Annual Financial Report

RNS Number : 5383M

Aurora Russia Limited

16 July 2014

Aurora Russia Limited ("Aurora Russia" or the "Company")

Results for the twelve months ended 31 March 2014

· The Board with support from the recently appointed advisor continue to focus on ensuring optimal exits from the investee companies

Financial highlights

· Net asset value per share for the Company as at 31 March 2014 of 27.9p per share (Net asset value £20.7m), down from 54.4p per share at 31 March 2013 (Net asset value £61.2m)

· The movement in the value of the portfolio companies principally reflects the lower valuation of comparable companies following a period of weakness in the Russian equity markets, foreign exchange movements and a weaker performance from Superstroy

· Cash and cash equivalents at 31 March 2014 were £9.1 million

· Cash at 30^th June (post tender) £2.50 million

Portfolio highlights

Unistream Bank

· Revenues for the twelve months ended 31 December 2013 were RUR 161.2 bn, up 4% YoY

· EBITDA of RUR172.5m for 2013, slightly below the RUR178.6m achieved in 2012

· Equity valuation of Aurora Russia's stake in Unistream at 31 March 2014 was £8m, compared to the valuation at 31 March 2013 of £12m

Superstroy

· Revenues for the twelve months ended 31 December 2013 were RUR 9.6 bn, in line with 2012

· EBITDA of RUR211m for 2013, down 12% YoY (the EBITDA is after an upward adjustment of some RUR 80 million for non-recurring store opening costs).

· Equity valuation of Aurora Russia's stake in Superstroy at 31 March 2014 was £1.8m, compared to the valuation at 31 March 2012 of £10.4m

Commenting, Gilbert Chalk, Chairman of Aurora Russia, said:

"The Board will continue to pursue all options for maximising shareholder value and returning further capital to shareholders. The Russian economy has slowed down but provides a relatively stable backdrop for the Board to continue to seek to realise assets at realistic valuations. We will continue to consult with shareholders on the best means and time frame in which to effect further returns to shareholders."

Enquiries:

Aurora Russia Limited

Gilbert Chalk +44 (0)7768 527973

Numis Securities Limited

Nominated Adviser: Hugh Jonathan +44 (0)20 7260 1000

Corporate Broking: Rupert Krefting / Nathan Brown

ANNUAL REPORT

For the year ended 31 March 2014

AURORA RUSSIA LIMITED

Company Summary

The Company

Aurora Russia Limited ('the Company') is a Guernsey registered closed-ended investment company and its shares are traded on the Alternative Investment Market of the London Stock Exchange ('AIM'). It was incorporated on 22 February 2006 and dealings commenced on AIM on 20 March 2006.

Investing policy

The Company's investing policy was to make equity or equity-related investments in small and mid-sized private Russian companies focused on the financial, business and consumer services sectors. The Directors are seeking to complete the realisation of the Company's residual investments in a timely manner.

The Manager

The Company's management contract with Aurora Investment Advisors Limited (the 'Manager') to provide investment advisory and management services which ran for 8 years has now been terminated effective 30 April 2014. The Manager's services were extended to 30 June 2014. The Board is pursuing its realisation policy with the assistance of Mr Nicholas Henderson-Stewart, who was appointed as Advisor effective 19 June 2014.

Registered address Dorey Court

Admiral Park

St Peter Port

Guernsey

GY1 2HT

Website details www.aurorarussia.com

Company registration no 44388

Chairman's Statement

Introduction

I am pleased to present the results of Aurora Russia Limited (the "Company" or "Aurora Russia") for the 12 months ended 31 March 2014.

The year and the immediate period thereafter have been dominated by long and complex negotiations to dispose of the Company's wholly owned investments and by deteriorating economic and trading conditions for the Company's remaining investments for the reasons set out in the Investment Manager's Report. The disposals have resulted in the Board being able to return in excess of £28 million of capital to shareholders by way of tender offer.

The Sale of Flexinvest Limited ("Flexinvest") and Kreditmart Finance Limited ("KFL")

On 3 March 2014, the Company announced that it had completed the sale of Flexinvest, its subsidiary in Cyprus, which owned OJSC Flexbank ("Flex Bank"). The consideration for the disposal of Flexinvest was RUR189.1 million (approximately £3.2 million) in cash plus, as part of the sale, mortgages with a nominal value of RUR144.2 million (approximately £2.4 million) held by Flex Bank which were transferred to the Company's wholly owned subsidiary KFL. As KFL owned shares in Flexinvest, it received its part of the £3.2 million cash proceeds which net of fees was approximately £261,500.

On 24th May 2014 the Company announced that it had sold KFL for a total consideration of RUR100 million (approximately £1.7 million) plus US $450,000 (approximately £267,500), which was KFL's cash balance at the time of the transaction.

Return of Capital

In the year to 31 March 2014, the Company returned £20.0 million to shareholders through a tender for 38,237,383 shares of Aurora Russia's stock at 52.3048p per share following the sale of OSG. The Company has now sold Flexinvest and KFL and with the proceeds of the sale and the residual payouts in connection with the sale of OSG returned an additional £8.2 million to shareholders through the tender announced in May for a further 29,651,549 shares, being approximately 39.9% of the current issued share capital of the Company, at a price of 27.5454p per share.

Subsequent to the year end, after payment of the tender proceeds and receipt of the sales proceeds from KFL, the remaining cash balances at 30 June 2014 were £2.5 million. These funds have been retained for future working capital and other purposes.

The Manager

On 31 October 2013 the Board announced that the Management Agreement between the Company and Aurora Investment Advisors Limited ("AIAL" or the "Manager") had been placed on six months' Notice of Termination. The Management Agreement has now come to an end and the Board has decided that it would be inappropriate for the Company to continue to bear the cost of a full time manager, particularly in the light of a reduced portfolio. The Board is of the view that its members have more than sufficient relevant experience and capability to monitor the progress of the remaining investments if supplemented by suitable local advice in Russia. The Board appointed Mr. Nicholas Henderson-Stewart as advisor to the Company on 19 June 2014.

Investment Review

The Company has two remaining investments:

· 24.3% of SuperStroy, one of the leading DIY retailers in Russia; and

· 26% of Unistream Bank, a leading Russian money transfer company.

Trading updates on these investments are set out in the Investment Manager's Report.

Portfolio Valuation

A valuation of the investment portfolio was performed at 31 March 2014 resulting in a valuation of £11.8 million. Including the cash from the sale of Flexinvest of £3.2 million to compare to the valuation of £32.8 million at 31 March 2013, this results in a decrease in value of £17.8 million, a fall of 54%. This valuation, recommended by the Valuation Committee of the Board was prepared by the Manager and formally adopted by the Board on 14 July 2014. These valuations are prepared for accounting purposes and are based on International Private Equity and Venture Capital Association ("IPEVCA") guidelines. The resultant valuations of investments included in the Company's financial statements will not necessarily reflect the market value that a third party would be prepared to pay for these businesses.

The current valuation of Aurora Russia's shareholdings reflects changes to the previous year valuation performed for March 2013 as follows:

· the value of the Company's 24.3% shareholding in SuperStroy has decreased by £8.6 million to £1.8 million, a decrease of 82.7%.

· the value of the Company's 26% stake in Unistream Bank has decreased by £4.0 million to £8.0 million, a decrease of 33.3%; and

· the value of the KFL assets were valued at £2.0 million which including the proceeds from Flexinvest of £3.2 million resulted in a decrease from £10.4 million to £5.2 million, a decrease of 50%.

Both Unistream's and Superstroy's valuations were affected by adverse FX movements. Unistream's valuation was also affected by lower market multiples. Superstroy valuation on the other hand has been written down due primarily to its disappointing financial performance as detailed in the Manager's Report and a decision of the Valuation Committee to amend the valuation methodology; applying a 100% weighting to EBITDA multiples rather than the 75% to EBITDA and 25% to Sales multiples a year earlier and increasing the liquidity discount to 25% from 20%.

Please refer to the Investment Manager's report for the performance on the investee companies during the period.

The Company has focused on further reducing operating expenses which excluding investment management and performance fees fell from £1.13 million to £0.9 million, a fall of 21%.

It is important to note that over the period there was an approximate 25% unfavorable movement in the £/RUR exchange rate. Therefore, the change in the value of the Company's investments may be distorted by the effect of the movement in the currency.

Results to 31^st March 2014

For the 12 months to 31 March 2014, Aurora Russia recorded a loss of £20.38 million or 26.31p per share, calculated based on the Company statement of comprehensive income. The net asset value ("NAV") of the Company as at 31 March 2014 was £20.69 million or 27.9p per share. Cash and cash equivalents at 31 March 2014 were £9.1 million.

Administration and operating expenses of £1.67 million (a decrease of 36% from the previous year) represent 8.1% of the current NAV.

Outlook

This is a time of great uncertainty and it is difficult to predict the outcome of the situation in Ukraine and the wider performance of the Russian economy. We expect that the value of our investments will continue to be affected by the general political and resultant economic situation. It is our intention to pursue every opportunity to maximise the value of our investments with a view to disposing of them at prices which reflect their fundamental value which we believe is likely to be material in any upturn of general market sentiment.

Gilbert Chalk

Chairman

Investment Manager's Report

Overview

According to the World Bank, Russia's GDP slowed to 1.3% in 2013 from 3.4% growth in 2012. The lack of growth supporting structural reforms, weak domestic demand, decreasing profit margins and the resultant poor business sentiment leading to reduced investment all played their part in the poor performance of the economy in 2013.

