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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Reconstruction Capital Ii Limited | LSE:RC2 | London | Ordinary Share | KYG741521028 | ORD EUR0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.035 | 0.025 | 0.045 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trusts | -2.1M | -2.94M | -0.0217 | -1.38 | 4.75M |
From Jul 2019 to Jul 2024
TIDMRC2
RNS Number : 4446J
Reconstruction Capital II Ltd
30 June 2011
Reconstruction Capital II Limited (the "Company")
30 June 2011
Annual Report and Audited Consolidated Financial Statements
for the year ended 31 December 2010
Reconstruction Capital II Ltd ("RC2, the "Company" or the "Group"), a closed-end investment company incorporated in the Cayman Islands admitted to trading on the AIM market of the London Stock Exchange, today announces its results for the year ended 31 December 2010.
Financial highlights
-- The audited net asset value as at 31 December 2010 was EUR 93.5m, representing EUR 0.9348 per share (EUR 86.7m or EUR 0.8666 per share as at 31 December 2009);
-- As at 31 December 2010 the Company's market capitalisation was approximately EUR 61m, with a closing price of EUR 0.61 per share;
-- Total investment income of EUR 12.5m for the year (EUR 11.0 m in 2009)
-- The Directors do not recommend the payment of a dividend.
Operational highlights
The Private Equity Programme
-- In April 2010, in exchange for releasing certain claims against EPH's other shareholders, RC2's shareholding in EPH increased from 21.3% to 42.0% for no extra consideration.
-- In March 2010, RC2 acquired an 11.1% shareholding in Klas DOO ("Klas"), the holding company for EPH's Bakeries business, for EUR 2.7m.
-- In June 2010, RC2 acquired 3.9% of the share capital of Agri Point Ltd ("Agri Point"), another subsidiary of EPH, for EUR 1.6m and a further 5.5% in December 2010 for EUR 2.2m. The Agripoint shareholding, which was governed by a put and call agreement with EPH, was sold back to EPH at year end for EUR 3.8m, in order to enable the disposal of this business to a third party.
-- In November 2010, RC2 acquired a 49.9% shareholding in East Point Metals Ltd ("EPM"), the copper processing subsidiary of EPH, for a total consideration of EUR 2.3m.
The Trading Programme
During the year, RC2 exited a number of its Romanian equity positions held under the Trading Programme, thereby generating EUR 5.4m of cash proceeds. At year-end, its listed equities held under the Trading Programme had a total market value of EUR 3.7 million. 99.3% of this was held in Romanian equities, while the balance of 0.7% was held in Serbian equities.
The financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted in the European Union.
The financial information set out in the announcement does not constitute the Company's audited financial statements for the years ended 31 December 2010 or 2009. The financial information for the year ended 31 December 2009 is derived from the audited financial statements for that year.
The audit of the financial statements for the year ended 31 December 2010 is complete. The auditors reported on those accounts; their report was unqualified and did not include references to any matters to which the auditors drew attention to by way of emphasis without qualifying their report.
The annual report and financial statements will be posted to shareholders today and published on its web site (www.reconstructioncapital2.com).
For further information, please contact:
Reconstruction Capital II Limited
Ion Florescu / Ivanka Ivanova
Tel: +44 (0) 20 7244 0088
Grant Thornton Corporate Finance (Nominated Adviser)
Philip Secrett / David Hignell
Tel: +44 (0) 20 7383 5100
LCF Edmond de Rothschild Securities (Broker)
Hiroshi Funaki / Johnny Hewitson
Tel: +44 (0) 20 7845 5960
INVESTMENT MANAGER AND INVESTMENT ADVISORS' REPORT
During the year, Reconstruction Capital II Limited ("RC2" or the "Company") did not make any new investments under its Private Equity Programme, but increased its shareholding in East Point Holdings Limited ("EPH") from 21.3% to 42.0% by exchanging certain claims it had against other shareholders in this company for additional shares. In addition, RC2 exited a number of positions held under its Trading Programme, thereby generating EUR 5.4m in cash.
