TIDMAURR
RNS Number : 7416T
Aurora Russia Limited
22 July 2015
22 July 2015
Aurora Russia Limited ("Aurora Russia" or the "Company")
Results for the twelve months ended 31 March 2015
-- Discussions are actively ongoing to dispose of the Company's shareholding in Unistream.
Financial highlights
-- Net asset value per share for the Company as at 31 March 2015
of 17.5p per share (Net asset value GBP7.8m), down from 27.9p per
share at 31 March 2014 (Net asset value GBP20.7m)
-- The movement in the value of the portfolio company
principally reflects the lower valuation of comparable companies
following a period of weakness in the Russian equity markets and
foreign exchange movements.
-- Cash and cash equivalents at 31 March 2015 were GBP2.6
million and 2.1 million following the April share buy back
-- Total annual running costs for the Company for the next
financial year are budgeted to reduce by 52% to GBP380,000 on a
like for like basis from 2014
Portfolio highlights
Unistream
-- Revenues for the twelve months ended 31 December 2014 were RUR 2.9 bn, up 19% YoY
-- EBITDA of RUR204 m for 2014, slightly above the RUR175.2 m achieved in 2013
-- Equity valuation of Aurora Russia's stake in Unistream at 31
March 2015 was GBP5.3m, compared to the valuation at 31 March 2014
was GBP8m
-- The Board and the Investment Adviser have explored actively
the options for selling the Company's 26% shareholding in
Unistream
Commenting, Gilbert Chalk, Chairman of Aurora Russia, said:
"The Board aims to maximise the value of its shareholding in
Unistream from a sale of Aurora's stake in the business as soon as
is practicable and a fair valuation can be obtained for the
Company's holding in current market conditions."
Enquiries:
Aurora Russia Limited
Gilbert Chalk +44 (0)7768 527973
Numis Securities Limited
Nominated Adviser: Hugh Jonathan +44 (0)20 7260 1000
Corporate Broking: Rupert Krefting / Nathan Brown
ANNUAL REPORT
For the year ended 31 March 2015
AURORA RUSSIA LIMITED
Company Summary
The Company
Aurora Russia Limited ('the Company') is a Guernsey registered
closed-ended investment company and its shares are traded on the
Alternative Investment Market of the London Stock Exchange ('AIM').
It was incorporated on 22 February 2006 and dealings commenced on
AIM on 20 March 2006.
Investing policy
The Company's investing policy was to make equity or
equity-related investments in small and mid-sized private Russian
companies focused on the financial, business and consumer services
sectors. The Directors are seeking to complete the realisation of
the Company's residual investment in a timely manner.
The Manager
The Company's management contract with Aurora Investment
Advisors Limited (the 'Manager') to provide investment advisory and
management services which ran for 8 years was terminated effective
30 April 2014. The Manager's services were extended to 30 June
2014.
The Investment Advisor
The Board is pursuing its realisation policy with the assistance
of Mr Nicholas Henderson-Stewart, who was appointed as Advisor
effective 19 June 2014.
Registered address Dorey Court
Admiral Park
St Peter Port
Guernsey
GY1 2HT
Website details www.aurorarussia.com
Company registration no 44388
Chairman's Statement
Introduction
I am pleased to present the results of Aurora Russia Limited
(the 'Company' or 'Aurora Russia' or 'ARL') for the 12 months ended
31 March 2015.
The last twelve months in Russia have been a difficult and
volatile period. Having lost 50% of its value in 2014, the Rouble
has rebounded in 2015, and so far this year is the world's best
performing currency. However the Ukraine crisis and related
sanctions are still far from over and the economy is forecast by
some commentators to contract by close to 4.0% in the current year
(Central Bank of Russia) not least because of the continuing low
price of oil. This said the economy appears to be stabilising
albeit at a lower level and this may allow for a clearer and
slightly more positive macro outlook over the next few months.
The Annual General Meeting ('AGM')
I would like to take this opportunity to thank our shareholders
for their support over the last year and not least at the AGM on 24
September 2014, voting in favour of all of the resolutions put
forward, including the re- appointment of myself and Tim Slesinger
to the board of ARL.
Review
The year has seen continued implementation of the Board's policy
to realise the Company's Investments at acceptable prices, in the
context of a difficult economic backdrop, and to make further cash
returns to Investors following realisations.
Subsequent to the year end, after payment of the tender proceeds
and receipt of the sales proceeds from KFL, the remaining cash
balances at 30 June 2014 were GBP2.5 million. These funds have been
retained for future working capital and other purposes.
In April the Board completed the sale of the non-cash mortgage
assets held by Kreditmart Finance Limited ('KFL') for a total
consideration of RUR100 million (approximately GBP1.7 million) plus
$450,000 (approximately GBP267,500), which was KFL's cash balance
at the time of the transaction. The Board agreed to the sale at a
discount in light of the then current Russian market for banking
assets and the difficult nature of the portfolio, which will have
only deteriorated further since this sale. Following this latter
sale and the earlier sale in March 2014 of Flexinvest Bank, the
Board announced in May a second tender offer to shareholders for an
aggregate gross consideration of GBP8.26 million.
Following the appointment of the Company's Investment Advisor,
Nicholas Henderson-Stewart, in June 2014 the Board has worked
actively with the Advisor to extract maximum value for the
Company's remaining investments in Superstroy and Unistream.
In February 2015 ARL completed the sale of its stake in
Superstroy - the DIY retail chain in the Urals. The sale resulted
in cash proceeds for the Company, net of expenses, of approximately
GBP680,000. ARL's shareholding in Superstroy was valued at
GBP280,000 in the Half Year Statement of Financial Position as at
30 September 2014, reflecting Superstroy's falling sales,
loss-making position and very high leverage.
Following the successful sale of Superstroy, ARL conducted a
share buy back in early April 2015 and cancelled 6,687,203 shares
at 10p a share representing a total consideration paid to
shareholders of GBP672,064. Following the share cancellation the
remaining number of shares in issue is 37,923,928 and the cash
balance of the Company amounted to GBP2.1 million at 10 April
2015.
This, together with the two earlier tender offers in May 2013
and May 2014, brings the total proceeds returned to shareholders in
the last two years to some GBP28.3 million.
Aurora's sole remaining asset is its 26% minority stake in
Unistream - a money transfer company active in Russia and CIS
countries. Unistream has performed well despite the macro-economic
downturn. Transfer volumes, related revenue and EBITDA were all up
year on year in RUR terms as reported in the Investment Advisor's
report. The Board plans to sell Aurora's stake in Unistream and
aims to complete this process during the next 6 to 12 months.
Unistream's encouraging trading performance, positive disposable
cash position and sizeable share of the Russia/CIS cash transfer
market means that it should be an attractive asset to both
strategic and financial investors.
In light of this, the Board has budgeted for substantially
reduced current year operating costs, budgeted at GBP380,000 (52%
less than the like for like costs incurred for the year ended 31
March 2015). Included in these savings is a 51% reduction in the
fees payable to the Company's directors to GBP105,000 in aggregate.
The directors will receive additional fees in excess of Director's
fees foregone only should net distributions to shareholders from 1
April 2015 be in excess of GBP5.3 million. Aurora has also entered
into a new incentive arrangement with Nicholas Henderson-Stewart
(the Company's investment advisor) under which the Advisor will
receive an additional incentive fee based on distributions to
Shareholders. The percentage of the distributions to Shareholders
payable to the Advisor will also vary according to the value and
timing of such distributions with no payment being due until
distributions from 1 April 2015 exceed approximately GBP5.3 million
and the additional payment being capped at 4% of such
distributions.
Results
For the 12 months to 31 March 2015, Aurora Russia recorded a
loss of GBP4.6 million or 9.79p per share, based on the Company
statement of comprehensive income. The net asset value ("NAV") of
the Company as at 31 March 2015 was GBP7.8 million or 17.5p per
share. Cash and cash equivalents at 31 March 2015 were GBP2.6
million. Administration and operating expenses were GBP1 million (a
decrease of 36% from the previous year).
Investments
The Company has one remaining investment:
> 26.0% stake in Unistream Bank, a leading Russian money
transfer company.
Portfolio Valuation
A valuation of Aurora's stake in Unistream was performed as at
31 March 2015 and resulted in a 37% decrease in value from GBP8.4
million as at 30 September 2014 to GBP5.3 million. This decrease in
value can be attributed to the sizeable devaluation of the Rouble
vs. the Pound during the last 6 months and to the application of
additional discounts to reflect the lack of liquidity and
heightened risks faced by businesses in Russia. This valuation was
prepared for accounting purposes only and is in accordance with the
International Private Equity and Venture Capital Board's ('IPEV')
valuation guidelines.
Sale of the Company's holding in Unistream
The Board and the Investment Adviser have explored actively the
options for selling the Company's 26% shareholding in Unistream.
These options have ranged from selling to the majority holders,
selling to possible trade buyers and sale to a financial buyer
including the possibility of a full bid for the Company rather than
a sale of the stake directly. This route could have advantages both
for a prospective buyer and for the Company's shareholders.
Discussions are ongoing with various parties but to date have not
produced a definitive resolution at a price which the Board
believes it is in the best interests of shareholders to accept.
Negotiations are continuing to seek to obtain an offer which can be
recommended to shareholders.
Outlook
The Board aims to maximise the value of its shareholding in
Unistream from a sale of Aurora's stake in the business as soon as
is practicable and a fair valuation can be obtained for the
Company's holding in current market conditions.
