amber trust ii sca, sicar

30 Pages·2015·1.45 MB·English

AMBER TRUST II S.C.A., SICAR
Socjétéd Investissementen C’apitalaRisque
R.C.S.LuxembourgB 103 888
Audited Annual Report
As at 31 December 2014
A Private Investment Company
managed by
AMBER TRUST!! Management S.A.
Nosubscrzption can be receivedon the basisoffinancialreports. Subscriptions are only validifmade on the basis ofthe
currentprospectusaccompaniedby the latestannualandthemostrecentsemi-annual report, fpublishedthereafter.
TABLE OF CONTENTS AMBER TRUST II S.C.A., SICAR
Page
Management and Organisation
Management Companyand InvestmentManager 2
Board ofthe Manager 2
Corporate information 3
Generalinformation
The Company 4
Investment objective 5
Management Company 5
Shareholders’ information 5
Reportofthe Manager 6 7
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Information on AmberII’s Investments 8 18
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Independent Auditor’s Report 19 20
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Annual accounts
Balance Sheet 21
Profit & Loss account 22
Notes to the annual accounts 23 29
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MANAGEMENT AND ORGANISATION AMBER TRUST II S.C.A., SICAR
Management Company and Investment iIanager ofthe Company (called hereafter the “Manager”)
Registered Office
412F, route d’Esch
L-1030 Luxembourg
Manager
AMBERTRUST II Management S.A.
412F, route d’Esch
L-1030 Luxembourg
Management Board ofthe Manager
Harvey Sawikin Principal, FirebirdPrivate EquityAdvisors LLC and
FirebirdManagement LLC
Klaus Ebert Head ofFund Products withinDanske BankInternational
Kustaa Alma ManagingDirector,
Kaima Capital Eesti Oü.
Martynas Cesnavicius Principal, UAB Profinance
SupervisoryBoard ofthe Manager
Lars Eigen Moller Executive Vice President and Head ofAssetManagement in Danske Capital
Majken Hauge Johansen ChiefPortfolio Manager, Danske Capital
Ian Hague Principal, FirebirdPrivate EquityAdvisors LLC and Firebird Management LLC
Joanne Tuckman ChiefFinancial Officer, FirebirdManagementLLC
Michael Nelleman Pedersen Executive Director, ClO, inPKALtd
ClydeAnderson Executive CharimanofBooks-A-Million,Inc.
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MANAGEMENT AND ORGANISATION AMBER TRUST II S.C.A., SICAR
CentralAdministration
ING Investment Management Luxembourg S.A.
52, route d’Esch
L-1470 Luxembourg
Depositary Bank
ING Luxembourg S.A.
52, route d’Esch
L-1470 Luxembourg
DomiciliationAgent
S.G.G. S.A.
412F, route d’Esch
L-1030 Luxembourg
Management Support
DANSKE CAPITAL, SAMPOBANK LLC
Hiililaiturinkuja 2
FIN 00180 Helsinki
Finland
FIREBIRD PRIVATE EQUITYADVISORS LLC
152 West 5th7 Street, 2th4 Floor
NewYork, New York 10019
USA
InvestmentAdvisors
Kaima CapitalEesti Ou
Vim 19,
10140 Tallinn,
Estonia
UAB Profinance
A. Smetonos g. 6,
LT—01115, Vilnius,
Lithiunia
Lindermann, Birnbaum & Kasela Oü
Vim 19,
10140 Tallinn,
Estonia
Auditors
Ernst & Young, Société Anonyme,
7 me Gabriel Lippmann,
Parc d’Activité Syrdall2,
L-5365 Munsbach
Legal Advisor in Luxembourg
Arendt & Medernach
14, me Erasme
L-1468 Luxembourg
LegalAdvisor in the United States
ProskauerRose LLP
1585 Broadway Time Square
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NewYork, NY 10036
USA
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GENERAL INFORMATION AMBER TRUST II S.C.A., SICAR
The Company
AmberTrust II S.C.A., SICAR (the “Company” or “Amber II”) is registered onthe official list ofinvestmentcompanies inrisk
capital (“sociétés d’investissement en capital a risque” or “SICAR”) pursuant to the law dated 15 June 2004 as amended from
time to time onthe investment companyinriskcapital (the “SICAR Law”).
