Eastnine — Interim / Quarterly Report 2014

Nov 7, 2014

Interim Report 1 January – 30 September 2014

Interim Report 1 January – 30 September 2014

Key events during the third quarter

• The fair value of the direct investment in the Russian fashion retailer Melon Fashion Group (MFG), has been impaired by 8.7 percent to EUR 56.6m, based on an external valuation. The principal reason is the gradual weakening of the Russian rouble throughout this year, impacting both the operating results of MFG and the book value of the holding through translation effects (RUB/EUR rate per 30 September)
• Following an extended period of outperforming expectations, the fair value of Starman was, based on an internal valuation, appreciated by 36 percent to EUR 34.0m
• As for other real estate investments, the fair value of Vilnius Business Harbour is adjusted for operating income on a quarterly basis. This led to a value appreciation of 2.7 percent to EUR 22.9m
• On 8 July, additionally EUR 2.3m was drawn down by East Capital Baltic Property Fund II. The company has invested a total of EUR 20.0m in the fund, which at 30 September was valued at EUR 23.9m
• At the Extraordinary General Meeting in August, Liselotte Hjorth was elected as a new Board Member. Liselotte has broad experience from banking, finance and real estate as well as from the Russian and Baltic markets, mainly through a number of positions within the SEB Group

Financial results for the third quarter

• The Group's net result for the third quarter 2014 was EUR -0.3 (3.9m)1 including EUR 0.0m (4.0m) changes in value of investments, of which EUR 9.0m relates to Starman and EUR -5.4m to MFG. Earnings per share amounted to EUR -0.01 (0.12) for the quarter
• Net asset value (NAV) per share on 30 September 2014 amounted to EUR 9.94 (9.04). The total NAV amounted to EUR 297m (284m), a decrease of 0.1 percent compared to the previous quarter
• Cash, cash equivalents and other short term investments on 30 September amounted to EUR 12.5m (14.1m)
• The closing price of the East Capital Explorer share as of 30 September 2014 was SEK 46.60, equivalent to EUR 5.12, a decrease of 19.3 percent from 30 June 2014

Financial results for the first nine months

• The Group's net result for the first nine months was EUR 2.3m (-2.1m) and earnings per share amounted to EUR 0.07 (-0.07)
• NAV per share increased by 0.9 percent from EUR 9.85 to EUR 9.94 during the first nine months of 2014. Total NAV decreased by 3.8 percent, after payment of EUR 13.6m to shareholders under the redemption program in June
• The closing price of the East Capital Explorer share as of 30 September 2014 was SEK 46.60, equivalent to EUR 5.12, a decrease of 22.8 percent from year-end 2013

Events after the end of the third quarter

• In October, East Capital Deep Value Fund lost 2.0 percent, East Capital New Markets Fund lost 4.0 percent, East Capital Russia Domestic Growth Fund lost 6.6 percent while East Capital Bering Ukraine Fund Class R rose by 0.7 percent. East Capital Baltic Property Fund II only publishes NAV on quarterly basis

Net asset value and share price development

		30 Sep 2014		30 Sep 2013
	EUR	SEK	EUR	SEK
NAV per share	9.94	90.5	9.04	78.6
Total NAV	297m	2.7bn	284m	2.5bn
NAV per share, % change in Q3	-0.1	-0.6	1.4	1.1
NAV per share, % change YTD	0.9	3.4	-0.6	0.5
Closing price per share	5.1	46.6	5.4	46.7
Total market capitalisation	153m	1.4bn	168m	1.5bn
Share price % change in Q3	-18.9	-19.3	2.3	2.0
Share price % change YTD2	-24.8	-22.8	-5.8	-4.7

¹ Comparable figures in brackets refer to the corresponding period 2013

Adjusted for redemption programs

Portfolio on 30 September 2014

East Capital Explorer's portfolio is actively managed and comprises of Direct Investments 44% (29%), Fund Investments 52% (67%) and Short-term Investments. The largest geographical exposures are towards Russia with a weight of 37% (46%), the Baltic countries 33% (20%) and the Balkan countries 19% (24%). The exposure to Ukraine is 4% (3%). 84% of the portfolio is invested in the Company's targeted sectors: Retail, Consumer Goods, Financials and Real Estate.

Portfolio on 30 September 2014

	Value 30 Sep 2014 EURm	NAV/share EUR	% of NAV	Value 30 Jun 2014 EURm4	Value 31 Dec 2013 EURm4	Value change Jan–Sep 2014, %1	Value change Jul–Sep 2014, %1
Direct Investments
Melon Fashion Group	56.6	1.89	19.0	62.0	70.5	-19.7	-8.7
Starman	34.0	1.14	11.4	25.0	23.6	44.04	35.8
Vilnius Business Harbour	22.9	0.77	7.7	22.3	-	2.7	2.7
Trev-2 Group	9.8	0.33	3.3	9.8	9.8	-	-
Komercijalna Banka Skopje	7.8	0.26	2.6	7.8	6.6	17.6	-0.4
Total Direct Investments	131.1	4.38	44.1	127.0	110.5	-1.3	3.3
Fund Investments
East Capital Deep Value Fund	51.9	1.73	17.4	49.6	-	12.4	4.5
East Capital New Markets Fund	49.1	1.64	16.5	47.4	-	11.4	3.7
East Capital Russia Domestic Growth Fund	27.5	0.92	9.3	35.1	42.3	-35.0	-21.6
East Capital Baltic Property Fund II	23.9	0.80	8.0	20.9	20.7	4.0	3.1
East Capital Bering Ukraine Fund Class R	2.0	0.07	0.7	2.1	2.5	-21.8	-5.3
Funds fully divested in 20143	-	-	-	-	105.6	-1.1	-
Total Fund Investments	154.4	5.16	51.9	155.1	171.1	-1.9	-1.9
Short-term Investments
Short-term Investments5	2.0	0.07	0.7	2.3	17.9
Cash and cash equivalents	10.4	0.35	3.5	14.1	20.3
Total Short-term Investments	12.5	0.42	4.2	16.4	38.2
Total Portfolio	298.0	9.95	100.2	298.5	319.8
Other assets and liabilities net	-0.5	-0.02	-0.2	-0.7	-10.4
Net Asset Value (NAV)	297.5	9.94	100.0	297.8	309.4	0.92,4	-0.12

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

² NAV per share development. The value change takes overhead costs and fees for direct investments into account

³ As of January 1, 2014 East Capital has restructured four of its Bering funds; East Capital Bering Russia Fund, East Capital Bering Balkan Fund, East Capital Bering Central Asia Fund and East Capital Bering Ukraine Fund A. The funds have been transformed into two new funds; East Capital New Markets Fund and East Capital Deep Value Fund. Of the fair value change of -1.1% for the period Jan-Jun 2014, -0.2 % relates to transaction costs that were attributed to the funds in connection with the transfer on 1 January 2014. For more information, please refer to page 34 in the Year-end Report 2013. The remaing fair value change relating to fully divested funds refer to the final redemption in East Capital Special Opportunities Fund, which was finalised in March 2014 ⁴ As from 1 January 2014, amendments to IFRS 10 and IAS 27 regarding accounting by Investment entities have been applied. Comparables have been restated. The only notable effect from the restatement is attributable to the holding in Starman. In the earlier published reports relating to 2013, Starman was included at equity value in the consolidated accounts compared to fair value (acquisition value) in the restated figures, resulting in an adjustment of the value per 31 December 2013 of EUR -1.4m

5 Due to the ongoing liquidation of East Capital Special Opportunities Fund II, this holding is no longer separately reported but included in short-term investments as the remaining assets are limited and are expected to be divested before year-end 2014

1 EUR = 9.11 SEK on 30 September 2014. Source: Reuters

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

CEO Comment Q3 2014 - Stable NAV as a result of strong development in the Baltics and Balkan while Russia still affected by geopolitical concerns

The development in East Capital Explorer's portfolio during the quarter was characterised by on one hand the increased geopolitical concern within and around Russia, which can be seen in both the fund investments and to some extent in the direct investment in Melon Fashion Group (MFG). On the other hand, the continued recovery in the Balkans and a strong development in our Baltic holdings, including Starman as well as our real estate investments, impacted the portfolio in a positive way. At the end of the quarter, East Capital Explorer's net asset value per share amounted to EUR 9.94 (SEK 90), which means that it was unchanged compared to the previous quarter, and increased by 0.9 percent during the first nine months. Total net asset value at the end of the quarter amounted to EUR 297m (SEK 2,709m), which was after EUR 13.6m was distributed to our shareholders in June through the redemption program.

Portfolio development and portfolio activity

Over the course of this year, the portfolio has continued to shift. The portion of Russian holdings in our portfolio has decreased, due to divestments as well as weak performance, to a current level of 37 percent compared to 49 percent at the end of 2013. Instead, our focus on the Baltics is evident; the region now corresponds to 33 percent of the portfolio compared to 20 percent at the end of 2013. We have invested a total of EUR 50m, in equity terms, in the region over the past 18 months, in direct investments as well as through the East Capital Baltic Property Fund II. Starman, the Estonian cable TV company acquired in May 2013, continued to impress during the quarter with strong growth in both sales and EBITDA. The company recently successfully launched its new product TV Everywhere, enabling customers to watch a selection of channels via mobile phones, tablets and other wireless units. In line with the company's evidenced stable and strong development, surpassing forecasts, the fair value of the holding was increased by 36 percent to EUR 34m. The new fair value is based on transaction multiples for comparable companies.

The Baltic real estate sector also continues to develop well. Both our investments in the sector developed positively during the quarter; Vilnius Business Harbour, which was acquired as a direct investment in May, increased in value by 2.7 percent to EUR 23m and East Capital Baltic Property Fund II increased in value by 3.1 percent during the quarter. No revaluations of the properties were made during the period, rather, the value increases reflect their positive operating results. During the quarter the remaining portion, EUR 2.3m of our total commitment of EUR 20m was drawn down. At the end of the quarter, the fund held four properties and has since then acquired one further property. The sector continues to be attractive with declining vacancy rates, rising rent levels and competitive financing terms.

The unstable situation in Russia and Ukraine continued during the third quarter in spite of the cease-fire that the parties agreed to in September, which has only partially been respected. This, together with the slow-down seen in the Russian economy and the rouble's continued decline, resulted in the Russian market underperforming. The Russian fashion retailer MFG was impacted by the increased uncertainty in Russia and has shown a weaker development than expected during the year, primarily due to the weakening of the rouble, but also as a result of a generally lower demand among Russian consumers. Given these factors, the annual external valuation, which is usually executed during the fourth quarter, was brought forward this year. The valuation, which was based on a discounted cash flow model, resulted in a fair value impairment of 8.7 percent to EUR 57m (EUR 62m in Q2 2014). This revaluation comes on top of an adjustment of -12 percent in February as a consequence of the weakening rouble at the beginning of the year. The main contributing factor for the impairment was currency effects, on the company's operating results as well as, and foremost, on the fair value of the holding translated to EUR.

The weak development in Russia impacted, to a large degree, also the performance of East Capital Russia Domestic Growth Fund that decreased by 22 percent during the period. Companies focused on domestic consumption underperformed export oriented companies that benefited from the low rouble. The single major reason for the fund's underperformance was, however, its large position in Sistema. Sistema's share price took a dramatic dip after the company's Chairman and largest shareholder, Evtushenkov, was placed under house arrest under the allegation of embezzlement, and questions regarding the privatisation of one of its largest subsidiaries, Bashneft, emerged. The market priced in a worst case scenario, where the proprietary rights of Bashneft would go back to the state and where possibly also dividends would have to be repaid.

The values of East Capital Deep Value Fund and East Capital New Markets Fund rose by 5 and 4 percent, respectively, during the third quarter, clearly benefitting from their high exposure to well performing markets during the quarter, in particular the Balkans, and also due to the manager's successful stock selection. This implies a performance of 12 and 11 percent, respectively, for the first nine months of 2014.

Continued focus on direct investments and Baltic properties

During the last two years, East Capital Explorer has increasingly focused on direct investments and investments in the Baltic real estate sector. These investments currently account for more than fifty percent of the portfolio, a portion which we expect will continue to increase in the future. However, the pace of this increase will depend on the opportunities we can identify. Besides Baltic real estate it is primarily Private Equity, primarily in the Baltic countries that continue to be economically stable, but also selective investments in Russia, which can be of interest in this context.

To be better aligned with our clearer focus on direct investments and real estate, the investment policy of East Capital Explorer was amended in November. The previous limitation of 15 percent of the NAV in any single direct investment (at the time of the investment) was removed. The Investment Manager has also been given increased possibilities to make real estate investments using leverage, which are not included in the general leverage limit of 30 percent on NAV, as the previous limitation of 30 percent of NAV has been removed.