Gilbert Chalk
Chairman of the Board
Investment Advisor's Report
Overview
Russia's difficult economic position has worsened since the
September 2014 Half-Year accounts. But the worst case predicted by
many analysts in late 2014 has not materialized. So far in 2015 the
Rouble and the Russian bond and stock markets have rebounded. While
the economic situation in Russia remains difficult and GDP will
contract in 2015, the country's sizeable foreign currency reserves,
positive trade balance and low debt to GDP levels will go some way
to cushion the adverse blows of Western sanctions and reduced
commodity prices.
Trading Updates
Unistream
Despite challenging economic conditions and a worsening
regulatory environment, Unistream performed quite well in 2014 by
maintaining positive growth dynamics. Unistream's accounts show
that volume transfers in FY 2014 were RUR214.6 billion (GBP2.87
billion using average exchange rate for the year), up 33% year on
year. Net revenues grew 19% to RUR2.9 billion (GBP39 million) for
the same period. EBITDA for the year was RUR204 million (GBP2.7
million) up 16% from RUR175.2million (GBP3.37 million) in 2013.
2015 accounts show Unistream's cash transfer volumes in the 12
months ended in March 2015 grew 33% year on year in Rouble terms.
Separately Central Bank of Russia statistics indicate Unistream's
share of the Russian money remittances market grew from 11.8% in
2013 to 13.4% in 2014. The transfer volume and market share growth
were partly driven by management's decision to reduce margins which
dropped from 1.52% in 2013 to 1.37% in 2014 and the bankruptcy in
June 2014 of a key competitor - Contact Systems. Contact Systems
was subsequently taken over by Otkrytie Bank and Qiwi the business
was relaunched but it has yet to regain the lost market share.
Another driver of Unistream's organic growth has been the launch of
a number of new products and financial services. Some have been
quite successful, in particular foreign currency cash desks that
allow customers an easy way to change money into other currencies
on a daily basis. Unistream's Rouble volumes and bottom line were
helped by forex volatility that boosted the value of incoming funds
from other currency zones, led customers to actively trade
currencies via Unistream and allowed Unistream to book RUR500m
(GBP6.6m) forex income in 2014 up 39% year on year versus 2013.
This trend continued in early 2015 with combined January and
February 2015 FX income up 108% year on year to RUR92m (GBP1.5m).
These trends have eased down subsequently to June and the current
economic crisis is now impacting revenues.
Recently published IFRS and RAS (Russian Accounting Standards)
accounts are now available on Unistream's website. Due to
differences in the accounting policies between IFRS and RAS there
are some key differences, mainly in regards to expenses which we
would like to highlight.
Under RAS accounting any purchase of fixed assets valued below
40,000 RUB is expensed fully in that period in which it was
bought.
Under IFRS accounting these fixed assets are depreciated over
2-5 years. As a result under RAS operating expenditures are
significantly higher and depreciation lower.
Management considers IFRS results to be a more accurate
representation of the companies financial position as in fact most
of these fixed assets under 40,000 RUB have a life span of 3 years
on average.
The valuation of Aurora's stake in Unistream as of 31 March 2015
was marked down to GBP5.3 million. This represents a 37% decrease
to the GBP8.4 million valuation on 30 September 2014. The main
reason for this is the falling value of the Russian Rouble, which
is the Company's primary currency. Also we increased the Unistream
comparative valuation discount by 10% to reflect the growing risk
of doing business in Russia. To reflect the slow down of M&A
activity in Russia and the reduced likelihood an investor would
acquire Unistream, The liquidity discount was increased from 30 to
40%.
Valuation Methodology
The GBP5.3 million Unistream valuation is arrived at as
follows:
> The benchmark is the trailing 12 months Western Union
EV/EBITDA and EV/Sales (publicly traded company) of 8.66x and 2.23x
respectively.
> Unistream's trailing 12 months Revenue is GBP36.2m and
EBITDA is GBP3m and net distributable cash balance of GBP3.6m on 28
February 2015.
> A 30% discount is applied to account for all the risks of
doing business in Russia.
> A second discount of 40% is applied to reflect the illiquid
nature of Aurora's stake in Unistream.
> A 75% weighting to EV/EBITDA and a 25% weighting to
EV/Sales has been used.
> This valuation methodology indicates an equity value of
GBP20.4m for Unistream, of which Aurora owns 26%.
Conclusion
I will continue to work closely with the Aurora Board of
Directors to achieve its stated objectives of realising Unistream
at a price that fully reflects its value.
Mr Nicholas Henderson-Stewart
21 July 2015
Directors
Gilbert Chalk - Non-executive Director
Mr Chalk is a British citizen, resident in the UK. He is
Chairman of Castle Private Equity AG a leading Private Equity and
Venture Capital Fund of Funds that is managed by LGT Capital
Partners and listed on the Zurich Stock Exchange. In addition he is
a Director of Vantage Goldfields Limited, a South African Gold
producing company. From 2000 to 2010 he was Chairman of the Baring
English Growth Fund and its Investment Committee. The Fund invested
in small and mid cap buy-outs in the UK. Previously he was the
Founder and Managing Director of Hambro European Ventures,
subsequently named Duke Street Capital. He has served as a Council
Member of the British Venture Capital Association and as Chairman
of its Taxation Committee conceived and formulated Venture Capital
Trusts. He has also worked as Head of Corporate Finance at ABSA
Bank (UK) and as a Corporate Finance executive at Hill Samuel Bank
and Brandts Limited. He holds an M.B.A. from Columbia University,
New York.
Timothy Slesinger - Non-executive Director
Mr Slesinger is a British citizen, resident in the UK. He
founded OSG Records Management ZAO in Moscow in 1998. During the 12
years he was CEO and then Director, the Company grew to become a
market leader in both physical document and on-line data management
in Central & Eastern Europe. OSG's clients range from
international Fortune 500 companies, highly regarded businesses
local to the region and governments. He sold OSG to Aurora Russia
in 2009. Mr Slesinger sits on Aurora Russia's Management Engagement
Committee and is Chairman of the Remuneration Committee.
Jonathan Bridel - Non Executive Director
Mr Jonathan Bridel is a British Citizen, resident in Guernsey.
He has a number of directorships including Alcentra European
Floating Rate Income Fund Limited, Starwood European Real Estate
Finance Limited, The Renewable Infrastructure Group and Sequoia
Economic Infrastructure Income Fund Limited which are listed on the
Main Market of The London Stock Exchange and DP Aircraft I Limited
and Fair Oaks Income Fund Limited. He was previously Managing
Director of Royal Bank of Canada's Investment businesses in the
Channel Islands. He has over 30 years international experience in
the finance and investment industry and private business. He was
for a period Chief Financial Officer of a group with operations in
Eastern Europe and the CIS. He is a Chartered Accountant, a
Chartered Marketer, a Chartered Fellow of the Chartered Institute
for Securities & Investment and holds an MBA from Durham
University and qualifications from the Australian Institute of
Company Directors.
Peregrine Moncreiffe - Non Executive Director
Mr Peregrine Moncreiffe is a British Citizen, resident in Jersey
and advises a number of International Investment companies. He is
Chairman of North Atlantic Smaller Companies Investment Trust and a
director of EOS Russia AB. He is also a director of Metage Funds
Limited and a shareholder in the Company. After an 18 year career
in investment banking managing trading departments at Credit Suisse
First Boston and Lehman Brothers, he co-founded Buchanan Partners
Limited where he was responsible for Russian investments from 1994
until 1999.
Lyndon Trott - Non Executive Director
Mr Lyndon Trott is a British Citizen, resident in Guernsey. He
is currently a non-executive director of a number of companies,
including the world's largest independent private equity and real
estate fund administrator. He served a four year term as Guernsey's
Treasury and Resources Minister and progressed to become the
jurisdiction's longest serving Chief Minister. He is a former
chairman of the board of trustees of a circa GBP1 billion pension
fund and is a graduate of the Institute of Directors' company
direction programme.
Directors' Report
The Directors of Aurora Russia Limited ('the Company') present
their report and audited financial statements of the Company for
the year ended 31 March 2015.
Background
The Company was incorporated in Guernsey on 22 February 2006 and
commenced activities on 20 March 2006. The Company is a
closed-ended investment company and is registered in Guernsey.
Principal activity
The principal activity of the Company is private equity
investment in Russia in the financial, business and consumer
services sectors. The Company is now seeking to dispose of its
residual investment at a level which reflects its underlying
value.
Listing
The Company is traded on the Alternative Investment Market of
the London Stock Exchange ('AIM'), and has complied with the
relevant provisions of the rules governing the admission to and
operation of a company traded on the AIM.
Business review
The Company's risk exposure, management objectives and policies
are disclosed in note 18 to these financial statements.
A review of the business during the year is contained in the
Chairman's Statement.
Results and dividends
The results for the year are set out in the attached financial
statements.
The Company has not proposed or declared a dividend for the year
ended 31 March 2015 (2014: GBPnil).
Incorporation
The Company was registered in Guernsey, Channel Islands on 22
February 2006, with registered number 44388.
Directors
The Directors during the year and to date were as follows:
Date of Appointment Date of resignation
Gilbert Chalk - Chairman 22 June 2011 -
Timothy Slesinger 22 August 2011 -
Jonathan Bridel 12 April 2013 -
Peregrine Moncreiffe 12 April 2013 -
Lyndon Trott 1 May 2013 -
Directors' and other interests
Directors of the Company or its previous Manager, whose
appointment was terminated effective 30 April 2014, who held office
during the year had the following interests in the shares of the
Company as at 31 March 2015:
Number of shares
Gilbert Chalk 19,827
Timothy Slesinger 5,674,913
Peregrine Moncreiffe 381,583
None of the Directors who held office during the year had any
interests in the contracts with the Company, save in their
capacities as directors and shareholders of the Company, as
applicable.
