Eastnine — Interim / Quarterly Report 2016

Nov 17, 2016

Interim Report January – September 2016

" The streamlining continues and our Baltic real estate exposure grows further (Mia Jurke, CEO)

	30 Sep 2016	31 Dec 2015
NAV per share	EUR 8.73	EUR 9.00
	SEK 84	SEK 82
Closing price per share	EUR 5.97	EUR 5.54
	SEK 57.50	SEK 50.75
Total NAV	EUR 228m	EUR 254m
Market cap	EUR 168m	EUR 158m

		2016	2015
Net result	Jul-Sep	EUR -2.0m	EUR -10.8m
	Jan-Sep	EUR -9.5m	EUR 6.0m
Earnings	Jul-Sep	EUR -0.08	EUR -0.38
per share	Jan-Sep	EUR -0.35	EUR 0.20

1 EUR = 9.63 SEK on 30 Sep 2016. Source: Reuters

Key events during the quarter

• » Net Asset Value (NAV) per share, adjusted for share buybacks, was EUR 8.73, -0.1% during the quarter. Total NAV was EUR 228m. Excluding items affecting comparability, NAV per share increased by 0.8% during the quarter
• » Real Estate increased by 2.5% and Private Equity by 0.4% in Q3. Public Equity decreased by 1.2%
• » The sale of Starman has been delayed due to legal proceedings and our current estimate is to close the transaction around the turn of the year
• » 891,059 shares, corresponding to 3.2% of outstanding shares, were repurchased during the quarter
• » EUR 12.5m of the holding in East Capital Frontier Markets Fund and EUR 7.2m in East Capital Deep Value Fund was sold during Q3
• » EUR 4.8m was invested in Baltic Property Fund III in conjunction with its acquisition of Hilton Tallinn Park
• » The results include EUR -2.0m related to the acquisition of the remaining shares in the holding company ECEX Holding SA, hitherto co-owned with East Capital, as well as other previously announced commitments
• » An in-house investment organisation with four new employees was created

Key events after the quarter

• » During 11 October 16 November the Company repurchased 243,655 own shares, corresponding to 0.9% of outstanding shares
• » Fund holdings totalling EUR 7.0m were sold after the end of Q3; EUR 2.0m in Frontier Markets Fund and EUR 5.0m in Deep Value Fund
• » In November, the Nomination Committee announced that it will propose Göran Bronner as a new Board Member at an EGM expected to be held around the end of January
• » The Company will construct a third office tower with a GLA of 13,000 sqm adjacent to 3 Burės in Vilnius. A longterm rental agreement was signed with Swedbank for 70% of the area

Tel: +46 8 505 97 700 info@eastcapitalexplorer.com www.eastcapitalexplorer.com

The streamlining continues

Increased exposure towards Baltic real estate while divestments of public equity funds continue. The reorganisation is on track and operating expenses were reduced by 43% in the third quarter

Mia Jurke, CEO

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We saw no dramatic changes in the markets, nor in our portfolio companies during the third quarter. The growth forecasts for the three Baltic economies, our largest investment region, have been slightly revised downwards. The countries are nevertheless expected to grow at balanced levels between 1.5 and 2.5 percent this year, mainly driven by private consumption. Since the end of June, we have increased our exposure to the Baltic real estate market further through the second draw down in East Capital Baltic Fund III in July. In October, we decided to start the construction of the third office tower in the 3 Burės property that we acquired in the spring of 2014. This means that our investments in both the Baltics and the real estate segment will continue to increase, completely in line with our strategy. In Russia, there are positive signs of a turnaround. Inflation fell to 6.1 percent in October 2016 compared to 15.6 percent a year earlier and, since the beginning of the year, the rouble has strengthened 13.4 percent against the euro. Consumption increased during the third quarter for the first time since the end of 2014, which is good news not least for our holding Melon Fashion Group.

The sale of Starman, which was expected to close during the third quarter, was further postponed as a partial award by an arbitration panel confirmed that the pre-emption right of the minority shareholder is still valid. In other words, the substantial cash injection that the sale entails will be further delayed. The buyback program, which was initiated in May, has proceeded financed by divestments of funds with public equity exposure. During the third quarter, a further 3.2 percent of outstanding shares were repurchased, corresponding to EUR 5.9m.

In August, East Capital Explorer acquired the control shares in the formerly jointly owned holding company in Luxembourg from East Capital, thereby giving us sole control of both the portfolio and the company structure. This enables us to streamline the corporate structure, which will eventually increase both cost efficiency and transparency in the company.

Our work on reducing our operating costs continues. In the quarter we added four new employees to our in-house investment organisation, thereby replacing the former management fees that were based on assets under management. Our underlying operating expenses were consequently reduced by 43 percent compared to the third quarter 2015, and we maintain our objective to half our overall operating costs.

NAV and share development

NAV per share in EUR was almost unchanged during the period, adjusted for repurchased shares (however +2.4 percent in SEK). Excluding items affecting comparability, NAV per share increased also in EUR, by 0.8 percent. The total NAV however decreased, primarily as a result of the ongoing repurchases. The NAV was also charged with costs related to the acquisition of the control shares in ECEX Holding and certain other commitments, a total of EUR 2.0m included in the results. The strongest segment was once again Real Estate, which now represents almost a third of the NAV. The Public Equity segment showed a slight decrease driven by negative results in the East Capital Deep Value Fund holding.

The share price decreased slightly during the quarter, ending at -3.0 percent in SEK. The price has however recovered since the quarter end, and year-to-date the share is up by 25.2 percent, adjusted for dividend.

Change in NAV during the third quarter 2016, EURm

MSCI EM Europe ECEX share price ECEX NAV

25.2%

share price increase (SEK) year-to-date

"Melon Fashion Group grew by 6.5% in total, with a like-for-like growth of 3.7%"

"We see good opportunities in the Baltic real estate market"

Portfolio development and activity

The exposure to the Baltic real estate market increased further during the quarter. In July, EUR 4.8m was invested in East Capital Baltic Property III in connection to the fund's acquisition of Hilton Tallinn Park Hotel in August. Furthermore, after the end of the quarter, we decided to commence construction of a third tower in our property 3 Burės on the adjacent land plot that was part of the acquisition in 2014. The third tower, which is expected to be finished within two years, will have a leasable area of 13,000 sqm, of which almost 70 percent is already leased out through an agreement with Swedbank. The building will thereby guarantee a stable cash flow immediately after completion, with an expected return on equity of around 15 percent. The new building also strengthens our offering in the 3 Burės property that will become the largest A class office complex in the Baltics. The total project investment is estimated at EUR 25m, of which EUR 9m will be an equity investment by East Capital Explorer, the bulk of which will be invested during the second construction year.

Among our other investments, there were no major changes. Despite continuingly weak store traffic, Melon Fashion Group reported a total sales growth of 6.5 percent and a like-for-like growth of 3.7 percent. The company is now focusing on rolling out the new store concepts, which are showing stronger sales, and on improving customer offerings and profitability. However, MFG's profitability in the quarter fell somewhat as a result of negative currency components and higher head office costs.

During the quarter, divestments of funds with public equity holdings continued. In total, EUR 19.7m in East Capital Frontier Markets Fund and East Capital Deep Value fund was divested, which means that the share of the portfolio with exposure towards the stock market is now down to a fourth. After the end of the quarter further divestments have been made.

Outlook

The decision to repurchase shares as long as the NAV discount is above 20 percent remains. In October we entered a so-called safe harbour agreement in order to uphold the repurchases until year-end. Up until now, we have repurchased 8.3 percent of our outstanding shares. We have, as we communicated earlier this spring, an intention to cancel the repurchased shares in case we get close to 10 percent, which is the mandate we were given by the AGM in June, in order to keep the repurchases going. East Capital Explorer will host

an EGM around the end of January for the election of the proposed fifth Board member Göran Bronner. At the same time, a proposal will be put forward to cancel treasury shares.

Despite many and long delays, we currently expect to close the Starman deal around the turn of the year, which will mean that we will have a strong position for investments in the time to come. As before, we see good opportunities in the Baltic real estate market. Focus will be on the construction of the third office tower in the 3 Burės property, and in parallel we are also examining other interesting investment opportunities.

