Eastnine — Interim / Quarterly Report 2013

Feb 20, 2014

Year-end Report 2013

Year-end Report 2013

Events during the quarter

• An external valuation of the Russian fashion retailer Melon Fashion Group (MFG) in December, resulting in a fair value increase of 59%, excluding dividend received during the period. The positive net contribution to East Captial Explorer's total net asset value was 7% per share. After the revaluation, the total value of East Capital Explorer's holding in MFG is EUR 70m, an increase of EUR 26m
• An additional 6% of the shares in Trev-2 Group (Trev-2), one of the leading infrastructure construction companies in Estonia, were acquired from East Capital Funds for a consideration of EUR 1.5m, after which East Capital Explorer owns 40% of Trev-2. The acquisition price per share was 12% higher than book value, which was supported by an independent external valuation. After the acquisition and revaluation, the Trev-2 holding was valued at EUR 9.8m
• The remaining holdings in East Capital Power Utilities Fund and East Capital Bering New Europe Fund were divested according to plan

Events after the end of the quarter

• As per 1 January 2014, East Capital has restructured part of their alternative investment funds in which East Capital Explorer has invested. The objective is to adapt the funds to the EU regulatory framework for alternative investment fund managers (AIFMD). Four of East Capital's Bering funds are included in the restructuring; East Capital Bering Russia Fund, East Capital Bering Balkan Fund, East Capital Bering Central Asia Fund and East Capital Bering Ukraine Fund (A), all domiciled in the Cayman Islands. At year-end, these funds comprised approximately 29% of the East Capital Explorer NAV. The funds were transferred to two new funds, East capital New Markets Fund and East Capital Deep Value Fund, domiciled in Luxembourg. For more information, please refer to page 34.
• In order to be able to take advantage of attractive investment opportunities in assets which are estimated to generate strong cash flow and good growth, the Board of East Capital Explorer today announced that it has resolved to convene an Extraordinary General Meeting 24 March 2014 to resolve upon the introduction of a new class of shares, preference shares, in the articles of association and an authorisation for the Board to resolve to issue preference shares. The two main areas of focus for new investments, the Russian and Baltic domestic consumer sector, which are expected to continue to benefit from a growing domestic consumption, and the Baltic real estate sector with current attractive prices, low interest rates and rising rents provide the conditions for an attractive dividend yield and positive growth. The proposed financing possibility, combined with the expected return on these investments, creates a higher return on invested capital for the owners of ordinary shares of East Capital Explorer. For more information regarding the proposals to the Extraordinary General Meeting on 24 March 2014, see separate press release and notice of Extraordinary General Meeting.
• East Capital Explorer will be covered by the new EU directive for alternative investment funds (AIFMD), currently being implemented across the European Union, aiming to strengthen the financial system and increase investor protection. Businesses and entities covered by directive, including East Capital Explorer, are now preparing to comply with these rules within the transition period which ends on 22 July 2014 and the Board of East Capital Explorer has proposed the Extraordinary General Meeting to resolve on certain amendments to the articles of association. The changes will entail supervision and licensing requirements as well as changes to the internal organisation and reporting to shareholders. Management anticipates that the changes will be managed in a cost efficient manner by utilizing the existing organisation

and resources available to East Capital, as an already supervised entity, in Sweden and in Luxembourg. For more information regarding the proposals to the Extraordinary General Meeting on 24 March 2014, see separate press release and notice of Extraordinary General Meeting.

• NAV per share on 31 January 2014 amounted to EUR 9.81 (EUR 9.31)1 , corresponding to a decrease of 1.2% during the month
• Cash, cash equivalent and other short term investments on 31 January 2014 amounted to EUR 22m (EUR 17m)
• The closing price of the East Capital Explorer share as of 31 January 2014 was SEK 60.00 (corresponding to EUR 6.79)

Financial results for the fourth quarter

• Net asset value (NAV) per share on 31 December 2013 amounted to EUR 9.89, corresponding to an increase of 9.1 % during the fourth quarter
• • The Group's net result for the fourth quarter was EUR 26.3m (EUR 0.6m), including EUR 32.9m (EUR 2.7m) changes in value of investments. Earnings per share amounted to EUR 0.83 (EUR 0.02) for the quarter
• Cash, cash equivalents and other short term investments on 31 December amounted to EUR 21.6m (EUR 46.5m)
• East Capital Explorer received payments of EUR 11.1m in total during the quarter; EUR 1.2m from East Capital Power Utilities Fund, EUR 0.8m from East Capital Bering New Europe Fund, EUR 7.4m from East Capital Special Opportunities Fund and EUR 1.7m from East Capital Bering Ukraine Fund R
• A third tranche of dividend amounting to EUR 1.6m was received from MFG (total dividend from MFG during 2013 amounted to EUR 3.9m)

Financial results for the full year 2013

• • Net asset value (NAV) per share increased by 8.7% in 2013 to EUR 9.89 (EUR 9.10) at the end of December
• • The net result for the Group was EUR 25.3m (EUR 14.4m) and earnings per share amounted to EUR 0.79 (EUR 0.42)
• The closing price of the East Capital Explorer share as of 31 December 2013 was SEK 62.25 (corresponding to EUR 7.00), an increase of 27% during the year

Net asset value and share price development

		31 Dec 2013	31 Dec 2012
	EUR	SEK	EUR	SEK
NAV per share	9.89	88	9.10	78
Total NAV	311m	2.8bn	301m	2.6bn
NAV per share, % change Q4	9.1	11.6	0.3	2.1
NAV per share, % change YTD	8.7	12.4	4.7	1.5
Closing price per share	7.00	62.25	5.70	49.00
Total market capitalization	225m	2.0bn	188m	1.6bn
Share price % change Q4	30.3	33.3	-5.6	-3.9
Share price % change YTD	22.8	27.0	-5.4	-8.8

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

Portfolio on 31 December 2013

East Capital Explorer's portfolio is actively managed and comprises Direct Investments (36%), Fund Investments (61%) and Short-term Investments. The largest geographical exposure is towards Russia with a weight of 49%. 86% of the portfolio is invested in the Company's targeted sectors: Retail, Consumer Goods, Financials and Real Estate.

Portfolio on 31 December 2013
	Value			Value	Value	Value change	Value change
	31 Dec 2013	NAV/share	% of	30 Sep 2013	31 Dec 2012	Jan–Dec	Oct–Dec
	EURm	EUR	NAV	EURm	EURm	2013, %1	2013, %1
Direct Investments
Melon Fashion Group	70.5	2.24	22.7	44.2	44.2	68.4	63.1
Starman	25.0	0.80	8.1	24.3	-	6.1	3.1
Trev-2 Group	9.8	0.31	3.2	7.4	7.4	10.1	10.1
Komercijalna Banka Skopje	6.6	0.21	2.1	6.7	8.7	-19.7	-1.2
Total Direct Investments	112.0	3.56	36.0	82.6	60.3	36.1	35.0
Fund Investments
East Capital Bering Balkan Fund4	41.1	1.31	13.2	42.0	38.9	5.6	-2.0
East Capital Russia Domestic Growth Fund	42.3	1.35	13.6	37.5	14.5	7.2	12.7
East Capital Bering Russia Fund4	23.0	0.73	7.4	24.8	27.8	-17.4	-7.4
East Capital Special Opportunities Fund	15.2	0.48	4.9	21.3	21.5	19.6	5.9
East Capital Bering Central Asia Fund4	23.0	0.73	7.4	20.8	18.5	23.9	10.5
East Capital Baltic Property Fund II	20.7	0.66	6.7	19.3	17.4	13.8	7.3
East Capital Special Opportunities Fund II	17.8	0.57	5.7	17.4	19.3	-7.6	2.5
East Capital Bering Ukraine Fund Class R	2.5	0.08	0.8	4.7	5.2	-19.5	-11.3
East Capital Bering Ukraine Fund Class A4	3.4	0.11	1.1	3.5	3.9	-12.8	-3.3
East Capital (Lux) Eastern European Fund	-	-	-	-	4.4	2.9	-
Total Fund Investments	188.9	6.01	60.8	191.3	171.5	4.3	3.5
Short-term Investments
Short-term Investments2	0.1	-	-	3.1	25.8
Cash and cash equivalents	20.3	0.65	6.5	11.1	46.4
Total Short-term Investments	20.4	0.65	6.6	14.1	72.2
Total Portfolio	321.3	10.22	103.4	288.0	304.0
Other assets and liabilities net	-10.4	-0.33	-3.4	-3.1	-3.5
Net Asset Value (NAV)	310.8	9.89	100.0	284.9	300.5	8.73	9.13

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

² Due to the ongoing liquidation of East Europeand Debt Finance, as from June 2013 these holdings are no longer separately reported but included in short-term investments as the remaining assets are limited and are expected to be divested during 2014

³ NAV per share development. The value change takes overhead cost and fees for direct investments into account

⁴ 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, previously domiciled on the Cayman Islands, are transferred to Luxembourg and transformed into two new funds; East Capital New Markets Fund and East Capital Deep Value Fund. For more information of the two new funds, please refer to page 34

1 EUR = 8.89 SEK on 31 December 2013. Source: Bloomberg

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

CEO Comment – Increased portion and value of direct investments

2013 was an eventful year for East Capital Explorer with significant changes in the portfolio. Compared with the previous year, we have both concentrated the fund holdings and increased the portion of direct private equity investments in unlisted companies, which are otherwise difficult for individual investors to access. The aim of these changes, in addition to seizing good investment opportunities, is to clarify our portfolio focus and enhance transparency, and our efforts to this end will continue throughout the year. The share of direct investments as at the end of 2013 amounted to 36% of the total NAV, compared with 29% at the end of September and 20% at the end of 2012.

The work with concentrating and focusing the portfolio continued during the fourth quarter as two funds were liquidated, while a decision was also made to restructure four East Capital Bering funds into two funds. Our portfolio of direct investments grew during the quarter in that we increased our holding in Trev-2 Group (Trev-2), one of the largest construction and maintenance companies working with infrastructure in Estonia, to 40% and through an external revaluation of our holding in the Russian fashion retailer, Melon Fashion Group (MFG), which showed both good growth and a strong cash flow during the year.

The NAV of the portfolio increased by 9.1% to EUR 9.89 (SEK 88) per share during the fourth quarter, while the share price rose by 33.3% to EUR 7.00 (SEK 62.25) during the same period.

Markets

The development in the global stock markets was positive during 2013. In particular, the stock markets in the US, Europe and Japan were strong, while emerging markets showed weaker tendencies. However, sentiment towards emerging markets improved somewhat at the end of the year and the MSCI Emerging Markets index rose by 3% during the fourth quarter. Russia, which comprises 49 % of our portfolio, showed an unchanged stock exchange development during the fourth quarter after an increase of 7% during the third quarter. The Baltic countries were, largely, unchanged whilst the exchanges in Romania, Serbia and Slovenia rose by around 7% in the fourth quarter.

Portfolio development

The positive development in the NAV was largely a result, of the revaluation of the fashion retailer, MFG, which saw a value increase of 63%, including dividend, during the fourth quarter as a result of exceeded growth projections. In addition to the value increase, the strong cash flow in the company has enabled dividends equivalent to a total of EUR 3.9m paid to East Capital Explorer during 2013. It is very pleasing to receive acknowledgment of the success of our long-term involvement in the development and management of MFG.

