Annual Financial Report

RNS Number : 0637H

Aurora Russia Limited

06 July 2012

6 July 2012

Aurora Russia Limited ("Aurora Russia" or the "Company")

Results for the twelve months ended 31 March 2012

Financial highlights

· Net asset value per share for the Company as at 31 March 2012 of 66.8p per share (Net asset value £76m) down from 83.6p per share at 31 March 2011

· The movement in the value of the portfolio companies reflects principally the lower valuation of comparable companies following a period of weakness in the equity markets and in Russian markets particularly

· Consolidated cash and cash equivalents at 31 March 2012 were £5.6 million

Portfolio highlights

OSG

· Revenues for the 12 months ended 31 March 2012 were £18.8m compared to £14.8m for the same period in 2011

· EBITDA was flat at £2.2m as at 31 March 2012

· Equity valuation of Aurora Russia's stake in OSG at 31 March 2012 was £28.2m compared to the valuation at 31 March 2011 of £28.8m

Unistream Bank

· Unistream's share in the Russia-outbound transfer market is estimated at 15.6% as at Q1 2012

· Revenues for the twelve month period ended 31 December 2011 were RUR 2.3bn, up 12% YoY

· EBITDA of RUR173m for 2011, up 160% YoY

· Equity valuation of Aurora Russia's stake in Unistream at 31 March 2012 was £16.3m, compared to the valuation at 31 March 2011 of £18.7m

Superstroy

· Revenues grew by 29% YoY for the twelve months ended 31 December 2011 to RUR8.8bn

· EBITDA, before non-recurring costs, of RUR167m for 2011, up 16% YoY

· Equity valuation of Aurora Russia's stake in Superstroy at 31 March 2012 was £15.0m, compared to the valuation at 31 March 2011 of £24.5m

Flexinvest

· Flex Bank's new strategy of taking deposits and issuing credit cards has been a great success and at the beginning of June 2012, Flex Bank had approximately 1,700 cards in issue with a total outstanding balance of RUR297 million and a total credit limit of RUR361 million

· Equity valuation of Aurora Russia's stake in Flexinvest Bank at 31 March 2012 was £15.1m, compared to the valuation at 31 March 2011 of £18.5m

Commenting, Geoff Miller, Chairman of Aurora Russia, said:

"The near-term global outlook is challenging and especially so in Europe. This has had an impact on both the immediate M&A and IPO market conditions which has also had an effect on progress with our realization strategy. We remain committed to achieving our realization strategy successfully and continue to focus on this. Whilst the macroeconomic environment is challenging, our portfolio companies continue to grow thanks to their solid platforms and leading market positions. We are confident of the outlook for our portfolio companies for 2012 and beyond which is also reflected in good growth expectations for the Russian economy."

Enquiries:

Aurora Russia Limited

Geoff Miller +44 (0) 7408 830719

Numis Securities Limited

Nominated Adviser: Hugh Jonathan +44 (0)20 7260 1000

Corporate Broking: Rupert Krefting / Nathan Brown

FTI Consulting

Ed Gascoigne-Pees +44 (0) 20 7269 7132

Jack Hickey

ANNUAL REPORT

For the year ended 31 March 2012

AURORA RUSSIA LIMITED

Company Summary

The Company Aurora Russia Limited ('the Company') is a Guernsey registered closed-ended investment company and its shares are traded on the Alternative Investment Market of the London Stock Exchange ('AIM'). It was incorporated on 22 February 2006 and dealings commenced on AIM on 20 March 2006.

Investing policy The Company's investing policy 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, where the Directors believe there is potential for growth together with viable exit opportunities.

The Manager The Company has appointed Aurora Investment Advisors Limited (the 'Manager') to provide investment advisory and management services. The Manager is responsible for identifying and developing investment opportunities for the Company.

Registered address Trafalgar Court

Admiral Park

St Peter Port

Guernsey

GY1 2JA

Website details www.aurorarussia.com

Company registration no 44388

Chairman's Statement

Introduction

"I am pleased to present the audited results of Aurora Russia Limited for the year ending 31 March 2012.

As announced on 5 August 2011, the Board is committed to a clear exit strategy for the Company's investments and the Company and the Manager are in discussions with potential strategic buyers and financial buyers for the assets.

We have also considered exiting through the IPO market, and this remains a potential route to fully exit one or more of the investments. This is, however, subject to a significant improvement in market sentiment. The appetite for IPOs did improve briefly earlier this year, but the increased uncertainty which surrounds the Eurozone and the global economy in general, has put paid to any of the renewed interest that was developing in the IPO markets. That being said, if sentiment improves I believe that this route to exit could once again become viable.

The other two options open to the Company would be to sell the entire portfolio or to look to seek a corporate exit. The former we would only consider if the Board believed that the proceeds would reflect a fair risk-adjusted return as compared to realising the portfolio individually; the latter would only be considered if it protected the economic interest of current shareholders in the existing assets, provided a cash exit from those assets as a default, did not adversely affect running costs for existing investors and protected the governance of existing assets.

The Company will make further announcements on progress in relation to the realisation strategy when appropriate. However, the Company's net asset value ("NAV") has fallen in the period, reflecting principally the lower valuation of comparable companies following a period of weakness in the equity markets and in Russian markets particularly.

Despite the current market sentiment, Russian economic growth continues with the most recent growth expectations from the IMF of GDP growth for 2012 at 4%. The portfolio companies have continued to demonstrate growth and the outlook for the rest of the year is positive.

In December 2011, the Board visited all of the portfolio companies and had presentations from the management of each of the companies. The meetings reinforced the view of all of us on the Board that these are high quality businesses with strong management, added to which three out of four have leading market positions.

The Manager

With the support of the Board, the Manager continues to manage the investments and work on the Company's clear exit strategy. To reflect the timeline indicated regarding the disposal of the investments, the Manager agreed with the Board at the end of April 2012 to an amendment to the management agreement regarding its notice period. The notice period has now been reduced from a rolling two year notice period to a rolling six month notice period with notice able to be given no earlier than 31 October 2013.

Results

For the 12 months to 31 March 2012, Aurora Russia Limited recorded a loss of £18.6 million (2011: £4.7 million) or 16.48p per share (2011: 4.16p), calculated based on the audited consolidated statement of comprehensive income. The NAV of the Company as at 31 March 2012 was £75.1 million (2011: £94.1 million) or 66.8p per share (2011: 83.6p). Consolidated Cash and cash equivalents at 31 March 2012 were £5.6 million (2011: £6.7 million).

Administration and operating expenses of £24.8 million (2011: £21.7 million) include Company costs of £3.1 million (2011: £4 million) or 4.4% (2011: 4.2%) of the current NAV. Operating costs of the Company's wholly owned subsidiaries were £21.7 million (2011: £17.7 million).

Composition of the Board

This year, the Board said farewell to Dan Koch, the Chairman since 8 September 2008, Alexandr Dumnov who served on the board from 17 June 2010 to 1 August 2011 and Ben Morgan who served on the Board from the listing of the Company in February 2006 to 28 September 2011. Gilbert Chalk and I joined the Board in June 2011 and Tim Slesinger joined the Board in August 2011. I believe that we have a strong Board with a diversity of experience and specialist knowledge that adds greatly to the quality of our debate and, I believe, our decision making.

I would like to thank all of the members of the Board, past and present, for their considerable contributions to the Company over the period. Despite significant changes to the Board, the focus on delivering shareholder value has remained throughout.

Investment Review

The Company sold Kreditmart OOO for a nominal consideration in December 2011, retaining an option over 10% of the purchasing entity into which Kreditmart will be integrated and which currently operates an early stage mortgage and consumer loan brokerage. Although the company is small it has a good management team. The rationale for entering into this transaction was to stop the cash burn at Kreditmart which continued to undermine the NAV of the Company and consequently value for our shareholders.

The Company has four remaining investments:

• 92.8% of OSG, a regional market leader in records management;

• 24.3% of Superstroy, one of the leading DIY retailers in Russia;

• 26.0% of Unistream Bank, a leading Russian money transfer company; and

• 100.0% of Flexinvest Bank which provides retail banking services.

In all of our investee companies the local management and staff have remained loyal and committed through this period and I would like to thank them for their hard work and dedication.

Portfolio Valuation

A valuation of the investment portfolio was performed at 31 March 2012, resulting in a decrease in value from £90.5 million at 31 March 2011 to £74.6 million. This valuation, recommended by the Valuation Committee of the Board, was prepared by the Manager and audited by the Company's auditor and formally adopted by the Board on 5 July 2012. These valuations are prepared for accounting purposes only and comply with International Private Equity and Venture Capital Board Valuation Guidelines. The resultant valuations of investments included in the Company's financial statements will not necessarily reflect the market value that a third party would be prepared to pay for these businesses.

The current valuation of Aurora Russia Limited's shareholdings reflects changes to the previous year valuation performed for 31 March 2011 as follows:

• 92.8% of OSG is valued at £28.2 million, down 2.1%

• 24.3% of Superstroy is valued at £15.0 million, down 38.8%

• 26% of Unistream is valued at £16.3 million, down 12.8%

• 100.0% of Flexinvest Bank is valued at £15.1 million, down 18.4%

The total value of the investments is £74.6 million equal to a 17.6% write-down on the values in the Aurora Russia Limited's 31 March 2011 year-end accounts and a 3% write-down on the values in the interim accounts as of 30 September 2011.

It is important to note that the movement in the values of the portfolio companies has been impacted by both currency translation effects and the decline in listed comparable companies both in Russia and abroad. Over the period there was an approximately 3.0% unfavourable movement in the £/RUR exchange rate. In addition the RTS Index (denominated in US Dollars) fell 19.9% and the Rouble denominated MICEX Index dropped 16.3%.

Of the changes in valuation, both Unistream and Flexinvest Bank were broadly in line with the movement of the market indices. Unistream's valuation reflects its performance and the valuation multiples of its peers; the latter has as in previous years been valued on an adjusted net asset value basis, as detailed in the Investment Manager's Report. The fall in the valuation of OSG was less than that of the market and reflects continued strong revenue growth. Superstroy's valuation fell significantly, despite the fact that the valuation multiples of its peer group expanded. The reason for this was that the basis of valuation was changed, from being based on forecasts for two years hence to current year expectations.

Outlook

The near-term global outlook is challenging and especially so in Europe. This has had an impact on both the immediate M&A and IPO market conditions which has also had an effect on progress with our realisation strategy. We remain committed to achieving our realisation strategy successfully and continue to focus on this.

Whilst the macroeconomic environment is challenging, our portfolio companies continue to grow thanks to their solid platforms and leading market positions. We are confident of the outlook for our portfolio companies for 2012 and beyond which is also reflected in good growth expectations for the Russian economy.

Investment Manager's Report

Overview

Russian GDP grew 4.3% in 2011 according to the IMF, which predicts 4.0% growth in 2012 and 2013. In Q1 2012 GDP grew 4.9% according to preliminary data from the Russian National Statistic Bureau.

Russia is not immune to the Euro-zone crisis and growth will be impacted should the situation in Europe deteriorate any further and in particular if the prices of commodities are adversely affected. However, economists generally believe that compared to the situation leading up to the 2008 crisis, Russia is currently less vulnerable owing to the reduction in the external leverage levels within both banks and corporates.

The portfolio performance highlights:

• OSG continued to drive box growth, with an impressive 71% growth in the Russian regions which resulted in the number of boxes in storage growing by 31% year-over-year for its financial year ending 31 March 2012;

• Unistream delivered its highest ever annual profit for the year ending 31 December 2011;

• Superstroy successfully opened its largest hypermarket store in Yekaterinburg in April 2011;

• We implemented a new credit card strategy in Flex Bank with results so far exceeding our most optimistic expectations;

• Last year we disposed of Kreditmart to Lespender Limited to stop its cash burn while maintaining a share in the upside should this business become successful in the future. The Company also entered into an option agreement to acquire of 10% of the purchasing company for £200 ($330) to be used anytime over a 10 year period from closing. The option is non-dilutable.

Our outlook for 2012 is generally optimistic on the performance of all our four companies based on their financial and operational performance year-to-date.

We expect that the exit environment in 2012 will be effected by the economic uncertainties globally and in Europe in particular. However, according to a recent study by Mergermarket, the value of the Russian M&A market was € 54 billion in 2011 or 6% lower than in 2010 in value terms, but the deal volume for transactions valued at €250 million and below actually grew in 2011. The other encouraging factor is that inbound M&A remained strong, suggesting that foreign firms with cash to spend are seeing Russia as an attractive place to do business. The discussions we have had with strategic buyers for some of our companies confirm this. We have not concluded on any of these discussions yet, but continue to work to achieve successful exits for each of the investments in a timely manner.

We do believe that should the market improve there is a potential to IPO any one of OSG, Superstroy or Unistream. Russian companies are expected to raise $4.7 billion on the London stock exchanges in 2012, up from $3.7 billion in 2011,far outweighing the $207 million raised in Moscow public offerings last year.

We would like to reaffirm that as the Manager of the investments, we are not only committed to finding good exits for Aurora's investments but believe strongly that in order to achieve this we need to build value in each by driving growth and capturing market share. Building value in a mid-market growth company demands critical judgement on the trade off between growth and EBITDA margins. Russia is a young, developing market with enormous potential; we believe that some compromise on EBITDA margins is therefore sensible to maintain growth, but we are always mindful not to simply "buy" turnover at any price. We are confident that this strategy will be rewarded when an exit for any of the investments occurs.

OSG Records Management

In 2011 and Q1 2012 OSG continued its expansion in Russia and internationally and now operates 44 archive facilities in seven countries.

OSG's audited accounts for the year ending 31 March 2012 show an increase in revenues over the year ending 31 March 2011 of 27% from £14.8 million to £18.8 million. EBITDA, however, remained flat year-over-year at £2.2 million. As OSG expanded its storage and services business in the Russian regions, it incurred non-recurring costs of £0.6 million which are largely responsible for its reduced EBITDA margin.

For Q1 2012 OSG reported revenues of £4.9 million compared to £4.0 million for the same period in 2011. The EBITDA margin reached 13%, or £0.7 million verses £0.5 million for the same period last year. As of the end of March 2012 OSG had 3.3 million boxes in storage showing a 31% annual growth rate compared to March 2011.

The equity valuation of Aurora Russia's stake in OSG at 31 March 2012 was £28.2 million. This is net of the liability associated with the management options in OSG valued at £1.4 million and net of third party debt less cash of £5.0 million. This valuation is a decrease of 2% on the equity value as at 31 March 2011 of £28.8 million.

Unistream Bank

According to the Central Bank of Russia ("CBR") the volume of Russia outbound transfers in Q1 2012 grew 24% over Q1 2011. Russia inbound transfers in Q1 2012 grew 35.5% over Q1 2011. Based on these statistics, Unistream had approximately 15.6% of the outbound money transfer ("MT") market and 10% of the inbound MT market compared to the 16.6% and 11.0% respectively that it had in 2011.

