10 Aug 2017 13:58
10 August 2017
Reconstruction Capital II Limited (the "Company")
Interim Unaudited Financial Statements
for the six months ended 30 June 2017
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 2017.
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
The net asset value ("NAV") as at 30 June 2017 was EUR37.5m or EUR0.2563 per share, which represents a 30.2% fall since the beginning of the year. This is due to the repayment of EUR17.0m to shareholders by means of the compulsory redemption of newly-created B Class shares. In the absence of the capital return, the NAV per share would have been EUR0.3723 per share, reflecting a EUR1.8m uplift from the sale of Top Factoring Group.
Operational highlights
Private Equity Programme
In the first half of 2017, RC2 sold its 93% shareholding in Top Factoring SRL, and Glasro Holdings Limited ("Glasro"), RC2's wholly-owned subsidiary, disposed of the whole of its non-performing loan book, for a total consideration of approximately EUR13.1m. In April, Glasro used EUR2.7m of the exit proceeds to make an investment in Telecredit S.A., a Romanian non-banking financial institution that provides consumer loans to individuals. In May, Glasro also distributed dividends of EUR3.5m to RC2.
In May, Policolor signed an agreement for the sale of its main Bucharest site (where its current Romanian production plant is located) to a Romanian real estate development company for a total consideration of EUR22m, of which EUR11.4m was received by the end of June, when Policolor delivered approximately half the site to the buyer, leaving a total of EUR0.7m as advance payments for the second half, which is due to be sold in 2019, when the balance of EUR9.9m should be cashed.
Operationally, the Policolor Group had a decent first half of the year, both in terms of sales and operating profitability, with operating revenues up 9.4% year-on-year from EUR30.0m to EUR32.9m, whilst EBITDA of EUR1.8m was better than the EUR1.0m recorded over the same period of the previous year.
The investments held under the Private Equity Programme had a fair value of EUR32.7m as at 30 June 2017, reflecting a 9.28% decrease over the semester mainly due to the sale of the holding in Top Factoring SRL.
Trading Programme
RC2 sold down part of its listed equities portfolio held under the Trading Programme during the first half of the year, generating cash proceeds of EUR0.1m. As at 30 June 2017, the portfolio was valued at EUR0.1m. The investments held under the Trading Programme are entirely in Romanian equities.
For further information, please contact:
Reconstruction Capital II Limited
Ion Florescu / Anca Moraru
Tel: +40 21 3167680
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett / Carolyn Sansom
Tel: +44 (0) 20 7383 5100
ADVISER'S REPORT
For the six months ended 30 June 2017
On 30 June 2017, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of EUR37.5m or EUR0.2563 per share, which represents a 30.2% fall since the beginning of the year. This is due to the repayment of EUR17.0m to shareholders by means of the compulsory redemption of newly-created B Class shares. In the absence of the capital return, the NAV per share would have been EUR0.3723 per share, reflecting a EUR1.8m uplift from the sale of Top Factoring Group.
Over the first half of 2017, RC2 acquired 1.1m of its own shares, bringing its total shares in issue to 146.5m.
As at 30 June 2017, RC2 had cash and cash equivalents of approximately EUR3.1m. RC2 Cyprus, a wholly owned subsidiary of the Company, had cash and cash equivalents of EUR2.4m. The Company had sundry liabilities of EUR0.3m.
Private Equity Programme
In the first half of 2017, RC2 sold its 93% shareholding in Top Factoring SRL, and Glasro Holdings Limited ("Glasro"), RC2's wholly-owned subsidiary, disposed of the whole of its non-performing loan book, for a total consideration of approximately EUR13.1m. In April, Glasro used EUR2.7m of the exit proceeds to make an investment in Telecredit S.A., a Romanian non-banking financial institution that provides consumer loans to individuals. In May, Glasro also distributed dividends of EUR3.5m to RC2.
In May, Policolor signed an agreement for the sale of its main Bucharest site (where its current Romanian production plant is located) to a Romanian real estate development company for a total consideration of EUR22m, of which EUR11.4m was received by the end of June, when Policolor delivered approximately half the site to the buyer, leaving a total of EUR0.7m as advance payments for the second half, which is due to be sold in 2019, when the balance of EUR9.9m should be cashed.
