Eastnine — Interim / Quarterly Report 2013

Aug 29, 2013

Interim Report 1 January – 30 June 2013

Interim Report 1 January – 30 June 2013

Events during the second quarter

• Net asset value (NAV) per share on 30 June 2013 amounted to EUR 8.92 (EUR 8.60)1 , corresponding to a change of -4.1% (-9.7%) during the second quarter. Since 30 June 2012, the NAV per share increased by 3.8% (-20.8%)2
• For the first six months, the net result for the Group was EUR -5.7m (EUR -0.1m), including EUR -5.5m (EUR 1.5m) changes in value on investments. Earnings per share amounted to EUR -0.18 (EUR 0.00)
• Cash, cash equivalents and other short term investments on 30 June 2013 amounted to EUR 8m (EUR 57m)
• During April, East Capital Explorer received two payouts, a distribution of EUR 9.4m from the East Capital Power Utilities Fund, and a distribution of EUR 3.1m from the East Capital Special Opportunities Fund. Due to the liquidation of East Capital Power Utilities Fund, the Fund is no longer reported separately as the remaining holding in the Fund is limited and will shortly be divested
• On 24 April, the AGM of East Capital Explorer decided not to pay any dividend due to the ongoing redemption program, which runs until 2015. The Company has chosen to focus on one clear distribution strategy and the redemption program is, therefore, seen to replace the Company's dividend policy during the period in which the program is in effect
• On 2 May, East Capital Explorer received a dividend of EUR 0.4m from Komercijalna Banka Skopje
• On 3 May, East Capital Explorer announced its acquisition of a majority stake in Starman, the leading cable TV, broadband internet and voice cable services provider in Estonia, and the transaction was completed on 30 May. East Capital Explorer has invested EUR 23.6m into Starman for a 51% stake in the company. Starman is managed as a subsidiary of East Capital Explorer and is consolidated into the Group as of 30 May 2013
• During May, East Capital Explorer divested its entire holding of EUR 4.5m in East Capital (LUX) Eastern European Fund
• As announced on 21 May, the Company is exiting East Capital Bering New Europe Fund and received the first payout of EUR 5.8m. The remaining holding in the Fund is expected to be distributed before year-end
• On 29 May, a drawdown of EUR 0.7m was made for previously committed capital to East Capital Baltic Property Fund II for the acquisition of a retail property in Latvia
• In June, East Capital Explorer received a dividend of EUR 1.2m from Melon Fashion Group
• The closing price of the East Capital Explorer share as of 30 June 2013 was SEK 45.80 (corresponding to EUR 5.25)

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

Events after the end of the quarter

• During July, East Capital Explorer received an additional dividend of EUR 1.1m from Melon Fashion Group and in total, the Company has received EUR 2.3m in dividends from the fashion retailer during 2013 for the fiscal year 2012
• The NAV per share on 31 July 2013 amounted to EUR 8.99 (EUR 8.93), corresponding to an increase during the month of 0.7%
• Cash, cash equivalents and other short term investments on 31 July 2013 amounted to EUR 8m (EUR 58m)
• The closing price of the East Capital Explorer share as of 31 July 2013 was SEK 45.90 (corresponding to EUR 5.30)

Net asset value and share price development

		30 June 2013	30 June 2012
	EUR	SEK	EUR	SEK
NAV per share	8.92	78	8.6	75
Total NAV	280m	2.4bn	290m	2.5bn
NAV % change per share Q2	-4.1	-0.1	-9.7	-10.2
NAV % change per share YTD	-2.0	-0.5	-1.0	-2.0
Closing price per share	5.25	45.80	5.42	47.50
Total MarketCap	165m	1.4bn	183m	1.6bn
Share price % change Q2	-15.4	-11.9	-14.2	-14.8
Share price % change YTD	-7.9	-6.5	-10.1	-11.6

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 more than a 15-year track-record, and is one of the largest investors in the region, with local presence and an extensive network in these countries

Portfolio on 30 June 2013

East Capital Explorer's portfolio is actively managed and comprises Direct Investments (30%), Fund Investments (69%) and Short-term Investments. The largest geographical exposure, on a see-through-basis, is towards Russia with a weight of 44% and 82% of the portfolio is invested in the Company's targeted sectors: Retail and Consumer Goods, Financials and Real Estate.

Portfolio on 30 June 2013
	Value 30 Jun 2013	NAV/share	% of	Value 31 Mar 2013	Value 31 Dec 2012	Value change Jan–Jun	Value change Apr–Jun
	EURm	EUR	NAV	EURm	EURm	2013, %1	2013, %1
Direct Investments
Melon Fashion Group	44.2	1.41	15.8	44.2	44.2	2.7	2.7
Starman	23.6	0.75	8.4	-	-	0.0	0.0
Komercijalna Banka Skopje	7.4	0.24	2.6	8.8	8.7	-10.3	-11.4
Trev-2 Group	7.4	0.24	2.6	7.4	7.4	0.0	0.0
Total Direct Investments	82.7	2.63	29.5	60.4	60.3	0.3	0.2
Fund Investments
East Capital Bering Balkan Fund	39.9	1.27	14.2	40.1	38.9	2.6	-0.3
East Capital Russia Domestic Growth Fund	37.1	1.18	13.2	38.9	14.5	-6.0	-4.6
East Capital Bering Russia Fund	24.3	0.77	8.7	28.4	27.8	-12.6	-14.4
East Capital Bering Central Asia Fund	21.3	0.68	7.6	22.7	18.5	14.8	-6.3
East Capital Special Opportunities Fund	19.6	0.62	7.0	24.0	21.5	5.5	-5.4
East Capital Baltic Property Fund II	18.8	0.60	6.7	17.9	17.4	3.7	1.3
East Capital Special Opportunities Fund II	16.6	0.53	5.9	17.5	19.3	-14.2	-5.4
East Capital Bering New Europe Fund	6.9	0.22	2.5	13.1	13.1	-3.4	-3.2
East Capital Bering Ukraine Fund Class R	5.0	0.16	1.8	5.5	5.2	-4.5	-8.7
East Capital Bering Ukraine Fund Class A	3.8	0.12	1.3	3.7	3.9	-3.6	0.2
East Capital (Lux) Eastern European Fund	-	-	-	4.5	4.4	2.9	1.5
Total Fund Investments	193.3	6.15	68.9	216.2	184.7	-1.7	-4.7
Short-term Investments
Short-term Investments2	2.1	0.07	0.7	12.3	12.6
Cash and cash equivalents	5.0	0.16	1.8	6.7	46.4
Total Short-term Investments	7.1	0.23	2.5	18.9	59.1
Total Portfolio	283.1	9.01	100.9	295.5	304.0
Other assets and liabilities net	-2.6	-0.09	-0.9	-3.2	-3.5
Net Asset Value (NAV)	280.5	8.92	100.0	292.4	300.5	-2.03	-4.13

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 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

NAV per share development

1 EUR = 8.72 SEK on 30 June 2013. Source: Bloomberg

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

CEO Comment

The gloom over emerging markets has accelerated over the past few months on the back of decelerating economic growth, street protests and policy mistakes in several large emerging markets, as well as the fear of a start to a reduction in asset purchases in the US (tapering) which is the number one reason behind the recent emerging market sell-off. The Net Asset Value (NAV) per share declined during the quarter by 4.1% where Russia, comprising our major geographical exposure, was the market representing the largest negative contribution to the portfolio development. However, the East Capital Explorer portfolio performed significantly better than the Eastern European region as a whole, which lost 11% (in EUR), with large variations in performance across the region.

Events and development in Russia continued to receive major media attention during the period and the fact that the politicians have failed to come further in solving the structural problems within the economy, is obvious. However, we expect that the measures now being undertaken and hopefully will be undertaken with the aim of decreasing corruption and improving corporate governance eventually will be effective. Similarly, our assessment is that the growing middle class with strong purchasing power will continue to lead to increased consumption and growth in Russia, something that benefits domestic-oriented companies where, in addition, state involvement and ownership is usually more limited in comparison with export-oriented companies. Consequently, we are convinced that our exposure to Russian domestic growth is right.

The Baltic region, another of our focus areas, which now comprises nearly 20% of our portfolio, continued to perform better than the other Eastern European markets during the second quarter. The Baltic Region is that part of Eastern Europe which, once again, developed positively and we see continued good conditions for further investments in the Baltic countries where, in addition, the risk is, in many aspects, significantly lower than in other areas within our investment universe.

"We see continued good conditions for further investments in the Baltic countries"

During the second quarter, the Company's NAV per share decreased by 4.1% (in EUR) and came in at EUR 8.92 per share (unchanged in SEK at SEK 78), which implies a decline since the year-end of 2%. The rise in the East Capital Explorer share price of 6% during the first quarter turned to a decline of 12% during the second quarter and the share ended the period at SEK 45.80. The decline in the share price for the year is equivalent to 6% as of 30 June.

Portfolio development and activity

The most significant event in the portfolio during the period was our acquisition of Starman. After approval from the Estonian competition authorities, the transaction was finalized on 30 May. East Capital Explorer has invested EUR 23.6m for a majority stake of 51% of the shares which was equivalent to 8.5% of the NAV as of 30 June, and Starman constitutes, consequently, the second largest holding in the portfolio. Starman is a consumer-driven, stable and well-managed company which entirely matches our investment strategy. The Company generates a stable and strong cash flow and, at the same time, there is potential for growth and consolidation within the industry, partly by offering an increasing number of services to existing clients and partly through expanding to other Baltic countries. To date, Starman has operations only in Estonia. As a result of the acquisition of Starman, the portion of direct investments in East Capital Explorer's portfolio has increased by approximately 10 percentage points during the quarter and amounts now to approximately 30% of the total portfolio.

"The portion of direct investments in East Capital Explorer's portfolio has increased to 30%"

During the quarter, East Capital Explorer received a number of payouts from investments, one from East Capital Power Utilities Fund of EUR 9.4m and

one from East Capital Special Opportunities Fund of EUR 3.1m. Both of these Funds are in the winding-up phase. East Capital Bering New Europe Fund is also being wound-up and a total of EUR 5.8m of the Company's holding in the Fund was sold during the period. The remaining portion is expected to be sold during the next six months. The cash received from these funds has mainly been used to finance the acquisition of Starman but also to finance supplementary investments in the East Capital Baltic Property Fund II which has recently acquired a retail property in Riga, Deglava Prisma, a part of the Finnish Prisma Hypermarket retail chain.

