Year-end Report Fourth Quarter 2013

Transcription

1 Year-end Report Fourth Quarter February 2014

2 Today s Presenters Catharina Hagberg, Acting CEO Peter Elam Håkansson, Founding Partner, Chairman and Chief Investment Officer, East Capital Kestutis Sasnauskas, Founding Partner, Head of Private Equity & Real Estate, East Capital 2

3 Agenda Key highlights and NAV development Our portfolio and performance Outlook and Focus going forward Q&A 3

4 Key highlights and NAV development 20 February 2014

5 Key highlights Q NAV per share 31 December 2013: EUR 9.89 (SEK 88) +9.1 % during Q4 NAV increased by 8.7 % compared to end-2012 An external valuation of Russian fashion retailer Melon Fashion Group (MFG) in December resulted in fair value increase of 59% per share A dividend of EUR 1.6m from MFG was received during the period ECEX acquired another 6% of the shares in Trev-2 Group, increasing ownership to 40% Remaining holdings in East Capital Power Utilities Fund and East Capital Bering New Europe Fund were divested 5

6 Highlights after the end of the quarter Today the Board announced that it convenes for an EGM, 24 March 2014: To introduce Preference Shares, to take advantage of attractive investment opportunities Investments with strong and stable cash flow and good growth potential; Baltic real estate market and consumer oriented Private equity investments in Baltics and Russia Attractive return on invested capital for ordinary shareholders Stable, long-term preferred dividend for preference holders, given low interest rates Lower financial risk for East Capital Explorer compared to conventional loan instruments To adapt to the new EU regulatory framework Alternative Investment Fund Managers Directive (AIFMD) East Capital Explorer AB East Capital Explorer Investments AB 6

7 Highlights after the end of the quarter As per 1 January 2014, East Capital restructured part of their alternative investment funds, to adopt the funds to the EU regulatory framework ; Affecting four of East Capital Bering Funds (in Cayman Islands) in our portfolio: Russia, Balkan, Central Asia and Ukraine (Fund A) The funds were transferred to two new funds in Luxemburg; East Capital New Markets and East Capital Deep Value Fund NAV per share 31 January 2014: EUR 9.81 (SEK 87) - 1.2% in January 7

8 Our portfolio and performance 20 February 2014

9 Portfolio on 31 December 2013 Value 31 Dec 2013 EURm NAV/ Share EUR Portfolio overview 31 December 2013 % of NAV Value 30 Sep 2013 EURm Value 31 Dec 2012 EURm Value change Jan-Dec 2013, % Value change Oct-Dec 2013, % Direct Investments Melon Fashion Group 70,5 2,24 22,7 44,2 44,2 68,4 63,1 Starman 25,0 0,80 8,1 24,3 0,0 6,1 3,1 Trev-2 Group 9,8 0,31 3,2 7,4 7,4 10,1 10,1 Komercijalna Banka Skopje 6,6 0,21 2,1 6,7 8,7-19,7-1,2 Total Direct Investments 112,0 3,56 36,0 82,6 60,3 36,1 35,0 Fund Investments East Capital Bering Balkan Fund 41,1 1,31 13,2 42,0 38,9 5,6-2,0 East Capital Russia Domestic Growth Fund 42,3 1,35 13,6 37,5 14,5 7,2 12,7 East Capital Bering Russia Fund 23,0 0,73 7,4 24,8 27,8-17,4-7,4 East Capital Special Opportunities Fund 15,2 0,48 4,9 21,3 21,5 19,6 5,9 East Capital Bering Central Asia Fund 23,0 0,73 7,4 20,8 18,5 23,9 10,5 East Capital Baltic Property Fund II 20,7 0,66 6,7 19,3 17,4 13,8 7,3 East Capital Special Opportunities Fund II 17,8 0,57 5,7 17,4 19,3-7,6 2,5 East Capital Bering Ukraine Fund Class R 2,5 0,08 0,8 4,7 5,2-19,5-11,3 East Capital Bering Ukraine Fund Class A 3,4 0,11 1,1 3,5 3,9-12,8-3,3 East Capital (Lux) Eastern European Fund 0,0 0,00 0,0 0,0 4,4 2,9 - Total Fund Investments 188,9 6,01 60,8 191,3 171,5 4,3 3,5 Short-term Investments Short-term Investments 0,1 0,00 0,0 3,1 25,8 Cash and cash equivalents 20,3 0,65 6,5 11,1 46,4 Total Short-term Investment 20,4 0,65 6,6 14,1 72,2 Total Portfolio 321,3 10,22 103,4 288,0 304,0 Other assets and liabilities net -10,4-0,33-3,4-3,1-3,5 Net Asset Value (NAV) 310,8 9,89 100,0 284,9 300,5 8,7 1 9,1 1 ¹NAV per share development 9