The World Bank projects in its low-risk scenario which assumes a limited and short-lived impact of the crisis in Ukraine, that growth in 2014 will slow to 1.1% before increasing slightly to 1.3% in 2015. The World Bank's high-risk scenario assumes a more severe shock to economic and investment activities from the Ukrainian crisis and projects a contraction in output of 1.8% for 2014.

Both of the Company's remaining investments are directly affected by the economic downturn, the drop in consumer confidence and domestic demand and are linked inextricably to the performance of the construction and other related sectors. The valuation of these investments in the Accounts reflects their performance in what has been and continues to be a very difficult market and there has been a further writedown in the value of each of our remaining investments.

The combined net asset value of these two investments at 31 March 2014 was £9.8million, down 56% from their value at 31 March 2013 of £22.4 million. The net asset value of the Company on 31 March 2014 was £20.7 million.

Management Agreement

Following the realisation of the Company's investments in OSG, Flexinvest and KFL, the Management Agreement between the Company and AIAL has been terminated. The Manager has agreed to remain available until 30 June 2014 to assist the Company where necessary in effecting a smooth transfer of its functions to the Board and its advisors.

Trading Updates

The following are trading updates for our remaining two portfolio companies.

Superstroy

For the year ended 31 December 2013, Superstroy's unaudited management accounts showed sales in line with 2012 at RUR9.6 billion (£192.9 million), with retail sales showing a 5% growth year on year to RUR7.1 billion (£142.7 million). Unfortunately wholesale sales dropped by 11% to RUR2.5 billion (£50.2 million). The 2013 gross profit of RUR2.9 billion (£58.2 million), and gross margin of 29.9% were in line with 2012. 2013 EBITDA was lower than in 2012 by 12% at RUR211 million (£4.2 million) (after an upward adjustment of some RUR 80 million for non-recurring store opening costs) compared to RUR240 million (£4.8 million).

In the first three months of 2014 sales were down by 3.5% for the period at RUR1.9 billion (£37.1 million). The decline in performance of Superstroy can be attributed to the market which remains weak, but also due to pricing pressure from increased competition entering the market with a view to gaining market share through low pricing strategies. Lower sales resulted in lower gross margins with gross profit down 17.6% at RUR509 million (£10.1 million) for the three months to 31 March 2014.

In April, Superstroy reported sales of RUR724 million (£14.4 million) lower by 7.9% than in April 2013 and a gross profit of RUR184.6 million (£3.7 million), down 14.9% year on year.

Unistream

For the year ended 31 December 2013, Unistream's unaudited management accounts showed volumes higher than 2012 by 4% at RUR161.2 billion (£3.2 billion) up from RUR155.0 billion (£3.1 billion). Total commissions for the year were 2% lower than in 2012 at RUR2.46 billion (£49.4 million) down from RUR2.51 billion (£50.4 million). Unistream's operating income was RUR1.23 billion (£24.7 million) down 3% from RUR1.27 billion (£25.6 million) and profit before tax was down by 3% at RUR130.8 million (£2.6 million). Management accounts show EBITDA at RUR172.5 million (£3.4 million), slightly below the RUR178.6 million (£3.6 million) that Unistream achieved in 2012. Average commissions for the year were 1.52% below the 1.62% achieved in 2012.

In the first three months of 2014 volumes were up by 4.3% for the period at RUR33.9 billion (£675 million). Total commission was 1.8% higher than for the same period in 2013 at RUR510.2 million (£10.2 million). The money transfer market in Russia remains extremely competitive with pricing the most important factor for money transfer customers thereby putting continued pressure on margin. This competitive pricing resulted in average commissions for the first quarter of 2014 dropping to 1.50% from 1.54% achieved in the first quarter of 2013.

Volumes continued to grow in April reaching RUR 14.6 billion (£291 million) an increase of 6.9% year on year with operating income up 7.2% on April 2013 at RUR221 million (£4.4 million).

Conclusion

We remain concerned about the immediate future of the Russian economy and the political situation in Ukraine. Superstroy and Unistream remain at critical stages in their lifecycle and their growth and development will rely on an improvement in the economy in Russia and each company taking advantage where they can by adapting to the market and keeping their focus on building value for their customers.

Directors

Gilbert Chalk - Non-executive Director

Mr Chalk is a British citizen, resident in the UK. He is Chairman of Castle Private Equity AG a leading Private Equity and Venture Capital Fund of Funds that is managed by LGT Capital Partners and listed on the Zurich Stock Exchange. In addition he is a Director of Vantage Goldfields Limited, a South African Gold producing company, listed on the ASX. From 2000 to 2010 he was Chairman of the Baring English Growth Fund and its Investment Committee. The Fund invested in small and mid cap buy-outs in the UK. Previously he was the Founder and Managing Director of Hambro European Ventures, subsequently named Duke Street Capital. He has served as a Council Member of the British Venture Capital Association and as Chairman of its Taxation Committee conceived and formulated Venture Capital Trusts. He has also worked as Head of Corporate Finance at ABSA Bank (UK) and as a Corporate Finance executive at Hill Samuel Bank and Brandts Limited. He holds an M.B.A. from Columbia University, New York.

Timothy Slesinger - Non-executive Director

Mr Slesinger is a British citizen, resident in the UK. He founded OSG Records Management ZAO in Moscow in 1998. During the 12 years he was CEO and then Director, the Company grew to become a market leader in both physical document and on-line data management in Central & Eastern Europe. OSG's clients range from international Fortune 500 companies, highly regarded businesses local to the region and governments. He sold OSG to Aurora Russia in 2009. Mr Slesinger sits on Aurora Russia's Management Engagement Committee and is Chairman of the Remuneration Committee.

Jonathan Bridel - Non Executive Director

Mr Jonathan Bridel is a British Citizen, resident in Guernsey. He has a number of directorships including Alcentra European Floating Rate Income Fund Limited, Starwood European Real Estate Finance Limited and The Renewable Infrastructure Group which are listed on the Main Market of The London Stock Exchange. He was previously Managing Director of Royal Bank of Canada's Investment businesses in the Channel Islands. He has nearly 30 years international experience in the finance and investment industry and private business. He was for a period Chief Financial Officer of a group with operations in Eastern Europe and the CIS. He is a Chartered Accountant, a Chartered Marketer, a Chartered Fellow of the Chartered Institute for Securities & Investment and holds an MBA from Durham University and qualifications from the Australian Institute of Company Directors.

Peregrine Moncreiffe - Non Executive Director

Mr Peregrine Moncreiffe is a British Citizen, resident in Jersey and advises a number of International Investment companies. He is Chairman of North Atlantic Smaller Companies Investment Trust and a director of EOS Russia AB. He is also a director of Metage Funds Limited, a shareholder in the Company. After an 18 year career in investment banking managing trading departments at Credit Suisse First Boston and Lehman Brothers, he co-founded Buchanan Partners Limited where he was responsible for Russian investments from 1994 until 1999.

Lyndon Trott - Non Executive Director

Mr Lyndon Trott is a British Citizen, resident in Guernsey. He is currently a non-executive director of a number of companies, including the world's largest independent private equity and real estate fund administrator. He served a four year term as Guernsey's Treasury and Resources Minister and progressed to become the jurisdiction's longest serving Chief Minister. He is a former chairman of the board of trustees of a circa £1 billion pension fund and is a graduate of the Institute of Directors' company direction programme.

Directors' Report

The Directors of Aurora Russia Limited ('the Company') present the annual report and audited financial statements of the Company for the year ended 31 March 2014.

Background

The Company was incorporated in Guernsey on 22 February 2006 and commenced activities on 20 March 2006. The Company is a closed-ended investment company and is registered in Guernsey.

Principal activity

The principal activity of the Company is private equity investment in Russia in the financial, business and consumer services sectors. The Company is now seeking to dispose of its residual investments at a level which reflects their underlying value.

Listing

The Company is traded on the Alternative Investment Market of the London Stock Exchange ('AIM'), and has complied with the relevant provisions of the rules governing the admission to and operation of a company traded on the AIM.

Business review

The Company's risk exposure, management objectives and policies are disclosed in note 21 to these financial statements.

A review of the business during the year is contained in the Chairman's Statement.

Results and dividends

The results for the year are set out in the attached financial statements.

The Company has not proposed or declared a dividend for the year ended 31 March 2014 (2013: £nil).

Incorporation

The Company was registered in Guernsey, Channel Islands on 22 February 2006, with registered number 44388.

Directors

The Directors during the year and to date were as follows:

Date of Appointment Date of resignation

Grant Cameron 24 February 2006 1 May 2013

John Whittle 17 January 2008 12 April 2013

Geoffrey Miller 22 June 2011 12 April 2013

Gilbert Chalk - Chairman from 25 February 2013 22 June 2011

Timothy Slesinger 22 August 2011

Jonathan Bridel 12 April 2013

Peregrine Moncreiffe 12 April 2013

Lyndon Trott 1 May 2013

Directors' and other interests

Directors who held office during the year had the following interests in the shares of the Company as at 31 March 2014:

Number of shares

Aurora Investment Advisors Limited			1,224,072
Micheal Hough (Director of Aurora Investment Advisors Limited)			100,000
Gilbert Chalk			33,005
Timothy Slesinger			9,446,850
Peregrine Moncreiffe			635,209

The Directors who held office during the year have interests in the contracts with the Company as follows:

Directors' remuneration

The following Directors emoluments were incurred:

	2014 Fees	2013 Fees
Grant Cameron	2,167	26,000
Gilbert Chalk	90,486	34,306
Timothy Slesinger	26,000	20,583
Lyndon Trott	28,906	-
Jonathan Bridel	37,063	-
Peregrine Moncreiffe	28,214	-
Geoffrey Miller	867	47,667
John Whittle	1,200	36,000
Total	£214,902	£164,556

Geoffrey Miller and John Whittle resigned from the Board on 12 April 2013 and Jonathan Bridel and Peregrine Moncreiffe were appointed as replacements on 12 April 2013. Jonathan Bridel's base remuneration was increased from £26,000 to £30,000 per annum with effect from 1 October 2013. Mr Bridel also receives £5,000 per annum for being chairman of the Audit Committee. Peregrine Moncreiffe's remuneration was agreed at £26,000 per annum. On 1 May 2013 Grant Cameron resigned from the Board and Lyndon Trott was appointed as a replacement on 1 May 2013 and his remuneration was agreed at £26,000 per annum; an additional one off fee of £5,000 was paid during the year to Lyndon Trott and Jonathan Bridel. Two once-off payments of £12,500 were paid to Gilbert Chalk during the year as well as a £3,000 one-off payment to Peregrine Moncreiffe. All of these payments were made in recognition of the significant additional work required of the directors in connection with disposals of the Company's assets and the subsequent return of capital to shareholders.