As communicated in October, the company does not intend to utilise the mandate to issue preference shares, which was given by the Extraordinary General Meeting in March and renewed at the Annual General Meeting in April. This decision is based on the assessment that this financing form, given current market conditions, would be unjustifiably expensive for our shareholders, and future investments will therefore be financed primarily through further divestment of the company's fund investments.

Events after the end of the quarter

The Eastern European markets were in general down, in line with the rest of the world markets, during October, which was reflected in the

fund investments in the portfolio. East Capital Russia Domestic Growth Fund declined with 6.6 percent, while East Capital New Markets and East Capital Deep Value declined with 4.0 percent and 2.0 percent respectively. East Capital Bering Ukraine Fund Class R, which only holds two unlisted investments, increased in value with 0.7 percent due to currency effects. The share of the listed Macedonian Bank KBS, however, increased during the month with 3.4 percent, but on no specific news flow. The East Capital Baltic Property Fund publishes NAV on a quarterly basis, so there was no change in value during October.

Mia Jurke CEO

Portfolio breakdown, % per 30 September 2014

Net asset value, share price and index development

(% change in EUR)	1 Jan – 30 Sep	1 Jan – 30 Sep
	2014	2013
NAV per share	0.9	-0.6
East Capital Explorer share1	-24.8	-5.8
RTS Index2	-14.9	-9.0
RTS 2 Index3	-17.1	-23.8
MSCI EM Europe4	-4.1	-5.3

¹ Adjusted for redemption programs

² 50 largest companies traded on the Russian Trading System

3 78 companies on the RTS that have limited trading volumes

4 Russian, Polish, Hungarian, Czech and Turkish equities

Investment Manager Comment Q3 2014 - Continued uncertainties in Russia balanced by strong performance in the Baltic and Balkan countries

After an upturn during the second quarter, the third quarter offered a mixed development in East Capital Explorer's portfolio. Both listed and unlisted holdings in Russia were negatively impacted by the conflict between Russia and the West regarding the situation in Ukraine. The rouble has, once again, weakened and the Russian economy has slowed down. On the other hand, the portfolio's Baltic holdings performed strongly during the quarter, as did the two largest fund investments East Capital Deep Value Fund and East Capital New Market Fund, driven by upturns in primarily the Balkan countries and by a strong development in a number of the fund's larger holdings.

Market comment

The region was characterised by major differences in performance in the third quarter. In Eastern Europe, the markets in Central Europe and the Balkans performed best with Kazakstan, Serbia, Croatia,

Poland, Rumania, Slovenia and Slovakia ending both the third quarter and the first nine months with a plus.

On the other hand, the Russian stock market has underperformed so far this year. The RTS index declined 8.0 percent (in EUR) during the quarter and has declined a total of 12.2 percent since the end of last year, weighed down by a combination of factors. The clearest reason is the conflict between Russia and the West in terms of the situation in Ukraine. Falling raw material prices is another contributing factor. The decline in the rouble has benefited the export sector, primarily oil and gas companies, while consumer-oriented companies have been hit hard by the weakened purchasing power. It should be noted that the decline which began in March took place after a long period of stock market upturn for this sector. At that time, the Russian market began to slow down due to the lingering effects of the 2008 financial crisis and the Kremlin's unsuccessful efforts to implement structural reforms.

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

On 30 September 2014
Company	Value in portfolio, EURm	% of NAV	Perf. Q3, %	Country	Sector	East Capital Explorer's investment vehicle
Melon Fashion Group	56.6	19.0	-8.7	Russia	Consumer Discretionary Direct Investment
Starman	34.0	11.4	35.8	Estonia	Telecom	Direct Investment
Vilnius Business Harbour	22.9	7.7	2.7	Lithuania	Real Estate	Direct Investment
Trev-2 Group	9.8	3.3	0.0	Estonia	Industrials	Direct Investment
Komercijalna Banka Skopje	9.6	3.2	-0.4	Macedonia	Financials	Direct Investment East Capital Deep Value Fund
Fondul Proprietatea	7.9	2.6	10.8	Romania	Financials	East Capital New Markets Fund
Gedimino 9	7.7	2.6	3.2	Lithuania	Real Estate	East Capital Baltic Property Fund II
Tanassilma Logistics	7.5	2.5	4.3	Estonia	Real Estate	East Capital Baltic Property Fund II
Sava Re	5.7	1.9	17.2	Slovenia	Financials	East Capital New Markets Fund
KCell	5.6	1.9	2.5	Kazakhstan	Telecom	East Capital New Markets Fund
Total	167.3	56.3

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

Portfolio comment

Among the non-listed direct investments, Starman continued to impress and Vilnius Business Harbour developed well. Melon Fashion Group (MFG) was, however, clearly impacted by the downturn in the Russian economy and weakening of the rouble. There was a mixed picture also amongst fund investments, which largely comprise listed holdings. The majority, but not all, Russian companies that East Capital Explorer is exposed to had a tough quarter on the stock exchange as domestically oriented companies generally underperformed compared to export companies. It is, however, important to note that many of these companies continue to show good profitability with stable dividends, currently not reflected in their share prices. Looking at the other markets, many holdings in the Balkan countries and Central Europe have performed well. These markets, primarily in the Balkans, have reflected the continued recovery of the economies.

In July, a final draw-down of EUR 2.3m was made in the East Capital Baltic Property Fund II. East Capital Explorer's invested amount totals EUR 20m, with a fair value of EUR 23.9m.

Direct investments

The share of direct investments represented 44 percent of East Capital Explorer's total net asset value at the end of September. The largest holding, Russian fashion retailer Melon Fashion Group (MFG), accounted for 19 percent of the net asset value. MFG continued to be under pressure during the third quarter. While total sales grew by 24 percent year-on-year and 12 percent quarter-on-quarter, comparable sales declined. MFG's gross margin decreased to 53 percent for the first nine months as a consequence of rising costs (affected by the continued weakening of the rouble) and higher reduction rates. The company is taking cost-savings measures to improve its profitability going forward, but it is also investing in its long-term branding. Among other things, MFG's collaboration with two of Russia's most well-known top models Irina Shayk and Natalya Vodyanova, who took part in Love Republic´s and Zarina´s respective fashion shows recently, generated good media coverage.

The leading Estonian cable tv and internet operator Starman, comprising 11 percent of net asset value at end-September, continued to exceed forecast in terms of both sales and profitability. The company is cutting edge in its industry with a competitive and strong product portfolio offering fast online speeds and user-friendly services. The company showed a year-on-year sales growth of 11 percent and EBITDA growth of 12 percent in the first nine months, with a strong EBITDA margin of 48.5 percent.

The property Vilnius Business Harbour in Lithuania, which was acquired in May and which accounted for 8 percent of net asset value at the end of the quarter, further decreased its already low vacancy level to 2.7 percent during the quarter. The large interest among potential new tenants strongly indicates that the vacancy level can be expected to decrease even further in the near future.

The Estonian construction and manufacturing company Trev-2 Group, which accounted for just over 3 percent of total net asset value at the end of the quarter, had, as expected, lower volumes compared with last year, while profitability on the other hand strengthened. For the year's first nine months, Trev-2 reported an EBITDA margin of 10.3 percent compared to 8.4 percent last year. A contributing factor to Trev-2's weaker net sales in 2014 is the lower level of EU funding to infrastructure projects, and the company expects that 2015 will also be characterised by reduced state and EU funding.

The listed Macedonian bank, Komercijalna Banka Skopje (KBS), continued to improve operating results. KBS's share price was unchanged during the quarter but it has performed well during the year; the share price is up 18 percent year to date.

Fund investments

The portfolio of fund investments accounted for 52 percent of East Capital Explorer's total portfolio as at the end of September. East Capital Deep Value Fund, which comprised 17 percent of the net asset value, rose 4.5 percent in the quarter and has gained 12.4 percent since the beginning of the year. The fund invests primarily in listed Eastern European companies with significant revaluation potential and in restructuring cases, and has gradually decreased its exposure towards Russia and increased its exposure to the Balkans. Of the Fund's ten largest holdings, only one company declined during the quarter, while one was unchanged and eight rose. The Russian steel and mining company, Evraz, saw an upturn of all of 51.4 percent after having announced plans to list its American assets and pay a dividend in the near future. Worth mentioning is also the Romanian real estate developer, Impact, that rose by 36.4 percent in the quarter, having gained 153 percent since the beginning of the year. Impact is a turn-around case where the new majority owner is expected to be able to transform the company to one of Romania's leading real estate developers in the medium term.

East Capital New Markets Fund, which accounted for 17 percent of net asset value at the end of the quarter and which invests in the European frontier markets, also continued in a positive direction during the quarter. The Fund, which holds exclusively listed holdings, rose by 3.7 percent and has increased by a total of 11.4 percent since the beginning of the year. The Slovenian holdings progressed particularly well during the quarter. The insurance company Sava Re increased by 17.2 percent after having shown good financial results while the fuel company Petrol rose by 9.7 percent on the back of acquisition speculations. The Fund's largest holding, the Romanian privatisation fund, Fondul Proprietatea, rose by 10.8 percent after an agreement with its manager was established stipulating that the discount to net asset value cannot exceed 15 percent during two out of three trading days. The discount to net asset value declined by 9 percentage points during the quarter, down to 26 percent. Fondul Proprietatea also has exit plans for its major holding in the oil company Petrom, which accounts for 35 percent of its portfolio. This could increase the possibilities of, for example, further share buybacks. On 20 October, the company informed its shareholders that it had applied for permission to execute its fourth buyback program since its AGM in April. The Kazakhstani telecom operator KCell (which similar to Sava Re and Fondul Proprietatea is included in East Capital Explorer's ten largest holdings at a see-through level) increased by 2.5 percent.

In Russia, the decline of the rouble has benefited the export sector, while consumer oriented companies have been hit harder by the weaker purchasing power among consumers. Even the food retail sector, that is usually considered stable in turbulent times, has been hit. Consequently, the East Capital Russia Domestic Growth Fund, which is focused on the domestic sector, showed a weaker than market performance with a decline of 21.6 percent in the quarter. The largest downturn was in the conglomerate, Sistema, whose share price plummeted by 71.4 percent after its largest shareholder and Chairman, Vladimir Evtushenkov, was placed in house arrest on 16 September for suspected money laundering and illegal property transactions. The market has already priced in a worst case scenario in which Bashneft, one of Sistema's largest subsidiaries, could be expropriated and historic dividends returned. In other words, there is a potential upside if this doesn't occur. Already during the summer, the Fund decreased its exposure to Sistema by slightly more than a third and we are now monitoring the situation and its development very carefully.

The Baltic real estate fund, East Capital Baltic Property Fund II, rose by 3.1 percent in the quarter, primarily due to the positive cash flows in the properties. Since inception in May 2012, the fund has gained a total of 26 percent. The Fund amounted to 8 percent of net asset value at the end of September. In August, the Fund undertook its fourth real estate investment in Rimi Eesti Foods' logistics center and headquarters in Tallinn. At the end of October the fund made an additional property investment; the office building Metro Plaza, located in the central business district of Tallinn. The total purchase price was EUR 21.8m, with a yield of 7 percent. Following these acquisitions the fund has invested in five properties with a total purchase value of EUR 95m and a total equity investment of EUR 35m.

East Capital Bering Ukraine Fund R, which represented less than one percent of the net asset value at the end of the quarter, decreased by 5.3 percent, primarily due to negative exchange rate effects. The Ukranian hryvnia has continued to depreciate and expectations are that the country's GDP will decrease by 8 percent this year.

Outlook

We believe that economic uncertainty will continue in Russia against the background of the geopolitical uncertainty. However, at the same time we view the Russian market as oversold as, at the time of writing, shares are traded at a P/E ratio which is as low as it was during the 2008 crisis. At that time there was a real crisis; companies were on the edge of bankruptcy and could not raise new financing, the Central Bank was forced to devalue the rouble by 30 percent while the economy declined by 7 percent during the year. Even though the oil price has dipped during recent months, unemployment remains at a historically low levels and the debt level in relation to the country's GDP is only 14 percent. The financial markets are, however, more worried about the general condition of the global economy, raw materials prices and political developments. We expect that the recovery in the Balkans will continue, and that the Baltic region will continue to look strong. Also, we are now entering into a six month period which, traditionally, is very good for growth markets.

For East Capital Explorer, we have continued to focus the portfolio as initiated two years ago, with a larger portion of private equity direct investments, primarily in Russia and the Baltics, and a larger exposure vis á vis the Baltic real estate sector. We have a number of interesting investment opportunities in the pipeline at the moment, and we hope to be able to realise these opportunities in the near future.

