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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Ukraine | LSE:UKRO | London | Ordinary Share | GB00B0HW6117 | ORD USD 0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.45 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMUKRO The Ukraine Opportunity Trust PLC Half-Yearly Report for the Period Ended 30 June 2015 Introduction The Ukraine Opportunity Trust PLC ("the Company" or "UKRO") was incorporated on 16 August 2005 and commenced operations on 4 November 2005. The Company's Articles of Association contain provisions designed to ensure that, unless the Company is wound up earlier, it will be wound up on 30 September 2020. Furthermore, the Directors may, at their discretion, convene a General Meeting of the Company in 2015 for the purpose of winding-up the Company and the Articles contain provisions designed to ensure that a Special Resolution to wind up the Company proposed at that meeting will be passed. Capital Structure The Company's share capital consists of Ordinary Shares of US$0.01 each (the "Ordinary Shares"). The number of Ordinary Shares in issue as at 30 June 2015 was 4,404,381, of which 800,000 were held in Treasury and 3,604,381 were in circulation. Investment Objective The Company's investment objective is to achieve long-term capital growth primarily from a diversified portfolio of companies incorporated, headquartered or domiciled in, or whose businesses are primarily carried on in, Ukraine (including the non-Ukrainian holding companies of any such companies). Investments may be made in private equity, listed shares and money market investments. Investment Policy The Company seeks to achieve long-term capital growth through investment in selected listed equities (including pre-IPO and IPO transactions), private equity, money market investments and fixed income securities. Fixed income securities may be held principally for liquidity purposes. The Company may invest in companies incorporated, resident or domiciled outside Ukraine that directly or indirectly invest in, or that have a substantial link with, Ukraine, and may invest up to 15 per cent of the portfolio in companies incorporated, headquartered or domiciled in, or whose businesses are primarily carried on in, other eastern European countries. It is expected that the Company's portfolio will comprise at least ten investments and that investment will be diversified across industries and sectors exposed to the Ukraine marketplace. In addition, the Company will seek diversification in terms of the capitalisation size of the investments in which it participates. The Company does not currently hedge its exposure to changes in the US Dollar/ Hryvnia exchange rate but has the power to do so. However, hedging will only take place if the Directors, on the recommendation of the Investment Manager, consider this to be in the Company's interests. The Company has the ability under its Articles of Association to borrow up to 30 per cent of its net assets. Examples of when the Directors may exercise the power to borrow include where necessary to make an investment where disposable proceeds from a realisation have not been received or where the Company wishes to purchase its own shares. Investment Process The investment approach is bottom-up, founded largely on sector-based company analysis. The Investment Manager will continue to procure extensive research based on reliable local sources. Regular company visits are, and will be, made in order to understand the management objectives and to seek to establish the quality of the assets. In Ukraine, factors such as corporate governance, management, economic instability and institutional reform continue to need to be given greater prominence in reaching an investment decision and give rise to greater risks in comparison to more developed markets. The investment process for the Company's private equity investments may involve deal origination and due diligence carried out by the Investment Manager. Once a final private equity proposal has been agreed by the Investment Manager, it will be presented to the Board for review and, if thought fit, approved. The Investment Manager has discretionary authority to invest and divest in respect of all non-private equity investment, but remains subject to the ultimate supervision and control of the Directors at all times. The Investment Manager has the discretion to make equity investments and disposals involving less than 2.5 per cent (subject to an aggregate maximum of 10 per cent) of the Company's Gross Assets without prior reference to the Board. Company Summary Management Company FPP Asset Management LLP. Assets