Directors' remuneration
The following Directors emoluments were incurred:
2015 Fees 2014 Fees
Grant Cameron - 2,167
Gilbert Chalk 81,250 90,486
Timothy Slesinger 28,500 26,000
Lyndon Trott 28,500 28,906
Jonathan Bridel 48,750 37,063
Peregrine
Moncreiffe 28,500 28,214
Geoffrey Miller - 867
John Whittle - 1,200
Total GBP215,500 GBP214,902
------------------- ----------------------- ------------------------
Grant Cameron resigned on 1 May 2013 and Geoffrey Miller and
John Whittle both resigned on 12 April 2013.
Jonathan Bridel's remuneration was increased from GBP35,000 to
GBP40,000 on 1 July 2014, and was then decreased from GBP40,000 to
GBP22,500 per annum with effect from 1 April 2015. Lyndon Trott,
Timothy Slesinger and Peregrine Moncreiffe's remuneration was
decreased from GBP26,000 to GBP17,500 per annum each with effect
from 1 April 2015. Gilbert Chalk's base remuneration was decreased
from GBP65,000 to GBP30,000 per annum with effect from 1 April
2015. A once-off payment of GBP10,000 was paid to Gilbert Chalk
during the year as well as a GBP2,500 one-off payment to Peregrine
Moncreiffe, Lyndon Trott, Timothy Slesinger and Jonathan Bridel
respectively. All of these payments were made in recognition of the
significant additional work required of the directors in connection
with disposals of the Company's assets and the subsequent return of
capital to shareholders. Directors fees of GBP7,500 and GBP6,250
were also paid to Jonathan Bridel and Gilbert Chalk respectively.
These were in relation to their trip to Russia in 2014. Please also
refer to the Corporate Governance section on page 12 for
disclosures regarding the Directors performance fee
arrangements.
There are no service contracts in existence between the Company
and any Director but each of the Directors was appointed by letter
of appointment which sets out the main terms of his
appointment.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
The Companies (Guernsey) Law, 2008, (the "Law") requires the
Directors to prepare financial statements for each financial year.
Under the Law they have elected to prepare the financial statements
in accordance with International Financial Reporting Standards
issued by the International Accounting Standards Board (IASB) and
applicable law.
The financial statements are required by law to give a true and
fair view of the state of affairs of the Company and of the profit
or loss of the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgements and estimates that are reasonable and
prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on a going concern basis
unless it is inappropriate to presume the Company will continue in
business. For the reasons set out in note 2.2, the financial
statements have been prepared on a non-going concern basis.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Law. They have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Company and to prevent and detect
fraud and other irregularities.
The Directors are also responsible for ensuring that the annual
report includes information required by the AIM Rules for Companies
(the 'AIM Rules').
Disclosure of information to the auditor
The Directors who held office at the date of this Directors'
Report confirm that, so far they are each aware, there is no
relevant audit information of which the Company's Auditor is
unaware; and each Director has taken all the steps that he ought to
have taken as a Director to make himself aware of any relevant
audit information and to establish that the Company's Auditor is
aware of that information.
Non-going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's Statement on pages 2 to 3 as well as
the statement of financial position of the Company and its
statement of cash flows. In addition, note 18 to the financial
statements includes the Company's objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity
risk.
The Directors resolved to begin the gradual winding up of the
Company over the following 12 months. As such the Directors believe
it is appropriate to adopt a non-going concern basis in preparing
the financial statements, as they consider that the Company will be
voluntarily liquidated within the next 12 months. The Directors
believe that the Company will be able to realise its remaining
investment in an orderly manner and therefore do not consider there
to be a material difference in the value of the Company's assets,
and liabilities, compared to if the financial statements had been
prepared on a going concern basis. Accruals of GBP15,000 for
circular and de-listing; GBP20,000 for liquidation and GBP15,000
for retention are reflected in the accounts for the
liquidation.
Auditor
A resolution for the re-appointment of KPMG Channel Islands
Limited will be proposed at the forthcoming annual general
meeting.
Gilbert Chalk Jonathan Bridel
Director Director
21 July 2015
Corporate Governance
Corporate Governance Codes
The Directors are committed to ensuring that high standards of
corporate governance are maintained and that best practice on
corporate governance is applied, in so far as the Directors believe
it is relevant and appropriate to the Company. As the Company is
now seeking to dispose of its final residual investment and in
light of the small and decreasing size of the Company, the Board is
now complying with Finance Sector Code of Corporate Governance (the
"GFSC Code") published by the Guernsey Financial Services
Commission (the "GFSC Code"). As the Company is an authorised
closed-ended investment scheme incorporated in Guernsey, the GFSC
Code automatically applies to the Company.
A copy of the GFSC Code can be obtained from the GFSC's website
www.gfsc.gg or from the Secretary upon request.
The Board and Board Committees
All of 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 all of the directors
are non-executives and all of them are considered to be
independent.
The Chairman is Gilbert Chalk.
The respective committee members resigned from, or were
appointed to, their committees when they resigned or were appointed
as directors.
On joining the Board, each Director was given a full tailored
induction and Directors receive regular relevant training on
matters relating to the Company's business. There were no changes
in the composition of the Board in the year under review.
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, transactions and
other general matters affecting the Company. The Board considers
that it meets sufficiently regularly to discharge its duties
effectively.
The Audit Committee comprises Jonathan Bridel, Gilbert Chalk and
Lyndon Trott and is chaired by Mr Bridel.
The Audit Committee is responsible for ensuring that the
financial performance of the Company is properly reported on and
monitored. The Audit Committee reviews the annual and interim
accounts, results, announcements, internal control systems and
procedures and accounting policies of the Company. The Audit
Committee also monitors the auditor's independence and objectivity
and the effectiveness of the audit process. Furthermore, the Audit
Committee makes recommendations to the Board, for it to put to
shareholders for their approval in the annual general meeting, in
relation to the re-appointment of the external auditor. Finally,
the Audit Committee considers and makes recommendations to the
Board on any non-audit services to be provided by the auditor. The
Audit Committee meets a minimum of twice a year but where
appropriate the meetings shall coincide with key dates in the
Company's financial reporting cycle. The terms of reference of the
Audit Committee are available from the Secretary upon written
request.
As all of the Directors are non-executive and as day-to-day
management and administration of the Company has been delegated to
the Manager and the Administrator, the Board on the recommendation
of the Audit Committee has agreed that it is not necessary to
create an internal audit function. This position is reviewed at
least annually.
The Valuation Committee comprises of all the Directors and is
chaired by Mr Chalk. The Valuation Committee is responsible for
valuing proposed investments and revaluing investments on an
ongoing basis and it meets at least twice a year. The terms of
reference of the Valuation Committee are available from the
Secretary upon written request.
The Remuneration Committee also comprises all of the Directors
and is chaired by Mr Slesinger. The Remuneration Committee is
responsible for reviewing the performance of Directors, the scale
and structure of remuneration and Directors' letters of appointment
and it meets a minimum of twice a year. The terms of reference of
the Remuneration Committee are available from the Secretary upon
written request.
As all of the Directors are non-executives, they ordinarily
receive a flat rate of remuneration. However, the Directors are
entitled to such remuneration as the Board may determine (subject
to an aggregate cap of GBP300,000 per annum), and during the year
under review the Directors were awarded additional remuneration for
the significant extra work and additional meetings required in
connection with the disposals of investee companies. The numbers of
additional meetings attended by the Directors is shown in the table
below. Details of the remuneration paid to the Directors in the
year under review and their current fees are set out on page 9.
None of the Directors has a contract of service with the Company
and they are all appointed in accordance with the Company's
articles of incorporation.
As announced on 31 March 2015, the Board stated at the time of
the announcement of the sale of Superstroy that it would be
reviewing the cost base of the Company. Following completion of
that review, the total annual running costs of the Company for the
year commencing 1 April 2015 were budgeted at GBP380,000, a
decrease of 52% on a like-for-like basis on the costs expected to
have been incurred in the year ending 31 March 2015. Included in
these savings was a 51% reduction in the fees payable to the
Company's directors (the "Directors") to GBP105,000 in
aggregate.
The Directors recognised that this fee reduction was necessary,
given the fact that the Company holds only one residual investment,
but agreed that the self-managed nature of the Company meant that
it was appropriate, in consideration for the reduction in their
fees, to establish an incentive arrangement for the Directors.
Following a consultation with certain major shareholders,
arrangements were therefore entered into between the Company and
the Directors, whereby:
-- The Directors are incentivised to maximise distributions to
the Company's shareholders (the "Shareholders") over a period of
twelve months.
-- The incentive fee payable to the Directors will scale up
relative to the value of any such distributions made on or after 1
April 2015, subject to reductions to the extent that the
realisation period extended beyond six months.
-- The Directors will receive a net reduction in fees until
distributions to the Shareholders exceed approximately GBP5.3
million.
-- Under the Company's articles, the aggregate Directors'
remuneration is limited to GBP300,000 in any financial year. The
aggregate Directors' remuneration would exceed this threshold if
distributions to Shareholders exceed approximately GBP7.6 million,
in which event the payment of such excess will be subject to
Shareholders' approval.
The Company has also entered into a new incentive arrangement
with Nicholas Henderson-Stewart, the Company's investment advisor
(the "Advisor"), under which the Advisor will receive an additional
incentive fee based on distributions to Shareholders made on or
after 1 April 2015. The percentage of the distributions to
Shareholders payable to the Advisor will vary according to the
value and timing of such distributions, with no payment being due
until distributions exceed approximately GBP5.3 million and the
payment being capped at 4% of such distributions.