There are no service contracts in existence between the Company and any Director but each of the Directors was appointed by letter of appointment which sets out the main terms of his appointment.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

The Companies (Guernsey) Law, 2008, (the "Law") requires the Directors to prepare financial statements for each financial year. Under the Law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and applicable law.

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Law. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Directors are also responsible for ensuring that the annual report includes information required by the AIM Rules for Companies (the 'AIM Rules').

Disclosure of information to the auditor

The Directors who held office at the date of this Directors' Report confirm that, so far they are each aware, there is no relevant audit information of which the Company's Auditor is unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Going concern

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement on pages 2 to 3 as well as the statement of financial position of the Company and its statement of cash flows. In addition, note 21 to the financial statements includes the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Company relies on the current cash resources and the ability to add to the cash reserves as and when further disposals are made. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.

Having made appropriate enquiries, the Directors have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Company financial statements.

Auditor

A resolution for the re-appointment of KPMG Channel Islands Limited will be proposed at the forthcoming annual general meeting.

By order of the Board,

Lyndon Trott Jonathan Bridel

Director Director

14 July 2014

Corporate Governance

Corporate Governance Codes

During the prior year until 10 October 2012, the Company complied with the Association of Investment Companies' (the "AIC") Code of Corporate Governance (the "AIC Code"). However, on 10 October 2012 the Company's initial year of free membership of the AIC expired and the Company decided not to renew its membership of the AIC.

The Directors are committed to ensuring that high standards of corporate governance are maintained and that best practice on corporate governance is applied, in so far as the Directors believe it is relevant and appropriate to the Company. As the Company is now seeking to dispose of its residual investments and in light of the small and decreasing size of the Company, the Board is now complying with Finance Sector Code of Corporate Governance (the "GFSC Code") published by the Guernsey Financial Services Commission. As the Company is an authorised closed-ended investment scheme domiciled in Guernsey, the GFSC Code automatically applies to the Company.

A copy of the GFSC Code can be obtained from the GFSC's website www.gfsc.gg or from the Secretary upon request.

The Board and Board Committees

All the Directors of the Company are non-executive Directors. The Board does not feel it is appropriate to appoint a chief executive or senior independent Director as day-to-day management of the Company's assets is delegated to the Manager, subject to the overall supervision of the Board.

The Chairman is Gilbert Chalk. The Board considers that all Directors who held office during the year and up to the date of this report are independent of the Manager.

The respective committee members resigned from, or were appointed to, their committees when they resigned or were appointed as directors.

Messrs Miller and Whittle resigned as Directors on 12 April 2013 and Mr Cameron resigned as a Director on 1 May 2013. Following an extensive search for appropriate candidates and having regard both to the Company's needs and the benefits of diversity on the Board, Messrs Bridel and Moncreiffe were appointed to the Board on 12 April 2013 and Mr Trott was appointed on 1 May 2013. As all of the directors are independent non-executives, the Board has not considered it to be necessary to establish a separate nomination committee and the appointments were considered and approved by the full Board. The Board did not consider it necessary to incur the expense of using the services of an external search consultancy nor open advertising, as the Board with its advisors was able to identify suitable candidates from their own lists of contacts.

On joining the Board, each Director was given a full tailored induction with the support of the retiring Directors and Directors receive regular relevant training on matters relating to the Company's business.

The full Board meets at least four times a year to consider, as appropriate, such matters as overall strategy, investment performance, share price performance, the shareholder profile of the Company, communications with shareholders, transactional and other general matters affecting the Company. The Board considers that it meets sufficiently regularly to discharge its duties effectively.

At the start of the year the Audit Committee comprised Grant Cameron, Gilbert Chalk and John Whittle. John Whittle was the Chairman of the Audit Committee until 12 April 2013 when Jonathan Bridel was appointed as Chairman. John Whittle and Grant Cameron retired from the Audit Committee and Jonathan Bridel and Lyndon Trott were appointed to the Audit Committee during the period.

The Audit Committee is responsible for ensuring that the financial performance of the Company is properly reported on and monitored. The Audit Committee reviews the annual and half-yearly accounts, results, announcements, internal control systems and procedures and accounting policies of the Company. The Audit Committee also monitors the auditor's independence and objectivity and the effectiveness of the audit process. Furthermore, the Audit Committee makes recommendations to the Board, for it to put to shareholders for their approval in the annual general meeting, in relation to the re-appointment of the external auditor. Finally, the Audit Committee considers and makes recommendations to the Board on any non-audit services to be provided by the auditor. The Audit Committee meets a minimum of twice a year but where appropriate the meetings shall coincide with key dates in the Company's financial reporting cycle. The terms of reference of the Audit Committee are available from the Secretary upon written request.

As all of the Directors are non-executive and as day-to-day management and administration of the Company has been delegated to the Manager and the Administrator, the Board on the recommendation of the Audit Committee has agreed that it is not necessary to create an internal audit function. This position is reviewed annually.

At the start of the year the Valuation Committee comprised Grant Cameron, Gilbert Chalk and John Whittle. John Whittle was the Chairman of the Valuation Committee up until his resignation date after which Gilbert Chalk became Chairman. John Whittle and Grant Cameron retired from the Valuation Committee and Jonathan Bridel, Peregrine Moncreiffe and Lyndon Trott were appointed to the Valuation Committee during the period. The Valuation Committee is responsible for valuing proposed investments and revaluing investments on an ongoing basis and it meets at least twice a year. The terms of reference of the Valuation Committee are available from the Secretary upon written request.

At the start of the year the Remuneration Committee comprised Tim Slesinger (Chairman), John Whittle, Grant Cameron, Gilbert Chalk and Geoffrey Miller. John Whittle, Geoffrey Miller and Grant Cameron retired from the Remuneration Committee and Jonathan Bridel, Peregrine Moncreiffe and Lyndon Trott were appointed to the Remuneration Committee. The Remuneration Committee is responsible for reviewing the performance of Directors, the scale and structure of remuneration and Directors' letters of appointment and it meets a minimum of twice a year. The terms of reference of the Remuneration Committee are available from the Secretary upon written request.

As all of the Directors are non-executives, they ordinarily receive a flat rate of remuneration with no performance related bonuses. However, the Directors are entitled to such remuneration as the Board may determine (subject to an aggregate cap of £300,000 per annum), and during the year under review the Directors were awarded additional remuneration for the significant extra work and additional meetings required in connection with the disposals of investee companies. The numbers of additional meetings attended by the Directors is shown in the table on page 13. Details of the remuneration paid to the Directors in the year under review and their current fees are set out on page 9. None of the Directors has a contract of service with the Company and they are all appointed in accordance with the Company's articles of incorporation.

At the start of the year the Management Engagement Committee comprised Gilbert Chalk (Chairman), Grant Cameron, Timothy Slesinger, Geoffrey Miller and John Whittle. Geoffrey Miller, John Whittle and Grant Cameron retired from the Management Engagement Committee and Jonathan Bridel and Lyndon Trott were appointed to the Management Engagement Committee during the period. The Management Engagement Committee is responsible for reviewing the terms of agreements with the Company's service providers, including the provisions relating to the applicable service provider's remuneration, and satisfy itself that they are market standard and comparable with those charged to peer group companies and ensure that the Service Agreements' terms are in accordance with industry norms and in the Company's and shareholders' best interests. The Management Engagement Committee meets at least once per year. The terms of reference of the Management Engagement Committee are available from the Secretary upon written request.

The Board receives from the Secretary and its other advisors information that it considers to be appropriate to enable it to discharge its duties. Directors usually receive Board papers several days in advance of Board meetings and are able to consider in detail any issues to be discussed at the relevant meeting.

All the Directors are entitled to have access to independent professional advice at the Company's expense where they deem it necessary to discharge their responsibilities as Directors and have access to the advice and services of the Secretary. The Company has purchased appropriate directors' and officers' liability insurance in respect of legal action against its directors.

The Board has delegated day-to-day management of the Company's assets to the Manager. All decisions relating to the Company's investment policy, investment objectives, investment decisions, dividend policy, gearing, corporate governance procedures and strategy in general are, however, reserved for the Board. The Board evaluates the Manager's performance on an annual basis and monitors the Manager at each quarterly Board meeting to ensure that the Company's assets are being managed in accordance with the guidelines set out by the Board.