Unistream has now distributed approximately 1.3 million loyalty cards to its customers and the company has recently taken the important step of strengthening its current network by entering the retail market, distributing its money transfer product through retail chains such as Megafon which operates 1,500 retail stores in Russia.

Unistream transferred RUR136.7 billion in 2011, 15% more than in 2010. Total fee and interest income for the same period was RUR2.3 billion, a 12% increase compared to 2010. Based on the audited accounts, 2011 EBITDA reached RUR173 million, up 160 % year-over-year.

In the first three months of 2012 volumes continued to grow at 15% from RUR25.0 billion to RUR28.8 billion. Total revenues were RUR476 million increasing 9% compared to the prior year period. For the first three months of the year the company showed a loss of RUR50 million compared to a loss of RUR30 million over the same period in 2011. The increased size of the first quarter loss is primarily related to increased costs related to growth and approximately RUR6 million of non-recurring costs. However, the budget for 2012 shows good growth in profitability over 2011.

The equity valuation of Aurora Russia's stake in Unistream at 31 March 2012 was marked down to £16.3 million, a decrease of 12.8% on the valuation at 31 March 2011 of £18.7 million.

Superstroy

Superstroy is the leading DIY company in the Urals Region of Russia with 45 stores and a total trade space of approximately 107,000 m2.

Superstroy performed well for the year ended 31 December 2011 growing its sales year on year by 29% from RUR6.9 billion to RUR8.8 billion. Like-for-like ("LFL") growth was 14% while additional growth came from a 24% growth in trade space during the year. Based on the audited accounts, EBITDA was approximately RUR167 million for the year, while adjusted for the non-recurring costs it reached RUR244 million.

Based on the unaudited management accounts, in Q1 2012 Superstroy had a 21% growth in revenues from RUR1.61 billion for the same period in 2011 to RUR1.95 billion in 2012, with LFL growth of 8%. March 2012 YTD EBITDA is slightly negative by RUR2.2 million however it has performed very well against a budget of a negative RUR24 million and against March 2011 YTD of a negative RUR64 million. The increase in profitability versus last year is largely due to higher gross margins and an absence of new store openings in Q1 2012.

The equity valuation of Aurora Russia's stake in Superstroy at 31 March 2012 was marked down to £15.0 million, a decrease of 38.8% on the valuation at 31 March 2011 of £24.5 million.

Flexinvest Bank

As was announced in Aurora Russia's recently published trading update, Flex Bank's new strategy of taking deposits and issuing credit cards has been a great success. It is the manager's view that the credit card business, rather than being a detriment to a sale of the bank, should attract a premium rating for the bank. It is worth mentioning that recently it was reported that Baring Vostok Private Equity invested $50 million into Tinkoff Credit Systems Bank, one of the larger credit card issuers in Russia which has a distribution model similar to that of Flex Bank.

All of Flex Bank's credit card (Mastercard) customers are sourced through the internet with applications filled out on http://www.flexbank.ru/. The bank's approval rate has been 12.3% on average and the average limit per credit card is approximately RUR0.2 million. The APR averages approximately 30% with rates at 23.9% for outstanding amounts on credit card purchases and 41.9% on amounts withdrawn in cash.

At the beginning of June 2012, Flex Bank had approximately 1,700 cards in issue with a total outstanding balance of RUR297 million and a total credit limit of RUR361 million. A central tenet of the bank's strategy is to fund the credit card book with retail savings deposits and it has been very successful in attracting deposits which at the beginning of June stood at RUR375 million, the balance of deposits budgeted for the entire year to December 2012.

When valuing the bank, we adjust its assets to its fair value. As of 31 March 2012, Flex Bank had an adjusted book value of £15.1 million, down 18.4% from £18.5 million as of 31 March 2011. Assets at 31 March 2012 include: 1) a net mortgage book of £5.6 million; 2) a net credit card book of £2.9 million; 3) the banking license valued at £2.5 million; 4) £4.2 million of cash and cash equivalents; and 5) other assets of £3.8 million. Liabilities at 31 March 2012 include customer accounts and deposits of £3.6 million, and other liabilities of £0.3 million.

In June this year £1.0 million of uninvested cash was repatriated to Aurora Russia Limited to cover operating cash flow needs post the balance sheet date.

Conclusion

We are optimistic about the performance of all four companies in our portfolio. To the extent that the economic environment allows, we are committed to building and delivering value to Aurora Russia shareholders.

Directors

Geoffrey Miller - Non-executive Chairman

Mr Miller is an investment professional with over twenty years experience in the investment company industry, and has also worked in Russia. Now an Executive Director of Greenwich Loan Income Fund Limited, a Guernsey-based investment company, he has been an analyst, fund manager and non-executive director of investment companies since 1987. He has worked in many other areas of financial services, having been a director of both private client wealth manager Brewin Dolphin and asset manager Exeter Asset Management. In the investment banking arena he was Director, Research of London-based Bridgewell Securities Limited and Head of Research Marketing at Russian investment bank Troika Dialog in Moscow. Mr Miller is a resident of Guernsey.

Grant Cameron - Non-executive Director

Mr Cameron is Managing Director of Investec Asset Management Guernsey Limited. He is a member of the South African Institute of Chartered Accountants and the Financial Planners Association of South Africa. In 1988 Mr Cameron joined KPMG South Africa and was transferred in 1991 to KPMG's Miami office, where he held the position of Manager of Financial Services. Mr Cameron moved to Investec Group in 1996 and was Operations Director of Investec Fund Managers SA Limited from January 1996 until February 2001. Mr Cameron acts as a Director of a number of investment funds, and was previously chairman of the Guernsey Investment Funds Association. He graduated with a B.Comm in 1987 and a B.Acc in 1989 from the University of Witwatersrand.

Gilbert Chalk - Non-executive Director

Mr Chalk is Chairman of Castle Private Equity AG a leading Private Equity and Venture Capital Fund of Funds that is managed by LGT Capital Partners and listed on the Zurich Stock Exchange. In addition he is a Director of Constantine Group Plc, a substantial Private Group with interests in Logistics, Manufacturing, Property and Alternative Energy and Vantage Goldfields Limited, a South African Gold producing company, listed on the ASX. From 2000 to 2010 he was Chairman of the Baring English Growth Fund and its Investment Committee. The Fund invested in small and mid cap buy-outs in the UK. Previously he was the Founder and Managing Director of Hambro European Ventures, subsequently named Duke Street Capital. He has served as a Council Member of the British Venture Capital Association and as Chairman of its Taxation Committee conceived and formulated Venture Capital Trusts. He has also worked as Head of Corporate Finance at ABSA Bank (UK) and as a Corporate Finance executive at Hill Samuel Bank and Brandts Limited. He holds an M.B.A. from Columbia University, New York.

Timothy Slesinger - Non-executive Director

Mr Slesinger is a British citizen, resident in the UK. He founded OSG Records Management ZAO in Moscow in 1998. During the 12 years he was CEO and then Director, the Company grew to become a market leader in both physical document and on-line data management in Central & Eastern Europe. OSG's clients range from international Fortune 500 companies, highly regarded businesses local to the region and governments. He sold OSG to Aurora Russia in 2009. Mr Slesinger sits on Aurora Russia's Management Engagement Committee and is Chairman of the Remuneration Committee.

John Whittle - Non-executive Director

John is a resident of Guernsey. He is a Chartered Accountant and holds the IoD Diploma in Company Direction. He is a non-executive director of International Public Partnerships Ltd (FTSE 250) and India Capital Growth Fund Ltd and Advance Frontier Markets Fund Ltd (AIM). He also acts as non executive director to several other Guernsey investment funds. He was previously Finance Director of Close Fund Services, a large independent fund administrator, where he successfully initiated a restructuring of client financial reporting services and was a key member of the business transition team. Prior to moving to Guernsey he was at Price Waterhouse in London before embarking on a career in business services, predominantly telecoms. He co-led the business turnaround of Talkland International (now Vodafone Retail) and was directly responsible for the strategic shift into retail distribution and its subsequent implementation; he subsequently worked on the £20 million private equity acquisition of Ora Telecom.

Directors' Report

The Directors of Aurora Russia Limited ('the Company') present the annual report and audited financial statements of the Company and the Group for the year ended 31 March 2012.

Background

The Company was incorporated in Guernsey on 22 February 2006 and commenced activities on 20 March 2006. The Company is a closed-ended investment company and is registered in Guernsey.

Principal activity

The principal activity of the Company is private equity investment in Russia in the financial, business and consumer services sectors with the objective of providing Ordinary Shareholders with an attractive level of capital growth from investing in a diversified private equity portfolio.

Listing

The Company is traded on the Alternative Investment Market of the London Stock Exchange ('AIM'), and has complied with the relevant provisions of the rules governing the admission to and operation of a company traded on the AIM. During the year the Company also became a member of the Association of Investment Companies ('AIC').

Substantial shareholdings

The Company's top ten shareholders as at 31 March 2012 were:

	Number of shares held	Cumulative Percentage total

Standard Life Investments	16,616,339	14.77%
Directors	14,710,977	27.85%
Scottish Widows	8,226,149	35.16%
Metage Capital	8,107,254	42.37%
South Yorkshire Pension Authority	5,750,000	47.48%
M&G Investment Management	5,300,000	52.19%
Aurora Investment Advisors	3,970,841	55.72%
James Bernard Cook	3,743,069	59.04%
Kestrel Services	3,356,596	62.03%
Natixis Private Banking	3,250,000	64.92%

Business review

The Group's risk exposure, management objectives and policies are disclosed in note 29 to these financial statements.

A review of the business during the year is contained in the Chairman's Statement.

Results and dividends

The results for the year are set out in the attached financial statements.

The Company has not proposed or declared a dividend for the year ended 31 March 2012 (2011: £nil).

Incorporation

The Company was registered in Guernsey, Channel Islands on 22 February 2006, with registered number 44388.

Directors

The Directors during the year and to date were as follows:

	Date of Appointment	Date of resignation
Dan Koch	11 August 2008	22 June 2011
Grant Cameron	24 February 2006
James Cook	22 February 2006	17 June 2011
Ben Morgan	24 February 2006	28 September 2011
John Whittle	17 January 2008
Alexandr Dumnov	17 June 2010	1 August 2011
Geoffrey Miller - Chairman from 22 June 2011	22 June 2011
Gilbert Chalk	22 June 2011
Timothy Slesinger	22 August 2011

Directors' and other interests

Directors who held office during the year had the following interests in the shares of the Company as at 31 March 2012:

				Number of ordinary shares
Geoffrey Miller				250,000
Gilbert Chalk				50,000
Timothy Slesinger				14,310,977

The Directors who held office during the year have interests in the contracts with the Company as follows:

Legal services: Ben Morgan is a partner of Carey Olsen in Guernsey, which provides legal services to the Company.

Directors' remuneration

The Directors received the following emoluments during the year:

	2012 Fees	2011 Fees
Dan Koch	29,167	95,000
Grant Cameron	20,000	20,000
Gilbert Chalk	15,495	-
Timothy Slesinger	12,174	-
Geoffrey Miller	35,467	-
Alexandr Dumnov	11,667	15,778
John Whittle	30,000	28,944
Ben Morgan	10,000	20,000
Total	£163,970	£179,722

Geoffrey Miller was appointed 22 June 2011 with remuneration of £5,000 per quarter. It was decided by the Remuneration Committee that Geoffrey Miller's remuneration would increase to £50,000 per annum as of 1 August 2011 when he was appointed Chairman. As from 1 April 2012 Grant Cameron and Gilbert Chalk's fees have been increased to £26,000 per annum. As from 1 April 2012 John Whittle's fees have been increased to £36,000 per annum.

There are no service contracts in existence between the Company and any Director but each of the Directors was appointed by letter of appointment which sets out the main terms of his appointment.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

The Companies (Guernsey) Law, 2008, (the "Law") requires the Directors to prepare financial statements for each financial year. Under the Law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and applicable law.

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and the Company for that period.

In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and the Company and to enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities

Disclosure of information to the auditor

The Directors who held office at the date of this Directors' report confirm that, so far they are each aware, there is no relevant audit information of which the Group's Auditor is unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Group's Auditor is aware of that information.

Going concern

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement on pages 4 to 6 as well as the financial position of the Company, its cash flows, liquidity position and borrowing facilities. In addition, note 29 to the financial statements include the company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Company has considerable financial resources across different geographic areas and industries. As a consequence, the Directors believe that the Company is well placed to manage its business risks successfully despite the current uncertain economic outlook.

Having made appropriate enquiries, the Directors have reasonable expectation that the Group and the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Group and the Company financial statements.

Auditor

A resolution for the re-appointment of KPMG Channel Islands Limited will be proposed at the forthcoming annual general meeting.

By order of the Board,

Director Director

5 July 2012

Corporate Governance

AIC Code

As a company incorporated in Guernsey, the Company was not for the year under review required to comply with the UK Corporate Governance Code published by the Financial Reporting Council (the "UK CG Code") nor the Association of Investment Companies' (the "AIC") Code of Corporate Governance (the "AIC Code"). During the year under review up until 28 September 2011, the Company complied with the UK CG Code. Upon the Board's decision for the Company to join the AIC, it was resolved to adopt and report against the AIC Code of Corporate Governance. The Company has adopted the principles and recommendations of the AIC Code by reference to the AIC's Corporate Governance Guide for Investment Companies (the "AIC Guide"). A framework of best practice for Guernsey domiciled member companies was issued by the AIC in March 2012.

The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the Combined Code and sets out additional principles and recommendations on issues that are of specific relevance to the Company.

The Company, in the Directors' opinion, complied with the provisions of the AIC Code for the financial year ended 31 March 2012.

The Board and Board Committees

All the Directors of the Company are non-executive Directors. The Board does not feel it is appropriate to appoint a chief executive or senior independent Director as day-to-day management of the Company's assets is delegated to the Manager.

The Chairman is Geoff Miller. The Directors consider that the Chairman is independent for the purposes of the AIC Code. The Board considers that, with the exception of James Cook, the Directors who held office during the year are independent of the Manager. Mr James Cook resigned as a director on 17 June 2011.

The full Board meets at least four times a year to consider, as appropriate, such matters as overall strategy, investment performance, share price performance, the shareholder profile of the Company, communications with shareholders, transactional and other general matters affecting the Company. The Board considers that it meets sufficiently regularly to discharge its duties effectively.

