Interim Results
Equest Investments Balkans Ltd
28 September 2007
28 September 2007
Equest Investments Balkans Limited
Interim Results for the 6 months ended 30 June 2007
Equest Investments Balkans Limited ('EIB' or the 'Company'), a company investing
in the Balkan region, today announces its interim results for the 6 months ended
30 June 2007.
2007 Highlights
• Strong increase in proforma net asset value per share of 17.1% to €21.17 at
30 June 2007 (€18.08 as at 31 December 2006); net asset value per share at
30 June 2007 (after writing off placing expenses) of €20.99, compared to
€17.90 per share as at 31 December 2006 (€16.32 per share as at 30 June 2006)
• Net assets of €363.6m as at 30 June 2007 includes investments at fair
value of €344.9m (based on independent valuations)
• Successful completion of two major investments during the period,
namely Novera, a waste management company, and Borovets, a property company
• Significant uplift in fair value of both Borovets and Technomarket,
the consumer electronics and household appliance retailer, resulting from
land price increases and continued improvement in trading respectively
• Company now fully invested with strong portfolio of 9 companies owned
Post Period End Events
• Agreement to acquire effective 56.25% of Domo, a consumer electronics and
household appliance retailer in Romania
KBC Peel Hunt has also been appointed as joint-broker to the Company. They are
part of the KBC Group which has extensive banking and investment banking
presence throughout the CEE region.
EIB is also pleased to announce the appointment of ING as Global Co-ordinator
and Bookrunner, and Raiffeisen Centrobank as joint Lead Manager for an IPO for
the combined Technomarket/Domo group, which is expected to be undertaken in Q1
2008.
Commenting on the results, John Carrington, Chairman of EIB, said:
'The Company has had a very active first half of 2007 during which it
successfully completed two of the major investments anticipated at the time of
the admission to the AIM market of the London Stock Exchange in December 2006,
namely Novera, in waste management, and Borovets, in property.
The Company's investment portfolio has continued its strong performance and is
now positioned within four main sectors; retail distribution, financial
services, retail land and property development and waste management.
During the second half of the year we have agreed to acquire Domo, the second
largest retailer of electronic goods in Romania. This acquisition is part of our
strategy to broaden investment in the wider Balkan region.'
Petri Karjalainen of Equest Partners Limited, EIB's Investment Adviser, added:
'We have been very active in 2007 shaping the portfolio and EIB's future
development. Two substantial acquisitions were completed during the period,
Novera and Borovets, as well as the strategically important acquisitions of
Technomarket Serbia & Montenegro and Technomobile Serbia. The business of
Technomarket will be enhanced by the acquisition of Domo.
Equest Partners Limited, as the Investment Adviser of EIB, has further
strengthened its Balkan presence with a new office in Belgrade and new
appointments in both the Bucharest and Sofia offices. We are very pleased with
the strong progress made in EIB and its portfolio companies. We will continue to
work to try to ensure that these developments are also reflected in the
Company's share price.'
For further information please contact:
Equest Partners Limited Petri Karjalainen +44 20 7240 7600
Naomi Kora
Financial Dynamics Ed Gascoigne-Pees +44 20 7269 7132
David Cranmer
Collins Stewart Europe Limited Hugh Field +44 20 7523 8350
Jonny Sloan
Chairman's Statement
Equest Investments Balkans Ltd (EIB) is a British Virgin Islands incorporated
company, whose ordinary shares were admitted to AIM, a market operated by the
London Stock Exchange, on 20 December 2006. At the same time the Company raised
a further £43.9 million (€64.8 million) to invest in the Balkan region.
I am pleased to be able to report that the Company has successfully completed
two of the major investments anticipated at the time of our IPO on AIM; namely a
94% stake in Novera, which comprises three waste management concessions for the
whole of the City of Sofia, plus a 33.5% indirect stake in Rila Samokov which
owns 1.97 million square metres of land in the Bulgarian mountain resort area
Borovets.
As at 30 June 2007 the valuation of the investment portfolio had increased by
51.6% or €117.4m in value since 31 December 2006.
The Company has a strong investment portfolio which continues to be positioned
within our four main target sectors; retail services, financial services, retail
land and property development and waste management. I am also pleased to note
that in the post interim period we have agreed to acquire a 56.25% stake in
Domo, the second largest retailer of electronic goods in Romania. Completion is
expected imminently. This acquisition is part of the company's strategy to
broaden its involvement in its targeted sectors throughout the Balkan region.
