TIDMAURR
RNS Number : 4772O
Aurora Russia Limited
30 June 2010
30 June 2010
Aurora Russia Limited ("Aurora Russia" or the "Company")
Results for the 12 months ended 31 March 2010
Investee companies well positioned to capitalise on future revival of Russian
economy
Financial highlights
· Net asset value per share at 31 March 2010 of 88.0p per share (Net asset
value GBP99.0m)
· Cash and cash equivalents as at 31 March 2010 were GBP5.70 million
· Net profit for the period of GBP4.8 million
· Earnings per share for the period of 5.78p per share
Operational highlights
· GBP73.9 million invested in five companies, three of which are leaders in
their field
· Successful fundraising of GBP15 million and acquisition of additional
45.5% of OSG
· Intention to return up to GBP105 million over time to shareholders from
proceeds of sale of Company's investments
OSG
· OSG remains the largest records management company in Russia, Ukraine and
Kazakhstan
· Increased stake in OSG to 95.5% following the Placing in January
· OSG continued its expansion in Russia and as of Q1 2010 operated in 20
cities (up from 13 in 2009)
· For the year ending 31 December 2009, revenues in Russia grew 30%
year-on-year in RUR terms while Poland grew 27% year-on-year in PLN terms
· EBITDA up 26% to GBP1.7 million for year ended 31 December 2009
Unistream Bank
· Unistream had c.21% of the outbound money transfer market according to Q1
2010 statistics published by the CBR
· Rationalized proprietary distribution network by shutting down 88
under-performing cash desks at the end of 2009
· Despite closures, the volume in Unistream's cash desks held up well and
grew 4% year-on-year in Q1 2010
· Revenue for the year ending 31 December 2009 was GBP51.9 million which
was down from GBP55.1 million compared to the prior year period, due to the
impact of the economic environment on the construction industry
· EBITDA was GBP1.3m down 55% year-on-year
Superstroy
· Focus in 2009 on conserving cash and reducing net debt
· The company's revenues declined by 14% to GBP132.4 million impacted by
fall in DIY market in Russia with most of the decline due to its wholesale
operations while retail sales were down by only 8%
· Reduction in net debt to GBP7.7 million from GBP14.2 million and increase
in EBITDA from a negative -GBP1.1 million to a positive GBP3.5 million for the
year ending 31 December 2009
Kreditmart and Flexinvest
· Kreditmart impacted by significant contraction in mortgage market
· Shift in focus to insurance and consumer loans
· Both Kreditmart and Flexinvest Bank together have net cash of GBP5.5
million and GBP20.5 million in assets as at 31 March 2010
· Principal assets as at 31 March 2010 include a mortgage book net of
provision of approximately GBP8.3 million, yielding 11.7% p.a.
Commenting, Dan Koch, Chairman of Aurora Russia, said:
"Three out of five of our companies are considered to be leaders in their
respective markets and we are satisfied that each of them has done what was
necessary to maintain this position through the crisis and set a platform to
achieve their growth aspirations as and when the Russian market recovers.
Economists and analysts have varying views on the strength of the Russian
revival but all seem to believe that the country has come through the worst and
is now in a good position to grow again over the foreseeable future and to
continue to develop as a market economy with an improving international
reputation."
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
Sue I Ong +44 (0) 203 077 0450
Chairman's Statement
Introduction
I am pleased to present to you the audited results of Aurora Russia Limited (the
"Company" or "Aurora") for the year ending 31 March 2010. Last year I said that
the previous twelve months had been a challenging time for companies in Russia.
Uncertainty continued into 2010 and many of the markets served by our investee
companies continued to be depressed. Against this background our companies have
continued to adapt, have reduced costs and ensured that investment plans are
appropriate whilst maintaining their market position. There are now signs that
the Russian economy is poised to bounce back after a record low in 2009, and the
World Bank projects that the economy will grow by 4.5% in 2010.
Aurora Russia's portfolio companies were not however able to escape the economic
difficulties in 2009. Unistream, our money transfer business saw reduced volumes
as the construction sector slowed and fewer migrant workers were employed. That
trend now seems behind us. Kreditmart and Flexinvest Bank were affected by the
almost complete lack of mortgage demand and responded by reducing costs and
offering a more diverse product range which went some way to mitigating the
effect of the sharp contraction in the mortgage market in Russia. Recent trends
have resumed an upward trajectory and whilst this is from a low base, it augurs
well for a recovery in 2010/11. Superstroy delayed its expansion programme in
order to maintain a strong balance sheet and focus on profitability. However, it
has now begun to grow again, with three new stores opened in May 2010, and OSG
maintained its progress and showed its resilience to the economic downturn by
growing revenues c. 30% in local currency terms in its largest markets.
I believe our portfolio companies have responded well to the financial crisis,
and by concentrating on
conserving cash and strengthening their operations, they are well positioned and
well capitalised to benefit from the gradual improvement in economic activity.
Results
For the 12 months to 31 March 2010, Aurora Russia and its subsidiaries (the
"Group") recorded a profit of GBP0.66 million or 0.80p per share, calculated on
the weighted average number of shares and based on the audited consolidated
statement of comprehensive income. The net asset value of the Company as at 31st
March 2010 was GBP98.99 million or 88.0p per share. Cash and cash equivalents of
the Company at 31 March 2010 were GBP5.70 million.
Administration and operating expenses of GBP10.07 million include Company costs
of GBP3.34 million, of which GBP1.68 million relates to the Manager's fee.
Operating costs of the Company's wholly owned subsidiaries were GBP6.73 million.
Placing and Acquisition of controlling position in OSG
During the year the opportunity arose to acquire an additional 45.5% of OSG at a
price that the Manager felt was attractive and below the present carrying value.
Your Board considered this to be an attractive opportunity for Aurora Russia
Limited to buy outright control of OSG and to invest additional funds in the
company to finance its continued strong growth. The purchase of the additional
shareholding in OSG was accomplished with funds raised by placing 37.5 million
new Aurora Russia Limited shares at 40 pence per share raising GBP15 million
which comprised GBP7 million in cash and GBP8 million in consideration shares
for the vendors of the OSG shares.
Following the Placing, the shareholders have now invested a total of GBP90
million into the Company. The Board announced at the time of the Placing that it
is its intention to return up to GBP105 million over time to shareholders from
the proceeds of the sale of the Company's investments, leaving the balance to
reinvest in other opportunities in Russia. In order to achieve this return of
cash, following receipt of cash from a disposal of any of its portfolio
companies, it intends to return to shareholders an amount up to the lower of the
total sale proceeds of the portfolio company and a maximum of 1.5 times of the
total amount invested in that portfolio company plus the pro-rata allocation of
costs of the Company to date; these are determined according to a formula as
outlined in the Placing announcement.
It was also decided by the Board that due to the Placing, the Manager's Option
Deed should be revised so as to keep the Manager suitably incentivised. The
Option Deed provides for further option shares to be issued upon the issue of
new shares by the Company, with the exercise price for such further option
shares being equal to the placing price of such new shares i.e. 40 pence in the
case of the Placing. The Board agreed with the Manager to amend the Option Deed
so that the condition of exercise be changed to take into consideration the new
ordinary shares issued at the Placing. Previous to this amendment, the Manager
was able to exercise the option shares in the event that the shareholders
received a total shareholder return per share of 12% per annum based on the
original IPO price of GBP1.00 per share from the date of the IPO. The revised
condition allows the Manager to exercise the option shares should the
shareholders receive a total shareholder return per share of 12% per annum based
on the weighted average price per share which at the time of the Placing would
have needed to be 115 pence per share rather than 153 pence per share as was
previously the case.
Investment review
Following the additional investment in OSG, Aurora Russia has invested GBP73.9
million into five
companies and has uncommitted funds of GBP5.70 million remaining in the Company
to allow for small
follow-on investments in its investee companies, specifically OSG, and to cover
its ongoing expenses.
Aurora Russia has five investments:
- 26% of Unistream Bank, a leading Russian money transfer company
- 100% of Kreditmart, a finance company distributing mortgages, equity release
loans and other consumer finance products
- 100% of Fleixinvest Bank which provides retail banking services
- 95.5% of OSG, a regional market leader in records management; and
- 24.3% of SuperStroy, one of the leading DIY retailers in Russia
In all of our investee companies the local management and staff have remained
loyal and committed
through this difficult period and I would like to thank them for their hard work
and dedication.
Portfolio Valuation
A valuation of the investment portfolio was performed at 31 March 2010,
resulting in an increase in value from GBP74.80 million to GBP 92.20 million.
Adjusted for our recent investment in OSG, portfolio book value grew 5.8%1. 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 17 June 2010. 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 of Aurora's shareholdings reflects changes to the previous
year valuation
performed for March 2009 as follows:
- the value of our 26% stake in Unistream Bank has decreased by GBP0.6 million
to GBP24.4 million, a
decrease of 2.4%;
- the value of Kreditmart and Flexinvest Bank has decreased by GBP0.8 million to
GBP22.2 million, a decrease of 3.5%;
- the value of 100% of OSG's equity has increased by GBP2.3 million to GBP29.4
million, an increase of 8.2% resulting in GBP28.1 million valuation for our
95.5% stake; and
- the value of our 24.3% shareholding in SuperStroy has increased by GBP4.3
million to GBP17.5 million, an increase of 32.6%.
Outlook
Three out of five of our companies are considered to be leaders in their
respective markets and we are satisfied that each of them has done what was
necessary to maintain this position through the crisis and set a platform to
achieve their growth aspirations as and when the Russian market recovers.
Economists and analysts have varying views on the strength of the Russian
revival but all seem to believe that the country has come through the worst and
is now in a good position to grow again over the foreseeable future and to
continue to develop as a market economy with an improving international
reputation.
Dan Collinson Koch
Chairman of the Board
Aurora Russia Limited
28 June 2010
1 31 March 2009 valuation recalculated as if Aurora Russia had owned 95.5% of
OSG as at 31 March 2009
Investment Manager's Report
Overview
In the twelve months to 31 March 2010 we experienced continued uncertainty as to
when the Russian economy would begin to grow again. It appears that we have now
reached that point. The economy in Russia began to grow again at the end of 2009
and according to Rosstat, grew c. 2.9% in Q1 2010 compared with the Q1 2009. The
World Bank has recently forecast Russian GDP growth of 4.5% for 2010.
In January 2010, Aurora Russia Limited (the "Company" or "Aurora Russia")
completed a GBP15 million placing at 40 pence per share to raise funds to
purchase an additional 45.5% in OSG and to provide OSG with GBP3.2 million of
investment capital of which GBP0.6 million has been drawn down so far. We
believe that the acquisition of OSG was strategically a great opportunity for
Aurora Russia and we are delighted to see that OSG is performing in line with
our expectations.
Aurora has now invested GBP73.91 million in five portfolio companies. The
companies are valued at 31 March 2009 at GBP92.2 million, representing an
increase over investment cost of 24.76%. Aurora now owns 26% of Unistream Bank,
100% of Kreditmart, 100% of Flexinvest Bank, 24.3% of SuperStroy's holding
company, and 95.5% of OSG Records Management. Three of our five investments
maintain their leadership position in their
respective markets.
Before investing in any company, we believe it is vital to have a clear exit
strategy. Russia remains the largest underserved consumer market in Europe and
our portfolio companies are poised for exit, some as market leaders in their
sector. Whilst there has been understandable pressure from shareholders to show
that our investments are saleable and that the Manager is capable of realising a
return on funds invested, the Manager did not believe it was in the
shareholders' interests to dispose of investments in a declining market. Now
that the Russian market is growing again, we expect to see the return of trade
and financial investors in Russian companies as they seek returns above those
they can achieve in their traditional markets. We therefore anticipate that as
this trend develops we will have more opportunity to exit our investments
favourably, thereby maximising returns for all Aurora Russia's shareholders.
OSG Records Management
Following the Placing in January we increased our stake in the company to 95.5%.
The remaining shares are allocated to OSG's management under an ESOP. From the
GBP3.2 million earmarked for further investment in OSG we have now invested
GBP0.6 million which is being used as a down payment on lease financing for
racking for its facilities in Moscow and Saint-Petersburg. The remainder is
still available to secure OSG's future storage requirements. The Company had
envisaged this would be accomplished either through the purchase of a warehouse
facility or through a long term lease contract. It has proved to be more
difficult to negotiate the purchase of a Class A property than management
originally anticipated. OSG's management has looked at a number of warehouses
and conducted a detailed feasibility study followed by negotiations on two
potentially interesting properties. In one case, the negotiations are ongoing.
In the event that the purchase of a suitable
facility is not achievable Management continue to examine alternative ways of
securing OSG's strategic storage requirements.
OSG continued its expansion in Russia and as of Q1 2010 operated in 20 cities
(up from 13 in 2009) while its closest competitor is present only in five
cities. The company recently changed its year end to coincide with that of
Aurora Russia as its accounts will now be consolidated and its reporting
currency changed from US Dollars to Pounds Sterling. For the year ending 31
December 2009, the company's revenues in its main markets of Russia and Poland
grew 30% and 27% year-on-year respectively measured in local currency terms.
However, due to exchange rate differences, revenue remained by and large flat at
GBP11.4 million1 with EBITDA growing to GBP1.7 million1 for the year ended 31
December 2009. For Q1 2010, OSG reported revenues of GBP3.0 million2 compared to
GBP2.7 million1 as of the same period in 2009. For the same period, EBITDA was
GBP0.4 million2 up c.90% year-on-year.
The equity valuation of 100% of OSG at 31 March 2010 was GBP29.4 million, an
increase of 8.2% on the equity valuation as at 31 March 2009 of GBP27.2 million,
with the value of Aurora Russia's 95.5% stake at GBP28.1 million. This valuation
also represents an increase of 32% on the equity valuation for the recent
acquisition of OSG.
Unistream Bank
Unistream continued to face a difficult economic environment as year-on-year
growth in the construction sector, which employs many migrant workers, remained
negative in Q1 2010.
According to the Central Bank of Russia ("CBR") the volume of Russia outbound
transfers in Q1 2010 started to grow for the first quarter since the crisis.
Adjusted for the difference in RUR/USD average rates, Q1 2010 volume grew c.12%
year-on-year following a year when, according to the same source, the Russia
outbound remittances market was down c.27% in USD terms.
Based on Q1 2010 statistics published by the CBR, Unistream had c.21% of the
outbound Money Transfer ("MT") market compared to c.24% it had in Q4 2009.
Unistream carefully monitors its market share in each large MT corridor as one
of the most important KPIs for the business. Management attributes half of the
loss of market share since last year to the delay in its annual advertising
campaign due to the scheduled launch of a new front-end operating system.
Seasonal migrants tend to have high rotation and therefore advertising is a very
important channel to capture new clients. The intensified competition in the
market also caused a similar loss of market share. Management's response to a
competitive threat is based on a combination of pricing actions and the
introduction of innovative MT products. In January 2010 Unistream signed an
agreement with a payment terminal company to offer its MT product through its c.
85,000 payment terminals located throughout
Russia. Initially, the service is available for a limited number of destinations
but will soon include all Unistream's pay-out network. Unistream has begun
offering mobile payment services in conjunction with one of Russia's largest
mobile phone networks.
Unistream's revenue for the year ending 31 December 2009 was GBP51.9 million1
down from GBP55.11 million the previous year with EBITDA of GBP1.3million1 down
from GBP2.9 million1. At the end of 2009 management rationalized Unistream's
proprietary distribution by shutting down 88 under-performing cash desks.
Despite these closures, volume in Unistream's cash desks held up well and grew
4% year-on-year in Q1 2010. However, total revenue which includes revenue from
Unistream's own cash desks and its agent network in Q1 2010 showed a 7% decline
year-on-year to GBP9.2 million1. Q1 each year is a very slow quarter in the MT
market and Unistream has always had negative EBITDA in this quarter. However,
although still negative at -GBP0.5 million1 EBITDA was better by GBP0.8 million
versus -GBP1.3 million1 in Q1 2009.
The equity valuation of Unistream at 31 March 2010 was GBP93.85 million, a
decrease of 2.4% on the valuation at 31 March 2009 of GBP96.15 million, with the
value of Aurora's stake at GBP24.4 million.
1 Translated at March 31 2010 spot rate of 1.51 USD/GBP or 44.2 RUR/GBP
2 Translated at the average rate for P&L and end of period rate for Balance
Sheet
Kreditmart
Kreditmart, a wholly owned subsidiary of Aurora Russia, distributes mortgages,
equity release loans, insurance, consumer and car loans, and pension funds.
The volume of new mortgages written by all banks in 2009 has contracted by 77%,
compared to the prior year, to RUR 152.5 billion according to Expert RA. The
market showed the first signs of growth at the end of 2009 and according to some
industry experts the amount of mortgage lending is expected to double to RUR
210-230 billion in 2010 with Q1 2010 volumes meeting these expectations.
During 2009, Kreditmart adapted to market conditions by shifting its focus to
insurance and consumer loans while downsizing to reduce costs. The crisis,
however, had a severe impact on Kreditmart's original growth plans for 2009 and
although broker revenue fell by only 21% year-on-year to GBP0.3 million2, it was
several times below what was projected in the original business plan. Kreditmart
resumed its focus on mortgages from March 2010 as developers began to unfreeze
their projects as the market began the first stages of recovery. For Q1 2010,
Kreditmart reported revenues of c. GBP0.1 million2 which, although small in
absolute terms, corresponds to 100% year-on-year growth.
While there are signs of growth in mortgage lending, the market continues to
prove challenging for the broker model as the number of active mortgage lenders
remains small with large state banks controlling 60-70% of the market.
As previous experience has demonstrated, transparent distribution platforms in
the financial services sector have value for strategic buyers seeking an entry
point into Russia's underserved financial services market. Russia's mortgage
market remains an attractive sector driven by pent-up housing demand and the
growth of the middle class. With mortgage penetration still less than 3% of GDP
and total consumer debt at c.10% of GDP, Russia represents one of the most
attractive growth markets in Europe for mortgages. With much of the mortgage
market void of significant competition, Kreditmart should be well-positioned to
capture market share and scale its business through B2B distribution channels.
Kreditmart is valued together with Flexinvest Bank as both businesses continue
to share common
infrastructure. Flexinvest Bank and Kreditmart have been valued based on the
adjusted net asset approach and Kreditmart's broker operations as at 31 March
2010 contribute c. GBP0.6 million to the total valuation of the combined
business.
Flexinvest Bank
When Flexinvest Bank was acquired by Aurora in May 2008, it was with a view that
it would become a
mortgage bank, booking mortgages originated through Kreditmart and other
brokers. During the crisis year of 2009 this strategy was adjusted with a focus
on preserving liquidity and the origination of short-term, high yield consumer
loans.
The investor market in mortgages has dried up but the appetite for mortgages
amongst banks in Russia is on the rise as many banks suffer from having excess
liquidity and are keen to find low risk banking assets yielding a reasonable
return. This in turn has allowed Flexinvest Bank to return to its original
mortgage based strategy.
Therefore, Flexinvest Bank has begun to originate mortgages on a limited scale
for on-sale to its partner banks with a view to building refinancing
relationships, mortgages, short-term consumer loans as well as offering a range
of deposit and banking products including deposit boxes, currency exchange and
money transfer.
As at 31 March 2010, both Kreditmart and Flexinvest had GBP20.5 million2 in
assets. Net assets stood at GBP19.7 million2 8% down from GBP21.4 million as at
31 March 2009. Principal assets as at 31 March 2010 include a mortgage book net
of provision of approximately GBP8.6 million2 yielding 11.7% p.a., gross cash of
GBP5.5 million and investments in highly liquid fixed income securities of
GBP1.2 million.
The Manager remains confident that Flexinvest Bank will have opportunities to
grow its assets and will continue benefiting from synergies with Kreditmart.
The equity valuation of the combined Kreditmart/Flexinvest Bank business at 31
March 2010 was GBP22.2 million down 3.5% on the valuation at 31 March 2009 of
GBP23.0 million.
1 Translated at March 31 2010 spot rate of 1.51 USD/GBP or 44.2 RUR/GBP
2 Translated at the average rate for P&L and end of period rate for Balance
Sheet
SuperStroy
RosBusinessConsulting ("RBC") estimates that the overall DIY market across
Russia was down by 26-28% in USD terms or 6-9% in RUR in 2009. SuperStroy showed
a 14% decline in RUR revenue which is broadly in line with management's
estimates for the market decline in the Urals where it is the market leader.
After 49% growth in revenues in 2008, and a year in which the company opened 13
new stores, the
management and the board decided that 2009 would be a year of conserving cash
and reducing the company's GBP14.2 million1 of net debt. Therefore, in the year
ending 31 December 2009, the company opened no new stores, reduced its net debt
to GBP7.7 million1 and increased its adjusted EBITDA from a negative
-GBP1.1million1 to a positive GBP3.5 million1. However, the company's revenues
declined by 14% to GBP132.4 million1 with most of the decline due to its
wholesale operations while retail sales were down by only 8%.
For Q1 2010 Superstroy reported revenues of GBP28.0 million1 compared to GBP30.1
million1 as of the same period in 2009 and EBITDA of -GBP0.9 million1 in line
with last year's figure. It should be mentioned that EBITDA for Q1 2010 was
impacted by pre-opening costs as the company started preparing for new store
openings.
In May 2010, the company opened its first stores since the financial crisis; two
large stores in Ufa and
Kamenets-Uralsky and a small store in Snezginsk. Initial sales results from
these stores have exceeded management's expectations.
Despite the difficult situation in the Urals, Superstroy continues to build its
reputation as a market leader and western style retailer with its large format
store in Ufa recently selected as the best DIY hypermarket in Russia by a panel
of 50 industry experts3. The short list included six other stores: two Castorama
stores and one store each of Leroy Merlin, K-Rauta, StroyDepo and Maxidom.
The equity valuation of Superstroy at 31 March 2010 was GBP72.02 million up
32.58% on the valuation at 31 March 2009 of GBP54.32 million, with the value of
Aurora's stake at GBP17.5 million.
Conclusion
Despite the challenges of the global financial crisis, the value of the
portfolio grew by 5.8%4 during the year. The Manager remains positive about the
growth prospects for the services sector in Russia. While the Russian economy
has historically been dependent on the price of commodities, the economy is
becoming more diversified. The services sector should benefit from the continued
diversification away from commodities and grow at a faster rate.
We remain very positive about all of Aurora Russia's investments and we believe
that all five are positioned to benefit from the growth of the services sector
and to gain market share. We are also confident that as the appetite for Russian
assets continues to improve we will be a good position to exit our investments
favourably.
Aurora Investment Advisors Limited
1 Translated at March 31 2010 spot rate of 1.51 USD/GBP or 44.2 RUR/GBP
2 Translated at the average rate for P&L and end of period rate for Balance
Sheet
3 The announcement was made at the Russian DIY sector conference held in Moscow
in May 2010
4 31 March 2009 valuation recalculated as if Aurora had owned 95.5% of OSG as at
31 March 2009
Directors
Dan Collinson Koch - Non-executive Chairman
Mr Koch retired as Chairman of Deloitte & Touche CIS (Deloitte,the Firm) in May
2009. He lived and worked in Russia for 11 years having been CEO and Managing
Partner and latterly Chairman of Deloitte during that period. Under Mr Koch's
leadership Deloitte in Russia and the CIS experienced unprecedented success,
growing from a small predominantly audit practice with approximately 150
professionals into a full service, multi functional, multi office practice with
approximately 3,000 professionals.
Mr Koch has over 30 years of public accounting and international executive
experience having been based in Canada prior to his Russian experience. In
Russia Mr Koch had direct overall responsibility for the Firm's major clients
including Norilsk Nickel, AFK Sistema and MTS.
Grant Cameron - Non-executive Director
Mr Cameron is Managing Director of Investec Asset Management Guernsey Limited.
