East Capital Explorer AB
Interim Report 1 January – 30 September 2009
East Capital Explorer AB / 12.11.2009 Dissemination of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer / publisher is solely responsible for the content of this announcement. --------------------------------------------------------------------------- * Net asset value per share on 30 September 2009 amounted to EUR 9.15 (EUR 8.77). The total net asset value amounted to EUR 324.7m (EUR 318.2m), which is a change of 11.2% (-13.6%) during the quarter and a change of 22.5% (-19.3%) during the reporting period * For the reporting period, the net profit amounted to EUR 80.4m (EUR -91.4m), including EUR 89.9m (EUR -96.8m) in unrealized change in value of investments. Earnings per share amounted to EUR 1.81 (EUR -2.10) * Net profit for the third quarter amounted to EUR 41.0m (EUR -60.7m), including EUR 44.0m (EUR -62.9m) in unrealised change in value of investments. Earnings per share amounted to EUR 0.96 (EUR -1.38) * On 30 September 2009, East Capital Explorer made additional investments in the East Capital Bering Funds. EUR 20m was invested in the East Capital Bering Russia Fund and EUR 10m in the East Capital Bering Balkan Fund * On 12 October 2009, East Capital Explorer announced that the Company had acquired approximately 2% of the shares in TEO LT, corresponding to a direct investment of approximately EUR 8.5m * Net asset value per share on 31 October 2009 amounted to EUR 9.19 (SEK 95.48). Cash and deposits per the same date amounted to EUR 72.1m (SEK 749.1m) corresponding to EUR 2.03 (SEK 21.09) per share * In November, East Capital Explorer decided to allocate an additional EUR 10m to short-term investments in bonds CEO COMMENTS ON THE THIRD QUARTER On 9 November 1989, exactly 20 years ago, a milestone event occurred, as the dismantling of the Berlin Wall unleashed reform and convergence processes throughout our region. In only 20 years our countries have made much progress in building market economies, although there have been setbacks, both for internal and external reasons. However, these setbacks, even the near-collapse of the financial markets experienced a year ago, have not changed the megatrend for Eastern European development. Most of our countries were much better prepared for this crisis than previous ones. Looking forward, we should not expect an easy, one-way climb, but we are certain that Eastern Europe continues to be an exciting and profitable place for investors. For East Capital Explorer, 9 November is also a special date, as it marks two years from our initial public offering. It has been two eventful years. We are pleased that despite the turbulent market, our NAV in SEK terms at the end of October 2009 is not far from the 100 SEK at our listing date, although our early investments lost substantially in value during 2008. This year we have used our large cash position to capitalize on the attractive valuations available in our region and we are confident that our portfolio still holds significant upside potential. Our markets continued to perform well during Q3, as risk appetite grew. Although the widely expected market correction has not materialized, with September being an especially strong month for many markets, volatility remains quite high and sentiment fragile. RTS index was up nearly 19% in September and gained another 10% in October. Although most of our countries have not yet released their Q3 GDP figures, the expectation is that the worst in terms of economic performance has passed. Central banks have continued monetary easing, with Russia, Turkey and Hungary being among those taking rates to new lows. The Turkish central bank has been particularly active, taking rates down by 1,000 basis points in one year. Inflation has continued to moderate and other imbalances have improved. Recent improvements in geopolitics, such as friendlier notes in the US-Russia relationship and deepening cooperation between Russia and China, have increased confidence towards Russia. Oil price resilience in the USD 70-80 range is good for Russia: high enough not to cause fiscal problems, yet low enough to incentivize reforms and responsible international behavior. Recent statements by the Russian leadership about the need to continue with privatizations and reduce corruption have been encouraging. Our NAV increased by 11.2% during the third quarter, taking the total gain in 2009 to 22.5%. Since inception and until 31 October, our NAV is down 15.9% in EUR terms and 4.7% in SEK terms. The third quarter was a very active investment period, and the proportion