attributable to Shareholders US$11,928,000 as at 30 June 2015. Market capitalisation US$7,930,000 as at 30 June 2015. Management fee US$140,000 (2 per cent of Net Asset Value ("NAV") of the Company) for the six months to 30 June 2015. Performance fee US$nil (20 per cent of increase in the NAV of the Company since the performance period when such fee was last earned). Ongoing charges* 6.71 per cent. ISA status The Company is fully eligible for inclusion in ISAs. AIC The Company is a member of the Association of Investment Companies. * Ongoing charges incurred in the six months to 30 June 2015 (excluding interest costs and certain non-recurring items) as a percentage of average Net Assets. Summary of Results 30 June 2015 30 June 2014 31 December 2014 Assets attributable to US$11.93m US$21.68m US$12.88m Shareholders NAV per Ordinary Share US$3.31 US$6.01 US$3.57 Mid market Ordinary Share price US$2.20 US$3.925 US$3.10 Discount to NAV 33.53% 34.69% 13.17% Dividend declared Nil Nil Nil Six months to Six months Year to to 30 June 2015 30 June 2014 31 December 2014 Total earnings per Ordinary (US$0.2650) (US$0.4472) (US$2.8868) Share Proposed Delisting Having consulted with its major shareholders, and taking into consideration the ongoing conflict in Ukraine, the Board believes the cost of maintaining a public listing outweighs the benefits. As such, the Board will be writing to shareholders via a shareholder circular to seek approval to delist the Company's shares from trading. A draft circular is currently with the UK Listing Authority for approval, and once approved will be sent to shareholders. Board Changes Further to the statement made in the Company's Annual Report for the year ended 31 December 2014, Robin Monro-Davies, a Non-Executive Director and Chairman of the Company retired from the Board at the Company's Annual General Meeting held on 18 June 2015. Following his resignation, Nigel Pilkington, was appointed Chairman. Following the result of the Annual General Meeting, when shareholders chose not to elect Beatrice Hollond or re-elect Dmitry Chernobay, Bertrand Lipworth remained on the Board contrary to his initial intention. Subsequently, Gordon Lawson and Nicholas Cournoyer were appointed as Non-Executive Directors of the Company on 26 June 2015. On 29 July 2015, the Company announced with great regret that Bertrand Lipworth had passed away. Bertrand had been a Director of the Company since 2007. The Board issued a statement saying "This is a great shock to us all and we will miss Bertrand's wise council and his excellent company." Risks The Board considers the following as the principal risks and uncertainties facing the Company for the remaining six months of the financial year. Risks Specific to Investing in Ukraine and Ukrainian Companies The Company's investments involve certain additional risks not typically associated with investments in developed and other developing market economies. This is increased with the unresolved conflict with Russia and the uncertainty this causes. The Investment Manager manages the Company's assets in a manner that will limit the exposure to such risks insofar as is practicable, and formally reports to the Board on a quarterly basis. Independent members of the Board undertake the role of the Investment Committee which reviews and comments on the research into potential private equity investments for the Company. More details regarding this function of the Board can be found in the Corporate Governance Statement in the Company's Annual Report and Financial Statements for the year ended 31 December 2014. The quality of financial reporting of Ukrainian companies is not at the same level as that of Western European companies. Most Ukrainian companies do not use internationally accepted accounting standards, or have their accounts subject to external audit, which may create a lack of transparency. There are differences between Western European and Ukrainian securities markets, including the relative underdevelopment and illiquidity of the Ukrainian securities market, together with less government supervision and regulation. The Ukrainian legal framework governing securities transactions is underdeveloped, incomplete and provides guidance only with respect to the most basic and unsophisticated transactions. There is an inherent lack of minority investor protection in Ukrainian law, however a change in political will would hopefully see this improve in the future. The value of the Company's investments is affected by fluctuations in the value of the Hryvnia against the US Dollar and by tightening in local exchange control regulations, tax laws and economic or monetary policies. The Company is