As regards direct investments, Trev-2 also contributed positively. We increased our ownership share in Trev-2 during the quarter to a share price which was 12% higher than the previously book value, supported by an external valuation, which implies that the value of this holding has increased by EUR 0.9m. The increased ownership share in Trev-2 means that East Capital Explorer secures its position as the largest shareholder in Trev-2 with an ownership share of 40%.

The market leading Estonian cable-tv and broadband company, Starman, in which we acquired 51% of the shares in May and which now comprises 8% of our NAV, has exceeded our expectations in terms of both growth and profitability. Starman's net sales for the entire year amounted to EUR 30m, equivalent to an increase in sales of 7.9 %, with a strong Ebitda margin of 48.5%.

The fund portfolio also developed positively during the fourth quarter and rose by 4%. The best performing fund during the quarter was the East Capital Russia Domestic Growth Fund which increased by 13%. This fund, which focuses on benefiting from the potential in the domestic Russian economy, implemented a number of changes during the quarter including, amongst other things, an increased ownership in Aeroflot which stock price increased by 49%.

We have previously stated that we are very positive toward the Baltic real estate market, where we see promising possibilities for a strong direct yield given the good potential in rental levels and financing possibilities. Our Baltic real estate fund, East Capital Baltic Property Fund II, has further strengthened our belief in the market with a value increase of 7% during the quarter. East Capital is deeply engaged in the development of the properties in the funds, where value is added through improvements in the rental mix, renovations, extensions to the buildings and the further development of the facilities.

Our fund portfolio has been concentrated even more during the year and this enhanced concentration will continue during 2014. Two funds, East Capital Power Utilities Fund and East Capital Bering New Europe, have been sold in their entirety, while East Capital Special Opportunities Fund and East Capital Bering Ukraine Fund R are being discontinued. After the end of the year, four of East Capital's Bering funds were restructured into two new funds (see page 34), the East Capital New Markets Fund which focuses on small and medium-sized companies in frontier markets in Eastern Europe and the East Capital Deep Value Fund with a diversified portfolio of clearly under-valued companies in Eastern Europe. This change has been undertaken partly due to the EU's new Directive for alternative investment funds (AIFMD), but also as a result of East Capital work with clarifying their fund focus, something which we hope will provide a greater degree of transparency.

Outlook

There are differing views regarding the developments within our investment universe during 2014. We continue to see opportunities for good returns in our two major markets, Russia and the Baltics. The valuation of Russian companies is, unjustifiably, low and we believe that an accelerated growth, in combination with the reforms taking place in the Russian finance market and a strong Russian balance sheet, create good premises for value increases. The Baltic economies are robust seen from a macroeconomic perspective and also represent a low exchange rate risk. It is primarily these two regions on which we will focus during the current year, both in terms of developing our existing holdings, but also in terms of new investment opportunities.

In addition to the growth potential we see in the investment portfolio, our intention is to continue to distribute value to our shareholders through the redemption program launched in 2012, which makes it possible for our shareholders to redeem 1 of 20 shares at NAV and, thereby, benefit from the difference between the share price and the NAV of the share. The redemption program also proves that we have confidence in the East Capital Explorer share.

Catharina Hagberg Acting CEO

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

On 31 December 2013

Company	Value in portfolio, EURm	% of NAV	Perf. Q4, %	Country	Sector	East Capital Explorer's investment vehicle
Melon Fashion Group	70.5	22.7	63.1	Russia	Consumer Discretionary Direct Investment
Starman	25.0	8.1	3.1	Estonia	Consumer Discretionary Direct Investment
Fondul Proprietatea	17.4	5.6	9.2	Romania	Financials	East Capital Bering Balkan Fund East Capital Special Opportunities Fund
Trev-2 Group	9.8	3.2	12.0	Estonia	Industrials	Direct Investment
Gedimino 9	8.5	2.8	17.8	Lithuania	Real Estate	East Capital Baltic Property Fund II
Komercijalna Banka Skopje	8.1	2.6	-1.2	Macedonia	Financials	Direct Investment East Capital Bering Balkan Fund
Tänassilma Logistics	7.6	2.4	1.6	Estonia	Real Estate	East Capital Baltic Property Fund II
Aeroflot Russian Airlines	7.2	2.3	48.8	Russia	Industrials	East Capital Russia Domestic Growth Fund
Zavarovalnica Triglav	6.1	2.0	4.4	Slovenia	Financials	East Capital Bering Balkan Fund East Capital Special Opportunities Fund II
Sberbank	6.1	2.0	2.4	Russia	Financials	East Capital Russia Domestic Growth Fund
Total Top 10	166.4	53.6

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 breakdown, % per 31 December 2013

East Capital Explorer vs indices since IPO

*TR= Total Return (incl. dividend)

Net asset value, share price and index development

(% change in EUR)	1 Jan – 31 Dec	1 Jan – 30 Dec
	2013	2012
NAV per share	8.7	2.4
East Capital Explorer share	22.8	-5.2
OMX Total Return Index2	24.2	16.5
RTS Index3	-9.5	8.4
RTS 2 Index4	-24.1	1.3
MSCI EM Europe5	-8.6	17.5

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

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

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

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

Investment Manager Comment - The core holdings represent 75% of the portfolio

Market comment

Last year at this time we believed we would, after five years of turbulence, see a normalisation of the financial markets during 2013 and a general rotation from bonds to equities. Indeed it actually looks like we are on the way out of the crisis and equity markets did perform well during the year. The best performance was seen in developed markets, with gains of up to 30% in the US, the Euro zone and Japan. Performance in emerging markets was not as uplifting and the returns were pressured by depreciating currencies.

Russia, which is East Capital Explorer's largest geographical exposure, generally surprised negatively on the macro side. Growth declined and inflation did not decline as much as expected, which in combination with less than favourable media coverage impacted the Russian stock market negatively in the beginning of the year. However, at the end of the year a number of positive events, such as successful listings as well as the release of Khodorkovsky and other prisoners, contributed to an improved view of Russia. Seen over the entire year, the Russian market declined 9.5% in EUR, partially due to the exchange rate effect. However, a number of key markets in East Capital Explorer's portfolio performed strongly. The three Baltic markets gained 10-20% while Romania rallied 25.1%.

Portfolio comment

East Capital Explorer's Net Asset Value per share increased by 9.1% during the fourth quarter and ended the full year 2013 with a gain of 8.7%, although the underlying markets were weak. The major contribution came from the Russian fashion retailer Melon Fashion Group, which was revalued during the fourth quarter. In addition, the strong development in, primarily, East Capital Russia Domestic Growth Fund and the Romanian core holding Fondul Proprietatea contributed to the positive development.

During the year, we made significant changes to East Capital Explorer's portfolio. We are pleased to note a successive improvement in the Eastern European private equity market, that largely disappeared during the financial crisis. This means that we, in line with our investment strategy, are able to pursue attractive private equity investments that are otherwise difficult for our shareholders to access themselves. In May, we acquired a majority stake in an Estonian cable TV, broadband internet and voice cable services provider, Starman, and at the end of the year we increased East Capital Explorer's ownership in the Estonian construction company Trev-2 Group. The share of private equity in the portfolio increased from 28% as at 1 January 2013 to 43% as at 31 December 2013.

In addition, we have highlighted our core holdings – six individual companies and three fund strategies focused on Russia, the Baltics and the Balkans – and determined the overall strategies for these holdings. Our aim is that the core holdings should have an equal exposure in terms of cash flow, value and growth. Starman and the real estate investments generate steady cash flows and Melon Fashion Group is a clear growth story, while Fondul Proprietatea, the Romanian restitution fund trading at a significant discount to net asset value, is an example of a value investment. As of 31 December 2013, the core holdings represented 75% of the total portfolio.

Melon Fashion Group (MFG), the Russian fashion retailer, which is East Capital Explorer's by far largest holding, continued its aggressive expansion in the Russian clothing market during the fourth quarter and increased sales by 28% compared with the corresponding period last year. The long winter and delayed opening of new shopping centers impacted

Core holdings
31 December 2013		% of NAV	Perf. Q4
Individual holdings	Business description
Melon Fashion Group	Russian fashion retailer	22.7	63.1
Starman	Estonian TV & broadband services provider	8.1	3.1
Fondul Proprietatea	Romanian restitution fund	5.6	9.2
Komercijalna Banka Skopje	Macedonian bank	2.6	-1.2
Trev-2 Group	Estonian construction company	3.2	12.0
Sollers	Russian vehicle manufacturer	1.8	15.9
Fund strategies	Investment theme
East Capital Russia Domestic Growth Fund	Domestic growth, Russia	13.6	12.9
East Capital Bering Balkan Fund	EU convergence, Balkan	13.2	-2.2
East Capital Baltic Property Fund II	Real estate, Baltics	6.7	7.3
Total % of NAV		74.8

sales negatively during the first half of the year, but on a full year basis, sales came in at around 9 billion rubles (EUR 212m), which is an increase of 27% in RUB terms if we exclude the less profitable franchise concept sold to Spanish Cortefiel in the early part of 2013. Sales in comparable stores (LFL) increased by 6.6%, negatively affected by the fourth quarter when comparable sales increased by just over 2%. During the year, a total of 139 new stores were opened, of which 58 during the fourth quarter, which increased the selling space for the company's three concepts Love Republic, Zarina and befree by almost 40%. At year-end, MFG, which also sells clothes online, had a total of 586 stores, primarily in Russia and Ukraine, but also a number of pilot stores in Kazakhstan and Belarus.

Starman, the Estonian media company in which we invested during the spring, has developed better than expected in terms of both growth and profitability. The company had net sales during 2013 of just over EUR 30m, equivalent to a sales growth of 7.9%. The company's Ebitda grew by 10% and exceeded top-line growth as the already high margin further improved, to 48.5%.

The Romanian restitution fund Fondul Proprietata (FP), where we are one of the larger minority owners through the East Capital Bering Balkan Fund and East Capital Special Opportunities Fund, continued its good progress during the fourth quarter. The share rose by 12.8% and finished the entire year with a gain of 63%. The share has been strong on the back of its share buyback program, the listing of holdings, and now, most recently, as the result of an extension of the management agreement with Franklin Templeton. During the quarter, its portfolio holding Romgaz, the country's largest gas producer, was successfully listed on Bucharest-stock exchange at a value exceeding the book value in FP's books, at the same time the share developed well and rose 15% during the first trading day. FP is one of East Capital Explorer's core holdings and we see continued potential in the share, which trades at a 33% discount to net asset value and has a dividend yield of around 6%.

Komercijalna Banka Skopje (KBS), East Capital Explorer's Macedonian direct investment, now puts a tough year behind it having reported extensive write-downs of bad loans during the first two quarters of 2013 due to the deteriorated macroeconomic situation in that country. These write-downs hit profitability hard but the fourth quarter showed a profit of approximately EUR 6 million, translating into a profit for the full year 2013 of around EUR 1.3 million. The return on equity was weak at O.8%, but the bank has worked actively during 2013 to clean up its loan portfolio in order to return to a normal level of profitability in 2014, something that showed up already in the improved results for the fourth quarter.

