Reconstruction Capital II Ltd Interim Unaudited Financial Statements (2764Y)

TIDMRC2

RNS Number : 2764Y

Reconstruction Capital II Ltd

20 August 2018

20 August 2018

Reconstruction Capital II Limited (the "Company")

Interim Unaudited Financial Statements

for the six months ended 30 June 2018

Reconstruction Capital II Limited ("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 six months ended 30 June 2018.

Copies of the company's interim financial statements will today be posted to shareholders. The interim report is also available on the Company's website http://www. reconstructioncapital2.com/.

Financial highlights

On 30 June 2018, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of EUR35.7m or EUR0.2463 per share, which represents a 1.61% fall since the beginning of the year.

At a general meeting of shareholders held on 21 February 2018 a decision was made to acquire 22% of the issued share capital of Reconstruction Capital Plc (RC) for EUR1.6m and 10% of the issued share capital of The Romanian Investment Fund Limited (RIF) for EUR1.7m. Both funds are Romanian-focused and have as their main underlying asset a 60% shareholding in Policolor SA in which RC2 already owns the balance of 40%. RC2 now has a further 15.36% indirect shareholding as a result of these acquisitions. To date, only part of the acquisition has been settled for EUR1.1m, the balance of EUR2.1m being due once the vendors have resolved certain technical issues for settlement.

As at 30 June 2018, RC2 had cash and cash equivalents of approximately EUR4.6m while its wholly-owned subsidiary RC2 Cyprus Ltd had cash and cash equivalents of EUR2.3m. As at 30 June 2018, RC2 had sundry liabilities of EUR2.3m, including the EUR2.1m due for the settlement of the acquisitions of shares in RC and RIF.

Operational highlights

In May, Policolor signed an amendment to the sales contract with the buyers of its main site in Bucharest, bringing forward the sale of 4.4ha of its remaining 7.6ha from 2019 to 2018. The land being sold in 2018 has been divided into three plots, with the first plot already having been sold in May generating cash proceeds of EUR1.4m. A second plot of land was sold in July, generating proceeds of EUR1.5m, and a further 2.2ha is due to be sold in the autumn, generating cash proceeds of EUR3m. In May, Policolor also signed the contract for the construction of its new Bucharest plant, which is due to be completed in the spring of 2019 and to become operational in the summer of that year.

Operationally, the Policolor Group had a reasonable first half of the year with sales marginally ahead of the same period last year at EUR33.3m (cf. 2017 EUR32.9m), whilst EBITDA fell by 10.6% to EUR1.95m compared to the same period of the previous year.

The fair value of the investments held under the Private Equity Programme increased by EUR3.4m to EUR33.6m during the period, primarily due to the acquisition of the shares in RC and RIF detailed above.

For further information, please contact:

Reconstruction Capital II Limited

Cornelia Oancea / Anca Moraru

Tel: [phone]

Grant Thornton UK LLP

(Nominated Adviser)

Philip Secrett

Tel: [phone]

finnCap Limited

(Broker)

William Marle / Giles Rolls

Tel: [phone]

ADVISER'S REPORT

For the six months ended 30 June 2018

On 30 June 2018, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of EUR35.7m or EUR0.2463 per share, which represents a 1.61% fall since the beginning of the year.

At a general meeting of shareholders held on 21 February 2018 a decision was made to acquire 22% of the issued share capital of Reconstruction Capital Plc (RC) for EUR1.6m and 10% of the issued share capital of The Romanian Investment Fund Limited (RIF) for EUR1.7m. Both funds are Romanian-focused and have as their main underlying asset a 60% shareholding in Policolor SA in which RC2 already owns the balance of 40%. RC2 now has a further 15.36% indirect shareholding as a result of these acquisitions. To date, only part of the acquisition has been settled for EUR1.1m, the balance of EUR2.1m being due once the vendors have resolved certain technical issues for settlement.

As at 30 June 2018, RC2 had cash and cash equivalents of approximately EUR4.6m while its wholly-owned subsidiary RC2 Cyprus Ltd had cash and cash equivalents of EUR2.3m. As at 30 June 2018, RC2 had sundry liabilities of EUR2.3m, including the EUR2.1m due for the settlement of the acquisitions of shares in RC and RIF.

