Annual Financial Report

RNS Number : 7416T

Aurora Russia Limited

22 July 2015

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

Results for the twelve months ended 31 March 2015

· Discussions are actively ongoing to dispose of the Company's shareholding in Unistream.

Financial highlights

· Net asset value per share for the Company as at 31 March 2015 of 17.5p per share (Net asset value £7.8m), down from 27.9p per share at 31 March 2014 (Net asset value £20.7m)

· The movement in the value of the portfolio company principally reflects the lower valuation of comparable companies following a period of weakness in the Russian equity markets and foreign exchange movements.

· Cash and cash equivalents at 31 March 2015 were £2.6 million and 2.1 million following the April share buy back

· Total annual running costs for the Company for the next financial year are budgeted to reduce by 52% to £380,000 on a like for like basis from 2014

Portfolio highlights

Unistream

· Revenues for the twelve months ended 31 December 2014 were RUR 2.9 bn, up 19% YoY

· EBITDA of RUR204 m for 2014, slightly above the RUR175.2 m achieved in 2013

· Equity valuation of Aurora Russia's stake in Unistream at 31 March 2015 was £5.3m, compared to the valuation at 31 March 2014 was £8m

· The Board and the Investment Adviser have explored actively the options for selling the Company's 26% shareholding in Unistream

Commenting, Gilbert Chalk, Chairman of Aurora Russia, said:

"The Board aims to maximise the value of its shareholding in Unistream from a sale of Aurora's stake in the business as soon as is practicable and a fair valuation can be obtained for the Company's holding in current market conditions."

Enquiries:

Aurora Russia Limited

Gilbert Chalk +44 (0)7768 527973

Numis Securities Limited

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

Corporate Broking: Rupert Krefting / Nathan Brown

ANNUAL REPORT

For the year ended 31 March 2015

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 was to make equity or equity-related investments in small and mid-sized private Russian companies focused on the financial, business and consumer services sectors. The Directors are seeking to complete the realisation of the Company's residual investment in a timely manner.

The Manager

The Company's management contract with Aurora Investment Advisors Limited (the 'Manager') to provide investment advisory and management services which ran for 8 years was terminated effective 30 April 2014. The Manager's services were extended to 30 June 2014.

The Investment Advisor

The Board is pursuing its realisation policy with the assistance of Mr Nicholas Henderson-Stewart, who was appointed as Advisor effective 19 June 2014.

Registered address Dorey Court

Admiral Park

St Peter Port

Guernsey

GY1 2HT

Website details www.aurorarussia.com

Company registration no 44388

Chairman's Statement

Introduction

I am pleased to present the results of Aurora Russia Limited (the 'Company' or 'Aurora Russia' or 'ARL') for the 12 months ended 31 March 2015.

The last twelve months in Russia have been a difficult and volatile period. Having lost 50% of its value in 2014, the Rouble has rebounded in 2015, and so far this year is the world's best performing currency. However the Ukraine crisis and related sanctions are still far from over and the economy is forecast by some commentators to contract by close to 4.0% in the current year (Central Bank of Russia) not least because of the continuing low price of oil. This said the economy appears to be stabilising albeit at a lower level and this may allow for a clearer and slightly more positive macro outlook over the next few months.

The Annual General Meeting ('AGM')

I would like to take this opportunity to thank our shareholders for their support over the last year and not least at the AGM on 24 September 2014, voting in favour of all of the resolutions put forward, including the re- appointment of myself and Tim Slesinger to the board of ARL.

Review

The year has seen continued implementation of the Board's policy to realise the Company's Investments at acceptable prices, in the context of a difficult economic backdrop, and to make further cash returns to Investors following realisations.

Subsequent to the year end, after payment of the tender proceeds and receipt of the sales proceeds from KFL, the remaining cash balances at 30 June 2014 were £2.5 million. These funds have been retained for future working capital and other purposes.

In April the Board completed the sale of the non-cash mortgage assets held by Kreditmart Finance Limited ('KFL') for a total consideration of RUR100 million (approximately £1.7 million) plus $450,000 (approximately £267,500), which was KFL's cash balance at the time of the transaction. The Board agreed to the sale at a discount in light of the then current Russian market for banking assets and the difficult nature of the portfolio, which will have only deteriorated further since this sale. Following this latter sale and the earlier sale in March 2014 of Flexinvest Bank, the Board announced in May a second tender offer to shareholders for an aggregate gross consideration of £8.26 million.

Following the appointment of the Company's Investment Advisor, Nicholas Henderson-Stewart, in June 2014 the Board has worked actively with the Advisor to extract maximum value for the Company's remaining investments in Superstroy and Unistream.

In February 2015 ARL completed the sale of its stake in Superstroy - the DIY retail chain in the Urals. The sale resulted in cash proceeds for the Company, net of expenses, of approximately £680,000. ARL's shareholding in Superstroy was valued at £280,000 in the Half Year Statement of Financial Position as at 30 September 2014, reflecting Superstroy's falling sales, loss-making position and very high leverage.

Following the successful sale of Superstroy, ARL conducted a share buy back in early April 2015 and cancelled 6,687,203 shares at 10p a share representing a total consideration paid to shareholders of £672,064. Following the share cancellation the remaining number of shares in issue is 37,923,928 and the cash balance of the Company amounted to £2.1 million at 10 April 2015.

This, together with the two earlier tender offers in May 2013 and May 2014, brings the total proceeds returned to shareholders in the last two years to some £28.3 million.

Aurora's sole remaining asset is its 26% minority stake in Unistream - a money transfer company active in Russia and CIS countries. Unistream has performed well despite the macro-economic downturn. Transfer volumes, related revenue and EBITDA were all up year on year in RUR terms as reported in the Investment Advisor's report. The Board plans to sell Aurora's stake in Unistream and aims to complete this process during the next 6 to 12 months. Unistream's encouraging trading performance, positive disposable cash position and sizeable share of the Russia/CIS cash transfer market means that it should be an attractive asset to both strategic and financial investors.

In light of this, the Board has budgeted for substantially reduced current year operating costs, budgeted at £380,000 (52% less than the like for like costs incurred for the year ended 31 March 2015). Included in these savings is a 51% reduction in the fees payable to the Company's directors to £105,000 in aggregate. The directors will receive additional fees in excess of Director's fees foregone only should net distributions to shareholders from 1 April 2015 be in excess of £5.3 million. Aurora has also entered into a new incentive arrangement with Nicholas Henderson-Stewart (the Company's investment advisor) under which the Advisor will receive an additional incentive fee based on distributions to Shareholders. The percentage of the distributions to Shareholders payable to the Advisor will also vary according to the value and timing of such distributions with no payment being due until distributions from 1 April 2015 exceed approximately £5.3 million and the additional payment being capped at 4% of such distributions.

Results

For the 12 months to 31 March 2015, Aurora Russia recorded a loss of £4.6 million or 9.79p per share, based on the Company statement of comprehensive income. The net asset value ("NAV") of the Company as at 31 March 2015 was £7.8 million or 17.5p per share. Cash and cash equivalents at 31 March 2015 were £2.6 million. Administration and operating expenses were £1 million (a decrease of 36% from the previous year).

Investments

The Company has one remaining investment:

> 26.0% stake in Unistream Bank, a leading Russian money transfer company.

Portfolio Valuation

A valuation of Aurora's stake in Unistream was performed as at 31 March 2015 and resulted in a 37% decrease in value from £8.4 million as at 30 September 2014 to £5.3 million. This decrease in value can be attributed to the sizeable devaluation of the Rouble vs. the Pound during the last 6 months and to the application of additional discounts to reflect the lack of liquidity and heightened risks faced by businesses in Russia. This valuation was prepared for accounting purposes only and is in accordance with the International Private Equity and Venture Capital Board's ('IPEV') valuation guidelines.

