TIDMAURR
RNS Number : 7363U
Aurora Russia Limited
30 June 2009
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 GBP79.86m or 106.5p per share,
compared to GBP85.58m or 114.1p per share at 31 March 2008
* Cash and cash equivalents as at 31 March 2009 were GBP4.12m, compared to
GBP7.83m as at 31 March 2008
* Consolidated net profit for the period of GBP0.43m (GBP5.22 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 GBP63.9 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 GBP0.43
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 GBP79.86 million or 106.5p per share, compared
to GBP85.58 million or 114.1p per share at 31 March 2008. Cash and cash
equivalents at 31 March 2009 were GBP4.12 million, compared to GBP7.83 million
as at 31 March 2008.
Administration and operating expenses of GBP12.52 million include Company costs
of GBP3.33 million, of which GBP1.78 million relates to the Manager's fee and
GBP0.60 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 GBP9.19 million.
Investment review
Aurora Russia has invested GBP63.51 million into five companies and has
uncommitted funds of GBP3.62 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 GBP77.26 million1 to GBP74.80 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 GBP7.4 million
to GBP25.0million, an increase of 42%. The valuation of Kreditmart and
Flexinvest Bank has been decreased by GBP11.4 million to GBP23.0 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 GBP5.7 million to GBP13.6 million1 an increase of 73%
and SuperStroy has decreased by GBP4.22 million to GBP13.2 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 GBP63.9 million in five companies. The
companies were valued at 31 March 2009 at GBP74.8 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.
Given Russias declining population it increasingly relies on migrant labour to
carry out its ambitious infrastructure development projects. Despite a clear
slowdown in private sector investment we see plenty of opportunities for growth
for Unistream as the government remains keen to use infrastructure investment as
a tool to stimulate the economy, protect jobs and improve Russias long-term
competitiveness. Analysts estimate that Russia will invest US$875 billion in
revamping its infrastructure in 2009 to 2015 representing a CAGR of
approximately 10%.
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 GBP4.6 million compared to the valuation at 30 September 2008 of
GBP20.4 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 GBP9.30 million compared to the valuation at 30 September 2008 of GBP32.30
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 GBP5.0
million (RUR 237 million). Additional funds of GBP1.2 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 GBP5.19 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 GBP6.5 million of our 24.3% stake compared to the
valuation at 30 September 2008 of GBP19.7 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 GBP3.5 million (the uplift includes already drawn down
US$0.5 million of new investment) compared to the valuation at 30 September 2008
of GBP10.1 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 | | 15 month |
| | ended | | period ended |
| | 31 March | | 31 March |
| | 2009 | | 2008 |
| | | | |
+--------------------------------------------------+---------------+----+---------------+
| | Notes | GBP'000 | | GBP'000 |
+------------------------------------------+-------+---------------+----+---------------+
| | | | | |
+------------------------------------------+-------+---------------+----+---------------+
| Revenue: | | 2,677 | | 4,313 |
+------------------------------------------+-------+---------------+----+---------------+
| - Fees | | 394 | | 227 |
+------------------------------------------+-------+---------------+----+---------------+
| - Interest on long term mortgages and | | 1,300 | | 534 |
| other loans | | | | |
+------------------------------------------+-------+---------------+----+---------------+
| - 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 | 12 | 7,531 | | 8,357 |
| investments | | | | |
+------------------------------------------+-------+---------------+----+---------------+
| 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 | | 15 month |
| | ended | | period |
| | 31 March | | ended |
| | 2009 | | 31 March |
| | | | 2008 |
+--------------------------------------------------+------------+----+------------+
| | Notes | GBP'000 | | GBP'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 | 12 | (3,867) | | 13,749 |
| of investments | | | | |
+---------------------------------------+----------+------------+----+------------+
| 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 | 6 | (8.43p) | | 17.18p |
| Diluted | | | | |
+---------------------------------------+----------+------------+----+------------+
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 | | 31 March |
| | | 2009 | | 2008 |
+----------------------------------------------+-------+-----------+-----+-----------+
| |Notes | GBP'000 | | GBP'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 | 12 | 51,833 | | 42,898 |
| and loss | | | | |
+----------------------------------------------+-------+-----------+-----+-----------+
| 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 | 22 | 103.8p | | 103.5p |
| Diluted | | | | |
+----------------------------------------------+-------+-----------+-----+-----------+
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 | | 31 March |
| | | 2009 | | 2008 |
+-----------------------------------------------+-------+-----------+-----+-----------+
| |Notes | GBP'000 | | GBP'000 |
+-----------------------------------------------+-------+-----------+-----+-----------+
| Non-current assets | | | | |
+-----------------------------------------------+-------+-----------+-----+-----------+
| Investment in subsidiaries - at fair value | 10 | 23,000 | | 34,423 |
| through profit and loss | | | | |
+-----------------------------------------------+-------+-----------+-----+-----------+
| Investments - at fair value through profit | 12 | 51,800 | | 42,840 |
| and loss | | | | |
+-----------------------------------------------+-------+-----------+-----+-----------+
| | | | | |
+-----------------------------------------------+-------+-----------+-----+-----------+
| | | 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 | |Special | |Options | |Retained | |Translation | | |
