East Capital Explorer AB Annual Report 2008 Report Annual AB Explorer Capital East E A S T C A P I T A L E X P L O R E R A B Annual Report 2008 Contact Financial information and calender AGM 2009 Investor Relations- and media contact: Monthly Net Asset Value report on the The Annual General Meeting of East Capital Louise Hedberg fifth working day after the end of each Explorer AB (publ) will be held at 4.00 p.m. Head of Communications/IR month CET on Monday 27 April 2009 in Grüne- +46 8 505 97 720 waldsalen at Konserthuset in Stockholm, Annual General Meeting in Stockholm [email protected] Sweden. Entrance from Kungsgatan 43. on 27 April 2009 Visiting address: Interim report 1 January – 31 March Kungsgatan 30, Stockholm 2009 on 14 May 2009 Programme Interim report 1 January – 30 June 2009 1.30 Registration opens Postal address: on 20 August 2009 Box 7214 2.00 Seminar on Eastern Europe with SE-103 88 Stockholm Interim report 1 January – 30 Septem- representatives from East Capital Sweden ber 2009 on 12 November 2009 3.00 Guest presentation with explorer Ola Skinnarmo about his upcoming www.eastcapitalexplorer.com adventure through the North East Pas- The annual report, other financial reports and sage 2009, sponsored by East Capital information as well as press releases, are Your opinion is very welcome available on www.eastcapitalexplorer.com. 3.30 Coffee break Shareholders and other interested persons How can we improve our financial reports, 4.00 Annual General Meeting begins may sign-up on the website for a subscrip- investor service and website? Please email tion to East Capital Explorer’s reports and your suggestions or ideas to us at press releases to be sent directly to their [email protected]. Participation e-mail address. The printed annual report is sent to shareholders who have notified East To be entitled to participate in the Annual Capital Explorer that they wish to receive General Meeting, shareholders must: Change of address printed financial information from the Com- Be recorded in the register of sharehold- Changes of address of physical persons pany. ers maintained by Euroclear Sweden AB who are registered as Swedish residents (formerly VPC) as per Tuesday, 21 April are made automatically by Euroclear Swe- 2009 den AB (formerly VPC). Please note that shareholders who have chosen not to Have notified the company of their have their addresses updated automati- attendance no later than 4.00 p.m. CET cally must, themselves, notify their account- on Tuesday, 21 April 2009 operating institute. Shareholders whose holdings are reg- istered in the name of a trustee, should Notification of attendance may be made: notify the trustee as soon as possible of On the web: any changes in their name, address or www.eastcapitalexplorer.com/agm account number. Other shareholders must notify changes of address and changes of By e-mail: account number to Euroclear Sweden AB [email protected] (formerly VPC), phone: +46 8 402 90 00, In writing to: e-mail: [email protected]. East Capital Explorer AB (publ) Att: Sandra Mårtensson Box 7214 More information about our investment SE-103 88 Stockholm region Sweden Do you want to know more about what By telephone to: happens in our investment region? Please Sandra Mårtensson, +46 8 505 977 27 visit our Investment Manager East Capital’s website www.eastcapital.com for news, When notifying attendance please state analyses and market comments. name, personal/company registration number, address, daytime telephone number, e-mail, number of shares as well as any assistants attending (maximum two). Please note that shareholders whose shares are not registered in the name of a nominee, must temporarily re-register their shares in their own name. Such registration must be in effect with Euroclear Sweden AB (formerly VPC) no later than Tuesday, 21 April 2009. Shareholders are requested to inform their nominees well in advance of this date. This annual report is available in Swedish and English. In the case of any discrepancies between the two language versions, the Swedish version shall govern. Komsomolets Island October Pioner I. Revolution Island Bol'shevik LAPTEV SEA Island ds Islan erian Sib EAST New A njo u I sla a nd