Interim Report 1 January – 30 September 2013

Events during the quarter

Net asset value (NAV) per share on 30 September 2013 amounted to EUR 9.07, corresponding to an increase of 1.6% during the third quarter. Compared to 30 September 2012, the NAV per share is unchanged
• During the third quarter, the net result for the Group was EUR 4.6m (EUR 13.9m)1 , including EUR 4.3m (EUR 14.1m) changes in value of investments. Earnings per share amounted to EUR 0.14 (EUR 0.40) during the quarter
For the first nine months, the net result for the Group was EUR -1.1m (EUR 13.8m), including EUR -1.2m (EUR 15.7m) changes in value of investments. Earnings per share amounted to EUR -0.04 (EUR 0.40)
Cash, cash equivalents and other short term investments on 30 September 2013 amounted to EUR 14m (EUR 38m)
In July, East Capital Explorer received an additional dividend of EUR 1.1m from Melon Fashion Group. In total, the Company has received EUR 2.3m in dividends from the fashion retailer during 2013 for the fiscal year 2012
During September, East Capital Explorer received an additional payout of EUR 6.1m from East Capital Bering New Europe Fund
The closing price of the East Capital Explorer share as of 30 September 2013 was SEK 46.70 (corresponding to EUR 5.38)

Events after the end of the quarter

During October, East Capital Explorer received a payout of EUR 1.7m from East Capital Bering Ukraine Fund R
The NAV per share on 31 October 2013 amounted to EUR 9.15 (EUR 8.90), corresponding to an increase of 1.4% during the month
Cash, cash equivalents and other short term investments on 31 October 2013 amounted to EUR 15m (EUR 36m)
The closing price of the East Capital Explorer share as of 31 October 2013 was SEK 54.75 (corresponding to EUR 6.22)

Net asset value and share price development

		30 Sep 2013	30 Sep 2012
	EUR	SEK	EUR	SEK
NAV per share	9.07	79	9.07	77
Total NAV	285m	2.5bn	301m	2.5bn
NAV per share, % change Q3	1.6	1.3	5.5	1.5
NAV per share, % change YTD	-0.4	0.8	4.4	-0.6
Closing price per share	5.38	46.70	6.04	51.00
Total market capitalization	169m	1.5bn	200m	1.7bn
Share price % change Q3	2.3	2.0	11.5	7.4
Share price % change YTD	-5.8	-4.7	0.2	-5.1

East Capital Explorer offers access to...

... an economically dynamic region

EU convergence and strong domestic demand are key drivers for growth. Eastern Europe is expected to grow more than three times faster than Western Europe over the next five years, with a third of the debt levels

... attractive sectors

We concentrate on sectors benefitting from strong domestic demand assessed to provide the best long-term growth prospects ... a unique and well-diversified portfolio

East Capital Explorer primarily provides exposure to small and medium-sized Eastern European companies with high growth potential, which usually are not easily accessible for investors

... an experienced investment manager

Our investments are managed by East Capital, which has a 16-year track-record, and is one of the largest investors in the region, with local presence and an extensive network in these countries

1 Comparable figures for the corresponding period 2012 are stated in parentheses

Portfolio on 30 September 2013

East Capital Explorer's portfolio is actively managed and comprises Direct Investments (29%), Fund Investments (67%) and Short-term Investments. The largest geographical exposure is towards Russia with a weight of 46% and 82% of the portfolio is invested in the Company's targeted sectors: Retail, Consumer Goods, Financials and Real Estate.

Portfolio on 30 September 2013
	Value			Value	Value	Value change	Value change
	30 Sep 2013	NAV/share	% of	30 Jun 2013	31 Dec 2012	Jan–Sep	Jul–Sep
	EURm	EUR	NAV	EURm	EURm	2013, %1	2013, %1
Direct Investments
Melon Fashion Group	44.2	1.41	15.5	44.2	44.2	5.3	2.6
Starman	24.3	0.77	8.5	23.6	-	2.9	2.9
Trev-2 Group	7.4	0.24	2.6	7.4	7.4	-	-
Komercijalna Banka Skopje	6.7	0.21	2.3	7.4	8.7	-18.8	-10.0
Total Direct Investments	82.6	2.63	29.0	82.7	60.3	1.6	1.3
Fund Investments
East Capital Bering Balkan Fund	42.0	1.34	14.7	39.9	38.9	7.9	5.1
East Capital Russia Domestic Growth Fund	37.5	1.19	13.2	37.1	14.5	-4.9	1.2
East Capital Bering Russia Fund	24.8	0.79	8.7	24.3	27.8	-10.9	2.0
East Capital Special Opportunities Fund	21.3	0.68	7.5	19.6	21.5	13.7	9.0
East Capital Bering Central Asia Fund	20.8	0.66	7.3	21.3	18.5	12.1	-2.3
East Capital Baltic Property Fund II	19.3	0.61	6.8	18.8	17.4	6.1	2.3
East Capital Special Opportunities Fund II	17.4	0.55	6.1	16.6	19.3	-9.9	5.0
East Capital Bering Ukraine Fund Class R	4.7	0.15	1.7	5.0	5.2	-9.3	-5.0
East Capital Bering Ukraine Fund Class A	3.5	0.11	1.2	3.8	3.9	-9.9	-6.5
East Capital (Lux) Eastern European Fund	-	-	-	-	4.4	2.9	-
Total Fund Investments	191.3	6.09	67.2	186.3	171.5	0.9	2.7
Short-term Investments
Short-term Investments2	3.1	0.10	1.1	9.0	25.8
Cash and cash equivalents	11.1	0.35	3.9	5.0	46.4
Total Short-term Investments	14.1	0.45	5.0	14.0	72.2
Total Portfolio	288.0	9.17	101.1	283.1	304.0
Other assets and liabilities net	-3.1	-0.10	-1.1	-2.6	-3.5
Net Asset Value (NAV)	284.9	9.07	100.0	280.5	300.5	-0.43	1.63

1 The value change calculation is adjusted for investments and distributions during the relevant period. i.e. it is the percentage change between the starting value plus any added investment during the period and the ending value plus any proceeds from divestments or dividends received during the period

2 Due to the ongoing liquidation of East Capital Bering New Europe Fund, East Capital Power Utilities Fund and East European Debt Finance, these holdings are no longer separately reported but included in short-term investments as the remaining assets are limited and are expected to be divested before year-end

NAV per share development. The value change takes overhead costs and fees for direct investments into account

1 EUR = 8.69 SEK on 30 September 2013. Source: Bloomberg

Note that certain numerical information may not sum up due to rounding

CEO Comment – Increased focus on direct investments and unlisted holdings

The third quarter was positive and the NAV per share increased by 1.6% (in EUR) and amounted to EUR 9.07 per share (SEK 79) as of 30 September. The share price also recovered somewhat during the quarter and ended at SEK 46.70, an increase of 2% compared with the previous quarter. Noteworthy is that the East Capital Explorer share has rebounded strongly after the end of the quarter partly explained by a rising risk appetite among investors.

"Noteworthy is that the East Capital Explorer share has rebounded strongly after the end of the quarter"

After a gloomy summer, the sentiment towards emerging markets has improved. The primary reason is the surprising decision from the Federal Reserve which, in September, chose not to initiate a tapering in their bond purchasing. In addition, the Eurozone appears to becoming out of the recession. China and a number of other emerging markets bottomed out during the first half of the year and the American economy is showing signs of stronger growth, which also had a positive impact on the overall sentiment in our markets. Russia, comprising our largest geographical exposure, finally turned its negative trend around and the equity market increased by slightly more than 7% during the period. There is, in other words, reason to be optimistic about our markets regarding future developments, even if the economic growth in many areas is still somewhat weaker than previously forecasted.

Portfolio development

The NAV per share developed positively during the quarter and the largest positive contributions to the portfolio's development came from the Romanian and the Russian holdings, while our Ukrainian holdings continued to have a negative impact. When considering individual holdings on a see-through-basis, Fondul Proprietatea, the Romanian restitution fund, was, by far, the largest positive contributor to the NAV development during the period.

Our two largest direct investments, Melon Fashion Group (MFG) and Starman, together approximately 24% of our total portfolio, both had a positive effect on the development of the portfolio during the third quarter due to the dividend payout from MFG, and Starman's profit development during the period. The latter is consolidated in East Capital Explorer's financial results due to our majority stake.

Starman continued to perform well and the company exceeded expectations in both growth and profitability. MFG continues to develop rapidly and sales from the continuing operations reached RUB 2.5bn (EUR 57m) during the third quarter, corresponding to an increase of 34% compared to the same quarter in 2012. The growth in comparable stores for the three concepts reached 12% during the quarter. In terms of profitability, preliminary figures indicate an Ebitda of RUB 261m (EUR 6m) for the third quarter which would correspond to an Ebitda margin of 10.4%

The Company's fund investments were, in general, strong during the quarter with the majority outperforming their respective markets. East Capital Special Opportunities Fund was the Fund showing the best development, largely due to the solid performance in three of the Fund's top 10 holdings, Fondul Proprietatea, Integra and Verofarm. East Capital Explorer's fund investments with focus on Ukraine, East Capital Bering Ukraine Fund A and R, continued their negative development against the background of the continuing challenging macroeconomic climate and are the fund investments that showed the weakest performance during the period.

Portfolio activity and changes in the portfolio

We have, together with our Investment Manager, worked intensively during the last twelve months to further clarify and explain our strategy and position ourselves for a recovery in Eastern Europe. East Capital Explorer's portfolio has undergone major changes during the past year, which has resulted in an increased concentration of the portfolio, a significantly larger portion of direct investments and an increased allocation to unlisted holdings.

"East Capital Explorer's portfolio has undergone major changes during the past year, which has resulted in an increased concentration of the portfolio, a significantly larger portion of direct investments and an increased allocation to unlisted holdings"

The activity in the underlying fund investments has been relatively high. Amongst other developments, the sale of the holding in the real estate developer, Henryland, and the sale of 40% of the Ukrainian "do-it-yourself- chain", Nova Liniya, indirectly owned via East Capital Bering Ukraine Fund R, were completed. Furthermore, eight holdings in the East Capital Bering Balkan Fund were sold as a result of the manager's work concentrating the fund portfolios and, thereby, also decreasing the number of underlying holdings in East Capital Explorer's portfolio. As stated in the previous quarterly report, three funds are in liquidation and the remaining holdings in these funds are expected to be entirely divested by year-end.

During the period, the Company received its second dividend this year, EUR 1.1m from MFG, and also received a further payment of EUR 6.1m from the East Capital Bering New Europe Fund.

Going forward, we intend to further increase the portion of direct investments in the portfolio and also our real estate exposure as we continue to see attractive investment opportunities within the Baltic real estate sector. To date, we have invested in three properties through East Capital Baltic Property Fund II, all of which have an annual expected pre-tax return of 18-20% while, at the same time, generating a satisfactory yield of 8-10%. The focus is on offices, logistics and retail properties with a stable cash flow and sustainable rental terms. These real estate investments constitute a very good complement to other investments in our portfolio. In general, we focus on cash flow generated investments in order to create a stable earnings level in addition to growth in the underlying companies.

We are convinced that the changes that have taken place will be beneficial for the future development of East Capital Explorer and we focus increasingly on our core holdings which, as of 30 September, amounted to more than 72% of the portfolio. You can read more about our core holdings in the Investment Manager comment on page 7.

Outlook and events after the end of the quarter

During October, the NAV per share increased by 1.4% in EUR (2.7% in SEK) and the majority of our portfolio holdings performed well during the month. The positive trend in Russia continued and the Russian market increased in October by over 4%. During the month, the Company received a distribution of EUR 1.7m from East Capital Bering Ukraine Fund R as a result of the disposals undertaken in the Fund. The external valuation conducted annually of, among others, our holdings in MFG and Trev-2 Group has been initiated. The result will be announced in conjunction with our indicative NAV report as of 31 December 2013.

During recent months, the interest in the company has significantly increased, which is very positive and after the end of the quarter the East Capital Explorer share has developed positively. During October, the share price rose by 17% (in SEK) which equals to an increase of 12% year-to-date. Both the average volume traded and net turnover in the share have increased.

We are cautiously optimistic for the fourth quarter knowing that our investment region has good premises for developing positively despite that differences in the region are significant in terms of valuations and vulnerability considering the possible tapering of bond buying by the Federal Reserve. Russia appears particularly attractive even if the country is facing slower growth.

"In addition to the growth potential we see in the investment portfolio, the redemption program that we launched last year also provides value to our shareholders"

Our portfolio has a good foundation for positive development going forward. In addition to the growth potential we see in the investment portfolio, the redemption program that we launched last year also provides value to our shareholders. The next redemption program will be the subject of approval by East Capital Explorer's AGM to take place on 22 April 2014. On the premise that the program is approved, all shareholders will be offered the possibility to redeem 1 of 20 shares at NAV and, thereby, to benefit from the difference between the share price and NAV.

Catharina Hagberg Acting CEO

Top 10 Holdings in East Capital Explorer's portfolio on a see-through basis (sum of direct and indirect holdings)1

On 30 September 2013
Company	Value in portfolio, EURm	% of NAV	Perf. Q3, %	Country	Sector	East Capital Explorer's investment vehicle
Melon Fashion Group	44.2	15.5	2.6	Russia	Consumer Discretionary Direct Investment
Starman	24.3	8.5	2.9	Estonia	Consumer Discretionary Direct Investment
Fondul Proprietatea	17.5	6.2	22.9	Romania	Financials	East Capital Bering Balkan Fund East Capital Special Opportunities Fund
Komercijalna Banka Skopje	8.2	2.9	-10.0	Macedonia	Financials	Direct Investment East Capital Bering Balkan Fund
Trev-2 Group	7.4	2.6	0.0	Estonia	Industrials	Direct Investment East Capital Bering Russia Fund East Capital Bering Ukraine Fund R
Tänassilma Logistics	7.4	2.6	3.0	Estonia	Real Estate	East Capital Baltic Property Fund II
Gedimino 9	7.2	2.6	-3.2	Lithuania	Real Estate	East Capital Baltic Property Fund II
Verofarm	6.9	2.4	27.2	Russia	Health Care	East Capital Special Opportunities Fund East Capital Special Opportunities Fund II East Capital Bering Russia Fund
Zavarovalnica Triglav	5.8	2.1	2.3	Slovenia	Financials	East Capital Bering Balkan Fund East Capital Special Opportunities Fund II
Sollers	5.3	1.9	-5.7	Russia	Consumer Discretionary	East Capital Special Opportunities Fund East Capital Russia Domestic Growth Fund East Capital Bering Russia Fund
Total Top 10	134.2	47.3

1 As if East Capital Explorer AB had owned its pro-rata share of all the underlying securities in the different funds it has invested in

Portfolio breakdown, % per 30 September 2013

East Capital Explorer vs indices since IPO

Net asset value, share price and index development

(% change in EUR)	1 Jan – 30 Sep	1 Jan – 30 Sep
	2013	2012
NAV per share	-0.4	2.4
East Capital Explorer share	-5.8	-0.2
OMX Total Return Index2	19.2	14.1
RTS Index3	-9.0	7.5
RTS 2 Index4	-23.8	2.3
MSCI EM Europe5	-5.3	13.6

OMX Total Return Index includes all equities listed on NASDAQ OMX Stockholm

3 RTS Index includes the 50 largest companies traded on the Russian Trading System

4 RTS 2 Index includes 78 companies on the RTS that have limited trading volumes

5 MSCI EM Europe Index includes Russian, Polish, Hungarian, Czech and Turkish equities

Investment Manager Comment - The core holdings represent 72% of the portfolio

Market comment

The third quarter was characterised by a continued focus on the Federal Reserve and a possible tapering of its bond buying. Initially, the risk appetite amongst investors declined which negatively impacted the emerging markets. However, not all markets were equally hit and the Eastern European equity markets resisted relatively well, even if the differences between the various countries within the region were significant. In September, when the Federal Reserve announced that it would delay its winding down of bond buying, the markets turned up. Improved global and regional macro statistics also contributed to these upswings, which were significant in many areas in Eastern Europe.

