REG - Aurora Russia Ltd - Half Yearly Report <Origin Href="QuoteRef">AURR.L</Origin> - Part 2

Aurrigo InternationalAnnouncement

11/12/2015 18:10

- Part 2: For the preceding part double click  ID:nRSK8790Ia 

(March 2015: Nil) was
outstanding. The performance fees became payable on the sale of Flexinvest,
calculated at 1.28% on the cash consideration of £1.9 million. Performance
fees also became payable on the sale of Grindelia, calculated at 1.024% on the
cash consideration of £1 million. 
 
Performance fees of £34,816 (£3,400,000 at 1.024%) to AIAL and £68,000
(£3,400,000 at 2%) Mr Nicholas Henderson-Stewart were accrued during the
period. 
 
Investment advisory fees of £35,040 (March 2015: £46,227) were paid during the
period to Mr Nicholas Henderson-Stewart. At the period end no investment
advisory fees were outstanding (31 March 2015: £Nil). Performance fees of Nil
(March 2015: £14,128) were paid during the period to Mr Nicholas
Henderson-Stewart. At the period end no performance fees were outstanding. 
 
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 Advisor effective 19 June 2014. 
 
As announced by the Company on 31 March, 2015, following completion of a
review of the cost base of the Company, the total annual running costs of the
Company for the year commencing 1 April 2015, excluding one off payments and
accruals relating to a potential sale, were budgeted at £380,000, a decrease
of 42% 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 43% reduction
in the fees payable to the Company's directors to £105,000 in aggregate. The
directors recognised that this fee reduction was necessary, given the fact
that the Company held only one residual investment, but believed that the
self-managed nature of the Company meant that it was also 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 were incentivised to maximise distributions to the Company's
shareholders over a period of twelve months commencing on 1 April 2015. The
incentive fee payable to the directors would increase relative to the value of
any such distributions made subsequent to that date, subject to reductions to
the extent that the realisation period extended beyond six months, and the
directors would receive a net reduction  in fees until distributions  to the
Company's shareholders exceeded approximately £5.3 million. Under the
Company's articles, the aggregate directors' remuneration is limited to
£300,000 in any financial year. The aggregate directors' remuneration will
exceed this threshold if distributions to shareholders exceed approximately
£7.6 million, in which event the payment of such excess will be subject to
shareholders' approval in general meeting. 
 
The Company has also entered into a new incentive arrangement with the
Investment Advisor, under which the Investment Advisor will also receive an
additional incentive fee based on distributions to shareholders made
subsequent to 1 April 2015. The percentage of the distributions to
shareholders payable to the Investment Advisor will vary according to the
value and timing of such distributions, with no payment being due until
distributions exceed approximately £5.3 million and the payment being capped
at 4% of such distributions. 
 
As explained elsewhere in this interim report, the Board with the assistance
of the Investment Advisor is seeking to achieve a sale of the Company's
holding in Unistream in the near term at a price which reflects Unistream's
market position, trading results and balance sheet. Based on recent
discussions, the Board believes that a sale is feasible. 
 
As required by International Financial Reporting Standards, the Board has
therefore accrued for incentive fees and performance fees to be paid to the
directors, the Investment Advisor and AIAL based on a disposal of Unistream at
or around the valuation ascribed to that final remaining investment in this
interim report and a subsequent return to shareholders of substantially  all
of their remaining invested capital prior to the voluntary liquidation of the
Company following a members' vote in favour of the same in general meeting. 
 
Although the Board currently intends to effect the distribution of cash by
placing the Company into a members' voluntary liquidation (the "Liquidation"),
the Board reserves the right to put forward a proposal other than the
Liquidation in order to secure an enhanced return for the Company's
shareholders. 
 
Based on current best estimates incentive fees of £75,000 to the Directors and
£6,000 to Mr Nicholas Henderson-Stewart were accrued for during the period. 
 
10.        Contingencies 
 
The Company had no contingencies outstanding at the reporting date other than
those disclosed in note 9. 
 
11.        Events after the reporting date 
 
No further material post balance sheet events were noted. 
 
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