The number of meetings of the full Board and those committees attended by each Director from 1 April 2013 up to 31 March 2014 is set out below:

	Audit	Committee	Valuation	Committee	Remuneration	Committee	Management	Committee
							Engagement
	Held	Attended	Held	Attended	Held	Attended	Held	Attended
Gilbert Chalk	3	3	2	2	5	3	3	3
Tim Slesinger	N/A	N/A	2	2	5	5	3	3
Jonathan Bridel	3	3	2	2	5	5	3	3
Lyndon Trott Peregrine Moncreiffe	3 N/A	3 N/A	2 2	2 2	5 5	3 5	3 3	3 3
	Quarterly		Ad hoc
	Held	Attended	Held	Attended
Gilbert Chalk	4	4	11	4
Tim Slesinger	4	4	11	1
Jonathan Bridel	4	4	11	9
Lyndon Trott	4	4	9	6
Peregrine Moncreiffe	4	4	11	9

John Whittle and Geoffrey Miller resigned on 12 April 2013 and therefore were not eligible to attend any meetings. Grant Cameron resigned on 1 May 2013 and only attended the meetings he was eligible to attend.

Performance of Board and proposal for re-election

The performance of each Director is appraised by the full Board prior to the convening of the annual general meeting for each year with support from the Secretary and by reference to a tailored set of criteria against which performance is measured. The performance of each Board committee is appraised by the Board as a whole. In accordance with the Company's articles of incorporation (the "Articles"), one third, or the number nearest to but not greater than one third, of the Directors will retire and stand for re-election at the annual general meeting each year, provided that each Director shall retire and stand for re-election at intervals of no more than three years. Mr Chalk was re-elected at the 2012 annual general meeting and Messrs Bridel, Moncreiffe and Trott at the 2013 annual general meeting. In accordance with the Company's articles of association Mr Slesinger will retire at the forthcoming annual general meeting and, being eligible, will offer himself for re-election.

The Directors believe that the Board has a balance of skills and experience which enables it to provide effective strategic leadership and proper governance of the Company. The Board believes that each Director's performance continues to be effective and to demonstrate commitment to the role and therefore supports the re-election of Mr Slesinger. Information on the Directors, including their relevant experience, is set out in pages 6 to 7.

Relations with shareholders

The Board welcomes correspondence from shareholders, addressed to the Company's registered office. All shareholders have the opportunity to put questions to the Board at the annual general meeting. In addition to the Chairman, all other non-executive Directors, including the Chairmen of the Audit and Remuneration Committees, will be available to answer questions at the forthcoming annual general meeting.

The Board believes that sustainable financial performance and delivering on the objectives of the Company are indispensable measures in order to build trust with the Company's shareholders. In order to promote a clear understanding of the Company, its objectives and financial results, the Board aims to ensure that information relating to the Company is disclosed with key investors in a timely manner and in a format suitable to the shareholders of the Company.

The Board has also organised periodic meetings to encourage communication and to ensure the concerns of shareholders are addressed.

The Articles of Incorporation state that a continuation vote via an ordinary resolution will be held proposing the extension of the life of the Company at the 2015 annual general meeting and every 5 years thereafter. The last such continuation vote was passed at the 2010 annual general meeting.

Independent auditor's report to the members of Aurora Russia Limited

We have audited the financial statements of Aurora Russia Limited (the "Company") for the year ended 31 March 2014 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Directors and Auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page 9, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board of Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion

In our opinion the financial statements:

• give a true and fair view of the state of the Company's affairs as at 31 March 2014 and of Company's loss for the year then ended;

• are in conformity with International Financial Reporting Standards as issued by the IASB; and

• comply with the Companies (Guernsey) Law, 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

• the Company has not kept proper accounting records; or

• the financial statements are not in agreement with the accounting records; or

• we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit.

KPMG Channel Islands Limited

Chartered Accountants

PO Box 20

20 New Street

St Peter Port

Guernsey

GY1 4AN

15 July 2014

Statement of Comprehensive Income
For the year ended 31 March 2014
		Year ended	Year ended
		31 March 2014	31 March 2013
	Notes	£'000	£'000

Profit on disposal of investments	12	-	766
Loss on disposal of investments	13	(2,877)	-
Revenue		464	6
- Dividend income		447	-
- Interest income		17	6
Administration and operating expenses	5	(1,672)	(2,617)
Deferred consideration written off		(813)	-
Fair value movements on revaluation of investments	8	(15,215)	(11,937)
Foreign exchange loss		(267)	(157)

Operating loss		(20,380)	(13,939)

Interest expense		-	(1)

Loss before tax		(20,380)	(13,940)

Income tax expense		-	-

Total comprehensive loss for the year	19	(20,380)	(13,940)


Basic and diluted loss per share	6	(26.31p)	(12.39p)

All items in the above statement derive from continuing operations.

The accompanying notes on pages 20 to 38 form an integral part of these financial statements.

Statement of Financial Position

As at 31 March 2014

		31 March	31 March
		2014	2013
	Notes	£'000	£'000
Non-current assets
Investment in subsidiaries	7	1,968	10,400
Investments	8	9,800	22,400
Other receivables	9	-	1,105

		11,768	33,905
Current assets
Other receivables	9	3	5,584
Cash and cash equivalents	10	9,136	23,134

		9,139	28,718

Total assets		20,907	62,623

Non-current liabilities
Loans payable to investee companies	11	-	496
Provisions	15	-	115
		-	611

Current liabilities
Other payables		219	456
Provisions	15	-	364
		219	820

Total liabilities		219	1,431


Equity
Share capital	16	743	1,125
Special reserve	18	64,331	84,073
Accumulated loss	19	(44,386)	(24,006)

Total equity		20,688	61,192


Total equity and liabilities		20,907	62,623

Net asset value per share - Basic and Diluted	20	27.9p	54.4p

The financial statements on pages 16 to 38 were approved by the Board of Directors on 14 July 2014 and signed on its behalf by:

Lyndon Trott Jonathan Bridel

Director Director

The accompanying notes on pages 20 to 38 form an integral part of these financial statements.

Statement of Changes in Equity

For the year ended 31 March 2014

				Retained Earnings/
		Share	Special	(Accumulated loss)	Total
		Capital	Reserve
		£'000	£'000	£'000	£'000


Balance as at 1 April 2012		1,125	84,073	(10,066)	75,132

Total comprehensive loss for the year
Loss for the year		-	-	(13,940)	(13,940)

At 31 March 2013		1,125	84,073	(24,006)	61,192


Balance as at 1 April 2013		1,125	84,073	(24,006)	61,192

Total comprehensive loss for the year
Loss for the year		-	-	(20,380)	(20,380)

Share buyback	17	(382)	(19,742)	-	(20,124)

At 31 March 2014		743	64,331	(44,386)	20,688

The accompanying notes on pages 20 to 38 form an integral part of these financial statements.

Statement of Cash Flows

For the year ended 31 March 2014

		Year	Year
		ended	ended
	Note	31 March	31 March 2013
		2014
		£'000	£'000
Cash flows from operating activities
Total comprehensive loss		(20,380)	(13,940)

Adjustments for movements in working capital:
Decrease in other receivables		19	588
(Decrease) / Increase in other payables		(1,212)	196

Adjust for:
Interest expense		-	1
Interest income		(17)	(6)
Revaluation of investments	8	15,215	11,937
Loss / (profit) on sale of investment		2,877	(766)
Exchange losses		267	157
Interest received		-	3

Net cash (outflow) from operating activities		(3,231)	(1,830)

Cash flows from investing activities
Proceeds on disposal of Flexinvest		2,940	1,400
Proceeds on disposal of OSG		6,667	22,843
Bank interest received		17	-

Net cash inflow from investing activities		9,624	24,243

Cash flows from financing activities
Increase in loans		-	5
Share buyback	17	(20,124)	-

Net cash (outflow) / inflow from financing activities		(20,124)	5

Net (decrease) / increase in cash and cash equivalents		(13,731)	22,418

Opening cash and cash equivalents		23,134	873

Effect of foreign exchange movements		(267)	(157)

Closing cash and cash equivalents	10	9,136	23,134

The accompanying notes on pages 20 to 38 form an integral part of these financial statements.

Notes to the Financial statements

For the year ended 31 March 2014

1. Reporting entity

The Company is a closed-ended investment fund that was incorporated in Guernsey on 22 February 2006, and was admitted to the Alternative Investment Market of the London Stock Exchange ('AIM') on 20 March 2006. The Company was established to acquire interests in small and mid-sized private companies in Russia, focusing on the financial, business and consumer services sectors.

2. Basis of preparation

2.1 Statement of compliance

The financial statements give a true and fair view and are prepared in accordance with International Financial Reporting Standards (IFRS) which comprise standards and interpretations approved by the International Accounting Standards Board and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee that remain in effect. These financial statements comply with the law.

2.2 Basis of Measurement

The financial statements have been prepared on the historical cost basis except for the following:

● financial instruments at fair value through profit or loss are measured at fair value

The significant accounting policies adopted are set out in note 3.

2.3 New standards and interpretations adopted during the year

The following standards, amendments and interpretations were adopted in the current year:

• IFRS 13: Fair Value Measurement (effective for periods commencing on or after 1 January 2013)

IFRS 13 explains how to measure fair value and aims to enhance fair value disclosures. The guidance includes enhanced disclosure requirements that could result in additional disclosure for reporting entities. These requirements are similar to those in IFRS 7, 'Financial instruments: Disclosures', but apply to all assets and liabilities measured at fair value, not just financial ones. These disclosures have been added into Note 21 of the accounts.

