• Net asset value per share on 31 December 2008 amounted to EUR 7.31 (EUR
10.87) which is a change of -16.7% (0.7%) during the fourth quarter and a
change of -32.8% (0.7%) during the year
• For the reporting period 1 January - 31 December 2008, the net loss amounted
to EUR -151.1m (EUR 4m), including EUR -152.3m (EUR 3.5m) in unrealised change
in value of investments. Earnings per share amounted to EUR -3.56 (EUR 0.09)
• For the fourth quarter, net loss amounted to EUR -60.3m (EUR 4m), including
EUR -56.1m (EUR 3.5m) in unrealised change in value of investments. Earnings per
share amounted to EUR -1.48 (EUR 0.09)
• Cash and deposits on 31 December 2008 amounted to EUR 175.8m (EUR 200.4m),
corresponding to EUR 4.85 (EUR 5.53) per share
• On 28 October 2008, East Capital Explorer made its first direct investment of
EUR 10m in unlisted Russian fashion retailer MFG (OAO Melon Fashion Group)
• In December 2008, East Capital Explorer invested an additional EUR 10m in
newly issued shares in the East Capital Bering Balkan Fund
• Net asset value per share on 31 January 2009 amounted to EUR 7.19 (SEK
76.21). Cash and deposits per the same date amounted to EUR 176.6m (SEK 1,872m)
corresponding to EUR 4.87 (SEK 51.62) per share
CEO COMMENTS ON THE FOURTH QUARTER
The global credit crisis and market volatility continued during the fourth
quarter, making year 2008 one of the most dramatic chapters in modern economic
history. Looking ahead to 2009, the overall market sentiment shows some signs
of improvement, but it remains very difficult to conclude that the turbulence
is behind us. 2009 will be a difficult year with the effects of a slowing real
economy becoming more evident on global, country, corporate and individual
level. Eastern Europe will not escape the slowdown, with many economies in our
region expected to post negative growth rates in 2009. Nevertheless, emerging
markets are still expected to outperform the established economies.
For East Capital Explorer, our NAV decreased 16.7% during the fourth quarter,
taking the total NAV decrease in 2008 to 32.8%. The change in the value of our
investments was approximately -60% during 2008, so it was our large cash
position that somewhat cushioned the fall.
In the fourth quarter, after a long period of no investments, we made our first
direct investment. Russian fashion retailer MFG is, in many ways, a good
example of the type of company that we like in this market environment.
Although the economic slowdown will affect consumption growth negatively, MFG's
brands in the midmarket segment are likely to be more resilient than many other
brands. Consumers looking for other ways to get the positive shopping emotion
will switch to clothes in a lower price segment. The company is also nearly
debt-free. Our investment, which in part meant a capital injection to the
company, makes MFG well positioned to benefit in the toughening market climate
and continue growing, both organically and through acquisitions.
We invested an additional EUR 10m in the East Capital Bering Balkan Fund in
December. The Balkan region has seen a strong market correction and with
several good companies trading at very attractive valuations, we decided to
increase our exposure to this region.
Investors everywhere are longing to see improved sentiment and the enormous
stimulus packages finally showing a positive effect. For Russia specifically,
stabilization of the oil price and rouble exchange rate would be positive
signs. For us, much more important than trying to identify a trigger when
markets might turn, is our ability to find companies with a solid business
model that can withstand the downturn, which are not overly reliant on
leverage, and have a credible management ready to lead in these challenging
times.
Although a lot has changed since East Capital Explorer was listed in November
2007, our investment focus has not. We will continue to target investments that
provide attractive exposure to the underlying long-term positive trends that
remain intact for our region. The long-term domestic growth story and
convergence with the west will continue, although at a slower pace for some
time. This means that although our favourite sectors are not likely to change
much over time, we will prioritise and focus on some sectors more than others
depending on the market situation. So, while the banking sector currently is
quite challenging, the basic retail and consumer goods sectors are relatively
attractive and, more than other sectors, likely to be resilient in the slower
growth period.
I would like to stress that we will continue to patiently maintain a selective
and cautious approach to making investments. A decision not to invest is also
an active investment decision, and our strong cash position has only grown more
valuable to us as markets and valuations have deteriorated further. If the
climate for launching new private equity funds, our preferred route to
investment exposure, does not improve, we may do more direct investments in the
meantime. We should not rule out that we can be a bit opportunistic in markets
that, from time to time, may offer very attractive investment opportunities in
listed small and midcaps. It is quite clear that we will not be fully invested
by May 2009 and as market conditions remain challenging, we have decided not to
set a new target date for being fully invested.
Gert Tiivas, CEO
The full Year-end 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, Wednesday 18 February 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
• Annual report 2008 available in the week of 6 April 2009
• AGM in Stockholm on 27 April 2009
• Interim Report 1 January - 31 March 2009 on 14 May 2009
• Interim Report 1 January - 30 June 2009 on 20 August 2009
• Interim Report 1 January - 30 September 2009 on 12 November 2009
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.
This information is disclosed in accordance with the Securities Markets Act,
the Financial Instruments Trading Act or demands made in the exchange rules.
It was released for publication at 08:20 a.m. CET on 18 February 2009.