| | |Capital | |Reserve | |Reserve | |Earnings | | Reserve | | Total |
+---+------------------------+ +---------+ +--+ +--------+ +--+ +--------+ +
| | | | | | | | | | | | | |
+---+------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| | |GBP'000 | |GBP'000 | |GBP'000 | | GBP'000 | | GBP'000 | |GBP'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 | - | | - | | 750 | | - | | - | | 750 |
| payments | | | | | | | | | | | |
+----------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| | | | | | | | | | | | | |
+---+------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| Foreign currency | - | | - | | - | | - | | (5) | | (5) |
| translation loss | | | | | | | | | | | |
+----------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| | | | | | | | | | | | | |
+---+------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| 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 | - | | - | | 600 | | - | | - | | 600 |
| payments | | | | | | | | | | | |
+----------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| | | | | | | | | | | | | |
+---+------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| Foreign currency | - | | - | | - | | - | | (805) | | (805) |
| translation loss | | | | | | | | | | | |
+----------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| | | | | | | | | | | | | |
+---+------------------------+---------+---------+---------+--+---------+--------+----------+--+-------------+--------+---------+
| 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 | | Special | |Options | |Retained | | |
| | | | Capital | | Reserve | |Reserve | |Earnings | | Total |
+---+--------------------------+---+ +----------+ +--+ +----------+ +--+ +
| | | | | | | | | | | | |
+---+--------------------------+---+----------+----------+----------+--+---------+----------+----------+--+---------+
| | | | GBP'000 | | GBP'000 | |GBP'000 | | GBP'000 | |GBP'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 | | - | | - | | 750 | | - | | 750 |
| payments | | | | | | | | | | |
+------------------------------+---+----------+----------+----------+--+---------+----------+----------+--+---------+
| | | | | | | | | | | | |
+---+--------------------------+---+----------+----------+----------+--+---------+----------+----------+--+---------+
| 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 | | - | | - | | 600 | | - | | 600 |
| payments | | | | | | | | | | |
+------------------------------+---+----------+----------+----------+--+---------+----------+----------+--+---------+
| | | | | | | | | | | | |
+---+--------------------------+---+----------+----------+----------+--+---------+----------+----------+--+---------+
| 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 | | 15 month |
| | ended | | period ended |
| | 31 March | | |
| | 2009 | | 31 March |
| | | | 2008 |
+-----------------------------------------------------------+ + + +
| | | | | Notes |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Cash flows from operating activities | | GBP'000 | | GBP'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 | | 53 | | (1,357) |
| trade and other receivables | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Increase in operating trade and other | | 14 | | 612 |
| payables | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Adjust for: | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Revaluation of investments | | (7,531) | | (8,085) |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Recognised share based payments | 19 | 600 | | 750 |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Fair value movements on revaluation | | 525 | | (89) |
| of derivatives | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| 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 | | (682) | | (17,612) |
| activities | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Cash flows from investing activities | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Acquisition of subsidiary net of cash | 11 | (3,082) | | (346) |
| acquired | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Acquisition of investments | | (15) | | (26,875) |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Acquisition of derivatives | | - | | (488) |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Proceeds on sale of derivatives | | - | | 530 |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Acquisition of property, plant and | 9 | (168) | | (1,461) |
| equipment | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Proceeds on sale of property, plant & | | 38 | | - |
| equipment | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Loans advanced to associated company | | (356) | | (1,717) |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Decrease in deposits | | (1,639) | | - |
+------------------------------------------+----------------+----------------+---------------+---------------+
| | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Net cash outflow from investing | | (5,222) | | (30,357) |
| activities | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| Net decrease in cash and cash | | (5,904) | | (47,969) |
| equivalents | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| | | | | |
+------------------------------------------+----------------+----------------+---------------+---------------+
| 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 | | 15 month |
| | ended | | period |
| | 31 March | | ended |
| | 2009 | | 31 March |
| | | | 2008 |
+-------------------------------------------------------+ + + +
| | | | |Note |
+------------------------------------------------+------------+--+--------------+------+
| | | GBP'000 | | GBP'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 | | (548) | | (481) |
| receivables | | | | |
+------------------------------------------------+------+------------+--+--------------+
| Increase/(decrease) in operating trade and | | 26 | | (37) |
| other payables | | | | |
+------------------------------------------------+------+------------+--+--------------+
| | | | | |
+------------------------------------------------+------+------------+--+--------------+
| 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 | | 525 | | (89) |
| derivatives | | | | |
+------------------------------------------------+------+------------+--+--------------+
| 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 GBP600. 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.