Mia Jurke CEO, East Capital Explorer

Our portfolio

East Capital Explorer's strategy builds on four cornerstones: growth in Eastern Europe, domestic consumption, companies with strong outlook and a long-term active ownership. The preferred way of investing is through direct investments. East Capital Explorer's focus for new investments is within the Private Equity and Real Estate segments, where the company can, in a more direct way, contribute its expertise and create value.

Net Asset Value (NAV)
	Value 30 Sep 2016 EURm	NAV/share EUR	% of NAV	Value 30 Jun 2016 EURm	Value 31 Dec 2015 EURm	Value change Jan-Sep 2016 %¹	Value change Jul-Sep 2016 %¹
Private Equity
Melon Fashion Group	26.4	1.01	11.6	26.7	26.5	1.2	0.5
Trev-2 Group	6.2	0.24	2.7	6.2	6.2	0.0	0.0
Total Private Equity	32.6	1.25	14.3	32.9	32.7	0.9	0.4
Real Estate
3 Burės	30.1	1.16	13.2	29.1	27.6	8.0	3.5
East Capital Baltic Property Fund II	27.7	1.06	12.2	27.3	26.8	6.8	1.6
East Capital Baltic Property Fund III	8.3	0.32	3.7	3.4	3.3	3.3	1.6
Total Real Estate	66.2	2.54	29.1	59.8	57.7	6.9	2.5
Public Equity
East Capital Deep Value Fund	31.3	1.20	13.7	40.1	40.3	-4.6	-4.1
Komercijalna Banka Skopje	9.1	0.35	4.0	8.0	8.6	10.8	13.8
Total Public Equity	40.4	1.55	17.7	48.1	48.9	-1.9	-1.2
Short-term Investments
Starman³	81.3	3.12	35.7	81.3	71.8	13.2	0.0
East Capital Frontier Markets Fund	11.7	0.45	5.1	24.0	31.1	0.5	0.8
Other short-term Investments⁴	1.1	0.04	0.5	1.1	1.4	-18.6	3.1
Short-term Investments	94.1	3.61	41.3	106.4	104.3	9.0	0.2
Cash and cash equivalents	4.1	0.16	1.8	4.0	10.5
Total Short-term Investments	98.2	3.77	43.1	110.4	114.8
Total Portfolio	237.4	9.11	104.3	251.2	254.2
Other assets and liabilities net	-9.7	-0.37	-4.3	-15.7	-0.6
Net Asset Value (NAV)	227.6	8.73	100.0	235.6	253.6	-3.0	-0.1²

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

² NAV per share development

³ Due to the ongoing sale of Starman, the asset has been reclassified from Private Equity at year-end 2015, to Short-term investments in Q1 2016

4 Includes East Capital Bering Ukraine Fund Class R

The number of shares used in NAV/share 30 Sep 2016 is 26,065,818 and is adjusted for repurchased shares held by the company (Note 6).

1 EUR = 9.63 SEK on 30 Sep 2016. Source: Reuters

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

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

30 September 2016
Company	Value in portfolio, mEUR	% of NAV	Perf. Q3, %	Country	Sector	East Capital Explorer's investment vehicle
Starman	81.3	35.7	0,0	Estonia	Telecom	Direct Investment (held for sale)
3 Burės	30.1	13.2	3,5	Lithuania	Real Estate	Direct Investment
Melon Fashion Group	26.4	11.6	0,5	Russia	Cons. Disc.	Direct Investment
Komercijalna Banka Skopje	11.5	5.0	13,8	Macedonia	Financials	Direct Investment East Capital Deep Value Fund
Gedimino 9	6.4	2.8	1,5	Lithuania	Real Estate	East Capital Baltic Property Fund II
Trev-2 Group	6.2	2.7	0,0	Estonia	Industrials	Direct Investment
Tanassilma Logistics	6.1	2.7	2,1	Estonia	Real Estate	East Capital Baltic Property Fund II
Mustamäe Keskus	5.1	2.3	2,4	Estonia	Real Estate	East Capital Baltic Property Fund II
Hilton Hotel	4.9	2.1	0,0	Estonia	Real Estate	East Capital Baltic Property Fund III
Metro Plaza	4.6	2.0	2,8	Estonia	Real Estate	East Capital Baltic Property Fund II
Total	182.6	80.2

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

A	Telecom	37 (34)
B	Real Estate	30 (24)
C	Consumer Discretionary	14 (17)
D	Financials	11 (13)
E	Industrials	3 (4)
F	Utilities	2 (1)
G	Consumer Staples	1 (4)
H	Energy	0 (2)
I	Materials	1 (1)
J	Health Care	0 (0)
K	Information Technology	0 (0)

A	Baltics	67 (54)
B	Russia	12 (19)
C	Balkans	10 (12)
D	Other countries	11 (15)

Segment breakdown, %

A	Private Equity	14 (14*)
B	Real Estate	29 (20)
C	Public Equity	18 (19)
D	Short-term investments, cash,	43 (47*)
	other assets and liabilities

*Starman reclassified to short-term asset for comparability

*Comparative numbers in parentheses refer to the corresponding

period 2015

Private Equity

The Private Equity segment represents 14 (14) percent of total Net Asset Value. East Capital Explorer primarily looks for non-cyclical, consumer-oriented companies with high growth and/or cash flow potential. More detailed financial information regarding the Private Equity holdings is available on www.eastcapitalexplorer.com under Investors/Reports and Presentations.

Melon Fashion Group

Russian fashion retailer Melon Fashion Group (MFG) is well positioned with a broad target group under three strong brands: Zarina, befree and Love Republic. MFG benefits from the consolidation in the fragmented Russian fashion industry and longterm consumption growth.

East Capital Explorer's holding in the company	36%
% of NAV	12%

RUBm	2016 Jan-Sep	2015 Jan-Sep	2016 Jul-Sep	2015 Jul-Sep
Sales	9,301	9,078	3,362	3,156
Gross profit	4,162	3,970	1,531	1,475
EBITDA	51	363	148	296
Net profit	-199	10	38	158
Sales growth (%)	2.5	14.6	6.5	1.9
Gross margin (%)	44.7	43.7	45.5	46.8
EBITDA margin (%)	0.5	4.0	4.4	9.4
Net debt (neg = net cash)	-320	4	-320	4
Balance sheet total	4,601	4,536	4,601	4,536
Number of stores (end-quarter)	577	641	577	641
Like-for-like sales growth (%)	0.6	3.5	3.7	-3.4

• MFG's total sales increased by 6.5% in Q3, lifted by positive 3.7% likefor-like growth and stronger sales in newly opened stores, despite no signs of relief in terms of store traffic numbers
• Gross margin declined to 45.5% (46.8%) in Q3 due to slightly weaker rouble and higher share of franchise sales. On a year-to-date basis the gross margin improved to 44.7% (43.7%) on the back of lower reduction levels despite the weak rouble
• Reported Q3 EBITDA weakened to RUB 148m (296m), corresponding to an EBITDA margin of 4.4% (9.4%). EBITDA was negatively affected by currency as well as administrative expenses
• On a 9M basis the EBITDA decreased to RUB 51m (363m) corresponding to a margin of 0.5% (4.0%). However, adjusted for non-cash revaluation of financial derivatives, the underlying 9M EBITDA improved from RUB 133m for the first nine months 2015 to RUB 246m in 2016
• MFG's current focus lies on a continued efficient roll-out of the new store formats financed by own operations, integration of new competence in the brand teams, and continuous fine-tuning of assortment in pursuit of higher full price sell-through ratio
• During the quarter the store count was reduced to 577 with no change in total selling area, as a result of store size increase of newly opened and relocated stores
• The underlying RUB based valuation was kept unchanged. The fair value was adjusted for dividend pay-out equivalent to EUR 0.5m for ECEX' holding (total RUB 100m), as well as for a marginal translation effect from RUB to EUR of 0.2%

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

Trev-2 Group

Trev-2 Group, one of the largest infrastructure construction and maintenance companies in Estonia, was acquired as a restructuring case and has under East Capital Explorer's ownership concentrated its operational focus on two core areas: road construction and road maintenance.

