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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 : 5646E
Reconstruction Capital II Ltd
29 September 2008
Reconstruction Capital II Limited (the "Company")
29 September 2008
Interim Unaudited Consolidated Financial Statements
for the six months ended 30 June 2008
Reconstruction Capital II Ltd (the "Company"), a closed-end investment company admitted to trading on the AIM market of the London Stock
Exchange, today announces its interim results for the six months ended 30 June 2008.
Financial highlights
* Net asset value, after minority interest, as at 30 June 2008 was EUR 138.9m, representing EUR 1.2326 per share (EUR 93.6m or EUR
1.4398 per share as at 30 June 2007);
* As at 30 June 2008 the Company's market capitalisation was approximately EUR 143.7m, 112.7m shares were in issue with a closing
share price of EUR 1.2750 per share on 30 June 2008;
* Retained earnings as at 30 June 2008 were EUR 3.9m (EUR 29.7m as at 30 June 2007);
* The Directors do not recommend the payment of a dividend.
Operational highlights
Under its Private Equity Programme, the Company effected one disposal and four investments in the period under review:
* In March, RC2 acquired a 63% shareholding in Antares Hotels SRL (now renamed Mamaia Resort Hotels SRL), the owner of a 305-room
beachside hotel at Mamaia, Romania's prime seaside resort, for a consideration of EUR 8m. RC2 appointed a new management team and renamed
the hotel Golden Tulip Mamaia as part of a franchise agreement with Golden Tulip Hotels.
* In March, RC2 committed a further EUR 1m to its investment in healthcare provider Romar Holding Limited, increasing its stake from
33% to 40%.
* In April, RC2 made a successful exit from its Bucharest real estate investment realizing a gain of EUR 2m (or 1.6x cost) less than
six months after its acquisition. The asset had been revalued in 2007, therefore the impact on the NAV in 2008 was not substantial.
* Over the first two quarters of 2008, RC2 took advantage of Albalact's lower share price by acquiring a further 7.5%, thus lifting
its shareholding to 17.3%.
* In June, RC2 acquired an additional 27% shareholding in Romanian paints producer Policolor for EUR 22.5m. Combined with its 8.6%
stake prior to the transaction and further market purchases during the second quarter, RC2 owned 37.6% of Policolor as at the 30 June. RC2's
strategy for Policolor is to work closely with the Romanian Investment Fund Ltd, another fund which owns 56%, in order to buy out the
remaining shareholders, delist the company, reorganize the Policolor group by separating excess real estate, chemicals and coatings, and
prepare it for exit.
Under the Trading Programme a total of EUR 3.9m was invested in the first half of 2008.
The portfolio was divided amongst companies operating in the following sectors: financial services (50.0%), building materials (18.5%),
other (12.7%), industrials (9.2%), oil & gas (3.9%), engineering (3.3%) and utilities (2.4%).
Commenting on the results, Ion Florescu, a Director of the Company said: "RC2's NAV performance over the first semester, although
disappointing, was substantially better than that of the main stock exchange indices where the Company invests. Whilst equity indices in the
region have fallen substantially more than the S&P 500 and the FTSE 100, the underlying economies remain strong, with Romanian GDP in
particular growing at an annualized rate of 8.8% over the first half of the year. We remain confident that the logic of convergence with the
rest of Europe is not affected by the worldwide credit crunch, and aim to continue making investments into the region over the coming
months."
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 above does not constitute the Company's statutory accounts for the period ended 30 June
2008.
The interim report of the Group for the six months ended 30 June 2008 has been posted to shareholders. Extracts of the financial
statements appear below and the full version is available on the Company's website - www.reconstructioncapital2.com
For further information, please contact:
Reconstruction Capital II Limited
Ion Florescu
Tel: +44 (0) 20 7244 0088
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett
Tel: +44 (0) 20 7383 5100
LCF Edmond de Rothschild Securities (Broker)
Hiroshi Funaki / Claire Heathfield
Tel: +44 (0) 20 7845 5960
INVESTMENT MANAGER AND ADVISER REPORT
On 30 June 2008, Reconstruction Capital II Limited ("RC2" or the "Group") had a total unaudited net asset value ("NAV") of EUR 138.9m
after deducting minority interest, or EUR 1.2326 per share, which represents a 14.7% decrease since the beginning of the year. The published
net asset value per share was EUR 1.2361, the difference between the published and the interim mainly resulting from the effects of the
consolidation of Antares Hotels SRL (now renamed Mamaia Resort Hotels SRL).