The Russian stock market rose by more than 10% in September and ended the quarter with an increase of 7.4%. The stock exchanges in Estonia, Latvia and Lithuania continued to develop positively during the quarter and rose by 2.9%, 4.3% and 4.5% respectively. Also Ukraine and Kazakhstan, which have been weak markets during the year, turned upwards during September although they finished the quarter with a minus. The Romanian market performed best and noted an upturn of 14.9% for the third quarter. The Romanian economy has developed relatively well during a number of years, but we currently see an impressive plan for the privatisation of state-owned companies which increases the interest on behalf of international investors. These privatisations imply that the capital market functions better and the Bucharest stock exchange, where East Capital Explorer has a significant exposure through the state-owned restitution fund, Fondul Proprietatea may soon become one of Eastern Europe's most attractive.

Portfolio comment

East Capital Explorer's NAV increased by 1.6% during the third quarter. We continued to work actively with the investment portfolio which has become more concentrated during the last year and now consists of a larger portion of direct investments and unlisted holdings. Our investment management work focuses primarily on the Company's strategically important holdings, our core holdings, which are comprised of six companies in Russia, the Baltics, and the Balkans, as well as three fund strategies, which are also focused on Russia, the Baltics and the Balkans. All together, the core holdings represent over 72% of NAV.

Amongst the core holdings, the Romanian restitution fund, Fondul Proprietatea (FP), which East Capital Explorer owns via East Capital Bering Balkan Fund and East Capital Special Opportunities Fund showed strong performance and gave the largest positive contribution to East Capital Explorer's NAV on a see-through-basis. FP is a listed fund set up in 2005 by the Romanian government with the aim of compensating the Romanian people for the property they lost during the Communist period. The fund was listed in 2011 and has been one of East Capital Explorer's indirect holdings since 2008 and is a fund where East Capital is also one of the largest minority shareholders. FP, which is co-owner in a large number of state-controlled companies in Romania, increased by 23% during the quarter and the share has surged by close to 50% since year-end (including dividends). The share has been strong thanks to a repurchase program. Furthermore, FP was also positively impacted when the fund made a bid for an additional 4% of the outstanding shares, at a price 30% above the share price, to accelerate the process.

Core holdings
		% of NAV	Perf. Q3
Individual holdings	Business description
Melon Fashion Group	Russian fashion retailer	15.5%	2.6%
Starman	Estonian TV & broadband services provider	8.5%	2.9%
Fondul Proprietatea	Romanian restitution fund	6.2%	22.9%
Komercijalna Banka Skopje	Macedonian bank	2.3%	-10.0%
Trev-2 Group	Estonian construction company	2.9%*	0.0 %
Sollers	Russian vehicle manufacturer	1.9%*	-5.7%
Fund strategies	Investment theme
East Capital Russia Domestic Growth Fund	Domestic growth, Russia	13.2%	1.2%
East Capital Bering Balkan Fund	EU convergence, Balkan	14.7%	5.1%
East Capital Baltic Property Fund II	Real estate, Baltics	6.8%	2.3%
Total % of NAV		72.3%

* On a see-through basis (sum of direct and indirect holdings)

"Fondul Proprietatea showed strong performance and gave the largest positive contribution to East Capital Explorer NAV on a see-through-basis"

FP has traded at a major discount to NAV, which initiated the repurchase program, and has strengthened the incentive for the fund's manager, Franklin Templeton, to try to make the values in the portfolio, evaluated at EUR 3.3bn, more visible. This best takes place via a listing and, to date during 2013, one holding in the fund's portfolio, the nuclear power station operator, Nuclearelectrica, has been listed. FP has also sold a large portion of the shares in another holding, the pipeline operator, Transgaz, through a so-called SPO (Secondary Public Offering). At the time of writing, FP has also initiated a listing process for Romgaz, the country's largest gas producer, while at the same time a listing is also planned for Hidrolectrica which produces almost all water power in Romania. We believe that the increased transparency which the privatisations imply for FP will reduce the discount to NAV which, today, is approximately 34%. A reduced discount to NAV, together with the fund's high dividend yield level, will almost certainly, have a positive impact on the share price.

Another core holding in the Balkan region is Komercijalna Banka Skopje (KBS), Macedonia's largest bank, in which East Capital Explorer owns 10% of the shares via its direct investment. East Capital Explorer has an additional indirect exposure to the bank via East Capital Bering Balkan Fund. The net loss for the first nine months of the year amounted to MKD 293m (EUR 4.76m) which was worse than the net loss same period last year (MKD 266m) but an improvement compared to the net loss for the first half of 2013 (MKD 401m). Losses have primarily been driven by a continued high level of provisioning on nonperforming loans and the management continues to focus on resolving several large loans that performed poorly this year. KBS's share price declined by 10% during the quarter.

East Capital Bering Balkan Fund increased by slightly more than 5% during the quarter. Fondul Proprietatea which comprises this Fund's largest holding contributed the most positively, followed closely by Aerodrom Ljubljana which operates Slovenia's largest airport.

Aerodrom Ljubljana performed strongly during the quarter with an upswing of 35% and we see continued potential in the company. Previously during 2013, we, together with a number of other large investors, prevented the company from investing in a new terminal. We deemed that the yield potential for this proposed project, which would have absorbed almost all of the liquid funds in the company, was low and we are now working, instead, to see that Aerodrom Ljubljana distributes its liquid funds to its shareholders. In general, we continued to concentrate the Fund's portfolio by undertaking the sale of additional eight holdings, executed between July and September.

East Capital Explorer's geographical exposure towards the Baltic countries significantly increased during the year to around 20%. East Capital Explorer's unlisted holdings as well as its real estate investments in the Baltics developed well during the quarter. The construction company, Trev-2 Group, noted record highs in terms of both net sales as well as Ebitda margin for the first nine months of the year. Trev-2 Group's focus on profitability and efficiency has shown to be fruitful and it is important that the company continues to focus on this as its net sales are expected to decline in pace with the EU decreasing the financing of infrastructure projects in the Baltic region. The Estonian cable-TV and broadband services provider, Starman, which East Capital Explorer acquired earlier in the year, has also surpassed our expectations. Net sales for the year's first nine months increased by 8.3% compared with the same period last year, to EUR 22.5m, and the Ebitda margin was all of 48%.

"The construction company, Trev-2 Group, noted record highs in terms of both net sales as well as Ebitda margin"

The real estate investments in the Baltics, which East Capital Explorer owns via East Capital Baltic Property Fund II, developed according to plan. In September, after extensive renovations, which are still underway, the shopping centre Gedimino 9 (G9) was opened in Vilnius. Today, 70% of the premises are rented out and the grand opening of G9, with all of the new rental tenants in place, is planned for March 2014. Tännasilma Logistics, the logistic property outside Tallinn, and the retail property, Deglava Prisma in Riga, also developed according to expectations.

East Capital Explorer's largest direct holding, the Russian fashion retailer Melon Fashion Group (MFG), continues to expand across Russia. Year-to-date, the company has rolled out 81 new stores (MFG operated 532 stores in total as of 30 September) and the target of 100 new store openings during 2013 will probably be exceeded as many new shopping malls usually open during the fourth quarter, in the light of Christmas sales. During the first nine months of the year, sales in the three concepts befree, Zarina and Love Republic amounted in total to RUB 6.3bn (EUR 143m), corresponding to an increase of approximately 27% compared to the same period last year. The total sales growth in comparable stores during the first nine months amounted to 8% with befree adding 11%, and the two other brands, Zarina and Love Republic, adding 7% each in comparable sales. During the same period, the gross margin amounted to 58.3% compared to a gross margin of 60% during the same period last year.

The Russian car manufacturer, Sollers, is another core holding for East Capital Explorer which is owned via East Capital Russia Domestic Growth Fund and East Capital Special Opportunities Fund. Sollers' share price declined slightly less than 6% during the quarter as a result of the Russian car market continuing to be depressed and the company's own sales of Ford Focus being surprisingly negative. However, after having recently met with the company, and having obtained a better insight into its plans for next year, we continue to be convinced that Sollers has a high value potential and is correctly positioned to develop better than the market and to benefit from the growing middle class in Russia. Furthermore, we are positive towards the company's high quality of corporate governance and high dividend yield.

East Capital Russia Domestic Growth Fund, whose strategy focuses on domestic growth, increased by 1.2% during the quarter. The Fund showed a weaker development than the broader Russian market as the increased risk appetite had a major positive impact on the larger Russian "blue chip" companies. The differences were significant between the various holdings in the Fund. Sollers contributed negatively while the search engine, Yandex, rose by 27%. Yandex recently became a search function for the Internet portal, Mail.ru, and entered into an agreement with Apple during the quarter to become the search engine in iOS7 system in Russia. Apple is aiming at growing its share of iPhones in the Russian market. In spite of a valuation which very clearly sticks out amongst the other companies on the Moscow exchange, with a P/E ratio of 26 (2014E), we still find the company attractive due to its very strong growth outlook.

Outlook

The focus will continue to be on the Federal Reserve and the point in time at which it can be expected that the bank will start to taper their bond buying. This will, to a large part, determine the liquidity in the markets and the investors' risk appetite for emerging markets.

A market which, to a large degree, is impacted by the general market sentiment and the investor's risk appetite is Russia. During the last two years we have seen a declining GDP growth rate in Russia quarter after quarter, and the investors' interest has been weak but slightly recovered now during September. At the beginning of the year, we expected a recovery which has not yet, entirely, taken place. Still, our assessment is that the economy in Russia bottomed out during the second quarter and that it now looks like it will accelerate somewhat in forthcoming quarters, even if a lower level of growth is, clearly, the normal state of affairs for Russia. At the same time, while growth has declined from 7-8% to 3-4%, inflation has, on the other hand, been halved from 12% to 6% during the last ten years. This tends to positively impact consumption, which now comprises the most important component in the Russian economy. An increased consumption would, in turn, probably benefit East Capital Explorer with its focus on domestic consumption and growth. We deem that a normalised economy and more diversified political decision-making climate, which we have seen clear signs of in recent months, are positive for Russia. This should help in the re-valuation of the very low valued Russian market. At the same time, we see an increasingly higher level of dividend yield amongst the Russian companies, also something which should encourage a revaluation of the Russian market. The Russian economy has the potential to grow even more rapidly, around 5%, if the government undertakes structural reforms and diversifies the economy.

In spite of the fact that we have undertaken a number of real estate investments since May 2012, we have a strong ambition to further increase our Baltic real estate exposure in East Capital Explorer's portfolio. We are currently looking at a number of interesting investments in this regard. In addition to real estate investments, we are also considering further investments within the private equity area (unlisted companies) which offer interesting investment possibilities.

Peter Elam Håkansson Chairman, East Capital

Portfolio Investments

On 30 September 2013, East Capital Explorer had direct and fund investments totalling EUR 274m compared to EUR 265m on 30 September 2012. The direct investment portion of the total portfolio has increased during 2013 and direct investments currently represent 29% of the investment portfolio.

Investment Management team at East Capital

Peter Elam Håkansson, Founding Partner and Chairman, heads the Public Equity investment team and Kestutis Sasnauskas, Founding Partner, heads the Private Equity and Real Estate investment teams. The Eastern European Public Equity team consists of senior advisors Aivaras Abromavicius, based in Kyiv, Jacob Grapengiesser and Tim Umberger, based in Moscow, as well as regional portfolio managers Eglé Fredriksson and Emre Akcakmak. The investment team is supported by a team of traders, analysts, macroeconomists, and a corporate governance function.

Peter Elam Håkansson Head of Public Equity

Kestutis Sasnauskas Head of Private Equity & Real Estate

Aivaras Abromavicius Senior Advisor

Jacob Grapengiesser Senior Advisor

Tim Umberger Senior Advisor

Eglé Fredriksson Portfolio Manager

Emre Akcakmak Portfolio Manager

If you wish to receive more comprehensive quarterly updates from the Investment Manager regarding the East Capital Bering Funds, East Capital Special Opportunities Fund, East Capital Special Opportunities Fund II, East Capital Baltic Property Fund II and East Capital Russia Domestic Growth Fund, please send an email to: [email protected]. Please note that the quarterly reports are not prepared or approved by East Capital Explorer or its Board of Directors. They are provided quarterly by the Investment Manager to investors in these funds.