East Capital Explorer's holding in the company	38%
% of NAV	3%

EURm	2016 Jan-Sep	2015 Jan-Sep	2016 Jul-Sep	2015 Jul-Sep
Sales	41.4	41.5	23.9	24.3
EBITDA	2.5	2.2	2.4	2.7
Operating profit	1.0	0.1	2.0	2.0
Net profit	0.7	0.0	1.9	2.1
Sales growth (%)	-0.2	-30.6	-1.6	-14.2
EBITDA margin (%)	6.0	5.3	10.0	11.1
Operating margin (%)	2.4	0.2	8.4	8.2
Net debt	5.5	6.7	5.5	6.7
Balance sheet total	37.7	42.9	37.7	42.9

• In the third quarter, business activity was high at Trev-2 Group. Revenues for the quarter amounted to EUR 23.9m (EUR 24.3m) and EBITDA to EUR 2.4m (EUR 2.7m), both of which decreased compared to the third quarter 2015

• Year-to-date EBITDA increased by 12.3% on flat revenues on the back of a slight gross margin improvement and a reduction in overhead expenses, as a result of recent efficiency measures. Despite a stable nine months' period for Trev-2, market visibility remains limited and the competitive climate challenging for Estonian road builders
• Trev-2's capex requirement is currently low and, as a consequence, cash flow from investment activities was positive during the first nine months of the year. The liquidity situation is good, with bank debt being reduced in the third quarter. A dividend of EUR 0.8m has been approved and EUR 0.3m is set to be distributed to ECEX before yearend
• On 30 September, net debt amounted to EUR 5.5m, corresponding to 2.6x EBITDA for the last twelve months
• The fair value of the holding in Trev-2 Group was kept unchanged at EUR 6.2m

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

Real Estate

The Real Estate segment represents 29 (20) percent of total Net Asset Value. The Real Estate investments in the Baltic capitals are characterised by strong cash flows, sustainable rents and low vacancies. Yields are 7-9 percent, 2-3 percentage points higher than in the Nordic capitals, with attractive financing terms. More detailed financial information regarding 3 Burės is available on www.eastcapitalexplorer.com under Investors/Reports and Presentations, and regarding East Capital Baltic Property Fund II and III, on www.eastcapital.com.

3 Burės

3 Burės is one of Vilnius' most modern and well located A Class office properties. The two buildings, with low vacancy rates and high interest from potential tenants, generate stable cash flows with potential ahead for increasing rents. At the same time, the country's stable and growing economy supports continued low financing costs and the potential for long term value appreciation. The construction of a third building will be completed in 2018.

East Capital Explorer's holding in the company 100% % of NAV 13%

RUBm	2016 Jan-Sep	2015 Jan-Sep	2016 Jul-Sep	2015 Jul-Sep
Net rental revenue*	3.4	3.3	1.1	1.1
Net operating income	3.2	3.0	1.2	1.0
Vacancy rate (%, end-quarter)	2.2	2.0	2.2	2.0
Avg. rent (€/sqm, end-quarter)	12.6	12.8	12.6	12.8

* Rental income only, excluding income from communal services

• The current tenant mix in the business centre is stable. Vacancy in the office complex during third quarter increased slightly to 2.2% (2.0%) as 220 sqm of area was released after reaching lease maturity
• The operating income includes an extraordinary income of EUR 0.2m related to compensation for termination of lease agreement. The terminated lease agreement temporarily affected the average rent level that was marginally reduced from EUR 12.7 per sqm/month in the second quarter to EUR 12.6 in the third quarter 2016
• Following a secured lease agreement with Swedbank for 70% of the leasable area in the planned third office tower, East Capital Explorer decided to commence the construction. The two-year construction works will commence during the fourth quarter 2016, and the building is expected to be completed by the end of 2018. Negotiations are being held with potential tenants covering the bulk of the remaining leasable area in the new tower. ECEX' equity investment is estimated to amount to approximately EUR 9m of the total investment of approximately EUR 25m over the two-year construction period
• During the third quarter 2016, the fair value of 3Burės increased by 3.5% as a result of positive operating results

Learn more about 3 Burės on: www.3bures.lt

East Capital Baltic Property Fund II

The fund invests in and manages properties with well-established tenants and sustainable rental terms in the Baltic capitals. Focus is primarily on well-located shopping centres and retail properties, as well as logistics and office properties with stable revenues and potential for improvements. The fund is fully-invested.

		12%
		YTD 2016 Since May 12
1.6%		42.9%
Contr,
		Retail
		Retail
		Logistics
		Office
		Retail
		Logistics
	Q3 2016	6.8% %* Location Type 18 Tallinn 10 Vilnius 45 Tallinn 27 Tallinn -19 Riga 19 Tallinn

* Contribution; Share of quarterly change in NAV from property operating result

• The fair value of East Capital Explorer's holding in East Capital Baltic Property Fund II increased by 1.6% during the third quarter. Operating profit from Tänassilma Logistics contributed the most to the quarterly increase, while Deglava Prisma decreased the quarterly performance
• The Deglava Prisma property remained closed after a deformation was detected in the construction elements at the beginning of June. The cause has however been detected, necessary technical design has been prepared and building permits have been received. The repair works are expected to be finalized by the end of November and the permit of use in the beginning of December. The NAV includes a reserve for extraordinary expenses that is estimated to cover the repair works
• Rent income for Deglava Prisma has been stopped from June and the lease agreement has been terminated, which might impact the yearend valuation of the property
• In Mustamäe Keskus shopping center, which was opened in February 2016, the management is in close contact with all tenants and coordinating marketing and other activities to achieve a solid market position for the shopping centre. Footfall has stabilized and shop turnovers are satisfactory

East Capital Baltic Property Fund III

The fund was launched in 2015 and will invest in and manage commercial properties with well-established tenants and sustainable rental terms in the Baltic capitals. Focus is primarily on retail, office, logistics and industrial properties in prime locations with stable income and enhancement or value-added potential

East Capital Explorer's share of the Fund	28%
% of NAV	4%

	Q3 2016		YTD 2016 Since Aug 15
Performance of the holding, EUR	1.6%	5.7%	5.2%

• The net asset value of East Capital Explorer's holding in the fund increased by 1.6% during the third quarter. The NAV increase is based on operational profits from the two investments in the fund and also includes costs related to the acquisition of the Hilton property in August 2016
• Vesse Retail Park, the first acquisition in the Fund, is operating as planned with full occupancy and average rent of EUR 9.4/sqm/month
• In Vesse property, the facade of the grocery store will be improved through a joint investment by the landlord and Maksimarket. Concurrently, the lease agreement is extended until 2027 and the tenant will receive a rent discount for coming 12 months
• In August, the fund completed its second investment by acquiring Hilton Tallinn Park Hotel, the first Hilton hotel in the Baltics. The property also includes Olympic flagship casino. ECEX invested EUR 4.8m in the fund's second drawdown in conjunction with the Hilton acquisition

Public Equity

The Public Equity segment represents 18 (19) percent of total Net Asset Value. Investments in this segment offer exposure to companies in sectors driven by domestic growth such as retail, consumer goods, finance, and real estate. The listed portfolio comprises assets that can be used as a financing source for further investments in the Private Equity and Real Estate segments.

Komercijalna Banka Skopje

Komercijalna Banka Skopje (KBS), listed on the Macedonian stock exchange, is Macedonia's largest bank by assets and capital. The low valuation compared to other banks in the region makes it a potential candidate for strategic investors.

East Capital Explorer's holding in the company	10%
% of NAV (direct inv. and through EC Deep Value Fund)	5%

MKDm	2016 Jan-Sep	2015 Jan-Sep	2016 Jul-Sep	2015 Jul-Sep
Net interest income	2,195	2,162	717	750
Net interest margin (%)	3.7	3.7	3.7	3.7
Total operating income	3,128	3,057	998	1,031
Operating expenses	1,255	1,272	411	403
Cost Income ratio (%) *	37.6	39.2	41.2	39.1
Profit before tax and provisions	1,878	1,786	587	628
Net profit	526	317	325	498

* Excluding one-offs

• KBS reported a nine month net profit of MKD 526m (EUR 8.6m), slightly exceeding the bank's profit for the full year 2015. Since the loan portfolio looks well provisioned, this interim profit bodes well for the full year result. KBS is targeting just under 10% ROE for the full year
• Although the nine month results are encouraging, third quarter figures in isolation are weaker. Net interest income for Q3 2016 was down 4.4% year-on-year, causing total operating income to drop by 3.2%, while operating expenses were 1.9% higher than Q3 2015
• The deposit withdrawals which affected all Macedonian banks during this spring's period of political tensions have now been more or less fully reversed. Total deposits are at almost the same level as this time last year. Liquidity throughout the year has remained at more than adequate levels, despite the deposit volatility

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

East Capital Deep Value Fund

The fund offers exposure to conservative market valuations of small and mid-cap companies with proven business models, strong revenue generation and high revaluation potential where the fund managers can take an active role in corporate governance of the portfolio companies.

