REG - Aurora Russia Ltd - Annual Financial Report <Origin Href="QuoteRef">AURR.L</Origin> - Part 2
06/09/2014 16:45
- Part 2: For the preceding part double click ID:nRSP5383Ma
17 -
Net cash inflow from investing activities 9,624 24,243
Cash flows from financing activities
Increase in loans - 5
Share buyback 17 (20,124) -
Net cash (outflow) / inflow from financing activities (20,124) 5
Net (decrease) / increase in cash and cash equivalents (13,731) 22,418
Opening cash and cash equivalents 23,134 873
Effect of foreign exchange movements (267) (157)
Closing cash and cash equivalents 10 9,136 23,134
The accompanying notes on pages 20 to 38 form an integral part of these financial statements.
Notes to the Financial statements
For the year ended 31 March 2014
1. Reporting entity
The Company is a closed-ended investment fund that was incorporated in Guernsey on 22 February 2006, and was admitted to
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 the law.
2.2 Basis of Measurement
The financial statements have been prepared on the historical cost basis except for the following:
● financial instruments at fair value through profit or loss are measured at fair value
The significant accounting policies adopted are set out in note 3.
2.3 New standards and interpretations adopted during the year
The following standards, amendments and interpretations were adopted in the current year:
• IFRS 13: Fair Value Measurement (effective for periods commencing on or after 1 January 2013)
IFRS 13 explains how to measure fair value and aims to enhance fair value disclosures. The guidance includes enhanced
disclosure requirements that could result in additional disclosure for reporting entities. These requirements are similar
to those in IFRS 7, 'Financial instruments: Disclosures', but apply to all assets and liabilities measured at fair value,
not just financial ones. These disclosures have been added into Note 21 of the accounts.
Revised and amended standards:
• IAS 1 Presentation of Items of Other Comprehensive Income (effective for periods commencing on or after 1 July 2012)
This amendment requires that an entity present separately the items of other comprehensive income (OCI) that would be
reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to
profit or loss; and change the title of the statement of comprehensive income to the statement of profit or loss and other
comprehensive income. However, an entity is still allowed to use other titles. There has been no significant impact on the
financial statements from adopting this amendment.
• Amendment to IFRS 7: Financial instruments: Disclosures (effective for periods beginning on or after 1 January 2013)
This amendment relates to offsetting financial assets and financial liabilities. This amendment reflects the joint IASB and
FASB requirements to enhance current offsetting disclosures. These new disclosures are intended to facilitate comparison
between those entities that prepare IFRS financial statements and those that prepare US GAAP financial statements. The
adoption of this standard has not materially impacted the financial statements of the Company.
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 2014, and have not been applied in preparing these financial statements.
• IFRS 9 Financial Instruments (effective date to be confirmed by IASB)
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 evaluating the potential effect of this standard. The
standard is not expected to have a significant impact on the financial statements since all of the Company's financial
assets are designated at fair value through profit and loss.
• Amendment to IAS 32 Financial instruments: Presentation', on offsetting financial assets and financial liabilities
(Effective for periods beginning on or after 1 January 2014)
This amendment updates the application guidance in IAS 32, 'Financial instruments: Presentation', to clarify some of the
requirements for offsetting financial assets and financial liabilities on the balance sheet. The standard is not expected
to have a material impact on the financial statements of 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
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. While the
functional currency of the investments are in Roubles, the Company's operations are in Sterling which is why the
presentation currency is Sterling.
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 £600.
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 Aurora Investment Advisors Limited. 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 8). In assessing which methodology is
appropriate, the Valuation Committee is predisposed towards those methodologies that draw upon market-based measures of
risk and return.
Ÿ Market Approach
Ÿ Income Approach
Ÿ 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.
3.7.4Financial 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: loans from investee companies, and 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.
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. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares, which comprise share options granted to employees.
3.9 Provisions
A provision is recognised in the statement of financial position when the Company has a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle
the obligation, and the obligation can be reliably measured. If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and, where appropriate, the risks specific to the liability.
3.10 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.
3.11 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.
4. Change In Accounting Policy
IFRS 13, Fair value measurement
IFRS 13 replaces existing guidance in individual IFRS with a single source of fair value measurement guidance. IFRS 13 also
contains extensive disclosure requirements about fair value measurements for both financial instruments and non-financial
instruments. To the extent that the requirements are applicable to the Company, the Company has provided those disclosures
in note 21.8. The adoption of IFRS 13 does not have any material impact on the fair value measurements of the Company's
assets and liabilities.
