Interim Management Statement -- European Capital Limited Reports 2012 Net Operating Loss Of Euro (1) Million And Net Earnings Of Euro 23 Million

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Interim Management Statement -- European Capital Limited Reports 2012 Net Operating Loss Of Euro (1) Million And Net Earnings Of Euro 23 Million

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Interim Management Statement -- European Capital Limited Reports 2012 Net Operating Loss Of Euro (1) Million And Net Earnings Of Euro 23 Million PR Newswire ST. PETER PORT, Guernsey, Aug. 30, 2012 ST. PETER PORT, Guernsey, Aug. 30, 2012 /PRNewswire/ -- European Capital Limited ("European Capital" or the "Company") today issues an Interim Management Statement announcing net operating income ("NOI") for the half year ended 30 June 2012 of €(1) million and Net earnings for the half year were €23 million. As at 30 June 2012, net asset value ("NAV") was €650 million, a 4%, or €23 million increase from the 31 December 2011 NAV of €627 million and a €65 million decrease from the 30 June 2011 NAV of €715 million. H1 2012 FINANCIAL SUMMARY €(1) million NOI Materially impacted by 1 particular asset put on non-accrual status €(3) million net realised loss on investments €18 million net unrealised appreciation on investments €23 million net earnings €56 million of cash proceeds from realisations €20 million of securitised debt repaid €95 million of committed investment €84 million in new portfolio companies "NAV grew by €23 million in the first half, performing better than we had expected considering the weak economy in some parts of Europe," said Malon Wilkus, Chairman and Chief Executive Officer. "In the past six months our aggregate portfolio companies experienced moderate revenue and EBITDA growth, year over year.

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Interim Management Statement -- European Capital Limited Reports 2012 Net Operating Loss Of Euro (1) Million And Net Earnings Of Euro 23 Million

PR Newswire ST. PETER PORT, Guernsey, Aug. 30, 2012

ST. PETER PORT, Guernsey,Aug. 30, 2012/PRNewswire/ -- European Capital Limited ("European Capital" or the "Company") today issues an Interim Management Statement announcing net operating income ("NOI") for the half year ended30 June 2012of €(1) million and Net earnings for the half year were €23 million. As at30 June 2012, net asset value ("NAV") was €650 million, a 4%, or €23 million increase from the31 December 2011NAV of €627 million and a €65 million decrease from the30 June 2011NAV of €715 million. H1 2012 FINANCIAL SUMMARY

€(1) million NOI

Materially impacted by 1 particular asset put on non-accrual status

€(3) million net realised loss on investments €18 million net unrealised appreciation on investments €23 million net earnings €56 million of cash proceeds from realisations €20 million of securitised debt repaid €95 million of committed investment

€84 million in new portfolio companies

"NAV grew by €23 million in the first half, performing better than we had expected considering the weak economy in some parts ofEurope," said Malon Wilkus, Chairman and Chief Executive Officer. "In the past six months our aggregate portfolio companies experienced moderate revenue and EBITDA growth, year over year. We believe this reflects the fact that 99% of European Capital's portfolio companies are located in countries with AA credit ratings or better. We were busy in the first half, generating €56 million cash realisations and investing €95 million of which €89 million was in senior loans. We remain poised to consider new investments particularly if attractive pricing develops." PORTFOLIO VALUATION For the half year ended30 June 2012, net unrealised appreciation of investments totalled €18 million on our private finance portfolio mainly driven by improvements in the performance of portfolio companies. PORTFOLIO LIQUIDITY AND PERFORMANCE In the first half of 2012, €56 million of cash proceeds were received from realisations of portfolio investments. The Company made €95 million in new committed investments in the first half of the year with €84 million committed to new portfolio companies and €11 million to support the current portfolio. "During the first half, we continued to see liquidity in the portfolio and deployed our capital into areas that add to shareholder value." said Ira Wagner, President. "We are committed to supporting our existing portfolio companies as well as originating new, attractive investments. We are actively pursuing additional attractive investment opportunities in both Debt investments and for One Stop Buyouts®". Since inception, European Capital has invested €3.4 billion in 100 portfolio companies. European Capital has realised €1.9 billion from the portfolio since inception, including senior debt syndications. Out of the €1.9 billion we have exited fully 43 portfolio companies, realising an aggregate of €1.2 billion comprising:

€809 million of rinci al re a ments

30 June 2011 € %

30 June 2012 Versus

Assets Investments at fair value (Cost basis of €1,568,941, €1,555,191 and €1,638,416, respectively) Cash and cash equivalents Restricted