SIBERIAN l y Kotel'nyy Island s m Novaya Sibir' e KARA SEA Lake Lyakhov Island SEA Z Taymyr Islands w T aymyr Peninsula Gulf of Yana e THIS IS EAST CAPITAL EXPLORER N o r t h S n d N i b e r i a n L o w l a This Wisrangel East Island Capital Explorer 2 V Y e e Comment from the CEO 4 n r i s e k y h o t The East Capital Exploreri share 6 C entral Siberian y a r ARCTIC CIRCLE a ARCTIC CIRCLE t S L n o 1895 w e g e s L g n s r en k i T a r ung Plateau n us R a e ka a R n W est n a B g m Arkhangel'sk e y a i l o O m b K ge y an a l R Lake ak RUt SSIAN FEDERATION o ry o Onega n Lake a a K K Len ld Ladoga n Siberian A Y e e n g St Petersburg u h is n s e a TALLINN ty y Ir R O o r ESTONIA b u Yaroslavl' Perm' h A z 4750 E Nizhniy M d LATVIA a Ye katerinburg g Kronotskaya S RIGA m Plain Tomsk Sopka Novgorod Ka u Commander C h I Kazan' Krasnoyarsk z LT LITHUANIA MOSCOW SEA OF Islands BA Ryazan' l Chelyabinsk Omsk Novosibirsk D VILNIUS Ufa OKHOTSK Lake Baikal Tula a Amur m Explorer Capital East is This MINSK hi Ir Barnaul s ty (1637 m) Penza I s POLAND Samara r h BELARUS Irkutsk Saratov ga ol U ASTANA WARSAW V Orenburg 4506 Sakhalin KIEV Belukha PRAGUE Voronezh s CZECH REP. SLOVAKIA Khabarovsk d UKRAINE Volgograd Lake Zaysan n BRATISLAVA a MOLDOVA Rostov-na-Donu KAZAKHSTAN sl BUDAPEST I CHISINAU (KISHINEV) Astrakhan' il Lake ur HOW WE INVEST SLOV. HUNGARY ROMANIA Balkhash K ZAGREB Aral LJUBLJANA BELGRADE BUCHAREST Sea Almaty CROATIA BOSNIA& H. C be 5642 A (Alma-Ata) Vladivostok SERBIA Danu S SARAJEVO BLACK SEA Elbrus UZBEKISTAN 7439 Eastern Europe during 2008 8 BULGARIA PI BISHKEK SOFIA GEORGIA Pik Pobedy MONTENEGRO TBILISI A PODGORICA SKOPJE N KYRGYZSTAN BAKU TIRANA MACEDONIA ARMENIA S TASHKENT Istanbul YEREVAN ALBANIA E Our investment region 10 ANKARA AZERB. A Euphrates TURKMENISTAN T Izmir TURKEY igris TAJIKISTAN ASHGABAT DUSHANBE Key sectors targeting long-term growth 14 How we invest 16 Our Investment Manager: East Capital 17 Q&A with the Chairman of East Capital 18 How we invest we How OUR PORTFOLIO Our portfolio on 31 December 2008 20 East Capital Bering Russia Fund 22 East Capital Bering Ukraine Fund 24 East Capital Bering Balkan Fund 26 East Capital Bering Central Asia Fund 28 East Capital Bering New Europe Fund 30 East Capital Power Utilities Fund 32 East Capital Russian Property Fund 34 Melon Fashion Group (MFG) 36 portfolio Our CORPORATE GOVERNANCE Corporate Governance Report 38 Q&A with the Chairman of the Board of Directors 39 The Board of Directors 40 Management 47 Internal control 48 Managing our risks 50 Corporate responsibility 53 Fees 54 Corporate Governance Corporate FINANCIAL STATEMENTS Administration Report 58 Financial statements 60 Notes to the financial statements 65 Audit Report 80 Financial Statements Financial Komsomolets Island October Pioner I. Revolution Island Bol'shevik LAPTEV SEA Island ds Islan erian Sib EAST New A njo u I sla a nd SIBERIAN l y Kotel'nyy Island s m Novaya Sibir' e KARA SEA Lake Lyakhov Island SEA Z Taymyr Islands w T aymyr Peninsula Gulf of Yana This is East Capital Explorer e N o r t h S n d N i b e r o w l a i a n L Wrangel Island V Y e e n r i s e k y In November 2007, we opened a new door h o t i C entral Siberian y a to investing in Eastern Europe by launching r ARCTIC CIRCLE a ARCTIC CIRCLE t S L n East Capital Explorer on the Stockholm o 1895 w e g e s L g n s r en k i T a r ung P l a t e a u n Stock Exchange, making hard-to-reach us R a e ka a R n W e s t n a B g m Arkhangel'sk e y a investments in our investment region easi- i l o O m b K ge y an a l R ly accessible to all investors. Lake ak RUt SS I A N FE DE RA TION o ry o Onega n Lake a a K K Len ld Ladoga n S i b e r i a n A Y e e n g St Petersburg u h is n s e a TALLINN ty y Ir R O o r ESTONIA b u Yaroslavl' Perm' h A z 4750 E Nizhniy M d LATVIA a Yekaterinburg g Kronotskaya S RIGA m P l a i n Tomsk Sopka Novgorod Ka u Commander C h I Kazan' Krasnoyarsk z LT LITHUANIA MOSCOW SEA OF Islands BA Ryazan' l Chelyabinsk Omsk Novosibirsk D VILNIUS Ufa OKHOTSK Lake Baikal Tula a m Amur MINSK hi Ir Barnaul s ty (1637 m) Penza I s POLAND Samara r h BELARUS Irkutsk Saratov ga ol U ASTANA WARSAW V Orenburg 4506 Sakhalin KIEV Belukha PRAGUE Voronezh s CZECH REP.