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also subject to the risks in Ukraine of continued inflation and significant currency devaluation. Due to the limited number of investment opportunities available to the Company, the portfolio is concentrated and therefore the insolvency or other business failure of any one or more of the Company's investment enterprises could have a material effect on the Company, its operations and ability to achieve its objective. Laws on the insolvency of enterprises have been enacted in Ukraine but, as yet, there has been little practical experience in the manner of implementation of these laws. In order to mitigate this risk, the Company has sought to invest in a diversified portfolio of assets, however, changing asset values and commercial investment decisions have impacted this policy. Risks Relating to the Company The Company by its nature is exposed to market risk due to fluctuations in the market prices of its investments, interest rates, exchange rates and currency markets, credit risk, liquidity risk, cash flow risk and political risk. The Investment Manager actively monitors the Company's performance and the performance of the market in which it invests and formally reports to the Board on a quarterly basis. The Company, as part of its investment strategy, invests in certain securities that are not listed or admitted to trading on any recognised stock exchange and as a consequence, such securities are not readily tradeable. The Company seeks to provide attractive long-term absolute returns, rather than returns relative to a particular index or benchmark. Its portfolio is managed without reference to the composition of any stock market index. Therefore, it is quite likely that there will be periods when the Company's performance will be quite unlike that of any index, which may or may not be to the advantage of shareholders. Failure by the Company to satisfy the requirements of Sections 1158/1159 of the CTA could result in the Company being subject to capital gains tax. In order to minimise the impact of taxation costs, the Directors, Investment Manager and Company Secretary monitor the Company's position on a monthly basis. On a quarterly basis, a more detailed assessment is made between the Board and the Investment Manager. The Board had, in late 2013, engaged lawyers to carry out a review of the share register to ensure the Company is not a close company (as defined in the CTA). The review concluded that the Company was not, and had not been, a close company; the Board regularly monitors this. The Board acknowledges that it has no control over shareholders purchasing shares, nor their concentration on the share register. A further prerequisite to qualify as an Investment Trust Company is the requirement to diversify risk in the portfolio; this is also a requirement of the Listing Rules. As the Company increases its focus on the successful private equity investments, the portfolio will become increasingly concentrated. The Board monitors the risk diversification and the Company's compliance with the Listing Rules and the CTA. Related Party Transactions FPP Asset Management LLP, as Investment Manager of the Company, is a related party by virtue of its management contract with the Company (novated to it on 7 December 2008). During the six months to 30 June 2015, services with a total value of US$140,000 (six months to 30 June 2014: US$225,000; year ended 31 December 2014: US$414,000) were purchased under the contract. No investment management performance fee was payable for the six months to 30 June 2015 (six months to 30 June 2014: US$nil; year ended 31 December 2014: US$nil). At 30 June 2015, the amount due to the Investment Manager, included within creditors, was US$20,000 (30 June 2014: US$36,000; 31 December 2014: US$22,000). There were no changes in the transactions or arrangements with related parties as described in the Company's Annual Report and Financial Statements for the year ended 31 December 2014 that would have a material effect on the financial position or performance of the Company in the first six months of the current financial year. Interim Management Report and Responsibility Statement of the Directors in respect of the Half-Yearly Financial Report Interim Management Report Under the Disclosure and Transparency Rules the Company is required to make a number of disclosures, including the following: Important events that have occurred during the period under review; key factors influencing the financial statements; and principal risks and uncertainties for the remaining six months of the financial year. These are set out in this Half-Yearly