Direct Investments

Melon Fashion Group

– One of the fastest growing Russian fashion retail companies

East Capital Explorer's holding in the company:	36%
% of NAV:	15.5%

• In the first nine months of 2013, total sales from the continuing operations of Melon Fashion Group (MFG) reached RUB 6.3bn (EUR 143m), corresponding to an increase of approximately 27% compared with the same period last year. The total growth in comparable stores during the first nine months reached 8% , with befree added 11% , and the two other brands Zarina and Love Republic added 7% each in comparable sales. The gross margin amounted to 58.3% during the same period compared to a gross margin of 60% during the same period last year

• In terms of profitability in the first nine months of 2013, preliminary figures indicate an Ebitda of RUB 619m (EUR 14m), corresponding to an Ebitda margin of 9.8% compared to an Ebitda margin of 13,8% for the same period last year. The Ebitda level was negatively affected by increased costs related to continued expansion and more aggressive promotion campaigns

• In the third quarter, sales from the continuing operations for the three

concepts reached RUB 2.5bn (EUR 57m), corresponding to an increase of 34% compared to the same quarter of 2012. The growth in comparable stores reached 12% during the quarter. The gross margin was 56.5% compared to a gross margin of 62.4% for the same period last year mainly due to aggressive discount campaigns

• In terms of profitability in the third quarter, preliminary figures indicate an Ebitda of RUB 261m (EUR 6m), corresponding to an Ebitda margin of 10.4% compared to an Ebitda margin of 14.5% for the same period last year

• During the third quarter, MFG opened 28 additional stores, bringing the total number of new store openings to 81 year-to-date. The earlier communicated plan of 100 new openings for 2013 will probably be exceeded as many new shopping centres open during the fourth quarter, just ahead of Christmas sales

Learn more about Melon Fashion Group on: www.melonfashion.ru

Starman

- The leading cable TV, broadband internet and voice cable services provider in Estonia

East Capital Explorer's holding in the company:	51%
% of NAV:	8.5%

• Starman has continued to perform well and has exceeded expectations, both in terms of top line growth and profitability

• Revenues for the first nine months were EUR 22.5m, which was 8% higher than during the same period in 2012

• Ebitda for the first nine months was EUR 10.8m, a 9% improvement compared to the same period in 2012. The Ebitda margin was strong at 48%

• Starman started to provide up to 200 Mbits internet speeds during the quarter, which is the fastest service available for home users in Estonia, giving the company a competitive advantage

• The company further improved its "video on demand" product offering, enabling customers to record up to 80 channels during a 2 week period

• In September, Starman began to re-sell electricity. The electricity market has recently been liberalised in Estonia and the company's management sees this as a good way to expand the product offering. September has been a very good month as a result of these new offers. The total customer base showed the largest increase in a number of years

• Johan Röhss, who previously worked in Investor AB, was elected to the Board of Directors

Learn more about Starman on: www.starman.ee

Komercijalna Banka Skopje

- The largest bank in Macedonia by assets and capital

East Capital Explorer's holding in the company:	10%
% of NAV:	2.3%

• Komercijalna Banka Skopje (KBS) had another weak quarter and the share price declined by 10% (in EUR)

• The net loss for the first nine months of 2013 was MKD 293m (EUR 4.76m) compared with MKD 266m for the same period last year. Still, this result is an improvement compared to the net loss for the first half of 2013 which amounted to MKD 401m

• The bank's core operating income continues to be slightly lower than last year, with net interest income and fee and commission income both decreasing by just under 3% year-on-year. Operating expenses, meanwhile, are up 5% year-on-year, but the main driver of the net loss remains the high level of provisioning on non-performing loans

• Management continues to focus on resolving several large loans that performed poorly this year. The provisions required on these loans, in addition to the loss of accrued interest income, have had the greatest negative impact on the bank's 2013 results

• Despite reducing interest rates on deposits three times in 2013, KBS has seen a 5% increase in their deposit base. On the one hand, this speaks favorably for the bank's reputation among depositors, but on the other hand, it implies added interest expense on unnecessary funding, since the loan portfolio has grown by less than 2% year-to-date. KBS's deposit rates are now lower than those of its main competitors

• Management has curtailed new lending mostly due to the absence of loan demand at acceptable risk levels. Although the Macedonian economy has now come out of recession, this improvement has yet to be reflected in loan applications

Learn more about Komercijalna Banka Skopje on: www.kb.com.mk

Trev-2 Group

- One of the largest infrastructure construction and maintenance companies in Estonia

East Capital Explorer's holding in the company:	35%
% of NAV:	2.6%

• The third quarter is a very busy season for Trev-2 Group and 2013 will probably bring a new record in turnover. Trev-2 Group's revenues for the first nine months totalled EUR 74.3m, which is 16% higher than for the same period in 2012

• Ebitda was EUR 6.8m, which is a significant improvement compared with 2012, when Ebitda for the first nine months was EUR 2.9m. The company's Ebitda margin of 9% is the highest among peers in the Baltic countries

• Focus on profitability and efficiency has paid off. This year, the Trev-2 Group is expected to make the highest Ebitda margin since 2007

• Disposal of certain unprofitable businesses and non-core assets is continuing as planned, enabling a further reduction in leverage, as well as supporting a streamlining of the organisation

• The investment manager expects revenues to decrease during the next few years, primarily due to reduced EU infrastructure funding, as well as the Trev-2 Group's exit from certain unprofitable business operations. Maintaining profitability will continue to be the key target for Trev-2 Group going forward

Learn more about Trev-2 Group on: www.trev2.ee

East Capital Baltic Property Fund II

The aim of the Fund is to invest in commercial properties in the Baltic region, primarily in shopping centres and retail properties, as well as logistics and office properties. The goal is to acquire properties in prime locations with stable income and enhancement potential.

The main focus is properties with well-established tenants and sustainable rental terms in and around Tallinn, Riga and Vilnius. Value is added through improvements in tenant mix, refurbishment, extension or redevelopment.

At the end of the period East Capital Explorer's share of the Fund was 65%.

Fund performance	Q3 2013	9m 2013	Since May 12
East Capital Baltic Property Fund II	2%	6%	13%

Portfolio highlights during the quarter

• The Fund showed a positive performance of 2.4% during the quarter and Tänassilma Logistics, the logistic property located outside Tallinn, accounted for almost the entire increase in value

• Tänassilma Logistics has a small vacancy following the termination of the Estonian operations by one tenant, but the rent is covered until November 2013. Negotiations are in the final stage with two candidates to take over the premises and the financial impact of this vacancy is expected to be limited

• The reconstruction of common areas in the shopping centre, Gedimino 9 (G9), in the heart of Vilnius, has been completed and G9 opened to the public on 25 September. The grand opening will take place according to plan in March 2014 when the anchor tenant, Hennes & Mauritz (H&M), launches its new flagship store. Signed leases correspond to more than 70% of the new leasable area and the average rent is in line with budget

• The Fund's third investment Deglava Prisma, the retail property in Riga, which the Fund acquired during the second quarter and which also constitutes is operating as planned

East Capital Bering Balkan Fund

The aim of the Fund is to achieve long term capital appreciation from investments in Balkan equities, both listed and unlisted. The Fund may also invest in companies that have significant trade with, or active investments in, the Balkans countries.

At the end of the period East Capital Explorer's share of the Fund was 73%.

Fund performance	Q3 2013	9m 2013	Since Dec 07
East Capital Bering Balkan Fund, EUR	5%	8%	-53%

Portfolio highlights during the quarter

• The best contribution during the quarter came from the Fund's largest holding, Fondul Proprietatea (FP). The Romanian restitution fund gained 23% and made a strong positive contribution of 3.4% to the Fund's performance. The two main triggers behind the strong performance were an ongoing share buyback program and accelerated privatisations, of which the first transaction, the IPO of Nuclearelectrica, is already complete. Despite the rally, FP is still trading at a large discount to NAV which, together with a high dividend yield, should continue to support the stock going forward

• The Slovenian-based company engaged in the airport management, Aerodrom Ljubljana, gained 30% in third quarter alone, and nearly doubled gains since the beginning of the year. The announced privatisation, together with potential dividends and a low valuation of around 4 times EV/Ebitda, support keeping the investment in the fund portfolio

• Komercijalna Banka Skopje had another weak quarter and the share declined by 10%. A high level of provisioning on non-performing loans continued to weight on results

Portfolio breakdown, % per 30 September 2013

Sector weighting % of the fund

Asset allocation by country % of the fund

Portfolio breakdown, % per 30 September 2013

Sector weighting % of the fund		Asset allocation by country % of the fund
Financials Consumer Discretionary Telecommunication Services Consumer Staples Industrials Energy Materials	51.8 17.0 9.3 7.2 3.5 0.9 0.5	 Romania  Serbia  Slovenia  Bosnia  Turkey  Montenegro  Macedonia  Other assets	29.5 24.1 15.2 9.2 4.3 4.1 4.0 9.6
Utilities Other assets and liabilities	0.3 9.6	and liabilities

Largest holdings in the Fund on 30 September 2013

(% of fund)

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Fondul Proprietatea	17.9	22.9	3.4	Romania	Financials
B92	13.7	0.0	-0.1	Serbia	Consumer Discr.
Reinsurance Co Sava	6.3	7.6	0.4	Slovenia	Financials
Zavarovalnica Triglav	4.0	2.3	0.1	Slovenia	Financials
Montenegro Telekom	3.9	18.4			0.7 Montenegro Telecom. Services
Telekom Srpske	3.7	-0.6	0.0		Bosnia Telecom. Services
Komercijalna Banka Skopje	3.6	-10.1	-0.4	Macedonia	Financials
Pinar Et Ve Un	3.2	-11.5	-0.5		Turkey Consumer Staples
Sif 4 (Muntenia)	3.1	2.3	0.1	Romania	Financials
Sif 5 (Oltenia)	3.1	13.2	0.4	Romania	Financials
All figures in EUR * Contribution to the portfolio performance
10 largest holdings		Unlisted holdings

63 16 49

(% of fund) Total number of holdings

East Capital Bering Central Asia Fund

The aim of the Fund is to achieve long term capital appreciation from investments in Central Asian equities, both listed and unlisted. The Fund may also invest in companies that have significant trade with, or active investments in, the Central Asian countries.

At the end of the period East Capital Explorer's share of the Fund was 67%.

Fund performance	Q3 2013	9m 2013	Since Jan 08
East Capital Bering Central Asia Fund, EUR	-2%	12%	-52%
KASE Index, EUR	-2%	-11%	-71%

Portfolio highlights during the quarter

• The remaining stake in Bank of Georgia was sold following the doubling of its share price since the beginning of the year. The fund manager considers the current valuation, at a P/E ratio of 8.4 (2014E), to be on the high side given political risks in the region and the size of the bank's operations. The Fund has realised an annualised pre-tax return of 28% (in USD) on its investment in the bank

• The fund manager also finalized the transaction in the Ukrainian real estate developer, Henryland, which was mentioned in the previous quarter. The entire stake was sold to another shareholder

• The mining company, ENRC, advanced 9% adjusting to the buyout terms earlier communicated and benefiting from a positive currency effect. ENRC gave the largest positive contribution to the Fund's performance

• The fund manager was offered to buy a large stake in Caucasus Energy and Infrastructure (CEI) at a very low price from a distressed seller. As a result, the entire holding was re-valued to a lower level corresponding to less than 5% of the company's book value and this resulted in the largest negative contribution to the Fund's performance. After the transaction, East Capital became the major owner of CEI, and the fund manager will work together with the board towards identifying a strategic buyer for the company

East Capital Bering Russia Fund

The aim of the Fund is to achieve long term capital appreciation from investments in Russian equities, both listed and unlisted. The Fund may also invest in companies that have significant trade with, or active investments in, Russia.

At the end of the period East Capital Explorer's share of the Fund was 59%.

Fund performance	Q3 2013	9m 2013	Since Dec 07
East Capital Bering Russia Fund, EUR	2%	-11%	-65%
RTS-2 Index, EUR	-1%	-24%	-45%

Portfolio highlights during the quarter

• The best contributor to the Fund's performance was Verofarm, the Russian pharmaceutical producer. The company rallied 27% during the quarter after the long-awaited sales of the company to a new strategic owner, MKB Capital, which sees pharmaceuticals as an attractive sector with a high growth potential. The fund manager initially invested in Verofarm due to an attractive valuation and takeover potential which now has been materialized

• The oil services company, Integra, surged by 32%, and provided the second best contribution to the Fund's performance. The company reported results for the second quarter showing an Ebitda margin recovering to 7%, compared to -0.2% a year earlier. By the end of the year, the company's management expects to receive full payment for the sale of nine drilling rigs, which significantly improves Integra's liquidity position

• The FED decision to continue stimulating the US economy caused gold prices to recover. Highland Gold Mining rallied 42% and gave a positive contribution of 0.8% to the Fund's performance. The company constitutes approximately 3% of the Fund

• The trend in falling car sales continued during August, with sales of new passenger cars and light car sales vehicle's (LCV's) dropping 10.4% year-onyear. The Russian automotive group, GAZ's stock price declined 9% on the back of this news and contributed negatively to the Fund's performance

Portfolio breakdown, % per 30 September 2013

Sector weighting

% of the fund

Asset allocation by country % of the fund

Telecom. Services	25.4
Materials	21.5
Energy	12.7
Consumer Staples	6.9
Financials	6.6
Consumer Discretionary	3.5
Utilities	1.0
Other assets and liabilities	22.5

Kazakhstan 60.6 Turkmenistan 6.1 Armenia 0.7 Georgia 10.0 Other assets and liabilities 22.5

Largest holdings in the Fund on 30 September 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Kcell	25.4	-2.1	-0.7	Kazakhstan	Telecom. Services
ENRC	14.7	8.7	1.1	Kazakhstan	Materials
Steppe Cement	6.2	21.5	1.0	Kazakhstan	Materials
Dragon Oil	6.1	4.8		0.2 Turkmenistan	Energy
Teliani Valley	4.9	-9.6	-0.5	Georgia	Consumer Staples
Kazmunaygaz	4.4	-6.0	-0.3	Kazakhstan	Energy
Chagala Group	3.5	-7.7	-0.3		Kazakhstan Consumer Discretionary
Halyk Bank	3.4	3.4	0.1	Kazakhstan	Financials
Bank Tsentrkredit	2.7	-5.1	-0.2	Kazakhstan	Financials
Liberty Consumer	2.1	-4.4	-0.1	Georgia	Energy

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
74	3	20

Portfolio breakdown, % per 30 September 2013

Sector weighting
% of the fund

Financials	20.8
Health Care	19.2
Energy	12.0
Industrials	11.8
Consumer Discretionary	11.6
Materials	9.6
Utilities	0.7
Consumer Staples	0.7
Telecommunication Services	0.5
Other assets and liabilities	13.1

Asset allocation by country % of the fund

Largest holdings in the Fund on 30 September 2013
Company	Weight, %	Perf, %	Contr, %*	Country	Sector
Verofarm	11.7	27.2	2.2	Russia	Health Care
Protek	7.2	-4.5	-0.4	Russia	Health Care
Cantik	6.3	-3.8	-0.3	Ukraine	Financials
Bank Sankt-Peterburg	5.7	6.4	0.3	Russia	Financials
FESCO	5.6	11.5	0.6	Russia	Industrials
Bashneft	5.2	3.4	0.1	Russia	Energy
GAZ	4.5	-9.3	-0.5	Russia	Cons. Discr.
Bank Tsentrkredit	3.9	-5.1	-0.2	Kazakhstan	Financials
Integra	3.7	32.0	0.9	Russia	Energy
Neftekamsky Avto	3.7	0.1	-0.1	Russia	Industrials
All figures in EUR

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
58	11	57

East Capital Bering Ukraine Fund A

The aim of the Fund is to achieve long term capital appreciation from investments in Ukrainian equities. The Fund may also invest in companies that have significant trade with, or active investments in, Ukraine.

Since 1 January 2010, the East Capital Bering Ukraine Fund is split into two classes: East Capital Bering Ukraine Fund A, comprising mainly of listed holdings, and East Capital Bering Ukraine Fund R, that comprises assets in unlisted companies.

At the end of the period East Capital Explorer's share of the Fund was 45%.

