Interim Trading Update

RNS Number : 8158W

Aurora Russia Limited

25 November 2010

 



25 November 2010

AURORA RUSSIA LIMITED

Interim Trading Update

Aurora Russia Limited ('Aurora Russia' or the 'Company') today announces a trading update on its investee companies ahead of its interim results for the six months ended 30 September 2010 which are expected to be released in December 2010.  

Highlights for the period include:

-        Growth in the Russian economy has resulted in improved performance in the Company's investee companies (particularly in the three months ended 30 September 2010).

-        The Board currently expects OSG, Unistream and Superstroy to be profitable in the year ending 31 December 2010.

-        OSG remains the largest records management company in Russia, Ukraine and Kazakhstan. OSG had a record month in September in terms of revenues which were £1.2m, up 40% from the prior year period and representing 9% growth over the previous month.  

-        Unistream continues to be the leading outbound money transfer company in Russia with c. 21% market share. Unistream's volumes grew 10.9% year-on -year ("YoY") in August and 9.7% YoY in September 2010.  August was the first month of YoY volume growth since the financial crisis.

-        Superstroy is the leading DIY company in the Urals Region of Russia.  It grew its revenues by 32% YoY in September following growth of 28% YoY in August and 23% YoY in July.  Superstroy began to grow again in April following the global financial crisis.

-        Flexinvest Bank's interest and fee income grew 47% compared to the prior year period and was at £746,000 for the nine months ended 30 September 2010.

-        Kreditmart's broker fees were £424,000 for the nine months ended 30 September 2010, representing a 156% increase YoY.  

Update on Russian economy

Russia's economy has returned to growth in 2010 after output contracted 7.9% in 2009 but the economic recovery is still fragile. The moderate growth momentum of the first half of 2010 is in the view of the Board likely to be sustained, with an implied growth of about 4.4% in 2010, strengthening slightly in 2011 (source: Transition Report, European Bank for Reconstruction and Development, 17 November 2010). The key risk to a sustained economic recovery remains the price of oil and other commodities. Higher oil prices and sufficient liquidity in the banking system, as well as the fiscal stimulus package being carried over into 2010, will be the main contributing factors to sustaining economic recovery. Policy-makers are likely to face the challenge of balancing the need to sustain the still fragile economic recovery with fiscal consolidation over the medium term.

The return to growth in the Russian economy has helped all of the Company's investments.  

OSG

For the nine months ended 30 September 2010, revenues were £9.8m representing an increase of 23% compared to the prior year period. September 2010 was a record month in terms of revenues which were £1.2m, up 40% from the prior year period and representing 9% growth over the previous month.  

OSG remains the largest records management company in Russia, Ukraine and Kazakhstan. OSG is expanding its operations with the Armenian operation receiving its first boxes under storage contracts that were recently signed in September 2010. In October 2010, OSG added additional racking in its main Moscow facility in Lobnya with capacity for approximately an additional 130,000 boxes which will be utilised in the next few months.  The company has also secured additional space in Moscow for up to 500,000 boxes.

Unistream Bank

Unistream transferred RUR84 billion in the nine months ended 30 September 2010. This reflects a decrease of 2% compared to the prior year period. Revenues for the same period were RUR1.5 billion, a 10% decrease compared to the prior year period due to lower commissions being charged as a result of a contraction in the industry of an estimated 27% in USD terms in 2009 and an increase in competition.

Unistream continues to be the leading money transfer company in Russia with c. 20% market share in Russia-outbound remittances as of Q2 2010. In August 2010 Unistream's volumes grew 10.9% YoY, the first month of growth since the global financial crisis.  In September 2010 this trend continued with the company transferring approximately RUR12 billion, a 9.7% YoY growth in volume.  Unistream continues to explore ways to expand its product range and has begun to grow mobile transfers aggressively with the mobile operators in Russia. In addition, Unistream launched a loyalty programme in August 2010 which has been a success and to date 187,000 customers have been issued with loyalty cards. So far statistics show that on the cards issued up to the end of September 2010 56% were used again in October 2010 in money transfer transactions.

Superstroy

Superstroy's revenues increased by 13% compared to the prior year period to RUR4.9 billion for the nine months ended 30 September 2010 and management expects that Superstroy will be profitable for the year ending 31 December 2010.

Superstroy is still the leading DIY company in the Urals Region of Russia which has a population of approximately 20 million people.  After a contraction in the DIY market due to the global financial crisis and a fall in revenues in 2009 of approximately 14%, Superstroy's revenues began to grow again in April 2010. They grew by 32% YoY in September following growth of 28% YoY in August and 23% YoY in July.  Superstroy is considering growing not only through new store openings, but also through acquisition.

Flexinvest

Flexinvest's interest and fee income grew 47% compared to the prior year period and reached £746,000 for the nine months ended 30 September 2010.

Flexinvest Bank is a fully licensed retail bank and is a member of the Russian Government's deposit insurance scheme.  Flexinvest continues to issue mortgage loans to its clients.  Given the current shortage of long term wholesale funding for mortgages, Flexinvest works with a handful of Russian partner banks for which it writes mortgages for on-sale to them.  

Kreditmart

Kreditmart's broker revenues were £424,000 for the nine months ended 30 September 2010. This represents an increase of 156% compared to the prior year period, due to the number of approvals received growing significantly. Kreditmart's interest income from its loan book earned £230,000 over the same period.

Kreditmart has returned to its core business of broking mortgages now that the mortgage market has begun to grow again.  Government statistics show that the volume of mortgages in Russia more than doubled in the first seven months of 2010 to RUR192 billion from RUR82 billion over the same period in 2009.

AGM

The Company is holding its AGM at 2.00pm on Friday 3 December 2010 at Trafalgar Court, Admiral Park, St. Peter Port, Guernsey, GY1 2JA.

Enquiries:

Aurora Russia Limited

James Cook                            [phone]

John McRoberts                      [phone]

Investec Investment Banking

Patrick Robb                           [phone]

Martin Smith                            [phone]

Financial Dynamics

Ed Gascoigne-Pees               [phone]

Sue I Ong                                [phone]

Notes to editors:

Aurora Russia

Aurora Russia floated on the Alternative Investment Market of the London Stock Exchange on 24 March 2006.  The Company has been established to make equity or equity related investments in small and mid-sized private Russian companies focused on the financial, business and consumer services sectors where the Directors of Aurora Russia believe there is potential for growth together with viable exit opportunities. The Company provides its investee companies with the necessary capital to continue to expand and develop and hands-on operational support to deliver significant step changes in performance and value creation. 

 

END

 

 

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