3.8.2Investments
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.
3.8.3Impairment 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.
3.8.4Loans 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.
3.8.5Cash 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.
3.8.6Trade 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.
3.8.7Trade 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.
3.9Earnings 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.
3.10Operating leases
Payments made under operating leases are recognised in profit or loss on a
straight-line basis over the term of the lease.
3.11Property, 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 & fittings3-4 years
Furniture5 years
Equipment3 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.
3.12Intangible 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.
3.13Impairment 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.
3.14Provisions
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 | | 15 month |
| | | ended 31 | | period |
| | | March | | ended 31 |
| | | 2009 | | March |
| | | | | 2008 |
+--------------------------------------+--+----------+--+-----------+
| | | GBP'000 | | GBP'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 | | 15 month |
| | | ended 31 | | period |
| | | March | | ended 31 |
| | | 2009 | | March |
| | | | | 2008 |
+--------------------------------------+--+----------+--+-----------+
| | | GBP'000 | | GBP'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 | | 562 | | (738) |
| Income Statement | | | | |
+--------------------------------------+--+----------+--+-----------+
+--------------------------------------+--+-----------+--+------------+
| * Deferred tax expense comprises of: | | | | |
+--------------------------------------+--+-----------+--+------------+
| Origination and reversal of | | (32) | | (798) |
| temporary differences | | | | |
+--------------------------------------+--+-----------+--+------------+
| Utilisation of tax losses | | (993) | | |
+--------------------------------------+--+-----------+--+------------+
| Reduction in tax rate | | (13) | | - |
+--------------------------------------+--+-----------+--+------------+
| Change in unrecognised deductible | | 1,600 | | - |
| temporary differences | | | | |
+--------------------------------------+--+-----------+--+------------+
| Recognition of previously | | - | | 14 |
| unrecognised tax losses | | | | |
+--------------------------------------+--+-----------+--+------------+
| | | 562 | | (784) |
+--------------------------------------+--+-----------+--+------------+
Group and Company
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| Tax rate reconciliation: | | | | | | | |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| | Year | | Year | | 15 month | | 15 month |
| | ended 31 | | ended 31 | | period | | period |
| | March | | March | | ended 31 | | ended 31 |
| | 2009 | | 2009 | | March | | March |
| | | | | | 2008 | | 2008 |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| | Group | | Company | | Group | | Company |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| | | | | | | | |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| Profit/(loss) for the period | 988 | | (6,321) | | 4,477 | | 12,884 |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| Aurora Consolidated profit | (4,866) | | - | | (7,749) | | - |
| exempt from tax | | | | | | | |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| | (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 | 17 | | - | | 64 | | - |
| expenses not deductable in | | | | | | | |
| taxable profit | | | | | | | |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| Effect of changes in tax rates | 13 | | - | | - | | - |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| Effect of deferred tax asset not | 1,600 | | - | | - | | - |
| recognised | | | | | | | |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
| | 562 | | | | (738) | | - |
+----------------------------------+-----------+--+-----------+--+-----------+--+----------+
5.2 Group deferred tax assets and liabilities
Group
2009
+--------------------------------------+--+-----------+--+-------------+--+------------+
| | | Year | | Year | | Year ended |
| | | ended 31 | | ended 31 | | 31 March |
| | | March | | March | | 2009 |
| | | 2009 | | 2009 | | |
+--------------------------------------+--+-----------+--+-------------+--+------------+
| Deferred tax asset/(liability) | | GBP'000 | | GBP'000 | | GBP'000 |
| comprises: | | | | | | |
+--------------------------------------+--+-----------+--+-------------+--+------------+
| | | 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 | | 15 month | | 15 month |
| | | period | | period | | period |
| | | ended 31 | | ended 31 | | ended 31 |
| | | March | | March | | March 2008 |
| | | 2008 | | 2008 | | |
+--------------------------------------+--+-----------+--+-------------+--+------------+
| Deferred tax asset/(liability) | | GBP'000 | | GBP'000 | | GBP'000 |
| comprises: | | | | | | |
+--------------------------------------+--+-----------+--+-------------+--+------------+
| | | Assets | | Liabilities | | Net |
+--------------------------------------+--+-----------+--+-------------+--+------------+
| | | | | | | |
+--------------------------------------+--+-----------+--+-------------+--+------------+
| Placements with banks and other | | - | | (3) | | (3) |