During the quarter, East Capital Explorer increased its ownership in the unlisted Estonian construction company Trev-2 Group (Trev-2) to 40%, following the acquisition of 6% of the shares from East Capital funds. The transaction price, set by an external Estonian financial advisor, was 12% higher than the previous valuation and resulted in a revaluation of East Capital Explorer's total holding. The company's net sales grew by 12% during the year and came in at almost EUR 100m, while at the same time profitability continued to be the strongest among comparable construction companies in the Baltics. The Ebitda margin for the full year was 9.8%. As we have previously reported, net sales are expected to decrease in 2014 as a result of fewer EU-financed projects. Management continues to focus on profitability and the company is considering implementing a new dividend policy. During the second quarter, we expect the first ever dividend payment from Trev-2.

The Russian car manufacturer Sollers, which is one of our core holdings through East Capital Special Opportunities Fund, performed stronger during the fourth quarter than in the previous quarter. After a weak start of the year, Sollers' share price increased 21.4% during the fourth quarter. The low valuation of 3.6x Enterprise Value/Ebitda 2013 and the high dividend yield of around 7% resulted in a strong interest in the name. We believe in continued potential for the company, not the least through a cooperation with Ford that could double profits from the 2013 level.

East Capital Russia Domestic Growth Fund performed exceptionally well during the fourth quarter and gained 12.9%, while the Russian market, as a whole, developed negatively. Seen over the entire year, the fund gained 8.7% while the benchmark index lost 3.4% in value. A number of the funds' largest holdings performed very well. The search engine Yandex gained 16.3%, the conglomerate Sistema rose 26% and the airline carrier Aeroflot rose by 48.8% when the third quarter's results came in as a positive surprise. We increased the fund's exposure to Aeroflot and the fund now owns shares for more than EUR 7m in the airline carrier, where East Capital, in total, is the second largest shareholder after the Russian government. During the fourth quarter, we met with the company's CEO, Vitaly Sveliev, and we continue to be impressed by the company's results. We are positive towards their ambition to expand in the low price segment during the forthcoming year and the up-coming privatisation of an additional 10% of the shares, which will be positive for the liquidity and the share.

Tänassilma Logistics, the logistics property outside of Tallinn owned through East Capital Baltic Property Fund II, continued to generate a steady cash flow during the fourth quarter. The shopping center G9 in the heart of Vilnius and the retail property Deglava Prisma, which were both acquired during the year, have both developed according to plan. The Lithuanian G9 is a turnaround-case where we have now redeveloped the entire shopping center and signed rental agreements for 70% of the premises. Its grand opening is planned for the end of the first quarter 2014. At the end of the year, the three properties were valued externally which, in combination with the cash flow generation, translated into an increase in the fund's Net Asset Value of 7.2% during the quarter. Since East Capital Explorer invested in the fund, in May 2012, the value increase has been 21.1 %.

As regards the investment in the Polish JSW, which was written down to zero during the first quarter 2013 due to the discovery that the counterparty in the transaction did not use the capital received for the intended purposes, the work in securing repayment of East Capital Special Opportunities Fund II's investment continues. The repayment plan according to the established agreement, entered into in March 2013, has not been complied with except for the first repayment of 10% of the initial investment. This repayment plan is now under renegotiation.

Outlook

Eastern Europe, which largely follows global trends, will experience moderate economic acceleration in 2014. However, this pick-up takes place from a relatively low level. The Baltic economies look good from a macro perspective and should benefit from Latvia's introduction of the Euro. Russia has one of the strongest balance sheets amongst global emerging economies and looks particularly strong from a macro perspective. Russian growth, which surprised on the downside in 2013, should accelerate during 2014 but the economy is expected to continue to grow at a rate slower than its potential.

We believe that the general pessimism towards emerging markets, which accelerated in January 2014, is exaggerated and that these markets should be able to be revalued in the light of rising economic growth, higher valuations in developed markets, reduced uncertainty concerning the US Central Bank's quantitative easing and continued low interest rates. However, we are aware that financial markets are not addressed purely on fundamental factors and we do not believe in a general economic recovery but, instead, in a selective recovery.

Especially in Russia, we view the low valuations and high dividend yields as an opportunity for good returns. Along with our expectation that growth will accelerate, a number of reforms are also underway in the Russian financial market. Russian bonds are already traded through Euroclear, which we see as an explanation for the relatively good valuation that Russian bonds enjoy. It is probable that also Russian shares will be able to begin to be traded via Euroclear already during the summer. At the same time, the quotas for GDR's and ADR's traded abroad are being increased, which should decrease the price difference compared with local shares.

As regards East Capital Explorer's portfolio, our ambition is to further concentrate it, while at the same time focusing on new investment opportunities. We want to increase our exposure towards private equity and the Baltic real estate sector, in particular. In addition, we will work actively with our existing investments, not the least with the largest holding, MFG. The company will continue with the projects initiated during 2013 in order to improve profitability and we recently strengthened the management group with expertise from Inditex. At the same time, we will continue the company's expansion in the Russian clothing market. During 2014, MFG targets 200 new stores.

At year-end, the four Bering funds focused on Russia, the Balkans, Central Asia and Ukraine (A), respectively, were restructured into two new funds; East Capital New Markets Fund with a concentrated portfolio of small and medium-sized companies the Eastern European frontier markets and East Capital Deep Value Fund with a diversified portfolio of undervalued companies in Eastern Europe. This restructuring, which has taken place to adapt the funds to EU's newly established framework for alternative investment funds (AIFMD), further differentiates East Capital Explorer's portfolio and will also provide efficiency gains which will benefit East Capital Explorer in the form of lower costs. See page 34 for more information on how the restructuring will impact East Capital Explorer's portfolio composition.

Peter Elam Håkansson Chairman, East Capital

Portfolio Investments

On 31 December 2013, East Capital Explorer had direct and fund investments totalling EUR 301m compared to EUR 258m on 31 December 2012. The direct investment portion of the total portfolio has increased during 2013 and direct investments currently represent 36% of the investment portfolio.

Investment Management team at East Capital

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

Peter Elam Håkansson Head of Public Equity

Kestutis Sasnauskas Head of Private Equity & Real Estate

Aivaras Abromavicius Senior Advisor

Jacob Grapengiesser Senior Advisor

Tim Umberger Senior Advisor

Eglé Fredriksson Senior Advisor

Emre Akcakmak Portfolio Manager

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:	22.7%

• Total fourth quarter sales from the continuing operations of Melon Fashion Group (MFG) reached RUB 2.7bn (EUR 60m), corresponding to an increase of approximately 28% compared to the same period last year. Growth in comparable stores sales during the period decelerated to 2.2% (13.6% in Q4 2012), due to a 10.3% drop in comparable sales in Zarina and slower growth of +3% in Love Republic, while comparable sales of befree showed significantly better dynamics than last year, with a growth of 13% versus -4.3% in 2012. The main reason for the slower sales growth in Zarina was insufficient stock in December

• Audited IFRS 9M results came in line with previously indicated preliminary numbers with Ebitda of RUB 619m (EUR 14m), corresponding to Ebitda margin of 9.8% vs 13.8% in 9M12. As mentioned earlier decreased margin was subject to more aggressive promotions and the pressure from continued expansion

• MFG's gross margin was reduced to 60.3% from 63% last year, given more aggressive discounting as a response to competitors' campaigns

• On a brand level, Love Republic significantly outperformed the other two brands, contributing 38% of the total sales and posting the highest gross margin of 62.2%

• During the fourth quarter, MFG opened 58 (net) additional stores, bringing the total number of new store openings in 2013 to 139, exceeding the previously communicated plan of 100 new openings during 2013 and

installing confidence in the company's ability to fulfill its expansion plan going forward

• An external valuation of MFG in December, resulted in a fair value increase of 59%, based on a more positive outlook on sales growth than previous estimates

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

Starman

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

East Capital Explorer's holding in the company:	51%
% of NAV:	8.1%

• Starman continues to perform very well. Both in terms of top line growth and profitability, the company has exceeded expectations due to a loyal client base and a strong customer offering

• Revenues in 2013 were EUR 30.2m, 7.9% higher than in 2012

• Ebitda in 2013 was EUR 14.6m, which was a 12% improvement on 2012. Ebitda margin was a strong 48.5%

• 2013 CAPEX amounted to EUR 5.7m, same as in 2012

• During the four last months the number of cable TV customers has increased, although for the full year the number declined. Total number of cable RGUs (Revenue Generating Unit) has increased 13.4% during the year

• Cable customer ARPU (Average Revenue Per User) amounted to EUR 16.1, compared to EUR 15.1 one year ago (corresponding to an increase of 6.3%). Growth in cable ARPU comes from customers choosing higher tier packages and increase of number of services per customer

• Bank debt amounted to EUR 53.2m, debt/Ebitda ratio was 3.6. Starman comfortably meets all covenants set by the banks

• Please note that numbers above include 2013 full year results while the Statement of Profit or Loss and Other Comprehensive Income of the East Capital Explorer Group only include the Starman operation after the acquisition i.e. seven months of operation

Learn more about Starman on: www.starman.ee

Komercijalna Banka Skopje

- The largest bank in Macedonia by assets and capital

East Capital Explorer's holding in the company:	10%
% of NAV:	2.1%

• The share price of Macedonian bank Komercijalna Banka Skopje (KBS) declined by 0.3% (in EUR) during the fourth quarter

• KBS reported a net profit for the full year of MKD 79m (EUR 1.3m). While this was a significant decline from 2012 full year profit of MKD 562m, the bank managed a sharp recovery during the second half of the year from a loss-making first six months. The turnaround reflects management's efforts and successes in loan loss recovery and sale of foreclosed assets

• Loan loss recoveries and the subsequent write-back of provisions, resulted in a net profit of MKD 372m (EUR 6m) for Q4 2013, an improvement from MKD 106m (EUR 1.8m) in Q3 and a sharp improvement from the MKD -401m loss in the first half of 2013, which was affected by bad loans

• Operationally, net interest income was up 1.7% quarter-on-quarter while net fee and commission income rose by just over 1% compared to Q3. Operating expenses increased by 20% quarter-on-quarter, due mostly to some one-off expenses booked in December. These additional costs, however, were more than offset by the lower net provisions booked in Q4, which were less than half of those taken in the previous quarter

• In both 2012 and 2013, KBS took net provisions of close to MKD 2bn for the full year, which effectively eroded the normalized operating profit. Management has been working diligently to clean up the portfolio in order to avoid further provisioning hits in 2014, so that the Bank can return to more normal profit levels

• Net interest margin was still weak at 3.3% for 2013, ROE (Return on Equity) was 0.8% while capital adequacy was a healthy 14.1%

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

Trev-2 Group

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

East Capital Explorer's holding in the company:	40%
% of NAV:	3.2%

• 2013 was a record year for Trev-2 Group (Trev-2). Revenues for the group amounted to EUR 99.7m, which is 12% higher than in 2012