The Company was incorporated under the name of Amber Trust II S.C.A., SICAR on 22 October 2004 as a “société en
commanditepar actions” under the laws of Luxembourg and registered as a “société d’investissernent en capital a risque”
(“SICAR”).
The Articles have been published on 22 November 2004 in the Memorial C, Recueil des Sociétés et Associations (the
“Memorial”). The Company is registered with the Registre de Commerce, Luxembourg, undernumberB 103.888.
The Company is a closed-ended SICAR (i.e., Shares shall not be redeemed at the request of a Shareholder) with variable
capital. The Company was created for a limited period oftime. On 26 June 2013, the Extraordinary General Meeting ofthe
shareholders decided to extend the life ofthe Companyuntil 30 June 2016.
As asociété en commanditeparactions, the Companyhas two differenttypes ofShareholders:
(1) The associégérant cominandité orunlimited Shareholder (the “Manager”), who is the equivalent ofthe general partner ofa
limited partnership. The Manager is responsible for the management ofthe Company and isjointly and severally liable for all
liabilities which cannot be paid out ofthe assets ofthe Company. The Manager may onlybe removedby an amendment ofthe
Articles approved at an extraordinary general meeting of Shareholders. In such a case, the Placement Memorandum will be
updatedaccordingly. The Manager willhold one Management Share inthe Company.
(2) The associés commanditaires or limited Shareholders whose liability is limited to the amount of their investment in the
Company. The Company may have an unlimited number oflimited Shareholders. The interest ofthe limited Shareholders in
the Company is expressedbytwo Classes: OrdinaryShares and Participating Shares.
The Manager is Amber Trust II Management S.A., a company organised under the laws ofLuxembourg on 22 October 2004
with a share capital of EUR 31,000. The articles of incorporation ofthe Manager have been published in the Memorial on
22 November 2004. The Manager is registered with the Registre de Commerce Luxembourg, under number B 103.887. The
articles ofincorporation were last amendedby anextraordinarygeneral meeting ofshareholders held on23 June 2013.
The capital of the Company is represented by three Classes: one Management Share (which has been subscribed by the
Manager), Ordinary Shares and Participating Shares. The Management Share and Participating Shares have been issued upon
incorporation ofthe Company. No further Management Share or Participating Shares will be issued. Ordinary Shares may, as
the Manager shall determine, be ofone or more different Series. As further described under section“Offering ofShares” ofthe
PlacementMemorandum, should Ordinary Shares be issued at aprice based on the NetAssetValue, all OrdinaryShares issued
on the same Closing shall constitute a separate Series.
Each Share (Management Share, Ordinary Share orParticipating Share) grants the rightto one vote at everygeneral meeting of
Shareholders. No measure affecting the interests ofthe Company vis-a-vis third parties or amending the Articles may validly
be takenwithout the affirmative vote ofthe holder ofthe Management Share.
The capital ofthe Company shall at all times be equal to the total net assetvalue ofthe Company.
The Company was incorporated with a subscribed Share capital ofEUR 31,000 divided into one Management Share and 30
Participating Shares ofno parvalue. Upon incorporation, the Management Share and each Participating Share were paid-up up
to 5%.
The minimum subscribedcapital ofthe Company, as providedbylaw, whichmust be achieved within 12 months after the date
onwhich the Companyhasbeen authorized as a SICARunderLuxembourg law, is EUR 1,000,000.
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GENERAL INFORMATION AMBER TRUST II S.C.A., SICAR
Investment Objective
Amber Trust II S.C.A., SICAJ{ is a closed-end investment company, the objective ofwhich is to generate long-term capital
gain by making risk capital investments (including private equity and buyout investments) in new and established companies
primarily in the Baltic States ofEstonia, Latvia and Lithuania. Such investments may be made either directly or through the
investmentinunits orshares ofventurecapital orprivate equityfunds or otherinvestmentvehicles having a similarinvestment
strategy.
