RNS Number:7021E
Aurora Russia Limited
28 September 2007
28 September 2007
Aurora Russia Limited
Results for the six months ended 30 June 2007
Aurora Russia Limited ("Aurora Russia" or the "Company"), the AIM-quoted
investment vehicle established to make equity or equity-related investments in
small and mid-sized private companies in Russia, today announces its results for
the six months ended 30 June 2007.
Operational highlights
- #40 million of its capital now committed (including an additional #10
million investment in Kreditmart, announced today, to fund further growth)
- All investments continue to perform strongly:
o Unistream (#10.3 million investment, 26% owned), one of the leading
Russian international money transfer companies
- 2006 volumes were $1.84 billion
- Monthly volumes transferred exceeded US$400 million for the
first time in August
- Second part of acquisition completed in July 2007 for #3.1
million
- Plans to establish up to 550 money transfer cash desks over
the next few years
o Kreditmart (#22.9 million investment, 100% owned), the finance
company distributing mortgages, equity release loans and other
consumer finance products
- First loan shop opened in Moscow in March 2007 followed by
St. Petersburg in August 2007. Additional loan shops in
Omsk, Novossibirsk, Rostov, and Ekaterinburg are scheduled to
open within the next sixty days
- Signed agreements with 18 banks to distribute mortgage
products to its customers and currently offers over 400 loan
products through its system
o OSG Records Management (#5.2 million investment, 37.1% holding,
loan #1.5m), the regional market leader in records management
- Forecast to grow revenues for the current year at 30%
- Pipeline of potential investment opportunities continues to build.
Financial highlights
- Net asset value as at 30 June 2007 #72.6 million, representing 96.8p per
share (#71.7 million or 95.6p per share as at 30 June 2006)
- Cash and cash equivalents as at 30 June 2007 of #45.3 million (#71.2
million as at 30 June 2006)
- Consolidated net loss for the period of #205,000 (net profit of #173,000
from incorporation in February 2006 to 30 June 2006)
- Consolidated loss per share for the period 0.27p (earnings per share
0.23p from incorporation in February 2006 to 30 June 2006)
Commenting, Sir Trevor Chinn, Chairman of Aurora Russia, said:
"We are delighted with the developments to date and the continued growth of all
three of our investee businesses. The Russian economy continues to be buoyant
and is promoting increased demand for consumer goods and services. Given the
strong pipeline of potential investments we are currently evaluating, we believe
that we are well positioned to take advantage of this trend."
Enquiries:
Aurora Russia Limited
James Cook, Moscow +7 495 644 1662
John McRoberts, London +44 (0) 20 7839 7112
Investec Investment Banking
Rupert Krefting +44 (0) 20 7597 5133
Paul Gray +44 (0) 20 7597 5176
Financial Dynamics
Ed Gascoigne-Pees +44 (0) 20 7269 7132
Felicity Murdoch +44 (0) 20 7269 7243
Chairman's Statement
I am pleased to present the unaudited results of the Company for the six months
to 30 June 2007. In this period, Aurora Russia recorded a loss of #205,000 or
0.27p per share, compared to a net profit of #173,000 or 0.23p per share for the
prior year period which ran from the Company's incorporation in February 2006 to
30 June 2006. The net asset value of the Company as at 30 June 2007 was #72.6
million or 96.8p per share, compared to #71.7 million or 95.6p per share at 30
June 2006. Cash and cash equivalents as at 30 June 2007 were #45.3 million,
compared to #71.2 million as at 30 June 2006.
Aurora Russia continues to implement its investment strategy of making equity
and equity related investments in small and mid-sized private Russian companies,
focused on the financial, business and consumer services sectors, where the
Directors believe that there is potential for growth together with viable exit
opportunities.
Aurora Russia, advised by Aurora Investments Advisors Limited (the "Manager"),
has now successfully made three investments and we are positive about the
prospects for the investments made to date which include: Unistream, a leading
Russian money transfer company; Kreditmart, a finance company distributing
mortgages, equity release loans and other consumer finance products; and
Whitebrooks, the regional market leader in records management trading as OSG
Records Management.
