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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 |
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RNS Number:3544Z
Reconstruction Capital II Ltd
29 June 2007
29th June 2007
Reconstruction Capital II Limited (the "Company")
Annual Report and Accounts
Reconstruction Capital II Limited (AIM: RC2) is pleased to announce its results
for the year ended 31 December 2006.
Extracts from the financial statements are given below and full versions are
available from the offices of New Europe Capital Limited, 33 Marloes Road,
London W8 6LG, United Kingdom (tel: +44 (20) 7244 0088).
The annual report has been posted to the Company's shareholders.
For further information:
Ion Florescu
Reconstruction Capital II Limited
Tel: +44 7767 477192
Philip Secrett / Fiona Owen
Grant Thornton Corporate Finance
Tel: +44 20 7383 5100
INVESTMENT MANAGER AND INVESTMENT ADVISER REPORT
Reconstruction Capital II Limited ("RC2" or the "Company") was incorporated on
17th October 2005 and started operations on 19th December 2005 when a total of
EUR 23.4 million was raised from investors, net of expenses. On 23rd December
2005, RC2's shares were admitted to trading on the London Stock Exchange's AIM
market and on 17th May 2006 a further EUR 40.5 million was raised from
investors, net of expenses. This is the first financial year for which accounts
are being presented.
For 2006, the Company reports a net profit excluding minority interest of EUR
6.1 million, primarily generated by a gain on investments of EUR 6.9 million and
interest income of EUR 1.4 million. At the end of the year, the Company's total
net asset value excluding minority interest was EUR 70.0 million, equivalent to
a net asset value per share of EUR 1.0768. This compares favourably to a net
asset value per share of EUR 0.9565 when the Company's shares were admitted to
trade on the AIM market at the end of 2005.
In 2006, the economies of Romania and Bulgaria, the two principal countries in
which the Company invests, experienced strong growth and generally healthy
macro-economic indicators. The year culminated in both countries joining the EU
on the 1st January 2007. Internal growth in the two countries was driven
primarily by an internal boom in consumption and construction, fuelled by
increasing living standards and the increased availability of consumer and
mortgage financing.
Romania in particular experienced an improving macroeconomic climate with a 7.7%
increase in GDP over the year (compared to 4.1% in 2005), whilst yearly
inflation stood at 4.9% in December 2006, compared to 8.6% in 2005. Growth in
Romanian GDP was driven by 19.4% growth in the construction sector, a 7.8%
increase in the manufacturing sector, and a 7.3% increase in the services
sector. In Bulgaria, GDP increased by 6.1% year-on-year compared to 6.2% in 2005
and the growth in the Bulgarian CPI index was 6.5% in 2006, unchanged from 2005.
The one dark spot on the horizon for both countries remains the current account
deficit, which stood at 10.3% of GDP for Romania and 15.8% of GDP for Bulgaria
over 2006. Nevertheless to a certain extent this is a result of the strong
confidence of international investors in the two economies, which resulted in
FDI flows of EUR 9.1bn in Romania and of EUR 4.0bn Bulgaria. In Romania, where
the local currency is not pegged to the euro, this led to a currency
appreciation against the single currency of 8.0% in 2006.
The Company operates two investment programmes, a Private Equity Programme which
is focused on acquiring and disposing of significant or controlling stakes in
companies, and a Trading Programme which focuses on portfolio investments in
listed equities and fixed income securities.
Under the Trading Programme, the Investment Manager invested approximately EUR
13.4 million in listed equities over the year, which had a total market value of
EUR 17.6 million at the end of 2006. Of this, 79.7% was held in Romanian
equities and the balance of 20.3% was invested in Bulgarian equities. As at 31st
December 2006, the increase in value over cost of the equity holdings held under
the Trading Programme (+ 31.0%) is significantly higher than the overall
performance of the Romanian EUR denominated index since RC2 started investing at
the end of January 2006 (+4.9%).
As of 31 December 2006, RC2's listed equities portfolio was divided amongst
companies operating in the following industries: financial services (63.1%),
building materials (6.9%), oil and gas (21.6%), utilities (7.5%) and industrials
(0.9%). In addition, as at end-December 2006, RC2's local currency fixed income
holdings amounted to EUR 5.8 million.
Under the Private Equity Programme, RC2's first private equity investment was
finalized in November 2006, when the Company increased its shareholding in
Albalact S.A. ("Albalact") to 16.4% and the Investment Adviser agreed to take a
seat on Albalact's board of directors (previously the Fund had had a smaller
shareholding in this company held under its Trading Programme). Albalact is
Romania's leading independent fresh dairy products company. With strong brands
on the local market, a powerful milk collection system which covers one of the
best dairy regions of the country, and a new production facility under
construction, Albalact has proven to be one of the most dynamic players in its
sector. Annual sales growth has averaged 65.7% over the past 3 years and the
2006 net profit was 98% above the previous year. Although it is a quoted
company, the shareholding in Albalact has been categorized as part of the
Private Equity Programme by the Board due to the size of the investment, RC2's
presence on the company's board, and the likely mid-term horizon for this
investment. The value of RC2's Albalact holding, based on the market price of
Albalact shares as at 31st December 2006, was EUR 5.82 million.