East Capital Explorer's share of the Fund	76%
% of NAV	14%

	Q3 2016	YTD 2016 Since Dec 14
Performance of the holding, EUR	-4.1%	-4.6% -0.6%

Largest holdings in the Fund on 30 September 2016

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
B92	12.2	-27.6		-4.5 Serbia	Cons. Disc.
Caucasus Energy & Infrastructure	9.3	-2.0		-0.2 Georgia	Utilities
Bank Sankt-Peterburg	8.5	18.5		1.7 Russia	Financials
Komercijalna Banka Skopje	6.8	14.0		0.7 Macedonia Financials
Reinsurance Co Sava	5.4	-2.8		-0.2 Slovenia	Financials
Impact	5.4	-5.2		-0.3 Romania	Real Estate
Chagala Group	3.4	-50.6		-2.9 Kazakhstan Cons. Disc.
Telekom Srpske	3.1	-15.7		-0.5 Bosnia	Telecom
Pif Big	2.8	-0.4		0.0 Bosnia	Financials
Cantik	2.8	-1.2		0.0 Ukraine	Real Estate

All figures in performance during the third quarter 2016

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
60	17	87

• The value of East Capital Explorer's holding in the fund fell by 4.1% in the third quarter. While the fund has no official benchmarks, this was below MSCI Emerging Markets Europe which increased by 3.4% and MSCI Russia which gained 7.8%
• Our largest contributor to return was Bank of St Petersburg at 18.5% on the back of improving sentiment for Russia as inflation fell to 6.4% in September and key interest rate was cut to 10.0%
• The biggest detractor to return was Serbian media company B92, which was revalued downwards by 27.6% following an external valuation and weaker market outlook
• The Kazakh real estate company Chagala Group fell by 50.6% after a sharp rise in the previous quarter, when the company announced a share issue that was cancelled in the third quarter, prompting the share to retract
• Going forward the fund's focus is on exits for companies where fair value can be realised. The outlook remains fairly positive on the economies in Eastern Europe, particularly Russia which a return to GDP growth is expected in 2017

Short-term investments

Short-term investments include assets that are expected to be divested. The largest short-term investment is Starman, which is held for sale and corresponds to 36 percent of NAV. East Capital Frontier Markets Fund corresponds to 5 percent of NAV. East Capital Bering Ukraine Fund Class R, which increased by 3 percent in the third quarter, corresponds to 0.5 percent of East Capital Explorer's NAV and is not specified below.

Starman (held for sale)

Starman, the only truly pan-Baltic cable TV and broadband provider in Estonia and Lithuania, has a loyal customer base and strong noncyclical cash flows. With its leading market position and superior product offering, Starman is well positioned to lead the market consolidation and benefit from the increasing broadband penetration.

East Capital Explorer's holding in the company	63%
% of NAV	36%

EURm	2016 Jan-Sep	2015 Jan-Sep	2016 Jul-Sep	2015 Jul-Sep
Sales	43.0	38.0	14.4	13.2
- of which Cgates	14.0	10.7	4.7	4.0
EBITDA	18.3	18.1	5.7	6.2
- of which Cgates	5.3	4.6	1.7	1.7
Net profit	0.7	3.5	-0.2	1.1
Sales growth (%)	13.3	52.4	9.1	58.0
EBITDA margin (%)	42.6	47.6	39.8	47.0
Net debt	77,4	73.1	77,4	73.1
Balance sheet total	174.4	165.6	174.4	165.6
Number of RGU's ('000)	560	502	560	502
- of which Cgates	257	201	257	201
Avg. ARPU, combined (EUR/m)	13.9	13.1	13.9	13.1

NOTE: Cgates consolidated as of 1 Feb 2015 RGU: Revenue generating units, ARPU: Average revenue per user

• The sale of ECEX' 63% interest in Starman to Providence Equity, originally announced in March 2016, was further delayed following a partial award by an arbitration panel. The award means that Polaris, a minority shareholder in Starman, can acquire ECEX' stake at the same terms as stipulated in the agreement with Providence Equity. The transaction is expected to close around the turn of the year
• Operationally, the third quarter saw an improvement compared to the weaker previous months, with customer intake being strong by the end of the quarter in both markets, Estonia in particular
• Comparable revenues grew year-on-year in both Estonia and Lithuania in the third quarter and during the first nine months. Comparable EBITDA for the third quarter was lower that of last year due to higher operating expenses and costs related to strong customer intake
• In August, the company made an add-on acquisition of TPG, a regional cable TV operator in Lithuania with presence in the cities Panevezys and Ukmerge, as part of its in-market consolidation strategy. The acquisition adds approximately 30,000 RGUs and makes Cgates the market leader in Panevezys, the fifth largest city in Lithuania
• On 30 September, net debt amounted to EUR 77.4m, corresponding to 3.1x EBITDA for the last twelve months
• The fair value of the holding in Starman was kept unchanged at EUR 81.3m, which is the estimated cash consideration at closing

Learn more about Starman on: www.starman.ee

East Capital Frontier Markets Fund

East Capital Frontier Markets Fund is a daily traded UCITS fund with a global focus on young and growing markets. To combine high growth, attractive valuations and risk-adjusted returns, the fund seeks to invest in a wide spectrum of countries, sectors and companies. A significant share is invested in off-index countries, the "next frontiers".

East Capital Explorer's share of the Fund	32%
% of NAV	5%

	Q3 2016	YTD 2016 Since Dec 14
Performance of the holding, EUR	0.8%	0.5%	3.0%

Largest holdings in the Fund on 30 September 2016

	Weight,	Perf,	Contr,
Company	%	%		%* Country	Sector
Banco Macro	5.3	2.0		0.1 Argentina	Financials
National Bank Of Kuwait	4.9	-1.2		-0.1 Kuwait	Financials
Viet Nam Dairy Products	4.3	21.0		0.7 Vietnam	Cons. Stap.
United Bank	4.2	11.9		0.5 Pakistan	Financials
Grupo Supervielle Sa	3.4	13.6		0.3 Argentina	Financials
Habib Bank	3.0	11.5		0.3 Pakistan	Financials
FPT Corp	2.9	15.0		0.4 Vietnam	IT
Zavarovalnica Triglav	2.7	-0.4		-0.1 Slovenia	Financials
Safaricom	2.7	17.7		0.4 Kenya	Telecom
Brd	2.7	15.0		0.3 Romania	Financials

All figures in performance during the third quarter 2016

* Contribution to the portfolio performance

10 largest holdings (% of fund)	Unlisted holdings (% of fund)	Total number of holdings
36	0	126

• The value of the holding in East Capital Frontier Markets Fund gained 0.8% while the MSCI Frontier Markets index gained 1.4% during the third quarter
• Vietnam was the best contributor during the third quarter following the long-awaited removal of the 49% foreign ownership limit. Top weighted Vietnamese holdings Vinamilk (Viet Nam Dairy Products) gained 21% and FPT Corporation 15%
• The largest active overweight position Grupo Supervielle in Argentina increased by 13.6% as President Macri's ambitious economic reforms continued to give positive momentum

Results

The investment activities of East Capital Explorer AB (publ) (the Company) are managed in the operating subsidiaries Humarito Ltd, East Capital Explorer Investments AB and ECEX Holdings SA (formerly East Capital Explorer Investments SA), which manages the investment portfolio. Transactions in the operating subsidiaries are referred to as the investment activities in this report.

Presentation currency is euro (EUR).

Results for the third quarter 2016

The net result for the third quarter was EUR -2.0m (EUR -10.8m), including value changes of shares in subsidiaries of EUR -1.7m (EUR -10.4m), corresponding to earnings per share of EUR -0.08 (EUR -0.38).

In Q3 2016, a dividend was received from Melon Fashion Group of EUR 0.5m. Together with fair value adjustments in 3 Burės of EUR 1.0m, Komercijalna Banka Skopje of EUR 1.1m and in East Capital Baltic Property Fund II of EUR 0.4m and East Capital Deep Value Fund of EUR -1.7m, and expenses amounting to EUR -3.0m (of which -2.0m refers to items affecting comparability), these were the main contributors to the change in value of shares in subsidiaries in the Income statement for the period.