Due to our confidence in Kreditmart we have decided to increase our investment
in the company by an additional #10 million to support further growth. A
separate announcement has been released today providing further information on
this investment. Including this additional investment in Kreditmart, the Company
has now committed approximately #40 million of its capital. It is currently
evaluating a number of potential investments and its pipeline of opportunities
continues to grow.
Valuation Policy
As mentioned in my year end statement, the Financial Reporting Review Panel now
requires that investments held for resale are consolidated when the holding is
greater than 50 per cent. Therefore, Aurora Russia's results consolidate those
of Kreditmart, which is 100 per cent owned.
The Board is encouraged by the trading performance of the investee companies,
but considers it too early in the lives of these investments to recognise any
revaluation in excess of cost. Consequently, no valuation surplus has been
reflected in these financial statements.
Administration and operating expenses
Administration and operating expenses predominantly relate to the Manager's Fee
and the Manager's Option which is being amortised over a period of five years.
Hedging Policy
The Company's policy is to hedge against any serious deterioration in the
foreign currency value of its investments and, in the period to date, this has
been achieved through the use of a combination of currency options and forward
contracts. Any profits or losses on such contracts are taken to the income
statement and are offset against currency fluctuations in the valuation of the
underlying investments.
Change of Accounting Reference Date
As previously reported, the Company's accounting reference date has been changed
from 31 December to 31 March in order to allow our investee companies more time
to finalise their audited financial statements. Therefore, the next audited
financial statements of Aurora Russia will be for the 15 month period to 31
March 2008. In this transitional period unaudited results will be issued for the
twelve month period to 31 December 2007.
Outlook
The Russian economy continues to be buoyant with GDP forecast to grow by
approximately 7.5 per cent both in 2007 and 2008. Analysts expect consumer
inflation to remain in the region of 8.0 to 8.5 per cent in 2007, reducing to
below 7.5 per cent in 2008. Exports are expected to be higher on the back of
higher oil prices. The strong economy has led to an increase in disposable
income, driving demand for consumer goods and services. As a result, there has
been an increase in the services sector which has expanded each year for the
past eight years.
Higher disposable incomes and the growing middle class create demand for
consumer and financial service products on which Aurora Russia's investment
strategy is focused.
Given the strong pipeline of investments and potential transactions being
evaluated, the Board remains confident that Aurora Russia will continue to
provide its investors with exposure to quality growth companies in the
financial, business and consumer services sectors in Russia.
Sir Trevor Chinn
Chairman
Investment Manager's Report
Since inception, Aurora Investment Advisors has evaluated over 70 separate
companies seeking capital that fall within its investment criteria. From these
companies, we have selected those which we believe have promising growth
prospects, strong management, a coherent strategy and a clear route to exit. We
are currently reviewing five potential investment opportunities and our pipeline
continues to grow. We are also delighted to announce a further #10 million
investment today in Kreditmart to help accelerate its promising growth
potential.
We have completed investments in Unistream, Kreditmart and OSG Records
Management and all three businesses are experiencing continued growth.
Unistream is a leading company for international transfers in Russia and
Kreditmart is making its mark in the fast growing mortgage market. OSG Records
Management remains the dominant provider of records management and archive
services in Russia, Ukraine, and Kazakhstan.
The macroeconomic indicators for the Russian economy continue to show sustained
expansion with a budget surplus of 7.5 per cent. Industrial production is
increasing by 7.8 per cent (YoY) and unemployment remains stable at 6.2 per
cent. The annual GDP growth is expected to be 7.5 per cent this year while the
Central Bank and Stabilization Fund reserves have grown to US$417.3 billion and
US$127.5 billion respectively. All of these factors have given Russia a solid
foundation for continued growth. The Financial Services, Business and Consumer
sectors in which we are investing are benefiting from Russia's economic growth
and are well positioned for further growth.
Investment in Unistream
In July we completed the second phase of our #10.3 million investment in
Unistream, resulting in Aurora Russia owning 26 per cent of the company. The
second phase of the investment was contingent upon the authorisation from the
Central Bank of Russia (CBR) for Aurora Russia to invest in excess of 20 per
cent in a Russian bank.