The incentive arrangements entered into between the Company and
the Directors represented a related party transaction under the AIM
Rules. In the circumstances where each of the Directors was party
to these incentive arrangements, Numis Securities Limited ("Numis")
as the Company's nominated adviser confirmed that it considered
that the terms of the transaction are fair and reasonable insofar
as Shareholders are concerned.
Details of the remuneration paid to the Directors in the year
under review and their current fees are set out on page 9. None of
the Directors have a contract of service with the Company and they
are all appointed in accordance with the Company's Articles of
Incorporation.
The Management Engagement Committee comprised Gilbert Chalk
(Chairman), Jonathan Bridel, Timothy Slesinger, Lyndon Trott and
Peregrine Moncreiffe. The Management Engagement Committee is
responsible for reviewing the terms of agreements with the
Company's service providers, including the provisions relating to
the applicable service provider's remuneration, and satisfy itself
that they are market standard and comparable with those charged to
peer group companies and ensure that the Service Agreements' terms
are in accordance with industry norms and in the Company's and
shareholders' best interests. The Management Engagement Committee
meets at least once per year. The terms of reference of the
Management Engagement Committee are available from the Secretary
upon written request.
The Board receives from the Secretary and its other advisors
information that it considers to be appropriate to enable it to
discharge its duties. Directors usually receive Board papers
several days in advance of Board meetings and are able to consider
in detail any issues to be discussed at the relevant meeting.
All the Directors are entitled to have access to independent
professional advice at the Company's expense where they deem it
necessary to discharge their responsibilities as Directors and have
access to the advice and services of the Secretary. The Company has
purchased appropriate directors' and officers' liability insurance
in respect of legal action against its directors.
Following the termination of the appointment of the Company's
investment manager, Aurora Investment Advisors Limited, the Board
is responsible for day-to-day management of the Company's assets
and receives advice thereon from the Advisor. All decisions
relating to the Company's investment policy, investment objectives,
investment decisions, dividend policy, gearing, corporate
governance procedures and strategy in general are specifically
reserved for the Board. The Board evaluates the Advisor's
performance on an annual basis and monitors the Advisor at each
quarterly Board meeting.
The number of meetings of the full Board and those committees
attended by each Director from 1 April 2014 up to 31 March 2015 is
set out below:
Audit Committee Valuation Committee Remuneration Committee Management Committee
Engagement
Held Attended Held Attended Held Attended Held Attended
Gilbert Chalk 3 3 2 2 2 1 2 2
Tim Slesinger 3 1 2 1 2 1 2 1
Jonathan Bridel 3 3 2 2 2 2 2 2
Lyndon Trott 3 2 2 2 2 2 2 2
Peregrine
Moncreiffe N/A N/A 2 2 2 2 2 2
----------------- ---------- ---------- ---------- ---------- ------------- ---------- ----------- ----------
Quarterly Ad hoc
Held Attended Held Attended
----------------- ---------- ---------- ---------- ----------
Gilbert Chalk 4 4 15 12
Tim Slesinger 4 4 15 10
Jonathan Bridel 4 4 15 12
Lyndon Trott 4 4 15 13
Peregrine
Moncreiffe 4 4 15 13
----------------- ---------- ---------- ---------- ----------
Tim Slesinger attended the Audit Committee meetings during the
year but was not a member of this committee.
Performance of Board and proposal for re-election
The performance of each Director is appraised by the full Board
prior to the convening of the annual general meeting for each year
with support from the Secretary and by reference to a tailored set
of criteria against which performance is measured. The performance
of each Board committee is appraised by the Board as a whole. In
accordance with the Company's Articles of Incorporation (the
"Articles"), one third, or the number nearest to but not greater
than one third, of the Directors will retire and stand for
re-election at the annual general meeting each year, provided that
each Director shall retire and stand for re-election at intervals
of no more than three years. Details of the specific resolutions to
be prepared at the annual general meeting and the identity of the
director(s) to stand for re-election will be included in the notice
of the annual general meeting, due to be sent out later in the
year.
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. Information on the Directors,
including their relevant experience, is set out in pages 6 to
7.
Relations with shareholders
The Board welcomes correspondence from shareholders, addressed
to the Company's registered office. All shareholders have the
opportunity to put questions to the Board at the annual general
meeting. In addition to the Chairman, all other non-executive
Directors, including the Chairmen of the Audit and Remuneration
Committees, will be available to answer questions at the
forthcoming annual general meeting.
The Board believes that sustainable financial performance and
delivering on the objectives of the Company are indispensable
measures in order to build trust with the Company's shareholders.
In order to promote a clear understanding of the Company, its
objectives and financial results, the Board aims to ensure that
information relating to the Company is disclosed with key investors
in a timely manner and in a format suitable to the shareholders of
the Company.
The Board has also organised periodic meetings to encourage
communication and to ensure the concerns of shareholders are
addressed.
The Articles of Incorporation state that a continuation vote via
an ordinary resolution will be held proposing the extension of the
life of the Company at the 2015 annual general meeting and every 5
years thereafter. The last such continuation vote was passed at the
2010 annual general meeting. In order to reduce the expense to
shareholders and to avoid proposing a continuation vote which may
not be required if the Company's last remaining investment is sold,
the Directors do not intend to convene the next annual general
meeting until the fourth calendar quarter of 2015.
Independent auditor's report to the members of Aurora Russia
Limited
We have audited the financial statements of Aurora Russia
Limited (the 'Company') for the year ended 31 March 2015 which
comprise the Statement of Comprehensive Income, the Statement of
Financial Position, the Statement of Changes in Equity and the
Statement of Cash Flows and the related notes. The financial
reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards as
issued by the IASB. As described in note 2.2, the financial
statements have been prepared on a non-going concern basis.
This report is made solely to the Company's members, as a body,
in accordance with section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of the Directors and Auditors
As explained more fully in the Statement of Directors'
Responsibilities set out on page 9 and 10, the Directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board's (APB's) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the Board of Directors;
and the overall presentation of the financial statements. In
addition, we read all the financial and non-financial information
in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that
is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion
In our opinion the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 March 2015 and of its loss for the year then
ended;
-- are in conformity with International Financial Reporting
Standards as issued by the IASB; and
-- comply with the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- the Company has not kept proper accounting records; or
-- the financial statements are not in agreement with the
accounting records; or
-- we have not received all the information and explanations,
which to the best of our knowledge and belief are necessary for the
purpose of our audit.
KPMG Channel Islands Limited
Chartered Accountants
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WR
21 July 2015
Statement of Comprehensive Income
For the year ended 31 March 2015
Year ended Year ended
31 March 31 March
2015 2014
Notes GBP'000 GBP'000
Loss on disposal of Flexinvest 13 - (2,877)
Loss on disposal of Kreditmart
Finance Limited (20,675) -
Loss on disposal of Grindelia Holdings
Limited (15,633) -
Revenue 6 464
------------------ -------------------
- Dividend income - 447
- Interest income 6 17
------------------ -------------------
Administration and operating expenses 5 (1,069) (1,672)
Deferred consideration written
off - (813)
Fair value movements on revaluation
of investments 8 32,760 (15,215)
Foreign exchange loss 3 (267)
Operating loss (4,608) (20,380)
------------------ -------------------
Interest expense - -
Loss before tax (4,608) (20,380)
Income tax expense - -
Total comprehensive loss for the
year 19 (4,608) (20,380)
================== ===================
Basic and diluted loss per share 6 (9.79p) (26.31p)
================== ===================
The accompanying notes on pages 19 to 36 form an integral part
of these financial statements.
Statement of Financial Position
As at 31 March 2015
31 March 31 March
2015 2014
Notes GBP'000 GBP'000
Non-current assets
Investment in subsidiaries 6 - 1,968
Investments 7 5,300 9,800
5,300 11,768
--------- -----------------
Current assets
Other receivables 8 13 3
Cash and cash equivalents 9 2,638 9,136
2,651 9,139
--------- -----------------
Total assets 7,951 20,907
========= =================
Current liabilities
Other payables 150 219
Provisions - -
--------- -----------------
150 219
--------- -----------------
Total liabilities 150 219
========= =================
Equity
Share capital 13 446 743
Special reserve 15 56,349 64,331
Accumulated loss 16 (48,994) (44,386)
Total equity 7,801 20,688
========= =================
Total equity and liabilities 7,951 20,907
========= =================
Net asset value per share - Basic and
Diluted 17 17.5p 27.9p
========= =================
The financial statements on pages 15 to 36 were approved by the
Board of Directors on 21 July 2015 and signed on its behalf by:
Gilbert Chalk Jonathan Bridel
Director Director
The accompanying notes on pages 19 to 36 form an integral part
of these financial statements.
Statement of Changes in Equity
For the year ended 31 March 2015
Retained Earnings/
Share Special (Accumulated Total
loss)
Capital Reserve
GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 April 2013 1,125 84,073 (24,006) 61,192
Total comprehensive loss for the year
Loss for the year - - (13,940) (13,940)
Share buyback 14 (382) (19,742) - (20,124)
At 31 March 2014 743 64,331 (44,386) 20,688
========= ========= =================== =========
Balance as at 1 April 2014 743 64,331 (44,386) 20,688
Total comprehensive loss for the year
Loss for the year - - (4,608) (4,608)
Share buyback 14 (297) (7,982) - (8,279)
At 31 March 2015 446 56,349 (48,994) 7,801
========= ========= =================== =========
The accompanying notes on pages 19 to 36form an integral part of
these financial statements.