Following the Domo acquisition, the equity of the company is now effectively
fully invested. Further investments may be financed through sales of assets and/
or additional but prudent debt financing. The emphasis will be on broadening and
deepening our exposure to our existing portfolio and target sectors rather than
on investments in new sectors.
We have also recently appointed ING as Global Co-ordinator and Bookrunner, and
Raiffeisen Centrobank as joint Lead Manager for a planned listing, in early
2008, of the combined Technomarket/ Domo electronics group.
The new Board of Directors has been working well and we have formed a new Audit
Committee under the Chairmanship of Robin James.
Our extensive local market presence through our investment adviser's offices in
Sofia, Bucharest and Belgrade which employ some 40 investment professionals,
provide us with in-depth sector and local market knowledge that provide the
Company with a competitive edge in these increasingly maturing markets. The
Investment Adviser is planning to expand its local office network and management
capability in the wider Balkan region.
Dividend
The Board of Directors does not propose the payment of an interim dividend for
the period and will retain all earnings to finance further growth.
John Carrington
Chairman
Equest Investments Balkans Ltd
Investment Manager's Report
Overview
At the time of EIB's admission to the London AIM market in late 2006 additional
equity was raised with the express intention of making new significant
investments: namely Novera and Borovets. We are pleased to have been able to
report that both of these very important transactions were completed during the
first half of 2007.
EIB acquired 94% of the Novera waste management businesses in April and 33.5% of
the company owning the Borovets mountain development land in June. Presently the
company is fully invested, however with potential sales of assets plus
additional but prudent debt financing we anticipate that additional funds will
be available for further acquisitions.
Strategy
In order to improve returns for shareholders, we continue to manage actively our
existing holdings and, by using our local offices and networks in Sofia,
Bucharest and Belgrade, we seek to exploit new opportunities for further
investment for EIB and its investments held in the Balkan region.
Our ongoing focus for the development of the Company's activities and growing
shareholder value remains to:
• actively manage our existing holdings and build cross-selling and other
synergies amongst the EIB portfolio companies;
• broaden the investment focus of EIB and its portfolio companies to the wider
Balkan region;
• concentrate investment activity on established companies in consumer growth
areas and select infrastructure opportunities, e.g. Novera, as well as
value-enhancing acquisitions for existing companies held;
• build strategic partnerships with leading global companies; and
• explore opportunities for IPOs on local and international stock exchanges for
listings of portfolio companies.
The Company may also consider issuing debt at EIB level, if felt appropriate, to
finance the growth of its portfolio.
Portfolio Review
As at 30 June 2007 the Company had nine investments with a fair valuation
totaling €344.9m. The net assets of the Company amount to €363.6m, equivalent to
€20.99 per share.
The fair value of the investments shown below and in the financial statements
were derived from independent valuers' reports as at 30 June 2007, adjusted
where necessary for the fair value of the assets and liabilities of the
respective holding companies; certain marketability discounts were also applied.
Investment Cost At Fair Value
(€m) (€m)
Technomarket Group 43.0 90.3
Borovets 21.1 69.9
Uniqua Bulgaria (formerly Vitosha Insurance) 17.1 49.5
Novera 36.1 36.8
Immofinance 29.8 35.9
Pelican 21.0 29.6
Avto Union Group 16.5 29.5
Citadel 3.4 3.4
Familia Group 11.4 0.0
Total investments 199.3 345.0
Cash 8.1
Other assets and liabilities 10.5
Net Assets 363.6
Retail
Technomarket (75% indirect holding via Lynx Properties BV as at 30 June 2007)
Early 2007 has been a period of continued growth for the Technomarket Group. In
particular, the Technomarket Group reinforced its dominant position in the
Bulgarian market for consumer electronics and household appliances and its
presence in the Balkan region. Exports into Serbia, Bosnia, Romania and Albania
were strong. Sales in the EU, albeit representing a relatively low percentage of
total sales, were also good, confirming the competitive strength of the Group in
the wider market.
Sales in 2007 are expected to grow strongly. With actual sales of €152m for the
first 6 months of 2007 the Company is well on track to reach its 2007 sales
target as the month of December typically accounts for 15-20% of the annual
turnover. This compares to sales for the first 6 months of 2006 which amounted
to €122m. Driving the increase in sales has been the continued retail network
expansion - 3 new stores were opened in the first half of 2007, bringing the
total to 27 and 2 more are expected to open by year end. In addition,
Technomarket is progressing well with establishing a presence in Romania.
