RC2.L Regulatory News (RC2)

As at 30 June 2019, RC2 had cash and cash equivalents of approximately €0.1m while its subsidiary, RC2 (Cyprus) Ltd, had cash and cash equivalents of € 2.21m. As at 30 June 2018, RC2 had sundry liabilities of € 0.11m.

ADVISER'S REPORT

For the six months ended 30 June 2019

On 30 June 2019, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of

€30.3m or €0.2224 per share, which represents a 0.62% fall since the beginning of the year.

During the first half of the year, RC2 acquired 4,075,463 of its Ordinary Shares of nominal value €0.01 for a total consideration of € 0.65m. The shares were subsequently cancelled bringing the total shares in issue to 136,256,913.

Policolor generated consolidated operating revenues of € 30.1m in the first half of 2019, down 9.2% year-on- year and 7.6% below budget. After a strong first quarter, Policolor's coatings sales weakened considerably in the second quarter, in part due to weak demand but also due to the difficulties in continuing to supply its full range of coatings prior to the opening of its new Bucharest factory. Over the first half of 2019, the Group generated recurring EBITDA (net of revenues and expenses allocated to the real estate division) of € 0.8m, significantly below the budgeted EBITDA of € 1.4m, mainly due to the lower coatings sales in the second quarter. Meanwhile, the construction of Policolor's new Bucharest factory and warehouse has progressed well over the quarter, with construction works having been finalized by the end of July, one month later than originallyplanned.

Mamaia Resort Hotel's operating revenues over the first semester were € 0.7m, up 19.7% year-on-year but 4.7% below budget. The Hotel, which is highly seasonal, makes most of its revenues over the months of July and August. The re-decoration of the Hotel's beach-facing "Junona" wing bedrooms and the renovation of the kitchen, which started at the end of 2018, were finalized just before the 1st May holiday which is also the official start of the Romanian seaside's summer season. The six-month EBITDA loss of € -0.4m was worse than the budgeted loss of € -0.2m, due to the lower than expected revenues, but also higher salary expenses and the cost of certain renovation related works which were not initiallybudgeted.

Following the recruitment of a new CEO as part of its strategy to re-direct its business towards B2B lending, whilst continuing with pay day lending to the extent permitted by the more restrictive prudential regulations introduced by the National Bank of Romania, Telecredit started to finance SMEs in February, having granted € 1.2m as factoring services and microloans over the first half of 2019. The lending activity was further helped by the official launch of Omnicredit, Telecredit's SME financing dedicated online platform at the beginning of June. The book value of Telecredit's SME-focussed portfolio was €0.7m at the end of June, considerably better than the budgeted figure of € 0.5m. Meanwhile, as expected due to the regulatory restrictions on pay day loans which came into effect at the beginning of 2019, pay day lending activity continued to fall, with the book value of the pay day loan book down from € 0.4m at the end of March to € 0.2m at the end of June. At the end of April, RC2 (Cyprus) Ltd, a wholly-owned subsidiary of RC2, acquired 20% of Telecredit for € 185,000, thereby bringing its shareholding in Telecredit to 100%. At the end of June, in order to support the expansion of Telecredit's SME loan book, RC2 (Cyprus) Ltd made available to Telecredit a € 1m financing line, none of which was drawn until after the end of June.

As at 30 June 2019, RC2 had cash and cash equivalents of approximately €0.1m while its subsidiary, RC2 (Cyprus) Ltd, had cash and cash equivalents of € 2.21m. As at 30 June 2018, RC2 had sundry liabilities of

€ 0.11m.

New Europe Capital SRL

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF FINANCIAL POSITION

STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2019

Share capital

Share premium

Retained (deficit)/ earnings

Equity component of loan notes

Total

EUR

EUR

EUR

EUR

EUR

Balance at 1 January 2018

1,449,460

110,581,355

(75,741,961)

-

36,288,854

Loss 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

Loss for the period

-

-

(3,532,886)

-

(3,532,886)

Other comprehensive income

-

-

-

-

-

Total comprehensive income for the period

-

-

(3,532,886)

-

(3,532,886)

Repurchase and cancellation of own shares

(46,136)

(719,257)

-

-

(765,393)

Transactions with owners

(46,136)

(719,257)

-

-

(765,393)

Balance at 31 December 2018

1,403,324

109,862,098

(79,860,200)

-

31,405,222

Loss for the period

-

-

(454,409)

-

(454,409)

Other comprehensive income

-

-

-

-

-

Total comprehensive income for the period

-

-

(454,409)

-

(454,409)

Repurchase and cancellation of own shares

(40,755)

(611,320)

-

-

(652,075)

Transactions with owners

(40,755)

(611,320)

-

-

(652,075)

Balance at 30 June 2019

1,362,569

109,250,778

(80,314,609)

-

30,298,738

CASH FLOW STATEMENT

For the six months ended 30 June 2019

30 June

30 June

31 December

2019

2018

2018

EUR

EUR

EUR

Unaudited

Unaudited

Audited

Cash flows from operating activities

Loss before taxation

(454,409)

(585,353)

(4,118,239)

Adjustments for:

Fair value loss on financial assets at fair value

through profit or loss

2,162,241

2,077,374

7,436,971

Impairment on trade and other receivables

-

126,000

-

Reversal of loan impairment

-

-

(9,000)

Interest income

(2,151,033)

(2,153,054)

(4,341,794)

Net (gain)/loss on foreign exchange

(255)

721

886

Net cash outflow before changes in working capital

(443,456)

(534,312)

(1,031,176)

Decrease/(increase) in trade and other receivables

6,712

(7,842)

115,427

Increase/(decrease) in trade and other payables

14,348

(83,686)

(180,513)

Purchase of financial assets

(133,602)

(1,224,079)

(3,433,045)

Disposals and repayments of financial assets

310,000

-

9,000

Net cash used in operating activities

(245,998)

(1,849,919)

(4,520,307)

Cash flows from financing activities

Payments to purchase own shares

(1,000,657)

-

(416,810)

Redemptions of B shares

(132,941)

(21,455)

(21,455)

Net cash flow used in financing activities

(1,133,598)

(21,455)

(438,265)

Net decrease in cash and cash equivalents before currency adjustment

(1,379,596)

(1,871,374)

(4,958,572)

Effects of exchange rate differences on cash and cash equivalents

255

(721)

(886)

Net decrease in cash and cash equivalents after currency adjustment

(1,379,341)

(1,872,095)

(4,959,458)

Cash and cash equivalents at the beginning of the period/year

1,480,305

6,439,763

6,439,763

Cash and cash equivalents at the end of the period/year

100,964

4,567,668

1,480,305