Peter Elam Håkansson Chairman, East Capital

Portfolio Investments

Income statements, balance sheet summaries and cash flow statements for East Capital Explorer's unlisted direct investments will be made available on www.eastcapitalexplorer.com shortly after publication of the Interim Report. Please note that Melon Fashion Group's statements will be available slightly later due to its internal reporting calendar.

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:	19%

• For the third quarter, total sales from continuing operations of Melon Fashion Group (MFG) reached RUB 3.1bn, corresponding to an increase of approximately 24 percent compared to the same period last year and 12 percent compared to the second quarter. MFG's operating performance continued to be under pressure of challenging external environment resulting in weaker sales. Higher sales expectations related to September's normal "back-to-school" effect were not fulfilled due to the overall downturn in discretionary spending. Falling traffic hit with different degree of severity all apparel retailers operating in Russia. As a result, an emerging positive dynamic in the second quarter comparable sales was not sustained in the third quarter with Zarina, befree and Love Republic posting -5.1, 0.6 and -1.1 percent likefor-like sales respectively

• MFG's gross margin decreased to 53 percent for the first nine months 2014 from 58 percent in 9M 2013 as a result of rising purchasing costs and higher reduction rate. Additionally, Zarina and Love Republic reduced the pricing levels to achieve better competitiveness in the longer term, which put further pressure on gross margins. Also, weak rouble negatively affected SG&A costs via rising rental expenses fixed in USD terms. Savings programs have been launched in order to mitigate the abovementioned factors

• While focusing on cost-saving measures in the short term, the company does not neglect its regular marketing and PR activities to create long-term positive brand equity. Love Republic held its first fashion show in Moscow featuring internationally acclaimed model Irina Shayk, while Zarina launched its new collaboration project with supermodel Natalya Vodyanova and her Naked Heart Foundation for children with special needs. Both fashion shows received wide media coverage

• Given changed conditions in the market the original store opening plan was reduced but not frozen – in total 70 new stores were added since January, resulting in 653 stores as of the end of the period

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:	11%

• 2014 year-to-date performance has been strong. Sales for the first nine months reached EUR 24.9m, up by 11% compared to the same period last year. This was reflected in the EBITDA, which amounted to EUR 12.1m, an increase of 12% compared to the same period in 2013. The EBITDA margin was 48.5%

• For Starman, the quarter was marked by high activity with several new product launches. In August, Starman successfully launched its TV Everywhere product which was met with considerable interest from both existing and new customers. Shortly thereafter, in September, Starman launched its 400 Mbits Internet service, which is the fastest service available for home users in the Estonian market

• Net customer intake continues to improve. Starman added net 6,176 new RGUs (revenue generating units) in the third quarter to a total of 307,100 RGUs at the end of the period, compared to 286,300 in Q3 2013

Learn more about Starman on: www.starman.ee

Vilnius Business Harbour - One of Vilnius' most modern and well located A Class office buildings

East Capital Explorer's holding in the company:	100%
% of NAV:	8%

• In the newly-acquired Vilnius Business Harbour, the vacancy rate decreased from 3.0 to 2.7 percent during the quarter. The office complex' vacancy is expected to reduce further as interest from potential tenants remains high

• To improve the quality of support services to tenants, the service agreements of the office complex have been reviewed. During the quarter, a new modern parking system was implemented, a contract with a cafeteria operator was signed and security and cleaning service providers were replaced

• Currently, Vilnius Business Harbour is participating in tenders for over 8,000 square metres of lease agreements commencing in 2015- 2016

• A technical project is initiated to start the planning of the construction of the third office tower on the adjacent land plot, which was acquired together with the existing office complex

Learn more about Vilnius Business Harbour on: www.vvu.lt

Trev-2 Group

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

East Capital Explorer's holding in the company:	40%
% of NAV:	3%

• For the first nine months of 2014, revenues amounted to EUR 51.1m compared to EUR 73.6m in the same period in 2013. The lower volumes were expected and occured as a result of falling EU infrastructure funding compared to last year

• EBITDA was EUR 5.2m (EUR 6.8m), corresponding to an EBITDA margin of 10.3% (8.4%), and the net result was EUR 2.5m (EUR 3.6m)

• Business volumes are expected to decrease slightly going forward based on indications of lower EU and state funding for road construction projects in 2015

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

Komercijalna Banka Skopje

- The largest bank in Macedonia by assets and capital

East Capital Explorer's holding in the company:	10%
% of NAV:	3%

• Komercijalna Banka Skopje (KBS) reported a net loss of EUR 3.0m for the first nine months 2014, up from a loss of EUR 4.8m over the same period last year. Core income and expense items showed improvement across the board. The bank's net interest margin increased to 3.6 percent, with net interest income increasing in absolute terms by 2.6 percent year on year, thanks largely to the bank's reductions in deposit rates over the past 18 months. Despite these reductions, deposits have grown by 5 percent year to date

• With total operating income up by just under 1 percent, and operating expenses down by 3.2 percent thanks to cost control measures, profit before taxes and provisions rose by 4.7 percent. However, as in previous periods, net provisions exceeded the profit

• Thus far, despite healthy GDP growth on paper, Macedonia still has a weak domestic economy with much of the reported growth coming from a handful of foreign companies making investments. Eventually, one would hope this new money would trickle down into the rest of the economy, but evidence of this is scarce at present

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

Fund Investments

East Capital Deep Value Fund

The East Capital Deep Value Fund provides exposure to conservative market valuations, companies with significant revenue generation and high potential for revaluation. This includes public as well as private equity holdings, small and medium sized companies with proven business models with attractive valuations and deep value holdings. No particular consideration is made to sector – return potential above market is the main guiding feature.

East Capital looks for turnaround cases in which they can take an active shareholder role in the portfolio companies. This allows East Capital to participate in board member nominations and shareholder actions that help to ensure that minority rights and proper corporate governance standards are prioritised, as well as the promotion of trade sales, repurchase of shares and/or other value realization measures. The fund's returns are less likely to be linked to general market returns as the portfolio companies are normally not part of the main indices.

At the end of the period East Capital Explorer's share of the Fund was 76 percent.

Fund performance	Q3 2014	9m 2014	Since Jan 14
East Capital Deep Value Fund, EUR	5%	12%	12%

Portfolio highlights during the quarter

• Steel and mining company Evraz continued to do well and added 51.4 percent in the quarter. The company has declared that it wants to IPO its US assets and will soon be able to pay out dividends

• Romanian real estate developer Impact continued to perform well, gaining 36.4 percent during the quarter and 153 percent year-to-date. Part of the position was sold on the back of this and it is believed that the new controlling shareholder – a Romanian real estate entrepreneur - will be able to develop the company into one of the leading in the country

• Slovenian Aerodrom (Ljubljana Airport) gained 33.6 percent in the quarter as the company was finally privatised. To lock in part of the gains, half of the position was sold before the final announcement. For the Deep Value Fund, the realised gain was 130 percent

• A new holding in the Fund, the Slovenian white goods manufacturer Gorenje, gained 39.3 percent since it was acquired early in the quarter

Portfolio breakdown, % per 30 September 2014

Sector weighting % of the fund		Asset allocation by country % of the fund
Financials	29.0	 Russia	30.8
		 Serbia	12.4
Consumer Discretionary	14.8	 Romania	8.3
Materials	12.6	 Georgia	7.7
Energy	10.3	 Kazakhstan	7.3
Industrials	7.0	 Ukraine	7.2
Utilities	6.7	 Bosnia	7.2
Consumer Staples	6.1	 Slovenia	5.1
Telecom	4.0	 Macedonia	4.0
Health Care	0.4
Other assets and liabilities	9.3	 Other assets and liabilities	9.9

Largest holdings in the Fund on 30 September 2014

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Integra	7.3	8.3	0.5	Russia	Energy
Impact	6.3	36.4	1.6	Romania	Financials
Evraz	6.2	51.4	2.2	Russia	Materials
B92	6.1	-0.7	-0.1	Serbia	Cons. Discr.
Caucasus Energy & Infrastructure	5.0	9.4	0.4	Georgia	Utilities
LSR Group	3.5	1.3	0.0	Russia	Financials
Komercijalna Banka Skopje	3.5	0.5	-0.0	Macedonia	Financials
Steppe Cement	3.1	-5.1	-0.2	Kazakhstan	Materials
Telekom Srpske	3.0	8.6	0.2	Bosnia	Telecom
Gorenje	2.9	39.3	0.9	Slovenia	Cons. Discr.
All figures in EUR

* Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
47	20	101

East Capital New Markets Fund

The East Capital New Markets Fund provides exposure to some of the fastest growing markets in Eastern Europe. The fund is a concentrated European frontier fund focusing on companies with significant growth and long term value potential. The main guiding principle is return potential above market and no particular consideration is made to sector or country. The investment region includes but is not limited to Bulgaria, Croatia, Estonia, Lithuania, Kazakhstan, Romania, Serbia, Slovenia and Ukraine.

East Capital works actively with the investments and selects companies based on valuations, revenue generation and operational performance but also on their position in the present market environment. East Capital may also take an active shareholder role to ensure good value realisation. This includes participating in board member nominations and shareholder actions that enable East Capital to ensure that minority rights and proper corporate governance standards are prioritised.

At the end of the period East Capital Explorer's share of the Fund was 70 percent.

Fund performance	Q3 2014	9m 2014	Since Jan 14
East Capital New Markets Fund, EUR	4%	11%	11%

Portfolio highlights during the quarter

• Slovenian holdings did well during the quarter. Sava Re gained 17.2 percent on the back of a massive non-organic 41 percent increase in written gross premium and an adjusted net profit increase of 11.3 percent. The fuel retailer Petrol gained 9.7 percent after acquisition on the back of a potential strategic acquisition

• Fondul Proprietatea's stock gained 10.8 percent during the quarter owing to, among other things, a new management contract stipulating that the NAV discount can be a maximum of 15 percent two out of three trading days. Consequently, the discount narrowed with 9 percent. The company is selling its stake in the oil company Petrom, which represents 35 percent of NAV. Proceeds could be used for aggressive share buybacks and/or dividends, which would contribute to further decreasing the NAV discount

East Capital Russia Domestic Growth Fund

The aim of the Fund is to exploit the potential of the 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 capitalisation 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 96 percent.

Fund performance			Since
	Q3 2014	9m 2014	Aug 12
East Capital Russia Domestic Growth Fund, EUR	-22%	-35%	-32%

Portfolio highlights during the quarter

• While export companies have benefited from the weaker rouble, Russian consumer companies have been negatively affected by the currency decline, rising inflation and higher interest rates, visible in a number of holdings, such as Aeroflot and M.Video

• The largest holding Mail.ru was also a negative contributor to the fund. Despite of strong revenue growth in Q2 and that the acquisition of the social network Vkontakte was announced, the company surprised by downgrading revenue growth guidance for the full year. The Fund's position remained unchanged based on a view that the new guidance of 14-18 percent growth is understated. The second largest holding Magnit on the other hand continued to impress with strong top line growth and results, and gained 3.9 percent

• Another unexpectedly negative contributor was Sistema, with a 71.3 percent decline during the quarter due to a court case on the privatisation of the company. The main shareholder and Chairman was charged with embezzlement. As the outlook has significantly worsened, the position in Sistema was consequently decreased during the quarter

Portfolio breakdown, % per 30 September 2014

Sector weighting % of the fund

Financials	41.2
Telecom	16.7
Energy	15.8
Consumer Staples	11.1
Consumer Discretionary	8.3
Health Care	4.3
Other assets and liabilities	2.6

Asset allocation by country % of the fund

Largest holdings in the Fund on 30 September 2014

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Fondul Proprietatea	16.0	10.8	1.5	Romania	Financials
Sava Re	11.6	17.2	1.7	Slovenia	Financials
KCell	11.5	2.5	0.2	Kazakhstan	Telecom
Kazmunaygaz	10.8	18.8	1.7	Kazakhstan	Energy
Myronivsky Hliboproduct	6.7	-14.2	-1.1	Ukraine	Cons. Staples
Petrol Slovenije	4.7	9.7	0.4	Slovenia	Cons. Discr.
Zavarovalnica Triglav	4.6	7.7	0.3	Slovenia	Financials
KRKA	4.3	-2.8	-0.2	Slovenia	Health Care
Bank Sankt-Petersburg	4.2	-23.8	-1.4	Russia	Financials
Montenegro Telekom	3.4	8.1	0.2	Montenegro	Telecom

All figures in EUR

* Contribution to the portfolio performance
10 largest holdings	Unlisted holdings
(% of fund)	(% of fund)	Total number of holdings
78	0	20

¹ MSCI FM Central and Eastern Europe + CIS Total Return Net

• The Kazmunaigaz share traded up by 18.8 percent during the quarter on speculation regarding a buy-out bid. Bank St Petersburg declined by 23.8 percent on the back of general market sentiment rather than company specific news

Portfolio breakdown, % per 30 September 2014

Sector weighting

% of the fund

Financials	19.6
Information Technology	19.1
Consumer Discretionary	14.0
Industrials	13.4
Consumer Staples	13.2
Utilities	10.7
Telecom	7.3

Other assets and liabilities 2.7

Asset allocation by country % of the fund

Russia 97.3 Other assets and liabilities 2.7

Largest holdings in the Fund on 30 September 2014

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Mail.Ru Group	13.7	-13.9	-0.5	Russia	IT
Magnit	13.2	3.9	0.2	Russia	Consumer Staples
E.ON Russia	10.7	-5.3	-0.5	Russia	Utilities
Aeroflot Russian Airlines	10.6	-25.8	-2.9	Russia	Industrials
M.Video	9.5	-25.4	-2.6	Russia	Cons. Discr.
Sberbank	7.8	-12.9	-0.2	Russia	Financials
Sistema	7.3	-71.3	-10.5	Russia	Telecom
LSR Group	5.9	1.1	0.0	Russia	Financials
Yandex	5.4	-10.8	-1.0	Russia	IT
Bank Sankt-Petersburg	4.8	-23.8	-1.2	Russia	Financials
All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
89	0	14

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 59 percent.