Sale of the Company's holding in Unistream

The Board and the Investment Adviser have explored actively the options for selling the Company's 26% shareholding in Unistream. These options have ranged from selling to the majority holders, selling to possible trade buyers and sale to a financial buyer including the possibility of a full bid for the Company rather than a sale of the stake directly. This route could have advantages both for a prospective buyer and for the Company's shareholders. Discussions are ongoing with various parties but to date have not produced a definitive resolution at a price which the Board believes it is in the best interests of shareholders to accept. Negotiations are continuing to seek to obtain an offer which can be recommended to shareholders.

Outlook

The Board aims to maximise the value of its shareholding in Unistream from a sale of Aurora's stake in the business as soon as is practicable and a fair valuation can be obtained for the Company's holding in current market conditions.

Gilbert Chalk

Chairman of the Board

Investment Advisor's Report

Overview

Russia's difficult economic position has worsened since the September 2014 Half-Year accounts. But the worst case predicted by many analysts in late 2014 has not materialized. So far in 2015 the Rouble and the Russian bond and stock markets have rebounded. While the economic situation in Russia remains difficult and GDP will contract in 2015, the country's sizeable foreign currency reserves, positive trade balance and low debt to GDP levels will go some way to cushion the adverse blows of Western sanctions and reduced commodity prices.

Trading Updates

Unistream

Despite challenging economic conditions and a worsening regulatory environment, Unistream performed quite well in 2014 by maintaining positive growth dynamics. Unistream's accounts show that volume transfers in FY 2014 were RUR214.6 billion (£2.87 billion using average exchange rate for the year), up 33% year on year. Net revenues grew 19% to RUR2.9 billion (£39 million) for the same period. EBITDA for the year was RUR204 million (£2.7 million) up 16% from RUR175.2million (£3.37 million) in 2013.

2015 accounts show Unistream's cash transfer volumes in the 12 months ended in March 2015 grew 33% year on year in Rouble terms. Separately Central Bank of Russia statistics indicate Unistream's share of the Russian money remittances market grew from 11.8% in 2013 to 13.4% in 2014. The transfer volume and market share growth were partly driven by management's decision to reduce margins which dropped from 1.52% in 2013 to 1.37% in 2014 and the bankruptcy in June 2014 of a key competitor - Contact Systems. Contact Systems was subsequently taken over by Otkrytie Bank and Qiwi the business was relaunched but it has yet to regain the lost market share. Another driver of Unistream's organic growth has been the launch of a number of new products and financial services. Some have been quite successful, in particular foreign currency cash desks that allow customers an easy way to change money into other currencies on a daily basis. Unistream's Rouble volumes and bottom line were helped by forex volatility that boosted the value of incoming funds from other currency zones, led customers to actively trade currencies via Unistream and allowed Unistream to book RUR500m (£6.6m) forex income in 2014 up 39% year on year versus 2013. This trend continued in early 2015 with combined January and February 2015 FX income up 108% year on year to RUR92m (£1.5m). These trends have eased down subsequently to June and the current economic crisis is now impacting revenues.

Recently published IFRS and RAS (Russian Accounting Standards) accounts are now available on Unistream's website. Due to differences in the accounting policies between IFRS and RAS there are some key differences, mainly in regards to expenses which we would like to highlight.

Under RAS accounting any purchase of fixed assets valued below 40,000 RUB is expensed fully in that period in which it was bought.

Under IFRS accounting these fixed assets are depreciated over 2-5 years. As a result under RAS operating expenditures are significantly higher and depreciation lower.

Management considers IFRS results to be a more accurate representation of the companies financial position as in fact most of these fixed assets under 40,000 RUB have a life span of 3 years on average.

The valuation of Aurora's stake in Unistream as of 31 March 2015 was marked down to £5.3 million. This represents a 37% decrease to the £8.4 million valuation on 30 September 2014. The main reason for this is the falling value of the Russian Rouble, which is the Company's primary currency. Also we increased the Unistream comparative valuation discount by 10% to reflect the growing risk of doing business in Russia. To reflect the slow down of M&A activity in Russia and the reduced likelihood an investor would acquire Unistream, The liquidity discount was increased from 30 to 40%.

Valuation Methodology

The £5.3 million Unistream valuation is arrived at as follows:

> The benchmark is the trailing 12 months Western Union EV/EBITDA and EV/Sales (publicly traded company) of 8.66x and 2.23x respectively.

> Unistream's trailing 12 months Revenue is £36.2m and EBITDA is £3m and net distributable cash balance of £3.6m on 28 February 2015.

> A 30% discount is applied to account for all the risks of doing business in Russia.

> A second discount of 40% is applied to reflect the illiquid nature of Aurora's stake in Unistream.

> A 75% weighting to EV/EBITDA and a 25% weighting to EV/Sales has been used.

> This valuation methodology indicates an equity value of £20.4m for Unistream, of which Aurora owns 26%.

Conclusion

I will continue to work closely with the Aurora Board of Directors to achieve its stated objectives of realising Unistream at a price that fully reflects its value.

Mr Nicholas Henderson-Stewart

21 July 2015

Directors

Gilbert Chalk - Non-executive Director

Mr Chalk is a British citizen, resident in the UK. He 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 Vantage Goldfields Limited, a South African Gold producing company. 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.

Jonathan Bridel - Non Executive Director

Mr Jonathan Bridel is a British Citizen, resident in Guernsey. He has a number of directorships including Alcentra European Floating Rate Income Fund Limited, Starwood European Real Estate Finance Limited, The Renewable Infrastructure Group and Sequoia Economic Infrastructure Income Fund Limited which are listed on the Main Market of The London Stock Exchange and DP Aircraft I Limited and Fair Oaks Income Fund Limited. He was previously Managing Director of Royal Bank of Canada's Investment businesses in the Channel Islands. He has over 30 years international experience in the finance and investment industry and private business. He was for a period Chief Financial Officer of a group with operations in Eastern Europe and the CIS. He is a Chartered Accountant, a Chartered Marketer, a Chartered Fellow of the Chartered Institute for Securities & Investment and holds an MBA from Durham University and qualifications from the Australian Institute of Company Directors.

Peregrine Moncreiffe - Non Executive Director

Mr Peregrine Moncreiffe is a British Citizen, resident in Jersey and advises a number of International Investment companies. He is Chairman of North Atlantic Smaller Companies Investment Trust and a director of EOS Russia AB. He is also a director of Metage Funds Limited and a shareholder in the Company. After an 18 year career in investment banking managing trading departments at Credit Suisse First Boston and Lehman Brothers, he co-founded Buchanan Partners Limited where he was responsible for Russian investments from 1994 until 1999.

Lyndon Trott - Non Executive Director

Mr Lyndon Trott is a British Citizen, resident in Guernsey. He is currently a non-executive director of a number of companies, including the world's largest independent private equity and real estate fund administrator. He served a four year term as Guernsey's Treasury and Resources Minister and progressed to become the jurisdiction's longest serving Chief Minister. He is a former chairman of the board of trustees of a circa £1 billion pension fund and is a graduate of the Institute of Directors' company direction programme.

Directors' Report

The Directors of Aurora Russia Limited ('the Company') present their report and audited financial statements of the Company for the year ended 31 March 2015.

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. The Company is now seeking to dispose of its residual investment at a level which reflects its underlying value.

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.

Business review

The Company's risk exposure, management objectives and policies are disclosed in note 18 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 2015 (2014: £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

Gilbert Chalk - Chairman 22 June 2011 -

Timothy Slesinger 22 August 2011 -

Jonathan Bridel 12 April 2013 -

Peregrine Moncreiffe 12 April 2013 -

Lyndon Trott 1 May 2013 -

Directors' and other interests

Directors of the Company or its previous Manager, whose appointment was terminated effective 30 April 2014, who held office during the year had the following interests in the shares of the Company as at 31 March 2015:

Number of shares

Gilbert Chalk			19,827
Timothy Slesinger			5,674,913
Peregrine Moncreiffe			381,583

None of the Directors who held office during the year had any interests in the contracts with the Company, save in their capacities as directors and shareholders of the Company, as applicable.

