21 August 2014

East Capital Explorer Q2 2014

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Today’s Presenters

• Mia Jurke

– CEO, East Capital Explorer AB

• Kestutis Sasnauskas

– Head of Private Equity & Real Estate, East Capital

Welcome to today’s conference call

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Agenda

• Key highlights and NAV development

• Our portfolio and performance

– Update on Direct Investments and Real Estate

• Outlook and Focus going forward

• Q&A

Key highlights and NAV development

Mia Jurke

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Key highlights Q2 2014

• NAV per share on 30 June 2014: EUR 9.95 (SEK 91)

– Increase of 8.4% compared to Q1 2014

– Increase of 11.5% compared to Q2 2013

• Recovery in Russia since bottom in March

– Moscow exchange +11.7% during the quarter (-4.4% ytd)

• Strong recovery also in the Balkans

– Romania +12.8%, Slovenia +14.7%

• Fund Investments +10% during the quarter

• No changes in fair value of Direct Investments

NAV per share increased 8.4% during Q2, helped by strong development mainly in the Fund Investments

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Key highlights Q2 2014

• Payment of EUR 17.7m received from East Capital Special Opportunities Fund II (in planned liquidation), final payment expected during fall

• Acquisition of Vilnius Business Harbour (VBH) and neighboring land plot. Total purchase price EUR 61.6m, cash consideration EUR 22.3m

• Peter Elam Håkansson (Chairman East Capital) new member of the Board. Karine Hirn (Partner East Capital) declined re-election

• Redemption program approved by AGM and finalized in June. Acceptance level 94%, EUR 13.6m transferred to shareholders

• Changes in the fee structure agreed with Investment Manager East Capital. Positive earnings effect of EUR 9.0m from reversed performance fee provisions

The second of three redemption programs finalized

Changes in fee structure gave positive effect of EUR 9.0m

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Highlights – after end of the quarter

• Liselotte Hjorth elected as new Member of the Board

• Increased turbulence in Ukraine/Russia from mid July, increased sanctions from EU and US, and Russian import ban on Western foods in August

– Rest of Eastern Europe relatively unaffected

• The East Capital Russia Domestic Fund -9.0 % during July, other Fund Investments flat or slightly positive

• The remaining committed capital of EUR 2.3m was drawn down in East Capital Baltic Property II

Increased worries in Ukraine and Russia – East Capital Russia Domestic Growth Fund down 9.0% during July…