| institutions | | | | | | |
+--------------------------------------+--+-----------+--+-------------+--+------------+
| 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 | | 15 month |
| | | ended 31 | | period |
| | | March | | ended 31 |
| | | 2009 | | March |
| | | | | 2008 |
+--------------------------------------+--+----------+--+-----------+
| | | GBP'000 | | GBP'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 | | 31 | | 31 | | 31 |
| | March | | March | | March | | March |
| | 2009 | | 2009 | | 2008 | | 2008 |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'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 | 426 | | (6,321) | | 5,215 | | 12,884 |
| diluted loss per share being net | | | | | | | |
| loss attributable to equity holders | | | | | | | |
| of the parent | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| Weighted average number of ordinary | 75,000 | | 75,000 | | 75,000 | | 75,000 |
| shares for the purpose of basic | | | | | | | |
| profit/(loss) per share (in | | | | | | | |
| thousands): | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| Effect of dilutive potential | | | | | | | |
| ordinary shares: | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| Options | - | | - | | - | | - |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| Weighted average number of ordinary | 75,000 | | 75,000 | | 75,000 | | 75,000 |
| shares for the purpose of diluted | | | | | | | |
| profit/(loss) loss per share (in | | | | | | | |
| thousands): | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
| Earnings per share - Basic and | 0.57 | | (8.43) | | 6.95 | | 17.18 |
| Diluted | | | | | | | |
+--------------------------------------+-----------+---+-----------+--+-----------+--+-----------+
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 | | 31 March |
| | | 2009 | | 2008 |
+--------------------------------------+--+-----------+--+------------+
| | | GBP'000 | | GBP'000 |
+--------------------------------------+--+-----------+--+------------+
| | | | | |
+--------------------------------------+--+-----------+--+------------+
| Cost: | | | | |
+--------------------------------------+--+-----------+--+------------+
| | | | | |
+--------------------------------------+--+-----------+--+------------+
| At 1 April 2008 and 1 January 2007 | | 169 | | - |
+--------------------------------------+--+-----------+--+------------+
| Recognised on acquisition of | | - | | 171 |
| Flexinvest Limited | | | | |
+--------------------------------------+--+-----------+--+------------+
| | | | | |
+--------------------------------------+--+-----------+--+------------+
| Exchange gain/(loss) for the | | 67 | | (2) |
| year/period | | | | |
+--------------------------------------+--+-----------+--+------------+
| | | | | |
+--------------------------------------+--+-----------+--+------------+
| 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 | | 31 |
| | | March | | March |
| | | 2009 | | 2008 |
+--------------------------------------+--+----------+---+----------+
| | | GBP'000 | | GBP'000 |
| | | | | |
+--------------------------------------+--+----------+---+----------+
| Cost: | | | | |
+--------------------------------------+--+----------+---+----------+
| Recognised on acquisition of VUB | | 2,680 | | - |
| (see note 10) | | | | |
+--------------------------------------+--+----------+---+----------+
| | | | | |
+--------------------------------------+--+----------+---+----------+
| Currency revaluation for the 11 | | (407) | | - |
| month period 6 May 2008 to 31 March | | | | |
| 2009 | | | | |
+--------------------------------------+--+----------+---+----------+
| | | | | |
+--------------------------------------+--+----------+---+----------+
| | | | | |
+--------------------------------------+--+----------+---+----------+
| 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 |
+-------------------------------------------------+----+-----------+----+---------------+----+----------------+
| | | GBP'000 | | GBP'000 | | GBP'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 | | 31 March |
| | | 2009 | | 2008 |
+--------------------------------------+--+-----------+--+-----------+
| | | GBP'000 | | GBP'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 | | Country of | Class of | % of | Principal |
| undertaking | |incorporation | share | class | activity |
| | | | | held | |
+-----------------------------+--+---------------+------------+---------+---------------+
| | | | | | |
+-----------------------------+--+---------------+------------+---------+---------------+
| Kreditmart Finance Limited | | Cyprus | Ordinary | 100.0% | Consumer |
| | | | | | finance |
+-----------------------------+--+---------------+------------+---------+---------------+
| Flexinvest Limited | | Cyprus | Ordinary | 100.0% | Investment |
| | | | | | holding |
+-----------------------------+--+---------------+------------+---------+---------------+
| Volzhski Universalny Bank | | Russia | Ordinary | 100.0% | Banking and |
| ("VUB") Limited* | | | | | 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 |
+--------------------------------------+-----------+-----------+---------------+
| | | | | GBP'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 | | | (209) |
| below) | | | |
+--------------------------------------------------+-----------+--+------------+
| 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 GBP553,941.