• Ebitda was EUR 9.4m, a significant improvement compared to 2012, when Ebitda was EUR 5m. Trev-2's Ebitda margin of 9.5% is the highest among its peers in the Baltic countries

• Net profit for the group amounted to EUR 3.8m, a significant improvement compared to 2012, when net profit was EUR 1m

• Net debt was reduced to zero by year-end

• In December, after taking the latest East Capital Explorer investment and an external valuation into consideration, the value of the Trev-2 shares in the East Capital Explorer portfolio were revalued up by 10%

• The external valuation has taken into consideration that revenues for the group are expected to decrease substantially in 2014, due to the fact that EU funding will be lower in the new budget cycle, and Trev-2 has exited general construction operations as well as Latvian and Russian operations in 2013

• Management focus in 2014 remains on maintaining profitability

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

Fund Investments

East Capital Baltic Property Fund II

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

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

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

Fund performance	Q4 2013	12m 2013	Since May 12
East Capital Baltic Property Fund II	7 %	14 %	21%

Portfolio highlights during the quarter

• Year-end external valuations completed for all three properties in the portfolio contributed to a 7.2% increase in NAV during the fourth quarter. NAV has risen 21.1% since the fund's start

• Shopping centre Gedimino 9 (G9), in the heart of Vilnius, has now signed leases corresponding to more than 70% of the leasable retail area and the grand opening is planned for the end of the first quarter 2014

• Tänassilma Logistics showed a continued strong cash flow. One smaller tenant ended its lease agreement in November, but is expected to be replaced during the first quarter

Portfolio breakdown, % per 31 December 2013

Sector weighting % of the fund

Asset allocation by country % of the fund

East Capital Bering Balkan Fund

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

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

Fund performance		Q4 2013 12m 2013	Since Dec 07
East Capital Bering Balkan Fund, EUR	-2 %	6 %	-54 %

Portfolio highlights during the quarter

• The Fund declined by 2.4% in the fourth quarter, but gained 5.6% for the full year 2013

• The value of B92, an unlisted Serbian media company, was revised downwards by 60% in an external valuation after a demanding year. At Board level, a new strategy was prepared together with East Capital's strategic partners, which will hopefully lead to a turnaround in the next two to three years

• The Romanian restitution fund, Fondul Proprietatea, gained 10.6% in the fourth quarter, following the listing of its third largest asset, Romgaz, at a price above book value, as well as being due to the extension of its management contract with Templeton, incorporating stricter performance criteria

• The best absolute performance came from Impact. The Romanian real estate developer with large land plots in Bucharest jumped 167% during the fourth quarter alone. The company has had some financial problems, which East Capital believed could be resolved given the strong positive net asset value of the company. After replacing management in agreement with a new large shareholder in late spring 2013, there has been good progress. Now, certain litigations are settled and the company's debt is largely refinanced, which led to the stock price increasing almost five times since the start of the year

Portfolio breakdown, % per 31 December 2013

Sector weighting % of the fund

Financials	55.1
Consumer Discretionary	13.0
Telecommunication Services	10.1
Consumer Staples	6.0
Industrials	4.0
Energy	0.8
Materials	0.4
Utilities	0.3
Other assets and liabilities	10.3

Asset allocation by country % of the fund

 Romania  Serbia  Slovenia  Bosnia  Montenegro  Macedonia  Turkey  Other assets and liabilities	33.4 20.9 15.3 9.3 4.7 4.1 2.1 10.3

Largest holdings in the Fund on 31 December 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Fondul Proprietatea	17.3	10.6	1.8	Romania	Financials
B92	9.3	-48.2	-8.3		Serbia Cons. Discretionary
Reinsurance Co Sava	6.4	-1.8	-0.1	Slovenia	Financials
Montenegro Telekom	4.4	10.5			0.4 Montenegro Telecom. Services
Impact	4.3	166.7	2.6	Romania	Financials
Zavarovalnica Triglav	4.2	4.4	0.2	Slovenia	Financials
Sif 4 (Muntenia)	4.0	25.4	0.8	Romania	Financials
Sif 5 (Oltenia)	3.9	22.1	0.7	Romania	Financials
Telekom Srpske	3.7	-2.4	-0.1		Bosnia Telecom. Services
Komercijalna Banka Skopje	3.6	-0.3	0.0	Macedonia	Financials
All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
61	5	50

East Capital Bering Central Asia Fund

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

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

Fund performance		Q4 2013 12m 2013	Since Jan 08
East Capital Bering Central Asia Fund, EUR	13%	27%	-46%
KASE Index, EUR	0%	-11%	-71%

Portfolio highlights during the quarter

• Bering Central Asia Fund outperformed the KASE index by 10.3% in the fourth quarter and by 37.4% for the full year 2013

• The main driver behind the fund's performance was a re-valuation of East Capital's stake in Caucasus Energy and Infrastructure (CEI). In August, the fund acquired a large stake (approximately 30%) in CEI from a distressed seller at a significant discount to book value. And as a result, the total holding was written down to the level of the most recent transaction in the stock. As some market trades in the stock took place in December, the fund re-valued its stake in CEI to this much higher level

• Another Georgian holding, Teliani Valley, started to export wine to Russia in the fourth quarter after a ban on importing Georgian wine was lifted earlier in the year. For the full year, Teliani's revenues grew by approximately 25%. The stock, however, lost 6.2% in the fourth quarter

• The Kazakh telecom operator Kcell share rose by 9.8% in the quarter, continuing to demonstrate stable performance and good corporate governance development, while paying out 100% of its earnings as dividends

East Capital Bering Russia Fund

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

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

Fund performance	Q4 2013	12m 2013	Since Dec 07
East Capital Bering Russia Fund, EUR	-7%	-17%	-67%
RTS-2 Index, EUR	0%	-24%	-45%

Portfolio highlights during the quarter

• The Fund's second biggest position, Russia's largest pharmaceuticals distributor Protek, rose by 23.4% during the quarter. The company had a good year, gaining 74.5% by improving its market communication, launching a successful cost optimization program and transforming into a true dividend story with a yield of 10%

• Bank Saint Petersburg reported neutral IFRS results for the third quarter and corrected 7.2% during the quarter. East Capital decided to increase its position in the bank from 5.7% to 11.9% (of the Fund NAV) based on significant upside potential in the bank that is now trading at an attractive valuation of 0.4x book 2014 and a P/E of 3.2 and we expect a turnaround in 2014

• Cantik was written down by 21% on the basis of generally increasing political and economic uncertainty in Ukraine

• The Fund sold automotive conglomerate Gaz Group due to declining corporate governance and the resignation of CEO Bo Anderson, who has been instrumental in the company's turnaround. The stock was down 30% and contributed negatively by -1.3%

Portfolio breakdown, per 31 December 2013

Sector weighting

% of the fund

Asset allocation by country % of the fund

Telecom. Services	25.8
Energy	11.7
Materials	10.3
Utilities	7.7
Financials	7.2
Consumer Staples	4.7
Consumer Discretionary	3.2
Other assets and liabilities	29.4

Largest holdings in the Fund on 31 December 2013

	Weight,	Perf, Contr,
Company			*	Country	Sector
Kcell	25.8	9.8	2.4	Kazakhstan	Telecom. Services
Caucasus Energy & Infrastructure	7.7	759.1	7.5	Georgia	Utilities
Steppe Cement	6.8	18.8	1.2	Kazakhstan	Materials
Dragon Oil	5.5	-2.6		-0.2 Turkmenistan	Energy
Halyk Bank	5.1	27.0	0.9	Kazakhstan	Financials
Kazmunaygaz	4.3	4.4	0.2	Kazakhstan	Energy
Teliani Valley	4.3	-6.2	-0.3	Georgia	Cons. Staples
Chagala Group	3.2	0.1	0.0	Kazakhstan	Cons. Discretionary
Kazakhmys	3.2	-15.8	-0.2	Kazakhstan	Materials
Bank Tsentrkredit	2.1	-9.8	-0.3	Kazakhstan	Financials

All figures in EUR * Contribution to the portfolio performance

10 largest holdings	Unlisted holdings
( of fund)	( of fund)	Total number of holdings
68	1	17

Sector weighting % of the fund		% of the fund
Financials	25.0
Health Care	10.3
Energy	8.4
Industrials	5.6
Materials	5.3
Consumer Discretionary	4.6
Utilities	1.4
Consumer Staples	0.7
Telecommunication Services	0.6
Other assets and liabilities	38.2

Asset allocation by country

Largest holdings in the Fund on 31 December 2013
Company	Weight, %	Perf, %	Contr, %*	Country	Sector
Bank Saint Petersburg	11.9	-7.2	-1.2	Russia	Financials
Protek	9.9	23.4	2.0	Russia	Health Care
Integra	6.3	-3.1	0.0	Russia	Energy
Cantik	5.5	-20.8	-1.4	Ukraine	Financials
FESCO	4.0	-35.1	-2.0	Russia	Industrials
Rosinter	3.3	-2.5	-0.1	Russia	Cons. Discretionary
Bank Tsentrkredit	3.2	-9.8		-0.4 Kazakhstan	Financials
Highland Gold Mining	2.4	-18.8	-0.5	Russia	Materials
Moskovskiy Bank Rekonstruksii I Razvitiya	1.6	-1.9	0.0	Russia	Financials
Ob Ng Geology	1.3	19.7	0.2	Russia	Energy

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
50	13	53

East Capital Bering Ukraine Fund A

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

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

At the end of the period East Capital Explorer's share of the Fund was 25%.

Fund performance	Q4 2013	12m 2013	Since Jan 08
East Capital Bering Ukraine Fund A, EUR	-2%	-12%	-76%
PFTS Index, EUR	-2%	-14%	-83%

Portfolio highlights during the quarter

• The share of Bank Aval gained 20.8% in the fourth quarter, outperforming its local peers by a wide margin, on speculations that parent bank, RBI, would sell its well-performing but undervalued Ukrainian subsidiary at an expected large premium to the market price

• Poultry producer Myronivsky Hliboproduct significantly reduced its exports to the OSS region as it is keen to diversify away from the politically unstable region. Its share price rose by 5.5%

• The Fund manager completed seven divestments during the quarter

Portfolio breakdown, % per 31 December 2013

Sector weighting % of the fund

Asset allocation by country % of the fund

Consumer Staples	15.4
Financials	10.7
Materials	5.8
Telecommunication Services	3.9
Utilities	3.8
Consumer Discretionary	0.3
Health Care	0.3
Other assets and liabilities	59.7

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Bank Aval	10.4	20.8		1.7 Ukraine	Financials
Myronivsky Hliboproduct	10.3	5.5		0.3 Ukraine	Consumer Staples
Ukrtelecom	3.9	-13.1		-0.6 Ukraine	Telecom. Services
Tsentr Energo	3.8	-7.0		-0.4 Ukraine	Utilities
Retail Group	3.2	21.9		0.5 Ukraine	Consumer Staples
Koryukivska Fabryka Tekhnichnyh Paperiv	2.7	-15.0		-0.9 Ukraine	Materials
Stirol	1.7	17.7		0.2 Ukraine	Materials
Poltava	1.4	1.0		0.0 Ukraine	Materials
Sun Interbrew Ltd	1.0	37.1		0.3 Ukraine	Consumer Staples
Ukrprodukt	0.9	-13.8		-0.2 Ukraine	Consumer Staples

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
39	6	17

East Capital Bering Ukraine Fund R

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

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

At the end of the period East Capital Explorer's share of the Fund was 12%.