He is a member of the South African Institute of Chartered Accountants and the
Financial Planners Association of South Africa. In 1988 Mr Cameron joined KPMG
South Africa and was transferred in 1991 to KPMG's Miami office, where he held
the position of Manager of Financial Services. Mr Cameron moved to Investec
Group in 1996 and was Operations Director of Investec Fund Managers SA Limited
from January 1996 until February 2001. Mr Cameron acts as a Director of a number
of investment
funds, and was previously chairman of the Guernsey Investment Funds Association.
He graduated with a B.Comm in 1987 and a B.Acc in 1989 from the University of
Witwatersrand.
James Cook - Non-executive Director
Mr Cook is a Director and joint founder of Aurora Russia Limited. He is also a
Partner and owner of Aurora Investment Advisors Limited which manages Aurora
Russia Limited. In addition, James has non-executive Directorships at ZAO Forus
Bank and ICICI Bank in Russia. He has over 17 years experience in advising,
founding and managing companies in Russia's consumer finance, residential
mortgage lending and leasing sectors. James was one of Russia's pioneers in
consumer finance in Russia and is credited with being the Father of Mortgage
Lending in Russia. Prior to setting up
Aurora Russia, James served as Chairman and CEO of GE Money Bank in Russia.
Before moving to GE, James was Executive Vice President of Delta Capital where
he worked from 1996 to 2004. Whilst at Delta Capital, James served as Chairman
of the Delta Financial Services Group. He was the founder, Chairman and CEO of
ZAO DeltaCredit, Russia's first mortgage bank and was co-founder and Chairman of
ZAO DeltaLeasing (now known as Europlan), a major provider of equipment and
automobile fleet leasing in Russia. In addition, he served as Chairman and CEO
of ZAO DeltaBank
which he built into a major provider of VISA credit cards in Russia and which
was later sold to GE and renamed GE Money Bank. James was a Merit Scholar at
Hampden-Sydney College and holds a B.S. in Finance from Virginia Tech.
John McRoberts - Non-executive Director
Mr McRoberts is one of the founders of Aurora Russia Limited. John is a Director
of Aurora Russia Limited and a partner and owner of Aurora Investment Advisors
Limited which manages Aurora Russia Limited. John has been working in Russia for
over 14 years. Prior to setting up Aurora Russia, he worked as a corporate
financier completing numerous transactions including the sale of Darial TV to
Modern Times Group, the first acquisition of a Russian TV channel by a foreign
strategic buyer, the sale of an outdoor advertising company to News Corporation
and the sale of two property companies to Raven Russia, the AIM listed property
company focusing on Russian commercial real estate. John first began working in
Russia in 1996 with a petrochemical and petroleum product trading company
advising on upstream acquisitions to secure the source of supply of their traded
products. In 1998, John set up Altium Capital's corporate finance business
(formerly Apax Partners & Co. Corporate Finance) in Russia and ran the business
until 2003. In December 2003, John accepted the position to set up and lead the
Corporate Finance Advisory business of Deloitte & Touche in Moscow. John left
Deloitte to set up Aurora Russia. John holds an MBA in Finance from the American
Graduate School of International Management in Arizona and a BSC in Finance from
Arizona State University.
Ben Morgan - Non-executive Director
Mr Morgan is a partner with Carey Olsen in Guernsey in the Corporate Group. He
qualified as a solicitor in 1992 and practised with the City law firm Norton
Rose, during which time he spent time in Russia, before joining Carey Olsen in
1999. Mr Morgan is a Director of a number of Guernsey investment funds.
John Whittle - Non-executive Director
Mr Whittle is a Chartered Accountant. After qualifying in 1978 he joined Price
Waterhouse in London before embarking on a career in business services,
predominantly telecoms. He co-led the business turnaround of Talkland
International (now Vodafone Retail) and was directly responsible for the
strategic shift into retail distribution and its subsequent implementation; he
subsequently worked on the GBP20 million private equity acquisition of Ora
Telecom. He has served on the boards of 3 listed companies. He was until
recently Finance Director of Close Fund Services where he successfully
initiated a restructuring of client financial reporting services and was a key
member of the business transition team.
Alexandr Dumnov - Non-executive Director
Mr Dumnov is a Russian national and has considerable experience working for and
advising Russian companies. He also has strong experience serving on the boards
of both UK and Russian companies. Most recently, Mr Dumnov was a member of the
Board of Deloitte & Touche CIS from 1998 to 2007, after which he became a Non
Executive Director of Trans-Siberian Gold plc, until 2009. He also served as a
Non Executive Director of Siberian Mining and Metallurgical Alliance from 2003
until May 2010 and is presently a Non Executive Director of MDM Bank.
Directors' Report
The Directors of Aurora Russia Limited ('the Company') present their annual
report and audited financial statements of the Company and its Group for the
year ended 31 March 2010.
Background
The Company was incorporated in Guernsey on 22 February 2006 and commenced
activities on 20 March 2006. The Company is a closed ended investment Company
and is registered in Guernsey.
Principal activity
The principal activity of the Company is private equity investment in Russia in
the financial, business and consumer services sectors with the objective of
providing Ordinary Shareholders with an attractive level of capital growth from
investing in a diversified private equity portfolio.
Listing
The Company is listed on the Alternative Investments Market of the London Stock
Exchange ('AIM'), and has complied with the relevant provisions of the rules
governing the admission to and operation of AIM.
Substantial shareholdings
The Company has been notified that the following shareholders had a beneficial
interest of 3% or more of the Company's issued share capital as at 1 May 2010:
+------------------------+--------------------+----------------+
| | Number of shares | Percentage |
| | held | held |
+------------------------+--------------------+----------------+
| Standard Life | 16,866,762 | 14.99% |
| Investments | | |
+------------------------+--------------------+----------------+
| Mr Tim James Slesinger | 15,560,977 | 13.83% |
| ESQ | | |
+------------------------+--------------------+----------------+
| Scottish Widows | 11,287,490 | 10.03% |
+------------------------+--------------------+----------------+
| Aurora Investment | 7,310,000 | 6.50% |
| Advisors | | |
+------------------------+--------------------+----------------+
| M&G Investment | 5,750,000 | 5.11% |
| Management | | |
+------------------------+--------------------+----------------+
| South Yorkshire | 5,750,000 | 5.11% |
| Pension Authority | | |
+------------------------+--------------------+----------------+
| Henderson Global | 3,849,202 | 3.42% |
| Investors | | |
+------------------------+--------------------+----------------+
| Metage Capital | 3,607,254 | 3.21% |
+------------------------+--------------------+----------------+
| UBS Global Asset | 3,373,994 | 3.00% |
| Management | | |
+------------------------+--------------------+----------------+
Business review
The Group's risk exposure, management objectives and policies are disclosed in
note 29 to these financial statements.
A review of the business during the period is contained in the Chairman's
Statement.
Details of significant events since the reporting date are contained in note 34
to the financial statements.
Results and dividends
The results for the period are set out in the attached financial statements.
The Company has not proposed or declared a dividend for the year ended 31 March
2010 (2009: GBPnil).
Incorporation
The Company was registered in Guernsey, Channel Islands on 22 February 2006
under the Companies (Guernsey) Laws 1994 to 1996 (as amended) (the "Old Law")
with registered number 44388. The Old Law has now been superseded by the
Companies (Guernsey) Law 2008 (the "New Law"). The Company has prepared these
financial statements in compliance with the New Law.
Directors
The Directors during the year and to date were as follows:
+----------------------------+----------------------+-------------+
| | Date of Appointment | Date of |
| | | resignation |
| | | |
+----------------------------+----------------------+-------------+
| Dan Koch - Chairman from 8 | 11 August 2008 | |
| September 2008 | | |
+----------------------------+----------------------+-------------+
| Grant Cameron | 24 February 2006 | |
+----------------------------+----------------------+-------------+
| James Cook | 22 February 2006 | |
+----------------------------+----------------------+-------------+
| Christopher Cowan | 9 February 2007 | 31 May |
| | | 2009 |
+----------------------------+----------------------+-------------+
| John McRoberts | 22 February 2006 | |
+----------------------------+----------------------+-------------+
| Ben Morgan | 24 February 2006 | |
+----------------------------+----------------------+-------------+
| John Whittle | 17 January 2008 | |
+----------------------------+----------------------+-------------+
| Alexandr Dumnov | 17 June 2010 | |
+----------------------------+----------------------+-------------+
Directors' and other interests
Directors who held office during the year had the following interests in the
shares of the Company as at 1 May 2010:
+------------------+---------------------------------+
| | Number of ordinary |
| | shares |
+------------------+---------------------------------+
| Dan Koch | 600,000 |
+------------------+---------------------------------+
| James Cook | 299,999 |
+------------------+---------------------------------+
| John McRoberts | 299,999 |
+------------------+---------------------------------+
The Directors have interests in the contracts with the Company as follows:
John McRoberts and James Cook are Directors of Aurora Investment Advisors
Limited ('the Manager'). At year end John McRoberts and James Cook each owned
47.5% of the ordinary shares and 36.25% of the preference shares of the Manager.
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 option provided that certain performance criteria are met.
John McRoberts and James Cook are shareholders and Directors of Aurora Russia
(Cyprus) Limited, which is Investment Advisor to the Manager.
Administration agreement: John Whittle was, until 31 May 2009, a Director of the
administrator, Close Fund Services Limited.
Legal services: Ben Morgan is a partner with Carey Olsen in Guernsey which
provides legal services to the Company.
Directors' remuneration
The Directors received the following emoluments during the year:
+-------+-------------+--------------------------+---------------------------+--------------------------+--------------------------+
| | | Fees | Other | Total | Annualised |
| | | | compensation | | total |
+-------+-------------+--------------------------+---------------------------+--------------------------+--------------------------+
| Dan Koch | 95,000 | | 95,000 | 95,000 |
| | | - | | |
+---------------------+--------------------------+---------------------------+--------------------------+--------------------------+
| Grant Cameron | 20,000 | | 20,000 | 20,000 |
| | | - | | |
+---------------------+--------------------------+---------------------------+--------------------------+--------------------------+
| James Cook | | | | |
| | - | - | - | - |
+---------------------+--------------------------+---------------------------+--------------------------+--------------------------+
| John McRoberts | | | | |
| | - | - | - | - |
+---------------------+--------------------------+---------------------------+--------------------------+--------------------------+
| Christopher | 16,667 | 833 | 17,500 | 17,500 |
| Cowan | | | | |
+---------------------+--------------------------+---------------------------+--------------------------+--------------------------+
| John Whittle | 21,779 | | 21,779 | 21,779 |
| | | - | | |
+---------------------+--------------------------+---------------------------+--------------------------+--------------------------+
| Ben Morgan | 20,000 | | 20,000 | 20,000 |
| | | - | | |
+---------------------+--------------------------+---------------------------+--------------------------+--------------------------+
| Total | | GBP173,446 | GBP833 | GBP174,279 | GBP174,279 |
+-------+-------------+--------------------------+---------------------------+--------------------------+--------------------------+
Up until his resignation, Christopher Cowan received remuneration of GBP40,000
per annum as Director of the Company as well as provided consultancy services,
both to the Manager and to the Company, for which he received a fee of GBP60,000
per annum plus a pro rata daily rate for any time in excess of 50 days per year.
The Manager agreed to contribute a minimum of GBP50,000 to the Company in
respect of the consultancy fees.
Dan Koch receives remuneration of GBP95,000 per annum.
Alexandr Dumnov, who was appointed on 17 June 2010, receives remuneration of
GBP20,000. It was also resolved by the Remuneration Committee that John
Whittle's remuneration would increase to GBP30,000 effective on the same date.
There are no service contracts in existence between the Company and any Director
but each of the Directors was appointed by letter of appointment which sets out
the main terms of his appointment.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with International Financial Reporting Standards and
applicable law.
The financial statements are required by law to give a true and fair view of the
state of affairs of the Group and Company and of the profit or loss of the Group
and the Company for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject to
any material
departures disclosed and explained in the financial statements; and
- prepare the financial statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Group and the Company and to enable them to ensure that the financial statements
comply with The Companies (Guernsey) Law, 2008. They have general
responsibility for taking such steps as are reasonably open to them to safeguard
the assets of the Group and the Company and to prevent and detect fraud and
other irregularities.
Disclosure of information to the auditor
The Directors who held office at the date of this Directors' report confirm
that, so far they are each aware, there is no relevant audit information of
which the Group's Auditor is unaware; and each Director has taken all the steps
that he ought to have taken as a Director to make himself aware of any relevant
audit information and to establish that the Group's Auditor is aware of that
information.
Going concern
Having made appropriate enquiries, the Directors have reasonable expectation
that the Group and the Company has adequate resources to continue in operational
existence for the foreseeable future. For this reason they continue to adopt
the going concern basis in preparing the Group and the Company financial
statements.
Corporate governance
The Directors' report on Corporate Governance is detailed on pages 16 to 17 of
these financial statements. As a Company incorporated in Guernsey, the Company
is not required to comply with the Combined Code on Corporate Governance.
However, it is the Company's policy to comply with best practice on good
corporate governance that is applicable to investment companies. The Board
believes that the Company has complied throughout the accounting period with the
provisions set out in the Combined Code on Corporate Governance (the "Code")
issued by the Financial Reporting Council subject to the statements made in the
Corporate Governance report on pages 16 to 17.
Auditor
A resolution for the re-appointment of KPMG Channel Islands Limited will be
proposed at the forthcoming annual general meeting.
By order of the Board,
+--------------------+---------------------------------+
| John Whittle | Ben Morgan |
+--------------------+---------------------------------+
| Director | Director |
+--------------------+---------------------------------+
28 June 2010
Corporate Governance
Combined Code
As a Company incorporated in Guernsey, there is no requirement for the Company
to comply with the Combined Code on Corporate Governance. The Company has,
however, adopted a policy to comply with best practice on good corporate
governance that is applicable to investment companies. To the extent considered
appropriate for an investment Company the Board believes that the Company has
complied throughout the accounting period with the provisions set out in the
Combined Code on Corporate Governance (the 'Code') issued by the Financial
Reporting Council in June 2008 and of the recommendations and guidelines issued
by the Association of Investment Companies Code of Corporate Governance ('AIC
Code'), as described in the following paragraphs.
The Board and Board Committees
All the Directors of the Company are non-executive Directors. The Board does
not feel it is appropriate to appoint a chief executive or senior independent
Director as day to day management of the Company's assets is delegated to the
Manager.
The Chairman is Dan Koch. The Directors consider that the Chairman is
independent for the purposes of the Combined Code. The Board considers that,
with the exception of James Cook and John McRoberts, the Directors are
independent of the Manager.
The full Board meets at least four times a year to consider, as appropriate,
such matters as overall strategy, investment performance, share price
performance, the shareholder profile of the Company, communications with
shareholders, transactional and other general matters affecting the Company. The
Board considers that it meets sufficiently regularly to discharge its duties
effectively.
During the year the Audit Committee comprised Ben Morgan, Grant Cameron,
Christopher Cowan (resigned on 31 May 2009) and John Whittle. The Committee is
responsible for ensuring that the financial performance of the Company is
properly reported on and monitored. The Audit Committee reviews the annual and
interim accounts, results, announcements, internal control systems and
procedures and accounting policies of the Company. It meets a minimum of three
times a year but where appropriate the meetings shall coincide with key dates in
the Company's financial reporting cycle. John Whittle was appointed as Chairman
of the Audit Committee in place of Christopher Cowan. Alexandr Dumnov was
appointed to the Audit Committee on 17 June 2010.
During the year the Valuation Committee comprised Christopher Cowan (resigned on
31 May 2009), Ben Morgan, John Whittle, Grant Cameron and Dan Koch. It is
responsible for valuing proposed investments and revaluing investments on an
ongoing basis. It meets at least twice a year. John Whittle was appointed as
Chairman of the Valuation Committee in place of Christopher Cowan. Alexandr
Dumnov was appointed to the Valuation Committee on 17 June 2010.
The Remuneration Committee comprises Ben Morgan, John Whittle and Dan Koch. It
is responsible for reviewing the performance of Directors, the scale and
structure of remuneration and Directors' letters of appointment. It meets a
minimum of twice a year. During the period, it was resolved that Ben Morgan
would Chair the Remuneration Committee in place of John Whittle.
The number of meetings of the full Board and those committees attended by each
Director from 1 April 2009 up to the date of this report is set out below.
+---------------+------+----------+------+----------+------+----------+------+----------+
| | Full Board | Audit | Valuation | Remuneration |
| | | Committee | Committee | Committee |
+---------------+-----------------+-----------------+-----------------+-----------------+
| |Held |Attended |Held |Attended |Held |Attended |Held |Attended |
+---------------+------+----------+------+----------+------+----------+------+----------+
| Dan Koch | 9 | 7 | N/A | N/A | 4 | 3 | 3 | 3 |
+---------------+------+----------+------+----------+------+----------+------+----------+
| John | 9 | 6 | N/A | N/A | N/A | N/A | N/A | N/A |
| McRoberts | | | | | | | | |
+---------------+------+----------+------+----------+------+----------+------+----------+
| James Cook | 9 | 7 | N/A | N/A | N/A | N/A | N/A | N/A |
+---------------+------+----------+------+----------+------+----------+------+----------+
| Christopher | 2 | 1 | N/A | N/A | N/A | N/A | N/A | N/A |
| Cowan | | | | | | | | |
+---------------+------+----------+------+----------+------+----------+------+----------+
| Ben Morgan | 11 | 10 | 2 | 2 | 4 | 4 | 3 | 2 |
+---------------+------+----------+------+----------+------+----------+------+----------+
| Grant Cameron | 10 | 8 | 2 | 2 | 4 | 4 | N/A | N/A |
| | | | | | | | | |
+---------------+------+----------+------+----------+------+----------+------+----------+
| John Whittle | 12 | 11 | 2 | 2 | 4 | 4 | 3 | 3 |
+---------------+------+----------+------+----------+------+----------+------+----------+
The Board receives information that it considers to be appropriate to enable it
to discharge its duties. Directors usually receive board papers several days in
advance of board meetings and are able to consider in detail any issues to be
discussed at the relevant meeting.
All the Directors are entitled to have access to independent professional advice
at the Company's expense where they deem it necessary to discharge their
responsibilities as Directors.
The Board has delegated day-to-day management of the Company's assets to the
Manager. All decisions relating to the Company's investment policy, investment
objectives, investment decisions, dividend policy, gearing, corporate governance
procedures and strategy in general are, however, reserved to the Board. The
Board evaluates the Manager's performance on an annual basis and monitors the
Manager to ensure that the Company's assets are being managed in accordance with
the guidelines set out by the Board.
Performance of Board and proposal for re-election
The performance of each Director will be appraised by the Remuneration Committee
prior to the holding of the Annual General Meeting for each year. The
performance of each Board committee will be appraised by the Board as a whole.
In accordance with the Combined Code, each Director is standing for re-election
at the Annual General Meeting in 2010. However, pursuant to the articles of
association of the Company, following the Annual General Meeting in 2010, one
third, or the number nearest to but not exceeding one third, of the Directors
will retire and stand for re-election at the annual general meeting each year,
provided that each Director shall retire and stand for re-election at intervals
of no more than three years. Each Director is appointed subject to the
provisions of the articles of association in relation to retirement as described
above.
The Directors believe that the Board has a balance of skills and experience
which enables it to provide effective strategic leadership and proper governance
of the Company. The Board believes that each Director's performance continues to
be effective and to demonstrate commitment to the role and therefore supports
the re-election of the Chairman and each of the other Directors per the articles
of association of the Company. Information on the Directors, including their
relevant experience, is set out on pages 10 to 11.
Audit and internal controls
The Board reviewed the effectiveness of the Company's system of internal
controls, including financial, operational and compliance controls and risk
management systems and has put in place procedures for the review of such
controls on an annual basis. Risk is managed by the Directors rather than
eliminated and can only provide reasonable assurance against material
misstatement or loss.
The Audit Committee meets at least three times a year and considers reports from
the independent auditors, the Manager and the administrator. The main
responsibilities of the Audit Committee include monitoring the integrity of the
Company's financial statements and appropriateness of its accounting policies,
reviewing the effectiveness of the internal control systems and making
recommendations to the Board regarding the appointment and independence of the
external auditor and the objectivity and effectiveness of the audit process,
with particular regard to the level of non-audit fees, if any. Shareholders have
the opportunity at each annual general meeting to vote on the election of the
independent auditors for the forthcoming year.
In view of the small number of transactions to date the Company has not yet
considered it necessary to establish an internal audit function. The Board
considers that the systems and procedures put in place by the Manager and the
administrator have been adequate to safeguard shareholders' interests. The Board
reviews an internal controls and risks monitoring report both for the Company
(annually) and for Kreditmart twice yearly. The Board will continue to keep this
matter under review.
Relations with shareholders
The Board welcomes correspondence from shareholders, addressed to the Company's
registered office. All shareholders have the opportunity to put questions to
the Board at the Annual General Meeting.
The Board believes that sustainable financial performance and delivering on the
objectives of the Company are indispensable measures in order to build trust
with the Company's shareholders. In order to promote a clear understanding of
the Company, its objectives and financial results the Board aims to ensure that
information relating to the Company is disclosed in a timely manner and in a
format suitable to the shareholders of the Company.
The Board has also encouraged the Manager to identify a sample of investors for
periodic meetings to encourage communication and to ensure the concerns of
shareholders are addressed.
The Articles of Incorporation state that a Continuation Vote via an Ordinary
resolution will be held proposing the extension of the life of the Company, at
the 2010 Annual General Meeting and every 5 years thereafter.
Independent auditor's report to the members of Aurora Russia Limited
We have audited the Group and Company financial statements (the "financial
statements") of Aurora Russia Limited (the "Company") for the year ended 31
March 2010 which comprise the Consolidated and Company Statement of
Comprehensive Income, the Consolidated and Company Statement of Financial
Position, the Consolidated and Company Statement of Changes in Equity and the
Consolidated and Company Statement of Cash Flows and the related notes. These
financial statements have been prepared under the accounting policies set out
therein.
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been
undertaken so that we might state to the Company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Directors and Auditors
The Directors' are responsible for preparing the financial statements which give
a true and fair view and are in accordance with International Financial
Reporting Standards and are in compliance with applicable Guernsey Law as set
out in the Statement of Directors' Responsibilities on page 14.
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, are in accordance with International Financial Reporting
Standards and comply with the Companies (Guernsey) Law, 2008. 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 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 of the state of the Group's and Company's affairs as
at 31 March 2010 and of Group's and Company's profit for the year then ended;
- are in conformity with International Financial Reporting Standards; and
- comply with the Companies (Guernsey) Law, 2008.