Notes to the Financial statements
For the year ended 31 March 2014
5. Administration and operating expenses
The operating loss for the year has been arrived at
after charging the following items of expenditure: Year ended Year ended
31 March 31 March
2014 2013
£'000 £'000
Company
Auditors' remuneration 91 75
Directors' remuneration 215 165
Other operating and administrative expenses:
- Administration fees 78 70
- Marketing costs 34 60
- Professional fees 327 484
- Bonus liability written off (97) -
- Other 252 279
Expenses excluding investment management 900 1,133
fee
Investment management fee and performance 772 1,484
fees
1,672 2,617
6. Loss per share 31 March 31 March
2014 2013
£'000 £'000
The calculation of the basic and diluted
loss per share is based on the following
data:
Loss for the purposes of basic and (20,380) (13,940)
diluted loss per share being net loss
attributable to equity holders of the
parent
Weighted average number of ordinary 77,449 112,500
shares for the purpose of diluted loss
loss per share (in thousands):
Loss per share - Basic and Diluted (26.31p) (12.39)
7. Investment in subsidiaries - at fair value through profit or loss
31 March
31 March 2014 2013
£'000 £'000
OSG
At 1 April 2013, and 1 April 2012 - 28,200
Fair value revaluation - 1,029
Sale of OSG - (29,229)
At 31 March 2014, and 31 March 2013 - -
KFL
At beginning of period 4,583 8,649
Fair value revaluation * (2,615) (4,066)
At end of period* 1,968 4,583
Flexinvest
At beginning of period 5,817 6,451
Sale of shares to KFML (6,158 shares) (refer to note 12 - (462)
for further detail)
Sale of shares to KFML (2,463 shares) (refer to note 12 - (172)
for further detail)
Proceeds on sale (2,940) -
Loss on disposal (2,877) -
At end of period* - 5,817
1,968 10,400
* The revaluation calculations performed on KFL included the value of Flexinvest as at 31 March 2013, and as such, no
revaluation was performed on the individual subsidiary companies. 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 13).
The valuation of the subsidiaries and investments at 31 March 2014 as well as the valuation at 31 March 2013 were performed
by Aurora Investment Advisors Limited; the final valuations were approved by the Valuation Committee.
The methodologies and assumptions used in valuing investments and investments in subsidiaries are discussed in Note 21.
Set out below is a list of the unconsolidated subsidiaries of the Company (The Company sold its entire holding of OSG on 8
March 2013, refer to note 14. The company also sold its entire holding in Flexinvest; please refer to note 13.):
Name of subsidiary undertaking Country of Class of % of class % of class Principal
incorporation/Principal share held at 31 held at 31 activity
place of business March March
2014 2013
KFL Cyprus Ordinary 100.0% 100.0% Consumer finance
Flexinvest Cyprus Ordinary 0.0% 100.0% Investment holding
Flex Bank Russia Ordinary 0.0% 100.0% Banking and finance
**Flex Bank is held directly by KFL and Flexinvest and was an indirectly held subsidiary of the Company.
8. Investments
31 March 31 March
2014 2013
£'000 £'000
Unistream Bank 8,000 12,000
Grindelia Holdings* 1,800 10,400
Total investments at fair value through profit or 9,800 22,400
loss
The Company holds 26% (2013: 26%) in Unistream and 24.3% (2013: 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..
Change in fair value of investments at fair value through profit or
loss
Year ended 31 Year ended 31
March 2014 March 2013
£'000 £'000
OSG - 1,029
Unistream Bank (4,000) (4,300)
Grindelia Holdings* (8,600) (4,600)
KFL (2,615) (3,564)
Flexinvest - (502)
Total unrealised losses (15,215) (11,937)
* Holding company for Superstroy.
9. Other receivables
31 March 31 March
2014 2013
£'000 £'000
Prepayments 3 18
Accrued income - 3
Deferred consideration on sale of OSG (refer Note 14) - 6,668
3 6,689
This balance is comprised of:
Non-current assets - 1,105
Current assets 3 5,584
3 6,689
10. Cash and cash equivalents
31 March 31 March
2014 2013
£'000 £'000
Bank balances 4,726 354
Fixed deposits 4,410 22,780
9,136 23,134
11. Loans payable to investees
31 March 2014 31 March 2013
£'000 £'000
Loans payable to Grindelia Holdings - 496
Loans were repayable with interest no later than 20 February 2015 and
37% of the loan balance attracted interest at a rate of 0.1% per annum
and the remaining 63% was repayable with interest at a rate of 0.01%
per annum. The loans payable were settled during the year through an
offset against a dividend receivable.
12. Sale of Flexinvest shares to KFL
31 March 2014 31 March 2013
£'000 £'000
Proceeds on sale - 1,400
Less: Cost of Investment - 634
Profit on sale - 766
Aurora Russia sold 6,158 shares of its investment in Flexinvest to KFL
for a consideration of £1,000,059 on 6 June 2012.
Aurora Russia sold 2,463 shares of its investment in Flexinvest to KFL
for a consideration of £399,991 on 30 September 2012.
13. Sale of Flexinvest shares
31 March 31 March
2014 2013
£'000 £'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 £3.2 million) in cash plus, as part of the sale,
mortgages with a
nominal value of RUR144.2 million (approximately £2.4 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 £2.9 million).
14. Sale of OSG
Aurora Russia transferred its entire holding (70,796 shares) of OSG to Octala Services Limited.