At the start of the year the Audit Committee comprised Grant Cameron, Ben Morgan and John Whittle. The Audit Committee is responsible for ensuring that the financial performance of the Company is properly reported on and monitored. The Audit Committee reviews the annual and half-yearly accounts, results, announcements, internal control systems and procedures and accounting policies of the Company. It meets a minimum of twice a year but where appropriate the meetings shall coincide with key dates in the Company's financial reporting cycle. John Whittle is the Chairman of the Audit Committee. Ben Morgan resigned as a director on 28 September 2011. Gilbert Chalk and Tim Slesinger were appointed to the Audit Committee on 24 August 2011. After the year end on 1 May Mr Slesinger retired from the Audit Committee.

At the start of the year the Valuation Committee comprised Ben Morgan, John Whittle, Grant Cameron and Dan Koch. It is responsible for valuing proposed investments and revaluing investments on an ongoing basis. It meets at least twice a year. John Whittle is the Chairman of the Valuation Committee. Ben Morgan and Dan Koch resigned as directors on 28 September 2011 and 22 June 2011 respectively. Gilbert Chalk and Tim Slesinger were appointed to the Valuation Committee on 24 August 2011. After the year end on 1 May Mr Slesinger retired from the Valuation Committee.

At the start of the year the Remuneration Committee comprised Ben Morgan, John Whittle and Dan Koch. It is responsible for reviewing the performance of Directors, the scale and structure of remuneration and Directors' letters of appointment. It meets a minimum of twice a year. Ben Morgan and Dan Koch resigned as directors on 28 September 2011 and 22 June 2011 respectively. Gilbert Chalk and Tim Slesinger were appointed to the Remuneration Committee on 24 August 2011. After the year end, Mr Miller was appointed to the Remuneration Committee on 1 May 2012.

The Board established a Management Engagement Committee on 24 August 2011, which initially comprised Gilbert Chalk, Geoffrey Miller, Grant Cameron, Timothy Slesinger and Ben Morgan. Ben Morgan resigned as a director on 28 September 2011. The Management Engagement Committee is responsible for reviewing the terms of agreements with its service providers, including the provisions relating to the applicable service provider's remuneration, and satisfy itself that they are market standard and comparable with those charged to peer group companies and ensure that the Service Agreements' terms are in accordance with industry norms and in the Company's and shareholders' best interests. It meets at least once per year. After the year end, on 1 May 2012 Geoffrey Miller and John Whittle were appointed to the Management Engagement Committee.

The Board receives information that it considers to be appropriate to enable it to discharge its duties. Directors usually receive board papers several days in advance of board meetings and are able to consider in detail any issues to be discussed at the relevant meeting.

All the Directors are entitled to have access to independent professional advice at the Company's expense where they deem it necessary to discharge their responsibilities as Directors.

The Board has delegated day-to-day management of the Company's assets to the Manager. All decisions relating to the Company's investment policy, investment objectives, investment decisions, dividend policy, gearing, corporate governance procedures and strategy in general are, however, reserved for the Board. The Board evaluates the Manager's performance on an annual basis and monitors the Manager to ensure that the Company's assets are being managed in accordance with the guidelines set out by the Board.

The number of meetings of the full Board and those committees attended by each Director from 1 April 2011 up to the date of this report is set out below.

	Audit Committee		Valuation Committee		Remuneration Committee		Management Engagement Committee
	Held	Attended	Held	Attended	Held	Attended	Held	Attended
Dan Koch	N/A	N/A	3	2	1	1	N/A	N/A
Gilbert Chalk	1	1	1	1	1	1	1	1
Geoffrey Miller	N/A	N/A	N/A	N/A	1	1	1	1
Tim Slesinger	1	1	1	1	1	1	1	1
Ben Morgan	1	1	3	2	3	3	N/A	N/A
Grant Cameron	2	2	3	3	N/A	N/A	1	1
John Whittle	2	2	3	3	4	4	1	1
Alexandr Dumnov	1	1	2	1	N/A	N/A	N/A	N/A
	Quarterly		Ad hoc
	Held	Attended	Held	Attended
Dan Koch	2	2	3	1
Gilbert Chalk	4	4	9	1
Geoffrey Miller	4	4	9	7
Tim Slesinger	3	3	6	2
Ben Morgan	3	3	6	6
Grant Cameron	5	5	8	4
John Whittle	5	5	9	9
Alexandr Dumnov	2	2	2	0

Performance of Board and proposal for re-election

The performance of each Director is appraised by the Remuneration Committee prior to the convening of the Annual General Meeting for each year. The performance of each Board committee is appraised by the Board as a whole. In accordance with the AIC Code and the Company's articles of incorporation (the "Articles"), one third, or the number nearest to but not fewer than one third, of the Directors will retire and stand for re-election at the annual general meeting each year, provided that each Director shall retire and stand for re-election at intervals of no more than three years. Accordingly, Messrs Cameron and Chalk will retire and, being eligible, offer themselves for re-election at the forthcoming annual general meeting.

Each Director is appointed subject to the provisions of the articles of incorporation in relation to retirement as described above.

The Directors believe that the Board has a balance of skills and experience which enables it to provide effective strategic leadership and proper governance of the Company. The Board believes that each Director's performance continues to be effective and to demonstrate commitment to the role and therefore supports the re-election of the Chairman and each of the other Directors per the articles of association of the Company. Information on the Directors, including their relevant experience, is set out on page 9

Audit and internal controls

The Board reviewed the effectiveness of the Company's system of internal controls, including financial, operational and compliance controls and risk management systems and has put in place procedures for the review of such controls on an annual basis. Risk is managed by the Directors rather than eliminated and can only provide reasonable assurance against material misstatement or loss.

The Audit Committee meets at least twice a year and considers reports from the independent auditors, the Manager and the administrator. The main responsibilities of the Audit Committee include monitoring the integrity of the Company's financial statements and appropriateness of its accounting policies, reviewing the effectiveness of the internal control systems and making recommendations to the Board regarding the appointment and independence of the external auditor and the objectivity and effectiveness of the audit process, with particular regard to the level of non-audit fees, if any. Shareholders have the opportunity at each annual general meeting to vote on the election of the independent auditors for the forthcoming year.

In view of the small number of transactions to date the Company has not yet considered it necessary to establish an internal audit function. The Board considers that the systems and procedures put in place by the Manager and the administrator have been adequate to safeguard shareholders' interests. The Board at least annually reviews an internal controls and risks monitoring report both for the Company and its subsidiaries. The Board will continue to keep this matter under review.

Relations with shareholders

The Board welcomes correspondence from shareholders, addressed to the Company's registered office. All shareholders have the opportunity to put questions to the Board at the Annual General Meeting

The Board believes that sustainable financial performance and delivering on the objectives of the Company are indispensable measures in order to build trust with the Company's shareholders. In order to promote a clear understanding of the Company, its objectives and financial results, the Board aims to ensure that information relating to the Company is disclosed in a timely manner and in a format suitable to the shareholders of the Company.

The Board has also encouraged the Manager to identify a sample of investors for periodic meetings to encourage communication and to ensure the concerns of shareholders are addressed.

The Articles of Incorporation state that a Continuation Vote via an Ordinary resolution will be held proposing the extension of the life of the Company at the 2015 Annual General Meeting and every 5 years thereafter. The last such Continuation Vote was passed at the 2010 Annual General Meeting.

Independent auditor's report to the members of Aurora Russia Limited

We have audited the Group and Company financial statements (the "financial statements") of Aurora Russia Limited (the "Company" and "Group") for the year ended 31 March 2012 which comprise the Consolidated and Company Statements of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity and the Consolidated and Company Statements of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Directors and Auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page 11 - 12, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board of Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion

In our opinion the financial statements:

• give a true and fair view of the state of the Group's and Company's affairs as at 31 March 2012 and of Group's and Company's loss for the year then ended;

• are in conformity with International Financial Reporting Standards as issued by the IASB; and

• comply with the Companies (Guernsey) Law, 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

• the Company has not kept proper accounting records; or

• the financial statements are not in agreement with the accounting records; or

• we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit."

KPMG Channel Islands Limited

Chartered Accountants

PO Box 20

20 New Street

St Peter Port

Guernsey

GY1 4AN

5 July 2012

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2012

		Year	Year
		ended	ended
		31 March 2012	31 March 2011
	Notes	£'000	£'000

Revenue:		20,335	16,952
- Fees		421	684
- Storage		8,838	6,939
- Warehousing, transport, data processing and other		9,999	7,979
- Interest on long term mortgages and other loans		840	943
- Interest income		237	220
- Dividend income		-	187
Administration and operating expenses	4	(24,835)	(21,656)
Fair value movements on revaluation of investments	13	(11,970)	1,273
Impairment of receivable from Kreditmart		(198)	-
Exchange losses		(662)	(548)


Operating loss		(17,330)	(3,979)

Interest expense	27	(938)	(585)

Loss before income tax		(18,268)	(4,564)

Income tax expense	5	(345)	(119)

Loss for the year		(18,613)	(4,683)

Other comprehensive income

Foreign currency translation differences for foreign operations		(304)	300

Total comprehensive loss for the year		(18,917)	(4,383)


Loss attributable to:
Owners of the Company	23	(18,543)	(4,676)
Non-controlling interest		(70)	(7)
Loss for the year		(18,613)	(4,683)

Total comprehensive loss attributable to:
Owners of the Company		(18,808)	(4,382)
Non-controlling interest		(109)	(1)
Total comprehensive loss for the year		(18,917)	(4,383)


Basic and diluted loss per share	6	(16.48p)	(4.16p)

All items in the above statement derive from continuing operations.

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Company Statement of Comprehensive Income

For the year ended 31 March 2012

		Year	Year
		ended	ended
		31 March 2012	31 March 2011
	Notes	£'000	£'000

Revenue		5	210
- Interest income		5	23
- Dividend income		-	187
Administration and operating expenses	4	(3,067)	(3,984)
Fair value movements on revaluation of investments	13	(15,900)	(1,700)
Exchange gains/(losses)		9	(4)


Operating loss		(18,953)	(5,478)

Interest expense		(3)	-

Loss before tax		(18,956)	(5,478)

Income tax expense	5	-	-

Total comprehensive loss for the year	23	(18,956)	(5,478)


Basic and diluted loss per share	6	(16.85p)	(4.87p)

All items in the above statement derive from continuing operations.

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Consolidated Statement of Financial Position

As at 31 March 2012

		31 March 2012	31 March 2011
	Notes	£'000	£'000
Non-current assets
Goodwill	7	13,909	14,164
Intangible assets	8	10,011	10,793
Property, plant and equipment	10	10,666	8,782
Investments - at fair value through profit and loss	13	32,294	45,805
Loans and advances to customers	14	4,910	7,787
Deferred tax asset	5	7	236

		71,797	87,567
Current assets
Trade and other receivables	15	5,057	4,404
Corporate loans		-	434
Loans and advances to customers	14	3,892	-
Due from banks		302	-
Cash and cash equivalents	16	5,576	6,739
Assets classified as held for sale	9	725	657

		15,552	12,234

Total assets		87,349	99,801

Non-current liabilities
Finance leases	17	2,245	1,777
Interest bearing borrowings		719	-
Loans payable to investee companies	18	491	-
Deferred tax liability	5	1,839	1,792
		5,294	3,569

Current liabilities
Finance leases	17	1,497	1,016
Tax payable		872	74
Trade and other payables	19	8,599	5,297

		10,968	6,387

Total liabilities		16,262	9,956

Equity
Share capital	20	1,125	1,125
Special reserve	21	84,073	84,073
Share options reserve	22	276	128
(Accumulated Loss) / Retained Earnings	23	(14,668)	4,015
Non-controlling interest		715	673
Translation reserve	24	(434)	(169)

Total equity		71,087	89,845


Total equity and liabilities		87,349	99,801

Net asset value per share - Basic and Diluted	25	63.2p	79.9p

The accounts on pages 16 to 54 were approved by the Board of Directors on 5 July 2012 and signed on its behalf by:

Director Director

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Company Statement of Financial Position

As at 31 March 2012

		31 March 2012	31 March 2011
	Notes	£'000	£'000
Non-current assets
Investment in subsidiaries - at fair value through profit and loss	11	43,300	47,300
Investments - at fair value through profit and loss	13	31,300	43,200

		74,600	90,500
Current assets
Trade and other receivables	15	494	30
Cash and cash equivalents	16	873	3,794

		1,367	3,824

Total assets		75,967	94,324

Non-current liabilities
Loans payable to investee companies	18	491	-

Current liabilities
Trade and other payables	19	344	236

Total liabilities		835	236


Equity
Share capital	20	1,125	1,125
Special reserve	21	84,073	84,073
Share options reserve	22	-	-
(Accumulated loss) / Retained Earnings	23	(10,066)	8,890

Total equity		75,132	94,088


Total equity and liabilities		75,967	94,324

Net asset value per share - Basic and Diluted	25	66.8p	83.6p

The accounts on pages 16 to 54 were approved by the Board of Directors on 5 July 2012 and signed on its behalf by:

Director Director

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Consolidated Statement of Changes in Equity

For the year ended 31 March 2012

		Share	Special	Share Options	Retained Earnings/	Translation		Non-controlling
		Capital	Reserve	Reserve	(Accumulated loss)	Reserve	Total	Interest	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

For the year 1 April 2010 to 31 March 2011

Balance as at 1 April 2010		1,125	84,073	2,437	5,857	(463)	93,029	500	93,529

Total comprehensive loss for the year
Loss for the year		-	-	-	(4,676)	-	(4,676)	(7)	(4,683)

Other comprehensive income for the year
Foreign currency translation gain		-	-	-	-	294	294	6	300

Transactions with owners, recorded directly in equity

Contributions and distributions to owners

Recognition of share-based payments	22	-	-	691	-	-	691	8	699

Cancellation of Share options in Company	26	-	-	(3,000)	3,000	-	-	-	-

Changes in ownership interests in subsidiaries
that do not result in a loss of control
Dilution of controlling interest in subsidiary	11,23	-	-	-	(166)	-	(166)	166	-

At 31 March 2011		1,125	84,073	128	4,015	(169)	89,172	673	89,845

For the year 1 April 2011 to 31 March 2012

Balance as at 1 April 2011		1,125	84,073	128	4,015	(169)	89,172	673	89,845

Total comprehensive loss for the year
Loss for the year		-	-	-	(18,543)	-	(18,543)	(70)	(18,613)

Other comprehensive loss for the year
Foreign currency translation loss		-	-	-	-	(265)	(265)	(39)	(304)

Transactions with owners, recorded directly in equity



Recognition of share-based payments	22	-	-	148	-	-	148	11	159

Changes in ownership interests in subsidiaries
that do not result in a loss of control
Dilution of controlling interest in subsidiary	11,23	-	-	-	(140)	-	(140)	140	-

At 31 March 2012		1,125	84,073	276	(14,668)	(434)	70,372	715	71,087

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Company Statement of Changes in Equity

