22 Aug 2014 07:00
22 August 2014
Reconstruction Capital II Limited (the "Company")
Interim Unaudited Consolidated Financial Statements
for the six months ended 30 June 2014
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 for the six months ended 30 June 2014.
Copies of the Company's interim financial statements will today be posted to shareholders. The annual report is also available to view on the Company's website http://www.reconstructioncapital2.com/.
Financial highlights
· The net asset value as at 30 June 2014 was EUR 0.3542 per share (EUR 0.3287 per share as at 31 December 2013);
· As at 30 June 2014 the Company's market capitalisation was approximately EUR 12.5m, with a closing price of EUR 0.125 per share;
· The Directors do not recommend the payment of a dividend.
Operational highlights
The Private Equity Programme
RC2 did not make any new investments under its Private Equity Programme, and continued to pursue a number of exits, both from the Fund's investee companies as well as from certain assets held by them. The investments held under the Private Equity Programme had a fair value of EUR 41.3m at the end of June, up 8.7% since the 2013 year-end audit report, primarily due to the effect of the increase in the Albalact SA share price.
The Trading Programme
As at 30 June 2014, RC2's listed equities held under the Trading Programme had a total market value of EUR 0.3m, down 6% over the semester, due to lower prices of these investments on the local stock exchange. All the investments held under the Trading Programme were in Romanian equities.
For further information, please contact:
Reconstruction Capital II Limited
Ion Florescu / Ivanka Ivanova
Tel: +44 (0) 207 244 0088
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett / David Hignell
Tel: +44 (0) 20 7383 5100
Edmond de Rothschild Securities (Broker)
Hiroshi Funaki
Tel: +44 (0) 20 7845 5960
INVESTMENT MANAGER'S AND INVESTMENT ADVISOR'S REPORT
On 30 June 2014, Reconstruction Capital II Limited ("RC2" or the Fund) had a total unaudited net asset value ("NAV") of EUR 35.4m or EUR 0.3542 per share, a 7.8% increase compared to the audited NAV at the end of December 2013. The increase in the NAV is mainly the result of a 40% increase in the Albalact SA share price over the first semester, as well as the receipt of EUR 1.5m of dividends from the Top Factoring Group.
In May, RC2 exchanged half its shareholder loan to Klas (the bakery division of East Point Holdings Ltd) amounting to EUR 1.3m for a 41% direct shareholding in the company. Consequently, RC2's direct shareholding in Klas has increased from 11% to 52%.
RC2 did not make any new investments under its Private Equity Programme, and continued to pursue a number of exits, both from the Fund's investee companies as well as from certain assets held by them. The investments held under the Private Equity Programme had a fair value of EUR 41.3m at the end of June, up 8.7% since the 2013 year-end audit report, primarily due to the effect of the increase in the Albalact SA share price.
As at 30 June 2014, RC2's listed equities held under the Trading Programme had a total market value of EUR 0.3m, down 6% over the semester, due to lower prices of these investments on the local stock exchange. All the investments held under the Trading Programme were in Romanian equities.
Over the first half of the year, RC2 received EUR 1.5m in dividends from the Top Factoring Group, as well as EUR 0.6m from Mamaia Resort Hotels SRL pursuant to a loan made by RC2 which has now been repaid following a refinancing. RC2 also secured a bridge loan of EUR 6.75m from Ion Florescu, a Director of the Fund, of which EUR 5.75m was drawn at the end of June. The proceeds were used to repay accrued liabilities, including prior shareholder and director loans, as well as to provide working capital to the Fund.
At the end of June 2014, RC2 had cash and cash equivalents of approximately EUR 0.5m, borrowings of EUR 5.9m, and another EUR 2.3m of accrued liabilities to its service providers, including investment management and advisory fees.
RC2 has announced that it is planning to launch a EUR 9m convertible bond to refinance the bridge loan and provide working capital to the Fund.