On the wholesale side, Technomarket continued its good relationships with key
accounts, increasing sales and adding new clients in Bulgaria, Serbia and
Romania. Strong and established relationships with global suppliers ensured
continued support for the company's operations. Samsung is the main supplier of
the company, providing the full range of white goods, consumer electronics and
IT products. Panasonic is the second major supplier. Technomarket stores also
sell other electronics/ household names such as Sony, Philips, LG, Whirlpool,
Electrolux and Sony Ericsson. In 2006 the brand portfolio was expanded by the
addition of three new brands - Daewoo, Nintendo and MSI. Special efforts were
directed at the marketing of Technomarket's own 'Neo' brand, which includes
small domestic appliances and consumer electronics. Also during the year the Neo
line added the latest plasma TV sets to its range and successfully marketed
these in Bulgaria and Serbia.
The major strategic objectives for Technomarket in 2007 remain:
• expanding the retail network in Bulgaria, with new big box stores into three
new cities;
• increasing marketing focus on the Technomarket brand;
• continuing support for Technomarket's own Neo brand of electronics; and
• establishing a retail presence in Romania and expanding activities into FYR
Macedonia and Serbia.
EIB's 75% investment in Technomarket as at 30 June 2007 has been valued at
€90.3m. This has been based on the DCF valuation of the Technomarket Group
undertaken by the independent valuer, adjusted to take account of the €30m in
acquisition-related debt within the EIB holding company structure. EIB is
currently in the process of developing strategic options for Technomarket. One
potential option is the flotation of Technomarket and Domo, the Romanian
consumer electronics and household appliances retailer, on the Sofia and
Bucharest Stock Exchange. The rationale for combining Technomarket with Domo is
to create a pan-Balkan presence in the electronic retailing market and to
generate operating and purchasing power synergies.
Land and Property Development
Borovets (33.5% indirect holding as at 30 June 2007)
At the end of June 2007, EIB acquired an effective 33.5% interest in Rila
Samokov, which owns 1,977,131 sq m of land for development in Borovets. EIB
invested €25.9m in cash, comprising a payment for the equity purchase and a
capital contribution into Rila Samokov.
EIB owns 50% of Borovets Invest NV, a holding company, which in turn owns 67% of
Rila Samokov. EIB's partner in Borovets Invest NV is an international
institution. The other shareholders in Rila Samokov are the Municipality of
Samokov (25% shareholding) and Bulgaria's leading construction company
Glavbolgarstroy (8% shareholding).
Rila Samokov's development project in Borovets is one of the largest property
development projects in Bulgaria currently in progress. Over the next five
years, the project involves the construction of a total 653,815 square metres of
residential apartments, hotels and retail space as well as associated
infrastructure, including the creation of an additional 36.5 km of ski runs to
complement the existing skiing area.
Borovets is Bulgaria's oldest mountain resort and is located 73km from the
capital, Sofia, and caters both for winter and summer recreation. The area
currently has some 42 km of ski runs and a high point in the mountains of 2,400
metres.
The project is divided into two main phases, with completion in 2012. Total
development cost for the project is approximately €566m. Rila Samokov plans to
finance the project through debt and the pre-sales of properties. The project
has obtained all necessary approvals for commencing the first phase of building
work.
EIB's investment in Borovets has been valued at €69.9m as at 30 June 2007 based
on the independent valuer's assessment of the land's current value with a small
discount. The option to acquire the land was finalised in April 2007. Since
negotiations commenced land prices in the area have increased considerably and
this is reflected in the independent valuer's report.
Financial Services
Uniqa Bulgaria (37.72% indirect holding as at 30 June 2007)
Set up as a private company in 1994, Uniqa Bulgaria (formerly Vitosha Insurance)
has more than 100 branches across the country and is now ranked third in life
insurance and sixth in non-life insurance (source: Bulgarian Financial
Supervisory Commission).
Uniqa Bulgaria had gross premium income of €28.6m in H1 2007 (H1 2006: €21.0m),
representing an increase of 36.2%. With the introduction of new products and
better marketing Uniqa Bulgaria's life market share jumped from 8.2% in 2006 to
about 15% during the period, while non life market share also continued to
increase from 6.27% in 2006 to about 7% in the period.
EIB has a strategic partnership with Uniqa, Austria's largest insurance company,
in respect of Uniqa Bulgaria. In March 2007 Uniqa re-branded Vitosha Insurance
as Uniqa Bulgaria and acquired a further 31% of the shares from the Company.