KPMG Channel Islands Limited
Chartered Accountants
PO Box 20
20 New Street
St. Peter Port
Guernsey
GY1 4AN
29 June 2010
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2010
+------+------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | Year | Year |
+-------------------------------------+-------+----------+--------------+
| | | ended | ended |
+-------------------------------------+-------+----------+--------------+
| | | 31 | 31 March |
| | | March | 2009 |
| | | 2010 | |
+-------------------------------------+-------+----------+--------------+
| |Notes | GBP'000 | GBP'000 |
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Revenue: | | 5,193 | 2,677 |
+-------------------------------------+-------+----------+--------------+
| - Fees | | 323 | 394 |
+-------------------------------------+-------+----------+--------------+
| - Storage | | 1,575 | |
| | | | - |
+-------------------------------------+-------+----------+--------------+
| - Warehousing, transport, data | | 1,420 | |
| processing and other | | | - |
+-------------------------------------+-------+----------+--------------+
| - Interest on long term mortgages | | 1,062 | 1,300 |
| and other loans | | | |
+-------------------------------------+-------+----------+--------------+
| - Loan interest | | 321 | 281 |
+-------------------------------------+-------+----------+--------------+
| - Bank interest | | 245 | 590 |
+-------------------------------------+-------+----------+--------------+
| - Dividend income | | 247 | 112 |
+-------------------------------------+-------+----------+--------------+
| Administration and operating | 4 | (10,066) | (12,519) |
| expenses | | | |
+-------------------------------------+-------+----------+--------------+
| Fair value movements on revaluation | 13 | 5,629 | 7,531 |
| of investments | | | |
+-------------------------------------+-------+----------+--------------+
| Fair value movements on derivatives | 18 | | (525) |
| | | - | |
+-------------------------------------+-------+----------+--------------+
| Impairment of goodwill | 7 | | (236) |
| | | - | |
+-------------------------------------+-------+----------+--------------+
| Exchange (losses)/gains | | (8) | 4,081 |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Operating income | | 748 | 1,009 |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Interest expense | | (95) | (21) |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Profit before income tax | | 653 | 988 |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Income tax expense | 5 | 3 | (562) |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Profit for the year | | 656 | 426 |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Other comprehensive income | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Foreign currency translation | | 337 | (805) |
| differences for foreign operations | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Total comprehensive income for the | | 993 | (379) |
| year | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Profit attributable to: | | | |
+-------------------------------------+-------+----------+--------------+
| Owners of the Company | 23 | 665 | 426 |
+-------------------------------------+-------+----------+--------------+
| Non-controlling interest | | (9) | |
| | | | - |
+-------------------------------------+-------+----------+--------------+
| Profit for the year | | 656 | 426 |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Total comprehensive income/(loss) | | | |
| attributable to: | | | |
+-------------------------------------+-------+----------+--------------+
| Owners of the Company | | 1,012 | (379) |
+-------------------------------------+-------+----------+--------------+
| Non-controlling interest | | (19) | |
| | | | - |
+-------------------------------------+-------+----------+--------------+
| Total comprehensive income/(loss) | | 993 | (379) |
| for the year | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Basic and diluted earnings per | 6 | | |
| share | | 0.80p | 0.57p |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| All items in the above statement derive | | |
| from continuing operations. | | |
+---------------------------------------------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | |
+------+----------------------------------------------------------------+
| | | | | |
+------+------------------------------+-------+----------+--------------+
Company Statement of Comprehensive Income
For the year ended 31 March 2010
+-------+-----------------------------+-------+----------+--------------+
| | | Year | Year |
+-------------------------------------+-------+----------+--------------+
| | | ended | ended |
+-------------------------------------+-------+----------+--------------+
| | | 31 | 31 March |
| | | March | 2009 |
| | | 2010 | |
+-------------------------------------+-------+----------+--------------+
| |Notes | GBP'000 | GBP'000 |
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Revenue | | 659 | 665 |
+-------------------------------------+-------+----------+--------------+
| - Loan interest | | 399 | 281 |
+-------------------------------------+-------+----------+--------------+
| - Bank interest | | 13 | 272 |
+-------------------------------------+-------+----------+--------------+
| - Dividend income | | 247 | 112 |
+-------------------------------------+-------+----------+--------------+
| Administration and operating | 4 | (3,341) | (3,331) |
| expenses | | | |
+-------------------------------------+-------+----------+--------------+
| Fair value movements on revaluation | 13 | 7,656 | (3,867) |
| of investments | | | |
+-------------------------------------+-------+----------+--------------+
| Fair value movements on derivatives | 18 | | (525) |
| | | - | |
+-------------------------------------+-------+----------+--------------+
| Other exchange gains/(losses) | | (146) | 737 |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Operating income/(loss) before tax | | 4,828 | (6,321) |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Income tax expense | 5 | | |
| | | - | - |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Profit and total comprehensive | 23 | 4,828 | (6,321) |
| income/(loss) for the year | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| Basic and diluted profit/(loss) per | 6 | | |
| share | | 5.78p | (8.43p) |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| All items in the above statement derive | | |
| from continuing operations. | | |
+---------------------------------------------+----------+--------------+
| | | | |
+-------------------------------------+-------+----------+--------------+
| | |
+-------+---------------------------------------------------------------+
| | | | | |
+-------+-----------------------------+-------+----------+--------------+
Consolidated Statement of Financial Position
As at 31 March 2010
+----------+--------+----------+--------------------------+----+--+--------+----------+-+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | | 31 March 2010 | 31 March |
| | | | 2009 |
+---------------------------------------------------------+-------+---------------------+------------+
| |Notes | GBP'000 | GBP'000 |
+---------------------------------------------------------+-------+---------------------+------------+
| Non-current assets | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Goodwill | 7 | 14,164 | - |
+---------------------------------------------------------+-------+---------------------+------------+
| Intangible assets | 8 | 11,078 | 2,273 |
+---------------------------------------------------------+-------+---------------------+------------+
| Property, plant and equipment | 10 | 6,444 | 1,019 |
+---------------------------------------------------------+-------+---------------------+------------+
| Investments - at fair value through profit and loss | 13 | 43,085 | 51,833 |
+---------------------------------------------------------+-------+---------------------+------------+
| Loans and advances to customers | 14 | 8,618 | 9,569 |
+---------------------------------------------------------+-------+---------------------+------------+
| Deferred tax assets | 5 | 190 | 191 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | | 83,579 | 64,885 |
+---------------------------------------------------------+-------+---------------------+------------+
| Current assets | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Trade and other receivables | 15 | 4,450 | 1,711 |
+---------------------------------------------------------+-------+---------------------+------------+
| Cash and cash equivalents | 16 | 13,242 | 12,022 |
+---------------------------------------------------------+-------+---------------------+------------+
| Assets classified as held for sale | 9 | 845 | - |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | | 18,537 | 13,733 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Total assets | | 102,116 | 78,618 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Non-current liabilities | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Finance leases | 17 | 1,567 | - |
+---------------------------------------------------------+-------+---------------------+------------+
| Deferred tax liability | 5 | 1,699 | - |
+---------------------------------------------------------+-------+---------------------+------------+
| | | 3,266 | - |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Current liabilities | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Finance leases | 17 | 719 | - |
+---------------------------------------------------------+-------+---------------------+------------+
| Derivative liabilities | 18 | - | 46 |
+---------------------------------------------------------+-------+---------------------+------------+
| Trade and other payables | 19 | 4,602 | 742 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | | 5,321 | 788 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Total liabilities | | 8,587 | 788 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Equity | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Share capital | 20 | 1,125 | 750 |
+---------------------------------------------------------+-------+---------------------+------------+
| Special reserve | 21 | 84,073 | 70,750 |
+---------------------------------------------------------+-------+---------------------+------------+
| Share options reserve | 22 | 2,437 | 1,820 |
+---------------------------------------------------------+-------+---------------------+------------+
| Retained earnings | 23 | 5,857 | 5,320 |
+---------------------------------------------------------+-------+---------------------+------------+
| Non-controlling interest | | 500 | - |
+---------------------------------------------------------+-------+---------------------+------------+
| Translation reserve | 24 | (463) | (810) |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Total equity | | 93,529 | 77,830 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Total equity and liabilities | | 102,116 | 78,618 |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| Net asset value per share - Basic and Diluted | 25 | 83.1p | |
| | | | 103.8p |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | |
+----------+-----------------------------------------------------------------------------------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| John Whittle | | Ben | |
| | | Morgan | |
+---------------------------------------------------------+----+-----------+-------------------------+
| Director | Director | | |
+---------------------------------------------------------+----------------+----------+--------------+
| | | | |
+---------------------------------------------------------+-------+---------------------+------------+
| | | |
+-------------------+----------+---------------------------------------------------------------------+
| | | | | | | | | | |
+----------+--------+----------+--------------------------+----+--+--------+----------+-+------------+
Company Statement of Financial Position
As at 31 March 2010
+--------+----------------------------+----+-------+----+----------+----+-------------+
| | | 31 March 2010 | 31 March |
| | | | 2009 |
+------------------------------------------+-------+--------------------+-------------+
| |Notes | GBP'000 | GBP'000 |
+------------------------------------------+-------+--------------------+-------------+
| Non-current assets | | | |
+------------------------------------------+-------+--------------------+-------------+
| Investment in subsidiaries - at fair | 11 | 50,300 | 23,000 |
| value through profit and loss | | | |
+------------------------------------------+-------+--------------------+-------------+
| Investments - at fair value through | 13 | 41,900 | 51,800 |
| profit and loss | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | 92,200 | 74,800 |
+------------------------------------------+-------+--------------------+-------------+
| Current assets | | | |
+------------------------------------------+-------+--------------------+-------------+
| Trade and other receivables | 15 | 1,171 | 1,112 |
+------------------------------------------+-------+--------------------+-------------+
| Cash and cash equivalents | 16 | 5,704 | 4,123 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | 6,875 | 5,235 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| Total assets | | 99,075 | 80,035 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| Current liabilities | | | |
+------------------------------------------+-------+--------------------+-------------+
| Derivative liabilities | 18 | - | 46 |
+------------------------------------------+-------+--------------------+-------------+
| Trade and other payables | 19 | 89 | 129 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| Total liabilities | | 89 | 175 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| Equity | | | |
+------------------------------------------+-------+--------------------+-------------+
| Share capital | 20 | 1,125 | 750 |
+------------------------------------------+-------+--------------------+-------------+
| Special reserve | 21 | 84,073 | 70,750 |
+------------------------------------------+-------+--------------------+-------------+
| Share options reserve | 22 | 2,420 | 1,820 |
+------------------------------------------+-------+--------------------+-------------+
| Retained earnings | 23 | 11,368 | 6,540 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| Total equity | | 98,986 | 79,860 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| Total equity and liabilities | | 99,075 | 80,035 |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| Net asset value per share - Basic and | 25 | 88.0p | |
| Diluted | | | 106.5p |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| John Whittle | | Ben Morgan | |
+-------------------------------------+----+-----------------------+------------------+
| Director | | | |
| | Director | | |
+-------------------------------------+-----------------+----------+------------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | | | |
+------------------------------------------+-------+--------------------+-------------+
| | |
+--------+----------------------------------------------------------------------------+
| | | | | | | | |
+--------+----------------------------+----+-------+----+----------+----+-------------+
Consolidated Statement of Changes in Equity
For the year ended 31 March 2010
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | Share | Special | Share | Retained | Translation | | Non-controlling | |
| | | | | | Options | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | Capital | Reserve | Reserve | Earnings | Reserve | Total | Interest | Total |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | |Notes | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| For | | | | | | | | | |
| the | | | | | | | | | |
| year 1 | | | | | | | | | |
| April | | | | | | | | | |
| 2008 | | | | | | | | | |
| to 31 | | | | | | | | | |
| March | | | | | | | | | |
| 2009 | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Balance | | 750 | 70,750 | 1,220 | 4,894 | (5) | 77,609 | | 77,609 |
| at 1 | | | | | | | | - | |
| April | | | | | | | | | |
| 2008 | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Total | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income for | | | | | | | | | |
| the year | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Profit | | | | | 426 | | 426 | | 426 |
| for | | - | - | - | | - | | - | |
| the | | | | | | | | | |
| year | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Other | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income for | | | | | | | | | |
| the year | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Foreign | | | | | | (805) | (805) | | (805) |
| currency | | - | - | - | - | | | - | |
| translation | | | | | | | | | |
| loss | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Transactions | | | | | | | | |
| with owners, | | | | | | | | |
| recorded | | | | | | | | |
| directly in | | | | | | | | |
| equity | | | | | | | | |
+-------------------------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Contributions | | | | | | | | | |
| and | | | | | | | | | |
| distributions | | | | | | | | | |
| to owners | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Recognition | 22 | | | 600 | | | 600 | | 600 |
| of | | - | - | | - | - | | - | |
| share-based | | | | | | | | | |
| payments | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| At 31 | | 750 | 70,750 | 1,820 | 5,320 | (810) | 77,830 | | 77,830 |
| March | | | | | | | | - | |
| 2009 | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| For | | | | | | | | | |
| the | | | | | | | | | |
| year 1 | | | | | | | | | |
| April | | | | | | | | | |
| 2009 | | | | | | | | | |
| to 31 | | | | | | | | | |
| March | | | | | | | | | |
| 2010 | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Balance | | 750 | 70,750 | 1,820 | 5,320 | (810) | 77,830 | | 77,830 |
| as at 1 | | | | | | | | - | |
| April | | | | | | | | | |
| 2009 | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Total | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income for | | | | | | | | | |
| the year | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Profit | | | | | 665 | | 665 | (9) | 656 |
| for | | - | - | - | | - | | | |
| the | | | | | | | | | |
| year | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Other | | | | | | | | | |
| comprehensive | | | | | | | | | |
| income for | | | | | | | | | |
| the year | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Foreign | | | | | | 347 | 347 | (10) | 337 |
| currency | | - | - | - | - | | | | |
| translation | | | | | | | | | |
| loss | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Transactions | | | | | | | | |
| with owners, | | | | | | | | |
| recorded | | | | | | | | |
| directly in | | | | | | | | |
| equity | | | | | | | | |
+-------------------------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Contributions | | | | | | | | | |
| and | | | | | | | | | |
| distributions | | | | | | | | | |
| to owners | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Issue |20,21 | 375 | 13,825 | | | | 14,200 | | 14,200 |
| of | | | | - | - | - | | - | |
| ordinary | | | | | | | | | |
| shares | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Share | 21 | | (502) | | | | (502) | | (502) |
| issue | | - | | - | - | - | | - | |
| costs | | | | | | | | | |
| on | | | | | | | | | |
| Placement | | | | | | | | | |
| Shares | | | | | | | | | |
| issued | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Acquisition | 12 | | | | | | | 390 | 390 |
| of | | - | - | - | - | - | - | | |
| subsidiary | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Recognition | 22 | | | 617 | | | 617 | 1 | 618 |
| of | | - | - | | - | - | | | |
| share-based | | | | | | | | | |
| payments | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Changes | | | | | | | | | |
| in | | | | | | | | | |
| ownership | | | | | | | | | |
| interests | | | | | | | | | |
| in | | | | | | | | | |
| subsidiaries | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| that | | | | | | | | | |
| do not | | | | | | | | | |
| result | | | | | | | | | |
| in a | | | | | | | | | |
| loss | | | | | | | | | |
| of | | | | | | | | | |
| control | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| Acquisition |11,23 | | | | (128) | | (128) | 128 | |
| of | | - | - | - | | - | | | - |
| non-controlling | | | | | | | | | |
| interests in | | | | | | | | | |
| subsidiary | | | | | | | | | |
+-----------------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| | | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
| At 31 | | 1,125 | 84,073 | 2,437 | 5,857 | (463) | 93,029 | 500 | 93,529 |
| March | | | | | | | | | |
| 2010 | | | | | | | | | |
+----------+------+-------+---------+---------+----------+----------+-------------+---------+-----------------+---------+
Company Statement of Changes in Equity
For the year ended 31 March 2010
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | Share | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | | Share | Special | Options | Retained | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | Notes | Capital | Reserve | Reserve | Earnings | Total |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| For the year 1 April 2008 to | | | | | | |
| 31 March 2009 | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Balance as at 1 April 2008 | | 750 | 70,750 | 1,220 | 12,861 | 85,581 |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Total comprehensive loss for | | | | | | |
| the year | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| Loss for the year | | | | | (6,321) | (6,321) |
| | | - | - | - | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Transactions with owners, | | | | | | |
| recorded directly in equity | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Contributions and | | | | | | |
| distributions to owners | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| Recognition of share-based | 22 | | | 600 | | 600 |
| payments | | - | - | | - | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| At 31 March 2009 | | 750 | 70,750 | 1,820 | 6,540 | 79,860 |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| For the year 1 April 2009 to | | | | | | |
| 31 March 2010 | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Balance as at 1 April 2009 | | 750 | 70,750 | 1,820 | 6,540 | 79,860 |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Total comprehensive profit | | | | | | |
| for the year | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| Profit for the year | | | | | 4,828 | 4,828 |
| | | - | - | - | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Transactions with owners, | | | | | | |
| recorded directly in equity | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Contributions and | | | | | | |
| distributions to owners | | | | | | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Issue of ordinary shares |20,21 | 375 | 13,825 | | | 14,200 |
| | | | | - | - | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Share issue costs on | 21 | | (502) | | | (502) |
| Placement Shares issued | | - | | - | - | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| Recognition of share-based | 22 | | | 600 | | 600 |
| payments | | - | - | | - | |
+------------------------------+-------+---------+---------+----------+----------+---------+
| | | | | | | | |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
| At 31 March 2010 | | 1,125 | 84,073 | 2,420 | 11,368 | 98,986 |
+-+----------------------------+-------+---------+---------+----------+----------+---------+
Consolidated Statement of Cash Flows
For the year ended 31 March 2010
+-------+------------------------------+-------+----------+----------+
| | | Year | Year |
+--------------------------------------+-------+----------+----------+
| | | ended | ended |
+--------------------------------------+-------+----------+----------+
| |Notes | 31 | 31 |
| | | March | March |
| | | 2010 | 2009 |
+--------------------------------------+-------+----------+----------+
| Cash flows from operating activities | | GBP'000 | GBP'000 |
| | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Profit before tax | | 653 | 988 |
+--------------------------------------+-------+----------+----------+
| Loan interest | | (321) | (281) |
+--------------------------------------+-------+----------+----------+
| Bank interest | | (245) | (590) |
+--------------------------------------+-------+----------+----------+
| Dividend income | | (247) | (112) |
+--------------------------------------+-------+----------+----------+
| | | (160) | 5 |
+--------------------------------------+-------+----------+----------+
| Adjustments for movements in working | | | |
| capital: | | | |
+--------------------------------------+-------+----------+----------+
| Decrease/(increase) in operating trade and | (554) | 53 |
| other receivables | | |
+----------------------------------------------+----------+----------+
| Increase in operating trade and | | 1,422 | 14 |
| other payables | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Adjust for: | | | |
+--------------------------------------+-------+----------+----------+
| Revaluation of investments | | (5,628) | (7,531) |
+--------------------------------------+-------+----------+----------+
| Recognised share based payments | 22 | 617 | 600 |
+--------------------------------------+-------+----------+----------+
| Fair value movements on revaluation | | | 525 |
| of derivatives | | - | |
+--------------------------------------+-------+----------+----------+
| Depreciation and amortisation | | 635 | 385 |
+--------------------------------------+-------+----------+----------+
| Impairment of goodwill | | | 236 |
| | | - | |
+--------------------------------------+-------+----------+----------+
| Loss on property, plant and | | 61 | |
| equipment written off | | | - |
+--------------------------------------+-------+----------+----------+
| Provision for loan losses | | (370) | 1,782 |
+--------------------------------------+-------+----------+----------+
| Allowance for doubtful debts | | 92 | |
| | | | - |
+--------------------------------------+-------+----------+----------+
| Other interest income | | (1,061) | |
| | | | - |
+--------------------------------------+-------+----------+----------+
| Interest paid | | (83) | 21 |
+--------------------------------------+-------+----------+----------+
| Taxation paid | | (62) | (7) |
+--------------------------------------+-------+----------+----------+
| Dividend income | | 247 | 112 |
+--------------------------------------+-------+----------+----------+
| Interest received | | 1,404 | 529 |
+--------------------------------------+-------+----------+----------+
| Exchange gains/(losses) | | 8 | (4,081) |
+--------------------------------------+-------+----------+----------+
| Loss on forex contract closed out | | (46) | (519) |
+--------------------------------------+-------+----------+----------+
| Loans advanced to customers | | 527 | 7,194 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Net cash outflow from operating | | (2,951) | (682) |
| activities | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Cash flows from investing activities | | | |
+--------------------------------------+-------+----------+----------+
| Acquisition of subsidiary net of | 12 | (567) | (3,082) |
| cash acquired | | | |
+--------------------------------------+-------+----------+----------+
| Acquisition of investments | 13 | (1,098) | (15) |
+--------------------------------------+-------+----------+----------+
| Acquisition of property, plant and | | (549) | (168) |
| equipment | | | |
+--------------------------------------+-------+----------+----------+
| Proceeds on sale of property, plant | | | 38 |
| & equipment | | - | |
+--------------------------------------+-------+----------+----------+
| Loans advanced to associated company | | (307) | (356) |
+--------------------------------------+-------+----------+----------+
| Decrease in deposits | | 200 | (1,639) |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Net cash outflow from investing | | (2,321) | (5,222) |
| activities | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Cash flows from financing activities | | | |
+--------------------------------------+-------+----------+----------+
| Proceeds from issue of ordinary | | 7,000 | |
| share capital | | | - |
+--------------------------------------+-------+----------+----------+
| Issue costs | 21 | (502) | |
| | | | - |
+--------------------------------------+-------+----------+----------+
| Financial lease payments - principal | | (284) | |
| | | | - |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Net cash inflow from financing | | 6,214 | |
| activities | | | - |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Net increase/(decrease) in cash and cash | 942 | (5,904) |
| equivalents | | |
+----------------------------------------------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Opening cash and cash equivalents | | 12,022 | 17,806 |
+--------------------------------------+-------+----------+----------+
| Effect of exchange rate changes | | 278 | 120 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Closing cash and cash equivalents | 16 | 13,242 | 12,022 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| | |
+-------+------------------------------------------------------------+
| | | | | |
+-------+------------------------------+-------+----------+----------+
Company Statement of Cash Flows
For the year ended 31 March 2010
+----------+----------------------------+--------------+---------+------------------------------+
| | | Year | Year |
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| | | ended | ended |
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| | Note | 31 | 31 March |
| | | March | 2009 |
| | | 2010 | |
+---------------------------------------+--------------+---------+------------------------------+
| | | GBP'000 | GBP'000 |
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Cash flows from operating activities | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Profit/(loss) before tax | | 4,828 | (6,321) |
+---------------------------------------+--------------+---------+------------------------------+
| Loan interest | | (399) | (281) |
+---------------------------------------+--------------+---------+------------------------------+
| Bank interest | | (13) | (272) |
+---------------------------------------+--------------+---------+------------------------------+
| Dividend income | | (247) | (112) |
+---------------------------------------+--------------+---------+------------------------------+
| | | 4,169 | (6,986) |
+---------------------------------------+--------------+---------+------------------------------+
| Adjustments for movements in working | | | |
| capital: | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Increase in operating trade and other | | (75) | (548) |
| receivables | | | |
+---------------------------------------+--------------+---------+------------------------------+
| (Decrease)/increase in operating trade and other | (39) | 26 |
| payables | | |
+------------------------------------------------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Adjust for: | | | |
+---------------------------------------+--------------+---------+------------------------------+
| (Profit)/loss on revaluation of | | (7,656) | 3,867 |
| investments | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Recognised share based payments | 22 | 600 | 600 |
+---------------------------------------+--------------+---------+------------------------------+
| Fair value movements on revaluation | | | 525 |
| of derivatives | | - | |
+---------------------------------------+--------------+---------+------------------------------+
| Exchange losses/(gains) | | 146 | (737) |
+---------------------------------------+--------------+---------+------------------------------+
| Loss on forex contract closed out | | (46) | (519) |
+---------------------------------------+--------------+---------+------------------------------+
| Dividend income | | 247 | 112 |
+---------------------------------------+--------------+---------+------------------------------+
| Bank interest received | | 29 | 312 |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Net cash outflow from operating | | (2,625) | (3,348) |
| activities | | | |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Cash flows from investing activities | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Acquisition of investments | | | (15) |
| | | - | |
+---------------------------------------+--------------+---------+------------------------------+
| Acquisition of subsidiary | | (1,985) | |
| | | | - |
+---------------------------------------+--------------+---------+------------------------------+
| Loans advanced to associated company | | (307) | (356) |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Net cash outflow from investing | | (2,292) | (371) |
| activities | | | |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Cash flows from financing activities | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Proceeds from issue of ordinary share | | 7,000 | |
| capital | | | - |
+---------------------------------------+--------------+---------+------------------------------+
| Issue costs | 21 | (502) | |
| | | | - |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Net cash inflow from financing | | 6,498 | |
| activities | | | - |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Net increase/(decrease) in cash and cash equivalents | 1,581 | (3,719) |
+------------------------------------------------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Opening cash and cash equivalents | | 4,123 | 7,829 |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Effect of foreign exchange movements | | | 13 |
| | | - | |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| Closing cash and cash equivalents | 16 | 5,704 | 4,123 |
+---------------------------------------+--------------+---------+------------------------------+
| | | | |
+---------------------------------------+--------------+---------+------------------------------+
| | |
+----------+------------------------------------------------------------------------------------+
| | | | | |
+----------+----------------------------+--------------+---------+------------------------------+
Notes to the Financial statements
For the year ended 31 March 2010
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 2010 comprise the Company and its subsidiaries (together referred
to as the "Group" and individually as "Group entities").