As at 31 December 2010, RC2 had an audited net asset value ("NAV") per share of EUR 0.9348, representing an increase of 7.87% over the year, mainly as a result of RC2's increased shareholding in EPH.
RC2's audited NAV per share compares to an unaudited published NAV per share of EUR 1.0264 at the end of 2010. The difference of EUR 0.0916 per share is mainly the result of the effects of the consolidation of Mamaia Resort Hotels SRL and Top Factoring SRL in the audited accounts. Both these investments are booked at fair value when computing RC2's unaudited published NAV per share.
Private Equity Programme
In April 2010, in exchange for releasing certain claims against EPH's other shareholders, RC2's shareholding in EPH increased from 21.3% to 42.0% for no extra consideration. In March 2010, RC2 acquired an 11.1% shareholding in Klas DOO ("Klas"), the holding company for EPH's Bakeries business, for EUR 2.7m. In June 2010, RC2 acquired 3.9% of the share capital of Agri Point Ltd ("Agri Point"), another subsidiary of EPH, for EUR 1.6m and a further 5.5% in December 2010 for EUR 2.2m. The Agripoint shareholding, which was governed by a put and call agreement with EPH, was sold back to EPH at year end for EUR 3.8m, in order to enable the disposal of this business to a third party. In November 2010, RC2 acquired a 49.9% shareholding in East Point Metals Ltd ("EPM"), the copper processing subsidiary of EPH, for a total consideration of EUR 2.3m.
Trading Programme
During the year, RC2 exited a number of its Romanian equity positions held under the Trading Programme, thereby generating EUR 5.4m of cash proceeds. At year-end, its listed equities held under the Trading Programme had a total market value of EUR 3.7 million. 99.3% of this was held in Romanian equities, while the balance of 0.7% was held in Serbian equities.
INVESTMENT MANAGER AND INVESTMENT ADVISORS' REPORT (Continued)
Outlook
In 2010, Romania, Serbia and Bulgaria, the three countries where RC2 has investments, took strong measures to improve their public sector balances, and Romania in particular had to apply severe fiscal tightening measures, including cutting public sector wages by 25% and increasing the VAT level from 19% to 24% over the summer of 2010, while Serbia implemented a freeze on public sector pensions and wages. Whilst painful in the short term, these measures should help lay the foundations for future economic growth. After a difficult 2010, the economic environment in RC2's three main countries of operation has started to show encouraging signs of improvement in 2011. The economic pattern has been helped by rising exports and increased industrial production, while in return, the trade deficits have improved significantly.
In 2011, RC2 is focussing on the ongoing financial and operational restructuring of EPH and its remaining operating subsidiaries (Agripoint and EDDSG, EPH's River Shipping Business, having been sold at the end of 2010), as well as on growing and preparing for sale the Fund's Romanian Private Equity investments.
New Europe Capital Ltd
New Europe Capital S.R.L.
New Europe Capital DOO
INVESTMENT POLICY
Private Equity Programme
Under the Private Equity Programme, the Company takes significant or controlling stakes in companies operating primarily in Romania, Serbia, Bulgaria and neighbouring countries (the "Target Region"). The Company invests in investee companies where it believes its Investment Advisers can add value by implementing operational and/or financial restructuring over a 3 to 5 year horizon. The Company only makes an investment under the Private Equity Programme if its Investment Advisers believe there is a clear exit strategy available, such as trade sale, break up and subsequent disposal of different divisions or assets, or a flotation on a stock exchange.
Trading Programme
Under the Trading Programme, the Company aims to generate short and medium term returns by investing such portion of its assets as determined by the Directors from time to time in listed equities and fixed income securities, including convertible and other mezzanine instruments, issued by entities in the Target Region. The Investment Manager is responsible for identifying and executing investments and divestments under the Trading Programme. The Trading Programme differs from the Private Equity Programme in the key respect that the Company will typically not take significant or controlling stakes in investee companies and will typically hold investments for shorter periods of time than investments made under the Private Equity Programme.