EIB's equity holding in Uniqa Bulgaria is now 37.72%. The initial advance
payment for the sale of 31%, made in March 2007 and amounting to €12m, was used
for repayment of a loan associated with EIB's further investment in the company
during 2006. A further payment for this tranche of €7.5m was made in August 2007
and another payment will be made in early 2009, the amount of which will be
determined by the company's performance in 2008.
EIB's investment in Uniqa Bulgaria as of 30 June 2007 is valued at €49.5m, based
on a discount to a DCF valuation undertaken by the independent valuer. The
independent valuer's valuation reflects the forward purchase contracts between
Uniqa and EIB of EIB's shares, the terms of which are based on the growth of
total premium income and profitability of the company.
Waste Management
Novera (94% indirect holding as at 30 June 2007)
In April 2007 EIB acquired Christota AD, Wolf 96 OOD and Ditz AD, the three
concession holding companies for waste collection and transportation in Sofia
(the 'Companies'), through Novera EAD ('Novera'), a wholly owned subsidiary of
EIB. It is planned that Novera will also acquire other activities related to
waste management and infrastructure services that are provided in Bulgaria and
in the future for the broader Balkan region.
The Companies provide waste collection, street cleaning and snow clearing
services to the Municipality of Sofia in Bulgaria. The current infrastructure,
which has been built up over the past 10 years of the operations of the
Companies, consists of more than 350 waste collection trucks and other vehicles,
and over 1,800 employees.
Through its investment in Novera, EIB is committed to improve the waste
collection services in the region. The company is in negotiations with a number
of leading European waste management companies to help grow and develop the
operations of Novera in Bulgaria.
The total consideration for the acquisitions was €45 million in cash, with up to
a further €10 million payable in cash dependent on the performance of the
Companies in 2007. The initial cost of the acquisition of €45 million was
financed as to €25 million by EIB and a mezzanine debt facility of €20 million
from Accession Mezzanine Capital ('AMC'). Under the terms of the mezzanine debt
facility, AMC will be entitled to an equity stake of up to 6% of the equity in
Novera EAD. It was announced at the time of purchase that the intention of EIB
was to refinance part of its initial €25 million commitment in the transaction
through a senior bank debt facility of €15 million. Credit approval from a major
European bank has been received.
The combined turnover of the concessionary companies in the year ended 31
December 2006 was €22.4 million and an EBITDA of €5.4 million. The combined net
assets of the concessionary companies as at 31 December 2006 were €13.6 million.
Other service activities in waste management and infrastructure services that
are to be incorporated in Novera represent an EBITDA of €6.1 million in the year
ended 31 December 2006. In the first half of 2007 recurring revenue totaled €9.1
million. In the two months of the period when EIB owned the companies EBITDA
totaled €1.23m.
The fair value of Novera of €36.8m reflects the independent valuation attributed
to the three concession holding companies, less the minority interest and
external debt. The fair value of Novera in the accounts is approximately the
same as the cost of the investment including allowing for the potential extra
performance related payment.
Land and Property Development
Immofinance (100% indirect holding as at 30 June 2007)
Embassy Suites is a gated community next to Vitosha Mountain in Sofia. It
consists of 80 apartments and 118 underground parking spaces and was completed
in November 2006. 73% of the apartments have now been sold with the remaining
27% expected to be sold by the end of 2007. The total developed area for
Immofinance in the project is 26,000 sq. metres, of which 15,917 sq. metres is
for residential apartments.
Construction of Banya Spa and Wellness Resort, a complex of residential
apartments, hotel, spa and sports facilities located in the Bulgarian Pirin
Mountains, started in September 2006 and is expected to be completed by March
2008. The project is currently under construction with the first phase of
off-plan sales completed. The gross floor area for Immofinance in the project is
18,924 sq. metres of which 12,029 sq. metres is for residential apartments and
6,895 sq. metres is for the hotel and spa.
Construction of Banya Spa II, a complex of holiday apartments, houses and a spa
centre, will commence in November 2007. A design permit has been obtained and a
preliminary design is in progress. Construction is expected to be completed by
Q3 2009. The gross floor area for Immofinance in the project is projected at
31,500 sq. metres, of which 24,300 sq. metres will be used for residential
apartments and 1,000 sq. metres will be used for the spa area.
Construction of Boyana Park, a modern gated community in Sofia which will
consist of functional apartments, sports facilities, community centre and retail
premises, will commence in December 2007 and is expected to be completed by Q3
2009. The gross floor area for Immofinance in the project is projected at 42,500
sq. metres, of which 26,438 sq. metres is for residential apartments and 3,490
sq. metres for commercial use.