Fund performance	Q3 2013	9m 2013	Since Jan 08
East Capital Bering Ukraine Fund A, EUR	-7%	-10%	-76%
PFTS Index, EUR	-8%	-13%	-83%

Portfolio highlights during the quarter

• The Fund's largest holding, the poultry producer, MHP, showed weaker results than expected during the second quarter due to continuous poultry price deflation and increasing production costs. MHP lost 12% during the quarter and gave the largest negative contribution of 2.5% to the Fund's performance

• Bank Aval dropped 13% against the background of a worsening macro scenario in Ukraine and this resulted in the second worst contribution to the Fund's performance

• The food retailer, Retail Group, is facing increasing competition in the food retail market but has managed to deliver solid results thanks to good cost control and performed almost flat during the quarter

Portfolio breakdown, % per 30 September 2013

Sector weighting

% of the fund

Asset allocation by country % of the fund

Consumer Staples	25.3
Financials	15.7
Utilities	14.5
Materials	10.9
Telecommunication Services	7.6
Consumer Discretionary	4.1
Industrials	1.0
Health Care	0.7
Other assets and liabilities	20.2

Largest holdings in the Fund on 30 September 2013
	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Myronivsky Hliboproduct	16.8	-12.4		-2.5 Ukraine	Consumer Staples
Bank Aval	14.7	-13.2	-2.2	Ukraine	Financials
Tsentr Energo	12.4	3.5	0.2	Ukraine	Utilities
Ukrtelecom	7.6	-12.7	-1.1	Ukraine	Telecom. Services
Koryukivska Fabryka Tekhnichnyh Paperiv	5.6	14.4	0.5	Ukraine	Materials
Retail Group	4.6	-0.3	-0.1	Ukraine	Consumer Staples
Hypovereinsbank	3.0	-3.8	-0.1	Ukraine	Cons. Discr.
Stirol	2.5	-7.3	-0.2	Ukraine	Materials
Poltava	2.3	-13.1	-0.3	Ukraine	Materials
Kherson Oblenergo	2.1	-36.2	-1.1	Ukraine	Utilities

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
72	0	21

East Capital Bering Ukraine Fund R

Since 1 January 2010, the East Capital Bering Ukraine Fund is split into two classes: East Capital Bering Ukraine Fund A, comprising listed holdings, and East Capital Bering Ukraine Fund R, that comprises assets in unlisted companies.

At the end of the period East Capital Explorer's share of the Fund was 18%.

Fund performance	Q3 2013	9m 2013	Since Jan 08
East Capital Bering Ukraine Fund R, EUR	-5%	-9%	-74%
PFTS Index, EUR	-8%	-13%	-83%

Portfolio highlights during the quarter

• During the quarter, the fund manager finalized the transaction in the real estate developer, Henryland. The entire stake was sold to another shareholder

• Also 40% of the holding in the do-it yourself-chain, Nova Liniya, was sold to the same buyer. After the transaction, the Fund owns 11% of Nova Liniya. The fund manager hopes to be able to sell the remaining part before year-end

• The real estate company, Cantik, continues to perform according to budget, in spite of the poor performance by its anchor tenant, Nova Liniya. There is information on the market that Nova Liniya's main competitor Epicentre is preparing to acquire a majority stake in Nova Liniya. The fund manager is investigating the implications for Cantik in case this will happen

• The food processing company, Chumak's, quarterly revenue for the third quarter amounted to USD 18.1m. Revenue was affected by decreased exports to Russia who raised trade barriers for food items from Ukraine during the summer

• The focus on profitability and efficiency at the construction company, Trev-2 Group, has paid off and the fund manager expects the Group to reach its highest Ebitda margin since 2007

Portfolio breakdown, % per 30 September 2013

Largest holdings in the Fund on 30 September 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Cantik	33.1	-3.8	-1.4	Ukraine	Financials
Chumak	16.5	0.0	-3.7	Ukraine	Consumer Staples
Nova Liniya	10.3	-3.8	-0.7	Ukraine	Consumer Discretionary
Trev-2 Group	2.2	0.0	0.0	Estonia	Industrials
Rtc Irpin	1.0	-3.8	0.0	Ukraine	Financials
Henryland	-	-3.2	-0.7	Ukraine	Financials
All figures in EUR

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
63	100	5

East Capital Russia Domestic Growth Fund

The aim of the Fund is to exploit the potential of the strong domestic growth in the Russian economy. The target is to create a concentrated portfolio of between 10 and 20 listed companies which generate at least half of their revenue in Russia and have a market capitalization of above USD 500m. The Fund operates across all sectors and invests in securities that are believed to be undervalued and have a significant performance potential.

At the end of the period East Capital Explorer's share of the Fund was 95%.

Fund performance			Since
	Q3 2013	9m 2013	Aug 12
East Capital Russia Domestic Growth Fund, EUR	1%	-4%	-7%

Portfolio highlights during the quarter

• During the third quarter, more than 60% of the portfolio holdings developed well, with several stocks gaining in the range of 10% to 27%

• For the second consecutive quarter, the Russian search engine, Yandex, posted the most notable performance, gaining 27% and contributing 1.7% to the Fund's performance

• Another top-performing holding in the Fund was the real estate developer, Etalon, which was added to the Fund during the quarter, after several meetings with management which convinced the fund manager that the company is on right track for a turnaround. The fund manager also added the leading internet company, Mail.ru Group. Both stocks were bought on appealing valuations and strong prospects

East Capital Special Opportunities Fund

The aim of the Fund has been to achieve capital appreciation from investments in undervalued assets in special situations where market corrections, liquidity, or company or owner-specific issues have created distressed-like valuations. The Fund has invested in the whole of Eastern European region and has a duration of four years, with a possibility to extend the term by one plus one year if required for an orderly divestment of the investment portfolio.

The fund has up to now returned more than 50 % of the contributed capital to its shareholders. The fund manager's assessment is that the term needs to be extended by one year to allow flexibility and time to divest the remaining holdings in the portfolio. The aim is to sell off the portfolio before year-end and distribute the proceeds to shareholders.

At the end of the period East Capital Explorer's share of the Fund was 83%.

Fund performance	Q3 2013	9m 2013	Since May 09
East Capital Special Opportunities Fund, EUR	9%	14%	29%

Portfolio highlights during the quarter

• The Fund's largest holding, Fondul Proprietatea (FP), gained 23% and gave a very strong positive contribution of 9.2% to the Fund's performance. For further information about FP, please see portfolio comment for the East Capital Bering Balkan Fund

• The second best contributor was Verofarm. The stock surged by 24% and resulted in a positive contribution of 1.9% towards the Fund's performance. For further information about Verofarm, please see portfolio comment for the East Capital Bering Russia Fund

• Integra increased by 32%. For further information about Integra, please see portfolio comment for the East Capital Bering Russia Fund

• The car manufacturer, Sollers, was the largest negative contributor during the quarter. The stock declined by almost 6% and came in with a 1.3% negative contribution. The Russian car market continued to remain weak but the fund manager is convinced that Sollers is well positioned to outperform the market

Portfolio breakdown, % per 30 September 2013

Sector weighting

% of the fund

Financials	29.0
Telecom. Services	15.1
Information Technology	12.8
Industrials	12.6
Utilities	11.9
Consumer Discretionary	11.8
Consumer Staples	5.6
Other assets and liabilities	1.2

Asset allocation by country % of the fund

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Aeroflot Russian Airlines	12.6	-5.5	-0.8	Russia	Industrials
Sberbank	11.6	1.3	-0.2	Russia	Financials
Sistema	8.9	18.6	1.4	Russia	Telecom. Services
Yandex	8.0	27.0	1.7	Russia	IT
M.video	7.9	9.5	0.7	Russia	Consumer Discr.
VTB Bank	7.0	-9.0	-0.7	Russia	Financials
OGK-5	6.3	-15.1	-1.2	Russia	Utilities
Vimpelcom	6.2	12.5	0.7	Russia	Telecom. Services
Dixy	5.6	-7.8	-0.5	Russia	Consumer Staples
E.ON Russia	5.6	1.3	0.0	Russia	Utilities

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
80	0	15

Portfolio breakdown, % per 30 September 2013

Sector weighting % of the fund Financials 46.6 Consumer Discretionary 18.0 Materials 11.8 Energy 10.2 Health Care 9.3 Consumer Staples 2.6 Industrials 0.4 Information Technology 0.3 Other assets and liabilities 0.8

Asset allocation by country % of the fund

 Russia	48.8
 Romania	46.6
 Ukraine	2.0
 Serbia	1.9
 Other assets and liabilities	0.8

Largest holdings in the Fund on 30 September 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Fondul Proprietatea	46.6	22.7	9.2	Romania	Financials
Sollers	18.0	-5.9	-1.3	Russia	Cons. Discr.
Sibirskiy Cement	10.1	-0.7	-0.1	Russia	Materials
Verofarm	9.3	24.0	1.9	Russia	Health Care
IG Seismic Service	4.7	2.2	0.1	Russia	Energy
Integra	3.6	31.7	0.9	Russia	Energy
Mashstroy	1.9	-16.7	-0.4	Russia	Energy
Vino Zupa	1.9	-9.5	-0.2	Serbia	Consumer Staples
Stirol	1.3	-12.7	-0.2	Ukraine	Materials
Sintal	0.7	-12.9	-0.1	Ukraine	Consumer Staples

All figures in EUR

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
98	0	14

% of the fund

Asset allocation by country

East Capital Special Opportunities Fund II

The aim of the Fund is to invest in companies with a solid business model and outlook, which for market or owner specific reasons could be acquired at low valuation levels. The Fund has targeted investments in the whole Eastern European region, with both a clear trigger for revaluation and an exit opportunity within four years from the launch of the Fund.

At the end of the period East Capital Explorer's share of the Fund was 56%.

Fund performance			Since
	Q3 2013	9m 2013	Oct 10
East Capital Special Opportunities Fund II, EUR	4%	-11%	-51%

Portfolio highlights during the quarter

• The Slovenian insurance company, Zavarovalnica Triglav, the largest holding in the Fund, reported strong financial results, with a net profit of EUR 47.5m, and increased by 14% year-on-year. However, the performance during the quarter was modest, up 3%

• Verofarm was the best contributor during the quarter, rallying 24% and adding 2.3% to the Fund's performance. For more information about Verofarm, please see portfolio comment for the East Capital Bering Russia Fund

• Integra had the strongest performance during the quarter, up 32%, and gave the second best contribution to the Fund's performance. For more information about Integra, please see portfolio comment for the East Capital Bering Russia Fund

• TGK-4 followed the trend across the utility sector, losing 16% on the back of the Russian government's decision to freeze tariffs on natural monopolies in 2014

• The Serbian confectionary producer, Bambi, continued to buy back shares from major shareholders. The stock was up 6% during the third quarter, contributing positively with 0.8% to the Fund's performance

Short-term investments

On 30 September 2013, East Capital Explorer had two fund investments and one direct investment under liquidation totalling EUR 3.1m (EUR 8.5m), which are included in short-term investments. The comparative figure for last year included a bond portfolio amounting to EUR 7.3m which has been divested.

Cash and cash equivalents

The amount of EUR 11.1m (EUR 29.4m) which has not yet been invested or drawn-down, was placed in cash and cash equivalents. Interest income from cash and cash equivalents during the reporting period amounted to EUR 0.1m (EUR 0.5m). The increase in cash during this quarter is attributable to divestments undertaken in the period and dividend received.

Cash and cash equivalents amounted to EUR 12.4 as of 30 September in the Statement of Financial Position, since it also includes cash from the consolidated Starman.

Portfolio breakdown, % per 30 September 2013

Sector weighting
% of the fund

Financials	37.6
Consumer Staples	19.6
Health Care	11.7
Energy	9.3
Utilities	6.2
Materials	3.9
Industrials	1.3
Other assets and liabilities	10.3

Largest holdings in the Fund on 30 September 2013

%	%			Sector
23.8	2.8	0.6	Slovenia	Financials
16.2	5.7	0.8	Serbia	Cons. Staples
11.7	24.0	2.3	Russia	Health Care
7.1	-3.1	-0.3	Slovenia	Financials
6.2	11.5	0.6	Serbia	Financials
5.3	2.2	0.1	Russia	Energy
4.2	9.1	0.4	Russia	Utilities
4.0	31.7	1.0	Russia	Energy
4.0	-0.7	-0.1	Russia	Materials
3.4	-0.3			Cons. Staples
	Weight,	Perf,	Contr,	%* Country 0.0 Lithuania

All figures in EUR

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
86	8	15

Results

The Group consists of the Parent Company East Capital Explorer AB (publ), the operating subsidiaries East Capital Explorer Investments AB, Humarito Ltd and as of 30 May 2013, the Baltic Cable Holding OÜ (Starman).

At the end of May, East Capital Explorer Investments AB acquired a majority stake of 51% in Starman, the leading cable TV, broadband internet and voice cable services provider in Estonia. Legally, the operations in Starman are owned through an Estonian holding structure. During the third quarter, the Purchase Price Allocation has been finalized. See further information in the section Business combination. The figures for the group include the impact from the acquisition of Starman. Group results where only affected by the outcome after the acquisition, which is four months of activity. The structure of the Statement of profit or loss and other comprehensive income were affected by the acquisition with new items.

Due to the application of changed IFRS (IFRS 10) control requirements, starting 2013, East Capital Explorer is no longer consolidating its fund investments in those cases in which the Company was previously regarded as having a controlling influence. Effectively, all fund holdings are, instead, reported at fair value in the financial statements. The application of IFRS 10 for annual periods begins on or after 1 January 2014, but earlier application is permitted. East Capital Explorer has decided to implement the standard starting 1 January 2013. All comparable figures for the corresponding period in the previous year have been restated. See pages 32-34.

East Capital Explorer Investments AB manages the Group's investment activities in accordance with the Investment Policy and manages the Group's investment portfolio.

The Group's functional currency and presentation currency is euro (EUR).

Group results in third quarter

During the third quarter, the net result for the Group was EUR 4.6m (EUR 13.9m), including EUR 4.3m (EUR 14.1m) changes in value of investments.

Of the net result EUR 4.5m (EUR 13.9m) relates to shareholders of the Parent Company, corresponding to earnings per share of EUR 0.14 (EUR 0.40) in the quarter.

The Group received a second tranche of dividend of EUR 1.1m from Melon Fashion Group.

The operations in Starman, acquired in May, are included with EUR 7.3m in sales volume contributing to Operating profit with EUR 1.5m. The Ebitda-margin in the operations has been stable around 48% in the past quarter. Due to finalised Purchase Price Allocation the amortisations of intangible assets have increased with EUR 0.2m per month. The Operating profit for this quarter also includes a retroactive impact of EUR -0.2m, from the increased amortisations related to the period of June.

Financial income for the period amounted to EUR 0.0m (EUR 0.3m). The decrease compared to last year is explained by a high amount of interest generating short-term investments in the portfolio last year.

Financial expenses amounted to EUR -1.1m (EUR -0.2m). The increase is due to the bank financing of Starman.

Group results for the period January-September

For the first nine months, the net result for the Group was EUR -1.1m (EUR 13.8m), including EUR -1.2m (EUR 15.7m) changes in value of investments.

Of the net result, EUR -1.3m (EUR 13.7m) relates to shareholders of the Parent Company, corresponding to earnings per share of EUR -0.04 (EUR 0.40).

The Group has received dividend of EUR 2.3m in total from Melon Fashion Group during 2013.

The operations in Starman, acquired in May, are included with EUR 9.8m in net sales contributing to Operating profit with EUR 2.0. The Ebitda-margin in the operations was 48%.

Of the total operating expenses of EUR -11.2m (EUR -3.8m) during the reporting period, EUR -8.0m (-) was related to Starman and EUR -1.6m (EUR -1.3m) was related to the Parent Company. The remaining EUR -1.6m (EUR -2.5m) was related to operating expenses in other subsidiaries, mainly fees for direct investments.