Fund performance	Q3 2014	9m 2014	Since May 12
East Capital Baltic Property Fund II	3%	4%	26%

Portfolio highlights during the quarter

• In mid-July, the fifth draw-down in the fund took place with EUR 7.7m drawn down, of which EUR 2.3m from East Capital Explorer. Additional commitments were received for an amount of EUR 10.9m

• At the end of August, East Capital Baltic Property Fund II made its fourth investment with the acquisition of Rimi Eesti Food's logistics centre and headquarters near Tallinn. This was a sale-leaseback transaction and Rimi Eesti Food will remain a long-term lessee of the property. The purchase price was EUR 13.4m, implying a yield of 8 percent

• After the end of the quarter, the fund acquired the Metro Plaza office building, located in the central business district of Tallinn. The purchase price was EUR 21.8m, implying a yield rate of 7 percent

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.

At the end of the period East Capital Explorer's share of the Fund was 10 percent.

Fund performance	Q3 2014	9m 2014	Since Jan 08
East Capital Bering Ukraine Fund R, EUR	-5%	-22%	-83%

Portfolio highlights during the quarter

• There have been no signs of improvement in the Ukrainian economy over the last quarter. On the contrary, the hryvnia continued to depreciate and forecasts indicate that the economy will contract by as much as 8 percent during 2014

• For the real estate company Cantik the situation is stable. All properties are still fully occupied and tenants are paying rent, albeit at temporarily discounted rates. The company still generates a solid cash flow surplus every month, and paid a USD 2m dividend in September

Short-term investments

Short-term investments

On 30 September 2014, East Capital Explorer had one investment under liquidation, East Capital Special Opportunities Fund II, the remaining value of which amounts to EUR 2.0m (EUR 17.9m on 31 December 2013) and is included in short-term investments in the portfolio report on page 3 in this report.

Portfolio breakdown, % per 30 September 2014

Sector weighting % of the fund

Asset allocation by country % of the fund

Portfolio breakdown, % per 30 September 2014

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector

Cantik	74.6	8.4	5.5	Ukraine	Financials
Chumak	20.8	-43.7	-15.2	Ukraine	Consumer Staples

All figures in EUR * Contribution to the portfolio performance

• The food producer Chumak continues to see increasing demand for its products, with solid growth in volume and market share in all main categories. However, as the company has large loans in USD, the cost of servicing debt has increased dramatically. The balance sheet has been strained, and bottom line earnings deteriorated considerably. Consequently, the value of the holding was written down by 44% in EUR terms

Cash and cash equivalents

Cash and cash equivalent amounted to EUR 10.4m (EUR 20.3m on 31 December 2013). Interest income from cash and cash equivalents during the reporting period amounted to EUR 0.0m (EUR 0.0m on 31 December 2013). The decrease in cash during the first nine months is attributable to investments undertaken in the period and distribution to shareholders in connection with the share redemption program. Cash and cash equivalents in the Balance Sheet amounted to EUR 1.5m as of 30 September, due to that it only includes cash in the Parent company.

Results

In accordance with the changes in foremost IFRS 10 and IAS 27 imposed on investment entities, East Capital Explorer AB (publ) (the Company) reports all investments at fair value and does not consolidate any of its subsidiaries starting from 1 January 2014. Comparatives for 2013 have been restated. The only notable difference is attributable to the holding in Starman, which was acquired in 2013. Please refer to page 20 for more information. After implementing the new principles, the financial reports of the Parent company correspond to the Separate Financial Statement according to IFRS.

In accordance with the Investment Policy, the investment activities of East Capital Explorer AB are managed by the operating subsidiary East Capital Explorer Investments SA which manages the investment portfolio. Transactions in the operating subsidiaries East Capital Explorer Investments SA, East Capital Explorer Investments AB and Humarito Ltd are referred to as the investment activities in this report.

Presentation currency is euro (EUR).

Results for the third quarter 2014

The net result for the third quarter was EUR -0.3m (EUR 3.9m), including value changes of shares in subsidiaries of EUR 0.0m (EUR 4.0m), corresponding to earnings per share of EUR -0.01 (EUR 0.12).

The value of the holding in Melon Fashion Group (MFG) was impaired by EUR 5.4m and the value of the holding in Starman was appreciated by EUR 9.0m. Together with the fair value adjustments in East Capital Deep Value Fund of EUR 2.3m, East Capital New Markets Fund of EUR 1.8m and East Capital Russia Domestic Growth Fund of EUR -7.5m, these were the main contributors to the change in value of shares in subsidiaries in the Income statement for the period.

The result for the period includes other expenses of EUR -0.3m (EUR -0.3m) and taxes of EUR 0.0m (EUR 0.0m), all of which refer to the Parent company.

Financial income for the period amounted to EUR 0.2m (EUR 0.4m) and is attributable to interest income from the loan to East Capital Explorer Investments SA.

Financial expenses amounted to EUR -0.0m (EUR -0.0m).

Results for the period January-September 2014

The net result for the first nine months of 2014 was EUR 2.3m (EUR -2.1m), including value changes of shares in subsidiaries of EUR 2.8m (EUR -1.9m), corresponding to earnings per share of EUR 0.07 (EUR -0.07).

In the investment activities, East Capital Explorer received a final consideration of EUR 14.1m relating to the holding in East Capital Special Opportunities Fund and EUR 17.7m from the divestment of shares in East Capital Special Opportunities Fund II. An A Class office complex in the central business district of Vilnius, Vilnius Business Harbour, was aquired for a cash consideration of EUR 22.3m. The value of the holding in Melon Fashion Group (MFG) was impaired by EUR 8.5m, or 12 percent in the first quarter, equivalent to the decline of the rouble against the euro between December 2013 and February 2014. Part of the performance fee provision, EUR 2.1m including VAT, was consequently reversed. In the third quarter the value of the holding in Melon Fashion Group (MFG) was impaired by an additional EUR 5.4m, which sums the total depreciation in 2014 to EUR 13.9m. The value of the holding in Starman was appreciated by EUR 9.0m during the third quarter. Together with the fair value adjustments in East Capital Deep Value Fund of EUR

5.7m, East Capital New Markets Fund of EUR 5.0m, East Capital Russia Domestic Growth Fund of EUR -14.8m, East Capital Special Opportunities Fund II of EUR 1.9m and the additional reversal of performance fee provisions noted below, these were the main contributors to the change in value of shares in subsidiaries in the Income statement for the period.

The result of the period includes other expenses of EUR -0.9m (EUR -0.8m) and taxes of EUR 0.0m (EUR 0.0m), all of which refer to the Parent company.

On 22 April 2014, it was announced that East Capital Explorer AB and East Capital have agreed to change a number of terms in their current fee structure. The changes mean that, inter alia, no performance fees are to paid out until the net asset value per ordinary share is above SEK 100, and that the management fees will be halved on portfolio values exceeding EUR 400m and lowered on real estate investments, at the same time as the hurdle rate is lowered (to 8 percent). As a consequence of reversed performance fee provisions, the changes had a positive effect of EUR 9.0m (including VAT) on the reported results for the second quarter of 2014. Please refer to the Company's web site for more information.

To calculate all fees related to East Capital Explorer, fees originated in funds should be added to the fees in the investment activities. 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 +6.6m (EUR -4.8m) including VAT. Of this, EUR +11.2m (EUR 0.0m) was performance fees. Due to the reversal of earlier provided performance fees noted above, the amount was positive for the period. For more details about fees, please see the latest annual report available on the Company's website.

Financial income for the period amounted to EUR 1.0m (EUR 1.3m) and is attributable to interest income from the loan to East Capital Explorer Investments SA.

Financial expenses amounted to EUR -0.0m (EUR -0.0m).

Financial Position and Cash Flow January-September 2014

The Company's equity ratio was 99.9 percent (99.9 percent). Compared to the key figures published in the annual report of 2013 of 77.2 percent, the ratio has increased as a result of the changes in accounting policies noted above. The main contribution to the increase is the fact that Starman is no longer consolidated.

The cash flow presented below only relates to transactions in the Parent Company. In the second quarter, the Parent Company received repayment of shareholder's contributions of EUR 15.6m (EUR 14.4m) from East Capital Explorer Investments AB and EUR 13.6m (EUR 14.3m) was paid out to the shareholders in connection with the redemption program that ended in June 2014 (January 2013).

Cash and cash equivalent at the end of the period amounted to EUR 1.5m (EUR 0.8m), all of which refer to the Parent Company. Interest income from cash and cash equivalent for the reporting period amounted to EUR 0.0m (EUR 0.0m).

The main cash outflow from the investment activities during the first nine months of 2014 refers to the acquisition of Vilnius Business Harbour in May 2014, amounting to EUR 22.3m.

The main cash inflow from the investment activities during the first nine months refers to the final redemption from East Capital Special Opportunities Fund of EUR 14.1m, which was received in March 2014 and the first redemption from East Capital Special Opportunities Fund II of

EUR 17.7m, received in June 2014.

At the end of the period, cash, cash equivalents and other short-term investments in the investment activities amounted to EUR 12.5m (EUR 38.2m). Please refer to the breakdown of values in subsidiaries on pages 21-23 for more details regarding the investment activities.

Commitments and draw-downs

East Capital Explorer had committed to invest EUR 20m in total in the East Capital Baltic Property Fund II. A total of EUR 17m was drawn down by the Fund in 2012 and EUR 0.7m in 2013. The final draw-down of EUR 2.3m was made in July 2014.

Parent Company

Following amendments to IFRS 10 and IAS 27 regarding accounting by Investment entities, as noted above, the result of the Parent company corresponds to the result prepared according to IFRS. Please refer to comments on the result, financial position and cash flow above.

Business Environment and Market

In the third quarter the sentiment towards East Capital Explorer's biggest investment market Russia deteriorated further against the background of the escalating conflict between Russia and Ukraine. The increased geopolitical unrest in Russia has led to a weakening currency, lower investments, higher inflation and a slower economic growth. The company's other major markets, the Baltics and the Balkans, had a more positive development. The economic growth rates of the Baltic countries are among the eurozone's highest, while the Balkan countries continue to recover from low levels. In other words, the economic development in East Capital Explorer's investment region is altogether uneven and remains subject to significant uncertainties. These uncertainties may lead to continued volatility in the region's financial equity and currency markets. East Capital Explorer's holdings, both listed and unlisted, may therefore be associated with increased risk, which may also impact the possibilities for divestments, while on the other hand creating opportunities for new investments.

There are significant differences between the countries in our region in terms of economic development. In Russia, the economic uncertainty has increased after Russia's annexation of Crimea in March and the subsequent geopolitical unrest, as well as the sanctions imposed by the EU and the US during the summer. The intensified geopolitical turmoil in Russia is expected to lead to a slowdown in the economy in 2014, with growth predicted to stay much below potential in 2014, and the Russian rouble is expected to stabilise at lower levels. The rest of Eastern Europe is predicted to experience an overall moderate macroeconomic recovery during in 2014.

Other information

Risks and uncertainties

The dominant risk in East Capital Explorer's operations is commercial risk in the form of exposure to specific sectors, geographic regions or individual holdings and financial risk in the form of market risk, equity price risk, foreign exchange risk and interest rate risk. A more detailed description of East Capital Explorer's and the Group's material risks and uncertainties is provided in the Company's Annual Report 2013 on pages 47-48. An assessment for the coming months is provided in the Business Environment and Market section above.

The fund investments and direct investments in the Investment activities are also exposed to commercial risks, financial risks, and market risks. In addition, through the business activities of their holdings, i.e. their offerings of products and services, within the respective sectors, the funds and direct investments are also exposed to legal/regulatory risk and political risk, for example political decisions on public sector expenditures and industry regulations.