Revised and amended standards:

• IAS 1 Presentation of Items of Other Comprehensive Income (effective for periods commencing on or after 1 July 2012)

This amendment requires that an entity present separately the items of other comprehensive income (OCI) that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss; and change the title of the statement of comprehensive income to the statement of profit or loss and other comprehensive income. However, an entity is still allowed to use other titles. There has been no significant impact on the financial statements from adopting this amendment.

• Amendment to IFRS 7: Financial instruments: Disclosures (effective for periods beginning on or after 1 January 2013)

This amendment relates to offsetting financial assets and financial liabilities. This amendment reflects the joint IASB and FASB requirements to enhance current offsetting disclosures. These new disclosures are intended to facilitate comparison between those entities that prepare IFRS financial statements and those that prepare US GAAP financial statements. The adoption of this standard has not materially impacted the financial statements of the Company.

2.4 New standards and interpretations not yet adopted

There are a number of new standards, amendments to standards and interpretations that are not yet effective for the year ended 31 March 2014, and have not been applied in preparing these financial statements.

• IFRS 9 Financial Instruments (effective date to be confirmed by IASB)

IFRS 9 deals with classification and measurement of financial assets and its requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets: amortised cost and fair value. Financial assets are measured at amortised cost when the business model is to hold assets in order to collect contractual cash flows. All other financial assets are measured at fair value with changes recognised in profit or loss. For an investment in an equity instrument that is not held for trading, an entity may on initial recognition elect to present all fair value changes from the investment in other comprehensive income. Once adopted, IFRS 9 will be applied retrospectively, subject to certain transitional provisions. The company is currently in the process of evaluating the potential effect of this standard. The standard is not expected to have a significant impact on the financial statements since all of the Company's financial assets are designated at fair value through profit and loss.

• Amendment to IAS 32 Financial instruments: Presentation', on offsetting financial assets and financial liabilities (Effective for periods beginning on or after 1 January 2014)

This amendment updates the application guidance in IAS 32, 'Financial instruments: Presentation', to clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. The standard is not expected to have a material impact on the financial statements of the Company.

2.5 Critical accounting judgements and key sources of estimation uncertainty

The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

The following areas are a key source of estimation uncertainty for the Company and are included within the relevant accounting policy note:

• Valuation of Investments

Significant estimates in the Company's financial statements include the amounts recorded for the fair value of the investments.

By their nature, these estimates and assumptions are subject to measurement uncertainty and the effect on the Company's financial statements of changes in estimates in future periods could be significant.

2.6 Functional and presentation currencies

All information presented in Sterling has been rounded to the nearest thousand unless otherwise stated. While the functional currency of the investments are in Roubles, the Company's operations are in Sterling which is why the presentation currency is Sterling.

3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by the Company.

3.1 Determination and presentation of operating segments

The Company has determined and presented operating segments based on the information that internally is provided to the Board of Directors of the Company, who is the Company's chief operating decision maker.

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components. An operating segment's operating results are reviewed regularly by the Board of Directors of the Company to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker. The Board of Directors are responsible for allocating resources, assessing performance of the operating segments and making strategic decisions..

3.2 Foreign currency transactions

Transactions in currencies other than Sterling are translated at the foreign exchange rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into sterling at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into Sterling at foreign exchange rates ruling at the dates the fair value was determined.

3.3 Revenue

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Dividend income from investments is recognised when the Company's right to receive payment has been established, which is the last date of registration of shareholders.

3.4 Expenses

All expenses are accounted for on an accruals basis through profit or loss.

3.5 Set up expenses

The preliminary expenses directly attributable to the issuance and listing of equity instruments of the Company that would otherwise have been avoided were deducted from the share capital account.

3.6 Taxation

The Company is exempt from Guernsey taxation on income derived outside Guernsey and bank interest earned in Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989, for which it pays an annual fee of £600.

3.7 Financial Instruments

Financial assets and financial liabilities are recognised on the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument, including unconditional commitments to make investments. The Company offsets financial assets and liabilities if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.

3.7.1 Investments

Recognition and Measurement

Unquoted investments, including investments in subsidiaries are designated as fair value through profit or loss. Investments are initially recognised at cost on a trade date basis. The investments are subsequently re-measured at fair value, which is determined by the Directors on the recommendation of the Valuation Committee; all the Directors are currently on the Valuation Comittee. Unrealised gains and losses arising from the revaluation of investments are taken directly to profit or loss. Investments deemed to be denominated in a foreign currency are revalued in Pounds Sterling even if there is no revaluation of the investment in its currency of denomination. Acquisition of investments is recorded on the trade date or when substantially all the risks and rewards of ownership transfer to the Company.

Investments are denominated in Russian Roubles, which the Directors believe best reflect the underlying nature of the currency exposure of the investee companies. The investments are translated into Sterling at the period end, which is the functional and presentational currency of the Company. Unrealised gains and losses arising from the revaluation of investments are taken directly to the Statement of Comprehensive Income.

The fair value of the investments is arrived at on the basis of the recommendation of the Company's Valuation Committee, based on valuations that were performed by Aurora Investment Advisors Limited. Fair value is determined as follows:

Unquoted securities are valued based on the fair value which is estimated by the Valuation Committee. The Valuation Committee will take into account the guidelines and principles for valuation of Portfolio Companies set out by the International Private Equity and Venture Capital (IPEV) Board, with particular consideration of the following factors:

• Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

• The valuation methodology applied uses reasonable assumptions and estimations and takes account of the nature, facts and circumstances of the investment and its materiality in the context of the total portfolio.

• An appropriate methodology incorporates available information about all factors that are likely material to affect the fair value of the investment. The valuation methodologies are applied consistently from period to period, except where a change would result in a better estimate of fair value. Any changes in valuation methodologies will be clearly disclosed in the financial statements.

The most widely used methodologies are listed below (discussed further in note 8). In assessing which methodology is appropriate, the Valuation Committee is predisposed towards those methodologies that draw upon market-based measures of risk and return.

Ÿ Market Approach

Ÿ Income Approach

Ÿ Net Assets Approach

Investments made by the Company are generally considered to be long term investments and are not intended to be disposed of on a short term basis. Accordingly valuations do not necessarily represent the amounts which may eventually be realised from sales or other disposals of investments. Values of unlisted investments may differ significantly from the values that would have been used had a ready market for these assets existed.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset. Any interest in such transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

On de-recognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset de-recognised), and consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss. In determining the consideration received the proceeds received are decreased by any payables that are directly linked to the sale.

The Company enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all the risks and rewards of the transferred asset or a portion of them. If all or substantially all risk and rewards are retained, then the transferred assets are not derecognised. Transfers of assets with retention of substantially all risks and rewards include securities lending and repurchase transactions.

The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

3.7.2 Cash and cash equivalents

Cash held with banks and short term deposits that are held to maturity are carried at amortised cost. Cash and cash equivalents consist of cash on hand and short term deposits in banks with an original maturity of three months or less. Cash is measured at amortised cost which approximates fair value.

3.7.3 Receivables

Receivables do not carry any interest. Where the time value of money is material, receivables are discounted to their present values. Allowance is made when there is objective evidence that the Company will not be able to recover balances in full.

3.7.4Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangement entered into.

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Financial liabilities and equity instruments are recorded at the proceeds received, net of issue costs.

Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Company has the following non-derivative financial liabilities: loans from investee companies, and other payables.

Other payables do not carry any interest. Where the time value of money is material, payables are discounted to their present values. Allowance is made when there is objective evidence that the Company will not be able to pay balances in full.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method..

3.8 Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

3.9 Provisions

A provision is recognised in the statement of financial position when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation, and the obligation can be reliably measured. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

3.10 Share capital and equity

Ordinary shares are classified as equity.

If the Company reacquires its own equity instruments, the consideration paid, including any directly attributable incremental costs (net of income taxes) on those instruments are deducted from equity until the shares are cancelled or reissued. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments. Consideration paid or received is recognised directly in equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

3.11 Fair Value

The Directors consider the carrying value of all financial assets and liabilities to approximate their fair value. Where the difference is significant, note disclosure is provided.

4. Change In Accounting Policy

IFRS 13, Fair value measurement

IFRS 13 replaces existing guidance in individual IFRS with a single source of fair value measurement guidance. IFRS 13 also contains extensive disclosure requirements about fair value measurements for both financial instruments and non-financial instruments. To the extent that the requirements are applicable to the Company, the Company has provided those disclosures in note 21.8. The adoption of IFRS 13 does not have any material impact on the fair value measurements of the Company's assets and liabilities.

Notes to the Financial statements

For the year ended 31 March 2014

5.	Administration and operating expenses

	The operating loss for the year has been arrived at
	after charging the following items of expenditure:	Year ended	Year ended
		31 March	31 March
		2014	2013
		£'000	£'000
	Company
	Auditors' remuneration	91	75
	Directors' remuneration	215	165
	Other operating and administrative expenses:
	- Administration fees	78	70
	- Marketing costs	34	60
	- Professional fees	327	484
	- Bonus liability written off	(97)	-
	- Other	252	279
	Expenses excluding investment management	900	1,133
	fee
	Investment management fee and performance	772	1,484
	fees

		1,672	2,617

Loss per share

31 March

2014

2013

£'000

The calculation of the basic and diluted

loss per share is based on the following

data:

Loss for the purposes of basic and

(20,380)

(13,940)

diluted loss per share being net loss

attributable to equity holders of the

parent

Weighted average number of ordinary

77,449

112,500

shares for the purpose of diluted loss

loss per share (in thousands):

Loss per share - Basic and Diluted

(26.31p)

(12.39)

7. Investment in subsidiaries - at fair value through profit or loss

		31 March
	31 March 2014	2013
	£'000	£'000

OSG
At 1 April 2013, and 1 April 2012	-	28,200
Fair value revaluation	-	1,029
Sale of OSG	-	(29,229)
At 31 March 2014, and 31 March 2013	-	-

KFL
At beginning of period	4,583	8,649
Fair value revaluation *	(2,615)	(4,066)

At end of period*	1,968	4,583

Flexinvest
At beginning of period	5,817	6,451
Sale of shares to KFML (6,158 shares) (refer to note 12	-	(462)
for further detail)
Sale of shares to KFML (2,463 shares) (refer to note 12	-	(172)
for further detail)
Proceeds on sale	(2,940)	-
Loss on disposal	(2,877)	-
At end of period*	-	5,817
	1,968	10,400

* The revaluation calculations performed on KFL included the value of Flexinvest as at 31 March 2013, and as such, no revaluation was performed on the individual subsidiary companies. Kreditmart is stated at fair value as at 31 March 2014 based on an agreed sales price and the entire holding on Flexinvest was sold on 14 February 2014 (refer to Note 13).