In the investment activities, shares in East Capital Frontier Markets Fund were sold for a total amount of EUR 12.5m, and in East Capital Deep Value Fund for a total amount of EUR 7.2m. Further, the second drawdown was made in East Capital Baltic Property Fund III for an amount of EUR 4.8m.

On 19 August 2016, the Company purchased the remaining shares in the previously jointly owned Luxemburg based company ECEX Holdings SA from East Capital, for an amount of EUR 2.0m that also includes other previously announced commitments such as brand and non-compete clause.

The result for the period includes income of EUR 0.4m (EUR 0.0m) from repayment of charged management fees in the funds, and expenses of EUR -0.7m (EUR -0.4m), all of which refer to the Parent company.

Comparative numbers in parenthesis refer to the third quarter of 2015.

Results for the period Jan-Sep 2016

The net result for the first nine months was EUR -9.5m (EUR 6.0m), including value changes of shares in subsidiaries of EUR -6.5m (EUR 7.1m), corresponding to earnings per share of EUR -0.35 (EUR 0.20).

The value of the holding in Starman was appreciated to EUR 81.3m in accordance with the sale purchase agreement, corresponding to an increase of EUR 9.5m. The exit gain, based on the upfront consideration, will result in a carried interest to East Capital of approximately EUR -6.5m which is treated as a liability in ECEX Holdings SA's balance sheet.

Melon Fashion Group was depreciated by EUR -0.2m. The underlying asset in rouble was impaired by EUR -2.8m due to lower sales forecasts, while the translation from rouble to euro had a positive effect of EUR 3.1m. Furthermore, a dividend was received from Melon Fashion Group of EUR 0.5m, from East Capital Baltic Property Fund II of EUR 0.9m and from Komercijalna Banka Skopje of EUR 0.4m. Together with fair value adjustments in 3 Burės of EUR 2.2m, East Capital Baltic Property Fund II of EUR 1.0m, Komercijalna Banka Skopje of EUR 0.5m and in East Capital Deep Value Fund of EUR -1.9m, and expenses amounting to EUR -13.0m (of which -10.3m refers to items affecting comparability), these were the main contributors to the change in value of shares in subsidiaries in the Income statement for the period. Please see Note 2 Segment Reporting for more information.

In the investment activities, the shares in East Capital Frontier Markets Fund were sold for a total of EUR 19.6m and in East Capital Deep Value Fund for a total amount of EUR 7.2m. Further, the second drawdown was made in East Capital Baltic Property Fund III for of EUR 4.8m, and a smaller add-on investment was made in 3 Burės of EUR 0.25m.

On 19 August 2016, the Company purchased the remaining shares in the previously jointly owned Luxemburg based company ECEX Holdings SA from East Capital, for an amount of EUR 2.0m that also includes other previously announced commitments such as brand and non-compete clause.

The result for the period includes income of EUR 0.4m (EUR 0.0m) from repayment of charged management fees in the funds, and expenses of EUR -3.4m (EUR -1.3m), all of which refer to the Parent company.

Comparative numbers in parenthesis refer to January-September 2015.

Financial Position and Cash Flow Jan-Sep 2016

The Company's equity ratio was 99.4 percent (99.8 percent).

The cash flow presented below only relates to transactions in the Parent Company. During the period January-September 2016, the Company received repayment of shareholder's contributions of EUR 20.7m (EUR 17.5m) from ECEX Holdings SA. In June, an ordinary dividend for 2015 of SEK 0.80 per share, corresponding to EUR 0.09 per share, was distributed to shareholders. The dividend amounted to a total of EUR 2.3m. During the period 20 May – 26 August 2016, East Capital Explorer repurchased a total of 2,095,745 shares, for an amount equivalent to EUR 14.1m.

Cash and cash equivalent at the end of the period amounted to EUR 1.6m (EUR 1.9m), all of which refer to the Parent Company.

At the end of the period, cash, cash equivalents and other short-term investments in the investment activities amounted to EUR 98.2m (EUR 43.0m). Please refer to the breakdown of values in subsidiaries on pages 16-18 for more details regarding the investment activities.

Comparative numbers in parenthesis refer to 31 December 2015.

Commitments

On 10 July 2015, East Capital Explorer announced a commitment to invest EUR 20m in total in East Capital Baltic Property Fund III. Of this, EUR 8.1m has been drawn down by the fund and the remaining commitment amounts to EUR 11.9m.

Business Environment and Market

The quarter started with the British EU referendum at the end of June and a high level of uncertainty in global markets. East Capital Explorer's focus markets, the Baltics, Balkans and Russia, were no exceptions. Looking at the second quarter, GDP growth rate for all the Baltic economies decreased somewhat to 1.9 percent in Lithuania, 2 percent in Latvia and 0.8 percent in Estonia. The slowdown in Lithuania is however most likely temporary, as creditgrowth among businesses and households remains strong. In Latvia, the main reason for the decline was lower investments while energy production weighed on the Estonian economy. The Baltic stock markets however showed stable returns in the third quarter as the Tallinn stock market rose by 2.1 percent, the Riga stock market by 14.2 percent and the Vilnius stock market by 6.4 percent.

In Russia, the economic situation has now stabilised as the previous inflation shock is over and consumer behaviour has adjusted. Following this, the Russian stock market gained 7.4 percent (MSCI Russia) in the third quarter. However, consumption growth is now around zero, which puts continued pressure on consumer-oriented companies but we nevertheless see signs of recovery.

In the Balkans, East Capital Explorer's third largest market, investments are returning as the global sentiment towards emerging and frontier markets is improving. The stock markets in Eastern European Emerging markets rose by 3.4 percent (MSCI EM Europe) in the third quarter.

The overall economic development in East Capital Explorer's investment region is thereby varied, and considerable uncertainties remain from a financial perspective. Global monetary policy as well as currencies and interest rates are likely to continue to affect the company's markets. East Capital Explorer's investments may therefore face increased risks for exit options, but on the other hand policy changes also create new investment opportunities.

Other information

Risks and uncertainties

The dominant risk in East Capital Explorer's operations is commercial risk in the form of exposure to specific sectors, geographic regions or individual holdings and financial risk in the form of market risk, equity price risk, foreign exchange risk and interest rate risk. A more detailed description of East Capital Explorer's material risks and uncertainties is provided in the Company's Annual Report 2015 on pages 44-46. An assessment for the coming months is provided in the Business Environment and Market section above.

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

Fees

At an Extraordinary General Meeting on 9 May 2016, the shareholders approved the Board's proposal regarding a joint termination of the Investment Agreement between East Capital Explorer and East Capital. Following the EGM decision, all management fee payments to East Capital were halted, with the exception of the real estate funds East Capital Baltic Property Fund II and East Capital Baltic Property Fund III. For further information about the termination of the Investment Agreement, please see Note 5 Related parties.

To calculate all management and performance fees paid by East Capital Explorer to East Capital, fees originated in funds are added to the fees in the investment activities. During the first nine months of 2016, management fees to East Capital amounted to EUR -1.8m (EUR -3.7m). Performance fees amounted to EUR -7.4m (EUR 0.0m). The performance fees are related to the upcoming sale of Starman, EUR -6.5m (treated as a liability), and accrued profit sharing of 3 Burės, EUR -0.9m.

The management fee for East Capital Baltic Property Fund II is 1.75% and the rebated management fee for East Capital Baltic Property Fund III is 1.25%. The performance fee for these funds is 20%, on the premise that a threshold value increase of 7-8 percent per year has been achieved.

Organisational and investment structure

East Capital Explorer AB (publ) is a Swedish investment company listed on Nasdaq Stockholm. East Capital Explorer's business concept is to maximise risk-adjusted shareholder return by offering shareholders a liquid exposure to a unique investment portfolio of primarily unlisted companies and properties in Eastern Europe.

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

material and relevant environmental and social factors. Active ownership also involves board representation and close relations with the companies in which East Capital Explorer invests.

For further information about the organizational and investment structure of the Company, please see the Company's web site www.eastcapitalexplorer.com under the section, 'Corporate Governance'.

The CEO certifies that the interim report presents a true and fair view of the Company's and the Group's operations, financial position and profits and describes the significant risks and uncertainties facing the Company and the Group.