Report. Responsibility Statement The Directors confirm that to the best of their knowledge: (a) the condensed set of financial statements has been prepared in accordance with International Accounting Standard ("IAS") 34, Interim Financial Reporting, as adopted by the European Union, and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; (b) the Half-Yearly Report includes a fair review of the information required to be disclosed under the Disclosure and Transparency Rule 4.2.7R. This includes (i) an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed interim financial information presented in the Half-Yearly Report and (ii) a description of the principal risks and uncertainties for the remaining six months of the financial year; and (c) the Half-Yearly Report includes a fair review of the information required to be disclosed under Disclosure and Transparency Rule 4.2.8R, being any changes in related party transactions described in the last annual report. On behalf of the Board Nigel Pilkington Chairman 26 August 2015 Investment Management Report for The Ukraine Opportunity Trust PLC for the six months to 30 June 2015 Ukraine has seen immense changes over the last year and a half. Politically we have seen the overthrow of the previous government in February 2014, closely followed by the Russian annexation of Crimea in March of that year. Mr Poroshenko then won the May 2014 Presidential election with 54.7 per cent support. The October parliamentary election returned a large pro-reform majority, led by the People's Front of the Prime Minister, Mr Yatsenyuk, and the Petro Poroshenko Bloc. Hostilities in the East of Ukraine, which peaked in early 2015, were finally brought to some sort of conclusion by the second ceasefire agreement signed in Minsk in February 2015. In March, the IMF board then approved a new programme loan, the first US$5 billion tranche of which was disbursed. This process, combined with an increase in interest rates and some exchange controls brought an end to repeated phases of Hryvnia weakness, allowing it to settle at around UAH22 per Dollar, compared to a low of UAH30 per Dollar in February. In 2014, Ukraine's GDP fell by 6.8 per cent and a similar economic contraction is expected this year. 2014 average inflation rose to 12.1 per cent, driven by currency weakness and IMF-led increases in utility tariffs. Inflation has continued to accelerate in 2015 as the currency has weakened further in Q1, this despite a higher base, low global energy prices and recession. Inflation accelerated rapidly to April 2015 when it peaked at 60 per cent. As of July, it has fallen back marginally to 55.3 per cent year-on-year, although month-on-month inflation has fallen to near zero from 14 per cent in April. This situation obviously still represents a major challenge for Ukrainian companies and consumers as incomes have singularly failed to keep pace with inflation, leading to a fall in real purchasing power. The external position of Ukraine has improved with both the current account deficit and the trade deficit contracting in 2015. The major positive effect of lower energy prices was in part cancelled out by lower demand in ex-Soviet CIS markets, but the Economist Intelligence Unit expects a 'marked narrowing' of the current account deficit from last year's 4 per cent of GDP to around 1.7 per cent of GDP in 2015. Taken together with the renewal of the IMF programme, this improvement will reduce the pressure on Ukraine's foreign reserves which had been sharply reduced by debt repayments and a fall in FDI. It remains to be seen whether Ukraine can deliver a significant debt restructuring along the lines outlined by the IMF, as talks with creditors are currently entering their fifth month. Currency depreciation and a deep recession have increased Ukraine's sovereign debt burden from around 40 per cent of GDP pre-crisis to nearer 70 per cent of GDP and this could hit 80 per cent this year without any restructuring agreement. Ukraine and the IMF have asked for a 40 per cent cut in debt principal, but creditors are reluctant to concede this degree of haircut. Ultimately some compromise will likely be reached which allows Ukraine to re-build its reserves. In an environment of accelerating inflation and economic contraction it was a difficult first half for our portfolio of companies. Managements must focus on trying to maintain sales volumes whilst passing through Hryvnia price increases where they can; at the same time a focus on cost containment and minimising financial debt remain paramount. It is too much to expect Dollar sales growth for 2015 in these circumstances, but our consumer-facing companies have delivered good local currency growth and maintained some measure of profitability in what have been challenging circumstances. The Company's insistence on minimal debt exposures for all our companies has also been important in an environment of rising local rates. Suppliers are quick to deny their services to companies they deem too risky in terms of working capital or debt exposure, and we have had no such problems at our pharmacy chain or the restaurants, in this situation, a conservative balance sheet becomes a