EUROPEAN CAPITAL LIMITED CONSOLIDATED BALANCE SHEETS As of 30 June 2012, 31 December 2011 and 30 June 2011 (in thousands)

30 June 2012 € (unaudited)

2,803

973,607

64%

94%

31 December 2011 € (audited)

44,721

-7%

(71,984)

1,099,214

2,114

-3%

7,848

3,021 6,522 1,188,515

142% -2% 2%

(2,526)

(2,716) (2,069) (32,460)

-32%

126 4,529 1,128,617

429,685

(174)

305 4,453 1,156,055

4,371

1,027,230

5,322

114,374

142,056

5,496

(27,682)

1,568

-90% -32% -3%

53,623

(4,438)

179 (76) 27,438

-1%

Total assets Liabilities and Shareholder's Equity Debt (maturing within one year

cash and cash equivalents Interest receivable Derivatives agreements at fair value Other

30 June 2011 € (unaudited)

434,579

439,017

4,894

These exits achieved an aggregate IRR of 9.7%. The equity investments of these exited portfolio companies have achieved a 28.8% IRR. European Capital's portfolio as of30 June 2012at fair value was €1.0 billion, with an average investment size of €20 million per portfolio company. European Capital's largest investment represents 15.4% of total investment assets at fair value and the ten largest investments represent 56.3% of total investment assets at fair value as of30 June 2012. As at30 June 2012, loans with a cost of €269 million and a fair value of €60 million were on non-accrual, representing 8.2% of total loans at fair value, compared to €245 million cost and €40 million fair value of non-accrual loans, representing 7.8% of total loans at fair value as at31 December 2011. The €20 million increase in the fair value of loans on non-accrual was driven by additional loans being placed on non-accrual during the first half and appreciation in the fair value of loans already on non-accrual status.

30 June 2012 Versus 31 December 2011 € %

respectively) Due to European

and €1,704,

€1,965, €2,356

69,653

2,257

-19%

56%

€166 million from loan syndications and sales; €125 million of collections of PIK notes and dividends; and €111 million from sales of equity.

Total operating income

1,156,055

NM = Not Meaningful

-63% 18%

-63%

(632) (18)

66,240 508

(41,982) 92

€

-8%

3% 2% -74%

-102% 59%

(39,810) 26

(39,784)

-102%

(32,460)

(2,080)

(65,153)

(88,186)

(464,259)

1,188,515

27,570

Interest and dividend income

General and administrative

(566,378)

649,678

(552,445)

22,942

13,933

1,128,617

27,438

626,736

-3%

(41,890)

-19%

-9%

39% 0%

-22%

4,496

9,411 (154)

24,258 600

(2,651)

1,078,718

501,881

24,272 37,153

33,683 36,999

506,377

224,475

1,076,067

1,116

224,475

(98,419)

-1%

NM -10%

32,693

(11,921)

32,768 (4,267)

(133,373)

1,087,988

EUROPEAN CAPITAL LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS Six Months Ended 30 June 2012 and 2011

11,660

915 41,266

1,818

11%

2012

Six Months Ended 30 June

224,475

473,684

OPERATING INCOME:

34,954

26%

-39%

(702)

(110,079)

€

(in thousands) (unaudited)

Net unrealised depreciation of investments Total shareholder's equity Total liabilities and shareholder's equity

fair value Other

Capital Financial Services (Guernsey)

Limited Derivatives agreements at

Total liabilities

Shareholder's equity: Share Capital

1,439

(323)

25,490

24,858

13,297 11,244 949

net realised earnings Net unrealised foreign currency depreciation

Undistributed

NET OPERATING INCOME

Total operating expenses

Provision for income taxes

OPERATING INCOME BEFORE INCOME TAXES

OPERATING EXPENSES: Interest Management fee

39,178 (44)

Fee and other income

39,134

66,748

12,887 10,980 3,703

410 264 (2,754)

€

2011

714,831

2012 Versus 2011

Six Months Ended 30 June

(650)

Foreign currency translations

Derivative agreements

Portfolio company investments

-5 3,001

Preferred Equity

91,679

(223) 5 127

Net realised loss on investments

Portfolio company investments

Foreign currency translations

Derivative agreements

Net unrealised appreciation on investments

91,679

8,251

Total net realised loss on investments

NET REALISED (LOSS) EARNINGS

17,542 11,660 (3,609)

(2,651)

30 June 2012 Versus

OTHER FINANCIAL INFORMATION

30 June 2012 Versus

(in thousands)

Six Months Ended 30 June 2012, 31 December 2011 and 30 June 2011

EUROPEAN CAPITAL LIMITED

(16,049)

(23,858) 4,028 3,781

20,581 (2,216) (4,317)