Directors' remuneration

The following Directors emoluments were incurred:

	2015 Fees	2014 Fees
Grant Cameron	-	2,167
Gilbert Chalk	81,250	90,486
Timothy Slesinger	28,500	26,000
Lyndon Trott	28,500	28,906
Jonathan Bridel	48,750	37,063
Peregrine Moncreiffe	28,500	28,214
Geoffrey Miller	-	867
John Whittle	-	1,200
Total	£215,500	£214,902

Grant Cameron resigned on 1 May 2013 and Geoffrey Miller and John Whittle both resigned on 12 April 2013.

Jonathan Bridel's remuneration was increased from £35,000 to £40,000 on 1 July 2014, and was then decreased from £40,000 to £22,500 per annum with effect from 1 April 2015. Lyndon Trott, Timothy Slesinger and Peregrine Moncreiffe's remuneration was decreased from £26,000 to £17,500 per annum each with effect from 1 April 2015. Gilbert Chalk's base remuneration was decreased from £65,000 to £30,000 per annum with effect from 1 April 2015. A once-off payment of £10,000 was paid to Gilbert Chalk during the year as well as a £2,500 one-off payment to Peregrine Moncreiffe, Lyndon Trott, Timothy Slesinger and Jonathan Bridel respectively. All of these payments were made in recognition of the significant additional work required of the directors in connection with disposals of the Company's assets and the subsequent return of capital to shareholders. Directors fees of £7,500 and £6,250 were also paid to Jonathan Bridel and Gilbert Chalk respectively. These were in relation to their trip to Russia in 2014. Please also refer to the Corporate Governance section on page 12 for disclosures regarding the Directors performance fee arrangements.

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 Company and of the profit or loss of 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 the Company will continue in business. For the reasons set out in note 2.2, the financial statements have been prepared on a non-going concern basis.

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

The Directors are also responsible for ensuring that the annual report includes information required by the AIM Rules for Companies (the 'AIM Rules').

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 Company'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 Company's Auditor is aware of that information.

Non-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 2 to 3 as well as the statement of financial position of the Company and its statement of cash flows. In addition, note 18 to the financial statements includes 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 Directors resolved to begin the gradual winding up of the Company over the following 12 months. As such the Directors believe it is appropriate to adopt a non-going concern basis in preparing the financial statements, as they consider that the Company will be voluntarily liquidated within the next 12 months. The Directors believe that the Company will be able to realise its remaining investment in an orderly manner and therefore do not consider there to be a material difference in the value of the Company's assets, and liabilities, compared to if the financial statements had been prepared on a going concern basis. Accruals of £15,000 for circular and de-listing; £20,000 for liquidation and £15,000 for retention are reflected in the accounts for the liquidation.

Auditor

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

Gilbert Chalk Jonathan Bridel

Director Director

21 July 2015

Corporate Governance

Corporate Governance Codes

The Directors are committed to ensuring that high standards of corporate governance are maintained and that best practice on corporate governance is applied, in so far as the Directors believe it is relevant and appropriate to the Company. As the Company is now seeking to dispose of its final residual investment and in light of the small and decreasing size of the Company, the Board is now complying with Finance Sector Code of Corporate Governance (the "GFSC Code") published by the Guernsey Financial Services Commission (the "GFSC Code"). As the Company is an authorised closed-ended investment scheme incorporated in Guernsey, the GFSC Code automatically applies to the Company.

A copy of the GFSC Code can be obtained from the GFSC's website www.gfsc.gg or from the Secretary upon request.

The Board and Board Committees

All of 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 all of the directors are non-executives and all of them are considered to be independent.

The Chairman is Gilbert Chalk.

The respective committee members resigned from, or were appointed to, their committees when they resigned or were appointed as directors.

On joining the Board, each Director was given a full tailored induction and Directors receive regular relevant training on matters relating to the Company's business. There were no changes in the composition of the Board in the year under review.

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, transactions and other general matters affecting the Company. The Board considers that it meets sufficiently regularly to discharge its duties effectively.

The Audit Committee comprises Jonathan Bridel, Gilbert Chalk and Lyndon Trott and is chaired by Mr Bridel.

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 interim accounts, results, announcements, internal control systems and procedures and accounting policies of the Company. The Audit Committee also monitors the auditor's independence and objectivity and the effectiveness of the audit process. Furthermore, the Audit Committee makes recommendations to the Board, for it to put to shareholders for their approval in the annual general meeting, in relation to the re-appointment of the external auditor. Finally, the Audit Committee considers and makes recommendations to the Board on any non-audit services to be provided by the auditor. The Audit Committee meets a minimum of twice a year but where appropriate the meetings shall coincide with key dates in the Company's financial reporting cycle. The terms of reference of the Audit Committee are available from the Secretary upon written request.

As all of the Directors are non-executive and as day-to-day management and administration of the Company has been delegated to the Manager and the Administrator, the Board on the recommendation of the Audit Committee has agreed that it is not necessary to create an internal audit function. This position is reviewed at least annually.

The Valuation Committee comprises of all the Directors and is chaired by Mr Chalk. The Valuation Committee is responsible for valuing proposed investments and revaluing investments on an ongoing basis and it meets at least twice a year. The terms of reference of the Valuation Committee are available from the Secretary upon written request.

The Remuneration Committee also comprises all of the Directors and is chaired by Mr Slesinger. The Remuneration Committee is responsible for reviewing the performance of Directors, the scale and structure of remuneration and Directors' letters of appointment and it meets a minimum of twice a year. The terms of reference of the Remuneration Committee are available from the Secretary upon written request.

As all of the Directors are non-executives, they ordinarily receive a flat rate of remuneration. However, the Directors are entitled to such remuneration as the Board may determine (subject to an aggregate cap of £300,000 per annum), and during the year under review the Directors were awarded additional remuneration for the significant extra work and additional meetings required in connection with the disposals of investee companies. The numbers of additional meetings attended by the Directors is shown in the table below. Details of the remuneration paid to the Directors in the year under review and their current fees are set out on page 9. None of the Directors has a contract of service with the Company and they are all appointed in accordance with the Company's articles of incorporation.

As announced on 31 March 2015, the Board stated at the time of the announcement of the sale of Superstroy that it would be reviewing the cost base of the Company. Following completion of that review, the total annual running costs of the Company for the year commencing 1 April 2015 were budgeted at £380,000, a decrease of 52% on a like-for-like basis on the costs expected to have been incurred in the year ending 31 March 2015. Included in these savings was a 51% reduction in the fees payable to the Company's directors (the "Directors") to £105,000 in aggregate.

The Directors recognised that this fee reduction was necessary, given the fact that the Company holds only one residual investment, but agreed that the self-managed nature of the Company meant that it was appropriate, in consideration for the reduction in their fees, to establish an incentive arrangement for the Directors. Following a consultation with certain major shareholders, arrangements were therefore entered into between the Company and the Directors, whereby:

• The Directors are incentivised to maximise distributions to the Company's shareholders (the "Shareholders") over a period of twelve months.

• The incentive fee payable to the Directors will scale up relative to the value of any such distributions made on or after 1 April 2015, subject to reductions to the extent that the realisation period extended beyond six months.

• The Directors will receive a net reduction in fees until distributions to the Shareholders exceed approximately £5.3 million.

• Under the Company's articles, the aggregate Directors' remuneration is limited to £300,000 in any financial year. The aggregate Directors' remuneration would exceed this threshold if distributions to Shareholders exceed approximately £7.6 million, in which event the payment of such excess will be subject to Shareholders' approval.