Fund performance	Q4 2013	12m 2013	Since Jan 08
East Capital Bering Ukraine Fund R, EUR	-17%	-25%	-78%
PFTS Index, EUR	-2%	-14%	-83%

Portfolio highlights during the quarter

• The Fund value declined 17.7%, mainly due to the sale of Ukrainian do-it-yourself chain, Nova Linya, and the revaluation of retail real estate developer Cantik

• The remaining part of Nova Linya was divested at a 40% loss to book value. The rationale for the sale was to avoid the risk of even larger losses going forward

• Cantik was written down by 21% on the basis of generally increasing macro-economic and economic uncertainty

• The investment manager plans to divest the two largers remaining holdings, Chumak and Cantik, in a near future

Portfolio breakdown, % per 31 December 2013

Largest holdings in the Fund on 31 December 2013

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Cantik	49.7	-20.8	-11.0	Ukraine	Financials
Chumak	30.2	-3.1	-0.8	Ukraine	Consumer Staples
Rtc Irpin	1.9	-1.9	0.0	Ukraine	Financials

All figures in EUR

* Contribution to the portfolio performance
10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
82	0	3

East Capital Russia Domestic Growth Fund

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

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

Fund performance			Since
	Q4 2013	12m 2013	Aug 12
East Capital Russia Domestic Growth Fund, EUR	13%	9%	5%

Portfolio highlights during the quarter

• The fourth quarter was exceptionally strong for the Fund with most stocks performing well. The Fund gained 12.9% during the period, significantly outperforming the MSCI Russia benchmark index which ended in negative territory

• Over the quarter the Fund made several significant changes, including a full exit from the Russian real estate developer LSR Group after the GDR spread narrowed to an almost historical low of 7% compared with nearly 20% at the time of the acquisition. The Fund also exited VTB Bank and the telecom operator, Vimpelcom

• The Fund increased its weight in Aeroflot to 17% of NAV, making it the largest holding. The Fund also increased its weight in Yandex, Russia's dominant internet search engine

• Sistema gained 26.5% as the spread to ADR and discount to NAV continued to narrow. Sell-side houses have started arguing that this conglomerate should trade a par with its NAV or at a discount of no more than 10% (for example, Koc Holding in Turkey) versus the current discount of 34%

East Capital Special Opportunities Fund

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

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

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

Fund performance			Since
		Q4 2013 12m 2013	May 09
East Capital Special Opportunities Fund, EUR	6%	22%	37%

Portfolio highlights during the quarter

• The Fund has continued its exit strategy as previously communicated and completely closed its position in the Russian generic pharmaceuticals producer, Verofarm, at a 33% premium to the market price, or 5.1 times enterprise value to Ebitda of 2013. The Fund also sold the Russian cement producer Sibirskiy Cement

• The Fund's largest holding, Romanian restitution Fund Fondul Proprietatea gained 10.8%, following the listing of its third largest asset, Romgaz, during the quarter

• The share price of the Fund's second largest holding, car manufacturer Sollers, gained 21.4% in the fourth quarter on investor interest in low valuation and yield

Portfolio breakdown, % per 31 December 2013

Sector weighting

% of the fund

Financials	22.5
IT	19.2
Industrials	17.2
Consumer Discretionary	11.9
Telecom. Services	10.1
Consumer Staples	9.3
Utilities	8.1
Other assets and liabilities	1.7

Asset allocation by country % of the fund

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Aeroflot Russian Airlines	17.2	48.8	6.2	Russia	Industrials
Sberbank	14.5	2.4	0.2	Russia	Financials
Yandex	13.5	16.3	1.9	Russia	IT
Sistema	10.1	26.5	2.3	Russia	Telecom. Services
M.Video	7.7	12.9	1.0	Russia	Cons. Discretionary
Mail.Ru Group	5.7	15.2	0.8	Russia	IT
Magnit	4.8	3.2	0.1	Russia	Consumer Staples
E.ON Russia	4.6	-8.0	-0.5	Russia	Utilities
Bank Saint Petersburg	4.6	-7.2	-0.3	Russia	Financials

All figures in EUR

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
87	0	13

Dixy 4.6 -9.4 -0.6 Russia Consumer Staples

Portfolio breakdown, % per 31 December 2013

Sector weighting % of the fund		Asset allocation by country % of the fund
Financials Consumer Discretionary	67.9 25.8	 Romania	67.9
Materials	2.4	 Russia  Serbia	28.1 2.4
Energy Industrials	1.6 0.5	 Other assets	1.6
Consumer Staples Other assets and liabilities	0.3 1.6	and liabilities

	Weight,	Perf,	Contr,
Company	%	%	%*	Country	Sector
Fondul Proprietatea	67.9	10.8	4.9	Romania	Financials
Sollers	25.8	21.4	4.8		Russia Cons. Discretionary
Stirol	2.2	17.8	0.2	Ukraine	Materials
Mashstroy	1.6	-38.7	-0.7	Russia	Energy
Trans Signalstroy	0.5	-15.8	0.0	Russia	Industrials
Sintal	0.3	-70.3	-0.5	Ukraine	Consumer Staples
Belon	0.2	-31.5	-0.1	Russia	Materials

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
98	0	7

East Capital Special Opportunities Fund II

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

At the end of the period East Capital Explorer's share of the Fund was 57%.

Fund performance			Since
	Q4 2013	12m 2013	Oct 10
East Capital Special Opportunities Fund II, EUR	3%	-8%	-49%

Portfolio highlights during the quarter

• Slovenian insurance company Zavarovalnica Triglav, the Fund's largest holding, continued to rise by 4.4% on the back of strong results and a large dividend similar to last year's, yielding above 10%. Additionally, the risk perception for Slovenia decreased after the country managed to recapitalize its banks without asking for international support

• The Fund's second largest holding, Serbian confectionary producer Bambi, continued to rise due to significant buybacks, increasing 14.7% in the fourth quarter and adding 2.3% to the Fund's NAV

Portfolio breakdown, % per 31 December 2013

Sector weighting

% of the fund

Financials 38.6 Consumer Staples 21.7 Health Care 11.8 Energy 9.5 Utilities 6.1 Materials 3.8 Other assets and liabilities 8.4

Asset allocation by country

% of the fund

Largest holdings in the Fund on 31 December 2013

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Zavarovalnica Triglav	24.7	4.4		0.9 Slovenia	Financials
Bambi	18.5	14.7	2.3	Serbia	Cons. Staples
Verofarm	11.8	0.8	0.0	Russia	Health Care
Nfd 1 Delniski Investicijski Sklad Dd	7.1	1.6		0.1 Slovenia	Financials
AIK Banka	6.8	11.1	0.7	Serbia	Financials
IG Seismic Service GDR	5.7	8.4	0.4	Russia	Energy
Hydro Ogk	4.0	2.4	0.1	Russia	Utilities
Integra	3.9	-3.1	-0.1	Russia	Energy
Sibirskiy Cement	3.8	-3.6	-0.2	Russia	Materials
Linas Agro Group	3.2	-4.5		-0.2 Lithuania	Cons. Staples

All figures in EUR * Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
89	8	14

Short-term investments

Short-term investments

On 31 December 2013, East Capital Explorer had one direct investment under liquidation totalling EUR 0.1m (EUR 25.8m), which is included in short-term investments. The comparative figure for last year, as presented on page 3 in this report, includes the holdings in East Capital Power Utilities Fund and East Capital Bering New Europe Fund which have been divested during the financial year.

Cash and cash equivalents

Includes an amount of EUR 20.3m (EUR 46.4m), not yet invested or drawn-down, which was placed in cash and cash equivalents. Interest income from cash and cash equivalents during the reporting period amounted to EUR 0.1m (EUR 0.4m). The increase in cash during this quarter is attributable to divestments undertaken in the period and dividend received.

Cash and cash equivalents amounted to EUR 21.5m as of 31 December in the Statement of Financial Position, since it also includes cash from the consolidated Starman.

Results

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

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

Due to the application of changed IFRS (IFRS 10) control requirements, starting 2013, East Capital Explorer is no longer consolidating its fund investments in those cases in which the Company was previously regarded as having a controlling influence. Effectively, all fund holdings are, instead, reported at fair value in the financial statements. The application of IFRS 10 for annual periods begins on or after 1 January 2014, but earlier application is permitted. East Capital Explorer has decided to implement the standard starting 1 January 2013. All comparable figures for the corresponding period in the previous year have been restated. See pages 31-33.

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

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

Group results in fourth quarter

During the fourth quarter, the net result for the Group was EUR 26.3m (EUR 0.6m) including EUR 32.9m (EUR 2.7m) changes in value of investments.

Of the net result EUR 26.0m (EUR 0.6m) relates to shareholders of the Parent Company, corresponding to earnings per share of EUR 0.83 (EUR 0.02) in the quarter.

During the period, the Group received a third dividend tranche of EUR 1.6m from Melon Fashion Group. The remaining holdings in East Capital Power Utilities Fund and East Capital Bering New Europe Fund were divested, contributing a loss of EUR 0.4m to the periods result. External valuations were performed of the holdings in the direct investments Melon Fashion Group and Trev-2 Group, resulting in a fair value adjustment of EUR 27.2m. As an effect, provisions were also made for performance fees in accordance with the investment management agreement of EUR 6.9m, including VAT.

The operations in Starman, acquired in May, are included with EUR 7.7m in total operating income, contributing with EUR 1.8m to operating profit. The Ebitda-margin of the operations has been stable around 50% in the past quarter. Due to the purchase price allocation the amortisation of intangible assets has increased by EUR 0.2m per month.

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

Financial expenses amounted to EUR -0.9m (EUR 0.4m). The increase

is due to the bank financing of Starman.

Group results for the period January-December

Net profit for the Group was EUR 25.3m (EUR 14.4m) including EUR 31.7m (EUR 18.4m) changes in value of investments.

Of the net result, EUR 24.7m (EUR 14.3m) relates to shareholders of the Parent Company, corresponding to earnings per share of EUR 0.79 (EUR 0.42).

The Group has received dividend of EUR 3.9m in total from Melon Fashion Group during 2013.

The operations in Starman, acquired in May, are included with EUR 17.8m in net sales contributing to operating profit with EUR 3.9m. The Ebitda-margin in the operations was 48.5%.

Of the total operating expenses of EUR -25.0m (EUR -7.2m) during the reporting period, EUR -13.9m (-) was related to Starman (of which EUR 1.4m refers to amortisation of intangible assets included in the purchase price allocation) and EUR -2.1m (EUR -1.8m) to the Parent Company. The remaining EUR -9.1m (EUR -5.4m) was related to operating expenses in other subsidiaries, mainly fees for direct investments.

To calculate all fees related to East Capital Explorer, fees originated in funds should be added. The total fees accrued to the Investment Manager generated by the fund investments and direct investments held by East Capital Explorer AB amounted to EUR 12.4m (EUR 9.3m) including VAT. Of this EUR 6.3m (EUR 4.0m) was performance fees. For more details about fees, please see the latest annual report available on our website.