10 Portfolio on 31 December 2013 Value 31 Dec 2013 EURm NAV/ Share EUR Portfolio overview 31 December 2013 % of NAV Value 30 Sep 2013 EURm Value 31 Dec 2012 EURm Value change Jan-Dec 2013, % Value change Oct-Dec 2013, % Direct Investments Melon Fashion Group 70,5 2,24 22,7 44,2 44,2 68,4 63,1 Starman 25,0 0,80 8,1 24,3 0,0 6,1 3,1 Trev-2 Group 9,8 0,31 3,2 7,4 7,4 10,1 10,1 Komercijalna Banka Skopje 6,6 0,21 2,1 6,7 8,7-19,7-1,2 Total Direct Investments 112,0 3,56 36,0 82,6 60,3 36,1 35,0 Fund Investments East Capital Bering Balkan Fund 41,1 1,31 13,2 42,0 38,9 5,6-2,0 East Capital Russia Domestic Growth Fund 42,3 1,35 13,6 37,5 14,5 7,2 12,7 East Capital Bering Russia Fund 23,0 0,73 7,4 24,8 27,8-17,4-7,4 East Capital Special Opportunities Fund 15,2 0,48 4,9 21,3 21,5 19,6 5,9 East Capital Bering Central Asia Fund 23,0 0,73 7,4 20,8 18,5 23,9 10,5 East Capital Baltic Property Fund II 20,7 0,66 6,7 19,3 17,4 13,8 7,3 East Capital Special Opportunities Fund II 17,8 0,57 5,7 17,4 19,3-7,6 2,5 East Capital Bering Ukraine Fund Class R 2,5 0,08 0,8 4,7 5,2-19,5-11,3 East Capital Bering Ukraine Fund Class A 3,4 0,11 1,1 3,5 3,9-12,8-3,3 East Capital (Lux) Eastern European Fund 0,0 0,00 0,0 0,0 4,4 2,9 - Total Fund Investments 188,9 6,01 60,8 191,3 171,5 4,3 3,5 Short-term Investments Short-term Investments 0,1 0,00 0,0 3,1 25,8 Cash and cash equivalents 20,3 0,65 6,5 11,1 46,4 Total Short-term Investment 20,4 0,65 6,6 14,1 72,2 Total Portfolio 321,3 10,22 103,4 288,0 304,0 Other assets and liabilities net -10,4-0,33-3,4-3,1-3,5 Net Asset Value (NAV) 310,8 9,89 100,0 284,9 300,5 8,7 1 9,1 1 ¹NAV per share development 10

11 Portfolio on 31 December 2013 Value 31 Dec 2013 EURm NAV/ Share EUR Portfolio overview 31 December 2013 % of NAV Value 30 Sep 2013 EURm Value 31 Dec 2012 EURm Value change Jan-Dec 2013, % Value change Oct-Dec 2013, % Direct Investments Melon Fashion Group 70,5 2,24 22,7 44,2 44,2 68,4 63,1 Starman 25,0 0,80 8,1 24,3 0,0 6,1 3,1 Trev-2 Group 9,8 0,31 3,2 7,4 7,4 10,1 10,1 Komercijalna Banka Skopje 6,6 0,21 2,1 6,7 8,7-19,7-1,2 Total Direct Investments 112,0 3,56 36,0 82,6 60,3 36,1 35,0 Fund Investments East Capital Bering Balkan Fund 41,1 1,31 13,2 42,0 38,9 5,6-2,0 East Capital Russia Domestic Growth Fund 42,3 1,35 13,6 37,5 14,5 7,2 12,7 East Capital Bering Russia Fund 23,0 0,73 7,4 24,8 27,8-17,4-7,4 East Capital Special Opportunities Fund 15,2 0,48 4,9 21,3 21,5 19,6 5,9 East Capital Bering Central Asia Fund 23,0 0,73 7,4 20,8 18,5 23,9 10,5 East Capital Baltic Property Fund II 20,7 0,66 6,7 19,3 17,4 13,8 7,3 East Capital Special Opportunities Fund II 17,8 0,57 5,7 17,4 19,3-7,6 2,5 East Capital Bering Ukraine Fund Class R 2,5 0,08 0,8 4,7 5,2-19,5-11,3 East Capital Bering Ukraine Fund Class A 3,4 0,11 1,1 3,5 3,9-12,8-3,3 East Capital (Lux) Eastern European Fund 0,0 0,00 0,0 0,0 4,4 2,9 - Total Fund Investments 188,9 6,01 60,8 191,3 171,5 4,3 3,5 Short-term Investments Short-term Investments 0,1 0,00 0,0 3,1 25,8 Cash and cash equivalents 20,3 0,65 6,5 11,1 46,4 Total Short-term Investment 20,4 0,65 6,6 14,1 72,2 Total Portfolio 321,3 10,22 103,4 288,0 304,0 Other assets and liabilities net -10,4-0,33-3,4-3,1-3,5 Net Asset Value (NAV) 310,8 9,89 100,0 284,9 300,5 8,7 1 9,1 1 ¹NAV per share development 11

