RB nr 9/2007

Legal basis: § 5 subpar. 1 pt. 25 of RO

Summary and preliminary results of 2006

The Management Board of MCI Management S.A. informs that according to preliminary results the fund achieved in 2006 the consolidated net profit of PLN 29.70 million and unit net profit of PLN 24.49 million. Complete results shall be published in the quarterly report on February 28, 2007.

The consolidated net profit reached 393% compared to 2005 (PLN 7,558 thousand), and the unit net profit as much as 481% (in 2005: PLN 5,093 thousand.) The reason of such positive results of the fund was successful exits from portfolio companies listed on the WSE: Travelplanet.pl SA, Bankier.pl SA and One-2-One SA. The last two companies had their very successful debut on the Warsaw Stock Exchange in the middle of 2006. Apart from cash profits from sales of shares the unit result of MCI was also affected by the growth of valuation of Bankier.pl – a WSE listed company, a dynamically growing company – Hoopla.pl and the release of restructuring provisions of the portfolio IT companies. The higher consolidated result was significantly affected by the increase of the value of net assets of One-2-One SA after its successful IPO and the change of consolidation method of that company (from complete to ownership rights method.)

In 2006 MCI started 6 new investment projects: two in the Czech Republic (Retail Info s.r.o. and Nostromo ICT s.r.o.) and four in Poland – Telecom Media Sp z o.o., Naviexpert Sp. z o.o., Grupa LEW Sp. z o.o. (first Big Ticket transaction in the portfolio of the fund) and Web2 Sp. z o.o.

The directors’ method of valuation of MCI net assets at the end of 2006 (conducted acc. to EVCA standards) finally reached PLN 210.7 million which in 105.35% fulfilled the forecast announced by the fund (PLN 200 million). Further potential of growth of the value of MCI portfolio is in the planned new investments and in the dynamic growth of such companies as Travelplanet.pl SA, One-2-One SA group, Bankier.pl SA group, Hoopla.pl Sp. z o.o. and CCS SA group.
MCI Management SA estimates its unrealized profit on investments portfolio at the end of 2006 at PLN 128.5 million. This calculation is based on directors’ valuation of MCI net assets decreased by the costs of purchase of assets, estimated variable costs of sale of those assets and income tax.

Forecast for 2007

The Management Board of MCI Management SA presents the forecast for 2007:

2007 forecast
Unit net financial result PLN 40.4 million
Directors’ valuation of MCI assets PLN 300 million

MCI assumes an increase of the unit net result by 65% compared with 2006. The source of growth shall include next cash exits planned at over PLN 50 million and planned further growth of the value of assets.

The Management Board of MCI Management SA assumes an increase by 42% of the value of assets of the fund in 2007 as a result of at least 10 new investments which are planned and growth of the companies held in the portfolio especially from the Internet and Mobile sector.

Activities planned in 2007

In the area of exits the fund is considering about 6 transactions, including 2-3 new offers of public portfolio companies. The cash value of exits from investments is planned to increase almost 3.5 times compared to 2006.

At the end of 2006 MCI Management SA had at its disposal PLN 34.5 million of free funds for new investments (cash, short-term liabilities and liquid financial assets.) Due to the expected high value of new investments in 2007 MCI also plans issue of new bonds in the second half of 2007.
The investment strategy of the fund for 2007 assumes making 10-15 investments of the total target value of engaged funds at the level of PLN 50-113.5 million. New investments shall be made in Poland, Czech Republic, Romania and Bulgaria. At present 7 investments are being finalized. The first investment is planned in the sector of Biotechnology/LifeScience as well as the first MegaTicket investment (LBOs of mature, profitable companies are conducted at the upper investment limit of the fund.)

Work continues at MCI Capital TFI SA over obtaining a permit for beginning operations of TFI and establishing two sub-funds: MCI.TechVentures 1.0 (where MCI is planning to bring by contribution the non-public companies held today) and MCI.EuroVentures 1.0 which shall be a new PE fund investing in Poland in the sectors of Services/Food Industry/Construction Services at expansion/pre-IPO stage.
By the middle of 2007 MCI.BioVentures shall be launched – the fund will be investing in projects in the sector of Biotechnology/LifeScience at early stages of development.