The Company has also entered into a new incentive arrangement with Nicholas Henderson-Stewart, the Company's investment advisor (the "Advisor"), under which the Advisor will receive an additional incentive fee based on distributions to Shareholders made on or after 1 April 2015. The percentage of the distributions to Shareholders payable to the Advisor will vary according to the value and timing of such distributions, with no payment being due until distributions exceed approximately £5.3 million and the payment being capped at 4% of such distributions.

The incentive arrangements entered into between the Company and the Directors represented a related party transaction under the AIM Rules. In the circumstances where each of the Directors was party to these incentive arrangements, Numis Securities Limited ("Numis") as the Company's nominated adviser confirmed that it considered that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned.

Details of the remuneration paid to the Directors in the year under review and their current fees are set out on page 9. None of the Directors have a contract of service with the Company and they are all appointed in accordance with the Company's Articles of Incorporation.

The Management Engagement Committee comprised Gilbert Chalk (Chairman), Jonathan Bridel, Timothy Slesinger, Lyndon Trott and Peregrine Moncreiffe. The Management Engagement Committee is responsible for reviewing the terms of agreements with the Company's 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. The Management Engagement Committee meets at least once per year. The terms of reference of the Management Engagement Committee are available from the Secretary upon written request.

The Board receives from the Secretary and its other advisors 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 and have access to the advice and services of the Secretary. The Company has purchased appropriate directors' and officers' liability insurance in respect of legal action against its directors.

Following the termination of the appointment of the Company's investment manager, Aurora Investment Advisors Limited, the Board is responsible for day-to-day management of the Company's assets and receives advice thereon from the Advisor. All decisions relating to the Company's investment policy, investment objectives, investment decisions, dividend policy, gearing, corporate governance procedures and strategy in general are specifically reserved for the Board. The Board evaluates the Advisor's performance on an annual basis and monitors the Advisor at each quarterly Board meeting.

The number of meetings of the full Board and those committees attended by each Director from 1 April 2014 up to 31 March 2015 is set out below:

	Audit	Committee	Valuation	Committee	Remuneration	Committee	Management	Committee
							Engagement
	Held	Attended	Held	Attended	Held	Attended	Held	Attended
Gilbert Chalk	3	3	2	2	2	1	2	2
Tim Slesinger	3	1	2	1	2	1	2	1
Jonathan Bridel	3	3	2	2	2	2	2	2
Lyndon Trott	3	2	2	2	2	2	2	2
Peregrine Moncreiffe	N/A	N/A	2	2	2	2	2	2
	Quarterly		Ad hoc
	Held	Attended	Held	Attended
Gilbert Chalk	4	4	15	12
Tim Slesinger	4	4	15	10
Jonathan Bridel	4	4	15	12
Lyndon Trott	4	4	15	13
Peregrine Moncreiffe	4	4	15	13

Tim Slesinger attended the Audit Committee meetings during the year but was not a member of this committee.

Performance of Board and proposal for re-election

The performance of each Director is appraised by the full Board prior to the convening of the annual general meeting for each year with support from the Secretary and by reference to a tailored set of criteria against which performance is measured. The performance of each Board committee is appraised by the Board as a whole. In accordance with the Company's Articles of Incorporation (the "Articles"), one third, or the number nearest to but not greater 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. Details of the specific resolutions to be prepared at the annual general meeting and the identity of the director(s) to stand for re-election will be included in the notice of the annual general meeting, due to be sent out later in the year.

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. Information on the Directors, including their relevant experience, is set out in pages 6 to 7.

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. In addition to the Chairman, all other non-executive Directors, including the Chairmen of the Audit and Remuneration Committees, will be available to answer questions at the forthcoming 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 with key investors in a timely manner and in a format suitable to the shareholders of the Company.

The Board has also organised 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. In order to reduce the expense to shareholders and to avoid proposing a continuation vote which may not be required if the Company's last remaining investment is sold, the Directors do not intend to convene the next annual general meeting until the fourth calendar quarter of 2015.

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

We have audited the financial statements of Aurora Russia Limited (the 'Company') for the year ended 31 March 2015 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the Statement 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 IASB. As described in note 2.2, the financial statements have been prepared on a non-going concern basis.

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 9 and 10, 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 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. 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 Company's affairs as at 31 March 2015 and of its 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

Glategny Court

Glategny Esplanade

St Peter Port

Guernsey

GY1 1WR

21 July 2015

Statement of Comprehensive Income
For the year ended 31 March 2015
		Year ended	Year ended
		31 March 2015	31 March 2014
	Notes	£'000	£'000

Loss on disposal of Flexinvest	13	-	(2,877)
Loss on disposal of Kreditmart Finance Limited		(20,675)	-
Loss on disposal of Grindelia Holdings Limited		(15,633)	-
Revenue		6	464
- Dividend income		-	447
- Interest income		6	17
Administration and operating expenses	5	(1,069)	(1,672)
Deferred consideration written off		-	(813)
Fair value movements on revaluation of investments	8	32,760	(15,215)
Foreign exchange loss		3	(267)

Operating loss		(4,608)	(20,380)

Interest expense		-	-

Loss before tax		(4,608)	(20,380)

Income tax expense		-	-

Total comprehensive loss for the year	19	(4,608)	(20,380)


Basic and diluted loss per share	6	(9.79p)	(26.31p)

The accompanying notes on pages 19 to 36 form an integral part of these financial statements.

Statement of Financial Position

As at 31 March 2015

		31 March	31 March
		2015	2014
	Notes	£'000	£'000
Non-current assets
Investment in subsidiaries	6	-	1,968
Investments	7	5,300	9,800

		5,300	11,768
Current assets
Other receivables	8	13	3
Cash and cash equivalents	9	2,638	9,136

		2,651	9,139

Total assets		7,951	20,907

Current liabilities
Other payables		150	219
Provisions		-	-
		150	219

Total liabilities		150	219


Equity
Share capital	13	446	743
Special reserve	15	56,349	64,331
Accumulated loss	16	(48,994)	(44,386)

Total equity		7,801	20,688


Total equity and liabilities		7,951	20,907

Net asset value per share - Basic and Diluted	17	17.5p	27.9p

The financial statements on pages 15 to 36 were approved by the Board of Directors on 21 July 2015 and signed on its behalf by:

Gilbert Chalk Jonathan Bridel

Director Director

The accompanying notes on pages 19 to 36 form an integral part of these financial statements.

Statement of Changes in Equity

For the year ended 31 March 2015

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


Balance as at 1 April 2013		1,125	84,073	(24,006)	61,192

Total comprehensive loss for the year
Loss for the year		-	-	(13,940)	(13,940)

Share buyback	14	(382)	(19,742)	-	(20,124)

At 31 March 2014		743	64,331	(44,386)	20,688


Balance as at 1 April 2014		743	64,331	(44,386)	20,688

Total comprehensive loss for the year
Loss for the year		-	-	(4,608)	(4,608)

Share buyback	14	(297)	(7,982)	-	(8,279)

At 31 March 2015		446	56,349	(48,994)	7,801

The accompanying notes on pages 19 to 36form an integral part of these financial statements.