On 8 March 2013 the Company sold OSG for a cash consideration of up to US$47.8 million (£32.6 million). US$34.1 million
(£22.8 million) was paid to the Company on the date of sale and the remaining US$8.5 million (£5.2 million) was delivered
to an escrow account in London, of which:
(a) US$4.25 million (£2.6 million) was payable 30 days following the signing of the accounts of OSG for the financial year
ended
31 March 2013, should they reflect management's expectations of the EBITDA (as defined), net debt and working capital of
the business; and
(b) the balance of US$4.25 million (£2.6 million) was payable 12 months following completion of the sale subject to any
warranty claim under certain commercial or tax warranties.
In terms of accounting for the transaction deferred revenue linked to the sale was determined by deducting the payables
related to the sale.
According to the sale agreement the Company was due to receive up to US$5.2 million (£3.2 million) in additional
consideration if the OSG business achieves EBITDA of over US$10.0 million (£6.2 million) for the year ending 31 March 2014;
this was to be proportionately reduced depending on the EBITDA. The first US$4.25 million was received on 28 August 2013.
The Board agreed on 10 December 2013 with Octala Services Limited ('Octala') to an amendment ('the Amendment') to the
Framework Agreement with Octala governing the payment of the warranties escrow and the deferred consideration. Under the
Amendment it was agreed that the remaining escrow amount of US$4.25 million was to be released to the Company in advance of
the 12 month anniversary in March 2014 of the completion of the sale of OSG. This was received on 17 December 2013. In
addition the Amendment provides that the earn out provisions in the Framework Agreement governing the deferred
consideration are deleted in consideration of the further payment to the Company of US$0.375 million. The final amount of
US$0.375 million (£0.227 million) was received on 16 December 2013.
15. Provisions
31 March 31 March
2014 2013
£'000 £'000
AIAL bonus payment on OSG sale - 108
Bonus payment liability on OSG sale - 371
- 479
This balance is comprised of:
Non-current liabilities - 115
Current liabilities - 364
- 479
16. Share Capital
31 March 2014 31 March 2013
£'000 £'000
Authorised share capital:
200,000,000 Ordinary Shares of 1p each: 2,000 2,000
Issued share capital:
74,262,617 (2013: 112,500,000) fully paid Ordinary 743 1,125
Shares of 1p each:
17. Share buyback
31 March 2014 31 March 2013
Share Capital £'000 £'000
Opening balance as at 1 April 2013, 1 April 2012 1,125 1,125
38,237,383 Ordinary Shares of 0.01p bought back (382) -
743 1,125
Special reserve
Opening balance as at 1 April 2013, 1 April 2012 84,073 84,073
38,237,383 Ordinary Shares bought back by (19,617) -
NUMIS
Professional and legal fees incremental to Share (125) -
buyback
64,331 84,073
On 30 April 2013 the Company entered into a
repurchase agreement to purchase ordinary
shares of the Company from Numis Securities
Limited (Numis). On 30 May 2013, the Company
purchased 38,237,383 ordinary shares at
0.523048p per Share for an aggregate gross
consideration of £19,999,947.
18. Special reserve
The Special reserve is a distributable reserve to be 31 March 2014 31 March 2013
used for all purposes permitted under Guernsey
company law, including the buy back of shares and
the payment of dividends.
£'000 £'000
Opening balance as at 1 April 2013, 1 April 2012 84,073 84,073
38,237,383 Ordinary Shares bought back by (19,617) -
Numis
Professional and legal fees incremental to Share (125) -
buyback
64,331 84,073
19. Accumulated Loss
31 March 2014 31 March 2013
£'000 £'000
Balance as at 1 April 2013, and 1 April 2012 (24,006) (10,066)
Total comprehensive loss for the year (20,380) (13,940)
Balance as at 31 March 2014, and 31 March 2013 (44,386) (24,006)
20. Net asset value per share
31 March 2014 31 March 2013
Net assets for the purposes of basic and 20,688 61,192
diluted net asset value per share
attributable to equity (£'000)
Number of ordinary shares for the 74,262,617 112,500,000
purpose of net asset value per share
Net asset value per share 27.9p 54.4p
21. 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.
21.1 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.
21.2 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 21.7 for the maturity analysis of the Company's liabilities.
21.3 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
2014 2013
£'000 £'000
Cash and cash equivalents 9,136 23,134
Other receivables 3 6,689
9,139 29,823
No balances are past due or impaired at year end.
21.4 Geographical risk
The geographical concentration of the assets and liabilities of the Company are set out below:
31 March 2014
ASSETS Russian
United
Federation Kingdom Other Total
% % % %
Investments
100 - - 100
Investments in subsidiaries 100
- - 100
Other receivables
68 - 32 100
Cash and cash equivalents -
100 - 100
31 March 2013
ASSETS Russian
United
Federation Kingdom Other Total
% % % %
Investments
100 - - 100
Investments in subsidiaries 100
- - 100
Other receivables
99 1 - 100
Cash and cash equivalents -
99 1 100
21.5 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 2014:
Currency of denomination Sterling US Dollars Russian Euro Total
Roubles
£'000 £'000 £'000 £'000 £'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
As at 31 March 2013:
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