… while Balkans has continued its recovery

Portfolio development Q2 2014

Mia Jurke

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Portfolio 30 June 2014

Portfolio 30 June 2014 Value 30 June

2014, mEUR1

NAV/ Share EUR

% of NAV Value 31 Dec

2013 mEUR

Value change Apr-Jun 2014, %

Direct Investments

Melon Fashion Group 62.0 2.1 20.8 70,5 -

Starman 25.0 0.8 8.4 23,6 -

Vilnius Business Harbour 22.3 0.8 7.5 - -

Trev-2 Group 9.8 0.3 3.3 9,8 -

Komercijalna Banka Skopje 7.8 0.3 2.6 6,6 23.5

Total Direct Investments 127.0 4.2 42.6 110.5 1.2

Fund Investments

East Capital Deep Value Fund 49.6 1.7 16.7 0.0 7.4

East Capital New Market Fund 47.4 1.6 15.9 0.0 13.5

East Capital Russia Domestic Growth Fund 35.1 1.2 11.8 42.3 16.4

East Capital Baltic Property Fund II 20.9 0.7 7.0 20.7 1.3

East Capital Bering Ukraine Fund Class R 2.1 0.1 0.7 2.5 -0.3

Total Fund Investments 155.1 5.2 52.1 171.1 10.2

Short-term Investments

Short-term Investments 2.3 0.1 0.8 17.9

Cash and cash equivalents 14.1 0.5 4.7 20.3

Total Short-term Investment 16.4 0.6 5.5 38.2

Total Portfolio 298.5 9.97 100.2 319.8

Other assets and liabilities net -0.7 -0.0 -0.2 -10.4

Net Asset Value (NAV) 297.8 9.95 100.0 309.4 8.4

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Portfolio 30 June 2014

Portfolio 30 June 2014 Value 30 June

2014, mEUR1

NAV/ Share EUR

% of NAV Value 31 Dec

2013 mEUR

Value change Apr-Jun 2014, %

Direct Investments

Melon Fashion Group 62.0 2.1 20.8 70,5 -

Starman 25.0 0.8 8.4 23,6 -

Vilnius Business Harbour 22.3 0.8 7.5 - -

Trev-2 Group 9.8 0.3 3.3 9,8 -

Komercijalna Banka Skopje 7.8 0.3 2.6 6,6 23.5

Total Direct Investments 127.0 4.2 42.6 110.5 1.2

Fund Investments

East Capital Deep Value Fund 49.6 1.7 16.7 0.0 7.4

East Capital New Market Fund 47.4 1.6 15.9 0.0 13.5

East Capital Russia Domestic Growth Fund 35.1 1.2 11.8 42.3 16.4

East Capital Baltic Property Fund II 20.9 0.7 7.0 20.7 1.3

East Capital Bering Ukraine Fund Class R 2.1 0.1 0.7 2.5 -0.3

Total Fund Investments 155.1 5.2 52.1 171.1 10.2

Short-term Investments

Short-term Investments 2.3 0.1 0.8 17.9

Cash and cash equivalents 14.1 0.5 4.7 20.3

Total Short-term Investment 16.4 0.6 5.5 38.2

Total Portfolio 298.5 9.97 100.2 319.8

Other assets and liabilities net -0.7 -0.0 -0.2 -10.4

Net Asset Value (NAV) 297.8 9.95 100.0 309.4 8.4

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Portfolio 30 June 2014

Portfolio 30 June 2014 Value 30 June

2014, mEUR1

NAV/ Share EUR

% of NAV Value 31 Dec

2013 mEUR

Value change Apr-Jun 2014, %

Direct Investments

Melon Fashion Group 62.0 2.1 20.8 70,5 -

Starman 25.0 0.8 8.4 23,6 -

Vilnius Business Harbour 22.3 0.8 7.5 - -

Trev-2 Group 9.8 0.3 3.3 9,8 -

Komercijalna Banka Skopje 7.8 0.3 2.6 6,6 23.5

Total Direct Investments 127.0 4.2 42.6 110.5 1.2

Fund Investments

East Capital Deep Value Fund 49.6 1.7 16.7 0.0 7.4

East Capital New Market Fund 47.4 1.6 15.9 0.0 13.5

East Capital Russia Domestic Growth Fund 35.1 1.2 11.8 42.3 16.4

East Capital Baltic Property Fund II 20.9 0.7 7.0 20.7 1.3

East Capital Bering Ukraine Fund Class R 2.1 0.1 0.7 2.5 -0.3

Total Fund Investments 155.1 5.2 52.1 171.1 10.2

Short-term Investments

Short-term Investments 2.3 0.1 0.8 17.9

Cash and cash equivalents 14.1 0.5 4.7 20.3

Total Short-term Investment 16.4 0.6 5.5 38.2

Total Portfolio 298.5 9.97 100.2 319.8

Other assets and liabilities net -0.7 -0.0 -0.2 -10.4

Net Asset Value (NAV) 297.8 9.95 100.0 309.4 8.4

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10 largest holdings on a see-through basis

Direct Investments

Kestutis Sasnauskas

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Melon Fashion Group One of the fastest growing Russian fashion retail companies

• 36% holding in MFG valued at EUR 62m (21% of NAV)

• Sales dynamics improved during the quarter

• Q2 sales for the three concepts reached RUB 2.7bn (EUR 60m), an increase of 32% compared to Q2 2013

– +29% compared to Q1 2014

• 26 new stores in Q2 (21 in Q1, 58 in Q4)

– Total number of stores 635

• Like-for-like sales growth +5%

– Zarina 7%, Love Republic 6%, befree 2%

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Melon Fashion Group One of the fastest growing Russian fashion retail companies

• Gross margin was 61.5% (63.4% in Q2 2013)

• Weaker gross margin on the back of higher purchasing costs and deeper discounting, reflecting general market trends

– One off negative impact from hedging contracts and hryvnia depreciation

• Higher SG&A costs as a result of expansion in recent periods are not fully offset by higher sales volumes

• Consumption remains positive despite slowing GDP growth and increased uncertainties, but impact from rising inflation and interest rates is visible through declining footfall

