Results for the full year to
30 June 2009
Aurora Russia Limited
Results for the full year to 31 March 2009
Focus on improved margins and costs positions investee companies strongly
Financial highlights
-
Net asset value at 31 March 2009 down 7% to £79.86m or 106.5p per share, compared to £85.58m or 114.1p per share at 31 March 2008
-
Cash and cash equivalents as at 31 March 2009 were £4.12m, compared to £7.83m as at 31 March 2008
-
Consolidated net profit for the period of £0.43m (£5.22 million for 15 months to 31 March 2008)
-
Consolidated earnings per share for the period of 0.57p per share (6.95p per share for 15 months to 31 March 2008)
Operational highlights - Focus on margins and costs
-
Fully invested with £63.9 million in five companies, four of which are leaders in their field
-
All companies have adapted to the economic environment by tempering short-term growth in favour of improved margins and a strategy of reducing costs while being careful not to lose market share
-
Unistream remains confident it can continue growing its revenues through several new initiatives; pushing its intra-Russia remittance volumes where it still has a relatively low market share, expanding in the corridors from CIS to China and Western Europe and improving the efficiency in the existing distribution network
-
Kreditmart continues its cost reduction plan which started last year and was able to reduce its overhead by approximately 50% compared to the run rate in September 2008, while diversifying its product offering with more emphasis on brokering consumer loans and auto insurance
-
Flexinvest Bank recently launched a short-term Rouble consumer loan product and has also started offering a deposit product
-
Recognizing the high growth prospects of OSG, Aurora Russia announced a further US$1 million investment in OSG in the form of a convertible loan facility in March 2009 aimed at helping the company to finance its capital expenditure plans primarily for warehouse racking
-
SuperStroy remains focused on improving the efficiency of its existing stores through successfully implementing a number of cost reduction initiatives and temporarily putting its expansion plans on hold
-
Detailed results for the investee companies are contained in the investment management report
Commenting, Dan Koch, Chairman of Aurora Russia, said:
'It is gratifying that despite the difficulties, Unistream, OSG and SuperStroy have continued to grow during this period of financial crisis. We believe that these companies, being national or regional leaders in their respective markets, have also strengthened their market position relative to competitors. Kreditmart and Flexinvest Bank have been more affected by the financial crisis, as expected. However, overheads have been significantly reduced and the product offering diversified. The general feeling in the Russian market is that the worst is over and indications within our investee companies are that there are the beginnings of improvement in the market.'
Enquiries:
Aurora Russia Limited
James Cook, Moscow +7 (495) 644 1662
John McRoberts, London +44 (0) 207 8397112
Investec Investment Banking
Patrick Robb +44 (0) 20 7597 4000
Martin Smith +44 (0) 20 7597 4000
Financial Dynamics
Ed Gascoigne-Pees +44 (0) 20 7269 7132
Alexandra Boycott +44 (0) 20 7269 7272
Chairman's Statement
Introduction
I am pleased to present to you the audited results of Aurora Russia Limited for the year ending 31 March 2009. The last twelve months have been a challenging time for companies in Russia. The uncertainty regarding the value of the Rouble, the price of oil and other commodities and concerns on how domestic demand and unemployment would be effected by the crisis, have made it particularly difficult for companies to budget and plan for the future. These concerns have been excacerbated by the difficulty companies have had to source financing as banks have become less willing to lend and equity financing has dried up due to the fall in demand for Russian equities. Both domestic and international investors have converted assets to cash and moved away from supposedly more risky assets.
Aurora Russia's portfolio companies, in some way, have all been affected by the crises. Although our investee companies continue to grow, we do not expect growth, this year, to be as explosive as in previous periods. All of the companies have adapted to deal with the crises by tempering short term growth in favour of improved margins and a strategy of reducing costs and conserving cash while being careful not to lose market share. I expect that there will be further economic challenges ahead, but I am confident that being prudent and having a near term focus on strengthening current operations, rather than expansion and growth, will pay dividends once this economic crisis is over.
Results
For the 12 months to 31 March 2009, Aurora Russia recorded a profit of £0.43 million or 0.57p per share, based on the audited consolidated income statement. Despite these difficult times the net asset value of the Company as at 31st March 2009 was down by only 7% to £79.86 million or 106.5p per share, compared to £85.58 million or 114.1p per share at 31 March 2008. Cash and cash equivalents at 31 March 2009 were £4.12 million, compared to £7.83 million as at 31 March 2008.
Administration and operating expenses of £12.52 million include Company costs of £3.33 million, of which £1.78 million relates to the Manager's fee and £0.60 million to the Manager's option which is being amortised over a period of five years and is a non-cash item. Operating costs of the Company's wholly owned subsidiaries were £9.19 million.
Investment review
Aurora Russia has invested £63.51 million into five companies and has uncommitted funds of £3.62 million remaining. The Company has now implemented its strategy to invest its capital in equity and equity related investments in small and mid-sized private Russian companies, focused on the financial, business and consumer services sectors, where the Directors believe that there is potential for growth together with viable exit opportunities.
Aurora Russia, advised by Aurora Investment Advisors Limited, has five investments:
• Unistream Bank, a leading Russian money transfer company
• Kreditmart, a finance company distributing mortgages, equity release loans and other consumer finance products
• Flexinvest Bank which provides retail banking services
• OSG Records Management, a regional market leader in records management
• SuperStroy, one of the leading DIY retailers in Russia
Our investment in Unistream Bank continues to perform well. Kreditmart has seen slower growth due to the difficulties in the credit markets; Flexinvest Bank has now moved its headquarters from Samara to Moscow. OSG continues to perform well in line with its budget and Superstroy is building on its position as one of the largest Russian DIY chains.
Portfolio Valuation
A valuation of the investment portfolio was performed at 31 March 2009, resulting in a decrease in value from £77.26 million1 to £74.80 million or 3%. This valuation, recommended by the Valuation Committee of the Board was prepared by an independent professional valuation firm and was formally adopted by the Board on 1 June 2009. These valuations are prepared for accounting purposes only and comply with 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 reflects changes to the previous valuation performed in September 2008 as follows: Unistream Bank has been increased by £7.4 million to £25.0million, an increase of 42%. The valuation of Kreditmart and Flexinvest Bank has been decreased by £11.4 million to £23.0 million, a decrease of 33%, reflecting lower values being placed on mortgage broking businesses and banks in the current uncertain market conditions. The valuation of OSG has increased by £5.7 million to £13.6 million1 an increase of 73% and SuperStroy has decreased by £4.22 million to £13.2 million a decrease of 24% due primarily to the lower multiples that comparable companies were trading on 31st March 2009.
Outlook
As previously stated this has not been an easy year for Russian companies. It is gratifying that despite the difficulties, Unistream, OSG and SuperStroy have continued to grow during this period of financial crisis. We believe that these companies, being national or regional leaders in their respective markets, have also strengthened their market position relative to competitors. Kreditmart and Flexinvest Bank have been more affected by the financial crisis, as expected. However, overheads have been significantly reduced and the product offering diversified. The general feeling in the Russian market is that the worst is over and indications within our investee companies are that there are the beginnings of improvement in the market. The Rouble and the Russian economy tend to track the price of oil and at the time of writing both of those indicators have improved and now appear to be stable with oil trading at approximately $70/bbl and the Rouble at approximately RUR31/$.
I am satisfied with the performance of our investee companies and look forward to a better year in 2010.
Dan Collinson Koch
Chairman of the Board
Aurora Russia Limited
25 June 2009
1 Includes convertible loan to OSG Records Management
Investment Manager's Report
Overview
Aurora Russia has invested in private Russian companies focused on the financial, business and consumer services sectors in accordance with the strategy outlined in its AIM Admission Document when the Company was listed in March 2006.
Our investee companies have all taken prudent steps to address the uncertainties resulting from the global financial crisis and Aurora Investment Advisors Limited (the 'Manager') continues to provide considerable hands-on operational and strategic support to assist them in delivering solid trading performances and in building long term value. Over the period, the investee companies have focussed on reducing operating costs, securing market share, conserving cash, and identifying additional growth opportunities in their sectors.
Aurora Russia has invested a total of £63.9 million in five companies. The companies were valued at 31 March 2009 at £74.8 million, representing an increase of 16.9%. Aurora Russia owns 26% of Unistream Bank, 100% of Kreditmart, 100% of Flexinvest Bank, 24.3% of SuperStroy, and 39.4% of OSG Records Management plus a convertible loan.
Unistream Bank continues to be a leader in the Russian money transfer market. Kreditmart has adapted its strategy to address the downturn in the mortgage market by reducing its cost base and by diversifying its product offering to be less dependent on the mortgage market and concentrating more on consumer loans and insurance. Flexinvest Bank moved its headquarters from Samara to Moscow and has started offering consumer loans and deposit products to its customers. SuperStroy remains the leading DIY retailer in the Urals region of Russia and is one of the largest independent DIY retailers in Russia and OSG remains the largest records management company in Russia, Kazakhstan and Ukraine and is one of the largest in Poland.
Unistream Bank
Unistream Bank continues to be one of the largest money transfer companies in Russia by providing competitive money transfer and foreign exchange products through 280 of its own money transfer offices throughout Russia. It is regulated by the Central Bank of Russia ('CBR') and has a banking license to receive and send money transfers, open bank accounts for corporate entities and accept loan payments through its points of sale.
In 2008, the Russia outbound money transfer market grew by 45%, one of the fastest growth rates globally. Despite Russia outbound volumes that will likely shrink in 2009 before they start growing again at the end of 2009 or early 2010, Unistream is confident it can continue growing its revenues through several new initiatives. Unistream will push its intra-Russia remittance volumes where it still has a relatively low market share, expand into the corridors from CIS to China and Western Europe and improve the efficiency in the existing distribution network.
Since 2006, Unistream Bank has increased its annual volume of money transfers from approximately US$1.84 billion to approximately US$3.68 billion in 2007 and US$4.91 billion in 2008 (an increase of 33% over 2007).
Despite first quarter 2009 RUR volumes being down 2% year on year, the company's RUR revenues grew 11% and RUR operating income grew 45% thanks to growth in foreign exchange transactions. Unistream's most recent volume figures show volumes beginning to grow again with year on year growth in June 2009 of approximately 7%. In 2008, Unistream posted revenues of RUR 2.4 billion (US$ 98.0 million) up from RUR1.4 billion (US$55.1 million) in 2007.
The valuation of our 26% stake in Unistream Bank at 31 March 2009 resulted in an uplift of £4.6 million compared to the valuation at 30 September 2008 of £20.4 million.
Kreditmart
Kreditmart commenced operations in March 2007 and now distributes a wide range of financial services in Russia with loan shops in Moscow, St. Petersburg, Tyumen, Yekaterinburg, Kazan, and Rostov-on-Don.
Kreditmart, a wholly owned subsidiary of Aurora Russia Limited, distributes mortgages, equity release loans, insurance, credit cards, auto loans, pension funds, mutual funds, and other consumer finance products. Kreditmart has signed agreements with over 60 banks to distribute mortgage products to its customers and currently offers over 600 loan products through its system.
The global liquidity crisis has resulted in a number of Russian banks suspending their mortgage lending programmes as the refinancing market dried up at the end of 2008. New mortgage originations are estimated to have decreased six-fold in the first half of 2009 following several years of high double digit growth. At the same time mortgage penetration in Russia remains at less than 3% of GDP with ample opportunities for future growth when the economy improves and refinancing becomes available again.
Management continued its cost reduction plan started last year and was able to reduce its overhead by approximately 50% compared to the run rate in September 2008. It also decided to close down two of its less successful branches and to consolidate operations in Moscow. While downsizing to reduce costs, it was able to diversify its product offering with more emphasis on brokering consumer loans and auto insurance. Sales of insurance products have been growing steadily each month since the beginning of 2009.
First quarter Kreditmart broker revenue fell 19% compared to the same period in 2008. However, overall revenues in the first quarter of 2009 were down 54% year on year attributed primarily to a decrease in interest revenue following the sale of part of the mortgage portfolio in 2008 and reduced interest earnings on bank deposits. In light of the current market, the valuation of Kreditmart (including Flexinvest - see below) as at 31 March 2009 resulted in a write down of £9.30 million compared to the valuation at 30 September 2008 of £32.30 million.