2. Basis of preparation
2.1 Statement of compliance
The financial statements give a true and fair view and are prepared in
accordance with International Financial Reporting Standards 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 Investments Market
('AIM'). These financial statements comply with the Companies (Guernsey) Law,
2008.
2.2 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.
2.3 Changes in accounting policies
The following standards, amendments and interpretations are effective for
periods beginning 1 January 2009 but had no impact on the financial position or
performance of the Group:
Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation
of Financial Statements - Puttable Financial Instruments and Obligations Arising
on Liquidation
Amendment to IAS 23 Borrowing Costs
IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments:
Recognition and Measurement
Starting as of 1 April 2009, the Group has changed its accounting policies in
the following areas:
? Accounting for business combinations
? Accounting for acquisitions of non-controlling interests
? Determination and presentation of operating segments
? Presentation of financial statements
(i) Accounting for business combinations
The Group has adopted early IFRS 3 Business Combinations (2008) and IAS 27
Consolidated and Separate Financial Statements (2008) for all business
combinations occurring in the financial year starting 1 April 2009. All business
combinations occurring on or after 1 April 2009 are accounted for by applying
the acquisition method. The change in accounting policy is applied prospectively
and had no material impact on earnings per share.
The Group has applied the acquisition method for the business combination
disclosed in note 12.
Control is the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities. In assessing control, the Group
takes into consideration potential voting rights that currently are exercisable.
The acquisition date is the date on which control is transferred to the
acquirer. Judgement is applied in determining the acquisition date and
determining whether control is transferred from one party to another.
The Group measures goodwill as the fair value of the consideration transferred
including the recognised amount of any non-controlling interest in the acquiree,
less the net recognised amount (generally fair value) of the identifiable assets
acquired and liabilities assumed, all measured as of the acquisition date.
Consideration transferred includes the fair values of the assets transferred,
liabilities incurred by the Group to the previous owners of the acquiree, and
equity interests issued by the Group. Consideration transferred also includes
the fair value of any contingent consideration and share-based payment awards of
the acquiree that are replaced mandatorily in the business combination (see
below). If a business combination results in the termination of pre-existing
relationships between the Group and the acquiree, then the lower of the
termination amount, as contained in the agreement, and the value of the
off-market element is deducted from the consideration transferred and recognised
in other expenses.
When share-based payment awards exchanged (replacement awards) for awards held
by the acquiree's employees (acquiree's awards) relate to past services, then a
part of the market-based measure of the awards replaced is included in the
consideration transferred. If they require future services, then the difference
between the amount included in consideration transferred and the market-based
measure of the replacement awards is treated as post-combination compensation
cost.
A contingent liability of the acquiree is assumed in a business combination only
if such a liability represents a present obligation and arises from a past
event, and its fair value can be measured reliably.
The Group measures any non-controlling interest at its proportionate interest in
the identifiable net assets of the acquiree.
Transaction costs that the Group incurs in connection with a business
combination, such as finder's fees, legal fees, due diligence fees, and other
professional and consulting fees are expensed as incurred.
(ii) Accounting for acquisitions of non-controlling interests
The Group has adopted early IFRS 3 Business Combinations (2008) and IAS 27
Consolidated and Separate Financial Statements (2008) for acquisitions of
non-controlling interests occurring in the financial year starting 1 April 2009.
The Group has applied IAS 27 (2008) for the acquisition of non-controlling
interests as explained in note 12.
The amendments to IAS 27 require changes in the parent's ownership interest in a
subsidiary after control is obtained that do not result in a loss of control to
be accounted for as transactions with equity holders in their capacity as equity
holders. As a result no gain or loss on such changes is recognised in profit or
loss. Also, no change in the carrying amounts of assets (including goodwill) or
liabilities is recognised as a result of such transactions. This approach is
consistent with treating non-controlling interest as a component of equity.
The carrying amounts of the controlling and non-controlling interest are
adjusted to reflect the relative change in their interests in the subsidiary's
net assets. Any differences between the amount by which the non-controlling
interest is adjusted and the fair value of the consideration paid or received,
if any, is recognised directly in equity and attributed to equity holders of the
parent. The change in accounting policy was applied prospectively and had no
material impact on earnings per share.
(iii) Determination and presentation of operating segments
As of 1 April 2009 the Group determines and presents operating segments based on
the information that internally is provided to the Board of Directors of the
Company, who is the Group's chief operating decision maker. This change in
accounting policy is due to the adoption of IFRS 8 Operating Segments.
Previously operating segments were determined and presented in accordance with
IAS 14 Segment Reporting. The new accounting policy in respect of segment
operating disclosures is presented as follows.
Comparative segment information has been re-presented in conformity with the
transitional requirements of such standard. Since the change in accounting
policy only impacts presentation and disclosure aspects, there is no impact on
earnings per share.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group's other
components. An operating segment's operating results are reviewed regularly by
the Board of Directors of the Company to make decisions about resources to be
allocated to the segment and assess its performance, and for which discrete
financial information is available.
(iv) Presentation of financial statements
The Group applies revised IAS 1 Presentation of Financial Statements (2007),
which became effective for years beginning on or after 1 January 2009 and was
applied by the Group from 1 April 2009. As a result, the Group presents in the
consolidated statement of changes in equity all owner changes in equity, whereas
all non-owner changes in equity are presented in the consolidated statement of
comprehensive income.
Comparative information has been re-presented so that it also is in conformity
with the revised standard. Since the change in accounting policy only impacts
presentation aspects, there is no impact on earnings per share.
2.4 New standards and interpretations not yet adopted
Other than those adopted early as explained in note 2.3, a number of new
standards, amendments to standards and interpretations are not yet effective for
the year ended 31 March 2010, and have not been applied in preparing these
consolidated financial statements. None of these will have a significant effect
on the consolidated financial statements of the Group:
? IFRS 1 First Time Adoption of International Financial Reporting Standards
(revised) - for accounting periods commencing on or after 1 January 2010
? IFRS 2 Group cash-settled share-based payment arrangements (Amendments) - for
accounting periods commencing on or after 1 January 2010
? IFRS 9 Financial Instruments- for accounting periods commencing on or after 1
January 2013
? IAS 24 Related Party Transactions (Revised) - for accounting periods
commencing on or after 1 January 2011
? IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments) - for
accounting periods commencing on or after 1 July 2010
'Improvements to IFRS' were issued in May 2008 and April 2009 respectively and
contain numerous amendments to IFRS, which the IASB consider non-urgent but
necessary. 'Improvements to IFRS' comprise amendments that result in accounting
changes for presentation, recognition or measurement purposes as well as
terminology or editorial amendments related to a variety of individual
standards. Most of the amendments are effective for annual periods beginning on
or after 1 January 2009 and 1 January 2010 respectively, with earlier
application permitted. No material changes to accounting policies are expected
as a result of these amendments.
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)
? Depreciation of property, plant and equipment (see note 3.11)
? Intangible assets (see note 3.12)
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.
2.6 Functional and presentation currencies
The Directors have selected Sterling as the presentation currency of the Group
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 unless otherwise stated.
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 Group has changed its accounting policy with respect to accounting for
business combinations. See note 2.3(i) for further details.
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 profit or loss in the period of
acquisition.
The results of subsidiaries acquired or disposed of during the period are
included in the consolidated statement of comprehensive income 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
The Group measures goodwill as the fair value of the consideration transferred
including the recognised amount of any non-controlling interest in the acquiree,
less the net recognised amount (generally fair value) of the identifiable assets
acquired and liabilities assumed, all measured as of the acquisition date.
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 profit or loss 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.
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 or loss.
3.2 Foreign currency transactions
Transactions in currencies other than sterling are translated at the foreign
exchange rates ruling at the date of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the reporting date are
translated into sterling at the exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the profit or
loss. 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 reporting 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 recognised in other comprehensive income 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 reporting date.
3.3 Revenue
Revenue from the sale of services is measured at the fair value of the
consideration received or receivable, net of returns, allowances and trade
discounts. Revenue from services rendered is recognised in the statement of
changes of comprehensive income when it is probable that the economic benefits
associated with the transaction will flow to the Group and the amount of revenue
can be measured reliably. Revenue from services are recognised in the accounting
period in which the services are rendered, by reference to stage of completion
of the specific transaction assessed on the basis of the actual service provided
as a proportion of the total services to be provided.
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, which is the last date of registration.
3.4 Expenses
All expenses are accounted for on an accruals basis through profit or loss.
3.5 Set up expenses
The preliminary expenses directly attributable to the issuance and listing of
equity instruments of the Company that would otherwise have been avoided are
deducted from the share premium account.
3.6 Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Chief Operating Decision Maker. The Chief Operating
Decision Maker, who is responsible for allocating resources, assessing
performance of the operating segments and making strategic decisions, has been
identified as the Board of Directors of the Company.
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 Group is liable to Ukranian, Kazakhstani and Bulgarian tax arising on the
activities of its Ukranian, Kazakhstani and Bulgarian 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 profit or loss 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 reporting 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. 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
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument, including unconditional commitments to
make investments. The Group offsets 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
reporting 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 profit or loss. Hedge accounting is not applied.
3.8.2 Investments
Unquoted investments, including investments in subsidiaries, as well as loans
receivable from associated companies are designated as fair value through profit
and loss. Investments are initially recognised at cost on a trade date basis.
The investments are subsequently re-measured at fair value, which is determined
by the Directors on the recommendation of the Valuation Committee. Unrealised
gains and losses arising from the revaluation of investments are taken directly
to profit or loss. 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 the presentation currency of the
consolidated financial statements. Unrealised gains and losses arising from the
revaluation of investments are taken directly to profit or loss.
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 Valuation Committee with prudence and good faith. The Valuation Committee
will take into account the guidelines and principles for valuation of Portfolio
Companies set out by the International Private Equity and Venture Capital
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 material to affect the fair value of the investment. The
valuation methodologies are applied consistently from period to period, except
where a change would result in a better estimate of fair value. Any changes in
valuation methodologies will be clearly disclosed in the financial statements.
The most widely used methodologies are listed below (discussed further in note
11). In assessing which methodology is appropriate, the Valuation Committee is
predisposed towards those methodologies that draw upon market-based measures of
risk and return.
· Market Approach
· Income Approach
· Net Assets Approach
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 reporting date. The quoted market price used for financial assets held by
the group is the current bid price.
3.8.3 Impairment of financial assets
At each reporting 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 judgement 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 or loss and reflected
in an allowance account against loans and advances. Interest on the impaired
asset continues to be recognised through the unwinding of the discount. When a
subsequent event causes the amount of impairment loss to decrease, the decrease
in impairment loss is reversed through profit or loss.
3.8.4 Loans and advances to customers
Loans granted by the Group are initially recognized at fair value plus related
transaction costs on the date they originated. Where the fair value of
consideration given does not equal the fair value of the loan, for example where
the loan is issued at lower than market rates, the difference between the fair
value of consideration given and the fair value of the loan is recognized as a
loss on initial recognition of the loan and included in the consolidated
statement of comprehensive income 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
statement of financial position, 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 statement of financial position. Transfers of
assets with retention of all or substantially all risks and rewards include, for
example, securities lending and repurchase transactions.
In transactions in which the Group neither retains nor transfers substantially
all the risks and rewards of ownership of a financial asset, it derecognises the
asset if it does not retain control over the asset. The rights and obligations
retained in the transfer are recognised separately as assets and liabilities as
appropriate. In transfers in which control over the asset is retained, the Group
continues to recognise the asset to the extent of its continuing involvement,
determined by the extent to which it is exposed to changes in the value of the
transferred asset.
3.8.5 Cash and cash equivalents
Cash in banks and short term deposits that are held to maturity are carried at
amortised cost. Cash and cash equivalents consist of cash in hand and short term
deposits in banks with an original maturity of three months or less.
3.8.6 Trade receivables
Trade receivables do not carry any interest and are short-term in nature. Trade
receivables are recognised and carried at the lower of their original invoiced
value and recoverable amount. Where the time value of money is material,
receivables are carried at amortised cost. Allowance is made when there is
objective evidence that the Group will not be able to recover balances in full.
Balances are written off when the probability of recovery is assessed as being
remote. They are accordingly stated at amortised cost as reduced by appropriate
allowances for estimated irrecoverable amounts.
3.8.7 Trade payables
Trade payables are not interest bearing and are recognised and carried at
amortised cost less repayments.
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.
The Group initially recognises debt securities issued and subordinated
liabilities on the date that they are originated. All other financial
liabilities (including liabilities designated at fair value through profit or
loss) are recognised initially on the trade date at which the Group becomes a
party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations
are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Group has a legal right
to offset the amounts and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
The Group has the following non-derivative financial liabilities: loans and
borrowings, and trade and other payables.
Such financial liabilities are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition these
financial liabilities are measured at amortised cost using the effective
interest method.
3.9 Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Group and Company by the weighted
average number of ordinary shares outstanding during the period. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares, which comprise share options granted
to employees.
3.10 Lease payments
Payments made under operating leases are recognised in profit or loss on a
straight-line basis over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the
finance expense and the reduction of the outstanding liability. The finance
expense is allocated to each period during the lease term so as to produce a
constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease
payments over the remaining term of the lease when the lease adjustment is
confirmed.
3.11 Property, plant and equipment
Property, plant and equipment are carried at historical cost less accumulated
depreciation and any recognised impairment loss, if any. Depreciation is charged
on the carrying value of property, plant and equipment and is designed to write
off assets on a straight line basis over their useful economic lives. The
estimated useful lives for the current and comparative periods are as follows:
+--------------------------------+--------------------------------+
| Vehicles: | |
+--------------------------------+--------------------------------+
| Trucks (included under | 7 years |
| Vehicles) | |
+--------------------------------+--------------------------------+
| Cars (included under Vehicles) | 5 years |
+--------------------------------+--------------------------------+
| | |
+--------------------------------+--------------------------------+
| Fixtures & fittings: | |
+--------------------------------+--------------------------------+
| Fixtures & fittings | 3-4 years |
+--------------------------------+--------------------------------+
| Warehouse equipment & racks | 5 to 20 years |
+--------------------------------+--------------------------------+
| | |
+--------------------------------+--------------------------------+
| Furniture & equipment: | |
+--------------------------------+--------------------------------+
| Office equipment | 5 to 10 years |
+--------------------------------+--------------------------------+
| Furniture | 5 years |
+--------------------------------+--------------------------------+
| Equipment | 3 years |
+--------------------------------+--------------------------------+
| Hardware | 2 to 5 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, the costs of dismantling and
removing the items and restoring the site on which they are located and
capitalised borrowing costs. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of that equipment.
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 reporting 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 "operating income" in the statement
of comprehensive income.
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.
Depreciation methods, useful lives and residual values are reviewed each
financial year -end and adjusted if appropriate.
3.12 Intangible assets
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in
intangible assets. For measurement of goodwill at initial recognition, see note
3.1.2.
Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with
equity holders in their capacity as equity holders and therefore no goodwill is
recognised as a result of such transactions.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of
equity accounted investees, the carrying amount of goodwill is included in the
carrying amount of the investment, and an impairment loss on such an investment
is not allocated to any asset, including goodwill, that forms part of the
carrying amount of the equity accounted investee.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other
expenditure, including expenditure on internally generated goodwill and brands,
is recognised in profit or loss as incurred.
Amortisation
Amortisation is calculated over the cost of the asset, or other amount
substituted for cost, less its residual value.
Amortisation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of intangible assets, other than goodwill, from the date
that they are available for use, since this most closely reflects the expected
pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives for the current and comparative periods are as
follows:
+---------------------------------+---------------------------------+
| Software | 10 years |
+---------------------------------+---------------------------------+
| Customer base - large customers | 15 years |
+---------------------------------+---------------------------------+
| Customer base - small customers | 10 years |
+---------------------------------+---------------------------------+
| Trademark and banking licence | Indefinite |
+---------------------------------+---------------------------------+
Amortisation methods, useful lives and residual values are reviewed at each
financial year-end and adjusted if appropriate.
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 profit or loss.
The useful life of an intangible asset with an indefinite life is reviewed at
each reporting date to determine whether the indefinite life assessment
continues to be supportable. If not, the change in the useful life assessment is
made prospectively.
3.13 Assets held for Sale
Non-current assets, or disposal groups comprising assets and liabilities, that
are expected to be recovered primarily through sale rather than through
continuing use, are classified as held for sale. This condition is regarded as
met only when the sale is highly probable and the asset (or disposal group) is
available for immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification. Immediately
before classification as held for sale, the assets, or components of a disposal
group, are remeasured in accordance with the Group's accounting policies.
Thereafter generally the assets, or disposal group, are measured at the lower of
their carrying amount and fair value less cost to sell. A non-current asset is
not depreciated (or amortised) while it is classified as held for sale, or while
it is part of a disposal group classified as held for sale. Any impairment loss
on a disposal group first is allocated to goodwill, and then to remaining assets
and liabilities on pro rata basis, except that no loss is allocated to
inventories, financial assets, and deferred tax assets, which continue to be
measured in accordance with the Group's accounting policies. Impairment losses
on initial classification as held for sale and subsequent gains or losses on
remeasurement are recognised in profit or loss. Gains are not recognised in
excess of any cumulative impairment loss.
3.14 Impairment of tangible and intangible assets excluding goodwill
At each reporting 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 profit or loss.
3.15 Provisions
A provision is recognised in the statement of financial position 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.
3.16 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an
entity pays fixed contributions into a separate entity and will have no legal or
constructive obligation to pay further amounts. Obligations for contributions to
defined contribution pension plans are recognised as an employee benefit expense
in profit or loss in the periods during which services are rendered by
employees. Prepaid contributions are recognised as an asset to the extent that a
cash refund or a reduction in future payments is available. Contributions to a
defined contribution plan that are due more than 12 months after the end of the
period in which the employees render the service are discounted to their present
value.
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 profit or loss
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.
3.17 Share capital and equity
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities.
Ordinary shares are classified as equity.
If the company reacquires its own equity instruments, the consideration paid,
including any directly attributable incremental costs (net of income taxes) on
those instruments are deducted from equity until the shares are cancelled or
reissued. No gain or loss is recognised in profit or loss on the purchase, sale,
issue or cancellation of the company's own equity instruments. Consideration
paid or received shall be recognised directly in equity.
Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds
3.18 Finance costs
Finance costs comprise interest expense on borrowings, unwinding of the discount
on provisions. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised in
profit or loss using the effective interest method. Foreign currency gains and
losses are reported on a net basis
In respect of borrowing costs relating to qualifying assets for which the
commencement date for capitalisation is on or after 1 April 2009, the Group
capitalises borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset as part of the cost of that
asset.