The development of the portfolio's holdings has, in general, been weak where the East Capital Bering Russia Fund was the fund investment showing the greatest negative development with a decline of 14% which is in line with the Russian market.

As regards our direct investments, Komercijalna Banka Skopje (KBS) accounted for the weakest performance during the quarter, primarily attributable to heavy provisioning for non-performing loans which continues to exceed forecasts. Unfortunately, this negative trend continued also in July.

Our largest direct investment, Melon Fashion Group (MFG), has developed slightly weaker than expected year-to-date mainly due to the late spring which negatively impacted the entire industry during the first quarter. However, since May we have seen a positive trend in terms of the company's sales which have further improved during June which is encouraging. Another promising development was that the AGM of MFG held during the second quarter resolved, for the first time, to make a dividend of a total of EUR 7m, which for East Capital Explorer corresponds to a total of EUR 2.3m.

Outlook and events after the quarter

During July, the NAV per share increased by 0.7% in EUR (unchanged in SEK). MFG was the holding contributing most positively to the portfolio development on the basis of the dividend which the Company received at the end of the month. July was a strong month for most of the Eastern European markets which largely recovered from the decline we could see in June. The Russian market showed a positive development of more than 3% and the Baltic markets continued to be strong.

To date, 2013 has developed significantly weaker than we had expected, particularly as regards Russia, but we are hopeful as regards future developments. An increased concentration of East Capital Explorer's portfolio, an increased share of direct investments and a clear focus imply that we are well positioned for an improvement of the investment climate. Our ten largest holdings on a see-through-basis now comprise nearly 50% of the portfolio and we see a strong potential in our investments. Our two largest holdings with a focus on domestic growth, MFG and Starman, have good conditions to develop positively, as does our investment in the Romanian restitution fund, Fondul Proprietatea (FP). The positive signals from Romania are many, with the country's economy developing very well and with growth having been relatively good during many years. At the same time, the country has an impressive plan for the privatisation of state owned companies, which will benefit FP which owns a number of companies currently on their way to being listed. Furthermore, we have a strong belief in our Baltic real estate investments and our manager continues to work actively with new investment possibilities in, primarily, real estate and private equity in the Baltic region.

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 June 2013
Company	Value in portfolio, EURm	% of NAV	Perf. Q2, %	Country	Sector	East Capital Explorer's investment vehicle
Melon Fashion Group	44.2	15.8	2.7	Russia	Consumer Discretionary Direct Investment
Starman	23.6	8.4	0.0	Estonia	Consumer Discretionary Direct Investment
Fondul Proprietatea	13.6	4.9	2.4	Romania	Financials	East Capital Bering Balkan Fund East Capital Special Opportunities Fund
Komercijalna Banka Skopje	9.0	3.2	-11.4	Macedonia	Financials	Direct Investment East Capital Bering Balkan Fund
Tänassilma Logistics	8.1	2.9	6.5	Estonia	Real Estate	East Capital Baltic Property Fund II
Trev-2 Group	7.5	2.6	0.0	Estonia	Industrials	Direct Investment East Capital Bering Russia Fund East Capital Bering Ukraine Fund R
Gedimino 9	6.8	2.4	-1.2	Lithuania	Real Estate	East Capital Baltic Property Fund II
Sberbank	6.4	2.3	-11.6	Russia	Financials	East Capital Russia Domestic Growth Fund
Sollers	5.6	2.0	-7.4	Russia	Consumer Discretionary	East Capital Special Opportunities Fund East Capital Russia Domestic Growth Fund East Capital Bering Russia Fund
Zavarovalnica Triglav	5.5	2.0	16.2	Slovenia	Financials	East Capital Bering Balkan Fund East Capital Special Opportunities Fund II
Total Top 10	130.3	46.5

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 June 2013

East Capital Explorer vs indices since IPO

Net asset value, share price and index development

(% change in EUR)	1 Jan – 30 Jun 2013	1 Jan – 30 Jun 2012
Net asset value per share	-2.0	-1.2
East Capital Explorer share	-7.9	-10.1
OMX Total Return Index2	7.4	4.7
RTS Index3	-15.1	0.0
RTS 2 Index4	-23.1	-6.9
MSCI EM Europe5	-10.2	6.1

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

5

Investment Manager Comment

Market comment

The second quarter turned out to be difficult for Eastern European equities. The MSCI Emerging Europe index dropped 11% (in EUR) while, once again, the markets saw divergence in performance.

The large Russian market was hit by fears that the US may start to reduce quantitative easing and dropped nearly 14% during the period. The negative development was also fuelled by the domestic uncertainty that emerged when growth reached a stand-still in February, and inflation accelerated and peaked at 7.3%. The Balkan region which is a key exposure for East Capital Explorer showed varying performance, with Bulgaria gaining 16%, partly as a result of the formation of a new government, and Serbia dropping 18%. Croatia entered the European Union on 1 July, a large step forward for the region.

The Baltics, an increasingly important exposure for East Capital Explorer, continued to outperform the majority of the Eastern European region in terms of both macro and market development. Growth is slowing down from a high base and unfavorable external sentiment, but the Estonian, Latvian and Lithuanian economies are strong on the back of robust demand, declining unemployment and increasing investment. They are expected to grow 3-4% and should be among the fastest growing economies in the EU also this year. In addition, during the quarter, Latvia was approved to join the Eurozone as of 1 January 2014.

Portfolio comment

East Capital Explorer's NAV per share decreased by 4.1% (in EUR) during the second quarter. The Russian holdings were the worst contributors and, together with Ukraine and Kazakhstan, Russia accounted for the entire decline. The NAV development was, however, stronger than double-digit losses posted by the Russian market and a number of other underlying markets. One reason for this is the Company's significant exposure to private equity and real estate.

The quarter was active in terms of portfolio activity. In May, East Capital Explorer acquired a majority stake in Starman, the leading Estonian cable TV and broadband provider, as well as a retail property in Riga through the East Capital Baltic Property Fund II. We also made a decision to close the East Capital Bering New Europe Fund as Central Europe looks relatively less attractive than other regions and during the period, East Capital Explorer exited part of its holding in the Fund. Throughout the last twelve months, we have focused on the concentration of East Capital Explorer's portfolio. The share of the top ten holdings on a see-through-basis has increased from 30% of the investment portfolio as of 1 January 2012 to 47% as of 30 June 2013. In addition, the direct investments portion has also increased and currently amounts to around 30%.

"The share of the top ten holdings on a see-through-basis has increased"

The Russian fashion retailer, Melon Fashion Group (MFG), the largest holding in East Capital Explorer's portfolio, representing nearly 16%, increased sales from continuing operations by 27% during the second quarter compared with the same period last year. Adverse weather conditions in the first quarter hit sales in comparable stores, but they picked up during the latter part of the second quarter. MFG continued its store expansion by opening 53 new stores in pursuit of the target for 100 new openings in 2013.

"MFG continued its store expansion by opening 53 new stores in pursuit of its target for 100 new openings in 2013"

We are pleased to note that Starman, East Capital Explorer's latest acquisition, has continued to grow its revenues and further improve its profitability in the first half of 2013. The company has stable revenue streams based on fixed subscription contracts and supported by a loyal customer base, Starman offers potential to expand through existing service lines as well as through consolidation within the industry and the Baltic region. During the first 6 months of 2013, the company performed according to our expectations with sales up 9% compared with the same period in 2012 (EUR 14.9m). During the same period Ebitda was EUR 7m (up 9.5%) and the Ebitda margin was 48.5%. The continuing digitalization and successful cross-selling has enabled ARPU (average revenue per user) to increase in spite of a relatively saturated market and slightly declining customer demand. The challenge for management will be to maintain the company's profitability levels. There are also initiatives underway to further expand the business in Estonia. As the leverage is fairly substantial, at approximately 4 times the 2013 Ebitda, we are satisfied that the company continues to generate a strong cash flow and relatively low financing costs, enabling it to gradually reduce leverage.

Being the leading bank for large corporate clients in Macedonia, Komercijalna Banka Skopje (KBS) was forced to carry out significant provisioning for non-performing loans as many of its clients were hit by a weak demand for exports and poor economic growth. The bank's share price declined by almost 12% during the quarter due to these losses and was the worst contributor to East Capital Explorer's NAV among the top ten holdings on a see-through-basis. While we see no immediate sign of recovery in the country's corporate sector, there are opportunities for the bank to expand its relatively small retail lending, which has been successful thanks to a good retail client base.

As annual shareholders meetings typically take place during the second quarter, this is usually the time of the year when our active investment style is most visible. This year was no exception and we were particularly active through the East Capital Bering Balkan Fund. We were instrumental at the recent AGM of Zavarovalnica Triglav, the Slovenian insurance company which is a top-ten holding of East Capital Explorer on a see-through-basis, in significantly increasing the dividend payout. Dividends were raised from EUR 0.40 per share to EUR 2.00 per share and the stock currently trades at an 11% dividend yield. Zavarovalnica Triglav gained 16% during the quarter and was one of the best contributors to East Capital Explorer's NAV.

We are favorable towards the Slovenian insurance sector in general because of its relative resilience to the financial crisis and also because of the potential consolidation in the industry. As Sava Reinsurance Company raised capital to finance an acquisition of a Slovenian peer, we chosed to participate in the capital increase. Together with another international investor we were an anchor investor in the deal, which was done at an attractive valuation of 4 times estimated earnings for 2013. At the time of writing the stock is up 28% from the placing.

In Bucharest, we recently met with the management of the Romanian restitution fund, Fondul Proprietatea, which is East Capital Explorer's third largest holding on a see-through basis. We discussed expected listings of some of the Fund's largest holdings and efforts to improve corporate governance in other key holdings. Its share, trading at a 7% dividend yield, gained over 2% during quarter and thus reached an all-time high price and an all-time low discount to its NAV on the back of the buyback program which has been reinitiated in the previous quarter. We see the buyback program as a straightforward mechanism to increase shareholder value.