Statement of Cash Flows

For the year ended 31 March 2015

		Year	Year
		ended	ended
	Note	31 March	31 March 2014
		2015
		£'000	£'000
Cash flows from operating activities
Total comprehensive loss		(4,608)	(20,380)

Adjustments for movements in working capital:
(Increase) / decrease in other receivables		(10)	19
Decrease in other payables		(68)	(1,212)

Adjust for:
Interest income		(6)	(17)
Revaluation of investments	8	(32,760)	15,215
Loss on sale of investment		36,308	2,877
Exchange gain / (loss)		(3)	267
Interest received		-	-

Net cash outflow from operating activities		(1,147)	(3,231)

Cash flows from investing activities
Proceeds on disposal of Flexinvest		-	2,940
Proceeds on disposal of OSG		-	6,667
Proceeds on disposal of Kreditmart Finance Limited		1,919	-
Proceeds on disposal of Superstroy		1,000	-
Bank interest received		6	17

Net cash inflow from investing activities		2,925	9,624

Cash flows from financing activities
Share buyback	17	(8,279)	(20,124)

Net cash outflow from financing activities		(8,279)	(20,124)

Net (decrease) / increase in cash and cash equivalents		(6,501)	22,418

Opening cash and cash equivalents		9,136	23,134

Effect of foreign exchange movements		3	(267)

Closing cash and cash equivalents	10	2,638	9,136

The accompanying notes on pages 19 to 36 form an integral part of these financial statements.

Notes to the Financial statements

For the year ended 31 March 2015

1. Reporting entity

The Company is a closed-ended investment fund that was incorporated in Guernsey on 22 February 2006, and was admitted to trading on the Alternative Investment Market of the London Stock Exchange ('AIM') on 20 March 2006. The Company was established to acquire interests in small and mid-sized private companies in Russia, focusing on the financial, business and consumer services sectors.

2. Basis of preparation

2.1 Statement of compliance

The financial statements give a true and fair view and are prepared in accordance with International Financial Reporting Standards (IFRS) which comprise standards and interpretations approved by the International Accounting Standards Board and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee that remain in effect. These financial statements comply with Companies (Guernsey) Law, 2008.

2.2 Basis of Measurement

The Directors resolved to begin the gradual winding up of the Company over the following 12 months. As such the Directors believe it is appropriate to adopt a non-going concern basis in preparing the financial statements. The Directors believe that the Company will be able to realise its investment in an orderly manner and therefore do not consider there to be a material difference in the value of the Company's assets, and liabilities, compared to if the financial statements had been prepared on a going concern basis. Accruals of £15,000 for circular and de-listing, £20,000 for liquidation and £15,000 for retention have been raised in the accounts for liquidation.

The significant accounting policies adopted are set out in note 3.

2.3 New standards and interpretations adopted during the year

There were no new standards adopted in the current year.

2.4 New standards and interpretations not yet adopted

There are a number of new standards, amendments to standards and interpretations that are not yet effective for the year ended 31 March 2015, and have not been applied in preparing these financial statements.

• IFRS 9 Financial Instruments (effective on or after 1 January 2018)

IFRS 9 deals with classification and measurement of financial assets and its requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets: amortised cost and fair value. Financial assets are measured at amortised cost when the business model is to hold assets in order to collect contractual cash flows. All other financial assets are measured at fair value with changes recognised in profit or loss. For an investment in an equity instrument that is not held for trading, an entity may on initial recognition elect to present all fair value changes from the investment in other comprehensive income. Once adopted, IFRS 9 will be applied retrospectively, subject to certain transitional provisions. The Company is currently in the process of realising its final investment and thereafter it will be wound up. Therefore this Standard is not expected to have an effect on the Company.

• Annual Improvements to IFRS, 'Presentation of financial statements' on the disclosure initiative (effective on or after 1 January 2016)

These amendments are as part of the IASB initiative to improve presentation and disclosure in financial reports. This standard is not expected to have a significant impact on the financial statements.

There are no other standards, amendments or interpretations that are not yet effective that would be expected to have a material impact on the Company.

2.5 Critical accounting judgements and key sources of estimation uncertainty

The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

The following areas are a key source of estimation uncertainty for the Company and are included within the relevant accounting policy note:

• Valuation of Investments in Subsidiaries and Investments

Significant estimates in the Company's financial statements include the amounts recorded for the fair value of the investments.

By their nature, these estimates and assumptions are subject to measurement uncertainty and the effect on the Company's financial statements of changes in estimates in future periods could be significant.

2.6 Functional and presentation currencies

All information presented in Sterling has been rounded to the nearest thousand unless otherwise stated. The functional and presentation currency of the Company is Sterling. The Company's investment is in Roubles.

3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by the Company.

3.1 Determination and presentation of operating segments

The Company has determined and presented operating segments based on the information that internally is provided to the Board of Directors of the Company, who is the Company's chief operating decision maker.

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components. An operating segment's operating results are reviewed regularly by the Board of Directors of the Company to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker. The Board of Directors are responsible for allocating resources, assessing performance of the operating segments and making strategic decisions.

3.2 Foreign currency transactions

Transactions in currencies other than Sterling are translated at the foreign exchange rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into sterling at the exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into Sterling at foreign exchange rates ruling at the dates the fair value was determined.

3.3 Revenue

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

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

3.4 Expenses

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

3.5 Set up expenses

The preliminary expenses directly attributable to the issuance and listing of equity instruments of the Company that would otherwise have been avoided were deducted from the share capital account.

3.6 Taxation

The Company is exempt from Guernsey taxation on income derived outside Guernsey and bank interest earned in Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989, for which it pays an annual fee of £600. The annual fee has increased to £1,200 per annum with effect from 1 January 2015.

3.7 Financial Instruments

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

3.7.1 Investments

Recognition and Measurement

Unquoted investments, including investments in subsidiaries are designated as fair value through profit or loss. Investments are initially recognised at cost on a trade date basis. The investments are subsequently re-measured at fair value, which is determined by the Directors on the recommendation of the Valuation Committee; all the Directors are currently on the Valuation Comittee. Unrealised gains and losses arising from the revaluation of investments are taken directly to profit or loss. Investments deemed to be denominated in a foreign currency are revalued in Pounds Sterling even if there is no revaluation of the investment in its currency of denomination. Acquisition of investments is recorded on the trade date or when substantially all the risks and rewards of ownership transfer to the Company.

Investments are denominated in Russian Roubles, which the Directors believe best reflect the underlying nature of the currency exposure of the investee companies. The investments are translated into Sterling at the period end, which is the functional and presentational currency of the Company. Unrealised gains and losses arising from the revaluation of investments are taken directly to the Statement of Comprehensive Income.

The fair value of the investments is arrived at on the basis of the recommendation of the Company's Valuation Committee, based on valuations that were performed by Mr Nicholas Henderson-Stewart ("NHS"). Fair value is determined as follows:

Unquoted securities are valued based on the fair value which is estimated by the Valuation Committee. The Valuation Committee will take into account the guidelines and principles for valuation of Portfolio Companies set out by the International Private Equity and Venture Capital (IPEV) Board, with particular consideration of the following factors:

• Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

• The valuation methodology applied uses reasonable assumptions and estimations and takes account of the nature, facts and circumstances of the investment and its materiality in the context of the total portfolio.

• An appropriate methodology incorporates available information about all factors that are likely material to affect the fair value of the investment. The valuation methodologies are applied consistently from period to period, except where a change would result in a better estimate of fair value. Any changes in valuation methodologies will be clearly disclosed in the financial statements.

The most widely used methodologies are listed below (discussed further in note 18). In assessing which methodology is appropriate, the Valuation Committee is predisposed towards those methodologies that draw upon market-based measures of risk and return.

• Market Approach

• Income Approach

• Net Assets Approach

Investments made by the Company are generally considered to be long term investments and are not intended to be disposed of on a short term basis. Accordingly valuations do not necessarily represent the amounts which may eventually be realised from sales or other disposals of investments. Values of unlisted investments may differ significantly from the values that would have been used had a ready market for these assets existed.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset. Any interest in such transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

On de-recognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset de-recognised), and consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss. In determining the consideration received the proceeds received are decreased by any payables that are directly linked to the sale.

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

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

3.7.2 Cash and cash equivalents

Cash held with banks and short term deposits that are held to maturity are carried at amortised cost. Cash and cash equivalents consist of cash on hand and short term deposits in banks with an original maturity of three months or less. Cash is measured at amortised cost which approximates fair value.