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 | | 31 March | | 31 | | 31 March |
| | 2009 | | 2009 | | March | | 2008 |
| | | | | | 2008 | | |
+--------------------------------+------------+--+-----------+--+----------+--+-----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+--------------------------------+------------+--+-----------+--+----------+--+-----------+
| | Group | | Company | | Group | | Company |
+--------------------------------+------------+--+-----------+--+----------+--+-----------+
| | | | | | | | |
+--------------------------------+------------+--+-----------+--+----------+--+-----------+
| Whitebrooks Investments | 13,600 | | 13,600 | | 7,861 | | 7,861 |
| Limited | | | | | | | |
+--------------------------------+------------+--+-----------+--+----------+--+-----------+
| | | | | | | | |
+--------------------------------+------------+--+-----------+--+----------+--+-----------+
| 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 | 51,833 | | 51,800 | | 42,898 | | 42,840 |
| value through profit and loss | | | | | | | |
+--------------------------------+------------+--+-----------+--+----------+--+-----------+
Change in fair value of investments at fair value through profit and loss
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| | Year | | Year | | 1 January | | 1 January |
| | ended 31 | | ended 31 | | 2007 to | | 2007 to 31 |
| | March | | March | | 31 March | | March 2008 |
| | 2009 | | 2009 | | 2008 | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| | Group | | Company | | Group | | Company |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| Whitebrooks Investments | 4,350 | | 4,350 | | 347 | | 347 |
| Limited | | | | | | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| 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 | - | | (11,423) | | - | | 5,378 |
| note 10) | | | | | | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
| Total unrealised | 7,531 | | (3,867) | | 8,357 | | 13,749 |
| gains/(losses) | | | | | | | |
+--------------------------------+----------+--+----------+--+-----------+--+------------+
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 GBP13.6 million (31 March 2008: GBP6.03
million), GBP25 million (31 March 2008: GBP17.56 million), and GBP13.2 million
(31 March 2008: GBP17.42 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 | | 31 March |
| | | | 2009 | | 2008 |
+--------------------------------------+-----------+--+-----------+--+------------+
| | | | GBP'000 | | GBP'000 |
+--------------------------------------+-----------+--+-----------+--+------------+
| | | | | | |
+--------------------------------------+-----------+--+-----------+--+------------+
| Residential mortgages | | | 9,569 | | 13,922 |
+--------------------------------------+-----------+--+-----------+--+------------+
| | | | | | |
+--------------------------------------+-----------+--+-----------+--+------------+
| Reconciliation of impairment loss allowance on | | | |
| loans to customers: | | | |
+-----------------------------------------------------+-----------+--+------------+
| | | | | | |
+--------------------------------------+-----------+--+-----------+--+------------+
| Balance at beginning of the | | | 195 | | - |
| year/period | | | | | |
+--------------------------------------+-----------+--+-----------+--+------------+
| 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 | | Financial | | Balance at |
| | | past due | | assets | | 31 March |
| | | nor | | that have | | 2009 |
| | | impaired | | been | | |
| | | | | impaired | | |
+--------------------------------------+--+-----------+--+-----------+--+------------+
| | | | | | | |
+--------------------------------------+--+-----------+--+-----------+--+------------+
| 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 | | Financial | | Balance at |
| | | past due | | assets | | 31 March |
| | | nor | | that have | | 2008 |
| | | impaired | | been | | |
| | | | | impaired | | |
+--------------------------------------+--+-----------+--+-----------+--+------------+
| | | | | | | |
+--------------------------------------+--+-----------+--+-----------+--+------------+
| 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 GBP1,900,102. 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 GBP8,716,313 (2008:
GBP13,881,000).
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 GBP8,055,453 (balance recognised using
amortised cost: GBP9,658,865).