Operationally, the Policolor Group had a decent first half of the year, both in terms of sales and operating profitability, with operating revenues up 9.4% year-on-year from EUR30.0m to EUR32.9m, whilst EBITDA of EUR1.8m was better than the EUR1.0m recorded over the same period of the previous year.
The investments held under the Private Equity Programme had a fair value of EUR32.7m as at 30 June 2017, reflecting a 9.28% decrease over the semester mainly due to the sale of the holding in Top Factoring SRL.
Trading Programme
RC2 sold down part of its listed equities portfolio held under the Trading Programme during the first half of the year, generating cash proceeds of EUR0.1m. As at 30 June 2017, the portfolio was valued at EUR0.1m. The investments held under the Trading Programme are entirely in Romanian equities.
New Europe Capital SRL
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2017
30 June | 30 June | 31 December | ||||
2017 | 2016 | 2016 | ||||
EUR | EUR | EUR | ||||
Unaudited | Unaudited | Audited | ||||
Revenue | ||||||
Movement in revaluation of | ||||||
financial assets at fair value through | ||||||
profit or loss | (4,011,373) | (825,499) | 4,699,325 | |||
Interest income | 2,146,080 | 2,958,759 | 5,854,313 | |||
Dividend income | 3,500,000 | 2,000,000 | 2,000,000 | |||
Other income | - | 12,103 | 11,347 | |||
Total revenue | 1,634,707 | 4,145,363 | 12,564,985 | |||
Expenses | ||||||
(1,096,874) | (561,241) | (1,230,810) | ||||
Operating expenses | ||||||
Financial expenses | (200) | (525,757) | (775,195) | |||
Total expenses | (1,097,074) | (1,086,998) | (2,006,005) | |||
Profit for the period/year | 537,633 | 3,058,365 | 10,558,980 | |||
Other comprehensive income | - | - | - | |||
Total comprehensive income for | ||||||
537,633 | 3,058,365 | 10,558,980 | ||||
the period/year | ||||||
Earnings Per Share attributable to | |||
the owners of the Company | |||
Basic undiluted earnings per share | 0.0037 | 0.0314 | 0.0971 |
Fully diluted earnings per share | 0.0037 | 0.0224 | 0.0971 |
STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
30 June | 30 June | 31 December | |||||
2017 | 2016 | 2016 | |||||
EUR | EUR | EUR | |||||
Unaudited | Unaudited | Audited | |||||
ASSETS | |||||||
Non-current assets | |||||||
Financial assets at fair value through | |||||||
profit or loss | 34,804,972 | 47,989,887 | 36,300,265 | ||||
Total non-current assets | 34,804,972 | 47,989,887 | 36,300,265 | ||||
Current assets | |||||||
Trade and other receivables | 50,564 | 30,097 | 17,791 | ||||
Cash and cash equivalents | 3,028,792 | 352,527 | 18,004,241 | ||||
Total current assets | 3,079,356 | 382,624 | 18,022,032 | ||||
TOTAL ASSETS | 37,884,328 | 48,372,511 | 54,322,297 | ||||
LIABILITIES | |||||||
Current liabilities | |||||||
Trade and other payables | 335,779 | 190,128 | 138,006 | ||||
Non-current liabilities | |||||||
Convertible loan notes | - | 9,459,742 | - | ||||
Total non-current liabilities | - | 9,459,742 | - | ||||
TOTAL LIABILITIES | 335,779 | 9,649,870 | 138,006 | ||||
NET ASSETS | 37,548,549 | 38,722,641 | 54,184,291 | ||||
EQUITY ATTRIBUTABLE TO OWNERS | |||||||
Share capital | 1,465,223 | 919,378 | 1,476,223 | ||||
Share premium | 110,829,614 | 119,958,354 | 127,991,989 | ||||
Equity component of convertible loan notes | - | 629,445 | - | ||||
Retained deficit | (74,746,288) | (82,784,536) | (75,283,921) | ||||
TOTAL EQUITY | 37,548,549 | 38,722,641 | 54,184,291 | ||||
Net Asset Value per share | |||||||
Basic undiluted net asset value per share | 0.2563 | 0.4212 | 0.3670 | ||||
Fully diluted net asset value per share | 0.2563 | 0.3118 | 0.3670 | ||||