30 June 2011

31 December 2011

Six Months Ended

30 June 2011

Six Months Ended

NM = Not Meaningful

14,048

Payment-in-kind

Dividends and

Original Issue Discount Sale of Equity

Interest and

Total

Realisations: Principal Prepayments Payment of Accrued

2,713

-100% -100% 100%

debt Convertible Bond

89,269

100%

-64%

(11,353)

100%

481%

100%

17,614

14,338

(8,077)

Acquisitions Add-on Financing for

6,261

-56%

100%

2,501

€

89,269

New Investments: Senior Debt Subordinated

Total

€

Recapitalisations

€

NET INCREASE IN NET ASSETS RESULTING

FROM OPERATIONS ("NET EARNINGS")

€

212

-100% 100% 4%

-73%

86% -55% -114%

Total net unrealised appreciation on investments

(25,736)

88%

(80,789) 46,886 (3,174)

(2,001)

(3,277) 1,812 (536)

23,085

98,331 (35,226) (435)

-82% 133% -730%

-59%

(62,813)

(37,077)

-111%

62,670

85,755

83,428

223 -2,874

297

3,309

94,988

11,263

47,688

47,751

83,725

94,988

3,309

2,713

89,269

€

Six Months Ended 30 June 31 December 2012 2011

Common Equity

Add-on Financing for

3,012

-31%

481%

-37%

(28,073)

78,635

(5,090)

22,942

25,593

6,300 10,053 -

16,353

(6,300) (10,048) 3,001

78,635

83,725

16,353

75,824

16,353

274%

(152)

(3,096)

3,781

4,894

Depreciation

8,088

429,685

Gross Realised Gains Gross Realised Losses Portfolio Net

Other Financial Data: Net Asset Value

Financial Liabilities Asset Coverage

(101,657)

(15,618)

100%

23,592

(435)

(35,226)

Extinguishment of debt Net Realised Losses

Upon Realisation

Appreciation

46,621

62,670

Net Unrealised

Appreciation,

(23,805)

-49%

Depreciation, Gains and Losses:

79,311

(1,293) (14,498)

-1,494

1,293 15,992

55,506

Appreciation of Portfolio Investments

Gross Unrealised Depreciation of

Foreign Currency Derivative Agreements Net Unrealised

Depreciation of Portfolio Investments

(16,771)

(2,909)

72,856

-92%

(158,510)

-5%

(56,779)

Portfolio Investments Reversal of Prior Period Unrealised

1,465

18,236

81%

40,142

-46%

(61,109)

16,413

32,714

133,965

(53,870)

-30%

(58,978)

-(19,552)

-21,046

114,484

Investments Sale of Loans

Total

714,831

-100% -91%

(23,029)

98,331

100% -93%

-52%

(419)

419

(13,627)

(13,208)

91%

-91%

(3,174)

(37,077)

-59%

(276)

133%

-82%

46,886

(80,789)

(Losses) Gains Foreign Currency Derivative Agreements

125,249

(Depreciation)

-50%

117%

132%

(3,445)

104,418

119,497

(11,634)

25,593

(3,609)

11,660

(78,825)

(164)

23,294

(101,955)

Depreciation of Investments

(14,948)

101,731

64%

17,542

123%

4,028

(8,240)

(16,049)

15,342

Net Gains, Losses, Appreciation and

-9%

(65,153)

Gross Unrealised

98%

100%

119%

98%

22,942

(4,438)

-1%

(22,832)

20,831

(2,001)

(3,385)

(152)

(9,335)

1,812

(289)

439,017

626,736

434,579

649,678

98%

-55%

-190%

98%

88%

14,048

(7,166)

(2,216)

11,147

13,351

12,932

Ratio Debt to Equity Ratio Credit Quality: Weighted Average

249%

0.7 x

of Total Loans Non-Accrual Loans at Fair Value as a Percentage of

Non-Accruing

Total Loans Non-Accrual Loans at Fair Value as a Percentage of

as a Percentage

Value Non-Accrual Loans at Cost

Year Realised

0.7 x

1.1%

23.0%

8.2%

Accrual at Fair

Loans on Non-

-76%

-7%

32%

-0.1%

-0.4%

Earnings Return on Average Equity at Cost Annualised Current Half

Rate on Debt Investments Loans on Non-

Accrual at Cost

25.2%

3.6%

23.0%

5.6%

-0.4%

6.2%

1.1%

244,947

39,940

266%

0.6 x

263,429

63,444

60,483

24.9%

Effective Interest

NM = Not Meanin ful

18,482

7.1%

-1.0%

-9.8%

16.3%

4.2%

2.1%

2.2%

-1.5%

-26.2%

5.8%

0.2%

20.4%

32.6%

7.8%

17.3%

51%

65,190

8.9%

-68%

20,543

199,985

-4.4%

6.5%

-6.8%

(4,707)