For the year ended 31 March 2012



		Share	Special	Share Options	Retained Earnings/
	Notes	Capital	Reserve	Reserve	(Accumulated loss)	Total
		£'000	£'000	£'000	£'000	£'000

For the year 1 April 2010 to 31 March 2011

Balance as at 1 April 2010		1,125	84,073	2,420	11,368	98,986

Total comprehensive loss for the year
Loss for the year		-	-	-	(5,478)	(5,478)


Transactions with owners, recorded directly in equity

Contributions and distributions to owners
Recognition of share-based payments	22	-	-	580	-	580

Cancellation of share options		-	-	(3,000)	3,000	-

At 31 March 2011		1,125	84,073	-	8,890	94,088

For the year 1 April 2011 to 31 March 2012

Balance as at 1 April 2011		1,125	84,073	-	8,890	94,088

Total comprehensive loss for the year
Loss for the year		-	-	-	(18,956)	(18,956)

At 31 March 2012		1,125	84,073	-	(10,066)	75,132

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Consolidated Statement of Cash Flows

For the year ended 31 March 2012

		Year	Year
		ended	ended
	Notes	31 March 2012	31 March 2011
Cash flows from operating activities		£'000	£'000

Loss before tax		(18,268)	(4,564)
Bank interest		(237)	(220)
Dividend income		-	(187)
		(18,505)	(4,971)
Adjustments for movements in working capital:
(Increase)/decrease in operating trade and other receivables		(886)	180
Increase in operating trade and other payables		1,164	69
(Decrease)/increase in loans		(1,272)	661
Increase in due from banks		(302)	(439)

Adjust for:
Revaluation of investments	13	11,970	(1,273)
Recognised share based payments	22	148	691
Depreciation and amortisation		1,928	1,701
Impairment of loan receivable		62	-
Loss on property, plant and equipment written off		200	45
Provision for loan losses		-	(257)
Allowance for doubtful debts		56	25
Interest income		(898)	(929)
Increase in non-current assets held for sale		-	246
Interest paid		39	-
Taxation paid		(29)	(156)
Dividend received		-	187
Interest received		1,120	1,148
Exchange gains		302	548

Net cash outflow from operating activities		(4,903)	(2,524)

Cash flows from investing activities
Proceeds on sale of investments (bonds)		1,596	(1,475)
Acquisition of intangible assets		-	(81)

Acquisition of property, plant and equipment		(1,441)	(2,097)
Proceeds on sale of property, plant & equipment		45	-
Deposits		3,145	123

Net cash inflow/(outflow) from investing activities		3,345	(3,530)

Cash flows from financing activities
Net proceeds from borrowing of short term loans		146	433
Proceeds from borrowing of 3rd party loans		1,068	-
Loan from Grindelia		491	-
Interest income on loan		-	(19)
Financial lease payments - principal		(1,280)	(1,003)

Net cash outflow from financing activities		425	(589)

Net decrease in cash and cash equivalents		(1,133)	(6,643)

Opening cash and cash equivalents		6,739	13,242
Effect of exchange rate changes		(30)	140

Closing cash and cash equivalents	16	5,576	6,739

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Company Statement of Cash Flows

For the year ended 31 March 2012

		Year	Year
		ended	ended
	Note	31 March 2012	31 March 2011
		£'000	£'000
Cash flows from operating activities
Loss before tax		(18,953)	(5,478)
Bank interest		(5)	(23)
Dividend income		-	(187)
		(18,958)	(5,688)
Adjustments for movements in working capital:
(Increase)/decrease in operating trade and other receivables		(466)	1,143
Increase in operating trade and other payables		108	147

Adjust for:
Revaluation of investments	13	15,900	1,700
Recognised share based payments	22	-	580
Exchange (losses)/gains		(9)	4
Dividend received		-	187
Interest paid		(3)	-
Bank interest received		7	21

Net cash outflow from operating activities		(3,421)	(1,906)

Cash flows from financing activities
Loan from Grindelia		491	-

Net cash inflow from financing activities		491	-

Net decrease in cash and cash equivalents		(2,930)	(1,906)

Opening cash and cash equivalents		3,794	5,704

Effect of foreign exchange movements		9	(4)

Closing cash and cash equivalents	16	873	3,794

The accompanying notes on pages 24 to 54 form an integral part of these financial statements.

Notes to the Financial statements

For the year ended 31 March 2012

1. Reporting entity

Aurora Russia Limited (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.

The consolidated financial statements of the Company as at and for the year ended 31 March 2012 comprise the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities").

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 and applicable legal and regulatory requirements of Guernsey Law and per ('AIM'). These financial statements comply with The Companies (Guernsey) Law, 2008, as amended.

2.2 Basis of Measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following:

· derivative financial instruments are measured at fair value

· 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 are effective for the period but had no impact on the financial position or performance of the Group:

IFRS 7: Financial Instruments: Disclosures (effective for periods beginning on or after 1 July 2011)

IAS 1: Presentation of Financial Statements (effective for periods beginning on or after 1 January 2011)

IAS 24: Related party disclosures (effective for periods beginning on or after 1 January 2011)

IFRS 3: Business Combinations (effective for periods beginning on or after 1 January 2011)

2.4 New standards and interpretations not yet adopted

Other than those explained in note 2.3, a number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 March 2012, and have not been applied in preparing these consolidated financial statements.

New standards:

· IFRS 9 Financial Instruments- for accounting periods commencing on or after 1 January 2015

· 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. IFRS 9 will be adopted for the first time for the year ending 31 March 2016 and 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 Group and Company's financial assets are designated at fair value through profit and loss.

· IFRS 10 Consolidated financial statements - for accounting periods commencing on or after 1 January 2013

IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements (IAS 27) and SIC 12 Consolidation - Special Purpose Entities. It revised the definition of control together with accompanying guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain the same. The standard is not expected to have a material impact on the financial statements of the Group.

· IFRS 12 Disclosure of Interests in Other Entities (effective from 1 January 2013)

This standard combines, in a single standard, the disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated structured entities. The required disclosures aim to provide information to enable user to evaluate the nature of, and risks associated with, an entity's interests in other entities and the effects of those interests on the entity's financial position, financial performance and cash flows. The adoption of the new standard will increase the level of disclosure provided for the entity's interests in subsidiaries, joint arrangements, associates and structured entities. This standard may impact the disclosure to be provided by the Group and Company, but will have to be assessed based on IFRS 10 and IFRS 11 conclusions. There is no significant impact on the financial statements as this amendment will only require additional disclosure.

· IFRS 13: Fair Value Measurement for annual accounting periods beginning 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 significantly more work 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. IFRS 13 will be adopted for the first time for the year ending 31 March 2013 and 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 material impact on the financial statements of the Group and Company.

Revised and amended standards:

· IAS 1 Presentation of Items of Other Comprehensive Income (effective from 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. IAS 1 will be adopted for the first time for the year ending 31 March 2013. There is no significant impact on the financial statements as this amendment will only require additional disclosure.

· IAS 27 Separate Financial Statements (2011) supersedes IAS 27 (2008) and is effective for year-ends commencing on or after 1 January 2013

IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate financial statements, with some minor clarifications. 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 estimated uncertainty for the Group and are included within the relevant accounting policy note:

· Valuation of Investments (see note 3.11.2)

· Loans and advances to customers (see note 3.11.4)

· Goodwill (see note 3.2.2)

· Depreciation of property, plant and equipment (see note 3.14)

· Intangible assets (see note 3.15)

The preparation of the Group and Company's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the time of the Group and Company's financial statements, and revenue and expenses during the reporting period. Actual results could differ from those estimated. Significant estimates in the Group and 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 Group and Company's financial statements of changes in estimates in future periods could be significant.

2.6 Functional and presentation currencies

The Directors have selected Sterling as the presentation currency of the Group which is also the functional currency of the Company as it is the currency its shares are issued in and the currency in which the Company has received all of its funding. All information presented in Sterling has been rounded to the nearest thousand unless otherwise stated.

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 and the Group.

3.1 Accounting for business combinations

The Group has applied the acquisition method for the business combination disclosed in note 12.

Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another.

Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination (see below). If a business combination results in the termination of pre-existing relationships between the Group and the acquiree, then the lower of the termination amount, as contained in the agreement, and the value of the off-market element is deducted from the consideration transferred and recognised in other expenses.

When share-based payment awards exchanged (replacement awards) for awards held by the acquiree's employees (acquiree's awards) relate to past services, then a part of the market-based measure of the awards replaced is included in the consideration transferred. If they require future services, then the difference between the amount included in consideration transferred and the market-based measure of the replacement awards is treated as post-combination compensation cost.

A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably.

The Group measures any non-controlling interest at its proportionate interest in the fair value of the acquiree.

Transaction costs that the Group incurs in connection with a business combination, such as finder's fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.

3.2 Basis of consolidation

3.2.1 Subsidiaries

The consolidated financial statements incorporate the financial statements of the Company and any entities controlled by the Company ('the Group') as at 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable are taken into account.

On acquisition the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the profit or loss in the period of acquisition.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

3.2.2 Goodwill

The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. 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 profit or loss and is not subsequently reversed.

3.2.3 Associates

Associates are those entities in which the Group and the Company has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group and Company holds between 20 and 50 percent of the voting power of another entity.

The Group and the Company has taken advantage of the exemption available to it under IAS 28, 'Investments in associates' and is accounting for the investments in Unistream and Grindelia at fair value through profit or loss, which normally as a result of the size of the stake in these two companies would potentially qualify as associated companies and would be required to be equity accounted.

3.3 Accounting for acquisitions of non-controlling interests

The amendments to IAS 27 required changes in the parent's ownership interest in a subsidiary after control is obtained that do not result in a loss of control to be accounted for as transactions with equity holders in their capacity as equity holders. As a result no gain or loss on such changes was recognised in profit or loss. Also, there is no change in the carrying amounts of assets (including goodwill) or liabilities was recognised as a result of such transactions. This approach is consistent with treating non-controlling interest as a component of equity.

The carrying amounts of the controlling and non-controlling interest are adjusted to reflect the relative change in their interests in the subsidiary's net assets. Any differences between the amount by which the non-controlling interest was adjusted and the fair value of the consideration paid or received, if any, is recognised directly in equity and attributed to equity holders of the parent.

3.4 Determination and presentation of operating segments

The Group 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 Group's chief operating decision maker.

An operating segment is a component of the Group 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 Group'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 Chief Operating Decision Maker, who is responsible for allocating resources, assessing performance of the operating segments and making strategic decisions, has been identified as the Board of Directors of the Company.

3.5 Presentation of financial statements

The Group applied revised IAS 1 Presentation of Financial Statements (2011), which became effective for years beginning on or after 1 January 2011 and was applied by the Group from 1 April 2011. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income.

Since the change in accounting policy in the previous year only impacted presentation aspects, there was no impact on earnings per share.

3.6 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 profit or loss. 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.

On consolidation, the assets and liabilities of the Group's overseas operations are translated at exchange rates prevailing on the reporting date. Income and expenses are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are recognised in other comprehensive income and transferred to the Group's translation reserve. Such translation differences are recognised as income or expenses in the period in which the operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the rate prevailing on the reporting date.

3.7 Revenue

Revenue from the sale of services is measured at the fair value of the consideration received or receivable, net of returns, allowances and trade discounts. Revenue from services rendered is recognised in the statement of changes of comprehensive income when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue can be measured reliably. Revenue from services are recognised in the accounting period in which the services are rendered, by reference to stage of completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

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.

Brokerage fees received from services provided to the banks are recognised in the month when the act of service is rendered with the bank and the loan agreement signed by the client.

Dividend income from investments is recognised when the Group and the Company's right to receive payment has been established, which is the last date of registration.

3.8 Expenses

All expenses are accounted for on an accruals basis through profit or loss.

3.9 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 premium account.

3.10 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 Group is liable to pay tax at a rate of 20% (2011: 20%) arising on its activities in Russia.

The Group is liable to pay tax at a rate of 10% (2011: 10%) arising on its activities in Cyprus.

The Group is liable to pay tax at a rate of 19% (2011: 19%) arising on its activities in Poland.

The Group is liable to pay tax at a rate of 25%, 20%, 20% and 10% arising on its activities in Ukraine,

Kazakhstan, Armenia and Bulgaria respectively.

The Group is liable to pay tax at a rate of 24% (2011: 24%) arising on its activities in Belorus.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

3.11 Financial Instruments

Financial assets and financial liabilities are recognised on the Group and the Company's statement of financial position when the Group and the Company becomes a party to the contractual provisions of the instrument, including unconditional commitments to make investments. The Group and Company offsets financial assets and liabilities if the Group and Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.

3.11.1 Forward exchange contracts

The Group's activities expose it to financial risks of changes in foreign currency exchange rates. The Group uses forward foreign exchange contracts to hedge net monetary assets denominated in foreign currencies, where practicable, other than the Russian Rouble, and not for speculative purposes. At the reporting date outstanding forward exchange contracts are measured at their marked to market price, and are included in the financial statements as either a derivative asset or liability. Gains or losses arising on forward foreign exchange contracts are taken to profit or loss. Hedge accounting is not applied.

3.11.2 Investments

Unquoted investments, including investments in subsidiaries, as well as loans receivable from associated companies are designated as fair value through profit and 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. 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 terms 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 and the Group

Investments are held 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 period end, which is the functional currency of the Company and the Group and the presentation currency of the consolidated financial statements. Unrealised gains and losses arising from the revaluation of investments are taken directly to profit or loss.

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 realisation value which is estimated by the Valuation Committee with prudence and good faith. 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 Association (IPEVCA), with particular consideration of the following factors:

· Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction.

· 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 11). 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. The fair value of financial assets traded in active markets are based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price.

3.11.3 Impairment of financial assets

At each reporting date the Company and the Group assess whether there is objective evidence that financial assets not carried at fair value through profit or loss are impaired. Financial assets are impaired when objective evidence demonstrates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the future cash flows of the asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a borrower, restructuring of a loan or advance by the Group on terms that the Group would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance of an active market for a security, or other observable data relating to a group of assets such as adverse changes in the payment status of borrowers or issuers in the group, or economic conditions that correlate with defaults in the group. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

The Group considers evidence of impairment for loans and advances at both a specific asset and collective level. All individually significant loans and advances and held-to-maturity investment securities are assessed for specific impairment. All individually significant loans and advances and held-to-maturity investment securities found not to be specifically impaired are then collectively assessed for any impairment by grouping together loans and advances and held-to-maturity investment securities with similar risk characteristics.

In assessing collective impairment the Group uses statistical modelling of historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for the management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical modelling. Default rates, loss rates and the expected timing of future recoveries are regularly benchmarked against actual outcomes to ensure that they remain appropriate.