The valuation of the subsidiaries and investments at 31 March 2014 as well as the valuation at 31 March 2013 were performed by Aurora Investment Advisors Limited; the final valuations were approved by the Valuation Committee.

The methodologies and assumptions used in valuing investments and investments in subsidiaries are discussed in Note 21.

Set out below is a list of the unconsolidated subsidiaries of the Company (The Company sold its entire holding of OSG on 8 March 2013, refer to note 14. The company also sold its entire holding in Flexinvest; please refer to note 13.):

Name of subsidiary undertaking	Country of	Class of	% of class	% of class	Principal
	incorporation/Principal	share	held at 31	held at 31	activity
	place of business		March	March
			2014	2013

KFL	Cyprus	Ordinary	100.0%	100.0%	Consumer finance

Flexinvest	Cyprus	Ordinary	0.0%	100.0%	Investment holding
Flex Bank	Russia	Ordinary	0.0%	100.0%	Banking and finance

**Flex Bank is held directly by KFL and Flexinvest and was an indirectly held subsidiary of the Company.

8. Investments


	31 March	31 March
	2014	2013
	£'000	£'000

Unistream Bank	8,000	12,000

Grindelia Holdings*	1,800	10,400

Total investments at fair value through profit or	9,800	22,400
loss

The Company holds 26% (2013: 26%) in Unistream and 24.3% (2013: 24.3%) in Grindelia respectively; the shareholding and voting rights are the same in both cases. Unistream is a Russian company with the principal place of business in Russia, Grindelia is a Cyprus holding company with its principal place of business in Russia..

Change in fair value of investments at fair value through profit or
loss
	Year ended 31	Year ended 31
	March 2014	March 2013
	£'000	£'000

OSG	-	1,029

Unistream Bank	(4,000)	(4,300)

Grindelia Holdings*	(8,600)	(4,600)

KFL	(2,615)	(3,564)

Flexinvest	-	(502)

Total unrealised losses	(15,215)	(11,937)
* Holding company for Superstroy.


9. Other receivables
	31 March	31 March
	2014	2013
	£'000	£'000

Prepayments	3	18
Accrued income	-	3
Deferred consideration on sale of OSG (refer Note 14)	-	6,668
	3	6,689

This balance is comprised of:
Non-current assets	-	1,105
Current assets	3	5,584
	3	6,689


10. Cash and cash equivalents
	31 March	31 March
	2014	2013
	£'000	£'000

Bank balances	4,726	354
Fixed deposits	4,410	22,780

	9,136	23,134

11. Loans payable to investees
	31 March 2014	31 March 2013
	£'000	£'000

Loans payable to Grindelia Holdings	-	496

Loans were repayable with interest no later than 20 February 2015 and
37% of the loan balance attracted interest at a rate of 0.1% per annum
and the remaining 63% was repayable with interest at a rate of 0.01%
per annum. The loans payable were settled during the year through an
offset against a dividend receivable.

12. Sale of Flexinvest shares to KFL
	31 March 2014	31 March 2013
	£'000	£'000

Proceeds on sale	-	1,400
Less: Cost of Investment	-	634
Profit on sale	-	766

Aurora Russia sold 6,158 shares of its investment in Flexinvest to KFL
for a consideration of £1,000,059 on 6 June 2012.
Aurora Russia sold 2,463 shares of its investment in Flexinvest to KFL
for a consideration of £399,991 on 30 September 2012.
13. Sale of Flexinvest shares
	31 March	31 March
	2014	2013
	£'000	£'000
Proceeds on sale	2,940	-
Less: Cost of Investment	5,817	-
Loss on sale	(2,877)	-

The Company sold its entire shareholding in Flexinvest on 14 February.

The consideration for the disposal was RUR189.1 million (approximately £3.2 million) in cash plus, as part of the sale, mortgages with a

nominal value of RUR144.2 million (approximately £2.4 million) held by Flex Bank which have been transferred to the Company's wholly

owned subsidiary KFL.

The cash proceeds totalled RUR172.2 million (approximately £2.9 million).

14. Sale of OSG

Aurora Russia transferred its entire holding (70,796 shares) of OSG to Octala Services Limited.

On 8 March 2013 the Company sold OSG for a cash consideration of up to US$47.8 million (£32.6 million). US$34.1 million (£22.8 million) was paid to the Company on the date of sale and the remaining US$8.5 million (£5.2 million) was delivered to an escrow account in London, of which:

(a) US$4.25 million (£2.6 million) was payable 30 days following the signing of the accounts of OSG for the financial year ended

31 March 2013, should they reflect management's expectations of the EBITDA (as defined), net debt and working capital of the business; and

(b) the balance of US$4.25 million (£2.6 million) was payable 12 months following completion of the sale subject to any warranty claim under certain commercial or tax warranties.

In terms of accounting for the transaction deferred revenue linked to the sale was determined by deducting the payables related to the sale.

According to the sale agreement the Company was due to receive up to US$5.2 million (£3.2 million) in additional consideration if the OSG business achieves EBITDA of over US$10.0 million (£6.2 million) for the year ending 31 March 2014; this was to be proportionately reduced depending on the EBITDA. The first US$4.25 million was received on 28 August 2013. The Board agreed on 10 December 2013 with Octala Services Limited ('Octala') to an amendment ('the Amendment') to the Framework Agreement with Octala governing the payment of the warranties escrow and the deferred consideration. Under the Amendment it was agreed that the remaining escrow amount of US$4.25 million was to be released to the Company in advance of the 12 month anniversary in March 2014 of the completion of the sale of OSG. This was received on 17 December 2013. In addition the Amendment provides that the earn out provisions in the Framework Agreement governing the deferred consideration are deleted in consideration of the further payment to the Company of US$0.375 million. The final amount of US$0.375 million (£0.227 million) was received on 16 December 2013.

15. Provisions

	31 March	31 March
	2014	2013
	£'000	£'000

AIAL bonus payment on OSG sale	-	108
Bonus payment liability on OSG sale	-	371

	-	479
This balance is comprised of:
Non-current liabilities	-	115
Current liabilities	-	364

	-	479

16. Share Capital

	31 March 2014	31 March 2013
	£'000	£'000
Authorised share capital:
200,000,000 Ordinary Shares of 1p each:	2,000	2,000

Issued share capital:
74,262,617 (2013: 112,500,000) fully paid Ordinary	743	1,125
Shares of 1p each:


17. Share buyback

	31 March 2014	31 March 2013
Share Capital	£'000	£'000

Opening balance as at 1 April 2013, 1 April 2012	1,125	1,125
38,237,383 Ordinary Shares of 0.01p bought back	(382)	-
	743	1,125

Special reserve

Opening balance as at 1 April 2013, 1 April 2012	84,073	84,073
38,237,383 Ordinary Shares bought back by	(19,617)	-
NUMIS
Professional and legal fees incremental to Share	(125)	-
buyback
	64,331	84,073
On 30 April 2013 the Company entered into a
repurchase agreement to purchase ordinary
shares of the Company from Numis Securities
Limited (Numis). On 30 May 2013, the Company
purchased 38,237,383 ordinary shares at
0.523048p per Share for an aggregate gross
consideration of £19,999,947.


18. Special reserve
The Special reserve is a distributable reserve to be	31 March 2014	31 March 2013
used for all purposes permitted under Guernsey
company law, including the buy back of shares and
the payment of dividends.

	£'000	£'000
Opening balance as at 1 April 2013, 1 April 2012	84,073	84,073
38,237,383 Ordinary Shares bought back by	(19,617)	-
Numis
Professional and legal fees incremental to Share	(125)	-
buyback
	64,331	84,073

19. Accumulated Loss
	31 March 2014	31 March 2013
	£'000	£'000
Balance as at 1 April 2013, and 1 April 2012	(24,006)	(10,066)

Total comprehensive loss for the year	(20,380)	(13,940)

Balance as at 31 March 2014, and 31 March 2013	(44,386)	(24,006)

20. Net asset value per share

	31 March 2014	31 March 2013

Net assets for the purposes of basic and	20,688	61,192
diluted net asset value per share
attributable to equity (£'000)

Number of ordinary shares for the	74,262,617	112,500,000
purpose of net asset value per share

Net asset value per share	27.9p	54.4p

21. Financial risk factors

The investment strategy of the Company is to make equity or equity-related investments in small and mid-sized private Russian companies focused on the financial, business and consumer services sectors with the objective to provide investors with an attractive level of capital growth from investing in a diversified private equity portfolio. Consistent with that objective, the Company's financial instruments mainly comprise of investments in private equity companies. In addition the Company holds cash and liquid resources as well as having debtors and creditors that arise directly from its operations. The main risks arising from the Company's financial instruments are credit risk, foreign currency risk, market price risk and interest rate risk.