Unistream is regulated by the CBR and has a banking license to receive/send
money transfers, open bank accounts for corporate entities and accept loan
payments through its points of sale. Unistream is well positioned to realize
strong revenue growth potential through aggressive expansion of its distribution
network using both company-owned locations and agents. Currently Unistream has
170 of its own cash desks and more than 70 under construction. It plans to
establish up to 550 money transfer cash desks over the next few years.
In 2006, Unistream transferred approximately US$1.84 billion, making it one of
the fastest growing and one of the largest Russian international money transfer
companies. It continues to experience rapid growth and management reports that
monthly volumes in August exceeded US$400 million for the first time.
Investment in Kreditmart
Last year Aurora Russia committed #12.5 million to launch Kreditmart, a wholly
owned finance company distributing mortgages, equity release loans and other
consumer finance products. The company has a strong management team recruited
from previous successful ventures in this sector. Kreditmart is making progress
in building its distribution network.
Kreditmart opened its first loan shop in Moscow in March 2007 followed by its
second loan shop in St. Petersburg in August. Additional branches in Omsk and
Novosibirsk are expected to open in October. Leases have been signed on
locations in Ekaterinburg and Rostov-on-Don, both to open by year-end. In
addition, Kreditmart has opened an additional 5 sales points in high street
locations in Moscow and the Moscow Region within the real estate sales offices
of Doki and Realmart. Kreditmart expects to announce further distribution
through these real estate agents in the cities where they operate. Kreditmart
now employs 80 people and is quickly growing its brand in Russia.
Kreditmart has signed agreements with 18 banks to distribute mortgage products
to its customers and currently offers over 400 loan products through its system.
In light of these promising initial results, Aurora Russia has committed an
additional #10 million to finance further growth of Kreditmart and to accelerate
its expansion in Russia.
Kreditmart received international exposure this year when it was featured in a
segment on CNN about the growing mortgage industry in Russia.
The Russian mortgage market continues to grow very quickly and is expected to
reach US$26 billion by the end of 2007, up from US$10 billion at the end of
2006. Kreditmart is well-positioned to participate in this growth while
providing affordable housing and consumer finance solutions to Russia's emerging
middle class.
Investment in Flexinvest
The Company has acquired 100 per cent of the shares of Flexinvest, a holding
company registered in Cyprus, which will be used for the purchase of a banking
platform in Russia in due course. This company has been capitalised with #6.4
million of Aurora Russia's cash.
Investment in OSG Records Management
On 24 July 2006, Aurora Russia made its first investment paying #5.2 million for
40.31 per cent (37.1 per cent on a fully diluted basis) of the common shares of
Whitebrooks Investments, the parent company of the OSG Records Management Group.
Aurora Russia also provided the company with a US$5 million short-term
convertible working capital facility of which US$2.8 million has so far been
drawn down.
OSG remains the largest operator in Russia (the majority of its business is in
Russia), Ukraine and Kazakhstan, and is considered a regional market leader in
records management, providing cost-effective total records management, document
storage, data security and confidential data destruction solutions. OSG is also
established in Poland.
OSG posted revenues in excess of US$8 million in 2006 compared with just under
US$5 million in 2005. We anticipate that revenues will continue to grow at an
annual rate of over 30 per cent. The company continues to grow in its key
markets of Russia, Ukraine and Kazakhstan.
We remain bullish about the Russian economy and are confident that we will
continue to build our pipeline of potential transactions and expect to complete
further investments in due course.
John McRoberts and James Cook
Aurora Investment Advisors
Unaudited Condensed Consolidated Income Statement
For the period from 1 January 2007 to 30 June 2007
Period from Period from
1 January 2007 22 February 2006
to 30 June 2007 to 30 June 2006
Notes #'000 #'000
Revenue 5 -
Loan interest receivable 53 -
Administration and operating expenses 3 (2,111) (677)
Unrealised gains on revaluation of investments 10 1 -
Gains on derivatives 67 -
Other exchange losses (51) -
Operating loss (2,036) (677)
Bank interest receivable 1,627 850
Finance income 1,627 850
(Loss)/profit before tax (409) 173
Tax 4 204 -
Net (loss)/profit for the period (205) 173
(Loss)/profit per share - Basic and Diluted (0.27p) 0.23p
All items in the above statement derive from continuing operations.