Flexinvest Bank (formerly Volzhski Universalny Bank)
Flexinvest Bank was acquired in May 2008 through Flexinvest Limited ('Flexinvest'), a wholly owned subsidiary for a consideration of £5.0 million (RUR 237 million). Additional funds of £1.2 million (RUR 57 million) were invested into the bank by Flexinvest to cover post-acquisition infrastructure costs and fund ongoing operations.
As of 31 March 2009, it had RUR 249.9 million (approximately £5.19 million) in assets. Flexinvest Bank recently launched a short-term Rouble consumer loan product which is distributed through Kreditmart distribution channels. It has also started offering a deposit product.
The new headquarters for Flexinvest Bank opened in Moscow on 22nd June 2009. Additional services are being offered in the branch including deposit boxes, currency exchange and money transfer.
Despite recent concerns about the increase in non-performing loans, Russia continues to be an attractive market for retail banking in the medium to long term and recently saw banks like HSBC start its retail operations in Russia.
We remain confident that Flexinvest Bank will have opportunities to grow its assets and will continue benefiting from the already established distribution of Kreditmart network.
SuperStroy
The DIY market in Russia in 2008 was estimated to be approximately US$16 billion up from US$14 billion in 2007. The top 10 chains are estimated to have increased their share and have approximately 25.8% of the total market size versus 22.8% in 2007. Analysts expect further consolidation of the sector in 2009 with the share of top 10 players reaching 30% to 35% by the year-end. Based on estimated turnover figures, SuperStroy ranks 4th among all chain DIY retailers operating in Russia, alongside Castorama (US$272 million estimated 2008 turnover), up from being 7th in 2007. Analysts expect the DIY market to shrink by 25% in US$ terms in 2009 before growth returns in 2010. In spite of the recent trends, long-term growth prospects of the Russian DIY industry continue to look attractive.
Due to the recent economic slowdown caused by the credit crunch, SuperStroy has temporarily put its expansion plans on hold and focused on improving the efficiency of its existing stores. It successfully implemented a number of cost reduction initiatives reducing store rent and central overhead by 18% and 10% respectively. As of March 2009 it operated 40 SuperStroy supermarkets and 5 StroyArsenal hypermarkets.
In the first quarter of 2009 the company's revenues have grown 7% year on year. In 2008, it posted revenues of approximately RUR 6.8 billion (US$273.3 million) up on 2007 revenues of RUR 4.6 billion (US$178.7 million).
Given a general decline in the valuation multiples of public retailers and DIY retailers, in particular, the valuation of SuperStroy as at 31 March 2009 resulted in a write down of £6.5 million of our 24.3% stake compared to the valuation at 30 September 2008 of £19.7 million.
OSG Records Management
OSG remains the largest records management company in Russia, Ukraine and Kazakhstan. It is the second largest in Poland and is considered a regional market leader. OSG continues to provide cost-effective total records management, document storage, data security, document scanning and confidential data destruction solutions. OSG's management estimates that the market for records management in Central and Eastern Europe is still young and immature, especially in Russia which has an extremely low vended ratio of under 2%. The unvended portion of the market offers enormous growth opportunities and is expected to increase from approximately US$20 million in 2008 to approximately US$200 million in 2012 reaching the current levels seen in Latin America (vended portion of approximately 20%).
Recognizing the high growth prospects of OSG, Aurora Russia announced a further US$1 million investment in OSG in the form of a convertible loan facility in March 2009 aimed at helping the company to finance its capital expenditure plans primarily for warehouse racking.
In the first quarter of 2009 the company's revenues have grown 8% year on year in US$ with growth in local operating currencies in the high double digits; Russia delivering 45% year on year growth in the first quarter of 2009. OSG is continuing its expansion in Russia and has recently opened offices in Perm, Tuymen and Rostov. In 2008, OSG posted revenues of US$17.1 million up from US$10.9 million in 2007 and US$8 million in 2006.
The valuation of our investment (equity and debt) in OSG at 31 March 2009 resulted in an uplift of £3.5 million (the uplift includes already drawn down US$0.5 million of new investment) compared to the valuation at 30 September 2008 of £10.1 million (including debt).
Conclusion
Through the current worldwide financial crisis, we continue to be very positive about all of Aurora Russia's investments and believe that all five are positioned to cope with the current economic climate and to emerge with secured market positions and strong platforms for growth.
Although we are seeing lower levels of activity due to the current downturn the Russian market continues to provide opportunities for growth due to the low penetration and vast market potential in the sectors we are targeting. We will continue to identify and target the niches where our companies can gain a competitive advantage while securing our current market position for continued growth.
Aurora Investment Advisors Limited
Independent auditor's report to the members of Aurora Russia Limited
We have audited the group and parent company financial statements (the 'financial statements') of Aurora Russia Limited (the 'Company') for the year ended 31 March 2009 which comprises the Consolidated and Company Income Statements, the Consolidated and Company Balance Sheets, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Cash Flow Statements and the related notes. These financial statements have been prepared under the accounting policies set out therein. The financial statements of the Company as of 31 March 2008 were audited by another auditor whose report dated 20 June 2008 expressed an unqualified opinion on these statements.
This report is made solely to the company's members, as a body, in accordance with section 64 of The Companies (Guernsey) Law, 1994. 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
The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable Guernsey law and International Financial Reporting Standards as set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with The Companies (Guernsey) Law, 1994. We also report to you if, in our opinion, the company has not kept proper accounting records, or if we have not received all the information and explanations we require for our audit.
We read the Directors' Report and consider the implications for our report if we become aware of any apparent misstatements within it.
We read the other information accompanying the financial statements and consider whether it is consistent with those statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements:
• give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the group's and the Company's affairs as at 31 March 2009 and of the group's profit and the Company's loss for the year then ended; and
• have been properly prepared in accordance with The Companies (Guernsey) Law, 1994.
KPMG Channel Islands Limited
PO Box 20
20 New Street
St. Peter Port
Guernsey
GY1 4AN
Consolidated Income Statement
For the year ended 31 March 2009
|
|
Year
ended
31 March 2009
|
|
15 month
period ended
31 March 2008
|
|
|
|
Notes
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
Revenue:
|
|
2,677
|
|
4,313
|
|
- Fees
|
|
394
|
|
227
|
|
- Interest on long term mortgages and other loans
|
|
1,300
|
|
534
|
|
- Loan interest
|
|
281
|
|
187
|
|
- Bank interest
|
|
590
|
|
3,365
|
|
- Dividend income
|
|
112
|
|
-
|
|
Administration and operating expenses
|
4
|
(12,519)
|
|
(8,892)
|
|
Fair value movements on revaluation of investments
|
12
|
7,531
|
|
8,357
|
|
Fair value movements on derivatives
|
15
|
(525)
|
|
89
|
|
Impairment of goodwill
|
7
|
(236)
|
|
-
|
|
Exchange gains
|
|
4,081
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before tax
|
|
1,009
|
|
4,477
|
|
|
|
|
|
|
|
Finance costs
|
|
|
|
|
|
Interest expense
|
|
(21)
|
|
-
|
|
|
|
|
|
|
|
Profit before tax
|
|
988
|
|
4,477
|
|
|
|
|
|
|
|
Tax
|
5
|
(562)
|
|
738
|
|
|
|
|
|
|
|
Net profit for the year/period
|
20
|
426
|
|
5,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit per share - Basic and Diluted
|
6
|
0.57p
|
|
6.95p
|
All items in the above statement derive from continuing operations.
All losses and income are attributable to the equity holders of the parent company. There are no minority interests.
The accompanying notes form an integral part of these financial statements.
Company Income Statement
For the year ended 31 March 2009
|
|
Year ended 31 March 2009 |
|
15 month period ended 31 March 2008 |
|
|
|
Notes |
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Revenue |
|
665 |
|
2,941 |
|
- Loan interest |
|
281 |
|
187 |
|
- Bank interest |
|
272 |
|
2,754 |
|
- Dividend income |
|
112 |
|
- |
|
Administration and operating expenses |
4 |
(3,331) |
|
(3,885) |
|
Fair value movements on revaluation of investments |
12 |
(3,867) |
|
13,749 |
|
Fair value movements on derivatives |
15 |
(525) |
|
89 |
|
Other exchange gains/(losses) |
|
737 |
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)/profit before tax |
|
(6,321) |
|
12,884 |
|
|
|
|
|
|
|
Tax |
5 |
- |
|
- |
|
|
|
|
|
|
|
Net (loss)/profit for the year/period |
20 |
(6,321) |
|
12,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit per share - Basic and Diluted |
6 |
(8.43p) |
|
17.18p |
All items in the above statement derive from continuing operations.
The accompanying notes form an integral part of these financial statements.
Consolidated Balance Sheet
As at 31 March 2009
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
Notes |
£'000 |
|
£'000 |
|
Non-current assets |
|
|
|
|
|
Goodwill |
7 |
- |
|
169 |
|
Intangible assets |
8 |
2,273 |
|
- |
|
Property, plant and equipment |
9 |
1,019 |
|
1,267 |
|
Investments - at fair value through profit and loss |
12 |
51,833 |
|
42,898 |
|
Loans and advances to customers |
13 |
9,569 |
|
13,922 |
|
Deferred tax assets |
5 |
191 |
|
784 |
|
|
|
|
|
|
|
|
|
64,885 |
|
59,040 |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
14 |
1,711 |
|
1,423 |
|
Cash and cash equivalents |
|
12,022 |
|
17,806 |
|
|
|
|
|
|
|
|
|
13,733 |
|
19,229 |
|
|
|
|
|
|
|
Total assets |
|
78,618 |
|
78,269 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Derivative liabilities |
15 |
46 |
|
12 |
|
Trade and other payables |
16 |
742 |
|
648 |
|
|
|
|
|
|
|
Total liabilities |
|
788 |
|
660 |
|
|
|
|
|
|
|
Total net assets |
|
77,830 |
|
77,609 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
17 |
750 |
|
750 |
|
Special reserve |
18 |
70,750 |
|
70,750 |
|
Share options reserve |
19 |
1,820 |
|
1,220 |
|
Retained earnings |
20 |
5,320 |
|
4,894 |
|
Translation reserve |
21 |
(810) |
|
(5) |
|
|
|
|
|
|
|
Total equity |
|
77,830 |
|
77,609 |
|
|
|
|
|
|
|
Net asset value per share - Basic and Diluted |
22 |
103.8p |
|
103.5p |
The accounts were approved by the Board of Directors on 29 June 2009 and signed on its behalf by:
|
John Whittle
|
Grant Cameron
|
|
Director
|
Director
|
The accompanying notes form an integral part of these financial statements.
Company Balance Sheet
As at 31 March 2009
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
Notes |
£'000 |
|
£'000 |
|
Non-current assets |
|
|
|
|
|
Investment in subsidiaries - at fair value through profit and loss |
10 |
23,000 |
|
34,423 |
|
Investments - at fair value through profit and loss |
12 |
51,800 |
|
42,840 |
|
|
|
|
|
|
|
|
|
74,800 |
|
77,263 |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
14 |
1,112 |
|
604 |
|
Cash and cash equivalents |
|
4,123 |
|
7,829 |
|
|
|
|
|
|
|
|
|
5,235 |
|
8,433 |
|
|
|
|
|
|
|
Total assets |
|
80,035 |
|
85,696 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Derivative liabilities |
15 |
46 |
|
12 |
|
Trade and other payables |
16 |
129 |
|
103 |
|
|
|
|
|
|
|
Total liabilities |
|
175 |
|
115 |
|
|
|
|
|
|
|
Total net assets |
|
79,860 |
|
85,581 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
17 |
750 |
|
750 |
|
Special reserve |
18 |
70,750 |
|
70,750 |
|
Share options reserve |
19 |
1,820 |
|
1,220 |
|
Retained earnings |
20 |
6,540 |
|
12,861 |
|
|
|
|
|
|
|
Total equity |
|
79,860 |
|
85,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value per share - Basic and Diluted |
22 |
106.5p |
|
114.1p |
The accounts were approved by the Board of Directors on 29 June 2009 and signed on its behalf by:
|
John Whittle
|
Grant Cameron
|
|
Director
|
Director
|
The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2009
|
|
|
Share |
||||||||||
|
|
|
Share Capital |
|
Special Reserve |
|
Options Reserve |
|
Retained Earnings |
|
Translation Reserve |
|
Total |
|
|
|
|
|
|
|
|
||||||
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 15 month period 1 January 2007 to 31 March 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2007 |
750 |
|
70,750 |
|
470 |
|
(321) |
|
- |
|
71,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
- |
|
- |
|
- |
|
5,215 |
|
- |
|
5,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of share-based payments |
- |
|
- |
|
750 |
|
- |
|
- |
|
750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
- |
|
- |
|
- |
|
- |
|
(5) |
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008 |
750 |
|
70,750 |
|
1,220 |
|
4,894 |
|
(5) |
|
77,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year 1 April 2008 to 31 March 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2008 |
750 |
|
70,750 |
|
1,220 |
|
4,894 |
|
(5) |
|
77,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the year |
- |
|
- |
|
- |
|
426 |
|
- |
|
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of share-based payments |
- |
|
- |
|
600 |
|
- |
|
- |
|
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation loss |
- |
|
- |
|
- |
|
- |
|
(805) |
|
(805) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2009 |
750 |
|
70,750 |
|
1,820 |
|
5,320 |
|
(810) |
|
77,830 |
|
The accompanying notes form an integral part of these financial statements.