Management ofthe Company
The Company is exclusively managed by the Manager. To receive management support and advisory services in connection
with the Management Company, the Manager has entered in a Management Support and Advisory Services Agreement with
eachofDanske CapitalandFirebirdPrivateEquityAdvisors LLC.
Futhermore, to advise the Manager in connection with the management ofthe investments ofthe Company, it has entered into
an Investment Agreement with each ofKaima Capital Eesti Oü, UAB Profinance and Lindermann, Birnbaum & Kasela Oü,
respectively.
Shareholders’ information
Audited annualreports are available atthe registered office ofthe Company.
Any other financial information to be published concerning the Company, including the Net Asset Value ofOrdinary Shares
and ofParticipating Shares of the Company and any suspension of its calculation, are available to the Shareholders at the
registeredoffice ofthe Company.
Copies of the Articles, the Placement Memorandum and the latest annual accounts of the Company may be examined by
Shareholders during business hours on eachBusiness Dayatthe registered office ofthe Company, 4l2F, route d’Esch, L-1030
Luxembourg.
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REPORT OF THE MANAGER AMBER TRUST II S.C.A., SICAR
Dear AmberTrust II SCA shareholder,
Amber Trust II’s NAV/share declined 9.1% in Q4 2014 and 9.4% over the full year 2014. The Q4 decline was largely due to
mark downs in two holdings that were affected by the crisis in the Russian and Ukrainian economies and currencies. Latvian
electronics distributor Elko swung to a net loss for 2014 as its Q4 profits were badly hit by the foreign exchange volatility in
their main markets despite record sales volumes, although EBITDA remained positive for the year. Meanwhile
Russia/Estonian pharma-biotech company Pharmsyntez was marked down because the FUR value ofthe company came down
with theruble exchange rate, even though the company did operationally well last year, as a result ofexecution ofa new sales
strategy under a new CEO. Pharmsyntez’ biotech arm also moved ahead as the first patients were entered into FDA trials for
its important cancer drug Virexxa we believe that the proposed Western IPO ofits drug pipeline is still doable. As for Elko,
—
its financial strength will allow it to weather the current storm while several competitors are closing down; we remain positive
on the company and our ability to generate an exitwithin ourtime-frame.
Also marked down during Q4 was Litagra, which had a tough year mainlybecause oflow grainprices. At the end ofthe year
the main shareholders appointed a new CEO with the task ofimproving customer outreach and the cost structure, and reducing
dependency on consumer prices. A more positive development during Q4 was the completed sale ofPrernia ice cream at a
healthy multiple, which should result in a significant payment to Amber II via a share buyback after the company’s AGM.
Premia will also proceed to a sale process for the remaining fish business during 2015. Next week Amber II will effect a €5
million share buyback, and we expect to make one or two more distributions this year as we receive proceeds related to
Premia, from dividends, andpossiblyfrom otherexits.
Also on the positive side, Tallinlc’s share price rose during Q4 as the market anticipated a recovery in sales along with the
Nordic economies and a benefit from falling fuel prices. The company also announced the appointment ofa new CEO and the
signing ofan LOI to construct a new generationLNG vessel. Tallinkhas continued to rally in 2015 and the stockhas reached a
52-week high. A new CEO was also appointed by Kitron, which was marked up during Q4 as previously imposed efficiency
measures, such as furtherrelocationfromNorwayto Lithuania, began to pay offwith significantlyhigher margins. Given solid
orderbacklog and improved cost controls, we are optimistic aboutKitron.