3.7.3 Receivables

Receivables do not carry any interest. Where the time value of money is material, receivables are discounted to their present values. Allowance is made when there is objective evidence that the Company will not be able to recover balances in full.

3.7.4 Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangement entered into.

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Financial liabilities and equity instruments are recorded at the proceeds received, net of issue costs.

Financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

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

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Company has the following non-derivative financial liabilities: other payables.

Other payables do not carry any interest. Where the time value of money is material, payables are discounted to their present values. Allowance is made when there is objective evidence that the Company will not be able to pay balances in full. Other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method.

3.8 Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

3.9 Share capital and equity

Ordinary shares are classified as equity.

If the Company reacquires its own equity instruments, the consideration paid, including any directly attributable incremental costs (net of income taxes) on those instruments are deducted from equity until the shares are cancelled or reissued. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments. Consideration paid or received is recognised directly in equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

3.10 Fair Value

The Directors consider the carrying value of all financial assets and liabilities to approximate their fair value. Where the difference is significant, note disclosure is provided.

Notes to the Financial statements

For the year ended 31 March 2015

4.	Administration and operating expenses

	The operating loss for the year has been arrived
	at after charging the following items of	Year ended	Year ended
	expenditure:	31 March	31 March
		2015	2014
		£'000	£'000
	Company
	Auditors' remuneration	72	91
	Directors' remuneration	215	215
	Other operating and administrative expenses:
	- Administration fees	66	78
	- Marketing costs	19	34
	- Professional fees	380	327
	- Liquidation costs	50	-
	- Bonus liability written off	-	(97)
	- Other	142	252
	Expenses excluding investment management	944	900
	fee
	Investment management fee and performance	125	772
	fees

		1,069	1,672

Loss per share

31 March

2015

2014

£'000

The calculation of the basic and diluted

loss per share is based on the following

data:

Loss for the purposes of basic and

(4,680)

(20,380)

diluted loss per share being net loss

attributable to equity holders of the

parent

Weighted average number of ordinary

47,048

77,449

shares for the purpose of diluted loss

loss per share (in thousands):

Loss per share - Basic and Diluted

(9.79p)

(26.31p)

6. Investment in subsidiaries - at fair value through profit or loss

		31 March
	31 March 2014	2013
	£'000	£'000

KFL
At beginning of period	1,968	4,583
Fair value revaluation *	-	(2,615)
Sale of Kreditmart	(22,594)	-
Reversal of unrealised losses	20,626	-

At end of period*	-	1,968

Flexinvest
At beginning of period	-	5,817
Proceeds on sale	-	(2,940)
Loss on disposal	-	(2,877)
At end of period*	-	-
	-	1,968

* Kreditmart is stated at fair value as at 31 March 2014 based on an agreed sales price and the entire holding on Flexinvest was sold on 14 February 2014 (refer to Note 10). The entire holding in KFL was sold on 28 April 2014.

The valuation of the subsidiaries and investments at 31 March 2014 was performed by Aurora Investment Advisors Limited; the final valuations were approved by the Valuation Committee. The valuation of the investment at 31 March 2015 was performed by Mr Nicholas Henderson-Stewart; the final valuation was approved by the Valuation Committee.

The methodologies and assumptions used in valuing investments and investments in subsidiaries are discussed in Note 18.

Set out below is a list of the unconsolidated subsidiaries of the Company (the Company sold its entire holding in Flexinvest and Kreditmart; please refer to notes 10 and 11):

Name of subsidiary undertaking	Country of	Class of	% of class	% of class	Principal
	incorporation/Principal	share	held at 31	held at 31	activity
	place of business		March	March
			2015	2014

KFL	Cyprus	Ordinary	0%	100.0%	Consumer finance

7. Investments


	31 March	31 March
	2015	2014
	£'000	£'000

Unistream Bank	5,300	8,000

Grindelia Holdings*	-	1,800

Total investments at fair value through profit or	5,300	9,800
loss

The Company holds 26% (2014: 26%) in Unistream and 0% (2014: 24.3%) in Grindelia respectively; the shareholding and voting rights are the same in both cases. Unistream is a Russian company with the principal place of business in Russia, Grindelia is a Cyprus holding company with its principal place of business in Russia. The Company sold its entire shareholding in Grindelia on 28 January 2015, refer to Note 12.

Change in fair value of investments at fair value through profit or
loss
	Year ended 31	Year ended 31
	March 2015	March 2014
	£'000	£'000


Unistream Bank	(2,700)	(4,000)

Grindelia Holdings*	14,834	(8,600)

KFL	20,626	(2,615)


Total unrealised losses	32,760	(15,215)
* Holding company for Superstroy.


8. Other receivables
	31 March	31 March
	2014	2013
	£'000	£'000

Prepayments	13	3
	13	3


9. Cash and cash equivalents
	31 March	31 March
	2015	2014
	£'000	£'000

Bank balances	2,638	4,726
Fixed deposits	-	4,410

	2,638	9,136


10. Sale of Flexinvest shares
	31 March	31 March
	2015	2014
	£'000	£'000
Proceeds on sale	-	2,940
Less: Cost of Investment	-	5,817
Loss on sale	-	(2,877)

The Company sold its entire shareholding in Flexinvest on 14 February.

The consideration for the disposal was RUR189.1 million (approximately £3.2 million) in cash plus, as part of the sale, mortgages with a nominal value of RUR144.2 million (approximately £2.4 million) held by Flex Bank which have been transferred to the Company's wholly owned subsidiary KFL.

The cash proceeds totalled RUR172.2 million (approximately £2.9 million).

11. Sale of Kreditmart Finance Limited
	31 March	31 March
	2015	2014
	£'000	£'000
Proceeds on sale	1,919	-
Less: Cost of Investment	(22,594)	-
Loss on sale	(20,675)	-

The Company sold 100% of its shares in Kreditmart Finance Limited to Amikson Business Limited on 24 April 2014. The proceeds of the sale was RUR 100,000,000 and $450,000, the total amount of which was paid in US Dollars.

12. Sale of Grindelia Holdings Limited
	31 March	31 March
	2015	2014
	£'000	£'000
Proceeds on sale	1,000	-
Less: Cost of Investment	(16,633)	-
Loss on sale	(15,633)	-

The Company sold 100% of its shareholding in Grindelia Holdings Limited to Tuina Assets Limited on 28 January 2015. The proceeds of the sale was $1,518,180, which was paid in US Dollars (£1,000,000).

13. Share Capital

	31 March 2015	31 March 2014
	£'000	£'000
Authorised share capital: £2,000,000
200,000,000 Ordinary Shares of 1p each:	2,000	2,000

Issued share capital:
44,611,131 (2014: 74,262,617) fully paid Ordinary	446	743
Shares of 1p each:


14. Share buyback
	31 March 2015	31 March 2014
Treasury shares	No. of Shares	No. of Shares

Opening balance as at 1 April 2014, 1 April 2013	-	-
38,237,383 Ordinary Shares of 0.01p bought back	-	38,237,383
Shares cancelled	-	(38,237,383)
29,651,486 Ordinary Shares bought	29,651,486	-
4,343,081 Shares cancelled	(4,343,081) (25,308,405)	- -
25,308,405 Shares cancelled	(4,343,081) (25,308,405)	- -


	-	-


	31 March 2015	31 March 2014
Share Capital	£'000	£'000

Opening balance as at 1 April 2013, 1 April 2012	743	1,125
38,237,383 Ordinary Shares of 0.01p bought back	-	(325)
5,739,488 Ordinary Shares of 0.01p bought back	-	(57)
25,308,405 Ordinary Shares of 0.01p bought back	(253)	-
4,343,081 Ordinary Shares of 0.01p bought back	(44)	-

	446	743

Special reserve

Opening balance as at 1 April 2014, 1 April 2013	64,331	84,073
38,237,383 Ordinary Shares bought back by	-	(16,673)
NUMIS
5,739,488 Ordinary Shares bought back by NUMIS	-	(2,944)
Professional and legal fees incremental to Share	-	(125)
buyback
25,308,405 Ordinary Shares bought back by	(6,718)	-
NUMIS
4,343,081 Ordinary Shares bought back by NUMIS	(1,153)	-
Professional and legal fees incremental to Share	(111)	-
buyback		-
	56,349	64,331
On 1 May 2014 the Company entered into a repurchase
agreement to purchase ordinary shares of the Company
from Numis Securities Limited ("Numis"). The Company
purchased 29,651,486 Shares, at a price of 27.5454p
per Share for an aggregate gross consideration of
£8,167,620.