Value Creation
Under its Private Equity Programme, the Investment Advisers are involved at board level in the investee company to seek to implement operational and financial changes to enhance returns. As part of the Company's pre-acquisition due diligence, the Investment Advisers seek to identify specific actions that they believe will create value in the target investee company post acquisition and, where appropriate, seek to work with third party professionals to develop, in combination with the proposed management team of the target, a value creation plan with clear and identifiable short and medium term targets. These plans are likely to address different parts of the business and are tailored to reflect the specific challenges of the relevant target company. Both the Investment Advisers and the Investment Manager believe that the investment strategies under the Private Equity and Trading Programme can achieve returns which are different than the returns of the relevant market indices.
Investing Restrictions and Cross-Holdings
The Directors, the Investment Advisers and the Investment Manager will take steps to ensure that the portfolio of investments is sufficiently diversified to spread the risks of those investments. The Investment Strategy does not restrict the Company from investing in other closed-ended funds operating in the Target Region. In line with the Company's investment policy, the Board will not normally authorise any investment in a single investee company that is greater than 20 per cent of the Company's net asset value at the time of effecting the investment and in no circumstances will it approve an investment in a single investee company that is greater than 25 per cent of the Company's net asset value at the time of effecting the investment.
Gearing
The Company may borrow up to a maximum level of 30 per cent of its gross assets (as defined in its articles).
Distribution Policy
The Company's investment objective is focused principally on the provision of capital growth. For further details of the Company's distribution policy, please refer to the Admission Document on the Company's website.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
Hot Features
Premium
31-Dec-10 31-Dec-09
EUR EUR
Revenue 4,631,539 3,083,961
----------- ------------
Total Revenue 4,631,539 3,083,961
Investment income
Gain on investments at fair
value
through profit or loss 11,954,421 10,379,006
Interest income 18,237 73,311
Dividend income 4,082 293,312
Other income 503,154 279,591
----------- ------------
Total investment income 12,479,894 11,025,220
Expenses
Operating expenses 10,955,345 8,924,356
----------- ------------
Total operating expenses 10,955,345 8,924,356
Profit before taxation 6,156,088 5,184,825
Income tax expense 491,582 (1,545,772)
----------- ------------
Net profit for the year 6,647,670 3,639,053
Other comprehensive income
Exchange differences on translating
foreign operations 87,787 (806,210)
----------- ------------
Total comprehensive income
for the year 6,735,457 2,832,843
----------- ------------
Net profit for the year attributable
to:
- Equity holders of the parent 6,731,609 3,731,544
- Non-controlling interest (83,939) (92,491)
----------- ------------
6,647,670 3,639,053
----------- ------------
Total comprehensive income
attributable to:
- Equity holders of the parent 6,819,396 2,925,334
- Non-controlling interest (83,939) (92,491)
----------- ------------
6,735,457 2,832,843
----------- ------------
Basic and diluted earnings
per share 0.0673 0.0373
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2010
31-Dec-10 31-Dec-09
Assets EUR EUR
Non-current assets
Property, plant and equipment 11,588,403 13,795,880
Financial assets at fair value through
profit or loss 83,387,381 61,977,165
Goodwill 1,257,153 1,257,153
------------ -----------
Total non-current assets 96,232,937 77,030,198
Current assets
Financial assets at fair value through
profit or loss 3,711,882 13,551,893
Inventories 181,000 27,000
Trade and other receivables 6,607,316 1,273,793
Cash and cash equivalents 812,543 5,017,459
------------ -----------
Total current assets 11,312,741 19,870,145
Total assets 107,545,678 96,900,343
Liabilities
Current liabilities
Trade and other payables 2,380,538 1,273,241
Loans and borrowings 2,924,754 -
Corporation tax payable 9,925 49,943
------------ -----------
Total current liabilities 5,315,217 1,323,184
