Interim Unaudited Financial Statements

RNS Number : 6866N

Reconstruction Capital II Ltd

10 August 2017

 

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: [phone]

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett / Carolyn Sansom

Tel: [phone]

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

 

END

 

 

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