3.19 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 | Year |
| | ended | ended |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+------------------------------------------+----------------------+---------------------+
| | GBP'000 | GBP'000 |
| | | |
+------------------------------------------+----------------------+---------------------+
| Company | | |
+------------------------------------------+----------------------+---------------------+
| Investment management fee | 1,677 | 1,779 |
+------------------------------------------+----------------------+---------------------+
| Auditors' remuneration | 37 | 48 |
+------------------------------------------+----------------------+---------------------+
| Directors' remuneration | 174 | 189 |
+------------------------------------------+----------------------+---------------------+
| Share based payments | 600 | 600 |
+------------------------------------------+----------------------+---------------------+
| Other operating and administrative | | |
| expenses: | | |
+------------------------------------------+----------------------+---------------------+
| - Professional fees | 292 | 262 |
+------------------------------------------+----------------------+---------------------+
| - Other | 561 | 453 |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| | 3,341 | 3,331 |
+------------------------------------------+----------------------+---------------------+
| Kreditmart | | |
+------------------------------------------+----------------------+---------------------+
| Auditors' remuneration | 41 | 52 |
+------------------------------------------+----------------------+---------------------+
| Directors' remuneration | 67 | 173 |
+------------------------------------------+----------------------+---------------------+
| Other operating and administrative | | |
| expenses: | | |
+------------------------------------------+----------------------+---------------------+
| - Depreciation | 268 | 379 |
+------------------------------------------+----------------------+---------------------+
| - Property, plant and equipment written | 139 | |
| off | | - |
+------------------------------------------+----------------------+---------------------+
| - Salaries | 1,428 | 2,734 |
+------------------------------------------+----------------------+---------------------+
| - Marketing expenses | 345 | 1,317 |
+------------------------------------------+----------------------+---------------------+
| - Premises expenses | 445 | 1,055 |
+------------------------------------------+----------------------+---------------------+
| - Credit losses and LLP | (424) | 1,780 |
+------------------------------------------+----------------------+---------------------+
| - Other | 239 | 639 |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| | 2,548 | 8,129 |
+------------------------------------------+----------------------+---------------------+
| Flexinvest Limited | | |
+------------------------------------------+----------------------+---------------------+
| Auditors' remuneration | 99 | 89 |
+------------------------------------------+----------------------+---------------------+
| Directors' remuneration | 149 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| Other operating and administrative | | |
| expenses: | | |
+------------------------------------------+----------------------+---------------------+
| - Depreciation | 51 | 6 |
+------------------------------------------+----------------------+---------------------+
| - Salaries | 431 | 468 |
+------------------------------------------+----------------------+---------------------+
| - Marketing expenses | 5 | 4 |
+------------------------------------------+----------------------+---------------------+
| - Premises expenses | 168 | 229 |
+------------------------------------------+----------------------+---------------------+
| - Credit losses and LLP | 49 | 2 |
+------------------------------------------+----------------------+---------------------+
| - Other | 208 | 261 |
+------------------------------------------+----------------------+---------------------+
| | 1,160 | 1,059 |
+------------------------------------------+----------------------+---------------------+
| Auditors' remuneration | 28 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| Directors' remuneration | 104 | |
+------------------------------------------+----------------------+---------------------+
| Share based payments | 18 | |
+------------------------------------------+----------------------+---------------------+
| Other operating and administrative | | |
| expenses: | | |
+------------------------------------------+----------------------+---------------------+
| - Depreciation and amortisation | 317 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| - Salaries | 1,242 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| - Marketing expenses | 33 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| - Operating lease expenses | 717 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| - Allowance for doubtful debts | 92 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| - Other | 466 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| | 3,017 | |
| | | - |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| Total for the Group | 10,066 | 12,519 |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| 5. Tax | | |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| Group | | |
+------------------------------------------+----------------------+---------------------+
| 5.1 Income tax expense | Year | Year |
| | ended | ended |
| | 31 | 31 |
| | March | March |
| | 2010 | 2009 |
+------------------------------------------+----------------------+---------------------+
| | GBP'000 | GBP'000 |
| | | |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| Kreditmart | | |
+------------------------------------------+----------------------+---------------------+
| Current tax charge | - | - |
+------------------------------------------+----------------------+---------------------+
| Deferred tax expense* | 75 | 688 |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| | 75 | 688 |
+------------------------------------------+----------------------+---------------------+
| Flexinvest Limited | | |
+------------------------------------------+----------------------+---------------------+
| Current tax charge | - | - |
+------------------------------------------+----------------------+---------------------+
| Deferred tax credit* | (62) | (126) |
+------------------------------------------+----------------------+---------------------+
| | (62) | (126) |
+------------------------------------------+----------------------+---------------------+
| Current tax charge | 29 | - |
+------------------------------------------+----------------------+---------------------+
| Deferred tax credit* | (45) | - |
+------------------------------------------+----------------------+---------------------+
| | (16) | - |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| Deferred tax (credit)/charge: | (32) | 562 |
+------------------------------------------+----------------------+---------------------+
| | | |
+------------------------------------------+----------------------+---------------------+
| Net tax (credit)/charge to profit or | (3) | 562 |
| loss | | |
+------------------------------------------+----------------------+---------------------+
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| * Deferred | | | | | | | | | | | |
| tax expense | | | | | | | | | | | |
| comprises | | | | | | | | | | | |
| of: | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Origination | | | | | | | | | 64 | | (32) |
| and reversal | | | | | | | | | | | |
| of temporary | | | | | | | | | | | |
| differences | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Temporary differences on fair | | | | | | (29) | | - |
| value adjustment on acquisition | | | | | | | | |
| of subsidiary | | | | | | | | |
+--------------------------------------+---------+----------+----------+---------+----------+---------+----------+---------+
| Utilisation | | | | | | | | | (1,145) | | (993) |
| of tax | | | | | | | | | | | |
| losses | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Reduction in | | | | | | | | | - | | (13) |
| tax rate | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Change in | | | | | | | | 1,078 | | 1,600 |
| unrecognised | | | | | | | | | | |
| deductible | | | | | | | | | | |
| temporary | | | | | | | | | | |
| differences | | | | | | | | | | |
+------------------------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Recognition | | | | | | | | | - | | - |
| of | | | | | | | | | | | |
| previously | | | | | | | | | | | |
| unrecognised | | | | | | | | | | | |
| tax losses | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | (32) | | 562 |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Group and | | | | | | | | | | | |
| Company | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Tax rate | | | | | | | | | | | |
| reconciliation: | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | Year | | | Year | | Year | | Year |
| | | | | ended | | | ended | | ended | | ended |
| | | | | 31 | | | 31 | | 31 | | 31 |
| | | | | March | | | March | | March | | March |
| | | | | 2010 | | | 2010 | | 2009 | | 2009 |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | GBP'000 | | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | Group | | | Company | | Group | | Company |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Profit/(loss) | | | | 653 | | | 4,828 | | 988 | | (6,321) |
| for the year | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Aurora | | | | (2,806) | | | - | | (4,866) | | - |
| Consolidated | | | | | | | | | | | |
| profit | | | | | | | | | | | |
| exempt from | | | | | | | | | | | |
| tax | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | (2,153) | | | 4,828 | | (3,878) | | (6,321) |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Tax at | | | | 92 | | | - | | 97 | | - |
| nominal rate | | | | | | | | | | | |
| (Cyprus) | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Tax at | | | | (615) | | | - | | (1,165) | | - |
| nominal rate | | | | | | | | | | | |
| (Russia) | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Tax effect of income and expenses | 49 | | | - | | 17 | | - |
| not deductable in taxable profit | | | | | | | | |
+--------------------------------------+---------+----------+----------+---------+----------+---------+----------+---------+
| Effect of | | | | - | | | - | | 13 | | - |
| changes in | | | | | | | | | | | |
| tax rates | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Effect of | | | | 470 | | | - | | 1,600 | | - |
| deferred tax | | | | | | | | | | | |
| asset not | | | | | | | | | | | |
| recognised | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| Foreign | | | | 1 | | | - | | - | | - |
| currency | | | | | | | | | | | |
| differences | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | (3) | | | - | | 562 | | - |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+-----------------+------+----------+--+---------+----------+----------+---------+----------+---------+----------+---------+
5.2 Group deferred tax assets and liabilities
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Group | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| 2010 | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Kreditmart | | | | | | | Year | | Year | | Year |
| and | | | | | | | ended | | ended | | ended |
| Flexinvest | | | | | | | 31 | | 31 | | 31 |
| | | | | | | | March | | March | | March |
| | | | | | | | 2010 | | 2010 | | 2010 |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Deferred | | | | | | | GBP'000 | | GBP'000 | | GBP'000 |
| tax | | | | | | | | | | | |
| asset/(liability) | | | | | | | | | | | |
| comprises: | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | Assets | | Liabilities | | Net |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Loans to | | | | | | | 5 | | - | | 5 |
| customers | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Other | | | | | | | 48 | | - | | 48 |
| assets | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Other | | | | | | | 34 | | (20) | | 14 |
| liabilities | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Tax loss | | | | | | | 123 | | - | | 123 |
| carry-forwards | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | 210 | | (20) | | 190 |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| 2010 | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| OSG Records Management (Europe) | | | | Year | | Year | | Year |
| Limited (for 3 month period) | | | | ended | | ended | | ended |
| | | | | 31 | | 31 | | 31 |
| | | | | March | | March | | March |
| | | | | 2010 | | 2010 | | 2010 |
+------------------------------------------------+-+----------+----------+---------+----------+-------------+----------+---------+
| Deferred | | | | | | | GBP'000 | | GBP'000 | | GBP'000 |
| tax | | | | | | | | | | | |
| asset/(liability) | | | | | | | | | | | |
| comprises: | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | Assets | | Liabilities | | Net |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Finance | | | | | | | - | | (94) | | (94) |
| leases | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Intangibles | | | | | | | - | | (1,605) | | (1,605) |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | - | | (1,699) | | (1,699) |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Group | | | | | | | | | | | 190 |
| deferred | | | | | | | | | | | |
| tax asset | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Group | | | | | | | | | | | (1,699) |
| deferred | | | | | | | | | | | |
| tax | | | | | | | | | | | |
| liability | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| 2009 | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | Year | | Year | | Year |
| | | | | | | | ended | | ended | | ended |
| | | | | | | | 31 | | 31 | | 31 |
| | | | | | | | March | | March | | March |
| | | | | | | | 2009 | | 2009 | | 2009 |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Deferred | | | | | | | GBP'000 | | GBP'000 | | GBP'000 |
| tax | | | | | | | | | | | |
| asset/(liability) | | | | | | | | | | | |
| comprises: | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | Assets | | Liabilities | | Net |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Loans to | | | | | | | 2 | | - | | 2 |
| customers | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Other | | | | | | | 45 | | - | | 45 |
| assets | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Other | | | | | | | - | | (45) | | (45) |
| liabilities | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| Tax loss | | | | | | | 189 | | - | | 189 |
| carry-forwards | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | | | | | |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
| | | | | | | | 236 | | (45) | | 191 |
+-------------------+------+----------+----------+-+----------+----------+---------+----------+-------------+----------+---------+
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| 5.3 | | | | | | | | | Year | | Year |
| Unrecognised | | | | | | | | | ended | | ended |
| deferred tax | | | | | | | | | 31 | | 31 |
| assets | | | | | | | | | March | | March |
| | | | | | | | | | 2010 | | 2009 |
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | |
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| Group | | | | | | | | | | | |
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| Tax losses | | | | | | | | | 470 | | 1,600 |
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | 470 | | 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 therefrom.
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% (2009:20%) arising on its
activities in Russia.
The Group is liable to pay tax at a rate of 10% (2009: 10%) arising on its
activities in Cyprus.
The Group is liable to pay tax at a rate of 19% (2009: 19%) arising on its
activities in Poland.
The Group is liable to pay tax at a rate of 25%, 20% and 10% arising on its
activities in Ukraine, Kazakhstan and Bulgaria respectively.
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 judgement of
taxpayer activities, if a particular treatment based on Management's judgement
of the Subsidiary's business activities was to be challenged by the tax
authorities, Kreditmart Finance Limited ("Kreditmart"), Flexinvest Limited
("Flexinvest") and OSG Records Management (Europe) Limited ("OSGRME") 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.
The Group'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 and OSGRME's assets and
operations could be at risk due to negative changes in the political and
business environment.
6. Earnings per share
+----------+------+----------+--------------+-----------+--------+----------+----------+-------+-------------------+------------------+
| | | | | 31 March 2010 | 31 March 2010 | 31 | 31 |
| | | | | | | March | March |
| | | | | | | 2009 | 2009 |
+----------+------+----------+--------------+--------------------+-----------------------------+-------------------+------------------+
| | | | | 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 | 665 | 4,828 | 426 | (6,321) |
| diluted loss per share being net | | | | |
| profit/(loss) attributable to equity | | | | |
| holders of the parent | | | | |
+-------------------------------------------+--------------------+-----------------------------+-------------------+------------------+
| | | | | |
+-------------------------------------------+-----------+-------------------+----------+----------------------------------------------+
| Weighted average number of ordinary | 83,491 | 83,491 | 75,000 | 75,000 |
| shares for the purpose of basic and | | | | |
| diluted profit/(loss) per share (in | | | | |
| thousands): | | | | |
+-------------------------------------------+--------------------+-----------------------------+-------------------+------------------+
| | | | | |
+-------------------------------------------+--------------------+-----------------------------+-------------------+------------------+
| Effect of dilutive potential ordinary | | | | |
| shares: | | | | |
+-------------------------------------------+--------------------+-----------------------------+-------------------+------------------+
| Options | - | - | - | - |
+-------------------------------------------+--------------------+-----------------------------+-------------------+------------------+
| | | | | |
+-------------------------------------------+--------------------+-----------------------------+-------------------+------------------+
| Weighted average number of ordinary | 83,491 | 83,491 | 75,000 | 75,000 |
| shares for the purpose of diluted | | | | |
| profit/(loss) loss per share (in | | | | |
| thousands): | | | | |
+-------------------------------------------+--------------------+-----------------------------+-------------------+------------------+
| | | | | | | | |
+----------+------+----------+--------------+--------------------+-----------------------------+-------------------+------------------+
| Earnings | | | | 0.80 | 5.78 | 0.57 | (8.43) |
| per | | | | | | | |
| share - | | | | | | | |
| Basic | | | | | | | |
| and | | | | | | | |
| Diluted | | | | | | | |
+----------+------+----------+--------------+--------------------+-----------------------------+-------------------+------------------+
| | | | | | | | | | | |
+----------+------+----------+--------------+-----------+--------+----------+----------+-------+-------------------+------------------+
The potential shares as identified in note 26, are anti-dilutive and as such
have not been included in the calculation of diluted earnings per share for the
years ended 31 March 2010 and 31 March 2009.
7. Goodwill
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| | | | | | | | | | 31 | | 31 |
| | | | | | | | | | March | | March |
| | | | | | | | | | 2010 | | 2009 |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| Group | | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| Cost: | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| At | | | | | | | | | | | 169 |
| beginning | | | | | | | | | - | | |
| of the | | | | | | | | | | | |
| year | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| Recognised on acquisition of | | | | | | 14,164 | | |
| OSG Records Management | | | | | | | | - |
| (Europe) Limited | | | | | | | | |
+--------------------------------+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| Exchange | | | | | | | | | | | 67 |
| gain for | | | | | | | | | - | | |
| the year | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| Impairment | | | | | | | | | | | (236) |
| | | | | | | | | | - | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| | | | | | | | | | | | |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
| | | | | | | | | | 14,164 | | - |
+------------+------+----------+-+--------+----------+----------+--------+----------+-------------------+----------+--------------------+
No impairment of goodwill on acquisition of OSGRME is necessary at 31 March 2010
based on the increase in the valuation of OSGRME. Refer to note 11 and 12 for
further details in this regard.
In accordance with the valuation at 31 March 2010 performed in respect of
Kreditmart by an independant valuer (see note 11), the goodwill acquired was
impaired in full in the prior year. This was as a result of significant
decreases in the Russian mortgage market which has resulted in the reduction in
value of the consumer loans.
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
|8.| Intangible | | | | | | | 31 | 31 |
| | assets | | | | | | | March | March |
| | | | | | | | | 2010 | 2009 |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | GBP'000 | GBP'000 |
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Group | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Cost: | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Opening | | | | | | | 2,273 | 2,680 |
| | balance | | | | | | | | |
| | in | | | | | | | | |
| | respect | | | | | | | | |
| | of VUB | | | | | | | | |
| | (see | | | | | | | | |
| | note 12) | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Currency | | | | | | | 203 | (407) |
| | revaluation | | | | | | | | |
| | - VUB | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Recognised on | | | | | | 8,744 | - |
| | acquisition of | | | | | | | |
| | OSGRME (see | | | | | | | |
| | note 12) | | | | | | | |
+-+--------------------------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Amortisation | | | | | | | (142) | - |
| | of | | | | | | | | |
| | intangibles | | | | | | | | |
| | in OSGRME | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Closing | | | | | | | 11,078 | 2,273 |
| | balance | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Reconciliation | | | | | | | | |
| | of intangibles | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | Banking | | Internally | OSGRME | | Customer | Customer | |
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | 2010 | licence | | generated | Trademark | | base | base | Total |
| | | | | | | | - | - | |
| | | | | | | | large | small | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | software | | | | | |
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | GBP'000 | | GBP'000 | GBP'000 | | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Group | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Cost: | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | At 1 | 2,680 | | - | - | | - | - | 2,680 |
| | April | | | | | | | | |
| | 2009 | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Additions | - | | 150 | 598 | | 7,381 | 615 | 8,744 |
| | - at | | | | | | | | |
| | acquisition | | | | | | | | |
| | of OSGRME | | | | | | | | |
| | (see note | | | | | | | | |
| | 12) | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Exchange | (204) | | - | - | | - | - | (204) |
| | movements | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | At 31 | 2,476 | | 150 | 598 | | 7,381 | 615 | 11,220 |
| | March | | | | | | | | |
| | 2010 | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Amortisation: | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | At 1 | - | | - | - | | - | - | - |
| | April | | | | | | | | |
| | 2009 | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Charge | - | | (4) | - | | (123) | (15) | (142) |
| | for the | | | | | | | | |
| | period | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | At 31 | - | | (4) | - | | (123) | (15) | (142) |
| | March | | | | | | | | |
| | 2010 | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | Carrying | | | | | | | | |
| | amount: | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
| | At 31 | 2,476 | | 146 | 598 | | 7,258 | 600 | 11,078 |
| | March | | | | | | | | |
| | 2010 | | | | | | | | |
+-+----------------+---------+----------+------------+-----------+----------+----------+----------+---------+
The valuation of the licence was considered by the Valuation Committee and
independent reputable valuer (see note 11) and based on fair market values less
costs to sell, it was determined that no impairment was required.
The fair valuation of the intangibles at acquisition date of OSGRME was
determined by an independent 3rd party using various valuation methods: the Cost
Approach (using historcial costs and consumer price inflation), and the Income
Approach (using the Multiple Excess Earnings method and Discounted Cash Flow
Analysis).
The banking licence and the trademark are both considered by the Directors to
have an indefinite useful life. They are expected to generate value
indefinitely. The banking licence is registered in Moscow and the OSGRME
trademark is registered in Russsia, Poland and Ukraine. Furthermore, there were
no impairment indicators identified by the Directors in respect of the other
intangibles that were subject to amortisation.
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
|9.| Assets | | | | | | | | | 31 | | 31 |
| | classified | | | | | | | | | March | | March |
| | as held for | | | | | | | | | 2010 | | 2009 |
| | sale | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | Group | | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | Balance at 1 | | | | | | | | | - | | - |
| | April 2009 | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | Additions | | | | | | | | | 914 | | - |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | Disposals | | | | | | | | | (69) | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | Balance at | | | | | | | | | 845 | | - |
| | 31 March | | | | | | | | | | | |
| | 2010 | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
| | | | | | | | | | | | | |
+-+--------------+------+----------+----------+----------+----------+----------+--------+----------+---------+----------+---------+
Assets classified as held for sale are the property (flat, cottage and land
plot) received after mortgage foreclosure. The assets are available for
immediate sale in their present condition. The flat has been sold, and
Kreditmart expects to sell the other assets within one year. The assets are
recognised at fair value less costs to sell.
+-----+-------------+----------+----------+----------+----+----------+----------+----------+---+----------+--+----------+----------+----------+----------+-------+---+----------+------------+
|10. | Plant and equipment | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | Vehicles | | | Fixtures | | Furniture | | |
| | | | | | | | | & | | & | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | 2010 | | | | | | | fittings | | equipment | | Total |
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | GBP'000 | | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Group | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Cost: | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At 1 April 2009 | | | | - | | | 429 | | 1,153 | | 1,582 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Additions - Kreditmart and Flexinvest | | | | - | | | - | | 50 | | 50 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At acquisition of OSGRME (see note 12) | | | | 655 | | | 3,199 | | 619 | | 4,473 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Additions - OSGRME | | | | 65 | | | 843 | | 162 | | 1,070 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Disposals | | | | - | | | (204) | | (92) | | (297) |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Exchange movements | | | | 32 | | | 341 | | 67 | | 440 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At 31 March 2010 | | | | 753 | | | 4,609 | | 1,958 | | 7,318 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Depreciation: | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At 1 April 2009 | | | | - | | | (259) | | (304) | | (563) |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Charge for the period | | | | (53) | | | (163) | | (277) | | (493) |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Disposals | | | | - | | | 116 | | 65 | | 181 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At 31 March 2010 | | | | (53) | | | (305) | | (516) | | (874) |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Carrying amount: | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At 31 March 2010 | | | | 700 | | | 4,303 | | 1,442 | | 6,444 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | 2009 | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | 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 | | | | - | | | (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) |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | Carrying amount: | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At 31 March 2009 | | | | - | | | 170 | | 849 | | 1,019 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | At 31 March 2008 | | | | - | | | 381 | | 886 | | 1,267 |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | | | |
+-----+---------------------------------------------------+----------+----------+----------+-----------------+----------+----------+----------+----------+-----------+----------+------------+
| | | | | | | | | | | |
+-----+-------------+----------+----------+----------+---------------+----------+--------------+----------+------------------------------------------------------+---------------------------+
| | | | | | | | | | | | | | | | | | | | |
+-----+-------------+----------+----------+----------+----+----------+----------+----------+---+----------+--+----------+----------+----------+----------+-------+---+----------+------------+
See note 17 for property, plant and equipment held under finance leases.
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
|11.| Investment in subsidiaries - at fair value through | | | | | | | | |
| | profit and loss | | | | | | | | |
+--+------------------------------------------------------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Company | | | | | | | | | 31 | | 31 |
| | | | | | | | | | | March | | March |
| | | | | | | | | | | 2010 | | 2009 |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | | | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | OSG Records | | | | | | | | | | | |
| | Management (Europe) | | | | | | | | | | | |
| | Limited | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | At 1 April 2009, | | | | | | | | | - | | - |
| | and 1 April 2008 | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Reclassification for | | | | | | | | 13,600 | | - |
| | investments at fair value | | | | | | | | | | |
| | through profit or loss | | | | | | | | | | |
+--+--------------------------------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Acquisition of | | | | | | | | | 8,584 | | - |
| | subsidiary as per | | | | | | | | | | | |
| | note 12 | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Additions | | | | | | | | | 600 | | - |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Fair value | | | | | | | | | 5,316 | | - |
| | revaluation | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | At 31 March 2010, | | | | | | | | | 28,100 | | - |
| | and 31 March 2009* | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Kreditmart | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | At 1 April 2009, | | | | | | | | | 16,549 | | 27,972 |
| | and 1 April 2008 | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Additions | | | | | | | | | - | | - |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Fair value | | | | | | | | | (800) | | (11,423) |
| | revaluation ** | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | At 31 March 2010, | | | | | | | | | 15,749 | | 16,549 |
| | and 31 March 2009 | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Flexinvest Limited | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | At 1 April 2009, | | | | | | | | | 6,451 | | 6,451 |
| | and 1 April 2008 | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Additions | | | | | | | | | - | | - |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | Fair value | | | | | | | | | - | | - |
| | revaluation * | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | At 31 March 2010, | | | | | | | | | 6,451 | | 6,451 |
| | and 31 March 2009 | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | | | | | | | | | | | | |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
| | | | | | | | | | | 50,300 | | 23,000 |
+--+---------------------+----------+----------+----------+----------+----------+----------+--------+----------+---------+----------+----------+
* OSG Records Management (Europe) Limited was treated as an investment at fair
value through profit or loss until a controlling interest was obtained on 12
January 2010 as per note 12.
** The revaluation calculations performed on Kreditmart included the value of
Flexinvest 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 2010 and 31 March
2009 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:
1) Market Approach:
The market comparable method indicates the market value of the ordinary shares
of a business by comparing it to publicly traded companies in similar lines of
business. The conditions and prospects of companies in similar lines of business
depend on common factors such as overall demand for their products and services.
An analysis of the market multiples of companies engaged in similar businesses
yields insight into investor perceptions and, therefore, the value of the
subject company.
In the market approach, recent sales and listings of comparable assets are
gathered and anlysed. After identifying and selecting the comparable publicly
traded companies, their business and financial profiles are analysed for
relative similarity. Price or EV multiples of the publicly traded companies are
calculated and then adjusted for factors such as relative size, growth,
profitability, risk, and return on investment. The adjusted multiples are then
applied to the relevant element of the subject company's business.
All valuations of unquoted investments and investments in subsidiaries
(collectively referred to as the "portfolio") were performed using either an
enterprise value/revenue or enterprise value/EBITDA multiple (except for
Kreditmart and Flexinvest where a Net Asset Assets Approach ie a price/book
value approach was used). 24%, by value at year end, of the portfolio was valued
using a price/book valuation approach (2009: 28%) with the remaining 76% (2009:
72%) of the portfolio being valued using an enterprise value/revenue multiple
and enterprise value/EBITDA multiple approach.
The key assumptions in the valuations were as follows:
- Liquidity discount: 15%-20% (31 March 2009: 5%-25%)
2) Income Approach:
The income approach methodology is used a a cross-check for the Market Approach
and indicates the market value of a business enterprise based on the present
value of the cash flows that the business can be expected to generate in the
future. Such cash flows are discounted at a discount rate that reflects the time
value of money and the risks associated with the cash flows.
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | The financial statements of the Group consolidate the results, assets and liabilities of the subsidiary companies listed |
| | below: |
+--+---------------------------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | Name of | Country of incorporation | | Class | | % of | | Principal |
| | subsidiary | | | of | | class | | activity |
| | undertaking | | | share | | held | | |
| | | | | | | at 31 | | |
| | | | | | | March | | |
| | | | | | | 2010 | | |
+--+----------------+--------------------------------------------------------+----------+----------+----------+--------+------------+------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | OSG Records | | | | | Cyprus | | Ordinary | | 95.5% | | Financing |
| | Management | | | | | | | | | | | |
| | (Europe) | | | | | | | | | | | |
| | Limited | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | OSG Records Management | | | | Russia | | Ordinary | | 100.0% | | Document |
| | Center Limited Liability | | | | | | | | | | storage, |
| | Company* | | | | | | | | | | data |
| | | | | | | | | | | | security |
| | | | | | | | | | | | and |
| | | | | | | | | | | | records |
| | | | | | | | | | | | management |
| | | | | | | | | | | | services |
+--+---------------------------+----------+----------+----------+------------+----------+----------+----------+--------+------------+ +
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+ +------------+
| | OSG Polska | | | | | Poland | | Ordinary | | 100.0% | | |
| | Limited | | | | | | | | | | | |
| | Liability | | | | | | | | | | | |
| | Company* | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+ +------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+ +------------+
| | OSG Records Management | | | | Ukraine | | Ordinary | | 100.0% | | |
| | Limited Liability | | | | | | | | | | |
| | Company* | | | | | | | | | | |
+--+---------------------------+----------+----------+----------+------------+----------+----------+----------+--------+------------+ +
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+ +------------+
| | OSG Records Management | | | | Kazakhstan | | Ordinary | | 100.0% | | |
| | Limited Liability | | | | | | | | | | |
| | Company* | | | | | | | | | | |
+--+---------------------------+----------+----------+----------+------------+----------+----------+----------+--------+------------+ +
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+ +------------+
| | OSG Records Management | | | | Bulgaria | | Ordinary | | 100.0% | | |
| | Limited Liability | | | | | | | | | | |
| | Company* | | | | | | | | | | |
+--+---------------------------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | Kreditmart | | | | | Cyprus | | Ordinary | | 100.0% | | Consumer |
| | Finance | | | | | | | | | | | finance |
| | Limited | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | Flexinvest | | | | | Cyprus | | Ordinary | | 100.0% | | Investment |
| | Limited | | | | | | | | | | | holding |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
| | Volzhski | | | | | Russia | | Ordinary | | 100.0% | | Banking |
| | Universalny | | | | | | | | | | | and |
| | Bank ("VUB") | | | | | | | | | | | finance |
| | Limited** | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------+----------+----------+----------+--------+------------+------------+
* Direct subsidiaries of OSG Records Management (Europe) Limited and indirect
subsidiaries of the Company.