All losses and income are attributable to the equity holders of the parent
company. There are no minority interests.
Unaudited Condensed Consolidated Balance Sheet
As at 30 June 2007
30 June 31 December
2007 2006
Notes #'000 #'000
Non-current assets
Goodwill 5 196 -
Other intangible assets 6 65 -
Plant and equipment 7 389 3
Investments - at fair value through profit and loss 10 15,488 15,401
Loans receivable from associated company 10 1,450 563
Loans and advances to customers 11 456 -
Derivative assets 12 414 -
Deferred tax assets 4 207 -
18,665 15,967
Current assets 684 274
Trade and other receivables
Derivative assets 12 5 -
Cash and cash equivalents 55,896 65,778
56,585 66,052
Total assets 75,250 82,019
Current liabilities 12 - 8
Derivative liabilities
Trade and other payables 13 3,508 10,362
Total liabilities 3,508 10,370
Total net assets
71,742 71,649
Equity 750 750
Share capital
Special reserve 70,750 70,750
Share options reserve 770 470
Revenue reserve - deficit (526) (321)
Translation reserve (2) -
Total equity 71,742 71,649
Net asset value per share - Basic and Diluted 95.7p 95.5p
Unaudited Condensed Company Balance Sheet
As at 30 June 2007
30 June 31 December
2007 2006
Notes #'000 #'000
Non-current assets
Investment in subsidiaries - at fair value through profit and
loss 8 12,925 12,500
Investments - at fair value through profit and loss 10 15,425 15,401
Loans receivable from associated company 10 1,450 563
Derivative assets 12 414 -
30,214 28,464
Current assets
Trade and other receivables 419 153
Derivative assets 12 5 -
Cash and cash equivalents 45,303 63,850
45,727 64,003
Total assets 75,941 92,467
Current liabilities 12 - 8
Derivative liabilities
Trade and other payables 13 3,361 20,512
Total liabilities 3,361 20,520
Total net assets
72,580 71,947
Equity 750 750
Share capital
Special reserve 70,750 70,750
Share options reserve 770 470
Revenue reserve - surplus/(deficit) 310 (23)
Total equity 72,580 71,947
Net asset value per share - Basic and Diluted 96.8p 95.9p
Unaudited Condensed Consolidated Statement of Changes in Equity
For the period from 1 January 2007 to 30 June 2007
Share Share Special Share Revenue Translation Total
Capital Premium Reserve Options Reserve Reserve
Reserve
#'000 #'000 #'000 #'000 #'000 #'000 #'000
For the period 22 February 2006 to 30
June 2006
Issue of ordinary share capital, net 750 70,790 71,540
of issue costs
Conversion of share premium account (70,790) 70,790 -
Net profit for the period 173 173
At 30 June 2006 750 - 70,790 - 173 - 71,713
For the period 1 January 2007 to 30
June 2007
At 1 January 2007 750 - 70,750 470 (321) - 71,649
Net loss for the period (205) (205)
Recognition in respect of share-based 300 300
payments
Loss recognised directly in equity (2) (2)
At 30 June 2007 750 - 70,750 770 (526) (2) 71,742
Unaudited Condensed Consolidated Cash Flow Statement
For the period from 1 January 2007 to 30 June 2007
Notes Period from Period from
1 January 2007 22 February 2006
to 30 June 2007 to 30 June 2006
Cash flows from operating activities #'000 #'000
Operating loss (2,036) (677)
Adjustments for:
Increase in operating trade and other receivables (178) (601)
Increase in operating trade and other payables 65 114
Loan interest receivable (53) -
Revaluation of investments (1) -
Recognised share based payments 300 -
Unrealised losses on derivatives 60 -
Other unrealised exchange losses 31 -
Depreciation 19 -
Loans advanced to customers 11 (456) -
Net cash outflow from operating activities (2,249) (1,164)
Cash flows from investing activities (6,913) -
Acquisition of investments
Acquisition of subsidiary net of cash acquired (257) -
Acquisition of derivatives (488) -
Acquisition of intangible assets 6 (66) -
Acquisition of plant and equipment 7 (404) -
Loans advanced to associated company (872) -
Bank interest received 1,367 850
Net cash (outflow)/inflow from investing activities (7,633) 850
Cash flows from financing activities - 75,000
Proceeds from issue of ordinary share capital
Issue costs - (3,460)
Net cash inflow from financing activities - 71,540
Net increase in cash and cash equivalents (9,882) 71,226
Opening cash and cash equivalents 65,778 -
Closing cash and cash equivalents 55,896 71,226
Notes to the Unaudited Condensed Financial Statements
For the period from 1 January 2007 to 30 June 2007
1. General information
Aurora Russia Limited ('the Company') was incorporated in Guernsey on 22
February 2006, and was listed on AIM on 24 March 2006. The Company was
established to acquire interests in small and mid-sized private companies in
Russia, focusing on the financial, business and consumer services sectors.