Company Statement of Changes in Equity
For the year ended 31 March 2009
|
|
|
Share |
|||||||||
|
|
|
|
Share Capital |
|
Special Reserve |
|
Options Reserve |
|
Retained Earnings |
|
Total |
|
|
|
|
|
|
|
|
|||||
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 15 month period 1 January 2007 to 31 March 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2007 |
|
750 |
|
70,750 |
|
470 |
|
(23) |
|
71,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
- |
|
- |
|
- |
|
12,884 |
|
12,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of share-based payments |
|
- |
|
- |
|
750 |
|
- |
|
750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008 |
|
750 |
|
70,750 |
|
1,220 |
|
12,861 |
|
85,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year 1 April 2008 to 31 March 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2008 |
|
750 |
|
70,750 |
|
1,220 |
|
12,861 |
|
85,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
- |
|
- |
|
- |
|
(6,321) |
|
(6,321) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of share-based payments |
|
- |
|
- |
|
600 |
|
- |
|
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2009 |
|
750 |
|
70,750 |
|
1,820 |
|
6,540 |
|
79,860 |
|
The accompanying notes form an integral part of these financial statements.
Consolidated Cash Flow Statement
For the year ended 31 March 2009
|
|
Year ended 31 March 2009 |
|
15 month period ended 31 March 2008 |
|
|
|
Notes |
|||
|
Cash flows from operating activities |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Profit before tax |
|
988 |
|
4,477 |
|
Loan interest |
|
(281) |
|
(187) |
|
Bank interest |
|
(590) |
|
(3,365) |
|
Dividend income |
|
(112) |
|
- |
|
|
|
5 |
|
925 |
|
Adjustments for movements in working capital: |
|
|
|
|
|
Decrease/(increase) in operating trade and other receivables |
|
53 |
|
(1,357) |
|
Increase in operating trade and other payables |
|
14 |
|
612 |
|
|
|
|
|
|
|
Adjust for: |
|
|
|
|
|
Revaluation of investments |
|
(7,531) |
|
(8,085) |
|
Recognised share based payments |
19 |
600 |
|
750 |
|
Fair value movements on revaluation of derivatives |
|
525 |
|
(89) |
|
Currency translation reserve |
|
- |
|
(3) |
|
Depreciation and amortisation |
|
385 |
|
197 |
|
Impairment of goodwill |
|
236 |
|
- |
|
Provision for loan losses |
|
1,782 |
|
195 |
|
Interest paid |
|
21 |
|
- |
|
Taxation paid |
|
(7) |
|
(5) |
|
Dividend income |
|
112 |
|
- |
|
Bank interest received |
|
529 |
|
3,365 |
|
Exchange gains |
|
(4,081) |
|
- |
|
Loss on forex contract closed out |
|
(519) |
|
- |
|
Loans advanced to customers |
|
7,194 |
|
(14,117) |
|
|
|
|
|
|
|
Net cash outflow from operating activities |
|
(682) |
|
(17,612) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Acquisition of subsidiary net of cash acquired |
11 |
(3,082) |
|
(346) |
|
Acquisition of investments |
|
(15) |
|
(26,875) |
|
Acquisition of derivatives |
|
- |
|
(488) |
|
Proceeds on sale of derivatives |
|
- |
|
530 |
|
Acquisition of property, plant and equipment |
9 |
(168) |
|
(1,461) |
|
Proceeds on sale of property, plant & equipment |
|
38 |
|
- |
|
Loans advanced to associated company |
|
(356) |
|
(1,717) |
|
Decrease in deposits |
|
(1,639) |
|
- |
|
|
|
|
|
|
|
Net cash outflow from investing activities |
|
(5,222) |
|
(30,357) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(5,904) |
|
(47,969) |
|
|
|
|
|
|
|
Opening cash and cash equivalents |
|
17,806 |
|
65,778 |
|
Effect of exchange rate changes |
|
120 |
|
(3) |
|
|
|
|
|
|
|
Closing cash and cash equivalents |
|
12,022 |
|
17,806 |
The accompanying notes form an integral part of these financial statements.
Company Cash flow statement
For the year ended 31 March 2009
|
|
Year ended 31 March 2009 |
|
15 month period ended 31 March 2008 |
|
|
|
Note |
|||
|
|
|
£'000 |
|
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
(Loss)/profit before tax |
|
(6,321) |
|
12,884 |
|
Loan interest |
|
(281) |
|
(187) |
|
Bank interest |
|
(272) |
|
(2,754) |
|
Dividend income |
|
(112) |
|
- |
|
|
|
(6,986) |
|
9,943 |
|
Adjustments for movements in working capital: |
|
|
|
|
|
Increase in operating trade and other receivables |
|
(548) |
|
(481) |
|
Increase/(decrease) in operating trade and other payables |
|
26 |
|
(37) |
|
|
|
|
|
|
|
Adjust for: |
|
|
|
|
|
Loss/(profit) on revaluation of investments |
|
3,867 |
|
(13,477) |
|
Recognised share based payments |
23 |
600 |
|
750 |
|
Fair value movements on revaluation of derivatives |
|
525 |
|
(89) |
|
Exchange (gains)/losses |
|
(737) |
|
10 |
|
Loss on forex contract closed out |
|
(519) |
|
- |
|
Dividend income |
|
112 |
|
- |
|
Bank interest received |
|
312 |
|
2,754 |
|
|
|
|
|
|
|
Net cash outflow from operating activities |
|
(3,348) |
|
(627) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Acquisition of investments |
|
(15) |
|
(53,724) |
|
Acquisition of derivatives |
|
- |
|
(488) |
|
Proceeds on sale of derivatives |
|
- |
|
530 |
|
Loans advanced to associated company |
|
(356) |
|
(1,717) |
|
|
|
|
|
|
|
Net cash outflow from investing activities |
|
(371) |
|
(55,399) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(3,719) |
|
(56,026) |
|
|
|
|
|
|
|
Opening cash and cash equivalents |
|
7,829 |
|
63,850 |
|
|
|
|
|
|
|
Effect of foreign exchange movements |
|
13 |
|
5 |
|
|
|
|
|
|
|
Closing cash and cash equivalents |
|
4,123 |
|
7,829 |
The accompanying notes form an integral part of these financial statements.
Notes to the Financial statements
For the year ended 31 March 2009
1. Reporting entity
Aurora Russia Limited ('the Company') is a closed ended investment fund that was incorporated in Guernsey on 22 February 2006, and was listed on the London Stock Exchange Alternative Investment Market ('AIM') on 24 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.
The consolidated financial statements of the Company as at and for the year ended 31 March 2009 comprise the company and its subsidiaries (together referred to as the 'Group' and individually as 'Group entities').
2. Basis of preparation
2.1 Accounting period
In the prior period, on decision of the Board, the Company changed its accounting period from 31 December to 31 March to allow its investee companies more time to provide their audited financial statements. As a result, the comparative amounts for the income statement, statement of changes in equity, statement of cash flows and related notes are not entirely comparable.
2.2 Statement of compliance
The financial statements 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 and applicable legal and regulatory requirements of Guernsey Law and of the London Stock Exchange Alternative Investment Market ('AIM').
2.3 Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following:
● derivative financial instruments are measured at fair value
● 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
2.4 New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 March 2009, and have not been applied in preparing these consolidated financial statements:
> Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations clarifies the definition of vesting conditions, introduces the concept of non-vesting conditions, requires non-vesting conditions to be reflected in grant-date fair value and provides the accounting treatment for non-vesting conditions and cancellations. The amendments to IFRS 2 will become mandatory for the Group's 2010 consolidated financial statements, with retrospective application.
The Group is currently in the process of evaluating the potential effect of this amendment.
> Revised IFRS 3 Business Combinations (2008) incorporates the following changes that are likely to be relevant to the Group's operations:
- The Definition of a business has been broadened, which may result in more acquisitions being
treated as business combinations.
- Contingent consideration will be measured at fair value, with subsequent changes in fair value recognised in profit or loss.
- Transaction costs, other than share and debt issue costs, will be expensed as incurred.
- Any pre-existing interest in an acquiree will be measured at fair value, with the related gain or loss
recognised in profit or loss.
- Any non-controlling (minority) interest will be measured at either their fair value, or at its proportionate interest in the identifiable assets and liabilities of an acquiree, on atransaction-by-transaction basis.
Revised IFRS 3, which becomes mandatory for the Group's 2010 consolidated financial statements, will be applied prospectively and therefore there will be no impact on prior periods in the Group's 2010 consolidated financial statements.
> Revised IAS 1 Presentation of Financial Statements (2007) introduces the term 'total comprehensive income,' which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income.
Revised IAS 1, which becomes mandatory for the Group's 2010 financial statements, is expected to have a significant impact on the presentation of the consolidated financial statements as the Group plans to provide total comprehensive income in a single statement of comprehensive income for its 2010 annual financial statements or consolidated financial statements.
> Amended IAS 27 Consolidated and Separate Financial Statements (2008) requires accounting for changes in ownership interests in a subsidiary that occur without loss of control, to be recognised as an equity transaction. When the Group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The amendments to IAS 27, which become mandatory for the Group's 2010 consolidated financial statements, are not expected to have a significant impact on the consolidated financial statements.
> Amendments to IAS 32 and IAS1 Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on Liquidation require puttable instruments and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation to be classified as equity if certain conditions are met. The amendments, which become mandatory for the Group's 2010 consolidated financial statements with retrospective application required, are not expected to have any significant impact on the consolidated financial statements.
> The International Accounting Standards Board made certain amendments to existing standards as part of its annual improvements project. The effective dates for these amendments vary by standard and most will be applicable to the Group's 2010 consolidated financial statements.
The Group does not expect these amendments to have a significant impact on the consolidated financial statements.
> Amendments to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items clarifies the application of existing principles that determine whether specific risks or portions of cash flows are eligible for designation in a hedging relationship. The amendments will become mandatory for the Group's 2010 consolidated financial statements, with retrospective application required. The Group is currently in the process of evaluating the potential effect of this amendment.
2.4 New standards and interpretations not yet adopted
> IFRIC 16 Hedges of a Net Investment in a Foreign Operation clarifies that:
- net investment hedging can be applied only to foreign exchange differences arising between the
functional currency of a foreign operation and the parent entity's functional currency and only in an amount equal to or less than the net assets of the foreign operation
- the hedging instrument may be held by any entity within the group except the foreign operation
that is being hedged
- on disposal of a hedged operation, the cumulative gain or loss on the hedging instrument that
was determined to be effective is reclassified to profit or loss.
The Interpretation allows an entity that uses the step-by-step method of consolidation, an accounting policy choice to determine the cumulative currency translation adjustment that is reclassified to profit or loss on disposal of a net investment as if the direct method of consolidation had been used. IFRIC 16, which becomes mandatory for the Group's 2010 consolidated financial statements, applies prospectively to the Group's existing hedge relationships and net investments. The Group does not expect IFRIC16 to have a significant impact on the consolidated financial statements.
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 estimated uncertainty for the group and are included within the relevant accounting policy note:
● Investments (see note 3.8.2)
● Loans and advances to customers (see note 3.8.4)
● Goodwill (see note 3.1.2)
● Intangible assets (see note 3.12)
2.6 Functional and presentation currencies
The Directors have selected sterling as the presentation currency of the Company which is also the functional currency of the Company as it is the currency its shares are issued in and the currency in which the Company has received all of its funding. All information presented in sterling has been rounded to the nearest thousand.
3. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.