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competitive advantage. The Company has continued the process of regularly reviewing asset valuations in this difficult environment. Property holdings are marked in line with third party estimates of their value as produced by a leading international property consultant. In the half year we also decreased the valuation of Food Master in line with the slight fall in rolling 12- month US Dollar cash flow as per the Q1 numbers. The listed holding in Creative, a sunflower and soy oil processor, was also marked down to account for the limited liquidity of the locally-listed shares. The Company continues to retain a considerable cash position, reflecting the uncertain environment. The ongoing conflict in Ukraine has prompted the Board and ourselves to review the Company's public market listing and whether the costs of maintaining this outweigh the benefits. Our goal is to continue to do everything to maximise the net asset value of the Company's investments and to protect long-term value for shareholders. Our collective judgement is that the current listed investment trust structure and the recurring expenses that it entails are not justifiable at current asset values. As such, the Board will be writing to shareholders via a shareholder circular to seek approval to delist the Company's shares from trading. FPP would also like to take this opportunity to extend our condolences to the family and friends of Mr Bertrand Lipworth, a Director of the Company, who died in July. Bertrand's contribution to the management of the business, most particularly his expertise in Private Equity transactions, was a great asset to us and he will be much missed by all who knew and worked with him. FPP Asset Management LLP Investment Manager 26 August 2015 ukro@fpictet.com Forward-looking statements This Half-Yearly Report may contain certain "forward-looking statements" which reflect the Company's and/or the Directors' current views with respect to financial performance, business strategy and future plans, both with respect to the group and the sectors and industries in which the Company invests. Statements which include the words "expects", "intends", "plans", "believes", "projects", "anticipates", "will", "targets", "aims", "may", "would", "could", "continue" and similar statements are of a future or forward-looking nature. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Company's actual results to differ materially from those indicated in these statements. Any forward-looking statements in this Half-Yearly Report reflect the Company's current views with respect to future events and are subject to risks, uncertainties and assumptions relating to the Company's investments, results and growth strategy. These forward-looking statements speak only as of the date of this Half-Yearly Report. Subject to any legal or regulatory obligations, the Company undertakes no obligation publicly to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or individuals acting on behalf of the Company are expressly qualified in their entirety by this paragraph. Nothing in this publication should be considered as a profit forecast. Portfolio Valuation as at 30 June 2015 Fair value % of net assets Security Name Currency Cost valuation as at as at 30 June 30 June 2015 2015 US$'000 US$'000 Private fixed income securities Bank Nadra 2.5% Loan 10 April UAH 3,044 218 1.8 2018 Total fixed income securities 3,044 218 1.8 Equities Listed equity Azovstal Iron & Steelworks UAH 427 52 0.4 Black Iron CAD 18 15 0.1 Centrenergo UAH 248 59 0.5 Creative Industrial Group UAH 1,255 403 3.4 Ferrexpo GBP 452 314 2.6 Kernel PLN 227 201 1.7 MHP USD 186 201 1.7 Ukrproduct Group GBP 144 25 0.2 Ukrsotsbank UAH 249 13 0.1 Zakhidenergo UAH 167 19 0.2 3,373 1,302 10.9 Private equity Food Master (Anthoreal Estates) UAH 5,663 5,389 45.2 Vitalux (Chalsen Trade) UAH 2,118 545 4.6 Ekipazh UAH 541 456 3.8 Elcinory UAH 1,131 668 5.6 UKRO Land Invest UAH 2,513 1,000 8.4 11,966 8,058 67.6 Total equity 15,339 9,360 78.5 Total portfolio valuation 18,383 9,578 80.3 Cash and cash equivalents 2,566 21.5 Other net liabilities (216) (1.8) Net assets 11,928 100.0 As at 30 June 