2. Accounting Policies
Basis of consolidation and preparation
These unaudited interim condensed financial statements have been consolidated
and prepared on a basis consistent with accounting policies set out in the
Aurora Russia Limited audited annual report and financial statements for the
period ended 31 December 2006.
The Group's financial statements incorporate significant estimates, in
particular in respect of the amounts recorded for the fair value of the
investments. By their nature these estimates are subject to measurement
uncertainty and the effect on the Group's financial statements of changes in
estimates in future periods in future periods could be significant.
Interim accounts
The Company has complied with the requirements of IAS 34 Interim Financial
Reporting in respect of these interim financial statements.
The following additional accounting policies became effective during the period:
Revenue recognition
Revenue is recognised at the fair value of the consideration received or
receivable and represents amounts receivable for services provided in the normal
course of business, net of discounts, VAT and other sales related taxes
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss. Recoverable amount is the higher of fair value
less costs to sell and value in use. Where an impairment loss subsequently
reverses, the carrying amount of the asset is increased to the revised estimate
of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset in prior years. Impairment losses and
reversals of impairment losses are recognised immediately in the income
statement.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary at the date of acquisition. Goodwill is
initially recognised as an asset at cost and is subsequently measured at cost
less any accumulated impairment losses. Goodwill which is recognised as an asset
is reviewed for impairment at least annually. Any impairment is recognised
immediately in the income statement and is not subsequently reversed.
Loans and advances to customers
Loans and advances to customers are accounted for at amortised cost using the
effective interest method. Loans and advances are initially recognised when cash
is advanced to the borrowers at fair value inclusive of transaction costs. Loans
and advances are derecognised when the rights to receive cash flows from them
have expired.
Quoted investments
Quoted investments are designated as fair value through profit and loss. They
are initially recognised at cost on a trade date basis, and are subsequently
re-measured at fair value, which is considered to be the bid price as at the
balance sheet date. Upon the sale of these investments, any profit or loss is
taken to the Income Statement.
3. Administration and operating expenses
The net loss for the period has been arrived at after charging the following items of expenditure:
1 January 22 February
to 30 June to 30 June
2007 2006
#'000 #'000
Company 719 521
Investment management fee
Auditors' remuneration 15 9
Directors' remuneration 83 59
Share based payments 300 -
Other operating and administrative expenses 213 88
1,330 677
Kreditmart 15 -
Auditors' remuneration
Directors' remuneration 40 -
Other operating and administrative expenses 726 -
781 -
Total 2,111 677
4. Tax
1 January to 30 22 February to 30
June June
2007 2006
#'000 #'000
Group Group
Current tax charge 3 -
Deferred tax asset arising on losses carried forward (207) -
Net tax credit to the Income Statement (204) -
The Company is exempt from Guernsey taxation on income derived outside Guernsey
and bank interest earned in Guernsey. The Company has obtained exemption from
Guernsey Income Tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance
1989 and has paid an annual exemption fee of #600.
The Group is liable to tax at a rate of 24% arising on its activities in Russia.