Stockholm, 17 November 2016

Mia Jurke Chief Executive Officer

Contact information

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

East Capital Explorer AB Kungsgatan 35, Box 7214 SE-103 88 Stockholm, Sweden Tel: +46 8 505 977 00 www.eastcapitalexplorer.com

Financial calendar

• Year-end Report 2016 13 February 2017
• Annual Report 2016 available in April 2017
• Interim Report Q1 2017 9 May 2017
• Annual General Meeting 2017 15 May 2017
• Interim Report Q2 2017 30 August 2017
• Interim Report Q3 2017 9 November 2017

Subscribe to financial reports and press releases directly to your e-mail on: www.eastcapitalexplorer.com or by sending an email to info@eastcapitalexplorer.com.

The information in this interim report is the information which East Capital Explorer AB is required to disclose under the EU Market Abuse Regulation and the Securities Markets Act. It was released for publication at 08:00 a.m. CET on 17 November 2016.

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

Introduction

We have reviewed the summary interim financial information (interim report) of East Capital Explorer AB (publ) as of 30 September 2016 and the nine-month period then ended except for the portfolio reporting on pages 5-10. 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. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. 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, 17 November 2016 KPMG AB

Anders Malmeby Authorised Public Accountant

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

Income Statement

EUR Thousands
		2016	2015	2016	2015
	Note	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
Changes in fair value of subsidiaries	2	-6,469	7,073	-1,650	-10,404
Other income		360	-	360	-
Staff expenses		-1,100	-603	-461	-188
Other operating expenses		-664	-657	-233	-239
Items affecting comparability1		-1,604	-	0	-
Operating profit/loss		-9,478	5,814	-1,984	-10,830
Financial income		22	192	22	66
Financial expenses		-73	0	-62	6
Profit/loss before tax		-9,528	6,005	-2,024	-10,759
Tax		-	-	-	-
NET PROFIT/LOSS FOR THE PERIOD2		-9,528	6,005	-2,024	-10,759
Earnings per share, EUR
- Attributable to shareholders of the Parent Company		-0.35	0.20	-0.08	-0.38
No dilutive effects during the periods

1 Advisory costs related to the termination of the Investment Agreement with East Capital

2 Net Profit/Loss for the period corresponds to Total Comprehensive income

Balance Sheet

EUR Thousands
		2016	2015	2015
	Note	30 Sep	31 Dec	30 Sep
Assets
Shares in subsidiaries	3, 4	204,594	252,140	250,217
Loans to group companies	4	20,900	-	-
Total non-current assets		225,494	252,140	250,217
Accrued interest income	4	1,499	-	-
Accrued income and prepaid expenses		369	14	3
Cash and cash equivalent		1,581	1,918	2,435
Total current assets		3,450	1,932	2,438
Total assets		228,943	254,071	252,655
Equity
Share capital1		3,655	3,654	3,654
Other contributed capital/Share premium reserve2		302,532	318,920	319,539
Retained earnings2		-69,014	-76,282	-76,901
Net profit/loss for the period2		-9,528	7,268	6,005
Total equity		227,646	253,561	252,298

Current liabilities

Other liabilities	94	256	88
Accrued expenses and prepaid income	1,203	254	268
Total current liabilities	1,297	510	357
Total equity and liabilities	228,943	254,071	252,655

1 Restricted capital 2 Unrestricted capital

Statement of Changes in Equity

EUR Thousands		Other contributed capital/Share premium	Retained earnings incl. profit/loss for	Total equity shareholders in Parent
	Share capital	reserve	the year	company
Opening equity 1 January 2016	3,654	318,920	-69,014	253,561
Net profit/loss for the period	-	-	-9,528	-9,528
Total comprehensive income	-	-	-9,528	-9,528
Bonus issue	1	-1	-	-
Dividend to shareholders	-	-2,335	-	-2,335
Share buy-back	-	-14,052	-	-14,052
Closing equity 30 September 2016	3,655	302,532	-78,542	227,646

EUR Thousands		Other
		contributed	Retained	Total equity
		capital/Share	earnings incl.	shareholders
		premium	profit/loss for	in Parent
	Share capital	reserve	the year	company
Opening equity 1 January 2015	3,650	333,945	-76,282	261,314
Net profit/loss for the period	-	-	6,005	6,005
Total comprehensive income	-	-	6,005	6,005
Bonus issue	4	-4	-	-
Redemption program	-	-13,170	-	-13,170
Share buy-back	-	-1,851	-	-1,851
Closing equity 30 September 2015	3,654	319,539	-70,277	252,298

Statement of Cash Flow

EUR Thousands
	2016	2015	2016	2015
	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep
Operating activities
Operating profit/loss	-9,478	5,814	-1,984	-10,830
Changes in fair value of subsidiaries	6,469	-7,073	1,650	10,404
Cash flow from current operations before changes in working capital	-3,009	-1,259	-334	-426
Cash flow from changes in working capital
Increase (-)/decrease(+) in other current receivables	-355	14	-363	4
Increase (+)/decrease(-) in other current payables	787	-47	698	32
Cash flow from operating activities	-2,578	-1,293	1	-390
Investing activities
Repayment of shareholder contributions	20,700	17,500	6,700	5,500
Aquisition of remaining shares in ECEX Holdings SA	-2,000	-	-2,000	-
Cash flow from investing activities	18,700	17,500	4,700	5,500
Financing activities
Redemption program	-	-13,170	-	-13,170
Dividend to shareholders	-2,335	-	-	-
Share buy-back	-14,052	-1,851	-5,926	-834
Cash flow from financing activities	-16,387	-15,021	-5,926	-14,004
Cash flow for the period	-264	1,186	-1,226	-8,894
Cash and cash equivalent at the beginning of the period	1,918	1,057	2,868	11,258
Exchange rate differences in cash and cash equivalents	-73	192	-62	71
Cash and cash equivalent/cash and bank at the end of the period	1,581	2,435	1,581	2,435

Note 1 Accounting Principles

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

The accounting policies applied in these interim financial statements are the same as those applied in the financial statements as at and for the year ended 31 December 2015.

Note 2 Segment Reporting

East Capital Explorer AB classifies the Company's various segments based on the nature of the investments. Management monitors the holdings on the basis of fair value, and all holdings are reported at fair value through profit or loss. The value change of holdings held by the subsidiaries has been allocated to value changes, dividends received and other operating expenses that are directly attributable to the underlying investments in private equity, real estate, public equity and shortterm investments. All other revenues and expenses are classified as unallocated in the table below.

71	3,229	-720	1,076	-13,185	-9,529
-		-	-	-73	-73
-	22	-	-	-	22
71	3,207	-720	1,076	-13,113	-9,478
-		-	-	-1,604	-1,604
-		-	-	-664	-664
-		-	-	-1,100	-1,100
-	17	266	78	-	360
71	3,191	-986	998	-9,744	-6,469
-	-935	-	-6,513	-9,400	-16,848
-240	-172	-61	-1,835	-344	-2,652
474	854	416	-	-	1,743
-163	3,444	-1,341	9,346	-	11,287
Equity			investments	Unallocated	Total
Private			Short-term
			Real Estate Public Equity - - - -

Assets	35,774	51,335	48,269	117,340	-63	252,655
Profit/loss before tax	543	2,398	1,225	3,248	-1,408	6,005
Financial expense	-	-	-	-	0	0
Financial income	-	-	-	-	192	192
Operating profit/loss	543	2,398	1,225	3,248	-1,600	5,813
Other operating expenses	-	-	-	-	-657	-657
Staff expenses	-	-	-	-	-603	-603
Changes in value of subsidiaries	-9,267	2,398	1,225	13,058	-340	7,073
Other operating expenses (incl. management fees)	-1,526	-317	-110	-	-340	-2,293
Changes in value of portfolio	-7,742	2,715	1,335	13,058	-	9,366
1 Jan – 30 Sep 2015, restated3	Equity		Real Estate Public Equity	investments	Unallocated	Total
EUR thousands	Private			Short-term

¹ Costs related to the transition and termination agreement with East Capital (Real Estate and Unallocated), and to the upcoming sale of Starman (Short-term investments). Please refer to Note 5 Related parties

² Advisory costs related to the termination of the Investment Agreement with East Capital

3 Due the ongoing sale of Starman, the asset has been reclassified from Private Equity at year-end 2015, to Short-term investments in Q1 2016. The comparative period has been restated in order to reflect the reclassification.