** VUB is held directly by Kreditmart and Flexinvest (see note 12) and is an
indirectly held subsidiary of the Company.
+-----+--------------------+----------------+----------+----------+----------+---------+
|12. | Acquisition of subsidiaries and | | | | |
| | non-controlling interests | | | | |
+-----+-------------------------------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | |
+-----+--------------------+----------------+----------+----------+--------------------+
| | | | | | Fair value on |
| | | | | | acquisition at |
| | | | | | 12 January 2010 |
+-----+--------------------+----------------+----------+----------+--------------------+
| | | | | | | GBP'000 |
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Non-current assets | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Property, plant | | | | | 4,473 |
| | and equipment | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Intangibles | | | | | 8,744 |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Current assets | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Trade and other | | | | | 2,245 |
| | receivables | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Cash and cash | | | | | 817 |
| | equivalents | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Non-current | | | | | |
| | liabilities | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Loans payable | | | | | (4,588) |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Deferred tax | | | | | (1,738) |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Current | | | | | |
| | liabilities | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Trade and other | | | | | (2,431) |
| | payables | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Current taxation | | | | | (412) |
| | payable | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | 7,110 |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Non-controlling | | | | | (390) |
| | interest | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Parent's ownership | | | | | 6,720 |
| | interest at | | | | | |
| | acquisition date | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Goodwill on | | | | | 14,164 |
| | acquisition | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | 20,884 |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Fair value of the | | | | | 12,300 |
| | Company's | | | | | |
| | previously | | | | | |
| | acquired | | | | | |
| | non-controlling | | | | | |
| | investment in | | | | | |
| | OSGRME: | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Purchase Price | | | | | 8,584 |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | 20,884 |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Purchase | | | | | |
| | consideration: | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | - Issue of 20 million ordinary | | | | 7,200 |
| | shares in the Company | | | | |
+-----+-------------------------------------+----------+----------+----------+---------+
| | - Cash paid on | | | | | 1,206 |
| | acquisition of | | | | | |
| | OSGRME | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | - Cash paid to terminate previous OSGRME management share | | 178 |
| | options | | |
+-----+-----------------------------------------------------------+----------+---------+
| | | | | | | 8,584 |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Less: non-cash | | | | | (7,200) |
| | portion of | | | | | |
| | purchase price | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Less: Cash | | | | | (817) |
| | received on | | | | | |
| | acquisition | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Net Cash Paid on | | | | | 567 |
| | acquisition of | | | | | |
| | OSGRME | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | | | | | | |
+-----+--------------------+----------------+----------+----------+----------+---------+
| | Date of | | | | | 12 |
| | acquisition | | | | |January |
| | | | | | | 2010 |
+-----+--------------------+----------------+----------+----------+----------+---------+
The Company acquired a controlling interest in OSGRME Records Management
(Europe) Limited on 12 January 2010, being the effective date when all of the
conditions relating to the OSGRME Purchase Agreement dated 17 December 2009
were satisfied. The OSGRME Investment increased the Company's interest in OSGRME
from approximately 50% to approximately 93.6% (on a fully diluted basis
including the conversion of all convertible loans at 28 February 2010), with the
remaining 6.4 per cent of the equity owned by current and previous members of
management of OSGRME. The carrying amounts of the assets and liabilities of the
acquiree reflected above equal their fair values.
Furthermore, of the option pool of 6.4 per cent of OSG's shares, approximately
2% of the shares were held under options by previous employees of OSG. As a
result of the restructuring, these options were terminated and the share option
rights were purchased by the Company for a consideration of US$288,222. This
additional 2% (which includes the conversion of all convertible loans
outstanding by the Company at 28 February 2010) of OSG's potential shareholding
acquired, resulted in the Company's overall holding in OSG increasing to
approximately 95.4%. The further capital injection increased the Company's
overall holding in OSGRME to approximately 95.52%.
The amount of the acquiree's loss since the acquisition date which is included
in the Consolidated profit of the Group is GBP161,489.
If the acquisition had been at the beginning of the year, the Consolidated
profit would decrease by GBP265,146.
The Company has applied acquisition accounting to account for its acquisition of
OSGRME. Control was obtained in successive share purchases ("step acquisition").
The fair value of the Company's previously acquired non-controlling investment
in OSGRME was used in the determination of goodwill.
OSGRME is a leading records and information management service provider in CEE
with a strong market presence in attractive markets (Russia, Poland, Ukraine,
Kazakhstan and Bulgaria), has a rapidly growing and diverse client base and has
shown resilience in the recent economic downturn. The Directors therefore are of
the opinion that the increased investment in OSGRME represents a significant
opportunity to take control of a high growth business and thereby increase its
ability to receive a control premium in any future exit. Also the new investment
in OSGRME will strengthen the Company's balance sheet which, the Directors
believe, should facilitate further growth.
The Directors of the Company have set aside GBP3.2 million as a capital
commitment for the future purchase of a warehouse by OSGRME. On 30 March 2010, a
GBP0.6 million share capital injection was made by the Company into OSGRME for
"racking". 1,822 shares were issued by OSGRME in this regard, which thus
increased the Company's overall holding in OSGRME to approximately 95.52%.
The following summarises the effect of changes in the Group's (parent) ownership
interest in OSGRME:
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | | GBP'000 |
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Parent's ownership | | | | | | | | | | 6,720 |
| interest at | | | | | | | | | | |
| acquisition date | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Effect of parent's | | | | | | | | | 4,259 |
| increase in parent's | | | | | | | | | |
| ownership interest | | | | | | | | | |
+--------------------------+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Share of | | | | | | | | | | (311) |
| comprehensive | | | | | | | | | | |
| income | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Parent's ownership | | | | | | | | | | 10,668 |
| at the the end of | | | | | | | | | | |
| the year | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+--------------------+
| | | | | | | | | | VUB |
| | | | | | | | | | Fair value on |
| | | | | | | | | | acquisition at 06 |
| | | | | | | | | | May 2008 |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+--------------------+
| | | | | | | | | | | GBP'000 |
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Non-current assets | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Property, plant | | | | | | | | | | 19 |
| and equipment | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Intangibles | | | | | | | | | | 2,680 |
| (banking licences) | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Loans receivable | | | | | | | | | | 1,689 |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Current assets | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Trade and other | | | | | | | | | | 556 |
| receivables | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Tax add back | | | | | | | | | | 44 |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Cash and cash | | | | | | | | | | 1,740 |
| equivalents | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| 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 | | | | | | | | | | (1,740) |
| received on | | | | | | | | | | |
| acquisition | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Less: Balance owing on | | | | | | | | | (209) |
| acquisition of VUB (see | | | | | | | | | |
| below) | | | | | | | | | |
+--------------------------+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Net Cash Paid on | | | | | | | | | | 3,082 |
| acquisition of VUB | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| | | | | | | | | | | |
+--------------------+-----+----------+----------+----------+----------+----------+--------+----------+----------+---------+
| Date of | | | | | | | | | | 06 May |
| acquisition | | | | | | | | | | 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,
the fellow subsidiary of the Company. 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 was included
in the Consolidated loss of the Group in 2009 was GBP553,941.
The effect on the Consolidated profit or loss if the acquisition had been at the
beginning of the prior year was immaterial as the acquisition was close to the
beginning of the year.
+--+----------------------------------------+----------+---------+---------+---------+---------+
|13.| Investments - at fair value through profit and | | | | |
| | loss | | | | |
+--+---------------------------------------------------+---------+---------+---------+---------+
| | | | 31 | 31 | 31 | 31 |
| | | | March | March | March | March |
| | | | 2010 | 2010 | 2009 | 2009 |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | | | Group | Company | Group | Company |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | | | | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | OSG Records Management (Europe) | | | - | 13,600 | 13,600 |
| | Limited | | - | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | (investment in subsidiary at 31 March 2010 - see | | | | |
| | note 11) | | | | |
+--+---------------------------------------------------+---------+---------+---------+---------+
| | | | | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | Unistream Bank | | 24,400 | 24,400 | 25,000 | 25,000 |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | | | | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | Grindelia Holdings | | 17,500 | 17,500 | 13,200 | 13,200 |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | | | | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | Quoted investments | | 1,185 | - | 33 | - |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | | | | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
| | Total investments at fair value through profit | 43,085 | 41,900 | 51,833 | 51,800 |
| | and loss | | | | |
+--+----------------------------------------+----------+---------+---------+---------+---------+
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| Change in fair value of investments at fair value | | | | | | | | |
| through profit and loss | | | | | | | | |
+-------------------------------------------------------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | Year | | Year | | Year | | Year |
| | | | | | ended | | ended | | ended | | ended |
| | | | | | 31 | | 31 | | 31 | | 31 |
| | | | | | March | | March | | March | | March |
| | | | | | 2010 | | 2010 | | 2009 | | 2009 |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | Group | | Company | | Group | | Company |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| OSG Records Management (Europe) | | | | 1,934 | | 4,756 | | 4,350 | | 4,350 |
| Limited (see note 11) | | | | | | | | | | |
+---------------------------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| Unistream Bank | | | | | (600) | | (600) | | 7,439 | | 7,439 |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| Grindelia Holdings | | | | | 4,300 | | 4,300 | | (4,233) | | (4,233) |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| Quoted investments | | | | | (5) | | | | (25) | | |
| | | | | | | | - | | | | - |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| Kreditmart and | | | | | | | (800) | | | | (11,423) |
| Flexinvest (see note | | | | | - | | | | - | | |
| 11) | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
| Total unrealised | | | | | 5,629 | | 7,656 | | 7,531 | | (3,867) |
| gains/(losses) | | | | | | | | | | | |
+----------------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+----------+
On the 8 December 2009, the OSG Group was restructured per a unanimous
resolution in writing by the shareholders of Whitebrooks Investments Limited
pursuant to the Whitebrooks' Articles of Association. Per the resolution,
Whitebrooks Investments Limited redeemed all its issued share capital from its
shareholders, and thereafter transferred the entire issued share capital of OSG
Records Management (Europe) Limited ("OSGRME") to its shareholders in the same
proportion.
The carrying value of the outstanding convertible loans to OSGRME (formerly
Whitebrooks Investments Limited) at 28 February 2010 was converted into ordinary
shares of OSGRME.
The OSGRME Investment as detailed in note 11, increased Aurora's interest in OSG
from approximately 50% to approximately 93.6% (on a fully diluted basis
including in both cases the conversion of all convertible loans outstanding),
with the remaining 6.4 per cent of the equity owned by current and previous
members of management of OSG. Furthermore, of the option pool of 6.4 per cent
of OSG's shares, approximately 2% of the shares were held under options by
previous employees of OSG. As a result of the restructuring, these options were
terminated and the share option rights were purchased by the Company for a
consideration of US$288,222 (GBP171,186). This additional 2% (which includes the
conversion of all convertible loans outstanding by the Company at 28 February
2010) of OSGRME's potential shareholding acquired, resulted in the Company's
overall holding in OSGRME increasing to approximately 95.4%. The further capital
injection at as detailed in note 12 increased the Company's overall holding in
OSGRME to approximately 95.52%
The Company conducted a Placing of 17.5 million shares at 40 pence per share to
satisfy the cash element of the consideration, enabling the Company to subscribe
for the new ordinary OSG shares and to provide working capital for the Company.
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, Unistream (and
OSGRME up to 12 January 2010 when a controlling interest was acquired) 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".
On 30 June 2009, the Company entered into an agreement with Grindelia Holdings
Limited to borrow RUR 5,832,000 on 20 February 2010 for 1 year with an interest
rate of 1% per annum. The Company receives quarterly payments in advance of
Grindelia Holdings Limited declaring a dividend.
The valuation of the investments at 31 March 2010 and 31 March 2009 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 11.
In the view of the Valuation Committee, the value of the investment in OSGRME,
Unistream Bank, and Grindelia Holdings Limited as at 31 March 2010 was estimated
at GBP28.1 million (31 March 2009: GBP13.6 million), GBP24.4 million (31 March
2009: GBP25 million), and GBP17.5 million (31 March 2009: GBP13.2 million)
respectively, resulting in a decrease of the value of total investments below
historical cost in the Company accounts.
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
|14.| Loans and | | | | | | | | | | | |
| | advances to | | | | | | | | | | | |
| | customers | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Group | | | | | | | | | 31 | | 31 |
| | | | | | | | | | | March | | March |
| | | | | | | | | | | 2010 | | 2009 |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Residential | | | | | | | | | 8,618 | | 9,569 |
| | mortgages | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Reconciliation of | | | | | | | | | |
| | impairment loss allowance | | | | | | | | | |
| | on loans to customers: | | | | | | | | | |
+--+----------------------------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Balance at | | | | | | | | | 1,912 | | 195 |
| | beginning of | | | | | | | | | | | |
| | the | | | | | | | | | | | |
| | year/period | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Allowance | | | | | | | | | (974) | | 1,722 |
| | for loan | | | | | | | | | | | |
| | losses | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Translation | | | | | | | | | - | | (5) |
| | differences | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | 938 | | 1,912 |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | The following table details the carrying value of assets that are impaired and the ageing of those that |
| | are past due but not impaired: |
+--+-----------------------------------------------------------------------------------------------------------------------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | 2010 | | | | | Neither | | Past | | Financial | | Balance |
| | | | | | | past | | due | | assets | | at 31 |
| | | | | | | due nor | | not | | that have | | March |
| | | | | | | impaired | | impaired | | been | | 2010 |
| | | | | | | | | | | impaired | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Loans to | | | | | 6,831 | | 332 | | 2,306 | | 9,469 |
| | customers | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Interest | | | | | 40 | | 2 | | 45 | | 87 |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Loan loss | | | | | (44) | | (2) | | (892) | | (938) |
| | allowance | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | 6,827 | | 332 | | 1,459 | | 8,618 |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | 2009 | | | | | Neither | | Past | | Financial | | Balance |
| | | | | | | past | | due | | assets | | at 31 |
| | | | | | | due nor | | not | | that have | | March |
| | | | | | | impaired | | impaired | | been | | 2009 |
| | | | | | | | | | | impaired | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Loans to | | | | | 6,441 | | - | | 4,856 | | 11,297 |
| | customers | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Interest | | | | | 34 | | - | | 150 | | 184 |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | Loan loss | | | | | (12) | | - | | (1,900) | | (1,912) |
| | allowance | | | | | | | | | | | |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
| | | | | | | 6,463 | | - | | 3,106 | | 9,569 |
+--+--------------+--+----------+--+----------+----------+----------+----------+----------+-----------+----------+---------+
The delinquent loans as determined by the Risk Management Department of
Kreditmart and Flexinvest for the portfolio is as follows: 26 (2009: 18)
Accounts comprising 35% (2009: 43%) of the balance of the loan portfolio. For
these loans, a specific allowance was made of GBP572,073 (2009: GBP1,900,102).
For the non-delinquent loans, a portfolio impairment of 0.6% (2009: 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
27 years). Interest is charged at fixed rates at an average annual interest rate
of 11.64% (range between 10.5% and 14.9% depending on each borrower). Based on
maximum exposure (carrying value of the loans), the collateral pledged in
respect of these mortgages is GBP8,189,157 (2009: GBP8,716,313).
The fair value of the loans to customers were determined using a market related
14.9% (2009: 14.9%) discount rate on the loans denominated in Roubles. The loans
denominated in US Dollars were discounted at 13.3% (2009: 12.8%). Based on these
criteria the fair value of the loans were determined to be GBP7,482,554
(2009:GBP8,055,453).
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| 15.| Trade and other | | | | | | | | | | | |
| | receivables | | | | | | | | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | | | | | | 31 | | 31 | | 31 | | 31 |
| | | | | | | March | | March | | March | | March |
| | | | | | | 2010 | | 2010 | | 2009 | | 2009 |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | | | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | | | | | | Group | | Company | | Group | | Company |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | | | | | | | | | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | Tax receivable | | | | | 211 | | | | 194 | | |
| | | | | | | | | - | | | | - |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | Trade debtors | | | | | 1,975 | | | | | | |
| | | | | | | | | - | | - | | - |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | Less: allowance | | | | | (213) | | | | | | |
| | for dubtful | | | | | | | - | | - | | - |
| | debts | | | | | | | | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | Sundry debtors | | | | | 2,477 | | 980 | | 1,496 | | 901 |
| | and prepayments | | | | | | | | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | Bank interest | | | | | | | | | 21 | | 16 |
| | receivable | | | | | - | | - | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | Amount | | | | | | | 191 | | | | 195 |
| | receivable from | | | | | - | | | | - | | |
| | related party | | | | | | | | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | | | | | | | | | | | | |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
| | | | | | | 4,450 | | 1,171 | | 1,711 | | 1,112 |
+--+------------------+----------+----------+----------+----------+-----------------+----------+--------------------+----------+----------------------+----------+---------------------+
The related party balance is due from Flexinvest Limited and relates to the due
diligence costs of the VUB transaction and is interest free, unsecured and
repayable on demand.
The breakdown of aged trade receivables in respect of the Group and the Company
is as follows:
+-----+-------------+----------+----------+----------+--+--+----------+----------+---------+----------+-------+-+----------+-------------------+-+-+-----------+---------+----------+---------------------+
| | | | | | 31 | | 31 | | 31 | | 31 | |
| | | | | | March | | March | | March | | March | |
| | | | | | 2010 | | 2010 | | 2009 | | 2009 | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| | | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | |
| | | | | | | | | | | | | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| | | | | | Group | | Company | | Group | | Company | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| | | | | | | | | | | | | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Current | | | | | 992 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Receivables < 30 days | | | | | 338 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Receivables > 30 days | | | | | 136 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Receivables > 60 days | | | | | 203 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Receivables > 90 days | | | | | 306 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| | | | | | 1,975 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| | | | | | | | | | | | | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Perfoming | | | | | 992 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Past due | | | | | 983 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| Impaired | | | | | | | | | | | | |
| | | | | | - | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| | | | | | 1,975 | | | | | | | |
| | | | | | | | - | | - | | - | |
+------------------------------+----------+-------------+-------------+----------+---------+----------+---------+----------+---------------------+-------------+---------+--------------------------------+
| 16. | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | Cash and | | | | | | | | | | | |
| | cash | | | | | | | | | | | |
| | equivalents | | | | | | | | | | | |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | | | | | | | | | | | | |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | | | | | | 31 March 2010 | | 31 | | 31 | | 31 |
| | | | | | | | | March | | March | | March |
| | | | | | | | | 2010 | | 2009 | | 2009 |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | | | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | | | | | | Group | | Company | | Group | | Company |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | | | | | | | | | | | | |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | Bank | | | | | 6,577 | | 4,685 | | 2,271 | | 1,896 |
| | balances | | | | | | | | | | | |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | Fixed | | | | | 6,167 | | 1,019 | | 9,501 | | 2,015 |
| | Deposits | | | | | | | | | | | |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | Cash | | | | | 498 | | | | 250 | | 212 |
| | | | | | | | | - | | | | |
+-----+-------------+----------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | Cash and cash | | | | 13,242 | | 5,704 | | 12,022 | | 4,123 |
| | equivalents in | | | | | | | | | | |
| | statement of cash | | | | | | | | | | |
| | flows | | | | | | | | | | |
+-----+------------------------+---------------------+-----+---------------------+----------------------------+------------+-------------------+---+---------------------+----------+---------------------+
| | | | | | | | | | | | | | | | | | | | | |
+-----+-------------+----------+----------+----------+--+--+----------+----------+---------+----------+-------+-+----------+-------------------+-+-+-----------+---------+----------+---------------------+
The restricted cash balances for the current year, which are included in the
above table, total GBP143,373.
17. Finance leases
The Group acquires the majority of its vehicles and racking systems for its
warehouses through finance lease contracts. Such contracts are generally
classified as finance leases because the rental period approximates to the
estimated useful economic life of the assets; and the Group has the right to
purchase the assets outright at the end of the minimum lease term. The Group
have financial lease obligations in Russia, Poland and Kazakhstan. The average
term of these finance leases are 36 months. The Group presents obligations under
financial leases in its Statement of Financial Position at present value (less
amounts representing finance charges related to future periods).
The payment schedule of the present value of minimum lease payments is as
follows:
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| Group | | | | | 31 | | 31 | | 31 | | 31 |
| | | | | | March | | March | | March | | March |
| | | | | | 2010 | | 2010 | | 2009 | | 2009 |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | Less | | Greater | | Less | | Greater |
| | | | | | than | | than | | than | | than |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | 1 year | | 1 year | | 1 year | | 1 year |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | | | | |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | | | | |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| Vehicles | | | | | 108 | | 237 | | | | |
| | | | | | | | | | - | | - |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| Fixtures and | | | | | 582 | | 1,264 | | | | |
| fittings | | | | | | | | | - | | - |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| Furniture and | | | | | 29 | | 66 | | | | |
| equipment | | | | | | | | | - | | - |
+--------------------+ +----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | 719 | | 1,567 | | | | |
| | | | | | | | | | - | | - |
+--------------------+ +----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | | | | |
+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
The carrying value of the property, plant and equipment held under finance
leases at 31 March 2010 are:
- Vehicles: GBP514,593 (2009: Nil
- Fixtures and fittings: GBP2,720,363 (2009: Nil)
- Furniture and equipment: GBP113,951 (2009: Nil)
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
|18.| Derivative | | | | | | | | | | | |
| | liabilities | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | Group and Company |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+------------------------------------------+
| | | | | | | | | | | 31 | | 31 |
| | | | | | | | | | | March | | March |
| | | | | | | | | | | 2010 | | 2009 |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Current | | | | | | | | | | | |
| | derivative | | | | | | | | | | | |
| | liability | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Sell US$ 1,200,000 | | | | | | | | | | |
| | (maturity date 13 November | | | | | | | | - | | - |
| | 2008) | | | | | | | | | | |
+--+----------------------------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Sell US$ | | | | | | | | | | | 2,685 |
| | 4,000,000 | | | | | | | | | - | | |
| | (maturity date 14 | | | | | | | | | | | |
| | May 2009) | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Buy US$ 4,000,000 | | | | | | | | | | | (2,731) |
| | (maturity date 14 | | | | | | | | | - | | |
| | May 2009) | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | | | (46) |
| | | | | | | | | | | - | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Valuation of US$ liability (maturity date 13 | | | | | | | | |
| | November 2008) - US$ 3,700,00 | | | | | | - | | - |
+--+--------------------------------------------------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Valuation of US$ liability | | | | | | | | | | (2,792) |
| | at year end - US$ 4,000,00 | | | | | | | | - | | |
+--+----------------------------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Valuation of US$ | | | | | | | | | | | 2,792 |
| | asset at year end | | | | | | | | | - | | |
| | - US$ 4,000,00 | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | - | | (46) |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Derivative | | | | | | | | | | | |
| | revaluation | | | | | | | | | | | |
| | reconciliation | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Loss realised on | | | | | | | | | (46) | | (491) |
| | forward exchange | | | | | | | | | | | |
| | contracts | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Forward exchange liability | | | | | | | | - | | (46) |
| | at 31 March 2009 as above | | | | | | | | | | |
+--+----------------------------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | Add: forward exchange | | | | | | | | 46 | | 12 |
| | liability at 31 March | | | | | | | | | | |
| | 2009, 31 March 2008 | | | | | | | | | | |
+--+----------------------------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | | | |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
| | | | | | | | | | | - | | (525) |
+--+-------------------+--------+----------+----------+----------+----------+----------+----------+----------+---------+----------+---------------------+
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 profit or loss within (losses)/gains on derivatives.