The East Capital Baltic Property Fund II showed an increase of 1.3% during the second quarter, as a result of continued strong cash flow generation by Tänassilma Logistics, the logistic property outside Tallinn. The redevelopment of the Fund's second investment, the shopping center, Gedimino 9 (G9), in the heart of Vilnius, continued. In May, H&M signed a lease agreement to open a store in the shopping center, which was an important step in the redevelopment of G9. During the quarter, our real estate team added a third property to the portfolio through the acquisition of a retail big box property in Riga. This property is fully leased to the retail chain, Prisma Hypermarket, and will generate a positive cash flow from the very start at a yield of over 8%. Tänassilma Logistics and G9 represent East Capital Explorer's fifth and seventh largest holding on a see-through-basis, respectively.

"During the quarter, our real estate team added a third property to the portfolio through the acquisition of a retail big box property in Riga"

Among the fund investments, the Russia-oriented investment vehicles performed most negatively. The East Capital Bering Russia Fund and the East Capital Russia Domestic Growth Fund represented 50% of the decline in East Capital Explorer's NAV. Nevertheless they were much stronger than the Russian market in general, mainly due to holdings, such as the Russian search engine Yandex, which gained 18% due to strong first-quarter results and a shareholder transaction reducing much of the share overhang. The Russian car manufacturer, Sollers, dropped 7% but continued to outperform industry peers. Passenger car sales in Russia dropped almost 6% during the first quarter (yearon-year), while Sollers' sales declined less than 1%, and Sollers remains one of our favorite companies, with exposure to the rapidly growing car market in Russia.

Year-to-date, East Capital Special Opportunities Fund II has shown the least favorable performance, down 14%. The larger portion of the decline derives from the first quarter and the impairment of Jastrzebska Spolka Weglowa ( JSW) as earlier communicated. The focus is now to secure collateral to support the established repayment plan, but it is too early to assess the final outcome. To date, 10% of the initial investment has been recovered.

Sberbank, also one of the top ten holdings on a see-through-basis, dropped 12% during the quarter, basically in line with the Russian market in general and banks in particular. There was no company specific news contributing to the decline and the bank's operating results were in line with expectations.

Outlook

The outlook for global emerging markets remains uncertain. Halfway into the year, our core market Russia has been a disappointment in terms of both market and macro development. It is true that Russia has entered a period of lower growth. Russia is a middle income economy today, ten times larger than in 2000, and the country neither will nor should grow as fast as in previous years. Consensus still expects Russia to grow 3-4% over the next couple of years, which is faster than many other large emerging markets. The economy has the potential to grow even more rapidly, but in order to reach its potential, Russia needs to implement a series of structural reforms and seriously address corruption.

In the medium to long term, Russia's large and growing middle class, which is slowly becoming more politically engaged, should be the best reform driver. But poor organisation makes these groups relatively weak in the short term, except perhaps as regards the anti-corruption drive. That leaves hope with the government in the short term. We are aware of the fact that the government is studying a number of alternatives on how to stimulate the economy and we are closely watching the moves of both the government and Russia's new central bank governor. Regardless of what the government does, the Russian economy is likely to rebound in the second half of 2013 as inflation is expected

to fall and have a positive impact on consumption, the primary growth driver in Russia. This will be beneficial for East Capital Explorer which has around 44% of its total investments in Russia, primarily exposed towards sectors and companies benefitting from domestic demand.

Going forward we will, in addition to existing investments, continue to focus on further increasing the Company's exposure to private equity and real estate, mainly in the Baltics where the opportunities are many and the risks are low compared with the other regions in our investment universe. We will also further concentrate the East Capital Bering Balkan Fund and, thereby, focus East Capital Explorer's 20% exposure in the Balkans on its key holdings.

Peter Elam Håkansson Chairman, East Capital

Portfolio Investments

On 30 June 2013, East Capital Explorer had direct and fund investments totalling EUR 276m compared to EUR 235m on 30 June 2012. The direct investment portion of the total portfolio has increased significantly during the second quarter of 2013 and direct investments currently represent 30% of the investment portfolio.

Investment Management team at East Capital

Peter Elam Håkansson, Founding Partner and Chairman, heads the Public Equity investment team. Kestutis Sasnauskas, Founding Partner, heads the Private Equity investment team and Ulf Sigfridsson heads the Real Estate investment team. 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.

Kestutis Sasnauskas Head of Private Equity

Aivaras Abromavicius Senior Advisor

Head of Public Equity

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: ir@eastcapitalexplorer.com. 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:	15.8%

• In the first half of 2013, total sales from the continuing operations of Melon Fashion Group (MFG) reached RUB 3,806m (EUR 87m), corresponding to a 22% growth year-on-year. Weak sales hit apparel retailers across the whole of Europe during the spring. Adverse weather conditions across Europe caused drops in spring collections sales. The positive news is that this weakness appears to be temporary as the industry started to report improved sales and increased sales in comparable stores (like-for-like sales growth) towards the end of the period

• During the second quarter of 2013, sales from the continuing operations of MFG reached RUB 2,089 m (EUR 47m), or a 27% increase compared with the same period last year. The relatively weak performance in the second quarter had been largely expected, due to the backdrop of continuing adverse weather conditions, with May and June sales signalling a recovery

• In terms of profitability in the first half of 2013, preliminary Ebitda reached RUB 358m (EUR 8.1m) from continuing operations implying a 9.4% margin which suggests a weaker performance compared to Ebitda of RUB 415m (EUR 9.4m) for the first half of 2012. Higher costs related to continuing expansion and the rollout of the new store format for the befree brand against the background of weaker than expected sales explain the lower profitability. On the positive side, MFG's gross margin remained resilient and increased to 59.5% from 58.5% during first half of 2012. Likefor-like sales in the first half of 2013 increased only by 5.9% compared to the same period last year, reflecting adverse market conditions

• Regarding individual brands, Zarina, Love Republic and befree sales in comparable stores increased during the first half of 2013 (year-on-year) by 13.0%, 12.1% and 3.9%, respectively, with the majority of the growth coming in at the end of the period. In June, sales in comparable stores increased by 22% for Zarina, 21% for befree, and 18% for Love Republic compared with the same period previous year, indicating a good outlook for the upcoming period and hopefully full recovery from the unfavorable conditions of the first half of the year

• MFG continued its expansion by opening additional stores during the second quarter. Year-to-date, the company has opened 53 new stores on net basis in pursuit of its target of 100 new openings during 2013

• At the AGM that took place in May a dividend of EUR 7m (53% payout ratio) was approved, which corresponds to a dividend of EUR 2.3m, in total, for East Capital Explorer. This is the first dividend ever paid by the company and we, as shareholders, are confident in the cash generation capacity of the operations and supported the dividend payout

• Going forward, the focus remains on improvements within logistics and procurement, as well as on store refurbishment which has proven to have a positive impact on traffic and sales. The management's focus on the new strategy, accompanied by a new format roll-out for the befree concept, appear to be paying off. For the befree concept, sales in comparable stores have been improving from -3% in the first quarter to 7.2% in the second quarter. After a very strong June with sales growth for the three concepts in comparable stores reaching 21%, MFG is counting on even stronger performance in the remaining summer months

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:	8.4%

• On 30 May 2013, East Capital Explorer completed the acquisition of a majority stake in Starman, the leading cable TV, broadband internet and voice service provider in Estonia. East Capital Explorer invested EUR 23.6m to acquire a 51% stake in the company based on a total enterprise value of EUR 107m. The remaining 49% stake is held by Starman's founders, Peeter Kern and Indrek Kuivallik. East Capital Explorer acquired its holding from a consortium led by Bancroft Private Equity Gmbh & Co. In conjunction with the Company's acquisition, the founders increased their stakes in Starman. SEB and Swedbank financed a portion of the acquisition with an acquisition loan

• Starman was founded in 1992 and is a strong brand in the region. The company was previously (2005) listed on the Tallinn Stock Exchange with approximately 30% of its shares being publicly traded, but was subsequently delisted (2009), to be entirely privately owned

• The company has 130,000 cable TV and 60,000 broadband clients, with a 100% digital network covering all major cities in Estonia. Starman has around 300 employees. The company has stable revenue streams based on fixed subscription contracts with a loyal customer base, with revenues in 2012 amounting to EUR 28m and Ebitda of EUR 13m

• The company has a strong cash generating capability. Further synergies could be achieved through market consolidation efforts in the future. Estonia's strong macro fundamentals and its growing disposable household incomes provide opportunities for the further expansion of digital TV and broadband ARPU/s (average revenue per user) as well as an increase in demand for premium services

• Starman has an experienced and professional management team, with its founders Peeter Kern and Indrek Kuivallik remaining active in the daily and strategic management of the company. East Capital Explorer has three representatives, and the two founders, together, have two representatives on the Supervisory Board of the company

• In the first 6 months of 2013, the company performed in line with our expectations. Sales were EUR 14.9m, up 9% compared with the same period in 2012. Ebitda was EUR 7.2m, up 10%. The Ebitda margin was 48.5%

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:	2.6%

• Komercijalna Banka Skopje's share price declined 12.3% in EUR terms during the second quarter of 2013 due to disappointing financial results

• The net loss for the first half of the year was MKD 401.5m (EUR 6.5m) and is principally attributable to significant provisioning which continues to exceed forecasts

• As the leading bank for large corporate clients in Macedonia, Komercijalna Banka Skopje has been forced to report provisions on non-performing loans as many of its clients have been hit by a weak demand for exports and poor economic growth

• The management team sees some bright spots as the bank is gaining good clients, but this new business is insufficient to compensate for the existing problems in the loan portfolio

• Despite of significant provisioning, the bank showed an increase in net interest income of 3.2% for the first half of the year, with fees and commission nearly flat

• Komercijalna Banka Skopje has a good retail client base, and although retail lending has, to date, been limited, the business has been reasonably successful, so there may be opportunities for the bank to expand in this area

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%

• Trev-2 Group's performance during the second quarter of 2013 has continued to be good and shows improvement from the same period 2012. Sales in the first 6 months of 2013 was EUR 35.2m (EUR 28.2m during same period 2012) and the result, Ebitda, was EUR 2.2m (EUR -1.6m during same period 2012). The net profit was EUR 0.5m (EUR -3.5m during same period 2012)

• The restructuring of Trev-2 Group has continued and the company has decided to exit the general construction business and, at the same time, increase its ownership in certain other core subsidiaries related to its main business units

Fund Investments

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 74%.