Statement of Cash Flows
For the year ended 31 March 2015
Year Year
ended ended
Note 31 March 31 March 2014
2015
GBP'000 GBP'000
Cash flows from operating activities
Total comprehensive loss (4,608) (20,380)
Adjustments for movements in working
capital:
(Increase) / decrease in other receivables (10) 19
Decrease in other payables (68) (1,212)
Adjust for:
Interest income (6) (17)
Revaluation of investments 8 (32,760) 15,215
Loss on sale of investment 36,308 2,877
Exchange gain / (loss) (3) 267
Interest received - -
Net cash outflow from operating
activities (1,147) (3,231)
---------- ---------------
Cash flows from investing activities
Proceeds on disposal of Flexinvest - 2,940
Proceeds on disposal of OSG - 6,667
Proceeds on disposal of Kreditmart
Finance Limited 1,919 -
Proceeds on disposal of Superstroy 1,000 -
Bank interest received 6 17
Net cash inflow from investing activities 2,925 9,624
---------- ---------------
Cash flows from financing activities
Share buyback 17 (8,279) (20,124)
Net cash outflow from financing
activities (8,279) (20,124)
---------- ---------------
Net (decrease) / increase in cash and cash equivalents (6,501) 22,418
---------- ---------------
Opening cash and cash equivalents 9,136 23,134
Effect of foreign exchange movements 3 (267)
Closing cash and cash equivalents 10 2,638 9,136
========== ===============
The accompanying notes on pages 19 to 36 form an integral part
of these financial statements.
Notes to the Financial statements
For the year ended 31 March 2015
1. Reporting entity
The Company is a closed-ended investment fund that was
incorporated in Guernsey on 22 February 2006, and was admitted to
trading on the Alternative Investment Market of the London Stock
Exchange ('AIM') on 20 March 2006. The Company was established to
acquire interests in small and mid-sized private companies in
Russia, focusing on the financial, business and consumer services
sectors.
2. Basis of preparation
2.1 Statement of compliance
The financial statements give a true and fair view and are
prepared in accordance with International Financial Reporting
Standards (IFRS) which comprise standards and interpretations
approved by the International Accounting Standards Board and
International Accounting Standards and Standing Interpretations
Committee interpretations approved by the International Accounting
Standards Committee that remain in effect. These financial
statements comply with Companies (Guernsey) Law, 2008.
2.2 Basis of Measurement
The Directors resolved to begin the gradual winding up of the Company over the following 12
months. As such the Directors believe it is appropriate to adopt a non-going concern basis in
preparing the financial statements. The Directors believe that the Company will be able to realise
its investment in an orderly manner and therefore do not consider there to be a material difference
in the value of the Company's assets, and liabilities, compared to if the financial statements
had been prepared on a going concern basis. Accruals of GBP15,000 for circular and de-listing,
GBP20,000 for liquidation and GBP15,000 for retention have been raised in the accounts for liquidation.
The significant accounting policies adopted are set out in note 3.
2.3 New standards and interpretations adopted during the year
There were no new standards adopted in the current year.
2.4 New standards and interpretations not yet adopted
There are a number of new standards, amendments to standards and
interpretations that are not yet effective for the year ended 31
March 2015, and have not been applied in preparing these financial
statements.
-- IFRS 9 Financial Instruments (effective on or after 1 January
2018)
IFRS 9 deals with classification and measurement of financial
assets and its requirements represent a significant change from the
existing requirements in IAS 39 in respect of financial assets:
amortised cost and fair value. Financial assets are measured at
amortised cost when the business model is to hold assets in order
to collect contractual cash flows. All other financial assets are
measured at fair value with changes recognised in profit or loss.
For an investment in an equity instrument that is not held for
trading, an entity may on initial recognition elect to present all
fair value changes from the investment in other comprehensive
income. Once adopted, IFRS 9 will be applied retrospectively,
subject to certain transitional provisions. The Company is
currently in the process of realising its final investment and
thereafter it will be wound up. Therefore this Standard is not
expected to have an effect on the Company.
-- Annual Improvements to IFRS, 'Presentation of financial
statements' on the disclosure initiative (effective on or after 1
January 2016)
These amendments are as part of the IASB initiative to improve
presentation and disclosure in financial reports. This standard is
not expected to have a significant impact on the financial
statements.
There are no other standards, amendments or interpretations that
are not yet effective that would be expected to have a material
impact on the Company.
2.5 Critical accounting judgements and key sources of estimation uncertainty
The preparation of Financial Statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and the reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the year in which the
estimate is revised if the revision affects only that year or in
the year of the revision and future years if the revision affects
both current and future years.
The following areas are a key source of estimation uncertainty
for the Company and are included within the relevant accounting
policy note:
-- Valuation of Investments in Subsidiaries and Investments
Significant estimates in the Company's financial statements
include the amounts recorded for the fair value of the
investments.
By their nature, these estimates and assumptions are subject to
measurement uncertainty and the effect on the Company's financial
statements of changes in estimates in future periods could be
significant.
2.6 Functional and presentation currencies
All information presented in Sterling has been rounded to the
nearest thousand unless otherwise stated. The functional and
presentation currency of the Company is Sterling. The Company's
investment is in Roubles.
3. Significant Accounting Policies
The accounting policies set out below have been applied
consistently to all periods presented in these financial
statements, and have been applied consistently by the Company.
3.1 Determination and presentation of operating segments
The Company has determined and presented operating segments
based on the information that internally is provided to the Board
of Directors of the Company, who is the Company's chief operating
decision maker.
An operating segment is a component of the Company that engages
in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Company's other components. An
operating segment's operating results are reviewed regularly by the
Board of Directors of the Company to make decisions about resources
to be allocated to the segment and assess its performance, and for
which discrete financial information is available.
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker.
The Board of Directors are responsible for allocating resources,
assessing performance of the operating segments and making
strategic decisions.
3.2 Foreign currency transactions
Transactions in currencies other than Sterling are translated at
the foreign exchange rates ruling at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies
at the reporting date are translated into sterling at the exchange
rate ruling at that date. Foreign exchange differences arising on
translation are recognised in the Statement of Comprehensive
Income. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are
stated at fair value are translated into Sterling at foreign
exchange rates ruling at the dates the fair value was
determined.
3.3 Revenue
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
Dividend income from investments is recognised when the
Company's right to receive payment has been established, which is
the last date of registration of shareholders.
3.4 Expenses
All expenses are accounted for on an accruals basis through
profit or loss.
3.5 Set up expenses
The preliminary expenses directly attributable to the issuance
and listing of equity instruments of the Company that would
otherwise have been avoided were deducted from the share capital
account.
3.6 Taxation
The Company is exempt from Guernsey taxation on income derived
outside Guernsey and bank interest earned in Guernsey under the
Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989, for which it
pays an annual fee of GBP600. The annual fee has increased to
GBP1,200 per annum with effect from 1 January 2015.
3.7 Financial Instruments
Financial assets and financial liabilities are recognised on the
Company's statement of financial position when the Company becomes
a party to the contractual provisions of the instrument, including
unconditional commitments to make investments. The Company offsets
financial assets and liabilities if the Company has a legally
enforceable right to set off the recognised amounts and interests
and intends to settle on a net basis.
3.7.1 Investments
Recognition and Measurement
Unquoted investments, including investments in subsidiaries are
designated as fair value through profit or loss. Investments are
initially recognised at cost on a trade date basis. The investments
are subsequently re-measured at fair value, which is determined by
the Directors on the recommendation of the Valuation Committee; all
the Directors are currently on the Valuation Comittee. Unrealised
gains and losses arising from the revaluation of investments are
taken directly to profit or loss. Investments deemed to be
denominated in a foreign currency are revalued in Pounds Sterling
even if there is no revaluation of the investment in its currency
of denomination. Acquisition of investments is recorded on the
trade date or when substantially all the risks and rewards of
ownership transfer to the Company.
Investments are denominated in Russian Roubles, which the
Directors believe best reflect the underlying nature of the
currency exposure of the investee companies. The investments are
translated into Sterling at the period end, which is the functional
and presentational currency of the Company. Unrealised gains and
losses arising from the revaluation of investments are taken
directly to the Statement of Comprehensive Income.
The fair value of the investments is arrived at on the basis of
the recommendation of the Company's Valuation Committee, based on
valuations that were performed by Mr Nicholas Henderson-Stewart
("NHS"). Fair value is determined as follows:
Unquoted securities are valued based on the fair value which is
estimated by the Valuation Committee. The Valuation Committee will
take into account the guidelines and principles for valuation of
Portfolio Companies set out by the International Private Equity and
Venture Capital (IPEV) Board, with particular consideration of the
following factors:
-- Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
-- The valuation methodology applied uses reasonable assumptions
and estimations and takes account of the nature, facts and
circumstances of the investment and its materiality in the context
of the total portfolio.
-- An appropriate methodology incorporates available information
about all factors that are likely material to affect the fair value
of the investment. The valuation methodologies are applied
consistently from period to period, except where a change would
result in a better estimate of fair value. Any changes in valuation
methodologies will be clearly disclosed in the financial
statements.
The most widely used methodologies are listed below (discussed
further in note 18). 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 Company are generally considered to be
long term investments and are not intended to be disposed of on a
short term basis. Accordingly valuations do not necessarily
represent the amounts which may eventually be realised from sales
or other disposals of investments. Values of unlisted investments
may differ significantly from the values that would have been used
had a ready market for these assets existed.
Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire or it
transfers the rights to receive the contractual cash flows in a
transaction in which substantially all the risks and rewards of
ownership of the financial asset are transferred or in which the
Company neither transfers nor retains substantially all the risks
and rewards of ownership and does not retain control of the
financial asset. Any interest in such transferred financial assets
that is created or retained by the Company is recognised as a
separate asset or liability.