The Company has a balance of GBPNil (2009: 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.
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
|19.| Trade and | | | | | | | | | | | |
| | other | | | | | | | | | | | |
| | payables | | | | | | | | | | | |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | 31 | | 31 | | 31 | | 31 |
| | | | | | | March | | March | | March | | March |
| | | | | | | 2010 | | 2010 | | 2009 | | 2009 |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | Group | | Company | | Group | | Company |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Trade | | | | | 380 | | | | | | |
| | payables | | | | | | | - | | - | | - |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Expense | | | | | 2,789 | | 89 | | 742 | | 129 |
| | accruals and | | | | | | | | | | | |
| | other | | | | | | | | | | | |
| | creditors | | | | | | | | | | | |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Income | | | | | 1,433 | | | | | | |
| | received in | | | | | | | - | | - | | - |
| | advance | | | | | | | | | | | |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | | |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | 4,602 | | 89 | | 742 | | 129 |
+--+--------------+----------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| 20.| Share capital | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | | | | | | | 31 | | 31 |
| | | | | | | | March | | March |
| | | | | | | | 2010 | | 2009 |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | Authorised | | | | | | | | |
| | share capital: | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | 200,000,000 | | | | | | 2,000 | | 2,000 |
| | Ordinary Shares | | | | | | | | |
| | of 1p each: | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | Issued share | | | | | | | | |
| | capital: | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | 75,000,000 | | | | | | 750 | | 750 |
| | fully paid | | | | | | | | |
| | Ordinary Shares | | | | | | | | |
| | of 1p each: | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | Issued during | | | | | | | | |
| | the year: | | | | | | | | |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | 17,500,000 | | | | | | 175 | | |
| | Ordinary Shares | | | | | | | | - |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | 3,356,596 | | | | | | 34 | | |
| | Ordinary Shares | | | | | | | | - |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | 16,643,404 | | | | | | 166 | | |
| | Ordinary Shares | | | | | | | | - |
+--+-----------------+----------+----------+----------+----------+-----------+---------+----------+---------+
| | 112,500,000 | | | | | | 1,125 | | 750 |
| | ordinary 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.
17,500,000 Consideration Shares were issued on 07 January 2010 at a fair value
of 36p each.
3,356,596 Placement Shares were issued on 06 January 2010 at 40 p each.
16,643,404 Placement Shares were issued on 08 January 2010 at 40p 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 26.
21. 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.
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | Group and | | | | | | | | | 31 | | 31 |
| | company | | | | | | | | | March | | March |
| | | | | | | | | | | 2010 | | 2009 |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | On conversion | | | | | | | | | 70,750 | | 70,750 |
| | from share | | | | | | | | | | | |
| | premium | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | Pemium on | | | | | | | | | 13,825 | | |
| | issue of | | | | | | | | | | | - |
| | ordinary | | | | | | | | | | | |
| | shares | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | Share issue costs on Placement of | | | | | | | (502) | | |
| | shares | | | | | | | | | - |
+--+--------------------------------------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | | | | | 84,073 | | 70,750 |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| 22.| Share options | | | | | | | | | | | |
| | reserve | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | 31 | | 31 | | 31 | | 31 |
| | | | | | | March | | March | | March | | March |
| | | | | | | 2010 | | 2010 | | 2009 | | 2009 |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | Group | | Company | | Group | | Company |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | Balance as at | | | | | 1,820 | | 1,820 | | 1,220 | | 1,220 |
| | 1 April 2009, | | | | | | | | | | | |
| | and 1 April | | | | | | | | | | | |
| | 2008 | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | Recognised | | | | | 617 | | 600 | | 600 | | 600 |
| | fair value of | | | | | | | | | | | |
| | share options | | | | | | | | | | | |
| | issued during | | | | | | | | | | | |
| | the year | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
| | Balance as at | | | | | 2,437 | | 2,420 | | 1,820 | | 1,820 |
| | 31 March 2010, | | | | | | | | | | | |
| | and 31 March | | | | | | | | | | | |
| | 2009 | | | | | | | | | | | |
+--+----------------+----------+----------+----------+----------+------------------+----------+--------------------+----------+---------------------+----------+---------------------+
Details of share-based payments are shown in note 26.
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| 23.| Retained | | | | | | | | | |
| | earnings | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | 31 | | 31 | | 31 | | 31 |
| | | | | March | | March | | March | | March |
| | | | | 2010 | | 2010 | | 2009 | | 2009 |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | Group | | Company | | Group | | Company |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Balance as at 1 | | | 5,320 | | 6,540 | | 4,894 | | 12,861 |
| | April 2009, and | | | | | | | | | |
| | 1 April 2008 | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Net | | | 665 | | 4,828 | | 426 | | (6,321) |
| | profit/(loss) | | | | | | | | | |
| | for the year | | | | | | | | | |
| | attributable to | | | | | | | | | |
| | owners | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Acquisition of | | (128) | | - | | - | | - |
| | non-controlling interests | | | | | | | | |
| | in subsidiary | | | | | | | | |
+--+----------------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Balance as at | | | 5,857 | | 11,368 | | 5,320 | | 6,540 |
| | 31 March 2010, | | | | | | | | | |
| | and 31 March | | | | | | | | | |
| | 2009 | | | | | | | | | |
+--+-----------------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
Any surplus or deficit arising from net profits or losses after payment of
dividends is taken to this reserve.
24. 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. Movements in the translation reserve are included under
"Other comprehensive income" in the statement of comprehensive income.
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| 25.| Net asset | | | | | | | | | | |
| | value per | | | | | | | | | | |
| | share | | | | | | | | | | |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | 31 | | 31 | | 31 | | 31 |
| | | | | | March | | March | | March | | March |
| | | | | | 2010 | | 2010 | | 2009 | | 2009 |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | Group | | Company | | Group | | Company |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Net assets for the purposes of basic and | 93,529 | | 98,986 | | 77,830 | | 79,860 |
| | diluted net asset value per share attributable | | | | | | | |
| | to equity holders of the parent: (GBP'000) | | | | | | | |
+--+-------------------------------------------------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Number of ordinary shares for the purpose of | 112,500 | | 112,500 | | 75,000 | | 75,000 |
| | net asset value per share:(in thousands): | | | | | | | |
+--+-------------------------------------------------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
| | Net asset | | | | 83.1p | | 88.0p | | 103.8p | | 106.5p |
| | value per | | | | | | | | | | |
| | share | | | | | | | | | | |
+--+----------------+----------+----------+----------+---------+----------+---------+----------+---------+----------+---------+
26. Share based payments
Company
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 Option Deed provides for further Option Shares to be issued upon the issue
of new shares by the Company, with the exercise price for such further Option
Shares being equal to the cash placing price of such new shares. Because the
Option Deed did not contemplate the issuance of shares at a discount to the IPO
placing price, the Condition is based on an increase in the price per share
rather than an increase in the value of the fund, as would be the case in a
typical private equity fund. Therefore, the Company has agreed with the Manager
to amend the Option Deed during the year, so that the formula used in the
Condition allows for new Ordinary Shares to be issued at, above or below the IPO
placing price, to more accurately reflect the value of the fund.
This amendment will mean that the 12 per cent hurdle will be based upon the
total funds raised by the Company across all shares issued for cash. The Manager
believes that it will have a realistic potential of exercising the Option, thus
further incentivising its performance. It should be noted that the Amended
Option Deed does not reduce the exercise price in respect of the Option Shares,
merely the condition to exercise the Option.
In terms of the amended Option Deed, there were 9,375,000 additional options
issued with a 40 pence strike price. However these additional share options do
not impact the grant date fair value of the equity options nor modify the value
recognised over the remaining vesting period.
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 | | | | | 31 | | 31 | | |
| | | | | | March | | March | | |
| | | | | | 2010 | | 2009 | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| | | | | | Number | | Number | | Exercise |
| | | | | | | | | | price |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| | | | | | '000 | | '000 | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| Options as at 1 | | | | | 18,750 | | 18,750 | | 100p |
| April 2009, and 1 | | | | | | | | | |
| April 2008 | | | | | | | | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| | | | | | | | | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| Options granted | | | | | 9,375 | | | | 40p |
| during the year | | | | | | | - | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| | | | | | | | | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| Options as at 31 | | | | | 28,125 | | 18,750 | | |
| March 2010, and 31 | | | | | | | | | |
| March 2009 | | | | | | | | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| | | | | | | | | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| | | | | | | | | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
| Exercisable | | | | | - | | - | | |
| options at the end | | | | | | | | | |
| of the year | | | | | | | | | |
+--------------------+----------+----------+----------+----------+-------------------+----------+--------------------+----------+----------+
The options outstanding at 31 March 2010 had a remaining contractual life of 6
years (31 March 2009: 7 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 | | | | | | | | 100p |
| of options | | | | | | | | |
+------------------------+ +----------+----------+----------+----------+----------+--------+--------+
| Exercise price | | | | | | | | 100p |
+------------------------+ +----------+----------+----------+----------+----------+----------+--------+
| Expected volatility | | | | | | | | 20% |
+------------------------+ +----------+----------+----------+----------+----------+----------+--------+
| Risk free rate | | | | | | | | 4.39% |
+------------------------+ +----------+----------+----------+----------+----------+----------+--------+
| Effective dividend | | | | | | | | 0% |
| yield | | | | | | | | |
+------------------------+----------+----------+----------+----------+----------+----------+----------+--------+
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
+------------------------+----------+----------+----------+----------+----------+----------+--------+--------+
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 profit or loss 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 2010 is GBP600,000
(2009: GBP600,000).
OSGRME
Terms
Under shareholders' approval a maximum of 3324 shares are available for issue to
management of the OSGRME Group. This is representing a maximum of 4.48% of the
OSGRME Group's equity as of 31 March 2010. From this pool 3250 share options
were actually granted to management of OSGRME as of 31 March 2010 (1250 were
granted in 2007 and are exercisable at grant date with a fair value at grant
date of $406,998, 1000 were granted in 2008 with a 5 year vesting period with a
fair value at grant date of $320,521, 1000 were granted in 2009 with a 5 year
vesting period with a fair value at grant date of $186,140).
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | Change in the year | | | | | 31 | | | | |
| | | | | | | March | | | | |
| | | | | | | 2010 | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | | | | | | Number | | | | Exercise |
| | | | | | | | | | | price |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | | | | | | | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | Options at acquisition | | | | | 3,250 | | | | $160 |
| | date | | | | | | | | | - $434 |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | | | | | | | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | Options granted during | | | | | | | | | |
| | the 3 month period | | | | | - | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | | | | | | | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | Options as at 31 March | | | | | 3,250 | | | | |
| | 2010 | | | | | | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | | | | | | | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | | | | | | | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
| | Exercisable options at | | | | | 1,250 | | | | |
| | the end of the year | | | | | | | | | |
+-+-------------------------+----------+----------+----------+----------+-------------------+----------+----------+----------+----------+
The options outstanding at 31 March 2010 had a remaining contractual life of 5
years
All share based payments were valued at the date of issue using the
Black-Scholes Model. The Directors have estimated that the hurdle rate will be
achieved, and hence the options will vest, after 5 years. The value of the 2000
options that were granted in 2008-2009 will be charged to profit or loss on a
pro rata basis over the course of the 5 years ending December 2013. The charge
arising for the 3 month ended 31 March 2010 is GBP17,661.
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| 27.| Interest expense | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Group | | | | | | | 31 | | 31 |
| | | | | | | | | March | | March |
| | | | | | | | | 2010 | | 2009 |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Finance leases | | | | | | | 83 | | - |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Other | | | | | | | 12 | | 21 |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | 95 | | 21 |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| 28.| Operating leases | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Leases as lessee | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Non-cancellable operating | | | | | | | | |
| | lease rentals are payable as | | | | | | | | |
| | follows: | | | | | | | | |
+--+-------------------------------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Group | | | | | | | 31 | | 31 |
| | | | | | | | | March | | March |
| | | | | | | | | 2010 | | 2009 |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | GBP'000 | | GBP'000 |
| | | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | Less than 1 year | | | | | | | 3,199 | | 602 |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
| | 1 - 5 years | | | | | | | 11,628 | | 47 |
+--+--------------------+ +----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | 14,827 | | 649 |
+--+--------------------+ +----------+----------+----------+----------+----------+----------+----------+----------+
| | | | | | | | | | | |
+--+--------------------+----------+----------+----------+----------+----------+----------+----------+----------+----------+
The Group leases a number of premises including warehouse facilities and office
buildings under operating leases. The leases typically run for a period of 1 - 5
years.
29. 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 continues 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 2009 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 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 (apart from the finance leases
as per note 16) and are payable in the normal operating cycle. Refer to the
interest rate risk table in note 29 for the maturity analysis of the Group's
liabilities.
Credit risk
The Group 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
were held in the prior year with The Royal Bank of Scotland International, a
highly reputable counterparty with a high credit rating. The Group monitors the
placement of cash balances on an ongoing basis. No financial assets held by the
group have had their credit rating graded by an internationally regarded agency.
Two subsidiaries of the Group, 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 Departments of OSG Records Management (Europe), 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 and Eastern Europe. The geographical concentration of
the assets and liabilities of the Group are set out below:
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| | 31 March 2010 | | | | | | |
+-------------+----------------------------------------------------+----------+-------------------+----------+---------------------+----------+----------------------------------+
| | Russian | | United | | Poland | | Cyprus | | Other | |
| | Federation | | Kingdom | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| ASSETS | % | | % | | % | | % | | % | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| Long term | 100 | | | | | | | | | |
| third | | | - | | - | | - | | - | |
| party | | | | | | | | | | |
| loans | | | | | | | | | | |
| receivable | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| Trade and | 57 | | 25 | | 13 | | | | 5 | |
| other | | | | | | | - | | | |
| receivables | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| Cash and | 44 | | 49 | | 1 | | 5 | | 1 | |
| cash | | | | | | | | | | |
| equivalents | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| | 31 March 2009 | | | | | | | |
+-------------+----------------------------------------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| | Russian | | United | | Cyprus | | Other | | | |
| | Federation | | Kingdom | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| ASSETS | % | | % | | % | | % | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| Long term | 100 | | | | | | | | | |
| third | | | - | | - | | - | | | |
| party | | | | | | | | | | |
| loans | | | | | | | | | | |
| receivable | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| Trade and | 41 | | 58 | | 1 | | | | | |
| other | | | | | | | - | | | |
| receivables | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
| Cash and | 4 | | 33 | | 62 | | 1 | | | |
| cash | | | | | | | | | | |
| equivalents | | | | | | | | | | |
+-------------+---------------------+----------+-------------------+----------+-------------------+----------+---------------------+----------+-----------------------+----------+
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. The Risk Department of Kreditmart and Flexinvest have
determined that the value of delinquent loans are GBP1,837,541 (2009:
GBP4,856,568). Loan payments are current except for GBP920,911 which is 60 days
overdue as at 31 March 2010 (2009: GBP280,718: 60 days overdue) and GBP574,709
which is 90 and 120 days overdue as at 31 March 2010 (2009: GBP1,694,239: 120
days). At 31 March 2010, a Loan Impairment Provision in respect of these loans
was raised of GBP572,073 (2009:GBP1,912,982). OSG Records Management (Europe)
has no loan receivables. See note 15 for details of the ageing of trade
receivables.
The maximum exposure to credit risk for the Group and Company at the end of the
reporting period without taking into account any collateral held or credit
enhancements is the following:
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | 31 | | 31 | | 31 | | 31 |
| | | | | | March | | March | | March | | March |
| | | | | | 2010 | | 2010 | | 2009 | | 2009 |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | Group | | Company | | Group | | Company |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | |Note | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | | | | |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| Cash and | | | 16 | | 13,242 | | 5,704 | | 12,022 | | 4,123 |
| cash | | | | | | | | | | | |
| equivalents | | | | | | | | | | | |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| Trade and | | | 15 | | 4,450 | | 1,171 | | 1,711 | | 1,112 |
| other | | | | | | | | | | | |
| receivables | | | | | | | | | | | |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| Loans to | | | 14 | | 8,618 | | - | | 9,569 | | - |
| customers | | | | | | | | | | | |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | | | | |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | 26,310 | | 6,875 | | 23,302 | | 5,235 |
+-------------+-+----------+------+----------+---------+----------+---------+----------+---------+----------+---------+
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 Group is exposed to
foreign exchange risk arising from various currency exposures primarily with
respect to Russian Roubles, Polish Zloty and the US Dollar. All of the Group's
equity investments are denominated in Russian Roubles. The Group 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 Group does not use such
currency derivatives for speculative purposes. See note 18 for detail of
currency derivative contracts entered into during the current year and prior
year, as well as those outstanding at year end.
Currency Risk Table
An analysis of the Group's net currency exposure is as follows:
+--------------+----------+----------+----------+---------+---------+---------+----------+
| As at 31 | | | | | | | |
| March | | | | | | | |
| 2010: | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Currency | Sterling | | US | Russian | Polish | Other | Total |
| of | | | Dollars | Roubles | Zloty | | |
| denomination | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | GBP'000 | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | 31,753 | | 4,009 | 63,045 | 2,284 | 1025 | 102,116 |
| assets | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | (1,564) | | (39) | (4,833) | (1,581) | (570) | (8,587) |
| liabilities | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Net | 30,189 | | 3,970 | 58,212 | 703 | 455 | 93,529 |
| currency | | | | | | | |
| exposure | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| As at 31 | | | | | | | |
| March | | | | | | | |
| 2009: | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Currency | Sterling | | US | Russian | Polish | Other | Total |
| of | | | Dollars | Roubles | Zloty | | |
| denomination | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | GBP'000 | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | 12,412 | | 5,108 | 61,039 | - | 59 | 78,618 |
| assets | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | (45) | | (4) | (739) | - | - | (788) |
| liabilities | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Net | 12,367 | | 5,104 | 60,300 | - | 59 | 77,830 |
| currency | | | | | | | |
| exposure | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| An analysis of the | | | | | |
| Company's net currency | | | | | |
| exposure is as follows: | | | | | |
+------------------------------------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| As at 31 | | | | | | | |
| March | | | | | | | |
| 2010: | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Currency | | | Sterling | US | Russian | Other | Total |
| of | | | | Dollars | Roubles | | |
| denomination | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | | | 6,568 | - | 92,507 | - | 99,075 |
| assets | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | | | (89) | - | - | - | (89) |
| liabilities | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Net | | | 6,479 | - | 92,507 | - | 98,986 |
| currency | | | | | | | |
| exposure | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| As at 31 | | | | | | | |
| March | | | | | | | |
| 2009: | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Currency | | | Sterling | US | Russian | Other | Total |
| of | | | | Dollars | Roubles | | |
| denomination | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | | | 5,034 | 168 | 74,833 | - | 80,035 |
| assets | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Total | | | (175) | - | - | - | (175) |
| liabilities | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
| Net | | | 4,859 | 168 | 74,833 | - | 79,860 |
| currency | | | | | | | |
| exposure | | | | | | | |
+--------------+----------+----------+----------+---------+---------+---------+----------+
Foreign Currency Sensitivity
The following table details the Group's sensitivity to a 20% (2009: 20%)
strengthening of the Sterling against each of the relevant foreign exchange
currencies. 20% (2009: 20%) is the sensitivity rate used when reporting foreign
currency risk internally to management and represents management's assessment of
the possible change in foreign exchange rates. This analysis assumes that all
variables, in particular interest rates remain constant. The analysis is
performed on the same basis for the prior period.
Increase/(decrease) in profit /loss:
+--------------------+----------+----------+----------+----------+----------+----------+
| | | | 31 | 31 | 31 | 31 |
| | | | March | March | March | March |
| | | | 2010 | 2010 | 2009 | 2009 |
+--------------------+----------+----------+----------+----------+----------+----------+
| | | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | |
+--------------------+----------+----------+----------+----------+----------+----------+
| | | | Group | Company | Group | Company |
+--------------------+----------+----------+----------+----------+----------+----------+
| | | | | | | |
+--------------------+----------+----------+----------+----------+----------+----------+
| Russian Rouble | | | (11,642) | (18,501) | (12,060) | (14,967) |
+--------------------+----------+----------+----------+----------+----------+----------+
| US Dollar | | | (794) | - | (1,021) | (34) |
+--------------------+----------+----------+----------+----------+----------+----------+
| Polish Zloty | | | (141) | - | - | - |
+--------------------+----------+----------+----------+----------+----------+----------+
| Other | | | (91) | - | (12) | - |
+--------------------+----------+----------+----------+----------+----------+----------+
A 20% (2009: 20%) weakening of the Sterling against each of the relevant foreign
exchange currencies at the year end would have had the equal but opposite
effect, on the basis that all other variables remain the same.
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 | | | | | | | | | | | |
| 2010: | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| | | | 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 | | | 13 | | 41,900 | | 43.29 | | 92,200 | | 93.14 |
| Equities | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| - Quoted | | | 13 | | 1,185 | | 1.22 | | - | | - |
| investments | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| At 31 March | | | | | | | | | | | |
| 2009: | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| | | | | | Fair | | % of | | Fair | | % of |
| | | | | | Value | | Net | | Value | | Net |
| | | | | | GBP'000 | | Assets | | GBP'000 | | Assets |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| | | | | | Group | | Company |
+----------------+----------+----------+------+----------+-----------------------------+----------+-----------------------------+
| Investments at | | | | | | | | | | | |
| fair value | | | | | | | | | | | |
| through profit | | | | | | | | | | | |
| & loss: | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| - Unlisted | | | 13 | | 51,800 | | 66.56 | | 74,800 | | 93.66 |
| Equities | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| - Quoted | | | 13 | | 33 | | 0.04 | | - | | - |
| investments | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| Derivative | | | | | | | | | | | |
| liabilities | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
| - Open | | | 18 | | (46) | | (0.06) | | (46) | | (0.06) |
| forwards | | | | | | | | | | | |
+----------------+----------+----------+------+----------+---------+----------+--------+----------+---------+----------+--------+
Valuation of financial instruments
The Group measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements:
> Level 1: Quoted market price (unadjusted) in an active market for an identical
instrument.
> Level 2: Valuation techniques based on observable inputs, either directly
(i.e. as prices) or indirectly (i.e. derived frrom prices). This category
includes instruments valued using: quoted market prices in active markets for
similar instruments; quoted prices for identical or similar instruments in
markets that are considered less than active; or other valuation techniques
where all significant inputs are directly or indirectly observable from market
data.
> Level 3: Valuation techniques using significant unobservable inputs. This
category includes all instruments where the valuation technique includes inputs
not based on observable data and the unobservable inputs have a significant
effect on the instrument's valuation. This category includes instruments that
are valued based on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect differences
between the instruments.