To calculate all fees related to East Capital Explorer, fees originated in funds should be added. The total fees accrued to the Investment Manager generated by the fund investments and direct investments held by East Capital Explorer AB amounted to EUR 4.8m (EUR 6.0m) including VAT. It relates to management fees only, as no performance related fees were generated during the period. Last year during the same reporting period, EUR 1.4m was related to performance fees. For more details about fees, please see the latest annual report available on our website.

Financial income for the period amounted to EUR 0.1m (EUR 0.8m). The decrease is explained by a high amount of interest generating short-term investments during last year.

Financial expenses amounted to EUR -1.4m (EUR -0.7m). The increase in financial expenses was due to the bank financing of Starman.

Tax of EUR -0.1m (EUR -0.4m) were mainly deferred taxes.

Financial Position and Cash Flow

Equity ratio of the group was 77% (98%). The ratio decreased due to the acquisition of Starman and the consolidation of Starman's assets and liabilities. The equity ratio was still at a high solid level.

As a consequence of the consolidation of Starman in the Group, the assets increased in volume. The increase mainly came from intangible and tangible fixed assets.

The Group's financial position changed after having consolidated the loans related to Starman. In total, interest bearing liabilities amounted to EUR 78.6m (-) and of this amount EUR 55.3m (-) related to Financial institutions and the remaining EUR 23.3m related to shareholders loans provided by the Non-controlling interest. The loans from the financial institutions included financial covenants depending on the Ebitda/debt ratio.

Cash flow from operating activities during the reporting period January-September 2013 was EUR 2.6m (EUR -0.4m). The positive development mainly came from Starman activities.

The Group's cash, cash equivalents and other short-term investments

at the end of the period amounted to EUR 15.4m (EUR 37.9m).

The major cash outflows in the investing activities during this year refered to investment in East Capital Russia Domestic Growth Fund amounting to EUR 25m and investment in Starman EUR 24m. The acquisition of Starman generated a net cash outflow of EUR 22.6m, since the acquired company included EUR 1.0m in cash. Sales of shares during the reporting period are mainly East Capital Bering New Europe Fund and East Capital Power Utilities Fund. Together these two funds contributed with EUR 21.2m to cash flow.

Commitments and draw-downs

East Capital Explorer has committed to invest EUR 20m in total in the East Capital Baltic Property Fund II. A total of EUR 17m was drawn down by the Fund during last year. EUR 0.7m was drawn down by the Fund during the reporting period and EUR 2.3m this year remains to be invested.

Parent Company

The Parent Company's net loss for the period amounted to EUR -2.6m (EUR 13.0m). This mainly referred to write downs of shares in East Capital Explorer Investments AB due to decreased value of the investment portfolio. Operating expenses amounted to EUR -1.6m (EUR -1.3m). No investment activities were carried out in the Parent Company.

Business Environment and Market

The global economic uncertainties relating to imbalances and continued concerns regarding recessions and the indebtedness of certain countries are expected to continue to impact the economic situation at micro and macro levels in our region. Many global markets are struggling to maintain or achieve economic growth, leading to continued irregular recovery. These uncertainties can have an adverse effect on the markets in our region due to general risk aversion, and may lead to continued volatility in the financial markets. Our overall view of this trend going forward remains unchanged. The assets held by the Group, both listed and unlisted, can thereby become associated with increased risks, which may also impact the possibilities for divestments, as well as providing opportunities for new investments.

For the coming months, we continue to anticipate economic growth at levels below long-term potential. We continue to anticipate a gradual recovery towards the end of the year which will become more clear in 2014 and have seen some signals of early recovery already during the quarter. Focus will continue to be on the Federal Reserve's decision in the United States regarding tapering of the bond buying, which is expected to continue to impact liquidity and investor risk appetite for our region. While the current markets can experience an increased volatility from time to time, such market changes can also provide significant opportunities for positive profitability growth and development in sound portfolio companies.

Other information

Risks and factors of uncertainty

The dominant risk in East Capital Explorer's and the Group's operations is commercial risk in the form of exposure to specific sectors, geographic regions or individual holdings and financial risk in the form of market risk, equity price risk, foreign exchange risk and interest rate risk. A more detailed description of East Capital Explorer's and the Group's material risks and uncertainties is provided in the Company's Annual Report. An assessment for the coming months is provided in the Business Environment and Market section above.

The Group fund investments and direct investments are also exposed to commercial risks, financial risks, and market risks. In addition, through the business activities of their holdings, i.e. their offerings of products and services, within the respective sectors, the funds and

direct investments are also exposed to legal/regulatory risk and political risk, for example political decisions on public sector expenditures and industry regulations.

Related party transactions

No related party transactions have occurred during the first nine months, other than fee payments according to the agreements in place. East Capital Explorer AB has a related party relationship with its subsidiaries, with other companies in the East Capital Group, as well as with the management and employees. The single largest counterparty is the East Capital Group.

East Capital Explorer Investments AB have a licensing agreement with East Capital Explorer Licensing AB, pursuant to which East Capital Explorer Licensing AB has granted a non-exclusive, royalty-free license to use the trade name and trademark "East Capital Explorer".

East Capital PCV Management AB (the "Investment Manager"), a subsidiary of East Capital Holding AB, implements investments according to the investment policy and provides investment management services pursuant to the Investment Management Agreement.

East Capital Explorer AB has an Investment Management Agreement with the Investment Manager and East Capital Explorer Investments AB. During January-September, East Capital Explorer generated fees to the Investment Manager of a total of EUR 4.8m (EUR 6.0m).

The Company has a service agreement with East Capital International AB, a service company within East Capital, pursuant to which the Company buys certain administrative and other services. The Company has a sub rent premises agreement with East Capital International AB. During January-September, the Group purchased services for EUR 0.2m (EUR 0.2m), all through the Parent Company.

East Capital Explorer AB's management, Board members and their close relatives and related companies control 22% of voting rights in the Company.

The CEO of East Capital Explorer AB is a Board member of East Capital Explorer Investments AB.

Organizational and investment structure

East Capital Explorer is a public limited liability company that indirectly and directly invests in Russia and other countries within the Commonwealth of Independent States (CIS), the Balkans, the Baltic States, Central Asia and Central Eastern Europe. Our indirect investments are made through a selection of East Capital's funds.

The investment activities of the Company are governed by an investment policy included in an Investment Management Agreement established between the Company and the Investment Manager.

For further information about the organizational and investment structure of the Company, please see the Corporate Governance Report for 2012 which was included in the Annual Report and is also found on our web site www.eastcapitalexplorer.com in the section, 'About East Capital Explorer/Corporate Governance'.

Share buyback mandate and redemption program

In accordance with the extraordinary general meeting's resolution on 4 December 2012, East Capital Explorer offered to redeem 5% of the Company's outstanding shares at a price of SEK 77 (corresponding to EUR 8.95) for each redeemed share. The redemption amount corresponded to the Company's net asset value per share on 31 October 2012.

A total of 1,600,286 shares were tendered for redemption during the redemption program, corresponding to an acceptance level of approximately 97 percent. Consequently, a total of SEK 123,222,022 was paid out to the shareholders participating in the redemption program in January 2013.

At the end of January 2013, East Capital Explorer cancelled the shares

repurchased through the share buyback program. The Company does not hold any own shares following the cancellation.

Following completion of the redemption and cancellation, and a bonus issue effected in conjunction therewith without issuing new shares, East Capital Explorer's share capital amounted to approximately EUR 3.6m with 31,424,309 shares.

The total number of shares in East Capital Explorer as of 30 September 2013 amounted to 31,424,309. The average number of shares outstanding for the reporting period was 31,424,309.

The Board has committed to also propose a redemption program to the Annual General Meeting (AGM) in 2014 and 2015 if the discount to NAV exceeds 10% of the six months average NAV preceding approval of agenda for the AGM.

Dividend

The redemption program has replaced the Company's dividend policy and, therefore, no dividend is expected to be paid out for 2013.

Events occurring after the end of the quarter

During October, East Capital Explorer received a payout of EUR 1.7m from East Capital Bering Ukraine Fund R as a result of the recent disposals undertaken in the Fund.

The external valuation conducted annually of, among others, our holdings in Melon Fashion Group and Trev-2 Group has been initiated. The result will be announced in conjunction with our indicative NAV report as of 31 December 2013.

NAV on 31 October 2013

NAV per share on 31 October 2013 amounted to EUR 9.15 (corresponding to SEK 81). The share price on 31 October 2013 was SEK 54.75 (corresponding to EUR 6.22). Cash, cash equivalents and other short-term investments on 31 October 2013 amounted to EUR 15m (SEK 135m).

Stockholm, 11 November 2013

Catharina Hagberg Acting Chief Executive Officer

Contact information

Catharina Hagberg, Acting CEO, +46 8 505 88 552 Mathias Pedersen, CFO, +46 8 505 977 48 Charlotte Åsberg, Investor Relations Manager, +46 8 505 885 94

East Capital Explorer AB

Kungsgatan 33, Box 2714 SE-103 88 Stockholm, Sweden Tel: +46 8 505 977 00 www.eastcapitalexplorer.com

Financial calendar

Monthly net asset value report on the fifth working day after the end of each month
Year-end Report 2013 on 20 February 2014
Annual Report 2013 available in April 2014
Annual General Meeting 2014 on 22 April 2014
Interim Report, 1 January 31 March 2014 on 22 May 2014

Subscribe to monthly NAV updates, financial reports and press releases directly to your e-mail on: www.eastcapitalexplorer.com or by sending an email to [email protected].

The information in this interim report is the information which East Capital Explorer AB is required to disclose under Sweden's Securities Market Act. It was released for publication at 07:00 a.m. CET on 11 November 2013.

Review Report

To the Board of East Capital Explorer AB (publ) Corporate identity number 556693-7404

Introduction

We have reviewed the interim report for East Capital Explorer AB (publ) as of 30 September 2013, and the nine-month reporting period ending on that date. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Focus and Scope of the Review

We conducted our review in accordance with the Standard on Review Engagements (SÖG) 2410, "Review of Interim Financial Information Performed by the Independent Auditors of the Entity". A review consists of making inquiries, primarily to persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices in Sweden. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed on the basis of a review does not give the same level of assurance as a conclusion expressed on the basis of an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, 11 November 2013 KPMG AB

Mårten Asplund Anders Malmeby Authorized Public Accountant Authorized Public Accountant

This review report is a translation of the original review report in Swedish.

Statement of Profit or Loss and Other Comprehensive Income

EUR thousands		Restated		Restated
	2013	2012	2013	2012
	Jan-Sep1	Jan-Sep2	Jul-Sep1	Jul-Sep2
Net sales	9,818	-	7,332	-
Other operating income	228	-	177	-
Changes in value of portfolio	-1,170	15,650	4,341	14,147
Received dividends	2,704	2,373	1,154	-
Total operating income	11,580	18,023	13,004	14,147
Goods, raw materials and services	-2,839	-	-2,059	-
Staff expenses	-2,380	-613	-1,430	-191
Depreciation and amortisation of non-current assets	-2,635	-	-2,110	-
Other operating expenses	-3,372	-3,171	-1,392	-628
Operating profit/loss	353	14,239	6,013	13,328
Financial income	52	760	13	290
Financial expense	-1,398	-739	-1,052	-152
Profit/loss before tax	-993	14,260	4,974	13,465
Tax	-68	-426	-350	459
NET PROFIT/LOSS FOR THE PERIOD	-1,061	13,834	4,624	13,924
Other comprehensive income:
Exchange differences on translating foreign operations	-	77	-	77
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	-1,061	13,911	4,624	14,002
Net profit/loss for the year distribution:
Shareholders of the Parent Company	-1,253	13,733	4,540	13,853
Non-controlling interest	192	101	85	71
	-1,061	13,834	4,624	13,924
Total comprehensive income distribution:
Shareholders of the Parent Company	-1,253	13,811	4,540	13,932
Non-controlling interest	192	101	85	71
	-1,061	13,911	4,624	14,002
Earnings per share, EUR - Shareholders of the Parent Company	-0.04	0.40	0.14	0.40

No accumulated dilution effects during the period

1 Actual figures for 2013 include the acquired and consolidated business of Starman from 30 May 2013

²Starting on 1 January 2013, the application of IFRS 10 begins. Comparable figures (Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Cash Flow and Segment Reporting) have been restated as if the framework had also applied in 2012. Further information can be found on page 30 "Accounting principles" and in the Note "Restatement of Financial Statements in respect of the application of IFRS 10"

Statement of Financial Position

EUR thousands		Restated	Restated
	2013	2012	2012
	30 Sep1	31 Dec2	30 Sep2
Assets
Property, plant and equipment	27,480	-	-
Goodwill	56,986	-	-
Other intangible assets	16,635	-	-
Shares and participations in investing activities	249,606	257,599	264,835
Deferred tax assets	356	403	-
Total non-current assets	351,063	258,002	264,835
Inventories	2,694	-	-
Short term receivables	800	32	-
Tax receivables	1,141	740	483
Accrued income and prepaid expenses	253	80	175
Short-term investments	3,054	-	8,466
Cash and cash equivalents	12,391	46,497	29,402
Total current assets	20,333	47,349	38,527
Total assets	371,396	305,350	303,363
Equity and Liabilities
Share capital	3,640	3,631	3,631
Other contributed capital	348,180	362,458	363,241
Other reserves	-117	77	77
Retained earnings	-66,829	-65,653	-66,265
Equity attributable to shareholders of the Parent Company	284,874	300,513	300,683
Non-controlling interest	90	8	8
Total Equity	284,964	300,521	300,691
Long-term interest bearing liabilities	70,324	-	-
Derivatives	229	-	-
Deferred tax liabilities	-	-	14
Total long-term liabilities	70,553	-	14
Current interest bearing liabilities	8,254	-	-
Other current liabilities	1,707	188	703
Accrued expenses and deferred income	5,918	4,641	1,955
Total current liabilities	15,879	4,829	2,659
Total equity and liabilities	371,396	305,350	303,363

1 Actual figures for 2013 include the acquired and consolidated business of Starman from 30 May 2013

2 Starting on 1 January 2013, the application of IFRS 10 begins. Comparable figures (Statement of profit or loss and other Comprehensive Income, Statement of Financial Position, Statement of Cash Flow and Segment Reporting) have been restated as if the framework had also applied in 2012. Further information can be read on page 30 "Accounting principles" and Note "Restatement of Financial Statements in respect of the application of IFRS 10"

Statement of Changes in Equity

EUR thousands	Share	Other contributed	Other	Retained earnings incl. profit /loss	Total equity shareholders in	Non-controlling
2013	capital	capital	Reserves	for the year	Parent Company	interest	Total equity
Opening equity 1 January 2013	3,631	362,458	77	-65,653	300,513	8	300,521
Net profit/loss for the period	-	-	-	-1,253	-1,253	192	-1,061
Other comprehensive income	-	-	-77	77	-	-	-
Total comprehensive income	3,631	362,458	-	-66,829	299,260	200	299,460
Acquired subsidiaries	-	-	-	-	-	2	2
Derivatives	-	-	-117	-	-117	-112	-229
Bonus issue/cancellation of share	9	-9	-	-	-	-	-
Redemption program	-	-14,269	-	-	-14,269	-	-14,269
Per 30 September 2013	3,640	348,180	-117	-66,829	284,874	90	284,964