Note 3 Entities with ownership interests over 50 percent

The following entities, in which the ownership interest is over 50%, are not consolidated due to the consolidation exception for investment entities.

Non consolidated entities 30 Sep 2016	Country	Number of shares	Book value, EURt	Ownership capital
ECEX Holdings SA (formerly East Capital Explorer Investments SA)	Bertrange, Luxembourg	100,000	10,745	100%
East Capital Explorer Investments AB	Stockholm, Sweden	11,000	9,229	100%
Humarito Limited	Nicosia, Cyprus	2,000	184,620	100%
Baltic Cable Holding OÜ	Tallinn, Estonia	2,502	-	100%
Starman AS	Tallinn, Estonia	10,758	81,300	63%
UAB Portarera1	Vilnius, Lithuania	300	30,127	100%
UAB Solverta1	Vilnius, Lithuania	100	-	100%
UAB Verslina1	Vilnius, Lithuania	100	-	100%

1 The operations in UAB Portarera, UAB Solverta and UAB Verslina have been aggregated as they are consolidated as 3 Burės

Note 4 Financial instruments

For a better understanding of the business, the information regarding financial instruments below is presented on a see-through basis as the fair value of the holdings in the subsidiaries. Shares and participations in the investment activities as well as the Company's holdings in subsidiaries are all valued at fair value.

Financial instruments not measured at fair value through profit and loss

For receivables and payables, the carrying amount is assessed to reflect fair value since the remaining maturity is generally short. This is also the case for cash and cash equivalent.

Calculation of fair value

The following summarises the main methods and assumptions applied in determining the fair values of the financial instruments in the balance sheet. Please refer to the Annual Report 2015 for more details on valuation policies used by East Capital Explorer AB.

Fair value hierarchy

The fair value hierarchy has the following levels:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

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

Shares in subsidiaries/financial instruments

In the Parent company, financial instruments consist of shares in subsidiaries of EUR 204.6m, loans to group companies of EUR 20.9m and cash and cash equivalent of EUR 1.6m. The carrying amount of these assets constitutes the fair value on the balance sheet date.

		Book value, EURt		Share of capital, %
Shares in subsidiaries including loans to group companies	Country	30 Sep 2016	31 Dec 2015	30 Sep 2016	31 Dec 2015
ECEX Holdings SA (formerly East Capital Explorer Investments SA)	Bertrange, Luxembourg	10,745	252,140	100	100
East Capital Explorer Investments AB	Stockholm, Sweden	9,229	-	100	-
Humarito	Nicosia, Cyprus	184,620	-	100	-
UAB Portarera (loan)	Vilnius, Lithuania	20,900	-	100	-

As of 19 August 2016, East Capital Explorer AB owns 100% (4.0%) of the votes in ECEX Holdings SA. On 20 September 2016, ECEX Holdings SA entered into liquidation and the shares in the subsidiaries Humarito Ltd and East Capital Explorer Investments AB, including loans to group companies and accrued interest, were transferred to the Parent Company East Capital Explorer AB.

As the holdings in the subsidiaries are presented on a see through basis, the tables below reflect the fair value hierarchy in the investment activities. The values of the shares in subsidiaries, including loans to group companies, are directly and indirectly made up by the following assets:

EUR Thousands
30 September 2016						Other assets
Breakdown of values in subsidiaries including	Private			Short-term		and liabilities,
loans to group companies	Equity		Real Estate Public Equity		investments Cash and bank	net	Total
Opening balance 1 January 2016	104,584	57,718	48,894	32,450	8,593	-98	252,140
Movement of acrrued interest income to Parent company	-	-1,477	-	-	-	-	-1,477
Reclassifications	-71,839	-	-	71,839	-	-	0
Purchases/additions	-	5,020	-	-	-5,020	-	0
Divestments/Reductions	-	-	-7,197	-19,563	26,760	-	0
Other	-	-	-	-	-8,808	-8,691	-17,499
Repaid shareholders contributions	-	-	-	-	-20,700	-	-20,700
Dividend received	-	-	-	-	1,743	-	1,743
Changes in fair value recognised net in profit/loss	-163	3,444	-1,341	9,346	-	-	11,287
Closing balance 30 September 2016	32,582	64,705	40,356	94,072	2,567	-8,789	225,494

EUR Thousands						Other assets
31 December 2015	Private			Short-term		and liabilities,
Breakdown of values in subsidiaries	Equity	Real Estate	Public Equity	investments	Cash and bank	net	Total
Opening balance 1 January 2015	85,028	48,620	70,442	52,188	4,557	-191	260,644
Reclassifications	-1,997	-	-16,110	18,107	-	-	-
Purchases/additions	22,514	3,325	-	-	-25,839	-	-
Divestments/Reductions	-	-	-7,397	-42,060	49,458	-	-
Other	-	-	-	-	-2,900	93	-2,807
Repaid shareholders contributions	-	-	-	-	-17,500	-	-17,500
Dividend received	-	-	-	-	817	-	817
Changes in fair value recognised net in profit/loss	-961	5,773	1,959	4,215	-	-	10,986
Closing balance 31 December 2015	104,584	57,718	48,894	32,450	8,593	-98	252,140

Private Equity consists of the holdings in Melon Fashion Group (MFG) and Trev-2 Group. Real Estate consists of holdings in 3 Burės, East Capital Baltic Property Fund II and East Capital Baltic Property Fund III. These holdings are valued internally or externally normally at year-end, and the fair value of the holdings is assessed on a quarterly basis.

Public Equity consists of funds with a majority of public holdings managed by East Capital. The holding in Komercijalna Banka Skopje, which is publicly traded, is also included in Public Equity. Holdings in Public Equity are valued at fair value according to the valuation principles described on the previous page.

Short-term investments consist of holdings which are expected to be divested within a year. The holding in Starman, East Capital Frontier Markets Fund and East Capital Bering Ukraine Fund R are classified as short-term investments.

		Valuation
Holding	Class	method	Valuation assumptions
Melon Fashion Group	Private Equity	DCF	Long-term growth 4%, Long term operating margin 8%, WACC 19%
Trev-2 Group	Private Equity	DCF	Long-term growth 2%, Long term operating margin 7%, WACC 7-11%
3 Burės	Real Estate	DCF	WACC 8-11%, Exit yield 7-8%
East Capital Baltic Property Fund II	Real Estate	DCF	WACC 8-9%, Exit yield 7-9%
East Capital Baltic Property Fund III	Real Estate	Acquisition value1

Discounted Cash Flow model (DCF), weighted average cost of capital (WACC)

1 First investment made in December 2015

For the fair values of Private Equity investments and Real Estate (3 Burės and East Capital Baltic Property Fund II) - reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant, would have the following effects:

Effect in EUR thousands	Private Equity
30 September 2016	Profit or loss
Sensitivity analysis	Increase	Decrease
Long term growth rate (0.5% movement)	954	-879
Weighted average cost of capital (WACC) (0.5% movement)	-1,125	1,210
Long term operating margin (0.5% movement)	1,682	-1,682

Effect in EUR thousands	Real Estate
30 September 2016	Profit or loss
Sensitivity analysis	Increase	Decrease
Weighted average cost of capital (WACC) (0.5% movement)	-1,004	1,026
Exit yield (0.5% movement)	-2,447	2,809

The East Capital Explorer portfolio is presented on page 4 in this report, including information on fair value changes during the period. More information on the portfolio holdings can be found on pages 5 to 10 in this report.