Malsena continued to perform well last year, with record saled and profits. In December Malsena closed the acquisition ofan
Estonian company, now giving it pan-Baltic coverage for its products, which should make it more attractive for potential
strategic acquirers. Financially strong, Malsena has continued to repay the shareholder loan Amber II extended in connection
with its 2013 purchase ofa Latvianpeer. This “build to sell” bolt-on has proven successful so far, as has Toode’s mergerwith
a Finnish roofing materials peer. Having grown sales by more 50% in Finland last year, Toode launched a new factory in
Nurmijarvi, Finland in November. Finally, we are receiving indicative bids for Latvian insurer Ban, and believe an exit is
possible within six months.
On 1 January 2015, Lithuania became the third Baltic state to join the Euro. Based on the experience ofEstonia and Latvia
before it, we believe this will be net very positive for the country as it will, among other things, reduce borrowing costs and
smooth the path for FDI in Lithuaniaby other Euro members. Indeed, Moody’s recentlyupgraded Lithuania’s long-term credit
rating to reflect Euro adoption.
The main macroeconomic news for the entire region In Q4 2014 was the sharp devaluation ofthe Russian ruble, following a
plunge in oil prices. This will impact the Baltic economies directly, as a Russian recession and adjusted terms of trade will
squeeze exports to Russia, as well as to its key trading partners like Belarus. However, the Baltics have diversifiedtheir export
markets over the years since the 1998 Russia crisis, and so should be able to reorient their trade now to a gradually
strengthening Eurozone while Russia is stagnating. Quantitative easing by the ECB is seen to benefit peripheral EU members
most ofall. In addition, domestic balances have been restored and this is visible in higher employmentrates, real wage growth,
and increased consumer spending. EU structural funding, which after a pause is set to resume this year and next, should also
support GDP performance in all three countries. Lastly, as energy importers the Baltic States are beneficiaries of lower oil
prices.
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REPORT OF THE MANAGER AMBER TRUST II S.C.A., SICAR
Therefore, while the Baltics’ GDP estimates have been cut owing to the impactofthe Russianproblem, growthwill stillrun at
approximately 2%+ in 2015, accelerating to 3%+ next year. This will make them again among the fastest-growing Eurozone
members and a likely target for FDI and beneficiaries of improved borrowing conditions. These latter factors should assist
those, like Amber, who are looking to divestassets in the region.
As always, please feel free to contactuswith anyquestions.
OnbehalfofAmberTrust II Management SA
Bestregards
Harvey Sawikin KustaaAimä
Luxembourg, 24 June 2015
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REPORT OF THE MANAGER AMBER TRUST II S.C.A., SICAR
ii!; MRLSENR
Food::u:
Anrto1841 Cashproceeds €4.5m
Carryingvalue: €17.4m+ €4.3m
Investmentdate: April2005 Dec2007
-.
Based on Malsena Group’s pro forma consolidated financials, sales for the calendaryear ending December 2014 increased 1%
to LTL 202.5 million. EBITDA for the period was LTL 18.9 million, up 40.5% from LTL 13.4m previous year. Results for
2014 benefitted from full year consolidation of Latvian RDZ. Year-end results were slightly negatively impacted by ban on
sale ofEUproduce in Russia and accompanying loss ofcertain sales.
In early December, Malsena’s Group closed acquisition of Estonian company Balti Veski for EUR 2.85m from Helsingin
Mylly, the Finnishmiller. Balti Veski is active inprocessing, packaging and wholesale ofcereals in Estonian market. Products
are sold mainly under the company’s Veski Mati brand. Annual turnover of the company is ca. EUR 3.2 million, while
EBITDA EUR 0.3 million. Balti Veski is debt free company. The acquisition gives Malsena a pan-Baltic coverage for its
products and makes it a more serious contenderin the market and also more meaningful candidate forpotential acquirer.
During 2014, the company repaid FUR 2 million ofloans to Amber, reducing the outstanding shareholder loan from Amber to
EUR 4.3 million. A further payment ofEUR 1.lm is expected within Q2/2015. Consolidated net debt at the end ofDecember
excluding shareholder loans was EUR 23.4 million (LTL 80.8m). During the current fiscal year (ending June 2015) Malsena’s
Group plans to generate sales of EUR 67.0 million (LTL 231 3m), while EBITDA is expected at FUR 6.0 million (LTL
20.7m).