The Group is liable to tax at a rate of 10% arising on its activities in Cyprus.
5. Goodwill
#'000
Group
Cost: 196
Recognised on acquisition of Flexinvest Limited
At 30 June 2007 196
Net book value:
At 30 June 2007 196
No impairment losses have been recognised in respect of the goodwill in the
period ended 30 June 2007. For further details in respect of the acquisition of
Flexinvest Limited, please refer to note 9.
6. Other intangible assets
#'000
Group
Cost: 66
Additions
At 30 June 2007 66
Depreciation: 1
Charge for the period
At 30 June 2007 1
Net book value:
At 30 June 2007 65
Other intangible assets comprises computer software, website development costs,
a company logotype and a promotional film.
The useful life of the intangible assets is estimated to be 3 years.
7. Plant and equipment
Fixtures & Furniture &
fittings equipment Total
#'000 #'000 #'000
Group Group Group
Cost: - 3 3
At 31 December 2006
Additions 200 204 404
At 30 June 2007 200 207 407
Depreciation: - - -
At 31 December 2006
Charge for the period 9 9 18
At 30 June 2007 9 9 18
Net book value:
At 31 December 2006 - 3 3
At 30 June 2007
191 198 389
The useful lives of the assets are estimated as follows:
Fixtures & fittings 3-4 years
Furniture 5 years
Equipment 3 years
8. Investment in subsidiaries - at fair value through profit and loss
2007 2006
#'000 #'000
Company Company
Kreditmart Finance Limited 12,579 12,500
Flexinvest Limited 346 -
12,925 12,500
The financial statements of the Group consolidate the results, assets and
liabilities of the subsidiary companies listed below:
Name of subsidiary undertaking Country of Class of % of class Principal
incorporation share held activity
Kreditmart Finance Limited Cyprus Ordinary 100.0% Consumer
finance
Flexinvest Limited Cyprus Ordinary 99.5% Investment
holding
9. Acquisition of subsidiary
Flexinvest Limited
Fair value on
acquisition
#'000
Company
Non-current assets 62
Quoted investments
Current assets 90
Cash and cash equivalents
Current liabilities (2)
Trade and other payables
150
Goodwill on acquisition 196
Cost of acquisition 346
Date of acquisition 27 June 2007
The cost of acquisition was paid entirely in cash. The Company purchased a 99.5%
stake in Flexinvest Limited, the remaining 0.5% stake being purchased by the
Company's subsidiary Kreditmart Finance Limited.
10. Investments - at fair value through profit and loss
2007 2007 2006 2006
#'000 #'000 #'000 #'000
Group Company Group Company
Whitebrooks Investments Limited 5,147 5,147 5,036 5,036
Unistream Bank 10,278 10,278 10,365 10,365
Quoted investments 63 - - -
Total investments at fair value through profit and 15,488 15,425 15,401 15,401
loss
Change in fair value of investments at fair value through profit and loss 2007 2006
#'000 #'000
Group Group
Whitebrooks Investments Limited 89 -
Unistream Bank (88) -
Total unrealised gains 1 -
These changes are in respect of local currency revaluation for reporting
purposes.
The Company acquired a 40.3% stake in Whitebrooks Investments Limited
('Whitebrooks') on 24 July 2006, diluted to 37.1% after the agreement of a
management option scheme.
The Company committed to acquire a 26% stake in Unistream Bank ('Unistream') on
30 November 2006, conditional upon CBR approval. At the balance sheet date funds
had been drawn down from this commitment to acquire a 17.7% stake. The remaining
8.3% stake was acquired on 26 July 2007 once the CBR had given its approval for
the Company to own more than 20% of a Russian bank.
As a result of the size of the stakes in these two companies, Whitebrooks and
Unistream could potentially qualify as associated companies, which would
normally require that they be equity accounted in the books of the Company.
However, the Company has taken advantage of the exemption available to it under
IAS 28, and hence accounts for these as investments at fair value through profit
and loss.
In the Group's 2006 financial statements, the investments in Whitebrooks and
Unistream were deemed to be denominated in US dollars, however with effect from
1 January 2007, following a review of the Group's hedging strategy, these
investments have been redenominated into Russian roubles, as it was felt that
this best reflected the underlying nature of the currency exposure of the
investee companies.