The fall in the NAV was primarily due to the sharp fall in equities across the world, which adversely affected the equity markets in
which RC2 operates, with the Romanian BET-EUR index and the Bulgarian SOFIX indices falling 36.8% and 34.6%, respectively. 70.4% of RC2's
investments in the Private Equity Programme are in quoted companies and are booked to market (Policolor, Albalact and Orgachim) while RC2's
total exposure to quoted equities amounted to 48.7% of total NAV as at 30 June 2008.
During the period and in light of the uncertain international environment and falling equity valuations, RC2 kept high levels of cash
which, excluding cash owed for the settlement of trades performed at month end and cash of subsidiaries amounted to EUR 51.4m (or 34.3% of
NAV) as at 30 June. The rest of RC2's net assets consisted of investments in the Private Equity Programme (44.2%), as well as listed
equities (17.7%) and fixed-income securities (3.8%) held under the Trading Programme.
During the period under review, most new investments were made under the Private Equity Programme, with limited additions to the Trading
Programme. The Group exploited the lower valuations of the public equity markets to increase its shareholdings in Policolor and Albalact,
both quoted companies where RC2 has significant positions under its Private Equity Programme.
Under its Private Equity Programme, the Company effected one disposal and four investments in the period under review:
* In March, RC2 acquired a 63% shareholding in Antares Hotels SRL (now renamed Mamaia Resort Hotels SRL), the owner of a 305-room
beachside hotel at Mamaia, Romania's prime seaside resort, for a consideration of EUR 8m. RC2 appointed a new management team and renamed
the hotel Golden Tulip Mamaia as part of a franchise agreement with Golden Tulip Hotels.
* In March, RC2 committed a further EUR 1m to its investment in healthcare provider Romar Holding Limited, increasing its stake from
33% to 40%.
* In April, RC2 made a successful exit from its Bucharest real estate investment realizing a gain of EUR 2m (or 1.6x cost) less than
six months after its acquisition. The asset had been revalued in 2007, therefore the impact on the NAV in 2008 was not substantial.
* Over the first two quarters of 2008, RC2 took advantage of Albalact's lower share price by acquiring a further 7.5%, thus lifting
its shareholding to 17.3%.
* In June, RC2 acquired an additional 27% shareholding in Romanian paints producer Policolor for EUR 22.5m. Combined with its 8.6%
stake prior to the transaction and further market purchases during the second quarter, RC2 owned 37.6% of Policolor as at the 30 June. RC2's
strategy for Policolor is to work closely with the Romanian Investment Fund Ltd, another fund which owns 56%, in order to buy out the
remaining shareholders, delist the company, reorganize the Policolor group by separating excess real estate, chemicals and coatings, and
prepare it for exit.
The Investment Manager invested a total of EUR 3.9m under the Trading Programme in the first half of 2008. The portfolio was divided
amongst companies operating in the following sectors: financial services (50.0%), building materials (18.5%), other (12.7%), industrials
(9.2%), oil & gas (3.9%), engineering (3.3%) and utilities (2.4%).
The Investment Manager and Advisers believe that there is little connection between the underlying economic and political fundamentals
of the region and the performance of the local stock markets. The sub-prime crisis, which originated in the US, has had a devastating effect
on US (and many Western European) financial institutions and brought the US and a number of leading European economies close to recession.