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and advances. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

3.11.4 Loans and advances to customers

Loans granted by the Group are initially recognised at fair value plus related transaction costs on the date they originated. Where the fair value of consideration given does not equal the fair value of the loan, for example where the loan is issued at lower than market rates, the difference between the fair value of consideration given and the fair value of the loan is recognised as a loss on initial recognition of the loan and included in the consolidated statement of comprehensive income according to the nature of these losses. Subsequently, loans are carried at amortised cost. Loans to customers are carried net of any impairment losses.

All loans are secured against the property of the borrower, with adequate provisions calculated and managed by the Risk Management Department of the Group.

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

The Group enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognised from the statement of financial position. Transfers of assets with retention of all or substantially all risks and rewards include, for example, securities lending and repurchase transactions.

In transactions in which the Group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset, it derecognises the asset if it does not retain control over the asset. The rights and obligations retained in the transfer are recognised separately as assets and liabilities as appropriate. In transfers in which control over the asset is retained, the Group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.

3.11.5 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.

3.11.6 Trade receivables

Trade receivables do not carry any interest and are short-term in nature. Trade receivables are recognised and carried at the lower of their original invoiced value and recoverable amount. Where the time value of money is material, receivables are carried at amortised cost. Allowance is made when there is objective evidence that the Company and the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote. They are accordingly stated at amortised cost as reduced by appropriate allowances for estimated irrecoverable amounts.

3.11.7 Trade payables

Trade payables are not interest bearing and are recognised and carried at amortised cost less repayments.

3.11.8 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 and the Group after deducting all of its liabilities. Financial liabilities and equity instruments are recorded at the proceeds received, net of issue costs.

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group 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 Group 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 Group has the following non-derivative financial liabilities: loans and borrowings, and trade and other payables.

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.

3.12 Earnings per share

The Company and the Group 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 Group and 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.

3.13 Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

3.14 Property, plant and equipment

Property, plant and equipment are carried at historical cost less accumulated depreciation and any recognised impairment loss, if any. Depreciation is charged on the carrying value of property, plant and equipment and is designed to write off assets on a straight line basis over their useful economic lives. The estimated useful lives for the current and comparative periods are as follows:

Vehicles:

Trucks (included under Vehicles) 7 years

Cars (included under Vehicles) 5 years

Fixtures & fittings:

Fixtures & fittings 3-5 years

Warehouse equipment & racks 5 to 20 years

Furniture & equipment:

Office equipment 5 to 10 years

Furniture 5 years

Equipment 3 years

Hardware 2 to 5 years

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The carrying amounts of property, plant and equipment and intangible assets are reviewed at each reporting date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount.

Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within "operating income" in the statement of comprehensive income.

Impairment is recognised in the respective period and is included in operating expenses.

After the recognition of an impairment loss the depreciation charge for property, plant and equipment is adjusted in future periods to allocate the assets' revised carrying value, less its residual value (if any), on a systematic basis over its remaining useful life.

Depreciation methods, useful lives and residual values are reviewed each financial year -end and adjusted if appropriate.

3.15 Intangible assets

Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For measurement of goodwill at initial recognition, see note 3.2.2.

Acquisitions of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions.

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted investee.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

Amortisation

Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

The estimated useful lives for the current and comparative periods are as follows:

Software 15 years

Customer base - large customers 15 years

Customer base - small customers 10 years

Trademark and banking licence Indefinite

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the company. Amortisation is not provided for these intangible assets. Intangible assets with indefinite useful lives are tested for impairment at each reporting date by determining the recoverable amount of the assets either individually or at the cash-generating unit level. Where this assessment is performed at the cash-generating unit level, the impairment is determined by assessing the recoverable amount of the cash-generating unit to which the intangible asset relates. In such instances, the recoverable amount is determined as the value in use of the cash-generating unit by estimating the expected future cash flows in the unit and choosing a suitable discount rate in order to calculate the present value of those cash flows.

Where the recoverable amount is less than the carrying amount of the asset or the cash-generating unit, an impairment loss is recognised in profit or loss.

The useful life of an intangible asset with an indefinite life is reviewed at each reporting date to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment is made prospectively.

3.16 Assets held for Sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Group's accounting policies.

Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell. A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part of a disposal group classified as held for sale. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, and deferred tax assets, which continue to be measured in accordance with the Group's accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

3.17 Impairment of tangible and intangible assets excluding goodwill

At each reporting 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 profit or loss.

3.18 Provisions

A provision is recognised in the statement of financial position when the Company and the Group 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.

3.19 Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

Share based payments

Share options granted to the manager in respect of ongoing services were conditional upon the achievement of certain performance conditions. The cancellation of share options in the prior year was accounted for as an acceleration of vesting, and therefore recognised the amount that would otherwise have been recognised for services rendered over the remainder of the vesting period immediately.

3.2 Share capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

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 shall be 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.

3.21 Finance costs

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis.

In respect of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after 1 April 2009, the Company and the Group capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset.

3.22 Fair Value

The Directors consider the carrying value of all financial assets and liabilities to approximate their fair value except for "Loans and advances to customers" which are at a fixed rate. Where the difference is significant, note disclosure is provided.

Notes to the Financial statements

For the year ended 31 March 2012

4.	Administration and operating expenses

	The net loss for the year has been arrived at after charging the following items of expenditure:

		Year ended 31 March 2012	Year ended 31 March 2011
		£'000	£'000
	Company
	Investment management fee	1,589	1,980
	Auditors' remuneration	326	401
	Directors' remuneration	164	180
	Share based payments	-	580
	Other operating and administrative expenses:
	- Administration fees	70	73
	- Marketing costs	81	92
	- Professional fees	285	280
	- Other	552	398

		3,067	3,984
	Kreditmart
	Directors' remuneration	104	77
	Other operating and administrative expenses:
	- Marketing costs	124	323
	- Professional fees	16	13
	- Depreciation and amortisation	7	165
	- Personnel	475	1,278
	- Premises expenses	105	279
	- Credit losses and LLP	(64)	(304)
	- Other	324	201

		1,091	2,032
	Flexinvest Limited
	Auditors' remuneration	15	56
	Directors' remuneration	174	145
	Other operating and administrative expenses:
	- Marketing costs	106	30
	- Professional fees	95	24
	- Depreciation and amortisation	85	61
	- Personnel	832	635
	- Premises expenses	219	208
	- Credit losses and LLP	56	49
	- Other	386	187
		1,968	1,395

	OSG Records Management (Europe) Limited
	Directors' remuneration	656	525
	Share based payments	159	118
	Other operating and administrative expenses:
	- Marketing expenses	243	216
	- Professional fees	183	213
	- Depreciation and amortisation	1,837	1,474
	- Personnel	6,893	5,497
	- Operating lease expenses	4,371	3,626
	- Allowance for doubtful debts	56	25
	- Repairs and maintenance	840	441
	- Travel and entertainment	579	377
	- Materials used	767	710
	- Other	2,125	1,023
		18,709	14,245

	Total for the Group	24,835	21,656


5.	Tax

	Group
	5.1 Income tax expense	Year ended 31 March 2012	Year ended 31 March 2011
		£'000	£'000

	Kreditmart
	Current tax charge	5	-
	Deferred tax charge	13	64

		18	64
	Flexinvest Limited
	Current tax charge	14	-
	Deferred tax charge (credit)	216	(109)
		230	(109)

	OSG Records Management (Europe) Limited
	Current tax charge	7	74
	Deferred tax charge	90	90
		97	164

	Deferred tax charge:	319	45

	Net tax charge to profit or loss	345	119

Tax (continued)				Year ended 31 March 2012		Year ended 31 March 2011
				£'000		£'000
* Deferred tax expense comprises of:
Origination and reversal of temporary differences				412		95
Temporary differences on fair value adjustment				(112)		(114)
Utilisation of tax losses				19		64
				319		45

Group and Company

Tax rate reconciliation:
	Year ended 31 March 2012	Year ended 31 March 2012		Year ended 31 March 2011		Year ended 31 March 2011
	£'000	£'000		£'000		£'000
	Group	Company		Group		Company

Loss for the year	(18,268)	(18,953)		(4,564)		(5,478)
Aurora Consolidated profit exempt from tax	14,956	-		2,478		-
	(3,312)	(18,953)		(2,086)		(5,478)

Tax at nominal rate (Cyprus)	67	-		(15)		-
Tax at nominal rate (Russia)	525	-		447		-
Tax effect of income and expenses not deductable in taxable profit	(570)	-		(256)		-
Effect of deferred tax asset not recognised	(350)	-		(295)		-
Other - previous year correction	(17)	-		-		-
	(345)	-		(119)		-


5.2 Group deferred tax assets and liabilities

Group

2012
Kreditmart and Flexinvest		Year ended 31 March 2012		Year ended 31 March 2012		Year ended 31 March 2012
Deferred tax asset/(liability) comprises:		£'000		£'000		£'000
		Assets		Liabilities		Net

Loans to customers		-		(2)		(2)
Other assets		51		-		51
Other liabilities		12		(52)		(40)
Tax loss carry-forwards		-		(2)		(2)

		63		(56)		7


OSG Records Management (Europe) Limited		Year ended 31 March 2012		Year ended 31 March 2012		Year ended 31 March 2012
Deferred tax asset/(liability) comprises:		£'000		£'000		£'000
		Assets		Liabilities		Net

Finance leases		490		-		490
Intangibles		1,349		-		1,349

		1,839		-		1,839

Group deferred tax asset						7

Group deferred tax liability						1,839

2011
Kreditmart and Flexinvest		Year ended 31 March 2011		Year ended 31 March 2011		Year ended 31 March 2011
Deferred tax asset/(liability) comprises:		£'000		£'000		£'000
		Assets		Liabilities		Net

Loans to customers		9		-		9
Other assets		45		-		45
Other liabilities		21		(14)		7
Tax loss carry-forwards		175		-		175

		250		(14)		236

OSG Records Management (Europe) Limited		Year ended 31 March 2011		Year ended 31 March 2011		Year ended 31 March 2011
Deferred tax asset/(liability) comprises:		£'000		£'000		£'000
		Assets		Liabilities		Net

Finance leases		-		(300)		(300)
Intangibles		-		(1,492)		(1,492)

		-		(1,792)		(1,792)

Group deferred tax asset						236

Group deferred tax liability						(1,792)
Tax (continued)
5.3 Unrecognised deferred tax assets			Year ended 31 March 2012		Year ended 31 March 2011
			£'000		£'000

Group

Tax losses			(350)		(295)

			(350)		(295)

A deferred tax asset has not been recognised in respect of the above tax losses because it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.

Due to the presence in Russian commercial legislation, and tax legislation in particular, of provisions allowing more than one interpretation, and also due to the practice developed by the tax authorities of making arbitrary judgement of taxpayer activities, if a particular treatment based on Management's judgement of the Subsidiary's business activities was to be challenged by the tax authorities, Kreditmart Finance Limited ("Kreditmart"), Flexinvest Limited ("Flexinvest") and OSG Records Management (Europe) Limited ("OSGRME") may be assessed for additional taxes, penalties and interest. Such uncertainty may relate to valuation of financial instruments, loss and impairment provisions and market level for deals' pricing. The Entity believes that it has already made all tax payments, and therefore no allowance has been made in the financial statements. Tax years remain open to review by the tax authorities for three years.

The Group's principal business activities are within the Russian Federation. Laws and regulations affecting the business environment in the Russian Federation are subject to rapid changes and Flexinvest and OSGRME's assets and operations could be at risk due to negative changes in the political and business environment.

6.	Loss per share
		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company
	The calculation of the basic and diluted loss per share is based on the following data:

	Loss for the purposes of basic and diluted loss per share being net loss attributable to equity holders of the parent	(18,543)	(18,956)	(4,676)	(5,478)

	Weighted average number of ordinary shares for the purpose of basic and diluted loss per share (in thousands):	112,500	112,500	112,500	112,500

	Effect of dilutive potential ordinary shares:
	Options	-	-	-	-

	Weighted average number of ordinary shares for the purpose of diluted profit/(loss) loss per share (in thousands):	112,500	112,500	112,500	112,500

	Loss per share - Basic and Diluted	(16.48p)	(16.85p)	(4.16p)	(4.87p)

	The potential shares as identified in note 26, are anti-dilutive and as such have not been included in the calculation of diluted loss per share for the years ended 31 March 2012 and 31 March 2011.


7.	Goodwill
				31 March 2012	31 March 2011
	Group			£'000	£'000

	Cost:

	At beginning of the year			14,164	14,164

	Exchange loss for the year			(255)	-


				13,909	14,164

No impairment of goodwill on acquisition of OSGRME is necessary at 31 March 2012 based on the valuation of OSGRME. Refer to note 11 and 12 for further details in this regard.

8.	Intangible assets					31 March 2012	31 March 2011
						£'000	£'000
	Group

	Cost:
	Opening balance in respect of FIexinvest (see note 12)					10,793	11,078

	Exchange rate movements					(221)	284

	Amortisation of intangibles in OSGRME					(561)	(569)

	Closing balance					10,011	10,793


	Reconciliation of intangibles

		Banking	Internally	OSGRME	Customer	Customer
	2012	licence	generated	Trademark	base - large	base - small	Total
			software

		£'000	£'000	£'000	£'000	£'000	£'000
	Group

	Cost:
	At 1 April 2011	2,760	146	598	7,258	600	11,362

	Exchange movements	(80)	(2)	(11)	(119)	(9)	(221)

	At 31 March 2012	2,680	144	587	7,139	591	11,141

	Amortisation:
	At 1 April 2011	-	(15)	-	(492)	(62)	(569)

	Charge for the period	-	(15)	-	(485)	(61)	(561)

	At 31 March 2012	-	(30)	-	(977)	(123)	(1,130)

	Carrying amount:
	At 31 March 2012	2,680	114	587	6,162	468	10,011

The valuation of the licence was considered by the Valuation Committee and based on its fair values less costs to sell, it was determined that no impairment was required.

The fair valuation of the intangibles at acquisition date of OSGRME was determined by an independent 3rd party using various valuation methods: the Cost Approach (using historcial costs and consumer price inflation), and the Income Approach (using the Multiple Excess Earnings method and Discounted Cash Flow Analysis).

The banking licence and the trademark are both considered by the Directors to have an indefinite useful life. They are expected to generate value indefinitely. The banking licence is registered in Moscow and the OSGRME trademark is registered in Russia, Poland and Ukraine. Furthermore, there were no impairment indicators identified by the Directors in respect of the other intangibles that were subject to amortisation.