Non-current liabilities
Deferred tax 621,000 1,180,000
Loans and borrowings 1,290,000 638,146
------------ -----------
Total non-current liabilities 1,911,000 1,818,146
Total liabilities 7,226,217 3,141,330
Total net assets 100,319,461 93,759,013
============ ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2010 (continued)
31-Dec-10 31-Dec-09
EUR EUR
Capital and reserves attributable to
equity holders
Share capital 1,000,000 1,000,000
Share premium reserve 121,900,310 121,900,310
Retained deficit (26,548,471) (33,280,080)
Foreign exchange reserve (2,876,569) (2,964,356)
------------- -------------
Total equity and reserves 93,475,270 86,655,874
Non-Controlling Interest 6,844,191 7,103,139
------------- -------------
Total equity 100,319,461 93,759,013
============= =============
The financial statements were approved by the Board of Directors and authorised for issue on 29 June 2011
Ion Florescu (Director)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS OF
31 DECEMBER 2010
Foreign Retained Non-
Share Share exchange (Deficit)/ controlling
Capital Premium reserve Earnings Sub-total Interest Total
EUR EUR EUR EUR EUR EUR EUR
Balance at 1
January 2009 1,000,000 121,900,310 (2,158,146) (37,011,624) 83,730,540 7,695,820 91,426,360
Profit for the
year - - - 3,731,544 3,731,544 (92,491) 3,639,053
Other
comprehensive
income - - (806,210) - (806,210) - (806,210)
---------- ------------ ------------ ------------- ----------- ------------ ------------
Total
comprehensive
income for the
year - - (806,210) 3,731,544 2,925,334 (92,491) 2,832,843
Dividends paid
to
non-controlling
interests - - - - - (500,190) (500,190)
---------- ------------ ------------ ------------- ----------- ------------ ------------
Balance at 31
December 2009 1,000,000 121,900,310 (2,964,356) (33,280,080) 86,655,874 7,103,139 93,759,013
Profit for the
year - - - 6,731,609 6,731,609 (83,939) 6,647,670
Other
comprehensive
income - - 87,787 87,787 - 87,787
---------- ------------ ------------ ------------- ----------- ------------ ------------
Total
comprehensive
income for the
year - - 87,787 6,731,609 6,819,396 (83,939) 6,735,457
Dividends paid
to
non-controlling
interests - - - - - (175,009) (175,009)
---------- ------------ ------------ ------------- ----------- ------------ ------------
Balance at 31
December 2010 1,000,000 121,900,310 (2,876,569) (26,548,471) 93,475,270 6,844,191 100,319,461
========== ============ ============ ============= =========== ============ ============
Share premium is stated net of share issue costs
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
31 DECEMBER 2010
31-Dec-10 31-Dec-09
EUR EUR
Cash flows from operating activities
Net profit before tax 6,156,088 5,184,825
Adjustments for:
Depreciation and amortisation 210,991 203,109
Impairment 2,738,000 2,181,000
FX translation of fixed assets 180,527 -
(Gain) on financial assets at FVTPL (11,954,421) (10,379,006)
Profit on sale of financial asset 50,670 -
Gain on foreign exchange 87,787 169,559
Interest income (18,237) (73,311)
Dividend income (4,082) (293,312)
============= =============
Net cash outflow before changes in
working capital (2,552,677) (3,007,136)
(Increase) in trade and other receivables (5,382,625) (422,338)
Increase /(decrease) in trade and
other payables 1,140,946 (39,481)
(Increase)/ decrease in inventories (154,000) 53,000
Interest received 18,957 79,912
Dividend received 52,466 291,015
Payments for purchase of financial
assets (229,995) (405,890)
Net proceeds from sale of financial
assets 5,467,342 4,761,660
============= =============
Net cash generated by operating
activities (1,639,586) 1,310,742
Income tax paid (107,439) (515,229)
Cash flows from investing activities
Sale of property, plant and equipment 167,741 31,192
Purchase of property, plant and
equipment (1,086,963) (314,438)
Purchase of financial assets (8,671,500) (1,439,700)
Sale of financial assets 3,764,880 -
(7,572,867) (927,433)
Cash flows from financing activities
Dividends paid to non-controlling
interests (175,009) (500,191)
Proceeds from loan 4,527,329 -
Payments of loan (984,369) 18,717
Decrease in cash and cash equivalents (4,204,916) (1,408,907)
Cash at beginning of year 5,017,459 6,426,366
Cash at end of year 812,543 5,017,459
This information is provided by RNS
The company news service from the London Stock Exchange
END
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