Meanwhile, Romanian GDP grew at an annualized rate of 8.8% over the first half of 2008, and FDI inflows were up 63.4% year-on-year, reaching
EUR 4.8bn, which covered 61% of the current account deficit, compared to 38% one year ago. In spite of this, it is the Romanian market which
fell by 36.8 % in euro terms, whilst the S&P500 and FTSE100 fell by a much more modest 19%, also in euro terms.
In March, the investment advisory team opened an office in Belgrade in order to source investment opportunities in Serbia. After years
of economic and political isolation, this country with its diversified economy, skilled labour force and improved macroeconomic situation to
a certain extent resembles its eastern neighbours, Romania and Bulgaria but has even more catching up to do. The pro-European government
coalition which was elected in May has already made substantial progress in bringing Serbia closer to the EU, with the handover of Radovan
Karadzic to the International Criminal Tribunal for the former Yugoslavia in July and the ratification of the EU Stabilization and
Association Agreement on September 4th.
New Europe Capital Limited
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2008
Six months Six months Year
ended ended ended
30-Jun-08 30-Jun-07 31-Dec-07
EUR EUR EUR
Notes Unaudited Unaudited Audited
Investment income
(Loss) / Gain on investments
at fair value
through profit or loss 4 (26,402,661) 27,376,303 23,983,989
Interest income 1,621,871 1,045,858 1,842,780
Dividend income 492,147 260,212 331,187
Other income 4,116,399 127,138 869,957
Total investment income (20,172,244) 28,809,511 27,027,913
Revaluation Surplus - - 3,639,779
Expenses
Operating expenses 5 3,102,808 4,779,448 6,174,519
Total operating expenses 3,102,808 4,779,448 6,174,519
(Loss) / Profit before (23,275,052) 24,030,063 24,493,173
taxation
Income tax expense 138,789 177,969 1,116,617
Net (loss) / profit for the (23,413,841) 23,852,094 23,376,556
period
Attributable to:
- Equity holders of the (23,707,730) 23,609,302 21,458,657
parent
- Minority interest 293,889 242,792 1,917,899
(23,413,841) 23,852,094 23,376,556
Basic and diluted earnings per 10 (0.2104) 0.3630 0.3363
share
CONSOLIDATED BALANCE SHEET AS OF 30 JUNE 2008
30-Jun-08 30-Jun-07 31-Dec-07
EUR EUR EUR
Assets Notes Unaudited Unaudited Audited
Non-current assets
Property, plant and equipment 18,454,484 53,024 59,269
Investment property - 7,279,779
Financial assets at fair value
through profit or loss
6 35,410,192 3,000,000 3,100,000
Goodwill 7 1,257,153 1,257,153 1,257,153
Total non-current assets 55,121,829 4,310,177 11,696,201
Current assets
Financial assets at fair value
through the profit or loss
account
6 42,121,496 55,428,643 67,634,822
Other financial assets 1,082,314 - 1,425,395
Trade and other receivables 1,441,047 1,119,073 1,261,298
Inventories 124,000 - -
Cash and cash equivalents 75,219,473 38,121,456 89,328,540
Total current assets 119,988,330 94,669,172 159,650,055
Total assets 175,110,159 98,979,349 171,346,256
Liabilities
Current liabilities
Trade and other payables 8 28,582,468 4,593,814 6,455,209
Total liabilities 28,582,468 4,593,814 6,455,209
Total net assets 146,527,691 94,385,535 164,891,047
Capital and reserves
attributable to equity holders
of the parent
Share capital 1,126,811 650,394 1,126,811
Share premium reserve 134,263,071 63,280,208 134,263,071
Retained earnings 3,857,495 29,715,870 27,565,225
Translation reserve (360,431) - (145,955)
Total capital and reserves 138,886,946 93,646,472 162,809,152
attributable to equity holders
of the parent
Minority Interest 7,640,745 739,063 2,081,895
Total equity 146,527,691 94,385,535 164,891,047
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS OF 30 JUNE 2008
