In Q1 2023, Fondul recorded an unrealized gain from equity instruments at fair value through a P&L of RON 4.1m. Net operating income amounted to RON 13.6m, while the Fund recorded a net loss of RON 11.5m (compared to RON 826.1m in Q1 2022). Finally, looking at the latest available data for NAV, as of March 2023, NAV stood at RON 14bn, a decrease of 3.7% YoY.

In Q1 2023, the unrealized gain from equity instruments at fair value through profit and loss amounted to RON 4.1m (compared to RON 821.2M in Q1 2022). The unrealized gain from equity investments at fair value through profit or loss was mainly generated by the change in fair value for the holding in Alro. Further, the Fund also assessed its unlisted holding valuation with no major changes. As a result, no updates were made in the valuation of the unlisted holdings in the Fund’s portfolio in Q1 2023.

In total, the net operating income amounted to RON 13.6m (compared to RON 859.8m). Moving on to OPEX, it amounted to RON 25.1m, a decrease of 25.3% YoY, coming mainly from intermediaries and other transaction-related fees (RON 6.1m, down from RON 7.3m in Q1 2022). Overall, the larger decrease in op. income meant that Fondul achieved a Loss before tax of RON 11.5m, compared to EBT of RON 826.1m in Q1 2023, which came on the back of higher net operating income in the year before.

The Fund, therefore, recorded a non-taxable income of RON 10.6m, which mitigates the non-deductible expenses of RON 13.7m, as well as the impact from the income tax of RON 1.8m. When combined with the mentioned income tax at 16% (RON 1.8m), this would mean that the Fund does not pay any income tax on a quarterly basis. With this said, the net loss amounted to RON 11.5m.

Fondul Proprietatea key financials (Q1 2022 vs. Q1 2023, RONm)

Source: Fondul Proprietatea, InterCapital Research

Balance Sheet

Looking at the balance sheet, the Fund recorded a decrease in liquid assets (including cash and cash equivalents, deposits with banks, treasury bills, and government bonds) due to the cash outflow for the buy-back program. Meanwhile, total liabilities increased by 8.1% YoY and amounted to RON 123.5m, due to the higher administration feeds.

Finally, the Fund’s total NAV amounted to RON 14bn, a decrease of 3.7 YoY, meaning that the NAV per share amounted to RON 2.5823 in March 2023 (the latest available data for NAV).