Construction of The Boyana Diplomatic Club, a complex of luxury condominium
apartments in Sofia aimed at the high-end residential market, is due to commence
in February 2008 and to be completed in February 2009. There are advanced
negotiations with a potential buyer. Currently a detailed urbanisation plan and
zoning are under preparation. Excavation works are expected to start by the end
of 2007. The gross floor area for Immofinance in the project is projected at
appr. 5,000 sq. metres, all of which is for residential apartments.
Sozopolis is a complex of second home properties, a hotel, two restaurants, a
spa centre and a supermarket on the Black Sea coast. Building permission has
been granted and construction is expected to commence in October 2007. The
completion date is expected to be mid 2009. The gross floor area for Immofinance
in the project is projected at 33,785 sq. metres, of which 30,742 sq. metres is
for residential apartments and 2,528 sq. metres is for the spa area.
Construction of the Kavarna Blue Lagoon, a vacation complex for second
homebuyers by the Black Sea, is expected to commence in January 2008, with a
completion date set for September 2009. Immofinance is a 50% owner of the
development. The total area developed for sale is projected at 50,000 sq.
metres. It is expected that the detailed plans for the development will be
completed in the next few months.
EIB's investment in Immofinance as of 30 June 2007 is valued at €35.9m. This is
based on the estimates of the present market values of Immofinance's various
developments, undertaken by the independent valuer.
Pelican (100% indirect holding as at 30 June 2007)
Pelican is a developer and owner of five sites that are to be redeveloped for
commercial use and let to tenants upon completion. Four of the sites are located
in the centre of the densely populated area of Sofia and were used as cinemas
prior to the introduction of the country's market reforms. The fifth site is a
former car factory situated at the entrance to Varna, Bulgaria's second city.
Serdika is a 24,000 sq. metres mixed office and retail scheme with underground
parking for 180 cars adjacent to the Vasil Levski monument in the centre of
Sofia. The development is being undertaken jointly between EIB (42% holding) and
Equest Balkan Properties plc (58% holding).
Construction is due to start in December 2007, subject to receiving further
approvals in respect of the historical significance of the location, which have
been requested by the authorities in recent months. Dismantling works started in
June 2007 and completion is expected by end of 2009.
Evropa Palace was let under a 10 year rental agreement to an Italian fashion
retailer in May 2007 who is responsible for the full refurbishment of the
property at a minimum. refurbishment cost set at €1m. Refurbishment is expected
to start in October 2007 and be completed by end of February 2008.
Iztok, a disused cinema, is to be demolished and reconstructed as a multi-storey
retail and office/hotel building with approximately 23,000 sq. metres of built
up area. A detailed urbanisation plan and zoning is to be prepared by end of
December 2007. Design works, additional land purchase, permits and approvals
could be completed by end of March 2008 and demolition and site mobilisation are
scheduled to start in April 2008.
Rodacar, a former factory in Varna with a built up area of 12,500 sq. metres, is
currently being let as general warehouse space. Plans are being prepared for the
redevelopment of this site into a new build multi-purpose development for
retail, office and hotel use. Options for a detailed urbanization plan and
zoning have been prepared and design works will commence shortly after one of
the options has been chosen.
EIB's investment in Pelican as at 30 June 2007 is valued at €29.6m based on the
estimates of the present market values of Pelican's developments, undertaken by
the independent valuer.
Retail
Avto Union (80% indirect holding as at 30 June 2007)
Avto Union sells the following brands: Fiat, Lancia, Alfa Romeo, Maserati,
Mazda, Opel and Chevrolet. It also sells Piaggio, Vespa and Gilera motorbikes,
has the Avis Rent-a-Car franchise and distributes Castrol and BP lubricants.
Avto Union is focused on organic expansion, but is also considering acquisitions
in the Balkan region. The company expects continued high growth in existing
brands driven by increasing car ownership in the region and the current low car
ownership ratio.
The company also has a substantial portfolio of property interests and is
currently constructing its flagship mixed-use retail and office development,
'Avto Union Centre', located adjacent to the Sofia Airport. This building is
being completed in two phases with the first phase, due to be opened in December
2007, incorporating new showrooms and service centres for the Italian car brands
of Avto Union and the second phase, which is due to be completed in May 2008,
for office buildings and further retail space. The total built-up area is 26,717
sq. meters of offices, retail and service space. The total development cost of
the construction is €20m, of which €16m has been financed through debt from
local banks.