Financial income for the period amounted to EUR 0.1m (EUR 1.1). The decrease is explained by a high amount of interest generated from short-term investments during last year.

Financial expenses amounted to EUR -2.3m (EUR -0.3m). The increase in financial expenses was due to the bank financing of Starman.

Tax of EUR -1.3m (EUR 0.3m) was mainly withholding taxes relating to dividend received.

Financial Position and Cash Flow

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

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

The Group's financial position changed after having consolidated the loans related to Starman. In total, interest bearing liabilities amounted to EUR 76.8m (-) and of this amount EUR 53.1m (-) related to Financial institutions and the remaining EUR 23.7m to shareholders loans provided by the Non-controlling interest. The loans from the financial institutions included financial covenants depending on the net debt to Ebitda ratio, for which Starman is compliant.

Cash flow from operating activities during the year was EUR 6.0m (EUR -0.9m). The positive development mainly came from Starman activities.

The Group's cash, cash equivalents and other short-term investments at the end of the period amounted to EUR 21.6m (EUR 46.5m).

The main cash outflows in the investing activities during the year refer to investment in East Capital Russia Domestic Growth Fund amounting to EUR 25m and investment in Starman of EUR 24m. The acquisition of Starman generated a net cash outflow of EUR 22.6m, since the acquired company included EUR 1.0m in cash. Sales of shares during the reporting period are mainly East Capital Bering New Europe Fund, East Capital Special Opportunities Fund and East Capital Power Utilities Fund. Together these three funds contributed with EUR 33.8m to the cash flow.

Commitments and draw-downs

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

Parent Company

The Parent Company's net profit for the year amounted to EUR 23.3m (EUR 15.6m). This mainly referred to reversal of write down of shares in East Capital Explorer Investments AB due to increased value of the investment portfolio. Operating expenses amounted to EUR -2.1m (EUR -1.8m). No investment activities were carried out in the Parent Company.

Business Environment and Market

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

GDP growth slowed down but bottomed out in the region in 2013. Inflation has fallen to new lows, but there are significant differences across countries. We believe in a modest macro recovery in 2014 and a continued divergence on the financial markets in the region. Some focus will remain on tapering and other external issues, which may impact liquidity and investor risk appetite for our region from time to time.

Other information

Risks and factors of uncertainty

The dominant risk in East Capital Explorer's and the Group's operations is commercial risk in the form of exposure to specific sectors, geographic regions or individual holdings and financial risk in the form of market risk, equity price risk, foreign exchange risk and interest rate risk. A more detailed description of East Capital Explorer's and the Group's material risks and uncertainties is provided in the Company's Annual Report 2012. An assessment for the coming months is provided in the Business Environment and Market section above.

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

Related party transactions year-to-date 2013

In December 2013, the Group acquired an additional 6% of the shares in Trev-2 Group from East Capital funds for a consideration of EUR 1.5m. The price was in line with the external valuation of Trev-2 Group which carried out during December 2013. The Group has also paid fees to related parties according to the agreements in place. East Capital Explorer AB has a related party relationship with its subsidiaries, with other companies in the East Capital Group, as well as with the management and employees. The single largest counterparty is the East Capital Group.

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

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

East Capital Explorer AB has an Investment Management Agreement with the Investment Manager and East Capital Explorer Investments AB. During the year, East Capital Explorer generated fees to the Investment Manager of a total of EUR 12.4m (EUR 9.3m).

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 year, the Group purchased services for EUR 0.3m (EUR 0.2m), all through the Parent Company.

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

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

Organizational and investment structure

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

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

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

Share buyback mandate and redemption program

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

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

At the end of January 2013, East Capital Explorer cancelled the shares repurchased through the share buyback program. The Company does not hold any own shares following the cancellation.

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

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

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

Dividend

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

Events occurring after the end of the quarter

In January, the four Bering funds; East Capital Bering Russia Fund, East Capital Bering Balkan Fund, East Capital Bering Central Asia Fund and East Capital Bering Ukraine Fund (Class A) were restructured and the investments held by the fund were transferred to two new funds, East Capital New Markets Fund and East Capital Deep Value Fund. The restructuring will not have a material effect on the result of the Group as the acquisition value that is attributed to the new funds is equal to the net valuation of the old funds as at 31 December 2013. However a small value change will occur due to restructuring costs of approximately EUR 0.2m (18 basis points). See page 34 for more information.

In order to be able to take advantage of attractive investment opportunities in assets which are estimated to generate strong cash flow and good growth, the Board of East Capital Explorer today announced that it has resolved to convene an Extraordinary General Meeting 24 March 2014 to resolve upon the introduction of a new class of shares, preference shares, in the articles of association and an authorisation for the Board to resolve to issue preference shares. The two main areas of focus for new investments, the Russian and Baltic domestic consumer sector, which are expected to continue to benefit from a growing domestic consumption, and the Baltic real estate sector with current attractive prices, low interest rates and rising rents provide the conditions for an attractive dividend yield and positive growth. The proposed financing possibility, combined with the expected return on these investments, creates a higher return on invested capital for the owners of ordinary shares of East Capital Explorer. For more information regarding the proposals to the Extraordinary General Meeting on 24 March 2014, see separate press release and notice of Extraordinary General Meeting.

East Capital Explorer will be covered by the new EU directive for alternative investment funds (AIFMD), currently being implemented across the European Union, aiming to strengthen the financial system and increase investor protection. Businesses and entities covered by directive, including East Capital Explorer, are now preparing to comply with these rules within the transition period which ends on 22 July 2014 and the Board of East Capital Explorer has proposed the Extraordinary General Meeting to resolve on certain amendments to the articles of association. The changes will entail supervision and licensing requirements as well as changes to the internal organisation and reporting to shareholders. Management anticipates that the changes will be managed in a cost efficient manner by utilizing the existing organisation and resources available to East Capital, as an already supervised entity, in Sweden and in Luxembourg. For more information regarding the proposals to the Extraordinary General Meeting on 24 March 2014, see separate press release and notice of Extraordinary General Meeting.

NAV on 31 January 2014

NAV per share on 31 January 2014 amounted to EUR 9.81 (corresponding to SEK 86.68). The share price on 31 January 2014 was SEK 60.00 (corresponding to EUR 6.79). Cash, cash equivalents and other shortterm investments on 31 January 2014 amounted to EUR 21.4m (SEK 189m).

Stockholm, 20 February 2014

Catharina Hagberg Acting Chief Executive Officer

Contact information

Catharina Hagberg, Acting CEO, +46 8 505 88 552 Lena Krauss, Head of Investor Relations & Finance, +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

• Monthly net asset value report on the fifth working day after the end of each month
• Extraordinary General Meeting 2014 on 24 March 2014
• Annual Report 2013 available in April 2014
• Annual General Meeting 2014 on 22 April 2014
• Interim Report, 1 January 31 March 2014 on 22 May 2014
• Interim Report, 1 January 30 June 2014 on 21 August 2014
• Interim Report, 1 January 30 September 2014 on 7 November 2014

Subscribe to monthly NAV updates, financial reports and press releases directly to your e-mail on: www.eastcapitalexplorer.com or by sending an email to 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 20 February 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 31 December 2013 and the twelve-month period then ended except for the portfolio reporting on page 5-14, and 34. 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, 20 February 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.

Statement of Profit or Loss and Other Comprehensive Income

EUR thousands		Restated		Restated
	2013	2012	2013	2012
	Jan-Dec1	Jan-Dec2	Oct-Dec1	Oct-Dec2
Net sales	17,369	-	7,551	-
Other operating income	383	-	154	-
Changes in value of portfolio	31,741	18,352	32,911	2,702
Received dividends	4,313	2,373	1,609	-
Total operating income	53,805	20,725	42,225	2,702
Goods, raw materials and services	-4,829	-	-1,990	-
Staff expenses	-3,644	-833	-1,264	-221
Depreciation and amortisation of non-current assets	-4,600	-	-1,965	-
Other operating expenses	-11,971	-6,495	-8,599	-3,324
Operating profit/loss	28,761	13,396	28,408	-843
Financial income	83	1,070	31	310
Financial expense	-2,311	-336	-913	403
Profit/loss before tax	26,533	14,130	27,526	-130
Tax	-1,280	317	-1,212	743
NET PROFIT/LOSS FOR THE PERIOD	25,253	14,447	26,314	612
Other comprehensive income:
Cash flow hedges - effective portion of changes in fair value	-277	-	-49	-
Exchange differences on translating foreign operations	-	77	-	1
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	24,976	14,524	26,265	613
Net profit/loss for the year distribution:
Shareholders of the Parent Company	24,712	14,346	25,965	612
Non-controlling interest	541	101	349	-
	25,253	14,447	26,314	612
Total comprehensive income distribution:
Shareholders of the Parent Company	24,571	14,424	25,940	613
Non-controlling interest	405	101	325	-
	24,976	14,524	26,265	613
Earnings per share, EUR - Shareholders of the Parent Company	0,79	0,42	0,83	0,02

No accumulated dilution effects during the period

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

²Starting on 1 January 2013, East Capital Explorer has chosen early adoption of IFRS 10. Comparable figures (Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Cash Flow and Segment Reporting) have been restated as if the framework had also applied in 2012. Further information can be found on page 29 "Accounting principles" and in the Note "Restatement of Financial Statements in respect of the application of IFRS 10"

Statement of Financial Position

EUR thousands		Restated	Restated
	2013	2012	2012
	31 Dec1	31 Dec2	1 Jan2
Assets
Property, plant and equipment	27,710	-	-
Goodwill	56,986	-	-
Other intangible assets	16,228	-	-
Shares and participations in investing activities	275,818	257,599	254,557
Deferred tax assets	-	403	70
Total non-current assets	376,742	258,002	254,627
Inventories	2,423	-	-
Short term receivables	1,047	32	-
Tax receivables	-	740	103
Accrued income and prepaid expenses	1,352	80	110
Short-term investments	112	-	22,793
Cash and cash equivalents	21,504	46,497	16,639
Total current assets	26,438	47,349	39,644
Total assets	403,179	305,350	294,271
Equity and Liabilities
Share capital	3,640	3,631	3,628
Other contributed capital	348,180	362,458	369,923
Other reserves	-141	77	-
Retained earnings	-40,863	-65,653	-79,999
Equity attributable to shareholders of the Parent Company	310,814	300,513	293,551
Non-controlling interest	415	8	-92
Total Equity	311,229	300,521	293,459
Long-term interest bearing liabilities	68,634	-	-
Derivatives	277	-	-
Total long-term liabilities	68,911	-	-
Current interest bearing liabilities	8,203	-	-
Tax liabilities	26	-	-
Derivatives	2	-	-
Other current liabilities	2,171	188	200
Accrued expenses and deferred income	12,637	4,641	612
Total current liabilities	23,039	4,829	811
Total equity and liabilities	403,179	305,350	294,271

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets	64,000	-	-
Contingent liabilities	-	-	-