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2014
30-Jun-14 | 30-Jun-13 | 31-Dec-13 | |||
EUR | EUR | EUR | |||
Unaudited | Unaudited | Audited | |||
Investment gain/(loss) | |||||
Gain/(loss) on investments at fair value through profit or loss | 1,950,240 | 237,252 | (4,139,530) | ||
Interest income | 54,324 | 216,387 | 449,689 | ||
Dividend income | 1,527,107 | 1,416,918 | 1,786,545 | ||
Other income | 35,986 | 55,792 | 111,693 | ||
Total investment gain/(loss) | 3,567,657 | 1,926,349 | (1,791,603) | ||
Expenses | |||||
Impairment on loan receivables | - | (428,921) | (1,915,317) | ||
Operating expenses | (603,632) | (966,770) | (1,724,249) | ||
Total operating expenses | (603,632) | (1,395,691) | (3,639,566) | ||
Operating gain/(loss) | 2,964,025 | 530,658 | (5,431,169) | ||
Financial expenses | (441,697) | (506,786) | (994,901) | ||
Profit/(loss) before taxation | 2,522,328 | 23,872 | (6,426,070) | ||
Withholding tax expense | (404) | - | - | ||
Income tax expense | - | (8,715) | (10,353) | ||
Net profit/(loss) for the period | 2,521,924 | 15,157 | (6,436,423) | ||
Other comprehensive income/(loss) | |||||
Exchange differences on translating foreign operations | 13,102 | (7,253) | 3,835 | ||
Total comprehensive income/(loss) for the period | 2,535,026 | 7,904 | (6,432,588) | ||
Net profit/(loss) for the period attributable to: | |||||
- Equity holders of the parent | 2,551,095 | (12,074) | (6,459,070) | ||
- Non-controlling interest | (29,171) | 27,231 | 22,647 | ||
2,521,924 | 15,157 | (6,436,423) | |||
Total comprehensive income/(loss) attributable to: | |||||
- Equity holders of the parent | 2,551,018 | (12,618) | (6,458,782) | ||
- Non-controlling interest | (15,992) | 20,522 | 26,194 | ||
Total comprehensive income/(loss) for the period | 2,535,026 | 7,904 | (6,432,588) | ||
Earnings Per Share attributable to the equity shareholders of the Company |
| ||||
Basic and diluted earnings per share | 0.0255 | (0.0001) | (0.0646) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2014
30-Jun-14 | 30-Jun-13 | 31-Dec-13 | |||
EUR | EUR | EUR | |||
Unaudited | Unaudited | Audited | |||
Assets | |||||
Non-current assets | |||||
Property, plant and equipment | 10,215 | 11,618 | 10,305 | ||
Financial assets at fair value through profit or loss | 41,281,075 | 42,377,362 | 37,983,957 | ||
Loans receivable | - | 576,702 | - | ||
Total non-current assets | 41,291,290 | 42,965,682 | 37,994,262 | ||
Current assets | |||||
Financial assets at fair value through profit or loss | 347,525 | 382,994 | 369,656 | ||
Trade and other receivables | 414,027 | 683,887 | 365,859 | ||
Loans receivable | 1,359,834 | 3,893,376 | 3,215,156 | ||
Cash and cash equivalents | 534,824 | 150,389 | 350,142 | ||
Total current assets | 2,656,210 | 5,110,646 | 4,300,813 | ||
Total assets | 43,947,500 | 48,076,328 | 42,295,075 | ||
Liabilities | |||||
Current liabilities | |||||
Trade and other payables | (2,280,790) | (4,203,198) | (4,726,550) | ||
Loans and borrowings | (5,870,917) | (4,126,344) | (4,306,163) | ||
Corporation tax payable | (4,469) | (4,993) | (1,792) | ||
Total current liabilities | (8,156,176) | (8,334,535) | (9,034,505) | ||
Non-current liabilities | |||||
Loans and borrowings | (43,031) | (40,731) | - | ||
Total non-current liabilities | (43,031) | (40,731) | - | ||
Total liabilities | (8,199,207) | (8,375,266) | (9,034,505) | ||
Total net assets | 35,748,293 | 39,701,062 | 33,260,570 |
Capital and reserves attributable to equity holders | |||||
Share capital | 1,000,000 | 1,000,000 | 1,000,000 | ||
Share premium reserve | 121,900,310 | 121,900,310 | 121,900,310 | ||
Retained deficit | (87,449,176) | (83,553,275) | (90,000,271) | ||
Foreign exchange reserve | (27,755) | (28,510) | (27,678) | ||
Total equity and reserves | 35,423,379 | 39,318,525 | 32,872,361 | ||
Non-controlling interests | 324,914 | 382,537 | 388,209 | ||
Total equity | 35,748,293 | 39,701,062 | 33,260,570 | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2014
Sharecapital | Sharepremium | Foreign exchange reserve | Retained (deficit)/earnings | Sub-total | Non- controlling interest | Total | |