Additionally Avto Union is planning to start the construction of a new flagship
Mazda centre in late 2007 in order to further support the growth of this brand
in the country. In total Avto Union has acquired 46,000 sq. meters of
development land in four separate sites for developing new car distribution
centres in Sofia and Plovdiv in Bulgaria.
In the first half of 2007 Avto Union had sales of €24m (up 49% over H1 2006) and
profits before tax of €487 thousand (up 1535% over H1 2006) on an adjusted
basis. Profitability continues to increase and the company is currently
financing its operational growth from internal sources with no long-term debt,
with the exception of debt associated with its property development, and
approximately €3.3m in short-term trade financing.
EIB's 80% investment in Avto Union as of 30 June 2007 has been valued at €29.5m
and is based on a discount to the DCF valuation undertaken by the independent
valuer and an independent valuation of the property and developments held by the
company. The increase in the fair value from €27.4m as at the year end date of
31 December 2006, reflects the further progress made at Avto Union and progress
on the property development.
Land and Property Development
Citadel (100% indirect holding as at 30 June 2007)
Citadel is a land-holding company which at period end had acquired 101.6
hectares of agricultural land on the northern outskirts of Bucharest, near the
Snagov area (some 25 km outside the capital). Citadel continues to acquire
further land in the area with a view to seeking permission to change the use of
the land area to a large-scale residential property development project.
EIB's investment in Citadel as of 30 June 2007 is valued at cost of €3.4m.
Retail
Familia (100% indirect holding as at 30 June 2007)
EIB installed a new management team in 2006 into the company to re-launch the
operations of the food retailer. The turnaround process of the company remains
ongoing. However, the company continues to perform poorly as it is too small,
and therefore it was considered prudent to write-down fully the investment in
terms of both equity and loans. EIB is presently exploring options to extract
some value from this investment.
Transactions after Period End
Domo
EIB announced on 19 July 2007 that its 75% owned subsidiary, Lynx Property B.V.
('Lynx') had agreed to acquire a 75% shareholding in Domo Retail S.A. ('Domo').
Domo is a consumer electronics and household appliances retailer in Romania.
Domo currently operates 113 retail shops located in major cities throughout
Romania, with an average size of over 420 sq m. The completion of this
acquisition is expected imminently.
Technomarket Serbia
EIB has acquired a 23% shareholding in Tehnik&Kom (Serbia) and a 50%
shareholding in K & K Electronics (Montenegro). These businesses operate
wholesale and retail operations of household appliances and consumer electronics
in Serbia and Montenegro under the Technomarket brand, with a regional network
of 13 stores in Serbia as well as wholesale operations in Montenegro. Both
companies are in an active programme of launching new stores in their respective
markets. The total aggregate consideration was €5.7m. EIB has options to acquire
the remaining share capital of Tehnik&Kom (Serbia) and K & K Electronics
(Montenegro) in stages commencing in 2008 at a price to be determined by an
agreed formula based upon sales and EBITDA.
Technomobile Serbia
EIB acquired a 50% shareholding of Technomobile Corporation (Serbia)
('Technomobile') for a total consideration of €1.6m. Technomobile operates a
chain of over 20 retail stores selling GSM sets, small consumer electronics
devices and complementary services, making it one of the largest such retailers
in Serbia.
Uniqa Bulgaria
Following the sale of a further 31% in Uniqa Bulgaria to Uniqa Austria in March
2007, an additional payment of €7.5m was received in August 2007 based on the
company's first half performance. This brings the total so far received for this
tranche to €19.5m. The advance payment of €12m received at the time of the sale
was used to repay a loan taken to invest into the company in 2006. A further
payment for this tranche will be received in 2009 based on the performance of
the company in 2008.
Equest Capital Management Limited
28 September 2007
Unaudited Statement of Net Assets
As at 30 June 2007
Expressed in Euro
Notes 30 June 2007 30 June 2006
€000 €000
Assets
Investments at fair value (cost:€199,329,000; 2 344,963 166,107
2006: €106,625,000)
Cash and cash equivalents 8,068 52,296
Management fees in advance 2,880 1,047
Pending investments 7,400 -
Interest receivable 24 92
Other debtors 882 1,454
364,217 220,996
Liabilities
Agency and administration fees payable 203 163
Custodian fees payable 211 57
Directors' fees 44 14
Performance fees 4 7,687
Other accrued liabilities 178 27
640 7,948
Net assets attributable to shareholders 363,577 213,048
Number of shares 5 17,324,350 13,052,844
Net asset value per share 4 €20.99 €16.32
The accompanying notes are an integral part of these unaudited financial
statements.
