30 August 2023

Reconstruction Capital II Limited (the "Company")

Interim Unaudited Financial Statements

for the six months ended 30 June 2023

Reconstruction Capital II Limited ("RC2", the "Company" or the "Group"), a closed-end investment company incorporated in the Cayman Islands admitted to trading on the AIM market of the London Stock Exchange, today announces its results for the six months ended 30 June 2023.

Copies of the company's interim financial statements will today be posted to shareholders. The interim report is also available on the Company's website http://www. reconstructioncapital2.com/.

Financial highlights

On 30 June 2023, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of €23.4m or €0.1729 per share, which represents a 1.59% fall since the beginning of the year.

As at 30 June 2023, RC2 and its subsidiary, RC2 (Cyprus) Ltd had cash and cash equivalents of approximately €0.017m and receivables of €0.017m. As at 30 June 2023, RC2 had short-term liabilities of €0.243m.

Operational highlights

During the first half of 2023, the macroeconomic challenges which started in 2022 due to the outbreak of war in neighbouring Ukraine continued to erode consumers' purchasing power, affecting all of the Fund's investee companies, although inflationary pressures which had been fuelled by the outbreak of war fell significantly in the second quarter.

The Policolor Group achieved revenues of € 37.6m during the first semester, 22.7% below budget and 15.9% lower year-on-year, as the anhydrides division struggled to source the necessary raw materials due to the less available ortho-xylene, pursuant to the EU banning imports from Russia. The coatings division's sales were slightly higher year-on-year but 9% below budget, as the cost-of-living crisis reduced consumers' discretionary spending, while the construction market weakened. Although the Group's gross margin overperformed the budget in percentage terms, the Group's six-month EBITDA of € 1.5m was € 1.3m below budget, mainly due to the reduced activity at the anhydrides division and the underperformance of the coatings division.

The Mamaia Hotel did not meet its budget over the first half of 2023, as the cost-of-living crisis and the ongoing war in Ukraine across the Black Sea significantly impacted demand for the Hotel in the second quarter, despite an unexpectedly good performance in the first quarter. In addition, unseasonal bad weather, including lots of rainfall on weekends in May and June, led to the cancellation of a number of corporate events and a significant reduction in the number of walk-in clients. As a result, the Hotel generated revenues of € 0.90m, 22% below budget. During the first half of the year, the Hotel posted an EBITDA loss of € 0.52m, € 0.14m higher than the budgeted loss of € 0.38m, mainly due to lower accommodation revenues, higher food and beverage costs, and higher salaries due to a tight labour market.

During the first half of 2023, Telecredit generated interest revenues of € 0.83m, 7.8% higher year-on-year but 10% below budget, and an operating profit before depreciation and interest expenses of € 0.25m, below both the € 0.34m budget target and last year's result of € 0.38m. The underperformance was mainly driven by lower demand in the first quarter since Telecredit outperformed its budgeted financing volumes in the second quarter. In May, Telecredit extended the maturity of its € 2.0m loan from a specialized institutional lender by a year to 2024, and increased the facility amount to € 3.0m.

At the end of June, RC2 had cash and cash equivalents of € 0.017m, receivables of € 0.017m, and short-term liabilities of    € 0.243m.  

For further information, please contact:

Reconstruction Capital II Limited

Cornelia Oancea / Luca Nicolae

Tel: +40 21 316 76 80

Grant Thornton UK LLP

(Nominated Adviser)

Philip Secrett
Tel: +44 (0) 20 7383 5100

finnCap Limited

(Broker)

William Marle / Giles Rolls

Tel: +44 20 7220 0500