Review of Costs and Share Buyback

RNS Number : 9863I

Aurora Russia Limited

31 March 2015

 



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31 March 2015

Aurora Russia Limited (the "Company")

Review of Costs and Share Buyback

Review of Costs

The Board stated at the time of the announcement of the sale of Superstroy that it would be reviewing the cost base of the Company. This review has now been completed and as a result the total annual running costs of the Company for the year commencing 1 April 2015 will be budgeted at £380,000, a decrease of 42% on a like-for-like basis on the costs expected to have been incurred in the year ending 31 March 2015. Included in these savings is a 43% reduction in the fees payable to the Company's directors (the "Directors") to £105,000 in aggregate.

The Directors recognise that this fee reduction is necessary given the fact that the Company holds only one residual investment, but believe that the self-managed nature of the Company means that it is appropriate, in consideration for the reduction in their fees, to establish an incentive arrangement for the Directors. Following a consultation with certain major Shareholders, arrangements have therefore been entered into between the Company and the Directors, whereby:

·      The Directors are incentivised to maximise distributions to the Company's shareholders (the "Shareholders") over a period of twelve months.

·      The incentive fee payable to the Directors will scale up relative to the value of any such distributions made subsequent to the date of this announcement, subject to reductions to the extent that the realisation period extends beyond six months.

·      The Directors will receive a net reduction in fees until distributions to the Shareholders exceed approximately £5.3 million.

·      Under the Company's articles, the aggregate Directors' remuneration is limited to £300,000 in any financial year. The aggregate Directors' remuneration would exceed this threshold if distributions to Shareholders exceed approximately £7.6 million, in which event the payment of such excess will be subject to Shareholders' approval.

The Company has also entered into a new incentive arrangement with Nicholas Henderson-Stewart (the Company's investment advisor, the "Advisor") under which the Advisor will receive an additional incentive fee based on distributions to Shareholders made subsequent to the date of this announcement. The percentage of the distributions to Shareholders payable to the Advisor will vary according to the value and timing of such distributions, with no payment being due until distributions exceed approximately £5.3 million and the payment being capped at 4% of such distributions.

The incentive arrangements entered into between the Company and the Directors represent a related party transaction under the AIM Rules. In the circumstances where each of the Directors is party to these incentive arrangements, Numis Securities Limited ("Numis") as the Company's nominated adviser has confirmed that it considers that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned.

Share Buyback

The Company announces that it intends on 10 April 2015 to use its existing authority to buy back for cancellation, at a price of 10p each, up to 6,687,208 ordinary shares of 1p each in the capital of the Company (the "Shares") (the "Buyback").

Qualified Investors (as defined in section 86(7) of the Financial Services and Markets Act 2000 (as amended)) are invited to apply to participate in the Buyback by contacting Numis on the contact details below, as soon as possible and no later than 4pm on 9 April 2015:

Numis Securities Limited
Corporate: Nathan Brown / Hugh Jonathan [phone]/1263
Sales: James Glass / Katherine Miller, tel. + 44 (0) 20 7260 1369/1380

It is intended that Shareholders will be able to participate in the Buyback pro rata to their current holding of Shares, and therefore requests to participate may be subject to scaling back. The decision to buy back Shares from any Qualified Investor shall be at the absolute discretion of the Company and Numis.

The Buyback is subject to the requirement of the AGM resolution that any buyback be made at a price not more than 5% above the average market price of the shares for the five business days preceding the date of repurchase. If the 10p price stated above does not meet this requirement, the Buyback will be executed at the price representing 105% of the average market price of the shares for the five business days preceding the date of repurchase.

The Company intends to seek a renewal of its share buyback authority in due course and the Company may, at the absolute discretion of the Company's directors, make further returns of capital to Shareholders through further Share buybacks or otherwise.

The Company will make a further announcement in due course.

For further information please contact:

Gilbert Chalk, Chairman
Tel. [phone]

Numis Securities Limited
Nominated Adviser: Hugh Jonathan [phone]
Corporate Broking: Nathan Brown [phone]

Important Information

Numis Securities Limited is acting only for the Company in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Numis Securities Limited or advice to any other person in relation to the matters contained herein.

 

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