9.	Assets classified as held for sale	31 March 2012	31 March 2011
	Group	£'000	£'000

	Balance at 1 April 2011	657	845

	Additions	111	43
	Disposals	(43)	(231)


	Balance at 31 March 2012	725	657

Assets classified as held for sale are the property (flat, cottage and land plot) received after mortgage foreclosure. The assets are available for immediate sale in their present condition. A potential buyer has been found for the flat, and Kreditmart expects to sell the other assets within one year. The assets are recognised at fair value less costs to sell.

10.	Plant and equipment
		Vehicles	Fixtures &	Furniture &
	2012		fittings	equipment	Total
		£'000	£'000	£'000	£'000
	Group

	Cost:
	At 1 April 2011	1,207	7,274	1,876	10,357

	Additions	445	2,620	796	3,861
	Disposals	(70)	(100)	(543)	(713)
	Exchange movements	(45)	(291)	(41)	(377)

	At 31 March 2012	1,537	9,503	2,088	13,128

	Accumulated Depreciation:
	At 1 April 2011	(247)	(646)	(682)	(1,575)

	Charge for the period	(302)	(682)	(384)	(1,368)
	Disposals	39	99	343	481

	At 31 March 2012	(510)	(1,229)	(723)	(2,462)

	Carrying amount:
	At 31 March 2012	1,027	8,274	1,365	10,666
	2011

	Cost:
	At 1 April 2010	752	4,608	1,958	7,318

	Additions	546	2,922	272	3,740
	Disposals	(75)	(171)	(298)	(544)
	Exchange movements	(16)	(85)	(56)	(157)

	At 31 March 2011	1,207	7,274	1,876	10,357

	Accumulated Depreciation:
	At 1 April 2010	(53)	(305)	(516)	(874)
					-
	Charge for the period	(242)	(501)	(389)	(1,132)
	Disposals	48	160	223	431

	At 31 March 2011	(247)	(646)	(682)	(1,575)

	Carrying amount:
	At 31 March 2011	960	6,628	1,194	8,782

See note 17 for property,plant and equipment held under finance leases.

11. Investment in subsidiaries - at fair value through profit and loss

Company	31 March 2012	31 March 2011
	£'000	£'000

OSG Records Management (Europe) Limited
At 1 April 2011, and 1 April 2010	28,800	28,100
Fair value revaluation	(600)	700
At 31 March 2012, and 31 March 2011	28,200	28,800

Kreditmart & Flexinvest Limited
At 1 April 2011, and 1 April 2010	18,500	22,200
Fair value revaluation *	(3,400)	(3,700)
At 31 March 2012, and 31 March 2011	15,100	18,500



	43,300	47,300

* The revaluation calculations performed on Kreditmart included the value of Flexinvest as at 31 March 2012, and as such, no revaluation was performed on the individual subsidiary companies.

The valuation of the subsidiaries and investments at 31 March 2012 was performed by Aurora Investment Advisors Limited and the valuation at 31 March 2011 was performed by an independant reputable valuer with the necessary experience in valuing investments of this nature. Both were approved by the Valuation Committee.

Methodologies and assumptions used in valuing investments and investments in subsidiaries:

1) Market Approach:

The market comparable method indicates the market value of the ordinary shares of a business by comparing it to publicly traded companies in similar lines of business. The conditions and prospects of companies in similar lines of business depend on common factors such as overall demand for their products and services. An analysis of the market multiples of companies engaged in similar businesses yields insight into investor perceptions and, therefore, the value of the subject company.

In the market approach, recent sales, listings of comparable assets and such other factors as the Board deems relevant are gathered and analysed. After identifying and selecting the comparable publicly traded companies, their business and financial profiles are analysed for relative similarity. Price or EV multiples of the publicly traded companies are calculated and then adjusted for factors such as relative size, growth, profitability, risk, and return on investment. The adjusted multiples are then applied to the relevant element of the subject company's business.

All valuations of unquoted investments and investments in subsidiaries (collectively referred to as the "portfolio") were performed using either an enterprise value/revenue or enterprise value/EBITDA multiple (except for Kreditmart and Flexinvest where a Net Asset Assets Approach ie a price/book value approach was used). 21%, by value at year-end, of the portfolio was valued using a price/book valuation approach (2011: 20%) with the remaining 79% (2011: 80%) of the portfolio being valued using an enterprise value/revenue multiple and enterprise value/EBITDA multiple approach.

The key assumptions in the valuations were as follows:

- Liquidity adjustment: 15%-30% (31 March 2011: 15%-20%)

2) Income Approach:

The income approach methodology is used as a cross-check for the Market Approach and indicates the market value of a business enterprise based on the present value of the cash flows that the business can be expected to generate in the future. Such cash flows are discounted at a discount rate that reflects the time value of money and the risks associated with the cash flows.

The Company sold OOO Kreditmart, a wholly owned subsidiary of Kreditmart Finance Limited, to Lespender Limited, which operates a mortgage and consumer loan brokerage for a nominal consideration. The Company also entered into an option agreement to acquire of 10% of the purchasing company for £200 ($330) to be used anytime over a 10 year period from closing. The option is non-dilutable. After completion of the sale, Kreditmart Finance Limited was able to release funds of £2.5m that were being held in the Kreditmart structure, for future expansion.

The financial statements of the Group consolidate the results, assets and liabilities of the subsidiary companies listed below:

Name of subsidiary undertaking

Country of incorporation

Class of share

% of class held at 31 March 2012

% of class held at 31 March 2011

Principal activity

OSG Records Management (Europe) Limited

Cyprus

Ordinary

92.8%

94.4%

Financing

OSG Records Management Center Limited Liability Company*

Russia

Ordinary

100.0%

Document storage, data security and records management services

OSG Polska Limited Liability Company*

Poland

Ordinary

100.0%

OSG Records Management Limited Liability Company*

Ukraine

Ordinary

100.0%

OSG Records Management Limited Liability Company*

Kazakhstan

Ordinary

100.0%

OSG Records Management Limited Liability Company*

Armenia

Ordinary

100.0%

OSG Records Management Limited Liability Company*

Bulgaria

Ordinary

100.0%

Kreditmart Finance Limited

Cyprus

Ordinary

100.0%

Consumer finance

Flexinvest Limited

Cyprus

Ordinary

100.0%

Investment holding

Flexinvest Bank Limited** ("FIB")

Russia

Ordinary

100.0%

Banking and finance

* Direct subsidiaries of OSG Records Management (Europe) Limited and indirect subsidiaries of the Company.

**FIB is held directly by Kreditmart and Flexinvest (see note 12) and is an indirectly held subsidiary of the Company.

12. Subsidiaries and non-controlling interests

OSGRME is a leading records and information management service provider in Central Eastern Europe with a strong market presence in attractive markets (Russia, Poland, Ukraine, Kazakhstan and Bulgaria), has a rapidly growing and diverse client base and has shown resilience in the recent economic downturn.

On 30 March 2010, a £0.6 million share capital injection was made by the Company into OSGRME for "racking". 1,822 shares were issued by OSGRME in this regard, which thus increased the Company's overall holding in OSGRME to approximately 95.52%. In the first quarter of 2011, the option pool was increased by a further 938 shares, which reduced the Company's overall holding in OSGRME to approximately 94.41%. In 2012, the option pool was increased by 1,000 shares, which reduced the Company's overall holdings in OSGRME to 92.8%.

The following summarises the effect of changes in the Group's (parent) ownership interest in OSGRME:
	31 March 2012	31 March 2011
	£'000	£'000
Parent's ownership interest at beginning of year	10,597	10,668
Effect of parent's decrease in ownership interest	(140)	(166)
Share of comprehensive (losses)/income	(1,245)	95
Parent's ownership at the the end of the year	9,212	10,597

13.	Investments - at fair value through profit and loss
		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company

	Unistream Bank	16,300	16,300	18,700	18,700

	Grindelia Holdings	15,000	15,000	24,500	24,500

	Quoted investments	994	-	2,605	-

	Total investments at fair value through profit and loss	32,294	31,300	45,805	43,200

13.	Investments - at fair value through profit and loss (continued)

	Change in fair value of investments at fair value through profit and loss
		Year ended 31 March 2012	Year ended 31 March 2012	Year ended 31 March 2011	Year ended 31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company

	OSG Records Management (Europe) Limited (see note 11)	-	(600)	-	700

	Unistream Bank	(2,400)	(2,400)	(5,700)	(5,700)

	Grindelia Holdings*	(9,500)	(9,500)	7,000	7,000

	Quoted investments	(70)	-	(27)	-

	Kreditmart and Flexinvest (see note 11)	-	(3,400)	-	(3,700)

	Total unrealised (losses)/gains	(11,970)	(15,900)	1,273	(1,700)

* Holding company for Superstroy.

In the view of the Valuation Committee, the value of the investment in OSGRME, Unistream Bank, and Grindelia Holdings Limited as at 31 March 2012 was estimated at £28.2 million (31 March 2011: £28.8 million), £16.3 million (31 March 2011: £18.7 million), and £15 million (31 March 2011: £24.5 million) respectively, resulting in a decrease of the value of total investments below historical cost in the Company accounts.

14.	Loans and advances to customers

	Group				31 March 2012		31 March 2011
					£'000		£'000

	Receivable within >1 year				4,910		7,787
	Receivable within <1 year				3,892		-
	Loans and advances to customers				8,802		7,787

	Secured				5,927		7,787
	Unsecured				2,875		-
					8,802		7,787

	Reconciliation of impairment loss allowance on loans to customers:

	Balance at beginning of the year/period				670		938
	Allowance for loan losses				(206)		(268)
					464		670
The following table details the carrying value of assets that are impaired and the ageing of those that are past due but not impaired:

2012		Neither past due nor impaired	Past due not impaired	Financial assets that have been impaired		Balance at 31 March 2012

Loans to customers		7,734	-	1,437		9,171
Interest		89	-	6		95
Loan loss allowance		(58)	-	(406)		(464)
		7,765	-	1,037		8,802

2011		Neither past due nor impaired	Past due not impaired	Financial assets that have been impaired		Balance at 31 March 2011

Loans to customers		6,016	674	1,721		8,411
Interest		46	-	-		46
Loan loss allowance		(37)	(4)	(629)		(670)
		6,025	670	1,092		7,787

The delinquent loans as determined by the Risk Management Department of Kreditmart and Flexinvest for the portfolio is as follows: 72 (2011: 35) Accounts comprising 16% (2011: 30%) of the balance of the loan portfolio. For these loans, a specific allowance was made of £407,323 (2011: £630,935). For the non-delinquent loans, a portfolio impairment of 2.1% (2011: 0.6%) of outstanding value is provided for. See note 29 "Credit Risk" for more in this regard.

The mortgages are secured upon borrowers' private residences, are repayable in equal monthly instalments and mature between 2014 and 2038 (average maturity of 25.1 years). Interest is charged at fixed rates at an average annual interest rate of 11.71% (range between 10.5% and 14.9% depending on each borrower). Based on maximum exposure (carrying value of the loans), the collateral pledged in respect of these mortgages is £5,001,044 (2011: £6,950,293).

For unsecured loans and advances to customers for the Group, the interest rates are 30.8% and 30.92% on consumer loans and credit cards respectively.

The fair value of the loans to customers were determined using a market related 14.9% (2011: 15.0%) discount rate on the loans denominated in Roubles. The loans denominated in US Dollars were discounted at 12.9% (2011: 13.3%). Based on these criteria the fair value of the loans were determined to be £8,013,805 (2011:£6,826,285).

15.	Trade and other receivables
			31 March 2012		31 March 2012		31 March 2011		31 March 2011
			£'000		£'000		£'000		£'000
			Group		Company		Group		Company

	Tax receivable		198		-		205		-
	Trade debtors		2,700		-		2,602		-
	Less: allowance for doubtful debts		(267)		-		(217)		-
	Sundry debtors and prepayments		1,596		494		1,492		30
	VAT receivable		-		-		322		-
	Other		798		-		-		-
	Rent guarantee deposits		32		-		-		-

			5,057		494		4,404		30
The breakdown of aged trade receivables in respect of the Group and the Company is as follows:
		31 March 2012		31 March 2012		31 March 2011		31 March 2011
		£'000		£'000		£'000		£'000
		Group		Company		Group		Company

Current		-		-		-		-
Receivables < 30 days		-		-		-		-
Receivables > 30 days		-		-		-		-
Receivables > 60 days		2,362		-		2,387		-
Receivables > 90 days		338		-		215		-
		2,700		-		2,602		-

Perfoming		2,362		-		2,387		-
Past due		338		-		215		-
		2,700		-		2,602		-

16.	Cash and cash equivalents

		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company

	Bank balances	4,085	797	1,856	555
	Fixed deposits	999	76	4,638	3,239
	Cash on hand	492	-	245	-
	Cash and cash equivalents in statement of cash flows	5,576	873	6,739	3,794

The restricted cash balances for the current year, which are included in the above table, total £999,200

17. Finance leases

The Group acquires the majority of its vehicles and racking systems for its warehouses through finance lease contracts. Such contracts are generally classified as finance leases because the rental period approximates to the estimated useful economic life of the assets; and the Group has the right to purchase the assets outright at the end of the minimum lease term. The Group have financial lease obligations in Russia, Poland and Kazakhstan. The average term of these finance leases are 36 months. The Group presents obligations under financial leases in its Statement of Financial Position at present value (less amounts representing finance charges related to future periods).

The payment schedule of the present value of minimum lease payments is as follows:

	Group	31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Less than	Greater than	Less than	Greater than
		1 year	1 year	1 year	1 year


	Vehicles	301	369	199	378
	Fixtures and fittings	1,114	1,787	766	1,342
	Furniture and equipment	82	89	51	57
		1,497	2,245	1,016	1,777


	The carrying value of the property, plant and equipment held under finance leases at 31 March 2012 are:
	- Vehicles: £866,757 (2011: £809,460)
	- Fixtures and fittings: £4,934,052 (2011: £3,465,319)
	- Furniture and equipment: £191,415 (2011: £96,290)

18.	Loans payable to investees
		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company
	Loans payable to Grindelia	491	491	-	-

	The loans payable to Grindelia were previously reported as dividend income in prior years. The loans are repayable with interest no later than 20 February 2015 and 37% of the loan balance attracts interest at a rate of 0.1% and the remaining 63% is repayable with interest at a rate of 0.01%.


19.	Trade and other payables
		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company

	VAT & Social Tax payable	-	-	253	-
	Expense accruals and other creditors	3,366	344	3,422	236
	Income received in advance	1,679	-	1,622	-
	Amount due from customers	3,554	-	-	-

		8,599	344	5,297	236

20.	Share capital
				31 March 2012	31 March 2011
				£'000	£'000
	Authorised share capital:
	200,000,000 Ordinary Shares of 1p each:			2,000	2,000

	Issued share capital:
	75,000,000 fully paid Ordinary Shares of 1p each:			1,125	1,125

21.	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.
	Group and company			31 March 2012	31 March 2011
				£'000	£'000
	On conversion from share premium			84,073	84,073

22.	Share options reserve
		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company

	Balance as at 1 April 2011, and 1 April 2010	128	-	2,437	2,420

	Recognised fair value of share options issued during the year	148	-	691	580

	Cancellation of share options	-	-	(3,000)	(3,000)

	Balance as at 31 March 2012, and 31 March 2011	276	-	128	-

	Details of share-based payments are shown in note 26.