Certain comparative amounts have been reclassified to conform with the current year's presentation (see note 27).
3.1 Basis of consolidation
3.1.1 Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and any entities controlled by the Company (the 'Group') as at 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable are taken into account.
On acquisition the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
3.1.2 Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed.
3.1.3 Associates
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity.
However, the Company has taken advantage of the exemption available to it under IAS 28, and hence accounts for these applicable investments in terms of IAS 39 at fair value through profit and loss.
3.2 Foreign currency transactions
Transactions in currencies other than sterling are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into sterling at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Income Statement. 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.
On consolidation, the assets and liabilities of the Group's overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expenses are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the rate prevailing on the balance sheet date.
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.
Brokerage fees received from services provided to the banks are recognised in the month when the act of service is rendered with the bank and the loan agreement signed by the client.
Dividend income from investments is recognised when the Company's right to receive payment has been established, normally the date the dividend is declared.
3.4 Expenses
All expenses are accounted for on an accruals basis and are presented as revenue items, except for expenses that are incidental to the disposal of an investment, which are deducted from the disposal proceeds, and certain set up expenses (see 3.5 below).
3.5 Set up expenses
The preliminary expenses of the Company directly attributable to the Offer and costs associated with the issuance and listing of equity instruments of the Company that would otherwise have been avoided are taken to the share premium account.
3.6 Segmental reporting
The directors are of the opinion that the Group is engaged in a single segment of business being investment in small and mid-sized companies in Russia and in one principal geographical area, being Russia.
3.7 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. With effect from 1 January 2008, Guernsey abolished the exempt company regime. As a publicly available fund, it is eligible to apply for exempt status however, and liable to the annual exempt fee if it chooses to do so.
The Group is liable to Russian tax arising on its activities in Russia.
The Group is liable to Cypriot tax arising on the activities of its Cypriot subsidiaries.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
3.8 Financial Instruments
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument, including unconditional commitments to make investments. The Group shall offset financial assets and liabilities if the Group has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.
3.8.1 Forward exchange contracts
The Group's activities expose it to financial risks of changes in foreign currency exchange rates. The Group uses forward foreign exchange contracts to hedge net monetary assets denominated in foreign currencies, where practicable, other than the Russian Rouble, and not for speculative purposes. At the balance sheet date outstanding forward exchange contracts are measured at their marked to market price, and are included in the financial statements as either a derivative asset or liability. Gains or losses arising on forward foreign exchange contracts are taken to the Income Statement. Hedge accounting is not applied.
3.8.2 Investments
Unquoted investments, including investments in subsidiaries, as well as loans receivable from associated companies are designated as fair value through profit and 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. Unrealised gains and losses arising from the revaluation of investments are taken directly to the Income Statement. Investments deemed to be denominated in a foreign currency are revalued in Pounds Sterling terms 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 Group.
Investments are held 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 period end, which is the functional currency of the Group and presentation currency of the consolidated financial statements. Unrealised gains and losses arising from the revaluation of investments are taken directly to the income statement.
The fair value of the investments is arrived at on the basis of the recommendation of the Company's Valuation Committee, based on independent professional advice. Fair value is determined as follows:
Unquoted securities are valued based on the realisation value which is estimated by the Committee with prudence and good faith. The Committee will take into account the guidelines and principles for valuation of Portfolio Companies set out by the International Private Equity and Venture Capital Association (IPEVCA), with particular consideration of the following factors:
-
Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction
-
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 materially 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. In assessing which methodology is appropriate, the Committee is predisposed towards those methodologies that draw upon market-based measures of risk and return.
-
Cost of recent investment
-
Revenue multiples
-
Net assets
-
Available market prices
Investments made by the Group 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. The fair value of financial assets traded in active markets are based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the group is the current bid price.
3.8.3 Impairment of financial assets
At each balance sheet date the Group assesses whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows of the asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a borrower, restructuring of a loan or advance by the Group on terms that the Group would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance of an active market for a security, or other observable data relating to a group of assets such as adverse changes in the payment status of borrowers or issuers in the group, or economic conditions that correlate with defaults in the group. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
The group considers evidence of impairment for loans and advances at both a specific asset and collective level. All individually significant loans and advances and held-to-maturity investment securities are assessed for specific impairment. All individually significant loans and advances and held-to-maturity investment securities found not to be specifically impaired are then collectively assessed for any impairment by grouping together loans and advances and held-to-maturity investment securities with similar risk characteristics.
In assessing collective impairment the Group uses statistical modelling of historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for the management's judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical modelling. Default rates, loss rates and the expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure that they remain appropriate.
Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit and loss and reflected in an allowance account against loans and advances. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
3.8.4 Loans and advances to customers
Loans granted by the Group are initially recognized at fair value plus related transaction costs on the date they originated. Where the fair value of consideration given does not equal the fair value of the loan, for example where the loan is issued at lower than market rates, the difference between the fair value of consideration given and the fair value of the loan is recognized as a loss on initial recognition of the loan and included in the consolidated income statement according to the nature of these losses. Subsequently, loans are carried at amortized cost. Loans to customers are carried net of any impairment losses.
All loans are secured against the property of the borrower, with adequate provisions calculated and managed by the Risk Management Department.
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
The Group enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognised from the balance sheet. Transfers of assets with retention of all or substantially all risks and rewards include, for example, securities lending and repurchase transactions.
In transactions in which the Group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset, it derecognises the asset if it does not retain control over the asset. The rights and obligations retained in the transfer are recognised separately as assets and liabilities as appropriate. In transfers in which control over the asset is retained, the Group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.
3.8.5 Cash and cash equivalents
Cash in banks and short term deposits that are held to maturity are carried at amortised cost. Cash and cash equivalents consist of cash in hand and short term deposits in banks with an original maturity of three months or less.
3.8.6 Trade receivables
Trade receivables do not carry any interest and are short-term in nature. They are accordingly stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
3.8.7 Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
3.8.8 Financial 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 Group after deducting all of its liabilities. Financial liabilities and equity instruments are recorded at the proceeds received, net of issue costs.
3.9 Earnings per share
The Group 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 Group and 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.
3.10 Operating leases
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
3.11 Property, plant and equipment
Property, plant and equipment are carried at historical cost less accumulated depreciation and any recognised impairment loss, if any. Depreciation is charged on the carrying value of property, plant and equipment and is designed to write off assets over their useful economic lives. It is calculated on a straight line basis at the following annual prescribed rates:
Fixtures & fittings 3-4 years
Furniture 5 years
Equipment 3 years
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Borrowing costs related to the acquisition, construction or production of qualifying assets are recognised in profit or loss as incurred.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
The carrying amounts of property, plant and equipment and intangible assets are reviewed at each balance sheet date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount.
Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within 'other income' in profit or loss.
Impairment is recognised in the respective period and is included in operating expenses.
After the recognition of an impairment loss the depreciation charge for property, plant and equipment is adjusted in future periods to allocate the assets' revised carrying value, less its residual value (if any), on a systematic basis over its remaining useful life.
3.12 Intangible assets
An intangible asset is regarded as having an indefinite useful life when, based of all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the company. Amortisation is not provided for these intangible assets. Intangible assets with indefinite useful lives are tested for impairment at each reporting date by determining the recoverable amount of the assets either individually or at the cash-generating unit level. Where this assessment is performed at the cash-generating unit level, the impairment is determined by assessing the recoverable amount of the cash-generating unit to which the intangible asset relates. In such instances, the recoverable amount is determined as the value in use of the cash-generating unit by estimating the expected future cash flows in the unit and choosing a suitable discount rate in order to calculate the present value of those cash flows.
Where the recoverable amount is less than the carrying amount of the asset or the cash-generating unit, an impairment loss is recognised in the income statement.
The useful life of an intangible asset with an indefinite life is reviewed at each reporting date to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment is made prospectively.
3.13 Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Recoverable amount is the higher of fair value less costs to sell and value in use. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Impairment losses and reversals of impairment losses are recognised immediately in the income statement.
3.14 Provisions
A provision is recognised in the balance sheet when the Group 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.
3.15 Share based payments
Share options granted to the manager in respect of ongoing services are conditional upon the achievement of certain performance conditions.
The share options have been valued by an independent valuer in the financial statements as at the date the options were granted. The grant date fair value of options granted to the manager is recognised as an expense, with a corresponding increase in equity, over the period that the manager becomes unconditionally entitled to the options. The resulting value is amortised in the Income Statement over the expected life of the options. The options may have a dilutive effect upon the Earnings per Share and the Net Asset Value of the Group.
3.16 Use of estimates
The preparation of the Group's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the time of the Group's financial statements, and revenue and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates in the Group'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 Group's financial statements of changes in estimates in future periods could be significant.
3.17 Fair Value
The Directors consider the carrying value of all financial assets and liabilities to approximate their fair value except for 'Loans and advances to customers' which are at a fixed rate. Where the difference is significant, note disclosure is provided.
4. Administration and operating expenses
The net profit / (loss) for the year/period has been arrived at after charging the following items of expenditure:
|
|
|
Year ended 31 March 2009 |
|
15 month period ended 31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
Company |
|
|
|
|
|
Investment management fee |
|
1,779 |
|
1,810 |
|
Auditors' remuneration |
|
48 |
|
68 |
|
Directors' remuneration |
|
189 |
|
258 |
|
Share based payments |
|
600 |
|
750 |
|
Other operating and administrative expenses: |
|
|
|
|
|
- Professional fees |
|
262 |
|
275 |
|
- Other |
|
453 |
|
724 |
|
|
|
|
|
|
|
|
|
3,331 |
|
3,885 |
|
Kreditmart |
|
|
|
|
|
Auditors' remuneration |
|
52 |
|
52 |
|
Directors' remuneration |
|
173 |
|
108 |
|
Other operating and administrative expenses: |
|
|
|
|
|
- Depreciation |
|
379 |
|
161 |
|
- Salaries |
|
2,734 |
|
2,133 |
|
- Marketing expenses |
|
1,317 |
|
1,012 |
|
- Premises expenses |
|
1,055 |
|
793 |
|
- Credit losses and LLP |
|
1,780 |
|
168 |
|
- Other |
|
639 |
|
561 |
|
|
|
|
|
|
|
|
|
8,129 |
|
4,988 |
|
Flexinvest Limited |
|
|
|
|
|
Auditors' remuneration |
|
89 |
|
4 |
|
Other operating and administrative expenses: |
|
|
|
|
|
- Depreciation |
|
6 |
|
- |
|
- Salaries |
|
468 |
|
- |
|
- Marketing expenses |
|
4 |
|
- |
|
- Premises expenses |
|
229 |
|
- |
|
- Credit losses and LLP |
|
2 |
|
- |
|
- Other |
|
261 |
|
15 |
|
|
|
1,059 |
|
19 |
|
|
|
|
|
|
|
Total for the Group |
|
12,519 |
|
8,892 |
5. Tax
Group
|
5.1 Income tax expense |
|
Year ended 31 March 2009 |
|
15 month period ended 31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Kreditmart |
|
|
|
|
|
Current tax charge |
|
- |
|
22 |
|
Deferred tax expense/(credit)* |
|
688 |
|
(784) |
|
|
|
|
|
|
|
|
|
688 |
|
(762) |
|
Flexinvest Limited |
|
|
|
|
|
Current tax charge |
|
- |
|
24 |
|
Deferred tax credit* |
|
(126) |
|
- |
|
|
|
(126) |
|
24 |
|
|
|
|
|
|
|
Net tax charge/(credit) to the Income Statement |
|
562 |
|
(738) |
|
* Deferred tax expense comprises of: |
|
|
|
|
|
Origination and reversal of temporary differences |
|
(32) |
|
(798) |
|
Utilisation of tax losses |
|
(993) |
|
|
|
Reduction in tax rate |
|
(13) |
|
- |
|
Change in unrecognised deductible temporary differences |
|
1,600 |
|
- |
|
Recognition of previously unrecognised tax losses |
|
- |
|
14 |
|
|
|
562 |
|
(784) |
Group and Company
|
Tax rate reconciliation: |
|
|
|
|
|
|
|
|
|
Year ended 31 March 2009 |
|
Year ended 31 March 2009 |
|
15 month period ended 31 March 2008 |
|
15 month period ended 31 March 2008 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the period |
988 |
|
(6,321) |
|
4,477 |
|
12,884 |
|
Aurora Consolidated profit exempt from tax |
(4,866) |
|
- |
|
(7,749) |
|
- |
|
|
(3,878) |
|
(6,321) |
|
(3,272) |
|
12,884 |
|
|
|
|
|
|
|
|
|
|
Tax at nominal rate (Cyprus) |
97 |
|
- |
|
46 |
|
- |
|
Tax at nominal rate (Russia) |
(1,165) |
|
- |
|
(848) |
|
- |
|
Tax effect of income and expenses not deductable in taxable profit |
17 |
|
- |
|
64 |
|
- |
|
Effect of changes in tax rates |
13 |
|
- |
|
- |
|
- |
|
Effect of deferred tax asset not recognised |
1,600 |
|
- |
|
- |
|
- |
|
|
562 |
|
|
|
(738) |
|
- |
5.2 Group deferred tax assets and liabilities
Group
2009
|
|
|
Year ended 31 March 2009 |
|
Year ended 31 March 2009 |
|
Year ended 31 March 2009 |
|
Deferred tax asset/(liability) comprises: |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Assets |
|
Liabilities |
|
Net |
|
|
|
|
|
|
|
|
|
Loans to customers |
|
2 |
|
- |
|
2 |
|
Other assets |
|
45 |
|
- |
|
45 |
|
Other liabilities |
|
- |
|
(45) |
|
(45) |
|
Tax loss carry-forwards |
|
189 |
|
- |
|
189 |
|
|
|
|
|
|
|
|
|
|
|
236 |
|
(45) |
|
191 |
2008
|
|
|
15 month period ended 31 March 2008 |
|
15 month period ended 31 March 2008 |
|
15 month period ended 31 March 2008 |
|
Deferred tax asset/(liability) comprises: |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Assets |
|
Liabilities |
|
Net |
|
|
|
|
|
|
|
|
|
Placements with banks and other institutions |
|
- |
|
(3) |
|
(3) |
|
Loans to customers |
|
8 |
|
- |
|
8 |
|
Property, plant and equipment |
|
- |
|
(16) |
|
(16) |
|
Other assets |
|
43 |
|
- |
|
43 |
|
Tax loss carry-forwards |
|
752 |
|
- |
|
752 |
|
|
|
|
|
|
|
|
|
|
|
803 |
|
(19) |
|
784 |
|
5.3 Unrecognised deferred tax assets |
|
Year ended 31 March 2009 |
|
15 month period ended 31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
|
|
Tax losses |
|
1,600 |
|
- |
|
|
|
|
|
|
|
|
|
1,600 |
|
- |
A deferred tax asset has not been recognised in respect of the above tax losses because it is not probable that future taxable profit will be available against which the Group can utilise the benefits there from.