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

2 Starting on 1 January 2013, East Capital Explorer has chosen early adoption of IFRS 10. Comparable figures (Statement of profit or loss and other Comprehensive Income, Statement of Financial Position, Statement of Cash Flow and Segment Reporting) have been restated as if the framework had also applied in 2012. Further information can be read on page 29 "Accounting principles" and Note "Restatement of Financial Statements in respect of the application of IFRS 10"

Statement of Changes in Equity

EUR thousands 2013	Share capital	Other contributed capital	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 2013	3,631	362,458	77	-65,653	300,513	8	300,521
Net profit/loss for the period	-	-	-	24,712	24,712,	541	25,253
Other comprehensive income	-	-	-218	77	-141	-136	-277
Total comprehensive income	-	-	-218	24,789	24,571	405	24,976
Acquired subsidiaries	-	-	-	-	-	2	2
Bonus issue/cancellation of share	9	-9	-	-	-	-	-
Redemption program	-	-14,269	-	-	-14,269	-	-14,269
Per 31 December 2013	3,640	348,180	-141	-40,864	310,814	415	311,229

EUR thousands
2012	Share capital	Other contributed capital	Other Reserves	Retained earnings incl. profit /loss for the year	Total equity shareholders in Parent Company	Non-controlling interest	Total equity
Per 31 December 2011	3,628	369,923	4,183	-84,182	293,551	45,627	339,178
Effect of changes in accounting principles	-	-	-4,183	4,183	-	-45,719	-45,719
Opening equity 1 January 2012	3,628	369,923	-	-79,999	293,551	-92	293,459
Net profit/loss for the period	-	-	-	14,346	14,346	101	14,447
Other comprehensive income	-	-	77	-	77	-	77
Total comprehensive income	-	-	77	14,346	14,424	101	14,524
Bonus issue	2	-2	-	-	-	-	-
Paid dividend to shareholders	-	-3,033	-	-	-3,033	-	-3,033
Share buy-back	-	-4,429	-	-	-4,429	-	-4,429
Per 31 December 2012	3,631	362,458	77	-65,653	300,513	8	300,521

Statement of Cash Flow

EUR thousands		Restated
	1 Jan – 31 Dec 20131	1 Jan – 31 Dec 2012
Operating activities
Operating profit/loss	28,761	13,396
Changes in value	-31,741	-18,352
Adjustment for non cash-items3	2,991	-
Interest received	55	626
Interests paid and other financial payments	-1,107	-
Tax paid	-149	-640
Cash flow from current operations before changes in working capital	-1,190	-4,970
Cash flow from changes in working capital
Increase (-)/decrease (+) in other current receivables	95	3
Increase (-)/decrease (+) in inventory	239	-
Increase (+)/decrease (-) in other current payables	6,868	4,017
Cash flow from operating activities	6,012	-951
Investing activities
Acquisition of group companies	-22,605	-
Investment in shares and participations	-27,279	-40,541
Repaid shareholders contributions	-	21,536
Sale of short-term investments	11,258	23,164
Sale of shares and participations	29,431	34,456
Purchase of property, plant, equipment and intangible assets	-3,728	-
Cash flow from investing activities	-12,925	38,616
Financing activities
Repayment of loans	-3,670	-
Paid dividend to shareholders	-	-3,033
Redemption program	-14,269	-4,429
Cash flow from financing activities	-17,939	-7,462
Cash flow for the period	-24,851	30,203
Cash and cash equivalents at beginning of the period2	46,497	16,639
Exchange rate differences in cash and cash equivalents	-142	-345
Cash and cash equivalents at end of the period	21,504	46,497
1 Actual figures for 2013 include the acquired and consolidated business of Starman from 30 May 2013 2 Cash equivalents comprise deposits and cash 3 Adjustment for non-cash items:

Amortisation and depreciation	4,600	-
Not received dividend	-1,609	-
	2,991	-

Segment Reporting

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

EUR thousands 1 Jan – 31 Dec 2013	Fund Investments	Direct Investments1	Short-term Investments	Unallocated	Total consolidated
Net sales	-	17,369	-	-	17,369
Other operating income	-	383	-	-	383
Changes in value	7,188	25,092	-537	-2	31,741
Received dividends	-	4,313	-	-	4,313
Goods, raw materials and services	-	-4,829	-	-	-4,829
Staff expenses	-	-2,558	-	-1,086	-3,644
Depreciation and amortisation of non-current assets	-	-4,600	-	-	-4,600
Other operating expenses	-	-10,942	-	-1,029	-11,971
Operating profit/loss	7,188	24,227,	-537	-2,117	28,761
Financial income	-	2	78	3	83
Financial expense	-	-2,008	-304	-	-2,311
Profit/loss before tax	7,188	22,222	-762	-2,114	26,533
Assets	188,892	193,843	20,405	40	403,179

EUR thousands
Restated		Direct	Short-term		Total
1 Jan – 31 Dec 2012	Fund Investments2	Investments1	Investments	Unallocated	consolidated
Changes in value	-4,025	22,041	335	-	18,352
Received dividends	-	2,373	-	-	2,373
Staff expenses	-	-	-	-833	-833
Other operating expenses	-109	-5,401	-	-985	-6,495
Operating profit/loss	-4,134	19,013	335	-1,818	13,396
Financial income	606	-	463	-	1,070
Financial expense	-334	-	-	-3	-336
Profit/loss before tax	-3,861	19,013	798	-1,821	14,130
Assets	196,094	61,586	46,498	1,172	305,350

1 Starman's segment reporting is included in direct investments

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

Financial Instruments

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

EUR thousands Group 31 December 2013	Total carrying amount	Fair Value
Shares and participation in investing activities	275,818	275,818
Other receivables	1,047	1,047
Short-term investments	112	112
Cash and cash equivalents	21,504	21,504
Total financial assets	298,481	298,481
Long-term interest bearing liabilities	68,634	68,634
Current interest bearing liabilities	8,203	8,203
Accrued expenses	11,074	11,074
Total financial liabilities	87,911	87,911

Calculation of fair value

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

Financial instruments not measured at fair value through profit or loss

For accounts receivable and accounts payable, the carrying amount is deemed to reflect fair value since the remaining maturity is generally short.

Fair value estimation

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

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

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

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

The following table analyses, within the fair value hierarchy, the Group's financial assets measured at fair value as at 31 December 2013.

EUR thousands
31 December 2013
Shares and participations in investment activities designated at
fair value through profit or loss at inception1 :	Level 1	Level 2	Level 3	Total balance
- Fund Investments	165,713	-	23,179	188,892
- Direct Investments	6,609	-	80,317	86,926
- Short-term Investments2	-	-	112	112
Total assets measured at fair value	172,322	-	103,608	275,929

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

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

2Due to the ongoing liquidation of East European Debt Finance, these holdings are no longer separately reported but included in short-term investments as the remaining assets are limited

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

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

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

The following table presents the movement in level 3 investments for the period ended 31 December 2013 by class of financial instrument:

31 December 2013
Changes in financial assets and liabilities in Level 3, EURt	Fund Investments	Direct Investments	Short term Investments	Total
Opening balance 2013	22,659	52,890	1	75,550
Reclassification direct investments to short-term investments	-	-1,289	1,289	-
Purchase/addition	740	1,537	-	2,277
Sales/reduction	-1,698	-	-621	-2,320
- Movements to Level 3	-	-	-	-
- Movements from Level 3	-	-	-	-
- Result from financial assets at fair value through Statement of profit or
loss	1,478	27,180	-557	28,100
Closing balance 2013	23,179	80,317	112	103,608

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

Groups Net debt position

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

31 December 2013
Net debt Group, EURt
Short-term investments	112
Cash and cash equivalents	21,504
Interest-bearing liabilites, financial institutes	-53,187
Interest-bearing liabilites, shareholders loan from non-controlling interest	-23,650
Net debt	-55,222

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

Within one year	8,203
1-3 years	16,347
4-5 years	28,636
More than 5 years	23,650
Total interest-bearing liabilities	76,837

All loans are originally denominated in euro.

The bank loans amount to EUR 53,098t and the remaining EUR 88t are related to financial lease loans.

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

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

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

The financial leases fall due up to 2014.

Other risk information

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

Sensitivity analysis for market risks (EUR thousands)

31 December 2013
Risk factors	Change	Effect on net profit/loss for the period
Equity price	+/- 10%	27,642
Value of level 3 holdings	+/- 10%	10,361

Pledged Assets and Contingent Liabilities

As of 31 December 2013 shares in subsidiaries have been pledged as collateral for the obligations within existing loan agreements with financial institutes. The group value of the pledged assets amounted at balance date to EUR 64m.

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

Business Combinations

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

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

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

Acquisition analysis for Starman

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

EUR thousands
	Finalised PPA
Fair value of purchase consideration paid	23,609
Fair value of identifiable assets and liabilities
Intangible assets	17,148
Property, plant and equipment	27,662
Financial fixed assets	38
Inventory and other current assets	3,660
Cash and cash equivalents	1,004
Interest-bearing liabilities to financial institutes	-56,820
Interest-bearing liabilities to non-controlling interest	-22,886
Current liabilities, non-financial	-3,180
Total fair value of identifiable net assets	-33,375
Non-controlling interest (49%)	-2
Goodwill	56,986
Total consideration paid in cash	23,609
Less acquired cash and cash equivalents	-1,004
Net cash outflow from the combination	22,605

The Purchase Price Allocation (PPA) has been finalised.

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

In the PPA, a fair value of EUR 20,106t was attributed to Buildings (of which EUR 18,611t relates to values in Networks), EUR 7,038t to Plant & Machinery and the remaining EUR 518t to Equipment tools and construction in progress.

The new business is consolidated starting from June and the contribution to Income is EUR 17,752t and to Operating profit EUR 3,899t.

If the new business would had been consolidated from 1 January 2013, the consolidated Group would have reported an Operating income of EUR 30,192t and an Operating profit of EUR 7,263t.

Transaction costs total EUR 353t. Included in other operating expenses in the Statement of profit or loss and other comprehensive income is EUR 115t and EUR 230t is included in bank debt.

