REG - Aurora Russia Ltd - Annual Financial Report <Origin Href="QuoteRef">AURR.L</Origin> - Part 2
22/07/2015 09:00
- Part 2: For the preceding part double click ID:nRSV7416Ta
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 £15,000 for circular and de-listing, £20,000 for liquidation and £15,000 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 £600. The annual fee has
increased to £1,200 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 items of Year ended Year ended
expenditure: 31 March 31 March
2015 2014
£'000 £'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
£'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 (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
£'000 £'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 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
2015 2014
KFL Cyprus Ordinary 0% 100.0% Consumer finance
7. Investments
31 March 31 March
2015 2014
£'000 £'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 31 Year ended 31
March 2015 March 2014
£'000 £'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
£'000 £'000
Prepayments 13 3
13 3
9. Cash and cash equivalents
31 March 31 March
2015 2014
£'000 £'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
£'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).
11. Sale of Kreditmart Finance Limited
31 March 31 March
2015 2014
£'000 £'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
£'000 £'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 (£1,000,000).
13. Share Capital
31 March 2015 31 March 2014
£'000 £'000
Authorised share capital: £2,000,000
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 2015 31 March 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) --
25,308,405 Shares cancelled
- -
31 March 2015 31 March 2014
Share Capital £'000 £'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
£8,167,620.
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 2015 31 March 2014
£'000 £'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 2015 31 March 2014
£'000 £'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 (£'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
£'000 £'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:
ASSETS 31 March 2015
Russian United Other Total
Federation Kingdom
% % % %
Investments 100 - - 100
Other receivables - 100 - 100
Cash and cash equivalents - 81 19 100
ASSETS 31 March 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
£'000 £'000 £'000 £'000 £'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
£'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
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
£'000 £'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
£'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
£'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 1 Level 2 Level 3 Total
At 31 March 2015: £'000 £'000 £'000 £'000
Investments at fair value through profit or loss:
-Unlisted Equities - - 5,300 5,300
- - 5,300 5,300
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