EUR thousands
	Share	Other contributed	Other	Retained earnings incl. profit /loss	Total equity shareholders in	Non-controlling
2012	capital	capital	Reserves	for the year	Parent Company	interest	Total equity
Per 31 December 2011	3,628	369,923	4,183	-84,182	293,551	45,627	339,178
Effect of changes in accounting principles	-	-	-4,183	4,183	-	-45,719	-45,719
Opening equity 1 January 2012	3,628	369,923	0	-79,999	293,551	-92	293,459
Net profit/loss for the period	-	-	-	13,733	13,733	101	13,834
Other comprehensive income	-	-	77	-	77	-	77
Total comprehensive income	3,628	369,923	77	-66,266	307,361	8	307,370
Bonus issue	2	-2	-	-	-	-	-
Paid dividend to shareholders	-	-3,033	-	-	-3,033	-	-3,033
Share buy-back	-	-3,646	-	-	-3,646	-	-3,646
Per 30 September 2012	3,631	363,241	77	-66,266	300,683	8	300,691

Statement of Cash Flow

EUR thousands		Restated
	1 Jan – 30 Sep 20131	1 Jan – 30 Sep 2012
Operating activities
Operating profit	353	14,239
Changes in value	1,170	-15,650
Depreciation and amortisation	2,635	-
Interest received	12	238
Interests paid and other financial payments	-710	131
Tax paid	-419	-722
Cash flow from current operations before changes in working capital	3,041	-1,764
Cash flow from changes in working capital
Increase (-)/decrease (+) in other current receivables	-185	33
Increase (-)/decrease (+) in inventory	-32	-
Increase (+)/decrease (-) in other current payables	-218	1,301
Cash flow from operating activities	2,606	-430
Investing activities
Acquisition of group companies	-22,605	-
Investment in shares and participations	-25,740	-32,153
Repaid shareholders contributions	-	7,317
Sale of short-term investments	584	17,111
Sale of shares and participations	28,936	27,784
Purchase of property, plant, equipment and intangible assets	-1,941	-
Cash flow from investing activities	-20,766	20,059
Financing activities
Repayment of loans	-1,579	-
Paid dividend to shareholders	-	-3,033
Redemption program	-14,269	-3,646
Cash flow from financing activities	-15,848	-6,679
Cash flow for the period	-34,008	12,950
Cash and cash equivalents at beginning of the period2	46,497	16,639
Exchange rate differences in cash and cash equivalents	-98	-187
Cash and cash equivalents at end of the period	12,391	29,402

1 Actual figures for 2013 include the acquired and consolidated business of Starman from 30 May 2013

Cash equivalents comprise deposits and cash

Segment Reporting

East Capital Explorer classifies the Company's segments based on the nature of its investments. Segment results and assets include items directly attributable to the segment as well as those that can be allocated on a reasonable basis.

EUR thousands 1 Jan – 30 Sep 2013	Fund Investments	Direct Investments1	Short-term Investments	Unallocated	Total consolidated
Net sales	-	9,818	-	-	9,818
Other operating income	-	228	-	-	228
Changes in value	1,383	-2,011	-540	-2	-1,170
Received dividends	-	2,704	-	-	2,704
Goods, raw materials and services	-	-2,839	-	-	-2,839
Staff expenses	-	-1,570	-	-810	-2,380
Depreciation and amortisation of non-current assets	-	-2,635	-	-	-2,635
Other operating expenses	-	-2,610	-	-762	-3,372
Operating profit/loss	1,383	1,084	-540	-1,574	353
Financial income	-	2	50	-	52
Financial expense	-	-1,180	-218	-	-1,398
Profit/loss before tax	1,383	-94	-709	-1,574	-993
Assets	191,317	164,399	14,126	1,554	371,396

EUR thousands Restated 1 Jan – 30 Sep 2012	Fund Investments2	Direct Investments	Short-term Investments	Unallocated	Total consolidated
Changes in value	1,555	13,727	368	-	15,650
Received dividends	-	-	2,373	-	2,373
Staff expenses	-	-	-	-613	-613
Other operating expenses	-2,181	-269	-	-721	-3,171
Operating profit/loss	-627	13,458	2,741	-1,334	14,239
Financial income	484	-	273	3	760
Financial expense	-739	-	-	-	-739
Profit/loss before tax	-882	13,458	3,014	-1,331	14,260
Assets	211,631	53,205	37,868	658	303,363

1 Starman's segment reporting is included in direct investments

² Reported figures in regards to Fund Investments segment were affected due to the application of IFRS 10. Please see Note "Restatement of Financial Statements in respect of the application of IFRS 10"

Financial Instruments

As of the first quarter 2013, IFRS requires the information presented below to be disclosed in the interim reports. The figures are based on the same accounting and valuation policies as applied in the preparation of the Company's most recent annual report.

EUR thousands
Group 30 September 2013	Total carrying amount	Fair Value
Shares and participation in investing activities	249,606	249,606
Other receivables	754	754
Short-term investments	3,054	3,054
Cash and cash equivalents	12,391	12,391
Total financial assets	265,805	265,805
Long-term interest bearing liabilities	70,324	70,324
Current interest bearing liabilities	8,254	8,254
Other financial liabilities	1,707	1,707
Accrued expenses	4,291	4,291
Total financial liabilities	84,576	84,576

Calculation of fair value

The following summarises the main methods and assumptions applied in determining the fair value of the Group's financial instruments.

Financial instruments not measured at fair value through profit or loss

For accounts receivable and accounts payable, the carrying amount is deemed to reflect fair value since the remaining maturity is generally short. Long-term interest bearing liabilities are the result of refinancing at the time of the acquisition of Starman and are based on floating interest rates and are consequently deemed to reflect fair value.

Fair value estimation

The Group applies IFRS 7. This requires the Group to classify, for disclosure purposes, fair value measurements using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level of input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs requiring significant adjustment based on unobservable inputs, such measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the financial asset.

The determination of what constitutes 'observable' requires significant judgement by the Group. The Group considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The remaining equity funds are classified in the level where underlying equities to a predominant proportion have been classified.

The following table analyses, within the fair value hierarchy, the Group's financial assets measured at fair value as at 30 September 2013.

EUR thousands
30 September 2013
Shares and participations in investment activities designated at fair value through profit or loss at inception1 :	Level 1	Level 2	Level 3	Total balance
- Fund Investments	167,306	-	24,013	191,319
- Direct Investments	6,686	-	51,601	58,287
- Short-term Investments2	970	-	2,084	3,054
Total assets measured at fair value	174,962	-	77,698	252,660

1 The following investments are classified in Level 1; East Capital Bering Balkan Fund, East Capital Russia Domestic Growth Fund, East Capital Bering Russia Fund, East Capital Bering Central Asia Fund, East Capital Special Opportunities Fund, East Capital Special Opportunities Fund II, East Capital Bering Ukraine Fund Class A, East Capital (Lux) Eastern European Fund and Komercijalna Banka Skopje

The following investments are classified in Level 3; East Capital Baltic Property Fund II, East Capital Bering Ukraine Fund Class R, Melon Fashion Group and Trev-2 Group

2Due to the ongoing liquidation of East Capital Bering New Europe Fund, East Capital Power Utilities Fund and East European Debt Finance, these holdings are no longer separately reported but included in short-term investments as the remaining assets are limited

Investments whose values are based on quoted market prices in active markets and are, therefore, classified within level 1, include publicly listed companies in Equity fund investments and direct investments.

Financial investments traded in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs, are classified within level 2. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. Level 3 instruments include mainly private equity investments. As observable prices are not available for these holdings, the Group has used valuation techniques to derive the fair value. Level 3 instruments also include investments in other East Capital Equity funds, to the extent they primarily hold unlisted investments.

The following table presents the movement in level 3 investments for the period ended 30 September 2013 by class of financial instrument:

30 September 2013
Changes in financial assets and liabilities in Level 3	Fund Investments	Direct Investments	Short term Investments	Total
Opening balance 2013	22,659	52,890	1	75,550
Reclassification direct investments to short-term investments	-	-1,289	1,289	-
Purchase/addition	740	-	-	740
Sales/reduction	-	-	-585	-585
- Movements to Level 3	-	-	1,409	1,409
- Movements from Level 3	-	-	-	-
- Result from financial assets at fair value through Statement of profit or
loss	614	-	-31	584
Closing balance 2013	24,013	51,601	2,084	77,698

Movement from or to level 3 during the year depends on change in the trading pattern of the investment.

Groups Net debt position

Net debt represents interest-bearing liabilities less interest-bearing receivables, short-term investments and cash.

Net debt Group, EUR thousands	30 September 2013
Short-term investments	2,083
Cash and cash equivalents	12,391
Interest-bearing liabilites, financial institutes	-55,258
Interest-bearing liabilites, shareholders loan from non-controlling interest	-23,321
Net debt	-64,105

Interest-bearing liabilities have the following maturity profile (excluding future interest capitalisation):

Within one year	8,254
1-3 years	16,323
4-5 years	30,681
More than 5 years	23,321
Total interest-bearing liabilities	78,579

All loans are originally denominated in euro.

The bank loans amout to EUR 55,130t and the remaining EUR 128t are related to financial lease loans.

The bank loans are based on floating rate and are due up to 2018.

To hedge interest risk the loan agreement made with the banks stipulate that a derivate instrument is to be used to ensure that 50% of the interest risk has a finance cap on the interest level. The loans from the financial institutions included financial covenants depending on the Ebitda/debt ratio.

The shareholder loans are due in 2020 and are based on a floating rate.

The financial leases fall due up to 2014.

Other risk information

The acquired Starman activities include other risks in addition to the interest risks on the financial loans. These are mainly related to credit risks in the customer and business partners and are also attributable to the foreign exchange risk due to purchase volumes being originally denominated in USD. Both these risk categories are considered to comprise a low level of risk and the Company has a risk management policy in place to control the risks.

Sensitivity analysis for market risks (EUR thousands)

30 September 2013
Risk factors	Change	Effect on net profit/loss for the period
Equity price	+/- 10%	25,266
Value of level 3 holdings	+/- 10%	7,867

Pledged Assets and Contingent Liabilities

As of 30 September 2013 shares in subsidiaries have been pledged as collateral for the obligations within existing loan agreements with financial institutes. The group value of the pledged assets amounted at balance date to EUR 55.3m.

No pledged assets or contingent liabilities exits in the Parent Company.

Business Combinations

At completion date, as at 30th of May, the Group acquired a majority stake in Starman. The acquired company is the leading cable TV, broadband internet and voice cable services provider in Estonia. The 51% ownership of Starman has been acquired by the wholly owned Estonian holding company, Baltic Cable Holding OÜ.

The consideration transferred amounted to EUR 23,609t for 51.0% of the shares in Starman.

Goodwill amounted to EUR 56,986t arising from the acquisition and is related to strong market presence combined with a product mix which is superior to competition and the expectation to utilise the growth potential in the coming years from recently developed new products. The recognised goodwill is not tax deductable.

Acquisition analysis for Starman

The fair value of assets acquired and liabilities assumed in the business combination and the net cash flow from business combination are presented below.

EUR thousands
		Reported in	Changes from
	Finalised PPA	second quarter	allocation
Fair value of purchase consideration paid	23,609	23,609	-
Fair value of identifiable assets and liabilities
Intangible assets	17,148	2,567	14,581
Property, plant and equipment	27,662	22,835	4,827
Financial fixed assets	38	38	-
Inventory and other current assets	3,660	4,469	-809
Cash and cash equivalents	1,004	1,004	-
Interest-bearing liabilities to financial institutes	-56,820	-56,820	-
Interest-bearing liabilities to non-controlling interest	-22,886	-22,886	-
Current liabilities, non-financial	-3,180	-3,180	-
Total fair value of identifiable net assets	-33,375	-51,973	18,598
Non-controlling interest (49%)	-2	-2	-
Goodwill	56,986	75,584	-18,598
Total consideration paid in cash	23,609	23,609	-
Less acquired cash and cash equivalents	-1,004	-1,004	-
Net cash outflow from the combination	22,605	22,605	-

During third quarter the Purchase Price Allocation (PPA) has been finalised.

The outcome of the analyze is that the following intangible assets has been identified: Client relationships EUR 12,962t, Trademark EUR 2,871t, Licenses and software EUR 1,315t. All these intangibles are amortised over a period of 7 years.

The allocation has also resulted in higher values on the tangible fixed assets, totally EUR 4,827t. This is mainly attributable to values in Network, increasing with EUR 4,412t compared to carrying amount at purchase time. The fair value of Networks was set to EUR 18,611t.

The new business is consolidated starting from June and the contribution to Income is EUR 10,046t and to Operating profit EUR 2,018t.

If the new business would had been consolidated from 1 January 2013, the consolidated Group would have reported an Operating income of EUR 22,265t and an Operating profit of EUR 3,705t.

Transaction costs total EUR 345t. Included in other operating expenses in the Statement of profit or loss and other comprehensive income is EUR 115t and EUR 230t is included in bank debt.

The fair value on the possession of a non-controlling interest in Starman, which is a non-listed company, has been calculated on the basis of the fair values after PPA of net assets including Goodwill. Since East Capital Explorer's ownership is 51% and the acquisition was done at the same time as non-controlling interest acquired it's share, the fair value has been calculated proportional to the ownership.