The Company is exempt from Guernsey taxation on income derived outside Guernsey and bank interest earned in Guernsey.
The Group is liable to pay tax at a rate of 20% (2008:24%) arising on its activities in Russia.
The Group is liable to pay tax at a rate of 10% (2008: 10%) arising on its activities in Cyprus.
Due to the presence in Russian commercial legislation, and tax legislation in particular, of provisions allowing more than one interpretation, and also due to the practice developed by the tax authorities of making arbitrary judgment of taxpayer activities, if a particular treatment based on Management's judgment of the Subsidiary's business activities was to be challenged by the tax authorities, Kreditmart Finance Limited and Flexinvest Limited may be assessed for additional taxes, penalties and interest. Such uncertainty may relate to valuation of financial instruments, loss and impairment provisions and market level for deals' pricing. The Entity believes that it has already made all tax payments, and therefore no allowance has been made in the financial statements. Tax years remain open to review by the tax authorities for three years.
Kreditmart and Flexinvest's principal business activities are within the Russian Federation. Laws and regulations affecting the business environment in the Russian Federation are subject to rapid changes and Kreditmart's assets and operations could be at risk due to negative changes in the political and business environment.
6. Earnings per share
|
|
31 March 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
Group |
|
Company |
|
Group |
|
Company |
|
The calculation of the basic and diluted earnings per share is based on the following data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the purposes of basic and diluted loss per share being net loss attributable to equity holders of the parent |
426 |
|
(6,321) |
|
5,215 |
|
12,884 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares for the purpose of basic profit/(loss) per share (in thousands): |
75,000 |
|
75,000 |
|
75,000 |
|
75,000 |
|
|
|
|
|
|
|
|
|
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
|
|
Options |
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares for the purpose of diluted profit/(loss) loss per share (in thousands): |
75,000 |
|
75,000 |
|
75,000 |
|
75,000 |
|
|
|
|
|
|
|
|
|
|
Earnings per share - Basic and Diluted |
0.57 |
|
(8.43) |
|
6.95 |
|
17.18 |
The potential shares as identified in note 23, are anti-dilutive and as such have not been included in the calculation of diluted earnings per share for the year ended 31 March 2009 and the 15 month period ended 31 March 2008.
7. Goodwill
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Cost: |
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2008 and 1 January 2007 |
|
169 |
|
- |
|
Recognised on acquisition of Flexinvest Limited |
|
- |
|
171 |
|
|
|
|
|
|
|
Exchange gain/(loss) for the year/period |
|
67 |
|
(2) |
|
|
|
|
|
|
|
Impairment |
|
(236) |
|
- |
|
|
|
|
|
|
|
At 31 March 2009 and 31 March 2008 |
|
- |
|
169 |
In accordance with the valuation at 31 March 2009 performed in respect of Kreditmart by an independant valuer (see note 10), the goodwill acquired has been impaired in full. This is as a result of significant decreases in the Russian mortgage market which has resulted in the reduction in value of the consumer loans. No impairment loss was recognised in respect of goodwill in the period ended 31 March 2008.
8. Intangible assets
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
Cost: |
|
|
|
|
|
Recognised on acquisition of VUB (see note 10) |
|
2,680 |
|
- |
|
|
|
|
|
|
|
Currency revaluation for the 11 month period 6 May 2008 to 31 March 2009 |
|
(407) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance |
|
2,273 |
|
- |
The valuation of the licence was considered by the Valuation Committee and based on fair market values less costs to sell, it was determined that no impairment was required.
9. Plant and equipment
|
|
|
Fixtures &
|
|
Furniture &
|
|
|
|
2009
|
|
fittings
|
|
equipment
|
|
Total
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
At 1 April 2008
|
|
459
|
|
1,005
|
|
1,464
|
|
|
|
|
|
|
|
|
|
Additions - Kreditmart and Flexinvest
|
|
30
|
|
138
|
|
168
|
|
Additions - at acquisition of VUB
|
|
-
|
|
19
|
|
19
|
|
Disposals
|
|
(33)
|
|
(24)
|
|
(57)
|
|
Exchange movements on disposals
|
|
(27)
|
|
15
|
|
(12)
|
|
|
|
|
|
|
|
|
|
At 31 March 2009
|
|
429
|
|
1,153
|
|
1,582
|
|
|
|
|
|
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
At 1 April 2008
|
|
(78)
|
|
(119)
|
|
(197)
|
|
|
|
|
|
|
|
|
|
Charge for the period
|
|
(196)
|
|
(189)
|
|
(385)
|
|
Disposals
|
|
15
|
|
4
|
|
19
|
|
|
|
|
|
|
|
|
|
At 31 March 2009
|
|
(259)
|
|
(304)
|
|
(563)
|
|
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
|
|
At 31 March 2009
|
|
170
|
|
849
|
|
1,019
|
|
2008
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
At 1 January 2007
|
|
-
|
|
3
|
|
3
|
|
|
|
|
|
|
|
|
|
Additions
|
|
459
|
|
1,002
|
|
1,461
|
|
|
|
|
|
|
|
|
|
At 31 March 2008
|
|
459
|
|
1,005
|
|
1,464
|
|
|
|
|
|
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
At 1 January 2007
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Charge for the period
|
|
(78)
|
|
(119)
|
|
(197)
|
|
|
|
|
|
|
|
|
|
At 31 March 2008
|
|
(78)
|
|
(119)
|
|
(197)
|
|
|
|
|
|
|
|
|
|
At 31 March 2008
|
|
381
|
|
886
|
|
1,267
|
10. Investment in subsidiaries - at fair value through profit and loss
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
Kreditmart |
|
|
|
|
|
At 1 April 2008, and 1 January 2007 |
|
27,972 |
|
12,500 |
|
Additions |
|
- |
|
10,094 |
|
Fair value revaluation * |
|
(11,423) |
|
5,378 |
|
At 31 March 2009, and 31 March 2008 |
|
16,549 |
|
27,972 |
|
|
|
|
|
|
|
Flexinvest Limited |
|
|
|
|
|
At 1 April 2008, and 1 January 2007 |
|
6,451 |
|
- |
|
Additions |
|
- |
|
6,451 |
|
Fair value revaluation * |
|
- |
|
- |
|
At 31 March 2009, and 31 March 2008 |
|
6,451 |
|
6,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000 |
|
34,423 |
* The revaluation calculations performed on Kreditmart included the value of Flexinvest Limited as at 31 March 2009, and as such, no revaluation was performed on the individual subsidiary companies.
The valuation of the subsidiaries and investments at 31 March 2009 and 31 March 2008 was performed by an independant reputable valuer with the necessary experience in valuing investments of this nature, and was approved by the Valuation Committee.
Methodologies and assumptions used in valuing investments and investments in subsidiaries:
Multiples Valuations:
The industry valuation benchmark methodology 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.
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 investments and investments in subsidiaries were performed using either a price/book ratio or enterprise vale/revenue multiple. Key assumptions were as follows:
- Liquidity discount: 5%-25%
- Control Premium: 20%
- Minority discount: 10%
28% of the portfolio was valued using a price/book valuation approach. The remaining 72% of the portfolio was valued using an enterprise value/revenue multiple approach.
Discounted Cash Flow Analysis:
The discounted cash flow methodology 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. . Due to the early stage of the business, a further discount was applied to reflect the inherent risk in the Kreditmart business proving successful.
The financial statements of the Group consolidate the results, assets and liabilities of the subsidiary companies listed below:
|
Name of subsidiary undertaking |
|
Country of incorporation |
Class of share |
% of class held |
Principal activity |
|
|
|
|
|
|
|
|
Kreditmart Finance Limited |
|
Cyprus |
Ordinary |
100.0% |
Consumer finance |
|
Flexinvest Limited |
|
Cyprus |
Ordinary |
100.0% |
Investment holding |
|
Volzhski Universalny Bank ('VUB') Limited* |
|
Russia |
Ordinary |
100.0% |
Banking and finance |
* VUB is held directly by Kreditmart and Flexinvest (see note 11) and is an indirectly held subsidiary of Aurora Russia Limited.
11. Acquisition of subsidiary
|
|
|
VUB |
||
|
|
|
|
Fair value on acquisition at 06 May 2008 |
|
|
|
|
|
|
£'000 |
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
|
|
19 |
|
Intangibles (banking licences) |
|
|
|
2,680 |
|
Loans receivable |
|
|
|
1,689 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Trade and other receivables |
|
|
|
556 |
|
Tax add back |
|
|
|
44 |
|
Cash and cash equivalents |
|
|
|
1,740 |
|
Current liabilities |
|
|
|
|
|
Customer deposits |
|
|
|
(1,675) |
|
Other liabilities |
|
|
|
(22) |
|
|
|
|
|
|
|
|
|
|
|
5,031 |
|
|
|
|
|
|
|
Goodwill on acquisition |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
5,031 |
|
|
|
|
|
|
|
Net cash paid on acquisition of VUB: |
|
|
|
|
|
Purchase price |
|
|
|
5,031 |
|
Less: Cash received on acquisition |
|
|
|
(1,740) |
|
Less: Balance owing on acquisition of VUB (see below) |
|
|
(209) |
|
|
Net Cash Paid on acquisition of VUB |
|
|
|
3,082 |
Date of acquisition 06 May 2008
The cost of acquisition was paid entirely in cash. Flexinvest Limited purchased a 89.9% stake in VUB, the remaining 10.1% stake being purchased by Kreditmart, its fellow subsidiary of Aurora Russia Limited. The carrying amounts of the assets and liabilities of the acquiree reflected above equal their fair values.
The amount of the acquiree's loss since the acquisition date which is included in the Consolidated loss of the Group is £553,941.
Since the acquisition date is close to the beginning of the financial year, the effect on the Consolidated profit or loss if the acquisition had been at the beginning of the year is immaterial.
