Interim Report 1 January - 31 March 2010

5/11/2010, 7:02 AM (Source: GlobeNewswire)
* Net asset value per share on 31 March 2010 amounted to EUR 11.73 (EUR
7.25). The total net asset value amounted to EUR 410m (EUR 259m),
corresponding to an increase of 20% (-2.2%) during the first quarter and an
increase of 58% (-30%) during the last twelve months
* For the first quarter, the net profit amounted to EUR 86m (EUR -4.1m),
including EUR 87m (EUR -3.9m) in unrealised value gain on investments.
Earnings per share to the shareholders of the parent company amounted to EUR
1.94 (EUR -0.12)
* Cash, cash equivalents and bonds on 31 March 2010 amounted to EUR 83m (EUR
176m), corresponding to EUR 2.38 (EUR 4.92) per share
* In January, East Capital Explorer announced a EUR 5m direct investment in a
new venture which, together with Intrum Justitia and the East Capital
Financials Fund, will seek to invest in portfolios of non-performing
consumer loans in Russia
* On 26 March 2010, East Capital Explorer announced an investment of
additional EUR 5m in East Capital Bering Ukraine Fund Class A. East Capital
Explorer invested in newly issued shares that were received in the beginning
of April
* During March the Board utilised the buy-back mandate and repurchased
547,485 shares. After the close of the quarter, between 1 - 9 April, an
additional 100,000 shares were repurchased, bringing the total number of
shares repurchased to 647,485 for a total value of EUR 5.2m. These shares
were resolved to be cancelled at the Annual General Meeting on 28 April 2010
* The total net asset value on 30 April 2010 amounted to EUR 417m,
corresponding to EUR 11.96 (SEK 115 per share). Cash, cash equivalents and
bonds per the same date amounted to EUR 55m (SEK 533m) corresponding to EUR
1.59 (SEK 15) per share. EUR 32m (SEK 303m) of those were available for
future investments


CEO COMMENTS ON THE FIRST QUARTER
This was again a good quarter for East Capital Explorer, both in terms of how
our existing investments performed and in terms of progress on new investments.
Our NAV ended the quarter up by 20% and added another 2% in April. The East
Capital Power Utilities Fund, our single largest fund investment, has continued
to show very strong performance and has added another 42% during the first
quarter.

For most of our markets, the first quarter was strong. Media attention shifted
from Eastern Europe to Western Europe and this is positive for our region in a
number of ways. First of all, investors are gradually realizing that Eastern
European countries are, with a few exceptions, in much better financial shape
than several Western European countries. Also, many Eastern European countries,
for example the Baltics, have demonstrated their ability to implement painful
reforms and adjust to new economic realities without major social or political
disruptions. This shows that political maturity and economic resilience in our
region is better than many had thought before. In addition, we have seen Russia
positively engaging on a number of issues of global and regional importance,
thereby improving its standing among the investor community.

We invested EUR 5.2 million in our own shares during March and April. We have
not changed our strategy and continue to see ample attractive investment
opportunities in our universe. As the discount was high, the Board decided to
send a clear signal again that we are confident about the valuation and value
growth potential of our portfolio. The buyback had immediate positive effect for
our shareholders, as our share outperformed all relevant benchmark indices. Now
that the shareholders meeting has decided to cancel these shares, every
shareholder's ownership in our company has grown proportionally.

We were happy to announce our third direct investment in January and to get this
venture up and running during the quarter. We have been impressed by the skills
and experience that Intrum Justitia and the East Capital Financials Fund bring
to the table. The pipeline has been satisfactory and we have taken an in-depth
look at a dozen or so investment opportunities during the last couple of months.
So far the debt portfolios we have evaluated have been of modest size and
variable quality, but we are confident that we can find attractive investment
opportunities in this field before long.

We have allocated an additional EUR 5 million to East Capital Bering Ukraine
Fund Class A. This is the fund that focuses on listed Ukrainian securities,
which we expect to benefit the most from political stabilization. We have been
underweight in Ukraine for the last two years. Ukraine is a country of enourmous
potential, but because of its troubled politics in recent years, we had decided
to wait for a more favorable environment. Now, with the presidential elections
behind us, and with a stable majority government in office, our expectation is
that Ukraine is again better able to focus on the important reform issues that
have been overshadowed by the political in-fighting before. The Ukrainian market
has been the best performer in our universe this year: it is up by 93%, but
still down by 41% from the peak. Our investment into the East Capital Bering
Ukraine Fund Class A is up by 28% so far in 2010.