21.1 Capital Management

The capital structure of the Company at year end consists of cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and accumulated loss. The Company has no return on capital benchmark, but the Board continues to monitor the balance of the overall capital structure so as to maintain investor and market confidence. The Company is not subject to any external capital requirements.

21.2 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

Refer to the interest rate risk table in note 21.7 for the maturity analysis of the Company's liabilities.

21.3 Credit risk

The Company is exposed to credit risk in respect of its cash and cash equivalents, arising from possible default of the relevant counterparty, with a maximum exposure equal to the carrying value of those assets. The credit risk on liquid funds is limited because the counterparties are banks with credit-ratings assigned by international credit-rating agencies. Credit ratings for the banks are as follows: Investec Baa3; Royal Bank of Scotland Baa1 and Lloyds A3. The Company monitors the placement of cash balances on an ongoing basis.

The maximum exposure to credit risk for the Company at the end of the reporting period without taking into account any collateral held or credit enhancements is the following:

	31 March	31 March
	2014	2013
	£'000	£'000
Cash and cash equivalents	9,136	23,134
Other receivables	3	6,689

	9,139	29,823

No balances are past due or impaired at year end.

21.4 Geographical risk

The geographical concentration of the assets and liabilities of the Company are set out below:

31 March 2014

ASSETS Russian United

Federation Kingdom Other Total

% % % %

Investments 100 - - 100

Investments in subsidiaries 100 - - 100

Other receivables 68 - 32 100

Cash and cash equivalents - 100 - 100

31 March 2013

ASSETS Russian United

Federation Kingdom Other Total

% % % %

Investments 100 - - 100

Investments in subsidiaries 100 - - 100

Other receivables 99 1 - 100

Cash and cash equivalents - 99 1 100

21.5 Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's reporting currency. The Company is exposed to foreign exchange risk arising from various currency exposures primarily with respect to Russian Roubles and US Dollars. All of the Company's equity investments are denominated in Russian Roubles. The Company does not hedge its currency exposure on equity investments.

Currency Risk Table

An analysis of the Company's net currency exposure is as follows:

As at 31 March 2014:

Currency of denomination	Sterling	US Dollars	Russian	Euro	Total
			Roubles
	£'000	£'000	£'000	£'000	£'000

Total assets	9,136	-	11,768	-	20,907
Total liabilities	(146)	(56)	-	(17)	(219)

Net currency exposure	8,993	(56)	11,768	(17)	20,688

As at 31 March 2013:

Currency of denomination	Sterling	US Dollars	Russian	Euro	Total
			Roubles
	£'000	£'000	£'000	£'000	£'000

Total assets	23,133	6,690	32,800	-	62,623
Total liabilities	(935)	-	(496)	-	(1,431)

Net currency exposure	22,198	6,690	32,304	-	61,192

Foreign Currency Sensitivity

The following table details the Company's sensitivity to a 20% (2013: 20%) strengthening of Sterling against each of the relevant foreign exchange currencies. 20% (2013: 20%) is the sensitivity rate used when reporting foreign currency risk internally to management and represents management's assessment of the possible change in foreign exchange rates. This analysis assumes that all variables, in particular interest rates remain constant. The analysis is performed on the same basis for the prior period.

Increase / (decrease) in profit /loss:

	31 March	31 March
	2014	2013
	£'000	£'000

Russian Rouble	(2,354)	(6,461)
US Dollar	11	(1,338)

A 20% (2013: 20%) weakening of the Sterling against each of the relevant foreign exchange currencies at the year end would have had the equal but opposite effect, on the basis that all other variables remain the same.

21.6 Market risk

Market price risk arises principally from uncertainty concerning future values of financial instruments used in the Company's operations. It represents the potential loss the Company might suffer through holding interests in unquoted private companies whose value may fluctuate and which may be difficult to value and/or to realise. The Company seeks to mitigate such risk by assessing such risks as part of the due diligence process related to all potential investments, and by establishing a clear exit strategy for all potential investments. There is a rigorous due diligence process before an investment can be approved which will cover financial, legal and market risks. Following investment the Company/Manager will always have Board representation, the investee company is required to submit regular management information to an agreed standard and timeliness and the Manager undertakes regular monitoring. The Board receives and considers the most recent monitoring report prepared by the Manager at every Board meeting.

Pricing Risk Table

All security investments present a risk of loss of capital, the maximum risk resulting from instruments is determined by the fair value of the financial instrument. The following represents the Company's market pricing exposure at year end:

At 31 March 2014:
	Note	Fair Value	% of Net
		£'000	Assets
Investments at fair value through profit or loss:
- Unlisted Equities	7 & 8	11,768	56.88

At 31 March 2013:
		Fair Value	% of Net
		£'000	Assets
Investments at fair value through profit or loss:
- Unlisted Equities	7 & 8	32,800	53.60

Valuation of financial instruments

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

> Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

> Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

> Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The table below analyses financial instruments, measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurement is categorised:

	Level 1	Level 2	Level 3	Total
At 31 March 2014:	£'000	£'000	£'000	£'000

Investments at fair value through profit or loss:
-Unlisted Equities	-	1,968	9,800	11,768
	-	1,968	9,800	11,768


At 31 March 2013:	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000

Investments at fair value through profit or loss:
-Unlisted Equities	-	-	32,800	32,800
	-	-	32,800	32,800

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy of the Company: Level 3

	£'000	£'000
	2014	2013
Opening balance	32,800	74,600
Disposal of investments	(5,817)	(29,863)
Total fair value gains or losses in profit or loss	(15,215)	(11,937)
Transfer to level 2	(1,968)	-
Closing balance	9,800	32,800

Although the Company believes that its estimates of fair values are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. Investments classified with level 3 have significant unobservable inputs, as they trade infrequently. As observable prices are not available for these securities, the Company has used valuation techniques to derive the fair value. Transfers between levels are deemed to take place at the end of the year.

Level 3 investments have been valued in accordance with the methodologies in Note 21.8. The value of the investments and the fair value movements are disclosed in note 8.

Unrealised loss on fair value movements from revaluation of level 3 investments still held at year end and recognised in the Statement of Comprehensive Income amounted to £12.6 million (2013: unrealised loss of £12.97 million).

Superstroy was valued using 100% EBITDA multiple with 25% liquidity discount. Unistream was valued using 75% EBITDA multiple and 25% revenue multiple basis and 30% liquidity discount and KFL was valued based on an agreed sales price.

The average of the EBITDA multiple range observed when valuing Superstroy was 7.8x. For Unistream the Revenue multiple observed was 2.0x and for EBITDA was 7.4x.

Price sensitivity

The sensitivity analysis below has been determined based on the exposure to equity price risks as at the reporting date.

At the reporting date, if the valuations had been 20% higher while all other variables were held constant net profit would increase by £2,353,600 (2013: £6,560,000) for the Company. This sensitivity rate was determined by the Directors as reasonable taking market conditions into account.

If the Revenue multiple weighting was increased by 10% the value of Superstroy would become £2.6 million and Unistream's value would become £9.1 million.

21.7 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company is exposed to interest rate risk as a result of the cash and bank balances that are invested at floating interest rates. The Company monitors its interest rate exposure regularly and allocates its cash resources to an appropriate mix of floating and fixed rate instruments of varying maturities.

The following table details the Company's exposure to interest rate risk as at period end by the earlier of contractual maturities or re-pricing:

At 31 March 2014:	No	Less than	1 months	1 to 2	2 to 5	Greater	Total
	contractual	1 month	to 1 year	years		than 5
	terms of				years	years
	repayment
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Assets
Non-interest bearing	11,768	-	3	-	-	-	11,771
Floating interest rate instruments	4,726	-	-	-	-	-	4,726
Fixed interest rate instruments	-	4,410	-	-	-	-	4,410
Total	16,494	4,410	3	-	-	-	20,907

Liabilities
Non-interest bearing	-	-	(219)	-		-	(219)
Total	-	-	(219)	-	-	-	(219)
Net Exposure	16,494	4,410	(216)	-	-	-	20,688

At 31 March 2013:	No	Less than	1 months	1 to 2	2 to 5	Greater	Total
	contractual	1 month	to 1 year	years		than 5
	terms of				years	years
	repayment
	£'000	£'000	£'000	£'000	£'000	£'000
Assets
Non-interest bearing	32,800	-	5,584	1,105	-	-	39,489
Floating interest rate instruments	277	-	-	-	-	-	277
Fixed interest rate instruments	-	22,857		-	-	-	22,857
Total	33,077	22,857	5,584	1,105	-	-	62,623

Liabilities
Non-interest bearing	-	(456)	(364)	(611)		-	(1,431)
Total	-	(456)	(364)	(611)	-	-	(1,431)
Net Exposure	33,077	22,401	5,220	494	-	-	61,192

* The Company's fixed interest rate instruments represents cash accounts placed on deposit. The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss.

Sensitivity analysis

The sensitivity analysis below has been determined based on the Company's exposure to interest rates for interest bearing assets and liabilities at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 50 basis points higher and all other variables were held constant, the Company's net profit and equity for the year ended 31 March 2014 would have increased by £23,634 (2013: £1,387).

If interest rates had been 50 basis points lower it would have had the equal but opposite effect, on the basis that all other variables remain the same.

21.8 Fair value measurement

Methodologies and assumptions used in valuing investments and investments in subsidiaries:

1) Market Approach:

The market approach uses industry specific benchmarks as its basis and indicates the market value of the shares of the company based on a comparison of the subject company to other comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction.