Fund performance			Since
	Q2 2013	6m 2013	May 12
East Capital Baltic Property Fund II	1%	4%	10%

Portfolio highlights during the quarter

• Tänassilma Logistics continued to generate a strong cash flow, and to contribute to the Fund's performance on the back of full occupancy. One tenant's parent company is currently undergoing a restructuring process and will terminate operations within the next few months. However, there are already two candidates waiting to take over the premises at the same, or a higher, rent

• The redevelopment of Gedimino 9 (G9) continued as planned. In May, Hennes & Mauritz (H&M) signed a lease agreement for a store in G9. Negotiations with other potential anchor tenants, existing and new, are ongoing

• The Fund completed its third investment by the end of May with the acquisition of a retail big box property in Riga which has been fully leased to the Finnish retail chain, Prisma Hypermarket. This property will also generate a strong cash flow on the back of full occupancy from day one of the acquisition

• During the second quarter, the management team was further strengthened by recruiting a new CFO, Rein Rätsep, with previous experience from several listed companies

• The Board of Directors of Trev-2 Group was also strengthened by adding an independent director, Teuvo Salminen, who has experience from senior management roles in various Nordic construction and engineering companies

• A share options program was launched during the quarter for senior executives to motivate and retain top performers further aligning their interests with the interests of the shareholders and implementing of a vesting period for the shares options

• On 27 June, Trev-2 Group opened a new asphalt production facility. It's the most modern production facility in Estonia. The Company's strong pipeline of projects is according to plan and management is focusing on improved profitability through, among other things, improved integration, optimization of activities and reallocation of resources.

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

Portfolio breakdown, % per 30 June 2013 Sector weighting % of the fund Logistics 55.5 Retail 44.5 Asset allocation by country % of the fund Estonia 55.5 Latvia 29.4 Lithuania 15.1

Prisma Hypermarket in Riga

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%.

	Q2 2013	6m 2013	Dec 07
East Capital Bering Balkan Fund, EUR	0%	3%	-55%

Portfolio highlights during the quarter

• The largest holding of the Fund, Fondul Proprietatea (FP) gained another 2% in the second quarter. The two main focus areas continue to be privatisation with the expected listings of a number of FP's largest holdings, such as Romgaz, as well as the efforts being made to improve corporate governance in several companies in which FP is an important shareholder

• Sava Reinsurance Company undertook a capital increase to finance the acquisition of a Slovenian peer. The deal took place at a very attractive multiple, a P/E ratio of 4. The stock is now a top three holding in the Fund at a weight of just below 6%, and the share price is up 14% against the price at which the Fund manager bought into the capital increase

• Zavarovalnica Triglav, the Slovenian insurance company, was the best contributor during the second quarter and the share price increased by 14%. At the recent AGM, the fund manager was instrumental in significantly increasing the dividend pay-out, resulting in a dividend increase from EUR 0.4/share in 2011 to EUR 2.0/share in 2013. The stock trades at a 11% dividend yield in EUR, which implies that this is an attractive investment going forward

• Komercijalna Banka Skopje's (KBS) share price declined with 12% due to continued weak financial results, primarily attributable to heavy provisioning

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 65%.

Fund performance			Since
	Q2 2013	6m 2013	Jan 08
East Capital Bering Central Asia Fund, EUR	-6%	15%	-51%
KASE Index, EUR	-11%	-9%	-70%

Portfolio highlights during the quarter

• The best contributor to the Fund's performance was Bank of Georgia which increased by 10%. The fund manager sold a large number of shares in the Bank, given its rich valuation compared with other regional banks. Bank of Georgia currently trades at a P/E ratio of 7.8 for 2013 and at a P/B of 1.3 for 2013

• Kcell, the leading Kazakh mobile operator, increased with an additional 8% after a stellar performance in the first quarter. The major attractive feature continues to be the dividend yield, estimated to come in at 10 -14% in 2013. The Fund increased its position in Kcell as the fund manager believes it to be the top quality mobile operator in the region

• The takeover of the natural resources company, ENRC, by its main shareholders did not materialize into a positive trigger for the stock as the offer from the founding shareholders, who intend to take the company private, was significantly below market expectations. The stock continued its decline, down 18%, and resulted in the largest negative contribution to the Fund's performance

• Against the backdrop of falling oil prices, Dragon Oil and Kazmunaygaz lost 12% and 13%, respectively. Added to the adverse external environment, Kazmunaygaz disappointed the market in terms of its first quarter results due to a significant impairment and low production volumes. By the end of the first quarter, the Fund cut its exposure to this sector by approximately 50% which helped to limit total losses

Portfolio breakdown, % per 30 June 2013

Sector weighting

% of the fund

Asset allocation by country % of the fund

		 Serbia	25.6
Financials	46.3	 Romania	24.9
Consumer Discretionary	17.8	 Slovenia	13.8
Consumer Staples	10.1	 Bosnia	8.8
Telecommunication Services	8.7	 Turkey	4.8
Industrials	2.9	 Macedonia	4.2
Energy	0.8	 Montenegro	3.9
Materials	0.5	 Croatia	1.5
Utilities	0.3	 Other assets	12.5
Other assets and liabilities	12.5	and liabilities

Largest holdings in the Fund on 30 June 2013
	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Fondul Proprietatea	14.0	2.4	0.3	Romania	Financials
B92	13.1	0.2	-0.0	Serbia	Cons. Discr.
Sava Reinsurance Company	5.7	8.1	0.4	Slovenia	Financials
Komercijalna Banka Skopje	3.8	-12.3	-0.6	Macedonia	Financials
Zavarovalnica Triglav	3.7	14.5	0.8	Slovenia	Financials
Montenegro Telekom	3.6	4.4			0.1 Montenegro Telecom. Services
Telekom Srpske	3.6	4.5	0.1		Bosnia Telecom. Services
Pinar Et Ve Un	3.5	-1.3	-0.0		Turkey Consumer Staples
Sif 4 (Muntenia)	2.9	-10.4	-0.4	Romania	Financials
Pif Big	2.8	-8.5	-0.3	Bosnia	Financials

All figures in EUR * Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
57	17	57

Sector weighting		Asset allocation by country
% of the fund		% of the fund
Telecom. Services	22.2		 Kazakhstan	52.1
Materials	17.4		 Georgia	16.8
Financials	16.5		 Turkmenistan  Ukraine	5.0 4.5
Energy	11.0		 Armenia	0.5
Consumer Staples	6.2		 Other assets	21.0
Consumer Discretionary	3.2		and liabilities
Utilities	2.4
Other assets and liabilities	21.0

Largest holdings in the Fund on 30 June 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Kcell	22.2	7.7	1.4	Kazakhstan	Telecom. Services
ENRC	12.6	-18.0	-4.5	Kazakhstan	Materials
Bank Of Georgia	6.3	10.5	1.7	Georgia	Financials
Dragon Oil	5.0	-12.0		-0.7 Turkmenistan	Energy
Henryland	4.5	-15.9	-0.8	Ukraine	Financials
Teliani Valley	4.4	-39.4	-2.7	Georgia	Consumer Staples
Steppe Cement	4.4	2.0	0.1	Kazakhstan	Materials
Kazmunaygaz	4.0	-13.4	-0.7	Kazakhstan	Energy
Chagala Group	3.2	1.0	0.0		Kazakhstan Consumer Discretionary
Halyk Bank	2.9	4.9	0.1	Kazakhstan	Financials
All figures in EUR
* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
70	9	22

East Capital Bering New Europe Fund

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

The Fund is in a winding-up phase and the remaining assets are expected to be sold before year-end.

At the end of the period East Capital Explorer's share of the Fund was 93%.

Fund performance			Since
	Q2 2013	6m 2013	May 08
East Capital Bering New Europe Fund, EUR	-5%	-5%	-21%

Portfolio highlights during the quarter

• Egis, the Hungarian pharmaceutical company, was by far the bestperforming holding, posting a 27% gain and provided the largest positive contribution. Egis reported better-than-expected first quarter results and is expected to show an improvement in results in 2013. Another important trigger for the rise in the stock was the start of dividend payments. Egis still remains one of the cheapest pharmaceutical companies in the region, trading at an EV/Ebitda of 3.9

• Fortuna Entertainment Group was another positive contributor as the stock was up 11% after the announcement of a very substantial one-off dividend, yielding up to 20%. The company confirmed that it had managed to turn around its loss-making lottery business in the Czech Republic, and the fund manager expects the company to continue to grow its solid business, with a strong sustainable dividend yield of 6-7%

• Mennica Polska, the Polish coin manufacturer and gold bar producer, saw a very weak quarter due to the turmoil in commodities and, specifically, as regards the gold market. Mennica Polska's share price fell by 17% and gave the largest negative contribution. The fund manager had exited the entire position earlier in the quarter and realised an average pre-tax return of 1.5% on investment. Before the divestment, Mennica Polska was one of the top ten holdings in the Fund

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			Since
	Q2 2013	6m 2013	Dec 07
East Capital Bering Russia Fund, EUR	-14%	-13%	-66%
RTS-2 Index, EUR	-19%	-23%	-44%

Portfolio highlights during the quarter

• Verofarm reported a sales dip in the first quarter, sales contracted by 26% year-on-year, although Ebitda stayed flat on efficient cost control. The company was suffering from aggressive competition amongst generic producers and from further pressure on the pricing of state tenders. However, the company is well on track to start production in new GMP-compliant facilities (Good Manufacturing Practice standard), which should give an additional 30% capacity boost by 2015. The stock continues to be attractively valued at a P/E ratio of 3.9