23.	Retained earnings
		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		£'000	£'000	£'000	£'000
		Group	Company	Group	Company

	Balance as at 1 April 2011, and 1 April 2010	4,015	8,890	5,857	11,368

	Net loss for the year attributable to owners	(18,543)	(18,956)	(4,676)	(5,478)

	Cancellation of share options	-	-	3,000	3,000

	Dilution of controlling interest in subsidiary	(140)	-	(166)	-

	Balance as at 31 March 2012, and 31 March 2011	(14,668)	(10,066)	4,015	8,890

Any surplus or deficit arising from net profits or losses after payment of dividends is taken to this reserve.

24. Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities that hedge the Company's net investment in a foreign subsidiary. Movements in the translation reserve are included under "Other comprehensive income" in the statement of comprehensive income.

25.

Net asset value per share

31 March 2012

31 March 2011

Group

Company

Group

Company

Net assets for the purposes of basic and diluted net asset value per share attributable to equity holders of the parent: (£'000)

71,087

75,132

89,845

94,088

Number of ordinary shares for the purpose of net asset value per share:(in thousands):

112,500

Net asset value per share

63.2p

66.8p

79.9p

83.6p

26.

Share based payments

Change in the year

31 March 2012

31 March 2011

Number

Exercise price

'000

Options as at 1 April 2011, and 1 April 2010

28,125

100p

Options granted during the year

40p

Reversal of options during the year

(28,125)

Options as at 31 March 2012, and 31 March 2011

Exercisable options at the end of the year

Calculation of the fair value of equity settled share based payments
All share based payments were valued during 2010 at the date of issue using the Monte Carlo model. The key inputs to this model that drive the option value are:

Share price at grant of options											100p
Exercise price											100p
Expected volatility											20%
Risk free rate											4.39%
Effective dividend yield											0%

Based on the above valuation the total value of the options granted at the date of grant was £3,000,000.

OSGRME

Terms

Under shareholders' approval a maximum of 5500 shares are available for issue to management of the OSGRME Group. This is representing a maximum of 7.21% of the OSGRME Group's equity as of 31 March 2012 (2011: 4500 shares representing a maximum of 5.98%). From this pool 5500 share options were actually granted to management of OSGRME as of 31 March 2012(1250 were granted in 2007 and are exercisable at grant date with a fair value at grant date of $406,998, 1000 were granted in 2008 with a 5 year vesting period with a fair value at grant date of $320,521, 1000 were granted in 2009 with a 5 year vesting period with a fair value at grant date of $186,140, 1,250 were granted in 2011 with 5 year vesting period with a fair value at grant date of $406,018 and 1,000 were granted in 2012 with 5 year vesting period with a fair value at grant date of $325,436).

Change in the year	31 March 2012	31 March 2011
	Number	Number	Exercise price

Options as at 31 March 2011	4,500	3,250	$155 - $493

Options granted during the year	1,000	1,250	$364 - $611

Options as at 31 March 2012	5,500	4,500


Exercisable options at the end of the year	1,250	1,250

The options outstanding at 31 March 2012 had a remaining contractual life of 4 years

All share based payments were valued at the date of issue using the Black-Scholes Model. The Directors have estimated that the hurdle rate will be achieved, and hence the options will vest, after 5 years (with a remaining contractual life of 4 years). The value of the 3,250 options that were granted in 2008-2010 will be charged to profit or loss on a pro rata basis over the course of the 5 years ending December 2013. The charge arising for the year ended 31 March 2012 is £159,000 (2011: £118,360).

27.	Interest expense

	Group	31 March 2012	31 March 2011
		£'000	£'000
	Financial lease interest paid	814	547
	Interest expense on loans	61	-
	Interest expense on private deposits	63	38
		938	585

28.	Operating leases

	Leases as lessee
	Non-cancellable operating lease rentals are payable as follows:
	Group	31 March 2012	31 March 2011
		£'000	£'000
	Less than 1 year	4,720	4,193
	1 - 5 years	10,406	12,127
	More than 5 years	1,907	3,657
		17,033	19,977

The Group leases a number of premises including warehouse facilities and office buildings under operating leases. The leases typically run for a period of 1 - 5 years.

29. 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.

Capital Management

The capital structure of the Group and Company at year end consists of cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings. The Group and 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 Group except for Flexinvest Bank and the Company are not subject to any external capital requirements.

The Central Bank of Russia ("CBR") sets and monitors capital requirements for Flexinvest Bank.

Flexinvest Bank defines as capital those items defined by statutory regulation as capital for credit institutions. Under the current capital requirements set by the CBR, Flexinvest Bank has to maintain a ratio of capital to risk weighted assets (statutory capital ratio) above the prescribed minimum level. As at 31 December 2011, this minimum level was 10%. Flexinvest Bank was in compliance with the statutory capital ratio during the years ended 31 December 2011 and 2010."

Liquidity risk

Liquidity risk is the risk that the Group and Company will not be able to meet its financial obligations as they fall due. The Group and 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 Group and Company's reputation.

Refer to the interest rate risk table in note 29 for the maturity analysis of the Group and Company's liabilities.

Credit risk

The Group 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 C-; Royal Bank of Scotland A2; Bank of Cyprus B1 and Lloyds A1. The Group monitors the placement of cash balances on an ongoing basis. No financial assets held by the Group have had their credit rating graded by an internationally regarded agency.

Two subsidiaries of the Group, Kreditmart and Flexinvest, are exposed to credit risk in respect of mortgage loans, arising from possible default of its customers. The credit risk is mitigated by the Risk Department, who on a monthly basis compile a Portfolio Quality report, which analyse the key trends and highlights any risk areas, as well as a review of any delinquent and potentially delinquent accounts. The Risk Department also mitigate the credit risk through the calculation of the Value at Risk ('VAR') to forecast the level of estimated losses, calculate the Loan Loss Provisions ('LLP') on a monthly basis based on Central Bank of Russia Federation instructions and calculate the limits of insurance responsibilities of Insurance companies that provide the customers mortgage insurance.

The Financial Departments of OSG Records Management (Europe), Kreditmart and Flexinvest exercises control over the risk in the legislation and regulatory arena and assesses its influence on the Group's activity. This approach allows the Group to minimise potential losses from the investment climate fluctuations in the Russian Federation and Eastern Europe. The geographical concentration of the assets and liabilities of the Group and Company are set out below:

	31 March 2012
	Russian Federation	United Kingdom	Poland	Cyprus	Other
ASSETS	%	%	%	%	%

Long term third party loans receivable	100	-	-	-	-
Trade and other receivables	67	10	14	-	9
Cash and cash equivalents	62	14	2	20	2

	31 March 2011
	Russian Federation	United Kingdom	Cyprus	Other
ASSETS	%	%	%	%

Long term third party loans receivable	100	-	-	-	-
Trade and other receivables	77	1	13	-	9
Cash and cash equivalents	32	49	2	16	1

Kreditmart and Flexinvest do not have any Sub-prime customers due to criteria guidelines which do not allow loans to be granted to borrowers without income confirmation documents. The Risk Department of Kreditmart and Flexinvest have determined that the value of delinquent loans are £1,437,502 (2011: £2,356,868). Loan payments are current except for Nil which is 60 days overdue as at 31 March 2012 (2011: £56,883: 60 days overdue) and £1,288,685 which is 90 and 120 days overdue as at 31 March 2012 (2011: £1,520,760: 120 days). At 31 March 2012, a Loan Impairment Provision in respect of these loans was raised of £406,000 (2011:£630,935). OSG Records Management (Europe) has no loan receivables. See note 15 for details of the ageing of trade receivables.

The maximum exposure to credit risk for the Group and Company at the end of the reporting period without taking into account any collateral held or credit enhancements is the following:

		31 March 2012	31 March 2012	31 March 2011	31 March 2011
		Group	Company	Group	Company
	Note	£'000	£'000	£'000	£'000
Cash and cash equivalents	16	5,576	873	6,739	3,794
Trade and other receivables	15	5,057	494	4,404	30
Corporate Loans		-	-	434	-
Loans to customers	14	8,802	-	7,787	-


		19,435	1,367	19,364	3,824

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 Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to Russian Roubles, Polish Zloty and the US Dollar. All of the Group's equity investments are denominated in Russian Roubles. The Group does not hedge its currency exposure on equity investments but has put in place hedges on monetary assets to mitigate its US Dollar exposure. The Group does not use such currency derivatives for speculative purposes.

Currency Risk Table

An analysis of the Group's net currency exposure is as follows:

As at 31 March 2012:

Currency of denomination	Sterling	US Dollars	Russian Roubles	Polish Zloty	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Total assets	3,134	2,800	70,520	9,688	1,207	87,349
Total liabilities	(400)	(46)	(12,024)	(3,056)	(736)	(16,262)

Net currency exposure	2,734	2,754	58,496	6,632	471	71,087

As at 31 March 2011:

Currency of denomination	Sterling	US Dollars	Russian Roubles	Polish Zloty	Other	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Total assets	27,287	2,803	65,636	3,056	1,019	99,801
Total liabilities	(1,762)	(2)	(5,580)	(2,164)	(448)	(9,956)

Net currency exposure	25,525	2,801	60,056	892	571	89,845

An analysis of the Company's net currency exposure is as follows:

As at 31 March 2012:

Currency of denomination	Sterling	US Dollars	Russian Roubles	Other	Total
	£'000	£'000	£'000	£'000	£'000

Total assets	1,320	30	74,617	-	75,967
Total liabilities	(344)	-	(491)	-	(835)

Net currency exposure	976	30	74,126	-	75,132


As at 31 March 2011:

Currency of denomination	Sterling	US Dollars	Russian Roubles	Other	Total
	£'000	£'000	£'000	£'000	£'000

Total assets	3,333	-	90,991	-	94,324
Total liabilities	(236)	-	-	-	(236)

Net currency exposure	3,097	-	90,991	-	94,088

Foreign Currency Sensitivity

The following table details the Group's sensitivity to a 20% (2011: 20%) strengthening of the Sterling against each of the relevant foreign exchange currencies. 20% (2011: 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 2012	31 March 2012	31 March 2011	31 March 2011
	£'000	£'000	£'000	£'000
	Group	Company	Group	Company

Russian Rouble	(11,699)	(14,923)	(12,011)	(18,198)
US Dollar	(551)	(6)	(560)	-
Polish Zloty	(1,326)	-	(178)	-
Other	(94)	-	(114)	-

A 20% (2011: 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.

Market risk

Market price risk arises principally from uncertainty concerning future values of financial instruments used in the Group's operations. It represents the potential loss the Group 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 Group and Company's market pricing exposure at year end:

At 31 March 2012:
	Note	Fair Value £'000	% of Net Assets	Fair Value £'000	% of Net Assets
		Group		Company
Investments at fair value through profit & loss:
- Unlisted Equities	13 & 11	31,300	44.03	74,600	99.29
- Quoted investments	13 & 11	994	1.40	-	-

At 31 March 2011:
		Fair Value £'000	% of Net Assets	Fair Value £'000	% of Net Assets
		Group		Company
Investments at fair value through profit & loss:
- Unlisted Equities	13 & 11	43,200	48.08	90,500	96.19
- Quoted investments	13 & 11	2,605	2.90	-	-

Valuation of financial instruments

The Group measures fair values using the 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:

Group
	Level 1	Level 2	Level 3	Total
At 31 March 2012:	£'000	£'000	£'000	£'000

Investments at fair value through profit & loss:
-Unlisted Equities	-	-	31,300	31,300
- Quoted investments	994	-	-	994
	994	-	31,300	32,294


At 31 March 2011:	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000

Investments at fair value through profit & loss:
-Unlisted Equities	-	-	43,200	43,200
- Quoted investments	2,605	-	-	2,605
	2,605	-	43,200	45,805

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy of the Group:

			Level 3
			£'000

Opening balance			43,200
Total gains or losses in profit or loss			(11,900)
Closing balance			31,300


Company
	Level 1	Level 2	Level 3	Total
At 31 March 2012:	£'000	£'000	£'000	£'000

Investments at fair value through profit & loss:
-Unlisted Equities	-	-	74,600	74,600
	-	-	74,600	74,600


At 31 March 2011:	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000

Investments at fair value through profit & loss:
-Unlisted Equities	-	-	90,500	90,500
	-	-	90,500	90,500

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy of the Company:

	Level 3
	£'000	£'000
	2012	2011
Opening balance	90,500	92,200
Total gains or losses in profit or loss	(15,900)	(1,700)
Closing balance	74,600	90,500

Although the Group and Company believes that its estimates of fair values are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. Investments classified with level 3 have significant unobservable inputs, as they trade infrequently. Level 3 instruments include investments in open-ended investment funds. As observable prices are not available for these securities, the Company has used valuation techniques to derive the fair value.

Level 3 investments have been valued in accordance with the methodologies in Note 11. The value of the investments and the fair value movements are disclosed in note 13.

Price sensitivity

The sensitivity analysis below has been determined based on the exposure to equity price risks as at the reporting date.

At the reporting date, if the valuations had been 20% higher while all other variables were held constant net profit would increase by £6,260,000 (2011: £8,269,000) for the Group and £14,920,000 (2011: £18,631,000) for the Company. This sensitivity rate was determined by the Directors as reasonable taking market conditions into account.

If the valuation of investments had been 20% (2011: 20%) lower it would have had the equal but opposite effect, on the basis that all other variables remain the same.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group is exposed to interest rate risk as a result of the cash and bank balances that are invested at floating interest rates. The Group monitors its interest rate exposure regularly and allocates its cash resources to an appropriate mix of floating and fixed rate instruments of varying maturities.

