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EEII AG reports the annual results 2017

EEII closes the reporting year with a moderate increase in profit of CHF 78’405 (2016: CHF 14’108) due to the more favorable market conditions and a reduced cost basis. The net asset value (NAV) as of December 31, 2017 improved to CHF 3,54 per share versus CHF 3,49 at year end 2016. The disciplined cost reduction initiated in 2016 showed its full year effect for the first time, and gains in Russian and Ukrainian equities offset the weak currency performance of the USD. 

Commodity prices in raw materials, precious metals and crude oil continued to accelerate across the board in 2017 (copper + 31 %, zinc + 30 %, aluminium + 35 %, gold + 13 %, crude oil + 12 %). The impact of this positive price momentum was the driving force behind the stellar performance of KAZ Minerals + 138 %, and the more tempered Russian equities at + 6 %, and in Ukraine + 22 %. The weak USD performance and a Ukrainian Hryvna which lost another 7,7 % impacted EEII’s investment performance negatively. By contrast the GBP improved + 4,5 % versus the CHF.

The macro-economic view for Ukraine shows a slow-down in GDP growth from + 4,8 % in Q4, 2016, to only 2,1 % in Q3, 2017 – clearly too low for a sustainable economic recovery in the region. Despite the sanctions in the Donbass area and statements by the political administration claiming to fight corruption, there is no perceptible progress witnessed on either front. The EBRD has openly declared that the privatization process in Ukraine has failed. Several of EEII’s Ukrainian investments, which were originally acquired for their highly promising business potential, have become all but worthless. The bureaucratic burden for foreign investors has reached dimensions rendering the investment process cumbersome, even for our Company, which has been engaged in this market for over 10 years.

EEII’s management is currently contemplating a complete exit from all its investments in Ukraine. Despite our belief that the potential for very substantial price increases should be there, we perceive that this potential is increasingly outweighed by the political risks. The Company is therefore reviewing its investment strategy in 2018 – including an association with another anchor investor or a group of stake-holders, to redefine its investment focus and long-term strategy. For this purpose, the Board of Directors shall propose to the shareholders the introduction of an “Opting Out” clause in the Articles of the Company.

The full annual report for 2017 as well as more detailed information regarding the introduction of an Opting Out 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  April 30,  2018, 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).