14. Trade and other receivables
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| | | 31 | | 31 March | | 31 | | 31 March |
| | | March | | 2009 | | March | | 2008 |
| | | 2009 | | | | 2008 | | |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| | | Group | | Company | | Group | | Company |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| | | | | | | | | |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| Sundry debtors and | | 1,690 | | 901 | | 1,367 | | 401 |
| prepayments | | | | | | | | |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| Bank interest receivable | | 21 | | 16 | | 56 | | 56 |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| Amount receivable from | | - | | 195 | | - | | 147 |
| related party | | | | | | | | |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| | | | | | | | | |
+------------------------------+--+----------+--+-----------+--+----------+--+-----------+
| | | 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 | | 31 March |
| | | March | | 2008 |
| | | 2009 | | |
+--------------------------------------------------------+--+----------+--+-----------+
| | | GBP'000 | | GBP'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 | | - | | (1,266) |
| 2008) - US$ 3,700,00 | | | | |
+--------------------------------------------------------+--+----------+--+-----------+
| Valuation of US$ liability at 31 March 2009 - US$ | | (2,792) | | - |
| 4,000,00 | | | | |
+--------------------------------------------------------+--+----------+--+-----------+
| 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 | | 12 | | 8 |
| December 2006 | | | | |
+--------------------------------------------------------+--+----------+--+------------+
| | | | | |
+--------------------------------------------------------+--+----------+--+------------+
| | | (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 GBP850,000 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 | | 31 March | | 31 March | | 31 March |
| | | March | | 2009 | | 2008 | | 2008 |
| | | 2009 | | | | | | |
+--------------------------------+---+----------+--+-----------+--+-----------+--+------------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | |
+--------------------------------+---+----------+--+-----------+--+-----------+--+------------+
| | | Group | | Company | | Group | | Company |
+--------------------------------+---+----------+--+-----------+--+-----------+--+------------+
| | | | | | | | | |
+--------------------------------+---+----------+--+-----------+--+-----------+--+------------+
| Expense accruals | | 742 | | 129 | | 648 | | 103 |
+--------------------------------+---+----------+--+-----------+--+-----------+--+------------+
| | | | | | | | | |
+--------------------------------+---+----------+--+-----------+--+-----------+--+------------+
| | | 742 | | 129 | | 648 | | 103 |
+--------------------------------+---+----------+--+-----------+--+-----------+--+------------+
17. Share capital
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
| | | | | 31 March | | 31 March |
| | | | | 2009 | | 2008 |
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
| | | | | GBP'000 | | GBP'000 |
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
| Authorised share capital: | | | | | | |
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
| 200,000,000 Ordinary Shares of 1p | | | | 2,000 | | 2,000 |
| each: | | | | | | |
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
| | | | | | | |
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
| Issued share capital: | | | | | | |
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
| 75,000,000 fully paid Ordinary | | | | 750 | | 750 |
| Shares of 1p each: | | | | | | |
+--------------------------------------+----------+-----------+--+-----------+--+-----------+
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 GBP1 each.
74,999,998 shares were issued on 20 March 2006 for a cash consideration of GBP1
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 | | 31 | | 31 March | | 31 |
| | | March | | March | | 2008 | | March |
| | | 2009 | | 2009 | | | | 2008 |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| | | Group | | Company | | Group | | Company |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| | | | | | | | | |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| Balance as at 1 April 2008, and | | 1,220 | | 1,220 | | 470 | | 470 |
| 1 January 2007 | | | | | | | | |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| | | | | | | | | |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| Recognised fair value of share | | 600 | | 600 | | 750 | | 750 |
| options issued during the | | | | | | | | |
| year/period | | | | | | | | |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| | | | | | | | | |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
| Balance as at 31 March 2009, and | | 1,820 | | 1,820 | | 1,220 | | 1,220 |
| 31 March 2008 | | | | | | | | |
+----------------------------------+---+----------+--+----------+--+-----------+--+----------+
Details of share-based payments are shown in note 23.