On de-recognition of a financial asset, the difference between
the carrying amount of the asset (or the carrying amount allocated
to the portion of the asset de-recognised), and consideration
received (including any new asset obtained less any new liability
assumed) is recognised in profit or loss. In determining the
consideration received the proceeds received are decreased by any
payables that are directly linked to the sale.
The Company enters into transactions whereby it transfers assets
recognised on its statement of financial position, but retains
either all or substantially all the risks and rewards of the
transferred asset or a portion of them. If all or substantially all
risk and rewards are retained, then the transferred assets are not
derecognised. Transfers of assets with retention of substantially
all risks and rewards include securities lending and repurchase
transactions.
The Company derecognises a financial liability when its
contractual obligations are discharged, cancelled or expire.
3.7.2 Cash and cash equivalents
Cash held with banks and short term deposits that are held to
maturity are carried at amortised cost. Cash and cash equivalents
consist of cash on hand and short term deposits in banks with an
original maturity of three months or less. Cash is measured at
amortised cost which approximates fair value.
3.7.3 Receivables
Receivables do not carry any interest. Where the time value of
money is material, receivables are discounted to their present
values. Allowance is made when there is objective evidence that the
Company will not be able to recover balances in full.
3.7.4 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 Company after deducting all of its
liabilities. Financial liabilities and equity instruments are
recorded at the proceeds received, net of issue costs.
Financial liabilities (including liabilities designated at fair
value through profit or loss) are recognised initially on the trade
date at which the Company becomes a party to the contractual
provisions of the instrument.
The Company derecognises a financial liability when its
contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount
presented in the statement of financial position when, and only
when, the Company has a legal right to offset the amounts and
intends either to settle on a net basis or to realise the asset and
settle the liability simultaneously.
The Company has the following non-derivative financial
liabilities: other payables.
Other payables do not carry any interest. Where the time value
of money is material, payables are discounted to their present
values. Allowance is made when there is objective evidence that the
Company will not be able to pay balances in full. Other payables
are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
Such financial liabilities are recognised initially at fair
value plus any directly attributable transaction costs. Subsequent
to initial recognition these financial liabilities are measured at
amortised cost using the effective interest method.
3.8 Earnings per share
The Company presents basic and diluted earnings per share (EPS)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period.
3.9 Share capital and equity
Ordinary shares are classified as equity.
If the Company reacquires its own equity instruments, the
consideration paid, including any directly attributable incremental
costs (net of income taxes) on those instruments are deducted from
equity until the shares are cancelled or reissued. No gain or loss
is recognised in profit or loss on the purchase, sale, issue or
cancellation of the Company's own equity instruments. Consideration
paid or received is recognised directly in equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
3.10 Fair Value
The Directors consider the carrying value of all financial
assets and liabilities to approximate their fair value. Where the
difference is significant, note disclosure is provided.
Notes to the Financial statements
For the year ended 31 March 2015
4. Administration and operating
expenses
The operating loss for the year
has been arrived
at after charging the following Year ended Year ended
items of
expenditure: 31 March 31 March
2015 2014
GBP'000 GBP'000
Company
Auditors' remuneration 72 91
Directors' remuneration 215 215
Other operating and administrative
expenses:
- Administration fees 66 78
- Marketing costs 19 34
- Professional fees 380 327
- Liquidation costs 50 -
- Bonus liability written off - (97)
- Other 142 252
------------------ ------------------
Expenses excluding investment
management 944 900
fee
Investment management fee and
performance 125 772
fees
1,069 1,672
------------------ ------------------
5. Loss per share 31 March 31 March
2015 2014
GBP'000 GBP'000
The calculation of the
basic and diluted
loss per share is based
on the following
data:
Loss for the purposes of
basic and (4,680) (20,380)
diluted loss per share
being net loss
attributable to equity
holders of the
parent
Weighted average number
of ordinary 47,048 77,449
shares for the purpose
of diluted loss
loss per share (in thousands):
Loss per share - Basic
and Diluted (9.79p) (26.31p)
============== ===============
6. Investment in subsidiaries - at fair value through profit or loss
31 March
31 March
2014 2013
GBP'000 GBP'000
KFL
At beginning of period 1,968 4,583
Fair value revaluation * - (2,615)
Sale of Kreditmart (22,594) -
Reversal of unrealised losses 20,626 -
------------------- -------------------
At end of period* - 1,968
------------------- -------------------
Flexinvest
At beginning of period - 5,817
Proceeds on sale - (2,940)
Loss on disposal - (2,877)
At end of period* - -
------------------- -------------------
- 1,968
=================== ===================
* Kreditmart is stated at fair value as at 31 March 2014 based
on an agreed sales price and the entire holding on Flexinvest was
sold on 14 February 2014 (refer to Note 10). The entire holding in
KFL was sold on 28 April 2014.
The valuation of the subsidiaries and investments at 31 March
2014 was performed by Aurora Investment Advisors Limited; the final
valuations were approved by the Valuation Committee. The valuation
of the investment at 31 March 2015 was performed by Mr Nicholas
Henderson-Stewart; the final valuation was approved by the
Valuation Committee.
The methodologies and assumptions used in valuing investments
and investments in subsidiaries are discussed in Note 18.
Set out below is a list of the unconsolidated subsidiaries of
the Company (the Company sold its entire holding in Flexinvest and
Kreditmart; please refer to notes 10 and 11):
Name of subsidiary Country of Class % of class % of class Principal
undertaking of
incorporation/Principal share held held at activity
at 31 31
place of business March March
2015 2014
Ordina Consumer
KFL Cyprus ry 0% 100.0% finance
7. Investments
31 March 31 March
2015 2014
GBP'000 GBP'000
Unistream Bank 5,300 8,000
Grindelia Holdings* - 1,800
Total investments at fair value
through profit or 5,300 9,800
========== ==========
loss
The Company holds 26% (2014: 26%) in Unistream and 0% (2014:
24.3%) in Grindelia respectively; the shareholding and voting
rights are the same in both cases. Unistream is a Russian company
with the principal place of business in Russia, Grindelia is a
Cyprus holding company with its principal place of business in
Russia. The Company sold its entire shareholding in Grindelia on 28
January 2015, refer to Note 12.
Change in fair value of investments at
fair value through profit or
loss
Year ended Year ended
31 31
March 2015 March 2014
GBP'000 GBP'000
Unistream Bank (2,700) (4,000)
Grindelia Holdings* 14,834 (8,600)
KFL 20,626 (2,615)
Total unrealised losses 32,760 (15,215)
============== ====================
* Holding company for Superstroy.
8. Other receivables
31 March 31 March
2014 2013
GBP'000 GBP'000
Prepayments 13 3
13 3
============== ====================
9. Cash and cash equivalents
31 March 31 March
2015 2014
GBP'000 GBP'000
Bank balances 2,638 4,726
Fixed deposits - 4,410
2,638 9,136
============== ====================
10. Sale of Flexinvest shares
31 March 31 March
2015 2014
GBP'000 GBP'000
Proceeds on sale - 2,940
Less: Cost of Investment - 5,817
-------------- --------------------
Loss on sale - (2,877)
============== ====================
The Company sold its entire shareholding in Flexinvest on 14
February.
The consideration for the disposal was RUR189.1 million
(approximately GBP3.2 million) in cash plus, as part of the sale,
mortgages with a nominal value of RUR144.2 million (approximately
GBP2.4 million) held by Flex Bank which have been transferred to
the Company's wholly owned subsidiary KFL.
The cash proceeds totalled RUR172.2 million (approximately
GBP2.9 million).
11. Sale of Kreditmart Finance Limited
31 March 31 March
2015 2014
GBP'000 GBP'000
Proceeds on sale 1,919 -
Less: Cost of Investment (22,594) -
--------------------- ----------
Loss on sale (20,675) -
===================== ==========
The Company sold 100% of its shares in Kreditmart Finance
Limited to Amikson Business Limited on 24 April 2014. The proceeds
of the sale was RUR 100,000,000 and $450,000, the total amount of
which was paid in US Dollars.
12. Sale of Grindelia Holdings Limited
31 March 31 March
2015 2014
GBP'000 GBP'000
Proceeds on sale 1,000 -
Less: Cost of Investment (16,633) -
-------------------- ----------
Loss on sale (15,633) -
==================== ==========
The Company sold 100% of its shareholding in Grindelia Holdings
Limited to Tuina Assets Limited on 28 January 2015. The proceeds of
the sale was $1,518,180, which was paid in US Dollars
(GBP1,000,000).
13. Share Capital
31 March
31 March 2015 2014
GBP'000 GBP'000
Authorised share capital: GBP2,000,000
200,000,000 Ordinary Shares of
1p each: 2,000 2,000
=============== ==============
Issued share capital:
44,611,131 (2014: 74,262,617)
fully paid Ordinary 446 743
Shares of 1p each:
==============
14. Share buyback
31 March
31 March 2015 2014
Treasury shares No. of Shares No. of Shares
Opening balance as at 1 April
2014, 1 April 2013 - -
38,237,383 Ordinary Shares of
0.01p bought back - 38,237,383
Shares cancelled - (38,237,383)
29,651,486 Ordinary Shares bought 29,651,486 -
4,343,081 Shares cancelled
(4,343,081) -
25,308,405 Shares cancelled (25,308,405) -
- -
=============== ==============
31 March
31 March 2015 2014
Share Capital GBP'000 GBP'000
Opening balance as at 1 April
2013, 1 April 2012 743 1,125
38,237,383 Ordinary Shares of
0.01p bought back - (325)
5,739,488 Ordinary Shares of 0.01p
bought back - (57)
25,308,405 Ordinary Shares of
0.01p bought back (253) -
4,343,081 Ordinary Shares of 0.01p
bought back (44) -
446 743
=============== ==============
Special reserve
Opening balance as at 1 April
2014, 1 April 2013 64,331 84,073
38,237,383 Ordinary Shares bought
back by - (16,673)
NUMIS
5,739,488 Ordinary Shares bought
back by NUMIS - (2,944)
Professional and legal fees incremental
to Share - (125)
buyback
25,308,405 Ordinary Shares bought
back by (6,718) -
NUMIS
4,343,081 Ordinary Shares bought
back by NUMIS (1,153) -
Professional and legal fees incremental
to Share (111) -
buyback -
56,349 64,331
=============== ==============
On 1 May 2014 the Company entered
into a repurchase
agreement to purchase ordinary
shares of the Company
from Numis Securities Limited
("Numis"). The Company
purchased 29,651,486 Shares, at
a price of 27.5454p
per Share for an aggregate gross
consideration of
GBP8,167,620.