• GAZ and Neftekamsky Avto (NEFAZ) were hit 30% and 29%, respectively. GAZ reported 2012 results which came in below market expectations, mainly because of an unexpected fall in truck orders. The valuation remains attractive, at a P/E ratio of 3 and at an EV/Ebitda of 3.9. NEFAZ reported positive dynamics in 2012 revenues, with an Ebitda growth of almost 40% and a margin increase of 1.8 percentage points. On the other hand, first quarter results were weak with sales dropping 5.2% year-on-year. NEFAZ trades at an EV/Ebitda of 3

• The fund manager re-introduced Bank Sankt-Petersburg common shares into the Fund. The Bank had some problems with large credit losses in 2012 but this is expected to be solved and hence improve the financials. The Bank is the cheapest bank in the CIS, trading at a P/E ratio of 3.9 and at a P/B of 0.4

• The Russian logistics company, FESCO, declined by 40% due to lower demand from Russian steel and coal companies

Portfolio breakdown, % per 30 June 2013

Sector weighting

% of the fund

Utilities	20.7
Financials	14.3
Consumer Discretionary	10.3
Health Care	5.8
Telecommunication Services	5.0
Energy	3.4
Industrials	1.1
Materials	0.7
Other assets and liabilities	38.7

Largest holdings in the Fund on 30 June 2013 Company Weight, % Perf, % Contr, %* Country Sector Inter Rao Lietuva 9.7 -3.6 -0.3 Lithuania Utilities Fortuna Entertainment Group 4.9 10.7 0.2 Czech Republic

Warsaw Stock Exchange	6.1	-6.2	-0.5	Poland	Financials
Egis	5.8	27.3	0.9	Hungary	Health Care
Netia	5.0	-4.8	-0.2	Poland	Telecom. Services
Fortuna Entertainment					Consumer

Fortuna Entertainment Group	4.9	10.7	0.2	Czech Republic	Consumer Discretionary
Ing Bank Slaski	4.5	0.7	0.0	Poland	Financials
Pegas Nonwovens	4.3	1.2	-0.1	Czech Republic	Consumer Discretionary
Pannenergy	4.2	-14.3	-0.6	Hungary	Utilities
Bgs Energy	3.5	-16.9	-0.6	Poland	Utilities
Bogdanka	3.4	-18.0	-0.7	Poland	Energy

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
50	1	16

Portfolio breakdown, % per 30 June 2013
Sector weighting % of the fund	Asset allocation by country % of the fund

Financials	17.3
Health Care	12.5
Industrials	11.8
Consumer Discretionary	11.4
Energy	9.0
Materials	8.0
Utilities	1.0
Consumer Staples	0.9
Telecommunication Services	0.5
Other assets and liabilities	27.6

Largest holdings in the Fund on 30 June 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Verofarm	6.1	-15.3	-1.0	Russia	Health Care
Protek	6.1	0.0	0.1	Russia	Health Care
Cantik	5.3	-7.9	-0.4	Ukraine	Financials
FESCO	4.4	-39.9	-2.5	Russia	Industrials
Bank Sankt-Peterburg	4.4	-19.8	-0.2	Russia	Financials
Bashneft	4.0	-12.2	-0.5	Russia	Energy
Nova Liniya	4.0	-10.1	-0.4	Ukraine	Cons. Discr.
GAZ	4.0	-29.5	-1.5	Russia	Cons. Discr.
Bank Tsentrkredit	3.3	-2.2	-0.1	Kazakhstan	Financials
Neftekamsky Avto	3.3	-28.7	-1.2	Russia	Industrials

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
45	13	62

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			Since
	Q2 2013	6m 2013	Jan 08
East Capital Bering Ukraine Fund A, EUR	0%	-4%	-74%
PFTS Index, EUR	-7%	-6%	-82%

Portfolio highlights during the quarter

• The key event was the sale of a big stake of 93% in Ukrtelecom to the Ukrainian business conglomerate, System Capital Management. The acquisition clarifies the shareholder structure and the fund manager expects that the new owners should be able to realize significant synergies, continue restructuration and improve corporate governance of the company

• Myronivsky Hliboproduct (MHP), the poultry producer, reported first quarter results in line with expectations due to deflating local poultry prices. The company has successfully ramped up exports, which tripled in the first quarter, helping MHP to channel through additional volumes from the new Vinnitsa poultry farm

• The damage caused by an explosion in Tsentr Energo's largest power plant appears to be more limited than originally expected. The government is eager to get the power plant fully up and running by the end of 2014, but there could be delays

• Kherson Oblenergo gained as much as 321% during the quarter and gave the largest positive contribution. However, the gain is not driven by any company specific news, but an effect of the limited liquidity of the share. Same applies for Retail Group which increased by 78%

East Capital Bering Ukraine Fund R

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 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 11%.

Fund performance			Since
	Q2 2013	6m 2013	Jan 08
East Capital Bering Ukraine Fund R, EUR	-9%	-4%	-72%
PFTS Index, EUR	-7%	-6%	-82%

Portfolio highlights during the quarter

• The Ukrainian real estate and retail markets have been impacted by the recession and are now experiencing a general drop in sales and in rental rates. This is particularly notable in the regions due to continued decrease of purchasing power of the population

• The performance of Nova Liniya has suffered considerably during the first six month of 2013, with revenues that are 12% below comparable period last year. For a low-margin retailer like Nova Liniya, such a sales drop has a large negative effect on profitability. This poor performance is also negatively impacting the retail real estate developers, Henryland and Cantik, which are dependent on Nova Liniya for the main part of its rental income

• The fund manager signed an agreement during the quarter to sell 40% of its shares in Nova Liniya at a price which was 8.8% lower (in USD) than its value in the Fund on 31 March, as the negative development in the operations has continued and there is no improvement in sight. The value of the holding was written down on 30 April to reflect the transaction

Portfolio breakdown, % per 30 June 2013

Consumer Staples 29.1 Financials 20.7 Utilities 11.9 Materials 9.2 Telecommunication Services 6.8 Consumer Discretionary 3.8 Energy 1.7 Industrials 1.0 Health Care 0.4 Other assets and liabilities 15.6

Sector weighting

% of the fund

Asset allocation by country % of the fund

Largest holdings in the Fund on 30 June 2013
	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Myronivsky Hliboproduct	21.7	0.3	0.1	Ukraine	Consumer Staples
Bank Aval	13.1	3.2	0.4	Ukraine	Financials
Tsentr Energo	9.5	-13.1	-1.5	Ukraine	Utilities
Ukrtelecom	6.8	18.7	1.0	Ukraine	Telecom. Services
Koryukivska Fabryka Tekhnichnyh Paperiv	4.5	13.1	0.5	Ukraine	Materials
Retail Group	4.0	77.6	1.7	Ukraine	Consumer Staples
Ukrsotsbank	3.7	10.6	0.3	Ukraine	Financials
Advantest	3.1	0.4		-0.0 Ukraine	Financials
Kherson Oblenergo	2.4	320.9	1.8	Ukraine	Utilities
Hypovereinsbank	2.4	12.3	0.3	Ukraine	Cons. Discr.

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
71	0	24

Portfolio breakdown, % per 30 June 2013 Sector weighting % of the fund Financials 54.3 Consumer Staples 19.3 Consumer Discretionary 17.0 Industrials 2.1 Other assets and liabilities 7.4 Asset allocation by country % of the fund Ukraine 90.6 Estonia 2.1 Other assets and liabilities

Largest holdings in the Fund on 30 June 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Cantik	32.8	-7.8	-2.7	Ukraine	Financials
Henryland	20.5	-15.9	-3.6	Ukraine	Financials
Chumak	19.3	-1.5	-0.2	Ukraine	Consumer Staples
Nova Liniya	17.0	-10.1	-1.8	Ukraine	Consumer Discretionary
Trev-2 Group	2.1	-0.0	-0.0	Estonia	Industrials
Rtc Irpin	1.0	-1.4	-0.0	Ukraine	Financials

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
93	100	6

• In light of the negative impact of Nova Liniya affecting the outlook of the real estate developers, the fund manager also signed an agreement to sell 100% of the shares in Henryland to the other co-owner, at a price which was 14.7 % lower (in USD) than its value in the Fund on 31 March. The fund manager is also discussing a sale of its shares in Cantik, to the same buyer. The value of both these holdings were written down on 31 May to reflect anticipated value under these respective transactions

• The market conditions for Chumak, the food processing company remain challenging. The company has, however, managed to increase revenues compared with last year, largely thanks to the positive contribution from the new line of fruit juices

7.4

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
	Q2 2013	6m 2013	Aug 12
East Capital Russia Domestic Growth Fund, EUR	-5%	-5%	-8%

Portfolio highlights during the quarter

• The major positive contribution came from Yandex, the Russian internet search engine. The stock gained 18%, adding 0.8% to the Fund's performance. The company has posted excellent first quarter results, showing an almost 50% year-on-year Ebitda growth. Following the strong results, Yandex has increased its 2013 revenue growth guidance to 30-35% year-on-year, from the previous 28-32% level, and also announced a buyback program

• Another strong performing stock was the conglomerate, Sistema, which advanced 6%. The company unexpectedly announced the sale of its 49% stake in the turnaround-story, RussNeft, for USD 1.2bn with the deal expected to be closed during the third quarter

• Among the worst-performing stocks were the utilities companies, OGK-5 and E.ON Russia, which were down 14% and 7%, respectively, adding a combined 1.5% negative contribution to the Fund in the way of multiple statements by senior government officials emphasising the necessity of a downward revision of the gas tariffs

• Sberbank's share price dropped 12% during the quarter, basically in line with Russian market in general. There was no company specific news contributing to the decline and the bank's operating results were in line with expectations

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 within 3-6 months and distribute the proceeds to shareholders.