EUR | EUR | EUR | EUR | EUR | EUR | EUR | |
Balance at 1 January 2013 | 1,000,000 | 121,900,310 | (27,966) | (83,541,201) | 39,331,143 | 362,015 | 39,693,158 |
(Loss)/profit for the period | - | - | - | (12,074) | (12,074) | 27,231 | 15,157 |
Other comprehensive (loss)/income | - | - | (544) | - | (544) | (6,709) | (7,253) |
Total comprehensive (loss)/income for the period | - | - | (544) | (12,074) | (12,618) | 20,522 | 7,904 |
Dividends paid to non-controlling interests | - | - | - | - | - | - | - |
Balance at 30 June 2013 | 1,000,000 | 121,900,310 | (28,510) | (83,553,275) | 39,318,525 | 382,537 | 39,701,062 |
Loss for the period | - | - | - | (6,446,996) | (6,446,996) | (4,584) | (6,451,580) |
Other comprehensive income | - | - | 832 | - | 832 | 10,256 | 11,088 |
Total comprehensive income/(loss) for the period | - | - | 832 | (6,446,996) | (6,446,164) | 5,672 | (6,440,492) |
Dividends paid to non-controlling interests | - | - | - | - | - | - | - |
Balance at 31 December 2013 | 1,000,000 | 121,900,310 | (27,678) | (90,000,271) | 32,872,361 | 388,209 | 33,260,570 |
Profit/(loss) for the period | - | - | - | 2,551,095 | 2,551,095 | (29,171) | 2,521,924 |
Other comprehensive (loss)/income | - | - | (77) | - | (77) | 13,179 | 13,102 |
Total comprehensive (loss)/income for the period | - | - | (77) | 2,551,095 | 2,551,018 | (15,992) | 2,535,026 |
Dividends paid to non-controlling interests | - | - | - | - | - | (47,303) | (47,303) |
Balance at 30 June 2014 | 1,000,000 | 121,900,310 | (27,755) | (87,449,176) | 35,423,379 | 324,914 | 35,748,293 |
Share premium is stated net of share issue costs and is not distributable by way of dividend.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2014
30-Jun-14 | 30-Jun-13 | 31-Dec-13 | ||
EUR | EUR | EUR | ||
Unaudited | Unaudited | Audited | ||
Cash flows from operating activities | ||||
Net profit/(loss) before tax | 2,522,328 | 23,872 | (6,426,070) | |
Adjustments for: | ||||
Depreciation and amortisation | 1,932 | 1,608 | 3,315 | |
(Gain)/loss on financial assets at fair value through profit or loss | (1,950,240) | (237,252) | 4,066,936 | |
Impairment/revaluation of fixed assets | - | 428,921 | 1,915,318 | |
Interest income | (54,535) | (216,387) | (449,689) | |
Interest expense | 441,697 | 365,967 | 994,901 | |
Dividend income | (1,527,107) | (1,416,918) | (1,786,545) | |
Net cash outflow before changes in working capital | (565,925) | (1,050,189) | (1,681,835) | |
Increase in trade and other receivables | (33,273) | (401,559) | (93,984) | |
(Decrease)/increase in trade and other payables | (2,463,675) | 448,721 | 694,304 | |
Sale of financial assets | - | 5,772 | 40,498 | |
Interest income received | 208 | - | - | |
Dividends received | 1,523,077 | 1,412,366 | 1,792,446 | |
Cash (used in)/generated by operating activities | (1,539,588) | 415,111 | 751,429 | |
Income tax paid | - | (48,373) | (53,212) | |
Net cash generated by operating activities | (1,539,588) | 366,738 | 698,217 | |
Cash flows from investing activities | ||||
Purchase of property, plant and equipment | (1,440) | (485) | (500) | |
Receipts of loans granted from subsidiaries | - | - | 40,000 | |
Payments of loans granted to subsidiaries | - | (756,000) | (756,000) | |
Proceeds from loans granted to subsidiaries | 598,719 | - | - | |
Net cash flow generated by/(used in) investing activities | 597,279 | (756,485) | (716,500) | |
Cash flows from financing activities | ||||
Dividends paid to non-controlling interests | (47,303) | - | - | |
Proceeds from loans granted by related parties | 5,750,000 | 40,000 | - | |
Repayments of loans granted by related parties | (3,550,000) | (781,341) | (993,402) | |
Interest paid on loans | (1,032,284) | - | - | |
Net cash flow used in financing activities | 1,120,413 | (741,341) | (993,402) | |
Increase/(decrease) in cash and cash equivalents | 178,104 | (1,131,088) | (1,011,685) | |
Cash at the beginning of the period/year | 350,142 | 1,318,380 | 1,318,380 | |
Foreign exchange gain | 6,578 | (36,903) | 43,447 | |
Cash at end of period/year | 534,824 | 150,389 | 350,142 | |