Related party transactions January-September 2014

There have been no related party transactions during the first nine months, other than fee payments according to the agreements in place. East Capital Explorer Investments SA has a related party relationship with its subsidiaries, with companies in the East Capital Group, as well as with management and employees.

East Capital Explorer AB, East Capital Explorer Investments SA and 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 Agreement. The parent company East Capital Explorer AB has an Investment Agreement with the Investment Manager and East Capital Explorer Investments SA. In connection with the transfer of the holdings to Luxembourg in August 2014 (for further information, please see the section "Organisational and investment structure"), the Investment Agreement was transferred from East Capital Explorer Investments AB to East Capital Explorer Investments SA on identical terms. During the first nine months of 2014, the fees to the Investment Manager were positive, EUR +6.6m (EUR -4.8m), due to reversed performance fees relating to earlier years (see above "result for the period January-September 2014").

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 first nine months, the Group purchased services for EUR 0.1m (EUR 0.1m), all through the Parent Company.

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

The CEO of East Capital Explorer AB is a Board member of East Capital Explorer Investments SA and a member of the Investment Committee of East Capital Explorer Investments SA (the AIFM).

Organisational and investment structure

East Capital Explorer is a Swedish investment company listed on NASDAQ OMX Stockholm. East Capital Explorer's business concept is to maximise risk-adjusted shareholder return by offering shareholders a liquid exposure to a unique investment portfolio of unlisted and listed companies in Eastern Europe. Value is added through active ownership made possible by the investment manager East Capital's local presence, extensive network and long experience in the Eastern European markets.

East Capital Explorer's strategy is to invest in sectors and companies that have the most to gain from the long-term trends in its investment universe. Strong domestic demand is a key driver for growth in Eastern Europe and this is the main investment theme. East Capital Explorer targets fast growing sectors such as retail, consumer goods, financials and real estate. The investment portfolio is actively managed to optimize the long-term value. All investments are considered carefully from a risk-reward perspective. Risks are managed on the basis of a number of methods and tools, among others, through emphasis on corporate governance, including material and relevant environmental and social factors. Active ownership also involves board representation and close relations with the companies in which East Capital Explorer invests.

As previously notified, it was at the beginning of the year assessed that East Capital Explorer AB's investment subsidiary East Capital Explorer Investments AB would be subject to EU's new regulatory framework for managers of alternative investment funds (AIFMD). In order to manage the new regulatory requirements in a cost-efficient manner, the portfolio management operations were transferred from Sweden to Luxembourg, where East Capital has an existing organization adapted

to meet the requirements of the AIFMD rules. To facilitate this reorganization, a new Luxembourg based subsidiary, East Capital Explorer Investments SA, was set up during 2014 and the operations previously managed under East Capital Explorer Investments AB were consequently transferred to the new subsidiary in August 2014. Other than certain additional fees to CSSF (the Luxembourg Financial Supervisory Authority) and charges related to the safe keeping and supervision of assets by a designated depositary (Citibank International plc) required under the AIFMD rules, the cost level for the management of the portfolio has not increased.

For further information about the organizational and investment structure of the Company, please see the Corporate Governance Report for 2013, included in the Annual Report and on the Company's web site www.eastcapitalexplorer.com under the section, 'Corporate Governance'.

Redemption program and preference shares

At the Annual General Meeting on 22 April 2014, it was resolved that East Capital Explorer would offer its shareholders to redeem 5 percent of the Company's outstanding shares at a price of SEK 83 (corresponding to EUR 9.38) for each redeemed share. The redemption price was equivalent to the Company's net asset value per share on 28 February 2014. A total of 1,481,049 ordinary shares were tendered for redemption during the period 6 May to 4 June 2014, corresponding to an acceptance level of approximately 94 percent. Consequently, a total of SEK 122,927,067, EUR 13.6m, was paid out in June 2014 to the shareholders participating in the redemption program.

At the end of June 2014, East Capital Explorer cancelled the shares redeemed through the redemption program. The Company does not hold any own shares following the cancellation. The total number of shares in East Capital Explorer as of 30 September 2014 amounted to 29,943,260. The average number of shares outstanding for the reporting period was 31,845,712, adjusted for the redemption program.

The Board has committed to propose a similar redemption program to the Annual General Meeting (AGM) in 2015 if the discount to net asset value exceeds 10 percent of the six months average net asset value preceding the approval of the notice to the AGM.

At the Extraordinary General Meeting on 24 March, it was decided to introduce a new class of shares, preference shares, and to authorise the Board to issue such preference shares in order to take advantage of attractive investment opportunities with strong cash flow and good growth. The AGM on 22 April resolved to renew this authorization. In October, East Capital Explorer decided not to exercise the mandate to issue preference shares. For further information see events after the end of the quarter.

Dividend

The redemption program has replaced the Company's dividend policy and, therefore, no dividend will be paid out on the ordinary shares in 2014.

Events occurring after the end of the quarter

East Capital Explorer has decided not to exercise the mandate to issue preference shares, which was obtained at the Company's Extraordinary General Meeting on 24 March and renewed at the Annual General Meeting on 22 April. The mandate is valid until the next AGM. The decision is based on the fact that the cost of funding through preference shares would be unjustifiably high given the present market conditions, whereas new investments may currently be financed through continued divestment of parts of the company's fund holdings.

In October, East Capital Deep Value Fund lost 2.0 percent, East Capital New Markets Fund lost 4.0 percent, East Capital Russia Domestic Growth Fund R lost 6.6 percent while East Capital Bering Ukraine Fund Class R rose by 0.7 percent. East Capital Baltic Property Fund II only publishes NAV on quarterly basis.

The Board of Directors and CEO give their assurance that the ninemonth 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, 7 November 2014

Mia Jurke Chief Executive Officer

Contact information

Mia Jurke, CEO, +46 8 505 885 32 Lena Krauss, CFO and Head of Investor Relations, +46 8 505 885 94

East Capital Explorer AB

Kungsgatan 33, Box 7214 SE-103 88 Stockholm, Sweden Tel: +46 8 505 977 00 www.eastcapitalexplorer.com

Financial calendar

• Year-end Report 1 January – 31 December 2014 on 12 February 2015

Subscribe to financial reports and press releases directly to your email 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 08:00 a.m. CET on 7 November 2014.

Review Report

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

Introduction

We have reviewed the summary interim financial information (interim report) of East Capital Explorer AB (publ) as of 30 September 2014 and the nine-month period then ended except for the portfolio reporting on pages 5-11. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of the Review

We conducted our review in accordance with the Standard on review engagements (ISRE) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, 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, 7 November 2014 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.

As East Capital Explorer AB, in accordance with IFRS, is classified as an investment entity, consolidated accounts are no longer produced, but instead separate financial statements in accordance with IFRS are presented below. Furthermore, as before, the separate financial statements of the Parent company are produced in accordance with RFR 2. As there are currently no differences between the requirements in accordance with RFR 2 and the reports according to IFRS - both sets of accounts are presented in one common set of financial statements below.

Income Statement

EUR thousands			Restated1		Restated1
		2014	2013	2014	2013
	Note	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
Changes in value of subsidiaries	2	2 831	-1,930	1	4,032
Staff expenses		-583	-810	-179	-227
Other operating expenses		-868	-762	-290	-327
Operating profit/loss		1 379	-3,502	-468	3,478
Financial income		961	1,331	210	387
Financial expenses		-5	-	-	-
Profit/loss before tax		2 335	-2,171	-258	3,864
Tax		-	51	-	36
NET PROFIT/LOSS FOR THE PERIOD2		2 335	-2,121	-258	3,901
Earnings per share, EUR - Shareholders of the Parent Company		0.07	-0.07	-0.01	0.12

No dilutive effects during the period

¹ As of 1 January 2014, amendments to IFRS 10 and IAS 27 regarding investment entities have been applied. Comparable figures have been restated as if the principles had also been applied in 2013. Further information can be found on page 18 "Accounting principles" and in note 6, "Restatement of Financial Statements in respect of the application of IFRS 10, investment entities". The only notable effect from the restatement is attributable to the holding in Starman. In the earlier published reports relating to 2013, Starman was included at equity value in the consolidated accounts compared to fair value (acquisition value) in the restated figures, resulting in an adjustment of the value per 31 December 2013 of EUR -1.4m

² There is no other comprehensive income relating to the Parent company. Net Profit/Loss for the period corresponds to Total Comprehensive income

Balance Sheet

EUR thousands		Restated1	Restated1
	30 Sep	31 Dec	30 Sep
	2014	2013	2013
Assets
Shares in subsidiaries	296,224	279,678	253,874
Deferred tax assets	-	-	391
Total non-current assets	296,224	279,678	254,265
Loans group companies	-	29,315	29,315
Other short-term receivables	100	1	1
Accrued income and prepaid expenses	8	21	8
Cash and cash equivalent	1,452	776	888
Total current assets	1,561	30,113	30,212
Total assets	297,785	309,791	284,477
Equity
Share capital2	3,650	3,640	3,640
Other contributed capital/Share premium reserve3	334,564	348,183	348,183
Retained earnings including other reserves3	-43,055	-65,579	-65,579
Net profit/loss for the period3	2,335	23,143	-2,121
Total equity	297,495	309,387	284,123
Current liabilities
Other liabilities	97	108	155
Accrued expenses and prepaid income	193	296	199

Total current liabilities 290 404 354 Total equity and liabilities 297,785 309,791 284,477

1 As of 1 January 2014, amendments to IFRS 10 and IAS 27 regarding investment entities have been applied. Comparable figures have been restated as if the principles had also been applied in 2013. Further information can be found on page 18 "Accounting principles" and in note 6, "Restatement of Financial Statements in respect of the application of IFRS 10, investment entities". The only notable effect from the restatement is attributable to the holding in Starman. In the earlier published reports relating to 2013, Starman was included at equity value in the consolidated accounts compared to fair value (acquisition value) in the restated figures, resulting in an adjustment of the value per 31 December 2013 of EUR -1.4m 2 Restricted capital

Unrestricted capital

As East Capital Explorer AB, in accordance with IFRS, is classified as an investment entity, consolidated accounts are no longer produced, but instead separate financial statements in accordance with IFRS are presented below. Furthermore, as before, the separate financial statements of the Parent company are produced in accordance with RFR 2. As there are currently no differences in the requirements in accordance with RFR 2 and the reports according to IFRS - both sets of accounts are presented in one common set of financial statements below.

Statement of Changes in Equity

EUR thousands
2014	Share capital	Other contributed capital/Share premium reserve	Other Reserves	Retained earnings incl. profit/loss for the year	Total equity shareholders in Parent Company	Non-controlling interest	Total equity
Opening equity 1 January 2014	3,640	348,183	-	-42,436	309,387	-	309,387
Net profit/loss for the period	-	-	-	2,335	2,335	-	2,335
Total comprehensive income	-	-	-	2,335	2,335	-	2,335
Bonus issue	10	-10	-	-	-	-	-
Redemption program	-	-13,609	-144	-	-13,753	-	-13,753
Other reserves	-	-	-475	-	-475	-	-475
Closing equity 30 September 2014	3,650	334,564	-619	-40,101	297,495	-	297,495

EUR thousands Restated1 2013	Share capital	Other contributed capital/Share premium reserve	Other Reserves	Retained earnings incl. profit/loss for the year	Total equity shareholders in Parent Company	Non-controlling interest	Total equity
Closing equity 31 December 2012	3,631	362,458	77	-65,653	300,513	8	300,521
Effect of changes in accounting principles	-	3	-77	74	-	-8	-8
Opening equity 1 January 2013	3,631	362,461	-	-65,579	300,513	-	300,513
Net profit/loss for the period	-	-	-	-2,121	-2,121	-	-2,121
Total comprehensive income	-	-	-	-2,121	-2,121	-	-2,121
Bonus issue	9	-9	-	-	-	-	-
Redemption program	-	-14,269	-	-	-14,269	-	-14,269
Closing equity 30 September 2013	3,640	348,183	-	-67,700	284,123	-	284,123

Statement of Cash Flow

EUR thousands		Restated1		Restated1
	1 Jan – 30 Sep	1 Jan – 30 Sep	1 Jul – 30 Sep	1 Jul – 30 Sep
	2014	2013	2014	2013
Operating activities
Operating profit/loss	1,379	-3,502	-468	3,478
Changes in value of subsidiaries	-2,831	1,930	-1	-4,032
Interest received	961	1,281	210	398
Tax paid	-	-30	-	-
Cash flow from current operations before changes in working capital	-490	-321	-259	-156
Cash flow from changes in working capital
Increase (-)/decrease (+) in other current receivables	14	29	9	-
Increase (+)/decrease (-) in other current payables	-589	-146	136	22
Cash flow from operating activities	-1,066	-438	-115	-135
Investing activities
Repayment of shareholder contributions	15,600	14,400	-	-
Loan to subsidiary	-100	-	-100	-
Cash flow from investing activities	15,500	14,400	-100	-
Financing activities
Redemption program	-13,7532	-14,269	-144	-
Cash flow from financing activities	-13,753	-14,269	-144	-
Cash flow for the period	682	-307	-359	-135
Cash and cash equivalent at the beginning of the period	776	1,131	1,811	1,029
Exchange rate differences in cash and cash equivalents	-5	63	-	-6
Cash and cash equivalent at the end of the period	1,452	888	1,452	888

¹ As of 1 January 2014, amendments to IFRS 10 and IAS 27 regarding investment entities have been applied. Comparable figures have been restated as if the principles had also been applied in 2013. Further information can be found on page 18 "Accounting principles" and in note 6, "Restatement of Financial Statements in respect of the application of IFRS 10, investment entities". The only notable effect from the restatement is attributable to the holding in Starman. In the earlier published reports relating to 2013, Starman was included at equity value in the consolidated accounts compared to fair value (acquisition value) in the restated figures, resulting in an adjustment of the value per 31 December 2013 of EUR -1.4m

2 Includes an fx gain of EUR 0.3m relating to the redemption program

Note 1 Accounting Principles

This interim report has been prepared in accordance with IFRSs and IAS 34 Interim Financial Reporting and applicable provisions in the Swedish Annual Accounts Act (Årsredovisningslagen). The interim report for the Parent Company has been prepared in accordance with RFR 2 and The Swedish Annual Accounts Act Chapter 9, Interim report. The parts of IFRSs and RFR 2 that are currently relevant for East Capital Explorer AB lead to the same accounting. The two sets of separate financial statements are therefore presented together above as a common single set of accounts.