• Opportunities arise as international competitors put on hold or cut their Russian expansion plans, leading to better location opportunities and lower competition

Gross margin affected by higher purchasing costs…

… and recent expansion

Tough macro environment visible through declining footfall…

… but provide opportunities as competition eases

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Starman Estonia’s leading cable TV and broadband provider

• 51% holding in Starman valued at EUR 25m (8% of NAV)

• Continues to enjoy good momentum thanks to market leading services and successful product launches

– TV Everywhere pre-launched in May – roll-out after summer

Successful pre-launch of TV Everywhere in May

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Starman Estonia’s leading cable TV and broadband provider

• Q2 2014 revenues EUR 16.6m, +11% vs Q2 2013

• Q2 EBITDA EUR 8.2m, 13% higher than Q2 2013

– EBITDA margin of 49.3% (48.5% Q1 2013)

• Positive year-on-year growth in cable customers

• Toomas Tiivel, formerly COO of Starman and CEO of Tele2 Estonia, appointed CEO in May

Continued double-digit sales growth and improving margins…

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Trev-2 Group A leading infrastructure construction and maintenance company in Estonia

• 40% holding in Trev-2 valued at EUR 10m (3% of NAV)

• As expected, H1 2014 revenues declined to EUR 22.7m (EUR 35.2m H1 2013)

– Lower EU funding and exited operations in Russia and Latvia in 2013 affect growth

– First half seasonally weaker

• H1 2014 EBITDA EUR 2.1m (EUR 3.3m H1 2013), corresponds to EBITDA margin of 9.3% (9.4%)

• Strong project pipeline satisfactory; 90% of FY 2014 budget already covered by tenders won

• Continued focus on efficiency and profitability

As expected, sales declined but margin remains stable

90% of FY14 budget covered

Real Estate

Kestutis Sasnauskas

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Vilnius Business Harbour One of Vilnius’ most modern and well located office buildings

• 100% holding in VBH valued at EUR 22m (8% of NAV)

• VBH and neighboring land plot acquired in May as direct investment

• Total purchase price EUR 62m, of which EUR 22m as equity commitment (paid in cash)

• Current yield level 7% and vacancy rate 3%

• Lease agreement signed with pharma company Teva in May, effective from October

• Renegotiations ongoing of lease agreements corresponding to 10% of leasable area, on improved terms

• Strong pipeline of new tenants and expansion needs of existing imply further reduced vacancy in 2H 2014

Baltic Property Fund II

• Holding in East Capital Baltic Property Fund II valued at EUR 21m (7% of NAV)

– In July, ECEX invested the remaining committed capital of EUR 2.3m in BPF II

• Full occupancy of Tänassilma Logistics in Tallinn

– Following terminated loan amortisation, return on equity increased to 22%

• Increasing footfall and tenant turnover in Vilnius shopping centre GO9

– Negotiations with high-end fashion brand, newcomer to Vilnius

– Occupancy rate of 81% following leases signed during and after Q2

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Outlook and Focus going forward

Mia Jurke

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Outlook & focus

• Russian development

– Our base case scenario; no Russian invasion of Ukraine

– Close to zero GDP growth in Russia but still moderate growth in consumption for 2014

– Increased inflation and intererest rates, weakening RUB and capital outflows can affect GDP in both short and long term, but Russia’s economy in good shape

– Attractive valuations and market could revalue quickly if the Ukrainian situation is resolved

• Limited impact on rest of Eastern Europe

– Ukraine obvious exception

– Balkans continues to recover

• Mandate for issuing preference shares, no decision to utilize yet, but interesting pipeline

• Continued focus on direct investments, primarily consumption companies in Russia and the Baltics and Real Estate in the Baltics

High uncertainty related to geopolitical unrest in Ukraine

Continued focus on direct investments

Q&A

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Thank you!

Quarterly Market Update in Stockholm on 22 August – Welcome! Our Q3 2014 report will be published on 7 November Mia Jurke, CEO Phone: +46 8 505 885 32 mia.jurke@eastcapitalexplorer.com Lena Krauss, CFO and Head of Investor Relations Phone: +46 73 988 44 66 lena.krauss@eastcapitalexplorer.com Kestutis Sasnauskas, Partner and Head of Private Equity & Real Estate, East Capital Phone: +46 8 505 885 23 kestutis.sasnauskas@eastcapital.com

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