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

Fund performance			Since
	Q2 2013	6m 2013	May 09
East Capital Special Opportunities Fund, EUR	-6%	5%	18%

Portfolio highlights during the quarter

• Fondul Proprietatea (FP) gained another 2% and was the best contributor to the Fund's performance. For further information about FP, please see the portfolio comment for the East Capital Bering Balkan Fund

• Sollers declined by 8% and gave the largest negative contribution. Passenger car sales declined by 5.7% year-on-year in Russia during the first quarter, but Sollers continuously outperforms the market and reported a decline in car sales of only 1%. The stock is also supported by dividends, which were introduced this year, with a 30% payout ratio, implying a dividend yield of 7%. The valuation remains cheap, at a P/E ratio of 4-5

• Verofarm declined 15% during the quarter and resulted in the second worst contribution of 1.3% to the Fund's performance. For further information about Verofarm, please see the portfolio comment for the East Capital Bering Russia Fund

Portfolio breakdown, % per 30 June 2013

Sector weighting

% of the fund

Financials	31.1
Telecom. Services	16.1
Industrials	13.4
Utilities	13.0
Consumer Discretionary	11.4
Information Technology	6.4
Consumer Staples	6.2
Other assets and liabilities	2.4

Largest holdings in the Fund on 30 June 2013
	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Sberbank	17.2	-11.6	-2.3	Russia	Financials
Aeroflot Russian Airlines	13.4	1.7	0.1	Russia	Industrials
Sistema	10.6	6.0	0.5	Russia	Telecom. Services
VTB Bank	7.9	-10.7	-0.7	Russia	Financials
OGK-5	7.5	-14.2	-1.2	Russia	Utilities
M.Video	7.3	-9.7	-0.8	Russia	Consumer Discr.
Yandex	6.4	17.7	0.8	Russia	IT
Dixy	6.2	2.9	0.2	Russia	Consumer Staples
Vimpelcom	5.6	-10.0	-0.6	Russia	Telecom. Services
E.ON Russia	5.5	-7.5	-0.3	Russia	Utilities
All figures in EUR

* Contribution to the portfolio performance
10 largest holdings	Unlisted holdings
(% of fund)

(% of fund)	(% of fund)	Total number of holdings
87	0	13

Portfolio breakdown, % per 30 June 2013

Sector weighting
% of the fund
Financials	41.3
Consumer Discretionary	20.7
Materials	13.2
Energy	10.5
Health Care	8.2
Consumer Staples	3.1
Industrials	0.5
Information Technology	0.4
Other assets and liabilities	2.3

Asset allocation by country % of the fund

 Russia	51.8
 Romania	41.3
 Ukraine	2.5
 Serbia	2.2
 Other assets and liabilities	2.3

Largest holdings in the Fund on 30 June 2013
Company	Weight, %	Perf, %	Contr, %*	Country	Sector
Fondul Proprietatea	41.3	2.3	0.7	Romania	Financials
Sollers	20.7	-7.6	-1.7	Russia	Cons. Discr.
Sibirskiy Cement	11.0	-8.7	-0.9	Russia	Materials
Verofarm	8.2	-14.5	-1.3	Russia	Health Care
IG Seismic Service GDR	5.0	-7.2	-0.3	Russia	Energy
Integra	3.0	-16.9	-0.5	Russia	Energy
Mashstroy	2.5	-32.0	-1.1	Russia	Energy
Vino Zupa	2.2	1.2	0.0	Serbia	Consumer Staples
Stirol	1.6	-6.6	-0.1	Ukraine	Materials
Sintal	0.9	-18.2	-0.2	Ukraine	Consumer Staples
All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
96	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
	Q2 2013	6m 2013	Oct 10
East Capital Special Opportunities Fund II, EUR	-5%	-14%	-53%

Portfolio highlights during the quarter

• Zavarovalnica Triglav came in with the largest positive contribution, 3.4%, during the quarter. For further information about Zavarovalnica Triglav, please see the portfolio comment for the East Capital Bering Balkan Fund

• Linas Agro Group was strong after beating already high expectations. The stock was up almost 3% during the quarter. Due to the extremely good harvest, as well as successful new acquisitions, sales grew by 149% year-onyear, while the comparable net profit was 8 times better. Stock is currently trading at a P/E ratio of 7

• The worst performing stock was Nova Kreditna Banka Maribor (NKBM), which was down 31% adding a 0.4% negative contribution. The Bank will need a large increase in capital because of the continuing situation as regards NPLs which now total more than 20%. Most likely, the state will provide this new capital, implying a high level of dilution. However, the weight of NKBM is currently very limited at just 0.9% of the Fund

• The largest negative contribution came from Verofarm. For further information about Verofarm, please see the portfolio comment from the East Capital Bering Russia Fund

Portfolio breakdown, % per 30 June 2013

Sector weighting
% of the fund
Financials	38.3
Consumer Staples	19.5
Health Care	9.9
Energy	8.5
Utilities	6.5
Materials	4.1
Industrials	1.5
Other assets and liabilities	11.6

Largest holdings in the Fund on 30 June 2013

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Zavarovalnica Triglav	24.1	16.2	3.4	Slovenia	Financials
Bambi	16.0	8.3	1.1		Serbia Cons. Staples
Verofarm	9.9	-14.5	-1.6	Russia	Health Care
Nfd 1 Delniski Investicijski Sklad Dd	7.6	-4.4	-0.4	Slovenia	Financials
AIK Banka	5.8	-20.9	-1.5	Serbia	Financials
IG Seismic Service GDR	5.4	-7.2	-0.4	Russia	Energy
Sibirskiy Cement	4.1	-8.7	-0.4	Russia	Materials
Energy System of Far East	4.0	-21.9	-1.1	Russia	Utilities
Linas Agro Group	3.6	2.8			0.1 Lithuania Cons. Staples
Integra	3.2	-16.9	-0.6	Russia	Energy

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
84	9	15

Short-term investments

Short-term investments

On 30 June 2013, East Capital Explorer had a fund investment and a direct investment under liquidation and some current loan receivables totalling EUR 2.1m (EUR 13.9m). The comparative figure for last year included a bond portfolio amounting to EUR 9m which has been divested.

Cash and cash equivalents

The EUR 6.0m (EUR 45.8m) which has not yet been invested or drawndown, was placed in cash and cash equivalents. Interest income from cash and cash equivalents during the reporting period amounted to EUR 0.0m (EUR 0.2m). The decrease in cash is attributable to the investments undertaken in the period.

Results

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

At the end of May East Capital Explorer Investments AB acquired a majority stake 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. See section Business combination.

Due to the application of changed IFRS (IFRS 10) control requirements, starting 2013, East Capital Explorer is no longer required to consolidate its fund investments in those cases in which the Company was previously regarded as having controlling influence. This implies that all fund holdings are, instead, reported at fair value in the financial statement. The application of IFRS 10 for annual periods begins on or after 1 January 2014, but earlier application is permitted. East Capital Explorer decided to implement it starting from 1 January 2013. All comparable figures for the corresponding period of the previous year have been restated. See pages 30-32.

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

The figures for the group include from this reporting period the impact from the acquisition of Starman. Group results where only affected by the outcome after the acquisition, which is one month of activity. The structure of the Statement of profit or loss and other comprehensive income were affected by the acquisition with new items.

Total comprehensive income for the reporting period 1 January – 30 June 2013 amounted to EUR -5.7m (EUR -0.1m).

Net loss for the period amounted to EUR -5.7m (EUR -0.1m), corresponding to earnings per share of EUR -0.18 (EUR 0.00).

For the reporting period, the main item of the net loss was the value change of EUR -5.5m (EUR 1.5m) in the investment portfolio.

Received dividends relates to Melon Fashion Group EUR 1.2m and Komercijalna Banka Skopje EUR 0.4m.

Of the total operating expenses of EUR -4.2m (EUR -3.0m) during the reporting period, EUR -2.0m (-) related to Starman and EUR -1.0m (EUR -1.0m) related to the Parent Company. The remaining EUR -1.2m (EUR -2.0m) related to operating expenses in other subsidiaries, mainly fees for direct investments. The decrease in expenses compared to last year is explained by lower costs for performance fees, due to the development of the investment portfolio.

To calculate all fees related to East Capital Explorer AB, 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 2.3m (EUR 4.0m) including VAT. It all relates to management fees as no performance related fees were generated during the period. Last year during the same reporting period EUR 1.4 m was related to performance fees. For more details about fees, please see the latest Annual Report available

on our website.

Financial income amounted to EUR 0.0m (EUR 0.5m). Financial expenses amounted to EUR -0.3m (EUR -0.6m).

Tax of EUR 0.3m (EUR -0.9m) are mainly deferred taxes.

Parent Company

The Parent Company's net loss for the period amounted to EUR -6.9 m (EUR 0.0m). 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 -1.0m (EUR -1.0m). No investment activities were carried out in the Parent Company.

Business Environment and Market

The global economic uncertainties relating to imbalances and continued concerns of recessions and indebtedness of certain states are expected to continue to impact the economic situation at the 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 also may impact the possibilities for divestments as well as opportunities for new investments.

For the coming months we continue to anticipate economic growth at levels below long-term potential, yet the average growth in our region is expected to be higher than in the developed markets. We anticipate a gradual recovery towards the end of the year which will become more clear in 2014. While the current markets can experience an increased volatility from time to time, the market changes can also provide significant opportunities for positive profitability growth and development in sound portfolio companies.

Financial Position and Cash Flow

Equity ratio of the group is 76% (98%). The rate has decreased due to the consolidation of the acquired Starman. The equity ratio is still at a highly solid rate.

As a consequence of the consolidation of subsidiary Starman in the Group the assets have increased in volume. The increase is mainly coming from intangible assets. The purchase price analysis is still to be finalized so the classification of the acquired assets will be revised in upcoming interim report.

The financial position has changed having consolidated the loans related to Starman. In total the interest bearing liabilities sum up to EUR 79.8m (-) and of this amount EUR 56.8m (-) relates to Financial institutions and the remaining EUR 23.0m relates to shareholders loans provided by the Non-controlling interest. The loans from the financial institutions are agreed to include financial covenants to be met depending on ratios between EBITDA and debts.

Cash flow from operating activities during the reporting period January-June 2013 was EUR -1.2m (EUR 2.8m).

The Group's cash, cash equivalents and other short-term investments at the end of the period amounted to EUR 8.1m (EUR 59.7m).