12 Melon Fashion Group 58 store openings in Q4 alone, 139 in FY 2013 (net) Initial plan of 100 openings in 2013 well exceeded External valuation resulting in fair value increase of 59% Our largest direct holding (36% ownership), representing 23% of NAV Q4 sales for the three concepts reached RUB 2.7bn (EUR 60m), an increase of 28% compared to Q Like-for-like sales growth 2.2% (Q4 2012: 13.6%) Zarina: -10.3% Love Republic: +3% befree: +13% Q4 gross margin was 60.3% (Q4 2012: 63%), affected by discount campaigns and ramp up of store openings Dividend payment to ECEX in Q4 of EUR 1.6m, FY 2013 dividends amounted to EUR 3.9m 12

13 Starman The value of Starman rose by 3.1% in Q4, representing 8.1% of ECEX NAV Direct investment (51% ownership) in Starman represents 8.1% of NAV Starman has continued to perform well and has exceeded our expectations, both in terms of top line growth and profitability. Good momentum thanks to market leading services and speeds FY 2013 revenues were EUR 30.2m, up 7.9% from FY 2012 FY 2013 Ebitda was EUR 14.6m, 12% higher than FY 2012, with Ebitda margin strong at 48.5% Total number of cable RGUs increased 13.4% with cable ARPU at EUR 16.1 (2012: EUR 15.1). ARPU increase due to higher tier packages and increased number of services per customer 13

14 Trev-2 Group Focus on profitability and efficiency has paid off East Capital Explorer made an additional investment of 6% of the shares in December Direct investment (40% ownership) represents 3.2% of NAV Revenues for 2013 amounted to EUR 99.7m corresponding to an increase of 12% compared to the same period last year Ebitda 2013 was EUR 9.4m, a significant improvement from 2012 Ebitda of EUR 5m. Ebitda margin of 9.5% Maintaining profitability will continue to be the key target for Trev-2 Group going forward 14

15 Komercijalna Banka Skopje (KBS) Successful turnaround in 2H 2013 thanks to loan loss recoveries and sales of foreclosed assets Management focus on cleanup of portfolio to avoid further provisioning hits Direct investment (10% ownership) represents 2.1% of NAV Share price of KBS declined by 0.3% (EUR) Q net profit of MKD 372m (EUR 6m), up from MKD 106m (EUR 1.8m) in Q3 and a sharp recovery from MKD -401m in 1H 2013, which was burdened by additional provisions Turnaround in 2H 2013 thanks to successful loan loss recoveries and subsequent write-back of provisions, as well as sale of foreclosed assets Net interest margin at 3.3%, ROE 0.8% and capital adequacy at 14.1% 15

16 Outlook and Focus going forward 20 February 2014

17 Attractive Baltic real estate market Currently low financing costs support real estate investments Demand for prime offices in all three Baltic capitals expected to remain high Commercial A-location properties with stable cash flow or high enhancement potential, and established anchor tenants with long-term leases Yield levels in Baltic A-locations around 7-8%. Vacancy rates peaked in 2010, having stabilized at low levels (around 4-5%) Yields of at least 7% at acquisition and current low interest rates, attractive return on equity 17

18 Investment opportunities in Private Equity Currently low PE activity means opportunities to acquire companies at attractive terms Strong market development (esp. Baltics) supports domestic growth Pipeline of companies with strong cash flow Consolidation potential as add-on investments, to strengthen existing portfolio companies Strong management with proven track record Baltic countries continue to recover, growth 2-3x OECD average past two years 18

19 Focus going forward Turbulent times and low valuations offer attractive investment opportunities for a long term investor Continued focus on further concentration of portfolio In addition to real estate investments, we are also considering further investments in the Private Equity area which offer interesting investment possibilities Redemption program 2014 Preference shares 19

20 Contact information Catharina Hagberg, Acting CEO Phone: catharina.hagberg@eastcapitalexplorer.com Lena Krauss, Head of Investor Relations and Finance Phone: lena.krauss@eastcapitalexplorer.com Peter Elam Håkansson, Founding Partner, Chairman and Chief Investment Officer, East Capital Phone: peter.elam-hakansson@eastcapital.com Kestutis Sasnauskas, Founding Partner, Head of Private Equity & Real Estate, East Capital Phone: kestutis.sasnauskas@eastcapital.com Listing: NASDAQ OMX Stockholm, Mid Cap Ticker: ECEX ISIN-code: SE Reuters: ECEX.ST Bloomberg: ECEX SS Equity Subscribe to monthly NAV updates, financial reports and press releases directly to your on 20