Consolidated Key Figures

Key figures1	9m 2013	6m 2013	3m 2013	12m 2012	9m 2012	6m 2012	3m 2012	12m 2011
Net asset value, EURm	285	280	292	301	301	290	321	294
Change in NAV during the quarter, %	1.6	-4.1	-2.7	-0.1	3.7	-9.7	9.4	-7.3
Equity ratio, %2	76.7	76.2	98.4	97.5	97.9	96.1	97.2	97.3
Market capitalisation, SEKm	1,468	1,439	1,634	1,618	1,691	1,601	1,879	1,815
Market capitalisation, EURm	169	165	195	188	200	183	213	209
Outstanding number of shares, m	31.4	31.4	31.4	33.0	33.2	33.7	33.7	33.8
Weighted average number of shares, m	31.4	31.4	31.4	33.5	33.6	33.7	33.7	34.6
Number of employees	2583	2833	5	5	4	4	4	4

Key figures per share	9m 2013	6m 2013	3m 2013	12m 2012	9m 2012	6m 2012	3m 2012	12m 2011
Earnings per share, EUR	-0.04	-0.18	0.19	0.49	0.41	-0.04	0.92	-3.59
NAV, SEK	79	78	78	78	77	75	84	77
NAV, EUR	9.07	8.92	9.30	9.10	9.07	8.6	9.52	8.69
Share price, SEK	46.7	45.80	52.00	49.00	51.00	47.50	55.75	53.75
Share price, EUR	5.38	5.25	6.21	5.70	6.04	5.42	6.32	6.03
SEK/EUR	8.69	8.72	8.37	8.59	8.44	8.77	8.83	8.92

1 Consolidated key figures are not affected by the change in the accounting principles

2 Influenced due to financial liabilities after consolidation of Starman

3 Influenced by the number of emloyees in Starman

Income Statement – Parent Company

EUR thousands
	2013 Jan-Sep	2012 Jan-Sep	2013 Jul-Sep	2012 Jul-Sep
Staff expenses	-810	-613	-227	-191
Other operating expenses	-762	-721	-327	-181
Operating profit/loss	-1,572	-1,333	-554	-372
Financial income	1,331	14,438	387	13,445
Financial expenses1	-2,390	-118	4,403	-113
Profit/loss before tax	-2,631	12,986	4,237	12,960
Income tax	51	-9	36	0
NET PROFIT/LOSS FOR THE PERIOD	-2,581	12,977	4,272	12,960

1 Financial expenses in Parent Company include write down of shares in East Capital Explorer Investments AB of EUR 2.4m. In the third quarter earlier write down was partly reversed with EUR 4.4m, giving a positive input in the last quarter result

Statement of Comprehensive Income – Parent Company

EUR thousands
	2013	2012	2013	2012
	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
NET PROFIT/LOSS FOR THE period	-2,581	12,977	4,272	12,960
TOTAL COMPREHENSIVE INCOME FOR THE period	-2,581	12,977	4,272	12,960

Balance Sheet – Parent Company

EUR thousands
	30 Sep 2013	31 Dec 2012	30 Sep 2012
Participations in Group companies	254,483	271,272	268,606
Deferred tax	391	340	393
Total non-current assets	254,874	271,612	269,000
Other short-term receivables	1	30	-
Loan to group companies	29,315	29,315	29,315
Accrued income and prepaid expenses	8	23	25
Cash and cash equivalents	888	1,131	1,914
Total current assets	30,212	30,499	31,254
Total assets	285,086	302,111	300,254
Shareholders' equity
Restricted equity
Share capital	3,640	3,631	3,631
Total restricted equity	3,640	3,631	3,631
Non-restricted equity
Share premium reserve	348,183	362,461	363,241
Retained earnings	-64,510	-80,096	-80,096
Net profit/loss for the period	-2,581	15,586	12,977
Total non-restricted equity	281,092	297,951	296,122
Total shareholders' equity	284,732	301,582	299,752
Liabilities
Other liabilities	155	198	73
Accrued expenses and prepaid income	199	332	429
Total current liabilities	354	530	502
Total liabilities	354	530	502
Total equity and liabilities	285,086	302,111	300,255

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets - - - Contingent liabilities - - -

Accounting Principles

The consolidated interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable provisions in the Swedish Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with The Swedish Annual Accounts Act Chapter 9, Interim report.

New and changed accounting policies in 2013

Changes in accounting policies due to new or amended IFRS. The following accounting policies are applied by the Group as of January 1, 2013:

IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls. Control requirements have changed compared to "IAS 27 Consolidated and Separate Financial Statements" and "SIC-12 Consolidation—Special Purpose Entities" which form the basis for the year-end report 2012. IFRS 10 requires exposure to variable returns and the ability to affect those returns through power over an investee in order for the investee to be considered to comprise a controlled entity. The application of IFRS 10 for annual periods begins on or after 1 January 2014, but earlier application is permitted. East Capital Explorer AB has chosen early adoption of these rules. As a consequence funds and similar entities are no longer consolidated due to lack of influence, and these holdings are instead held at fair value under IAS 39 starting on 1 January 2013. Consequently, the funds that were consolidated in the year-end report no longer qualify as subsidiaries, and were therefore deconsolidated and instead held at fair value in this interim report for the reporting period 1 January-30 September 2013. All of the comparable figures for the corresponding period in the previous year have been restated. Effect of changes in the accounting principles can be seen in the Statement of Changes in Equity for the Group on page 22 and in the Note "Restatement of Financial Statement" on pages 32-34.

East Capital Explorer continues to consolidate its subsidiaries East Capital Explorer Investments AB and Humarito Ltd. During the year, Baltic Cable Holding oü was acquired. This holding company acquired 51% of AS Starman, jointly referred as Starman.

IFRS 13 Fair Value Measurement and Amendment to IFRS 7 Financial Instruments – Disclosures does not have any material monetary effect on the Group or Parent Company. Disclosures in accordance with the new requirements are presented on pages 25-26.

Implemented accounting policies in 2013 due to consolidation of acquired business

Due to acquisition of Starman as at 30th May 2013 a number of added principles have been implemented compared to accounting principles earlier used by East Capital Explorer. Starman is consolidated in the Group figures from the acquisition point. As Starman's financial statements are consolidated line by line and Starman's operations are industrial, unlike the financial character for the rest of the Group, additional IFRS accounting policies had to be implemented.

A description of the most important accounting principles implemented are described below.

Revenue recognition

Revenue is recognised at the fair value of the consideration received or receivable. When payment occurs during a longer than normal period of time, revenue is recognised at the present value of the consideration receivable.

Revenue from the sale of goods (i.e. instalment sale) is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer, when the amount of revenue and the costs incurred in respect of the transaction can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity. Revenue from the provision of services is recorded upon the provision of the service.

The Company offers various products and services as bundled packages to its customers. Such packages may include the transfer of several products or provision of several services. In some cases, the offering also includes installation, launching and activation of the product, for which fixed fees or fixed fees with periodic payments are charged. Telecommunication products are treated separately from the service to be provided in case a separate market exists for the equipment to be transferred to the customer, i.e. they can be sold separately from the service. The costs related to such products are recognised simultaneously with recognition of revenue. Combined contracts are divided into parts if individual parts meet the criteria for allocation. Contract terms are allocated to individual parts according to the percentage of their fair value. Revenue is allocated to the equipment and services proportionately to the fair value of single elements. Similarly to the breakdown of revenue between products and services, packages made up of several different services are recognised as components. For a package made up of several different services, the management evaluates and distinguishes components of the services to be received within a package from the point of view of the consumer of the service.

Recognition of revenue from connection fees

Connection fees are recognised as revenue, considering the useful life of the investment attributable to the connection on the one hand and management estimates about the loyalty of new customers on the other hand. Connection fees are recognised in revenue over the average length of the customer relationship. Connection fees are recognised upon connection if these fees do not include future income from services but only compensation for the costs related to the connection.

Inventories

Inventories are recorded in the balance sheet at cost, which consists of the purchase costs, customs duties, other non-refundable taxes and direct transportation costs, less discounts. The weighted average cost method is used for determining the cost of inventories.

Inventories are measured in the balance sheet at the lower of acquisition/production cost or net realisable value. The net realisable value is the sales price less estimated costs to sell. Inventory writedowns to their net realisable value are charged to expenses in the reporting period and they are carried in line Goods, raw materials and services in Statement of Profit or Loss.

Property, plant and equipment

Assets with useful lives of over one year are considered to be items of property, plant and equipment when it is probable that future economic benefits attributable to them will flow to the Group.

An item of property, plant and equipment is initially measured at cost, comprising of its purchase price and any directly attributable expenditures.

An item of property, plant and equipment is subsequently carried at its cost less any accumulated depreciation and any accumulated impairment losses. Items of property, plant and equipment are written down to their recoverable amount (higher of fair value less costs to sell

and value in use), if it is lower than the asset's carrying amount. An impairment test is performed to determine if the recoverable amount is lower than the carrying amount is performed whenever there is any indication that an impairment loss has incurred.

The straight-line method is used for depreciation of items of property, plant and equipment. The depreciation rates are set separately for each item of property, plant and equipment depending on their useful lives.

The annual depreciation rates for the groups of property, plant and equipment are as follows:

Land and buildings

buildings and facilities 3% 10%
cable networks 8% 12%
main stations 13% 22%

Machinery and equipment

modems 20% 25%
digital boxes 20%
machinery and equipment 10% 40%
equipment related to provision of services 17% 59%

Other items of property, plant and equipment

• other fixtures, tools and fittings 20% - 33%

Land is not depreciated.

Depreciation of the asset is ceased when the residual value which is the amount the Group would receive upon the disposal of the asset today if the asset were as old and in the same condition as at the end of its expected useful life, exceeds its carrying amount.

The depreciation methods, rates and residual values of items of property, plant and equipment are reviewed at least once at the end of each financial year and if new estimates differ from previous ones, the changes are recognised as changes in accounting estimates, i.e. prospectively.

Borrowing costs which are related to a specific non-current asset that takes longer than initially intended to be put to use, are included in the cost of non-current assets. As the management of the Group estimates that the process of preparing non-current assets for their intended use takes little time, the Group has not capitalised the borrowing costs in the cost of non-current assets.

Employee wages and salaries related to the construction of property, plant and equipment (cable networks) that the Group constructs itself are capitalised in their cost.

Intangible assets

Intangible assets acquired through business combinations are accounted for separately from goodwill when these assets can be separated or they have arisen as a result of contractual or other legal rights and their fair value can be determined reliably at the date of acquisition.

An intangible asset is initially recognised at cost, comprising its purchase price and any directly attributable expenditure. An intangible asset is subsequently carried at its cost less any accumulated amortisation and any accumulated impairment losses.

Intangible assets are divided into assets with finite useful lives and assets with indefinite useful lives. The straight-line method is used for amortising intangible assets with finite useful lives.

The annual amortisation rate for all the groups of intangible assets with finite useful life is 14.3%.

The depreciation charge of intangible assets with finite useful lives is carried in the line Depreciation and amortisation in Statement of profit or loss. The amortisation period and method of intangible assets with finite useful lives are reviewed once at the end of each financial year.

Changes in the expected useful lives or in the time structure of future economic benefits are recognised prospectively as changes in the depreciation period and method or as changes in accounting estimates. Whenever there is any indication that the recoverable amount of intangible assets with finite useful lives is lower than their carrying amount, an impairment test is performed and if necessary, the asset is written down to its recoverable amount.

With regard to intangible assets with indefinite useful lives, an impairment test is performed annually either for each asset or the cashgenerating unit. Such intangible assets are not subject to amortisation.

Borrowing costs which are related to a specific non-current asset that takes a longer time to be put to use than initially intended, are included in the cost of non-current assets. As the management of the Group estimates that the process of preparing non-current assets for their intended use takes little time, the Group has not capitalised the borrowing costs in the cost of non-current assets in the reporting period.

Goodwill

Goodwill is initially recognised at its cost which is the positive difference of the consideration paid, the fair value of the non-controlling interest in the acquiree and the equity interest previously held by the acquirer in the acquiree (as at the date of acquisition) between the identifiable assets acquired and liabilities assumed of the Group's interest. Goodwill is subsequently carried at cost less any impairment losses. Impairment tests are performed once a year or more frequently when certain events or changes in circumstances indicate that the recoverable amount may have decreased. Goodwill is not subject to amortisation.

Accounting for leases

Leases of property, plant and equipment which transfer substantially all the risks and rewards of ownership to the lessee are classified as finance leases. Other leases are classified as operating leases. Starman uses financial lease to fund its investments in cable netwoerks, machinery and equipment.

Assets leased under finance lease terms are recognised at the lower of the fair value of the asset and minimum lease payments in the balance sheet of the lessee. The depreciation period of assets acquired under finance lease terms is the useful life of the asset and the rental period. Assets leased out under the finance lease terms are recognised in the balance sheet as a receivable at the net investment amount. Lease payments are divided into finance cost/-income and payment of the lease liability/-receivable so that the interest remains constant at any time.

In case of an operating lease, the lessor recognises the leased asset in its balance sheet. Operating lease payments are recognised on a straightline basis as income by the lessor and as expense by the lessee.

Taxation

In accordance with applicable laws of the Republic of Estonia, the Estonian entities do not pay income tax on profits. Instead of the income tax payable on profits, the Estonian entities pay corporate income tax on dividends, fringe benefits, gifts, donations, costs of entertaining guests, non-business related disbursements and adjustments of the transfer price.

As income tax is paid on dividends and not on profit, no temporary differences arise between the tax bases of assets and liabilities and the carrying amounts of assets and liabilities which may give rise to deferred income tax assets and liabilities.

Restatement of Financial Statements in respect of the application of IFRS 10 The initial effect is recognized against retained earnings per January 1, 2012

Statement of Profit or Loss and Other Comprehensive Income

EUR thousands	2012 Jan Mar	Adj. IFRS 10	Jan-Mar Restat ed 2012	2012 Apr-Jun	Adj. IFRS 10	Restat ed 2012 Apr-Jun	2012 Jan Jun	IFRS 10 Adj.	ed Restat 2012 Jan-Jun	2012 Jul-Sep	Adj. IFRS 10	Restat ed 2012 Jul-Sep	2012 Jan Sep	Adj. IFRS 10	Restat ed 2012 Jan-Sep	2012 Oct Dec	IFRS 10 Adj.	Restat ed 2012 Oct-Dec	IFRS 10 2012 Jan Dec	Adj.	ed Jan-Dec Restat 2012
Received dividends Changes in value	43,810 326	-15,014 -326	28,796 0	-48,119 7,115	20,826 -4,742	-27,293 2,373	-4,309 7,441	5,812 -5,068	1,503 2,373	20,284 1,522	-1,522 -6,138	14,147 0	15,976 8,963	-326 -6,591	15,650 2,373	5,390 421	-2,688 -421	2,702 0	21,366 9,385	-3,014 -7,012	18,352 2,373
Total operating income	44,137 -15,342		28,796 -41,004		16,084 -24,920		3,133	744	3,876	21,807	-7,660	14,147	24,939	-6,916	18,023	5,811	-3,109	2,702	-10,026 30,750		20,725
Staff expenses	-180	1	-180	-242	0	-242	-422	1	-422	-191	0	-191	-613	0	-613	-221	0	-221	-833	0	-833
Other operating expenses	-1,944	1,412	-531	-3,629	1,617	-2,012	-5,572	3,029	-2,544	-1,859	1,231	-628	-7,431	4,260	-3,171	-4,466	1,142	-3,324	-11,897	5,402	-6,495
Operating profit/loss	42,013 -13,929		28,085	-44,875	17,701	-27,174	-2,862	3,773	911	19,757	-6,429	13,328	16,895	-2,656	14,239	1,125	-1,967	-843	18,020	-4,623	13,396
Financial income	100	-54	46	847	-423	424	947	-477	470	473	-183	290	1,420	-661	760	325	-16	310	1,746	-676	1,070
Financial expense	-335	144	-191	190	-586	-396	-145	-442	-587	-213	62	-152	-359	-380	-739	278	125	403	-81	-255	-336
Profit/loss before tax	41,777 -13,838		27,940	-43,837	16,692	-27,146	-2,060	2,854	794	20,016	-6,551	13,465	17,957	-3,697	14,260	1,728	-1,858	-130	19,685	-5,555	14,130
Income tax	-61	28	-33	-1,119	267	-852	-1,180	295	-884	331	128	459	-849	424	-426	714	28	743	-135	452	317
NET PROFIT/LOSS FOR THE PERIOD	41,716	-13,810	27,907 -44,956		16,958	-27,998	-3,240	3,150	-90	20,347	-6,423	13,924	17,107	-3,273	13,834	2,442	-1,830	612	19,550	-5,103	14,447
Other comprehensive income:
Exchange differences on translating foreign operations	-4,622	4,622	0	5,933	-5,933	0	1,306	-1,306	0	-2,447	2,524	77	-1,142	1,219	77	-1,857	1,857	1	-3,000	3,077	77
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	37,094	-9,187	27,907	-39,024	11,025	-27,998	-1,934	1,844	-90	17,900	-3,899	14,002	15,966	-2,054	13,911	585	28	613	16,550	-2,026	14,524
Net profit/loss for the year distribution:
Shareholders of the Parent Company	30,948	-3,026	27,922	-32,379	4,336	-28,043	-1,431	1,312	-121	15,175	-1,322	13,853	13,744	-10	13,733	3,134	-2,522	612	16,878	-2,532	14,346
Non-controlling interest	10,769	-10,782	-14	-12,577	12,621	44	-1,808	1,839	29	5,172	-5,101	71	3,364	-3,263	101	-691	691	0	2,673	-2,572	101
	41,716	-13,810	27,907 -44,956		16,958	-27,998	-3,240	3,150	-90	20,347	-6,423	13,924	17,107	-3,273	13,834	2,443	-1,830	612	19,550	-5,104	14,447
Total comprehensive income distribution:
Shareholders of the Parent Company	27,922	0	27,922	-28,043	0	-28,043	-121	0	-121	13,932	0	13,932	13,811	0	13,811	613	0	613	14,424	0	14,424
Non-controlling interest	9,172	-9,187	-14	-10,981	11,026	44	-1,813	1,843	29	3,968	-3,897	71	2,155	-2,054	101	-28	28	0	2,127	-2,026	101
	37,094	-9,187	27,907	-39,024	11,026	-27,998	-1,934	1,844	-90	17,900	-3,897	14,002	15,966	-2,054	13,911	585	28	613	16,550	-2,026	14,524