of cash in our NAV has decreased to approximately 30% at the end of October. We are happy that the East Capital Special Opportunities Fund has been particularly active. Its top three investments are described on page 10. At the end of October, 81.2% of the fund was invested in a total of 14 holdings. As valuations have increased quickly during the past months, we are pleased that the portfolio managers were working efficiently in executing those truly unique opportunities that only arise in turbulent times. The fund has gained 12.3% since its launch and we are confident that this fund will continue to generate attractive returns for our shareholders. Towards the end of the quarter, we decided to allocate an additional EUR 20m to the East Capital Bering Russia Fund and EUR 10m to the East Capital Bering Balkan Fund. These add-on investments enable us to increase our exposure to small- and mid-cap segments, where valuations are still attractive. We recently announced our second direct investment into TEO LT, a leading Baltic telecom company. We have known this company for years and followed its development with admiration. It is a very well managed company in a defensive sector and has been able to produce strong results both in good and bad times. But it has remained one of the lowest valued telecoms in our region, as the market has perceived its prospects to be limited. We see potential in TEO and will work with TeliaSonera, its strategic shareholder, to ensure that TEO develops in a way that creates value for all shareholders. East Capital Explorer is not very far from having fully committed its capital. We currently have EUR 88m in cash, deposits and bonds of which approximately EUR 50m is available for future investments. We have a strong pipeline of ideas for new investments, and we also carefully monitor the development of the existing portfolio. Gert Tiivas, CEO The full Interim Report is available in the attached PDF-file and on the website www.eastcapitalexplorer.com. TELEPHONE CONFERENCE The report will be presented and commented at a telephone conference with Gert Tiivas, CEO and Pia Tell Svensson, CFO. Date: Today, Thursday 12 November 2009 Time: 10.00 AM CET Telephone details: +46 (0)8 505 598 53 (Sweden) or +44 (0)203 043 24 36 (UK). Please dial-in a few minutes before the conference starts. A presentation for the telephone conference will be made available on www.eastcapitalexplorer.com before the telephone conference. The telephone conference will be webcasted simultaneously and can be viewed on www.eastcapitalexplorer.com. The webcast will also be recorded and made available on the website after the telephone conference. Contact information: Gert Tiivas, CEO East Capital Explorer +46 8 505 977 30 Louise Hedberg, Head of Communications/IR East Capital Explorer +46 8 505 977 20 Financial reporting calendar - East Capital Explorer: * Monthly Net Asset Value report on the fifth working day after the end of each month * Year-end Report 2009, 17 February 2010 * Annual Report 2009 available in the week of 5 April 2010 * Annual General Meeting 2010 in Stockholm on 28 April 2010 * Interim Report 1 January - 31 March 2010, 11 May 2010 * Interim Report 1 January - 30 June 2010, 20 August 2010 * Interim Report 1 January - 30 September 2010, 11 November 2010 About East Capital Explorer │ East Capital Explorer AB is a Swedish company, created with the specific aim of bringing unique investment opportunities in Eastern Europe to a broader investor base. The company invests mainly in East Capital's private equity and semi-public equity funds that provide exposure to companies not otherwise accessible via the local stock exchanges in Eastern Europe. East Capital Explorer targets fast growing sectors such as the power utilities, financial, retail and consumer goods and real estate sectors. East Capital Explorer has appointed East Capital to manage its investment activities. Since 9 November 2007, East Capital Explorer is listed on NASDAQ OMX Stockholm, Mid Cap. The information in this interim report is that which East Capital Explorer AB is required to disclose under Sweden's Securities Market Act. It was released for publication at 08:20 a.m. CET on 12 November 2009. News Source: NASDAQ OMX 12.11.2009 Financial News distributed by DGAP. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: East Capital Explorer AB Sweden Phone: Fax: E-mail: Internet: ISIN: SE0002158568 WKN: End of News DGAP News-Service ---------------------------------------------------------------------------
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