New and changed accounting policies in 2014

Changes in accounting policies are due to new or amended IFRS. The following accounting policies are applied by the Group as of 1 January 2014:

In accordance with the changes of IFRS 10 "Consolidated Financial Statements" and IAS 27 "Separate Financial Statements", imposed on investment entities, as from 1 January 2014, the Company reports all investments at fair value and does not consolidate any of its subsidiaries. Comparatives for 2013 have been recalculated. The effect of the changes in the accounting principles are presented in the Statement of Changes in Equity on page 17 and in Note 6, "Restatement of Financial Statements in respect of the application of IFRS 10, investment entities" on pages 24-26.

In connection with the implementation of IFRS 10, investment entities, the financial statements have been renamed from Statement of profit and loss and other comprehensive income to Income Statement, and from Statement of financial position to Balance sheet.

A number of other new standards, amendments to standards and interpretations of standards are effective for periods beginning after this report has been published. These are assessed not to have any material impact on the reports of East Capital Explorer.

As of 1 January 2014, the Parent Company applies the fair value option in Swedish Annual Accounts Act, chapter 4, paragraph 14 (b) for accounting of financial instruments, whereas interest in subsidiaries is measured at fair value through profit and loss instead of at historical cost less impairment. There were no material effect on recognised amounts from the change. In connection with the amended principles the format of the income statement has changed, so that the change in the value of shares in subsidiaries is included in the Company's operating results.

Any future performance fees to the Investment Manager East Capital pertaining to direct investments will not be accounted for as a provision on the balance sheet nor as a contingent liability until a direct investment has been realised, and a number of other conditions are met (see page 12). As all decisions to realise direct investments are taken by East Capital Explorer's Board of Directors, and the payment of any accrued performance fees therefore are within the Company's control, it is the Company's interpretation of IAS 32 and IAS 37 that no obligation arises until such a decision is taken.

Investment entities

From of 1 January 2014, East Capital Explorer applies the investment entity consolidation exception in IFRS 10, which implies that all holdings are recognised at fair value through profit or loss and that subsidiaries are no longer consolidated. In assessing East Capital Explorer AB, it has been concluded that the Company, even though it has only one investment (East Capital Explorer Investments SA), falls within the classification of an investment entity, as the subsidiary is set up to facilitate the portfolio in the investment activities of the Group, where investment in several holdings take place through a subsidiary below East Capital Explorer Investments SA (Humarito Ltd) (the fund investments, direct investments and short term investments in the East Capital Explorer's portfolio). East Capital Explorer AB has according to its listing agreement and investment agreement undertaken to provide East Capital Explorer Investments SA and downwards in the structure with financing for its investments, from bringing several investors (the shareholders) together for the single purpose of making investments through Humarito Ltd. East Capital Explorer AB's investment strategy is to acquire attractive assets and sell them in the foreseeable future at a profit. The investment agreement between East Capital Explorer AB and East Capital includes an agreement on the payment of performance fees. This applies both in the context of fund investments and direct investments. The incentive is designed so that East Capital essentially gets paid only if the profits are realised, which strengthens the manager's focus on the realisation of assets, i.e. to plan for and execute an exit. Also, East Capital Explorer AB's strategy in optimising the long-term return for the shareholders is to actively manage the portfolio of investments. The capital invested in the portfolio is of a long-term nature and enables making investments over a full economic cycle. However, implicit in the active management is the strategy to exit direct investments through trade sales or IPOs and to exit fund investments either through the closure of the funds or through sales.

Note 2 Segment Reporting

East Capital Explorer AB classifies the Company's various segments based on the nature of the investments. Segment results and assets include items directly attributable to the segment, which can be allocated in a reasonable and dependable manner. Management monitors the holdings on the basis of fair value, and all holdings are reported at fair value through profit or loss in accordance with IAS 39. As the value of the holding in East Capital Explorer Investments SA, where the investment activities are managed, is directly dependable of the investment portfolio, the value change of holdings held by the subsidiary has been allocated to value changes, dividends received and other operating expenses that are directly attributable to the underlying fund investments, direct investment or short-term investments. All other revenues and expenses are classified as unallocated in the table below.

EUR thousands		Direct	Short-term
1 Jan – 30 Sep 2014	Fund investments	investments	investments	Unallocated	Total
Changes in value of portfolio	-4,897	-1,703	1,884	-	-4,716
Received dividends	-	-	-	-	-
Other operating expenses	-	8,888	-	-1,341	7,547
Changes in value of subsidiaries	-4,897	7,185	1,884	-1,341	2,831
Staff expenses	-	-	-	-583	-583
Other operating expenses	-	-	-	-868	-868
Operating profit/loss	-4,897	7,185	1,884	-2,792	1,380
Financial income	-	-	-	961	961
Financial expense	-	-	-	-5	-5
Profit/loss before tax	-4,897	7,185	1,884	-1,836	2,335
Assets	154,400	131,145	12,450	-210	297,785
EUR thousands, Restated1		Direct	Short-term
1 Jan – 30 Sep 2013	Fund investments	investments	investments	Unallocated	Total
Changes in value of portfolio	1,383	-2,011	-540	-2	-1,170
Received dividends	-	2,704	-	-	2,704
Other operating expenses	-	-1,301	-	-2,163	-3,464
Changes of value of subsidiaries	1,383	-608	-540	-2,165	-1,930
Staff expenses	-	-	-	-810	-810
Other operating expenses	-	-	-	-762	-762
Operating profit/loss	1,383	-608	-540	-3,737	-3,502
Financial income	-	-	-	1,331	1,331
Financial expense	-	-	-	-1	-1
Profit/loss before tax	1,383	-608	-540	-2,407	-2,172

1 As of 1 January 2014, amendments to IFRS 10 and IAS 27 regarding investment entities have been applied. Comparable figures have been restated as if the principles had also been applied in 2013. Further information can be found on page 18 "Accounting principles" and in note 6, "Restatement of Financial Statements in respect of the application of IFRS 10, investment entities". The only notable effect from the restatement is attributable to the holding in Starman. In the earlier published reports relating to 2013, Starman was included at equity value in the consolidated accounts compared to fair value (acquisition value) in the restated figures, resulting in an adjustment of the value per 31 December 2013 of EUR -1.4m

Note 3 Entities with ownership interests over 50 percent

The following entities, in which the ownership interest is over 50%, are not consolidated. Entities indicated with "Investment entity" are subsidiaries that are not consolidated due to the consolidation exception for investment entities. Entities indicated with "Lack of control" are not consolidated since the lack of control means that they are not subsidiaries. The total impact of the restatement relating to investment entities is presented on page 25-27 in this report.

Non consolidated entities 30 September 2014		Country	Number of shares	Book value, EUR Thousands	Ownership capital
East Capital Explorer Investments SA	Investment entity	Bertrange, Luxembourg	4,000	296,224	100%
East Capital Explorer Investments AB	Investment entity	Stockholm, Sweden	11,000	63,278	100%
Baltic Cable Holding OÜ	Investment entity	Tallinn, Estonia	2,501	-	100%
Starman AS	Investment entity	Tallinn, Estonia	6,657	34,001	51%
Humarito Limited	Investment entity	Nicosia, Cyprus	2,000	228,342	100%
UAB Portarera1	Investment entity	Vilnius, Lithuania	300	22,922	100%
UAB Solverta1	Investment entity	Vilnius, Lithuania	100	-	100%
UAB Verslina1	Investment entity	Vilnius, Lithuania	100	-	100%
East Capital Deep Value Fund	Lack of control	Emerging Europe	63,503	51,879	76%
East Capital New Markets Fund	Lack of control	Eastern Europe	60,718	49,131	70%
East Capital Russia Domestic Growth Fund	Lack of control	Russia	40,000	27,518	96%
East Capital Baltic Property Fund II2	Lack of control	Baltic	189,758	23,909	59%
East Capital Special Opportunities Fund II	Lack of control	Eastern Europe	378,591	2,040	59%

1 The operations in UAB Portarera, UAB Solverta and UAB Verslina, acquired in 2014, have been aggregated as they are consolidated as Vilnius Business Harbour 2 East Capital Explorer has committed to invest EUR 20m in total in East Capital Baltic Property Fund II. A total of EUR 17m was drawn down by the Fund during 2012 and EUR 0.7m in 2013. The final

drawdown of EUR 2.3m was made in July 2014

As an effect of the restatement noted above, presented in full on pages 25-27 in this report, the above-mentioned subsidiaries are no longer consolidated. The holdings are instead valued at fair value through profit or loss. The table below specifies the impact from each subsidiary (held on 31 December 2013) on the Balance sheet compared to the Statement of Financial position as presented in the annual report of 2013. The figures relate to 31 December 2013.

EUR thousands
	ECEI AB	Starman	Humarito	Total
Assets
Property, plant and equipment	-	-27,710	-	-27,710
Goodwill	-	-56,986	-	-56,986
Other intangible assets	-	-16,227	-	-16,227
Shares and participations in investing activities/shares in subsidiaries	-19,822	23,609	72	3,860
Total non-current assets	-19,822	-77,314	72	-97,063
Total current assets	8,588	-4,833	-80	3,675
Total assets	-11,234	-82,147	-8	-93,388
Equity and Liabilities
Equity attributable to shareholders of the Parent Company	-	-1,428	-	-1,428
Non-controlling interest	-8	-407	-	-415
Total Equity	-8	-1,835	-	-1,843
Total long-term liabilities	-	-68,911	-	-68,911
Total current liabilities	-11,227	-11,401	-8	-22,635
Total equity and liabilities	-11,234	-82,147	-8	-93,388

Note 4 Financial Instruments

Comparative figures for 2013 have been restated in accordance with IFRS 10 and IAS 27, investment entities. The main effect of the application of the consolidation exception relating to investment entities is that only one set of financial statements is presented above, whereas the accounts prepared according to IFRS agree with the accounting principles applied by the Parent company. For a better understanding of the business, the information regarding financial instruments below have been presented on a see-through basis as the fair value of the holding in the subsidiary East Capital Explorer Investments SA is a result of the fair value of the holdings in the investment activities within East Capital Explorer Investments AB and Humarito Ltd. Shares and participations in the investment activities as well as the parent company's holdings in subsidiaries are all valued at fair value.

Financial instruments not measured at fair value through profit and loss

For accounts receivable and accounts payable, the carrying amount is assessed to reflect fair value since the remaining maturity is generally short. This is also the case for cash and bank. East Capital Explorer AB measures its loan to group companies at amortised cost according to the effective interest method. The value has been assessed to correspond to fair value on the balance sheet date.

Calculation of fair value

The following summarises the main methods and assumptions applied in determining the fair value of the financial instruments in the balance sheet. Please refer to the Annual Report for 2013 for more details on valuation policies used by East Capital Explorer AB.

Fair value hierarchy

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

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

Shares in subsidiaries/financial instruments

In the Parent company, financial instruments consist of shares in subsidiaries of EUR 296.2m and cash and cash equivalent of EUR 1.5m. The carrying amount of these assets corresponds to the fair value on the balance sheet date.