East Capital Explorer AB Interim Report 1 January – 31 March 2013

Statement of Financial Position

EUR thousands	2011 31 Dec	Adj. IFRS 10	Restated 2011 31 Dec	2012 31 Mar	Adj. IFRS 10	Restated 2012 31 Mar	30 Jun 2012	IFRS 10 Adj.	Restated 2012 30 Jun	2012 30 Sep	IFRS 10 Adj.	Restated 2012 30 Sep	2012 31 Dec	IFRS 10 Adj.	Restated 2012 31 Dec
Assets
Shares and participations in investing activities	293,585	-39,028	254,557	343,326	-58,975	284,350	279,328	-43,946	235,382	303,016	-38,180	264,835	287,925	-30,327	257,599
Deferred tax assets	70	0	70	0	0	0	0	0	0	0	0	0	403	0	403
Total non-current assets	293,656	-39,028	254,627	343,326	-58,975	284,350	279,328	-43,946	235,382	303,016	-38,180	264,835	288,328	-30,327	258,002
Other short-term receivables	100	-100	0	2,844	-2,811	34	5,105	-5,072	33	4,985	-4,985	0	3,073	-3,041	32
Tax receivables	103	0	103	309	0	309	0	0	0	483	0	483	740	0	740
Accrued income and prepaid expenses	125	-15	110	1,031	-885	146	1,240	-1,141	100	420	-245	175	50	30	80
Short-term investments	22,793	0	22,793	17,279	0	17,279	13,921	0	13,921	8,466	0	8,466	1	-1	0
Cash and cash equivalents	32,147	-15,508	16,639	35,234	-15,271	19,963	55,027	-9,248	45,778	44,183	-14,780	29,402	61,210	-14,713	46,497
Total current assets	55,266	-15,623	39,644	56,697	-18,966	37,730	75,293	-15,461	59,832	58,538	-20,010	38,527	65,074	-17,725	47,349
Total assets	348,923	-54,652	294,271	400,023	-77,942	322,081	354,621	-59,408	295,214	361,554	-58,191	303,363	353,402	-48,052	305,350
Equity
Share capital	3,628	0	3,628	3,628	0	3,628	3,631	0	3,631	3,631	0	3,631	3,631	0	3,631
Other contributed capital	369,923	0	369,922	369,552	0	369,552	366,517	0	366,517	363,241	0	363,241	362,458	0	362,458
Translation reserve	4,183	-4,183	0	1,157	-1,157	0	5,493	-5,495	-2	4,250	-4,173	77	1,729	-1,652	77
Retained earnings	43,743	3,674	47,417	-84,182	4,183	-79,999	-84,182	4,183	-79,999	-84,182	4,183	-79,999	-84,182	4,183	-79,999
Profit/loss for the period	-127,925	509	-127,416	30,948	-3,027	27,921	-1,431	1,312	-120	13,744	-10	13,733	16,878	-2,532	14,346
Equity attributable to shareholders of the Parent Company	293,551	0	293,551	321,103	0	321,103	290,027	0	290,026	300,683	0	300,683	300,513	0	300,513
Non-controlling interest	45,627	-45,719	-92	67,906	-68,011	-106	50,661	-50,723	-63	53,099	-53,091	8	44,120	-44,113	8
Total Equity	339,178	-45,719	293,459	389,009	-68,012	320,997	340,688	-50,724	289,964	353,783	-53,091	300,691	344,634	-44,112	300,521
Liabilities
Deferred tax liabilities	0	0	0	9	0	9	13	0	13	14	0	14	0	0	0
Total long-term liabilities	0	0	0	9	0	9	13	0	13	14	0	14	0	0	0
Tax liabilities	0	0	0	0	0	0	162	-60	102	0	0	0	0	0	0
Other liabilities	3,609	-3,409	200	4,478	-3,989	489	5,283	-2,551	2,732	3,153	-2,449	703	2,137	-1,949	188
Accrued expenses and deferred income	6,136	-5,524	612	6,527	-5,942	586	8,476	-6,073	2,403	4,606	-2,650	1,955	6,632	-1,990	4,641
Total current liabilities	9,745	-8,933	811	11,005	-9,930	1,075	13,921	-8,683	5,238	7,758	-5,100	2,659	8,768	-3,939	4,829
Total equity and liabilities	348,923	-54,652	294,271	400,023	-77,942	322,081	354,621	-59,408	295,214	361,554	-58,191	303,363	353,402	-48,052	305,350

East Capital Explorer AB Interim Report 1 January – 31 March 2013

Statement of Cash Flow

EUR thousands	2012 Jan-Mar	Adj. IFRS 10	Restatated 2012 Jan-Mar	2012 Jan-Jun	IFRS 10 Adj.	Restatated Jan-Jun 2012	2012 Jan-Sep	IFRS 10 Adj.	Restatated 2012 Jan-Sep	2012 Jan-Dec	IFRS 10 Adj.	Restatated 2012 Jan-Dec
Operating activities
Operating profit/loss	42,013	-13,928	28,085	-2,862	3,773	911	16,895	-2,656	14,239	18,020	-4,624	13,396
Changes in value	-43,810	15,014	-28,796	4,309	-5,812	-1,503	-15,976	326	-15,650	-21,366	3,014	-18,352
Interest received	47	0	47	454	92	546	305	-67	238	614	-95	519
Other financial income	93	-93	0	98	-374	-276	550	-419	131	143	-36	107
Tax paid	-187	28	-159	-833	237	-596	-1,145	423	-722	-1,092	451	-640
Cash Flow from current operations before changes in working capital	-1,845	1,021	-823	1,166	-2,085	-919	629	-2,393	-1,764	-3,681	-1,289	-4,970
Cash flow from changes in working capital
Increase (-)/decrease (+) in other current receivables	-2,772	2,313	-459	-4,886	4,729	-157	-4,082	4,114	33	-1,141	1,143	3
Increase (+)/decrease (-) in other current payables	763	-434	329	-874	4,737	3,863	-4,733	6,033	1,301	-1,783	5,799	4,017
Cash flow from operating activities	-3,853	2,901	-953	-4,595	7,383	2,788	-8,186	7,756	-430	-6,604	5,653	-951
Investing activities
Investment in shares and participations	-16,141	15,067	-1,074	-21,996	6,808	-15,188	-45,557	13,404	-32,153	-65,840	25,299	-40,541
Repaid shareholders contributions						7,317			7,317			21,536
Sale of short-term investments	5,580	0	5,580	9,523	0	9,523	17,111	0	17,111	23,164	0	23,164
Sale of shares and participations	20,768	-20,768		49,352	-21,161	28,191	66,223	-38,439	27,784	105,458	-71,002	34,456
Cash flow from investing activities	10,207	-5,701	4,506	36,880	-14,354	29,843	37,777	-25,035	20,059	62,782	-45,702	38,616
Financing activities
Dividend to and redemption from non-controlling interest	-5,025	5,025	0	-8,372	8,372	0	-12,732	12,732	0	-21,306	21,306	0
Paid dividend to shareholders	0	0	0	-3,033	0	-3,033	-3,033	0	-3,033	-3,033	0	-3,033
Redemption program	-370	0	-370	-370	0	-370	-3,646	0	-3,646	-4,429	0	-4,429
Cash flow from financing activities	-5,395	5,025	-370	-11,775	8,372	-3,403	-19,411	12,732	-6,679	-28,768	21,306	-7,462
Cash flow for the period	959	2,224	3,182	20,511	1,400	29,228	10,180	-4,547	12,950	27,410	-18,743	30,203
Cash and cash equivalents at beginning of the period1	32,147	-15,508	16,639	32,147	-15,508	16,639	32,147	-15,508	16,639	32,147	-15,508	16,639
Reclassification from subsidiary to investment2	2,219	-2,219	0	2,219	-2,219	0	2,219	-2,219	0	2,219	-2,219	0
Exchange rate differences in cash and cash equivalents	-91	233	142	150	-239	-89	-363	176	-187	-566	221	-345
period the of end at ivalents equ cash and ash C	35,234	-15,270	19,963	55,027	-16,565	45,778	44,183	-22,097	29,402	61,210	-36,249	46,497

1 Cash equivalents comprise deposits and cash 2 The holding in East Capital Bering Central Asia Fund was reclassified from investment to subsidiary during 2012. During 2011, the holding in East Capital Special Opportunities Fund II was reclassified from subsidiary to investment

Definitions

Average number of shares

Balanced average of number of shares outstanding during the year, adjusted for share issues, splits and buybacks.

Change in value

Change in market value.

Dividend per share

Paid or proposed dividend per share adjusted for share issues and splits.

Earnings per share

Net profit for the year, attributable to equity holders of the Parent Company, divided by average number of shares.

Ebitda

(Earnings before interest, tax, depreciation and amortisation). Profit before depreciation and impairment.

Equity ratio

Total equity as a percentage of total assets.

Enterprise value

Sum of the company's market capitalisation, minority interests and net debt.

IRR

(Internal Rate of Return). Annual average return.

Net Asset Value (NAV)

Corresponds to the value of East Capital Explorer´s net assets, i.e. total assets less net debt. An indicative NAV is calculated on a monthly basis and is published five working days after the end of the month.

Net asset value per share

Net asset value per share in relation to the total number of registered shares on the Balance Sheet date.

Net debt/Net cash

Interest-bearing current and long-term liabilities, including pension liabilities, less cash and cash equivalents, short-term investments and interest-bearing current and long-term receivables.

Outstanding number of shares

Registered number of shares less any share held by the company.

Profit/loss for the year

Profit/loss after tax.

Registered number of shares

The number of shares in the company including shares held by the Company.

Return on equity

Profit/loss for the year as a percentage of average shareholders' equity.

Shareholders' equity per share

Shareholders' equity, attributable to equity holders of the Parent Company, divided by number of registered shares.

Total assets

All assets and liabilities not included in net debt or net cash, which is the same as the Balance Sheet total less asset items included in net debt or net cash and less non-interest-bearing liabilities.

Total comprehensive income for the year

Change in equity during the period resulting from transactions and other events, other than those changes resulting from transactions with the owners in their capacity as owners.

Volatility

A measure of the variability in an asset's return. Volatility is usually measured as a standard deviation in the return of an asset during a certain given period of time.

Kungsgatan 33, Box 7214 SE-103 88 Stockholm, Sweden Tel: +46 8 505 97 700 Coroporate identity no: 556693-7404 www.eastcapitalexplorer.com

AI assistant

Eastnine — Interim / Quarterly Report 2013

3037_10-q_2013-11-11_0b9aa83b-a35f-47c5-a00e-95f169aa75c3.pdf

Interim Report 1 January – 30 September 2013

Interim Report 1 January – 30 September 2013

Events during the quarter

Events after the end of the quarter

Net asset value and share price development

East Capital Explorer offers access to...

... attractive sectors

Portfolio on 30 September 2013

CEO Comment – Increased focus on direct investments and unlisted holdings

"Noteworthy is that the East Capital Explorer share has rebounded strongly after the end of the quarter"

Portfolio development

Portfolio activity and changes in the portfolio

Outlook and events after the end of the quarter

"In addition to the growth potential we see in the investment portfolio, the redemption program that we launched last year also provides value to our shareholders"

Top 10 Holdings in East Capital Explorer's portfolio on a see-through basis (sum of direct and indirect holdings)1

Portfolio breakdown, % per 30 September 2013

East Capital Explorer vs indices since IPO

Investment Manager Comment - The core holdings represent 72% of the portfolio

Market comment

Portfolio comment

"Fondul Proprietatea showed strong performance and gave the largest positive contribution to East Capital Explorer NAV on a see-through-basis"

"The construction company, Trev-2 Group, noted record highs in terms of both net sales as well as Ebitda margin"

Outlook

Portfolio Investments

Investment Management team at East Capital

Direct Investments

Melon Fashion Group

Starman

Komercijalna Banka Skopje

Trev-2 Group

East Capital Baltic Property Fund II

Portfolio highlights during the quarter

East Capital Bering Balkan Fund

Portfolio highlights during the quarter

Portfolio breakdown, % per 30 September 2013

Portfolio breakdown, % per 30 September 2013

Largest holdings in the Fund on 30 September 2013

East Capital Bering Central Asia Fund

Portfolio highlights during the quarter

East Capital Bering Russia Fund

Portfolio highlights during the quarter

Portfolio breakdown, % per 30 September 2013

Largest holdings in the Fund on 30 September 2013

* Contribution to the portfolio performance

Portfolio breakdown, % per 30 September 2013

East Capital Bering Ukraine Fund A

Portfolio highlights during the quarter

Portfolio breakdown, % per 30 September 2013

Sector weighting

East Capital Bering Ukraine Fund R

Portfolio highlights during the quarter

Portfolio breakdown, % per 30 September 2013

Largest holdings in the Fund on 30 September 2013

East Capital Russia Domestic Growth Fund

Portfolio highlights during the quarter

East Capital Special Opportunities Fund

Portfolio highlights during the quarter

Portfolio breakdown, % per 30 September 2013

Sector weighting

Portfolio breakdown, % per 30 September 2013

Largest holdings in the Fund on 30 September 2013

East Capital Special Opportunities Fund II

Portfolio highlights during the quarter

Short-term investments

Short-term investments

Cash and cash equivalents

Portfolio breakdown, % per 30 September 2013

Largest holdings in the Fund on 30 September 2013

Results

Group results in third quarter

Group results for the period January-September

Financial Position and Cash Flow

Commitments and draw-downs

Parent Company

Business Environment and Market

Other information

Risks and factors of uncertainty

Eastnine Interim / Quarterly Report 2013