15. 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.
31 March
31 March 2015 2014
GBP'000 GBP'000
Balance as at 31 March 2015, 31
March 2014 56,349 64,331
=============== ==============
A detailed breakdown of the Special
Reserve is shown in
Note 14 above.
16. Accumulated Loss
31 March
31 March 2015 2014
GBP'000 GBP'000
Balance as at 1 April 2014, and
1 April 2013 (44,386) (24,006)
Total comprehensive loss for the
year (4,608) (20,380)
Balance as at 31 March 2015, and
31 March 2014 (48,994) (44,386)
=============== ==============
17. Net asset value per share
31 March
2015 31 March 2014
Net assets for the purposes
of basic and 7,801 20,688
diluted net asset value
per share
attributable to equity (GBP'000)
Number of ordinary shares
for the 44,611,131 74,262,617
purpose of net asset value
per share
Net asset value per share 17.5p 27.9p
=========== ===============
18. 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.
18.1 Capital Management
The capital structure of the Company at year end consists of
cash and cash equivalents and equity attributable to equity holders
of the Company, comprising issued capital, reserves and accumulated
loss. The Company has no return on capital benchmark, but the Board
continues to monitor the balance of the overall capital structure
so as to maintain investor and market confidence. The Company is
not subject to any external capital requirements.
18.2 Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The Company's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Company's reputation.
Refer to the interest rate risk table in note 18.7 for the
maturity analysis of the Company's liabilities.
18.3 Credit risk
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets. The credit risk on liquid funds is limited because
the counterparties are banks with credit-ratings assigned by
international credit-rating agencies. Credit ratings for the banks
are as follows: Investec Baa3; Royal Bank of Scotland Baa1 and
Lloyds A3. The Company monitors the placement of cash balances on
an ongoing basis.
The maximum exposure to credit risk for the Company at the end
of the reporting period without taking into account any collateral
held or credit enhancements is the following:
31 March 31 March
2015 2014
GBP'000 GBP'000
Cash and cash equivalents 2,638 9,136
Other receivables 13 3
2,651 9,139
No balances are past due or impaired at year end.
18.4 Geographical risk
The geographical concentration of the assets and liabilities of
the Company are set out below:
31 March
ASSETS 2015
Russian United Other Total
Federation Kingdom
% % % %
Investments 100 - - 100
Other receivables - 100 - 100
Cash and cash equivalents - 81 19 100
31 March
ASSETS 2014
Russian United Other Total
Federation Kingdom
% % % %
Investments 100 - - 100
Investments in subsidiaries 100 - - 100
Other receivables 68 - 32 100
Cash and cash equivalents - 100 - 100
18.5 Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. Currency risk arises when future commercial transactions and
recognised assets and liabilities are denominated in a currency
that is not the Company's reporting currency. The Company is
exposed to foreign exchange risk arising from various currency
exposures primarily with respect to Russian Roubles and US Dollars.
All of the Company's equity investments are denominated in Russian
Roubles. The Company does not hedge its currency exposure on equity
investments
Currency Risk Table
An analysis of the Company's net currency exposure is as
follows:
As at 31 March 2015:
Currency of denomination Sterling US Dollars Russian Euro Total
Roubles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 2,146 505 5,300 - 7,951
Total liabilities (150) - - - (150)
Net currency exposure 1,996 505 5,300 - 7,801
As at 31 March 2014:
Currency of denomination Sterling US Dollars Russian Euro Total
Roubles
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 9,136 - 11,768 - 20,907
Total liabilities (146) (56) - (17) (219)
Net currency exposure 8,993 (56) 11,768 (17) 20,688
Foreign Currency Sensitivity
The following table details the Company's sensitivity to a 20%
(2014: 20%) strengthening of Sterling against each of the relevant
foreign exchange currencies. 20% (2014: 20%) is the sensitivity
rate used when reporting foreign currency risk internally to
management and represents management's assessment of the possible
change in foreign exchange rates. This analysis assumes that all
variables, in particular interest rates remain constant. The
analysis is performed on the same basis for the prior period.
Increase / (decrease) in profit /loss:
31 March 31 March
2015 2014
GBP'000 GBP'000
Russian Rouble (1,060) (2,354)
US Dollar (101) 11
A 20% (2014: 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.
18.6 Market risk
Market price risk arises principally from uncertainty concerning
future values of financial instruments used in the Company's
operations. It represents the potential loss the Company might
suffer through holding interests in unquoted private companies
whose value may fluctuate and which may be difficult to value
and/or to realise. The Company seeks to mitigate such risk by
assessing such risks as part of the due diligence process related
to all potential investments, and by establishing a clear exit
strategy for all potential investments. There is a rigorous due
diligence process before an investment can be approved which will
cover financial, legal and market risks. Following investment the
Company/Manager will always have Board representation, the investee
company is required to submit regular management information to an
agreed standard and timeliness and the Manager undertakes regular
monitoring. The Board receives and considers the most recent
monitoring report prepared by the Manager at every Board
meeting.
Pricing Risk Table
All security investments present a risk of loss of capital, the
maximum risk resulting from instruments is determined by the fair
value of the financial instrument. The following represents the
Company's market pricing exposure at year end:
At 31 March 2015:
Note Fair Value % of Net
GBP'000 Assets
Investments at fair value through
profit or loss:
- Unlisted Equities 6 & 7 5,300 67.94
At 31 March 2014:
Fair Value % of Net
GBP'000 Assets
Investments at fair value through
profit or loss:
- Unlisted Equities 6 & 7 11,768 56.88
Valuation of financial instruments
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements:
> Level 1: Quoted market price (unadjusted) in an active
market for an identical instrument.
> Level 2: Valuation techniques based on observable inputs,
either directly (i.e. as prices) or indirectly (i.e. derived from
prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted
prices for identical or similar instruments in markets that are
considered less than active; or other valuation techniques where
all significant inputs are directly or indirectly observable from
market data.
> Level 3: Valuation techniques using significant
unobservable inputs. This category includes all instruments where
the valuation technique includes inputs not based on observable
data and the unobservable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are
valued based on quoted prices for similar instruments where
significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
The table below analyses financial instruments,measured at fair
value at the end of the reporting period,by the level in the fair
value hierarchy into which the fair value measurement is
categorised:
Level
Level 1 2 Level 3 Total
At 31 March 2015: GBP'000 GBP'000 GBP'000 GBP'000
Investments at fair value through
profit or loss:
-Unlisted Equities - - 5,300 5,300
- - 5,300 5,300
Level
At 31 March 2014: Level 1 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Investments at fair value through
profit or loss:
-Unlisted Equities - 1,968 9,800 11,768
- 1,968 9,800 11,768
The following table shows a reconciliation from the beginning
balances to the ending balances for fair value measurements in
Level 3 of the fair value hierarchy of the Company:
Level 3
GBP'000 GBP'000
2015 2014
Opening balance 9,800 32,800
Disposal of investments (1,000) (2,940)
Total fair value gains or losses
in profit or loss (3,500) (18,092)
Transfer to level 2 - (1,968)
Closing balance 5,300 9,800
Although the 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. Investments
classified with level 3 have significant unobservable inputs, as
they trade infrequently. As observable prices are not available for
these securities, the Company has used valuation techniques to
derive the fair value. Transfers between levels are deemed to take
place at the end of the year.
Level 3 investments have been valued in accordance with the
methodologies in Note 18.8. The value of the investments and the
fair value movements are disclosed in note 7.
Unrealised loss on fair value movements from revaluation of
level 3 investments still held at year end and recognised in the
Statement of Comprehensive Income amounted to GBP2.7 million (2014:
unrealised loss of GBP12.6 million).
Unistream was valued using 75% EBITDA multiple and 25% revenue
multiple basis and 40% liquidity discount (2014: 30% liquidity
discount).
The Revenue multiple observed was 1.6x and the EBITDA multiple
observed was 6.2x.
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 loss would
decrease by GBP1,060,000 (2014: GBP2,353,600) for the Company. This
sensitivity rate was determined by the Directors as reasonable
taking market conditions into account.
If the Revenue multiple increases from 25% to 35% the value of
Unistream would become GBP5.9 million.
18.7 Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
The Company is exposed to interest rate risk as a result of the
cash and bank balances that are invested at floating interest
rates. The Company monitors its interest rate exposure regularly
and allocates its cash resources to an appropriate mix of floating
and fixed rate instruments of varying maturities.