Martynas Cesnavicius is the chairman ofthe board ofMalsena.
Key figures
LTLm 2009 2010 2011 2012/13 2013/14 2014/15
Sales 76.9 89.4 133.6 166.5 204.1 231.3
Growth 5.0% 16.2% 49.3 % 24.7% 22.6% 13.3 %
EBITDA 15.9 14.5 13.4 7.6 20.0 20.7
NetProfit 3.3 3.4 0.0 -0.5 8.3 11.0
NetProfitGrowth 4.0% 3.7% -99.5% n.a n.a 32.5 %
NetProfitMargin 4.3 % 3.9% 0.0% -0.3 % 4.1 % 4.8 %
Owner’sequity 4.3 4.0 2.3 13.8 93.2 104.2
PER 36.0 34.7 na -239.6 14.4 10.9
P/Sales 0.5 0.4 0.3 0.2 0.2 0.1
EV/EBITDA 12.5 13.9 14.2 9.0 8.8 8.0
P/Book 28.2 30.2 51.8 8.7 1.3 1.1
Net Debt 80.2 81.8 71.3 84.3 56.0 46.0
Debt/Equity 18.8 20.6 30.8 6.1 0.6 0.4
Valuation 119.8 EURm 34.7
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REPORT OF THE MANAGER AMBER TRUST H S.C.A., SICAR
A
Sector; Agriculture
Percentageowned; 17.8%
Acquisitioncost; €3.9m
Caslsproceeds; €3.7m
Carryingvalue; €4.6m
Investmentdate; May2005&Nov2007
LITAGRA
Litagra’s consolidated sales reached LTL 463.3 million last year, up 2% from 2013 results. EBITDA came in at LTL 17.5
million significantly behind LTL 26.6 million reported in 2013. Profit was down to LTL 2.4 million from 12.6 million last
-
year.
Themainreasonforfallinprofitabilitywere weakerfarmcommodityprices that affectedbothLitagra’sproducing subsidiaries
as well as purchasing power of the company’s customers. In addition to global commodity price trends, Lithuanian dairy
farmers were specificallyimpactedbyRussianbanonEUproduce. Onebrightspotinthe yearwas the recordharvestofover 5
million tonnes ofgrain, which led to strongeamings in graintradingand elevatordivisions.
Company is inthe process ofconsidering ways to improve its profitability, management and considering other steps necessary
to make the company more attractive to strategic buyers. Gintaras Kateiva, founder ofthe company, stepped down as the CEO
in January and was replacedbyAidas Mackevicius, ex CEO ofretail chainIKI and furnituremakerVBK.
Martynas Cesnavicius represents AT II onthe board ofdirectors ofLitagra.
Key figures
LTLm 2009 2010 2011 2012 2013 2014 20l5F
Sales 451.9 321.7 337.5 429.2 452.6 463.3 480.0
Growth -7.0% -28.8% 4.9% 27.2% 5.4% 2.4% 3.6%
EBITDA 16.9 16.6 20.0 38.9 26.6 17.5 24.5
NetProfit -12.3 -13.6 -0.9 18.0 11.2 2.4 6.5
NetProfitGrowth -332% 10% -93 % 2075 % -38 % -79% 171 %
NetProfitMargin -3% -4% 0% 4% 2% 1% 1%
Owne?sequity 64.9 51.3 73.9 108.8 115.6 114.0 120.5
PER neg neg neg 3.5 5.6 neg 9.7
P/Sales 0.1 0.2 0.2 0.1 0.1 0.1 0.1
EV/EBITDA 12.6 12.1 7.7 5.0 5.0 6.7 4.6
P/Book 1.0 1.2 0.9 0.6 0.5 0.6 0.5
NetDebt 149.9 138.0 90.5 133.0 70.2 55.0 50.0
Debt/Equity 2.5 2.5 1.2 1.2 0.6 0.5 0.4
Valuation 63.0 EURus 18.2
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