20. Retained earnings
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| | | 31 | | 31 March | | 31 March | | 31 |
| | | March | | 2009 | | 2008 | | March |
| | | 2009 | | | | | | 2008 |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| | | Group | | Company | | Group | | Company |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| | | | | | | | | |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| Balance as at 1 April 2008, and | | 4,894 | | 12,861 | | (321) | | (23) |
| 1 January 2007 | | | | | | | | |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| | | | | | | | | |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| Net profit/(loss) for the | | 426 | | (6,321) | | 5,215 | | 12,884 |
| year/period | | | | | | | | |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| | | | | | | | | |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
| Balance as at 31 March 2009, and | | 5,320 | | 6,540 | | 4,894 | | 12,861 |
| 31 March 2008 | | | | | | | | |
+----------------------------------+--+----------+--+-----------+--+-----------+--+----------+
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 | | 31 | | 31 | | 31 March |
| | March | | March | | March | | 2008 |
| | 2009 | | 2009 | | 2008 | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| | Group | | Company | | Group | | Company |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| Net assets for the purposes of basic | GBP77,830 | | GBP79,860 | | GBP77,609 | | GBP85,581 |
| and diluted net asset value per | | | | | | | |
| share attributable to equity holders | | | | | | | |
| of the parent: (GBP'000) | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| Weighted average number of ordinary | 75,000 | | 75,000 | | 75,000 | | 75,000 |
| shares for the purpose of basic | | | | | | | |
| earnings per share:(in thousands): | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| Effect of dilutive potential | | | | | | | |
| ordinary shares: | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| Options | - | | - | | - | | - |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| Weighted average number of ordinary | 75,000 | | 75,000 | | 75,000 | | 75,000 |
| shares for the purpose of diluted | | | | | | | |
| earnings per share: | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
| Net asset value per share - Basic | 103.8p | | 106.5p | | 103.5p | | 114.1p |
| and Diluted | | | | | | | |
+--------------------------------------+-----------+--+-----------+--+-----------+--+------------+
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 | | 18,750 | | 18,750 | | 100p |
| January 2007 | | | | | | |
+--------------------------------------+--+-----------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+-----------+--+------------+--+------------+
| Options granted during the | | - | | - | | |
| year/period | | | | | | |
+--------------------------------------+--+-----------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+-----------+--+------------+--+------------+
| Options as at 31 March 2009, and 31 | | 18,750 | | 18,750 | | |
| March 2008 | | | | | | |
+--------------------------------------+--+-----------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+-----------+--+------------+--+------------+
| | | | | | | |
+--------------------------------------+--+-----------+--+------------+--+------------+
| 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 GBP3,000,000.
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
GBP600,000 (15 month ended 31 March 2008: GBP750,000).
24. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
+--------------------------------------+--+-----------+--+-----------+--+-----------+
| Group | | | | 31 March | | 31 March |
| | | | | 2009 | | 2008 |
+--------------------------------------+--+-----------+--+-----------+--+-----------+
| | | | | GBP'000 | | GBP'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 | | Cyprus |
| | | Federation | | |
+------------------------------------+--+------------+--+------------+
| ASSETS | | % | | % |
+------------------------------------+--+------------+--+------------+
| | | | | |
+------------------------------------+--+------------+--+------------+
| Property, plant and equipment & | | 98 | | 2 |
| intangible assets | | | | |
+------------------------------------+--+------------+--+------------+
| Investments | | - | | 100 |
+------------------------------------+--+------------+--+------------+
| Long term third party loans | | 100 | | - |
| receivable | | | | |
+------------------------------------+--+------------+--+------------+
| 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 GBP280,718 which is
60 days overdue as at 31 March 2009 (2008: GBP253,215: 60 days overdue) and
GBP1,694,239 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
GBP1,912,982 (2008:GBP195,219).
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 |Russian | Other | Total |
| | | Dollars |Roubles | | |
+------------------------------------+----------+----------+---------+---------+---------+
| | | GBP'000 | GBP'000 |GBP'000 |GBP'000 |GBP'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 |Russian | Other | Total |
| | | Dollars |Roubles | | |
+------------------------------------+----------+----------+---------+---------+---------+
| | | GBP'000 | GBP'000 |GBP'000 |GBP'000 |GBP'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 |Russian | Other | Total |
| | | Dollars |Roubles | | |
+------------------------------------+----------+----------+---------+---------+---------+
| | | GBP'000 | GBP'000 |GBP'000 |GBP'000 |GBP'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 | Russian | Other | Total |
| | |Dollars | Roubles | | |
+-----------------------------------+----------+---------+----------+---------+---------+
| | | GBP'000 |GBP'000 | GBP'000 |GBP'000 |GBP'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 | | 31 | | 31 March | | 31 |
| | | March | | March | | 2008 | | March |
| | | 2009 | | 2009 | | | | 2008 |
+-----------------------------+---+----------+--+----------+--+-----------+--+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'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 | | % of | | Fair | | % of |
| | | | | Value | | Net | | Value | | Net |
| | | | | GBP'000 | | Assets | | GBP'000 | | 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 | | % of | | Fair | | % of |
| | | | | Value | | Net | | Value | | Net |