Melon Fashion Group has continued to grow very fast: it now has a total of 343
shops. During the first quarter it added 70 shops, most of which came from
taking over the operations of a former competitor. In the course, MFG has
acquired the franchising rights for three international brands: Springfield,
women´secret and Colors&Beauty, first two from the Spanish retailer Cortefiel
Group. By adding men´s fashion, women´s underwear and accessories to its brand
portfolio, MFG has once again demonstrated its ability to utilize its strong
financial position and execution capability to grow the business. This is
exactly why we invested new capital into the company and once again, they are
smartly taking advantage on the market situation. MFG´s same store sales during
the first quarter were weak. The company had some problems with getting goods to
the shops quickly enough; these issues have now been resolved. All in all, the
financial result was better than expected due to higher gross margins and lower
operating costs.

Our investment in TEO has done fine, the stock is up 24% so far in 2010 2. First
quarter results showed a modest revenue decline, but good net profit, due to
effective cost control. Also, comparing TEO´s performance to other Baltic
telcos, we see that it has been quite resilient, as the economic downturn has
taken a bigger bite out of competitors´ revenues. TEO met our expectations in
terms of dividend payout: it continued to pay high dividends, yielding 9.2%.
This is great news for East Capital Explorer, as we will receive our first
dividend income of approximately EUR 1 million in a couple of weeks. The TEO AGM
also decided to cancel the 4.7% of share capital that was previously held in
treasury, effectively meaning that our ownership in the company grew.

Looking ahead, we continue seeing many interesting opportunities, which means
that we will continue investing at a fast pace, despite recent market
nervousness. We are very close to meeting our target of being fully invested.

Gert Tiivas, CEO


The full Interim Report is available for download as a PDF-file through the link
below and on the website www.eastcapitalexplorer.com.


TELEPHONE CONFERENCE

The report will be presented and commented at a telephone conference with Gert
Tiivas, CEO and Mathias Pedersen, CFO.

Date: today, Tuesday, 11 May 2010
Time: 10.00 am CET
Telephone details: +46 8 505 598 53 (Sweden) or +44 203 043 24 36 (UK).

Please dial-in a few minutes before the conference starts. A presentation for
the telephone conference will be made available on www.eastcapitalexplorer.com
before the conference.

The telephone conference will be webcasted simultaneously and can be viewed on
www.eastcapitalexplorer.com . The webcast
will also be recorded and made available on the website after the telephone
conference.


CONTACT INFORMATION
Gert Tiivas, CEO, +46 8 505 977 30
Mathias Pedersen, CFO, +46 8 505 977 48


FINANCIAL CALENDAR

* Monthly net asset value report on the fifth working day after the end of
each month
* Interim Report 1 January - 30 June 2010, 20 August 2010
* Interim Report 1 January - 30 September 2010, 11 November 2010


About East Capital Explorer │ East Capital Explorer AB is a Swedish company,
created with the specific aim of bringing unique investment opportunities in
Eastern Europe to a broader investor base. The company invests mainly in East
Capital's private equity and semi-public equity funds that provide exposure to
companies not otherwise accessible via the local stock exchanges in Eastern
Europe. East Capital Explorer targets fast growing sectors such as the power
utilities, financial, retail and consumer goods and real estate sectors. East
Capital Explorer has appointed East Capital to manage its investment activities.
Since 9 November 2007, East Capital Explorer is listed on NASDAQ OMX Stockholm,
Mid Cap.


The information in this interim report is that which East Capital Explorer AB is
required to disclose under Sweden's Securities Market Act. It was released for
publication at 07:00 a.m. CET on 11 May 2010.


The full press release including tables can be downloaded from the following
link.



[HUG#1414500]





East_Capital_Explorer_Q1_2010: http://hugin.info/143006/R/1414500/365849.pdf
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