Unaudited Schedule of Investments
As at 30 June 2007
Expressed in Euro
Investment Cost €000 Fair value €000 % of Net Assets
Avto Union Holding Ltd 16,500 29,533 8.12%
AXIS Retail Holding Ltd 43,005 90,344 24.85%
Citadel Financial Holding Ltd 3,375 3,375 0.93%
Familia Overseas Holding Ltd 11,428 - -
Immofinance Holding Ltd 29,773 35,925 9.88%
Pelican Retail Holding Ltd 21,000 29,558 8.13%
Vitosha Holdings Ltd 17,100 49,498 13.61%
Borovets Invest Ltd 21,070 69,935 19.24%
Novera Holding Ltd 36,078 36,795 10.12%
Total investments 199,329 344,963 94.88%
Cash 8,068 2.22%
Other assets and liabilities 10,546 2.90%
Total Net Assets 363,577 100.00%
As at 31 December 2006
Investment Cost €000 Fair value €000 % of Net Assets
Avto Union Holding Ltd 16,500 27,359 8.82%
AXIS Retail Holding Ltd 41,675 78,300 25.26%
Citadel Financial Holding Ltd 2,460 2,460 0.79%
Familia Overseas Holding Ltd 10,128 3,960 1.28%
Immofinance Holding Ltd 29,773 35,429 11.43%
Pelican Retail Holding Ltd 21,000 30,734 9.91%
Vitosha Holdings Ltd 17,100 49,365 15.92%
Total investments 138,636 227,607 73.41%
Cash 76,072 24.53%
Other assets and liabilities 6,389 2.06%
Total Net Assets 310,068 100.00%
As at 30 June 2006
Investment Cost €000 Fair value €000 % of Net Assets
Avto Union Holding Ltd 16,500 23,865 11.20%
AXIS Retail Holding Ltd 24,175 23,647 11.10%
Citadel Financial Holding Ltd 2,350 2,336 1.10%
Familia Overseas Holding Ltd 7,500 4,508 2.12%
Immofinance Holding Ltd 21,000 29,748 13.96%
Pelican Retail Holding Ltd 21,000 34,602 16.24%
Vitosha Holdings Ltd 14,100 47,401 22.25%
Total investments 106,625 166,107 77.97%
Cash 52,296 24.54%
Other assets and liabilities (5,355) (2.51%)
Total Net Assets 213,048 100.00%
Unaudited Statement of Operations
For the period ended 30 June 2007
Expressed in Euro
Notes Period ended Period ended
30 June 2007 30 June 2006
€000 €000
Income
Investment income 2 814 763
Total investment income 814 763
Expenses
Investment management fees 2,874 1,949
Performance fees (25) (355)
Custodian fees 86 55
Amortisation of formation expenses 524 152
Audit fees 16 10
Legal fees 10 3
Administrative and agency fees 184 164
Directors' fees and expenses 56 4
Other fees and expenses 244 35
Total expenses 3,969 2,017
Net investment loss (3,155) (1,254)
Net realised gain on foreign currency transactions 1 -
Net movement in unrealised gain on investments 56,663 6,462
Net Increase in Net Assets Resulting from Operations 53,509 5,208
Unaudited Statement of Changes in Net Assets
For the period ended 30 June 2007
Expressed in Euro
Period ended Period ended
30 June 2007 30 June 2006
€000 €000
From operations
Net investment loss (3,155) (1,254)
Net realised gain on foreign currency transactions 1 -
Net movement in unrealised gain on investments 56,663 6,462
Net increase in net assets resulting from operations 53,509 5,208
From share capital transactions
Proceeds from shares issued - 48,845
Net increase in net assets from share capital transactions - 48,845
Net increase in net assets in the period 53,509 54,053
Net Assets:
Beginning of period 310,068 158,996
End of period 363,577 213,049
Notes to the Unaudited Financial Statements For the period ended 30 June 2007
Note 1 - Operations
Equest Investment Balkans Ltd (formerly known as Equest Investments Bulgaria
Ltd) (the 'Company') was incorporated on 10 December 2003, as an International
Business Company under the laws of the British Virgin Islands. The Company
commenced operations on 14 April 2004. The shares of the Company were first
listed on the Irish Stock Exchange on 19 April 2004. On 20 December 2006 the
shares of the Company were listed on the Alternative Investment Market ('AIM')
of the London Stock Exchange.
The Company changed its name to Equest Investments Balkans Limited on 20
December 2006.