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

Consolidated Key Figures

Key figures1	12m 2013	9m 2013	6m 2013	3m 2013	12m 2012	9m 2012	6m 2012	3m 2012
Net asset value, EURm	311	285	280	292	301	301	290	321
Change in NAV during the quarter, %	9.1	1.6	-4.1	-2.7	-0.1	3.7	-9.7	9.4
Equity ratio, %2	77.2	76.7	76.2	98.4	97.5	97.9	96.1	97.2
Market capitalisation, SEKm	1,956	1,468	1,439	1,634	1,618	1,691	1,601	1,879
Market capitalisation, EURm	225	169	165	195	188	200	183	213
Outstanding number of shares, m	31.4	31.4	31.4	31.4	33.0	33.2	33.7	33.7
Weighted average number of shares, m	31.4	31.4	31.4	31.4	33.5	33.6	33.7	33.7
Number of employees	2653	2583	2833	5	5	4	4	4

Key figures per share	12m	9m	6m	3m	12m	9m	6m	3m
	2013	2013	2013	2013	2012	2012	2012	2012
Earnings per share, EUR	0.79	-0.04	-0.18	0.19	0.49	0.41	-0.04	0.92
NAV, SEK	88	79	78	78	78	77	75	84
NAV, EUR	9.89	9.07	8.92	9.30	9.10	9.07	8.6	9.52
Share price, SEK	62.25	46.70	45.80	52.00	49.00	51.00	47.50	55.75
Share price, EUR	7.00	5.38	5.25	6.21	5.70	6.04	5.42	6.32
SEK/EUR	8.89	8.69	8.72	8.37	8.59	8.44	8.77	8.83

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

2 Influenced due to financial liabilities after consolidation of Starman

3 Influenced by the number of employees in Starman

Income Statement – Parent Company

EUR thousands
	2013	2012	2013	2012
	Jan-Dec	Jan-Dec	Oct-Dec	Oct-Dec
Staff expenses	-1,086	-833	-276	-220
Other operating expenses	-1,029	-985	-267	-264
Operating profit/loss	-2,115	-1,818	-543	-485
Financial income	1,724	17,607	393	3,169
Financial expenses1	24,048	-124	26,438	-6
Profit/loss before tax	23,657	15,664	26,288	2,678
Income tax	-340	-78	-391	-69
NET PROFIT/LOSS FOR THE PERIOD	23,317	15,586	25,898	2,609

1 Financial expenses in Parent Company include reversal of previously recognised write down of shares in subsidiaries of EUR 24.1m, mainly attributable to the fourth quarter

Statement of Comprehensive Income – Parent Company

EUR thousands
	2013	2012	2013	2012
	Jan-Dec	Jan-Dec	Oct-Dec	Oct-Dec
NET PROFIT/LOSS FOR THE period	23,317	15,586	25,898	2,609
TOTAL COMPREHENSIVE INCOME FOR THE period	23,317	15,586	25,898	2,609

Balance Sheet – Parent Company

EUR thousands
	31 Dec 2013	31 Dec 2012
Participations in Group companies	280,921	271,272
Deferred tax assets	-	340
Total non-current assets	280,921	271,612
Other short-term receivables	1	30
Loan to group companies	29,315	29,315
Accrued income and prepaid expenses	21	23
Cash and cash equivalents	776	1,131
Total current assets	30,113	30,499
Total assets	311,034	302,111
Shareholders' equity
Restricted equity
Share capital	3,640	3,631
Total restricted equity	3,640	3,631
Non-restricted equity
Share premium reserve	348,183	362,461
Retained earnings	-64,510	-80,096
Net profit/loss for the period	23,317	15,586
Total non-restricted equity	306,990	297,952
Total shareholders' equity	310,629	301,581
Liabilities
Other liabilities	108	198
Accrued expenses and prepaid income	296	332
Total current liabilities	404	530
Total liabilities	404	530
Total equity and liabilities	311,034	302,111

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets - - Contingent liabilities - -

Accounting Principles

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

New and changed accounting policies in 2013

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

IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls. Control requirements have changed compared to "IAS 27 Consolidated and Separate Financial Statements" and "SIC-12 Consolidation—Special Purpose Entities" which form the basis for the year-end report 2012. IFRS 10 requires exposure to variable returns and the ability to affect those returns through power over an investee in order for the investee to be considered to comprise a controlled entity. The application of IFRS 10 for annual periods begins on or after 1 January 2014, but earlier application is permitted. East Capital Explorer AB has chosen early adoption of these rules. As a consequence funds and similar entities are no longer consolidated due to lack of influence, and these holdings are instead held at fair value under IAS 39 starting on 1 January 2013. Consequently, the funds that were consolidated in the year-end report no longer qualify as subsidiaries, and were therefore deconsolidated and instead held at fair value in this interim report for the reporting period 1 January-31 December 2013. All of the comparable figures for the corresponding period in the previous year have been restated. Effect of changes in the accounting principles can be seen in the Statement of Changes in Equity for the Group on page 21 and in the Note "Restatement of Financial Statement" on pages 31-33.

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

IFRS 13 Fair Value Measurement and Amendment to IFRS 7 Financial Instruments – Disclosures does not have any material monetary effect on the Group or Parent Company. Disclosures in accordance with the new requirements are presented on pages 24-25.

New IFRS standards to come into force from 2014 and later

The following new or amended standards will be applied and affect the consolidated financial statements from 1 January 2014 and later.

In accordance with the changes of foremost IFRS 10 and IAS 27, imposed on investment entities, the Company will, from 1 January 2014 report all investments at fair value and will not consolidate any of its subsidiaries. Comparatives for 2013 will be recalculated. The only notable difference is attributable to the holdings in Starman, which was acquired in 2013. The Statement of Financial Position as at the beginning of 2013 is therefore not affected by the change. As the value of Starman has not changed significantly during the holding period, the equity at the end of 2013 will not be affected by any significant amount by the recalculation. Nevertheless, the net result for 2013 is affected, but only to a small extent. The main difference will consist of a changed appearance as several lines in the Statement of Profit or Loss and Other Comprehensive Income and the Statement of Financial Position as the income, expenses and balance sheet items relating to subsidiaries and sub-subsidiaries will not be recognized as part of the Group.

Implemented accounting policies in 2013 due to consolidation of acquired business

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

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

Revenue recognition

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

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

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

Recognition of revenue from connection fees

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

Inventories

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

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

Property, plant and equipment

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

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

An item of property, plant and equipment is subsequently carried at its cost less any accumulated depreciation and any accumulated impairment losses. Items of property, plant and equipment are written down to their recoverable amount (higher of fair value less costs to sell and value in use), if it is lower than the asset's carrying amount. An impairment test is performed to determine if the recoverable amount is lower than the carrying amount is performed whenever there is any indication that an impairment loss has incurred.

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

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

Land and buildings

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

Machinery and equipment

• modems 20% 25%
• digital boxes 20%
• machinery and equipment10% 40%
• equipment related to provision of services 17% 59%

Other items of property, plant and equipment • other fixtures, tools and fittings 20% - 33%

Land is not depreciated.

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

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

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

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

Intangible assets

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

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

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

The annual amortisation rate for all the groups of intangible assets with finite useful life is 14.3%. Trademarks are not depreciated due to the infinite useful life of the asset.

The depreciation charge of intangible assets with finite useful lives is carried in the line Depreciation and amortisation in Statement of profit or loss. The amortisation period and method of intangible assets with finite useful lives are reviewed once at the end of each financial year. Changes in the expected useful lives or in the time structure of future economic benefits are recognised prospectively as changes in the depreciation period and method or as changes in accounting estimates. Whenever there is any indication that the recoverable amount of intangible assets with finite useful lives is lower than their carrying amount, an impairment test is performed and if necessary, the asset is written down to its recoverable amount.

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

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

Goodwill

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

Accounting for leases

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

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

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

Taxation

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

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

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

Statement of Profit or Loss and Other Comprehensive Income

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

31

East Capital Explorer AB Year-end Report 2013

Statement of Financial Position

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

East Capital Explorer AB Year-end Report 2013

Statement of Cash Flow

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

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

Portfolio on 31 January 2014

As earlier communicated, four of the East Capital Bering Funds held by East Capital Explorer Group as at 31 December 2013 have been restructured and the assets in these funds have been transferred into two new funds; East Capital New Market Fund and East Capital Deep Value Fund. The accumulated fair value adjustments of the Bering funds from inception were realized in the books on 1 January 2014 and the fair value attributed to the transferred assets as at 1 January 2014 form the acquisition value of the new funds. The Portfolio report of 31 January 2014 includes the new funds and in note 4 below, the basis of the transfer is presented.

Portfolio on 31 January 2014	Value 31 Jan 2014, EURm	NAV/share, EUR	% of NAV	Value 31 Dec 2013, EURm1	Value change Jan 2014, %1
Direct Investments
Melon Fashion Group	70.5	2.24	22.9	70.5	-
Starman	25.0	0.80	8.1	25.0	-
Trev-2 Group	9.8	0.31	3.2	9.8	-
Komercijalna Banka Skopje	6.3	0.20	2.0	6.6	-4.4
Total Direct Investments	111.7	3.55	36.2	112.0	-0.3
Fund Investments
East Capital Russia Domestic Growth Fund	38.6	1.23	12.5	42.3	-8.7
East Capital Special Opportunities Fund	14.5	0.46	4.7	15.2	-4.2
East Capital Baltic Property Fund II	20.7	0.66	6.7	20.7	-
East Capital Special Opportunities Fund II	19.8	0.63	6.4	17.8	11.0
East Capital Bering Ukraine Fund Class R	2.6	0.08	0.8	2.5	1.7
East Capital Deep Value Fund4	47.0	1.50	15.3	-	2.0
East Capital New Markets Fund4	43.8	1.39	14.2	-	-0.8
East Capital Bering Balkan Fund4	-	-	-	41.1	-0.2
East Capital Bering Russia Fund4	-	-	-	23.0	-0.2
East Capital Bering Central Asia Fund4	-	-	-	23.0	-0.2
East Capital Bering Ukraine Fund Class A4	-	-	-	3.4	-0.2
Total Fund Investments	187.0	5.95	60.7	188.9	-1.0
Short-term Investments
Short-term Investments2	0.1	-	-	0.1
Cash and cash equivalents	21.4	0.68	6.9	20.3
Total Short-term Investments	21.5	0.68	7.0	20.4
Total Portfolio	320.1	10.19	103.9	321.3
Other assets and liabilities net	-11.9	-0.38	-3.9	-10.4
Net Asset Value (NAV)	308.2	9.81	100.0	310.8	-0.83

1 EUR = 8,84 SEK on 31 January 2014. Source: Bloomberg

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

¹ The value change calculation is adjusted for investments and distributions during the relevant period. i.e. it is the percentage change between; the ending value plus any proceeds from divi-

dends divided by the starting value plus any added investment during the period

² Due to the ongoing liquidation of East Europeand Debt Finance, as from June 2013 these holdings are no longer separately reported but included in short-term investments as the remaining assets are limited and are expected to be divested during 2014

³ NAV per share development. The value change takes overhead cost and fees for direct investments into account 4

The tables below represent the fair value of the restructured Bering Funds and a presentation of the split of the values into the new Funds:

		Fair value since inception, EURm		New Fair value, EURm
	Acquisition value	Accumulated fair value change	Fair Value 31 Dec 2013	East Capital New Markets 1 Jan 2014	East Capital Deep Value 1 Jan 2014
East Capital Bering Balkan Fund	54.9	-13.8	41.1	20.5	20.5
East Capital Bering Russia Fund	43.6	-20.6	23.0	8.9	14.0
East Capital Bering Ukraine Fund A	11.0	-7.6	3.4	1.3	2.1
East Capital Bering Central Asia Fund	29.5	-6.5	23.0	13.4	9.5
	139.0	-48.6	90.4	44.1	46.1

The Fair value of the assets in the four Bering funds were transferred to the new funds according to the following split:

	East Capital New Markets	East Capital Deep Value
East Capital Bering Russia Fund	39%	61%
East Capital Bering Balkan Fund	50%	50%
East Capital Bering Central Asia Fund	58%	42%
East Capital Bering Ukraine Fund A	37%	63%

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