Current Half Year Net Operating

243%

Earnings Return on Average Equity at Cost

Income Return on Average Equity at Cost Annualised Current Half

LTM Earnings Return on Average Equity

Income Return on Average Equity at Cost

Loans at Cost Return on Equity: LTM Net Operating

Year Earnings Return on Average Equity Annualised

LTM Realised

Investments as a % of

€

Buyout®Investments

0.0%

€

0.0%

Total Net Realised

Total Investments at Fair Value Net Unrealised

Gains (Loss) on Investments Current Cost of Investments Current Fair Value of Investments Current Fair Value of

(396,876)

43.8%

100.0%

€

1,027,230

1,898,118

€

196,091

34.4%

24.1%

(45.1)%

21.1%

(20.5)%

28.8%

18.7%

0.0%

3.3%

(0.3)%

6.3%

(16.4)%

9.7%

(137,055)

1,568,941

€

(27,797)

€

247,356

€

1,517,015

€

683,258

€

333,927

83,041

77,297

€

5.5%

€

19.1%

1,421

€

(51,265)

(541,711)

(9.8)%

Depreciation (16)

Non-Accruing Loans at

NA = Not Applicable

1.6%

9.4%

(65,397)

€

Investments(2) (14)

IRR of Exited

IRR at Fair Value of

(0.5)%

54,966

(0.5)%

Investments (3) (14)

IRR of Exited Portfolio

IRR of Exited Equity

16,804

11,750

1,690

Investments Only (3)

IRR of Exited Portfolio

Companies' Equity

Total Exits and

Portfolio statistics (1) (15)

Total Interest,

Only (4) (5) (14)

Dividends and Fees

(18.5)%

€

2006

Companies (14)

Only (2) (4) (5) (14)

Equity Investments

(0.7)%

(50.1)%

Aggregate

0.2%

(15,114)

2.1%

€

31.4%

(79,877)

8.8%

2012

2005

IRR at Fair Value of All

EUROPEAN CAPITAL LIMITED

2007

2008

STATIC POOL INFORMATION

Portfolio Statistics for Investments Made in Each of the Following Years

Static Pool

(1.4)%

9.0%

5.8%

8.5%

9.5%

(14.0)%

Collected (14)

Prepayments of Committed Investments (14)

16.9%

8.9%

(19.3)%

(94.0)%

IRR at Fair Value of All One Stop Buyout®Investments(2) (14) IRR at Fair Value of

14.6%

4.8%

(in thousands)

223,645

81,216

6.9%

240,673

€

10.2%

€

(3) (14) Committed Investments (14)

14.4%

11.8%

(16.6)%

€

1,242,200

83,725

€

56,387

€

3,322,552

0.0%

402,512

(55,611)

€

665,172

847,303

450,427

€

322,635

908,174

184,550

€

322,108

0.0%

(4) (5) (14)

Current One Stop

Buyout®Investments (2) (14) IRR of Exited One Stop

2005-2008 Static Pools Aggregate 8 672,274 323,172 83,733 11,651 337,922 484,738 106,338 147,750 72.8% 76,940 747,456 508,100 359,908 239,357

Static pool classification is based on the year the initial investment was made. Subsequent add-on investments are included in the static pool year of the original investment. There were no new investments made in 2009 to 2011. (1) Assumes investments are exited at current US GAAP fair value. (2) Includes fully exited investments of existing portfolio companies. (3) Excludes investments in Structured Products. (4) Excludes equity investments that are the result of conversions of debt and warrants received with the issuance of debt. (5) Majority Owned Portfolio Company ("MOPC") investments represents investments in which European Capital, or its affiliates, have a fully diluted ownership percentage of 50% or more or has over 50% board representation at the portfolio company. (6) Adjusted EBITDA may reflect certain adjustments to the reported EBITDA of a portfolio company for non-recurring, unusual or infrequent items or other

€

€ €

16,304

34.2%

6.6

5.1

€

85,205

188,994

€

100.0%

306,021

€

6.3

12.6%

Diluted Ownership Percentage of European Capital in MOPC(13) Total Cash Total Assets Total Debt Total Third Party Debt at Cost

€ €

€

Total Current European Capital Investment in MOPC At Cost Basis

€

€ €

0.0%

€ € € € €

Number of MOPC

Total Revenues (10)