In May, Policolor signed an amendment to the sales contract with the buyers of its main site in Bucharest, bringing forward the sale of 4.4ha of its remaining 7.6ha from 2019 to 2018. The land being sold in 2018 has been divided into three plots, with the first plot already having been sold in May generating cash proceeds of EUR1.4m. A second plot of land was sold in July, generating proceeds of EUR1.5m, and a further 2.2ha is due to be sold in the autumn, generating cash proceeds of EUR3m. In May, Policolor also signed the contract for the construction of its new Bucharest plant, which is due to be completed in the spring of 2019 and to become operational in the summer of that year.

Operationally, the Policolor Group had a reasonable first half of the year with sales marginally ahead of the same period last year at EUR33.3m (cf. 2017 EUR32.9m), whilst EBITDA fell by 10.6% to EUR1.95m compared to the same period of the previous year.

The fair value of the investments held under the Private Equity Programme increased by EUR3.4m to EUR33.6m during the period, primarily due to the acquisition of the shares in RC and RIF detailed above.

New Europe Capital SRL

STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2018

 
                                   30 June      30 June    31 December 
                                    2018          2017          2017 
                                     EUR          EUR          EUR 
                                  Unaudited    Unaudited     Audited 
Revenue 
Fair value loss on financial 
 assets at 
fair value through profit 
 or loss                         (2,077,374)  (4,011,373)  (10,981,533) 
Recovery of previously 
 written off 
receivable                                 -            -       189,000 
Interest income                    2,153,054    2,146,080     4,334,820 
Dividend income                            -    3,500,000     7,619,610 
Other income                              10            -             - 
 
Total revenue                         75,690    1,634,707     1,161,897 
 
Expenses 
Impairment on trade and other 
 receivables                       (126,000)            -             - 
Operating expenses                 (534,322)  (1,096,874)   (1,619,749) 
Financial expenses                     (721)        (200)         (188) 
 
Total expenses                     (661,043)  (1,097,074)   (1,619,937) 
 
Profit for the period/year         (585,353)      537,633     (458,040) 
 
Other comprehensive income                 -            -             - 
 
Total comprehensive income 
 for 
the period/year                    (585,353)      537,633     (458,040) 
 
 
 
 
Earnings Per Share attributable 
 to 
the owners of the Company 
Basic and diluted earnings 
 per share                        (0.0040)  0.0037  (0.0031) 
 

STATEMENT OF FINANCIAL POSITION

As at 30 June 2018

 
                                       30 June       30 June     31 December 
                                         2018           2017          2017 
                                         EUR           EUR           EUR 
                                      Unaudited     Unaudited      Audited 
ASSETS 
Non-current assets 
Financial assets at fair 
 value through 
profit or loss                         33,568,867    34,804,972    30,143,162 
 
Total non-current assets               33,568,867    34,804,972    30,143,162 
 
Current assets 
Trade and other receivables                18,281        50,564       136,439 
Cash and cash equivalents               4,567,668     3,028,792     6,439,763 
 
Total current assets                    4,585,949     3,079,356     6,576,202 
 
TOTAL ASSETS                           38,154,816    37,884,328    36,719,364 
 
LIABILITIES 
Current liabilities 
Trade and other payables                2,451,315       335,779       430,510 
 
TOTAL LIABILITIES                       2,451,315       335,779       430,510 
 
NET ASSETS                             35,703,501    37,548,549    36,288,854 
 
 
EQUITY ATTRIBUTABLE TO OWNERS 
Share capital                           1,449,460     1,465,223     1,449,460 
Share premium                         110,581,355   110,829,614   110,581,355 
Retained deficit                     (76,327,314)  (74,746,288)  (75,741,961) 
 
TOTAL EQUITY                           35,703,501    37,548,549    36,288,854 
 
 
 
 
Net Asset Value per 
 share 
Basic and diluted net 
 asset value per 
share                    0.2463   0.2563  0.2504 
 

STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2018

 
                                                             Retained      Equity 
                                                                         component 
                                                Share       (deficit)/       of 
                              Share capital    premium       earnings    loan notes         Total 
                                        EUR      EUR           EUR          EUR               EUR 
Balance at 1 January 2017         1,476,223   127,991,989  (75,283,921)           -    54,184,291 
Profit for the period                     -             -       537,633           -       537,633 
Other comprehensive income                -             -             -           -             - 
 
Total comprehensive income 
 for the period                           -             -       537,633           -       537,633 
 
Issue of B shares                16,997,375  (16,997,375)             -           -             - 
Redemption of B shares         (16,997,375)             -             -           -  (16,997,375) 
Repurchase and cancellation 
 of own shares                     (11,000)     (165,000)             -           -     (176,000) 
 
Transactions with owners           (11,000)  (17,162,375)             -           -  (17,173,375) 
 
Balance at 30 June 2017           1,465,223   110,829,614  (74,746,288)           -    37,548,549 
 
 
Loss for the period                       -             -     (995,673)           -     (995,673) 
Other comprehensive income                -             -             -           -             - 
 
Total comprehensive income 
 for the period                           -             -     (995,673)           -     (995,673) 
 
Repurchase and cancellation 
 of own shares                     (15,763)     (248,259)             -           -     (264,022) 
 
Transactions with owners           (15,763)     (248,259)             -           -     (264,022) 
 
Balance at 31 December 
 2017                             1,449,460   110,581,355  (75,741,961)           -    36,288,854 
 
 
Profit for the period                     -             -     (585,353)           -     (585,353) 
Other comprehensive income                -             -             -           -             - 
 
Total comprehensive income 
 for the period                           -             -     (585,353)           -     (585,353) 
 
Balance at 30 June 2018           1,449,460   110,581,355  (76,327,314)           -    35,703,501 
 
 
 

CASH FLOW STATEMENT

For the six months ended 30 June 2018

 
                                         30 June      30 June     31 December 
                                          2018           2017          2017 
                                           EUR          EUR           EUR 
                                        Unaudited    Unaudited      Audited 
Cash flows (used in)/generated 
 from operating 
activities 
Profit/(loss) before taxation            (585,353)       537,633     (458,040) 
Adjustments for: 
Fair value loss on financial 
 assets at fair value 
through profit or loss                   2,077,374     4,011,373    10,981,533 
Impairment on trade and other 
 receivables                               126,000             -             - 
Reversal of loan impairment                      -             -     (189,000) 
Interest income                        (2,153,054)   (2,146,080)   (4,334,820) 
Dividend income                                  -   (3,500,000)   (7,619,610) 
Net loss on foreign exchange                   721           200           188 
 
Net cash outflow before changes 
 in working 
capital                                  (534,312)   (1,096,874)   (1,619,749) 
(Increase)/decrease in trade 
 and other receivables                     (7,842)      (32,773)         7,352 
(Decrease)/increase in trade 
 and other payables                       (83,686)        43,377       138,108 
Purchase of financial assets           (1,224,079)     (370,000)     (370,000) 
Disposals and repayments of 
 financial assets                                -             -        63,000 
Dividends received                               -     3,500,000     7,500,000 
 
Net cash (used in)/generated 
 from operating 
activities                             (1,849,919)     2,043,730     5,718,711 
 
Cash flows used in financing 
 activities 
Payments to purchase own shares                  -     (176,000)     (440,022) 
Redemptions of B shares                   (21,455)  (16,842,979)  (16,842,979) 
 
Net cash flow used in financing 
 activities                               (21,455)  (17,018,979)  (17,283,001) 
 
Net decrease in cash and cash 
 equivalents 
before currency adjustment             (1,871,374)  (14,975,249)  (11,564,290) 
Effects of exchange rate differences 
 on cash and 
cash equivalents                             (721)         (200)         (188) 
 
Net decrease in cash and cash 
 equivalents after 
currency adjustment                    (1,872,095)  (14,975,449)  (11,564,478) 
Cash and cash equivalents at 
 the beginning of the 
period/year                              6,439,763    18,004,241    18,004,241 
 
Cash and cash equivalents at 
 the end of the 
period/year                              4,567,668     3,028,792     6,439,763 
 
 
 

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August 20, 2018 04:16 ET (08:16 GMT)