	Country Book value, EURt			Share of capital, %
Shares in subsidiaries including loans to group companies		30 Sep 2014	31 Dec 2013	30 Sep 2014	31 Dec 2013
East Capital Explorer Investments SA	Bertrange, Luxembourg	296,224	-	100	-
East Capital Explorer Investments AB1	Stockholm, Sweden	-	308,993	-	100

1 Including loans to group companies

East Capital Explorer AB owns 100% of the Class A shares, and 4.0% (4.3%) of the votes, in East Capital Explorer Investments SA and is entitled to all profits, assets and liabilities attributable to that company. East Capital Explorer Investments SA is in turn classified as an investment entity whose total holdings, including its subsidiaries, are measured at fair value through profit and loss. Comparative figures for prior period are related to East Capital Explorer Investments AB.

As the holdings in East Capital Explorer Investments SA and in its investing subsidiary Humarito Ltd are presented on a see through basis, the tables below reflect the fair value hierarchy in the investment activities.

The value of the shares in East Capital Explorer Investments SA is directly and indirectly made up by the following assets:

EUR thousands
30 September 2014
Breakdown of values in subsidiaries,	Fund	Direct	Short term		Other assets and
including loans to subsidiaries	Investments	Investments	Investments	Cash and bank	liabilities, net	Total
Opening balance 1 January 2014	188,892	110,535	112	19,471	-10,016	308,993
Reclassifications	-17,820	-	17,820	-	-	-
Purchase/additions	2,330	22,314	-	-24,643	-	-
Divestments/Reductions	-14,103	-	-17,775	31,879	-	-
Other	-	-	-	-2,149	9,697	7,547
Repaid shareholders contributions	-	-	-	-15,600	-	-15,600
Changes in fair value recognised in net profit/loss	-4,897	-1,703	1,884	-	-	-4,717
Closing balance 30 September 2014	154,400	131,145	2,041	8,957	-319	296,224

EUR thousands 30 September 2013

Breakdown of values in subsidiaries, including loans to subsidiaries Opening balance 1 January 2013	Fund Investments 196,046	Direct Investments 61,586	Short term Investments 1	Cash and bank 45,224	Other assets and liabilities, net -3,338	Total 299,519
Reclassifications	-24,493	-1,289	25,782	-	-	-
Purchase/additions	25,740	23,609	-	-49,349	-	-
Divestments/reductions	-7,381	-	-22,139	29,520	-	-
Other	22	-	-	-859	77	-760
Repaid shareholders contributions	-	-	-	-14,400	-	-14,400
Changes in fair value recognised net in profit/loss	1,383	-2,011	-542	-	-	-1,169
Closing balance 30 September 2013	191,317	81,895	3,103	10,136	-3,261	283,189

Fund investments consist of funds managed by East Capital, a specialist in emerging and frontier markets, basing its investment strategy on thorough knowledge of the markets, fundamental analyses and frequent company visits by its investment teams. Holdings in the funds are valued at fair value according to the valuation principles described above.

Direct investments consist of the holdings in Melon Fashion Group, Starman, Vilnius Business Harbour, Trev-2 Group and Komercijalna Banka Skopje. All of these holdings, but Komercijalna Banka Skopje, which is publicly traded, are valued by external appraisers at least once a year, normally at year-end. The fair value of the holdings is assessed on a quarterly basis.

The fair values of East Capital Explorer's unlisted Direct Investments are estimated using the income approach (Discounted Cash Flow model) and market approach given that there is available information about comparable companies and transactions. The income approach valuations are based on long term growth rates in a range of 2.0-3.8%, and weighted average cost of capital (WACC) in the range of 10-17%.

Short-term investments consist of holdings which are expected to be divested within a year. At the beginning of the year, the holding in East European Debt Finance was classified as short-term investments. As from the first quarter 2014, East Capital Special Opportunitites Fund II has been reclassified as short-term investment due to the ongoing liquidation fo the fund, which is expected to be finalised in 2014.

The East Capital Explorer portfolio is presented on page 3 in this report, including information on fair value changes during the period. More information on the portfolio holdings can be found on page 5 to 11 in this report.

The following table analyses, within the fair value hierarchy, the investments in the investment activities measured at fair value:
EUR thousands
30 September 2014
Shares and participations in investment activities at fair value through profit or loss1	Level 1	Level 2	Level 3	Total balance
- Fund Investments	128,528	-	25,871	154,400
- Direct Investments	7,773	-	123,372	131,145
- Short-term Investments2	2,040	-	1	2,041
Total assets measured at fair value	138,341	-	149,244	287,586
EUR thousands
30 September 2013
Shares and participations in investment activities at fair value through profit or loss1	Level 1	Level 2	Level 3	Total balance
- Fund Investments	167,306	-	24,013	191,319
- Direct Investments	6,686	-	75,209	81,895
- Short-term Investments3	970	-	2,131	3,101
Total assets measured at fair value	174,962	-	101,355	276,315
EUR thousands
31 December 2013
Shares and participations in investment activities at fair value through profit or loss1	Level 1	Level 2	Level 3	Total balance
- Fund Investments	165,713	-	23,179	188,891
- Direct Investments	6,609	-	103,926	110,535
- Short-term Investments3	0	-	112	112

Total assets measured at fair value 172,323 - 127,217 299,539

¹ The following investments in the investment activities are classified in Level 1: East Capital Russia Domestic Growth Fund, East Capital New Markets Fund, East Capital Deep Value Fund and Komercijalna Banka Skopje. The following investments are classified in Level 3; East Capital Baltic Property Fund II, East Capital Bering Ukraine Fund Class R, Melon Fashion Group, Starman and Trev-2 Group in both 2014 and 2013. As from 30 June 2014, Vilnius Business Harbour is also included in Level 3

² Due to the ongoing liquidation of East Capital Special Opportunities Fund II, this holding is no longer separately reported, but included in short-term investments as the remaining assets are limited

Due to the then ongoing liquidation of East European Debt Finance and East Capital Power Utilities Fund, these holdings were included in short-term investments in Q3 2013

Investments with values based on quoted market prices in active markets are classified within Level 1, including publicly listed companies in Equity fund investments and direct investments.

Financial investments traded in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources 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 unquoted investments. As observable prices are not available for these holdings, valuation techniques are used to derive fair value. Level 3 instruments also include investments in East Capital funds, to the extent they primarily hold unlisted investments.

EUR thousands
30 September 2014
Changes in financial assets and liabilities in Level 3	Fund Investments	Direct Investments	Short term Investments	Total
Closing balance 2013	23,179	80,317	112	103,608
Effects of changes in accounting principles	-	23,609	-	23,609
Opening balance 2014	23,179	103,926	112	127,217
Purchase/additions	2,329	22,314	-	24,643
Divestments/Reductions	-	-	-58	-58
Changes in fair value recognised net in profit/loss	363	-2,868	-53	-2,559
Closing balance 30 September 2014	25,871	123,371	1	149,244

30 September 2013 Fund Direct Changes in financial assets and liabilities in Level 3 Investments Investments Short term Investments Opening balance 2013 22,659 52,890 1 Reclassifications - -1,289 1,289 Purchase/additions 740 23,609 Divestments/Reductions - - -9,995			EUR thousands
	Total
	75,550
	-
	24,349
	-9,995
	- 11,360 11,360	-	Transfer to Level 31
Changes in fair value recognised net in profit/loss 614 - -525	90
Closing balance 30 Sepetmber 2013 24,013 75,209 2,131	101,355

1 There have been no transfer to or from Level 3 during the period in 2014. In 2013, the holding in East Capital Power Utilities Fund was reclassified in Q2 due to that the main part of the fund was redeemed in April 2013 and the remaining holdings in the fund were classified as Level 3 since market data was not available

EUR -2,506 thousands (EUR 90 thousands) of changes in fair value recognised net in profit/loss relate to investments still held at the end of the period.

Sensitivity analysis

For information about risks, uncertainties and information about the business environments and markets in which East Capital Explorer invests, please refer to the Directors' Report on page 12. For a summary of the methods and assumptions used to determine fair value of the portfolio holdings please see Note 4 and in more detail on page 71 in the Annual Report of 2013. The effect of fluctuations in the major parameters on the value of the portfolio holdings is presented in the table below:

Sensitivity analysis for market risks (EUR thousands)

30 September 2014
Risk factors	Change	Effect on net profit/loss for the period
Fx EUR/LTL	+/- 10%	2,292
Fx EUR/RUB	+/- 10%	5,660
Fx EUR/USD	+/- 5%	5,149
Equity price	+/- 10%	28,759

Note 5 Key Figures

Key figures	9m 2014	6m 2014	3m 2014	12m 2013	9m 2013	6m 2013	3m 2013	12m 2012
Net asset value, EURm	297	298	288	3091	2841	2801	2921	3011
Change in NAV during the quarter, %	-0.1	3.3	-6.8	8.91	1.41	-4.21	-2.71	-0.11
Equity ratio, %	99.9	99.9	99.8	99.91	99.91	99.91	99.91	99.81
Market capitalisation, SEKm	1 395	1,729	1,587	1,956	1,468	1,439	1,634	1,618
Market capitalisation, EURm	153	189	178	225	169	165	195	188
Outstanding number of shares, m	29.9	29.9	31.4	31.4	31.4	31.4	31.4	33.0
Weighted average number of shares, m	31.8	32.4	32.4	32.4	32.4	32.4	32.4	35.4
Number of employees	4	3	3	41	51	51	5	5

Key figures per share	9m	6m	3m	12m	9m	6m	3m	12m
	2014	2014	2014	2013	2013	2013	2013	2012
Earnings per share, EUR	0.07	0.08	-0.65	0.721	-0.071	-0.191	0.191	0.411
Dividend per share, EUR	0.00	0.00	0.00	0.001	0.001	0.001	0.001	0.001
NAV, SEK	90	91	82	871	791	781	781	781
NAV, EUR	9.94	9.95	9.17	9.85	9.04	8.92	9.30	9.10
Share price, SEK2	46.60	57.75	50.50	62.25	46.70	45.80	52.00	49.00
Share price, EUR2	5.12	6.31	5.67	7.00	5.38	5.25	6.21	5.70
SEK/EUR	9.11	9.15	8.91	8.89	8.69	8.72	8.37	8.59

1 Recalculated due to amendments to IFRS 10 and IAS 27 regarding accounting by Investment entities

Not adjusted for redemption programs

Note 6 Restatement of Financial Statements in respect of the application of IFRS 10, Investment entities