The following table details the Company's exposure to interest
rate risk as at period end by the earlier of contractual maturities
or re-pricing:
2 to
At 31 March 2015: No Less than 1 months 1 to 2 5 Greater Total
contractual 1 month to 1 year years than 5
terms of years years
repayment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-interest bearing 5,300 - 13 - - - 5,300
Floating interest
rate instruments 2,638 - - - - - 2,638
Total 7,938 - 13 - - - 7,951
Liabilities
Non-interest bearing - - (150) - - (150)
Total - - (150) - - - (150)
Net Exposure 7,938 - (216) - - - 7,801
2 to
At 31 March 2014: No Less than 1 months 1 to 2 5 Greater Total
contractual 1 month to 1 year years than 5
terms of years years
repayment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-interest bearing 11,768 - 3 - - - 11,771
Floating interest
rate instruments 4,726 - - - - - 4,726
Fixed interest rate
instruments - 4,410 - - - - 4,410
Total 16,494 4,410 3 - - - 20,907
Liabilities
Non-interest bearing - - (219) - - (219)
Total - - (219) - - - (219)
Net Exposure 16,494 4,410 (216) - - - 20,688
* The Company's fixed interest rate instruments represents cash
accounts placed on deposit. The Company does not account for any
fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore a change in interest rates at the
reporting date would not affect profit or loss.
Sensitivity analysis
The sensitivity analysis below has been determined based on the
Company's exposure to interest rates for interest bearing assets
and liabilities at the reporting date and the stipulated change
taking place at the beginning of the financial year and held
constant throughout the reporting period in the case of instruments
that have floating rates.
If interest rates had been 50 basis points higher and all other
variables were held constant, the Company's net profit and equity
for the year ended 31 March 2014 would have increased by GBP13,190
(2014: GBP23,634).
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.
18.8 Fair value measurement
Methodologies and assumptions used in valuing investments and
investments in subsidiaries:
1) Market Approach:
The market approach uses industry specific benchmarks as its
basis and indicates the market value of the shares of the Company
based on a comparison of the subject company to other comparable
companies in similar lines of business that are publicly traded or
which are part of a public or private transaction.
The market comparable method indicates the market value of the
ordinary shares of a business by comparing it to publicly traded
companies in similar lines of business. The conditions and
prospects of companies in similar lines of business depend on
common factors such as overall demand for their products and
services. An analysis of the market multiples of companies engaged
in similar businesses yields insight into investor perceptions and,
therefore, the value of the subject company.
In the market approach, recent sales, listings of comparable
assets and such other factors as the Board deems relevant are
gathered and analysed. After identifying and selecting the
comparable publicly traded companies, their business and financial
profiles are analysed for relative similarity. Price or EV
multiples of the publicly traded companies are calculated and then
adjusted for factors such as relative size, growth, profitability,
risk, and return on investment. The adjusted multiples are then
applied to the relevant element of the subject company's
business.
The unquoted investment was valued using weighted combination of
revenue and/or EBITDA multiples. Refer to Note 18.6.
The key assumptions in the valuations were as follows:
- Liquidity adjustment: 40% (31 March 2014: 25% to 30%)
2) Income Approach:
The income approach methodology is used as a cross-check for the
Market Approach and indicates the market value of a business
enterprise based on the present value of the cash flows that the
business can be expected to generate in the future. Such cash flows
are discounted at a discount rate that reflects the time value of
money and the risks associated with the cash flows.
The reconciliation between beginning and ending balances of
Level 3 investments is disclosed in Note 18.6. There was a transfer
to level 2 from level 3 during the prior year. The investment was
moved from level 3 to level 2 as the sales price could be used to
value the investment. The investment was sold during the year,
refer to note 11.
19. Segmental information
The Board of Directors of the Company decides on the strategic
resource allocations of the Company. The operating segments of the
Company are the business activities that earn revenue or incur
expenses, whose operating results are regularly reviewed by the
Board of Directors of the Company, and for which discrete financial
information is available. The Board of Directors considers the
Company to be made up of one segment, which is reflective of the
business activities of the Company and the information used for
internal decision-making which includes the monthly reporting to
management of investment holdings on a fair value basis:
- Aurora Russia
The Investment Advisor's Report provides more information on the
Company's business and the operations of its investment.
The Company derives its revenues from its investment primarily
through fair value gains or losses.
The Company regards the holders of its ordinary shares as its
customers, as it relies on their funding for continuing operations
and meeting its objectives. The Company's shareholding structure is
not exposed to a significant shareholder concentration.
The Company is engaged in investment in small and mid-sized
companies in Russia.
20. Related party transactions
The Company had one direct subsidiary, KFL, at the beginning of
the year, which was sold during the year (see notes 6 and 11).
Details of the investment in Unistream Bank is presented in note
7.
Aurora Investment Advisors Limited ('AIAL') holds Nil (2014:
1,224,072) of the shares in Aurora Russia as at 31 March 2015.
The management fees paid to AIAL were GBP30,000 (2014:
GBP744,743); at year end there was no prepayment of management
fees. There were no amounts payable at year end (2014: GBPNil).
Per the Amended and Restated Management Agreement, the
management fee and performance fee payable to AIAL were as
follows:
(a) Management fee of an amount equal to i) for all Valuation
Dates up to and including 31 March 2011, 1% of the net asset value
of the Company; and ii) for all Valuation Dates after 31 March
2011, 0.75% of net asset value of the Company;
(b) Performance fee is calculated as follows:
- 2.5% of the value of any disposals realised by the Company
would be payable to the Manager, calculated on the value of assets
of the Company realised up to GBP45 million, i.e. GBP0.40 per share
(the "2.5% Tranche");
- 7.5% of the value of any disposals realised by the Company
would be payable to the Manager, calculated on the value of assets
of the Company realised between GBP45 million and GBP99 million,
i.e. GBP0.40 per share to GBP0.88 per share (NAV) (the "7.5%
Tranche"); and
- 20% of the value of any disposals realised by the Company
would be payable to the Manager, calculated on the value of assets
of the Company realised over GBP99 million, i.e. over GBP0.88 per
share (the "20% Tranche").
Performance fees to decline by 20% per annum from 1 January 2012
in respect of the 2.5% Tranche, and by 20% per annum from 1 January
2013 in respect of each of the 7.5% Tranche and the 20%
Tranche.
The performance fees paid by the Company to AIAL during the year
was GBP34,799 (2014: GBP27,735); at year end GBPNil (2014:
GBP40,960) was outstanding. The performance fees became payable on
the sale of Flexinvest, calculated at 1.28% on the cash
consideration of GBP1.9 million. Performance fees also became
payable on the sale of Grindelia, calculated at 1.024% on the cash
consideration of GBP1 million.
If the remaining investments were sold at their fair values as
at 31 March 2015, GBP54,272 (GBP5,300,000 at 1.024%) would be
payable to AIAL and GBP106,000 (GBP5,300,000 at 2%) would be
payable to Mr Nicholas Henderson-Stewart by way of performance
fees.
The Company's management contract with AIAL was terminated
effective 30 April 2014. The Manager's services were extended to 30
June 2014. Mr Nicholas Henderson-Stewart was appointed as Advisor
effective 19 June 2014.
Investment advisor fees of GBP46,227 (2014: GBPNil) were paid
during the year to Mr Nicholas Henderson-Stewart. At year end no
fees were outstanding. Performance fees of GBP14,128 (2014: GBPNil)
were paid during the year to Mr Nicholas Henderson-Stewart. At year
end no fees were outstanding.
21. Contingencies and capital commitments
The Company had no contingencies and capital commitments
outstanding at the reporting date.
22. Events after the reporting date
Tender offer
On 10 April 2015 the Company announced a tender offer for up to
6,687,203 Ordinary Shares, representing 14.99% of the issued Shares
(the "Buyback"), at a price of 10p per share.
Following the Buyback and cancellation of such Shares, the total
number of Ordinary Shares in issue is 37,923,928.
Change in directors interests
The Company announced that as a result of the tender offer for
Shares on 10 April 2015, the Company's directors' beneficial
shareholdings in the Company have changed as follows:
Gilbert Chalk sold 2,972 Shares (remaining holding: 16,855
Shares).
Tim Slesinger sold 850,669 Shares (remaining holding: 4,824,244
Shares).
Each at a price of 10p per Share and representing 14.99% of each
Director's holding of Shares prior to the Buyback.
There are no further events after reporting date which require
disclosure.
Directors and Advisors
Directors Registrar
Gilbert Chalk - Chairman Capita IRG (CI) Limited
Tim Slesinger 2nd Floor
Jonathan Bridel No 1 Le Truchot
Peregrine Moncreiffe St Peter Port
Lyndon Trott Guernsey GY1 4AE
Manager Independent Auditor
Aurora Investment Advisors
Limited KPMG Channel Islands Limited
(terminated 30 June 2014) Glategny Court
Sarnia House Glategny Esplanade
Le Truchot St Peter Port
St Peter Port Guernsey GY1 1WR
Guernsey GY1 4NA
CREST Service Provider and UK Transfer
Advisor Agent
Mr Nicholas Henderson-Stewart Capita Registrars
(appointed 19 June 2014) The Registry
10 Avenue Maurice 34 Beckenham Road
1050 Brussels Beckenham
Belgium Kent BR3 4TU
Administrator and Secretary Nominated Adviser and Broker
Kleinwort Benson (Channel Islands) Numis Securities Limited
Fund Services Limited The London Stock Exchange Building
Dorey Court 10 Paternoster Square
Admiral Park London
St Peter Port EC4M 7LT
Guernsey GY1 2HT
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR RTMRTMBTTMFA
Aurrigo (LSE:AURR)
過去 株価チャート
から 6 2024 まで 7 2024
Aurrigo (LSE:AURR)
過去 株価チャート
から 7 2023 まで 7 2024