| | | | | GBP'000 | | Assets | | GBP'000 | | 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 GBP10,357,400 (2008:
increase of 10% in the valuations resulting in an increase in profit of
GBP4,099,600) for the Group and GBP14,950,800 (2008: increase of 10% in the
valuations resulting in an increase in profit of GBP7,542,000) 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 | Less | 1-3 | 3 |1 to 2 |2 to 5 |Greater | Total |
| |interest | than 1 |months | months | years | years | than 5 | |
| | bearing | month | | to 1 | | | years | |
| | | | | year | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| | GBP000 | GBP000 |GBP000 | GBP000 |GBP000 |GBP000 | GBP000 |GBP000 |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Assets | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Non-interest | 57,429 | - | - | - | - | - | - |57,429 |
| bearing | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Floating interest | - | 2,091 | - | - | - | - | - | 2,091 |
| rate instruments | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Fixed interest | - | 8,561 | 59 | 1,266 | 353 | 1,058 | 7,801 |19,098 |
| rate instruments * | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Total | 57,429 | 10,652 | 59 | 1,266 | 353 | 1,058 | 7,801 |78,618 |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Liabilities | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Non-interest | (742) | - | (46) | - | - | - | - | (788) |
| bearing | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| 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 | Less | 1-3 | 3 | 1 to 2 | 2 to 5 | Greater | Total |
| | interest | than 1 | months | months | years | years | than 5 | |
| | bearing | month | | to 1 | | | years | |
| | | | | year | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| Assets | | | | | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| Non-interest | 47,508 | - | - | - | - | - | - | 47,508 |
| bearing | | | | | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| Floating interest | - | 457 | - | - | - | - | - | 457 |
| rate instruments | | | | | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| Fixed interest | - | 8,339 | 6,407 | 3,372 | 1,737 | 3,473 | 6,976 | 30,304 |
| rate instruments | | | | | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| Total | 47,508 | 8,796 | 6,407 | 3,372 | 1,737 | 3,473 | 6,976 | 78,269 |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| | | | | | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| Liabilities | | | | | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| Non-interest | (660) | - | - | - | - | - | - | (660) |
| bearing | | | | | | | | |
+--------------------+-----------+----------+----------+----------+----------+----------+----------+-----------+
| 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 | Less | 1-3 | 3 |1 to 2 |2 to 5 |Greater | Total |
| |interest | than 1 |months | months | years | years | than 5 | |
| | bearing | month | | to 1 | | | years | |
| | | | | year | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| | GBP000 | GBP000 |GBP000 | GBP000 |GBP000 |GBP000 | GBP000 |GBP000 |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Assets | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Non-interest | 75,896 | - | - | - | - | - | - |75,896 |
| bearing | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Floating interest | - | 2,091 | - | - | - | - | - | 2,091 |
| rate instruments | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Fixed interest | - | 1,048 | - | 1,000 | - | - | - | 2,048 |
| rate instruments | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Total | 75,896 | 3,139 | - | 1,000 | - | - | - |80,035 |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Liabilities | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Non-interest | (129) | - | (46) | - | - | - | - | (175) |
| bearing | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| 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 | Less | 1-3 | 3 |1 to 2 |2 to 5 |Greater | Total |
| |interest | than 1 |months | months | years | years | than 5 | |
| | bearing | month | | to 1 | | | years | |
| | | | | year | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| | GBP000 | GBP000 |GBP000 | GBP000 |GBP000 |GBP000 | GBP000 |GBP000 |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Assets | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Non-interest | 77.867 | - | - | - | - | - | - |77,867 |
| bearing | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Floating interest | - | 491 | - | - | - | - | - | 491 |
| rate instruments | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Fixed interest | - | 375 | 6,118 | 845 | - | - | - | 7,338 |
| rate instruments | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Total | 77,867 | 866 | 7,950 | 845 | - | - | - |85,696 |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Liabilities | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| Non-interest | (115) | - | - | - | - | - | - | (115) |
| bearing | | | | | | | | |
+--------------------+----------+---------+--------+---------+--------+--------+---------+--------+
| 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 | 1-3 |3 months | 1 to 2 | 2 to 5 |Greater | Total |
| | than 1 | months | to 1 | years | years | than 5 | |
| | month | | year | | | years | |
+--------------------+----------+---------+----------+---------+---------+---------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------+----------+---------+----------+---------+---------+---------+---------+
| 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 GBP10,373 (15 month period to 31 March 2008: GBP2,279) and the
Company's by GBP 10,373 (2008: GBP2,279).
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 GBP3,221,334 at 31 March 2009 (March 2008: GBP1,831,577).
Interest received on this loan of GBP280,626 is separately disclosed on the face
of the Income Statement (15 month period ended 31 March 2008: GBP187,161).
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 GBP1,779,091 (15 month period to 31 March 2008:
GBP1,810,480). 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
GBP72,978 (15 month period to 31 March 2008: GBP20,500), of which GBPNIL (2008:
GBP17,500) 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 GBP188,839 (2008: GBP379,124), of which GBP4,776
(2008: GBP17,292) 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
The company news service from the London Stock Exchange
END
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