15. Special reserve
The Special reserve is a distributable reserve to be
used for all purposes permitted under Guernsey
company law, including the buy back of shares and
the payment of dividends.
	31 March 2015	31 March 2014
	£'000	£'000

Balance as at 31 March 2015, 31 March 2014	56,349	64,331

A detailed breakdown of the Special Reserve is shown in
Note 14 above.

16. Accumulated Loss
	31 March 2015	31 March 2014
	£'000	£'000
Balance as at 1 April 2014, and 1 April 2013	(44,386)	(24,006)

Total comprehensive loss for the year	(4,608)	(20,380)

Balance as at 31 March 2015, and 31 March 2014	(48,994)	(44,386)

17. Net asset value per share

	31 March 2015	31 March 2014

Net assets for the purposes of basic and	7,801	20,688
diluted net asset value per share
attributable to equity (£'000)

Number of ordinary shares for the	44,611,131	74,262,617
purpose of net asset value per share

Net asset value per share	17.5p	27.9p

18. Financial risk factors

The investment strategy of the Company is to make equity or equity-related investments in small and mid-sized private Russian companies focused on the financial, business and consumer services sectors with the objective to provide investors with an attractive level of capital growth from investing in a diversified private equity portfolio. Consistent with that objective, the Company's financial instruments mainly comprise of investments in private equity companies. In addition the Company holds cash and liquid resources as well as having debtors and creditors that arise directly from its operations. The main risks arising from the Company's financial instruments are credit risk, foreign currency risk, market price risk and interest rate risk.

18.1 Capital Management

The capital structure of the Company at year end consists of cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves and accumulated loss. The Company has no return on capital benchmark, but the Board continues to monitor the balance of the overall capital structure so as to maintain investor and market confidence. The Company is not subject to any external capital requirements.

18.2 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

Refer to the interest rate risk table in note 18.7 for the maturity analysis of the Company's liabilities.

18.3 Credit risk

The Company is exposed to credit risk in respect of its cash and cash equivalents, arising from possible default of the relevant counterparty, with a maximum exposure equal to the carrying value of those assets. The credit risk on liquid funds is limited because the counterparties are banks with credit-ratings assigned by international credit-rating agencies. Credit ratings for the banks are as follows: Investec Baa3; Royal Bank of Scotland Baa1 and Lloyds A3. The Company monitors the placement of cash balances on an ongoing basis.

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

	31 March	31 March
	2015	2014
	£'000	£'000
Cash and cash equivalents	2,638	9,136
Other receivables	13	3

	2,651	9,139

No balances are past due or impaired at year end.

18.4 Geographical risk

The geographical concentration of the assets and liabilities of the Company are set out below:

ASSETS	31 March 2015
	Russian	United	Other	Total
	Federation	Kingdom
	%	%	%	%
Investments	100	-	-	100
Other receivables	-	100	-	100
Cash and cash equivalents	-	81	19	100

ASSETS	31 March 2014
	Russian	United	Other	Total
	Federation	Kingdom
	%	%	%	%
Investments	100	-	-	100
Investments in subsidiaries	100	-	-	100
Other receivables	68	-	32	100
Cash and cash equivalents	-	100	-	100

18.5 Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's reporting currency. The Company is exposed to foreign exchange risk arising from various currency exposures primarily with respect to Russian Roubles and US Dollars. All of the Company's equity investments are denominated in Russian Roubles. The Company does not hedge its currency exposure on equity investments

Currency Risk Table

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

As at 31 March 2015:

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

Total assets	2,146	505	5,300	-	7,951
Total liabilities	(150)	-	-	-	(150)

Net currency exposure	1,996	505	5,300	-	7,801

As at 31 March 2014:

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

Total assets	9,136	-	11,768	-	20,907
Total liabilities	(146)	(56)	-	(17)	(219)

Net currency exposure	8,993	(56)	11,768	(17)	20,688

Foreign Currency Sensitivity

The following table details the Company's sensitivity to a 20% (2014: 20%) strengthening of Sterling against each of the relevant foreign exchange currencies. 20% (2014: 20%) is the sensitivity rate used when reporting foreign currency risk internally to management and represents management's assessment of the possible change in foreign exchange rates. This analysis assumes that all variables, in particular interest rates remain constant. The analysis is performed on the same basis for the prior period.

Increase / (decrease) in profit /loss:

	31 March	31 March
	2015	2014
	£'000	£'000

Russian Rouble	(1,060)	(2,354)
US Dollar	(101)	11

A 20% (2014: 20%) weakening of the Sterling against each of the relevant foreign exchange currencies at the year end would have had the equal but opposite effect, on the basis that all other variables remain the same.

18.6 Market risk

Market price risk arises principally from uncertainty concerning future values of financial instruments used in the Company's operations. It represents the potential loss the Company might suffer through holding interests in unquoted private companies whose value may fluctuate and which may be difficult to value and/or to realise. The Company seeks to mitigate such risk by assessing such risks as part of the due diligence process related to all potential investments, and by establishing a clear exit strategy for all potential investments. There is a rigorous due diligence process before an investment can be approved which will cover financial, legal and market risks. Following investment the Company/Manager will always have Board representation, the investee company is required to submit regular management information to an agreed standard and timeliness and the Manager undertakes regular monitoring. The Board receives and considers the most recent monitoring report prepared by the Manager at every Board meeting.

Pricing Risk Table

All security investments present a risk of loss of capital, the maximum risk resulting from instruments is determined by the fair value of the financial instrument. The following represents the Company's market pricing exposure at year end:

At 31 March 2015:
	Note	Fair Value	% of Net
		£'000	Assets
Investments at fair value through profit or loss:
- Unlisted Equities	6 & 7	5,300	67.94

At 31 March 2014:
		Fair Value	% of Net
		£'000	Assets
Investments at fair value through profit or loss:
- Unlisted Equities	6 & 7	11,768	56.88

Valuation of financial instruments

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

> Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

> Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

> Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The table below analyses financial instruments,measured at fair value at the end of the reporting period,by the level in the fair value hierarchy into which the fair value measurement is categorised:

	Level 1	Level 2	Level 3	Total
At 31 March 2015:	£'000	£'000	£'000	£'000

Investments at fair value through profit or loss:
-Unlisted Equities	-	-	5,300	5,300
	-	-	5,300	5,300


At 31 March 2014:	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000

Investments at fair value through profit or loss:
-Unlisted Equities	-	1,968	9,800	11,768
	-	1,968	9,800	11,768

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
	2015	2014
Opening balance	9,800	32,800
Disposal of investments	(1,000)	(2,940)
Total fair value gains or losses in profit or loss	(3,500)	(18,092)
Transfer to level 2	-	(1,968)
Closing balance	5,300	9,800

Although the Company believes that its estimates of fair values are appropriate, the use of different methodolgies or assumptions could lead to different measurements of fair value. Investments classified with level 3 have significant unobservable inputs, as they trade infrequently. As observable prices are not available for these securities, the Company has used valuation techniques to derive the fair value. Transfers between levels are deemed to take place at the end of the year.