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2017
Retained | Equity | ||||||||
Share | (deficit)/ | component of | |||||||
Share capital | premium | earnings | loan notes | Total | |||||
EUR | EUR | EUR | EUR | EUR | |||||
Balance at 1 January 2016 | 1,000,000 | 121,570,802 | (85,842,901) | 629,445 | 37,357,346 | ||||
Profit for the period | - | - | 3,058,365 | - | 3,058,365 | ||||
Other comprehensive income | - | - | - | - | - | ||||
Total comprehensive income for the period | - | - | 3,058,365 | - | 3,058,365 | ||||
Repurchase and cancellation of own shares | (80,622) | (1,612,448) | - | - | (1,693,070) | ||||
Transactions with owners | (80,622) | (1,612,448) | - | - | (1,693,070) | ||||
Balance at 30 June 2016 | |||||||||
919,378 | 119,958,354 | (82,784,536) | 629,445 | 38,722,641 | |||||
Profit for the period | - | - | 7,500,615 | - | 7,500,615 | ||||
Other comprehensive income | - | - | - | - | - | ||||
Total comprehensive income for the period | - | - | 7,500,615 | - | 7,500,615 | ||||
Conversion of loan notes | 626,145 | 9,711,114 | - | (629,445) | 9,707,814 | ||||
Repurchase and cancellation of own shares | (69,300) | (1,677,479) | - | - | (1,746,779) | ||||
Transactions with owners | 556,845 | 8,033,635 | - | (629,445) | 7,961,035 | ||||
Balance at 31 December 2016 | |||||||||
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 | |||||
CASH FLOW STATEMENT
For the six months ended 30 June 2017
30 June | 30 June | 31 December | ||||
2017 | 2016 | 2016 | ||||
EUR | EUR | EUR | ||||
Unaudited | Unaudited | Audited | ||||
Cash flows from operating activities | 537,633 | 3,058,365 | 10,558,980 | |||
Profit/(loss) before taxation | ||||||
Adjustments for: | ||||||
Movement in revaluation of financial assets at fair value through profit or loss | 4,011,373 | 825,499 | (4,699,325) | |||
Interest income | (2,146,080) | (2,958,759) | (5,854,313) | |||
Financial expenses | - | 525,698 | 775,152 | |||
Dividend income | (3,500,000) | (2,000,000) | (2,000,000) | |||
Net loss on foreign exchange | 200 | 59 | 43 | |||
Net cash outflow before changes in working capital | ||||||
(1,096,874) | (549,138) | (1,219,463) | ||||
(Increase)/decrease in trade and other receivables | (32,773) | 7,365 | 19,671 | |||
Increase in trade and other payables | 43,377 | 67,067 | 14,945 | |||
Purchase of financial assets | (370,000) | (2,710) | (2,710) | |||
Disposals and repayments of financial assets | - | 300,000 | 20,410,000 | |||
Dividends received | 3,500,000 | 2,000,000 | 2,000,000 | |||
Net cash generated by operating activities | 2,043,730 | 1,822,584 | 21,222,443 | |||
Cash flows from financing activities | ||||||
(176,000) | (1,693,070) | (3,439,849) | ||||
Payments to purchase own shares | ||||||
Redemptions of B shares | (16,842,979) | - | - | |||
Loans received from subsidiaries | - | - | 200,000 | |||
Repayment of loans from subsidiaries | - | (40,000) | (240,000) | |||
Interest paid | - | (6,647) | (8,029) | |||
Net cash flow generated from financing activities | (17,018,979) | (1,739,717) | (3,487,878) | |||
Net increase in cash and cash equivalents before currency adjustment | (14,975,249) | 82,867 | 17,734,565 | |||
Effects of exchange rate differences on cash and cash equivalents | (200) | (59) | (43) | |||
Net increase in cash and cash equivalents after currency adjustment | (14,975,449) | 82,808 | 17,734,522 | |||
Cash and cash equivalents at the beginning of the period/year | 18,004,241 | 269,719 | 269,719 | |||
Cash and cash equivalents at the end of the period/year | 3,028,792 | 352,527 | 18,004,241 | |||