2015, the portfolio was held in the following denominations: 2.1% in USD (US Dollar); 92.1% in UAH (Ukranian Hryvnia); 3.5% in GBP (Sterling); 2.1% in PLN (Polish Zloty); and 0.2% in CAD (Canadian Dollar). Statement of Comprehensive Income (unaudited) for the six months to 30 June 2015 Six months to 30 June 2015 Six months to 30 June 2014 Year ended 31 December 2014 (audited) Revenue Capital Revenue Capital Revenue Capital return return Total return return Total return return Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Income 44 - 44 44 - 44 35 80 115 Losses on investments Losses on fair value through profit or loss investments - (372) (372) - (1,064) (1,064) - (9,338) (9,338) Exchange gains/(losses) (3) (3) - (15) (15) - 14 14 - - (358) (358) - (1,067) (1,067) - (9,353) (9,353) Expenses Investment management fee (140) - (140) (225) - (225) (414) - (414) Other expenses (488) - (488) (360) - (360) (747) - (747) (628) - (628) (585) - (585) (1,161) - (1,161) Net return before tax (584) (358) (942) (541) (1,067) (1,608) (1,126) (9,273) (10,399) Tax (Note 3) (13) - (13) (4) - (4) (5) - (5) Net return for the period (597) (358) (955) (545) (1,067) (1,612) (1,131) (9,273) (10,404) US$ US$ US$ US$ US$ US$ US$ US$ US$ Return per Ordinary Share Basic and Diluted (Note 4) (0.1657) (0.0993) (0.2650) (0.1512) (0.2960) (0.4472) (0.3138) (2.5730) (2.8868) The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU. The supplementary revenue return and capital return columns have been prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement are derived from continuing operations. The Company does not have any income or expense that is not included in net return for the period, and therefore the "Net return for the period" is also the "Total comprehensive income for the period", as defined in IAS 1 (revised). All of the net return and total comprehensive income for the period is attributable to the owners of the Company. Statement of Changes in Equity (unaudited) for the six months to 30 June 2015 Share Capital Share premium Special redemption Capital Revenue
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capital account reserve reserve reserve reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 As at 1 January 2015 44 6,494 47,227 18 (34,968) (5,932) 12,883 Revenue return for the (597) period - - - - - (597) Losses on realisation of investments - - - - (84) - (84) Movement in fair value of investments - - - - (288) - (288) Exchange gains - - - - 14 - 14 Total recognised income and expenses - - - - (358) (597) (955) Balance at 30 June 2015 44 6,494 47,227 18 (35,326) (6,529) 11,928 Statement of Changes in Equity (unaudited) for the six months to 30 June 2014 Share Capital Share premium Special redemption Capital Revenue capital account reserve reserve reserve reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 As at 1 January 2014 44 6,494 47,227 18 (25,695) (4,801) 23,287 Revenue return for the period - - - - - (545) (545) Movement in fair value of investments - - - - (1,064) - (1,064) Exchange losses - - - - (3) - (3) Total recognised income and expenses - - - - (1,067) (545) (1,612) Balance at 30 June 2014 44 6,494 47,227 18 (26,762) (5,346) 21,675 Statement of Changes in Equity (audited) for the year ended 31 December 2014 Share Capital Share premium Special redemption Capital Revenue capital account reserve reserve reserve reserve Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 As at 1 January 2014 44 6,494 47,227 18 (25,695) (4,801) 23,287 Revenue return for the year - - - - - (1,131) (1,131) Losses on realisation of investments - - - - (2,997) - (2,997) Capital dividend received - - - - 80 - 80 Movement in fair value of investments - - - - (6,341) - (6,341) Exchange losses - - - - (15) - (15) Total recognised income and expenses - - - - (9,273) (1,131) (10,404) Balance at 31 December 2014 44 6,494 47,227 18 (34,968) (5,932) 12,883 Statement of Financial Position (unaudited) as at 30 June 2015 As at 30 June As at 30 June As at 31 December 2014 2015 2014 (audited) US$'000 US$'000 US$'000 Non-current assets Investments at fair value through profit or 9,578 17,875 9,806 loss Current assets Other receivables 28 33 81 Cash and cash 2,566 3,963 3,245 equivalents 2,594 3,996 3,326 Total assets 12,172 21,871 13,132 Current liabilities Other payables (244) (196) (249) (244) (196) (249) Total assets less current liabilities/net 11,928 21,675 12,883 assets Represented by: Capital and reserves Share capital 44 44 44 Special reserve* 47,227 47,227 47,227 Capital redemption 18 18 18 reserve Capital reserve* (35,326) (26,762) (34,968) Share premium account 6,494 6,494 6,494 Revenue reserve* (6,529) (5,346) (5,932) Total