Ad-Hoc Information: EEII Annual Results
Zug, April 26, 2019
EEII AG reports the annual results 2018
EEII closes the reporting year with a net loss of minus CHF 593'829 (2017: profit plus CHF 78'405) due to poor stock market conditions, particularly in the last quarter of 2018, a major decline of one of its key holdings, KAZ Minerals, and EEII's Ukrainian investments in the power generation/distribution sector struggling to recover from an unsuccessful privatization process. The net asset value (NAV) as of December 31, 2018, declined to CHF 3,15 per share versus CHF 3,54 at year end 2017. The disciplined cost regime was maintained. Total expenses 2018: CHF 378,500 vs. 2017: CHF 387,906 with a positive dividend income increase 2018: CHF 275,604 vs. 2017: CHF 149,615.
While the price of Brent Crude dropped from USD 67 to 54 per barrel by the end of 2018 and the MSCI World Oil & Gas Exploration and Production Index shed 23%, EEII's two other main investments Ukrnafta and Gazprom (combining 87% of the portfolio) remained largely unchanged. The outperformance of both companies (compared to the stock markets' general downturn) can be explained by improvements in their operating results, especially at Ukrnafta, and the fact that in particular Ukrnafta's valuation is so low at this point that short term price movements in the oil market have hardly any impact on its share price any more.
Currency fluctuations had no material influence on EEII's 2018 results. With the exception of the Brexit related weakness of the British Pound (-5.7% yoy), both the Ukrainian Hryvna (UAH) and the USD were steady.
While Ukraine as the major investment market of EEII has managed to somewhat stabilize the situation and halt the decline that characterized the period immediately following the outbreak of the conflict with Russia, the timid GDP growth of 3.3% (expected) in 2018 only serves to demonstrate how much the administration has failed to realize any of Ukraine's unbroken potential. In line with the country's overall performance, its stock market and the general state of the financial industry as well as the judicial system remain haphazard.
In order to facilitate EEII's potential exit from Ukraine and possibly attract new anchor investors, EEII introduced an opting-out clause in its statutes and initiated a change in its bank and custodian in Ukraine. This will facilitate on-going discussions and negotiations with interested partners.
The full annual report for 2018 as well as more detailed information are available for download under www.eeii.ch; a printed copy can be sent to the shareholders upon demand.
EEII AG's Annual General Meeting will take place May 27, 2019, at 11.00h at the Parkhotel in Zug.
For comprehensive information about the AGM, please refer to: www.eeii.ch
For further information, please contact:
Marcus H. Bühler, CEO (Tel: +41-44-552 43 43).
EEII is quoted on the Swiss Exchange (SIX) (Bloomberg: EEII SW Equity).