In the view of the Valuation Committee, insufficient time has elapsed from the
acquisition of the investments to permit any meaningful upwards revaluation of
the investments. There are no factors of which the Committee is aware that would
lead it to value the investments at less than cost price in their currency of
denomination.
In addition to its investment in the shares of Whitebrooks, the Company has
provided the investee company with a loan facility of US$5 million. The drawn
down tranches of the loan are each repayable within twelve months of the
drawdown date, however it is likely that further drawdowns will be made in order
to repay any amounts still outstanding at maturity. In the event of default the
loan is convertible into ordinary shares of the borrower.
The outstanding balance as at 30 June 2007 was as follows:
2007 2006
#'000 #'000
Group and Group and
Company Company
Loans drawn down plus capitalised interest 1,450 563
11. Loans and advances to customers
2007 2006
#'000 #'000
Group Group
Residential mortgages 456 -
The mortgages are secured upon borrowers' private residences, are repayable in
equal monthly installments and mature between 2014 and 2022. Interest is charged
at rates between 11% and 13%.
12. Derivative assets/(liabilities)
The Group utilises currency options to hedge its rouble-denominated investments
against any significant devaluation in the value of the rouble against sterling.
Forward foreign exchange contracts are utilised to hedge the loan receivable
from Whitebrooks against movements in the sterling exchange rate against the US
dollar. At the balance sheet date the fair value of currency derivatives was as
follows:
2007 2006
#'000 #'000
Group and Group and
Company Company
Non-current derivative assets 414 -
#20m sterling/rouble 3 year call option @ 56.87 maturing 1 July 2010
Current derivative assets/(liabilities) 5 (8)
Sterling/US dollar forward foreign exchange contracts
The following contracts were open at the Balance Sheet date (Group and Company):-
Sell US$ 1,600,000 at 1.9973 to buy #801,081 for value 31 December 2007;
Sell US$ 1,200,000 at 2.0005 to buy #599,850 for value 31 December 2007.
13. Trade and other payables
2007 2007 2006 2006
#'000 #'000 #'000 #'000
Group Company Group Company
Kreditmart Finance Limited - undrawn investment - - - 10,166
commitment
Unistream Bank - undrawn investment commitment 3,181 3,181 10,214 10,214
Expense accruals 327 180 148 132
3,508 3,361 10,362 20,512
14. Events after the balance sheet date
On 17 July 2007 the Company subscribed for a further 60,000 shares in Flexinvest
Limited at a cost of #6,104,700. These funds are held in cash or cash
equivalents pending investment in a banking platform.
On 26 July 2007 the Company completed its purchase of Unistream Bank following
receipt of Central Bank of Russia approval for the Company to own more than 20%
of a Russian Bank.
On 27 September 2007 the Board approved the investment of an additional #10
million in Kreditmart.
15. Related party transactions
Transactions between the Company and any subsidiaries which are related parties
have been eliminated on consolidation and are not disclosed in this note.
The Company pays fees to Aurora Investment Advisors Limited ('AIAL') for its
services as investment manager and advisor. The total charge to the Income
Statement during the period was #719,470 (2006: #521,277). There were no
outstanding fees at the period end (2006: Nil).
John McRoberts and James Cook each hold 47.5% of the ordinary share capital and
42.5% of the non-voting preference share capital of AIAL. A trust created by Sir
Trevor Chinn (in which he has no interest) holds 10% of the non-voting
preference shares in AIAL.
The Company pays fees to Investec Administration Services Limited ('IASL') for
its services as administrator. The total charge to the Income Statement during
the period was #40,000 (2006: #26,250), of which #18,750 was outstanding at the
period end (2006: #18,750). Steve Coe, a director of the Company, served as a
director of IASL until his resignation on 26 April 2007.
The Directors of the Company and of Kreditmart OOO received fees for their
services. The total charge to the Income Statement during the period was
#123,263 (2006: #58,685), of which #37,786 was outstanding at the period end
(2006: Nil).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKFKNABKKQCB
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