The Company's investment objective is to provide shareholders with long term
capital growth. The Company will seek to achieve its investment objective by
investing directly or indirectly in equity or equity related securities in
developing enterprises organised or operating primarily in Bulgaria, Romania and
other countries throughout the Balkan region.
Note 2 - Significant Accounting Policies
The unaudited interim financial statements for the period ended 30 June 2007
have been prepared on a basis consistent with accounting policies set out in the
Equest Investment Balkans Ltd (formerly known as Equest Investments Bulgaria
Ltd) audited annual report and accounts for the year ended 31 December 2006.
Note 3 - Distributions to Shareholders
The Board of Directors may declare distributions out of such sources and at such
times as it from time to time may determine at its sole discretion. The Company
does not currently intend to distribute its income or net realised capital
gains. For the period ended 30 June 2007 no distributions were declared. The
Board of Directors will periodically review its distribution policy in light of
the Company's ongoing needs and operations.
Note 4 - Net Asset Value
In accordance with US Generally Accepted Accounting Standards formation expenses
of €3,191,914, relating to the listing by the Company on AIM have been fully
expensed in the statement of operations for the period in which they are
incurred. However, in accordance with the Company's Offering Memorandum the
Reported Net Asset Value ('NAV') each quarter reflects the amortization of these
formation expenses in order not to prejudice early investors. A reconciliation
of the Net Asset Value is as follows:
30 June 2007 30 June 2006
€000 €000
Net Asset value per financial statements 363,577 213,048
Write back listing cost expensed in period 3,192 -
Net Asset value per valuation at the end of the period 366,769 213,048
Number of shares in issue at period end 17,324,350 13,052,844
Net Asset Value per share as published per valuation €21.17 €16.32
Net Asset Value per share as per financial statements €20.99 €16.32
Difference between published Net Asset Value per share €0.18 -
and financial statements Net Asset Value per share
The reported Net Asset Value per share is calculated by dividing the adjusted
Net Assets of the Company by the number of participating shares in issue.
Note 5 - Share Capital Authorised
The authorised share capital of the Company is 50,000,000 Ordinary shares of no
par value. Prior to the listing on AIM the authorised share capital of the
Company was 20,000,000 Class A shares of €0.01 each and 4 Class B shares of €100
par value each. All A Class shares were converted into Ordinary Shares on a one
for one basis. The four Class B shares were repurchased and cancelled.
Transactions in Common Shares of the Company were as follows:
As at period ended 30 June2007
Shares Amount €000
Opening Balance at 1 January 2007 13,052,844 165,846
Proceeds from shares issued - -
Payments from shares redeemed - -
Closing Balance at 30 June 2007 13,052,844 165,846
Note 6 - Related Party Transactions
Mr John Walley, a director of the Company is a director of Olympia Capital
(Ireland) Limited, the Administrator to the Company. Mr Walley resigned as
director of the Company on 30 April 2007.
Mr Petri Karjalainen, a director of the Company is a director and shareholder of
the Investment Manager and Investment Advisor. As at 30 June 2007 Mr Karjalainen
held 71,200 Ordinary shares in the Company.
Mr John Carrington a director of the Company held 30,000 shares at 30 June 2007.
No further material contracts for provisions of services existed during the
period under review to which the Company is a party and in which any director
was interested.
Other than the investment management agreement and investment advisory agreement
in relation to Mr Karjalainen and the administration agreement in relation to Mr
Walley there are no contracts entered into by the Company in which the directors
have a material interest.
Note 7 - Financial Highlights
The financial highlights for the Company for the period ended 30 June 2007 are
as follows:
Basic earnings per share for the period ended 30 June 2007 was (€0.18), (2006:
(€0.10)). Basic earnings per share is based on the net investment loss in the
statement of operations and the average number of shares in issue during the
period
€ €
2007 2006
Per share operating performance (for a share of capital stock
outstanding throughout the period)
Net Asset Value, beginning of period 17.90 15.90
Income from operations
Net investment loss (0.18) (0.10)
Net unrealised gain on investment 3.27 0.52
Benefit of share premium on additional share issue - -
Net Asset Value, end of period 20.99 16.32
Total return 17.26% 2.66%
Ratio of investment income to average net assets (annualised) 0.24% 0.39%
Ratio of expenses to average net assets (annualised) (1.18%) (1.03%)
Ratio of unrealised gain on investments to average net assets 16.82% 3.30%
(annualised)
Ratio of net investment income to average net assets 15.88% 2.66%
This information is provided by RNS
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