Shareholders' 11,928 21,675 12,883 funds US$ US$ US$ NAV per Ordinary Share (Note 6) 3.31 6.01 3.57 The above financial information has been prepared in accordance with IFRS (as adopted by the EU). * These reserves are distributable (by way of dividend). Statement of Cash Flows (unaudited) for the six months to 30 June 2015 Six months to Six months to Year ended 31 December 2014 30 June 2015 30 June 2014 (audited) US$'000 US$'000 US$'000 Cash flows from operating activities Net return before tax (942) (1,612) (10,399) Adjustments to reconcile net return before tax to net cash flows from operating activities: Add back: losses on investments 372 1,064 9,338 Add back: exchange (gains)/ (14) 3 15 losses Decrease/(increase) in other 53 22 (25) receivables (Decrease)/increase in other (5) 7 60 payables Net cash outflow from operating activities (536) (516) (1,011) Taxation Irrecoverable overseas tax paid (13) - (5) (13) - (5) Cash flows from investing activities Purchases of investments (309) (2,136) (2,430) Sales of investments 164 - 87 Net cash flows used in investing activities (145) (2,136) (2,343) Decrease in cash and cash equivalents (Note 8) (694) (2,652) (3,359) Cash and cash equivalents at start of period/year 3,245 6,618 6,618 Effect of exchange movements 15 (3) (14) Cash and cash equivalents at end of period/year (Note 8) 2,566 3,963 3,245 Notes 1. Accounting policies The interim financial information has been prepared in accordance with IAS34, 'Interim Financial Reporting' and also in accordance with the accounting policies set out in the statutory accounts for the year ended 31 December 2014. The interim financial information should be read in conjunction with the statutory accounts for the year ended 31 December 2014, which have been prepared in accordance with IFRS. The Company has adequate financial resources and no significant investment commitments and as a consequence, the Directors believe that the Company is well placed to manage its business risks successfully. After making appropriate enquiries, the Directors have a reasonable expectation that the Company has adequate available financial resources to continue in operational existence for the foreseeable future and accordingly have concluded that it is appropriate to continue to adopt the going concern basis in preparing the Half-Yearly Report. 2. Financial information The financial information contained in this Half-Yearly Report does not constitute full statutory accounts as defined in sections 434-436 of the Companies Act 2006. The financial information for the six months to 30 June 2015 and 30 June 2014 has not been audited or reviewed. The information for the year ended 31 December 2014 has been extracted from the latest published audited accounts. Those statutory accounts have been filed with the Registrar of Companies and included a report of the auditors which was unqualified and did not contain a statement under sections 498(2) or (3) of the Companies Act 2006. 3. Tax credit/charge on ordinary activities The tax charge for the six months to 30 June 2015 is US$13,000 (six months to 30 June 2014: US$4,000 year ended 31 December 2014: US$5,000). The tax charge for the six months to 30 June 2015 relates entirely to irrecoverable overseas withholding tax. The estimated effective tax rate is zero per cent for the year ending 31 December 2015. This is because investment gains are exempt from Capital Gains Tax owing to the Company's current status as an Investment Trust Company and there is expected to be an excess of management expenses over taxable income in the year ending 31 December 2015. Therefore there is no liability to Corporation Tax during the six months to 30 June 2015 (six months to 30 June 2014: US$nil; year ended 31
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December 2014: US$nil). However, as a result of the Company's intention to delist before the year ending 31 December 2015, the Company will become an unapproved Investment Trust Company for the full year and therefore will be subject to Corporation Tax on all profits and required to recognise deferred tax on gains and losses arising on the revaluation or disposal of investments. The Directors' current expectation is that unless there is a very significant change to the current political and military impasse in Ukraine before the end of 2015, asset values will be at best around current levels, meaning little or no tax is likely to become payable. 