The following table analyses, within the fair value hierarchy, the investments in the investment activities measured at fair value:

EUR thousands
30 September 2016
Shares and participations in investment activities at fair value through profit or loss1	Level 1	Level 2	Level 3	Total balance
Private Equity	-	-	32,582	32,582
Real Estate	-	-	66,204	66,204
Public Equity	40,356	-	-	40,356
Short-term investments	11,654	81,300	1,118	94,072
Total	52,010	81,300	99,904	233,215

EUR thousands
31 December 2015
Shares and participations in investment activities at fair value through profit or loss	Level 1	Level 2	Level 3	Total balance
Private Equity	-	-	104,584	104,584
Real Estate	-	-	57,718	57,718
Public Equity	48,894	-	-	48,894
Short-term investments	31,077	-	1,373	32,450
Total	79,970	-	163,675	243,645

¹The following investments are classified in:

Level 1 - East Capital Deep Value Fund, East Capital Frontier Markets Fund and Komercijalna Banka Skopje

Level 2 - Starman Level 3 - East Capital Baltic Property Fund II, East Capital Baltic Property Fund III, East Capital Bering Ukraine Fund Class R, 3 Burės, MFG and Trev-2 Group

Private Equity	Real Estate	Investments	Total
104,584	57,718	1,373	163,675
-71,839	-	-	-71,839
-	5,020	-	5,020
-163	3,466	-255	3,048
32,582	66,204	1,118	99,904
			Short-term

EUR thousands
31 December 2015			Short-term
Changes in financial assets and liabilities in Level 3	Private Equity	Real Estate	Investments	Total
Opening balance 2015	85,028	48,620	1	133,649
Reclassifications	-1,997	-	1,997	-
Purchase/additions	22,514	3,325	-	25,839
Changes in fair value recognised net in profit/loss	-961	5,773	-625	4,187
Closing balance 31 December 2015	104,584	57,718	1,373	163,675

1 Starman have been moved from level 3 to level 2 due to the upcoming divestment; the unobservable input is not a significant part of the value of the holding.

EUR 3,048 thousands (EUR 4,187 thousands) of changes in fair value recognised net in profit/loss relate to investments still held at the end of the period.

Risks and uncertainties

For information about risks, uncertainties and information about the business environments and markets in which East Capital Explorer invests, please see page 11. For a summary of the methods and assumptions used to determine fair value of the portfolio holdings please see Note 4 and in more detail on page 71 in the Annual Report of 2015. The effect of fluctuations in the major parameters on the value of the portfolio holdings is presented in the table below:

Sensitivity analysis for market risks (EUR Thousands)

30 September 2016		Effect on net
Risk factors	Change	profit/loss for the period
Fx EUR/RUB	+/- 10%	2,637
Fx EUR/USD	+/- 5%	2,203
Equity price	+/- 10%	23,172

Note 5 Related parties

On 30 September 2016, East Capital Explorer AB had a related party relationship with its subsidiaries, Board members and employees.

At an Extraordinary General Meeting on 9 May 2016, East Capital Explorer's shareholders approved the Board's proposal to terminate the Investment Agreement between East Capital Explorer and East Capital. Consequently, no management fees to East Capital have been paid following the EGM, with the exception of the real estate funds East Capital Baltic Property Fund II and East Capital Baltic Property Fund III. Management fees paid to East Capital Asset Management SA for the first nine months of 2016 amounted to EUR 1.8m (EUR 3.7m).

Following the decision to terminate the investment agreement, East Capital Explorer and East Capital have signed a Transition and Termination Agreement regarding services and other undertakings until 31 December 2017. According to this agreement, a total of EUR 10.3m will be paid to East Capital as compensation for services, undertakings and shares. The cash payment will be in installments according to the following; EUR 7.5m in Q3 2016, EUR 0.9m in Q4 2016 and EUR 2.0m in Q4 2017. EUR 8.3m of this was included in the Q2 results, and another EUR 2.0m is included in the Q3 2016 results. Furthermore, a reserve of EUR 6.5m relating to performance fees for the upcoming sale of Starman was booked in Q1 2016 and will be paid upon closing of the transaction. Please see Note 2 Segment reporting and company press releases.

On 20 September 2016, ECEX Holdings SA entered into liquidation and the shares in the subsidiaries Humarito Ltd and East Capital Explorer Investments AB, including loans to group companies and accrued interest, were transferred to the Parent Company East Capital Explorer AB. The transaction had no impact on the Net Asset Value.

East Capital Explorer AB's management, Board members and their close relatives and related companies control 22.6 percent of voting rights in the Company.

Comparative numbers in parenthesis refer to January-September 2015.

Note 6 Repurchase of shares and dividend

On 20 May 2016, the Company launched a buyback program. The buybacks will be carried out for as long as the Company's shares trade at a discount of more than 20 percent to its most recently published NAV. Going forward, the Board has announced its intention to call an EGM in order to cancel the Company's treasury shares if the buyback mandate's 10 percent of outstanding shares threshold is reached. The Company repurchased a total of 2,095,745 shares during the period 20 May through 26 August 2016, corresponding to 7.44 percent of the Company's outstanding shares, at an average price of SEK 62.78 per share.

The total number of shares outstanding in East Capital Explorer as of 30 September 2016 amounted to 28,161,563. Adjusted for repurchased shares in 2016, the number of shares amounted to 26,065,818. The weighted average number of shares outstanding for the reporting period was 27,425,098, adjusted for the repurchased shares. In June 2016 the Company reduced its share capital by cancelling the 315,229 shares that were repurchased during 2015.

East Capital Explorer's dividend policy states that at least 50 percent of dividends received from portfolio holdings shall be distributed to shareholders. With an ordinary dividend as a base, share redemptions and repurchases can also be used from time to time to enhance shareholder value. At the Annual General Meeting 2016, it was resolved to pay an ordinary dividend for 2015 of SEK 0.80 per share, corresponding to EUR 0.09 per share. Payment to shareholders was made in June 2016.

Note 7 Events occurring after the end of the quarter

Shares in East Capital Deep Value Fund were sold for an amount equivalent to EUR 5.0m and in East Capital Frontier Markets Fund for an amount equivalent to EUR 2.0m.

The Company repurchased a total of 243,655 shares during the period 11 October through 16 November 2016, corresponding to 0.87 percent of the Company's outstanding shares, at an average price of SEK 60.49 per share.

On 7 October 2016, the members of the Nomination Committee were appointed based on the ownership structure as of 31 August 2016. The Nomination Committee, convened by Lars O Grönstedt, comprises Magnus Lekander representing East Capital, David Bliss representing Lazard Asset Management and Mathias Svensson representing Keel Capital. The Committee also comprises Lars O Grönstedt as Chairman of the Board of Directors of East Capital Explorer.

On 21 October 2016, the Company signed, through 3 Burės, a long-term lease contract with Swedbank for premises covering approximately 70 percent of a new office building to be constructed in central Vilnius. The new building will be built on the land plot adjacent to the existing 3 Burės office complex, both of which were purchased by the Company in 2014. The Company will invest up to EUR 9m over a two-year construction period, which will commence in the fourth quarter 2016.

On 10 November 2016, the Nomination Committee of East Capital Explorer resolved to nominate Göran Bronner as new Member of the Board of Directors, to be proposed at an Extraordinary General Meeting around the end of January 2017. The proposal means that the Board will be increased by one member in addition to the four members appointed at the AGM in June 2016; Lars O Grönstedt (Chairman), Peter Elam Håkansson, Liselotte Hjorth and Nadya Wells.

Note 8 Key Figures

Key figures	9m	6m	3m	12m	9m	6m	3m	12m
	2016	2016	2016	2015	2015	2015	2015	2014
Net asset value (NAV), EUR m	228	236	253	254	252	264	279	261
Equity ratio, %	99.4	99.7	99.8	99.8	99.9	95.1	99.8	99.8
Market capitalisation, SEK m	1,619	1,669	1,545	1,445	1,481	1,495	1,692	1,273
Market capitalisation, EUR m	168	177	169	158	158	162	183	134
Number of outstanding shares, m	26.1	27.0	28.2	28.2	28.2	28.3	29.9	29.9
Number of outstanding shares including
repurchased shares, m	28.2	28.2	28.5	28.5	28.5	28.5	29.9	29.9
Weighted average number of shares, m	27.4	28.0	28.2	29.3	29.7	30.5	30.6	31.8
Number of employees	9	5	4	4	4	4	4	4
Key figures per share	9m	6m	3m	12m	9m	6m	3m	12m
	2016	2016	2016	2015	2015	2015	2015	2014
Earnings per share, EUR	-0.35	-0.27	-0.01	0.25	0.20	0.55	0.52	-1.06
Dividend per share, EUR	-	-	-	0.09	-	-	-	-
NAV, SEK	84	82	83	82	84	86	87	83
NAV, EUR	8.73	8.74	9.00	9.00	8.96	9.32	9.35	8.73
Share price, SEK1	57.50	59.25	54.25	50.75	52.00	52.50	56.50	42.50
Share price, EUR1	5.97	6.29	5.87	5.54	5.55	5.68	6.10	4.49
SEK/EUR	9.63	9.41	9.24	9.16	9.36	9.25	9.26	9.47

1 Not adjusted for share redemptions