The following table details the Group and Company's exposure to interest rate risk as at period end by the earlier of contractual maturities or re-pricing:

Group
At 31 March 2012:	No contractual terms of repayment	Less than 1 month	1-3 months	3 months to 1 year	1 to 2 years	2 to 5 years	Greater than 5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Assets
Non-interest bearing	59,277	6,551	2,412	1,591	1,316	1,683	3,940	76,770
Floating interest rate instruments	780	-	-	-	-	-	-	780
Fixed interest rate instruments *	-	3,794	34	189	47	185	5,550	9,799
Total	60,057	10,345	2,446	1,780	1,363	1,868	9,490	87,349

Liabilities
Non-interest bearing	(15)	(3,307)	(2,615)	(4,593)	(287)	(336)	(788)	(11,941)
Fixed interest rate instruments	-	-	-	(1,497)	(898)	(1,926)	-	(4,321)
Total	(15)	(3,307)	(2,615)	(6,090)	(1,185)	(2,262)	(788)	(16,262)
Net Exposure	60,042	7,038	(169)	(4,310)	178	(394)	8,702	71,087

At 31 March 2011:	No contractual terms of repayment	Less than 1 month	1-3 months	3 months to 1 year	1 to 2 years	2 to 5 years	Greater than 5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Assets
Non-interest bearing	78,104	2,866	2,332	45	343	236	-	83,926
Floating interest rate instruments	64	-	-	-	-	-	-	64
Fixed interest rate instruments	89	1,478	190	5,659	846	233	7,316	15,811
Total	78,257	4,344	2,522	5,704	1,189	469	7,316	99,801

Liabilities
Non-interest bearing	(1,792)	(2,383)	(2,656)	(1,347)	-	-	-	(8,178)
Fixed interest rate instruments	-	-	-	-	(1,095)	(682)	-	(1,777)
Total	(1,792)	(2,383)	(2,656)	(1,347)	(1,095)	(682)	-	(9,955)
Net Exposure	76,465	1,961	(134)	4,357	94	(213)	7,316	89,846

Company
At 31 March 2012:	No contractual terms of repayment	Less than 1 month	1-3 months	3 months to 1 year	1 to 2 years	2 to 5 years	Greater than 5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Assets
Non-interest bearing	74,617	-	494	-	-	-	-	75,111
Floating interest rate instruments	780	-	-	-	-	-	-	780
Fixed interest rate instruments	-	-	-	76	-	-	-	76
Total	75,397	-	494	76	-	-	-	75,967

Liabilities
Non-interest bearing	-	(344)	-			(491)	-	(835)
Total	-	(344)	-	-	-	(491)	-	(835)
Net Exposure	75,397	(344)	494	76	-	(491)	-	75,132

At 31 March 2011:	No contractual terms of repayment	Less than 1 month	1-3 months	3 months to 1 year	1 to 2 years	2 to 5 years	Greater than 5 years	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Assets
Non-interest bearing	90,991	-	30	-	-	-	-	91,021
Floating interest rate instruments	64	-	-	-	-	-	-	64
Fixed interest rate instruments	-	-	-	3,239	-	-	-	3,239
Total	91,055	-	30	3,239	-	-	-	94,324

Liabilities
Non-interest bearing	-	(236)	-	-	-	-	-	(236)
Total	-	(236)	-	-	-	-	-	(236)
Net Exposure	91,055	(236)	30	3,239	-	-	-	94,088

* The Group's fixed interest rate instruments represents cash accounts placed on deposit by the Company, Kreditmart and Flexinvest, and OSGRME, and the mortgages granted by Kreditmart and Flexinvest. The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (forward exchange contracts) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.

The expected maturities of the undiscounted cash flows (including interest) of the mortgages granted by Kreditmart and Flexinvest at 31.03.12 and 31.03.11 is presented in the following table (note: there are no mortgage bonds in OSGRME):

Kreditmart and Flexinvest
	Less than 1 month	1-3 months	3 months to 1 year	1 to 2 years	2 to 5 years	Greater than 5 years	Total
	£000	£000	£000	£000	£000	£000	£000
At 31 March 2012:	288	539	1,991	1,877	3,499	15,560	23,754
At 31 March 2011:	108	217	885	1,097	3,293	21,715	27,315

Sensitivity analysis

The sensitivity analysis below has been determined based on the Group's exposure to interest rates for interest bearing assets and liabilities at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 50 basis points higher and all other variables were held constant, the Group's net profit for the year ended 31 March 2011 would have increased by £3,899 (2011: £319) and the Company's by £3,899 (2011: £319).

If interest rates had been 50 basis points lower it would have had the equal but opposite effect, on the basis that all other variables remain the same.

30. Segmental information

The Board of Directors of the Company decides on the strategic resource allocations of the Group. The operating segments of the Group are the business activities that earn revenue or incur expenses, whose operating results are regularly reviewed by the Board of Directors of the Company, and for which discrete financial information is available. The Board of Directors considers the Group to be made up of 3 segments, which are reflective of the business activities of the Group and the information used for internal decision-making:

- Aurora Russia Limited (parent company)

- Kreditmart Finance Limited, Flexinvest Limited and Flexinvest Bank Limited ("FIB") (subsidiaries)

- OSG Records Management (Europe) Limited ("OSGRME") (subsidiary)

The Group is engaged in investment in small and mid-sized companies in Russia and in one principal geographical area, being Russia.

Kreditmart Finance Limited, Flexinvest Limited and Flexinvest Bank ("FIB") Limited (subsidiaries) disburse mortgage and consumer loans for private clients, place deposits, and render other services (money transfers, safe boxes).

The OSG Group consists of seven legal entities: OSG Records Management (Europe) Ltd (Cyprus), OSG Records Management Center (Russia), OSG Polska (Poland), OSG Records Management (Ukraine), OSG Records Management (Armenia), OSG Records Management (Bulgaria) and OSG Records Management (Kazakhstan). OSG Records Management (Europe) Ltd (Cyprus) is a parent company for OSG Group which owns 100% of shares of 7 operating units in Russia (being the largest operation), Poland, Ukraine, Kazakhstan, Armenia, Belorus and Bulgaria. The OSG Group provides records management services (document storage and other services) through its 100% owned operating subsidiaries. More than half of sales revenues are earned through providing document storage services. The remaining revenues come from the following warehouse services, transportation of documents; archive services, data processing services and destruction of documents and tapes. Approximately 70% of the operating income is derived from Russia, with the bulk of the remaining portion being derived from Poland.

The main customers of Flexinvest and FIB are private clients and the main customers of OSGRME are financial institutions, telecom and other companies.

The Investment Manager's Report provides more information on the Company's business and the operations of each investment.

The parent company derives its revenues from its investments by way of interest and dividends.

	31 March 2012	31 March 2012	31 March 2012	31 March 2012	31 March 2011	31 March 2011	31 March 2011	31 March 2011
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

	Aurora	Kreditmart/ Flexinvest/ FIB	OSGRME	Total	Aurora	Kreditmart/ Flexinvest/ FIB	OSGRME	Total


Revenue	2	1,552	18,844	20,398	210	1,908	14,839	16,957
- Fees	-	421	-	421	-	684	-	684
- Storage	-	-	8,838	8,838	-	-	6,939	6,939
- Warehousing, transport, data processing and other	-	-	9,999	9,999	-	86	7,893	7,979
- Interest on long term mortgages and other loans	-	840	-	840	-	943	-	943
- Loan interest	(3)	66	-	63	-	5	-	5
- Bank interest	5	225	7	237	23	190	7	220
- Dividend income	-	-	-	-	187	-	-	187
Administration and operating expenses	(3,067)	(2,967)	(16,872)	(22,906)	(3,984)	(3,200)	(12,771)	(19,955)
Depreciation and amortisation	-	(92)	(1,837)	(1,929)	-	(227)	(1,474)	(1,701)
Amortisation of receivable from KMOOO	-	(198)	-	(198)	-	-
Interest expense	-	(63)	(938)	(1,001)	-	(38)	(552)	(590)
Fair value movements on revaluation of investments	(15,900)	(70)	-	(15,970)	(1,700)	(27)	-	(1,727)
- Kreditmart/Flexinvest/FIB	(3,400)	-	-	(3,400)	(3,700)	-	-	(3,700)
- OSGRME	(600)	-	-	(600)	700	-	-	700
- Unistream	(2,400)	-	-	(2,400)	(5,700)	-	-	(5,700)
- Grindelia (SuperStroy)	(9,500)	-	-	(9,500)	7,000	-	-	7,000
- Quoted investments	-	(70)	-	(70)	-	(27)	-	(27)
Exchange (losses)/gains	9	(598)	(73)	(662)	(4)	(545)	1	(548)

Operating (loss)/profit before tax	(18,956)	(2,436)	(876)	(22,268)	(5,478)	(2,129)	43	(7,564)


Tax	-	(248)	(97)	(345)	-	45	(164)	(119)

Net segment loss	(18,956)	(2,684)	(973)	(22,613)	(5,478)	(2,084)	(121)	(7,683)

Reconciliation of segment loss to consolidated statement of comprehensive income	31 March 2012	31 March 2011
	£'000	£'000

Total net segment loss	(22,613)	(7,683)

Adjustment for fair value movements on
Kreditmart/Flexinvest/FIB and OSGRME	4,000	3,000


Net loss for the year for the Group	(18,613)	(4,683)

	31 March 2012	31 March 2012	31 March 2012	31 March 2012	31 March 2011	31 March 2011	31 March 2011		31 March 2011
	£'000	£'000	£'000	£'000	£'000	£'000	£'000		£'000

	Aurora	Kreditmart/ Flexinvest/ FIB	OSGRME	Total	Aurora	Kreditmart/ Flexinvest/ FIB	OSGRME		Total

Total segments assets include:

Investments in subsidiaries	43,300	-	-	43,300	47,300	-	-		47,300
Financial assets at fair value through profit or loss	31,300	994	-	32,294	43,200	2,605	-		45,805
- OSGRME	-	-	-	-	-	-	-		-
- Unistream	16,300	-	-	16,300	18,700	-	-		18,700
- Grindelia (SuperStroy)	15,000	-	-	15,000	24,500	-	-		24,500
- Quoted investments	-	994	-	994	-	2,605	-		2,605

Cash and cash equivalents	873	4,481	524	5,878	3,794	2,718	227		6,739
Intangible assets	-	2,680	21,240	23,920	-	2,760	22,198		24,958
Property, plant and equipment	-	351	10,315	10,666	-	418	8,364		8,782
Assets classified as held for sale	-	725	-	725	-	657	-		657
Loans and advances to customers	-	8,802	-	8,802	-	7,787	-		7,787
Other assets	494	341	4,230	5,065	30	1,430	3,613		5,073

Segment assets	75,967	18,373	36,309	130,649	94,324	18,375	34,402		147,101

Total segment liabilities	(835)	(3,850)	(10,229)	(14,914)	(236)	(760)	(7,469)		(8,465)

Reconciliation of segment assets and liabilities to consolidated statement of financial position							31 March 2012	31 March 2011
							£'000	£'000

Segment assets for reportable segments							130,649	147,101

Investment in subsidiaries							(43,300)	(47,300)

Total assets for the Group							87,349	99,801

Segment liabilities for reportable segments							(14,914)	(8,465)

Deferred taxation adjustment on acquisition of OSGRME							(1,348)	(1,491)

Total liabilities for the Group							(16,262)	(9,956)

31. Related party transactions

The Company has 4 direct subsidiaries, OSG Records Management (Europe) Limited, Kreditmart Finance Limited, Flexinvest Limited and Flexinvest Bank Limited (see note 11 and 12). Details of the investments in Unistream Bank and Grindelia Holdings are presented in note 13.

Balances owing between the Company and any subsidiaries which are related parties have been eliminated on consolidation. This includes a loan receivable from Flexinvest.

Michael Hough, who is a director of Aurora Investment Advisors Limited, holds 100,000 (2011: 100,000) of the shares in Aurora Russia Limited as at 31 March 2012.

John McRoberts, who is a director of Aurora Investment Advisors Limited, holds 300,000 (2011: 299,999) of the shares in Aurora Russia Limited as at 31 March 2012.

Aurora Russia Investment Advisors Limited, holds 3,970,841 (2011: 7,310,000) of the shares in Aurora Russia Limited as at 31 March 2012.

The management fees paid to Aurora Investment Advisors Limited were £1,589,140 (2011: 1,979,720) and the prepayment at year end was £478,110 for 6 months following the year end.

"Per the Amended and Restated Management Agreement, the management fee and performance fee payable to Aurora Investment Advisors Limited ('AIAL') are as follows:

(a) Management fee of an amount equal to I) for all Valuation Dates up to and including 31 March 2011, 1% of the net asset value of the Company; and ii) for all Valuation Dates after 31 March 2011, 0.75% of net asset value of the Company;

(b) Performance fee is calculated as follows:

- 2.5% of the value of any disposals realised by the Company would be payable to the Manager, calculated on the value of assets of the Company realised up to £45 million, i.e. £0.40 per share (the "2.5% Tranche");

- 7.5% of the value of any disposals realised by the Company would be payable to the Manager, calculated on the value of assets of the Company realised between £45 million and £99 million, i.e. £0.40 per share to £0.88 per share (NAV) (the "7.5% Tranche"); and

- 20% of the value of any disposals realised by the Company would be payable to the Manager, calculated on the value of assets of the Company realised over £99 million, i.e. over £0.88 per share (the "20% Tranche").

Performance fees to decline by 20% per annum from 1 January 2012 in respect of the 2.5% Tranche, and by 20% per annum from 1 January 2013 in respect of each of the 7.5% Tranche and the 20% Tranche.

32. Contingencies and capital commitments

The Group had no contingencies and capital commitments outstanding at the reporting date.

33. Events after the reporting date

There were no further material post balance events to report.

Directors and Advisors


Directors		Independent Auditor
Geoff Miller - Chairman - appointed 22 June 2011		KPMG Channel Islands Limited
Dan Koch - resigned 22 June 2011		PO Box 20
Ben Morgan - resigned 28 September 2011		St Peter Port
Grant Cameron		Guernsey GY1 4AN
James Cook - resigned 17 June 2011
Tim Slesinger - appointed 22 August 2011		CREST Service Provider and UK Transfer Agent
John Whittle		Capita Registrars
Alexandr Dumnov - resigned 28 September 2011		The Registry
Gilbert Chalk - appointed 22 June 2011		34 Beckenham Road
		Beckenham
Manager		Kent BR3 4TU
Aurora Investment Advisors Limited
Sarnia House		Nominated Advisor and Broker
Le Truchot		Numis Securities Limited
St Peter Port		The London Stock Exchange Building
Guernsey GY1 4NA		10 Paternoster Square
		London
Administrator and Secretary		EC4M 7LT
Kleinwort Benson Fund Services Limited
Dorey Court		Russian Solicitors to the Company
Admiral Park		White & Case LLC
St Peter Port		4 Romanov Pereulok
Guernsey GY1 3BG		125009 Moscow
		Russia
Registrar
Capita IRG (CI) Limited		UK Solicitors to the Company
2nd Floor		SNR Denton UK LLP
No 1 Le Truchot		One Fleet Place
St Peter Port		London EC4M 7WS
Guernsey GY1 4AE

Guernsey Advocates to the Company
Carey Olsen
7 New Street
St Peter Port
Guernsey GY1 4BZ

This information is provided by RNS

The company news service from the London Stock Exchange

END

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