The table below analyses financial instruments, measured at fair value at the
end of the reporting period, by the level in the fair value hierarchy into which
the fair value measurement is categorised:
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Group | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | Level | | Level | | Level | | Total |
| | | 1 | | 2 | | 3 | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| At 31 March | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| 2010: | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Investments | | | | | | | | |
| at fair value | | | | | | | | |
| through | | | | | | | | |
| profit & | | | | | | | | |
| loss: | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| -Unlisted | | - | | - | | 41,900 | | 41,900 |
| Equities | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Quoted | | 1,185 | | - | | - | | 1,185 |
| investments | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Derivative | | | | | | | | |
| liabilities | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Open | | - | | - | | - | | - |
| forwards | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | 1,185 | | - | | 41,900 | | 43,085 |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| At 31 March | | Level | | Level | | Level | | Total |
| 2009: | | 1 | | 2 | | 3 | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Investments | | | | | | | | |
| at fair value | | | | | | | | |
| through | | | | | | | | |
| profit & | | | | | | | | |
| loss: | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| -Unlisted | | - | | - | | 51,800 | | 51,800 |
| Equities | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Quoted | | 33 | | - | | - | | 33 |
| investments | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Derivative | | | | | | | | |
| liabilities | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Open | | - | | (46) | | - | | (46) |
| forwards | | | | | | | | |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | 33 | | (46) | | 51,800 | | 51,787 |
+---------------+----------+---------+----------+---------+----------+---------+----------+---------+
The following table shows a reconciliation from the beginning balances to the
ending balances for fair value measurements in Level 3 of the fair value
hierarchy of the Group:
+--------------------------------+----------+----------+----------+----------+----------+----------+
| 2010 | | | | | | Level |
| | | | | | | 3 |
+--------------------------------+----------+----------+----------+----------+----------+----------+
| | | | | | | GBP'000 |
| | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+
| | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+
| Opening balance | | | | | | 51,800 |
+--------------------------------+----------+----------+----------+----------+----------+----------+
| Purchases | | | | | | - |
+--------------------------------+----------+----------+----------+----------+----------+----------+
| Sales | | | | | | - |
+--------------------------------+----------+----------+----------+----------+----------+----------+
| Transfer to investment in subsidiary | | | | | (15,534) |
| (OSGRME) (Note 11) | | | | | |
+-------------------------------------------+----------+----------+----------+----------+----------+
| Total gains or losses in | | | | | | 5,634 |
| profit or loss | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+
| Closing balance | | | | | | 41,900 |
+--------------------------------+----------+----------+----------+----------+----------+----------+
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Company | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | Level | | Level | | Level | | Total |
| | | 1 | | 2 | | 3 | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| At 31 March 2010: | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Investments at | | | | | | | | |
| fair value through | | | | | | | | |
| profit & loss: | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| -Unlisted | | - | | - | | 92,200 | | 92,200 |
| Equities | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Quoted | | - | | - | | - | | - |
| investments | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Derivative | | | | | | | | |
| liabilities | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Open forwards | | - | | - | | - | | - |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | - | | - | | 92,200 | | 92,200 |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| At 31 March 2009: | | Level | | Level | | Level | | Total |
| | | 1 | | 2 | | 3 | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Investments at | | | | | | | | |
| fair value through | | | | | | | | |
| profit & loss: | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| -Unlisted | | - | | - | | 74,800 | | 74,800 |
| Equities | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Quoted | | - | | - | | - | | - |
| investments | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| Derivative | | | | | | | | |
| liabilities | | | | | | | | |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| - Open forwards | | - | | (46) | | - | | (46) |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
| | | - | | (46) | | 74,800 | | 74,754 |
+--------------------+----------+---------+----------+---------+----------+---------+----------+---------+
The following table shows a reconciliation from the beginning balances to the
ending balances for fair value measurements in Level 3 of the fair value
hierarchy of the Company:
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| 2010 | | | | | | | Level |
| | | | | | | | 3 |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| | | | | | | | GBP'000 |
| | | | | | | | |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| | | | | | | | |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| Opening balance | | | | | | | 74,800 |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| Purchases | | | | | | | 9,744 |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| Sales | | | | | | | - |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| Total gains or losses in | | | | | | | 7,656 |
| profit or loss | | | | | | | |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
| Closing balance | | | | | | | 92,200 |
+-----------------------------+--------+----------+----------+----------+----------+----------+---------+
Although the Group and Company believes that its estimates of fair values are
appropriate, the use of different methodolgies or assumptions could lead to
different measurements of fair value. For fair value measurements in Level 3 of
the fair value hierarchy (as per note 11), changing one or more of the
unobservable inputs used for either a conservative and optimistic approach would
have the following effects:
Level 3 investments have been valued in accordance with the methodologies in
Note 11. The value of the investments and the fair value movements are disclosed
in note 13.
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 GBP8,380,000 (2009:
GBP10,357,400) for the Group and GBP18,440,000 (2009: GBP14,950,800) 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% (2009: 20%) 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 Group monitors its
interest rate exposure regularly and allocates its cash resources to an
appropriate mix of floating and fixed rate instruments of varying maturities.
The following table details the 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 | No | Less | 1-3 | 3 | 1 | 2 | Greater | Total |
| March | contractual | than | months | months | to | to | than 5 | |
| 2010: | terms of | 1 | | to 1 | 2 | 5 | years | |
| | repayment | month | | year | years | years | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Assets | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Non-interest | 77,156 | 2,166 | 1,525 | 191 | 569 | 190 | - | 81,797 |
| bearing | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Floating | 4,379 | - | - | - | - | - | - | 4,379 |
| interest | | | | | | | | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Fixed | 682 | 3,415 | 1,293 | 2,192 | 187 | 217 | 7,954 | 15,940 |
| interest | | | | | | | | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
| * | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Total | 82,217 | 5,581 | 2,818 | 2,383 | 756 | 407 | 7,954 | 102,116 |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Liabilities | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Non-interest | (1,699) | (2,981) | (1,317) | (1,023) | - | - | - | (7,020) |
| bearing | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Floating | - | - | - | - | - | - | - | - |
| interest | | | | | | | | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Fixed | - | - | - | - | (824) | (743) | - | (1,567) |
| interest | | | | | | | | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Total | (1,699) | (2,981) | (1,317) | (1,023) | (824) | (743) | 0 | (8,587) |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Net | 80,518 | 2,600 | 1,501 | 1,360 | (68) | (336) | 7,954 | 93,529 |
| Exposure | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| At 31 | No | Less | 1-3 | 3 | 1 | 2 | Greater | Total |
| March | contractual | than | months | months | to | to | than 5 | |
| 2009: | terms of | 1 | | to 1 | 2 | 5 | years | |
| | repayment | month | | year | years | years | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Assets | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Non-interest | 57,429 | | | | | | | 57,429 |
| bearing | | - | - | - | - | - | - | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Floating | | 2,091 | | | | | | 2,091 |
| interest | - | | - | - | - | - | - | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
| Fixed | | 8,561 | 59 | 1,266 | 353 | 1,058 | 7,801 | 19,098 |
| interest | - | | | | | | | |
| 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 | 56,687 | 10,652 | 13 | 1,266 | 353 | 1,058 | 7,801 | 77,830 |
| Exposure | | | | | | | | |
+--------------+----------------+----------------+-----------------+-----------------+---------------+---------------+----------------+--------------+
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Company | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| At 31 March | No | Less | 1-3 | 3 | 1 | 2 to |Greater | Total |
| 2010: | contractual | than | months | months | to | 5 | than 5 | |
| | terms of | 1 | | to 1 | 2 | years | years | |
| | repayment | month | | year | years | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| | GBP000 | GBP000 | GBP000 | GBP000 |GBP000 |GBP000 | GBP000 | GBP000 |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Assets | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Non-interest | 92,607 | | 980 | | | | | 93,587 |
| bearing | | - | | - | - | - | - | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Floating | 4,379 | | | | | | | 4,379 |
| interest | | - | - | - | - | - | - | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Fixed | | | | 1,109 | | | | 1,109 |
| interest | - | - | - | | - | - | - | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Total | 96,986 | | 980 | 1,109 | | | | 99,075 |
| | | - | | | - | - | - | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Liabilities | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Non-interest | | (89) | | | | | | (89) |
| bearing | - | | - | - | - | - | - | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Floating | | | | | | | | |
| interest | - | - | - | - | - | - | - | - |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Fixed | | | | | | | | |
| interest | - | - | - | - | - | - | - | - |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Total | 0 | (89) | 0 | | | | | (89) |
| | | | | - | - | - | - | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Net | 96,986 | (89) | 980 | 1,109 | | | | 98,986 |
| Exposure | | | | | - | - | - | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| At 31 March | No | Less | 1-3 | 3 | 1 | 2 to |Greater | Total |
| 2009: | contractual | than | months | months | to | 5 | than 5 | |
| | terms of | 1 | | to 1 | 2 | years | years | |
| | repayment | month | | year | years | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| | GBP000 | GBP000 | GBP000 | GBP000 |GBP000 |GBP000 | GBP000 | GBP000 |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Assets | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Non-interest | 75,896 | | | | | | | 75,896 |
| bearing | | - | - | - | - | - | - | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Floating | | 2,091 | | | | | | 2,091 |
| interest | - | | - | - | - | - | - | |
| rate | | | | | | | | |
| instruments | | | | | | | | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
| Fixed | | 1,048 | | 1,000 | | | | 2,048 |
| interest | - | | - | | - | - | - | |
| 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 | 75,767 | 3,139 | (46) | 1,000 | | | | 79,860 |
| Exposure | | | | | - | - | - | |
+--------------+-----------------+----------------+----------------+-----------------+--------+--------+---------+--------------+
* The Group's fixed interest rate instruments represents cash accounts placed on
deposit by the Company, Kreditmart and Flexinvest, and OSGRME, 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 31.03.10 and 31.03.09 is
presented in the following table (note: there are no mortgage bonds in OSGRME):
+------------+----------+----------+-----------------+----------------+-----------------+--------------+---------------+---------------+--+-------------+
| Kreditmart | | | | | | | | | | |
| and | | | | | | | | | | |
| Flexinvest | | | | | | | | | | |
+------------+----------+----------+-----------------+----------------+-----------------+--------------+---------------+---------------+--+-------------+
| | | | Less | 1-3 | 3 | 1 to | 2 to | Greater | | Total |
| | | | than | months | months | 2 | 5 | than 5 | | |
| | | | 1 | | to 1 | years | years | years | | |
| | | | month | | year | | | | | |
+------------+----------+----------+-----------------+----------------+-----------------+--------------+---------------+---------------+--+-------------+
| | | | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | | GBP000 |
+------------+----------+----------+-----------------+----------------+-----------------+--------------+---------------+---------------+--+-------------+
| At 31 | | | 120 | 240 | 1,079 | 1,276 | 3,420 | 24,846 | | 30,981 |
| March | | | | | | | | | | |
| 2010: | | | | | | | | | | |
+------------+----------+----------+-----------------+----------------+-----------------+--------------+---------------+---------------+--+-------------+
| At 31 | | | 117 | 234 | 1,055 | 1,392 | 4,176 | 30,781 | | 37,755 |
| March | | | | | | | | | | |
| 2009: | | | | | | | | | | |
+------------+----------+----------+-----------------+----------------+-----------------+--------------+---------------+---------------+--+-------------+
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
reporting date and the stipulated change taking place at the beginning of the
financial year and held constant throughout the reporting period in the case of
instruments that have floating rates.
If interest rates had been 50 basis points higher and all other variables were
held constant, the Group's net profit for the year ended 31 March 2010 would
have increased by GBP21,896 (2009: GBP10,373) and the Company's by GBP21,896
(2009: GBP10,373).
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.
30. Segmental information
The Board of Directors of the Company decides on the strategic resource
allocations of the Group. The operating segments of the Group are the business
activities that earn revenue or incur expenses, whose operating results are
regularly reviewed by the Board of Directors of the Company, and for which
discrete financial information is available. The Board of Directors considers
the Group to be made up of 3 segments, which are reflective of the business
activities of the Group and the information used for internal decision-making:
- Aurora Russia Limited (parent company)
- Kreditmart Finance Limited, Flexinvest Limited and Volzhski Universalny Bank
("VUB") Limited (subsidiaries)
- OSG Records Management (Europe) Limited ("OSGRME") (subsidiary)
The Group is engaged in investment in small and mid-sized companies in Russia
and in one principal geographical area, being Russia.
Kreditmart Finance Limited, Flexinvest Limited and Volzhski Universalny Bank
("VUB") Limited (subsidiaries) disburse mortgage and consumer loans for private
clients, place deposits, and render other services (money transfers, safe
boxes). Kreditmart provides private clients with consultaions on mortgage,
consumer loans, vehicle insurance, and other financial services.
The OSG Group consists of six legal entities: OSG Records Management (Europe)
Ltd (Cyprus), OSG Records Management Center (Russia), OSG Polska (Poland), OSG
Records Management (Ukraine), OSG Records Management (Bulgaria) and OSG Records
Management (Kazakhstan). OSG Records Management (Europe) Ltd (Cyprus) is a
parent company for OSG Group which owns 100% of shares of 5 operating units in
Russia (being the largest operation), Poland, Ukraine, Kazakhstan and Bulgaria.
The OSG Group provides records management services (document storage and other
services) through its 100% owned operating subsidiaries. More than half of sales
revenues are earned through providing document storage services. The remaining
revenues come from the following warehouse services, transportation of
documents; archive services, data processing services and destruction of
documents and tapes. Approximately 70% of the operating income is derived from
Russia, with the bulk of the remaining portion being derived from Poland.
The main customers of Kreditmart, Flexinvest and VUB are private clients and the
main customers of OSGRME are financial institutions, telecom and other
companies.
The Investment Manager's Report provides more information on the Company's
business and the operations of each investment.
The parent company derives its revenues from its investments by way of interest
and dividends.
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 |
| | March | March | March | March | March | March | March | March |
| | 2010 | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | Aurora | Kreditmart/ | OSGRME | Total | Aurora | Kreditmart/ | OSGRME | Total |
| | | Flexinvest/ | | | | Flexinvest/ | | |
| | | VUB | | | | VUB | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Revenue | 659 | 1,615 | 2,997 | 5,271 | 665 | 2,012 | | 2,677 |
| | | | | | | | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Fees | | 323 | | 323 | | 394 | | 394 |
| | - | | - | | - | | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Storage | | | 1,575 | 1,575 | | | | |
| | - | - | | | - | - | - | - |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - | | | 1,420 | 1,420 | | | | |
| Warehousing, | - | - | | | - | - | - | - |
| transport, | | | | | | | | |
| data | | | | | | | | |
| processing | | | | | | | | |
| and other | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Interest | | 1,062 | | 1,062 | | 1,321 | | 1,321 |
| on long term | - | | - | | - | | - | |
| mortgages | | | | | | | | |
| and other | | | | | | | | |
| loans | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Loan | 399 | | | 399 | 281 | | | 281 |
| interest | | - | - | | | - | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Bank | 13 | 230 | 2 | 245 | 272 | 297 | | 569 |
| interest | | | | | | | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Dividend | 247 | | | 247 | 112 | | | 112 |
| income | | - | - | | | - | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Administration | (3,341) | (3,390) | (2,701) | (9,432) | (3,331) | (8,803) | | (12,134) |
| and operating | | | | | | | - | |
| expenses | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Depreciation | | (318) | (317) | (635) | | (385) | | (385) |
| and | - | | | | - | | - | |
| amortisation | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Interest | | (12) | (161) | (173) | | (21) | | (21) |
| expense | - | | | | - | | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Fair value | 7,656 | (5) | 0 | 7,651 | (3,867) | (25) | | (3,892) |
| movements on | | | | | | | - | |
| revaluation | | | | | | | | |
| of | | | | | | | | |
| investments | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - | (800) | | | (800) | (11,423) | | | (11,423) |
| Kreditmart/Flexinvest/VUB | | - | - | | | - | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - OSGRME | 4,756 | | | 4,756 | 4,350 | | | 4,350 |
| | | - | - | | | - | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Unistream | (600) | | | (600) | 7,439 | | | 7,439 |
| | | - | - | | | - | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Grindelia | 4,300 | | | 4,300 | (4,233) | | | (4,233) |
| (SuperStroy) | | - | - | | | - | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| - Quoted | | (5) | | (5) | | (25) | | (25) |
| investments | - | | - | | - | | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Fair value | | | | | (525) | | | (525) |
| movements on | - | - | - | - | | - | - | |
| derivatives | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Exchange | (146) | 134 | 4 | (8) | 737 | 3,344 | | 4,081 |
| (losses)/gains | | | | | | | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Operating | 4,828 | (1,976) | (177) | 2,675 | (5,796) | (3,878) | | (10,199) |
| profit/(loss) | | | | | | | - | |
| before tax | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Tax | | (13) | 16 | 3 | | (562) | | (562) |
| | - | | | | - | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Net segment | 4,828 | (1,989) | (162) | 2,677 | (5,796) | (4,440) | | (10,761) |
| profit/(loss) | | | | | | | - | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Reconciliation | | | | | | | 31 | 31 |
| of segment | | | | | | | March | March |
| profit/(loss) | | | | | | | 2010 | 2009 |
| to | | | | | | | | |
| consolidated | | | | | | | | |
| statement of | | | | | | | | |
| comprehensive | | | | | | | | |
| income | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | GBP'000 | GBP'000 |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Total net | | | | | | | 2,677 | (10,761) |
| segment | | | | | | | | |
| income/(loss) | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Adjustment | | | | | | | | |
| for fair | | | | | | | | |
| value | | | | | | | | |
| movements on | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Kreditmart/Flexinvest/VUB | | | | | | | (2,021) | 11,423 |
| and OSGRME | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Impairment | | | | | | | | (236) |
| of goodwill | | | | | | | - | |
| - Flexinvest | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
| Net profit | | | | | | | 656 | 426 |
| for the year | | | | | | | | |
| for the | | | | | | | | |
| Group | | | | | | | | |
+---------------------------+---------+-------------+---------+---------+----------+-------------+---------+----------+
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 |
| | March | March | March | March | March | March | March | March |
| | 2010 | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | Aurora | Kreditmart/ | OSGRME | Total | Aurora | Kreditmart/ | OSGRME | Total |
| | | Flexinvest/ | | | | Flexinvest/ | | |
| | | VUB | | | | VUB | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Total | | | | | | | | |
| segments | | | | | | | | |
| assets | | | | | | | | |
| include: | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Investments | 50,300 | | | 50,300 | 23,000 | | | 23,000 |
| in | | - | - | | | - | - | |
| subsidiaries | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Financial | 41,900 | 1,185 | | 43,085 | 51,800 | 33 | | 51,833 |
| assets at | | | - | | | | - | |
| fair | | | | | | | | |
| value | | | | | | | | |
| through | | | | | | | | |
| profit or | | | | | | | | |
| loss | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| - | | | | | 13,600 | | | 13,600 |
| OSGRME | - | - | - | - | | - | - | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| - | 24,400 | | | 24,400 | 25,000 | | | 25,000 |
| Unistream | | - | - | | | - | - | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| - | 17,500 | | | 17,500 | 13,200 | | | 13,200 |
| Grindelia | | - | - | | | - | - | |
| (SuperStroy) | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| - | | 1,185 | | 1,185 | | 33 | | 33 |
| Quoted | - | | - | | - | | - | |
| investments | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Cash and | 5,704 | 5,502 | 2,036 | 13,242 | 4,123 | 7,899 | | 12,022 |
| cash | | | | | | | - | |
| equivalents | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Intangible | | 2,680 | | 2,680 | | 2,680 | | 2,680 |
| assets | - | | - | | - | | - | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Property, | | 689 | 5,755 | 6,444 | | 1,019 | | 1,019 |
| plant and | - | | | | - | | - | |
| equipment | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Assets | | 845 | | 845 | | | | |
| classified | - | | - | | - | - | - | - |
| as held | | | | | | | | |
| for sale | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Loans | | 8,618 | | 8,618 | | 9,569 | | 9,569 |
| and | - | | - | | - | | - | |
| advances | | | | | | | | |
| to | | | | | | | | |
| customers | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Other | 1,171 | 949 | 2,711 | 4,831 | 1,112 | 987 | | 2,099 |
| assets | | | | | | | - | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Segment | 99,075 | 20,468 | 10,502 | 130,045 | 80,035 | 22,187 | | 102,222 |
| assets | | | | | | | - | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Total | (89) | (760) | (6,324) | (7,173) | (175) | (810) | (810) | (985) |
| segment | | | | | | | | |
| liabilities | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Reconciliation | | | | | | | 31 | 31 |
| of segment | | | | | | | March | March |
| assets and | | | | | | | 2010 | 2009 |
| liabilities to | | | | | | | | |
| consolidated | | | | | | | | |
| statement of | | | | | | | | |
| financial | | | | | | | | |
| position | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | GBP'000 | GBP'000 |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Segment | | | | | | | 130,045 | 102,222 |
| assets | | | | | | | | |
| for | | | | | | | | |
| reportable | | | | | | | | |
| segments | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Exchange | | | | | | | (204) | (407) |
| loss on | | | | | | | | |
| translation | | | | | | | | |
| of | | | | | | | | |
| intangibles | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Investment | | | | | | | (50,300) | (23,000) |
| in | | | | | | | | |
| subsidiaries | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Goodwill | | | | | | | 14,164 | |
| on | | | | | | | | - |
| acquisition | | | | | | | | |
| of OSGRME | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Fair value | | | | | | 8,602 | |
| adjustment of | | | | | | | - |
| Net Assets on | | | | | | | |
| acquisition of | | | | | | | |
| OSGRME | | | | | | | |
+--------------------------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Intercompany | | | | | | | (191) | (197) |
| debtors | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Total | | | | | | | 102,116 | 78,618 |
| assets | | | | | | | | |
| for the | | | | | | | | |
| Group | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Segment | | | | | | | (7,173) | (985) |
| liabilities | | | | | | | | |
| for | | | | | | | | |
| reportable | | | | | | | | |
| segments | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Deferred | | | | | | (1,605) | |
| taxation | | | | | | | - |
| adjustment on | | | | | | | |
| acquisition of | | | | | | | |
| OSGRME | | | | | | | |
+--------------------------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Intercompany | | | | | | | 191 | 197 |
| creditors | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
| Total | | | | | | | (8,587) | (788) |
| liabilities | | | | | | | | |
| for the | | | | | | | | |
| Group | | | | | | | | |
+----------------+---------+-------------+---------+---------+---------+-------------+----------+----------+
31. Related party transactions
The Company has 4 subsidiaries, OSG Records Management (Europe) Limited,
Kreditmart Finance Limited, Flexinvest Limited and Volzhski Universalny Bank
Limited (see note 11 and 12). Details of the investments in Unistream Bank and
Grindelia Holdings are presented in note 13.
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 15).
The conversion of the loan to equity in respect of OSGRME is disclosed in notes
11 and 12. Interest received on this loan up to date of conversion of
GBP398,574 (year ended 31 March 2009: GBP280,626) is separately disclosed on the
face of the statement of comprehensive income.
The Company pays fees, which are at arm's length, to Aurora Investment Advisors
Limited ('AIAL') for its services as investment manager and advisor. The total
charge to profit or loss during the year was GBP1,677,216 (2009: GBP1,779,091).
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. 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 proposed 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. In
addition, John McRoberts and James Cook are both directors of Aurora (II) GP
Limited, a wholly owned subsidiary of AIAL.
The Company pays fees to Close Fund Services Limited ('CFSL') for its services
as administrator. The total charge to profit or loss during the year was
GBP93,839 (2009: GBP72,978), of which GBP5,000 (2009: GBPNIL) was outstanding at
the year 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 profit or
loss during the year was GBP174,279 (2009: GBP188,839), of which GBP3,330 (2009:
GBP4,776) was outstanding at the year end. Details of directors' remuneration
are disclosed in the Directors' Report.
32. Reclassification of comparatives
Movements in foreign currency translation differences have been reclassified
from "Equity" in the consolidated statement of changes in equity to "Other
comprehensive income" in the consolidated statement of comprehensive income per
IAS 1 Presentation of Financial Statements.
33. Contingencies and capital commitments
As detailed in note 12, The Directors of the Company have set aside GBP3.2
million as a capital commitment for the future purchase of a warehouse by
OSGRME.
The Group had no other contingencies and capital commitments outstanding at the
reporting date.
34. Events after the reporting date
There were no material subsequent events after the reporting date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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