Potential contingencies exist in relation to the conduct of business formerly carried out by VUB. A retention from the purchase consideration has been made to cover any potential claims that may arise (the last instalment of 10,000,000 RUR was paid on 13 May 2009) and in the opinion of the directors any contingent liability in respect of the past business of VUB is considered remote.
12. Investments - at fair value through profit and loss
|
|
31 March 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
Whitebrooks Investments Limited |
13,600 |
|
13,600 |
|
7,861 |
|
7,861 |
|
|
|
|
|
|
|
|
|
|
Unistream Bank |
25,000 |
|
25,000 |
|
17,561 |
|
17,561 |
|
|
|
|
|
|
|
|
|
|
Grindelia Holdings |
13,200 |
|
13,200 |
|
17,418 |
|
17,418 |
|
|
|
|
|
|
|
|
|
|
Quoted investments |
33 |
|
- |
|
58 |
|
- |
|
|
|
|
|
|
|
|
|
|
Total investments at fair value through profit and loss |
51,833 |
|
51,800 |
|
42,898 |
|
42,840 |
Change in fair value of investments at fair value through profit and loss
|
|
Year ended 31 March 2009 |
|
Year ended 31 March 2009 |
|
1 January 2007 to 31 March 2008 |
|
1 January 2007 to 31 March 2008 |
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
Whitebrooks Investments Limited |
4,350 |
|
4,350 |
|
347 |
|
347 |
|
|
|
|
|
|
|
|
|
|
Unistream Bank |
7,439 |
|
7,439 |
|
7,224 |
|
7,224 |
|
|
|
|
|
|
|
|
|
|
Grindelia Holdings |
(4,233) |
|
(4,233) |
|
800 |
|
800 |
|
|
|
|
|
|
|
|
|
|
Quoted investments |
(25) |
|
- |
|
(14) |
|
- |
|
|
|
|
|
|
|
|
|
|
Kreditmart and Flexinvest (see note 10) |
- |
|
(11,423) |
|
- |
|
5,378 |
|
|
|
|
|
|
|
|
|
|
Total unrealised gains/(losses) |
7,531 |
|
(3,867) |
|
8,357 |
|
13,749 |
The Company acquired a 40.3% stake in Whitebrooks Investments Limited ('Whitebrooks') on 24 July 2006, diluted to 37.1% after the agreement of a management option scheme. In addition to its investment in the shares of Whitebrooks, the Company has provided the investee company with a loan facility of US$5 million. Interest accrues daily on drawn down funds at a rate of 12% pa on a 360 day year basis, and is capitalised monthly. The drawn down amounts on the loan are repayable within one year of the date of drawdown. In the event of default, a default interest premium of 1% shall accrue on the overdue amount. As per the Facility Agreement dated 24 July 2006 the loan is convertible into ordinary shares of the borrower. The loan is revalued into sterling at the rate of exchange ruling at the balance sheet date. Any resulting gains or losses are taken to the income statement.
On 27 December 2007 the loan principal amount drawn down on 27 December 2006 plus accrued interest was converted into ordinary shares in accordance with the facility agreement. The conversion resulted in an increase in the diluted holding as at 31 December 2007 to 39.1% and was further increased to 39.4% as a result of the buyback of shares by Whitebrooks from the former chief executive. The conversion of these options is subject to certain trigger events in the loan agreement.
On 22 December 2008, the Board of Directors of Aurora Russia Limited approved a further US$1,000,000 convertible loan facility to Whitebrooks Investments Limited. Interest accrues daily at a rate of 13% pa on a 360 day year basis, and is capitalised monthly. The loan is repayable within 12 months. Per the agreement, the Company will have the option to convert all outstanding principal and accrued interest into equity of the borrower at the valuation of $28,000,000. This replaces the conversion valuation in the existing loan facility. The drawn down amounts on the loan are repayable within one year of the date of drawdown. In the event of default, a default interest premium of 1% shall accrue on the overdue amount. $500,000 of this facility was advanced to the borrower on 30 March 2009.
The Company committed to acquire a 26% stake in Unistream Bank ('Unistream') on 30 November 2006, conditional upon Central Bank of Russia ('CBR') approval. At 30 June 2007 funds had been drawn down from this commitment to acquire a 17.7% stake. The remaining 8.3% stake was acquired on 26 July 2007 once the CBR had given its approval for the Company to own more than 20% of a Russian bank.
As a result of the size of the stakes in these two companies, Whitebrooks and Unistream could potentially qualify as associated companies, which would normally require that they be equity accounted in the books of the Company. However, the Company has taken advantage of the exemption available to it under IAS 28, and hence accounts for these as investments at fair value through profit and loss.
In December 2007 the company acquired a 24.3% shareholding in Grindelia Holdings Limited, which owns 99.5% of the retail chain that operate under the brands 'SuperStroy' and 'StroyArsenal'.
The valuation of the investments at 31 March 2009 and 31 March 2008 was performed by an independant reputable valuer with the necessary experience in valuing investments of this nature, and was approved by the Valuation Committee. The methods and assumptions used in determining the valuations of investments are discussed in note 10.
In the view of the Valuation Committee, the value of the investment in Whitebrooks Investments Limited, Unistream Bank, and Grindelia Holdings Limited as at 31 March 2009 was estimated at £13.6 million (31 March 2008: £6.03 million), £25 million (31 March 2008: £17.56 million), and £13.2 million (31 March 2008: £17.42 million) respectively, resulting in a decrease of the value of total investments below historical cost in the Company accounts.
During the year the Company acquired a further a loan facility of US$1 million in Whitebrooks including options which if exercised would give the Company over 50% ownership of Whitebrooks Limited. The Company's ability to exercise these options is subject to certain trigger events including the sale of OSG and as such does not give the Company control of Whitebrooks Limited. As such the Directors consider the nature of this loan to be quasi equity in nature and have reclassified this loan as part of Investments and is valued on this basis.
13. Loans and advances to customers
|
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
Residential mortgages |
|
|
9,569 |
|
13,922 |
|
|
|
|
|
|
|
|
Reconciliation of impairment loss allowance on loans to customers: |
|
|
|
||
|
|
|
|
|
|
|
|
Balance at beginning of the year/period |
|
|
195 |
|
- |
|
Allowance for loan losses |
|
|
1,722 |
|
195 |
|
Translation differences |
|
|
(5) |
|
- |
|
|
|
|
1,912 |
|
195 |
The following table details the carrying value of assets that are impaired and the ageing of those that are past due but not impaired:
|
2009 |
|
Neither past due nor impaired |
|
Financial assets that have been impaired |
|
Balance at 31 March 2009 |
|
|
|
|
|
|
|
|
|
Loans to customers |
|
6,441 |
|
4,856 |
|
11,297 |
|
Interest |
|
34 |
|
150 |
|
184 |
|
Loan loss allowance |
|
(12) |
|
(1,900) |
|
(1,912) |
|
|
|
6,463 |
|
3,106 |
|
9,569 |
|
2008 |
|
Neither past due nor impaired |
|
Financial assets that have been impaired |
|
Balance at 31 March 2008 |
|
|
|
|
|
|
|
|
|
Loans to customers |
|
13,237 |
|
793 |
|
14,030 |
|
Interest |
|
73 |
|
14 |
|
87 |
|
Loan loss allowance |
|
(25) |
|
(170) |
|
(195) |
|
|
|
13,285 |
|
637 |
|
13,922 |
The delinquent loans as determined by the Risk Management Department of Kreditmart and Flexinvest for the portfolio is as follows: 18 Accounts comprising 43% of the balance of the loan portfolio. For these loans, a specific allowance was made of £1,900,102. For the non-delinquent loans, a portfolio impairment of 0.2% of outstanding value is provided for. See note 25 'Credit Risk' for more in this regard.
The mortgages are secured upon borrowers' private residences, are repayable in equal monthly instalments and mature between 2014 and 2038 (average maturity of 29 years). Interest is charged at fixed rates at an average annual interest rate of 11.81% (range between 10.5% and 14.9% depending on each borrower). The collateral pledged in respect of these mortgages is £8,716,313 (2008: £13,881,000).
The fair value of the loans to customers were determined using a market related 14.9% discount rate on the loans denominated in Roubles. The loans denominated in US Dollars were discounted at 13.3%. Based on these criteria the fair value of the loans were determined to be £8,055,453 (balance recognised using amortised cost: £9,658,865).
14. Trade and other receivables
|
|
|
31 March 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Sundry debtors and prepayments |
|
1,690 |
|
901 |
|
1,367 |
|
401 |
|
Bank interest receivable |
|
21 |
|
16 |
|
56 |
|
56 |
|
Amount receivable from related party |
|
- |
|
195 |
|
- |
|
147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,711 |
|
1,112 |
|
1,423 |
|
604 |
The related party balance is due from Flexinvest Limited and relate to the due diligence costs of the VUB transaction (2008: Aurora Investment Advisors Limited), and is interest free, unsecured and repayable on demand.
15. Derivative liabilities
|
|
|
Group and Company |
||
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
Current derivative liability |
|
|
|
|
|
|
|
|
|
|
|
Sell US$ 1,200,000 (maturity date 13 November 2008) |
|
- |
|
1,254 |
|
Sell US$ 4,000,000 (maturity date 14 May 2009) |
|
2,685 |
|
- |
|
Buy US$ 4,000,000 (maturity date 14 May 2009) |
|
(2,731) |
|
- |
|
|
|
(46) |
|
1,254 |
|
Valuation of US$ liability (maturity date 13 November 2008) - US$ 3,700,00 |
|
- |
|
(1,266) |
|
Valuation of US$ liability at 31 March 2009 - US$ 4,000,00 |
|
(2,792) |
|
- |
|
Valuation of US$ asset at 31 March 2009 - US$ 4,000,00 |
|
2,792 |
|
|
|
|
|
(46) |
|
(12) |
Derivative revaluation reconciliation
|
Loss realised on forward exchange contracts |
|
(491) |
|
|
|
Forward exchange liability at 31 March 2009 as above |
|
(46) |
|
81 |
|
|
|
|
|
|
|
Add: Forward exchange liability at 31 March 2008, 31 December 2006 |
|
12 |
|
8 |
|
|
|
|
|
|
|
|
|
(525) |
|
89 |
The Company's policy is to enter into forward foreign currency contracts on an ad hoc basis, to hedge the Company's exposure to currency risk. Fair values are calculated by reference to current forward exchange rates for contracts with similar maturity profiles. They are initially recognised at fair value on the date on which the derivative contract is entered into and subsequently remeasured to their fair value.
Changes in fair values of derivatives and amounts realised on closure of contracts are included in the income statement within (losses)/gains on derivatives.
The Company has a balance of £850,000 included in cash and cash equivalents which is held as security by the counterparty for the forward exchange contracts oustanding at year end.
16. Trade and other payables
|
|
|
31 March 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Expense accruals |
|
742 |
|
129 |
|
648 |
|
103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
742 |
|
129 |
|
648 |
|
103 |
17. Share capital
|
|
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
|
|
|
£'000 |
|
£'000 |
|
Authorised share capital: |
|
|
|
|
|
|
|
200,000,000 Ordinary Shares of 1p each: |
|
|
|
2,000 |
|
2,000 |
|
|
|
|
|
|
|
|
|
Issued share capital: |
|
|
|
|
|
|
|
75,000,000 fully paid Ordinary Shares of 1p each: |
|
|
|
750 |
|
750 |
The Company has one class of ordinary shares which carry no right to fixed income.
2 shares were issued on 24 February 2006 for a consideration of £1 each.
74,999,998 shares were issued on 20 March 2006 for a cash consideration of £1 each.
The Share Premium balance was transferred to Special Reserve (see below).
Shares reserved for issue under the share option scheme are detailed in note 23.
18. Special reserve
The Special reserve is a distributable reserve to be used for all purposes permitted under Guernsey company law, including the buy back of shares and the payment of dividends.
19. Share options reserve
|
|
|
31 March 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Balance as at 1 April 2008, and 1 January 2007 |
|
1,220 |
|
1,220 |
|
470 |
|
470 |
|
|
|
|
|
|
|
|
|
|
|
Recognised fair value of share options issued during the year/period |
|
600 |
|
600 |
|
750 |
|
750 |
|
|
|
|
|
|
|
|
|
|
|
Balance as at 31 March 2009, and 31 March 2008 |
|
1,820 |
|
1,820 |
|
1,220 |
|
1,220 |
Details of share-based payments are shown in note 23.