The major cash outflows in the investing activities refer to investment in East Capital Russia Domestic Growth Fund amounting to EUR 25m and investment in Starman EUR 24m during the reporting period. The acquisition of Starman generated a net cash outflow of EUR 22.6m, since the acquired company included EUR 1.0m in cash.

Commitments and draw-downs

East Capital Explorer has committed to invest in total EUR 20m into East Capital Baltic Property Fund II. EUR 17m was drawn down by the Fund during last year. EUR 0.7m was drawn down by the Fund during the reporting period of 2013 and EUR 2.3m is left to invest.

Other information

Risks and uncertainty factors

The dominant risk in East Capital Explorer's and the Group's operations is commercial risk in the form of exposure to certain 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.

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

Related party transactions

No related party transactions have occurred during the reporting period of 2013 other than fee payments according to agreements. East Capital Explorer AB has a related party relationship with its subsidiaries, with other companies in the East Capital Group, as well as with 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 the reporting period 2013 the Group generated fees to a total of EUR 2.3m (EUR 4.0m).

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 the reporting period 2013, the Group purchased services for EUR 0.1m (EUR 0.2m), all of it through the Parent Company.

East Capital Explorer AB's management, Board members and their close relatives, and related companies control 20% 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 within an Investment Management Agreement 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 that has been included in the Annual Report and on our web site www.eastcapitalexplorer.com in the section, 'About East Capital Explorer/Corporate Governance'.

Share buyback mandate and redemption program

On 25 April 2012, the Annual General Meeting 2012 issued a new repurchase authorization for the Board to decide on acquiring the company's own shares until the Annual General Meeting 2013. 685,111 shares were repurchased during the period of 8 August - 5 October 2012 through the share buyback 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.

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 affected in connection therewith without issuing new shares, East Capital Explorer's share capital amounted to approximately EUR 3.6m by 31,424,309 shares.

The total number of shares in East Capital Explorer as of 30 June 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%.

The redemption program is voluntary and requires shareholders to actively participate.

Dividend

The redemption program is intended to replace 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 July an additional dividend of EUR 1.1m from Melon Fashion Group was received.

NAV on 31 July 2013

NAV per share on 31 July 2013 amounted to EUR 8.99 (corresponding to SEK 78). The share price on 31 July 2013 was SEK 45.90 (corresponding to EUR 5.30). Cash, cash equivalents and other short-term investments on 31 July 2013 amounted to EUR 8m (SEK 68m).

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:

• Amendment to IFRS 7 Financial Instruments – Disclosures: The change refers to new requirements for disclosures regarding netting of financial assets and liabilities. Netting disclosures are not applicable for the East Capital Explorer Group and had no effect on the profit/loss and financial position.

• 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. It has been decided that all the funds and similar entities in East Capital Explorer are exempt from consolidation and that these holdings are held at fair value under IFRS 10 starting on 1 January 2013. Consequently, the funds that were consolidated in the yearend report no longer qualify as subsidiaries, and therefore were deconsolidated and instead held at fair value in this interim report for the reporting period 1 January-30 June 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 in respect of the application of IFRS 10" on pages 30-32.

East Capital Explorer continues to consolidate its subsidiaries East Capital Explorer Investments AB, Humarito Ltd and newly acquired Starman.

• IFRS 13 Fair Value Measurement: This is a new standard for measuring fair value, including changed disclosure requirements. The new standard 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.

A number of new standards, amendments to standards and interpretations become effective after the publication of these financial statements, and have not been applied in preparing these consolidated accounts. These are not judged to have any material effect on the consolidated accounts.

The Board of Directors and CEO give their assurance that the sixmonth report presents a true and fair view of the Group's and Parent Company's operations, financial position and profits and describes the significant risks and uncertainties facing the Parent Company and companies included in the Group.

Stockholm, 29 August 2013

Paul Bergqvist Catharina Hagberg Chairman of the Board Acting Chief Executive Officer

Lars O Grönstedt Louise Hedberg Board member Board member

Karine Hirn Alexander Ikonnikov Board member Board Member

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
• Capital Markets Day on 3 October 2013
• Interim Report, 1 January 30 September 2013 on 11 November 2013

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 ir@eastcapitalexplorer.com.

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 29 August 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 June 2013, and the six-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, 29 August 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-Jun1	Jan-Jun2	Apr-Jun1	Apr-Jun2
Net sales	2,486	-	2,486	-
Other operating income	51	-	51	-
Changes in value	-5,511	1,503	-12,247	-27,293
Received dividends	1,550	2,373	1,550	2,373
Total operating income	-1,424	3,876	-8,159	-24,920
Goods, raw materials and services	-780	-	-780	-
Staff expenses	-951	-422	-737	-242
Depreciation and amortisation of non-current assets	-525	-	-525	-
Other operating expenses	-1,980	-2,544	-1,326	-2,012
Operating profit/loss	-5,660	911	-11,528	-27,174
Financial income	39	470	13	424
Financial expense	-347	-587	-314	-396
Profit/loss before tax	-5,968	794	-11,829	-27,146
Tax	282	-884	36	-852
NET PROFIT/LOSS FOR THE PERIOD	-5,686	-90	-11,792	-27,998
Other comprehensive income:
Exchange differences on translating foreign operations	-	-	-	-
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	-5,686	-90	-11,792	-27,998
Net profit/loss for the year distribution:
Shareholders of the Parent Company	-5,792	-121	-11,899	-28,043
Non-controlling interest	107	29	107	44
	-5,686	-90	-11,792	-27,998
Total comprehensive income distribution:
Shareholders of the Parent Company	-5,792	-121	-11,899	-28,043
Non-controlling interest	107	29	107	44
	-5,686	-90	-11,792	-27,998
Earnings per share, EUR - Shareholders of the Parent Company No accumulated dilution effects during the period	-0.18	0.00	-0.38	-0.81

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 18 "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 Jun1	31 Dec2	30 Jun2
Assets
Intangible assets	78,049	-	-
Property, plant and equipment	22,412	-	-
Shares and participations in investing activities	252,327	257,599	235,382
Deferred tax assets	627	403	-
Total non-current assets	353,788	258,002	235,382
Inventories	3,471	-	-
Short term receivables	773	32	33
Tax receivables	1,268	740	-
Accrued income and prepaid expenses	1,127	80	100
Short-term investments	2,098	0	13,921
Cash and cash equivalents	6,029	46,497	45,778
Total current assets	14,394	47,349	59,832
Total assets	368,182	305,350	295,214
Equity and Liabilities
Share capital	3,640	3,631	3,631
Other contributed capital	348,180	362,458	366,517
Translation reserve	0	77	-2
Retained earnings	-71,368	-65,653	-80,119
Equity attributable to shareholders of the Parent Company	280,451	300,513	290,026
Non-controlling interest	117	8	-63
Total Equity	280,568	300,521	289,964
Long-term interest bearing liabilities	72,033	-	-
Deferred tax liabilities	-	-	13
Total long-term liabilities	72,033	-	13
Current liabilities
Current interest bearing liabilities	7,780	-	0
Tax liabilities	0	-	102
Other current liabilities	1,708	188	2,732
Accrued expenses and deferred income	6,092	4,641	2,403
Total current liabilities	15,581	4,829	5,238
Total equity and liabilities	368,182	305,350	295,214

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 18 "Accounting principles" and Note "Restatement of Financial Statements in respect of the application of IFRS 10"

Statement of Changes in Equity

EUR thousands 2013	Share capital	Other contributed capital	Translation Reserves	Retained earnings incl. profit /loss for the year	Total equity shareholders in Parent Company	Non-controlling 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	-	-	-	-5,792	-5,792	107	-5,686
Other comprehensive income	-	-	-77	77	0	0	0
Total comprehensive income	3,631	362,458	0	-71,368	294,721	115	294,835
Acquired subsidiaries	-	-	-	-	-	2	2
Bonus issue/cancellation of share	9	-9	-	-	0	-	0
Redemption program	-	-14,269	-	-	-14,269	-	-14,269
Per 30 June 2013	3,640	348,180	0	-71,368	280,451	117	280,568

2012	Share capital	Other contributed capital	Translation Reserves	Retained earnings incl. profit /loss for the year	Total equity shareholders in Parent Company	Non-controlling 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	-	-	-	-120	-120	29	-90
Other comprehensive income	-	-	-2	-	-2	0	-3
Total comprehensive income	3,628	369,923	-2	-80,119	293,429	-63	293,366
Bonus issue	2	-2	-	-	0	-	0
Paid dividend to shareholders	-	-3,033	-	-	-3,033	-	-3,033
Share buy-back	-	-370	-	-	-370	-	-370
Per 30 June 2012	3,631	366,517	-2	-80,119	290,026	-63	289,964

Statement of Cash Flow

EUR thousands		Restated
	1 Jan – 30 Jun 20131	1 Jan – 30 Jun 2012
Operating activities
Operating profit/loss	-5,660	911
Changes in value	5,511	-1,503
Adjustment for non-cash items	525	-
Interest received	41	546
Other financial income	-9	-276
Tax paid	-469	-596
Cash flow from current operations before changes in working capital	-61	-919
Cash flow from changes in working capital
Increase (-)/decrease (+) in other current receivables	-1,064	-157
Increase (+)/decrease (-) in other current payables	-107	3,863
Cash flow from operating activities	-1,232	2,788
Investing activities
Acquisition of group companies	-22,605	-
Investment in shares and participations	-25,740	-15,188
Repaid shareholders contributions	-	7,317
Sale of short-term investments	9,995	9,523
Sale of shares and participations	13,463	28,191
Cash flow from investing activities	-24,887	29,843
Financing activities
Paid dividend to shareholders	-	-3,033
Redemption program	-14,269	-370
Cash flow from financing activities	-14,269	-3,403
Cash flow for the period	-40,388	29,228
Cash and cash equivalents at beginning of the period2	46,497	16,639
Exchange rate differences in cash and cash equivalents	-80	-89
Cash and cash equivalents at end of the period	6,029	45,778

