RNS Number : 2696E
Aurora Russia Limited
17 December 2009
Aurora Russia Limited ("Aurora Russia" or the "Company")
Results for the 6 months ended 30 September 2009

Investee companies well positioned to grow market share as Russia's economy improves
Successful fundraising of 15 million
Financial highlights
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Net asset value at 30 September 2009 up 2.0% to 81.43 million or 108.6p per share, compared to 79.86 million or 106.5p per share at 31 March 2009
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Cash and cash equivalents as at 30 September 2009 were 3.49 million, compared to 4.12 million as at 31 March 2009
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Consolidated net profit for the period of 1.99 million (1.08 million for 6 months to 30 September 2008)
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Consolidated earnings per share for the period of 2.65p per share (1.44p per share for 6 months to 30 September 2008)

Operational highlights - Focus on cost efficiency whilst pursuing market share gains.
Fully invested with 64.2million in five companies, three of which are leaders in their field

OSG
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OSG remains the largest records management company in Russia, Ukraine and Kazakhstan
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For the period to 30 September 2009, revenues in Russia grew 33% year-on-year in RUR terms while Poland grew 44% year-on-year in PLN terms
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EBITDA was 1.1m up 21% year-on-year

Unistream Bank
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Continues to build on position as one of the largest money transfer companies in Russia through c.280 of its own money transfer offices
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Revenue for the 9 month period to 30 September 2009 reduced by 5% in RUR terms at 35 million, compared to the prior year period, due to the impact of the financial crisis on the construction industry
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Operating income before fixed expenses during the period increased 9% year-on-year to 15.7 million due to growth in foreign exchange commissions and an increase in the share of own points of sale in the total volume transferred

Superstroy
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Solid performance through focus on operational efficiencies and cost reduction, with all 45 stores expected to be profitable in 2009
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EBITDA improved by 188% year-on-year with the company maintaining its market position which, based on estimated turnover figures, ranks the company as 4th among all chain DIY retailers operating in Russia (up from 7th in 2007)

Kreditmart and Flexinvest
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Due to the financial crisis, Kreditmart has shifted focus on insurance and consumer loans until the mortgage market returns to Russia
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Management achieved a decrease in monthly cash burn of 71% through cost-cutting and reduction of headcount by 53%
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Both Kreditmart and Flexinvest Bank together have net cash of 6.7 million and 20 million in assets as at 30 September 2009

Successful fundraising of 15 million

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On 17 December 2009, the Company announced a Placing of 15 million of newly issued shares
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12.4 million will be used to purchase an additional 43.5% of OSG's shares bringing the shareholding in OSG to 93.6% and to invest new money into OSG to part fund a large warehouse facility
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Balance of proceeds of the Placing to be used to pay costs associated with the Placing and retained by the Company as working capital

Detailed results for the investee companies are contained in the investment management report

Commenting, Dan Koch, Chairman of Aurora Russia, said:
"While the global operating environment over the period has been challenging, the investee companies have taken prudent measures to ensure that they are positioned for growth. Three of the five investments are market leaders and I believe that they are well-positioned for exit either through a strategic sale or IPO.
I am encouraged that the Rouble is gaining strength and that currency stability will likely support growth in consumption. Russia's reserves of over $400 billion remain one of the world's largest and should allow Russia to recover faster than most world economies."

Financial highlights:

Net asset value per share at 31 March 2010 of 88.0p per share (Net asset value 99.0m)

Cash and cash equivalents as at 31 March 2010 were 5.70 million

Net profit for the period of 4.8 million

Earnings per share for the period of 5.78p per share

Operational highlights:

73.9 million invested in five companies, three of which are leaders in their field

Successful fundraising of 15 million and acquisition of additional 45.5% of OSG

Intention to return up to 105 million over time to shareholders from proceeds of sale of Company's investments

OSG

OSG remains the largest records management company in Russia, Ukraine and Kazakhstan

Increased stake in OSG to 95.5% following the Placing in January

OSG continued its expansion in Russia and as of Q1 2010 operated in 20 cities (up from 13 in 2009)

For the year ending 31 December 2009, revenues in Russia grew 30% year-on-year in RUR terms while Poland grew 27% year-on-year in PLN terms

EBITDA up 26% to 1.7 million for year ended 31 December 2009

Unistream Bank

Unistream had c.21% of the outbound money transfer market according to Q1 2010 statistics published by the CBR

Rationalized proprietary distribution network by shutting down 88 under-performing cash desks at the end of 2009

Despite closures, the volume in Unistream's cash desks held up well and grew 4% year-on-year in Q1 2010

Revenue for the year ending 31 December 2009 was 51.9 million which was down from 55.1 million compared to the prior year period, due to the impact of the economic environment on the construction industry

EBITDA was 1.3m down 55% year-on-year

Superstroy

Focus in 2009 on conserving cash and reducing net debt

The company's revenues declined by 14% to 132.4 million impacted by fall in DIY market in Russia with most of the decline due to its wholesale operations while retail sales were down by only 8%

Reduction in net debt to 7.7 million from 14.2 million and increase in EBITDA from a negative -1.1 million to a positive 3.5 million for the year ending 31 December 2009

Kreditmart and Flexinvest

Kreditmart impacted by significant contraction in mortgage market

Shift in focus to insurance and consumer loans

Both Kreditmart and Flexinvest Bank together have net cash of 5.5 million and 20.5 million in assets as at 31 March 2010

Principal assets as at 31 March 2010 include a mortgage book net of provision of approximately 8.3 million, yielding 11.7% p.a.

Commenting, Dan Koch, Chairman of Aurora Russia, said:

"Three out of five of our companies are considered to be leaders in their respective markets and we are satisfied that each of them has done what was necessary to maintain this position through the crisis and set a platform to achieve their growth aspirations as and when the Russian market recovers. Economists and analysts have varying views on the strength of the Russian revival but all seem to believe that the country has come through the worst and is now in a good position to grow again over the foreseeable future and to continue to develop as a market economy with an improving international reputation."

It gets a mention in Investors Chronicle today -Aurora Russia has perked up nicely - but this fund is hugely undervalued at 32p against a net assett value of 88p a share