Attributable
Share Share Retained Translation to equity holders of Minority
Capital Premium Earnings Reserve the parent Interest Total
EUR EUR EUR EUR EUR EUR EUR
Balance at 31 December 2006 650,394 63,280,208 6,106,568 - 70,037,170 521,384 70,558,554
Profit for the period - - 23,609,302 23,609,302 242,792 23,852,094
Issue of Share Capital - - - - - - -
Minority interest arising on - - - 145,213 145,213
acquisition
Reserves - - - - - - -
Dividends payable to - - - (170,326) (170,326)
minorities
Balance at 30 June 2007 650,394 63,280,208 29,715,870 - 93,646,472 739,063 94,385,535
Loss for the period - - (2,150,645) - (2,150,645) 1,675,107 (475,538)
Issue of Share Capital 476,417 70,982,863 - - 71,459,280 - 71,459,280
Minority interest arising on - - - - -
acquisition
Reserves - - - (145,955) (145,955) (164,824) (310,779)
Dividends payable to - - - - - (167,451) (167,451)
minorities
Balance at 31 Dec 2007 1,126,811 134,263,071 27,565,225 (145,955) 162,809,152 2,081,895 164,891,047
Loss for the period - - (23,707,730) - (23,707,730) 293,889 (23,413,841)
Issue of Share Capital - - - - - - -
Minority interest arising on - - - - - 6,581,261 6,581,261
acquisition
Reserves - - - (214,476) (214,476) 164,827 (49,649)
Dividends payable to - (1,481,127) (1,481,127)
minorities
Balance at 30 June 08 1,126,811 134,263,071 3,857,495 (360,431) 138,886,946 7,640,745 146,527,691
The share premium is stated net of share issue costs.
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2008
Six months Six months Year
ended ended ended
30-Jun-08 30-Jun-07 31-Dec-07
Unaudited Unaudited Audited
EUR EUR EUR
Cash flows from operating
activities
Net Profit / (loss) before tax (23,275,052) 24,030,063 24,493,174
Adjustments for:
Depreciation 877,085 1,542 8,141
Loss / (Gain) on financial
assets at fair value
through profit or loss 29,278,620 (21,441,033) (23,983,989)
Revaluation surplus - - (3,639,779)
Negative Goodwill (3,210,739) - -
Profit on sale of fixed asset (1,289,720) - -
Gain on foreign exchange (1,009,065) (1,111,256) (707,073)
Interest income (1,621,871) (1,323,755) (1,865,763)
Dividend income (492,147) (263,002) (331,187)
Net cash outflow before changes in working (742,889) (107,441) (6,026,476)
capital
Increase/ (decrease) in trade (38,019) 1,329,975 788,515
and other receivables
Increase (decrease) in trade 15,643,439 3,670,459 4,642,995
and other payables
Increase (decrease) in (124,000) - -
inventories
Interest received 1,651,720 1,323,755 2,067,107
Dividend received 486,568 263,002 373,681
Payments for purchase of (34,514,380) (18,456,640) (42,343,817)
financial assets
Proceeds from sale of 2,185,240 13,737,844 23,503,476
financial assets
Net cash used in operating (15,452,321) 1,760,954 (16,994,519)
activities
Income tax paid - - (205,176)
Cash flows from investing
activities
Proceeds from sale of 6,785,435 - -
investment assets
Purchase of property, plant (357,309) (24,791) (37,632)
and equipment
Purchase of financial assets (1,000,000) (3,000,000) (3,000,000)
Acquisition of subsidiary (net (2,276,000) (2,960,458) (2,960,458)
of cash acquired)
3,152,126 (5,985,249) (5,998,090)
Cash flows from financing
activities
Proceeds from shares issued - - 71,459,280
Proceeds from loan 10,032 - -
Dividends paid to minority (1,818,904) (170,327) (337,777)
interest
(1,808,872) (170,327) 71,121,503
Gain on foreign exchange - 1,111,256 -
Increase in cash and cash (14,109,067) (3,283,366) 47,923,718
equivalents
Cash at start of period 89,328,540 41,404,822 41,404,822
Cash at end of period 75,219,473 38,121,456 89,328,540
This information is provided by RNS
The company news service from the London Stock Exchange
END
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