20. Retained earnings
|
|
|
31 March 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Balance as at 1 April 2008, and 1 January 2007 |
|
4,894 |
|
12,861 |
|
(321) |
|
(23) |
|
|
|
|
|
|
|
|
|
|
|
Net profit/(loss) for the year/period |
|
426 |
|
(6,321) |
|
5,215 |
|
12,884 |
|
|
|
|
|
|
|
|
|
|
|
Balance as at 31 March 2009, and 31 March 2008 |
|
5,320 |
|
6,540 |
|
4,894 |
|
12,861 |
Any surplus or deficit arising from net profits or losses after payment of dividends is taken to this reserve.
21. Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities that hedge the Company's net investment in a foreign subsidiary.
22. Net asset value per share
|
|
31 March 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
Net assets for the purposes of basic and diluted net asset value per share attributable to equity holders of the parent: (£'000) |
£77,830 |
|
£79,860 |
|
£77,609 |
|
£85,581 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares for the purpose of basic earnings per share:(in thousands): |
75,000 |
|
75,000 |
|
75,000 |
|
75,000 |
|
|
|
|
|
|
|
|
|
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
|
|
Options |
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares for the purpose of diluted earnings per share: |
75,000 |
|
75,000 |
|
75,000 |
|
75,000 |
|
|
|
|
|
|
|
|
|
|
Net asset value per share - Basic and Diluted |
103.8p |
|
106.5p |
|
103.5p |
|
114.1p |
23. Share based payments
Terms
The Company has granted an option to the Manager to subscribe for ordinary shares representing 20% of the issued share capital of the Company after the exercise of the Manager option at the placing price per ordinary share (subject to adjustments for any dividends per share paid by the Company prior to exercise by the Manager); provided that the total shareholder return on the ordinary shares including distributions to shareholders, as compared to the placing price has increased by at least 12% per annum from the date of admission until exercise measured by reference to the average of the closing mid-market prices of the ordinary shares in the three months prior to the date on which the Manager option becomes exercisable (the 'hurdle rate'), and, provided further that if any additional ordinary shares are issued following admission as part of any secondary fundraising, the exercise price of the Manager option in respect of such additional shares shall be the issue price paid for such shares pursuant to such secondary fundraising (subject to adjustments for any dividends per share paid by the Company prior to exercise by the Manager).
The Manager option is exercisable at any time during the period between the third and tenth anniversaries of the date of admission; provided that the hurdle rate has been met prior to the date of exercise of the Manager option. The Manager option shall also become exercisable at any time between the date of admission and the tenth anniversary thereof in the event of a takeover of the Company or the Company's liquidation. In such circumstances, the Manager does not need to satisfy the hurdle rate in order to exercise the Manager option.
|
Change in the year/period |
|
|
|
|
|
|
|
|
|
Number |
|
Number |
|
Exercise price |
|
|
|
'000 |
|
'000 |
|
|
|
Options as at 1 April 2008, and 1 January 2007 |
|
18,750 |
|
18,750 |
|
100p |
|
|
|
|
|
|
|
|
|
Options granted during the year/period |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Options as at 31 March 2009, and 31 March 2008 |
|
18,750 |
|
18,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable options at the end of the year/period |
|
- |
|
- |
|
|
The options outstanding at 31 March 2009 had a remaining contractual life of 7 years (31 March 2008: 8 years).
Calculation of the fair value of equity settled share based payments
All share based payments were valued at the date of issue using the Monte Carlo model. The key inputs to this model that drive the option value are:
|
Share price at grant of options |
|
|
|
|
|
100p |
|
Exercise price |
|
|
|
|
|
100p |
|
Expected volatility |
|
|
|
|
|
20% |
|
Risk free rate |
|
|
|
|
|
4.39% |
|
Effective dividend yield |
|
|
|
|
|
0% |
Based on the above valuation the total value of the options granted at the date of grant was £3,000,000.
The directors have estimated that the hurdle rate will be achieved, and hence the options will vest, after 5 years. The value of the options will be charged to the income statement on a pro rata basis over the course of the 5 years ending 20 March 2011. The charge arising for the year ended 31 March 2009 is £600,000 (15 month ended 31 March 2008: £750,000).
24. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
|
Group |
|
|
|
31 March 2009 |
|
31 March 2008 |
|
|
|
|
|
£'000 |
|
£'000 |
| Less than 1 year |
602 |
1,239 |
||||
|
1 - 5 years |
|
|
|
47 |
|
491 |
|
|
|
|
|
649 |
|
1,730 |
|
|
|
|
|
|
|
|
The Group leases a number of premises under operating leases. The leases typically run for a period of 1 - 5 years.
25. 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.
Capital Management
The capital structure of the Group at year end consists of cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings. The Group has no return on capital benchmark, but the Board continue to monitor the balance of the overall capital structure so as to maintain investor and market confidence. The Group is not subject to any external capital requirements.
In the 2008 Annual General Meeting, the Board of Directors renewed their ability to repurchase 14.99% of shares each period in accordance with The Companies (Guernsey) Law 2008.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its s liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
The Group's liabilities are short-term in nature and are payable in the normal operating cycle. Hence no maturity analysis has been presented.
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 high credit-ratings assigned by international credit-rating agencies. Forward exchange contracts are held with The Royal Bank of Scotland International, a highly reputable counterparty with a high credit rating. The Company monitors the placement of cash balances on an ongoing basis. No credit ratings of financial assets held by the group have been graded by an internationally regarded agency.
The Company is also exposed to credit risk in respect of the loans granted to Whitebrooks Investments Limited, with a maximum exposure equal to the value of the loans advanced. Under the terms of the loan agreement, should the loans not be repaid by the maturity date, they are convertible at the option of the Company into ordinary shares of the borrower at an agreed valuation (see note 12). This puttable option by the Company per note 12 mitigates the credit risk to some extent.
Kreditmart and Flexinvest are exposed to credit risk in respect of mortgage loans, arising from possible default of its customers. The credit risk is mitigated by the Risk Department, who on a monthly basis compile a Portfolio Quality report, which analyse the key trends and highlights any risk areas, as well as a review of any delinquent and potentially delinquent accounts. The Risk Department also mitigate the credit risk through the calculation of the Value at Risk ('VAR') to forecast the level of estimated losses, calculate the Loan Loss Provisions ('LLP') on a monthly basis based on Central Bank of Russia Federation instructions and calculate the limits of insurance responsibilities of Insurance companies that provide the customers mortgage insurance.
The Financial Department of Kreditmart and Flexinvest exercises control over the risk in the legislation and regulatory arena and assesses its influence on the Group's activity. This approach allows the Group to minimize potential losses from the investment climate fluctuations in the Russian Federation. The geographical concentration of the assets and liabilities of the subsidiaries of Aurora Russia Limited are set out below:
|
|
|
31 March 2009 |
||
|
|
|
Russian Federation |
|
Cyprus |
|
ASSETS |
|
% |
|
% |
|
|
|
|
|
|
|
Property, plant and equipment & intangible assets |
|
98 |
|
2 |
|
Investments |
|
- |
|
100 |
|
Long term third party loans receivable |
|
100 |
|
- |
|
Deferred tax asset |
|
21 |
|
79 |
|
Trade and other receivables |
|
99 |
|
1 |
|
Cash and cash equivalents |
|
6 |
|
94 |
|
Banking licence |
|
100 |
|
- |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Customer account and deposits |
|
100 |
|
- |
|
Trade and other payables |
|
94 |
|
6 |
|
Taxation payable |
|
- |
|
100 |
Kreditmart and Flexinvest do not have any Sub-prime customers due to criteria guidelines which do not allow loans to be granted to borrowers without income confirmation documents. Loan payments are current except for £280,718 which is 60 days overdue as at 31 March 2009 (2008: £253,215: 60 days overdue) and £1,694,239 which is 120 days overdue as at 31 March 2009 (2008:NIL). At 31 March 2009, a Loan Impairment Provision in respect of these loans was raised of £1,912,982 (2008:£195,219).
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 the US Dollar. All of the Company's equity investments are denominated in Russian Rouble and loans made to Whitebrooks Investments Limited are in US Dollars. The Company does not hedge its currency exposure on equity investments but has put in place hedges on monetary assets to mitigate its US Dollar exposure. The Company does not use such currency derivatives for speculative purposes. See note 15 for detail of currency derivative contracts entered into during the current year and prior period, as well as those outstanding at year end/period end.
Currency Risk Table
An analysis of the Group's net currency exposure is as follows:
|
As at 31 March 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency of denomination
|
Sterling |
US Dollars |
Russian Roubles |
Other |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Total assets |
|
12,412 |
5,108 |
61,039 |
59 |
78,618 |
|
Total liabilities |
|
(45) |
(4) |
(739) |
- |
(788) |
|
|
|
|
|
|
|
|
|
Net currency exposure |
|
12,367 |
5,104 |
60,300 |
59 |
77,830 |
|
As at 31 March 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency of denomination |
Sterling |
US Dollars |
Russian Roubles |
Other |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Total assets |
|
16,908 |
8,890 |
52,346 |
125 |
78,269 |
|
Total liabilities |
|
(143) |
(81) |
(416) |
(20) |
(660) |
|
Off balance sheet assets |
|
1,254 |
- |
- |
- |
1,254 |
|
Off balance sheet liabilities |
|
- |
(1,254) |
- |
- |
(1,254) |
|
|
|
|
|
|
|
|
|
Net currency exposure |
|
18,019 |
7,555 |
51,930 |
105 |
77,609 |
An analysis of the Company's net currency exposure is as follows:
|
As at 31 March 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency of denomination
|
Sterling |
US Dollars |
Russian Roubles |
Other |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Total assets |
|
5,034 |
168 |
74,833 |
- |
80,035 |
|
Total liabilities |
|
(175) |
- |
- |
- |
(175) |
|
|
|
|
|
|
|
|
|
Net currency exposure |
|
4,859 |
168 |
74,833 |
- |
79,860 |
|
As at 31 March 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency of denomination
|
Sterling |
US Dollars |
Russian Roubles |
Other |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Total assets |
|
8,398 |
1,832 |
75,466 |
- |
85,696 |
|
Total liabilities |
|
(115) |
- |
- |
- |
(115) |
|
Off balance sheet assets |
|
1,254 |
- |
- |
- |
1,254 |
|
Off balance sheet liabilities |
|
- |
(1,254) |
- |
- |
(1,254) |
|
|
|
|
|
|
|
|
|
Net currency exposure |
|
9,537 |
578 |
75,466 |
- |
85,581 |
Foreign Currency Sensitivity
The following table details the Group's sensitivity to a 20% (15 month period ended 31 March 2008: 10%) strengthening of the Sterling against each of the relevant foreign exchange currencies. 20% (15 month period ended 31 March 2008: 10%) 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 2009 |
|
31 March 2009 |
|
31 March 2008 |
|
31 March 2008 |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
Group |
|
Company |
|
Group |
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Russian Rouble |
|
(12,060) |
|
(14,967) |
|
(5,109) |
|
(7,547) |
|
US Dollar |
|
(1,021) |
|
(34) |
|
(896) |
|
(58) |
|
Euro |
|
(12) |
|
- |
|
(25) |
|
- |
A 20% (15 month period ended 31 March 2008: 10%) 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.
Market risk
Market price risk arises principally from uncertainty concerning future values of financial instruments used in the Group's operations. It represents the potential loss the Group 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 Group and Company's market pricing exposure at year end:
|
At 31 March 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
|
Fair Value £'000 |
|
% of Net Assets |
|
Fair Value £'000 |
|
% of Net Assets |
|
|
|
|
|
Group |
|
Company |
||||
|
Investments at fair value through profit & loss - |
|
|
|
|
|
|
|
|
|
|
|
Unlisted Equities |
|
12,10 |
|
51,800 |
|
66.56 |
|
74,800 |
|
93.66 |
|
Quoted investments |
|
12 |
|
33 |
|
0.04 |
|
- |
|
- |
|
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
- Open forwards |
|
15 |
|
(46) |
|
(0.06) |
|
(46) |
|
(0.06) |
|
At 31 March 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value £'000 |
|
% of Net Assets |
|
Fair Value £'000 |
|
% of Net Assets |
|
|
|
|
|
Group |
|
Company |
||||
|
Investments at fair value through profit & loss - |
|
|
|
|
|
|
|
|
|
|
|
Unlisted Equities |
|
12,10 |
|
42,840 |
|
55.12 |
|
75,431 |
|
88.14 |
|
Quoted investments |
|
12 |
|
58 |
|
0.07 |
|
- |
|
- |
|
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
- Open forwards |
|
15 |
|
(12) |
|
(0.02) |
|
(12) |
|
(0.01) |
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 £10,357,400 (2008: increase of 10% in the valuations resulting in an increase in profit of £4,099,600) for the Group and £14,950,800 (2008: increase of 10% in the valuations resulting in an increase in profit of £7,542,000) for the Company. This sensitivity rate was determined by the Directors as reasonable taking market conditions into account.