As of 31st December 2006, the value of RC2's equity holdings, including
Albalact, was EUR 23.4m or 33.4% above cost. On 31st December 2006, RC2's assets
were broken down as follows: a total of EUR 17.6 million was held in listed
equities (24.9% of total net asset value); EUR 5.8 million was held in Albalact,
a private equity position (8.2% of total net asset value); EUR 5.8 million was
invested in Romanian fixed income instruments (8.2 % of total net asset value);
EUR 20.8 million (29.4% of total net asset value) in EUR-denominated deposits
and the equivalent of EUR 15.6 million (22.1% of total net asset value) in
RON-denominated deposits. The balance of EUR 5.0 million was held in cash.
Overall, the Company's net asset value per share increased by 12.6% during the
period under review from EUR 0.9565 to EUR 1.0768.
OUTLOOK
The Investment Manager and Investment Adviser remain confident that growth rates
will continue to be strong in the two economies of Romania and Bulgaria and that
the investment climate will remain favourable for both RC2's Trading and its
Private Equity Programme.
The Investment Manager and Adviser intend to make further investments under both
RC2's Trading and Private Equity Programmes during 2007. In this respect, in the
first half of 2007 the Company completed a EUR 3 million investment in a
Romanian receivables collection company, as well as a EUR 3 million investment
in one of Romania's leading private medical services providers.
New Europe Capital Ltd New Europe Capital SRL
CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2006
31-Dec-06
EUR
Investment income
Gain on investments at fair value
through the profit and loss account 6,852,945
Interest income 1,378,959
Dividend income 95,175
Other income 280,162
---------
Total investment income 8,607,241
Expenses
Operating expenses 1,960,436
---------
Total operating expenses 1,960,436
Profit before taxation 6,646,805
Income Tax expense 118,214
---------
Net Profit for the period 6,528,591
---------
Attributable to:
- Equity holders of the parent 6,106,568
- Minority interest 422,023
---------
6,528,591
---------
Basic and diluted earnings per share 0.2092
CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2006
31-Dec-06
Assets
EUR
Non-Current Assets
Property, plant and equipment 3,210
Total non-current assets 3,210
Current Assets
Financial assets at fair value through the profit and loss account 29,268,814
Trade and other receivables 547,498
Cash and cash equivalents 41,404,822
Total current assets 71,221,134
Total Assets 71,224,344
Liabilities
Current Liabilities
Trade and other payables 665,790
Total Current Liabilities 665,790
Total Net Assets 70,558,554
Capital and reserves attributable to equity holders
Share capital 650,394
Share premium reserve 63,280,208
Retained earnings 6,106,568
Total equity and reserves 70,037,170
Minority Interest 521,384
Total Equity 70,558,554
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS OF 31 DECEMBER 2006
Share Share Retained Minority Total
Interest
Capital Premium Earnings
EUR EUR EUR EUR EUR
Balance at beginning of period - - - - -
Net profit for the
period and total
recognised income
for the period - - 6,528,591 (422,023) 6,106,568
Issue of Share
Capital 650,394 63,280,208 - - 63,930,602
------- -------- -------- ------- --------
Balance at 31 Dec
2006 650,394 63,280,208 6,528,591 (422,023) 70,037,170
The share premium is stated net of share issue costs of EUR 1,382,694.
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2006
31-Dec-06
EUR
Cash flows from operating activities
Net Profit before tax 6,646,805
Adjustments for:
Depreciation 5,307
Gain on financial assets at fair value through profit or loss (6,036,097)
Gain on foreign exchange (726,504)
Interest income (1,378,959)
Dividend income (95,175)
-----------
Net cash out outflow before changes in working capital (1,584,623)
Increase in trade and other receivables (487,695)
Increase in trade and other payables 494,340
Interest received 1,378,959
Dividend received 95,175
Purchase of financial assets (24,761,107)
Proceeds from sale of financial assets 1,526,428
-----------
Net cash used in operating activities (23,338,523)
Income tax paid (60,762)
Cash flows from investing activities
Purchase of property, plant and equipment (2,345)
Acquisition of subsidiary net of cash acquired 149,346
-----------
(23,252,284)
Cash flows from financing activities
Proceeds from shares issued 63,930,602
-----------
Gain on foreign exchange 726,504
Increase in cash and cash equivalents 41,404,822
This information is provided by RNS
The company news service from the London Stock Exchange
END
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