4. Return per Ordinary Share Six months to 30 June 2015 Weighted average number of Net Ordinary Ordinary return Shares Share US$'000 '000 US$ Total return per ordinary (955) 3,604 (0.2650) share Revenue return per ordinary (597) 3,604 (0.1657) share Capital return per ordinary (358) 3,604 (0.0993) share Six months to 30 June 2014 Weighted Average number of Net Ordinary Ordinary return Shares Share US$'000 '000 US$ Total return per ordinary (1,612) 3,604 (0.4472) share Revenue return per ordinary (545) 3,604 (0.1512) share Capital return per ordinary (1,067) 3,604 (0.2960) share Year to 31 December 2014 Weighted Average Net number of Ordinary return Ordinary Share US$'000 Shares US$ '000 Total return per ordinary (10,404) 3,604 (2.8868) share Revenue return per ordinary (1,131) 3,604 (0.3138) share Capital return per ordinary (9,273) 3,604 (2.5730) share 5. Segment reporting As detailed in the Company's Report and Financial Statements for the year ended 31 December 2014, the Company operates in a single geographical segment (being an investment business mainly operating in Ukraine-based entities) but identifies two key areas based on the decision making process by the Board and Investment Manager and has therefore prepared an analysis of results by segment based on these key decision making processes. These two identifiable segments are: 1) the listed investment portfolio (both equity and fixed income securities); and 2) the private investment portfolio (both equity and fixed income securities). The listed investment portfolio and the private investment portfolio are shown above. Information regarding the Company's reportable operating segments is presented below. 30 June 2015 Listed Private equity/ equity/ fixed fixed income income Total securities securities Unallocated US$'000 US$'000 US$'000 US$'000 Segment income and expenses Investment income 44 44 - - Total losses on investments taken to profit or loss (372) (107) (265) - Other gains 14 - - 14 Expenses (628) - - (628) Total net return after tax as per Statement of Comprehensive Income (942) (63) (265) (614) 30 June 2014 Listed Private equity/ equity/ fixed fixed income income Total securities securities Unallocated US$'000 US$'000 US$'000 US$'000 Segment income and expenses Investment income 44 15 29 - Total losses on investments taken to profit or loss (1,064) (76) (988) - Other losses (3) - - (3) Expenses (585) - - (585) Total net return after tax as per Statement of Comprehensive Income (1,608) (61) (959) (588) 31 December 2014 Listed Private equity/ equity/ fixed Fixed income income Total securities securities Unallocated US$'000 US$'000 US$'000 US$'000 Segment income and expenses Investment income 115 19 96 - Total losses on investments taken to profit or loss (9,338) (754) (8,584) - Other losses (15) - - (15) Expenses (1,161) - - (1,161) Total net return after tax as per Statement of Comprehensive Income (10,399) (735) (8,488) (1,176) 6. Net assets attributable to Ordinary Shares The total net assets attributable to Shareholders are calculated as follows: 30 June 2015 30 June 2014 31 December 2014 US$'000 US$'000 US$'000 Shareholders' funds 11,928 21,675 12,883 The basic NAV per Ordinary Share is as follows: NAV US$3.31 US$6.01 US$3.57 Number of Ordinary Shares 3,604,381 3,604,381 3,604,381 7. Fair value hierarchy Financial assets and financial liabilities of the Company are carried in the Statement of Financial Position at their fair value. The fair value is the amount at which the asset could be sold or the liability transferred in a current transaction between market participants, other than a forced or liquidation sale. For investments actively traded in organised financial markets, fair value is generally determined by reference to quoted market bid prices. The Company measures fair values using the following hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant assets as follows: * Level 1 - valued using quoted prices, unadjusted in active markets for identical assets or liabilities. * Level 2 - valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted prices included in level 1. * Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data for the asset or liability. The tables below set out fair value measurements of financial instruments as at the respective period ends, by the level in the fair value hierarchy into which the fair value measurement is categorised. Financial assets at fair value though profit or loss at 30 June 2015 Total Level 1 Level 2 Level 3 US$'000 US$'000 US$'000 US$'000 Equity investments 9,360 899 403 8,058 Fixed income securities 218 - - 218 Total 9,578 899 403 8,276 Financial assets at fair value though profit or loss at 30 June 2014 Total Level 1 Level 2 Level 3 US$'000 US$'000 US$'000 US$'000 Equity investments 17,504 1,029 851 15,624 Fixed income securities 371 - - 371 Total 17,875 1,029 851 15,995
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