Level 3 investments have been valued in accordance with the methodologies in Note 18.8. The value of the investments and the fair value movements are disclosed in note 7.

Unrealised loss on fair value movements from revaluation of level 3 investments still held at year end and recognised in the Statement of Comprehensive Income amounted to £2.7 million (2014: unrealised loss of £12.6 million).

Unistream was valued using 75% EBITDA multiple and 25% revenue multiple basis and 40% liquidity discount (2014: 30% liquidity discount).

The Revenue multiple observed was 1.6x and the EBITDA multiple observed was 6.2x.

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 loss would decrease by £1,060,000 (2014: £2,353,600) for the Company. This sensitivity rate was determined by the Directors as reasonable taking market conditions into account.

If the Revenue multiple increases from 25% to 35% the value of Unistream would become £5.9 million.

18.7 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 Company is exposed to interest rate risk as a result of the cash and bank balances that are invested at floating interest rates. The Company 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 Company's exposure to interest rate risk as at period end by the earlier of contractual maturities or re-pricing:

At 31 March 2015:	No	Less than	1 months	1 to 2	2 to 5	Greater	Total
	contractual	1 month	to 1 year	years		than 5
	terms of				years	years
	repayment
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Assets
Non-interest bearing	5,300	-	13	-	-	-	5,300
Floating interest rate instruments	2,638	-	-	-	-	-	2,638
Total	7,938	-	13	-	-	-	7,951

Liabilities
Non-interest bearing	-	-	(150)	-		-	(150)
Total	-	-	(150)	-	-	-	(150)
Net Exposure	7,938	-	(216)	-	-	-	7,801

At 31 March 2014:	No	Less than	1 months	1 to 2	2 to 5	Greater	Total
	contractual	1 month	to 1 year	years		than 5
	terms of				years	years
	repayment
	£'000	£'000	£'000	£'000	£'000	£'000
Assets
Non-interest bearing	11,768	-	3	-	-	-	11,771
Floating interest rate instruments	4,726	-	-	-	-	-	4,726
Fixed interest rate instruments	-	4,410	-	-	-	-	4,410
Total	16,494	4,410	3	-	-	-	20,907

Liabilities
Non-interest bearing	-	-	(219)	-		-	(219)
Total	-	-	(219)	-	-	-	(219)
Net Exposure	16,494	4,410	(216)	-	-	-	20,688

* The Company's fixed interest rate instruments represents cash accounts placed on deposit. The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss.

Sensitivity analysis

The sensitivity analysis below has been determined based on the Company'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 Company's net profit and equity for the year ended 31 March 2014 would have increased by £13,190 (2014: £23,634).

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.

18.8 Fair value measurement

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

1) Market Approach:

The market approach uses industry specific benchmarks as its basis and indicates the market value of the shares of the Company based on a comparison of the subject company to other comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction.

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.

The unquoted investment was valued using weighted combination of revenue and/or EBITDA multiples. Refer to Note 18.6.

The key assumptions in the valuations were as follows:

- Liquidity adjustment: 40% (31 March 2014: 25% to 30%)

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 reconciliation between beginning and ending balances of Level 3 investments is disclosed in Note 18.6. There was a transfer to level 2 from level 3 during the prior year. The investment was moved from level 3 to level 2 as the sales price could be used to value the investment. The investment was sold during the year, refer to note 11.

19. Segmental information

The Board of Directors of the Company decides on the strategic resource allocations of the Company. The operating segments of the Company 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 Company to be made up of one segment, which is reflective of the business activities of the Company and the information used for internal decision-making which includes the monthly reporting to management of investment holdings on a fair value basis:

- Aurora Russia

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

The Company derives its revenues from its investment primarily through fair value gains or losses.

The Company regards the holders of its ordinary shares as its customers, as it relies on their funding for continuing operations and meeting its objectives. The Company's shareholding structure is not exposed to a significant shareholder concentration.

The Company is engaged in investment in small and mid-sized companies in Russia.

20. Related party transactions

The Company had one direct subsidiary, KFL, at the beginning of the year, which was sold during the year (see notes 6 and 11). Details of the investment in Unistream Bank is presented in note 7.

Aurora Investment Advisors Limited ('AIAL') holds Nil (2014: 1,224,072) of the shares in Aurora Russia as at 31 March 2015.

The management fees paid to AIAL were £30,000 (2014: £744,743); at year end there was no prepayment of management fees. There were no amounts payable at year end (2014: £Nil).

Per the Amended and Restated Management Agreement, the management fee and performance fee payable to AIAL were 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.

The performance fees paid by the Company to AIAL during the year was £34,799 (2014: £27,735); at year end £Nil (2014: £40,960) was outstanding. The performance fees became payable on the sale of Flexinvest, calculated at 1.28% on the cash consideration of £1.9 million. Performance fees also became payable on the sale of Grindelia, calculated at 1.024% on the cash consideration of £1 million.

If the remaining investments were sold at their fair values as at 31 March 2015, £54,272 (£5,300,000 at 1.024%) would be payable to AIAL and £106,000 (£5,300,000 at 2%) would be payable to Mr Nicholas Henderson-Stewart by way of performance fees.

The Company's management contract with AIAL was terminated effective 30 April 2014. The Manager's services were extended to 30 June 2014. Mr Nicholas Henderson-Stewart was appointed as Advisor effective 19 June 2014.

Investment advisor fees of £46,227 (2014: £Nil) were paid during the year to Mr Nicholas Henderson-Stewart. At year end no fees were outstanding. Performance fees of £14,128 (2014: £Nil) were paid during the year to Mr Nicholas Henderson-Stewart. At year end no fees were outstanding.

21. Contingencies and capital commitments

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

22. Events after the reporting date

Tender offer

On 10 April 2015 the Company announced a tender offer for up to 6,687,203 Ordinary Shares, representing 14.99% of the issued Shares (the "Buyback"), at a price of 10p per share.

Following the Buyback and cancellation of such Shares, the total number of Ordinary Shares in issue is 37,923,928.

Change in directors interests

The Company announced that as a result of the tender offer for Shares on 10 April 2015, the Company's directors' beneficial shareholdings in the Company have changed as follows:

Gilbert Chalk sold 2,972 Shares (remaining holding: 16,855 Shares).

Tim Slesinger sold 850,669 Shares (remaining holding: 4,824,244 Shares).

Each at a price of 10p per Share and representing 14.99% of each Director's holding of Shares prior to the Buyback.

There are no further events after reporting date which require disclosure.

Directors and Advisors


Directors		Registrar
Gilbert Chalk - Chairman		Capita IRG (CI) Limited
Tim Slesinger		2nd Floor
Jonathan Bridel		No 1 Le Truchot
Peregrine Moncreiffe		St Peter Port
Lyndon Trott		Guernsey GY1 4AE

Manager		Independent Auditor
Aurora Investment Advisors Limited		KPMG Channel Islands Limited
(terminated 30 June 2014)		Glategny Court
Sarnia House		Glategny Esplanade
Le Truchot		St Peter Port
St Peter Port		Guernsey GY1 1WR
Guernsey GY1 4NA

Advisor		CREST Service Provider and UK Transfer Agent
Mr Nicholas Henderson-Stewart		Capita Registrars
(appointed 19 June 2014)		The Registry
10 Avenue Maurice		34 Beckenham Road
1050 Brussels		Beckenham
Belgium		Kent BR3 4TU

Administrator and Secretary		Nominated Adviser and Broker
Kleinwort Benson (Channel Islands)		Numis Securities Limited
Fund Services Limited		The London Stock Exchange Building
Dorey Court		10 Paternoster Square
Admiral Park		London
St Peter Port		EC4M 7LT
Guernsey GY1 2HT

This information is provided by RNS

The company news service from the London Stock Exchange

END

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