The market comparable method indicates the market value of the ordinary shares of a business by comparing it to publicly traded companies in similar lines of business. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. An analysis of the market multiples of companies engaged in similar businesses yields insight into investor perceptions and, therefore, the value of the subject company.

In the market approach, recent sales, listings of comparable assets and such other factors as the Board deems relevant are gathered and analysed. After identifying and selecting the comparable publicly traded companies, their business and financial profiles are analysed for relative similarity. Price or EV multiples of the publicly traded companies are calculated and then adjusted for factors such as relative size, growth, profitability, risk, and return on investment. The adjusted multiples are then applied to the relevant element of the subject company's business.

All valuations of unquoted investments and investments in subsidiaries (collectively referred to as the "portfolio") were performed using weighted combination of revenue and/or EBITDA multiples (except for KFL where an agreed sales price was used). 17% (2013: 32%), by value at year-end, of the portfolio was valued using an agreed sales price with the remaining 83% (2013: 68%) of the portfolio being valued using an enterprise value/EBITDA multiple approach and/or enterprise value/revenue multiple.

The key assumptions in the valuations were as follows:

- Liquidity adjustment: 25% to 30% (31 March 2013: 20% to 30%)

2) Income Approach:

The income approach methodology is used as a cross-check for the Market Approach and indicates the market value of a business enterprise based on the present value of the cash flows that the business can be expected to generate in the future. Such cash flows are discounted at a discount rate that reflects the time value of money and the risks associated with the cash flows.

The reconciliation between beginning and ending balances of Level 3 investments is disclosed in Note 21.6. There was a transfer to level 2 from level 3 during the year. The investment was moved from level 3 to level 2 as the sales price could be used to value the investment. The investment was sold after year end, refer to note 25.

22. Segmental information

The Board of Directors of the Company decides on the strategic resource allocations of the Company. The operating segments of the Company are the business activities that earn revenue or incur expenses, whose operating results are regularly reviewed by the Board of Directors of the Company, and for which discrete financial information is available. The Board of Directors considers the Company to be made up of one segment, which is reflective of the business activities of the Company and the information used for internal decision-making which includes the monthly reporting to management of investment holdings on a fair value basis:

- Aurora Russia

The Investment Manager's Report provides more information on the Company's business and the operations of each investment.

The Company derives its revenues from its investments primarily through fair value gains or losses.

The Company regards the holders of its ordinary shares as its customers, as it relies on their funding for continuing operations and meeting its objectives. The Company's shareholding structure is not exposed to a significant shareholder concentration.

The Company is engaged in investment in small and mid-sized companies in Russia and in one principal geographical area, being Russia..

23. Related party transactions

The Company had three direct subsidiaries, KFL, Flexinvest and Flex Bank during the year and one subsidiary at the year end (see note 7 and 8). Details of the investments in Unistream Bank and Grindelia Holdings are presented in note 8.

Michael Hough, who is a director of AIAL, holds 100,000 (2013: 100,000) of the shares in Aurora Russia as at 31 March 2014.

AIAL holds 1,224,072 (2013: 2,576,534) of the shares in Aurora Russia as at 31 March 2014.

The management fees paid to AIAL were £744,743 (2013: £1,103,705); at year end there was no prepayment of management fees. There were no amounts payable at year end (2013: £Nil).

Per the Amended and Restated Management Agreement, the management fee and performance fee payable to AIAL were as follows:

(a) Management fee of an amount equal to i) for all Valuation Dates up to and including 31 March 2011, 1% of the net asset value of the Company; and ii) for all Valuation Dates after 31 March 2011, 0.75% of net asset value of the Company;

(b) Performance fee is calculated as follows:

- 2.5% of the value of any disposals realised by the Company would be payable to the Manager, calculated on the value of assets of the Company realised up to £45 million, i.e. £0.40 per share (the "2.5% Tranche");

- 7.5% of the value of any disposals realised by the Company would be payable to the Manager, calculated on the value of assets of the Company realised between £45 million and £99 million, i.e. £0.40 per share to £0.88 per share (NAV) (the "7.5% Tranche"); and

- 20% of the value of any disposals realised by the Company would be payable to the Manager, calculated on the value of assets of the Company realised over £99 million, i.e. over £0.88 per share (the "20% Tranche").

Performance fees to decline by 20% per annum from 1 January 2012 in respect of the 2.5% Tranche, and by 20% per annum from 1 January 2013 in respect of each of the 7.5% Tranche and the 20% Tranche.

The performance fees paid by the Company to AIAL during the year was £27,735 (2013: £470,758); at year end £40,960 (2013: £107,520) was outstanding. The performance fees became payable on the sale of Flexinvest, calculated at 1.28% on the cash consideration of £3.2 million. At year end £40,960 was still payable.

If the remaining investments were sold at their fair values as at 31 March 2014, £150,630 (£11,767,500 at 1.28%) would be payable to AIAL by way of performance fees.

24. Contingencies and capital commitments

The Company had no contingencies and capital commitments outstanding at the reporting date other than disclosed in note 23.

25. Events after the reporting date

Sale of KFL

On 28 April 2014 the Company announced that it has agreed to sell KFL for a total consideration of RUR100 million (approximately £1.7 million) plus US$450,000 (approximately £267,500). The Board have agreed to the sale at a discount in the light of the current Russian market for banking assets and the difficult nature of the portfolio, which is the rump of the Flexinvest mortgage book and which could only otherwise be disposed of on a protracted piecemeal basis, which would be lengthy and uncertain.

Tender offer

On 1 May 2014 the Company announced a tender offer to Shareholders for up to 29,651,549 Shares, being approximately 39.9 per cent. of the current issued share capital of the Company, at a price of 27.5454p per Share (the "Repurchase Price"). The Repurchase Price has been calculated by reference to the Unaudited Net Asset Value of 27.8464p per Share as at 31 March 2014 and after deducting 0.3010p per Share of costs of the Tender Offer (such costs representing approximately 1.1 per cent. of the Unaudited Net Asset Value per Share). The full amount of shares under the tender offer was repurchased at 27.5454 pence per Share by the Company and subsequently cancelled.

Following the implementation of the Tender Offer and the cancellation, the Company has 44,611,131 shares in issue (being 74,262,617 shares in issue less 29,651,486 shares being repurchased under the Tender Offer and subsequently cancelled).

Termination of Investment Advisor

On 30 April 2014 the Management agreement between the Manager, Aurora Russia Investment Advisors Limited, and the Company was terminated by mutual agreement. Under the termination agreement £40,960 is payable to the Manager in respect of the sale of Flexinvest as a performance fee as well as £15,000 per calender month for the service to be provided for the two months to 30 June 2014. Mr Nicholas Henderson-Stewart was appointed as advisor to the Company on 19 June 2014 to assist in managing, monitoring and realising the Company's residual investments. This will include representing the Company on Investee company boards if so requested by Aurora Russia Board, assistance with certain administrative functions and the provision of financial information, including management accounts, and other relevant information on the Investee companies.

Fees payable to the Advisor comprise a modest annual fee. In addition the Advisor will obtain a commission of 2 per cent of any payment made by the Company to its shareholders (whether by way of dividends, capital return, share buy backs or otherwise) during the term of the agreement.

Change in directors interests

The Company announced that as a result of the tender offer for Shares on 30 May 2014, the Company's directors' beneficial shareholdings in the Company have changed as follows:-

Gilbert Chalk: from 33,005 ordinary shares to 19,827 ordinary shares.

Tim Slesinger: from 9,446,850 ordinary shares to 5,674,913 ordinary shares.

Peregrine Moncreiffe: from 635,209 ordinary shares to 381,583 ordinary shares.

There are no further events after reporting date that require disclosure.

Directors and Advisors


Directors		Independent Auditor
Gilbert Chalk - Chairman - appointed 25 February		KPMG Channel Islands Limited
2013		20 New street
Geoffrey Miller - resigned 12 April 2013		St Peter Port
Tim Slesinger - appointed 22 August 2011		Guernsey GY1 4AN
Grant Cameron - resigned 1 May 2013
John Whittle - resigned 12 April 2013
Jonathan Bridel - appointed 12 April 2013
Peregrine Moncreiffe - appointed 12 April 2013		CREST Service Provider and UK Transfer Agent
Lyndon Trott - appointed 1 May 2013		Capita Registrars
		The Registry
Manager		34 Beckenham Road
Aurora Investment Advisors Limited		Beckenham
(terminated 30 June 2014)		Kent BR3 4TU
Sarnia House
Le Truchot
St Peter Port		Nominated Adviser and Broker
Guernsey GY1 4NA		Numis Securities Limited
		The London Stock Exchange Building
Advisor		10 Paternoster Square
Mr Nicholas Henderson-Stewart		London
(appointed 19 June 2014)		EC4M 7LT
10 Avenue Maurice
1050 Brussels		Russian Solicitors to the Company
Belgium		White & Case LLC
		4 Romanov Pereulok
Administrator and Secretary		125009 Moscow
Kleinwort Benson (Channel Islands)		Russia
Fund Services Limited
Dorey Court
Admiral Park		UK Solicitors to the Company
St Peter Port		SNR Denton UK LLP
Guernsey GY1 2HT		One Fleet Place
		London EC4M 7WS
Registrar
Capita IRG (CI) Limited
2nd Floor
No 1 Le Truchot
St Peter Port
Guernsey GY1 4AE

Guernsey Advocates to the Company
Carey Olsen
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ

This information is provided by RNS

The company news service from the London Stock Exchange

END

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