If the valuation of investments had been 20% (2008: 10%) lower it would have had the equal but opposite effect, on the basis that all other variables remain the same.
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 Group is exposed to interest rate risk as a result of the cash and bank balances that are invested at floating interest rates.
The following table details the Group and Company's exposure to interest rate risk as at period end by the earlier of contractual maturities or re-pricing:
|
Group |
|
|
|
|
|
|
|
|
|
At 31 March 2009: |
Non interest bearing |
Less than 1 month |
1-3 months |
3 months to 1 year |
1 to 2 years |
2 to 5 years |
Greater than 5 years |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Assets |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
57,429 |
- |
- |
- |
- |
- |
- |
57,429 |
|
Floating interest rate instruments |
- |
2,091 |
- |
- |
- |
- |
- |
2,091 |
|
Fixed interest rate instruments * |
- |
8,561 |
59 |
1,266 |
353 |
1,058 |
7,801 |
19,098 |
|
Total |
57,429 |
10,652 |
59 |
1,266 |
353 |
1,058 |
7,801 |
78,618 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
(742) |
- |
(46) |
- |
- |
- |
- |
(788) |
|
Floating interest rate instruments |
- |
- |
- |
- |
- |
- |
- |
- |
|
Fixed interest rate instruments |
- |
- |
- |
- |
- |
- |
- |
- |
|
Total |
(742) |
- |
(46) |
- |
- |
- |
- |
(788) |
|
Net Exposure |
56,687 |
10,652 |
13 |
1,266 |
353 |
1,058 |
7,801 |
77,830 |
|
At 31 March 2008: |
Non interest bearing |
Less than 1 month |
1-3 months |
3 months to 1 year |
1 to 2 years |
2 to 5 years |
Greater than 5 years |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Assets |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
47,508 |
- |
- |
- |
- |
- |
- |
47,508 |
|
Floating interest rate instruments |
- |
457 |
- |
- |
- |
- |
- |
457 |
|
Fixed interest rate instruments |
- |
8,339 |
6,407 |
3,372 |
1,737 |
3,473 |
6,976 |
30,304 |
|
Total |
47,508 |
8,796 |
6,407 |
3,372 |
1,737 |
3,473 |
6,976 |
78,269 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
(660) |
- |
- |
- |
- |
- |
- |
(660) |
|
Floating interest rate instruments |
- |
- |
- |
- |
- |
- |
- |
- |
|
Fixed interest rate instruments |
- |
- |
- |
- |
- |
- |
- |
- |
|
Total |
(660) |
- |
- |
- |
- |
- |
- |
(660) |
|
Net Exposure |
46,848 |
8,796 |
6,407 |
3,372 |
1,737 |
3,473 |
6,976 |
77,609 |
|
Company |
|
|
|
|
|
|
|
|
|
At 31 March 2009: |
Non interest bearing |
Less than 1 month |
1-3 months |
3 months to 1 year |
1 to 2 years |
2 to 5 years |
Greater than 5 years |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Assets |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
75,896 |
- |
- |
- |
- |
- |
- |
75,896 |
|
Floating interest rate instruments |
- |
2,091 |
- |
- |
- |
- |
- |
2,091 |
|
Fixed interest rate instruments |
- |
1,048 |
- |
1,000 |
- |
- |
- |
2,048 |
|
Total |
75,896 |
3,139 |
- |
1,000 |
- |
- |
- |
80,035 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
(129) |
- |
(46) |
- |
- |
- |
- |
(175) |
|
Floating interest rate instruments |
|
- |
- |
- |
- |
- |
- |
- |
|
Fixed interest rate instruments |
|
- |
- |
- |
- |
- |
- |
- |
|
Total |
(129) |
- |
(46) |
- |
- |
- |
- |
(175) |
|
Net Exposure |
75,767 |
3,139 |
(46) |
1,000 |
- |
- |
- |
79,860 |
|
At 31 March 2008: |
Non interest bearing |
Less than 1 month |
1-3 months |
3 months to 1 year |
1 to 2 years |
2 to 5 years |
Greater than 5 years |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Assets |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
77.867 |
- |
- |
- |
- |
- |
- |
77,867 |
|
Floating interest rate instruments |
- |
491 |
- |
- |
- |
- |
- |
491 |
|
Fixed interest rate instruments |
- |
375 |
6,118 |
845 |
- |
- |
- |
7,338 |
|
Total |
77,867 |
866 |
7,950 |
845 |
- |
- |
- |
85,696 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Non-interest bearing |
(115) |
- |
- |
- |
- |
- |
- |
(115) |
|
Floating interest rate instruments |
|
- |
- |
- |
- |
- |
- |
- |
|
Fixed interest rate instruments |
|
- |
- |
- |
- |
- |
- |
- |
|
Total |
(115) |
- |
- |
- |
- |
- |
- |
(115) |
|
Net Exposure |
77,752 |
866 |
6,118 |
845 |
- |
- |
- |
85,581 |
* The Group's fixed interest rate instruments represents cash accounts placed on deposit by the Company, Kreditmart and Flexinvest, and the mortgages granted by Kreditmart and Flexinvest. The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (forward exchange contracts) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.
The expected maturities of the undiscounted cash flows (including interest) of the mortgages granted by Kreditmart and Flexinvest at 31.03.09 and 31.03.08 is presented in the following table:
|
Kreditmart and Flexinvest |
|
|
|
|
|
|
|
|
|
Less than 1 month |
1-3 months |
3 months to 1 year |
1 to 2 years |
2 to 5 years |
Greater than 5 years |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
At 31 March 2009: |
117 |
234 |
1,055 |
1,392 |
4,176 |
30,781 |
37,755 |
|
At 31 March 2008: |
145 |
289 |
1,302 |
1,737 |
5,210 |
40,074 |
48,757 |
Sensitivity analysis
The sensitivity analysis below have been determined based on the Group's exposure to interest rates for interest bearing assets and liabilities at the balance sheet 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 lower and all other variables were held constant, the Group's net profit for the year ended 31 March 2009 would have increased by £10,373 (15 month period to 31 March 2008: £2,279) and the Company's by £ 10,373 (2008: £2,279).
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.
26. Related party transactions
The Company (Aurora Russia Limited) has 3 subsidiaries, Kreditmart Finance Limited, Flexinvest Limited and Volzhski Universalny Bank Limited (see note 11). Details of the investments in Whitebrooks Investment Limited, Unistream Bank, and Grindelia Holdings are presented in note 12.
Balances owing between the Company and any subsidiaries which are related parties have been eliminated on consolidation. This includes a loan receivable from Flexinvest (see note 14).
The terms of the loan to Whitebrooks is highlighted in note 12. The loan is considered as quasi equity in nature and is included as part of the investment in Whitebrooks at fair value. The balance of the principal and interest in respect of the loan is £3,221,334 at 31 March 2009 (March 2008: £1,831,577). Interest received on this loan of £280,626 is separately disclosed on the face of the Income Statement (15 month period ended 31 March 2008: £187,161).
The Company pays fees to Aurora Investment Advisors Limited ('AIAL') for its services as investment manager and advisor. The total charge to the Income Statement during the period was £1,779,091 (15 month period to 31 March 2008: £1,810,480). There were no outstanding fees at the year end.
On 10 March 2009, an amendment was made to the Management Agreement between the Manager, Aurora Investment Advisors Limited ('AIAL'), and the Company, Aurora Russia Limited. With effect from 1 January 2009, the Manager is free to provide investment advice or other equivalent services to persons other than the Company. The Company shall be entitled to co-investment rights in relation to any investments made by a new fund that the Manager proposes to establish after January 2009 in any securities which could otherwise be acquired by the Company in accordance with the Investment Policy ('Co-Investments').
John McRoberts and James Cook each hold 47.5% of the ordinary share capital and 36.25% of the non-voting preference share capital of AIAL at year end.
The Company pays fees to Close Fund Services Limited ('CFSL') for its services as administrator. The total charge to the Income Statement during the year was £72,978 (15 month period to 31 March 2008: £20,500), of which £NIL (2008: £17,500) was outstanding at the period end. John Whittle was appointed a director of the Company on 17 January 2008. He was also a director of CFSL until 31 May 2009.
The Directors of the Company and of Kreditmart OOO, other than John McRoberts and James Cook, received fees for their services. The total charge to the Income Statement during the period was £188,839 (2008: £379,124), of which £4,776 (2008: £17,292) was outstanding at the year end.
27. Reclassification of comparatives
Loan interest, bank interest, as well as dividend income, have been reclassified from 'Finance income' to 'Revenue' in the Consolidated and Company Income Statement, Cash Flow Statement and related notes thereto. The reason for this change is that the ordinary activities of the Company is to earn income on its investments.
Furthermore, 'Taxation Paid' in the Cash Flow Statement was reclassified from 'Investing Activities' to 'Operating Activities' in order to comply with IAS7 'Statements of Cash Flows'.
28. Events after the balance sheet date
There were no material subsequent events after the year end.
|
|
|
|
|
|
|
|
|
Directors and Advisors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors |
|
|
|
Dan Koch - appointed as Non-Executive Director on 11 August 2008 (Chairman on 8 September 2008) |
||
|
Sir Trevor Chinn CVO - resigned on 8 September 2008 |
|
|
|
Ben Morgan |
|
|
|
Christopher Cowan - resigned on 31 May 2009 |
|
|
|
Grant Cameron |
|
|
|
James Cook |
|
|
|
John McRoberts |
|
|
|
John Whittle |
|
|
|
|
|
|
|
Manager |
|
Auditor |
|
Aurora Investment Advisors Limited |
|
(appointed 11 August 2008) |
|
Investec House |
|
KPMG Channel Islands Limited |
|
La Plaiderie |
|
PO Box 20 |
|
St Peter Port |
|
20 New Street |
|
Guernsey GY1 3RP |
|
St. Peter Port |
|
|
|
Guernsey |
|
Administrator and Secretary |
|
GY1 4AN |
|
Close Fund Services Limited |
|
|
|
PO Box 105 |
|
(resigned 11 August 2008) |
|
Trafalgar Court, Admiral Park |
|
Deloitte & Touche LLP |
|
St Peter Port |
|
Regency Court |
|
Guernsey GY1 2JA |
|
Glategny Esplanade |
|
|
|
St Peter Port |
|
Registrar |
|
Guernsey GY1 3HW |
|
Capita IRG (CI) Limited |
|
|
|
2nd Floor |
|
CREST Service Provider |
|
No 1 Le Truchot |
|
Capita Registrars |
|
St Peter Port |
|
The Registry |
|
Guernsey GY1 4AE |
|
34 Beckenham Road |
|
|
|
Beckenham |
|
Guernsey Advocates to the Company |
|
Kent BR3 4TU |
|
Carey Olsen |
|
|
|
7 New Street |
|
Nominated Advisor |
|
Guernsey GY1 4BZ |
|
Investec Bank (UK) Limited |
|
|
|
2 Gresham Street |
|
Joint Brokers |
|
London EC2V 7QP |
|
Investec Bank (UK) Limited |
|
|
|
2 Gresham Street |
|
Russian Solicitors to the Company |
|
London EC2V 7QP |
|
White & Case LLC |
|
|
|
4 Romanov Pereulok |
|
(from 31 May 2008) |
|
125009 Moscow |
|
Numis Securities Limited |
|
Russia |
|
The London Stock Exchange Building |
|
|
|
10 Paternoster Square |
|
UK Solicitors to the Company |
|
London |
|
White & Case LLP |
|
EC4M 7LT |
|
5 Old Broad Street |
|
|
|
London EC2N 1DW |
|
(from incorporation to 31 May 2008) |
|
|
|
Altium Capital Limited |
|
|
|
30 St James's Square |
|
|
|
London |
|
|
|
EC4M 7LT |
|
|
This information is provided by RNS
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