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 Jun 2013	Fund Investments	Direct Investments1	Short-term Investments	Unallocated	Total consolidated
Net sales	-	2,486	-	-	2,486
Other operating income	-	51	-	-	51
Changes in value	-3,699	-1,270	-540	-2	-5,511
Received dividends	-	1,550	-	-	1,550
Goods, raw materials and services	-	-780	-	-	-780
Staff expenses	-	-368	-	-583	-951
Depreciation and amortisation of non-current assets	-	-525	-	-	-525
Other operating expenses	-	-758	-	-1,222	-1,980
Operating profit/loss	-3,699	386	-540	-1,807	-5,660
Financial income	-	-	39	-	39
Financial expense	-	-233	-114	-	-347
Profit/loss before tax	-3,699	153	-615	-1,807	-5,968
Assets	193,260	166,096	7,124	1,702	368,182

EUR thousands Restated 1 Jan – 30 Jun 20122	Fund Investments3	Direct Investments	Short-term Investments	Unallocated	Total consolidated
Changes in value	-8,420	9,651	272	-	1,503
Received dividends	-	2,373	-	-	2,373
Staff expenses	-	-	-	-422	-422
Other operating expenses	-1,735	-269	-	-540	-2,544
Operating profit/loss	-10,155	11,755	272	-961	911
Financial income	-	-	273	197	470
Financial expense	-	-	-	-587	-587
Profit/loss before tax	-10,155	11,755	545	-1,351	794
Assets	186,813	48,665	59,699	37	295,214

1 Starman's segment reporting is included in direct investments

2 Comparable figures in the segment reporting for the corresponding period 2012 have been restated due to changes in IFRS control requirements

3 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 below to be disclosed in the interim reports. The numbers are based on the same accounting- and valuation policies as used in the preparation of the company's most recent annual report.

EUR thousands Group 30 June 2013	Total carrying amount	Fair Value
Shares and participation in investing activities	252,327	252,327
Other receivables	773	773
Short-term investments	2,098	2,098
Cash and cash equivalents	6,029	6,029
Total	261,227	261,227
Long-term interest bearing liabilities	72,033	72,033
Current interest bearing liabilities	7,780	7,780
Other financial liabilities	1,708	1,708
Accrued expenses	4,341	4,341
Total	85,863	85,863

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 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 that require significant adjustment based on unobservable inputs, that 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 that which 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. Classification of equity funds that are consolidated are done in each level according to the underlying equities. 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 June 2013.

EUR thousands
30 June 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	169,471	-	23,829	193,299
- Direct Investments	7,426	-	51,922	59,348
- Short-term Investments	-	-	2,098	2,098
Total assets measured at fair value	176,897	-	77,849	254,746

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 New Europe Fund, 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 Fun II, East Capital Bering Ukraine Fund Class R, Melon Fashion Group and Trev-2 Group

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

Financial investments that trade 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 June 2013 by class of financial instrument:

30 June 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	-	-	-9,996	-9,996
- Movements to Level 3	-	-	11,360	11,360
- Movements from Level 3	-	-		-
- Result from financial assets at fair value through profit or loss included
in balance sheet	430	322	-557	195
Closing balance 2013	23,829	51,922	2,098	77,849

Movement from or to level 3 during the year depends on change in trade pattern for the share.

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 June 2013
Short-term investments	2,098
Cash and cash equivalents	6,029
Interest-bearing liabilites, financial institutes	-56,820
Interest-bearing liabilites, shareholders loan from non-controlling interest	-22,993
Net debt	-71,686

The loans from financial institutes has the following maturity profile (excluding future interest capitalization):

Within one year	7,780
1-3 years	16,316
4-5 years	32,724
Total loans from financial institutes	56,820

All loans are originally denominated in Euro.

The bank loans amout to EUR 56,550t and the remaining EUR 270t are related to financial lease loans.

The bank loans are based on floating rate and due up to 2018. To hedge the interest risk in the bank loans an agreement was made with the banks to enter a derivate instrument to provide that 50% of the interest risk has a finance cap on the interest level. The loans from the financial institutions are agreed to include financial covenants to be met depending on ratios between Ebitda and debts.

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

The financial leases are due up to 2014.

Other risk information

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

Sensitivity analysis for market risks (EUR thousands)

30 June 2013
Risk factors	Change	Effect on net profit/loss for the period
Equity price	+/- 10%	27,594
Value of level 3 holdings	+/- 10%	7,785

Pledged assets and contingent liabilities

As of 30 June 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 56.8m.

Business combinations

As at 30th of May, as completion date, 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 purchase price amounted to EUR 23,609t for 51.0% of the shares.

Preliminary acquisition analysis for Starman

The fair value of assets acquired and liabilities assumed in business combinations and the net cash flow from business combination are presented below. As the initial measurement for the business combination is still not yet finalized the fair values measures in the acquisition analyses is preliminary appraisals and subject to confirmation of certain facts.

Preliminary acquisition analysis for Starman	EUR thousands
Fair value of purchase consideration paid	23,609
Fair value of identifiable assets and liabilities
Intangible assets	2,567
Property, plant and equipment	22,835
Financial fixed assets	38
Current receivables	4,469
Cash and cash equivalents	1,004
Interest-bearing liabilities to financial institutes	-56,820
Interest-bearing liabilities to non-controlling interest	-22,886
Current liabilities, non-financial	-3,180
Total fair value of identifiable net assets	-51,973
Non-controlling interest (49%)	-2
Goodwill1	75,584
1 The provisional goodwill arising on acquisition will be partly reclassified by identificable assets and other fair value adjustments including deferred tax

Total consideration paid in cash	23,609
Less acquired cash and cash equivalents	-1,004
Net cash outflow from the combination	22,605

The new business is consolidated starting from June and the contribution on income is EUR 2,537t and on operating result EUR 567t.

If the new business would had been consolidated from 1 January 2013 the consolidated group would had reported an operating income of EUR 11 016t and an operating profit/loss of EUR -2,304t. The loss is mainly explained by the change in value of the investment portfolio and is not related to Starman activities.

Transaction costs EUR 345t are included in other operating expenses in the Statement of profit or loss and other comprehensive income.

The non-controlling interests in Starman has been measured at fair value as of the date of the acquisition.

Consolidated Key Figures

Key figures1	6m 2013	3m 2013	12m 2012	9m 2012	6m 2012	3m 2012	12m 2011	9m 2011
Net asset value, EURm	280	292	301	301	290	321	294	317
Change in NAV during the quarter, %	-4.1	-2.7	-0.1	3.7	-9.7	9.4	-7.3	-17.0
Equity ratio, %2	76.2	98.4	97.5	97.9	96.1	97.2	97.3	98.3
Market capitalisation, SEKm	1,439	1,634	1,618	1,691	1,601	1,879	1,815	1,846
Market capitalisation, EURm	165	195	188	200	183	213	209	201
Outstanding number of shares, m	31.4	31.4	33.0	33.2	33.7	33.7	33.8	34.7
Weighted average number of shares, m	31.4	31.4	33.5	33.6	33.7	33.7	34.6	34.8
Number of employees	2833	5	5	4	4	4	4	4

Key figures per share	6m 2013	3m 2013	12m 2012	9m 2012	6m 2012	3m 2012	12m 2011	9m 2011
Earnings per share, EUR	-0.18	0.19	0.49	0.41	-0.04	0.92	-3.59	-3.07
NAV, SEK	78	78	78	77	75	84	77	84
NAV, EUR	8.92	9.30	9.10	9.07	8.6	9.52	8.69	9.14
Share price, SEK	45.80	52.00	49.00	51.00	47.50	55.75	53.75	53.00
Share price, EUR	5.25	6.21	5.70	6.04	5.42	6.32	6.03	5.76
SEK/EUR	8.72	8.37	8.59	8.44	8.77	8.83	8.92	9.20

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	2012	2013	2012
	Jan-Jun	Jan-Jun	Apr-Jun	Apr-Jun
Staff expenses	-583	-422	-369	-242
Other operating expenses	-435	-540	-230	-330
Operating profit/loss	-1,018	-961	-599	-572
Financial income	944	993	-4,553	-27,398
Financial expenses1	-6,793	-5	-6,793	-5
Profit/loss before tax	-6,868	26	-11,946	-27,975
Income tax	15	-9	47	21
NET PROFIT/LOSS FOR THE PERIOD	-6,853	17	-11,899	-27,954

1 Financial expenses in Parent Company include write down of shares in East Capital Explorer Investments AB of EUR 6.8m

Statement of Comprehensive Income – Parent Company

EUR thousands
	2013	2012	2013	2012
	Jan-Jun	Jan-Jun	Apr-Jun	Apr-Jun
NET PROFIT/LOSS FOR THE period	-6,853	17	-11,899	-27,954
TOTAL COMPREHENSIVE INCOME FOR THE period	-6,853	17	-11,899	-27,954

Balance Sheet – Parent Company

EUR thousands
	30 Jun 2013	31 Dec 2012	30 Jun 2012
Participations in Group companies	250,079	271,272	259,651
Deferred tax	355	340	393
Total non-current assets	250,434	271,612	260,044
Other short-term receivables	1	30	-
Loan to group companies	29,315	29,315	29,315
Accrued income and prepaid expenses	13	23	28
Cash and cash equivalents	1,029	1,131	1,151
Total current assets	30,358	30,499	30,494
Total assets	280,792	302,111	290,538
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	366,517
Retained earnings	-64,510	-80,096	-80,096
Net profit/loss for the period	-6,853	15,586	17
Total non-restricted equity	276,819	297,951	286,438
Total shareholders' equity	280,459	301,582	290,069
Liabilities
Other liabilities	126	198	216
Accrued expenses and prepaid income	207	332	253
Total current liabilities	333	530	469
Total liabilities	333	530	469
Total equity and liabilities	280,792	302,111	290,538

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets - - - Contingent 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	2012 Jan Dec	IFRS 10 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	30,750	-10,026	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

30

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	Adj.	Restatated	2012	Adj.	Restatated	2012	Adj.	Restatated	2012	Adj.	Restatated
	Jan-Mar	IFRS 10	2012 Jan-Mar	Jan-Jun	IFRS 10	Jan-Jun 2012	Jan-Sep	IFRS 10	2012 Jan-Sep	Jan-Dec	IFRS 10	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.

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