The initial effect is recognized against retained earnings per 1 January 2013

Statement of Profit or Loss and Other Comprehensive Income/Income statement

EUR thousands	Mar 2013 Jan	IFRS 10 Adj.	Re stated 2013 Jan-Mar	Jun 2013 Apr	IFRS 10 Adj.	Re stated 2013 Apr-Jun	Jan-Jun 2013	Adj. IFRS 10	Re stated 2013 Jan-Jun	2013 Jul-Sep	IFRS 10 Adj.	Re stated Jul-Sep 2013	2013 Jan Sep	IFRS 10 Adj.	Re stated 2013 Jan-Sep	2013 Oct-Dec	IFRS 10 Adj.	Re stated 2013 Oct-Dec	Jan Dec 2013	Adj. IFRS 10	Re stated Jan-Dec 2013
Net sales	-	-	-	2,486	-2,486	-	2,486	-2,486	-	7,332	-7,332	-	9,818	-9,818	-	7,551	-7,551	-	17,369	-17,369	-
Other operating income	-	-	-	51	-51	-	51	-51	-	177	-177	-	228	-228	-	155	-155	-	383	-383	-
Changes in value of subsidiaries Changes in value of portfolio/	6,736	-742	5,994	-12,247	291	-11,956	-5,511	-451	-5,962	4,341	-309	4,032	-1,170	-760	-1,930	32,911	-7,107	25,804	31,741	-7,867	23,874
Received Dividend	-	-	-	1,550	-1,550	-	1,550	-1,550	-	1,154	-1,154	-	2,704	-2,704	-	1,609	-1,609	-	4,313	-4,313	-
Total operating income	6,736	-742	5,994	-8,160	-3,796	-11,956	-1,424	-4,538	-5,962	13,004	-8,972	4,032	11,580	-13,510	-1,930	42,225 -16,422		25,804	53,805	-29,932	23,874
Goods, raw material and services	-	-	-	-780	780	-	-780	780		-2,059	2,059	-	-2,839	2,839		-1,990	1,990	-	-4,829	4,829	-
Staff expenses	-214	-	-214	-737	368	-368	-951	368	-583	-1,430	1,202	-227	-2,380	1,570	-810	-1,264	989	-276	-3,644	2,558	-1,086
Depreciation and amortisation of non-current assets	-	-	-	-525	525	-	-525	525	-	-2,110	2,110	-	-2,635	2,635	-	-1,965	1,965	-	-4,600	4,600	-
Other operating expenses	-654	449	-205	-1,326	1,097	-229	-1,980	1,545	-435	-1,392	1,065	-327	-3,372	2,610	-762	-8,599	8,331	-267	-11,971	10,942	-1,029
Operating profit/loss	5,868	-293	5,575	-11,528	-1,027	-12,555	-5,660	-1,320	-6,980	6,013	-2,536	3,478	353	-3,856	-3,502	28,408	-3,146	25,261	28,761	-7,003	21,759
Financial income	26	538	564	13	367	380	39	905	944	13	374	387	52	1,279	1,331	31	362	394	83	1,641	1,724
Financial expense	-33	33	-	-314	314	-	-347	347	-	-1,052	1,051	-	-1,398	1,397	-1	-913	913	-	-2,311	2,310	-1
Profit/loss before tax	5,861	278	6,139	-11,829	-346	-12,175	-5,968	-68	-6,036	4,974	-1,112	3,864	-993	-1,180	-2,172	27,526	-1,871	25,655	26,533	-3,052	23,483
Tax	246	-278	-32	36	11	47	282	-267	15	-350	386	36	-68	119	51	-1,212	822	-390	-1,280	941	-339
NET PROFIT/LOSS FOR THE PERIOD	6,107	-	6,107	-11,792	-336	-12,129	-5,686	-336	-6,022	4,624	-724	3,901	-1,061	-1,061	-2,121	26,314	-1,049	25,265	25,253	-2,110	23,143
Cash flow hedges - effective portion of changes Other comprehensive income: in fair value	-	-	-	-	-	-	-	-	-	-229	229	-	-229	229	-	-49	49	-	-277	277	-
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	6,107	-	6,107	-11,792	-336	-12,129	-5,686	-336	-6,022	4,395	-496	3,901	-1,290	-832	-2,121	26,265	-1,000	25,265	24,976	-1,834	23,143
Net profit/loss for the year distribution:
Shareholders of the Parent Company	6,107	-	6,107	-11,899	-230	-12,129	-5,792	-230	-6,022	4,540	-638	3,901	-1,253	-868	-2,121	25,965	-700	25,265	24,712	-1,569	23,143
Non-controlling interest	-	-	-	107	-107	-	107	-107	-	85	-85	-	192	-192	-	349	-349	-	541	-541	-
	6,107	-	6,107	-11,792	-336	-12,129	-5,686	-336	-6,022	4,624	-724	3,901	-1,061	-1,061	-2,121	26,314	-1,049	25,265	25,253	-2,110	23,143
Total comprehensive income distribution:
Shareholders of the Parent Company	6,107	-	6,107	-11,899	-230	-12,129	-5,792	-230	-6,022	4,422	-521	3,901	-1,370	-751	-2,121	25,940	-675	25,265	24,571	-1,428	23,143
Non-controlling interest	-	-	-	107	-107	-	107	-107	-	-27	27	-	80	-80	-	325	-325	-	405	-405	-
	6,107	-	6,107	-11,792	-336	-12,129	-5,686	-336	-6,022	4,395	-496	3,901	-1,290	-832	-2,121	26,265	-1,000	25,265	24,976	-1,834	23,143 25

Statement of Financial Position/Balance sheet

EUR thousands	2012 31 Dec	IFRS 10 Adj.	Restated 1 Jan 2013	2013 31 Mar	IFRS 10 Adj.	Restated 31 Mar 2013	2013 30 Jun	Adj. IFRS 10	Restated 2013 30 Jun	2013 30 Sep	Adj. IFRS 10	Restated 2013 30 Sep	31 Dec 2013	Adj. IFRS 10	Restated 2013 31 Dec
Assets
Property, plant and equipment	-	-	-	-	-	-	22,412	-22,412	-	27,480	-27,480	-	27,710	-27,710	-
Goodwill	-	-	-	-	-	-	56,986	-56,986	-	56,986	-56,986	-	56,986	-56,986	-
Other intangible assets	-	-	-	-	-	-	21,063	-21,063	-	16,635	-16,635	-	16,228	-16,227	-
Shares and participations in investing activities/Shares in subsidiaries	257,599	12,605	270,204	288,871	-27,073	261,798	252,327	-2,485	249,842	249,606	4,268	253,874	275,818	3,860	279,678
Deferred tax assets	403	-63	340	649	-341	308	627	-272	355	356	35	391	-	-	-
Total non-current assets	258,002	12,542	270,544	289,520	-27,415	262,105	353,415	-103,218	250,197	351,063	-96,798	254,265	376,742	-97,063	279,678
Inventories	-	-	-	-	-	-	3,471	-3,471	-	2,694	-2,694	-	2,423	-2,423	-
Loans to group companies	-	29,315	29,315	-	29,315	29,315	-	29,315	29,315	-	29,315	29,315	-	29,315	29,315
Other short term receivables	32	-2	30	33	-2	31	773	-772	1	800	-799	1	1,047	-1,046	1
Tax receivables	740	-740	-	895	-895	-	1,268	-1,268	-	1,141	-1,141	-	-	-	-
Accrued income and prepaid expenses	80	-57	23	21	-	21	1,127	-1,114	13	253	-245	8	1,352	-1,331	21
Short-term investments	-	-	-	-	-	-	2,098	-2,098	-	3,054	-3,054	-	112	-112	-
Cash and cash equivalents	46,497	-45,366	1,131	6,677	-5,430	1,247	6,029	-5,000	1,029	12,391	-11,503	888	21,504	-20,728	776
Total current assets	47,349	-16,850	30,499	7,626	22,988	30,614	14,766	15,592	30,358	20,333	9,879	30,212	26,438	3,675	30,113
Total assets	305,350	-4,308	301,043	297,146	-4,427	292,719	368,182	-87,627	280,555	371,396	-86,919	284,477	403,179	-93,388	309,791
Shareholder Equity
Share capital	3,631	-	3,631	3,640	-	3,640	3,640	-	3,640	3,640	-	3,640	3,640	-	3,640
Other contributed capital/Share premium reserve	362,458	3	362,461	348,180	3	348,183	348,180	3	348,183	348,180	3	348,183	348,180	3	348,183
Other reserves	77	-77	-	-	-	-	-	-	-	-117	117	-	-141	141	-
Retained earnings	-80,077	74	-80,003	-65,576	-3	-65,579	-65,576	-3	-65,579	-65,576	-3	-65,579	-65,576	-3	-65,579
Profit/Loss for the period	14,424	-	14,424	6,107	-	6,107	-5,792	-230	-6,022	-1,253	-868	-2,121	24,712	-1,569	23,143
Equity attributable to shareholders of the Parent Company	300,513	-	300,513	292,351	-	292,350	280,451	-230	280,222	284,874	-752	284,122	310,814	-1,428	309,387
Non-controlling interest	8	-8	-	8	-8	-	117	-117	-	90	-90	-	415	-415	-
Total Equity	300,521	-8	300,513	292,358	-8	292,350	280,568	-347	280,222	284,964	-842	284,122	311,229	-1,843	309,387
Liabilities
Non-current interest bearing liabilities	-	-	-	-	-	-	72,033	-72,033	-	70,324	-70,324	-	68,634	-68,634	-
Derivatives	-	-	-	-	-	-	-	-	-	229	-229	-	277	-277	-
Total non-current liabilities	-	-	-	-	-	-	72,033	-72,033	-	70,553	-70,553	-	68,911	-68,911	-
Current interest bearing liabiltities	-	-	-	-	-	-	7,780	-7,780	-	8,254	-8,254	-	8,203	-8,203	-
Tax liabilities	-	-	-	-	-	-	-	-	-	-	-	-	26	-26	-
Derivatives	-	-	-	-	-	-	-	-	-	-	-	-	2	-2	-
Other current liabilities	188	10	198	294	-127	167	1,708	-1,582	126	1,707	-1,552	155	2,171	-2,063	108
Accrued expenses and deferred income	4,641	-4,309	332	4,494	-4,293	201	6,092	-5,885	207	5,918	-5,719	199	12,637	-12,341	296
Total current liabilities	4,829	-4,300	530	4,788	-4,419	369	15,581	-15,247	333	15,879	-15,525	354	23,039	-22,635	404
Total equity and liabilities	305,350	-4,308	301,043	297,146	-4,427	292,719	368,182	-87,627	280,555	371,396	-86,919	284,477	403,179	-93,388	309,791
															26

East Capital Explorer AB Interim Report 1 January – 30 September 2014

Statement of Cash Flow

EUR thousands	Jan-Mar 2013	Adj. IFRS 10	Restatated 2013 Jan-Mar	2013 Jan-Jun	IFRS 10 Adj.	Restatated Jan-Jun 2013	2013 Jan-Sep	IFRS 10 Adj.	Restatated 2013 Jan-Sep	2013 Jan-Dec	IFRS 10 Adj.	Restatated Jan-Dec 2013
Operating activities
Operating profit/loss	5,868	-293	5,575	-5,660	-1,320	-6,980	353	-3,855	-3,502	28,761	-7,002	21,759
Changes in value in portfolio/Changes in value in shares in subsidiaries	-6,736	742	-5,994	5,511	451	5,962	1,170	760	1,930	-31,741	7,867	-23,874
Adjustment for non-cash items	-	-	-	525	-525	-	2,635	-2,635	-	2,991	-2,991	-
Interest received	51	437	488	41	842	883	12	1,269	1,281	55	1,608	1,663
Interest paid and other financial payments	-17	17	0	-9	9	-	-710	710	-	-1,107	1,107	-
Tax paid	-154	124	-30	-469	439	-30	-419	389	-30	-149	119	-30
Cash Flow from current operations before changes in working capital	-987	1,027	39	-61	-103	-164	3,041	-3,362	-321	-1,190	708	-482
Cash flow from changes in working capital
Increase (-)/decrease (+) in other current receivables	-1	-	-1	-1,064	1,093	29	-185	214	29	95	-66	29
Increase (-)/decrease (+) in inventory	-	-	-	-	-	-	-32	32	-	239	-239	-
Increase (+)/decrease (-) in other current payables	-42	-90	-132	-107	-61	-168	-218	72	-146	6,868	-6,964	-96
Cash flow from operating activities	-1,030	938	-93	-1,232	930	-303	2,606	-3,043	-438	6,012	-6,560	-549
Investing activities
Acquisition of group companies	-	-	-	-22,605	22,605	-	-22,605	22,605	-	-22,605	22,605	-
Investment in shares and participations	-25,000	25,000	-	-25,740	25,740	-	-25,740	25,740	-	-27,279	27,279	-
Sale of short-term investments	-	-	-	9,995	-9,995	-	584	-584	-	11,258	-11,258	-
Sale of shares and participations	522	-522	-	13,463	-13,463	-	28,936	-28,936	-	29,431	-29,431	-
Purchase of property, plant, equipment and intangible assets	-	-	-	-	-	-	-1,941	1,941	-	-3,728	3,728	-
Cash flow from investing activities	-24,478	24,478	-	-24,887	24,887	-	-20,766	20,766	-	-12,925	12,925	-
Financing activities
Repayment of loans	-	-	-	-	-	-	-1,579	1,579	-	-3,670	3,670	-
Repaid shareholders contributions	-	14,400	14,400	-	14,400	14,400	-	14,400	14,400	-	14,400	14,400
Redemption program	-14,269	-	-14,269	-14,269	-	-14,269	-14,269	-	-14,269	-14,269	-	-14,269
Cash flow from financing activities	-14,269	14,400	131	-14,269	14,400	131	-15,848	15,979	131	-17,939	18,070	131
Cash flow for the period	-39,777	39,816	38	-40,388	40,217	-172	-34,008	33,702	-307	-24,852	24,434	-418
Cash and cash equivalents at beginning of the year	46,497	-45,366	1,131	46,497	-45,366	1,131	46,497	-45,366	1,131	46,497	-45,366	1,131
Exchange rate differences in cash and cash equivalents	-43	121	78	-80	149	69	-98	161	63	-142	204	62
period the of end at ivalents equ cash and ash C	6,677	-5,428	1,247	6,029	-5,000	1,029	12,391	-11,503	888	21,504	-20,727	776

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 fair value.

Dividend per share

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

Earnings per share

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

Ebitda

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

Equity ratio

Total equity as a percentage of total assets.

Enterprise value

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

IRR

(Internal Rate of Return). Annual average return.

Net Asset Value (NAV)

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

Net asset value per share

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

Net debt/Net cash

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

Outstanding number of shares

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

Profit/loss for the year

Profit/loss after tax.

Registered number of shares

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

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

Shareholders' equity per share

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

Total assets

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

Total comprehensive income for the year

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

Volatility

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

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