12 months forward, and other specific liquidity requirements that may arise, such as, and we note here, the portfolio companies may require share capital increases.
Here we note, of course, CNAB, which is the ongoing discussion about the potential capital increase. When will you receive dividends from airports and other companies in 2026? And what is your estimate for dividend income in 2026? Good question. As you know, generally, state-owned companies in Romania approve their financial results in May of the year, and they are generally paid in June or July, depending also, they have 60 days to approve from the date of the approval. Sometimes they pay a bit earlier and so forth, but generally, this is the time frame. The main paying assets last year have been Bucharest Airport and Salrom. CNAB has had very, very good results. Of course, we will be fighting and we will be striving to continue the dividend payout as high as possible, more in excess of 90%. So we'll know that there.
In Salrom, of course, last year, they paid also a high dividend payout. We are also waiting to see the management proposal, the executive management proposal that will be this year. In CNAB, in Constanța Port, we are always discussing this with the government, with the Ministry of Transport, the Ministry of Finance. They haven't paid dividend for the past two years, although they are sitting on a massive amount of cash. And of course, as everybody knows, there is also this limitation through law where the dividend is capped at 25% of net profit. Okay. Profit, I think we covered some of the questions I think we have already answered. Can you move a bit upwards? Okay. Some comments higher, please. So by and large, I think we have quite answered the questions. Okay. Why did CNAB increase by 30% in last valuation?
I think this is driven primarily by strong results. I mean, we note the strong increase in the results in 2025. Factors, of course, traffic, renegotiation of commercial terms of the commercial spaces. We really do hope that this is really confirmed. So yes, on CNAB, there is a 30% increase in valuation driven mainly by good results. Of course, I see a lot of questions around the valuation of CNAB, of airports, and I think we all understand where shareholders are coming from. Of course, we also, I mean, if you go through our report, we have tried to provide a bit more color in the work that is done for the valuation of the assets, which is, again, for financial purposes.
The valuation that we are seeing here was done not in the context of a transaction. It was done with financial statements at the end of September and valuation at October. It does not incorporate latest news. So just bear in mind, this is what it is. Cătălin, maybe also you can, our colleague Cătălin, and of course, maybe you can. Cătălin Cadaru has also from reporting side, has also provided a lot of input and valuable input. And please, Cătălin, if you can add something also a bit more color on the process itself.
Yes. Like Daniel mentioned on the process itself, the current results are based on a valuation report for 31st of October, based on the financial information provided by the company as at the end of September.
We are now in the process of analyzing the subsequent events, including the effect of the decision the shareholders took on 9th of January. That will be also discussed with the auditor because in terms of the financial reporting, we need to observe certain standards and rules and practices in relation to financial reporting. For the preliminary report, we included additional information for all the shareholders and interested investors to see the basis of the valuation. If you look at our report, you can see the total value of the equity, the part allocated to the Fund, and also various discounts applied according to the methodologies, and also the limitations in the valuation, most notably the fact that the current valuation doesn't include anything related to the second terminal. The annual financial statements will have more disclosures.
They generally have more disclosures historically, but in this case, we will include even more disclosures in the annual financial statements related to the valuation of all the significant holdings for all the investors to better understand the assumptions that were considered and how the value was derived for the inclusion in the financial statements, and of course, in case of transactions, the consultants may be employed, and this will be subject to further discussions and negotiations between the parties.
Thank you, Cătălin. I see a lot of questions, but some of them are kind of repeating. Of course, I see here a question about shareholder involvement. How can you support a stronger shareholder involvement? Is there a solution for proxy voting, well, I would say that this is not the forum really to discuss this. It's focused mainly on financial statements.
But of course, if you have ideas, please, we have IR contact. Of course, please share us with your ideas. But of course, this is a country given answer. How much cash? I see a, okay, if we lose the litigation with CNAB , what is the NAV loss per share? I mean, I would remind everybody about this litigation. This litigation, well, the initial valuation that was, well, the valuation from 2021, basically, which was at 3.8 billion RON, basically that process was canceled in court irrevocably. So currently, we have a new valuation process. Of course, seeing that we, as we always said, if the valuation is done at a reasonable level, that really reflects the economic value of the Băneasa Airport and the land, of course, the Fund will participate.
In the last capital increase, when they came with a value that disregarded, they had no connection with the economic value of the land. Of course, we had to fight. Of course, as we mentioned there, at the 3.8 billion valuation that was proposed back in 2021, the dilution for the Fund would have been dramatic to less than 1%. I see also a question about some smaller company, Zirom, but of course, I don't know if this is the interest for the wider public being a relatively small holding in the portfolio. What I can mention is it's a titanium producer. It never occurred on such calls, but it's really, it was a niche producer. It went through a lot of operational challenges. Basically, it's part of a legacy portfolio, but it worked in a very complicated market, in a highly competitive market.
But currently, the past year's tides have also turned from them with the investment they have made, with the move in the upstream. I think there are better times ahead. But of course, if there are persons who really want to dig in smaller companies, of course, we can reply directly and are happy to provide more color if there are very specific questions to smaller companies that we know interest all audience. A question about Alro, when are you going to sell? Of course, as a listed company, we cannot comment on this. Of course, we would like to see higher price of the shares, and they have been suffering a lot from, especially due to higher electricity prices. But yeah, we cannot comment when and if we are going to sell Alro. I see a very specific question on this.
Why are key resolutions adopted at portfolio companies not proactively disclosed to Fondul Proprietatea? Of course, we have many companies and there are a lot of shareholders' decisions, so it's difficult. I think there's no practical. We think that, I mean, we as Fund managers, as the Fund, we communicate on key resolutions, either through current report information or through our periodic reporting. I think it's important to keep focus and to focus shareholders' attention on most relevant. Also, we remind everybody that the companies and most SOEs, they also are subject to corporate governance code and themselves, by and large, observe the regulation, and they do publish GSM convening notice and their resolutions on their website. So this is also in a way public, not directly through us maybe, but also through their respective websites. Are there any questions directly on the line?
We have no questions on the line at this time.
I think we have covered quite a lot of territory here. I mean, if there are questions that I have not been able to answer or they've skipped or are not covered to the satisfaction of those asking, we are, of course, open to discuss, and please send us the question directly, and we will again try to reply as to the best of our possibility, so I think with this, if there are really no more questions on the line, I invite, I thank everyone for the time today, and as I said, for any additional questions, please do not hesitate to contact me and our team, and we look forward to engaging with you on the forthcoming GSM and the next calls. Go ahead.
And ladies and gentlemen, that does conclude today's conference call.
Thank you for your participation, and you may now disconnect.