€

Average Revenue (4) (10) (12) Average Adjusted

€

€ €

€

100.0%

34,233

€

10.9

51.1%

1.7

0.7

9,212

€

€ €

205,723

2,481 1,200,003

€

1,690.00

0.0%

€

(4) (9) (12)

Average Age of

Companies (4) (12)

EBITDA (4) (7) (8) (9) (12) Interest Coverage (4) (9) (12) Debt Service Coverage

Diluted Ownership

Percentage (4) (13)

Total Adjusted EBITDA (4) (7) % Senior Loans (4) (9) (11) % Loans with Lien(4) (9) (11)

Total Revenues(4) (10)

EBITDA (4) (7) (12)

Total Adjusted EBITDA (7)

Total Capital Expenditure(10)

Total Gross Profits(10)

Total Current European Capital Debt Investment in MOPC At Cost Basis

Total Current European Capital Debt Investment in MOPC At Fair Value

Cost Non-Accruing Loans at Fair Value Equity Interest at Fair Value (4) Debt to Adjusted

Majority Owned Portfolio Companies ("MOPC")

5.3

263,228

274,582

60,483

100.0%

5,309,222

48,586 43,159,482

301,886

€ € € € € € € €

100.0%

26.9%

6.2

3.4

26.7%

2.1

0.4%

5.4

3.4

23,055

2,092

56,439 13,441,200

36,552

1,133,405

214,196

€

4.1

187,285

19,434

28,470

€

100.0%

€ €

€

4.0

0.4%

4.2

€

7.8

66.7%

1.8

100.0%

€

144,122 22,114,919

2,092,077

20.8%

451,463

2,331,386

100.0%

234,182

€

27,708 5,005,442

228,573

37,858 1,397,918

Total Shareholders' Equity (16)

Total Current European Capital Investment in MOPC At Fair Value

pro-forma items or events to normalize current earnings which a buyer may consider in a change in control transactions. These adjustments may be material and are highly subjective in nature. Portfolio company reported EBITDA is for the most recently available twelve months, or when appropriate, the forecasted twelve months or current annualized run-rate. (7) For portfolio companies with a nominal Adjusted EBITDA amount, the portfolio company's maximum debt leverage is limited to 15 times Adjusted EBITDA. (8) Excludes investments in which we own only equity. (9) For the most recent twelve months, or when appropriate, the forecasted twelve months. (10) As a percentage of our total debt investments. (11) Weighted average based on fair value. (12) Weighted average based on fair value of equity investments. (13) Non euro-denominated amounts are retranslated at the exchange rate ruling at the date of original investment. (14) Non euro-denominated balances, other than those referred to in (14), are retranslated at the exchange rate ruling at the balance sheet date. (15) Balance Sheet appreciation (depreciation) of investments excluding foreign exchange revaluation. (16) Calculated as the estimated enterprise value of the MOPC's less the cost basis of any outstanding debt of the MOPC's. IMPORTANT DISCLOSURES NAV Any valuation information relating to the portfolio companies of European Capital stated or referred to in this release has been determined by the Board of European Capital in good faith, on a basis consistent with past practice and for the purposes of complying with its reporting obligations under applicable laws. Forward-looking statements This document may contain "forward-looking statements." By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Many of these risks and uncertainties relate to factors beyond European Capital's control or which cannot be estimated precisely. These factors include, but are not limited to, uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, changes in regional, national or international economic conditions, and changes in the conditions of the industries in which European Capital has made investments. Actual outcomes and results may therefore differ materially from any outcomes or results expressed or implied by any such forward-looking statements. Performance data quoted above represents past performance of European Capital. Past performance does not guarantee future results and the investment return and principal value of an investment in European Capital will likely fluctuate. Additionally, European Capital's current performance may be lower or higher than the performance data quoted above. Basis of preparation This interim management statement has been prepared to provide further transparent information about European Capital and should not be relied on by any person for any other purpose. Certain financial information in this interim management statement is based on unaudited management accounts. Nothing in this document is intended to be, or should be construed as, a profit forecast. ABOUT EUROPEAN CAPITAL European Capital is an investment company for pan-European equity, mezzanine and senior debt investments with €1.2 billion in assets under management. European Capital is a wholly-owned affiliate of American Capital, Ltd ("American Capital"). It is managed by European Capital Financial Services (Guernsey) Limited ("ECFSG" or the "Investment Manager"), a wholly-owned affiliate of American Capital. The Investment Manager has offices inLondon andParis. As of30 June 2012the Investment Manager had 5 investment teams with 21 investment professionals and employed 26 support staff. European Capital and its affiliate, American Capital, will consider senior and mezzanine